REG - GVC Holdings PLC - Notification of Transfer to a Premium Listing <Origin Href="QuoteRef">GVC.L</Origin> - Part 2
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games portfolio with the addition of over 225 new casino games of which 80 were on mobile. Mobile revenue
once again enjoyed strong growth, driven by the addition of new third party games as well as our own Slider Blackjack and
Slider Roulette games.
The small dip in overall gross win margin reflected lower VIP activity that contributed to a shift in the mix of games
played. The imposition of VAT on certain online gambling games in certain EU countries from 1 January 2015 also impacted
gross win margins with the result that gross gaming revenue fell by 2% to E242.9m (2014: E248.2m). Adjusting for the impact
of VAT, net gaming revenue would have actually increased by 1% to E201.6m rather than declined by 4%.
Our marketing efforts continued into the second half with the result that new player sign-ups increased by 28% and in the
nationally regulated and/or taxed markets they more than doubled, with a small associated increase in bonus costs. A 22%
increase in cost of sales reflected the introduction of the point of consumption tax in the UK with effect from 1 December
2014 with the result that gross profit fell by 5% to E182.9m (2014: E192.2m).
Poker
2015 2014
Year ended 31 December Emillion Emillion Change
Gross revenue 76.4 93.5 (18%)
Bonuses and other fair value adjustments to revenue (14.8) (14.8) -%
Net revenue 61.6 78.7 (22%)
Other revenue 3.0 3.0 -%
Total revenue 64.6 81.7 (21%)
% of total revenue from nationally regulated and/or taxed markets* 44% 44%
Cost of sales (6.9) (9.3) 26%
Gross profit 57.7 72.4 (20%)
*Austria, Belgium, Denmark, France, Italy, Spain, UK and US (New Jersey)
Poker - Key Performance Indicators
Year ended 31 December 2015 2014 Change
Active player days (million) 9.0 12.0 (25%)
Daily average players (000s) 24.7 32.9 (25%)
Yield per active player day (E) 6.8 6.6 3%
New player sign-ups (000s) 95.9 120.6 (20%)
Average daily net revenue (E000) 168.8 215.6 (22%)
European poker continued to face a number of challenges with further market declines in the ring-fenced markets of Italy,
France and Spain, each of which impacted poker activity. Revenue was also impacted by the imposition of VAT in certain EU
countries since 1 January 2015.
Our focus on the UK market has begun to pay dividends and our partnership with Dusk Till Dawn is continuing to work well as
evidenced by the fact that poker overall returned to year-on-year growth in the fourth quarter of 2015 with a particularly
encouraging performance from partypoker.
Having launched multi-table and single table tournaments on mobile, the share of gross gaming revenue coming through this
channel increased to 11% of poker gross gaming revenue (2014: 9%).
Bingo
2015 2014
Year ended 31 December Emillion Emillion Change
Gross revenue 115.9 114.0 2%
Bonuses and other fair value adjustments to revenue (63.9) (62.5) (2%)
Net revenue 52.0 51.5 1%
Other revenue 0.3 0.4 (25%)
Total revenue 52.3 51.9 1%
% of total revenue from nationally regulated and/or taxed markets* 99% 98%
Cost of sales (9.1) (4.6) (98%)
Gross profit 43.2 47.3 (9%)
* Italy, Spain and UK
Bingo - Key Performance Indicators
Year ended 31 December 2015 2014 Change
Active player days (million) 4.8 5.7 (16%)
Daily average players (000s) 13.2 15.6 (15%)
Yield per active player day (E) 10.8 9.0 20%
New player sign-ups (000s) 150.7 117.5 28%
Average daily net revenue (E000) 142.5 141.1 1%
The battle for market share in the UK remains as intense as ever and whilst total bonus costs increased slightly to 55.1%
of gross revenue (2014: 54.8%), we increased total gross revenue by 2% and net revenue by 1%. The UK is driven by our Foxy
Bingo and Cheeky Bingo brands that remain strong and UK net revenue grew by 8.5%, representing 92% of the total (2014:
85%). The popularity of online bingo in Italy continued to decline and our revenues there fell by 29% to E3.9m (2014:
E5.5m). We remain the market leader in Italy. Our UK marketing campaigns sustained the growth in new player sign-ups that
we saw in the first half for the balance of the year resulting in a 28% increase in new player sign-ups. While active
player days fell by 16% this was more than made up for by an associated increase in average yield per active player day
that grew by 20%, resulting in a 1% increase in average daily net revenue although both included the benefit of favourable
movements in Sterling against the Euro.
Following further updates to the Foxy Bingo mobile app during the year the share of gross gaming revenue coming through
mobile and touch increased to 36% (2014: 24%).
Other revenue
Other revenue increased to E50.6m (2014: E48.9m) with strong performances from B2B, Kalixa and Intertrader that grew
revenue by 51%, 63% and 24% respectively. However, having sold our interests in WPT, social gaming, Winners and certain
other non-core assets during the year, 2015 included non-recurring revenue of approximately E14.3m that will be absent in
future periods. The absence of any major domain sales in the period and lower software services revenue, as these resources
moved onto internal development work, also held back the year-on-year growth.
Cost of sales
Cost of sales reduced marginally to E90.0m (2014: E91.3m), with a 1% increase in gaming taxes that reached E80.9m (2014:
E80.2m), principally due to the introduction of the POC tax in the UK, partially offset by lower taxes in other countries.
Broadcasting costs fell due to the sale of WPT in June 2015. Other costs also fell as a result of the fall in commissions
following the disposal of Winners in May 2015.
Included within total cost of sales but outside of Clean EBITDA is E8.9m of retroactive taxes that were levied on gaming
operators that accepted online bets from players in Romania prior to receiving a national gaming licence. A joint complaint
by the European Gaming and Betting Association, the Gibraltar Betting and Gaming Association and the Maltese Remote Gaming
Council has been made to the European Commission in respect of the legislation that was enacted giving rise to these
obligations. Conversely, there are credits of E5.7m applied to cost of sales outside of EBITDA relating to changes in
estimates applied when providing for gaming taxes in historical periods.
2015 2014
Year ended 31 December Emillion Emillion Change
Gaming taxes 80.9 80.2 (1%)
Broadcasting costs 5.6 6.4 13%
Other 3.5 4.7 26%
Clean EBITDA cost of sales 90.0 91.3 1%
Retroactive taxes and associated charges 8.9 - n/a
Adjustments to gaming taxes arising from changes in estimates (5.7) - n/a
Total cost of sales 93.2 91.3 (2%)
Other operating income
Other operating income of E12.9m (2014: E12.3m) includes E4.9m relating to the release of a fair value tax liability that
was set-up at the time of the merger between bwin and PartyGaming and a profit of E5.0m recorded on the disposal of certain
non-core investments. There were also foreign exchange gains of E3.0m in the year (2014: losses of E3.1m were included in
other operating expenses). The figure for the prior year included E11.3m released from contingent consideration adjustments
relating to changes in assumptions arising on the acquisition of PXP by Kalixa.
Other operating expenses
Advisory fees and related expenses of E25.3m (2014: E1.5m), most of which were associated with the acquisition by GVC and
costs associated with the 888 bid, were the primary driver of an increase in other operating expenses to E25.5m (2014:
E4.6m).
Distribution expenses
As a percentage of total revenue
As a percentage
of total revenue
2015 2014 Change 2015 2014
Year ended 31 December Emillion Emillion fav/(adv) % %
Customer acquisition and retention 104.1 122.7 15% 18.1% 20.1%
Affiliates 23.8 27.4 13% 4.1% 4.5%
Customer bad debts 0.5 2.3 78% 0.1% 0.4%
Third-party content 27.8 27.7 (0%) 4.8% 4.5%
Webhosting and technical services 29.1 29.1 -% 5.0% 4.8%
Clean EBITDA distribution expenses 185.3 209.2 11% 32.1% 34.2%
Reorganisation expenses 0.3 1.4 79% 0.1% 0.2%
Distribution expenses 185.6 210.6 12% 32.2% 34.4%
Customer acquisition and retention spend fell by 15% primarily due to the absence of a major football tournament this year
and the major marketing effort in the prior year around the FIFA World Cup. It also reflected our continued focus on
reducing the Group's cost base in New Jersey and the expiration of certain sponsorship contracts. Affiliate costs also
continued to fall as we further reduced our reliance on this channel, as well as lower poker revenue that continues to
derive a meaningful proportion of its revenue through the affiliate channel. Customer bad debts fell from 0.4% of revenue
to 0.1% of revenue due to lower chargebacks. Third-party content costs increased slightly to 4.8% of revenue (2014: 4.5%)
reflecting the addition of a substantial number of third-party games content to our casino offering.
Administrative expenses
As a percentage
of total revenue
2015 2014 Change 2015 2014
Year ended 31 December Emillion Emillion fav/(adv) % %
Transaction fees 27.7 27.2 (2%) 4.8% 4.4%
Staff costs 107.5 109.9 2% 18.7% 18.0%
Outsourced services 18.0 24.4 26% 3.1% 4.0%
Other overheads 39.9 49.7 20% 6.9% 8.1%
Clean EBITDA administrative expenses 193.1 211.2 9% 33.5% 34.5%
Depreciation 31.0 26.3 (18%) 5.4% 4.3%
Amortisation 42.0 51.0 18% 7.3% 8.3%
Impairment losses 17.1 104.4 84% 3.0% 17.1%
Adjustment to investment following dividend 1.4 - n/a 0.2% -
Market exit costs - 5.4 100% - 0.9%
Reorganisation expenses 8.8 7.5 (17%) 1.5% 1.2%
Administrative expenses before share based payments 293.4 405.8 28% 50.9% 66.3%
Share-based payments and associated payroll taxes 33.2 9.8 (239%) 5.8% 1.6%
Administrative expenses 326.6 415.6 21% 56.7% 67.9%
Clean EBITDA administrative expenses fell by E18.1m or 9% to E193.1m (2014: E211.2m) despite unfavourable foreign exchange
movements. Transaction fees increased as a percentage of revenue to 4.8% (2014: 4.4%) primarily due to the full year impact
of additional third party processing volume at PXP. Staff costs fell by E2.4m as we benefited from the full year impact of
the shift to a label-led structure that took place in 2014, partially offset by movements in foreign exchange, increased
performance-based incentive costs and the full year impact of the PXP acquisition. Outsourced services fell by E6.4m with a
significant contribution coming from our move to a single technology platform in both France and Italy as well as further
productivity gains in our Studios business unit. Overheads were reduced by E9.8m primarily from reductions in travel, legal
costs, rent and consulting services.
An increased level of capital expenditure in the Studios business that took place in 2014 fed through into a higher
depreciation charge that increased by E4.7m in the period to 5.4% of total revenue while the amortisation charge, that is
almost entirely due to acquired intangibles, continued to fall to 7.3% of total revenue (2014: 8.3%).
As noted above and in notes 5 and 10 to the financial information, there was a E16.4m impairment charge to the carrying
value of PXP. The figure for the prior year included an impairment charge of E95.9m against the Group's non-US facing poker
assets and a further E8.5m impairment against certain of the Group's non-core investments including those held for sale.
Increased reorganisation expenses of E8.8m (2014: E7.5m) reflect the remaining costs of the Group's shift to a label-led
set-up and redundancies.
Taxation
The total tax charge for the period was E4.2m (2014: credit of E3.6m). The tax credit in the previous year was driven by a
deferred tax credit related to the release of deferred tax provisions set up at the time of the merger between PartyGaming
Plc and bwin interactive digital entertainment AG, as well as the acquisition of PXP in 2014, arising from the amortisation
and impairments of short life intangible assets. The fall relative to the prior year is primarily due to the large
impairment of intangibles made in 2014. The current tax charge was flat year on year at E9.8m (2014: E9.8m).
Net cash
2015 2014
As at 31 December Emillion Emillion
Cash and cash equivalents 150.3 162.9
Short-term investments 16.1 13.5
Loans and borrowings (56.5) (56.9)
Net cash 109.9 119.5
Payment service providers (less chargebacks) 30.9 31.2
Net cash including amounts held by processors 140.8 150.7
Less: Client liabilities and progressive prize pools (114.9) (116.1)
Net cash including amounts held by processors less client liabilities 25.9 34.6
Net cash (after deducting all customer liabilities but adding back net payment processor receivables) declined to E25.9m
(31 December 2014: E34.6m) primarily due to increased merger and acquisition costs, capital expenditure and dividends.
Cashflow
2015 2014
Year ended 31 December Emillion Emillion
Clean EBITDA 108.5 101.2
Exchange gains (losses) 3.0 (3.1)
Retroactive taxes and associated charges (8.9) -
Market exit costs - (5.4)
Contingent consideration adjustments - 11.3
Adjustments to gaming taxes arising from changes in estimates 5.7 -
Reorganisation costs (9.8) (8.9)
Income taxes paid (10.5) (8.8)
Movements in working capital 21.1 6.7
Other 0.6 1.3
Operating cashflows before M&A costs and cash settled options 109.7 94.3
Merger and acquisition expenses (25.3) (1.5)
Cash settled share-based payments (15.2) -
Net cash inflow from operating activities 69.2 92.8
Acquisition of subsidiaries and businesses (8.8) (25.0)
Purchases of intangible assets (19.4) (22.7)
Purchases of property, plant and equipment (38.3) (23.4)
Sale of non-core assets 35.8 -
Dividends paid (43.2) (37.8)
Net bank borrowings (repaid) drawn down (5.9) 6.5
Other 1.7 (0.8)
Net cash outflow (8.9) (10.4)
Operating cashflow before merger and acquisition expenses and cash settled options increased by 16% to E109.7m despite
retroactive taxes paid of E8.9m (2014: Enil) relating to Romania. The working capital movement increased by E14.4m over
last year, primarily related to share options that were accelerated and settled in cash as a result of the acquisition by
GVC. Ordinarily these options would have been settled by way of shares.
Merger and acquisition costs increased by E23.8m to E25.3m versus the prior year, almost entirely due to the sale of the
Group. In combination with the cash settled share-based options referred to above, this contributed to a fall in the net
cash flow from operating activities to E68.7m (2014: E92.8m).
In respect of investments, E8.8m was paid in settlement of the Amaury option that resulted in us increasing our
shareholding in BES SAS to 100%. Conversely, we received E35.8m in respect of the sale of non-core assets during the
period. These proceeds related primarily to the World Poker Tour.
Capital expenditure (including capitalised workforce costs) increased from E46.1m to E57.7m due to increased investment in
our Studios business.
Dividends paid increased by 14% to E43.2m (2014: E37.8m) and this, coupled with a E5.9m reduction in bank borrowings and
the other movements noted above, gave rise to an overall cash outflow of E9.4m (2014: outflow E10.4m).
Principal risks
There are a number of potential risks and uncertainties which could have a material impact on the Group's future
performance and could cause actual results to differ materially from expected and historical results. To mitigate against
these risks bwin.party conducts a continuous process of Group-wide assessments that examine whether any risk has increased,
decreased or become obsolete; identify any new risks, especially from recent key business events; and the likelihood of a
risk occurring and what level of impact it would have on the Group.
Many of the threats and challenges faced by online gaming companies are similar to those faced by other leisure and
entertainment industries. They include competition, changes to consumer tastes, maintaining healthy financial ratios in
compliance with banking covenants and loss of key personnel.
There are also certain risks that are more specific to bwin.party and to the online gaming industry. These risks and how we
seek to manage them are set out below:
1. Technology
The Group's customer offer includes products operated using different labels and gaming licences, the majority of which are
driven by the Group's proprietary technology.
2013 saw the completion of the dotcom player migration project and during 2014 our customer base in France was migrated
successfully onto our target technology platform. The migration of our Italian customers to the target platform represented
the last of our integration projects following the merger between PartyGaming Plc and bwin Interactive Digital
Entertainment AG and was completed in March 2015.
The fact that with the exception of bingo, the vast majority of our customer base is already supported by our target
platform, highlights how important our technology is to the Group. In an industry where service reliability and integrity
are key differentiating factors, our continual commitment to providing a reliable, safe, secure, compliant and continuous
service has been a key area of focus this year.
A Group-wide initiative on achieving close to 100% system availability was introduced and we have made significant progress
in ensuring our customer facing systems are available for 24 hours a day, 7 days a week. This was monitored and overseen by
the IT Committee.
Other technology-related risks, such as our continuing operations in the event of a natural or man-made disaster, have been
addressed with a substantial investment and both the Group's disaster recovery and business continuity solutions have been
updated and tested during the past 12 months.
With continuous shifts in how consumers choose and are able to access our services (via different devices and/or channels),
the process of maintaining and improving our technology will become more complex. As mentioned elsewhere, a key area of
focus in 2015 was to improve our customer experience through an expanded mobile offer across all products as well as high
levels of availability.
2. Regulation
There are potential risks to the operations and financial position of the Group from all markets where regulation is not
clearly defined or adopted, especially in relation to EU legislation and associated cases.
To manage this risk, the Group continues to engage (either directly or indirectly) with national governments and regulators
on to-be regulated markets. The Group's Compliance and Regulatory Affairs team keeps abreast of the regulatory landscape
and reports to the Audit & Risk Committee on any developments. However, most of the risks in relation to the regulatory
landscape are outside of our direct control.
Operating in nationally regulated and/or taxed markets necessitates that we comply with the required rules and protocols.
Currently, the Group holds licences for and offers real money gambling in 12 different territories, each with their own
unique licence obligations. The need to sometimes develop bespoke technological, operational and promotional offers in each
market requires significant investment. The Group is committed to meeting its licence obligations and monitors its
compliance with regulatory requirements by performing reviews of its licenced operations on a periodic basis with the
results reported to the Audit and Risk Committee. The Group's licenced entities are subject to a series of external audits
by regulators and industry specialists to ensure that policies and procedures are being followed as intended.
3. Taxation
As outlined above the Group's strategic focus has been to concentrate operations in nationally regulated and/or taxed
markets. Revenues earned from customers located in a particular jurisdiction may give rise to further taxes in that
jurisdiction. If such taxes are levied, either on the basis of existing law or the current practice of any tax authority,
or by reason of a change in law or practice, then this may have a material adverse effect on the amount of tax payable by
the Group.
Group companies operate only where they are incorporated, domiciled or registered. The multi-location setup of the Group
gives rise to transfer pricing risk, mitigated by the fact that all intra-group transactions are documented and take place
on commercial terms agreed with input from the Group's professional advisors.
The Head of Tax routinely holds workshops with senior management and business unit leaders during the course of the year.
On 1 January 2015, new VAT rules came into force across the EU impacting several areas of the digital economy. Gambling has
typically been exempt from VAT but falls within the rules for VAT on electronically supplied services. Under EU law, Member
States have the ability to apply VAT to gambling subject to certain limitations and conditions, and tax may be due
depending on where customers are located and how Member States implement any exemption. Whilst substantial uncertainty
remains, in light of the new rules the Group is now filing for, and paying VAT, in certain EU Member States. It is possible
that VAT could be payable in other EU Member States.
4. Country and currency risk
Whilst the continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks
to which the Group is exposed, the diversified nature of the Group's business means that such risks are not
disproportionately different from any other commercial enterprise of a similar scale and international reach. Conditions in
the Eurozone remain challenging and reference has already been made in previous statements to the challenging economic
backdrop in several European countries, reducing the spending power of customers particularly in Southern European
countries, which the Group has attempted to reflect in its financial forecasts. The weaker European economies are also
increasing the risk of currency volatility and the potential for significant currency devaluation and business disruption
if one or more of these countries exits the Euro currency. Accordingly, the Group's treasury processes and policies are
designed with the aim of minimising the Group's exposure to the Eurozone economic risk and preserving our ability to
operate if such events arise.
The functional currency of the Company and a majority of the Company's subsidiaries is the Euro. bwin.party's treasury
policy dictates that all material transaction and currency liability exposures are hedged with financial derivatives or
cash. Consequently, those bwin.party companies that have adopted the Euro as their functional currency ensure their
financial assets and liabilities in non-euro currencies are equal and that any residual balance is held in Euros. With the
so-called 'GIPSI' countries (Greece, Ireland, Portugal, Spain and Italy), if one or more of these countries exits the Euro
then the Group may be exposed to a currency devaluation of its financial assets to the extent that the financial assets
located in the exiting jurisdiction exceed its financial liabilities. Accordingly, the treasury policy requires that
wherever practical and subject to regulatory requirements, the financial assets located in each GIPSI country are limited
so they do not exceed the financial liabilities associated with that jurisdiction.
5. Transaction-related Risks
The Company announced the terms of a recommended offer from GVC Holdings PLC on 4 September 2015 and the transaction
completed on 1 February 2016. As a result the Board was aware of several additional areas of risk that may affect the
Group's financial performance. These risks relate primarily to the retention of key people, the ability to attract new
talent, the need to continue to focus on day-to-day operational activities and the protection of company assets. Other risk
factors may also become relevant now that control has passed to GVC Holdings PLC.
6. Impact of Brexit
On 23 June 2016, a referendum will be held to determine whether the United Kingdom remains in the European Union (EU). In
the event that the decision is to leave the EU, in addition to a likely increase in the volatility of both the global
currency and financial markets, this will reduce the Group's ability to operate on an unfettered basis in certain EU
markets that have tried to restrict competition in their domestic market from online gaming companies based overseas. The
Group, along with other EU based online gaming operators, have previously relied on the ability to challenge such
protectionist measures through the EU Court of Justice ("CJEU"). In the event that the UK, and by extension Gibraltar
(being a UK protectorate), was to leave the EU, unless the Group was to re-domicile certain of its subsidiaries within the
EU, it would no longer be able to rely on such protection. Such a re-domiciliation could give rise to higher taxes
payable.
Directors
The following persons were directors of the Company during the reporting period:
Norbert Teufelberger
Martin Weigold
Philip Yea (resigned 1 February 2016)
Rod Perry (resigned 21 May 2015)
Helmut Kern (resigned 21 May 2015)
Georg Riedl (resigned 29 January 2016)
Per Afrell (resigned 29 January 2016)
Daniel Silvers (resigned 9 November 2015)
Elizabeth Catchpole (appointed 1 March 2015)
Sylvia Coleman
Barry Gibson (appointed 1 March 2015)
Statement of Directors' responsibilities
The directors are responsible for preparing financial statements for each financial year which give a true and fair view of
the state of affairs of the Group and of the profit or loss for that year and which comply with the Gibraltar Companies Act
2014.
Under that law, the directors have elected to prepare the financial statements in accordance with International Financial
Reporting Standards as adopted by the European Union. In preparing the financial statements, the directors are required
to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company
will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the
financial position of the company and to enable them to ensure that the accounts comply with applicable law. They are also
responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any
information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of
that information. The directors are not aware of any relevant audit information of which the auditors are unaware.
By order of the Board of Directors
Martin Weigold
Chief Financial Officer
4 March 2016
bwin.party digital entertainment limited
Independent auditors' report to the member of bwin.party digital entertainment Limited
We have audited the financial statements of bwin.party digital entertainment Limited for the year ended 31 December 2015
which comprise the Consolidated statement of comprehensive income, the Consolidated and Company statement of financial
position, the Consolidated and Company statements of changes in equity, the Consolidated and Company statements of
cashflows and the related notes. These financial statements have been prepared under the accounting policies set out
therein.
In line with our engagement letters this report, including the opinion, has been prepared for and only for the company's
member as a body in accordance with Section 257 of the Gibraltar Companies Act 2014 and for no other purpose. We do not, in
giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior consent in writing. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's member as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have
been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements. In addition, we read all the financial and
non-financial information in the directors' report to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Opinion
In our opinion:
• the financial statements give a true and fair view of the state of the group's and the parent company's affairs as
at 31 December 2015 and of the group's loss for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Gibraltar Companies Act 2014; and
• have been properly prepared in accordance with the Gibraltar Companies Act 2014.
Opinion on other matter prescribed by the Companies Act
In our opinion the information given in the Directors' Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Gibraltar Companies Act 2014 requires us to report
to you if, in our opinion:
• the company has not kept proper accounting records; or
• if information specified by law regarding directors' remuneration and other transactions is not disclosed; or
• we have not received all the information and explanations we require for our audit.
BDO LLP
Chartered Accountants
55 Baker Street
London W1U 7EU
United Kingdom
4 March 2016
Desiree McHard (Statutory Auditor)
For and on behalf of
BDO Limited
Registered Auditors
Regal House
PO Box 1200
Gibraltar
4 March 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
BDO Limited, a Gibraltar limited company, is registered in Gibraltar with company number 52200.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2015
2015 2014
Year ended 31 December Notes Emillion Emillion
Net revenue 525.8 563.0
Other revenue 50.6 48.9
Total revenue 2 576.4 611.9
Cost of sales (93.2) (91.3)
Gross profit 483.2 520.6
Other operating income 3 12.9 12.3
Other operating expense 4 (25.5) (4.6)
Administrative expenses (326.6) (415.6)
Distribution expenses (185.6) (210.6)
Clean EBITDA 108.5 101.2
Exchange gains (losses) 3.0 (3.1)
Merger and acquisition costs 4 (25.3) (1.5)
Amortisation 10 (42.0) (51.0)
Depreciation 11 (31.0) (26.3)
Profit on disposal of assets held-for-sale 5.0 -
Retroactive taxes and associated charges (8.9) -
Adjustments to gaming taxes arising from changes in estimates 5.7 -
Impairment losses 10,13,14 (17.1) (104.4)
Adjustment to investment following dividend (1.4) -
Market exit costs 5 - (5.4)
Contingent consideration adjustments 3 - 11.3
Release of acquisition fair value tax liability 4.9 -
Share-based payments and associated payroll taxes 30 (33.2) (9.8)
Reorganisation costs 5 (9.8) (8.9)
Loss from operating activities 5 (41.6) (97.9)
Finance income 7 1.8 1.2
Finance expense 7 (5.2) (3.6)
Dividends received 26 5.3 -
Share of (loss) profit of associates and joint ventures 14 (0.5) 2.4
Loss before tax (40.2) (97.9)
Tax (expense) credit 8 (4.2) 3.6
Loss for the year (44.4) (94.3)
2015 2014
Year ended 31 December Notes Emillion Emillion
Other comprehensive (expense) income:
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of foreign operations, net of tax (3.9) 10.9
Change in fair value of available-for-sale investments 10.1 (0.4)
Deferred tax arising (2.1) -
Total comprehensive expense for the year (40.3) (83.8)
Loss for the year attributable to:
Equity holders of the parent (43.6) (92.1)
Non-controlling interests 29 (0.8) (2.2)
(44.4) (94.3)
Total comprehensive expense for the year attributable to:
Equity holders of the parent (39.5) (81.6)
Non-controlling interests 29 (0.8) (2.2)
(40.3) (83.8)
Earnings per share attributable to the ordinary equity holders of the parent:
Loss per share (E cents)
Basic 9 (5.3) (11.3)
Diluted 9 (5.3) (11.3)
Consolidated statement of financial position
As at As at
31 December 31 December
2015 2014
Notes Emillion Emillion
Non-current assets
Intangible assets 10 512.3 545.1
Property, plant and equipment 11 48.6 55.9
Investments 14 4.8 11.0
Other receivables 15 6.4 10.6
Deferred tax 22 2.0 -
574.1 622.6
Current assets
Assets held for sale 13 14.5 27.5
Trade and other receivables 15 100.3 87.5
Short-term investments 16 16.1 13.5
Cash and cash equivalents 17 150.3 162.9
281.2 291.4
Total assets 855.3 914.0
Current liabilities
Trade and other payables 18 (111.0) (82.6)
Income and gaming taxes payable (34.7) (41.4)
Client liabilities and progressive prize pools 19 (114.9) (116.1)
Provisions 20 (8.1) -
Loans and borrowings 21 (6.8) (31.8)
Liabilities held for sale 13 - (7.4)
(275.5) (279.3)
Non-current liabilities
Trade and other payables 18 (4.4) (17.4)
Loans and borrowings 21 (49.7) (25.1)
Deferred tax 22 (26.1) (27.2)
(80.2) (69.7)
Total liabilities (355.7) (349.0)
Total net assets 499.6 565.0
As at As at
31 December 31 December
2015 2014
Notes Emillion Emillion
Equity
Share capital 25 0.2 0.1
Share premium account 3.3 3.0
Own shares 25 (2.3) (2.1)
Capital contribution reserve 24.1 24.1
Capital redemption reserve 0.0 0.0
Available-for-sale reserve 10.2 2.2
Retained earnings 1,040.3 1,115.7
Other reserve (573.7) (573.7)
Currency reserve (1.2) 2.7
Equity attributable to equity holders of the parent 500.9 572.0
Non-controlling interests 32 (1.3) (7.0)
Total equity 499.6 565.0
The financial statements were approved by the board of directors and authorised for issue on 4 March 2016.
They were signed on its behalf by:
Martin Weigold Elizabeth Catchpole
Director Director
Consolidated statement of changes in equity
Total
compre-
hensive
As at Other income Share- As at 31
1 January Reserves issue of Dividends Purchase for the based December
Year ended 2015 transfer shares paid of shares year payments 2015
31 December 2015 Emillion Emillion Emillion Emillion Emillion Emillion Emillion Emillion
Share capital 0.1 - 0.1 - (0.0) - - 0.2
Share premium account 3.0 - 0.3 - - - - 3.3
Own shares (2.1) - 0.0 - (0.2) - - (2.3)
Capital contribution reserve 24.1 - - - - - - 24.1
Capital redemption reserve 0.0 - - - - - - 0.0
Available-for-sale reserve 2.2 - - - - 8.0 - 10.2
Retained earnings 1,115.7 (6.5) (0.1) (43.2) - (43.6) 18.0 1,040.3
Other reserve (573.7) - - - - - - (573.7)
Currency reserve 2.7 - - - - (3.9) - (1.2)
Total attributable to equity holders of parent 572.0 (6.5) 0.3 (43.2) (0.2) (39.5) 18.0 500.9
Non-controlling interests (7.0) 6.5 - - - (0.8) - (1.3)
Total equity 565.0 - 0.3 (43.2) (0.2) (40.3) 18.0 499.6
Total
compre-
hensive
As at Other income Share- As at 31
1 January Reserves issue of Dividends Purchase for the based December
Year ended 2014 transfers shares paid of shares year payments 2014
31 December 2014 Emillion Emillion Emillion Emillion Emillion Emillion Emillion Emillion
Share capital 0.1 - (0.0) - (0.0) - - 0.1
Share premium account 2.2 - 0.8 - - - - 3.0
Own shares (5.2) - 3.3 - (0.2) - - (2.1)
Capital contribution reserve 24.1 - - - - - - 24.1
Capital redemption reserve 0.0 - - - 0.0 - - 0.0
Available-for-sale reserve 2.6 - - - - (0.4) - 2.2
Retained earnings 1,240.5 - (2.7) (37.8) (2.0) (92.1) 9.8 1,115.7
Other reserve (573.7) - - - - - - (573.7)
Currency reserve (8.2) - - - - 10.9 - 2.7
Total attributable to equity holders of parent 682.4 - 1.4 (37.8) (2.2) (81.6) 9.8 572.0
Non-controlling interests (4.8) - - - - (2.2) - (7.0)
Total equity 677.6 - 1.4 (37.8) (2.2) (83.8) 9.8 565.0
Share premium is the amount subscribed for share capital in excess of nominal value.
Capital contribution reserve is the amount arising from share-based payments made by parties associated with the original
shareholders and cash held by the Employee Trust.
Capital redemption reserve is the amount transferred from share capital on redemption of issued shares.
Available-for-sale reserve is the change in fair value arising on financial assets classified as available for sale.
Retained earnings represent cumulative profit (loss), share-based payments and any other items of other comprehensive
income not disclosed as separate reserves in the table above.
The other reserve of E573.7m is the amount arising from the application of accounting which is similar to the pooling of
interests method, as set out in the Group's accounting policies.
Currency reserve represents the gains/losses arising on retranslating the net assets of overseas operations into Euros.
Non-controlling interests relate to the interests of other shareholders in certain subsidiaries (see note 32).
CONSOLIDATED STATEMENT OF CASHFLOWS
2015 2014
Year ended 31 December Emillion Emillion
Loss for the year (44.4) (94.3)
Adjustments for:
Depreciation of property, plant and equipment 31.0 26.3
Amortisation of intangibles 42.0 51.0
Impairment of goodwill 16.4 19.7
Impairment of acquired and other intangible assets - 76.2
Impairment of available-for-sale investments 0.7 3.2
Adjustment to investment following dividend 1.4 -
Impairment of assets held for sale - 5.3
Share of (loss) profit of associates and joint ventures 0.5 (2.4)
Profit arising on disposal of assets held-for-sale (5.0) -
Release of acquisition fair value tax liability (4.9) -
Interest expense 5.2 3.6
Interest income (1.8) (1.2)
Dividend income (5.3) -
Increase in reserves due to share-based payments 18.0 9.8
Loss on sale of property, plant and equipment 0.6 1.3
Income tax expense 4.2 (3.6)
Operating cashflows before movements in working capital and provisions 58.6 94.9
(Increase) decrease in trade and other receivables (4.4) 36.4
Increase (decrease) in trade and other payables 28.8 (29.7)
Decrease in provisions (3.3) -
Cash generated from operations
Cash generated from operations 79.7 101.6
Income taxes paid (10.5) (8.8)
Net cash inflow from operating activities 69.2 92.8
Investing activities
Acquisition of subsidiaries and businesses - net of cash acquired - (25.0)
Purchases of intangible assets (19.4) (22.7)
Purchases of property, plant and equipment (38.3) (23.4)
Sale of property, plant and equipment 0.9 1.4
Purchase of investments (0.3) (0.8)
Issue of loan to joint venture (0.9) (1.0)
Distribution received from associate 0.5 -
Repayment of loan from joint venture - 2.0
Sale of available-for-sale investments 4.4 -
Sale of intangibles 0.2 -
Sale of assets held-for-sale net of cash disposed of 31.4 -
Interest received 1.8 1.2
Dividends received 4.5 -
Increase in short-term investments (2.6) (0.7)
Net cash used by investing activities (17.8) (69.0)
Financing activities
Issue of ordinary shares 0.4 0.8
Purchase of own shares (0.2) (2.2)
Dividends paid (43.2) (37.8)
Repayment of bank borrowings (20.7) (31.2)
New bank borrowings 14.8 37.7
Acquisition of subsidiaries - deferred payment (8.8) -
Interest paid (2.6) (1.5)
Net cash used in financing activities (60.3) (34.2)
Net decrease in cash and cash equivalents (8.9) (10.4)
Exchange differences (5.2) 1.5
Cash and cash equivalents at beginning of the year 164.4 173.3
Cash and cash equivalents at end of the year 150.3 164.4
Cash and cash equivalents
Included within cash and cash equivalents is Enil (2014: E1.5m) held within assets held for sale. Cash and cash equivalents
balances also include E44.9m (2014: E35.6m) related to cash held in segregated accounts in certain regulated markets.
Notes to the audited consolidated financial information
1. Accounting policies
Basis of preparation
The
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