EX-99.15 16 d909907dex9915.htm EX-99.15 EX-99.15

Exhibit 99.15

FORM 51-102F4

BUSINESS ACQUISITION REPORT

 

Item 1. Identity of Company

1.1 Name and Address of Company

Amaya Gaming Group Inc. (the “Corporation”)

7600 Trans Canada Hwy

Pointe-Claire, Québec H9R 1C8

1.2 Executive Officer

For further information, please contact Daniel Sebag, Chief Financial Officer of the Corporation, at 514-744-3122.

 

Item 2. Details of Acquisition

2.1 Nature of Business Acquired

On August 1, 2014, the Corporation, through a wholly-owned subsidiary Amaya Holdings B.V. (“AcquireCo”), acquired 100% of the issued and outstanding shares of privately held Oldford Group Limited (“Oldford Group”), the parent company of Rational Group Ltd. (“Rational Group”), for an aggregate purchase price of approximately US$4.9 billion, which includes a deferred payment (the “Purchase Price”) (the “Acquisition”).

Oldford Group, through its wholly-owned subsidiary Rational Group, operates gaming and related businesses and brands including PokerStars, Full Tilt, the European Poker Tour, PokerStars Caribbean Adventure, Latin American Poker Tour and the Asia Pacific Poker Tour. In addition to operating two of the largest online poker sites, the group is the largest producer of live poker events in the world.

For more information concerning Oldford Group, please refer to Appendix N of the management information circular of the Corporation dated June 30, 2014 (the “Circular”) available under the Corporation’s profile on SEDAR at www.sedar.com.

2.2 Date of Acquisition

August 1, 2014 (the “Closing Date”).

2.3 Consideration

On the Closing Date, cash consideration of US$4.5 billion (the “Upfront Purchase Price”) was paid to the shareholders, optionholders and certain other participating equityholders of Oldford Group (collectively, the “Sellers”) pursuant to the terms of the deed and scheme of merger agreement entered into on June 12, 2014 by the Corporation with AcquireCo, Titan IOM Mergerco Ltd., Oldford Group and the Sellers (the “Deed”). The Deed also provides for a deferred payment of US$400 million, which shall be subject to adjustment based upon the occurrence of certain events, payable to the Sellers within thirty (30) months of the Closing Date. There is no interest on the deferred payment.


The Upfront Purchase Price and fees and expenses relating to the Acquisition that were paid by closing of the Acquisition were financed through a combination of cash on hand, new debt, a private placement of subscription receipts, a private placement of common shares and a private placement of non-voting convertible preferred shares, allocated as follows: (i) US$1.05 billion of convertible preferred shares, (ii) C$640 million of subscription receipts at C$20 per subscription receipt which were automatically converted into common shares on a one-to-one basis upon closing of the Acquisition, (iii) US$55 million of common shares subscribed at C$20 per common share, (iv) senior secured credit facilities in the aggregate principal amount of approximately US$2.92 billion, and (v) cash on hand in the amount of US$213 million.

2.4 Effect on Financial Position

Upon closing of the Acquisition, Oldford Group’s CEO, founders and shareholders and certain other principals resigned from all positions with Oldford Group. However, the other primary executive officers including the CFO and COO and other members of the management team were retained to continue leading the business. No other material changes occurred within the corporate structure, management or personnel of Oldford Group as there was minimal overlap between the Corporation’s business-to-business operations and Oldford Group’s business-to-consumer operations.

The Acquisition is expected to generate revenue synergies since part of the Corporation’s previously existing business is the licensing of online casino gaming content to third party “business to consumer” (B2C) gaming operators. Following announcement of the Acquisition, the Corporation has integrated its library of casino games into the PokerStars and Full Tilt online casino offerings, which is expected to generate increased revenues at a relatively low marginal cost.

The Acquisition also provides opportunities for geographic growth as Oldford Group generated no revenue in the United States. As jurisdictions within the United States become regulated, the Corporation, which has numerous licenses in the United States, anticipates its ownership will have the potential to accelerate the entry of PokerStars and Full Tilt into these newly regulated markets.

The acquired business has historically required a relatively low amount of capital expenditure and working capital and Oldford Group’s base in the Isle of Man results in a low corporate tax rate, which should not be affected by the acquisition structure. The Corporation expects that the balance sheet will continue to deleverage over the 18 to 30 months following the Closing Date due to the cash generation profile of the combined company, paired with projected growth.

For additional details of the effect of the Acquisition on the Corporation’s financial position and results of operations, see the financial statements referred to under “Item 3 – Financial Statements” of this business acquisition report.

2.5 Prior Valuations

None.

2.6 Parties to Transaction

The Acquisition was not with an informed person, associate or affiliate of the Corporation.

2.7 Date of Report

October 15, 2014.

 

- 2 -


Item 3. Financial Statements

The following financial statements are appended hereto and form an integral part of this business acquisition report:

 

(a) the audited consolidated financial statements of Oldford Group as at and for the year ended December 31, 2013, together with the notes thereto (appended hereto as Schedule “A”);

 

(b) the unaudited financial statements of Oldford Group as at and for the six-month period ended June 30, 2014, together with the notes thereto (appended hereto as Schedule “B”);

 

(c) unaudited pro forma consolidated statement of financial position of the Corporation as at June 30, 2014, together with the notes thereto (appended hereto as Schedule “C”);

 

(d) unaudited pro forma consolidated statement of comprehensive income of the Corporation for the six-month period ended June 30, 2014, together with the notes thereto (appended hereto as Schedule “C”); and

 

(e) unaudited pro forma consolidated statement of comprehensive income of the Corporation for the year ended December 31, 2013, together with the notes thereto (appended hereto as Schedule “C”).

The Corporation has not requested or obtained the consent of the auditors of the above-noted financial statements to include or incorporate by references their audit report in this business acquisition report.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

The Corporation’s public communications often include oral or written forward-looking statements. Statements of this type are included in this business acquisition report and may be included in other filings with Canadian securities regulators or in other communications. All such statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of the words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “foresee”, “could”, “goal”, “strive”, “might”, “would”, “should”, “believe”, “objective”, “ongoing” or the negative of these words or other variations or synonyms of these words or comparable terminology and similar expressions.

Forward-looking statements reflect current estimates, beliefs and assumptions, which are based on the Corporation’s perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. The Corporation’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. The Corporation can give no assurance that such estimates, beliefs and assumptions will prove to be correct. This business acquisition report contains forward-looking statements concerning, in particular, the combined company’s financial position, cash flow and growth prospects, certain strategic benefits and operational benefits, and the Corporation’s and Oldford Group’s anticipated future results. The pro forma information appended hereto should not be considered to be what the actual financial position or other results of operations would have necessarily been had the Corporation and Oldford Group operated as a single combined company as, at, or for the periods stated.

Numerous risks and uncertainties could cause the combined company’s actual results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to, failure to realize anticipated results, including revenue growth from the combined company’s major initiatives; heightened competition, whether from current competitors or new

 

- 3 -


entrants to the marketplace, changes in economic conditions including the rate of inflation or deflation, changes in interest and currency exchange rates and derivative and commodity prices; failure to achieve desired results in labour negotiations; failure to attract and retain key employees or effectively manage succession planning; damage to the reputation of brands promoted by the combined company; new, or changes to current, gaming laws in various jurisdictions; changes in the combined company’s regulatory liabilities including changes in tax laws, regulations or future assessments; new, or changes to existing, accounting pronouncements; the risk of violations of law, breaches of the combined company’s policies or unethical behaviour; the risk of material adverse effects arising as a result of litigation; and events or series of events that may cause business interruptions. For additional information, please refer to the “Risk Factors” section of the Circular and the Corporation’s annual information form dated March 31, 2014, both of which are available on SEDAR at www.sedar.com.

Readers should not place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based might change. The Corporation cautions that the foregoing list of significant risk factors is not exhaustive. The forward-looking statements contained in this business acquisition report are expressly qualified by this cautionary statement. Unless otherwise indicated by the Corporation, forward-looking statements in this business acquisition report describe the Corporation’s expectations as of the date of this report and, accordingly, are subject to change after such date. The Corporation does not undertake to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required by law.

 

- 4 -


SCHEDULE “A”

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

OF OLDFORD GROUP FOR THE YEAR ENDED DECEMBER 31, 2013


OLDFORD GROUP LIMITED

Annual Report and Consolidated Financial Statements

Year Ended 31 December 2013


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

 

Contents    Page  

Directors and Advisors

     1   

Report of the Board of Directors

     2 - 4   

Report of the Independent Auditors

     5   

Consolidated Income Statement

     6   

Consolidated Statement of Comprehensive Income

     7   

Consolidated Statement of Financial Position

     8   

Company Statement of Financial Position

     9   

Consolidated Statement of Changes in Equity

     10   

Company Statement of Changes in Equity

     11   

Consolidated Statement of Cash Flows

     12   

Company Statement of Cash Flows

     13   

Notes to the Consolidated Financial Statements

     14 - 41   


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Directors and Advisors

Directors

 

  P Schapira
  I M Scheinberg
Registered Agent
Appleby Trust (Isle of Man) Limited
Registered Office
Douglas Bay Complex, Kind Edward Road, Onchan, Isle of Man, IM3 1DZ
Company Number
010483V
Auditors

Haines Watts London LLP

New Derwent House

69 - 73 Theobalds Road

London

WC1X 8TA

Principal Solicitors
Herzog, Fox & Neeman, Asia House, 4 Welzmann Street, Tel Aviv, Israel

 

Page 1


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Report of the Board of Directors

The directors present their annual report and consolidated financial statements of Oldford Group Limited (“the Company”) for the year ended 31 December 2013.

Principal activity and incorporation

The Company was incorporated on 10 October 2001 In the British Virgin Islands as the holding company of a group of companies providing online poker (“the Group”). The headquarters of the Company and the Group have been located in the Isle of Man since August 2005. The Company obtained a certificate of continuation under the Isle of Man Companies Act 2006 on 20 November 2013 and discontinued as a BVI company in the British Virgin Islands on 26 November 2013.

Business review

The Group operates two main online poker brands; “PokerStars” and “Full Tilt”. PokerStars is the world’s largest online poker site and the leader in Online Tournaments worldwide with yearly events such as the World Championship of Online Poker (WCOOP) and World Cup of Poker (WCP). PokerStars also has the largest online tournament prizes with the weekly guaranteed Sunday Million event. PokerStars broke the Guinness world record in 2011 for having the largest online tournament with 200,000 players (PokerStars record from 2009). This record was again broken in June 2013 with a tournament featuring 225,000 participants.

Poker is widely considered to be one of the world’s most popular card games. Poker’s popularity has increased significantly over the last five years with the advent of televised poker events such as the World Poker Tour (WPT) and the World Series of Poker (WSOP), together with televised celebrity poker, which have attracted large audiences. A key driver in the growth in the popularity of televised poker has been the use of cameras embedded In the table to show the players’ cards, enabling television viewers to follow the game strategies of the players. PokerStars is available In 31 languages and is played in over 250 locations.

The Group has been granted licences to various regulated markets over the preceding years, these are detailed below:

 

Jurisdiction

  

Brand

  

Licence

granted

  

Licence no.

  

Regulator

Isle of Man    PokerStars    31/07/2005    N/A   

IoM Gambling Supervision Committee

(GSC)

Italy    PokerStars    10/10/2008    15023    Agenzla delle Dogane e del Monopoll (AAMS)
France    PokerStars    25/06/2010    0006-PO-2010-06-25    Autorité de regulation des Jeux en ligne (ARJEL)
Estonia    PokerStars    20/09/2010    12.2-2/283-1    Estonian Tax and Customs Board (ETCB)
Belgium    PokerStars    20/04/2011    E121495    Belgium Gaming Commission (BGC)
Malta    PokerStars    22/12/2011    LGA/CL3/795/2011    Lotteries and Gaming Authority (LGA)
Denmark    PokerStars    01/01/2012    11-204104    Danish Gambling Authority (DGA)
Spain    PokerStars    01/06/2012    03-11/GO/461241/SGR    Direcclón General de Ordenaclón del Juego (DGOJ)
Isle of Man    Full Tilt Poker    09/10/2012    N/A    IoM Gambling Supervision Committee (GSC)
Malta    Full Tilt Poker    10/12/2012    LGA/CL3/846/2013    Lotteries and Gaming Authority (LGA)
Germany    PokerStars    21/12/2012    N/A    Schleswig Holstein (www.schleswlg-holstein.de)

PokerStars launched its first real money play application on a mobile platform in January 2012. This was in line with our strategy to make poker available on any platform and has proven to be an excellent acquisition tool. Using PokerStars ambassador Rafael Nadal in mobile marketing campalgns allowed us to further promote this product PokerStars signed former Brazilian football star Ronaldo as a brand ambassador this year, joining tennis superstar Nadal as a promoter of poker In a continued effort to Introduce poker to new audiences and to Increase consumer creditability and confidence In online poker.

 

Page 2


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Report of the Board of Directors (continued)

Business review (continued)

 

PokerStars officially launched its fast-fold ring game format called ‘Zoom Poker’ In May 2012 which has become a massive hit, with more than a quarter of all cash game hands on the Internet being played in Zoom. Full Tilt launched a similar yet different product called ‘Rush Poker’ which is a popular innovation, offering players the fastest, slickest action in online poker, and is available in both tournament and ring game formats.

PokerStars maintains its position as the market leader by continuing to improve its products and by Introducing new Innovative features. The company lunched a new play money offering known as ‘Freemlum’, in October 2013. This allows our play money customers to purchase money chip bundles for real cash and facilitates the acceleration and enhancement of their gaming experience through the occasional purchase of these chips. The sale of play money chips has the potential to become a significant revenue stream for the Group.

The Facebook client was launched in beta phase in August 2013 which allows our play money customers to play for free, share achievements with friends and enjoy the greatest selection of play money poker games available on Facebook.

Full Tilt Poker celebrated its first year anniversary (launched in November 2012) with the brand becoming established resulting in an increase in Group market share. The Group looks forward to Introducing new poker game variants in the near future which will help to differentiate the brand and attract more players.

June this year marked a huge milestone for PokerStars when we dealt our 100 billionth hand of online poker. In addition, PokerStars received the prestigious Online Poker Operator of the Year award for the second consecutive year at the International Gaming Awards and the Best Mobile Poker Operator award at the mGaming Awards.

The Group continues to show steady growth in revenue year on year. The $157.0M, 16.1% (2012; $111.4M, 12.9%) Increase in revenue was partly achieved by a 14.7% (2012; 3.2%) increase in the number of unique players who played on the Group’s websites, coupled by a 8.4% (2012; 1.7%) Increase in Active Player Days. Much of this growth in activity was attributable to the re-branding of the Full Tilt brand and a full year of activity in 2013.

Expenses increased by $46.1M, 7.0% (2012; $23.5M, 3.5% decrease) mainly as a result of the inclusion of Full Tilt Poker for a full year. The Group continued to Invest in all offices with overall headcount growing by 10.5% (2012; 20.1%), which was mainly attributed to the incorporation and expansion of Full Tilt Poker. These Increases in costs were however offset by controlling the Group’s marketing spend.

Profit from operations increased $110.9M, 34.7% (2012; $135.0M, 73.2%), primarily driven by the release of historic dormant account balances and revenues from the sale of play money chips, a reduction in distribution and administration costs as a percentage of gaming revenues and a full year of activity on the Full Tilt brand in 2013 compared to two months in 2012. In addition, Full Tilt brand performance has significantly Improved year on year due to operating losses in 2012, attributable to pre-launch expenses and the write-off of historic bad debts.

Risks & uncertainties facing the business

The Group operates in the online environment in which the regulatory environment is rapidly evolving. The Group seeks legal advice from leading practitioners in Jurisdictions in which it has a physical presence or from which a substantial part of its revenue is drawn and acts in accordance with such advice.

Goals and objectives

Our primary corporate objective is to deliver the best customer experience for poker players, by leading in product innovation, customer service and engaging with our players in multiple ways to develop PokerStars and Full Tilt Poker as the leading brands in poker. To achieve our objectives we need to be the first to launch into newly regulated markets to maintain and grow our global number one market share position in online poker.

Our other objectives include being a socially responsible operator and to be an employer of choice.

Operational review

Results and dividends

The results for the Group for the financial year ended 31 December 2013 are set out within the consolidated income statement on page 6.

The directors recommend dividends during the year which are set out in note 33.

 

Page 3


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Report of the Board of Directors (continued)

Operational review (continued)

 

Future expectations

The Group intends to continue to promote and develop its online poker business in its core markets and increase the awareness of the ‘PokerStars’ and ‘Full Tilt’ brands in the markets. A new product and revenue stream anticipated for the forthcoming year is casino games under the Full Tilt brand and platform. This product will help us create a stronger experience for the player and to meet the demands in the market. It is a natural extension of our new strategy for the Full Tilt brand as we aim to create an exciting and unique customer gaming experience. Overall it is anticipated that 2014 will continue to show improved results.

Directors

The directors who served during the year and to the date of signature of this report were:

P Schapira

I M Scheinberg

Directors’ responsibilities

The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and International Financial Reporting Standards (“IFRSs”) and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for that period.

In preparing these financial statements, the directors are required to:

 

    select suitable accounting policies and then apply them consistently;

 

    make judgements and accounting estimates that are reasonable and prudent;

 

    prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business; and

 

    state that the financial statements comply with IFRSs.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Provision of information to auditors

Each of the persons who are directors at the time when this Directors’ Report is approved has confirmed that, so far as they are aware, there is no relevant audit information of which the Group’s auditors are unaware, and that each director has taken all the steps that ought to have been taken as a director in order to be aware of any information needed by the Group’s auditors in connection with preparing their report and to establish that the Group’s auditors are aware of that information.

Auditors

Haines Watts London LLP are deemed to be re-appointed under section 487(2) of the Companies Act 2006.

On behalf of the Board

 

 

LOGO

P Schapira

21 March 2014

 

Page 4


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Independent Auditor’s Report to the Shareholders of Oldford Group Limited

 

We have audited the financial statements of Oldford Group Limited (“the Company”) for the year ended 31 December 2013 which comprise the Group Income Statement and Statement of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Cash Flows, the Group and Parent Company Statements of Changes in Equity and the related notes 1 to 37. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (“IFRSs”) and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Section 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/UKNP.

Opinion on financial statements

In our opinion:

 

    the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 31 December 2013 and of the Group’s profit for the year then ended;

 

    the financial statements have been properly prepared in accordance with IFRSs;

 

    the parent company financial statements have been properly prepared in accordance with IFRSs and, as applied in accordance with the provisions of the Companies Act 2006; and

 

    the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

 

    adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

 

    the parent company financial statements are not in agreement with the accounting records and returns; or

 

    certain disclosures of directors’ remuneration specified by law are not made; or

 

    we have not received all the information and explanations we require for our audit.

 

 

LOGO

 

New Derwent House Matthew Perry (Senior Statutory Auditor)
69 - 73 Theobalds Road For and on behalf of:
London HAINES WATTS LONDON LLP
WC1X 8TA Chartered Accountants
21 March 2014 & Statutory Auditor

 

Page 5


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Consolidated Income statement for the year ended 31 December 2013

 

     Note     

Year ended
31 Dec 2013

$‘000

    Year ended
31 Dec 2012
$‘000
 

Revenue

        1,133,417        976,439   

Distribution costs

     8         (268,040     (249,055

Administration costs

     8         (435,337     (408,196
     

 

 

   

 

 

 

Profit from operations

  430,040      319,188   

Net investment losses

  12      (6,910   (3,237

Net finance (costs)/income

  13      (1,122   1,174   
     

 

 

   

 

 

 

Profit before tax

  422,008      317,125   

Income tax expense

  14      (5,333   (3,508
     

 

 

   

 

 

 

Profit for the year

  416,675      313,617   
     

 

 

   

 

 

 

Attributable to:

Equity holders of the parent

  416,404      313,031   

Non-controlling interests

  32      271      586   
     

 

 

   

 

 

 
  416,675      313,617   
     

 

 

   

 

 

 

The notes on pages 14 - 41 form part of these financial statements.

 

Page 6


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Consolidated statement of comprehensive income for the year ended 31 December 2013

 

     Note      Year
ended 31
Dec 2013
$‘000
    Year
ended 31
Dec 2012
$‘000
 

Profit for the year

        416,675        313,617   

Other comprehensive income

       

Items that will be reclassified to profit or loss in subsequent periods

       

Exchange differences on translation of foreign operations

     31         (184     (36

Available for sale financial assets - net changes in fair value

     31         (896     —     
     

 

 

   

 

 

 

Other comprehensive expense for the year, net of tax

  (1,080   (36
     

 

 

   

 

 

 

Total comprehensive income for the year

  415,595      313,581   
     

 

 

   

 

 

 

Attributable to:

Equity holders of the parent

  415,324      312,995   

Non-controlling interests

  32      271      586   
     

 

 

   

 

 

 
  415,595      313,581   
     

 

 

   

 

 

 

 

The notes on pages 14 - 41 form part of these financial statements.

 

Page 7


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Consolidated statement of financial position as at 31 December 2013

 

 

            31-Dec-13      31-Dec-12  
     Note      $‘000      $‘000      $‘000     $‘000  

ASSETS

             

Non-current assets

             

Property, plant and equipment

     15            48,175           43,533   

Goodwill

     16            602           840   

Other intangible assets

     17            1,069           2,615   

Long term receivables

     18            15,000           —     

Unquoted equity investments

     19            9,461           8,641   
        

 

 

      

 

 

 

Total non-current assets

  74,307      55,629   

Current assets

Available-for-sale investments

  20      211,946      —     

Inventories

  21      1,580      4,163   

Trade and other receivables

  22      134,544      133,926   

Short-term deposits

  24      88,859      218,791   

Cash and cash equivalents

  25      678,544      599,550   
     

 

 

       

 

 

   

Total current assets

  1,115,473      956,430   
        

 

 

      

 

 

 

TOTAL ASSETS

  1,189,780      1,012,059   
        

 

 

      

 

 

 

LIABILITIES

Non-current liabilities

Other payables

  26      97,000      197,000   

Current liabilities

Trade and other payables

  27      392,460      225,746   

Client liabilities

  28      615,316      626,141   

Short-term provisions

  29      4,832      3,443   
     

 

 

       

 

 

   

Total current liabilities

  1,012,608      855,330   
        

 

 

      

 

 

 

TOTAL LIABILITIES

  1,109,608      1,052,330   
        

 

 

      

 

 

 

EQUITY

Share capital

  30      49      49   

Share premium

  31      3,241      1,655   

Other reserves

  31      99      1,179   

Retained earnings

  31      76,269      (43,397
     

 

 

       

 

 

   

Equity attributable to equity holders of the parent

  79,658      (40,514

Non-controlling interests

  32      514      243   
        

 

 

      

 

 

 

TOTAL EQUITY

  80,172      (40,271
        

 

 

      

 

 

 

TOTAL EQUITY AND LIABILITIES

  1,189,780      1,012,059   
        

 

 

      

 

 

 

The financial statements were approved by the Board of Directors and authorised for Issue on 21 March 2014. They were signed on its behalf by:

 

 

LOGO

P Schapira

The notes on pages 14 - 41 form part of these financial statements.

 

Page 8


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

 

Company statement of financial position as at 31 December 2013

 

            31-Dec-13      31-Dec-12  
     Note      $‘000      $‘000      $‘000     $‘000  

ASSETS

             

Non-current assets

             

Property, plant and equipment

     15            —             —     

Unquoted equity investments

     19            —             —     
        

 

 

      

 

 

 

Total non-current assets

  —        —     

Current assets

Trade and other receivables

  22      42      —     

Amounts receivable from group companies

  23      909,067      607,665   

Short-term deposits

  24      836      21,621   

Cash and cash equivalents

  25      10,435      10,977   
     

 

 

       

 

 

   

Total current assets

  920,380      640,263   
        

 

 

      

 

 

 

TOTAL ASSETS

  920,380      640,263   
        

 

 

      

 

 

 

LIABILITIES

Non-current liabilities

Other payables

  26      97,000      197,000   

Current liabilities

Trade and other payables

  27      270,865      125,098   

Amounts payable to group companies

  23      486,661      449,561   
     

 

 

       

 

 

   

Total current liabilities

  757,526      574,659   
        

 

 

      

 

 

 

TOTAL LIABILITIES

  854,526      771,659   
        

 

 

      

 

 

 

EQUITY

Share capital

  30      49      49   

Share premium

  31      3,241      1,655   

Other reserves

  31      1      1   

Retained earnings

  31      62,563      (133,101
     

 

 

       

 

 

   

TOTAL EQUITY

  65,854      (131,396
        

 

 

      

 

 

 

TOTAL EQUITY AND LIABILITIES

  920,380      640,263   
        

 

 

      

 

 

 

In accordance with the exemption allowed by Section 408(3) of the Companies Act 2006, the Company has not presented its own income statement.

The financial statements were approved by the Board of Directors and authorised for issue on 21 March 2014. They were signed on its behalf by:

 

 

LOGO

P Schapira

The notes on pages 14 - 41 form part of these financial statements.

 

Page 9


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Consolidated statement of changes in equity for the year ended 31 December 2013

 

 

            Share
Capital
     Share
Premium
     Other
Reserves
    Retained
Earnings
   

Attributable
to equity
holders

of the
parent

    Non-
controlling
Interests
 
     Note      $‘000      $‘000      $‘000     $‘000     $‘000     $‘000  

Balance at 1 January 2012

        49         852         1,215        (356,428     (354,312     (463

Total comprehensive income

                 

Profit for the year

        —           —           —          313,031        313,031        586   

Other comprehensive income

     31         —           —           (36     —          (36     —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        (36   313,031      312,995      586   

Transactions with owners of the parent

Contributions and distributions

Issue of Ordinary Shares

  31      —        803      —        —        803      —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        803      —        —        803      —     

Changes in ownership interests

Purchase of additional shares in subsidiary

  —        —        —        —        —        120   
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        —        —        —        120   
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 31 December 2012

  49      1,655      1,179      (43,397   (40,514   243   
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 January 2013

  49      1,655      1,179      (43,397   (40,514   243   

Total comprehensive income

Profit for the year

  —        —        —        416,404      416,404      271   

Other comprehensive income

  31      —        —        (1,080   —        (1,080   —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        (1,080   416,404      415,324      271   

Transactions with owners of the parent

Contributions and distributions

Dividends paid

  —        —        —        (296,738   (296,738   —     

Issue of Ordinary Shares

  31      —        1,586      —        —        1,586      —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        1,586      —        (296,738   (295,152   —     

Changes in ownership interests

Purchase of additional shares in subsidiary

  —        —        —        —        —        —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        —        —        —        —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 31 December 2013

  49      3,241      99      76,269      79,658      514   
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

The notes on pages 14 - 41 form part of these financial statements.

 

Page 10


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Company statement of changes in equity for the year ended 31 December 2013

 

    

Share

Capital

$‘000

    

Share

Premium

$‘000

    

Other

Reserves

$‘000

    

Retained

Earnings

$‘000

   

Total

$‘000

 

Balance at 1 January 2012

     49         852         1         (388,469     (387,567

Total comprehensive income

             

Profit for the year

     —           —           —           255,368        255,368   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
  —        —        —        255,368      255,368   

Transactions with owners of the parent

Contributions and distributions

Issue of Ordinary Shares

  —        803      —        —        803   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
  —        803      —        —        803   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 31 December 2012

  49      1,655      1      (133,101   (131,396
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 1 January 2013

  49      1,655      1      (133,101   (131,396

Total comprehensive income

Profit for the year

  —        —        —        492,402      492,402   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
  —        —        —        492,402      492,402   

Transactions with owners of the parent

Contributions and distributions

Dividends paid

  —        —        —        (296,738   (296,738

Issue of Ordinary Shares

  —        1,586      —        —        1,586   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
  —        1,586      —        (296,738   (295,152
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 31 December 2013

  49      3,241      1      62,563      65,854   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

The notes on pages 14 - 41 form part of these financial statements.

 

Page 11


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Consolidated statement of cash flows for the year ended 31 December 2013

 

            Year ended 31 Dec 2013     Year ended 31 Dec 2012  
     Note      $‘000     $‘000     $‘000     $‘000  

Cash flows from operating activities

           

Net profit from ordinary activities

          422,008          317,125   

Adjustments for:

           

Dormant accounts recognised as revenue

        (42,053       —       

Interest income received

        (365       (3,216  

Effect of foreign exchange rate changes

        (3,702       (2,550  

Unrealised foreign exchange gains and losses on operating activities (excluding cash)

        3,593          1,086     

Impairment of goodwill

        238          3,639     

Provision for unquoted equity investments

        3,558          —       

Share based payment expense

        1,587          803     

Depreciation of property, plant and equipment

        8,287          7,232     

Amortisation of intangible assets

        1,576          2,315     

Loss on disposal of property, plant and equipment

        14          684     
     

 

 

     

 

 

   
  (27,267   9,993   
       

 

 

     

 

 

 

Operating cash flows before movements in working capital and provisions

  394,741      327,118   

Decrease/(increase) in trade and other receivables

  4,684      (29,300

Decrease in inventories

  2,582      3,403   

Decrease in trade and other payables

  (83,148   (31,920

Increase in provisions

  1,389      335   
     

 

 

     

 

 

   

Cash used in operations

  (74,493   (57,482

Taxes paid

  (3,472   (2,432
       

 

 

     

 

 

 

Net cash generated from operating activities

  316,776      267,204   

Investing activities

Interest income received

  365      3,216   

Purchases of property, plant and equipment

  (13,057   (38,660

Purchases of intangible assets

  (30   (6,183

Purchase of available for sale financial assets

  (212,842   —     

Investment in companies

  —        (8,628

(Purchase)/disposal of investments

  (4,378   5,000   

Proceeds on disposal of property, plant and equipment

  39      555   

Increase in long term receivables

  (15,000   —     

Decrease in short-term deposits

  129,932      19,804   
     

 

 

     

 

 

   

Net cash used in investing activities

  (114,971   (24,896

Cash flows from financing activities

Equity dividends paid

  (126,513   —     
     

 

 

     

 

 

   

Net cash used in financing activities

  (126,513   —     
       

 

 

     

 

 

 

Net increase in cash and cash equivalents

  75,292      242,308   

Cash and cash equivalents at the beginning of year

  599,550      354,692   

Effect of foreign exchange rate changes

  3,702      2,550   
       

 

 

     

 

 

 

Cash and cash equivalents at the end of year

  25      678,544      599,550   
       

 

 

     

 

 

 

The notes on pages 14 - 41 form part of these financial statements.

 

Page 12


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Company statement of cash flows for the year ended 31 December 2013

 

 

     Note      Year ended 31 Dec 2013     Year ended 31 Dec 2012  
            $‘000     $‘000     $‘000     $‘000  

Cash flows from operating activities

           

Net profit from ordinary activities

          492,402          255,368   

Adjustments for:

           

Interest income

        (1       (31  

Share based payment expense

        1,587          803     
     

 

 

     

 

 

   
  1,586      772   
       

 

 

     

 

 

 

Operating cash flows before movements in working capital and provisions

  493,988      256,140   

Increase in trade and other receivables

  (42   —     

Decrease in trade and other payables

  (124,459   (231,220
     

 

 

     

 

 

   

Cash utilised in operations

  (124,501   (231,220
       

 

 

     

 

 

 

Net cash generated from operating activities

  369,487      24,920   

Investing activities

Interest received

  1      31   

Decrease/(increase) in short-term deposits

  20,785      (799
     

 

 

     

 

 

   

Net cash generated from/(used) in investing activities

  20,786      (768

Cash flows from financing activities

Increase in amounts receivable from Group companies

  (301,402   (471,684

Increase in amounts payable to Group companies

  37,100      445,272   

Equity dividends paid

  (126,513   —     
     

 

 

     

 

 

   

Net cash used in financing activities

  (390,815   (26,412
       

 

 

     

 

 

 

Net decrease in cash and cash equivalents

  (542   (2,260

Cash and cash equivalents at the beginning of year

  10,977      13,237   
       

 

 

     

 

 

 

Cash and cash equivalents at the end of year

  25      10,435      10,977   
       

 

 

     

 

 

 

The notes on pages 14 - 41 form part of these financial statements.

 

 

Page 13


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013

 

1 General

Oldford Group Limited (the “Company”) is a limited company which continued in the isle of Man (previously a British Virgin Islands company until 26 November 2013). The Company’s registered office is at Douglas Bay Complex, Kind Edward Road, Onchan, Isle of Man. These consolidated financial statements comprise the Company and its principle subsidiaries (collectively the “Group”). The list of subsidiaries can be found in note 19. The Group is primarily involved as a provider of online poker.

 

2 Basis of preparation

The financial statements for both the Group and the Company have been prepared in accordance with applicable international Financial Reporting Standards (IFRSs), IFRS Interpretations Committee (IFRIC), interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs.

The consolidated financial statements have been prepared under the historical cost basis except for certain financial instruments that are measured at fair values at the end of the each reporting period, as explained in the significant accounting polices below.

 

3 Functional and presentation currency

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in United States Dollars, which is the Group’s functional and presentation currency.

All amounts have been rounded to the nearest thousand, unless otherwise indicated.

 

4 Use of judgements and estimates

The preparation of the consolidated financial statements necessitates the use of estimates, assumptions and Judgements that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Although the estimates are based on management’s knowledge and best Judgement information and financial data, the actual outcome may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis.

In the process of applying the Group’s accounting policies, management has made Judgements, assumptions and estimates of information and financial data that have the most significant effect on the amounts recognised in the consolidated financial statements in the following notes:

 

    Note 7—dormant accounts: regarding player accounts remaining inactive after the positive balances in dormant accounts have been recognised as revenue;

 

    Notes 15 and 17—depreciation and amortisation: regarding the assessment of and changes in useful lives and residual values;

 

    Notes 16 and 19—impairment test: regarding the key assumptions underlying recoverable amounts;

 

    Notes 19 and 32—consolidation: whether the Group has control over an investee with non-controlling interests;

 

    Notes 19, 20 and 35—fair value measurements: regarding the measurement of fair values for both financial and non-financial assets and liabilities; and

 

    Notes 19 and 20—available-for-sale investments: regarding classification of financial assets as available-for-sale and the current/non-current split of these financial assets.

 

    Note 29—short-term provisions: regarding the measurement of provisions including the key assumptions about the likelihood and magnitude of an outflow of resources.

 

5 Application of new and revised IFRSs

New and revised IFRSs affecting amounts reported and/or disclosed in the financial statements

In the current year, the Group has applied the following new and revised IFRSs that are mandatorily effective for accounting period that begins on or after 1 January 2013:

 

  (a) Amendments to IFRS 7 Disclosures—Offsetting Financial Assets and Financial Liabilities

The amendments to IFRS 7 require entities to disclose Information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.

As the Group does not have any significant offsetting arrangements in place, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in the consolidated financial statements.

 

Page 14


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

5 Application of new and revised IFRSs (continued)

 

New and revised IFRSs affecting amounts reported and/or disclosed in the financial statements (continued)

 

  (b) New and revised Standards on consolidation, joint arrangements, associates and disclosures

In May 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was issued comprising IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interest in Other Entities, IAS 27 (revised 2011) Separate Financial Statements and IAS 28 (revised 2011) Investment in Associates and Joint Ventures. Subsequent to the issue of these standards, amendments to IFRS 10, IFRS 11 and IFRS 12 were issued to clarify certain transitional guidance on the first-time application of the standards.

The impact of the application of these standards is set out below:

Impact of the application of IFRS 10

IFRS 10 changes the definition of control such that an investor has control over an investee when a) it has power over the investee, b) it is exposed, or has rights, to variable returns from its involvement with the investee and c) has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

In accordance with the transitional provisions of IFRS 10, the Group reassessed the control conclusion for its investees at 1 January 2013 and concluded that there are no changes to control the Group has over its investee. All subsidiaries which were previously consolidated will be continued to be treated as a subsidiary and consolidated with Group results.

Impact of the application of IFRS 11

IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified and accounted for. Under IFRS 11, there are only two type of joint arrangements – joint operations and joint ventures. The classification of joint arrangements under IFRS 11 is determined based on the rights and obligations of parties to the joint arrangements by considering the structure, the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement, and when relevant, other facts and circumstances. Previously IAS 31 contemplated three type of arrangements – jointly controlled entitles, jointly controlled operations and Jointly controlled assets. The classification of joint arrangements under IAS 31 was primarily determined based on the legal form of the arrangement.

In accordance with the transitional provisions of IFRS 11, the Group has reassessed the arrangements it has with third parties and concluded that there are no joint arrangements in place. This is consistent with the Group’s assessment in prior year.

Impact of the application of IFRS 12

IFRS 12 is a new disclosure standard and is applicable to entitles that have Interests in subsidiaries, joint arrangements, associates and/or unconsolidated structure entities.

As a result of IFRS 12, the Group has mainly expanded its disclosures about its Interests in subsidiaries (see notes 19 and 32).

Impact of the application of IAS 27 (revised 2011)

IAS 27 (revised 2011) now only deals with the requirements for separate financial statements. Previously IAS 27 also dealt with the requirements for consolidated financial statements which are now dealt with in IFRS 10. The standard requires that when an entity prepares separate financial statements, Investments In subsidiaries, associates, and jointly controlled entitles are accounted for either at cost, or in accordance with IFRS 9 Financial Instruments.

There is no impact to the Company as a result of application of IAS 27 (revised 2011) as Its accounting policies in relation to subsidiaries remain unchanged and are being accounted for at cost.

Impact of the application of IAS 28 (revised 2011)

IAS 28 (revised 2011) supersedes IAS 28 Investment in Associates and prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for Investments in associates and joint ventures.

 

Page 15


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

5 Application of new and revised IFRSs (continued)

 

New and revised IFRSs affecting amounts reported and/or disclosed in the financial statements (continued)

Impact of the application of IAS 28 (revised 2011) (continued)

The Group does not have any investments in associates and has also established that there are no joint arrangements in place. As a result the application of IAS 28 (revised 2011) has no impact on the Group.

 

  (c) IFRS 13 Fair Value Measurements

IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements when such measurements are required or permitted by other IFRSs. It unifies the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7.

As a result of IFRS 13, the Group has included additional disclosures in this regard (see notes 19 and 35). In accordance with the transitional provisions of IFRS 13, the Group has applied the new fair value measurement guidance prospectively and has not provided any comparative Information for new disclosures. Notwithstanding the above, the change had no significant impact on the measurements of the Group’s assets and liabilities.

 

  (d) Amendment to IAS 1 Presentation of Items of Other Comprehensive Income

As a result of the amendments to IAS 1, the Group has modified the presentation of Items of OCI in its statement of profit or loss and OCI, to present separately Items that would be reclassified to profit or loss from those that would never be. Comparative Information has been re-presented accordingly.

 

  (e) Amendment to IAS 19 Employee Benefits (revised 2011)

IAS 19 (revised 2011) changes the accounting for defined benefit plans and termination benefits.

The Group does not have any defined benefit plans and significant termination benefits. As a result the application of IAS 19 (revised 2011) has no Impact on the Group.

New and revised IFRSs in Issue but not yet effective

At the date of authorisation of these financial statements, there were a number of standards and interpretations that have not been applied in these financial statements, which were in issue but not yet effective. In future periods the following are expected to have an impact on the financial statements:

IFRS 9 — Financial Instruments (effective for accounting periods beginning on or after 1 January 2015).

Amendments to IFRS 10, IFRS 12 and IAS 27—Investment Entities (effective for accounting periods beginning on or after 1 January 2014).

Amendments to IAS 32—Offsetting Financial Asses and Financial Liabilities (effective for accounting periods beginning on or after 1 January 2014).

 

6 Significant accounting policies

The Group has applied following principal accounting policies in the preparation of the consolidated financial statements:

Basis of consolidation

Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and entitles controlled by the Company (Its subsidiaries). Control is achieved when the Company a) has power over the investee; b) is exposed, or has rights, to variable returns from its involvement with the investee; and c) has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of controls listed above.

 

Page 16


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

6 Significant accounting policies (continued)

 

Subsidiaries (continued)

Subsidiaries are consolidated from the date of acquisition (i.e. the date on which control of the subsidiary effectively commences) to the date of disposal (i.e. the date on which control over the subsidiary effectively ceases). Specifically, Income and expenses of a subsidiary acquired or disposed during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All Intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Business combinations and related goodwill

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Acquisition related costs are generally recognised in profit or loss as Incurred.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

The excess of the consideration transferred over the fair value of the net identifiable assets, liabilities and contingent liabilities acquired is capitalised as goodwill. Any gain on a bargain purchase is recognised in profit or loss immediately. Goodwill is not amortised but tested for impairment at least annually and upon the occurrence of an indication of impairment. The impairment testing process is described in the appropriate section of these policies.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Non-controlling Interests (“NCI”)

NCI are measured at their proportionate share of the acquiree’s Identifiable net assets from acquisition date.

Changes in the Group’s ownership interest in existing subsidiaries

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and NCI are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the NCI are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other components of equity, Any resulting gain or loss is recognised in profit or loss and is calculated as the difference between (I) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (II) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any NCI. Any interest retained in the former subsidiary is measured at fair value when control is lost.

Foreign currency

Foreign currency transactions

In preparing the financial statements of the individual group entitles, transactions in currencies other than the entity’s functional currency (foreign currencies) are translated at the spot foreign exchange rate at the date of the transaction.

At the end of each reporting period, monetary Items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences arising on the retranslation of monetary assets and liabilities are recognised Immediately in the profit or loss.

 

Page 17


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

6 Significant accounting policies (continued)

 

Foreign currency (continued)

Foreign currency transactions (continued)

Non-monetary Items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Foreign operations

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

  (i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement;

 

  (ii) Income and expenses for each income statement are translated at spot exchange rates (unless this spot is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

 

  (iii) all resulting exchange differences are recognised in statement of comprehensive income and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI.

When a foreign operation is disposed of in its entirety or partially such that control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI.

Revenue recognition

Revenue is measured at the fair value of the consideration derived. Revenue is only recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably.

Internet gaming and tournament fees

Revenue from internet gaming is recognised in the accounting periods in which the gaming transactions occur. Revenue is recognised with reference to the underlying arrangements and agreements with the players.

Player deposit fees and conversion margins

Revenue from customer cross currency deposits and withdrawals is recognised when the transaction is complete. Revenue is recognised with reference to the underlying arrangements and agreements with the players.

Interest and Investment Income

Interest Income is accrued on a time basis, with reference to the principal amount and the applicable effective Interest rate. Dividend Income is recognised in profit or loss on the date that the Group’s right to receive payment is established.

Rental Income

Refer to accounting policy notes on leased assets below.

Employee benefits

Short-term employee benefits

Short-term employee benefits (which also include payroll costs) are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined contribution plan

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

 

Page 18


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

6 Significant accounting policies (continued)

 

Employee benefits (continued)

Share-based payment transactions

The Group has applied the requirements of IFRS 2 Share-based payments. The Group issues equity settled share-based payments to certain employees.

Equity settled share based payments are measured at fair value at the date of the grant. Fair value is measured by use of a suitable pricing model. The grant-date fair value of equity settled share-based payment granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards factoring in any vesting conditions.

Dividends payable

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when declared by the directors and paid to the shareholders. In the case of final dividends, this is when approved by the shareholders at the Annual General Meeting.

Income tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or other comprehensive income.

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates that have been enacted or substantively enacted by the year end date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computations of taxable profits.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each year end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, using tax rates enacted or substantively enacted at the year end date.

Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

If significant parts of an Item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss at the date of disposal.

Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

 

Page 19


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

6 Significant accounting policies (continued)

Property, plant and equipment (continued)

Depreciation

Depreciation is calculated to write off the cost, less estimated residual values, of property, plant and equipment (except land), using the straight-line method over their expected useful lives. Land is not depreciated.

It is calculated at the following rates:

 

Freehold Property

4% per annum

IT Equipment, Servers and Software

33% per annum

Office Furniture and Equipment

20% per annum

Office Alterations

20% per annum

Motor Vehicles

20% per annum

Event and Poker Room

20% per annum

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted as appropriate.

Intangible assets

Recognition and measurement

Intangible assets with finite useful lives that are acquired separately from a business are carried at cost less accumulated amortisation and any accumulated Impairment losses.

Intangible assets acquired as part of a business combination are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition (which is regarded as its cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Any gain or loss on disposal of an intangible asset is recognised in profit or loss at the date of disposal.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific assets to which it relates.

Amortisation

Amortisation is calculated to write off the cost or valuation, less estimated residual values, of intangible assets, using the straight-line method over their estimated useful lives.

It is calculated at the following rates:

 

Customer lists

50% per annum

Domain names

50% per annum

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted as appropriate.

Impairment of tangible and Intangible assets

At each year end date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An impairment loss is recognised immediately in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Leased assets

All of the Group leasing arrangements are considered to be operating leases.

The Group as lessee

Rentals payable are charged to profit or loss on a straight line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight line basis over the lease term.

 

Page 20


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

6 Significant accounting policies (continued)

The Group as lessor

Rental income is credited to profit or loss on a straight line basis over the term of the relevant lease. Lease incentives granted are recognised as an integral part of the total rental income on a straight line basis over the lease term.

Investments in subsidiaries

Investments in subsidiaries are stated at cost less any identified impairment losses at the end of each reporting period.

Investments in unquoted equity investments

Investments in unquoted equity investments are stated at cost (or fair value) less any identified impairment losses at the end of each reporting period.

Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price for inventories less costs necessary to make the sale.

Trade and other receivables

Trade and other receivables are stated at their amortised cost less impairment losses and doubtful accounts.

Short-term deposits

Short-term deposits comprise deposits held at call with banks with maturities of more than three months.

Cash and cash equivalents

Cash and cash equivalents comprises cash in hand, deposits held on call with banks, other short-term highly liquid investments that are readily convertible to known amounts of cash. They include unrestricted short-term bank deposits originally purchased with maturities of three months or less.

Trade and other payables

Trade and other payables are not interest bearing and are stated at their nominal value.

Client liabilities

Client liabilities are amounts deposited by players and are stated at their nominal value.

Provisions

Provisions are recognised when the Group has present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Where time value is long term and material, the amount of the related provision is calculated by discounting the expected future cash flows at a pre-tax rate that reflects market assessments of the time value of money and, any risks specific to the liability.

Financial Instruments

Recognition, derecognition and offsetting

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the Instrument.

The Group derecognises financial assets when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

 

Page 21


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

6 Significant accounting policies (continued)

Financial Instruments (continued)

Measurement

Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The classification depends on the nature and purpose of the financial assets and financial liabilities and is determined at the time of initial recognition.

Financial assets at fair value through profit or loss

A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, are recognised in profit or loss.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method less any impairment.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method less any impairment.

Available-for-sale (“APS”) financial assets

AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses are recognised in other comprehensive income and accumulated in the fair value reserve. When these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.

AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period.

Financial liabilities at fair value through profit or loss

A financial liability is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial liabilities at fair value through profit or loss are measured at fair value and changes therein, are recognised in profit or loss.

Other financial liabilities

Other financial liabilities are non-derivative financial liabilities initially recognised at fair values less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.

Impairment of non-derivative financial assets

Non-derivative financial assets not classified as fair value through profit or loss, including an interest in an equity-accounted investee, are assessed at each reporting date to determine whether there is objective evidence of impairment.

Financial assets measured at amortised cost

For financial assets measured at amortised cost, the Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the Group uses historical information on the timing of recovering and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.

 

Page 22


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

6 Significant accounting policies (continued)

Financial instruments (continued)

Financial assets measured at amortised cost (continued)

An impairment loss is calculated as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off.

Available-for-sale financial assets

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any Impairment loss previously recognised in profit or loss.

 

7 Dormant accounts

The Group Introduced a dormant account (i.e. player account which has been inactive for a period of twelve months consecutively) policy during the year after obtaining approval from the Regulators. Positive balances in dormant accounts recognised as revenue totalled $42,053k during the year. Although this is a change in accounting policy, it was not considered to be so significant that a prior year adjustment was required, had the policy been applied retrospectively, the amounts recognised in revenue in earlier years would have totalled $22,426k.

 

8 Profit from operations

 

     Year ended      Year ended  
     31 Dec 2013      31 Dec 2012  
This is arrived at after charging:    $‘000      $‘000  

Distribution Costs

     

Customer acquisition and retention

     179,423         157,917   

Affiliates

     32,746         43,163   

Other customer bonuses and frequent player points

     1,467         5,466   

Bad debts and provisions

     4,620         3,626   

Web hosting and technical support

     45,900         36,443   

Gaming licence fee

     3,884         2,440   
  

 

 

    

 

 

 

Administration Costs

  268,040      249,055   
  

 

 

    

 

 

 

Processor costs

  63,657      56,457   

Payroll and associated costs

  190,496      166,036   

General and administrative costs (excluding depreciation and audit fees)

  76,818      82,080   

Amortisation

  1,576      2,315   

Depreciation

  8,287      7,232   

Impairment of goodwill

  238      3,639   

Gaming duty

  93,349      89,288   

Loss on disposal of fixed assets

  14      684   

Auditors remuneration for audit services

  571      320   

Auditors remuneration for other services

  331      145   
  

 

 

    

 

 

 
  435,337      408,196   
  

 

 

    

 

 

 

 

Page 23


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

9 Particulars of employees

 

     Year ended      Year ended  
     31 Dec 2013      31 Dec 2012  
Number of staff employed by the Group at year end totalled:    No.      No.  

Directors

     2         2   

Operations and Customer Support

     882         840   

Administration and Marketing

     610         510   
  

 

 

    

 

 

 
  1,494      1,352   
  

 

 

    

 

 

 

The aggregate payroll costs of the above were:

 

     $‘000      $‘000  

Salaries

     137,584         115,509   

Social security costs

     15,435         11,849   

Pension cost

     4,937         4,112   

Equity-settled share-based payments (note 34)

     1,587         803   
  

 

 

    

 

 

 
  159,543      132,273   
  

 

 

    

 

 

 

 

10 Directors’ emoluments

 

     Year ended    Year ended
     31 Dec 2013    31 Dec 2012
     $‘000    $‘000

The directors’ aggregate emoluments in respect of qualifying services were as follows:

     

During 2013 two executive directors were employed (2012: two)

     

Emoluments receivable (including benefits)

   1,510    1,108
  

 

  

 

Emoluments of highest paid director:

1,510 1,108
  

 

  

 

Emoluments receivable (including benefits)

930 900
  

 

  

 

 

11 Operating lease arrangements

The Group as lessee

The Group leases a number of offices under operating leases. The lease periods range from 2 to 15 years with options to renew after that date. Lease payments are also renegotiated regularly in accordance with lease agreements to reflect market rentals.

At the year end date, the Group had outstanding commitments for future minimum lease payments, which fall due as follows:

 

     Year ended      Year ended  
     31 Dec 2013      31 Dec 2012  
     $‘000      $‘000  

Within one year

     8,445         7,366   

Within two to five years

     24,005         18,245   

In more than five years

     41,574         49,919   
  

 

 

    

 

 

 
  74,024      75,530   
  

 

 

    

 

 

 

The lease payments recognised as rental expenses in profit or loss for the year were $9,336k (2012; $10,539k).

The Group as lessor

The Group leases out part of the property it owns. The lease period is for 15 years with options to renew after that date. Lease payments are renegotiated every 3 years to reflect market rentals.

 

Page 24


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

11 Operating lease arrangements (continued)

The Group as lessor (continued)

At the year end date, the Group had outstanding commitments for future minimum lease receivables, which fall due as follows:

 

     Year ended
31 Dec 2013
     Year ended
31 Dec 2012
 
     $‘000      $‘000  

Within one year

     2,411         2,375   

Within two to five years

     10,255         9,856   

In more than five years

     22,485         24,765   
  

 

 

    

 

 

 
  35,151      36,996   
  

 

 

    

 

 

 

The lease income recognised as rental income in profit or loss for the year was $2,295k (2012: $1,844k).

 

12 Net Investment losses

 

     Year ended      Year ended  
     31 Dec 2013      31 Dec 2012  
     $‘000      $‘000  

Interest on short-term deposits

     592         817   

Dividend Income

     625         127   

Market value adjustments

     654         482   

Loss on sale or transfer of investments

     (1,160      (4,663

Investment provisions

     (3,558      —     

Investment write offs

     (4,063      —     
  

 

 

    

 

 

 
  (6,910   (3,237
  

 

 

    

 

 

 

 

13 Net finance (costs)/income

 

     Year ended      Year ended  
     31 Dec 2013      31 Dec 2012  
     $‘000      $‘000  

Interest on bank balances and deposits

     365         3,216   

Realised foreign exchange gains and losses on operating activities
(excluding cash)

     

Unrealised foreign exchange gains and losses on operating activities

     (1,596      (3,506

    (excluding cash)

     (3,593      (1,086

Unrealised foreign exchange gains and losses on cash and cash equivalents

     3,702         2,550   
  

 

 

    

 

 

 
  (1,122   1,174   
  

 

 

    

 

 

 

 

14 Income taxes

 

     Year ended      Year ended  
     31 Dec 2013      31 Dec 2012  
     $‘000      $‘000  

Amounts recognised in income Statement

     

Current tax expense

     

Current year

     (4,652      (3,159

Adjustment for prior years

     (797      8   
  

 

 

    

 

 

 
  (5,449   (3,151
  

 

 

    

 

 

 

Deferred tax expense

Current year

  (1,057   (357

Adjustment for prior years

  1,173      —     
  

 

 

    

 

 

 
  116      (357
  

 

 

    

 

 

 

Total tax expense for the year

  (5,333   (3,508
  

 

 

    

 

 

 

 

Page 25


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

14 Income taxes (continued)

The Group’s main operations are carried on in the isle of Man which during the year benefited from a zero per cent tax regime. Tax has been provided at the appropriate rates in those other jurisdictions where group subsidiaries are based.

Effective tax rate

The Group’s principal activities are conducted from the isle of Man, where the tax rate is nil (2012: nil). The Group incurs tax expense in other jurisdictions, principally in Malta, the UK, Ireland, Australia and Costa Rica. The overall underlying tax rate for the Group is considered to be 1.3% per calculation below:

 

     Year ended     Year ended  
     31 Dec 2013     31 Dec 2012  
     $‘000     $‘000  

Profit before tax

     422,008        317,125   

Tax expense

     5,333        3,508   
  

 

 

   

 

 

 

Effective tax rate for the year

  1.3   1.1
  

 

 

   

 

 

 

 

15 Property, plant and equipment (Group)

 

     Freehold
Property
     IT
Equipment,
Servers &
Software
    Office
Furniture &
Equipment
    Office
Alterations
    Motor
Vehicles
    Event &
Poker Room
    Total  
     $‘000      $‘000     $‘000     $‘000     $‘000     $‘000     $‘000  

Cost or valuation

               

At 1 January 2012

     —           26,288        4,522        6,505        575        49        37,939   

Additions

     31,278         2,829        459        4,076        18        —          38,660   

Acquisitions

     —           146        1,080        —          —          —          1,226   

Disposals

     —           (1,334     (839     (1,721     (399     (38     (4,331

Foreign currency transl

     —           71        66        13        6        —          156   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At 1 January 2013

  31,278      28,000      5,288      8,873      200      11      73,650   

Additions

  31      11,344      338      698      —        646      13,057   

Acquisitions/reclassifications

  —        (29   29      —        —        —        —     

Disposals

  —        —        (159   (6   (23   —        (188

Foreign currency transl

  —        (337   (221   (265   —        —        (823
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At 31 December 2013

  31,309      38,978      5,275      9,300      177      657      85,696   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation

At 1 January 2012

  —        19,036      2,570      2,969      380      27      24,982   

Acquisitions/reclassifications

  —        80      807      —        —        —        887   

Disposals

  —        (1,113   (597   (1,126   (230   (26   (3,092

Charge for the year

  969      4,135      934      1,155      29      10      7,232   

Foreign currency transl

  —        72      33      2      1      —        108   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At 1 January 2013

  969      22,210      3,747      3,000      180      11      30,117   

Acquisitions / reclassifications

  —        —        —        —        —        —        —     

Disposals

  —        —        (122   (5   (8   —        (135

Charge for the year

  1,143      5,261      563      1,230      4      86      8,287   

Foreign currency transl

  —        (324   (212   (212   —        —        (748
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At 31 December 2013

  2,112      27,147      3,976      4,013      176      97      37,521   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Carrying amount

At 31 December 2013

  29,197      11,831      1,299      5,287      1      560      48,175   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At 31 December 2012

  30,309      5,790      1,541      5,873      20      —        43,533   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 26


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

 

15 Property, plant and equipment (Company)

 

     Servers  
     $‘000  

Cost or valuation

  

At 1 January 2012, 1 January 2013 and 31 December 2013

     1,929   
  

 

 

 

Accumulated depreciation

At 1 January 2012, 1 January 2013 and 31 December 2013

  1,929   
  

 

 

 

Carrying amount

At 31 December 2012 and 31 December 2013

  —     
  

 

 

 

 

16 Goodwill (Group)

 

     Goodwill  
     $‘000  

Cost or valuation

  

At 1 January 2012

     7,661   

Additions

     3,399   
  

 

 

 

At 1 January 2013

  11,060   

Additions

  —     
  

 

 

 

At 31 December 2013

  11,060   
  

 

 

 

Impairment

At 1 January 2012

  6,581   

Charge for the year

  3,639   
  

 

 

 

At 1 January 2013

  10,220   

Charge for the year

  238   
  

 

 

 

At 31 December 2013

  10,458   
  

 

 

 

Carrying amount

At 31 December 2013

  602   
  

 

 

 

At 31 December 2012

  840   
  

 

 

 

The goodwill at year end primarily relates to a poker room licence held by one of the Group’s subsidiary companies. In accordance with IAS 36 and the Group’s stated accounting policy, an annual impairment review was carried out by comparing the carrying amount of goodwill against the recoverable amount. The recoverable amount was based on fair value less cost of disposal of the poker room licence (as this was considered to be significantly higher than value in use), The fair value was estimated with reference to current replacement cost i.e. costs that would be incurred in obtaining this licence from the relevant authority. The carrying amount was adjusted at year end accordingly.

 

17 Other Intangible assets (Group)

 

     Customer
lists
$‘000
     Domain
names
$‘000
     Total
$‘000
 

Cost or valuation

        

At 1 January 2012

     2,970         2,942         5,912   

Additions

     —           2,784         2,784   
  

 

 

    

 

 

    

 

 

 

At 1 January 2013

  2,970      5,726      8,696   

Additions

  —        30      30   
  

 

 

    

 

 

    

 

 

 

At 31 December 2013

  2,970      5,756      8,726   
  

 

 

    

 

 

    

 

 

 

 

Page 27


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

17 Other intangible assets (Group) (continued)

 

     Customer      Domain         
     lists
$‘000
     names
$‘000
    

Total

$‘000

 

Amortisation

        

At 1 January 2012

     2,482         1,284         3,766   

Charge for the year

     488         1,827         2,315   
  

 

 

    

 

 

    

 

 

 

At 1 January 2013

  2,970      3,111      6,081   

Charge for the year

  —        1,576      1,576   
  

 

 

    

 

 

    

 

 

 

At 31 December 2013

  2,970      4,687      7,657   
  

 

 

    

 

 

    

 

 

 

Carrying amount

At 31 December 2013

  —        1,069      1,069   
  

 

 

    

 

 

    

 

 

 

At 31 December 2012

  —        2,615      2,615   
  

 

 

    

 

 

    

 

 

 

No impairment indicators were identified in relation to other intangible assets. The other intangible assets are being amortised over their estimated useful economic lives as detailed in the significant accounting policies section.

 

18 Long term receivables

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Other receivables

     15,000         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

19 Unquoted equity investments (Group)

 

     Unquoted equity  
     investments  
Cost    $‘000  
(which approximates fair value)       

At 1 January 2012

     5,013   

Additions

     8,628   

Disposals

     (5,000
  

 

 

 

At 1 January 2013

  8,641   

Additions

  4,378   

Provision against investments

  (3,558

Disposals

  —     
  

 

 

 

At 31 December 2013

  9,461   
  

 

 

 

The principal unquoted equity investments of the Group are as follows:

 

Name    Holding   Country of Incorporation    Principal Activity

Hippodrome Casino Limited

   5%   UK    Operator of land based casino

Stack Evantos Esportivos SA

   10%   Brazil    Operator of the brand “Brazilian Series of Poker”

Gambling Management SA

   5%   Belgium    Operator of land based casino

 

Page 28


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

19 Unquoted equity Investments (Group) (continued)

 

Acquisitions

On 15 May 2013 the Group Invested further 2.5% in Gambling Management SA, thus increasing its total share holdings from 2.5% to 5%.

Due to economic crisis in the Eurozone, the Bank of Cyprus was balled-in in accordance with the Bailing-in of Bank of Cyprus Public Company Limited Dearee of 2013 whereby affected customer deposits were converted into Bank of Cyprus Class A shares at a nominal value of EUR 1 per share. The Group was also affected by this bailing-in as a result of holding deposit balances with the bank and was issued 2,764,854 shares at EUR 1,00 each (USD equivalent: 3,555,878). The shares in Bank of Cyprus were suspended for trading as a result of the bailing-in. These investments are currently being carried at their nominal value of EUR 1.00 per share.

Investment provisions

A full provision has been made against Bank of Cyprus investments due to significant uncertainty regarding the value of these investments. The bank is currently undergoing a restructuring exercise and the shares remain suspended. As a result it is not possible for the Group to measure the fair value of the Class A shares reliably.

 

Investments in subsidiaries (Company)    31 Dec 2013      31 Dec 2012  
   $      $  

Cost & carrying amount

     

Investments in subsidiaries

     197         217   
  

 

 

    

 

 

 

The principal subsidiaries of Oldford Group Limited, all of which have been included in these consolidated financial statements, are as follows:

 

Name

   Holding   

Country of

Incorporation

  

Principal Activity

Asia Pacific Poker Tour Limited    100%    Isle of Man    Organises & markets APPT event
Euro Poker Tour Limited    100%    England    Organises & markets EPT event
Global Poker Tours Limited    100%    Isle of Man    Tour Management
Latin America Poker Tour Limited    100%    Isle of Man    Organises & markets LAPT event
Halfords Media (Italy) S.r.l.    100%    Italy    Services - marketing and customer support
Halfords Media (UK)    100%    England    Services - marketing and customer support
Halfords Media (IOM)    100%    Isle of Man    Services - marketing and customer related
Halfords Media (France) SAS    100%    France    Services - marketing and customer related
Kawa Productions SAS    100%    France    Media production services
GP Information Services Pty Limited    100%    Australia    Customer services
Cayden Limited    100%    Isle of Man    Payment processing
Rational Entertainment Enterprises Limited    100%    Isle of Man    Operates PokerStars.com business
Rational Poker School Limited    100%    Isle of Man    Owns website for training players
Rational Services Limited    100%    Isle of Man    Services - varied
REEL Italy Limited    100%    Malta    Operates PokerStars .it business
REEL Malta Limited    100%    Malta    Operates PokerStars .fr business
REEL Estonia Limited    100%    Isle of Man    Operates PokerStars.ee business
REEL Europe Limited    100%    Malta    Operates PokerStars .be business
REEL Spaln Pic    100%    Malta    Operates PokerStars .es business
Rational FT Enterprises Limited    100%    Isle of Man    Operates fulltiltpoker.com business
Rational FT Enterprises (Malta) Limited    100%    Malta    Operates fulltiltpoker.eu business
Rational FT Licensed Funds Limited    100%    Isle of Man    Holds Full Tilt player funds
Rational FT Holdings Limited    100%    Isle of Man    Holding company for RFT group
Rational FT Holdings (Malta) Limited    100%    Malta    Maltese holding company for RFT Maltese/Irish subgroup

 

Page 29


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

19 Investments in subsidiaries (Company) (continued)

 

Name

   Holding     

Country of

Incorporation

  

Principal Activity

Rational FT Payments Limited      100%       Isle of Man    Payment processing
Rational FT Poker School (IOM)      100%       Isle of Man    Owns website for training players
Rational FT Services (Ireland) Limited      100%       Ireland    Services - marketing, customer support and IT
Rational FT Services Limited      100%       Isle of Man    Support service company for Full Tilt group
Rational FT Treasury Limited      100%       Isle of Man    Treasury company
Halfords Denmark ApS      100%       Denmark    Tax representative in Denmark
Halfords Media Spain, SL      100%       Spain    Tax representative in Spain
IPT Services Sri      51%       Italy    Italian live room Joint venture
Mainsail Holdings Limited      100%       Jersey    Holds Skandia House
REEL Denmark Limited      100%       Isle of Man    Operates PokerStars.dk (Danish) business
Rational Group Limited      100%       Isle of Man    Holding company
Rational Networks Limited      100%       Malta    Holds PokerStars.eu (Maltese) Class 4 platform licence
Rational Resources Limited      100%       Malta    Holding company

 

20 Available-for-sale Investments

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Available-for-sale financial assets Include the following:

           

Fixed Interest bonds

     143,878         —           —           —     

Funds

     66,620         —           —           —     

Equities

     1,448         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
  211,946      —        —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

21 Inventories

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Finished goods

     2,080         4,445         —           —     

Provision against slow moving goods

     (500      (282      —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
  1,580      4,163      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

22 Trade and other receivables

The directors consider the carrying amount of trade and other receivables approximate to their fair value, which is based on an estimate of the recoverable amount.

Included within other receivables are funded commitments of $7,247k (2012; $4,700k) with the local Regulator as part of the licencing requirements and contracts with third parties.

 

Page 30


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

22 Trade and other receivables (continued)

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Trade receivables

     54,960         67,254         —           —     

Prepayments

     18,265         18,644         —           —     

Other receivables

     57,192         47,917         42         —     

Tax refunds

     3,451         —           —           —     

Deferred tax assets

     676         111         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
  134,544      133,926      42      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

23 Amounts receivable from / (payable to) group companies

 

     Company  
     31 Dec 2013      31 Dec 2012  
     $‘000      $‘000  

Amounts receivable from subsidiaries

     909,067         607,665   

Amounts payable to subsidiaries

     (486,661      (449,561
  

 

 

    

 

 

 

Net receivable from group companies

  422,406      158,104   
  

 

 

    

 

 

 

 

24 Short-term deposits

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Cash on deposit for more than three months

     88,859         218,791         836         21,621   
  

 

 

    

 

 

    

 

 

    

 

 

 

Included within short-term deposits is a total commitment of $4,500k (2012: $14,260k) with the local Regulator as part of the licencing requirement. The Group is required to maintain these commitments in cash or deposits with the financial Institutions agreed with the Regulator.

 

25 Cash and cash equivalents

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Cash at bank and in hand

     678,544         599,550         10,435         10,977   
  

 

 

    

 

 

    

 

 

    

 

 

 

Included within cash and cash equivalents is a total commitment of $2,100k (2012: $ 1,350k) with the local Regulators as part of the licencing requirements. The Group is required to maintain these commitments in cash or deposits with the financial Institutions agreed with the Regulators.

 

26 Other payables due in more than 1 year

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Other payables

     97,000         197,000         97,000         197,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 31


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

27 Trade and other payables

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Dividends payable

     170,225         —           170,225         —     

Trade payables

     7,377         6,130         —           —     

Current tax liabilities

     6,882         1,325         —           —     

Other taxes and social security

     701         1,479         —           —     

Deferred tax liabilities

     787         467         —           —     

Other payables

     206,488         216,345         100,640         125,098   
  

 

 

    

 

 

    

 

 

    

 

 

 
  392,460      225,746      270,865      125,098   
  

 

 

    

 

 

    

 

 

    

 

 

 

Trade and other payables comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for trade purchases is 27 days (2012:25 days). The carrying amount of trade and other payables approximate their fair value which is based on an estimate of the amount required to settle outstanding obligations.

 

28 Client liabilities

 

     Group      Company  
     31 Dec 2013      31 Dec 2012      31 Dec 2013      31 Dec 2012  
     $‘000      $‘000      $‘000      $‘000  

Client liabilities

     657,369         626,141         —           —     

Dormant accounts recognised as revenue

     (42,053      —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
  615,316      626,141      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Dormant accounts (player accounts which have been inactive for a period of twelve months consecutively) are recognised as revenue.

Client liabilities comprises of sums due to customers including net deposits received, undrawn winnings and tournament prize pools for tournaments that have yet to commence. This liability is matched by funds and investments held by the Group on behalf of the customers, which is included in the total of available-for-sale investments, short-term deposits and cash and cash equivalents as disclosed in notes 20,24 and 25 respectively.

 

29 Short-term provisions

 

     Group      Company  
     2013      2012      2013      2012  
     $‘000      $‘000      $‘000      $‘000  

Player bonuses and rebates

           

At 1 January

     3,443         3,108         —           —     

Movement in period

     1,389         335         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

At 31 December

  4,832      3,443      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Short-term provisions relate to player bonus and rebates scheme which is run by the Group. Player bonuses and rebates are due when certain milestones are reached by players. Provision for player bonuses and rebates are estimated by the monitoring level of players’ activities on the Group’s website, scheme levels or milestones achieved by the players and bonuses and rebates redeemed by the players up to year end.

 

Page 32


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

30 Share capital

Authorised share capital and significant terms and conditions

The total authorised number of shares comprises 1,000,000,000 (2012:1,000,000,000) ordinary shares with a par value of $0.00005 (2012: $0.00005). All issued shares are fully paid. The holders of ordinary shares are entitled to receive dividends when declared and are entitled to one vote per share at meetings of the company.

 

     Group and Company  
Allotted, called up and fully paid    Number      $  

At 1 January 2012

     984,874,929         49,245   

Issued during the period

     2,812,573         141   
  

 

 

    

 

 

 

At 31 December 2012

  987,687,502      49,386   
  

 

 

    

 

 

 

At 1 January 2013

  987,687,502      49,386   

Cancellation of treasury shares

  (10,035,000   (502

Issued during the period

  1,549,322      77   
  

 

 

    

 

 

 

At 31 December 2013

  979,201,824      48,961   
  

 

 

    

 

 

 

 

31 Reserves

 

    

Capital

Redemption

    

Translation

Reserve

   

AFS

Reserve

   

Share

Premium

    

Retained

Earnings

 
Group    $‘000      $‘000     $‘000     $‘000      $‘000  

At 1 January 2012

     1         1,214        —          852         (356,428

Profit for the period

     —           —          —          —           313,031   

Premium arising on issue of equity shares

     —           —          —          803         —     

Foreign currency translation

     —           (36     —          —           —     
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

At 31 December 2012

  1      1,178      —        1,655      (43,397
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

At 1 January 2013

  1      1,178      —        1,655      (43,397

Profit for the period

  —        —        —        —        416,404   

Dividends paid

  —        —        —        —        (296,738

Premium arising on issue of equity shares

  —        —        —        1,586      —     

Foreign currency translation

  —        (184   —        —        —     

Available-for-sale financial assets—net changes in fair value

  —        —        (896   —        —     
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

At 31 December 2013

  1      994      (896   3,241      76,269   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

    

Capital

Redemption

    

Share

Premium

    

Retained

Earnings

 
Company    $‘000      $‘000      $‘000  

At 1 January 2012

     1         852         (388,469

Profit for the period

     —           —           255,368   

Premium arising on issue of equity shares

     —           803         —     
  

 

 

    

 

 

    

 

 

 

At 31 December 2012

  1      1,655      (133,101
  

 

 

    

 

 

    

 

 

 

 

Page 33


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

31 Reserves (continued)

 

Company (continued)

 

    

Capital

Redemption

    

Share

Premium

    

Retained

Earnings

 
     $‘000      $‘000      $‘000  

At 1 January 2013

     1         1,655         (133,101

Profit for the period

     —           —           492,402   

Dividends paid

     —           —           (296,738

Premium arising on issue of equity shares

     —           1,586         —     
  

 

 

    

 

 

    

 

 

 

At 31 December 2013

  1      3,241      62,563   
  

 

 

    

 

 

    

 

 

 

Nature and purpose of reserves

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

AFS reserve

AFS reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the assets are derecognised or impaired.

 

32 Non-controlling Interests

 

     $‘000  

At 1 January 2012

     (463

Share of profit for the year

     586   

Purchase of additional shares in subsidiary

     120   
  

 

 

 

At 1 January 2013

  243   

Share of profit for the year

  271   

Purchase of additional shares in subsidiary

  —     
  

 

 

 

At 31 December 2013

  514   
  

 

 

 

The Group controls its non-controlling interest as it has power over the investees; it is exposed, and has rights to, variable returns from its involvement with the investees and has the ability to use its power to affect its returns.

 

33 Dividends

 

                   Year ended      Year ended  
                   31 Dec 2013      31 Dec 2012  
                   $‘000      $‘000  

Amounts recognised as distributions to equity holders in the year:

           

Interim ordinary dividends

     2013         2012         

Per Share

   $ 0.30       $ 0.00         296,738         —     
        

 

 

    

 

 

 

 

34 Share-based payments

The Company has a share-based bonus scheme and nil-cost share options for certain individuals within the Group. The award of shares is entirely at the discretion of the directors. The shares are awarded as bonuses for services rendered or as a sign-on incentive.

The shares and nil-cost share options awarded during the year have been measured at fair value and an appropriate amount has been recognised in the results for the year. The fair value has been calculated using a projected earnings basis taking into account the company’s dividend policy and agreed with relevant tax authorities.

1.75M nil cost options were awarded to employees of the Group during the year. The accounting cost to the company would be based on the value of the nil cost option spread over the five year life of the option.

As a result of the number of shares and share options awarded during the year, and the fair value of the company, a total expense of $1,587k (2012: $803k) has been recognised in the Company’s profit and loss account.

 

Page 34


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

35 Financial risk management

The Group and Company are exposed through its day to day operations to risks that arise from use of its financial instruments. The main financial instruments used by the Group and Company, on which financial risk arises, are as follows:

 

    Long term receivables;

 

    Unquoted equity investments (Group);

 

    Available-for-sale investments;

 

    Trade and other receivables (excluding deferred tax and prepayments);

 

    Short-term deposits;

 

    Long term other payables;

 

    Cash and cash equivalents;

 

    Trade and other payables (excluding deferred tax and current tax);

 

    Client liabilities; and

 

    Short-term provisions.

Categories of financial instruments

The table below summarises the Group’s financial instruments by category and their respective carrying amounts:

 

          2013      2012  
Financial instruments    Category    $‘000      $‘000  

Financial assets

        

Long term receivables

   Loans and receivables      15,000         —     

Unquoted equity investment (Group)

   Available-for-sale      9,461         9,461   

Available-for-sale investments

   Available-for-sale      211,946         —     

Trade and other receivables (excluding deferred
tax and prepayments)

   Loans and receivables      112,152         115,171   

Short-term deposits

   Loans and receivables      88,859         218,791   

Cash and cash equivalents

   Loans and receivables      678,544         599,550   
     

 

 

    

 

 

 
  1,115,962      942,973   
     

 

 

    

 

 

 

Financial liabilities

Long term other payables

Other financial liabilities   97,000      197,000   

Trade and other payables (excluding deferred
tax and current tax)

Other financial liabilities   384,791      223,954   

Client liabilities

Other financial liabilities   657,369      626,141   

Short-term provisions

Other financial liabilities   4,832      3,443   
     

 

 

    

 

 

 
  1,143,992      1,050,538   
     

 

 

    

 

 

 

The Group and Company have exposure to the following risks arising from financial instruments:

 

    Credit risk;

 

    Liquidity risk; and

 

    Market risk.

Risk management framework

The Company’s Board of Directors have overall responsibility for the establishment and oversight of the Group and Company’s risk management framework. The Group and Company’s risk management policies are established to identify and analyse the risks faced by the Group and Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group and Company’s activities. The Group, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

Credit risk

Credit risk is the risk of financial loss to the Group or Company if a customer or counterparty to a financial instrument falls to meet its contractual obligations. The Group and Company’s principal financial assets that are subject to credit risk are long-term receivables, available-for-sale investments, trade and other receivables (excluding deferred tax and prepayments), short-term deposits and cash and cash equivalents.

 

Page 35


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

35 Financial risk management (continued)

 

Credit risk (continued)

The carrying amount of these financial assets represents the maximum credit exposure.

Trade and other receivables

The Group and Company’s credit risk relating to trade and other receivables is primarily attributable to receivables from payment service providers and from customers, who chargeback deposits made, after playing on the Group’s website.

The Group and Company closely monitors the credit quality, financial health and operational economic environment of the payment service providers, where possible, to ensure that it is only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading history to rate its major payment service providers.

The risk arising from customers consist of a large number of customers spread across diverse industries and geographical areas i.e. limited concentration risk. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, appropriate credit provisions are made or third parties appointed to collect the debt on behalf of the Group and Company.

Long term receivables

The Board analyses the credit risk for each of the new long term receivables before advancing funds. The financial health and its operating and financial performance are then regularly reviewed and monitored by the Board.

Available-for-sale Investments

The Group has adopted a policy on available-for-sale investments whereby investments are allowed only in assets which are tolerant and within the parameters agreed between the Group’s treasury and investment managers. The placements are made via counter parties that have a credit rating equal to or better than the Group.

Short-term deposits and cash and cash equivalents

The Group and Company have adopted a policy on short-term deposits and cash and cash equivalents whereby placements are allowed only in liquid securities and with counterparties that have a credit rating equal to or better than the Group.

Liquidity risk

Liquidity risk is the risk that the Group or Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Group and Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group and Company aim to maintain the level of its available-for-sale investments, short-term deposits and cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities. The Group also forecasts cash flows by matching the maturity profiles of financial assets and liabilities.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts presented are undiscounted.

 

     Long term
other
payables
     Trade & other payables
(excl. deferred tax &
current tax)
     Client
liabilities
     Short-term
provisions
     Total  
31 December 2013    $‘000      $‘000      $‘000      $‘000      $‘000  

On demand

     —           11         657,369         4,832         662,212   

In 3 months

     —           281,732         —           —           281,732   

Between 3 months and 1 year

     —           9,343         —           —           9,343   

More than 1 year

     97,000         101,374         —           —           198,374   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  97,000      392,460      657,369      4,832      1,151,661   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 36


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

35 Financial risk management (continued)

 

Liquidity risk (continued)

 

     Long
term
other
payables
     Trade & other
payables
(excl. deferred tax &
current tax)
     Client
liabilities
     Short-
term
provisions
     Total  
31 December 2012    $‘000      $‘000      $‘000      $‘000      $‘000  

On demand

     —           —           626,141         3,443         629,584   

In 3 months

     —           96,843         —           —           96,843   

Between 3 months and 1 year

     —           3,099         —           —           3,099   

More than 1 year

     197,000         125,804         —           —           322,804   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  197,000      225,746      626,141      3,443      1,052,330   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Capital management

The Group and Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.

The capital structure of the Group and Company consist mainly equity of the Group (comprising issued capital, reserves, retained earnings and non-controlling interests per notes 30,31 and 32). The Group does not have any significant external debt or borrowings.

The Group and Company are not subject to any externally imposed share capital requirements.

Market risk

Market risk is the risk that changes in market prices will affect the Group or Company’s income or the value of its holdings of financial instruments. The Group and Company’s exposure mainly relates to foreign currency balances and fair market value of its unquoted equity investments. Interest rate risk is not considered to be significant to the Group or Company and as a result no further analysis regarding this has been presented below.

Foreign currency risk

The Group and Company’s financial risk arising from exchange rate fluctuations is mainly attributed to:

 

    Mismatch between balance sheet liabilities to customers which is predominantly denominated in US Dollars (USD) and the net receipts from customers which are settled in the currency of the customer’s choice, of which Euros (EUR) and Sterling (GBP) are significant.

 

    Mismatch between reported revenue which is mainly generated in USD (the Group and Company’s functional and reporting currency) and significant portion of deposits which are settled in local currencies.

 

    Expenses, the majority of which are denominated in foreign currencies including Euros (EUR) and Sterling (GBP).

The Group and Company continually monitor the foreign currency risks and takes steps, where practical, to ensure that the net exposure is kept to an acceptable level. Foreign currencies are bought or sold at spot rates when necessary to address the short-term imbalances.

The table below details the Group’s exposure to currency risks at year end reporting dates:

 

     EUR      GBP      Other      Total  
31 December 2013    $‘000      $‘000      $‘000      $‘000  

Financial assets

           

Available-for-sale Investments

     8,248         —           —           8,248   

Unquoted equity investment (Group)

     2,186         7,275         —           9,461   

Long term receivables

     —           —           —           —     

Trade and other receivables (excluding deferred tax and prepayments)

     35,845         13,937         15,809         65,591   

Short-term deposits

     34,156         —           —           34,156   

Cash and cash equivalents

     85,848         11,319         17,053         114,220   
  

 

 

    

 

 

    

 

 

    

 

 

 
  166,283      32,531      32,862      231,676   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 37


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

35 Financial risk management (continued)

 

Foreign currency risk (continued)

 

31 December 2013   

EUR

$‘000

    

GBP

$‘000

    

Other

$‘000

    

Total

$‘000

 

Financial liabilities

           

Long term other payables

     —           —           —           —     

Trade and other payables (excluding deferred tax and current tax)

     23,107         16,748         4,376         44,231   

Client liabilities

     111,613         6,243         1,778         119,634   

Short-term provisions

     434         —           —           434   
  

 

 

    

 

 

    

 

 

    

 

 

 
  135,154      22,991      6,154      164,299   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net exposure

  31,129      9,540      26,708      67,377   
  

 

 

    

 

 

    

 

 

    

 

 

 
     EUR      GBP      Other      Total  
31 December 2012    $‘000      $‘000      $‘000      $‘000  

Financial assets

           

Available-for-sale investments

     —           —           .         .   

Unquoted equity investment (Group)

     1,366         7,275         —           8,641   

Long term receivables

     —           —           —           —     

Trade and other receivables (excluding deferred tax and prepayments)

     57,236         15,424         20,638         93,298   

Short-term deposits

     9,238         1,625         22         10,885   

Cash and cash equivalents

     101,910         10,471         12,873         125,254   
  

 

 

    

 

 

    

 

 

    

 

 

 
  169,750      34,795      33,533      238,078   
  

 

 

    

 

 

    

 

 

    

 

 

 
31 December 2012                            

Financial liabilities

           

Long term other payables

     —           —           —           —     

Trade and other payables (excluding deferred tax and current tax)

     20,590         16,079         4,600         41,269   

Client liabilities

     98,256         4,167         1,770         104,193   

Short-term provisions

     834         —           —           834   
  

 

 

    

 

 

    

 

 

    

 

 

 
  119,680      20,246      6,370      146,296   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net exposure

  50,070      14,549      27,163      91,782   
  

 

 

    

 

 

    

 

 

    

 

 

 

Sensitivity analysis

The table below details the effect on profit before tax of a 10% strengthening (and weakening) in the US Dollar exchange rate at the balance sheet date for balance sheet Items denominated in Euros and Sterling as noted above:

 

     31 December 2013      31 December 2012  
     EUR      GBP      EUR      GBP  
     $‘000      $‘000      $‘000      $‘000  

10% strengthening

     (3,113      (954      (5,007      (1,455

10% weakening

     3,113         954         5,007         1,455   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fair value measurements

This note provides information about how the Group determines fair values of various financial assets and financial liabilities and how it manages the risks arising due to changes to market price (or fair values) of financial assets and financial liabilities.

 

Page 38


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

35 Financial risk management (continued)

Fair value measurements (continued)

 

In accordance with IFRS 13 Fair Value Measurements when measuring the fair value of an asset or a liability, the Group and Company uses market observable data as far as practically possible. Fair values are categorised into different levels in a fair value hierarchy based on the Inputs in the valuation techniques as follows:

 

    Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

 

    Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as a prices) or indirectly (i.e. derived form prices)

 

    Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis

The Group’s unquoted equity investments are categorised as available-for-sale financial assets and as a result are measured at fair value (both at initial recognition and subsequent measurement). The fair value of these unquoted equity investments, hierarchy level, valuation techniques and inputs used can be noted as follows:

 

Fair value disclosures:
Fair value at 31 December 2013: $9,461k (2012: $8,641k)
Fair value hierarchy: Level 3;
Valuation technique used: Given the unique nature of the investees’ business, there are no readily available market data as these types of investments are generally structured through private companies and confidential. As a result the Group has adopted income approach for valuing these investments, taking into account current and expected income from the investees over long-term.
Significant unobservable inputs: Long-term revenue growth rates and pre-tax operating margins taking into account management’s experience and knowledge of market conditions of the specific industries.
Relationship of unobservable inputs to fair value: The higher the revenue growth rates and pre-tax operating margins, the higher the fair value and vice versa.

The Group has classified certain financial assets as avallable-for-sale investments (see note 20) and as a result are measured at fair value (both at initial recognition and subsequent measurement). The fair value of these available-for-sale investments, hierarchy level, valuation techniques and inputs used can be noted as follows:

 

Fair value at 31 December 2013: $211,946k (2012: Nil)
Fair value hierarchy: Level 1;
Valuation technique used: Quoted prices in an active market.
Significant unobservable inputs: N/A
Relationship of unobservable inputs to fair value: N/A

The fair value movements of unquoted equity investments from 2012 to 2013 were insignificant. As a result separate reconciliation of Level 3 fair values has not been presented.

Fair value of the Group and Company’s financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required)

The fair value of the Group and Company’s financial assets and financial liabilities that are not measured at fair value on a recurring basis reasonably approximate the carrying amounts currently disclosed on the respective notes in these consolidated financial statements. As a result no further fair value disclosures were considered necessary by the Group or Company.

There were no transfers between Level 1 and 2 during the year.

 

Page 39


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

35 Financial risk management (continued)

 

Fair value risk management

The Group and Company are exposed to equity price risk on its unquoted equity securities. Management monitors the performance of its investees on a regular basis by reviewing periodic financial and operational information of the investees to ensure that fair value of its investments are being sustained and investment returns are being generated in the long-term. All buy and sell decisions are discussed and approved by the Board.

 

36 Related parties

Ultimate controlling party

At 31 December 2013 the Group was controlled by the Palcolex Trust Management AG and PalcolexTrust Company (BVI) Limited by virtue of its 75% shareholding in the Group.

Transactions with key management personnel

Key management are those individuals who the directors believe have significant authority and responsibility for planning, directing and controlling the activities of the Group. The aggregate short-term and long-term benefits, as well as share-based payments of the directors and key management of the Group are set out below:

 

 

     2013      2012  
Year ended 31 December    $‘000      $‘000  

Short-term benefits

     4,877         3,030   

Share-based payments

     124         44   
  

 

 

    

 

 

 

Certain directors and key management were granted share awards and options under service contracts as disclosed in note 34.

Transactions with related partiesDirectors

Remuneration and benefits payable to directors during the year are disclosed in note 10.

During the year dividends totalling $264,032k (2012: $nil) were paid to the order of the directors.

During the year, P Schapira purchased a security holding from a subsidiary of the Group for its market value of $1,960k.

Transactions with related parties-Group

Transaction between the Group companies have been eliminated on consolidation and are not disclosed in this note.

Transactions with related parties—Company

The balance outstanding with Group companies as at year end were as follows:

 

     31 Dec 2013      31 Dec 2012  
     $‘000      $‘000  

Amounts receivable from its subsidiaries

     422,406         158,104   
  

 

 

    

 

 

 

Transactions with related parties-Other

During the year, the Group entered into the following transactions with other related parties:

PYR Software, a company incorporated in Canada, provided contract software and development services to the Group in the year. Oldford Group Limited has a cost plus agreement with PYR based on reasonable market practice. During the year $28,843k (2012: $22,185k) was paid to PYR Software for these services. The outstanding balance receivable from PYR at year end was $867k (2012: payable of $252k).

 

Page 40


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the year ended 31 December 2013

Notes forming part of the consolidated financial statements for the year ended 31 December 2013 (continued)

 

37 Contingent liabilities

 

Legal and regulatory developments

As part of the Board’s on going regulatory compliance and operational risk assessment process, the Board continues to monitor legal and regulatory developments, and their potential impact on the business, and continues to take appropriate advice in respect of these developments. No additional provisions have been made with regards to legal and regulatory developments.

Income Tax

The Group operates in numerous jurisdictions. Accordingly, the Group is filing tax returns, providing for and paying all taxes and duties it believes are due based on local tax laws, transfer pricing arrangements and tax advice obtained. The Group is periodically subject to audits and assessments by local taxing authorities. The Board is unable to quantify reliably any exposure for additional taxes, if any, that may arise from the final settlement of such assessments. Accordingly no additional provisions have been made.

VAT Group

The Company is jointly and severally liable for all Value Added Tax (VAT) debts of the VAT group registration of which it is a part, relating to the period that it has been a member of the VAT group. The Group is periodically subject to audits and assessments by local taxing authorities. The Board is unable to quantify reliably any exposure for additional indirect taxes, if any, that may arise from the final settlement of such assessments. Accordingly no additional provisions have been made.

 

Page 41


SCHEDULE “B”

UNAUDITED FINANCIAL STATEMENTS OF OLDFORD GROUP FOR THE PERIOD

ENDED JUNE 30, 2014


OLDFORD GROUP LIMITED

Annual Report and Consolidated Financial Statements

Half-Year Ended 30 June 2014


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the half-year ended 30 June 2014

 

Consolidated income statement for the half-year ended 30 June 2014

 

     Note      Half-year ended
30 June 2014
$‘000
    Half-year ended
30 June 2013
$‘000
 

Revenue

        567,864        545,892   

Distribution costs

     1         (125,243     (133,518

Administration costs

     1         (220,615     (209,764
     

 

 

   

 

 

 

Profit from operations

  222,006      202,610   

Net investment gains/(losses)

  2      1,053      (7,930

Net finance (costs)/income

  3      (1,817   (2,998
     

 

 

   

 

 

 

Profit before tax

  221,242      191,682   

Income tax expense

  4      (2,826   (1,825
     

 

 

   

 

 

 

Profit for the period

  218,416      189,857   
     

 

 

   

 

 

 

Attributable to:

Equity holders of the parent

  218,187      189,857   

Non-controlling interests

  18      229      —     
     

 

 

   

 

 

 
  218,416      189,857   
     

 

 

   

 

 

 

 

The notes on pages 6 - 11 form part of these financial statements.

 

Page 1


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the half-year ended 30 June 2014

 

Consolidated statement of comprehensive income for the half-year ended 30 June 2014

 

     Note      Half-year ended
30 June 2014
$‘000
    Half-year ended
30 June 2013
$‘000
 

Profit for the period

        218,416        189,857   

Other comprehensive income

       

Items that will be reclassified to profit or loss in subsequent periods

       

Exchange differences on translation of foreign operations

     17         (49     (184

Available for sale financial assets - net changes in fair value

     17         5,616        (896
     

 

 

   

 

 

 

Other comprehensive expense for the period, net of tax

  5,567      (1,080
     

 

 

   

 

 

 

Total comprehensive income for the period

  223,983      188,777   
     

 

 

   

 

 

 

Attributable to:

Equity holders of the parent

  223,754      188,777   

Non-controlling interests

  18      229      —     
     

 

 

   

 

 

 
  223,983      188,777   
     

 

 

   

 

 

 

 

The notes on pages 6 - 11 form part of these financial statements.

Page 2


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the half-year ended 30 June 2014

 

Consolidated statement of financial position as at 30 June 2014

 

     30-Jun-14      31-Dec-13  
     Note      $‘000      $‘000      $‘000      $‘000  

ASSETS

              

Non-current assets

              

Property, plant and equipment

     5            48,718            48,175   

Goodwill

     6            482            602   

Other intangible assets

     7            373            1,069   

Long term receivables

     8            15,000            15,000   

Unquoted equity investments

     9            9,461            9,461   
        

 

 

       

 

 

 

Total non-current assets

  74,034      74,307   

Current assets

Available-for-sale investments

  292,975      211,946   

Inventories

  10      883      1,580   

Trade and other receivables

  11      128,069      134,544   

Short-term deposits

  60,147      88,859   

Cash and cash equivalents

  566,641      678,544   
     

 

 

       

 

 

    

Total current assets

  1,048,715      1,115,473   
        

 

 

       

 

 

 

TOTAL ASSETS

  1,122,749      1,189,780   
        

 

 

       

 

 

 

LIABILITIES

Non-current liabilities

Other payables

  12      97,000      97,000   

Current liabilities

Trade and other payables

  13      232,428      392,460   

Client liabilities

  14      606,095      615,316   

Short-term provisions

  15      18,764      4,832   
     

 

 

       

 

 

    

Total current liabilities

  857,287      1,012,608   
        

 

 

       

 

 

 

TOTAL LIABILITIES

  954,287      1,109,608   
        

 

 

       

 

 

 

EQUITY

Share capital

  17      49      49   

Share premium

  17      3,241      3,241   

Other reserves

  17      5,666      99   

Retained earnings

  17      158,763      76,269   
     

 

 

       

 

 

    

Equity attributable to equity holders of the parent

  167,719      79,658   

Non-controlling interests

  18      743      514   
        

 

 

       

 

 

 

TOTAL EQUITY

  168,462      80,172   
        

 

 

       

 

 

 

TOTAL EQUITY AND LIABILITIES

  1,122,749      1,189,780   
        

 

 

       

 

 

 

 

The notes on pages 6 - 11 form part of these financial statements.
Page 3


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the half-year ended 30 June 2014

 

Consolidated statement of changes in equity for the half-year ended 30 June 2014

 

     Note      Share
Capital
$‘000
     Share
Premium
$‘000
     Other
Reserves
$‘000
    Retained
Earnings
$‘000
    Attributa-
ble to
equity
holders
of the
parent
$‘000
    Non-
controlling
Interests
$‘000
 

Balance at 1 January 2013

        49         1,655         1,179        (43,397     (40,514     243   

Total comprehensive income

                 

Profit for the year

        —           —           —          416,404        416,404        271   

Other comprehensive income

     17         —           —           (1,080     —          (1,080     —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        (1,080   416,404      415,324      271   

Transactions with owners of the parent

Contributions and distributions

Dividends paid

  —        —        —        (296,738   (296,738   —     

Issue of Ordinary Shares

  17      —        1,586      —        —        1,586      —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        1,586      —        (296,738   (295,152   —     

Changes in ownership interests

Purchase of additional shares in subsidiary

  —        —        —        —        —        —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        —        —        —        —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2013

  49      3,241      99      76,269      79,658      514   
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 January 2014

  49      3,241      99      76,269      79,658      514   

Total comprehensive income

Profit for the year

  —        —        —        218,187      218,187      229   

Other comprehensive income

  17      —        —        5,567      —        5,567      —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        5,567      218,187      223,754      229   

Transactions with owners of the parent

Contributions and distributions

Dividends paid

  —        —        —        (135,693   (135,693   —     

Issue of Ordinary Shares

  17      —        —        —        —        —        —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        —        (135,693   (135,693   —     

Changes in ownership interests

Share repurchase

  —        —        —     

Purchase of additional shares in subsidiary

  —        —        —        —        —        —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  —        —        —        —        —        —     
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2014

  49      3,241      5,666      158,763      167,719      743   
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

The notes on pages 6 - 11 form part of these financial statements.
Page 4


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the half-year ended 30 June 2014

 

Consolidated statement of cash flows for the half-year ended 30 June 2014

 

            Half-Year ended 30 June     Half-Year ended 30 June 2013  
     Note      $‘000     $‘000     $‘000     $‘000  

Cash flows from operating activities

           

Net profit from ordinary activities

          221,242          191,682   

Adjustments for:

           

Dormant accounts recognised as revenue

        (3,925       —       

Interest income received

        (333       397     

Effect of foreign exchange rate changes

        1,220          2,710     

Unrealised foreign exchange gains and losses on operating

        (482       (391  

Impairment of goodwill

        120          120     

Depreciation of property, plant and equipment

        4,262          3,439     

Amortisation of intangible assets

        693          796     

Loss on disposal of property, plant and equipment

        2          1     
     

 

 

     

 

 

   
  1,557      7,072   
       

 

 

     

 

 

 

Operating cash flows before movements in working capital and provisions

  222,799      198,754   

Decrease in trade and other receivables

  6,737      15,373   

Decrease in inventories

  697      932   

Increase/(decrease) in trade and other payables

  7,992      (15,084

Increase in provisions

  13,932      10,673   
     

 

 

     

 

 

   

Cash used in operations

  29,358      11,894   

Taxes paid

  (5,750   (3,641
       

 

 

     

 

 

 

Net cash generated from operating activities

  246,407      207,007   

Investing activities

Interest income received

  333      (397

Purchases of property, plant and equipment

  (4,807   (4,444

Purchases of intangible assets

  3      —     

Purchase of available for sale financial assets

  (75,413   (127,304

(Purchase)/disposal of investments

  —        (3,586

Decrease in short-term deposits

  28,712      82,445   
     

 

 

     

 

 

   

Net cash used in investing activities

  (51,172   (53,286

Cash flows from financing activities

Equity dividends paid

  (305,918   —     
     

 

 

     

 

 

   

Net cash used in financing activities

  (305,918   —     
       

 

 

     

 

 

 

Net (decrease)/increase in cash and cash equivalents

  (110,683   153,721   

Cash and cash equivalents at the beginning of year

  678,544      599,550   

Effect of foreign exchange rate changes

  (1,220   (2,710
       

 

 

     

 

 

 

Cash and cash equivalents at the end of year

  25      566,641      750,561   
       

 

 

     

 

 

 

 

The notes on pages 6 - 11 form part of these financial statements.

Page 5


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the half-year ended 30 June 2014

 

Notes forming part of the consolidated financial statements for the half-year ended 30 June 2014

 

1 Profit from operations

 

    Half-year ended     Half-year ended  
    30 June 2014     30 June 2013  
    $‘000     $‘000  

This is arrived at after charging:

   

Distribution Costs

   

Customer acquisition and retention

    78,703        87,573   

Affiliates

    16,479        19,152   

Other customer bonuses and frequent player points

    480        1,186   

Bad debts and provisions

    1,279        2,409   

Web hosting and technical support

    26,103        21,481   

Gaming licence fee

    2,199        1,717   
 

 

 

   

 

 

 
  125,243      133,518   
 

 

 

   

 

 

 

Administration Costs

Processor costs

  33,931      31,632   

Payroll and associated costs

  104,377      89,873   

General and administrative costs (excluding depreciation and audit fees)

  26,565      36,899   

Amortisation

  693      796   

Depreciation

  4,264      3,439   

Impairment of good will

  120      120   

Gaming duty

  50,079      46,415   

Loss on disposal of fixed assets

  2      1   

Auditors remuneration for audit services

  584      589   
 

 

 

   

 

 

 
  220,615      209,764   
 

 

 

   

 

 

 

 

2 Net investment gains/(losses)

 

    Half-year ended     Half-year ended  
    30 June 2014     30 June 2013  
    $‘000     $‘000  

Interest on short-term deposits

    299        397   

Dividend income

    25        34   

Market value adjustments

    729        199   

Loss on sale or transfer of investments

    —          (5

Investment provisions

    —          (4,492

Investment write offs

    —          (4,063
 

 

 

   

 

 

 
  1,053      (7,930
 

 

 

   

 

 

 

 

3 Net finance (costs)/income

 

    Half-year ended     Half-year ended  
    30 June 2014     30 June 2013  
    $‘000     $‘000  

Interest on bank balances and deposits

    333        (397

Realised foreign exchange gains and losses on operating activities

    (1,412     (282

Unrealised foreign exchange gains and losses on operating activities

    482        391   

Unrealised foreign exchange gains and losses on cash and cash equivalents

    (1,220     (2,710
 

 

 

   

 

 

 
  (1,817   (2,998
 

 

 

   

 

 

 

 

The notes on pages 14 - 41 form part of these financial statements.
Page 6


OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the half-year ended 30 June 2014

 

Notes forming part of the consolidated financial statements for the half-year ended 30 June 2014

 

4 Income taxes

 

     Half-year ended      Half-year ended  
     30 June 2014      30 June 2013  
Amounts recognised in Income Statement    $‘000      $‘000  

Current tax expense

     

Current year

     (2,614      (2,878