Entain Annual Report 2015

FY2015 Annual Report · Entain
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The multinational sports betting and gaming group

Annual Report

 
 
 
 
 
 
 
 
GVC Holdings PLC is a leading e-gaming operator in both b2c and b2b 
markets. GVC has four main product verticals and its core brands are 
CasinoClub, Betboo, Sportingbet, bwin, partypoker, partycasino and 
FoxyBingo.

GVC acquired bwin.party digital entertainment plc on 1 February 2016. 
The Group is headquartered in the Isle of Man and has licences in over 
14 countries.

Highlights

Total Revenues (€’000)

247,730

Annual growth of 10%

2015  247.7

2014  224.8

2013  182.1

Contribution (€’000)

135,361

Annual growth of 10%

2015  135.4

2014  123.3

2013  102.6

Clean EBITDA (€’000)

54,077

Annual growth of 10%

2015  54.1

2014  49.2

2013  38.3

Dividend (€cents)

56.0

Increased by 1%

2015  56.0

2014  55.5

2013  48.5

GVC HOLDINGS PLC

CONTENTS

DIRECTORS

THE BOARD

ADVISORS
REGISTERED OFFICE, REGISTRAR AND UK TRANSFER AGENT

FACTSHEET

HISTORY

2015 REVIEW
Chairman’s Statement
Report of the Chief Executive
Report of the Group Finance Director

PRINCIPAL RISKS AND UNCERTAINTIES

REMUNERATION
Report of the Remuneration Committee

GOVERNANCE
Directors’ Report

CONSOLIDATED FINANCIAL STATEMENTS (UNDER IFRS)
Independent Auditor’s report to the Members of GVC Holdings PLC
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements

COMPANY FINANCIAL STATEMENTS (UNDER UK GAAP – FRS 101)
Independent Auditor’s report to the Members of GVC Holdings PLC
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements

ADDITIONAL UNAUDITED INFORMATION
Five year trading history

GVC HOLDINGS PLC ANNUAL REPORT 2015

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DIRECTORS

Lee Feldman (age 48), Chairman, and non-executive Director
Lee joined GVC in December 2004. He is the Managing Partner of Twin Lakes Capital, a private equity ﬁrm focused on
branded consumer products, media and business services, which he co-founded in 2007. From 2008 through to 2015 he
was also the CEO of Aurora Brands, the owner of both MacKenzie-Childs and Jay Strongwater, the iconic American luxury
home furnishings and personal accessories companies. Lee was named the CEO of Aurora Brands when Twin Lakes led
the acquisition of the business. He is also a member of the boards of directors of Aurora Brands, Paciﬁc Health Labs and
LRN Corporation. Prior to co-founding Twin Lakes, Lee was a partner in Softbank Capital Partners. He has a B.A and J.D.
from Columbia University.

Kenneth J Alexander (age 46), Chief Executive Officer
Kenneth joined GVC in March 2007 as Chief Executive. He was formerly Finance Director, then Managing Director, of the
European operations of Sportingbet PLC, which he joined in 2000. He is a member of the Institute of Chartered Accountants
of Scotland and previously worked for Grant Thornton.

Richard Cooper (age 55), Group Finance Director
Richard joined GVC in December 2008 as Group Finance Director. He spent the early part of his career in the ﬁnancial
markets where he was Finance Director at the principal UK subsidiary of the Tullett and Tokyo Group (a forerunner of Tullett
Prebon plc) and Chief Financial Officer at Fidelity Brokerage. He then undertook a number of restructuring roles, including
working as Finance Director at Patsystems Group plc, a ﬁnancial software company. In early 2005 he became a founder
director of Trident Gaming plc which bought, developed and then sold the Gamebookers business. He is a member of the
Institute of Chartered Accountants in England and Wales, having trained and qualiﬁed with Saffery Champness in London.

Stephen Morana (age 45), Independent non-executive Director and Chairman of the Audit Committee
Stephen joined GVC in February 2016 as an independent non-executive Director and Chairman of the Audit Committee. He
was until recently the Chief Financial Officer of Zoopla Property Group Plc, the FTSE 250 digital media business, which he
joined in 2013 and helped to ﬂoat in 2014. Prior to that, he spent ten years at Betfair Plc, becoming Chief Financial Officer
in 2006 and serving as interim Chief Executive Officer in 2012. Stephen is also a non-executive Director of boohoo.com plc.
He  is  a  member  of  the  Institute  of  Chartered  Accountants  in  England  and  Wales  and  an  alumnus  of  the  executive
management programme at INSEAD.

Karl Diacono (age 53), non-executive Director
Karl joined GVC as a non-executive Director in December 2008. He chaired the Audit Committee up to 1 February 2016 and
serves on the Remuneration Committee, and was appointed Chairman of that committee on 1 February 2016. He holds a
Masters Degree in Management and is currently CEO of Fenlex Group that includes a corporate service provider and trust
company based in Malta. He is also a non-executive director of various trading and holding companies as well as other
online gaming companies. He is actively involved in the hospitality industry. Karl is also a director of a number of GVC
subsidiaries including Gaming VC Corporation Limited, a Maltese subsidiary of the GVC Group to which Fenlex Corporate
Services Limited also provides certain administrative services. He is a Maltese citizen.

Peter Isola (age 57), non-executive Director
Peter joined GVC in February 2016 as a non-executive Director. He currently holds a number of non-executive directorships
which are regulated by the Gibraltar Financial Services Commission, including Gibraltar International Bank Limited and
Callaghan Insurance Brokers Limited. Peter is a senior partner at ISOLAS in Gibraltar and was initially called to the Bar of
England and Wales and the Gibraltar Bar in 1982. He is also a member of the Honourable Society of the Inner Temple, a
Notary  Public  of  Gibraltar,  a  Member  of The  Gibraltar  Bar  Council  and  former  President  of  the  Gibraltar  Chamber  of
Commerce. His is recognised as a leading practitioner in the Remote Gambling Industry in Gibraltar and sits on a committee
undertaking a review of the Remote Gambling legislation regime. He also forms part of a legislative review committee working
on an overhaul of the personal taxation regime in Gibraltar.

Norbert Teufelberger (age 51), non-executive Director
In April 2016, Norbert joined Fastforward Innovations Plc, an AIM listed company focusing on investments in early stage
technology companies, as a special advisor. Norbert, who served as the CEO of bwin, the forerunner to bwin.party, since
2001, joined GVC in February 2016 as a non-executive Director. He has been involved in the global casino and gaming
industry since 1989. He occupied key positions with Casinos Austria, was a consultant to the Novomatic Group of companies
and co-founded Century Casinos, Inc., a land-based casino company currently listed on the Nasdaq Capital Market and on
the Prime Market of the Vienna Stock Exchange. He joined bwin in September 1999 and was instrumental in drawing up
the initial business plan of the company and the subsequent structuring and preparation for its public listing. Norbert is a
founding member of the European Gaming and Betting Association (www.egba.eu) and ESSA (www.eu-ssa.org). He holds
a Masters in Business Administration from the University of Economics and Business Administration in Vienna.

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GVC HOLDINGS PLC ANNUAL REPORT 2015

THE BOARD

The Board aims to meet four times a year or more frequently if required.

Committees of the Board
The Board has Audit, Remuneration and Nominations Committees.

Audit Committee
Members during 2015: Karl Diacono (Chair), Lee Feldman
The Audit Committee is required to give its approval before the release of the annual report and accounts, the preliminary
year-end statement and the interim ﬁnancial statements. In addition to this, the Committee is responsible for assessing the
Group’s internal controls, monitoring the independence of the Group auditors and assessing the Group’s audit arrangements.

On 2 February 2016, Stephen Morana was appointed chairman of the Audit Committee. Stephen has recent and relevant
ﬁnancial experience. From 7 April 2016, the members of the Audit Committee are Stephen Morana (Chair), Karl Diacono
and Peter Isola.

Remuneration Committee
Members during 2015: Karl Diacono (Chair), Lee Feldman
The Remuneration Committee reviews the remuneration packages of the Executive Directors and is required by the Board
to review the bonus arrangements of any employee or consultant to the group. The Committee meets at least twice a year.
See the Report of the Remuneration Committee on page 29 for further details.

From 7 April 2016, the members of the Remuneration Committee are Karl Diacono (Chair), Stephen Morana and Peter Isola.

Nominations Committee
The Nominations Committee was established on 7 April 2016. The members of the Nominations Committee are Lee Feldman
(Chair), Peter Isola and Stephen Morana.

GVC HOLDINGS PLC ANNUAL REPORT 2015

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REGISTERED OFFICE, REGISTRAR
AND UK TRANSFER AGENT

Registered Office:
32 Athol Street
Douglas
Isle of Man
IM1 1JB

Registration Number:
4685V

Registrar:
Capita Registrars (Isle of Man) Limited
Clinch’s House
Lord Street
Douglas
Isle of Man
IM99 1RZ

UK Transfer Agent:
Capita Asset Services
The Registry
34 Beckenham Road
Kent
BR3 4TU

Telephone: 0871 664 0300

ADVISORS

Sponsor:
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS

Lawyers to the Company:
As to matters of UK law
Addleshaw Goddard LLP
Milton Gate
60 Chiswell Street
London
EC1Y 4AG

As to matters of Isle of Man law
DQ Advocates Limited
The Chambers
5 Mount Pleasant
Douglas
Isle of Man
IM1 2PU

As to matters of Maltese law
Fenech & Fenech Advocates
198, Old Bakery Street
Valletta, VLT 1455
Malta, Europe

As to matters of Gibraltar law
Isolas
Portland House
Glacis Road
GX11 1AA
Gibraltar

Auditor:
Grant Thornton UK LLP
Grant Thornton House
Melton Street
London
NW1 2EP

Financial PR Advisers:
Bell Pottinger
Holborn Gate
330 High Holborn
London
WC1V 7QD

Financial Advisors:
Houlihan Lokey
83 Pall Mall
London
SW1Y 5ES

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GVC HOLDINGS PLC ANNUAL REPORT 2015

FACTSHEET

GVC Holdings PLC is a multinational sports betting and gaming company. The Company is incorporated in the Isle of Man
and the Group’s activities are licensed in 15 countries. It acquired all of the issued and to be issued share capital of bwin.party
digital entertainment plc on 1 February 2016 following a court sanction of a scheme arrangement on that date.

The Company is bound by the corporate laws of the Isle of Man, the Company’s Articles of Association, the rules of the
London Stock Exchange and the City Code on Takeovers and Mergers.

The primary economic environment in which the Group’s subsidiaries operate is the Eurozone and thus the Euro is the
functional currency of the majority of the Group’s subsidiaries. As such, management and the Directors have selected the
Euro as the presentational currency of the Group. The Group offers its customers a number of payment options across a
wide range of currencies including EUR and GBP. The full payment options can be found on www.sportingbet.com. The
shares are traded on the Standard Segment of the London Stock Exchange in GBP. The ﬁnancial statements are prepared
under International Financial Reporting Standards as adopted by the European Union (IFRS).

Investor Relations Website
Extensive information on the Group, prior-year ﬁnancial statements and press releases can be found on the Group’s website:
www.gvc-plc.com.

Some key deﬁnitions
bwin.party: bwin.party digital entertainment plc

Enlarged Group: GVC Holdings plc incorporating bwin.party digital entertainment plc

Sports Gross Margin: Sports wagers less payouts.

Sports Gross Margin %: Sports Gross Margin divided by Sports wagers.

Sports Net Gaming Revenue (‘Sports NGR’): Sports Gross Margin less free bets and promotional bonuses.

Total Net Gaming Revenue (‘Total NGR’): Sports NGR + Net gaming stakes less payout winnings less customer bonuses
+ Other revenues.

Contribution: Total NGR less betting taxes, VAT (imposed by certain EU jurisdictions on either sports or gaming revenue),
payment service provider fees, software royalties, commissions, revenue share and marketing costs.

Clean EBITDA: Earnings before interest, taxation, depreciation, amortisation, impairment charges, changes in the fair value
of derivative ﬁnancial instruments, share option charges and exceptional items.

Clean Net Operating Cashﬂow (‘CNOC’): Clean EBITDA less: capitalised development costs, net corporate taxes paid,
capital expenditure, ﬁnance lease payments, net working capital movements and exceptional items of a cash nature.

GVC HOLDINGS PLC ANNUAL REPORT 2015

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HISTORY

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2004

























Acquisition of bwin.party completes 1 February 2016, admitted to 
Main Market of London Stock Exchange 2 February
Appointment of Norbert Teufelberger, Stephen Morana and 
Peter Isola as non-executive Directors

Announced bid for bwin.party digital entertainment plc
Trading update announces revenue of €247.7 million for the year

Announcement on 14 May of strategic investment in Scandinavian markets

Acquisition of Sportingbet (ex Australia) completes March 2013

Announced exclusive talks with William Hill to acquire Sportingbet

Launch of Betboo outside Latin America
Acquisition of the rights to provide back-office services to East Pioneer Corporation BV, who in turn acquired
Superbahis, a Sportingbet branded sportsbook

Re-domicile from Luxembourg to the Isle of Man to improve post tax dividend return for shareholders

Acquisition of Betboo, a Brazilian-focused Bingo/sportsbook product

Richard Cooper joins as Group Financial Director; Karl Diacono joins as a non-executive Director

Launch of a sportsbook
Grant of Maltese license
Kenneth Alexander joins as Chief Executive Officer and starts to reinvigorate the Group

Incorporation of Gaming VC Holdings SA in Luxembourg
Shares admitted to trading on AIM
Acquisition of CasinoClub

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GVC HOLDINGS PLC ANNUAL REPORT 2015

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in this section

Chairman’s statement

report of the Chief exeCutive

report of the Group finanCe DireCtor

prinCipaL risKs anD unCertainties

report of the remuneration Committee

DireCtors’ report

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35

Business review

 
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GVC HOLDINGS PLC ANNUAL REPORT 2015

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chAiRMAn’s stAteMent

2015 was a momentous year for the Group. not only did the Group increase its revenues and Clean eBitDa
by 10% in the face of adverse currency movements, but also shareholders voted overwhelmingly for the
acquisition of bwin.party on 15 December 2015 which completed on 1 february 2016.

the acquisition was structured as a mixture of a share and cash offer to the bwin.party shareholders; and
ﬁnanced by an equity placing of £150 million and a senior debt facility of €400 million. the Group is thus well
resourced to see through its restructuring plan and to derive the targeted cost synergies on the combined
businesses.

the Group has augmented its board by the recruitment of three additional non-executive directors: norbert
teufelberger, who joins us from bwin.party, stephen morana and peter isola. as a result, we have added
signiﬁcant expertise to the Board in the areas of accounting and ﬁnance, regulatory matters and business
development. in addition the operating management has been signiﬁcantly strengthened below the board
level with senior appointments in operations, product, sales and marketing and investor relations.

the Group’s performance across the year was excellent. increased and effective marketing in all territories
led to: growth in net Gaming revenue (nGr), up 10% on 2014 to €248 million; Clean eBitDa up 10% to a
record €54.1 million (at the top end of market expectations) and proﬁt before tax, excluding exceptional items,
increasing 21% to €50.0 million. Dividends paid in the year increased from 55.0 €cents to 56.0 €cents. i am
pleased to be able to say that the Group has increased its revenues, its Clean eBitDa and its dividends for
each of the last ﬁve years. as shareholders will be aware, however, one of the conditions of the debt ﬁnancing
in connection with the bwin.party acquisition is a dividend holiday in calendar 2016.

GvC has a proven ability of generating value through successful integration of signiﬁcant acquisitions and
management is conﬁdent this will continue. we anticipate generating signiﬁcant synergistic savings through
the integration and restructuring of operations, which we aim to complete over the next 12 months. our target
is to drive €125 million of synergies from the combined businesses, and we remain conﬁdent that this can be
achieved. however, the opportunity for the enlarged Group goes beyond cost synergies and we are excited
by the current growth trends and potential across the breadth of businesses.

the Company has a highly focused and entrepreneurial culture, supported by an employee cash bonus
structure  as  well  as  its  long  term  incentive  plan  with  market-priced  stock  options  together  with  a  total
shareholder return measure. furthermore i, together with the executive directors, have acquired a highly
meaningful personal ﬁnancial stake which should assure shareholders that our ﬁnancial interests are closely
aligned. returning cash to shareholders via dividends has been core to the Group’s philosophy and this
remains the case. as with the sportingbet acquisition, we aim to return to paying dividends as quickly as our
borrowing facilities allow and is prudent from a balance sheet and cash ﬂow perspective.

GvC now has signiﬁcant scale and capability, and has positioned itself to make further acquisitions if they
are sufficiently accretive for shareholders. we operate in a challenging and competitive market but one that
also  presents  signiﬁcant  opportunities.  i  believe  the  Group  has  never  been  better  placed  to  face  these
challenges and pursue the many opportunities.

GvC will be posting its annual report to shareholders on saturday 30 april 2016 and it will be uploaded on
our website (www.gvc-plc.com) from that date. the aGm will be held in the isle of man on tuesday 24 may
2016. Lastly, i can conﬁrm that we are actively pursuing our stated aim of seeking admission of the enlarged
Group to the premium segment of the official List as soon as practicable following publication of the 2015
annual report and we will update shareholders accordingly.

Lee Feldman
Chairman and non-executive Director
22 april 2016

GVC HOLDINGS PLC ANNUAL REPORT 2015

9

 
 
RePoRt oF the chieF eXecUtiVe

i am pleased to say the Group delivered on all its objectives in 2015, producing a record Clean eBitDa and
culminating in the positive vote by shareholders in both GvC and bwin.party for the acquisition of bwin.party
which completed on 1 february 2016.

GvC has a strong track record of integrating challenging acquisitions and driving through synergies. the
acquisition of sportingbet in 2013 led to Clean eBitDa in 2015 three times higher than the GvC result in
2012 and turned sportingbet from being profoundly loss-making into a signiﬁcant proﬁt contributor to the
Group. Dividends during this time more than doubled from 22 €cents per share to 56 €cents last year.

the culture of GvC is to create a dynamic and entrepreneurial working environment, within a professional
infrastructure which is imperative given the markets we operate in. as a consequence, GvC has built a strong
management team at all levels, alongside highly talented and motivated staff. it is relatively early days but i
am delighted to say that bwin.party also has many managers and staff of exceptional calibre, and together
we shall drive the enlarged group forward. our philosophy is about rewarding success and not failure; staff
rewards are currently aligned to growth in 2016 nGr compared to 2015, whilst the long term incentive plan
for senior management is aligned with the price at which shares were issued in relation to the bwin acquisition,
£4.22, and total shareholder return, so option holders can only prosper if shareholders do so too.

i have already evaluated the bwin, party Gaming, party Casino, Gioco Digitale and foxy Bingo brands and
am  encouraged  by  what  i  see  –  we  have  in  the  combined  group  a  great  portfolio  of  assets.  there  is
undoubtedly great potential, but there is also much to be done.

our challenges for 2016 and beyond are to:

•

•

•

•

•

•

•

Quickly assimilate, reorganise and re-energize bwin.party into the GvC group to drive cost synergies
and revenue opportunities

increase the product quality to improve the customer experience

increase the sports margin % and cross-sell additional gaming products to our customers

focus  marketing  expenditure  on  areas  where  we  can  measure  the  roi  and  thus “ﬁnely-tune”  the
campaigns to maximise returns

fully leverage the substantial ip across the enlarged group in both B2C and B2B

review non-core assets and identify potential disposals

inject a cultural change to bwin.party to recognise ﬁnancial performance as the success trigger for
incentives.

i am particularly excited by the growth potential of the enlarged Group, and remain conﬁdent that we can
secure our target of €125 million synergies within a year, the full beneﬁts of which will be seen in 2018.
although we have only owned bwin.party since the 1st february, i have visited all the key operations and am
very encouraged by what i have seen. we have already made progress in increasing the breadth and depth
of management and executed a number of product improvements. it is too soon for these developments to
have had a material impact, which makes the positive performance of the business in the ﬁrst quarter of 2016
(see below), even more pleasing. i feel the positive start to 2016 reﬂects the fact that we acquired, in bwin.party,
a  business  that  had  stabilised  and  was  capable  of  returning  to  growth  after  some  challenging  years.
nevertheless, as i commented above, there is still much to be done to derive the inherent value that we
believe exists within the bwin businesses.

Looking back at 2015, GvC delivered excellent operational and organic growth across the broad spread of
markets in which the Group operates. the Board is pleased to report a signiﬁcant increase in sports wagers
driving an increase in Clean eBitDa. Due to the impact of €24.5m of exceptional items, of which €23.0m
relate to the acquisition of bwin.party, operating proﬁt is down year on year. this also impacts on proﬁt before
tax and earnings per share. Key ﬁnancial metrics for GvC on a standalone basis are shown below:

sports wagers
nGR
contribution
clean eBitDA
operating proﬁt
Proﬁt before tax
Basic ePs
Dividends declared

percentage
increase

15%
10%
10%
10%
(35%)
(38%)

2015
(€)

1.7 billion
248 million
135 million
54.1 million
27.7 million
25.5 million
40.2 €cents
56.0 €cents

2014
(€)

1.5 billion
225 million
123 million
49.2 million
42.9 million
41.3 million
66.4 €cents
55.5 €cents

Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised
ﬁgures.

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GVC HOLDINGS PLC ANNUAL REPORT 2015

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the Group has achieved a record level of Clean eBitDa for 2015 at €54.1 million which is 10% higher than
the prior year, giving rise to Clean net operating Cashﬂows of €52.9 million.

the combination of GvC and bwin.party’s operations for 2015 (less those activities disposed of during the
year) would have resulted in the following “aggregated” results:

in €millions

sports wagers
sports margin %
total revenues
clean eBitDA
(after FX differences)

Bwin

2,708.5
9.0%
576.4

108.5

Less
disposed
activities
and other
adjustments

–
–
(14.3)

Restated
Bwin

2,708.5
9.0%
562.1

GVc

1,683.0
9.2%
247.7

Aggregated
(Unaudited)

4,391.5
9.1%
809.8

Per day

12.0

2.2

0.9

109.4

54.1

163.5

Both GvC and bwin.party were impacted in 2015 by the full year of point of Consumption tax on uK gaming
revenues and by eu vat imposed by certain jurisdictions on gaming revenues. the combined impact of that
during 2015 when compared to 2014 was around €12.4 million.

taxes are inevitable headwinds and it is through a balanced and well-diversiﬁed product and geographical
proﬁle of markets that GvC can best mitigate this exposure. a proforma revenue analysis for 2015 shows that
no one market generates more than 25% of nGr and no one individual market which is not locally regulated
generates more than 12% of nGr.

Q1 2016 AnD cURRent tRADinG
GvC has traditionally focused on “revenue per day” and we shall continue to do so as an easy to understand
metric across all its business units.

Average daily KPis expressed

in €000s

sports wagers
Sports Margin %

sports nGR
Gaming nGR
other revenue

total nGR per day

total nGR €m

Q1-2016*
91 days

Q1-2015
90 days

10,626
8.8%

773
1,016
54

1,843

167.7

4,558
9.0%

313
352
–

665

60.0

Year on
year
change

133%

147%
189%
–

177%

180%

Prior quarter history
Q3-2015

Q2-2015

Q4-2015

4,544
8.7%

299
372
–

671

4,371
9.9%

337
330
–

667

4,968
9.0%

316
396
–

712

* GVC for the three month period 1 January 2016 to 31 March 2016; bwin.party for the two month period from 1 February
2016 to 31 March 2016.

** wagers less payouts before bonuses.

in Q1, Group daily total nGr increased by 177% on the previous year, boosted by the acquisition of bwin.party
which was consolidated from 1 february 2016.

Proforma nGR per day in constant currency
€000s

Q1-2016*

Q1-2015*

Year on year
change

GVc
Bwin.party

Group constant currency

Group actual

* bwin.party since 1 February 2016.

746
1,791

2,537

2,444

665
1,659

2,324

2,324

12%
8%

9%

5%

GvC daily nGr in constant currency rose 12% in Q1 year on year. Daily nGr at bwin.party, since it became
part of the Group, increased 8% on the comparable period in 2015. for the Group as a whole daily nGr in
constant currency rose 9%.

GVC HOLDINGS PLC ANNUAL REPORT 2015

11

 
RePoRt oF the chieF eXecUtiVe continued

Quarter 2 has also started strongly. sports margins have improved within the bwin business, in part reﬂecting
sports  results  but  also  improvements  implemented  since  acquisition.  we  are  also  pleased  with  the
performance of the gaming activities of bwin.party (party Gaming, party Casino, Cashcade, Gioco Digitale)
since acquisition.

at 17 april 2016, gross cash (and cash equivalents) were €327 million; customer liabilities were €120 million;
and the principal amount of the Cerberus loan was €400 million, leading to net debt of €193 million. in addition,
however, the Group had €52 million of cash in transit with payment processors.

i end my report on a very upbeat note – the Board believe the Group has never been in a stronger position
than  now,  beneﬁtting  from robust  trading;  diversiﬁed  products  and  markets;  highly  motivated  staff;  and
technological opportunities which will allow the Group to prosper. we look forward to a successful year.

Kenneth Alexander
Chief executive
22 april 2016

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RePoRt oF the GRoUP FinAnce DiRectoR

my ﬁnancial review is in two parts this year: part one takes readers through the primary ﬁnancial statements
of the GvC group for 2015, whilst part two deals with the impact and ﬁnancing of the bwin.party acquisition.

PARt one – A ReVieW oF 2015

BUsiness MoDeL
Despite the underlying complexities of the Group, the business of GvC as it existed in 2015 can be presented
in a simple and transparent way as the table below illustrates:

‘Formula’

a

Wagers

b
c = a x b
d

e = c + d
f

Margin %
Gross margin
sports bonus

sports nGR
Gaming nGR across all brands

g = e + f

totAL nGR

h
j = g x h

k = g + j
m

n = k + m
p = n / g
q
r
s
t
u

variable cost %
variable costs

contRiBUtion
other expenditure

cLeAn eBitDA
cLeAn eBitDA %
exceptional items (non-deal related)
Capitalised development costs
net corporate taxes paid
working capital and other movements
Capex and lease payments

v = sum q-u total of additional operating cashﬂows

w = n + v

x = w / g
y
z = y / w

cLeAn net oPeRAtinG
cAshFLoWs (‘cnoc’)
noc %
Dividends
Dividends as a % of cnoc

Year ended
31 December 2015
€000’s
€000’s

1,682,955

Per day
€000’s

4,611

679

9.2%
154,086
(40,234)

113,852
133,878

247,730

45.4%
(112,369)

135,361
(81,284)

54,077
21.8%

(1,143)

52,934
21.4%
(34,319)
65%

(1,475)
(5,003)
(657)
8,916
(2,924)

•

•

•

•

•

•

•

nGr increased by over 10% from €224.8 million to €247.7 million on wagers of €1.7 billion

Contribution margin remained at 55%

eBitDa increased 10% from €49.2 million to €54.1 million. the eBitDa margin remained in line with
2014 at 22% of revenue

operating proﬁt at €27.7 million was 35.4% lower than 2014, due to the impact of exceptional items.
operating proﬁt increased by 21.7% on a normalised basis, excluding exceptional items

exceptional items totaled €24.5 million, of which €23.0 million related to bwin.party deal costs

Basic eps before exceptional items rose to 80.2 €cents (Diluted eps before exceptional items: 76.4
€cents), an increase of 20.8%. Basic eps after exceptional items fell to 40.2 €cents (Diluted eps: 38.3
€cents)

CnoC as deﬁned below in table 1, was €52.9 million out of which the Group distributed €34.3 million
in dividends equal to a distribution ratio of 65% (2014: €42.6 million, dividend of €33.6 million, distribution
ratio 79%)

GVC HOLDINGS PLC ANNUAL REPORT 2015

13

 
RePoRt oF the GRoUP FinAnce DiRectoR continued

Table 1: Summary of key ﬁnancial measures (totals may not sum due to rounding and percentages have
been calculated on the underlying rather than the summarised ﬁgures).

2015

2014

change % change

1,683.0

1,463.5

219.5

15%

in €millions

sports wagers

sports margin

sports revenue
Gaming revenue

total nGR

9.2%

113.8
133.9

9.8%

110.2
114.6

247.7

224.8

contribution
Contribution divided by total nGr =
expenditure

clean eBitDA
Clean eBitDa/revenue
Depreciation and amortisation
share option charges
Betit and winunited revaluation 
finance charges

Proﬁt before tax and exceptional items
exceptional items
taxation

Proﬁt after taxation

Basic, non-dilutive eps in €cents
Basic pre-exceptional items, non-dilutive eps in €cents

Dividend paid in the year / share in €cents
Dividends declared for the year / share in €cents

clean net operating cashﬂows
Dividends paid

cash and cash in transit
– Cash and cash equivalents
– Balances with payment processors

Customer liabilities
net current liabilities
non-current liabilities

– Interest bearing loans and borrowings
– Non-interest bearing loan and borrowings
– Share option liability
– Deferred consideration on Betboo
– Betit option liability

135.4
55%
(81.3)

54.1
22%
(5.0)
(0.5)
3.6
(2.2)

50.0
(24.5)
(0.8)

24.7

40.2
80.2

56.0
28.0

52.9
(34.3)

49.9
28.2
21.7

(14.8)
(8.4)
(22.6)

(19.8)
–
(2.1)
–
(0.7)

123.3
55%
(74.1)

49.2
22%
(3.9)
(0.8)
(1.6)
(1.6)

41.3
–
(0.7)

40.6

66.4
66.4

55.0
55.5

42.6
(33.6)

40.0
17.8
22.2

(13.0)
(3.3)
(6.5)

(0.4)
(2.8)
–
(1.6)
(1.7)

shareholder funds
number of shares in issue
number of shares under option

128.1
61,276,480
3,481,947

149.5
61,276,480
6,806,947

3.6
19.3

22.9

12.1

(7.2)

4.9

(1.1)
0.3
5.2
(0.6)

8.7
(24.5)
(0.1)

(15.9)

3%
17%

10%

10%

(10%)

10%

(28%)
38%
325%
(38%)

21%
–
(14%)

(39%)

(39%)
21%

2%
(50%)

24%
2%

(1.8)
(5.1)

(14%)
>100%

14

GVC HOLDINGS PLC ANNUAL REPORT 2015

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ReVenUes
sports wagers grew 15% to €1,683.0 million (2014: €1,463.5 million). they averaged €4.6 million per day and
rose to over €4.9 million per day in Q4 (Q4-2014: €4.4 million).

sports margins differ widely across the multiple markets in which GvC operates as a consequence of the
maturity of each market and the sports followed within them. a sports margin of 9.2% (2014: 9.8%) was
achieved.

sports nGr represents the sports gross margin less free bets and promotional bonuses.

Customers have a variety of gaming opportunities ranging from Casino (table games and slots), through to
poker and, in certain markets, Bingo. sports and gaming revenues are relatively equal now, and in 2015
sports nGr represented 46% of revenue and Gaming nGr represented 54%. 2015 saw a 10% increase in
revenue over 2014, most of which came from growth in Gaming nGr.

Table 2: Average revenues per day since 1 January 2015

€000’s

sports wagers per day
sports margin %
total nGr per day

Q1-2016*

Q1-2015

Q2-2015

Q3-2015

Q4-2015

10,626
8.8%
1,843

4,558
9.0%
665

4,544
8.7%
671

4,371
9.9%
667

4,968
9.0%
712

* including bwin.party since 1 february.

contRiBUtion
Contribution is GvC’s measure of revenues less cost of sales, and costs with a high correlation to revenues,
such  as  partner  shares,  affiliate  commissions  and  other  marketing  expenditure.  Cost  of  sales  includes
payment processing charges, software royalties and local betting taxes, and value added taxes where the
Group has a liability.

Contribution increased by 10% to €135.4 million, and a constant contribution margin percentage of 55% was
achieved (2014: 55%).

eXPenDitURe
in the context of a growing business, absolute costs have increased from €74.1 million to €81.3 million, with
cost ratios as a percentage of total nGr remaining ﬂat at 60%. staff cost ratios remained broadly level at
19.6% from 19.2%, with 34% of staff costs (2014: 32%) being performance related – chieﬂy based on Group
dividend payments. this should be seen in the context of €34.3 million of dividends paid in 2015, an increase
of 2% on the €33.6 million paid in 2014.

Table 3: The principal cash expenditures of the Group (excluding exceptional items) and their percentages

in €millions

staff costs including performance pay
technology and product content
other costs

2015 % of nGR

2014 % of nGR

48.5
23.7
9.1

81.3

19.6%
9.6%
3.6%

32.8%

43.1
21.0
10.0

74.1

19.2%
9.3%
4.5%

33.0%

cLeAn eBitDA
the Group aims to achieve a clean eBitDa margin of not less than 20%.

Clean eBitDa rose 10% to €54.1 million (2014: €49.2 million), and a 22% margin on nGr was achieved, in
line with 2014.

non-cAsh iteMs oF An AccoUntinG nAtURe
Depreciation of Property, Plant and Equipment rose in the year to €0.9 million (2014: €0.7 million) on total
acquisitions of €1.2 million.

Amortisation of Intangible Assets increased to €4.1 million (2014: €3.2 million) driven by the €5.0 million
acquisition of additional software and software development costs to further strengthen our mobile and tablet
offering.

GVC HOLDINGS PLC ANNUAL REPORT 2015

15

 
RePoRt oF the GRoUP FinAnce DiRectoR continued

Finance charges increased by €0.6m this year, driven by €1.2m effective interest on the €20.0 million loan
drawn down in september 2015 from Cerberus. other ﬁnance charges included an imputed cost (as per ias
39) on the interest free loan from william hill of €0.2 million (2014: €0.2m); €0.1 million (2014: €0.7 million) on
the unwinding of the discount on the deferred consideration arising from the 2009 acquisition of Betboo; €0.6
million on the retranslation of the GBp denominated william hill loan and leased software assets (2014: €0.6
million) and €0.1 million (2014: €0.1 million) in respect of ﬁnance charges on leased software assets.

Share option charges amounted to €0.5 million (2014: €0.8 million). the charge for 2015 represented the
ongoing charges arising from the share options awarded and announced on 2 June 2014, net of adjustments
for movements in the fair value of cash settled options and share options forfeited by an employee leaving. at
the year end, the Group had 3.3 million share options granted to directors and officers (5.4% of the existing
issued share capital although its permitted allocation was 16.8% of the issued share capital (page 354 of the
January 2013 prospectus)). During the year, directors surrendered 3,200,000 fully vested share options and
were awarded associated cash settlements of €12.2 million, which has been recognised as a deduction from
equity. these cash payments were to be made over a two year period, but were subsequently put on hold
pending the outcome of the bwin.party acquisition. these were fully settled on 1 february 2016, and re-
invested into new shares as part of the placing of shares on completion of the bwin.party deal.

Betit and other revaluations: in accordance with ias 39 ‘financial instruments: recognition and measurement’,
the Group recognises the option to acquire further shares in both Betit and winunited (a B2B contract entered
into in march 2015) at their fair value, and also revalues the investment in Betit which is recognised as an
available-for-sale  (afs)  asset.  Betit  underperformed  against  its  previous  forecast  provided  by  the  Betit
management, which decreases the expected value of the asset but also decreases the expected cost of the
options. the call/put options with Betit now have a net liability of €0.7 million (2014: €1.7 million), and the afs
asset has decreased in value by €1.2 million, from a value of €3.8 million in 2014. the movement on Betit is
therefore a net cost of €0.2 million. the winunited option was valued at €3.8 million, which represents a gain
of €3.8 million. overall, the revaluations result in a net credit to the income statement of €3.6 million.

eXcePtionAL iteMs
During 2015, the Group incurred €24.5 million of exceptional costs. of this, €23.0 million related to deal costs
on the acquisition of bwin.party and consisted mainly of legal and professional fees and the cost of taking out
a euro/GBp hedge.

as part of the requirements for the acquisition of bwin.party, GvC had to “cash-conﬁrm” that it had sufficient
GBp funds to meet the obligations of the acquisition; namely 25p in cash per bwin.party share. as the loan
facility from Cerberus was denominated in euro, an american style call option was purchased for €5.3 million
on  4  september  2015  to  sell  €365,000,000  and  purchase  £256,138,750  (a  rate  of  £1:€1.4250).  the
counterparty to this trade was nomura.

on 18 December 2015, it was decided to terminate this option and replace its cash-conﬁrmation obligations
with a “ﬂexible-forward”, a forward contract with option components. entering into this transaction resulted in
a refund of €5.6 million and a new sale of €365,000,000 and purchase of £260,719,500 (a rate of £1:€1.400).

By 31 December, foreign exchange rates had moved and the rate used by GvC for the translation of its GBp
current assets and current liabilities was £1:€1.36249, whilst the effective rate behind the valuation of the
GBp obligation under the ﬂexible forward was €1.3621. this resulted in a revaluation charge of €9.9 million
shown as a forward contract liability. this is shown in more detail in the tables below:

Table 4: forward contract movements

Details 

arrangement cashﬂows
arrangement valuations

euro sale under ﬂexible forward
rate

GBp purchase under ﬂexible forward
implicit rate in valuation

revaluation

valuation expense

paid
€000s

(5,329)
–

(5,329)

received
€000s

5,675
–

5,675

p&L
€000s

346
(9,877)

(9,531)

Balance at
31.12.15
€000s

–
(9,877)

(9,877)

€365,000,000
€1.4000

£260,719,500
€1.3621

€355,123,000

€9,877,000

16

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eARninGs PeR shARe
Table 5: Earnings per share

Basic eps: 

Diluted eps:

before exceptional items
after exceptional items
before exceptional items
after exceptional items

80.2 €cents (2014: 66.4 €cents)
40.2 €cents (2014: 66.4 €cents)
76.4 €cents (2014: 61.4 €cents)
38.3 €cents (2014: 61.4 €cents)

the diluted eps is affected by two components: grants of share options granted to employees and directors,
and warrants granted to third parties pursuant to underwriting arrangements entered into in contemplation of
the sportingbet acquisition which completed in march 2013.

DiViDenDs
Table 6: History of dividends paid and declared since 1 July 2014

Declaration date

15 July 2014
22 september 2014
12 January 2015
20 march 2015
8 July 2015
8 october 2015

fiscal year
2014
€cents

fiscal year
2015
€cents

paid
2015
€cents

payable
2016
€cents

12.5
15.0
12.5
15.5
–
–

55.5

–
–
–
–
14.0
14.0

28.0

–
–
12.5
15.5
14.0
14.0

56.0

–
–
–
–
–
–

–

up until the announcement of its bid for bwin.party in november 2015, the Group was committed to paying
dividends on a quarterly basis and paying a cash amount broadly equivalent to 75% of its Clean net operating
Cashﬂows, taking into account an assessment of its working capital needs. the actual percentages were
65% in 2015 and 79% in 2014. Details of the Clean net operating Cashﬂow calculation are included in table
7 below.

on 4 september 2015, the Company announced a dividend holiday in the calendar year 2016 as a result of
the impending acquisition of bwin.party and the consequential combination of debt covenants that will be
applicable and the intended restructuring of the Group.

GVC HOLDINGS PLC ANNUAL REPORT 2015

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RePoRt oF the GRoUP FinAnce DiRectoR continued

sUMMARiseD cAshFLoW
the Group’s cashﬂow position for 2015 is summarised below:

Table 7: Summarised cashﬂow

€000’s

clean eBitDA
exceptional items (non-acquisition related)
Capitalised software development
net payment of corporate taxes
equipment purchased 
asset lease repayments
working capital and other movements

cLeAn net oPeRAtinG cAshFLoWs (‘cnoc’)

Dividends paid
Dividends as a % of cnoc
otheR cAshFLoWs

– Betboo earn-outs
– investment in Betit
– proceeds from exercise of share options
– settlement of share options
– sportingbet: william hill loan instalments

AcQUisition cAshFLoWs: bwin.party

– Cerberus drawdown
– Cerberus ﬁnancing costs
– Cerberus legal fees
– other legal and professional fees
– option payment
– hedge receipts

20,000
(7,025)
(1,950)
(13,490)
(5,329)
5,675
––––––––

Cash and cash equivalents at the beginning of the year

cash and cash equivalents at the end of the year 

Amount, in €cents per share

€000’s

–
–
–
–
–
–
––––––––

2015
€000’s

54,077
(1,475)
(5,003)
(657)
(1,156)
(1,768)
8,916
––––––––
52,934

(34,319)
65%

(2,401)
–
–
(509)
(3,245)

(2,119)
––––––––
10,341
17,829

28,170

46.0

2014
€000’s

49,162
–
(3,343)
(508)
(802)
(1,149)
(742)
––––––––
42,618

(33,607)
79%

(4,339)
(3,649)
854
–
(2,856)

–
––––––––
(979)
18,808

17,829

29.1

sUMMARiseD BALAnce sheet AnD LiQUiDitY
the net position is affected by the timing of the dividend payments, which totalled €34.3 million during 2015
(2014: €33.6 million). such is the strategy of the Group towards its dividend payments that GvC aimed to
keep its net Current assets relatively equal to its net Current Liabilities, but ensuring at all times that its
balances with customers are covered and meet regulatory requirements.

18

GVC HOLDINGS PLC ANNUAL REPORT 2015

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Table 8: Balance Sheet and Customer liquidity position as at 31 December 2015

non-current assets
Balances with payment processors
prepayments – deal related
prepayments – other

restricted cash*
free cash

trade and other payables
Balances with customers
Loans and leases: current
Loans and leases: non-current – deal related

forward contract – deal related
share option liability: current
share option liability: non-current

option liability: non-current
other net current assets

total

€000’s

7,651
3,888
––––––––

6,838
21,332
––––––––

(3,711)
(19,821)
––––––––

(9,740)
(2,036)
––––––––

customer
liquidity
coverage
€000’s

21,708

Balance
sheet
€000’s

159,166
21,708

11,539

28,170
(32,016)
(14,808)

28,170

(14,808)

(23,532)
(9,877)

(11,776)
(736)
286

128,124

35,070

* Restricted cash refers to balances at banks where the cash has to be ring-fenced for regulatory reasons.

non-cURRent LiABiLities
these consist of three principal items: the initial loan draw down from Cerberus; share option liabilities due
in 2017; and the Betit put option.

a.) Loan from Cerberus: initial draw down
on 4 september 2015, the Group drew down €20.0 million of its €400.0 million facility with Cerberus. the
initial drawdown was utilised to pay for professional fees and upfront loan costs, including a foreign currency
option for converting the loan receipts into GBp in order to settle the acquisition price for bwin.party and
associated costs. the effective interest rate has been calculated based on anticipated costs including loan
arrangement and drawdown fees, ongoing interest payments, and other amounts payable during the period
of the loan. the loan is repayable in full by 4 september 2017.

b.) share option liability
During the year, directors surrendered 3,200,000 fully vested share options and were awarded associated
cash  settlements  of  €12.2  million,  which  has  been  recognised  as  a  deduction  from  equity. these  cash
payments were to be made over a two year period, but were subsequently put on hold pending the outcome
of the bwin.party acquisition, and have been fully settled following completion of the acquisition. at the year
end, one payment had been made, on an “on account” basis, and the liability, which is denominated in GBp,
was restated in euros. the balance at 31 December 2015 was €11.7 million, of which €9.7 million was a current
liability and €2.0 million was non-current, based on the original payment schedules.

c.) Betit option liability
in accordance with the requirements of ias 39, the options embedded in the Betit contract are required to be
measured at fair value and recognised in the statement of financial position. Based on the valuation at
31 December 2015, the net liability is now €0.7 million, reduced from €1.7 million at 31 December 2014. the
options are potentially exercisable, subject to certain conditions, between 1 July 2017 and 30 september
2017.

GVC HOLDINGS PLC ANNUAL REPORT 2015

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RePoRt oF the GRoUP FinAnce DiRectoR continued

sUMMARY oF MoVeMents in the stAteMent oF FinAnciAL Position
a bridge between the 2014 and 2015 ﬁnancial position is shown below in table 9:

Table 9: Statement of ﬁnancial position bridge

At 1 January 2015
proﬁt before tax
tax charge

share based payment charges on equity settled options
share options surrendered
Dividends paid

At 31 December 2015

no share options were exercised during the year and no shares were issued.

25,506
(847)

total
€000’s

149,458

24,659
509
(12,183)
(34,319)

128,124

cURRencY eXPosURes
During the year, the charge to operating Costs within the income statement from realised and unrealised
foreign exchange was €1.0 million. in addition the william hill loan is denominated in sterling (£4.6 million at
1 January 2015) and incurred an unrealised loss of €0.5 million included within financial expenses. also
included within financial expenses are the foreign exchange differences arising on the ﬁnance leases. many
non-euro currencies are handled by the Group’s payment processing intermediaries up-front.

additionally, the net Current assets of the Group are revalued each month at month-end exchange rates and
this also results in exchange gains and losses. the principal revaluations are for customer liabilities, although
these are now largely currency matched to produce a natural hedge.

in anticipation of the bwin.party acquisition, the Group entered into a foreign currency option in order to enable
the euro-denominated Cerberus loan to be converted into GBp for the purchase of shares and the settlement
of associated costs incurred in GBp. this instrument has been stated at fair value at 31 December 2015.

Key foreign exchange rates are shown in the table below:

Table 10: Currency rates against the Euro

1 Jan
2014

0.831 
3.254 
2.959 
4.775 

30 Jun
2014

31 Dec
2014

0.802 
3.000 
2.897 
4.695 

0.779 
3.224 
2.829 
4.720 

30 Jun
2015

0.711 
3.470 
2.995 
4.207 

31 Dec
2015

Average
2014

Average
2015

0.734 
4.312 
3.177 
4.248 

0.803 
3.110 
2.894 
4.739

0.724
3.710
3.031
4.308

uK (GBp)
Brazil (BrL)
turkey (trY)
israel (iLs)

as the Group’s operations result in a currency mis-match between income and costs (long euro, short GBp),
the Group is retaining a signiﬁcant GBp bank balance which will of course be subject to foreign exchange
revaluation at each balance sheet date.

ceRBeRUs LoAn FAciLitY
the senior loan facility from Cerberus Business finance LLC has a number of components other than simple
interest and therefore there are signiﬁcant differences between the cash proﬁle of the payments and the
accounting recognition. firstly the deal and associated fees need to be allocated to each portion of the draw-
down; secondly, they need to be expensed over the two year period of the loan facility. the simple interest on
the loan is 11.5% above a 1% euriBor ﬂoor. this ﬂoor has been identiﬁed as an “embedded derivative”,
which is not material at 31 December 2015 in respect of the initial draw-down and will be evaluated again
when the second tranche is drawn down in 2016. the tables below show each of the fee components, how
they are allocated and in which year the charges would arise.

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Table 11: Allocation of the fees to each draw-down

Principal amount

facility fee
Draw-down fee
extension fee
anniversary fee*
18 month fee*
exit fee
Legal fees

total arrangement fees

Fee %

initial
4 sept 2015
€000’s

Final
2 Feb 2016
€000’s

total
€000’s

20,000

380,000

400,000

1.0%
2.0%
0.5%
1.0%
2.5%
3.0%

200
400
–
200
500
600
98

1,998

3,800
7,600
2,000
3,800
9,500
11,400
1,853

39,953

4,000
8,000
2,000
4,000
10,000
12,000
1,950

41,950

* these items are required to be accounted for in 2015 whether or not the loan remains in place at 2 February 2017 or 2
August 2017.

Table 12: Accounting allocation and cash proﬁle (assuming the loan reaches maturity on 4 September 2017)

Fee %

2015
€000’s

1.0%
2.0%
0.5%
1.0%
2.5%
3.0%

€100k/qtr
12.5%

Accounting allocation
facility fee
Draw-down fee
extension fee
anniversary fee
18 month fee
exit fee
Legal fees

total arrangement fees
maintenance fees
interest

total anticipated ﬁnance charge

cash proﬁle
fees
interest

Table 13: Loan components in 2015

33
65
–
33
81
98
16

325
100
819

1,245

8,479
625

9,104

Principal amount
fees
interest

Borrowed
in year
€000’s

Payments
in year
€000’s

20,000
–
–

20,000

–
(8,479)
(625)

(9,104)

2016
€000’s

2,288
4,577
1,152
2,288
5,721
6,865
1,116

24,007
400
46,611

71,018

8,000
38,653

46,653

interest
charge
€000’s

–
426
819

1,245

Note 4

2017
€000’s

1,679
3,358
848
1,679
4,198
5,037
819

17,618
232
34,174

52,024

26,203
42,326

68,530

total
€000’s

4,000
8,000
2,000
4,000
10,000
12,000
1,950

41,950
733
81,604

124,287

42,683
81,604

124,287

Prepaid
€000’s

–
7,680
–

7,680

Included
in note 11

total
€000’s

20,000
(373)
194

19,821

Note 14.1

GVC HOLDINGS PLC ANNUAL REPORT 2015

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RePoRt oF the GRoUP FinAnce DiRectoR continued

PARt tWo – Post BALAnce sheet eVent: the AcQUisition oF BWin.PARtY
the acquisition of bwin.party completed on 1 february 2016. the GvC share price used to account for the
acquisition will be £4.67, the closing middle market price of a GvC share on the trading day prior to the
making of the offer. the share price at which the related £150 million placing of new ordinary shares was
effected and the strike price at which share options were issued pursuant to the 2015 Ltip was 422p. the
rate of exchange between sterling and the euro used for the acquisition accounting will be £1 = €1.3205.

the number of bwin.party shares subject to the mix and match election was 843,469,689, and the number
of shares placed by GvC was 35,545,024. the offer for bwin.party was 0.231 GvC shares and 25 pence for
each bwin.party share. in addition, there was the cost of cashing out the cash-settled options of £21.4 million.

the gross acquisition value of bwin.party is therefore:

equity component

843,469,689 x 0.231 = 194,841,498 shares at £4.67 =

Cash component

843,469,689 x 0.25 = 

option component

£909.9m
+
£210.9m
+
£21.4m

£1,142.2m@ 1.3205 = €1,508.2m

our early work on the acquisition balance sheet suggests a purchase price allocation of €608 million for the
brand, platform and customer relationships.

the acquisition, plus additional working capital, and funds to settle inherited debts and pay acquisition costs
was ﬁnanced through a combination of:

shares issued to bwin.party shareholders
shares issued to placees

total GBp components

translated into euro at 1.3205
senior debt facility from Cerberus Business finance LLC

total ﬁnance raised
Less:
share and cash offer to bwin.party share and option holder
existing bwin.party debt discharged*
Deal costs
– Discharged before 31 December 2015
– Discharged since 1 January 2016

Bwin.party
€4.2m
€8.8m

GvC
€13.5m
€16.9m

other liabilities contractually discharged at or near deal close

FUnDs AVAiLABLe FoR WoRKinG cAPitAL AnD RestRUctURinG

£909.9m
£150.0m

£1,059.9m

€1,399.6m
€400.0m

€1,799.6m

(€1,508.2m)
(€56.7m)

(€43.4m)
(€3.2m)

€188.1m

* includes any and all amounts repaid since 31 December 2015 including any interest and break fees.

i can now turn to the condensed aggregated balance sheet, income statement and cash ﬂow statement of
the combined entities as they would have looked for the year ended 31 December 2015, making adjustments
for the businesses which bwin.party disposed of during 2015.

the aggregated statements do not reﬂect the accounting for the business combination, whereby assets and
liabilities acquired will be fair valued, and goodwill will be recognised by the Group, nor the funding for the
acquisition, with consequential impacts on the income statement. please note that the aggregated balance
sheet,  income  statement  and  cash  ﬂow  statement  have  not  been  prepared  on  the  same  basis  as  the
unaudited pro forma financial information of the enlarged Group included in part 7 of the prospectus
prepared by GvC in connection with the bwin.party acquisition.

the ﬁgures of GvC Group have been aggregated with the bwin.party ﬁgures which have been audited by
their independent auditors.

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GVC HOLDINGS PLC ANNUAL REPORT 2015

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a balance sheet prepared as an aggregation of the enlarged Group at 31 December 2015 is shown below:

AGGReGAteD BALAnce sheet
As at 31 December 2015
€ millions

non-current assets
intangible assets
property plant and equipment
available for sale ﬁnancial assets
other investments
Deferred consideration receivable
Deferred tax

current assets
*Cash, cash equivalents and short-term investments
*payment processor balances
Deferred consideration receivable
assets held for sale
income taxes receivable
other receivables and prepayments

current liabilities
*Customer liabilities
*progressive prize pools
accrued deal costs
trade and other payables
income and gaming taxes payable
hedging instrument liability
share option liability
*Loans and borrowings
provision for onerous contracts
Contingent consideration payable

non-current liabilities
Contingent consideration payable and similar
*Loans and borrowings
share option liability
Deferred tax

total net current assets
total of net current assets less non-current liabilities
total net assets

*net cash/(net debt)

Bwin
(audited)

GVc

Aggregated
(Unaudited)

512.3
48.6
3.7
1.1
6.4
2.0

574.1

166.4
30.9
6.0
14.5
–
63.4

281.2

(106.3)
(8.6)
–
(110.2)
(34.7)
–
–
(6.8)
(8.1)
(0.8)

(275.5)

(4.4)
(49.7)
–
(26.1)

(80.2)

5.7
(74.5)
499.6

25.9

155.1
1.4
2.6
–
–
–

159.1

28.2
21.7
–
3.8
6.0
12.9

72.6

(14.8)
–
–
(32.0)
(9.3)
(9.9)
(9.7)
(3.7)
–
(1.6)

(81.0)

(0.7)
(19.8)
(2.1)
–

(22.6)

(8.4)
(31.0)
128.1

11.6

667.4
50.0
6.3
1.1
6.4
2.0

733.2

194.6
52.6
6.0
18.3
6.0
76.3

353.8

(121.1)
(8.6)
–
(142.2)
(44.0)
(9.9)
(9.7)
(10.5)
(8.1)
(2.4)

(356.5)

(5.1)
(69.5)
(2.1)
(26.1)

(102.8)

(2.7)
(105.5)
627.7

37.5

there are a number of liabilities which are split between current and non-current. the table below summarises
these:

As at 31 December 2015
€ million

memorandum: total of deferred consideration payable

memorandum: total of loans and indebtedness

memorandum: share option liability discharged on acquisition

Bwin
(audited)

(5.2)

(56.5)

–

GVc

(2.3)

(23.5)

(11.8)

Aggregated
(Unaudited)

(7.5)

(80.0)

(11.8)

GVC HOLDINGS PLC ANNUAL REPORT 2015

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RePoRt oF the GRoUP FinAnce DiRectoR continued

an income statement, aggregated as if bwin.party had been acquired on 1 January 2015, would appear as
below:

AGGReGAteD incoMe stAteMent
Year ended 31 December 2015

Bwin
Bwin Disposals classiﬁcation restated

Re-

Aggregated
GVc (Unaudited)

€ millions

sports wagers
sports margin %
sports margin
sports nGr

Gaming

totaL revenues
variable costs

Contribution

Contribution %
expenditure

clean eBitDA

2,708.5
9.02%
244.3
220.6

355.8

576.4
(278.8)

297.6

51.6%
(189.1)

108.5

Deal costs and similar*
other exceptional items*
retrospective gaming taxes*
net ﬁnancial income/(expense)
Depreciation, amortisation
impairments and similar items
share option charges
other costs

Proﬁt before tax
taxation

proﬁt/(loss) for the year

(25.3)
(9.8)
(8.9)
1.4
(68.0)
(7.9)
(33.2)
3.0

(40.2)
(4.2)

(44.4)

normalised proﬁt for the year
(* added back)

2,708.5
9.02%
244.3
220.6

341.5

562.1
(271.8)

290.3

51.6%
(180.9)

109.4

(25.3)
(9.8)
(8.9)
(1.6)
(68.0)
(7.9)
(33.2)
3.0

(42.3)
(4.2)

(46.5)

1,683.0
9.16%
154.1
113.9

133.8

247.7
(112.3)

135.4

54.6%
(81.3)

54.1

(23.3)
–
(1.2)
(2.3)
(5.0)
3.6
(0.4)
–

25.5
(0.8)

24.7

(14.3)

(14.3)
7.0

(7.3)

51.0%
5.2

(2.1)

–

–
–

–

–
3.0

3.0

–

(3.0)

(2.1)

(2.1)

–

–

4,391.5
9.07%
398.4
334.5

475.3

809.8
(384.1)

425.7

52.6%
(262.2)

163.5

(48.6)
(9.8)
(10.1)
(3.9)
(73.0)
(4.3)
(33.6)
3.0

(16.8)
(5.0)

(21.8)

46.7

24

GVC HOLDINGS PLC ANNUAL REPORT 2015

a cash ﬂow, aggregated as if bwin.party had been acquired on 1 January 2015, would appear as below:

Bwin
Bwin Disposals classiﬁcation restated

Re-

Aggregated
GVc (Unaudited)

(2.1)

3.0

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AGGReGAteD cAsh FLoW
Year ended 31 December 2015

€ millions

clean eBitDA
plant and equipment
Capitalised development costs
exceptional items incurred in

cash

Debt & Lease repayments
investments made and similar
earn-out repayments
Cash settled share options
Loans drawn down (gross)
Draw down fees, interest and

legal expenses

other deal related professional

fees

fx option premium paid, less
return of premium received

net ﬁnance expenses
net payment of taxes
net issue of shares
working capital movements

Cash movement for the year

before dividend

Dividend paid

Cash movement for year
Cash at start of year

Cash at end of year

108.5
(38.3)
(19.4)

–
(3.6)
2.8

(0.8)
(8.2)
0.2
(10.1)

31.1
(43.2)

(12.1)
164.4

152.3

109.4
(38.3)
(19.4)

–
(3.6)
2.8
–
–
–

–

–

–
(0.8)
(8.2)
0.2
(10.1)

32.0
(43.2)

(11.2)
177.9

166.7

54.1
(1.2)
(5.0)

(1.5)
(5.0)
–
(2.4)
(0.5)
20.0

(9.0)

163.5
(39.5)
(24.4)

(1.5)
(8.6)
2.8
(2.4)
(0.5)
20.0

(9.0)

(13.5)

(13.5)

0.3
–
–
–
8.4

44.7
(34.3)

10.4
17.8

28.2

0.3
(0.8)
(8.2)
0.2
(1.7)

76.7
(77.5)

(0.8)
195.7

194.9

84.6

(2.1)

(2.1)
–

(2.1)

–

3.0

3.0
13.5

16.5

Clean net operating cash ﬂow

31.7

–

31.7

52.9 

Future trading updates and ﬁnancial calendar

it is anticipated that GvC will make further announcements on or around the following dates:

w/c 25 april 2016
30 april 2016
24 may 2016
July 2016
september 2016

– publication of report and accounts on the Company’s website, www.gvc-plc.com
– posting of report and accounts and notice of aGm
– aGm trading update, result of aGm
– h1 trading update
– interim results

Richard cooper
Group finance Director
22 april 2016

GVC HOLDINGS PLC ANNUAL REPORT 2015

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PRinciPAL RisKs AnD UnceRtAinties

there are a number of potential risks and uncertainties which could have a material impact on the Group’s
future performance. to mitigate against these risks, the Group conducts a continuous process of assessments
that examine whether any risk has increased, decreased or become obsolete; identify new risks; and evaluate
the likelihood of each risk occurring and the impact it would have on the Group.

the key risks and how we seek to manage them are set out below:

Risks and uncertainties

Mitigation

technology

the Group may be threatened by Denial of
service attacks or similar.

the  Group  has  highly  advanced  preventative
measures with world-class technology ﬁrms.

natural or man-made disasters may affect
continuity of operations, undermining player
conﬁdence.

with technological advances and continuous
shifts in how consumers access our services,
maintaining and improving technology may
become more complex.

Disaster recovery and business continuity solutions
are in place and tested regularly.

focus  on  developing  customer  experience,  for
example through an expanded mobile offering.

following the acquisition of bwin.party, the Group
is undertaking a signiﬁcant technology platform
migration, which carries a project risk.

Close monitoring by management; reporting up to
the Board regularly.

Regulatory

Conﬂict between jurisdictions in which the
customer resides and where the service is
provided; risk of enforcement action.

strict adherence to the laws of the jurisdiction in
which the service is provided and the rules and
protocols in nationally regulated markets.

in some markets regulation is not clearly deﬁned
or adopted; there may be changes in regulation in
all markets.

Close monitoring of regulatory developments and
assessment of their longer term impact.
maintenance of a diversiﬁed product portfolio.

taxation

imposition of additional gaming or other indirect
taxes.

transfer pricing between group entities could be
challenged by the tax authorities.

may not be possible to mitigate. however,
payment of additional taxes may create
opportunities to work with governments and gain
market beneﬁts.

intra-group transactions are documented and take
place on commercial terms.
regular review of all tax arrangements and
update transfer pricing when required.

Changes in vat rules within the eu impacting the
digital economy.

monitor the situation, as signiﬁcant uncertainty
remains.

economic

Conditions in the eurozone remain challenging
and this may erode customer base conﬁdence
and spending power.

foreign exchange movements; risk of certain
countries exiting the euro.

Customer retention programmes.
Broader geographic spread of products.

the Group tries to match its income and cost
exposures to create a natural hedge.
regular evaluation of low cost hedging
opportunities.
wherever practical, ﬁnancial assets held within
certain countries are limited so they do not exceed
the ﬁnancial liabilities in that jurisdiction.

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Risks and uncertainties

Mitigation

economic (continued)

Brexit: if the outcome of the June referendum is
that the uK leaves the eu, this may increase the
volatility of global currency and ﬁnancial markets.
in addition, it may reduce the Group’s ability to
operate in certain eu markets without a change in
domiciliation, which could carry a higher tax
burden.

Financial

monitor the situation. the Group has licences in a
number of eu countries including: malta,
Denmark, italy, france, romania, Greece,
Germany, as well as licences in the Brexit zone
(uK, Gibraltar).

increases in euriBor will increase the interest
cost for the Group. the loan arrangements contain
covenants which, if breached, would trigger early
repayment of the facility.

maintenance of cash headroom mitigates some
interest rate risk and provides ﬂexibility of early
repayment. Covenants are monitored on a
monthly basis.

operational

the market place becomes more competitive via
new entrants or more attractive products available
from those or existing competitors.

monitoring of the competitive landscape.
working with software providers to enhance the
product offering.

withdrawal of payment processing facilities.

multiple payment processing methods used by the
Group.

reliance on third party payment and multi-
currency processing systems.

spreading of risk across payment processors with
varying deposit and withdrawal methods.

Dependence on third party software.

Long-term contracts in place with key suppliers.

Dependence on key personnel.

Loss of major introducer of business.

Loss of major customer.

poor sports results.

abnormal jackpot wins.

Business integration process following the
acquisition of bwin.party: risk of business
disruption and the impact on staff; risk of
unexpected costs or constraints on delivering
expected synergies.

there is a broad base of executives below Board
level which has been strengthened with recent
joiners.

Competitive revenue sharing models applied and
monitored regularly. Key introducers are offered
long-term revenue prospects with the Group to
ensure alignment of ﬁnancial interests.

highly diversiﬁed customer base with thousands
of customers across all brands.

sports represents c.50% of the Group’s net
gaming revenue and as a matter of policy they are
not hedged as over the longer term sports results
trend to the Group’s expected margin percentage.

revenues from some business lines have a
jackpot insurance policy; others do not, as a
matter of policy.

regular monitoring by management.

GVC HOLDINGS PLC ANNUAL REPORT 2015

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28

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RePoRt oF the ReMUneRAtion coMMittee

Remuneration committee
During the year, the remuneration Committee was comprised of the two non-executive Directors and was
chaired by Karl Diacono. the Committee determines the remuneration packages of the executive Directors
and  other  senior  management,  and  is  required  by  the  Board  to  review  the  bonus  arrangements  of  any
employee or consultant to the Group. the Committee meets at least twice a year. the current members of
the committee are shown on page 3.

Group Remuneration Policy

1.
in  accordance  with  its  remit,  the  Committee’s  policy  is  to  determine  the  remuneration  packages  of  the
executive Directors and other senior management in order to ensure that the relevant individuals are provided
with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner,
rewarded for their individual contributions to the success of the Company.

Remuneration Package

2.
the  remuneration  package  comprises  basic  salary  and  beneﬁts,  annual  bonus  and  long  term  incentive
arrangements. the executive Directors and senior management are remunerated using the policy described
below.

2.1 Basic salary and Beneﬁts

Basic  salary  is  set  for  each  individual  based  on  individual achievement  of  objectives  and  following  the
consideration of compensation information for other companies in the e-gaming industry, both quoted and
unquoted. the executive Directors are also entitled to health and life cover.

2.2 Pension

the Group did not operate a pension plan for the executive Directors or senior management in 2015 or 2014.

2.3 Bonus Arrangements

Bonus scheme arrangements are in place for all members of staff, including the executive Directors. the staff
bonuses are based on individual performance and the executive Directors linked to the performance of the
Group as detailed below.

the remuneration Committee, after consulting with shareholders, has decided that executive Directors’ annual
bonuses should be linked directly to the dividends paid by the Company. accordingly, Kenneth alexander,
richard Cooper and Lee feldman had a bonus entitlement each year equal to the dividends that would have
been paid by the Company to that Director in the relevant period in respect of the GvC holdings shares
subject to unexercised awards granted and exercisable under the scheme to that Director, as if those awards
had already been exercised (and the GvC holdings shares issued) at the record date for payment of the
relevant dividend. other bonuses are awarded based on the dividend paid in each ﬁscal year exceeding
certain targets.

3.

Directors’ emoluments summary

Beneﬁts

salary/fees
€

Bonus*
€

pension
€

in Kind*** total 2015 total 2014
€

€

€

executive Directors
K alexander
r Cooper

non-executive Directors
L feldman
n Blythe-tinker**
K Diacono

1,052,194
555,919

3,630,747
1,866,325

1,608,113

5,497,072

178,693
–
69,000

1,486,879
–
69,000

1,855,806

7,052,951

see bonus detail on page 30

*
** stepped down from the Board on 17 January 2014
*** principally family healthcare

–
–

–

–
–
–

–

2,508
3,411

5,919

4,685,449
2,425,655

4,430,489
2,288,890

7,111,104

6,719,379

–
–
–

1,665,572
–
138,000

1,549,560
291,795
138,000

5,919

8,914,676

8,698,734

GVC HOLDINGS PLC ANNUAL REPORT 2015

29

 
RePoRt oF the ReMUneRAtion coMMittee continued

4.

Bonus

executive Directors
K alexander
r Cooper
non-executive Directors
L feldman
n Blythe-tinker
K Diacono

share option base
Dividend per share

Dividend bonus (note 4.1)
Dividend pool bonus (note 4.2)
Dividend target bonus (note 4.3)

4.1 Dividend Bonus

total 2015
€

total 2014
€

3,630,747
1,866,325

3,496,827
1,793,821

1,486,879
–
69,000

1,391,524
167,103
69,000

7,052,951

6,918,275

K alexander

r Cooper

L feldman 

K Diacono

1,600,000
€0.56

€896,000
€1,715,741
€1,019,006

800,000
€0.56

€448,000
€857,871
€560,454

800,000
€0.56

€448,000
€857,871
€181,008

€3,630,747

€1,866,325

€1,486,879

–

–
–
€69,000

€69,000

the share options granted to directors in may 2010 and June 2012 attracted a bonus calculated by reference
to the number of options held and the dividends per share declared. following the surrender of those options,
the dividend bonuses continued to be paid under the 2015 retention plan, as set out in note 6.4 below.

4.2 Dividend Pool Bonus

providing that dividends paid in a ﬁscal year exceed 35.99 €cents per share, 10% of the total dividend cost
(2015: €34,314,828) was awarded to the directors in the ratio: K alexander 5%; r Cooper 2.5%, L feldman
2.5%. this scheme was fully disclosed on page 354 of the prospectus published by the Group on 25 January
2013.

4.3 Dividend target Bonus

providing that dividends exceed 54.99 €cents per share in a ﬁscal year, the directors were entitled to receive
100%  of  their  base  salary/fees. this  bonus  scheme  was  approved  by  the  remuneration  Committee  on
13 December 2013. Differences between the bonus paid and the salary/fees disclosed on page 29 relate to
foreign exchange differences and certain allowances that are not included in base salary.

5.

Directors’ service and consultancy Agreements

executive Directors
K alexander
r Cooper
non-executive Directors
L feldman
K Diacono
n teufelberger
s morana
p isola

Date
appointed

19 april 2010
19 april 2010

Arrangement

notice
period by
either party

service contract
service contract

12 months*
12 months*

19 april 2010
19 april 2010
2 february 2016
2 february 2016
2 february 2016

Letter of appointment
Letter of appointment

12 months*
12 months
Letter of appointment: 2 year period remaining period
Letter of appointment: 3 year period remaining period
Letter of appointment: 3 year period remaining period

* If either of the executive directors or the chairman either resign for good reason or are given notice without
cause, employment can terminate seven days later and the director would be entitled to a settlement
based upon two years basic salary (or fee in the case of the chairman) and two years bonus.

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Long-term incentive schemes

6.
the  Group  operated  four  schemes  during  the  year. the  participants  of  the  schemes  include  executive
Directors and senior management.

6.1) 21 May 2010 scheme

following a vote by shareholders in an extraordinary General meeting held in Luxembourg on the 21 may
2010 the Group introduced a new scheme and made an initial award to the executive Directors and certain
senior management. the awards will normally be exercisable up to ten years from the date of grant at the
end of which period they will lapse. During 2015, the directors surrendered their options under this scheme.

6.2) 16 november 2011 scheme

on 16 november 2011, shareholders approved the grant of additional share options with the same rights as
the 21 may 2010 scheme to three directors. these share options were granted at an exercise price of 154.79p
being a 20% premium to the average mid-market closing price over the period from 17 november 2011 to 28
January 2012. During 2015, the directors surrendered their options under this scheme.

6.3) 2 June 2014 awards

the awards will vest in full (and become exercisable) on the share price being equal to or exceeding £6.00
per share for a continuous period of 90 calendar days at any time from the date of grant. if there is a change
of control, the awards will vest in full immediately unless the share price is less than £5.00 per share, in which
case the awards will lapse in full. the awards have been treated as vesting over a 3 year period. of the awards
granted on 2 June 2014, 350,000 were issued as cash settled options under the same terms as the equity
settled  awards,  as  an  equity  settled  award  would  have  triggered  an  immediate  personal  tax  liability  on
L feldman as a us citizen and tax resident.

6.4) 27 March 2015 awards

in  light  of  the  surrender  of  share  options  granted  under  the  2010  and  2011  schemes,  the  Company
implemented a new retention plan (the ‘retention plan’) for the senior team comprising K alexander, r Cooper
and L feldman (the ‘senior team’). the retention plan is focused on ensuring that the senior team are
compensated for the surrender of their fully vested and “in the money” share options. accordingly, each
member of the senior team was entitled to receive cash payments which in total equal the value of their
surrendered share options. under the retention plan:

•

•

•

•

total cash payment due to each director were to be paid evenly over a period of two years.

the directors’ dividend bonuses derived from the share options will decrease in a straight-line over the
24 month period of the retention plan

in the event a director’s service is terminated by the Company for cause (as deﬁned in their service
agreement of letter of appointment) or he resigns during the two year period (other than due to serious
illness or repudiatory breach by the Company of his service agreement), he will not be entitled to receive
any further retention plan payments.

all payments would become payable on a change of control of the Company.

During 2015, the ﬁrst of the 24 monthly retention plan payments was made, but all subsequent payments
were put on hold pending the outcome of the proposed deal with bwin.party.

prior to the surrender of the vested share options, the senior team also received cash bonuses equal to the
dividends that would have been paid to them had they exercised those options. to compensate them for the
loss  of  this  dividend  credit,  the  senior team  would  continue  to  receive  a  cash  payment  at  the  time  the
dividends are paid, equal to the dividend they would have received had they exercised their share options.
these notional shareholdings are treated as reducing over the two year period, in line with the cash payments
set out above.

all and any plans in which the directors participated terminated on 1 february 2016 and were replaced with
new arrangements the details of which were listed on pages 325 to 329 of the prospectus.

GVC HOLDINGS PLC ANNUAL REPORT 2015

31

 
RePoRt oF the ReMUneRAtion coMMittee continued

7.

Directors’ share options

existing
at 31

scheme

option
price

December Granted in surrendered
in the year
the year

2014

existing
at 31
December
2015

Vested
at 31
December
2015

expiry
date

executive Directors
K alexander
K alexander
K alexander

r Cooper
r Cooper
r Cooper

21 may 2010
16 nov 2011
2 June 2014

21 may 2010
16 nov 2011
2 June 2014

non-executive Directors
L feldman
L feldman
L feldman

21 may 2010
16 nov 2011
2 June 2014

213p
154.79p
1p

213p
154.79p
1p

213p
154.79p
1p

total

800,000
800,000
1,400,000

400,000
400,000
700,000

400,000
400,000
350,000

5,650,000

–
–
–

–
–
–

–
–
–

–

(800,000)
(800,000)
–

(400,000)
(400,000)
–

(400,000)
(400,000)
–

–
–
1,400,000

–
–
700,000

–
–
350,000

– 20 may 2020
– 27 Jan 2022
– 31 mar 2022

– 20 may 2020
– 27 Jan 2022
– 31 mar 2022

– 20 may 2020
– 27 Jan 2022
– 31 mar 2022

(3,200,000)

2,450,000

–

the charge to the Consolidated income statement in respect of these options in 2015 was €314,000 (2014:
€638,000).

other employees and consultants

8.
the majority of staff in the Group are also able to beneﬁt ﬁnancially from their endeavours through either a
discretionary bonus scheme and/or Group share option plans.

the  charge  to  the  Consolidated  income  statement  in  respect  of  the  options  for  other  employees  and
consultants in 2015 was €135,000 (2014: €98,000).

the total share option charge to the consolidated income statement for the year ended 31 December was:

Directors
other staff

2015
€

314,000
135,000

449,000

2014
€

638,000
98,000

736,000

Proposed changes to remuneration arrangements

9.
as set out in the prospectus issued on 13 november 2015, the Company made an offer for bwin.party digital
entertainment  plc.  included  within  the  prospectus  were  details  of  the  proposed  changes  to  the  current
arrangements for share options and Long term incentive plans. under these proposals, on completion of the
acquisition in february 2016:

(a) Cash payments due under the retention plan were settled contemporaneously and re-invested into

new GvC shares, with a lock up for a year from 1 february 2016;

(b) existing share options held by the directors were cash cancelled on the basis of the value of a GvC
share  at  the  date  of  announcement  of  the  acquisition,  422p,  and  the  after-tax  proceeds  were
contemporaneously re-invested in new GvC shares, also with a lock up for a year from 1 february 2016;

(c)

a new Long-term incentive plan (Ltip) was introduced under which options may be granted at an
exercise price and with/without dividend equivalents, as determined by the remuneration Committee.

under the new Ltip, the following share options were granted on 3 february 2016:

Granted
2 Feb 2016

exercise
price

Vesting
period

Performance
conditions

K alexander
r Cooper
L feldman
n teufelberger

8,798,075
4,399,037
4,399,037
200,000

422p
422p
467p
422p

2 years 6 months
2 years 6 months
2 years 6 months
2 years

total shareholder return to rank
at median or above in the ftse
250, measured quarterly
none

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in addition, L feldman will receive a cash bonus of £1,979,567 over a period of 2 years 6 months under the
same performance conditions. this cash sum is the equivalent of the difference between the exercise price
of £4.67 and the issue price of £4.22, applied to the quantity of share options which he was granted.

the options are entitled to a dividend equivalent and are exercisable up to ten years from the date of grant.

the dividend bonus scheme applicable in 2015 has been cancelled.

Karl Diacono
Chairman, remuneration Committee
22 april 2016

GVC HOLDINGS PLC ANNUAL REPORT 2015

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DiRectoRs’ RePoRt

the Directors present their report for GvC holdings pLC and the audited ﬁnancial statements for the year
ended 31 December 2015.

Principal Activities
GvC holdings pLC is a multinational sports betting and gaming group. the Group operates some of the
leading brands in the gaming sector including bwin, sporting bet, partypoker and foxy Bingo. in addition the
Group provides online gaming services on a business-to-business basis to a limited number of third party
operators.

Results and Dividends
the proﬁt for the year attributable to ordinary shareholders after taxation amounted to €24,659,000 (2014: proﬁt
of €40,563,000).

the Company is incorporated under the isle of man Companies act 2006. this act does not require the
Company to have designated distributable reserves for the purpose of declaring a dividend. the act requires
the Directors to consider the solvency of the Company before making a dividend. a corollary of this is that the
matter of dividends is not required to be put before General meeting.

the Group’s consolidated ﬁnancial statements are set out on pages 46 to 87. for a more detailed review of
the Group’s result see the report of the Chief executive and the report of the Group finance Director.

trading Review and Future Developments
the Directors are pleased with the Group’s performance during 2015 and are conﬁdent that this performance
will continue to improve during 2016 and beyond. in february 2016, the Group acquired bwin.party, one of
europe’s leading online betting brands, for €1.5 billion.

for a detailed review of the trading performance and future developments of the Group see the Chairman’s
statement, report of the Chief executive and the report of the Group finance Director.

Key Performance indicators
for a more detailed review of the key performance indicators of the Group see the report of the Chief
executive.

Directors and their interests
the Directors of the Company and their interests in the ordinary share capital of the Group are as follows:

ordinary shares of €0.01 each in
GVc holdings PLc

22 April 2016

31 December 2015

31 December 2014

executive Directors
K alexander
r Cooper

non-executive Directors
L feldman
K Diacono
s morana
p isola
n teufelberger

1,585,455
757,553

702,169
–
–
–
2,755,264

212,000
15,000

185,957
–
–
–
–

87,000
1,667

122,575
–
–
–
–

the  wife  of  K alexander  owned  313,333  ordinary  shares  at  22 april  2016,  31  December  2015  and  31
December 2014.

the wife of r Cooper owned 335,000 ordinary shares at 31 December 2015 and at 22 april 2016, and 325,000
ordinary shares at 31 December 2014.

the Directors’ shareholdings represent 2.2% (2014: 1.39%) of the voting shares of the Company.

Details of the Directors who have an interest in share options are disclosed in the report of the remuneration
Committee.

GVC HOLDINGS PLC ANNUAL REPORT 2015

35

 
DiRectoRs’ RePoRt continued

creditor Payment Policy
it is the Group’s policy to agree terms of business with suppliers prior to the supply of goods and services.

corporate Governance statement
the Company was not required to comply with the uK Corporate Governance Code (the “Code”) in 2015 as
an aim listed company, or more recently as a standard listed company. as previously publicly stated, however,
the Company intends to apply for a premium listing on the London stock exchange later this year and as part
of this process will explain how it complies with the Code.

Going concern
the Group’s business activities, together with the factors likely to affect its future performance and position
are set out in the Chairman’s, Chief executive’s and Group finance Director’s reports. note 21 to the ﬁnancial
statements sets out the Group’s ﬁnancial risk management policies and its exposure to credit risk and liquidity
risk including those arising from the Cerberus loan facility.

the Directors have assessed the ﬁnancial and regulatory 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  the
consolidated ﬁnancial statements.

statement of Directors’ Responsibilities
the Directors are responsible for preparing the Directors’ report and the ﬁnancial statements in accordance
with applicable law and regulations.

Company law requires the Directors to keep reliable accounting records which allow ﬁnancial statements to
be prepared. in addition, the Directors have elected to prepare group ﬁnancial statements in accordance with
international financial reporting standards as adopted by the european union and applicable law, and have
elected to prepare the parent company ﬁnancial statements in accordance with uK accounting standards and
applicable law (uK Generally accepted accounting practice including frs 101). the ﬁnancial statements are
required to give a true and fair view of the state of affairs of the Group and Company and of the proﬁt or loss
of the Group for that year. in preparing these ﬁnancial statements, the Directors are required to:

•

•

•

•

select suitable accounting policies and apply them consistently;

make judgments and estimates that are reasonable and prudent;

state whether applicable international financial reporting standards and uK accounting standards
have  been  followed,  subject  to  any  material  departures  disclosed  and  explained  in  the  ﬁnancial
statements; and

prepare the ﬁnancial statements on a going concern basis unless it is inappropriate to presume that
the Group and Company will continue in business.

the Directors are responsible for keeping reliable accounting records that disclose with reasonable accuracy
at any time the ﬁnancial position of the Company and enable them to ensure that the ﬁnancial statements
comply with the isle of man Companies act 2006. they are also responsible for safeguarding the assets of
the  Group  and  hence  for  taking  reasonable  steps  for  the  prevention  and  detection  of  fraud  and  other
irregularities.

Directors’ responsibility statement under the Disclosure and transparency Rules
each of the Directors conﬁrm that:

•

•

36

to the best of their knowledge, the Group ﬁnancial statements, which have been prepared in accordance
with ifrs as adopted by the eu, give a true and fair view of the assets, liabilities, ﬁnancial position and
proﬁt of the Group; and

to the best of their knowledge, the Company ﬁnancial statements, prepared in accordance with frs
101, give a true and fair view of the assets, liabilities and ﬁnancial position of the Company; and

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to the best of their knowledge, the reports of the Chief executive and the finance Director contained in
the annual report include a fair review of the development and performance of the business.

in so far as the Directors are aware:

•

•

there is no relevant audit information of which the Company’s auditors are unaware; and

the Directors have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditors are aware of that information.

the Directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information
included  on  the  Company’s  website.  Legislation  in  the  isle  of  man  and  the  uK  Listing  rules  governing
preparation and dissemination of ﬁnancial statements may differ from legislation in other jurisdictions.

for and on behalf of the Board of GvC holdings pLC.

Richard cooper
Group finance Director

Registered office: 32 athol street, Douglas, isle of man, im1 1JB

GVC HOLDINGS PLC ANNUAL REPORT 2015

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in tHis section:

independent auditor’s report to tHe memBers 
of GVc HoldinGs plc

consolidated income statement

consolidated statement of compreHensiVe income

consolidated statement of financial position

consolidated statement of cHanGes in eQuity

consolidated statement of casH floWs

41

46

46

47

48

49

auditor’s report and
primary financial
statements 

 
 
 
 
 
  
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independent auditor’s report to tHe memBers of
GVc HoldinGs plc

our opinion on the ﬁnancial statements is unmodiﬁed
in our opinion the Group ﬁnancial statements:

•

•

give a true and fair view of the state of the Group’s affairs as at 31 december 2015 and of its proﬁt for the
year then ended; and

have been properly prepared in accordance with international financial reporting standards (ifrss) as
adopted by the european union.

other matter
We have reported separately on the parent company ﬁnancial statements of GVc Holdings plc for the year.

Who we are reporting to
this report is made solely to the company’s members, as a body, in accordance with the terms of our engagement
letter dated 27 october 2015. our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. to the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

What we have audited
GVc Holdings plc’s ﬁnancial statements for the year ended 31 december 2015 comprise the consolidated income
statement,  the  consolidated  statement  of  comprehensive  income,  the  consolidated  statement  of  financial
position, the consolidated statement of changes in equity, the consolidated statement of cash flows and the
related notes.

the ﬁnancial reporting framework that has been applied in their preparation is applicable law and ifrss as adopted
by the european union.

overview of our audit approach
•

overall group materiality: €1.7 million, which represents 3.4% of the Group’s earnings before taxation less
exceptionals;

•

•

We performed full scope audits at the key business operations in the uK, ireland and malta; and

Key  audit  risks  were  identiﬁed  as  post  balance  sheet  date  reporting,  revenue  recognition,  valuation  of
derivative ﬁnancial instruments and impairment of goodwill and intangible assets.

our assessment of risk
in arriving at our opinions set out in this report, we highlight the following risks that, in our judgement, had the
greatest effect on our audit.

GVC HOLDINGS PLC ANNUAL REPORT 2015

41

 
 
 
 
 
  
independent auditor’s report to tHe memBers of
GVc HoldinGs plc continued

audit risk

How we responded to the risk

post balance sheet date reporting

the Group completed an agreement to acquire the entire
issued  and  to  be  issued  ordinary  share  capital  of
bwin.party  digital  entertainment  plc 
(“bwin”)  on
2 february 2016.

the impact on the Group’s ﬁnancial statements for the
year  ended  31  december  2015  relate  primarily  to  the
post balance sheet disclosures included in note 26.

there are a number of items related to this disclosure
note which require the application of judgements and
estimates by management – most notably:

•

•

ifrs  3 

requirements  of 

identiﬁcation of the acquirer, taking into account
“Business
the 
Combinations”  and 
ifrs  10  “Consolidated
Financial Statements”; and
identiﬁcation and valuation of intangible assets and
goodwill  on  acquisition,  and  any  fair  value
adjustments to net assets acquired.

Given these judgements and the fact that the transaction
signiﬁcantly increases the size of the business we have
identiﬁed  post  balance  sheet  date  reporting  as  a
signiﬁcant risk requiring special audit consideration.

audit risk

revenue recognition

the  Group  enters  in  to  high  volumes  of  net  Gaming
revenue  ("nGr")  generating  transactions  each  day,
recorded  across  inhouse  and  third  party  it  systems.
auditing standards prescribe a presumed risk of fraud in
revenue recognition in that revenue may be misstated
through improper recognition.

We have therefore identiﬁed revenue recognition as a
signiﬁcant risk requiring special audit consideration.

We have performed the following procedures on the
key areas of judgement:

•

•

•

•

treatment  of 

compared management’s assessment of the
the  business
accounting 
combination and in particular the identiﬁcation
of  the  acquirer  in  accordance  with  the
requirements of ifrs 3 and ifrs 10;

examined  signed  sales  and  purchase
agreements  and  associated  contractual
documents  to  understand  the  terms  and
conditions of the transaction;

prepared 

the  models 

by
assessed 
management  to  value  the  intangible  assets
identiﬁed in the acquired business, using our
internal 
the
assumptions  and  methodology  used  by
management;

specialists 

challenge 

to 

assessed whether the disclosures presented
in  note  26  to  the  ﬁnancial  statements  are  in
accordance with the requirements of ifrs 3
and ifrs 10.

How we responded to the risk

our audit work included, but was not limited to:

•

•

•

•

•

evaluating  whether 
the  Group’s  revenue
recognition policies are in line with accounting
standards;

evaluating 
the  design  effectiveness  and
implementation of controls around the relevant
it  systems  including  the  Group’s  gaming
platform, mm1;

reconciling data both from mm1 to the general
ledger and in reverse;

where the it system is outsourced, obtaining
and  reviewing  a  sample  of  the  provider’s
monthly reports and the reconciliations to the
Group’s trial balances;

testing a sample of bets placed during the year
to  verify  that  the  event  relating  to  the  bet
occurred in the year, and that in the case of
winning  bets,  the  pay-out  was  correctly
calculated  and  recorded  in  the  customer’s
account;.

the Group’s accounting policy on the recognition of
income is shown in note 1.11 and the components of
that income are included in note 2.

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How we responded to the risk

Valuation of derivative financial instruments

the Group has entered into a number of contracts during
the  current  and  preceding  years  resulting  in  ﬁnancial
derivative  instruments  of  €3.8  million  (assets)  and
€0.7 million (liabilities) being recognised respectively on
the statement of financial position at fair value in line
with  IAS  39 “Financial  Instruments:  Recognition  and
Measurement”.

the valuation of these instruments are often complex,
involve  a  number  of  estimates,  some  of  which  derive
from  management  information  and  can  be  highly
judgemental.

We  have  therefore  identiﬁed  the  valuation  of  these
instruments as a signiﬁcant risk requiring special audit
consideration.

our audit work included, but was not restricted to:

•

•

•

meeting  with 
the  external  valuer,  and
assessing their qualiﬁcations and objectivity in
preparing the valuations;

engaging our valuation specialists to assess
the  appropriateness  of  assumptions,  inputs
and methodology applied;

reviewing  the  disclosures  in  note  21  and
conﬁrming  they  are  in  compliance  with  the
requirements of ifrs 7 “Financial Instruments:
Disclosures”.

the  Group’s  accounting  policy  on  the  recognition
and measurement of ﬁnancial derivative instruments
is included in note 1.17 to the ﬁnancial statements.

audit risk

How we responded to the risk

impairment of goodwill and intangible assets

the Group holds goodwill of €133 million and intangible
assets  of  €22  million  on  its  statement  of  financial
position at 31 december 2015.

ias 36 requires that goodwill and other intangibles with
indeﬁnite useful lives are tested for annual impairment.
all  other  intangible  assets  must  also  be  assessed
annually for indicators of impairment.

the impairment review process to test the recoverability
of  these  assets  arising  on  acquisition  involves  the
application  of 
judgements  and  estimates  by
management.

there  are  particular  risks  regarding  the  judgments
included in the forecasts to determine the recoverable
amount, including the growth rates underlying projected
future  cash  ﬂows,  the  discount  rates  applied  to  those
forecasts  and  the  scenarios  applied  to  test  the
calculations’ sensitivity to reasonably possible changes
in key assumptions

We tested the assumptions used by management
within  their  annual  impairment  assessment  to
support the recoverability of the carrying value of
goodwill and intangible assets. our work included,
but was not restricted to:

•

•

•

challenging  the  projected  future  cash  ﬂow
growth rates and patterns;

engaging  valuation  specialists  to  provide
additional challenge regarding the calculations
of  the  discount  rate  applied  to  these  cash
ﬂows;  assessing  the  appropriateness  of  the
sensitivities applied by management including
scenarios
considering 
represented reasonably possible changes in
key assumptions; and

whether 

the 

considering  whether  the  disclosures  on  the
impairment test performed by management in
the ﬁnancial statements are in line with those
prescribed in accounting standards.

the  Group’s  accounting  policy  on  impairment  is
shown in note 1.7 and the goodwill and impairment
testing disclosures are included in note 8.2.

our application of materiality and an overview of the scope of our audit

materiality
We deﬁne materiality as the magnitude of misstatement in the ﬁnancial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or inﬂuenced. We use materiality
in determining the nature, timing and extent of our audit work and in evaluating the results of that work.

We determined materiality for the audit of the Group ﬁnancial statements as a whole to be €1.7 million, which is
approximately 3.4% of earnings before taxation less exceptional costs. this benchmark is considered the most
appropriate because this is a key performance measure used by the directors to report to investors on the ﬁnancial
position of the Group.

GVC HOLDINGS PLC ANNUAL REPORT 2015

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independent auditor’s report to tHe memBers of
GVc HoldinGs plc continued

We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set
at 75% of ﬁnancial statement materiality for the audit of the Group ﬁnancial statements. We also determine a lower
level of speciﬁc materiality for certain areas such as directors’ remuneration and related party transactions.

We determined the threshold at which we will communicate misstatements to the audit committee to be €85,000.
in  addition  we  will  communicate  misstatements  below  that  threshold  that,  in  our  view,  warrant  reporting  on
qualitative grounds.

overview of the scope of our audit
an audit involves obtaining evidence about the amounts and disclosures in the ﬁnancial statements sufficient to
give reasonable assurance that the ﬁnancial statements are free from material misstatement, whether caused by
fraud or error. this includes an assessment of: whether the accounting policies are appropriate to the group’s
circumstances and have been consistently applied and adequately disclosed; the reasonableness of signiﬁcant
accounting estimates made by the directors; and the overall presentation of the ﬁnancial statements. in addition,
we read all the ﬁnancial and non-ﬁnancial information in the annual report to identify material inconsistencies
with the audited ﬁnancial statements and to identify any information that is apparently materially incorrect based
on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. if we become
aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

We conducted our audit in accordance with international standards on auditing (isas) (uK and ireland). our
responsibilities under those standards are further described in the ‘responsibilities for the ﬁnancial statements
and the audit’ section of our report. We believe the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.

We are independent of the Group in accordance with the auditing practices Board’s ethical standards for auditors,
and we have fulﬁlled our other ethical responsibilities in accordance with those ethical standards.

our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement at the Group level. the Group’s activities are spread
across 57 wholly owned statutory entities. the components of the Group were evaluated by the Group audit team
based on a measure of materiality, considering each as a percentage of total Group assets, revenues and earnings
before tax, to assess the signiﬁcance of each component and to determine the planned audit response.

for those components that were deemed signiﬁcant either a full scope, targeted or analytical audit approach was
determined based on their relative materiality to the Group and our assessment of audit risk. for signiﬁcant
components requiring a full scope approach we evaluated and tested controls over the ﬁnancial reporting systems
identiﬁed  as  part  of  our  risk  assessment,  reviewed  the  accounts  production  process  and  addressed  critical
accounting matters.

Based on this assessment we focused on the Group’s operations based in the uK, ireland and malta, which were
subject to a full audit for the year ended 31 december 2015. We used a Grant thornton network member ﬁrm to
complete the audit work of the operations in malta under our supervision and review. the remaining entities were
subject to a targeted or analytical approach. our audit was executed at levels of materiality applicable to each
individual entity which were lower than Group materiality and ranged from €1,275k to €1,700k. at the parent entity
level we performed audit procedures on material transactions and consolidation adjustments.

as a consequence of the audit scope determined, we achieved full scope coverage of 100% of the Group’s revenue,
99% of the Group’s net assets, 100% of the Group’s proﬁt making components and 92% of the Group’s loss making
components.

as the Group’s parent company is based in the isle of man we used a Grant thornton network member ﬁrm to
check the requirements of local isle of man statute had been met in the disclosures included in the annual report.

in  the  current  year  the  Group  audit  team  visited  the  operations  in  ireland  and  malta,  due  to  their  ﬁnancial
signiﬁcance to the Group.

44

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responsibilities for the ﬁnancial statements and the audit
What the directors are responsible for:

as  explained  more  fully  in  the  statement  of  directors’  responsibilities  set  out  on  page 36,  the  directors  are
responsible for the preparation of the Group ﬁnancial statements which give a true and fair view.

What we are responsible for:

our  responsibility  is  to  audit  and  express  an  opinion  on  the  Group  ﬁnancial  statements  in  accordance  with
applicable law and isas (uK and ireland). those standards require us to comply with the auditing practices Board’s
ethical standards for auditors.

Grant thornton uK llp
chartered accountants
london
22 april 2016

GVC HOLDINGS PLC ANNUAL REPORT 2015

45

 
 
 
 
 
  
consolidated income statement
for the year ended 31 december 2015

net Gaming revenue
cost of sales

contribution
administrative costs

clean eBitda
share option charges
exceptional items
depreciation and amortisation
impairment of available for sale asset
changes in the fair value of derivative ﬁnancial instruments

operating proﬁt
financial income
financial expense

proﬁt before tax
taxation expense

proﬁt after tax

earnings per share
Basic

diluted

notes

2

2
3

3
3
3, 7, 8
9
10

4
4

5

6

6

2015
€000’s

247,730
(112,369)

135,361
(81,284)

54,077
(449)
(24,496)
(4,985)
(1,216)
4,817

27,748
4
(2,246)

25,506
(847)

24,659

€
0.402

0.383

2014
€000’s

224,801
(101,513)

123,288
(74,126)

49,162
(736)
–
(3,912)
(1,593)
–

42,921
16
(1,646)

41,291
(728)

40,563

€
0.664

0.614

consolidated statement of compreHensiVe income
for the year ended 31 december 2015

proﬁt for the year

total comprehensive income for the year

the notes on pages 53 to 87 form part of these ﬁnancial statements.

2015
€000’s

24,659

24,659

2014
€000’s

40,563

40,563

46

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consolidated statement of financial position
as at 31 december 2015

assets
property, plant and equipment
intangible assets
available for sale ﬁnancial asset

total non-current assets

trade and other receivables
Winunited option asset
income taxes reclaimable
other tax reclaimable
cash and cash equivalents

total current assets

total assets

current liabilities
trade and other payables
Balances with customers
amounts due under ﬁnance leases
non-interest bearing loans and borrowings
deferred consideration on Betboo
share option liability
forward contract liability
income taxes payable
other taxation payable

total current liabilities

current assets less current liabilities

non-current liabilities
interest bearing loans and borrowings
non-interest bearing loans and borrowings
share option liability
Betit option liability
deferred consideration on Betboo

total non-current liabilities

total net assets

capital and reserves
issued share capital
merger reserve
share premium
translation reserve
retained earnings

notes

7
8
9

11
10
5

12

13

17
14
15
20
3
5
16

14, 17
14
20
10
15

18
18
18
18
18

2015
€000’s

1,428
155,153
2,585

159,166

34,618
3,808
5,972
12
28,170

72,580

2014
€000’s

1,147
154,260
3,801

159,208

27,605
–
3,925
139
17,829

49,498

231,746

208,706

(32,016)
(14,808)
(691)
(3,020)
(1,606)
(9,740)
(9,877)
(7,251)
(2,020)

(81,029)

(26,777)
(13,036)
(1,362)
(2,735)
(2,347)
(184)
–
(5,014)
(1,338)

(52,793)

(8,449)

(3,295)

(19,821)
–
(2,036)
(736)
–

(22,593)

128,124

613
40,407
85,380
359
1,365

(327)
(2,777)
–
(1,745)
(1,606)

(6,455)

149,458

613
40,407
85,380
359
22,699

total equity attributable to equity holders of the parent

128,124

149,458

the ﬁnancial statements from pages 46 to 87 were approved and authorised for issue by the Board of directors
on 22 april 2016 and signed on their behalf by:

K.J. alexander
(chief executive officer)

r.Q.m. cooper
(Group finance director)

the notes on pages 53 to 87 form part of these ﬁnancial statements.

GVC HOLDINGS PLC ANNUAL REPORT 2015

47

 
 
 
 
 
  
consolidated statement of cHanGes in eQuity
for the year ended 31 december 2015

attributable to equity holders of the parent company:

share

merger
capital reserve
€000’s
€000’s

notes

share translation 

retained
premium reserve earnings*
€000’s
€000’s

€000’s

total
€000’s

609 

40,407 

84,530 

359

15,191 

141,096

Balance at 1 January 2014

share option charges**
share options exercised
dividend paid

transactions with owners

proﬁt for the year

total comprehensive income for the year

–
4 
–

4 

–

–

–
–
–

–

–

–

–
850 
–

850 

–

–

Balance as at 31 december 2014

613 

40,407 

85,380

Balance at 1 January 2015

share option charges**
share options surrendered
share options exercised
dividend paid

transactions with owners

proﬁt for the year
other comprehensive income for the year

total comprehensive income for the year

613 

40,407 

85,380 

20
20
20
19

–
–
–
–

–
–

–

–
–
–
–

–

–
–

–

–
–
–
–

–
–

–

–
–
–

–

–

–

359

359

–
–
–
–

–

–
–

–

552 
–
(33,607)

552
854
(33,607)

(33,055)

(32,201)

40,563

40,563

40,563

40,563

22,699 

149,458

22,699 

149,458

509 
(12,183)
–
(34,319)

509
(12,183)
–
(34,319)

(45,993)

(45,993)

24,659 
–

24,659

24,659
–

24,659

Balance as at 31 december 2015

613

40,407

85,380

359

1,365 

128,124

* the share option reserve included within retained earnings at 31 December 2015 amounted to a debit balance
of €6,955,345, largely due to the surrender of fully vested share options during 2015, now recognised as a liability.

** total share option charge per the Consolidated Income Statement amounted to €449,231, the difference being
a net credit to the cash settled share option expense of €59,282 which is not taken directly to retained earnings.

all reserves of the company are distributable, as under the isle of man companies act 2006 distributions are not
governed by reserves but by the directors undertaking an assessment of the company’s solvency at the time of
distribution (section 49, companies act isle of man 2006).

the notes on pages 53 to 87 form part of these ﬁnancial statements.

48

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consolidated statement of casH floWs
for the year ended 31 december 2015

cash ﬂows from operating activities
cash receipts from customers
cash paid to suppliers and employees
corporate taxes recovered
corporate taxes paid

net cash from operating activities

cash ﬂows from investing activities
interest received
acquisition earn-out payments (Betboo)
investment in Betit
acquisition of property, plant and equipment
capitalised development costs

net cash used in investing activities

cash ﬂows from ﬁnancing activities
proceeds from interest bearing loan (cerberus)
non-interest bearing loan (from William Hill)
proceeds from issue of share capital
repayment of borrowings
dividend paid 

net cash used in ﬁnancing activities

net increase/(decrease) in cash and cash equivalents
exchange differences
cash and cash equivalents at beginning of the year

cash and cash equivalents at end of the year

the notes on pages 53 to 87 form part of these ﬁnancial statements.

notes

15
10
7
8

14
14

17
19

2015
€000’s

248,227
(208,600)
–
(657)

38,970

4
(2,401)
–
(1,156)
(5,003)

(8,556)

19,375
(3,245)
–
(1,768)
(34,319)

(19,957)

10,457
(116)
17,829

28,170

2014
€000’s

221,048
(172,581)
1,256
(1,740)

47,983

16
(4,339)
(3,649)
(802)
(3,343)

(12,117)

–
(2,856)
854
(1,149)
(33,607)

(36,758)

(892)
(87)
18,808

17,829

GVC HOLDINGS PLC ANNUAL REPORT 2015

49

 
 
 
 
 
  
50

GVC HOLDINGS PLC ANNUAL REPORT 2015

in this section

Notes to the CoNsolidated FiNaNCial statemeNts

ComPaNY FiNaNCial statemeNts (UNdeR UK GaaP – FRs 101)

additioNal UNaUdited iNFoRmatioN

53

91

103

Notes to the CoNsolidated 
FiNaNCial statemeNts,
ComPaNY FiNaNCial statemeNts aNd
additioNal UNaUdited iNFoRmatioN

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notes to the consolidated financial statements
for the year ended 31 december 2015

1.

2.

3.

4.

5.

6.

7.

8.

9.

signiﬁcant accounting policies

segmental reporting

operating costs

Financial income and expenses

taxation

earnings per share

Property, plant and equipment

intangible assets

available for sale ﬁnancial asset

10. derivative ﬁnancial instruments: options

11. Receivables and prepayments

12. Cash and cash equivalents

13. trade and other payables

14.

loans and borrowings

15. Betboo deferred consideration

16. other taxation payable

17. Commitments under operating and ﬁnance leases

18. share capital and reserves

19. dividends

20. share option schemes

21.

Financial instruments and risk management

22. Related parties

23. Contingent liabilities

24. accounting estimates and judgements

25. Going concern

26. subsequent events

GVC HOLDINGS PLC ANNUAL REPORT 2015

53

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

siGnificant accoUntinG policies

1.
this note deals with both the signiﬁcant accounting policies used in the preparation of these ﬁnancial statements, together with
a note identifying new accounting standards which will affect the Group.

GVC holdings PlC is a company registered in the isle of man and was incorporated on 5 January 2010. it is the successor
company of Gaming VC holdings s.a., a company which had been incorporated in luxembourg, and took the assets of Gaming
VC holdings s.a. on 21 may 2010 after formal approval by shareholders. the consolidated ﬁnancial statements of the Group for
the year ended 31 december 2015 comprise the Company and its subsidiaries (together referred to as the ‘Group’).

1.1 statement of compliance

the consolidated ﬁnancial statements have been prepared in accordance with international Financial Reporting standards
(iFRss), as adopted by the european Union.

the directors have reviewed the accounting policies used by the Group and consider them to be the most appropriate. the
accounting policies are consistent with the prior year with the exception of revisions and amendments to iFRs issued by the
iasB, which are relevant to and effective for the annual period beginning 1 January 2015. there was no material effect on current,
prior or future periods arising from the ﬁrst-time application of these new requirements in respect of presentation, recognition
and measurement are described more fully in note 1.21.

1.2 Basis of preparation

the ﬁnancial information, which comprises the Consolidated income statement, the Consolidated statement of Comprehensive
income, the Consolidated statement of Financial Position, the Consolidated statement of Changes in equity, the Consolidated
statement of Cash ﬂows and related notes, is derived from the Group ﬁnancial statements for the year ended 31 december 2015,
which have been prepared under international Financial Reporting standards as adopted by the european Union (iFRs) and
those parts of the isle of man Companies act 2006 applicable to companies reporting under iFRs.

the ﬁnancial statements are presented in the euro, rounded to the nearest thousand, and are prepared on the historical cost
basis with the exception of those assets and liabilities carried at fair value (see note 21.6). the ﬁnancial statements are prepared
on the going concern basis (see note 25).

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using another
valuation technique. in estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the
asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the
measurement  date.  Fair  value  for  measurement  and/or  disclosure  purposes  in  these  consolidated  ﬁnancial  statements  is
determined on such a basis, except for share-based payment transactions that are within the scope of iFRs 2, leasing transactions
that are within the scope of ias 17, and measurements that have some similarities to fair value but are not fair value, such as net
realisable value in ias 2 or value in use in ias 36.

the  preparation  of  ﬁnancial  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.

signiﬁcant accounting estimates and judgements are discussed in further detail in note 24.

the accounting policies set out below have been applied consistently to all periods presented in these consolidated ﬁnancial
statements.

the accounting policies have been applied consistently by Group entities.

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1.3  Basis of consolidation

1.3.1 subsidiaries
the Group ﬁnancial statements consolidate those of the parent company and all of its subsidiaries as of 31 december 2015.

Proﬁt or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of disposal, as applicable. the Group attributes total comprehensive income
(or loss) of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership
interests.

Where the company has control over an investee, it is classiﬁed as a subsidiary. the company controls an investee if all three of
the following elements are present:

•

•

•

Power over the investee

exposure or rights to variable returns from the investee

the ability of the company to use its power to affect those variable returns.

Control is re-assessed whenever facts and circumstances indicate that there may be a change in any of the above elements of
control.

1.3.2 transactions eliminated on Consolidation
all transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation,
the underlying asset is also tested for impairment from a group perspective. amounts reported in the ﬁnancial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

1.3.3 Business Combinations
acquisitions  of  businesses  are  accounted  for  using  the  acquisition  method.  the  consideration  transferred  in  a  business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred
by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group
in exchange for control of the acquiree. acquisition related costs are generally recognised in proﬁt or loss as incurred.

at the acquisition date, the identiﬁable assets acquired and the liabilities assumed are recognised at their fair value, except that:

•

•

•

deferred tax assets or liabilities, and assets or liabilities related to employee beneﬁt arrangements are recognised and
measured in accordance with ias 12 income taxes and ias 19 employee Beneﬁts respectively;

liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in
accordance with iFRs 2 share Based Payments at the acquisition date; and

assets (or disposal groups) that are classiﬁed as held for sale in accordance with iFRs 5 Non-current assets held for sale
and discontinued operations are measured in accordance with that standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in
the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the
acquisition-date amounts of the identiﬁable assets acquired and the liabilities assumed. if, after reassessment, the net of the
acquisition-date amounts of the identiﬁable assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest
in the acquiree (if any), the excess is recognised immediately in proﬁt or loss as a bargain purchase gain.

When  the  consideration  transferred  by  the  Group  in  a  business  combination  includes  assets  or  liabilities  resulting  from  a
contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included
as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that
qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.
measurement period adjustments are adjustments that arise from additional information obtained during the “measurement
period” (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition
date.

the subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement
period adjustments depends on how the contingent consideration is classiﬁed. Contingent consideration that is classiﬁed as
equity is not re-measured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent
consideration that is classiﬁed as an asset or a liability is re-measured at subsequent reporting dates in accordance with ias 39,
as appropriate, with the corresponding gain or loss being recognised in proﬁt or loss.

GVC HOLDINGS PLC ANNUAL REPORT 2015

55

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

1.

siGnificant accoUntinG policies continued

1.3 Basis of consolidation continued

1.3.3 Business Combinations continued
if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the terms for which the accounting is incomplete. those provisional amounts
are  adjusted  during  the  measurement  period  (see  above),  or  additional  assets  or  liabilities  are  recognised,  to  reﬂect  new
information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the
amounts recognised at that date.

1.4

foreign currency

the functional currency of the Company, as well as the presentational currency of the Group, is the euro.

1.4.1 Foreign Currency transactions
monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the euro at the foreign
exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated income
statement within operating costs (note 3) and ﬁnancial costs (note 4.1). 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.

income and expense items are translated using the exchange rates at the start of the relevant month, unless exchange rates
ﬂuctuate signiﬁcantly, in which case the spot rate for signiﬁcant items is used.

exchange differences arising due to the functional currency of operations differing from the presentational currency of the Group,
if any, are recognised in other comprehensive income, classiﬁed as equity and transferred to the Group’s translation reserve.
such translation differences are reclassiﬁed to proﬁt or loss in the period in which the operation is disposed of.

1.5 property, plant and equipment

1.5.1 owned assets
Property, plant and equipment is stated at cost, less accumulated depreciation (see 1.5.2 below) and impairment losses (see
accounting policy 1.7). 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.

1.5.2 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:

Fixtures and ﬁttings:
Plant and equipment:

3 years
3 years

the residual value, if signiﬁcant, is reassessed annually.

1.6

intangible assets

1.6.1 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less
accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill has been allocated to each of the Group’s Cash-Generating Units (‘CGU’) that
is expected to beneﬁt from the synergies of the combination.

a CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. if the recoverable amount of the CGU is less than its carrying amount, the impairment loss is
allocated ﬁrst to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata
based on the carrying amount of each asset in the unit. any impairment loss for goodwill is recognised directly in proﬁt or loss.
an impairment loss recognised for goodwill is not reversed in subsequent periods.

on disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the proﬁt or loss on
disposal.

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1.6.2 other intangible assets
other  intangible  assets  that  are  acquired  by  the  Group  are  stated  at  cost  less  accumulated  amortisation  (see  1.6.4)  and
impairment losses (see accounting policy 1.7).

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 identiﬁable asset category is detailed below:

asset category
Consulting and magazine
software licence
trademarks
trade name
Non Contractual customer relationships

Valuation methodology
income (cost saving)
income (incremental value plus loss of proﬁts)
Relief from royalty
Relief from royalty
excess earnings

Where, in the opinion of the directors, the Group’s expenditure in relation to development of internet activities results in future
economic beneﬁts, these costs are capitalised within software licences and amortised over the useful economic life of the asset.

development costs are capitalised only when it is probable that future economic beneﬁt will result from the project and the
following criteria are met:

• 

• 

• 

• 

• 

the technical feasibility of the product has been ascertained;

adequate technical, ﬁnancial and other resources are available to complete and sell or use the intangible asset;

the Group can demonstrate how the intangible asset will generate future economic beneﬁts and the ability to use or sell
the intangible asset can be demonstrated;

it is the intention of management to complete the intangible asset and use it or sell it; and

the development costs can be measured reliably.

1.6.3 subsequent expenditure
subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic beneﬁts
embodied in the speciﬁc asset to which it relates. this includes legal and similar expenditure incurred in registering brands and
trade names, which is capitalised, all other expenditure is expensed as incurred.

1.6.4 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 indeﬁnite. Goodwill and trademarks with an indeﬁnite useful life are systematically tested for impairment at
each reporting date. other intangible assets are amortised from the date they are available for use. the estimated useful lives
are as follows:

software licence agreements 
Non-contractual customer relationships

2-15 years
4 years

1.7

impairment

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 inﬂows 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 reﬂecting the asset speciﬁc risks and the time value of money are used for the
value in use calculation.

For goodwill and trademarks that have an indeﬁnite useful life, the recoverable amount is estimated at each reporting date.

1.8 dividends paid to holders of share capital

dividend distributions payable to equity shareholders are recognised through equity reserves on the date the dividend is paid.

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57

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

1.

siGnificant accoUntinG policies continued

1.9 employee Beneﬁts

1.9.1 Pension Costs
in some jurisdictions in which the Group has employees, there are government or private schemes into which the employing
company or branch must make payments on a deﬁned contribution basis, the contributions are shown in the proﬁt or loss account
in the year.

1.9.2 share options
the Group has share option schemes which allow Group employees and contractors 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 are measured using either a binomial or monte Carlo valuation model. this valuation method
takes into account the terms and conditions upon which the options were granted. the amount recognised as an expense is
adjusted to reﬂect the actual number of share options that vest and market conditions if applicable.

Payments made to repurchase or cancel vested awards are accounted for with the fair value of the options cancelled, measured
at the date of cancellation being taken to retained earnings; the balance is taken to the income statement. also on cancellation
an accelerated charge would be recognised immediately.

see note 20 for further details of the schemes.

1.10 provisions

a provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is
probable that an outﬂow of economic beneﬁts will be required to settle the obligation. if the effect is material, provisions are
determined by discounting the expected future cash ﬂows at a pre-tax rate that reﬂects current market assessments of the time
value of money and, where appropriate, the risks speciﬁc to the liability.

1.11 revenue recognition

Net Gaming Revenue (‘NGR’) is measured at the fair value of consideration received or receivable and comprises the following
elements:

Casino:

net win in respect of bets placed on casino games that have concluded in the year, stated net of promotional
bonuses.

sportsbook:

gains and losses in respect of bets placed on sporting events in the year, stated net of promotional bonuses.
open positions are carried at fair market value and gains and losses arising on this valuation are recognised in
revenue, as well as gains and losses realised on positions that have closed.

Poker:

Bingo: 

net win in respect of rake for poker games that have concluded in the year, stated net of promotional bonuses.

net win in respect of bets placed on bingo games that have concluded in the year, stated net of promotional
bonuses.

Where promotional bonuses apply to customers playing a variety of products through the same wallet, bonuses are allocated
pro-rata to the net win.

B2B income comprises the amounts receivable for services to other online gaming operators. income is recognised when a right
to consideration has been obtained through performance and reﬂects contract activity during the year.

1.12 financial expenses

Financial expenses comprise interest payable on borrowings, calculated using the effective interest rate method which discounts
the expected cash ﬂows over the life of the ﬁnancial instrument, and foreign exchange differences arising on loans and ﬁnance
leases.

1.13 exceptional items

exceptional items are those that in the judgement of the directors need to be disclosed by virtue of their size or incidence in
order for the user to obtain a proper understanding of the ﬁnancial information.

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1.14 financial income

Financial income is interest income recognised in the income statement as it accrues, using the effective interest method.

1.15 tax

the tax currently payable is based on taxable proﬁt for the year. taxable proﬁt differs from proﬁt as reported in the consolidated
income statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.

deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases,
calculated using the liability method on temporary differences. however, deferred tax is neither provided on the initial recognition
of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects
tax or accounting proﬁt. deferred tax on temporary differences associated with investments in subsidiaries is not provided if
reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the
foreseeable future. in addition, tax losses available to be carried forward as well as other income tax credits to the Group are
assessed for recognition as deferred tax assets.

deferred tax liabilities are provided in full, with no discounting. deferred tax assets are recognised to the extent that it is probable
that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred
tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided
they are enacted or substantively enacted at the reporting date.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except
where they relate to items that are charged or credited directly to other comprehensive income or equity in which case the related
deferred tax is also charged or credited directly to other comprehensive income or equity as appropriate.

1.16 segment reporting

the Board has reviewed and conﬁrmed the Group’s reportable segments in line with the requirements of iFRs 8 ‘operating
segments’. the segments disclosed below are aligned with the reports the Group’s Chief executive reviewed during 2015 to make
strategic decisions.

sports: 

being the gains and losses in respect of bets placed on sporting events in the year

Gaming: 

being the net win in respect of bets placed on casino, poker, bingo that have concluded in the year, along with
deposit charges debited to customer accounts.

Variable costs and corporate overheads which are not directly attributable to the business activities of any operating segment
are not allocated to a segment. these are not reviewed by the Chief executive on a segment basis and accordingly the analysis
by segment is for revenue only. in addition, the statement of Financial Position is not reviewed on a segment basis.

the Board will review the Group’s reportable segments during 2016, in light of the acquisition of bwin.party in February 2016.

1.17 financial instruments

Financial assets and ﬁnancial liabilities are recognised when a Group entity becomes a party to the contractual provisions of the
instruments.

Financial assets and ﬁnancial liabilities are initially measured at fair value. transaction costs that are directly attributable to the
acquisition or issue of ﬁnancial assets and ﬁnancial liabilities (other than ﬁnancial assets and ﬁnancial liabilities at fair value
through proﬁt or loss) are added to or deducted from the fair value of the ﬁnancial assets or ﬁnancial liabilities, as appropriate,
on initial recognition. transaction costs directly attributable to the acquisition of ﬁnancial assets or ﬁnancial liabilities at fair value
through proﬁt or loss are recognised immediately in proﬁt or loss.

1.17.1 Non-derivative Financial instruments
Non-derivative ﬁnancial instruments comprise trade and other receivables including balances with payment processors, cash
and cash equivalents, loans and borrowings, and trade and other payables. subsequent to initial recognition, non-derivative
ﬁnancial instruments are measured at amortised cost using the effective interest method. Provisions for impairment are made
against ﬁnancial assets if considered appropriate and any impairment is recognised in proﬁt or loss. the liability for inactive
customer balances is derecognised when the obligation is extinguished with reference to player terms and conditions.

GVC HOLDINGS PLC ANNUAL REPORT 2015

59

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

1.

siGnificant accoUntinG policies continued

1.17 financial instruments continued

1.17.2 Cash and Cash equivalents
Cash and cash equivalents comprise cash balances and bank balances. 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 ﬂows.

accounting for ﬁnancial income and ﬁnancial expenses are discussed in notes 1.14 and 1.12 respectively.    

1.17.3 available for sale Financial assets (‘aFs’)
aFs ﬁnancial assets are non-derivative ﬁnancial assets that are either designated to this category or do not qualify for inclusion
in any of the other categories of ﬁnancial assets. the Group’s aFs ﬁnancial assets include the equity investment in Betit holdings
limited (‘Bhl’).

aFs ﬁnancial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported
within the aFs reserve within equity, except for interest and dividend income, impairment losses and foreign exchange differences
on monetary assets, which are recognised in proﬁt or loss.

When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive
income is reclassiﬁed from the equity reserve to proﬁt or loss. interest calculated using the effective interest method and dividends
are recognised in proﬁt or loss within ﬁnance income.

For aFs equity investments impairment reversals are not recognised in proﬁt and loss and any subsequent increase in fair value
is recognised in other comprehensive income.

1.17.3 derivative Financial instruments
derivative ﬁnancial instruments are accounted for at Fair Value through Proﬁt and loss (FVtPl). the options associated with
the Group’s investment in Bhl are considered derivative ﬁnancial instruments and are carried at their fair value which is re-
measured at each reporting date. any movements in fair value are taken to the consolidated income statement

1.17.3 impairment of Financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered
to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition
of the ﬁnancial asset, the estimated future cash ﬂows of the investment have been affected.

objective evidence of impairment could include:

•

•

•

•

signiﬁcant ﬁnancial difficulty of the issuer or counterparty; or

breach of contract, such as a default or delinquency in interest or principal payments; or

it becoming probable that the borrower will enter bankruptcy or ﬁnancial re-organisation; or

the disappearance of an active market for that ﬁnancial asset because of ﬁnancial difficulties.

1.18 equity

equity comprises the following:

‘share capital’ represents the nominal value of equity shares.

‘share premium’ represents the excess over nominal value of the fair value of consideration received for equity shares, net of
expenses of the share issue.

‘Retained earnings’ represents retained proﬁts.

‘merger reserve’ arose on the re-domiciliation of the Group from luxembourg to the isle of man in 2010. it consists of the pre-
redomiciliation reserves of the luxembourg company plus the difference in the issued share capital (31,135,762 share at €0.01
versus 31,135,762 shares at €1.24).

‘translation reserve’ represents exchange differences on translation of foreign subsidiaries recognised in other comprehensive
income.

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1.19 finance leases

management applies judgment in considering the substance of a lease agreement and whether it transfers substantially all the
risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease term in
relation to the economic life of the asset, the present value of the minimum lease payments in relation to the asset’s fair value,
and whether the Group obtains ownership of the asset at the end of the lease term.

the interest element of lease payments is charged to proﬁt or loss, as ﬁnance costs over the period of the lease.

1.20 operating leases

all other leases other than ﬁnance leases are treated as operating leases. Where the Group is a lessee, payments on operating
lease  agreements  are  recognised  as  an  expense  on  a  straight-line  basis  over  the  lease  term. associated  costs,  such  as
maintenance and insurance, are expensed as incurred.

1.21 new and revised standards that are effective for annual periods beginning on or after 1 January 2015

1.21.1 deﬁned Beneﬁt Plans: employee Contributions (amendments to ias 19)
deﬁned Beneﬁt Plans: employee Contributions (amendments to ias 19) came into mandatory effect for the ﬁrst time in 2015. as
the Company does not operate any deﬁned beneﬁt plans, there is no impact on these ﬁnancial statements.

1.22 standards in issue, not yet effective

at the date of authorisation of these ﬁnancial statements, certain new standards, and amendments to existing standards have
been published by the iasB that are not yet effective, and have not been adopted early by the Group. information on those
expected to be relevant to the Group’s ﬁnancial statements is provided below.

management anticipates that all relevant pronouncements will be adopted in the Group’s accounting policies for the ﬁrst period
beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either adopted or
listed below are not expected to have a material impact on the Group’s ﬁnancial statements.

1.22.1 iFRs 9 ‘Financial instruments’ (2014)
the iasB has released iFRs 9 ‘Financial instruments’ (2014), representing the completion of its project to replace ias 39 ‘Financial
instruments: Recognition and measurement’. the new standard introduces extensive changes to ias 39’s guidance on the
classiﬁcation and measurement of ﬁnancial assets and introduces a new ‘expected credit loss’ model for the impairment of
ﬁnancial assets. iFRs 9 also provides new guidance on the application of hedge accounting.

the Group’s management have yet to assess the impact of iFRs 9 on these consolidated ﬁnancial statements. the new standard
is required to be applied for annual reporting periods beginning on or after 1 January 2018.

1.22.2 iFRs 15 ‘Revenue from Contracts with Customers’
iFRs 15 presents new requirements for the recognition of revenue, replacing ias 18 ‘Revenue’, ias 11 ‘Construction Contracts’,
and several revenue-related interpretations. the new standard establishes a control-based revenue recognition model and
provides additional guidance in many areas not covered in detail under existing iFRss, including how to account for arrangements
with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase options, and other common
complexities. iFRs 15 is effective for reporting periods beginning on or after 1 January 2018. the Group’s management have not
yet assessed the impact of iFRs 15 on these consolidated ﬁnancial statements.

1.22.3 amendments to iFRs 11 Joint arrangements
these amendments provide guidance on the accounting for acquisitions of interests in joint operations constituting a business.
the amendments require all such transactions to be accounted for using the principles on business combinations accounting in
iFRs 3 ‘Business Combinations’ and other iFRss except where those principles conﬂict with iFRs 11. acquisitions of interests in
joint ventures are not impacted by this new guidance.

the amendments are effective for reporting periods beginning on or after 1 January 2016. the Group’s management have yet to
assess the impact of iFRs 11 on these consolidated ﬁnancial statements.

1.22.4 iFRs 16 ‘leases’
iFRs 16 presents new requirements for the recognition, measurement, presentation and disclosure of leases, replacing ias 17
‘leases’. the standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all
leases of over 12 months unless the underlying asset has a low value. lessors continue to classify leases as operating or ﬁnance
leases, with minimal changes from ias 17. the new standard applies to annual reporting periods beginning on or after 1 January
2019. the Group’s management have not yet assessed the impact of iFRs 16 on these consolidated ﬁnancial statements.

GVC HOLDINGS PLC ANNUAL REPORT 2015

61

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

seGmental reportinG

2.
management follows one business line with two operating segments, being sports and Gaming segmenting the revenues. these
operating segments are monitored and strategic decisions are made on the basis of overall operating results.

management also monitors revenue by geographic location of its customers, monitoring performance in europe and latin
america.

2.1 Geographical analysis

the Group’s revenues and other income from external customers are divided into the following geographic areas:

europe
latin america and emerging markets

total

2015
€000’s

214,980
32,750

247,730

2014
€000’s

197,442
27,359

224,801

the total non-current assets (other than ﬁnancial instruments, investments accounted for using the equity method, deferred tax
assets and post-employment beneﬁt assets) located in europe is €103,350,000 (2014: €103,446,000) and the total located in
other regions is €55,816,000 (2014: €55,762,000).

Revenues from external customers in the Group’s domicile, europe, as well as its major markets, latin america and emerging
markets, have been identiﬁed on the basis of the customer’s geographical location. Non-current assets are allocated based on
their physical location.

2.2 reporting by segment

statement of reVenUe
sports wagers
Sports margin
Gross margin
sports bonuses

sports NGR
Gaming NGR

total revenue

Notes

2015
€000’s

2014
€000’s

1,682,955
9.2%
154,086
(40,234)

113,852
133,878

247,730

1,463,523
9.8%
143,544
(33,345)

110,199
114,602

224,801

management do not review the performance of each segment below the level of Net Gaming Revenue.

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2.3 detailed income statement

net Gaming revenue 
Variable costs*

contribution
Contribution margin
other operating costs 
Personnel expenditure (including incentive arrangements)
Professional fees
technology costs
office, travel and other costs
third party service costs
Foreign exchange differences

clean eBitda
exceptional items 
share option charges
impairment of available for sale asset
movement in fair value of derivative ﬁnancial instruments

eBitda
depreciation and amortisation
Financial income 
Financial expense
Finance lease interest 
Unwinding of discount on deferred consideration 

proﬁt before tax
taxation

proﬁt after tax from continuing operations

Notes

3

3
3
9
10

3
4
4
4
4

5

2015
€000’s

247,730
(112,369)

135,361
55%

(48,454)
(4,662)
(23,659)
(3,471)
–
(1,038)

54,077
(24,496)
(449)
(1,216)
4,817

32,733
(4,985)
4
(2,110)
(82)
(54)

25,506
(847)

24,659

2014
€000’s

224,801
(101,513)

123,288
55%

(43,055)
(4,489)
(20,991)
(5,248)
(3)
(340)

49,162
–
(736)
(1,593)
–

46,833
(3,912)
16
(869)
(67)
(710)

41,291
(728)

40,563

*  Variable costs include betting taxes & VAT, payment service provider charges, software royalties, chargebacks & bad debt, commissions and

marketing costs

2.4 performance summary by six month period

revenue
h2-2015
h1-2015

fy-2015
h2-2014
h1-2014

FY-2014

contribution
h2-2015
h1-2015

fy-2015
h2-2014
h1-2014

FY-2014

clean eBitda
h2-2015
h1-2015

fy-2015
h2-2014
h1-2014

FY-2014

GVC HOLDINGS PLC ANNUAL REPORT 2015

€000’s

126,814
120,916
––––––––

119,735
105,066
––––––––

69,960
65,401
––––––––

66,566
56,722
––––––––

28,592
25,485
––––––––

26,808
22,354
––––––––

total
€000’s

247,730

224,801

135,361

123,288

54,077

49,162

63

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

3.

operatinG costs

Wages and salaries, including directors (excluding incentive schemes)
directors incentive schemes (see page 30)
other employees incentive schemes

Notes

2015
€000’s

23,878

7,168
9,411
–––––

6,918
6,947
–––––

incentive schemes
amounts paid to long term contractors
Compulsory social security contributions
Compulsory pension contributions
health and other beneﬁts
Recruitment and training

Personnel expenditure (excluding share option charges)
Professional fees
technology costs
office, travel and other costs
Foreign exchange differences on operating activity

administrative costs
equity settled share option charges
Cash settled share option (credit)/charges
exceptional items
impairment of available for sale asset
movement in the fair value of derivative ﬁnancial instruments
depreciation
amortisation

16,579
3,333
2,251
722
902
789

48,454
4,662
23,659
3,471
1,038

81,284
509
(60)
24,496
1,216
(4,817)
875
4,110

107,613

20
20
3.1
9
10
7
8

2014
€000’s

21,744

13,865
3,270
2,137
627
758
654

43,055
4,489
20,991
5,251
340

74,126
552
184
–
1,593
–
675
3,237

80,367

3.1 exceptional items

the Group incurred expenditure on exceptional items (as deﬁned in accounting policy note 1.13) of €24,496,000 (2014: €nil).
these are items which are both exceptional in size and nature.

Proposed acquisition of bwin.party
– legal advice
– Nominated advisors
– Reporting accountants
– other professional fees

total professional fees
– Currency option, including fair value adjustment
– PR fees
– loan fees

total acquisition costs

Non-deal income/expenditure
– Romania tax amnesty payments
– other

total non-acquisition costs

total exceptional items

3.1.1 currency option

2015
€000’s

5,101
1,636
2,629
3,177

12,543
9,531
847
100

23,021

1,180
295

1,475

24,496

2014
€000’s

–
–
–
–

–

–

–

–
–

–

–

as part of the requirements for the acquisition of bwin.party, GVC had to “cash-conﬁrm” that it had sufficient GBP funds to meet
the obligations of the acquisition; namely 25p per bwin.party share. as the loan facility from Cerberus was denominated in euro,
an  american  style  call  option  was  purchased  for  €5.3  million  on  4  september  2015  to  sell  €365,000,000  and  purchase
£256,138,750 (a rate of £1:€1.4250). the counterparty to this trade was Nomura.

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on 18 december 2015, it was decided to terminate this option and replace its cash-conﬁrmation obligations with a “ﬂexible-
forward”, a forward contract with option components. entering into this transaction resulted in a refund of €5.6 million and a new
sale of €365,000,000 and purchase of £260,719,500 (a rate of £1:€1.400).

By 31 december, foreign exchange rates had moved and the rate used by GVC for the translation of its GBP current assets and
current liabilities was £1:€1.36249, whilst the effective rate behind the valuation of the GBP obligation under the ﬂexible forward
was €1.3621. this resulted in a revaluation charge of €9.9 million shown as a forward contract liability. this is more fully shown in
the tables below:

details 

arrangement cashﬂows
arrangement valuations

euro sale under ﬂexible forward
Rate

GBP purchase under ﬂexible forward
implicit rate in valuation

Revaluation

Valuation expense

3.2 employees

paid
€000s

(5,329)
–

(5,329)

received
€000s

5,675
–

5,675

p&l
€000s

346
(9,877)

(9,531)

Balance at
31.12.15
€000s

–
(9,877)

(9,877)

€365,000,000
€1.4000

£260,719,500
€1.3621

€355,123,000

€9,877,000

the average monthly number of persons (including directors) employed by the Group during the year was:

number of personnel
With employment contracts or service contracts
Contractors

4.

financial income and eXpense

Financial income – interest income

Financial expense – interest payable
– Unwinding of discount on non-interest bearing loan
– Finance lease interest
– Unwinding of discount on Betboo deferred consideration
– Foreign exchange revaluation (see note 4.1)
– interest on Cerberus loan (see note 14.1)*
– other expense 

2015

527
49

576

2015
€000’s

4

4

(238)
(82)
(54)
(627)
(1,245)
–

(2,246)

* this includes interest payments at the contracted rate of 12.5% and an accrual for exit and similar fees not yet due.

4.1 foreign exchange differences

the foreign exchange differences above arose as follows:

Retranslation of the William hill non-interest bearing loan
Retranslation of amounts due in respect of ﬁnance leases
other

GVC HOLDINGS PLC ANNUAL REPORT 2015

2015
€000’s

(516)
(69)
(42)

(627)

2014

507
42

549

2014
€000’s

16

16

(238)
(67)
(710)
(627)
–
(4)

(1,646)

2014
€000’s

(467)
(160)
–

(627)

65

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

taXation

5.
Current tax for the current and prior periods is classiﬁed as a current liability to the extent that it is unpaid. amounts paid in excess
of amounts owed are classiﬁed as a current asset. there is a current tax liability from continuing operations of €1,291k (net of
tax receivable amounts) at 31 december 2015 (2014: Current tax liability from continuing operations of €1,089k (net of tax
receivable amounts)).

current tax expense
Current year
Prior year

deferred tax
origination and reversal of temporary differences

total income tax expense in income statement

2015
€000’s

2014
€000’s

758
89

847

–

847

840
(112)

728

–

728

the tax for the year is different from that which would result from applying the standard rate of UK Corporation tax of 20.25%*
(2014: 21.5%). a reconciliation is shown below:

Proﬁt before tax
income tax using the domestic corporation tax rate
effect of tax rates in foreign jurisdictions (rates decreased)
expenses not deductible/income not chargeable for tax purposes
Utilisation of tax losses
tax losses for which no deferred tax assets have been recognised
adjustment in respect of prior years – corporation tax
Capital allowances for the period in excess of depreciation**

2015
€000’s

25,506
5,165
(4,748)
773
(177)
659
89
(914)

847

* From 1 April 2015 the UK Corporation Tax rate changed from 21% to 20%.

** Represents current tax movement on temporary differences as deferred tax asset amounts have not been recognised.

5.1 taxation amounts recognised in the statement of financial position

current tax

Payable
€000’s

Receivable
€000’s

Balances at 1 January 2014
Paid/(received) during the year ended 31 december 2014
Credit/(charge) in income statement for prior years
(Charge)/credit in income statement for the year ended 31 december 2014
Balances at 31 december 2014

Balances at 1 January 2015
Paid/(received) during the year ended 31 december 2015
Credit/(charge) in income statement for prior years
(Charge)/credit in income statement for the year ended 31 december 2015

Balances at 31 december 2015

(2,722)
1,740 
112 
(4,144)
(5,014)

(5,014)
2,073
119
(4,429)

(7,251)

1,877 
(1,256)
–
3,304 
3,925

3,925
(1,416)
(208)
3,671

5,972

2014
€000’s

41,291
8,878
(8,430)
36
(261)
1,693
(112)
(1,076)

728

total
€000’s

(845)
484
112
(840)
(1,089)

(1,089)
657
(89)
(758)

(1,279)

tax reclaimable represents a portion of the tax paid by maltese entities in the Group which is refundable by the maltese tax
authorities to the parent company shortly after the submission of the audited accounts and tax computation for the company the
tax is payable in.

Unrelieved tax losses remain available to offset against future trading proﬁts of approximately €43.9 million (2014: €34.7 million).

66

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6.

earninGs per share

6.1 Basic earnings per share and Basic earnings per share Before exceptional items

Basic earnings per share has been calculated by taking the proﬁt attributable to ordinary shareholders and dividing by the weighted
average number of shares in issue. Basic earnings per share from continuing operations before exceptional items has been
calculated by taking the proﬁt attributable to ordinary shareholders and adding back the cost of exceptional items in the year and
dividing by the weighted average number of shares in issue.

Proﬁt for the year attributable to ordinary shareholders (€)

Weighted average number of shares

Basic earnings per share (€)

exceptional items (€)
Proﬁt for the year attributable to ordinary shareholders before exceptional items (€)
Basic earnings per share before exceptional items (€)

2015

24,659,000

61,276,480

0.402

24,496,000
49,155,000
0.802

2014

40,563,268

61,099,894

0.664

–
40,563,268
0.664

6.2 diluted earnings per share and diluted earnings per share Before exceptional items

diluted earnings per share has been calculated by taking the proﬁt attributable to ordinary shareholders and dividing by the
weighted average number of shares in issue as diluted by share options. diluted earnings per share from continuing operations
before exceptional items has been calculated by taking the proﬁt attributable to ordinary shareholders and adding back the cost
of exceptional items and dividing by the weighted average number of shares in issue, as diluted by share options.

Proﬁt for the year attributable to ordinary shareholders (€)

Weighted average number of shares
effect of dilutive share options
Weighted average number of dilutive shares

diluted earnings per share (€)

exceptional items (€)
Proﬁt for the year attributable to ordinary shareholders before exceptional items (€)
diluted earnings per share before exceptional items (€)

7.

property, plant and eQUipment

2015

24,659,000

61,276,480
3,088,932
64,365,412

0.383

24,496,000
49,155,000
0.764

2014

40,563,268

61,099,894
5,010,290
66,110,184

0.614

–
40,563,268
0.614

cost
at 1 January 2014
additions

at 1 January 2015
additions

at 31 december 2015

depreciation
at 1 January 2014
depreciation charge for the year

at 1 January 2015
depreciation charge for the year

at 31 december 2015

net Book Value
at 31 december 2014

at 31 december 2015

GVC HOLDINGS PLC ANNUAL REPORT 2015

Leased
Plant
and
Equipment
€000’s

Owned 
Plant
and
Equipment
€000’s

total
Plant
and
equipment
€000’s

Fixtures
and
Fittings
€000’s

543
101

644
492

1,136

124
198

322
360

682

322

454

1,197
487

1,684
576

2,260

827
321

1,148
375

1,523

536

737

1,740
588 

2,328 
1,068

3,396

951
519 

1,470
735

2,205

858

1,191

1,080
316 

1,396 
88

1,484

951
156 

1,107
140

1,247

289

237

total
€000’s

2,820
904

3,724
1,156

4,880

1,902
675

2,577
875

3,452

1,147

1,428

67

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

8.

intanGiBle assets

Leased
Software
Licence 
€000’s

Owned
Software
Licence
€000’s

total
software
licence
€000’s

trade-
marks &

Non-
contractual
Customer
trade Consulting
Name & magazine Relationships
€000’s
€000’s
€000’s

total
€000’s

cost
at 1 January 2014
additions

at 1 January 2015
additions

at 31 december 2015

amortisation and impairment
at 1 January 2014
amortisation 

at 1 January 2015
amortisation 

at 31 december 2015

net Book Value
at 31 december 2014

at 31 december 2015

827
306

1,133
–

1,133

243
232

475
390

865

658

268

Goodwill
€000’s

166,167
–

166,167 
–

23,836
3,647

27,483 
5,003

32,486

166,167

19,260
2,683

21,943 
3,847

25,790

33,274
–

33,274 
–

33,274

17,065
–

17,065 
–

17,065

1,095
216

1,311 
190

1,501

23,009
3,341

26,350
5,003

31,353

19,017
2,451

21,468
3,457

24,925

4,882

6,428

5,540

6,696

132,893

132,893

15,754

15,564

4,919
–

4,919 
–

4,919

4,919
–

4,919 
–

4,919

–

–

2,379
–

2,379 
–

214,366
3,647

218,013
5,003

2,379

223,016

1,968
338

2,306 
73

2,379

60,516
3,237

63,753
4,110

67,863

73

–

154,260

155,153

Certain intangible assets are deemed to have an indeﬁnite useful life as there is no foreseeable limit to the period over which the
asset is expected to generate net cash inﬂows for the entity. the carrying amounts of such assets at 31 december 2015 were as
follows:

trademarks & trade Names

8.1 amortisation

the amortisation for the year is recognised in the following line items in the income statement.

Net operating expenses

2015
€000’s

15,142

2015
€000’s

4,110

2014
€000’s

15,142

2014
€000’s

3,237

8.2

impairment tests for cash-Generating Units containing Goodwill and trademarks

an impairment Review of the Group’s goodwill was carried out for the year ended 31 december 2015. the goodwill relates to
Betboo, CasinoClub and sportingbet. the carrying values of the assets were compared with the recoverable amounts, the
recoverable amount was estimated based upon a value in use calculation, based upon management forecasts for the years
ending 31 december 2016 and up to 31 december 2020. the assumptions detailed below have been determined based on past
experience in this market which the Group’s management believes is the best available input for forecasting this market.

Betboo
signiﬁcant growth is expected in the short-term reducing to 20% annual growth by 2017, a long-term growth rate of 2% was used
from 2019 to reﬂect the likely competitive pressures. a discount rate of 35% was used, based on the internal rate of return of the
Betboo acquisition. it was concluded that the carrying value of the goodwill and trademarks was not impaired.

CasinoClub
a long-term growth rate of 2% was used to reﬂect the increasing competitive pressures from large online gaming companies. a
discount rate of 17.2% was used, based on company speciﬁc pre-tax weighted average cost of capital. it was concluded that the
carrying value of the goodwill and trademarks was not impaired.

68

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a long-term growth rate of 3% has been applied to reﬂect the likely competitive pressures from other large online gaming
companies. a discount rate range of 20%-25% was used across the different geographical areas, and a sensitivity analysis
carried out including decreasing the growth rate to 1% and increasing the discount to 30%-45%. it was concluded that the carrying
value of the goodwill and trademarks was not impaired.

the following units have signiﬁcant carrying amounts of goodwill:

Betboo
CasinoClub
sportingbet

total Goodwill

2015
€000’s

8,333
40,339
84,221

2014
€000’s

8,333
40,339
84,221

132,893

132,893

aVailaBle for sale financial asset – Betit holdings limited

9.
Where an entity holds, directly or indirectly through subsidiaries, less than 20% 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.

at 1 January 
additions 
impairment

at 31 december

2015
€000’s 

3,801
–
(1,216)

2,585

2014
€000’s

–
5,394
(1,593)

3,801

on 14 may 2014, the Group acquired a 15% stake in Betit holdings limited (‘Bhl’) from Betit securities limited (‘Bsl’). the
consideration was for €3.5 million, which was attributed to both the available for sale asset (€5.2 million) and the option liability
(€1.7 million) taken on at acquisition. the asset held for sale consideration, together with professional fees incurred at the time,
amounted to a total upfront cost of €5.4 million which was impaired at 31 december 2014 to €3.8 million.

although the Group has a director on the Board of Bhl and has inﬂuence through its shareholding over the payment of dividends
the director does not participate in policy making decisions, and the entity is unlikely to be in a dividend paying position over the
lifetime of the investment. the Group does not believe there is evidence to rebut the presumption it does not have signiﬁcant
inﬂuence over Bhl and therefore the investment is not considered to be an associate and has been accounted for as an available
for sale asset.

the available for sale asset is required to be re-measured at fair value at each reporting date. Changes in the fair value will be
recognised in other comprehensive income, except for impairment losses which are recognised through proﬁt or loss as a
deduction from clean eBitda. the Group engaged a third party valuations specialist to value the asset.

in valuing the underlying business of Bhl, a discounted cash ﬂow model was used, applying a long-term growth rate of 2%
(2014: 2%) to the Group’s forecasts and a discount rate of 18% (2014: 18%) (based on comparison to industry peers and
observable inputs). Based on this model, the value as at 31 december 2015 of the asset available for sale was €2.6 million,
leading to an impairment of €1.2 million.

10.  deriVatiVe financial instrUments: options
on 24 march 2015, GVC contracted with Winunited limited for the day-to-day back office operations of the Winunited business,
licensed in malta. Under the terms of the agreement, GVC obtained a call option to purchase the Winunited assets comprising
goodwill, customers, licenses, brands and websites. the exercise period for the option is in the three months prior to the ﬁve
year anniversary of the 24 march 2015. No consideration was paid for the call option.

the Betit option was acquired in the prior year as part of the asset purchase set out in note 9.

GVC HOLDINGS PLC ANNUAL REPORT 2015

69

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

10.  deriVatiVe financial instrUments: options continued
a summary of the movement in the option values during the year and the balances at 31 december 2015 is shown below:

Balance at 1 January 2015
movement in fair value

Balance at 31 december 2015

split:

current asset

non-current liability

10.1  Winunited option

Winunited option
€000s

Betit option 
€000s

–
3,808

3,808

3,808

–

(1,745)
1,009

(736)

–

(736)

total
€000s

(1,745)
4,817

3,072

at 31 december 2015 the option was valued by a third party valuation specialist using a monte Carlo valuation model and two
methodologies: a discounted cash ﬂow and a multiples based calculation. a long-term growth rate of 2% was assumed, and a
discount rate of 15% based on industry peers and observable inputs. Based on this model, the value of the call option at
31 december 2015 was €3.8 million. this increase in the fair value of the option has been recognised in the income statement
in accordance with ias 39.

10.2  Betit option

on 14 may 2014, the Group acquired a 15% stake in Betit holdings limited (‘Bhl’). the Group has a call option to acquire the
balance of the outstanding shares. the call option can be exercised no earlier than 1 July 2017 and no later than 30 september
2017, and would be subject to further maltese Gaming authority clearance and the stock exchange Rules. the minimum call
option price is €70 million, and the actual price would be determined by the mix of revenues between regulated and non-regulated
markets and certain multiples attaching thereto.

if the Group decides not to exercise its call option Bsl may require the Group to acquire its shares in Bhl at a price determined
by the mix of revenues between regulated and non-regulated markets and certain multiples thereof (but absent any ﬂoor on the
price). Completion of this purchase would be subject to certain conditions including the Group’s ability to raise the necessary
ﬁnancing.  should  the  Group  not  raise  the  required  ﬁnancing,  Bsl  may  acquire  the  Group’s  shares  in  Bhl  for  nominal
consideration.

the Group engaged a third party valuations specialist to value the options using a monte Carlo valuation model based on the
enterprise value for Bhl and modelling of the anticipated exercise price. in valuing the underlying business of Bhl, a discounted
cash ﬂow model was used, applying a long-term growth rate of 2% (2014: 2%) to the Group’s forecasts and a discount rate of
18% (2014: 18%) (based on comparison to industry peers and observable inputs). Based on this model, the fair value of the put
and call options was a net liability of €0.7 million (2014: €1.7 million), leading to a movement in the fair value of €1.0 million.

11. receiVaBles and prepayments

Balances with payment processors
trade receivables
other receivables

loans and receivables
Prepayments 

2015
€000’s

21,708
91
1,280

23,079
11,539

34,618

2014
€000’s

22,222
111
1,500

23,833
3,772

27,605

Payment processor balances described as receivables are funds held by third party collection agencies subject to collection after
one month, or balances used to make refunds to players.

Prepayments include payments as at 31 december 2015 for goods or services which will be consumed after 1 January 2016. it
includes the prepayment of certain costs and fees in respect of the Cerberus loan which was drawn down in February 2016.

70

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payment processor debtor days (excluding retention balances):

on revenue per income statement:
Balance with payment processors (excluding retention balances)
Revenue
debtor days (balances with payment processors/revenue x 365 days)

2015
€000’s

17,854
247,745
26 days

2014
€000’s

18,359
224,801
30 days

Retention balances relate to amounts held with payment processors required as security and do not relate to customer funds.
Retentions amounted to €3,854,000 at 31 december 2015 (31 december 2014: €3,863,000).

12.  cash and cash eQUiValents

cash and cash equivalents
Bank balances

held in the following currencies
(in euro equivalents at the reporting date):
euro
British Pounds
danish Kroner
Czech Koruna
south african Rand
other

Balances with customers:

– Restricted cash subject to regulator constraints

Balances with customers 
own funds

13. trade and other payaBles

other trade payables
accruals

14. loans and BorroWinGs

14.1  interest bearing loan

2015
€000’s

2014
€000’s

28,170

17,829

18,587
6,628
964
896
677
418

28,170

6,838

6,838
21,332

28,170

2015
€000’s

12,753
19,263

32,016

14,437
1,054
1,055
200
620
463

17,829

3,506

3,506
14,323

17,829

2014
€000’s

12,166
14,611

26,777

on 4 september 2015, the Group entered into an agreement with Cerberus Business Finance llC for a loan of up to €400m, in
order to part-fund the proposed acquisition of bwin.party. Under the terms of the loan, a ‘hedging loan’ of up to €20m could be
drawn down in advance of the acquisition, in order to fund a hedging arrangement for the conversion of the loan funds into GBP
and to pay for initial costs including loan arrangement fees. accordingly, €20m was drawn down immediately on entering into the
contract. the balance of €380m was drawn down on 1 February 2016 and so was not recorded as a liability at the year end. the
full amount of the loan is to be repaid by 4 september 2017.

ias 39 Financial instruments: Recognition and measurement, states that all ﬁnancial liabilities should initially be measured at
their fair value and subsequently measured at amortised cost using the effective interest rate method. the effective interest has
been  calculated  using  the  internal  rate  of  return  on  the  cash  outﬂows  across  the  period  of  the  loan,  which  includes  loan
arrangement fees, loan servicing fees, interest and transaction costs such as legal fees.

GVC HOLDINGS PLC ANNUAL REPORT 2015

71

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

14. loans and BorroWinGs continued

14.1  interest bearing loan continued

loan balance at 1 January 2015
initial drawdown
initial costs and loan servicing fees paid
interest instalments paid to 31 december 2015
effective interest due to 31 december 2015 (note 4)

loan balance at 31 december 2015

split between:

current liabilities

non-current liabilities

14.2  non-interest bearing loan

principal
€000’s

–
(20,000)
–
–
–

(20,000)

effective
interest
€000’s

–
–
799
625
(1,245)

179

2015
total
€000’s

–
(20,000)
799
625
(1,245)

(19,821)

–

(19,821)

as part of the Group’s acquisition of sportingbet PlC, a credit facility was made available to the Group by William hill PlC. at
31 december 2015 the Group had drawn down €3,138,515 (£2,303,513) (2014: €5,867,084 (£4,590,832)) of this facility. the loan
was revalued at the 31 december exchange rate of €1.3625.

ias 39 Financial instruments: Recognition and measurement, states that all ﬁnancial liabilities should initially be measured at
their fair value and subsequently measured at amortised cost using the effective interest rate method. the loan has therefore
been discounted at a rate of 4% and will be unwound over the period of the loan.

the facility is repayable in three instalments and should GVC declare dividends in excess of 58 €cents per share, William hill is
entitled to receive an accelerated repayment equal to the excess of the actual dividend over 58 €cents per share. the instalments
as well as the impact of the discount are shown below:

loan balance at 1 January
Repayment during the year
Revaluation at 31 december exchange rate

loan balance at 31 december 

Undiscounted payments due within 12 months:
Undiscounted payments due between 12 and 24 months:

loan balance before discount
discount on recognition of the loan
Unwinding of discount to date

loan balance at 31 december

split:

current liabilities

non-current liabilities

2015
Base 
currency
£000’s

4,591
(2,287)
–

2,304

2,304
–

2014
Base
currency
£000’s

6,862
(2,271)
–

4,591

2,295
2,296

2015
total
€000’s

5,867
(3,245)
516

3,138

3,138
–

3,138
(780)
662

3,020

3,020

–

2014
total
€000’s

8,256
(2,856)
467

5,867

2,933
2,934

5,867
(780)
425

5,512

2,735

2,777

72

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15. BetBoo deferred consideration

Balance at 1 January
Unwinding of discount charged to income statement
Payments made

Balance at 31 december

split (prior year restated):
current liabilities

non-current liabilities

2015
€000’s

3,953
54
(2,401)

1,606

1,606

–

2014
€000’s

7,582
710
(4,339)

3,953

2,347

1,606

on 2 July 2009, the Group acquired the trade and assets of betboo.com, a leading south american internet gaming operator,
offering bingo, casino, poker and a sports betting product. the terms of the acquisition were an initial payment of Us$4 million
(€2,840k) with the sellers able to earn up to a further Us$26 million depending on performance.

on 23 February 2011, the Group announced a change in the terms of the earn-out. the costs of the revised earn-out were
estimated using cash ﬂow projections for the 4 years to 31 december 2014, and discounted using the estimated weighted average
cost of capital of 21%.

on 1 october 2013 the Betboo business migrated to the sportingbet trading platform, the payments terms of the earn-out changed
from this date to the following:

•

•

an earn-out dependent on certain revenue shares with a ﬂoor of €200,000 per month for the 40 months ending 31 January
2017. there are also further earn-out payments that stretch to the earlier of:

(a)

(b)

the date on which the total earn-outs reach €21,381,227

40 months after 31 January 2017

the total earn-out cap remains at €21,381,227, which we now expect to reach in august 2016.

the intangible assets acquired in the transaction and the impact of the revised earn-out are as follows:

acquisition price of Betboo
initial consideration
deferred consideration

total consideration
acquisition costs

original cost on acquisition

€000’s

2,840
18,541

21,381
289

21,670

the deferred consideration has been discounted to reﬂect its fair value at the date of acquisition. the effect of this discount will
be unwound over the period of the deferral with a charge to the income statement contained within interest expense. the expected
impact of this over the earn-out period is shown below:

Balance at 1 January
deferred consideration
Unwinding of discount charged to income statement
Payments made
Payments anticipated

Balance at 31 december

Prior
periods
€000’s

–
9,942
7,824
(10,184)
–

7,582 

2014
€000’s

7,582
–
710
(4,339)
–

3,953

2015
€000’s

3,953
–
54
(2,401)
–

1,606

2016
€000’s

1,606
–
11
–
(1,617)

–

total
€000’s

–
9,942
8,599
(16,924)
(1,617)

–

GVC HOLDINGS PLC ANNUAL REPORT 2015

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notes to the consolidated financial statements continued
for the year ended 31 december 2015

15. BetBoo deferred consideration continued
total payments to date and anticipated are as follows:

at acquisition
Up to 31 december 2015
anticipated future payments

total (Cap = €21,381,227)

16. other taXation payaBle

social security 
Betting taxes 

total
€000’s

2,840
16,924
1,617

21,381

2014
€000’s

695
643

1,338

2015
€000’s

760
1,260

2,020

17. commitments Under operatinG and finance leases

17.1 finance leases

in June 2014 the Group entered into a ﬁnance lease for the purchase of computer hardware and software together with support
services for these, in addition to a lease taken out in June 2013. as at 31 december 2015 the life outstanding on the 2013 lease
was ﬁve months and the 2014 lease was nine months. in January 2015 the Group entered into an additional ﬁnance lease for the
purchase of hardware and software. the life outstanding on this lease at 31 december 2015 was one year.

Future minimum lease payments under ﬁnance leases at 31 december were:

31 december 2015

lease payments
Finance charges

net present values

31 december 2014

lease payments
Finance charges

net present values

date lease taken out

June 2013
June 2014
January 2015

Within 1
year
€000’s

705
(14)

691

Within
1 year
€000’s

1,393
(31)

1,362

1 to 5
years
€000’s

–
–

–

1 to 5
years
€000’s

334
(7)

327

total
€000’s

705
(14)

691

total
€000’s

1,727
(38)

1,689

amount
of ﬁnance
provided
€000’s

Balance at
31 december
2015
€000’s

2,123
605
712

3,440

280
67
344

691

expiry
date

Borrowing
rate

June 2016
september 2016
december 2016

8.5%
5.5%
8.9%

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17.2 operating leases

the Group leases various offices under non-cancellable operating leases. the leases have varying terms, escalation clauses
and renewal rights.

the future minimum lease payments under non-cancellable leases are as follows:

No later than one year
later than one year and no later than ﬁve years

18. share capital and reserVes

18.1  share capital

2015
€000’s

1,255
574

1,829

2014
€000’s

1,300
1,725

3,025

on 21 may 2010 shareholders of Gaming VC holdings s.a., approved a redomiciliation to the isle of man which resulted, pari
passu, in shareholders receiving shares with a nominal value of €0.01 in GVC holdings PlC. as a result of this transaction, GVC
holdings PlC acquired all the assets and liabilities of Gaming VC holdings s.a. arising from this transaction was the creation of
a merger Reserve. the various transfers into this reserve are shown in the Consolidated statement of Changes in equity.

at an extraordinary General meeting on 18 december 2015, the authorised share capital of the Company was increased to
350,000,000 ordinary shares.

the authorised and issued share capital is:

authorised
ordinary shares of €0.01 each
at 31 december – 350,000,000 shares (2014: 80,000,000 shares)

issued, called Up and fully paid
at 31 december – 61,276,480 shares (2014: 61,276,480 shares)

the issued share capital history is shown below:

Balance at 1 January
shares issued on initial listing in 2004
share options exercised by employees
– at £1.00
– at £1.26
– at £1.29
– at £0.01
share options exercised by third parties
– at £2.36
issue of shares for acquisition

Balance at 31 december

2015
€000’s

2014
€000’s

3,500

613

800

613

2004 to 2012

2013

2014

2015

–
31,135,762

31,592,172
–

60,906,760
–

61,276,480
–

233,333
100,000
123,077
–

–
165,000
31,513
100,000

26,667
–
–
–

–
–

–
29,018,075

343,053
–

–
–
–
–

–
–

31,592,172

60,906,760

61,276,480

61,276,480

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. however, should the Company not be satisﬁed as to the true identity of the shareholders it
can suspend the entitlement of those shareholders to a) vote at general meetings of the Company; and/or b) to receive dividends.

GVC HOLDINGS PLC ANNUAL REPORT 2015

75

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

18. share capital and reserVes continued

18.2 reserves

at 1 January 2015
Result for the year
dividends paid
share option charge
share options surrendered

at 31 december 2015

share
Capital
€000’s

share
Premium
€000’s

merger
Reserve
€000’s

translation
Reserve
€000’s

Retained
earnings
€000’s

613
–
–
–
–

613

85,380
–
–
–
–

85,380

40,407
–
–
–
–

40,407

359
–
–
–
–

359

22,699
24,659
(34,319)
509
(12,183)

1,365

total
€000’s

149,458
24,659
(34,319)
509
(12,183)

128,124

the  ‘merger  reserve’  arose  on  the  re-domiciliation  of  the  Group  from  luxembourg  to  the  isle  of  man.  it  consists  of  the
pre-redomiciliation reserves of the luxembourg company plus the difference in the issued share capital (31,135,762 share at
€0.01 versus 31,135,762 shares at €1.24).

Capital comprises total equity. the Group’s capital management objectives are to ensure its ability to continue as a going concern
and to provide an adequate return to shareholders and beneﬁts to other stakeholders by pricing services commensurately with
the level of risk, and maintaining an optimal capital structure to reduce the cost of capital. the Group’s objective is to pay around
75% of its net operating cashﬂows to shareholders by way of dividends (see note 19).

in order to maintain or adjust the capital structure, the Company may issue new shares, return capital to shareholders, limit the
amount of dividends paid, or sell assets.

total equity employed at 31 december 2015 was €128.1 million (2014: €149.5 million).

19. diVidends
the dividend history for 2014 and 2015 is shown below:

date declared

09-Jan-14
09-apr-14
09-apr-14 (special)
15-Jul-14
22-sep-14
22-sep-14 (special)

total in 2014

12-Jan-15
23-mar-15
23-mar-15 (special)
08-Jul-15
08-oct-15

total in 2015

per share €c

per share £p

11.50
11.50
4.50
12.50
12.50
2.50

55.0

12.50
14.00
1.50
14.00
14.00

56.0

9.5000
9.4340
3.6910
9.8700
9.7900
1.9600

44.2450

9.6000
10.2900
1.1000
9.7575
10.3472

41.0947

shares
in issue

60,906,760
60,906,760
60,906,760
61,276,480
61,276,480
61,276,480

61,276,480
61,276,480
61,276,480
61,276,480
61,276,480

amount €

amount £

7,004,277
7,004,277
2,740,804
7,659,560
7,659,560
1,531,912

5,786,142
5,745,944
2,248,069
6,047,989
5,998,967
1,201,019

33,600,390

27,028,130

7,659,560
8,578,707
919,147
8,578,707
8,578,707

5,882,542
6,305,350
674,041
5,979,053
6,340,400

34,314,828

25,181,386

as a result of the acquisition of bwin.party and the combination of debt covenants and the intended restructuring of the Group,
the directors have not proposed any further dividends.

20. share option schemes
at 31 december 2015, the Group had the following share options schemes for which options remained outstanding at the year
end:

i.

options were granted to third parties on 28 February 2013 as part of the sportingbet PlC acquisition following underwriting
commitments made at the time. the awards vested on the grant date and the options have the exercise price reduced by
the value of any dividends declared up to the point of exercise. of the 156,947 outstanding at 1 January 2015, none were
exercised during the year ended 31 december 2015. these options were fully exercised on 12 February 2016 at a weighted
average price of £1.263.

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ii.

a further grant of options to directors and employees under the existing and already approved ltiP was made on 2 June
2014. Under this scheme, 125,000 options were forfeited during the year and as at 31 december 2015 3,325,000 share
options remained outstanding. after the year end, 2,450,000 of these options were cancelled under the arrangements for
the acquisition of bwin.party.

Under the terms of the share option plans the Group can allocate up to 16.8% of the issued share capital, although it must take
allowance of the 752,923 shares in issue as a consequence of the exercise of share options.

the following options to purchase €0.01 ordinary shares in the Company were granted, exercised, forfeited or existing at the year
end:

date of Grant

21 may 2010
28 Jan 2012
28 Feb 2013
02 Jun 2014

total all schemes

exercise
price

213p
154.79p
233.5p
1p

existing at
1 January
2015

1,600,000
1,600,000
156,947
3,450,000

6,806,947

Granted in
the year

surrendered

existing at exercisable at
/ forfeited 31 december 31 december
2015
in the year

2015

–
–
–
–

–

(1,600,000)
(1,600,000
–
(125,000)

–
–
156,947
3,325,000

(3,325,000)

3,481,947

–
–
156,947
–

156,947

Vesting
criteria

Note a
Note a
Note b
Note c

the existing share options at 31 december 2015 are held by the following employees:

option price
Grant date

Kenneth alexander
Richard Cooper
lee Feldman (note d)
third parties
employees

233.5p
28-feb-13

–
–
–
156,947
–

156,947

1p
02-Jun-14

1,400,000 
700,000 
350,000 
–
875,000

3,325,000 

total

1,400,000
700,000
350,000
156,947
875,000

3,481,947

note a: these options were granted under the 2010 scheme. the Company announced on 27 march 2015 that three of its
directors surrendered 3,200,000 fully vested and “in the money” share options granted in 2010 and 2012 at the prevailing market
price at the time (average of £1.83895). the surrender price was £4.46067, being the average of the middle market closing prices
of the Company’s shares for the thirty dealing days up to and including the date of surrender.

in light of the surrender of share options, described above, by Kenneth alexander, Richard Cooper and lee Feldman (the “senior
team”), the Company has implemented a new retention plan for the senior team (the “Retention Plan”). the Retention Plan is
focused on ensuring that the senior team are compensated for the surrender of their fully vested share options. accordingly,
each member of the senior team will receive cash payments which in total equal the “in-the-money” value of their surrendered
share options. this payment of €12,183,000 is at the fair value of the vested equity instruments and is accounted for as a deduction
from equity and recognition of the liability.

during 2015, the ﬁrst of the 24 monthly Retention Plan payments was made, but all subsequent payments were put on hold
pending the outcome of the proposed deal with bwin.party. the balance and maturity is shown below:

Value of share options surrendered
Payment in the year
Revaluation at 31 december 2015 exchange rate

Retention plan balance at 31 december 2015
liability for cash-settled options under 2014 scheme

Balance at 31 december 2015

split:
current liabilities
non-current liabilities

2015
€000’s

12,183
(508)
31

11,706
70

11,776

9,740
2,036

note b: these options were granted to third parties as part of the sportingbet PlC acquisition following underwriting commitments
made at the time. the awards vested on the grant date and the options have the exercise price reduced by the value of any
dividends declared up to the point of exercise.

GVC HOLDINGS PLC ANNUAL REPORT 2015

77

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

20. share option schemes continued
note c: these options were granted to certain directors and employees. the awards will vest in full (and become exercisable)
on the share price being equal to or exceeding £6.00 per share for a continuous period of 90 calendar days at any time from the
date of grant. if there is a change of control, the awards will vest in full immediately unless the share price is less than £5.00 per
share, in which case the awards will lapse in full. the awards have been treated as vesting over a 3 year period. the directors’
options under this scheme were cash cancelled after the year end on completion of the acquisition of bwin.party, and the after-
tax proceeds re-invested in new GVC shares at 422p per share, the placing price.

note d: these awards were issued on the same basis as the awards in Note c but were awarded as cash settled rather than
equity settled options. the director’s options under this scheme were cash cancelled after the year end on completion of the
acquisition of bwin.party, and the after-tax proceeds re-invested in new GVC shares at 422p per share, the placing price.

the charge to the consolidated income statement in respect of these options in 2015 was €449,000 (2014: €736,000). of the
2015 charge, €509,000 related to equity settled options and a net credit of €60,000 to cash settled options. the deduction from
equity in respect of the cash payments to be made for the surrender of the vested equity instruments was €12,183,000.

20.1 Weighted average exercise price of options

the number and weighted average exercise prices of share options is as follows: 

outstanding at the beginning of the year
Granted during the year
exercised during the year
surrendered/bought out in the year
Forfeited in the year

outstanding at the end of the year

exercisable at the end of the year

Weighted
average
exercise number of 
options
2015

price
2015

Weighted
average 
exercise  number of
options
2014

price
2014

94p
–
–
184p
1p

11p

6,806,947
–
–
(3,200,000)
(125,000)

3,481,947

156,947

191p
1p
184p
213p
–

94p

3,801,667
3,450,000
(369,720)
(75,000)
–

6,806,947

3,356,947

the options outstanding at 31 december 2015 have a weighted average contractual life of 8.4 years (2014: 5.9 years).

20.2 Valuation of options

the fair value of services received in return for share options granted were measured by reference to the fair value of share
options granted. With the exception of the options granted in 2014 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 all individuals was the
average market price on grant date, with the exception of the options granted to third parties as part of the sportingbet acquisition.
these were priced at the amount the Group offered as consideration for the purchase.

the 2014 options were valued using a monte Carlo model due to the performance conditions associated with the options. the
2014 cash-settled options have been revalued using a monte Carlo model at 31 december 2015.

Fair value of share options and assumptions:

date of grant

21 may 10
21 may 10
21 may 10
28 Jan 12
28 Feb 13
02 Jun 14 – equity settled
02 Jun 14 – cash settled

share
price at
date of grant*
(in £)

1.85
1.85
1.85
1.67
2.375
4.49
4.49

exercise 
price
(in £)

2.13
0.01
1.50
1.5479
2.335
0.01
0.01

expected
volatility

exercise
multiple

Fair value at
expected
dividend Risk free measurement
date (in £)
rate**

yield

60%
60%
60%
58%
60%
24%
21%

2
2
2
2
2
n/a
n/a

17%
17%
17%
20%

2.75%
2.75%
2.75%
2.19%
12.15% 0.572%
1.425%
10.00%
0.52%
9.40%

0.39
0.05
0.59
0.33
0.61
0.41
0.28

* This is the bid price, not the mid-market price, at market close, as sourced from Bloomberg.

** The measurement of the risk-free rate was based on rate of UK sovereign debt prevalent at each grant date over the expected term of the

option.

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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 with the exception of those issued in 2014 as noted above.

financial instrUments and risK manaGement

21.
the Group’s principal ﬁnancial instruments as at 31 december 2015 comprise cash and cash equivalents. the main purpose of
these ﬁnancial instruments is to ﬁnance the Group’s operations. the Group has other ﬁnancial instruments which mainly comprise
receivables and payables, which arise directly from its operations. during the year, the Group entered into a foreign currency
option  to  hedge  its  exposure  to  the  potential  GBP  funding  requirement  for  the  acquisition  of  bwin.party,  which  was  to  be
part-funded by a euro-denominated loan. other than that, the Group did not use derivative ﬁnancial instruments to hedge its
exposure to foreign exchange or interest rate risks arising from operational, ﬁnancing and investment activities. during 2015, the
Group did not hold or issue derivative ﬁnancial instruments for trading purposes.

21.1 market risk

market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates which will affect the
Group’s income or value of its holdings of ﬁnancial instruments. exposure to market risk arises in the normal course of the
Group’s business.

21.2 foreign exchange risk

Foreign exchange risk arises from transactions, recognised assets and liabilities and net investments in foreign operations. during
the year, the Group entered into a foreign currency option to hedge its exposure to the potential GBP funding requirement for the
acquisition of bwin.party, which was to be part-funded by a euro-denominated loan. other than that, the Group does not use
foreign exchange contracts to hedge its currency risk. the Group dividend is declared in the euro. shortly before the dividend is
due to be paid, the Company sells euros and buys British Pounds for an amount equal to the dividend.

the Group has investments in foreign operations which are all denominated in euros, minimising the Group’s exposure to currency
translation risk.

21.2.1 analysis of the statement of Financial Position by Currency
at 31 december 2015

non-current assets

Receivables and prepayments
Winunited option
tax reclaimable
other taxes reclaimable
Cash and cash equivalents

total current assets

trade and other payables
Balances with customers
loans
deferred consideration
share option liability
Forward contract liability
taxation payable
other taxation liabilities

total current liabilities

net current assets/(liabilities)

Betit option
interest bearing loan and borrowings
share option liability

total non-current liabilities

total assets less total liabilities

euro
€000’s

149,310

11,745
3,808
293
6
18,587

34,439

(5,927)
(6,717)
–
(1,606)
–
(9,877)
(7,251)
(731)

(32,109)

2,330

–
(19,821)
–

(19,821)

131,819

GBp
€000’s

9,570

9,923
–
5,672
6
6,628

22,229

(18,898)
(5,393)
(3,711)
–
(9,740)
–
–
(1,128)

(38,870)

(16,641)

(736)
–
(2,036)

(2,772)

(9,843)

other
€000’s

total
€000’s

286

159,166

12,950
–
7
–
2,955

15,912

(7,191)
(2,698)
–
–
–
–
–
(161)

(10,050)

5,862

–
–
–

–

34,618
3,808
5,972
12
28,170

72,580

(32,016)
(14,808)
(3,711)
(1,606)
(9,740)
(9,877)
(7,251)
(2,017)

(81,029)

(8,449)

(736)
(19,821)
(2,036)

(22,593)

6,148

128,124

GVC HOLDINGS PLC ANNUAL REPORT 2015

79

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

21.

financial instrUments and risK manaGement continued

21.2 foreign exchange risk continued

21.2.1 analysis of the statement of Financial Position by Currency continued
at 31 december 2014

non-current assets

Receivables and prepayments
tax reclaimable
other taxes reclaimable
Cash and cash equivalents

total current assets

trade and other payables
Balances with customers
deferred consideration
taxation payable
other taxation liabilities

total current liabilities

net current assets/(liabilities)

Betit option
interest bearing loan and borrowings
Non-interest bearing loan and borrowings
deferred consideration

total non-current liabilities

total assets less total liabilities

euro
€000’s

148,454

10,578
1,593
5
11,320

23,496

(7,322)
(6,366)
(2,347)
(4,962)
(241)

(21,238)

2,258

–
–
–
(1,606)

(1,606)

149,106

GBp
€000’s

10,539

1,926
2,332
134
4,533

8,925

(18,183)
(4,298)
–
(53)
(941)

(23,475)

(14,550)

(1,745)
(327)
(2,777)
–

(4,849)

(8,860)

other
€000’s

total
€000’s

215

159,208

15,101
–
–
1,976

17,077

(5,553)
(2,372)
–
1
(156)

(8,080)

8,997

–
–
–
–

–

27,605
3,925
139
17,829

49,498

(31,058)
(13,036)
(2,347)
(5,014)
(1,338)

(52,793)

(3,295)

(1,745)
(327)
(2,777)
(1,606)

(6,455)

9,212

149,458

a signiﬁcant proportion of the Group’s ﬁnancial assets and liabilities are denominated in euros, which minimises the Group’s
exposure to foreign exchange risk. management do not consider the impact of possible exchange rate movements based on
current market conditions to be material to the net result for the year.

21.3 interest rate risk

the Group earns interest from bank deposits. during the year, the Group held cash on deposits with a range of maturities of less
than three months. the Group has a non-interest bearing loan (see note 14.2) which does not carry any interest rate risk. on
4 september 2015, the Group entered into an agreement with Cerberus Business Finance llC for a loan of up to €400m, in
order to part-fund the proposed acquisition of bwin.party. at 31 december 2015, the Group had €19.8 million of committed and
drawn-down borrowing facilities under this loan arrangement, with a further €380.0 million of committed un-drawn facilities
(2014: €nil). the interest on these loans is based on eURiBoR with a ﬂoor of 1%, plus a margin of 11.5%.

management do not consider the impact of possible interest rate movements based on current market conditions to be material
to the net result for the year or the equity position at the year end for either the year ended 31 december 2014 or 31 december
2015.

21.4 credit risk

the Group seldom has any signiﬁcant concentrations of credit risk, with exposure spread over a large number of customers. the
Group grants credit facilities to its customers and the maximum exposure to credit risk is represented by the carrying amount of
each ﬁnancial asset in the statement of Financial Position.

the Group has material exposure to credit risk through amounts owed by payment processors (third party collection agencies)
of €21.7 million (2014: €22.2 million) and cash balances held with banking institutions of €28.2 million (2014: €17.8 million). the
Group considers the credit risk associated with these balances to be low, having assessed the credit ratings and ﬁnancial strength
of the counter-parties involved. the Group is seeking to diversify its banking deposits to further reduce credit risk.

No provision for impairment has been made at 31 december 2015 (2014: €nil). No receivable amounts were past due date at
31 december 2015 (2014: €nil).

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21.5 liquidity risk

at 31 december 2015, the Group had cash and cash equivalents of €28.2 million (2014: €17.8 million) and current assets are
broadly in line with current liabilities. Within non-current liabilities, the balances are all due to be settled within two years. at the
year end the Group had entered into a loan facility arrangement for a further €380.0 million, which was drawn down after the
year end. accordingly, the liquidity risk for the Group is forecast to increase in the short-term, having previously been low.

21.6 maturity analysis

the following table sets out the maturities of ﬁnancial liabilities:

trade payables and customer balances
interest-bearing loans
Non-interest bearing loans
deferred consideration
Forward contract liability
share option liability
Betit option liability
Finance leases

21.7 fair Values

12 months or less
€000’s

1 – 2 years
€000’s

27,561
–
3,020
1,606
9,877
9,740
–
691

52,495

–
19,821
–
–
–
2,036
736
–

22,593

the carrying amounts of the ﬁnancial assets and liabilities, including deferred consideration in the statement of Financial Position
at 31 december 2015 and 2014 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.

Financial assets and ﬁnancial liabilities measured at fair value in the statement of Financial Position are grouped into three levels
of a fair value hierarchy. the three levels are deﬁned based on the observability of signiﬁcant inputs to the measurement, as
follows:

•

•

•

level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
or indirectly

level 3: unobservable inputs for the asset or liability.

the following table shows the levels within the hierarchy of ﬁnancial assets and liabilities measured at fair value on a recurring
basis at 31 december 2015 and 31 december 2014:

at 31 december 2015

financial assets
available for sale ﬁnancial asset
Winunited share option asset

financial liabilities
Betit option liability
Forward contract liability

level 1
€000’s

level 2
€000’s

level 3
€000’s

total
€000’s

–
–

–

–
–

–

–
–

–

–
(9,877)

(9,877)

2,585
3,808

6,393

(736)
–

(736)

2,585
3,808

6,393

(736)
(9,877)

(10,613)

GVC HOLDINGS PLC ANNUAL REPORT 2015

81

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

21.

financial instrUments and risK manaGement continued

21.7 fair Values continued

at 31 december 2014

financial assets
available for sale ﬁnancial asset

financial liabilities
Betit option liability

level 1
€000’s

level 2
€000’s

level 3
€000’s

total
€000’s

3,801

3,801

3,801

3,801

(1,745)

(1,745)

(1,745)

(1,745)

–

–

–

–

–

–

–

–

there were no transfers between levels in 2015 or 2014.

Measure of fair value of ﬁnancial instruments:

the Group’s ﬁnance team performs valuations of ﬁnancial items for ﬁnancial reporting purposes, including level 3 fair values, in
consultation  with  third  party  valuation  specialists  for  complex  valuations. Valuation  techniques  are  selected  based  on  the
characteristics of each instrument, with the overall objective of maximising the use of market-based information.

the valuation techniques used for the available for sale ﬁnancial asset, the Betit option liability and the Winunited option asset,
classed as level 3 in 2015, are described in detail in notes 9 and 10.

the valuation technique for the forward contract was to value both the put and call elements at mid-market rates based on an
expected maturity date of 29 march 2016.

21.8 summary of financial assets and liabilities by category

the carrying amounts of the Group’s ﬁnancial assets and liabilities recognised at the reporting date are categorised as follows:

non-current assets:
available for sale Financial asset 

Non-current assets

current assets:
Financial assets measured as loans and receivables:
– trade and other receivables
– Cash and cash equivalents
Financial assets measured at fair value through proﬁt or loss:
– Winunited option asset

Current assets

current liabilities:
Financial liabilities measured at amortised cost:
– trade and other payables
– Non-interest bearing loans and borrowings
– deferred consideration
Financial liabilities measured at fair value through proﬁt or loss:
– Forward contract liability

Current liabilities

non-current liabilities
Financial liabilities measured at amortised cost:
– interest-bearing loans and borrowings
– Non-interest loans and borrowings
– share option liability
– deferred consideration
Financial liabilities measured at fair value through proﬁt or loss:
– Betit option liability (level 3)

Non-current liabilities

2015
€000’s

2,585

2,585

23,079
28,170

3,808

55,057

(37,992)
(3,020)
(1,606)

(9,877)

(52,495)

(19,821)
–
(2,036)
–

(736)

(22,593)

2014
€000’s

3,801

3,801

23,833
17,829

–

41,662

(26,748)
(2,735)
(2,347)

–

(31,830)

(327)
(2,777)
–
(1,606)

(1,745)

(6,455)

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22 related parties

22.1 identity of related parties

the Group has a related party relationship with its subsidiaries and with its directors and executive officers.

22.2 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 year ended 31 december 2015, Fenlex received €97,385 from the Group in relation to Company secretarial
and other matters arising in malta (2014: €45,979).

Richard Cooper received dividends during the year of €934 (2014: €917). the wife of Richard Cooper received dividends during
the year of €184,800 (2014: €171,417) in respect of her interest in the ordinary share capital of the Group.

lee Feldman received dividends during the year of €79,265 (2014: €67,416) 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 year ended 31 december 2015, twin lakes Capital received €68,715 (2014: €31,435) in relation to office services.

Kenneth alexander received dividends during the year of €69,264 (2014: €47,850). the wife of Kenneth alexander received
dividends during the year of €175,466 (2014: €172,333) in respect of her interest in the ordinary share capital of the Group.

22.3 transactions with directors and Key management personnel

details of the remuneration of key management are detailed below:

short term employee beneﬁts (directors)
short term employee beneﬁts (Key management)
termination beneﬁts
share based payments

2015
€000’s

8,915
2,099
808
522

12,344

2014
€000’s

8,699
1,934
–
470

11,103

details of directors’ remuneration is given in the Report of the Remuneration Committee on page 29.

23. continGent liaBilities
the Group, through its trading websites, offers progressive jackpots on slot machines.

23.1 casinoclub progressive Jackpots

CasinoClub offers an equivalent system in which only its own customers participate. this means that CasinoClub make no
contributions to the central fund as it builds up (since they are the only operator in the scheme, this would serve no purpose)
and, should a CasinoClub customer win the progressive jackpot, there is no central fund to cover the payout so the cost of this
would be taken directly to the income statement in the period in which it would be won.

across 44 games, the total of the available jackpots at 31 december 2015 was €6.9 million (2014: 44 games and total available
jackpot of €5.7 million). the single largest jackpot available amounted to €3.3 million (2014: €3.2 million).

the Group had one winner of a signiﬁcant jackpot (2014: none), winning a prize of €226,000.

23.2 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 €171 million. the directors consider this has a fair value of €nil (2014: €nil).

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.

GVC HOLDINGS PLC ANNUAL REPORT 2015

83

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

24. 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.

24.1 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.

24.2 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 8.2 provides
information on the assumptions used in these ﬁnancial statements.

the valuation work to assess the impairment of goodwill and intangible assets was conducted internally by management.

24.3 available for sale asset

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 asset, and any impairment to the value which is recognised in the income statement.

24.4 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 the ﬁnancial statements.

24.5 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.

24.6 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.

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24.7 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 €70 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.

24.8 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 20.

24.9 embedded derivatives

the drawn-down loan contains embedded derivatives. the interest rate on the loan is eURiBoR, subject to a ﬂoor of 1%, plus
a margin of 11.5%. the 1% ﬂoor represents an embedded derivative which has been valued at the year end. management assess
the value of this embedded derivative to be immaterial.

in addition, the loan may be repaid early but if it is repaid in the ﬁrst year, there is an additional ‘make-whole’ premium. 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 have been grouped for the purposes of evaluating the embedded
derivative. management assess the combined value of these derivatives to be immaterial.

there are also embedded derivatives in the undrawn portion of the loan. in the opinion of management, these are outside the
scope of recognition under ias 39.

25. GoinG concern
the Group’s business activities, together with the factors likely to affect its future performance and position are set out in the
Chairman’s, Chief executive’s and Group Finance director’s statements. Note 21 to the ﬁnancial statements sets out the Group’s
ﬁnancial risk management policies, and its exposure to credit risk and liquidity risk.

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 the consolidated ﬁnancial statements.

26. sUBseQUent eVents

26.1  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 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 traded on the main market of the london stock exchange and listed on the official
list (Premium segment), for total consideration of €1,508.2 million as set out in the table below. the acquisition resulted in GVC
obtaining control of bwin.party from 1 February 2016, and this will be accounted for as a business combination in the year ending
31 december 2016.

GVC HOLDINGS PLC ANNUAL REPORT 2015

85

 
 
 
 
 
notes to the consolidated financial statements continued
for the year ended 31 december 2015

26. sUBseQUent eVents continued

26.1  acquisition of bwin.party continued

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 on the previous day was £4.67. the total fair value of the consideration
paid was €1,508.2 million as set out below:

total bwin.party shareholding
GVC shares issued (0.231 per bwin.party share, 

at a price of £4.67)

Cash payment (£0.25 per bwin.party share)
Cash settled options

total consideration

No of shares

843,469,689

194,841,498

Value
£’000

exchange 
rate

Value
€’000

909,910
210,867
21,397

1,142,174

1.3205
1.3205
1.3205

1,201,536
278,450
28,255

1,508,241

the fair value of the assets and liabilities recognised at the date of acquisition, on a provisional basis, is set out in the table
below:

assets
intangible assets
Property, plant and equipment
trade and other receivables
Cash

total assets

liabilities
trade and other payables
Client liabilities and progressive prize pools
taxation

total liabilities

net assets

Fair value of consideration paid

Goodwill recognised

Business combination costs

Fair value
€000

636,899
43,555
145,069
117,325

942,848

(157,597)
(115,574)
(113,379)

(386,550)

556,298

1,508,241

951,943

24,800

the fair value of trade and other receivables is €145.1 million and includes trade receivables with a fair value of €38.5 million.
the gross contractual amount for trade receivables due is €40.0 million, of which €1.5 million is expected to be irrecoverable.

the goodwill consists of assembled workforce, future growth and business reputation.

all contingent liabilities have been provided for.

the total cost that will be recognised in the income statement is €9.6 million, being the business combination costs incurred in
2016.

the ﬁgures presented above are provisional due to the timing of the transaction.

the audited accounts for bwin.party digital entertainment plc for the year ended 31 december 2015 showed:

a.

b.

c.

d.

total revenue of €576.4 million

Clean eBitda of €108.5 million

loss before tax of €40.2 million

Net assets of €499.6 million.

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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 may 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.

the Group will also review non-core assets and may identify some for disposal in due course.

26.2  funding for the acquisition

the cash element of the acquisition of bwin.party was funded through drawing down the balance of the Cerberus loan facility
(see note 14).

the amount drawn down on the loan was a further €380.0 million. of this, €365.0m was converted into GBP under a foreign
currency option taken out in 2015. the GBP amount received was £260,719,500. For further details of the currency option, see
note 3.1.1.

the loan is fully repayable on 4 september 2017.

26.3  issuance of shares

on the same date as the acquisition of bwin.party, the Group issued additional shares at a price of 422p. the additional share
capital consisted of 27,978,812 Placing shares, including the purchase by directors of shares under the terms of the ltiP, and
7,566,212 subscription shares. the cash consideration received for these shares was £150.0 million. the aggregate net proceeds
of these shares of £145.1 million are to be used to fund re-organisational costs (c.£44m), repay existing debt facilities of bwin.party
(c.£45m) and to fund working capital (c.£56.1m).

GVC HOLDINGS PLC ANNUAL REPORT 2015

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company financial statements (Under UK Gaap)

in this section

iNdePeNdeNt aUditoR’s RePoRt to the memBeRs oF GVC holdiNGs PlC 91

ComPaNY BalaNCe sheet

ComPaNY statemeNt oF ChaNGes iN eQUitY

Notes to the ComPaNY FiNaNCial statemeNts

92

93

94

iNdePeNdeNt aUditoR’s RePoRt to 
the memBeRs oF GVC holdiNGs PlC,
ComPaNY BalaNCe sheet, 
ComPaNY statemeNt oF ChaNGes iN eQUitY
aNd Notes to the ComPaNY FiNaNCial
statemeNts

 
 
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independent aUditor’s report to the memBers of GVc holdinGs plc

We have audited the parent company ﬁnancial statements of GVC holdings PlC for the year ended 31 december 2015 which
comprise the Balance sheet, statement of Changes in equity and the related notes. the ﬁnancial reporting framework that has
been applied in their preparation is applicable law and United Kingdom accounting standards (United Kingdom Generally
accepted accounting Practice), including FRs 101.

this report is made solely to the company’s members, as a body. our audit work has been undertaken so that we might state to
the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. to the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.

respective responsibilities of directors and auditor
as explained more fully in the statement of directors’ Responsibilities on page 36, the directors are responsible for the preparation
of the parent company ﬁnancial statements which give a true and fair view. our responsibility is to audit and express an opinion
on the parent company ﬁnancial statements in accordance with applicable law and international standards on auditing (UK and
ireland). those standards require us to comply with the auditing Practices Board’s ethical standards for auditors.

scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and disclosures in the ﬁnancial statements sufficient to give reasonable
assurance that the ﬁnancial statements are free from material misstatement, whether caused by fraud or error. this includes an
assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of signiﬁcant accounting estimates made by the directors; and the overall
presentation of the ﬁnancial statements. in addition, we read all the ﬁnancial and non-ﬁnancial information in the annual Report
to identify material inconsistencies with the audited consolidated ﬁnancial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing
our audit. if we become aware of any apparent material misstatements or inconsistencies we consider the implications for our
report.

opinion on financial statements
in our opinion the parent company ﬁnancial statements:

•

•

give a true and fair view of the state of the Company’s affairs as at 31 december 2015 and of its loss for the year then
ended; and

have been properly prepared in accordance with United Kingdom Generally accepted accounting Practice, including FRs
101.

other matter
We have reported separately on the group ﬁnancial statements of GVC holdings PlC for the year ended 31 december 2015.

Grant thornton UK llp
Chartered accountants
london
22 april 2016

GVC HOLDINGS PLC ANNUAL REPORT 2015

91

 
 
company Balance sheet
for the year ended 31 december 2015

fixed assets
investments

current assets
debtors
Winunited option asset
Cash at bank and in hand

total assets

creditors: amounts falling due within one year

net current liabilities
total assets less current liabilities
creditors: amounts falling due after more than one year

net (liabilities)/assets

capital and reserves
issued share capital
share premium
merger reserve
Retained earnings

total equity

Notes

2015
€000’s

2014
€000’s

3

4
5
6

7

8

86,647

152,364

142,315
3,808
333

146,456

233,103

(213,510)

(67,054)
19,593
(22,593)

(3,000)

613
85,380
40,407
(129,400)

(3,000)

46,524
–
137

46,661

199,025

(132,227)

(85,566)
66,798
(4,522)

62,276

613
85,380
40,407
(64,124)

62,276

the Financial statements from pages 92 to 101 were approved and authorised for issue by the Board of directors on 22 april
2016 and signed on their behalf by:

K.J. alexander
(Chief executive officer)

r.Q.m. cooper
(Group Finance director)

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company statement of chanGes in eQUity
for the year ended 31 december 2015

Balance at 1 January 2014

share option charges**
share options exercised
dividend paid

transactions with owners

loss for the year

total comprehensive income for the year

Balance as at 31 december 2014

Balance at 1 January 2015

share option charges**
share options surrendered
share options exercised
dividend paid

transactions with owners

loss for the year

total comprehensive income for the year

Balance as at 31 december 2015

share
capital
€000’s

share
premium
€000’s

merger
reserve
€000’s

retained
earnings*
€000’s

notes

609

84,530 

40,407 

–
4 
–

4 

–

–

–
850
–

850 

–

–

–
–
–

–

–

–

613 

613 

85,380

85,380

40,407 

40,407

–
–
–
–

–

–

–
–
–
–

–

–

–
–
–
–

–

–

–

(30,660)

552
–
(33,607)

(33,055)

(409)

(409)

(64,124)

(64,124)

509 
(12,183)
–
(34,319)

(45,993)

(19,283)

(19,283)

613

85,380

40,407

(129,400)

10
10
10
11

total
€000’s

94,886

552
854
(33,607)

(32,201)

(409)

(409)

62,276

62,276

509
(12,183)
–
(34,319)

(45,993)

(19,283)

(19,283)

(3,000)

*the share option reserve included within retained earnings at 31 December 2015 amounted to a debit balance of €6,955,345, largely due to
the surrender of fully vested share options during 2015, now recognised as a liability.

**total share option charge per the income statement amounted to €449,231, the difference being a net credit to the cash settled share option
expense of €59,282 which is not taken directly to retained earnings.

all reserves of the Company are distributable, as under the isle of man Companies act 2006 distributions are not governed by
reserves but by the directors undertaking an assessment of the Company’s solvency at the time of distribution (section 49,
Companies act isle of man 2006).

the notes on pages 94 to 101 form part of these ﬁnancial statements.

GVC HOLDINGS PLC ANNUAL REPORT 2015

93

 
 
notes to the company financial statements
for the year ended 31 december 2015

accoUntinG policies

1.
these ﬁnancial statements were prepared in accordance with Financial reporting standard 101 ‘Reduced disclosure Framework’.

a summary of the signiﬁcant accounting policies are set out below, these policies have been applied consistently to the periods
presented, unless otherwise stated.

1.1 Basis of preparation

the ﬁnancial information has been prepared on the historical cost basis with the exception of those assets and liabilities which
are carried at fair value, and in accordance with applicable isle of man law and United Kingdom accounting standards. during
the year the Company adopted FRs 101 ‘Reduced disclosure Framework’ and has undergone transition from reporting under
UK GaaP (UK Generally accepted accounting Practice). this transition is not considered to have a material effect on the ﬁnancial
statements. the Company intends to continue reporting under FRs 101 in the next ﬁnancial year.

as permitted under FRs 101, the Company has taken advantage of the disclosure exemptions available under that standard in
relation to share-based payments, business combinations, ﬁnancial instruments, fair values, presentation of a cash ﬂow statement
and certain related party transactions. Where required, equivalent disclosures are given in the consolidated ﬁnancial statements.

1.2

investments

investments in subsidiary undertakings are stated at cost less amounts written off.

1.3

foreign currency translation

the Company maintains its accounting records in euro and the balance sheet and proﬁt and loss account are expressed in this
currency. income and charges are translated at the exchange rates ruling at the transaction date. Fixed assets are valued using
historical exchange rates. other current assets and liabilities expressed in foreign currencies are translated into euros at the
rates of exchange in effect at the balance sheet date. Realised exchange gains and losses and unrealised exchange losses are
recognised in the proﬁt and loss account.

1.4

fixed assets

investments in subsidiaries are shown as ﬁxed assets in the Company balance sheet, and are valued at cost less any provision
for impairment in value.

1.5 share Based payments

the Group has share option schemes which allow Group employees and contractors 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 are measured using either a binomial or monte Carlo valuation model. this valuation method
takes into account the terms and conditions upon which the options were granted. the amount recognised as an expense is
adjusted to reﬂect the actual number of share options that vest.

Payments made to repurchase or cancel vested awards are accounted for with the fair value of the options cancelled, measured
at the date of cancellation being taken to retained earnings; the balance is taken to the income statement. also on cancellation
an accelerated charge would be recognised immediately.

1.6

financial instruments

Financial assets and ﬁnancial liabilities are recognised when the Company becomes a party to the contractual provisions of the
instruments.

Financial assets and ﬁnancial liabilities are initially measured at fair value. transaction costs that are directly attributable to the
acquisition or issue of ﬁnancial assets and ﬁnancial liabilities (other than ﬁnancial assets and ﬁnancial liabilities at fair value
through proﬁt or loss) are added to or deducted from the fair value of the ﬁnancial assets or ﬁnancial liabilities, as appropriate,
on initial recognition. transaction costs directly attributable to the acquisition of ﬁnancial assets or ﬁnancial liabilities at fair value
through proﬁt or loss are recognised immediately in proﬁt or loss.

1.6.1 Non-derivative Financial instruments
Non-derivative ﬁnancial instruments comprise debtors, loans and borrowings, and trade and other creditors. Non-derivative
ﬁnancial instruments are recognised initially at fair value, plus, for instruments not at fair value through proﬁt or loss, any directly
attributable transaction costs. subsequent to initial recognition, non-derivative ﬁnancial instruments are measured at amortised
cost using the effective interest method. Provisions for impairment are made against ﬁnancial assets if considered appropriate
and any impairment is recognised in proﬁt or loss.

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1.6.2 available for sale Financial assets (aFs)
aFs ﬁnancial assets are non-derivative ﬁnancial assets that are either designated to this category or do not qualify for inclusion
in any of the other categories of ﬁnancial assets. the Company’s aFs ﬁnancial assets include the equity investment in Bhl.

aFs ﬁnancial assets are measured at fair value. Gains and losses are recognised in the statement of total recognised gains and
losses, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which
are recognised in proﬁt or loss.

When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in the statement of total
recognised gains and losses is reclassiﬁed to proﬁt or loss. interest calculated using the effective interest method and dividends
are recognised in proﬁt or loss within ﬁnance income.

For aFs equity investments impairment reversals are not recognised in proﬁt loss and any subsequent increase in fair value is
recognised in the statement of total recognised gains and losses.

1.6.3 derivative Financial instruments
derivative ﬁnancial instruments are accounted for at fair value through proﬁt and loss (FVtPl). the options associated with the
Company’s investment in Bhl are considered derivative ﬁnancial instruments and are carried at their fair value which is re-
measured at each reporting date. any movements in fair value are taken to the proﬁt and loss account.

1.6.4 impairment of Financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered
to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition
of the ﬁnancial asset, the estimated future cash ﬂows of the investment have been affected.

objective evidence of impairment could include:

•

•

•

•

signiﬁcant ﬁnancial difficulty of the issuer or counterparty; or

breach of contract, such as a default or delinquency in interest or principal payments; or

it becoming probable that the borrower will enter bankruptcy or ﬁnancial re-organisation; or

the disappearance of an active market for that ﬁnancial asset because of ﬁnancial difficulties.

1.7 Going concern

the accounts are prepared on a going concern basis, as there are available proﬁts within subsidiaries which, when paid as
dividends, will offset the net liabilities reported on the Balance sheet.

profit and loss accoUnt

2.
the loss for the year dealt with in the accounts of the Company was €19,283,000 (2014: loss of €409,000). the Company has
not presented a separate proﬁt and loss account. the loss in the year relates mainly to the exceptional costs incurred in relation
to the acquisition of bwin.party.

GVC HOLDINGS PLC ANNUAL REPORT 2015

95

 
 
notes to the company financial statements continued
for the year ended 31 december 2015

3.

inVestments

investment in subsidiary undertakings
at 1 January
additions
disposals

at 31 december

available for sale financial asset
at 1 January
impairment

at 31 december

total investments 31 december

2015
€000’s

148,563
5
(64,506)

84,062

2015
€000’s

3,801
(1,216)

2,585

86,647

2014
€000’s

148,563
–
–

148,563

2014
€000’s

5,394
(1,593)

3,801

152,364

during the year the Company disposed of its interests in Gaming VC Cyprus 1 limited and intera N.V. to another entity within the
Group.

available for sale asset
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. on 14 may 2014, the Company acquired a 15% stake in Betit holdings limited
(‘Bhl’) from Betit securities limited (‘Bsl’). the consideration was for €3.5 million, which was attributed to both the available for
sale asset (€5.2 million) and the option liability (€1.7 million) taken on at acquisition. the asset held for sale consideration, together
with professional fees incurred at the time, amounted to a total upfront cost of €5.4 million which was impaired at 31 december
2014 to €3.8 million.

although the Company 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 Company does not believe there is evidence to rebut the presumption it does not have
signiﬁcant inﬂuence over Bhl and therefore the investment is not considered to be an associate and has been accounted for as
an available for sale asset.

the available for sale asset is required to be re-measured at fair value at each reporting date. Changes in the fair value will be
recognised in other comprehensive income, except for impairment losses which are recognised through proﬁt or loss as a
deduction from clean eBitda. the Company engaged a third party valuations specialist to value the asset.

in valuing the underlying business of Bhl, a discounted cash ﬂow model was used, applying a long-term growth rate of 2%
(2014: 2%) to the Company’s forecasts and a discount rate of 18% (2014: 18%) (based on comparison to industry peers and
observable inputs). Based on this model, the value as at 31 december 2015 of the asset held for sale was €2.6 million, leading
to an impairment of €1.2 million.

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subsidiaries
the signiﬁcant subsidiaries of the Company are detailed below:

subsidiary

country of incorporation

ownership interest
2015

2014

Netherlands antilles
Netherlands antilles
Netherlands antilles
england and Wales
england and Wales
england and Wales
england and Wales
england and Wales
england and Wales
alderney
Guernsey
malta
malta
malta

GVC services B.V.*
intera N.V.
Bluebell B.V. (previously GVC sports B.V.)
GVC administration services limited
sportingbet limited
sportingbet (management services) limited
sportingbet (it services) limited
sportingbet (Product services) limited
sporting odds limited
interactive sports (C.i.) limited
longfrie limited
Gaming VC Corporation limited
martingale malta 2 limited
headlong limited

*also has a branch registered in Israel

4.

deBtors

amounts owed by Group undertakings
other debtors
Prepayments and accrued income

5. WinUnited option asset

Winunited option

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

2015
€000’s

131,067
3,310
7,938

142,315

2015
€000’s

3,808

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

2014
€000’s

43,022
3,344
158

46,524

2014
€000’s

–

on 24 march 2015, the Company contracted with Winunited limited for the day-to-day back office operations of the Winunited
business. Under the terms of the agreement, the Company obtained a call option to purchase the Winunited assets comprising
goodwill, customers, licenses, brands and websites. the exercise period for the option is in the three months prior to the ﬁve
year anniversary of the 24 march 2015. No consideration was paid for the call option.

at 31 december 2015 the option was valued by a third party valuation specialist using a monte Carlo valuation model and two
methodologies: a discounted cash ﬂow and a multiples based calculation. a long-term growth rate of 2% was assumed, and a
discount rate of 15% based on industry peers and observable inputs. Based on this model, the value of the call option at 31
december 2015 was €3.1 million. this increase in the fair value of the option has been recognised in the income statement in
accordance with ias 39.

6.

cash at BanK and in hand

Bank balances

2015
€000’s

333

2014
€000’s

137

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notes to the company financial statements continued
for the year ended 31 december 2015

7.

creditors: amoUnts fallinG dUe Within one year

amounts due to Group undertakings
Non-interest bearing loan (see note 7.1 below)
share option liability (note 10)
Forward contract liability
other creditors

2015
€000’s

186,439
3,020
9,740
9,877
4,434

213,510

2014
€000’s

127,189
2,735
184
–
2,119

132,227

7.1 non-interest bearing loan

as part of the Company’s acquisition of sportingbet PlC, a credit facility was made available to the Company by William hill
PlC. at 31 december 2015 the Company had drawn down €3,138,515 (£2,303,513) (2014: €5,867,084 (£4,590,832)) of this
facility. the loan was revalued at the 31 december exchange rate of €1.3625.

ias 39 Financial instruments: Recognition and measurement, states that all ﬁnancial liabilities should initially be measured at
their fair value and subsequently measured at amortised cost using the effective interest rate method. the loan has therefore
been discounted at a rate of 4% and will be unwound over the period of the loan.

the facility is repayable in three instalments and should GVC declare dividends in excess of 58 €cents per share, William hill is
entitled to receive an accelerated repayment equal to the excess of the actual dividend over 58 €cents per share.

the instalments as well as the impact of the discount are shown below:

2015
Base currency
£000’s

4,591
(2,287)
–

2,304

2,304
–

loan balance at 1 January
Repayment during the year
Revaluation at 31 december exchange rate

loan balance at 31 december

Undiscounted payments due within 12 months:
Undiscounted payments due between 12 and 24 months:

loan balance before discount
discount on recognition of the loan
Unwinding of discount to date

loan balance at 31 december

split:
current liabilities

non-current liabilities

8.

creditors: amoUnts fallinG dUe after more than one year

interest bearing loan (see note 8.1 below)
Non-interest bearing loan (see note 7.1)
share option liability (see note 10)
Betit option (see note 8.2 below)

8.1

interest bearing loan

2014
Base currency
£000’s

6,862
(2,271)
–

4,591

2,295
2,296

2015
total
€000’s

5,867
(3,245)
516

3,138

3,138
–

3,138
(780)
662

3,020

3,020

–

2015
€000’s

19,821
–
2,036
736

22,593

2014
total
€000’s

8,256
(2,856)
467

5,867

2,933
2,934

5,867
(780)
425

5,512

2,735

2,777

2014
€000’s

–
2,777
–
1,745

4,522

on 4 september 2015, the Company entered into an agreement with Cerberus Business Finance llC for a loan of up to €400m,
in order to part-fund the proposed acquisition of bwin.party. Under the terms of the loan, a ‘hedging loan’ of up to €20m could
be drawn on in advance of the acquisition, in order to fund a hedging arrangement for the conversion of the loan funds into GBP
and to pay for initial costs including loan arrangement fees. accordingly, €20m was drawn down immediately on entering into the
contract. the balance of €380m was drawn down on 1 February 2016 and so was not recorded as a liability at the year end. the
full amount of the loan is to be repaid by 4 september 2017.

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ias 39 Financial instruments: Recognition and measurement, states that all ﬁnancial liabilities should initially be measured at
their fair value and subsequently measured at amortised cost using the effective interest rate method. the effective interest has
been calculated using the internal rate of return on the cash outﬂows across the period of the loan.

loan balance at 1 January 2015
initial drawdown
initial costs and loan servicing fees paid
interest instalments paid to 31 december 2015
effective interest due to 31 december 2015

loan balance at 31 december 2015

8.2 Betit option

2015
€000’s

–
(20,000)
799
625
(1,245)

(19,821)

on 14 may 2014, the Company acquired a 15% stake in Betit holdings limited (‘Bhl’). the Company has a call option to acquire
the balance of the outstanding shares. the call option can be exercised no earlier than 1 July 2017 and no later than 30 september
2017, and would be subject to further maltese Gaming authority clearance and the stock exchange Rules. the minimum call
option price is €70 million, and the actual price would be determined by the mix of revenues between regulated and non-regulated
markets and certain multiples attaching thereto.

if the Company decides not to exercise its call option Bsl may require the Company 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 Company’s ability to raise
the necessary ﬁnancing. should the Company not raise the required ﬁnancing, Bsl may acquire the Company’s shares in Bhl
for nominal consideration.

the Company engaged a third party valuations specialist to value the options using a monte Carlo valuation model based on the
enterprise value for Bhl and modelling of the anticipated exercise price. in valuing the underlying business of Bhl, a discounted
cash ﬂow model was used, applying a long-term growth rate of 2% (2014: 2%) to the Company’s forecasts and a discount rate
of 18% (2014: 18%) (based on comparison to industry peers and observable inputs). Based on this model, the fair value of the
put and call options was a net liability of €0.7 million (2014: €1.7 million), leading to a movement in the fair value of €1.0 million.

called Up eQUity share capital

9.
on 21 may 2010 shareholders of Gaming VC holdings s.a., approved a redomiciliation to luxembourg which resulted, pari passu,
in shareholders holding shares with a nominal value of €0.01 in GVC holdings PlC. as a result of this transaction, GVC holdings
PlC acquired all the assets and liabilities of Gaming VC holdings s.a. arising from this transaction was the creation of a merger
Reserve, which is distributable.

at an extraordinary General meeting on 18 december 2015, the authorised share capital was increased to 350 million ordinary
shares.

the authorised and issued share capital is:

authorised
ordinary shares of €0.01 each
at 31 december – 350,000,000 shares (2014: 80,000,000 shares)*

issued, called Up and fully paid
at 31 december – 61,276,480 shares (2014: 61,276,480 shares)

*The authorised share capital was increased as part of the Group’s proposed acquisition of bwin.party

2015
€000’s

2014
€000’s

3,500

613

800

613

GVC HOLDINGS PLC ANNUAL REPORT 2015

99

 
 
notes to the company financial statements continued
for the year ended 31 december 2015

called Up eQUity share capital continued

9.
the issued share capital history is shown below:

Balance at 1 January
shares issued on initial listing in 2004
share options exercised
– at £1.00
– at £1.26
– at £1.29
– at £2.36
– at €0.01
issue of shares for acquisition

Balance at 31 december

2004 to 2012

2013

2014

2015

–
31,135,762

31,592,172
–

60,906,760
–

61,276,480
–

233,333
100,000
123,077
–
–
–

–
165,000
31,513
–
100,000
29,018,075

26,667
–
–
343,053
–
–

–
–
–
–
–
–

31,592,172

60,906,760

61,276,480

61,276,480

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. however, should the Company not be satisﬁed as to the true identity of the shareholders it
can suspend the entitlement of those shareholders to receive dividends.

10. share option schemes
the Company has the following share options schemes for which options remained outstanding at the year end:

i.

ii.

options were granted to third parties on 28 February 2013 as part of the sportingbet PlC acquisition following underwriting
commitments made at the time. the awards vested on the grant date and the options have the exercise price reduced by
the value of any dividends declared up to the point of exercise. of the 156,947 outstanding at 1 January 2015, none were
exercised during the year ended 31 december 2015. these options were fully exercised on 8 February 2016 at a weighted
average price of £1.015.

a further grant of options to directors and employees under the existing and already approved ltiP was made on 2 June
2014. Under this scheme, 125,000 options were forfeited during the year and as at 31 december 2015 3,325,000 share
options remained outstanding. after the year end, 2,450,000 of these options were cancelled under the arrangements for
the acquisition of bwin.party.

Under the terms of the share option plans the Company can allocate up to 16.8% of the issued share capital, although it must
take allowance of the 752,923 shares in issue as a consequence of the exercise of share options.

the following options to purchase €0.01 ordinary shares in the Company were granted, exercised, forfeited or existing at the year
end:

date of Grant

21 may 2010
28 Jan 2012
28 Feb 2013
02 Jun 2014

total all schemes

exercise
price

213p
154.79p
233.5p
1p

existing at
1 January
2015

1,600,000
1,600,000
156,947
3,450,000
6,806,947

Granted in
the year

surrendered/

existing at exercisable at
forfeited in 31 december 31 december
2015

the year

2015

–
–
–
–
–

(1,600,000)
(1,600,000)
–
(125,000)
(3,325,000)

–
–
156,947
3,325,000
3,481,947

–
–
156,947
–
156,947

Vesting
criteria

Note a
Note a
Note b
Note c

the options outstanding at 31 december 2015 have a weighted average contractual life of 8.4 years (2014: 5.9 years).

the existing share options at 31 december 2015 are held by the following employees:

option price
Grant date

Kenneth alexander
Richard Cooper
lee Feldman (note d)
third parties
employees

233.5p
28-Feb-13

–
–
–
156,947
–

156,947

1p
02-Jun-14

1,400,000
700,000
350,000
–
875,000

3,325,000

total

1,400,000
700,000
350,000
156,947
875,000

3,481,947

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GVC HOLDINGS PLC ANNUAL REPORT 2015

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note a: these options were granted under the 2010 scheme. the Company announced on 27 march 2015 that three of its
directors surrendered 3,200,000 fully vested and “in the money” share options granted in 2010 and 2012 at the prevailing market
price at the time (average of £1.83895). the surrender price was £4.46067, being the average of the middle market closing prices
of the Company’s shares for the thirty dealing days up to and including the date of surrender.

in light of the surrender of share options, described above, by Kenneth alexander, Richard Cooper and lee Feldman (the “senior
team”), the Company has implemented a new retention plan for the senior team (the “Retention Plan”). the Retention Plan is
focused on ensuring that the senior team are compensated for the surrender of their fully vested share options. accordingly,
each member of the senior team will receive cash payments which in total equal the “in-the-money” value of their surrendered
share options. this payment is at the fair value of the vested equity instruments and is accounted for as a deduction from equity
and recognition of the liability.

during 2015, the ﬁrst of the 24 monthly Retention Plan payments was made, but all subsequent payments were put on hold
pending the outcome of the proposed deal with bwin.party. the balance and maturity is shown below:

Value of share options surrendered
Payment in the year
Revaluation at 31 december 2015 exchange rate

Retention plan balance at 31 december 2015
liability for cash-settled options under 2014 scheme

Balance at 31 december 2015

split:
current liabilities

non-current liabilities

2015
€000s

12,183
(508)
31

11,706
70

11,776

9,740

2,036

note b: these options were granted to third parties as part of the sportingbet PlC acquisition following underwriting commitments
made at the time. the awards vested on the grant date and the options have the exercise price reduced by the value of any
dividends declared up to the point of exercise.

note c: these options were granted to certain directors and employees. the awards will vest in full (and become exercisable)
on the share price being equal to or exceeding £6.00 per share for a continuous period of 90 calendar days at any time from the
date of grant. if there is a change of control, the awards will vest in full immediately unless the share price is less than £5.00 per
share, in which case the awards will lapse in full. the awards have been treated as vesting over a 3 year period. the directors’
options under this scheme were cash cancelled after the year end on the acquisition of bwin.party, and the after-tax proceeds
re-invested in new GVC shares.

note d: these awards were issued on the same basis as the awards in Note c but were awarded as cash settled rather than
equity settled options. the director’s options under this scheme were cash cancelled after the year end on the acquisition of
bwin.party, and the after-tax proceeds re-invested in new GVC shares.

11. diVidends
the dividends paid in the year were as follows:

declaration date

12 January 2015
23 march 2015
23 march 2015
21 July 2015
8 october 2015 

eUro amount

GBp amount

0.125
0.140
0.015
0.140
0.140

0.0960
0.1029
0.0110
0.0975
0.1034

2015
€000’s

7,660
8,581
919
8,579
8,580

34,319

all reserves of the Company are distributable, as under the isle of man Companies act 2006 distributions are not governed by
reserves but by the directors undertaking an assessment of the Company’s solvency at the time of distribution (section 49,
Companies act isle of man 2006).

GVC HOLDINGS PLC ANNUAL REPORT 2015

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additional UnaUdited information

Net gaming revenue

Contribution

Clean eBitda

operating proﬁt

Proﬁt before tax

Cash at the balance-sheet date

total dividend declared (pence)

interim dividends (euro)

Final dividend (euro)

total dividend (euro)

total dividend paid during the year (€’000’s)

2011*
€000’s

44,340

20,550

8,382

1,999

(386)

9,853

17.4p

€0.10

€0.11

€0.21

6,225

2012*
€000’s

60,325

36,476

15,452

13,034

10,830

6,632

17.99p

€0.22

–

€0.22

2013
€000’s

168,407

102,631

38,300

14,118

13,014

18,808

40.51p

€0.325

€0.160

€0.485

2014
€000’s

224,801

123,288

49,162

42,921

41,291

17,829

42.61p

€0.400

€0.155

€0.555

2015
€000’s

247,730

135,361

54,077

27,748

25,506

28,170

20.10p

€0.28

–

€0.28

8,214

14,979

33,607

34,319

* The results for the ﬁnancial years 2011 and 2012 exclude the results of Betaland that has been disposed of. The results of this business have

been discontinued.

GVC HOLDINGS PLC ANNUAL REPORT 2015

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GVC Holdings PLC | www.gvc-plc.com

Incorporated in the Isle of Man under number 4685V