GVC Holdings PLC
("GVC", the "Company" or the "Group")
Interim Results
GVC Holdings PLC (AIM:GVC), the multinational sports betting and gaming group, today releases its unaudited interim results for the six months ended 30 June 2015.
Financial highlights*
· Wagers - up 18.6% to €824 million (H1-2014: €694 million)
· Sports Gross Margin - 8.8% (H1-2014: 9.9% )
· Net Gaming Revenue ("NGR") - up 15.1% to €121 million (H1-2014: €105 million)
· Contribution - up 15.3% to €65 million (H1-2014: €57 million)
· Clean EBITDA - up 14.0% to €25.5 million (H1-2014: €22.4 million)
· Total dividend declarations to date - up 5% to 42€cps on the same period in the prior year
· Deposit values - up 18% on H1-2014
· In-play - generating 73% of Sports Gross Margin (H1-2014: 63%)
· Mobile - generating 38% of Sports Gross Gaming Revenue ("GGR") (H1-2014: 22%)
· Adjusted, diluted Earnings Per Share - growth of 25% to 33.3 €cps
Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings PLC, said:
"GVC continues to show strong financial performance, with growth in revenue, clean EBITDA and dividends. The Board would like to thank our talented and motivated staff for helping us to maintain this. We are highly confident for the rest of the year.
"With our track record of delivering value through organic growth and acquisitions we are determined that GVC will play an important role in the continuing consolidation of the online gaming sector. We expect to update the market soon about our discussions with bwin.party digital entertainment plc."
- Ends -
For further information:
GVC Holdings PLC |
|
Kenneth Alexander, Chief Executive |
Tel: +44 (0) 1624 652 559 |
Richard Cooper, Group Finance Director |
|
Cenkos Securities Plc |
Tel: +44 (0) 20 7397 8900 |
Mark Connelly, Stephen Keys, Camilla Hume |
|
Media enquiries:
Bell Pottinger |
|
David Rydell, James Newman, Anna Legge, Laura Jaques |
Tel: +44 (0) 20 3772 2496 |
|
|
About GVC Holdings PLC
GVC Holdings PLC is a leading e-gaming operator in both b2c and b2b markets. Its core brands are Sportingbet, Betboo and CasinoClub. The Group has around 650 employees, is headquartered in the Isle of Man and is licensed in Malta, Denmark, UK, South Africa, Philippines and the Dutch Caribbean.
Further information on the Group is available at www.gvc-plc.com
* Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised figures.
Chief Executive's Report
The Group has had an excellent first half of 2015 and is confident for continued strong performance for the full year.
As early as January this year, the Group declared a dividend of 12.5 €cents per share ("€cps"). This was followed by a declaration of 15.5 (14.0 ordinary + 1.5 special) €cps in March 2015 and 14 €cps on 8th July 2015, bringing the total dividend declarations to 42 €cps for the year to date, being 5% higher than the same period in 2014. The Group anticipates declaring a second interim dividend along with its Q3-2015 trading results in Q4-2015.
Trading KPI summary €000's |
Sports wagers per day |
Sports NGR per day |
Gaming NGR per day |
Total NGR per day
|
Q1-2014 |
3,765 |
278 |
281 |
559 |
Q2-2014 |
3,907 |
296 |
306 |
602 |
H1-2014 |
3,836 |
287 |
293 |
580 |
|
|
|
|
|
Q1-2015 |
4,558 |
318 |
347 |
665 |
Q2-2015 |
4,543 |
289 |
382 |
671 |
H1-2015 |
4,551 |
303 |
365 |
668 |
|
|
|
|
|
YoY increase |
19% |
6% |
25% |
15% |
Of the sports Gross Gaming Revenue ("GGR") in-play now amounts to 73% (H1-2014: 63%) and mobile represents around 38% (H1-2014: 22%). During H1-2015, deposit values were up 18% on the same period last year and active and new depositing customers were up 14% and 7% respectively on the same period last year
Negotiations to acquire bwin.party digital entertainment plc
As the market and investors are already aware from our announcements from 15 May 2015 to 24 August 2015, the Company is in discussions with the board of bwin.party digital entertainment plc ("bwin.party") to acquire the whole of the company's share capital through a scheme of arrangement. Were this acquisition to complete, it would, under the AIM rules, constitute a reverse takeover, and would therefore require the consent of the GVC shareholders. It is anticipated that the acquisition would be accompanied by a move from AIM to the Official List (standard segment) and the Main Market of the London Stock Exchange at the time of completion.
If successful, this reverse takeover would be a further transformational step for the Group and its shareholders. In pursuance of this goal, the Group has of course incurred costs in undertaking due diligence, synergy review, tax planning, and extensive legal workstreams amounting to €3.8 million as at 30 June 2015. These costs have been shown within exceptional items. By 30 June 2015 a total of €1.0 million of these costs had been paid.
Regulatory update
The Group is making an application to be licensed in Romania. As part of this licensing process, the Romanian authorities impose back taxes. GVC's estimate of the back-tax liability is €0.9 million and has been treated as an exceptional item in these financial statements. The ongoing tax impact is likely to be in the region of €0.5 million per year.
Outlook
After experiencing softening in the Greek market following the well-publicised economic problems in Greece, and as reported on 8 July 2015, GVC is now encouraged by signs of greater customer activity. GVC remains confident on the future prospects of the Greek market, which will continue to be important for the Group.
Current trading for the Group as a whole remains strong, even with the absence of the World Cup this year. The Board remains highly confident for the remainder of 2015, such confidence being underpinned by our declarations to date this year of dividends amounting to 42 €cps. We look forward to providing further positive trading updates in October 2015 and January 2016.
Kenneth Alexander
Chief Executive
27 August 2015
Group Finance Director's Report
Consistent with prior disclosures we summarise the business model of the Group and express this into "figures per day." This accords with our preferred KPI disclosures. Section 2 of the report summarises the primary Financial Statements along with a short explanation behind material movements in the figures.
SECTION 1: Summary of business model based upon H1-2015
(Subject to rounding)
€000's |
Total |
|
Per Day H1-2015
|
|
Per Day H1-2014
|
Wagers per day |
823,703 |
|
4,551 |
|
3,836 |
Sports margin |
8.8% |
|
8.8% |
|
9.9% |
Gross margin |
72,842 |
|
402 |
|
380 |
Gaming revenues less customer bonuses |
48,074 |
|
266 |
|
200 |
Total revenue |
120,916 |
|
668 |
|
580 |
Contribution margin |
54% |
|
|
|
|
Contribution |
65,401 |
|
|
|
|
Expenditure |
(39,916) |
|
|
|
|
Clean EBITDA |
25,485 |
|
|
|
|
Clean EBITDA margin |
21.1% |
|
|
|
|
|
|
|
|
|
|
Other operating cashflows |
(2,512) |
|
|
|
|
Clean Net Operating Cashflow ("CNOC") |
22,973 |
|
|
|
|
Other cash outflows |
(2,202) |
|
|
|
|
Net Cashflow before dividends |
20,771 |
|
|
|
|
|
|
|
|
|
|
Dividends paid in period |
17,160 |
|
|
|
|
% of CNOC distributed |
75% |
|
|
|
|
SECTION 2: Summary of financial disclosures
(In € millions)
|
H1-2015 |
|
H1-2014 |
INCOME STATEMENT EXTRACTS |
|
|
|
Clean EBITDA |
25.5 |
|
22.4 |
Non-cash operating costs |
(2.4) |
|
(3.5) |
Exceptional items |
(4.7) |
|
- |
Financial expense |
(1.3) |
|
(0.9) |
Profit before tax |
17.1 |
|
18.0 |
|
|
|
|
Key ratios |
|
|
|
Contribution margin (contribution/revenue) |
54.0% |
|
54.0% |
Clean EBITDA margin (clean EBITDA/revenue) |
21.1% |
|
21.3% |
|
|
|
|
|
|
|
|
CASHFLOW EXTRACTS |
H1-2015 |
|
H1-2014 |
Clean EBITDA |
25.5 |
|
22.4 |
Capitalisation of internally developed software |
(2.6) |
|
- |
Purchase of non-current assets |
(0.4) |
|
(0.2) |
Trade investment in Betit (including costs) |
- |
|
(3.6) |
Finance lease payments |
(0.9) |
|
(0.5) |
Corporate tax, payments net of receipts |
(0.2) |
|
(0.2) |
Other working capital movements |
1.6 |
|
(0.8) |
CLEAN NET OPERATING CASHFLOW ("CNOC") |
23.0 |
|
17.1 |
Payment of exceptional items relating to offer for bwin.party |
(1.0) |
|
- |
Betboo earn-out payments |
(1.2) |
|
(3.1) |
NET CASHFLOWS |
20.8 |
|
14.0 |
Cash at start of period |
17.8 |
|
18.8 |
Dividends |
(17.2) |
|
(16.8) |
Cash at end of period |
21.4 |
|
16.0 |
|
|
|
|
Dividends as % of CNOC |
75% |
|
98% |
|
|
|
|
CNOC / Clean EBITDA |
90% |
|
76% |
|
|
|
|
Net cashflow / Clean EBITDA |
82% |
|
63% |
Group revenues at €120.9 million were 15.1% ahead of the same period last year.
Contribution at €65.4 million rose by 15.3%. The contribution margin was 54%. This was after the new imposition of the UK point of consumption tax of 15% on Sports GGR and 15% of Gaming NGR, and German VAT of 19% on certain aspects of Gaming Revenues.
Clean EBITDA rose €3.1 million to €25.5 million (H1-2014: €22.4 million) an increase of 14.0% over the prior year period.
Exceptional items, which totalled €4.7 million (H1-2014: €nil), comprised €3.8 million of fees relating to the potential acquisition of bwin.party and a provision of €0.9 million for back-taxes relating to the Romanian licensing regime application.
Non-cash items of operating expenditure (charges for share options and the Betit put option, together with, depreciation and amortisation etc.) reduced to €2.4 million from €3.5 million.
Financial expenses totalled €1.3 million (H1-2014: €0.9 million). The bulk of the increase is due to foreign exchange differences arising on the translation of finance leases and the William Hill loan which, as at 30 June 2015, stood at an underlying amount of £4.6 million (30 June 2014: €6.2 million). The pertinent FX rates were:
30 June 2014 |
£1 = €1.2477 |
31 December 2014 |
£1 = €1.2780 |
30 June 2015 |
£1 = €1.4057 |
STATEMENT OF FINANCIAL POSITION
Non-current assets rose to €160.6 million at 30 June 2015 from €159.2 million at 31 December 2014 following the investment in product (€2.6million; H1-2014 €nil) and the purchase of equipment (€1.0 million, H1-2014 €1.0 million), net of amortisation and depreciation of €2.2 million, (H1-2014 €1.8 million).
Customer liability coverage With payment processor balances of €17.7 million at 30 June 2015, and cash and cash equivalents of €21.4 million, compared to customer liabilities of €12.1 million, there was a surplus of €27.0 million (30 June 2014: €20.0 million), a coverage ratio of 223% (30 June 2014: 154%)
STATEMENT OF CASHFLOWS
From a Clean EBITDA of €25.5 million, €23.0 million of Clean Net Operating Cashflow ("CNOC") was delivered and €20.8 million of net cash inflows were generated from which €17.2 million was paid to shareholders as in the form of dividends during the period.
The cash-conversion ratio (CNOC/Clean EBITDA) rose to 90% from 76% in H1-2014 and overall net cashflow (before dividends) was 82% of Clean EBITDA (H1-2014: 63%).
Richard Cooper
Group Finance Director
27 August 2015
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2015
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014* |
Year ended 31 Dec 2014 |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
Notes |
€000's |
€000's |
€000's |
Revenue |
2 |
120,916 |
105,066 |
224,801 |
Variable costs |
|
(55,515) |
(48,344) |
(101,513) |
Contribution |
2 |
65,401 |
56,722 |
123,288 |
Operating costs (as below) |
3 |
(47,028) |
(37,856) |
(80,367) |
|
|
|
|
|
Other operating costs |
3 |
(39,916) |
(34,367) |
(74,126) |
Share based payments |
|
(202) |
(124) |
(736) |
Depreciation and amortisation |
|
(2,202) |
(1,772) |
(3,912) |
Exceptional items |
|
(4,708) |
- |
- |
Effect of valuing the Betit put option |
13 |
- |
(1,593) |
(1,593) |
|
|
|
|
|
Operating profit |
|
18,373 |
18,866 |
42,921 |
Financial income |
|
- |
8 |
16 |
Financial expense |
4 |
(1,306) |
(855) |
(1,646) |
Profit before tax |
|
17,067 |
18,019 |
41,291 |
Taxation charge |
5 |
(322) |
(447) |
(728) |
Profit after tax |
|
16,745 |
17,572 |
40,563 |
|
|
|
|
|
Earnings per share |
|
€ |
€ |
€ |
Basic |
|
|
|
|
Total |
6 |
0.273 |
0.288 |
0.664 |
|
|
|
|
|
Diluted |
|
|
|
|
Total |
6 |
0.260 |
0.267 |
0.614 |
*restated - see note 14 for details
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2015
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014* |
Year ended 31 Dec 2014 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
€000's |
€000's |
€000's |
Profit and total comprehensive income for the period |
16,745 |
17,572 |
40,563 |
*restated - see note 14 for details
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
|
|
|
30 June 2015 |
30 June 2014* |
31 Dec 2014 |
|
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
Notes |
|
€000's |
€000's |
€000's |
Assets |
|
|
|
|
|
Property, plant and equipment |
|
|
1,634 |
864 |
1,147 |
Intangible assets |
|
|
155,205 |
152,360 |
154,260 |
Available for sale financial asset |
13 |
|
3,801 |
3,801 |
3,801 |
Total non-current assets |
|
|
160,640 |
157,025 |
159,208 |
|
|
|
|
|
|
Receivables and prepayments |
7 |
|
22,806 |
24,237 |
27,605 |
Income taxes reclaimable |
|
|
5,473 |
3,881 |
3,925 |
Other tax reclaimable |
|
|
101 |
201 |
139 |
Cash and cash equivalents |
8 |
|
21,440 |
15,995 |
17,829 |
Total current assets |
|
|
49,820 |
44,314 |
49,498 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
9 |
|
(28,301) |
(22,545) |
(26,961) |
Balances with customers |
|
|
(12,109) |
(13,060) |
(13,036) |
Interest bearing loans and borrowings |
|
|
(1,406) |
(945) |
(1,362) |
Non-interest bearing loans and borrowings |
11 |
|
(6,214) |
(2,735) |
(2,735) |
Share option liability |
10 |
|
(6,826) |
- |
- |
Income taxes payable |
|
|
(6,672) |
(4,946) |
(5,014) |
Other taxation liabilities |
|
|
(1,854) |
(2,344) |
(1,338) |
Total current liabilities |
|
|
(63,382) |
(46,575) |
(50,446) |
|
|
|
|
|
|
Current assets less current liabilities |
|
|
(13,562) |
(2,261) |
(948) |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Share option liability |
10 |
|
(5,251) |
- |
- |
Interest bearing loans and borrowings |
|
|
(182) |
(747) |
(327) |
Non-interest bearing loan and borrowings |
11 |
|
- |
(5,352) |
(2,777) |
Betit option liability |
13 |
|
(1,745) |
(1,745) |
(1,745) |
Deferred consideration on Betboo |
|
|
(2,779) |
(4,842) |
(3,953) |
Total non-current liabilities |
|
|
(9,957) |
(12,686) |
(8,802) |
|
|
|
|
|
|
Total net assets |
|
|
137,121 |
142,078 |
149,458 |
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
Issued share capital |
12 |
|
613 |
609 |
613 |
Merger reserve |
|
|
40,407 |
40,407 |
40,407 |
Share premium |
|
|
85,380 |
84,571 |
85,380 |
Translation reserve |
|
|
359 |
359 |
359 |
Retained earnings |
|
|
10,362 |
16,132 |
22,699 |
Total equity attributable to equity holders of the parent |
|
|
137,121 |
142,078 |
149,458 |
*restated - see note 14 for details
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2015
Attributable to equity holders of the parent company:
|
Share Capital |
Merger Reserve |
Share Premium |
Translation reserve |
Retained Earnings |
Total |
|
€000's |
€000's |
€000's |
€000's |
€000's |
€000's |
|
|
|
|
|
|
|
Balance at 1 January 2014 |
609 |
40,407 |
84,530 |
359 |
15,191 |
141,096 |
|
|
|
|
|
|
|
Share option charges |
- |
- |
- |
- |
124 |
124 |
Share options exercised |
- |
- |
41 |
- |
- |
41 |
Dividend paid |
- |
- |
- |
- |
(16,755) |
(16,755) |
Transactions with owners |
- |
- |
41 |
- |
(16,631) |
(16,590) |
|
|
|
|
|
|
|
Profit and total comprehensive income (restated) |
- |
- |
- |
- |
17,572 |
17,572 |
|
|
|
|
|
|
|
Balance as at 30 June 2014 (restated) |
609 |
40,407 |
84,571 |
359 |
16,132 |
142,078 |
|
|
|
|
|
|
|
Balance at 1 July 2014 (restated) |
609 |
40,407 |
84,571 |
359 |
16,132 |
142,078 |
|
|
|
|
|
|
|
Share option charges |
- |
- |
- |
- |
428 |
428 |
Share options exercised |
4 |
- |
809 |
- |
- |
813 |
Dividend paid |
- |
- |
- |
- |
(16,852) |
(16,852) |
Transactions with owners |
4 |
- |
809 |
- |
(16,424) |
(15,611) |
|
|
|
|
|
|
|
Profit and total comprehensive income |
- |
- |
- |
- |
22,991 |
22,991 |
|
|
|
|
|
|
|
Balance as at 31 December 2014 |
613 |
40,407 |
85,380 |
359 |
22,699 |
149,458 |
|
|
|
|
|
|
|
Balance at 1 January 2015 |
613 |
40,407 |
85,380 |
359 |
22,699 |
149,458 |
|
|
|
|
|
|
|
Share option charges |
- |
- |
- |
- |
261 |
261 |
Share option cash out |
- |
- |
- |
- |
(12,183) |
(12,183) |
Share options exercised |
- |
- |
- |
- |
- |
- |
Dividend paid |
- |
- |
- |
- |
(17,160) |
(17,160) |
Transactions with owners |
- |
- |
- |
- |
(29,082) |
(29,082) |
|
|
|
|
|
|
|
Profit and total comprehensive income |
- |
- |
- |
- |
16,745 |
16,745 |
|
|
|
|
|
|
|
Balance as at 30 June 2015 |
613 |
40,407 |
85,380 |
359 |
10,362 |
137,121 |
Under The Isle of Man Companies Act 2006, distributions are not governed by reserves but by the Directors undertaking an assessment of the Company's solvency at the time of distribution.
CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 June 2015
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
€000's |
€000's |
€000's |
Cash flows from operating activities |
|
|
|
Cash receipts from customers |
125,507 |
106,316 |
221,048 |
Cash paid to suppliers and employees |
(99,335) |
(84,685) |
(172,668) |
Corporate taxes recovered |
- |
- |
1,256 |
Corporate taxes paid |
(213) |
(220) |
(1,740) |
Net cash from operating activities |
25,959 |
21,411 |
47,896 |
|
|
|
|
Cash flows from investing activities |
|
|
|
Interest received |
- |
8 |
16 |
Earn-out payments made - Betboo |
(1,200) |
(3,140) |
(4,339) |
Investment in Betit (note 13) |
- |
(3,649) |
(3,649) |
Acquisition of property, plant and equipment |
(407) |
(229) |
(802) |
Capitalised development costs |
(2,633) |
- |
(3,343) |
Net cash from investing activities |
(4,240) |
(7,010) |
(12,117) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Non-interest bearing loan (from William Hill) |
- |
- |
(2,856) |
Proceeds from issue of share capital |
- |
41 |
854 |
Finance lease payments |
(948) |
(500) |
(1,149) |
Dividend paid |
(17,160) |
(16,755) |
(33,607) |
Net cash from financing activities |
(18,108) |
(17,214) |
(36,758) |
|
|
|
|
Net increase / (decrease) in cash and cash equivalents |
3,611 |
(2,813) |
(979) |
Cash and cash equivalents at beginning of the period |
17,829 |
18,808 |
18,808 |
Cash and cash equivalents at end of the period |
21,440 |
15,995 |
17,829 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 30 June 2015
1. SIGNIFICANT ACCOUNTING POLICIES
GVC Holdings PLC is a company registered in The Isle of Man and was incorporated on 5 January 2010. It is the successor company of Gaming VC Holdings S.A. (incorporated on 30 November 2004 and listed on AIM on 21 December 2004) and took the assets of Gaming VC Holdings S.A. on 21 May 2010 after the formal approval by shareholders to re-domicile the Group. The consolidated financial statements of the Group for the interim period ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as the 'Group').
These interim condensed consolidated financial statements are for the six months ended 30 June 2015. They have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2014.
The comparative figures for the year ended 31 December 2014 are extracted from GVC Holdings PLC's consolidated financial statements which are available on the Company's website. An unmodified audit opinion was issued on these consolidated financial statements.
The financial statements are presented in the Euro, rounded to the nearest thousand. They are prepared on the historical cost basis.
2. SEGMENTAL REPORTING
2,1 Reporting by Segment
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
€000's |
€000's |
€000's |
STATEMENT OF TURNOVER |
|
|
|
Sports wagers |
823,703 |
694,320 |
1,463,523 |
Sports margin |
8.8% |
9.9% |
9.8% |
Gross margin |
72,842 |
68,744 |
143,544 |
|
|
|
|
Sports NGR |
54,849 |
52,034 |
110,199 |
Gaming NGR |
66,067 |
53,032 |
114,602 |
TOTAL REVENUE |
120,916 |
105,066 |
224,801 |
|
|
|
|
SEGMENTAL REPORTING |
|
|
|
Total revenue |
120,916 |
105,066 |
224,801 |
Variable costs |
(55,515) |
(48,344) |
(101,513) |
Contribution |
65,401 |
56,722 |
123,288 |
Contribution margin |
54% |
54% |
55% |
|
|
|
|
Other operating costs (note 3) |
|
|
|
Personnel expenditure |
(23,440) |
(20,667) |
(43,055) |
Costs other than personnel |
(15,590) |
(13,660) |
(30,731) |
Foreign exchange differences |
(886) |
(40) |
(340) |
|
(39,916) |
(34,367) |
(74,126) |
|
|
|
|
Clean EBITDA |
25,485 |
22,355 |
49,162 |
Exceptional items (note 3.1) |
(4,708) |
- |
- |
Share option charges |
(202) |
(124) |
(736) |
Effect of valuing the Betit put option |
- |
(1,593) |
(1,593) |
EBITDA |
20,575 |
20,638 |
46,833 |
Depreciation and amortisation |
(2,202) |
(1,772) |
(3,912) |
Financial income (note 4) |
- |
8 |
16 |
Financial expense (note 4) |
(1,306) |
(855) |
(1,646) |
Profit before tax |
17,067 |
18,019 |
41,291 |
Taxation |
(322) |
(447) |
(728) |
Profit after tax |
16,745 |
17,572 |
40,563 |
Total assets |
210,460 |
201,339 |
208,706 |
Total liabilities |
(73,339) |
(59,261) |
(59,248) |
2.2 Performance by quarter
|
Number of sports wagers |
Value of Sports wagers |
Sports margin % |
Sports NGR |
Gaming NGR |
Total Revenue |
Contribution |
|
000's |
€000's |
|
€000's |
€000's |
€000's |
€000's |
Q1-2014 |
19,896 |
338,805 |
10.0% |
25,068 |
25,248 |
50,316 |
27,585 |
Q2-2014 |
19,298 |
355,515 |
9.8% |
26,966 |
27,784 |
54,750 |
29,137 |
H1-2014 |
39,194 |
694,320 |
9.9% |
52,034 |
53,032 |
105,066 |
56,722 |
|
|
|
|
|
|
|
|
Q3-2014 |
18,915 |
367,550 |
10.5% |
30,348 |
29,892 |
60,240 |
32,843 |
Q4-2014 |
22,834 |
401,653 |
9.0% |
27,817 |
31,678 |
59,495 |
33,723 |
H2-2014 |
41,749 |
769,203 |
9.7% |
58,165 |
61,570 |
119,735 |
66,566 |
|
|
|
|
|
|
|
|
FY-2014 |
80,943 |
1,463,523 |
9.8% |
110,199 |
114,602 |
224,801 |
123,288 |
|
|
|
|
|
|
|
|
Q1-2015 |
22,008 |
410,220 |
9.0% |
28,592 |
31,244 |
59,836 |
32,059 |
Q2-2015 |
19,513 |
413,483 |
8.7% |
26,257 |
34,823 |
61,080 |
33,342 |
H1-2015 |
41,521 |
823,703 |
8.8% |
54,849 |
66,067 |
120,916 |
65,401 |
3. OPERATING COSTS
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
Notes |
€000's |
€000's |
€000's |
Wages and salaries |
|
11,566 |
10,698 |
21,744 |
Incentive schemes, including directors |
|
8,084 |
6,103 |
13,865 |
Amounts paid to long term contractors |
|
1,586 |
1,703 |
3,270 |
Compulsory social security contributions |
|
1,044 |
1,107 |
2,137 |
Compulsory pension contributions |
|
343 |
313 |
627 |
Health and other benefits |
|
385 |
351 |
758 |
Recruitment and training |
|
432 |
392 |
654 |
Personnel expenditure (excluding share option charges) |
|
23,440 |
20,667 |
43,055 |
Professional fees |
|
2,080 |
1,637 |
4,489 |
Technology costs |
|
11,564 |
10,170 |
20,991 |
Office, travel and other costs |
|
1,946 |
1,853 |
5,251 |
Foreign exchange losses |
|
886 |
40 |
340 |
Other operating costs |
|
39,916 |
34,367 |
74,126 |
Equity settled share option charges |
|
261 |
124 |
552 |
Cash settled share option charges |
|
(59) |
- |
184 |
Exceptional items |
3.1 |
4,708 |
- |
- |
Effect of valuing the Betit put option |
|
- |
1,593 |
1,593 |
Depreciation |
|
413 |
282 |
675 |
Amortisation |
|
1,789 |
1,490 |
3,237 |
|
|
47,028 |
37,856 |
80,367 |
3.1 Exceptional items
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
Notes |
€000's |
€000's |
€000's |
Costs arising on proposed acquisition of bwin.party digital entertainment plc |
a |
3,793 |
- |
- |
Romanian back tax and license fees |
b |
915 |
- |
- |
|
|
4,708 |
- |
- |
Note a: On 15 May 2015, the Group confirmed it had submitted a proposal with a view to the Group acquiring the entire issued (and to be issued) share capital of bwin.party digital entertainment plc. Professional fees relating to the proposed acquisition have been shown as an exceptional item due to their materiality.
Note b: Under the licensing regime enacted for Romania, entities that have in the past operated in that country are obligated to make a "tax amnesty" settlement should they wish to be considered for a new license. The Group has made a provision for these back-tax costs and treated the expense as an exceptional item.
4. FINANCIAL INCOME AND EXPENSE
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
€000's |
€000's |
€000's |
Financial income |
|
|
|
Interest receivable |
- |
8 |
16 |
|
- |
8 |
16 |
|
|
|
|
Financial expense |
|
|
|
Unwinding of discount on non-interest bearing loan |
(116) |
(119) |
(238) |
Finance lease interest |
(53) |
(26) |
(67) |
Unwinding of discount on deferred consideration |
(27) |
(400) |
(710) |
Foreign exchange revaluation |
(1,110) |
(306) |
(627) |
Other expense |
- |
(4) |
(4) |
|
(1,306) |
(855) |
(1,646) |
The foreign exchange differences above arose as follows:
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
€000's |
€000's |
€000's |
Retranslation of the William Hill non-interest bearing loan |
(587) |
(306) |
(467) |
Retranslation of amounts due in respect of finance leases |
(107) |
- |
(160) |
Retranslation of share option cash out liability |
(416) |
- |
- |
|
(1,110) |
(306) |
(627) |
5. TAXATION
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|||
|
€000's |
€000's |
€000's |
|||
Current tax expense |
|
|
|
|||
Current year |
322 |
447 |
840 |
|||
Prior year |
- |
- |
(112) |
|||
|
322 |
447 |
728 |
|||
Deferred tax |
|
|
|
|||
Origination and reversal of temporary differences |
- |
- |
- |
|||
Total income tax expense in Income Statement |
322 |
447 |
728 |
|||
6. EARNINGS PER SHARE
6.1 Basic Earnings Per Share and Basic Earnings Per Share Before Exceptional Items
Basic earnings per share has been calculated by taking the profit attributable to ordinary shareholders and dividing by the weighted average number of shares in issue. Basic earnings per share from continuing operations before exceptional items has been calculated by taking the profit attributable to ordinary shareholders and adding back the cost of exceptional items in the year and dividing by the weighted average number of shares in issue.
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
Profit for the period attributable to ordinary shareholders |
16,744,558 |
17,572,000 |
40,563,268 |
Weighted average number of shares |
61,276,480 |
60,912,801 |
61,099,894 |
Basic earnings per share (in €) |
0.273 |
0.288 |
0.664 |
Profit for the year attributable to ordinary shareholders before exceptional items |
21,452,500 |
17,572,000 |
40,563,268 |
Basic earnings per before exceptional items (in €) |
0.350 |
0.288 |
0.664 |
6.2 Diluted Earnings Per Share and Diluted Earnings Per Share Before Exceptional Items
Diluted earnings per share has been calculated by taking the profit attributable to ordinary shareholders and dividing by the weighted average number of shares in issue as diluted by share options. Diluted earnings per share from continuing operations before exceptional items has been calculated by taking the profit attributable to ordinary shareholders and adding back the cost of exceptional items and dividing by the weighted average number of shares in issue, as diluted by share options.
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
Profit for the period attributable to ordinary shareholders |
16,744,558 |
17,572,000 |
40,563,268 |
Weighted average number of shares |
61,276,480 |
60,912,801 |
61,099,894 |
Effect of dilutive share options |
3,170,759 |
4,876,210 |
5,010,290 |
Weighted average number of dilutive shares |
64,447,239 |
65,789,011 |
66,110,184 |
Diluted earnings per share (in €) |
0.260 |
0.267 |
0.614 |
Profit for the year attributable to ordinary shareholders before exceptional items |
21,452,500 |
17,572,000 |
40,563,268 |
Diluted earnings per share before exceptional items (in €) |
0.333 |
0.267 |
0.614 |
7. RECEIVABLES AND PREPAYMENTS
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
€000's |
€000's |
€000's |
Balances with payment processors |
17,696 |
17,156 |
22,222 |
Trade receivables |
10 |
138 |
111 |
Other receivables |
1,224 |
1,189 |
1,500 |
Total receivables |
18,930 |
18,483 |
23,833 |
Prepayments |
3,876 |
5,754 |
3,772 |
|
22,806 |
24,237 |
27,605 |
|
|
|
|
Payment processor balances described as receivables are funds held by third party collection agencies subject to collection, or balances used to make refunds to players. Some of the balances should be considered as working capital floats in certain markets.
8. CASH AND CASH EQUIVALENTS
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
€000's |
€000's |
€000's |
Restricted cash subject to regulator constraints |
3,935 |
1,092 |
3,506 |
Other cash |
17,505 |
14,903 |
14,323 |
|
21,440 |
15,995 |
17,829 |
9. TRADE AND OTHER PAYABLES
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
€000's |
€000's |
€000's |
Other trade payables |
10,076 |
10,581 |
12,166 |
Accruals |
18,225 |
11,964 |
14,795 |
|
28,301 |
22,545 |
26,961 |
10. LIABILITY TO SHARE OPTION SETTLEMENT
As announced by the Company on 27 March 2015 three of its directors surrendered 3,200,000 fully-vested and "in the money" share options granted in 2010 and 2012 at the prevailing market price at that time (average of £1.83895). The surrender price was £4.64067, being the average of the middle market closing prices of the Company's shares for the thirty dealing days up to and including the date of surrender.
In light of the surrender of share options described above by Kenneth Alexander, Richard Cooper and Lee Feldman (the "Senior Team"), the Company has implemented a new retention plan for the Senior Team (the "Retention Plan").
The Retention Plan is focused on ensuring that the Senior Team are compensated for the surrender of their fully vested share options. Accordingly, each member of the Senior Team will receive cash payments which in total equal the "in-the-money" value of their surrendered share options.
Under the Retention Plan:
· Total cash payment due to each director shall be paid evenly over a period of two years.
· The directors' dividend bonuses derived from the share options will decrease in a straight-line over the 24 month period of the retention plan.
· In the event a director's service is terminated by the Company for cause (as defined in their service agreement or letter of appointment) or he resigns during the two year period (other than due to serious illness or repudiatory breach by the Company of his service agreement), he will not be entitled to receive any further Retention Plan payments.
· All payments will become payable on a change of control of the Company.
IFRS 2 Share based payments, states that the liability is recognised on the surrender through retained earnings. The recognition of this liability is shown below:
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 Dec 2014 |
|
€000's |
€000's |
€000's |
Amounts falling due in one year |
6,826 |
- |
- |
Amounts falling due after one year |
5,251 |
- |
- |
|
12,077 |
- |
- |
11. NON-INTEREST BEARING LOAN
As part of the Group's acquisition of Sportingbet plc in March 2013, a credit facility was made available to the Group by William Hill PLC to fund working capital.
The principal amount, together with the prevailing exchange rate between the £ and the €, and the resultant balances, expressed in euros, are shown below:
|
30 June 2015
|
30 June 2014
|
31 Dec 2014
|
Original principal amount in £ |
6,862 |
6,862 |
6,862 |
Repayments made |
(2,271) |
- |
(2,271) |
Principal amount outstanding at period end |
4,591 |
6,862 |
4,591 |
Prevailing exchange rate |
1.4057 |
1.2477 |
1.2780 |
Principal amount expressed in € |
6,454 |
8,562 |
5,867 |
The second instalment of £2,295k is repayable in December 2015 with the final instalment of £2,296k repayable in June 2016.
IAS 39 Financial Instruments: Recognition and Measurement, states that all loans and receivables should initially be measured at their fair value. The loan has therefore been discounted at a rate of 4% and will be unwound over the period of the loan.
The facility is repayable in three instalments and should GVC declare dividends in excess of 58 €cents per share, William Hill are entitled to receive an accelerated repayment equal to the excess of the actual dividend over 58 €cents per share. The installment as well as the impact of the discount are shown below:
|
Total |
|
€000's |
Loan balance at 1January 2015 |
5,867 |
Revaluation at 30 June exchange rate |
587 |
|
6,454 |
Discount on recognition of the loan |
(780) |
Unwinding of discount at 30 June 2015 |
540 |
Loan balance at 30 June 2015 |
6,214 |
Future discount |
240 |
|
6,454 |
12. SHARE CAPITAL
|
Number of shares |
At 1 January 2015 and 30 June 2015 |
61,276,480 |
Share options currently in issue are:
|
Exercise price |
Number of shares |
Directors and executives* |
1p |
3,450,000 |
Provided to third parties following underwriting commitments made at the time of the Sportingbet acquisition** |
2.335p |
156,947 |
*350,000 of these share options relate to cash settled share options. The remaining balance relates to equity settled share options.
13. INVESTMENT IN BETIT SECURITIES LIMITED
On 14 May 2014, the Group acquired a 15% stake in Betit Holdings Limited ('BHL') from Betit Securities Limited ('BSL'). The consideration was €3.5 million, which together with professional fees incurred at the time amounted to a total upfront cost of €3.6 million. The Group has a call option to acquire the balance of the outstanding shares. There is also a put option. These options, are, under IAS 39, required to be valued, and are shown within both Non-current assets and non-current liabilities.
|
30 June 2015
|
30 June 2014
|
31 Dec 2014
|
Available for sale financial asset |
|
|
|
Original cost |
- |
3,500 |
- |
Incidental acquisition costs |
- |
149 |
- |
Put option at fair value |
- |
1,745 |
- |
Effect of |
- |
(1,593) |
- |
Balance at start of period |
3,801 |
- |
3,801 |
Balance at end of period |
3,801 |
3,801 |
3,801 |
|
|
|
|
Non-current liability to put option |
(1,745) |
(1,745) |
(1,745) |
There were no significant changes in the fair value of the asset or the options as at 31 December 2014 or 30 June 2015. Accordingly no adjustments have been made to the carrying value of the asset since inception.
14. RESTATEMENTS
The Group has made two modest restatements to the 30 June 2014 interim financial statement due to clarification of accounting treatments associated with the investment in Betit.
14.1 Restatements in the Consolidated Income Statement
Six months ended 30 June 2014 |
Reference |
Original |
Restatements |
Restated |
|
|
€000's |
€000's |
€000's |
Revenue |
|
105,066 |
- |
105,066 |
Cost of sales |
|
(48,344) |
- |
(48,344) |
Contribution |
|
56,722 |
- |
56,722 |
Other expenditure |
|
(34,367) |
- |
(34,367) |
Share based payments |
|
(124) |
- |
(124) |
Depreciation and amortisation |
|
(1,772) |
- |
(1,772) |
Effect of valuing the Betit put option |
a |
- |
(1,593) |
(1,593) |
Financial income |
|
8 |
- |
8 |
Financial expense |
|
(855) |
- |
(855) |
Profit before tax |
|
19,612 |
(1,593) |
18,019 |
Taxation |
|
(447) |
- |
(447) |
Profit after tax |
|
19,165 |
(1,593) |
17,572 |
14.2 Restatements in the Consolidated Statement of Financial Position
|
Reference |
Original |
Restatements |
Restated |
|
|
€000's |
€000's |
€000's |
Investments |
a |
3,649 |
152 |
3,801 |
Trade and other payables |
b |
(26,225) |
3,680 |
(22,545) |
Interest bearing loans and borrowings |
b |
- |
(945) |
(945) |
Non-interest bearing loans and borrowings |
b |
- |
(2,735) |
(2,735) |
Betit option liability |
a |
- |
(1,745) |
(1,745) |
All other assets and liabilities |
|
166,247 |
- |
166,247 |
|
|
143,671 |
(1,593) |
142,078 |
a. |
Represents the entries to recognise the fair value of the put and call options associated with Betit as discussed in note 13 above. At the time the 2014 interim financial statements were published the fair value exercise had not been completed. |
b. |
Represents reclassifications of the current portions of the William Hill interest free loan and finance lease liabilities which were included within trade and other payables in the 2014 interim financial statements. The reclassifications aid comparison with the 31 December 2014 audited consolidated Statement of Financial Position. |
15. SUBSEQUENT EVENTS
On 2 July 2015, GVC received notice that 37 Entertainment Inc, a company incorporated in Quebec, had filed legal proceedings against GVC Holdings plc in Quebec. GVC believes the claim is without merit and intends to robustly contest the claim.
- Ends -