GVC HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
23. CONTINGENT LIABILITIES
The Group, through its trading websites, offers progressive jackpots on slot machines.
23.1 CasinoClub Progressive Jackpots
Unlike Betaland, CasinoClub does not participate in the network progressive jackpot scheme; instead, it 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 37 games, the total of the available jackpots at 31 December 2012 was €6.6 million (2011: 33 games and
total available jackpot of €5.9 million). The single largest jackpot available amounted to €2.9 million from the slots
game "Aladdin's Lamp" (2011: €2.7 million).
The Group had no winners of a significant jackpot. In accordance with the Group's policy.
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
GVC is providing back office and support services to EPC, and hence entered into the agreement with Sportingbet.
Additionally GVC entered into the agreement for the purpose of guaranteeing to a subsidiary of Sportingbet the
payment and performance by EPC of all amounts and obligations under the Business Purchase Agreement and
certain other Transaction Documents. The full detail of the arrangements is contained in the circular to shareholders
dated 31 October 2011 which is available on the Group's website.
The consideration due from EPC to Sportingbet under the terms of the Business Purchase Agreement will be payable
in monthly installments in arrears. The amounts payable are dependent on whether the software being used remains
on the Sportingbet platform, and are calculated as follows:
(a) for each month of the first three years following 21 November 2011 until the software platform being used
ceases to be that of Sportingbet, an amount equal to 75 per cent. and, following the software platform
ceasing to be that of Sportingbet, 67.5 per cent., of a definition of Adjusted Combined Net Revenue (close
to GVC's definition of gross profit, but before marketing expenditure but after affiliate commissions, and
subject to certain allowances and thresholds). The calculation is a combination of the revenue from
Superbahis and similar sites operated by GVC. This is known as the Initial Profit Share.
(b) for each calendar month during the fourth year following 21 November 2011, if the Initial Profit Share is
less than €142.5 million ("Minimum Consideration"), the profit share will continue as outlined in (a) above
capped at an amount equal to the sum of €28.5 million and the amount by which the Initial Profit Share is
less than the Minimum Consideration. If the Initial Profit Share is greater than the Minimum Consideration,
the profit share will continue as outlined in (a) above capped at €28.5 million (the "Second Profit Share");
(c) for each calendar month during the fifth and sixth years following Completion, if the aggregate of the Initial
Profit Share and the Second Profit Share is less than the Minimum Consideration, the profit share will
continue as outlined in (a) above capped at an amount equal to the amount by which the Initial Profit
Share, together with the Second Profit Share, is less than the Minimum Consideration. If the aggregate of
the Initial Profit Share and the Second Profit Share is more than or equal to the Minimum Consideration,
no further Consideration is payable.