Press Release

22 September 2014

 

GVC Holdings PLC

 

("GVC" or the "Group")

 

Interim Results and Q3 Trading Update

 

GVC Holdings PLC (AIM:GVC), the multinational sports betting and gaming group,today announces its Interim Results for the six-months ended 30 June 2014 together with its quarterly dividend and a special dividend.

 

Dividend

•	Quarterly dividend of 12.5 €cents (2013: 10.5 €cents)
•	Additional special dividend of 2.5 €cents (2013: nil)
•	Total quarterly dividend is 15 €cents, up 43% on same quarter last year (2013: 10.5 €cents)
•	Cumulative dividends payable in calendar year 2014, 55 €cents. Total up 96% over prior year (2013: 28 €cents)

 

Financial highlights

 

•	Wagers up 38% to €694 million (H1-2013: €502 million)
•	Sports margin 9.9% (H1-2013: 10.3%)
•	Net Gaming Revenue ("NGR") up 44% to €105 million (H1-2013: €73 million)
•	Contribution up 25% to €57 million (H1-2013: €46 million)
•	Clean EBITDA up 26% to €22.4 million (H1-2013: €17.8 million)
•	Strong start to Q3-2014: trading per day, at €628k is 20% higher than Q3-2013 (€523k)

 

Operational metrics

•	A leading operator of in-play markets with over 4,000 concurrent markets
•	A market leading sports-trading team generating 10% margin
•	Current number of active customers up 22% on prior year
•	New depositing customers, 56k in Q3-2014,up 30% on Q3-2013
•	Deposits up 22% on Q3-2013
•	Enhancement of mobile product and sportsbook planned for 2015
•	In-play generating 70% of sports gross margin
•	Mobile generating 22% of sportsbook revenues

 

Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings plc, said: "GVC operates in numerous markets in both casino and sports betting and as a group is well diversified and highly cash generative.  GVC is now in a very strong position with exciting growth prospects as we continue to develop our market leading in-house sportsbook and mobile platform.  The Group remains highly confident for the outcome of this current financial year and this confidence is reflected in the enhanced dividend that we have announced today."

 

- Ends -

 

For further information:

GVC Holdings PLC
Kenneth Alexander, Chief Executive	Tel: +44 (0) 1624 652 559
Richard Cooper, Group Finance Director	www.gvc-plc.com

 

Daniel Stewart & Company Plc	Tel: +44 (0) 20 7776 6550
Paul Shackleton / Mark Treharne	www.danielstewart.co.uk

 

Media enquiries:

Abchurch
Henry Harrison-Topham / Jamie Hooper	Tel: +44 (0) 20 7398 7702
henry.ht@abchurch-group.com	www.abchurch-group.com

 

About GVC Holdings PLC

GVC Holdings PLC is a multinational sports betting and gaming group.  Its core brands are CasinoClub, Betboo and Sportingbet.  The Group has over 600 employees and is headquartered in the Isle of Man and is licensed in Malta, Germany, Denmark, UK, South Africa, Italy, Alderney and the Dutch Caribbean.

 

Further information on the Group is available at www.gvc-plc.com

Chief Executive's Report

 

The Group has had an excellent 2014 so far, with a very strong performance during the World Cup, which has built on the success of the complete restructuring of the Sportingbet business that GVC acquired in 2013.

 

The Board is delighted to announce today a second special dividend in this year, this time allowing our shareholders to participate in GVC's successful World Cup performance during which, customer acquisition accelerated, sports margins were strong and systems proved very robust.

 

During 2014 the Group has declared a dividend of 11.5 €cents per share ("€cps") in January 2014, 16.0 (12.5+3.5) €cps in April 2014, 12.5 €cps in July 2014 and now 15 €cps (12.5+2.5) in September 2014, bringing the total dividend declarations to 55 €cps for the year to date, and being 96% higher than in 2013 despite an additional 30 million shares in issue.

 

GVC's commitment to highly cash generative markets does not however come at the expense of investing in the future.  GVC will continue to invest and develop its in-house sportsbook and mobile technology to maximise the Group's growth prospects and generate the cash crucial to its aggressive dividend policy.

 

The Group's Latam business continues to grow impressively and remains the market leader in Latam for sports betting.  Furthermore, the Group demonstrated its commitment to widening its geographical offering by the 15% investment in the Scandinavian start-up venture, Betit, who in the short space of time since its launch has captured meaningful market share in the Scandinavian online casino market across its brands.

 

GVC's relentless focus on the customer journey is applied across all markets and the Group's customer facing teams are incentivised to deliver a positive experience to our customers. 

 

KPI summary €000's	Sports wagers per day	Sports NGR per day	Gaming NGR per day	Total NGR  per day
Q1-2013¶	1,894	209	185	394
Q2-2013	3,637	275	273	548
H1-2013	2,771	242	229	472

Q3-2013	3,335	267	256	523
Q4-2013	3,926	244	285	529
H2-2013	3,631	255	271	526

 

Q1-2014	3,765	278	281	559
Q2-2014	3,907	296	306	602
H1-2014	3,836	287	293	580
YoY increase	38.4%	19%	27%	23%
Q3-2014*	3,894	325	303	628
YoY increase	17%	22%	18%	20%

 

* to midnight Thursday 18 September 2014

¶ based on pro-forma revenues

 

Both sports wagers and NGR per day have increased quarter on quarter and NGR per day is now averaging €628k.

 

The relative mix between sports NGR and other revenues has remained relatively static at just under 50% (H1-2013: 51%; H2-2013: 49%), but in-play now amounts to 70% of wagering, and mobile was around 22% up from a low base of 8% in H1-2013 before GVC started investing in it.

 

Operationally, current trading across all measures is at least 20% higher than in 2013:

·     Deposit values were up 22% in Q3-2013;

·     Active and new depositing customers were up 30% on the same period last year.

 

Platform ability

Under GVC's tenure, the Sportsbook platform has been developed to give significantly greater latency, response time and volume capability.  In the last quarter the uptime has been 99.999%, handling over 4,000 concurrent events, more than 100% higher than the same period in 2013.  The number of sports bets placed per day during Q2-2014 averaged 212,000 up 27% on Q2-2013 which averaged 167,000.

 

Dividend

The quarterly and special dividend totalling 15 €cent per share will be payable on Monday 3 November 2014 to shareholders on the register ("the record date") on Friday 10 October 2014.  The shares will go "ex-dividend" on Thursday 9 October 2014.

 

Outlook

The Board remains highly confident for 2014 and this confidence is expressed in the enhanced dividend declared today.  We look forward to providing further trading updates in December 2014 and January 2015.

 

Kenneth Alexander

Chief Executive

22 September 2014

 

Group Finance Director's Report

 

I start my report by summarising the business model of the Group and expressing this into "figures per day."  This accords with our preferred KPI disclosures.  Section 2 of my 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 H1-2014

(Subject to roundings)

 

€000's	Total		Per Day H1-2014
Wagers per day	694,320		3,836
Sports margin %	9.9%		-
Gross margin	68,744		380
Add-on revenue less all bonuses	21,187		116
Sportsbook revenue	89,931		496
CasinoClub revenue	15,135		84
Total revenue	105,066		580
EBITDA margin	21.3%		-
EBITDA	22,355
Non-P&L outflows*	(4,040)
Net cashflow available for other uses	18,315
Dividends paid in period	16,755
% of available cashflow distributed	91%

 

*the principal component of this were funds paid in pursuance of the Betboo earn-out

SECTION 2: Summary of financial disclosures

(In € millions)	H1-2014		H1-2013
INCOME STATEMENT EXTRACTS
Sports wagers	694.3		501.5
Pro-forma revenue	105.1		85.3
Total revenue	105.1		73.2
Contribution	56.7		45.6
Other operating costs	(34.3)		(27.8)
Clean EBITDA	22.4		17.8
Non-cash operating costs	(1.9)		(2.0)
Exceptional items	-		(13.8)
Financial income	0.0		0.8
Financial expense	(0.9)		(0.9)
Profit before tax	19.6		1.9
Key ratios
Contribution margin (contribution/pro-forma revenue)	54.0%		53.4%
Clean EBITDA margin (clean EBITDA/proforma revenue)	21.3%		20.9%
BALANCE SHEET EXTRACTS	30.6.14		30.6.13
Non-current assets	156.9		152.5
Net current assets before loans and leases	1.4		7.6
Loan from William Hill	(8.1)		(7.3)
Finance leases	(1.7)		-
Betboo deferred consideration	(4.8)		(10.6)
Total net assets	143.7		142.2
CASHFLOW EXTRACTS	H1-2014		H1-2013
Clean EBITDA	22.4		17.8
Exceptional items, contribution and costs relating to the acquisition of Sportingbet	-		(13.8)
Contribution from William Hill to the acquisition of Sportingbet	-		42.6
Loan from William Hill	-		8.0
Working capital movements including liabilities pursuant to the acquisition	(0.8)		(28.3)
Betboo earn-out payments	(3.1)		(2.5)
Purchase of non-current assets	(0.2)		-
Trade investment in Betit (including costs)	(3.6)		-
Finance lease payments	(0.5)		-
Net corporate tax payments	(0.2)		(0.1)
Share option subscriptions	-		0.2
Cash at start of period	18.8		6.6
Dividends	(16.8)		(2.2)
Cash at end of period	16.0		28.3

 

 

Group revenues at €105.1 million were 43.6% ahead of the same period last year.

 

Contribution at €56.7 million rose by 24.5%.  The contribution margin was 54%.  This reflects the investments made ahead of and during the World Cup, particularly in Latin America where the Group raised marketing expenditure by €4.5 million in this one region alone.

 

Clean EBITDA rose €4.6 million, 25.6% or 7.5 €cents per share to €22.4 million.

 

Non-cash items of operating expenditure(share option charges, depreciation and amortisation) fell to €1.9 million from €2.0 million.

 

Exceptional items H1-2014: €zero.  H1-2013 reflected restructuring costs following the Sportingbet acquisition.

 

Financial income. The credit in H1-2013 is attributable to a one-off imputed interest credit on the interest-free loan from William Hill, drawn-down in H1-2013.  It is a non-cash item.

 

Net current assets before betting tax accruals and loan instruments, have fallen due a higher value of dividend paid during the period (€16.8 million in H1-2014 compared to €2.2 million in H1-2013).

 

Betting tax accruals have naturally increased substantially as GVC is paying betting taxes in six markets, where local taxes are levied.

 

William Hill loan. This has remained static in underlying terms, but a strengthening in GBP since 30 June 2014 (1.25, up from 1.17 at 30 June 2013) has increased the liability as measured in Euros.

 

Cashflow. The key points on the Group's cashflow are:

·     15% stake in Betit, €3.5 million plus associated costs

·     A modest amount repayable to finance lease houses (€0.5 million; H1-2012 €nil) in furtherance to acquisitions of computer hardware for the Group's growing data centers.

·     Continuation of working capital absorption as the Group grows.

 

Share capital

The Group issued 216,513 shares to employees and consultants between 30 June 2013 and 30 June 2014.  On 1 July 2014, a further 343,053 shares were issued to third parties following their underwriting commitments pursuant to the Sportingbet acquisition in 2013.

 

As announced on 2 June 2014, the Company granted a total of 3,100,000 nil cost share options; 2,100,000 to directors and 1,000,000 to senior executives.  The awards will vest in full and become exercisable on the share price being equal to or exceeding £6.00 per share for a continuous period of 90 calendar days at any time from 30 May 2014.

 

During H1-2014, 26,667 share options at an exercise price of €1.26 were exercised and the resulting cash receipt was translated into Euros as €41,187 which when rounded is reported in the above analysis as €0.0k.

 

 

Richard Cooper

Group Finance Director

22 September 2014

 

CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2014

		Six months ended 30 June 2014	Six months ended 30 June 2013*	Year ended 31 Dec 2013*
		(Unaudited)	(Unaudited)	(Audited)
	Notes	€000's	€000's	€000's
Revenue	2	105,066	73,182	169,959
Variable costs		(48,344)	(27,632)	(67,328)
Contribution	2	56,722	45,550	102,631
Operating costs	3	(36,263)	(43,542)	(88,513)
Analysed as:
Other operating costs	3	(34,367)	(27,750)	(64,332)
Share based payments		(124)	(224)	(730)
Exceptional items	3.1	-	(13,797)	(19,711)
Depreciation and amortisation		(1,772)	(1,771)	(3,740)
Operating profit		20,459	2,008	14,118
Financial income		8	785	813
Financial expense		(855)	(934)	(1,917)
Profit before tax		19,612	1,859	13,014
Taxation charge	5	(447)	(316)	(711)
Profit after tax		19,165	1,543	12,303
Earnings per share		€	€	€
Basic
Total	6	0.315	0.032	0.225
Diluted
Total	6	0.291	0.031	0.220

 

*restated - see note 13 for details

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2014

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	(Unaudited)	(Unaudited)	(Audited)
	€000's	€000's	€000's
Profit for the period	19,165	1,543	12,303
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations	-	123	359
Profit and total comprehensive income for the period	19,165	1,666	12,662

CONSOLIDATED BALANCE SHEET

As at 30 June 2014

 

			30 June 2014	30 June 2013*	31 Dec 2013
			(Unaudited)	(Unaudited)	(Audited)
	Notes		€000's	€000's	€000's
Assets
Property, plant and equipment			864	649	918
Intangible assets			152,360	151,874	153,850
Investments	12		3,649	-	-
Total non-current assets			156,873	152,523	154,768
Receivables and prepayments	7		24,237	23,527	23,579
Income taxes reclaimable			3,881	1,582	1,877
Other tax reclaimable			201	-	306
Cash and cash equivalents	8		15,995	28,298	18,808
Total current assets			44,314	53,407	44,570
Current liabilities
Trade and other payables	9		(26,225)	(28,968)	(24,089)
Balances with customers			(13,060)	(13,807)	(13,298)
Income taxes payable			(4,946)	(2,351)	(2,722)
Other taxation liabilities			(2,344)	(671)	(4,182)
Total current liabilities			(46,575)	(45,797)	(44,291)
Current assets less current liabilities			(2,261)	7,610	279
Long term liabilities
Interest bearing loans and borrowings			(747)	-	(1,221)
Non-interest bearing loan	10		(5,352)	(7,306)	(5,148)
Deferred consideration on Betboo			(4,842)	(10,601)	(7,582)
Total net assets			143,671	142,226	141,096
Capital and reserves
Issued share capital	11		609	607	609
Merger reserve			40,407	40,407	40,407
Share premium			84,571	84,397	84,530
Translation reserve			359	123	359
Retained earnings			17,725	16,692	15,191
Total equity attributable to equity holders of the parent			143,671	142,226	141,096

 

*restated - see note 13 for details

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2014

 

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 2013	316	40,407	611	-	17,137	58,471
Share option charges	-	-	-	-	230	230
Lapsed share options	-	-	-	-	(6)	(6)
Share options exercised	1	-	158	-	-	159
Issue of share capital for the acquisition of Sportingbet PLC	290	-	83,628	-	-	83,918
Dividend paid	-	-	-	-	(2,212)	(2,212)
Transactions with owners	291	-	83,786	-	(1,988)	82,089
Profit and total comprehensive income	-	-	-	123	1,543	1,666
Balance as at 30 June 2013	607	40,407	84,397	123	16,692	142,226
Balance at 1 July 2013	607	40,407	84,397	123	16,692	142,226
Share option charges	-	-	-	-	506	506
Share options exercised	2	-	133	-	-	135
Dividend paid	-	-	-	-	(12,767)	(12,767)
Transactions with owners	2	-	133	-	(12,261)	(12,126)
Profit and total comprehensive income	-	-	-	236	10,760	10,996
Balance as at 31 December 2013	609	40,407	84,530	359	15,191	141,096
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	-	-	-	-	19,165	19,165
Balance as at 30 June 2014	609	40,407	84,571	359	17,725	143,671

 

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 2014

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	(Unaudited)	(Unaudited)	(Audited)
	€000's	€000's	€000's
Cash flows from operating activities
Cash receipts from customers	106,316	85,022	173,885
Cash paid to suppliers and employees	(84,685)	(100,106)	(181,592)
Corporate taxes recovered	-	-	1,143
Corporate taxes paid	(220)	(89)	(1,580)
Net cash from operating activities	21,411	(15,173)	(8,144)
Cash flows from investing activities
Interest received	8	5	33
Acquisition earn-out payments	(3,140)	(2,541)	(6,378)
Investment in Betit (note 12)	(3,649)	-	-
Acquisition of Sportingbet (note 12.2)	-	64,792	64,755
Non-interest bearing loan	-	8,020	8,020
Acquisition of property, plant and equipment	(229)	-	(37)
Acquisition of intangible assets	-	-	(4)
Net cash from investing activities	(7,010)	70,276	66,389
Cash flows from financing activities
Proceeds from issue of share capital	41	159	294
Repayment of borrowings (note 12.2)	-	(31,384)	(31,384)
Finance lease payments	(500)	-	-
Dividend paid	(16,755)	(2,212)	(14,979)
Net cash from financing activities	(17,214)	(33,437)	(46,069)
Net (decrease)/increase in cash and cash equivalents	(2,813)	21,666	12,176
Cash and cash equivalents at beginning of the period	18,808	6,632	6,632
Cash and cash equivalents at end of the period	15,995	28,298	18,808

 

 

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2014

 

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 2014 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 2014.  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 2013.

 

The comparative figures for the year ended 31 December 2013 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. Reporting by Segment and detail of Income and Expenditure Account

Six months ended 30 June 2014
	Six months ended 30 June 2014		Six months ended 30 June 2013	Year ended 31 Dec 2013
	€000's		€000's	€000's
STATEMENT OF TURNOVER
Sports wagers	694,320		501,481	1,169,505
Sports margin	9.9%		10.3%	9.6%
Gross margin	68,744		51,664	112,081
Sports NGR	52,034		43,858	90,823
Gaming NGR	53,032		41,490	91,302
	105,066		85,348	182,125
Revenue recognised by GVC	105,066		73,182	169,959
Revenue recognised by B2B partners	-		12,166	12,166
	105,066		85,348	182,125
SEGMENTAL REPORTING
Total revenue (notes 2.2)	105,066		73,182	169,959
Variable costs	(48,344)		(27,632)	(67,328)
Contribution	56,722		45,550	102,631
Contribution margin	54%		62%	60%
Other operating costs (note 3)
Personnel expenditure	(20,667)		(14,441)	(32,507)
Costs other than personnel	(13,660)		(12,840)	(29,891)
Sub-total of costs	(34,327)		(27,281)	(62,398)
Foreign exchange differences	(40)		(469)	(1,934)
Clean EBITDA	22,355		17,800	38,299
Exceptional items	-		(13,797)	(19,711)
Share option charges	(124)		(224)	(730)
EBITDA	22,231		3,779	17,858
Depreciation and amortisation	(1,772)		(1,771)	(3,740)
Financial income (note 4)	8		785	813
Financial expense (note 4)	(855)		(934)	(1,917)
Profit before tax	19,612		1,859	13,014
Taxation	(447)		(316)	(711)
Profit after tax	19,165		1,543	12,303
Total assets	201,187		205,930	199,338
Total liabilities	(57,516)		(63,704)	(58,242)

 

 

2.2        Performance by quarter

 

	Number of Sports wagers (000s)	Value of Sports wagers	Sports margin %	Sports NGR	Gaming NGR	Total pro-forma revenue	Total Revenue	Contribution
		€000's		€000's	€000's	€000's	€000's	€000's
Q1-2013	18,656	170,476	12.5%	18,825	16,666	35,491	23,325	15,521
Q2-2013	15,235	331,005	9.2%	25,033	24,824	49,857	49,857	30,029
H1-2013	33,891	501,481	10.3%	43,858	41,490	85,348	73,182	45,550
Q3-2013	15,475	306,803	9.9%	24,555	23,585	48,140	48,140	29,116
Q4-2013	19,676	361,221	8.4%	22,410	26,227	48,637	48,637	27,965
H2-2013	35,151	668,024	9.0%	46,965	49,812	96,777	96,777	57,081
FY-2013	69,042	1,169,505	9.6%	90,823	91,302	182,125	169,959	102,631
Q1-2014	19,896	338,805	10.0%	25,068	25,248	50,316	50,316	27,585
Q2-2014	19,298	355,515	9.8%	26,966	27,784	54,750	54,750	29,137
H1-2014	39,194	694,320	9.9%	52,034	53,032	105,066	105,066	56,722

 

 

3.       OPERATING COSTS

 

		Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	Notes	€000's	€000's	€000's
Wages and salaries		16,801	11,205	24,776
Amounts paid to long term contractors		1,703	1,563	3,763
Compulsory social security contributions		1,107	854	1,794
Compulsory pension contributions		313	379	751
Health and other benefits		351	221	701
Recruitment and training		392	219	722
Personnel expenditure (excluding share option charges)		20,667	14,441	32,507
Professional fees		1,637	943	2,523
Technology costs		10,170	8,121	19,795
Office, travel and other costs		1,853	2,242	5,146
Third party service costs		-	1,534	2,427
Costs other than personnel		13,660	12,840	29,891
Foreign exchange losses		40	469	1,934
Total of Other operating costs		34,367	27,750	64,332
Share option charges		124	224	730
Exceptional items	3.1	-	13,797	19,711
Depreciation		282	184	504
Amortisation		1,490	1,587	3,236
		36,263	43,542	88,513

 

 

3.1        Exceptional Items

 

The Group incurred expenditure on exceptional items.  These are items which are both exceptional in size and nature.

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	€000's	€000's	€000's
Costs arising on the acquisition of Sportingbet PLC
- Total professional fees arising on the acquisition of Sportingbet PLC	-	6,268	6,398
- Underwriting	-	810	810
- Stamp duty and stock exchange fees	-	639	639
- Other costs, net of the economic benefit arising from the management of the Sportingbet Spanish business	-	133	(8)
	-	7,850	7,839
Redundancies, retentions and similar	-	5,134	9,017
Contract buyouts	-	813	2,855
	-	13,797	19,711

 

 

4.       FINANCIAL INCOME AND EXPENSES

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	€000's	€000's	€000's
Financial income
- Discount on non-interest bearing loan	-	780	780
- Interest receivable	8	5	33
	8	785	813
Financial expense
- Unwinding of discount on non-interest bearing loan	(119)	(66)	(186)
- Unrealised foreign exchange loss on revaluation of non-interest bearing loan	(306)	-	-
- Unwinding of discount on deferred consideration	(400)	(859)	(1,677)
- Finance lease interest	(26)	-	(43)
- Other expense	(4)	(9)	(11)
	(855)	(934)	(1,917)

 

Note:

 

The impact on cash of the financial income expenses in the six months ending 30 June 2014 was an outflow of €22k (H1-2013: €4k).

 

 

5.       TAXATION

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	€000's	€000's	€000's
Current tax expense
Current year	447	222	524
Prior year	-	11	104
	447	233	628
Deferred tax
Origination and reversal of temporary differences	-	83	83
Total income tax expense in income statement	447	316	711

 

 

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 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
Profit for the period attributable to ordinary shareholders	19,165,000	1,543,000	12,303,000
Weighted average number of shares	60,912,801	48,296,772	54,586,391
Basic earnings per share (in €)	0.315	0.032	0.225
Exceptional items	-	13,797,000	19,711,000
Profit for the year attributable to ordinary shareholders before exceptional items	19,165,000	15,340,000	32,014,000
Basic earnings per before exceptional items (in €)	0.315	0.318	0.586

 

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 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
Profit for the period attributable to ordinary shareholders	19,165,000	1,543,000	12,303,000
Weighted average number of shares	60,912,801	48,296,772	54,586,391
Effect of dilutive share options	4,876,210	1,273,738	1,419,914
Weighted average number of dilutive shares	65,789,011	49,570,510	56,006,305
Diluted earnings per share (in €)	0.291	0.031	0.220
Exceptional items	-	13,797,000	19,711,000
Profit for the year attributable to ordinary shareholders before exceptional items	19,165,000	15,340,000	32,014,000
Diluted earnings per share before exceptional items (in €)	0.291	0.309	0.572

 

 

7.         RECEIVABLES AND PREPAYMENTS

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	€000's	€000's	€000's
Balances with payment processors	17,156	16,983	18,270
Trade receivables	138	344	274
Other receivables	1,189	4,047	1,341
Total receivables	18,483	21,374	19,885
Prepayments	5,754	2,153	3,694
	24,237	23,527	23,579
Payment processor debtor days
- On revenue per income statement	30 days	42 days	39 days
- On pro-forma revenue	30 days	36 days	37 days

 

Payment processor balances described as receivables are funds held by third party collection agencies subject to collection after one month, or balances used to make refunds to players.

 

 

8.         CASH AND CASH EQUIVALENTS

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	€000's	€000's	€000's
Balances with customers	13,060	13,807	13,298
Other cash	2,935	14,491	5,510
	15,995	28,298	18,808

 

 

9.         TRADE AND OTHER PAYABLES

 

	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 Dec 2013
	€000's	€000's	€000's
Other trade payables	10,581	9,511	9,586
Finance leases	945	-	945
Non-interest-bearing loan from William Hill PLC (see note 10)	2,735	-	2,514
Accruals	11,964	19,457	11,044
	26,225	28,968	24,089

 

 

10.        NON INTEREST-BEARING LOAN

 

As part of the Group's acquisition of Sportingbet PLC, 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 balance, expressed in € is shown below:

 

	30 June 2014	30 June 2013	31 Dec 2013
Principal amount in £	6,862	6,862	6,862
Prevailing exchange rate	1.2477	1.1687	1.2031
Principal amount expressed in €	8,562	8,020	8,256
Repayment profile (base currency)
By 31 December 2014	2,287	2,287	2,287
By 31 December 2015	2,287	2,287	2,287
By 30 June 2016	2,288	2,288	2,288
	6,862	6,862	6,862

 

 

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 instalments as well as the impact of the discount are shown below:

 

 

	Amount in Euro's
	Total	Current liabilities	Non-current liabilities
	€000's	€000's	€000's
Loan balance on initial recognition	8,020
Revaluation at 30 June exchange rate	542
	8,562
Discount on recognition of the loan	(780)	(424)	(356)
Unwinding of discount at 30 June 2014	305	305	-
Loan balance at 30 June 2014	8,087	2,735	5,352
Future discount	475	119	356
	8,562	2,854	5,708

 

11.        SHARE CAPITAL

 

	Number of shares
At 1 January 2014	60,906,760
Shares issued pursuant to the exercise of options by Directors (admitted to trading on 21 May 2014)	26,667
At 30 June 2014	60,933,427
Shares issued pursuant to the exercise of options by third parties** (admitted to trading on 1 July 2014)	343,053
At 1 July 2014	61,276,480

 

Share options currently in issue are:

Directors and Executives:

 

1,600,000*	at £2.13
1,600,000*	at £1.5479
3,100,000	at €0.01
6,300,000	61,276,480

 

Provided to third parties following underwriting commitments made at the time of the acquisition:

 

156,947**

at £2.335

 

* These share options attract a dividend credit payable by way of bonuses and through the payroll.

 

**These share options have the exercise price reduced by the value of any dividends declared up to the point of exercise.

 

12.        ACQUISITIONS

 

 

12.1      TRADE INVESTMENT IN BETIT SECURITIES LIMITED

The Group announced on 14 May 2014 that it had paid €3.5 million for a 15% stake in Betit Holdings Limited ("Betit").

The Group has a call option to acquire the balance of the outstanding shares.  The call option can be exercised no earlier than 1 July 2017 and no later than 30 September 2017, and would be subject to further LGA clearance and the AIM Rules (principally the rules on a Reverse Takeover if applicable).  The minimum call option price is €70 million, and the actual price would be determined by the mix of revenues between regulated and non-regulated markets and certain multiples attaching thereto which at our current multiple levels would lead to the transaction being accretive for shareholders.

If the Group decides not to exercise its call option then Betit may require the Group to acquire its shares in Betit at a price determined by the mix of revenues between regulated and non-regulated markets and certain multiples thereof (but absent any floor on the price).  Completion of this purchase would be subject to certain conditions including the Group's ability to raise the necessary financing.  Should the Group fail to raise the required financing, Betit Securities Limited may acquire the Group's shares in Betit for nominal consideration.

The Group, as a 15% shareholder in Betit, does not have the power to govern the financial and operating policies of the company.  On this basis the Group will not be consolidating the results of the company into the Group's financial statements and has recognised the investment as a non-current asset at cost.  This in accordance with IFRS 10 (Consolidated Financial Statements).  A review of the accounting treatment of the investment will be carried out in the full year accounts made up to the 31 December 2014.

 

 

12.2      Acquisition of Sportingbet plc

 

Sportingbet plc was acquired on 19 March 2013.  During the period ended 30 June 2013, a total of €15,108k of costs were incurred, defrayed by €1,311k of gain from the disposal (to William Hill plc) of the Sportingbet Spanish business.

 

The acquisition balance sheet of Sportingbet plc, for IFRS accounting purposes, included the contribution made from William Hill (£36.5 million @FX rate of 1.1661).  In more conventional terms the acquisition arrangements looked like:

 

	Total €000's	Other assets €000's	Cash & debt €000's
Current assets	43,929	21,700	22,229*
Current liabilities	(93,537)	(62,153)	(31,384)
Net balance sheet deficit	(49,608)	(40,453)	(9,155)
Contribution from William Hill	42,563	-	42,563*
	(7,045)	(40,453)	33,408

 

* reported in the acquisition balance sheet as a combined figure €66,834k as subsequently restated to exclude the cash associated with the Spanish business (€2,042k) and thus netting to €64,792k reported in the acquisition balance sheet as "Bank borrowings and similar".

 

 

13.        RESTATEMENTS

 

The Group has made three modest restatements to the 30 June 2013 interim financial statement chiefly due to clarification of accounting treatments associated with the acquisition of Sportingbet plc in March 2013.

 

 

13.1      Restatements in Statement of Consolidated Income

 

 

Six months ended 30 June 2013	Reference	Original	Restatements	Restated
		€000's	€000's	€000's
Revenue	a	72,335	847	73,182
Cost of sales	a	(26,785)	(847)	(27,632)
Contribution		45,550	-	45,550
Other expenditure		(29,745)	-	(29,745)
Exceptional items	b	(15,108)	1,311	(13,797)
Income from assets available for re-sale	b	1,311	(1,311)	-
Financial income	c	5	780	785
Financial expense	d	(868)	(66)	(934)
Profit before tax		1,145	714	1,859
Taxation		(316)	-	(316)
Profit after tax		829	714	1,543

 

Year ended 31 December 2013	Reference	Original	Restatements	Restated
		€000's	€000's	€000's
Revenue	a	168,407	1,552	169,959
Cost of sales	a	(65,776)	(1,552)	(67,238)
Contribution		102,631	-	102,631

 

 

13.2      Restatements in Consolidated Balance Sheet

 

	Reference	Original	Restatements	Restated
		€000's	€000's	€000's
Intangible assets	e	146,968	4,906	151,874
Non-interest bearing loan	c+d	(8,020)	714	(7,306)
All other assets and liabilities		(2,342)	-	(2,342)
		136,606	5,620	142,226

 

 

13.3      Restatement to the Consolidated Statement of cashflows

 

	Reference	Original	Restatements	Restated
		€000's	€000's	€000's
Cash paid to suppliers & employers		(102,148)	2,042	(100,106)
Acquisition of Sportingbet	b	66,834	(2,042)	64,792
All other cashflows		63,612	-	63,612
Cash and cash equivalent at end of period		28,298	-	28,298

 

a.	Represents income from customers previously netted-off with cost of sales.
b.	Represents a reclassification of the contribution from the Sportingbet Spanish business, which, at the time of the 2013 interim financial statements was an asset for resale, and was sold after the period end, thus disclosed within exceptional items.  The cash movement is the cash acquired with the business.
c.	Represents the imputed value of interest (under IAS 39) on the interest-free loan from William Hill plc
d.	Represents the pro-rata release of the above interest.
e.	Retranslation of shares using the price on the first day of post-acquisition trading as opposed to the price on the day on which the shares were suspended. [(£2.48-£2.335) x 29,018,075 x FX rate of 1.1661 = €4,906k]

 

 

14.        SUBSEQUENT EVENTS

 

There have been no subsequent events between 30 June 2014 and the date of the signing of these accounts that merit inclusion.

 

 

- Ends -