1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Century Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment company. As of June 30, 2017, the Company owned casino operations in North America; was developing a casino in England; held a majority ownership interest in six casinos throughout Poland, a racetrack and entertainment center (“REC”) in Canada and the pari-mutuel off-track betting network in southern Alberta, Canada; managed cruise ship-based casinos on international waters; managed a casino in Aruba and provided gaming services in Argentina.

The Company currently owns, operates and manages the following casinos through wholly-owned subsidiaries in North America:

The Century Casino & Hotel in Edmonton, Alberta, Canada (“Century Resorts Alberta” or “CRA”)

The Century Casino St. Albert in Edmonton, Alberta, Canada (“CSA”)

The Century Casino Calgary, Alberta, Canada (“CAL”)

The Century Casino & Hotel in Central City, Colorado (“CTL”); and

The Century Casino & Hotel in Cripple Creek, Colorado (“CRC”)

The Company currently has a controlling financial interest through its subsidiary CCE in the following majority-owned subsidiaries:

The Company owns 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). CPL is the owner and operator of six casinos throughout Poland. CPL is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Polish Airports Company (“Polish Airports”) owns the remaining 33.3% of CPL, which is reported as a non-controlling financial interest.

The Company owns 75% of United Horsemen of Alberta Inc. dba Century Downs Racetrack and Casino (“CDR” or “Century Downs”). CDR operates Century Downs Racetrack and Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada. CDR is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. The remaining 25% of CDR is owned by unaffiliated shareholders and is reported as a non-controlling financial interest.

The Company owns 75% of Century Bets! Inc. (“CBS” or “Century Bets”). CBS operates the pari-mutuel off-track betting network in Southern Alberta, Canada. CBS is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Rocky Mountain Turf Club (“RMTC”) owns the remaining 25% of CBS, which is reported as a non-controlling financial interest.

The Company has the following concession, management and consulting service agreements:

The Company operates 14 ship-based casinos through concession agreements with four cruise ship owners. The Company began operating the ship-based casino onboard Mein Schiff 6, a new 2,500 passenger cruise ship, in May 2017.

In connection with a concession agreement with Diamond Cruise International Co., Ltd. (“Diamond”) for the operation of the ship-based casino onboard Glory Sea, the Company has a Cooperation Agreement with Dynamic Partners International, Ltd. (“Dynamic”). Under this agreement, Dynamic markets and promotes the casino to VIP players along with facilitating the concession agreement between Diamond and the Company, for which the Company pays Dynamic a portion of the net profit from the casino onboard Glory Sea.

In March 2015, in connection with an agreement with Norwegian Cruise Line Holdings (“Norwegian”) to terminate the Company’s concession agreements with Oceania Cruises (“Oceania”) and Regent Seven Seas Cruises (“Regent”), the Company entered into a two-year consulting agreement, which became effective on June 1, 2015, under which the Company provided limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million, which was payable $250,000 per quarter through May 2017.

The Company has a management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort & Casino from which the Company receives a monthly management fee. The management agreement ends in December 2017, and the Company does not anticipate extending this agreement.

The Company, through its subsidiary CCE, has a 7.5% ownership interest in Mendoza Central Entretenimientos S.A., an Argentina company (“MCE”). The shares are reported on the condensed consolidated balance sheet using the cost method of accounting. MCE has an exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Casino de Mendoza, a casino located in Mendoza, Argentina and owned by the Province of Mendoza. In addition, CCE and MCE have entered into a consulting services agreement pursuant to which CCE provides advice on casino matters and receives a service fee consisting of a fixed fee plus a percentage of MCE’s earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 4 for additional information related to MCE.

Additional Projects and Other Developments

In September 2016, the Company was selected by Horse Racing Alberta (“HRA”) as the successful applicant to own, build and operate a horse racing facility in the Edmonton market area, which the Company is planning to operate as Century Mile Racetrack and Casino. In March 2017, the Company received approval for the Century Mile project from the Alberta Gaming and Liquor Commission (“AGLC”). Century Mile will be a one-mile horse racetrack and a multi-level REC. The multi-level REC is expected to have 550 slot machines, restaurants, bars, delis, an off-track betting parlor and grandstand and to hold a minimum of 100 horse races per year. The project is located on Edmonton International Airport land close to the city of Leduc, south of Edmonton. Century Mile will be approximately 30 miles from both CRA and CSA. The Company estimates this project will cost approximately CAD 60.0 million ($46.2 million based on the exchange rate in effect on June 30, 2017). Construction of the Century Mile project began in July 2017. The Company estimates that construction of this project will take approximately 15 months and that it will be completed by the fourth quarter of 2018. The Company is seeking to obtain financing for the Century Mile project.

On June 20, 2017, the Company’s subsidiary, Century Casinos Europe GmbH (“CCE”), entered into a Share Purchase Agreement (the “Agreement”), by and among Global Gaming Ventures (Group) Limited, Saw Close Casino Ltd. (“SCCL”), Anthony Wollenberg and CCE pursuant to which CCE has acquired 100% of the outstanding common stock of SCCL as well as casino licenses held by SCCL (the “SCCL License Acquisition”) for a total consideration of GBP 0.6 million ($0.8 million based on the exchange rate in effect on June 30, 2017) as well as assumed liabilities of GBP 0.2 million ($0.2 million based on the exchange rate in effect on June 30, 2017). The Company will utilize the casino licenses to develop and operate a casino in Bath, England. The Company paid GBP 0.1 million ($0.1 million) at closing. Payment of the remaining purchase consideration will be made after the receipt of certain regulatory and governmental approvals and the opening of the casino. Payment of the assumed liabilities is subject to certain performance criteria being met once the casino is in operation. The Company estimates that construction of the casino will cost GBP 5.0 million ($6.5 million based on the exchange rate in effect on June 30, 2017) and that the casino will open in the first half of 2018.

Preparation of Financial Statements

The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial reporting, the rules and regulations of the Securities and Exchange Commission which apply to interim financial statements and the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.

In the opinion of management, all adjustments considered necessary for the fair presentation of financial position, results of operations and cash flows of the Company have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The results of operations for the period ended June 30, 2017 are not necessarily indicative of the operating results for the full year.

Presentation of Foreign Currency Amounts

The Company’s functional currency is the U.S. dollar (“USD” or “$”). Foreign subsidiaries with a functional currency other than the U.S. dollar translate assets and liabilities at current exchange rates at the end of the reporting periods, while income and expense accounts are translated at average exchange rates for the respective periods. The Company and its subsidiaries enter into various transactions made in currencies different from their functional currencies. These transactions are typically denominated in the Canadian dollar (“CAD”), Euro (“EUR”), Polish zloty (“PLN”) and British pound (“GBP”). Gains and losses resulting from changes in foreign currency exchange rates related to these transactions are included in income from operations as they occur.

The exchange rates to the U.S. dollar used to translate balances at the end of the reported periods are as follows:


	June 30,	December 31,
Ending Rates	2017	2016
Canadian dollar (CAD)	1.2977	1.3427
Euros (EUR)	0.8761	0.9476
Polish zloty (PLN)	3.7027	4.2065
British pound (GBP)	0.7696	0.8106

The average exchange rates to the U.S. dollar used to translate balances during each reported period are as follows:



	For the three months			For the six months
	ended June 30,			ended June 30,
Average Rates	2017	2016	% Change	2017	2016	% Change
Canadian dollar (CAD)	1.3451	1.2890	(4.4%)	1.3343	1.3311	(0.2%)
Euros (EUR)	0.9096	0.8856	(2.7%)	0.9240	0.8961	(3.1%)
Polish zloty (PLN)	3.8354	3.8726	1.0%	3.9459	3.9141	(0.8%)
British pound (GBP)	0.7822	0.6976	(12.1%)	0.7947	0.6979	(13.9%)
Source: Pacific Exchange Rate Service

Correction of Prior Period Balances

Subsequent to the issuance of the Company’s Quarterly Report on Form 10-Q for the three and six month periods ended June 30, 2016, the Company determined that it had erroneously recognized a reduction in pari-mutuel revenue for CBS totaling $0.7 million in its condensed consolidated statement of earnings for the six months ended June 30, 2016. This error also affected the Company’s income tax expense, net earnings attributable to non-controlling interests and consolidated statements of comprehensive income (loss), equity, cash flows and Note 12 “Segment and Geographic Information” for the six months ended June 30, 2016.

The prior period amounts within the Company’s condensed consolidated financial statements for the six months ended June 30, 2016 have been revised to reflect the correct balances as presented below.


Condensed Consolidated Statement of Earnings for the six months ended June 30, 2016:
Amounts in thousands, except for per share information	As Previously Reported		Correction		As Corrected
Operating Revenue:
Other	$	6,028	$	697	$	6,725
Gross revenue		71,943		697		72,640
Net operating revenue		67,731		697		68,428
Earnings from operations		7,924		697		8,621
Earnings before income taxes		8,133		697		8,830
Income tax expense		(1,584)		(181)		(1,765)
Net earnings		6,549		516		7,065
Net earnings attributable to non-controlling interests		(2,407)		(129)		(2,536)
Net earnings attributable to Century Casinos, Inc. shareholders		4,142		387		4,529

Earnings per share attributable to Century Casinos, Inc. shareholders:
Basic and Diluted	$	0.17	$	0.01	$	0.18


Condensed Consolidated Statement of Comprehensive Income for the six months ended June 30, 2016:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Net earnings	$	6,549	$	516	$	7,065

Other comprehensive income
Foreign currency translation adjustments		2,447		(28)		2,419
Other comprehensive income		2,447		(28)		2,419
Comprehensive income	$	8,996	$	488	$	9,484

Comprehensive income attributable to non-controlling interests
Net earnings attributable to non-controlling interests		(2,407)		(129)		(2,536)
Foreign currency translation adjustments		(5)		7		2
Comprehensive income attributable to Century Casinos, Inc. shareholders	$	6,584	$	366	$	6,950


Condensed Consolidated Statement of Equity for the six months ended June 30, 2016:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Accumulated other comprehensive income
Accumulated other comprehensive income (loss) balance at January 1, 2016	$	(12,704)	$	21	$	(12,683)
Foreign currency translation adjustment		2,442		(21)		2,421

Retained earnings
Retained earnings balance at January 1, 2016		57,558		(387)		57,171
Net earnings		4,142		387		4,529

Total Century Casinos shareholders' equity
Total Century Casinos shareholders' equity balance at January 1, 2016		122,416		(366)		122,050
Net earnings		4,142		387		4,529
Foreign currency translation adjustment		2,442		(21)		2,421

Non-controlling interest
Non-controlling interest balance at January 1, 2016		4,859		(122)		4,737
Net earnings		2,407		129		2,536
Foreign currency translation adjustment		5		(7)		(2)

Total equity
Total equity balance at January 1, 2016		127,275		(488)		126,787
Net earnings		6,549		516		7,065
Foreign currency translation adjustment		2,447		(28)		2,419


Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2016:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Cash Flows from Operating Activities:
Net earnings	$	6,549	$	516	$	7,065
Changes in Operating Assets and Liabilities:
Receivables, net		278		(659)		(381)
Taxes payable		(1,209)		171		(1,038)
Net cash provided by operating activities		8,879		28		8,907
Effect of Exchange Rate Changes on Cash		444		(28)		416


Note 12: Segment and Geographic Information for the six months ended June 30, 2016:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Canada
Net operating revenue	$	25,462	$	697	$	26,159
Net earnings attributable to Century Casinos, Inc. shareholders		3,604		387		3,991
Income taxes		1,118		181		1,299
Non-controlling interest		1,735		129		1,864
Adjusted EBITDA		7,938		697		8,635

Consolidated results in Note 12 “Segment and Geographic Information” for the six months ended June 30, 2016 have been updated as presented in the condensed consolidated statement of earnings table above. Consolidated Adjusted EBITDA for the six months ended June 30, 2016 was corrected by $0.7 million, adjusting the previously reported Consolidated Adjusted EBITDA of $12.5 million to $13.2 million.