REG - GVC Holdings PLC - Notification of Transfer to a Premium Listing <Origin Href="QuoteRef">GVC.L</Origin> - Part 9
01/07/2016 07:07
- Part 9: For the preceding part double click ID:nRSA8980Ch
RELATED PARTIES
27.1 Identity of Related Parties
The Group has a related party relationship with its subsidiaries and with its Directors and executive officers.
27.2 Transactions with Directors and Key Management Personnel
Karl Diacono is the Chief Executive Officer of Fenlex Corporate Services Limited, a corporate service provider incorporated
in Malta. During the period ended 31 March 2016, Fenlex received E24,065 from the Group in relation to Company secretarial
matters arising in Malta (12 months to December 2015: E97,385).
Richard Cooper received no dividends during the period (12 months to December 2015: E934). The wife of Richard Cooper
received no dividends during the period (12 months to December 2015: E184,800) in respect of her interest in the ordinary
share capital of the Group.
Lee Feldman received no dividends during the period (12 months to December 2015: E79,265) in respect of his beneficial
interest in the ordinary share capital of the Group. Lee Feldman is the Managing Partner of Twin Lakes Capital, a private
equity firm based in New York. During the period ended 31 March 2016, Twin Lakes Capital received E15,790 (12 months to
December 2015: E68,715) in relation to office services.
Kenneth Alexander received no dividends during the period (12 months to December 2015: E69,264). The wife of Kenneth
Alexander received no dividends during the period (12 months to December 2015: E175,466) in respect of her interest in the
ordinary share capital of the Group.
On acquisition of bwin.party, Norbert Teufelberger became a director of the Group and at this date, he had a loan balance
due to the Group of E3.1 million, including accrued interest. This liability was settled in full in the period.
The Group purchased certain customer services of E0.5 million (2015: Enil) from an associate, with amounts owed at 31 March
2016 of E0.5 million (2015: nil).
The Group purchased certain rights to broadcast licensed media of E1.3 million (2015: Enil) from Conspo, a joint venture,
with no amounts outstanding at 31 March 2016 (2015: Enil). 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 E0.1 million (2015: Enil).
27.3 Transactions with Directors and Key Management Personnel
Details of the remuneration of key management are detailed below:
Period ended Period ended
31 March 31 March
2016 2015
(Unaudited)
Em Em
Short term employee benefits (Directors) 5.8 0.9
Short term employee benefits (Key Management) 1.7 1.4
Termination benefits - -
Share based payments 24.1 -
31.6 2.3
28. GROUP STRUCTURE
The Non-Controlling interest comprises a 10% holding in bwin.party entertainment (NJ) LLC, a company incorporated in the
United States. The loss attributable to the Non-controlling interest in the period was E0.1 million (31 March 2015: nil).
All other subsidiaries are 100% owned by the Group. The significant subsidiaries are shown below
Ownership interest
31 March 31 December
Subsidiary Country of incorporation 2016 2015
bwin.party digital entertainment Limited Gibraltar 100% -
GVC Services B.V.* Netherlands Antilles 100% 100%
Intera N.V. Netherlands Antilles 100% 100%
Bluebell B.V. (previously GVC Sports B.V.) Netherlands Antilles 100% 100%
GVC Administration Services Limited England and Wales 100% 100%
Sportingbet Limited England and Wales 100% 100%
Sportingbet (Management Services) Limited England and Wales 100% 100%
Sportingbet (IT Services) Limited England and Wales 100% 100%
Sportingbet (Product Services) Limited England and Wales 100% 100%
Sporting Odds Limited England and Wales 100% 100%
Interactive Sports (C.I.) Limited Alderney 100% 100%
Longfrie Limited Guernsey 100% 100%
Gaming VC Corporation Limited Malta 100% 100%
Martingale Malta 2 Limited Malta 100% 100%
Headlong Limited Malta 100% 100%
*also has a branch registered in Israel
29. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
29.1 East Pioneer Corporation Guarantee
On 21 November 2011 the Group entered into a service agreement and guarantee relating to the acquisition by East Pioneer
Corporation B.V. ('EPC') from Sportingbet PLC of Superbahis, a Turkish language website. The maximum contingent liability
under this agreement at inception was E171 million. The Directors consider this has a fair value of Enil (31 December 2015:
Enil).
The Group continues to provide back office and support services to EPC. Following the acquisition of Sportingbet PLC on 19
March 2013 the Group now receives all payments of amounts from EPC under the Business Purchase Agreement and other
Transaction Documents and does not now offer any guarantee of payments to legal entities outside of the Group.
29.2 Capital commitments
The Group has capital commitments contracted but not provided for at 31 March 2016 of E1.2 million (31 December 2015:
Enil).
30. ACCOUNTING ESTIMATES AND JUDGEMENTS
The Directors discuss the development, selection and disclosure of the Group's critical accounting policies and estimates
and the application of these policies and estimates.
In the application of the accounting policies, which are detailed in this note, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the period of the revision and future periods if the revision
affects both current and future periods. The estimates and assumptions, which have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
30.1 Intangible assets
For all acquisitions management has recognised separately identifiable intangible assets on the Statement of Financial
Position. These intangible assets have been valued based on expected future cash flow projections from existing customers.
The calculations of the value and estimated future economic life of the assets involve, by the nature of the assets,
significant judgement.
30.2 Impairment of Goodwill and Trademarks
Determining whether goodwill and trademarks with an indefinite useful life are impaired requires an estimation of the
value-in-use of the cash-generating units. The value-in-use calculation requires the entity to estimate the future cash
flows expected to arise from the cash-generating unit and select a suitable discount rate in order to calculate present
value. Note 9.2 provides information on the assumptions used in this consolidated historical financial information.
The work to assess the existence of impairment indicators and, where applicable, to evaluate the impairment of goodwill and
intangible assets was conducted internally by management.
30.3 Available for sale 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. 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.
Management apply judgement in evaluating the fair value of the available for sale assets, and any impairment to the value
which is recognised in the income statement.
The Group holds a 50% investment in bwin e.k., a company incorporated in Germany, but do not exercise control over the
entity. Accordingly, management have determined it should be recognised as an investment in an associate.
30.4 Receivables
Management apply judgement in evaluating the recoverability of receivables including balances with payment processors. To
the extent that the Board believes receivables not to be recovered they have been provided for in this consolidated
historical financial information.
30.5 Winunited
In 2015 GVC contracted with Winunited Limited for the day-to-day back office operations of the Winunited business. The
Group are responsible for setting the odds and running the games, using internal expertise and based on the GVC platform.
In addition, GVC take on proportionately more of the credit risk than Winunited. In management's opinion, the Group is
acting as principal as it has exposure to the significant risks and rewards of the business and consequently recognise the
full transactions within revenue.
Under the terms of the contract, the Group has a call option to purchase the Winunited assets. This has been valued based
on a discounted cash flow and a multiples based calculation. Management have exercised judgement in forecasting the future
cash flows of the business and the appropriate discount rates in arriving at the valuation.
The Group does not have any current shareholding in Winunited Limited and does not exercise managerial control over the
business. Management have applied judgement in determining that the Group does not control Winunited and therefore does
therefore not treat it as a subsidiary or an associate.
30.6 Open Bets
The Directors review the scale and magnitude of open bets frequently, and in particular at the reporting date. Management
exercise judgement in assessing the fair value of the open bets position based on the actual or expected outcome of such
events.
30.7 Progressive Jackpots
Some Casino games offer a progressive jackpot, in which the level of the jackpot on offer increases as players participate
in the game. Where there is a legal or regulatory obligation to fund these progressive jackpots, no management judgement is
required. In other cases, management review the game rules and history of payouts and form a judgement on whether a
constructive obligation exists; if so, a provision is recorded. In 2015, Management determined that no provision was
required. Following the acquisition of bwin.party, management have reviewed the history and past practice of the enlarged
Group and determined that a provision is required. As some of the provision relates to jackpots that were on offer at 31
December 2015, the recognition of the E7.6 million cost associated with that element of the liability has been recorded as
an exceptional item.
30.8 Betit call/put option
On 14 May 2014, the Group acquired a 15% stake in Betit Holdings Limited ('BHL') from Betit Securities Limited ('BSL').
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 London 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 which at our
current multiple levels would lead to the transaction being accretive for shareholders.
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 fail to raise the required financing, BSL may acquire the Group's shares in
BHL for nominal consideration.
These options have been valued based on expected future cash flow projections and using a Monte Carlo valuation model. In
addition there were two commercial factors relating to regulatory and financing matters which were not initially factored
into this valuation model. The calculations of the options values and the estimated future economic life of the assets
involve, by the nature of the assets, significant judgement. The Group has applied a discount based on the probability of
the put option being fulfilled based on these commercial factors, of 15%, which requires significant judgement on behalf of
management.
30.9 Share Options
Accounting for share option charges requires a degree of judgement over such matters as dividend yield, and expected
volatility. Further details on the assumptions made by management are disclosed in note 25.
30.10 Embedded derivatives
The drawn-down Cerberus loan contains embedded derivatives. The interest rate on the loan is EURIBOR, subject to a floor of
1%, plus a margin of 11.5%. Based on recent guidance issued by IFRIC, management assess this floor to be closely related to
the host contract and therefore it has not been treated as an embedded derivative.
In addition, the loan may be repaid early but if it is repaid in the first year, there is an additional 'make-whole'
premium payable. If it is repaid before the expiry date, the payment of the exit fees is brought forward but additional
fees at the 12 month and 18 month date could be avoided. These options for early repayment are considered to be non-closely
related to the host contract and have been recognised separately. The options have been grouped for the purposes of
evaluating the embedded derivative. They have been valued based on the projected cash flows and applying a probability
weighting to the potential cash saving from lower effective interest rates.
30.11 Acquisition of bwin.party
The GVC Group has been identified as the acquirer of bwin.party as it is the entity financing the acquisition through
equity interests and debt, paying a premium for the assets of bwin.party. In the combined entity, the Board is made up
primarily of GVC management, with one director of bwin.party joining as a non-executive director, together with two other
external appointments. On acquisition and post-acquisition, bwin.party does not have the ability to control the combined
entity.
30.12 Assets/liabilities held for sale
Assets and liabilities held for sale are measured at the lower of carrying value and fair value less associated costs of
sale. Management apply judgement in determining when assets meet the criteria to be recognised as held for sale and in
evaluating the fair value less costs to sell.
30.13 Provisions
The recognition of provisions requires management to apply judgement in determining the likelihood of the outcome of legal
proceedings.
31. GOING CONCERN
Note 26 sets out the Group's financial risk management policies, and its exposure to credit risk and liquidity risk.
Subsequent to the reporting date, an extension to the Cerberus loan facility was agreed on similar terms to the current
arrangement. The loan is now due to be repaid by April 2018.
The Directors have assessed the financial risks facing the business, and compared this risk assessment to the net current
assets position and dividend policy. The Directors have also reviewed relationships with key suppliers and software
providers and are satisfied that the appropriate contracts and contingency plans are in place. The Directors have prepared
income statement and cash flow forecasts to assess whether the Group has adequate resources for the foreseeable future.
The Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the going concern basis in preparing this consolidated historical financial
information.
32. BUSINESS COMBINATIONS
32.1 Acquisition of bwin.party
It is part of the core strategy for the Group to improve the quality and mix of the Group's earnings through acquisitions,
especially where these increase the number of markets in which the Group trades and where there are opportunities for high
levels of cash generation through synergies. On 1 February 2016, the Group acquired 100% of the share capital of bwin.party
digital entertainment plc ("bwin.party"), an online gaming company listed on the London Stock Exchange, for total
consideration of E1,504.1 million as set out in the table below. The acquisition resulted in GVC obtaining control of
bwin.party from 1 February 2016, and this has been accounted for as a business combination in the period ending 31 March
2016.
The Group issued a prospectus on 13 November 2015 setting out the terms of the bid, which included an offer of 25p plus
0.231 new GVC shares for each bwin.party share. At the date of the acquisition, there were 843m bwin.party shares and 14m
of share options and the closing price for GVC Holdings PLC shares at the end of trading on the previous day was £4.67. The
total fair value of the consideration paid was E1,504.1 million as set out below:
No of shares Value Exchange Value
m £m rate Em
Total bwin.party shareholding 843.5
GVC shares issued (0.231 per
bwin.party share, at a price of £4.67) 194.8 909.9 1.3205 1,201.5
Cash payment (£0.25 per bwin.party
share) 210.9 1.3205 278.5
Cash settled options 18.2 1.3205 24.1
Total consideration 1,139.0 1,504.1
The fair value of the assets and liabilities recognised at the date of acquisition is set out in the table below:
Provisional
fair value
Em
Assets
Intangible assets 608.0
Property, plant and equipment 44.5
Trade and other receivables 108.2
Investments and available for sale assets 4.5
Deferred tax 1.9
Assets held for sale 12.3
Short term investments 15.6
Cash 116.2
Total assets 911.2
Liabilities
Trade and other payables (94.6)
Client liabilities and progressive prize pools (118.0)
Loans (39.4)
Taxation including gaming tax (31.9)
Deferred tax (81.4)
Total liabilities (365.3)
Non-controlling interest 1.2
Net assets 547.1
Fair value of consideration paid 1,504.1
Goodwill recognised 957.0
Business combination costs (note 3.1) 53.9
The fair value of Trade and other receivables is E108.2 million and includes trade receivables and balances with payment
processors with a fair value of E78.7 million. The gross contractual amount for trade receivables and payment processor
balances due is E80.2 million, of which E1.5 million is expected to be irrecoverable.
The figures presented above are provisional due to the timing of the transaction.
The goodwill consists of assembled workforce, future growth and business reputation.
All contingent liabilities have been provided for at fair value at acquisition date and subsequently measured at the higher
of the amount that would be recognised in accordance with IAS 37, and the amount initially recognised.
The loan was settled post acquisition.
The total cost recognised in the income statement for the period ending 31 March 2016 was E53.9 million, being the business
combination costs incurred and treated as an exceptional cost.
In 2015, bwin.party reported revenue of E576.4 million and loss before tax of E40.2 million. If the acquisition had
occurred at the beginning of the period, the revenue of the combined entity in the three months to 31 March 2016 would have
been E210.7 million and the loss after tax would have been E86.1 million.
Following the acquisition, GVC expects to generate significant synergistic savings through integration and restructuring of
operations. Plans include:
• The migration of GVC's Sportsbook onto bwin.party's technology platform, after which the GVC platform will cease
operating
• The termination of all sponsorship programmes
• Restructuring bwin.party's casino and poker operations including integrating GVC's poker operation onto the
bwin.party platform
• Operational efficiencies in customer services, IT and marketing functions
• Integration of some back office functions which may lead to headcount reductions
All plans are subject to consultation with employee representative bodies and other stakeholders.
Bwin.Party contributed E103.3 million revenue and E0.4 million profit to the Group's result for the period between the date
of acquisition and the balance sheet date.
SECTION C
PART I: ACCOUNTANT'S REPORT ON THE HISTORICAL FINANCIAL INFORMATION FOR BWIN FOR THE THREE MONTHS ENDED 31 MARCH 2016
The Directors
GVC Holdings plc
32 Athol Street
Douglas
Isle of Man
IM1 1JB
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
1 July 2016
Dear Sirs
GVC Holdings plc (the "Company")
bwin.party digital entertainment Limited ("bwin")
Introduction
We report on the historical financial information on bwin set out in Part II of Section C the Company's announcement dated
1 July 2016 of the proposed transfer of the listing category of all of the Company's ordinary shares from a standard
listing to a premium listing (the "Announcement"). This financial information has been prepared for inclusion in the
Announcement on the basis of the accounting policies set out in note 1 to the financial information.
This report is required by item 6.1.3R(d) of the listing rules made by the Financial Conduct Authority for the purposes of
part VI of the Financial Services and Markets Act 2000 and is given for the purpose of complying with that item and for no
other purpose. We have not audited or reviewed the financial information for the three months ended 31 March 2015 which has
been included for comparative purposes only and accordingly do not express an opinion thereon.
Responsibilities
The directors of the Company are responsible for preparing the financial information in accordance with International
Financial Reporting Standards as adopted by the European Union.
It is our responsibility to form an opinion on the historical financial information and to report our opinion to you.
Save for any responsibility which we may have to those persons to whom this report is expressly addressed and which we may
have to shareholders of the Company as a result of the inclusion of this report in the Announcement, to the fullest extent
permitted by the law we do not assume any responsibility and will not accept any liability to any other person for any loss
suffered by any such other person as a result of, arising out of, or in connection with this report or our statement
consenting to its inclusion in the Announcement.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in the
United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial
information. It also included an assessment of significant estimates and judgements made by those responsible for the
preparation of the financial information and whether the accounting policies are appropriate to the entity's circumstances,
consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from
material misstatement whether caused by fraud or other irregularity or error.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in the
United States of America or other jurisdictions outside the United Kingdom and accordingly should not be relied upon as if
it had been carried out in accordance with those standards and practices.
Opinion
In our opinion, the historical financial information gives, for the purposes of the Announcement, a true and fair view of
the state of affairs of bwin as at 31 March 2016 and of its results, cash flows, and changes in equity for the three months
ended 31 March 2016 in accordance with International Financial Reporting Standards as adopted by the European Union.
Yours faithfully
BDO LLP
Chartered Accountants
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
PART II: THE HISTORICAL FINANCIAL INFORMATION FOR BWIN FOR THE THREE MONTHS ENDED 31 MARCH 2016
Consolidated statement of comprehensive income
2015
2016 (Unaudited)
For the 3 months ended 31 March Notes Emillion Emillion
Net revenue 143.6 135.5
Other revenue 9.6 19.8
Total revenue 2 153.2 155.3
Cost of sales (22.9) (26.9)
Gross profit 130.3 128.4
Other operating income 3 3.4 1.9
Other operating expense 4 (1.1) (0.4)
Administrative expenses (74.1) (72.3)
Distribution expenses (51.1) (47.6)
Clean EBITDA 37.0 31.1
Exchange gains 3.1 1.8
Premium listing application costs 4 (0.6) -
Amortisation 10 (10.3) (11.2)
Depreciation 11 (5.7) (7.9)
Impairment losses 11,13,14 (2.7) -
Provisions against receivables 5 (7.0) -
Adjustment to investment following dividend 14 (1.4) -
Share-based payments and associated payroll taxes 29 (1.9) (3.0)
Reorganisation costs 5 (3.1) (0.8)
Profit from operating activities 5 7.4 10.0
Finance income 7 0.1 0.4
Finance expense 7 (0.5) (1.7)
Dividends received 14 3.1 -
Share of profit (loss) of associates and joint ventures 14 0.1 (0.3)
Profit before tax 10.2 8.4
Tax expense 8 (2.7) (1.1)
Profit for the period 7.5 7.3
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 (8.7) 11.0
Change in fair value of available-for-sale investments (3.5) (0.6)
Total comprehensive (expense) income for the period (4.7) 17.7
Profit for the period attributable to:
Equity holders of the parent 7.6 7.6
Non-controlling interests 31 (0.1) (0.3)
7.5 7.3
Total comprehensive (expense) income for the period attributable to:
Equity holders of the parent (4.6) 18.0
Non-controlling interests 31 (0.1) (0.3)
(4.7) 17.7
Earnings per share attributable to the ordinary equity holders of the parent:
Earnings per share (E cents)
Basic 9 0.9 0.9
Diluted 9 0.9 0.9
Consolidated statement of financial position
As at As at
31 March 31 December
2016 2015
Notes Emillion Emillion
Non-current assets
Intangible assets 10 477.5 512.3
Property, plant and equipment 11 38.3 48.6
Investments 14 1.4 4.8
Other receivables 15 6.5 6.4
Deferred tax 22 0.6 2.0
524.3 574.1
Current assets
Non-current assets held for sale 13 68.2 14.5
Trade and other receivables 15 72.6 100.3
Short-term investments 16 4.5 16.1
Cash and cash equivalents 17 140.8 150.3
286.1 281.2
Total assets 810.4 855.3
Current liabilities
Trade and other payables 18 (101.0) (111.0)
Income and gaming taxes payable (38.9) (34.7)
Client liabilities and progressive prize pools 19 (100.4) (114.9)
Provisions 20 (5.4) (8.1)
Loans and borrowings 21 - (6.8)
Liabilities held for sale 13 (24.6) -
(270.3) (275.5)
Non-current liabilities
Trade and other payables 18 (4.3) (4.4)
Loans and borrowings 21 - (49.7)
Deferred tax 22 (21.3) (26.1)
(25.6) (80.2)
Total liabilities (295.9) (355.7)
Total net assets 514.5 499.6
Equity
Share capital 25 0.2 0.2
Share premium account 3.5 3.3
Own shares 25 - (2.3)
Capital contribution reserve 42.4 24.1
Capital redemption reserve 0.0 0.0
Available-for-sale reserve 6.7 10.2
Retained earnings 1,046.7 1,040.3
Other reserve (573.7) (573.7)
Currency reserve (9.9) (1.2)
Equity attributable to equity holders of the parent 515.9 500.9
Non-controlling interests 31 (1.4) (1.3)
Total equity 514.5 499.6
Total
compre-
hensive
As at Other income Share- As at
1 January Reserves issue of Dividends Purchase for the based 31 March
For the 3 months ended 2015 transfer* shares* paid* of shares* period* payments* 2015*
31 March 2015 Emillion Emillion Emillion Emillion Emillion Emillion Emillion Emillion
Share capital 0.1 - 0.0 - (0.0) - - 0.1
Share premium account 3.0 - 0.0 - - - - 3.0
Own shares (2.1) - 0.0 - - - - (2.1)
Capital contribution reserve 24.1 - - - - - - 24.1
Capital redemption reserve 0.0 - - - - - - 0.0
Available-for-sale reserve 2.2 - - - - (0.6) - 1.6
Retained earnings 1,115.7 - (0.1) - - 7.6 3.0 1,126.2
Other reserve (573.7) - - - - - - (573.7)
Currency reserve 2.7 - - - - 11.0 - 13.7
Total attributable to equity
holders of parent 572.0 - (0.1) - (0.0) 18.0 3.0 592.9
Non-controlling interests (7.0) - - - - (0.3) - (7.3)
Total equity 565.0 - (0.1) - (0.0) 17.7 3.0 585.6
Total
compre-
hensive
As at Other income Share- As at 31
1 April Reserves issue of Dividends Purchase for the based December
For the 9 months ended 2015* transfers* shares* paid* of shares* period* 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 1.6 - - - - 8.6 - 10.2
Retained earnings 1,126.2 (6.5) (0.0) (43.2) - (51.2) 15.0 1,040.3
Other reserve (573.7) - - - - - - (573.7)
Currency reserve 13.7 - - - - (14.9) - (1.2)
Total attributable to equity
holders of parent 592.9 (6.5) 0.4 (43.2) (0.2) (57.5) 15.0 500.9
Non-controlling interests (7.3) 6.5 - - - (0.5) - (1.3)
Total equity 585.6 - 0.4 (43.2) (0.2) (58.0) 15.0 499.6
Total
Capital compre-
contri- hensive
As at Other bution income Share- As at
1 January Reserves issue of from Purchase for the based 31 March
For the 3 months ended 2016 transfers shares parent of shares period payments 2016
31 March 2016 Emillion Emillion Emillion Emillion Emillion Emillion Emillion Emillion
Share capital 0.2 - 0.0 - - - - 0.2
Share premium account 3.3 - 0.2 - - - - 3.5
Own shares (2.3) - 2.3 - - - - -
Capital contribution reserve 24.1 - - 18.3 - - - 42.4
Capital redemption reserve 0.0 - - - - - - 0.0
Available-for-sale reserve 10.2 - - - - (3.5) - 6.7
Retained earnings 1,040.3 - (2.3) - - 7.6 1.1 1,046.7
Other reserve (573.7) - - - - - - (573.7)
Currency reserve (1.2) - - - - (8.7) - (9.9)
Total attributable to equity
holders of parent 500.9 - 0.2 18.3 - (4.6) 1.1 515.9
Non-controlling interests (1.3) - - - - (0.1) - (1.4)
Total equity 499.6 - 0.2 18.3 - (4.7) 1.1 514.5
* Balance or periodic movements have not been audited by the Reporting Accountants.
Share premium is the amount subscribed for share capital in excess of nominal value.
Own shares represented shares in the parent company held by an Employee Benefit Trust for the benefit of the Group's
employees. These were all allocated in the period and therefore the closing balance at 31 March 2016 is Enil.
Capital contribution reserve is the amount arising from capital contributions provided by parent company together with
share-based payments made by parties associated with the original shareholders and cash previously held by the Employee
Trust which are non-refundable.
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 31).
Consolidated statement of cashflows
31 March 31 March
2016 2015
(Unaudited)
For the 3 months ended 31 March Emillion Emillion
Profit for the period 7.5 7.3
Adjustments for:
Depreciation of property, plant and equipment 5.7 7.9
Amortisation of intangibles 10.3 11.2
Impairment of property, plant and equipment 1.6 -
Impairment of available-for-sale investments 0.3 -
Adjustment to investment following dividend 1.4 -
Impairment of assets held for sale 0.8 -
Share of (profit) loss of associates and joint ventures (0.1) 0.3
Interest expense 0.5 1.7
Interest income (0.1) (0.4)
Dividend income (3.1) -
Increase in reserves due to share-based payments 1.1 3.0
Loss on sale of property, plant and equipment 0.1 -
Income tax expense 2.7 1.1
Operating cashflows before movements in working capital and provisions 28.7 32.1
Decrease (increase) in trade and other receivables 14.4 (12.9)
(Decrease) increase in trade and other payables (28.9) 5.5
Decrease in provisions (2.7) -
Cash generated from operations 11.5 24.7
Income taxes paid (1.2) (2.3)
Net cash inflow from operating activities 10.3 22.4
Investing activities
Purchases of intangible assets (3.5) (5.3)
Purchases of property, plant and equipment (6.1) (13.3)
Issue of loan to joint venture - (0.9)
Sale of available-for-sale investments - 4.4
Sale of intangibles - 0.2
Interest received 0.1 0.4
Dividends received 3.1 -
Decrease (increase) in short-term investments 5.1 (2.8)
Net cash used by investing activities (1.3) (17.3)
Financing activities
Issue of ordinary shares 0.2 -
Repayment of bank borrowings (54.5) -
Capital contribution from parent 18.3 -
Loan advanced from parent company 38.3 -
Interest paid (0.2) (0.7)
Net cash generated (used) by financing activities 2.1 (0.7)
Net (decrease) increase in cash and cash equivalents 11.1 4.4
Exchange differences (3.2) (1.5)
Cash and cash equivalents at beginning of the period 150.3 164.4
Cash and cash equivalents at end of the period 158.2 167.3
Cash and cash equivalents
Included within cash and cash equivalents is E17.4m (2015: Enil) held within assets held for sale. Cash and cash
equivalents balances also include E33.4m (2015: E44.9m) 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 financial information has been prepared in accordance with those International Financial Reporting Standards including
International Accounting Standards (IASs) and interpretations, (collectively 'IFRS'), published by the International
Accounting Standards Board ('IASB') which have been adopted by the European Commission and endorsed for use in the EU. It
does not constitute statutory financial statements within the meaning of the Gibraltar Companies Act 2014.
The Company was listed on the London Stock Exchange but, following its acquisition by GVC Holdings Plc on 1 February 2016,
the Company was re-registered as a private company. The financial information is presented in euros and rounded to the
nearest E0.1m which is the principal and presentational currency of the Group.
Comparatives
The financial information, shown as comparatives (and presented in accordance with the basis of preparation noted above) to
the consolidated statement of comprehensive income, the consolidated statement of changes in equity, consolidated statement
of cashflows and the respective related notes to the financial information, is extracted without material adjustment from
the unaudited management accounts of the Group for the 3 months ended 31 March 2015, and, in respect of the consolidated
statement of changes in equity only, the unaudited management accounts of the Group for the 9 months ended 31 December
2015. The financial information, shown as comparatives (and presented in accordance with the basis of preparation noted
above) in respect of the consolidated statement of financial position and related notes is extracted without material
adjustment from the published audited financial statements of the Group for the year ended 31 December 2015.
Adoption of new and revised Standards and Interpretations
There were no new Standards and Interpretations issued by the International Accounting Standards Board ('IASB') that were
effective for the first time in the current financial period and had an impact on the Group.
The following relevant standards and interpretations were issued by the IASB or the IFRIC before the period end but are as
yet not effective for the three month period ended 31 March 2016.
IFRS 9 Financial Instruments (effective date 1 January 2018)*
IFRS 15 Revenue Recognition (effective date 1 January 2018)*
IFRS 16 Leases (effective date 1 January 2019)*
* Not yet endorsed by the EU.
The Group is currently assessing the impact, if any, that these standards will have on the presentation of, and recognition
in its consolidated results in future periods.
Basis of accounting
The consolidated financial information has been prepared under the historical cost convention other than for the valuation
of certain financial instruments which are held at their fair value.
Critical accounting policies, estimates and judgements
The preparation of financial statements under IFRS requires the Group to make estimates and judgements that affect the
application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on
historical experience and other factors including expectations of future events that are believed to be reasonable under
the circumstances. Actual results may differ from these estimates.
Included in this note are accounting policies which cover areas that the Directors consider require estimates, judgements
and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year. These policies, together with references to the related notes to the financial
statements, can be found as follows:
Revenue recognition note 1
Intangible assets and impairment of goodwill note 10
Regulatory compliance, litigation, provisions and contingent liabilities note 24
Tax including deferred tax note 8 and 22
Basis of consolidation
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Accounting for the Company's acquisition of the controlling interest in bwin.party holdings Limited
The Company's controlling interest in its directly held, wholly-owned subsidiary, bwin.party Holdings Limited was acquired
through a transaction under common control, using a form of accounting that is similar to pooling of interests.
Accounting for subsidiaries
A subsidiary is an entity controlled directly or indirectly by the Company. The Company controls an investee if all three
of the following elements are present: power over the investee, exposure to variable returns from the investee, and the
ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and
circumstances indicate that there may be a change in any of these elements of control.
On the date of acquisition the assets and liabilities of the relevant subsidiaries are measured at their fair values. The
non-controlling interest is stated at the non-controlling interest's proportion of the fair values of the assets and
liabilities recognised.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of
comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
with those used by the Group
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those interests at the date of the original business
combination and the non-controlling shareholder's share of changes in equity since the date of the combination except where
any non-controlling interests have been acquired by the Group. At this point any share of gains or losses are transferred
to the Group's retained earnings. Total comprehensive income is attributed to non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in the
income statement as incurred. The acquiree's identifiable assets and liabilities are recognised at their fair values at the
acquisition date.
The interest of the non-controlling shareholders in the acquiree may initially be measured either at fair value or at the
non-controlling shareholders' proportion of the net fair value of the identifiable assets acquired, liabilities and
contingent liabilities assumed. The choice of measurement basis is made on an acquisition-by-acquisition basis.
Investments
Investments include investments in associates, joint ventures and available for sale investments.
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 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
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.
Investments in joint ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is
subject to joint control;
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