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.
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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.”
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 |
| Cenkos Securities plc | Tel: +44 (0) 20 7397 8900 |
| Mark Connelly, Stephen Keys, Camilla Hume |
Media enquiries:
| Bell Pottinger | Tel: +44 (0) 20 3772 2496 |
| David Rydell, James Newman, Laura Jaques |
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
The notes are available in the PDF download.