GVC Holdings PLC (AIM:GVC), a leading provider of B2B and B2C services to the online gaming and sports betting markets, today announces its Interim Results for the six months ended 30 June 2012.
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Highlights
- 50% increase in interim dividend to 15€cents per share (H1-2011: 10€cents) and ahead of market expectations
- €58 million returned to shareholders in the last 5 years, giving one of the highest returns in the industry
- 47% increase in Revenues to €29.1 million (H1-2011: €19.8 million)
- Industry leading sports margins continue to be delivered
- 78% increase in contribution to €17.0 million (H1-2011: €9.6 million)
- 105% increase in EBITDA to €7.9 million (H1-2011: €3.8 million)
- 138% increase in Operating Profit to €6.6 million (H1-2011: €2.8 million)
- 76% increase in diluted EPS to €0.134 (H1-2011: €0.076)
Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings plc, said: “We have been delighted by the performance of both our B2C and B2B divisions in the first six months of this year, and our confidence in the future is represented by the significant increase in our dividend.”
For further information:
| GVC Holdings PLC | |
| Kenneth Alexander, Chief Executive Officer | Tel: +44 (0) 20 7398 7702 |
| Richard Cooper, Group Finance Director | www.gvc-plc.com |
| Daniel Stewart & Company Plc | Tel: +44 (0) 20 7776 6550 |
| David Hart / Paul Shackleton / Jamie Barklem | www.danielstewart.co.uk |
Media enquiries:
| Abchurch | |
| Henry Harrison-Topham / Shabnam Bashir | Tel: +44 (0) 20 7398 7702 |
| henry.ht@abchurch-group.com | www.abchurch-group.com |
About GVC Holdings PLC
GVC Holdings PLC is a leading provider of B2B and B2C services to the online gaming and sports betting markets. The Group is headquartered in the Isle of Man and is licensed in Malta, and the Netherlands Antilles.
Further information on the Group is available at www.gvc-plc.com
Chief Executive’s Statement
I am delighted to present these results, reflecting, for the first time, a full half-year for the Group’s B2B division. GVC’s investment in its B2C brands together with the successful delivery of the Group’s B2B service to East Pioneer Corporation B.V. (“EPC”) is now delivering considerable returns and to illustrate the Board’s confidence the interim dividend has been increased by 50% to 15€cents per share.
For the benefit of shareholders and industry observers, GVC has within the notes to its interim statements, shown the underlying trading volumes across both B2B and B2C businesses. The Group’s B2C brands include CasinoClub and Betboo. For the avoidance of doubt, the results of Betaland, disposed in April this year are shown as discontinued activities.
Underlying sports wagers increased to €256.3 million from €23.2 million. With a combined gross win of 11% the underlying sports turnover enjoyed by GVC and its B2B partner, East Pioneer Corporation BV amounted to €28.7 million (H1-2011: €23.3 million).
Total revenue rose by 47% to €29.1 million (H1-2011: €19.8 million). Revenue from B2B amounted to €9.9 million (H1-2011: €1.4 million). CasinoClub revenues were marginally lower at €14.1 million (H1-2011: €14.6 million), impacted by the industry-wide decline in poker revenues. Revenue at Betboo, our Latin American brand, rose by 33% to €5.0 million (H1-2011: €3.8 million).
Profit after taxation amounted to €5.2 million (H1-2011: €1.6 million) and that, combined with our confidence for the future allows us to declare an interim dividend of 15€cents per share (H1-2011: 10€cents). This will be paid on 2 November 2012 to shareholders on the register at the close of business on the record date of 5 October 2012.
Kenneth Alexander
Chief Executive
19 September 2012
Group Finance Director’s Statement
The Group’s financial statements are prepared under IFRS. Additionally the Group presents an alternative presentation to show the underlying transaction volumes.
As shareholders will be aware, the Group’s Betaland brand was disposed of in April 2012 and the results of this are thus shown as “discontinued activities.”
REVENUE
Total revenue recognised by GVC was €29.1 million up 47% on the same period in 2011. B2C revenue amounted to €19.2m, an increase of 4%.
| In €000’s | H1-2012 | H1-2011 | % Change |
| CasinoClub | 14,127 | 14,632 | (3.5%) |
| Betboo Sports | 1,167 | 820 | 42.3% |
| Betboo Gaming | 3,882 | 2,989 | 29.9% |
| Total B2C revenue | 19,176 | 18,441 | 4.0% |
| Total B2B revenue | 9,932 | 1,387 | 616.0% |
| Total Revenue | 29,108 | 19,828 | 46.8% |
CasinoClub results comprised a robust casino offering and a declining poker product, and the Board is pleased that the casino held up well against a backdrop of economic uncertainty in Europe.
Betboo sports turnover increased by 147% to €21.7 million (H1-2011: €8.8 million). Betboo sports revenue increased by 42.3% from a lower hold of 8% (H1-2011: 11%) due to less favourable results in the Brazilian regional football leagues. The Board expects the margin to normalise by the end of 2012 to closer to 10%. Additionally in the period the Group provided a higher level of customer bonuses than in the previous years.
Betboo gaming rose by 29.9% with an increasing amount of its revenue from Casino as opposed to Bingo.
B2B revenue comprises both:
i. a share of underlying revenues from the Superbahis brand, sold by Sportingbet plc to East Pioneer Corporation B.V in late November 2011, and
ii. GVC’s revenues in similar markets.
The combined revenues rose from €1.4 million to €9.9 million, and GVC’s B2B share is after direct costs such as payment processing, software royalties, affiliate marketing and the revenue shares due to Sportingbet plc.
Contribution, if expressed as a percentage of underlying turnover of the B2B division, was 23% (H1-2011: 30%) compared to 51% for the B2C division (H1-2011: 49%).
OPERATING COSTS
With the continued investment in the B2C brands, operating costs in the B2C division increased to €5.6 million (H1-2011: €4.4 million).
The Group now has a sizable office in Dublin with around 60 staff. Operating costs in the B2B division reflect this staffing and establishment cost and have risen from €0.9 million to €3.8 million. The Group expects a modest increase to these costs in H2-2012.
Across the Group, staff costs amounted to 49% of total operating costs (before non-cash items) of €9.4 million (H1-2011: 51%) and increased 71% to €4.6 million largely due to increased headcount. The Group has around 145 staff across four core locations up from 79 staff in the same period last year.
Group-wide technology costs at €1.0 million (H1-2011: €0.2 million) also increased substantially due to increased infrastructure support and increased resilience in the Group’s Betboo product.
Third-party service costs are largely associated with the out-sourced support from personnel and premises in GVC’s Betboo brand. These costs increased to €1.9 million (H1-2011: €1.4 million) in the six months and are being kept under close review.
The Group has a variety of foreign exchange exposures which moved against it in the first half of 2012 costing €0.2 million. The Group does not hedge its foreign exchange exposures.
Depreciation and Amortisation at €1,236k was higher than the €1,043k incurred last year. The increase of nearly €200k was evenly split between B2C and B2B.
The charges for Depreciation and Amortisation were significantly higher than the actual cash outflow on fixed assets on which €464k was incurred (H1-2011: €996k).
There were no Exceptional charges in the period (H1-2011: €189k).
Share option charges were a credit for the period following the lapse of options associated with personnel engaged in the now disposed Betaland brand.
The charge to Taxation increased, although remains modest compared to the profits. The increase was associated with taxation levied on recharges from certain service operations within the Group.
Discontinued operations refer to the Betaland business which ceased to be operated by GVC in April 2012, although there were a series of post disposal costs which GVC needed to bear. This brand had been in decline for some time and the Group could not see any future potential in it. The result for the period was a loss of €0.9 million (H1-2011: profit, €0.8 million).
BALANCE SHEET
The development of the B2B business has had a material impact on the Balance Sheet of the Group. The most significant changes have been the increase in receivables, (up 94% to €14.2 million); and trade and other payables (up 130% to €14.5 million).
The B2B business absorbs much greater working capital than a traditional B2C business principally as more payment processing methods are involved and trade debtors can take a number of months to convert into cash.
The Group has today declared a dividend of 15€cents per share, making a total payable during 2012 of 26€cents (2011: 20€cents). The recent history of dividends the Group has paid is:
| €cents Per share | Total paid | Cumulative paid | |
| 2008 | 40 | €12.54 million | €12.5 million |
| 2009 | 40 | €12.54 million | €24.90 million |
| 2010 | 60 | €18.68 million | €43.58 million |
| 2011 | 20 | €6.22 million | €47.81 million |
| 2012 | 26 | €8.16 million | €57.97 million |
Richard Cooper
Group Finance Director
19 September 2012
Consolidated Income Statement
for the six months ended 30 June 2012
| Six months ended 30 June 2012 |
Six months ended 30 June 2011 |
Year ended 31 Dec 2011 |
||
| (Unaudited) | (Unaudited) | (Audited) | ||
| Notes | €000’s | €000’s | €000’s | |
| Revenue | 2 | 29,108 | 19,828 | 44,340 |
| Variable costs | (12,073) | (10,277) | (23,790) | |
| Contribution | 2 | 17,035 | 9,551 | 20,550 |
| Operating costs | 3 | (10,421) | (6,770) | (18,551) |
| Operating profit | 6,614 | 2,781 | 1,999 | |
| Financial income | 1 | – | 2 | |
| Financial expense | (1,102) | (1,150) | (2,387) | |
| Profit/(loss) before tax | 5,513 | 1,631 | (386) | |
| Taxation charge | 4 | (328) | (61) | (236) |
| Profit/(loss) after taxation from continuing operations | 5,185 | 1,570 | (622) | |
| (Loss)/profit after taxation from discontinued operations | 5 | (922) | 834 | 477 |
| Profit/(loss) after tax | 4,263 | 2,404 | (145) | |
| Earnings per share | € | € | € | |
| Basic | ||||
| Profit/(loss) from continuing operations | 1.165 | 0.050 | (0.020) | |
| (Loss)/profit from discontinued operations | (0.029) | 0.027 | 0.015 | |
| Total | 6 | 0.136 | 0.077 | (0.005) |
| Diluted | ||||
| Profit/(loss) from continuing operations | 0.163 | 0.050 | (0.020) | |
| (Loss)/profit from discontinued operations | (0.029) | 0.026 | 0.015 | |
| Total | 6 | 0.134 | 0.076 | (0.005) |
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2012
| Six months ended 30 June 2012 |
Six months ended 30 June 2011 |
Year ended 31 Dec 2011 |
|
| (Unaudited) | (Unaudited) | (Audited) | |
| €000’s | €000’s | €000’s | |
| Profit/(loss) and total comprehensive income/(expense) for the period |
4,263 | 2,404 | (145) |
Consolidated Balance Sheet
As at 30 June 2012
| 30 June 2012 | 30 June 2011 | 31 Dec 2011 | ||
| (Unaudited) | (Unaudited) | (Audited) | ||
| Notes | €000’s | €000’s | €000’s | |
| Assets | ||||
| Property, plant and equipment | 465 | 229 | 470 | |
| Intangible assets | 66,278 | 67,943 | 67,223 | |
| Deferred tax asset | 83 | 38 | 83 | |
| Total non-current assets | 66,826 | 68,210 | 67,776 | |
| Receivables and prepayments | 7 | 14,169 | 7,311 | 8,983 |
| Income taxes reclaimable | ,813 | 2,111 | 1,529 | |
| Other tax reclaimable | 19 | – | ||
| Cash and cash equivalents | 8 | 4,014 | 5,799 | 9,853 |
| Total current assets | 19,996 | 15,240 | 20,365 | |
| Current liabilities | ||||
| Trade and other payables | 9 | (14,482) | (6,305) | (15,926) |
| Income taxes payable | (2,327) | (2,366) | (1,771) | |
| Other taxation liabilities | (252) | (203) | (330) | |
| Total current liabilities | (17,061) | (8,874) | (18,027) | |
| Current assets less current liabilities | 2,935 | 6,366 | 2,338 | |
| Long term liabilities | ||||
| Deferred consideration on Betboo | (11,778) | (12,375) | (12,940) | |
| Total net assets | 57,983 | 62,201 | 57,174 | |
| Capital and reserves | ||||
| Issued share capital | 316 | 311 | 315 | |
| Merger reserve | 40,407 | 40,407 | 40,407 | |
| Share premium | 610 | – | 416 | |
| Retained earnings | 16,650 | 21,483 | 16,036 | |
| Total equity attributable to equity holders of the parent | 57,983 | 62,201 | 57,174 |
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2012
Attributable to equity holders of the parent company:
| Share Capital |
Merger Reserve |
Share Premium |
Retained Earnings |
Total | |
| €000’s | €000’s | €000’s | €000’s | €000’s | |
| Balance at 1 January 2011 | 311 | 40,407 | – | 21,966 | 62,684 |
| Share option charges | – | – | – | 225 | 225 |
| Dividend paid | – | – | – | (3,112) | (3,112) |
| Transactions with owners | 311 | 40,407 | – | 19,079 | 59,797 |
| Profit and total comprehensive income | – | – | – | 2,404 | 2,404 |
| Balance as at 30 June 2011 | 311 | 40,407 | – | 21,483 | 62,201 |
| Balance at 1 July 2011 | 311 | 40,407 | – | 21,483 | 62,201 |
| Share option charges | – | – | – | 215 | 215 |
| Share options exercised | 4 | – | 416 | – | 420 |
| Dividend paid | – | – | – | (3,113) | (3,113) |
| Transactions with owners | 315 | 40,407 | 416 | 18,585 | 59,723 |
| Loss and total comprehensive expense | – | – | – | (2,549) | (2,549) |
| Balance as at 31 December 2011 | 315 | 40,407 | 416 | 16,036 | 57,174 |
| Balance at 1 January 2012 | 315 | 40,407 | 416 | 16,036 | 57,174 |
| Share option charges | – | – | – | 315 | 315 |
| Lapsed share options | – | – | – | (489) | (489) |
| Share options exercised | 1 | – | 194 | – | 195 |
| Dividend paid | – | – | – | (3,475) | (3,475) |
| Transactions with owners | 316 | 40,407 | 610 | 12,387 | 53,720 |
| Loss and total comprehensive expense | – | – | – | 4,263 | 4,263 |
| Balance as at 30 June 2012 | 316 | 40,407 | 610 | 16,650 | 57,983 |
All reserves of the Company are distributable, as 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 2012
| Six months ended 30 June 2012 |
Six months ended 30 June 2011 |
Year ended 31 Dec 2011 |
|
| (Unaudited) | (Unaudited) | (Audited) | |
| €000’s | €000’s | €000’s | |
| Cash flows from operating activities | |||
| Cash receipts from customers | 27,164 | 27,969 | 61,289 |
| Cash paid to suppliers and employees | (26,974) | (24,579) | (49,640) |
| Corporate taxes recovered | – | – | 1,356 |
| Corporate taxes paid | (22) | (35) | (1,627) |
| Net cash from operating activities | 168 | 3,355 | 11,378 |
| Cash flows from investing activities | |||
| Interest received | 1 | 2 | 5 |
| Acquisition of business and earn out | (2,264) | – | (671) |
| Acquisition of property, plant and equipment | (151) | (81) | (395) |
| Acquisition of intangible assets | (313) | (915) | (1,210) |
| Net cash from investing activities | (2,727) | (994) | (2,271) |
| Cash flows from financing activities | |||
| Proceeds from issue of share capital | 195 | – | 420 |
| Dividend paid | (3,475) | (3,113) | (6,225) |
| Net cash from financing activities | (3,280) | (3,113) | (5,805) |
| Net (decrease)/increase in cash and cash equivalents | (5,839) | (752) | 3,302 |
| Cash and cash equivalents at beginning of the period | 9,853 | 6,551 | 6,551 |
| Cash and cash equivalents at end of the period | 4,014 | 5,799 | 9,853 |
Notes
The notes are available in the PDF download.