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GVC HOLDINGS PLC ANNUAL REPORT 2014 17 prINcIpaL rISKS aND UNcErtaINtIES risk description potential impact mitigation EcoNomIc rISK - customer base becomes less confident about their financial prospects lower revenues and consequently profits • customer retention programmes • Broader geographic spread of products • migration of third party costs to be aligned with revenues rEGULatorY rISK - conflict between jurisdictions in which the customer resides and where the service is provided - risk of criminal, civil and administrative enforcement action in jurisdictions where the group generates business reduction in market size • diversified product portfolio • strict adherence to the laws of the jurisdiction in which the service is provided • close monitoring of regulatory developments and assessment of their longer-term impact tax chaNGES - imposition of additional gaming or other indirect taxes lower profits • may not be possible to mitigate • however, payment of additional taxes may create opportunities to work with governments and therefore gain market benefits FINaNcIaL - foreign exchange risks - withdrawal of payment processing facilities lower or more volatile profits short-term interruption of funds deposited by customers • group tries to match its income and cost exposures to create a natural hedge • regular evaluation of low cost hedging opportunities • multiple payment processing methods used by the group opEratIoNaL - dependence on third party software - dependence on key personnel reduction of revenue streams gvc's casinoclub website is highly dependent on Boss media with whom it has a longterm contract interruption of business continuity and loss of corporate knowledge • long-term contracts entered into with suppliers of a good financial covenant • in some cases it is not practicable to mitigate the software reliance risk without significant business and economic disruption • Broader base of executives below Board level BUSINESS rEvIEw