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Empire Resorts Inc.Gaming VC Holdings SA Results for the year ending 31 December 2007 2 3 6 8 8 9 10 11 11 17 18 18 18 19 20 21 21 22 23 24 26 26 28 28 28 28 29 30 GAMING VC Holdings SA (Incorporated in the Grand Duchy of Luxembourg, Registered Number RC Luxembourg B 104348) CONTENTS CHAIRMAN’S STATEMENT CHIEF EXECUTIVE STATEMENT INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF GAMING VC HOLDINGS SA CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENT OF CASHFLOWS NOTES TO THE CONSOLIDATED ACCOUNTS Signi¢cant accounting policies 1 2 Segment reporting Personnel expenses 3 Net ¢nancing costs Income tax expense 4 5 6 7 Property, plant and equipment Intangible assets Trade and other receivables 8 Cash and cash equivalents 9 Capital and reserves 10 11 12 13 14 Earnings per share Employee bene¢ts Trade and other payables Financial Instruments Related parties 15 Group entities 16 Accounting estimates and judgments 17 Subsequent events DIRECTORS ADVISERS 1 CHAIRMAN’S STATEMENT I am pleased to present the 2007 full year results for Gaming VC which demonstrate strong growth and are in line with expectations. Over the last year, the Group has successfully implemented the important strategic and operational objectives as set out in Gaming VC’s 2006 results by the then newly appointed Chief Executive, Kenneth Alexander, including : . . . . Reducing the risk from potential German legislative issues; Improving the pro¢tability of the German business; Diversifying into other territories and into other products and Strengthening the level of expertise within the business. The outcome of carefully following these strategies is record pro¢tability for the Group. The ¢nancial results for the year ended 31 December 2007 show an operating pro¢t before exceptional items and share option charges of C17.3 million (2006 : C13.5 million), an increase of 28 per cent. I believe that the current dividend policy remains appropriate for the Group. The core business is cash generative and not capital intensive, and we will continue to return excess cash £ow to shareholders as appropriate. The Board is recommending a ¢nal dividend of C0.20 (c. »0.16) giving a total distribution of C0.40 (c. »0.29) for the current ¢nancial year (2006 : C0.384 and 0.26). This ¢nal dividend will be paid on 30 May 2008 to all shareholders of record at the close of business on 9 May 2008. To reduce risk from potential legislative issues in Europe the majority of our business including all of our German Operations now operates under our Maltese licence. We look forward to a resolution of the regulatory debate within the EU. We are pleased with the results for the ¢rst quarter of 2008 and are con¢dent that we will continue to build on the strong momentum created in 2007. Adrian J. R. Smith Chairman 22 April 2008 2 CHIEF EXECUTIVE’S STATEMENT The successful implementation of our strategy has produced record results for the 2007 ¢nancial year. The Group has taken a number of steps to improve the pro¢tability of its core German business including tighter control of overheads and expenditure. The distribution of all direct mail to recruit customers was stopped in May 2007, and marketing efforts were concentrated on af¢liate marketing and search engine optimisation with customer recruitment remaining at historic levels. In June 2007, the Group renegotiated its casino/poker operating contract with Boss Media on more favourable commercial terms. In order to remain competitive, Gaming VC believes it is important to utilise other software providers. New brands utilising £ash casino and live dealer casino products will be launched during 2008 and a new poker brand www.pokerkings.com was launched in December 2007. In September 2007, Gaming VC launched a sportsbook licenced in Malta (www.betaland.com) and in the ¢rst quarter of 2008, has secured an additional Italian sportsbook licence (www.betpro.it). The Maltese sportsbook launch has exceeded our expectations and represents a signi¢cant step for Gaming VC in developing business outside of Germany. The new business has continued to grow during 2008 and Italy will continue to be a key strategic market for the Group in the ¢nancial year ahead. Further sportsbook sites will be launched under the ‘Betaland’ brand in 2008 to assist with diversi¢cation. To further extend the Group’s product range, Gaming VC launched a bingo site, www.winzingo.es, in the ¢rst quarter of 2008, using the proven software from Parlay. This site will initially be focused on the Spanish female market and rolled out across other European territories in due course. Consistent with the change in marketing strategy, the Group replaced direct marketers with experienced executives from the online gaming industry including af¢liate marketing. In addition, an experienced Customer Relationship Management (CRM) teams allow us to concentrate on the retention of existing casino customers. The CRM expertise that was recruited in 2007 together with further recruits will be employed to set up a new CRM centre during the second quarter of 2008 to handle all aspects of customer service, currently provided by Boss Media. By bringing all areas of customer contact in-house Gaming VC will have complete control over all areas of the customer interface. This should signi¢cantly enhance retention and maximise the lifetime value of customers. Group Financial Performance All C’000 Casino Poker Sports Betting Total Net Revenue Gross Pro¢t 2007 38,164 3,420 1,123 42,707 2006 38,365 2,208 ^ 40,573 2007 28,685 2,409 1,075 32,169 2006 28,377 1,038 ^ 29,415 In 2007, the total gross wagers placed were C1.8 billion (2006: C1.6 billion) and net revenues were C42.7 million (2006 : C40.6 million). A signi¢cant proportion of the revenue growth is attributable to the commencement of sports betting during the year, which accounted for C1.1 million of the increase. The gross pro¢t for the ¢nancial year ended 31 December 2007 was C32.2 million (2006: C29.4 million). C1.1 million of the increased gross pro¢t was generated from the sportsbook activity started in 2007. Casino operating activities in 2007 remained at a similar level and margin to 2006 and poker net revenues increased by 55% year-on-year. In both 2007 and the prior year less than 1% of the gross margin was earned from customers residing outside the European Union and Gaming VC have never transacted any wagering activity by customers in the US. 3 In the 2007 ¢nancial year there were no signi¢cant one-off jackpot winners on the Group’s slot machine games with associated ‘‘progressive’’ jackpots. The total of the available jackpots at the end of December 2007 was C3.2 million (2006 : C2.2million) with the largest available individual jackpot being C1.6 million (2006 : C1.3 million). The Group operating pro¢t before exceptional items and share option charges for the ¢nancial year ended 31 December 2007 increased by 28% to C17.3 million (2006: C13.5 million) after the deduction of distribution and administrative expenses. The Group incurred no exceptional charges in the year (2006 : C41.5 million) and generated an operating pro¢t before ¢nancing of C16.5 million (2006 : loss of C28.9 million). Distribution costs of C5.8 million (2006 : C7.1 million) re£ect the savings generated due to the change in customer recruitment from direct mail to af¢liate marketing which have been partly offset by the additional costs of C1.0 million for the 2007 sportsbook launch. The major items within the administrative expenses incurred (excluding amortisation) during the ¢nancial year are detailed below : Employment costs Travel Legal, accounting and tax All other costs Total administrative expenses 2007 g’000 2,886 548 2,432 990 6,856 2006 C’000 3,434 886 1,682 775 6,777 Employment costs are analysed in note 2 to the ¢nancial results. Within the legal, accounting and tax costs for 2007 are expenses related to the acquisition of the Maltese operating licences in the year. The amortisation of intangible assets is detailed in note 6 to the ¢nancial results. This is a non-cash charge primarily to re£ect the reduction in economic value over the useful lives of these assets. Net ¢nancing income for the ¢nancial year of C0.1 million (2006 : net ¢nancing income C0.1 million) are analysed in note 3 to the ¢nancial results. The majority of Group revenues are in Euros, as are the majority of both the cost of distribution and administration. Due to the increased levels of business in both Malta and Italy projected in 2008 compared to 2007, it is estimated that Gaming VC will increase its tax charge from a current base level of 2% of operating pro¢ts to closer to 5% in 2008. The ¢nal charge will depend on both the markets where growth is achieved and future developments on taxation in the domiciles Gaming VC operates in. In the reporting period the Group generated C19 million (2006 : C17.9 million) of cash £ows from operating activities. After payment of the dividends totalling C12.2 million during the year, the Group’s closing cash balance as at 31 December 2007 was C15.9 million (2006 : C9.4 million). Capital expenditure in the ¢nancial year across the Group was C0.6 million (2006 : C0.3 million) which primarily re£ects new equipment and software related to the setting up of the Maltese operations. A similar level of capital expenditure is envisaged in 2008 relating to the acquisition of the Italian licence and the establishment of an in-house customer service centre. Dividends The Board is recommending a ¢nal dividend of C0.20 (c. »0.16) giving a total distribution of C0.40 (c. »0.29) for the current ¢nancial year (2006 : C0.384 and 0.26). This ¢nal dividend will be paid on 30 May 2008 to all shareholders of record at the close of business on 9 May 2008. Outlook During the ¢rst three months of the 2008 ¢nancial year trading has been slightly ahead of expectations due to both resilience in the German casino business and better than expected Sportbook performance. The total revenues are 12% ahead of the same period in the previous year and 6% more funded accounts have been recruited. Compared to the fourth quarter of 2007 revenue is 23% higher and there have been 3% more funded accounts recruited. 4 We will continue to focus on maintaining German casino volumes with the reduced cost base and aggressively growing revenue outside Germany through new initiatives including the Italian operation, bingo and through af¢liate marketing. We move into 2008 with an experienced team now in place and a clear strategic direction that will continue the transformation of the business from a German casino supported by direct mail into a signi¢cant European gaming business using ef¢cient online marketing for recruitment and industry leading CRM. Kenneth Alexander Chief Executive 22 April 2008 5 6 7 Consolidated income statement For the year ended 31 December 2007 In thousands of euro Revenue Cost of Sales Gross pro¢t Net operating expenses (including exceptional items and share option charges) Operating pro¢t before exceptional items and share option charge Share option charge Exceptional items Operating pro¢t/loss before ¢nancing EBITDA Depreciation Amortisation Financial income Financial expense Net ¢nancing income Pro¢t/(Loss) before Tax Income tax income Pro¢t/(Loss) for the year Pro¢t/(Loss) per ordinary share Basic earnings per share (euro) Diluted earnings per share (euro) Year ended 31 December 2007 Year ended 31 December 2006 Before goodwill impairment Goodwill impairment Total 42,707 (10,538) 40,573 (11,158) 32,169 29,415 ^ ^ ^ 40,573 (11,158) 29,415 (15,665) (25,075) (33,274) (58,349) 17,319 13,505 ^ 13,505 (815) ^ (893) (8,272) ^ (33,274) (893) (41,546) 16,504 19,480 (57) (2,919) 459 (332) 127 16,631 11 16,642 4,340 15,536 (35) (11,161) 163 (68) 95 4,435 ^ 4,435 (33,274) ^ ^ (33,274) ^ ^ (28,934) 15,536 (35) (44,435) 163 (68) ^ 95 (33,274) ^ (28,839) ^ (33,274) (28,839) Note 1 6 3 3 4 10 10 0.534 0.534 (0.93) (0.93) Consolidated statement of recognised income and expense For the year ended 31 December 2007 In thousands of euro Year ended 31 December 2007 Year ended 31 December 2006 Pro¢t/(Loss) and total recognised income and expense for the year 16,642 (28,839) 8 Consolidated balance sheet As at 31 December 2007 In thousands of euro Assets Property, plant and equipment Intangible assets Deferred tax asset Total non-current assets Trade receivables Other receivables and prepayments Cash and cash equivalents Total current assets Total assets Equity Issued share capital Share premium Retained earnings Total equity attributable to equity holders of the parent Liabilities Income tax payable Trade and other payables Accrued expenses Withholding tax on dividends Total current liabilities Total liabilities Total equity and liabilities Note 31 December 2007 31 December 2006 5 6 4 7 7 8 9 9 9 12 12 12 521 55,724 11 56,256 3,021 1,274 15,859 20,154 76,410 56 58,548 ^ 58,604 1,892 417 9,407 11,716 70,320 38,608 51,977 (18,623) 71,962 38,608 57,926 (29,853) 66,681 18 1,538 2,892 ^ 4,448 4,448 18 1,317 1,101 1,203 3,639 3,639 76,410 70,320 9 Consolidated statement of cash£ows For the year ended 31 December 2007 In thousands of euro Cash £ows from operating activities Cash receipts from customers Cash paid to suppliers and employees Net cash from operating activities Cash £ows from investing activities Interest received Disposal of equipment Acquisition of property, plant and equipment Acquisition of intellectual property Net cash from investing activities Cash £ows from ¢nancing activities Dividend paid Net cash from ¢nancing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate £uctuations on cash held Cash and cash equivalents at end of the year Year ended 31 December 2007 Year ended 31 December 2006 Note 41,578 (22,545) 19,033 40,833 (22,934) 17,899 459 40 (562) (95) (158) 154 ^ (45) (231) (122) (12,176) (12,176) (15,612) (15,612) 6,699 9,407 (247) 15,859 2,165 7,233 9 9,407 5 6 3 10 Notes to the consolidated ¢nancial statements Signi¢cant accounting policies Gaming VC Holdings S.A. (the ‘‘Company’’) is a company registered in Luxembourg that was incorporated on 30 November 2004. The consolidated ¢nancial statements of the Company for the year ended 31 December 2007 comprise the Company and its subsidiaries (together referred to as the ‘‘Group’’). The ¢nancial statements were authorised for issue by the directors on 22 April 2007. (a) Statement of compliance The consolidated ¢nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and its interpretations adopted by the International Accounting Standards Board (IASB) as adopted by the European Union. (b) Basis of preparation The ¢nancial statements are presented in euro, rounded to the nearest thousand. They are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative ¢nancial instruments held for trading or classi¢ed as available for sale. instruments, ¢nancial The preparation of ¢nancial statements in conformity with IFRSs requires directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on various factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. 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 accounting policies set out below have been applied consistently to all periods presented in these consolidated ¢nancial statements. The accounting policies have been applied consistently by Group entities. (c) Basis of consolidation Subsidiaries (i) Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the ¢nancial and operating policies of an entity so as to obtain bene¢ts from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The ¢nancial statements of subsidiaries are included in the consolidated ¢nancial statements from the date that control commences until the date that control ceases. Transactions eliminated on consolidation (ii) Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated ¢nancial statements. (iii) Business combinations All business combinations are accounted for by applying the purchase method. The cost of a business combination is measured as the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity instruments issued by the Group, plus any costs directly liabilities and contingent liabilities of the attributable to the combination. The identi¢able assets, acquiree are measured initially at fair value at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of the business combination over the Group’s interest in the net fair value of the identi¢able assets, liabilities and contingent liabilities is recognised as goodwill. 11 Foreign currency transactions (d) Foreign currency (i) Transactions in foreign currencies are translated to euro at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the consolidated income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Financial statements of foreign operations (ii) The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to euro at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to euro at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity. (e) Property, plant and equipment (i) Owned assets Property, plant and equipment are stated at cost, less accumulated depreciation (see below) and impairment losses (see accounting policy g). Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. (ii) Depreciation Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows: . . . buildings plant and equipment ¢xtures and ¢ttings 40 years 3-12 years 5-10 years The residual value, if not insigni¢cant, is reassessed annually. Intangible assets Goodwill (f) (i) Acquired goodwill represents the excess of the cost of a business combination over the Group’s interest in the fair value of the identi¢able assets, liabilities and contingent liabilities of the acquiree at the date of acquisition. Goodwill is tested at least annually for impairment and carried at cost less accumulated impairment losses. At the date of acquisition, goodwill is allocated to cash generating units for the purpose of impairment testing. Negative goodwill arising on an acquisition is recognised directly in pro¢t or loss. (ii) Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy g). The cost of intangible assets acquired in a business combination is the fair value at acquisition date. The valuation methodology used for each type of identi¢able asset category is detailed below : . . . . . Magazine-related Consulting Software licence Trademarks Goodwill Cost Income (cost saving) Income (incremental value plus loss of pro¢ts) Relief from royalty Residual balance Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred. Subsequent expenditure (iii) Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic bene¢ts embodied in the speci¢c asset to which it relates. All other expenditure is expensed as incurred. 12 (iv) Amortisation Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are inde¢nite. Goodwill and intangible assets with an inde¢nite useful life are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows: . . . consulting agreements capitalised development costs software licence agreements 3-5 years 2-4 years 5-15 years Impairment (g) At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the group makes an estimate of the recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is written down to its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use and is determined for an individual asset. If the asset does not generate cash in£ows that are largely independent of those from other assets or groups of assets the recoverable amount of the cash generating unit to which the asset belongs is determined. Discount rates re£ecting the asset speci¢c risks and the time value of money are used for the value in use calculation. For goodwill and trademarks that have an inde¢nite useful life, the recoverable amount is estimated at each balance sheet date. (h) Share capital Dividends (i) Dividends are recognised as a liability in the period in which they are declared. (i) Employee bene¢ts De¢ned contribution plans (i) The Group operates a de¢ned contribution plan. Obligations for contributions to de¢ned contribution pension plans are recognised as an expense in the income statement as incurred. Share-based payment transactions (ii) The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted in 2007 were measured using a bi-nominal valuation model. Prior to 2007 the black-scholes valuation model was used, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to re£ect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting. Provisions (j) A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an out£ow of economic bene¢ts will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash £ows at a pre-tax rate that re£ects current market assessments of the time value of money and, where appropriate, the risks speci¢c to the liability. (k) Trade and other payables Trade and other payables are stated at cost. Revenue (l) Revenue comprises proceeds from gaming activities. In accordance with industry practice, gaming revenue represents ‘‘customer drop’’ or net revenue which comprises amounts staked net of customer winnings and not the handle or wagered amount. (m) Expenses (i) Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. 13 (ii) Net ¢nancing costs Net ¢nancing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable on funds invested, dividend income, foreign exchange gains and losses. Interest income is recognised in the income statement as it accrues, using the effective interest method. Dividend income is recognised in the income statement on the date the entity’s right to receive payments is established. (n) Tax Income tax on the pro¢t or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for ¢nancial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable pro¢t, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is more probable than not that future taxable pro¢ts will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax bene¢t will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. (o) Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. (p) Short-term deposits Short-term deposits comprise cash deposits held with highly credit rated ¢nancial original maturities of more than three months and up to one year. institutions with (q) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits held with banks. Financial instruments (r) Non-derivative ¢nancial instruments. Non-derivative ¢nancial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative ¢nancial instruments are recognised initially at fair value plus, for instruments not at fair value through pro¢t or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative ¢nancial instruments are measured as described below. Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash £ows. Accounting for ¢nance and income and expense is discussed in note m (ii). 14 (s) New standards The company adopted the following new IFRS standards and interpretations. The following amendments and interpretations, which are mandatory for accounting periods beginning on or after 1 January 2007, did give rise to additional disclosures: . Instruments: Disclosures and the Amendment IFRS 7 Financial to IAS 1 Presentation of Financial Statements: Capital Disclosures did give rise to additional disclosures about the signi¢cance of ¢nancial instruments for the Group’s ¢nancial position and performance, and qualitative and quantitative disclosures on the nature and extent of risks. The following amendments and interpretations, which are mandatory for accounting periods beginning on or after 1 January 2007, did not have any effect on the ¢nancial statements of the Group and did not give rise to additional disclosures: . . . . . IFRS 4 Insurance contracts; IFRIC 7 Applying the restatement approach under IAS 29, Financial reporting in hyper-in£ationary economies; IFRIC 8 Scope of IFRS 2 Share-based Payments ; IFRIC 9 Re-assessment of embedded derivatives; and IFRIC 10 Interim Financial Reporting and Impairment. A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2007, and have not been applied in preparing these ¢nancial statements. These include: . . . . . . . IFRS 8 Operating Segments, which becomes mandatory for the Group’s 2009 ¢nancial statements, will require the disclosure of segment information based on the internal reports reviewed by the Group’s Chief Operating Decision Maker in order to assess each segment’s performance and to allocate resources to them. Revised IAS 23 Borrowing Costs will become mandatory for the 2009 ¢nancial statements and this revised standard removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of the asset. It is not expected to have any impact on the ¢nancial statements. IFRIC 11 IFRS2 ^ Group and Treasury Share Transactions requires a share-based payment arrangement in which an equity receives goods or services as consideration for its own equity instruments to be accounted for as an equity-settled share-based payment transaction, regardless of how the equity instruments are obtained. IFRIC 11 will become mandatory for the Group’s 2008 ¢nancial statements, with retrospective application required. It is not expected to have any impact on the consolidated ¢nancial statements. IFRIC 14 IAS 19 ^ The Limit on a De¢ned Bene¢t Asset, Minimum Funding Requirements and their Interaction clari¢es when refunds or reductions in future contributions in relation to de¢ned bene¢t assets should be regarded as available and provides guidance on the impact of minimum funding requirements (MFR) on such assets. It also addresses when a MFR might give rise to a liability. IFRIC 14 will become mandatory for the Group’s and Company’s 2008 ¢nancial statements, with retrospective application required. Revised IAS 1 Presentation of Financial Statements is aimed at improving users ability to analyse and compare the information given in ¢nancial statements. Revised IFRS 3 Business Combinations continues to apply the acquisition method to business combinations, with some signi¢cant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently remeasured at fair value through income. Goodwill may be calculated based on the parent’s share of net assets or it may include goodwill related to the minority interest. All transaction costs will be expensed. Revised IAS 27 Consolidated and Separate Financial Statements provides mainly guidance on changes in the ownership interests. 15 . . . Amendments to IAS 32 Financial Instruments: Presentation and Amendments to IAS 1 Presentation of Financial Statements. These amendments to the standards require that some puttable ¢nancial instruments and some ¢nancial instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be classi¢ed as equity. IFRIC 12 Service Concession Arrangements applies to contractual arrangements whereby a private sector operator participates in the development, ¢nancing, operation and maintenance of infrastructure for public sector services. IFRIC 13 Customer loyalty programmes clari¢es that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement in using fair values. The Company has not yet determined all the potential effect of the new standards and interpretation not yet effective. 16 Segment reporting 1 Segment information is presented in respect of the Group’s business and geographical segments. Business segments Based on risks and returns and transacting with customers, the management considers that the Group’s primary reporting format is by following three business segments: . . . Casino; Poker ; Sports Betting. Following the acquisition of new operating licences during the year, and the expectation of additional licences being acquired in 2008 the management reporting now places more emphasis on vertical product groups and majority of distribution costs being allocated on an activity basis to each business segment. The 2006 data has been restated on a consistent basis. Unallocated corporate expenses, assets and liabilities relate to the entity as a whole and cannot be allocated to individual segments. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one year. Year ended 31 December 2007 g‘000 Revenue Gross Pro¢t Distribution costs Administrative expenses Pro¢t Before Tax Segmental assets Capital Expenditure Casino 38,164 28,685 3,649 ^ 24,927 57,842 77 Year ended 31 December 2006 C‘000 Revenue Gross Pro¢t Distribution costs Administrative expenses Pro¢t Before Tax Segmental assets Capital Expenditure Casino 38,365 28,377 5,841 ^ 22,536 60,457 266 Geographical analysis of net revenue Year ended Germany Austria Italy Other Total Revenue Poker 3,420 2,409 780 ^ 1,629 100 80 Poker 2,208 1,038 385 ^ 653 269 10 Sports Betting Unallocated Corporate Consolidated 1,123 1,075 1,013 ^ 62 1,519 289 ^ ^ 391 6,856 (9,987) 16,949 210 42,707 32,169 5,833 6,856 16,631 76,410 656 Sports Betting Unallocated Corporate Consolidated ^ ^ ^ ^ ^ ^ ^ ^ ^ 911 6,777 (52,028) 9,594 ^ 40,573 29,415 7,137 6,777 (28,839) 70,320 276 31 December 07 g’000 31 December 06 C’000 32,083 6,297 2,337 1,990 42,707 75.1% 14.7% 5.5% 4.7% 100% 30,330 7,515 130 2,598 40,573 74.8% 18.5% 0.3% 6.4% 100% Non current assets within Luxembourg total Cnil (2006: Cnil) and non-current assets in other locations total C56.2 million (2006 : C58.6 million). All segments are continuing operations. 17 2 Personnel expenses In thousands of euro Wages and salaries Compulsory social security contributions Contributions to de¢ned contribution plans Equity-settled transactions 3 Net ¢nancing costs In thousands of euro Interest income Net foreign exchange gain through pro¢t Financial income Interest expenses and bank charges Net foreign exchange loss Financial expenses Net ¢nancing income 4 Income tax expense Current tax Year ended 31 December 2007 Year ended 31 December 2006 1,957 65 49 815 2,886 2,400 154 (13) 893 3,434 Year ended 31 December 2007 Year ended 31 December 2006 459 ^ 459 (85) (247) (332) 127 154 9 163 (68) ^ (68) 95 Current tax for the current and prior periods is classi¢ed as a current liability to the extent that it is unpaid. Amounts paid in excess of amounts owed are classi¢ed as a current asset. Recognised in the income statement In thousands of euro Current tax expense Current year Adjustments for prior period Deferred tax income Origination and reversal of temporary differences Reduction in tax rate Bene¢t of tax losses recognised Total income tax (income)/expense in income statement Year ended 31 December 2007 Year ended 31 December 2006 ^ ^ ^ (11) ^ ^ ^ (11) ^ ^ ^ ^ ^ ^ ^ ^ 18 Reconciliation of effective tax rate In thousands of euro (Pro¢t)/loss before tax Income tax using the domestic corporation tax rate Effect of tax rates in foreign jurisdictions (Rates decreased) Capital allowances for period in excess of depreciation Year ended 31 December 2007 Year ended 31 December 2006 16,631 (28,839) 4,936 (4,936) (11) (11) ^ ^ ^ ^ A deferred tax asset was recognised as the Group considers that it more probable than not that future taxable pro¢ts will be available against which the asset could be utilised. 5 Property, plant and equipment In thousands of euro Cost Balance at 1 January 2007 Disposal Acquisitions Balance at 31 December 2007 Depreciation and impairment losses Balance at 1 January 2007 Disposal Depreciation charge for the year Balance at 31 December 2007 Carrying amounts At 31 December 2006 At 31 December 2007 Fixtures and Fittings Total Property Plant and Equipment 112 (112) 562 562 56 (72) 57 41 56 521 112 (112) 562 562 56 (72) 57 41 56 521 Capital expenditure related primarily to the setup of the Maltese of¢ce in the year. 19 Software licence Consulting Magazine Total 6 Intangible assets In thousands of euro Cost Balance at 1 January 2006 Acquisitions Balance at 31 December 2006 Goodwill 73,613 ^ 73,613 Trade- marks 15,144 ^ 15,144 11,915 231 12,146 Balance at 1 January 2007 73,613 15,144 12,146 Acquisitions ^ ^ 95 At 31 December 2007 73,613 15,144 12,241 Amortisation and impairment losses Balance at 1 January 2006 Amortisation for the year ^ ^ Impairment loss for the year 33,274 Balance at 31 December 2006 33,274 Balance at 1 January 2007 Amortisation for the year Impairment loss for the year 33,274 ^ ^ At 31 December 2007 33,274 ^ ^ ^ ^ ^ ^ ^ ^ 1,213 9,556 ^ 10,769 10,769 1,335 ^ 12,104 Carrying amounts At 31 December 2006 40,339 15,144 1,377 At 31 December 2007 40,339 15,144 137 419 ^ 419 419 ^ 419 106 105 ^ 211 211 104 ^ 315 209 104 4,500 ^ 4,500 105,591 231 105,822 4,500 105,822 ^ 95 4,500 105,917 1,520 1,500 2,839 11,161 ^ 33,274 3,020 47,274 3,020 1,480 ^ 47,274 2,919 ^ 4,500 50,193 1,480 58,548 ^ 55,724 Valuation methodologies The valuation methodology of each type of identi¢able intangible asset is detailed below. Asset Magazine-related Consulting Software licence Trade-marks Goodwill Valuation methodology Cost Income (cost saving) Income (incremental value plus loss of pro¢ts) Relief from royalty Residual balance The valuation conclusions, for the assets acquired through business combinations, were cross-checked relative to the overall consideration paid in the transaction over net tangible assets, to ensure that the proportion of value attributed to (i) each identi¢able tangible asset : and (ii) to all of the identi¢ed intangible assets combined in the total purchase price appears reasonable. In addition, the implied weighted average return on assets was reconciled with the cost of capital derived for the business as a whole to check for the reasonableness of values placed on intangible assets and the discount rates/returns used. 20 Amortisation and impairment charge The amortisation for the year and the accelerated amortisation on the software licence 2006 are recognised in the following line items in the income statement. In thousands of euro Net operating expenses Exceptional items Year ended 31 December 2007 Year ended 31 December 2006 2,919 ^ 2,889 8,272 Impairment tests for cash-generating units containing goodwill An Impairment Review was carried out at the year end of the Company’s goodwill in the Casino operation. The carrying values of the assets were compared with the recoverable amounts, these were determined with the assistance of independent valuers. It was viewed that the goodwill was not impaired. The following units have signi¢cant carrying amounts of goodwill : In thousands of euro 31 December 2007 31 December 2006 Casino operation: GVC Corporation II BV 40,339 40,339 7 Receivables and prepayments In thousands of euro Trade receivables Interest receivables Prepayments Other Debtors 31 December 2007 31 December 2006 3,021 ^ 734 540 4,295 1,892 11 406 ^ 2,309 Trade receivables include funds held by third party collection agencies as of 31 December 2007 amounting to C3 million, which corresponds to the revenue generated over the last 3 weeks of the 12 month period ended 31 December 2007. Prepayments include payment as at 31 December 2007 for goods or services which will be consumed after 1 January 2008. 8 Cash and cash equivalents In thousands of euro Bank balances Treasury deposits Cash and cash equivalents 31 December 2007 31 December 2006 15,859 ^ 15,859 2,341 7,066 9,407 21 Capital and reserves 9 Reconciliation of movement in capital and reserves In thousands of euro Balance at 1 January 2006 Equity settled transactions net of tax Dividend paid in year Total recognised income and expense Note 12 Attributable to equity holders of the parent Share capital Share premium Retained earnings Total 38,608 ^ ^ ^ 67,522 ^ (9,596) ^ 4,109 893 (6,016) (28,839) 110,239 893 (15,612) (28,839) Balance at 31 December 2006 38,608 57,926 (29,853) 66,681 Balance at 1 January 2007 Equity settled transactions net of tax Dividend paid in year Total recognised income and expense 12 38,608 ^ ^ ^ 57,926 ^ (5,949) ^ (29,853) 815 (6,227) 16,642 66,681 815 (12,176) 16,642 Balance at 31 December 2007 38,608 51,977 (18,623) 71,962 Share capital and share premium Ordinary shares On issue at beginning of year On issue at end of the year Year ended 31 December 2007 Year ended 31 December 2006 31,135,762 31,135,762 31,135,762 31,135,762 At 31 December 2007, (2006 : 49,600,000). The ordinary shares have a par value of C1.24. the authorised share capital comprised 49,600,000 ordinary shares The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. Dividends After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided for and there are no income taxes consequences. In thousands of euro C0.20 (GBP 0.16) per qualifying ordinary share (2006 : C0.191 ((GBP 0.13)) Year ended 31 December 2007 Year ended 31 December 2006 6,227 5,949 22 Earnings per share 10 The calculation of basic earnings per share at 31 December 2007 was based on the pro¢t attributable to ordinary shareholders of C16,641,810 (2006 : loss of C28,838,575) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2007 of 31,135,762 (2006 : 31,135,762), calculated as follows: Pro¢t attributable to ordinary shareholders In thousands of euro Pro¢t/(Loss) attributable to ordinary shareholders Exceptional item Pro¢t before exceptional item Weighted average number of ordinary shares In shares Year ended 31 December 2007 Year ended 31 December 2006 16,642 ^ 16,642 (28,839) 41,546 12,707 Year ended 31 December 2007 Period ended 31 December 2006 Issued ordinary shares at beginning of the year 31,135,762 31,135,762 Weighted average number of ordinary shares at end of the year 31,135,762 31,135,762 Earnings per share In euro Basic earnings per share Basic earnings per share before exceptional items Year ended 31 December 2007 Year ended 31 December 2006 0.534 0.534 (0.926) 0.408 Diluted earnings per share The calculation of diluted earnings per share at 31 December 2007 was based on the pro¢t attributable to ordinary shareholders of C16,641,810 (2006:loss of C28,838,575) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2007 of 31,135,762 (2006 : 31,135,762), calculated as follows: Pro¢t attributable to ordinary shareholders (diluted) In thousands of euro (Loss)/Pro¢t attributable to ordinary shareholders (diluted) Exceptional item Pro¢t before exceptional item Year ended 31 December 2007 Year ended 31 December 2006 16,642 ^ 16,642 (28,839) 41,546 12,707 23 Weighted average number of ordinary shares (diluted) In shares Year ended 31 December 2007 Year ended 31 December 2006 Weighted average number of ordinary shares at end of the year Effect of share options on issue 31,135,762 ^ 31,135,762 ^ Weighted average number of ordinary shares (diluted) at end of the year 31,135,762 31,135,762 Diluted earnings per share In euro Year ended 31 December 2007 Year ended 31 December 2006 Diluted earnings per share Diluted earnings per share before exceptional items 0.534 0.534 (0.926) 0.408 11 Employee bene¢ts Share-based payments At 2 December 2004, the Group established a share option programme that entitles key management personnel and senior employees to purchase shares in the Group. During 2007 grants were made available to eligible individuals under the programme as detailed below. In accordance with the programme options are exercisable at the market price of the shares at the starting date of employment or the date of grant. Share-based payments Grant date Option grants to eligible individuals at 1 March 2007 Option grants to eligible individuals at 15 May 2007 Option grants to eligible individuals at 21 August 2007 Option grants to eligible individuals at 21 September 2007 Option grants to eligible individuals at 24 October 2007 Modi¢cation of options granted 23 January 2006 Number of instruments Contractual life of options 800,000 321,834 110,000 126,500 390,000 473,846 Ten years Ten years Ten years Ten years Ten years Ten years Vesting Options will vest and become exercisable as to one quarter on the ¢rst anniversary of the date of grant, and the balance becoming exercisable in 36 equal monthly instalments over the following three years. The number of weighted average exercise prices of share options is as follows : Weighted average exercise price 2007 GBP 4.06 1.27 3.36 2.03 Number of options 2007 1,063,898 2,222,180 (228,689) 3,009,883 592,339 Weighted average exercise price 2006 GBP 4.58 3.55 4.66 4.06 Number of options 2006 840,365 515,000 (291,476) 1,063,889 229,652 Outstanding at the beginning of the year Granted during the year Forfeited during the year Outstanding at the end of the year Exercisable at the end of the year The options outstanding at 31 December 2006 have a weighted average contractual life of 8.75 years. 24 The fair value of services received in return for share options granted in 2007 were measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured on a Binomial valuation model. The contractual life of the option (10 years) is used as an input into this model. Expectations of early exercise are incorporated into the Binomial model. The option exercise price for individuals who were employed at 21 December 2004 was the market price on admission to AIM of GBP 4.20 and for all other individuals the average market price on grant date. Fair value of share options and assumptions 1 March 2007 GBP 15 May 2007 GBP 13 July 2007 GBP 13 July 2007 GBP 21 August 2007 GBP 21 Sept 2007 GBP 24 Nov 2007 GBP Fair value at measurement date Share price Exercise price Expected volatility Exercise Multiple Expected dividends Risk-free interest rate (based on national government bonds) 0.46 1.08 1.00 65% 2 8% 0.40 1.22 1.29 50% 2 8% 0.39 1.42 2.98 60% 2 8% 0.53 1.42 1.60 60% 2 8% 0.48 1.25 1.29 60% 2 8% 0.48 1.32 1.35 55% 2 8% 0.44 1.33 1.38 50% 2 8% 5.02% 5.33% 5.63% 5.63% 5.07% 5.08% 4.8% The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information. There are no market conditions associated with the share option grants The fair value of services received in return for share options granted prior to 2007 were measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured on a Black-Scholes valuation model. The contractual life of the option (10 years) is used as an input into this model. Expectations of early exercise are incorporated into the Black-Scholes model. The option exercise price for individuals who were employed at 21 December 2004 was the market price on admission to AIM of GBP 4.20 and for all other individuals the average market price on grant date. Fair value of share options and assumptions 16 May 2006 GBP 23 January 2006 GBP 1.10 3.89 2.98 GBP 0.94 3.89 3.59 28 September 2005 GBP GBP 1.95 5.50 4.20 1.58 5.50 5.50 2004 GBP 1.33 4.20 4.20 1.23 3.83 4.20 Fair value at measurement date Share price Exercise price Expected volatility (expressed as weighted average volatility used in the modelling under Black-Scholes model) Option life (expressed as weighted average life used in the modelling under Black-Scholes model) Expected dividends Risk-free interest rate (based on national government bonds) 65% 65% 65% 45% 45% 45% 4.8 8% 4.8 8% 4.8 8% 4.8 5% 4.8 5% 4.8 4% 4.70% 4.16% 4.16% 4.22% 4.22% 4.51% The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information. There are no market conditions associated with the share option grants. 25 12 Trade and other payables In thousands of euro Other trade payables Accrued expenses Withholding tax on dividends 31 December 2007 31 December 2006 1,538 2,910 ^ 4,448 1,317 1,101 1,203 3,621 Financial instruments and risk management 13 The Group’s principal ¢nancial instruments as at 31 December 2007 comprise cash and cash equivalents. The main purpose of these ¢nancial instruments is to ¢nance the Group’s operations. The Group has other ¢nancial instruments which mainly comprise receivables and payables which arise directly from its operations. Cash and cash equivalents and trade and other receivables have been classi¢ed as loans and receivables and trade and other payables as ¢nancial liabilities measured at amortised cost. During the year the Group did not use derivative ¢nancial instruments to hedge its exposure to foreign exchange or interest rate risks arsing from operational, ¢nancing and investment activities. The Group does not hold or issue derivative ¢nancial instruments for trading purposes. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or value of its holdings of ¢nancial instruments. Exposure to market risk (which includes currency and interest rate risk) and credit risk arises in the normal course of the Group’s business. Foreign exchange risk Foreign exchange risk arises from transactions, recognised assets and liabilities and net investments in foreign operations. The Group does not use foreign exchange contracts to hedge its currency risk. The Group dividend is declared in Euros (EUR) as a Luxembourg company, it is then paid in Pounds Sterling (GBP) at the exchange rate ruling when the dividend is declared. The Group considers its net exposure to currency risk to be low and that the potential savings from managing this exposure to be minimal. The Group has investments in foreign operations which are all denominated in Euros minimising the Group’s exposure to currency translation risk. Financial assets and ¢nancial liabilities by currency Trade and other Receivables In thousands of euro Euro Sterling USD Other 31 December 2007 31 December 2006 4,125 70 100 ^ 4,295 2,146 12 147 4 2,309 26 Cash & Cash Equivalents In thousands of euro Euro Sterling USD Other Trade and other payables In thousands of euro Euro Sterling USD Other 31 December 2007 31 December 2006 15,773 63 9 14 15,859 6,904 2,188 311 4 9,407 31 December 2007 31 December 2006 2,982 638 741 69 4,430 2,867 216 530 8 3,621 A signi¢cant proportion of the Group’s ¢nancial assets and liabilities are denominated in Euros, which minimises the Group’s exposure to foreign exchange risk. Interest rate risk The Group and Company earn interest from bank deposits. During the year, the Group and Company have held cash on deposits with a range of maturities of less than three months. The Group had no committed borrowing facilities as at 31 December 2007. Credit risk The Group has no signi¢cant concentrations of credit risk with exposure spread over a large number of customers. The Group does not grant credit facilities to any of its customers and the maximum exposure to credit risk is represented by the carrying amount of each ¢nancial asset in the balance sheet. Liquidity risk At 31 December 2007, the Group had cash and cash equivalents of C15.9 million (2006 : C9.4 million) and considers liquidity risk to be low for the business. Fair values The carrying amounts of the ¢nancial assets and liabilities in the balance sheet at 31 December 2007 and 2006 for the Group and Company are a reasonable approximation of their fair values. All trade and other receivables and payables have a maturity of less than one year. 27 14 Related parties Identity of related parties The Group has a related party relationship with its subsidiaries (see note 14) and with its directors and executive of¢cers. Transactions with key management personnel Directors of the Company and their immediate relative’s control nil% of the voting shares of the Company as detailed below : In shares Steve Barlow 31 December 2007 31 December 2006 ^ 2,251,927 In addition to their salaries, the Group also contributes to a post-employment de¢ned contribution bene¢t plan on their behalf. The key management personnel compensations are as follows : In thousands of euro Post-employment bene¢ts Total remuneration is included in ‘‘personnel expenses’’ (see note 2): In thousands of euro Directors 15 Group entities Signi¢cant subsidiaries Year ended 31 December 2007 Year ended 31 December 2006 46 22 Year ended 31 December 2007 Year ended 31 December 2006 1,281 1,430 Country of incorporation Ownership interest 31 December 2007 31 December 2006 Gaming VC (Cyprus) Limited Gaming VC (Jersey) Limited GVC Corporation B.V. GVC Corporation II B.V. Gaming VC Corporation Limited Gaming VC Corporation S.P.A Cyprus Jersey Netherland Antilles Netherland Antilles Malta Italy 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% ^ ^ 16 Accounting estimates and judgements Management discussed with the Audit Committee the development, selection and disclosure of the Group’s critical accounting policies and estimates and the application of these policies and estimates (note 6). Subsequent events 17 There have been no subsequent events between 31 December 2007 and the date of the signing of these accounts that merit inclusion. 28 DIRECTORS Adrian J R Smith, Non-Executive Director Chairman (64) Adrian is the CEO of the Woolton Group, and has signi¢cant public company and corporate governance experience, having been the Non-Executive Chairman of the Carter and Carter Group from 2002 through to its £otation in 2005. He serves on the board of Regeneration Biologics Inc. in the USA, and Byotrol plc in the UK. He is also a non-Executive Director at Zodiac Training and Premier Credit. His management experience includes Deloitte Touche Tohmatsu, Grant Thornton LLP and Arthur Andersen LLP, as well as Ecolab Inc. and Procter and Gamble. Nigel Blythe-Tinker, Non-Executive Director (57) Between January 1999 and May 2004, Nigel was the Group Company Secretary and Head of Legal at William Hill plc as well as a member of the executive management team. He was involved in the highly successful £otation of William Hill plc at an enterprise value of »1.46 billion. He was associated with William Hill’s discharge of US high yield debt and ¢nancial and corporate restructuring of the business. His additional responsibilities to the William Hill plc board were for corporate governance, statutory and regulatory compliance, legal matters (including worldwide litigation), its insurance portfolio and group services. Nigel was also actively involved in William Hill plc’s acquisition and transactional programme. Prior to this, he held various positions including Company Secretary and Head of the Legal department for Thorn Lighting Group plc, Head of Legal Services at Framlington Group plc and Assistant Secretary of The Rank Organisation plc. He serves as a Non-Executive Director of New Media Lottery Services PLC and Pentasia Limited. Lee Feldman, Non-Executive Director (40) Lee is the Managing Partner of Twin Lakes Capital LLC, a private equity ¢rm based in New York and focused on growth capital investments primarily in technology, media and consumer branded products. Prior to this he was a partner in SOFTBANK Capital Partners, a US private equity fund focused on technology and media enterprises. His extensive experience has been in private equity investing, as well as corporate and business development activities. Prior to his partnership in SOFTBANK Capital Partners, he was Vice President of corporate development at Ziff-Davis, which, prior to its sale, was a New York Stock Exchange quoted media company focused on technology with annual revenues exceeding US$1 billion. Prior to this, he was a member of the senior management team of two leveraged roll-ups and began his career as a corporate lawyer practicing with a major New York City law ¢rm. Kenneth J Alexander, Chief Executive Of¢cer (38) Kenny is a member of the Institute of Chartered Accountants of Scotland. He started his career as an accountant at Grant Thornton and joined Sportingbet in February 2000 where he held the position of Finance Director for European operations. In April 2002, Kenny was appointed Managing Director of Sportingbet’s European Operations. In this position, Kenny was directly responsible for 150 employees from 16 countries overseeing trading, marketing, ¢nance, IT, product development and customer service. In addition he had overall responsibility for all Sportingbet’s sports book and gaming sites in Europe. Kenny was instrumental in developing Sportingbet’s operations in new European markets including Turkey, Spain, Greece, Germany, France and Italy and driving cross-selling initiatives in these markets. Under Kenny’s leadership, the business became one of the most pro¢table gaming operations in Europe. Gerard Cassels, Finance Director (46) Gerard an experienced Finance Director of listed companies, and has worked both in Europe and the US. Between 2001 and 2004, he was Group Finance Director for NMT Group PLC, the medical device design, development and licensing company. Prior to that he was Group Finance Director of Inveresk PLC, the niche specialty paper and board manufacturer. Gerard started his career at KPMG in the corporate ¢nance department and is a quali¢ed chartered accountant. 29 ADVISERS Registered Of¢ce : Financial PR Advisers: Nominated Adviser and Broker : Lawyers to the Company: Auditors: Depositary : 73 Cote d’Eich L-1450 LUXEMBOURG Abchurch Communications Ltd 100 Cannon Street London EC4N 6EU Arbuthnot Securities Limited Arbuthnot House 20 Ropemaker Street London EC2Y 9AR Reynolds Porter Chamberlain LLP (as to matters of English Law) Tower Bridge House St. Katharine’s Way London E1W 1AA Loyens & Loeff (as to matters of Luxembourg Law) PO Box 507 J8 Corsiraweg 4 Willemstad Curacao Netherland Antilles KPMG Audit S.a'.r.l. 9, allee Scheffer L-2520 LUXEMBOURG Capita IRG Trustees Limited The Registry 34 Beckenham Road Beckenham KENT BR3 4TU 30 9 4 3 1 0 1 E s y a w a n e e r G g n i l r e t S
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