Perform Group plc Annual Report and Successful execution Accounts 2012 of growth strategy ABOUT US

Perform is a global market leader in the commercialisation of multimedia sports content across multiple platforms. The Group licenses one of the largest portfolios of digital sports rights in the world, through contracts relating to more than 200 sports leagues, tournaments and events.

The Group’s Management is focused on driving earnings growth through leveraging its content across new digital platforms, new products and across new geographies, taking advantage of favourable technology trends such as growth in digital media consumption and online video viewership.

www.performgroup.co.uk OVERVIEW

Financial highlights OVERVIEW OVERVIEW Revenue (£’000) Financial highlights 1 Business at a glance 4 151,607 Market overview 6 Chairman/Joint CEOs’ review 10 Year on year growth of 47% Vision and growth strategy 12

2010 67,430 Enhance digital sports rights portfolio 14 2011 103,194 Expand geographically 16 2012 151,607 Grow the audience 18 Pursue complementary strategic acquisitions 19 Launch on new digital platforms 20 Adjusted EBITDA 1 (£’000) 2013: Investment for future growth 22 BUSINESS AND FINANCIAL REVIEWREVIEW 37,502 BUSINESS AND FINANCIAL REVIEW Year on year growth of 103% Content distribution 26 2010 10,345 Advertising & sponsorship (display) 28 2011 18,474 Advertising & sponsorship (video) 30 2012 37,502 Subscription 32 Technology & production 34 Financial review 36 Adjusted profit after tax 2 (£’000) 26,861 Year on year growth of 83%

2010 10,133

2011 14,692 GOVERNANCE GOVERNANCE 2012 26,861 Board of Directors 44 Profit after tax (£’000) Risks & uncertainties 46 Directors’ Report 49 Corporate Governance Statement 54 Remuneration Committee Report 60 13,497 Directors’ Responsibilities Statement 65 Year on year growth of 263%

2010 9,448 2011 3,717 2012 13,497

Adjusted basic earnings per share 3 (pence) FINANCIAL STATEMENTS FINANCIAL STATEMENTS

Independent auditor’s report 68 11.2p Consolidated income statement 69 Year on year growth of 78% Consolidated statement of comprehensive income 70 2010 4.5 Consolidated statement of changes in equity 71 2011 6.3 Consolidated statement of financial position 72 2012 11.2 Consolidated statement of cash flows 73 Notes to the Group financial statements 74 1 Adjusted EBITDA is before charging exceptional items (£5.3m; 2011: £5.0m; 2010: £0.7m) and Parent company independent auditor’s reports 115 share-based payments (£3.2m; 2011: £5.1m, 2010: £0.1m). 2 Adjusted profit after tax excludes exceptional items and share-based payments as above and also Parent company financial statements 116 excludes acquisition related amortisation and service charges £2.9m (2011: £0.9m, 2010: nil) and Shareholders information 122 accretion of acquisition related deferred consideration £1.9m (2011: £nil, 2010: £nil). 3 Refer to note 10 of the financial statements for an explanation of adjusted earnings per share.

Perform Group plc Annual Report and Accounts 2012 1 Overview OVERVIEW OVERVIEW glance a at Business overview Market review CEOs’ Chairman/Joint strategy growth and portfolio Vision rights sports digital Enhance geographically Expand audience acquisitions the Grow strategic complementary 14 Pursue 19 platforms digital new on growth Launch future 10 for Investment 2013: 4 12 6 20 22 16 18 OVERVIEW

Business at a glance The Group is the market leader in the commercialisation of sports content across digital platforms and has developed a range of B2B and B2C products which deliver five revenue streams

E D I A C O Overview M N S T S U R M O E P R The Group licenses a large portfolio S S of digital sports rights with contracts Content relating to more than 200 sports leagues, distribution tournaments and events. Utilising this rights portfolio, the Group creates a range of products, combining sports video, editorial and data content that are distributed direct to consumers and to business clients including sports bodies, rights agencies, broadcasters, Technology Advertising & & production sponsorship bookmakers and publishers. (display)

Across the Group’s owned portals, video-on-demand player and managed websites, the Group reaches in excess of 150 million sports fans per month on PC’s, laptops, tablets, smartphones and connected TV’s.

Advertising & Subscription sponsorship (video)

C O S N N N A E F C T T S T O S P O R

All business areas are delivered according to the Group’s growth strategy which is set out more fully on pages 12 to 23

Enhance digital Expand Grow audience Pursue Launch on sports rights geographically complementary new digital portfolio strategic platforms acquisitions

4 Perform Group plc Annual Report and Accounts 2012 OVERVIEW

The Group owns the digital sports media rights to over 200 OVERVIEW Content distribution leagues, tournaments and events and utilises this rights More in Business Review page 26 portfolio to deliver a range of B2B products covering live video, sports data, sports news and editorial, and sports statistics. These products are sold to online bookmakers, broadcasters, mobile operators and other business clients around the world. £93m YOY revenue growth of 43% (2011: £65 million)

Advertising & sponsorship The Group generates display advertising and sponsorship revenues through the sale of display advertisements on the (display) Group’s own branded websites and mobile services including More in Business Review page 28 Goal, the world’s largest football website, Spox, Mackolik, Sahadan BUSINESS AND FINANCIAL REVIEW and Soccerway. In 2012, the Group had an average of 43 million monthly unique users across these sites. The Group also acts as an advertising sales agent for a network of third-party sports £18m websites including the Premier League’s oecial website. YOY revenue growth of 164% (2011: £7 million)

Advertising & sponsorship The Group generates video advertising and sponsorship revenues (video) through the sale of pre-roll video advertisements on its video-on- demand broadcast platform the ePlayer. The ePlayer is embedded More in Business Review page 30 on the websites of over 1,000 leading publishers and sports portals in 24 territories. In 2012, 4.5 billion videos were streamed and 1.8 billion pre-roll adverts sold with content including National Football League, Major League Baseball and National Basketball Association (all US), Serie A (Italy) and La Liga (Spain). £13m GOVERNANCE YOY revenue growth of 95% (2011: £7 million)

Subscription The Group generates subscription revenues from consumers More in Business Review page 32 paying monthly or annual fees to watch internet delivered live video and video-on-demand sports content via Livesport.tv and a range of third-party subscription products on behalf of football clubs, sports bodies and broadcasters. £12m YOY revenue growth of 29% (2011: £10 million) FINANCIAL STATEMENTS

Technology & production The Group generates technology and production revenues More in Business Review page 34 from a range of clients by: designing, building and managing websites and mobile products on behalf of sports rights holders; ingesting, encoding and streaming live and on demand content on behalf of sports rights holders and broadcasters £15m and by filming and editing sports matches for rights holders. YOY revenue decline of 2% (2011: £15 million)

Perform Group plc Annual Report and Accounts 2012 5 OVERVIEW

Market overview Perform’s digital business model is uniquely positioned to exploit global growth trends

Increased digital media consumption

Increased broadband penetration leading to increased digital Internet subscriber growth (2012-16 CAGR %) media consumption and internet powered business models. 50

40 Internet penetration today exceeds 2 billion people globally, representing approximately 32.7% of the world’s population 30 with c.45% of the world’s internet users under the age of 25

(Source: ITU). There are now 5.9 billion mobile subscriptions 20 globally (87% of the world’s population), increasing from 5.4

billion in 2010. The ITU estimates that there are almost 1.2 billion 10 mobile broadband subscriptions with mobile subscriptions Mobile Internet Fixed broadband outnumbering fixed broadband subscriptions two to one. 0 Latin Asia EMEA North In addition, there were estimated to be over 1.2 billion people America Pacific America around the world using social networking websites at least Source: IDC (Dec 2012) once per month.

Fixed broadband penetration (%) With technological advances, consumers are able to access 90 high speed internet relatively inexpensively across the globe. 80 Fibre network roll outs and the extension of broadband 70 infrastructure into underserved areas is driving broadband 60 subscriptions and fuelling broadband spending. In the mobile 50 market, the enormous popularity of smart devices is driving internet penetration. Carriers are rolling out third generation 40 and fourth generation wireless networks to provide faster 30 20 Latin America speeds and to accommodate surging data traec. APAC 10 EMEA 0 N. America

2011 2012 2007 2008 2009 2010 2013 2014 2015 2016 Source: IDC (Dec 2012)

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2011 2007 2008 2009 2010 2012 2013 2014 2015 2016 Source: IDC (Dec 2012)

PERFORM • Platform agnostic approach • Multi-platform rights portfolio • Internet powered business model

6 Perform Group plc Annual Report and Accounts 2012 OVERVIEW

Proliferation of smart connected devices Social media usage exploding globally OVERVIEW

Proliferation of smart connected devices providing Social media usage exploding globally with network enhanced user experience and a significant connected efect ofering an unrivalled distribution platform and TV and mobile opportunity. new routes to market.

IHS Screendigest predicts that there will be more active Social media is now ubiquitous with: connected living-room devices than TV households in the • 1 billion monthly active users and 680 million mobile Western World by 2016. Smart connected devices shipped users on Facebook worldwide are forecast to increase from c.1.2 billion in 2012 to • 800 million monthly users and 4 billion views per day c.2.1 billion in 2016 with growing penetration of smartphones on YouTube (US: 70%; EU5: c.70%; Japan: 79% by 2016) and connected • 500 million total users and 200 million active users devices across the world. The number of smartphone on Twitter shipments is expected to reach 1 billion in 2014 from • 700 million+ monthly active users on Tencent 0.5 billion in 2011. There is a continued rise in the number of people, brands and sports properties using social networking platforms Smart connected device shipments worldwide, by type, 2011-16

(millions of units) with increasing sophistication in the use of these platforms. BUSINESS AND FINANCIAL REVIEW 2500 Social media accounts for nearly 19% of the time spent online globally and social networks reach 82% of the world’s online 2000 population. Advertisers are increasingly using social media platforms to build consumer interaction with social media 1500 delivering 28% of online display advertising impressions and 15% of online display advertising spending. Facebook’s 1000 Open Graph platform, the new Graph Search feature and the multiplier elect on fans-of-fans olers an unrivalled Tablet 500 Desktop distribution platform and an opportunity to deeply embed Portable PC content into people’s daily lives. Smartphone 0

2011 2012 2013 2014 2015 2016 Average hours spent on social networking (per month) Source: IDC (Dec 2012) 12

10 Consumers’ attention is more divided than ever as media multi-tasking becomes the norm. The amount of time spent 8 GOVERNANCE on mobile is growing at fourteen times the rate of desktop 6 web with smart device users spending 19% of their time on mobile web and 81% of their time on mobile apps (based on 4 US smartphone users; Source: Nielsen). 2

0

UK USA Italy Israel Chile Peru Spain Russia Turkey Mexico Brazil Canada Norway Simultaneous usage of connected devices: Argentina Columbia Indonesia TV with another device 77% Source: comScore / Broker research With a smartphone 49% With a PC / Laptop 34% Years to achieve 50% global penetration Tablet with another device 75% 16 With a TV 44% 14 With a smartphone 35% 12 PC with another device 67% 10 With a smartphone 45% 8 With a TV 32% 6

Smartphone with another device 57% 4 FINANCIAL STATEMENTS With a TV 29% 2 With a PC / Laptop 28% 0

Source: eMarketer (% of interactions according to US connected device users Mobile VCRs Radio Ipads DVDs PVRs (E) Digital TV CD playersColour TVBroadband Audio on PC TV on PC Social(E) media Multichannel TV Smartphones (E) Source: comScore / Broker research

• Ideally positioned for exploiting connected • The Group’s direct to consumer products TV and mobile opportunity continue to focus on social media platforms to • The Group’s consumer products benefit immensely enhance consumer engagement and address from its technologically advanced platform growing advertising potential development strategy

Perform Group plc Annual Report and Accounts 2012 7 OVERVIEW

Market overview continued

Increasing consumption of sport through digital media

The Group works with KantarSport and TV Sports Market to In Great Britain, Germany, , Italy and upwards publish an annual survey of how sports fans are consuming of one in two fans, consume sport online, whilst in Spain, sports content. The report covers a wide range of media (TV, USA and Russia this increases to two out of three fans and in print media, radio, online, social), a wide range of devices Brazil and China eight out of ten. There has been a continued (televisions, connected TVs, mobiles, tablets, PCs) and a wide growth in the tendency to watch and read sport online and a range of content formats (video, data, editorial, news). The more significant uplift in following sport via a mobile devices report covers ten global markets – , Germany, this year. Spain, France, Italy, USA, Brazil, China, Australia and Russia – in which there are over 700 million sports fans. Reading articles online via a PC is the most common online activity in all markets except China which has a high The report found that the proportion of sports fans proportion of fans (73%) watching online sports coverage. consuming sport ranges from 68% of the adult population Brazil (57%) and Russia (49%) are two other markets with a in France to 90% of the urban internet connected adult greater proportion of fans claiming to watch sport online via population in China. Fans in Europe and the USA spend, on a PC. These three markets also represent the highest level of average, between four to eight hours per week consuming watching live streaming of sports events. sport. This increases to over ten hours per week in Brazil and upwards of 11 hours per week in China. Although TV continues The number of consumers accessing sport via internet to be the dominant media for following sport, consuming connected TVs and set top boxes has increased year-on- sport online is the second most popular method fans use to year by 12 million to reach 58 million users worldwide. In follow sport. A key change in 2012 has been the expansion in all markets, there has been an increase in the proportion the use of social media platforms both for fans following and of sports fans using mobile devices to consume sport. In by sports properties engaging with their fans. China, approximately two thirds of sports fans now claim to use a mobile device to follow sport. In the USA, the growth of mobile devices to consume sport has increased from one fifth of fans in 2011 to a third of sports fans in 2012.

Sport consumption Top methods sport fans use to consume sport (%) 100 12 100

80 10 80

8 60 60 6 40 40 4

20 20 2

0 0 0 China Italy Spain Brazil Russia Germany Great USA Australia France Great Germany Spain France Italy USA Brazil China Australia Russia Britain Britain % of adult population claiming to follow sport in 2012 TV Hours spent each week consuming sport Online Mobile Source: Global Sports Media Consumption Report 2012 Social network

Source: Global Sports Media Consumption Report 2012

PERFORM • Pioneer and market leader for exploitation of sports in digital media • Increasing expansion to exploit emerging markets growth opportunity

8 Perform Group plc Annual Report and Accounts 2012 OVERVIEW

Online, video and mobile advertising In-play betting continues

spend following consumer eyeballs to be a key focus area OVERVIEW

Online, video and mobile advertising spend following In-play betting continues to be a key focus area of a number consumer eyeballs and driving internet advertising as of major multi-territory and local online betting platforms the fastest growing advertising category Live in-play sports betting continues to be a high growth Internet advertising is projected to be the fastest growing segment with a wide range of betting companies now olering advertising category in the next 5 years growing to $188 and augmenting their live in-play content products such as billion by 2016 with c.16% CAGR over 2012-16 vs. a total Watch&Bet and RunningBall. In-play betting represents the global advertising CAGR of c.6% over the same period. The fastest growing part of sports betting, contributes a majority online advertising market is benefitting from high broadband of online sportsbook (non-horse racing) turnover and is the penetration rates, faster broadband speeds, the migration major driver of growth for the big online companies (e.g. of traditional media to online platforms and a growing bet365, Unibet, Sportingbet etc.). Streamed events make up audience spending more time online. an increasing proportion of in-play events for all sportsbooks.

Internet advertising growth $ billions Sportsbooks have found in-play products to drive customer

50 loyalty, improved engagement, longer time spent on their BUSINESS AND FINANCIAL REVIEW websites and increased frequency of bets. The combination of 40 these factors have resulted in increasing yield per active user across Europe and emerging markets and yields continue to 30 increase as sportsbooks add more in-play events (e.g. Betfair increased the proportion of football matches olered in-play 20 to 77% in 2012 compared to 53% in 2011).

10 2016 Unibet Sports betting turnover 2011 0 (£m) Display Video Mobile 200000 CAGR 12.6% CAGR 33.9% CAGR 35.5% 180000 Source: PWC Global entertainment and media outlook 2012-2016 160000 140000 Growing traec on social networking sites (e.g. two-thirds of 120000 internet users in North America access social networking sites) 100000 and increased time spent online are attracting advertising and 80000 fuelling growth in display and interactive advertising. Faster 60000 GOVERNANCE broadband speeds, increased TV streaming and shifting 40000 Pre-game 20000 betting consumer behaviour are driving significant growth in online In-play 0 video advertising. Viewing of online TV shows and number betting

Q1 2011 of embedded video ads have doubled in 2012 with higher ad Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 rates for online video ads compared to even live TV as video Source: Unibet PLC financial reports ads cannot be skipped.

Mobile is still an under-utilised advertising medium given the non-voice time consumers spend on it. Growing tablet and smartphone penetration and growth in the mobile internet access subscriber base will propel mobile advertising in the 77% next 5 years. APAC has the largest mobile advertising market reflecting the high mobile internet penetration rates in Japan The proportion of Betfair fooball at 88% and South Korea at 96%. matches olered in-play in 2012, up 24% from 53% in 2011 Global internet advertising market 2016: Source: Betfair 2012 annual report FINANCIAL STATEMENTS 2011: $90bn 2016: $188bn

Source: PWC Global entertainment and media outlook 2012–2016

• Goal, the world’s leading football portal • Market leader in delivery of live video with an average of 28 million monthly unique to online sportsbooks users in 2012 • Growing portfolio of multi-platform live events • ePlayer is a leading online sports video player • Provider of live data on over 49,000 matches with 4.5 billion streams in 2012 in 2012 via its RunningBall service • The Group continues to invest in mobile products to efectively monetise and take advantage of the emerging mobile advertising opportunity

Perform Group plc Annual Report and Accounts 2012 9 OVERVIEW

Chairman’s review Joint CEOs’ review

It is a pleasure to introduce Perform’s second Annual Report. It has been another busy year for the Group and these results reflect its strong, international growth and a number of successful acquisitions.

In December, leading sports broadcaster and journalist Gabby Logan joined the Board as an Independent Non- Executive Director. This appointment increased the number of Independent Non-Executive Directors on the Board to five; three Executives also sit on the Board together with one Non- Independent Non-Executive Director. As a Chairman and as a Board we view governance as particularly important. 2012 was an exciting year for the Group The Board meets regularly to discuss These results highlight the strong with year on year revenue growth of strategy and holds the Executive team operational and financial performance 47%, adjusted EBITDA growth of 103%, accountable for its execution whilst the Group has delivered this year. increasing international development ensuring that the entrepreneurial The Group has reported substantial and diversification of the business and a culture that has seen the Group grow increases in revenues and earnings number of important acquisitions including so successfully over the last few years whilst significantly expanding our rights RunningBall and Mackolik, all delivered is maintained wherever possible. portfolio, licensees, video streams and against the backdrop of continued subscriber numbers. economic uncertainty. Looking ahead our priorities for 2013 are clear. The Group will continue to The Group is delighted to have The Group has delivered a strong set execute its organic growth strategy supplemented its strong organic growth of results with Group revenues of £151.6 and to seek complimentary acquisition with two important acquisitions: million (2011: £103.2 million), adjusted opportunities. The Group will invest EBITDA of £37.5 million (2011: £18.5 million), for the future, in particular in rights for In May 2012 the Group completed the and adjusted basic earnings per share the Watch&Bet service so it is best acquisition of RunningBall adding delivery of 11.2p (2011: 6.3p). The growth of the positioned for the licence renewals of best-in-class live sports data to the advertising and sponsorship business, which will occur for the majority of Group’s existing live video, video-on- both video and display, has been very licensees at the end of 2013, in new demand and editorial content portfolio. In impressive with revenues growing 130% platforms and in new editorial content to 2012 RunningBall produced real-time data year on year and these revenues now grow our audiences in particular across coverage of over 49,000 sporting events comprise 21% of the Group’s total revenues Goal in the run up to the FIFA 2014 (including over 30,000 football matches), compared to 13% in 2011. World Cup Finals. producing over 1,000 items of data for each match. It currently engages more Particular highlights include: Finally, on behalf of the Group’s Board, than 1,100 scouts in over 70 countries to • the continued growth of the Watch&Bet I wish to express my sincere thanks gather real-time information on live sports service with 40 bookmakers now again to all the Group’s employees events. RunningBall was acquired for licensing the service and 14,729 events for their commitment and support €120 million, financed from existing cash delivered during the year; throughout an incredibly busy year. resources, the issuance of 13.5 million new • the international growth of the ePlayer, ordinary shares and by drawing down with the product now live in 24 territories new debt facilities agreed with Bank of and delivering over four billion streams Ireland plc and Royal Bank of Scotland plc. across the year with a headline sell through rate of 39%; Paul Walker On 30 June 2012 the Group acquired • The launch of 16 new editions of Goal Non–Executive Chairman an initial 51% stake in Mackolik which with 28 million average monthly unique owns and operates a number of Turkey’s users across the year; and leading independent sports websites, • the successful acquisition and including mackolik.com and sahadan. integration of RunningBall and Mackolik com. It is the market leader in digital sports media in Turkey, one of the world’s most exciting growth territories.

10 Perform Group plc Annual Report and Accounts 2012 OVERVIEW OVERVIEW

We are delighted with the progress the Group has made over the last year and it continues to successfully execute its growth strategy.

The initial 51% stake was acquired for The Group’s video-on-demand network, cash consideration of 40.8 million the ePlayer, had a very positive year. The Turkish Lira (£14.5 million) out of the Group increased the number of territories Group’s existing cash resources. A the ePlayer was live in from 20 at the end further £1.0 million will be paid in 2013 of 2011 to 24, with launches in Argentina, BUSINESS AND due to Mackolik’s better than expected Canada, Netherlands and Norway. Total performance in 2012. In addition, the streams viewed across the year increased Group will acquire the remaining 49% to 4.5 billion (2011: 3.6 billion) and average for cash, based on an agreed ten times monthly unique users increased to 112 F multiple calculation of the average million (2011: 80 million). Importantly INANCIAL REVIEW full year audited EBITDA results of across the year the Group’s ability to the business for the years ending This has been a transformational year monetise these streams improved with 31 December 2014 and 2015 weighted for the Group with significant growth in a headline sell through rate increasing to 25% and 75% respectively, with maximum the underlying business which continued 39% (2011: 23%) with investment in sales additional consideration payable in March to benefit from positive structural teams and rights in Italy, Spain and US. 2016 of up to £59.4 million. trends such as increased digital media consumption, growth in connected Goal went from strength to strength Both acquisitions have delivered strong device penetration, growth in online increasing its average monthly audience financial performance following acquisition. video advertising and growth in in-play from 24 million in 2011 to 28 million. By online sports betting. All of these trends the end of 2012, 36 editions were live, The opportunities for long-term are forecast to continue to improve over in 17 languages and over 1,500 stories GOVE sustainable growth remain significant. the next few years. were being published each day. It is the

The exciting developments in mobile Group’s aim to have a local language R NANCE and connected technology, innovation Across the Group the key themes have edition launched for every country taking in digital sports rights and international been the growth of its advertising and part in the FIFA 2014 World Cup Finals. expansion oler ever greater prospects. sponsorship business, improving margins The Group continues to invest in growing and investment in new platforms, rights The average number of full time stal its international presence and in 2012 and editorial content. Year on year employed in the year increased by 316 made significant inroads in Africa, Middle revenue growth was 47% (2011: 53%) with to 906. In the UK the Group launched East, South America and South East Asia advertising and sponsorship representing a graduate training scheme with nine that will enable the Group in the medium 21% of revenues (2011: 13%) and the graduates. In October the Group held its to long term to maintain strong growth. percentage of revenues generated from first ever global management conference outside the UK increasing from 70% in in the UK with over 100 of the Group’s The Group will continue to augment its 2011 to 73% in 2012, helped by a strong global stal meeting to discuss strategy strong organic growth and investment performance around the 2012 European and plans for the future. in the core business with strategic Football Championships. acquisitions, consolidating its position These were only a few of many highlights FINANCIAL STATEMENTS as the world’s leading digital sports The Watch&Bet service had a strong in what was the most exciting and busy business. year. The service offering was increased year ever for Perform and the Group to 14,729 events per year. The Group looks forward to continuing its success acquired more rights including US Open in 2013. , a range of new football leagues, and WTA, ATP 250 and ATP Challenger tennis tournaments and National Oliver Slipper Basketball Association. The Group chose Joint Chief Executive Okcer not to renew rights for Serie A or Ligue Simon Deny er 1 as it focused on ensuring the service Joint Chief Executive Okcer provided high quality content 24 hours a day, 365 days a year and was not overly concentrated on weekend afternoons. At the end of the year the service had 40 (2011: 35) licensees.

Perform Group plc Annual Report and Accounts 2012 11 OVERVIEW

Vision and growth strategy The Group’s vision is to become the leading global digital sports media company by delivering five strategic growth drivers

Strategic drivers

Enhance digital sports Expand Grow rights portfolio geographically audience

Compelling content is at the heart Since 2008 the Group’s strategy has been With its wholly and majority owned of the Group’s products and services to expand its business geographically websites, including Goal, Spox and and ultimately drives the Group’s both organically and through acquisition, Mackolik, and its ePlayer network the revenues and profitability. The Group’s reducing the Group’s dependence on a Group has actively sought to grow its rights buying strategy is to expand its small number of territories, in particular audience and increase the size of its rights portfolio by securing exclusive the United Kingdom, and being able to Direct to Consumer sourced revenues. live video rights to distribute on the take advantage of opportunities in new This direct access to consumers allows Watch&Bet service, by securing markets. In 2012 this strategy has involved improved engagement, better product exclusive live video rights in selected the targeted launch of 16 new editions development and improved and more markets and across selected platforms of Goal and the investment in new and targeted monetisation. for exploitation via Livesport.tv and existing ePlayer territories with the acquiring video-on-demand clip rights ePlayer being launched in Argentina, In 2012, advertising became a for distribution across the ePlayer and Canada, Netherlands and Norway and significant part of the Group’s Omnisport suite of products. significant investment in rights and business. The driver to advertising advertising sales teams in Italy, Spain growth is audience growth, a KPI In 2013, the Group will continue and the US. the Group takes very seriously. A the expansion of its rights portfolio number of key tactics are used to in anticipation of Watch&Bet rights The Group will launch further editions deliver audience growth including renewals during 2013 and also perform of Goal with a view to having a local search engine optimisation, social a full re-launch of its Content Distribution edition for every participating nation marketing and integration, new products for the betting and media in the 2014 World Cup. languages, new platforms and user sectors. journey optimisation. A dedicated In addition the Group will continue to team of digital market analysts is In addition the Group will continue increase the number of advertising sales charged with continuing to deliver to enhance its editorial output and oeces and stal to enhance growth audience growth. expand the production of live data and in 2013 will look to establish its own via the RunningBall scout network. in house advertising sales teams in the US and Japan.

12 Perform Group plc Annual Report and Accounts 2012 OVERVIEW OVERVIEW

2013 BUSINESS AND FINANCIAL REVIEW

Pursue complementary Launch on new Investment for strategic acquisitions digital platforms future growth

The Group has three categories The Group’s strategy is to develop 2014 will be an exciting year for the of target acquisition: products and delivery solutions Group with the FIFA World Cup acting for all digital platforms including as a major catalyst for advertising spend • Local Champions: strong single smartphones, tablets, gaming and the start of a new Watch&Bet GOVERNANCE territory digital sports media consoles and connected TVs. The licence period. businesses that are similar in increased market penetration of their product or service olering such devices and the increased To fully capitalise on these and other to the Group. consumption of media on such opportunities, major investment is • Direct to Consumer platforms: devices allow consumers better and currently underway in the following areas: local or global sports portals and easier access to the Group’s content destination sports websites. and products. In addition, the Group • New versions of Goal and Livesport.tv • Complementary Products: digital recognises that social networks such are being launched across all platforms sports products such as sports as Facebook and Twitter and video and there will be a significant expansion data, social gaming and fantasy. sharing sites such as YouTube are of the Goal olering. equally as important as hardware • The re-launch of the Group’s Content For all acquistions by leveraging the platforms and the development of Distribution betting and media products. Group’s content portfolio, international products and delivery solutions for sales teams and technology platform these networks is also a key part of • The enhancement of the Group’s revenue growth and profitability can the Group’s strategy. production and news gathering facilities be maximised. to increase the quality and the quantity FINANCIAL STATEMENTS In 2013, the Group will launch new of output. In 2012 the Group acquired versions of Goal and Livesport.tv • Expansion of the rights portfolio in RunningBall, Mackolik and Sportal.de. across all platforms, including a full anticipation of Watch&Bet rights re-brand of Goal and a significant renewals during 2013. In addition the Group has a strong expansion of the Goal olering in balance sheet (with cash of £34 million preparation for the 2014 World Cup. • Increasing the number of advertising and net funds of £26 million) and sales oeces and stal to further grow continues to consider acquisitions this sector including the establishment that could further its expansion. of in house advertising sales teams in Japan and US.

Perform Group plc Annual Report and Accounts 2012 13 OVERVIEW

Growth strategy Enhance digital sports rights portfolio

Compelling content is at the heart of Football and tennis remain the key sports Strategy in action the Group’s products and services and in the Group’s live events portfolio and ultimately drives the Group’s revenue and Perform secured new rights contracts profitability. The Group’s rights buying in 2012 which expanded its portfolio • Rights to over 900 South strategy is to expand its rights portfolio in these sports and consolidated the American football matches by (i) securing exclusive live video rights Group’s position as the market leader for exploitation across the Group’s to distribute on the Watch&Bet service, for the delivery of tennis and football services acquired from leading (ii) securing exclusive live video rights over the internet. sports agency Full Play in selected markets and across selected • Renewal of a content deal that platforms for exploitation via Livesport.tv Key rights acquired during 2012 included sees coverage of an average of and (iii) acquiring video-on-demand clip the US Open, NBA and a range of new 650 Asian football matches per rights for distribution across the ePlayer soccer leagues and additional ATP year for the Group’s core products and Omnisport suite of products. and WTA tennis tournaments further over the next five years improving scheduling and broadening In 2012, the Group successfully increased appeal for the Watch&Bet service for • Rights to US Open tennis tournament acquired the volume of live events streamed to 2013 and beyond. 14,729 an increase of 29% compared to • Multi-platform, digital, domestic 2011. A key part of this strategy has been During the year the Group also and international rights and to acquire content and events to deliver added to ts portfolio of premium production agreement reached quality content 24 hours a day, 365 days video-on-demand clip rights. including with the Australian National a year allowing online sportsbooks the La Liga in Spain, Serie A and B in Italy Basketball League opportunity to maximize their revenues. and NFL in the US. • Live content and data agreement confirmed with the National Basketball Association

• Expanded premium video-on-demand clip portfolio with La Liga in Spain and National W&B Events by Time - Jan '12 v Jan '13 Events Jan '12 Events Jan '13 Football League in US 250

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14 Perform Group plc Annual Report and Accounts 2012 OVERVIEW

One day in October… OVERVIEW

The Group is achieving near continuous coverage as demonstrated on 31 October 2012 when it showed 6 dilerent sports, 21 dilerent events, 113 matches, limited concurrency including ATP 1000 series, NBA, Chelsea v Man Utd in the Capital One Cup, WTA and the best snooker and .

Start Property/Event Match Start Property/Event Match Time Time 00:00 NBA 8 Miami Heat vs Boston Celtics 14:00 WTA Challenger 2012-13 (Barnstable)^ Jill Craybas vs Marta Sirotkina 00:00 Peruvian League O San Martin vs Sporting Cristal 14:00 WTA International (Sofia)^ N Petrova vs J Zheng 02:30 NBA 8 LA Lakers vs Dallas 14:30 Championship League Darts* Paul Nicholson vs 05:00 WTA Challenger 2012-13 (Taiwan)^ vs 14:30 Championship League Darts* Peter Wright vs 05:00 WTA Challenger 2012-13 (Taiwan)^ vs 15:00 Championship League Darts* Peter Wright vs Robert Thornton BUSINESS AND FINANCIAL REVIEW 06:30 World Snooker International Championship (China) # Matthew Stevens 15:00 Championship League Darts* Brendan Dolan vs Mark Walsh vs Neil Robertson 15:15 Intercontinental Cup 2012 + Brazil vs Japan 06:30 World Snooker International Championship (China) # Marco Fu vs Mark Davis 15:30 ATP 1000 Series (Paris)^ Michael Llodra vs John Isner 06:30 WTA Challenger 2012-13 (Taiwan)^ Ling Zhang vs Kimiko Date-Krumm 15:30 ATP 1000 Series (Paris)^ Albert Ramos vs Nicolas Almagro 06:30 WTA Challenger 2012-13 (Taiwan)^ Kuru mi Nara vs 15:30 Championship League Darts* Denis Ovens vs Paul Nicholson 08:00 WTA Challenger 2012-13 (Taiwan)^ Shuai Peng vs Zarina Diyas 15:30 Championship League Darts* Michael van Gerwen vs Steve Beaton 08:00 WTA Challenger 2012-13 (Taiwan)^ Julia Glushko vs 15:30 WTA Challenger 2012-13 (Barnstable)^ Annika Beck vs Lisa Whybourn 09:15 Philippine Basketball 8 Globalport Batang Pier vs San Mig Coffee Mixers 15:30 WTA Challenger 2012-13 (Barnstable)^ Maria Joao Koehler vs Karen Barbat 09:30 ATP 1000 Series (Paris)^ vs David Ferrer 15:30 WTA International (Sofia)^ M Kirilenko vs T Pironkova 09:30 ATP 1000 Series (Paris)^ Igor Sijsling vs Janko Tipsarevic 16:00 WTA International (Sofia)^ Evgeny Donskoy vs Adrien Bossel 09:30 WTA Challenger 2012-13 (Taiwan)^ Paula Kania vs Hua-Chen Lee 16:00 WTA International (Sofia)^ /Ken Skupski vs 09:30 WTA Challenger 2012-13 (Taiwan)^ Monique Adamczak/Stephanie Bengson Matthias Bachinger/Oliver Marach vs Kai-Chen Chang/Olga Govortsova 16:15 Championship League Darts* Brendan Dolan vs Steve Beaton 10:00 ATP 1000 Series (Paris)^ Marc Gicquel vs Aljaz Bedene 16:15 Championship League Darts* Paul Nicholson vs Robert Thornton 10:00 ATP 1000 Series (Paris)^ Loic Perret/Lucas Zweili vs / 16:30 Intercontinental Cup 2012 + USA vs UAE 10:30 Asian Champions League O Ulsan Hyundai vs Bunyodkor 16:45 Championship League Darts* Denis Ovens vs Peter Wright 10:30 Championship League Darts* Mark Walsh vs Paul Nicholson 16:45 Championship League Darts* Mark Walsh vs Michael van Gerwen 10:30 Championship League Darts* Peter Wright vs Steve Beaton 17:00 Asian Champions League O Al Ahli vs Al Ittihad 11:00 Russian First Division O Sibir vs Tom 17:00 VTB Basketball 8 Neptunas vs Minsk

11:00 WTA Challenger 2012-13 (Taiwan)^ Ting-Fei Juan/Zi Yang 17:00 WTA Challenger 2012-13 (Barnstable)^ Madison Brengle/ GOVERNANCE vs Chin-Wei Chan/Kimiko Date-Krumm vs Anna Danilina/ Mayya Katsitadze 11:00 WTA Challenger 2012-13 (Taiwan)^ Shu-Ying Hsieh/ 17:00 WTA Challenger 2012-13 (Barnstable)^ / Vesna Dolonc vs Ching-Wen Hsu/Ya-Hsuan Lee vs Nicole Clerico/ Tereza Mrdeza 11:00 WTA Challenger 2012-13 (Taiwan)^ vs Anna Danilina 17:00 WTA International (Sofia)^ C aroline Wozniacki vs 11:00 WTA Challenger 2012-13 (Taiwan)^ Emily Webley-Smith vs Lesley Kerkhove 17:15 Championship League Darts* Michael van Gerwen vs Denis Ovens 11:05 Championship League Darts* Brendan Dolan vs Denis Ovens 17:15 Championship League Darts* Robert Thornton vs Brendan Dolan 11:05 Championship League Darts* Robert Thornton vs Michael van Gerwen 17:30 ATP 1000 Series (Paris)^ Juan Martin Del Porto vs 11:30 ATP 1000 Series (Paris)^ Richard Gasquet vs 17:45 Championship League Darts* Peter Wright vs Mark Walsh 11:30 ATP 1000 Series (Paris)^ Juan Monaco vs Grigor Dimitrov 17:45 Championship League Darts* Steve Beaton vs Paul Nicholson 11:30 Philippine Basketball 8 Barako Bull Energy Cola vs Meralco Bolts 18:00 ATP Challenger (Geneva)^ Stephane Bohli vs Thiago Alves 11:30 World Snooker International Championship (China) # Shaun Murphy vs Ding Junhui 18:00 ATP Challenger (Geneva)^ Dusan Lajovic/ vs / 11:30 World Snooker International Championship (China) # Judd Trump vs Aditya Mehta 18:00 ATP Challenger 2012-13 (Montevideo)^ Boris Pashanski vs Blaz Kavcic 11:40 Championship League Darts* Steve Beaton vs Mark Walsh 18:00 Peruvian League O Real Garcilaso vs Juan Aurich 11:40 Championship League Darts* Paul Nicholson vs Peter Wright 18:30 ATP 1000 Series (Paris)^ Andy Murray vs Paul-Henri Mathieu 12:00 ATP Challenger (Geneva)^ Marius Copil vs Lukas Rosol 18:45 Championship League Darts* Michael van Gerwen vs Steve Beaton 12:00 ATP Challenger (Geneva)^ Vasek Pospisil vs Gregoire Burquier 18:45 Championship League Darts* Robert Thornton vs Mark Walsh 12:15 Championship League Darts* Michael van Gerwen vs Brendan Dolan 19:00 Swedish League O Helsingborg vs Göteborg 12:15 Championship League Darts* Denis Ovens vs Robert Thornton 19:00 Swedish League O Åtvidaberg vs Sundsvall 12:30 WTA Challenger 2012-13 (Taiwan)^ Hao-Ching Chan/ 19:00 Swedish League O Kalmar vs Norrköping

vs /Ling Zhang 19:00 Swedish League O Djurgården vs Syrianska FINANCIAL STATEMENTS 12:30 WTA Challenger 2012-13 (Taiwan)^ Mayya Katsitadze vs 19:30 Belgian League O KRC Genk vs Standard Liège 12:30 WTA Challenger 2012-13 (Taiwan)^ Amanda Elliott vs Eva Birnerova 19:30 Championship League Darts* Steve Beaton vs Mark Walsh 12:45 Intercontinental Cup 2012 + Nigeria vs Switzerland 19:45 Capital One Cup O Chelsea vs Manchester United 12:50 Championship League Darts* Steve Beaton vs Robert Thornton 19:45 Capital One Cup O Norwich vs Tottenham Hotspur 12:50 Championship League Darts* Mark Walsh vs Denis Ovens 20:00 ATP Challenger (Geneva)^ Jan Hajek vs Illya Marchenko 13:25 Championship League Darts* Michael van Gerwen vs Peter Wright 20:00 ATP Challenger 2012-13 (Montevideo)^ Horacio Zeballos vs Paul Capdeville 13:25 Championship League Darts* Paul Nicholson vs Brendan Dolan 20:00 Capital One Cup O Liverpool vs Swansea 13:30 ATP 1000 Series (Paris)^ vs Novak Djokovic 20:30 ATP 1000 Series (Paris)^ Milos Raonic vs Jeremy Chardy 13:30 ATP 1000 Series (Paris)^ Victor Hanescu vs Gilles Simon 22:00 ATP Challenger 2012-13 (Montevideo)^ Stephane Robert vs Marcel Felder 14:00 ATP 1000 Series (Paris)^ Rik De Voest vs 22:10 Paraguayan League O Olimpia vs Independiente 14:00 ATP 1000 Series (Paris)^ Bjorn Phau vs Sergei Bubka 22:45 Peruvian League O Alianza Lima vs Union Comercio 14:00 Championship League Darts* Robert Thornton vs Mark Walsh 23:00 NBA 8 Toronto vs Indiana 14:00 Championship League Darts* Steve Beaton vs Denis Ovens 23:00 NBA 8 Philadelphia vs Denver 14:00 Euroleague Women 8 Spartak M. R. Vidnoje vs Bourges 23:30 NBA 8 Detroit vs Houston 14:00 Intercontinental Cup 2012 + Russia vs Tahiti 23:50 Copa Sudamericana O Universidad de Chile vs São Paulo 14:00 WTA Challenger 2012-13 (Barnstable)^ Diana Marcinkevica vs

^ Tennis # Snooker + Beach Soccer * Darts 8 Basketball O Football

Perform Group plc Annual Report and Accounts 2012 15 OVERVIEW

Growth strategy Expand geographically

Global Reach Strategy in action

• InMobi, the world’s largest independent mobile advertising network, signs exclusive agreement to represent all African mobile traec on Goal

• Omnisport Regional Feeds launched with a localised sports news feed for the UK, Italian, French, German, Spanish, Australian, Brazilian and Spanish speaking Latin American markets

• 16 new Goal editions launched over the course of the year and 41 regional oeces open

Since 2008 the Group’s strategy Revenue 2011 – 2012 by territory (%) has been to expand its business geographically both organically UK and through acquisition, reducing its 2012 – £41.4m dependence upon a small number 32% increase on 2011 (£31.2m) of territories, in particular the United Kingdom, and being able to take advantage of opportunities in new Europe excluding UK markets. In 2012 this strategy has 2012 – £65.2m involved the targeted launch of 16 new 45% increase on 2011 (£45.0m) editions of Goal in Ghana, Nigeria, Kenya, Malaysia, Thailand, Canada, Australia, Argentina, Mexico, South Africa, APAC Vietnam, Ireland, Colombia, Chile, 2012 – £24.8m Peru and Singapore and four new 63% increase on 2011 (£15.2m) ePlayer territories Argentina, Canada, Netherlands and Norway. The Group has also continued its significant Americas investment in rights and advertising 2012 – £13.5m sales teams in Italy, Spain and US. 97% increase on 2011 (£6.9m) The Group will launch further editions of Goal with a view to having an edition MENA for every participating nation in the 2012 – £5.0m 2014 World Cup. 11% increase on 2011 (£4.5m) In addition, the Group will continue to increase the number of advertising sales ROW oeces and stal to enhance growth and 2012 – £1.6m in 2014 will establish its own in house 445% increase on 2011 (£0.3m) advertising sales teams in the US and Japan.

16 Perform Group plc Annual Report and Accounts 2012 OVERVIEW OVERVIEW

exc. UK

UK Europe APAC Americas MENA ROW Total (2011)

Number of (20) Goal editions 1 7 11 8 4 5 36 BUSINESS AND FINANCIAL REVIEW

Average Goal monthly web (24) unique users 3 6 13 3 2 1 28 (millions)

Countries (20) ePlayer live 1 13 6 3 – 1 24

Total ePlayer streams 470 1,505 859 1,565 25 59 4,483 (3,606) (millions)

Number of video GOVERNANCE (202) subscribers 122 25 13 33 12 14 219 (thousands)

Number of Watch&Bet 6 23 10 1 – - 40 (35) licensees

Number of RunningBall 17 19 7 - 1 2 46 (N/A) customers

Number of Watch&Trade 28 27 6 1 1 5 68 (54) licensees FINANCIAL STATEMENTS

Number of (173) GSM licencees 27 83 23 43 29 4 209

Number of Omnisport 9 42 51 23 15 18 158 (97) licensees

Average number of 501 182 197 24 – – 904 (590) staf

Perform Group plc Annual Report and Accounts 2012 17 OVERVIEW

Growth strategy Grow the audience

With its wholly and majority owned The Group employs four key tactics to grow Strategy in action websites, including Goal, Spox, Mackolik, its ePlayer audience: and its ePlayer network the Group has 1. Continue to expand the number of actively sought to grow its audience publishers taking the ePlayer. In 2012 the • Multi-platform, digital, domestic and increase the size of its Direct to Group added a number of key publishers and international rights and Consumer sourced revenues. This including over 100 of Gannett’s local production agreement reached direct access to consumers allows media organisations and the owned and with the Australian National improved engagement, better product Basketball League operated sites within USA TODAY Sports development and improved and more Digital Properties. • Leading sports agency DFL targeted monetisation. stream Bundesliga live and 2. Continue to improve content to drive The Group’s own display network had video-on-demand content in Italy more viewer engagement. In 2012 the 43 million average monthly unique users on Goal and across the ePlayer Group added new content such as La Liga (2011: 26 million) during 2012. Goal unique distribution partner network in Spain and National Football League in US. users increased to 28 million average • Over 100 websites within the unique users (2011: 24 million), During 3. Continue to enhance its technology. In USA TODAY Sports Media the year 16 new editions of Goal were 2012 the Group launched the ePlayer in Group and Gannett’s local media launched. Continued investment in new organisations agree to become HTML5 to enable all users on an Apple part of the US ePlayer distribution editions is planned for 2013 as the Group devices to view its content. partner network seeks to establish local language editions in each of the 32 participanting nations in 4. Continue to launch the ePlayer in new • La Liga match highlights acquired the 2014 World Cup. countries. In 2012 the Group launched for Spanish ePlayer the ePlayer in Argentina, Canada, Spox delivered 2 million average monthly Netherlands and Noway • Serie A match highlights renewed unique users in Germany in 2012, up from for Italian ePlayer and partnership 1.6 million unique users in December 2011. In addition the Group is investing in its agreed with YouTube to launch Mackolik delivered 16 million average Direct to Consumer team and technology and operate an oecial Serie A monthly unique users post acquisition. – specifically in relation to search engine YouTube channel In addition the Group owns Sportal.com. optimisation, social networking and • Deal agreed with National Football au a leading sports portal in Australia working with key social platforms such as League for match highlights for and New Zealand and Soccerway.com, a Facebook and Twitter to drive additional US ePlayer football portal focused on live scores and users to its content. statistics. At the end of the year Sportal. • Perform leads ESPN in online, com.au had average monthly unique US, sports video unique users on comscore users of 0.3 million and Soccerway.com had 5.0 million unique uses.

comScore number one US sports video provider in November 2012 Total Internet : Total audience MyMetrix

Video Metrix Key Measures Sports Total Unique Media Viewers (000) 1 Perform Sports Total Internet : Total audience 188,508 Sports 63,583 1 Perform Sports 24,532 2 ESPN 2 ESPN 24,092 3 Yahoo! Sports 9,988 4 CineSport 8,387 3 Yahoo! Sports 5 NFL Internet Group 5,936

18 Perform Group plc Annual Report and Accounts 2012 OVERVIEW

Growth strategy Pursue complementary OVERVIEW strategic acquisitions

The Group has three categories of target Group products such as Watch&Bet and/ Strategy in action acquisition: or WatchandTrade. 40% more matches were delivered in the post-acquisition • Local Champions: strong single territory period than in the comparative period in • Acquisition for €120 million of digital sports media businesses that 2011 and the number of sports covered BUSINESS AND FINANCIAL REVIEW leading real time sports data are similar in their product or service increased from four to six with darts and provider RunningBall offering to Perform, typically with local ice-hockey launched post acquisition. user traffic, advertising sales capability In addition a further two sports will be • Post acquisition increased number and a range of technology and content launched in 2013. of RunningBall customers taking the service by cross selling to the distribution clients, and that have not Group’s existing customers been able to expand beyond their core On 30 June 2012 the Group acquired an market. initial 51% stake in Mackolik which owns • Majority stake acquired for £14.5 • Direct to Consumer platforms: local and and operates a number of Turkey’s leading million in leading Turkish digital global sports portals and destination independent sports websites, including sports media company Mackolik sports websites to grow the Group’s mackolik.com and sahadan.com, and is • Integrated the Turkish ePlayer wholly owned user base and audience the market leader in digital sports media into the Mackolik business. • Complementary Products: digital sports in Turkey, one of the world’s most exciting Post acquisition users in Turkey products such as sports data, social growth territories. increased by 53% compared to gaming and fantasy. the pre acquisition period in 2012 The Turkish Goal edition and Turkish For all acquisitions by leveraging the ePlayer were integrated into Mackolik • German, sports portal Sportal.de GOVERNANCE acquired for €1.2 million Group’s content portfolio, international and are now better monetising traffic. sales teams and technology platform January 2013 Turkish Goal unique users • Subsequent to the year-end, revenue growth and profitability can were 942,000 compared to 452,000 in acquired Voetbalzone for initial be maximised. January 2012. Average monthly Turkish consideration of €2 million. ePlayer unique users post acquisition were In May 2012 the Group completed 23 million in 2012, an increase of 53% (8 the acquisition of RunningBall adding million) on pre-acquisition average unique delivery of best-in-class live sports users of 15 million in 2012 and an increase data to the Group’s existing live video, of 47% (7 million) on 2011 average unique video-on-demand and editorial content users of 16 million. portfolio. In 2012 RunningBall produced real-time data coverage of over 49,000 Both acquisitions have delivered sporting events (including over 30,000 strong financial performance following football matches), producing over 1,000 acquisition. items of data for each match. It currently engages more than 1,100 scouts in over 70 Subsequent to the year-end the Group FINANCIAL STATEMENTS countries to gather real-time information acquired Voetbalzone, the number one on live sports events. Seven new independent sports site in the Netherlands customers took a RunningBall service post with over 650,000 unique users. acquisition of whom four also receive other

Perform Group plc Annual Report and Accounts 2012 19 OVERVIEW

Growth strategy Launch on new digital platforms

The Group’s strategy is to develop including European and South American Strategy in action products and delivery solutions for football, tennis, rugby union, rugby all digital platforms including web, league, snooker and Austrialian rules smartphones, tablets, gaming consoles football, as well as a number of one ol • YouTube launch Livesport.tv and and connected televisions. The increased box oece sporting events. The Group’s Goal.com channels proliferation on smart connected devices integration with Facebook also enabled is driving greater than ever digital sports the Group to use targeted advertising to • Livesport.tv channels are olered media consumption and the Group is reach potential subscribers. across LG’s connected televisions committed to delivering an outstanding in five European territories consumer experience on every device. In In 2012 the Group also integrated • Livesport.tv channels launched on addition, the Group recognises that social Livesport.tv and Goal products across Facebook networks such as Facebook and Twitter branded YouTube channels delivering and video sharing sites such as YouTube the Group’s video content globally. The • Multi-platform, digital, domestic are equally as important as hardware content is funded by advertising with and international rights and platforms and the development of some of the content available in the US production contract started with the Australian National products and delivery solutions for as a paid live stream. In addition the Basketball League these networks is also a key part of the Group also developed applications for Group’s strategy. the Chrome Web Store. • Total College Sport’s 5th Quarter weekly show produced and In 2012 the Group launched more than The chart below illustrates what distributed exclusively in the 50 live and video-on-demand digital platforms the Group’s products are US on Hulu sports channels on Facebook across a currently on and what platforms they number of leading sports competitions will roll out to in 2013.

Major connected platform investment

2012 2013

20 Perform Group plc Annual Report and Accounts 2012 OVERVIEW OVERVIEW BUSINESS AND F INANCIAL REVIEW GOVE R NANCE FINANCIAL STATEMENTS

2014

Perform Group plc Annual Report and Accounts 2012 21 OVERVIEW

2013 Investment for future growth

2014 will be an exciting year for the To fully capitalise on these opportunities • The launch of further editions of Goal Group with the FIFA World Cup significant investment in products, with a view to having a edition of Goal and the start of the new Watch&Bet technology, content, rights and key stal for every participating nation at the licence period. are already underway and includes: 2014 World Cup.

The FIFA World Cup will be a major • Launching new versions of Goal and • A full re-launch of the Group’s Content catalyst for football advertising spend Livesport.tv across all platforms, Distribution products for the betting and the Group is planning a full product including a full re-brand of Goal and and media sectors. overhaul in 2013 for its Goal, Soccerway, a significant expansion of the Goal ePlayer and other Direct to Consumer editions in preparation for the 2014 brands. These overhauls will include World Cup. The roll-out of Goal and product re-designs, improved user Livesport.tv across platforms in 2013 experience and enhanced functionality. is illustrated on page 20. The Goal re- The Group will also be re-branding Goal launch will have a responsive design, be and ensuring there is an edition of Goal device agnostic, have integrated video for every participating nation in the and have real-time scores. World Cup. The Group is also planning on expanding its editorial and data operations to further help it achieve its goals in 2014.

The new Watch&Bet licence period presents real opportunities for the Group. These opportunities include the potential to adjust the existing licence structure and expand the license base. The Group will continue to expand its rights portfolio to ensure it is able to deliver the most comprehensive in-play proposition.

In 2013 the Group will launch new versions of Goal across all platforms, including a full re-brand and an edition for every nation competing in the 2014 World Cup

22 Perform Group plc Annual Report and Accounts 2012 OVERVIEW OVERVIEW

In 2013 there will be a number of new product innovations for the Group’s betting clients that combine Run ningBall’s real-time data, Wat ch&Bet and Wat ch& Tra de’s live video and G SM ’s s ports information and statistics BUSINESS AND F INANCIAL REVIEW GOVE • The continued enhancement of • The further expansion of the production • The increase in the number of

the Group’s Content Management of live data from the RunningBall scout advertising sales oeces and stal to R NANCE System and underlying technology. network. In 2013 the number of sports deliver further growth. The enhanced Content Management olered by RunningBall will expand to System will manage the content work include volleyball and handball and the • By the middle of 2013 having a 22 flow across the Group’s entire business Group anticipates covering over 62,000 person US advertising sales team with and seek to capture every sporting matches in 2013. The global scouting focus in the major media markets event globally. network will also grow by over 20%. including New York, Chicago, Detroit, Atlanta, Los Angeles and Dallas. • The establishment of a series of new • There will also be a number of production facilities around the world to new product innovations for the The Group continues to have a strong further multi-lingual content. Group’s betting clients that combine balance sheet (with cash of £34 million RunningBall’s real-time data, and net funds of £26 million) and will • The establishment of news desks in Watch&Bet and Watch&Trade’s live continue to consider strategic acquisition multiple markets to improve the quality video and GSM’s sports information opportunities in 2013. and quantity of the Group’s editorial and statistics. FINANCIAL STATEMENTS output in text and video. • The continued expansion of the Group’s rights portfolio in anticipation of Watch&Bet rights renewals later in 2013.

Perform Group plc Annual Report and Accounts 2012 23 Business and financial review BUSINESS AND FINANCIAL REVIEW 32 Technology & production production & Technology review Financial 34 36 BUSINESS AND FINANCIAL REVIEW FINANCIAL AND BUSINESS distribution (display) Content sponsorship & (video) Advertising sponsorship & Advertising Subscription 28 30 26 BUSINESS AND FINANCIAL REVIEW

Content distribution

Strategy on target:

The Group has licenced the digital Watch&Bet is a major supplier of live sports media rights to over 200 sports video to online bookmakers. The leagues, tournaments and events and service delivers live streaming of sports utilises this rights portfolio to deliver a content directly to consumers through range of products covering live video, bookmakers’ websites over the internet video-on-demand, sports data, sports and via mobile networks, without news and editorial and sports statistics. bookmakers having to invest directly These products are sold to online in content and streaming technology. bookmakers, broadcasters, mobile Watch&Bet generates revenue through operators and other business clients fixed-term, multi-year licences, giving the around the world. Group long term, visible revenues. The service is currently licenced on a semi- exclusive basis, capped at six licensees per territory. During the year five new licensees acquired the Watch&Bet service, increasing the total number of licensees to 40 (2011: 35). The new licensees of the service have licenced single or multiple territories in either

Live WTA tennis on Watch&Bet’s mobile and PC service

26 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEW OVERVIEW

Year ended Year ended Content distribution 31 December 2012 31 December 2011 Revenue (£’m) 93.0 64.9 43% Year on year revenue growth (%) 43 58 Year on year revenue growth Percentage of overall revenues (%) 61 63 BUSINESS AND FINANCIAL REVIEW (2011: 58%)

Europe or Australasia. The geographical 2011. The number of sports covered diversification of Watch&Bet revenues increased from four prior to the 40 continued, with historically the largest acquisition to six after the acquisition with territory, the UK, representing 5% (2011: darts and ice-hockey launched since the Number of Watch&Bet licensees 7%) of Group revenues and no other acquisition. In addition a further two at year end (2011: 35) territory representing more than 4% (2011: sports will be launched in 2013. 4%) of Group revenues. The Group expects to have limited growth in the Omnisport is a sports news product that number of new licensees in 2013 as the combines video, editorial, images and Group approaches the new renewal data. It is available across multiple 14,729 period at the end of 2013. platforms (television, online, smartphones and tablets) in a number of formats Number of live events streamed by During 2012, the Group’s rights portfolio (Uncut, Ready, Bulletin), in 11 languages GOVERNANCE Watch&Bet in the year (2011: 11,376) increased by 29%, delivering 14,729 live and in six regional variants. During the events (2011: 11,376). New rights added year the numbers of customers licensing included the NBA, US Open Tennis, the product increased from 97 to 158. additional ATP and WTA Tennis tournaments and a range of new soccer GSM is a leading digital provider of 46 leagues. The Group currently has 14,500 sports statistics to the betting, media events contracted/contracting for and mobile sectors covering over 1,700 Number of RunningBall customers delivery in 2013 and 10,000 events leagues and competitions from 134 taking a service during the year in 2014. countries. During the year the number of (2011: 39) customers licensing the product In May, the Group acquired RunningBall, increased from 173 to 208. a leading provider of real time sports data to online bookmakers. During the Watch&Trade is a major supplier of live year 46 customers licenced RunningBall’s sports video to online bookmakers. 49,866 products, compared to 39 for 2011. The service delivers live streaming of Seven new customers took a RunningBall sports content directly to traders at the FINANCIAL STATEMENTS Number of events delivered by service post acquisition of whom four bookmakers. The service is licensed on RunningBall (2011: 38,060) also receive other Group products such a non-exclusive basis. During the year as Watch&Bet and/or Watch&Trade. the number of customers licensing the product increased from 54 to 68. Across the whole year RunningBall covered 49,866 live events of which The majority of the year on year revenue 158 31,288 were delivered post acquisition in increase in content distribution has been the period June to December 2012. In due to increased licence fees from sales Number of Omnisport licensees 2011, 38,060 events were delivered of of the Watch&Bet service and the at year end (2011: 97) which 22,404 were in the period June to inclusion of the results of RunningBall. December 2011. This represents a full year on year increase of 31% and an increase in the post-acquisition period of 40% compared to the comparative period in

Perform Group plc Annual Report and Accounts 2012 27 BUSINESS AND FINANCIAL REVIEWEVIEW

Advertising & sponsorship (display)

Strategy on target:

The Group generates display The Group’s owned web display network advertising and sponsorship had 43 million average monthly unique revenues through the sale of display users (2011: 26 million) during the year. advertisements on the Group’s own websites including Goal, which is the Goal unique users increased to 28 million world’s largest football website, Spox, average unique users (2011: 24 million), Mackolik, Sahadan and Soccerway. In During the year 16 new editions of 2012 the Group had an average of 43 Goal were launched in Ghana, Nigeria, million monthly unique users across Kenya, Malaysia, Thailand, Canada, these sites. The Group also acts as an Australia, Argentina, Mexico, South Africa, advertising sales agent for a network Vietnam, Ireland, Colombia, Chile, Peru of third-party sports websites including and Singapore. the Premier League’s okcial website.

Hyundai homepage takeover on UK edition of Goal during the UEFA EURO 2012 football championships

28 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEW OVERVIEW

Year ended Year ended Advertising & sponsorship (display) 31 December 2012 31 December 2011 Revenue (£’m) 18.4 7.0 164% Year on year revenue growth (%) 164 90 Year on year revenue growth Percentage of overall revenues (%) 12 7 BUSINESS AND FINANCIAL REVIEW (2011: 90%)

Spox delivered 2 million average monthly In addition, the Group owns Sportal.com. unique users in 2012 in Germany, up from au, a leading sports portal in Australia 43m 1.6 million unique users in December 2011. and New Zealand and Soccerway. com, a football portal focussed on live Number of average monthly In June the Group acquired 51% of scores and statistics. At the end of unique users on owned websites Mackolik, Turkey’s leading digital sports the year Sportal.com.au had average (2011: 26 million) business. Mackolik owns Turkey’s top monthly unique users of 0.3 million two most visited sports sites – mackolik. and Soccerway.com had 5.0 million com and sahadan.com – which delivered unique users. 16 million average monthly unique users post acquisition. Its websites contain a During the year the Group continued 36 mix of original sports editorial content, to focus on the performance of owned live scores and social features including websites for which it retains all of the GOVERNANCE Editions of Goal at year end forums and moderated chat. The revenue and increased its third-party (2011: 20) sites are available in desktop formats revenue in certain countries such and via a range of smartphones and as Germany. tablet platforms. 16m Average monthly unique users on Mackolik group of websites FINANCIAL STATEMENTS

The Group’s owned websites which include Mackolik.com in Turkey and Spox.com in Germany allow the Group to reach millions of international sports fans

Perform Group plc Annual Report and Accounts 2012 29 BUSINESS AND FINANCIAL REVIEWEVIEW

Advertising & sponsorship (video)

Strategy on target:

The Group generates video advertising The number of live territories increased in and sponsorship revenues through the the year to 24 with the ePlayer launched in sale of pre-roll video advertisements on Argentina, Canada, Netherlands and its video-on-demand network the Norway. The sell through rate in Q4 2012 of ePlayer. The ePlayer is embedded on 45% was a considerable improvement both the websites of over 1,000 leading quarter on quarter (Q3 2012: 41%) and year publishers and sports portals in 24 on year (Q4 2011: 35%). This reflects the territories. In 2012 4.5 billion videos Group’s improved ability to monetise its were streamed and 1.8 million pre-roll traffic and an improvement in the quality of adverts sold (resulting in a sell-through available inventory with the player removed rate of 39% up from 23% in 2011) with from a number of websites which delivered content including National Football high streams but little or no revenues. League, the National Basketball Association, Serie A and La Liga. The table opposite separates the ePlayer business into three territory categories; The ePlayer’s content proposition is a set the United States and the United Kingdom, of global and territory specific sports video FIGS (France, Italy, Germany, Spain) and the clips, packaged into different branded rest of the World (including Turkey, Japan, channels including football, tennis, golf and India, South Korea). The territory of a motorsport. Approximately 60,000 two to stream and a unique user is determined three minute sport clips were distributed by geographic location of the unique user through the ePlayer in 2012, with many clips and is based on data from Omniture. re-voiced in different languages specifically for individual territories.

The Group’s ePlayer provides extensive opportunities for brands to engage sports audiences through sponsorship of okcial video content

30 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEW OVERVIEW

Year ended Year ended Advertising & sponsorship (video) 31 December 2012 31 December 2011 Revenue (£’m) 13.3 6.8 95% Year on year revenue growth (%) 95 129 Year on year revenue growth Percentage of overall revenues (%) 9 7 BUSINESS AND FINANCIAL REVIEW (2011: 129%)

US and UK streams have increased inventory. The Group also renewed the to 2.1 billion (2011: 1.0 billion) with improving domestic clip rights for Serie A in Italy, and increased distribution, including across secured Serie B and secured La Liga 4.5bn the Gannett newspaper network in the US. domestic clip rights in Spain. As a result of In addition, the Group cleared domestic clip these new rights, the focus on the quality Total ePlayer streams viewed rights to the National Football League of the streams and improved performance (2011: 3.6 billion) (NFL) in the US to further improve the of the sales teams across the region, the content in the US. The sell through rate in sell through rate increased to 29% from the US and UK improved to 63% (2011: 13% in 2011. 58%) due to the better monetisation of the streams, helped by an increased volume Streams in the rest of the world increased 39% and quality of content. The US ePlayer to 1.4 billion in 2012 from 1.1 billion in 2011 achieved a significant milestone in as the Group launched the ePlayer in four ePlayer annual sell through rate November 2012 when it was ranked new territories and improved traffic in key GOVERNANCE (2011: 23%) number one by Comscore for Online markets such as Japan and Turkey. The Sports Video. sell through rate improved to 13% in 2012 from 4% in 2011 as sales teams became Streams in FIGS decreased from 1.5 billion better established. in 2011 to 1.0 billion in 2012 as the Group 24 focussed on improving monetisable stream Number of live ePlayer territories at year end (2011: 20) Video KPIs Year ended Year ended Total for all territories 31 December 2012 31 December 2011 Total streams (millions) 4,483 3,606 Total streams sold (millions) 1,756 821 Average monthly unique users (millions) 112 80 112m Sell through rate (%) 39% 23% Average monthly unique users United States and United Kingdom FINANCIAL STATEMENTS (2011: 80 million) Total streams (millions) 2,065 996 Total streams sold (millions) 1,292 578 Average monthly unique users (millions) 52 26 Sell through rate (%) 63% 58% FIGS Total streams (millions) 969 1,490 Total streams sold (millions) 279 200 Average monthly unique users (millions) 22 23 Sell through rate (%) 29% 13% Rest of the World Total streams (millions) 1,449 1,120 Total streams sold (millions) 185 43 Average monthly unique users (millions) 38 31 Sell through rate (%) 13% 4%

Perform Group plc Annual Report and Accounts 2012 31 BUSINESS AND FINANCIAL REVIEW

Subscription

Strategy on target:

The Group generates subscription Video subscribers, where subscribers revenues from consumers paying have access to live or video-on-demand monthly or annual fees to watch content through the internet, grew from internet delivered live video and 202,000 to 219,000. The majority of this video on demand sports content via increase was on third-party subscription Livesport.tv and a range of third-party products including www.tennistv.com subscription products on behalf of and www.foxsoccer2go.com where football clubs, sports bodies and successful marketing, improved platform broadcasters. In addition, the Group access and competitive pricing all generates revenues from consumers increased the subscriber base. paying monthly fees to receive data.

The Group’s Livesport.tv subscription platform provides rightsholders such as the Dutch Eredivisie with access to a global audience of online fans

32 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEWEVIEW OVERVIEW

Ye ar ended Year ended Subscription 31 Dec ember 2012 31 Dec ember 2011 Revenue (£’m) 12.3 9.5 29% Year on year revenue growth (%) 29 19 Year on year revenue growth Percentage of overall revenues (%) 8 9 BUSINESS AND FINANCIAL REVIEW (2011: 19%)

Data subscribers, where subscribers and Livesport.tv channels on Facebook have access to or receive data products and YouTube with those products also 219k (such as goal updates), grew from available on web, IOS, Android and 173,000 to 290,000 with the launch through a number of other OTT (Over Total video subscribers of Goal SMS products and the inclusion The Top) environments including LG and (2011: 202k) of Mackolik products. Toshiba connected TVs. In 2013 these products will also be available through There has been continued and significant a number of other device manufacturer investment in platform and product operating environments. 290k development with the launch of Goal Total data subscribers GO

(2011: 173k) VERNANCE 2.6m Total apps downloaded in year (2011: 1.2 million) 35 Livesport.tv channels live at year FINANCIAL end (2011: 29) S T A T E M EN T S

The Group power’s TennisTV. com, the okcial subscription portal of ATP and WTA Tennis

Perform Group plc Annual Report and Accounts 2012 33 BUSINESS AND FINANCIAL REVIEW

Technology & production

Strategy on target:

The Group generates technology and The Group is contracted to manage over production revenues from a range 100 websites and mobile services on of clients by: designing, building behalf of third parties. Key clients are and managing websites and mobile primarily football clubs and leagues, products on behalf of sports rights sports federations and broadcasters. holders; ingesting, encoding and During 2012, the Group won some streaming live and on demand content significant new international contracts on behalf of sports rights holders including: and broadcasters; and by filming and editing sports matches for • Building the website and launching rights holders. a streaming service for BeIn Sport in France.

The Group is a production partner of Premiership Rugby

34 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEW OVERVIEW

Year ended Year ended Technology & production 31 December 2012 31 December 2011 Revenue (£’m) 14.6 15.0 2% Year on year revenue growth (%) (2) 28 Year on year revenue decline Percentage of overall revenues (%) 10 15 BUSINESS AND FINANCIAL REVIEW (2011: 28% growth)

• Building a multi platform subscription Revenues marginally decreased year and streaming service for Setanta Sport on year reflecting a shift in the Group’s 42 in Australia. strategy to enter into advertising or subscription based revenue share Number of mobile apps launched • Building and launching a multi platform contracts rather than one ol build or (2011: 47) subscription product including ongoing service fees. The Group expects streaming services for National this to continue in the future. Basketball League in Australia.

• Launching a new sports portal for 2 Starhub in Singapore. Number of connected TV apps GOVERNANCE launched (2011: nil) FINANCIAL STATEMENTS

The Group powers Al Jazeera Sports live streaming service across PC, smartphone and tablet. The mobile service won the Content Service Award at the Mobile Entertainment’s 2012 Mefys Awards

Perform Group plc Annual Report and Accounts 2012 35 BUSINESS AND FINANCIAL REVIEW

Financial review

Income Stat ement and exceptional items) increased by 103% to £37.5 million in 2012 from The Group’s total revenue increased £18.5 million in 2011. The Group’s profit to £151.6 million in 2012, an increase of after tax increased to £13.5 million from £48.4 million (47%) from £103.2 million £3.7 million in 2011 due to the increase in in 2011. Adjusted EBITDA (defined as underlying EBITDA. earnings before interest, tax, depreciation and amortisation and excluding amounts in respect of share based payments

Summary Inc ome Stat ement

David Surtees 2012 2011 Chief Financial Okcer £’000 £’000 Reve nue Content distribution 92,971 64,943 Subscription 12,341 9,535 Technology and production 14,609 14,953 Advertising and sponsorship (video) 13,275 6,792 Advertising and sponsorship (display) 18,411 6,971 Tot al revenue 151,607 103,194 Cos t of sales Content (41,102) (35,831) Publisher shares (6,397) (2,715) Technical and software fees (7,807) (6,221) Production (10,159) (6,947) Other (1,687) (1,386) Tot al cost of sales (67,152) (53,100) Gross profit 84,455 50,094 Stal costs (36,601) (24,415) Other administrative costs (10,352) (7,205) Adju sted EBIT DA 37, 502 18,474 Exceptional items (5,348) (4,998) Exceptional share-based payments (1,228) (4,770) Share-based payments (2,018) (352) EBIT DA 28 ,908 8,354 Amortisation and depreciation (6,486) (3,748) Amortisation of acquisition intangibles (2,908) (855) Group operating profit 19,514 3,751 Investment income 533 834 Accretion of deferred consideration (1,862) - Finance costs (1,265) (1,099) Group profit before tax 16,920 3,486 Taxation (3,423) 231 Group profit after tax 13,497 3,717

36 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEW OVERVIEW

Revenue Advertising and sponsorship (display) Content costs increased by £5.3 million revenues earned from third party (15%) to £41.1 million due to the increased The following table sets out revenue for the websites the Group represents number and mix of sports events and years ended 31 December 2011 and 2012: reduced as the Group focussed on the rights acquired and due to higher performance of its own websites for revenue shares related to the increase in which it retains all of the revenue. subscription revenues. Year to Year to 31 December 31 December Subscription revenues increased by Publisher shares increased by 136% 2012 2011 29% to £12.3 million (2011: £9.5 million). from £2.7 million to £6.4 million £’000 £’000 This increase was primarily due to due to increases in advertising and Content distribution 92,971 64,943 the launch of new mobile services for sponsorship revenues and the relating Subscription 12,341 9,535 Goal, the inclusion of mobile revenues payments to ePlayer publishers and Technology generated by the Mackolik group of third party websites. and production 14,609 14,953 websites and client branded products Advertising and such as www.foxsoccer2go.com and Technical and software fees increased by sponsorship BUSINESS AND FINANCIAL REVIEW (video) 13,275 6,792 www.tennistv.com. £1.6 million (25%) to £7.8 million due to the Advertising and increased number of end users, customers, sponsorship Technology and production revenues new products and new services. (display) 18,411 6,971 were £14.6 million (2011: £15.0 million). Total 151,607 103,194 Revenues marginally decreased year Production costs increased by on year reflecting a shift in the Group’s £3.3 million (46%) to £10.2 million due Year on year revenue growth excluding strategy to enter into advertising or to the scouting costs of producing the acquisitions of RunningBall and subscription based revenue share RunningBall data, the costs of multi- Mackolik was £35.9 million (35%). contracts rather than one ol build lingual commentary on the Watch&Bet or service fees. service and increased editorial content Content distribution had a very strong produced for Goal and Omnisport. year with revenues increasing by 43% Cost of sales to £93.0 million (2011: £64.9 million). Gross profit The majority of this growth has been The following table sets out cost of sales driven by increased licence fees for the years ended 31 December 2011 The Group’s gross profit increased from from sales of the Watch&Bet service, £50.1 million in 2011 to £84.5 million in and 2012: GOVERNANCE reflecting new licensees and additional 2012, an increase of £34.4 million (69%). content, and £10.0 million from the Gross profit margin was 56% in 2012 acquisition of RunningBall. compared to 49% in 2011. This increase Year to Year to 31 December 31 December was as a result of the Group better Advertising and sponsorship (video) 2012 2011 monetising its content across its multiple revenues increased by 95% to £’000 £’000 revenue streams. £13.3 million (2011: £6.8 million) due to Content costs 41,102 35,831 increasing audiences and total streams Publisher shares 6,397 2,715 Administrative expenses Technical and viewed and more of these streams being software fees 7,807 6,221 monetised, in particular in the United Production 10,159 6,947 The Group’s administrative expenses Kingdom, United States and Italy. Other 1,687 1,386 increased from £46.3 million in 2011 Total 67,152 53,100 to £64.9 million in 2012, an increase Advertising and sponsorship (display) of £18.6 million (40%). This increase revenues increased by 164% to £18.4 million was primarily a result of increased (2011: £7.0 million), with strong sales around Cost of sales increased from £53.1 million stal employed (from an average of the 2012 European Football Championship. in 2011 to £67.2 million, an increase of 590 in 2011 to an average of 906 in FINANCIAL STATEMENTS £6.8 million of revenues were generated by £14.1 million (26%). The increase during the 2012) and their related costs, higher the Spox business in Germany, which was year was primarily a result of the increased depreciation and amortisation charges acquired in December 2011. Goal delivered volume and mix of content acquired by and the inclusion of RunningBall and £3.2 million more revenue during the year the Group to support its product and Mackolik (£3.5 million). than in 2011. The leading Turkish websites revenue development and the inclusion Mackolik.com and Sahadan.com, which of RunningBall and Mackolik (£4.6 The average cost of an employee were acquired at the end of June, delivered million). Year on year cost of sales growth decreased from £41,000 in 2011 to £2.3 million revenue post acquisition. excluding the acquisitions of RunningBall £40,000 in 2012. and Mackolik was £9.5 million (18%). Acquisition related amortisation and service charges increased by £2.0 million from £0.9 million in 2011 to £2.9 million in 2012. Exceptional costs increased by

Perform Group plc Annual Report and Accounts 2012 37 BUSINESS AND FINANCIAL REVIEW

Financial review continued

£0.3 million from £5.0 million in 2011 Share based payments Finance costs to £5.3 million in 2012. Share based payments decreased by £1.9 million from The Group incurred share based payment The Group’s finance costs increased £5.1 million in 2011 to £3.2 million in 2012. charges relating to the Group’s non- from £1.1 million in 2011 to £3.1 million in recurring Growth Securities Ownership 2012 due to the accretion of deferred Year on year administrative cost growth Plan (GSOP) of £1.2 million (2011: consideration relating to the Group’s excluding the impact of acquisitions, £4.8 million) and the Group’s ongoing acquisitions (£1.9 million) (2011: £nil). acquisition related amortisation and service Performance Share Plan £2.0 million Other finance costs of £1.2 million charges, exceptional items and share based (2011: £0.3 million). (2011: £1.1 million) related to bank interest payments was £14.7 million (42%). and commitment costs on the Group’s Amortisation and depreciation new debt facility Adjusted EBITDA Amortisation and depreciation increased Taxation Adjusted EBITDA is defined as earnings from £3.7 million in 2011 to £6.5 million before interest, tax, depreciation and in 2012, an increase of £2.8 million The Group recognised a tax charge amortisation excluding share based (73%). The increase was primarily due of £3.4 million (2011: tax credit £0.2 payments and exceptional items and to the increased investment in the million). In the prior year a deferred tax is considered by the Directors to be a Group’s technical infrastructure and asset had been recognised. The Group’s key measure of the Group’s financial software development and the related underlying tax rate for 2012 is 18%. The performance. Adjusted EBITDA amortisation and depreciation of the Group’s statutory tax rate is 20% and is increased from £18.5 million in 2011 businesses acquired. higher than the underlying tax rate of to £37.5 million in 2012, an increase of 18% primarily due to the impact of non- £19.0 million (103%). This increase was Acquisition related amortisation deductible exceptional professional costs as a result of the improved financial and and service charges increased from relating to the Group’s acquisitions. operational performance of the Group. £0.9 million in 2011 to £2.9 million in 2012. The increase of £2.0 million was due to Profit after tax Exceptional items the full year amortisation of Spox and Goal acquired intangibles and the impact Profit after tax increased to £13.5 million During the year the Group incurred of Mackolik and RunningBall. in 2012 from £3.7 million in 2012, an exceptional costs of £5.3 million increase of £9.8 million (263%). Adjusted (2011: £5.0 million) relating to professional Investment income profit after tax, excluding exceptional fees in respect of the Group’s corporate items, share-based payments, accretion and strategic development including Investment income primarily relates to of deferred consideration relating to the acquisitions of RunningBall (which bank interest receivable of £0.5 million acquisitions and acquisition related was a Class 1 transaction) and Mackolik on funds raised during the Group’s IPO amortisation and service charges and the professional costs of putting in (2011: £0.8 million). increased from £14.7 million in 2011 place the Group’s new debt facility. These to £26.9 million in 2012. costs were considered exceptional by the Directors as they were items that were material in size and were unusual and infrequent in nature.

38 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEW OVERVIEW Earnings per share Dividend On 30 June 2012 the Group acquired an initial 51% stake in Mackolik which Adjusted basic and diluted earnings per The Directors do not recommend the owns and operates a number of Turkey’s share are based on profit attributable payment of a dividend (2011: £nil). leading independent sports websites, to equity holders of the parent plus including mackolik.com and sahadan. exceptional items, share based payments, Acquisitions com, and is the market leader in digital accretion of deferred consideration sports media in Turkey. relating to acquisitions and acquisition RunningBall was acquired for a minimum related amortisation and service charges consideration of €101 million and a The initial 51% stake was acquired for divided by the adjusted weighted maximum consideration of €120 million. cash consideration, paid out of the average number of ordinary shares The initial consideration of €70 million Group’s existing cash resources, of outstanding in 2012 and in the period consisted of €20 million in cash, financed 40.8 million Turkish Lira (£14.5 million) between Listing and 31 December 2011. from existing cash resources, and based on an agreed ten times multiple €50 million in the form of 13.5 million new calculation of the full year forecast Adjusted basic earnings per share grew ordinary shares in the Company which EBITDA results of the business for the BUSINESS ANDAND FINANCIALFINANCIAL REVIEWREVIEW by 78% to 11.2p (2011: 6.3p). Adjusted were issued to the sellers. Contingent year ending 31 December 2012. A further diluted earnings per share grew by 76% consideration of €50 million (based on £1.0 million is payable in 2013 due to the to 11.1p (2011: 6.3p). RunningBall’s 2012 EBITDA) will be paid in above expected performance of the 2013 entirely in cash and will be financed business in 2012. Statutory basic earnings per share both from existing cash reserves and by reflects the Group’s statutory profit and drawing down new debt facilities agreed In addition, the Group will acquire the was based on the average number of with Bank of Ireland plc and Royal Bank remaining 49% for cash, based on an ordinary shares outstanding in 2012 of of Scotland plc. Total consideration will be agreed ten times multiple calculation of 233 million (2011: 218 million). Statutory based on a nine times multiple applied to the average full year audited EBITDA basic earnings per share increased to the audited EBITDA of RunningBall for the results of the business for the years ending 5.5p from 1.4p. Statutory diluted earnings year ended 31 December 2012. 31 December 2014 and 2015, weighted per share increased to 5.4p from 1.4p. 25% and 75% respectively, with maximum additional consideration payable in March The following table reconciles adjusted 2016 of up to £59.4 million. and statutory basic and diluted earnings per share: On 5 September 2012 the Group acquired the entire share capital of GOVERNANCE Sportal GmBH for an acquisition price 2012 2011 Profit for the period attributable to equity holders (£’000) (A) 12,840 3,129 of €1.2 million. Exceptional items (£’000) 5,348 4,998 Share based payments (£’000) 3,246 5,122 On 4 March 2013 the Group completed Accretion of acquisition related deferred consideration (£’000) 1,862 - the acquisition of Voetbalzone B.V. Acquisition related amortisation and service costs (£’000) 2,908 855 (“Voetbalzone”) for initial consideration Adjusted earnings (£’000) (B) 26,204 14,104 of €2 million. Additional contingent consideration of up to €10.5 million Weighted average number of shares in issue (000s) – basic (C) 233,255 218,370 is payable based on the EBITDA Dilutive elect of performance share plan (000s) 2,388 468 of Voetbalzone for the years to Weighted average number of shares in issue (000s) – dilutive (D) 235,643 218,838 31 December 2013, 2014 and 2015.

Adjusted weighted average number of shares in issue – basis (E) 233,255 225,376 Dilutive elect of performance share plan (000s) 2,388 468 Capital expenditure Adjusted weighted average number of shares in issue (000s) – dilutive (F) 235,643 225,844 During the year the Group continued Basic earnings per share to capitalise expenditure on additions FINANCIAL STATEMENTS Statutory (pence) (A/C) 5.5 1.4 and improvements to its technical Adjusted (pence) (B/E) 11.2 6.3 software as new functionality and Diluted earnings per share services were developed. Internal stal Statutory (pence) (A/D) 5.4 1.4 costs of £2.6 million were capitalised Adjusted (pence) (B/F) 11.1 6.3 in 2012 (2011: £2.1 million). Further external development and software costs were capitalised of £3.0 million (2011: £2.2 million). Therefore total intangible asset additions were £5.6 million (2011: £4.3 million). This included investment in enhancements to Goal, the ePlayer, Watch&Bet and the Group’s subscription products.

Perform Group plc Annual Report and Accounts 2012 39 BUSINESS AND FINANCIAL REVIEW

Financial review continued

The Group continued its investment Total acquisition spend during the The number of shares issued was based program to update and improve year excluding working capital related on the average closing mid market price the equipment used to support its payments and cash acquired was for the Group’s ordinary shares over a technical hardware platform and £31.8 million (£31.4 million including 30 day period prior to the acquisition. invested £4.9 million during 2012 working capital payments and net of The fair value of those shares was (2011: £4.0 million). cash acquired) relating to the acquisitions calculated based on the bid price at of RunningBall (£16.3 million), Mackolik the date of acquisition. A merger relief Of the total £10.5 million (2011: (£14.5 million) and Sportal.de (£1.0 million). reserve of £47.2 million has been created £8.3 million) invested relating to to record the excess over nominal value technical software and hardware, Payments in respect of the acquisitions on the issue of the shares in relation to £6.6 million (2011: £4.9 million) related to of non-controlling interests in subsidiaries the acquisition (being fair value of £47.6 investment in new products, £2.2 million were £0.6 million (2011: £4.5 million). million less nominal value of £0.4 million). (2011: £2.1 million) related to additional supply side capacity, £1.1 million Total debt repayments made in the year The Group has a forward contract to (2011: £0.9 million) related to back oece were £5.6 million (2011: £4.2 million). acquire the remaining 49% of Mackolik and £0.6 million (2011: £0.4 million) in 2016. On acquisition the value of that related to renewals. In 2011 the Company listed on the forward contract which the Group has London Stock Exchange, raising gross recognised as a liability was £14.9 million In addition, the Group invested primary proceeds of £72.5 million with a corresponding debit to equity £0.5 million in land and buildings, (£69.7 million after bank costs and fees). (as this represents a transaction with a leasehold improvements and furniture shareholder). In addition, the Group is and fittings (2011: £0.4 million). Closing cash was £33.6 million committed to pay 49% of Mackolik’s (2011: £75.9 million). Closing debt distributable profits to the owners Cash flow and net debt was £7.1 million (2011: £13.0 million) of the non-controlling interest in that including finance leases of £0.2 million business until the Group owns 100% of Cash generated from operating activities (2011: £0.5 million). Closing net funds it. The Group recognised a liability on (before advance payments in respect of were £26.5 million (2011: £62.9 million). acquisition with a corresponding debit the 2013-2016 Women’s Tennis Association to equity for the fair value of these rights contract, exceptional items and In May 2012 the balance of the Group’s dividends of £4.9 million. GSOP payments) was £29.5 million term loan was converted into a new term (2011: £15.2 million). Cash generated from loan facility financed by Bank of Ireland Prospects and outlook operating activities (before exceptional plc and Royal Bank of Scotland plc. In items and GSOP payments) was addition, they provided an additional The Group is confident that demand for £18.8 million (2011: £15.2 million). €30 million term loan facility and a its products and services will continue to €20 million multi-currency revolving increase supported by structural growth The exceptional GSOP payment of credit facility to support the acquisition drivers and through the Group’s own £6.0 million was paid out during the of RunningBall. Neither of the new growth strategy. year (2011: £nil). Payments relating to facilities had been utilised at the year end exceptional costs were £5.3 million (2011: although the Group anticipates drawing Increasing penetration of residential £5.0 million). £10.7 million of advance them down in full in March 2013 when broadband connections, smartphones payments in respect of the 2013-2016 the RunningBall deferred consideration and connected televisions combined Women’s Tennis Association rights is due to be paid. with the impact of digital technology on contract were paid in the year (2011: £nil) the sales and marketing strategies of the Reserves sports and media industries will continue Capital expenditure during the year to drive demand for our products was £10.4 million (2011: £7.8 million) In May 2012, 13,506,000 new ordinary 2 and services. These industries need with increased investment in the and 7/9ths pence shares were issued in innovative solutions to generate new Group’s technical hardware and part consideration for RunningBall and revenue streams and protect existing software development. as a result share capital increased by revenues and the Group is well-placed to £0.4 million. capitalise on these trends.

40 Perform Group plc Annual Report and Accounts 2012 BUSINESS AND FINANCIAL REVIEW OVERVIEW In addition, the Group will continue to execute its growth strategy through increasing its international presence, continuing to strengthen its rights portfolio and developing and launching new products and services to meet the demands of its customers, it will continueto look to make strategic acquisitions to strengthen its market leadership and will continue to explore opportunities to enter strategic partnerships or joint ventures with incumbent companies in key markets that will enable the Group to accelerate its international growth strategy. BUSINESS AND FINANCIAL REVIEW The Group has made a positive start to 2013, with January and February showing strong year-on-year growth in revenues, EBITDA and operational metrics. The Group has significant visibility over full year revenues, with in excess of £130 million already contracted, and remains confident that it will deliver strong full year revenue and EBITDA growth in line with the Board’s expectations. The Group will continue to invest in its core products to ensure they can be accessed across multiple platforms and to increase its international presence. The Group’s 2013 investment strategy is set out on pages 22 and 23. GOVERNANCE

David Surtees Chief Financial Okcer FINANCIAL STATEMENTS

Perform Group plc Annual Report and Accounts 2012 41 Governance GOVERNANCE GOVERNANCE Directors of Board uncertainties & Risks Report Directors’ Statement Governance Corporate Report Committee Statement Remuneration Responsibilities Directors’ 54 65 60 44 46 49 GOVERNANCE

Board of Directors

1 Paul Walker 3 Oliver Slipper 5 Peter Williams Non-Executive Chairman Joint Chief Executive Okcer Senior Independent Non-Executive Director Paul Walker was appointed to the Board Oliver Slipper was appointed to the in January 2011 as the Company’s Non- Board in August 2007. He was the chief Peter Williams was appointed to the Executive Chairman. Paul served as chief executive oecer of Premium TV until Board in March 2011. Peter was finance executive oecer of The Sage Group its amalgamation with Inform Group in director of Daily Mail and General Plc from 1994 to September 2010. Paul 2007 to create Perform. Oliver joined Trust plc (“DMGT”) from 1991 until March has been a non-executive director of Premium TV in 2001 as commercial 2011. During his time with DMGT, he Experian plc since June 2010 and a manager. In 2005, Oliver was appointed served as a non-executive director of non-executive director of Diageo Plc chief executive oecer. Prior to Premium Bristol Evening Post plc, GWR Group since June 2002. He is currently chair of TV, Oliver worked at Accenture within the plc (subsequently Gcap Media plc) and the Newcastle Science City Partnership media and entertainment team, where Euromoney Institutional Investor plc. He is and is a director of the Entrepreneurs’ he worked for clients including Cable also a trustee and Investment Committee Forum. Paul previously served as a non- & Wireless, NTL and Sony Playstation chairman of the DMGT Pension Funds, a executive director of MyTravel Group advising on digital strategies. Oliver holds non-executive director of Ibis Media VCT1 Plc from December 2000 to December a BA Hons in Classical Studies from plc and a trustee of the Royal Academy . 2004. Paul qualified as a chartered Manchester University. accountant at Ernst & Young, having 6 Marc Brown graduated from York University with 4 David Surtees Independent Non-Executive Director an economics degree. Chief Financial Okcer Marc Brown was appointed to the Board 2 Simon Denyer David Surtees was appointed to the in March 2011. Marc has been a member Joint Chief Executive Okcer Board in March 2011. David joined of Microsoft’s Corporate Development the Company at the start of 2008 Group since joining the company in Simon Denyer was appointed to the from Shine, one of the UK’s leading January 2000. Currently he is a General Board in September 2007. The founder independent television producers, Manager, Corporate Development and of Inform Group in 2004, Simon was its where he had been chief financial oecer Global Head of M&A and Strategic managing director until its amalgamation since April 2002. Prior to Shine, David Investments. Prior to joining Microsoft, with Premium TV in 2007 to create worked at Carlton Productions for two Marc practised corporate law at a firm Perform. Prior to Inform Group, Simon was years and the BBC for six years. David in Boston, was a high school teacher head of digital rights at IMG, sales director qualified as a chartered accountant and coach and an investment banker at Sportal and started his career in sports with Price Waterhouse in 1993. David in New York. He holds a JD degree from media at Haymarket Publishing. He has holds a BSc Hons in Geography from Georgetown University Law Center, an worked with major sports rights holders in Bristol University. MBA in finance from New York University the exploitation of their digital media rights and a bachelor of arts in economics from for the past 12 years. Simon holds a BA Colgate University. Hons in Economics and Geography from Loughborough University.

44 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE O VERV I E

1 2 W

7 Jörg Mohaupt Non-Executive Director

Jörg Mohaupt was appointed to the 3 4 Board when Access Industries acquired BUSI a majority stake in the Company in July 2007. Jörg is responsible for the NE S S

media/online and telecom businesses AN at Access Industries, which he joined in D F I May 2007. He was previously a managing NANC director of Providence Equity Partners. I A

Jörg has been active in the media and L R communications space since 1992. Jörg’s EV I E current board positions include Tory W Burch LLC, Rebate Networks GmbH, AINMT Holdings AB, RGE Group Limited, 5 6 Icon UK Distribution Holdings Limited and Mendeley Research Networks. Prior board positions include Digiturk, Casema NV, Comhem AB, Bibit BV, VersaTel Telecom NV and Speedera Networks Inc. GOVERNANCE 8 Peter Parmenter Independent Non-Executive Director

Peter Parmenter was appointed to the Board in December 2011. Peter is Head of New Platforms and OEM at 7 8 EA Interactive, a division of Electronic Arts, a global leader in digital interactive entertainment. Prior to joining EA, Peter held positions at EMI Records, Hutchison Telecoms and the Bertelsmann Group. Peter is vice-chair of the Mobile Entertainment Forum.

9 Gabby Logan FI

Independent Non-Executive Director NANC I 9 A Gabby Logan was appointed to the L ST

Board in December 2012. Gabby is one A T E of Britain’s leading sports journalists. M EN

She was appointed as a non-executive TS director in December 2012 Through the course of her extensive career in sports, Gabby has worked for broadcasters including , the BBC, ITV and Channel 5 covering the biggest sporting events around the world. Her current commitments include BBC Sport; Match of the Day, Final Score and Six Nations Rugby.

Perform Group plc Annual Report and Accounts 2012 45 GOVERNANCE

Risk and uncertainties The Group considers good risk management fundamental to achieving its objectives, protecting its reputation and delivering added value.

Macro risk

Summary Description Mitigation

Internet The delivery of the Group’s products and services are These factors are largely out of Management’s control infrastructure dependent on third-party mobile and internet service although Management will continue to monitor mobile not maintained providers continuing to expand high speed internet and internet access, infrastucture and costs closely. access and maintain reliable networks with necessary speeds and capacity. Changes in access fees may adversely impact the ability and/or willingness of users to access the Group’s content.

Macro economic The Group’s revenue streams are dependent on the These factors are largely out of Management’s control dikculties disposable income of its customers and the overall although Management consider the Group’s revenue macro economic environment (in particular for online streams to be sueciently diverse and global that advertising and sponsorship). Current economic any economic slowdown in one particular economy dieculties could adversely impact the Group’s results. or region should not have a material impact on the Group’s results.

Government Any adverse government regulations of the Management closely monitor and review current regulation internet and betting regulations could impact and upcoming internet and betting regulations and of the internet the Group’s results. do not currently consider there to be a material risk and betting given the geographical and product diversity of the regulations Group’s revenues.

Rights inflation Competitors may outbid the Group for certain rights Continue to develop relationships with key and renewals or push up renewal costs. rights-holders and continue to oler attractive commercialisation options to them. Certain content holders (such as sports bodies) may decide to commercialise their own content rather than The Directors monitor the level of contract exposure selling it on which could increase competition/price for and endeavour, wherever possible, to progress rights available rights. contract negotiations well before the contracts are due to terminate, thus limiting the financial risks of With less content the Group may face decreasing such exposure. Revenue contracts are also worded, demand for its products whilst more expensive rights where possible, to ensure rights may be replaced with may reduce the Group’s margin. rights of similar value if a rights renewal is unsuccessful during the period of the relevant contract.

Piracy of If live sport is made available via online pirate websites, Management monitor illegal use of sports content sports rights demand for the Group’s products may decline. In closely and the appropriate legal developments. addition if the Group’s content is made avilable other Management do not consider this currently represents than in accordance with the rights-holder contracts a material risk to the Group but will continue to monitor then the Group may face liabilities/penalites to the this closely and regularly. rights-holders.

Dependency on Any long-term postponement or cancellation of any These factors are largely out of Management’s control scheduling of sports league season may impact the Group. although Management consider the Group’s revenue live sport streams to be sueciently diverse and global that any issue with one particular sport would not have a material impact on the Group’s results. If an event is not played the Group, typically, does not have to pay for it.

46 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE

Risk management and responsibility OVERVIEW The Board has ultimate responsibility for the Group’s risk management process and reviews its electiveness annually. In 2012 the Group established a Risk Committee comprising of five members of the Group’s senior management who are charged, on a quarterly basis, with reviewing the Group’s risk register and the Group’s risk management processes and projects to actively mitigate and manage risks. On a day to day basis, senior management is responsible for providing visible leadership in the management of risk and ensuring that it is integrated as appropriate into the Group’s business processes and activities. The tables below identify the most significant risks identified by the Board:

Operational risks

Summary Description Mitigating actions

Infrastructure to As the Group continues to grow it will need Management regularly review the adequacy support growth to continue to support its systems, infrastructure and of the Group’s support functions and ensure back-oece. appropriate resource and capability to support the Group’s growth. BUSINESS AND FINANCIAL REVIEW

Technology The Group is highly reliant on its technology platform The Group has put in place appropriate business failure and certain other operational IT systems. If these continuity processes, disaster recovery systems and systems were damaged or interrupted there could security measures to protect against network and be significant costs and disruptions to the products/ IT system failure or disruption. Management closely services olered by the Group. monitors performance of the platform and key systems (both housed internally and externally) and addresses any issues immediately.

Unprotected If the Group does not adequately protect customer Management consider that the Group currently has customer data account information there is a legal risk to the Group. appropriate security controls in place to protect such data although these are closely monitored by Management on a regular basis. GOVERNANCE Finance and legal risks

Summary Description Mitigating actions

Protection The Group’s ability to compete may be harmed if it is The Group carefully words external contracts so as of intellectual not able to protect its intellectual property rights. Its to protect its intellectual property rights. All material property rights ability to compete could also be harmed if it is unable contracts are reviewed by either the Group’s in-house to use all intellectual property needed for its business. legal team or external advisors. The Group monitors use of its intellectual property.

Foreign A significant portion of the Group’s revenues and Management prepare cashflow forecasts by currency exchange risk costs are in Euros and Dollars so the Group could and attempt, where possible, to naturally hedge the potentially be exposed to adverse movements in Group’s cash flow. Management will carefully monitor those currencies. the Group’s cash flow and consider alternative arrangements in the event that there is a material unhedged exposure. In December 2012 the Group

entered into a vanilla option to sell euros in 2013. FINANCIAL STATEMENTS

Tax risk Adverse changes in taxation could alect the Group’s Management work closely with the Group’s external results and the Group could be exposed to various tax tax advisors on an ongoing basis, to mitigate its risks in various countries. tax risks.

Contract The Group is continuing to expand into new countries, Management work closely with, and take the enforcement many of whom are still developing, such as in Asia, appropriate level of advice from, local external Africa and South America. The laws and judicial advisors before entering into contracts with counter systems in these countries may make it hard for the parties in developing countries. Management also Group to enforce key contracts. regularly review compliance with contracts in developing countries.

Perform Group plc Annual Report and Accounts 2012 47 GOVERNANCE

Risk and uncertainties continued

Business risks

Summary Description Mitigating actions

W&B renewals The Group supplies live streaming video of sporting During 2013 the Group’s senior management will be events to online sports bookmakers through the Group’s working with existing and new customers to renew Watch&Bet product. Watch&Bet generates a significant these licences. proportion of the Group’s overall revenue. The current Watch&Bet license cycle ends on 31 December 2013.

Unsuccessful The Group’s growth is dependent on expanding Management perform appropriate commercial geographic its products and services into new business diligence before launching a new product/territory expansion and geographic areas. There are no assurances that and ensure that appropriate levels of stal are in place these new areas will be profitable. to appraise and manage new products and territories.

In addition, the Group will seek to mitigate these risks by entering into local partnership arrangements, where appropriate, with local partners who can help the Group roll out its products and services in those markets.

Dependency on The Group is dependent on Watch&Bet for a significant Management closely monitor and review the online online gaming proportion of its revenues. Any significant adverse gaming industry and regulation and do not currently regulations introduced in the gaming industry could consider there to be a material risk. The Group has impact the Group’s results. diverse geographical revenues and continues to diversify its portfolio of products.

Retention of key The success of the Group depends in part to its ability Management have implemented a Performance Share employees to continue to attract, retain and motivate highly skilled Plan to incentivise key senior stal over the longer employees. term (three years). The Group has also recruited a Chief Personnel Oecer who starts in March 2013.

Unsuccesful Merger and acquisition activity may be unsuccessful or Management performs an appropriate level of diligence or costly M&A costly and the Group may not achieve technical and/or and business planning on any acquisition to ensure activity other synergies as quickly as it anticipates. incremental shareholder value is generated. The Group has a Head of Corporate Development to lead M&A activity and an integration team has been built working into him and the Group’s Chief Operating Officer.

Products The Group needs to develop and upgrade the Management continue to closely monitor the digital become functionality of its products and to adapt to new sports rights and media industries and encourage technologically business environments and competition. It needs to and reward initiative and enterprise across the obsolete develop new products and services to keep up to whole Group. date with developments in the digital sports rights and media industries. This includes the risks that: There is a focus on new products with a specific focus on the migration of content and usage to mobile. • Consumption of content by consumers could continue A dedicated Managing Director of the Group’s to migrate to mobile before some of the Group’s Direct-to-Consumer has been appointed to lead this products work on mobile and before some of its sales business area. team are ready to sell on mobile and before it has a strategy to prevent the cannibalisation of existing web Management continue to closely review and evaluate advertising revenues; and techincal developments which could impact the • The manner in which events are live streamed over the latency with which the Group’s products are delivered. internet could result in increased latency which could make some of the Group’s products less attractive.

Insukcient The growth in the Group’s video advertising revenues Management continue to regularly review both the quality is dependent on the Group having click-to-play video content on the Group’s ePlayer in each market to advertising advertising inventory of a sufficient quality and is also ensure it has appropriate level of viewer engagement inventory dependent on the Group’s advertising formats evolving to drive advertising inventory and also the products in line with the wider market. In the event that the Group’s advertising formats to ensure it remains in line with the doesn’t have enough inventory or the right formats then wider market. this may result in reduced advertising revenues.

48 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE

Directors’ Report OVERVIEW

The Directors present their Annual Report together with the audited financial statements for the year to 31 December 2012.

Business Review Perform Group plc is required to set out in this report a fair review of the business of the Group during the year to 31 December 2012 and of the position of the Group at the end of the financial year and a description of the principal risks and uncertainties facing the Group (known as a “Business Review”). The purpose of the Business Review is to enable shareholders to assess how the Directors have performed their BUSINESS AND FINANCIAL REVIEW duty under section 172 of the Companies Act 2006 (duty to promote the success of the Company). The Overview and Business and Financial Review sections on pages 1 to 41 report on the activities and results for the year and give an indication of the Company’s future developments. The sections of the Annual Report referred to above, fulfil the requirements of the Business Review and are incorporated by reference and shall be deemed to form part of this report.

Principal Activities The Company’s principal activity during the year was that of the holding Company of a group of digital media companies. The Group is the market leader in the commercialisation of multimedia sports content across a variety of digital platforms.

Revenue and profit Revenue during the year amounted to £151.6 million (2011: £103.2 million). Profit attributable to equity holders of the parent was £12.8 million (2011: £3.1 million).

Dividends The Directors do not recommend that a final dividend is paid (2011: £nil). No interim dividend (2011: £nil) was paid. GOVERNANCE Directors The names and biographical details of the Directors holding oece at the date of this report are set out on pages 44 and 45 and are incorporated by reference into this report.

At the Annual General Meeting on 16 April 2013, Gabby Logan will retire in accordance with the Articles of Association and, being eligible, will oler herself for election. All the other Directors are subject to re-election annually by shareholders at the Annual General Meeting in line with the Company’s Articles of Association and provision A.7.1 of the Code. The separate circular to shareholders incorporating the Notice of this year’s Annual General Meeting sets out why the Board believes the Directors should be re-elected, or in the case of Gabby Logan, elected. Details of the Directors’ service agreements and letters of appointment are given in the Remuneration Committee Report on pages 60 to 64.

Directors’ share interests Directors’ holdings in the shares of the Company at 31 December 2012 are shown on page 58. There were no changes to the beneficial interests of the Directors between 31 December 2012 and 20 February 2013. Details of Executive Directors’ share schemes are provided in the Directors’ remuneration report on page 63.

Directors’ insurance and indemnities

The Company maintains Directors’ and oecers’ liability insurance which gives appropriate cover for any legal action brought against its FINANCIAL STATEMENTS Directors. In accordance with section 236 of the Companies Act 2006, qualifying third-party indemnity provisions are in place for the Directors and Company Secretary in respect of liabilities incurred as a result of their oece, to the extent permitted by law.

Share capital Details of the authorised and issued share capital, together with details of movements in the issued share capital of Perform Group plc are shown in note 24 to the financial statements which is incorporated by reference and deemed to be part of this report. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company. Details of employee share schemes are set out in note 26. No person has any special rights of control over the Company’s share capital.

Perform Group plc Annual Report and Accounts 2012 49 GOVERNANCE

Directors’ Report continued

In May 2012 the Group acquired RunningBall Holding AG via the acquisition of RunningBall’s two immediate holding companies for consideration of €120 million. Initial consideration of €70 million consisted of €20 million in cash, financed from existing cash resources, and €50 million in the form of 13.5 million new ordinary shares in the Company which were issued to the sellers. The number of issued shares was based on the average closing mid-market price of the Group’s ordinary shares and the average closing mid-point sterling:euro exchange rate over the 30 trading days preceding 15 May 2012. The fair value of the 13.5 million new ordinary shares issued was calculated based on the bid price at the date of acquisition. A merger relief reserve has been created to record the excess over nominal value on the issue of the shares in relation to the acquisition.

Following the issuance of this equity, and at 31 December 2012 the Company had 238,882,000 Ordinary Shares in issue. Immediately after the Group’s re-registration as a public limited company (see below) and at 31 December 2011 the Company has 225,376,000 Ordinary Shares in Issue.

In May 2011 the Company re-registered from a private limited company to a public limited company.

Following a resolution of the Company passed on 7 April 2011 which took elect immediately prior to the Listing of the Company’s securities on the main market of the London Stock Exchange:

• each of the Company’s A Ordinary Shares were subdivided, reclassified and redesignated as 36 new Ordinary Shares; • each of the Company’s B Ordinary Shares were subdivided, reclassified and redesignated as 36 new Ordinary Shares; • each holding of the existing Preference Shares were consolidated into one preference share; • these Preference Shares were subdivided, reclassified and redesignated into, in aggregate, 21,132,432 new Ordinary Shares and 1,380,354,048 deferred shares of 2 and 7/9ths pence each in the capital of the Company; and • the Company allotted a further 28.0 million Ordinary Shares of 2 and 7/9ths pence each.

The Company received proceeds, net of bank fees and costs, of £69.7 million (gross primary proceeds were £72.5 million).

On 21 June 2011 the Company cancelled, at no cost, all of the deferred shares created on Listing. The deferred shares did not entitle the holders to any dividends or distribution and were only able to be transferred by the Company. A capital redemption reserve of £38.3 million was created as a result.

The Company does not hold any treasury shares.

The Company will be subject to the continuing obligations contained in the Listing Rules with regard to the issue of Ordinary Shares for cash. The provisions of section 561(1) of the Companies Act 2006 (the “Act”) (which confer on shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to be, paid up in cash other than by way of allotment to employees under any employees’ share scheme as defined in section 1166 of the Act) apply to the issue of shares in the capital of the Company except to the extent that such provisions were disapplied as set out in the Company’s Prospectus.

The Company may by ordinary resolution increase, consolidate, or subject to the Act, sub-divide its share capital. The Company may by ordinary resolution also cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its authorised share capital by the amount of the shares so cancelled. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, capital redemption reserve and share premium account in any way.

Subject to the Act and without prejudice to any relevant special rights attached to any class of shares, the Company may purchase any of its own shares.

With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the Corporate Governance Code 2010, the Companies Act 2006 and related legislation. The Articles of Association may be amended by special resolution of the shareholders.

Under its Articles of Association the Company has authority to issue 10% ordinary shares in any 12 month period.

50 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE OVERVIEW

Substantial shareholdings As at 31 December 2012 the Company had been notified under Rule 5 of the Disclosure and Transparency Rules of the following major interests in its issued ordinary share capital: Number of Ordinary Shares % of total voting rights Premium TV Group 101,865,876 43% Simon Denyer* 26,417,368 11% John Gleasure** 12,121,342 5% Hans Thomas Gross 12,830,743 5% Cazenove Capital Management 11,314,863 5%

* Simon Denyer’s holding includes 2,334,311 shares held in trust. ** John Gleasure’s holding includes 1,724,167 shares held in trust.

On 5 February 2013 the Company received notificiation from Deutsche Bank AG that it had increased the number of shares held to 6,776,358 representing 3% of the Group’s total voting rights. On 20 February 2013 Deutsche Bank AG subsequently notified the Company that they had

decreased the number of shares they held to under 3% of the Group’s total voting rights. During the period between 31 December 2012 and BUSINESS AND FINANCIAL REVIEW 20 February 2013 the Company did not receive any other notifications under chapter 5 of the Disclosure and Transparency Rules.

Interests in own shares The Company does not hold any of its own shares. The Company operates a Performance Share Plan scheme for its Executive Directors and Senior Management and it also operates a share save scheme open to all its employees. These schemes are further explained in note 26 to the financial statements. These awards and schemes will be satisfied by the issue of new shares at the date on which the shares vest.

Charitable donations During the year to 31 December 2012 the Group donated £20,000 to charitable causes including the Children’s Heart Unit Fund, York Against Cancer, the Dove Trust, Sport Relief, SME Trust and Grassroots Soccer.

During the year to 31 December 2011 the Group donated £10,000 to charitable causes including Save The Children, John Hartson’s Foundation, ’s Foundation and Urdd Sports Department, who organise sporting activities for children all over Wales.

Political donations The Company made no political donations during the year. GOVERNANCE Employment policies Equal opportunities The Group’s policy is always to ensure that all persons are treated fairly irrespective of their age, race (including colour, nationality, ethnic or national origins), sexual orientation, disability, gender including gender reassignment, religious beliefs or political opinion, trade union membership or non-membership, marital and physical or mental status or any other factors including pregnancy and maternity. The Group endeavours to provide those who have physical or mental disabilities with equal opportunities in the application and recruitment process, and specific assistance and arrangements (including training, career development and promotion arrangements) to enable them to work for us wherever and whenever this is reasonably practicable.

Health and Safety The Group is committed to providing a consistently safe and elective working environment for all stal, including contractors, customers and members of the public. In doing so it will, as a minimum, comply with local health and safety legislation, but will exceed those requirements should it be necessary to do so. The Group has a Health and Safety Policy available to all employees and applied to the Group’s business operations worldwide. The Health and Safety Policy sets out the organisation and arrangements for achieving and maintaining adequate standards of health and safety at work throughout the Group.

Overall Group health and safety is the responsibility of the Chief Operating Oecer. Each Executive member of the Group Board is responsible FINANCIAL STATEMENTS for giving appropriate consideration to the health and safety implications arising out of decisions or proposals made within the remit of their respective areas of corporate responsibility.

For subsidiary companies health and safety is the responsibility of the Managing Directors who will establish appropriate and effective systems and arrangements to ensure compliance and to achieve the corporate objectives.

All employees are expected to exercise personal responsibility in preventing injury to themselves and others and to co-operate with management in complying with health and safety legislation.

Perform Group plc Annual Report and Accounts 2012 51 GOVERNANCE

Directors’ Report continued

Employee Involvement Employee communication The Group believes that employee communication is important in building strong relationships with, and in motivating and retaining, employees. The Group makes use of various methods and channels including annual senior management seminars, weekly newsletters, face to face briefings, open discussion forums with senior management, team briefings, email and corporate internet to ensure that matters of interest and importance are conveyed to and heard from employees quickly and electively and that all employees are aware of the financial and economic factors alecting the performance of the Company.

The Group has recruited a Chief People Oecer (“CPO”) who has started in March 2013 and one of the CPO’s tasks will be to enhance the Group’s communications with its employees.

Employee share schemes The Group recognises the importance of good relationships with employees of all levels. During 2011 the Group implemented a Performance Share Plan for senior management. The Group has implemented a share save scheme in 2012. Details of these plans are set out in note 26 to the financial statements.

In March 2010, the Group put in place a Growth Securities Ownership Plan (“GSOP”) under which certain key non-shareholding employees were given the opportunity to purchase a financial instrument which tracked the Company’s market capitalisation for a period which ended in April 2012 (being one year after the Group’s admission to the London Stock Exchange). Further details of this scheme are set out in note 26 to the financial statements.

Environmental policy During the year the Group recycled 25,140 kg (2011: 16,040 kg) of paper which equated to CO2 savings of 36,050kg (2010: 22,820 kg).

The Group is currently working with Carbon Smart to:

• measure environmental impacts to report performance internally, benchmark the organisation and target improvements based on a realistic baseline; • receive support in developing and implementing practical low or no cost actions for improving environmental performance; and • assistance in engaging stal to ensure that improved environmental performance becomes part of the everyday work environment.

The Group also introduced a Cycle2Work Scheme in 2012 to oler employees the opportunity to lower the cost of equipment and spread the cost of that equipment. The scheme is designed to assist those employees looking to consider a more sustainable way of travelling to work.

Financial Instruments In December 2012, just prior to the year-end, the Group entered into a vanilla option which gives the Group the right but not the obligation to sell €2.0 million euros and buy sterling at an exchange rate rate of 1.25 at each of the following settlement dates: 26 April 2013, 29 May 2013, 26 June 2013, 29 July 2013, 28 August 2013, 26 September 2013, 29 October 2013, 27 November 2013 and 27 December 2013. The cost of this option was €264,000. The fair value of this option at the year-end was €220,000. No forward contracts were put in place during 2011 or were outstanding at 31 December 2011.

The Group’s financial risk management objectives and policies are set out within note 21 to the financial statements. Note 21 also details the Group’s exposure to foreign exchange, interest, credit and liquidity risks. These notes are incorporated by reference and are deemed to form part of this report.

52 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE OVERVIEW

Creditor payment policy For all trade creditors, it is policy to:

• agree and confirm the terms of payment at the commencement of business with that supplier; • pay in accordance with contractual and other legal obligations; and • continually review the payment procedures and liaise with suppliers as a means of eliminating dieculties and maintaining a good working relationship.

The Company’s trade creditors at 31 December 2012 were £392,000 (2011: £277,000) and the Group’s trade creditors at 31 December 2012 were £18,004,000 (2011: £16,369,000) The average credit period taken for trade purchases is set out in note 18 to the accounts.

Essential contracts The Group has a number of contractual arrangements with suppliers of goods and services, including a variety of content rights-holders. Whilst these arrangements are important to the Group, individually none are them are essential to the business of the Group.

Auditors BUSINESS AND FINANCIAL REVIEW In accordance with section 418(2) of the Companies Act 2006, each of the Company’s Directors in oece as at the date of this report confirms that:

• so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and • he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

The Group’s auditors are Grant Thornton UK LLP. A resolution to re-appoint Grant Thornton UK LLP as auditors to the Company will be proposed at the forthcoming Annual General Meeting.

Note 4 in the financial statements states the auditors’ fees for both audit and non-audit work.

Going Concern The Group’s business activities, together with the factors likely to alect its future development, performance and position are set out in the Overview and Business and Financial Review sections on pages 1 to 41 together with details of the Group’s cash flows, liquidity position and borrowing facilities. Financial risk management objectives, details of financial instruments and hedging activities, and exposures to capital, credit risk and liquidity are described in note 21 to the financial statements. GOVERNANCE

The Group had cash balances of £33.6 million at the year end and £6.9 million of debt relating to borrowings and finance leases of £0.2 million. The Group has net current liabilities at 31 December 2012 but this is due to the liability for the final earnout payment in relation to the RunningBall acquisition in March 2013. The Group has in place committed debt facilities of €50 million which will be drawn down in full to finance this. Having reviewed cash flow forecasts and budgets for the year ahead the Directors have a reasonable expectation that the Group has suecient resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts

Annual General Meeting The Annual General Meeting of the Company will be held at the Company’s oeces at Hanover House, Plane Tree Crescent, Feltham, TW13 7JJ commencing at midday on Tuesday 16 April 2013. The Notice of this year’s Annual General Meeting is included in the separate circular to shareholders. The Notice is available to view under the “Investors” section of the Company’s website www.performgroup.com.

By order of the Board

David Surtees Company Secretary FINANCIAL STATEMENTS Registered Oece: Sussex House Plane Tree Crescent Feltham TW13 7HE

Registered number: 6324278

Perform Group plc Annual Report and Accounts 2012 53 GOVERNANCE

Corporate Governance Statement

The Board is committed to high standards of corporate governance which it considers to be central to the elective management of the business and to maintaining the confidence of investors. The Group complies with the laws and endeavours to observe the customs and culture in the countries in which it operates and does business. The Group expects all Directors and employees to drive to achieve the highest standards and to act with respect and integrity. The Board monitors and keep under review the Company’s corporate governance framework.

In accordance with the Listing Rules of the UK Listing Authority, the Company confirms that throughout 2012 it complied with the relevant provisions set out in Section 1 of the UK Corporate Governance Code 2010 (“the Code”) with the exception of B.1.2 of the Code which specifies that at least half the Board, excluding the Chairman should comprise Non-Executive Directors determined by the Board to be independent. However as at 31 December 2012 and at the date of this report, the Company can confirm that it does now comply with this provision.

For the period between 1 January 2012 and 12 December 2012 the Company only had three Non-Executive Directors (Peter Williams, Peter Parmenter and Marc Brown), excluding the Non-Executive Chairman (Paul Walker) determined by the Board to be independent. Jörg Mohaupt is not considered to be independent due to his affiliation with Premium TV Group, the majority shareholder in the Company. On 12 December 2012 the Company appointed Gabby Logan as an additional Non-Executive Director. The Board consider Gabby Logan to be independent.

This report, together with the Remuneration Committee Report on pages 60 to 64 provides details of how the Company has applied the principles and complies with the provisions of the Code. The Board

The Board is collectively responsible for promoting the success of the Company. The Board provides leadership for the Group and concentrates its elorts on strategy, performance, governance and internal control. As at the date of this report, the Board has nine members: the Non-Executive Chairman (Paul Walker), the joint Chief Executive Oecers (Simon Denyer and Oliver Slipper), the Chief Financial Oecer (David Surtees), four Independent Non-Executive Directors (Peter Williams, Marc Brown, Gabby Logan and Peter Parmenter) and one Non-Executive Director (Jörg Mohaupt).

The biographical details of each of the Directors are set out on pages 44 to 45 and details of their membership of the Board’s committees are set out below.

The Board has a formal schedule of matters reserve to it for decision and approve which include, but are not limited to: • the Group’s business strategy; • annual budget and operating plans; • major capital expenditure and acquisitions; • the systems of corporate governance, internal control and risk management; • the approval of the interim and annual financial statements and interim management statements; and • any interim dividend and the recommendation of any final dividend.

The Board held eight scheduled meetings during 2012. The Group’s strategy was regularly reviewed. All Directors participate in discussions relating to the Group’s strategy, financial and trading performance and risk management. The Board considers it met sueciently often to enable the Directors to discharge their duties electively.

The table below gives details of Directors’ attendance at Board and Committee meetings in 2012:

Audit Remuneration Nomination Board Committee Committee Committee Paul Walker 8/8 – 2/2 1/1 Simon Denyer 8/8 – – – Oliver Slipper 8/8 – – – David Surtees 8/8 – – – Peter Williams 8/8 3/3 2/2 1/1 Marc Brown 8/8 3/3 2/2 1/1 Jörg Mohaupt 8/8 – – – Peter Parmenter (2) 6/8 2/3 0/2 1/1 Gabby Logan (1) ––––

(1) Gabby Logan was appointed a Non-Executive Director on 12 December 2012 and was appointed to each of the Audit, Nomination and Remuneration Committees on that date. (2) Peter Parmenter was unable to attend all board and commitees meetings due to work commitments

54 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE OVERVIEW

At the request of any Non-Executive Director, the Non-Executive Chairman will arrange meetings consisting of only the Non-Executive Directors to allow the opportunity for any concerns to be expressed. During 2012, the Non-Executive Chairman maintained regular contact and met the Non-Executive Directors.

The Board is chaired by Paul Walker. The Non-Executive Chairman is responsible for leading the Board and its electiveness. Simon Denyer and Oliver Slipper are joint Chief Executive Oecers and are jointly responsible for the execution of strategy and the day-to-day management of the Group. The division of roles and responsibilities between the Non-Executive Chairman and the Chief Executive Oecers are formally set out in writing and agreed by the Board.

Board balance and independence Paul Walker, Peter Williams, Marc Brown, Peter Parmenter and Gabby Logan are, in the opinion of the Board, independent of Management and free from any business relationship which could materially interfere with the exercise of their independent judgement.

As set out above whilst the majority of the Board (excluding the non-Executive Chairman) did not comprise Independent Non-Executive Directors during the entirety of 2012, at the year-end and at the date of this report, the majority of the Board comprised Independent

Non-Executive Directors. The Directors consider that the Board has an appropriate balance of skills and experience by virtue of the Directors’ BUSINESS AND FINANCIAL REVIEW varied backgrounds (see biographical details on pages 44 and 45).

Board appointments Board nominations are recommended to the Board by the Nomination Committee under its terms of reference. All Directors are subject to election by shareholders at the Annual General Meeting following their appointment and thereafter to re-election every year in line with the Company’s Articles of Association and provision A.7.1 of the Code.

Information and professional development On appointment, Independent Directors receive a full, formal and tailored induction, including meetings with members of the Management team and briefings on particular issues.

As an ongoing process, Directors are briefed and provided with information concerning major developments alecting their roles and responsibilities. In particular, the Directors’ knowledge of the Group’s worldwide operations is regularly updated by arranging presentations from Senior Management throughout the Group. The Chairman and Executive Directors consult with each Non Executive Director to ensure that they are all able to allocate suecient time to the Group to discharge their responsibilities.

The Non-Executive Chairman works closely with the Company Secretary to ensure that the Board is supplied in a timely manner with GOVERNANCE information in a form and of a quality appropriate to enable it to electively discharge its duties. Where there are occasions when Directors are unable to attend a meeting they have the opportunity to review meeting papers and submit comments to the Non-Executive Chairman. Directors are also supplied with a monthly Chief Executive Oecer report and a monthly financial report which provides the Board with information on operational and financial performance and the Group’s business plans.

All Directors are able to consult with the Company Secretary. The appointment and removal of the Company Secretary is a matter reserved for the Board as a whole. Directors may obtain, in the furtherance of their duties, independent professional advice, if necessary, at the Group’s expense. In addition, all Directors have direct access to the advice and services of the Company Secretary and all Senior Management.

Board performance evaluation The Board recognises that it is required to undertake a formal and rigorous review of its performance and that of its Committees each financial year. The Board had intended to review the electiveness of the Chairman, the Board and its various committees in the latter part of 2012. However in light of (i) the Board’s intention to fully comply with the Code and ensure a majority of its members were independent (which is now the case) and (ii) its desire to operate for a full financial year before performing this review, the Board has decided to conduct its first full review in 2013. The results of this review will be presented in the Company’s Annual Report for the year to 31 December 2013.

Committees FINANCIAL STATEMENTS The Board is supported by a number of committees including the following principal committees: Audit Committee, Remuneration Committee and Nomination Committee. All the Independent Non-Executive Directors are members of each of the principal committees of the Board.

The terms of reference of each of the principal committees are available on request by writing to the Company Secretary at the Company’s registered address and are available on the Group’s website: www.performgroup.com/board-and-governance/board-committees.

The Committees, if they consider it necessary, can engage with third-party consultants and independent professional advisors and can call upon other resources of the Group to assist them in developing their respective roles.

Perform Group plc Annual Report and Accounts 2012 55 GOVERNANCE

Corporate Governance Statement continued

Audit Committee

The Audit Committee comprises four Independent Non-Executive Directors: The table below gives details of Directors’ attendance at Audit Committee meetings in 2012 Audit Committee Peter Williams (Chair) 3/3 Marc Brown 3/3 Peter Parmenter 2/3 Gabby Logan (1) –

(1) Gabby Logan was appointed a Non-Executive Director on 12 December 2012 and was appointed to each of the Audit, Nomination and Remuneration Committees on that date. The main roles and responsibilities of the Audit Committee are set out in written terms of reference. The Audit Committee is responsible for: • reviewing financial statements and formal announcements relating to the Group’s performance; • reviewing the Group’s internal financial controls and risk management systems; • assessing the independence, objectivity and electiveness of the external auditors; • developing and implementing policies on the engagement of the external auditors for the supply of non-audit services; • making recommendations for the appointment, re-appointment and removal of the external auditors and approving their remuneration and terms of engagement; and • reviewing arrangements by which employees may, in confidence, raise concerns about possible improprieties in matters of financial reporting and other matters.

The Board is satisfied, in accordance with the provisions of the Code, that at least one member of the Audit Committee has recent and relevant financial experience, given the nature of the senior management positions previously held by Peter Williams (see biographical details on pages 44 to 45).

The Audit Committee met three times during the year. The attendance record of Committee members is recorded in the table above. At the invitation of the Chairman of the Audit Committee, the Joint Chief Executive Oecers, the Chief Financial Oecer, the Chairman of the Board and the Group’s external auditors regularly attend meetings.

The Audit Committee is responsible for reviewing and monitoring the electiveness of the Group’s internal control procedures and risk management systems. The Audit Committee is also responsible for assessing whether the Group requires an internal audit function. The Group does not currently have an internal audit function. Given that most of the Group’s financial functions are currently centralised, such a function is not considered appropriate. This will be reconsidered as the Group grows and decentralises its operations.

The Audit Committee was presented by the Group’s Management with a presentation of the Group’s current internal control procedures and risk management systems and following due consideration the Audit Committee was satisfied that the current arrangements and the Group’s internal controls and risk management systems were appropriate. The Audit Committee considers that the Group has made good progress on risk during the year, resulting in better process, understanding and awareness combined with a greater engagement right across the business. The debate on risk, risk tolerance and risk appetite will continue to be a focus for the Board and the Committee during the next year.

During the year the Financial Reporting Council’s Conduct Committee (“FRCCC”) requested some information and clarification relating to certain items in the Group’s 2011 financial statements and following that the Directors concluded that certain items in the Group’s 2011 consolidated statement of cash flows should be re-classified and a liability in respect of an acquisition of a non-controlling interest in an already controlled subsidiary should be recognised. Details of these items are set out in note 1 to the Financial Statements. The discussions with the FRCCC in respect of the Group’s 2011 financial statements have now been concluded. The Committee reviewed, and approved all of the Group’s correspondence with the FRCCC.

56 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE OVERVIEW

In addition, the Committee reviewed the adequacy of the “whistle-blowing” arrangements in place to enable employees to raise, in confidence, any concerns they may have. The Committee is satisfied that such arrangements remain appropriate.

Key to giving the Board confidence In the Group’s approach to controls and risk is the electiveness of the Group’s external auditors. The Audit Committee had intended to review their electiveness during 2012 but decided to hold this review in early 2013 following the finalisation of the Group’s 2012 audit – being the first full financial year that the Group has operated as a public company.

The Audit Committee will judge them on the quality of their audit findings, Management’s response and stakeholder feedback. The Audit Committee will also assess their independence by way of their challenge to Management. The Audit Committee have considered their independence with reference to their audit and non-audit fees which for 2012 are set out in note 4 to the financial statements and have concluded they are independent.

The Committee recognises that the independence of the auditors is an essential part of the audit framework and the assurance that it provides. The Committee monitors the types of non-audit work that are undertaken by the external auditors to ensure that their objectivity and independence is not compromised. Any significant proposed non-audit assignments require prior approval and the Committee receives a report

at each meeting providing details of non-audit assignments carried out by the external auditors in addition to their normal work. BUSINESS AND FINANCIAL REVIEW

Audit partner rotation is also important to retain the objectivity of the process and the 2012 audit will be the final audit of Mark Henshaw after eight years (although only two of those were post the Group’s IPO). In future the audit partner will rotate after five years.

In advance of that review the Audit Committee has recommended to the Board that it propose to shareholders that Grant Thornton UK LLP be re-appointed as the Group’s external auditors.

Accountability and audit The Board acknowledges that it should present a balanced and understandable assessment of the Group’s position and prospects. In this context, reference should be made to the Directors’ Responsibilities Statement which includes a statement in compliance with the Code regarding the Group’s status as a going concern, and to the Independent auditor’s report which includes a statement by the auditors about their reporting responsibilities. The Board recognises that its responsibility to present a balanced and understandable assessment extends to interim and other price-sensitive public reports and reports to regulators as well as information required to be presented by law.

Internal control The Board acknowledges that it is responsible for the Group’s system of internal control and the Audit Committee reviews its electiveness.

Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable GOVERNANCE and not absolute assurance against material misstatement or loss. The Audit Committee has reviewed the electiveness of the key procedures, which have been established to provide internal control. As part of the process that the Board has in place to review the electiveness of the internal control system, there are procedures designed to capture and evaluate failings and weaknesses, and in the case of those categorised by the Board as significant, procedures exist to ensure that necessary action is taken to remedy the failings.

In accordance with the revised guidance for Directors on internal control (“the Revised Turnbull Guidance”), the Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. These include those relating to social, environmental and ethical matters. This process was in place throughout 2012 and up to the date of approval of the Annual Report and Accounts. The process will be regularly reviewed by the Audit Committee which will report its findings for consideration by the Board and is in accordance with the Revised Turnbull Guidance. The key procedures operating within the Group were as follows:

• during the year the Audit Committee met to evaluate risk and consider the appropriateness of the Group’s risk assessment systems and internal control policies;

• the Group consists of a number of units each with its own management structure which forms part of the overall management structure of the Group. The senior executives of these units report to the Executive Directors on a monthly basis; FINANCIAL STATEMENTS

• the Group has a comprehensive system of budgetary and re-forecasting control, focused on monthly performance reporting which is at an appropriate detailed level. A summary supported by commentary and performance measures is presented to the Board each month. The performance measures are subject to review to ensure that they provide relevant and reliable indications of business performance;

• the Group has established procedures for the delegation of authority;

• the Group’s divisions operate within a framework of policies and procedures which are laid down in policy and procedure manuals and cover key issues such as authorisation levels; and

Perform Group plc Annual Report and Accounts 2012 57 GOVERNANCE

Corporate Governance Statement continued

• the Group has established policies and procedures designed to ensure the maintenance of accurate accounting records suecient to enable the preparation of financial statements, and consolidated financial statements, in accordance with the financial reporting frameworks applicable to the Group, the main feature of which is a structured system of review and approval by Management and the Board.

Remuneration Committee

The Remuneration Committee comprises five Independent Non-Executive Directors: The table below gives details of Directors’ attendance at Remuneration Committee meetings in 2012

Remuneration Committee Paul Walker 2/2 Peter Williams 2/2 Marc Brown (Chair) 2/2 Peter Parmenter 0/2 Gabby Logan (1) –

(1) Gabby Logan was appointed a Non-Executive Director on 12 December 2012 and was appointed to each of the Audit, Nomination and Remuneration Committees on that date.. The Remuneration Committee is responsible for: Considering and evaluating remuneration arrangements for senior managers and other key employees and making recommendations to the Board. Its purpose is to support the strategic aims of the business and shareholder interest, by enabling the recruitment, motivation and retention of key employees while complying with the requirements of regulatory and governance bodies.

The report of the Remuneration Committee is set out on pages 60 to 64.

Nomination Committee

The Nomination Committee comprises five Independent Non-Executive Directors: The table below gives details of Directors’ attendance at Nomination Committee meetings in 2012

Nomination Committee Paul Walker (Chair) 1/1 Peter Williams 1/1 Marc Brown 1/1 Peter Parmenter 1/1 Gabby Logan (1) –

(1) Gabby Logan was appointed a Non-Executive Director on 12 December 2012 and was appointed to each of the Audit, Nomination and Remuneration Committees on that date.. The Nomination Committee is responsible for: Reviewing the balance and composition of the Board and its committees and for identifying and recommending appointments or renewal of appointments to the Board. These regular reviews ensure that the Group and the Board are able to draw from a complementary balance of skills and experience and there is in place an appropriate plan for orderly succession to the Board. The procedure for appointments is set out in its terms of reference.

The Nomination Committee made good progress in 2012, securing the appointment of the Group’s new Non-Executive Director, Gabby Logan, following on from the appointment of Peter Parmenter in December 2011. The Committee spent time reviewing the existing skill set on, and diversity of the Board specifically in terms of background, experiences and gender and balancing this against the Group’s long term strategies and plans. The Committee spent a considerable amount of time considering potential candidates that might fit the criteria and have secured, in Gabby and Peter, two excellent appointments to the Board. Both directors have undertaken extensive induction programmes to ensure a rounded understanding of the business and its ambitions.

The Committee also ensured that succession is a key agenda item for the board and have spent time discussing talent and succession for Senior Managers in the business. During 2013 the Committee will continue to support succession plans and development of the Executive

58 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE OVERVIEW Director team, continue to review ongoing knowledge and training for all directors and continue to ensure the Committee plans for the evolution of Non-Executive Directors over the medium term to maintain the appropriate mix of skills.

During 2013 the Nomination Committee intends to consider and review the Group’s succession planning arrangements and the Board’s Performance Evaluation.

The Nomination Committee met once during 2012. The table above gives details of Directors’ attendance at that meeting.

The terms and conditions of appointment of Non-Executive Directors are available for inspection at the Company’s registered address.

Corporate Responsibility Details of the Group’s approach to Corporate Responsibility are set out on pages 51 to 52, under the headings Employment policies, Employee Involvement and Environmental policy.

Relations with shareholders The Board recognises the importance of maintaining good communication with its shareholders and does this through the Annual Report, preliminary and interim announcements, interim management statements and the Annual General Meeting. In addition, one of the Joint Chief BUSINESS AND FINANCIAL REVIEW Executive Oecers and the Chief Financial Oecer make presentations to institutional shareholders and analysts immediately following the release of the preliminary and interim results. These presentations are made available on the Company’s website: www.performgroup.com.

The Non-Executive Directors are available to meet with major shareholders to discuss issues of importance to them, should a meeting be requested.

Annual General Meeting Voting at the 2012 Annual General Meeting will be by way of poll. The results of the voting at the Annual General Meeting will be announced and details of the votes will be available to view on the Company’s website www.performgroup.com as soon as possible after the meeting. GOVERNANCE FINANCIAL STATEMENTS

Perform Group plc Annual Report and Accounts 2012 59 GOVERNANCE

Remuneration Committee Report

The Remuneration Committee considers and evaluates remuneration arrangements for Executive Directors, Senior Managers (including Executive Committee members and Regional Managing Directors) and other key employees and makes recommendations on remuneration arrangements to the Board. The purpose is to enable the recruitment, motivation and retention of key employees while complying with the requirements of regulatory and governance bodies.

The Committee’s report is unaudited, except where indicated, and is set out below.

The Committee The Committee held two meetings during 2012, both chaired by Marc Brown. Peter Williams, Peter Parmenter, Gabby Logan and Marc Brown are members of the Committee and all, with the exception of Peter Parmenter and Gabby Logan (who was appointed on 12 December 2012), participated in both meetings. The members of the Committee have no personal interest in the outcome of their decisions and give due regard to the interests of shareholders and to the continuing financial and commercial health of the business.

Remuneration Policy The remuneration policy of Board is to retain and motivate existing key employees and to attract new employees to the Group. The policy reflects that a significant number of key employees, including Executive Directors, hold material, existing shareholdings in the Group and as a result are already materially incentivised to deliver the Group’s strategic and financial objectives. The policy also reflects that the Group has a limited number of listed company peers and in terms of revenue and profit scale and growth profile is unique in the FTSE 250. The components of remuneration for Executive Directors, Executive Committee members and Regional Managing Directors comprise base salary, benefits, annual bonus and a longer term share incentive scheme. Emphasis is placed on the longer term incentive scheme which is linked to the Group’s revenue and profit/EBITDA growth.

The Committee recognises that the mix of key employees will change over time along with the financial profile of the Group and these changes will be refleced in the compensation packages olered to key employees. The Group has recently appointed a Chief Personnel Oecer who joined the Group on 4 March 2013. He will work closely with the Committee to ensure the remuneration policy and compensation packages are appropriate and are appropriately benchmarked.

Base salary The Group aims to provide salaries which are fair and reasonable in comparison with companies of a similar size, industry, complexity and international scale. When making salary determinations, the Committee takes into account not only competitive performance but also each executive’s individual performance and overall contribution to the business during the year. The salaries of the Executive Directors and other key stal are in the lower quartile when compared to the FTSE 250.

Annual bonus The annual bonus scheme allows Executive Directors, Executive Committee members and Regional Managing Directors the opportunity to receive, in cash, up to 25% of their annual salary, with awards subject to the discretion of the Committee. 2011 and 2012 bonus schemes were both based on the Group’s financial performance compared to budget, with Group revenue and adjusted EBITDA and divisional revenue and EBITDA the key criteria. If 90% of any of the budget targets are not achieved then that element of the bonus will not be payable. The Group’s budgeted revenue and adjusted EBITDA are not typically materially dilerent to the analysts’ consensus financial estimates. In 2012 the Executive Directors received no annual bonus given the Group’s performance compared to budget. Total discretionary bonuses of £0.7 million are being paid to stal across the organisation.

Benefits Benefits for Executive Directors, Executive Committee members and Regional Managing Directors include private medical insurance, death in service cover, childcare vouchers and matching contributory pension contributions of up to 5%. These benefits are made available on the same basis to all stal, subject to a small number of international variations.

Long term share incentive scheme (Peformance Share Plan “PSP”) The Group has in place a PSP which is set out below and in note 26 to the financial statements and below.

60 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE OVERVIEW

Service Contracts Each Executive Director’s service agreement is terminable by either party on 12 months notice. The Company has the ability to terminate the agreement by the payment of a cash sum in lieu of notice equal to (i) the Executive Directors’ salary; and (ii) the cost to the Company of providing medical cover. The payment in lieu of notice does not include pension or bonus. The payment can, at the Company’s discretion, be paid as a lump sum or in equal monthly instalments over the notice period. There is a mechanism to reduce the payment in lieu of notice where the Executive Director commences alternative employment paying more than £20,000 per annum. Where the Company elects to make a payment in lieu of notice, the Executive Director is required to use reasonable endeavours to find alternative paid employment.

Audited Information Executive Directors’ remuneration*

Other Aggregate Pension benefits(3,4) emoluments contributions Salary £’000 Bonus £’000 £’000 £’000 £’000 Simon Denyer

Year to 31 December 2012 269 – 1 270 15 BUSINESS AND FINANCIAL REVIEW Year to 31 December 2011 253 (1) 57 2 312 1(2) Oliver Slipper Year to 31 December 2012 269 – 6 275 9 Year to 31 December 2011 253 (1) 57 2 312 – David Surtees Year to 31 December 2012 224 – 1 225 14 Year to 31 December 2011 211 (1) 48 1 260 11 (2)

(1) Simon Denyer (from December 2011), Oliver Slipper (from June 2012) and David Surtees (for the whole of 2011 and 2012) participate in the Group’s salary sacrifice pension scheme and accordingly elected to sacrifice 5%, 5% and 10% of their salaries respectively which is contributed directly to the Perform Group Personal Pension Plan. Their salaries are presented gross of the amount sacrificed. Oliver Slipper participated in the Groups’ childcare voucher scheme between January and July 2011 and for that period of time elected to sacrifice £243 per month. His salary is presented gross of the amount sacrificed. (2) The Group makes an annual matching contribution equal to 5% of Simon Denyer’s, Oliver Slipper’s and David Surtees’ salaries to the Group

Personal Pension Plan as described above. GOVERNANCE (3) Benefits relate to private medical insurance and death in service cover. Oliver Slipper also received an additional weeks salary in 2012 after completing ten years service to the Company. (4) Oliver Slipper’s other benefits also include the childcare vouchers referred to in (1) above. Simon Denyer’s other benefits also include income protection insurance which was cancelled in May 2012. All of the benefits listed above including the matching contributions of 5% to the Group’s Personal Pension Plan, childcare voucher scheme, private medical insurance, death in service cover and the ten year service award are available to all eligible employees. FINANCIAL STATEMENTS

Perform Group plc Annual Report and Accounts 2012 61 GOVERNANCE

Remuneration Committee Report continued

Non-Executive Directors* The Non-Executive Directors serve under Contracts, and have received fees in 2012, as detailed in the table below:

Contract 2012 Fees 2011 Fees dated £’000 £’000 Paul Walker 10 January 2011 150 146 Peter Williams 9 March 2011 55 45 Marc Brown 9 March 2011 48 39 Jörg Mohaupt 23 March 2011 48 39 Peter Parmenter 14 December 2011 48 2 Gabby Logan 12 December 2012 4 –

Paul Walker is entitled to receive an annual fee of £150,000. His appointment is terminable by either party giving to the other three months’ written notice or at any time in accordance with the Articles or the Act. His letter of appointment states that his appointment is expected to last at least three years. The Company has the ability to terminate his appointment by the payment of a cash sum in lieu of notice equal to the fee payable for any unexpired portion of the notice period.

The appointments of Peter Williams, Marc Brown, Peter Parmenter and Gabby Logan are for a term of three years. Jörg Mohaupt has been a member of the Board since 2007 and entered into new terms of appointment with the Company on 23 March 2011 which is for a term of three years. Mr Mohaupt is appointed to the Board by the Major Shareholder pursuant to the terms of a Relationship Agreement.

The appointments of Peter Williams, Marc Brown, Peter Parmenter and Jörg Mohaupt are subject to re-election when appropriate at the Company’s annual general meeting. The appointment of Gabby Logan is subject to election at the Company’s annual general meeting.

Each of Peter Williams, Marc Brown, Peter Parmenter, Gabby Logan and Jörg Mohaupt is entitled to receive an annual fee of £48,000. Their appointments may be terminated at any time upon written notice or in accordance with the Articles or the Act or upon their resignations. In addition to the annual fee shown above, Peter Williams is entitled to an additional fee of £7,000 as Senior Independent Director and Chairman of the Audit Committee.

Paul Walker and Peter Williams each acquired Ordinary Shares on the Company’s Admission to the London Stock Exchange at the Oler Price from their own funds in the amount of £150,000 and £25,000 respectively. The disposal of any Ordinary Shares by any Director will be subject to the Company’s code on Directors’ dealings in securities.

The Chairman and the Non-Executive Directors are entitled to reimbursement of reasonable expenses in connection with the discharge of their duties.

The Non-Executive Directors are not entitled to receive any compensation on termination of their appointment and are not entitled to participate in the Company’s share, bonus or pension schemes.

Performance Share Plan (“PSP”)* The PSP is the primary long-term incentive for Executive Directors and other key stal. PSPs are issued annually and vest three years from the date of grant. On grant Executive Directors are awarded a maximum number of performance shares based on 150% of their current annual salary divided by the Group’s share price the day before the date of grant. Other senior stal are awarded performance shares based on either 100% or 75% of their annual salaries. In June 2011 a total of 22 key stal (in addition to the three executive directors) were awarded PSPs, 30 key stal in March 2012 (again in addition to the three executive directors) and an additional four key stal in September 2012.

The number of performance shares an employee will receive when the award vests after three year is dependent on certain vesting criteria. For both 2011 and 2012 the Committee concluded that the most appropriate criteria would be revenue and adjusted earnings per share (as defined underneath the Income Statement) growth across each three year period. These criteria are in line with the Group’s growth strategy as set out on IPO. The exact number of shares vesting will be based on a matrix of these criteria.

62 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE OVERVIEW

In respect of the 2011 award, if compound revenue growth is less than 35% over the three year period from 2010 and compound adjusted EPS growth is less than 35% over the same period, no shares will be awarded. In order for the maximum number of shares to be awarded, compound revenue growth must be at least 40% over the three year period and compound adjusted EPS growth must be at least 55% over the same period. There are a number of “performance points” set out in the matrix. For levels of performance between the points, vesting would be determined on a straight line, pro-rata basis.

In respect of the 2012 awards, if compound revenue growth is less than 30% over the three year period from 2011 and compound adjusted EPS growth is less than 30% over the same period, no shares will be awarded. In order for the maximum number of shares to be awarded, compound revenue growth must be at least 35% over the three year period and compound adjusted EPS growth must be at least 50% over the same period. There are a number of “performance points” set out in the matrix. For levels of performance between the points, vesting would be determined on a straight line, pro-rata basis.

The 2012 awards have a slightly lower growth rate attached to them as the Committee recognises that it is not realistic for the Group’s revenue and adjusted EPS growth to continue to accelerate at its current rate.

The interests of the Executive Directors in ordinary shares subject to awards under this plan were as follows (the number of ordinary shares BUSINESS AND FINANCIAL REVIEW assumes that 100% of the awards vest – refer above for a description of the matrix):

Maximum number of Ordinary Shares that may vest As at 31 Date of Granted Granted December Vesting grant during 2011 (2) during 2012 (3) 2012 date (1) Simon Denyer 24 June 2011 174,041 – 174,041 24 June 2014 23 March 2012 – 133,339 133,339 23 March 2015 Total 174,041 133,339 307,380 Oliver Slipper 24 June 2011 174,041 174,041 24 June 2014 23 March 2012 – 133,339 133,339 23 March 2015 Total 174,041 133,339 307,380 David Surtees 24 June 2011 145,034 145,034 24 June 2014 23 March 2012 – 111,117 111,117 23 March 2015

Total 145,034 111,117 256,151 GOVERNANCE

(1) Subject to performance testing (2) The closing price of Perform Group plc shares on the date of the award (24 June 2011) was £2.19. (3) The closing price of Perform Group plc shares on the date of the award (23 March 2012) was £3.03 Directors’ interests* The interests of the Directors in the Group’s Ordinary Shares (excluding share awards which have not yet vested under the PSP) are:

Holdings of Ordinary Shares Holdings of Ordinary Shares Holdings of Ordinary Shares as at 31 December 2012 as at 31 December 2011 as at 7 April 2011 Simon Denyer* 26,417,368 27,518,088 27,518,088 Oliver Slipper 6,025,576 6,325,576 6,325,576 David Surtees 1,126,976 1,576,976 1,576,976 Paul Walker 136,640 136,640 136,640 Peter Williams 9,615 9,615 9,615 Jörg Mohaupt 568,620 568,620 568,620 FINANCIAL STATEMENTS

* Simon Denyer’s holding includes 2,334,311 shares held in trust.

No changes took place in the interests of directors between 31 December 2012 and 20 February 2013.

Perform Group plc Annual Report and Accounts 2012 63 GOVERNANCE

On 18 March 2011 the Company re-registered from a private limited company to a public limited company. Before the re-registration certain Directors owned preference, A and B shares in Perform Group plc. The interests of the Directors in these preference, A and B Shares immediately prior to the Company’s re-registration are set out below:

Preference Shares A Shares B Shares Simon Denyer 6,317,569 701,952 72,974 Oliver Slipper 1,006,239 111,804 72,974 David Surtees 92,030 10,227 46,995 Jörg Mohaupt 167,004 18,556 – Andrew Croker (resigned 17 March 2011) 234,000 26,000 69,311

The market price of an ordinary share on 30 December 2012 (the last dealing day of the financial year) was 395p. The highest and lowest market prices of an ordinary share in 2012 was 450p and 209p respectively.

Total shareholder return The graph illustrates the performance of the Group against the FTSE250 over the period since the Group listed on 7 April 2011. The FTSE 250 has been chosen as it is a recognised broad equity market index of which the Group has been a member throughout the period since listing.

250

200

150

100

50

2012 /04/2011 07/10/2011 07/11/2011 07/12/2011 07/11/2012 07 07/05/2011 07/06/2011 07/07/2011 07/08/2011 07/09/2011 07/01/2012 07/02/2012 07/03/2012 07/04/2012 07/05/2012 07/06/2012 07/07/2012 07/08/2012 07/09/2012 07/10/2012 07/12/

Perform Group plc FTSE 250 Index

Audit Statement In their audit opinion on page 68, Grant Thornton UK LLP refer to their audit of the disclosures required by Schedule 8 to the Regulations. These comprise all sections suexed with an asterix (*).

Basis of preparation and approval of report This report, which constitutes the Directors’ Remuneration Report, has been prepared in accordance with Regulation 11 and Schedule 8 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 and the Listing Rules of the Financial Services Authority.

As required by the Companies Act 2006, an advisory resolution to approve this report will be proposed at the forthcoming Annual General Meeting.

Approved by the Board and signed on its behalf by:

Marc Brown Chairman of the Remuneration Committee 5 March 2013

64 Perform Group plc Annual Report and Accounts 2012 GOVERNANCE

Directors’ Responsibilities Statement OVERVIEW

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 to prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs), and have elected to prepare the Company accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Practice and applicable laws). Under Company law the Directors must not approve the financial statements unless they are satisfied BUSINESS AND FINANCIAL REVIEW that they give a true and fair view of the state of alairs and profit or loss of the Company and Group for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently; • make judgments and accounting estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are suecient 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 and the Remuneration report comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as each of the Directors is aware: GOVERNANCE • there is no relevant audit information of which the Company’s auditors are unaware; and • the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed on pages 44 and 45 confirms that, to the best of their knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and • the management report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

David Surtees FINANCIAL STATEMENTS Company Secretary

Perform Group plc Annual Report and Accounts 2012 65 Financial statements FINANCIAL STATEMENTS FINANCIAL STATEMENTS

Independent auditor’s report 68 Consolidated income statement 69 Consolidated statement of comprehensive income 70 Consolidated statement of changes in equity 71 Consolidated statement of financial position 72 Consolidated statement of cash flows 73 Notes to the Group financial statements 74 Parent company independent auditor’s reports 115 Parent company financial statements 116 Shareholders information 122 FINANCIAL STATEMENTS

Independent auditor’s report to the members of Perform Group plc

We have audited the group financial statements of Perform Group plc for the year ended 31 December 2012 which comprise the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of financial position, consolidated statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 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 auditor’s 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 auditor As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group 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/private.cfm.

Opinion on financial statements In our opinion the group financial statements:

• give a true and fair view of the state of the group’s alairs as at 31 December 2012 and of its profit for the year then ended; • have been properly prepared in accordance with IFRSs as adopted by the European Union; and • have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS regulation.

Opinion on other matters prescribed by the Companies Act 2006 In our opinion:

• the information given in the Directors’ Report for the financial year for which the group financial statements are prepared is consistent with the group financial statements; and • the information given in the Corporate Governance Statement set out on pages 54 to 59 with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures 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:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• 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; or • a Corporate Governance Statement has not been prepared by the Company.

Under the Listing Rules, we are required to review:

• the Directors’ statement, set out on page 53 in relation to going concern; and • the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate Governance Code specified for our review; and • certain elements of the report to shareholders by the Board on Directors’ remuneration.

Other matter We have reported separately on the parent Company financial statements of Perform Group plc for the year ended 31 December 2012 and on the information in the Remuneration Committee Report that is described as having been audited.

Mark Henshaw Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants

London 5 March 2013

68 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS

Consolidated income statement Year ended 31 December 2012 OVERVIEW

2012 2011 Notes £’000 £’000 All results relate to continuing operations Revenue 1,2,3 151,607 103,194 Cost of sales 3 (67,152) (53,100) Gross profit 3 84,455 50,094 Administrative expenses 3,4 (64,941) (46,343) Group operating profit 3,4 19,514 3,751 BUSINESS AND FINANCIAL REVIEW Analysed as: Adjusted EBITDA* 37,502 18,474 Exceptional items 6 (5,348) (4,998) Exceptional share-based payments (GSOP) 26 (1,228) (4,770) Other share-based payments 26 (2,018) (352) EBITDA* 28,908 8,354 Amortisation and depreciation 4, 13, 14 (6,486) (3,748) Acquisition related amortisation and service charges 4, 12 (2,908) (855) Group operating profit 19,514 3,751 Investment income 7 533 834 Finance costs 8 (3,127) (1,099) Group profit before tax 16,920 3,486 Taxation (charge)/credit 9 (3,423) 231 Group profit for the year 13,497 3,717 Profit attributable to: Equity holders of the parent 12,840 3,129 GOVERNANCE Non-controlling interests 657 588 13,497 3,717 Basic earnings per share Basic (pence) 10 5.5 1.4 Adjusted (pence) 10 11.2 6.3 Diluted earnings per share Diluted (pence) 10 5.4 1.4 Adjusted (pence) 10 11.1 6.3

*EBITDA is defined as earnings before interest, tax, depreciation and amortisation. Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortisation excluding amounts in respect of the Group’s share-based payments and exceptional items. EBITDA and Adjusted EBITDA are considered by the Directors to be key measures of financial performance.

Adjusted basic and diluted earnings per share are based on profit attributable to equity holders of the parent plus exceptional items, share-based payments, acquisition related amortisation and service charges and accretion of acquisition-related payments divided by the weighted average number of Ordinary Shares outstanding in the period. Weighted average shares in 2011 were calculated based on shares outstanding between when the Group listed on the London Stock Exchange and 31 December 2011. FINANCIAL STATEMENTS

Perform Group plc Annual Report and Accounts 2012 69 FINANCIAL STATEMENTS

Consolidated statement of comprehensive income Year ended 31 December 2012

2012 2011 £’000 £’000 Profit for the year 13,497 3,717 Items that may be reclassified subsequently to profit or loss: Exchange dilerences on translating foreign operations (including goodwill) (1,248) 23 Total comprehensive income for the year 12,249 3,740 Total comprehensive income for the year attributable to: Equity holders of the parent 11,592 3,152 Non-controlling interests 657 588 12,249 3,740

70 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS

Consolidated statement of changes in equity Year ended 31 December 2012 OVERVIEW

Total to owners Issued Merger Profit Other of the Non- Total share Share relief Capital and loss FX reserve parent controlling equity capital premium reserve reserve account reserve (re-stated) (re-stated) interests (re-stated) £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 At 1 January 2011 43,242 – – – 18,724 156 – 62,122 1,173 63,295 Profit for the year – – – – 3,129 – – 3,129 588 3,717 BUSINESS AND FINANCIAL REVIEW FX on translating foreign operations – – – – – 23 – 23 – 23 Total comprehensive income for the year – – – – 3,129 23 – 3,152 588 3,740 Credit to equity for share-based payments – – – – 351 – – 351 – 351 Re-classification and issue of share capital/premium (net of fees) 1,360 68,323 – – – – 69,683 – 69,683 Cancellation of deferred shares (38,342) – – 38,342 – – – – – – Obligation to acquire non-controlling interest in subsidiary – – – – – – (4,892) (4,892) – (4,892) Non-controlling interests acquired – – – – (2,604) – – (2,604) (1,611) (4,215) At 31 December 2011 and

1 January 2012 (re-stated) 6,260 68,323 – 38,342 19,600 179 (4,892) 127,812 150 127,962 GOVERNANCE Profit for the year – – – – 12,840 – – 12,840 657 13,497 FX on translating foreign operations – – – – – (1,248) – (1,248) – (1,248) Total comprehensive income for the year – – – – 12,840 (1,248) – 11,592 657 12,249 Credit to equity for share-based payments – – – – 2,017 – – 2,017 – 2,017 Share capital issued 375 – 47,197 – – – – 47,572 – 47,572 Obligation to acquire non-controlling interest in subsidiary – – – – – – (19,805) (19,805) – (19,805) Non-controlling interests acquired – – – – – – – – 873 873 Transactions with shareholders – – – – (169) – – (169) (192) (361) At 31 December 2012 6,635 68,323 47,197 38,342 34,288 (1,069) (24,697) 169,019 1,488 170,507

2011 equity has been re-stated. Details of the re-statement are explained in note 1, Accounting Policies – Restatement of obligation to acquire non-controlling interests in a subsidiary. FINANCIAL STATEMENTS Previously total equity at 31 December 2011 and 1 January 2012 had been £132,854,000. The re-statement has had the elect of reducing total equity by £4,892,000 to £127,962,000 as presented above.

Perform Group plc Annual Report and Accounts 2012 71 FINANCIAL STATEMENTS

Consolidated statement of financial position Year ended 31 December 2012

2011 2012 (re-stated) 2010 Notes £’000 £’000 £’000 Non-current assets Goodwill 11, 28 153,908 57,192 38,642 Acquisition intangibles 12, 28 46,349 11,862 396 Other intangible assets 13 8,444 5,453 2,273 Property, plant and equipment 14 7,757 6,327 4,562 Deferred tax asset 22 – 5,515 7,835 216,458 86,349 53,708 Current assets Trade and other receivables 16 50,340 24,269 13,839 Cash and cash equivalents 17 33,605 75,863 16,937 83,945 100,132 30,776 Total assets 300,403 186,481 84,484

Current liabilities Trade and other payables 18 (43,979) (36,779) (20,885) Current acquisition related payments 19 (45,989) (150) – Current borrowings 20 (5,533) (5,534) – Current tax liabilities (3,196) (498) (90) (98,697) (42,961) (20,975) Non-current liabilities Non-current borrowings 20 (1,392) (6,926) – Non-current acquisition related payments 19 (25,440) (8,439) – Non-current finance lease obligations 29 – (193) (214) Deferred tax liability 22 (4,367) –– Total liabilities (129,896) (58,519) (21,189) Net assets 170,507 127,962 63,295

Equity Called-up share capital 24 6,635 6,260 43,242 Share premium 24 68,323 68,323 – Merger relief reserve 28 47,197 –– Capital redemption reserve 24 38,342 38,342 – Retained earnings 34,288 19,600 18,724 Foreign exchange reserve (1,069) 179 156 Other reserve 25, 28 (24,697) (4,892) – Equity attributable to equity holders of the parent 169,019 127,812 62,122 Non-controlling interest 27 1,488 150 1,173 Total equity 170,507 127,962 63,295

The 2011 consolidated statement of financial position has been re-stated. Details of the re-statement are explained in note 1, Accounting Policies – Restatement of obligation to acquire non- controlling interests in a subsidiary. Previously total net assets and total equity at 31 December 2011 had been £132,854,000. The re-statement has had the effect of increasing non current acquisition related consideration (previously £3,547,000) by £4,892,000 to £8,439,000 and reducing total equity by the same amount from £132,854,000 to £127,962,000 as presented above. In addition as the Group is making a prior year re-statement, in accordance with IAS 1, the statement of financial position as at 31 December 2010 is also being presented.

The financial statements of Perform Group plc, registered number 6324278 were approved by the Board of Directors and authorised for issue on 5 March 2013. Signed on behalf of the Board of Directors

O Slipper Director

72 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS

Consolidated statement of cash flows Year ended 31 December 2012 OVERVIEW

2011 2012 (re-stated) £’000 £’000 Operating activities Group operating profit 19,514 3,751 Increase in receivables (9,226) (8,972) Increase in payables 3,463 5,652

Advance payment for 2013-16 WTA rights contract (10,733) – BUSINESS AND FINANCIAL REVIEW Depreciation and amortisation (including acquisition intangible amortisation) 9,394 4,603 Employee share-based costs 3,246 5,122 Exceptional costs 5,348 4,998 Corporation and related tax payments (2,243) – Cash flow from operating activities (prior to exceptional costs and GSOP payment) 18,763 15,154 Exceptional GSOP payment (5,999) – Exceptional items directly attributable to Listing – (3,228) Exceptional and other items directly attributable to acquisitions (5,348) (1,770) Cash flow from operating activities (after exceptional costs and GSOP payment) 7,416 10,156

Investing activities Purchases of property, plant and equipment (5,084) (3,699) Purchase of intangible assets (5,283) (4,094) GOVERNANCE Acquisition of subsidiaries (net of cash acquired) (31,363) (20,553) Investment income 533 513 Cash flow used in investing activities (41,197) (27,833)

Financing activities Acquisition of non-controlling interests (611) (4,480) Proceeds from sale and finance lease backs – 487 Finance lease capital repayments (368) (449) Borrowings (net of bank fees and costs) – 16,590 Arrangement fees in respect of new debt facilities (290) – IPO proceeds (net of bank fees and costs) – 69,683 Borrowings capital repayment (5,566) (4,248) Interest and finance lease charges paid (922) (980) Cash flow (used in)/from financing activities (7,757) 76,603

Net (decrease)/ increase in cash and cash equivalents in the period (all continuing operations) (41,538) 58,926 FINANCIAL STATEMENTS Cash and cash equivalents at start of period 75,863 16,937 Elect of foreign currency exchange rates (720) – Cash and cash equivalents at end of period 33,605 75,863

The 2011 consolidated statement of cash flows has been re-stated. Details of the re-statement are explained in note 1, Accounting Policies – Restatement of statement of cash flows. Whilst there has been no change to the total net increase in cash and cash equivalents in 2011 nor to the closing balance of cash and cash equivalents at 31 December 2011 the categorisation of certain cash flows have been re-classified. Consequently cash flow from operating activities which was previously disclosed as £15,154,000 has been reduced by £4,998,000 to £10,156,000; cash flow used in investing activities which was previously disclosed as £34,083,000 has been reduced by £6,250,000 to £27,833,000; and cash flow from financing activities which was previously disclosed as £77,855,000 has been reduced by £1,252,000 to £76,603,000.

Perform Group plc Annual Report and Accounts 2012 73 FINANCIAL STATEMENTS

Notes to the Group financial statements Year ended 31 December 2012

1. Accounting policies General Information Perform Group plc is a public limited liability company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered oece is Sussex House, Plane Tree Crescent, Feltham, Middlesex, TW13 7HE. The nature of the Group’s operations and its principal activities are set in the Directors’ Report.

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in pounds sterling – which is the parent’s functional and presentational currency. Foreign operations are included in accordance with the policies set out below.

Adoption of new and revised standards IAS 19 – Employee Benefits (amended June 2011) – The amendments to IAS 19 change the accounting for defined benefit schemes and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and scheme assets. The Group does not operate any defined benefit schemes and accordingly whilst the amendments to IAS 19 have been adopted this revision will not alect amounts reported in these financial statements.

Amendments to IFRS 7 – Financial Instruments: Disclosures – The Group has applied the amendments to IFRS 7 titled Disclosures – Transfers of Financial Assets in the current year. The amendments increase the disclosure requirements for transactions involving the transfer of financial assets in order to provide greater transparency around risk exposures when financial assets are transferred.

Amendments to IAS 12 – Income Taxes – The amendments to IAS 12 provide a practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model in IAS 40 Investment Property. The Group does not have any investment property and accordingly whilst the amendments to IAS 12 have been adopted this revision will not affect amounts reported in these financial statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet elective (and in some cases had not yet been adopted by the EU):

• IFRS 9 Financial Instruments (elective 1 January 2015); • IFRS 10 Consolidated Financial Statements (elective 1 January 2013); • IFRS 11 Joint Arrangements (elective 1 January 2013); • IFRS 12 Disclosure of Interests in Other Entities (elective 1 January 2013); • IFRS 13 Fair Value Measurement (elective 1 January 2013); • IAS 19 Employee Benefits (Revised June 2011) (elective 1 January 2013); • IAS 27 (Revised), Separate Financial Statements (elective 1 January 2013); • IAS 28 (Revised), Investments in Associates and Joint Ventures (elective 1 January 2013); • Presentation of Items of Other Comprehensive Income – Amendments to IAS 1 (elective 1 July 2012); • Disclosures – Olsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7 (elective 1 January 2013); • Olsetting Financial Assets and Financial Liabilities – Amendments to IAS 32 (elective 1 January 2014); • Mandatory Elective Date and Transition Disclosures – Amendments to IFRS 9 and IFRS 7 (elective 1 January 2015); • Government Loans – Amendments to IFRS 1 (elective 1 January 2013); • IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (elective 1 January 2013); • Annual Improvements 2009-2011 Cycle (elective 1 January 2013); • Transition Guidance – Amendments to IFRS 10, IFRS 11 and IFRS 12 (elective 1 January 2013); and • Investment Entities – Amendments to IFRS 10, IFRS 12 and IAS 27 (elective 1 January 2014).

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods except as follows:

• IAS 1 (amended) will increase the disclosure requirements within the statement of comprehensive income; • IFRS 7 (amended) will increase the disclosure requirements where netting arrangements are in place for financial assets and financial liabilities; • IFRS 9 will impact both the measurement and disclosure of Financial Instruments; • IFRS 12 will impact the disclosure of interests the Group has in other entities; and • IFRS 13 will impact the measurement of fair value for certain assets and liabilities as well as the associated disclosures.

74 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

Beyond the information above, it is not practicable to provide a reasonable estimate of the elect of these standards until a detailed review has been completed.

Basis of accounting The Group’s consolidated financial statements have been prepared and approved by the Directors in accordance with applicable International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). The financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS regulation. BUSINESS AND FINANCIAL REVIEW

The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below.

Basis of consolidation The Group financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights by way of contractual arrangement.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the elective date of acquisition or up to the elective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group transactions, balances, income and expenditure are eliminated on consolidation. GOVERNANCE Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition by acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any dilerence between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

Restatement of 2011 statement of equity, statement of financial position and statement of cash flows The Group has recently concluded discussions with the Financial Reporting Council’s Conduct Committee (“FRCCC”). The FRCCC requested some information and clarification relating to the Group’s 2011 financial statements and following that the Directors concluded that certain items in the Group’s 2011 consolidated statement of cash flows should be re-classified and a liability in respect of an acquisition of a non-controlling

interest in an already controlled subsidiary should be recognised. These are explained below. FINANCIAL STATEMENTS

(i) Presentation of 2011 consolidated statement of cash flows

The Group, in its 2011 consolidated statement of cash flows, classified exceptional Iiems directly attributable to (i) its listing on the London Stock Exchange and (ii) acquisition costs as ‘financing’ and ‘investing activities’ respectively. Following the Group’s discussions with the FRCCC, the Directors now consider that these items should be disclosed within the Group’s operating cash flows and are not directly related to the Group’s investing or financing activities. In addition the Group had recorded a cash outflow in respect of its acquisition of non-controlling interests as an investing activity, however, following the Group’s discussion with the FRCCC, the Group now considers that these cash flows arise from a change in ownership interests in subsidiary companies and as they do not result in the gain or loss of control these outflows should be presented as a financing cash outflow.

Consequently cash flow from operating activities, which was previously disclosed as £15,154,000, has been reduced by £4,998,000 to £10,156,000; cash flow used in investing activities which was previously disclosed as £34,083,000 has been reduced by £6,250,000 to £27,833,000; and cash flow from financing activities which was previously disclosed as £77,855,000 has been reduced by £1,252,000 to £76,603,000 to reflect the above reclassifications.

Perform Group plc Annual Report and Accounts 2012 75 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

1. Accounting policies continued The Group has also taken the opportunity to separately disclose working capital into movements in trade and other receivables, trade and other payables and foreign exchange in its consolidated statement of cash flows.

The re-presentation of these items has had no effect on the opening and closing cash position, comprehensive income, or statement of financial position as previously reported within the 2011 annual report.

(ii) Accounting for contingent amounts payable to the seller of a non-controlling interest

The Group has also reviewed its accounting with respect to its 2011 acquisition of the non-controlling interest in WatchandTrade Limited. The Group did not record a liability in respect of the contingent consideration for the acquisition of the non-controlling interest and instead had intended to recognise the payments, on a cash basis, directly within equity as a transaction with a shareholder.

Following the Group’s discussions with the FRCCC, the directors’ have re-considered this policy and whilst they still consider that the payments are, in substance, to acquire the shares in WatchandTrade Limited, the directors consider that a liability should have been recorded at the date of the transaction with an offsetting adjustment to equity in accordance with IAS 27 and IAS 32. As such the Group have re-stated its prior year consolidated statement of changes in equity and consolidated statement of financial position by recognising a liability of £4,892,000 for the fair value of the contingent consideration with a corresponding balance recognised within equity in the 2011 comparative balances.

Previously total net assets and total equity at 31 December 2011 had been £132,854,000. The re-statement has had the effect of increasing non- current acquisition related consideration (previously £3,547,000) by £4,892,000 to £8,439,000 and reducing total equity by the same amount from £132,854,000 to £127,962,000. This prior year adjustment has had no effect on the consolidated income statement.

Going concern The Group had cash balances of £33.6 million at the year end and £6.9 million of debt relating to borrowings and finance leases of £0.2 million. The Group has net current liabilities at 31 December 2012 but this is due to the liability for the final earnout payment in relation to the RunningBall acquisition in March 2013. The Group has in place committed debt facilities of €50 million which will be drawn down in full to finance this. Having reviewed cash flow forecasts and budgets for the year ahead the Directors have a reasonable expectation that the Group has suecient resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

Business combinations On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired is credited to the income statement in the period of acquisition.

Changes in the Group’s ownership interest that do not result in a loss of control are accounted for as equity transactions. Purchase of non- controlling interests are recognised directly within equity being the dilerence between the fair value of the consideration paid and the relevant share acquired of the book value of the net assets to the subsidiary.

Contingent and deferred consideration arising as a result of acquisitions is stated at fair value. Contingent and deferred consideration is based on management’s best estimate of the likely outcome and best estimate of fair value, which is usually, but not always, a contracted formula based on a multiple of EBITDA. The contingent and deferred consideration is recorded as a liability and re-measured at each reporting date. Any changes to the fair value are charged to the Income Statement.

To the extent that contingent consideration is substantively linked to employment or service conditions, where the selling shareholders continue to provide post-combination services those payments will be charged to the Income Statement as a remuneration or service-related charge over the relevant period.

Where there are no service-related charges, changes to the contingent consideration are charged to the Income Statement.

Where the Group has an option to acquire a non-controlling interest in a subsidiary the fair value of that option is recognised as a liability with a corresponding movement in reserves, in accordance with IAS 27. The changes in fair value of the option at each reporting date are recognised in the Income Statement. If the contingent consideration is subject to service-related provisions it is charged through the Income Statement as

76 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

a service cost over the relevant period. However, if there are no service related conditions, the changes in the fair value are recognised in the income statement as a finance cost.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have alected the amounts recognised as of that date. BUSINESS AND FINANCIAL REVIEW

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year.

Additional consideration and details with respect to the Group’s policies relating to the acquisition of non-controlling interests and contingent consideration are set out in “key judgements and estimation uncertainty” below.

Goodwill Goodwill arising on a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

If, after re-assessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. GOVERNANCE Goodwill is internally monitored for impairment purposes at the level of the Group’s single operating segment – accordingly the Group only has one cash generating unit (“CGU”) for impairment testing purposes.

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. Goodwill is not amortised.

The recoverable amount of the Group’s CGU is determined from value in use calculations. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. Goodwill arising on the acquisition of a foreign operation is treated as an asset of the foreign operation and translated at the closing rate.

Revenue recognition Revenue represents amounts derived from the provision of services falling within the Group’s continuing ordinary activities, after the deduction of value added tax. Revenue is measured at the fair value of consideration received or receivable.

Content distribution

Content distribution relates to sales of licences of the Group’s Watch&Bet, Omnisport, GSM, Watch&Trade and RunningBall products. Content FINANCIAL STATEMENTS distribution revenue is recognised over the course of the contract using a stage of completion method. Stage of completion is measured as the ratio of value of content delivered to date to total value of content to be delivered over the life of the contract period. Any content distribution monies received in advance of the contract commencing are recognised in current liabilities as deferred income.

Subscription Sales of online subscription products, mobile downloads, online pay-per-view transactions and sms alerts are recognised across the period in which service is provided. The clients’ shares of such revenues are shown within cost of sales.

Technology and production Service fees generated from the ongoing provision of website servicing, maintenance and hosting to customers are recognised in line with the service delivery to the customer, which is usually evenly across a contractual period. Fees arising from the building of products for customers or for structural enhancements to existing customer products are recognised in line with contractual milestones (which reflect the stage of completion) during the contractual build period.

Perform Group plc Annual Report and Accounts 2012 77 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

1. Accounting policies continued Advertising and sponsorship (display and video) Revenue related to sponsorship activity is recognised in line with the services physically delivered compared to the services specified within a contract agreed with a sponsor.

Revenue related to static/display and video advertising is recognised based on the number of advertising impressions physically delivered compared to the required number of advertising impressions included within a contract agreed with either a brand or an advertising agency.

Where the Group represents a third-party website, the clients’ shares of such revenues are shown within cost of sales.

Content costs The Group typically licenses the right (from sports associations, sports bodies, leagues or their agents or partners) to supply live sports content to online bookmakers and/or to supply aggregated non-exclusive video-on-demand (typically highlights) via the Group’s embeddable video player (embedded on publisher websites) or distributed in a news feed (typically highlights).

The rights the Group license are for a fixed period of time, typically three years. The rights are generally paid in instalments over the length of the contract, typically quarterly in advance (and as such the Group will recognise a prepayment).

The Group recognises its payments for sports streaming rights as an expense when the sporting event is streamed. If the contract comprises several sporting events or match days, the contractually agreed amount is allocated to the individual events or match days according to their respective share. For example, the contractually agreed amount for broadcasting the matches in a football league season are allocated to the individual match days using the straight line method.

Refer to critical accounting judgements below for an explanation of the accounting treatment adopted.

Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value, or if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets in which case they are capitalised in accordance with the Group’s general policy on borrowing costs.

Rentals payable under operating leases are charged to the Income Statement over the term of the relevant lease and in accordance with the terms of the relevant leases. Operating lease costs relating to accommodation are recognised in the income statement under ‘Administrative expenses’.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Foreign currencies The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates. For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are re-translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange dilerences are recognised in profit or loss in the period in which they arise.

78 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange dilerences arising, if any, are recognised in other comprehensive income and accumulated in equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group elected to treat goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRS as sterling-denominated assets and liabilites. BUSINESS AND FINANCIAL REVIEW

Borrowing costs Borrowing costs are recognised in profit or loss in the period in which they are incurred.

Operating profit Operating profit is stated before investment income and finance costs.

Taxation The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit dilers from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on dilerences between the carrying amounts of assets and liabilities in the GOVERNANCE financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary dilerences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary dilerences can be utilised.

Such assets and liabilities are not recognised if the temporary dilerence arises from goodwill or the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that alects neither the tax profit nor the accounting profit.

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

The carrying amount of the deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that suecient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity or other comprehensive income, in which case the deferred tax is also dealt with in equity or other comprehensive income. FINANCIAL STATEMENTS Deferred tax assets and liabilities are olset when there is a legally enforceable right to set ol current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is provided on all property, plant and equipment at rates calculated to write each asset down to its residual value (assumed to be nil), using the straight line method, over its expected useful life as follows:

• Internet hosting platform – three years • Oece furniture and equipment – three years • Leasehold improvements – three years • Motor vehicles – three years

Perform Group plc Annual Report and Accounts 2012 79 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

1. Accounting policies continued Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, over the term of the relevant lease.

Intangible assets – computer software development Where in the opinion of the Directors, the Group’s expenditure in relation to development of software results in future economic benefits, these costs (including directly attributable overheads) are capitalised and amortised over the useful economic life of the asset.

Development costs are capitalised only when it is probable that future economic benefit will result from the project and the following criteria are met:

• the technical feasibility of the product has been ascertained; • adequate technical, financial and other resources are available to complete and sell or use the intangible asset; • the Group can demonstrate how the intangible asset will generate future economic benefits and the ability to use or sell the intangible asset can be demonstrated; • it is the intention of management to complete the intangible asset and use it or sell it; and • the development costs can be measured reliably.

Where these criteria are not met development costs are charged to the income statement as incurred.

Amortisation is provided on computer software development at a rate calculated to write each asset down to its estimated residual value (assumed to be nil), using the straight line method, over its useful life, usually three years.

Methods of amortisation, residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting date.

Intangible assets – other Identifiable intangible assets acquired as part of business combinations, that meet the conditions for recognition under IFRS 3, are recognised at their fair value at the acquisition date and amortised, on a straight line basis, over their useful economic life on the following basis:

• Domain names/URLs – indefinite life (refer to critical judgements below for an explanation of why URLs have an indefinite life) • Database content – 8% – 33% • Customer relationships – 8% – 33% • Website architecture – 8% – 33%

Impairment of tangible and intangible assets (excluding Goodwill) At each reporting date, the Group reviews the carrying amounts of its goodwill, tangible and intangible assets and intangible assets not yet available for use to determine whether there is any indication that those assets have sulered an impairment loss. If any such indication exists, the recoverable amount of the assets 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/product to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of the fair value, less costs to sell, and the value in use. In assessing value in use, the estimated future cash flows, which are based on budgeted figures, are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.

80 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

Financial instruments Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial liability and equity Financial liability and equity instruments are classified according to the substance of the contractual arrangements entered into. Equity instruments issued are recorded at the proceeds received, net of direct issue costs. BUSINESS AND FINANCIAL REVIEW

Borrowings Borrowings are initially measured at fair value, net of transaction costs. They are subsequently measured at amortised cost using the elective interest method, with an interest expense recognised on an elective yield basis. The elective interest method is a method of calculating the amortised cost of a financial liability and of allocating the interest expense over the relevant period. The elective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Derivative financial instruments From time to time the Group enters into certain financial instruments to manage its exposure to interest rate and foreign exchange rate risk including foreign exchange vanilla options and interest rate swaps. Further details of derivative financial instruments are disclosed in note 21.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than GOVERNANCE 12 months and is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilites.

In the event a premium is paid for a derivative financial instrument, this premium is recognised over the life of the relevant contract.

In addition, certain of the Group’s acquisitions contain an option to acquire non-controlling interests at specified dates in the future for either fixed of variable future payments. The accounting for these options is set out in ‘Business Combinations’ pages 76 and 77.

Trade receivables and other receivable financial assets Trade receivables do not carry any interest and are stated at their fair value on initial recognition (plus transaction costs if any) and carried at amortised cost under the elective interest method.

Cash and cash equivalents Cash and cash equivalents comprise cash and short term deposits held by the Group. In 2011 It also included cash held on deposit with the Group’s credit card service provider, Streamline. There was no such balance at 31 December 2012.

Trade and other payables

Trade payables are not interest bearing and are stated at their fair value on initial recognition (plus transaction costs if any) and carried FINANCIAL STATEMENTS at amortised cost. The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers the carrying values recognised in the balance sheet to be a reasonable approximation of their fair value.

Share-based payments Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. The fair value excludes the elect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 26.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

Perform Group plc Annual Report and Accounts 2012 81 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

1. Accounting policies continued The fair value of SAYE share options is recognsed as an expense and adjusted to reflect the number of shares expected to vest. SAYE share options granted to employees are treated as cancelled when employees cease to contribute to the scheme. This results in accelerated recognition of the expenses that would have arisen over the remainder of the original vesting period.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At each balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured with any changes in fair value recognised in profit or loss for the year.

Pension The Group makes contributions on behalf of employees to an independent, defined contribution pension scheme. The Group has no legal obligation to pay further contributions after the payment of its fixed contribution, providing that fixed contribution is matched by an employee. These contributions are recognised as an expense in the period the relevant employee services are received.

Segmental reporting In accordance with IFRS 8, operating segments are reporting in a manner that is consistent with the internal reporting provided to the Board of Directors, the chief operating decision maker.

Critical accounting judgements and key sources of estimation uncertainty In the application of the Group’s accounting policies, which are described in this Statement of Group Accounting Policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may diler from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision alects only that period, or in the period of the revision and future periods if the revision alects both current and future periods.

Critical judgements in applying the Group’s accounting policies The items below are critical judgements that the Directors believe have a significant elect on the amounts recognised in these financial statements:

Content costs The Group typically licences the right (from sports associations, sports bodies, leagues or their agents or partners) to supply live sports content to online bookmakers and/or to supply aggregated non-exclusive video-on-demand (typically highlights) via the Group’s embeddable video player (embedded on publisher websites) or distributed in a news feed (typically highlights).

The rights the Group license are for a fixed period of time, typically three years. The rights are generally paid in instalments over the length of the contract, typically quarterly in advance (and as such the Group recognises a prepayment).

The Group recognises its payments for sports rights as an expense when the sporting event is delivered. If the contract comprises several sporting events or match days, the contractually agreed amount is allocated to the individual events or match days according to their respective share. For example, the contractually agreed amount for broadcasting the matches in a football league season are allocated to the individual match days using the straight line method.

Whilst in substance the sports rights are intangible assets, given their nature they are not capable of recognition as an intangible asset until the sports event occurs, at which time an asset is capable of recognition but at the same time is fully amortised because the value is substantially diminished as the event is delivered to customers.

The rights may relate to individual events (such as an international football match) or a series of sporting events (such as a football league season). In contrast to, say, an acquired film licence, a sports right is not based on an exploitation right protected by copyright. Rather the organiser declares to the Group that it will waive the exercise of its own rights not to stream the sport to the sportsbooks.

82 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

A sports broadcasting right arises when the sporting event is actually held, broadcast or streamed. The intellectual property relating to a sporting event is only created once the sporting event has actually been held.

If the rights relate to a series of sporting events, such as the streaming of football league matches for an entire season, the sports right has the characteristics of a successive supply agreement because the required performance by the organiser in the form of the above mentioned waiver of the exercise of its rights not to stream the sport only happens on the relevant match day.

In the case of rights for video-on-demand olerings, these highlights are generally viewed on publisher websites very soon after the event BUSINESS AND FINANCIAL REVIEW and unlike a film or TV programming are generally viewed significantly less as time passes after the original event. The Group has considered whether there is any residual value to such video-on-demand olerings and concluded that any value would be minimal and not material.

The amounts to be paid are based on the sports events to be streamed. There is no minimum amount that would be payable if the event does not occur. No payment is made if a match is postponed. Payments are made for the value of the future events and not for a right to future content.

Any advance payments made (of when the event is held and when the expense is recognised) represent a pre-payment of the rights or the organisers’ waiver of the exercise of its rights not to stream the sport. In substance part of the pre-payment becomes an intangible asset when the event or tournament takes place but, given the short life, is fully amortised over the same period and no accounting entries are made to reflect this reclassification. The pre-payment balance attributable to the sporting event is simply expensed to match the revenue recognised.

Commitment to acquire content rights The Group has commitments to acquire internet content rights. As at 31 December 2012 these commitments total £84 million (2011: £101 million). The Directors’ do not consider this commitment to be a financial liability as this commitment relates to future payments for future sporting events that the Group has acquired the right to stream. For the reasons set out above and as the organiser declares it waives the exercise of its GOVERNANCE own rights to stream the sport, the Group does not consider it meets the criteria for recognition of an intangible asset nor does it consider it has a financial liability in accordance with IAS 39 until the sporting event has been delivered to the Group.

Whilst the Group has a commitment to make these payments, such payments are dependent on the sporting events occurring. In the event that a particular event or set of events does not occur the Group would not be required to make all, or part of, the “committed” payments referred to above. In the light of this, the Group considers the long term contract to contain a number of executory components and, therefore, does not consider the future amounts payable that are conditional on the occurrence of the sporting event and the delivery by the right’s owner of the live stream to be a financial liability as neither party has performed any of its obligations relating to the future sporting events.

Segmental reporting In accordance with IFRS 8, operating segments are reporting in a manner that is consistent with the internal reporting provided to the Board of Directors, the chief operating decision maker. The performance of the Group is monitored on the same basis as the group’s consolidated accounts.

Management information that is regularly reported to the Board for the purposes of allocating resources and monitoring performance is the monthly board pack. The board pack contains an analysis of revenue for the Group’s five activities. It is the Directors’ assessment that the

revenue only information reported in the monthly board pack does not constitute discrete financial information in the context of the definition FINANCIAL STATEMENTS of an operating segment as set out in IFRS 8. The revenue information that is presented in note 3 is however, considered to be useful information for the readers of our annual report and accounts.

The Group considers it only has a single operating segment.

The Board does not monitor the profitability of the five activities individually. Whilst the Group reports its revenues across the five activities (which is considered the most helpful and transparent for its investors) operationally the Group has a number of products (such as Watch&Bet) that operate ol one common technology platform, sets of rights typically cleared for all products and platforms and stal who sell, manage and produce this content across multiple products.

A key decision for the Board is whether to acquire a particular set of (high value) sports rights. The Board make their decision based on whether the business, in aggregate, can generate revenue across the five activities for that set of sports rights in excess of the cost.

Perform Group plc Annual Report and Accounts 2012 83 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

1. Accounting policies continued In light of the fact that value of acquired rights is typically not split between the Group’s dilerent products and platforms it is not possible to present a reliable, accurate or helpful measure of profitability to the Board and any profitability of the five activities would be arbitrary and unreliable for the purpose of making decisions (and involve significant allocation and apportionment of Group wide costs).

Treatment of subsidiary undertakings and related deferred and/or contingent consideration The Group has one subsdiary Mackolik Internet Hitzmetleri Ticaret A.S. (“Mackolik”) which was not wholly owned at the year-end and three further subsidiaries (Global Sports Media BV (GSM), Sportal Australia Pty Ltd (“Sportal.au”) and WatchandTrade Limited) which were not wholly owned for the whole of 2011.

These have all been consolidated and included as subsidiary undertakings within the Group’s financial statements. The Directors have reviewed the accounting treatment of each subsidiary to confirm that they should not be accounted for as joint ventures. In each case these reviews concluded that the Group had elective control either through its actual influence on the strategic and operational policies of the companies and/or through its contractual rights to acquire 100% control of voting equity.

As reported in last years annual report and accounts, the remaining non-controlling interest in GSM was acquired in 2011 in exchange for a contractually fixed payment. The remaining non-controlling interest in Sportal.au was acquired in 2012 in exchange for a nominal payment.

WatchandTrade Limited

In December 2011 the Group acquired the remaining 40% of shares (non-controlling interest) of WatchandTrade Limited for a cash payment of £550,000 with additional consideration based on the annual results of WatchandTrade over the period to 31 December 2013. The Sale and Purchase Agreement entered into in December 2011 modified a previous agreement entered into by the Group in 2009 and the other shareholder who owned the non-controlling interest. The original 2009 agreement contained an option for the Group to acquire the non- controlling interest by paying additional consideration based on the results of WatchandTrade or a fixed payment of £5 million before December 2011. At the date of entering the 2009 agreement the Group valued the 40% at between £5 million and £6 million.

The additional consideration mechanic set out in the 2011 agreement is determined on the annual results of WatchandTrade and is over the period to 31 December 2013. The maximum amount payable under the new agreement is £6.4 million. £0.7 million was paid in December 2011 on signing the new agreement. As such the maximum undiscounted liability at 31 December 2011 was £5.7 million. The Directors believe that the maximum amount will be paid out.

The Group have recognised a liability for the discounted fair value of the contingent consideration as at 31 December 2011 of £4.8 million (in accordance with IAS 32 and 39) with a corresponding adjustment to equity (in accordance with IAS 27) as the Directors believe that these payments are consideration for acquiring the non-controlling interest.

The financial liability will be subsequently measured and any changes arising from either the timing or the amount of the liability will be recognised in the income statement as a finance charge in accordance with the requirements of IAS 39.

The Group had not recognised this financial liability in its previous financial statements as it had initially concluded that any payments in respect of the acquisition of the non-controlling interest should be recognised directly in equity as a transaction with a shareholder. However following the conclusion of the Group’s discussions with the FRCCC the Group has re-stated its prior year consolidated statement of financial position and statement of changes in equity (refer to ‘prior year re-statement’ above).

The payments are, to a certain extent, conditional upon continuing service from the selling shareholder during the earn-out period, however, in the judgement of the Directors’ it is not believed that these payments due to the selling shareholder reflect payments in respect of his service. The Directors believe that IAS 27 applies to the contingent payments to acquire the shares and as such have not considered it necessary to develop an alternative accounting policy by reference to other accounting standards. The Directors’ acknowledge that there is a critical judgment in this accounting treatment and acknowledge that the Group could have developed an alternative accounting policy. However, as the Directors consider the estimated fair value of the payments under the 2011 agreement is not materially dilerent from the 2009 agreement, that wasn’t contingent on future service, the Directors believe the treatment adopted is appropriate. In the event that the payments become (or the Directors believe will become) materially dilerent from the estimated fair value of payments under the 2009 contract, the Group will recognise this cost as a charge within the Income Statement.

84 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

Mackolik

The Mackolik Sale and Purchase Agreement contains a forward contract to enable the Group to acquire the remaining 49% interest. The Directors have judged that this does not result in a 100% acquisition on the acquisition date. The sellers of the 49% interest remain exposed to the risks and rewards of ownership (the distributable profit of the company will be distributed pro-rata to the share ownership until the point at which the Group acquires the remaining 49%) until these shares are acquired by the Group and accordingly the acquisition has been accounted for as a step acquisition. BUSINESS AND FINANCIAL REVIEW

The Group have obtained an independent valuation of what the forward contract to acquire the 49% of the controlled subsidiary is worth in 2016 and as the risks and rewards of owning the 49% will not be transferred to the Group until actual payment is made in 2016, in accordance with IAS 32 and 39, the Group have recorded a liability (with a corresponding debit to equity) for the present value of £14.9 million of that independently valued liability.

Whilst there are no employment provisions connected to the payment of the contingent consideration, there are certain service-related provisions contained within the Sale and Purchase Agreement. As such it is the Directors’ view that any dilerence between the independent valuation of the forward contract and the present value of the amount the Group expects to pay must be related to those service-related provisions. As such any dilerence will be taken to the Income Statement as an acquisition related service charge. The Directors’ best estimate (at the date of acquisition and at 31 December 2012) of the amount to be paid in 2016 is approximately £23 million. The present value of this payment at the date of acquisition was £15.1 million. Consequently a £0.2 million service charge will be recognised in the Income Statement over the period from acquisition until the date of payment in 2016. The charge recognised in 2012 was £22,000. The Directors will re-assess their estimation of the final payment at each reporting date and any future dilerences will be charged (or credited) to the income statement.

The accretion in respect of the unwind of the discount being applied to the Directors’ best estimate of the final payment (£23 million) to present value (£15.1 million) is being recognised in the Income Statement as a finance charge over the period from the acquisition date to the date of the GOVERNANCE final payment in 2016. The charge recognised in 2012 in respect of this accretion was £1.0 million.

In addition, distributable profits of Mackolik for each financial year between 2012 – 2015 will be distributed to the Group and other shareholders pro-rata to their respective holdings. These contractual dividend payments represent an obligation to make payments to the shareholders and accordingly the present value of the expected future payments have been recorded as a liability with a corresponding entry recognised directly in equity. The liability will be remeasured at each reporting date with any subsequent amendments being recognised as a service charge or credit through the Income Statement. The Directors’ current best estimate of the undiscounted cash flows is approximately £6.0 million and discounted is £5.0 million.

The accretion in respect of the unwind of the discount being applied to the Directors’ best estimate of the final payment (£6 million) to present value (£5 million) is being recognised in the Income Statement as a finance charge over the period from the acquisition date to the date of the final payment in 2016. The charge recognised in 2012 in respect of this accretion was £0.2 million.

The independent valuation of the option to acquire the 49% non-controlling interest of £14.9 million plus the present value of the future liability for the dividends of £4.9 million exceeds the payments for the 51% of £16.5 million (including the working capital payment). In addition, the Sale and Purchase Agreement contains a provision which allows the shareholders to re-purchase the 51% in the event the Group does not purchase

the non-controlling interest. The independent valuer considers this has a discounted value of approximately £2 million. The Directors’ believe that FINANCIAL STATEMENTS the remaining dilerential represents a discount on the fair value accepted by the sellers of the 51% stake, who have exited the business, in order to receive cash consideration upon disposal of 51% of their shares and to reduce any ongoing ownership risk.

Perform Group plc Annual Report and Accounts 2012 85 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

1. Accounting policies continued Spox Media GmbH and mediasports Digital GmbH

The contingent consideration in respect of the acquisition of Spox Media GmbH and mediasports Digital GmbH is payable to the previous private equity owners and four other individuals, only two of whom are continuing to provide post-combination service. The private equity owners were the majority shareholders in the business prior to the acquisition and the Group anticipates that approximately two-thirds of the contingent consideration will be payable to them. The remaining third of the contingent consideration is split amongst the four individuals in proportion to their shareholdings. The Directors’ view is that the amount allocated to the two individuals providing a continuing service is not material and as such no service-related charge has been recognised.

Contingent consideration Contingent consideration arising as a result of acquisitions is stated at fair value. Contingent and deferred consideration is based on Management’s best estimate of the likely outcome and best estimate of fair value, which is usually, but not always, a contracted formula based on a multiple of EBITDA.

Subscription and advertising sales revenue recognition The Group provides online and mobile subscription based products to its customers, usually via customer branded websites to end users. The Group sets the price of these products, collects revenues and delivers the products, including after service customer care. The Directors have reviewed the products and the nature of how they were supplied and concluded that the revenue generated from these products should be shown as that of the Group being a principal to these transactions with customer revenue share payments included in cost of sales.

The Group acts as advertising sales agent for online advertising inventory of a network of internet sites. The Group has built this network and seeks advertising campaigns from brands and media agencies to deliver via this network. The Group employs its sales stal at its own risk, electively negotiates prices and delivers (traecs) the advertising campaigns. The Directors have reviewed these arrangements and concluded that the revenue generated from these products should be shown as that of the Group being a principal to these transactions with customer internet sites revenue share payments included in cost of sales, rather than as an agent.

Internally generated software and research Management monitors progress of internal software development projects by using a project management system. Significant judgement is required in distinguishing whether such development should be written ol or capitalised. Development costs are recognised as an asset when all the criteria are met, costs are not capitalised and are written ol where this is not the case.

The Group’s Management also monitors whether the recognition requirements for development costs continue to be met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems or developments after the time of recognition.

Domain names/URLs In 2011 and 2012 the Group has acquired a number of large businesses whose primary focus is to run and monetise sports portals and as such a large element of the value of the acquired intangible assets has been attributed to the domain name/URL. Due to the nature of the assets acquired, competitive benchmarking and external valuation advice received, the Directors have concluded that it was appropriate for the domain names to have an indefinite life. This conclusion was reached because the Directors consider that it is definite the internet will continue and sport and football will continue to be as popular and digitally consumed by consumers and used by the Group in a similar way to the way it is used currently. As such the Directors do not see a foreseeable limit to the period of over which the domain names are expected to generate cash inflows. This conclusion is reviewed, and will continue to be reviewed, at each reporting date by the Directors.

Key sources of estimation uncertainty The estimates and assumptions, which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. Where a source of uncertainty has been discussed above it has not been duplicated below.

Impairment of goodwill and intangible assets Determining whether goodwill or intangible assets with indefinite lives are impaired requires an estimation of the value in use of the cash-generating units/products/entities to which goodwill or those intangible assets have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating units/products and a suitable discount rate in order to calculate present value.

86 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

2. Revenue 2012 2011 £’000 £’000 Rendering of services and revenue as disclosed in the consolidated income statement 151,607 103,194 Investment income 533 834

Total revenue as defined in IAS 18 152,140 104,028 BUSINESS AND FINANCIAL REVIEW

3. Segment information The Group focuses its internal management reporting on the following activities:

Content distribution – The Group’s content distribution revenue is generated from the sales of the Watch&Bet, RunningBall and WatchandTrade services, suite of Omnisport products and GSM data products.

Subscription – The Group’s subscription revenue is generated by subscribers paying for web TV, mobile content and Livesport.tv products.

Advertising and sponsorship (online video) – The Group’s ePlayer generates pre-roll video advertising and sponsorship revenues.

Advertising and sponsorship (online display) – The Group generates its online display revenues through sales of display inventory on Goal, Spox, Sportal.de, Mackolik, Soccerway and Sportal and on a network of third-party premium sports websites.

Technology and production – The Group generates technology and production revenues from the design, build and management of website GOVERNANCE and mobile services and the production of live and video on demand content.

The Group considers it only has a single operating segment. Refer to accounting policies – critical judgments – for an explanation of why the Directors have concluded this. The Group has elected to disclose additional costs over and above the requirements of IFRS 8 in the following table. FINANCIAL STATEMENTS

Perform Group plc Annual Report and Accounts 2012 87 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

3. Segment information continued Operating segment information for the years ended 31 December 2012 and 2011 is as follows: 2012 2011 £’000 £’000 Revenue Content distribution 92,971 64,943 Subscription 12,341 9,535 Technology and production 14,609 14,953 Advertising and sponsorship (video) 13,275 6,792 Advertising and sponsorship (display) 18,411 6,971 Total revenue 151,607 103,194 Cost of sales Content (41,102) (35,831) Publisher shares (6,397) (2,715) Technical and software fees (7,807) (6,221) Production (10,159) (6,947) Other (1,687) (1,386) Total cost of sales (67,152) (53,100) Gross profit 84,455 50,094 Stal costs (36,601) (24,415) Other administrative costs (10,352) (7,205) Adjusted EBITDA (excluding exceptional items and share-based payments) 37,502 18,474 Exceptional items (5,348) (4,998) Exceptional share-based payments (1,228) (4,770) Share-based payments (2,018) (352) EBITDA 28,908 8,354 Amortisation and depreciation (6,486) (3,748) Acquisition related amortisation and service charges (2,908) (855) Group operating profit 19,514 3,751 Investment income 533 834 Accretion of deferred consideration (1,862) – Other finance costs (1,265) (1,099) Group profit before tax 16,920 3,486 Total assets 300,403 186,481 Total liabilities 129,896 58,519

The Group is required to present geographical information relating to its revenues. Revenues are attributed to territories in the following ways:

• Content distribution (Watch&Bet) and Subscription revenues are recognised in the territory where the end viewer is located; Other content distribution (Omnisport, WatchandTrade, RunningBall and GSM) revenues are recognised where the contracting party is located which is typically where the service is delivered. • Technology and production revenues are recognised in the territory where the contracting party is located which is typically where the service is delivered; and • Advertising and sponsorship revenues are recognised in the territory where the publisher is located.

Geographical revenue information for the years ended 31 December 2012 and 2011 is presented below.

88 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

Middle East United Asia and North Rest of Kingdom Europe Pacific Americas Africa world Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 2012 Content distribution 17,274 49,497 20,003 2,867 2,130 1,200 92,971 Subscription 7,096 1,464 808 2,011 548 414 12,341 BUSINESS AND FINANCIAL REVIEW Technology and production 9,306 1,471 1,618 280 1,934 – 14,609 Advertising and sponsorship 7,747 12,754 2,369 8,376 431 9 31,686 Total revenue 41,423 65,186 24,798 13,534 5,043 1,623 151,607

Middle East United Asia and North Rest of Kingdom Europe Pacific Americas Africa world Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 2011 Content distribution 9,824 39,800 11,870 1,426 1,903 123 64,946 Subscription 6,202 1,139 511 1,551 122 9 9,534 Technology and production 9,505 1,395 1,623 132 2,378 – 15,033 Advertising and sponsorship 5,748 2,647 1,225 3,764 131 166 13,681 Total revenue 31,279 44,981 15,229 6,873 4,534 298 103,194

The total of non-current assets other than goodwill and deferred tax assets (there are no post-employment benefit assets or rights arising under insurance contracts) located in the UK is £14,730,000 (2011: £11,140,000). Assets held outside the UK are £1,471,000 (2011: £640,000). GOVERNANCE

Revenues of £24,244,000 were derived from one external customer in 2012. In 2011 revenues of £18,516,000, £6,353,000 and £6,277,000 were derived from three external customers. These revenues are attributable to the Content Distribution, Subscription, Technology and Production and Advertising and sponsorship segments and are from the only customers which individually represented over 5% of the Group’s revenues.

4. Operating profit Operating profit has been arrived at after charging: 2012 2011 £’000 £’000 Rentals payable under operating leases 1,475 961 Impairment loss recognised on trade receivables 429 289 Net foreign exchange (gains)/losses (775) 335 Exceptional share-based payments (GSOP) 1,228 4,770 Share-based payments 2,018 352

Depreciation of property, plant and equipment 3,952 2,634 FINANCIAL STATEMENTS Amortisation and impairment of intangible assets 2,534 1,114 Amortisation of acquisition intangibles 2,886 855 Acquisition related service charge 22 –

Perform Group plc Annual Report and Accounts 2012 89 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

4. Operating profit continued In accordance with Statutory Instrument 2005 No. 2417, fees payable to Grant Thornton UK LLP and their associates are shown below: 2012 2011 £’000 £’000 Fees payable to the Group’s auditors for the audit of the Group’s annual accounts 54 48 Fees payable to the Group’s auditors for the audit of the Group’s subsidiaries pursuant to legislation 113 50 Total audit fees 167 98 Fees payable to the Group’s auditors for other services: Interim review 29 17 Tax services 218 259 IPO and acquisition services (classified within exceptional items) 45 688 Other services 69 20 Total fees payable to the Group’s auditors 528 1,082

5. Staf costs The average monthly number of employees (including Executive and Non-Executive Directors) was: 2012 2011 Nos. Nos. Business development and sales 80 70 Account management and marketing 65 55 Production 467 235 Technology 183 165 Administration and management 111 65 Total 906 590

Production stal costs have increased due to the impact of RunningBall, Spox and Mackolik employees who produce data and content and an increase in the number of the Group’s core data and content and production stal supporting its Omnisport and Watch&Bet products.

Employee costs (including Executive Directors) were: 2012 2011 £’000 £’000 Wages and salaries 31,680 21,937 Social security costs 3,731 1,746 Pension costs 1,190 732 Total 36,601 24,415

In addition, the total exceptional share-based payment charge was £1,228,000 (2011: £4,770,000) and other share-based charges were £2,018,000 (2011: £352,000). See note 26 for further details of the Group’s share-based payment schemes.

Key management costs (including Executive and Non Executive Directors) were: 2012 2011 £’000 £’000 Wages and salaries 4,855 2,968 Social security costs 645 285 Pension costs 321 114 Total 5,821 3,367

90 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

In the current year the Directors have expanded the number of employees classified as key employees. In 2011 the Directors considered 19 individuals to be key (including Executive and Non-Executive Directors). In 2012 this increased to 42, 2011 relates solely to those individuals classified as key management in 2011 and has not been restated to include those considered to be key in 2012. Had this been re-stated, the 2011 comarative on a like for like basis would have been approximately £5 million. In addition to the above, the total share-based payment charge relating to key employees was £2,018,000 (2011: £537,000). This excludes the exceptional share-based payment charge which was also primarily paid to individuals classified as key management in 2012 (refer to note 26). Directors’ remuneration is set out on page 61 within the Remuneration Committee Report. BUSINESS AND FINANCIAL REVIEW

6. Exceptional costs 2012 2011 £’000 £’000 Costs in relation to the Group’s Listing on the London Stock Exchange – 3,228 Costs in relation to the Group’s class 1 transaction, acquisition and new debt facilities 2,042 – Costs in relation to the Group’s acquisition of other subsidiaries 3,306 1,770 5,348 4,998

During the year the Group acquired RunningBall Holding AG (a class 1 transaction), Mackolik Internet Hitzmetleri Ticaret A.S. and Sportal GmbH. The related costs (given their size and nature) have been classified as exceptional by the Directors. In addition certain costs were incurred in relation to the issue of new equity (related to the acquisition of RunningBall) (refer to notes 24 and 28) and the arrangement of the Group’s new debt facilities (related to the acquisition of RunningBall) (refer to note 20) – these have also been categorised as exceptional.

During 2011 the Group listed on the London Stock Exchange (see note 24). In addition, during 2011 the Group acquired Goal.com (Holdco)

S.A., Spox Media GmbH and mediasports Digital GmbH as well as acquiring the non-controlling interests of Global Sports Media B.V. and GOVERNANCE WatchandTrade Limited. The associated costs have been classified as exceptional items by the Directors.

7. Investment income 2012 2011 £’000 £’000 Interest receivable 533 834

Investment income primarily relates to bank interest receivable on funds raised during the Group’s IPO.

8. Finance costs 2012 2011 £’000 £’000 Interest payable 558 849 Finance lease costs 48 59 FINANCIAL STATEMENTS Accretion of deferred consideration 1,862 – Other bank charges and finance costs 659 191 3,127 1,099

Interest payable in both years primarily relates to bank interest on the Group’s borrowings. Other bank charges and finance costs relate to the amortisation of the arrangement fee paid on the Group’s current term loan and the cost of the related fixed rate hedge (£132,000 and £55,000 respectively), non-utilisation fees paid under the Group’s new debt facilities (refer to note 20) (£296,000) and other bank charges (£176,000). Other bank fees in 2011 primarily related to the amortisation of the term loan, the related interest rate swap cost and other bank charges.

Accretion of deferred consideration relates to the unwind of the discount applied to the valuation of the liabilities for contingent payments due in respect of the acquisitions of Spox (£293,000), Mackolik (£1,182,000) and WatchandTrade (£387,000). Refer to notes 1 and 28 for a further explanation. There was no accretion of deferred consideration in the prior year.

Perform Group plc Annual Report and Accounts 2012 91 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

9. Taxation 2012 2011 £’000 £’000 Current tax: UK corporation tax at 24.5% (2011: 26.5%) – 303 Foreign tax: Overseas tax 2,281 194 Deferred tax: Current year originating temporary dilerences 955 (813) Adjustment in respect of prior years 187 85 Tax charge/(credit) for the year 3,423 (231)

UK corporation tax is calculated at 24.5% (2011: 26.5%) of the estimated assessable profit for the year Taxation for other jurisdictions is calculated at the rates prevailing in those jurisdictions. The charge/(credit) for the year can be reconciled to the profit per the income statement as follows: 2012 2011 £’000 £’000 Profit before tax 16,920 3,486 Tax at weighted average UK corporation tax rate of 24.5% (2011: 26.5%) 4,145 924 Elects of: Tax elect of expenses not deductible in determining taxable profit 848 1,132 Tax elect of service credits not taxable in determining taxable profit (172) – Prior year adjustments 187 – Recognition of deferred tax assets – (1,958) Change in UK tax rate on deferred tax balances 284 – Elects of dilerent tax rates of subsidiaries operating in other jurisdictions (2,382) (98) Other dilerences 513 – Tax charge/(credit) 3,423 (231)

The Group’s underlying tax rate for 2012 is 18%. The Group’s statutory tax rate is 20% and is higher than the underlying tax rate of 18% primarily due to the impact of non-deductible exceptional professional costs relating to the Group’s acquisitions.

92 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

10. Earnings per share 2012 2011 Profit for the period attributable to equity holders (£’000) (A) 12,840 3,129 Exceptional items (£’000) 5,348 4,998 Share-based payments (£’000) 3,246 5,122 Accretion of acquisition related payments (£’000) 1,862 –

Acquisition related amortisation and service costs (£’000) 2,908 855 BUSINESS AND FINANCIAL REVIEW Adjusted earnings (£’000) (B) 26,204 14,104

Weighted average number of shares in issue (000s) – basic (C) 233,255 218,370 Dilutive elect of performance share plan (000s) 2,388 468 Weighted average number of shares in issue (000s) – diluted (D) 235,643 218,838

Adjusted weighted average number of shares in issue – basic (E) 233,255 225,376 Dilutive elect of performance share plan (000s) 2,388 468 Adjusted weighted average number of shares in issue (000s) – diluted (F) 235,643 225,844

Basic earnings per share Statutory (pence) (A/C) 5.5 1.4 Adjusted (pence) (B/E) 11.2 6.3

Diluted earnings per share Statutory (pence) (A/D) 5.4 1.4 Adjusted (pence) (B/F) 11.1 6.3 GOVERNANCE Adjusted basic and diluted earnings per share are based on profit attributable to equity holders of the parent plus exceptional items, share based payments, acquisition related amortisation and service costs and accretion of acquisition-related deferred consideration divided by the weighted average number of ordinary shares outstanding in the Period. Weighted average shares in the 2011 adjusted calculations are calculated as the weighted number between when the Group listed on the London Stock Exchange and the Period or year end.

In May 2012, 13,506,000 new ordinary 2 and 7/9ths pence shares were issued as part consideration for RunningBall.

11. Goodwill £’000 Cost and Net Book Value At 1 January 2011 38,642 Additions Goal.com (Holdco) S.A. 12,515 Spox Media GmbH and mediasports Digital GmbH 6,035 At 31 December 2011 57,192 Additions RunningBall Holding AG 82,286 FINANCIAL STATEMENTS Mackolik Internet Hitzmetleri Ticaret A.S. 13,578 Sportal GmbH 1,110 Arising from finalisation of acquisition accounting of Goal.com (Holdco) S.A. and Spox Media Gmbh/ mediasports Digital GmbH 591 Retranslation of goodwill of foreign operations at closing rate (849) At 31 December 2012 153,908

As set out in the accounting policies – critical judgements section the Group has only one operating segment.

Each unit or group of units to which the goodwill is so allocated should both represent the lowest level within the entity at which the goodwill is monitored for internal management purposes; and not be larger than an operating segment as defined by paragraph 5 of IFRS 8 Operating Segments before aggregation.

As such the lowest level that goodwill is internally monitored for impairment purposes is at the level of the Group’s single operating segment – accordingly the Group only has one cash-generating unit (“CGU”) for impairment testing purposes.

Perform Group plc Annual Report and Accounts 2012 93 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

11. Goodwill continued The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The Group compares the carrying amount of the unit (including goodwill) to the recoverable amount of the unit.

The recoverable amount of the Group’s CGU is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. These assumptions have been revised In the year in light of the current economic environment which has resulted in more conservative estimates about the future. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. Changes in selling prices, volumes and direct costs are based on past practices and expectations of future changes in the market.

The Group prepares cash flow forecasts for the next five years derived from the most recent financial annual budget approved by the Directors and extrapolates cash flows for the following five years based on an estimated blended growth rate of 10% (2011: 10%). This rate does not exceed the average long-term growth rate for the relevant markets. In its five year forecasts the Group has, in some instances, applied growth rates significantly in excess of that of the current economic environment because the Directors’ believe that the Group’s success in creating value for its customers’ digital rights, the length and nature of its existing contracts and its international customer base will result in the Group’s results improving significantly quicker than that of the current economy.

The Group experienced underlying and adjusted EBITDA of 103% in 2012, significantly in excess of the 10% assumed for future years and the Group’s budget for 2013 (which forms the basis of “Year 1” of the impairment calculations) assumes a high rate of growth from 2013 (although not as high as 2012 – see below).

The Directors recognise that such high growth is unlikely to continue to be maintained and as such consider it appropriate to apply a lower growth rate of 10% from 2014 to allow for increased competition in the areas in which the Group operates.

The Group looks out five years when conducting its impairment review and does not use any growth rates in perpetuity.

The rate used to discount the forecast cash flows is 10% (2011: 10%).

12. Acquisition intangibles Information Domain technology Customer names architecture relationships Content Other Total £’000 £’000 £’000 £’000 £’000 £’000 Cost At 1 January 2011 1,096 – – – – 1,096 Additions 9,652 710 1,697 262 – 12,321 At 31 December 2011 and 1 January 2012 10,748 710 1,697 262 – 13,417 Additions 2,182 18,785 14,294 16 2,102 37,379 At 31 December 2012 12,930 19,495 15,991 278 2,102 50,796 Accumulated depreciation At 1 January 2011 700 – – – – 700 Charge for the year 366 152 251 86 – 855 At 31 December 2011 and 1 January 2012 1,066 152 251 86 – 1,555 Charge for the year 30 1,330 1,353 74 105 2,892 At 31 December 2012 1,096 1,482 1,604 160 105 4,447 Net book value At 31 December 2011 9,682 558 1,446 176 – 11,862 At 31 December 2012 11,834 18,013 14,387 118 1,997 46,349

The carrying value of domain names of £11,834,000 relate to the Goal.com (£8.0 million), Spox.com (£1.8 million), Mackolik.com and Sahadan. com (together £1.6 million) and Sportal.de (£0.5 million) domain names. After consideration by the Directors in light of the size of the acquisitions, the nature of the assets acquired, competitive benchmarking and external valuation advice received, the Directors have concluded that it was appropriate for the domain names to have an indefinite life.

94 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

This conclusion was reached on the basis that the Directors consider that it is definite the internet will continue and sport and football will continue to be as popular and digitally consumed by consumers and used by the Group in a similar way to the way it is used currently. This conclusion is reviewed, and will continue to be reviewed, at each reporting period by the Directors. The other domain names owned by the Group (Soccerway.com and Sportal.au) were previously amortised over a period of three years. The fair value of those domain names were not considered to be material by the directors. The Group’s indefinite life intangible assets were valued on acquisition, during 2011 and 2012, and there have been no significant changes in the inputs to these valuations or economic conditions since. The Directors are therefore satisfied that the carrying value of these assets at least equals their recoverable amount BUSINESS AND FINANCIAL REVIEW

13. Other intangible assets Computer software development £’000 Cost At 1 January 2011 2,930 Additions 4,294 At 31 December 2011 and 1 January 2012 7,224 Additions 5,563 Foreign exchange (38) At 31 December 2012 12,749 Accumulated amortisation At 1 January 2011 657 Charge for the period 1,114 At 31 December 2011 and 1 January 2012 1,771 GOVERNANCE Charge for the period 2,534 Foreign exchange – At 31 December 2012 4,305 Net book value At 31 December 2011 5,453 At 31 December 2012 8,444

Included within additions to computer software development in 2012 is £2,624,000 (2011: £2,137,000) of internally capitalised stal costs.

14. Property, plant and equipment Okce Freehold Internet furniture land and hosting and Leasehold Motor buildings platform equipment improvements vehicles Total £’000 £’000 £’000 £’000 £’000 £’000

Cost FINANCIAL STATEMENTS At 1 January 2011 – 7,312 941 584 15 8,852 Additions – 4,025 310 64 – 4,399 At 31 December 2011 and 1 January 2012 – 11,337 1,251 648 15 13,251 Additions 290 4,859 194 34 – 5,377 Foreign exchange – 5 – – – 5 At 31 December 2012 290 16,201 1,445 682 15 18,633 Accumulated amortisation – At 1 January 2011 – 3,781 329 165 15 4,290 Charge for the period – 1,921 458 255 – 2,634 At 31 December 2011 and 1 January 2012 – 5,702 787 420 15 6,924 Charge for the period – 3,535 259 158 – 3,952 At 31 December 2012 – 9,237 1,046 578 15 10,876 Net book value At 31 December 2011 – 5,635 464 228 – 6,327 At 31 December 2012 290 6,964 399 104 – 7,757

Perform Group plc Annual Report and Accounts 2012 95 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

14. Property, plant and equipment continued Assets with a present value of the minimum lease payments of £nil (2011: £443,000) were acquired or sold and leased back under a finance lease arrangement during the year. The total accumulated depreciation related to finance lease assets is £1,295,000 (2011: £898,000) and accordingly the net book value at the year-end is £220,000 (2011: £616,000).

15. Subsidiaries The principal subsidiaries of the Company, their country of incorporation, ownership of their issued, ordinary share capital and the nature of their trade are listed below: Proportion of all classes Country of of issued share capital incorporation owned by the Company Principal activity Directly owned: Perform Media Services Ltd Great Britain 100% Digital sports media

Held through intermediate companies: Online advertising and Perform Media Sales Ltd Great Britain 100% sponsorship sales Perform Media Channels Ltd Great Britain 100% Digital sports media Watchandtrade Ltd Northern Ireland 100% Digital sports media Perform Media Asia Pte Ltd Singapore 100% Digital sports media Perform Media Inc United States 100% Digital sports media Sportal Australia Pty Ltd Australia 100% Digital sports media Pangorights Ltd Great Britain 100% Digital sports media Sportal New Zealand Pty Ltd New Zealand 100% Digital sports media Sportal India Private Ltd India 100% Digital sports media Global Sports Media BV Holland 100% Digital sports media Mangalore Sports Data India Private Limited India 100% Digital sports media Premium TV Australia Pty Ltd* Australia 100% Digital sports media Classic Sport Ltd Great Britain 100% Digital sports media Perform Media Services SRL Italy 100% Digital sports media Perform Media Services Germany GmBH Germany 100% Digital sports media Perform Media France SARL France 100% Digital sports media Perform Media Zoo Poland 100% Digital sports media Perform Media Japan KK Japan 100% Digital sports media Perform Media Norway AS Norway 100% Digital sports media Goal.com (Holdco) SA Luxembourg 100% Holding company Goal.com North America Inc United States 100% Digital sports media Spox Media GmbH Germany 100% Digital sports media Online advertising and mediasports Digital GmbH Germany 100% sponsorship sales Kontertaktik GmbH Germany 100% Digital sports media Sportal GmbH Germany 100% Digital sports media Perform Media Spain SL Spain 100% Digital sports media Perform Media Sweden AB Sweden 100% Digital sports media RunningBall Group Holdings AG Switzerland 100% Holding company RunningBall Invest AG Switzerland 100% Holding company RunningBall Holding AG Switzerland 100% Holding company RunningBall AG Switzerland 100% Sports data provider RunningBall Sports Information GmbH Austria 100% Sports data provider RunningBall SDN BHD Malaysia 100% Sports data provider RunningBall Services & Consulting Ltd Cyprus 100% Sports data provider RunningBall Informacao Desportiva Portugal 100% Sports data provider Mackolik Internet Hitzmetleri Ticaret A.S. Turkey 51% Digital sports media

96 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

* This entity, at the date these financial statements were approved, was in the process of being wound up.

The proportion of voting rights held is the same as the proportion of shares held. Subsequent to the year-end, the following companies which the Group owns 50% of were incorporated: PFPSA Limited (UK, Holdco) and PFPSA BV (Netherlands, Holdco). In addition a 100% owned Canadian subsidiary, Perform Digital Media Canada Inc, was incorporated. BUSINESS AND FINANCIAL REVIEW

16. Trade and other receivables At 31 At 31 December December 2012 2011 £’000 £’000 Gross trade receivables 24,818 16,453 Provision for impairment of trade receivables (1,815) (693) Net trade receivables 23,003 15,760 Prepayments and accrued income 27,337 8,509 50,340 24,269

Trade receivables are stated at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts.

The due date for trade receivables will vary depending on the jurisdiction and product but is typically between 30 and 60 days. Trade receivables do not bear any elective interest rate. All trade receivables are subject to credit risk exposure, however, the Group does not identify GOVERNANCE specific concentration of credit risk with regards to trade receivables, as the amount recognised consists of a large number of receivables from various customers.

The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.

Movements on the Group provision for impairment of trade receivables are set out in the table below: 2012 2011 £’000 £’000 At 1 January 693 238 Provision for receivables impairment 429 327 Provision for bad debts acquired with subsidiaries 693 128 1,815 693

The creation and release of provisions for impaired receivables has been included in the Income Statement. Amounts charged to the provision account are generally written ol, when there is no expectation of recovering additional cash. FINANCIAL STATEMENTS The other classes within trade and other receivables do not contain impaired assets.

Perform Group plc Annual Report and Accounts 2012 97 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

16. Trade and other receivables continued Some of the unimpaired trade receivables are past due as at the reporting date. Financial assets past due but not impaired are shown below: At 31 At 31 December December 2012 2011 £’000 £’000 Not more than three months 8,528 6,584 More than three months but not more than six months 3,363 3,801 More than six months but not more than a year 1,052 666 More than one year 716 – Total 13,659 11,051

Of the £716,000 which is more than one year old, £288,000 relates to items which can be olset against corresponding items on the Group’s purchase ledger.

The average credit period taken is 50 days (2011: 54 days).

The Directors consider that the carrying value of trade and other receivables approximates their fair value.

Prepayments and accrued income balances are set out below: At 31 At 31 December December 2012 2011 £’000 £’000 Prepayments for acquiring WTA rights 2013-2016 in advance of those tournaments* 13,402 – Prepayments for acquiring rights to future content in advance of other future sporting events 4,559 3,540 Unbilled advertising and technology related revenues 6,206 3,927 Prepaid finance costs (debt arrangement fee and foreign exchange option premium) 449 General prepaid oece costs 2,721 1,042 27,337 8,509

* Included in the WTA rights prepayments is an invoice received for £2.7 million before the year-end relating to 2013 which was paid in 2013 (and at the year-end was included within prepayments and trade creditors). The amount paid in 2012 in respect of WTA rights was £10.7 million.

Movements in prepayments and accrued income are set out below: At 31 At 31 December December 2012 2011 £’000 £’000 At 1 January 8,509 5,617 Prepayments for acquiring WTA rights 2013-2016 in advance of those tournaments 13,402 – Prepayments for acquiring rights to future content in advance of other future sporting events 31,701 28,829 Release of prepayments to profit or loss relating to rights for content of sporting events (30,682) (27,654) Unbilled advertising and technology revenues 6,206 3,927 Transfer of unbilled advertising and technology balances to trade debtors/cash (3,927) (1,832) Prepaid finance costs (debt arrangement fee and foreign exchange option premium) 449 – Net movement in oece costs prepayments 1,679 (378) At 31 December 27,337 8,509

98 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

17. Cash and cash equivalents At 31 At 31 December December 2012 2011 £’000 £’000 Cash 33,605 75,356 Restricted cash – 507 33,605 75,863 BUSINESS AND FINANCIAL REVIEW

The restricted cash related to a security deposit which was under charge to the Group’s credit card payment service provider to support the acceptance of credit card payments from customers of the Group and its clients. Cash was held in a variety of interest bearing accounts.

Net funds 2012 2011 £’000 £’000 Cash and cash equivalents 33,605 75,863 Borrowings (6,925) (12,460) Finance leases (181) (500) Net funds 26,499 62,903

18. Trade and other payables

At 31 At 31 GOVERNANCE December December 2012 2011 £’000 £’000 Trade payables 18,076 16,369 Accruals, deferred income and other creditors 25,722 20,103 Amounts owed under finance leases 181 307 43,979 36,779

The average credit period taken for trade purchases is 52 days (2011: 42 days).

The Directors consider that the carrying amount of trade payables approximates to their fair value.

19. Deferred consideration and associated acquisition related liabilities

The following table summarises and reconciles acquisition related deferred consideration recorded in the financial statements (and includes the Group’s estimated future dividend payments to the owners of the non-controlling interest in Mackolik): FINANCIAL STATEMENTS

Recognised Unwind of on discount acquisition applied to Service At 1 or re- FV initial related At 31 Due in Due in January measured liability charge Payment FX December < 1 year > 1 year £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 RunningBall – 40,552 – – – (327) 40,225 40,225 – Mackolik – 20,852 1,178 24 – – 22,054 2,097 19,957 WatchandTrade 4,892 – 387 – (143) – 5,136 2,189 2,947 Spox 3,547 300 293 – – (126) 4,014 1,478 2,536 8,439 61,704 1,858 24 (143) (453) 71,429 45,989 25,440

Perform Group plc Annual Report and Accounts 2012 99 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

19. Deferred consideration and associated acquisition related liabilities continued Refer to note 28 for further information on the above acquisitions. The table below sets out the Directors’ best estimates of the undiscounted payments the Group anticipates paying and the years the payments for deferred consideration are expected to be made:

Total expected Total acquisition Amounts expected related paid in future payments 2011 and payments (including Total deal 2012 2013 2014 2015 2016 (2013–16) to date) cap £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 16,346 (cash) 47,622 RunningBall (equity) 40,225 – – – 40,225 104,193 104,193 Mackolik* 14,476 1,047 – – 23,100 24,147 38,623 75,000 WatchandTrade 875 2,189 3,336 – – 5,525 6,400 6,400 Spox 3,079 1,000 1,200 2,400 – 4,600 7,679 13,333 82,398 44,461 4,536 2,400 23,100 74,497 156,895 198,926

*Excludes dividend payments to shareholders of non-controlling interests in Mackolik in 2013-2016.

20. Borrowings At 31 At 31 December December 2012 2011 £’000 £’000 Current borrowings 5,533 5,534 Non-current borrowings 1,392 6.926 6,925 12,460

The acquisition of Goal.co (Holdco) S.A. was funded, in part, by the full drawndown of a £17 million term loan facility (“Old Facility A”) provided by the Bank of Ireland plc which Perform Media Services Ltd entered into on 17 February 2011.

In May 2012 the balance of Old Facility A (£11,300,000) was converted into a new term loan facility of £11,300,000 (“Facility A”) which was provided to Perform Media Services Ltd. This new facility was provided by Bank of Ireland plc and Royal Bank of Scotland plc who also provided Perform Group plc and Perform Media Services Ltd an additional €30 million term loan facility (“Facility B”) and a €20 million multi-currency revolving credit facility (“Facility C”) (together the “New Facilities”).

Together Facilities A, B and C form the “Facilities Agreement”. Facility A bears interest at a rate equal to the aggregate of LIBOR plus a margin of 3.5%. A commitment fee is payable on Facilities B and C to the extent they remain undrawn. Two thirds of the interest rate (of Facility A and B) is required to be hedged. Neither Facility B nor Facility C were drawn down at 31 December 2012 although the Group expects to draw down both in March 2013. The Facilities Agreement requires the Borrower to comply with certain financial covenants.

The Group is exposed to interest rate risk as it borrows funds at floating rate interest rates. The Group is required to hedge at least two-thirds of the loan via an interest rate swap hedging floating rate interest for fixed rate interest. The interest rate swap settles on a quarterly basis. A floating rate of LIBOR (plus 3.5% premium) is swapped to a fixed rate of 1.94% (plus 3.5% premium). The Directors do not consider that this derivative had a material value at either 31 December 2011 or 2012.

Facility A is being repaid in equal installments of £1,416,667 (the first installment was in June 2012) and on each subsequent quarter date. Facility A must be repaid by no later than 31 March 2014. In the event Facilities B and/or C are drawn down, they must be repaid by May 2016 at the latest.

The amounts provided above are net of fees paid to the banks. Of these fees, £410,000 were offset against the loan on inception of Old Facility A and these are being amortised to the income statement over the length of the loan. The carrying value of the fees at 31 December 2012 is £162,000. The arrangement fee for the New Facilities was £544,000. Of this, £272,000 was paid on arrangement and the remaining £272,000 will be payable when the facility is drawn-down on for the first time. These fees will be amortised over the length of time the facilities are available to the Group.

100 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

21. Financial risk management The Group’s activities expose it to a variety of financial risks. The main financial risks faced by the Group relate to capital risk, foreign exchange rates, interest rate risks, the risk of default by counter-parties to financial transactions and the availability of funds to meet business needs. These risks are managed as described below.

The Group’s risk management is co-ordinated at its headquarters, in close cooperation with the board of Directors, and focuses on actively securing the Group’s short to medium term cash flows by minimising the exposure to financial markets. BUSINESS AND FINANCIAL REVIEW

The Group does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Group is exposed are described below.

Capital risk The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns whilst having enough capital to continue it’s acquisition strategy, sustain future product development. The Group will continue to seek to maximise the return to shareholders through the optimisation of the debt and equity balance although this is a longer term aspiration. The Group’s overall strategy has not changed in the last year.

The capital structure of the Group consists of net debt, which includes the borrowings disclosed in note 20 after deducting cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings.

The Group is not subject to any externally imposed capital requirements.

The primary reason for the Group to raise debt or equity is to finance its acquisitions.

The Group’s Directors review the capital structure on an ad-hoc basis and do consider the impact any acquisitions (and how it is financed) has GOVERNANCE on the Group’s capital structure before completing any acquisition (or financing). As part of this review the Board considers the cost of capital and the risks associated with each class of capital.

The Group had a gearing ratio of 4% at 31 December 2012 (2011: 10%). The ratio has decreased as the Group has continued to repay its term loan and during 2012 issued shares to part fund the acquisition of RunningBall. The gearing ratio will increase to over 20% in 2013 when the Group draws down on its bank facilities to satisfy the contingent consideration in respect of the RunningBall acquisition.

The gearing ratio at the year-end is as follows: At 31 At 31 December December 2012 2011 £’000 £’000 Debt 6,925 12,460 Equity 170,507 127,962 Debt to equity ratio 4% 10%

Debt is defined as long and short term borrowings and equity includes all capital and reserves of the Group that are managed as capital. FINANCIAL STATEMENTS

Due to the current fast growth and acquisitive nature of the Group, the Group does not currently have a long-term target gearing ratio although the Group’s preference is for future significant acquisitions to be financed by equity rather than debt. The Group also has no current policy as to the level of equity capital and other reserves other than to address statutory requirements.

The Group currently does not envisage paying a dividend in the short term, consistent with its intentions as set out when it listed.

Perform Group plc Annual Report and Accounts 2012 101 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

21. Financial risk management continued Currency risk The table below shows the extent to which the Group has monetary assets and liabilities in currencies other than their local currency: Other Euro US Dollar currencies Total £’000 £’000 £’000 £’000 2012 Financial assets 22,714 9,209 2,252 34,175 Financial liabilities (8,394) (5,462) (2084) (15,940) Total exposure 14,320 3,747 168 18,235

2011 Financial assets 11,125 4,673 2,365 18,163 Financial liabilities (9,055) (5,435) (1,936) (16,426) Total exposure 2,070 (762) 429 1,737

Exposures to currency exchange rates arise from the Group’s retranslation of its foreign subsidiaries as well as the Group’s overseas sales and purchases, which are primarily denominated in euros and US dollars.

The following table illustrates the sensitivity of the net result for the year and equity with regard to the Group’s financial assets and financial liabilities and the euro/sterling exchange rate and the US dollar/sterling rate. It assumes a +/- 10% movement in each exchange rate on both years

These percentages have been determined based on the average market volatility in exchange rates in the previous 12 months.

If sterling had weakened by 10% then this would have had the following impact: 2012 2011 Euro US Dollar Euro US Dollar £’000 £’000 £’000 £’000 Net profit 1,297 340 842 137 Equity 2,888 756 612 222

If sterling had strengthened by 10% then this would have had the following impact: 2012 2011 Euro US Dollar Euro US Dollar £’000 £’000 £’000 £’000 Net profit (1,061) (278) (689) (112) Equity (2,363) (619) (501) (181)

The Group’s objective when managing currency risk is to ensure that changes in exchange rates would not have a material impact on the Group. The Group’s policy is to review the level of revenues and costs denominated in various key currencies and to naturally hedge wherever possible. Where this is not possible and a currency risk is forecast the Directors’ strategy is to acquire forward options to mitigate the level of risk.

In addition to the monetary assets and liabilities set out above the Group has acquisition related liabilities which will be settled in foreign currencies. The contingent consideration for RunningBall (£40.2 million) is €49.6 million, the contingent consideration for Spox (£4.0 million) is €4.9 million and the contingent consideration for Mackolik (£22.1 million) is 63.0 million Turkish Lira. If at the year-end sterling was 10% stronger profit and equity would increase by £6 million. If at the year-end sterling was 10% weaker, profit and equity would decrease by £7 million.

In December 2012, just prior to the year-end, the Group entered into a vanilla option which gave the Group the right but not the obligation to sell €2.0 million euro and buy sterling at a FX rate of 1.25 at each of the following settlement dates: 26 April 2013, 29 May 2013, 26 June 2013, 29 July 2013, 28 August 2013, 26 September 2013, 29 October 2013, 27 November 2013 and 27 December 2013. The cost of this option was €264,000. The fair value of this option at the year-end was €220,000. The €45,000 impairment has been recorded as a finance cost in the Income Statement and the fair value of the liability has been recorded as a current liability at 31 December 2012. No forward contracts were put in place during 2011 or were outstanding at the year-end.

102 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

Interest rate risk The Group is exposed to interest rate risk as it borrows funds at floating rate interest rates. The Group is required to hedge at least two-thirds of the loan via an interest rate swap hedging floating rate interest for fixed rate interest. The interest rate swap settles on a quarterly basis.

A floating rate of LIBOR (plus 3.5% premium) is swapped to a fixed rate of 1.94% (plus 3.5% margin). The Directors do not consider that this derivative had a material value at either 31 December 2011 or 2012.

The Group’s hedging activities are evaluated regularly to align them with interest rate views and defined risk appetite, ensuring the most BUSINESS AND FINANCIAL REVIEW appropriate hedging strategies are applied.

If interest rates had been 3% higher/lower and all other values were held constant, the Group’s profit for the year ended 31 December 2012 would decrease/increase by £0.4 million due to the Group’s exposure to floating interest rates.

Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining suecient collateral where appropriate as a means of mitigating the risk of financial loss from defaults. The Group uses publicly available financial information and its own trading records to assess the creditworthiness of counterparties. The Group continually monitors its exposure to counterparties and the aggregate value of transactions concluded is spread amongst approved counterparties.

Cash held by counterparty is presented to the board on a monthly basis. The credit risk on these funds is limited because the counter-parties are banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. GOVERNANCE Cash balances are held across a number of banks, the Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities. Concentration of credit risk to any counterparty did not exceed 3% of gross monetary assets at any time during the year.

Liquidity risk Liquidity risk is managed by short and long term cash flow forecasts. Suecient cash reserves are held to maintain short term flexibility. As at 31 December 2012 and 2011, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below: Current within Current 6 to Non-current Non-current later 6 months 12 months 1 to 5 years than 5 years 31 December 2012 £’000 £’000 £’000 £’000 Trade payables 18,076 – – – Borrowings 2,978 2,913 1,431 – Amounts owed under finance leases 97 84 – – 21,151 2,997 1,431 – Deferred consideration 45,989 – 25,440 –

67,140 2,997 26,871 – FINANCIAL STATEMENTS

Current within Current 6 to Non-current Non-current later 6 months 12 months 1 to 5 years than 5 years 31 December 2011 £’000 £’000 £’000 £’000 Trade payables 16,369 – – – Borrowings 2,767 2,767 6,926 – Amounts owed under finance leases 168 309 193 – Deferred consideration 150 – – – 19,454 3,076 7,119 –

Perform Group plc Annual Report and Accounts 2012 103 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

22. Deferred tax 2012 2011 £’000 £’000 Deferred tax movement At 1 January 5,515 7,835 Acquisition of subsidiaries (8,952) (3,125) (Charge)/credit to income statement (1,142) 728 Other 212 77 At 31 December (4,367) 5,515

At 31 At 31 December December Analysis of deferred tax (liability)/asset 2012 2011 Capital allowances in excess of depreciation 1,759 914 Share-based payments 695 1,231 Losses 4,105 6,187 Acquisition intangibles (10,926) (2,817) Total (4,367) 5,515

In addition to the amounts set out above the Group has an unrecognised deferred tax asset at 31 December 2012 of £1.3 million (2011: £1.3 million) relating to capital allowances.

23. Non-current finance lease obligations At 31 At 31 December December 2012 2011 £’000 £’000 Amounts due under finance leases – 193

24. Share capital At 31 At 31 December December 2012 2011 £’000 £’000 Issued Ordinary Shares of 2 and 7/9ths pence each 6,635 6,260 6,635 6,260

At 31 At 31 December December 2011 2010 nos. nos. Issued Ordinary Shares of 2 and 7/9ths pence each 238,882 225,376 238,882 225,376

In May 2012, 13,506,000 new ordinary 2 and 7/9ths pence shares were issued as part consideration for RunningBall.

On 18 March 2011 the Company re-registered from a private limited company to a public limited company.

104 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

Following a resolution of the Company passed on 7 April 2011 which took elect immediately prior to the Listing of the Company’s securities on the main market of the London Stock Exchange:

• each of the Company’s A Ordinary Shares were subdivided, reclassified and redesignated as 36 new Ordinary Shares; • each of the Company’s B Ordinary Shares were subdivided, reclassified and redesignated as 36 new Ordinary Shares; • each holding of the existing Preference Shares were consolidated into one preference share; • these Preference Shares were subdivided, reclassified and redesignated into, in aggregate, 21,132,432 new Ordinary Shares and 1,380,354,048 deferred shares of 2 7/9ths pence each in the capital of the Company; and BUSINESS AND FINANCIAL REVIEW • the Company allotted a further 28.0 million Ordinary Shares of 2 and 7/9ths pence each.

Following the share re-organisation and Listing the Company’s share capital comprised 225,376,072 new Ordinary Shares of 2 and 7/9ths pence. The Company received proceeds, net of bank fees and costs, of £69.7 million.

On 21 June 2011 the Company cancelled, at no cost, all of the deferred shares created on Listing. The deferred shares did not entitle the holders to any dividends or distribution and were only able to be transferred by the Company. A capital redemption reserve of £38.3 million was created as a result.

25. Other reserves At 31 At 31 December December 2011 2012 (re-stated) £’000 £’000 1 January 4,892 – GOVERNANCE Debit to reserve in respect of WatchandTrade Limited transaction with shareholder – 4,892 Debit to reserve in respect of Mackolik 49% acquisition 19,805 31 December 24,697 4,892

26. Share-based payments A total charge of £3,246,000 (2011: £5,122,000) relating to the Group’s share-based payment schemes has been included in the Income Statement. Of this £1,228,000 related to the Group’s non-recurring GSOP (2011: £4,770,000) and £2,018,000 related to the PSP (2011: £352,000).

Growth Securities Ownership Plan (GSOP) In March 2010, the Board put in place a Growth Securities Ownership Plan (the “GSOP”). Under the GSOP, certain key non-shareholding employees were given the opportunity to purchase a financial instrument which tracked the Group’s enterprise value, defined as market capitalisation for these purposes, over a set period, being the period ending 12 months after the occurrence of an exit event. FINANCIAL STATEMENTS 21 senior employees (none of whom is a Director) held a total of 35 units under the plan. The terms of the GSOP provided for cash payments, on a pro-rata basis, by the Company to participants, subject to such participant’s continued employment at the Group at the date payable, if the Company’s enterprise value at the end of the relevant period exceeded a floor amount. The amount payable to participants increased up to a maximum aggregate amount of £6 million which was payable if the Company’s enterprise value at such time is not less than £450 million.

The Admission to the London Stock Exchange (“Admission”) constituted an exit event under the scheme. The Group paid the maximum amount of £6 million to the participants in May 2012.

The fair values of the financial instruments entered into under this scheme were calculated and were purchased by the participants at this price. In accordance with IFRS 2, the Group has recognised a charge of £1,228,000 in 2012 and £4,770,000 in 2011 in respect of this cash settled scheme. No further charges or payments will be made under the plan.

Perform Group plc Annual Report and Accounts 2012 105 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

26. Share-based payments continued Performance Share Plan (PSP) The Group has put in place a Performance Share Plan (“PSP”) to provide long-term incentives to Executive Directors and Senior Management of the Group. Share awards made under the PSP are based on a percentage of salary and the share price the date before the date of grant and are subject to a matrix of non-market based performance targets (including annual compound growth of the Group’s revenues and adjusted earnings per share) over a three year performance period.

Award – 24 June 2011 An award made in June 2011 is measured over a performance period to 31 December 2013 with awards vesting in June 2014 subject to continued employment. In the event that all the performance criteria are met, a maximum number of 1,400,000 shares will vest. The fair value of each award is £2.19 calculated by reference to the closing market price on the dealing day preceding the date of grant. None of the awards lapsed during either 2012 or 2011. Based on the Group’s current forecast, Management expect that 100% of the shares will vest and management expect that 5% of participants will leave before the awards vest. At the previous year-end Management expected 65% of the awards would vest. As such a true-up charge has been recognised in the current year.

As such, and In accordance with IFRS 2, the Group has recognised a charge (including true-up) of £1,242,000 (2011: £352,000) in respect of this equity settled scheme.

Award – March 2012 An award made in March 2012 is measured over a performance period to 31 December 2014 with awards vesting in March 2015 subject to continued employment. In the event that all the performance criteria are met, a maximum number of 1,500,000 shares will vest. The fair value of each award is £3.03 calculated by reference to the closing market price on the dealing day preceding the date of grant. None of the awards lapsed during the year. Based on the Group’s three year forecasts, Management expect that 65% of the shares will vest and 5% of participants will leave before the awards vest.

In accordance with IFRS 2, the Group has recognised a charge of £747,000 (2011: nil) in respect of this equity settled scheme.

Award – September 2012 An award made in September 2012 is measured over a performance period to 31 December 2014 with awards vesting in September 2015 subject to continued employment. In the event that all the performance criteria are met, a maximum number of 100,000 shares will vest. The fair value of each award is £3.74 calculated by reference to the closing market price on the dealing day preceding the date of grant. None of the awards lapsed during the year. Based on the Group’s three year forecasts, Management expect that 65% of the shares will vest and 5% of participants will leave before the awards vest.

In accordance with IFRS 2, the Group has recognised a charge of £28,000 (2011: nil) in respect of this equity settled scheme..

27. Non-controlling interests At 31 At 31 December December 2012 2011 £’000 £’000 Sportal Australia Pty Ltd – 189 Mackolik Internet Hitzmetleri Ticaret A.S. 1,487 – Other 1 (39) 1,488 150

106 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

28. Acquisitions Acquisitions have been accounted for by the acquisition method of accounting. The goodwill arising on these acquisitions will be subject to an annual impairment review.

RunningBall Holding AG (“RunningBall”) In May 2012 the Group acquired RunningBall Holding AG via the acquisition of RunningBall’s two immediate holding companies for €120 million. The Group acquired RunningBall as the Directors belived that combining the Group with RunningBall would significantly enhance the Group’s strong growth prospects by combining RunningBall’s data with Goal’s (and other owned portals) strong editional and video content to increase BUSINESS AND FINANCIAL REVIEW user traec (and hence revenue) on match days and by enhancing existing betting related products and cross selling to existing customers.

Initial consideration of €70 million consisted of €20 million in cash, financed from existing cash resources, and €50 million in the form of 13.5 million new ordinary shares in the Company which were issued to the sellers. The number of issue shares was based on the average closing mid market price of the Group’s ordinary shares and the average closing mid-point sterling/euro exchange rate over the 30 trading days preceding 15 May 2012. The fair value of the 13.5 million new ordinary shares issued was calculated based on the bid price at the date of acquisition.

A merger relief reserve has been created to record the excess over nominal value on the issue of the shares in relation to the acquisition.

Contingent consideration of €50 million will be paid in 2013 entirely in cash and will be financed both from existing cash reserves and by drawing down the new debt facilities agreed with Bank of Ireland plc and Royal Bank of Scotland plc (see note 20).

Total consideration will be based on a nine times multiple applied to the audited EBITDA of RunningBall for the year ended 31 December 2012 (the “Earn-out Period”). Whilst the selling shareholders have been retained on a consultancy basis the contingent payment is not dependent on either employment or continuing service and as such consider it to be directly linked to the acquisition and not to post combination service. GOVERNANCE

In addition a payment of €2 million was made in August 2012 for excess working capital and cash acquired. The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group at the acquisition date:

Book value Fair value Fair value on acquisition adjustments to the Group £’000 £’000 £’000 Non current assets Intangible assets 840 29,051 29,891 Property, plant and equipment 431 (431) – Current assets Trade and other receivables 2,481 (402) 2,079 Shareholder loan 6,113 (6,113) – Cash and cash equivalents 2,630 – 2,630 Total assets 12,495 22,105 34,600 Current liabilities Trade and other payables (1,838) (1,502) (3,340) FINANCIAL STATEMENTS Deferred tax liability (144) (7,174) (7,318) Total liabilities (1,982) (8,676) (10,658) Net assets acquired 10,513 13,429 23,942 Goodwill arising 82,286 Fair value of total consideration 106,228

The fair value of consideration is comprised of: £’000 Initial cash consideration 16,346 Payment for excess working capital and cash acquired 1,708 Issue of equity 47,622 Contingent cash consideration 40,552 Fair value of total consideration 106,228

Perform Group plc Annual Report and Accounts 2012 107 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

28. Acquisitions continued Fair value adjustments relate primarily to the following:

• Elimination of intangible assets (£0.8 million) and tangible assets (£0.4 million) that were replaced as part of the acquisition accounting process • Recognition of an intangible asset for software valued at £17.4 million using a cost approach. The software will be written ol over 10 years. • Recognition of an intangible asset for customer relationships valued at £10.5 million using an excess-earnings method. The customer relationships will be written ol over 12 years. • Recognition of other intangibles which together are valued at £2.0 million and will be written ol over 10-12 years. • Deferred tax liabilities in relation to the recognised acquisition intangibles totaling £7.2 million which will be written ol over the corresponding periods to those set out above.

In addition a shareholder loan of £6.1 million was repaid by the sellers on completion.

The goodwill arising on the acquisition is largely attributable to the anticipated synergies created by the highly complementary business activities. None of this goodwill is deductible for tax purposes.

The Group’s results for the Period include post acquisition revenue of £10 million and a profit after tax of £5 million. Had RunningBall been acquired on 1 January 2012 it would have contributed revenue and statutory profit after tax for the year of approximately £18 million and £8 million respectively.

Mackolik Internet Hitzmetleri Ticaret A.S. (“Mackolik”) On 30 June 2012 the Group acquired an initial 51% stake in Mackolik for cash consideration of 40.8 million Turkish Lira (£14.5 million) based on an agreed ten times multiple calculation of the full year forecast EBITDA results of the business for the year ending 31 December 2012. This initial payment was made out of the Group’s existing cash resources and will be adjusted if audited EBITDA for 2012 is higher or lower than the current forecast of 8 million Turkish Lira. The Directors’ estimate at the date of signing these accounts based on draft EBITDA numbers submitted by Mackolik is that an additional payment of £1,047,000 will be required to be made. This payment is not dependent on any continuing service or employment provisions. A payment of approximately £1 million was also made in September 2012 for excess working capital and cash acquired.

Whilst the Sale and Purchase Agreement contains a forward contract to enable the Group to acquire the remaining 49% interest, the Directors have judged that this does not result in a 100% acquisition on the acquisition date. The sellers of the 49% interest remain exposed to the risks and rewards of ownership until these shares are acquired by the Group and accordingly the acquisition has been accounted for as a step acquisition.

The Group have obtained an independent valuation of what the forward contract to acquire the 49% of the controlled subsidiary is worth in 2016 and as the risks and rewards of owning the 49% will not be transferred to the Group until actual payment is made in 2016, in accordance with IAS 32 and 39, the Group have recorded a liability (with a corresponding debit to equity) for the present value of £14.9 million of that independently valued liability.

Whilst there are no employment provisions connected to the payment of the contingent consideration, there are certain service-related provisions contained within the Sale and Purchase Agreement. As such it is the Directors’ view that any dilerence between the independent valuation of the forward contract and the present value of the amount the Group expects to pay must be related to those service-related provisions. As such any dilerence will be taken to the Income Statement as an acquisition related service charge. The Directors’ best estimate (at the date of acquisition and at 31 December 2012) of the amount to be paid in 2016 is approximately £23 million. The present value of this payment at the date of acquisition was £15.1 million. Consequently a £0.2 million service charge will be recognised in the Income Statement over the period from acquisition till the date of payment in 2016. The charge recognised in 2012 was £22,000. The Directors will re-assess their estimation of the final payment and any future dilerences will be charged (or credited) to the income statement. The maximum amount of the future payment is £59.4 million.

The accretion in respect of the unwind of the discount being applied to the Directors’ best estimate of the final payment (£23 million) to present value (£15.1 million) is being recognised in the Income Statement as a finance charge over the period from the acquisition date to the date of the final payment in 2016. The charge recognised in 2012 in respect of this accretion was £1.0 million.

In addition, distributable profits of Mackolik for each financial year between 2012 – 2015 will be distributed to the Group and other shareholders pro-rata to their respective holdings. These contractual dividend payments represent an obligation to make payments to the shareholders and accordingly the present value of the expected future payments has been recorded as a liability with a corresponding entry recognised directly in

108 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

equity. The liability will be remeasured at each reporting date with any subsequent amendments being recognised as a service charge through the Income Statement. The Directors’ current best estimate of the undiscounted cash flows is approximately £6.0 million and discounted is £5.0 million.

The accretion in respect of the unwind of the discount being applied to the Directors’ best estimate of the final payment (£6 million) to present value (£5 million) is being recognised in the Income Statement as a finance charge over the period from the acquisition date to the date of the final payment in 2016. The charge recognised in 2012 in respect of this accretion was £0.2 million.

The independent valuation of the option to acquire the 49% non-controlling interest of £14.9 million plus the present value of the future liability BUSINESS AND FINANCIAL REVIEW for the dividends of £4.9 million exceeds the payments for the 51% of £16.5 million (including the working capital payment). In addition the Sale and Purchase Agreement contains a provision which allows the shareholders to re-purchase the 51% in the event the Group does not purchase the non-controlling interest. The independent valuer considers this has a discounted value of approximately £2 million. The Directors’ believe that the remaining dilerential represents a discount on the fair value accepted by the sellers of the 51% stake, who have exited the business, in order to receive cash consideration upon disposal of 51% of their shares and to reduce any on-going ownership risk.

The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value at the acquisition date: Book value Fair value Fair value on acquisition adjustments to the Group £’000 £’000 £’000 Non current assets Intangible assets 8 6,781 6,789 Property, plant and equipment 9 (9) – Current assets Trade and other receivables 776 (132) 644

Shareholder loan 1,112 (1,112) – GOVERNANCE Cash and cash equivalents 405 – 405 Total assets 2,310 5,528 7,838 Current liabilities Trade and other payables (298) (1,743) (2,041) Deferred tax liability – (1,663) (1,663) Total liabilities (298) (3,406) (3,704) Net assets acquired 2,012 2,122 4,134 Initial cash consideration 14,476 Deferred consideration in respect of initial 51% acquisition 1,047 Payment for excess working capital and cash acquired 1,176 Non controlling interest 1,013 Goodwill arising 13,578

Fair value adjustments relate primarily to the following:

• Recognition of an intangible asset for customer relationships valued at £3.8 million using an excess-earnings method. These relationships will be written ol over nine years. FINANCIAL STATEMENTS • Recognition of an intangible asset for the domain names of the acquired websites, valued at £1.6 million, using the relief from royalty method. The domain names have an indefinite life. • Recognition of an intangible asset for the software and database which together were valued at £1.4 million and are written ol over nine years. • In addition a shareholder loan of £1.1 million was repaid by the sellers on completion.

The goodwill arising on the acquisition is largely attributable to the anticipated synergies created by the highly complementary business activities. The acquisition enables the Group to increase its scale and reach in the Turkish digital sports media market in addition to realising technology cost synergies. None of the goodwill is tax deductible. The non-controlling interest was measured based on the book value of the identifiable net assets at acquisition.

The Group’s results for the Period include post acquisition revenue of £2,500,000 and a profit after tax of £1,500,000. Had Mackolik been acquired on 1 January 2012 it would have contributed revenue and statutory profit after tax for the Period of approximately £4 million and £2,400,000 respectively.

Perform Group plc Annual Report and Accounts 2012 109 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

28. Acquisitions continued Sportal GmbH (“Sportal.de”) On 5 September 2012 the Group acquired the entire share capital of Sportal GmBH for a total acquisition price of €1.2 million (plus €0.2 million to repay a shareholder loan). The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group at the acquisition date: Book value Fair value Fair value on acquisition adjustments to the Group £’000 £’000 £’000 Non current assets Intangible assets 6 693 699 Property, plant and equipment 4 (4) – Current assets Trade and other receivables 57 (53) 4 Cash and cash equivalents 95 – 95 Total assets 162 636 798 Current liabilities Trade and other payables (275) (516) (791) Deferred tax liability – (175) (175) Total liabilities (275) (691) (966) Net liabilities acquired (113) (55) (168) Goodwill arising 1,110 Fair value of total consideration 943

The fair value adjustments relate principally to the recognition of acquisition intangibles and related deferred tax liabilities in respect of the domain name and associated trademarks, customer relationships and software and content. The domain name will not be amortised as it is considered to have an indefinite life whilst the customer relationships, software and content will all be amortised over three years.

Spox Media GmbH and mediasports Digital GmbH In December 2011 the Group acquired the entire share capital of Spox Media GmbH (Spox) and mediasports Digital GmbH (msd) for initial consideration of €3,650,000. Contingent consideration of up to €12,350,000 is payable based on the combined results of Spox and msd for the years to 31 December 2012, 2013 and 2014 (the “Earn-out Period”). The Directors’ best estimate of the discounted fair value contingent consideration at 31 December 2012 is £4,014,000. The discount (10%) applied is being unwound through the Income Statement over the Earn-out Period.

The contingent consideration is payable to the previous private equity owners and four other individuals, only two of whom are continuing to provide post-combination services. The private equity owners were the majority shareholders in the business prior to the acquisition and the Group anticipates that approximately two-thirds of the contingent consideration will be payable to them. The remaining third of the contingent consideration is split amongst the four individuals in proportion to their shareholdings. The Directors’ view is that the amount allocated to the two individuals providing a continuing service is not material and as such no service-related charge has been recognised.

110 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group at the acquisition date: Book value Fair value Fair value on acquisition adjustment to the Group £’000 £’000 £’000 Non-current assets: Intangible assets 745 1,980 2,725 BUSINESS AND FINANCIAL REVIEW Property, plant and equipment 88 (88) – Current assets: Trade and other receivables 961 (81) 880 Cash 598 – 598 Total assets 2,392 1,811 4,203 Current liabilities: Trade and other payables (2,801) (262) (3,063) Deferred tax liability – (706) (706) Total liabilities (2,801) (968) (3,769) Net assets acquired (409) 843 434 Goodwill arising 6,492 Fair value of total consideration 6,926

Fair value adjustments relate primarily to the following:

• elimination of intangible assets (£0.7 million) and tangible assets (£0.1 million) that were replaced as part of the acquisition accounting process.

• recognition of an intangible asset for the domain name and associated trademarks, valued at £1.8 million, using the relief from royalty method GOVERNANCE which reflects the discounted future cash flows saved from not incurring royalty payments. The doman name has an indefinite life. • recognition of customer relationships, website architecture and content archives which in total are valued at £1.0 million. These amounts will be written ol over three years.

The goodwil arising on the acquisition is largely attributable to the anticipated synergies created by the highly complementary business activities. The acquisition enables the Group to increase its scale and reach in the German digital sports media market in addition to realising technology cost synergies.

The fair value of consideration is comprised of: £’000 Initial cash consideration 3,079 Contingent cash consideration 3,847 6,926 FINANCIAL STATEMENTS

Perform Group plc Annual Report and Accounts 2012 111 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

28. Acquisitions continued Goal.com (Holdco) S.A. On 18 February 2011 the Group acquired the entire share capital of Goal.com (Holdco) S.A. for a total acquisition price of US $30 million. The acquisition was funded, in part, with a £17 million term loan facility.

The following table sets out the book values of the identifiable assets and liabilities acquired and their provisional fair value to the Group at the acquisition date: Book Acquisition value on related Fair value Fair value acquisition adjustments adjustments to the Group £’000 £’000 £’000 £’000 Non-current assets: Intangible assets 5,971 (5,971) 9,331 9,331 Property, plant and equipment 9 (9) – – Current assets: Trade and other receivables 641 – (216) 425 Cash 26 – – 26 Total assets 6,647 (5,980) 9,115 9,782 Current liabilities: Deferred tax liability – – (2,426) (2,426) Trade and other payables (1,239) – (646) (1,885) Non-current liabilities Loans and other borrowings (1,734) 1,734 – – Total liabilities (2,973) 1,734 (3,072) (4,311) Net assets acquired 3,674 (4,246) 6,043 5,471 Goodwill arising 12,643 Fair value of total consideration 18,114 Net cash outflows in respect of the acquisition comprised: Gross cash consideration 18,114 Cash acquired (42) 18,072

Acquisition related adjustments relate to the elimination of intangible assets which were replaced as part of the acquisition accounting process and financing-related adjustments arising on the transaction.

Fair value adjustments relate principally to the recognition of the following acquisition intangibles and related deferred tax liabilities:

• the domain name and associated trademarks, valued at £8 million using the relief from royalty method, which reflects the discounted future cash flows saved from not incurring royalty payments. The domain name has an indefinite life. • customer relationships, valued at £0.75 million, using the excess earnings valuation method, with a deduction for contributory assets. The customer relationships will be amortised over three years. • software and content related intangible assets, which together are valued at £0.5 million. The software and content assets will be amortised over three years.

The goodwill arising on the acquisition of Goal.com reflects buyer-specific synergies. The acquisition has enabled the Group to increase its scale and reach in the digital sports market in addition to realising technology cost synergies and improving global advertising sales.

Global Sports Media BV On 9 January 2009 the Group acquired 51% of the shares in Global Sports Media BV, a Dutch company which owns and runs the Soccerway. com sports information website and provides sports statistics and data to a wide range of international customers. The Group excercised its option to acquire the remaining 49% of shares in December 2011 for €4.3 million.

112 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

WatchandTrade Ltd In December 2011 the Group acquired the remaining 40% of shares (non-controlling interest) of WatchandTrade Limited for a cash payment of £550,000 with additional consideration based on the annual results of WatchandTrade over the period to 31 December 2013. The Sale and Purchase Agreement entered into in December 2011 modified a previous agreement entered into by the Group in 2009 and the other shareholder who owned the non-controlling interest. The original 2009 agreement contained an option for the Group to acquire the non- controlling interest by paying additional consideration based on the results of WatchandTrade or with a fixed payment of £5 million by December 2011. At the date of entering the 2009 agreement the Group valued the 40% at between £5 million and £6 million. BUSINESS AND FINANCIAL REVIEW

The additional consideration mechanic set out in the 2011 agreement is determined on the annual results of WatchandTrade and is over the period to 31 December 2013. The maximum amount payable under the new agreement is £6.4 million. £0.7 million was paid in December 2011 on signing the new agreement. As such the maximum undiscounted liability at 31 December 2011 was £5.7 million. The Directors believe that the maximum amount will be paid out. The Group have recognised a liability for the fair value of the contingent consideration as at 31 December 2011 of £4.8 million (in accordance with IAS 32 and 39) with an olsetting adjustment to equity (in accordance with IAS 27) as the Directors believe that these payments are consideration for acquiring the non-controlling interest. The financial liability will be subsequently measured and any changes arising from either the timing or the amount of the liability will be recognised in the Income Statement as a finance charge in accordance with the requirements of IAS 39.

The Group had not recognised this financial liability in its previous financial statements as it had initially concluded that any payments in respect of the acquisition of the non-controlling interest should be recognised directly in equity as a transaction with a shareholder. However following the conclusion of the Group’s discussions with the FRCCC the Group has re-stated its prior year consolidated statement of financial position and statement of changes in equity (refer to “prior year re-statement” above).

The payments are, to a certain extent, conditional upon continuing service from the selling shareholder during the earn-out period, however, in the judgement of the Directors it is not believed that these payments due to the selling shareholder reflect payments in respect of his service. GOVERNANCE The Directors believe that IAS 27 applies to the contingent payments and as such have not considered it necessary to develop an alternative accounting policy by reference to other accounting standards. The Directors’ acknowledge that there is a critical judgment in this accounting treatment and acknowledge that the Group could have developed an alternative accounting policy. However, as the directors consider the estimated fair value of the payments under the 2011 agreement is not materially dilerent from the 2009 agreement, that wasn’t contingent on future service, the Directors believe the treatment adopted is appropriate. In the event that the payments become (or the Directors believe will become) materially dilerent from the estimated fair value of payments under the 2009 contract, the Group will recognise this cost as a charge above operating profit within the Income Statement.

Sportal On 29 July 2009 the Group acquired 66% of the shares in Sportal Australia Pty Ltd, an Australian company which owns and runs the Sportal. com.au sports website and provides sports data and website and mobile solutions to a wide range of customers to Australia. A contractual commitment was also made to acquire the remaining shareholding in three tranches in 2010, 2011 and 2012. Accordingly, in 2010, 2011 and 2012 the Group acquired an additional 33% (11% in each year) of the shares in Sportal for £314,000, £311,000 and £316,000 respectively.

29. Commitments under finance leases

Within 1 to 5 After FINANCIAL STATEMENTS 1 year years 5 years Total £’000 £’000 £’000 £’000 2012 Lease payments 202 – – 202 Future finance charges (21) – – (21) Net present values 181 – – 181 2011 Lease payments 354 214 – 568 Future finance charges (47) (21) – (68) Net present values 307 193 – 500

Perform Group plc Annual Report and Accounts 2012 113 FINANCIAL STATEMENTS

Notes to the Group financial statements continued Year ended 31 December 2012

30. Commitments (a) Operating leases At the balance sheet date, the Group had total outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: 2012 2011 £’000 £’000 Within one year 1,599 892 In the second to fifth years inclusive 931 1,092 After five years 62 –

Operating lease payments represent rentals payable by the Group for oece property and computer equipment costs.

(b) Rights commitments At 31 December 2012 the Group had commitments to acquire sports content rights of £84 million (2011: £101 million) of which £43 million (2011: £39 million) is due in the next year and the remaining £41 million (2011: £62 million) is due in the next two to five years.

(c) Acquisition related commitments The Group has a contractual commitment to pay contingent consideration in 2013, 2014 and 2015 in relation to the acquisitions of RunningBall, Spox and msd as well as WatchandTrade and Mackolik. Refer to notes 1 and 28 or further details.

31. Related parties There are no additional related party transactions to disclose.

32. Contingent liabilities There were no contingent liabilities at the year end (2011: £nil).

33. Subsequent events Subsequent to the year-end, on 4 March 2013, the Group completed the acquisition of Voetbalzone B.V. (“Voetbalzone”) for initial consideration of €2 million. Additional contingent consideration of €10,500,000 is payable based on the EBITDA of Voetbalzone for the years to 31 December 2013, 2014 and 2015. The Group will disclose the book value of the identifiable assets and liabilities and their value in the Group’s interim results for the six months to 30 June 2013 and in its 2013 financial statements.

114 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS

Parent company independent auditors’ report Perform Group plc OVERVIEW Annual Report and Accounts 2012

We have audited the parent company financial statements of Perform Group plc for the year ended 31 December 2012 which comprise the parent company balance sheet, the parent company statement of accounting policies and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 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 auditor’s 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 BUSINESS AND FINANCIAL REVIEW 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 auditor As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the parent company 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/private.cfm.

Opinion on financial statements In our opinion the parent company financial statements:

• give a true and fair view of the state of the company’s alairs as at 31 December 2012; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and GOVERNANCE • have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006 In our opinion:

• the part of the Remuneration Committee Report to be audited has been properly prepared in accordance with the Companies Act 2006; and • the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the parent company 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 and the part of the Remuneration Committee Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or FINANCIAL STATEMENTS • we have not received all the information and explanations we require for our audit.

Other matter We have reported separately on the group financial statements of Perform Group plc for the year ended 31 December 2012.

Mark Henshaw Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants

London 5 March 2013

Perform Group plc Annual Report and Accounts 2012 115 FINANCIAL STATEMENTS

Perform Group plc Parent company financial statements Year ended 31 December 2012

2011 2012 (re-stated) Notes £’000 £’000 Fixed assets Investments 3 25,772 25,110 Current assets Debtors 4 137,564 26,945 Cash at bank and in hand 9,007 65,016 146,571 91,961 Current liabilities Creditors: amounts falling due within one year 5 (8,263) (1,952) Net current assets 138,308 90,009 Total assets less current liabilities 164,080 115,119 Net assets 164,080 115,119 Capital and reserves Called-up share capital 6 6,635 6,260 Share premium 6 68,323 68,323 Capital redemption reserve 6 38,342 38,342 Merger reserve 8 47,197 – Profit and loss account 8 3,583 2,194 Total capital and reserves 164,080 115,119

The 2011 balance sheet has been re-stated. Details of the re-statement are explained in note 1, Accounting Policies – Restatement of prior year profit and loss account. Previously the profit and loss account had been £5,424,000. The re-statement has had the elect of reducing this by £3,230,000 to £2,194,000 and total capital and reserves by the same amount from £118,349,000 to £115,119,000. Debtors also reduced by the same amount from £30,175,000 to £26,945,000.

The financial statements of Perform Group plc, registered number 6324278 were approved by the Board of Directors and authorised for issue on 5 March 2013.

Signed on behalf of the Board of Directors

O Slipper Director

116 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

The individual financial statements for the Company have been prepared in accordance with UK law and applicable UK GAAP accounting standards.

The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and the preceding year.

Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards and company law. BUSINESS AND FINANCIAL REVIEW

The Company had cash balances of £9,007,000 at the year end and no borrowings. Having reviewed cash flow forecasts and budgets for the year ahead the Directors have a reasonable expectation that the Group has suecient resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

The Company had incorrectly recognised an inter-company charge receivable of £3,230,000 in its 2011 Company-only Income Statement. The Directors’ consider that due to the amount the prior year Company-only Income Statement and Balance Sheet should be re-presented. In the 2011 financial statements, the Company reported a profit of £1,266,000. The re-statement has had the elect of reducing this by £3,230,000 to a loss of £1,964,000. The profit and loss account previously reported had been £5,424,000. The re-statement has had the elect of reducing this by £3,230,000 to £2,194,000 and total capital and reserves by the same amount from £118,349,000 to £115,119,000. Debtors also reduced by the same amount from £30,175,000 to £26,945,000.

Exemptions The Directors have taken advantage of the exemption available under section 408 of the Companies Act 2006 and not presented a profit and loss account for the Company alone. The Company is also exempt under the terms of FRS 8 Related Parties from disclosing related-party transactions with entities that are wholly owned and part of the Perform Group plc group. GOVERNANCE Investments Fixed asset investments are shown at cost less provision, if any, for impairment.

Revenue recognition Revenue represents amounts derived from the provision of management services to the Group’s subsidiaries and are also derived from the Group’s continuing, ordinary activities, after the deduction of value added tax.

Foreign currency translation Foreign currency transactions of individual companies are translated at the rates ruling when they occurred. Foreign currency monetary assets and liabilities are translated at the closing spot rate. Any dilerences are taken to the profit and loss account.

Taxation The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and further excludes items that are never taxable or deductible.

The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. FINANCIAL STATEMENTS

Deferred tax is recognised in respect of all timing dilerences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exceptions:

• provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold; and

• deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing dilerences can be deducted.

Perform Group plc Annual Report and Accounts 2012 117 FINANCIAL STATEMENTS

Perform Group plc Parent company financial statements continued Year ended 31 December 2012

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing dilerences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Share-based payments Where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and for cash settled instruments is re-appraised at each balance sheet date.

All equity settled share-based payments are ultimately recognised as an expense in the Income Statement with a corresponding credit to reserves. All cash settled share-based payments have a corresponding liability.

If vesting periods apply, the expense is allocated over the vesting period. Estimates are revised subsequently if there is any indications that the number of awards expected to vest dilers from previous estimates.

1. Staf costs Employee costs (including Executive Directors) were 2012 2011 £’000 £’000 Wages and salaries 2,884 2,539 Social security costs 380 284 Pension costs 186 114 Share-based payments 1,426 537 4,876 3,474

The following table sets out the Executive Directors’ remuneration: 2012 2011 £’000 £’000 Wages and other benefits 808 892 Social security costs 113 110 921 1,002

The emoluments of the highest paid Director were:

2012 2011 £’000 £’000 Emoluments 285 319

2. Profit for the year As permitted by section 408 of the Companies Act 2006 the Company has elected not to present its own profit and loss account for the year. The Company reported a loss after tax for the year ended 31 December 2012 of £678,000. The Company had incorrectly recognised an inter- company charge receivable of £3,230,000 in its 2011 Company-only Income Statement. The Directors’ consider that due to the amount the prior year Company-only Income Statement and Balance Sheet should be re-presented. In the 2011 financial statements, the Company reported a profit of £1,266,000. The re-statement has had the elect of reducing this by £3,230,000 to a loss of £1,964,000.

118 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

3. Investments 2012 £’000 £’000 2011 At 1 January 25,110 25,008 Capital contributions to Group companies 662 102 At 31 December 25,772 25,110 BUSINESS AND FINANCIAL REVIEW Perform Media Services Ltd, a registered company in Great Britain whose main trade is digital sports media, is the Company’s only directly owned subsidiary. The Company owns 100% of the shares in the entity.

It is the opinion of the Directors that the total value of the Company’s investment in its subsidiaries is not less than the amounts at which they are stated above.

The Group’s Performance Share Plan (refer to note 7 to the financial statements) is an equity settled scheme, settled with shares in the Company. Accordingly an increase in investments is recorded to account for the capital contribution to subsidiaries.

4. Debtors (all current) 2011 2012 (re-stated) £’000 £’000 Amounts owed by group undertakings 136,552 26,463 Prepayments and accrued income 506 353

Deferred tax 506 129 GOVERNANCE 137,564 26,945

5. Creditors: amounts falling due within one year 2012 2011 £’000 £’000 Trade creditors 392 277 Amounts owed by Group undertakings 6,419 197 Corporation tax liability – 233 Other taxes and social security (143) 113 Accruals and deferred revenue 1,595 1,132 8,263 1,952

6. Share capital FINANCIAL STATEMENTS At 31 At 31 December December 2012 2011 £’000 £’000 Issued Ordinary Shares of 2 and 7/9ths pence each 6,635 6,260 6,635 6,260

At 31 At 31 December December 2012 2011 Nos. Nos. Issued Ordinary Shares of 2 and 7/9ths pence each 238,882 225,376 238,882 225,376

Perform Group plc Annual Report and Accounts 2012 119 FINANCIAL STATEMENTS

Perform Group plc Parent company financial statements continued Year ended 31 December 2012

6. Share capital continued In May 2012, 13,506,000 new ordinary 2 and 7/9ths pence shares were issued as part consideration for RunningBall.

On 18 March 2011 the Company re-registered from a private limited company to a public limited company.

Following a resolution of the Company passed on 7 April 2011 which took elect immediately prior to the Listing of the Company’s securities on the main market of the London Stock Exchange:

• each of the Company’s A Ordinary Shares were subdivided, reclassified and redesignated as 36 new Ordinary Shares; • each of the Company’s B Ordinary Shares were subdivided, reclassified and redesignated as 36 new Ordinary Shares; • each holding of the existing Preference Shares were consolidated into one preference share; • these Preference Shares were subdivided, reclassified and redesignated into, in aggregate, 21,132,432 new Ordinary Shares and 1,380,354,048 deferred shares of 2 7/9ths pence each in the capital of the Company; and • the Company allotted a further 28.0 million Ordinary Shares of 2 and 7/9ths pence each.

Following the share re-organisation and Listing the Company’s share capital comprised 225,376,072 new Ordinary Shares of 2 and 7/9ths pence. The Company received proceeds, net of bank fees and costs, of £69.7 million.

On 21 June 2011 the Company cancelled, at no cost, all of the deferred shares created on Listing. The deferred shares did not entitle the holders to any dividends or distribution and were only able to be transferred by the Company. A capital redemption reserve of £38.3 million was created as a result.

7. Share-based payments

Performance Share Plan (PSP) The Group has put in place a Performance Share Plan (“PSP”) which uses shares to provide long-term incentives to Executive Directors and senior management of the Group. Awards made under the PSP are subject to a matrix of non-market based performance targets (based on adjusted earnings per share and revenue compound growth) and are measured over a three year performance period.

Award – 24 June 2011 An award made in June 2011 is measured over a performance period to 31 December 2013 with awards vesting in June 2014 subject to continued employment. In the event that all the performance criteria are met, a maximum number of 1,400,000 shares will vest. The fair value of each award is £2.19 calculated by reference to the closing market price on the dealing day preceding the date of grant. None of the awards lapsed during either 2012 or 2011. Based on the Group’s current forecast, Management expect that 100% of the shares will vest and management expect that 5% of participants will leave before the awards vest. At the previous year-end Management expected 65% of the awards would vest. As such a true-up charge has been recognised in the current year.

As such, and In accordance with IFRS 2, the Group has recognised a charge (including true-up) of £1,242,000 (2011: £352,000) in respect of this equity settled scheme. The charge recognised in the Company only Income Statement in 2012 is £881,000.

Award – March 2012 An award made in March 2012 is measured over a performance period to 31 December 2014 with awards vesting in March 2015 subject to continued employment. In the event that all the performance criteria are met, a maximum number of 1,500,000 shares will vest. The fair value of each award is £3.03 calculated by reference to the closing market price on the dealing day preceding the date of grant. None of the awards lapsed during the year. Based on the Group’s three year forecasts, Management expect that 65% of the shares will vest and 5% of participants will leave before the awards vest.

In accordance with IFRS 2, the Group has recognised a charge of £747,000 (2011: nil) in respect of this equity settled scheme. The charge recognised in the Company only Income Statement in 2012 is £469,000.

120 Perform Group plc Annual Report and Accounts 2012 FINANCIAL STATEMENTS OVERVIEW

Award – September 2012 An award made in September 2012 is measured over a performance period to 31 December 2014 with awards vesting in September 2015 subject to continued employment. In the event that all the performance criteria are met, a maximum number of 100,000 shares will vest. The fair value of each award is £3.74 calculated by reference to the closing market price on the dealing day preceding the date of grant. None of the awards lapsed during the year. Based on the Group’s three year forecasts, Management expect that 65% of the shares will vest and 5% of participants will leave before the awards vest.

In accordance with IFRS 2, the Group has recognised a charge of £28,000 (2011: nil) in respect of this equity settled scheme.. No charge has been BUSINESS AND FINANCIAL REVIEW recognised in the Company only Income Statement.

8. Equity/retained earnings Profit Total Issued Capital and loss shareholders’ share Share Merger redemption account funds capital premium reserve reserve (re-stated) (re-stated) £’000 £’000 £’000 £’000 £’000 £’000 At 1 January 2011 43,242 – – – 3,801 47,043 Re-classification and issue of share capital/ premium (net of fees) 1,360 68,323 – – – 69,683 Cancellation of deferred shares (38,342) – – 38,342 – – Loss for the year – – – – (1,964) (1,964) Credit to equity for share-based payments – – – – 357 357 At 31 December 2011 6,260 68,323 – 38,342 2,194 115,119

Share capital issued 375 – 47,197 – – 47,572 GOVERNANCE Loss for the year – – – – (678) (678) Foreign exchange – – – – 49 49 Credit to equity for share-based payments – – – – 2,018 2,018 At 31 December 2012 6,635 68,323 47,197 38,342 3,583 164,080

As part of the Group’s acquisition of RunningBall, 13.5 million new ordinary shares in the Company which were issued to the sellers. The number of issued shares was based on the average closing mid market price of the Group’s ordinary shares and the average closing mid-point sterling/euro exchange rate over the 30 trading days preceding 15 May 2012. The fair value of the 13.5 million new ordinary shares issued was calculated based on the bid price at the date of acquisition.

A merger relief reserve of £47.2 million has been created to record the excess over nominal value on the issue of the shares in relation to the acquisition. FINANCIAL STATEMENTS

Perform Group plc Annual Report and Accounts 2012 121 FINANCIAL STATEMENTS

Perform Group plc Shareholders information

Company secretary Legal advisers David Surtees Freshfields Bruckhaus Deringer LLP 65 Fleet Street Registered okce London EC4Y 1HS Perform Group plc Sussex House Wiggin LLP Plane Tree Crescent 10th Floor, Met Building Feltham TW13 7HE 22 Percy Street London W1T 2BU Investor contact Stephen Malthouse Joint Corporate Brokers Tulchan Communications LLP Morgan Stanley 85 Fleet Street 25 Cabot Square London EC4Y 1AE London T: 020 7353 4200 E14 4QA E: [email protected] UBS Registrars 1 Finsbury Avenue Equiniti Limited London Aspect House EC2M 2PP Spencer Road Lancing Company website West Sussex BN99 6DA Investor and shareholder related information can be found on the Company website at: Auditors www.performgroup.com/Investors Grant Thornton UK LLP Grant Thornton House Financial Calendar Melton Street AGM 16 April 2013 Euston Square Interim results presentation August 2013 1 London NW1 2EP 1 Date of Interim results presentation correct at time of print, but subject to change

122 Perform Group plc Annual Report and Accounts 2012 The paper used in the report is Revive 50 Silk. Fibre source 50% recovered fibre and 50% virgin wood fibre from Sweden and Brazil. Recovered fibre is Process Chlorine Free (PCF). Virgin fibre is Elemental Chlorine Free (ECF) bleached. Printed in the UK by Pureprint using their alcofree® and pureprint® environmental printing technology, and vegetable inks were used throughout. Pureprint is a CarbonNeutral® company. Both manufacturing mill and the printer are registered to the Environmental Management System ISO14001 and are Forest Stewardship Council® (FSC) chain-of-custody certified.

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