Leading Edge

leading edge

Annual report & accounts 2013 bwin.party Annual report & accounts 2013 Introduction 117 117 Consolidated statement of statement Consolidated 116 of statement Consolidated 115 on statement Consolidated 114 Independent 110 Auditors’ Report performance Financial Statement of Directors’ 109 Disclosures Report Directors’ Other 106 83 2013 62 Corporate Directors’ of Directors Board governance 60 58 Chairman’s statement Governance responsibility on Focus 54 52 Principal 2013 review financial and Business risks 42 overview regulatory and Markets 26 16 Strategy 10 CEO’s KPIs and model Ourbusiness review 08 04 Investment case 02 Our business 01 Financial snapshot Strategic report 160 160 Glossary of cashflows statement Company 159 of statement Company 158 of statement Company 157 consolidated the to Notes 118 changes in equity position financial income comprehensive responsibilities Report Remuneration changes in equity changes in position financial statements financial of cashflows future at: future at: our about thoughts and in action ourstrategy about hear and can see you where ouronlinereport View onlineA richer experience demanding customer base. and markets to anincreasingly and brands, across multiple channels products gaming world-leading deliver transition to regulated markets. We and gives us a leading edge ourcompetitors from us differentiates platform eCommerce Our proprietary key drivers of our revenue model. maximising their appeal –these are by improving access to our games and We want to ‘let the world play for real’ www.bwinparty.com CEO Norbert Teufelberger “ onour performance Based full year prospects.” theGroup’s confident about summer, remains the Board FIFA World Cup during the the tocome and savings With cost further in 2014. growth revenue year-on-year todeliver we expect to-date as we Financial snapshot 01

2013 overview

Total revenue by product (€m) % Total revenue from nationally regulated and/or taxed markets Strategic Strategic S trateg r report

2013 2012 Change e ¤m ¤m % 100% p ort i Sports betting 235.8 262.9 (10) c 75% 47% 57% Other Casino & games 215.6 271.2 (21) Poker 114.6 176.5 (35) 50%

Bingo 53.1 64.3 (17) Nationally 25% 53% 43% regulated Other 33.3 26.7 25 and/or taxed Total 652.4 801.6 (19) 0% 2013 2012 oenneFinancial Governance Go v e rn

1 a Clean EBITDA by product (€m) 2013 net revenue by country n ce 2013* 2013# 2012# Change# ¤m ¤m ¤m % Germany 25% Sports betting 53.7 23.2 42.7 (46) UK 10% Italy 9% Casino & games 45.0 72.6 80.1 (9) Americas 6% France 6% Poker 7.7 22.3 28.5 (22) Spain 5% Bingo 8.2 12.9 18.8 (31) Greece 3% Belgium 1% performance performance Other (6.6) (23.0) (5.2) 342 Denmark 1% p erformance Other EU 18% Fin Total 108.0 108.0 164.9 (35) a Rest of World 16% n c i al * New method – see page 43 # Old method

Current trading, outlook and dividend Also in this report

t Trading in the first 10 weeks of 2014 in-line with expectations; p16 average daily net revenue down 10% year-on-year but up 6% (Re)-born in the USA versus Q4 2013 t Nationally regulated and/or taxed markets represented 56% of net revenue in the 10 weeks to 11 March 2014 t Board remains confident in the Group’s full year prospects t Recommended final dividend of 1.80p per share, a 5% increase over the prior year making 3.60p per share for the full year – a 5% increase over 2012

DividendDividend perp share 4.0 3.5 3.0

e 2.5 1.80 1.72 Final 2.0 1.5 p18

Pence per share shar Pence 1.0 1.80 1.72 Interim Upwardly 0.5 mobile 0.0 2013 2012 p10 1 Continuing operations – EBITDA adjusted for exchange differences, reorganisation expenses, income or expenses that relate to exceptional items CEO’s review and non-cash charges relating to share-based payments 02 Our business

bwin.party is a leading online gaming company with millions of customers who enjoy playing for real or virtual currency. Annual report & accounts 2013

bwin.party Sports betting Casino & games Poker

We offer bets on a pre-event Blackjack, roulette, slots One of the leading poker and live basis on all key and jackpot slots are some networks in several markets, sports worldwide. of our most popular online we have thousands of players casino games. each day, offering different levels of stakes and a wide range of tournaments.

KeyKey brandbrand 2013 Clean EBITDA2 KeyKey bbrandsrand 2013 Clean EBITDA2 KeyKey bbrandsrand 2013 Clean EBITDA2 bbwinwin €53.7m bbwinwin €45.0m papartypokerrtypoke €7.7m ppartypokerartypoke bbwinwin ppartycasinoartycasin GGiocoioco DigitaleDig GGiocoioco DigDigitale 47% 39% 7%

Read more on page 26 Read more on page 28 Read more on page 30

2 Before unallocated corporate costs of ¤6.6m 03 Strategic Strategic S trateg r report e p ort i c

Bingo Other revenue Powered by oenneFinancial Governance Go v e

With leading market positions Payments Our products are enabled rn a n in the UK, Italian and Spanish Kalixa is an integrated payments through our extensive ce online bingo markets, we are business offering acceptance, eWallet, resources in technology, looking to consolidate our acquiring and processing capabilities. supported by marketing position and expand into and customer service. Social gaming new territories. Win Interactive develops and markets Technology a range of games using the ‘freemium’ Our proprietary technology platform performance performance 2 p erformance KeyKey brandsbrand 2013 Clean EBITDA model through mobiles, social channels is managed by our in-house teams, Fin a

and the worldwide web. n

supported where necessary by third- c i FFoxyoxy BingoBingo €8.2m party resources. Organised into a series al GiGiocooco DigDigitale Other of Agile scrum teams, our software engineers delivered seven platform The Group has several smaller 7% releases in 2013 and expect to increase businesses including World Poker Tour, this to 11 releases in 2014. Winners (retail), InterTrader, sports content, B2B revenue, software services and domain sales. Marketing Our marketing mix employs a full Read more on page 32 Read more on pages 34 to 37 range of channels and assets to drive new player traffic and retain existing customers. These include offline, online and search, sponsorship and promotions, loyalty programmes and bonuses.

Customer service We have over 500 full-time customer service staff who provide around-the- clock assistance to our customers – using phone, email and chat we aim to respond quickly and effectively to all customer queries. 04 Investment case

The opportunity

The global online real money Global gross gaming revenue (‘GGR’) gaming market is a growing €m % and valuable segment of 400 12 Annual report & accounts 2013 the digital economy, with an increasing share of the global 300 9 bwin.party gaming market.

200 6

€26.1bn 100 3 +10.1% CAGR 3 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 All gambling (land-based and interactive) Percentage interactive (RH Scale)

External growth drivers

1 Broadband and mobile penetration4 2 Smartphone and tablet penetration5 Overall European % penetration in 2017 Absolute number of users in France, Germany, Italy, Spain and the UK

Broadband Avg 80% Mobile Avg Tablet Smartphone (Vs 2013 Avg 75%) 203.4 78% 29.3 million (Vs 2013 million Avg 52%)

3 Estimated global market size in terms of GGR in 2013 and compound annual growth 2013–2018 – H2 Gambling Capital – March 2014 6 7 3 M-commerce 4 Propensity to play games online 4 PWC Global Entertainment Average European % year-on-year % of 9–16 year olds who play and Media Outlook 2013–2017 (published 2013) growth in use of mobile for payments games on the internet 5 ComScore Rise of the 3Ms: m-retail, m-commerce and m-payments – November 2013 6 PWC Global Entertainment and Media Outlook 2013–2017 83% (published 2013) € +37% 7 Risk and Safety on the Internet – the perspective of European children – London School of Economics, co-funded by the European Union 05

External growth drivers (continued) Strategic Strategic S trateg r report e

5 Regulation – Europe p ort i Several countries in Europe have introduced or are c expected to introduce online gaming regulations. The table below seeks to summarise the position in a number of key markets. 3 1 Austria 6 Italy Products S Products S, P, C, B Tax rate8 2% S turnover Tax rate8 2–5% S turnover 8 9 oenneFinancial Governance 40% P, C, B 3% P turnover Go

5 v

Ring-fenced No in tournaments; e 9 20% GGR for C, 2 rn

Market size €191m a n

P cash games ce 2 Belgium and 11% B turnover Ring-fenced Yes Products S, P, C 9 8 Market size €893m Tax rate 11% 4 1 Ring-fenced No Market size9 €133m

3 Denmark 7 Spain Products S, P, C Products S, P, C11, B 6 8 performance performance Tax rate 20% Tax rate8 25% 7 p erformance Ring-fenced No Ring-fenced Yes Fin a Market size9 €276m 9 n Market size €431m c i al 4 France 8 UK Products S, P Products S, P, C, B Tax rate8 9.3% S turnover Tax rate8 15% onshore 2% P turnover 0% offshore12 Ring-fenced Yes Ring-fenced No Market size9 €1,060m Market size9 €2,899m

5 Germany10 9 Netherlands13 Products S Products S, P, C, B Tax rate8 5% S turnover Tax rate 20% Ring-fenced No Ring-fenced No Market size9 €731m Market size9 €205m

Product S = Sports betting P= Poker C= Casino & games B= Bingo MarketMarket dynamics in Europe14

8 As a % of gross gambling 11 Currently excludes online slots 25%25% revenue, unless stated otherwise although there are proposals to 3 9 Estimated 2013 gross gaming allow online slots in due course 1 Germany 20 20% revenue for online sports 12 A place of consumption betting, casino, poker and tax of 15% GGR is due to be bingo – H2 Gambling Capital – introduced in December 2014 Spain Austria 115%5% March 2014 13 Proposed, not enacted 10 A licensing regime for online Italy 14 Relative size of circle is total UK sports betting has been market online GGR in 2013 – 10%

proposed in all 16 states but estimated mar ket share in France

H2 Gambling Capital y no licences have yet been issued. Taxes on sports betting 5%

win .par t Belgium are at 5% of turnover on all bwin.party estimated market share in 2013 b German revenues. Taxes on Denmark poker and casino are being 0% paid at 20% of GGR but only -5% 0% 5% 10% on revenues generated by Estimated CAGR of GGR 2013–20189 Schleswig-Holstein residents 06 Investment case

External growth drivers (continued)

6 Regulation – United States Three states have enacted legislation to allow intra-state online gaming. The map highlights those states that are currently active or have previously considered intra-state Annual report & accounts 2013

online gaming regulations. bwin.party

1 Nevada Washington Massachusetts Products P Connecticut Tax rate 6.75% of GGR Ring-fenced Yes Population15 1.9m New York 2 Delaware Iowa Pennsylvania New Products P, C Nevada Jersey Tax rate State retains first $3.75m Illinois Delaware net proceeds p.a. then Colorado shared according to lotto agent mechanism California Ring-fenced Yes 15 Washington Population 0.7m DC

3 New Jersey Products P, C Texas Florida Tax rate 15% of GGR plus 2.5% Louisiana investment alternative Actively considering or or 5% alternative previously considered investment tax Regulations enacted Mississippi Ring-fenced Yes Population15 6.4m

4 California16 Products P Tax rate 5–10% Ring-fenced Yes Population15 26.3m Actively considering or previously considered California, Colorado, Connecticut, District of Columbia, Florida, Illinois, Iowa, Louisiana, New Jersey – Online Gross Win Massachusetts, Mississippi, New York, $m Pennsylvania, Texas and Washington. 10

Product P= Poker C= Casino & games 8

Golden Nugget/Amaya 6 15 Adult population over the age of 21 – US Trump/Ultimate Trump Plaza/Betfair Census Bureau, January 2014 Tropicana/Gamesys 16 On 21 February 2014 two bills were introduced, 4 WSOP/Caesars/888 one in the California Senate (SB1366) the Borgata/partypoker other in the Assembly (AB2291) to regulate online poker in California. As at the date of 2 this document, no vote had taken place and the future of this draft legislation remained uncertain. The proposed tax rate is expected 0 to be between 5% and 10% of GGR. Nov 13 Dec 13 Jan 14 Feb 14 07

Our core assets Strategic Strategic S trateg r report e

The five pillars of our business strategy p ort i are focused on leveraging our core c assets in order to increase accessibility to our gaming products and services 2 and to enhance their customer appeal. (For further details on our strategy see pages 16 to 25) Our core assets fall under the following four headings: oenneFinancial Governance Go v e rn a n ce

1 3

People International brands Proprietary technology performance performance p erformance Our business has been built over bwin and partypoker are our two and operating model Fin a n many years by a highly-driven and largest brands. bwin is one of the c i

We have invested significant capital al creative team. With over 2,700 full-time best known online sports betting in building a proprietary technology employees at the end of 2013 working in brands with a strong presence in most platform that combines key elements several international locations, we are European countries. partypoker is of the value chain including games able to attract and retain talent from internationally renowned and continues development, CRM and business within and outside our industry that to command strong brand recognition, intelligence. Each provides flexibility adds value to our business. particularly in the US. and control over our customer offer so that we can maximise revenues For more on our approach to employee engagement For further details on our market-leading products whilst maintaining a tight control see pages 55 to 57 and brands see pages 26 to 37 over our costs.

For further details on our technology platform see the feature on pages 38 and 39

Scale and reputation The opportunity for operational leverage, together with a shifting regulatory landscape, means that a strong presence in all four of our key product categories is an important driver of long-term success. It has also resulted in valuable long-term strategic partnerships with some of the world’s best known brands.

For further details on our strategic partnerships see page 20 and 21 08 Our business model and KPIs

The big picture – delivered through… ...key business drivers

A. The things we seek to influence To ‘let the world play for real’ our products and services KPI measure Annual report & accounts 2013 Regulated % of total revenue coming from need to be accessible and nationally regulated and/or markets taxed markets

bwin.party appealing for our customers around the world. Multiple % of gross gaming revenue channels through mobile/touch devices

User experience across all products and channels, Quality and measured by loyalty index scores breadth Market share across all products in key regulated markets accessible Availability of services Reliability and productivity Volume of software releases per annum

B. The things we have to manage

Technological The continuous emergence of new devices, change channels and platforms

Regulation and New regulatory regimes require tailored compliance solutions while rules in existing markets are also subject to change Taxation Changes to prevailing tax rates can result in significant shifts in the mix of products offered, consumer and competitor behaviour Challenging Traditional online poker has declined poker market in several markets in Europe and this is affecting casino volumes appealingap Shifting Increasing penetration and capabilities consumer tastes of mobile devices, advent of new social channels and opening of new markets all contribute to continuous shifts in consumer tastes 09

...and a robust revenue model Strategic Strategic Strate rep report ort gi c Current status Expectation for Dec 2015

New Existing Leaving On track 75% customers customers customers oenneFinancial Governance On track 50% Number of active customers Go v e rn a n ce Still improving 75% Yield per active customer

Still improving 9% Gross revenue performance performance performance F Bonuses and loyalty points in a

Still improving n c

% i

99.9 al

24 platform and Net revenue Still improving 52 product releases per annum Other revenue

Total revenue

Cost of sales & local gaming taxes

Gross proﬁt

For a summary of our principal strategic risks see page 52 Distribution costs/marketing expenses*

Administration costs*

Clean EBITDA

*Adjusted in accordance with Clean EBITDA definition (see Glossary) 10 CEO’s review

Transforming our business “2013 was a challenging Annual report & accounts 2013

year for our business,

bwin.party but it also marked a turning point as we increased our focus on nationally regulated and to-be-regulated markets, began to roll-out new and refreshed versions of our mobile and desktop products, and commenced the transformation of our technology Hear from Norbert online infrastructure.” bwinparty.com/ouryearinaction

Norbert Teufelberger CEO

2013 results Whilst disappointing, this masks good With further shifts towards regulated progress on several key objectives: we frameworks in several markets, we increased the proportion of our business optimised the shape and size of our in regulated and/or taxed markets having business with the aim of returning to launched into Belgium and New Jersey; growth in 2014. While focusing on fewer we began the transformation of our markets would reduce revenues it would software delivery process with our shift also allow us to reduce our cost base to an Agile working methodology; we significantly, and we delivered €97m launched our new poker product; we grew of cost savings in 2013 compared with the proportion of our revenue coming our original target of €70m of savings. through mobile and touch and introduced However, ISP blocking in Greece, poker our new mobile product for sports betting market declines in France and Italy as well in Spain. as losses associated with the migration of Total operating profit was €51.9m players to our new technology platform (2012: operating loss of €55.7m) reflecting in December 2012, meant that revenues the absence of retroactive taxes and declined by more than we had expected. lower amortisation costs as well as Total revenue declined by 19% and total the write-back of acquisition fair value Clean EBITDA fell by 35% year-on-year. provisions following the successful 11

settlement of the outstanding disputes. Having provided €85.7m at the time of the Merger, the settlement now agreed with Strategic Strategic Strate rep the authorities is for €1.9m resulting in report ort

a write back of €83.8m and a transfer to gi creditors of the balance. Consequently, c the Group delivered a profit after tax of €41.1m (2012: loss after tax of €64.7m). A detailed analysis of our performance in 2013 is covered in the Business and financial review 2013 on pages 42 to 51. Market backdrop oenneFinancial Governance Go v

Opting to reduce revenue and downsize e rn a

our business is not a natural choice for an n entrepreneurial enterprise like ours, but ce it was clear that in order to maximise our bwin extended its sponsorship of MotoGP in 2013 long-term prospects we had to focus our operations on fewer and more sustainable The opportunity additional taxes, the transition to markets – a process that initially would As set out in the investment case on pages fragmented, nationally regulated digital result in lower revenues and Clean EBITDA. 4 to 7, despite an increasingly complex gaming markets is inevitable, as are the Whilst painful to execute, we are now in business environment, we believe that increasing demands of the modern digital performance performance a stronger position from which we can performance

consumer. Our strategy has been set to F

the market opportunity for real money in begin to move forward – evidenced by maximise the long-term potential of our a gaming through digital channels is set to n c i

the sequential revenue growth we have al expand. While the structure and dynamics business model in this fast changing and delivered since the third quarter of 2013. vary for each of our core gaming verticals complex environment. As we predicted several years ago, (sports betting, casino & games, poker The five pillars of our strategy have not the regulatory landscape for online and bingo), we have established leading changed since bwin.party was first gaming has continued to fragment with positions in most products and in most conceived as a new entity back in the governments ring-fencing their online territories (see Markets and regulatory summer of 2010. As summarised on pages gaming markets. This development, overview on pages 26 to 37). 16 to 25, each pillar is focused on either together with the introduction of new We are determined to monetise the improving accessibility to our products, national taxes on gaming and increased opportunity before us by making our enhancing the appeal of our products, or complexity, have combined to reduce products accessible in regulated markets, both. Our long-term success will be driven financial returns. through as many channels and on as by our ability to execute against each In 2013, while we were impacted by the many different devices as we can. But to strategic pillar and we have established introduction of ISP blocking in Greece, we be truly successful, we also need to ensure a series of key performance indicators secured regulatory clearance to operate that our products appeal to the largest (‘KPIs’) against which our success and in both Belgium and New Jersey17. We do possible audience over the medium- future progress can be measured (see Our not anticipate any significant markets term. These two factors: accessibility and business model and KPIs on pages 8 and 9). will implement new regulations in 2014, customer appeal define the core drivers Implementing our strategy however several markets are continuing of our business model that is focused on Online operators have adopted different to develop regulatory frameworks driving sustainable growth in revenue and approaches in order to harness the online that may come into force during 2015. Clean EBITDA. gaming opportunity and our own path In addition, the UK intends to revise its Strategy for growth is different from most. While many have existing regime as well as introduce sought to embed third-party software a point-of-consumption tax from The shift towards regulation means that into their existing franchise, we have December 2014. the previous, so-called ‘dotcom’ approach to online gaming markets: one product developed almost all of the requisite A summary of key regulatory developments (sports, poker, casino & games or bingo), technological skills and assets in-house. affecting the Group can be found on pages one channel (worldwide web) and one However, recognising that we do not have 40 and 41. domain (dotcom), is no longer sustainable. a monopoly on good ideas, we have also With governments seeking to raise developed the requisite tools to enable third-party developers to connect to

17 The Group received an E-Licence to offer services in Belgium on 6 March 2013; and a transactional waiver from the Division of Gaming Enforcement in New Jersey on 8 November 2013 12 CEO’s review

our systems through open application Achievements in 2013 Second, the launch of our network in programming interfaces (‘APIs’), thereby As summarised in the Business and New Jersey at the end of November 2013 maximising the potential product offering financial review on pages 42 to 51, was a key milestone for us in expanding for our customers. Our objective is to our results last year were below what our presence in regulated markets. 18 reach our customers using a flexible, we had initially expected to achieve. Having secured the leadership position , modular, scalable and highly resilient While external and some internal factors we remain optimistic that New Jersey technology platform; one that provides such as migration losses meant that the will continue to grow and become an Annual report & accounts 2013 easy access to games through traditional, rebasing of our business was more painful attractive and profitable market for as well as new digital channels including than we had anticipated, we made solid us, although as already announced, mobile and social platforms; can progress against many of the operational we do not believe that we will achieve

bwin.party easily switch between B2C as well as objectives set out in my review last year profitability there until 2015. B2B business models; and that can be and are now well-positioned to return to Third, innovating our core gaming tailored to meet prevailing regulatory growth. I do not propose to go through all products and improving the experience requirements and demands that continue of these achievements, but there are three of our customers was another key to vary from market-to-market. that I want to highlight. objective for us in 2013. The first version We acknowledge that, to date at least, First, increasing the proportion of of our new poker product went live in we have yet to realise the full potential our business coming from nationally September but so far has only been of what we are building. However, we are regulated and/or taxed markets was a available to our dotcom customers and starting to see what can be achieved – key objective. The shift from ‘volume to the recently opened New Jersey market being able to launch new product labels value’ saw us reduce or discontinue new (together representing approximately through multiple channels quickly and customer acquisition in 18 countries and 65% of our total active customer base at low cost into newly regulated markets shift our focus onto the more sustainable in December 2013). is the acid test. Our early success in New regulated markets. As explained below, Jersey has proven what is now possible. whilst we successfully reduced our Guy Duncan, who joined us as Director of exposure to territories without nationally Product and Technology a little over a year regulated frameworks, a number of “ The launch of our network ago, provides a more detailed overview regulated markets actually shrank in 2013 in New Jersey at the end due to macroeconomic and other factors of our future plans and objectives for of 2013 was a key technology on pages 38 and 39. and this affected our overall revenue and Clean EBITDA performance. milestone for us” Managing key risks The online gaming sector has to contend with continuous regulatory, technological and fiscal change as part of its day-to-day business. How each of these factors and other specific risks can affect our business, the steps we take to mitigate their impact and how we believe they have changed over the past 12 months are summarised on pages 52 and 53. Regulatory change remains one of our biggest challenges but we have developed significant experience and invested in the resources needed to manage this risk as well as seize the opportunities that also arise from regulatory change. While regulation and other external factors are largely outside our control, through a coherent risk management framework we are able to sustain our business model as well as identify new opportunities for future growth. partypoker became a sponsorship partner of the New Jersey Devils in January 2014

18 Division of Gaming Enforcement – February 2014 13

Given the challenging market backdrop in Europe, we are pleased with the new product’s performance to date and plan Strategic Strategic Strate rep to enhance our offer and add many more report ort

features throughout 2014 that we believe gi will help to drive additional growth. c During 2014 we plan to roll-out the new product to more countries, increasing its coverage of our total active base. Our new mobile sports betting product launched into Spain in December 2013 and, once through its initial testing phase, will be launched in other key markets oenneFinancial Governance Go

during 2014. Each of these product v e rn

enhancements will be complemented a n by a marked improvement in our digital ce marketing capabilities, leveraging our extensive international player base. Each of these initiatives represent important steps towards returning our business to growth. Our blindfold challenge with Manchester United went viral with 3 million views: see www.youtube.com/bwin performance performance Things we still need to do In our half year results presentation in Mobile/touch performance F August 2013 we talked about addressing in Despite having delivered against Second, the explosion in mobile/touch a n c

what we call ‘technical debt’ – areas of i many of our objectives for 2013, there represents a major opportunity for al were some items that we have yet our software and technology set-up the Group and we are determined to to complete. Whilst we made good that need to be improved and updated increase our mobile footprint significantly. progress towards achieving our target to ensure maximum platform stability Having been held back from releasing technology platform, we still have further and a smooth user experience. With the cutting-edge mobile products until now work to do and as a result continue to demands of many other projects in 2013 due to other priorities, we believe there run duplicate technologies across our we still have work to do in order to reduce is an opportunity to replicate the success platforms in France and Italy. Delays to the level of technical debt further and this achieved on mobile/touch by several the launch of our new poker software is scheduled to take place during the first operators in the UK, across each of our in dotcom markets until September half of 2014. core markets in Europe as well as the US. 2013, coupled with the launch into New Plans for 2014 and KPI targets for 2015 Our new sports betting application for Jersey in November, meant we were mobile that is built in HTML5 will be rolled- unable to integrate France and Italy Focus on sustainable markets out across key markets later this year. during the year as we had originally Against this backdrop, our plans for 2014 intended. Both integrations are now are clear: first, we will continue to focus Increase productivity scheduled to take place later this year, on nationally taxed, regulated and to-be- Now that we are emerging from the releasing additional synergies in 2015 and regulated markets. This will include the complex integration of our multiple simplifying our operations further. US where we want to consolidate our technology platforms, we are determined Some late changes to design and user market-leading position in New Jersey to deliver a marked improvement in experience meant that there were some as well as secure market entry into other productivity, stability and speed to market delays in launching mobile applications states that pass the requisite legislation during 2014. This will be assisted by our for our new poker product before the and that represent a significant business transition to the Agile development year-end. However, we are now live in New opportunity for us. methodology. For further details on our transition see pages 38 and 39. Jersey on iOS and Android and expect As part of our desire to increase focus, to launch a number of new features we will look to divest non-core assets including sit ‘n’ go tournaments and an in order to further reduce complexity HTML5 version of ‘FastForward’ within the and costs. Any surplus funds raised from next few weeks. disposals will be returned to shareholders when appropriate. 14 CEO’s review Annual report & accounts 2013

bwin.party

The FIFA World Cup in Brazil is expected to stimulate overall betting volumes in the summer of 2014

“We are determined For these three plans, our KPIs are t For both our US and non-US technology to increase our as follows: platforms we are aiming to increase significantly the volume of technology t By the end of 2015 we plan to have mobile footprint releases delivered each year and 75% of our net revenue coming from signiﬁcantly improve the availability of our services. nationally taxed and /or regulated Having implemented seven major that represents a markets19. Having shifted our tactics platform releases on our non-US major opportunity from ‘volume to value’ during 2013, we platform in 2013, this will increase to 11 had already reached 53% of net revenue for the Group” releases in 2014 and our target is to be coming from these markets in 2013 able to deliver 24 platform releases and and want to continue to build on the 52 gaming-related releases per annum positive start that we have made in New by the end of 2015, all of which will Jersey where our network currently has help to ensure that we deliver on our an approximate 40% market share20. strategic objectives. By the end of 2015 we want to continue to command a leadership position Board changes in New Jersey and aim, legislation Back in November 2013, Simon Duffy, permitting, to have launched into at Non-Executive Chairman notified the least one other state; Board of his intention not to stand t In mobile, we have big ambitions. for re-election to the Board at the Users that typically use mobile as well forthcoming AGM. The Board wishes to as desktop devices tend to be higher thank Simon for his contribution over value players. Therefore, we are aiming the past three years and wishes him to increase the proportion of our gross every success for the future. As previously gaming revenue that comes through announced, a process is underway, led mobile and touch devices from 10% in by the Independent Directors, to find 2013 to 50% by December 2015; and Simon’s successor.

19 Currently Austria, Belgium, Denmark, France, Germany (sports betting), Italy, Spain, UK and US (New Jersey) 20 Division of Gaming Enforcement – February 2014 15

Share repurchases While New Jersey has yet to reach its Shareholders wishing to receive Using the authorities granted by full potential because of geolocation dividends in euros rather than pounds shareholders at the 2012 and 2013 AGMs and payment processing issues that sterling will need to file a currency election Strategic Strategic Strate rep to repurchase up to 10% of the Company’s are continuing to impact all operators, and return it to the Group’s registrars on report ort issued share capital, in 2013 the Company the Group has made a solid start in this or before 2 May 2014. Further information gi bought back 2,635,677 shares for newly regulated market. Despite the regarding the final dividend is set out in c cancellation at a total cost, including headwinds of lost revenue from Greece the AGM Notice. commission, of £3,513,586. The Company and continued pressures in European poker, based on the Group’s performance Norbert Teufelberger has purchased 500,000 shares for CEO cancellation since the year-end at a total to date and the planned developments cost, including commission, of £577,437. outlined below, we are confident that The total number of bwin.party shares in we can deliver year-on-year revenue and Clean EBITDA growth in 2014. oenneFinancial Governance issue as at 11 March 2014 was 817,477,478 Go v and the total number of voting rights in e Dividend rn a

issue was 814,398,097 (total number of n The Board is recommending a 5% ce shares in issue minus 3,079,381 shares held increase in the final dividend to 1.80p per by the employee benefit trust in respect of share which together with the interim which the voting rights have been waived). dividend of 1.80p per share makes a total Current trading, outlook and dividend of 3.60p per share for the year final dividend ended 31 December 2013 (2012: 3.44p). Trading in the first ten weeks of 2014 The final dividend, if approved at the Annual General Meeting, will be payable performance performance has been in line with our expectations performance F with average daily net revenue down to shareholders on the register of in a

shareholder interests on 25 April 2014 n 10% year-on-year primarily due to the c i tactical shift from ‘volume to value’ (the ‘Record Date’). It is expected that al but up 6% versus the previous quarter dividends will be paid on 28 May 2014. and with nationally regulated and/or taxed markets representing 56% of net revenue. While our shift from ‘volume to value’ means that our year-on-year performance remains down versus 2014, we have achieved sequential growth since the third quarter of 2013, in line with our guidance.

partypoker partnered with the Philadelphia 76ers in January 2014 16 Strategy

Focus on nationally 2013 review regulated and to-be-regulated What we said we would do What we achieved markets t Launch online poker and casino t Successful launch of online poker services in New Jersey and casino into New Jersey in Annual report & accounts 2013 accounts & report Annual Newly regulated markets in Europe November 2013 t Continue our active programme of and the US represent exciting political and regulatory dialogue in – secured the number one position opportunities for growth. bwin.party key markets with our local partner, the Borgata Hotel Casino and Spa t Focus customer acquisition in regulated markets – mobile apps launched t Implemented our shift from ‘volume to value’ – stopped player acquisition in 18 markets and increased mix of marketing spend towards regulated, taxed and to-be-regulated markets

Case study: 1 New Jersey: (Re)born in the USA Name: Jeffrey Haas Title: Director of Poker

Hear mmore from Jeffrey online bwinparty.com/ouryearinactionbwinparty 17

Priorities for 2014 Strategic Strategic Strate rep t Transition from operating under report ort gi

transactional waiver to online gaming c licence in New Jersey; and launch t 53% of total revenue came from these full mobile offer to consolidate markets in 2013: (2012: 43%) leadership position t Maintained top three market share t Optimise profitability in regulated position in Spain, Italy and France markets where either a top three position is currently out-of-reach t Launched into Belgium in April or where other factors, such as high oenneFinancial Governance through partnership with a locally Go

taxes, are impacting financial returns v e

licensed operator rn a Prepare to enter regulated n t ce markets that may open in the near future, securing local partners where necessary

bwin.be launched in Belgium in April 2013 performance performance performance F in a n c i al

KPIsKPIs aand expectations

t Grow net revenue in absolute terms and increase the proportion of total revenue coming from regulated and/ or taxed markets from 53% in 201321 to 75% by the end of 2015 t Increase market share in each of our regulated markets

% of tottotala revenue from nationally The Garden State of New Jersey opened number one position in terms of gross rregulatedegulate and/or taxed markets as a regulated market for online poker win. Early in 2014 we continued to build 7575 and casino in November 2013, providing our local presence through pioneering 75% an exciting opportunity to return the partnerships with the New Jersey Devils partypoker brand to the US after a NHL team and their home venue, the 1.80 seven-year absence. Partnering with Prudential Center, and also with the 5500 53% the Borgata Hotel Casino and Spa, the 76ers NBA team which is located just leading land-based casino brand in New across the state border in Philadelphia Jersey, our network has secured the with a large fan base in New Jersey. 25

2013 2015 0 21 Austria, Belgium, Denmark, France, Germany (sports), Italy, Spain, UK and US (New Jersey). Actual Expectation 18 Strategy

Invest in our core 2013 review assets: technology, product, people What we said we would do and brands t Continue to progress our technology integration, decommissioning surplus Annual report & accounts 2013 accounts & report Annual Continuous investment in our technology and associated resources technology, products, brands t Secure the necessary infrastructure and people is essential for bwin.party to launch into the US our long-term success. t Launch new version of our poker product, including touch- enabled channels t Introduce a 360-degree appraisal t Deliver real money poker and process for our managers and leaders casino games in the UK for Zynga and close skill gaps through a tailored programme of training t Develop new proprietary bingo product on our integrated t Upgrade our work processes technology platform using Agile methodology t Add new features to our sports product

Case study: Upwardly mobile

Having pioneered mobile sports betting back in 2001, last year saw the launch of our new mobile software in Spain under the bwin brand. 2 With many new features including feature-rich scoreboards and statistics, a modern, clean user interface designed specifically for touch devices and greater personalisation, the product is a major step forward for the Group. Built in HTML5, the new client can work on any device although we are also delivering iOS and Android versions to maximise ease of use and accessibility. Feedback received is already being used to improve the product further ahead of a roll-out to our major markets in 2014. 19

Priorities for 2014 Strategic Strategic Strate rep t Deliver revitalised poker product report ort gi

What we achieved to key regulated markets c t Roll-out new sports mobile product t Launched new poker product in t Began test phase for new mobile to key markets dotcom markets under partypoker sports product in Spain and bwin labels t Increase number of third-party t Completed 360-degree assessment games in our casino portfolio t Went live in New Jersey in November of senior leadership team with poker and casino under t Increase mobile revenues for t Implemented new organisation partypoker and Borgata labels all products oenneFinancial Governance structure in technology and began Go v e t Delivered real money poker and transition to Agile methodology t Expand 360-degree appraisal process rn a to top 150 managers n casino games for Zynga in the UK ce through web and also on Facebook t Reduce technical debt and t Launched all-new version improve availability and overall of partybingo on our user experience proprietary platform performance performance performance F in a n c i al

KPIsKPIs aand expectations

t Mobile to represent 50% of total gross gaming revenue by the end of 2015 Name: Marco Falchetto Title: Director of Sports Betting t By the end of 2015, achieve a production velocity of 52 games- related software releases and 24 platform-related releases each year

NumberNumber of technology related incidentsi 700700

600

500500

400

300

200

100 Hear more from Marco online 0 bwinparty.com/ouryearinaction Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 20 Strategy

Secure long-term 2013 review strategic partnerships What we said we would do What we achieved

Strategic B2B relationships t Deliver excellent service to our t Relaunched in Belgium with a local existing B2B customers partner under licence Annual report & accounts 2013 accounts & report Annual

and sports sponsorships enable us to generate new t Explore new partnerships t New digital partnerships agreed revenue streams that would in regulated and to-be- with Juventus, RSC Anderlecht and

bwin.party otherwise be out of reach. regulated markets Olympique de Marseille, providing signature partnerships in key nationally t Monetise Manchester regulated markets United partnership t Launched partypoker/Borgata network in New Jersey t Our ‘blindfold challenge’ with Manchester United went viral with 3 million views

Case study: 3 Digital sponsorship strategy

Name: Daniele Sano Title: Head of Sponsorship and Events

Hear more from Daniele online bwinparty.com/ouryearinaction 21

Priorities for 2014 Strategic Strategic Strate rep t Exploit sponsorship assets and drive report ort gi

player acquisition and revenue growth c through multiple channels including t Real money poker and casino social gaming products launched for Zynga in t Explore regulated and to-be regulated the UK through both Facebook markets for partners that can make a and the web difference to our B2C business and/or t Secured partnerships for deliver a strategic benefit we cannot partypoker with New Jersey deliver alone oenneFinancial Governance Go

Devils (NHL), Philadelphia 76ers v e

t Prepare for further state openings rn

(NBA) and Prudential Center a in the US n ce t Extended MotoGP and Euroleague basketball sponsorships

‘New Jersey’s Next Poker Millionaire’ was crowned at the partypoker/Borgata tournament in January 2014 performance performance performance F in a n c i al

KPIsKPIs aand expectations

t Drive B2B revenues with our partners t Increase brand presence and engagement with customers through social media channels t Exploit marquee sponsorships in regulated markets

Olympique de Marseille were one of our six digital partners to compete in the 2013–14 Champions League bwin has always been at the heart We also evolved our long-standing of European sports. Given changing relationship with Real Madrid in Spain, regulatory dynamics and consumer from shirt sponsor to digital partner. behaviour, our approach has shifted The result is that we are now allied with towards digital partnerships. In 2013 Champions League qualified clubs we built upon bwin’s innovative deals in six key nationally regulated and/ with Manchester United and or taxed markets. In January 2014, we Bayern Munich by agreeing similar unveiled similar partnerships with the arrangements with Juventus, Olympique New Jersey Devils and Philadelphia 76ers de Marseille and RSC Anderlecht. to bolster partypoker’s strong position in New Jersey. 22 Strategy

Extend into 2013 review new areas

By extending into new areas What we said we would do What we achieved we can leverage our assets Payments: Payments: to generate incremental revenue. Annual report & accounts 2013 accounts & report Annual In 2013, we focused on two key t Relaunch payments business t Successful rebrand as Kalixa in April areas: payments and social gaming. under the Kalixa brand 2013, followed by the introduction of a number of new products t Hire sales team and grow bwin.party third-party revenues t Senior sales team hired in London and continental Europe. Back office Social Gaming: functions moved to low cost locations t Launch mobile extensions t Payments portfolio expanded to t Develop new bingo application include Kalixa Pay, Kalixa Accept and Kalixa Pro t Create social sports betting application t Global expansion plan mobilised with Kalixa Pay launching in Austria and US office set up t Deals signed with MasterCard and Invapay Case study: Kalixa

In April 2013, we re-launched our Kalixa’s portfolio now includes Kalixa payments business under the Kalixa Pay, an eWallet with an integrated brand. Previously focused on servicing contactless pre-paid card, micro SD card our in-house gaming customers, and mobile app; Kalixa Pro, a payments a recently hired sales team was tasked solution empowering small businesses with securing new revenue streams to take payments via a smartphone from outside of the gaming sector. with a simple card reader and app; and 4 Kalixa quickly rolled-out a raft of new Kalixa Accept, an end-to-end payments payment tools to service all elements platform enabling merchants to accept in the payments chain. more than 200 methods of physical and online payments. Find out more at www.kalixa.com 23

PrioritiesPriorit for 2014 Strategic Strategic Strate rep Payments report ort gi t Build revenue outside of the c online gaming industry with a Social Gaming: focus on the retail, travel, digital t Launched Slots Craze, our first and government sectors in-house slots app, on iOS and t Win issuing and acquiring contracts Facebook, surpassing one million across Europe, LATAM and US, installs and adding several new slot obtaining the necessary licencing machines based on brands such as oenneFinancial Governance to offer full service capability in target Go

Garfield, Casper the Friendly Ghost v e

markets and states rn

and others a n t Explore M&A opportunities to further ce t Launched social version of Cheeky bolster our full service capability and Bingo on iOS and Facebook boost business volume Slots Craze, our leading social casino portal t Launched Stardust Casino on Social Gaming: Facebook, working closely with our partner Boyd Gaming t Launch ‘Sportster – Bet and Win’, our social betting product performance performance on Facebook, iOS and Android performance F in

Develop existing products and a t n c i introduce new content and games al t Launch additional games for our B2B customers t Optimise existing titles and port to new platforms

Name: Ed Chandler Title: CEO, Kalixa

KPIsKPIs aand expectations

t Grow payments revenues from non gaming sectors to reach 50% of total Kalixa revenue by the end of 2015 t Grow social gaming customer volumes and revenue to reach $1m per month by December 2014

Hear more from Ed online bwinparty.com/ouryearinaction 24 Strategy

Act responsibly 2013 review

Being a leader in responsible gaming is fundamental for What we said we would do our long-term success. t Develop predictive algorithm to help prevent problem gambling Annual report & accounts 2013 accounts & report Annual

t Explore ID verification technologies designed to help prevent

bwin.party underage gambling t Evaluate and optimise consumer protection tools t Increase outreach to key stakeholders, especially in new markets t Implement environmental management programme

Case study: 5 Making Responsibility Real

All of our games, including partypoker, feature player protection and self-exclusion tools 25

Priorities for 2014 Strategic Strategic Strate rep t Continue our research collaboration report ort gi

What we achieved with the DOA, extending the predictive c algorithm to poker-specific markets to t In collaboration with the Division t Zynga, our B2B partner in the UK, explore practical applicability for US on Addiction, Cambridge Alliance, received GamCare certification markets, as and when they open a Harvard Medical School teaching for its casino and poker apps on t Finalise the limited pilot phase of the affiliate (DOA), we developed the first Facebook, featuring the full set of algorithm-based predictive model and prototype of a predictive algorithm player protection tools required launch on dotcom labels to help prevent problem gambling for regulated gambling websites oenneFinancial Governance t Further evaluate and optimise Go t Our eight-year research collaboration t Established constructive v e

integrated consumer protection tools rn

with the DOA saw the total number cooperation with US stakeholders a and policies n of peer-reviewed studies increase from the healthcare and counselling ce by 3 to 20 communities ahead of our New t Support licensing regimes in regulated Jersey launch and to-be-regulated markets through t Successful collaborative project best-in-class player protection tools with the Oxford Internet Institute t Monitored and measured and policies to explore new technologies for environmental performance in our electronic ID verification to prevent main offices to ensure compliance t Increase co-operation with key underage gambling with local regulations and identify stakeholders in regulated markets performance performance performance

where energy consumption and F t Retained membership of the in waste can be reduced a n

FTSE4Good Index Series comprising c i companies that meet globally al recognised responsibility standards KPIsKPIs aand expectations We want our customers to enjoy playing Find out more on pages 54 to 57 our games safely and make sure they are of this annual report and also from t Collate players’ ratings of the aware of the risks. Our evidence-based our website: protection tool offered on our approach to responsible gaming ensures www.bwinparty.com/sustainability leading gaming sites that we have the best possible protections t Capture type of incident, our in place for our customers. Working with intervention and average number institutions such as the DOA, we have of incidents per month developed a framework of responsible gaming tools that can be personalised to t Ensure fairness and counter fraud a player’s individual behaviour, ensuring t Monitor and manage energy that it doesn’t assume too large a part of consumption and waste their lives. Our approach to responsibility also covers wider corporate initiatives, including our contribution to society through charitable donations and a pro bono scheme that enables employees to support local community and environmental projects. In 2013, our employees contributed over 1,350 working hours to good causes across Our staff contribute ‘hands-on’ time to a great our communities. variety of projects and good causes 26 Markets and regulatory overview

Market snapshot 2013 Spotlight on The global online sports betting market is highly fragmented, comprising a large number of privately owned companies and a few large publicly- sports betting listed operators. In the EU 28, where the majority of the Group’s customers are based, the online sports betting segment was estimated to be worth around €4.0bn in gross gaming revenue (‘GGR’) in 2013, an increase of 7.7% over the prior year. This growth is forecast to continue, reaching 22

Annual report & accounts an estimated €6.0bn by 2018, implying a CAGR of 8.4% .

Success factors Offering odds on a wide variety of sporting events is important but so too bwin.party is scale and brand strength. By having a broadly-based pool of bets, a sports book operator is better able to balance its exposure to risk. Customers bet against the operator or ‘the house’ and so if it fails to set odds correctly, the operator can lose money. The amount of revenue generated by a bookmaker or ‘gross win margin’ is influenced both by the level of betting volume but also by the outcome of sporting results. The dominance of favourites over an extended period can be expected to result in lower gross win margins for the bookmaker. Whilst the bookmaker can adjust the odds to take these results into account, it makes it easier for the individual to pick winning bets. However, across a wide variety of bets and events, an operator should be able to make a positive return. The increasing popularity of live betting means that operators also need to be able to offer an extensive range of live bets in order to remain competitive. Betting through mobile and touch devices is increasingly popular and being available on multiple channels is becoming a further source of value for operators (see overleaf). How we make money By offering attractive odds to customers, bookmakers seek to balance the portfolio of bets taken on a particular event so that they achieve a targeted return or ‘gross win margin’ based on the expected outcome. By predicting Bet type: the correct result more often than not, an online bookmaker can expect to Against ‘the house’ or bookmaker achieve an average gross win margin of 6–8% of the total amount wagered (before any withholding of gaming taxes due), depending upon the mix Key offer: of live and pre-event betting that tend to generate different returns as Odds on a broad range of sports both summarised below: pre-event and ‘live’ or ‘in-running’ where customers can place a bet whilst the Example revenue model Live Pre-event Total game or event is underway Amount wagered 700 300 1,000 Variations: Typical gross win margin 6% 14% 8% ‘Single’ bets as well as ‘combination’ or Gross revenue 42 42 84

‘accumulator’ bets on multiple results Less bonus costs 10% 10% 10% and special bets on individual elements such as ‘first goal scored’ Net gaming revenue 38 38 76 Less cost of sales and local gaming taxes Key brand: (e.g. 20% of gross revenue) (8) (8) (16)

bwin Gross profit 30 30 60

22 H2 Gambling Capital – March 2014 27

Our offer Sponsorships Sports betting is our largest product vertical, generating total revenue 2013 marked a shift in bwin’s sponsorship strategy. Moving away from in 2013 of €235.8m (2012: €262.9m) or 36% of the total. Our primary brand traditional brand-building sponsorship opportunities, we have created Strategic Strategic Strate rep is bwin, a pioneer in online sports betting and which today offers odds a network of digital partnerships, with a focus on online and mobile report ort

on more than 90 different sports in 18 different languages. Our pan- integration, social media and social gaming, reﬂecting the signiﬁcant gi European footprint means that our sports betting performance is not increase in usage of these channels. In addition to our ongoing c directly comparable with other, mainly UK-focused sports books. partnership with Manchester United and Bayern Munich, bwin moved from main shirt sponsor to digital partner of Real Madrid, and signed While many of our processes are automated, more than 100 bookmakers similar partnerships with three of Europe’s other leading clubs, Juventus, are responsible for managing our sports offer and work around the Olympique de Marseille and RSC Anderlecht. clock managing odds on sports including all popular ball-related sports, US sports and motorsport such as Formula 1 and MotoGP. By far our Away from football, bwin sponsors MotoGP, the International Basketball most popular sport is football, for which we offer odds on more than Federation (‘FIBA’) European and World Championships and Euroleague 500 leagues in over 100 different countries. Basketball. Since launching in the US we have signed sponsorship deals oenneFinancial Governance for partypoker with the New Jersey Devils of the NHL and the NBA’s Go v

As well as pre-event betting, we revolutionised the industry in 2002 e Philadelphia 76ers. Each of our sponsorships is subject to a continuous rn a

by enabling customers to bet on live sports events. In 2013 we offered n

process of evaluation including the impact on customer acquisition, ce odds on 96,000 live events, covering 27 sports including live multi-bets brand awareness and the media value obtained. with integrated real-time streaming of audio and video coverage. Streamed matches included all games in the German Bundesliga, games % total sports betting revenue from nationally regulated/taxed markets from the Spanish La Liga BBVA (Primera Division), Serie A in Italy as well as the qualiﬁers for the Champions League, the Europa League and the 100 European Championships, to name but a few. Complementing our core consumer-facing offer, we have begun to explore B2B revenue opportunities by providing third-parties with 75 performance performance performance F some of our sports betting content including video streaming as well 67% in a as betting odds. Still in its early stages of development, this represents n c

50 i a new source of potential revenue growth. al 47% In addition to our dotcom offer, our sports betting products are licensed in several nationally regulated and/or taxed markets (for a summary of 25 the latest developments by market please see ‘Spotlight on regulation’ on pages 40 and 41). 0 Mobile/touch 2013 2012 Smartphones and tablet devices have grown in popularity in recent years and have quickly become a major channel through which digital Priorities for 2014 gaming services are consumed. It is estimated that the EU 28 mobile t Increase market share in regulated markets, leveraging our sports gambling market was worth approximately €1.2bn of GGR in digital partnerships 2013, up by 35% versus 201222. This rapid growth is predicted to continue, reaching €3.8bn by 2018 or a CAGR of 26.0%. In the past year we have t Roll-out new mobile offer across core markets seen a significant uplift in sports betting revenue generated from t Capitalise on 2014 FIFA World Cup opportunity our mobile channel that represented 19% of total sports GGR in 2013 (2012: 12%). t Increase B2B revenue streams Having been a pioneer in the field of mGambling with the launch of t Improve CRM and risk management procedures to increase our first mobile product in 2001, our focus on integrating our technology player values following the merger of bwin and PartyGaming in 2011 meant that our Consolidate our technology platforms in Italy and France mobile offer had fallen behind some of our competitors. That changed t in 2013 with the launch of our next generation mobile product, returning us to the vanguard of mobile sports betting. Built in HTML5 with Discover more at: additional native apps for both iOS and Android, the new bwin mobile www.bwinparty.com/productsandbrands product will be available across a range of markets and devices so as to maximise its reach. As well as mobile/touch, we are also exploring the opportunity to leverage social channels such as Facebook as an additional driver for real money sports betting. 28 Markets and regulatory overview

Market snapshot Spotlight on Online casinos were some of the ﬁrst online gaming sites to emerge in the mid-1990s. The online casino market in the EU 28 countries was estimated casino & games to be worth approximately €2.5bn of GGR in 2013, up 4.3% versus 2012 and it is forecast to reach €3.3bn by 2018, implying a compound annual growth rate of 5.4%23. In the US, regulation of online casino games has been adopted in New Jersey while other states are considering a similar

Annual report & accounts 2013 move. Despite an absence of widespread regulation, the US online casino

market is predicted to reach €1.5bn by 2018 as more states are expected to regulate, implying a CAGR of 17.6%23.

bwin.party Success factors As play is against ‘the house’, player liquidity is not as important as in community games like poker. However, scale does mean that an operator is able to offer larger jackpot prizes and this can act as a major draw for customers. Reputation is also important as players need to be conﬁdent that games are fair and that if they win a major prize, the operator will pay them their winnings. Having a broad range of popular games that is continually being refreshed with new content is another important success factor, ensuring that players can ﬁnd a game they want to play. Our offer Our online casino business has a global footprint and is a market leader. In 2013, casino & games generated total revenue of €215.6m (2012: €271.2m) or 33% of the total.

% total casino & games revenue from nationally regulated/taxed markets

30 Bet type:

Against the house that extracts a 24% 20 statistical margin or ‘edge’, being a fixed 22% percentage of the amount wagered. The edge varies depending upon which 10 game is being played

Key offer: 0 A variety of slot games, jackpot slots and 2013 2012 traditional table casino games such as blackjack and roulette In addition to our dotcom offer, our casino products are licensed in several nationally regulated and/or taxed markets. In November 2013 the Variations: Group began offering casino games in the state of New Jersey under our Casino tournaments, raffle jackpot slots, partypoker brand and also as a supplier to the Borgata Hotel Casino and virtual racing, video poker and live dealer Spa, under our partnership with Boyd Gaming. In Europe we operate online casino games in Italy under the Gioco Digitale brand, in Denmark under the Key brands: partycasino brand, in Belgium under the bwin brand and in Spain we offer bwin table-based casino games under the bwin and partycasino brands. For a partypoker summary of the latest developments by market please see ‘Spotlight on partycasino regulation’ on pages 40 and 41. Gioco Digitale

23 H2 Gambling Capital – March 2014 29

How we make money Mobile/touch Games pay out randomly and therefore over short periods, revenues As with sports betting, mobile/touch is a rapidly growing channel can be volatile but over time will gravitate to the pre-determined rate for the casino segment. H2GC estimates that, taken collectively, real Strategic Strategic Strate rep of return or ‘edge’ that is earned by ‘the house’. Prizes for progressive money gaming (including casino, poker and bingo) through mobile report ort

or jackpot slots are accrued out of gross revenue. devices was worth €761.4m of GGR across the EU 28 countries in 2013, gi up 61.1% on 2012 and this is expected to increase to approximately c Example revenue model Total €3.1bn by 2018, implying a compound annual growth rate of 32.4%.

Amount wagered 1,000 In 2013 we launched a new mobile browser-optimised product under the partycasino brand to complement our existing bwin branded Typical gross win margin 3% mobile offer. In the second half of 2013 we began transforming our Gross revenue 30 production process to enable us to offer games simultaneously on PCs, Less bonus costs 15% mobile and tablet devices. This process, augmented by the addition of games from third-parties, will see us roll-out a much expanded casino oenneFinancial Governance Net gaming revenue 25 offer in 2014, including the introduction of native apps for the iOS and Go v e Android platforms. rn

Less cost of sales and local gaming taxes (e.g. 20% of gross revenue) (6) a n ce Gross proﬁt 19 New channels The vast majority of customers arriving at one of our casino sites have In casino, content is an important factor in attracting players. ﬁrst played at one of our other gaming sites, mainly sports or poker. Developing some of our own games is a point of differentiation from For example the majority of our partycasino customers arrive via our competitors that tend to rely entirely on third-party suppliers for their partypoker brand, while bwin casino players come via the bwin sports content. This approach has enabled us to offer our customers a unique betting site. and diverse portfolio of titles that includes internally produced slots, such as Melon Madness, through to blockbuster themed games we In 2013 we began supplying real money casino and poker games in the performance performance performance

UK to Zynga, the world’s leading producer of social games. Under the F

have built under license. Our jackpot strategy is another major draw in

terms of the arrangement, Zynga’s real money casino is based upon a for customers and one of our customers hit a single jackpot prize of n c i US$7.5m in 2013. our market-leading software, complemented by a number of bespoke al features including FarmVille-branded slots produced by our in- While this differentiation is an attraction for customers, we also house team. recognise that many customers enjoy playing classic slots offered on a variety of competitor sites. Our scale and open application Priorities for 2014 programming interfaces (‘APIs’) have helped us to add some of t Tailor our offer to maximise cross-sell to sports betting and the market’s most popular online slot games under licence from poker customers with a focus on nationally regulated and/or manufacturers such as IGT, Amaya and others, ensuring that our offer taxed markets remains current and popular. In 2014 we will add further third-party content, augmented by a small number of internally produced games. t Roll-out new mobile casino games on main brands in key regulated markets Casino products are offered in both download and instant play variants. The latter, which is the most popular of the two options, does not require t Enhance our games portfolio through integration of leading the installation of any software onto a customer’s computer. third-party content – targeting 120 new games by June 2014

Discover more at: www.bwinparty.com/productsandbrands 30 Markets and regulatory overview

Market snapshot Spotlight Whist globally the online poker market was largely ﬂat in 2013, it experienced a marked decline in Europe, where the majority of the on poker Group’s customers are based. The online poker market across the EU 28 countries was estimated to be worth approximately €1.8bn of GGR in 2013, down 8.4% versus 201224. It is forecast to remain largely ﬂat over the next few years, and is estimated to be worth €1.9bn by 2018, implying a

Annual report & accounts 2013 compound annual growth rate of just 0.8%. More positively, in 2013 we saw

the regulation of online poker in three US states: Nevada, Delaware and New Jersey. H2GC estimates that the US online poker market (regulated and unregulated) was worth approximately €140.0m of GGR in 2013, but this is bwin.party expected to rise significantly due to further regulatory change, reaching €1.7bn by 2018, a compound annual growth rate of 66.4%. The decline in the value of the dotcom online poker market over the past decade is due to a number of factors, some of which have also impacted several newly regulated markets. The first was the change in US law in 2006, prompting many poker operators to withdraw from the world’s largest online poker market, while a few privately owned companies remained and became dominant players in the sector. The second was the advent of a new regulatory concept that saw a number of markets ring-fence their player liquidity. Italy was the first market to effectively remove all of its players from the dotcom liquidity pool, a step which has been followed by France and Spain. By fragmenting player liquidity, the quality of the poker players’ experience is reduced and this has impacted the value of the global online poker market as well as the value of those markets that have gone down this path. Success factors In addition to excellent software and safe and secure payments, having sufficient player liquidity is a prerequisite for success in online poker. It means that players can quickly find a table to play at the stakes they Bet type: want. Being able to offer attractive tournaments and promotions are also Peer-to-peer important for long-term success. Key offer: How we make money Texas Hold’em is the most popular The Group facilitates games and in cash games takes a small commission variant, played in both cash game and on the amount wagered on each hand, referred to as ‘rake’. In tournaments tournament formats. In cash games, we charge an entry fee that constitutes revenue. players directly bet against each other while in tournament play, chips are used Example revenue model Total as a virtual currency, with a knockout Amount wagered 1,000 format adopted where the winner Typical gross win margin 2% is the player who ultimately wins all of the allotted chips Gross revenue 20 Less bonus costs 18% Variations: Other formats include Omaha and 7 Card Net gaming revenue 16 Stud in both standard and Hi/Lo versions Less cost of sales and local gaming taxes (e.g. 20% of gross revenue) (4) and FastForward, a ‘quick-fire’ variant of Gross profit 12 Texas Hold ’em where players who fold are immediately dealt in at a new table, increasing the velocity of gameplay Key brands: partypoker bwin Gioco Digitale

24 H2 Gambling Capital – March 2014 31

Our offer World Poker Tour In September 2013 our principal poker brand, partypoker, underwent The World Poker Tour (‘WPT’), while not included in net revenue from a major relaunch, with new brand positioning, user interface, social a ﬁnancial reporting perspective, is an important part of our overall Strategic Strategic Strate rep features, missions and achievements, as well as substantial changes poker offer. WPT was a major force behind the explosive growth in report ort

to our tournament structures and overall poker ecology. This was the early years of online poker, breaking new ground by televising gi followed in November 2013 with the launch of this new partypoker high stakes tournaments that proved to be a hugely popular format. c experience to players in New Jersey. As well as the partypoker brand, Televised coverage of poker games has soared since the WPT enabled through our agreement with Boyd Gaming Corporation, we also supply viewers to see each player’s cards during a game, enhancing the software to our network partner the Borgata Hotel Casino and Spa, New broadcasting appeal. Jersey’s largest casino. Although it’s only a short period since the market Since its acquisition in 2009, WPT has expanded its reach both inside opened, the partypoker/Borgata network has established itself as the and outside the US, hosting a total of 65 main events in 2013 up from market leader in the state with an approximate 40% share of GGR in 55 in 2012. Now into its twelfth season, WPT programming has been February 2014. aired in over 150 countries and territories. US viewership was up by oenneFinancial Governance Outside New Jersey, we also offer poker under the bwin brand. 58% in 2013 over the previous year, maintaining its number one rating Go v e Sports betting is an important source of customers in Europe, operating on Fox Sports Networks for the third consecutive year. ClubWPT.com is rn a n

in Belgium, France, Italy and Spain under ‘dotnational’ domains. the Group’s online membership site which offers inside access to the ce In France, a large part of our liquidity is driven through our strategic World Poker Tour. It includes a sweepstakes-based social poker offering alliance with PMU, the French horseracing giant, while in Italy our and remains the largest site of its kind in the US. WPT revenues are largest brand is Gioco Digitale that was acquired in 2009. included within ‘Other revenue’. Against a challenging market backdrop, our dotcom poker network, that Mobile/touch combines the player liquidity of our two leading poker brands, is one of In 2013 we began the roll-out of a ﬁrst generation mobile version of the larger networks outside of the PokerStars/Full Tilt nexus. In 2013 our our new partypoker product. Offered for both iOS and Android devices, poker segment generated total revenue of €114.6m (2012: €176.5m) or these new applications were initially available with standard and performance performance 18% of the total. performance F

fast-fold poker functionality in the dotcom and New Jersey markets. in a

In 2014 we will be improving and reﬁning this offer, adding a number n c

% total poker revenue from nationally regulated/taxed markets i of features including ‘Sit and Go’ and ‘Multi-table Tournament’ al 50 functionality for the ﬁrst time. In addition, we will evolve the business messaging layer to allow seamless integration of mobile products into our holistic player communications. Our mobile poker offer will 40 41% 42% also be expanded to additional markets including Belgium, Spain and Denmark – both on our own B2C labels and to our B2B partners’ labels. 30 Priorities for 2014

20 t Roll-out of next generation partypoker software in key regulated markets including Belgium, France, Italy and Spain 10 t Enhance native mobile apps (iOS and Android) in H1 2014, launch fully featured mobile client in H2 2014 0 t Improve and expand tournament structure and continue to add 2013 2012 new missions and achievements

Our B2B agreement with Zynga saw the introduction of real money t Build on early leadership position for partypoker/Borgata network poker using the Zynga brand in the UK through the web and on in New Jersey, leveraging our sponsorship of the New Jersey Devils Facebook. Zynga’s real money UK players form part of our dotcom and the Philadelphia 76ers poker liquidity pool. In addition to our dotcom offer, our poker games are licensed in several Discover more at: nationally regulated and/or taxed markets (for a summary of the latest www.bwinparty.com/productsandbrands developments by market please see ‘Spotlight on regulation’ on pages 41 and 42). 32 Markets and regulatory overview

Market snapshot Spotlight Whilst smaller than our three other product verticals in terms of revenue, bingo is a highly dynamic, regional market opportunity, one that typically on bingo attracts a dedicated player base. The size of the online bingo market across the EU28 was estimated to be worth approximately €1.0bn of GGR in 2013, up 11.4% versus 2012. It is estimated that it will reach approximately €1.5bn by 2018, implying a compound annual growth rate of 7.2%25. Annual report & accounts 2013 The major markets in Europe are the UK, Italy and Spain. The UK is the world’s largest online bingo market, estimated to be worth €424.6m of GGR in 2013 (2012: €388.3m) , where Foxy Bingo, our primary brand, is one

bwin.party of the UK’s leading bingo sites. We also have a number of secondary brands including Cheeky Bingo, appealing to a slightly younger demographic. Gioco Digitale is our leading brand in the Italian market whilst bwin and our dedicated bingo brand Binguez are aimed at Spanish-speaking customers. Success factors Like poker, player liquidity in bingo is important for long-term success. As a pari mutual game, the more players there are then the bigger the potential prizes on offer, that themselves act as a draw for customers. The online bingo experience has sought to replicate many of the ofﬂine bingo characteristics including the ability for players to socialise through online chat rooms and to play slots and other games. Our scale meant that during 2013 Foxy Bingo was able to offer jackpot prizes in excess of £100,000, helping it to maintain a market-leading position in the UK market. Another important success factor for online bingo operators is being able to offer an appealing portfolio of side games that are played while the main bingo game is taking place. How we make money We receive a percentage of each virtual bingo card sold, with the majority of the proceeds making up the prize fund. Revenue on side games and casino Bet type: games is a statistical gross win margin. Bingo players buy draw tickets to win an accumulated jackpot from which Example revenue model Total the house takes a rake Amount wagered 1,000 Key offer: Typical gross win margin 35% 30, 75 and 90-ball bingo, with guaranteed Gross revenue 350 and progressive jackpots Less bonus costs 50% Variations: Net gaming revenue 175 Side games include tournament bingo, Less cost of sales and local gaming taxes (e.g. 20% of gross revenue) (70) team bingo and casino-type games, Gross proﬁt 105 including slots Key brands: Foxy Bingo (UK) Gioco Digitale (Italy)

25 H2 Gambling Capital – March 2014 33

Our offer Our primary markets for bingo are currently the UK and Italy where we have built leading market positions through the historical acquisitions We offer a variety of bingo games at varying stake levels and also a of Cashcade and Gioco Digitale respectively. Having launched an range of side games and slots. Our bingo business generated total all-new proprietary bingo product under the partybingo brand in 2013, Strategic S trateg r report revenue of €53.1m (2012: €64.3m) or 8% of the total. Focused on the UK, e we plan to continue to improve all our bingo products during 2014. p Italy and Spain, almost all of our bingo revenues come from nationally ort i regulated and/or taxed markets. Mobile/touch c Our browser-based mobile/touch offer for Foxy Bingo went live % total bingo revenue from nationally regulated/taxed markets in April 2013, and so the proportion of total bingo revenue coming from 100 mobile/touch is relatively small compared with sports betting. However, having launched our all-new Foxy Bingo mobile app in January 2014, the 98% 97% response has been very positive with an increasing proportion of new 75 registrations now coming through the mobile/touch channel. oenneFinancial Governance Priorities for 2014 Go v e 50 t Complete the development of our new bingo platform and optimise rn a n

our current third-party software agreement in the UK ce

25 t Increase proportion of revenue coming through mobile/touch t Grow Foxy Bingo and Cheeky Bingo in the UK through operational excellence and focused marketing investments 0 2013 2012 t Extend the Foxy proposition with new products and features performance performance Discover more at: p erformance www.bwinparty.com/productsandbrands Fin a n c i al

HearHear mmore from Golan online bwinparty.com/ouryearinactionbwinparty

Name: Golan Shaked Title: Director of Games 34 Markets and regulatory overview

Market snapshot Spotlight on The global payments industry will be worth an estimated $782 trillion in non-cash transaction value and $492bn in transaction revenues by payments 202026. While the demand for electronic payments is already large and growing fast, it remained a small percentage of global payments which is still dominated by cash-based transactions. According to Capgemeni, a specialist consultancy, global non-cash Annual report & accounts 2013 payment transactions reached 307bn in 2011, up 8.8% on the prior year. The M-payments and E-payments segments of the industry are forecast to grow by 58.5% and 18.1% respectively in 2014. Whilst the mature markets

bwin.party in North America and Europe recorded mid-single digit growth rates, they remain the world’s largest non-cash payments markets, together accounting for about two-thirds of global non-cash transaction volumes. The fastest growing areas include Central Europe, the Middle East and Africa (CEMEA) and the emerging Asia regions, each growing by more than 20% per annum, while Latin America also recorded above average growth of 14.4%27. Kalixa’s unique expertise and assets put it in a strong position to increase revenues by generating new income streams from fast-growing payment segments. Success factors The ability to make and receive payments across any device is a critical long-term success factor. Another is being able to help merchants streamline their payment infrastructures, increase sales and deliver omni-channel B2C payment solutions that meet the constantly evolving needs of the digital commerce market. As a ‘FinTech’ business specialising in payments, Kalixa is in an excellent position to capitalise on the rapid industry growth that is expected over the next few years. Kalixa’s single platform offers a turnkey solution with Key offer: real ﬂexibility, agility and conﬁgurability, twinned with open access to allow simple ‘plug-in’ connectivity for merchants or partners. Kalixa is also Kalixa offers an entire payment able to integrate new payment options and methods rapidly for consumers. ecosystem: issuing, acquiring and This gives Kalixa and its customers, measurable advantages in terms of acceptance, all under one roof speed-to-market product development and innovation, all within a low Key brand: cost model. Kalixa How we make money Key applications: Kalixa sells payment products directly, as well as via third-party distribution partners, to consumers and merchants for a recommended Kalixa Pay retail price. Each time these products are used to make or accept a Kalixa Pro payment,Kalixa earns a share of the transaction value. Kalixa Accept Illustrative fees charged for payments

Gateway 5-25 €cents per transaction

Merchant service charging 1.0%–1.5%

Card and wallet revenue 1.0–3.0%

Added value services – Risk management 5–15 € cents per transaction – Reconciliation 5–10 € cents per transaction

26 Boston Consulting Group 27 Capgemeni – World Payments Report 2013 35

Our offer Priorities for 2014 Kalixa has developed its own technology platform enabling sellers and t Increase the level and proportion of revenue coming from outside buyers to make and accept payments, anywhere, anytime and any way. of the online gaming industry with a focus on the retail, travel, digital Strategic Strategic S trateg r report

This connectivity affords us a much bigger opportunity in the payments and government sectors e p market than competitors that don’t have the same breadth of offer. ort i t Win new issuing and acquiring contracts across Europe, LATAM and c Our next generation ‘payment-as-a-service’ (PaaS) platform connects US, obtaining the necessary licensing to offer full service capability the end-to-end payments ecosystem so that consumers, merchants in target markets and partners enjoy real value, ﬂexibility and agility. t Explore M&A opportunities to further bolster our full service Having launched in April 2013 with products that cover every area capability and increase business volume of the payments chain – from issuing and acquiring to acceptance – Discover more at: www.kalixa.com Kalixa owns its own ecosystem and offers three core products: t Kalixa Pay, a prepaid e-wallet with more than 150,000 users oenneFinancial Governance Go

across Europe; v e rn a t Kalixa Pro, a mPOS (mobile point of sale) for small businesses and n sole traders; and ce t Kalixa Accept, which enables merchants to accept more than 200 payment methods. In 2013, Kalixa processed transactions worth €2.5bn for more than 300 merchants. Kalixa won ‘Best Alternative Payments’ and ‘Payments Pioneer’ at the Payment Awards and was shortlisted for numerous awards in 2013 including ‘Best Prepaid Innovation’ at the Prepaid and Emerging performance performance p erformance

Payments Awards. Fin a n

Kalixa Pay holds an E-Money licence and Kalixa Accept a Payment c i Institute licence from the Financial Service Conduct Authority in the UK al as well as MasterCard and Visa acquiring licences. In New Jersey, Kalixa has a money transmission licence from the New Jersey banking and insurance regulators.

The payments value chain

BankB – Issuer Reimburse Bank – Acquirer Reimburse

s Collect transactions s er ment d y a Deliver Deliver p

dhol Payment Service d r transactions transactions e t ca

Provider ll ec ll Bill cardholders Bi

Collected payments Co Card payments

ConsumerC Purchase goods Retailer Send transactions

Alternative payments options e.g. online wallets, bank transfers, vouchers etc. 36 Markets and regulatory overview

Market snapshot Spotlight on The advent of social gaming has been a major success story over the past few years. During this period, revenue models have evolved extensively so social gaming that what previously was an interesting internet phenomenon has become a large commercial marketplace. Within the broader social gaming sector, casino-based games are the fastest growing genre, reaching an estimated market size of approximately $2.9bn in terms of GGR in 2013 and this is

Annual report & accounts 2013 expected to rise to $4.4bn by 2016, implying a compound annual growth

rate of 14.9%28. The social gaming sector offers games through a variety of online channels,

bwin.party the largest of which include social networks such as Facebook and mobile operating platforms such as iOS and Android. Unlike the real money gaming market, social games are not subject to licensing and regulation and can be offered in a broader number of markets, including the United States and Asia. Success factors We launched our social gaming strategy in May 2012 with the formation of Win, a dedicated social gaming business. Several of the assets and skills required for success in the social gaming world are similar to those required by successful real money gaming companies such as proprietary gaming content supported by state-of the-art graphics, CRM and business analytics, online marketing expertise and the ability to partner with leading brands. Whilst a relatively new business area, we have established a specialist management team and acquired the team of software developers who built a number of the world’s leading social gaming applications and platforms including Slotomania and Caesar’s Casino. Combining this expertise with the wider assets within the Group, we are optimistic about our prospects for social gaming. To support our in-house and partner game applications, we have developed and released a robust end-to-end, proprietary analytics Bet type: platform called WinSight. Social gaming players use virtual currency How we make money to play games and can never cash out. Free virtual currency is provided on sign-up. Customers can then purchase We are focused on the ‘freemium’ model additional virtual currency to advance game play, open new features whereby players are given chips for free or send gifts to their friends – this is the so-called ‘freemium’ model. but can choose to buy more to enhance Successful applications can achieve conversion rates from free to paying their game experience customers of 2% or higher, with average revenue per paying user of around $20 per month. Advertising can provide additional revenue through offers, Key offer: banners and search. A summary of illustrative conversion rates and costs Virtual currency-based slots, bingo, and value per user are shown below. casino games and sports betting Conversion Cost per user Value per user Key brands: Ad impression 0.1% $0.5 $1.5 Win Installation 50% $1.0 $3.0 Key applications: Active user 70% $1.55 $6.0 Slots Craze Cheeky Bingo Paying user 4% $35 $200 Stardust Casino High-value player or ‘whale’ 3% $1,000 >$2,000 Sportster – Bet and Win

28 Social casino metrics, SuperData Research 2013 37

Our offer Priorities for 2014 Social gaming can be used to describe a broad range of different t Grow customer volumes and revenue to reach $1m per month by gaming applications. Through Win we are focused on casino-themed December 2014 Strategic Strategic Strate rep games where we can best leverage the broader Group’s expertise. report

t Roll-out ‘Sportster – Bet and Win’ on Facebook, iOS and Android ort

Following the testing of several beta games in 2012, Win launched gi its ﬁrst fully-ﬂedged product, Slots Craze, in February 2013, offering t Develop existing products and introduce new content and games c a variety of highly original and engaging slot games within a single within each application portal. t Launch additional games for our B2B customers In March 2013 we launched a bingo-based product under our Cheeky Bingo brand on Facebook and iOS. In September 2013 we launched t Continually optimise existing titles and port to new platforms Stardust Casino on Facebook in partnership with Boyd Gaming Corporation, one of America’s leading casino entertainment companies. Discover more at: A social game offering slots, blackjack and roulette, Stardust Casino is oenneFinancial Governance www.bwinparty.com/productsandbrands Go based on the classic Stardust Resort and Casino that has become an v e iconic brand from the Las Vegas strip and is also now available in iOS. rn a n In the Win development pipeline for 2014 is a new sports betting ce game called ‘Sportster – Bet and Win’, which has been developed in conjunction with Nordeus, the creator of Top Eleven, currently one of the most successful sports apps in the social gaming arena. In addition we are developing a new casino offer for another of the Group’s US partners, the United Auburn Indian Community. performance performance performance F in a n c i al

Sportster – Bet and Win was launched in Spring 2014 in partnership with Nordeus 38 Markets and regulatory overview

Introduction Spotlight on In the 2012 annual report we set out a clear vision, explaining why we believed that developing our own technology was essential for our technology long-term success. Each of the core elements of our target platform remain in place with the addition of a new ‘social layer’ catering for the fact that social features and access are increasingly standard requirements for our “In 2013 we continued products and services. Annual report & accounts 2013 our journey towards Our target platform completion of a unique, While we are moving ever closer to completing our target platform, its power and capabilities are already proving their worth as evidenced by our bwin.party scalable, fully-flexible launch of a new poker product in September 2013. This was swiftly followed by our launch of casino and poker into New Jersey in November. Using a and inter-connected separate, stand-alone code branch, the launch further demonstrated the platform’s power and ﬂexibility to deliver multiple products through technology platform multiple labels, in a very short timeframe. While the completion of our target platform still needs to be synchronised with the short- and long- upon which we can build term commercial objectives of the business, our experience in New Jersey a digital entertainment provides a positive insight into the future capabilities of this proprietary and, we believe, unique asset. company for the future. With many of the core elements in Core platform place, we began the transformation of our technology organisation BI & Products Payments Market through the adoption of predictive integration the Agile methodology so analytics that we can move faster, Social platform be more productive and deliver better quality services to our customers.” Adaptive customer touchpoints

Maximising the platform’s potential required that we improve our feature cycle time, moving closer towards a process of continuous deployment of new products; we also had to be able to enter new markets, add new labels and move with greater velocity to deliver better quality software, all at low cost. Another key requirement was that we increase the availability and quality of our services by continuing to pay down the technical debt that we had accumulated over recent years. To achieve this ambitious goal we needed to change the way that we were organised and the way that we work. We needed to become Agile. 39

The move to Agile We are focused on achieving a service-oriented and connected company, one with a culture of excellence, delivering quality Agile methodology is not a new way of developing software but it products and services at low cost; one that recognises and rewards has evolved substantially in recent years and at bwin.party we are outperformance and can respond quickly to business requests. Strategic S trateg r report developing our own tailored version, catered speciﬁcally for our e We are empowering our technology teams to challenge convention p requirements but drawing upon all of the key principles of Agile: ort i

and consistently seek to improve our processes and procedures. c 1 Active user involvement; We have reorganised our technology operations into a series of 2 Empowered decision-making teams; technology ‘pods’ – self-contained units with a shared purpose (such 3 Requirements evolve but the timescale is ﬁxed; as bwin Europe and partypoker US for example) that are focused on 4 Capture requirements at a high level, lightweight and visual; providing a service to other pods in the enterprise or on delivering a particular service or project. Each pod contains a series of so called 5 Develop small, incremental software releases and iterate; ‘scrum teams’ comprising up to six individuals, each team having the 6 Focus on frequent delivery of products; requisite skills to deliver discrete outputs that can be achieved within oenneFinancial Governance 7 Complete each feature before moving on to the next; one or more technology ‘sprints’ – development cycles that typically Go v

last two to three weeks. e 8 Apply the 80/20 rule; rn a n

9 Testing is integrated throughout the project lifecycle – test early Through this new organisational structure we are starting to see ce and often; and real beneﬁts in terms of faster and better quality software releases and through more effective resource allocation we are also reducing 10 Collaborative and co-operative approach between all stakeholders our technical debt that is improving overall system performance is essential. and reliability. With over 900 software engineers, located across three continents, we Key performance indicators opted for a new organisation structure to embrace this change, itself an ambitious goal, but essential in order that we stay on-track to meet our By the end of 2015 we expect to be in a position to deliver 24 platform strategic objectives. releases each year and up to 52 games-related releases. This would performance performance p erformance represent a substantial increase from what was achieved in 2013. Fin a n c i

Improved stability and reliability will come from reduced technical al debt as well as improved quality of newly-released software.

Name: Guy Duncan Title: Director of Product and Technology

Hear mmore from Guy online bwinparty.com/ouryearinactionbwinparty 40 Markets and regulatory overview

Spotlight on Europe At the end of November 2013, the European Commission launched formal regulation infringement proceedings criticising the online gambling legislation in six Member States (Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania) and stepped up the two pending infringement cases against Sweden with the issuance of detailed opinions for failing to comply with EU law. This move follows repeated calls from the European Parliament for the Annual report & accounts 2013 Commission to act as the Guardian of the European Treaties and signiﬁcant legal clariﬁcations by the Court of Justice of the European Union (‘CJEU’) on how the Treaties apply to national gambling legislation. The Commission

bwin.party made clear its position regarding other countries in a press release stating: “After consultation of the Member States concerned, decisions on a first series of pending cases have now been taken. …Proceedings against other Member States remain open – either because the national rules in question are still under investigation or in the process of being substantially amended.”29 Sweden, which was already subject to infringement proceedings, was sent two reasoned opinions requesting formally that its legislation be brought into line with EU law. A reasoned opinion represents the final step before potential litigation at the CJEU. Sweden was given until late January 2014 to reply to the Commission. Whilst the minister in charge of Sweden’s gambling policy said in January 2014 that the European Commission’s critique of Sweden’s approach was invalid, the Commission has yet to assess Sweden’s reply and respond accordingly. Having launched the first infringement cases relating to online gambling back in 2006, the implications of the Commission’s move could be significant. With several Member States continuing to restrict the activities of EU licensed operators without having provided the requisite justification for doing so, a successful outcome for the Commission at the CJEU could result The shift towards in positive regulatory change in several other countries across Europe. nationally and locally Germany (24% of total revenue in 2013) Despite having enacted a revised State Lottery Treaty on 1 July 2012, regulated markets is problems with the licensing process, threats of legal action and a pending case at the CJEU have all contributed to a delay in any licences being issued. continuing across many It is understood that 41 companies have now been invited to resubmit countries in Europe their applications for up to 20 sports betting licences by the middle of March 2014. Whilst we have applied for a licence and are working with the and also now in the authorities to deliver a long-term solution that works for all stakeholders, it remains unclear how long the process will take for the regulator to review United States. all of the applications, verify compliance with the regulatory requirements and issue licences.

United Kingdom (10% of total revenue in 2013)

The Gambling (Licensing and Advertising) Bill 2013–14 received three readings in the House of Commons by late November 2013, and then moved on to the House of Lords, where it received its first and second readings ahead of the Christmas break. It is has now entered the report stage in the House of Lords and it is expected that licence applications from existing operators and those new to the UK market will commence two months after the Bill has received Royal Assent, expected some time during the first half of 2014. While the applicable rate of taxation for offshore operators offering services to customers located in the UK has yet to be confirmed, the current rate of tax for onshore operators is 15% of gross gaming revenue. It is expected that the new tax will become payable by licensed operators on or before 1 December 2014.

29 European Commission – 20 November 2013 41

Italy (9% of total revenue in 2013) Denmark (1% of total revenue in 2013)

The delayed introduction of an extended range of permitted bets under The Danish online gaming market opened in January 2012 and as of 31 the less regimented ‘Palinsesto Supplementare’ went live on 16 October November 2013, 43 licences were held by 30 online operators , led by Strategic Strate rep report

2013, providing a further boost for the Italian sports betting market. our local partner Danske Licens Spil. According to ﬁgures from the ort gi

Total gross gaming revenue across all products grew by 2% in the third regulator the total size of the online gaming market in 2013 was equal c quarter of 2013 versus the prior year to €143.7m according to ofﬁcial to approximately €309m of gross gaming revenue. statistics from the regulator with strong growth in sports betting and Elsewhere, there is pending legislation for online gaming in several casino offsetting a 35% year-on-year decline in poker/skill games and a countries including Bulgaria, Hungary and Netherlands with similar 23% decline in bingo. proposals being contemplated in other countries. The ﬁnal details France (6% of total revenue in 2013) of such proposals and whether such legislation may become law remain unclear. According to ARJEL, the French regulator, online sports betting gross 32 oenneFinancial Governance gaming revenues in France grew nearly 19% to €164m in 2013 versus the United States (2% of total revenue in 2013) Go v e prior year, while poker revenues declined 13% to €258m. Overall, gross rn

2013 marked the watershed for online gaming in the US. Nevada became a gaming revenues in France for sports betting and poker fell 3% to €422m n the ﬁrst regulated online gaming market to launch, going live with real ce versus 201230. money poker in April 2013. While Delaware followed in November 2013, Despite continued concern that the regulatory and ﬁscal regime in it was the opening of New Jersey, with over eight million residents and France is not commercially viable, there has been little appetite to make a large transient population that proved to be the US online gaming any changes to the current framework. highlight of 2013.

Spain (5% of total revenue in 2013) Having issued transactional waivers to a number of online gaming service providers in partnership with locally licensed land-based casino operators, New Jersey opened for online poker and casino games on performance performance Since opening the online market in June 2012 the Spanish authorities performance

21 November 2013. Despite similar challenges to that experienced in F have continued to look at expanding the current regime to also include in a

Nevada with geolocation and payments (so far some of the major US n online slots, but it is thought that they will first look at the possibility c i of introducing betting exchanges. According to data from the Spanish banking groups are not yet processing credit or debit card transactions al regulator, in the period from July to September 2013 Spanish customers for online gaming in New Jersey), the market in New Jersey generated wagered €1,293bn on online gambling, a 0.2% increase over the same approximately $27m of gross gaming revenue in its first full three period in 2012. months of operation. Whilst the rigorous geolocation requirements set by the regulator have meant that it is not yet possible to play Greece (3% of total revenue in 2013) licensed real money gaming using mobile devices (other than through a wifi connection), the industry is working hard to find a solution. Despite an outstanding detailed opinion from the European A concerted effort is also underway to persuade more of the major US Commission and in contravention of EU law, the Greek government banks to permit licensed online gaming transactions in New Jersey. began ISP blocking over 400 online gaming sites in 2013, including Improvements in these factors, together with increased marketing those of bwin.party. This has had a severe impact on the overall market activities of several operators is expected to provide a further boost in Greece. Despite the launch of several legal challenges by online to the total number of daily active players and overall revenue. operators, the ISP blocking remains in place. In California, the Internet Consumer Protection Act of 2014 was introduced in the form of two separate bills on 21 February 2014, one in Belgium (1% of total revenue in 2013) the Senate (SB1366) by Senator Correa and one in the Assembly (AB2291) by Reggie Jones-Sawyer. Should a bill progress through committee There have been no material changes to the regulated regime where stages and pass during the 2014 legislative session, it is anticipated that all products are allowed and gross gaming revenues are taxed at the market would open in 2015. It is estimated that with over 26 million 11%. In a presentation given by the Belgium Gaming Commission in residents over 21 years old in the state, the size of the intra-state October 2013 it was reported that the regulatory model had been a online poker market in California could be as large as $1bn of gross major success and that the country’s online market, excluding lottery, gaming revenue. would generate gross gaming revenue of between €100m and €120m in 2013. Prompted by certain concerns over the current gambling regime, While many other states have considered online gaming legislation Belgium was among those countries to receive an infringement notice in the past it remains unclear whether other states will seek to follow from the European Commission in November 2013. New Jersey, Nevada and Delaware with their own framework. However, through our existing agreements with MGM Resorts International, Boyd Gaming Corporation and the United Auburn Indian Community as well as further partnership opportunities throughout the US, we believe the Group is well-placed to take advantage of further market expansion.

30 www.arjel.fr/-Communiques-de-presse-.html 31 www.spillemyndigheden.dk 32 Including WPT 42

Key points Business and ﬁnancial review Total revenue of €652.4m (2012: €801.6m) reflecting shift from ‘volume to value’, ISP blocking in Greece, migration losses and the full year impact of gaming taxes Annual report & accounts 2013 in Germany; nationally regulated and/or taxed markets represented 53% of total bwin.party 2013 revenue (2012: 43%) Gross gaming revenue through mobile/ touch grew by 77% to €76.9m (2012: €43.4m) Successful US launch – number one online poker network in New Jersey Costs reduced by €97m in 2013 versus 2012 compared with targeted savings of €70m Clean EBITDA from Continuing operations of €108.0m (2012: €164.9m) due to lower revenue, increased gaming taxes in Germany and start-up costs in New Jersey Continuing operating profit of €51.9m (2012: loss of €16.5m) driven by release of acquisition fair value provisions, absence of retroactive taxes and lower amortisation costs Continuing Clean EPS~ of 7.3 € cents per share (2012: 14.7 € cents) Current trading: average daily net revenue up 6% versus Q4 13 with nationally regulated and/or taxed markets representing 56% of net revenue Recommended final dividend up 5% to 1.80 pence per share (2012: 1.72 pence) making a total FY13 dividend of 3.60 pence per share (2012: 3.44 pence) 43

Financial summary Amortisation fell by 28% to €68.9m (2012: €95.5m), partially offset by a small increase in depreciation charges, reﬂecting the acquisition of the 2013 2012 business and assets of Orneon and Velasco Services that were acquired Year ended 31 December €million €million

in May 2012. Strategic Strate rep Net revenue 609.4 768.9 report ort

Other revenue 43.0 32.7 €83.8m of a fair value provision created at the time of the Merger was gi c Total revenue 652.4 801.6 written-back during the second half of 2013. €1.9m was transferred to creditors. Clean EBITDA~ from Continuing operations 108.0 164.9 Clean EBITDA~ from Discontinued operations^ – (21.3) Share-based payments fell by €3.5m to €16.6m (2012: €20.1m) because Total Clean EBITDA~ 108.0 143.6 of a reduction in the number of senior executives participating in the Group’s incentive schemes as part of the Merger synergy programme ~ EBITDA adjusted for exchange differences, reorganisation expenses, income or expenses and other cost-saving measures. that relate to exceptional items, and non-cash charges relating to share-based payments (see reconciliation of Clean EBITDA to operating profit/(loss) below and reconciliation of Impairment losses of €9.4m (2012: €2.0m) were incurred in respect oenneFinancial Governance Clean EPS to Basic EPS in note 11 to the Consolidated financial statements). of write-downs of certain non-core investments held by the Group. Go v

^ Discontinued operations refers to Ongame’s B2B business as well as operations located Market exit costs relate to expenses incurred on the Group’s exit from e rn

physically outside of the US but which relate to US customers that were no longer a

the Argentinean market. These totalled €2.5m in the period (2012: nil). n accepted following the enactment of the UIGEA. ce As a result, the Group’s Continuing operations reported a proﬁt before 2013 Results tax of €44.9m (2012: loss of €23.5m). Total revenue was €652.4m (2012: €801.6m) reflecting the shift from ‘volume Discontinued operations relate to the Ongame B2B poker business that to value’ announced in March 2013, the impact of reduced cross-sell volumes was sold in October 2012 as well as on-going costs associated with the following the dotcom platform migration in December 2012, as well as Company’s Non-Prosecution Agreement (‘NPA’) that was reached with market declines in certain regulated markets and ISP blocking in Greece. the United States Attorney’s Ofﬁce for the Southern District of New York The introduction of a 5% turnover tax on sports betting in Germany and (the ‘USAO’) on 6 April 2009. No further charges were incurred during the performance performance performance

the securing of a licence in Belgium contributed to higher gaming taxes in period. The profit before tax after taking Discontinued operations into F in these two countries. However, market declines in other regulated markets account was €44.9m (2012: loss before tax of €62.9m). a n c i meant that total gaming taxes (excluding retroactive taxes) fell by €2.7m to al Taking into account Discontinued operations, total Clean EPS of €80.1m. Increased TV production costs at WPT meant that total cost of sales, 7.3 € cents was down 40% (2012: 12.1 € cents) while total basic EPS excluding retroactive taxes and associated charges, increased by €0.2m to was 5.4 € cents (2012: loss per share of 7.8 € cents). €88.9m (2012: €88.7m). Taken together with lower revenue and start-up costs in New Jersey, Clean EBITDA declined to €108.0m (2012: €164.9m). New basis of segmental reporting The table provides a reconciliation of the movements between Clean EBITDA As disclosed at the time of the 2013 half year results, the basis for the and operating profit. allocation of costs and resources for the latest reporting period has changed and is no longer comparable with the prior year. While total Reconciliation of Clean EBITDA to operating profit Clean EBITDA is directly comparable with the prior year, the Clean EBITDA generated by each vertical is not and so we have provided the 2013 2012 Year ended 31 December €million €million figure on both the new as well as the previous basis, against which the prior year is directly comparable. It has not been possible to provide a Continuing operations comparable Clean EBITDA figure by vertical on the new basis for 2012 Clean EBITDA 108.0 164.9 as the new organisation structure did not then exist. Exchange differences (8.0) (5.3) Depreciation (24.4) (21.3) The new basis aims to reflect more appropriately the fact that certain Amortisation (68.9) (95.5) product verticals are dependent on the cross-sell of players from Retroactive taxes and associated charges (0.6) (31.5) other product verticals and thus includes a re-allocation of marketing Share-based payments (16.6) (20.1) costs between these verticals in order to reflect more accurately the profitability of that segment on a stand-alone basis. Also, under the Merger and acquisition costs – (0.1) new basis, a higher proportion of costs are allocated directly to each Impairment losses (9.4) (2.0) segment and the remaining central costs are now allocated pro rata to Market exit costs (2.5) – gross profit instead of net revenue. Release of acquisition fair value provision 83.8 – Reorganisation expenses (9.5) (5.6) There follows a more detailed review of the Continuing operations Profit/(loss) from operating activities – Continuing operations 51.9 (16.5) including each of the individual product segments. Discontinued operations Clean EBITDA – (21.3) Exchange differences – 0.2 Depreciation – (0.1) Share-based payments – (0.2) Merger and acquisition expenses – (0.5) Loss on disposal of discontinued operations – (17.3) Profit/(loss) from operating activities – Discontinued operations – (39.2) 44 Business and financial review 2013

Sports betting Key Performance Indicators

2013 2012 Year ended 31 December €million €million Change Year ended 31 December 2013 2012 Change Total stakes 2,775.3 3,804.5 (27%) A ctive player days (million) 37.1 45.2 (18%) Gross win margin 9.2% 7.8 % 18% Daily average players (000s) 101.6 123.5 (18%) Gross revenue 256.7 298.2 (14%) Yield per active player day (€) 6.3 5.8 9% Bonuses and other fair value adjustments to revenue (22.7) (35.4) 36% New player sign-ups (000s) 555.9 791.9 (30%) Annual report & accounts 2013 Net revenue 234.0 262.8 (11%) Average daily net revenue (€000) 641.1 718.0 (11%) Other revenue 1.8 0.1 1,700% Whilst new player sign-ups and player volumes declined by 30% and Total revenue 235.8 262.9 (10%) 18% respectively, this was driven by the shift from ‘volume to value’, ISP bwin.party % of total revenue from nationally regulated blocking in Greece and the fact that prior year volumes (activity and new and/or taxed markets* 67% 47% player sign-ups) were flattered by the Euro 2012 Championship that had Cost of sales (55.0) (44.9) (22%) resulted in a higher than normal level of activity. The greater focus on Gross profit 180.8 218.0 (17%) more valuable players can be seen by the increase in player yields that Clean EBITDA (new basis) 53.7 n/a n/a also benefited from a reduced number of casual players during the Euro Clean EBITDA margin 22.8% n/a n/a 2012 Championship. The net impact was that average daily revenue was Clean EBITDA (old basis) 23.2 42.7 (46%) down year-on-year at €641,100 (2012: €718,000). Clean EBITDA margin 9.8% 16.2% n/a While bwin remains a leading brand across continental Europe, our digital * Austria, Belgium, France, Denmark, Germany, Italy, Spain and UK partnerships with Manchester United (UK), Real Madrid (Spain), Bayern In addition to the shift from ‘volume to value’ and ISP blocking in Munich (Germany), Olympique de Marseille (France), RSC Anderlecht Greece, the introduction of a 5% turnover tax for German customers on (Belgium) and Juventus (Italy) have all helped to raise our brand profile 1 July 2012 contributed to a 27% decline in amounts wagered, as well in each of these nationally regulated and/or taxed markets. Based on as a 22% increase in cost of sales. The new fiscal regime in Germany external market data, our estimated market share in terms of gross partly contributed to an increase in gross win margin as we sought gaming revenue in Belgium was 8% (went live under licence in March 33 to recover some of the tax due from customers, as well as encourage 2013), in France it was 18%, in Italy it was 9% and it was 20% in Spain . them to shift towards betting on longer odds and combination bets. Mobile and touch is an increasingly popular channel for sports bettors As a result, the total gross win margin increased to 9.2% (2012: 7.8%). across Europe. In 2013, mobile/touch represented 19% of sports gross Our increased focus on higher value customers, together with the gaming revenue (2012: 12%) and in December 2013 it had reached 28% absence of the Euro Championship, saw bonuses reduce to 0.8% of the of gross gaming revenue versus 15% a year earlier. Our analysis shows amount wagered (2012: 0.9%) and this helped to mitigate the impact that bwin customers that play on both mobile and desktop generate of lower turnover on net revenue which was down 11% at €234.0m incremental value over those that use the desktop alone. As a result, we (2012: €262.8m). Having generated approximately €17.6m of net revenue expect that by increasing the proportion of our customers using our next in 2012, ISP blocking in Greece from August 2013 saw Greek revenue generation mobile product as well as desktop, our revenue will also grow. almost eliminated during the fourth quarter. While there are several legal challenges underway in Greece, it seems unlikely that there will be Objectives for 2014/15: any positive resolution there in the short-term. As mentioned above, increasing our share in regulated markets The impact of lower revenue and a €10.1m increase in gaming taxes, is at the heart of our business strategy. We plan to increase our primarily in Germany, resulted in Clean EBITDA from sports betting of already strong brand presence in these markets using our digital €53.7m on the new basis and €23.2m on the old basis (2012: €42.7m). partnerships with six of Europe’s leading football clubs by offering Under the previous basis of segmental reporting, costs that were not unique experiences and content to bwin customers. This effort able to be directly allocated to a particular vertical were allocated will be complemented by improvements in our digital marketing pro rata to the net revenue generated by each vertical. Following the capabilities, leveraging our extensive international player base. introduction of the turnover tax on sports betting in Germany, the We also plan to expand the reach of our new mobile and touch sports betting segment was allocated a disproportionately high share products significantly and expect that by December 2015, 50% of of central costs under the old basis. Under the new basis of segmental total net revenue will be through mobile and touch devices, driven reporting, a higher proportion of costs are allocated directly to each by sports betting. segment, and the remaining central costs are now allocated pro rata to The first stage of the FIFA World Cup starts on 12 June and the final gross profit. takes place on 13 July. With all of the major European countries A summary of the key performance indicators for sports betting during competing, this should provide a meaningful uplift in betting 2013 is shown in the following table: turnover for the Group during June and July. Having entered into a supply agreement with Fortuna Entertainment Group in January 2014, we are looking to add further B2B agreements with a view to leveraging our extensive sports content through partnerships in non-core markets.

33 Company estimates based on data provided by ARJEL, AAMS and DGOJ respectively. In the absence of any official data from the regulator, the estimate for Belgium has been based on data from H2 Gambling Capital – February 2014. 45

Casino & games Key Performance Indicators

2013 2012 Year ended 31 December €million €million Change Year ended 31 December 2013 2012 Change Strategic Strategic Strate rep report Total stakes 7,023.6 8,117.7 (13%) Active player days (million) 7.3 9.9 (26%) ort Gross win margin 3.7% 3.9% (5%) Daily average players (000s) 20.0 27.0 (26%) gi c Gross revenue 262.3 318.6 (18%) Yield per active player day (€) 29.2 27.2 7% Bonuses and other fair value adjustments to revenue (49.5) (49.8) 1% New player sign-ups (000s) 59.2 134.3 (56%) Net revenue 212.8 268.8 (21%) Average daily net revenue (€000) 583.0 734.4 (21%) Other revenue 2.8 2.4 17% Active player days fell by 26% which was in line with the performance in Total revenue 215.6 271.2 (21%) the ﬁrst half of 2013, driven by the shift from ‘volume to value’. This also % of total revenue from nationally regulated and/or taxed markets* 24% 22% impacted new player sign-ups following the decision to cease player acquisition and registration in 18 countries. Despite steps taken to Cost of sales (9.8) (11.0) 11% oenneFinancial Governance improve operational performance in the second half, such as improved Go

Gross proﬁt 205.8 260.2 (21%) v e

mini games and mobile offerings, ISP blocking in Greece in August acted rn

Clean EBITDA (new basis) 45.0 N/A N/A a

as a signiﬁcant drag on performance with a signiﬁcant reduction in the n Clean EBITDA margin 20.9% N/A N/A number of daily players from Greece during the second half versus the ce Clean EBITDA (old basis) 72.6 80.1 (9%) same period in 2012. While the focus on more valuable customers meant Clean EBITDA margin 33.7% 29.5% N/A that player yields increased by 7%, lower player activity meant that * Belgium, Denmark, Italy, Spain, UK and US (New Jersey) average daily revenue declined by 21% to €583,000 (2012: €734,400).

Total stakes fell by 13% in the year driven by the shift from ‘volume to Objectives for 2014/15: value’, ISP blocking in Greece and a softer performance in poker that continues to act as a major source of player trafﬁc for partycasino. Regulated markets will remain a consistent theme, although for performance performance Performance was also impacted by migration losses incurred following casino & games, customer trafﬁc is much more dependent on cross- performance F sell from sports betting and poker than from stand-alone customer in the transfer of 13 million bwin customer accounts onto our integrated a n

acquisition. While the main cross-sell in Europe will be from sports c technology platform at the end of 2012. While the full launch into New i al Jersey on 26 November provided some growth in December, it was betting, in the US it will be from partypoker. By tailoring our offer insufficient to prevent the decline year-on-year. to maximise the appeal of our casino offer to sports bettors and poker players respectively and by improving our digital marketing A reduction in gross win margin to 3.7% (2012: 3.9%) reflected a shift in capabilities, we aim to increase player volumes and revenue. business mix towards lower hold table games driven by the popularity of these games among bwin sports betting customers. As a result, Having represented 6% of total casino gross gaming revenue in gross revenue fell by 18% to €262.3m (2012: €318.6m). Whilst bonus costs 2013, we plan to increase the proportion of casino & games revenue remained flat in absolute terms, they increased as a proportion of gross coming through mobile/touch channels significantly over the next revenue reflecting increased loyalty points generated and redeemed by 18 months, driven by the launch of mobile casino apps in several top tier players and as a result net revenue fell 21%. Lower total revenue regulated territories following our successful launch in Belgium and launch-related marketing costs associated with New Jersey meant in January 2014. that Clean EBITDA was €45.0m on the new basis and €72.6m on the old We plan to differentiate our content offering with a greater selection basis, a 9% decline versus the previous year (2012: €80.1m). A summary of exclusive proprietary games, including games leveraging our of the key performance indicators for casino & games is shown in the sports sponsorships, while at the same time sourcing ‘best of breed’ following table: games from leading content suppliers so that we will have over 120 new games in our portfolio by June 2014, of which 25 will be available on mobile/touch devices. 46 Business and financial review 2013

Poker Key Performance Indicators

2013 2012 Year ended 31 December €million €million Change Year ended 31 December 2013 2012 Change Gross revenue 135.5 219.0 (38%) Active player days (million) 17.3 28.4 (39%) Bonuses and other fair value adjustments to revenue (25.4) (45.2) 44% Daily average players (000s) 47.4 77.6 (39%) Net revenue 110.1 173.8 (37%) Yield per active player day (€) 6.4 6.1 5% Other revenue 4.5 2.7 67% New player sign-ups (000s) 177.3 390.6 (55%) Annual report & accounts 2013 Total revenue 114.6 176.5 (35%) Average daily net revenue (€000) 301.6 474.9 (36%) % of total revenue from nationally regulated and/or taxed markets* 41% 42% For the reasons mentioned above, player volumes were down signiﬁcantly versus the prior year. Whilst pleased with the response to

bwin.party Cost of sales (13.7) (21.9) 37% Gross proﬁt 100.9 154.6 (35%) our new poker product, we have yet to launch it into some of our largest regulated markets and were also hampered by the loss of Greece that Clean EBITDA (new basis) 7.7 N/A N/A in 2012 averaged 3,326 players per day. Although player yields increased Clean EBITDA margin 6.7% N/A N/A by 5% due to lower bonus rates, the reduction in player volumes meant Clean EBITDA (old basis) 22.3 28.5 (22%) that average daily revenue fell 36% to €301,600 (2012: €474,900). Clean EBITDA margin 19.5% 16.2% N/A

* Belgium, Denmark, France, Italy, Spain, UK and US (New Jersey) Objectives for 2014/15: While the launch of our new poker product on 5 September 2013 to Having launched the first phase of our new poker product on customers using our dotcom poker services helped to improve the dotcom as well as in New Jersey in 2013, we plan to introduce further recent revenue trend, structural declines in many markets including new product features throughout 2014 and roll these out to our Italy and France, coupled with ISP blocking in Greece made for a key regulated markets including Belgium, France, Italy and Spain. challenging operating environment. While the new product has so far Enhancing our mobile offering is a key objective and we will launch only been made available to customers in dotcom markets and New enhanced versions of our native mobile clients (Android and iOS) in Jersey (it has not yet been launched in Belgium, Denmark, France, Italy our key markets as well as an HTML5 version of ‘FastForward’ that or Spain), overall customer feedback has been positive and we are we believe will prove popular. Having grown the proportion of our pleased with its performance in a difficult market. revenue coming from mobile during the second half of 2013, we expect this to increase further in both 2014 and 2015. Having exited the US market on 13 October 2006, partypoker’s return in New Jersey was undoubtedly one of the highlights of 2013 and Having overhauled our tournament structure in January 2014, we represented a major milestone for our poker business. Having received will continue to add new tournaments throughout the year and offer the requisite transactional waiver from the Division of Gaming new missions for players to embark upon every two weeks. In New Enforcement and after a five-day test period, we went live with poker Jersey we will seek to build upon our solid start since the market and casino products within the state of New Jersey on 26 November opened and capitalise on our new sponsorship deals with the New 2013. While pleased with the early performance of our network, that Jersey Devils in the NHL and the Philadelphia 76ers in the NBA. operates on a completely stand-alone platform and is distinct from the rest of our technology, one month’s contribution in 2013 was not sufficient to make any meaningful impact on the overall poker result for the year as a whole. The shift from ‘volume to value’ coupled with the challenges outlined above meant that new player sign-ups and activity levels were down 55% and 39% respectively. Our increased focus on more valuable customers delivered a 44% reduction in bonus costs, the result being that net revenue declined by 37%. Despite an increase in other revenue following the launch in New Jersey, total poker revenue fell by 35% to €114.6m (2012: €176.5m). The drop in revenue was matched by a similar reduction in cost of sales due to market declines in a number of regulated markets including France where taxes are particularly high. Clean EBITDA on the new basis was €7.7m and €22.3m on the old basis (2012: €28.5m), a 22% decline on the prior year, driven by lower revenue and costs associated with our launch into New Jersey. 47

Bingo Key Performance Indicators

Year ended 31 December 2013 2012 Change Year ended 31 December 2013 2012 Change Strategic Strategic Strate rep report Gross revenue 104.8 119.7 (12%) Active player days (million) 6.4 7.1 (10%) ort Bonuses and other fair value adjustments to revenue (52.3) (56.2) 7% Daily average players (000s) 17.5 19.4 (10%) gi c Net revenue 52.5 63.5 (17%) Yield per active player day (€) 8.2 8.9 (8%) Other revenue 0.6 0.8 (25%) New player sign-ups (000s) 123.5 141.1 (12%) Total revenue 53.1 64.3 (17%) Average daily net revenue (€000) 143.8 173.5 (17%) % of total revenue from nationally regulated and/or taxed markets* 98% 97% New player sign-ups and player volumes were down 12% and 10% Cost of sales (3.7) (5.0) 26% respectively, reﬂecting the market decline in Italy as well as the highly Gross proﬁt 49.4 59.3 (17%) competitive environment in the UK. While the launch of bwin bingo in several markets in December 2013 provided some incremental revenue, Clean EBITDA (new basis) 8.2 N/A N/A oenneFinancial Governance as did the launch of Foxy Bingo on mobile in April 2013, these initiatives Go

Clean EBITDA margin 15.4% N/A N/A v e

were unable to reverse the year-on-year decline seen in the Italian rn

Clean EBITDA (old basis) 12.9 18.8 (31%) a

bingo market that shrank in 2013. The net impact was that average daily n Clean EBITDA margin 24.3% 29.2% N/A revenue was down 17% year-on-year at €143,800 (2012: €173,500). ce * Italy, Spain and UK Objectives for 2014/15: Both the UK and Italy remained highly competitive during 2013. In the UK, the expected introduction of a point-of-consumption tax Preliminary discussions are already underway with 888 Holdings in December 2014 prompted a significant increase in marketing regarding possible options for the Group’s existing supply agreement activity by competitors, many of whom seemed determined to try under which several of the Group’s UK bingo sites are operated and increase market share, irrespective of cost. The strength of the using 888 software. The contract is scheduled to terminate in May performance performance Foxy Bingo brand meant that while we did lose some revenue due 2014. The two main options for the Group are to either terminate performance F to aggressive, competitor promotions, we were able to maintain a the agreement and migrate customers to the Group’s proprietary in a n strong market position overall. In Italy, a 26% decline in the size of technology platform; or extend the existing agreement under c i the bingo market34 made for a challenging market backdrop. However, revised terms. It is expected that a decision will be reached over the al despite aggressive attempts by competitors to seize market share, coming weeks. we maintained a leadership position with an estimated 26% share Mobile is again a key area of focus and represented approximately of the Italian market in terms of gross gaming revenue. In Spain, we 7% of total bingo GGR in 2013. We are aiming to reach 40% of GGR have seen solid growth in revenue, in part due to the full year impact coming through mobile/touch devices by December 2015 as we in 2013 following the Spanish launch that took place in June 2012. launch mobile apps for all of our key bingo brands. Since launching Overall, Spanish net revenue increased by 47% versus 2012 although our new Foxy iOS app in the UK in January 2014, we have seen a the market remains small as a proportion of the bingo segment. significant jump in mobile activity and are confident of hitting our Gross revenue declined by 12% due to the factors outlined above but 2015 target. also by a 5% weakening of Sterling versus the Euro. An increase in the bonus rate meant that net revenue fell by 17% to €52.5m (2012: €63.5m). The declines in Italy meant that gaming taxes also fell to €3.7m (2012: €5.4m), helping to offset the impact on gross profit as well as Clean EBITDA that was €8.2m on the new basis or €12.9m on the old basis (2012: €18.8m). A summary of the key performance indicators for bingo is shown in the following table:

34 Total gross gaming revenue – AAMS 48 Business and financial review 2013

Other revenue Distribution expenses Other revenue includes revenue from network services, payment 2013 2012 services to third parties, domain sales, software services, World Poker Year ended 31 December €million €million Change Tour, Win, InterTrader and Winners, our retail franchise. Total other Customer acquisition and retention 126.0 157.2 20% revenue was up 31% to €43.0m (2012: €32.7m) driven by domain sales Afﬁliates 32.4 53.5 39% of €6.7m as well as a maiden contribution from social gaming and Customer bad debts 6.3 6.0 (5%) growth in Winners, B2B and InterTrader. Third-party content 28.9 34.0 15% Annual report & accounts 2013 We are continuing to invest in Kalixa, our digital payments business that Webhosting and technical services 26.5 28.6 7% is performing well and in-line with our original plans. The dynamics of Clean EBITDA distribution expenses 220.1 279.3 21% the digital payments industry are such that we are considering several Reorganisation expenses 2.5 0.9 (178%)

bwin.party opportunities to accelerate Kalixa’s expansion through a combination Total distribution expenses 222.6 280.2 21% of organic growth and externally funded bolt-on acquisitions. Clean EBITDA distribution expenses as a % of total revenue 33.7% 34.8% Distribution expenses as a % of total revenue 34.1% 35.0% Cost of sales As a result of our shift from ‘volume to value’, we stopped player 2013 2012 acquisition in 18 markets where the returns from marketing spend Year ended 31 December €million €million Change were insufficient or where there was significant regulatory uncertainty. Gaming taxes 80.1 82.8 3% By focusing our marketing efforts on fewer, nationally regulated Broadcasting costs 6.6 3.5 (89%) and taxed markets, there was a significant reduction in customer Other 2.2 2.4 8% acquisition-related spend as well as affiliates that fell to 19.3% and 5.0% Clean EBITDA cost of sales 88.9 88.7 0% of total revenue respectively. Customer bad debts increased to 1.0% Retroactive taxes and associated charges 0.6 31.5 98% of total revenue (2012: 0.7%) reflecting a change in the mix of deposits Total cost of sales 89.5 120.2 26% following the dotcom platform migration. However, this increase was more than offset by an associated reduction in transaction fees Gaming taxes fell slightly reflecting market declines in Italy and (see below). Third-party content costs fell by 15% in absolute terms France and this more than offset increased taxes in Belgium and but increased slightly as a proportion of total revenue reflecting Germany. Broadcasting costs increased significantly driven by higher the addition of new third-party games to our casino during the year. amortisation costs arising from the production of the new Alpha 8 Series Webhosting and technical services costs fell by €2.1m reflecting the by the World Poker Tour and lower sales of WPT library programming to realisation of merger-related synergies. The net result was that Clean third-party broadcasters. EBITDA distribution expenses were reduced by €59.2m or 21% to €220.1m (2012: €279.3m), representing 33.7% of total revenue (2012: 34.8%). Reorganisation costs of €2.5m reflected ongoing costs of the poker platforms in Italy and France that are still operated using the Ongame software and which are due to be migrated in 2014 and costs incurred following the ISP blocking in Greece.

CleanClean EBITEBITDADA distributiondistribution expensesexxpenses asas a % ofof totaltotal revenuerevenue

WebhostingWebhosting andand technicaltechnicaal servicesservices 34.8%34.8% €€300m300m CustomerCustomere bad debtsdebts 3.6% €€250m250m 33.7%33.7% 0.7%07% Third-partyThird-party content 4.2% 44.1%.1% AfﬁliatesAfﬁliatess €200m€200m 10%1.0% 6.6.7%7% CustomerCustomer acquisition 4.4% andand retentionretention €150m€150m 55.0%.0% 19.6%19.6% 119.3%9.3% €100m€100m

€€50m50m

0 20132013 2 2012012 49

Administrative expenses Taxation The tax charge for the period was €3.8m (2012: €1.4m) reﬂecting an 2013 2012 Year ended 31 December €million €million Change effective tax rate for Continuing operations of 8.5% (2012: 6.0%). Strategic Strategic S trateg r The deferred tax credit of €6.9m (2012: €11.6m) is related to the release of report Transaction fees 30.1 40.9 26% e p

deferred tax provisions set up on the Merger arising from amortisation ort Staff costs 121.0 133.6 9% i of short-life intangible assets. c Outsourced services 25.6 28.4 10% Other overheads 58.0 69.5 17% Net cash Clean EBITDA administrative expenses 234.7 272.4 14% Depreciation 24.4 21.3 (15%) As at As at 31 December 31 December Amortisation 68.9 95.5 28% 2013 2012 Year ended 31 December €million €million Impairment losses 9.4 2.0 (370%) Cash and cash equivalents 173.3 169.7 Market exit costs 2.5 – N/A Short-term investments 12.7 31.5 Reorganisation expenses 7.0 4.7 (49%) oenneFinancial Governance Loans and borrowings (46.1) (36.4) Go Administrative expenses before share-based payments 346.9 395.9 12% v e

Net cash 139.9 164.8 rn

Share-based payments 16.6 20.1 17% a n

Payment service providers (less chargeback provision) 48.7 68.6 ce Administrative expenses 363.5 416.0 13% Net cash including amounts held by processors 188.6 233.4 Clean EBITDA administrative expenses as a % of total revenue 36.0% 34.0% Less: Client liabilities and progressive prize pools (124.8) (136.7) Administrative expenses before share-based payments as a % of total revenue 53.2% 49.4% Net cash including amounts held by processors less client liabilities 63.8 96.7 Administrative expenses as a % of total revenue 55.7% 51.9%

Transaction fees fell both in absolute terms and relative to revenue Cashflow reflecting the reduction in revenue, merger-related synergies and the increased focus on nationally regulated and/or taxed markets where Continuing operations performance performance p erformance fees tend to be lower. Staff costs and outsourced services were reduced Operating cashflow from Continuing operations increased by 49% Fin a by €12.6m and €2.8m respectively reflecting the realisation of merger- to €61.0m (2012: €40.9m), due primarily to the prior year having been n c i related synergies. Other overheads were reduced by €11.5m or 17% impacted by a payment of €31.5m in retroactive taxes and associated al reflecting synergies arising from the Merger. The net result was that charges in Spain. Clean EBITDA administration costs fell by €37.7m. After dividend payments of €33.6m (2012: €33.0m), capital expenditure (including intangibles) of €45.8m (2012: €39.7m) and a reduction in short- CleanClean EBITDAEBITDA admin expensesexpensses as a % ooff totatotall reverevenuenue term investments of €17.9m (2012: €8.3m), the net cash inflow in the period was €10.5m (2012 outflow: €94.9m). This was a marked increase OtherOther ovoverheadsverheads over the prior year that was impacted by substantial share repurchases, 36.0%36.0% 34.0%334.0% retroactive taxes and associated charges, as well as payments relating OutsourcedOutsourcedc servicesservices €300m€300m to acquisitions made. StaffStaff costscosts 8.7% €250m€250m TransactionTransacttion feesfees 88.9%.9% Discontinued operations €200m€200m 3.5% The net cash outflow arising from Discontinued operations in 2013 3.9% 116.7%6.7% €150m€150m comprises the settlement of the Kentucky litigation for €11.9m (2012: 18.5%18.5% nil) and contingent consideration due from the sale of Ongame of €0.7m €100m€100m (2012: nil). In 2012, the net cash outflow of €24.8m was driven primarily

€50m€50m by the payments arising under the Non-Prosecution Agreement, the last 5.1% 4.6% payment of which was made in September 2012, coupled with the loss 0 on disposal of Ongame. A summary of the Group’s cashﬂow in the period 2013 2012 is shown in the table overleaf: 50 Business and financial review 2013

Cashﬂow (continued)

2013 2012 Continuing Discontinued Total Continuing Discontinued Total Year ended 31 December €million €million €million €million €million €million Clean EBITDA 108.0 – 108.0 164.9 (21.3) 143.6 Exchange differences (8.0) – (8.0) (5.3) 0.2 (5.1) Movement in inventory – – – 0.6 – 0.6 Movement in trade and other receivables 11.0 0.7 11.7 (21.9) 2.4 (19.5) Annual report & accounts 2013 Movement in trade and other payables (27.6) – (27.6) (41.6) (13.8) (55.4) Movement in provisions 0.2 (11.9) (11.7) (10.1) – (10.1) Income taxes paid (12.2) – (12.2) (8.2) – (8.2)

bwin.party Other (0.3) – (0.3) (0.3) – (0.3) Net cash inflow/(outflow) from operating activities pre-merger-related costs 71.1 (11.2) 59.9 78.1 (32.5) 45.6 Merger-related costs – – – (0.1) (0.5) (0.6) Reorganisation costs (9.5) – (9.5) (5.6) – (5.6) Retroactive taxes and associated charges (0.6) – (0.6) (31.5) – (31.5) Net cash inflow/(outflow) from operating activities 61.0 (11.2) 49.8 40.9 (33.0) 7.9 Issue of ordinary shares 1.6 – 1.6 1.0 – 1.0 Purchase of own shares (5.8) – (5.8) (51.5) – (51.5) Dividends paid (33.6) – (33.6) (33.0) – (33.0) Repayment of bank borrowings (7.6) – (7.6) (32.6) – (32.6) New bank borrowings 18.1 – 18.1 36.4 – 36.4 Acquisitions – – – (13.7) – (13.7) Acquisitions – deferred payment (1.8) – (1.8) (8.3) – (8.3) Capital expenditure (22.3) – (22.3) (29.2) – (29.2) Purchases of intangible assets (23.5) – (23.5) (10.5) – (10.5) Purchase of investments – – – (4.1) – (4.1) Repayment of loan by joint venture 5.7 – 5.7 2.3 – 2.3 Dividend received from associate 1.5 – 1.5 ––– Sale of assets held for sale – – – –8.28.2 Decrease in short-term investments 17.9 – 17.9 8.3 – 8.3 Other (0.7) – (0.7) (0.9) – (0.9) Net cashflow 10.5 (11.2) (0.7) (94.9) (24.8) (119.7) 51

Current trading and outlook Trading in the ﬁrst 10 weeks of 2014 has been in-line with our expectations with average daily net revenue down 10% year-on-year but Strategic Strategic Strate rep up 6% versus the previous quarter and with nationally regulated and/ report or taxed markets representing 56% of net revenue. While our shift from ort gi

‘volume to value’ means that our year-on-year performance remains c down versus 2013, we have achieved sequential growth since the third quarter of 2013, in line with our guidance. A summary of the current trading performance in terms of net revenue relative to the same period in 2013 and also to Q4 13 is shown below:

Average daily net revenue (€) 10 weeks to 11 March 2014 2013 % change Q4 2013 % change oenneFinancial Governance Sports betting 725,000 772,000 (6%) 680,000 7% Go v e

Casino & games 590,000 634,000 (7%) 564,000 5% rn a

Poker 275,000 385,000 (29%) 266,000 3% n ce Bingo 153,000 155,000 (1%) 141,000 9% Total 1,743,000 1,946,000 (10%) 1,651,000 6% % from nationally regulated and/or taxed markets 56% 51% 54%

While New Jersey has yet to reach its full potential because of geolocation and payment processing issues that are continuing to impact all operators, the Group has made a solid start in this newly performance performance regulated market. Despite the headwinds of lost revenue from Greece performance F and continued pressures in European poker, based on the Group’s in a n performance to-date and the planned developments outlined above, c i we are conﬁdent that we can deliver year-on-year revenue and Clean al EBITDA growth in 2014. As a result, the Board remains conﬁdent in the Group’s prospects. 52 Principal risks

Identifying and assessing key risks Spotlight on As detailed elsewhere, we have made signiﬁcant changes to our business in 2013, many of which relate to structural shifts in the online gaming industry principal risks brought about by the transition from a dotcom trading environment to more fragmented, nationally regulated and taxed markets and rapid advances in technology that are driving consumer habits from e-commerce to m-commerce. Annual report & accounts 2013 Key risk and Many of the risks associated with online gaming are similar to those faced change versus 2012 Rationale for change by other leisure and entertainment industries including competition, Technology changes to consumer tastes, maintaining healthy ﬁnancial ratios in

bwin.party compliance with banking covenants and loss of key personnel. There are Reduced Transition to single operating platform almost complete also certain risks that are more speciﬁc to bwin.party and to the online with customers in France and gaming industry that deserve particular mention, such as increased Italy to be migrated in 2014.* taxation when countries introduce regulated regimes, or make changes Regulation and compliance to existing licensing requirements.

Increased Two more regulatory regimes Regardless of whether the changes are within or outside our control, added – Belgium and New our overall approach to managing risk has not changed. Identifying, Jersey. Whilst additional minimising, monitoring and assessing the likelihood of adverse events is complexity is mitigated by never-ending and needs to involve employees at all levels by continually experience gained from operating in regulated asking ‘what if?’. markets, a number of European countries and As in previous years, we asked this question many times during 2013. states in the US are actively However, ‘what if?’ is just the starting point, because to manage risk considering introducing properly it has to become a regular topic of discussion within management online gaming regulations. meetings outside of regular Group-wide risk assessments. Taxation Identifying a risk is just a first step towards understanding the all-important Unchanged Tax risk remains high. inter-dependencies and how the knock-on effects of a potentially adverse The number of tax-paying change might impact other parts of the business. jurisdictions is set to increase as per the reasons We held 79 individual meetings and 12 workshops in 2013 to: assess given in the ‘Spotlight on whether any risk had increased, decreased, remained unchanged or had regulation’ on pages 40 and 41 in the section above. become obsolete; identify new risks, especially from recent key business events; and to ascertain the chances of a risk happening and its associated Poker level of impact. The number of high-level risks identified stayed static as Unchanged Market fragmentation a percentage of the overall risks at 6.0% (2012: 6.1%), although there was resulting from regulated, a small increase in the number of risks identified. ring-fenced regimes in several countries has We held 12 risk workshops during 2013, capturing information from all impacted the game’s appeal. key business areas as well as from the Executive Directors of the Board. PokerStars remains the dominant competitor. The Group Risk Committee, chaired by Martin Weigold, Chief Financial Officer, met five times in 2013. The Committee aims to ensure that all strategic risks are identified and to reach a consensus on the significant risks identified by the 12 workshops. This process helps to ingrain the importance of risk management throughout all business functions (Technology, Marketing, each of the product verticals, Human Resources, Operations, Finance, Regulatory Affairs, Legal and Company Secretarial). These risks were then submitted to the Audit Committee for review, which then raised queries and concerns with management and requested corresponding action to be taken against key risks. The top seven risks identified are described in more detail in the Corporate Governance Section on pages 77 and 78.

*The French and Italian migrations represent the last major merger integration projects. As a result the separate ‘integration’ category shown in the 2012 Annual report is no longer classed as a stand- alone ‘key risk’ and has been incorporated into the technology category. 53

Our main risk groups are: Regulation and compliance t Technology Regulation is another complex area. Managing this key risk is critical for us, particularly because of the increasing number of countries and now Regulation and compliance Strategic Strate rep t report US states that are introducing regulatory regimes, each of which have ort t Taxation different compliance requirements. gi c t Poker Our compliance obligations range from administration of our gaming licences in Gibraltar, Alderney, Belgium, Denmark, France, Italy, Spain Technology and Schleswig-Holstein in Germany, to assessing what impact country- speciﬁc and pan-regional rules and regulations might have on our Technology is at the core of our business, employing a third of our staff business and the wider industry. While political and cultural attitudes who are continuously developing our capabilities to maintain our towards online gaming are continuing to evolve, as evidenced by the competitive edge and keep on top of the ongoing changes in tastes and opening of online gaming markets in three US states in 2013 – Nevada, demands by consumers who expect to access fun and entertainment Delaware and New Jersey – there is always a risk that certain territories oenneFinancial Governance whenever and wherever they want. may seek to prohibit or restrict one or more of the products that we Go v e offer or online gaming entirely. rn

Our reputation for data protection and for responsible, safe and a n secure products and services is upheld to a high degree by our We have a dedicated regulatory and compliance team that reports ce technology capabilities. directly to the CEO and is closely supported by our legal and regional As with all technology, making sure that our services are available management teams. We submit ourselves to a series of external audits 24/7 and remain stable at all times is a key driver of long-term success. as required under our gaming licences and also perform our own System failures and/or errors in newly released software can destabilise compliance assessments to ensure that policies and procedures are services and result in them not being available for customers, or failing being followed and working effectively. to provide a quality user experience. One of the main reasons why we Taxation have adopted the Agile working methodology is to increase both the performance performance performance quality and the number of software releases we make each year, helping Taxation is the third category of risk which we believe is material. F in

Group companies operate only where they are incorporated, domiciled a us to continue to improve platform stability and enhance our product n c i offer so that we can deliver the best possible online experience for or registered. Revenues earned from customers located in a particular al our customers. jurisdiction may give rise to further taxes in that jurisdiction. If such taxes are levied, either on the basis of existing law or the current Most of our gaming technology is proprietary, we believe that practice of any tax authority, or by reason of a change in law or practice, this means we are better placed to manage risks associated with then this may have a material adverse effect on the amount of tax technological and regulatory change than those competitors that rely payable by the Group. We manage these risks by considering tax as heavily on third-party software and systems. part of our overall business planning. We plan to migrate customers in France and Italy to our new platform Poker later this year and this will help to reduce our risk in this general area. However, we do share the industry’s general risks that arise The international online poker market has struggled in recent years as from sourcing broadband and communications, data management several countries have regulated and ring-fenced their online gaming and storage services as well as a raft of other services from external markets, reducing player liquidity for customers both within and suppliers. Our aim is to offset these risks by not becoming overly reliant outside such regulatory regimes. This has reduced the overall appeal of on any single supplier as well as having in place disaster recovery poker in several markets where the Group has historically had a strong centres and business continuity plans. presence. At the same time, PokerStars remains a dominant competitor in most markets. With a strong cross-sell from poker to casino and other games, market declines and competitive pressures have also impacted revenues in other areas of the Group’s business. To counter this trend, the Group has launched an all new version of its poker product with many new features such as missions and achievements that are aimed at broadening its appeal to a larger customer base. In addition, the opening of the online poker market in New Jersey provides a further source of growth as the US remains one of the largest poker markets in the world. 54 Focus on responsibility

Making Responsibility Real Our approach is all about ‘Making Responsibility Real’. We create evidence- Key stakeholders based solutions for a safe and secure online gaming environment and seek to drive innovation and knowledge across the industry. We want to share that knowledge with stakeholders and society and prove that we are doing it – for real. There are eight main elements to our approach to Making Responsibility Annual report & accounts 2013 Real, being: t Real innovation – we support the creation of scientific evidence and use it to create a gaming environment that is pioneering in terms of bwin.party innovative, safe and responsible products and services. We share our knowledge through the Transparency Project – for more information, please visit www.thetransparencyproject.org; t Real prevention – we’ve developed an evidence-based responsible gaming framework to identify risky behaviour and help prevent gaming-related problems; t Real fairness – we create a fair gaming environment that provides consumer protection, prevents fraud and fosters the integrity of sports; t Real compliance – we comply with national and European regulations and set the standards for the security of gaming; t Real governance – we give our stakeholders a full and clear picture of the performance of our management team and how the company is run; t Real care for the environment – we identify, measure and strive to reduce our impact on the environment; t Real people – we empower employees to realise their individual potential and ensure that they remain our greatest asset over the long-term; and t Real engagement – we enable employees to contribute to local communities by creating opportunities to volunteer and support good causes. Our other corporate responsibility initiatives include contributing to “Being a leader in society through charitable donations. Responsibility starts at the top of bwin.party. Martin Weigold, responsible gaming is Chief Financial Officer, has executive responsibility for our corporate responsibility matters, a role he has held since 2005. The overall process is fundamental for our overseen by the Audit & Risk Committee comprising four Independent Non- long-term success” sums Executive Directors – Helmut Kern, Rod Perry, Per Afrell and Sylvia Coleman. The Committee oversees bwin.party’s corporate social responsibility up our Acting Responsibly policies and procedures that have been adopted to manage our relationships with stakeholders including customers, the wider community strategy that runs across and the environment, regulators, suppliers and providers of capital. and penetrates deep into For more information on our Audit & Risk Committee Report see pages 75 to 79. many areas at bwin.party. Customers As well as our customers, After eight years of collaboration with the Division on Addiction, Cambridge Alliance, a Harvard Medical School teaching affiliate (‘DOA’), we have we recognise we have developed the first prototype of a predictive algorithm to help prevent problem gambling. Following successful trials amongst 7,000 players in a number of important Spain in late 2013, the algorithm will now be tested in a wider field involving active players on bwin.com and then on partypoker.com. Such an approach stakeholders. is an important step forward in the protection of those online gaming customers that may be at risk of developing gambling-related problems. 55

Based on evidence and a validated algorithm, a player’s behaviour Community and the environment is analysed and ﬂagged, resulting in tailored, tiered interventions Helping to protect the environment and provide support to our local that range from information distributed via pop-ups to a manual communities are important elements of our overall approach to investigation that can lead to an imposed exclusion if further evidence Strategic Strate rep responsibility. We fund a variety of responsible gaming organisations report for gambling-related problems is conﬁrmed. ort

and more general charities and also run a pro bono scheme that allows gi Only by tailoring our efforts to the customer’s protective needs, can employees to give their time to good causes. c we leave the greatest possible freedom to responsible players, while In addition to our research with the DOA, in 2013 we donated more than being able to closely monitor and protect those who might be at risk of €360,000 to several responsible gaming organisations in Europe including developing problems in the future. For the first time, player protection The Responsible Gambling Trust, Gambling Therapy, Spielsuchthilfe, Jogo is not uniformly the same for all players. Instead of over-protecting the Responsavel, Addictel and the University Clinic Aarhus. majority of recreational players or not sufficiently protecting those at risk, we have chosen to implement an individualised approach that is Hundreds of employees from our offices in India, Israel, Europe and based on our understanding of our duty of care: the United States participated in a variety of pro bono schemes that oenneFinancial Governance included the construction of a school in India, raising funds for cancer Go Providing an informed choice to the majority or recreational gamblers; t v

research, helping out at centres for elderly and homeless people, e rn a

t Supporting at-risk players in maintaining control over their gameplay; and supporting children’s charities and environmental projects including n tree planting and helping out with repair and construction work at a ce t Protecting problem gamblers and supporting them to actively seek big cat sanctuary. professional help. Resource consumption Having reached an important milestone, our research with the DOA is being continued in order to further improve the effectiveness of the Compared with many other international businesses, we are a low- predictive model and the associated interventions. impact company, but we continuously monitor our environmental performance by measuring the water and energy we consume, the More information about our approach to sustainability: embracing amount of physical waste we produce and the amount of CO2 gas we performance performance our approach for safe and secure digital entertainment can be accessed performance

produce through air travel. F at www.bwinparty.com/Sustainability/OurApproach.aspx. in a n

Key metrics for 2013 show that: c i Proactive detection processes are increasingly helping us to detect al t A total of 5,765 air flights taken by employees producing an estimated a greater number of possible cases of gambling-related problems 2,780 metric tons of CO2; Average number of t Our highest energy consumption resulted from our eight data incidents per month centres, which consumed 9.24 million KWh of electricity in total; Incident type Intervention (% of total investigated cases) t On average, each full time employee in our six main offices every 2013 2012 month used: Suspicion with Exclusion indication of gaming- imposed – 136 KWh of electricity; related problems 93 (25%) 64 (26%) – 607 litres of water; and Suspicion with Agreed on risk- – produced 200 grams of waste. indication of at-risk mitigation with behaviour customer 74 (20%) 43 (18%) Our approach to the environment and the community goes beyond our own Concerns allayed Responsible gaming business. Our suppliers’ commitment to a wider corporate responsibility advice given 198 (55%) 138 (56%) agenda relating to the environment is also assessed by aligning our interests we can try and make a real difference where it is needed. Players’ ratings of the player protection tools offered via our two global gaming brands – bwin and partypoker Employees Rebasing and reshaping bwin.party in 2013 required employees in bwin partypoker all of our offices to adapt to some big changes, especially in how they supported and drove the business strategy as the shift towards Percentage 2013 2012 2013 2012 regulated and to-be-regulated markets gained momentum. Rating our player protection positively (‘excellent’ to ‘good’) 89% 91% 87% 90% Belgium and New Jersey joined our growing list of nationally regulated markets and more can be expected to be added in the near future, Considering our player protection each with differing requirements that we will have to address quickly effective (‘completely’ to ‘partly’) 86% 87% 86% 87% and effectively. Given our diverse geographic footprint relative to Considering our player protection some of our peers, the shift from ‘dotcom’ to ‘dotnational’ means we easy to find (‘completely’ to ‘partly’) 92% 92% 91% 91% have already implemented the requisite structural changes, changes Considering our player protection easy which have yet to reach much of the online industry but which are to understand (‘completely’ to ‘partly’) 96% 97% 95% 95% inevitable for those seeking to secure a leadership position in key regulated markets. 56 Focus on responsibility

The core of our business is technology, accounting for 33% of the total Our transition to Agile will continue to be a prime focus for us in 2014, number of employees. Under the leadership of Guy Duncan, Product as will developing strong leaders and leadership across the Group. and Technology Director, we have introduced the Agile working For further details on our transition to Agile, see the ‘Spotlight on methodology that has set global leaders in online commerce apart Technology’ on pages 38 and 39. from their peers. Leadership capability Transition to Agile The dynamics of our industry require that we have strong leadership Agile will not be the preserve of our technology teams, however. capabilities from the top down. During 2013 we defined our own Annual report & accounts 2013 Whilst Agile is most frequently referred to as ‘a methodology and leadership profile – that is, the behaviours that make for a great leader approach for software development organisations’, we plan to embed at bwin.party. We then selected a model that dovetails with this profile, many of its core principles group-wide by mid-2015. The reason is simple, known as the Transformational Leadership Model (TLM) – the origin of

bwin.party the process can be tailored for all disciplines bringing about operational which derives from James MacGregor Burns’ analysis of political leaders efficiencies, increasing productivity and ultimately ensuring the timely in 1978. execution of our business strategy. Beginning with Norbert Teufelberger, CEO, we conducted a Through Agile we will be able to assess our progress more effectively detailed 360-degree leadership feedback process for more than using a series of new internal Key Performance Indicators – both 80 of our senior managers based on the TLM which provides each collectively for departments and teams, as well as for individuals. participant with a comprehensive report as a basis for their personal development planning. Outside of the technology discipline, we are changing the assessment and development of every employee’s performance ahead of formally During 2014 a further 130 leaders will participate in the feedback introducing Agile towards the end of 2014. Following a review of our process and around 80 leaders drawn from all levels of management performance management process, in 2013 we introduced an element will participate in our newly designed leadership programme to develop of 360-degree feedback for all employees that in turn became the further their ‘transformational leadership’. cornerstone for personal development planning for 2014. Employee review of 2013 We also moved away from recording the detailed steps of how The diversity profile registers 62 different nationalities which makes objectives are achieved to focusing more on the results that for a culturally-rich, interesting as well as a challenging place to work. are attained. To support this move we also reduced sharply the Overcoming those challenges require passion, insight and creativity – administration needed to measure performance, easing the process for each of which lie at the heart of our corporate values. managers at all levels. Rebasing and reshaping bwin.party has had an inevitable knock-on Increasing collaboration and teamwork effect on employee numbers. We had 2,771 employees at the end of 2013, Looking forward, performance management for our technology a net reduction over the year of around 8.0% that comprised a mixture of employees working within an Agile team will be recorded on voluntary attrition at a manageable 13.4%, redundancies and new hires a team basis as opposed to an individual basis previously. to strengthen some business areas. Collective performance will also be the driver and denominator for Our future success depends upon the skills, knowledge and endeavours reward and recognition through team-based bonuses. of our employees. We are committed to fostering and nurturing a Under Agile, a manager’s role changes significantly – the team assumes culture that enables people to learn, develop and achieve, irrespective more management of itself while a manager’s role becomes more of their nationality or gender. about coaching, mentoring and facilitating. As a result, managers Life is fast-paced and highly demanding, but for those with the right are ultimately responsible for a greater number of individuals than skills and temperament, there is great opportunity. Discover more at: they would have in a more traditional structure: during 2013 the span www.bwinparty.com/Careers of control for the total workforce moved from 5.12 employees per manager in January to 6.46 at the end of December. Within technology, the measurement moved from 4.6 to 10.74 respectively. As a result, General 2013 2012 while some managers moved into different roles we were also Average headcount 2,818 2,907 able to remove several layers of management, reducing costs and increasing productivity. Total headcount as at 31 December 2,770 2,952 Average length of service: 4.1 years 3.6 years Transitioning to Agile requires that employees learn and embrace a broader set of skills, increase their knowledge across different Average staff turnover (voluntary) % 13.4% 12.8% technologies and domains, and understand how to increase Average staff turnover (involuntary) % 8.4% 4.0% effectiveness as part of a newly formed, self-managed team. Sickness absence rate 1.9% 1.5% During 2013 we designed a certification process for employees acquiring new skills and increasing their knowledge. This provides a Working part time % 3.0% 4.0% clear view of the learning undertaken and the knowledge gained by Total no of nationalities 62 61 a team as a whole as well as by its individual members – it also ensures that we have the necessary skills in-house to respond to the changing Total no of international moves 23 29 needs of the industry. 57

Providers of capital – past, present and future Gender split at 31 December 2013 2012 Over the past decade, the online gaming market has changed Female Male Female Male considerably, principally due to three prime catalysts – regulation, Strategic Strategic Strate rep Number of employees 905 1,865 952 2,000 technology and competition. report ort

All three factors are particularly relevant given the need to adapt to gi

Gender 32% 68% 32% 68% c the ongoing shift from dotcom to ‘dotnational’ regulated markets % at Grade 9 20% 80% 21% 79% and the increasing uptake of mCommerce. % at Grade 10 8% 92% 5% 95% The common denominator in helping investors understand why % at Grade 11 17% 83% 13% 87% changes have happened, what’s happening now and what’s likely to happen in the future is transparency. This allows investors to gain a % at Manager Level (Grade 9 and above) 18% 82% 18% 82% greater understanding and appreciation of our business model and long-term prospects by being kept fully informed on developments oenneFinancial Governance Age proﬁle at 31 December 2013 2012 affecting our own performance and also that of the wider industry. Go v e

Employees under 25 258 324 We have endeavoured to again move forward with the quality rn a

and breadth of our disclosure. Our annual report, however, is just n Employees 25 to 29 716 836 ce one medium through which we engage with investors and other Employees 30 to 49 1,727 1,731 stakeholders whose ranks include lenders, politicians, regulators, Employees 50 and over 69 61 environmentalists, academics and business partners, amongst others. Their collective and individual opinions and actions matter and can Suppliers impact on how we operate our business. They also affect the perceptions Our decision to shift from ‘volume to value’ necessitated numerous of both our company and the industry as a whole. There is no set adjustments to be made to our supply chain, most notably amongst calendar that governs stakeholders’ interaction with online gaming, performance performance so we have to communicate often and through a variety of channels. performance

affiliates that had previously been at the forefront of acquiring F in customers in the 18 markets where we decided to cease player a These include: n c i acquisition. Another consequence of our tactical marketing shift al was the need to establish new supply chains in two new markets – t Providing shareholders and lenders with regular updates on both Belgium and in New Jersey in the US. corporate and financial developments throughout the course of the financial year; Our supply chain is diverse, spanning IT, travel, sponsorship, translation services, telephony and affiliates amongst others. We manage all t Regular meetings between our executive team and financial analysts, suppliers through a single Enterprise Resource Planning system, current as well as prospective investors, but with a focus around the overseen by our central procurement team whose strategic aim is to: publication of our half year and full year results; t Reduce risk; t Investor and industry presentations, online webcasts, the publishing of financial reports and analysts’ consensus forecasts, to name but t Develop mutually beneficial long-term business relationships; and a few, all of which are publicly available on our corporate website: t Deliver best value from our suppliers on a long-term basis. www.bwinparty.com; and Our procurement policy includes a ‘Supplier Acknowledgement and t Using our regular interactions to gain a greater understanding of Self-Certification Checklist’, which requests information relating to: investors’ and other stakeholders’ perceptions about our strategy, performance and prospects. t Financial strength to ensure long-term reliability; The saying that ‘news travels fast’ has been replaced by ‘news is instant’ t Ability to deliver enduring quality and value; and has to be addressed promptly so as to avoid misinterpretation and consequent confusion that can easily arise through the rapid shaping t Commitment to innovation and ability to help us develop new of views via social media channels and online sites that are always keen products, processes and ways of working that will provide us with a to be the first to break a story. commercial advantage; and The instant exchange of information around the globe poses a big t Commitment to a wider corporate responsibility agenda relating to challenge for any public company. This is why we continue to invest the environment, labour/employment standards, equal opportunities time and resources in building strong and long-term relationships with and employee rights. investors, analysts and other providers of capital to avoid the potential In return, we aim to operate to the highest professional standards, risks that can sometimes be created by an unwitting comment or article treating our suppliers in a fair and reasonable manner and settling placed through digital media. invoices promptly. For further details on our relations with Shareholders see page 73. We have now reached the end of our ‘Strategic Review’ and now move on from talking about our operational performance and prospects to how we govern our business, beginning with a statement by Simon Duffy, Chairman of the Board. 58

GovernanceGove Chairman’s statement Reshaped for growth Annual report & accounts 2013 In this, my last Annual Report after serving “We set our sights on three years as Chairman, I am pleased to making 2013 a year of say that, despite a number of regulatory bwin.party challenges, we achieved many of the transition for bwin.party by objectives we set ourselves in 2013 to increasing our operational transition from merger integration to innovation in order to position bwin.party focus on regulated and to capitalise on growth opportunities. to-be-regulated markets, The transition required some big operational changes to reposition our improving how we develop business for the long term, most notably our decision to move from ‘volume to and launch products value’ so that we can return the business and reducing our cost to growth. Declining returns and an uncertain regulatory outlook in several base significantly.” countries prompted our decision to stop acquiring customers in 18 markets and shift the focus of our marketing expenditure onto nationally regulated and to-be-regulated markets. The consequent rebasing and reshaping of our business is reflected in our softer financial performance in 2013 which, whilst painful, was a necessary precursor to being able to return to sustainable revenue growth. This will come from the delivery of a suite of new gaming products through all channels, including mobile and touch, that is fast becoming the platform of choice for digital consumers. The CEO’s Review on pages 10 to 15 provides further details on what has already been achieved and what we hope to deliver in 2014. Board composition and governance In 2013 we achieved our objectives of reducing the size of the Board, appointing at least one female Director and achieving compliance with the UK Corporate Governance Code’s recommendation regarding the balance of independent and non-independent Directors. StrategicStrategic GovernanceGovernance FinancialFinancial 59 report performance and expect them to make a nomination course. due in On appointment this of SpringOwl be not nominee, who will deemed independent, the Board no will have a balancelonger and independent of non-independent Directors, so the Board have to appoint a new independentwill Director order to comply with in the UK Corporate Governance Code. Dividend The Board is recommending a final dividend 1.80p of per share which, of dividend interim the with together 1.80p, makes a total dividend 3.60p of per share the for year ended 31 December (2012:2013 3.44p). The final dividend, if approved at the 2014 be paid AGM, will on May 2014.23 Further details are contained the Notice.in AGM Share buyback shareholders AGM renewedAt the 2013 the authority to repurchase to 10% up of the Company’s issued share capital at half-year and the AGM in 2013 the 2013 results we expressed announcement an to purchase to €10mintention up worth of shares 12 over the following months as part the of Company’s distribution policy. the During Company 2013 purchased a total 2,635,677 of shares at a total purchase £3,513,586. price of Since the year-end a further 500,000 shares have been purchased a total for cost, commission, £577,437. of including All purchased shares have been cancelled. Simon Duffy Chairman Sylvia Coleman joined the Board as an Non-ExecutiveIndependent Director on remain8 March committed We 2013. to having at least two women serving on the Board by 2015 Geoff Baldwin, Tim Bristow and Lord Moonie each stepped down, reducing the Directors number of to nine As all Directors, 2013, in excluding be standingmyself, will re-election for at the 2014 be AGM. stepping I will thedown at the of AGM conclusion on 22 May 2014. The Board, led by the Directorsindependent and supported by an recruitmentindependent firm, are progressing with a search for my successor and it is expected that new the about announcement an in made be will appointment Chairman’s advance the of AGM. I wish the Company every success as it continueswith the itsimplementation of strategy and seeks to capitalise on the opportunities it faces. In February 2014 SpringOwl Partners B Gibraltar Limited (‘SpringOwl’) acquired a 6% stake bwin.party, in together right nomination Director the with agreement theunder relationship between the Company and Emerald Bay Limited and Stinson Ridge Limited at the theentered time merger of into PartyGamingof with Interactive bwin Entertainment date SpringOwl AG. To has not formally nominated an individual appointmentfor to the Board, however, we are discussions in with SpringOwl In summary, the changeswere: t t This resulted a Board, in excluding the Chairman, comprising four Directorsindependent and four non-independent Directors. 60 bwin.party Annual report & accounts 2013 Board of Directors Board BSc Physics, University of Salford University Physics, BSc Academic and professional qualiﬁcations Plc PartyGaming and Ltd Indago Petroleum Non-executive: Executive: Previous directorships Non-executive: Markets Capital Executive: Other current directorships 19 2013 June re-elected: Last 2005 May 31 Appointed: Independent Non-Executive Director Senior and Chairman Deputy (68) Perry Rod Fellowship Harknos MBA. School, Business Harvard Oxford University, Philosophy,BA Politics and Economics, Academic and professional qualiﬁcations plc Distillers United and plc Group EMI BV, International WorldOnline AS, End2End SA, Orange Inc.), Media Virgin (now Inc. ntl:Telewest Executive: InvestmentGartmore Ltd and plc Group Media HMV plc, GWR Group Non-executive: Previous directorships Inc. mBlox and Ltd C(Pty) Cell AB, Group Non-executive: Other current directorships 2013 19 June re-elected: Last 2011 March 31 Appointed: Chairman Non-Executive (64) Simon Duffy 3i Group plc Emerging Life and Capital Ithmar plc), Ricardo QXL (formerly plc Tradus Gulf of Guinea Energy BVI, BVI, Energy Guinea of Gulf PLC Resources 3Legs plc, Group Tobacco Imperial Oger Telecom Ltd, ModernTimes

Last re-elected: 19 2013 June re-elected: Last 2011 March 31 Appointed: Officer Executive Chief TeufelbergerNorbert (48) Last re-elected: 19 2013 June re-elected: Last 2011 March 31 Appointed: Director Independent Non-Executive (56) Afrell Per Swedish Accounting Standards Committee Swedish AccountingStandards the of Board the of Member and Committee Listing Exchange Stock Stockholm the of Member Academic and professional qualifications AB esolutions Ongame and AG Non-executive: Executive: Previous directorships Non-executive Other current directorships Economics and Business Administration, Vienna of University (‘Magister’), Mag.rer.soc.oec Academic and professional qualifications Exchange. Stock Vienna the of Market Prime the and Nasdaq on listed currently company casino aland-based co-founded and of companies; Group Novomatic the to ;consultant AG Austria Other roles: Non-executive: Previous directorships (‘EGBA’) Association Betting and Gaming European Non-executive: Other current directorships Profi Management AB Management Profi Occupied key positions with Casinos Casinos with positions key Occupied : Profi I AB and Profi II AB II Profi and IAB : Profi bwin Interactive Entertainment Entertainment Interactive bwin SE Holding betbull the of Board Supervisory

Last re-elected: 19 June 2013 19 June re-elected: Last 2005 4April Appointed: Chief Officer Financial Weigold (48) Martin Last re-elected: 19 June 2013 19 June re-elected: Last 2011 March 31 Appointed: Integration Committee Chairman of the Non-Executive (51) Bodner Manfred Accountants of England and Wales and England of Accountants Chartered of the Institute of Member of Bristol University accounting, and economics in Degree Honours Joint Academic and professional qualifications Limited, Plc PartyGaming and Guinness Mahon Development Capital WaltEurope Disney NV), Television International Executive: Previous directorships Studies from Webster University, St. Louis St. University, Webster from Studies in Degree BusinessBachelor’s and International Academic and professional qualifications GmbH Italia Bar and AG Press Eastern AG, Handels Neckermann AG, Versand Trend Executive: Previous directorships Jetix Europe NV (formerly Fox Kids Kids Fox (formerly NV Europe Jetix bwin Interactive Entertainment AG, AG, Entertainment Interactive bwin StrategicStrategic GovernanceGovernance FinancialFinancial 61 reportreport pperformanceerformance Österreichische Salinen AG and bwin Interactive Entertainment Androsch Privatstiftung and other Other current directorships current Other Executive: foundations private Non-Executive: group companies, AT&S Austria Technologie & Systemtechnik AG, Wiesenthal & Co AG and bwin Services AG directorshipsPrevious Non-executive: AG, Wertkarten paysafecard.com AG, Allgemeine Baugesellschaft – A. Porr AG, Loser GmbH Bergbahnen roles Other Lawyer, Riedl & Partner Law Firm, Vienna qualifications professional and Academic Doctor juris, University of Vienna, Faculty of Law compliance our of Confirmation with together Code, the with details about how the Board oversees the interests of the Group through its operating is structure, management and the in depth more explored in pagesGovernance review 62 on of thisto 74 Annual Report. Key to Committees Audit & Risk Committee member Integration Committee member Nominations Committee member Remuneration Committee member Indicates Chairman of the Committee Georg Riedl (54) Riedl Georg Non-Executive Director Appointed: 31 March 2011 Last re-elected: June 19 2013

TC Invest AG and bwin Services bwin Interactive Entertainment AG Beyond ConsultingGmbH and Beyond PricewaterhouseCoopers Consulting Consulting PricewaterhouseCoopers Other current directorships current Other Executive: Holding GmbH Supervisory Board: Previous directorshipsPrevious Executive: qualiﬁcations professional and Academic Mag.rer.soc.oec (‘Magister’), University of Vienna Administration, Business and Economics Executive Program at Development Leadership Columbia University, N.Y Licenced Accountant (Austrian Management Chamber of Commerce) BA History, University Vienna of LLP, DeloitteLLP, DFGJ Privatstiftung LLP, FN and und Gesellschaft Prävention für Wellcon Arbeitsmedizin GmbH. Non-executive: Helmut Kern (48)Helmut Kern Non-ExecutiveIndependent Director Appointed: 31 March 2011 Last re-elected: June 19 2013 2Simon, Rod Sylvia 7 Georg, Martin, Rod, Manfred, Norbert, Simon, Per 4 Sylvia Simon, Sylvia, Martin, Norbert 2Simon, 2Georg, 6 Norbert, Norbert, Rod, Manfred, Georg Simon, 1Norbert 3 Per Simon, Helmut, 2Manfred, 2 Georg, Helmut

Reprieve (Non-executive) Banking & Investment Entertainment Energy & Utilities Law Telecommunications & Technology gaming Land-based Accountancy Marketing & Publishing ProcessingPayment Experience the of Board members outside bwin.party BoardNumber of members with relevant experience Previous directorshipsPrevious Europe, Music EMI International, Music EMI Sony Entertainment Music Europe, Sony Music Entertainment UK, Chickenshed Theatre Trust roles Other Member of Action Aid and the Law Society qualifications professional and Academic Solicitor/Honours degree Law, in University of Birmingham Other current directorships current Other Non-executive: Sylvia Coleman (56) Non-ExecutiveIndependent Director Appointed: March 8 2013 Last re-elected: June 19 2013 62 bwin.party Annual report & accounts 2013 Directors’ Responsibilities. Responsibilities. Directors’ Statement of before the addressed are matters report director remaining any then ancillary and on their work (the ‘Code’) Code Governance UKCorporate compliance the with bwin.party’s toexplain and structure its operating ofthrough Company the interests the oversees Board howthe istodemonstrate Report ofAnnual the section of this purpose The in business. success for sustainable condition isanecessary governance corporate Good Introduction A. Corporate governance * . The various Board committees then report report then committees Board various . The summarised below: Senior definedand are Independent and areclearly Director Directors Non-Executive ,CFO, CEO Chairman, of the responsibilities The Board the on Roles (IV) day-to-day. business Group’s the managing when follow to level Board below business ofthe employees and Directors Executive the for ofauthority level the out sets which memorandum ofauthority delegation aformal adopted has Board the In addition, t t t t t t t t t t to: limited not but including areas ofkey anumber into categorised be can These decision. for Board the to referred be must issues which out setting Board, the to reserved ofmatters schedule aformal adopted have Directors The (I) Overview – Management and decision-making bodies decision-making and –Management Overview (I) B. The Board Governance-Code-September-2012.pdf *https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate- delegation and Responsibility (III) 61. and 60 pages on out set are biographies their and Directors ofnine comprises Board The (II) Members responsibility, health and safety and the environment the and safety and health responsibility, social and corporate to inrelation policies Group’s ofthe approval and Committee); &Risk Audit the from recommendations (following auditors external ofthe appointment/re-appointment and the framework control and management risk Group’s ofthe approval fromrecommendations the Remuneration Committee); (following policy remuneration Group’s of the approval exchange announcements; conveningshareholder circulars, stock and shareholder meetings dividend policy; management statements); financial reporting (interim and annual financial results and interim levels; certain approval of capital expenditure and financial guarantees above arrangements; structure capital and banking finance, Group’s the disposals; and acquisitions material and Group ofthe reorganisation or restructuring forecasts; and budgets strategy, plan, business long-term Senior Management TeamSeniorSen Management e entertainment plc Board nte The bwin.party digital digital bwin.party The T he ExecutiveEx Directors io Remuneration Committee Nominations Committee Audit & Risk Committee &Risk Audit Integration Committee StrategicStrategic GovernanceGovernance FinancialFinancial 63 report performance Rod PerryRod (C) Afrell Per Coleman Sylvia Kern Helmut Remuneration Remuneration Committee Ensuring business decisions are grounded in solid financial criteria solid in are grounded decisions business Ensuring Providing insight and analysis to support the CEO and other senior managers Leading key initiatives in finance that support overall strategic goals Funding, enabling and executing the strategy set by the CEO organisation strategy overall the your for defining and Developing Representing the organisation’s progress on strategic goals to stakeholders external developmentthe to contribute and Constructively challenge of strategy Scrutinising the performance of management in meeting agreed goals and objectives and monitoring the reporting of performance and accurate is information financial that themselves Satisfying that financial controls and systems of risk management are robust and defensible Being responsible for determining appropriate levels of remuneration of executive directors and havea prime role in appointing, and where necessary removing, senior management and in succession planning be available to shareholders if they have concerns which contact through the Chairman, CEO or CFO has failed to resolve or for which such contact is inappropriate lead the Non-Executive Directors in evaluating the performance of the Chairman, taking into account the views of the Executive Directors contact understandmaintain shareholders sufficient with to their issues and concerns perform such other roles and responsibilities as the Senior Code the Director by as Independent be contemplated may or best practice guidelines in place from time to time Simon Duffy (C) Afrell Per PerryRod Nominations Nominations Committee Chief Financial Officer (‘CFO’) t t t t t t Non-Executive Directors t t t t Director Independent Senior As well as performing the normal duties expected of a Non-Executive to: required Director is Independent Senior the Director, t t t t Manfred Bodner (C) DuffySimon PerryRod Norbert Teufelberger Integration Integration Committee Overseeing the effective running of the Board Ensuring that the Board as a whole plays a full and constructive part in the development and determination of the Company’s strategy objectivesand commercial overall Acting as the guardian of the Board’s decision-making process probity and corporate standards highest the integrity, Promoting of governance throughout the Company and particularly at Board level Overseeing effective engagement with the Company’s various stakeholders Running the Company’s business Company’s the strategy developing and overall and Proposing objectives,commercial the consultation with close does he in which Board the and Chairman Responsible, with the executive team, for implementing the decisions of the Board and its Committees Promoting and conducting the affairs of the Company with, the probity standardshighest and corporate integrity, governance of Managing the senior management team and promoting the strategic mission and goals to all Group employees Engaging with external stakeholders and explaining the logic for and strategy business the with progress (C) denotes Chairman of the committee. the of Chairman denotes (C) Audit & Risk Committee Helmut Kern (C) Afrell Per PerryRod Sylvia Colman Each committee reports separately on its work on pages 75 to 105. The Board has delegated certain responsibilities to the following committees of Directors: Chairman t t t t t Chief Executive Officer (‘CEO’) t t t t t t (V) Committees (V) 64 Corporate governance governance Corporate 64 bwin.party Annual report & accounts 2013 C. Compliance with UKGovernanceRecommendations Corporate Code C. purposes. quorum for present as regarded being them prevented location their ofassociation articles Company’s becau telephone, by inattendance being as regarded were or present either were Directors the all meetings, ofthese one attend were who Bristow Tim and Bodner ofManfred exception the With opportunity. business Jersey New the and 107) page (see Agreement arisi issues address to notice short at convened also were meetings Board two meetings, Board scheduled five the to In addition, the to owing but UK, the from telephone by instead attended He flying. from him preventing injury an to owing impor meetings of set one another for with clash Gibraltar to diary travel to unable unavoidable an to was owing Moonie year the Lewis during meeting Board one 5. attend to unable was Bodner Manfred 2013. during Board 4. the from resigned Directors These illness. to owing meeting Committee 3. Ethics the attend to unable Committee. was &Risk Afrell Audit Per the form to Committee Audit the into 2. merged was Committee Ethics the 2013 During 1. Notes in the table below: are records attendance and ofmeetings number ofthe details and inGibraltar met committees its and Board the year the During (vi) Meetings Geoff Baldwin Baldwin Geoff A.1.3 A.1.2 A.1.1 Principle Supporting Principle Main Board ofthe Role The A.1 A. DIRECTORS Total held in year attend to entitled was Total number of scheduledDirector meetingsheld during the each year ended 31 2013 December that and the number of number of attended meetings um the maxim Tim Bristow Bristow Tim Per Afrell Manfred Bodner G Perry Rod S Simon Duffy Norbert TeufelbergerNorbert Lewis Moonie H M y e e provisions in the Company’s articles of association he could not be regarded as present for quorum purposes. quorum for present as regarded be not could he association of articles Company’s the in provisions a l o l v r m r i t a g i u n C R t W K o i e l e e (2) e d r i m l g n o (3) a l n (3) (5) d (3) (4) management. to delegated be to are which and board the by taken be to are decisions of types which of statement level ahigh including operates, board the how of astatement include should report annual The decision. its for reserved specifically matters of schedule aformal be The should board meet sufficiently regularly to discharge duties its effectively. There should duties. statutory their with consistent company, the of interests best the be to consider they what in act must directors All met. and understood are others and s and shareholders its to values obligations company’s the its set that should and ensure board The performance. in management are review and resources human and objectives its financial meet to company the necessary for the place that ensure aims, strategic company’s the set should board The w controls managed. and effective and assessed to be prudent of aframework within company the of leadership entrepreneurial provide to is role board’s The company. the of success the for responsible collectively is which board, effective an by headed be should company Every its directors. its against action legal of respect in cover insurance appropriate arrange should company The by directors. attendance individual and committees those and board the of meetings of number the out set also should It committees. board the of members and chairmen the and director independent senior the executive, chief the one), is there (where chairman deputy the chairman, the identify should report annual The Board 2/3 3 3 4/5 5/5 5/5 5 5 5 5 5/5 5/5 / / / / / / 5 33 3––––– 53 5––––– 54 5––––– Audit/Audit & Risk Committee 4/4 / / / – – 41224 – 31 3–––1 – 41 – (1) Committee Ethics 1/1 0/1 / / – 1––– – 1––4 – – (1) Integration Committee the annual report. in included is operates Board the which in way the adopted.A decision been statement on has Board’s the for reserved specifically matters of A schedule 2014. in times five least at meet to and is scheduled 2013 in Gibraltar in times five met Board full The response: bwin.party liability insurance. liability officers’ and directors’ place in has bwin.party response: bwin.party table above. the in shown is attendance and meetings of number The report. annual the in identified is Director Each response: bwin.party tant business commitment. business tant 2/2 2/2 2/2 2/2 – – Nominations Committee 2/2 2/2 2/2 – – – ng from the 2010 2010 the ng from se under the se under the set out hich risk enables unable to to unable tandards Remuneration Committee 2/3 4/4 4/4 / / – 1 – 4 – StrategicStrategic GovernanceGovernance FinancialFinancial 65 report performance ble them to them ble reporting of ation n-executive n-executive ive responsibility roposals roposals risk management management risk ould be taken into taken into be ould ensure effective ensure contribution contribution genda items, bwin.party response: The Company Secretary is responsible for recording concerns. All Board minutes are reviewed by the approved. being Directors before bwin.party response: On appointment the Chairman met the B.1.1 criteria.independence bwin.party response: Independent Senior Perry appointed Rod the is (‘SID’).Director bwin.party response: The Chairman of the Board meets with the Non- Executive Directors usually in relation to the Board performance evaluation process. The SID meets with Non-Executive Directors at least once a year performance. Chairman’s the to appraise bwin.party response: The roles of the Chairman and CEO are clearly out set are responsibilities separate Their segregated. in writing and agreed by the Board. directors) such that no individual or small group of individuals can dominate the board’s decision taking. The value of ensuring that committee membership is refreshed and that undue reliance is not placed on particularaccount in deciding individuals chairmanship sh and membership of committees. No one other than the committee chairman and members is entitled to be present at a meeting of the nomination,committee, audit or remuner but others may attend at the invitation of the committee. The board and its committee should have the appropriate balance of skills and, independence and knowledge of the company to ena The board should be of sufficient size that the requirements of the business can be met and that changes tocommittees the board’s can composition be managed and without that of its undue disruption, and should not be so large as to be unwieldly. The board should include an appropriate combination of executive and non-executive directors (and in particular, independent no Where directors have concerns which cannot be resolved about the running of the company or a proposed action, they should ensure that their concerns are recorded in the board minutes. On resignation, a non-executive director should provide a written statement tochairman, the for circulation to the board, if they have any such concerns. The chairman should hold meetings with the non-executive executives the the with meetings without directors hold should chairman The present. Led by the senior independent director, the non-executive directors should meetwithout the chairman present at least annually to appraise the chairman’s performance occasions other as deemed such appropriate are andon in particular strategic issues. The chairman should also promote a culture of openness and debateof non-executive by facilitating the effective directors in particular and ensuring constructive relations between executive and non-executiveThe chairman directors. is responsible for ensuring that the directors receive accurate, timely and clear information. shareholders.communication with The chairman should As part of their role as members of a unitary board, non-executive directors should constructivelyon strategy. challenge and help develop p Non-executive directors should scrutinise the performance of management in meeting agreedperformance. goals and objectives They should satisfy and monitor themselves the on the integrity of financial information andare that robust financial and defensible. controls and They systems are responsible of for determining appropriate levels of remunerationappointing of executive and, directors where necessary, and have a prime removing role in executive directors, and in succession planning. The board should appoint one of the independent non-executive directors to be the senior independent director to provide a sounding board for the chairman and to serve as an intermediary for the other directors when necessary. The senior independent director should be available to shareholders if they have concerns which contact through the normal channels of chairman, chief executive or finance director has failed to resolve or for which such contact is inappropriate. discharge respective their duties and responsibilities effectively. The chairman should on appointment meet the independence criteria set out in B.1.1 in below. out set criteria independence the meet appointment on should chairman The A chief executive should not go on to be chairman of the same company. If exceptionally a board decides that a chief executive should become chairman, the board time the at should shareholders reasons its to out consult set should and advance in shareholders major of the appointment and in the next annual report. The chairman should be responsible for the leadership of the board and ensuring its effectiveness on all aspects of its role The chairman is responsible for setting the board’s agenda and ensuring that adequate time is available for discussion of all a There clear division should a responsibilities be of head the company the between at board of the of running the and execut the same the exercised individual. be by not executive should chief chairman and of roles The The division of responsibilities between the chairman and chief executive should be clearlyestablished, set out in writing and agreed by the board. for the runningof the company’s business. No one individual should have unfettered powers of decision. Supporting Principle B. EFFECTIVENESS B.1 The Composition of the Board Main Principle A.4.3 A.4.2 A.4.1 Supporting Principle A.4 Non-executive Directors Main Principle A.3.1 A.3 Chairman Chairman A.3 Main Principle Supporting Principle A.2.1 A.2 Division of Responsibilities Main Principle 66 Corporate governance governance Corporate 66 bwin.party Annual report & accounts 2013 B.2.3 B.2.2 B.2.1 Principle Supporting Principle Main B.2 Appointments to the Board B.1.2 B.1.1 review, and should take into account the need for progressive refreshing of the board. the of refreshing progressive for need the account into take should and review, vigorous particularly to subject be should director anon-executive for years six beyond Any terms adirector. of removal the to relating provisions statutory to and re-election to subject terms specified for appointed be should directors Non-executive capabilities required for a and particular role appointment. the of adescription prepare evaluation, this of light the in and, board the on experience and knowledge skills, of balance the evaluate should committee nomination The board. the by it to delegated authority the and role its explaining reference, of terms its available make should committee nomination The chairmanship. the to asuccessor of appointment the with dealing is it when committee nomination the chair not should chairman the but committee, the chair should director non-executive independent nomination The chairmanor committee should an directors. be independent non-executive the of members of Amajority board. the to recommendations make and appointments board for process the lead should which committee anomination be should There board. the of refreshing progressive ensure to and board the on and company the within experience and skills of balance mana senior to and appropriate an board the to maintain appointments for succession orderly for place in are plans that itself satisfy should board The benefits for regard due with gender. and including criteria board, the on objective diversity of against merit, on made, appointments and conducted, be should candidates board for search The board. the to directors new of appointment the for procedure transparent and rigorous aformal, be should There directors. non-executive independent two least at have should company Asmaller independent. be to board the by determined directors non-executive comprise should chairman, the excluding board, the half least at companies, smaller for Except t t t t t t t director: the if including determination, its to relevant appear may which circumstances or relationships of existence the notwithstanding independent is adirector that reasons its determines it if state should board The judgement. director’s the affect, to appear could or affect, to likely are which circumstances or relationships are there whether and judgement and be to should Theindependent. board determine whether the director is independent considers in it character director non-executive each report annual the in identify should board The has served on the board for more than nine years from the date of the first election. first the of date the from years nine than more for board the on served has or shareholder; asignificant represents bodies; or companies other in holds or cross-directorships significant has links with other directors through involvement employees; senior or directors advisers, company’s the of any with ties family close has scheme; pension company’s the of amember is or pay scheme, aperformance-related or option share company’s the in participates fee, director’s a from apart company the from remuneration additional receives or received has company; the with arelationship such has that abody of employee senior or director shareholder, apartner, as or directly, either company the with relationship business amaterial years, three last the within had has or has, years; five last the within group or company the of employee an been has review and to annual re-appointment at the AGM. the at re-appointment annual to and review performance annual an to subject but term, specified a for appointed not are Directors Non-Executive independenceon Rod 81). page (see Perry’s commentary further for Committee Nominations the of Report the see Please independence. to his as Committee Nominations by the review vigorous a to subject was appointment his of anniversary sixth the on re-appointment ’s Perry Rod years. six last the within appointed were Directors Executive Non- the all Perry, Rod of exception the With response: bwin.party appointed an independent Director in March 2013. was Coleman Sylvia 2013, of end the by the Board to woman one least at recruit to desire the stated and Director independent anew in bring to need the of light In review. performance Board annual the with conjunction in place takes review This response: bwin.party website. bwin.party the on available are Committee Nominations the for of reference terms The 81). page on Committee Nominations the of Report the (see Board the of Chairman successor independent formed been to has a Directors select of three A committee Committee. Nominations independent. The Chairman of thechairs the Board are whom of two of three members, comprised is and appointed is Committee A Nominations response: bwin.party page 74. Chairman’s commentary on Code compliance on the See Weigold). Martin and Teufelberger Norbert independent (Manfred Directors Bodner, Georg Riedl, non- four and Kern) Helmut and Coleman independent (Rod Perry, Per Directors Afrell, Sylvia four has currently Board the Chairman the Excluding 2013. 15 January since recommendation this with complied has Company The response: bwin.party Company. the by operated currently plans share the for eligible are Directors Non-Executive No page 74. on Code complianceChairman’s commentary on the independent. See were as Directors described disclosed in the merger documentation when both fully were and AG Entertainment bwin Interactive of Board Supervisory the on positions previous their of alegacy are these but awards, Plan Option Helmut Kern and Per Rollover Afrell hold bwin.party the independence criteria. satisfy each Perry Rod and Kern Helmut Coleman, Sylvia Afrell, Per that determined has Board The response: bwin.party gement, so as to to as so gement, StrategicStrategic GovernanceGovernance FinancialFinancial 67 report performance and updating updating and y requiredy to bwin.party response: A full induction programme is provided to new Directors which is specifically tailored to the needs andexperience of the new Director and the committees on which they sit. Major shareholders can meet new Non-Executive Director on request, but to date have not asked to do so. bwin.party response: The Chairman meets with each Director from time to time to discuss their training and development needs performance Board annual the following usually process. evaluation bwin.party response: The letters of appointment are available for inspection at the Company’s registered office. The time commitment is set out in the letters of appointment. and disclosed are commitments Significant discussed with the Board prior to appointment and subsequent changes notified to theBoard. bwin.party response: No Executive Director is a non-executive director of a FTSE 100 company. bwin.party response: The Report of the Nominations Committee can be found on pages 81 and 82. Information on the Company’s diversity policy and its implementation is set out in that report. An external search agency was engaged in the recruitment of Sylvia Coleman and for the recruitment of a new Chairman. The external search agency, Spencer Stuart, has no connection with bwin.party. bwin.party response: The appointment of a successor for the current Chairman is being overseen by a committee of independent Directors – see the Report of the Nominations Committee on page 81. A job specification was prepared and the time commitment and availability are factors being taken account of in the selection process. All business commitments will be disclosed prior to appointment and the new Chairman will need to obtain written consent from the Board for any trustee, positions, board company listed proposed office. public any and roles advisory or consultancy The chairman should regularly review and agree with each director their training and needs.development The chairman should ensure that new directors receive a full, formal and tailored induction on joining the board. As part of this, the company should offer to major shareholders the opportunity to meet a new non-executive director. The board should not agree to a full time executive director taking on more than one non- executive directorship in a FTSE 100 company nor the chairmanship of such a company. directorsAll board the receive should joining regularly induction and should on update and refresh skills their and knowledge. The chairman should ensure that the directors continually update their skills and the knowledge and familiarity with the compan The terms and conditions of appointment of non-executive directors should be made available for inspection. The letter of appointment should set out the expected time commitment. Non-executive directors should undertake that they will have sufficient timemeet to what is expected of them. Their other significant commitments should be disclosed to the board before appointment, with a broad indication of the time involved changes. subsequent and the of board informed be should fulfill their role both on the board and on board committees. The company should provide the necessaryits directors’ resources knowledge for developing and capabilities. staff. its and operations to access and company the of knowledge need directors appropriate all effectively, function To All directorsAll should able be allocate to sufficient company discharge the to to time their responsibilities effectively For the appointment of a chairman, the nomination committee should prepare a job specification, including an assessment of the time commitment expected, recognising the need for availability in the event of crises. A chairman’s other significant commitments should be disclosed to the board before appointment and included in the annual report. Changes to such commitments should be reported to the board as they arise, and included in the next annual report. A separate section of the annual report should describe the work of the nomination nomination the of work the describe should report annual the of section separate A committee, including the process it has used in relation to board appointments. This section should include a description of the board’s policy on diversity,including gender, any measurable objectives that it has set for implementing the policy, and progress on achieving objectives. An explanation should be given if neither an external searchconsultancy nor open advertising has been used in the appointment of a chairman or a non-executive director. Where an external search consultancy has been used, it shouldbe identified in the report andstatement a should be made as to whether it has any other company. the with connection B.4.2 B.4.1 Main Principle Supporting Principle B.4 Development B.3.3 B.3.2 B.3 CommitmentB.3 Main Principle B.3.1 B.2.4 68 Corporate governance governance Corporate 68 bwin.party Annual report & accounts 2013 B.6.3 B.6.2 B.6.1 Principle Supporting Principle Main B.6 Evaluation B.5.2 B.5.1 Principle Supporting Principle Main Support and Information B.5 should be made available as to whether they have any other connection with the company. the with connection other any have they whether to as available made be should astatement and report annual the in identified be should facilitator external The years. three every least at facilitated externally be should companies 350 FTSE of board the of Evaluation conducted. been has directors individual its and committees its board, the of evaluation performance how report annual the in state should board The effectiveness. its to relevant factors other and aunit, as together works boa the on board the how company gender, the of including knowledge and independence experience, skills, of balance the consider should board the of Evaluation duties). other any and meetings committee and board for time of commitment (including Individual evaluation should aim to show whether each director continues to contribute and to effectively demonstrate commitmen directors. of resignation the seeking or board the to appointed be board the of members new proposing weaknesses the appropriate, addressing and where and, strengths the recognising by evaluation performance the of results the on act should chairman The indivi and committees its of that and performance own its of evaluation annual rigorous and aformal undertake should board The a whole. as board the for amatter be should secretary company the of removal and appointment the Both with. complied are procedures board that ensuring for board the to is responsible who secretary, company the of services and advice the to access have should directors All duties. their undertake to resources sufficient with provided be should Committees directors. as responsibilities their to discharge necessary it judge they where expense company’s the at advice professional to access independent have directors, non-executive especially directors, that ensure should board The matters. governance all on chairman the through board the advising for responsible be should secretary company The prof with assisting and induction facilitating development required. as as well as directors, non-executive and management the within senior flows between and information good ensuring committees include responsibilities secretary’s company the chairman, the of direction the Under o an has Management such information. information but should directors clear or clarification seek amplification where and necessary. timely accurate, receive directors the that ensuring for responsible is chairman The dischar to it enable to appropriate aquality of and aform in information with manner atimely in supplied be should board The of executive directors. of executive views the account into taking chairman, the of evaluation responsible for performance be should director, independent senior the by led directors, non-executive The has no other connection with bwin party. with connection other no has facilitate this annually. exercise Limited Lintstock to 2012 since engaged been has Limited Lintstock response: bwin.party process. succession the to aid order in Chairman Board new the of appointment the built around being is assessment evaluation the completing of timing the 2014, In individually. each Director with review the of conclusions the discussed had Chairman the once Board the and Committee Nominations the to presented being before SID the and Chairman the by reviewed then are results The committees. Board the and performance of the Board, the Chairman, themselves the on of questions aseries answer to Director each requires process evaluation This 2013. in Board the of performance the of evaluation aformal undertake to corporate governance specialist, Lintstock Limited, athird-party engaged has Board the 2014, and 2013 In response: bwin.party Board. the to Reserved Matters of Schedule the under Board whole the for decision a is Secretary Company the of removal The required. when Directors other and Chairman the advises Secretary is the guardian of all Board procedures and Company The matters. plan share and law company governance, corporate on advice and guidance offer to Directors all to available is Secretary Company The response: bwin.party third-party engage to authority the have committees out theircarry duties effectively. For instance, access to sufficient in resources order for them to given are committees Board All advice. professional enabling any Director to seek independent process written aformal adopted has Board The response: bwin.party and the rest of the Board. the of rest the and Chairman the to finding these presents then The SID review the results of the Chairman’s evaluation. to Directors Non-Executive the all with SID meets contributions from the Executive Directors), the includes (which Directors its and Board of the evaluation performance the of part as year, Each response: bwin.party Directors for the new Chairman selection process). selection Chairman new the for Directors independent of Committee the by retained being Stuart Spencer and PwC of engagement Committee’s Remuneration The (e.g. committee the of remit the fulfilling with Directors the assist to experts bligation to provide ge duties. its board and its rd, its diversity, diversity, its rd, essional essional dual directors. t to the role role the t to StrategicStrategic GovernanceGovernance FinancialFinancial 69 report performance d risk ve public reports public ve rstandable. trategic objectives.trategic y the corporate reporting an corporate the y bwin.party response: An Audit Committee (now superseded by the Audit & Risk Committee) has been established. The Non-Executive independent has four Committee Chairman, committee’s the Kern, Helmut Directors. experience. financial relevant and recent has bwin.party response: on Directors’ of Responsibilities See Statement the 109 page bwin.party response: See the Strategic report on pages 4 to 41. bwin.party response: See the statement in the Directors’ Report on page 108. bwin.party response: Reviews are conducted at the Audit Committee and Audit & Risk Committee meetings throughout the year and disclosed in Report of the Audit & Risk 75–79. pages on Committee bwin.party response: Each Director stood for re-appointment at the 2013 AGM and, except for Simon Duffy who has decided not to seek re-appointment, will stand for re-appointment at the 2014 AGM. The names and biographies of all the Directors together with tenure information and roles are set out in the 2014 AGM notice. bwin.party response: A supporting explanation is set out in the 2014 AGM notice and the Chairman gives the required confirmation at the AGM. sidering how they should appl should they how sidering nsparent arrangements con nsparent for management and internal control principles maintaining and for appropriate an relationship company’s the auditor. with The board should establish formal and tra and establish formal board should The The board should establish an audit committee of at least three, or in the case of smaller companies two, independent non-executive directors. In smaller companies the companychairman may be a member of, but not chair, the committee in addition to the independent as appointment non-executive on was independent considered she directors, or provided he chairman. The board should satisfy itself that at least one member of experience. the audit financial committee relevant and recent has The directors should report that the business is a going concern, with supporting as qualifications necessary.assumptions or The board responsible is determining for and nature extent the take significant to achieving the risks willing in of is its s it The board should, at least annually, conduct a review of the effectiveness of the group’s risk management and internal control systems and should report to shareholders that they have done so. The review should cover all material controls, including financial, operational and controls.compliance and reports to regulators as well as to information required to be presented by statutory requirements. The board should establish arrangements that will enable it to ensure that the information presented is fair, balanced and unde The directors should explain in the annual report their responsibility for preparing the annualreport and accounts, and state that they consider the report and accounts, taken as a whole,is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy. Thereshould be a statement by the auditor about their reporting responsibilities. The directors should include in the annual report an explanation of the basis on which the company generates or preserves value over the longer term (the business model) and the strategy for delivering the objectives of the company. The board should maintain a sound risk management and internal control systems. The board should present a fair, balanced and understandable assessment of the company’s position and prospects. The board’s responsibility topresent a fair, balanced and understandable assessment extends to interim and other price-sensiti The board should set out to shareholders in the papers accompanying a resolution to elect a non-executive director why they believe an individual should be elected. The chairmanshould confirm to shareholders when proposing re-election that, following formal performance evaluation, the individual’s performance continues to be effective role. the to and commitment demonstrate to All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance. All directors of FTSE 350 companies should be subject to annual election by shareholders.All other directors should be subject to election by shareholders at the first annual general meeting after their appointment, and to re-electionthereafter at intervals of no morethree than years. Non-executive directors who have served longer than nine years shouldsubject be to annual re-election. The names of directors submitted for election or re-electionshould be accompanied by sufficient biographical details and any other relevant information election. their on decision take informed an shareholders to enable to C.3.1 C.3 Audit Committee and Auditors Main Principle C.2.1 C.2 Risk Management and Internal Control Main Principle C.1.3 C.1.2 C.1.1 Main Principle Supporting Principle C. ACCOUNTABILITY C. C.1 Financial and Business Reporting B.7.2 B.7 Re-election B.7 Main Principle B.7.1 70 Corporate governance governance Corporate 70 bwin.party Annual report & accounts 2013 C.3.8 C.3.7 C.3.6 C.3.5 C.3.4 C.3.3 C.3.2 t t t include: should report The responsibilities. its discharging in committee the of work the describe should report annual the of section A separate position. adifferent taken has board the why reasons out set should and recommendation the explaining committee audit the from astatement re-appointment, or appointment recommending papers any in and report, annual the in include should it recommendation, committee’s audit the accept not does board the If years. ten every least at tender to out contract audit external the put should companies 350 FTSE auditors. external the of removal and reappointment appointment, the on arecommendation making for responsibility primary have should committee audit The report. annual the of section relevant the in explained be should afunction such of absence the for reasons the and board, the to arecommendation make and function audit internal an for aneed is there whether annually consider should committee audit the function, audit internal no is there Where activities. audit internal the of effectiveness the review and monitor should committee audit The appropriate follow-up action. place for and independent the proportionate investigation of in such and for matters are arrangements that ensure to be should objective committee’s audit The matters. other confidence, concerns raise about possible improprieties in of matters or financial reporting in may, company the of staff which by arrangements review should committee audit The strategy. and model business performance, company’s the assess to shareholders for necessary information the provides and understandable and balanced fair, is awhole, as taken accounts, and report annual the whether on advice provide should committee audit the board, the by requested Where available. made be should board, the by it to delegated authority the and role its including committee, audit the of reference of terms The t t t t t t t of reference and should include: terms written in out set be should committee audit the of responsibilities and role main The and, if the external auditor provides non-audit services, an explanation of how auditor and independence is safeguarded. objectivity auditor how of explanation an services, non-audit provides auditor external the if and, conducted; was last atender when and firm audit current the of tenure of length the on and information auditor, external the of reappointment or appointment the to taken approach and the process audit external the of effectiveness the assessed has it how of explanation an addressed; were issues these how and statements, financial the to relation in considered it that issues significant the responsibilities. its discharged has it how on board the to report to and taken; be to steps to as recommendations making and needed is improvement or action that considers it which of respect in matters any identifying firm, audit external the by services non-audit of provision the regarding guidance ethical relevant account into taking services, non-audit supply to auditor external the of engagement the on policy implement and develop to regulatory requirements; and professional UK relevant consideration into taking process, audit the of effectiveness the and objectivity and independence auditor’s external the monitor and review to auditor; external the of engagement of terms and remuneration the approve to and auditor external the of removal and re-appointment appointment, the to relation in meeting, general in approval for their shareholders the to put to it for board, the to recommendations make to function; audit internal company’s the of effectiveness the review and monitor to systems; management risk and control internal company’s the review to itself, board the by or directors, independent of composed committee risk board separate a by addressed expressly unless and, controls financial internal company’s the review to financial reporting judgements contained in them; announcements relating reviewing to significant financial the performance, company’s formal any and company, the of statements financial the of integrity the monitor to Audit & Risk Committee on pages 75–79. 75–79. pages on Committee &Risk Audit the of Report the in addressed all are matters These response: bwin.party the Board. by accepted been has this and auditors external current the of re-appointment the recommended has Committee &Risk Audit The Committee. &Risk Audit the of Report the of 79 page on with dealt is years 10 every least at tender for out contract audit external the putting on policy Company’s The reference. of terms Committee’s &Risk Audit in the This recommendation requirement is for provided response: bwin.party Department. Audit Internal an has The Company 75–79). pages on Committee &Risk Audit of the Report the (see year the effectiveness of internal audit activities throughout the reviews and monitors Committee &Risk Audit The response: bwin.party on page 79. Committee &Risk Audit the of See the Report policy. adopted ‘Whistleblowing’ Company’s the reviewed has Committee &Risk Audit The response: bwin.party 75–79. pages on Committee &Risk Audit the of Report the see please done, been has This response: bwin.party website. Company’s the on available are Committee &Risk Audit the for reference of terms The response: bwin.party duties. these include that Committee &Risk Audit the for reference of terms adopted has Board The response: bwin.party StrategicStrategic GovernanceGovernance FinancialFinancial 71 report performance neration omparisons omparisons m y increases. successfully, bwin.party response: Executive the for period notice the Currently Directors is one year, for the Chairman six months and for the Non-Executive Directors, three months. bwin.party response: non- any hold not Executive DirectorsThe do executive directorships outside the Group for which they receive a fee. bwin.party response: The fees paid to the Non-Executive Directors and the of expected commitment time the reflect Chairman and risks attaching to the roles. In 2011, the bwin Directors joining the Board on the merger of bwin Interactive Entertainment AG and PartyGaming Plc had their bwin FMV options The options. FMV rollover bwin converted into Chairman of the Integration Committee has participated in the VCP and There BBP. is no intention for Non-Executive Directors to participate in the Company’s BIP or any other share plans – see the on commentaryChairman’s compliance Code on page 74. bwin.party response: On the departure of an Executive Director the considers the Committee Remuneration diligently the with Company, the of obligations compensation aim of avoiding reward for poor performance, which is aided by the current notice terms and the rules of A robustthe BIP. line is taken where possible to compensation pay-outsreduce reflect any to to departing the individual of obligations mitigate loss. bwin.party response: The current share plans comply with Schedule A. See the Directors’ Remuneration Report on pages 83 to 105 for a description of the current arrangements. Notice or contract periods should be set at one year or less. If it is necessary to offer longer notice or contract periods to new directors recruited from outside, such periods should reduce to one year or less after the initial period. The remuneration committee should carefully consider what compensation commitments what carefully consider should committee remuneration The (including pension contributions and all other elements) their directors’ terms of appointment would entail in the event of early termination. The aim should be to avoid rewarding poor performance. They should take a robust line on reducing compensation to reflect departing directors’ obligations to mitigate loss. Where a company releases an executive director to serve as a non-executive directorelsewhere, the remuneration report should include a statement as to whether or not the director will retain such earnings and, if so, what the remuneration is. Levels of remuneration for non-executive directors should reflect the time commitment andresponsibilities of the role. Remuneration for non-executive directors should not include granted, are performance-related options other or exceptionally, options share elements. If, the exercise of by acquired shares advance any and in sought be approval should shareholder non-executive after the least year the one leaves at director until held be should options board. Holding of share options could be relevant to the determination of a non-executive director’s independence (as set out in provision B.1.1). The performance-related elements of executive directors’ remuneration should be stretching and designed to promote the long-ter In designing schemes of performance-related remuneration, the remuneration committeeshould follow the provisions in Schedule A to this Code. Levels remuneration sufficient be should of attract, to retain and motivate directors quality the company required the of run to but a company should avoid paying more than is necessary for this purpose. A significant proportionshould be of executive structured directors’ so as to link remu rewards to corporate and individual performance. success of the company. The remuneration committeeshould judge where to position their company relative to other companies.with But caution, they should in view use such c of the risk of an upward ratchet of remuneration levels with no corresponding improvement in performance. They should also be sensitive to pay and employment conditions elsewhere in the group, especially when determiningannual salar D.1.5 D.1.4 D.1.3 D.1.2 D.1.1 Supporting Principle D. REMUNERATION D. D.1 The Level and Components Remuneration of Main Principle 72 Corporate governance governance Corporate 72 bwin.party Annual report & accounts 2013 D.2.4 D.2.3 D.2.2 D.2.1 Principle Supporting Principle Main Procedure D.2 circumstances permitted by the Listing Rules. Listing the by permitted circumstances the in save schemes, existing to changes significant and Rules) Listing the in defined (as schemes incentive long-term new all approve to specifically invited be should Shareholders executive. chief the include might which acommittee, to this delegate responsibility however may board the Articles, the by permitted Where Association. of Articles the in set limits the within directors non-executive the of remuneration the determine should shareholders the Association, of Articles the by required or, where itself board The management level. below board of layer first the include normally should but board the by determined be should purpose this for management’ ‘senior of definition The management. senior for remuneration of structure and level the monitor and recommend also should committee The payments. compensation any and rights pension including chairman, the and directors executive all for The remuneration committee should have delegated responsibility for setting remuneration company. the with connection other any have they whether to as made and a statement report annual the in identified be should they appointed, are consultants remuneration Where board. the by it to delegated authority the and role its explaining of reference, terms its available make should committee remuneration The chairman. as independent considered was she or he if committee the chair, not but of, amember be also may chairman company the addition In directors. non-executive independent two companies, smaller of case or, the in three least at of committee aremuneration establish should board The re about shareholders principal its with required as contact maintains company the that ensure should board the of chairman The interest. of conflicts avoid and committee, recognise to remuneration the should be taken supporting or advising in involved are management senior or directors executi of executive respect in Where consultants any remuneration. appointing for responsible be also should committee remuneration The remuneratio the to directors. relating executive proposals their about executive chief and/or chairman the consult should committee remuneration The remuneration. own her or his deciding in involved be should director No remunerati the fixing directors. for and individual of remuneration executive on policy developing for procedure transparent and aformal be should There process withprocess major shareholders. consultation an extensive after 2014 February on 24 approved was BIP, the which including shareholders, by approved been have plans incentive long-term All response: bwin.party Executive Directors. the of recommendation the on Board the for matter a is Directors Non-Executive the of remuneration The response: bwin.party CEO. the into the Chairman and all senior management reporting Directors, Executive the all of remuneration the set to authority the has Committee Remuneration The response: bwin.party Group. the for done has together with a description of other work the firm Remuneration on 105, page Report Directors’ the in identified are consultants remuneration The website. Company’s the on available are reference of terms Committee’s The Directors. Executive appointed comprising four independent Non- been has Committee A Remuneration 105. and 104 pages on Report Remuneration Directors’ the See response: bwin.party ve director director ve muneration. n of other other n of care on packages StrategicStrategic GovernanceGovernance FinancialFinancial 73 report performance bility for at all directors are bwin.party response: and reports voting produces registrar Company’s The attends the AGM. All resolutions presented at poll a decided meetings on are general shareholder and voting results announced to the London Stock Exchange and published on the bwin.party website. bwin.party response: All the Directors are usually present at the AGM. bwin.party response: The Notice of AGM and related documentation are always posted more than 20 working days before the AGM. bwin.party response: Clear communication lines have been established between the Directors and the trustees of the Emerald Trust, Stinson Trust and founding bwin shareholders, which equates in total to 14.3% of the Company’s issued share capital. The Chairman, CEO, CFO and Communications Director keep Directors communications other with of informed are reports broker and analyst and shareholders circulated to the Directors. All Directors remain available to meet with major shareholders, although in practice the latter usually only want to meet with the Executive Directors, Chairman and occasionally the SID and Chairman of the Remuneration Committee (who currently is also the SID). bwin.party response: Each item of business has been or will be dealt with by a separate resolution at the 2013 and 2014 AGMs. Forms of proxy include an ‘abstain’ box against each resolution. Forms of proxy (shareholders) and direction (depositary interest holders) and AGM and resultsEGM announcements include an explanation withheld’. ‘vote a of status the on bwin.party response: The Chairman ensures that the views expressed by shareholders are shared with the Board, with sufficient opportunity given to the Directors to discuss issues. addition, In following investor roadshows, the CEO and CFO share feedback received Board. meeting the When shareholders with from discusses Chairman the shareholders major corporate governance and strategy matters and Non- Executive Directors are always welcome to attend meetings if acceptable to the shareholder. The SID remains available to meet with major shareholders and met with a number of major shareholders in 2013. the number of shares in respect of which proxy appointments have been validly made; the number of votes for the resolution; the number of votes against the resolution; and withheld. be was to directed vote the which respect of in shares of number the The chairman should arrange for the chairmen of the audit, remuneration and nomination committees to be available to answer questions at the AGM and for all directors to attend. The company should arrange for the Notice ofthe AGM and related papers to be sent to shareholders at least 20 working days before the meeting. The company should ensure that all valid proxy appointments received for general meetings are properly recorded and counted. For each resolution, after a vote has been taken, exceptwhere taken on a poll, the company should ensure that the following information is given at the meeting and made available as soon as reasonably practicable on a website which is maintained or by, on behalf of, the company; t t t t The board should use the AGM to communicate with investors and to encourage their participation. At any general meeting, the company should propose a separate resolution at the AGM on each substantially separate issue and should in particular propose a resolution at the AGM relating to the report and accounts. For each resolution, proxy appointment forms should provide shareholders with the option to direct their proxy vote either for or against a of results the of announcement the and proxy form The vote. their withhold to or resolution in counted be not will and law in vote a not is withheld’ ‘vote a that clear it make should vote the calculation of the proportion of the votes for and against the resolution. The board should state in the annual report the steps they have taken to ensure that the members of the board, and in particular the non-executive directors, developunderstanding an of the views of major shareholders about the company, for example through direct face-to-face contact, analysts’ or brokers’ briefings and surveysshareholder opinion. of The chairman should ensure that the views of shareholders are communicated to the board as a whole. The chairman should discuss governance and strategy with major shareholders.Non-executive directors should be offered the opportunity to attend meetings withshareholders major and should expect to attend them if requested by major shareholders. Thesenior independent director should attend sufficient meetings with a range of major balanced a understanding develop help to order views in their to listen shareholders to of the issues and concerns of major shareholders. There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsi Whilst recognising that most shareholder contact is with the chief executiveand finance director, the chairman should ensure th ensuring that a satisfactory dialogue with shareholders takes place. satisfactory a with that dialogue ensuring made aware of their major shareholders’ issues and concerns. The board should keep in touch with shareholder opinion in whatever ways are most practical and efficient. E.2.4 E.2.3 E.2.2 Main Principle E.2.1 E.2 Constructive use of the AGM E.1.2 E.1.1 Supporting Principle E. RELATIONS WITH SHAREHOLDERS E.1 Dialogue with Shareholders Main Principle 74 Corporate governance governance Corporate 74 bwin.party Annual report & accounts 2013 13 March 2014 March 13 Chairman Duffy Simon plans. remuneration related performance Company’s of the inany participate not will Bodner Manfred From this date Mar 31 on terminate will Committee Integration ofthe Chairman ofthe role the and operate to ceased now have plans These share int participate to permitted was Integration ofthe Chairman the role, ofthe duties special and importance ofthe recognition aconsolid from benefits other and savings synergy the deliver to fail businesses merging many that given businesses PartyGaming bw ofthe integration effective an implements management that inoverseeing important been has role This Committee. Integration Chair as role ofhis inrecognition Plan Creation Value and Plan Banking Bonus Company’s inthe participated has Bodner Manfred date. departure their from months 12 after only then and the once so do only will and FMV options their exercised not have Kern Helmut and Afrell Per that noted be Itshould Directors. any to made be will awards share further no that and fees annual oftheir size the to relative awards ofthe quantum the grant, held by Per Afrell and Helmut Kern do not undermine a determination are independent,given the circum that Directors both these lega these that concluded has ROP. the Board under The awarded FMV options new into rolled that plans FMV option bwin the under ha also ofbwin Co-CEO former Bodner, Manfred shareholders. by approved was plan This merger. ofthe time the at holders option ado plan share Company anew (‘ROP’), Plan Option Rollover bwin.party the under options value market fair new into rolled be to the and amerger on ofvalue crystallisation for provide not did plans FMV option bwin ofthe rules The conventions. governance t subject not and exchange stock Vienna the on listed company Austrian an was bwin board. supervisory company’s ofthat members Helmut Afrell, Per to AG Entertainment Interactive bwin by granted were options (‘FMV’) value market fair merger, the to Prior Code) the of (D.1.3 plans rel remuneration performance in participating Committee Integration the of Chairman the and Directors Non-Executive to granted options Share be independent. ofthe half least at Chairman, the excluding that, recommendation the with complied has Board the and rectified been has matter 1 Since year. inthe independent be to determined was Board the half than 2013 less 15 2013 to January 1January period the For Board of independence the (B.1.1 Code) respects: following inthe recommendations complied not has bwin.party date, 2013 to 1January From Code. ofthe recommendations the with comply to endeavours Company The Chairman’s commentary on Code Compliance onCode Chairman’s commentary Kern and Georg Riedl, Riedl, Georg and Kern he BBP and VCP. and BBP he y have left the Board Board the left y have Non-Executive ofthe 5 January 2013 this 2013 this 5 January refore the value had had value the refore pted for bwin bwin for pted man of the ofthe man d FMV options d FMV options Board should Board stances of the ofthe stances ch 2014. ch 2014. ation . In .In ation cy FMVcy options in and in and o UK corporate corporate o UK ated ated with these StrategicStrategic GovernanceGovernance FinancialFinancial 75 report performance meet with the external auditors post-audit at the reporting stage to discuss the audit, including problems and reservations arising from the audit, and any matters the auditor may wish to discuss (in the absence of management, where appropriate); make recommendations to the Board concerning any proposed, new or amended accounting policy; monitor and review the internal audit programme and its effectiveness; ensure co-ordination between the officers responsible for internal audit and the external auditors, and that the internal audit function is adequately resourced and has appropriate standing within bwin.party; consider any major audit recommendations and the major findings of internal investigations and management’s response (in the absence of management, where appropriate); monitor and review bwin.party’s systems for internal control, and management; risk and reporting financial review the individual internal audit reports covering various areas and activities of the business. responsible gaming, including the prevention of underage or problem gambling; and financial services gaming the with bycompliance held licences the Company or any of its subsidiaries; probity matters; licence gambling anti-money laundering; the fairness and integrity of the Company’s gaming and trading systems and the process for managing any challenges to the fairness and/or integrity of these systems; privacy and data protection; employment matters relating to codes of conduct and health and safety; charitable local the in and community; investment donations the Company’s suppliers and service providers; and the Company’s impact on the environment. reports; and statements financial annual 2012 the results of the 2012 annual external audit process, the audit report and the letter of representation from management; the independence of the external auditors and their terms of engagement; the external auditors’letter to management following the 2012 annual audit and management’s responses to the recommendations letter; the in made the re-appointment of the external auditors at the 2013 AGM; the latest register of Identified risks in the business and the controls put in place by management to mitigate these risks; t t t t t t t In addition, in relation to the oversight of CSR issues the ARC ensures that the Group has policies and effective controls regarding the following: t t t t t t t t t t year the during Business During the 2013 Audit Committee and Ethics Committee met three times revised the respectivelyand once in format. ARC once meeting before The main items of business addressed at these meetings were: t t t t t t , but in summary the main consider and make recommendations to the Board as regards the appointment of the head of the internal audit function and the external auditors as well as the re-appointment of the latter; recommend the audit fee to the Board and develop and recommend to the Board bwin.party’s policy in relation to the provision of non- audit services by the external auditor; monitor the integrity of the financial statements of bwin.party and any formal announcements relating to the Company’s financial performance and to review, and challenge where necessary, the actions and judgements of management in relation to the half-year and annual financial statements before submission to the Board; Audit & Risk Committee Report Committee & Risk Audit Introduction During 2013, the Board decided to merge the Ethics Committee with the Audit Committee to form the Audit & Risk Committee (‘ARC’). By way of background, the Ethics Committee was formed at the time of PartyGaming Plc’s initial public offering in 2005. Owing to the infancy and rapid pace of change of the issues surrounding the online gaming sector, it was helpful at that time to have a separate Board Committee focusing on corporate social responsibility (‘CSR’) issues. Since 2005 the sector and the Company have evolved significantly, so lastyear the Board considered it an opportune moment to consider merging the Ethics Committee into the ARC, particularly as theAudit Committee already monitored risks identified by the business so it made sense to extend its remit to cover CSR risks as well. This decision was taken with the support of both Committees. On behalf my fellow of ARC members I would like to thank Tim Bristow for chairing the Ethics Committee from 2013. 2007 to Membership During there 2013 were three changes to the Committee’s membership. Sylvia Coleman was appointed a member on 8 March following 2013 her appointment to the Board and Tim Bristow’s membership lapsed on Per Board. the stepped from he down when Finally, 2013 23 September Afrell was appointed a member of the ARC December on 13 2013. Rod Perry and myself remain members of the Committee. I am an Austrian certified management consultant and have a degree in economics and business administration majoring in accountancy. I serve on various boards where I oversee the preparation of financial statements and the external audit. Therefore, I am regarded as the Committee memberwith recent and relevant financial experience. All members of ARC have been Directors Board the we by be independent anddetermined therefore to comply with the Code’s recommendation that an audit committee comprises of at least three independent Directors. reference of Terms ARC’s terms of reference can be found on the bwin.party website at http://www.bwinparty.com/AboutUs/CorporateGovernance/~/media/ C36664926036430B851E8ED57BE68F1C.ashx responsibilities of ARC are to: t t t 76 Corporate governance governance Corporate 76 bwin.party Annual report & accounts 2013 indicators of an impairment. impairment. ofan indicators no show assets intangible and ofgoodwill reviews impairment Other CGUs. other the for reviews impairment on impact immaterial an have verticals product inother UK the from generated Revenues ofTax. Director Group with the consequences tax ofthe estimate best the discussed and scenarios other and sensitivities considered used, assumptions the challenged has ARC The necessary. is charge impairment no that indicating thus and €16.0m by value carrying the CGUexceeding ofthe valuation inthe results tax ofthe introduction ofthe Group the to impact The of€86.3m. value carrying atotal CGU, giving €10.5m. There are also €2.7m of other intangibles at stood associated intangibles to acquired the other bingo and €265.0m total ofthe €73.1m to amounts Bingo to allocated Goodwill performed. was assumptions of review management’s A detailed customers. from UK-based derived revenues ofits majority the CGU as ofthis areview to rise gave UK inthe tax ofConsumption Point proposed The Unit(‘CGU’). Generating Cash Bingo the to paid was attention specific total, this Of €626.1m. to 2013 amounts December 31 at intangibles and ofgoodwill amount carrying the statements, financial the to 12 innote further detailed As assets intangible and ofgoodwill Impairment statements. financial year’s full ofthe audit ofthe conclusion the at and reviewed were results interim half-year Group’s the when plan, audit Group auditors’ the agreed and reviewed ARC when auditors external the and management with discussed were issues These interest. ofsignificant were statements the financial of areas following the determined ARC year, ofthe course the During Financial statement topics this report. in with dealt are matters ofthese some from arising issues The t t t t t t t t t t t t amendment donation policy. of the charitable and monitoring; reporting laundering anti-money on updates gaming and financial services licence compliance; policy; tendering audit external Company’s the plan; 2013 audit auditors’ external the cyber-security; managing to approach Group’s the fromrequired of management; letter representation the and results half-year ofthe review interim auditor external results; 2013 half-year policy; treasury updated an ofreference; terms work and Committee’s Ethics and Committee Audit ofthe review annual plan; 2013 audit auditors’ external the meetings; between Committee reports audit internal full received departments having audit internal Company’s the from reports status has decided to review the Group’s tax strategy at least once ayear. once least at strategy tax Group’s the review to has decided Board the sector gaming online ofthe nature dynamic the to Owing whilstbusiness strategy simultaneously managing risk effectively. Group’s the supporting appropriate, is strategy tax adopted the that concluded Board The environment. tax changing ofthe strategy tax the on impact the including parameters, external reviewed also Board The models. business Group’s the and risk to attitude the governance, to responsibility corporate approach position, corporate strategy, commercial Group’s the with aligned itwas whether considered and strategy tax Group’s the reviewed Board the year, the During Taxation appropriate. was statements financial the inpreparing adopted treatment the that process review ofthe aresult as satisfied was ARC The Committee. the to findings their reported and recognition revenue on procedures audit detailed audit performed controls External inpoliciesadopted. and operation ofthe appropriateness the on ARC the to report and cycle review annual their into recognition ofrevenue area the incorporate function audit internal Group’s The contracts. ofkey areview involved which contracts, new from ofrevenue recognition the assessed ARC the particular In adopted. policies accounting the considered and recognition ofrevenue inrespect made judgements the reviewed ARC The Recognition Revenue 139. page on 21 innote found be can details Further appropriate. is provision ofthe release the that concluded and ofTaxation Director Group’s the with matter the with discussed and received advice external the reviewed ofsettlement, the terms considered has ARC The periods. earlier into ofenquiries settlement the following €83.8m for income ofcomprehensive statement consolidated the to credited been has compliance regulatory legal and of inrespect merger ofthe time the upat set provision value A fair statements. financial the to note 25 in disclosed as members Board its and/or Group the against lodged currently claims ofvarious outcomes ofthe likelihood the reviewed ARC the year, the During advisers. legal external and internal from meetings ARC ofthe occurrence every at updates periodic receives Committee The operations. Group’s the from arise may that Group the against claims legal or regulatory potential or known ofall abreast keeps ARC The compliance regulatory and legal for Provisions StrategicStrategic GovernanceGovernance FinancialFinancial 77 report performance bwin.party’s internal auditors performed internal audits of offices and departments within the business to assess whether adequate internal controls are in place to protect the Group, its employees and shareholders. The internal audit reports are presented to the ARC and the Head of Internal Audit meets regularly with the ARC as well as the Chairman of the ARC, to whom he has direct access. The Board, with the support of the Audit & Risk Committee, has completed its annual review of the effectiveness of the internal system of control, and is satisfied that it is robust and in accordance practice. best with During the year, the Head of Risk ran workshops with different departments across the Group which allowed the Group’s risk register to be updated. The following table sets out the key risks identified by the Audit & Risk Committee and the steps taken to mitigate these risks: A new Director of Product and Technology was appointed in 2013. The method of development for IT operations has been moved to AGILE in order to enhance all key projects as well as the developmentsoftware of and product migrations. Having already migrated 80% of the Group’s players onto thesingle new platform, a lot of experience has been gained which will help mitigate the previous issues whichhave occurred. As part of the oversight and assurance process, the Audit & Risk Committee askedinternal audit to review the platform product management and development as well as poker technology and sports betting technology. These reports were discussed in the AuditCommittee & Risk meetings and the key recommendations were added to the Group’s all across team IT risk the of register. management with held workshops were and During risk meetings individual 15 2013, key locations and the corresponding risks were put into the Group risk register and discussed at theAudit & Risk Committee meetings. Customer services have had to cover all products, platforms and markets of the combined Group.this reason For they have not been part of the core synergies of the merger until a time that the products,platforms and markets are all migrated and aligned. Following on from the initial migration to the target platform, the Audit & Risk Committee requested internal audit to carry out a detailedthe review Group customer of services function. This review looked at ongoing operations and specificallyissues at around the platform migration. This report was discussed with the Audit & Risk Committee andmanagement key recommendations were made. These key recommendations were also added to the Group risk register to ensure visibility and monitor the mitigating actions taken. services During customer the team of 2013, management with held two workshops and were risk meetings individual across all key locations and the corresponding risks were put into the Group risk register and discussed at an Audit & Risk Committee meeting. Mitigating factorsMitigating Risks projects integration and migration system IT The ability to accomplish complex IT system migration and integration projects on time and to the required quality. bwin.party develops and maintains our own systems, product portfolios and platform. Being in control of our own software has been a key driver of our success and allows us to differentiate our offer from those of our competitors but also to move quickly in response to requirements. To consumer regulatory and to changes increase our ability to leverage our key assets and minimise costs a single product platform is being rolled out across all markets. This creates complex IT projects,specifically around player migration which is due to happen for Dot FR and Dot IT in 2014. Failure to carry these out to the required timescale and quality will impact upon the customer which can lead to a reputational and financial loss to the Group. Customer service The relationship with our customers is managed in many differing ways across the Group. One key point of contact services. customer customers is our with Professional customer supportis essential for maintaining customer satisfaction by making their journey through our system as easy as possible. service customer internationally, operate units Our providing local-language support on a wide range of topics including account queries and complaints mitigation, as well as performance, quality and incident management. Trained to address issues on each of these areas they are available around the clock via telephone and email and aim to respond as quickly as possible. Customer services are often the first point of contact when things go wrong and therefore are key to having an input into maintaining the reputation of the Group’s products and portfolios. Failure to manage customer contact can lead to reputational damage as well as financial risk. At bwin.party ‘the customer is king’, because we know that the potential business penalty for not providing great service is very real and potentially very large – with one click customers can leave and go to a competitor. Risk managementRisk and controls bwin.party maintains a robust system of internal control for the purpose of safeguarding the investment of shareholders the in Company and the Group’s assets. At least annually the Board conducts a review of the effectiveness of the Group’s system of internal controls, financial, operational material all controls, including andcovering compliance controls and risk management systems. bwin.party’s system of internal control reduces the probability that business risks might impede the Company in achieving its objectives, but it cannot eliminate these risks and can therefore provide only reasonable, not absolute, assurance against material misstatement or loss. The Group has an internal audit department, which also carries out the Company’s risk management monitoring. During the year, management identified the risks attaching to the business and, on an ongoing basis, effortsare being taken to mitigate these risks. Throughout the year 78 Corporate governance governance Corporate 78 bwin.party Annual report & accounts 2013 and financial loss to the Group. the to loss financial and could effectively risks manage these lead to reputational to Board the by Failure jurisdictions. many in obligations tax to rise giving jurisdictions, many in staff and customers has obligations. bwin.party from which taxation arise model a operates multi-jurisdictional bwin.party expected. than tax more pays bwin.party that risk the is This Tax financial risk. corresponding the and Group the for risk reputational lead to could turn in This regulations. protection data of abreach create would which used or released stored, incorrectly is data that that risk the is This means. business normal through collected is which suppliers holds dataon customers employees, bwin.party and Data protection with regulatory requirements in licensed Jurisdictions. comply to failing for sanctioned is or licence operating its loses Group the that risk the is This jurisdictions. holds licences several to operatebwin.party in different sanction Regulatory Group. the for risk financial create would which profitable being longer no activities business certain in result may jurisdiction each in structure regulatory alicensed towards nations by a move services, offer to Group the allows which is passed legislation Where countries. to services providing from us preventing respective citizens from gaming on the internet or of legislation being passed in countries preventing arisk is their there markets, many across differently develops legislation gaming However, as markets. be-regulated to- and regulated on focus to is Group the of strategy A key world. the across markets many in operates Group The Gaming legislation threatens the business our products. copy to able were competitors our if risk financial and Group the in have customers and investors our ‘trust’ the damaging risk reputational both to lead could property intellectual the Group’s of Loss domain. public the in put or to our competitors released was it if products our of nature competitive the damage could and Group the which benefits adevelopment, lot is of created Intellectual property bespoke all is this As customer. the to offering key of its control in is Group the as competitors our of most over advantage adynamic Group the gives This systems. and platform products, software, own its develops Group The Loss of intellectual property Risks Mitigating factors Audit & Risk Committee meetings. & Risk Audit the at discussed and register risk Group the into put were risks corresponding the and head office two individual risk meetings andwere 2013, workshops held with management team of at During the the tax Committee. & Risk Audit the for out carried was which review recognition the revenue as such audit, under operations the in policy management risk tax the in controls of application the of a review audits all in included have audit internal Furthermore meetings. Committee &Risk Audit the in discussed then was this and jurisdictions several in operations of taxation the review to audit internal requested Committee &Risk Audit The payable. tax compute to in place are systems Financial procedures. and policies of means by employees our to communicated are which practices working appropriate implement to business the with works then and requirements their understand to Board the with meets regularly who Taxation of aDirector Group The Group. has appointed the for risk tax the evaluates and strategy tax the sets and oversees Board The meetings. Committee &Risk Audit the at discussed and register risk Group the into put were risks corresponding the and locations key all across During 2013, 15 individual risk meetings and were workshops held with management of the IT team evaluation. and discussion for Committee &Risk Audit the to Committee Risk Group the through reported then were findings corresponding the compliance; ensure to review adetailed had During 2013, requirements. which four includesprotection licensed operations data licensedentities independently all This reviews current department and new department. licensed review operations a up set audit internal had also has Committee &Risk The Audit procedures. and policies of by means employees our to communicated are practices working Our Committee. Risk Group the by are governed which practices working strict follow and data key of aware be to required are all departments Furthermore, compliant. fully are protection data as such areas key maintain and ensure process to accreditation 27001 ISO an led department this 2013, During systems. IT our within obligations protection data our manages which department governance IT adedicated has bwin.party Committee meetings. &Risk Audit at discussed and register risk Group the into put were risks corresponding the and locations key all across team review operations licensed and team compliance the of management Duringand evaluation. 2013, four individual risk were and meetings workshops held with discussion for Committee &Risk Audit the to Committee Risk Group the through reported then were findings corresponding the compliance; ensure to review adetailed had entities licensed four 2013, independently all This reviews current department and new Duringdepartment. licensed operations. review operations a licensed up set audit internal had also has Committee &Risk Audit The procedures. and policies of means by employees our to communicated are practices working Our obligations. which a exclusively compliance has dedicated our manages department, regulatory bwin.party meetings. Committee &Risk Audit the at discussed and register Group risk the into put were risks corresponding the and locations key all across teams review operations risk were andmeetings workshops held with and licensed management lawyers of the affairs, regulatory individual six 2013, During management. with forward way the decides and strategy and risks the discusses Board the and meetings Committee &Risk Audit the at discussed is which register Group risk the into fed are updates These landscape. regulatory the in happening is what Board understand to the for updates regular produce to lawyers Group’s the with works department This companies. unregulated to disadvantage asignificant at not are companies regulated that ensure to attractive legislation that the needsand both desires meets of the regulators whilst remaining commercially which toThe lobby Group works department governments a for affairs regulatory has dedicated ARC meetings. at discussed and register risk Group the into put were risks corresponding the and locations key all across team IT this During area. over 2013, 15 individual risk meetings assurance andwere workshops held with management gave of the also Committee &Risk Audit the StrategicStrategic GovernanceGovernance FinancialFinancial 79 report performance and BDO Limited. 2013 Annual Report In 2014 the Audit & Risk Committee has met once to review the statements financial Company and Group consolidated bwin.party for the year ended 31 December 2013, together with the report of the external auditors. When reviewing these financial statements the Directors have also reviewed the complete Annual 2013 Report and considered that if taken as a whole, the Annual Report is fair, balanced and understandable and provides the information necessary for bwin.party’s shareholders to assess the Company’s performance, business model and strategy. The Audit & Risk Committee has determined that the Annual 2013 Report does meet these objectives and has advised the Board accordingly. Kern Helmut Chairman of the Audit & Risk Committee 13 March 2014 In accordance with its duties, the ARC made recommendations to the Board on the appointment of the external auditors, approved their remuneration (both subject to shareholder approval) and also approved their terms of engagement. The Audit& Risk Committee has reviewed the effectiveness of theexternal audit and the independence of the external auditors and has recommended to the Board that it propose at the 2014 Annual General Meeting the re-appointment of BDO LLP Whistle-blowing The Group continues to adopt and publicisea formal ‘whistle-blowing’ raise about concerns employees can, confidence, which by in procedure possible improprieties in financial or other matters. This procedure is set out in the Group’s employee handbooks and has been reviewed by the Audit & Risk Committee.The ARC is satisfied that arrangements are in proportionate the such investigation for of place and independent matters and for appropriate follow-up action. External auditors During the year ended 31 December 2013, BDO LLP was appointed under an engagementletter toact as auditors to enable the Company to meet prepare to financial statementsits the accordance with obligations in Listing Rules. For the purposes filing the of Company’s financial statements in Gibraltar, BDO LLP and BDO Limited have been appointed to act as joint auditors to allow an audit report to be issued under section 10 of the Gibraltar Companies (Accounts) Act 1999. The ARC has also established a policy regarding the appointment of external auditors to perform non-audit services for the Group and will keep this under continual review. This policy dictates that in the Company’s financial year, the total fees for non-audit services provided by the external auditors, excluding non-audit fees for due diligence for acquisitions and other specific matters noted below, should not exceed the total fees for audit services theyprovide. In the year ended 31 December 2013, the proportion of total non-audit fees to total audit fees paid to the external auditors was 0.28:1.0. In addition to their statutory duties, BDO LLP are also employed where, as a result of their position as auditors or for their specific expertise, they either must, or the ARC accepts they are best placed to, perform the work in question. This is primarily work in relation to matters such as shareholder circulars, Group borrowings, regulatory filings and certain business acquisitions and disposals. In such circumstances the Audit & Risk Committee will separately review the specific service requirements objectivity impact on any theand consider of and independence auditors and any appropriate safeguards to this. As such the Audit & Risk Committee believes it appropriate for these non-audit services to be excluded from the 1:1 ratio set out above. In the year ended 31 December the 2013 total fees paid to the external auditors in respect of due diligence for acquisitions was €50,000. In 2014 the BDO LLP partner will rotate having acted for five years. The UK Corporate Governance Code recommends that FTSE 350 companies put their external audit out to tender at least once every ten years. The current external auditors have served the Company since its IPO in 2005. intoTaking account the Financial Reporting Council’s advice on the and recommendation this with comply to transitioning companies timing of the audit partner rotation, the Board has decided on the recommendation from the Audit & Risk Committee to put the external audit out to tender Thereafter in 2017. the external audit will be put out for tender at least once every ten years. 80 Corporate governance governance Corporate 80 bwin.party Annual report & accounts 2013 t t t t t t t t t following: the regarding policies and controls effective has Group the that ensure to are Committee Integration the IntegrationCommittee.aspx. http://www.bwinparty.com/AboutUs/CorporateGovernance/ website: Company’s the on available are that Board approved by the ofreference, terms adopted has Committee Integration The Responsibilities composition. Committee’s Integration the to change only the been has this and Company the left Jim Ryan 2013, 15 On January meetings. Committee inIntegration participate and attend to invited were Director Strategy Group’s and CFO The t t t t Membership inimplemented a timely effectively manner. itis ensure and plan integration merger oversee bwin.party’s to is Committee Integration ofthe purpose The assets. and bwin PartyGaming combined ofthe exploitation effective and synergies ofeconomic delivery the about bringing to given was oversight sufficient ensure to wanted Board the objectives, their achieving significant mergerschallenges experience many in corporate As Purpose Report Integration Committee stakeholders and making recommendations to the Board accordingly. Board the to recommendations making and stakeholders other any and regulators governments, shareholders, employees, to process integration ofthe progress ofthe communication monitoring and management; by issues arising from and the resolved merger addressed are effectively ensuring that any product branding, cultural or employee morale software; and ofplatforms disposal including process, rationalisation any decisions relating to the software the or Group the by used be to platforms gaming the about decisions any regarding Board the to recommendations making merger; the following redundant as management by regarded businesses or assets material Group’s the of ofany sale the regarding Board the to recommendations making relating to integration matters; attachingto the manage risks the Group’s business effectively to continue to functions all across resource staffing and structure management necessary the inplace has Group the times, all that, at overseeing Committee, Audit Company’s the with in consultation plan; integration the to facilitate any material investment making management in proposes order regarding Board the to recommendations making and reviewing integration process; ofthe element any over disputes management any resolving strategy; business rolling Group’s ensuring that the integration plan complements and supports the PartyGaming; and bwin of businesses the integrate to Group the across plan effective of an manner inatimely implementation and preparations ofthe oversight TeufelbergerNorbert (CEO) Senior and Independent Chairman Director) (Deputy Rod Perry Board) ofthe (Chairman Duffy Simon Non-Executive Director) and Committee ofthe (Chairman Bodner Manfred In summary, the main responsibilities of of responsibilities main the Insummary, 13 March 2014 March 13 Chairman of the Integration Committee Manfred Bodner business objectives. its on indelivering effective cost and efficient more leaner, Group the make will changes these term longer difficult, are redundancies Whilst redundancies. further some to led in2013 this and strategy value’ to ‘volume ofthe adoption ofthe aresult as particularly its operations, in efficiencies for look to continues Group the forward, Going culture. together,constructively with aof sense Group shared and purpose and come of togetherteam productively has worked and employees each however, offamiliarisation, period initial an After challenging. proved cultures ofworking ofanumber together bringing The US$1.7m. approximately of consideration for pending domain poker ofanother sale the with (dependent to on which the extent online gaming open up in the US), US$8m upto for ofPokerroom.com sale in2013 inthe resulted This value. realise can we which for and offering our to central longer no are which brands sell to continue will and have we process this During brands. our positioning with Directors Commercial and Strategy Group’s the and Directors Executive the inassisting instrumental been Ihave year the During customers. ofgaming tastes changing rapidly and demanding the to relevant and attractive remain they ensure to gaming ofonline world ever-changing inthe maintenance and focus constant require These verticals. product all across disposal its at of brands collection impressive an has Group combined the merger, the Following and businesses. brands non-core further sell to looking currently is Group the and businesses core the on focus to management enable to of enterprises portfolio its rationalise to itcontinues and of2012 end the at business poker Ongame the sold successfully Group the reported, previously As games. ofour market to speed and quality the improve should term longer which management, technology to approach ‘Agile’ an in2013 to inamove instrumental been have these and learnings came difficulties these With in2014. place take to due are migrations these however, priority, take to had all that launch market casino Jersey New the and re-launch poker the market, German the for changes software as such projects urgent more other to due mainly oftimes, number a delayed been has platform technology one onto players Italian and ofFrench migration the Frustratingly, software. own ofour ownership having us by aided objective an 2012, December since platform gaming of have players the majority on played one challenging, somewhat been has technology Group’s combined ofthe consolidation the Whilst implementation teams. merger and Directors Executive ofthe skills management strong the and plan consolidation merger ofthe implementation and design ofthe success the reflects This merger. the time of the at forecast originally those than larger 30% date, to synergies ofcost €136.5m ingenerating succeeded has merger The process. implementation merger the overseeing years three after 2014 March 31 on disbands which Committee, Integration ofthe report last the is This Review of the merger integration process StrategicStrategic GovernanceGovernance FinancialFinancial 81 report performance During the year the Nominations Committee considered the Company’s succession plans for Directors and members of the senior management team, with advice provided by the CEO and the Group’s HR Director. The Committee is comfortable that the Group has effective plans in place to deal with the replacement of any Director and key members of the team. management senior Board the to changes Future In February 2014, Emerald Bay Limited and Stinson Ridge Limited right, Board provided for held transferred nomination jointly their in the Relationship Agreement with bwin.party (see page 107) to SpringOwl Gibraltar Partners B Limited (‘SpringOwl’). SpringOwl has executed a deed of adherence in respect of the Relationship Agreement. date SpringOwlTo has yet to notify the Company of their nominee to join the Board as a Non-Executive Director, however, the Board anticipatesa nominee notification will be received shortly. Under the terms of the Relationship Agreement the Board has one month from the nomination date to make the appointment or declare the nominee potential this appointment.unsuitable on for An announcement appointment is anticipated to be made in due course. If the becomesappointment aforementioned effective, the Board will consist of four independent and five non-independent Directors (excluding the Chairman) and will thereforewith comply longer no the Code that at least half of the Board of Directorsindependent. be undertake will Committee searcha Nominations the for Consequently, recommendations Director and make then to independent a new the Board for the appointment of a suitable candidate. In December, I announced that I would be stepping down from the Board at the conclusion of the Company’s 2014 Annual General Meeting. By the time I depart at May’s AGM I will have served as bwin.party’s Chairman for more than three years. As Non-Executive Chairman I was tasked with overseeing the integration of bwin and PartyGaming following the announcement of their merger in 2010 and I am pleased to say that many of the strategic objectives positioning bwin.party for future growth have now been achieved. A committee of independent Directors has been overseeing search the and selection by Spencersupported Stuart. process, That committee will make a recommendation to the Board regardingmy successor in due course and then the Board will make a decision on an appointment. It is be will Chairman new the of identity the that anticipated currently announced before the AGM on 22 May 2014. Rod Perry is coming up to his ninth anniversary since being first re-appointed a Director by shareholders. The Board, led by the other near his Directors, despite whether considered independent vigorously character in Perry Rod be independent to year tenure, continues nine and judgement and there are no relationships or circumstances that are likely to affect, or could appear to affect his judgement. The Board concluded that he still maintains his independence. In the context of these changes, the Directors remain mindful of the stated intention to appoint at least two women to the Company’s Board by 2015, although the selection of candidates will be done primarily on merit. In summary, the main responsibilities Simon Duffy (Chairman of the Nominations Committee) Director) (Independent Afrell Per PerryRod Director) Independent (Senior regularly review the structure, size and composition (including the skills, knowledge and experience) required of the Board compared to its current position and make recommendations to the Board with regard to any adjustments that are deemed necessary; give full consideration to successionplanning for Directors and other senior management in the course of its work, taking into account the challenges and opportunities facing the Company, and what skills and expertise are needed on the Board in the future; be responsible for identifying and nominating candidates for the approval of the Board, to fill Board vacancies as and when they arise; and make recommendations to the Board concerning the re-appointment by shareholders of any Director. Nominations Committee Report Purpose The Board has adopted a formal and transparent procedure for the appointment of new Directors to the Board by appointing a Nominations Committee to lead the process of appointment and make recommendations to the Board. The Nominations Committee also advises the Board on its structure, size, composition and matters of Director and senior management succession. Membership t t t Responsibilities The Nominations Committee has adopted terms of reference, approved by the Board, that are available on the Company’s website: http://www.bwinparty.com/AboutUs/CorporateGovernance/ NominationsCommittee.aspx. of the Nominations Committee are to: t t t t year the during Business During 2013, the Nominations Committee oversaw the processof recommendation a Director and following selecting independent new a from the Committee the Board appointed Sylvia Coleman on 8 March 2013. Her solicitor background and experience in the entertainment sector have all ready proven to be valuable to the Board and her appointment also means the Board has satisfied its previously disclosed intention of appointing a female director by the end of 2013. Spencer Stuart was engaged to assist the Committee with the search and selection role. this process for As disclosed last year, the Directors generally believed a Board with 13 members was too large. following In 2013 the retirement of Jim Ryan and resignation of Joachim Baca and after a series of discussions, Geoff Baldwin, Tim Bristow and Lewis Moonie agreed to step down as Directors, reducing the Board’s membership to nine Directors, whilst also ensuring the remaining independent Directors were not in a minority to the non-independent Directors. For the time being the Nominations Committee regards the size of the Board to be appropriate and maintains it the appropriate balance of skills, knowledge and experience. 82 Corporate governance Corporate 82 bwin.party Annual report & accounts 2013 13 March 2014 March 13 Committee Nominations the of Chairman Duffy Simon re-appointed. be Directors ofthe each that Board the to skills recommended commitment and performance, has demonstrated, ofexperience, basis the on and re-appointments ofthese each reviewed recently has Committee Nominations The AGM. 2014 the at appointment re- for standing are Directors the all ofmyself, exception the With 2014 AGM set. been not have objectives or ratios diversity Group, the across existing ofdiversity breadth the to Owing policy. the with employee responsibilities for ensuring enforcement compliance and individual and workers ofpart-time management the development, promotion, and learning and guidelines selection recruitment, impact diversity the how out sets also policy The duties. the perform to ability individual’s an to unrelated criteria other any on or beliefs, religious or political disabilities, nationality, partnership, civil or status marital origin, ethnic race, orientation, sexual sex, ofage, inrespect customers or contractors employees, their or behalf Group’s the on acting others or employees its by discriminate to pressure or discrimination forbids policy The experience. and qualifications capabilities, oftheir basis the on employees promotes and trains engages, Group the ensure to policy adiversity adopted has Company The policy Diversity whollyand is as independent. regarded bwin.party with connection other no has Stuart Spencer Directors. new of selection and search inthe assistance provide to engaged been has specialist, recruitment athird-party Stuart, Spencer above, disclosed As Use of in third-parties the recruitment process StrategicStrategic GovernanceGovernance FinancialFinancial 83 report performance Whilst this outcome is disappointing for participants it demonstrates their interests are aligned with those of bwin.party’s investors and that these plans have been operated by the Remuneration Committee in exactly the way we presented to shareholders that they would be when shareholder approval was sought for these plans ahead of the merger in 2011. The Remuneration Committee believes the remuneration policy of the Group remains appropriate and for 2014 there are no fundamental changes to the policy implemented in 2013. Whilst the Remuneration Committee recognises the need to incentivise and retain talented employees, we cannot reward effort when the results do not have the desired impact on the financial performance of the Group. Both the BBP and VCP came to the end of their life at the end of 2013, so last year we undertook an exercise to design a new incentive plan to succeed them: the bwin.party digital entertainment plc Incentive Plan (‘BIP’). After a lengthy consultation process with our largest shareholders, the BIP was presented to all shareholders for approval earlier this year and I am grateful for the strong support we received for this new plan from our shareholders. The BIP retains the BBP structure of a partial annual cash payment, whilst deferring the balance of the contribution into shares for release in future years, subject to a ‘clawback’ mechanism. replace To the VCP the BIP adopts a capped annual restricted share award. A summary of the BIP mechanics is set out in this report on page 89. In recognition of the senior management team’s achievement in implementing the majority of the key strategic and transformational objectives for set 2013 last year, the first awards under Element B of the BIP will be made this month and are detailed on pages 99 and 100 of this report. year’sThis Directors’ Report Remuneration previous years differs from as we have adopted the reporting requirements set out in the UK’s Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended, following the initiatives of the UK Government to bring greater transparency and corporate practices. to regards remuneration accountability with In doing so we have followed the guidance issued by the GC100 and Investor Group and trust that we have been successful in presenting a clear picture and justification for our remuneration policy and practices. The change in the regulations also requires us this year to put two remuneration. Resolution shareholdersresolutions regarding to (resolution 2) is the usual non-binding approvalthis of Directors’ Remuneration Report. Resolution 3 is also an ordinary resolution, but to approve the Group’s remuneration policy as set out in Section 2 of the Directors’ Remuneration Report. will We present the remuneration policy for approval every three years unless any material changes are required to the policy in which case we present the new policy to shareholders for formal approval. This is a binding vote, so we need shareholders to approve the remuneration policy otherwise we cannot implement it and will be required to present a revised remuneration consultation, shareholder lengthy BIP shareholders.policy to our Given the degree of shareholder support for the plan and as the remuneration policy remains unchanged from previous years, it will be disappointing if this resolution is not approved. haveWe provided a glance’ an ‘At summary remuneration of 2013 and performance immediately after this letter. The Annual Report on remuneration provides further details and the Directors’ remuneration policy sets out how we are building for the future. The Directors’ remuneration policy sets out the Company’s proposed policy on Directors’ remuneration for three years from the 2014 AGM and the key factors that were taken into account in setting the policy. The Directors’ remuneration policy part is subject to a binding shareholder vote at this year’s AGM and after that at least every third year. The Annual Report on remuneration sets out payments and awards made to the Directors and details the link between Company performance and remuneration for the financial 2013 year. The statement annual this with together remuneration on Report Annual is subject to an advisory shareholder vote at the AGM on 22 May 2014. Bonus the under 2013 for earned contribution participant No Banking Plan Value the under 2013 for earned contribution participant No Creation Plan New senior executive incentive plan launched in 2014 to succeed BBP and VCP called the bwin.party 2014 Incentive Plan (the ‘BIP’) First awards under Element B of the BIP following implementation of strategic and transformational objectives 2013 in No material change to other elements of the remuneration policy Salary freeze for the second year in succession for senior executives 1. Chairman of the Remuneration Committee’s Statement Committee’s Remuneration the 1. of Chairman Shareholder, Dear Introduction On behalf of the Board, I am pleased to present the 2013 Remuneration Report. As required by the new Largeand Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, the rest of this Remuneration Report is split into two parts: t t Headlines t t t t t t Background The performance of the business was disappointing as in 2013 the Group began implementing a fundamental shift in its strategy from ‘volume to value’ and a focus away from dotcom gaming markets towards growing its revenues from the more sustainable nationally regulated and to-be- regulated gaming markets. Events beyond the control of management in important markets, such as regulatory uncertainty in Germany and illegal ISP blocking in Greece, also contributed to the softer performance. external impacted by performance Despite unfairly being factors, circumstances, the decided, Committee Remuneration the in it was not appropriate to adjust any of the targets for pay-outs under the Company’s incentive plans. This has resulted in no contribution being earned by the Executive Directors and senior management for 2013 under the Bonus Banking Plan (‘BBP’) and Value Creation Plan (‘VCP’). In addition, despite a general upward trend in inflation we have decided not to increase the salaries of the senior management team for 2014, (an approach we also took in 2013), as the business needs first to show sustainable signs of getting back to growth. 2013 Directors’2013 Remuneration Report 84 2013 Directors’ Remuneration Report 2013 Directors’ 84 bwin.party Annual report & accounts 2013 Proposed changes to Remuneration Policy year-on-year? changed structure the has How A. remuneration. on Report Annual inthe found be can detail More remuneration and outcomes for 2013.performance we and objectives strategic corporate our to linkage its policy, remuneration ofour purpose the summarise we section, In this Ataglance 2. Value Creation Plan Plan Banking Bonus Pension Benefits Element Salary t t t t Element follows: B as operates future years. and 2013 of respect in BIP the Bof Element by replaced was Plan Creation Value The of level maximum overall in Reduction BIP. new the Aof Element of Introduction No change. No change. No change. t t t t In summary: replaces. it Plan Banking Bonus the as way same the exactly in Aoperates Element Operation ofOperation element an employee. remains participant the not or whether of irrespective grant of fifth anniversary the after or on sold be only may Shares of grant. anniversary third the on vest Shares been met. have year previous the for objectives strategic and/or transformational dependent on to the extent which the An annual award of shares granted KPIs. transformational – and/or KPIs; strategic – annually: conditions measured performance following the on based Company contribution will be earned annual forfeiture. of risk at be will account Plan Participant’s a of balance unpaid the of 50% shares); and of form the (in four year of end the at out paid value the of 100% with Committee) determined by the Remuneration as shares and/or cash of form the (in years three for annually out paid be will Account Plan aParticipant’s of value the of 50% with made payments over four years; years three for made be will Contributions set annually in advance; be to are which of both (25%), objectives target and the satisfaction of personal apre-determined versus Company the of (75%) EBITDA Clean of level the on based Company contribution will be earned

granted under Element B is 300% of salary. of 300% Bis Element under granted be can that award annual maximum The was uncapped. VCP the under benefit potential The salary. of 250% to 300% from award annual Maximum potentialMaximum value No change. No change. No change. conditions for 2013 operation of the Plan. the of operation 2013 for conditions the of details the for 100 and 99 pages Strategic and/or transformational KPIs see satisfaction. of level their and targets 2013 the of details for 100 and 99 pages See period applicable time and weighting used, metrics Performance n/a n/a n/a highlight the highlight the StrategicStrategic GovernanceGovernance FinancialFinancial 85 report performance 0 0 0 0 € 2013 2013 Total 65.05 Vesting Incentive ny has – £ 5.50 5.75 2013 2013 Total Actual €108.0m 2,191,585 2,636,705 1,615,456 1,943,562 results againstresults See the analysis of targets onpage 99 10 €176.4m Maximum Uncapped 121.18 pence Exceed target target Exceed metric by 120% by metric 5 Target Target €147.0m performance regulated marketsregulated target metric target Shareholder aligned Shareholder 65% of the overall remuneration package capable of being earned is provided in shares; with 70% of these shares locked in for five years from the date of award. priorities? strategic are our What 1. Shift business modelfrom volume to value 2. Move focus from dotcom markets to regulated and soon to-be- 3. technology of organisation andoperations Transformation 4. Market expansion channel 5. Re-launch of Poker 6. Leverage technology software platform Achieving 100% of 4 N/A pence 201.67 €117.6m Threshold performance target metric target achievement of of achievement BBP BBP Incentive Plan Element B of BIP Any material Value Creation Plan Creation Value implementation of strategic business transformational of in implementation change model over the next period; rapid and unpredictable changes to the Company’s market; and regulatory international environment. changing Executive Director Executive EBITDA KPIs Norbert Teufelberger (CEO) Norbert Teufelberger Martin Weigold (CFO) Personal Objectives CEO CFO Market Expansion Channel 1 (see page 99 for breakdown of targets) Market Expansion Channel 1 (see page 99 for breakdown of targets) re-launchPoker (see page 99 for breakdown of targets) Volume from Move Strategic to Value (see page 100 for breakdown of targets) page (see Leverage Technology 100 for breakdown of targets) re-launch Poker Transformation of Technology Technology of Transformation (see page 99 for breakdown of targets) C. Single total figure of remuneration for Executive Directors for 2013 performed against these metrics in respect of 2013: B. How have we performed against our corporate performance objectives? The following table sets out the various performance metrics targeted by the Company’s incentive arrangements and how the Compa The principles of our remuneration Competitive Market competitive reward packages to recruit and retain in an international market. Fixed elements are below market with a highly outperformance. reward to plan incentive entrepreneurial Flexibility The need for the remuneration package to be flexible enough to deal with: t t t 86 2013 Directors’ Remuneration Report 2013 Directors’ 86 bwin.party Annual report & accounts 2013 of 1% ofsalary. provision pension matching aminimum and benefits levels, minimal quartile median at targeted salaries with package, remuneration total for elements modest the of fixed elements comparatively adopts the policy the approach, this with Inconjunction executives. innovative remunerationbased package appealing to entrepreneurial and ashare- providing on placed is focus Particular changes. legislative of effect the and strategy business Group’s ofthe supportive is offer on remuneration ofthe profile the that ensure to policy incentive leveraged ahighly adopted has Group the considerations, above ofthe aresult As t t t t t t t account: into taken are factors key following the policy, remuneration current the in adopting and environment dynamic and competitive ahighly sector remains gaming online The business. ofits performance and future growth entrepreneurs required to high-calibre recruit drive and retain the to business the enabling packages remuneration total competitive market- provide to be to continues policy remuneration Group’s The Policy ofapproval. date the from ofthree years period the for apply will and Meeting General Annual 2014 the at effective formally become Itwill vote. shareholders abinding to put and be 2014 1January from operate will below out set as ‘Policy’) (the Policy Remuneration Directors’ the regulations, new the with In accordance IntroductionA. Remuneration3. policy employees, including the US. the including employees, has Group the where jurisdictions inall practices remuneration market with guidance governance corporate UK reconcile to need the and compromised; becoming without changes these accommodate to enough durable and flexible be to has policy remuneration The performance. price share and financial Group’s the on impact asubstantial have may adevelopment, ofsuch timing the with together regime, licensing state or afederal under market gambling USonline ofthe opening the opportunities; career greater are there where locations business responsibilities from Gibraltar, versusother larger international oftheir all discharge and relocate to have who executives senior certain and Directors Executive retain and attract to requirement the taxation; compliance and of cost additional to due margins Group’s the on impact the performance; high drive and talent key retain and attract to need the unjustified windfalls; adjustment provisions to ensure do executives not receive risk suitable incorporate to arrangements incentive for need the regulators; by ofregulation interpretation the or gaming ofonline regulation to changes adverse by impacted be may varies from jurisdiction to jurisdiction, is subject to uncertainties and gaming ofonline legality and regulation the that fact the particular, in and, operates Group the inwhich market ofthe nature the the implementation of the policy for the future year on page 103. page on year future the for policy ofthe implementation the with dealing report ofthe section inthe out set be used will The group group. this amend to discretion the policy the within has Committee The purposes. benchmarking reward all for used is group This t t t t t t t t t t t t t t t t t t t t t t t companies: following ofthe consists currently benchmarking for group peer The companies of group peer Our t t t t following: the address to seeks and business gaming online the with associated risks ofthe account takes arrangements remuneration share-based ofthe design The Boyd Gaming Unibet Shuffle Master Corporation Games Scientific Betsson WMS Industries Software Take Two Interactive Betfair Group Leisure Aristocrat Zynga Caesars Entertainment Technologies Bally HSN Ladbrokes Hill William Lottomatica NCR IAC/InterActivecorp Expedia International Game Technology Netflix Arts Electronic MGM Resorts Group. the and sector the impacting factors risk the by undermined completely not is and return shareholder to linked is executives senior to provided reward ofthe part where inplace arrangements remuneration have to is Group the for challenge remuneration the and operates; Group the inwhich environment regulatory changing the with deal to enough flexible be to need incentives have different risk exposure; aresult as and markets geographical verticals, gaming the various on focus adifferent have comparators industry direct as even inappropriate are targets return shareholder total comparative market; gaming online ofthe nature moving fast to due executives senior retain and motivate to use to difficult are periods performance year three incentives with standard long-term StrategicStrategic GovernanceGovernance FinancialFinancial 87 report performance Grant Outstanding options. respect of 2013 performance. Policy: Median Median Policy: salaryCurrent levels: £500,000 – CEO CFO – £446,000 Maximum: In general, rises will be linked to those provided to employees and/or inflation up to a maximum increase of 5% per annum. The Company will set out in the section of implementation of headed statement following the in policy remuneration financial year the salaries for that year for each of the Executive Directors (see page 103). Opportunity/Maximum Plan bwin.party Plan Banking Bonus entertainment digital bwin.party Plan Option Rollover plc participants. Deferred balances by held bwin.party Plan Option Share BIP Outstanding options. Element B awards granted in Such commitments remain subject to the share plan rules plan and terms share the subject to remain commitments Such granted. they were which under and conditions population employee wider the from policy in Differences The Group aims to provide a remuneration package for all employees that is market competitive and operates the same core structure as for the Executive Directors. The Group operates all employee share and bonus plans throughout the organisation, with pension provisions the same for all Executives and employees. In addition, salary increases for Executive Directors are limited to those that apply to all employees of Company. the the levels of base salary for similar status, comparable with positions responsibility and organisations skills in of broadly similar size and complexity. The companies in the comparator group are listed onpage 86. The Committee intends to review the list of companies each year and may add or remove companies from the group as it considers appropriate. Any changes made in future to the comparator group will be disclosed toshareholders in setting out the operation of the policy for year. subsequent the the performance of the individual Director; Executive the individual Executive Director’s and responsibilities; and experience pay and conditions throughout the Company. The Committee has access to pay and conditions of other employees determining when Group the within remuneration for the Executive Directors andalso considers the relationship and pay to changes general between conditions within the Group as a whole. the across salaries in increase general The Group is in line with inflation in the country in which an employee is working. Payable monthly. When determining the base salary of the Executive Directors the Committee takes consideration: into t t t t increases events, of course normal the In in the Executive Directors’ salaries will not exceed the average increase for employees globally. Operation Purpose and Link to Strategy to Link and Purpose Provides a base level of remuneration to remuneration base a of level Provides support recruitment and retention of and necessary experience the with directors expertise to deliver the group’s strategy. Key element of core fixed remuneration. Salary Salary Element B. Remuneration components for Executive componentsB. Remuneration for Directors remuneration Fixed Discretion The Committee has discretion in several areas of policy as setout in this report. The Committee may also exercise operational and administrative relevant rules plan approved shareholders as by under discretions set out in those rules. In addition, the Committee has the discretion to amend policy with regard to minor or administrative matters where it would be, in the opinion of the Committee, disproportionate to seek or approval. shareholder await It is the Committee’s intention that commitments made in line with its policies prior to the date of the 2014 AGM will be honoured, even if satisfaction of such commitments is made post the AGM and may be policies. the remuneration with commitments include Such inconsistent but are not limited to the following: 88 2013 Directors’ Remuneration Report 2013 Directors’ 88 bwin.party Annual report & accounts 2013 t t by: objectives Company’s the supports BIP the Inparticular, shareholders. for ofvalue creation the and strategy Company’s the with aligned closely are that goals indelivering achievement to linked itis because management senior and Directors Executive the to incentive asignificant provides BIP The Summary Directors. Executive for policy remuneration normal ofthe part as used arrangement incentive sole the currently is BIP The ‘BIP’) (the Plan Incentive 2014 bwin.party remuneration based Variable performance transformational objectives with a substantial proportion of incentives proportion with a substantial objectives transformational and strategic and measures financial ofpredominately a range of assessment annual the that believes Committee Remuneration The Background t Pension Benefits Element – flexibility to support the strategic and transformational change of of change transformational and strategic the support to flexibility – the challenges facing the Company including: with deal to ability the with Committee Remuneration the providing to be achievable; potential to linked incentive sufficient providing also whilst stretching suitably and relevant are that used be can metrics performance of range awider that meaning time, that at objectives strategic businesses’ the on based targets ofannual setting the allowing – timing and impact of US market opening on the appropriate appropriate the on opening ofUSmarket impact and timing – cessation of employment which provides an effective lock-in. effective an provides which ofemployment cessation voluntary aDirector’s on forfeitable also are inshares deferred Amounts period. deferral the during achieved be to performance shares and ongoing risk adjustment by requiring a threshold level of in deferral substantial providing and together years plan BIP linking targets. financial on ofregulation impact ongoing the –

the Company over the next period; next the over Company the financial and strategic targets set; and Purpose and Link to Strategy highly entrepreneurial remuneration policy. and cost fixed alow support to contribution pension of level aminimum Provides entrepreneurial remuneration policy. highly and cost fixed alow support to benefits of level aminimum Provides Operation target positioning is achieved. positioning target the until average the than higher be may salary in increases subsequent cases In such role. their in established become they until level policy targeted the below set salaries their have occasion, on may, Board to the promoted or recruited are who Individuals Executive Directors. the for arrangements allowances or pension other no are There salary. their of 3% least at contributes employee the if of salary contribution by the employing entity of 1% amodest with pension, provided employees to contribute to a Company for option the provides this and programme benefits aflexible adopted has Group The providing the benefits described. of cost the at set be will maximum The the minimum level. at set been has package remuneration executive the of part as ncurred costs fixed of level the policy the remuneration with accordance In assurance. and life insurance, permanent health insurance medical private of form the in Provided t t issues: key following the address to flexible sufficiently are mechanisms its because appropriate is BIP the In addition, t t outcomes: following the achieve will periods significant for retained be to have then which inshares paid earned revenues and profit. profit. and revenues in in a country order to beeligible for a licence, both impact can products some or all operating stop to requirement the and in Spain) happened (as taxation retrospective example –for predict to difficult be can profitability and revenues along-term as well as short-term both that means markets and countries inmany landscape regulated anewly towards shift the regarding ofvisibility alack However, services. and products its offers Group the inwhich jurisdictions inthe licences gaming national obtain to possible where and markets to-be-regulated and inregulated operate to is strategy Company’s The greatest. its at be to expected be can executives, gaming online attract to seeking UScompetitors to staff senior oflosing risks the arguably when implementation ofits years early the during acute most be to likely is This investors. by supported widely been has that one strategy, ofthis execution successful the reward to fail likely would plans incentive traditional more by used metrics ofconventional application the aresult, As ofyears. number a over measured traditionally is performance which by metrics key ofthe many affect to expected be can that model business in its shift transformational and astrategic implementing is Company The requirement. shareholding minimum the (b) and basis; year five arolling on BIP Bofthe Element under restrictions the (a) to due sold be cannot that ofshares form inthe made be will compensation incentive ofthe majority the since created been has value shareholder dependent judgement upon the market’s sustainable that long-term be will KPIs), transformational and strategic offinancial, achievement the (following earned incentive ofany recipient the to value the and Company; ofthe performance sustainable long-term the reflect will earned incentives ofthe value ultimate the Opportunity/Maximum Maximum contribution up to 1% salary. of to up contribution Maximum Quartile Lower Below Policy: salary. annual the of 10% exceed not shall benefits ongoing these of value The Quartile Lower Below Policy: StrategicStrategic GovernanceGovernance FinancialFinancial 89 report performance value for performance. have majorhave ainty for for ainty nment. are both testing testing both are The performance conditions will be based on strategic The KPIs. transformational and/or strategic and transformational objectives are set by the Remuneration Committee after the Board has reviewed the Group’s business strategy either at the end of the preceding year or at the beginning of the year to which the objectives relate The Company operates in a rapidly changing sector and therefore the Committee may change the balance of the measures, or use different measures, years, financial as to appropriate, for subsequent reflect this. The Company will set out in the section headed remuneration of implementation of ‘Statement policy’ in the following financial year the nature of the targets and their weighting for each year (see page 103). Details of the performance conditions, targets and their level of satisfaction for the year being reported on will be set out in the Annual Remuneration 99). page (see Report Committee The Committee has the same discretions set out A. Element for above The primary performance condition is Clean EBITDA with a secondary condition based on personal objectives.business The Company operates in a rapidly changing sector and therefore the Committee may change the balance of the measures, or use different measures years, financial as subsequent to appropriate, for reflect this; although currently there is no intention so. do to The Company will set out in the section headed remuneration of implementation of ‘Statement policy’ in the following financial year, the nature of the targets and their weighting for each year (see page 103). Details of the performance conditions, targets and their level of satisfaction for the year being reported on will be set out in the Annual Remuneration Committee Report. The Committee retains discretion exceptional in performance the measures change circumstances to and targets and their respective weightings part way through a performance year if there is a significant and material event which causes the Committee to believe the original measures, weightings and targets are no longer appropriate. Discretion may cases exercised be also in Committee the where believes that the bonus outcome is not a fair and performance. business reflection of accurate Policy: Upper Quartile Maximum 300% of salary. the 50% Threshold of At maximum is payable. At On-target 70% of the maximum is payable. Policy: Upper Quartile Maximum 250% of salary. the50% Threshold of At maximum is payable. At On-target 70% of the maximum is payable. There are forfeiture minimum if provisions not are thresholds achieved. Opportunity/Maximum Metrics Performance

Contribution will be earned earned be will Contribution based on the following performance conditions annually: measured – strategic KPIs; and/or – transformational KPIs. shares of award annual An the on dependent granted extent to which the strategic transformationaland/or objectives for the previous year have been met. third the on vest Shares grant. of anniversary or on sold be only Shares may after the fifth anniversary of irrespective whethergrant of or not the participant remains employee. an The Company contribution will will contribution Company The be earned based on the level of Clean EBITDA ofthe Company pre-determined a versus target personal of satisfaction the and objectives, both of which are to be set annually in advance; for made be will Contributions three years with payments years; four over made 50% of the value of a participant’s will account plan be paid out annually for three years (in the form of cash and/or the by determined as shares with Committee) Remuneration 100% of the value paid out at the end of year four (in the form of and shares); 50% of the unpaid balance of a participant’s will account plan be at risk of annual forfeiture. Operation of Element B: t t t t Operation of Element A: t t t t See above. See See above. See the operates in A Element same way as the previous Bonus Banking Plan which it replaces, with the only difference being the reduction in the maximum from 300% of salary to 250% of salary. the Group is not compromised by an overly rigid incentive structure that is unable to cope with such a shift business in enviro and realistic without also being able to amend such targets response in to significant changes to market dynamics that can also consequences for theGroup’s ability to generate attractive financial returns – a process that creates a higher degree of uncert participants, shareholders and the Company. The opening of the US online gaming market is expected to have a significant impact on the Group’s short- and long-term financial The exact shape and size of this impact, however, remains unknown and the Remuneration Committee wants to ensure that long-term Given such evolving and, in some cases, highly volatile market conditions, it is difficult to establish multi-year targets that Element B Element Element Strategy to Link and Purpose Operation Element A Element The Remuneration Committee is of the opinion that given the commercial sensitivityprecise targets arising in relation for the BIP to in advance the detailed would not financial, be in shareholder operational interests.budgets and strategic This and avoids giving targets the international risk of the used Company for the competitors disclosing inadvertently BIP, an unfair providing advantage a profit forecast becauseachieved and they because awards are not made required profit will targets be published to report are at the to linked the end same of the to performance disclosure standard periods as so shareholders a UK listed company. can Actual fully assess targets, the basis performance for any pay-outs under the BIP. t t 90 2013 Directors’ Remuneration Report 2013 Directors’ 90 bwin.party Annual report & accounts 2013 Plan Global Share bwin.party Operation Purpose and Link to Strategy Element Requirement Shareholding shareholders. and Directors Executive alignment between the Ensures a locked-in long-term with shareholders. interests employees’ align thereby and ownership share To encourage wide employee t t follows: as operates requirement shareholding The and matching share programme. in of respect share the purchased inshares are purchased the market whilst awards, share free satisfy Generally new shares are used to period. year athree over vest and have conditions any performance free share awards generally do not allotted shares. These discretionary newly by funded if annum per value in £3,000 to up award an granted be also can Directors Executive employee share purchased. each for share amatching provide can Company the employment, continued and years three for shares retaining purchased these sharesparty annually. Subject to bwin. of worth £1,500 of maximum are able to a purchase Participants of shares to meet a legal liability. alegal meet to shares of a sale requiring circumstances personal example –for reason agood is there determines wherecircumstances it in Executive an by shares of sale will have discretion to allow the the Remuneration Committee and requirement; shareholding the against count will BIP shares under Element B of the by participants and vested only shares held unconditionally Opportunity / Maximum to increase this minimum. discretion has Committee the However, salary. of 500% is requirement shareholding Minimum Quartile Upper Policy: Share Incentive Plan. UK the for limits HMRC changes in the any to subject shares free of £3,000 Incentive Plan. Share UK the for limits HMRC the in changes any to subject shares matching of £3,000 N/A None Performance Metrics StrategicStrategic GovernanceGovernance FinancialFinancial 91 report performance £20,000 £350,000 annual fee only fee annual Remuneration – – Remuneration Role Chairman ChairmanDeputy Non-ExecutiveIndependent Director Director Independent Senior Chairing the Audit & Risk Committee or Remuneration Committee Non-Independent £130,000 £30,000 £220,000 £100,000 Policy: Median to Upper Quartile Current Fee Levels are: Maximum: In general, rises will be linked to those provided to employees and/or inflation up to a maximum increase of 5% per annum. The Company will set out in the section headed statement of following the policy in remuneration of implementation financial year the fees for that year for each of the Non- 103). page (see Directors Executive Opportunity/Maximum the upper quartile to median fee position in the comparator group used to benchmark the Company’s executive remuneration; the laws concerning online gaming are still evolving and there are instances of ambiguity and conflict between different laws resulting in uncertainty and greater personal risk for members of the Board; increased regulation, particularly in the US which focuses on the licensing of individual Board members has increased the workload of NEDs; and all Board and Committee meetings are required time additional Gibraltar requiring in held be to and inconvenience spent travelling to and from location. that The Board determines the remuneration payable to the Non-Executive Directors on recommendation by the Executive Directors. The column to the right sets out the annual fees payable to each non-executive position. Where the any chair Chairman Deputy and Chairman committees their standard fees are inclusive of duties. additional these the recommendations fee the determining When Executive Directors take account of the following in determining the appropriate levels: t t t t Provides a level of fees to andsupport recruitment Non-Executive of retention necessary the Directors with assist and advise to experience and establishing with monitoring the Group’s objectives. strategic Fees Element Strategy to Link and Purpose Operation C. Fees for Non-Executive Directors 92 2013 Directors’ Remuneration Report 2013 Directors’ 92 bwin.party Annual report & accounts 2013 The annual fees payable to newly recruited Non-Executive Directors will be in line with the fees payable to existing Non-Execut existing to payable fees the with inline be will Directors Non-Executive recruited newly to payable fees annual The year. financial relevant the for Report Remuneration Annual inthe shareholders to disclosed be would con person ofthe remuneration ongoing ofthe part form and honoured be would employee existing an for package remuneration the p Accordingly, arrangements. remuneration or awards incentive subsisting to inrelation policy ofthe application retrospective there but ofpromotion date the from apply would above out set policy the Board, the to promoted is employee existing an Where Directors: Executive for remuneration recruitment to respect with policies key bwin.party’s summarises below table The award. an with associated measures performance ofany appropriateness the and recruitment have regard to guidelines and shareholder or sentiment or enhancedshort-term incentive ma long-term payments regarding one-off c preferred the secure to necessary itconsiders than more paying avoid to itwishes that mindful is Committee Remuneration The the inwhich market international the from role the for needed experience and calibre appropriate ofthe candidates attract to tha more no pay to is remuneration recruitment to approach Committee’s Remuneration The above. table policy remuneration in the Executi the for principles same the with inline assessed be will recruit new ofany remuneration the is principle bwin.party’s toD. recruitment remuneration Approach Relocation policies Relocation awards Share buy-outs/replacement recruitment awards payments/ Sign-on of variable remuneration Maximum level Incentives Pension benefits and salary Base Component Policy The level of relocation package will be assessed on a case by case basis but will take into consideration any cost of living di living of cost any consideration housing into allowance/schooling. take will but basis case by acase on assessed be will package relocation of level The domicile. of wh country cases in their from Executive relocate the to for relocation of are expected cost the reflect to compensation benefits relocation Director’s one-off/ongoi Executive the of provide will part Company the another, to location one from relocated is Director Executive new the where instances In incentive existing a bespoke Company’s arrangement the of would terms the be used. within buyout the provide to practical or plan possible not incentive was it that Company’s the extent To the under possible, where value, lapsed the as value equivalent the to up grant then may Committee The t t t into taking calculated be the following: will employment previous aDirector’s of cessation on forfeited be th will that abuyout, of incentives any provision the value of justified recruitment of circumstances individual the that determine Committee the should However, course. of amatter as buy-outs provide to not is policy Committee’s The i provided be only will which circumstances. exceptional salary of 250% to limited is circumstances all in and Company the th by to offered proportionate be remuneration will overall compensation one-off this of value maximum The with commitment. any to in consult to entering to endeavour will prior Committee the shareholders practical, where addition, In targets. performance of satisfaction the to forfeitur in result subject generally will employment of cessation which during period aholding to pro subject to equity, in endeavour will it compensation the compensation of type this provide to decides Committee the where circumstances exceptional in However, compensation. sign-on provide to not is policy Committee’s The made. is award asign-on if 800% to increased be may circumstances this recruitment exceptional of In year annum. the per for salary of 550% is policy Company’s the under remuneration variable of level maximum The Remuneration the at Committee’s discretion. table policy remuneration the in allowable opportunity maximum the to up granted be may Awards table. policy remuneration the in out set as BIP the in participate to eligible be will Directors Executive The ex not annum. shall per this that salary of provided benefits pension of lieu in allowance cash or scheme pension abl be to apersonal to recruitment on a contribution required if either discretion the retains Committee the However, supplements. salary execu or provide to contributions pension Directors Executive existing for policy current Committee’s Remuneration the not is it that noted be should It remunera the in out set as policy policy table. benefits bwin.party’s with line in benefits receive to eligible be shall Director Executive The Directo Executive for policy salary the with consistent be will and bwin.party within and structures pay other and experience individual’s responsibilities the practice, market including factors of anumber account into taking set be will level salary The any other terms and condition having a material effect on their value (‘lapsed value’); (‘lapsed value their on effect amaterial having condition and terms other any and satisfied; being them of likelihood the and incentives these of vesting the to attached conditions performance the employment; of cessation Director’s the of date the on completed period performance the of proportion the ve Directors, as set out as ve Directors, Company competes. Company revailing of elements ive Directors. andidate and will would be no no be would de on de on n is necessary necessary n is fferences/ fferences/ cerned. These account tion

plans, plans, rs. its key key its tive level tive level ceed in 25% e and e and n ere they e to offer offer e to ng as ng as e s. e vide solely solely StrategicStrategic GovernanceGovernance FinancialFinancial 93 report performance None None None None None None None None None nual re- months t between the for early termination early for termination early for legal obligation obligation legal ly during the the during ly eover bid. The auses. If a If auses. the first year mittee in may, Compensation provisions Compensation provisions Compensation provisions on with the the with on ere are no contractual 3 months 3 months 3 months 6 months 3 months 3 months 3 3 months 3 12 months 12 months From Director From 3 months 3 months 3 months 6 months 3 months 3 months 3 3 months 3 12 months 12 months From bwin.partyFrom Notice periods Notice periods Notice Rolling Rolling Rolling Rolling Rolling Rolling Rolling Rolling Rolling contract bwin.party From contract Director From Nature of of Nature of Nature Date of of Date 16.12.10* 21.10.10* 16.12.10* 24.12.10* 16.12.10* 08.03.13 24.12.10* 16.12.10 04.04.05 Date of letter letter of Date of appointment of service contract Georg Riedl Martin Weigold Helmut Kern PerryRod Per Afrell Norbert Teufelberger Manfred Bodner Simon Duffy Name Name Sylvia ColemanSylvia * Took effect from 31 March 2011 when the merger completed. The Committee’s policy for setting notice periods is that a maximum 12 month period will apply for Executive Directors. The Com exceptional circumstances arising on recruitment, allow a longer period which would in any event reduce to 12 months following of employment. The service agreements are governed by English law and contain non-compete provisions which apply during employment and for 12 following termination. The letters of appointment are also governed by English law and contain non-compete provisions which app appointment and for six months following termination (12 months in the case of the Chairman of the Board). The Company follows the UK Corporate Governance Code’s recommendation that all directors of FTSE 350 companies be subject to an shareholders. by appointment Policy on paymentF. for loss of office The Committee will honour Executive Directors’ contractual entitlements. Service contracts do not contain liquidated damages cl contract is to be terminated, agreemen no the is Committee There will determine retirement. such early mitigation or severance as on it considers abatement fair no and or reasonable limited with in each case. pension a Th guarantee would that arrangements Company and its Directors or employees, providing for compensation for loss of office or employment that occurs because of a tak Committee reserves the right to make additional payments where such payments are made in good faith in discharge of an existing (or by way of damages for breach of such an obligation); or by way of settlement or compromise of any claim arising in connecti termination of an Executive Director’s office or employment. Non-executive Directors E. Service contract and letter of appointment key terms and policy on payment forloss of office Directors Executive 94 2013 Directors’ Remuneration Report 2013 Directors’ 94 bwin.party Annual report & accounts 2013 Company whilst seeking to address the circumstances at the time. time. the at circumstances the address to seeking whilst Company c minimise to seek always will Committee Remuneration the individual adeparting for payment ofoffice loss any determining When obligations Other contractual BIP and pension benefits salary, Base Component Approach see following table. table. see following – Directors Executive the of agreements service the in provision control of of the change exception the with 2012, June 27 to prior agreed provisions contractual other no are There grant. of date the at satisfied been have Bwill Element under awards subsisting the Aand Element under elements deferred the for conditions performance the noted be should It restrictions. sale relevant the to subject remain shall shares the that provided date such on completed period vesting relevant the of amount the to rated pro- Committee Remuneration the by determined as date measurement next the or cessation of date the on vest shall employment of cessation of date the at awards subsisting to subject Shares restrictions. sale the to subject be shall and targets performance the of satisfaction of the level of determination the after practicable as soon as made be will award Any date. measurement performance next the at targets performance the of satisfaction of level the account into taking and cessation of date Director’s Executive the on completed year plan the of amount the to rated pro- award any calculate will Committee Remuneration the cessation of year the of respect In Element B paid. be will years previous from balance deferred Any satisfaction of of the performance level targets. the of determination the after practicable as soon as made be shall date. payment Any measurement performance next the at targets performance the of satisfaction of level the account into taking and cessation of date Director’s Executive the on completed year plan the of amount the to pro-rated payment any of amount the calculate will Committee Remuneration The Element A following: the for provide rules BIP the circumstances above the of one in leaves Director Executive an If t t t t t t apply: circumstances following the unless lapse; will entitlements subsisting any and cessation of the year of respect in granted be will award no date, vesting relevant the to prior or date measurement performance the before employment of termination on that provide BIP the of rules The 2014. February shareholders on 24th by approved BIP, the as of rules the by governed is employment of cessation on awards of BIP.treatment the The Directors, Executive the for plan incentive one operates only Company The 12 months. of amaximum for Company the by employed still if received have would they that contributions pension and value benefit payments, salary the to equivalent be will notice of lieu in Payment notice. of lieu in payment receive to entitled be may Directors Executive circumstances, other In to misconduct or normal resignation. due office of loss for compensation no be will there Company, the by termination of event the In any other circumstances if the Remuneration Committee decides in any particular case. particular any in decides Committee Remuneration the if circumstances other any or Group; the of amember not is who aperson to transferred is which undertaking an of part or undertaking an in employed being participant the Group; the of amember be to ceases which acompany by employed being participant the retirement by agreement with the Company; redundancy; disability; or injury Committee discretion Committee ofApplication Remuneration N/A determination. its for basis the ifshareholders, possible in of advance, to explanation afull provide will and leaver in circumstances exceptional agood is Director Executive an that determine to discretion general its use only will Committee Remuneration The adjacent column. manner as those described in the same the in classified is termination for discretion to determine that the reason has Committee Remuneration The None ost to the the to ost StrategicStrategic GovernanceGovernance FinancialFinancial 95 report performance 19% 61% 19% idual performsidual in €556 €563 €2,890 €1,771 Multiple Reporting Periods 18% 57% The Remuneration Committee has a discretion whether to pro-rate any element to time. It is the policy Committee’s Remuneration in normal circumstances to pro-rate to exceptional in however, time; circumstances where the nature of the exceptional produces transaction value for shareholders and provided the performance targets are met the Remuneration Committee consider will pro-ratingwhether equitable. is The Remuneration Committee has the Element to relation in same discretion B as set out above for Element A and will operate it inthe same manner. None Application of Remuneration Remuneration Application of Committee discretion €394 €1,240 €2,190 On-Target Maximum Annual Variable 100% 25% €556 €556 €556 Minimum Fixed 0 500 3,500 3,000 2,500 2,000 1,500 1,000 €’000 Chief Financial Officer

19% 65% 16% €623 €752 €3,932 €2,557 Multiple Reporting Periods 18% 61% €526 €1,790 €2,939 On-Target Maximum Element A Element The Remuneration Committee will calculate the amount of any payment pro-rated to the proportion of the plan year completed on the change of control and taking into account the level of satisfaction of the performance targets at the date of the change of control. Any payment shallbe made as soon as practicable after the determination of the level of satisfaction of theperformance targets. Any deferred balance from previous years will be paid. B Element In respect of the year of the change of control the Remuneration Committee will calculate any award pro-rated to the proportion of the plan year completed on thechange of control and taking into account the level of satisfaction of the performance targets at the date of the changeof control. Any award shall be made as soon as practicable after the determination of the levelsatisfaction of of the performance targets and shall not be subject to the sale restrictions. Shares subject to subsisting awardsshall vest on the date of the change of control and the sale restrictions shall be removed. It should be noted that the performance targets for subsistingawards were satisfied at the dateof grant. If a change of control of the Company (as defined in each service agreement) takes place, each of the Executive Directors may, in the 12 months following the change of control, terminate his employment if the Company makes a material adverse change to his title, responsibilities or status or changes his principal place of work to a place otherthan Gibraltar by giving three months’ notice to the Company in writing. The Company will then be required to pay the relevant Executive Director a payment equal to the amount he would have received had his employment been terminated in accordance with the payment in lieu provisions in his service agreement. This is not a term which would be offered in contracts to new ExecutiveDirectors. Approach Annual Variable 100% 21% €623 €623 €623 Minimum Fixed 0 500 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 €’000 Service Agreement prior (provisions agreed to 27 June 2012) BIP Component Chief Executive Officer H. Illustrations of the application of the remuneration policy The charts below show for each Executive Director the minimum remuneration receivable, the remuneration receivable if the indiv line with the Company’s expectation and the maximum remuneration receivable in accordance with the Company remuneration policy. G. Policy on a change of control 96 2013 Directors’ Remuneration Report 2013 Directors’ 96 bwin.party Annual report & accounts 2013 the shareholders, with 70% of the shares voted cast in favour of the plan (please see page 105). 105). page see (please plan ofthe infavour cast voted shares ofthe 70% with shareholders, the form was BIP the 2014 February 24 on and BIP the for support their expressed consulted shareholders ofthose amajority design, change ofthe informed been Having reduced. pay-outs maximum potential the and simplified was BIP ofthe design the shareholders receiv feedback ofthe aresult As in2011. merger the since unchanged remained have which explained, were Policy Remuneration ofth elements BIP, ofthe central design the and background the Inexplaining correspondence. email upby followed consultants re Company’s the and/or Chairman Committee Remuneration the with meetings face face-to and document aconsultation used process designing when shareholders major Company’s the with consulted Committee Remuneration the report, inthis earlier disclosed As views ofshareholder ofconsideration Statement J. Group. ofthe needs business the support to if required co Committee Remuneration the and employees incentivising and retaining inrecruiting, Policy Remuneration ofthe effectiveness Committee Remuneration the to reports Director Resources Human Group’s the Inturn shares. Company’s the to exposure employees Sh Global the for eligibility universal and benefits fixed over offlexible adoption the example for implemented, been have Policy ofthe elements inwhich way the to changes to led have these and employees from suggestions and feedback receive does function Hum the Policy, Remuneration the indesigning employees with process consultation aformal conducted not has Company the Whilst metrics. comparison remuneration any use not does Group The t t t t t t t t practi following the adopts Group the Accordingly sector. dynamic and competitive inahighly working on thrive and performance g business drive can that individuals talented retaining and ofrecruiting aim the is Policy Remuneration the to Core strategy. implementation the supports and to aligned is which employees ofall remuneration the to approach aconsistent adopts Group The Company inthe elsewhere conditions ofemployment ofconsideration Statement I. VCP. the under participants by earned was n and below or target on either BBP the under awards made has Committee Remuneration the years three past the over year. any in In practice, BIP the Aof Element under earned contribution Company any of balance the year. any in BIP includes the Bof Element periods 100% Aand reporting Element Multiple under earned 2. contribution Company the of 50% includes variable Annual 1. Notes charts: bar inthe used assumptions the out sets table following The Maximum (target) In line with Expectations Minimum Level of Performance the intranet. webinars seat’ ‘hot meetings, hall’ ‘town regular through employees all to strategy business Group’s ofthe communication Clear Group. whole the across inplace put been has structure grading job A global ‘snap-shot’. package remuneration oftheir value current the see to everyone allowing employees all to available are statements reward Total di store (e.g. benefits ofnon-cash form the take rewards These workplace. inthe assistance and support exceptional recognising rewa for colleagues their nominate to employees enabling Group the across launched been has programme recognition A performance requirements. t to receive they benefits the tailor to employees all allowing Group the across rolled-out been has programme benefits A flexible owners. ofits those with employees ofGroup interests the inaligning assisting Plan, G the under awards share commitment and performance exceptional for eligible are BIP) inthe participants (except employees All financial performance and l individual are performance cases inall against personal objectives. pay-outs Bonus managers). senior to mid (for Plan &Shares Bonus the or mid-management) below (for employees main the through either abonus for eligible are oftransition inaperiod still are that exceptions afew with employees, All promotion of developing people in a individuals role. role exceptional who those and in continually a outperform particular recrui the enable to ofmedian 130% to of80% range acompetitive with level median at targeted is salary base Group the Across aayBnfis&PninBIP &Pension Benefits Salary ie Nil. Maximum of 100% 70% of Maximum Fixed Fixed Fixed cash bonus scheme scheme bonus cash rowth and and rowth are Plan giving all ally approved by ally by approved e Company’s e Company’s ed from ed from tment or tment or ces: scount vouchers). , CEO TV and and TV , CEO nsiders changes changes nsiders o entitlement heir specific inked to Group Group to inked in a single inasingle the BIP. the This Remuneration Remuneration of the business business ofthe lobal Share s to the BIP’s BIP’s the s to an Resources Resources an on the on the muneration muneration rds rds StrategicStrategic GovernanceGovernance FinancialFinancial 97 report performance €0m 6.9% €176.4m Total (£) e being to the Bonus Pool heir personalheir Clean EBITDA Maximum EBITDA Clean Value of Contribution Contribution of Value O were set by the Pension (£) 2013 2012 2013 2012 0% (4) 4.1% 2012 €147.0m 22.77 pence) in accordance with the remuneration remuneration the with accordance in pence) 22.77 arget’ cash bonus payment of £750,000 in respect of the 2013, ire the value of this award to be categorised asa bonus. The basis (3) LTIP (£)LTIP % of Clean EBITDA 2013 Clean EBITDA on Target on EBITDA Clean credited to the Bonus Pool (2) 2012 871,624 0 359,848 0 0 770,943 2,250,806 (1) (6) Bonus (£) 2.6% €117.6m €108.0m Clean EBITDA Clean EBITDA Threshold EBITDA Clean Benefits (£) Salary (£) 2013 2012 2013 2012 2013 18,329 446,000 374 11,650 0 334,500 0 626,883 0 0 18,703 1,398,190 20,458 1,000,000 395 19,334 750,000 500,000 500,000 13,691 12,135 990,051 438,282 687,843 799,657 0 0 2,191,585 1,772,156 446,000 446,000 8,863 11,640 662,344 320,563 498,249 576,156 0 0 1,615,456 1,370,355 (5) (5) private medical insurance; private and insurance; health permanent life assurance. been earned in 2013. These awards have been valued using the average share price for the three months ended 31 December 2013 (1 Report for the year ended 31 December 2012. amended at the time of the merger, to mirror the terms of the newly appointed Co-CEO’s and COO’s service agreement, to an ‘on t for this categorisation is that there are no further performance conditionsshare price to be for satisfied the three months after ended 2013, the 31 December year to which 2013 these in accordanceawards relate. with the remunerationfor These 2013 in respect awards reporting have of the been BBP. valued regulations. using the average As reported elsewhere in this report, there was no cash bonuspayment reporting regulations. payable as part ofhis payment in lieu of notice. In 2013 the Remuneration Committeeservice agreed, agreements at no cost to the of all Company, remaining the removal executives. of the ‘on target’ This type cash of clause bonus will not payment be included clause in any from future the service agreements. grant and the shares only being eligible for sale on the fifth anniversary of grant, the remuneration reporting regulations requ regulations reporting remuneration the grant, of anniversary fifth the on sale for eligible being only shares the and grant Martin Weigold Martin 2013 Outcomes EBITDA % of EBITDA credited to the Bonus Pool Norbert Teufelberger Norbert Name Joachim BacaJoachim Jim RyanJim Additional requirements in respect of the Single Total Figure (audited Table information) Benefits The benefits provided are: t t t Operation of Bonus Banking Plan for 2013 Performance against targets – BBP outcomes 2013 The following table sets out the Clean EBITDA targets for and 2013 their level of satisfaction: 2. The bonus shown is 50% of the contribution to the BBP3. earned in respect of 2012.The amounts shown are the values of the shares to be awarded in March 2014 in respect of the deferred value from BBP contributions in 2011 and 2012 (see page 98), no contribution having 4. The values are the balance of the deferred payments5. made under the BBP in respectThese Directors of 2012’s operation left the Board of the BBP during and reflect 2013 and only the Joachim payment Baca of part remains of the deferred an employee value of the under Group. the Information BBP in 2012. on Jim Ryan’s 6. departure terms wasAs set out disclosed in the Directors’ in last year’s Remuneration report, under the rules of the BBP Jim Ryan was not entitled to participate in the BBP for 2013. However, hewas entitled under the terms of his service agreement, as Notes 1. The amounts relate tothe value of the proposed Element B BIP awards to be granted in March 2014 (see page 100).Despite the fact that this is a share award vesting on the third anniversary of objectives set for 2013. The objectives for the CFO and senior executives were set by the CEO, whilst the objectives for the CE Chairman. All these personal objectives were reviewed and approved by the Remuneration Committee at the beginning befor of 2013 rolled out. In addition, the Remuneration Committee has reviewed the performance of the Executive Directors and senior executives against t 2013 Remuneration Report For the year ended 31 December 2013, the Group’s policy on remuneration was implemented as setout below. A. Single Total Figureof Remuneration for each Director (audited information) 98 2013 Directors’ Remuneration Report 2013 Directors’ 98 bwin.party Annual report & accounts 2013 * For the value of the shares at the Measurement Date, the number of deferred shares carried forward from 2012 (Opening Balanc BBP: the under Directors participating the for Accounts Plan the summarises table following The satisfied: were they whether and Directors Executive ofthe each for objectives personal the out sets table following The Total Value at Measurement Date Measurement at Value Total Date* Measurement at shares of Value 2013 Opening Balance (shares) Balance Opening 2013 Plan Accounts and Group the of ownership take to continuing by culture oriented aperformance Drive strategy business the deliver to team senior the Weigold managing Martin and Building Teufelberger Norbert Name Number of shares represented by Closing Balance* Closing by represented shares of Number Closing Balance LTIP Element (Total Element Vested less the Bonus Element) Contribution) 2013 of (50% Element Bonus 2013 Element to vest in March 2014 (% of salary/fee) 2013 Contribution price for the 30-day measurement period to 31 December 2013 which was 121.18 pence. For the number of shares represented by the Closing Balance, the value of the Closing Balance has been been has 2015. Balance 1January on Closing the of vest to due value are the shares Balance, Balance Closing the by Closing The pence. represented shares of 121.18 of number price the For share same pence. the by 121.18 divided was which 2013 December 31 to period measurement 30-day the for price Personal Objective Personal t t t t t t t t the Group: PersonalAssessed Contribution to the Group including the following contribution to meeting Board December the in approved and submitted be can that 2014 so for budget aquality of production the Ensure Board. the with agreement with consistent Conduct required as exercise re-budgeting throughout 2013 to any reflect required changes financial risk unnecessary any to Group the exposing not whist efficient is sheet balance the Ensure passed being legislation enabling material of months three within assets US-facing off the spinning potentially to aview with strategy re-entry US of execution oversee to Continue captured are market the to promised synergies that Ensure and KPIs deadlines agreed with line in plans tactical the against Deliver department analysis and intelligence business the of of ownership assumption and expansion market regulated European B2B, payments, mobile, gaming, social re-entry, US acquisitions, and mergers sales, assets Premium.com, to limited but not level ofProvide first class for decision support decisions strategic of the Group, including when necessary action/improvements corrective suggesting and budget to tracking are leaders all ensuring in basis amonthly on leadership continued provide and budgets and P&Ls units’ business team senior the for plan succession arobust Build Ensuring the Finance function has an appropriate succession plan succession appropriate an has function Finance the Ensuring growth focused profit and revenue is that culture energy high and entrepreneurial amore Create lines time agreed within completed are requirements audit internal all ensuring and procedures and policies company all with complies Fully required as responsibilities additional on take to prepared and work to approach Flexible managers senior other of plans tactical the of implementation the assisting also and plans tactical CFO’s the delivering rate, work and ethic work Strong and EBITDA generation and growth of aDemonstrating commercial in your approach all role aspects contributing to revenue employees to model arole as acting and Leadership Teamwork Norbert Teufelberger Martin Weigold Manfred Bodner Manfred Weigold Martin Teufelberger Norbert £339,458 £339,458 £339,458 £678,916 £678,916 560,254 280,127 0% £0 £0 e for 2013) has been multiplied by the average bwin.party share share bwin.party average the by multiplied been has 2013) e for of a possible maximum of 10 of maximum of a possible out 5.50 of score overall an Achieved of a maximum of 10 of of a maximum out 5.75 of score overall an Achieved Level of Satisfaction £245,891 £245,891 £245,891 £491,782 £491,782 405,828 202,914 0% £0 £0 £535,062 £535,062 £267,531 £267,531 £267,531 441,543 220,771 0% £0 £0 StrategicStrategic GovernanceGovernance FinancialFinancial 99 report performance se of determining f this report (see A blueprint structure was designed and approved in 2013 in line with the Group’s budget process. Reduced technology employee costs by €11.1m, savings. targeted of 104% programme training and briefing Comprehensive rolled out across the Group in 2013, using third- party experts to facilitate the process. 95% of the Group’s technology employees attended ‘agile’ training in 2013. A plan for decoupling Poker and Casino to enable releases, product platformindependent reducing down-time risk, has been signed-off. The has team Operations implemented Development a plan to improve platform stability and reduce software bugs. The Group exceeded the ‘on target’ system down-time reduction in 2013*. A new monthly Technology and Product Operations reporting process was successfully introduced 2013. in for programme a of implementation Successful identifying duplicate tools used for the same IT service and then reducing to a single IT tool for each service. All products and brands rolled-out in the Main Markets by the end of 2013. From revenues generated on the Group’s proprietary software 13.6% of net gaming revenue was generated from IOS and Android in 2013, with a rate of 16.1% achieved in quarter 4 2013. Achieved Zynga Plus Poker and Zynga Plus Casino ‘on canvas’ launch in September 2013. bwin Sports ‘on canvas’ concept, specifications and prototype finalised in 2013, but not due to be 2014. March/April until launched New poker product launched in September 2013. Aimed to increase net gaming revenue in quarter 4 2013 over quarter 3 2013 by 8%. Achieved an actual increase of 6.5%. Also aimed to improve the trend curve by reducing the average decline of de- seasonalised business from 38% for the first eight months of 2013 to an average of 30% in quarter 4 2013 versus the prior year. Achieved a reduction to 31.8% of average an Actual Result Actual t t t t t t t t t t t t the Company’s shareholders. Company’s the Design new organisational structure to meet the needs of the transformational strategy and align all employees to the new model including managing exits and necessary new hiring. Up-skill agile technology on employees practices. and methodology Complete education programme across Group on technology approach.new Provide a clear plan for achieving zero gaming for date cost, total with down-time platform achievement and decoupling of poker, casino and deployable. independently is each so platform New management information system rolled out. Standardise IT tools across organisation. Complete roll-out of all products and brands on IOS and Android in principal regulated trading markets by the end of 2013. Target of achieving 13.7% of total net gaming revenue after tax from mobile/touch devices by the end of 2013. Launch in the UK as first test market. Launch software and follow with marketing campaign in principal regulated trading markets. Stop the revenue decline in poker (measuring quarter after launch with quarter prior to launch). t t t t t t t t t t t Measurement Metrics for 2013 for Metrics Measurement Strategic/Transformational Projects Strategic/Transformational of Transformation Fundamental Implement Operations: and Organisation Technology Adopt a new ‘agile’ methodology to increase work throughput and utilising a leaner technology develops softwareworkforce and that cheaply more faster. market to it brings technology hardware.Consolidate Measurement weighting:15% Market Expansion Channel 1: All products and brands availableon mobile devices (tablets and smart phones) via IOS and Android in principal markets (Austria, Belgium, Canada, Denmark, Spain, Russia, Netherlands, Italy, Germany, France, Markets’)). (‘Main UK and Switzerland Measurement weighting: 15% Market Expansion Channel 2: Launch social ‘on canvas’ poker, casino and sports products. betting Measurement weighting: 15% Re-launch:Poker Launch new poker offering and reposition poker to be number 1 rival to PokerStars. Measurement weighting: 15% * Further information on this matter is commercially sensitive and could be used by the Group’s competitors to the detriment of B. Plan interested awarded in respect of the financial year financial the of respect in awarded interested Plan B. BIP Information on the design of theBIP and the justification for the design are set out above in the Remuneration Policy section o pages 88 and 89). The Remuneration Committee set the following strategic and transformational objectives for for 2013 thepurpo the level of awards to be made under Element of the B BIP in respect performance. of 2013 100 2013 Directors’ Remuneration Report 2013 Directors’ 100 bwin.party Annual report & accounts 2013 * Number of shares was calculated using the average share price for the 30 days to 31 December 2013, 121.18 pence. 121.18 2013, December 31 to days 30 the for price share average the using calculated was shares of * Number outperform to management incentivising thereby contribution, maximum ofthe 70% earning as treated was performance ‘on-target’ table inthe out (set aweighting assigned was project each projects, strategic/transformational six ofthe ofeach importance Inascert accuracy. its on advise and report status of the areview conduct to BIP) inthe participate ofwhom (none department Intern Company’s the engaged then Committee Remuneration The Committee. Remuneration the to report a status presented and above transformational and strategic 2013 ofthe status the reviewed Director Strategy and Directors Executive the end year the After granted in March 2014 to the Executive Directors in the form of a nil-cost share option or restricted shares: restricted or option share ofanil-cost form inthe Directors Executive the to 2014 inMarch granted Bshare Element following the achieved, were objectives above the which to extent ofthe determination above ofthe aresult As of65.05%. rate achievement overall an team management senior and Directors Executive the that concluded Committee Remuneration the Overall ‘on-target’. above results Martin Weigold Martin TeufelbergerNorbert Name 15% weighting: Measurement operating in dotcom markets. B2BLaunch offering to B2C licensed operators Technology Platform:Leverage Software 25% weighting: Measurement their value. of irrespective customers of volume the increase to aiming than rather revenues these protecting value and most the provide that customers those servicing on focusing approach business arevised Adopt Value’: to ‘Volume from Move Strategic Strategic/Transformational Projects Face Value of award on grant on award of Value Face Number of shares*/ Number of shares*/ Measurement Metrics for 2013 t t t t t t in at least two dotcom markets in January 2014. January in markets dotcom two least in at a B2CSelect to operator and be prepared launch licence. gaming online B2B aMalta Obtain 2014. in €32.5m by cost headcount reduce to plan agree and run-rate 2013 1January at 2013 for costs employee cap 2013, in business the on demands additional the Despite savings. cost of €70m Capture employees and responsibilities. management, to changes via approach strategic new the support to Group the of restructure Complete changes. marketing and product through concept value’ to ‘volume Implement £653,748 £977,202 806,405 539,485 % of maximum Vesting date Eligible for sale for Eligible date Vesting maximum % of % of salary/ salary/ % of 147 195 65 65 Actual Result t t t t t t gaming licence and platform sign-off. sign-off. platform and licence gaming online Malta awaiting as date to markets dotcom in launch No agreed. and prepared and contracts B2C (Premium.com) operator selected been has March 2014. in granted be to due now is and 2013 in granted not was licence gaming online B2B Maltese The headcount reduction. further €32.5m the captured fully not has plan saving cost 2014 the Currently year-end. the 2013 by €117.8m of run-rate achieved a sustainable and €120.7m was run-rate 2013 1 January 2013. in made savings cost of €79.04m implemented. programme redundancy the and identified were roles Redundant reductions. budget 2013 line with changesStructural have implemented been in decisions. and initiatives marketing and product drives and organisation the into embedded been has concept value’ to ‘volume The March 2017 March 2017 below). In addition, In addition, below). aining the relative projects set out out set projects awards will be be will awards had attained attained had and achieve al Audit March 2019 March 2019 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 101 0 0 0 0 0 0 6 2 0 0 0 0 0 0 9 8 0 0 0 0 0 0 , , , , , , 1 0 2012 , , 0 0 0 0 0 0 2 5 5 3 3 0 0 1 1 2 3 1 1 in sharesin interests interests 326,138 366,252 1,702,213 1,182,238 of sharesof or 21,353,973 20,428,857 Total number Total 7– 0£ 2£ 6£ 0£ 0£ 0£ Total 5 8 4 0 0 0 0 0 8 2 0 0 0 0 , , , , , , , 2013 3 5 5 0 0 0 0 7 0 3 5 5 3 0 1 A5 A0 A2 1 1 2 3 1 / / / Yes Yes N/A N/A N/A N/A – £150,000 £150,000 – £146,425 £150,000 Share ownershipShare requirements met requirements 2012 (4) (4) (3) (4) (3) neration Committee has determined that the forfeiture forfeiture the that determined has Committee neration Vested 326,138 326,138 326,138 – – 100,000 7,511,887 7,511,887 ee months’ notice. months’ ee share options share erger bwin Interactive Entertainment AG, an Austrian company company Austrian an AG, Entertainment Interactive bwin erger 2013 but unexercised unexercised but Other Remuneration (2) 0 0 0 – £542,097 £938,306 £1,007,097 £1,403,306 2012 945,313 441,543 1,366,659 Deferred shares shares Deferred under the BBP/BIP the under – 2013 6 0 0 N 2 0 0 N 0 9 8 1 0 , , 2 40,114 persons) 856,100 656,900 12,475,427 12,475,427 Additional SID/Committee Chair Fees owned outright outright owned Number of shares of Number 0––––£ 0––––£ 0––––£ 0––––£ 0––––£ 0––––£ 0 0 0 0 0 0 (including connected 0 0 0 0 0 0 , , , , , , 2012 0 0 0 0 0 0 5 5 3 3 0 0 1 1 2 3 1 1 – –5 – –2 – – 200 500 (% of salary) of (% 7–––––£ 0£ 2£ 6£ 0£ 0£ 0£ 5 8 4 requirements 0 0 0 0 NED Fees 0 8 2 0 0 0 0 , , , , , , , 2013 Share ownershipShare 3 5 5 0 0 0 0 7 0 3 5 5 3 0 1 £ 1 1 2 3 1 £ £ £126,855 £130,000 £19,570 £20,000 £130,000 £130,000 £20,000 £20,000 £ £465,000 £465,000 (2) (3) (1) (1) n –000N a

(1) y y l £ m f f d f f e l y y £ e l £ u u i l r r o r r e D D R C r e e n n f g a i r P P o o A v o d d r l Clean EBITDA generated for 2013 was 70% or less of the Clean EBITDA target set for 2013 by the Remuneration Committee. The Remu on 1 April 2020), 2,503,958 shares have a strike price of 157 pence (option vested. all expireshave on 1 April 2020) and 2,503,971 shares havea strike price of 154 pence (option expires 18 May 2020). The options provision has not been triggered and so 50% of these deferred shares vestedin this column immediately relate to the restricted on the award being granted share awards later to in be March made in 2014 March and 2014 50% under on 1 January Element B of the 2015. BIP (see The balancing page 100). figures listed on the Vienna Stock Exchange and so not subject to the recommendationsThe of the rules UK Corporate of the bwin option Governance plan made no Code, provision awarded for the fair treatment market value of outstanding shareshares options awards under to its a new on non-executive a merger plan, and the These therefore ROP. options directors. these have vested legacy and awards will expire had to be rolled on 22 Mayof 155 into pence. 2020. options Approximately No further over bwin.party share half awards of the have shares been have or will a strike be made price under of the 151 pence ROP. and the other half a strike price for 2013 under the BBP The or VCP. amount shown under the ‘Other Remuneration’ column for 2012£348,750 relates which to the under amount the paid regulations out in respect would be of 2012 considered (£487,816). a bonus payment This consisted and2012 and an amount 2011 of of an £139,066 amount contributions of which would (this be deferred considered value an LTIP in the payment. form of 441,543 The valueThe deferred deferred notional shares in value respect crystallised was of the valued at the average after the share Remuneration price for the three Committee months(see page determined ended 97) 31 and December therefore that the 2012 audited the (114.42 claw-back Clean EBITDA mechanism figure pence). for the was year-ended not triggered.month 31 December The and deferred the balance 2013 exceeded value on 1 January crystallised 70% of the 2015. 2013 target These into shares an award of are 441,543 valued at the shares, average‘Other Remuneration half share vesting price for when the 2013’ the three column. award months Manfred is granted ended Bodner later 31 December this does not 2013 participate (122.77 pence) in the and BIP. the valueis shown in the m m e o o e i i y Per Afrell Helmut Kern R Georg Riedl Manfred Bodner S S Martin Weigold Martin Helmut Kern Helmut Moonie Lewis Name Norbert Teufelberger Name S Manfred Bodner Bodner Manfred Tim Bristow Sylvia Coleman Sylvia R G Geoff Baldwin P Notes 1. December 2013. 31 ended year the during options share exercised Director any No 2. These deferred shares relate to contributions earned under the BBP in 2011 and 2012. These deferred contributions were subject to a 50% forfeiture mechanism in the BBP rules if the actual 3. These relate to awards made under the bwin.party digital entertainment plc Rollover Option Plan (the ‘ROP’). For each individual 2,503,958 shares have a strike price of 123 pence (option4. expires These relate to awards made under the bwin.party digital entertainment plc Rollover Option Plan (the ‘ROP’). Prior to the m 2. Manfred Bodner was the Chairman of the Integration Committee during 2013 and was the only Non-Executive Director entitled to participate in the BBP and No contribution VCP. was earned 3. The Director was appointed during 2013. past Directors to Payments D. There were no payments to past Directors. E. Payments for loss of office There were not payments for loss of office during the year being reported on. interests share and Directors’ shareholding of Statement F. requirements, these beenwhether met: have table shareholding are Directors’ there the where and sets details of shareholdings out The following Notes 1. The Director resigned from the Board during 2013. For Tim Bristow and Lewis Moonie the 2013 includes payment in lieu of thr C. Non-Executive Director remuneration distilled to a single figure (auditedinformation) 102 2013 Directors’ Remuneration Report 2013 Directors’ 102 bwin.party Annual report & accounts 2013 Value of£100since31December2008 average of the Group’s other employees. other Group’s ofthe average of remuneration ofthe aspects ofcertain inrespect 2012 2013 and between changes percentage the out sets table following The employee Group average and CEO of remuneration in change Percentage H. ayear, during earned was anything extent the to therefore, and performance of assessment annual an to subject was BBP The 2012. and 2013 in VCP and BBP the operated Company The 2. eligible being only shares the and grant of anniversary third the on vesting award ashare is this that fact the Despite 2013. of respect in made award BBIP Element the represents value This 1. Notes in respect of the holding Director the position of CEO. t for plans incentive long-term and short-term under vesting amounts and remuneration total the out setting table following The period. inthe reinvested as treated is income ofdividend The value 31 December 2013. any change changes The in in the constituent reflects value of Index ove Dec 31 companies the holdings in from the FTSE250 Index FTSE250 inthe and shares inbwin.party’s of£100 value the plots graph following The years. five last the for of aconstituent been has Company the because comparator, the as Index FTSE250 the use to chosen has Committee Remuneration The table remuneration CEO and graph Performance G. 11 083 220 11 003 221 11 0231122013 31122012 31122011 31122010 31122009 31 122008 100 150 200 250 300 350 09Jim Ryan 2009 00Jim Ryan 2010 Average employee CEO Role Jim Ryan 2011 2012 Norbert Teufelberger Norbert 2012 2013 Norbert Teufelberger Norbert CEO 2013 Year 50 0 operated the VCP, which was uncapped, however, as described earlier in this report the performance conditions were not met and therefore no awards have been granted. been have awards no therefore and met not were conditions also Company the performance 2012 the and 2013 In report this column. in earlier incentive’ described as ‘Long-term the in however, value BBP the of uncapped, forfeiture, of part was risk VCP, at show which to the and misleading deferred operated was potentially and operation of confusing years be the in would it BBP the under believes earned Committee value any of part Remuneration the technically Whilst column’. out pay bonus ‘Annual the in for accounted is value the total opportunity maximum BBP. The the of BIP). the Bof respect Element in 2013 for under payment 300% and are bonus BBP there the cash no that under is was There (300% relate. categorisation salary of awards this for these 600% basis which The to was 2013 in year abonus. the as 2013, after categorised be to satisfied be to award this of value conditions the require performance regulations further no reporting remuneration the grant, of anniversary fifth the on for sale bwin.party FTSE 250 total remuneration CEO single figure of of figure single CEO 1,769,464 1,750,073 2,135,120 2,191,585 2,087,197 hneBenefits Change 65%-.2 -46.80% -2.32% -6.51% Salary %1.2 -100% 12.82% 0% (£) (£) of the maximum maximum the of Annual bonus pay out as % % as out pay opportunity 100.00 58.27 60.33 59.57 32.15 (1) ember 2008 to to 2008 ember the CEO and an an and CEO the he same period maximum opportunity opportunity maximum r the period. period. r the vesting rates against Long-term incentive this index Short-term Short-term incentives 100.00 100.00 42.82 0 0 % (2) (2) StrategicStrategic GovernanceGovernance FinancialFinancial report performance 103 0.12 4.86 (9.58) (53.37) (24.35) 2012 to 2013 to 2012 % change from from change % (%age of Salary) under Element B Element under items for Unibet Boyd Gaming Remuneration ny changes in changes ny Maximum opportunity w and the extent not be disclosed utions. in 2014. as been attained will KPIs for Element B, Element for KPIs (m) €65.9 €84.5 €84.2 250% 300% 210% 225% €133.6 €210.7 Shuffle MasterShuffle Zynga 2012 Total Total 2012 (%age of Salary) under Element A A Element under Maximum opportunity Corporation Entertainment Games Scientific IAC/InterActivecorp NCR (m) €84.3 €69.1 €39.4 €159.4 €120.8 2013 Total Total 2013 Bally Technologies Caesars Expedia WMS IndustriesWMS Betsson International Game Technology Software 75% on Clean EBITDA target. personal on 25% objectives. 100% on achievement of strategic and transformational targets set for the year (see page 99 for the targets set for 2013). Aristocrat Leisure Betfair Group Interactive Two Take Lottomatica William Hill Ladbrokes HSN Employee remuneration Distribution Expense Distribution MGM Resorts Electronic Arts Netflix Name Norbert Teufelberger Distributions to shareholders Martin Weigold Marketing expenditure Technology expenditure Technology Tax and gaming duty I. Relative importance of spend on remuneration and other distributions The following table sets out the total amount spent and in 2013 2012 on remuneration the of Group’s employees and major distrib BIP performance conditions and targets The following sets out the weighting of the targets for Element A and Element B: A Element t t B Element t The targets for the BIP participants in 2014, the Clean EBITDA target for contributions under Element A and the 2014 strategic have been set by the Remuneration Committee. Owing, however, to the commercial sensitivity of the Clean EBITDA target this will until the 2014 Directors’ Remuneration Report is published in 2015, when statements regarding the extent to which this target h be published. A summary of the 2014 strategic and transformational objectives set by the Remuneration Committee is set out belo to which these targets have been achieved will be disclosed in the 2014 Directors’ Remuneration Report: Salary, benefits and pension No change in 2014. Salary freeze for Executive Directors. Fees No change to fees for Non-Executive Directors. BIP Operation for 2014 Maximum The maximum opportunity for the Executive Directors under each Element of the BIP is as follows: The technology, marketing and tax and gaming duty expenditure metrics have been chosen, because these represent key expenditure the Group. 2014 in policy remuneration of implementation of Statement J. The Group’s remuneration practices are managed in accordance with the remuneration policy set out above, a policy for which the Committee is seeking shareholder approval of at this year’s AGM. Consequently, the Remuneration Committee is not anticipating a remuneration for the current year, except in respect salary of a freeze for the Executive Directors and senior management team remuneration for group Comparator The comparator group set by the Remuneration Committee for all remuneration benchmarking consists of the following companies: 104 2013 Directors’ Remuneration Report 2013 Directors’ 104 bwin.party Annual report & accounts 2013 Executive Directors. No other Board committee carried out any remuneration-related matters in2013. matters remuneration-related any out carried committee Board other No Directors. Executive recommen the on of Directors Board the for amatter is Chairman) the (excluding Directors Non-Executive of the remuneration The BIP. ofthe finalisation and design the was Committee the for ofbusiness item main 2013 the During CorporateGovernance/RemunerationCommittee.aspx website, bwin.party’s on available are ofreference terms Committee’s Remuneration The t t t t t are: Committee Remuneration ofthe members The CEO. the into reporting executives senior Dir Executive Board, ofthe Chairman ofthe remuneration ofthe oversight Committee Remuneration the to delegated has Board The considered remuneration that issues advisers and Committees K. the shareholding increased requirements for has adoption Directors: of the Board the Executive the BIP in 2014, inconju However, salary. annual oftheir 100% to equivalent shares bwin.party own to required were Directors In 2013 Executive Shareholding requirement CFO CEO Director busine new and assets non-core of realisation Value (‘Main Markets’). UK and France, Germany, Italy, Netherlands, Russia, Denmark, Spain, Switzerland Canada, Belgium, Austria, territories: key Android in and ,IOS browsing mobile via smartphones) (tablets and devices mobile on available brands all and products All Market Channel Expansion: reduce software bugs and reduce technology debt availability, platform increase engineering: efficient and Lean faster. market to it brings and cheaply more and utilise that a workforce developssoftware leaner technology throughput work increase to adopted methodology ‘agile’ New and Operations: Organisation Technology of Transformation Fundamental Roll-out Strategic/Transformation Project Senior Executives reporting into the CEO the into reporting Executives Senior markets. in dotcom B2BLaunch offering to B2C licensed operating operator Technology Platform: Leverage Software value. of their irrespective customers of volume the increase to aiming than rather value most the provide that customers those servicing on focusing approach, business revised the roll-out Further Value’: to ‘Volume from Move Strategic value. maximise to flexibility establish and independentEstablish US set-up by roll-out to state state support Independent US set-up: Lewis Moonie (resigned on 16 October 2013) October 16 on (resigned Moonie Lewis Helmut Kern 2013) October 17 (appointed Coleman Sylvia Per Afrell (Chairman) Perry Rod s s . Measurement Metrics for 2014 t t t t t t t t t t t t t t t 2. In the fourth quarter of 2014 more than 24% of NGR comes from mobile/touch devices. mobile/touch from comes NGR of 24% than more 2014 of quarter fourth the In 2. devices. mobile/touch from comes NGR of 21% than More 1. so: (‘NGR’), tax) (after gaming net 2014 in total of revenue percentage the target software proprietary bwin.party on hosted offering For resolution bug future rate. the improve and experience customer the impacting bugs software the of half Resolve system. software overall for coverage test automated Improve products. casino and poker the of decoupling the Service to productionEnable stage. releases automated software incidents arising releases. from software fix to taken time the and availability platform improving by experience customer the Enhance Product development documented lifecycle to and bemeasured. re-engineered, roles. technology key on afocus with necessary where talent refresh and gaps skill Fill practices. and methodology ‘agile’ on employees technology ‘Up-skill’ Launch in 90% of all the B2C operator’s target markets, having first obtained the Malta B2B online online B2B licence. gaming Malta the obtained first having markets, target operator’s B2C the all of 90% in Launch 2013. December 31 at cost workforce the than lower €10m be shall 2014 December 31 at businesses core B2C the for cost workforce annualised The run-rate. annualised 2013 December the with compared savings cost total in €25m 2014 in Achieve support. central little with states in newly-regulated offerings new of opening the lead to able to structured be should structure US stand-alone The US. the in markets gaming online independentEstablish technology, the regulated commercial functions servicing and operational businesses. and assets non-core all in interests Group’s the sell and Identify http://www.bwinparty.com/AboutUs/ Shareholding requirement as a % of annual salary annual a%of as 0 n/a 100 0 3,140 500 0 242 200 Value of shareholding at the year nction with the dation of the ofthe dation ectors and end as a % of salary a%of as end StrategicStrategic GovernanceGovernance FinancialFinancial report performance 105 107,456 (Abstentions) (Abstentions) d attendd Votes Withheld Withheld Votes Votes Withheld Withheld Votes n matters es. rvices to one one to rvices , however, however, , signatory to ss with major major with ss was involved which a number at the meeting During 2013 2013 During C’s remuneration re of the BIP and incentive plans BIP. The trusteesBIP. ectors were were ectors r, Company ted by Emerald Bay of bingo marketing hares, voted also nly purchased this e Directors’ ided to the Committee the to ided ach divestiture trust 589,011,243 30.34 % Against Total Votes Cast % Against Total Votes Cast 178,731,675 Votes Against Votes Against % For % For 69.66 Votes For Votes For 459,625,439 93.70 30,905,503 6.30 490,530,942 48,510,837 410,279,568 holders that voted at the EGM, 87% approved the BIP Resolution approveTo the BIP To approveTo the 2012 Directors’ Remuneration Report 2012 Resolution Of the above votes cast against the resolution, 49,829,863 shares were voted by SpringOwl Gibraltar Partners B Limited, which o stake the week prior to the and EGM so was not involved in the Company’s extensive consultation with major bwin.party shareholders s on the 67,167,470 aggregate held in which Limited, Ridge Stinson and Bay Limited Emerald trusts divestiture the owning of against the resolution. The bwin.party Directors were surprised at this decision, because the former bwin.party DirectorLimited nomina and Stinson Ridge Limited participated in discussions with the Remuneration Committee in 2012 and over 2013 the structu did not object to its design. In addition, theCompany’s efforts to engage with the trustees on this issue were frustrated by e having appointed three different trustees since 30 October 2013. Despite meetings and correspondence with the trustees, the Dir disappointed that the Company was not informed of their views until the vote. EGM The Remuneration Committee was pleased to see that of the other share Rod Perry Committee Remuneration the Chairman of 13 March 2014 were aswere follows: On 24 February 2014 an extraordinary general meeting of the Company was held to approve the BIP and the votes cast 24 votes On proxy the February and and by BIP 2014 the approve wasto extraordinary Company an held the of meeting general The Remuneration Committee met five times in 2013 in order to fulfil its duties. The Chairman of the Board, Chief Executive Board, the its Office duties. Chief The Chairman of fulfil to order in 2013 in times five met Committee The Remuneration Secretary andGroup Human Resources Director were invited to advise or provide information to Remuneration Committee members an meetings on a number of occasions during the year. The Company Secretary is the Remuneration Committee secretary. No individual in any decision regarding that individual’s remuneration. PricewaterhouseCoopers LLP (‘PwC’) London in has been retained to provide guidance to the Remuneration Committee on remuneratio and in particular general practice and developments in executive remuneration. PwC also provides advice on short-and long-term and during provided 2013 assistance in devising the BIP and supporting the Remuneration Committee Chairman’s consultation proce shareholders regarding the proposed PwC was BIP. appointed by the Remuneration Committee in 2010 following a tender process at of remuneration advisory firms participated. PwC’s performance is evaluated by the Remuneration Committee at least once a year. separate departments within the PwC organisation provided internal audit reviews in respect of the Group’s controls in respect and technology product management and development. In addition, PwC France in and Italy provided tax advisory and compliance se of the Group’s French and Italian subsidiaries. This work was completelyunrelated and segregated from the work performed by Pw consultancy business and in the Remuneration Committee’s judgement did not undermine PwC’s independence. In addition, PwC is a and follows the provision of the Remuneration Consultants Code. PwC worked with the Company to implement the Committee’s polici PwC’s fees were based on agreed amounts for each of the projects carried out. The total fees for PwC in relation to advice provduring the year being reported on were £280,500. Meeting General at Voting of L. Statement th respect cast in of votes meeting the proxy at and by 2013, June 19 on held Company the last the of GeneralAt Annual Meeting as were follows: remuneration 106 bwin.party Annual report & accounts 2013 accordance with the Company’s stated remuneration policy. remuneration stated Company’s the with accordance the to granted awards incentive long-term satisfy to used be will shares acquired These shares. 1million acquired which Trust, In share under vesting plans. of 2013 shares upon the Company’s exercise share options or the Company £1.1m donated restricted This Plan. Share only waiver the Global while subsists held are the shares in ou the Employee Trust. transferred are shares The ofcertain inrespect except plans share bwin.party the all under awards ofshare exercise future the satisfy Trust to Employee inrespe rights voting and dividend all waived Trust has Employee ofthe trustee The Trust’). ‘Employee Trust (the Shares party shareswere held of sharesin in employee the 817,477,478 issue, benefit the Company’s 3,079,381 at March 2014, bwin.party 11 As shares (v) Non-voting AGM. 2014 the at authority s is Board the capital, share of its aproportion purchase to power the have to interests best Company’s inthe itremains that give and statement ofthis Inlight Company. ofthe position financial overall the and levels gearing appropriate opportunities, conditions market prevailing to subject be will purchase Any of€10m. value aggregate upan cancellation for shares to purchase A 30 to period the over intended Company the policy, distribution bwin.party’s under that 2014 August 30 on announced Board The cancelled. haveshares been there is compan under no facilityGibraltar As to hold website in shares corporate (www.bwinparty.com). treasury the bwin.party above table inthe out set is purchased ofshares number the about Information capital. share issued Company’s ofthe rep 10% time shares, bwin.party 81,469,580 Company ofthe behalf on purchase to authority Board the granted Shareholders AGM 2012 the At (iv) Share authority buy-back AGM. 2014 the at authorities of these a renewal seeking are and parameters these within shares new issue to the flexibility be Company’s inthe itis believe however, do, Directors The date. to utilised been not have authorities allotment 2013 AGM The 2014). 19 on September ofbusiness close at (or, AGM ifearlier, 2014 Company’s the at expires shares million (40.7 of£6,110 amount nominal aggregate an upto cash for ofshares above) (i) to pursuant (otherwise allotment juris inany body regulatory ofany requirements or laws, any under problems practical or legal or entitlements, the fractional nec be may as exclusions such to subject but ofshareholders, infavour offer pre-emptive other any or offer open issue, rights ofshares allotment the (i) to limited be authority such that provided allotment, the to apply not did rights as if pre-emption 20 above the to pursuant cash, for shares allot to articles, the to pursuant AGM, 2013 the at empowered also were Directors The 2014). 19 on September ofbusiness close at (or, AGM ifearlier, 2014 Company’s the at expires authority is rights pre-emptive afully for only used be to of£41,094 aggregate an up to shares new further allot to authority a further mil (273 of£41,094 amount nominal aggregate initial an upto shares new allot to authorised were Directors the 2013 AGM the At Allotment authority (iii) website, corporate www.bwinparty.com. an on available are the bwin.party documents Boththese respectively. ofassociation articles bwin.party inthe are contained interests depositary and shares ordinary the to attaching rights The representing interests the underlying shareswhich depositary dematerialised are held on for trust the of holders the depositar sh put the Company to has in system, settlement hold for bwin.party place arrangements through a paperless depositary the CREST a maintains premium beheld cannot companies or issued listing by non-UK securities bwin.party on the London As Stock Exchange. Share allotment history (ii) each. pence of£0.00015 shares ordinary 1,500,000,000 into dividend £225,000 capital share Authorised (i) capital Share Disclosures Report Directors’ Other hrsbuh akfrcnelto n21 21567 817,654,184 819,789,861 817,977,478 817,477,478 (2,135,677) 6,681,305 323,294 (500,000) 2014) March 11 (to 2014 in cancellation for back bought Shares 2014) March 11 (to 2014 in plans share for allotted Shares 2013 in cancellation for back bought Shares 2013 during plans share for allotted Shares 2013 1 January Event hrsalte/prhsd Total shares in issue Shares allotted/(purchased) –813,108,556 in connection with a sue. This 2013 This sue. AGM eeking a renewal of this ofthis a renewal eeking ct ofct held shares by the essary to deal with with deal to essary t of the Employee Trust Trust Employee t ofthe diction; and (ii) the awards made under awards made under n the Directors belief belief Directors n the st interests to have Group’s employees in in employees Group’s d deed poll ). This authority also also authority This ). 13 AGM authority, 13 authority, AGM y interests. lion shares), with with shares), lion trust, the bwin. , other investment investment , other and is available on on available is and y law, all purchased purchased all y law, to the Employee ugust 2014 2014 ugust resenting at the at the resenting ares and issue transferred StrategicStrategic GovernanceGovernance FinancialFinancial report performance 107 4.97 4.99 6.16 4.07 5.26 5.88 3.06 lso entered into reholders at % of total voting rights voting total of % y. They. interests on Stock Exchange Stock on d others entered y Rules, and Stinson Ridge 31 March 2011. Their capital to that other nuary 2011, when ent SpringOwl will be ation right and must reed to transfer transfer to reed matters, including omination right could nd Stinson Ridge uted a deed of rticles. cuted a deed of te SpringOwl has not le individual for for individual le rprise Licence (the (the Licence rprise th the Board nomination nomination Board the th espectively total (in orce settlement andorce ted the Group a l Licence applications Licence l into separate trusts into 4.97 4.95 3.05 5.86 4.05 6.14 5.24 % of total issued shares issued total of % Board nomination right SpringOwl Gibraltar Partners B Limited 47,927,325 33,147,090 50,193,690 40,645,349 40,475,779 24,950,854 42,850,000 Shares held as at 11 March 2014 11 March as at held Shares (1) (2) (3) New Media Gaming & Holding Limited Androsch Foundation Janus Capital Management LLC SpringOwl Gibraltar Partners B Limited Standard Life Investments Limited Investments Life Standard SRS Investment Management LLC Management SRS Investment Shareholder M. Cohen as trustee of the Emerald Trust table above. the in out set shares of number the to 3. holding their reduced New Media Gaming & Holding Limited is wholly-owned by Manfred Bodner and Norbert Teufelberger. of the Directors in the Company’s issued share capital are set out in the Directors’ Remuneration Report on page 101. shareholders Agreements with agreements Relationship (a) Emerald Bay Limited and Stinson Ridge Limited entered into a relationship agreement with the Company when it floated on the Lond in 2005, governing their combined rights to nominate a representative for appointment to the Board and governing the process for them selling their shares. This agreement was superceded by a new relationship agreement (the ‘Relationship Agreement’) which took effect on 29 Ja approved by the shareholders at an extraordinary general meeting. The trustees of the Emerald and Trust Stinson have Trust exec adherence to comply with the terms of the relationship agreement. Under the current relationship agreement Emerald Bay Limited Limited had the right whilst they both held in aggregate 5% or more of the Company’s issued share capital, to nominate a suitab appointment to the Board. Geoff Baldwin was their last nominee until he stepped down as a Director on 23 September 2013. This n be transferred to another party where Emerald Bay Limited and Stinson Ridge Limited transfer 6% or more of the Company’s share party. On 20 February 2014 the trustees of the Emerald Bay and Trust Stinson Ridge sold Trust 8,304,977 and 41,524,886 sharesequivalent r to 6.10% of the Company’s issued share capital) to SpringOwl Gibraltar Partners B Limited (‘SpringOwl’), togetherright. wi In conjunction with this purchase SpringOwl executed a deed of adherence in respect the Relationship of Agreement. da To nominated an individual for appointment to the Board. nominee If a is appointed then under the terms of the Relationship Agreem subject to the Company’s share dealing code whilst they maintain a representative on the Board. SpringOwl cannot sell the nomin right. nomination the maintain capital Company’s to the share order issued 5% of to in shares equivalent hold Androsch Foundation and New Media Gaming and Holding Limited, founder shareholders of bwin Interactive Entertainment AG, have a a relationship agreement with the Company on the same terms as detailed above. This relationship agreement came into effect on representative on the Board is currently Manfred Bodner. Agreement 2010 (b) Emerald Bay Limited, Stinson Ridge Limited, Androsch Foundation, New Media Gaming & Holding Limited, the Executive Directors an a regulatory process agreement with the Company at the time of the merger. The 2010 Agreement was approved by the Company’s sha an extraordinary general meeting on 29 January 2011. Subsequently, the trustees of the Emerald and Trust Stinson have Trust exe adherence to comply with the terms of the 2010 Agreement. The 2010 Agreement governs how its parties will deal with regulatory licensing procedures and requirements, which for shareholders not party to the 2010 Agreement are generally dealt with by the a (c) The Divestiture Agreement On 29 July 2013, bwin.party applied to the New Jersey Division of Gaming Enforcement (‘DGE’) for a Casino Service Industry Ente ‘Licence’). As part of the application process, certain substantial shareholders of bwin.party are (‘Emerald’), required Emerald Bay Limited shareholdings. their of otherwise or dispose to DGE submit wholly-owned Parasol individuato the Ruth by DeLeon, a Limited (‘Stinson’), wholly-owned by James Russell DeLeon (together, the ‘Substantial Shareholders’) elected, pursuant tofor reasons a div of privacy, to enter into a divestiture agreement with bwin.party and the DGE (the ‘Divestiture Agreement’), rather than submitLicence individual applications. Under the terms of the Divestiture Agreement executed on 30 October 2013, the Substantial Shareholders bwin.party of ag holding (58,498,667 shares their entire 58,498,666 Emerald and respect shares in of Stinson) respect shares in of (the Emerald in respect Trust of Emerald and the Stinson in respect Trust of Stinson) (together the ‘Trusts’) when the DGE gran transactional waiver in respect of the Licence application. The transactional waiver was granted on 8 November 2013. The number of shares held by each major shareholder in the table the in based above shareholder each major is by shares held last the of on notifications receivedThe number Compan the by Notes 1. The Emerald Trust owns all the share capital2. of the Emerald acquired agreements’. Having Relationship ‘(a) under below Bay out set Limited is holding this of which acquisition the about in Information turn owns the bwin.party shares listed above. Ruth Parasol is the beneficiary of the Emerald Trust. (vi) Significant shareholders and Transparenc Disclosure the with in accordance Company the notifications disclosed to shareholding of list a below is Set out the Company’s articlesand deed poll and Gibraltar Disclosure of Interests in Shares Act 1998: 108 Other Directors’ Report Disclosures Report Directors’ Other 108 bwin.party Annual report & accounts 2013 challenging economic outlook. current the despite successfully risks business its manage to placed well is Group the believe Directors the aconsequence, As industries. and areas geographic different across suppliers and customers ofcorporate anumber with contracts long-term and ofplayers number alarge with together resources financial considerable has Group The liquidity risk. and risk credit to exposures its and activities; hedging and instruments offinancial details objectives; management risk financial its capital; its managing for processes and policies objectives, Group’s the 152includes to 147 pages on statements financial the to 31 note Inaddition, section. aforementioned the out in set are borrowings and position liquidity cashflow, its Group, of the position financial The Report. Annual ofthe section report’ ‘Strategic inthe out set are position and performance development, future its affect to likely factors the with together activities, business Group’s The Going concern quickly. dispute the settle to seeks and delay without supplier the informs Group the then contested is invoice an that event Inthe terms. agreed such with compliance ensure and ofatransaction outset the at terms agree to policy Group’s the itis creditors, ofother In the case instruction. acustomer ofreceiving days seven within customers to made be will payments Normally balances. and withdrawals customer cover to reserves cash adequate maintains and requests cash-out ofcustomer payment prompt to committed is Group The policy payment creditor and Customer Notice. AGM inthe out set is dividend final the about information Further 2014. of25April date arecord with 2014, 27May on payable share per pence of1.80 dividend afinal recommending is The Board 2013. October 11 on paid was which share per pence of1.80 dividend interim an paid 2013 bwin.party December 31 ended year the During Dividend and maintaining the Licence. receiving bwin.party to subject are arrangements divestiture These code. dealing share bwin.party’s to subject not are Trusts the consequently and inforce remain arrangements divestiture the as long so for above) (described Agreement Relationship inthe granted right nomination Board this exercise to agreed not have Trusts the Agreement, Divestiture ofthe terms the Under period. divestiture month 24 initial timing of shares any held disposal in of during trust the bwin.party the and manner the to as Trustees the direct may Shareholders Substantial the that save Shareholders, Substantial ofthe independently will act Trustees the that provide Agreement Divestiture ofthe terms The period. a12 month over ofassociation articles inthe provisions disposal the with inaccordance shares bwin.party remaining ofany dispose and process divestiture ofthe control take will Company the period, month 24 ofthe end the by shares bwin.party the ofall disposed not have Trusts the event Inthe 2013. November 21 was which regulations, new the under Jersey inNew taken be to allowed were wagers online first the that date the on commencing period month 24 the over transactions, of aseries or transaction inone transferees, more or one to off-market, or on shares, bwin.party respective their divest to ‘Trustees’) (the Trusts oftheir trustees independent the direct to entitled are Shareholders Substantial the Agreement, Divestiture ofthe terms the Under 13 March 2014 March 13 Company Secretary Robert Hoskin Board the of order By (as amended). 1930 Act Companies Gibraltar the under obligations the of satisfying purposes the 2013 for December 31 ended year the for Report Directors’ the constitutes section governance corporate this Report, Annual ofthe sections of2013 Review and review CEO’s the with Together Report Directors’ www.bwinparty.com. website, Company’s the on available is Notice AGM The considered. be to resolutions the summarises also which document, inaseparate out set is Notice AGM The Gibraltar. Bay, AGM will Hotel,The 2014 Catalan at be held on TheCaleta May 22 2014 2014 AGM AGM. 2014 the at proposed being is bwin.party to auditors joint as Limited BDO and LLP ofBDO re-appointment the for resolution a Committee, Risk the Audit & by recommended As that information. of aware is auditor Company’s the that establish to and information in Director as a taken have to ought reasonably they that steps all taken has Director each and unaware; is auditor bwin.party’s ofwhich information audit relevant no is there aware, each are they as far so that, confirm Report, who heldThe Directors office at the date of of approval the 2013 Annual Audit Annual Report. the inpreparing basis concern going the adopt to they continue Accordingly, future. foreseeable the for existence in operational continue to resources adequate have Group the and Company the that expectation areasonable have Directors the enquiries, making After order to aware make of themselves any relevantaudit StrategicStrategic GovernanceGovernance FinancialFinancial report performance 109 In accordance with DTR4.1.12 of the FCA’s Disclosure and Transparency Rules, the Directors confirm to the best of their knowledge: a) financial statements Group’s the been have prepared accordance in with IFRS and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group; and b) the Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and theCompany, together with a description of the principal risks face. they that and uncertainties By order of the Board Hoskin Robert SecretaryCompany 13 March 2014 provides relevant, reliable, comparable and understandable understandable and comparable reliable, relevant, provides information; and users enable understand to to insufficient IFRS is in requirements the impact of particular transactions, other events and conditions performance. financial and position financial Group’s the on The Directors are responsible for preparing the Annual Report and consolidated financial statements the Gibraltar accordance with in Companies (Consolidated Accounts) Act 1999, the Gibraltar Companies (Accounts) Act 1999, the Gibraltar Companies Act 1930 (as amended), International Financial Reporting Standards as adopted by the European Union (‘IFRS’) and Article 4 of the IAS Regulation, and the FCA’s Disclosure and Transparency Rules and Listing Rules. The Directors are also responsible for preparing the Company’s financial statements in accordance withthe Gibraltar Companies (Accounts) Act 1999 and the Gibraltar Companies Act 1930 (as amended). The Directors prepare Company’s the to statements chosen financial also have in accordance with IFRS. records accounting proper keeping The Directors for are responsible which disclose with reasonable accuracy at any time the financial position of the Company, for safeguarding the assets, for taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of a Directors’ Report which complies with the Gibraltar Companies (Consolidated Accounts) Act 1999, the Gibraltar Companies (Accounts) Act 1999 and the Gibraltar Companies Act 1930 (as amended), and a Directors’ Remuneration Report which complies with the requirements of the UK’s Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008, Schedule8. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. In accordance with International Accounting Standard 1 the Directors prepare to financial statementsare required financial each year that for present fairly the financial position of the Group and the Company and the financial performance and cashflows of the Group and the Company for that period. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the Preparation and Presentation of Financial Statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS requirements. In preparing the financial statements the Directors are required to: (i) consistently; policies and them apply then select suitable accounting (ii) present information, including accounting policies, in a manner that (iii) provide additional disclosure when compliance with the specific of the Annual Report and financial statements financial and Report Annual the of Statement of Directors’ responsibilities in respect respect in responsibilities Directors’ of Statement 110 bwin.party Annual report & accounts 2013 We documented and tested the key controls in respect of the capitalisation of intangible assets, tested a sample of projects ofprojects asample tested assets, ofintangible capitalisation ofthe inrespect controls key the tested and We documented generated internally and acquisitions on recognised assets intangible those comprise primarily assets intangible to Additions OHWBMVFPGHPPEXJMM PUIFSJOUBOHJCMFBTTFUTBOEUIFJOWFTUNFO 8FGPDVTFEPOUIFBTTFTTNFOUPGUIFBEEJUJPOTUP BOEDBSSZJ t in provided had been t whether a service to testing establish through recorded weWhere journal entries performed revenue was industr EUand the by adopted IFRS with comply Group the by adopted policies recognition revenue the whether assessed We also revenue the whether assess to documentation relevant other and agreements share revenue to related contracts key We reviewed bets open and bonuses customer certain to related management by applied judgements and estimates assumptions, the We reviewed Gro ofthe accuracy and completeness the over controls application and general manual and IT key the tested and We documented 8FGPDVTFEPOUIFBSFBPGSFWFOVFSFDPHOJUJPO5IFNBJOSJTL t 79: to 75 pages on out set is statements financial the to inrelation issues significant be to considered they that matters Committee. &Risk Audit the with offocus areas these We discussed audit. our by identified focus ofaudit areas or risks of all is This below. noted are year current inthe audit Group our on effect greatest the had that misstatement ofmaterial risks The statements. financial inthe disclosures the evaluating and judgements own our forming bias, and override risk of management in evidence, available against judgements Directors’ the assessing by areas inthese work our focused We primarily statements). consolidate the 1to note (see uncertain inherently nature, their by are, that events future considering and assumptions making estimates accounting significant and judgements ofsubjective anumber made directors the statements, financial the In preparing ofOur of material risks assessment misstatement Europ the by adopted as IFRSs and law applicable is preparation intheir applied been has that framework reporting The financial n related the and ofcashflows statements Company and consolidated the inequity, ofchanges statements Company and consolidated position, offinancial statement Company and consolidated the income, ofcomprehensive statement consolidated the comprise which ended year the for plc entertainment digital ofbwin.party statements’) ‘financial (the statements financial the audited We have t t t In our opinion: Opinion on financial statements digitalplc entertainment ofto themembers bwin.party Report Independent Auditors’ intangible assets. The audit team utilised our internal valuations team as part of the audit team and together we challenged ma challenged we together and team audit ofthe part as team valuations internal our utilised team audit The assets. intangible of of impairment indications any were there whether We considered 38. inIAS out set criteria recognition the all met spend project the whether ZFBSBHBJOTUJOWPJDFTGSPNFYUFSOBMTVQQMJFSTBOEJOUFSOBMQBZS analysis. sensitivity JODMVEFEJTDPVOUSBUFT QFSQFUVJUZSBUFT PQFSBUJOHNBSHJOTBOE assum Key management. by reviewed been have that judgements and estimates assumptions, with models cashflow discounted compiling value is which not TheGroup that they support the impair carrying enhancements. holds material related amounts assets to these recognised. be should an impairment and assets ofthese value carrying inthe misstatement ofmaterial arisk was there whether determine to company parent the by recognition. this support year to Group. the by into entered contracts material for complete was statements financial recognised revenue whether establish to databases contract reviewed We also impacts. disclosure or accounting material had any with terms other any whether and policies accounting stated Group’s the with inline net or gross as treated correctly been had DIBMMFOHFEUIFTFCBTFEPOBWBJMBCMFJOGPSNBUJPOBOEQBTUFYQFSJ oftreatment bonuses. customer reve other revenue, gaming net over work interrogation IT including testing, substantive other and analytical undertook We also nomin the and systems gaming main the between reconciliation the testing and bets test conducting included This systems. gaming streams entered into. arrangeme ofcontractual treatment the and recognition ofrevenue timing the revenue, against for provided be to need that bets ofopen value fair ofthe estimation an acost, as treated or revenue from deducted either are that bonuses customer ofcertain and treatment the around judgements certain makes also Group The statements. financial the 2to innote given are Group the by earned streams v ofthe inrespect applied policies accounting ofthe Details revenue. other and revenue gaming ofnet income of comprehensive amended). (as 1930 Act Companies Gibraltar the and 1999 Act (Accounts) Companies Gibraltar 1999 Act Accounts) (consolidated Companies Gibraltar the with inaccordance prepared properly been have statements financial The and Union; European the by adopted as (‘IFRSs’) St Reporting Financial International with inaccordance prepared properly been have statements financial Company’s and Group The ended; then year the for Group’s profit 2013 December 31 at as affairs Company’s the and Group’s ofthe state ofthe view fair and atrue give statements financial The UIFTUBUFNFOU TBSFUIFDPNQMFUFOFTT FYJTUFODF BDDVSBDZBOEQSFTFOUBUJPOJO PMMDPTUTBOEBTTVNQUJPOT BOEFWBMVBUFEUIFBTTFTTNFOUCZNBOB HSPXUISBUFTBOEUIFOVNCFSPGZFBSTUIBUQSPKFDUJPOTXJMMCFFYUFOEFEGPSBOE FODFUPHFUIFSXJUIBOZFYUFSOBMJOEVTUSZJOGPSNBUJPOBWBJMBCMF Their report on those those on report Their not a complete list list acomplete not undertaken in the in the undertaken UTJOTVCTJEJBSJFTIFME d financial cluding the 31 December 2013 31 December computer software software computer and of the ofthe and ean Union. ean in the contract contract in the nagement’s nagement’s nue and the the and nue arious income that involved he financial whether whether nts for revenue revenue for nts HFNFOUBTUP y standards. ed through estimates up’s main main up’s in the Group’s Group’s in the recognised recognised the , the , the al ledger. otes. otes. andards and ptions ptions StrategicStrategic GovernanceGovernance FinancialFinancial report performance 111111 rying rying OHUIF e and areas otential ent, where MTPSFWJFXFE hes inhes d. We also also We d. on these on XFSFWJFXFE Group has ed the the ed ODFDPNQMJBODF an estimate of NBUJPOBOE DUJDFTHPWFSOJOH TFENBUUFSTXJUI BOEUIFSFGPSF ld influence the influence ld material casesmaterial mic benefits or the NFOUUIF level of 5% of FOUTNBEF XIFSF POBMNBOBHFNFOU IJDIUIF(SPVQ e would report to TOPUDPOTJEFSUIF f the nature of NBUUFSTJO OT8FBMTP formance critically reviewed so reviewed, where our audit and on the tements as a whole. n created at the iately low level the low iately assumptions assumptions rlier studies,rlier whether PMETUIBU JOPVSWJFX FSJBMUBYFYQPTVSFT TJEFPG$MFBO&#*5%" 8FDPSSPCPSBUFEUIJTCZ FPGUIFHBNJOHTFDUPSJONBOZDPVOUSJFTBDSPTTUIF PODMVTJPOTGSPNBOZFYUFSOBMBVEJUTSFMBUFEUPUIF(SPVQTMJDF TUBWBJMBCMFFWJEFODFUPTVQQPSUUIFTFJODMVEJOHFYUFSOBMJOGPS MBEWJDFUBLFOJOSFTQFDUPGUIFTFEFWFMPQNFOUT8FBMTPEJTDVT BMBEWJDFSFDFJWFEBOEDPODVSUIBUUIJTNBUUFSIBTCFFOTFUUMFE UIFUBYQSPWJTJPOTBOEDPOUJOHFOUMJBCJMJUJFT UFSSJUPSJFTUIBUNBZSFRVJSFBEEJUJPOBMEJTDMPTVSFTPSQSPWJTJP JOKVSJTEJDUJPOT8FEJTDVTTFEXJUIUIF(SPVQTUBYBUJPOEFQBSU DBTInPXQSPKFDUJPOTBHBJOTU#PBSEBQQSPWFECVEHFUTBOEBTTFTTJ UIFMJHIUPGUIFFYUFSOBMBEWJDFQSPWJEFEUPUIF(SPVQ8FBMTPSFWJFXFEBMM JOFTTQMBOOJOHBOEIPXUIFZSFHVMBSMZNPOJUPSUIFSVMFTBOEQSB MJDFODFTUPBTTFTTJOHUIFJNQBDUPGDPVOUSZTQFDJmDBOEQBOSFHJPOBMSVMFTBOE TFEPOBDRVJTJUJPOTVOEFS*'34 SFWJTFE 8IFSFUIF(SPVQEPF VOUSJFT5IF(SPVQTFFLTFYUFSOBMBOEJOUFSOBMBEWJDFPOUIFTF (JWFOUIFEFWFMPQJOHOBUVS TFUIFFYJTUFODFPGBDPOUJOHFOUMJBCJMJUZVOMFTTJUJTSFNPUF UIFJOUFSOBUJPOBMOBUVSFPGUIF(SPVQUIFSFXBTBSJTLUIBUNBU 8FBMTPBHSFFUPSFQPSUEJGGFSFODFTCFMPXUIFTFUISFTI studies. assessed We the past ability of management to forecast with material accuracy. performed We other sensitivity analysesNPEFMT QBSUJDVMBSMZXIFSFDIBOHFTJOLFZBTTVNQUJPOTDPVMEIBWFBOJNQBDUPOUIFIFBESPPNBHBJOTUBCSFBLFWFOQPTJUJPO8FB the disclosures in the financialstatements to conclude that these reasonably highlighted all key assumptions and judgements mad XIFSFUIFSFXBTMFTTIFBESPPNJOFYJTUFODF world, there is a risk that potential material legal or regulatory matters are not disclosed or provided for. regulatory and licence compliance that needed to be disclosed or required provisions to be made in the financial statements. The DPNQMJBODFPCMJHBUJPOTUIBUSBOHFGSPNBENJOJTUSBUJPOPGUIFJS that the release of the provision is appropriate. may not be reasonably disclosed or provided for in the financial statements. provisions calculated by them in respect of each jurisdiction in which the Group is registered or has a significant presence. We UIFMBUFTUFYUFSOBMMZQSFQBSFEBEWJDFSFDFJWFECZNBOBHFNFOUXJUISFHBSEUPFYQPTVSFUPUBYBUJPOJOUIFNBKPSUFSSJUPSJFTJOXPQFSBUFT BOEBOZDPSSFTQPOEFODFGSPNUBYBVUIPSJUJFTJOUIPTF regulations on its business. reviewed We how the Group monitors legal and regulatory developments and their assessment of the p value of investments in subsidiaries as described in note 12 of the Group’s annual report. This included reviewing all the key BHBJOTUňFYUFSOBMFWJEFODFXIFSFBWBJMBCMFBOECZSFWJFXJOHUIF SFBTPOBCMFOFTTPGDBTInPXQSPKFDUJPOTCFZPOEUIBUQFSJPEBHBJO JNQBDUPOUIFCVTJOFTTBOEUIFBQQSPQSJBUFJOUFSOBMBOEFYUFSOB requirements. met We with, and reviewed, the litigation report provided by the Group’s legal counsel and discussed each of the noted in the report to determine the Group’ s assessment of the likelihood and magnitude of any liability that may arise. al We SFRVJSFE BOZBWBJMBCMFFYUFSOBMMFHBMPSSFHVMBUPSZBEWJDFTPVHIUCZUIF(SPVQJOUIFJSBTTFTTNFOU8FDIBMMFOHFEUIFBTTFTTN OFFEFE BOESFWJFXFEUIFDBMDVMBUJPOPGBOZQSPWJTJPOTNBEFJO time of the merger with bwin. This has resulted in a release to the statement of comprehensive income of €83.8m. have We review DPSSFTQPOEFODFXJUIUIFUBYBVUIPSJUJFTBOEJOUFSOBMBOEFYUFSO SFWJFXFEIPXUIF(SPVQDPOTJEFSTUBYBTQBSUPGUIFPWFSBMMCVT UIFUBYBUJPOPGFDPNNFSDFBDUJWJUZUIBUJTFWPMWJOHJONBOZDP GPSNVMBUJOHUIFFTUJNBUFEBNPVOUPGUBYUPCFQSPWJEFEJODFSUB considered the latest transfer pricing studies carried out on behalf of the Group in the period, and assessed, in respect of ea there had been any change in the basis of operations in the relevant territories. challenged We the assessments made by managem OFFEFE BOESFWJFXFEUIFEJTDMPTVSFTQSFQBSFECZUIF(SPVQGPS assumptions used the in discounted cash flow models prepared to assess the impairment of goodwill, other intangibles and the car disclosures prepared by the Group for these provisions and contingent liabilities. The Group has released a fair value provisio UIF(SPVQTEFEJDBUFESFHVMBUPSZBOEDPNQMJBODFUFBNTUIBUSFQPSUEJSFDUMZUPUIF#PBSEBOEJTTVQQPSUFECZUIFMFHBMBOESFHJ UFBNT5IFZBMTPVOEFSUBLFJOIPVTFDPNQMJBODFBTTFTTNFOUTBOEIBWFFYUFSOBMBVEJUTBTSFRVJSFECZUIFJSHBNJOHMJDFODFTUIBU The Group makes certain provisions and disclosures required under IFRS for certain outstanding legal and regulatory disputes as what the Directors believe to be the fair value based on the Directors’ best estimate where there is a probable outflow of econo QSPCBCJMJUZXFJHIUFEFYQFDUFEGBJSWBMVFGPSQSPWJTJPOTSFDPHOJ MJLFMJIPPEPGBQSPWJTJPOCFJOHQSPCBCMF UIF(SPVQXJMMEJTDMP SFWJFXJOHBOZDPSSFTQPOEFODFGSPNSFHVMBUPSTBOESFWJFXFEUIFD financial statements. For planning, we consider materiality to be the magnitude by which misstatements, including omissions, cou reasonable of decisions economic users are taken that financial basis the appropr the statements. an on to reduce of to order In QSPCBCJMJUZUIBUBOZNJTTUBUFNFOUTFYDFFENBUFSJBMJUZ XFVTFBMPXFSNBUFSJBMJUZMFWFM QFSGPSNBODFNBUFSJBMJUZ UPEFUFSNJOFUIFFYUFOUPGUFTUJOHneeded. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account o identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial sta determinedWe materiality for the financial statements as a whole to be €5.4m. In determining this, we based our assessment on a $MFBO&#*5%"GPSUIFZFBSXIJMTUIBWJOHSFHBSEUPUIPTFJUFNTUIBUBSFDIBSHFEPSDSFEJUFEUPBSSJWFBUQSPmUGPSUIFZFBSPVU On the basis of our risk assessment, together with our assessment of the Group’s control environment, our judgement is that per materiality for the financial statements should be 75% of planning materiality. agreed We with the Audit & Risk Committee that w UIF$PNNJUUFFBMMBVEJUEJGGFSFODFTJOEJWJEVBMMZJOFYDFTTPGŇ grounds. qualitative on reporting warranted We applyWe the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on Our application of materiality t 8FGPDVTFEPOMFHBMBOESFHVMBUPSZDPNQMJBODFBOEQSPWJTJPOT discussedWe with the Group’s compliance and legal departments as to whether there were any known instances of material breac t 8FGPDVTFEPOUBY JODMVEJOHEFGFSSFEUBYHJWFOUIBUEVFUP discussedWe with the Group how they manage, control and operate Group companies in the countries in which they are registere 112 bwin.party Annual report & accounts 2013 We have nothing to report in respect of these matters. ofthese inrespect report to nothing We have t t review: to required are we Rules Listing the Under t SFRVJSFGPSPVSBVEJUPS XFIBWFOPUSFDFJWFEBMMUIFJOGPSNBUJPOBOEFYQMBOBUJPOTXF t t opinion: if, inour you to report to required are we requirements regulatory and legal Gibraltar Under disclosed. been have should consider we which Committee &Risk Audit the to communicated we that matters those discloses repor annual the whether and understandable and balanced fair, is report annual the consider they that statement the Directors’ during acquired knowledge our between inconsistencies any identified have we whether consider to required are we In particular, t t t is: report annual inthe information opinion, if, inour you to report to required are we Ireland), and (UK ISAs the Under onwhich byMatters exception we required are toreport t t In our opinion: requirements regulatory and by legal prescribed Opinion onothermatters awhole. as statements financial Group the on opinion ofour abasis as obtained been had evidence audit appropriate sufficient QFSGPSNJOHBVEJUTPSSFWJFXTUPUIF(SPVQXBTŇNBOEŇN reporting Group for materiality The team. audit Group the by set materiality ofcomponent level alower on based entities those busines inthe risks size, relative their on based payroll) or cash as (such balances certain on procedures audit selected with r perform to asked are criteria these meet not do that locations Other reporting. and instructions Group under team audit Group DPNQPOFOUT EFmOFEBTUIPTFXJUI$MFBO&#*5%"HSFBUFSUIBO dee are that components for auditors component that request we auditors)’ ofcomponent work the (including Statements Financial –Au Considerations ‘Special 600 ISA under requirements ofour part As location. subsidiary by down broken results consolidated Group the audit ofthe stage planning the At Gibraltar. from managed centrally is Group the for accounting ofthe majority The An overview of the scope of our group audit Report Independent Auditors’ Corporate Governance Code specified for our review. our for specified Code Governance Corporate provisions nine the with compliance Company’s the to 74 to relating 64 pages on statement governance corporate ofthe part the and concern; going to inrelation 108, page on out set statement, Directors’ the disclosed. not is transactions other and remuneration Directors’ regarding law by specified information records; accounting proper kept not has Company the misleading. is otherwise or our audit; course inthe acquired Company ofthe knowledge our with, inconsistent materially or on, based incorrect materially apparently or statements; financial audited inthe information the with inconsistent materially 2006. Act 421 Companies Section with inaccordance prepared properly been has audited been having as described Report Remuneration ofthe part The and with statements; the financial prepar are statements financial the which 2013 for December 31 ended year the for Report Directors’ inthe given information the SFTQFDUJWFMZ#BTFEPOUIFBCPWFTDPQFXFXFSFBCMFUPDPODMVEF PGUIF(SPVQ$MFBO&#*5%" QFSGPSNBVEJUTUPDPNQPOFOUNBUFSJBM s and our knowledge of of knowledge our s and auditors review the for components for components dit of Group dit ofGroup eviews or reviews t appropriately t appropriately XIFUIFS the audit and and audit the of performing of performing ed is consistent is consistent ed of the UK UK of the med significantmed JUZTFUCZUIF of the UK UK of the StrategicStrategic GovernanceGovernance FinancialFinancial report performance 113113 in accordance in s) Act 1999 and plications for ire us to en undertakenen s have been have s assurance that he reasonablenesshe for no other whether thewhether irectors’ Report is we read all the BUFNFOUTBOEUP ated in the United red by us in the Financial Conduct UJPOPGUIFmOBODJBM FDUPSTSFNVOFSBUJPO EFOUJGZNBUFSJBMJODPOTJTUFODJFTXJUIJOUIFBVEJUFEmOBODJBMTU CJMJUJFTPOQBHF UIF%JSFDUPSTBSFSFTQPOTJCMFGPSQSFQBSB SWJFX0VSSFTQPOTJCJMJUZJTUPBVEJUBOEFYQSFTTBOPQJOJPOPOUIFmOBODJBM EBOE8BMFT XJUISFHJTUFSFEOVNCFS0$

comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors. bwin.party digital entertainment plc has complied with the requirements of rules 9.8.6 and 9.8.8 of the Listing Rulesthe of UK Authority and in accordance with Section 421 of the UK Companies Act 2006 in preparing its Annual Report, as if it was incorpor Kingdom. As auditors, we have agreed that our responsibilities in relation to the annual report will be those as set out below. reportWe to you our opinion as to whether the financial statements give a true and fair view and whether the financial statement properly prepared in accordance with the Gibraltar Companies (consolidated Accounts) Act 1999, the Gibraltar Companies (Account the Gibraltar Companies Act 1930 (as amended), and the part of the Remuneration Report to be audited has been properly prepared with Section 421 of the UK Companies Act 2006. also We report to you whether in our opinion, the information disclosed in the D consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and FYQMBOBUJPOTXFSFRVJSFGPSPVSBVEJU PSJGJOGPSNBUJPOTQFDJmFECZUIF-JTUJOH3VMFTBOE(JCSBMUBSMFHJTMBUJPOSFHBSEJOH%JS and other transactions is not disclosed. statements and in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards requ Our report is made solely to the Company’s members, as a body, in accordance with our engagement letters. Our audit work has be The purpose of this report and restrictions on its use by persons other than the members of the Company, Company, the of members the than other persons its by on use report and restrictions this of purpose The as a body 7EU W1U London United Kingdom March13 2014 (Statutory McHard Desiree Auditor) For and on behalf of #%0-JNJUFE Registered Auditors Regal House 10#PY Gibraltar March13 2014 #%0--1JTBMJNJUFEMJBCJMJUZQBSUOFSTIJQSFHJTUFSFEJO&OHMBO TUBUFNFOUTBOEGPSCFJOHTBUJTmFEUIBUUIFZHJWFBUSVFBOEGBJ the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: accounting policies are appropriate to the Group’s circumstancesand have been consistently applied and adequately disclosed; t of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, mOBODJBMBOEOPOmOBODJBMJOGPSNBUJPOJOUIF"OOVBM3FQPSUUPJ identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acqui course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the im our report. so that we might state to the Company’s members those matters that we are required to state to them in an auditor’s report and QVSQPTF5PUIFGVMMFTUFYUFOUQFSNJUUFECZMBX XFEPOPUBDDFQUPSBTTVNFSFTQPOTJCJMJUZUPBOZPOFPUIFSUIBOUIF$PNQBOZBOEUIF$PNQBOZT members as a body, for our audit work, for this report, or for the opinions we have formed. #%0--1 Chartered Accountants #BLFS4USFFU #%0-JNJUFE B(JCSBMUBSMJNJUFEDPNQBOZ JTSFHJTUFSFEJO(JCSBMUBSXJUIDPNQBOZOVNCFS Anaudit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable Scope of the audit of the financial statements performed in accordance with ISAs (UK and Ireland) ISAs (UK with statements accordance performed in financial the of audit the of Scope Respective responsibilities of Directorsand auditors "TFYQMBJOFENPSFGVMMZJOUIF4UBUFNFOUPG%JSFDUPST3FTQPOTJ 114 bwin.party Annual report & accounts 2013 Consolidated statement ofincome comprehensive statement Consolidated Diluted #BTJD cents) (€ share per (loss) earnings Continuing Diluted #BTJD cents) (€ share per (loss) Earnings parent: the of holders equity ordinary the to attributable share per Earnings /PODPOUSPMMJOHJOUFSFTUT parent the of holders Equity to: attributable year the for (expense) income comprehensive Total /PODPOUSPMMJOHJOUFSFTUT parent the of holders Equity to: attributable year the for (loss) Profit year the for (expense) income comprehensive Total $IBOHFJOGBJSWBMVFPGBWBJMBCMFGPSTBMFJOWFTUNFOUT &YDIBOHFEJGGFSFODFTPOUSBOTMBUJPOPGGPSFJHOPQFSBUJPOT OFUPGUBY loss: or profit to reclassified be may or will that Items Other comprehensive income (expense): year the for (loss) Profit -PTTBGUFSUBYGSPN%JTDPOUJOVFEPQFSBUJPOT Profit (loss) from Continuing tax after operations 5BYFYQFOTF Profit (loss) before tax ventures joint and associates of profit of Share 'JOBODFFYQFOTF Finance income Profit (loss) from operating activities Reorganisation costs 4IBSFCBTFEQBZNFOUT provision value fair acquisition of Release .BSLFUFYJUDPTUT Impairment losses 3FUSPBDUJWFUBYFTBOEBTTPDJBUFEDIBSHFT Depreciation Amortisation costs acquisition and Merger &YDIBOHFMPTTFT $MFBO&#*5%" %JTUSJCVUJPOFYQFOTFT "ENJOJTUSBUJWFFYQFOTFT 0UIFSPQFSBUJOHFYQFOTF Other operating income Gross profit Cost of sales Total revenue Other revenue Net revenue Continuing operations Year ended 31 December 12, 13,15 Notes 11 11 11 11 36 36 10 15 4 3 2 9 8 8 6 3 6 5 €million (222.6) (363.5) 652.4 108.0 562.9 609.4 (24.4) (68.9) (89.5) (16.6) (10.4) 84.1 51.9 83.8 39.4 41.1 42.2 43.9 39.4 41.1 41.1 44.9 43.0 2013 (8.0) (3.0) (9.5) (9.0) (3.8) (2.5) (0.6) (2.8) (2.8) (9.4) 1.1 5.3 5.4 5.3 5.4 2.3 1.3 – – €million (120.2) (280.2) (416.0) 801.6 164.9 681.4 768.9 (21.3) (95.5) (20.1) (16.5) (31.5) (63.4) (64.7) (39.8) (62.4) (63.7) (63.4) (64.7) (24.9) (23.5) 2012 2012 32.7 (5.3) (5.6) (5.6) (8.7) (1.4) (0.1) (1.0) (1.0) (2.0) (2.9) (2.9) (7.8) (7.8) 0.0 3.9 1.5 0.2 1.3 – – StrategicStrategic GovernanceGovernance FinancialFinancial report performance 115115 As at at As (371.0) (150.6) €million (Restated) 31 December31 2011 – (29.4) –– 51.3 0.6 0.01.3 – – 0.1 0.2 0.6 1,018.4 6.8 – (6.9) (33.2) (9.9) (7.1) (2.8) (3.8) (5.2) (5.2) 24.1 24.1 42.6 32.8 25.8 23.1 31.5 39.7 As at at As (73.7) (112.7) (13.4)(29.5)(44.1) (13.8) – (59.1) (16.0) (10.8) (78.9) (77.7) (37.6) (28.7) 658.6 783.2 661.4658.6 787.0 783.2 679.6 738.6 139.4 129.7 169.7 289.0 340.6 510.3 754.8 794.5 (270.9) (136.7) (156.2) (165.9) (436.8) (521.6) (573.7) (573.7) 1,095.4 1,304.8 1,224.1 330.3 €million (Restated) 31 December 201231 – – – – – 0.0 2.6 0.1 2.2 (5.2) (4.8) (8.2) 24.1 36.8 16.1 10.9 12.7 As at at As (60.6) (23.0) (13.6) (23.1) (36.9) (73.6) (43.2) 677.6 682.4 677.6 626.1 126.9 173.3 312.9 689.9 (251.6) (124.8) (325.2) (573.7) 1,002.8 1,240.5 €million 31 December 2013 2013 December 31 19 20 21 22 19 21 22 23 26 35 26 36 12 13 15 16 16 17 18 Notes *ODPNFBOEHBNJOHUBYFTQBZBCMF Total assets Current liabilities Trade and other payables Inventories Trade and other receivables 4IPSUUFSNJOWFTUNFOUT Cash and cash equivalents Current assets Current Assets sale for held 1SPQFSUZ QMBOUBOEFRVJQNFOU Investments receivables Other Non-current assets Intangible assets Loans and borrowings and Loans sale for held Liabilities Client liabilities and progressive prize pools 1SPWJTJPOT /PODPOUSPMMJOHJOUFSFTUT equity Total Other reserve Other parent the of holders equity to attributable Equity Capital contribution reserve contribution Capital Capital redemption reserve Equity Share capital account premium Share shares Own 1SPWJTJPOT borrowings and Loans %FGFSSFEUBY Non-current liabilities Trade and other payables Currency reserve Currency "WBJMBCMFGPSTBMFSFTFSWF Retained earnings Total liabilitiesTotal Total net assets Consolidated statement of financial position financial of statement Consolidated 116 bwin.party Annual report & accounts 2013 Consolidated statement of changes in equity /PODPOUSPMMJOHJOUFSFTUTSFMBUFUPUIFJOUFSFTUTPGPUIFS4IBS euros. into operations ofoverseas assets net the retranslating on arising gains/losses the represents reserve Currency policies. accounting Group’s inthe out of pooling the to similar is which ofaccounting application the from arising amount the is million of€573.7 reserve other The above. table inthe reserves separate 3FUBJOFEFBSOJOHTSFQSFTFOUDVNVMBUJWFQSPmU MPTT TIBSFCBT "WBJMBCMFGPSTBMFSFTFSWFJTUIFDIBOHFJOGBJSWBMVFBSJTJOH shares. ofissued redemption on capital share from transferred amount the is reserve redemption Capital held by the Employee Trust. cash and $BQJUBMDPOUSJCVUJPOSFTFSWFJTUIFBNPVOUBSJTJOHGSPNTIBSFC 35). note (see account premium 4IBSFQSFNJVNJTUIFBNPVOUTVCTDSJCFEGPSTIBSFDBQJUBMJOFYD Share capital Share 31 December 2013 Year ended interests /PODPOUSPMMJOH parent equity holders of Total attributable to Currency reserve Other reserve earnings Retained reserve "WBJMBCMFGPSTBMF reserve redemption Capital reserve Capital contribution Own shares account Share premium Total equity Total Total equity Total interests /PODPOUSPMMJOH parent equity holders of Total attributable to Currency reserve Other reserve earnings Retained reserve "WBJMBCMFGPSTBMF reserve redemption Capital reserve Capital contribution Own shares account Share premium capital Share 31 2012 December Year ended 1 January 2013 2013 1 January 1 January 2012 2012 1 January (As previously (As (As previously (As €million 1,234.4 (10.3) 1,224.1 – (6.3) (33.6) (4.2) – 43.9 43.9 16.6 1,240.5 – (4.2) (33.6) (6.3) – 1,224.1 (10.3) 1,234.4 €million (1,018.9) – – 1.1 – 1,018.4 – 1,018.4 stated) stated) (573.7) – (573.7) – – – – – – – (573.7) – (573.7) stated) stated) 537 537 – – – – – (573.7) – (573.7) 671.7 (10.3) 661.4 – 1.6 (33.6) (5.8) – 42.2 16.6 682.4 682.4 16.6 42.2 39.4 16.6 677.6 – – (5.8) (5.8) (33.6) 1.6 1.6 0.8 (33.6) – 658.6 (10.3) 661.4 668.9 (10.3) 671.7 793.5 (10.3) 783.2 2.0 5.9 (33.0) (56.4) – (63.4) 20.3 20.3 658.6 20.3 661.4 (63.4) (62.4) – 20.3 – 1,224.1 (63.7) 1,018.9 (56.4) (56.4) (48.7) 5.9 5.9 2.0 783.2 (33.0) (33.0) (33.0) (10.3) – 787.0 – 793.5 (10.3) 797.3 – 330.3 (10.3) 340.6 As at 41–2. – – – – – 24.1 – 24.1 As at 41–2. – – – – – 24.1 – 24.1 (2.8) – (2.8) 0.8 – – – – (2.8) – – (4.8) – (8.2) (2.8) (3.0) – – – – 0.8 – – – – (2.8) – – – (5.2) (2.8) – 6.3 – (1.6) – (5.2) (9.9) – (9.9) 38 38 . – – – – – – – 2.0 – (3.8) – – – (7.6) (5.2) (3.8) – 4.8 – – (5.2) (7.1) – (7.1) . . – – – – – – – 0.0 – – 1.3 0.0 – – – – 1.6 – – – – – 1.3 – 0.6 0.0 0.1 – – – 0.6 0.1 . . 01 – (0.1) – – – 0.2 – 0.2 –––––1.3 – ––––– –– ––––0.0–– –1.3 –0.0 – – adjustment adjustment adjustment prior year prior year Effect of Effect of of Effect €million €million (As restated) restated) (As (As restated) 1 January 1 January 1 January 1 January €million €million As at As at 2012 2012 2013 investment investment Disposal of additional additional minority minority POmOBODJBMBTTFUTDMBTTJmFEBTBWBJMBCMFGPSTBMF Share of of Share €million €million interest FIPMEFSTJODFSUBJOTVCTJEJBSJFT TFFOPUF BTFEQBZNFOUTNBEFCZQBSUJFTBTTPDJBUFEXJUIUIFPSJHJOBM1SJO FEQBZNFOUTBOEBOZPUIFSJUFNTPGPUIFSDPNQSFIFOTJWFJODPNFO FTTPGOPNJOBMWBMVF%VSJOHUIF$PNQBOZDBODFMMFEŇ N Other issue Other issue issue Other of shares of shares of shares of shares €million €million Dividends Dividends €million €million paid paid Purchase Purchase 1VSDIBTF of shares of shares of shares of shares €million €million

Cancellation Cancellation Cancellation Cancellation premium premium €million of share €million of share of share comprehensive comprehensive comprehensive for the year year the for for the year year the for FYQFOTF €million €million income income Total Total Total Total 10 (2.8) – (1.0) 1.3 – – 2.6 1.3 . (5.2) – 0.0 – – 0.6 0.6 – – – – 0.1 0.1 – – – – – – 24.1 – – – 0.0 – – 2.2 – – – 0.1 – – 24.1 24.1 – – (573.7) – – – – – – (573.7) – – – – (5.2) –(9.9) – – interests method, as set set as method, interests

share-based share-based TIBSFCBTFE payments payments DJQBM4IBSFIPMEFST €million €million PGJUTTIBSF PUEJTDMPTFEBT Other Other Other Other 31 December 31 December 31 December (As restated) €million €million €million As at As at 2012 2012 2013 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 117117 – – – – 0.4 2.0 1.8 2.3 1.5 1.0 8.9 0.6 7.9 0.6 8.2 8.3 (0.2) (4.1) (0.2) (1.5) (8.2) (8.3) (3.0) 21.3 95.5 20.3 17.3 16.1 36.4 2012 (19.5) (13.7) (64.7) (51.5) (32.6) (55.4) (10.1) (10.5) (29.2) (44.9) (33.0) (82.7) 289.0 169.7 100.5 (119.7) €million – – – – – – 4.3 5.7 1.5 1.1 1.6 1.4 1.0 2.3 6.1 0.8 3.8 (0.7) (1.8) (5.8) (7.6) (1.8) (2.3) (1.1) 2013 2013 11.7 62.0 49.8 17.9 18.1 41.1 24.4 68.9 10.4 16.6 (27.6) (95.5) (12.2) (23.5) (22.3) (21.4) (33.6) (29.1) 169.7 173.3 173.4 ated markets. €million s in working capital and provisions Year ended 31 December31 ended Year 1SPmU MPTT GPSUIFZFBS Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year Net cash used in financing activities financing cash in used Net Net increase (decrease) in cash and cash equivalents Dividends paidDividends borrowings bank of Repayment New bank borrowings Interest paid Net cash used by investing activities activities Financing Issue of ordinary shares 1VSDIBTFPGPXOTIBSFT Interest received Interest %FDSFBTFJOTIPSUUFSNJOWFTUNFOUT Sale of property, plant and equipment 1VSDIBTFPGJOWFTUNFOUT Repayment of loan by joint venture associate receivedDividend from Acquisition of subsidiaries and businesses – deferred payment 1VSDIBTFTPGJOUBOHJCMFBTTFUT 1VSDIBTFTPGQSPQFSUZ QMBOUBOEFRVJQNFOU *ODPNFUBYFTQBJE cashNet operating activities from inflow activities Investing Acquisition subsidiaries of and businesses Decrease (increase) in trade and other receivables Decrease in trade and other payables Decrease provisions in operations Cash from generated sale assets for sale of held on Loss *ODPNFUBYFYQFOTF movement cashflows before Operating Decrease inventory in Interest income Interest *ODSFBTFJOSFTFSWFTEVFUPTIBSFCBTFEQBZNFOUT Loss (profit) on sale of property, plant and equipment Impairment acquired of intangible assets *NQBJSNFOUPGBWBJMBCMFGPSTBMFJOWFTUNFOUT Share of profit of associates and joint ventures *OUFSFTUFYQFOTF Amortisation intangibles of combinations business prior consideration of to Adjustment Impairment of property, plant and equipment Adjustments for: Adjustments Depreciation of property, plant and equipment &YDIBOHFEJGGFSFODFT Sale of assets saleSale of for held Consolidated statement cashflows of Segregated cashSegregated cash certain cash segregated within to in accounts and cash related Included in held (2012: regul equivalents €30.3m €27.1m) is 118 bwin.party Annual report & accounts 2013 certain financial instruments. val the for than other convention cost historical the under prepared been have statements financial Company and consolidated The accounting of Basis in future periods. in, recognition of, and presentation the on have will standards these ifany, that impact, the assessing currently is Group The endorsed. be to yet are standards the to amendments further endorsed, been have standards Original ** EU. the by endorsed yet * Not 12 IFRS 11 IFRS IFRS 10 9 IFRS 3FDPWFSBCMFBNPVOUEJTDMPTVSFTGPSOPOmOBODJBMBTTFUT FGGFDUJWFGPSBOOVBMQFSJPETCFHJOOJOHPOPSBGUFS+BOVBSZ (Amended) 36 IAS 32IAS (Amended) 2014)** 1January after or on beginning periods annual for 28(Amended) (effective IAS Statements Financial Separate 27 (Amended) IAS 2013 end: year 5IFGPMMPXJOHSFMFWBOUTUBOEBSETBOEJOUFSQSFUBUJPOTXFSFJTTVF 13IFRS after or on beginning periods annual for (effective liabilities financial and assets offinancial –Offsetting Disclosures 7(Amended) IFRS &NQMPZFF#FOFmUT FGGFDUJWFGPSBOOVBMQFSJPETCFHJOOJOHPOPS 1SFTFOUBUJPOPG*UFNTPG0UIFS$PNQSFIFOTJWF*ODPNF FGGFDUJWF 19 (Amended) IAS 1(Amended) IAS fina or results consolidated its on effect no with Group the by adopted been have and year financial current inthe time the first 5IFGPMMPXJOHOFXBOESFWJTFE4UBOEBSETBOE*OUFSQSFUBUJPOTJTT interpretations and standards revised and new of Adoption included. also is 2011 December 31 at as position of financial 4JODFUIF(SPVQIBTNBEFBQSJPSZFBSSFTUBUFNFOU VOEFSUIFSF 1999. Act (Accounts) ofthe 10 section under areport with together inGibraltar ofCompanies Registrar the to delivered been have 2012 f 31 December accounts Statutory Act. Companies Gibraltar ofthe (a) 182(1) section or 1999 Act (Accounts) Companies Gibraltar the 10(2) of un statements contain not did and unqualified was report their and accounts those on reported have auditors The General Meeting. Annu Company’s the following Gibraltar House Companies with filed be 2013 will December 31 ended year the for accounts Statutory €0.1m. nearest rounded to the ineu presented are statements financial The amended). (as 1930 Act Companies Gibraltar the and 1999 Act Accounts) (consolidated Compani Gibraltar the 1999, Act (Accounts) Companies Gibraltar the with comply statements financial Company and consolidated The fina year full Group’s ofthe purposes the EUfor inthe use for endorsed and Commission European the by adopted been have which *OUFSOBUJPOBM"DDPVOUJOH4UBOEBSET *"4T BOEJOUFSQSFUBUJPOT Standard Reporting Financial International those with inaccordance prepared been have statements financial parent and Group The of preparation Basis policies Accounting 1. Notes to the consolidated financial statements

Investments in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2014) 1January after or on beginning periods annual for (effective Ventures Joint and inAssociates Investments Offsetting of financial assets and financial liabilities (effective for annual periods beginning on or after 1 January 2014) 1January after or on beginning periods annual for (effective liabilities financial and assets offinancial Offsetting Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014)** 1January after or on beginning periods annual for (effective Entities inOther ofInterests Disclosure 2014) 1January after or on beginning periods annual for (effective Arrangements Joint consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014)** 1January after or on beginning periods annual for (effective Statements Financial consolidated uncertain)* date (effective Instruments Financial 2013) 1January after or on beginning periods annual for (effective Measurement Fair Value 1 January 2013) DPMMFDUJWFMZA*'34 QVCMJTIFECZUIF*OUFSOBUJPOBM"DDPVOUJOH TUBUFNFOU RVJSFNFOUTPG*"4o1SFTFOUBUJPOPG'JOBODJBM4UBUFNFOUTUIF ECZUIF*"4#PSUIF*'3*$CFGPSFUIFQFSJPEFOECVUBSFBTZFUOPUFGGFDUJWFGPSUIF VFECZUIF*OUFSOBUJPOBM"DDPVOUJOH4UBOEBSET#PBSE A*"4# BS BGUFS+BOVBSZ GPSBOOVBMQFSJPETCFHJOOJOHPOPSBGUFS+VMZ its consolidated results results consolidated its or the year ended or ended the year 4UBOEBSET#PBSE A*"4# ncial position: ncial Gibraltar Companies FFGGFDUJWFGPS ros and ros and ncial statements. der section der section uation of of uation al s including s including es StrategicStrategic GovernanceGovernance FinancialFinancial report performance 119119 PSTJODMVEJOH on of policies QSFTFOUJUTPXO income from income to govern the the govern to ssumptions which ssumptions erests. OJGUIJTSFTVMUTJO BNJOH)PMEJOHT regate of the fair e to the financial FJO/PODPOUSPMMJOH JBMZFBS5IFTFQPMJDJFT ngs Limited) JOFYDIBOHFGPSDPOUSPM of measurement basis is DPOUSPMMJOHJOUFSFTUJT note 25 note note 29note note 1 note OPUF OPUF OPUF note 12 note 28 SWBMVFPSBUUIFOPODPOUSPMMJOHTIBSFIPMEFST FWBMVBUFEBOEBSFCBTFEPOIJTUPSJDBMFYQFSJFODFBOEPUIFSGBDU FMJNJOBUFEPODPOTPMJEBUJPO SFIFOTJWFJODPNFJTBUUSJCVUFEUPOPODPOUSPMMJOHJOUFSFTUTFWF OEBWBJMBCMFGPSTBMFJOWFTUNFOUT FVOEFSUIFDJSDVNTUBODFT"DUVBMSFTVMUTNBZEJGGFSGSPNUIFTFFTUJNBUFT TJEJBSJFTBSFJEFOUJmFETFQBSBUFMZGSPNUIF(SPVQTFRVJUZUIFS FJODPNFTUBUFNFOUBTJODVSSFE5IFBDRVJSFFTJEFOUJmBCMFBTTFUTBOEMJBCJMJUJFTBSF PXOFETVCTJEJBSZ CXJOQBSUZIPMEJOHT-JNJUFE GPSNFSMZ1BSUZ( PGUIFPSJHJOBMCVTJOFTTDPNCJOBUJPOBOEUIFOPODPOUSPMMJOH4IBSFIPMEFSTTIBSFPG WBMVFTPGUIFBTTFUTBOEMJBCJMJUJFTSFDPHOJTFE ODVSSFEPSBTTVNFE BOEFRVJUZJOTUSVNFOUTJTTVFECZUIF(SPVQ e carried at cost less any impairment in value. in impairment any less cost at carried e IPMEFSTJOUIFBDRVJSFFNBZJOJUJBMMZCFNFBTVSFEFJUIFSBUGBJ Included in this note are accounting policies which cover areas that the Directors consider require estimates, judgements and a 1. Accounting policies (continued) judgements and estimates policies, accounting Critical The preparation of financial statements under IFRS requires the Group to make estimates and judgements that affect the applicati BOEňSFQPSUFEBNPVOUT&TUJNBUFTBOEKVEHFNFOUTBSFDPOUJOVBMMZ FYQFDUBUJPOTPGGVUVSFFWFOUTUIBUBSFCFMJFWFEUPCFSFBTPOBCM IBWFBTJHOJmDBOUSJTLPGDBVTJOHBNBUFSJBMBEKVTUNFOUUPUIFDBSSZJOHBNPVOUPGBTTFUTBOEMJBCJMJUJFTXJUIJOUIFOFYUmOBOD together with references to the related notes tothe financial statements, can be found as follows: Revenue recognition Intangible assets and impairment of goodwill Regulatory liabilities and compliance, litigation contingent Acquisition accounting and value of acquired assets and liabilities and contingent consideration payable 1SPWJTJPOT 5BYJODMVEJOHEFGFSSFEUBY considerationDisposal receivable and contingent accounting 4IBSFCBTFEQBZNFOUT Basis consolidation of 6OEFSTFDUJPO PGUIF(JCSBMUBS$PNQBOJFT DPOTPMJEBUFE"DDPVOUT "DU UIF$PNQBOZJTFYFNQUGSPNUIFSFRVJSFNFOUUP statement of comprehensive income. "MMJOUSB(SPVQUSBOTBDUJPOT CBMBODFT JODPNFBOEFYQFOTFTBSF 5IF$PNQBOZTDPOUSPMMJOHJOUFSFTUJOJUTEJSFDUMZIFME XIPMMZ Limited), was acquired through a transaction under common control, using a form of accounting that is similar to pooling of int subsidiaries for Accounting A subsidiary is an entity controlled directly or indirectly by the Company. Control is achieved where the Company has the power financial and operating policies of an entity so as to obtain benefits from its activities. 0OUIFEBUFPGBDRVJTJUJPOUIFBTTFUTBOEMJBCJMJUJFTPGUIFSFMFWBOUTVCTJEJBSJFTBSFNFBTVSFEBUUIFJSGBJSWBMVFT5IFOPO TUBUFEBUUIFOPODPOUSPMMJOHJOUFSFTUTQSPQPSUJPOPGUIFGBJS The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive the effective date of acquisition or up to the effective date of disposal, as appropriate. Wherenecessary, adjustments are mad statements of subsidiaries to bring their accounting policies into line with those used by the Group. /PODPOUSPMMJOHJOUFSFTUTJOUIFOFUBTTFUTPGDPOTPMJEBUFETVC JOUFSFTUTDPOTJTUPGUIFBNPVOUPGUIPTFJOUFSFTUTBUUIFEBUF DIBOHFTJOFRVJUZTJODFUIFEBUFPGUIFDPNCJOBUJPO5PUBMDPNQ UIFňOPODPOUSPMMJOHJOUFSFTUTIBWJOHBEFmDJUCBMBODF ar Company the by held subsidiaries in Investments combinations Business Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of the acquisition is measured at the agg WBMVFT BUUIFEBUFPGFYDIBOHF PGBTTFUTHJWFO MJBCJMJUJFTJ PGUIFBDRVJSFF"DRVJTJUJPOSFMBUFEDPTUTBSFSFDPHOJTFEJOUI recognised at their fair values at the acquisition date. 5IFJOUFSFTUPGUIFOPODPOUSPMMJOHTIBSF proportion of the net fair value of the identifiable assets acquired, liabilities and contingent liabilities assumed. The choice NBEFPOBOBDRVJTJUJPOCZBDRVJTJUJPOCBTJT Investments *OWFTUNFOUTJODMVEFJOWFTUNFOUTJOBTTPDJBUFT KPJOUWFOUVSFTB Accounting for the Company’s acquisition of the controlling interest in bwin.party holdings Limited (formerly PartyGaming Holdi (formerly Limited bwin.party holdings in interest controlling the of acquisition Company’s the for Accounting 120 Notes to the consolidated financial statements financial consolidated tothe Notes 120 bwin.party Annual report & accounts 2013 life of the assets. assets. life ofthe amortised are intangibles identified The date. acquisition the at value fair their at recognised are assets Identifiable rights. c other to rise give or entity acquired the from separate are ifthey combinations business on recognised are assets Intangible acquiredExternally intangible assets annually. atleast impairment Business Combinations transiti the with Inaccordance years. lifeof20 useful estimated its over amortised being was acquisitions earlier on arising reversed subsequently not is and income ofcomprehensive statement consolidated inthe immediately recognised is impairment Any impairmen for reviewed is and amortised not is goodwill 2004, March 31 after or on is date agreement the where acquisitions For date. acquisition the at assumed liabilities and entity controlled jointly or associate subsidiary, in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree, if any, over the net amounts of ide (PPEXJMMJTNFBTVSFEBTUIFFYDFTTPGUIFTVNPGUIFGBJSWBMVF Goodwill measured. reliably be can asset ofthe cost the and Group the to flow will att benefits economic future that probable itis asset, the controls Group the when recognised are assets intangible Identifiable assets Intangible obligations on behalfof or made payments constructive the joint venture. JOWFTUNFOUBSFOPUSFDPHOJTFE"EEJUJPOBMMPTTFTBSFQSPWJEFEGPS BOEBMJBCJMJUZJTSFDPHOJTFE POMZUPUIFFYUFOUUIBUUIF(SPVQIBTJODVSSFEMFHBMPS OFUBTTFUTPGUIFKPJOUWFOUVSF MFTTBOZJNQBJSNFOUJOUIFWBM inthe changes acquisition post for adjusted as cost at position offinancial statement consolidated inthe carried are ventures method, equity the Under of accounting. method equity the using entities controlled injointly interests its reports Group The sharing control. of consent unanimous the require activities the to relating decisions policy operating and financial strategic the when is, that subject is that activity economic an undertake parties other and Group the whereby arrangement acontractual is venture A joint in joint ventures Investments FYUFOUUIBUUIF(SPVQIBTJODVSSFEMFHBMPSDPOTUSVDUJWFPCMJHB JOFYDFTTPGUIF(SPVQTJOUFSFTUJOUIBUBTTPDJBUFBSFOPUSFD investment ofthe value inthe impairment any less associate, ofthe assets net ofthe share Group’s inthe changes acquisition 6OEFSUIFFRVJUZNFUIPE JOWFTUNFOUTJOBTTPDJBUFTBSFDBSSJFE equity the using statements financial consolidated inthe incorporated are ofassociates liabilities and assets and results The policies. over those contr not is but investee ofthe decisions policy operating and financial inthe participate to power the is Significant influence inajo interest an nor asubsidiary neither is that and influence significant has Group the which over entity an is associate An in associates Investments income. ofcomprehensive statement consolidated inthe recognised and equity from removed is asset TFUUMFNFOUEBUFCFJOHSFDPHOJTFEJOUIFBWBJMBCMFGPSTBMFSFTF 1VSDIBTFTBOETBMFTPGBWBJMBCMFGPSTBMFmOBODJBMBTTFUTBSFS comprehensive income. BTJHOJmDBOUPSQSPMPOHFEEFDMJOFJOUIFGBJSWBMVFPGBOB inequ directly recognised value infair changes with value fair at carried are They entities. controlled jointly or associates DPNQSJTFUIF(SPVQTTUSBUFHJDJOWFTUNFOUTJOFOUJUJFTOPURVBM /POEFSJWBUJWFmOBODJBMBTTFUTDMBTTJmFEBTBWBJMBCMFGPSTBMF investments Available-for-sale (continued) policies Accounting 1. , the unamortised balance of goodwill at 31 December 2004 was frozen and reviewed for impairment and will be reviewed for for reviewed be will and impairment for reviewed and frozen was 2004 December 31 at ofgoodwill balance unamortised , the WBJMBCMFGPSTBMFmOBODJBMBTTFUJTSFDPHOJTFEJOUIFDPOTPMJEB PHOJTFE"EEJUJPOBMMPTTFTBSFQSPWJEFEGPS BOEBMJBCJMJUZJTSFDPHOJTFE POMZUPUIF VFPGUIFJOWFTUNFOU-PTTFTPGBKPJOUWFOUVSFJOFYDFTTPGUIF(SPVQTJOUFSFTUJOUIBU FDPHOJTFEPOTFUUMFNFOUEBUFXJUIBOZDIBOHFJOGBJSWBMVFCFUX PGUIFDPOTJEFSBUJPOUSBOTGFSSFE UIFBNPVOUPGBOZOPODPOUSPMMJOHJOUFSFTUTJOUIF SWF0OTBMF UIFBNPVOUIFMEJOUIFBWBJMBCMFGPSTBMFSFTFSWF UJPOTPSNBEFQBZNFOUTPOCFIBMGPGUIFBTTPDJBUF JOUIFDPOTPMJEBUFETUBUFNFOUPGmOBODJBMQPTJUJPOBUDPTUBTB ity. In accordance with IAS IAS with Inaccordance ity. UFETUBUFNFOUPG ntifiable assets acquired acquired assets ntifiable IFRS 3 3 ofIFRS provisions onal over the useful economic over useful economic the BTTPDJBUFEXJUIUIBU int venture. int venture. JGZJOHBTTVCTJEJBSJFT ol or joint control control joint or ol the parties parties the method of accounting. ofaccounting. method ontractual or legal orontractual legal investments in joint injoint investments . Losses of an associate associate ofan . Losses Group’s share of the ofthe share Group’s FFOUSBEFEBUFBOE EKVTUFEGPSQPTU ributed to the asset t at least annually. annually. least t at to joint control; control; joint to . Goodwill StrategicStrategic GovernanceGovernance FinancialFinancial report performance 121121 DBTIHFOFSBUJOH FSNJOFEIBE the Group has OEJUVSFXJMMMFBE JBUFQSPQPSUJPO mpairment loss.mpairment TUIFSFMFWBOUBTTFU CFEFSJWFEGSPN WJTFEFTUJNBUFPG er there is an there is er POFZBOEUIFSJTLT mounts of its other eated as a revaluation BNPVOUPGUIFBTTFU DPHOJTFEBTJODPNF ture cashflows are ture UTDVSSFOUMFWFMPG (SPVQFYQFDUTUPCFOFmU UPGUIFJNQBJSNFOUMPTT JGBOZ 8IFSF QJUBMJTFEJODMVEFTUIFDPTUPGNBUFSJBMT MBCPVSBOEBOBQQSPQS PVOUPGUIFBTTFU DBTIHFOFSBUJOHVOJU JTJODSFBTFEUPUIFSF PUIFSBTTFUT UIF(SPVQFTUJNBUFTUIFSFDPWFSBCMFBNPVOUPGUIF OUEPFTOPUFYDFFEUIFDBSSZJOHBNPVOUUIBUXPVMEIBWFCFFOEFU OHVOJU JOQSJPSZFBST"SFWFSTBMPGBOJNQBJSNFOUMPTTJTSF SPVQTTPGUXBSFEFWFMPQNFOU JTDBQJUBMJTFEPOMZXIFSFUIFFYQF JNQBJSNFOUMPTTJTSFDPHOJTFEBTBOFYQFOTFJNNFEJBUFMZ VOMFT UBMJTFEBOEBNPSUJTFEPWFSUIFMJGFPGUIFMJDFODF JTFTUJNBUFEUPCFMFTTUIBOJUTDBSSZJOHBNPVOU UIFDBSSZJOH TFUJTFTUJNBUFEJOPSEFSUPEFUFSNJOFUIFFYUFO FBTTFUT XJUIUIFFYDFQUJPOPGHPPEXJMM PWFSUIFQFSJPETUIF UIBUJODVSSFEJOPSEFSUPNBJOUBJOUIFSFMBUFEJOUBOHJCMFBTTF to new or substantially improved products or processes, the productsor processes are technically and commercially feasible and TVGmDJFOUSFTPVSDFTUPDPNQMFUFEFWFMPQNFOU5IFFYQFOEJUVSFDB PGňPWFSIFBET"MMPUIFSEFWFMPQNFOUFYQFOEJUVSFJTFYQFOTFEBTJODVSSFE 4VCTFRVFOUFYQFOEJUVSFPODBQJUBMJTFEJOUBOHJCMFBTTFUTJTDBQJUBMJTFEPOMZXIFSFJUDMFBSMZJODSFBTFTUIFFDPOPNJDCFOFmUTUP UIFňBTTFUUPXIJDIJUSFMBUFT"MMPUIFSFYQFOEJUVSF JODMVEJOH QFSGPSNBODF JTFYQFOTFEBTJODVSSFE costs Licence &YQFOEJUVSFJODVSSFEJOPSEFSUPPCUBJOHBNJOHMJDFODFTJTDBQJ Amortisation intangible assets of "NPSUJTBUJPOJTQSPWJEFEUPXSJUFPGGUIFDPTUPGBMMJOUBOHJCM from their use, and varies between: #SBOEBOEEPNBJOOBNFT#SPBEDBTUMJCSBSJFT$BQJUBMJTFEEFWFMPQNFOUFYQFOEJUVSFContractual relationships Customer lists and contracts oUPQFSBOOVN Intellectual property and gaming licences oUPQFSBOOVN Software – over the length of the licence Impairment of goodwill, other intangibles and property, plant and equipment oQFSBOOVN At the end of each reporting – over the year, length an impairment of the review contract of goodwill is completed. In addition, the Group reviews the carrying – 5% to 50% per a annum intangibles and property, plant and equipment to determine whether there is any indication that those assets have suffered an i *GňBOZTVDIJOEJDBUJPOFYJTUT UIFSFDPWFSBCMFBNPVOUPGUIFBT UIFBTTFUEPFTOPUHFOFSBUFDBTInPXTUIBUBSFJOEFQFOEFOUGSPN – 20% to 33% per annum DBTIHFOFSBUJOHVOJU JTSFEVDFEUPJUTSFDPWFSBCMFBNPVOU"O is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. 8IFSFBOJNQBJSNFOUMPTTTVCTFRVFOUMZSFWFSTFT UIFDBSSZJOHBN JUTňSFDPWFSBCMFBNPVOU CVUTPUIBUUIFJODSFBTFEDBSSZJOHBNPV OPňJNQBJSNFOUMPTTCFFOSFDPHOJTFEGPSUIFBTTFU DBTIHFOFSBUJ immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is tr increase. Impairments related to goodwill are not reversed. 1. Accounting policies (continued) Internally generated intangible assets – research and development expenditure &YQFOEJUVSFJODVSSFEPOEFWFMPQNFOUBDUJWJUJFT JODMVEJOHUIF( unit to which the asset belongs. An intangibleasset with an indefinite useful life is tested for impairment annually and whenev indication that the asset may be impaired. Recoverableamount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated fu EJTDPVOUFEUPUIFJSQSFTFOUWBMVFVTJOHBQSFUBYEJTDPVOUSBUFUIBUSFnFDUTDVSSFOUNBSLFUBTTFTTNFOUTPGUIFUJNFWBMVFPGN specific to the asset for which the estimates of future cashflows have not been adjusted. *GUIFSFDPWFSBCMFBNPVOUPGBOBTTFU PSDBTIHFOFSBUJOHVOJU 122 Notes to the consolidated financial statements financial consolidated tothe Notes 122 bwin.party Annual report & accounts 2013 0UIFSPQFSBUJOHFYQFOTFTDPOTJTUQSJNBSJMZPGFYDIBOHFMPTTFTBOENFSHFSBOEBDRVJTJUJPODPTUTBOEBSFSFDPHOJTFEPOBOBDDSVB Other operating expenses 0UIFSPQFSBUJOHJODPNFDPOTJTUTQSJNBSJMZPGFYDIBOHFHBJOT Other operating income revenues. total remaining estimated #SPBEDBTUJOHDPTUTBSFFYQFOTFEPWFSUIFBQQMJDBCMFMJGFDZDMF $PTUPGTBMFTDPOTJTUTQSJNBSJMZPGCFUUJOHBOEHBNJOHUBYFTBO Cost of sales basis. accruals an on recognised is income Interest invoiced. commission net the is customer the with relationship the TFSWJDFTBOEGFFTGSPNCSPBEDBTUJOH IPTUJOHBOETVCTDSJQUJPOT 0UIFSSFWFOVFDPOTJTUTQSJNBSJMZPGSFWFOVFGSPNOFUXPSLTFSWJDFT UIJSEQBSUZQBZNFOUTFSWJDFT TBMFPGEPNBJOOBNFT mOBODJB segment. reporting each to allocated FYDIBOHFDPNNJTTJPOTPODVTUPNFSEFQPTJUTBOEXJUIESBXBMTBOE WBMVFPGMPZBMUZQPJOUTBDDSVFE3FWFOVFHFOFSBUFEGSPNGPSFJHO b promotional certain positions betting open on losses and ofgains value market fair the for adjusted win house net represents g net betting sports and bingo Casino, accrued. points ofloyalty value the and bonuses promotional certain less tournament the 1PLFSOFUHBNJOHSFWFOVFSFQSFTFOUTUIFDPNNJTTJPODIBSHFEPSU HFOFSBUFEGSPNGPSFJHOFYDIBOHFDPNNJTTJPOTPODVTUPNFSEFQPTJU a revenue gaming ofnet consists revenue Net receivable. or received consideration ofthe value fair the at measured is Revenue occur. transactions gaming the inwhich periods accounting inthe recognised is services), certain and platform Group’s 3FWFOVFGSPNPOMJOFHBNJOH DPNQSJTJOHTQPSUTCFUUJOH DBTJOPB Revenue segment. product to according report to appropriate itis that determined has Group the Therefore, performance. financial decisions operating ofmaking purposes the for regions geographic about information some by supplemented are which type product UIF(SPVQGPSEFDJTJPONBLJOHQVSQPTFTBOEGPSUIFBTTFTTNFOUP segme operating the organises management way the on based is report to information what determining for method The performance. segmen the to allocated be to resources about decisions make to Group the by reviewed regularly are results operating segment’s "OPQFSBUJOHTFHNFOUJTBDPNQPOFOUPGUIF(SPVQUIBUFOHBHFTJOCVTJOFTTBDUJWJUJFTGSPNXIJDIJUNBZFBSOSFWFOVFTBOEJODVS Segment information equipment. and fromfuture to that item bederived economic of benefits property plant, – over of length lease BDDPVOUFEGPSTFQBSBUFMZJODMVEJOHNBKPSJOTQFDUJPOBOEPWFSIBV 4VCTFRVFOUFYQFOEJUVSFJTDBQJUBMJTFEXIFSFJUJTJODVSSFEUPS equipment. and plant oQFSBOOVN of property, for accounted are they lives, useful different having components major comprises equipment or plant ofproperty, item an Where oQFSBOOV 'JYUVSFT mUUJOHT UPPMTBOEFRVJQNFOU WFIJDMFT 1MBOU NBDIJOFSZ DPNQVUFSFRVJQNFOU improvements Leasehold MBOEBOECVJMEJOHT FWFOMZPWFSUIFJSFYQFDUFEVTFGVMMJWFT*U %FQSFDJBUJPOJTQSPWJEFEUPXSJUFPGGUIFDPTU MFTTFTUJNBUFE their intended use. a the when commences Depreciation fees. professional including use, intended their for condition working to assets the bringing inAssets the course of construction are carried at cost, less any recognised impairment loss. Cost includes directly attributa depreciated. not are and cost at stated "MMQSPQFSUZ QMBOUBOEFRVJQNFOUBSFTUBUFEBUDPTU MFTTBDDV equipment and plant Property, (continued) policies Accounting 1. JTDBMDVMBUFEBUUIFGPMMPXJOHSBUFT SFTJEVBMWBMVFT PGBMMQSPQFSUZ QMBOUBOEFRVJQNFOUXJUIUIF NVMBUFEEFQSFDJBUJPO XJUIUIFFYDFQUJPOPGGSFF FQMBDFBDPNQPOFOUPGBOJUFNPGQMBOU QSPQFSUZPSFRVJQNFOUX ECSPBEDBTUJOHDPTUT PGFBDIQSPHSBNNFCBTFEVQPOUIFSBUJPPGUIFDVSSFOUZFBSTSF 3FWFOVFJOSFTQFDUPGOFUXPSLTFSWJDFBSSBOHFNFOUTXIFSFUIFU OEHBNFT QPLFS CJOHP BOEOFUXPSLTFSWJDFT UIJSEQBSUZFOUJU M"MMPUIFSTVCTFRVFOUFYQFOEJUVSFJTFYQFOTFEBTJODVSSFE VOMFTTJUJODSFBTFTUIF N GmOBODJBMQFSGPSNBODF5IF(SPVQSFWJFXTmOBODJBMTUBUFNFOUTQ PVSOBNFOUFOUSZGFFTXIFSFUIFQMBZFSIBTDPODMVEFEIJTPSIFS TBOEXJUIESBXBMTBOEBDDPVOUGFFT IPMEMBOEBOECVJMEJOHTXIJDIBSF FYDFQUJPOPGGSFF ble costs incurred in in incurred costs ble WFOVFUPUIF nd revenue IFSFUIBUJUFNJT onuses and the JFTUIBUVTFUIF aming revenue FYQFOTFT&BDI ssets are ready for for ready are ssets MNBSLFUT TPGUXBSF IJSEQBSUZPXOT MTCBTJT as separate items t and assess its its assess t and QBSUJDJQBUJPOJO SFTFOUFECZ BDDPVOUGFFTJT and assessing assessing and nts within within nts IPME StrategicStrategic GovernanceGovernance FinancialFinancial report performance 123123 Average 2012 HBTBIFEHFPGB FUSBOTMBUJPOPG DVSSFODZSFTFSWF they operate (their FSFYDMVEFTJUFNT n disposal. EUIFDPSSFTQPOEJOH lities are translated translated are lities UIBUPQFSBUJPO 0.15411.23180.51130.0138 0.1697 0.2030 1.2343 0.1165 0.5113 0.0949 0.0145 0.7575 0.2015 0.1153 0.0973 0.7751 SBSZEJGGFSFODFXJMMOPU T BOEJOUFSFTUTJOKPJOU UJCMFUFNQPSBSZ EUIFSFTVMUTPGPWFSTFBT BUFETUBUFNFOUPG OPMPOHFSQSPCBCMFUIBU %FD from the initial BTTFUTBOEMJBCJMJUJFTBSF STVCTUBOUJWFMZFOBDUFE FEFGFSSFEUBYJTBMTPEFBMU BYBCMFQSPmUOPSUIF USFBMJTFE%FGFSSFEUBYJT 0.11131.20310.51130.1199 0.1367 0.2094 1.1766 0.1129 0.5113 0.0881 0.1224 0.7259 0.2087 0.1155 0.0934 0.7516 31-Dec-13 2013 Average FOTJWFJODPNF FYDFQUGPSGPSFJHODVSSFODZCPSSPXJOHTRVBMJGZJO IAS 12 Income TaxesDPOUBJOTTQFDJmDFYFNQUJPOT FOTFUIBUBSFUBYBCMFPSEFEVDUJCMFJOPUIFSZFBSTBOEJUGVSUI WFJODPNFPG(SPVQFOUJUJFTTFQBSBUFmOBODJBMTUBUFNFOUTPOUI NFOUJOUIFPWFSTFBTPQFSBUJPODPODFSOFEBSFSFDMBTTJmFEUPUIF SF BNPVOUTPGBTTFUTBOEMJBCJMJUJFTJOUIFmOBODJBMTUBUFNFOUTBO JGGFSFODFTBSFSFDPHOJTFEJOBTFQBSBUFDPNQPOFOUPGFRVJUZ GFSFODFTSFDPHOJTFEJOUIFGPSFJHOFYDIBOHFSFTFSWFSFMBUJOHUP MPGUIFUFNQPSBSZEJGGFSFODFBOEJUJTQSPCBCMFUIBUUIFUFNQP FUTBOEMJBCJMJUJFTJOBUSBOTBDUJPOUIBUBGGFDUTOFJUIFSUIFU S5BYBCMFQSPmUEJGGFSTGSPNQSPmUBTSFQPSUFEJOUIFDPOTPMJE BUFEJOUPFVSPTBUSBUFTBQQSPYJNBUJOHUPUIPTFSVMJOHXIFOUIFUSBOTBDUJPOTUPPL JGGFSFODFTBSJTJOHPOJOWFTUNFOUTJOTVCTJEJBSJFTBOEBTTPDJBUF JUFNTDIBSHFEPSDSFEJUFEEJSFDUMZUPFRVJUZ JOXIJDIDBTFUI EJGGFSFODFTBSJTJOHPOUIFSFUSBOTMBUJPOPGVOTFUUMFENPOFUBSZ PGUIFBTTFUUPCFSFDPWFSFE Israeli Shekel (ILS) Shekel Israeli Swedish Kronas (SEK) Ukraine Hryvnia (UAH) dollarUS (USD) #SJUJTIQPVOE (#1 #VMHBSJBO-FW #(/ Indian Rupees (INR) "SHFOUJOJBO1FTPT "3( Taxation *ODPNFUBYFYQFOTFSFQSFTFOUTUIFTVNPGUIF%JSFDUPSTCFTUFTUJNBUFPGUBYBUJPOFYQPTVSFTBOEEFGFSSFEUBY 5IFUBYDVSSFOUMZQBZBCMFJTCBTFEPOUBYBCMFQSPmUGPSUIFZFB up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss o The financial statements were translated into euros at the following rates: DPNQSFIFOTJWFJODPNFCFDBVTFJUFYDMVEFTJUFNTPGJODPNFPSFYQ UIBUBSFOFWFSUBYBCMFPSEFEVDUJCMF5IF(SPVQTMJBCJMJUZGPSDVSSFOUUBYJTDBMDVMBUFEVTJOHSBUFTUIBUIBWFCFFOFOBDUFEP by the end of the reporting year. taxDeferred %FGFSSFEUBYJTSFDPHOJTFEPOEJGGFSFODFTCFUXFFOUIFDBSSZJOH UBYCBTFTVTFEJOUIFDPNQVUBUJPOPGUBYBCMFQSPmU*UJTBDDPVOUFEGPSVTJOHUIFCBMBODFTIFFUMJBCJMJUZNFUIPE%FGFSSFEUBYMJBCJMJUJFTBSFHFOFSBMMZSFDPHOJTFEGPSBMMUBYBCMFUFNQPSBSZEJGGFSFODFTPUIFSUIBOXIF %FGFSSFEUBYBTTFUTBSFSFDPHOJTFEUPUIFFYUFOUUIBUJUJTQSPCBCMFUIBUUBYBCMFQSPmUTXJMMCFBWBJMBCMFBHBJOTUXIJDIEFEVD differences can be assets utilised. Such the recognised temporary are if not and liabilities arises difference or goodwill from SFDPHOJUJPO PUIFSUIBOJOBCVTJOFTTDPNCJOBUJPO PGPUIFSBTT profit.accounting %FGFSSFEUBYMJBCJMJUJFTBSFSFDPHOJTFEGPSUBYBCMFUFNQPSBSZE WFOUVSFT FYDFQUXIFSFUIF(SPVQJTBCMFUPDPOUSPMUIFSFWFSTB 1. Accounting policies (continued) currency Foreign Transactions entered into by Group entities a currency in other than the currency of the primary economic environment in which ‘functional currency’) currency the transactionswhen monetary are recorded Foreign the rates at ruling occur. assets and liabi BUUIFSBUFTSVMJOHBUUIFFOEPGUIFSFQPSUJOHZFBS&YDIBOHF SFDPHOJTFEJNNFEJBUFMZJOUIFDPOTPMJEBUFETUBUFNFOUPGDPNQSFI OFUJOWFTUNFOUJOBGPSFJHOPQFSBUJPO JOXIJDIDBTFFYDIBOHFE 0ODPOTPMJEBUJPO UIFSFTVMUTPGPWFSTFBTPQFSBUJPOTBSFUSBOTM place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rateSVMJOHBUUIFFOEPGUIFSFQPSUJOHZFBS&YDIBOHFEJGGFSFODFTBSJTJOHPOUSBOTMBUJOHUIFPQFOJOHOFUBTTFUTBUPQFOJOHSBUFBO operations at actual rate are recognised directly in equity (the ‘currency reserve’). &YDIBOHFEJGGFSFODFTSFDPHOJTFEJOUIFTUBUFNFOUPGDPNQSFIFOTJ consolidation.on 0OEJTQPTBMPGBGPSFJHOPQFSBUJPO UIFDVNVMBUJWFFYDIBOHFEJG foreseeable future. the reverse in 5IFDBSSZJOHBNPVOUPGEFGFSSFEUBYBTTFUTJTSFWJFXFEBUUIFFOEPGFBDISFQPSUJOHZFBSBOESFEVDFEUPUIFFYUFOUUIBUJUJT TVGmDJFOUUBYBCMFQSPmUTXJMMCFBWBJMBCMFUPBMMPXBMMPSQBSU %FGFSSFEUBYJTDBMDVMBUFEBUUIFUBYSBUFTUIBUBSFFYQFDUFEUPBQQMZJOUIFQFSJPEXIFOUIFMJBCJMJUZJTTFUUMFEPSUIFBTTFDIBSHFEPSDSFEJUFEUPQSPmUPSMPTT FYDFQUXIFOJUSFMBUFTUP MPOHUFSNNPOFUBSZJUFNTGPSNJOHQBSUPGUIF(SPVQTOFUJOWFTU equity. in with 124 Notes to the consolidated financial statements financial consolidated tothe Notes 124 bwin.party Annual report & accounts 2013 of comprehensive income. of comprehensive th to directly charged are charges Finance liability. ofthe balance remaining the on ofinterest rate aconstant achieve to as leas ofthe reduction and charges finance between apportioned are payments Lease obligation. lease a finance as position financial consolida inthe included is lessor the to liability corresponding The lease. ofthe inception the at determined each payments, of the Group at their assets fair value or, as recognised are held under finance if leases lower,Assets at the present value of leases. operating as classified are of owner All other leases rewards and risks the all substantially transfer lease of the terms the whenever leases finance as classified are Leases Leased assets liability. the to specific risks any and ofmoney value time ofthe assessments 8IFSFUJNFWBMVFJTNBUFSJBM UIFBNPVOUPGUIFSFMBUFEQSPWJTJ reimbursement. ofany possibility the and ofresources, ofoutflow timing or amount the to relating e financial ofthe estimate an practicable, where including, liability contingent ofthe made are Disclosures made. is provision ofe outflow inan result not, will probably may, but that event ofapast aresult as obligation apossible has Group the Where obligation. the settle to required be will benefits ofeconomic outflow an that probable itis and event past obligat constructive or alegal ithas when position offinancial statement consolidated inthe aprovision recognises Group The liabilities contingent and Provisions reserve. redemption capital the to taken entry corresponding 0XOTIBSFTSFQVSDIBTFEJODBTIBTQBSUPGUIFTIBSFCVZCBDLQS QSPDFFETMFTTXFJHIUFEBWFSBHFDPTUPGTIBSFTJOJUJBMMZQVSDIBT 8IFOPQUJPOTJTTVFECZUIF&NQMPZFF5SVTUBSFFYFSDJTFEUIFPXO reser share own an creates shares ofown cost cash The Company. the Trust by Employee the to gifted shares to relate shares Own Own shares contribution. payment isa Where made, capital this a as is cash recorded reserve. 8IFSFFRVJUZJOTUSVNFOUTBSFUSBOTGFSSFECZPOFPSNPSF4IBSFIP BTňBňTIBSFCBTFEQBZNFOU VOMFTTUIFUSBOTGFSPSQBZNFOUJTDMFBSMZGPSBQVSQPTFPUIFSUIBOQBZNFOUGPSHPPETPSTFSWJDFTTVQQMJFEUPUIF(SPVQ controlledshare price by made, are by onethe transact or shareholder(s) or entities that more effectively are Shareholder(s), as (or Company’s the on based payments cash or transferred, are asubsidiary or company parent ofthe instruments equity Where the charge when is there is recorded Shareholders, a commitment to make the payment. GBJSňWBMVFPGUIFTIBSFCBTFEQBZNFOUTPOBTUSBJHIUMJOFCBTJTPWFSUIFWFTUJOHQFSJPE'PSDBTIQBZNFOUTNBEFCZQBSUJFTSFM TFUUMFNFOU XJUIDIBOHFTCFJOHSFDPSEFEJOUIFDPOTPMJEBUFETUB UIFňMJBCJMJUZ6QUPUIFQPJOUBUXIJDIUIFMJBCJMJUZJTTFUUMF TFSWJDFTSFDFJWFEBOEUIFMJBCJMJUZJODVSSFEBSFNFBTVSFEBUU 'PSDBTITFUUMFETIBSFCBTFEQBZNFOUUSBOTBDUJPOT UIFHPPETPS FYFSDJTFSFTUSJDUJPOTBOECFIBWJPVSBMDPOTJEFSBUJPOT QSJDJOHNPEFM5IFFYQFDUFEMJGFVTFEJOUIFNPEFMIBTCFFOBEK OPONBSLFUWFTUJOHDPOEJUJPOT POUIF(SPVQTFTUJNBUFPGUIFT TFUUMFETIBSFCBTFEQBZNFOUTJTFYQFOTFEPOBTUSBJHIUMJOFCBT &RVJUZTFUUMFETIBSFCBTFEQBZNFOUTBSFNFBTVSFEBUGBJSWBMVF employees. of requirements the applied has Group The payments Share-based ofsale. costs associated less value fair and value ofcarrying lower the at measured are assets These BTTFUJTBWBJMBCMFGPSJNNFEJBUFTBMFJOJUTQSFTFOUDPOEJUJPO committed is management probable, highly is sale the when only met being as regarded is condition This use. continuing through /PODVSSFOUBTTFUTBOEEJTQPTBMHSPVQTBSFDMBTTJmFEBTIFMEGPSTBMFJGUIFDBSSZJOHBNPVOUXJMMCFSFDPWFSFEUISPVHIBTBMF held for sale Assets UIFZSFMBUFUPJODPNFUBYFTMFWJFECZUIFTBNFUBYBUJPOBVUIPSJ MFHBMMZFOGPSDFBCMFSJHIUUPTFUPGGDVSSFOUBTTFUTBHBJOTUDVSSFOUUBYMJBCJMJUJFTBOEXIFO %FGFSSFEUBYBTTFUTBOEMJBCJMJUJFTBSFPGGTFUXIFOUIFSFJTB (continued) policies Accounting 1. IFRS 2 Share-based Payments 2Share-based IFRS E UIFGBJSWBMVFPGUIFMJBCJMJUZJTSFNFBTVSFEBUFBDISFQPS BOEUIFTBMFJTFYQFDUFEUPCFDPNQMFUFEXJUIJOPOFZFBSGSPNUIFEBUFPGDMBTTJmDBUJPO POJTDBMDVMBUFECZEJTDPVOUJOHUIFDBTInPXTBUBQSFUBYSBUFUIBUSFnFDUTNBSLFU FEOPXFYFSDJTFE OPOUSBOTGFSBCJMJUZ VTUFE CBTFEPONBOBHFNFOUTCFTUFTUJNBUF GPSUIFFGGFDUTPG IBSFTUIBUXJMMFWFOUVBMMZWFTU'BJSWBMVFJTNFBTVSFECZVTF UZBOEUIF(SPVQJOUFOETUPTFUUMFJUTDVSSFOUUBYBTTFUTBOEM JTPWFSUIFWFTUJOHQFSJPEBOECBTFE GPSUIPTFTIBSFPQUJPOTX UFNFOUPGDPNQSFIFOTJWFJODPNF5IF(SPVQSFDPSETUIFFYQFOTFCBTFEPOUIF PHSBNNFBSFEFCJUFEUPSFTFSWFT5IFTIBSFTBSFDBODFMMFEBUOP BUUIFEBUFPGHSBOU5IFGBJSWBMVFEFUFSNJOFEBUUIFHSBOUEB TIBSFSFTFSWFJTSFEVDFEBOEBHBJOPSMPTTJTSFDPHOJTFEJOS MEFS T UIFBNPVOUSFDPSEFEJOSFTFSWFTJTJODMVEFEJOUIFTIB 5IF(SPVQJTTVFTFRVJUZTFUUMFETIBSFCBTFEQBZNFOUTUPDFSUB UJOHEBUFBOEBUUIFEBUFPG the minimum lease lease minimum the e consolidated statement statement e consolidated ion is accounted for for accounted is ion conomic benefits, no no conomic benefits, JBCJMJUJFTPOBOFUCBTJT PGBTVJUBCMFPQUJPO USBOTBDUJPOSBUIFSUIBO ted statement of of statement ted ffect, uncertainties BUFEUP1SJODJQBM UFPGUIFFRVJUZ FTFSWFTCBTFEPO IFGBJSWBMVFPG ion as a result of a ofa aresult as ion IJDIDPOUBJOPOMZ ship to the lessee. lessee. the ship to SFCBTFEQBZNFOU NJOBMWBMVFXJUIB ve. ve. to a sale plan, the the plan, asale to ubsidiary’s) ubsidiary’s) e obligation so JO StrategicStrategic GovernanceGovernance FinancialFinancial report performance 125125 s at derivative derivative y deposits are NBSLFU5IFZBSF UMJOFCBTJTPWFS action costsaction PGUISFFNPOUIT SFMBUFEQSPWJTJPOT UIFGVUVSFFYQFDUFE n declaredn the by TUIBUBSFSFBEJMZ BMBTTFUT unable to collect all FFOUSBEFEBUFBOE BODJBMMJBCJMJUZ JGZJOHBTTVCTJEJBSJFT FEBUBNPSUJTFEDPTU BZBCMFXIJMFUIF UIFMFBTFUFSN BTTPDJBUFEXJUIUIBU money’ derivative money’ derivative UFETUBUFNFOUPG ity. In accordance with IAS include the following items: uently carried at amortised amortised at carried uently PSUJTFEDPTUVTJOHUIFFGGFDUJWF TXIJDIBSFSFDPHOJTFEBUGBJSWBMVFMFTTJNQBJSNFOUBOEPUIFS TIPSUUFSNCBOLEFQPTJUTPSJHJOBMMZQVSDIBTFEXJUINBUVSJUJFT JPOT$BTIFRVJWBMFOUTBSFTIPSUUFSN IJHIMZMJRVJEJOWFTUNFOU JOJUJBMUSBOTBDUJPODPTUT BTXFMMBTBOZJOUFSFTUPSDPVQPOQ mYFEPSEFUFSNJOBCMFQBZNFOUTUIBUBSFOPURVPUFEPOBOBDUJWF DBUFHPSJTFEBTMPBOT SFDFJWBCMFTBOEBWBJMBCMFGPSTBMFmOBODJ POMZUPUIFFYUFOUUIBUUIFZEPOPUNFFUUIFEFmOJUJPOPGBmO UIFDPOTPMJEBUFETUBUFNFOUPGDPNQSFIFOTJWFJODPNFPOBTUSBJHI SFODFCFUXFFOUIFOFUDBSSZJOHBNPVOUBOEUIFQSFTFOUWBMVFPG OPQFSBUJOHMFBTFBSFBMTPTQSFBEPOBTUSBJHIUMJOFCBTJTPWFS SWF0OTBMF UIFBNPVOUIFMEJOUIFBWBJMBCMFGPSTBMFSFTFSWF DPNQSJTFUIF(SPVQTTUSBUFHJDJOWFTUNFOUTJOFOUJUJFTOPURVBM FDPHOJTFEPOTFUUMFNFOUEBUFXJUIBOZDIBOHFJOGBJSWBMVFCFUX WBJMBCMFGPSTBMFmOBODJBMBTTFUJTSFDPHOJTFEJOUIFDPOTPMJEB arried in the consolidated statement of financial position. financial of statement consolidated the in arried Client liabilities, including amounts due to progressive prize pools. VTJOHUIFFGGFDUJWFJOUFSFTUSBUFNFUIPE XIJDIFOTVSFTUIBUJOUFSFTUFYQFOTFPWFSUIFQFSJPEUPSFQBZNFOUJTBUBDPOTUBOUSBUFPOUIFCBMBODFof the liability c Loans and borrowings, comprising bank borrowings and overdrafts, which are initially recognised at fair value, net of any trans EJSFDUMZBUUSJCVUBCMFUPUIFJTTVFPGUIFJOTUSVNFOU4VDIJOUFSFTUCFBSJOHMJBCJMJUJFTBSFTVCTFRVFOUMZWBMVFEBUBN JOUFSFTUSBUFNFUIPE*OUFSFTUFYQFOTFJOUIJTDPOUFYUJODMVEFT liability is outstanding. derivative a instruments held money’ financial the since derivative of required instruments was financial category ‘out not A for derivative December as instruments (no 31 2012). held at significant not were 31 December 2013 associates or jointly controlledentities. They are carried at fair value with changes in fair value recognised directly in equ BTJHOJmDBOUPSQSPMPOHFEEFDMJOFJOUIFGBJSWBMVFPGBOB income. comprehensive 1VSDIBTFTBOETBMFTPGBWBJMBCMFGPSTBMFmOBODJBMBTTFUTBSFS TFUUMFNFOUEBUFCFJOHSFDPHOJTFEJOUIFBWBJMBCMFGPSTBMFSFTF initially recognised at fair value, plus transaction costs directly attributable to their acquisition or issue. They are subseq cost using the effective interest rate method, less any provisions for impairment. 5SBEFBOEPUIFSSFDFJWBCMFTSFQSFTFOUTIPSUUFSNNPOFUBSZBTTFU which are recognised when there is objective evidence (primarily default or significant delay in payment) that the Group will be PGUIFBNPVOUTEVF5IFBNPVOUPGTVDIBQSPWJTJPOJTUIFEJGGF These include restrictedThese include than cash Amounts as months. three more held securit unrestricted and of deposits maturities bank with restricted be to considered cash. assets financial no There are the category ‘in classified are A maturity’. that as for to ‘held (no significant not were derivative December as financialfinancial instruments since instruments 31 held 2013 was required at not December as 2012). 31 instruments held at /POEFSJWBUJWFmOBODJBMBTTFUTDMBTTJmFEBTBWBJMBCMFGPSTBMF asset is removed from equity and recognised in the consolidated statement of comprehensive income. 4IPSUUFSNJOWFTUNFOUTBSFOPOEFSJWBUJWFmOBODJBMBTTFUTXJUI receivable. impaired the with associated cashflows $BTIDPNQSJTFTDBTIJOIBOEBOECBMBODFTXJUImOBODJBMJOTUJUVU 1. Accounting policies (continued) 3FOUBMTQBZBCMFVOEFSPQFSBUJOHMFBTFTBSFDIBSHFEEJSFDUMZUP the term of the relevant lease. #FOFmUTSFDFJWFEBOESFDFJWBCMFBTBOJODFOUJWFUPFOUFSJOUPB Financial assets 5IF(SPVQTmOBODJBMBTTFUTXIJDIBSFmOBODJBMJOTUSVNFOUTBSF DPOWFSUJCMFUPLOPXOBNPVOUTPGDBTI5IFZJODMVEFVOSFTUSJDUFE or less. Financial liabilities The Group’s financial liabilities are all categorised as financial liabilities measured at amortised cost. Financial liabilities t t 5SBEFQBZBCMFTBOEPUIFSTIPSUUFSNNPOFUBSZMJBCJMJUJFTXIJDIBSFJOJUJBMMZSFDPHOJTFEBUGBJSWBMVFBOETVCTFRVFOUMZDBSSJ The Group’s ordinary shares are classified as equity instruments. Dividends Dividends are recognised when they become legally payable. In the case interim of dividends to equity Shareholders, this is whe Directors. In the case of final dividends, this is when approved by the Shareholders at the Annual General Meeting. t t Share capital 'JOBODJBMJOTUSVNFOUTJTTVFECZUIF(SPVQBSFUSFBUFEBTFRVJUZ 126 Notes to the consolidated financial statements financial consolidated tothe Notes 126 bwin.party Annual report & accounts 2013 New basis of reporting of basis New QSPWJEFBDPNQ n Ithas year. prior and year current the both for basis old the and year current the for basis new the disclose will Group The periods. infuture case the be to continue PGSFQPSUJOHTFHNFOUQFSGPSNBODFXBTIJTUPSJDBMMZ$MFBO&#*5%" 6OEFSUIFOFXCBTJTPGTFHNFOUBMSFQPSUJOH VOBMMPDBUFEDPSQPSB basis. astandalone on segment ofthat profitability in order to more verticals accurately reflec these thus and of includes between a marketing reallocation costs verticals product 5IFOFXCBTJTBMTPBJNTUPSFnFDUNPSFBQQSPQSJBUFMZUIFGBDUU profit. gross to rata pro allocated now are costs central remaining the and segment, each to directly allocated are of costs a reporting, ofsegmental basis new the Under costs. ofcentral share high adisproportionately allocated were segments certain UPňUIFOFUSFWFOVFHFOFSBUFECZFBDIWFSUJDBM"TUIFQSPQPSUJP wer vertical aparticular to allocated directly be to able not were that costs reporting, ofsegmental basis previous the Under business. retail Winners the and sales domain on profit gaming, social services, software InterTrader; business, spreadbetting $MFBO&#*5%"PSBTTFUT*ODMVEFEXJUIJOUIJTTFHNFOUBSF8PSME ofthe 10% than more for account to enough large not are inaggregate that ofbusinesses anumber includes ‘other’ segment The t t t t t segments: reporting following the into segmented are operations Group’s 1Jan since Accordingly, 8. IFRS under information ofsegmental reporting the on effect aconsequential had has which (‘CODMs’) Dec Operating Chief the to ofresults reporting Group’s the change to need ofthe undertaken was areview Merger, the Following segments. individual to allocated not are and awhole as Group the relate to 5IFTFTFHNFOUTBSFUIFCBTJTVQPOXIJDIUIF(SPVQSFQPSUFEJUT VOBMMPDBUFEDPSQPSBUF JODMVEJOH8PSME1PLFS5PVS *OUFS5SBEF t t t t t r following the into segmented historically were operations Group’s the customers, with transacting and purposes management For Segment information2. Net revenue Total operations 1SPmU MPTT CFGPSFUBY $MFBO&#*5%" revenue Total Other revenue 2013 December 31 ended Year other. other. bingo; and poker; &games; casino betting; sports bingo; and poker; &games; casino betting; sports BSBCMF$MFBO&#*5%"mHVSFCZWFSUJDBMPOUIFOFXCBTJTGPSUIF Sports betting betting Sports €million 235.8 215.6 114.6 53.1 33.3 652.4 652.4 33.3 53.1 114.6 215.6 235.8 609.4 – 52.5 110.1 212.8 234.0 28.4 53.7 1.8 2.8 4.5 0.6 0.6 4.5 2.8 1.8 33.3 43.0 OPGUIF(SPVQTSFWFOVFUIBUJTTVCKFDUUPOBUJPOBMSFHVMBUJPOBOEUBYFTJODSFBTFE IBUDFSUBJOQSPEVDUWFSUJDBMTBSFEFQFOEFOUPOUIFDSPTTTFMMP 1PLFS5PVSUIFUIJSEQBSUZQBZNFOUQSPDFTTJOHCVTJOFTT ,BMJYBUIFmOBODJBM the payment services business). business). services payment the SDPN 8*/DPN TPGUXBSFTFSWJDFTBOE MJBCJMJUJFT TFHNFOUJOGPSNBUJPO6OBMMPDBUFEDPSQPSBUFFYQFOTFT BTTFUTBOE BOEUIFCBTJTGPSBSSJWJOHBUUIJTJTUIFTBNFBTUIF(SPVQBDDPVOUT5IJTXJMM UFFYQFOTFTBSFOPXBMMPDBUFEUPFBDIPGUIFTFPQFSBUJOHTFHNFO Casino &Casino games €million 45.0 42.3 QSJPSZFBSBTUIFOFXPSHBOJTBUJPOTUSVDUVSFEJEOPUUIFOFYJTU €million Poker (6.3) 7.7 €million Bingo 1.2 8.2 ot been possible to to possible ot been e allocated pro rata rata pro e allocated €million GQMBZFSTGSPNPUIFS Other Other (20.7) t the true true t the uary 2013 the uary (6.6) higher proportion higher proportion ision Makers ision Makers Group’s revenues, eporting segments: segments: eporting UT5IFNFBTVSF consolidated €million 108.0 44.9 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 127127 – 3.9 3.9 2012 81.6 2012 44.9 (62.9) (23.5) 176.0 544.0 801.6 164.9 143.6 108.0 €million €million €million €million consolidated consolidated consolidated 0.3 2013 2013 2013 2013 83.8 84.1 68.4 45.6 (23.0) UIFSSFWFOVFBSF815 155.3 428.7 652.4 €million €million €million €million corporate corporate corporate corporate the Merger. Merger. the Unallocated Unallocated Unallocated

– – (21.3) – –(39.4) 5.8 (6.5) 5.8 (6.5) (1.7) 12.9 #JOHP Bingo Bingo €million €million

(3.1) 22.3 1PLFS Poker €million €million 28.7 (55.3) 28.7 (15.9) 72.6 37.6 €million €million Casino & games Casino & Casino & Games – – 10.4 – – 10.4 – – – – – – 10.4– – 10.4 – – 10.4– – – – – –(21.3) – – (39.4) 0.1 2.4 13.1 0.8 26.7 43.1 0.1 2.4 2.7 0.8 26.7 32.7 26.7 0.1 2.4 2.70.8 1.8 2.8 4.5 0.6 33.3 43.0 33.3 1.8 2.84.5 0.6 42.7 80.1 7.2 18.8 (5.2) 42.7 80.128.5 18.8 (5.2) 23.2 (35.6) (35.6) (33.5) 262.8 268.8 173.8 63.5 – 768.9 262.9 271.2 186.9 64.3 26.7 812.0 262.8 268.8 173.8 63.5 – 768.9 262.9 271.2 176.5 64.3 26.7 801.6 235.8 215.6114.6 53.1 33.3 652.4 234.0 212.8110.1 52.5 –609.4 €million €million Sports betting Sports betting Year ended 31 December 31 ended Year Release of acquisition fair value provision Other Total revenue Total Year ended 31 December 31 ended Year Germany United Kingdom Other 1SPmU MPTT CFGPSFUBY Total revenue $MFBO&#*5%" Other revenue Other -PTTCFGPSFUBY operations Total revenue Net Total revenue $MFBO&#*5%" Other revenue Other $MFBO&#*5%" 1SPmU MPTT CFGPSFUBY operationsDiscontinued revenue Net Total revenue 1SPmU MPTT CFGPSFUBY December 2012 31 ended Year Other revenue Other Total revenue $MFBO&#*5%" Year ended 31December 2013 Continuing operations Continuing revenue Net revenue Other Total operations Total revenue Net The release of fair value provision relates to the settlement of certain legal and regulatory disputes, created at the time of 3. Other operating income 0UIFSSFWFOVFXBTVQUPŇN ŇN XJUIHSPXUIBDSPTTBMMDBUFHPSJFTZFBSPOZFBS5IFNBKPSDPOTUJUVFOUTPGP ŇN EPNBJOTBMFT ŇN ## ŇN BOE8JOOFST ŇN Geographical total analysis of revenue The following table provides an analysis of the Group’s continuing total revenue by geographical segment: 2. Segment information (continued) 2. information Segment Old basis of reporting 128 Notes to the consolidated financial statements financial consolidated tothe Notes 128 bwin.party Annual report & accounts 2013 Details of Directors’ emoluments are set out in the Remuneration Report. Report. Remuneration inthe out set are emoluments ofDirectors’ Details 7. Staff costs .BSLFUFYJUDPTUTSFMBUFUPFYQFOTFTJODVSSFEPOUIF(SPVQTFY 6. Profit (loss) fromoperating activities HBNJOHNBSLFUUISPVHIBKPJOUWFOUVSFXJUIB#FMHJBOMBOECBTFE 5IFDIBSHFJOUIFQFSJPEPGŇNSFMBUFTUPBTFUUMFNFOUQBZNF year. prior inthe of€31.5m charge interes and surcharges associated Including 2011. June to prior ofperiods inrespect of€25.6m apayment made and requirements PEECFUT "TBSFTVMU UPHFUIFSXJUIBOVNCFSPGPUIFSPQFSBUPST XFDPNQMFUFEBUBYTFMGBTTFTTNFOUJOBDDPSEBODFXJUIUIF4 1SFWJPVTMZUIFTFMBXTXFSFBQQMJFEUPPQFSBUPSTCBTFEJO4QBJO UIBUIBTFWFSBDDFQUFEDVTUPNFSTGSPN4QBJOIBTBOPCMJHBUJPOU %VSJOH UIF4QBOJTIUBYBVUIPSJUZDPOUBDUFEBMMPGUIFNBK andassociated charges Retroactive taxes 5. Other operating4. expenses Aggregate remuneration including Directors comprised: Directors including remuneration Aggregate Year ended 31 December (crediting): charging after at arrived been has This Year ended 31 December Other &YDIBOHFMPTTFT –successful costs acquisition and Merger –aborted costs acquisition and Merger Year ended 31 December Other benefits Employer insurance social contribution 4IBSFCBTFEQBZNFOUT costs acquisition and Merger services –transaction remuneration Auditors’ services related –audit remuneration Auditors’ services –audit remuneration Auditors’ .BSLFUFYJUDPTUT equipment and plant –property, losses Impairment intangibles – acquired losses Impairment *NQBJSNFOUMPTTFToBWBJMBCMFGPSTBMFJOWFTUNFOUT Impairment losses – associates debts) (bad receivables –trade losses Impairment 3FPSHBOJTBUJPOFYQFOTFT &YDIBOHFMPTT -PTT QSPmU POEJTQPTBMPGmYFEBTTFUT equipment and plant property, on Depreciation of intangibles Amortisation Wages and salaries and Wages emoluments Directors’ PSPOMJOFHBNJOHPQFSBUPSTBOENBEFDMFBSUIBU JOUIFJSPQJOJPO BOZPOMJOFPQFSBUPS JUGSPNUIF"SHFOUJOFBONBSLFU5IFTFUPUBMMFEŇNJOUIFQFS OUNBEFUP#FMHJBOBVUIPSJUJFTJODPOOFDUJPOXJUIPCUBJOJOHBDD DBSSZJOHPVUPGnJOFHBNJOHBDUJWJUJFTBOEUPDFSUBJOLJOETPGCFUT PUIFSUIBOmYFE PQBZ4QBOJTIUBYFTVOEFSUXPMBXT POFEBUJOHGSPNBOEUIFPUIFSGSPN HBNJOHPQFSBUPS €million €million €million JPE OJM QBOJTI5BY"VUIPSJUZT 144.6 144.6 105.5 105.5 17.2 17.2 16.6 24.4 68.9 FTTUPUIF#FMHJBO 2013 2013 2013 9.0 9.0 8.0 8.0 1.0 5.3 5.3 1.0 0.3 0.1 0.9 2.5 1.0 2.3 6.1 6.3 9.5 8.0 0.8 3.5 t, this resulted in a in a resulted this t, – – – €million €million €million 153.7 153.7 110.6 110.6 2012 2012 2012 2012 10.2 14.3 14.3 20.1 21.3 95.5 (0.2) 0.2 0.2 0.1 5.6 5.6 2.0 5.3 5.3 8.7 8.7 0.1 0.1 0.1 0.8 7.7 5.6 5.3 – – – – – StrategicStrategic GovernanceGovernance FinancialFinancial report performance 129129 – 14 1.5 1.5 8.7 1.8 (6.3) (0.6) (1.5) (7.2) (8.7) (7.2) 191 588 2012 2012 2012 2012 Total (23.5) (62.9) (39.4) 2,114 2,907 €million €million €million – – (11.6) 11 0.4 1.8 4.5 6.3 1.4 3.8 1.1 1.1 185 535 (8.6) (9.3) (8.4) (1.8) 2013 2013 2013 2013 2013 44.9 44.9 period end there there end period (10.4) 2,818 2,087 €million €million €million BNPVOUQSPWJEFEJOUIF EJGGFSFOUKVSJTEJDUJPOT operations Discontinued Discontinued 10 1.4 13.0 0.4 13.4 13.0 0.4 Note (11.6) €million operations Continuing Continuing 3.8 (6.9) 2013 10.7 Total €million – – – €million operations Discontinued Discontinued MUBS)PXFWFS UIFSVMFTBOEQSBDUJDFHPWFSOJOHUIFUBYBUJPOPGFDPNNFSDFBDUJWJUZ BUJPOBOEJNQBJSNFOUPGJOUBOHJCMFBTTFUT QSPmU MPTT BTGPMMPXT BTFEPOUIFBTTPDJBUFEUBYFYQFOTFJT 3.8 SFTQFDUPGBNPSUJTBUJPOPGDFSUBJOBDRVJSFEJOUBOHJCMFT (6.9) 10.7 €million operations Continuing Continuing Directors Administration serviceCustomer Others Year ended 31 December 31 ended Year &GGFDUPGOPOUBYBCMFJODPNF &GGFDUPGFYQFOTFTOPUBMMPXFEGPSUBYQVSQPTFT Total income tax expense for the year -PTTCFGPSFUBYGSPN%JTDPOUJOVFEPQFSBUJPOT tax before Loss 5BYSBUFJO(JCSBMUBSPG &GGFDUPGUBYJOPUIFSKVSJTEJDUJPOT 1SPmU MPTT CFGPSFUBYGSPN$POUJOVJOHPQFSBUJPOT 5BYFYQFOTF %FGFSSFEUBYDSFEJUGPSUIFZFBS Year ended 31 December 31 ended Year $VSSFOUUBYFYQFOTFGPSUIFZFBS Net finance expense finance Net Finance income Finance *OUFSFTUFYQFOTF 6OXJOEJOHPGEJTDPVOUPODVSSFOUBOEOPODVSSFOUMJBCJMJUJFT expenseFinance Year ended 31 December 31 ended Year income Interest Year ended 31 December31 ended Year employees of Average number Factors affecting the tax charge for the year The Group’s policy is to manage, control and operate Group companies only in the countries in which they are registered. At the XFSF(SPVQDPNQBOJFTSFHJTUFSFEJODPVOUSJFTJODMVEJOH(JCSB BSFFWPMWJOHJONBOZDPVOUSJFT*UJTQPTTJCMFUIBUUIFBNPVOUPGUBYUIBUXJMMFWFOUVBMMZCFDPNFQBZBCMFNBZEJGGFSGSPNUIF financial statements. Factors that may affect future tax charges "TUIF(SPVQJTJOWPMWFEJOXPSMEXJEFPQFSBUJPOT GVUVSFUBYDIBSHFTXJMMCFBGGFDUFECZUIFMFWFMTBOENJYPGQSPmUBCJMJUZJO 'VUVSFUBYDIBSHFTXJMMCFSFEVDFECZBEFGFSSFEUBYDSFEJUJO 5IFFYQFOTFTOPUBMMPXFEGPSUBYQVSQPTFTBSFQSJNBSJMZBNPSUJT 5IFFGGFDUJWFUBYSBUFGPSDPOUJOVJOHPQFSBUJPOTGPSUIFZFBSC 5IFUPUBMFYQFOTFGPSUIFZFBSDBOCFSFDPODJMFEUPBDDPVOUJOH Analysis of tax charge of Analysis 9. Tax 9. 8. Finance income and expense and income 8. Finance 7. Staff costs Staff (continued) 7. 130 Notes to the consolidated financial statements financial consolidated tothe Notes 130 bwin.party Annual report & accounts 2013 Consolidated statement of cashflows Consolidated statement of comprehensive in UIGEA. ofthe enactment accepte longer no were that UScustomers to relate which USbut ofthe outside physically located operations those to US refers US 0O0DUPCFSUIF(SPVQTPMEUIF0OHBNF##CVTJOFTTJUBDRVJSFEBTQBSUPGUIF.FSHFSUP"NBZB(BNJOH(SPVQ*OD Ongame B2B following: ofthe consists operations Discontinued operations Discontinued 10. Sale of assets held for ofSale sale assets 1VSDIBTFTPGQSPQFSUZ QMBOUBOEFRVJQNFOU 1VSDIBTFTPGJOUBOHJCMFBTTFUT Net decrease in cash and cash equivalents cash and cash in decrease Net activities investing in used cash Net businesses and subsidiaries of acquisition on acquired cash Net Investing activities Net outflow from cash operating activities payables other and trade in Decrease receivables other and trade in Decrease Operating before cashflows movement Adjustments for: Loss for the period Year ended 31 December #BTJDBOEEJMVUFE cents) (€ share per Loss parent the of holders equity the to attributable period the for Loss 5BY Loss before tax 'JOBODFFYQFOTF Loss from operating activities %JTUSJCVUJPOFYQFOTFT 1SPWJTJPOTJOZFBS Loss on disposal held of for assets sale "ENJOJTUSBUJWFFYQFOTFT Other operating income Gross profit Total revenue Other revenue Year ended 31 December *OUFSFTUFYQFOTF Loss on disposal held of for assets sale *ODPNFUBYFYQFOTF *ODSFBTFJOSFTFSWFTEVFUPTIBSFCBTFEQBZNFOUT of intangibles Amortisation Depreciation of property, plant and equipment and plant property, of Depreciation s in working capital and provisions and capital working s in come relating to discontinued operations Notes 11 €million €million (11.9) 11.2 11.2 d following the the d following 2013 2013 0.7 – – – – – – – – – – – – – – – – – – – – – – – – – – – €million €million (13.8) (21.6) (39.8) (39.8) (39.4) (39.2) (11.9) (17.3) (15.3) (24.8) (33.0) 2012 2012 2012 10.4 10.4 10.4 10.4 17.3 17.3 (4.9) (4.9) (0.4) (0.2) (4.1) (1.0) 8.2 8.2 8.2 0.4 0.2 0.2 0.1 2.4 2.4 – – – – StrategicStrategic GovernanceGovernance FinancialFinancial report performance 131131 – – – 5.6 5.1 (7.8) 12.1 98.8 20.3 17.3 91.5 31.5 2012 2012 2012 98.8 Total Total Total Total (63.7) (63.7) (11.6) 817.7 817.7 € cents €million POFPGGBOE SMZJOH – 5.4 7.3 TFTUIBUSFMBUFUP MMPXT 2013 2013 17.3 43.9 59.2 Total (39.8) 809.2 809.2 OVNCFSPGPSEJOBSZ € cents €million operations operations Discontinued Discontinued Discontinued Discontinued – – – – – – ––– ––– 2.0 – 2.0 0.1 0.5 0.6 5.6 – 5.3 (0.2) 20.1 0.2 91.5 – 31.5 – (2.9) (4.9) (7.8) (2.9)* (4.9)* (7.8)* (23.9) (11.6) 14.7 (2.7)14.4 (2.7)* 12.1 11.8 120.6 (21.8) € cents €million operations operations Continuing Continuing Continuing Continuing – – 0.2 0.2 – – – 6.1 2.3 1.0 0.6 2.5 9.5 8.0 (6.9) 2013 2013 43.9 16.6 59.4 59.2 Total Total Total (83.8) € cents€ €million – – – – – – € cents€ €million operations operations Discontinued Discontinued Discontinued Discontinued NBOBHFUIFPQFSBUJPOTPGUIFCVTJOFTTBOESFNPWFUIFJNQBDUPG QBZNFOUT.BOBHFNFOUCFMJFWFTUIBUUIJTCFUUFSSFnFDUTUIFVOEF ––– – – – – – – FYDIBOHFEJGGFSFODFT SFPSHBOJTBUJPOFYQFOTFT JODPNFPSFYQFO BUUSJCVUBCMFUPPSEJOBSZ4IBSFIPMEFSTCZUIFXFJHIUFEBWFSBHF 6.1 2.3 1.0 0.6 – 2.5 9.5 – 8.0 – 5.4 – 5.4 5.4 – 5.3 5.3 – 7.3 7.3 – 7.2 7.2 – (6.9) 59.2 – 43.9 – 16.6 – 59.4 – (83.8) € cents€ €million operations operations Continuing Continuing Continuing Continuing Impairments on property, plant and equipment earnings net Clean *NQBJSNFOUTPOBWBJMBCMFGPSTBMFJOWFTUNFOUT Impairments on acquired intangibles Impairments on acquired intangible assets and goodwill .BSLFUFYJUDPTUT assetsAmortisation intangible acquired on o5BYUIFSFPO Loss on disposal of assets held for sale assets for of held disposal on Loss Release of fair value provision 3FUSPBDUJWFUBYFTBOEBTTPDJBUFEDIBSHFT 4IBSFCBTFEQBZNFOUT #BTJD$MFBO&14 Year ended 31 December 31 ended Year #BTJD&14 %JMVUFE&14 Merger and acquisition costs &YDIBOHFMPTTFT HBJOT %JMVUFE$MFBO&14 3FPSHBOJTBUJPOFYQFOTFT 1SPmU MPTT GPSUIFQVSQPTFTPGCBTJDBOEEJMVUFE earnings per share being profit attributable to equity holders of the parent Unwinding of discount associated with the Group’s /PO1SPTFDVUJPO"HSFFNFOU Year ended 31 December 31 ended Year Weighted average number ordinary of shares (million) Adjusted earnings per ordinary share (€ cents) Weighted average number ordinary of shares (million) #BTJDFBSOJOHT MPTT QFSPSEJOBSZTIBSF ŇDFOUT Basic EPS Clean Adjusted earnings (€million) Year ended 31 December 31 ended Year EPS Basic #BTJDQSPmU MPTT ŇNJMMJPO 11. Earnings per share (‘EPS’) 11. per share Earnings Basic earnings per share #BTJDFBSOJOHTQFSTIBSFJTDBMDVMBUFECZEJWJEJOHUIFFBSOJOHT "EJMVUFE&14DBMDVMBUJPONBZOPUJODSFBTFBCBTJD&14DBMDVMBUJPOXIFOUIFCBTJD&14JTBMPTT TIBSFTPVUTUBOEJOHEVSJOHUIFQFSJPE FYDMVEJOHUIPTFIFMEBTPXOTIBSFT Clean earningsClean per share 5IFQFSGPSNBODFNFBTVSFPG&14VTFEJOUFSOBMMZCZNBOBHFNFOUUP DFSUBJOOPODBTIJUFNTJT$MFBO&14 XIJDIJTDBMDVMBUFECFGPSF FYDFQUJPOBMJUFNTBOEOPODBTIDIBSHFTSFMBUJOHUPTIBSFCBTFE performance of the business and assists in providing a clearer view of the fundamental performance of the Group. $MFBOOFUFBSOJOHTFYDMVEJOHBNPSUJTBUJPOBOEJNQBJSNFOUTPOBDRVJTJUJPOTBUUSJCVUBCMFUPFRVJUZ4IBSFIPMEFSTJTEFSJWFEBTGP 132 Notes to the consolidated financial statements financial consolidated tothe Notes 132 bwin.party Annual report & accounts 2013 Amortisation charges are charged through administration on theAmortisation income costs statement. t ofbetween lives economic useful estimated their over amortised being are intangibles other and licences lifeofthe the over %FWFMPQNFOUFYQFOEJUVSFSFQSFTFOUTTPGUXBSFJOGSBTUSVDUVSFBTTFUTUIBUIBWFCFFOEFWFMPQFEBOEHFOFSBUFEJOUFSOBMMZ-JDFODFTBSFBNPSUJTFE 0UIFSJOUBOHJCMFTQSJNBSJMZJODMVEFEFWFMPQNFOUFYQFOEJUVSF MPOHUFSNHBNJOHBOEJOUFMMFDUVBMQSPQFSUZMJDFODFTBOEQVSDIBTFE DVTUPNFSTUBLFJOUPBDDPVOUUIFFYQFDUFEJNQBDUPGQMBZFSBUUSJ BOECSPBEDBTUMJCSBSJFT5IFWBMVFPGBDRVJSFEJOUBOHJCMFTJTC lists customer include primarily and acquisition ofan part as purchased assets intangible those are assets intangible Acquired Intangible12. assets FRVJUZJOTUSVNFOUTIBWFCFFOJODMVEFEGPSUIFQVSQPTFPGEJMVUF poten related their and requirements performance the satisfied have to deemed are date that at employees were who holders option performanc ofthe end the as treated is end period the 33, IAS with inaccordance issuable, contingently are instruments equity p unvested, the Although above. share per earnings basic for ofshares number inthe included not are which granted instruments potentia all account into takes share per earnings diluted for ofshares number average weighted the 33, IAS with In accordance Earnings pershare11. (continued) (‘EPS’) &YDIBOHFNPWFNFOUT of assets Reclassification Additions Adjustment to of consideration prior business combinations 2012 December 31 at As &YDIBOHFNPWFNFOUT Additions through combinations business Acquired As at 31 December 2013 2012 December 31 at As Carrying amounts As at 31 December 2013 &YDIBOHFNPWFNFOUT of assets Reclassification Impairment year the for Charge 2012 December 31 at As &YDIBOHFNPWFNFOUT year the for Charge 2012 1January at As Amortisation As at 31 December 2013 2012 1January at As Cost or valuation share per earnings diluted of purposes the for shares ordinary of number average Weighted shares issuable contingently and options share unvested dilutive potential of Effect share per earnings basic of purposes the for shares ordinary of number average Weighted Weighted average number of during shares purchased the year year the during issued shares of number average Weighted Number of in shares issueat held as by 1 the January Employee Trust 1January at as issue in shares of Number of number Weighted shares average Year ended 31 December BTFEPODBTInPXQSPKFDUJPOTBUUIFUJNFPGBDRVJTJUJPO$VTUPNF UJPO E&14 (As restated) restated) (As Goodwill Goodwill €million 265.0 331.4 29.7 626.1 626.1 29.7 331.4 265.0 907.4 24.5 422.2 460.7 54.2 753.6 725.7 1,533.5 267.8 460.7 460.7 728.5 708.2 19.3 (2.1) (0.7) 1.0 – (0.3) – 0.1 – (0.1) 2.3 – 2.3 – 68.9 9.5 59.4 – – – (0.2) – – – 23.5 23.5 – intangibles intangibles Acquired €million 395.5 360.7 270.3 756.2 751.4 91.5 (1.7) (0.7) (1.1) 0.8 4.0 – intangibles intangibles €million Number Number million hree and five years. years. five and hree SMJTUTGSPNFYJTUJOH 826.6 826.6 809.2 813.0 Other Other e period. Those , brands, software software , brands, lly dilutive equity equity dilutive lly 17.4 17.4 16.3 14.6 10.4 1,515.6 30.9 1,480.0 20.4 10.4 2013 (0.4) (0.9) (6.0) 0.5 0.2 0.2 0.5 0.2 – – 0.2 3.1 3.1 0.2 0.1 4.0 otentially dilutive dilutive otentially – (1.4) – – EPNBJOOBNFT tially dilutive dilutive tially (As restated) restated) (As €million Number Number million 679.6 836.0 741.4 838.4 838.4 817.7 837.2 (19.9) Total 2012 2012 95.5 10.4 23.3 20.7 (4.2) (3.9) (0.9) 1.9 4.3 4.3 – – StrategicStrategic GovernanceGovernance FinancialFinancial report performance 133133 rate rate 98.0 67.4 13.4 74.8 14.2 2012 1.0% 1.0% 267.8 Growth Growth (25.0%) €million €18.4m (€15.3m) projections ow ed fromed POEJUJPOT 2013 2013 98.8 67.7 12.8 73.1 12.6 ns is appropriate is ns ns is appropriate is ns PXT 265.0 rtaken at at rtaken 26.9% 26.0% 20.4% margin margin €million Operating Operating Operating Operating Key assumptions used in the projections Key assumptions used in the projections rate rate 11.8% 11.8% 16.5% €43.8m (€22.9m) Discount Discount Discount Discount (€36.2m) €22.9m FYQFDUBUJPOTJOUIFMJHIUPGBOUJDJQBUFEFDPOPNJDBOENBSLFUD BTUT FNBKPSBTTVNQUJPOTVTFEGPSUIFDBTJOPHBNFT$(6BSFBTGPMM CGU Casino & games Effect increase of 1% in assumption decrease assumption 1% in Effect of Sports betting Key assumptions used in the projections Change in assumption required to equal carrying value Other year of end At Casino & games 1PLFS #JOHP As at 31 December Sports betting covering the following ten year period. The Group believes that going beyond five years’ cashflows in the value in use calculatio given the Group is an established business and is a market leader in a growth industry. The Directors have concluded that there are no reasonably possible changes in the key assumptions which would cause the carrying value of HPPEXJMMBOEPUIFSJOUBOHJCMFTUPFYDFFEUIFJSWBMVFJOVTF5I Casino games & The recoverable amount of the casino & games CGU of €353.1m has been determined from value in use calculations based on cashflow Sports betting The recoverable amount of the sports betting CGU of €408.9m has been determined from value in use calculations based on cashflow projections covering the following ten year period. The Group believes that going beyond five years’ cashflows in the value in use calculatio Impairment In accordance with IAS 36, the Group regularly monitors the carrying value of its intangible assets. A detailed review was unde 31 December 2013 to assess whether the carrying value of assets was supported by the net present value of future cashflows derivthose assets. The recoverable amounts of all the above CGUs have been determined from value use in calculations based on cashQSPKFDUJPOTňGSPNGPSNBMMZBQQSPWFECVEHFUTBOEMPOHSBOHFGPSFD fl given theGroup is an established business and is a market leader in a growth industry. 0QFSBUJOHNBSHJOTIBWFCFFOCBTFEPOQBTUFYQFSJFODFBOEGVUVSF Discount rates are based on the Group’s weighted average cost of capital. The table below shows the effect of changes in the key assumptions would have on the recoverable amount. 12. Intangible assets12. (continued) Intangible Goodwill Goodwill is allocated to the following cash generating units (CGUs): 134 Notes to the consolidated financial statements financial consolidated tothe Notes 134 bwin.party Annual report & accounts 2013 During the year an impairment of €2.3m was charged to administration costs in the income statement in relation to assets with the other CGU. other the with assets to inrelation statement income inthe costs administration to charged was of€2.3m impairment an year the During aggregated. be cannot value carrying deter to used assumptions the and significant not are inthemselves which units business ofindividual composed CGUis other The Other amount. recoverable the on have would assumptions key inthe ofchanges effect the shows below table The ofcapital. cost average weighted Group’s the on based are rates Discount 0QFSBUJOHNBSHJOTIBWFCFFOCBTFEPOQBTUFYQFSJFODFBOEGVUVSF industry. inagrowth leader amarket is and business established an is Group app is calculations inuse value inthe cashflows years’ five beyond going that believes Group The period. year ten following the projecti cashflow on based calculations inuse value from determined been has CGUof€102.3m bingo ofthe amount recoverable The Bingo amount. recoverable the on have would assumptions key inthe ofchanges effect the shows below table The ofcapital. cost average weighted Group’s the on based are rates Discount 0QFSBUJOHNBSHJOTIBWFCFFOCBTFEPOQBTUFYQFSJFODFBOEGVUVSF industry. inagrowth leader amarket is and business established an is appropr is calculations inuse value inthe cashflows years’ five beyond going that believes Group The period. year ten following projectio cashflow on based calculations inuse value from determined been has CGUof€94.7m poker ofthe amount recoverable The Poker Intangible (continued)12. assets Effect ofEffect in 1% assumption decrease assumption in 1% of increase Effect Bingo ofEffect in 1% assumption decrease assumption in 1% of increase Effect Poker Change in assumption required to equal carrying value carrying equal to required assumption in Change projections the in used assumptions Key value carrying equal to required assumption in Change projections the in used assumptions Key FYQFDUBUJPOTJOUIFMJHIUPGBOUJDJQBUFEFDPOPNJDBOENBSLFUD FYQFDUBUJPOTJOUIFMJHIUPGBOUJDJQBUFEFDPOPNJDBOENBSLFUD Discount Discount 1.m(€4.8m) €11.2m (€11.4m) €10.0m €.m €11.4m (€8.3m) €.m €4.8m (€9.2m) 12.7% 11.8% 13.7% 11.8% rate rate Key assumptions used in the projections the in used assumptions Key projections the in used assumptions Key Operating Operating margin margin 12.5% 27.7% 11.8% 24.4% ropriate given the the given ropriate iate given the Group Group the given iate mine their their mine POEJUJPOT POEJUJPOT ons covering ns covering the (€3.9m) (€3.5m) Growth Growth Growth €4.2m €4.7m (1.6%) (4.6%) 1.0% 1.0% rate rate StrategicStrategic GovernanceGovernance FinancialFinancial report performance 135135 6.5 1.3 4.1 2.3 0.4 0.2 0.3 1.4 2.3 1.3 1.0 (2.3) (3.1) (2.0) (4.8) (5.7) (6.1) (1.5) (8.0) (4.3) (6.7) (2.9) 25.8 30.6 80.4 21.3 99.0 23.1 2012 16.1 Total Total Total Total 141.6 113.2 €million €million €million

– – – – – – – – 1.3 4.1 0.3 5.0 0.3 5.0 1.9 1.3 (1.7) (2.1) (6.1) (5.4) (2.6) (5.4) (3.3) 2013 2013 92.5 15.4 73.5 19.4 91.5 26.9 10.6 117.6 fittings, €million €million €million 'JYUVSFT tools and tools equipment equipment financial assets financial "WBJMBCMFGPSTBMF

– – – – – – – – – – 7.3 5.5 8.4 4.5 0.5 3.7 0.2 0.6 0.9 3.6 (0.1) (2.3) (1.3) (2.3) (5.7) (0.3) (0.2) (0.3) (0.6) 10.5 1MBOU €million €million machinery and vehicles vehicles and Joint ventures – – – – – – 2.0 2.4 1.4 0.1 3.8 7.6 0.0 3.1 0.1 2.3 1.4 1.9 2.4 1.3 20.7 24.4 20.7 2.4 1.3 1.0 114.8 104.2 6.1 4.5 2.4 0.8 19.1 22.3 19.1 2.4 0.8 (2.0) (0.1) (3.6) (0.4) (1.5) (1.0) (0.1) (2.3) (0.4) 14.7 1.8 26.1 42.6 26.1 14.7 1.8 13.4 18.5 12.1 0.9 23.8 36.8 23.8 12.1 0.9 18.2 5.4 128.0 151.6 128.0 18.2 5.4 €million €million Land and Land and buildings buildings Associates Associates Share of profit Unrealised gain transferred to equity Impairments 2013 December 31 at As As at 31 December 2012 profits of Distribution loan of Repayment Repayment of loan of Repayment Share of profit Unrealised gains transferred to equity Impairments Additions Reclassification investments of As at 1 January 2012 As at 31 December Contracted but not provided for As at 31 December 2013 December 31 at As Carrying amounts Carrying As at 31 December 2012 &YDIBOHFNPWFNFOUT 2013 December 31 at As Charge for the year Impairment Disposals Charge for the year Disposals &YDIBOHFNPWFNFOUT As at 31 December 2012 &YDIBOHFNPWFNFOUT 2013 December 31 at As Depreciation As at 1 January 2012 As at 31 December 2012 Additions Disposals Additions Disposals &YDIBOHFNPWFNFOUT Reclassified assets sale from for held Cost or valuation or Cost As at 1 January 2012 15. Investments 14. capital expenditure for Commitments 13. Property, plant and equipment and plant 13. Property, 136 Notes to the consolidated financial statements financial consolidated tothe Notes 136 bwin.party Annual report & accounts 2013 market movement impairment of €3.1m in the investment trust that has been charged through administration costs on the income st income the on costs administration through charged been has that trust investment inthe of€3.1m impairment movement market JOWFTUNFOUTPGŇNUIBUXBTSFDPHOJTFEJOUPFRVJUZ BTQFDJmDQSPWJTJPOPGŇNBHBJOTUUIFDBSSZJOHWBMVFPG3FBM'VO)PME comprisi of€1.3m) gain (2012: €4.8m by fell investments ofoverall value The trust. investment an Trust, Aldorino and company) JODMVEJOH/FX(BNF$BQJUBM-1BOE"YPO$BQJUBM*$5'VOE5IF(S *OWFTUNFOUTBSFIFMEJO8BWF$SFTU)PMEJOHT-JNJUFE BQBZNFOU "WBJMBCMFGPSTBMFJOWFTUNFOUTQSJNBSJMZSFMBUFUPUIF(SPVQTJOUFSFTUTJOTFWFSBMFBSMZTUBHFEJHJUBMFOUFSUBJONFOUJOWFTUNF investments Available-for-sale 2013. December 31 at as outstanding remained commitments These conditions. performance certain c working €1m afurther and platform software the develop to €1.0m company venture joint the loan to agreed Group The platform. On the Group 9 August entered 2012 into a joint venture with agreement Nordeus distribute LLC to publish and develop,market, a year. the during arising oflosses share unrecognised no is There follows: as are ventures joint to relating amounts Aggregated statem financial consolidated inthe accounted equity been have and venture ofajoint definition the meet entities following The in joint ventures Investment income. ofcomprehensive statement inthe recognised 2012 5December to period UIF"MEPSJOP5SVTU5IFJOWFTUNFOUJO#FUCVMM)PMEJOHT4&XBTF 4&XBTSFDMBTTJmFEBTBOBWBJMBCMFGPSTBMFmOBODJBMBTTFUPO 5IFDBSSZJOHWBMVFBUUIFFOEPGUIFSFQPSUJOHQFSJPESFMBUFEQSJNBSJMZUPUIFJOWFTUNFOUJOBTTPDJBUFPGCXJOFL5IFJOWFTU investment. ofthe amount carrying the within included is The goodwill rec is ofacquisition date the at recognised associate ofthe liabilities contingent and liabilities assets, identifiable of the 5IFSFJTOPVOSFDPHOJTFETIBSFPGMPTTFTBSJTJOHEVSJOHUIFZFB follows: as are associates to relating amounts Aggregated The following entities meet the definition of an associate and have been equity accounted in the consolidated financial statement financial consolidated inthe accounted equity been have and associate ofan definition the meet entities following The in associates Investment Investments15. (continued) 1SPmU Revenues liabilities Total Current assets /PODVSSFOUBTTFUT Nordeus WIN (Gibraltar) Limited Conspo Sportcontent GmbH /PODVSSFOUBTTFUT Name 1SPmU Revenues liabilities Current Current assets Coimbra II SL Restaurante bwin e.k. Name %FDFNCFSGPMMPXJOHBDIBOHFJODPOUSPMXIFOUIFTIBSFTXF S"OZFYDFTTPGUIFDPTUPGBDRVJTJUJPOPWFSUIF(SPVQTTIBSF RVJUZBDDPVOUFEVOUJMUIFUSBOTGFSXJUIUIFTIBSFPGUIFMPTTB QSPDFTTJOHDPNQBOZBOEWBSJPVTHBNJOHBOEOPOHBNJOHJOWFTUNFOUGVOET PVQBMTPIBTJOWFTUNFOUTJO3FBM'VO)PMEJOHT4SM BTPDJBMHBN Spain Gibraltar Germany Country ofCountry incorporation ofCountry incorporation Germany ognised as goodwill. goodwill. as ognised NFOUJO#FUCVMM)PMEJOHT PGUIFOFUGBJSWBMVF OUGVOET OEJNQBJSNFOUGPSUIF €million €million ng a gain on various various on ng again JOHT4SMBOEBNBSLUP Proportion ofProportion voting rights ofProportion voting rights 50% 50% 50% 50% 36.5 10.7 2013 2013 2013 2013 SFUSBOTGFSSFEJOUP FTEFWFMPQNFOU 1.7 3.0 0.4 2.3 6.9 4.9 0.4 4.8 social betting ents: s: apital under held at 31 December held at 31 December atement. €million €million 50% 50% 50% 50% 2012 2012 2012 2012 2012 2012 28.5 7.0 1.9 4.9 0.2 0.2 2.9 4.4 1.0 5.3 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 137137 – – – – – – 2.9 7.7 1.9 7.8 0.6 1.0 2.2 6.3 1.3 (8.7) (6.9) 10.0 As at at As As at at As 106.2 107.8 €million €million €million Company 31 December31 2012 31 December 201231 of this – – – – – – – 0.4 0.1 11.8 11.8 As at at As As at at As OUWBMVFPGFYQFDUFE 106.2 106.7 FEPOFTUJNBUFTPG €million €million Deferred and contingent consideration contingent and Deferred 31 December 2013 2013 December 31 31 December 2013 2013 December 31

– 2.0 6.8 6.8 (1.9) 27.5 41.3 70.5 68.6 As at at As 139.4 Group €million 31 December 201231 – – (1.3) 32.2 46.0 10.9 10.9 50.0 48.7 As at at As 126.9 €million 31 December 2013 2013 December 31 MDVMBUJOHUIFQSFTFOUWBMVFPGFYQFDUFEGVUVSFDBTInPXT IFSSFDFJWBCMFTBQQSPYJNBUFTUPUIFJSGBJSWBMVFT XIJDIJTCBT As at 31 December 2013 December 31 at As Credited income comprehensive consolidated statement to of As at 31 December 2012 income comprehensive Charged consolidated statement to of Credited income comprehensive consolidated statement to of As at 1 January 2012 income comprehensive Charged consolidated statement to of Later than one year but not later than five years Within one year one Within Contingent consideration Contingent Due from Group companies assets Current Contingent consideration Contingent Non-current assets Other receivables Other Less: chargeback provision chargeback Less: 1BZNFOUTFSWJDFQSPWJEFSToOFU 1SFQBZNFOUT 1BZNFOUTFSWJDFQSPWJEFST Movements on the provision are as follows: 5IF%JSFDUPSTDPOTJEFSUIBUUIFDBSSZJOHBNPVOUPGUSBEFBOEPU BNPVOUTSFDPWFSBCMF5IFSFDPWFSBCMFBNPVOUJTEFUFSNJOFECZDB Deferred and contingent consideration relates to amounts receivable for the sale of Ongame and domain names. 1SPWJTJPOTBSFFYQFDUFEUPCFTFUUMFEXJUIJOUIFOFYUZFBSBOESFMBUFUPDIBSHFCBDLTXIJDIBSFSFDPHOJTFEBUUIF%JSFDUPSTCFTUFTUJNBUFPGUIFQSPWJTJPOCBTFEPOQBTUFYQFSJFODFPGTVDIFYQFOTFTBQQMJFEUPUIFMFWFMPGBDUJWJUZ 5IFOPOEJTDPVOUFECPPLWBMVFTGPSUIFTFBNPVOUTBSFBTGPMMPXT 16. Trade and other receivables and other 16. Trade 15. Investments (continued) 15. Investments 5IF%JSFDUPSTDPOTJEFSUIBUUIFDBSSZJOHBNPVOUPGUIFJOWFTUNFOUTBQQSPYJNBUFTUPUIFJSGBJSWBMVFTPSFTUJNBUFTPGUIFQSFTF future cashflows. future Company The carrying company. value Group 2012 another from in acquired it which Aldorino Trust the in investment the holds The Company investment was impaired as noted above, resulting in a carrying value of €1.4m (2012: €4.5m). 138 Notes to the consolidated financial statements financial consolidated tothe Notes 138 bwin.party Annual report & accounts 2013 20. Client liabilities and progressive prize pools prize progressive and liabilities Client 20. 5IFOPOEJTDPVOUFECPPLWBMVFTGPSUIFTFBNPVOUTBSFBTGPMMPXT BQQSPYJNBUFTUPUIFJSGBJSWBMVFXIJDIJTCBTFEPOUIFOFUQSFT ofother amount carrying The costs. ongoing other and purchases trade for outstanding amounts comprise payables other and Trade %FGFSSFEBOEDPOUJOHFOUDPOTJEFSBUJPOSFMBUFTUPBNPVOUTQBZBCMFGPSUIFBDRVJTJUJPOTPG0SOFPOBOE815 19. Trade andother payables equivalents andcash Cash 18. €21.3m). (2012: of €25.0m held for payment provider service transactions. In addition, at 31 held representsguaranteesRestricted cash as cash for regulated licences markets’ and significant marketing contracts together 17. Short-term investments BQQSPYJNBUFTUPUIFJSGBJSWBMVFXIJDIJTCBTFEPOUIFOFUQSFT progressive and liabilities ofclient amount carrying The bonuses. promotional certain and pools prize tournament and jackpots winn undrawn received, deposits net including customers to due amounts represent pools prize progressive and liabilities Client Cash in hand and current accounts current and hand in Cash As at 31 December Restricted cash As at 31 December Client liabilities liabilities Client years five than later not but year one than Later Within one year liabilities Non-current years five than later not but year one than Later Other payables andcontingentDeferred consideration liabilities Current companies Group to Due payables other and Trade andcontingentDeferred consideration 1SPHSFTTJWFQSJ[FQPPMT FOUWBMVFPGFYQFDUFEGVUVSFDBTInPXT FOUWBMVFPGFYQFDUFEGVUVSFDBTInPXT December 2013 there are other guarantees in place that are n 31 December 2013 €million €million €million €million 173.3 173.3 As at 13.6 13.6 13.6 60.6 59.6 2013 9.8 9.8 3.8 1.0 – 31 December 2012 2012 31 December (Restated) (Restated) €million €million €million €million Group Group 169.7 169.7 As at 2012 2012 13.4 13.4 13.4 73.7 70.4 8.6 4.8 3.3 –

31 December 2013 31 December 2013 31 December 2013 Deferred and contingent consideration €million €million €million €million €million €million €million €million €million ot secured with cash cash with ot secured 198.4 196.9 124.8 124.8 116.0 As at As at As at 12.7 12.7 12.7 2013 2013 5.4 5.4 prize pools 0.6 1.5 8.8 8.8 4.4 1.0 ings, progressive ings, progressive with client funds – – – – – payables 31 December 2012 31 2012 December 31 December 2012 31 2012 December 31 December 2012 31 2012 December Company Company €million €million €million €million €million €million €million €million €million 134.8 132.2 136.7 136.7 122.4 As at As at As at 2012 2012 2012 2012 31.5 31.5 31.5 14.3 14.3 0.3 2.6 5.7 3.5 9.2 – – – – – StrategicStrategic GovernanceGovernance FinancialFinancial report performance 139139 – – 6.9 6.9 4.2 4.2 6.8 (3.8) (1.9) 29.5 29.5 29.5 2012 As at at As Total Total (11.3) (83.8) €million €million €million Fair value Fair 31 December 201231 Onerous contractsOnerous – – – – (1.6) – – terms and 8.7 10.8 rtain countries countries rtain (9.1) (4.2)(16.1) 2013 2013 23.0 23.0 23.1 23.1 23.1 As at at As JOHEJTQVUF ŇN untries involved. n discounted for t the Directors O5IFEJTDPVOUSBUF UPTFUUMFDMBJNT €million €million €million Onerous contracts 31 December 2013 2013 December 31 – – – – – – – 3.83.8 – 0.10.1 – – – (3.8) 6.2 6.2 2.1 0.1 0.70.8 6.6 6.6 – 6.8 – (2.2) (1.6) (1.9) 30.8 30.8 30.8 78.9 – 78.9 78.9 – 11.9 93.2 11.9 – 11.9 11.9 – 16.0 11.9 4.1 77.7 73.9 3.8 2012 As at at As (83.8) (11.9) 105.1 €million €million €million Litigation Litigation Litigation Book value Book 31 December31 2012 – – – 2013 2013 24.3 24.3 24.3 24.3 24.3 As at at As €million €million 31 December 2013 2013 December 31 BSSJFEBUBNPSUJTFEDPTUCBTFEPOUIFJSJOUFSOBMSBUFTPGSFUVS XSJUUFOCBDLEVSJOHUIFTFDPOEIBMGPG5IFTFUUMFNFOUBHSFFEJTGPSŇN Later than one year but not later than ﬁve years Non-current liabilities Secured bank loan Current liabilities Secured bank loan

Later than one year but not later than five years Within one year one Within Credited to consolidated statement of comprehensive income Credited comprehensive consolidated statement to of Utilised during the year the during Utilised Non-current liabilities December 31 at 2013 Transferred to creditors to Transferred Unwinding discount of Later than one year but not later than five years Reclassification due to date of maturity income Credited comprehensive consolidated statement to of As at 31 December 2012 Current liabilities December as 31 at 2013 As at 1 January 2012 Unwinding discount of Utilised during the year the during Utilised income comprehensive Charged consolidated statement to of As at 31 December 2012 Unwinding discount of As at 1 January 2012 Unwinding discount of Reclassification due to date of maturity As at 31 December #BOLCPSSPXJOHTBSFSFDPHOJTFEBUGBJSWBMVFBOETVCTFRVFOUMZD 22. and borrowings Loans applied was 6.48% (2012: 3.82%). Litigation refers to provisions made in respect of certain outstanding legal and regulatory disputes and are an estimate of wha CFMJFWFUPCFUIFGBJSWBMVFCBTFEPOQSPCBCJMJUZXFJHIUFEFYQFDUFEWBMVFT'PMMPXJOHUIFTVDDFTTGVMTFUUMFNFOUPGBOPVUTUBOEPGBGBJSWBMVFQSPWJTJPODSFBUFEBUUIFUJNFPGUIF.FSHFSXBT SFTVMUJOHJOBXSJUFCBDLPGŇNBOEBUSBOTGFSUPDSFEJUPSTPGŇN%VSJOHUIFZFBSUIFSFXBTBMTPBOBHSFFNFOUSFBDIFE 21. Provisions from the state of Kentucky for €11.9m. See note 25 for further details. Onerous contracts relate to provisions made against the future costs of contracts where subsequent changes in legislation in ce have meant that the future economic benefits received by the Group are less than the costs involved with fulfilling the remaining conditions of the contracts and is recognised at the Directors’ best estimate based on their knowledge of the markets of the co The amounts due for provisions are recognised at fair value based on the above and carried at the best estimate of the provisio the time value of money. 5IFOPOEJTDPVOUFECPPLWBMVFTGPSUIFTFBNPVOUTBSFBTGPMMPXT 140 Notes to the consolidated financial statements financial consolidated tothe Notes 140 bwin.party Annual report & accounts 2013 1SJODJQBMUFSNTBOEUIFEFCUSFQBZNFOUTDIFEVMFPGMPBOTBOECP Loans andborrowings22. (continued) 23. Deferred tax Deferred 23. 2014. inJanuary repaid was drawdown of this 5IFbNMPBOPVUTUBOEJOHUP5IF3PZBM#BOLPG4DPUMBOEQMDBTBU%FDFNCFSXBTBESBXEPXOPGQBSUPGBbNGBDJMJUZ follows: as is fees, and interest including borrowings, and ofloans analysis maturity The comprehensive income in equal annual amounts over the period of the leases. ofthe period the over amounts annual inequal income comprehensive consolidat the to charged are leases operating under costs Rental buildings. and land to relate commitments lease operating All 5IFUPUBMGVUVSFNJOJNVNMFBTFQBZNFOUTEVFVOEFSOPODBODFMMBC Operating commitments lease 24. %FGFSSFEUBYSFMBUFTQSJNBSJMZUPUFNQPSBSZEJGGFSFODFTBSJTJOH 5IF3PZBM#BOLPG4DPUMBOEQMD 2013 December 31 at As Within one year Within one year 5IF3PZBM#BOLPG4DPUMBOEQMD 2012 December 31 at As 5IF3PZBM#BOLPG4DPUMBOEQMD Later than one year and not later than five years five than later not and year one than Later December 31 at As More than five years five than More years five than later not but year one than Later December 31 at As As at 31 December 2013 of to statement consolidated comprehensiveCredited income &YDIBOHFEJGGFSFODFT 2012 December 31 at As of to statement consolidated comprehensiveCredited income &YDIBOHFEJGGFSFODFT unit of a business disposal through Disposed 2012 1January at As Amount £30m £30m £15m £25m NPOUIT-*#03QMVT NPOUIT-*#03QMVT NPOUIT-*#03QMVT GSPNGBJSWBMVFBEKVTUNFOUTPGBDRVJSFEJOUBOHJCMFT SSPXJOHTCFGPSFBNPSUJTBUJPOBSFBTGPMMPXT MFPQFSBUJOHMFBTFQBZNFOUTBSFBOBMZTFECFMPX Nominal rate Year of maturity of Year rate Nominal 2015 Floating charge over the assets of Cashcade FloatingchargeovertheassetsofCashcade 2015 Floatingchargeovertheassetsofvarious FloatingchargeovertheassetsofCashcade 2014 2015 Limited anditssubsidiaryundertakings Limited anditssubsidiaryundertakings Group’s subsidiaryundertakings €million €million €million €million 50.3 25.0 25.3 42.9 42.9 14.6 20.8 2013 2013 5IFFOUJSFBNPVOU ed statement of of statement ed 7.5 7.5 Security €million €million €million €million €million (11.6) 36.9 36.9 2012 2012 2012 2012 44.1 44.1 59.1 40.1 32.6 27.0 15.0 (6.9) (0.3) (0.4) (3.0) 8.2 8.2 7.5 3.8 3.8 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 141141 he amount of IJDIIBWFCFFO al sulting in a TUSBUJWF recedence for y pending before operator liable tooperator liable 1PSUVHBM 4MPWFOJB FDJTJPOPG ent betweenent therefore not be n published in "VTUSJBOMJDFOTFUP QQSPYJNBUFMZŇN atibility of Austrian H1MDBOEPUIFS give rise to further Company continues continues Company regarding Ongame regarding s pending against of First Instance. It OTUBODF XIJDIXBT BSTUP PSUVHVFTF4VQSFNF UB$BTBJO1PSUVHBM s no valid claims are 1PSUVHVFTF$BTJOP ZXIFSFUIFTFSWJDFT tablished at the time ums lost by Kentucky by lost ums d of success of such 5IFBTTFTTNFOUTXFSF QVCMJTIJOHPGUIFSVMJOH UIPSJUZ PSCZSFBTPOPGB BOE-1'1TBQQFBMJTQFOEJOH5IF FCFFOUSFBUFEBTFYFNQUTVQQMJFTPGHBNCMJOH PSPOTVQQMJFTX UJPOTPG " Ň GPSFBDIEBZUIFJOGSBDUJPOMBTUTUPUIF SUZmMFEBOBQQFBMBHBJOTUUIFEFDJTJPOPGUIF$PVSUPG'JSTU* ONFOUGPSPOMJOFHBNJOHJO&VSPQF BOVNCFSPGDJWJMBOEBENJOJ MUIPG,FOUVDLZmMFEBDJWJMTVJUBHBJOTUUIFGPSNFS1BSUZ(BNJO SZGPSUIFTVNPGŇN CXJOQBSUZmMFEBOBQQFBMBHBJOTUUIJTEFDJTJPOUPUIF1 BJOTU-1'1BOECXJOQBSUZGPSBMMFHFEOPODPNQMJBODFXJUIUIFE BVUIPSJUJFTUPIBWFWBMVFBEEFEUBYBSSFBSTPGŇNGPSUIFZF VOUJM1BSUZ(BNJOHTUFSNJOBUJPOPG64GBDJOHBDUJWJUJFTPO0DUPCFS FMJNJOBSZJOKVODUJPO7FSZTJNJMBSUPUIFDPNQMBJOUmMFECZ4BO M JJ EFDMBSFECXJOQBSUZTHBNJOHPGGFSBOEBEWFSUJTJOHNFBTVSFTBTJMMFHBMJO WFSTFFGGFDUPOUIFBNPVOUPGUBYQBZBCMFCZUIF(SPVQ FTFFLTEBNBHFTBOEQSFKVEJDJBMDPOTFRVFODFTJOUIFBNPVOUPGB U UIFOUIJTDPVMEIBWFNFBOUBQPUFOUJBMMJBCJMJUZPGŇN IBUUIFTFSWJDFTBSFSFDFJWFEPSVTFEBOEFOKPZFEJOUIFDPVOUS EMPUUFSZHBNFTJO1PSUVHBMBOEUPDBSSZPVUBOZGPSNPGQVCMJDJUZPSQSPNPUJPOPGUIF UB$BTBEF.JTFSJDØSEJBEB-JTCPB A4$.- BOE W PSEFSFEUIF UIFCBTJTPGDVSSFOUMBXPSUIFDVSSFOUQSBDUJDFPGBOZUBYBV IFMEUPCFJOTVGmDJFOUCZBDPNQFUFOUDPVSUXIJMFCXJOQBSUZT n 23 Apriln 2013, Amaya Gaming Group Inc. (‘Amaya’) issued a claim notice in relation to the Share Sale and Transfer Agreement 25. Contingent liabilities From time to time the Group is subject to legal claimsand actions against it. The Group takes legal advice as to the likelihoo claims and actions. and claims "TQBSUPGUIF#PBSETPOHPJOHSFHVMBUPSZDPNQMJBODFQSPDFTT UIF#PBSEDPOUJOVFTUPNPOJUPSMFHBMBOESFHVMBUPSZEFWFMPQNFOUTBOEUIFJSpotential impact on the business and takes appropriate advice in respect of these developments. (SPVQDPNQBOJFTNBZCFTVCKFDUUP7"5POUSBOTBDUJPOTXIJDIIBW [FSPSBUFEGPSFYQPSUUP(JCSBMUBSXIFSFMFHJTMBUJPOQSPWJEFTU 1PSUVHBM JJJ QSPIJCJUFECXJOQBSUZUPFYQMPJUNVUVBMCFUTBO provider is located. No such amounts have been recognised as liabilities at the balance sheet date. In the view of the Director outstanding in respect of these contingent liabilities. Revenues earned from customers located in a particular jurisdiction may UBYFTJOUIBUKVSJTEJDUJPO*GTVDIUBYFTBSFMFWJFE FJUIFSPO DIBOHFJOUIFMBXPSQSBDUJDF UIFOUIJTNBZIBWFBNBUFSJBMBE Litigation "TBDPOTFRVFODFPGUIFBTZFUOPOIBSNPOJTFESFHVMBUPSZFOWJSP QSPDFFEJOHTBSFQFOEJOHBHBJOTUUIF(SPVQBOEPSJUT#PBSENFNCFSTJOTFWFSBMDPVOUSJFT JODMVEJOHCVUOPUMJNJUFEUP(FSNBOZ and Spain) aimed at preventing bwin.party from offering its services in these countries. Further, there are criminal proceeding #PBSENFNCFSTGPSUIFBMMFHFEWJPMBUJPOPGMPDBMHBNJOHMBXTJO'SBODF *O BGPSNFSCXJOTVCTJEJBSZXBTBTTFTTFECZ"VTUSJBOUBY *GňUIFň"VTUSJBOUBYBVUIPSJUJFTXFSFDPSSFDUJOUIFJSBTTFTTNFO appealed and overruled by a decision of the Independent Finance Senate in 2012. Further assessments have finally been agreed, re settlement of €1.9m. Associated fair value provisions for contingent liabilities in that period and later periods which were es of the Merger have been released. In September 2011, the Oporto Court of First Instance, amongst others, (i) declared the (already terminated) sponsorship agreemCXJOQBSUZBOEUIF1PSUVHVFTF4PDDFS-FBHVF A-1'1 BTJMMFHB XFCTJUFCXJODPN JW JNQPTFEPOUIFEFGFOEBOUTQFDVOJBSZTBOD "TTPDJBUJPO A"1$ BOE # Ň GPSFBDIJOGSBDUJPOUP4BO BOEUIFOPUJmDBUJPOPG1PSUVHVFTFNFEJBPSHBOTJTBUJPOTCXJOQB SFKFDUFECZUIF$PVSUPG"QQFBMTXJUIEFDJTJPOEBUFE'FCSVBSZ $PVSUPG+VTUJDF*O+VOF "1$mMFEFOGPSDFNFOUNPUJPOTBH September 2011 requesting the payment of penalties. These motions were rejected by the Court of First Instance and are currentl the Appellate Court. bwin.party is of the view that it has taken the necessary steps to comply with the judgement of the Court DBOOPUCFFYDMVEFE IPXFWFS UIBUTVDITUFQTBSF Company continues to dispute its liability under the relevant statutes and intends to continue vigorously with its defence. *O+VMZ UIF4QBOJTIHBNJOHPQFSBUPS$PEFSFmMFEBOVOGBJSDPNQFUJUJPODPNQMBJOUBHBJOTUWBSJPVTCXJOQBSUZ(SPVQDPNQBOJFT1SJPSUPUIJTDPNQMBJOU UIF4QBOJTI$PVSUSFKFDUFE$PEFSFTSFRVFTUGPSBQS XIJDIXBTEJTNJTTFEJO+VMZ UIFDPNQMBJOUmMFECZ$PEFS On 5 October 2012, the Regional Court Linz (second instance court, Oberlandesgericht Linz) found a Malta based online gambling SFJNCVSTFBQQSPYJNBUFMZŇNUPBDVTUPNFSUIBUIBEMPTUPOUIFPQFSBUPSTPOMJOFSPVMFUUF5IF$PVSUBSHVFEUIBUXJUIPVUBO operate games of chance via the internet the offer of online roulette would be illegal and the underlying gaming contract would enforceable. The operator appealed the decision to the Austrian Supreme Court where the case is currently pending. In a decisio February 2014, the Austrian Supreme Court decided to send back the case to the first instance court stating that further monopoly’s the findings, to relation advertising Austrian the on market, in particular are necessary properly Court the assess to for order in comp the in gambling monopoly with the jurisprudence of the Court of Justice of the European Union (CJEU). The proceedings might serve as p potential other claims against other online gaming operators not licenced in Austria but accepting bets from that country. The to take the view that the Austrian gambling monopoly is inconsistent and not in line with the requirements of CJEU case law. O Network Limited (‘Ongame’) to bwin.party alleging that the financial information of Ongame was incorrect and sought damages in t BQQSPYJNBUFMZŇN5IJTNBUUFSXBTmOBMMZTFUUMFEPO+BOVB *O UIF+VTUJDFBOE1VCMJD4BGFUZ$BCJOFUPGUIF$PNNPOXFB defendants in Franklin Circuit Court, a state court in Kentucky in the US. The suit sought a claim for damages related to the s SFTJEFOUTPO1BSUZ(BNJOHTTJUFTEVSJOHUIFQFSJPEPG"VHVTU The Commonwealth reached an agreement with bwin.party digital entertainment plc to settle its claims bwin.party for $15m. digit entertainment plc was dismissed as a defendant to the claim on 24 June 2013. 142 Notes to the consolidated financial statements financial consolidated tothe Notes 142 bwin.party Annual report & accounts 2013 consider that this would be prejudicial to the interests of the Group. ofthe interests the to prejudicial be would this that consider provid been have details further No 21. innote found be can disputes regulatory and litigation for provided ofamounts Details IBTBQQFBMFEUIJTEFDJTJPO'VMMQSPWJTJPOGPSGSP[FOGVOETIBT 2012). December to 2008 February (from inplace was measure precautionary the while Argentina bwin by obtained profits of actual s were fees oflegal calculation the for basis numeric the which to pursuant decision court’s instance first the confirmed Appeal challenged on orders the thegrounds freezing November 2013 that the sums On 14 frozen to the debts. not are proportionate FOTVSFQBZNFOUPGUIFTFGFFT ##7"#BODP'SBODÏTIBTGSP[FO"3% BOE#BODP)JQPUFDBSJPIBTGSP[FO"3% CXJO a result of fees oforders As of freezing (e.g. the counsels allvarious the proceedings to costs bear the prevailing parties). GSPNBOZTQFDJmDUIJSEQBSUJFT0O+VOF UIFDPVSUSFKF DPOTUJUVUJPOBMQSPUFDUJPOUPPQFSBUFJUTMJDFOTFHSBOUFECZUIF an filed Argentina’) (‘bwin S.A. Argentina bwin company Group the In 2007 juri sufficient have not did ofFlorida District Southern the for Court USDistrict the that effect resulting the with plaintiff CSBOE5IFQMBJOUJGGTBMMFHFEUIBUUIFZIBWFTVTUBJOFEEBNBHFT "DU 64$ SFMBUFEUPUIFEFGFOEBOUTFGGPSUTUPQSFWFOUJOGSJOHFNFOUPGUIFA1BSUZ1PLFSUSBEFNBSLCZQMBJOUJGGTA IBWFBMMFHFEUPSUJPVTJOUFSGFSFODFXJUICVTJOFTTSFMBUJPOTIJQ Ordinary shares 26. Share capital 4PVUIFSO%JTUSJDUPG'MPSJEB FOUJUMFE:FTTFOJB4PGmO FUBMW JOH*"-UE XFSFOBNFEBTEFGFOEBOUTJOBOBDUJPOJOUIF64%JTUSJDU$PVSUGPSUIF CXJOQBSUZEJHJUBMFOUFSUBJONFOUQMDBOEBTVCTJEJBSZ 1BSUZ(BN (continued) liabilities Contingent 25. Company. Trustee The of the Employee Trust all voting waived of in dividend and has held rights shares by respect the Employee sha per vote one to entitled are and declared when dividends receive to entitled are shares ofordinary holders The All paid. fully each. pence of0.015 shares ordinary million 1,500 into divided £225,000 to amounts capital share authorised Company’s The conditions and terms significant and capital share Authorised TUFSMJOHJTb BOEUSBOTMBUFTBUBOBWFSBHFFYDIBOHFSBUFPGFVSPTUPbTUFSMJOH The shares. ordinary 817,154,184 into split is and €146,377.95 to amounts Group ofthe capital share paid fully and issued The 3FEFFNFEBTQBSUPGTIBSFCVZCBDLTDIFNF of consideration forIssued satisfaction &NQMPZFFTIBSFPQUJPOTFYFSDJTFEEVSJOHUIFZFBS 2012 December 31 at As 3FEFFNFEBTQBSUPGTIBSFCVZCBDLTDIFNF &NQMPZFFTIBSFPQUJPOTFYFSDJTFEEVSJOHUIFZFBS 2012 1January at As As at 31 December 2013 CXJOQBSUZEJHJUBMFOUFSUBJONFOUQMD FUBM $BTF/PD amparo DUFEUIF CFFOJODMVEFEJONBSLFUFYJUDPTUT DJWJMDPOTQJSBDZ WJPMBUJPOTPG'M4UBU '%615" HBNJOHSFHVMBUPSZBVUIPSJUZPGUIF1SPWJODFPG.JTJPOFTJODBTFPGBOZUISFBUPSBDU JOFYDFTTPG64NCXJOQBSUZTVDDFTTGVMMZDIBMMFOHFEUIFKVS amparo complaint. The decision is final, meaning that bwin Argentina must must Argentina bwin that meaning final, is decision The complaint. DPNQMBJOU QSPUFDUJWFPSEFS SFRVFTUJOHFYUSBPSEJOBSZ W%5,)5IFQMBJOUJGGT Issued and fully fully and Issued BOEWJPMBUJPOTPGUIF-BOIBN which have been served to to served been have which sdiction to hear the matter. 1BSUZ4UBS1PLFSHBNJOH share capital in UK inUK capital share 146,378 817.1 817.1 146,378 145,644 813.0 813.0 145,644 837.2 150,114 re at meetings of the ofthe meetings at re (5,047) 1,092 6.1 6.1 1,092 ed as the Directors Directors the as ed JTEJDUJPOPGUIF issued shares are are shares issued (465) ettled in the amount paid 107 0.6 0.6 107 3.1 577 Trust. Federal Court of of Court Federal € bwin Argentina Argentina bwin "SHFOUJOBIBT Number Number million (27.3) (2.6) StrategicStrategic GovernanceGovernance FinancialFinancial report performance 143143 – 3.9 4.4 5.7 1.2 2.8 17.6 10.0 27.6 2012 million €million Number PSNFS#PBSE the Directors ting and and ting BQBSUOFS 4.8 (2.6) any donated £1.3many 9.1 7.2 1.3 6.3 (4.1) (7.1) (7.6) (9.9) (1.6) (5.2) 2013 2013 lly 365,083 ustomer account account ustomer rental of the 17.6 F%JSFDUPSTBOELFZ in the market. reserve €million €million Own shares Own ŇN GSPNBDPNQBOZPOBOBSNTMFOHUICBTJTGPSXIPNBG ŇN GSPNBDPNQBOZPOBOBSNTMFOHUICBTJTGPSXIPNB#PBSENFNCFSXBT N GSPNBDPNQBOZPOBOBSNTMFOHUICBTJTGPSXIPNB#PBSENFNCFSXBTB SNBOEMPOHUFSNCFOFmUT BTXFMMBTTIBSFCBTFEQBZNFOUTPGUI 4IBSFCBTFEQBZNFOUT benefits Termination Year ended 31 December 31 ended Year As at 31 December 2013 December 31 at As 4IPSUUFSNCFOFmUT &NQMPZFFTIBSFPQUJPOTFYFSDJTFE &NQMPZFFTIBSFPQUJPOTFYFSDJTFEEVSJOHUIFZFBS As at 31 December 2012 1VSDIBTFPGPXOTIBSFTGPSUIF&NQMPZFF5SVTU As at 1 January 2012 1VSDIBTFPGPXOTIBSFTGPSUIF&NQMPZFF5SVTU director during the period, with amounts owed at 31 December 2013 of less than €0.1m (2012: less than €0.1m). 5IF(SPVQQVSDIBTFEDFSUBJODPOTVMUBODZTFSWJDFTPGŇN a director during the period with amounts owed at 31 December 2013 of less than €0.1m (2012: less than €0.1m). 5IF(SPVQFBSOFEJODPNFPGŇN ŇN GSPNBOJOWFTUNFOUJOBGVOEPGŇN ŇN GPSXIPNB#PBSENFNCFSJT member is a director, with amounts owed at 31 December 2013 of €nil (2012: €0.2m). 5IF(SPVQQVSDIBTFEDFSUBJOQBZNFOUTFSWJDFTPGŇN Ň DirectorsTwo each have an interest bearing loan from the Group of €3.1m (2012: €3.1m) and one Director made a deposit into a c with the Group with a balance of €2.1m (2012: €nil). furnishedIn 2013 property was leased to a member of key management at an annual lease rental of €43,200 (2012: €44,300),believe is the which fairvalue rental of the property. There were no amounts owed at 31 December 2013 (2012: €nil). furnishedIn 2013 property was leased to a member of key management at an annual lease rental of €nil for which the fair value property was €31,800. Certain Directors and certain key management were granted share options under service contracts which were granted under a Group share option plan. At 31 December an 2013 aggregate balance of €nil (2012: €4.4m) wasdue to Directors and key management. 5IF(SPVQQVSDIBTFEDFSUBJODPNNVOJDBUJPOTFSWJDFTPGŇN Group Transactions between the Group companies have been eliminated on consolidation and are not disclosed in this note. Directors and key management Key management are those individuals who the Directors believe have significant authority and responsibility for planning, direc 27. Related parties Related 27. As at 31 December 2013 2,775,627As December 31 2013 at (2012 5,691,683) ordinary as held shares were treasury Additiona Trust. Employee the shares by period the Comp the During Group. the employees of (2012: 203,228) behalf of on Trust Employee the ordinary in held shares were (2012: £6.1m) to the Employee Trust, which the Employee then Trust used to purchase 1,207,565 (2012: 4,350,296) ordinary shares DPOUSPMMJOHUIFBDUJWJUJFTPGUIF(SPVQ5IFBHHSFHBUFTIPSUUF management of the Group are set out below: 26. Share capital (continued) capital 26. Share sharesOwn 144 Notes to the consolidated financial statements financial consolidated tothe Notes 144 bwin.party Annual report & accounts 2013 revenue share element. 0O4FQUFNCFSUIF(SPVQFOUFSFEJOUPBOBHSFFNFOUXJUI#MBDL3JEHF0JM(BT *OD GPSNFSMZ"OUF UPTFUUMFUIFPSJHJ plus a contingent element from an ongoing derived revenue share 5% agreement. 0O/PWFNCFS UIF(SPVQQVSDIBTFEUIFCVTJOFTTBOETVCTUB World Poker Tour ofdiscounting. effects likel is consider they which payable amount ofthe estimate best current Directors’ the represents consideration contingent for MFBEJOHUPUIFSFDPHOJUJPOPGHPPEXJMM OPOFPGXIJDIJTEFEVDU years. three ofupto lives economic useful estimated their over amortised being are goodwill than other assets intangible The are goodwill and consideration purchase acquired, liabilities and assets ofidentifiable values fair provisional ofthe Details rates. discount appropriate and outcomes DPOEJUJPOTCFJOHNFU5IF(SPVQIBTEFUFSNJOFEUIFGBJSWBMVFP certain to subject payable (€2.3m) $2.6m ofupto consideration contingent with paid of$17.3m was (€13.7m) consideration Cash UIFTPDJBMHBNJOHNBSLFU5IFBTTFUTBDRVJSFEJODMVEFEBOVNCFSPGFYJTUJOH##TPDJBMHBNJOHDPOUSBDUTBOETPGUXBSFFOHJOFFSJ On Limited the Group and MayInc. Orneon 30 in 2012 acquired order to a from accelerate number the Services Velasco G of assets Orneon Acquisitions28. during the prior year 19. and 16 innotes included are subsidiaries from and to owed ofamounts Details subsidiaries. inthose ofinvestment cost Company’s the to added been has €17.2m) (2012: of€13.2m options shares these $PNQBOZIBTHSBOUFEPQUJPOTPWFSJUTTIBSFTUPFNQMPZFFTPGDFSUBJOTVCTJEJBSJFT5IFTIBSFCBTFEQBZNFOUFYQFOTFGPSUIFZFBS PGňŇN ŇN BOETIBSFPQUJPOTJTTVFECZUIF$PNQBOZXJUIBTIBSFCBTFEQBZNFOUFYQFOTFPGŇN th within entities other by made payments cash through remunerated were Company ofthe management key certain and Directors The facilities. borrowing other any have not did Company the end, year At €33.0m). (2012: of€33.6m Shareholders to adividend declared and subsidiaries from dividends no received Company In 2013 the €1.4m). (2012: Company ofthe behalf on subsidiaries by incurred were of€1.4m costs Du balances. intercompany related the to adjustment an through for accounted are subsidiaries the by paid amounts subsidiaries, 8IFSFUIFDBTIPCMJHBUJPOTPGCXJOQBSUZEJHJUBMFOUFSUBJONFOU Company €0.8m). (2012: of€0.3m 2013 December 31 at owed amounts ajo to €3.6m) (2012: of€nil media licenced broadcast to rights sold and €nil) (2012: of€nil 2013 December 31 at owed amounts ven ajoint from €5.0m) (2012: of€3.5m media licenced broadcast to rights certain basis length arm’s an on purchased Group The €0.3m). (2012: o of€0.4m 2013 amounts with 31 December associate, an from €5.0m) (2012: of€4.1m services customer certain basis length arm’s an on purchased Group The €0.2m). (2012: of€nil 2013 December 31 at owed amounts with subsidiary in aGroup 5IF(SPVQQVSDIBTFEPOBOBSNTMFOHUICBTJTDFSUBJOBEWFSUJTJO joint and ventures Associates 27. Related (continued) parties Consideration Contingent consideration Cash paid acquired assets Net Goodwill goodwill than other assets Intangible assets Non-current JCMFGPSUBYQVSQPTFT JTUIFFYQFSUJTFPGUIFXPSLGPSDF5IFB JUTPQFSBUJOH QMD UIFA$PNQBOZ GPSPQFSBUJOHFYQFOEJUVSFBSFEJTDIBSHFECZ GDPOUJOHFOUDPOTJEFSBUJPOUBLJOHJOUPBDDPVOUUIFQSPCBCJMJUZ HTFSWJDFTPGŇN ŇN GSPNBDPNQBOZUIBUIBTBOPO OUJBMMZBMMPGUIFBTTFUTPG815&OUFSQSJTFT*OD$BTIDPOTJEFS ŇN "EEJUJPOBMMZ UIF NPVOUJODMVEFEBCPWF as follows: int venture partner, with with partner, int venture OBMDPOUJOHFOU The main factor performance performance PGFYQFDUFE y to be paid, after the the after paid, be y to ture with partner, BUJPOXBTN DPOUSPMMJOHJOUFSFTU roup’s entry into into entry roup’s OHSFTPVSDFT wed at at wed JOSFTQFDUPG ring the year, e Group e Group €million 16.0 13.7 16.0 11.7 2.3 2.3 4.3 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 145145 8.2 8.8 0.8 6.0 3.5 3.8 (0.2) 17.2 34.3 17.0 12.4 89.5 37.6 (17.3) (16.6) (551.2) 1,637.0 1,102.8 1,205.5 €million €million in subsidiaries ich theyich in December which they iscontinued rment is is rment B GPSBOJOJUJBM which $0.4m was f employees of ertain proportion cognised the for UIBUXBT TMZSFDPHOJTFEPGŇN MMPOUIFPSJHJOBM815BDRVJTJUJPOJOBDDPSEBODFXJUI*'34 As at 1 January 2012 Options issued to employees of subsidiary undertakings Disposals in the year Impairment

Fair value of contingent consideration contingent value of Fair value receivableFair disposal on Loss Current liabilities Trade and other payables assetsNet of disposed Net cash received Current assets Current Trade and other receivables Cash and cash equivalents Non-current assets Intangible assets 1SPQFSUZ QMBOUBOEFRVJQNFOU Revaluation of investmentsRevaluation of 2013 December 31 at As As at 31 December 2012 Options issued to employees of subsidiary undertakings Liabilities of subsidiary undertakings satisfied by equity instruments applicable to that acquisition. The amount included above for contingent consideration represents the Directors’ current best estimate of the amount payable wh consider is likely to be paid, after the effects of discounting. Merger and acquisition costs in the prior year in respect of these D to acquisitions can relates be found in note 3. which of (€10.4m €814.8m been have would 2012 in revenue total 2012, January 1 on made been acquisitions these Had PQFSBUJPOT BOEUIFMPTTBGUFSUBYŇN PGXIJDIŇNSFMBUFTUP%JTDPOUJOVFEPQFSBUJPOT consideration of €15m before any adjustments for net debt with contingent consideration of up to €10m receivable subject to a c of the US real money online gaming market opening within five years of the sale date. The value of identifiable assets and liabilities sold, the sale consideration and the loss on disposal were as follows: Ongame 0O0DUPCFS UIF(SPVQTPMEUIF0OHBNF##CVTJOFTTJUBDRVJSFEBTQBSUPGUIF.FSHFSUP"NBZB(BNJOH(SPVQ*OD A"NBZ 29. Disposals during the prior year prior the during 29. Disposals 28. Acquisitions during the prior year (continued) year prior the during 28. Acquisitions Cash consideration of $11.0m (€8.3m) was paid during the year ended 31 December 2012 with a deferred cash payment of $2.5m paid 2013 and2013 further contingent considerationto of up $6.5m payable subject to the US real money online gaming market opening (of QBJEEVSJOH 5IFFYDFTTPGUIFGBJSWBMVFPGDPOTJEFSBUJPOPGŇNPWFSUIFDPOUJOHFOUDPOTJEFSBUJPOMJBCJMJUZQSFWJPV BNPVOUJOHUPŇN IBTCFFOUSFBUFEBTBOBEKVTUNFOUUPHPPEXJ year ending 31 December 2012 of €551.2m was partially reversed by €89.5m in the year ending 31 December 2013. Any gain or impai measured as the difference between the market capitalisation of the Company and the carrying value of the Company’s ends. year investments respective the as at During the year ended 31 December the 2013 Company issued share options with a fair value €12.4m of (2012: €17.2m) in respect o undertakings. subsidiary Investments in subsidiaries carried by the Company are carried at cost less any impairment in value. The impairment that was re was that impairment The value. in impairment any less cost at carried are Company the by carried subsidiaries in Investments 30. Investments in subsidiaries in 30. Investments The amount included above for contingent consideration represents the Directors’ current best estimate of the amount receivable consider is likely to be received, after the effects of discounting. 1MFBTFSFGFSUPOPUFGPSEFUBJMTPGEJTDPOUJOVFEPQFSBUJPOT 146 Notes to the consolidated financial statements financial consolidated tothe Notes 146 bwin.party Annual report & accounts 2013 consolidated within the Group accounts. Group the within consolidated (SPVQXJUIGVMMZQBJEJTTVFETIBSFDBQJUBMPSXIFSFUIF(SPVQF &BDIPGUIFTFDPNQBOJFTJTJODMVEFEXJUIJOUIFDPOTPMJEBUFEBDD CompanyThe is the ultimate holding company of the Group. following The subsidia of principal shows details the Company’s table Investments30. in subsidiaries (continued) Alancia Limited Alancia Name of Undertaking Subsidiary #&44"4 #FMMJOHSBUI-JNJUFE CXJO&VSPQFBO.BSLFUT)PMEJOHT41" bwin Interactive Marketing España S.L. España Marketing Interactive bwin bwin.party entertainment Limited S.r.l. Italia bwin bwin.party entertainment (NJ), LLC (NJ), entertainment bwin.party CXJOQBSUZ(BNFT"# bwin.party management (Gibraltar) Limited Limited holdings bwin.party bwin.party marketing (Israel) Limited bwin.party marketing (Gibraltar) Limited bwin.party marketing (UK) Limited (UK) marketing bwin.party bwin.party services (Austria) GmbH (Austria) services bwin.party CXJOQBSUZTFSWJDFT #VMHBSJB &00% bwin.party services (Malta) Limited bwin.party (USA), Inc. Cashcade Limited Club Services, Inc Services, Club Dominion Entertainment Limited ElectraGames Limited ElectraWorks (Alderney) Limited (Alderney) ElectraWorks &MFDUSB8PSLT &TQB×B 1MD ElectraWorks (Kiel) Limited ElectraWorks (France) Limited ElectraWorks Limited EZE International Limited Herotech Limited iGlobalMedia Entertainment Limited Independent Technology Ventures Limited Intertrader Limited ITV Holdings Limited Holdings ITV *7:$PNQUFDI1SJWBUF-JNJUFE Kaiane Services Limited Services Kaiane ,BMJYB"DDFQU-JNJUFE ,BMJYB(SPVQ-JNJUFE ,BMJYB0QFSBUJPOT(NC) ,BMJYB1BZ-JNJUFE ,BMJYB64" *OD Leodata Limited 1BSUZ*OUFSWFOUVSFT-JNJUFE 1BSUZ(BNJOH*"-JNJUFE 1# *UBMJB 4SM 1BZUFDI*OUFSOBUJPOBM-JNJUFE 1FFSMFTT.FEJB-JNJUFE 1(#-JNJUFE 1,34FSWJDFT-JNJUFE TC Invest A.G. Invest TC Websports Entertainment Marketing Services GmbH Services Marketing Entertainment Websports WIN (Gibraltar) Limited WIN LLC WIN Interactive (Israel) Limited Winners Apuestas S.A. Apuestas Winners Winners Apuestas Aragon, S.L. Aragon, Apuestas Winners 815&OUFSQSJTFT *OD Country Cyprus Italy France Cyprus Italy Gibraltar Spain US Gibraltar Sweden Israel Gibraltar Gibraltar UK Austria Malta Channel Islands #VMHBSJB Malta Malta US Malta Gibraltar US UK Gibraltar Malta Gibraltar #SJUJTI7JSHJO*TMBOET Gibraltar #SJUJTI7JSHJO*TMBOET India Gibraltar UK Gibraltar UK Austria UK Malta US Gibraltar Gibraltar Gibraltar #FSNVEB Italy Gibraltar Gibraltar Gibraltar Austria Gibraltar Austria Ukraine Israel Spain Spain US YFSUTTVGmDJFOUDPOUSPMTPWFSUIFPQFSBUJPOTPGUIBUFOUJUZGPS PVOUTPGUIF(SPVQ FJUIFSCZWJSUVFPGCFJOHXIPMMZPXOFECZB of Incorporation Principal Business Online gaming Intermediate holding company Online gaming Online Intermediate holding company holding Intermediate Intermediate holding company holding Intermediate Marketing support services support Marketing IT and services customer support ##TFSWJDFT Intermediate holding company holding Intermediate Online gaming Online Marketing services Management and IT services Marketing support services support Marketing IT, customer support and marketing support services support marketing and support customer IT, Marketing support services Online gaming IT and services customer support Online gaming Online gaming ##TFSWJDFT IT services ##TFSWJDFT IT and customer support services support customer and IT IT services Marketing services Online gaming Online gaming Online Online gaming Online gaming and IT services IT and gaming Online Financial services Transaction services Intermediate holding company IT and customer support services support customer and IT Marketing services Transaction services Transaction Intermediate holding company holding Intermediate IT services IT services Transaction services Transaction Transaction services Transaction Transaction services Transaction services Intangible management asset Transaction support services Online gaming Online Customer services -BOECBTFEQPLFSFWFOUT Transaction services Social gaming Intermediate holding company holding Intermediate Marketing support services support Marketing Land based betting based Land Land based betting based Land IT services IT services -BOECBTFEQPLFSFWFOUT JUUPXBSSBOUCFJOH NFNCFSPGUIF ry undertakings. undertakings. ry StrategicStrategic GovernanceGovernance FinancialFinancial report performance 147147 – – 2.0 6.8 25.8 34.6 2012 €million Available-for-sale ion in respect of – – – the period ended ended period the 2013 2013 10.9 16.1 27.0 FTTFTGPSNBOBHJOH €million EFTDSJCFTUIF(SPVQT TPGUIF(SPVQBUGBJS – – – 2012 169.7 109.9 279.6 €million Loans and receivables and Loans – – – 2013 2013 94.7 173.3 268.0 PSEFEJOUIFmOBODJBMTUBUFNFOU €million SEDPOUSBDUXBTTFUUMFEPO'FCSVBSZ STFPGCVTJOFTTBOEBSFSFD FSUIFOPNJOBMWBMVFPGGPSFJHOFYDIBOHFGPSXBSEDPOUSBDUTPVUTUBOEJOHXBT BODJBMSJTLT TLTUIBUBSJTFGSPNJUTVTFPGmOBODJBMJOTUSVNFOUT5IJTOPUF BOHFGPSXBSEDPOUSBDUTBUUIFZFBSFOEXBTJOTJHOJmDBOUBOEUIFSFGPSFIBTOPUCFFO Liquidity risk risk Capital Credit risk risk Market risk rate Interest Currency risk investments; trade and other receivables; equivalents; cash and cash borrowings; and loans trade and other payables; contingent consideration; client liabilities and progressive prize pools; and $POUJOHFOUDPOTJEFSBUJPOoOPODVSSFOU Investments Cash and cash equivalents Trade and other receivables current consideration – Contingent t t t t t t *ODPNNPOXJUIBMMPUIFSCVTJOFTTFT UIF(SPVQJTFYQPTFEUPSJ 31. Financial instruments and risk management and risk instruments 31. Financial 5IF(SPVQJTFYQPTFEUISPVHIJUTPQFSBUJPOTUPUIFGPMMPXJOHmO objectives, policies and processes for managing these risks and the methods used to measure them. Further quantitative informat these risks is presented throughout these financial statements. 5IFSFIBWFCFFOOPTVCTUBOUJWFDIBOHFTJOUIF(SPVQTFYQPTVSFUPmOBODJBMJOTUSVNFOUSJTLT JUTPCKFDUJWFT QPMJDJFTBOEQSPD these risks or the methods used to measure them from previous periods, unless otherwise stated in this note. Principal financial instruments The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows: t t TIPSUUFSNJOWFTUNFOUT t t t t t t t GPSFJHOFYDIBOHFGPSXBSEDPOUSBDUT 'PSFJHOFYDIBOHFDPOUSBDUTBSFSFHVMBSMZVTFEJOUIFOPSNBMDPV WBMVFXIFOUIFGBJSWBMVFJTEFFNFETJHOJmDBOU"TBU%FDFNC ŇN ŇOJM 'BJSWBMVFPGUIFPVUTUBOEJOHGPSFJHOFYDI SFDPSEFEJOUIFmOBODJBMTUBUFNFOUT5IFGPSFJHOFYDIBOHFGPSXB The Group operates a sports betting business and always has open bets. As at 31 December and 2013 at the prior year end the fair market value of open bets was not material. Other financial derivative instruments are permitted to be used by the Group, but none were used in 31 December or 2013 in the prior year. category by instruments Financial assetsFinancial 148 Notes to the consolidated financial statements financial consolidated tothe Notes 148 bwin.party Annual report & accounts 2013 The fair value hierarchy of financial instruments measured at fair value is provided below: provided is value fair at measured instruments offinancial hierarchy value fair The value fair at measured instruments Financial CPSSPXJOHTIBWFCFFOWBMVFECZFTUJNBUJOHUIFGVUVSFDPOUSBDUVB no within disclosed been have and hierarchy value fair of2the inlevel classified are borrowing and ofloans value fair The PUIFSQBZBCMFT DMJFOUMJBCJMJUJFTBOEQSPHSFTTJWFQSJ[FQPPMT %VFUPUIFJSTIPSUUFSNOBUVSF UIFDBSSZJOHWBMVFTPGDBTIBOE borrowings. and loans and pools prize progressive and liabilities client payables, other 'JOBODJBMJOTUSVNFOUOPUNFBTVSFEBUGBJSWBMVFJODMVEFTDBTIBOEDBTIFRVJWBMFOUT TIPSUUFSNJOWFTUNFOUT USBEFBOEPUIFSSF statements financial the within value fair at measured not instruments Financial Financial liabilities Financial31. instruments andrisk management (continued) set out in the table below. table inthe out set 3financial oflevel measurement value fair the indetermining used inputs unobservable significant and techniques valuation The for. into entered are contracts the which over period time short the to due insignificant is value 5IF(SPVQBMTPGBJSWBMVFTUIFEFSJWBUJWFGPSFJHOFYDIBOHFDPOU period. the during levels between transfers no were There Contingent consideration –payables consideration Contingent Contingent consideration – receivables Discounted cash flow forecasts Discounted cash Contingent – consideration receivables Contingent consideration Investments assets Financial $POUJOHFOUDPOTJEFSBUJPOoOPODVSSFOU Contingent – consideration current -PBOTBOECPSSPXJOHToOPODVSSFOU –current borrowings and Loans pools prize progressive and liabilities Client 5SBEFBOEPUIFSQBZBCMFToOPODVSSFOU –current payables other and Trade As at 31 December 31 at As instrument Financial Trade and other payables other and Trade Contingent consideration liabilities Financial As at 31 December 31 at As Investments Financial instrument Discounted cash flow forecasts flow cash Discounted Valuation techniques Discounted cash flow forecasts flow cash Discounted €million BQQSPYJNBUFTUIFJSGBJSWBMVFBOEBSFDMBTTJmFEJOMFWFMPGU 2013 6.7 6.7 used – DBTIFRVJWBMFOUT TIPSUUFSNJOWFTUNFOUT USBEFBOEPUIFSSFDF – – –

SBDUTJOQMBDFBUUIFQFSJPEFOE IPXFWFSUIFTFIBWFOPUCFFOS MDBTInPXTBUUIFDVSSFOUNBSLFUJOUFSFTUSBUFT €million ee ee Level 3 Level 2 Level 1 2012 2012 8.2 8.2 – – – –

At fair value through profit and loss and profit through value fair At 8FJHIUFEBWFSBHFDPTUPGDBQJUBMBOEFYQFDUFEDBTInPXT Significant unobservable inputs Significant unobservable 8FJHIUFEBWFSBHFDPTUPGDBQJUBMBOEFYQFDUFEDBTInPXT term growth rates 8FJHIUFEBWFSBHFDPTUTPGDBQJUBM DBTInPXGPSFDBTUTBOEMPOH €million €million 60.1 14.1 60.1 60.1 2013 2013 3.8 1.0 9.3 – – – – – – – –

(Restated) (Restated) €million €million 2012 2012 2012 2012 70.4 16.7 70.4 4.8 3.3 8.6 – – – – – – – –

IFGBJSWBMVFIJFSBSDIZ te 22. The loans and and loans The 22. te €million €million FDPHOJTFEBTUIFGBJS JWBCMFT USBEFBOE 231.0 124.8 14.1 20.3 10.9 23.1 23.0 59.6 2013 2013 DFJWBCMFT USBEFBOE 9.4 9.3 4.8 0.5 instruments are are instruments – –

Amortised cost Amortised (Restated) (Restated) €million €million 243.5 136.7 2012 2012 2012 2012 26.4 17.6 16.7 29.5 70.4 8.6 8.1 8.8 6.9 – – –

StrategicStrategic GovernanceGovernance FinancialFinancial report performance 149149 6.7 Total Total Total Total €million €million p Finance VOEFSMZJOH MCBTJTXIJDI ). As such, the EBOESFQPSUFE l control review 6.7 HFNFOUQPMJDJFT PVOUJOHJNQMJDBUJPOT FQBSUNFOU5IF SFUBJOJOHVMUJNBUF ctive implementation €million €million (Restated) Contingent Contingent consideration consideration F(SPVQTDPNQFUJUJWFOFTT Other payables Other Financial assets Financial liabilities

– – – – 8.1 8.6 16.7 8.1 8.6 0.2 0.7 0.9 2.0 – 2.0 2.0 – 4.8 9.3 14.1 4.8 9.3 9.4 10.920.3 (3.5) – (3.5) (3.5) – (3.0) 1.0(2.0) (12.8) (7.2)(5.6) 17.6 8.8 26.4 17.6 8.8 €million €million Contingent Contingent Investments consideration consideration GPSFJHOFYDIBOHFDPOUSBDUTBOETXBQTJOPSEFSUPNBOBHFUIFTF PWFSMFWFMTGPSLFZBSFBTPGUSFBTVSZSJTL5IF(SPVQSJTLNBOB TBOEHVJEFMJOFTSFWJFXFEBOEBQQSPWFECZUIF#PBSEPOBOBOOVB IPSJUZGSPNUIF#PBSE BUXIJDIQPJOUBOFYQMBOBUJPOPGUIFBDD OJmDBOUDIBOHFTUPUIF(SPVQTCVTJOFTT&YQPTVSFTBSFNPOJUPSF IF(SPVQTSJTLNBOBHFNFOUPCKFDUJWFTBOEQPMJDJFTBOE XIJMTU SFJHOFYDIBOHFSBUFSJTLTBSFNBOBHFECZUIF(SPVQTUSFBTVSZE UPSFEVDFSJTLBTGBSBTQPTTJCMF XJUIPVUVOEVMZBGGFDUJOHUI in other comprehensive income comprehensive other in in proﬁt or loss in other comprehensive income comprehensive other in in proﬁt or loss

As at 31 December 2013 December 31 at As As at 1 January 2013 Total gains or losses

Settlements received 2013 December 31 at As New considerationNew arrangement Total gains or losses As at 1 January 2013 Settlements (paid) Management controls and proceduresManagement controls 5IF#PBSEIBTPWFSBMMSFTQPOTJCJMJUZGPSUIFEFUFSNJOBUJPOPGU responsibility for them, has it delegated the authority for designing and operating the required processes that ensure the effe of the objectives and policies to the Group’s treasury department under the auspices of the Group Treasury Committee (see below (SPVQTGVOEJOH MJRVJEJUZBOEFYQPTVSFUPJOUFSFTUSBUFBOEGP USFBTVSZEFQBSUNFOUJTNBOEBUFEUPFYFDVUFDPOWFOUJPOBMGPSXBSE SJTLT/PPUIFSEFSJWBUJWFTNBZCFFYFDVUFEXJUIPVUXSJUUFOBVU would also be given. 5SFBTVSZPQFSBUJPOTBSFDPOEVDUFEXJUIJOBGSBNFXPSLPGQPMJDJF are recommended and subsequently monitored by the Group Treasury Committee. The Group Treasury Committee is chaired by the Grou %JSFDUPS5IFTFQPMJDFTJODMVEFCFODINBSLFYQPTVSFTBOEIFEHFD XPVMEBMTPCFSFWJFXFECZUIF#PBSEGPMMPXJOH GPSFYBNQMF TJH The reconciliation of the opening and closing fair value balance level of 3 financial liabilities is as follows: 31. Financial instruments and risk management (continued) management and risk instruments 31. Financial The reconciliation of the opening and closing fair value balance of level 3 financialassets is as follows: UPňNBOBHFNFOUPOBNPOUIMZCBTJT UPHFUIFSXJUISFRVJSFEBDUJPOTXIFOUPMFSBODFMJNJUTBSFFYDFFEFE5IFJOUFSOBMDPOUSPMQSPDFEVSFTBOESJTLmanagement processes of the treasury department are also reviewed periodically by the internal audit function. The lastwas interna undertaken during and 2013 the procedures and processes were deemed satisfactory. 5IFPWFSBMMPCKFDUJWFPGUIF#PBSEJTUPTFUQPMJDJFTUIBUTFFL BOEnFYJCJMJUZ'VSUIFSEFUBJMTSFHBSEJOHUIFTFQPMJDJFTBSFTFUPVUPWFSUIFGPMMPXJOHQBHFT 150 Notes to the consolidated financial statements financial consolidated tothe Notes 150 bwin.party Annual report & accounts 2013 A#VTJOFTTBOEmOBODJBMSFWJFXPG un Report Annual ofthis 42 page on also and introduction Chairman’s inthe disclosed is policy dividend Group’s ofthe Details (SPVQTQPMJDZJTUIBUHSPTTEFCUTIPVMEOPUFYDFFEŇNBOEU net Group’s the to relative ofdebt level the is Group the to risk capital primary The requirements. statutory address to than capital ofequity level the to as policy no has Group the assets, physical few have that companies internet many with In common risk Capital liabilities: offinancial maturities the out sets table following The 22. innote disclosed are in details Further in2014. entirely repaid was facility credit this on down drawn balance The £nil). (2012: £15m was facility the on drawn balance 2013 the December 31 at As 2016. December until upon draw to Group the for available is facility This risk. liquidity managing c revolving a£50m into entered also Group 2013 the InDecember £30m). (2012: £25m was loan term this on balance drawn 2013 the at 2013 As inDecember repaid £5mwas ofwhich loan term amortising year three a£30.0m into entered Group the 2012 In December receivables. other and trade and deposits bank cash, are assets financial principal Group’s The Group. the to available are resources liquid sufficient that ensure to liquidity monitors Management refinancing risk. 5IF(SPVQJNQPTFTBNBYJNVNEFCUMJNJUPGŇNUIBUNBZNBUVSF EVFGSPN141T $MJFOU-JBCJMJUZ$PWFSBOEDPVOUFSQBSUZFYQPTVSFTPOBNPOUIMZCBTJT PSNPSFGSFRVFOUMZJGSFRVJSFE 5IF(SPVQ5SFBTVSZ$PNNJUUFFJTBEWJTFEPGDBTICBMBODFT JOWFT pools. prize progressive and deposits FYDFFEJUTDPNCJOFEDMJFOUMJBCJMJUJFTBUBMMUJNFT5IJTFYDFT 5IF(SPVQTUSFBTVSZEFQBSUNFOUFOTVSFTUIBUUIF(SPVQTDBTIB fal they as obligations financial its inmeeting difficulty encounter will Group the that risk the itis Inessence, instruments. repayment principal and charges finance the as well as capital, working ofits management Group’s the from arises risk Liquidity risk Liquidity Financial31. instruments andrisk management (continued) analysis of gross debt is as follows: as is debt ofgross analysis Ratio Headroom $MFBO&#*5%" Gross debt As at 31 December liabilities Financial Loans and borrowings pools prize progressive and liabilities Client Contingent consideration payables other and Trade 2012 December 31 at As liabilities Financial Loans and borrowings pools prize progressive and liabilities Client Contingent consideration payables other and Trade As at 31 December 2013 TJTEFmOFEBTUIF$MJFOU-JBCJMJUZ$PWFS$MJFOUMJBCJMJUJFTQ IBUUIFMFWFSBHFSBUJPPGHSPTTEFCU$MFBO&#*5%"TIPVMECFMFT UNFOUT GPSFJHODVSSFODZFYQPTVSFT JOUFSFTUJODPNF JOUFSFTUF OEDBTIFRVJWBMFOUT BOEBNPVOUTEVFGSPNQBZNFOUTFSWJDFQSPWJ JOBOZPOFZFBSUPFOTVSFUIBUUIFSFJTOPTJHOJmDBOUDPODFOUS Undiscounted Undiscounted Undiscounted Undiscounted cash flows cash cash flows €million €million 4. 0. 60 38.1 6.0 – 203.6 247.7 – 124.8 124.8 6. 0. 84 46.1 8.4 – 207.4 261.9 – 136.7 136.7 48.1 18.0 6.0 24.1 24.1 6.0 18.0 48.1 9.6 – 59.8 69.4 37.0 – – 37.0 6.2 30.8 9.6 – 69.4 79.0 5.4 1.0 5.4 9.2 1.3 9.2 6 months or less 6 months or less less or 6 months €million €million SJODJQBMMZSFQSFTFOUDVTUPNFS relation to these facilities l due. 6-12 months NPOUIT income. Accordingly, the €million €million €million der the heading 115.9 108.0 TUIBOY"O 46.1 2013 YQFOTF BNPVOUT and reserves other other reserves and 0.3 s on its debt debt its s on 2.2 5.7 5.7 2.2 redit facility for for redit facility – 4.4 4.4 – BUJPOPG 31 December 31 December EFST A141T 1-5 years ZFBST €million €million €million 210.4 164.9 2012 2012 37.0 0.2

StrategicStrategic GovernanceGovernance FinancialFinancial report performance 151151 5.3 3.4 39.7 22.1 70.5 2012 €million UIFSFBOZ DPSSFDUJWFBDUJPO VTFPGDIBOHFT 2.5 4.7 nks in Israel, QPTJUJPO in instant access 2013 2013 OPOJOWFTUNFOU 50.0 24.2 18.6 t cash with banks CBMBODFTBSFLFQU ilst a rating of five is QVUFUIFJSEFQPTJUT OHUFSNTUBCJMJUZ PUFECZ#MPPNCFSH , Italy and the UK €million t position of the Group, LUIBUUIFGBJSWBMVFPG PVQNBJOUBJOTEPNFTUJD JOUIBUUIFNBKPSJUZEFSJWF POTVDIGBDUPSTBT GSPN141TUPCFUIFDBSSZJOHBNPVOU FFLMZCBTJT JODMVEJOHBHFEEFCUPSBOBMZTJT BOEQSPNQUMZUBLFT HPG"""POUIFQSJODJQBM BTEFmOFECZ.PPEZTSBUJOHBHFODZ5IF(SPVQDBO VFBNPVOUTEVFGSPN141TXIJDIIBEOPUCFFOJNQBJSFE OPSXFSF NFOUT XJUIPVUQSJPSXSJUUFOBVUIPSJUZCZUIF#PBSE OUTUISPVHIUIFVTFPGBmOBODJBMJOTUSVNFOUXJMMnVDUVBUFCFDB JODMVEFBOJNQBJSNFOUPGŇNJO141SFDFJWBCMFTBTQBSUPGUIFNBSLFUFYJUDPTUT ODJBMJOTUJUVUJPOBOEIBTBPOFZFBSDSFEJUEFGBVMUTXBQ BTRV BCJMJUZ DVTUPNFSEJWFSTJmDBUJPO HFPHSBQIJDEJWFSTJmDBUJPO MP BOEEFCJUDBSEDIBSHFCBDLT0UIFSUIBOUIJT OPODFOUSBMDBTI XIFSFQSBDUJDBCMFBOEFDPOPNJD UIF(SPVQTFFLTUPTVCTUJUVUF UUSJCVUBCMFUPSFDFJWBCMFTGSPN141TBOEGSPNDVTUPNFSTXIPEJT BEBCMFBOEGPSFJHODVSSFODZmOBODJBMJOTUSVNFOUT*UJTUIFSJT FOTFTBOEMFHBMSFRVJSFNFOUT*O*UBMZ 4QBJOBOE'SBODFUIF(S DVSSFODZSJTL PSPUIFSNBSLFUGBDUPST PUIFSQSJDFSJTL overnight cash deposits;overnight pooled money market funds; certificates of deposit; and paper. commercial 2 (Strong) (Good) 3 4 (Satisfactory) 141TBNPVOUTEVF As at 31 December 31 at As 1 (Very strong) .BOBHFNFOUDPOTJEFSUIFNBYJNVNDSFEJUFYQPTVSFPOBNPVOUTEVF "TBU%FDFNCFSBOE%FDFNCFSUIFSFXFSFOPPWFSE JOňJOUFSFTUSBUFT JOUFSFTUSBUFSJTL GPSFJHOFYDIBOHFSBUFT risk rate Interest The Group’s current net cash position is maintained primarily on a floating basis. In the event of a strategic change in the deb the interest rate management policy would be reviewed. EJTDMPTFEJOOPUF ŇOJM 5IFSFJTBOJOIFSFOUDPODFOUSBUJPOPGSJTLXJUI141T XIJDIBSFOPUJOWFTUNFOUHSBEFCBOLT QBSUJBMMZJNQBJSFEBNPVOUT5IFCBMBODFTBTBU%FDFNCFS NPTUPGUIFJSJODPNFGSPNUIFPOMJOFHBNJOHTFDUPS5PUIJTFOE HSBEF141TXJUIJOWFTUNFOUHSBEF PS BUMFBTU CFUUFSRVBMJUZ141T /PUFEFUBJMTUIFNPWFNFOUBOEMFWFMPGQSPWJTJPOTGPS141T Cash investments: As a result of the deteriorating European financial situation, in October 2012 the Group decided to only inves on an overnight basis with a small number of very strong German and English financial institutions. The Group also invests cash QPPMFENPOFZNBSLFUGVOETXJUIBNJOJNVNMPOHUFSNDSFEJUSBUJO BMTPQVSDIBTFDPNNFSDJBMQBQFSQSPWJEFEUIFJTTVFSJTOPUBmOB of no more than 1%. Investments are allowed only in highly liquid securities. The Group maintains monthly operational balances with strong local ba #VMHBSJB "VTUSJB UIF64BOE*OEJBUPNFFUMPDBMTBMBSJFT FYQ respective the as by accounts required funds regulatorysegregated player authorities. Cash as held Austria also security is in QSJNBSJMZUPTVQQPSUCBOLHVBSBOUFFTBOEBTSFTFSWFTGPSDSFEJU to a minimum. "TBU%FDFNCFSBOE%FDFNCFSBMMDBTIBOETIPSUUFSNJOWFTUNFOUCBMBODFTXFSFIFMEBUCBOLT 5IFUSFBTVSZEFQBSUNFOUNBZPOMZNBLFUIFGPMMPXJOHDBTIJOWFTU t t t t 5IFNBYJNVNFYQPTVSFUPDSFEJUSJTLJTSFQSFTFOUFECZUIFDBSSZJOHBNPVOUPGFBDImOBODJBMBTTFUJOUIFTUBUFNFOUPGmOBODJBM risk Market .BSLFUSJTLBSJTFTGSPNUIF(SPVQTVTFPGJOUFSFTUCFBSJOH US GVUVSFDBTInPXTPOJUTMPOHUFSNEFCUmOBODFBOEDBTIJOWFTUNF JGQSFBHSFFEMJNJUTBSFFYDFFEFE'PS141TUIBUEPOPUIBWFBGPSNBMDSFEJUSBUJOH BOJOUFSOBMSBUJOHTZTUFNJTVTFE CBTFE JOEVTUSZLOPXMFEHF UIFJSTUBUFNFOUPGmOBODJBMQPTJUJPO QSPmU management credibility, potential regulatory risk and historic payment track record. These internal ratings are monitored and reviewed on a quarterly basis. An internal rating of one is assessed as weak. very as strong wh assessed NBEFBGUFSQMBZJOHPOUIF(SPVQTXFCTJUFT1SJPSUPBDDFQUJOHOFX141TBOEXIFSFWFSQSBDUJDBCMF DSFEJUDIFDLTBSFQFSGPSNFEVTJOHBSFQVUBCMFFYUFSOBMTPVSDF4FOJPSNBOBHFNFOUNPOJUPST141CBMBODFTPOBX 31. Financial instruments and risk management (continued) management and risk instruments 31. Financial Credit risk 0QFSBUJPOBM5IF(SPVQTPQFSBUJPOBMDSFEJUSJTLJTQSJNBSJMZB 152 Notes to the consolidated financial statements financial consolidated tothe Notes 152 bwin.party Annual report & accounts 2013 FYUFSOBMJOTVSBODFJTOPUDPOTJEFSFEBOFDPOPNJDNFBOTPGNJUJHBUJOHUIFTFSJTLT i certain retains also Group The reasons. contractual or legal required, or, where commercial for insurance purchases Group The Insurance t BOJOTUBOUBOFPVTJODSFBTFPSEFDSFBTFPGJONBSLFUJOUFSFT t ofeither: earnings Group’s the on impact and instruments financial Group’s ofthe value fair the to change the measures that analysis asensitivity adopted has Group The Sensitivity analysis to currency and interest rate risk ratios. earnings Group on impact potential the and currencies PGUIFOFUJOWFTUNFOUWBMVF*ONBOBHJOHUIFNJYPGPOHPJO /FUJOWFTUNFOUFYQPTVSFT5IF(SPVQIBTUIFnFYJCJMJUZUPIPME FYFDVUJOHMPXWBMVFBOEVOFDPOPNJDGPSFJHOFYDIBOHFDPOUSBDUT i permitted is currency) other any and euro between €3m to (reduced dollars Canadian and sterling USdollars, and euros between TIPSU MFTTUIBOPOFNPOUI $VSSFODZFYQPTVSFTBSFNPOJUPSFECZUIF(SPVQ5SFBTVSZ$PNNJUUFFPOBNPOUIMZCBTJT"ŇNDVSSFO NBZBMTPFDPOPNJDBMMZIFEHFNBUFSJBMDPNNJUUFEFYQPTVSFTTVDIB flows cash forecast other No months. 12 upto for UK the and inGibraltar costs operational sterling forecast ofits all or some EJTDSFUJPOUPIFEHF BOEGVMMZIFEHFEVTJOHGPSFJHOFYDIBOHFDPOUSBDUTBOEPSCZIPMEJOHDBTIJOUIFSFMFWBOUDVSSFODZ"EEJUJPOBMMZ UIF(SPVQIBT 5SBOTBDUJPOBOEDVSSFODZMJBCJMJUZFYQPTVSFT5IF(SPVQTQPMJD Currency risk Financial31. instruments andrisk management (continued) projection of likely future events and losses. and events future oflikely projection UTEJTDMPTFEJOUIFGPMMPXJOHUBCMF XIJDIUIFSFGPSFTIPVMEOPU JOUFSFTUBOEFYDIBOHFSBUFTUPWBSZGSPNUIFIZQPUIFUJDBMBNPVO ca may that markets infinancial developments other to due results these from materially differ may future inthe results Actual specified that assuming risk, ofmarket impact possible ofthe estimates are analysis sensitivity the from generated amounts The inisolation. change rarely rates market inpractice, only, as FVSP BSJTJOHPVUPGDIBOHFTJOUIFGBJSWBMVFPGmOBODJBMJOTU DMJFOUMJBCJMJUZPCMJHBUJPOTUIBUBSFOPOJOUFSFTUCFBSJOHBOE 5IF(SPVQJTFYQPTFEUPJOUFSFTUSBUFNPWFNFOUTTJODFJUIPMET 10% strengthening in the reporting currency reporting the in strengthening 10% currency reporting the in weakening 10% rates in interest 1% increase 1% in decrease interest rates As at 31 December a 10% strengthening or weakening in the reporting currency against all other currencies from the rates applicable at 31 Decembe 31 at applicable rates the from currencies other all against currency reporting inthe weakening or strengthening a 10% or instruments); financial bearing SVNFOUTXIJDIBSFIFMEJOOPOFVSPDVSSFODJFT5IJTBOBMZTJTJT -*#03CBTFEMPBOT TFFOPUF 5IF(SPVQJTFYQPTFEUPDVSSFODZNPWFNFOUTJOUIF ZJTUIBUBMMNBUFSJBMUSBOTBDUJPOBOEDVSSFODZMJBCJMJUZFYQPT TJHOJmDBOUBNPVOUTPGDBTIBUnPBUJOHSBUFTBTXFMMBTDBTIFRV EFCUJODVSSFODJFTPUIFSUIBOFVSPTJOPSEFSUPIFEHFOPOFVSP HEFCUFYQPTVSFUIF(SPVQUBLFTJOUPBDDPVOUQSFWBJMJOHJOUFSFTUSBUFTJOQBSUJDVMBS USBUFT JODMVEJOHUIFBOOVBMJTFEJOUFSFTUJODPNFJNQBDUPGWBS TDBQJUBMFYQFOEJUVSFVOMFTTUIFQFSJPECFUXFFODPNNJUNFOUBOE (Decrease) increase in fair increase value of (Decrease) €million 2013 (2.0) 2.2 0.0 0.0 financial instruments Impact on gain (loss) Impact earnings instruments financial €million 2012 2012 (1.6) 1.8 0.0 0.0 GPSJMMVTUSBUJWFQVSQPTFT VSFTBSFFDPOPNJDBMMZ are hedged. The Group Group The hedged. are €million JOWFTUNFOUTVQUP JWBMFOUTUPNFFU JBCMFSBUFJOUFSFTU use fluctuations in in fluctuations use nsurable risk where risknsurable where 2013 CFDPOTJEFSFEBTB (0.7) (0.2) any resultant 0.1 1.5 changes occur. changes n order to avoid DZUPMFSBODFMJNJU r. r. QBZNFOUJT €million 2012 2012 (1.0) (0.8) 0.1 2.0 2.0 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 153153 – – 0.3 0.3 1.4 5.5 3.6 0.8 (1.0) (0.1) n/a 20.3 10.4 2012 2012 Total Total 2,192 million €million Number ed the the ed sting at which JBOCZQFS – – – – – – – – – 5IF(SPVQIBT BQQSPQSJBUF 0.2 0.2 0.3 n/a (0.3) 2013 ear period period ear new awards are OUNFBTVSFNFOUEBUF PVOU BOOVBM million OHJGUIF$PNQBOZT OJMDPTUPQUJPOT UIFZ €million Number operations Discontinued Discontinued 5.5 3.6 0.8 20.1 10.2 €million operations Continuing Continuing 5.9 0.8 2013 16.6 Total Total €million – – 4.5 – 5.4 – – €million operations Discontinued Discontinued JPOJODFOUJWFGPSFNQMPZFFT JODMVEJOHUIF&YFDVUJWF%JSFDUPST BSUJMF VNCFSPGTIBSFTVTJOHUIFNBSLFUWBMVFPGBTIBSFBUUIFSFMFWB DPNQBSBUPSHSPVQ SJTJOHPOBTUSBJHIUMJOFCBTJTUPWFTUJ TŇOJM ŇOJM 7$1QPPM5IFBXBSETXJMMCFTUSVDUVSFEBTOJMDPTUTIBSFPQUJPOT XJUIIBMGPGUIF FSUISFFPOFZFBSQFSGPSNBODFQFSJPET JOFYDFTTPGBIVSEMFBN NBODFQFSJPEBOEUIFSFNBJOJOHIBMGWFTUJOHPOFZFBSMBUFS"T GUIFJODSFBTFJOUIF$PNQBOZTTIBSFQSJDFEVSJOHUIFSFMFWBOUZFBS"GUFSFBDIZFBS 4.5 5.4 5.9 0.8 IBSFT JOUIFGPSNPGBOJMDPTUPQUJPOPSBDPOEJUJPOBMTIBSFBXBSE XJUIBWBMVFFRVBM 7$1QPPMXJMMCFMJOLFEUPUIFWBMVFDSFBUFEGPS4IBSFIPMEFST UBLJOHJOUPBDDPVOUUIF 16.6 €million operations Continuing Continuing &YFSDJTBCMFBUUIFFOEPGZFBS Shares over which options granted during the period (number) Shares over which options granted during the year &YFSDJTFEEVSJOHUIFZFBS Outstanding at end of year Weighted average remaining contractual life of options outstanding upon satisfaction of performancerelevant conditions (days) where 1FSDFOUBHFPGUPUBMJTTVFETIBSFDBQJUBM Shares in respect of options lapsed during the year PSP Plan Plan PSP December 31 ended Year Outstanding at beginning of year Total charge Total Other Orneon acquisition Year ended 31 December 31 ended Year 5PUBM4IBSFIPMEFSSFUVSOCBTFE $MFBO&#*5%"$MFBO&#*5%"HSPXUICBTFE Total Shareholder return based return Shareholder Total 1411MBO BOEJOBDDPSEBODFXJUIUIFQBSUJDJQBOUTBMMPDBUFETIBSFPGUIF XJMMSFNBJOFYFSDJTBCMFGPSUFOZFBSTGSPNUIFEBUFPGHSBOU "TBU%FDFNCFSUIFMJBCJMJUZBTTPDJBUFEXJUIUIF7$1XB TIBSFTVOEFSFBDIPQUJPOWFTUJOHBUUIFFOEPGUIFUIJSEQFSGPS These options were to vest subject to the achievement of a total Shareholder return (‘TSR’) performance target over ve for The 2007 threshold each year comparator from the group. a of compared January median TSR the of 1 three July to on 1 or commencing y XJMMWFTU XPVMEIBWFCFFO543FRVBMMJOHUIFNFEJBOPGUIF HSPXUI 5IF7$1QPPMXJMMCFDBMDVMBUFEBTCFJOHFRVBMUPP FOEUIF7$1QPPMXJMMCFDPOWFSUFEJOUPBXBSETPWFSBTQFDJmDO UPUIFJSBMMPDBUFEQFSDFOUBHFPGUIF7$1QPPM5IFTJ[FPGUIF JODSFBTFJOTIBSFQSJDF EJWJEFOETQBJEBOETIBSFCVZCBDLT PW 5IF(SPVQIBTBEPQUFEBOEHSBOUFEBXBSETBTBSFXBSEBOESFUFOU VTFEUIF#MBDL4DIPMFTPQUJPOQSJDJOHNPEFMUPWBMVFUIFTFPQUJPOTVOMFTTUIF.POUF$BSMPPQUJPOQSJDJOHNPEFMJTEFFNFENPSF An appropriate discount has been applied to reflect the fact that dividends are not paid on options that have not vested or have not vested have and CFFOFYFSDJTFE 543FYDFFEFEUIFNFEJBOCZQFSBOOVNDBMDVMBUFEPWFSUIFUISFFZFBSQFSJPE*UJTFTUJNBUFEUIBUPVUQFSGPSNBODFPGUIFNFE BOOVNPWFSUIBUQFSJPEJTQFSGPSNBODFJOFYDFTTPGUIFVQQFSRV As part of the Merger, the Remuneration Committee measured the TSR performance condition up to the date of the and EGM determin number of shares capable of vesting. Vesting will still occur on the original vesting dates subject to continued employment. No to be granted under this plan. 7BMVFDSFBUJPOQMBO A7$1 1BSUJDJQBOUTBSFHSBOUFE7$1QPJOUT CFJOHBSJHIUUPSFDFJWFT 32. Share-based payments 154 Notes to the consolidated financial statements financial consolidated tothe Notes 154 bwin.party Annual report & accounts 2013 #POVTBOE4IBSF1MBO A#41 achieved in 2013. perform to inrelation in2014 made be will agrant although plan this under yet made been had grants no 2013 December 31 at As BOBOOVBM&MFNFOU#BXBSENBZOPUFYDFFEPGTBMBSZ TIBSFTWFTUPOUIFUIJSEBOOJWFSTBSZPGHSBOU CVUBSFPOMZFMJHJCMFGPSTBMFPOUIFmGUIBOOJWFSTBSZPGHSBOU6OMJLFUIF7$1 UIFCFHJOOJOHPGUIBUQSFWJPVTZFBS"OZBXBSENBEFVOEFS&MFNF Remuneratio the by set been having projects these year, previous the during objectives transformational and strategic completed &MFNFOU#PGUIF#*1 XIJDISFQMBDFTUIF7$1 BMMPXTGPSUIFBOOVBMHSBOUPGSFTUSJDUFETIBSFTEFQFOEFOUPOUIFFYUFOUUPXIJD WJSUVBMMZJEFOUJDBMUPUIF##1 TFFBEFTDSJQUJPOPGUIJTQMBOBCPWF FYDFQUXJUIBSFEVDFENBYJNVNBOOVBMDPOUSJCVUJPO A7$1 XIJDISFBDIFEUIFFOEPGUIFJSUISFFZFBSQFSJPEPGPQ 5IF#*1XBTBQQSPWFECZUIF$PNQBOZT4IBSFIPMEFSTPO'FCSVBSZBOETVDDFFETUIF#POVT#BOLJOH1MBO CXJOQBSUZEJHJUBMFOUFSUBJONFOUQMD*ODFOUJWF1MBO A#*1 "TBU%FDFNCFSUIFMJBCJMJUZBTTPDJBUFEXJUIUIFTIBSF bonus account of current is its value. debited 50% participant’s perfor the satisfy not does year inany performance Ifthe cash. ofany balance the with four, together inyear vesting balance IBMGPGUIFCBMBODFPGUIFCPOVTBDDPVOUXJMMCFQBJEJOTIBSFT EBUFXJMMCFDSFEJUFEJOUIFGPSNPGTIBSFT UISPVHIBOJM have met been in any targets year,performance an amount may bonus be credited (or account debited) to the on participant’s the 5IF##1QMBODPWFSTBUISFFZFBSQFSJPEXJUIBOOVBMQFSGPSNBODF #POVT#BOLJOH1MBO A##1 based growth EBITDA /Clean EBITDA Clean payments (continued) Share-based 32. Other in2013. achieved conditions performance to XJMMSFDFJWFOJMDPTUTIBSFPQUJPOTXIJDIWFTUJOFRVBMJOTUBMN 5IF#41QMBOBMTPDPWFSTBUISFFZFBSQFSJPEXJUIBOOVBMQFSGPS Year ended 31 December plan share and Bonus Weighted average remaining contractual life of options outstanding upon satisfaction of performance conditions where where (days) conditions relevant performance of satisfaction upon outstanding options of life contractual remaining average Weighted 1FSDFOUBHFPGUPUBMJTTVFETIBSFDBQJUBM (number) period the during granted options which over Shares &YFSDJTBCMFBUUIFFOEPGZFBS year of end at Outstanding &YFSDJTFEEVSJOHUIFZFBS year the during lapsed options of respect in Shares year the during granted options which over Shares year of beginning at Outstanding performance conditions where (days) relevant performance of satisfaction upon outstanding options of life contractual remaining average Weighted 1FSDFOUBHFPGUPUBMJTTVFETIBSFDBQJUBM (number) period the during granted options which over Shares &YFSDJTBCMFBUUIFFOEPGZFBS year of end at Outstanding &YFSDJTFEEVSJOHUIFZFBS year the during lapsed options of respect in Shares &YDIBOHF year the during granted options which over Shares year of beginning at Outstanding 2013 December 31 ended Year DPTUPQUJPO BOEJODBTI4IPSUMZBGUFSFBDINFBTVSFNFOUEBUFBOBNPVOUFRVBMUP FSBUJPOPO%FDFNCFS5IF#*1JTTQMJUJOUPUXPTFQBSBUF FOUTPWFSUIFOFYUUISFFZFBST"GVSUIFSHSBOUPGTIBSFTXJMM UPUIFQBSUJDJQBOU"GUFSUIFJOJUJBMUISFFZFBSTIBMGUIFOJM CBTFEFMFNFOUPGUIF##1XBTŇN ŇN NBODFUBSHFUTTFUBUUIFCFHJOOJOHPGFBDIZFBS*GUIFUBSHFUT UBSHFUTTFUBUUIFCFHJOOJOHPGFBDIZFBS%FQFOEJOHPOUIFFY OU#JTNBEFJOUIFGPSNPGBSFTUSJDUFETIBSFBXBSEPSOJMDPT Rollover Plan Rollover Plan bwin.party bwin.party Number Number million 1,166 21.4 21.6 23.7 (1.2) (0.9) n/a 1,598,719 – –––– – GSP Plan GSP Plan Number Number million 3,096 0.2% 14.9 (4.5) (2.3) 2.7 9.7 1.6 A##1 BOE7BMVF$SFBUJPO1MBO DPTUPQUJPOWFTUT XJUIUIF XIJDIEJEOPUDBQBXBSET CFNBEFJOJOSFMBUJPO 1,902,266 FMFNFOUT&MFNFOU"JT FMV Plan Plan FMV mance target then a then a mance target BSFNFUUIFQBSUJDJQBOU Number Number Number Number IUIF$PNQBOZIBT million million million 0.23% JOTUFBEPG 1,667 3,052 UTIBSFPQUJPO5IF 2013 (0.3) (1.4) n/a UFOUUPXIJDIUIF 3.1 3.1 3.4 0.3 1.6 0.0 1.6 1.4 ance conditions conditions ance measurement measurement – – – n Committee at at n Committee Nil-Cost Plan Plan Nil-Cost 1,733,629 Number Number Number Number million million million 0.21% 1,941 3,379 2012 (1.0) n/a (0.3) 0.3 0.4 1.4 0.3 1.4 1.7 – – – – – StrategicStrategic GovernanceGovernance FinancialFinancial report performance 155155 – – – 2.7 1.4 0.5 (0.2) (1.1) n/a 2,329 million Number

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JOHCBTJT – – his plan. his 3.4 3.1 e not subject to (0.6) (0.1) n/a 18.9 YJTUJOHPQUJPOTJO nce conditionsnce (14.8) 2,030 etention capabilitiesetention million Number OTSFDFJWFEBTQBSUPG '.71MBO

1.7 3.7 5.1 (0.5) (1.5) 10.1 14.9 3,391 1.25% million Number (411MBO – – 10,127,567 (7.0) (1.1) (1.3) n/a 33.1 23.7 21.0 1,567 million Number bwin.party 3PMMPWFS1MBO 1VSDIBTFETIBSFTNVTUCFIFMEGPSBNJOJNVNPGUISFFZFBSTGPSUIFNBUDIJOH FBDI UIFZNBZCFBXBSEFEBEEJUJPOBMGSFFTIBSFTPOBNBUDI Z3PMMPWFS1MBOBOEUIF'.7QMBOUIFPQUJPOUPFYDIBOHFUIFJSF SMJLFCBTJTVTJOHUIF#MBDL4DIPMFTWBMVBUJPONPEFM/FXPQUJP &YFSDJTBCMFBUUIFFOEPGZFBS Shares over which options granted during the period (number) 1FSDFOUBHFPGUPUBMJTTVFETIBSFDBQJUBM Weighted average remaining contractual life of optionsoutstanding upon satisfaction of performance relevant (days) where conditions Shares in respect of options lapsed during the year &YFSDJTFEEVSJOHUIFZFBS Outstanding at end of year Year ended 31 December 2012 31 ended Year Outstanding at beginning of year Shares over which options granted during the year &YDIBOHF Option exchangeOption programme %VSJOHUIF(SPVQPGGFSFEUIFQBSUJDJQBOUTPGUIFCXJOQBSU SFUVSOGPSOJMDPTUPQUJPOT5IFFYDIBOHFXBTEPOFPOBMJLFGP UIFFYDIBOHFBSFTVCKFDUUPUIFPSJHJOBMWFTUJOHTDIFEVMF bwin.party Rollover Plan 5IFTFPQUJPOTXFSFHSBOUFEBTBSFTVMUPGUIF.FSHFSUPSFQMBDFUIFFYJTUJOHCXJOPQUJPOTBUUIFUJNFVTJOHUIFTBNFFYDIBOHFSBUJPBTGPSTIBSFT They are subject to the original vesting conditions and have no performance conditions. No new awards are to be granted under t (‘GSP’) Plan Share Global "XBSETPGGSFFTIBSFTXPSUIVQUPBNBYJNVNPGb PSFRVJWBMFOU NBZCFNBEFUPFBDIFMJHJCMFFNQMPZFFFBDIZFBS5IFBXBSENBZCFTVCKFDU UPQFSGPSNBODFDPOEJUJPOT5IFSFJTnFYJCJMJUZUPHSBOUEJGGFSFOUUZQFTPGGSFFTIBSFBXBSEJODMVEJOHOJMDPTUPQUJPOT DPOEJUJPOBMBXBSETPGTIBSFT and restricted shares where the employee is the owner of the shares from thedate of award. "EEJUJPOBMMZ XIFSFFNQMPZFFTCVZTIBSFTVQUPBNBYJNVNPGb VQUPBNBYJNVNPGUXPNBUDIJOHTIBSFTGPSFBDIQVSDIBTFETIBSF shares to vest. Directors are not eligible to receive any awards under this plan. FMV Plan Options granted under this plan during the period generally vest in instalments over a three year period. There are no performa BUUBDIFEUPPQUJPOTJTTVFECZUIF(SPVQVOEFSUIFUFSNTPGUIF'.71MBO%JSFDUPSTBSFOPUFMJHJCMFUPSFDFJWFBOZBXBSETVOEFSUIJTQMBO/POFX awards are to be granted under this plan. Nil-Cost Plan These options are not generally subject to performance conditions as this is regarded as detracting from their attraction and r and instead usually vest on a phased basis over a four to five year period. No new awards are to be granted under this plan. acquisitionOrneon As part of theOrneon acquisition, the Group granted share options to key management of the acquired entities. These options ar performance conditions but require continued employment for a period of two years from the date of acquisition. 32. Share-based (continued) payments 156 Notes to the consolidated financial statements financial consolidated tothe Notes 156 bwin.party Annual report & accounts 2013 interest was €0.4m (2012: €nil). (2012: €0.4m was interest IPMEJOHJOCXJOQBSUZFOUFSUBJONFOU /+ --$ *UBMTPJODMVEFTB €1.0m). (2012: €2.4m was /PODPOUSPMMJOHJOUFSFTUTJODMVEFB Non-controlling36. interests policy. distribution Company’s the support to reserves in order to createOn sufficient 19 share di premium its the Company July cancelled account 2012 by the amount of €1,018,951,463 premium Share 35. today. issued been has payment dividend the regarding announcement Aseparate 2013. 2May before or on registrars Group’s electio acurrency file to need will sterling pounds than rather ineuros dividends receive to wishing Shareholders 2014. 27 May CFňQBZBCMFUP4IBSFIPMEFSTPOUIFSFHJTUFSPG4IBSFIPMEFSJOUFSFTUTPO"QSJM UIFA3FDPSE%BUF *UJTFY Gen Annual the at ifapproved dividend, final The 3.44p). 2013 (2012: December 31 ended year the for share per of3.60p dividend 5IF#PBSEJTSFDPNNFOEJOHBmOBMEJWJEFOEPGQQFSTIBSFXIJDI UPHFUIFSXJUIUIFJOUFSJNEJWJEFOEPGQFODFQFSTIBSF Dividend 34. year. financial 2011 inthe infull impaired subsequently and Merger ofthe date rest been also has goodwill aresult, As years. financial 2012 and 2011 the also and date Merger the at as sheet balance Group’s incl to restated been have results the and sale) on consideration the to in2013 Amaya with agreed adjustment the (representing liabilities ofthe value The in2012. sale subsequent and Merger ofthe point the at understated be to identified were business "TBSFTVMUPGEVFEJMJHFODFBSJTJOHGSPNUIFTBMFPGUIF0OHBN in2011. amount same the by down written also was goodwill ofits value carrying ofthe review Group’s the with Inline of€8.6m. aliability and of€8.6m in goodwill increase an include IBWFUIFSFGPSFTVCTFRVFOUMZCFFOSFTUBUFEUPJODMVEFBMJBCJMJU JOUFSFTUTPGmSTU4BKPP4"4BOEUIFO MBUUFSMZ #&44"4UIB minority ofthe buyout the on arise would aliability Merger, the during acquired balances inthe that identified itwas year, financial the During Prior year restatement 33. IPMEJOHJO#&44"4 UXBTOPUJODMVEFEXJUIJOUIFWBMVBUJPOPGJOUBOHJCMFBTTFUT5IFSFTVMUTGPSBOE BDPNQBOZJODPSQPSBUFEJO'SBODF5IFMPTTBUUSJCVUBCMFUPUIFOPODPOUSPMMJOHJOUFSFTU F##CVTJOFTTEVSJOHUIFmOBODJBMZFBS TFFOPUF DFS ZPGŇNXJUIJOPUIFSQBZBCMFT OPODVSSFOU 5IFSFTVMU OPODPOUSPMMJOH BDPNQBOZJODPSQPSBUFEJOUIF645IFMPTTBUUSJCVUBCMFUPUIF QFDUFEUIBUEJWJEFOETXJMMCFQBJEPO intangibles, the resulting resulting the intangibles, UBJOMJBCJMJUJFTPGUIBU in question was €1.7m €1.7m was in question TIBWFCFFOSFTUBUFEUP ated by €1.7m at the the at €1.7m by ated n and return it to the the itto return n and eral Meeting, will ude these within the NBLFTBUPUBM stributable StrategicStrategic GovernanceGovernance FinancialFinancial report performance 157157 – – 4.5 0.3 0.1 0.6 (9.9) 2012 108.1 107.8 (137.4) (137.4) (137.4) 1,107.3 1,215.4 1,102.8 1,078.0 1,087.2 1,078.0 €million – – 0.1 2.2 1.4 0.6 (5.2) 2013 2013 107.3 106.7 (198.4) (198.4) (198.4) 1,206.9 1,314.2 1,115.8 1,118.7 1,115.8 1,205.5 €million 26 35 26 30 15 16 18 19 19 Notes Year ended 31 December31 ended Year Non-current assets subsidiaries in Investments Own shares Own "WBJMBCMFGPSTBMFSFTFSWF Equity Share capital account premium Share Total liabilitiesTotal Total net assets Non-current liabilities Trade and other payables Cash and cash equivalents Total assets Current liabilities Trade and other payables Investments assets Current Trade and other receivables Retained earnings parent the of holders equity to attributable Equity Company statement of financial position financial of statement Company 158 bwin.party Annual report & accounts 2013 Company statement of changes in equity Total equity earnings Retained Own shares Share premium account capital Share Share premium account capital Share 2013 December 31 ended Year Year ended 31 2012 December Total equity earnings Retained Own shares 1 January 1 January 1 January 1 January €million 1,087.2 (6.3) (33.6) (4.2) 59.0 – – 16.6 59.0 1,118.7 (4.2) (5.8) (33.6) 1.6 1,078.0 (33.6) (6.3) 1,087.2 €million ,1. . 3.)(64 (573.0) (56.4) 2.7 1,717.4 (33.0) – – 1.1 1,018.4 705.9 (3.2) (33.0) (48.7) (573.0) 1,018.9 3.1 3.1 1,018.9 1,070.0 (573.0) (48.7) (33.0) (3.2) 705.9 As at As at (9.9) (7.1) 0.6 1.6 – 0.1 – 2.2 0.1 0.2 – – – – 0.2 (0.1) Other issue Other issue issue Other of shares of shares of shares of shares €million €million 6.3 – (1.6) – 6.3 4.8 – (7.6) – 4.8 Dividends Dividends €million €million paid paid Purchase of Purchase 1VSDIBTFPG €million €million shares shares shares shares comprehensive comprehensive comprehensive FYQFOTFGPSUIF income for the €million €million period period period Total Total Total Total 59.0 – – 59.0 16.6 1,115.8 – – – – – – 0.1 – (1,018.9) – 0.6 0.6 – (1,018.9) – – – – (9.9) – – – – – – (5.2) – – – Transfer of Transfer of reserves reserves reserves reserves €million €million – 3.1 3.1 – 1,060.8 Other share- 0UIFSTIBSF payments payments €million €million based based based based December December €million €million As at 31 As at 31 StrategicStrategic GovernanceGovernance FinancialFinancial report performance 159159 – – – 2.7 3.1 6.4 5.9 0.3 0.2 (7.2) (7.2) 25.5 78.1 65.5 2012 (25.2) (56.4) (19.0) (33.0) (83.5) 551.2 (576.2) €million – – – – – – 1.6 0.3 0.3 0.6 3.1 3.4 1.1 (5.8) 2013 2013 59.0 61.0 38.1 (33.6) (37.8) (89.5) (24.0) €million s in working capital and provisions (Revaluation) Impairment of investments in subsidiaries Impairment investments of *ODSFBTFJOSFTFSWFTEVFUPTIBSFCBTFEQBZNFOUT income Dividend Year ended 31 December31 ended Year 1SPmU MPTT GPSUIFZFBS for: Adjustments &YDIBOHFEJGGFSFODFT Cash cash and equivalents Dividends paidDividends received Interest activities financing cash in used Net Net increase (decrease) in cash and cash equivalents Net cash (used in) generated by investing activities activities Financing Issue of ordinary shares 1VSDIBTFPGPXOTIBSFT Net cashNet operating activities from inflow activities Investing 1VSDIBTFPGJOWFTUNFOUT /FUJOUFSFTUFYQFOTF JODPNF movement cashflows before Operating Decrease in trade and other receivables Increase in trade and other payables Cash and cash equivalents at beginning of year Company statement of cashflows of statement Company 160 bwin.party Annual report & accounts 2013 Glossary A*"4# ‘IAS’ Group’ ‘bwin.party or ‘Group’ ‘gross win’ margin’ win ‘gross Digitale’ ‘Gioco A'54&HPPE*OEFY4FSJFT ‘yield per active player day’ day’ player active per ‘yield A815 ‘WIN’ ‘wager’ ‘UIGEA’ betting’ ‘sports ‘shares’ ‘Shareholders’ A'PYZ#JOHP Trust’ ‘Employee A&#*5%" ‘Discontinued operations’ or ‘bwin.party’ A$PNQBOZPSA1BSUZ(BNJOH A$MFBO&#*5%"BOEA$MFBO&14 ‘Cashcade’ ‘bwin.party shares’ ‘bwin.party’ ‘bwin’ A#PBSEPSA%JSFDUPST placed A#$ and/or rake to contributed has who aplayer products, Group’s the to relation in A## players’ ‘average or players’ active ‘Daily average money’ real ‘active or player’ ‘active days’ player ‘Active ‘InterTrader’ ‘IFRS’ ASFBMNPOFZTJHOVQTPSATJHOVQT ‘rake’ player’ active ‘unique or ‘player’ ‘partypoker’ 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