REG - GVC Holdings PLC - Notification of Transfer to a Premium Listing <Origin Href="QuoteRef">GVC.L</Origin> - Part 10
01/07/2016 07:07
- Part 10: For the preceding part double click ID:nRSA8980Ci
that is, when the strategic financial and operating policy decisions relating to the activities
require the unanimous consent of the parties sharing control.
The Group reports its interests in jointly controlled entities using the equity method of accounting. Under the equity
method, investments in joint ventures are carried in the consolidated statement of financial position at cost as adjusted
for post-acquisition changes in the Group's share of the net assets of the joint venture, less any impairment in the value
of the investment. Losses of a joint venture in excess of the Group's interest in that investment are not recognised.
Additional losses are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the joint venture.
Intangible assets
Identifiable intangible assets are recognised when the Group controls the asset, it is probable that future economic
benefits attributed to the asset will flow to the Group and the cost of the asset can be reliably measured.
Goodwill
Goodwill is measured as the excess of the sum of the fair value of the consideration transferred, the amount of any
non-controlling interests in the acquiree and the fair value of the Group's previously held equity interest in the
acquiree, if any, over the net amounts of identifiable assets acquired in the subsidiary, associate or jointly controlled
entity and liabilities assumed at the acquisition date.
For acquisitions where the agreement date is on or after 31 March 2004, goodwill is not amortised and is reviewed for
impairment at least annually. Any impairment is recognised immediately in the consolidated statement of comprehensive
income and is not subsequently reversed. Goodwill arising on earlier acquisitions was being amortised over its estimated
useful life of 20 years. In accordance with the transitional provisions of IFRS 3 Business Combinations, the unamortised
balance of goodwill at 31 December 2004 was frozen and reviewed for impairment and will be reviewed for impairment at least
annually.
Externally acquired intangible assets
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to
other contractual or legal rights. Identifiable assets are recognised at their fair value at the acquisition date. The
identified intangibles are amortised over the useful economic life of the assets.
Internally generated intangible assets - research and development expenditure
Expenditure incurred on development activities, including the Group's software development, is capitalised only where the
expenditure will lead to new or substantially improved products or processes resulting in future economic benefits flowing
to the Group, the products or processes are technically and commercially feasible and the Group has sufficient resources to
complete development. The expenditure capitalised includes the cost of materials, labour and an appropriate proportion of
overheads. All other development expenditure is expensed as incurred.
Subsequent expenditure on capitalised intangible assets is capitalised only where it clearly increases the economic
benefits to be derived from the asset to which it relates. All other expenditure, including that incurred in order to
maintain the related intangible asset's current level of performance, is expensed as incurred.
Licence costs
Expenditure incurred in order to obtain gaming licences is capitalised and amortised over the life over the licence.
Amortisation of intangible assets
Amortisation is provided to write-off the cost of all intangible assets, with the exception of goodwill, over the periods
the Group expects to benefit from their use, and varies between:
Brand and domain names - 5% to 20% per annum
Capitalised development expenditure - 20% to 33% per annum
Contractual relationships - over the length of the contract
Customer lists and contracts - 5% to 50% per annum
Intellectual property and gaming licences - over the length of the licence
Software - 20% to 33% per annum
Impairment of goodwill, other intangibles and property, plant and equipment
At the end of each reporting period, an impairment review of goodwill is completed. In addition, the Group reviews the
carrying amounts of its other intangibles and property, plant and equipment to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cashflows
that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the
asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cashflows have
not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Impairments related to
goodwill are not reversed.
Property, plant and equipment
All property, plant and equipment are stated at cost, less accumulated depreciation, with the exception of freehold land
and buildings which are stated at cost and are not depreciated.
Assets in the course of construction are carried at cost, less any recognised impairment loss. Cost includes directly
attributable costs incurred in bringing the assets to working condition for their intended use, including professional
fees. Depreciation commences when the assets are ready for their intended use.
Depreciation is provided to write-off the cost, less estimated residual values, of all property, plant and equipment with
the exception of freehold land and buildings, evenly over their expected useful lives. It is calculated at the following
rates:
Leasehold improvements - over length of lease
Plant, machinery, computer equipment - 33% per annum
Fixtures, fittings, tools and equipment, vehicles - 20% per annum
Where an item of property, plant or equipment comprises major components having different useful lives, they are accounted
for as separate items of property, plant and equipment.
Segment information
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses. Each segment's operating results are regularly reviewed by the Group to make decisions about resources to
be allocated to the segment and assess its performance. The method for determining what information to report is based on
the way management organises the operating segments within the Group for decision-making purposes and for the assessment of
financial performance. The Group reviews financial statements presented by business segments which are supplemented by some
information about geographic regions for the purposes of making operating decisions and assessing financial performance.
Therefore, the Group has determined that it is appropriate to report according to business segment.
Revenue
Revenue from online gaming, comprising sports betting, casino & games, poker, bingo, and network services (third-party
entities that use the Group's platform and certain services), is recognised in the accounting periods in which the gaming
transactions occur.
Revenue is measured at the fair value of the consideration received or receivable. Net revenue consists of net gaming
revenue and revenue generated from foreign exchange commissions on customer deposits and withdrawals and account fees.
Sports betting, casino & games and bingo net gaming revenue represents net house win adjusted for the fair market value of
gains and losses on open betting positions, certain promotional bonuses and the value of loyalty points accrued. Poker net
gaming revenue represents the commission charged or tournament entry fees where the player has concluded his or her
participation in the tournament less certain promotional bonuses and the value of loyalty points accrued. Revenue generated
from foreign exchange commissions on customer deposits and withdrawals and account fees is allocated to each reporting
segment.
Other revenue consists primarily of revenue from network services, third-party payment services, sale of domain names,
financial markets, software services and fees from broadcasting, hosting and subscriptions. Revenue in respect of network
service arrangements where the third-party owns the relationship with the customer is the net commission invoiced.
Interest income is recognised on an accruals basis.
Cost of sales
Cost of sales consists primarily of betting and gaming taxes and broadcasting costs.
Broadcasting costs are expensed over the applicable lifecycle of each programme based upon the ratio of the current
period's revenue to the estimated remaining total revenues.
Clean EBITDA
Clean EBITDA is the Group's measure of reporting performance and is EBITDA adjusted for exchange differences,
reorganisation expenses, income or expenses that relate to exceptional items and non-cash charges relating to impairments
and share-based payments and associated payroll taxes. Exceptional items are those items the Group considers to be
non-recurring or material in nature that may distort an understanding of financial performance for the period or impair
comparability.
Foreign currency
Transactions entered into by group entities in a currency other than the currency of the primary economic environment in
which they operate (their 'functional currency') are recorded at the rates ruling when the transactions occur. Foreign
currency monetary assets and liabilities are translated at the rates ruling at the end of the reporting period. Exchange
differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the
consolidated statement of comprehensive income.
On consolidation, the results of overseas operations are translated into Euros at rates approximating to those ruling when
the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the
acquisition of those operations, are translated at the rate ruling at the end of the reporting period. Exchange differences
arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are
recognised directly in equity (the 'currency reserve').
Exchange differences recognised in the statement of comprehensive income of group entities' separate financial statements
on the translation of long-term monetary items forming part of the group's net investment in the overseas operation
concerned are reclassified to the currency reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating
to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part
of the profit or loss on disposal.
The financial information was translated into Euros at the following rates:
Average for Average for
the period the period
ended ended
31 March 31 March 31 December 31 March
2016 2016 2015 2015
British Pound (GBP) 1.2626 1.2862 1.3586 1.3606
Bulgarian Lev (BGN) 0.5113 0.5113 0.5097 0.5116
Indian Rupees (INR) 0.0133 0.0134 0.0139 0.0145
Israeli Shekel (ILS) 0.2337 0.2341 0.2362 0.2277
Ukraine Hryvnia (UAH) 0.0337 0.0346 0.0383 0.0423
US Dollar (USD) 0.8780 0.9072 0.9203 0.9016
Taxation
Income tax expense represents the sum of the Directors' best estimate of taxation exposures and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for
current tax is calculated using rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences other than
where IAS 12 Income Taxes contains specific exemptions.
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting year and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are
offset when there is a legally enforceable right to set off current assets against current tax liabilities and when they
relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Assets held for sale
Non-current assets and disposal groups are classified as held for sale if the carrying amount will be recovered through a
sale transaction rather than through continuing use. This condition is regarded as being met only when the sale is highly
probable, management is committed to a sale plan, the asset is available for immediate sale in its present condition and
the sale is expected to be completed within one year from the date of classification. These assets are measured at the
lower of carrying value and fair value less associated costs of sale except where the assets were previously classified as
available for sale, in which case they are carried at fair value.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payments. The Group issues equity settled share-based payments
to certain employees.
Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period and based, for
those share options which contain only non-market vesting conditions, on the Group's estimate of the shares that will
eventually vest. Fair value is measured by use of a suitable option pricing model. The expected life used in the model has
been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and
behavioural considerations.
For cash-settled share-based payment transactions, the goods or services received and the liability incurred are measured
at the fair value of the liability. Up to the point at which the liability is settled, the fair value of the liability is
re-measured at each reporting date and at the date of settlement, with changes being recorded in the consolidated statement
of comprehensive income. The Group records the expense based on the fair value of the share-based payments on a
straight-line basis over the vesting period.
Where equity instruments of the parent company or a subsidiary are transferred, or cash payments based on the Company's (or
a subsidiary's) share price are made, by shareholder(s) or entities that are effectively controlled by one or more
shareholder(s), the transaction is accounted for as a share-based payment, unless the transfer or payment is clearly for a
purpose other than payment for goods or services supplied to the Group.
Own shares
Own shares relate to shares gifted to the Employee Trust by the Company. The cash cost of own shares is recorded in the own
shares reserve.
When options issued by the Employee Trust are exercised the own share reserve is reduced and a gain or loss is recognised
in reserves based on proceeds less weighted-average cost of shares initially purchased now exercised.
The cost of own shares repurchased in cash as part of the share buy-back programme is debited to reserves. The shares are
cancelled at nominal value with a corresponding entry taken to the capital redemption reserve.
Provisions and contingent liabilities
The Group recognises a provision in the consolidated statement of financial position when it has a legal or constructive
obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle
the obligation.
Where the Group has a possible obligation as a result of a past event that may, but probably will not, result in an outflow
of economic benefits, no provision is made. Disclosures are made of the contingent liability including, where practicable,
an estimate of the financial effect, uncertainties relating to the amount or timing of outflow of resources, and the
possibility of any reimbursement.
Where time value is material, the amount of the related provision is calculated by discounting the cashflows at a pre-tax
rate that reflects market assessments of the time value of money and any risks specific to the liability.
Leased assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the
lessor is included in the consolidated statement of financial position as a finance lease obligation. Lease payments are
apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on
the remaining balance of the liability. Finance charges are charged directly to the consolidated statement of comprehensive
income.
Rentals payable under operating leases are charged directly to the profit or loss on a straight-line basis over the term of
the relevant lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis
over the lease term.
Financial assets
The Group's financial assets which are financial instruments are categorised as loans and receivables, available-for-sale
financial assets and those measured at fair value through profit & loss.
These include restricted cash and unrestricted bank deposits with maturities of more than three months. Amounts held as
security deposits are considered to be restricted cash. There are no financial assets that are classified as 'held to
maturity'. A category for 'in the money' derivative financial instruments is included in respect of foreign exchange
contracts entered into by the Group.
Non-derivative financial assets classified as available-for-sale comprise the Group's strategic investments in entities not
qualifying as subsidiaries, associates or jointly controlled entities. They are carried at fair value with changes in fair
value recognised directly in equity except where a fair value cannot be reliably determined whereby they are carried at
cost. In accordance with IAS 39, a significant or prolonged decline in the fair value of an available-for-sale financial
asset is recognised in the consolidated statement of comprehensive income.
Purchases and sales of available-for-sale financial assets are recognised on settlement date with any change in fair value
between trade date and settlement date being recognised in the available for sale reserve. On sale, the amount held in the
available-for-sale reserve associated with that asset is removed from equity and recognised in the consolidated statement
of comprehensive income.
Short-term investments are non-derivative financial assets with fixed or determinable payments that are not quoted on an
active market. They are initially recognised at fair value, plus transaction costs directly attributable to their
acquisition or issue. They are subsequently carried at amortised cost using the effective interest rate method, less any
provisions for impairment.
Trade and other receivables represent short-term monetary assets which are recognised at fair value less impairment and
other related provisions, which are recognised when there is objective evidence (primarily default or significant delay in
payment) that the Group will be unable to collect all of the amounts due. The amount of such a provision is the difference
between the net carrying amount and the present value of the future expected cashflows associated with the impaired
receivable.
Cash comprises cash in hand and balances with financial institutions. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash. They include unrestricted short-term bank deposits
originally purchased with maturities of three months or less.
Financial liabilities
The Group's financial liabilities are measured at amortised cost or fair value through profit and loss. Financial
liabilities include the following items:
> Client liabilities, including progressive prize pools.
> Trade payables and other short-term monetary liabilities which are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest rate method, which ensures that interest expense over
the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of
financial position.
> Loans and borrowings, comprising bank borrowings and overdrafts, which are initially recognised at fair value, net
of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are
subsequently valued at amortised cost using the effective interest rate method. Interest expense in this context includes
initial transaction costs, as well as any interest or coupon payable while the liability is outstanding.
> Contingent consideration is initially recognised at fair value and subsequently, for acquisitions completed under
IFRS 3 (2008) at amortised cost and for IFRS 3 (revised) at fair value through profit and loss.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of
a financial liability. The Group's ordinary shares are classified as equity instruments.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is
when declared by the Directors. In the case of final dividends, this is when approved by the shareholders at the Annual
General Meeting.
2. Segment information
The Group's operations are segmented into the following reporting segments based on the reporting of results to the Chief
Operating Decision Makers ('CODMs'):
• bwin labels;
• Games labels;
• Studios - the Group's fully-integrated and scaleable technology platform provided through arms-length B2B agreements
with both internal and external customers;
• Non-core - includes Kalixa, as well as InterTrader and some smaller, non-core assets as well as assets disposed of
in 2015 (World Poker Tour, Win (social gaming) and Winners); and
• Corporate - includes shared and corporate functions such as finance, legal and HR which are performed by the
corporate centre and the costs associated with being a listed business.
Only directly attributable costs sit in each business unit with a re-charge across business units where services are
provided to another unit.
Removal
of inter-
bwin Games led Corporate segmental
Period ended labels labels Studios Non-core* Services revenue Total
31 March 2016 Emillion Emillion Emillion Emillion Emillion Emillion Emillion
Net revenue 98.8 44.8 - - - - 143.6
Other revenue (external) 0.1 0.1 3.8 5.5 0.1 - 9.6
Other revenue (internal) - - 17.9 5.1 7.7 (30.7) -
Total revenue 98.9 44.9 21.7 10.6 7.8 (30.7) 153.2
Clean EBITDA 31.4 7.2 (0.7) 0.4 (1.3) - 37.0
Removal
of inter-
Period ended bwin Games led Corporate segmental Total
31 March 2015 labels labels Studios Non-core* Services revenue (Unaudited)
(Unaudited) Emillion Emillion Emillion Emillion Emillion Emillion Emillion
Net revenue 88.9 46.6 - - - - 135.5
Other revenue (external) 0.3 0.1 3.5 15.9 - - 19.8
Other revenue (internal) - - 16.9 5.0 8.9 (30.8) -
Total revenue 89.2 46.7 20.4 20.9 8.9 (30.8) 155.3
Clean EBITDA 24.0 11.6 (5.3) 2.9 (2.1) - 31.1
* Segment includes E3.8m of revenue (2015: E12.7m) and a loss of E4.0m at a Clean EBITDA level (2015: loss of E0.8m)
relating to assets reclassified as held for sale or disposed of.
Geographical analysis of total revenue
The following table provides an analysis of the Group's total revenue by geographical segment:
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Germany 41.2 36.4
United Kingdom 22.3 19.1
Other 89.7 99.8
Total revenue 153.2 155.3
3. Other operating income
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Exchange gains 3.1 1.8
Other 0.3 0.1
Total income 3.4 1.9
4. Other operating expenses
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Premium listing application costs 0.6 -
Other 0.5 0.4
Total expense 1.1 0.4
5. Profit from operating activities
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
This has been arrived at after charging (crediting):
Amortisation of intangibles 10.3 11.2
Depreciation on property, plant and equipment 5.7 7.9
Impairment losses - property, plant and equipment 1.6 -
Impairment losses - assets held for sale 0.8 -
Impairment losses - available-for-sale investments 0.3 -
Provisions against receivables 7.0 -
Loss on disposal of fixed assets 0.1 -
Exchange (gains) (3.1) (1.8)
Reorganisation costs 3.1 0.8
Adjustment to investment following dividend 1.4 -
Premium listing application costs 0.6 -
The impairment in property, plant, and equipment relates to certain assets which will no longer be used following the
acquisition of the Group by GVC.
Refer to note 13 for details of the impairment loss on assets held for sale.
In the opinion of the Directors a number of receivable balances totalling E7.0m are not considered be fully recoverable and
appropriate provisions have been booked against those balances. Receivables include PSPs, B2B customers and certain tax
receivables.
Reorganisation costs reflect restructuring and redundancies including onerous leases.
6. Staff costs
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Aggregate remuneration including Directors comprised:
Wages and salaries 19.5 25.6
Share-based payments and associated taxes 1.9 3.0
Employer social insurance contribution 3.1 3.7
Other benefits 1.2 1.2
Total staff costs 25.7 33.5
Staff costs capitalised in respect of internally generated intangible assets (1.7) (2.6)
Net staff costs 24.0 30.9
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Average number of employees
Directors 6 11
Administration 183 190
Customer service 442 486
Others 1,294 1,603
1,925 2,290
7. Finance income and expense
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Interest income 0.1 0.4
Finance income 0.1 0.4
Interest expense (0.2) (0.7)
Unwinding of discount on current and non-current liabilities (0.3) (1.0)
Finance expense (0.5) (1.7)
Net finance expense (0.4) (1.3)
8. Tax
Analysis of tax charge
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Current tax expense for the period 2.6 2.3
Deferred tax credit for the period 0.1 (1.2)
Tax expense 2.7 1.1
The effective tax rate for the period based on the associated tax expense is 26.5% (2015: tax rate of 10.4%).
The total expense for the period can be reconciled to accounting loss as follows:
2015
2016 (Unaudited)
Period ended 31 March Emillion Emillion
Profit before tax 10.2 8.4
Tax rate in Gibraltar of 10% (2015: 10%) 1.0 0.8
Effect of differential tax rates in other jurisdictions 0.8 0.2
Effect of non-taxable income (0.3) -
Effect of other expenses not allowed for tax purposes 1.2 0.1
Total tax expense for the period 2.7 1.1
The expenses not allowed for tax purposes are primarily share-based payments, depreciation, amortisation and impairment of
assets.
Factors affecting the tax charge for the period
The Group's policy is to manage, control and operate Group companies only in the countries in which they are registered. At
the period end there were Group companies registered in 23 countries including Gibraltar. However, the rules and practice
governing the taxation of eCommerce activity are evolving in many countries. It is possible that the amount of tax that
will eventually become payable may differ from the amount provided in the financial information.
Factors that may affect future tax charges
As the Group is involved in worldwide operations, future tax charges will be affected by the levels and mix of
profitability in different jurisdictions.
9. Earnings per Share ('EPS')
2015
2016 (Unaudited)
Period ended 31 March Ecents Ecents
Basic EPS 0.9 0.9
Diluted EPS 0.9 0.9
Basic earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the period, excluding those held as own shares.
2015
Period ended 31 March 2016 (Unaudited)
Basic EPS
Basic profit (Emillion) 7.6 7.6
Weighted average number of ordinary shares (million) 831.7 822.8
Basic earnings per ordinary share (E cents) 0.9 0.9
2015
2016 (Unaudited)
Period ended 31 March million million
Weighted average number of shares
Number of shares in issue as at the start of the period 831.3 823.2
Number of shares in issue at the start of the period held by the
Employee Trust (1.0) (0.9)
Weighted average number of shares issued during the period 1.4 0.6
Weighted average number of shares purchased during the period - (0.1)
Weighted average number of ordinary shares for the purposes of basicearnings per share 831.7 822.8
Effect of potential dilutive unvested share options and contingently
issuable shares - 16.8
Weighted average number of ordinary shares for the purposes of
diluted earnings per share 831.7 839.6
In accordance with IAS 33, the weighted average number of shares for diluted earnings per share takes into account all
potentially dilutive equity instruments granted which are not included in the number of shares for basic earnings per share
above. Although the unvested, potentially dilutive equity instruments are contingently issuable, in accordance with IAS 33,
the period end is treated as the end of the performance period. Those option holders who were employees at that date are
deemed to have satisfied the performance requirements and their related potentially dilutive equity instruments have been
included for the purpose of diluted EPS.
10. Intangible assets
Acquired Other
Goodwill intangibles intangibles Total
Emillion Emillion Emillion Emillion
Cost or valuation
As at 1 January 2015 746.9 761.3 68.0 1,576.2
Additions - - 19.4 19.4
Disposals - - (0.2) (0.2)
Exchange movements 5.9 4.1 0.2 10.2
As at 31 December 2015 752.8 765.4 87.4 1,605.6
Additions - - 3.5 3.5
Disposals - - - -
Reclassified as assets held for sale (22.8) (18.3) (7.6) (48.7)
Exchange movements (7.0) (5.2) (0.2) (12.4)
As at 31 March 2016 723.0 741.9 83.1 1,548.0
Amortisation and Impairment
As at 1 January 2015 473.6 513.9 43.6 1,031.1
Charge for the period - 28.0 14.0 42.0
Impairment 16.4 - - 16.4
Reclassified as assets held for sale 0.1 3.0 0.7 3.8
As at 31 December 2015 490.1 544.9 58.3 1,093.3
Charge for the period - 6.4 3.9 10.3
Disposals - - - -
Reclassified as assets held for sale (15.2) (8.9) (3.2) (27.3)
Exchange movements (1.2) (4.5) (0.1) (5.8)
As at 31 March 2016 473.7 537.9 58.9 1,070.5
Carrying amounts
As at 1 January 2015 273.3 247.4 24.4 545.1
As at 31 December 2015 262.7 220.5 29.1 512.3
As at 31 March 2016 249.3 204.0 24.2 477.5
Acquired intangible assets are those intangible assets purchased as part of an acquisition and primarily include customer
lists, brands, software and broadcast libraries. The value of acquired intangibles is based on cashflow projections at the
time of acquisition. The fair value of customer lists from existing customers take into account the expected impact of
player attrition.
Other intangibles primarily include development expenditure, long-term gaming and intellectual property licences and
purchased domain names. Development expenditure represents software infrastructure assets that have been developed and
generated internally. Licences are amortised over the life of the licences and other intangibles are being amortised over
their estimated useful economic lives of between three and five years. Amortisation charges are charged through
administration costs on the income statement.
Goodwill
Goodwill is allocated to the following cash generating units (CGUs):
31 March 31 December
2016 2015
Emillion Emillion
bwin labels 189.5 193.5
Games labels 59.8 61.1
PXP - 8.1
At end of period 249.3 262.7
Impairment
In accordance with IAS 36, the Group regularly monitors the carrying value of its intangible assets. A detailed review was
undertaken at 31 March 2016 to assess whether the carrying value of assets was supported by the net present value of future
cashflows derived from those assets. The recoverable amounts of all the above CGUs have been determined from value in use
calculations based on cash flow projections from formally approved budgets and long-range forecasts. These budgets and
forecasts assume the underlying business models will continue to operate on a comparable basis under the current regulatory
and taxation regimes, adjusted for any known changes. The key assumptions including discount rate, operating margin and
terminal growth rates are based on past experience, long-term growth expectations and the directors' best estimates.
bwin labels
The recoverable amount of the bwin labels CGU of E969.5m has been determined from value in use calculations based on
cashflow projections covering the following ten year period. The Group believes that going beyond five years' cashflows in
the value in use calculations is appropriate given the Group is an established business and is a market leader in a growth
industry.
The Directors have concluded that there are no reasonably possible changes in the key assumptions which would cause the
carrying value of goodwill and other intangibles to exceed their value in use. The major assumptions used for the bwin
labels CGU are as follows:
Key assumptions used in the projections
Discount Operating Terminal
bwin labels rate margin growth Rate
Key assumptions used in the projections 9.4% 31.1% 1%
Games labels
The recoverable amount of the Games labels CGU of E309.4m has been determined from value in use calculations based on
cashflow projections covering the following ten year period. The Group believes that going beyond five years' cashflows in
the value in use calculations is appropriate given the Group is an established business and is a market leader in a growth
industry.
The Directors have concluded that there are no reasonably possible changes in the key assumptions which would cause the
carrying value of goodwill and other intangibles to exceed their value in use. The major assumptions used for the Games
labels CGU are as follows:
Key assumptions used in the projections
Games labels Discount Operating Terminal
rate margin growth Rate
Key assumptions used in the projections 9.4% 21.5% 1%
PXP
The PXP CGU was acquired in 2014 and formed part of the non-core segment. As part of the Group's decision to move forward
with the expected sale of Kalixa in 2016, the intangible assets allocated to this CGU have been re-allocated to assets held
for sale.
11. Property, plant and equipment
Fixtures,
Plant, fittings,
Land and machinery tools and
buildings and vehicles equipment Total
Emillion Emillion Emillion Emillion
Cost or valuation
As at 1 January 2015 12.7 3.5 147.6 163.8
Additions 0.2 0.3 22.7 23.2
Disposals (1.1) (0.4) (16.0) (17.5)
Exchange movements 0.5 0.2 7.2 7.9
As at 31 December 2015 12.3 3.6 161.5 177.4
Additions - - 0.8 0.8
Disposals - - (0.6) (0.6)
Exchange movements (0.5) (0.2) (6.7) (7.4)
Reclassified as assets held for sale - - (4.6) (4.6)
As at 31 March 2016 11.8 3.4 150.4 165.6
Depreciation and impairment
As at 1 January 2015 5.4 3.3 99.2 107.9
Charge for the period 2.0 0.7 28.3 31.0
Disposals (0.4) (0.6) (15.9) (16.9)
Exchange movements 0.3 0.2 6.3 6.8
As at 31 December 2015 7.3 3.6 117.9 128.8
Charge for the period 0.3 - 5.4 5.7
Impairment - - 1.6 1.6
Disposals - - (0.5) (0.5)
Exchange movements (0.4) (0.2) (5.5) (6.1)
Reclassified as assets held for sale - - (2.2) (2.2)
As at 31 March 2016 7.2 3.4 116.7 127.3
Carrying amounts
As at 1 January 2015 7.3 0.2 48.4 55.9
As at 31 December 2015 5.0 - 43.6 48.6
As at 31 March 2016 4.6 - 33.7 38.3
12. Commitments for capital expenditure
31 March 31 December
2016 2015
Emillion Emillion
Contracted but not provided for 1.2 1.1
13. Assets and liabilities held for sale
The Group has classified certain of its non-core assets as held for sale. This includes the Group's investment in the
Conspo joint venture and its Kalixa business including its investment in Visa Europe Limited.
The Kalixa business was transferred to held for sale as at 31 March 2016 and its valuation has been considered by Directors
as at 31 March 2016 based on the lower of cost and current fair value less costs to sell and an impairment of E0.8m to the
carrying value was deemed appropriate. Management are actively pursuing a disposal within the next twelve months. Due to
the asset originally being carried as available for sale, the carrying value of the Visa Europe Limited investment is
recorded at fair value and a E2.2m fall in the carrying value of this asset was recorded in the period.
The carrying value of the Conspo investment represents the lower of cost and the current fair value. The movement in assets
and liabilities held for sale are disclosed in the table below.
Assets Liabilities
held-for-sale held-for-sale Total
Emillion Emillion Emillion
As at 1 January 2015 27.5 (7.4) 20.1
Disposals (23.6) 7.4 (16.2)
Reclassified as held-for-sale 10.6 - 10.6
As at 31 December 2015 14.5 - 14.5
Reclassified as held-for-sale 56.7 (25.0) 31.7
Revaluation of assets held-for-sale (2.2) 0.4 (1.8)
Impairment of assets held-for sale (0.8) - (0.8)
As at 31 March 2016 68.2 (24.6) 43.6
14. Investments
Available-for-
Joint sale financial
Associates ventures assets Total
Emillion Emillion Emillion Emillion
As at 1 January 2015 2.1 0.2 8.7 11.0
Additions including loans advanced - 0.9 0.3 1.2
Disposals - - (3.5) (3.5)
Distribution of profits (1.2) - - (1.2)
Share of profit (losses) 0.1 (0.6) - (0.5)
Unrealised gain transferred to equity - - 10.1 10.1
Adjustment to investment following dividend - - (1.4) (1.4)
Transfer to assets held for sale - - (10.6) (10.6)
Foreign exchange - 0.2 0.2 0.4
Impairments - (0.7) - (0.7)
As at 31 December 2015 1.0 - 3.8 4.8
Share of profit 0.1 - - 0.1
Adjustment to investment following dividend - - (1.4) (1.4)
Release of available-for-sale reserve - - (1.7) (1.7)
Foreign exchange (0.1) - - (0.1)
Impairments - - (0.3) (0.3)
As at 31 March 2016 1.0 - 0.4 1.4
Investment in associate
The following entity meets the definition of an associate and has been equity accounted in the consolidated financial
information.
Proportion of voting rights held
31 March 31 December
Name Country of incorporation 2016 2015
bwin e.k. Germany 50% 50%
There is no unrecognised share of losses arising during the period. Any excess of the cost of acquisition over the Group's
share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised
at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the
investment.
Investment in joint ventures
Circulo Payment Limited was a venture launched with Millicom International Cellular S.A., to develop a payment service
provider to operate in Africa and Latin America. A decision was taken with the joint venture partner to wind up this entity
and, accordingly, the investment was fully impaired in 2015.
Available-for-sale investments
The value of overall investments fell by E3.4m (Year ended 31 December 2015: E3.8m), principally as a result of the
dividend declared by the Aldorino Trust of E3.1m which resulted in the full impairment of the investment. Other movements
include an impairment in the carrying value of the investment in Winners by E0.3m.
15. Trade and other receivables
31 March 31 December
2016 2015
Emillion Emillion
Payment service providers - net of chargeback provision 25.9 30.9
Prepayments 13.6 15.0
Contingent consideration 5.5 6.0
Derivative financial assets - 1.2
Other receivables 27.6 47.2
Current assets 72.6 100.3
Contingent consideration 6.5 6.4
Non-current assets 6.5 6.4
The Directors consider that the carrying amount of trade and other receivables approximates to their fair values, which is
based on estimates of amounts recoverable. The recoverable amount is determined by calculating the present value of
expected future cashflows.
Deferred and contingent consideration relates to amounts receivable for the sale of Ongame and domain names. The
non-discounted book values for these amounts are E5.8m (2015: E6.5m) due within one year and E7.1m (2015: E7.0m) due later
than one year but not later than five years.
Provisions relate either to chargebacks, or provisions against B2B customers, tax debtors and other receivables based on
the Director's best assessment of the recoverable value of those receivables.
Movements on the provision are as follows:
Emillion
As at 1 January 2015 1.2
Charged to consolidated statement of comprehensive income 0.3
As at 31 December 2015 1.5
Charged to consolidated statement of comprehensive income 6.1
As at 31 March 2016 7.6
16. Short-term investments
31 March 31 December
2016 2015
Emillion Emillion
Restricted cash 10.2 16.1
Restricted cash held within assets held for sale (5.7) -
4.5 16.1
Restricted cash represents cash held as guarantees for regulated markets' licences and significant marketing contracts
together with client funds held for payment service provider transactions. In addition, at 31 March 2016 there are other
guarantees in place that are not secured with cash of E18.4m (31 December 2015: E16.7m).
17. Cash and cash equivalents
31 March 31 December
2016 2015
Emillion Emillion
Total cash in hand and current accounts 158.2 150.3
Cash held within assets held for sale (17.4) -
Cash in hand and current accounts 140.8 150.3
18. Trade and other payables
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