Annual Report & Accounts 2016 - Notes to the Company Statements
GVC Holdings PLC Annual Report 2016
NOTES TO THE COMPANY
for the year ended 31 December 2016
1. SIGNIFICANT ACCOUNTING POLICIES
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 years 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
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 cashflow
statement and certain related party transactions. Where required, equivalent
disclosures are given in the consolidated financial statements.
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 is
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 based payment schemes which allow certain employees
and contractors to acquire shares of the Company. The Group has accounted for
these under IFRS 2 Share-based payments. As the related services are received by
subsidiary entities, the Company accounts for these as a capital contribution made
to relevant subsidiaries.
Share option schemes
The fair value of options granted under the LTIP and MIP schemes will be
recognised as an share based payment 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.
Cash cancelled options
On occasion, at the Remuneration Committee's discretion, vested share options
may be settled in cash, as opposed to issuing new shares. 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. Also on cancellation an accelerated charge would be
Employers social security costs
Employers social security costs due on the cash cancellation of options and the
employee gain on exercised options will be paid by the Company and shown within
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.
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
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
were considered derivative financial instruments and carried at their fair value
and 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 cashflows 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
• it becoming probable that the borrower will enter bankruptcy or financial
• the disappearance of an active market for that financial asset because
of financial difficulties.
Company financial statements continued