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Annual Report & Accounts 2012 - NOTES
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GVC HOLDINGS PLC NOTES TO THE FINANCIAL STATEMENTS The terms of the contracts between SBT, EPC and the group are complex. Neither the Group nor EPC currently provide the platform or licensing, hold the customers on their servers, retain the brand nor set and control the sports book odds of the website. In return for the back office services provided, the Group is entitled to receive income from EPC equating to a share of the profits of the business. The Group does not, however have any interest in the net assets or equity of EPC which is an independently held entity. Management assert that the group does not currently control any of the operating or financial policies of EPC. The Group does recognise there are material transactions between itself and EPC and the provision of back office services necessitates an interchange of management personnel and the provision of essential technical information between EPC and the Group. Accordingly, such amounts due under the B2B transaction with EPC are therefore included within revenue. The Directors consider that the guarantee relating to the acquisition by EPC as referred to in note 23 has a fair value of €nil due to the uncertainty regarding the regulatory environment in which EPC operates and also due to the fact that much of the cash used to fund such payments resides within payment processor accounts operated by the Group. 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 20 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 Sportingbet plc On 20 December 2012, the GVC Board, the William Hill Board and the Sportingbet Board announced that they had reached agreement on the terms of a recommended offer pursuant to which GVC will acquire the entire issued and to be issued share capital of Sportingbet, and members of the William Hill Group will acquire the Sportingbet Australian Business, the "miapuesta" brand, certain Guernsey domiciled companies which hold title to the Guernsey Properties and be granted a call option over the Sportingbet Spanish Business. The acquisition was effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act 2006. The Acquisition had been unanimously recommended by the GVC Board, the William Hill Board and the Sportingbet Board and was approved by shareholders at an Extraordinary General Meeting on 21 February 2013 and the effective date of the scheme was 19 March 2013. GVC issued 29,018,075 shares as consideration to Sportingbet shareholders at 233.5p, there is no contingent consideration related to the acquisition. Further details including the Prospectus can be found on the GVC website at www.gvc-plc.com. IFRS 3 'Business Combinations' requires disclosure of the fair value of the identifiable assets and liabilities and the subsequent calculation of goodwill for all business combinations that occur after the reporting date but before the financial statements are authorised for issue unless the disclosure is impractical. As the acquisition completed on the same day as the financial statements were authorised for issue management have not had access to the financial records of Sportingbet plc in order to carry out their initial fair value estimate of the identifiable assets and liabilities and therefore consider the disclosure requirements of IFRS 3 to be impractical at the date of issue of these financial statements. Disclosure will be made in the Groups interim financial report for the six months to 30 June 2013. 26.2 Other Events There have been no other subsequent events between 31 December 2012 and the date of the signing of these accounts that merit inclusion. 55