Preliminary Results for year ended 31 December 2014, Trading Update for period from 1 January 2015 to 18 March 2015, Announcement of increased quarterly dividend and special dividend

Clarissa Elsner

GVC Holdings PLC (AIM:GVC), a leading online sports betting and gaming group, today announces its Preliminary Results for the year ended 31 December 2014 together with a recommended quarterly dividend and a recommended special dividend.

The full results are available to
download in PDF format.



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Dividend and returns to shareholders

  • Quarterly dividend raised from 12.5 €cents to 14.0 €cents per share. In addition we are proposing a further 1.5 €cents per share special dividend, giving a total of 15.5 €cents per share payable 6 May 2015
  • On a “declared” basis, this results in 2014 dividends of 55.5 €cents (2013: 48.5 €cents), an increase of 14.4% over 2013
  • Dividends paid in 2014 amounted to: 68% of Clean EBITDA and 79% of Clean Net Operating Cashflows
  • Total returns to shareholders since the completion of the acquisition of Sportingbet two years ago include a share price rise of over £2.00 and, including today´s dividend declaration, total dividends announced of €1.04 per share

2014 Financial highlights

  • Impressive revenue growth resulting from increased marketing and a strong World Cup performance
  • Wagers up 25% to €1,464 million (2013: €1,170 million)
  • Sports Gross Margin 9.8% (2013: 9.6%)
  • Net Gaming Revenue (“NGR”) up 32% to €225 million (2013: €170 million)
  • Contribution up 20% to €123 million (2013: €103 million)
  • Clean EBITDA up 28% to €49.2 million (2013: €38.3 million)
  • Profit Before Tax increased 217% to €41.3 million (2013: €13.0 million)

2015 Current Trading (1.1.15 to 18.3.15 “Q1”)

  • Deposits up 20% to €1.7million per day
  • Q1-2015 wagers €4,601k per day up 22% on Q1-2014 (€3,765k)
  • Q1-2015 sports gross margin was 8.9% against 10.0% in same period in 2014
  • Q1-2015 NGR €661k per day, up 18% on Q1-2014 (€559k)
  • Q1-2015 in-play revenues rose 19% to €300k per day (Q1-2014 €252k)


Kenneth Alexander, Chief Executive of GVC Holdings PLC, commenting on the results said:

“During 2014 GVC continued to grow NGR, up by 32% in the year; it achieved a 22% EBITDA margin; and distributed 68% of its Clean EBITDA and 79% of its Clean Net Operating Cash by way of dividends. This is an exceptional performance and our growth continues in the broad spread of markets in which we operate. We control our costs very tightly, have highly motivated employees who have financial incentives aligned to shareholders and we are in a strong position to be a consolidator in the industry. I am delighted to announce, yet again, a proposed increase in the quarterly dividend along with a special dividend which in total amounts to a year-on-year increase of 14% in the dividends declared so that shareholders will receive a total of 15.5 €cents in May 2015. GVC has never been in a stronger position and we look forward to 2015 and beyond with confidence.”

For further information:

GVC Holdings PLC
Kenneth Alexander, Chief Executive Tel: +44 (0) 1624 652 559
Richard Cooper, Group Finance Director
Cenkos Securities PLC Tel: +44 (0) 20 7397 8900
Mark Connelly, Stephen Keys

Media enquiries:

Bell Pottinger
David Rydell, James Newman Tel: +44 (0) 20 3772 2500


About GVC Holdings PLC
GVC Holdings PLC is a leading online sports betting and gaming group. It operates a number of brands across over 20 countries. The Group has over 700 employees and is headquartered in the Isle of Man and is licensed in Malta, Denmark, UK, South Africa, Alderney and the Dutch Caribbean.

Definitions used in the announcement

Clean EBITDA: Earnings before interest, taxation, depreciation, amortisation, impairment charges, share option charges and exceptional items.

Clean Net Operating Cashflow (‘CNOC’): Clean EBITDA less: capitalised development costs, net corporate taxes paid, capital expenditure, finance lease payments and net working capital movements, and exceptional items of a cash nature.

Sports Gross Margin:  Sports wagers less payouts.

Sports Gross Margin %: Sports Gross Margin divided by Sports wagers.

Net Gaming Revenue (‘NGR’):  Sports Gross Margin, plus net gaming stakes less payouts winnings, less customer bonuses.

Proforma Revenue: Being the underlying levels of the business as if the revenues of the B2B partner, East Pioneer Corporation B.V. were fully consolidated in the results of GVC for 2013.

Contribution: Gross Margin less commissions, revenue share and marketing costs.

Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised figures.

Further information on the Group is available at



I am pleased to announce that 2014 has been a record year with excellent results. Increased and effective marketing in all territories led to: growth in Net Gaming Revenue (NGR), up 32% on 2013 to €225 million; Clean EBITDA up 28% to €49.2 million and Profit Before Tax increasing 217% to €41.3 million.

The Group is now generating over €1.5 billion a year in sports wagers, and total revenues in the 77 days of first quarter of 2015 to 18 March 2015 exceeded €51 million, an average of more than €661k per day, up 18% on first quarter 2014 (€559k). The Group continues to be highly cash generative driving progress through organic growth and its proven track record of acquisitions. In the two years since the acquisition of Sportingbet on 19 March 2013, the Group has declared €63.5 million in dividends and its market capitalisation has risen 87% to close to €290 million.I am also pleased to announce a further 15.5 €cents per share dividend today, including a 1.5 €cents special dividend.  We look forward to presenting this for shareholder approval at the AGM. GVC is ranked as one of the highest yielding dividend payers on AIM.

Cash generation and its conversion into dividends continues to be central to the Group’s focus. With GVC’s strong performance for 2014 and the Board’s confidence in the outlook for the current financial year, the board therefore aims to set 14.0 €cents as its new quarterly dividend benchmark, and the 1.5 €cents per share special dividend in essence backdates this policy to January 2015. The record date for the dividend will be Friday 10 April. The “ex-div” date will be Thursday 9 April and the payment date will be 6 May 2015.

The Group’s strategy is to increase shareholder returns through a combination of: high levels of cash generation through organic growth and acquisitions, redistributing this by way of dividends to shareholders; increasing the markets in which the Group trades to diversify geographic risk; and improving the quality and mix of the Group’s earnings through strategic acquisitions and joint ventures.  GVC has a proven ability of generating value through successful integration of significant acquisitions and management is confident this will continue. In the next 12 months, the Group aims to continue to improve the product offering, particularly mobile; continue growing the many markets in which the Group operates; and devote more executive time to non-dilutive investment and accretive acquisition opportunities.

The Company has a highly focused and entrepreneurial culture, supported by an employee bonus structure aligned with dividend levels. Moving into 2015, GVC is in the strongest position it has ever been, and the Group’s wide spread of geographies and products position it at the forefront of many emerging and fast-growing markets which gives the Board confidence in the Group’s prospects in 2015 and beyond.

As mentioned above, current trading (Q1 2015 to 18 March 2015) is at record levels, with sports wagers averaging €4.6 million per day, a sports margin of 8.9 % and an average Net Gaming Revenue increasing by 18% to €661k per day compared to €559k in 2014, producing yet another quarter of growth. The Board is therefore confident of a successful 2015 as demonstrated by our proposed respective 14 €cents final and 1.5 €cents special dividends.

Lee Feldman
Chairman and Non-Executive Director
20 March 2015

* closing price on 19 March 2013 £2.49, closing price on 19 March 2015 £4.56.



In 2014 GVC delivered excellent operational and organic growth across the broad spread of markets in which the Company operates. The Board is pleased to report a series of significant increases over those achieved in 2013 across all key financial metrics as shown below.

Sports wagers 25% 1.5 billion 1.2 billion
Proforma Revenue 23% 225 million 182 million
NGR 32% 225 million 170 million
Contribution 20% 123 million 103 million
Clean EBITDA 28% 49.2 million 38.3 million
Operating profit 204% 42.9 million 14.1 million
Profit before tax 217% 41.3 million 13.0 million
Basic EPS 195% 66.4 cents 22.5 cents
Dividends declared 14% 55.5 cents 48.5 cents

Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised figures.

The Group has achieved a record level of Clean EBITDA for 2014 at €49.2 million which is 28% higher than the prior year, giving rise to Clean Net Operating Cash Flows of €42.6 million.

While the focus of 2013 was the integration of the transformational Sportingbet acquisition, 2014 was about identifying where GVC’s products and services could be improved, positioning the Group for the 2014 World Cup and using this as an event to secure organic growth.

The World Cup was a resounding success for the Group.  Not only was the four week event itself prosperous for the Group, particularly in the host country, Brazil, but the event led to a ‘step-change’ in the retention and acquisition of customers beyond the World Cup final in many of the territories in which the Group operates.

GVC invested approximately GVC’s €7 million into marketing around the World Cup and reaped an immediate benefit in profitability which, following its policy on dividend distribution, allowed the Group in September 2014 to declare a special dividend of 1.5 €cents, and thus returned €1.5 million of the World Cup net profits (approximately €2 million) back to shareholders, in line with its stated dividend policy.

In line with its strategy for 2014, GVC invested in its products. These investments which totaled €3.3 million (2013: €4k) have been capitalised as required under IAS 38 ‘Intangible Assets’.  Given that mobile is fast becoming the natural choice for players in many markets, continued investment in mobile is seen to be key to future success. In addition, GVC has broadened its games offering through third party integration. As stated previously, the ability to offer market leading in-play products is a significant milestone in unlocking additional organic growth opportunities. In addition, efforts in widening our payments capability and content to assist the expansion of our in-play market were key achievements as in-play represented 71% of Sports Gross Gaming Revenue (“GGR”) in Q4 2014.

In order to continue the growth momentum achieved in 2014, the strategic product investments GVC plan for 2015 will be around 50% higher than 2014. We believe that increased investment will not only help maintain GVC’s position in its current markets but also be accretive to revenue, as already evidenced by the growth in wagering and gaming revenues.

Average daily KPIs expressed in €000s             
      Prior quarter history
Q1-2015* Q1-2014 Year on year change Q2-2014 Q3-2014 Q4-2014
Sports wagers 4,601 3,765 +22% 3,907 3,995 4,366
Sports Margin % 8.9% 10.0%   9.8% 10.5% 9.0%
Sports GGR** %            
-In play 73% 67%   59% 61% 70%
-Mobile 35% 21%   24% 28% 34%
Sports NGR 306 279 +10% 296 330 302
Gaming NGR 355 280 +27% 306 325 345
Total NGR 661 559 +18% 602 655 647

* to18 March 2015
** wagers less payouts before bonuses

Sports margin percentages fluctuate daily depending on sports results, however GVC’s combination of diversified geographies and the success of its in-play product mitigate this volatility.  In 2014, the monthly gross margin ranged from a low of 8.3% to a high of 11.8% with an average of 9.8% (2013: 9.6%).

I am pleased to report that momentum has continued in Q1 – 2015 with sports wagers growing 22% to €4.6 million per day (Q1-2014 €3.8 million) and NGR growing 18% to €661k per day (Q1-2014 €559k).

GVC has also expanded its geographic diversification through its 15% stake in Scandinavian-facing start-up Betit. This business has had a strong start and its stake in this entity does allow the Group to acquire the balance in Q4-2017 for a minimum of €70 million providing that the profits of the entity are of sufficient scale to warrant the investment and would be immediately accretive to the Group.  The results of Betit are not consolidated in our financial statements however as its stake has been accounted for as an available for sale asset.

The Group now has over 700 co-workers. GVC is proud  that the bonus structure for all staff has a highly material relationship to dividend declarations and that this correlation to shareholders’ interests allows GVC to incentivise its staff in a transparent way, which facilitates the retention and recruitment of talented people.

Despite the underlying complexities of the Group, the business can be presented in a simple and transparent way as the table below illustrates:

    Year ended 31 December 2014
‘Formula’   €000s €000s Per day
Per day
a Wagers   1,463,523 4,010 4,601
b Margin %   9.8%    
c = a x b Gross margin   143,544    
d Sports bonus (33,345)
e = c + d Sports NGR   110,199    
f Gaming NGR across all brands   114,602    
g = e + f TOTAL NGR   224,801 616 661
h Variable cost % 45.2%
j = g x h Variable costs   (101,513)    
k = g + j CONTRIBUTION   123,288    
m Other expenditure   (74,126)    
n = k + m CLEAN EBITDA   49,162    
p = n / g CLEAN EBITDA %   21.9%    
q Capitalised development costs (3,343)      
r Net corporate taxes paid (508)      
s Working capital and other movements (742)      
t Capex and lease payments (1,951)      
u = sum q-t Total of additional operating cashflows   (6,544)    
v = n + u CLEAN NET OPERATING CASHFLOWS (‘CNOC’)   42,618    
w = v / g NOC %   19.0%    
y Dividends   (33,607)    
z = y / v Dividends as a % of CNOC   78.9%    

* to 18 March 2015.

Net non-operating cash out-flows in 2014 amounted to just under €10 million. These included: the investment cost in Betit (€3.6 million); earn-outs payable under the 2009 acquisition of Betboo (€4.3 million); the first of three tranches of the repayment of the loan from William Hill (€2.8 million), offset by €0.8 million received on the exercise of options.

GVC’s presence in frontier markets provide first mover advantage and exposure to high growth revenues. In addition increased regulation should allow GVC to achieve better co-operation with governments and therefore promotion of its products to an increased audience, so these developments should be positive for GVC and the industry in the long-term.

In the UK in particular the new tax-regime has increased headwinds for smaller and less diversified operators. The strength of GVC’s diversified operations coupled with strong cash generation and cash control place the Group in an enviable position in the industry, although GVC is not immune to movements in rates of foreign exchange. In 2015, it is the intention that GVC will continue to build on its exceptional record of integrating strategic acquisitions and the focus will be on increasing the diversification of our revenues by targeting accretive acquisition in regulated markets. However, should the right opportunity arise, we would also consider acquisition opportunities in unregulated markets.

I end my report on a very upbeat note – The Board believe the Group has never been in a stronger position than now; robust trading; diversified products and markets; highly motivated staff; and technological developments which will allow the Group to prosper.  For this reason I am delighted to be able to announce a further increase in the quarterly dividend to 14.0 €cents per share plus a final special dividend of 1.5 €cents per share.


Kenneth Alexander
Chief Executive
20 March 2015




  • The combination of the World Cup, higher sports margin and a full year of the acquired Sportingbet business led to NGR increasing by a third over 2013 to €225 million on wagers of €1.5 billion
  • Contribution margin remained buoyant at 55% despite a considerable investment in marketing in the Latin America region, before, during and after the World Cup
  • The clean EBITDA margin rose slightly over 2013 to 22% (€49.2 million) leading to a 28.4% increase for the year
  • Operating profit at €42.9 million was 26.9% higher than 2013 (normalised to exclude exceptional items) despite a 4.6% increase in depreciation and amortisation resulting from purchases of equipment and capitalisation of development software
  • Basic EPS rose to 66.4 €cents, up 195%
  • CNOC as defined below in table 1, was €42.6 million out of which the Group distributed €33.6 million in dividends equal to a distribution ratio of 79% (2013: €18.1 million, dividend of €15 million, distribution ratio 83%)

Table 1: Summary of key financial measures
Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised figures.

In €millions 2014 2013 Change % change
Sports wagers 1,463.5 1,169.5 294 25%
Sports margin 9.8% 9.6%    
Sports revenue 110.2 90.8 19.4 21%
Gaming revenue 114.6 91.3 23.3 26%
Total proforma revenue 224.8 182.1 42.7 23%
Total NGR 224.8 170.0 54.8 32%
Contribution 123.3 102.6 20.7 20%
Contribution divided by PFR = 55% 56%
Expenditure (74.1) (64.3) (9.8) (15)%
Clean EBITDA 49.2 38.3 10.9 28%
Clean EBITDA/proforma revenue 22% 21%
Depreciation and amortisation (3.9) (3.7) (0.2) (5)%
Share option charges (0.8) (0.7) (0.1)
Betit valuation charge (1.6) (1.6)
Finance charges (1.6) (1.1) (0.5) (45)%
PBT and exceptional items 41.3 32.8 8.5 26%
Exceptional items (19.7) 19.7
Taxation (0.7) (0.7)
Profit after taxation 40.5 12.3 28.2 230%
Basic, non dilutive EPS in €cents 66.4 22.5 195%
Dividend paid in the year / share in €cents 55.0 28.0 96%
Dividends declared for the year / share in €cents 55.5 48.5 14%
Clean net operating cashflows 42.6 18.1   135%
Dividends paid (33.6) (15.0) 124%
Cash and cash in transit 40.0 37.1 2.9 8%
– Cash and cash equivalents 17.8 18.8    
– Balances with payment processors 22.2 18.3    
Customer liabilities (13.0) (13.3) 0.3 2%
Net current (liabilities)/assets (0.9) 0.3 (1.2) (300)%
Non-current liabilities (8.8) (14.0)
– Interest bearing loans and borrowings (0.4) (1.2)    
– Non-interest bearing loan and borrowings (2.8) (5.2)    
– Deferred consideration on Betboo (3.9) (7.6)    
– Betit valuation liability (1.7)    
Shareholder funds 149.5 141.1    
Number of shares in issue 61,276,480 60,906,760
Number of shares under option 6,806,947 3,801,667

Sports wagers grew 25% to €1,463.5 million (2013: €1,169.5 million).  They averaged €4.0 million per day and rose to €4.4 million per day in Q4 (Q4-2013: €3.9 million).

Sports margins differ widely across the multiple markets in which GVC operates as a consequence of the maturity of each market and the sports followed within them.  A sports margin of 9.8% (2013: 9.6%) was achieved despite the industry-wide backdrop of ‘punter-friendly’ results in Q4-2014.

Sports NGR represents the sports gross margin less free bets and promotional bonuses.

Customers have a variety of gaming opportunities ranging from Casino, through to Poker and, in certain markets, Bingo.  Sports and gaming revenues are relatively equal now, and in 2014 Sports NGR represented 49% of proforma revenue and Gaming NGR represented 51%.

2014 saw a 24% increase in Proforma Revenues over 2013. In the prior year accounting standards required the third party contract with East Pioneer Corporation BV to be consolidated from 19 March 2013 whereas prior to this the results were not consolidated.  To report a like-for-like figure to 2014, the Group uses Proforma Revenue as a measure.  The difference between Proforma Revenue and NGR in 2014 was €nil (2013: €20 million).

Table 2: Average revenues per day per quarter from 1 January 2014 until 18 March 2015

€000’s *Q1-2015 Q1-2014 Q2-2014 Q3-2014 Q4-2014
Sports wagers per day 4,601 3,765 3,907 3,995 4,366
Sports margin % 8.9% 10.0% 9.8% 10.5% 9.0%
NGR per day 661 559 602 655 647

* to 18 March 2015.

Average sports wagers per day have risen by 22% to €4.6 million in Q1-2015 compared to Q1-2014 (€3.8 million). NGR per day has increased by 18% over the same period.

Contribution is GVC’s measure of revenues less cost of sales, and costs with a high correlation to revenues, such as partner shares, affiliate commissions and other marketing expenditure. Cost of sales includes payment processing charges, software royalties and local betting taxes, and value added taxes where the Group has a manifest liability.

Contribution increased by 20% to €123.3 million, and a contribution margin percentage of 55% was achieved. (2013: Proforma contribution margin 56%).

In the context of a growing business, absolute costs have increased from €64.3 million to €74.1 million, but cost ratios have improved to 60% down from 63%. Staff cost ratios remained level, despite one third of staff costs (2013: 20%) being performance related – chiefly based on Group dividend payments. This should be seen in the context of €33.6 million of dividends paid in 2014, an increase of 124% on the €15 million paid in 2013.

The Group aims to achieve a clean EBITDA margin of not less than 20%.

Clean EBITDA rose 28.5% to €49.2 million (2013: 38.3 million), and a 22% margin on NGR was achieved, slightly higher than in 2013.


Depreciation of Property, Plant and Equipment rose in the year to €0.7 million (2013: €0.5 million) on total acquisitions of €0.9 million.

Amortisation of Intangible Assets amounted to €3.2 million (2013: €3.2 million) arising from either assets acquired through the Sportingbet acquisition or through the acquisition of additional software and software development costs required to run the Sportsbook platform.

Finance charges included an imputed debit (as per IAS 39) on the interest free loan from William Hill of €0.2 million.  A rate of 4% has been used for the imputation. Other finance charges related to €0.7 million (2013: €1.7 million) on the unwinding of the discount on the deferred consideration arising from the 2009 acquisition of Betboo, €0.6 million on the retranslation of the GBP denominated William Hill loan and leased software assets and €67k (2013: €43k) in respect of finance charges on leased software assets.

Share option charges amounted to €0.7 million (2013: €0.7 million).  The charge for 2014 represented the final accounting charges for the share options awarded in in 2010 and 2012, in addition to the charges arising from the share options awarded and announced on 2 June 2014. The Group has only 5.6 million share options granted to directors and officers (9.2% of the existing issued share capital although its permitted allocation is 16.8% of the issued share capital (page 354 of the January 2013 prospectus)). Of the charge in the current year, €0.5 million relates to equity settled options and €0.2 million relates to cash settled options with a corresponding liability recognised in the consolidated balance sheet.

Betit put option:The effect of valuing the Betit put optionresulted ina €1.6 million charge in accordance with IAS 39 ‘Financial Instruments: Recognition and Measurement’.



Table 3: Earnings per share

Basic EPS: 66.4 €cents (2013: 22.5 €cents)
Diluted EPS: 61.4 €cents (2013: 22.0 €cents)

The diluted EPS is affected by two components: grants of share options granted to employees and directors, and warrants granted to third parties pursuant to underwriting arrangements entered into in contemplation of the Sportingbet acquisition.


Table 4: History of dividends paid and declared since 1 July 2013

Declaration date Fiscal year 2013 Fiscal year
Paid 2014 Payable 2015
€cents €cents €cents €cents
1 July 2013 10.5
25 September 2013 10.5
9 January 2014 11.5 11.5
9 April 2014 16.0 16.0
15 July 2014 12.5 12.5
22 September 2014 15 15
12 January 2015 12.5 12.5
20 March 2015 15.5 15.5
48.5 55.5 55.0 28.0

As previously announced, the Group is committed to paying dividends on a quarterly basis and paying a cash amount broadly equivalent to 75% of its Clean Net Operating Cashflows, taking into account an assessment of its working capital needs.  The actual percentages were 79% in 2014 and 72% in 2013.  Details of the Clean Net Operating Cashflow calculation are included in table 6.

Should the relevant resolutions be approved by shareholders, the final and special dividends totaling 15.5 €cents per share will be payable on 6 May 2015 to shareholders on the register at the close of business on Friday 10 April 2015.  The shares will go ex-dividend on Thursday 9 April 2015.


The net position is obviously affected by the timing of the dividend payments, which totaled €33.6 million during 2014 (2013: €15.0 million).  Such is the strategy of the Group towards its dividend payments that GVC aims to keep its Net Current Assets relatively equal to its Net Current Liabilities, but ensuring at all times that its balances with customers are covered and meet regulatory requirements.

Table 5: Liquidity position as at 31 December 2014

€000’s €000’s
Restricted cash* 3,506
Add: cash in transit with payment processors 22,222
Total 25,728
Less: Customer balances (13,036)
Surplus over customer liabilities 12,692
Free cash 14,323
Trade payables (12,166)
Loan Instalments paid in 2014 to providers of lease finance (1,362)
Loan instalment payable to William Hill in December 2014 (2,933)
Less imputed interest on William Hill loan 198
Corporate and other taxes reclaimable less payable (1,089)
Other tax liabilities (1,338)
Accruals, prepayments and other net current assets (9,273)
Net current liabilities (948)

* Restricted cash refers to balances at banks where the cash has to be ring-fenced for regulatory reasons.

The Group’s cashflow position for 2014 is summarised below:

Table 6: Summarised cashflow

  2014   2013
€000s €000s €000s €000s
Clean EBITDA   49,162   38,299
Exceptional items (19,711)
Capitalised software development (3,343) (4)
Net payment of corporate taxes (508) (437)
Equipment purchased and asset lease repayments (1,951) (37)
Working capital and other movements (742) 2,719*
Dividends paid   (33,607)   (14,979)
Dividends as a % of CNOC 79% 72%
– Betboo earn-outs (4,339) (6,378)
– Investment in Betit (3,649)
– Proceeds from exercise of share options 854 294
– Capital contribution from William Hill 42,562
– William Hill loan (instalment)/draw-down (2,856)   8,020
– Cash acquired from Sportingbet   22,230
– Bank loans to Sportingbet repaid at acquisition   (31,384)
– Deficit in other net current assets of Sportingbet at acquisition* (29,018)
(2,856) 12,410
(979) 12,176
Cash and cash equivalents at the beginning of the year 18,808 6,632
Cash and cash equivalents at the end of the year   17,829   18,808
Amount, in €cents per share   29.1   30.7

*adjusted for the customer liabilities of €11.4 million acquired at acquisition.

These consist of four principal items; the deferred consideration on 2009 acquisition of Betboo; the interest-free loan from William Hill; finances leases; and the Betit put option.

a.) Deferred consideration on Betboo

Under accounting rules, this item is a combination of gross amounts payable, €4.0 million at 31 December 2014, and which can vary, but are subject to a cap, and the “unwinding of the discount”, €0.1 million and chargeable to the Income Statement.

Table 7: Analysis of Betboo deferred consideration

€ millions Due to Founders Acquisition costs Sub total Accounting discount Total
Arising on acquisition 21.4 0.3 21.7 (8.6) 13.1
Charge to income statement

  • prior to 2013
  • during 2013
  • due in 2014
  • due in future periods

Payments made

  • on acquisition
  • up to 31.12.2012
  • During 2013


  • During 2014
4.3 4.3 4.3
Payments due

  • In 2015
  • In 2016


Lifetime balances 21.4 0.3 21.7 (8.6) 13.1
Balances due at 31.12.2014 4.0 4.0 (0.1) 3.9


b.) Interest free loan from William Hill

As part of the Sportingbet acquisition there was a loan facility from William Hill of up to £15 million.  As at 1 January 2014 the balance stood at £6.9 million of which £2.3 million was repaid in the year.  The balance of £4.6 million was revalued to €5.9 million using the exchange rate prevailing at 31 December 2014 of £1: €1.28.  £2.3 million (€2.9 million) is repayable in less than one year and thus accounted for as a current liability and the balance is shown on the balance sheet as a non-current liability.  It is repayable in one further instalment due on 30 June 2016.  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. Whilst the loan is interest free, IAS 39 requires the Group to account for imputed interest calculated at 4%.

Table 8: William Hill loan recognised in non-current liabilities

Gross amount of loan payable after one year 2,934
Imputed interest (157)
Amount recognised in non-current liabilities 2,777

c.) Finance leases

This represents the finance leases taken out for the purchase of software and similar underpinning the Sportsbook platform.

Table 9: Analysis of finance lease liabilities

Property, plant and equipment capitalised 644 543
Software capitalised 1,133 827
1,777 1,370
Hardware and software support to be expensed 951 753
Total amount financed 2,728 2,123
Finance charges 110 43
Payments made (1,149)
Total amounts repayable to provider of lease finance 1,689 2,166
Payable in 2015 (included in current liabilities) 1,362 945
Payable in future periods (included in non-current liabilities) 327 1,221
1,689 2,166

As identified in a, b, and c above, the Group has additional cash out flows.  The anticipated amounts (plus those actually incurred in 2013 and 2014) are shown in table 10 below:

Table 10: Liability cash outflows

In €000’s 2013 2014 2015 2016
a.) Betboo deferred consideration 6,378 4,339 2,400 1,617
b.) William Hill loan repayment* 2,856 2,933 2,934
c.) Existing finance leases 1,149 1,362 327
6,378 8,344 6,695 4,878
* in underlying GBP 2,287 2,287 2,287

d.) Betit

In accordance with the requirements of IAS 39, the options embedded in the Betit contract are required to be measured at fair value and recognised in the balance sheet.  Based on the valuation at inception and at 31 December 2014, a net liability has been recognised of €1.7 million. The options are potentially exercisable, subject to certain conditions, in 2017 and are discussed in more detail below.

A bridge between the 2013 and 2014 balance sheets is shown below in table 11:

Table 11: Balance Sheet bridge

At 1 January 2014 141,096
Profit before tax 41,291
Tax charge (728)
Share based payment charges on equity settled options 552
Share options exercised 854
Dividends paid (33,607)
At 31 December 2014   149,458

During the year a total of 369,720 shares were issued.  26,667 shares were issued on 15 May 2014 for a consideration of £1.26 per share as a result of an exercise of Director’s share options.  343,053 shares were issued on 1 July 2014 for a price of £1.89 per share as a result of an exercise of third party share options issued as part of the Sportingbet transaction in 2013.

On 14 May 2014, the Group announced that it had acquired a 15% stake in Betit Holdings Limited (‘BHL’), a start-up gaming venture focusing on the Scandinavian markets headed up by a team of Scandinavian gaming market veterans from Betit Securities Limited (‘BSL’).  The stake was for €3.5 million, which, together with professional fees incurred at the time, amounted to a total upfront cost of €3.6 million.  The investment was approved by the Maltese Gaming Authority (formerly known as the LGA) on 29 May 2014.

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 MGA clearance and compliance with the AIM Rules.  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 prevailing multiple levels would lead to the transaction being accretive for shareholders.

If the Group decides not to exercise its call option BSL may require the Group to acquire its shares in BHL 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 raising the necessary financing.  Should the Group not raise the required financing, BSL may acquire the Group’s shares in BHL for nominal consideration.

Both of the above options are required to be carried at fair value in accordance with IAS 39. Commercially the put option can effectively be mitigated should the Company at that time not wish to acquire the full asset, by handing back the initial investment to BSL, yet this cannot be reflected in the fair value calculation although the fair value has been discounted to reflect this.  Accordingly, the put valuation results in a modest non-cash impairment.  The options are required to be revalued at each reporting date.


During the year, the charge to Operating Costs within the Income Statement from realised and unrealised foreign exchange was €0.3 million. In addition the William Hill loan is denominated in Sterling (£4.6 million) and incurred an unrealised loss of €0.5 million included within Financial Expenses. Many non-Euro currencies are handled by the Group’s payment processing intermediaries up-front.

Additionally, the Net Current Assets of the Group are revalued each month at month-end exchange rates and this also results in exchange gains and losses.  The principal revaluations are for customer liabilities, although these are now largely currency matched to produce a natural hedge.

Future trading updates and financial calendar

It is anticipated that GVC will make further announcements on or around the following dates:
W/c 23 March 2015 – publication of Report and Accounts on the Company’s website,
7 April 2015 – Posting of R&As and Notice of AGM
5 May 2015 – AGM Trading Update, Result of AGM
6 May 2015 – Payment of Final Dividend
W/c 6 July 2015 – H1 Trading Update and announcement of dividend
W/c 18 August 2014 – Payment of quarterly dividend
W/c 21 September 2015 – Interim Results


Richard Cooper
Group Finance Director
20 March 2015

For the year ended 31 December 2014

      2014   2013
  Notes   €000’s   €000’s
Net Gaming Revenue 2   224,801    169,959
Cost of sales   (101,513)    (67,328)
Contribution 2    123,288    102,631
Operating costs (as below) 3   (80,367)    (88,513)
Other operating costs 3   (74,126)    (64,332)
Share option charges 3   (736)    (730)
Exceptional items 3      (19,711)
Depreciation and amortisation 3   (3,912)    (3,740)
Effect of valuing the Betit put option   (1,593)  
Operating profit   42,921    14,118
Financial income   16    627
Financial expense   (1,646)    (1,731)
Profit before tax   41,291    13,014
Taxation expense   (728)    (711)
Profit after tax   40,563    12,303
Earnings per share      
Basic 4   0.664   0.225
Diluted 4   0.614   0.220

for the year ended 31 December 2014

  2014   2013
  €000’s   €000’s
Profit for the year 40,563 12,303
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Exchange differences on translation of foreign operations 359
Total comprehensive income for the year 40,563 12,662

at 31 December 2014

  2014   2013
  €000’s   €000’s
Property, plant and equipment 1,147    918
Intangible assets 154,260    153,850
Available for sale financial asset 3,801  
Deferred tax asset    –
Total non-current assets 159,208    154,768
Trade and other receivables 27,605    23,579
Income taxes reclaimable 3,925    1,877
Other tax reclaimable 139    306
Cash and cash equivalents 17,829    18,808
Total current assets 49,498    44,570
Current liabilities    
Trade and other payables (26,961)    (20,630)
Balances with customers (13,036)   (13,298)
Interest bearing loans and borrowings (1,362)   (945)
Non-interest bearing loan and borrowings (2,735)   (2,514)
Income taxes payable (5,014)    (2,722)
Other taxation payable (1,338)    (4,182)
Total current liabilities (50,446)    (44,291)
Current assets less current liabilities (948)    279
Non-current liabilities    
Interest bearing loans and borrowings (327)    (1,221)
Non-interest bearing loan and borrowings (2,777)    (5,148)
Betit option liability (1,745)  
Deferred consideration on Betboo (3,953)    (7,582)
Total non-current liabilities (8,802)   (13,951)
Total net assets 149,458   141,096
Capital and reserves    
Issued share capital 613    609
Merger reserve 40,407    40,407
Share premium 85,380    84,530
Translation reserve 359   359
Retained earnings 22,699    15,191
Total equity attributable to equity holders of the parent 149,458    141,096


For the year ended 31 December 2014

Attributable to equity holders of the parent company:

Merger Reserve Share
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  –  736  736
Share options cancelled  (6)  (6)
Share options exercised  3  291  294
Issue of share capital for the acquisition of Sportingbet PLC  290  83,628  83,918
Dividend paid  (14,979)  (14,979)
Transactions with owners  293  83,919  (14,249)  69,963
Profit for the year  12,303  12,303
Other comprehensive income for the year 359 359
Total comprehensive income for the year 359 12,303 12,662
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** 552 552
Share options exercised 4 850 854
Dividend paid (33,607) (33,607)
Transactions with owners 4 850 (33,055) (32,201)
Profit for the year 40,563 40,563
Other comprehensive income for the year
Total comprehensive income for the year 40,563 40,563
Balance as at 31 December 2014 613 40,407 85,380 359 22,699 149,458

* the cumulative share option reserve included within retained earnings at 31 December 2014 amounted to €5,940,000.
**total share option charge per the consolidated income statement amounted to €736,000 the difference being the cash settled share option expense of €184,000 which is not taken directly to retained earnings.

All reserves of the Company are distributable. 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.

For the year ended 31 December 2014

  2014   2013
€000’s   €000’s
Cash flows from operating activities  
Cash receipts from customers 221,048  173,885
Cash paid to suppliers and employees (172,668)  (181,592)
Corporate taxes recovered 1,256  1,143
Corporate taxes paid (1,740)  (1,580)
Net cash from operating activities 47,896  (8,144)
Cash flows from investing activities  
Interest received  16  33
Acquisition earn-out payments (Betboo) (4,339)  (6,378)
Acquisition (net of cash acquired)  64,755
Investment in Betit (3,649)
Acquisition of property, plant and equipment (802)  (37)
Capitalised development costs (3,343)  (4)
Net cash from investing activities (12,117) 58,369
Cash flows from financing activities  
Non-interest bearing loan (from William Hill) (2,856)  8,020
Proceeds from issue of share capital 854  294
Repayment of borrowings (1,149)  (31,384)
Dividend paid (33,607)  (14,979)
Net cash from financing activities (36,758)  (38,049)
Net (decrease)/increase in cash and cash equivalents          (979)    12,176
Cash and cash equivalents at beginning of the year 18,808  6,632
Cash and cash equivalents at end of the year 17,829    18,808



The notes are available in the PDF download.