REG - GVC Holdings PLC - Notification of Transfer to a Premium Listing <Origin Href="QuoteRef">GVC.L</Origin> - Part 11
01/07/2016 07:07
- Part 11: For the preceding part double click ID:nRSA8980Cj
31 March 31 December
2016 2015
Emillion Emillion
Contingent consideration 0.5 0.8
Other payables 61.0 110.2
Derivative financial liabilities 1.2 -
Due to parent undertaking 38.3 -
Current liabilities 101.0 111.0
Contingent consideration 4.3 4.4
Other payables - -
Later than one year but not later than five years 4.3 4.4
Non-current liabilities 4.3 4.4
Contingent consideration relates to amounts payable for the acquisitions of WPT.
Other payables comprise amounts outstanding for trade purchases and other ongoing costs. The carrying amount of other
payables approximates to their fair value which is based on the net present value of expected future cashflows.
The parent company advanced a non-interest bearing short-term loan to the Group which is repayable on demand.
The non-discounted book values for these amounts are as follows:
Contingent consideration Other payables
31 March 31 December 31 March 31 December
2016 2015 2016 2015
Emillion Emillion Emillion Emillion
Within one year 0.6 1.0 61.3 110.5
Later than one year but not later than five years 4.9 5.0 - -
5.5 6.0 61.3 110.5
19. Client liabilities and progressive prize pools
31 March 31 December
2016 2015
Emillion Emillion
Client liabilities 91.4 106.3
Progressive prize pools 9.0 8.6
100.4 114.9
Client liabilities and progressive prize pools represent amounts due to customers including net deposits received, undrawn
winnings, progressive jackpots and tournament prize pools and certain promotional bonuses. The carrying amount of client
liabilities and progressive prize pools approximates to their fair value which is based on the net present value of
expected future cashflows.
20. Provisions
Total
Emillion
As at 1 January 2015 -
Charged to consolidated statement of comprehensive income 11.4
Utilised during the period (3.3)
As at 31 December 2015 8.1
Charged to consolidated statement of comprehensive income 0.8
Utilised during the period (3.5)
As at 31 March 2016 5.4
Provisions relate to onerous contracts and leases made against the future costs of contracts or leases where the future
economic benefits received by the Group are less than the costs involved with fulfilling the remaining terms and conditions
of those contracts or leases.
The amounts due for provisions are recognised based on the above and carried at the best estimate of the provision. Due to
the short-term nature of the provisions which are expected to be settled with 12 months, no discounting has been applied.
21. Loans and borrowings
31 March 31 December
2016 2015
Emillion Emillion
Secured bank loan - 6.8
Current liabilities - 6.8
Secured bank loan - 49.7
Later than one year but not later than five years - 49.7
Non-current liabilities - 49.7
Bank borrowings are recognised at fair value and subsequently carried at amortised cost based on their internal rates of
return. The effective interest rate applied as at 31 December 2015 was 4.8%. There are no material differences between book
and fair values.
The £30 million and E16 million outstanding to The Royal Bank of Scotland plc as at 31 December 2015 were drawdowns of part
of a £75 million multi-currency facility. The E16m facility drawdown was repaid on 28 January 2016. On completion of the
acquisition of the Group by GVC on 1 February 2016, the remaining Group facilities along with any accrued interest were
repaid in their entirety and cancelled.
Year of
maturity
As at 31 December 2015 Amount Nominal rate of facility Security
The Royal Bank of Scotland plc £30 million 3 months 2018 Floating
and LIBOR charge over
E16 million plus 3.00% the assets
of various
of the Group's
subsidiary
undertakings
The maturity analysis of loans and borrowings, including interest and fees, is as follows:
31 March 31 December
2016 2015
Emillion Emillion
Within one year - 8.7
Later than one year and not later than five years - 52.6
- 61.3
22. Deferred tax
Emillion
As at 1 January 2015 27.2
Exchange differences 0.4
Credited to consolidated statement of comprehensive income (5.6)
Charged to other comprehensive income 2.1
As at 31 December 2015 24.1
Exchange differences 0.3
Charged to consolidated statement of comprehensive income 0.1
Transferred to liabilities held for sale (3.8)
As at 31 March 2016 20.7
Deferred tax of E20.7m (31 December 2015: E24.1m) consists of E21.3m (31 December 2015: E26.1m) deferred tax liabilities
and E0.6m (31 December 2015: E2.0m) of deferred tax assets. Deferred tax liabilities relate primarily to temporary
differences arising from fair value adjustments of acquired intangibles. The deferred tax asset relates primarily to
temporary timing differences in respect of taxes in certain jurisdictions.
23. Operating lease commitments
The total future minimum lease payments due under non-cancellable operating lease payments are analysed below:
31 March 31 December
2016 2015
Emillion Emillion
Within one year 6.8 6.7
Later than one year but not later than five years 17.9 17.1
More than five years 6.7 7.8
31.4 31.6
All operating lease commitments relate to land and buildings. Rental costs under operating leases are charged to the
consolidated statement of comprehensive income in equal annual amounts over the period of the leases.
24. Contingent liabilities
From time to time the Group is subject to legal claims and actions against it. The Group takes legal advice as to the
likelihood of success of such claims and actions.
As part of the Board's ongoing regulatory compliance process, the Board continues to monitor legal and regulatory
developments and their potential impact on the business and takes appropriate advice in respect of these developments.
Indirect taxation
Group companies may be subject to VAT on transactions which have been treated as exempt supplies of gambling, or on
supplies which have been exported outside the scope of VAT where legislation provides that the services are received or
used and enjoyed in the country where the service provider is located. Where group companies have treated supplies of
gambling as exempt based on exemptions available to comparable supplies in the place where the customer is located, the
right to exemption may be restricted if the supplies do not have similar characteristics or meet the same needs as other
exempt gambling from the customer's point of view. Where group companies have determined the taxable amount for supplies of
gambling to be the amount of stakes received less amounts that have to be returned to players, the right to a deduction for
amounts returned to players may be restricted to the extent that the obligation to make a payment is not enforceable in the
place where the customer is located. Revenues earned from customers located in any particular jurisdiction may give rise to
further taxes in that jurisdiction. If such taxes are levied, either on the basis of current law or the current practice of
any tax authority, or by reason of a change in the law or practice, then this may have a material adverse effect on the
amount of tax payable by the Group or on its financial position. Where it is considered probable that a previously
identified contingent liability will give rise to an actual outflow of funds, then a provision is made in respect of the
relevant jurisdiction and period impacted. Where the likelihood of a liability arising is considered remote, or the
possible contingency is not material to the financial position of the Group, the contingency is not recognised as a
liability at the balance sheet date.
Litigation
As a consequence of the as yet non-harmonised regulatory environment for online gaming in Europe, a number of civil and
administrative proceedings are pending against the Group and/or its board members in several countries (including but not
limited to Germany, Portugal and Spain) aimed at preventing bwin.party from offering its services in these countries.
On 16 October 2014, the Portuguese Supreme Court confirmed a ruling of the Oporto Court of First Instance of September 2011
against Liga Portuguesa de Futebol Profissional ('Liga'), bwin.party digital entertainment plc and bwin.party services
(Gibraltar) Ltd (together 'bwin.party'). In this initial ruling the first instance Court had (i) declared the (meanwhile
already terminated) sponsorship agreement between bwin.party and the Liga as illegal, (ii) declared bwin.party's gaming
offer and advertising measures as illegal in Portugal, (iii) prohibited bwin.party to exploit mutual bets and lottery games
in Portugal and to carry out any form of publicity or promotion of the website bwin.com, (iv) imposed on the defendants
pecuniary sanctions of (A) E50,000 for each day the infraction lasts, payable to the Portuguese Casino Association ('APC')
and (B) E50,000 for each infraction, payable to Santa Casa da Misericórdia de Lisboa, and (v) ordered the publishing of the
ruling and the notification of Portuguese media organisations.
Following the initial first instance ruling, the Liga and bwin.party already took measures in order to comply with the
decision. However, it cannot be ruled out that certain activities may still be considered as violation of the ruling.
In June 2012, APC initiated enforcement proceedings against the Liga and bwin.party, requesting the payment of pecuniary
sanctions in the total amount of E6.35 million for the alleged violation of the first instance court judgment during the
period between 24 September 2011 and 31 January 2012. The Liga and bwin.party remain firmly of the view that such
enforcement action is without merit. In June 2012, the Oporto enforcement court dismissed APC's enforcement claim for lack
of enforceability. APC filed an appeal against this decision, which the appellate enforcement court granted on 25 November
2014 and decided that pecuniary sanctions were enforceable at the time APC initiated the enforcement proceeding without
assessing the enforcement case on its merits. On 29 May 2015, the Supreme Court rejected the appeal submitted by the Liga
solely on formal admissibility grounds and the Liga subsequently filed a petition requesting that the case be presided over
by a chamber of three judges of the Supreme Court, which the Supreme Court rejected on 17 November 2015 confirming the
rejection of the appeal lodged by the Liga, on the same grounds as in its initial rejection. On 3 December 2015, the Liga
submitted an appeal to the Constitutional Court on grounds of unconstitutionality of the interpretation of the applicable
admissibility rules. The Supreme Court did not rule on the substantive matter of whether or not the pecuniary sanctions are
in fact due in the present case, which, despite the petition pending at the Constitutional Court on the formal question of
enforceability, will be the subject of the enforcement proceedings initiated by APC that will be continued before the
Oporto enforcement court, where the Liga and bwin.party will submit their defence arguments.
On 28 February 2014, bwin.party digital entertainment plc received a claim filed at the District Court of Limassol by
Rodolfo Odoni against Nomato Investments Limited ('Nomato') and six other defendants, including bwin.party digital
entertainment plc and BAW International Limited (now bwin.party services (Gibraltar) Limited). Among other things, Mr.
Odoni seeks damages in the amount of E6.9 million or 30% of realised profits in Nomato since 29 June 2005 and a declaration
that he holds 30% of the shares in Nomato. As the documents were not served to bwin.party digital entertainment plc and
bwin.party services (Gibraltar) Limited in accordance with EU-Regulation 1393/2007/EC on the service of documents and not
all documents had been translated into English, bwin.party refused to accept the service according to the rights granted
under the EU-Regulation. Local counsel filed a conditional appearance to prevent a default judgment and an application to
set aside service and/or strike out the action, which the court assessed in the oral hearing of 5 February 2015. The court
has not yet set a date for its decision on the formal issues. On 29 February 2016, the court decided not to grant the
application set aside service and/or strike out the action. bwin.party has appealed this decision within the statutory
deadline.
No provision has been made for contingent liabilities relating to the above detailed claims.
A number of Group companies are obligors and guarantors for the E400m drawn down loan facility within the parent company
and would be liable for meeting the debt obligations if the parent company defaulted on repayment. No liability has been
recognised for any provision in respect of the loan.
The Directors do not consider that there are any other contingent liabilities requiring disclosure.
25. Share capital
Ordinary shares
Issued and
fully paid Number
E million
As at 1 January 2015 147,193 823.1
Employee share options exercised during the period 14,389 8.2
As at 31 December 2015 161,582 831.3
Employee share options exercised during the period 96 0.9
As at 31 March 2016 161,678 832.2
The issued and fully paid share capital of the Group amounts to E161,677.91 and is split into 832,194,034 ordinary shares.
The share capital in UK Sterling is £124,829.11 and translates at an average exchange rate of 1.29519 Euros to £1
Sterling.
Authorised share capital and significant terms and conditions
The Company's authorised share capital is £225,000 divided into 1,500 million ordinary shares of 0.015 pence each. All
issued shares are fully paid. The holders of ordinary shares are entitled to receive dividends when declared and are
entitled to one vote per share at meetings of the Company. The Trustee of the Employee Trust has waived all voting and
dividend rights in respect of shares held by the Employee Trust.
Own shares
Own shares
reserve Number
Emillion million
As at 1 January 2015 (2.1) 0.9
Purchase of own shares for the Employee Trust (0.2) 0.2
Employee share options exercised during the period 0.0 (0.1)
As at 31 December 2015 (2.3) 1.0
Employee share options awarded during the period or allocated to
specific employees 2.3 (1.0)
As at 31 March 2016 - -
Following the acquisition of the Group by GVC Holdings, all shares held in the Employee Trust were allocated to employees.
Therefore, as at 31 March 2016 no ordinary shares were held as treasury shares by the Employee Trust.
26. Related parties
Group
Transactions between Group companies have been eliminated on consolidation and are not disclosed in this note.
Directors and key management
Key management are those individuals who the Directors believe have significant authority and responsibility for planning,
directing and controlling the activities of the Group. The aggregate short-term and long-term benefits, as well as
share-based payments of the Directors and key management of the Group are set out below:
Period ended
Period ended 31 March
31 March 2015
2016 (Unaudited)
Emillion Emillion
Short-term benefits 1.1 1.4
Share-based payments 0.9 0.9
Termination benefits 0.3 -
2.3 2.3
One director had a loan with the Group of E3.1m with interest accrued as at 31 December 2015. This loan was settled in
2016.
A director during the period is a director and shareholder of a company that provides investment advisory services to a
fund for which InterTrader Limited is the broker. InterTrader earned commissions of E27,735 (2015: Enil) in the period and
the fund had a balance of E4.4m deposited with InterTrader as at 31 March 2016 (31 December 2015: E4.4m).
In 2015 a furnished property was leased by a member of key management at an quarterly lease rental of Enil for which the
open market value of rent of the property was E10,525. This property was sold in 2015.
During 2016 GVC Holdings Plc, the parent company of the Group, advanced E38.3m to the Group that was outstanding at the
period end as well as contributing E18.3m which has been included as a capital contribution reserve.
Associates and joint ventures
The Group purchased certain customer services of E0.6m (2015: E0.7m) from an associate, with amounts owed at 31 March 2016
of E0.5m (31 December 2015: E0.3m).
The Group purchased certain rights to broadcast licensed media of E2.0m (2015: E0.9m) from Conspo a joint venture, with no
amounts prepaid or due as at 31 March 2016 or 31 December 2015. Certain expenses are paid on behalf of this associate and
repaid to the Group on an ad-hoc basis, resulting in an overpayment by Conspo of E0.1m (31 December 2015: receivable
balance of E0.2m).
27. Investment in subsidiaries
The Company is the ultimate holding company of the Group. The following table shows the Company's subsidiary undertakings
at 31 March 2016. Each of these companies is included within the consolidated accounts of the Group, either by virtue of
being wholly-owned by a member of the Group (other than bwin.party entertainment (NJ) LLC which is 90% owned) with fully
paid issued share capital or where the Group exerts sufficient controls over the operations of that entity for it to
warrant being consolidated within the Group accounts.
Name of Subsidiary Undertaking Country of Incorporation Principal Business
Alancia Limited Cyprus Intermediate holding company
Amber Limited Gibraltar Dormant
Bellingrath Enterprises Limited Cyprus Intermediate holding company
BES SAS France Online gaming
bwin Argentina SA Argentina Dormant
bwin European Markets Holding Spa Italy Intermediate holding company
Bwin Interactive Marketing España SL Spain Marketing support services
bwin Italia Srl Italy Online gaming
bwin.party (USA) Inc USA B2B services
bwin.party corporate services Limited British Virgin Islands Company Secretarial Services
bwin.party entertainment (NJ) LLC USA Online gaming
bwin.party entertainment Limited Gibraltar Intermediate holding company
bwin.party Games AB Sweden Dormant
bwin.party holdings Limited Gibraltar Intermediate holding company
bwin.party Holdings Malta Limited Malta Dormant
bwin.party International Malta Limited Malta Dormant
bwin.party Limited Gibraltar IT, customer support and marketing services
bwin.party management (Gibraltar) Limited Gibraltar Management and IT services
bwin.party marketing (Gibraltar) Limited Gibraltar Marketing services
bwin.party marketing (Israel) Limited Israel Marketing support services
bwin.party marketing (UK) Limited United Kingdom Marketing support services
bwin.party partners Limited Gibraltar Dormant
bwin.party services (Austria) GmbH Austria IT, customer support and marketing support services
bwin.party services (Bulgaria) EOOD Bulgaria IT and customer support services
bwin.party services (Gibraltar) Limited Gibraltar Dormant
bwin.party services (Malta) Limited Malta B2B services
bwin.party services (NJ) Inc USA B2B services
Cashcade Limited United Kingdom Marketing services
Dominion Entertainment Limited Malta Online gaming
Dominion Services GmbH Austria Marketing support services
DSG Deutsche Sportwett GmbH Germany Dormant
ElectraGames Limited Gibraltar Dormant
ElectraWorks (Alderney) Limited Alderney IT services
ElectraWorks (España) PLC Malta Online gaming
ElectraWorks (France) Limited Malta Online gaming
ElectraWorks (Kiel) Limited Malta Online gaming
ElectraWorks Limited Gibraltar Online gaming
EZE International Limited Gibraltar Dormant
Herotech Limited United Kingdom Marketing services
IGM Domain Name Services Limited Gibraltar Domain management services
Independent Technology Ventures Limited British Virgin Islands Online gaming and IT services
Infield Servicios De Consultoria E Marketing Unipessoal LDA
Portugal Dormant
Interskill Games Limited Gibraltar Dormant
InterTrader Limited Gibraltar Financial services
ISG (Gibraltar) Limited Gibraltar Domain management services
ITV Holdings Limited British Virgin Islands Intermediate holding company
IVY BPO Services Private Limited India Customer support services
IVY Comptech Private Limited India IT and customer
support services
IVY Foundation India Charity
IVY Software Development Services India Software Development Services
Private Limited
Kaiane Services Limited Malta B2B services
Kalixa Accept Limited United Kingdom Transaction services
Kalixa Group Limited Gibraltar Intermediate holding company
Kalixa Pay Limited United Kingdom Transaction Services
Kalixa Payments GmbH Austria Dormant
Kalixa Payments Group Limited United Kingdom Transaction Services
Kalixa Services GmbH Austria Intermediate holding company
Kalixa USA Inc. USA Transaction services
Leodata Limited Gibraltar Dormant
Party Ventures Limited Gibraltar Intermediate holding company
PartyGaming Finance Limited Bermuda Treasury Services
Party InterVentures Limited Gibraltar Dormant
PartyGaming IA Limited Bermuda Intellectual Property holding
Paytech International Limited Gibraltar Dormant
PB (Italia) S.r.l. Italy Online gaming
PGB Limited Gibraltar Intermediate holding company
PKR Services Limited Gibraltar Dormant
PXP Solutions Inc. USA Gateway services provider
PXP Solutions Limited United Kingdom Intermediate holding company
PXP Solutions PTY Limited Australia Gateway services provider
Servebase Limited United Kingdom Gateway services provider
Websports Entertainment Marketing Services GmbH Austria Marketing support services
Westman Holdings Limited British Virgin Islands Intermediate holding company
WIN (Gibraltar) Limited Gibraltar Dormant
WIN Interactive (Israel) Limited Israel Dormant
WIN Interactive LLC Ukraine Software Development Services
Winner Summit Limited BVI Dormant
WorldNet DNS Management Limited Gibraltar Dormant
28. Financial instruments and risk management
The Group is exposed through its operations to the following financial risks:
• Liquidity risk
• Capital Risk
• Credit Risk
• Market Risk
• Interest Rate Risk
• Currency Risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This
note describes the Group's objectives, policies and processes for managing these risks and the methods used to measure
them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and
processes for managing these risks or the methods used to measure them from previous periods, unless otherwise stated in
this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
> investments;
> short-term investments;
> trade and other receivables;
> cash and cash equivalents;
> loans and borrowings;
> trade and other payables;
> contingent consideration;
> client liabilities and progressive prize pools; and
> foreign exchange forward contracts.
The Group operates a sports betting business and always has open bets representing bets placed by customers for which
events have not yet happened. As at 31 March 2016 and 31 December 2015 the fair market value of open bets was negligible.
Financial instruments by category
Included within overall financial instruments in the tables below are financial assets and liabilities which have been
classified as held for sale within note 13.
Financial assets
Financial instrument Available for sale Fair value through Profit & Loss
Loans & Receivables
31 March 31 December 31 March 31 December 31 March 31 December
2016 2015 2016 2015 2016 2015
Emillion Emillion Emillion Emillion Emillion Emillion
Investments - - 8.8 14.4 - -
Short term investments 10.2 16.1 - - - -
Cash & cash equivalents 158.2 150.3 - - - -
Trade & other receivables 62.5 78.1 - - - -
Derivative financial assets - - - - - 1.2
Contingent consideration -
current - - - - 5.5 6.0
Contingent consideration -
non-current - - - - 6.5 6.4
230.9 244.5 8.8 14.4 12.0 13.6
Financial liabilities
Financial instrument At fair value through Amortised cost
profit & loss
31 March 31 December 31 March 31 December
2016 2015 2016 2015
Emillion Emillion Emillion Emillion
Trade & other payables - current - - 116.7 95.0
Trade & other payables - non-current - - - -
Derivative financial liabilities 1.2 - - -
Client liabilities and progressive prize pools - - 105.6 114.9
Loans and borrowings - current - - - 6.8
Loans and borrowings - non-current - - - 49.7
Contingent consideration - current 0.2 0.3 0.5 0.5
Contingent consideration - non-current - 0.1 4.3 4.3
1.4 0.4 227.1 271.2
Financial instruments not measured at fair value within the financial statements
Financial instruments not measured at fair value includes cash and cash equivalents, short term investments, trade and
other receivables, trade and other payables, client liabilities and progressive prize pools, loans and borrowings and
contingent consideration that arose on acquisitions prior to the introduction of IFRS 3 (revised).
Due to their short term nature, the carrying values of cash and cash equivalents, joint venture and associate investments,
short term investments, trade and other receivables, trade and other payables, client liabilities and progressive prize
pools approximates their fair value and are classified in level 3 of the fair value hierarchy.
Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below:
Financial instrument Level 1 Level 2 Level 3
As at 31 March 2016 2016 2016 2016
Emillion Emillion Emillion
Financial assets
Investments - - 8.8
Deferred and contingent consideration - - 12.0
Derivative financial assets - - -
As at 31 March 2016 - - 20.8
Financial liabilities
Contingent consideration - - 0.2
Derivative financial liabilities - 1.2 -
Other payables - - -
As at 31 March 2016 - 1.2 0.2
Financial instrument Level 1 Level 2 Level 3
As at 31 December 2015 2015 2015 2015
Emillion Emillion Emillion
Financial assets
Investments 3.1 - 11.3
Deferred and contingent consideration - - 12.4
Derivative financial assets - 1.2 -
As at 31 December 2015 3.1 1.2 23.7
Financial liabilities
Contingent consideration - - 0.4
Other payables - - -
As at 31 December 2015 - - 0.4
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the
fair value measurement of the relevant asset or liability as follows:
Level 1 - valued using quoted prices in active markets for identical assets
Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within
level 1
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.
There were no transfers between levels during the period.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of level 3
financial instruments are set out in the table below.
Financial instrument Valuation techniques used Significant unobservable inputs
Investments Discounted cash flow Weighted average costs of capital,
forecasts cash flow forecasts and long term
growth rates
Contingent consideration - Discounted cash flow Weighted average cost of capital and
receivables forecasts expected cash flows
Contingent consideration - Discounted cash flow Weighted average cost of capital and
payables forecasts expected cash flows
Other payables Discounted cash flow Weighted average cost of capital and
forecasts expected cash flows
In respect of the investment in Visa Europe Limited which is carried at fair value and recorded within level 3, the
directors have arrived at a valuation which they believe to be within a reasonable range, based on information available.
The expected consideration should the transaction complete which based on available information the directors believe will
be the case and hence the basis for arriving at fair value is split between cash, potentially convertible shares in Visa
Inc and contingent consideration payable on the fourth anniversary of the potential transaction completing. The conversion
of the shares in Visa Inc are dependent on the eventual outcome of certain litigation matters facing Visa Europe Limited
and may not be convertible and capable of being realised for a period of up to 12 years. Consequently management have
applied a discount to the expected proceeds to reflect the risk that the shares may not convert and the contingent
consideration may not be payable.
The reconciliation of the opening and closing fair value balance of level 3 financial assets is as follows:
Financial Assets
Contingent
Investments consideration Total
Emillion Emillion Emillion
As at 1 January 2015 2.0 10.6 12.6
Additional investments 0.3 - 0.3
Total gains or losses
in profit or loss (1.6) 1.7 0.1
in other comprehensive income 10.6 0.1 10.7
As at 31 December 2015 11.3 12.4 23.7
Additional investments - - -
Total gains or losses
in profit or loss (0.3) (0.2) (0.5)
in other comprehensive income (2.2) (0.2) (2.4)
Settlements (received) - - -
As at 31 March 2016 8.8 12.0 20.8
The reconciliation of the opening and closing fair value balance of level 3 financial liabilities is as follows:
Financial liabilities
Contingent Other
consideration payables Total
Emillion Emillion Emillion
As at 31 January 2015 0.4 9.2 9.6
Total gains or losses
in profit or loss - (0.4) (0.4)
in other comprehensive income - - -
Settlements (paid) - (8.8) (8.8)
As at 31 December 2015 0.4 - 0.4
Total gains or losses
in profit or loss (0.2) - (0.2)
in other comprehensive income - - -
Settlements (paid) - - -
As at 31 March 2016 0.2 - 0.2
Management controls and procedures
The Board of GVC Holdings Plc ("the GVC Board") has overall responsibility for the determination of the GVC group's risk
management objectives and policies and its policies have been adopted by the Board. The GVC Board has delegated the
authority for designing and operating the required processes that ensure the effective implementation of the objectives and
policies to the Group's treasury department under the auspices of the Chief Financial Officer of GVC Holdings Plc ("GVC
CFO"). As such, the Group's funding, liquidity and exposure to interest rate and foreign exchange rate risks are managed by
the Group's treasury department. The treasury department is mandated to execute conventional forward foreign exchange
contracts and swaps in order to manage these underlying risks. No other derivatives may be executed without written
authority from the GVC Board at which point an explanation of the accounting implications would also be given.
The treasury operation and polices include benchmark exposures and hedge cover levels for key areas of treasury risk. The
Group risk management policies would also be reviewed by the GVC Board following, for example, significant changes to the
Group's business. Exposures are monitored and reported to management on a monthly basis, together with required actions
when tolerance limits are exceeded. The internal control procedures and risk management processes of the treasury
department were reviewed periodically by the internal audit function.
The overall objective of the GVC Board is to set working practices and policies that seek to reduce risk as far as
possible, without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies
are set out below:
Liquidity risk
Liquidity risk arises from the Group's management of its working capital as well as the finance charges and principal
repayments on its debt instruments. In essence, it is the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due.
The Group's treasury department ensures that the Group's cash and cash equivalents, and amounts due from payment service
providers ('PSPs') exceed its combined client liabilities at all times. This excess is defined as the Client Liability
Cover. Client liabilities principally represent customer deposits and progressive prize pools.
The GVC CFO is advised of cash balances, investments, foreign currency exposures, interest income, interest expense,
amounts due from PSPs, Client Liability Cover and counterparty exposures on a weekly basis.
Prior to the period under review the Group imposed a maximum debt limit of E200million that could mature in any one year to
ensure no significant concentration of refinancing risk. This has now been superseded following the Group's acquisition by
GVC as the Company and other material Group companies are now guarantors to the debt facility of the ultimate parent
company.
Management monitors liquidity to ensure that sufficient liquid resources are available to the Group. The Group's principal
financial assets are cash, bank deposits and trade and other receivables.
As at 31 December 2015 the Group had a revolving credit facility of up to £75m, withdrawable in both sterling and euros. As
at 31 December 2015 the drawn balance on this facility was £30m and E16m. On completion of the acquisition of the Group on
1 February 2016 these facilities along with any accrued interest were repaid in their entirety and cancelled. The Company,
together with other Group entities, became a guarantor to the E400m debt facility held by GVC Holdings Plc on 1 February
2016. This guarantee is secured by way of first-priority security interests in substantially all tangible and intangible
assets of GVC, its subsidiaries and Group companies. This facility has been fully drawn down at the period end.
Further details in relation to the Group's closed loan facilities are disclosed in note 21.
The following table sets out the maturities of financial liabilities:
Undiscounted 6 months
cash flows or less 6-12 months 1-5 years
As at 31 March 2016 Emillion Emillion Emillion Emillion
Trade and other payables 116.7 106.7 10.0 -
Contingent consideration 5.5 - 0.6 4.9
Client liabilities and progressive prize pools 105.6 105.6 - -
Financial liabilities 227.8 212.3 10.6 4.9
As at 31 December 2015 Undiscounted 6 months
cash flows or less 6-12 months 1-5 years
Emillion Emillion Emillion Emillion
Trade and other payables 110.1 99.6 10.5 -
Contingent consideration 6.0 - 1.0 5.0
Client liabilities and progressive prize pools 115.0 115.0 - -
Loans and borrowings 61.3 7.7 1.1 52.5
Financial liabilities 292.4 222.3 12.6 57.5
Capital risk
In common with many internet companies that have few physical assets, the Group has no policy as to the level of equity
capital and reserves other than to address statutory requirements.
Details of the Group's dividend policy is disclosed within note 30.
Credit risk
Operational: The Group's operational credit risk is primarily attributable either to receivables from PSPs and from
customers who dispute their deposits made after playing on the Group's websites or to other receivables including B2B
customers.
PSPs: Prior to accepting new PSPs and wherever practicable, credit checks are performed using a reputable external source.
Senior management monitors PSP balances on a weekly basis, including aged debtor analysis, and promptly takes corrective
action if pre-agreed limits are exceeded. For PSPs that do not have a formal credit rating, an internal rating system is
used, based on such factors as industry knowledge, their statement of financial position, profitability, customer
diversification, geographic diversification, long-term stability, management credibility, potential regulatory risk and
historic payment track record.
These internal ratings are monitored and reviewed on a quarterly basis. An internal rating of one is assessed as very
strong whilst a rating of five is assessed as weak.
31 March 31 December
2016 2015
Emillion Emillion
1 (Very Strong) 24.9 25.1
2 (Strong) 2.6 2.8
3 (Good) 5.0 3.6
4 (Satisfactory) 0.3 0.9
PSPs amounts due 32.8 32.4
Included within the amounts above is E5.7m relating to PSPs carried within assets held for sale. Management consider the
maximum credit exposure on amounts due from PSPs to be the carrying amount.
During the period to 31 March 2016 a provision of E0.4m was recorded in respect of an overdue amount from a PSP which the
Directors considered required impairment. There were no further amounts due from PSPs which the Directors considered
required impairment as at 31 March 2016 and no impairments were considered necessary as at 31 December 2015. There is an
inherent concentration of risk with PSPs, which are not investment grade banks, in that the majority derive most of their
income from the online gaming sector. To this end, where practicable and economic, the Group seeks to substitute
non-investment grade PSPs with investment grade, or, at least, better quality PSPs.
Other receivables: The Group has a small number of B2B customers with whom it works closely to provide its services.
Nonetheless disputes may arise in the consideration as to the value of these services or it may be considered that the
Group's customers may be considered to be financially insecure. Additionally other receivables arise within the Group
outside of the normal course of business. During the period the Group considered a provision of E6.5m appropriate in
respect of other receivables on its balance sheet.
Cash investments: The Group only invest cash with a small number of strong European financial institutions. The Group also
invests cash in instant access pooled money market funds with a minimum long-term credit rating of AAA on the principal, as
defined by Moody's rating agency. The Group can also purchase commercial paper provided the issuer is not a financial
institution and has a one year credit default swap, as quoted by Bloomberg, of no more than 1%.
Investments are allowed only in highly liquid securities. The Group maintains monthly operational balances with strong
local banks in Gibraltar, UK, France, Malta, Italy, Israel, Bulgaria, Austria, USA and India to meet local salaries,
expenses and legal requirements. In Italy, Spain and France the Group maintains domestic segregated player funds accounts
as required by the respective regulatory authorities. Cash is also held as security in Austria, Italy and UK primarily to
support bank guarantees and as reserves for credit and debit card chargebacks. Other than this, non-central cash balances
are kept to a minimum.
As at 31 March 2016 and 31 December 2015 all cash and short term investment balances were held at banks.
The treasury department may only make the following cash investments, without prior written authority by the GVC Board:
> cash deposits;
> pooled money market funds;
> certificates of deposit; and
> commercial paper.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of
financial position.
Market risk
Market risk arises from the Group's use of interest-bearing, tradable and foreign currency financial instruments. It is the
risk that the fair value of future cash flows on its long-term debt finance and cash investments through the use of a
financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates
(currency risk) or other market factors (other price risk).
Currency and Interest rate risk
The Group's current net cash position is maintained primarily on a floating rate basis. In the event of a strategic change
in the debt position of the Group, the interest rate management policy would be reviewed.
Transaction and currency liability exposures: The Group's policy is that all material transaction and currency liability
exposures are economically and fully hedged using foreign exchange contracts and/or by holding cash in the relevant
currency. Additionally, the Group has discretion to hedge some or all of its forecast sterling operational costs in
Gibraltar and the UK for up to 12 months. No other forecast cash flows are hedged. The Group may also economically hedge
material committed exposures such as capital expenditure unless the period between commitment and payment is short (less
than one month). Currency exposures are monitored by the Group treasury function on at least a monthly basis. A E5 million
currency tolerance limit between euros and US dollar, sterling and Canadian dollar (reduced to E3m between euro and any
other currency) is permitted in order to avoid executing low value and uneconomic foreign exchange contracts.
Net investment exposures: The Group has the flexibility to hold debt in currencies other than euros in order to hedge
non-euro investments up to 50% of the net investment value. In managing the mix of on-going debt exposure the Group takes
into account prevailing interest rates in particular currencies and the potential impact on Group earnings ratios.
Sensitivity analysis to currency and interest rate risk
The Group has adopted a
- More to follow, for following part double click ID:nRSA8980ClRecent news on Entain
See all newsREG - Entain PLC - BetMGM - Upgraded FY 2025 Guidance
AnnouncementREG - Entain PLC - Director/PDMR Shareholding
AnnouncementREG - Entain PLC - Total Voting Rights
AnnouncementREG - Entain PLC - Board Appointments
AnnouncementREG - Entain PLC - Director/PDMR Shareholding
Announcement