Inspired Entertainment, Inc. Leases Disclosure

24. Leases

 

The Company as Lessee

 

The Company is party to operating leases with third parties with respect to various real estate and vehicle assets. Both real estate and vehicle leases typically include a lease (of the property or vehicle) and a non-lease (provision of services) component which are accounted for separately. Payment terms are typically fixed, however, certain leases may contain various provisions for increases in rental rates based either on changes in a specific price index (such as the published Consumer Price Index CPI), a predetermined escalation schedule or rate, or as a percentage of sales. Such variable lease payments are recognized as lease expense as they are incurred. We initially measure the present value of the lease payments using the index at the lease commencement date. Additional payments based on the future subsequent change in an index or rate, or payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded when incurred as variable payments.

 

The lease term begins on the commencement date, which is the date the Company takes possession of the property. The Company’s lease terms may include options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis, and the ROU assets and lease liabilities are adjusted when it is reasonably certain that the option to extend or terminate will be exercised. The lease term is used to determine lease classification as an operating or finance lease and is used to calculate straight-line expense for operating leases. The operating leases have remaining terms of 4 months to 12 years.

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 

The Company is also party to finance leases with third parties with respect to gaming machines. Payment terms and interest rates are fixed at lease inception. Minimum amounts of cash are required to be maintained in the Company’s bank accounts with respect to the finance leases. The leases have remaining terms of between 1 month and 3.5 years.

 

The components of lease expense were as follows:

 

Schedule of Lease Expense

		Year Ended December 31, 2025				Year Ended December 31, 2024
		(in millions)
Finance lease costs:		$				$
Depreciation			5.9				1.0
Interest			3.8				1.8
Operating lease costs			6.1				6.7
Short-term lease costs			1.5				1.6
Variable lease costs			2.0				2.3
Total		$	19.3			$	13.4

 

		December 31, 2025				December 31, 2024
Weighted average remaining lease term – finance leases			40.2 months				50.0 months
Weighted average remaining lease term – operating leases			73.6 months				77.3 months
Weighted average discount rate – finance leases			17.1	%			16.7	%
Weighted average discount rate – operating leases			9.9	%			9.5	%

 

Assets leased under finance leases had a cost of $27.8 million and $21.4 million at December 31, 2025 and 2024, respectively, and accumulated depreciation associated with these assets was $6.1 million and $2.7 million at December 31, 2025 and 2024, respectively.

 

Future minimum finance lease payments as of December 31, 2025 were as follows:

 

Schedule of Future Minimum Finance Lease Payments

Year ending December 31, (in millions)
2026		$	7.2
2027			7.0
2028			6.9
2029			3.4
Total future minimum lease payments			24.5
Less: imputed interest			(6.4	)
Total		$	18.1

 

Future minimum operating lease payments as of December 31, 2025 were as follows:

 

Schedule of Future Minimum Operating Lease Payments

Year ending December 31, (in millions)
2026		$	3.0
2027			1.7
2028			1.4
2029			1.4
2030			1.3
Thereafter			3.3
Total future minimum lease payments			12.1
Less: imputed interest			(3.1	)
Total		$	9.0

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 

The Company as Lessor

 

Certain of our arrangements include leases for equipment installed at customer locations. As the lessor, we combine lease and non-lease components for all classes of underlying assets in arrangements that involve operating leases. The single combined component is accounted for under ASC 606, Revenue from Contracts with Customers based on the consideration that the non-lease components are the predominant items in the arrangements. If a component cannot be combined, the consideration is allocated between the lease component and the non-lease component based on relative standalone selling price. The lease component is accounted for under ASC 842, Leases and the non-lease component is accounted for under ASC 606.

 

Lease income from operating leases is not material for any of the periods presented. Lease income from sales type leases is as follows:

 Schedule of Lease Income from Operating Lease

		Year Ended December 31, 2025				Year Ended December 31, 2024
		(in millions)
Interest receivable		$	1.3			$	1.0
Profit recognized at commencement date of sales type leases			5.6				2.7
Total		$	6.9			$	3.7

 

Future minimum sales type lease receivables as of December 31, 2025 were as follows:

 

Schedule of Future Minimum Sales Type Lease Receivables

Year ending December 31, (in millions)
2026		$	7.7
2027			4.9
2028			2.2
2029			0.3
2030			0.1
Total future minimum lease receivables			15.2
Less: imputed interest			(1.0	)
Total		$	14.2

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024