Interim Results

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 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 OfficerTel: +44 (0) 20 7398 7702
Richard Cooper, Group Finance Directorwww.gvc-plc.com
Daniel Stewart & Company PlcTel: +44 (0) 20 7776 6550
David Hart / Paul Shackleton / Jamie Barklemwww.danielstewart.co.uk

Media enquiries:

Abchurch
Henry Harrison-Topham / Shabnam BashirTel: +44 (0) 20 7398 7702
henry.ht@abchurch-group.comwww.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’sH1-2012H1-2011% Change
CasinoClub14,12714,632(3.5%)
Betboo Sports1,16782042.3%
Betboo Gaming3,8822,98929.9%
Total B2C revenue19,17618,4414.0%
Total B2B revenue9,9321,387616.0%
Total Revenue29,10819,82846.8%

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 shareTotal paidCumulative paid
200840€12.54 million€12.5 million
200940€12.54 million€24.90 million
201060€18.68 million€43.58 million
201120€6.22 million€47.81 million
201226€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
Revenue229,10819,82844,340
Variable costs(12,073)(10,277)(23,790)
Contribution217,0359,55120,550
Operating costs3(10,421)(6,770)(18,551)
Operating profit6,6142,7811,999
Financial income12
Financial expense(1,102)(1,150)(2,387)
Profit/(loss) before tax5,5131,631(386)
Taxation charge4(328)(61)(236)
Profit/(loss) after taxation from continuing operations5,1851,570(622)
(Loss)/profit after taxation from discontinued operations5(922)834477
Profit/(loss) after tax4,2632,404(145)
  
Earnings per share
Basic 
Profit/(loss) from continuing operations1.1650.050(0.020)
(Loss)/profit from discontinued operations(0.029)0.0270.015
Total60.1360.077(0.005)
  
Diluted 
Profit/(loss) from continuing operations0.1630.050(0.020)
(Loss)/profit from discontinued operations(0.029)0.0260.015
Total60.1340.076(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
4,2632,404(145)

 

Consolidated Balance Sheet
As at 30 June 2012

  30 June 201230 June 201131 Dec 2011
  (Unaudited)(Unaudited)(Audited)
 Notes€000’s€000’s€000’s
Assets
Property, plant and equipment465229470
Intangible assets66,27867,94367,223
Deferred tax asset833883
Total non-current assets66,82668,21067,776
 
Receivables and prepayments714,1697,3118,983
Income taxes reclaimable,8132,1111,529
Other tax reclaimable 19
Cash and cash equivalents84,0145,7999,853
Total current assets19,99615,24020,365
 
Current liabilities 
Trade and other payables9(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 liabilities2,9356,3662,338
 
Long term liabilities 
Deferred consideration on Betboo(11,778)(12,375)(12,940)
 
Total net assets57,98362,20157,174
 
Capital and reserves 
Issued share capital316311315
Merger reserve40,40740,40740,407
Share premium610416
Retained earnings16,65021,48316,036
Total equity attributable to equity holders of the parent57,98362,20157,174

 

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 201131140,40721,96662,684
Share option charges225225
Dividend paid(3,112)(3,112)
Transactions with owners31140,40719,07959,797
Profit and total comprehensive income2,4042,404
Balance as at 30 June 201131140,40721,48362,201
 
Balance at 1 July 201131140,40721,48362,201
Share option charges215215
Share options exercised4416420
Dividend paid(3,113)(3,113)
Transactions with owners31540,40741618,58559,723
Loss and total comprehensive expense(2,549)(2,549)
Balance as at 31 December 201131540,40741616,03657,174
 
Balance at 1 January 201231540,40741616,03657,174
Share option charges315315
Lapsed share options(489)(489)
Share options exercised1194195
Dividend paid(3,475)(3,475)
Transactions with owners31640,40761012,38753,720
Loss and total comprehensive expense4,2634,263
Balance as at 30 June 201231640,40761016,65057,983

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 customers27,16427,96961,289
Cash paid to suppliers and employees(26,974)(24,579)(49,640)
Corporate taxes recovered1,356
Corporate taxes paid(22)(35)(1,627)
Net cash from operating activities1683,35511,378
 
Cash flows from investing activities 
Interest received125
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 capital195420
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 period9,8536,5516,551
Cash and cash equivalents at end of the period4,0145,7999,853

 

Notes

The notes are available in the PDF download.