30 Apr 2013 16:41
30 April 2013
bwin.party digital entertainment plc
('bwin.party' or the 'Company')
2012 Annual Report
Following the communication on 15 March 2013 of the Company's annual financial report for the year ended 31 December 2012, hard copies of the bwin.party annual report and accounts for the year ended 31 December 2012 (the "Annual Report"), incorporating the notice of the Company's 2013 Annual General Meeting, will shortly be posted to bwin.party's shareholders and depositary interest holders that have elected to receive hard copies. A copy of the Annual Report will also be made available on the Company's website, www.bwinparty.com.
A. Disclosure and Transparency Rules 4.1 and 6.3.5
A condensed set of the financial statements for the year ended 31 December 2012 together with information on important events that occurred during that financial year and their impact on the financial statements, were contained in the annual financial report disclosed on 15 March 2013. That information, together with the information set out below, which is extracted from the Annual Report, constitute the material required by Disclosure and Transparency Rules 4.1 and 6.3.5 to be communicated to the media through a Regulatory Information Service. This announcement is not a substitute for reading the Annual Report.
B. 2012 Annual Report Extracts
1. "Assessing key risks
Many of the threats and challenges faced by online gaming companies are similar to those faced by other leisure and entertainment industries. They include competition, changes to consumer tastes, maintaining healthy financial ratios in compliance with banking covenants and loss of key personnel.
However, there are also certain risks that are more specific to bwin.party and to the online gaming industry that deserve particular mention. Our five main risk groups are:
• Technology
• Regulation and compliance
• Taxation
• Integration
• Poker
Technology
Technology is at the core of our business and undergoes a continuous process of development. The evolution of our eCommerce platform and the products and services we provide through it is a vital process to maintain our competitive edge as we address the ever-changing desires of consumers whilst upholding our reputation for responsible, safe and secure products and services.
Most of our gaming technology is proprietary, which means that we are better placed to manage risks associated with technological and regulatory change than competitors that rely on third-party software and systems.
As with all technology, new versions of software can require additional enhancement before becoming fully effective. Delays in such enhancements can impact operational and financial performance.
However, we do share the industry's general risks that arise from sourcing broadband and communications, data management and storage services as well as a raft of other services from external suppliers. Our aim is to offset these risks by not becoming overly reliant on any single supplier as well as having in place disaster recovery centres and business continuity plans.
The reduced level in technology risk reflects the near completion of our Merger integration having already migrated significant parts of our technology and customer base from the separate platforms and systems that were operated pre-Merger, to a single, centralised operating system that supports each of our gaming verticals across multiple brands and territories. Our Italian and French technology systems and customer bases have yet to be integrated, and a few remaining back-office functions have also still to be harmonised. As a result, some operational risk remains for the business, but the potential impact on revenue is less significant. To mitigate this risk we have planned extensively and will run appropriate tests before switching to any new systems.
Regulation and compliance
Regulation is probably the most complex of our key risks and managing it effectively is a critical process for us, especially given the increasing number of countries that are introducing regulatory regimes, each of which have different requirements.
Our compliance obligations range from administration of our gaming licences in Gibraltar, Alderney, Denmark, France, Italy, Spain, Belgium and Schleswig-Holstein in Germany to assessing what impact country-specific and pan-regional rules and regulations might have on both our business and the wider industry. Whilst political and cultural attitudes towards online gaming continue to evolve, there is always a risk that certain territories may seek to prohibit or restrict one or more of the products that we offer or online gaming entirely.
We have a dedicated regulatory and compliance team that reports directly to the CEO and is closely supported by our legal and regional management teams. We submit ourselves to a series of external audits as required under our gaming licences and also perform our own compliance assessments to ensure that policies and procedures are being followed and working effectively.
Taxation
Taxation is the third category of risk which we believe is material. Group companies operate for tax purposes only where they are incorporated, domiciled or registered. Revenues earned from customers located in a particular jurisdiction may give rise to further taxes in that jurisdiction. If such taxes are levied, either on the basis of existing law or the current practice of any tax authority, or by reason of a change in law or practice, then this may have a material adverse effect on the amount of tax payable by the Group. We manage these risks by considering tax as part of our overall business planning
Integration
The complex process of integrating bwin and PartyGaming is almost complete, easing both the pressure on management and other resources. The Integration Management Office, which was set up at the time of the Merger to drive and monitor progress across each of the synergy streams as well as identify constraints and inter-dependencies, was wound-up in August 2012 and the responsibilities passed back to the business units. While there can be no guarantee that all elements of the integration will be successful, the significant investment in planning and preparation ahead of the Merger has proved worthwhile. The main risks in this category are achieving financial synergies and completing the migration to a single e-gaming platform.
Poker
PokerStars remains the largest operator in most markets and a very strong competitor. We have not changed the risk level that was reduced to one of 'strong competition' in 2011, reflecting the closure of the US-facing activities of PokerStars. In 2012, PokerStars also acquired and relaunched Full Tilt, previously the second largest poker brand in the dotcom market, which strengthened its market position. The migration of bwin's dotcom poker players to our single platform was completed at the end of 2012 increasing our dotcom poker player liquidity pool. However, dotcom poker remains a challenging market and the pending relaunch of PartyPoker does carry risk. As a result Poker remains one of our key risks."
2. "Directors' Responsibility Statement
In accordance with DTR 4.1.12 of the FSA's Disclosure and Transparency Rules, the Directors confirm to the best of their knowledge:
(a) the Group's financial statements have been prepared in accordance with IFRS and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group; and
(b) the Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and the Company, together with a description of the principal risks and uncertainties that they face.
By order of the Board of Directors
Robert Hoskin
Company Secretary
15 March 2013"
Contact:
bwin.party digital entertainment plc
Robert Hoskin
Company Secretary +350 200 78700