SEC Filing | The Stars Group Inc

Amaya Inc.

Date: July 27, 2015

/s/ Daniel Sebag

Daniel Sebag

Chief Financial Officer

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Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

For the Month of July 2015

001-37403

(Commission File Number)

AMAYA INC.

(Translation of registrant’s name into English)

7600 Trans Canada Hwy.

Pointe-Claire, Quebec, Canada

H9R 1C8

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ¨ Form 40-F x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

On July 27, 2015, Amaya Inc. (the “Company”) filed an Amended and Restated Business Acquisition Report (the “A&R BAR”), which amends and restates that certain Business Acquisition Report, dated October 15, 2014, relating to the August 1, 2014 acquisition by a subsidiary of the Company of the Oldford Group Limited (now known as Amaya Group Holdings (IOM) Limited), on SEDAR at www.sedar.com. A copy of the A&R BAR is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EXHIBIT INDEX


Exhibit No.		Description

99.1		Amended and Restated Business Acquisition Report, dated July 27, 2015

EX-99.1

Exhibit 99.1

EXPLANATORY NOTE

In contemplation of potential future filings with applicable securities authorities, Amaya Inc. (the “Corporation”) is filing this amended and restated business acquisition report (the “A&R BAR”) solely to (i) replace Schedule “A” to the Corporation’s business acquisition report, dated October 15, 2014 (the “BAR”), with the re-audited consolidated financial statements of Oldford Group Limited (now known as Amaya Group Holdings (IOM) Limited) (“Oldford”) as at and for the year ended December 31, 2013, including the report thereon of Dannible & McKee, LLP, Syracuse, New York (the “Re-Audited 2013 Financial Statements”) and (ii) make certain other applicable changes to update the information provided in the BAR, including in Items 1.1, 2.1, 2.4 and 2.7 and the section titled “Caution Regarding Forward-Looking Statements”. The Re-Audited 2013 Financial Statements include the following changes to the audited consolidated financial statements of Oldford as at and for the year ended December 31, 2013, which were previously included as Schedule “A” to the BAR and audited by Haines Watts London LLP, London, England: (i) updating the list of directors and advisors; (ii) replacing the “Report of the Board of Directors” and the “Independent Auditor’s Report to the Shareholders of Oldford Group Limited” with the “Report of Independent Registered Public Accounting Firm” by Dannible & McKee, LLP; (iii) noting the 2012 comparative data as unaudited and making conforming changes to the related notes; (iv) removing all unconsolidated data and making conforming changes to the related notes; (v) adding basic and diluted earnings per share data for the years ended December 31, 2013 and 2012 and adding Note 34 “Earnings per share” relating thereto; (vi) adding clause (iii) to Note 6 “Significant accounting policies” under the heading “Foreign operations”; and (vii) adding Note 38 “Subsequent events”.

The other financial statements, including all pro-forma statements, appended to the BAR as Schedules “B” and “C”, and all other information contained in the BAR, remains entirely unmodified, regardless of events that may have occurred subsequent to the initial filing date of the BAR. This explanatory note does not form a part of, and is not incorporated by reference in, the A&R BAR.

FORM 51-102F4

AMENDED AND RESTATED BUSINESS ACQUISITION REPORT

Item 1.

Identity of Company

1.1

Name and Address of Company

Amaya Inc. (the “Corporation”)

7600 Trans Canada Hwy

Pointe-Claire, Québec H9R 1C8

1.2

Executive Officer

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

Item 2.

Details of Acquisition

2.1

Nature of Business Acquired

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

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

For more information concerning the Acquisition, please refer to the Corporation’s annual information form for the year ended December 31, 2014 (the “AIF”), available under the Corporation’s profile on SEDAR at www.sedar.com.

2.2

Date of Acquisition

August 1, 2014 (the “Closing Date”).

2.3

Consideration

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

The Upfront Purchase Price and fees and expenses relating to the Acquisition that were paid by closing of the Acquisition were financed through a combination of cash on hand, new debt, a private placement of

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

2.4

Effect on Financial Position

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

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

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

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

2.5

Prior Valuations

None.

2.6

Parties to Transaction

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

2.7

Date of Report

October 15, 2014, as amended and restated July 27, 2015.

Item 3.

Financial Statements

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

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

- 2 -

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

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

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

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

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

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

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

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

Numerous risks and uncertainties could cause the combined company’s actual results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to, the heavily regulated industry in which the Corporation carries on business; interactive entertainment and online and mobile gaming generally; current and future laws or regulations and new interpretations of existing laws or regulations with respect to online and mobile gaming; potential changes to the gaming regulatory scheme; legal and regulatory requirements; ability to obtain, maintain and comply with all applicable and required licenses, permits and certifications to distribute and market its products and services, including difficulties or delays in the same; significant barriers to entry; competition and the competitive environment within the Corporation’s addressable markets and industries; impact of inability to complete future acquisitions or to integrate businesses successfully; ability to develop and enhance existing products and services and new commercially viable products and

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services; ability to mitigate foreign exchange and currency risks; risks of foreign operations generally; protection of proprietary technology and intellectual property rights; lengthy and variable sales cycle; ability to recruit and retain management and other qualified personnel, including key technical, sales and marketing personnel; defects in the Corporation’s products or services; losses due to fraudulent activities; management of growth; contract awards; potential financial opportunities in addressable markets and with respect to individual contracts; ability of technology infrastructure to meet applicable demand; systems, networks, telecommunications or service disruptions or failures or cyber-attacks; regulations and laws that may be adopted with respect to the Internet and electronic commerce and that may otherwise impact the Corporation in the jurisdictions where it is currently doing business or intends to do business; ability to obtain additional financing on reasonable terms or at all; refinancing risks; customer and operator preferences and changes in the economy; dependency on customers’ acceptance of its products and services; changes in ownership of customers or consolidation within the gaming industry; litigation costs and outcomes; expansion within existing and into new markets; relationships with vendors and distributors; and, natural events. For additional information, please refer to the “Risk Factors and Uncertainties” sections in the AIF and in the Corporation’s management’s discussion and analysis for the period ended March 31, 2015, each as filed on SEDAR at www.sedar.com, and in other filings that the Corporation has made and may make in the future with applicable securities authorities.

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

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SCHEDULE “A”

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

OF OLDFORD GROUP FOR THE YEARS ENDED DECEMBER 31, 2013 AND DECEMBER 31, 2012

(UNAUDITED)

OLDFORD GROUP LIMITED

Annual Report and Consolidated Financial Statements

Years Ended 31 December 2013 and 31 December 2012 (unaudited)

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)


Contents	Page

Directors and Advisors		1

Report of Independent Registered Public Accounting Firm		2

Consolidated Income Statement		3

Consolidated Statement of Comprehensive Income		4

Consolidated Statement of Financial Position		5

Consolidated Statement of Changes in Equity		6

Consolidated Statement of Cash Flows		7

Notes to the Consolidated Financial Statements		8 - 46

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Directors and Advisors


Directors

	P Schapira	resigned 1 August 2014
	I M Scheinberg	resigned 1 August 2014
	M Goldstein	appointed 1 August 2014
	D Baazov	appointed 1 August 2014, resigned 4 March 2015
	D Sebag	appointed 1 August 2014
	A Baker	appointed 1 August 2014, resigned 4 March 2015
	R Vanderplank	appointed 1 August 2014, resigned 4 March 2015
	O Webster	appointed 1 August 2014, resigned 4 March 2015
	D Meyers	appointed 1 August 2014, resigned 4 March 2015
	T Shepherd	appointed 1 August 2014, resigned 4 March 2015
	T Head	appointed 1 August 2014, resigned 4 March 2015
	S Gibson	appointed 1 August 2014, resigned 4 March 2015
	J Killip	appointed 1 August 2014, resigned 4 March 2015
	R Ashkenazi	appointed 4 March 2015, resigned 30 April 2015
	I Rosenthal	appointed 28 May 2015
	M Hazel	appointed 4 March 2015
	G Templer	appointed 4 March 2015
Registered Agent

	Appleby Trust (Isle of Man) Limited

Registered Office

	Douglas Bay Complex, Kind Edward Road, Onchan, Isle of Man, IM3 1DZ

Company Number

	010483V

Auditors

	Dannible & McKee LLP Financial Plaza 221 S. Warren St., Syracuse, New York 13202-1628

Principal Solicitors

	Herzog, Fox & Neeman, Asia House, 4 Weizmann Street, Tel Aviv, Israel

Page 1

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Amaya Group Holdings (IOM) Ltd. (formerly known as Oldford Group Limited) (the “Company”)

We have audited the accompanying consolidated statement of financial position of the Company as of December 31, 2013, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, and the results of their operations and their cash flows for the year then ended in conformity with International Financial Accounting Standards as issued by the International Accounting Standards Board.

The accompanying consolidated statement of financial position of the Company as of December 31, 2012, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended were not audited by us and, accordingly, we do not express an opinion on them.

/s/ Dannible & McKee, LLP

Syracuse, New York

July 24, 2015

Page 2

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Consolidated income statement for the years ended 31 December 2013 and 31 December 2012 (unaudited)


	Note		Year ended 31 Dec 2013 $‘000			(Unaudited) Year ended 31 Dec 2012 $‘000
Revenue				1,133,417			976,439
Distribution costs		8		(268,040	)		(249,055	)
Administration costs		8		(435,337	)		(408,196	)

Profit from operations				430,040			319,188
Net investment losses		12		(6,910	)		(3,237	)
Net finance (costs)/income		13		(1,122	)		1,174

Profit before tax				422,008			317,125
Income tax expense		14		(5,333	)		(3,508	)

Profit for the year				416,675			313,617

Attributable to:
Equity holders of the parent				416,404			313,031
Non-controlling interests		31		271			586

				416,675			313,617


Basic earnings per common share		34	$	0.42		$	0.32


Diluted earnings per common share		34	$	0.42		$	0.32

The notes on pages 8 - 46 form part of these financial statements.

Page 3

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Consolidated statement of comprehensive income for the years ended 31 December 2013 and 31 December 2012 (unaudited)


	Note		Year ended 31 Dec 2013 $‘000			(Unaudited) Year ended 31 Dec 2012 $‘000
Profit for the year				416,675			313,617
Other comprehensive income
Items that will be reclassified to profit or loss in subsequent periods
Exchange differences on translation of foreign operations		30		(184	)		(36	)
Available for sale financial assets - net changes in fair value		30		(896	)		—

Other comprehensive expense for the year, net of tax				(1,080	)		(36	)

Total comprehensive income for the year				415,595			313,581

Attributable to:
Equity holders of the parent				415,324			312,995
Non-controlling interests		31		271			586

				415,595			313,581

The notes on pages 8 - 46 form part of these financial statements.

Page 4

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Consolidated statement of financial position as at 31 December 2013 and 31 December 2012 (unaudited)


			31-Dec-13				(Unaudited) 31-Dec-12
	Note		$‘000		$‘000		$‘000			$‘000
ASSETS
Non-current assets
Property, plant and equipment		15				48,175					43,533
Goodwill		16				602					840
Other intangible assets		17				1,069					2,615
Long term receivables		18				15,000					—
Unquoted equity investments		19				9,461					8,641

Total non-current assets						74,307					55,629
Current assets
Available-for-sale investments		20		211,946				—
Inventories		21		1,580				4,163
Trade and other receivables		22		134,544				133,926
Short-term deposits		23		88,859				218,791
Cash and cash equivalents		24		678,544				599,550

Total current assets						1,115,473					956,430

TOTAL ASSETS						1,189,780					1,012,059

LIABILITIES
Non-current liabilities
Other payables		25				97,000					197,000
Current liabilities
Trade and other payables		26		392,460				225,746
Client liabilities		27		615,316				626,141
Short-term provisions		28		4,832				3,443

Total current liabilities						1,012,608					855,330

TOTAL LIABILITIES						1,109,608					1,052,330

EQUITY
Share capital		29		49				49
Share premium		30		3,241				1,655
Other reserves		30		99				1,179
Retained earnings		30		76,269				(43,397	)

Equity attributable to equity holders of the parent						79,658					(40,514	)
Non-controlling interests		31				514					243

TOTAL EQUITY						80,172					(40,271	)

TOTAL EQUITY AND LIABILITIES						1,189,780					1,012,059

The financial statements were approved by the Board of Directors and authorised for issue on 24 July 2015. They were signed on its behalf by:

/s/ Michael Hazel

Michael Hazel

The notes on pages 8 - 46 form part of these financial statements.

Page 5

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Consolidated statement of changes in equity for the years ended 31 December 2013 and 31 December 2012 (unaudited)


			Share Capital		Share Premium		Other Reserves			Retained Earnings			Attributable to equity holders of the parent			Non- controlling Interests
	Note		$‘000		$‘000		$‘000			$‘000			$‘000			$‘000
Balance at 1 January 2012 (unaudited)				49		852		1,215			(356,428	)		(354,312	)		(463	)
Total comprehensive income
Profit for the year (unaudited)				—		—		—			313,031			313,031			586
Other comprehensive income (unaudited)		30		—		—		(36	)		—			(36	)		—

				—		—		(36	)		313,031			312,995			586
Transactions with owners of the parent
Contributions and distributions
Issue of Ordinary Shares (unaudited)		30		—		803		—			—			803			—

				—		803		—			—			803			—
Changes in ownership interests
Purchase of additional shares in subsidiary (unaudited)				—		—		—			—			—			120

				—		—		—			—			—			120

Balance at 31 December 2012 (unaudited)				49		1,655		1,179			(43,397	)		(40,514	)		243

Balance at 1 January 2013				49		1,655		1,179			(43,397	)		(40,514	)		243
Total comprehensive income
Profit for the year				—		—		—			416,404			416,404			271
Other comprehensive income		30		—		—		(1,080	)		—			(1,080	)		—

				—		—		(1,080	)		416,404			415,324			271
Transactions with owners of the parent
Contributions and distributions
Dividends declared				—		—		—			(296,738	)		(296,738	)		—
Issue of Ordinary Shares		30		—		1,586		—			—			1,586			—

				—		1,586		—			(296,738	)		(295,152	)		—
Changes in ownership interests
Purchase of additional shares in subsidiary				—		—		—			—			—			—

				—		—		—			—			—			—

Balance at 31 December 2013				49		3,241		99			76,269			79,658			514

The notes on pages 8 - 46 form part of these financial statements.

Page 6

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Consolidated statement of cash flows for the years ended 31 December 2013 and 31 December 2012 (unaudited)


			Year ended 31 Dec 2013						(Unaudited) Year ended 31 Dec 2012
	Note		$‘000			$‘000			$‘000			$‘000
Cash flows from operating activities
Net profit from ordinary activities							422,008						317,125
Adjustments for:
Dormant accounts recognised as revenue				(42,053	)					—
Interest income received				(365	)					(3,216	)
Effect of foreign exchange rate changes				(3,702	)					(2,550	)
Unrealised foreign exchange gains and losses on operating activities (excluding cash)				3,593						1,086
Impairment of goodwill				238						3,639
Provision for unquoted equity investments				3,558						—
Share based payment expense				1,587						803
Depreciation of property, plant and equipment				8,287						7,232
Amortisation of intangible assets				1,576						2,315
Loss on disposal of property, plant and equipment				14						684

							(27,267	)					9,993

Operating cash flows before movements in working capital and provisions							394,741						327,118
Decrease/(increase) in trade and other receivables				4,684						(29,300	)
Decrease in inventories				2,582						3,403
Decrease in trade and other payables				(83,148	)					(31,920	)
Increase in provisions				1,389						335

Cash used in operations							(74,493	)					(57,482	)
Taxes paid							(3,472	)					(2,432	)

Net cash generated from operating activities							316,776						267,204
Investing activities
Interest income received				365						3,216
Purchases of property, plant and equipment				(13,057	)					(38,660	)
Purchases of intangible assets				(30	)					(6,183	)
Purchase of available for sale financial assets				(212,842	)					—
Investment in companies				—						(8,628	)
(Purchase)/disposal of investments				(4,378	)					5,000
Proceeds on disposal of property, plant and equipment				39						555
Increase in long term receivables				(15,000	)					—
Decrease in short-term deposits				129,932						19,804

Net cash used in investing activities							(114,971	)					(24,896	)
Cash flows from financing activities
Equity dividends paid				(126,513	)					—

Net cash used in financing activities							(126,513	)					—

Net increase in cash and cash equivalents							75,292						242,308
Cash and cash equivalents at the beginning of year							599,550						354,692
Effect of foreign exchange rate changes							3,702						2,550

Cash and cash equivalents at the end of year		24					678,544						599,550

The notes on pages 8 - 46 form part of these financial statements.

Page 7

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

1	General

Oldford Group Limited (now known as Amaya Group Holdings (IOM) Limited) (the “Company”) is primarily involved as a provider of online poker. The Company’s head office is at Douglas Bay Complex, Kind Edward Road, Onchan, Isle of Man. These consolidated financial statements comprise the Company and its principle subsidiaries (collectively the “Group”). The list of subsidiaries can be found in note 19.

2	Basis of preparation

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

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

3	Functional and presentation currency

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

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

4	Use of judgements and estimates

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

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

•

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

•

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

•

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

•

Notes 19 and 31—consolidation: whether the Group has control over an investee with non-controlling interests;

Page 8

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

4	Use of judgements and estimates (continued)

•

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

•

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

•

Note 28—short-term provisions: regarding the measurement of provisions including the key assumptions about the likelihood and magnitude of an outflow of resources.

5	Application of new and revised IFRSs

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

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

(a)

Amendments to IFRS 7 Disclosures—Offsetting Financial Assets and Financial Liabilities

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

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

(b)

New and revised Standards on consolidation, joint arrangements, associates and disclosures

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

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

Impact of the application of IFRS 10

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

Page 9

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

5	Application of new and revised IFRSs (continued)

(b)

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

Impact of the application of IFRS 10 (continued)

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

Impact of the application of IFRS 11

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

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

Impact of the application of IFRS 12

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

As a result of IFRS 12, the Group has mainly expanded its disclosures about its interests in subsidiaries (see notes 19 and 31).

Impact of the application of IAS 27 (revised 2011)

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

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

Impact of the application of IAS 28 (revised 2011)

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

Page 10

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

5	Application of new and revised IFRSs (continued)

(b)

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

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

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

(c)

IFRS 13 Fair Value Measurements

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

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

(d)

Amendment to IAS 1 Presentation of Items of Other Comprehensive Income

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

(e)

Amendment to IAS 19 Employee Benefits (revised 2011)

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

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

New and revised IFRSs in Issue but not yet effective

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

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

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

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

Page 11

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies

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

Basis of consolidation

Subsidiaries

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

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

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

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

Business combinations and related goodwill

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

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

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

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

Page 12

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Non-controlling interests (“NCI”)

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

Changes in the Group’s ownership interest in existing subsidiaries

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

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

Foreign currency

Foreign currency transactions

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

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

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

Foreign operations

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

(i)

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

(ii)

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

Page 13

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Foreign operations (continued)

(iii)

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

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

Revenue recognition

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

Internet gaming and tournament fees

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

Player deposit fees and conversion margins

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

Interest and investment income

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

Rental income

Refer to accounting policy notes on leased assets below.

Employee benefits

Short-term employee benefits

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

Page 14

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Employee benefits (continued)

Defined contribution plan

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

Share-based payment transactions

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

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

Dividends payable

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

Income tax

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

Current tax

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

Deferred tax

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

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

Page 15

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Deferred tax (continued)

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

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

Property, plant and equipment

Recognition and measurement

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

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

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

Subsequent expenditure

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

Depreciation

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

It is calculated at the following rates:


Freehold Property		4% per annum
IT Equipment, Servers and Software		33% per annum
Office Furniture and Equipment		20% per annum
Office Alterations		20% per annum
Motor Vehicles		20% per annum
Event and Poker Room		20% per annum

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

Page 16

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Intangible assets

Recognition and measurement

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

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

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

Subsequent expenditure

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

Amortisation

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

It is calculated at the following rates:


Customer lists		50% per annum
Domain names		50% per annum

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

Impairment of tangible and intangible assets

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

Page 17

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Leased assets

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

The Group as lessee

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

The Group as lessor

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

Investments in subsidiaries

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

Investments in unquoted equity investments

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

Inventories

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

Trade and other receivables

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

Short-term deposits

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

Cash and cash equivalents

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

Trade and other payables

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

Client liabilities

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

Page 18

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Provisions

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

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

Financial instruments

Recognition, derecognition and offsetting

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

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

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

Measurement

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

Financial assets at fair value through profit or loss

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

Page 19

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Financial instruments (continued)

Held-to-maturity investments

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

Loans and receivables

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

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

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

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

Financial liabilities at fair value through profit or loss

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

Other financial liabilities

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

Page 20

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

6	Significant accounting policies (continued)

Impairment of non-derivative financial assets

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

Financial assets measured at amortised cost

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

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

Available-for-sale financial assets

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

7	Dormant accounts

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

Page 21

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

8	Profit from operations


	Year ended		(Unaudited) Year ended
	31 Dec 2013		31 Dec 2012
This is arrived at after charging:	$‘000		$‘000
Distribution Costs
Customer acquisition and retention		179,423		157,917
Affiliates		32,746		43,163
Other customer bonuses and frequent player points		1,467		5,466
Bad debts and provisions		4,620		3,626
Web hosting and technical support		45,900		36,443
Gaming licence fee		3,884		2,440

		268,040		249,055

Administration Costs
Processor costs		63,657		56,457
Payroll and associated costs		190,496		166,036
General and administrative costs (excluding depreciation and audit fees)		76,818		82,080
Amortisation		1,576		2,315
Depreciation		8,287		7,232
Impairment of goodwill		238		3,639
Gaming duty		93,349		89,288
Loss on disposal of fixed assets		14		684
Auditors remuneration for audit services		571		320
Auditors remuneration for other services		331		145

		435,337		408,196

9	Particulars of employees


	Year ended		(Unaudited) Year ended
	31 Dec 2013		31 Dec 2012
Number of staff employed by the Group at year end totalled:	No.		No.
Directors		2		2
Operations and Customer Support		882		840
Administration and Marketing		610		510

		1,494		1,352

Page 22

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

9	Particulars of employees (continued)

The aggregate payroll costs of the above were:


	$‘000		$‘000
Salaries		137,584		115,509
Social security costs		15,435		11,849
Pension cost		4,937		4,112
Equity-settled share-based payments (note 33)		1,587		803

		159,543		132,273

10	Directors’ emoluments


	Year ended		(Unaudited) Year ended
	31 Dec 2013		31 Dec 2012
	$‘000		$‘000
The directors’ aggregate emoluments in respect of qualifying services were as follows:
During 2013 two executive directors were employed (2012 unaudited: two)
Emoluments receivable (including benefits)		1,510		1,108

		1,510		1,108

Emoluments of highest paid director:
Emoluments receivable (including benefits)		930		900

11	Operating lease arrangements

The Group as lessee

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

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


	Year ended		(Unaudited) Year ended
	31 Dec 2013		31 Dec 2012
	$‘000		$‘000
Within one year		8,445		7,366
Within two to five years		24,005		18,245
In more than five years		41,574		49,919

		74,024		75,530

Page 23

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

11	Operating lease arrangements (continued)

The Group as lessee (continued)

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

The Group as lessor

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

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


	Year ended 31 Dec 2013		(Unaudited) Year ended 31 Dec 2012
	$‘000		$‘000
Within one year		2,411		2,375
Within two to five years		10,255		9,856
In more than five years		22,485		24,765

		35,151		36,996

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

12	Net investment losses


	Year ended			(Unaudited) Year ended
	31 Dec 2013			31 Dec 2012
	$‘000			$‘000
Interest on short-term deposits		592			817
Dividend income		625			127
Market value adjustments		654			482
Loss on sale or transfer of investments		(1,160	)		(4,663	)
Investment provisions		(3,558	)		—
Investment write offs		(4,063	)		—

		(6,910	)		(3,237	)

Page 24

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

13	Net finance (costs)/income


	Year ended			(Unaudited) Year ended
	31 Dec 2013			31 Dec 2012
	$‘000			$‘000
Interest on bank balances and deposits		365			3,216
Realised foreign exchange gains and losses on operating activities (excluding cash)		(1,596	)		(3,506	)
Unrealised foreign exchange gains and losses on operating activities (excluding cash)		(3,593	)		(1,086	)
Unrealised foreign exchange gains and losses on cash and cash equivalents		3,702			2,550

		(1,122	)		1,174

14	Income taxes


	Year ended			(Unaudited) Year ended
	31 Dec 2013			31 Dec 2012
	$‘000			$‘000
Amounts recognised in income Statement
Current tax expense
Current year		(4,652	)		(3,159	)
Adjustment for prior years		(797	)		8

		(5,449	)		(3,151	)

Deferred tax expense
Current year		(1,057	)		(357	)
Adjustment for prior years		1,173			—

		116			(357	)

Total tax expense for the year		(5,333	)		(3,508	)

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

Page 25

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

14	Income taxes (continued)

Effective tax rate

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


	Year ended 31 Dec 2013 $‘000			(Unaudited) Year ended 31 Dec 2012 $‘000
Profit before tax		422,008			317,125
Tax expense		5,333			3,508

Effective tax rate for the year		1.3	%		1.1	%

15	Property, plant and equipment


	Freehold Property		IT Equipment, Servers & Software			Office Furniture & Equipment			Office Alterations			Motor Vehicles			Event & Poker Room			Total
	$‘000		$‘000			$‘000			$‘000			$‘000			$‘000			$‘000
Cost or valuation
At 1 January 2012 (unaudited)		—		26,288			4,522			6,505			575			49			37,939
Additions (unaudited)		31,278		2,829			459			4,076			18			—			38,660
Acquisitions (unaudited)		—		146			1,080			—			—			—			1,226
Disposals (unaudited)		—		(1,334	)		(839	)		(1,721	)		(399	)		(38	)		(4,331	)
Foreign currency transl. (unaudited)		—		71			66			13			6			—			156

At 1 January 2013		31,278		28,000			5,288			8,873			200			11			73,650
Additions		31		11,344			338			698			—			646			13,057
Acquisitions/reclassifications		—		(29	)		29			—			—			—			—
Disposals		—		—			(159	)		(6	)		(23	)		—			(188	)
Foreign currency transl.		—		(337	)		(221	)		(265	)		—			—			(823	)

At 31 December 2013		31,309		38,978			5,275			9,300			177			657			85,696

Accumulated depreciation
At 1 January 2012 (unaudited)		—		19,036			2,570			2,969			380			27			24,982
Acquisitions/reclassifications (unaudited)		—		80			807			—			—			—			887
Disposals (unaudited)		—		(1,113	)		(597	)		(1,126	)		(230	)		(26	)		(3,092	)
Charge for the year (unaudited)		969		4,135			934			1,155			29			10			7,232
Foreign currency transl. (unaudited)		—		72			33			2			1			—			108

At 1 January 2013		969		22,210			3,747			3,000			180			11			30,117
Acquisitions / reclassifications		—		—			—			—			—			—			—
Disposals		—		—			(122	)		(5	)		(8	)		—			(135	)
Charge for the year		1,143		5,261			563			1,230			4			86			8,287
Foreign currency transl.		—		(324	)		(212	)		(212	)		—			—			(748	)

At 31 December 2013		2,112		27,147			3,976			4,013			176			97			37,521

Carrying amount
At 31 December 2013		29,197		11,831			1,299			5,287			1			560			48,175

At 31 December 2012 (unaudited)		30,309		5,790			1,541			5,873			20			—			43,533

Page 26

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

16	Goodwill


	Goodwill
	$‘000
Cost or valuation
At 1 January 2012 (unaudited)		7,661
Additions (unaudited)		3,399

At 1 January 2013		11,060
Additions		—

At 31 December 2013		11,060

Impairment
At 1 January 2012 (unaudited)		6,581
Charge for the year (unaudited)		3,639

At 1 January 2013		10,220
Charge for the year		238

At 31 December 2013		10,458

Carrying amount
At 31 December 2013		602

At 31 December 2012 (unaudited)		840

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

17	Other intangible assets

Customer
lists
$‘000

Domain
names
$‘000

Total
$‘000

Cost or valuation

At 1 January 2012 (unaudited)

2,970

2,942

5,912

Additions (unaudited)

—

2,784

At 1 January 2013

2,970

5,726

8,696

Additions

—

At 31 December 2013

2,970

5,756

8,726

Page 27

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

17	Other intangible assets (continued)

Customer

Domain

lists
$‘000

names
$‘000

Total

$‘000

Amortisation

At 1 January 2012 (unaudited)

2,482

1,284

3,766

Charge for the year (unaudited)

488

1,827

2,315

At 1 January 2013

2,970

3,111

6,081

Charge for the year

—

1,576

At 31 December 2013

2,970

4,687

7,657

Carrying amount

At 31 December 2013

—

1,069

At 31 December 2012 (unaudited)

—

2,615

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

18	Long term receivables


	31 Dec 2013 $‘000		(Unaudited) 31 Dec 2012 $‘000
Other receivables		15,000		—

19	Unquoted equity investments


	Unquoted equity
	investments
Cost (which approximates fair value)	$‘000
At 1 January 2012 (unaudited)		5,013
Additions (unaudited)		8,628
Disposals (unaudited)		(5,000	)

At 1 January 2013		8,641
Additions		4,378
Provision against investments		(3,558	)
Disposals		—

At 31 December 2013		9,461

Page 28

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

19	Unquoted equity investments (continued)

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


Name	Holding			Country of Incorporation	Principal Activity
Hippodrome Casino Limited		5	%	UK	Operator of land based casino
Stack Evantos Esportivos SA		10	%	Brazil	Operator of the brand “Brazilian Series of Poker”
Gambling Management SA		5	%	Belgium	Operator of land based casino

Acquisitions

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

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

Investment provisions

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

Page 29

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

19	Unquoted equity investments (continued)

Investments in subsidiaries

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


Name	Holding	Country of Incorporation	Principal Activity
Asia Pacific Poker Tour Limited	100%	Isle of Man	Organises & markets APPT event
Euro Poker Tours Limited	100%	England	Organises & markets EPT event
Global Poker Tours Limited	100%	Isle of Man	Tour Management
Latin America Poker Tour Limited	100%	Isle of Man	Organises & markets LAPT event
Halfords Media (Italy) S.r.l	100%	Italy	Services – marketing and customer support
Halfords Media (UK)	100%	England	Services – marketing and customer support
Halfords Media (IOM)	100%	Isle of Man	Services – marketing and customer related
Halfords Media (France) SAS	100%	France	Services – marketing and customer related
Kawa Productions SAS	100%	France	Media production services
GP Information Services Pty Limited	100%	Australia	Customer services
Cayden Limited	100%	Isle of Man	Payment processing
Rational Entertainment Enterprises Limited	100%	Isle of Man	Operates PokerStars.com business
Rational Poker School Limited	100%	Isle of Man	Owns website for training players
Rational Services Limited	100%	Isle of Man	Services - varied
REEL Italy Limited	100%	Malta	Operates PokerStars .it business
REEL Malta Limited	100%	Malta	Operates PokerStars .fr business
REEL Estonia Limited	100%	Isle of Man	Operates PokerStars.ee business
REEL Europe Limited	100%	Malta	Operates PokerStars .be business
REEL Spain Plc	100%	Malta	Operates PokerStars .es business
Rational FT Enterprises Limited	100%	Isle of Man	Operates fulltiltpoker.com business
Rational FT Enterprises (Malta) Limited	100%	Malta	Operates fulltiltpoker.eu business
Rational FT Licensed Funds Limited	100%	Isle of Man	Holds Full Tilt player funds
Rational FT Holdings Limited	100%	Isle of Man	Holding company for RFT group
Rational FT Holdings (Malta) Limited	100%	Malta	Maltese holding company for RFT Maltese/Irish subgroup
Rational FT Payments Limited	100%	Isle of Man	Payment processing
Rational FT Poker School (IOM)	100%	Isle of Man	Owns website for training players
Rational FT Services (Ireland) Limited	100%	Ireland	Services - marketing, customer support and IT
Rational FT Services Limited	100%	Isle of Man	Support service company for Full Tilt group
Rational FT Treasury Limited	100%	Isle of Man	Treasury company
Halfords Denmark ApS	100%	Denmark	Tax representative in Denmark
Halfords Media Spain, SL	100%	Spain	Tax representative in Spain
IPT Services Srl	51%	Italy	Italian live room Joint venture
Mainsail Holdings Limited	100%	Jersey	Holds Skandia House
REEL Denmark Limited	100%	Isle of Man	Operates PokerStars.dk (Danish) business
Rational Group Limited	100%	Isle of Man	Holding company
Rational Networks Limited	100%	Malta	Holds PokerStars.eu (Maltese) Class 4 platform licence
Rational Resources Limited	100%	Malta	Holding company

Page 30

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

20	Available-for-sale investments


	31 Dec 2013 $‘000		(Unaudited) 31 Dec 2012 $‘000
Available-for-sale financial assets include the following:
Fixed interest bonds		143,878		—
Funds		66,620		—
Equities		1,448		—

		211,946		—

21	Inventories


	31 Dec 2013 $‘000			(Unaudited) 31 Dec 2012 $‘000
Finished goods		2,080			4,445
Provision against slow moving goods		(500	)		(282	)

		1,580			4,163

22	Trade and other receivables

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

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


	31 Dec 2013 $‘000		(Unaudited) 31 Dec 2012 $‘000
Trade receivables		54,960		67,254
Prepayments		18,265		18,644
Other receivables		57,192		47,917
Tax refunds		3,451		—
Deferred tax assets		676		111

		134,544		133,926

Page 31

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

23	Short-term deposits


	31 Dec 2013		(Unaudited) 31 Dec 2012
	$‘000		$‘000
Cash on deposit for more than three months		88,859		218,791

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

24	Cash and cash equivalents


	31 Dec 2013		(Unaudited) 31 Dec 2012
	$‘000		$‘000
Cash at bank and in hand		678,544		599,550

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

25	Other payables due in more than 1 year


	31 Dec 2013		(Unaudited) 31 Dec 2012
	$‘000		$‘000
Other payables		97,000		197,000

Page 32

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

26	Trade and other payables


	31 Dec 2013		(Unaudited) 31 Dec 2012
	$‘000		$‘000
Dividends payable		170,225		—
Trade payables		7,377		6,130
Current tax liabilities		6,882		1,325
Other taxes and social security		701		1,479
Deferred tax liabilities		787		467
Other payables		206,488		216,345

		392,460		225,746

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

27	Client liabilities


	31 Dec 2013			(Unaudited) 31 Dec 2012
	$‘000			$‘000
Client liabilities		657,369			626,141
Dormant accounts recognised as revenue		(42,053	)		—

		615,316			626,141

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

Client liabilities comprises of sums due to customers including net deposits received, undrawn winnings and tournament prize pools for tournaments that have yet to commence. This liability is matched by funds and investments held by the Group on behalf of the customers, which is included in the total of available-for-sale investments, short-term deposits and cash and cash equivalents as disclosed in notes 20, 23 and 24 respectively.

28	Short-term provisions


	2013		(Unaudited) 2012
	$‘000		$‘000
Player bonuses and rebates
At 1 January		3,443		3,108
Movement in period		1,389		335

At 31 December		4,832		3,443

Page 33

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

28	Short-term provisions (continued)

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

29	Share capital

Authorised share capital and significant terms and conditions

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


Allotted, called up and fully paid	Number		$
At 1 January 2012 (unaudited)		984,874,929		49,245
Issued during the period (unaudited)		2,812,573		141

At 31 December 2012 (unaudited)		987,687,502		49,386

At 1 January 2013		987,687,502		49,386
Issued during the period		1,549,322		77

At 31 December 2013		989,236,824		49,463

30	Reserves


	Capital Redemption		Translation Reserve			AFS Reserve			Share Premium		Retained Earnings
	$‘000		$‘000			$‘000			$‘000		$‘000
At 1 January 2012 (unaudited)		1		1,214			—			852		(356,428	)
Profit for the period (unaudited)		—		—			—			—		313,031
Premium arising on issue of equity shares (unaudited)		—		—			—			803		—
Foreign currency translation (unaudited)		—		(36	)		—			—		—

At 31 December 2012 (unaudited)		1		1,178			—			1,655		(43,397	)

At 1 January 2013		1		1,178			—			1,655		(43,397	)
Profit for the period		—		—			—			—		416,404
Dividends paid		—		—			—			—		(296,738	)
Premium arising on issue of equity shares		—		—			—			1,586		—
Foreign currency translation		—		(184	)		—			—		—
Available-for-sale financial assets—net changes in fair value		—		—			(896	)		—		—

At 31 December 2013		1		994			(896	)		3,241		76,269

Page 34

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

30	Reserves (continued)

Nature and purpose of reserves

Translation reserve

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

AFS reserve

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

31	Non-controlling interests


	$‘000
At 1 January 2012 (unaudited)		(463	)
Share of profit for the year (unaudited)		586
Purchase of additional shares in subsidiary (unaudited)		120

At 1 January 2013		243
Share of profit for the year		271
Purchase of additional shares in subsidiary		—

At 31 December 2013		514

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

32	Dividends

Year ended
31 Dec 2013
$‘000

(Unaudited)

Year ended
31 Dec 2012
$‘000

Amounts recognised as distributions to equity holders in the year:

Interim ordinary dividends

2013

Unaudited

2012

Per Share

0.30

0.00

296,738

—

Page 35

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

33	Share-based payments

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

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

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

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

34	Earnings per share

The following table sets forth the computation of basic earnings per common and diluted share for the year ended 31 December 2013 and 2012 (unaudited).


	31 Dec 2013		(Unaudited) 31 Dec 2012

Numerator
Numerator for basic and diluted earnings per common share – net earnings ($‘000)	$	416,675	$	313,617


Denominator
Denominator for basic earnings per common share - weighted average number of common shares (‘000)		987,817		987,688


Basic earnings per common share	$	0.42	$	0.32


Diluted earnings per common share	$	0.42	$	0.32

The dilutive effect of shares which could potentially be issued under the Company’s share based payment schemes is insignificant.

Page 36

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management

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

•

Long term receivables;

•

Unquoted equity investments;

•

Available-for-sale investments;

•

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

•

Short-term deposits;

•

Long term other payables;

•

Cash and cash equivalents;

•

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

•

Client liabilities; and

•

Short-term provisions.

Categories of financial instruments

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


Financial instruments	Category	2013 $‘000		(Unaudited) 2012 $‘000
Financial assets
Long term receivables	Loans and receivables		15,000		—
Unquoted equity investment	Available-for-sale		9,461		9,461
Available-for-sale investments	Available-for-sale		211,946		—
Trade and other receivables (excluding deferred tax and prepayments)	Loans and receivables		112,152		115,171
Short-term deposits	Loans and receivables		88,859		218,791
Cash and cash equivalents	Loans and receivables		678,544		599,550

			1,115,962		942,973

Financial liabilities
Long term other payables	Other financial liabilities		97,000		197,000
Trade and other payables (excluding deferred tax and current tax)	Other financial liabilities		384,791		223,954
Client liabilities	Other financial liabilities		657,369		626,141
Short-term provisions	Other financial liabilities		4,832		3,443

			1,143,992		1,050,538

Page 37

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management (continued)

The Group has exposure to the following risks arising from financial instruments:

•

Credit risk;

•

Liquidity risk; and

•

Market risk.

Risk management framework

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

Credit risk

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

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

Trade and other receivables

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

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

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

Page 38

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management (continued)

Long term receivables

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

Available-for-sale investments

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

Short-term deposits and cash and cash equivalents

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

Liquidity risk

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

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

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

31 December 2013

Long term
other
payables
$‘000

Trade & other payables
(excl. deferred tax &
current tax)

$‘000

Client
liabilities
$‘000

Short-
term
provisions
$‘000

Total

$‘000

On demand

—

657,369

4,832

662,212

In 3 months

—

281,732

—

281,732

Between 3 months and 1 year

—

9,343

—

9,343

More than 1 year

97,000

101,374

—

198,374

97,000

392,460

657,369

4,832

1,151,661

Page 39

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management (continued)

Liquidity risk (continued)


31 December 2012 (Unaudited)	Long term other payables $‘000		Trade & other payables (excl. deferred tax & current tax) $‘000		Client liabilities $‘000		Short- term provisions $‘000		Total $‘000
On demand		—		—		626,141		3,443		629,584
In 3 months		—		96,843		—		—		96,843
Between 3 months and 1 year		—		3,099		—		—		3,099
More than 1 year		197,000		125,804		—		—		322,804

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

Capital management

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

The capital structure of the Group consists mainly of equity of the Group (comprising issued capital, reserves, retained earnings and non-controlling interests per notes 29, 30 and 31). The Group does not have any significant external debt or borrowings.

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

Market risk

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

Foreign currency risk

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

•

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

•

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

•

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

Page 40

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management (continued)

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

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

31 December 2013

EUR
$‘000

GBP
$‘000

Other
$‘000

Total
$‘000

Financial assets

Available-for-sale investments

8,248

—

8,248

Unquoted equity investment

2,186

7,275

—

9,461

Long term receivables

—

Trade and other receivables (excluding deferred tax and prepayments)

35,845

13,937

15,809

65,591

Short-term deposits

34,156

—

34,156

Cash and cash equivalents

85,848

11,319

17,053

114,220

166,283

32,531

32,862

231,676

Financial liabilities

Long term other payables

—

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

23,107

16,748

4,376

44,231

Client liabilities

111,613

6,243

1,778

119,634

Short-term provisions

434

—

434

135,154

22,991

6,154

164,299

Net exposure

31,129

9,540

26,708

67,377

Page 41

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management (continued)


31 December 2012 (unaudited)	EUR $‘000		GBP $‘000		Other $‘000		Total $‘000
*Financial assets*
Available-for-sale investments		—		—		—		—
Unquoted equity investment		1,366		7,275		—		8,641
Long term receivables		—		—		—		—
Trade and other receivables (excluding deferred tax and prepayments)		57,236		15,424		20,638		93,298
Short-term deposits		9,238		1,625		22		10,885
Cash and cash equivalents		101,910		10,471		12,873		125,254

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

*Financial liabilities*
Long term other payables		—		—		—		—
Trade and other payables (excluding deferred tax and current tax)		20,590		16,079		4,600		41,269
Client liabilities		98,256		4,167		1,770		104,193
Short-term provisions		834		—		—		834

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

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

Sensitivity analysis

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


	31 December 2013						(Unaudited) 31 December 2012
	EUR $‘000			GBP $‘000			EUR $‘000			GBP $‘000
10% strengthening		(3,113	)		(954	)		(5,007	)		(1,455	)
10% weakening		3,113			954			5,007			1,455

Fair value measurements

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

Page 42

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management (continued)

Fair value measurements (continued)

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

•

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

•

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

•

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

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

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


Fair value disclosures:

Fair value at 31 December 2013:		$9,461k (2012 unaudited: $8,641k)

Fair value hierarchy:		Level 3;

Valuation technique used:		Given the unique nature of the investees’ business, there are no readily available market data as these types of investments are generally structured through private companies and confidential. As a result the Group has adopted income approach for valuing these investments, taking into account current and expected income from the investees over long-term.

Significant unobservable inputs:		Long-term revenue growth rates and pre-tax operating margins taking into account management’s experience and knowledge of market conditions of the specific industries.

Relationship of unobservable inputs to fair value:		The higher the revenue growth rates and pre-tax operating margins, the higher the fair value and vice versa.

Page 43

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

35	Financial risk management (continued)

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


Fair value at 31 December 2013:		$211,946k (2012 unaudited: Nil)

Fair value hierarchy:		Level 1;

Valuation technique used:		Quoted prices in an active market.

Significant unobservable inputs:		N/A

Relationship of unobservable inputs to fair value:		N/A

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

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

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

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

Fair value risk management

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

36	Related parties

Ultimate controlling party

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

Page 44

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

36	Related parties (continued)

Transactions with key management personnel

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


Year ended 31 December	2013 $‘000		(Unaudited) 2012 $‘000
Short-term benefits		4,877		3,030
Share-based payments		124		44

Certain directors and key management were granted share awards and options under service contracts as disclosed in note 33.

Transactions with related parties—Directors

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

During the year dividends totalling $264,032k (2012 unaudited: $nil) were declared by the directors.

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

Transactions with related parties-Group

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

Transactions with related parties-Other

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

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

Page 45

OLDFORD GROUP LIMITED

Annual report and consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited)

Notes forming part of the consolidated financial statements for the years ended 31 December 2013 and 31 December 2012 (unaudited) (continued)

37	Contingent liabilities

Legal and regulatory developments

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

Income Tax

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

VAT Group

The Group is periodically subject to audits and assessments by local taxing authorities. The Board is unable to quantify reliably any exposure for additional indirect taxes, if any, that may arise from the final settlement of such assessments. Accordingly no additional provisions have been made.

38	Subsequent events

On 12 June 2014 Amaya Inc. announced that it would acquire 100% of the issued and outstanding shares of the Company. On 1 August 2014 Amaya Inc. completed the acquisition, in an all cash-transaction for an aggregate purchase price of $4.9 billion, including certain deferred payments and subject to customary purchase price adjustments.

Subsequent to the acquisition the Company changed its name to Amaya Group Holdings (IOM) Limited on 2 October 2014.

Page 46

SCHEDULE “B”

UNAUDITED FINANCIAL STATEMENTS OF OLDFORD GROUP FOR THE PERIOD

ENDED JUNE 30, 2014

OLDFORD GROUP LIMITED

Annual Report and Consolidated Financial Statements

Half-Year Ended 30 June 2014

OLDFORD GROUP LIMITED

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

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


	Note		Half-year ended 30 June 2014 $‘000			Half-year ended 30 June 2013 $‘000
Revenue				567,864			545,892
Distribution costs		1		(125,243	)		(133,518	)
Administration costs		1		(220,615	)		(209,764	)

Profit from operations				222,006			202,610
Net investment gains/(losses)		2		1,053			(7,930	)
Net finance (costs)/income		3		(1,817	)		(2,998	)

Profit before tax				221,242			191,682
Income tax expense		4		(2,826	)		(1,825	)

Profit for the period				218,416			189,857

Attributable to:
Equity holders of the parent				218,187			189,857
Non-controlling interests		18		229			—

				218,416			189,857

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

Page 1

OLDFORD GROUP LIMITED

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

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


	Note		Half-year ended 30 June 2014 $‘000			Half-year ended 30 June 2013 $‘000
Profit for the period				218,416			189,857
Other comprehensive income
Items that will be reclassified to profit or loss in subsequent periods
Exchange differences on translation of foreign operations		17		(49	)		(184	)
Available for sale financial assets - net changes in fair value		17		5,616			(896	)

Other comprehensive expense for the period, net of tax				5,567			(1,080	)

Total comprehensive income for the period				223,983			188,777

Attributable to:
Equity holders of the parent				223,754			188,777
Non-controlling interests		18		229			—

				223,983			188,777


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

Page 2

OLDFORD GROUP LIMITED

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

Consolidated statement of financial position as at 30 June 2014

30-Jun-14

31-Dec-13

Note

$‘000

$‘000

ASSETS

Non-current assets

Property, plant and equipment

48,718

48,175

Goodwill

482

602

Other intangible assets

373

1,069

Long term receivables

15,000

15,000

Unquoted equity investments

9,461

9,461

Total non-current assets

74,034

74,307

Current assets

Available-for-sale investments

292,975

211,946

Inventories

883

1,580

Trade and other receivables

128,069

134,544

Short-term deposits

60,147

88,859

Cash and cash equivalents

566,641

678,544

Total current assets

1,048,715

1,115,473

TOTAL ASSETS

1,122,749

1,189,780

LIABILITIES

Non-current liabilities

Other payables

97,000

97,000

Current liabilities

Trade and other payables

232,428

392,460

Client liabilities

606,095

615,316

Short-term provisions

18,764

4,832

Total current liabilities

857,287

1,012,608

TOTAL LIABILITIES

954,287

1,109,608

EQUITY

Share capital

Share premium

3,241

3,241

Other reserves

5,666

Retained earnings

158,763

76,269

Equity attributable to equity holders of the parent

167,719

79,658

Non-controlling interests

743

514

TOTAL EQUITY

168,462

80,172

TOTAL EQUITY AND LIABILITIES

1,122,749

1,189,780


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

Page 3

OLDFORD GROUP LIMITED

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

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


	Note		Share Capital $‘000		Share Premium $‘000		Other Reserves $‘000			Retained Earnings $‘000			Attributa- ble to equity holders of the parent $‘000			Non- controlling Interests $‘000
Balance at 1 January 2013				49		1,655		1,179			(43,397	)		(40,514	)		243
Total comprehensive income
Profit for the year				—		—		—			416,404			416,404			271
Other comprehensive income		17		—		—		(1,080	)		—			(1,080	)		—

				—		—		(1,080	)		416,404			415,324			271
Transactions with owners of the parent
Contributions and distributions
Dividends paid				—		—		—			(296,738	)		(296,738	)		—
Issue of Ordinary Shares		17		—		1,586		—			—			1,586			—

				—		1,586		—			(296,738	)		(295,152	)		—
Changes in ownership interests
Purchase of additional shares in subsidiary				—		—		—			—			—			—

				—		—		—			—			—			—

Balance at 30 June 2013				49		3,241		99			76,269			79,658			514

Balance at 1 January 2014				49		3,241		99			76,269			79,658			514
Total comprehensive income
Profit for the year				—		—		—			218,187			218,187			229
Other comprehensive income		17		—		—		5,567			—			5,567			—

				—		—		5,567			218,187			223,754			229
Transactions with owners of the parent
Contributions and distributions
Dividends paid				—		—		—			(135,693	)		(135,693	)		—
Issue of Ordinary Shares		17		—		—		—			—			—			—

				—		—		—			(135,693	)		(135,693	)		—
Changes in ownership interests
Share repurchase											—			—			—
Purchase of additional shares in subsidiary				—		—		—			—			—			—

				—		—		—			—			—			—

Balance at 30 June 2014				49		3,241		5,666			158,763			167,719			743


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

Page 4

OLDFORD GROUP LIMITED

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

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


			Half-Year ended 30 June						Half-Year ended 30 June 2013
	Note		$‘000			$‘000			$‘000			$‘000
Cash flows from operating activities
Net profit from ordinary activities							221,242						191,682
Adjustments for:
Dormant accounts recognised as revenue				(3,925	)					—
Interest income received				(333	)					397
Effect of foreign exchange rate changes				1,220						2,710
Unrealised foreign exchange gains and losses on operating				(482	)					(391	)
Impairment of goodwill				120						120
Depreciation of property, plant and equipment				4,262						3,439
Amortisation of intangible assets				693						796
Loss on disposal of property, plant and equipment				2						1

							1,557						7,072

Operating cash flows before movements in working capital and provisions							222,799						198,754
Decrease in trade and other receivables				6,737						15,373
Decrease in inventories				697						932
Increase/(decrease) in trade and other payables				7,992						(15,084	)
Increase in provisions				13,932						10,673

Cash used in operations							29,358						11,894
Taxes paid							(5,750	)					(3,641	)

Net cash generated from operating activities							246,407						207,007
Investing activities
Interest income received				333						(397	)
Purchases of property, plant and equipment				(4,807	)					(4,444	)
Purchases of intangible assets				3						—
Purchase of available for sale financial assets				(75,413	)					(127,304	)
(Purchase)/disposal of investments				—						(3,586	)
Decrease in short-term deposits				28,712						82,445

Net cash used in investing activities							(51,172	)					(53,286	)
Cash flows from financing activities
Equity dividends paid				(305,918	)					—

Net cash used in financing activities							(305,918	)					—

Net (decrease)/increase in cash and cash equivalents							(110,683	)					153,721
Cash and cash equivalents at the beginning of year							678,544						599,550
Effect of foreign exchange rate changes							(1,220	)					(2,710	)

Cash and cash equivalents at the end of year		25					566,641						750,561


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

Page 5

OLDFORD GROUP LIMITED

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

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

1	Profit from operations


	Half-year ended		Half-year ended
	30 June 2014		30 June 2013
	$‘000		$‘000
This is arrived at after charging:
Distribution Costs
Customer acquisition and retention		78,703		87,573
Affiliates		16,479		19,152
Other customer bonuses and frequent player points		480		1,186
Bad debts and provisions		1,279		2,409
Web hosting and technical support		26,103		21,481
Gaming licence fee		2,199		1,717

		125,243		133,518

Administration Costs
Processor costs		33,931		31,632
Payroll and associated costs		104,377		89,873
General and administrative costs (excluding depreciation and audit fees)		26,565		36,899
Amortisation		693		796
Depreciation		4,264		3,439
Impairment of good will		120		120
Gaming duty		50,079		46,415
Loss on disposal of fixed assets		2		1
Auditors remuneration for audit services		584		589

		220,615		209,764

2	Net investment gains/(losses)


	Half-year ended		Half-year ended
	30 June 2014		30 June 2013
	$‘000		$‘000
Interest on short-term deposits		299		397
Dividend income		25		34
Market value adjustments		729		199
Loss on sale or transfer of investments		—		(5	)
Investment provisions		—		(4,492	)
Investment write offs		—		(4,063	)

		1,053		(7,930	)

3	Net finance (costs)/income


	Half-year ended			Half-year ended
	30 June 2014			30 June 2013
	$‘000			$‘000
Interest on bank balances and deposits		333			(397	)
Realised foreign exchange gains and losses on operating activities		(1,412	)		(282	)
Unrealised foreign exchange gains and losses on operating activities		482			391
Unrealised foreign exchange gains and losses on cash and cash equivalents		(1,220	)		(2,710	)

		(1,817	)		(2,998	)


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

Page 6

OLDFORD GROUP LIMITED

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

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

4	Income taxes


	Half-year ended			Half-year ended
	30 June 2014			30 June 2013
Amounts recognised in Income Statement	$‘000			$‘000
Current tax expense
Current year		(2,614	)		(2,878	)
Adjustment for prior years		(212	)		1,053

		(2,826	)		(1,825	)

The Group’s main operations are carried on in the Isle of Man which during the year benefited from a zero per cent tax regime. Tax has been

Effective tax rate

The Group’s principal activities are conducted from the Isle of Man, where the tax rate is nil (2013: nil). The Group incurs tax expense in other


	Half-year ended			Year ended
	30 June 2014			30 June 2013
	$‘000			$‘000
Profit before tax		221,242			191,682
Tax expense		2,826			1,825

Effective tax rate for the year		1.3	%		1.0	%

5	Property, plant and equipment (Group)


			IT
			Equipment,			Office
	Freehold		Servers &			Furniture &			Office			Motor			Event &
	Property		Software			Equipment			Alterations			Vehicles			Poker Room		Total
	$‘000		$‘000			$‘000			$‘000			$‘000			$‘000		$‘000
*Cost or valuation*
At 1 January 2013		31,278		28,000			5,288			8,873			200			11		73,650
Additions		31		11,344			338			698			—			646		13,057
Acquisitions		—		(29	)		29			—			—			—		—
Disposals		—		—			(159	)		(6	)		(23	)		—		(188	)
Foreign currency transl		—		(337	)		(221	)		(265	)		—			—		(823	)

At 1 January 2014		31,309		38,978			5,275			9,300			177			657		85,696
Additions		—		3,164			379			1,103			—			161		4,807

At 30 June 2014		31,309		42,142			5,654			10,403			177			818		90,503

*Accumulated depreciation*
At 1 January 2013		969		22,210			3,747			3,000			180			11		30,117
Disposals		—		—			(122	)		(5	)		(8	)		—		(135	)
Charge for the year		1,143		5,261			563			1,230			4			86		8,287
Foreign currency transl		—		(324	)		(212	)		(212	)		—			—		(748	)

At 1 January 2014		2,112		27,147			3,976			4,013			176			97		37,521
Charge for the year		618		2,631			268			665			—			82		4,264

At 30 June 2014		2,730		29,778			4,244			4,678			176			179		41,785

*Carrying amount*
At 30 June 2014		28,579		12,364			1,410			5,725			1			639		48,718

At 31 December 2013		29,197		11,831			1,299			5,287			1			560		48,175


Page 7

OLDFORD GROUP LIMITED

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

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

6	Goodwill (Group)


	Goodwill
	$‘000
*Cost or valuation*
At 1 January 2013		11,060
Additions		—

At 1 January 2014		11,060
Additions		—

At 30 June 2014		11,060

*Impairment*
At 1 January 2013		10,220
Charge for the year		238

At 1 January 2014		10,458
Charge for the period		120

At 30 June 2014		10,578

*Carrying amount*
At 30 June 2014		482

At 31 December 2013		602

The goodwill at year end primarily relates to a poker room licence held by one of the Group’s subsidiary companies. In accordance with IAS 36

7	Other intangible assets (Group)

Customer

Domain

lists

names

Total

$‘000

Cost or valuation

At 1 January 2013

2,970

5,726

8,696

Additions

—

At 1 January 2014

2,970

5,756

8,726

Additions

—

120

At 30 June 2014

2,970

5,876

8,846

Customer

Domain

lists

names

Total

$‘000

Amortisation

At 1 January 2013

2,970

3,111

6,081

Charge for the year

—

1,576

At 1 January 2014

2,970

4,687

7,657

Additions

123

Charge for the year

—

693

At 30 June 2014

2,970

5,503

8,473

Carrying amount

At 30 June 2014

—

373

At 31 December 2013

—

1,069

No impairment indicators were identified in relation to other intangible assets. The other intangible assets are being amortised over their


Page 8

OLDFORD GROUP LIMITED

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

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

8	Long term receivables


	30 June 2014		31 Dec 2013
	$‘000		$‘000
Other receivables		15,000		15,000

9	Unquoted equity investments (Group)


	Unquoted equity investments
Cost (which approximates fair value)	$‘000
At 1 January 2013		8,641
Additions		4,378
Disposals		(3,558	)

At 1 January 2014		9,461
Additions		—
Provision against investments		—
Disposals		—

At 30 June 2014		9,461

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


Name	Holding		Country of incorporation	Principal Activity
Hippodrome Casino Limited		5%	UK	Operator of land based casino
Stack Evantos Esportivos SA		10%	Brazil	Operator of the brand “Brazilian Series of Poker”
Gambling Management SA		5%	Belgium	Operator of land based casino

10	Inventories


	30 June 2014			31 Dec 2013
	$‘000			$‘000
Finished goods		1,413			2,080
Provision against slow moving goods		(530	)		(500	)

		883			1,580

11	Trade and other receivables


	30 June 2014		31 Dec 2013
	$‘000		$‘000
Trade receivables		49,059		54,960
Prepayments		17,352		18,265
Other receivables		57,410		57,192
Tax refunds		3,570		3,451
Deferred tax assets		678		676

		128,069		134,544

12	Other payables due in more than 1 year


	30 June 2014		31 Dec 2013
	$‘000		$‘000
Other payables		97,000		97,000


Page 9

OLDFORD GROUP LIMITED

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

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

13	Trade and other payables


	30 June 2014		31 Dec 2013
	$‘000		$‘000
Dividends payable		—		170,225
Trade payables		2,598		7,377
Current tax liabilities		4,079		6,882
Other taxes and social security		725		701
Deferred tax liabilities		787		787
Other payables		224,239		206,488

		232,428		392,460

14	Client liabilities


	30 June 2014			31 Dec 2013
	$‘000			$‘000
Client liabilities		610,020			657,369
Dormant accounts recognised as revenue		(3,925	)		(42,053	)

		606,095			615,316

15	Short-term provisions


	30 June 2014		31 Dec 2013
	$‘000		$‘000
Player bonuses and rebates
At 1 January		4,832		3,443
Movement in period		13,932		1,389

At 31 December		18,764		4,832

Short-term provisions relate to player bonus and rebates scheme which is run by the Group. Player bonuses and rebates are due when certain

16	Share capital

Authorised share capital and significant terms and conditions

The total authorised number of shares comprises 1,000,000,000 (2013:1,000,000,000) ordinary shares with a par value of $0.00005 (2013:


Allotted, called up and fully paid	Number		$
At 1 January 2013		987,687,502		49,386
Issued during the period		1,549,322		77

At 31 December 2013		989,236,824		49,463

At 1 January 2014		989,236,824		49,463
Cancellation of treasury shares		—		—
Issued during the period		—		—

At 30 June 2014		989,236,824		49,463


Page 10

OLDFORD GROUP LIMITED

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

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

17	Reserves


	Capital		Translation			AFS			Share		Retained
	Redemption		Reserve			Reserve			Premium		Earnings
	$‘000		$‘000			$‘000			$‘000		$‘000
At 1 January 2013		1		1,178			—			1,655		(43,397	)
Profit for the period		—		—			—			—		416,404
Dividends paid		—		—			—			—		(296,738	)
Premium arising on issue of equity shares		—		—			—			1,586		—
Foreign currency translation		—		(184	)		—			—		—
Available-for-sale financial assets - net changes in fair value		—		—			(896	)		—		—

Balance at 31 December 2013		1		994			(896	)		3,241		76,269

Balance at 1 January 2014		1		994			(896	)		3,241		76,269
Profit for the period		—		—			—			—		218,187
Dividends paid		—		—			—			—		(135,693	)
Premium arising on issue of equity shares		—		—			—			—		—
Share buyback		—		—			—			—		—
Foreign currency translation		—		(49	)		—			—		—
Available-for-sale financial assets - net changes in fair value		—		—			5,616			—		—

Balance at 30 June 2014		1		945			4,720			3,241		158,763

18	Non-controlling interests


	$‘000
At 1 July 2013		514
Share of profit for the year
Purchase of additional shares in subsidiary		—

At 1 January 2014		514
Share of profit for the year		229
Purchase of additional shares in subsidiary		—

At 30 June 2014		743

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


Page 11

SCHEDULE “C”

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL

POSITION OF THE CORPORATION AS AT JUNE 30, 2014

- and -

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME OF THE CORPORATION FOR THE PERIOD ENDED JUNE 30, 2014

- and -

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME OF THE CORPORATION FOR THE YEAR ENDED DECEMBER 31, 2013

See attached.

AMAYA GAMING GROUP INC.

Pro Forma Consolidated Statement of Financial Position

As at December 31, 2013

$‘000

(unaudited)


	Amaya		Oldford		Adjustments			Notes			Pro Forma
Assets
Current
Cash and cash equivalents		93,640		721,699		(238,982	)		2	(b)		576,358
Short-term deposits and available for sale investments		10,582		329,999								340,581
Income tax and investment tax credits receivable		3,305		—								3,305
Prepaid expenses and deposits		4,173		—								4,173
Accounts receivable		47,460		159,055								206,515
Assets classified as held for sale		38,369		—								38,369
Inventories		7,595		1,680								9,275

		205,124		1,212,434		(238,982	)					1,178,576
Restricted cash		131										131
Acquisition-related intangibles and Goodwill		142,048		640		5,139,190			2	(c)		5,281,878
Intangible assets and Goodwill		20,989		1,137								22,126
Property and equipment		40,521		51,239								91,760
Deferred development costs		3,818										3,818
Receivable under finance lease		14,869										14,869
Deferred income Taxes		13,331										13,331

		440,831		1,265,450		4,900,208						6,606,489

AMAYA GAMING GROUP INC.

Pro Forma Consolidated Statement of Financial Position

As at December 31, 2013

$‘000

(unaudited)


	Amaya			Oldford		Adjustments			Notes			Pro Forma
Liabilities
Current
Accounts payable and accrued liabilities		27,477			520,590								548,067
Provisions		5,232			5,139								10,371
Income taxes payable		1,763											1,763
Liabilities classified as held for sale		4,638											4,638
User funds held on deposit		4,453			654,450								658,903

		43,563			1,180,179								1,223,742
Long-term debt		195,186					2,997,747			2	(d)		3,192,933
Deferred purchase price							425,440			2	(e)		425,440
Equipment financing		1,684											1,684
Deferred revenue		249											249
Deferred income Taxes		5,802											5,802

		246,484			1,180,179		3,423,187						4,849,850

Shareholders’ equity
Share Capital		220,683			52		1,595,874			2	(f)		1,816,609
Contributed surplus		4,214			3,552		263,109			2	(g)		270,875
Accumulated other comprehensive income		8,838			4,042		(4,042	)					8,838
Retained Earnings (Deficit)		(39,388	)		77,625		(377,920	)					(339,694	)

		194,347			85,271		1,477,021						1,756,639

		440,831			1,265,450		4,900,208						6,606,490

AMAYA GAMING GROUP INC.

Pro Forma Consolidated Statement of Financial Position

As at June 30, 2014

$‘000

(unaudited)


	Amaya		Oldford		Adjustments			Notes			Pro Forma
Assets
Current
Cash and cash equivalents		228,021		917,210		(132,184	)		4	(b)		1,013,047
Short-term deposits and available for sale investments		73,670		74,272								147,942
Income tax and investment tax credits receivable		4,557										4,557
Prepaid expenses and deposits		7,275										7,275
Accounts receivable		51,136		152,655								203,791
Assets classified as held for sale		35,799										35,799
Inventories		9,788		942								10,730

		410,246		1,145,079		(132,184	)					1,423,141
Restricted cash		130										130
Acquisition-related Intangibles and Goodwill		162,630				5,061,413			4	(c)		5,224,043
Intangible assets and Goodwill		22,683		912								23,595
Property and equipment		44,305		51,982								96,287
Deferred development costs		5,012										5,012
Receivable under finance lease		13,374										13,374
Deferred income Taxes		20,566										20,566
Promissory Note		10,000										10,000

		688,946		1,197,973		4,929,228						6,816,148

AMAYA GAMING GROUP INC.

Pro Forma Consolidated Statement of Financial Position

As at June 30, 2014

$‘000

(unaudited)


	Amaya			Oldford		Adjustments			Notes			Pro Forma
Liabilities
Current
Accounts payable and accrued liabilities		35,872			351,500								387,372
Provisions		10,621			20,021								30,642
Income taxes payable		1,539											1,539
Liabilities classified as held for sale		3,290											3,290
User funds held on deposit		4,303			646,703								651,006

		55,625			1,018,224		—						1,073,849
Long-term debt		369,069					3,012,731			4	(d)		3,381,800
Deferred purchase price		1,482					426,800			4	(e)		428,282
Equipment financing		2,537											2,537
Deferred revenue		7,469											7,469
Deferred income Taxes		5,344											5,344

		441,526			1,018,224		3,439,531						4,899,281

Shareholders’ equity
Share Capital		223,390			52		1,560,358			4	(f)		1,783,800
Contributed surplus		20,087			10,297		256,365			4	(g)		286,748
Accumulated other comprehensive income		6,582			2,458		(2,458	)					6,582
Retained Earnings (Deficit)		(2,639	)		166,942		(324,566	)					(160,263	)

		247,420			179,749		1,489,698						1,916,867

		688,946			1,197,973		4,929,229						6,816,149

AMAYA GAMING GROUP INC.

Pro Forma Consolidated Statement of Comprehensive Income

Six months ended June 30, 2014

$‘000

(unaudited)


	Amaya			Oldford		Adjustments			Notes			Pro Forma
Revenue		83,654			622,833		—						706,487

Expenses
Cost of Products		5,768			—								5,768
Selling		7,541			137,367								144,908
G&A		78,118			241,971								320,089
Financial		9,951			1,993		104,979			5	(a)		116,923
Acquisition-related costs		9,804			—		18,465			5	(b)		28,269

		111,182			381,330		123,444						615,956

Non-Recurring Items		55,439			1,155								56,594
Net earnings (loss) before income taxes		27,911			242,658		(123,444	)					147,126
Income taxes		(8,837	)		3,100								(5,737	)

Net earnings (loss)		36,748			239,559		(123,444	)					152,863

Other Comprehensive Income (loss), net of tax
Foreign currency translation		(2,255	)		2,458		—						203

		(2,255	)		2,458		—						203

Total Comprehensive Income (loss)		34,493			242,017		(123,444	)					153,066

Basic earnings per common share										5	(c)		1.18

Diluted earnings per common share										5	(c)		0.75

AMAYA GAMING GROUP INC.

Pro Forma Consolidated Statement of Comprehensive Income

Year ended December 31, 2013

$‘000

(unaudited)


	Amaya			Oldford			Adjustments			Notes			Pro Forma
Revenue		154,529			1,167,306			—						1,321,835

Expenses
Cost of Products		5,980			—									5,980
Selling		14,590			276,054									290,644
G&A		132,585			448,354									580,939
Financial		21,071			1,156			212,503			3	(a)		234,730
Acquisition-related costs		1,332			—			18,406			3	(b)		19,738

		175,558			725,564			230,909						1,132,030

Non-recurring items		1,502			(7,117	)								(5,615	)
Net earnings (loss) before income taxes		(19,527	)		434,626			(230,909	)					184,190
Income taxes		9,646			5,492									15,138

Net earnings (loss)		(29,173	)		429,134			(230,909	)					169,052

Other Comprehensive Income (loss), net of tax
Foreign currency translation		9,673			4,042			—						13,715

		9,673			4,042			—						13,715

Total Comprehensive Income (loss)		(19,500	)		433,175			(230,909	)					182,766
Basic earnings per common share											3	(c)		1.42

Diluted earnings per common share											3	(c)		0.90

1.	Basis of Presentation

(All figures are in Canadian dollars unless otherwise indicated)

The accompanying unaudited pro forma consolidated statements of financial position of Amaya Gaming Group Inc. (“Amaya”) as at December 31, 2013 and June 30, 2014 and the unaudited pro forma consolidated statement of comprehensive income for the year ended December 31, 2013 and for the six months ended June 30, 2014 (the “pro forma statements”) have been prepared to reflect the cash offer by one of Amaya’s wholly-owned subsidiaries for the acquisition of the Oldford Group Limited (“Oldford”).

The unaudited pro forma statements have been prepared by management in accordance with International Financial Reporting Standards. The pro forma statements may not be indicative of the results that actually would have occurred if the events reflected therein had been in effect on the dates indicated or of the results which may be obtained in the future. In preparing these pro forma financial statements, no adjustments have been made to reflect operating synergies and administrative cost savings that could result from the operations of the combined assets.

Accounting policies used in the preparation of the pro forma statements are in accordance with those disclosed in Amaya’s audited consolidated financial statements as at and for the year ended December 31, 2013 and for six months ended June 30, 2014. The pro forma statements have been prepared from information derived from and should be read in conjunction with the following:

Amaya’s audited financial statements as at and for the year ended December 31, 2013; Oldford’s audited financial statements as at and for the year ended December 31, 2013; Amaya’s unaudited financial statements as at and for the six month period ended June 30, 2014; Oldford’s unaudited financial statements as at and for the six month period ended June 30, 2014.

In the opinion of management, the pro forma statements include all the necessary adjustments for a fair presentation of the ongoing entity in accordance with International Financial Reporting Standards.

2.	Pro forma consolidated statements of financial position assumptions and adjustments as at December 31, 2013

The unaudited pro forma consolidated statements of financial position gives effect to the following assumptions and adjustments as if they had occurred on January 1, 2013:

(a)	Acquisition of Oldford:

The following summarizes the estimated fair value of Oldford’s assets and liabilities assumed by Amaya at the date of acquisition:


Net assets acquired	$‘000
Cash and cash equivalents		721,699
Short-term deposits and available for sale investments		329,999
Accounts receivable		159,055
Inventories		1,680
Acquisition-related Intangibles and Goodwill		5,140,967
Property and equipment		51,239
Accounts payable and accrued liabilities		(520,590	)
Provisions		(5,139	)
User funds held on deposit		(654,450	)

Total Consideration		5,224,461


Consideration for the acquisition	$‘000
Upfront Purchase Price		4,799,021
Deferred Purchase Price		425,440

		5,224,461

The purchase price allocation has been determined from information available to the management of Amaya at this time and incorporates and reflects management’s preliminary assessment of the exchange value and net assets acquired. The allocation of the purchase price to the assets and liabilities of Oldford will be finalized once the fair values of the assets and liabilities have been determined, and accordingly, the above purchase price allocation will change.

(b)	Cash and cash equivalents


	$‘000
Proceeds from Issuance of Common Shares		699,681
Proceeds from Issuance of Convertible Preferred Shares		1,139,356
Issuance of Senior Secured First and Second Lien Term Facility		2,997,820
Proceeds from the issuance of mezzanine debt and an incremental term loan facility		186,481
Upfront Purchase Consideration		-4,799,021
Payment of fees incurred in connection with the acquisition of Oldford		-244,406
Interest paid on long-term debt		-194,871
Repayment of principal		-24,022

Total adjustment to cash and cash equivalents		-238,982

Cash consideration of approximately $244,406,000 was used to pay fees incurred in connection with the financing and the acquisition of Oldford.

Principal repayments and interest paid on long-term debt amount to approximately $24,022,000 and $194,871,000 respectively for the year ended December 31, 2013.

Proceeds from issuance of mezzanine debt and an incremental term loan facility amount to approximately $186,481,000.

(c)	Acquisition-related intangibles and goodwill


	$‘000
Management’s preliminary estimate of acquisition-related intangibles and Goodwill with respect to Oldford transaction		5,139,190

Total adjustment to Acquisition-related Intangibles and Goodwill		5,139,190

The purchase price allocation for the Oldford transaction has been determined from information available to the management of Amaya at this time and incorporates and reflects management’s preliminary assessment of the exchange value and net assets acquired. The allocation of the purchase price to the assets and liabilities of Oldford will be finalized once the final fair values of the assets and liabilities have been determined, and accordingly, the above estimates of acquisition-related intangibles and Goodwill will change.

(d)	Long term debt


	$‘000
Issuance of long-term debt		3,184,301
Related Transaction costs		-129,102
Interest accretion and PIK Interest on long-term debt		17,632
Repayment of principal		-24,022
Value of common share purchase warrants issued in connection with mezzanine debt financing re-allocated to Contributed Surplus		-51,062

Total adjustment to Long-term debt		2,997,747

Proceeds of $3,184,301,000 from the issuance of long-term debt were used to finance the acquisition of Oldford. $24,022,000 of principal and $129,102,000 of transaction costs were paid during the period from January 1, 2013 to December 31, 2013. PIK Interest and accretion of $17,632,000 of transaction costs is included in interest expense. Common share purchase warrants issued in connection with mezzanine debt financing and valued at approximately $51,062,000 are re-allocated to Contributed Surplus.

(e)	Deferred purchase price


	$‘000
Deferred purchase price		425,440

Total adjustment to Deferred purchase price		425,440

Under the terms of the definitive agreement, Oldford shareholders will receive approximately $425,440,000 in deferred purchase price consideration payable upon the earlier of (i) July 31, 2017 and (ii) 30 months following closing of the transaction, based upon the occurrence of certain events.

(f)	Share Capital


	$‘000
Issuance of convertible preferred shares		1,139,356
Issuance of common shares		699,681
Related Transaction costs		-96,898
Convertible preferred share payment in kind (PIK)		69,387
Elimination of Oldford Share Capital		-52
Value of common share purchase warrants issued in connection with the transaction		-215,599

Total adjustment to Share Capital		1,595,874

Approximately $1,139,356,000 was raised through the issuance of convertible preferred shares on a private-placement basis at an initial conversion price of $24 per convertible preferred share.

Approximately $699,681,000 was raised through the issuance of common shares on a bought-deal private-placement basis.

Transaction costs associated with the issuance of convertible preferred shares and common shares is approximately $96,898,000.

Convertible preferred share payment in kind for the year ended December 31, 2013 is approximately $69,387,000.

Common share purchase warrants issued in connection with financing of the transaction are valued at approximately $215,599,000.

(g)	Contributed Surplus


	$‘000
Value of common share purchase warrants issued in connection with the transaction		215,599
Value of common share purchase warrants issued in connection with mezzanine debt financing		51,062
Elimination of Oldford Contributed Surplus		-3,552

Total adjustment to Contributed surplus		263,109

Common share purchase warrants issued in connection with the transaction are valued at approximately $215,599,000.

Common share purchase warrants issued in connection with mezzanine debt financing are valued at approximately $51,062,000.

Translation of Oldford’s financial statements

Oldford’s reporting currency is the United States Dollars. Oldford’s audited statement of financial position as at December 31, 2013 was translated to Canadian Dollars at rate of 1 United State Dollar to 1.0636 Canadian Dollars. Oldford’s audited statement of comprehensive income for the year ended December 31, 2013 was translated to Canadian Dollars at rate of 1 United State Dollar to 1.0299 Canadian Dollars.

3.	Pro forma consolidated statement of comprehensive income assumptions and adjustments for the year ended December 31, 2013

(a)	Financial Expense


	$‘000
Interest expense on long-term debt		194,871
PIK Interest and Interest accretion on long-term debt		17,632

Total adjustment to Financial Expenses		212,503

Interest paid on long-term debt issued in connection with the transaction amounts to approximately $194,871,000 for the year ended December 31, 2013.

PIK Interest and accretion of $17,632,000 of transaction costs is included in financial expense.

(b)	Acquisition-related costs


	$‘000
Acquisition-related costs in connection with the Oldford transaction	$	18,406

Total adjustment to Acquisition-related costs		18,406

Fees incurred in connection with the acquisition of Oldford are approximately $18,406,000.

(c)	Pro forma common shares outstanding:

The earnings per share is based on the following:


	31-Dec-13
Basic weighted average common shares		129,062,322


	31-Dec-13
Diluted weighted average common shares		203,895,254

4.	Pro forma consolidated statement of financial position assumptions and adjustments as at June 30, 2014

The unaudited pro forma consolidated statement of financial position gives effect to the following assumptions and adjustments as if they had occurred on January 1, 2014:

(a)	Acquisition of Oldford:

The following summarizes the estimated fair value of Oldford’s assets and liabilities assumed by Amaya at the date of acquisition:


Net assets acquired	$‘000
Cash and cash equivalents		917,210
Short-term deposits and available for sale investments		74,272
Accounts receivable		152,655
Inventories		942
Acquisition-related Intangibles and Goodwill		5,062,325
Property and equipment		51,982
Accounts payable and accrued liabilities		(351,500	)
Provisions		(20,021	)
User funds held on deposit		(646,703	)

Total Consideration		5,241,162


Consideration for the acquisition	$‘000
Upfront Purchase Price		4,814,362
Deferred Purchase Price		426,800

		5,241,162

The purchase price allocation has been determined from information available to the management of Amaya at this time and incorporates and reflects management’s preliminary assessment of the exchange value and net assets acquired. The allocation of the purchase price to the assets and liabilities of Oldford will be once the fair values of the assets and liabilities have been determined, and accordingly, the above purchase price allocation will change.

(b)	Cash and cash equivalents


	$‘000
Proceeds from Issuance of Common Shares		699,681
Proceeds from Issuance of Convertible Preferred Shares		1,139,356
Issuance of Senior Secured First and Second Lien Term Facility		3,007,404
Proceeds from the issuance of mezzanine debt and an incremental term loan facility		186,760
Upfront Purchase Consideration		-4,814,362
Payment of fees incurred in connection with the acquisition of Oldford		-245,187
Interest paid on long-term debt		-93,786
Repayment of principal		-12,049

Total adjustment to cash and cash equivalents		-132,184

Cash consideration of approximately $245,187,000 was used to pay fees incurred in connection with the financing and the acquisition of Oldford.

Principal repayments and interest paid on long-term debt amount to approximately $12,049,000 and $93,786,000 respectively for the six month period ended June 30, 2014.

Proceeds from issuance of mezzanine debt and an incremental term loan facility amount to approximately $186,760,000.

(c)	Acquisition-related intangibles and goodwill


	$‘000
Management’s preliminary estimate of acquisition-related intangibles and Goodwill with respect to Oldford transaction		5,061,431

Total adjustment to Acquisition-related Intangibles and Goodwill		5,061,431

The purchase price allocation for the Oldford transaction has been determined from information available to the management of Amaya at this time and incorporates and reflects management’s preliminary assessment of the exchange value and net assets acquired. The allocation of the purchase price to the assets and liabilities of Oldford will be finalized after the acquisition has been completed and the final fair values of the assets and liabilities have been determined, and accordingly, the above estimates of acquisition-related intangibles and Goodwill will change.

(d)	Long term debt


	$‘000
Issuance of long-term debt		3,194,164
Related Transaction costs		-129,515
Interest accretion and PIK Interest on long-term debt		11,193
Repayment of principal		-12,049
Value of common share purchase warrants issued in connection with mezzanine debt financing reallocated to Contributed Surplus		-51,062

Total adjustment to Long-term debt		3,012,731

Proceeds of $3,194,164,000 from the issuance of long-term debt were used to finance the acquisition of Oldford. $12,049,000 of principal and $129,515,000 of transaction costs were paid during the period from January 1, 2014 to June 30, 2014. PIK interest and accretion of $11,193,000 of transaction costs is included in interest expense. Common share purchase warrants issued in connection with mezzanine debt financing and valued at approximately $51,062,000 are reallocated to Contributed Surplus.

(e)	Deferred purchase price


	$‘000
Deferred purchase price		426,800

Total adjustment to Deferred purchase price		426,800

Under the terms of the definitive agreement, Oldford shareholders will receive approximately $426,800,000 in deferred purchase price consideration payable upon the earlier of (i) July 31, 2017 and (ii) 30 months following closing of the transaction, based upon the occurrence of certain events.

(f)	Share Capital


	$’000
Issuance of convertible preferred shares		1,139,356
Issuance of common shares		699,681
Related Transaction costs		-97,207
Convertible preferred share payment in kind (PIK)		34,181
Elimination of Oldford Share Capital		-52
Value of common share purchase warrants issued in connection with the transaction		-215,599

Total adjustment to Share Capital		1,560,358

Approximately $1,139,356,000 was raised through the issuance of convertible preferred shares on a private-placement basis at an initial conversion price of $24 per convertible preferred share.

Approximately $699,681,000 was raised through the issuance of common shares on a bought-deal private-placement basis.

Transaction costs associated with the issuance of convertible preferred shares and common shares is approximately $97,207,000.

Convertible preferred share payment in kind for the six months for June 30, 2014 is approximately $34,181,000.

Common share purchase warrants issued in connection with financing of the transaction are valued at approximately $215,599,000.

(g)	Contributed Surplus


	$’000
Value of common share purchase warrants issued in connection with the transaction		215,599
Value of common share purchase warrants issued in connection with mezzanine debt financing		51,062
Elimination of Oldford Contributed Surplus		-10,297

Total adjustment to Contributed surplus		256,365

Common share purchase warrants issued in connection with the transaction are valued at approximately $215,599,000.

Common share purchase warrants issued in connection with mezzanine debt financing are valued at approximately $51,062,000.

Translation of Oldford’s financial statements

Oldford’s reporting currency is the United States Dollars. Oldford’s unaudited statement of financial position as at June 30, 2014 was translated to Canadian Dollars at rate of 1 United State Dollar to 1.0670 Canadian Dollars. Oldford’s unaudited statement of comprehensive income for the six months ended June 30, 2014 was translated to Canadian Dollars at rate of 1 United State Dollar to 1.0968 Canadian Dollars.

5.	Pro forma consolidated statement of comprehensive income assumptions and adjustments for the six months ended June 30, 2014

(a)	Financial Expense


	$‘000
Interest expense on long-term debt		93,786
PIK interest and accretion on long-term debt		11,193

Total adjustment to Financial Expenses		104,979

Interest paid on long-term debt issued in connection with the transaction amounts to approximately $93,786,000 for the six months ended June 30, 2014.

PIK interest and accretion of $11,193,000 of transaction costs is included in financial expense.

(b)	Acquisition-related costs


	$‘000
Acquisition-related costs in connection with the Oldford transaction	$	18,465

Total adjustment to Acquisition-related costs		18,465

Fees incurred in connection with the acquisition of Oldford are approximately $18,465,000.

(c)	Pro forma common shares outstanding:

The earnings per share is based on the following:


	30-Jun-14
Basic weighted average common shares		129,669,931


	30-Jun-14
Diluted weighted average common shares		202,994,254