Annual Report & Accounts 2013 - REPORT OF THE GROUP FINANCE DIRECTOR
GVC HOLDINGS PLC ANNUAL REPORT 2013 11
An acquisition as complex as a public company consortium bid has been accounted for by GVC as an
exceptional item, as substantial, and one-off costs were incurred in both the acquisition and the restructuring.
Whilst a significant portion in cash-terms was contributed by William Hill, accounting rules require that the
contribution was taken to the balance sheet whilst the costs were taken to the Income Statement. A summary
of the components of these and other exceptional costs is reproduced below:
Table 3: Summary of exceptional items
Transaction costs 9.2
Restructuring costs 11.9
Gross costs 21.1
Contribution from Sportingbet Spanish business to 16 September 2013 (1.4)
The actual costs of the restructuring at €21.1 million have been lower than €24 million as anticipated in page
49 of the prospectus.
Included within restructuring costs of €11.9 million was €9.0 million incurred through either redundancy or
retention arrangements payable to staff who departed through the restructuring process. The terms of the
exit payments were governed largely by the inherited redundancy terms of the Sportingbet group and these
terms were enforceable by the application of the City Code on takeovers and mergers. Also included were
the cost of terminating a variety of contracts, including property commitments that has allowed the Group to
reduce its overheads.
Under the terms of the consortium agreement with William Hill plc, GVC was the custodian and financial
beneficiary of the Sportingbet Spanish "Miapuesta" brand from 19 March 2013 to 16 September 2013. As
GVC was not a "controlling party" as defined under IFRS, the contribution has been treated as a deduction
from exceptional items. The financial benefit of this amounted to €1.4 million.
NON-CASH CHARGES IN THE INCOME STATEMENT
Depreciation of Property, Plant and Equipment rose in the year to €0.5 million (2012 €0.2 million) on total
acquisitions of €0.6 million.
Amortisation of Intangible Assets rose to €3.2 million (2012: €2.3 million) arising from either assets acquired
through the Sportingbet acquisition or through the acquisition of additional software required to run the
Finance income is principally the imputed credit (as per IAS 39) on the interest free loan from William Hill. A
rate of 4% has been used for the imputation.
Finance charges included €43k (2012: €0) on leased software and €1.7 million (2012: €2.2 million) on the
unwinding of the discount on the deferred consideration arising from the 2009 acquisition of Betboo.
Share option charges increased to €0.7 million principally through the granting of share options to third parties
in consideration for underwriting arrangements on the Sportingbet acquisition. The Group has only 3.2 million
share options granted to directors and officers (5.2%) although its permitted allocation is 16.8% (10.2 million).