Interim Results and Q3 Trading Update

Clarissa Elsner

GVC Holdings PLC (AIM:GVC), the multinational sports betting and gaming group, today announces its Interim Results for the six-months ended 30 June 2014 together with its quarterly dividend and a special dividend.

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The full results are available to
download in PDF format.

 

Presentation

View the slides of the Interim Results Presentation

 

Dividend

  • Quarterly dividend of 12.5 €cents (2013: 10.5 €cents)
  • Additional special dividend of 2.5 €cents (2013: nil)
  • Total quarterly dividend is 15 €cents, up 43% on same quarter last year (2013: 10.5 €cents)
  • Cumulative dividends payable in calendar year 2014, 55 €cents. Total up 96% over prior year (2013: 28 €cents)

Financial highlights

  • Wagers up 38% to €694 million (H1-2013: €502 million)
  • Sports margin 9.9% (H1-2013: 10.3%)
  • Net Gaming Revenue (“NGR”) up 44% to €105 million (H1-2013: €73 million)
  • Contribution up 25% to €57 million (H1-2013: €46 million)
  • Clean EBITDA up 26% to €22.4 million (H1-2013: €17.8 million)
  • Strong start to Q3-2014: trading per day, at €628k is 20% higher than Q3-2013 (€523k)

Operational metrics

  • A leading operator of in-play markets with over 4,000 concurrent markets
  • A market leading sports-trading team generating 10% margin
  • Current number of active customers up 22% on prior year
  • New depositing customers, 56k in Q3-2014,up 30% on Q3-2013
  • Deposits up 22% on Q3-2013
  • Enhancement of mobile product and sportsbook planned for 2015
  • In-play generating 70% of sports gross margin
  • Mobile generating 22% of sportsbook revenues

Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings plc, said: “GVC operates in numerous markets in both casino and sports betting and as a group is well diversified and highly cash generative. GVC is now in a very strong position with exciting growth prospects as we continue to develop our market leading in-house sportsbook and mobile platform. The Group remains highly confident for the outcome of this current financial year and this confidence is reflected in the enhanced dividend that we have announced today.”

 

For further information:

GVC Holdings PLC
Kenneth Alexander, Chief ExecutiveTel: +44 (0) 1624 652 559
Richard Cooper, Group Finance Directorwww.gvc-plc.com
Daniel Stewart & Company PlcTel: +44 (0) 20 7776 6550
Paul Shackleton / Mark Treharnewww.danielstewart.co.uk

Media enquiries:

Abchurch
Henry Harrison-Topham / Jamie HooperTel: +44 (0) 20 7398 7702
henry.ht@abchurch-group.comwww.abchurch-group.com

 

About GVC Holdings PLC

GVC Holdings PLC is a multinational sports betting and gaming group. Its core brands are CasinoClub, Betboo and Sportingbet. The Group has over 600 employees and is headquartered in the Isle of Man and is licensed in Malta, Germany, Denmark, UK, South Africa, Italy, Alderney and the Dutch Caribbean.

Further information on the Group is available at www.gvc-plc.com

 

Chief Executive’s Report

The Group has had an excellent 2014 so far, with a very strong performance during the World Cup, which has built on the success of the complete restructuring of the Sportingbet business that GVC acquired in 2013.

The Board is delighted to announce today a second special dividend in this year, this time allowing our shareholders to participate in GVC’s successful World Cup performance during which, customer acquisition accelerated, sports margins were strong and systems proved very robust.

During 2014 the Group has declared a dividend of 11.5 €cents per share (“€cps”) in January 2014, 16.0 (12.5+3.5) €cps in April 2014, 12.5 €cps in July 2014 and now 15 €cps (12.5+2.5) in September 2014, bringing the total dividend declarations to 55 €cps for the year to date, and being 96% higher than in 2013 despite an additional 30 million shares in issue.

GVC’s commitment to highly cash generative markets does not however come at the expense of investing in the future. GVC will continue to invest and develop its in-house sportsbook and mobile technology to maximise the Group’s growth prospects and generate the cash crucial to its aggressive dividend policy.

The Group’s Latam business continues to grow impressively and remains the market leader in Latam for sports betting.  Furthermore, the Group demonstrated its commitment to widening its geographical offering by the 15% investment in the Scandinavian start-up venture, Betit, who in the short space of time since its launch has captured meaningful market share in the Scandinavian online casino market across its brands.

GVC’s relentless focus on the customer journey is applied across all markets and the Group’s customer facing teams are incentivised to deliver a positive experience to our customers.

KPI summary
€000’s
Sports wagers
per day
Sports NGR
per day
Gaming NGR
per day
Total NGR
per day
Q1-20131,894209185394
Q2-20133,637275273548
H1-20132,771242229472
Q3-20133,335267256523
Q4-20133,926244285529
H2-20133,631255271526
Q1-20143,765278281559
Q2-20143,907296306602
H1-20143,836287293580
YoY increase38.4%19%27%23%
Q3-2014*3,894325303628
YoY increase17%22%18%20%

* to midnight Thursday 18 September 2014
¶ based on pro-forma revenues

Both sports wagers and NGR per day have increased quarter on quarter and NGR per day is now averaging €628k.

The relative mix between sports NGR and other revenues has remained relatively static at just under 50% (H1-2013: 51%; H2-2013: 49%), but in-play now amounts to 70% of wagering, and mobile was around 22% up from a low base of 8% in H1-2013 before GVC started investing in it.

Operationally, current trading across all measures is at least 20% higher than in 2013:

  • Deposit values were up 22% in Q3-2013;
  • Active and new depositing customers were up 30% on the same period last year.

Platform ability

Under GVC’s tenure, the Sportsbook platform has been developed to give significantly greater latency, response time and volume capability. In the last quarter the uptime has been 99.999%, handling over 4,000 concurrent events, more than 100% higher than the same period in 2013. The number of sports bets placed per day during Q2-2014 averaged 212,000 up 27% on Q2-2013 which averaged 167,000.

Dividend

The quarterly and special dividend totalling 15 €cent per share will be payable on Monday 3 November 2014 to shareholders on the register (“the record date”) on Friday 10 October 2014. The shares will go “ex-dividend” on Thursday 9 October 2014.

Outlook

The Board remains highly confident for 2014 and this confidence is expressed in the enhanced dividend declared today. We look forward to providing further trading updates in December 2014 and January 2015.

 

Kenneth Alexander
Chief Executive
22 September 2014

 

Group Finance Director’s Report

I start my report by summarising the business model of the Group and expressing this into “figures per day.” This accords with our preferred KPI disclosures. Section 2 of my 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 H1-2014
(Subject to roundings)

€000’sTotal Per Day
H1-2014
Wagers per day694,3203,836
Sports margin %9.9%
Gross margin68,744380
Add-on revenue less all bonuses21,187116
Sportsbook revenue89,931496
CasinoClub revenue15,13584
Total revenue105,066580
EBITDA margin21.3%
EBITDA22,355
Non-P&L outflows*(4,040)
Net cashflow available for other uses18,315
Dividends paid in period16,755
% of available cashflow distributed91%

*the principal component of this were funds paid in pursuance of the Betboo earn-out

SECTION 2: Summary of financial disclosures

(In € millions)H1-2014 H1-2013
INCOME STATEMENT EXTRACTS   
Sports wagers694.3501.5
Pro-forma revenue105.185.3
Total revenue105.173.2
Contribution56.745.6
Other operating costs(34.3)(27.8)
Clean EBITDA22.417.8
Non-cash operating costs(1.9)(2.0)
Exceptional items(13.8)
Financial income0.00.8
Financial expense(0.9)(0.9)
Profit before tax19.61.9
    
Key ratios   
Contribution margin (contribution/pro-forma revenue)54.0% 53.4%
Clean EBITDA margin (clean EBITDA/proforma revenue)21.3% 20.9%
    
BALANCE SHEET EXTRACTS30.6.14 30.6.13
Non-current assets156.9152.5
Net current assets before loans and leases1.47.6
Loan from William Hill(8.1)(7.3)
Finance leases(1.7)
Betboo deferred consideration(4.8)(10.6)
Total net assets143.7142.2
CASHFLOW EXTRACTSH1-2014 H1-2013
Clean EBITDA22.417.8
Exceptional items, contribution and costs relating to the acquisition of Sportingbet(13.8)
Contribution from William Hill to the acquisition of Sportingbet42.6
Loan from William Hill8.0
Working capital movements including liabilities pursuant to the acquisition(0.8)(28.3)
Betboo earn-out payments(3.1)(2.5)
Purchase of non-current assets(0.2)
Trade investment in Betit (including costs)(3.6)
Finance lease payments(0.5)
Net corporate tax payments(0.2)(0.1)
Share option subscriptions0.2
Cash at start of period18.86.6
Dividends(16.8)(2.2)
Cash at end of period16.028.3

Group revenues at €105.1 million were 43.6% ahead of the same period last year.

Contribution at €56.7 million rose by 24.5%. The contribution margin was 54%. This reflects the investments made ahead of and during the World Cup, particularly in Latin America where the Group raised marketing expenditure by €4.5 million in this one region alone.

Clean EBITDA rose €4.6 million, 25.6% or 7.5 €cents per share to €22.4 million.

Non-cash items of operating expenditure (share option charges, depreciation and amortisation) fell to €1.9 million from €2.0 million.

Exceptional items H1-2014: €zero. H1-2013 reflected restructuring costs following the Sportingbet acquisition.

Financial income. The credit in H1-2013 is attributable to a one-off imputed interest credit on the interest-free loan from William Hill, drawn-down in H1-2013. It is a non-cash item.

Net current assets before betting tax accruals and loan instruments, have fallen due a higher value of dividend paid during the period (€16.8 million in H1-2014 compared to €2.2 million in H1-2013).

Betting tax accruals have naturally increased substantially as GVC is paying betting taxes in six markets, where local taxes are levied.

William Hill loan. This has remained static in underlying terms, but a strengthening in GBP since 30 June 2014 (1.25, up from 1.17 at 30 June 2013) has increased the liability as measured in Euros.

Cashflow. The key points on the Group’s cashflow are:

  • 15% stake in Betit, €3.5 million plus associated costs
  • A modest amount repayable to finance lease houses (€0.5 million; H1-2012 €nil) in furtherance to acquisitions of computer hardware for the Group’s growing data centers.
  • Continuation of working capital absorption as the Group grows.

Share capital

The Group issued 216,513 shares to employees and consultants between 30 June 2013 and 30 June 2014. On 1 July 2014, a further 343,053 shares were issued to third parties following their underwriting commitments pursuant to the Sportingbet acquisition in 2013.

As announced on 2 June 2014, the Company granted a total of 3,100,000 nil cost share options; 2,100,000 to directors and 1,000,000 to senior executives.  The awards will vest in full and become exercisable on the share price being equal to or exceeding £6.00 per share for a continuous period of 90 calendar days at any time from 30 May 2014.

During H1-2014, 26,667 share options at an exercise price of €1.26 were exercised and the resulting cash receipt was translated into Euros as €41,187 which when rounded is reported in the above analysis as €0.0k.

 

Richard Cooper
Group Finance Director
22 September 2014

 

Consolidated Income Statement
for the six months ended 30 June 2014

Six months
ended
30 June
2014
Six months
ended
30 June
2013*
Year
ended
31 Dec
2013*
(Unaudited)(Unaudited)(Audited)
Notes€000’s€000’s€000’s
Revenue2105,06673,182169,959
Variable costs(48,344)(27,632)(67,328)
Contribution256,72245,550102,631
Operating costs3(36,263)(43,542)(88,513)
 
Analysed as: 
Other operating costs3(34,367)(27,750)(64,332)
Share based payments(124)(224)(730)
Exceptional items3.1(13,797)(19,711)
Depreciation and amortisation(1,772)(1,771)(3,740)
  
Operating profit20,4592,00814,118
Financial income8785813
Financial expense(855)(934)(1,917)
Profit before tax19,6121,85913,014
Taxation charge5(447)(316)(711)
Profit after tax19,1651,54312,303
  
Earnings per share
Basic 
Total60.3150.0320.225
  
Diluted 
Total60.2910.0310.220

*restated – see note 13 for details

 

Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2014

Six months
ended
30 June
2014
Six months
ended
30 June
2013
Year
ended
31 Dec
2013
(Unaudited)(Unaudited)(Audited)
€000’s€000’s€000’s
Profit for the period19,1651,54312,303
Items that may be reclassified subsequently to profit or loss: 
Exchange differences on translation of foreign operations123359
Profit and total comprehensive income for the period19,1651,66612,662

 

Consolidated Balance Sheet
As at 30 June 2014

  30 June
2014
30 June
2013*
31 Dec
2013
  (Unaudited)(Unaudited)(Audited)
 Notes€000’s€000’s€000’s
Assets
Property, plant and equipment864649918
Intangible assets152,360151,874153,850
Investments123,649
Total non-current assets156,873152,523154,768
 
Receivables and prepayments724,23723,52723,579
Income taxes reclaimable3,8811,5821,877
Other tax reclaimable201306
Cash and cash equivalents815,99528,29818,808
Total current assets44,31453,40744,570
 
Current liabilities 
Trade and other payables9(26,225)(28,968)(24,089)
Balances with customers(13,060)(13,807)(13,298)
Income taxes payable(4,946)(2,351)(2,722)
Other taxation liabilities(2,344)(671)(4,182)
Total current liabilities(46,575)(45,797)(44,291)
 
Current assets less current liabilities(2,261)7,610279
 
Long term liabilities 
Interest bearing loans and borrowings(747)(1,221)
Non-interest bearing loan10(5,352)(7,306)(5,148)
Deferred consideration on Betboo(4,842)(10,601)(7,582)
 
Total net assets143,671142,226141,096
 
Capital and reserves 
Issued share capital11609607609
Merger reserve40,40740,40740,407
Share premium84,57184,39784,530
Translation reserve359123359
Retained earnings17,72516,69215,191
Total equity attributable to equity
holders of the parent
143,671142,226141,096

*restated – see note 13 for details

 

Consolidated Statement of Changes in Equity
for the six months ended 30 June 2014

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 201331640,40761117,13758,471
 
Share option charges230230
Lapsed share options(6)(6)
Share options exercised1158159
Issue of share capital for the acquisition of Sportingbet PLC29083,62883,918
Dividend paid(2,212)(2,212)
Transactions with owners29183,786(1,988)82,089
 
Profit and total comprehensive income1231,5431,666
 
Balance as at 30 June 201360740,40784,39712316,692142,226
 
Balance at 1 July 201360740,40784,39712316,692142,226
 
Share option charges506506
Share options exercised2133135
Dividend paid(12,767)(12,767)
Transactions with owners2133(12,261)(12,126)
 
Profit and total comprehensive income23610,76010,996
 
Balance as at 31 December 201360940,40784,53035915,191141,096
 
Balance at 1 January 201460940,40784,53035915,191141,096
 
Share option charges124124
Share options exercised4141
Dividend paid(16,755)(16,755)
Transactions with owners41(16,631)(16,590)
 
Profit and total comprehensive income19,16519,165
 
Balance as at 30 June 201460940,40784,57135917,725143,671

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 2014

 Six months
ended
30 June
2014
Six months
ended
30 June
2013
Year
ended
31 Dec
2013
 (Unaudited)(Unaudited)(Audited)
€000’s€000’s€000’s
Cash flows from operating activities 
Cash receipts from customers106,31685,022173,885
Cash paid to suppliers and employees(84,685)(100,106)(181,592)
Corporate taxes recovered1,143
Corporate taxes paid(220)(89)(1,580)
Net cash from operating activities21,411(15,173)(8,144)
 
Cash flows from investing activities 
Interest received8533
Acquisition earn-out payments(3,140)(2,541)(6,378)
Investment in Betit (note 12)(3,649)
Acquisition of Sportingbet (note 12.2)64,79264,755
Non-interest bearing loan8,0208,020
Acquisition of property, plant and equipment(229)(37)
Acquisition of intangible assets(4)
Net cash from investing activities(7,010)70,27666,389
 
Cash flows from financing activities 
Proceeds from issue of share capital41159294
Repayment of borrowings (note 12.2)(31,384)(31,384)
Finance lease payments(500)
Dividend paid(16,755)(2,212)(14,979)
Net cash from financing activities(17,214)(33,437)(46,069)
 
Net (decrease)/increase in cash and cash equivalents(2,813)21,66612,176
Cash and cash equivalents at beginning of the period18,8086,6326,632
Cash and cash equivalents at end of the period15,99528,29818,808

 

Notes

The notes are available in the PDF download.