Preliminary Results and Trading Update

Clarissa Elsner

GVC Holdings PLC (AIM:GVC), a leading provider of B2B and B2C services to the online gaming and sports betting markets, today announces its Preliminary Results for the year ended 31 December 2012 and a Trading Update to 24 March 2013

The full results are available to
download in PDF format.



View the Preliminary Results audiocast.



    • Acquisition of Sportingbet plc completed on 19 March 2013
    • Total revenues for 2012 rose 34% to €59.6 million (2011: €44.3 million), another year of increased revenues
    • 2012 Clean *EBITDA increased by 84% to €15.5 million (2011: €8.4 million)
    • 30% increase in dividend in the year: 11€cents paid in May 2012 (May 2011: 10€cents) and 15€cents paid in November 2012 (November 2011: 10€cents)

All four operational aims achieved in period:

    • build revenues and profits from B2B operations
    • achieve a step-change in Latin American revenue growth
    • stabilise profits from CasinoClub
    • position GVC as an acquirer of businesses within the sector

Trading Update (83 day period to 24 March 2013) – GVC excluding Sportingbet

  • 27% increase in average pro forma daily revenues to €348k (2012: €273k)
  • 34% increase in B2B pro forma daily revenues to €230k (2012: €171k)
  • 15% increase in B2C daily revenues to €118k (2012: €102k)

* Earnings before interest, taxation, depreciation, amortisation, share option charges and exceptional items

Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings plc, said: “The Board is pleased to report that not only was 2012 another period of increased financial performance and returns for shareholders, but that on 19 March 2013 we completed the most significant deal in the Group’s history. The acquisition of Sportingbet enhances our current market position and provides potential for considerable growth, as well as laying the foundations for future transactions.

“The Group met all of its key operational objectives during the period and has seen a significant increase in revenues in the B2B division in its first full year of operation. Betboo’s revenues increased by 17% to €10.3 million and the profitability of CasinoClub was maintained as planned.

“The Board is pleased with the strong start to the current financial year in terms of trading, and looking ahead we will integrate and restructure the Sportingbet retained business over the coming 12 months. We are confident that the Group is well positioned for the future, with its portfolio of brands now including Sportingbet serving numerous markets”


For further information:

GVC Holdings PLC
Kenneth Alexander, Chief Executive Tel: +44 (0) 20 7398 7702
Richard Cooper, Group Finance Director
Daniel Stewart & Company Plc Tel: +44 (0) 20 7776 6550
David Hart / Paul Shackleton / Jamie Barklem

Media enquiries:

Henry Harrison-Topham / Shabnam Bashir Tel: +44 (0) 20 7398 7702


Chairman’s Statement

2012 was yet another year of increased financial performance and returns for our shareholders.

There were two increases in dividends: 11€cents paid in May 2012 (May 2011: 10€cents) and 15€cents paid in November 2012 (November 2011: 10€cents).

The Group, along with William Hill plc, commenced its discussions with Sportingbet plc in the third quarter of 2012, and I am delighted to be able to say that this transaction completed a week ago, on 19 March 2013.

This transaction is transformational for the Group as it cements the Group’s reputation as a dealmaker in gaming markets and mitigates revenue sharing on the B2B transaction completed in November 2011 with Sportingbet and third party partner, East Pioneer Corporation BV (“EPC”). Indeed, the resulting revenue in the first two months of 2013 would have amounted to €6.4 million, an annual “run-rate” in excess of €38 million.

In 2013, owing to certain changes in accounting rules and the impact of the Sportingbet acquisition, the Group will be obliged to fully consolidate the results of EPC. With that in mind, the Group refers in these financial statements to a new measure, Pro-Forma Revenues (“PFR”) along with Net Gaming Revenue (“NGR”). PFR refers to the underlying level of sports wagers, sports NGR and gaming and other revenues enjoyed by EPC of which, up to 19 March 2013, the Group received a 25% share net of certain costs and adjustments. This is discussed in more detail in the Report of the Group Finance Director.

The Group disposed of Betaland during 2012 to an unrelated third party and the results of this are shown as discontinued activities.

I am also pleased to announce that shortly before these Financial Statements were approved, the Group reached an amicable settlement with Boss Media which has led to a credit to the income statement as an exceptional item.

Changing online gaming regulatory constraints continue to cast uncertainty, and the Board  keeps a close eye on regulatory developments.

The management team of the Group is now focused on the key task of integrating and restructuring the Sportingbet Retained Business in the year ahead.

I am also pleased to report that in the 83 days to 24 March 2013, current trading for the existing GVC business excluding Sportingbet has got off to a strong start with average PRF per day reaching €348k, 27% higher than in the same period in 2012.

The Group will be holding its Annual General Meeting in the Isle of Man on Wednesday 8 May 2013 and issuing a trading update at that time.

Lee Feldman
Chairman and Non-Executive Director
25 March 2013


Report of the Chief Executive

The main operational aims of the Group in 2012 were to:

  • build revenues and profits from B2B operations;
  • achieve a step-change in Latin American revenue growth;
  • stabilise profits from CasinoClub; and
  • position GVC as an acquirer of businesses within the sector.

I am pleased to say that the Group met all of these objectives.

In its first full year of operation, the B2B division produced a Clean EBITDA (being EBITDA before share option charges and exceptional items) of €7.3 million, Betboo’s revenues increased 17% to €10.3 million and the Clean EBITDA from CasinoClub remained level at €9.6 million on an increased contribution of €16.3 million (2011: €15.5 million).

(€million) 2012 2011
– B2B 65.8 10.1
– CasinoClub 28.1 29.4
– Betboo 10.3 8.8
104.2 48.3
– B2B 21.2 6.1
– CasinoClub 28.1 29.4
– Betboo 10.3 8.8
59.6 44.3
Clean EBITDA  
– B2B 7.3 0.2
– CasinoClub 9.6 9.7
– Betboo (1.4) (1.5)
15.5 8.4

Revenues in the markets in which the Group operates are cyclical and sportsbook customers are most active around the football season. Sports margin, being the amount retained after paying sports winnings, is also a key metric in the performance of Sports betting operators. The average PFR per day, along with the sports margin percentage and the aggregate NGR per quarter is shown below:

2012 Q1 – 12 Q2 – 12 Q3 – 12 Q4 – 12 Average for
Days 91 91 92 92 366
PFR per day (€000’s)  
– B2B 171.8 167.8 168.9 209.8 179.6
– CasinoClub 76.1 79.1 71.2 81.1 76.9
– Betboo 25.4 30.0 28.0 29.0 28.1
273.3 276.9 268.1 319.9 284.6
Sports wagers per day (€000’s)  
– B2B 1,420 1,158 1,269 1,342 1,297
– Betboo 110 129 133 110 121
1,530 1,287 1,402 1,452 1,418
Sports hold %  
– B2B 11.8% 11.1% 10.8% 12.5% 11.6%
– Betboo 7.3% 8.7% 7.5% 10.7% 8.5%
11.5% 10.8% 10.4% 12.3% 11.3%
Aggregate revenue per quarter (€million)
– B2B 4.8 5.2 5.1 6.1 21.2
– CasinoClub 6.9 7.2 6.5 7.5 28.1
– Betboo 2.3 2.7 2.6 2.7 10.3
14.0 15.1 14.2 16.3 59.6
2011 Q1 – 11 Q2 – 11 Q3 – 11 Q4 – 11 Average for
Days 90 91 92 92 365
PFR per day (€000’s)  
– B2B 2.8 12.5 14.5 79.9 27.6
– CasinoClub 81.7 80.0 80.7 79.8 80.5
– Betboo 20.9 21.2 28.2 26.2 24.1
105.4 113.7 123.4 185.9 132.2
Sports wagers per day (€000’s)  
– B2B 36 124 127 613 226
– Betboo 40 57 89 81 67
76 181 216 694 293
Sports hold %  
– B2B 8.4% 7.9% 10.5% 11.3% 10.6%
– Betboo 13.4% 9.2% 12.8% 8.3% 10.8%
11.0% 8.3% 11.4% 11.0% 10.6%
Aggregate revenue per quarter (€million)
– B2B 0.3 1.1 1.3 3.4 6.1
– CasinoClub 7.4 7.3 7.4 7.3 29.4
– Betboo 1.9 1.9 2.6 2.4 8.8
9.6 10.3 11.3 13.1 44.3


Aggregate revenues have, given a full year of operation, been extremely significant for the Group, amounting to €21.2 million in 2012 compared to just €6.1 million in 2011.

Average PFR per day has increased from €80k in Q4-2011 to €210k per day in Q4-2012.

The B2B division delivered a contribution margin of 72% with a cost base at €7.9 million reflecting a whole year of staff and office costs in supporting the revenue stream. At the end of the year, the headcount associated with this division was 70.

A feature of the B2B division is that it is more working capital intensive than our other businesses with just under €16 million of net current assets and €14 million of current liabilities.


CasinoClub revenue at €28.1 million was marginally lower than 2011 (€29.4 million). €0.3 million of this reduction was associated with lower poker revenue, a trend experienced in many other gaming companies.

Contribution margin improved both in terms of percentage, 58% for 2012 (2011: 53%) and absolute terms, €16.3 million for 2012 (2011: €15.5 million).

At the end of the year, the headcount associated with this division was 56.

Revenues grew by 17% to €10.3 million, up from €8.8 million in 2011. This was despite a lower sports hold at an aggregate of 8.5% (2011: 10.8%). The fact that wagers increased 81% from €24.4 million to €44.1 million is most encouraging.

There were additional investments in marketing and infrastructure to support this growth and accordingly the Clean EBITDA loss at €1.4 million (2011: loss €1.5 million), was contained well. The underlying headcount at the end of the year was 120. The Group has embarked on an internal restructuring which aims to make meaningful reductions in the Betboo cost base, and lead to an improvement in its financial performance.

Early in the year, the Board concluded that the markets in which Betaland operated were worsening and that the Group was not well placed to make any significant long-term returns from this business. By continuing Betaland in operation, the Group might have been burdened with some substantial closure costs. The disposal to an external third-party managed to contain these losses.

Future prospects
The most significant development in the Group’s history is the acquisition of Sportingbet plc which was completed on 19 March 2013 and which was approved by an overwhelming vote of GVC shareholders on 21 February 2013.

The transaction was completed with William Hill plc, the UK’s leading bookmaker. William Hill plc has now taken over Sportingbet’s Australian business (and the Sportingbet brand in Australia), certain freehold properties and, after six months, an option to acquire Sportingbet’s Spanish brand, “Miapuesta”.

The Group has acquired the Sportingbet brand in all other territories, along with a number of significant other brands. Additionally, the transaction allows the Group to enjoy substantially all of the revenue from the Superbahis business.

However, and as outlined in the Group’s prospectus, the Group has to undertake a substantial restructuring of Sportingbet to turnaround the historic cash burn suffered by that business, and does inherit its existing liabilities along with the assets. The Group will be discharging these debts along with the combined deal costs. I have every confidence that my Board colleagues and I can achieve the restructuring in the 12 months timeframe indicated in the prospectus.

This transaction marks a turning point in the Group’s history in that it reinforces the Group’s ability to close major and complex transactions to benefit its shareholders. The Group has a continued appetite to explore further opportunities if the Board believes them to be in the financial interest of shareholders.

The amicable settlement of legal disputes with Boss Media has also been achieved and allows the Group to focus its collective efforts on the tasks ahead as opposed to being distracted by historical issues.

I end my report by commenting about dividends and the Group’s dividend policy. The Group aims to pay not less than 75% of its net operating cashflow by way of dividends. In the last calendar year, the Group has paid 26€cents per share (2011: 20€cents per share) and since the calendar year-end has paid a further 7€cents to shareholders. Going forward, the Group intends to pay a dividend in November 2013 and thereafter quarterly.

Kenneth Alexander
Chief Executive
25 March 2013


Report of the Group Finance Director

This review is split into four sections:

  1. Income statement;
  2. Cashflow;
  3. Balance sheet; and
  4. Key financial issues for 2013.


1. Income statement

The income statement reflects Betaland as a discontinued activity and therefore the comparatives for 2011 are restated.

The complex deal with EPC and Superbahis results in a combination of revenues and costs normally being associated with gaming activities being compressed into a composite revenue figure, not easily expressed into the Group’s preferred KPI measure of “revenue per day”. For this reason, the Group describes the underlying activities in more conventional terms such as “sports wagers” and “sports margin” and “revenue per day” although the latter for B2B is referred to here as “pro-forma revenue per day” (PFR). This is in advance of the accounting treatment required following the acquisition of Sportingbet plc and the elimination of the revenue-share arrangements.

1.1 Proforma revenues (“PFR”)

Total revenues rose 116% to €104.2 million (2011: €48.3 million). The dominant reason for the increase was the full-year’s activity of the Superbahis customers.

Betboo’s revenues increased by 17% to €10.3 million from €8.8 million, whilst CasinoClub decreased by 4% to €28.1 million from €29.4 million.

1.2 Net Gaming Revenue (“NGR”)

NGR is Gross Gaming Revenues less customer bonuses, bad debts and chargebacks, and in the case of the agreement with EPC, is net of the certain allowable costs (such as payment processing, and software royalties and affiliate commissions associated with the Superbahis product), along with the revenue-share payable to Sportingbet.

Total NGR increased by €15.3 million (34%) to €59.6 million (2011: €44.3 million). €15 million of this increase was attributable to B2B; €1.5 million was attributable to Betboo, whilst CasinoClub revenue fell by €1.2 million.

1.3 Variable costs

These consist of payment processing fees, software royalties, and affiliate and other marketing arrangements.

1.4 Contribution

Contribution is NGR less variable costs and it increased by €14.5 million to €35.1 million. This increase is attributable between:

€million 2012 2011 Increase
B2B €15.2 €2.8 €12.4
CasinoClub €16.3 €15.5 €0.8
Betboo €3.6 €2.3 €1.3
€35.1 €20.6 €14.5

The rise in B2B contribution reflected a full year’s activity, whilst for CasinoClub the increase was a result of tight cost control. Betboo’s increase was attributable to higher revenues. The relative contribution ratios were:

2012 2011
B2B 72% 46%
CasinoClub 58% 53%
Betboo 35% 26%

1.5 Other Operating costs

These costs, which are analysed in detail in Note 3 to the accounts are before “non-cash” items such as depreciation, amortisation and share option charges.

These costs increased to €19.6 million from €12.2 million in 2011. The principal components of this €7.4 million increase were as follows:

Increased staff costs

  • reflecting an increase in personnel in the B2B division
  • dividend related bonuses to the executive management team
  • other increased staffing costs

Overall average staff numbers grew by 30% in the year.

€4.8 million
Increased professional fees €0.2 million
Increased technology costs to support a more complicated business €0.8 million
Increased travel and other costs, reflecting visits to additional offices   and the cost of those offices themselves €0.6 million
Increased third-party support providers for Betboo €0.8 million
Foreign exchange differences arising on the translation and transaction of non-Euro denominated amounts €0.2 million
€7.4 million

1.6 Exceptional items

Following the settlement of the legal disputes with Boss Media, there was a €0.2 million credit to the income statement, being the release of accruals relating to the disputes.

1.7 Depreciation and Amortisation

This amounted to €2.5 million for the year (2011: €2.0 million), on additions of €1.1 million (2011: €1.6 million, excluding additional goodwill arising on the change in the Betboo earn-out arrangements).

1.8 Share option charges

These fell to €79k (2011: €440k) chiefly due to the lapse of 1.1 million of options following the disposal of Betaland.

1.9 Financial income/expense

This is an accounting, non-cash expense relating to the accounting treatment of the Betboo earn-out. The charge fell marginally to €2.2 million from €2.4 million in 2011.

1.10 Taxation

The charge to taxation rose to €0.5 million from €0.2 million largely due to retrospective taxes imposed on the Group’s operation in Tel-Aviv.

1.11 Discontinued activities

Betaland was discontinued in the year. The business made a negligible contribution in the months it was trading, and closure costs, including depreciation and net of tax allowances amounted to a total loss of €1.1 million (2011: profit, €0.5 million).

1.12 Profit after tax and earnings per share

Profit after taxation was €9.2 million (2011: €145k loss). Basic earnings per share from continuing operations amounted to 32.3€cents up from a loss of 2.0€cents per share in 2011.



The principal movements in the Group’s cash position are summarised below:

Clean EBITDA 15,452 8,382
Exceptional items 208 (3,919)
Discontinued activities (after exceptional items) (1,005) 731
Adjusted EBITDA 14,655 5,194
Add: Proceeds of shares issued 196 420
Less: Betboo earn-out payments (2,863) (671)
Acquisition of property plant and equipment and
intangible assets
(1,120)  (1,605)
Net corporation taxes paid (417) (271)
10,451 3,067
DIVIDENDS PAID (8,214) (6,225)
Change in working capital (5,458) 6,460
Cash and cash equivalents brought forward 9,853 6,551
Cash and cash equivalents carried forward 6,632 9,853

More funds were tied up in B2B payment processing during the year through a combination of activity volume and more complex processing arrangements entered into to provide customers with a greater choice of payment streams.

Dividends are declared on the basis of the Group’s cash position created by its net operating cashflows and an assessment of the working capital requirements of the group which can have some unpredictability, particularly in the working-capital intense B2B division.



Net assets, net of dividend payment have increased by 2.3% rising to €58.5 million from €57.2 million in 2011.

€’000s €’000s
Net assets at 1 January 2012 57,174
Total non-current assets
Additions 1,120
Charge to depreciation and amortisation (2,720)
Net change   (1,600)
Deferred consideration
Charge to income statement (2,206)
Earn-out payments made 2,863
Net change 657
Charge in income statement 480
Credit in discontinued activities (63)
Net payments made (417)
Net change  
Increase in other current assets 5,152
Increase in other current liabilities (2,912)
Net assets at 31 December 2012 58,471

The activity of the B2B division results in trade receivables settling on a longer time-frame compared to other businesses of the Group due to complexities with third party payment processor operators, although this is offset by an increase in credit terms extended by EPC.



The acquisition of Sportingbet plc will result in a number of matters which will impact the income and cash-flow statements of the enlarged group. Many of these have been trailed in the Group’s prospectus already but it is worth re-iterating them here.

The Group will now benefit from substantially all of the revenues from the Superbahis business, in the first two months of 2013 this would have amounted to an additional €6.4 million if the transaction had completed on 31 December 2012. Additionally, William Hill plc are making a capital contribution to the restructuring of Sportingbet and providing some loan facilities.

As disclosed in the prospectus, the Group will however, be incurring substantial deal fees and restructuring costs along with discharging the bank debts of Sportingbet and the incumbent losses of that group.

The foreign exchange exposures will also be significantly different and more complex. The reporting currency of the Group is, and will remain, the Euro. Sportingbet is believed to have substantial Euro inflows along with GBP outflows. The Group will be closely examining the currency exposures, and will be assessing what, if any, currency hedging programs should be implemented.

Richard Cooper
Group Finance Director
25 March 2013


Consolidated Income Statement
For the year ended 31 December 2012

2012 2011
Notes €000’s €000’s
Revenue 2 59,596 44,340
Cost of sales (24,513) (23,790)
Contribution 2 35,083 20,550
Operating costs (as below) 3 (22,049) (18,551)
Other operating costs 3 (19,631) (12,168)
Share option charges 3 (79) (440)
Exceptional items 3 208 (3,919)
Depreciation and amortisation 3 (2,547) (2,024)
Operating profit 13,034 1,999
Financial income 4 2 2
Financial expense 4 (2,206) (2,387)
Profit/(loss) before tax 10,830 (386)
Taxation charge 5 (480) (236)
Profit/(loss) after taxation from continuing operations 10,350 (622)
(Loss)/profit after taxation from discontinued operations 6 (1,114) 477
Profit/(loss) after tax 9,236 (145)
Earnings per share  
Profit/(loss) from continuing operations 0.328 (0.020)
(Loss)/profit from discontinued operations (0.035) 0.015
Total 7 0.293 (0.005)
Profit/(loss) from continuing operations 0.323  (0.020)
(Loss)/profit from discontinued operations (0.035)  0.015
Total 7 0.288  (0.005)


Consolidated Statement of Comprehensive Income
For the year ended 31 December 2012

2012 2011
€000’s €000’s
Profit/(loss) and total comprehensive income/(expense) for the year 9,236 (145)


Consolidated Balance Sheet
As at 31 December 2012

  2012 2011
Notes €000’s €000’s
Property, plant and equipment 653 470
Intangible assets 65,440 67,223
Deferred tax asset 5 83 83
Total non-current assets 66,176 67,776
Receivables and prepayments 17,356 8,983
Income taxes reclaimable 5 943 1,529
Cash and cash equivalents 6,632 9,853
Total current assets 24,931 20,365
Current liabilities  
Trade and other payables (18,982) (15,926)
Income taxes payable 5 (1,185) (1,771)
Other taxation liabilities (186) (330)
Total current liabilities (20,353) (18,027)
Current assets less current liabilities 4,578 2,338
Long term liabilities  
Deferred consideration on Betboo (12,283) (12,940)
Total net assets 58,471 57,174
Capital and reserves  
Issued share capital 316 315
Merger reserve 40,407 40,407
Share premium 611 416
Retained earnings 17,137 16,036
Total equity attributable to equity holders of the parent 58,471 57,174


Consolidated Statement of Changes in Equity
For the year ended 31 December 2012

Attributable to equity holders of the parent company:

€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 440 440
Share options exercised 4 416 420
Dividend paid (6,225) (6,225)
Transactions with owners 4 416 (5,785) (5,365)
Loss and total comprehensive expense  –  –  –  (145)  (145)
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 568 568
Lapsed share options (489) (489)
Share options exercised 1 195 196
Dividend paid (8,214) (8,214)
Transactions with owners 1 195 (8,135) (7,939)
Profit and total comprehensive income 9,236 9,236
Balance as at 31 December 2012 316 40,407 611 17,137 58,471

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 year ended 31 December 2012

2012 2011
€000’s €000’s
Cash flows from operating activities  
Cash receipts from customers 56,881 61,289
Cash paid to suppliers and employees (47,686) (49,640)
Corporate taxes recovered 1,529 1,356
Corporate taxes paid (1,946) (1,627)
Net cash from operating activities 8,778 11,378
Cash flows from investing activities  
Interest received 2 5
Earn out relating to prior period acquisitions (2,863) (671)
Acquisition of property, plant and equipment (492) (395)
Acquisition of intangible assets (628) (1,210)
Net cash from investing activities (3,981) (2,271)
Cash flows from financing activities  
Proceeds from issue of share capital 196 420
Dividend paid (8,214) (6,225)
Net cash from financing activities (8,018) (5,805)
Net (decrease)/increase in cash and cash equivalents (3,221) 3,302
Cash and cash equivalents at beginning of the year 9,853 6,551
Cash and cash equivalents at end of the year 6,632 9,853



The notes are available in the PDF download.