STRONG BRANDS, TECHNOLOGY & TALENT Annual Report 2016 SET FOR SUCCESS. GVC Holdings PLC is a multinational sports betting and gaming group. Listed on the London Stock Exchange (ticker:GVC) and a member of the FTSE 250. The Group owns some of the world’s leading online gaming brands across sports, casino, poker and bingo. 2016 was a momentous year in the Group’s history, with the completion of our biggest acquisition to date, that of bwin.party. Having made substantial progress in integrating our operations, we delivered both strong growth and substantive returns to our shareholders. While the online gaming sector is constantly evolving, with the challenges of new regulatory requirements and the need to continuously develop our product, we believe GVC is well positioned to carry the positive momentum of the past year into 2017 and beyond. GVC Holdings PLC Annual Report 2016 01 PERFORMANCE HIGHLIGHTS 02 CHAIRMAN’S INTRODUCTION 03 AT A GLANCE 04 CHIEF EXECUTIVE’S REVIEW 06 OUR STRATEGY 09 MAJOR TRENDS IN THE MARKETPLACE 10 REGULATORY OVERVIEW 12 BUSINESS MODEL 14 PERFORMANCE OF DIVISIONS 16 CORPORATE SOCIAL RESPONSIBILITY 22 CHIEF FINANCIAL OFFICER’S REVIEW 26 PRINCIPAL RISKS 32 GOVERNANCE & REMUNERATION 34 FINANCIAL STATEMENTS 68 SHAREHOLDER INFORMATION 119 02 Performance highlights/Chairman’s introduction NGR (€’000) / Annual growth 894,600+9% 2015: 822,200 Contribution (€’000) / Annual growth +5% 2015: 442.8 464,000 Clean EBITDA (€’000) / Annual growth +26% 2015: 163,200 205,700 Total sports wagers (€’000) / Increased 4,553,600+4% 2015: 4,389,700 All figures are provided on a pro forma basis, as if bwin.party had been acquired on 1 January 2015. GVC Holdings PLC Annual Report 2016 03 WE NOT ONLY ACHIEVED ALL OF OUR TARGETS, BUT IN MOST CASES WE EXCEEDED THEM. We employ c2,800 people across 15 offices and four and GVC’s proven track record of adding shareholder Lee Feldman continents. Creating a Group-wide identity and culture value through mergers and acquisitions this is an based on common values has been an important important development for the Group. Non-executive Chairman part of the integration process. Our core values of The strong underlying performance of the business 23 March 2017 collaboration, dynamism, ownership, recognition and transparency, reflect the culture of our business and together with the favourable refinancing enabled the what we believe is required to succeed in a highly Group to declare a special dividend in November, competitive and rapidly evolving industry. which was subsequently increased by 49% in December to euro 14.9c per share. The dividend It is a reflection of the progress made and the potential was settled in sterling at 12.5p per share and paid of GVC, that the Group has been able to attract 14 February 2017. In addition, we have also declared a number of highly regarded professionals from a second special dividend of euro 15.1c, giving total 016 was the most significant year in the Group’s across the gaming industry and beyond. This has declared dividends of euro 30c per share for the history. The acquisition of bwin.party was enabled us to strengthen our business in a number financial year ended 31 December 2016. For the 2017 2 completed on 1 February 2016 and transformed of areas, the benefits of which have already begun financial year and beyond, we will pursue a progressive GVC into one of the leading global businesses in the to be experienced, but with much more to come. dividend policy, reflecting the growth in the business online gaming industry. Importantly, the purchase and aiming to return no less than 50% of free cash of bwin.party was consistent with our strategy; to ...and financially flow. In addition, the Board will also give consideration deliver increased scale, further international diversity The Group’s financial performance during the year to returning future excess cash to shareholders. and enable us to leverage our proprietary technology Excess cash will be determined by the capital and exceptional management team. In a competitive exceeded our original expectations both in terms of Net Gaming Revenue (NGR) and Clean EBITDA. requirements of the business, together with the and rapidly evolving global regulatory environment, trading outlook at the appropriate time. we believe this strategy leaves GVC well placed to Pro forma NGR increased 9% to €894.6m and by continue to create shareholder value. 12% in constant currency. Meanwhile, pro forma I would also like to take this opportunity to thank Clean EBITDA increased 26% to €205.7m, reflecting Richard Cooper, who retired as Group Finance Director In August, just six months after completing the an increase in margin to 23% from 20%. Net debt and from the Board in February 2017. Richard joined bwin.party transaction, the Group was admitted to as at 31 December 2016 was €131.5m, just 0.6x the Group in 2008 and has been a major part of the the Premium Segment of the Official List. A month Clean EBITDA. Company’s success over the past eight years. We wish later GVC became a constituent of the FTSE 250 We remain on target to secure €125m of synergies by him all the success in the future. I would also like to index, having grown from a market value of less than welcome aboard Paul Miles who joined us as Chief £100m four years ago to over £2bn today. the end of 2017 with the full impact being derived in 2018 in line with the timetable we set out at the time Financial Officer in February. GVC is highly ambitious and focused on measurable of the bwin.party acquisition. In addition to this, annual Finally, as announced separately today, Will Whitehorn delivery. Therefore, it is pleasing to report the capital expenditure is expected to be approximately has been appointed to the Board as Senior Independent Group achieved a strong operational and financial €20m lower per annum than the combined Group Non-executive Director. Will is a highly experienced performance in 2016. spent in 2015. business professional and is a significant appointment for the Group. He is the Deputy Chairman and Senior A year of significant progress... The Group’s progress is clearly reflected in the development of our financing structure. In October Independent Director of Stagecoach Group plc and is operationally 2016, we secured a short term €250m loan facility an Independent Non-executive Director of Purplebricks As a management team and a business we set from Nomura International plc (the “Nomura Loan”), Group plc. This builds upon the strengthening of the ourselves a number of targets in 2016, and which was used in part to fully retire the €400m Board in 2016 when Stephen Morana, Peter Isola and I’m pleased to be able to say that we not only loan provided by Cerberus Business Finance LLP. Norbert Teufelberger joined the Group. achieved all of these targets but also in most cases The Nomura Loan significantly lowered our Through the combination of talented people, proprietary exceeded them. finance costs. technology and strong brands, GVC is well placed to The integration of bwin.party was a key focus of In February 2017, we launched our inaugural pursue the many opportunities and face the challenges 2016 and whilst all such large scale transactions syndicated debt offer to great success. A €250m presented by the dynamic industry in which we operate. present challenges, the assimilation of the business Senior Secured six year term loan (the “Term Loan”) GVC will be posting its Annual Report to shareholders has progressed positively and is ahead of our initial was significantly oversubscribed. This was used to the week commencing 1 May 2017 and it will be expectations. Our talented, hardworking team and the pay down the Nomura Loan in full. In addition, we also uploaded on our website (www.gvc-plc.com) from corporate culture we have fostered have been the key secured a €70m Revolving Credit Facility (“RCF”). that date. The AGM will be held in Gibraltar and is drivers for a smooth integration. The new financing gives us both significant financing scheduled for 20 June 2017. visibility and also access to a broad number of debt investors. Given the ongoing industry consolidation 04 At a glance A GLOBAL LEADER IN ONLINE GAMING... FAST FACTS GVC has four business segments with a number of Headquartered in Isle of Man B2C and B2B product offer leading brands; Sports Labels (bwin, Sportingbet, Listed on LSE (LSE:GVC) and Proprietary technology platform gamebookers), Games Labels (partypoker, partycasino, member of FTSE 250 Foxy Bingo, Gioco Digitale, CasinoClub), B2B and Licensed in more than Gaming sites in 21 languages non-core assets. The Group acquired bwin.party 18 jurisdictions digital entertainment plc on 1 February 2016. 2,800+ employees and Bets accepted in 19 currencies contractors with offices across four continents Leading brands in all product In 2016 GVC processed €4.6bn verticals, sports betting, casino, sporting wagers poker and bingo PRO FORMA FINANCIAL HIGHLIGHTS NGR CONTRIBUTION CLEAN EBITDA (+9%) (+5%) (+26%) (€m) (€m) (€m) 1,000 500 464.0 250 894.6 442.8 822.2 205.7 800 400 200 163.2 600 300 150 400 200 100 200 100 50 0 0 0 2015 2016 2015 2016 2015 2016 DIVISIONAL SPLIT 2016 NGR 2016 CONTRIBUTION 2% 2% 3% 9% 1 % 3 2 Sports Labels Sports Labels Games Labels Games Labels B2B B2B Non-core Non-core 7 3 (-1) not shown % in pie chart 7 8 % GVC Holdings PLC Annual Report 2016 05 STRONG BRANDS... + Read more on page 17 + Read more on page 18 PROVEN TECHNOLOGY... 95% 90% 1k + >99.95 % NGR processed on our platform Increase in games wagers Games Platform up-time on mobile We operate our own unique proprietary 2119 79m technology platform + Read more on page 21 Languages Currencies Registered company accounts GLOBAL TALENT..