REG - GVC Holdings PLC - Notification of Transfer to a Premium Listing <Origin Href="QuoteRef">GVC.L</Origin> - Part 7
01/07/2016 07:07
- Part 7: For the preceding part double click ID:nRSA8980Cf
Assets ('AFS')
AFS financial assets are non-derivative financial assets that are either designated to this category or do not qualify for
inclusion in any of the other categories of financial assets.
AFS financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported
within the AFS reserve within equity, except for interest and dividend income, impairment losses and foreign exchange
differences on monetary assets, which are recognised in profit or loss.
When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other
comprehensive income is reclassified from the equity reserve to profit or loss. Interest calculated using the effective
interest method and dividends are recognised in profit or loss within finance income.
For AFS equity investments impairment reversals are not recognised in profit and loss and any subsequent increase in fair
value is recognised in other comprehensive income.
1.17.5 Derivative Financial Instruments
Derivative financial instruments are accounted for at Fair Value Through Profit and Loss (FVTPL). The options associated
with the Group's investment in BHL, the Winunited option, the early repayment of the Cerberus loan and certain forward
exchange contracts are considered derivative financial instruments and are carried at their fair value which is re-measured
at each reporting date. Any movements in fair value are taken to the consolidated income statement.
1.17.6 Impairment of Financial Assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are
considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
Objective evidence of impairment could include:
- significant financial difficulty of the issuer or counterparty; or
- breach of contract, such as a default or delinquency in interest or principal payments; or
- it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
- the disappearance of an active market for that financial asset because of financial difficulties.
1.18 Equity
Equity comprises the following:
'Share capital' represents the nominal value of equity shares.
'Share premium' represents the excess over nominal value of the fair value of consideration received for equity shares, net
of expenses of the share issue, including that arising in the acquisition of bwin.party.
'Retained earnings' represents retained profits.
'Merger reserve' arose on the re-domiciliation of the Group from Luxembourg to the Isle of Man in 2010. It consists of the
pre-redomiciliation reserves of the Luxembourg company plus the difference in the issued share capital (31,135,762 shares
at E0.01 versus 31,135,762 shares at E1.24).
'Translation reserve' represents exchange differences on translation of foreign subsidiaries recognised in other
comprehensive income.
1.19 Finance leases
Management applies judgment in considering the substance of a lease agreement and whether it transfers substantially all
the risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease
term in relation to the economic life of the asset, the present value of the minimum lease payments in relation to the
asset's fair value, and whether the Group obtains ownership of the asset at the end of the lease term.
The interest element of lease payments is charged to profit or loss, as finance costs over the period of the lease.
1.20 Operating leases
All other leases other than finance leases are treated as operating leases. Where the Group is a lessee, payments on
operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs,
such as maintenance and insurance, are expensed as incurred.
1.21 Assets classified as 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.
1.22 Investments in joint ventures
A joint venture is a contractual relationship whereby the Group and other parties undertake an economic activity that is
subject to joint control; 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.
1.23 Investments in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest
in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of
the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in the consolidated financial information using the
equity method of accounting. Under the equity method, investments in associates are carried at cost as adjusted for
post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of the
investment. Losses of an associate in excess of the Group's interest in that associate 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 associate.
1.24 New and revised standards that are effective for annual periods beginning on or after 1 January 2016
1.24.1 Amendments to IFRS 11 Joint Arrangements
These amendments provide guidance on the accounting for acquisitions of interests in joint operations constituting a
business. The amendments require all such transactions to be accounted for using the principles on business combinations
accounting in IFRS 3 'Business Combinations' and other IFRSs except where those principles conflict with IFRS 11.
Acquisitions of interests in joint ventures are not impacted by this new guidance.
The amendments are effective for reporting periods beginning on or after 1 January 2016. The amendments do not have an
impact on this consolidated historical financial information.
1.24.2 Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements
These amendments provide guidance on the materiality considerations to apply to all parts of the financial statements and
the extent to which line items can be aggregated and disaggregated.
The amendments are effective for reporting periods beginning on or after 1 January 2016. The amendments do not have an
impact on this consolidated historical financial information.
1.25 Standards in issue, not yet effective
At the date of authorisation of this consolidated historical financial information, certain new standards, and amendments
to existing standards have been published by the IASB that are not yet effective, and have not been adopted early by the
Group. Information on those expected to be relevant to the Group's financial statements is provided below.
Management anticipates that all relevant pronouncements will be adopted in the Group's accounting policies for the first
period beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either
adopted or listed below are not expected to have a material impact on this consolidated historical financial information.
1.25.1 IFRS 9 'Financial Instruments' (2014)
The IASB has released IFRS 9 'Financial Instruments' (2014), representing the completion of its project to replace IAS 39
'Financial Instruments: Recognition and Measurement'. The new standard introduces extensive changes to IAS 39's guidance on
the classification and measurement of financial assets and introduces a new 'expected credit loss' model for the impairment
of financial assets. IFRS 9 also provides new guidance on the application of hedge accounting.
The Group's management have yet to assess the impact of IFRS 9 on this consolidated historical financial information. The
new standard is required to be applied for annual reporting periods beginning on or after 1 January 2018.
1.25.2 IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 'Revenue', IAS 11 'Construction
Contracts', and several revenue-related Interpretations. The new standard establishes a control-based revenue recognition
model and provides additional guidance in many areas not covered in detail under existing IFRSs, including how to account
for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase
options, and other common complexities. IFRS 15 is effective for reporting periods beginning on or after 1 January 2018.
The Group's management have not yet assessed the impact of IFRS 15 on this consolidated historical financial information.
1.25.3 IFRS 16 'Leases'
IFRS 16 presents new requirements for the recognition, measurement, presentation and disclosure of leases, replacing IAS 17
'Leases'. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for
all leases of over 12 months unless the underlying asset has a low value. Lessors continue to classify leases as operating
or finance leases, with minimal changes from IAS 17. The new standard applies to annual reporting periods beginning on or
after 1 January 2019. The Group's management have not yet assessed the impact of IFRS 16 on this consolidated historical
financial information.
1.25.4 Disclosure Initiative: Amendments to IAS 7 Statement of Cash Flows
This amendment requires entities to disclose additional information on certain changes in liabilities arising from
financing activities. It will be effective from 1 January 2017. The Group's management have not yet assessed the impact of
the amendment on this consolidated historical financial information.
2. SEGMENTAL REPORTING
Prior to the acquisition of bwin.party, management followed one business line with two operating segments, being Sports and
Gaming. Post the acquisition, and reflecting the label-focussed basis for bwin.party's segmental analysis, this approach
has been revised. There are now five operating segments, being Sports labels, Gaming labels, Studios, Non-core and
Corporate. These operating segments are monitored and strategic decisions are made on the basis of overall operating
results. The segmental analysis below shows the prior year comparative on the new segmental basis of reporting in order to
aid comparability.
Management also monitors revenue by geographic location of its customers.
2.1 Geographical Analysis
The Group's revenues and other income from external customers are divided into the following geographic areas:
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Germany 35.8 8.8
Turkey 23.9 21.1
UK 12.6 1.7
Other 88.5 27.8
Total 160.8 59.4
At 31 December 2015, the total non-current assets (other than financial instruments, investments accounted for using the
equity method, deferred tax assets and post-employment benefit assets) located in Europe was E103,350,000 and the total
located in other regions was E55,816,000. Given the recent significant changes in composition of the Group, this
information is not available for the period to 31 March 2016.
Revenues from external customers have been identified on the basis of the customer's geographical location. Non-current
assets are allocated based on their physical location.
2.2 Reporting by Segment
Period ending 31 March 2016:
Sports Games Total Non-
labels labels Studios core core Corporate Total
Em Em Em Em Em Em Em
Revenue 117.8 35.6 2.8 156.2 4.6 - 160.8
Variable costs (55.3) (20.3) (0.1) (75.7) (4.5) 0.2 (80.0)
Contribution 62.5 15.3 2.7 80.5 0.1 0.2 80.8
Contribution margin 53% 43% 96% 52% 2% 0% 50%
Other operating costs:
Personnel expenditure (7.3) (2.5) (11.6) (21.4) (2.1) (2.7) (26.2)
Professional fees (0.4) (0.2) (0.3) (0.9) (0.3) (2.3) (3.5)
Technology costs (2.1) (1.9) (11.7) (15.7) (0.4) 1.2 (14.9)
Office, travel and other costs (0.6) (0.2) (0.7) (1.5) (0.6) (3.0) (5.1)
Foreign exchange differences 0.3 (0.6) 0.3 - 1.7 0.4 2.1
Clean EBITDA 52.4 9.9 (21.3) 41.0 (1.6) (6.2) 33.2
Period ending 31 March 2015:
Sports Games Total Non-
labels labels Studios core core Corporate Total
Em Em Em Em Em Em Em
Revenue 50.8 8.6 - 59.4 - - 59.4
Variable costs (24.3) (3.0) - (27.3) - - (27.3)
Contribution 26.5 5.6 - 32.1 - - 32.1
Contribution margin 52% 65% - 54% - - 54%
Other operating costs:
Personnel expenditure (4.8) (1.0) (3.2) (9.0) - (3.1) (12.1)
Professional fees (0.1) - - (0.1) - (1.0) (1.1)
Technology costs (0.7) (0.3) (4.9) (5.9) - - (5.9)
Office, travel and other costs (0.4) (0.2) (0.4) (1.0) - (0.2) (1.2)
Foreign exchange differences (0.2) 0.1 - (0.1) - (0.4) (0.5)
Clean EBITDA 20.3 4.2 (8.5) 16.0 - (4.7) 11.3
Management do not review the performance of each segment below the level of Clean EBITDA.
2.3 Detailed income statement
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
SEGMENTAL REPORTING Notes Em Em
Net Gaming Revenue 160.8 59.4
Variable costs* (80.0) (27.3)
Contribution 80.8 32.1
Contribution margin 50% 54%
Other operating costs 3
Personnel expenditure (including incentive arrangements) (26.2) (12.1)
Professional fees (3.5) (1.1)
Technology costs (14.9) (5.9)
Office, travel and other costs (5.1) (1.2)
Third party service costs - -
Foreign exchange differences 2.1 (0.5)
Clean EBITDA 33.2 11.3
Exceptional items 3 (65.5) -
Share option charges 3 (3.0) -
Change in value of available for sale asset 9 (3.1) -
Movement in fair value of derivative financial instruments 10 (1.6) 3.1
EBITDA (40.0) 14.4
Depreciation and amortisation 3 (26.3) (1.2)
Financial income 4 0.3 -
Financial expense 4 (11.6) (0.7)
Dividend income 3.1 -
Share of profit/(loss) of associate 0.1 -
(Loss)/profit before tax (74.4) 12.5
Taxation 5 0.5 (0.2)
(Loss)/profit after tax from continuing operations (73.9) 12.3
* Variable costs include betting taxes, payment service provider charges, software royalties, chargebacks & bad debt,
commissions and marketing costs
3. OPERATING COSTS
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Notes Em Em
Wages and salaries, including Directors (excluding incentive schemes)
17.1 6.0
Incentive schemes, including Directors 1.5 4.0
Amounts paid to long term contractors 3.9 0.9
Compulsory social security contributions 2.4 0.5
Compulsory pension contributions 0.1 0.2
Health and other benefits 0.8 0.2
Recruitment and training 0.4 0.3
Personnel expenditure (excluding share option charges) 26.2 12.1
Professional fees 3.5 1.1
Technology costs 14.9 5.9
Office, travel and other costs 5.1 1.2
Foreign exchange differences on operating activity (2.1) 0.5
Administrative costs 47.6 20.8
Equity settled share option charges 24 2.6 0.1
Cash settled share option (credit)/charges 24 0.4 (0.1)
Exceptional items 3.1 65.5 -
Change in value of available for sale asset 10 3.1 -
Movement in the fair value of derivative financial instruments 11 1.6 (3.1)
Depreciation 8 3.8 0.2
Amortisation 9 22.5 1.0
147.1 18.9
3.1 Exceptional Items
The Group incurred expenditure on exceptional items (as defined in accounting policy note 1.13) of E65.5 million (Period
ended 31 March 2015: Enil). These are items which are both exceptional in size and nature.
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Acquisition of bwin.party
- Legal advice 1.2 -
- Financial advisors 10.9 -
Total professional fees 12.1 -
- Currency option, including fair value adjustment (see note 3.1.2) 10.8 -
- Bonuses and share options (see note 3.1.1) 21.4 -
- Legal fees for securitisation 1.0 -
- Foreign exchange differences 8.6 -
Total acquisition costs 53.9 -
Non-deal income/expenditure
- Premium Listing application costs 2.4 -
- Reorganisation costs 1.6 -
- Progressive jackpots (see note 30.7) 7.6 -
Total non-acquisition costs 11.6 -
Total exceptional items 65.5 -
3.1.1 Transaction bonuses and share options
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
2014 share option plan rolled into share placing* 18.4 -
Transaction bonuses rolled into share placing** 3.0 -
21.4 -
* Includes employer's National Insurance. See pages 322-325 of the prospectus.
** Includes employer's National insurance. See page 349 of the prospectus.
3.1.2 Currency option
A currency option was taken out in 2015, in order to meet the cash confirmation requirements of the offer for bwin.party.
Under the terms of the contract, the Group would sell E365.0 million and buy £260.7 million. Hedge accounting was not
applied. The derivative, recognised as a current liability, was valued at 31 December 2015 at E9.9 million. The option was
exercised on 2 February 2016. The movement in exchange rate between 31 December 2015 and 2 February 2016 created an
additional fair value loss of E10.8 million which has been recognised as an exceptional item above.
At 31 March 2016 there were other forward exchange contracts taken out in the ordinary course of business with a fair value
liability of E1.2 million. The cost of these options is included within administrative costs and not treated as an
exceptional cost.
3.2 Employees
The average monthly number of persons (including Directors) employed by the Group during the three month period was:
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Number of personnel
With employment contracts or service contracts 1,798 532
Contractors 392 47
2,190 579
The number of employees and contractors for the enlarged Group as at 31 March 2016 was c.3,100.
4. FINANCIAL INCOME AND EXPENSE
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Financial income - interest income 0.3 -
0.3 -
Financial expense - interest payable
- Unwinding of discount on non-interest bearing loan 0.1 0.1
- Foreign exchange revaluation (see note 4.1) - 0.6
- Interest on Cerberus loan* 12.3 -
- Amortisation of the early repayment option (0.8) -
11.6 0.7
* This represents the effective interest on the loan which includes interest payments at the contracted rate of 12.5%
and an accrual for exit and similar fees not yet due but obliged to be accounted for.
4.1 Foreign exchange differences
The foreign exchange differences above arose as follows:
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Retranslation of the William Hill non-interest bearing loan - 0.5
Retranslation of amounts due in respect of finance leases - 0.1
- 0.6
5. DIVIDEND INCOME
Dividends were received in the period from the Aldorino Trust in respect of the investment in Betbull.
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Dividend income 3.1 -
6. TAXATION
Current tax for the current and prior periods is classified as a current liability to the extent that it is unpaid. Amounts
paid in excess of amounts owed are classified as a current asset. There is a current tax liability from continuing
operations of E8.3 million (net of tax receivable amounts) at 31 March 2016 (31 December 2015: Current tax liability from
continuing operations of E1.3 million (net of tax receivable amounts)).
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Current tax expense
Current period (1.0) (0.2)
Prior period - -
(1.0) (0.2)
Deferred tax
Origination and reversal of temporary differences 1.5 -
Total income tax credit/(expense) in income statement 0.5 (0.2)
The tax for the period is different from that which would result from applying the standard rate of UK Corporation Tax of
20% (2015: 21%). A reconciliation is shown below:
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
(Loss)/profit before tax (74.4) 12.5
Income tax using the domestic corporation tax rate (14.9) 2.6
Effect of tax rates in foreign jurisdictions (rates decreased) 10.3 (2.4)
Tax adjustments including those arising from tax losses 4.1 -
Adjustment in respect of prior years - corporation tax - -
Tax (credit)/charge (0.5) 0.2
6.1 Current Taxation Amounts Recognised in the Statement of Financial Position
Current Tax
Payable Receivable Total
Em Em Em
Balances at 1 January 2015 (5.0) 3.9 (1.1)
Paid/(received) during the year ended 31 December 2015 2.1 (1.4) 0.7
Credit/(charge) in income statement for prior periods 0.1 (0.2) (0.1)
(Charge)/credit in income statement for the year
ended 31 December 2015 (4.5) 3.7 (0.8)
Balances at 31 December 2015 (7.3) 6.0 (1.3)
Acquired in business combination (6.8) - (6.8)
Paid/(received) during the period ended 31 March 2016 0.7 - 0.7
Credit/(charge) in income statement for prior periods - - -
(Charge)/credit in income statement for the period
ended 31 March 2016 (1.0) - (1.0)
Transfer to Liabilities held for sale 0.1 - 0.1
Balances at 31 March 2016 (14.3) 6.0 (8.3)
Tax reclaimable represents a portion of the tax paid by Maltese entities in the Group which is refundable by the Maltese
tax authorities to the parent company shortly after the submission of the audited accounts and tax computation for the
company the tax is payable in.
Unrelieved trading tax losses remain available to offset against future trading profits of a minimum of E50.0 million (31
December 2015: E43.9 million).
6.2 Deferred Taxation Amounts Recognised in the Statement of Financial Position
Deferred tax
Asset Liability Total
Em Em Em
Balances at 1 January 2015 and 31 December 2015 - - -
Acquired in business combination 1.9 (2.0) (0.1)
Arising on Intangible fixed assets acquired in
business combination - (79.4) (79.4)
(Charge)/credit in income statement for the period
ended 31 March 2016 (1.3) 2.8 1.5
Transfer to Liabilities held for sale - 1.7 1.7
Balances at 31 March 2016 0.6 (76.9) (76.3)
7. EARNINGS PER SHARE
7.1 Basic Earnings Per Share and Basic Earnings Per Share Before Exceptional Items
Basic earnings per share has been calculated by taking the profit attributable to ordinary shareholders and dividing by the
weighted average number of shares in issue. Basic earnings per share from continuing operations before exceptional items
has been calculated by taking the profit attributable to ordinary shareholders and adding back the cost of exceptional
items in the period and dividing by the weighted average number of shares in issue.
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
(Loss)/profit for the period attributable to ordinary shareholders (Em) (73.8) 12.3
Weighted average number of shares (m) 210.7 61.3
Basic earnings per share (E) (0.350) 0.200
Exceptional items (Em) 65.5 -
(Loss)/profit for the period attributable to ordinary shareholders before
exceptional items (Em) (8.3) 12.3
Basic earnings per share before exceptional items (E) (0.039) 0.200
7.2 Diluted Earnings Per Share and Diluted Earnings Per Share Before Exceptional Items
Diluted earnings per share has been calculated by taking the profit attributable to ordinary shareholders and dividing by
the weighted average number of shares in issue as diluted by share options. Diluted earnings per share from continuing
operations before exceptional items has been calculated by taking the profit attributable to ordinary shareholders and
adding back the cost of exceptional items and dividing by the weighted average number of shares in issue, as diluted by
share options.
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
(Loss)/profit for the period attributable to ordinary shareholders (Em) (73.8) 12.3
Weighted average number of shares (m) 210.7 61.3
Effect of dilutive share options (m) - 3.2
Weighted average number of dilutive shares (m) 210.7 64.5
Diluted earnings per share (E) (0.350) 0.190
Exceptional items (Em) 65.5 -
(Loss)/profit for the period attributable to ordinary shareholders before
exceptional items (Em) (8.3) 12.3
Diluted earnings per share before exceptional items (E) (0.039) 0.190
Share options that could potentially dilute basic earnings per share but were not included because they are antidilutive
for the period ending 31 March 2016 amounted to 1.7 million effective shares (2015: nil).
8. PROPERTY, PLANT AND EQUIPMENT
Land and Plant and Fixtures
buildings Equipment and Fittings Total
Em Em Em Em
Cost
At 1 January 2015 - 2.3 1.4 3.7
Additions - 1.1 0.1 1.2
At 31 December 2015 - 3.4 1.5 4.9
Additions - - 0.5 0.5
Acquisition of subsidiaries 4.9 - 39.6 44.5
Disposals - - (0.5) (0.5)
Exchange movements - - (0.9) (0.9)
Reclassified as assets held for sale - - (2.5) (2.5)
At 31 March 2016 4.9 3.4 37.7 46.0
Depreciation
At 1 January 2015 - 1.5 1.1 2.6
Depreciation charge for the period - 0.7 0.2 0.9
At 31 December 2015 - 2.2 1.3 3.5
Depreciation charge for the period 0.3 0.2 3.3 3.8
Disposals - - (0.5) (0.5)
Exchange movements - - (0.1) (0.1)
Reclassified as assets held for sale - - (0.2) (0.2)
At 31 March 2016 0.3 2.4 3.8 6.5
Net Book Value
At 31 December 2015 - 1.2 0.2 1.4
At 31 March 2016 4.6 1.0 33.9 39.5
The net book value of items held under finance leases was E0.4 million at 31 March 2016 (31 December 2015: E0.5 million).
9. INTANGIBLE ASSETS
Trade- Non-
Leased Owned Total marks contractual
Software Software Software & Trade Consulting Customer
Licence Licence Licence Goodwill Name & Magazine Relationships Total
Em Em Em Em Em Em Em Em
Cost
At 1 January 2015 1.1 26.4 27.5 166.2 17.0 4.9 2.4 218.0
Additions - 5.0 5.0 - - - - 5.0
At 31 December 2015 1.1 31.4 32.5 166.2 17.0 4.9 2.4 223.0
Additions - 6.3 6.3 - - - - 6.3
Acquisition of subsidiaries - 224.0 224.0 957.0 176.0 - 208.0 1,565.0
Reclassified as assets
held for sale
- (2.0) (2.0) (6.5) - - (12.0) (20.5)
At 31 March 2016 1.1 259.7 260.8 1,116.7 193.0 4.9 198.4 1,773.8
Amortisation and Impairment
At 1 January 2015 0.4 21.5 21.9 33.3 1.3 4.9 2.3 63.7
Amortisation 0.4 3.5 3.9 - 0.2 - 0.1 4.2
At 31 December 2015 0.8 25.0 25.8 33.3 1.5 4.9 2.4 67.9
Amortisation 0.1 11.2 11.3 - 2.5 - 8.7 22.5
Reclassified as assets
held for sale
- (0.1) (0.1) - - - (0.5) (0.6)
At 31 March 2016 0.9 36.1 37.0 33.3 4.0 4.9 10.6 89.8
Net Book Value
At 31 December 2015 0.3 6.4 6.7 132.9 15.5 - - 155.1
At 31 March 2016 0.2 223.6 223.8 1,083.4 189.0 - 187.8 1,684.0
Certain intangible assets are deemed to have an indefinite useful life as there is no foreseeable limit to the period over
which the asset is expected to generate net cash inflows for the entity. The carrying amounts of such assets at 31 March
2016 were as follows:
31 March 31 December
2016 2015
Em Em
Trademarks & Trade Names 15.1 15.1
9.1 Amortisation
The amortisation for the period is recognised in the following line items in the income statement.
Period Ended Period Ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Net operating expenses 22.5 0.9
9.2 Impairment Tests for Cash-Generating Units Containing Goodwill and Trademarks
An assessment of the Group's goodwill was carried out for the period ended 31 March 2016 to identify whether there were any
indicators of impairment. The goodwill relates to Betboo, CasinoClub, Sportingbet, which had all been assessed for
impairment at 31 December 2015, and the bwin assets acquired in the period. No indicators of impairment were found. As the
period from the acquisition of bwin to the reporting date is so short, management have assessed that the fair value less
costs to sell of these assets would not be materially different from their carrying value.
At 31 December 2015 the following assumptions were used in the impairment reviews:
Betboo
Significant growth was expected in the short-term reducing to 20% annual growth by 2017, a long-term growth rate of 2% was
used from 2019 to reflect the likely competitive pressures. A discount rate of 35% was used, based on the internal rate of
return of the Betboo acquisition. It was concluded that the carrying value of the goodwill and trademarks was not
impaired.
CasinoClub
A long-term growth rate of 2% was used to reflect the increasing competitive pressures from large online gaming companies.
A discount rate of 17.2% was used, based on company specific pre-tax weighted average cost of capital. It was concluded
that the carrying value of the goodwill and trademarks was not impaired.
Sportingbet
A long-term growth rate of 3% was applied to reflect the likely competitive pressures from other large online gaming
companies. A discount rate range of 20%-25% was used across the different geographical areas, and a sensitivity analysis
carried out including decreasing the growth rate to 1% and increasing the discount to 30%-45%. It was concluded that the
carrying value of the goodwill and trademarks was not impaired.
The following units have significant carrying amounts of goodwill:
31 March 31 December
2016 2015
Em Em
Betboo 8.3 8.3
CasinoClub 40.4 40.4
Sportingbet 84.2 84.2
Bwin Sportsbook 614.9 -
Bwin Gaming 244.1 -
Bwin other 91.5 -
Total Goodwill 1,083.4 132.9
10. INVESTMENTS AND AVAILABLE FOR SALE (AFS) FINANCIAL ASSETS
Where an entity holds, directly or indirectly through subsidiaries, less than 20 per cent of the voting power of an
investee, it is presumed that the entity does not have significant influence and therefore an investment does not qualify
as an associate unless such influence can be clearly demonstrated. Where an entity holds more than 20 per cent of the
voting power of an investee, further assessments are required to evaluate the level of influence and control.
AFS Investments Total Total AFS
2016 2016 2016 2015
Em Em Em Em
At 1 January 2.6 - 2.6 3.8
Acquisition through business combination 3.5 1.0 4.5 -
Share of profit - 0.1 0.1 -
Movement in fair value 0.1 - 0.1 -
Change in value of investment following
dividend (3.1) - (3.1) -
Impairment - - - (1.2)
At 31 March 2016 / 31 December 2015 3.1 1.1 4.2 2.6
10.1 Betit investment
On 14 May 2014, the Group acquired a 15% stake in Betit Holdings Limited ('BHL') from Betit Securities Limited ('BSL'). The
consideration was for E3.5 million, which was attributed to both the available for sale asset (E5.2 million) and the option
liability (E1.7 million) taken on at acquisition. The asset held for sale consideration, together with professional fees
incurred at the time, amounted to a total upfront cost of E5.4 million which was impaired at 31 December 2015 to E2.6
million.
Although the Group has a Director on the Board of BHL and has influence through its shareholding over the payment of
dividends the Director does not participate in policy making decisions, and the entity is unlikely to be in a dividend
paying position over the lifetime of the investment. The Group does not believe there is evidence to rebut the presumption
it does not have significant influence over BHL and therefore the investment is not considered to be an associate and has
been accounted for as an available for sale asset.
The available for sale asset is required to be re-measured at fair value at each reporting date. Changes in the fair value
will be recognised in other comprehensive income, except for impairment losses which are recognised through profit or loss
as a deduction from clean EBITDA. The Group engaged a third party valuations specialist to value the asset.
In valuing the underlying business of BHL, a discounted cash flow model was used, applying a long-term growth rate of 2%
(2015: 2%) to the Group's forecasts and a discount rate of 18% (2015: 18%) (based on comparison to industry peers and
observable inputs). Based on this model, the value as at 31 March 2016 of the available for sale asset was E2.7 million, an
increase since 31 December 2015 of E0.1 million.
10.2 Bwin Available For Sale assets (AFS)
The value of bwin.party's AFS on acquisition was E3.5 million. The value of these has decreased by E3.1 million during the
period, principally as a result of the dividend declared by the Aldorino Trust of E3.1million which resulted in the full
impairment of the Betbull investment. The remaining AFS assets have been valued using a discounted cash flow. The
significant unobservable inputs are the weighted average cost of capital, cash flow forecasts and long term growth rates.
10.3 Associates
The value of bwin.party's associates on acquisition was E1.0 million. The value of this investment had increased by E0.1
million by 31 March 2016.
11. DERIVATIVE FINANCIAL INSTRUMENTS: OPTIONS
On 24 March 2015, GVC contracted with Winunited Limited for the day-to-day back office operations of the Winunited
business, licensed in Malta. Under the terms of the agreement, GVC obtained a call option to purchase the Winunited assets
comprising goodwill, customers, licenses, brands and websites. The exercise period for the option is in the three months
prior to the five year anniversary of the 24 March 2015. No consideration was paid for the call option.
The Betit option was acquired in the prior year as part of the asset purchase set out in note 10.
A summary of the movement in the option values during the period and the balances at 31 March 2016 is shown below:
Early
Winunited repayment
option option Betit option Total
Em Em Em Em
Balance at 1 January 2015 - - (1.7) (1.7)
Movement in fair value 3.8 - 1.0 4.8
Balance at 31 December 2015 3.8 - (0.7) 3.1
Recognised on loan draw-down - 7.4 - 7.4
Movement in fair value (0.4) - (1.2) (1.6)
Balance at 31 March 2016 3.4 7.4 (1.9) 8.9
Split:
Current asset 3.4 7.4 - 10.8
Non-current liability - - (1.9) (1.9)
11.1 Winunited option
At 31 March 2016 the option was valued by a third party valuation specialist using a Monte Carlo valuation model and two
methodologies: a discounted cash flow and a multiples based calculation. A long-term growth rate of 1.5% was assumed (31
December 2015: 2%), and a discount rate of 14% (31 December 2015: 15%) based on industry peers and observable inputs. Based
on this model, the value of the call option at 31 March 2016 was E3.4 million (31 December 2015: E3.8 million). This
increase in the fair value of the option has been recognised in the income statement in accordance with IAS 39.
11.2 Cerberus loan early repayment option
On 2 February 2016 a further E380 million was drawn down under the Cerberus loan facility. The facility has a repayment
date of 4 September 2017 but may be repaid at any date. Early repayment will change the profile and size of the cash
payments and this feature has been identified as an embedded derivative therefore separated from the host contract. Changes
in the Group's credit rating will have an impact on the value of the option for early repayment. The option has been valued
by a third party valuation specialist based on the contracted cash flows under the terms of the facility and applying a
probability weighted measure to the cost saving opportunities. The value of the early repayment at inception and at 31
March 2016 was E7.4 million.
11.3 Betit option
On 14 May 2014, the Group acquired a 15% stake in Betit Holdings Limited ('BHL'). The Group has a call option to acquire
the balance of the outstanding shares. The call option can be exercised no earlier than 1 July 2017 and no later than 30
September 2017, and would be subject to further Maltese Gaming Authority clearance and the Stock Exchange Rules. The
minimum call option price is E70 million, and the actual price would be determined by the mix of revenues between regulated
and non-regulated markets and certain multiples attaching thereto.
If the Group decides not to exercise its call option BSL may require the Group to acquire its shares in BHL at a price
determined by the mix of revenues between regulated and non-regulated markets and certain multiples thereof (but absent any
floor on the price). Completion of this purchase would be subject to certain conditions including the Group's ability to
raise the necessary financing. Should the Group not raise the required financing, BSL may acquire the Group's shares in BHL
for nominal consideration.
The Group engaged a third party valuations specialist to value the options using a Monte Carlo valuation model based on the
enterprise value for BHL and modelling of the anticipated exercise price. In valuing the underlying business of BHL, a
discounted cash flow model was used, applying a long-term growth rate of 2% (2015: 2%) to the Group's forecasts and a
discount rate of 18% (2015: 18%) (based on comparison to industry peers and observable inputs). Based on this model, the
fair value of the put and call options was a net liability of E1.9 million (31 December 2015: E0.7 million), leading to a
movement in the fair value of E1.2 million.
12. RECEIVABLES AND PREPAYMENTS
31 March 31 December
2016 2015
Em Em
Balances with payment processors 53.3 21.7
Trade receivables 0.1 0.1
Contingent consideration 5.5 -
Other receivables 30.3 1.3
Loans and receivables 89.2 23.1
Prepayments 18.3 11.5
Current assets: trade and other receivables 107.5 34.6
31 March 31 December
2016 2015
Em Em
Contingent and deferred consideration 6.5 -
Non-current assets: trade and other receivables 6.5 -
Payment processor balances described as receivables are funds held by third party collection agencies subject to collection
after one month, or balances used to make refunds to players.
Contingent and deferred consideration balances were acquired in the bwin.party business combination.
Prepayments include payments as at 31 March 2016 for goods or services which will be consumed after 1 April 2016.
13. SHORT TERM INVESTMENTS
31 March 31 December
2016 2015
Em Em
At 1 January - -
Acquired in business combination 15.6 -
Transferred to Assets Held for Sale (5.8) -
Decrease in the period (4.4) -
5.4 -
Short term investments represent cash held as guarantees for regulated markets' licences and significant marketing
contracts together with client funds held for payment service provider transactions. These funds cannot be freely accessed
by the Group and so are not treated as cash or cash equivalents.
14. CASH AND CASH EQUIVALENTS
31 March 31 December
2016 2015
Em Em
Cash and cash equivalents
Bank balances 307.9 28.2
Held in the following currencies
(in Euro equivalents at the reporting date):
Euro
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