Preliminary Results for year ended 31 December 2015 2016 Trading Update

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 2015.

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Presentation

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2015 Highlights

  • Net Gaming Revenue (NGR) up 10% on 2014 to €248 million
  • Clean EBITDA up 10% to a record €54.1 million
  • Profit Before Tax* up 21% to €50.0 million
  • Fully diluted EPS (pre-exceptional) up 21% to 80.2 €cents
  • Dividends in 2015 increased to 56.0 €cents
  • Fifth consecutive year of NGR, Clean EBITDA and dividend growth
  • Shareholders approved acquisition of bwin.party on 15 December 2015 which completed on 1 February 2016
  • Materially strengthened management team at senior operational level and board
  • Product and marketing tools significantly improved during the year

2016 Trading Update

  • Q1-2016 Total Group NGR at €167.7 million, up 180% (Q1-2015: €60.0 million) following the acquisition of bwin.party on 1 February 2016.
  • Q1-2016, like-for-like, constant currency basis, average NGR per day, up 9%
  • Year to 20 April 2016, like-for-like, constant currency basis, average NGR per day increases were:
    • Group: +13%
    • GVC brands: +18%
    • Bwin.party brands: +11%
  • PartyPoker shows first year on year quarterly growth for five years
  • On track to secure €125 million of synergies by the end of 2017 from enlarged GVC

Financial position

  • Gross cash position as at 17 April €327 million
  • Group net debt*** as at 17 April €193 million

Kenneth Alexander, Chief Executive of GVC, said: 
“GVC has had a momentous year. Not only has the Company seen a fifth consecutive year of revenue and clean EBITDA growth but the completion of the bwin.party acquisition in early 2016 affords us an opportunity to take the Group to the next level.

GVC has never been in a stronger position going forward. The enlarged Group is already enjoying encouraging trading, resulting from our unique mix of diversified products and strong brands. There is much work to be done, nevertheless, with GVC brands and bwin.party brands (including PartyPoker), growing, together with synergy benefits, we look forward with confidence to another successful year.”

*excluding exceptional items ** since acquisition ***cash less client liabilities less debt

 

For further information:

GVC Holdings PLC
Kenneth Alexander, Chief ExecutiveTel: +44 (0) 20 7398 7702
Richard Cooper, Group Finance Directorwww.gvc-plc.com
Nicholas Batram, Head of IR & Corporate Strategy
Cenkos Securities plc (Nomad & Broker)Tel: +44 (0) 20 7397 8900
Mark Connelly, Camilla Hume
Media enquiries:
Bell PottingerTel: +44 (0) 20 3772 2500
David Rydell, James Newman, Anna Legge, Laura Jaques

 

Definitions

bwin.party: bwin.party digital entertainment plc

Enlarged Group: GVC Holdings plc incorporating bwin.party digital entertainment plc

Sports Gross Margin: Sports wagers less payouts.

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

Sports Net Gaming Revenue (‘Sports NGR‘): Sports Gross Margin less free bets and promotional bonuses.

Total Net Gaming Revenue (‘Total NGR‘): Sports NGR + Net gaming stakes less payout winnings less customer bonuses + Other revenues.

Contribution: Total NGR less betting taxes, VAT (imposed by certain EU jurisdictions on either sports or gaming revenue), payment service provider fees, software royalties, commissions, revenue share and marketing costs.

Clean EBITDA: Earnings before interest, taxation, depreciation, amortisation, impairment charges, changes in the fair value of derivative financial instruments, 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, net working capital movements and exceptional items of a cash nature.

Chairman’s Statement

2015 was a momentous year for the Group. Not only did the Group increase its revenues and Clean EBITDA by 10% in the face of adverse currency movements, but also shareholders voted overwhelmingly for the acquisition of bwin.party on 15 December 2015 which completed on 1 February 2016.

The acquisition was structured as a mixture of a share and cash offer to the bwin.party shareholders; and financed by an equity placing of £150 million and a senior debt facility of €400 million. The Group is thus well resourced to see through its restructuring plan and to derive the targeted cost synergies on the combined businesses.

The Group has augmented its board by the recruitment of three additional non-executive directors: Norbert Teufelberger, who joins us from bwin.party, Stephen Morana and Peter Isola. As a result, we have added significant expertise to the Board in the areas of accounting and finance, regulatory matters and business development. In addition the operating management has been significantly strengthened below the board level with senior appointments in operations, product, sales and marketing and investor relations.

The Group’s performance across the year was excellent. Increased and effective marketing in all territories led to: growth in Net Gaming Revenue (NGR), up 10% on 2014 to €248 million; Clean EBITDA up 10% to a record €54.1 million (at the top end of market expectations) and Profit before tax, excluding exceptional items, increasing 21% to €50.0 million. Dividends paid in the year increased from 55.0 €cents to 56.0 €cents. I am pleased to be able to say that the Group has increased its revenues, its Clean EBITDA and its dividends for each of the last five years. As shareholders will be aware, however, one of the conditions of the debt financing in connection with the bwin.party acquisition is a dividend holiday in calendar 2016.

GVC has a proven ability of generating value through successful integration of significant acquisitions and management is confident this will continue. We anticipate generating significant synergistic savings through the integration and restructuring of operations, which we aim to complete over the next 12 months. Our target is to drive €125 million of synergies from the combined businesses, and we remain confident that this can be achieved. However, the opportunity for the enlarged Group goes beyond cost synergies and we are excited by the current growth trends and potential across the breadth of businesses.

The Company has a highly focused and entrepreneurial culture, supported by an employee cash bonus structure as well as its long term incentive plan with market-priced stock options together with a total shareholder return measure. Furthermore I, together with the executive directors, have acquired a highly meaningful personal financial stake which should assure shareholders that our financial interests are closely aligned. Returning cash to shareholders via dividends has been core to the Group’s philosophy and this remains the case. As with the Sportingbet acquisition, we aim to return to paying dividends as quickly as our borrowing facilities allow and is prudent from a balance sheet and cash flow perspective.

GVC now has significant scale and capability, and has positioned itself to make further acquisitions if they are sufficiently accretive for shareholders. We operate in a challenging and competitive market but one that also presents significant opportunities. I believe the Group has never been better placed to face these challenges and pursue the many opportunities.

GVC will be posting its Annual Report to shareholders on Saturday 30 April 2016 and it will be uploaded on our website (www.gvc-plc.com)from that date. The AGM will be held in the Isle of Man on Tuesday 24 May 2016. Lastly, I can confirm that we are actively pursuing our stated aim of seeking admission of the enlarged Group to the Premium Segment of the Official List as soon as practicable following publication of the 2015 Annual Report and we will update shareholders accordingly.

 

Lee Feldman
Chairman and Non-Executive Director
22 April 2016

 

Report of the Chief Executive Officer

I am pleased to say the Group delivered on all its objectives in 2015, producing a record Clean EBITDA and culminating in the positive vote by shareholders in both GVC and bwin.party for the acquisition of bwin.party which completed on 1 February 2016.

GVC has a strong track record of integrating challenging acquisitions and driving through synergies. The acquisition of Sportingbet in 2013 led to Clean EBITDA in 2015 three times higher than the GVC result in 2012 and turned Sportingbet from being profoundly loss-making into a significant profit contributor to the Group. Dividends during this time more than doubled from 22 €cents per share to 56 €cents last year.

The culture of GVC is to create a dynamic and entrepreneurial working environment, within a professional infrastructure which is imperative given the markets we operate in. As a consequence, GVC has built a strong management team at all levels, alongside highly talented and motivated staff. It is relatively early days but I am delighted to say that bwin.party also has many managers and staff of exceptional calibre, and together we shall drive the enlarged group forward. Our philosophy is about rewarding success and not failure; staff rewards are currently aligned to growth in 2016 NGR compared to 2015, whilst the long term incentive plan for senior management is aligned with the price at which shares were issued in relation to the bwin acquisition, £4.22, and total shareholder return, so option holders can only prosper if shareholders do so too.

I have already evaluated the bwin, Party Gaming, Party Casino, Gioco Digitale and Foxy Bingo brands and am encouraged by what I see – we have in the combined group a great portfolio of assets. There is undoubtedly great potential, but there is also much to be done.

Our challenges for 2016 and beyond are to:

  • Quickly assimilate, reorganise and re-energize bwin.party into the GVC group to drive cost synergies and revenue opportunities
  • Increase the product quality to improve the customer experience
  • Increase the sports margin % and cross-sell additional gaming products to our customers
  • Focus marketing expenditure on areas where we can measure the ROI and thus “finely-tune” the campaigns to maximise returns
  • Fully leverage the substantial IP across the enlarged group in both B2C and B2B
  • Review non-core assets and identify potential disposals
  • Inject a cultural change to bwin.party to recognise financial performance as the success trigger for incentives.

I am particularly excited by the growth potential of the enlarged Group, and remain confident that we can secure our target of €125 million synergies within a year, the full benefits of which will be seen in 2018. Although we have only owned bwin.party since the 1st February, I have visited all the key operations and am very encouraged by what I have seen. We have already made progress in increasing the breadth and depth of management and executed a number of product improvements. It is too soon for these developments to have had a material impact, which makes the positive performance of the business in the first quarter of 2016 (see below), even more pleasing. I feel the positive start to 2016 reflects the fact that we acquired, in bwin.party, a business that had stabilised and was capable of returning to growth after some challenging years. Nevertheless, as I commented above, there is still much to be done to derive the inherent value that we believe exists within the bwin businesses.

Looking back at 2015, GVC delivered excellent operational and organic growth across the broad spread of markets in which the Group operates. The Board is pleased to report a significant increase in Sports wagers driving an increase in Clean EBITDA. Due to the impact of €24.5m of exceptional items, of which €23.0m relate to the acquisition of bwin.party, operating profit is down year on year. This also impacts on Profit before tax and Earnings per share. Key financial metrics for GVC on a standalone basis are shown below:

Percentage
Increase
2015
(€)
2014
(€)
Sports wagers15%1.7 billion1.5 billion
NGR10%248 million225 million
Contribution10%135 million123 million
Clean EBITDA10%54.1 million49.2 million
Operating profit(35%)27.7 million42.9 million
Profit before tax(38%)25.5 million41.3 million
Basic EPS 40.2 €cents66.4 €cents
Dividends declared 56.0 €cents55.5 €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 2015 at €54.1 million which is 10% higher than the prior year, giving rise to Clean Net Operating Cashflows of €52.9 million.

The combination of GVC and bwin.party’s continuing operations for 2015 (less those activities disposed of during the year) would have resulted in the following “aggregated” results:

In €millionsBwinLess disposed activities and other adjustmentsRestated BwinGVCAggregated
(Unaudited)
  Per day
Sports wagers2,708.52,708.51,683.04,391.512.0
Sports margin %9.0%9.0%9.2%9.1%
 
Total revenues576.4(14.3)562.1247.7809.82.2
 
Clean EBITDA (after FX differences)108.50.9109.454.1163.5

Both GVC and bwin.party were impacted in 2015 by the full year of Point of Consumption tax on UK gaming revenues and by EU VAT imposed by certain jurisdictions on gaming revenues. The combined impact of that during 2015 when compared to 2014 was around €12.4 million.

Taxes are inevitable headwinds and it is through a balanced and well-diversified product and geographical profile of markets that GVC can best mitigate this exposure. A proforma revenue analysis for 2015 shows that no one market generates more than 25% of NGR and no one individual market which is not locally regulated generates more than 12% of NGR.

Q1-2016 AND CURRENT TRADING

GVC has traditionally focused on “revenue per day” and we shall continue to do so as an easy to understand metric across all its business units.

Average daily KPIs expressed in €000s       
   Prior quarter history
 
Q1-2016*
91 days
Q1-2015
90 days
 

Year on year change

 
Q2-2015
Q3-2015Q4-2015
Sports wagers10,6264,558133%4,5444,3714,968
Sports Margin %8.8%9.0% 8.7%9.9%9.0%
       
Sports NGR773313147%299337316
Gaming NGR1,016352189%372330396
Other revenue54
Total NGR per day1,843665177%671667712
Total NGR €m167.760.0180%   

* GVC for the three month period 1 January 2016 to 31 March 2016; bwin.party for the two month period from 1 February 2016 to 31 March 2016
** wagers less payouts before bonuses.

In Q1, Group daily total NGR increased by 177% on the previous year, boosted by the acquisition of bwin.party which was consolidated from 1 February 2016.

Proforma NGR per day in constant currency 
€000s
   
Q1-2016*Q1-2015*Year on year change
GVC74666512%
Bwin.party1,7911,6598%
Group constant currency2,5372,3249%
Group actual2,4442,3245%

GVC daily NGR in constant currency rose 12% in Q1 year on year. Daily NGR at bwin, since it became part of the Group, increased 8% on the comparable period in 2015. For the Group as a whole daily NGR in constant currency rose 9%.

Quarter 2 has also started strongly. Group daily average NGR on a like for like currency basis is up 13% year to date (up to 20 April); GVC brands up 18% and bwin.party brands up 11% (since 1st February). Sports margins have improved within the bwin business, in part reflecting sports results but also improvements implemented since acquisition. We are also pleased with the performance of the gaming activities of bwin.party since acquisition.

At 17 April 2016, gross cash (and cash equivalents) were €327 million; customer liabilities were €120 million; and the principal amount of the Cerberus loan was €400 million, leading to net debt of €193 million. In addition, however, the Group had €52 million of cash in transit with payment processors.
I end my report on a very upbeat note – The Board believe the Group has never been in a stronger position than now, benefitting from robust trading; diversified products and markets; highly motivated staff; and technological opportunities which will allow the Group to prosper. We look forward to a successful year.

 

Kenneth Alexander
Chief Executive
22 April 2016

 

Report of the Group Finance Director

My financial review is in two parts this year: Part One takes readers through the primary financial statements of the GVC group for 2015, whilst Part Two deals with the impact and financing of the bwin.party acquisition.

PART ONE – A REVIEW OF 2015

BUSINESS MODEL

Despite the underlying complexities of the Group, the business of GVC as it existed in 2015 can be presented in a simple and transparent way as the table below illustrates:

  Year ended 31 December 2015
‘Formula’ €000’s€000’sPer day
€000’s
aWagers 1,682,9554,611
bMargin % 9.2% 
c = a x bGross margin 154,086 
dSports bonus(40,234)
e = c + dSports NGR 113,852 
fGaming NGR across all brands 133,878 
g = e + fTOTAL NGR 247,730679
hVariable cost %45.4%
j = g x hVariable costs (112,369) 
k = g + jCONTRIBUTION 135,361 
mOther expenditure (81,284) 
n = k + mCLEAN EBITDA 54,077 
p = n / gCLEAN EBITDA % 21.8% 
qExceptional items (non-deal related)(1,475) 
rCapitalised development costs(5,003)  
sNet corporate taxes paid(657)  
tWorking capital and other movements8,916  
uCapex and lease payments(2,924)  
v = sum q-uTotal of additional operating cashflows (1,143) 
w = n + vCLEAN NET OPERATING CASHFLOWS (‘CNOC’) 52,934 
x = w / gNOC % 21.4% 
yDividends (34,319) 
z = y / wDividends as a % of CNOC 65% 
  • NGR increased by over 10% from €224.8 million to €247.7 million on wagers of €1.7 billion
  • Contribution margin remained at 55%
  • EBITDA increased 10% from €49.2 million to €54.1 million. The EBITDA margin remained in line with 2014 at 22% of revenue.
  • Operating profit at €27.7 million was 35.4% lower than 2014, due to the impact of exceptional items. Operating profit increased by 21.7% on a normalised basis, excluding exceptional items
  • Exceptional items totaled €24.5 million, of which €23.0 million related to bwin.party deal costs
  • Basic EPS before exceptional items rose to 80.2 €cents (Diluted EPS before exceptional items: 76.4 €cents), an increase of 20.8%. Basic EPS after exceptional items fell to 40.2 €cents (Diluted EPS: 38.3 €cents)
  • CNOC as defined below in table 1, was €52.9 million out of which the Group distributed €34.3 million in dividends equal to a distribution ratio of 65% (2014: €42.6 million, dividend of €33.6 million, distribution ratio 79%)

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 €millions20152014Change% change
Sports wagers1,683.01,463.5219.515%
     
Sports margin9.2%9.8%  
Sports revenue113.8110.23.63%
Gaming revenue133.9114.619.317%
Total NGR247.7224.822.910%
     
Contribution135.4123.312.110%
Contribution divided by Total NGR =55%55%
Expenditure(81.3)(74.1)(7.2)(10%)
Clean EBITDA54.149.24.910%
Clean EBITDA/revenue22%22%
Depreciation and amortisation(5.0)(3.9)(1.1)(28%)
Share option charges(0.5)(0.8)0.338%
Betit and Winunited revaluation3.6(1.6)5.2325%
Finance charges(2.2)(1.6)(0.6)(38%)
Profit before Tax and exceptional items50.041.38.721%
Exceptional items(24.5)(24.5)
Taxation(0.8)(0.7)(0.1)(14%)
Profit after taxation24.740.6(15.9)(39%)
Basic, non-dilutive EPS in €cents40.266.4(39%)
Basic pre-exceptional items, non-dilutive EPS in €cents80.266.421%
Dividend paid in the year / share in €cents56.055.02%
Dividends declared for the year / share in €cents28.055.5(50%)
Clean net operating cashflows52.942.6 24%
Dividends paid(34.3)(33.6)2%
Cash and cash in transit49.940.0  
– Cash and cash equivalents28.217.8  
– Balances with payment processors21.722.2  
Customer liabilities(14.8)(13.0)(1.8)(14%)
Net current liabilities(8.4)(3.3)(5.1)>100%
Non-current liabilities(22.6)(6.5)
– Interest bearing loans and borrowings(19.8)(0.4)  
– Non-interest bearing loan and borrowings(2.8)  
– Share option liability(2.1)  
– Deferred consideration on Betboo(1.6)  
– Betit option liability(0.7)(1.7)  
Shareholder funds128.1149.5  
Number of shares in issue61,276,48061,276,480
Number of shares under option3,481,9476,806,947

REVENUES
Sports wagers grew 15% to €1,683.0 million (2014: €1,463.5 million). They averaged €4.6 million per day and rose to over €4.9 million per day in Q4 (Q4-2014: €4.4 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 9.2% (2014: 9.8%) was achieved.

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

Customers have a variety of gaming opportunities ranging from Casino (table games and slots), through to Poker and, in certain markets, Bingo. Sports and gaming revenues are relatively equal now, and in 2015 Sports NGR represented 46% of revenue and Gaming NGR represented 54%. 2015 saw a 10% increase in revenue over 2014, most of which came from growth in Gaming NGR.

Table 2: Average revenues per day since 1 January 2015

€000’sQ1-2016*Q1-2015Q2-2015Q3-2015Q4-2015
Sports wagers per day10,6264,5584,5444,3714,968
Sports margin %8.8%9.0%8.7%9.9%9.0%
Total NGR per day1,843665671667712

* including bwin.party since 1 February

CONTRIBUTION
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 liability.

Contribution increased by 10% to €135.4 million, and a constant contribution margin percentage of 55% was achieved (2014: 55%).

EXPENDITURE
In the context of a growing business, absolute costs have increased from €74.1 million to €81.3 million, with cost ratios as a percentage of Total NGR remaining flat at 60%. Staff cost ratios remained broadly level at 19.6% from 19.2%, with 34% of staff costs (2014: 32%) being performance related – chiefly based on Group dividend payments. This should be seen in the context of €34.3 million of dividends paid in 2015, an increase of 2% on the €33.6 million paid in 2014.

Table 3: The principal cash expenditures of the Group (excluding exceptional items) and their percentages

In €millions2015% of NGR2014 % of NGR
Staff costs including performance pay48.519.6%43.119.2%
Technology and product content23.79.6%21.09.3%
Other costs9.13.6%10.04.5%
81.332.8%74.133.0%

 

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

Clean EBITDA rose 10% to €54.1 million (2014: €49.2 million), and a 22% margin on NGR was achieved, in line with 2014.

NON-CASH ITEMS OF AN ACCOUNTING NATURE
Depreciation of Property, Plant and Equipment rose in the year to €0.9 million (2014: €0.7 million) on total acquisitions of €1.2 million.

Amortisation of Intangible Assets increased to €4.1 million (2014: €3.2 million) driven by the €5.0 million acquisition of additional software and software development costs to further strengthen our mobile and tablet offering.

Finance charges increased by €0.6m this year, driven by €1.2m effective interest on the €20.0 million loan drawn down in September 2015 from Cerberus. Other finance charges included an imputed cost (as per IAS 39) on the interest free loan from William Hill of €0.2 million (2014: €0.2m); €0.1 million (2014: €0.7 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 (2014: €0.6 million) and €0.1 million (2014: €0.1 million) in respect of finance charges on leased software assets.

Share option charges amounted to €0.5 million (2014: €0.8 million). The charge for 2015 represented the ongoing charges arising from the share options awarded and announced on 2 June 2014, net of adjustments for movements in the fair value of cash settled options and share options forfeited by an employee leaving. At the year end, the Group had 3.3 million share options granted to directors and officers (5.4% of the existing issued share capital although its permitted allocation was 16.8% of the issued share capital (page 354 of the January 2013 prospectus)). During the year, directors surrendered 3,200,000 fully vested share options and were awarded associated cash settlements of €12.2 million, which has been recognised as a deduction from equity. These cash payments were to be made over a two year period, but were subsequently put on hold pending the outcome of the bwin.party acquisition. These were fully settled on 1 February 2016, and re-invested into new shares as part of the placing of shares on completion of the bwin.party deal.

Betit and other revaluations: In accordance with IAS 39 ‘Financial Instruments: Recognition and Measurement’, the Group recognises the option to acquire further shares in both Betit and Winunited (a B2B contract entered into in March 2015) at their fair value, and also revalues the investment in Betit which is recognised as an available-for-sale (AFS) asset. Betit underperformed against its previous forecast provided by the Betit management, which decreases the expected value of the asset but also decreases the expected cost of the options. The call/put options with Betit now have a net liability of €0.7 million (2014: €1.7 million), and the AFS asset has decreased in value by €1.2 million, from a value of €3.8 million in 2014. The movement on Betit is therefore a net cost of €0.2 million. The Winunited option was valued at €3.8 million, which represents a gain of €3.8 million. Overall, the revaluations result in a net credit to the Income Statement of €3.6 million.

EXCEPTIONAL ITEMS

During 2015, the Group incurred €24.5 million of exceptional costs. Of this, €23.0 million related to deal costs on the acquisition of bwin.party and consisted mainly of legal and professional fees and the cost of taking out a Euro/GBP hedge.

As part of the requirements for the acquisition of bwin.party, GVC had to “cash-confirm” that it had sufficient GBP funds to meet the obligations of the acquisition; namely 25p in cash per bwin.party share. As the loan facility from Cerberus was denominated in Euro, an American style call option was purchased for €5.3 million on 4 September 2015 to sell €365,000,000 and purchase £256,138,750 (a rate of £1:€1.4250). The counterparty to this trade was Nomura.

On 18 December 2015, it was decided to terminate this option and replace its cash-confirmation obligations with a “flexible-forward”, a forward contract with option components. Entering into this transaction resulted in a refund of €5.6 million and a new sale of €365,000,000 and purchase of £260,719,500 (a rate of £1:€1.400).

By 31 December, foreign exchange rates had moved and the rate used by GVC for the translation of its GBP current assets and current liabilities was £1:€1.36249, whilst the effective rate behind the valuation of the GBP obligation under the flexible forward was €1.3621. This resulted in a revaluation charge of €9.9 million shown as a forward contract liability. This is shown in more detail in the tables below:

Table 4: forward contract movements

DetailsPaid

€000s

Received

€000s

P&L

€000s

Balance at 31.12.15

€000s

Arrangement cashflows(5,329)5,675346
Arrangement valuations(9,877)(9,877)
(5,329)5,675(9,531)(9,877)

 

Euro sale under flexible forward€365,000,000
Rate€1.4000
GBP purchase under flexible forward£260,719,500
Implicit rate in valuation€1.3621
Revaluation€355,123,000
Valuation expense€9,877,000

EARNINGS PER SHARE

Table 5: Earnings per share

Basic EPS:before exceptional items80.2 €cents (2014: 66.4 €cents)
after exceptional items40.2 €cents (2014: 66.4 €cents)
Diluted EPS:before exceptional items76.4 €cents (2014: 61.4 €cents)
after exceptional items38.3 €cents (2014: 61.4 €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 which completed in March 2013.

DIVIDENDS

Table 6: History of dividends paid and declared since 1 July 2014

Declaration dateFiscal
year
2014
Fiscal
year
2015
Paid
2015
Payable
2016
€cents€cents€cents€cents
15 July 201412.5
22 September 201415.0
12 January 201512.512.5
20 March 201515.515.5
8 July 201514.014.0
8 October 201514.014.0
55.528.056.0

Up until the announcement of its bid for bwin.party in November 2015, the Group was 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 65% in 2015 and 79% in 2014. Details of the Clean Net Operating Cashflow calculation are included in table 7 below.

On 4 September 2015, the Company announced a dividend holiday in the calendar year 2016 as a result of the impending acquisition of bwin.party and the consequential combination of debt covenants that will be applicable and the intended restructuring of the Group.

SUMMARISED CASHFLOW
The Group’s cashflow position for 2015 is summarised below:

Table 7: Summarised cashflow

 2015 2014
€000’s€000’s€000’s€000’s
Clean EBITDA 54,077 49,162
Exceptional items (non-acquisition related)(1,475)
Capitalised software development(5,003)(3,343)
Net payment of corporate taxes(657)(508)
Equipment purchased(1,156)(802)
Asset lease repayments(1,768)(1,149)
Working capital and other movements8,916(742)
CLEAN NET OPERATING CASHFLOWS (‘CNOC’)52,93442,618
Dividends paid (34,319) (33,607)
Dividends as a % of CNOC65% 79%
OTHER CASHFLOWS
– Betboo earn-outs(2,401)(4,339)
– Investment in Betit(3,649)
– Proceeds from exercise of share options854
– Settlement of share options(509)
– Sportingbet: William Hill loan instalments(3,245)(2,856)
ACQUISITION CASHFLOWS: bwin.party
– Cerberus drawdown20,000 
– Cerberus financing costs(7,025) 
– Cerberus legal fees(1,950) 
– Other legal and professional fees(13,490) 
– Option payment(5,329) 
– Hedge receipts5,675 
(2,119)
10,341(979)
Cash and cash equivalents at the beginning of the year17,82918,808
Cash and cash equivalents at the end of the year 28,170 17,829
Amount, in €cents per share 46.0 29.1

SUMMARISED BALANCE SHEET AND LIQUIDITY
The net position is affected by the timing of the dividend payments, which totalled €34.3 million during 2015 (2014: €33.6 million). Such is the strategy of the Group towards its dividend payments that GVC aimed 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 8: Balance Sheet and Customer liquidity position as at 31 December 2015

Balance sheetCustomer
liquidity
coverage
€000’s€000’s€000’s
Non-current assets159,166
Balances with payment processors21,70821,708
Prepayments – deal related7,651
Prepayments – other3,888
11,539
Restricted cash*6,838
Free cash21,332
28,17028,170
Trade and other payables(32,016)
Balances with customers(14,808)(14,808)
Loans and leases: current(3,711)
Loans and leases: non-current – deal related(19,821)
(23,532)
Forward contract – deal related(9,877)
Share option liability: current(9,740)
Share option liability: non-current(2,036)
(11,776)
Option liability: non-current(736)
Other net current assets286
Total128,12435,070

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

NON-CURRENT LIABILITIES
These consist of three principal items: the initial loan draw down from Cerberus; share option liabilities due in 2017; and the Betit put option.

a.) Loan from Cerberus: initial draw down
On 4 September 2015, the Group drew down €20.0 million of its €400.0 million facility with Cerberus. The initial drawdown was utilised to pay for professional fees and upfront loan costs, including a foreign currency option for converting the loan receipts into GBP in order to settle the acquisition price for bwin.party and associated costs. The effective interest rate has been calculated based on anticipated costs including loan arrangement and drawdown fees, ongoing interest payments, and other amounts payable during the period of the loan. The loan is repayable in full by 4 September 2017.

b.) Share option liability

During the year, directors surrendered 3,200,000 fully vested share options and were awarded associated cash settlements of €12.2 million, which has been recognised as a deduction from equity.

These cash payments were to be made over a two year period, but were subsequently put on hold pending the outcome of the bwin.party acquisition, and have been fully settled following completion of the acquisition. At the year end, one payment had been made, on an “on account” basis, and the liability, which is denominated in GBP, was restated in Euros. The balance at 31 December 2015 was €11.7 million, of which €9.7 million was a current liability and €2.0 million was non-current, based on the original payment schedules.

c.) Betit option liability

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 Statement of Financial Position. Based on the valuation at 31 December 2015, the net liability is now €0.7 million, reduced from €1.7 million at 31 December 2014. The options are potentially exercisable, subject to certain conditions, between 1 July 2017 and 30 September 2017.

SUMMARY OF MOVEMENTS IN THE STATEMENT OF FINANCIAL POSITION
A bridge between the 2014 and 2015 financial position is shown below in table 9:

Table 9: Statement of financial position bridge

 Total
€000’s
At 1 January 2015149,458
Profit before tax25,506
Tax charge(847)
24,659
Share based payment charges on equity settled options509
Share options surrendered(12,183)
Dividends paid(34,319)
At 31 December 2015 128,124

No share options were exercised during the year and no shares were issued.

CURRENCY EXPOSURES

During the year, the charge to Operating Costs within the Income Statement from realised and unrealised foreign exchange was €1.0 million. In addition the William Hill loan is denominated in Sterling (£4.6 million at 1 January 2015) and incurred an unrealised loss of €0.5 million included within Financial Expenses. Also included within Financial Expenses are the foreign exchange differences arising on the finance leases. 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.

In anticipation of the bwin.party acquisition, the Group entered into a foreign currency option in order to enable the Euro-denominated Cerberus loan to be converted into GBP for the purchase of shares and the settlement of associated costs incurred in GBP. This instrument has been stated at fair value at 31 December 2015.

Key foreign exchange rates are shown in the table below:

Table 10: Currency rates against the Euro

 1 Jan 201430 Jun 201431 Dec 201430 Jun 201531 Dec 2015Average 2014Average 2015
UK (GBP)       0.831       0.802       0.779       0.711       0.734    0.803    0.724
Brazil (BRL)       3.254       3.000       3.224       3.470       4.312    3.110    3.710
Turkey (TRY)       2.959       2.897       2.829       2.995       3.177    2.894    3.031
Israel (ILS)        4.775        4.695        4.720        4.207        4.248     4.739     4.308

As the Group’s operations result in a currency mis-match between income and costs (long Euro, short GBP), the Group is retaining a significant GBP bank balance which will of course be subject to foreign exchange revaluation at each balance sheet date.

CERBERUS LOAN FACILITY

The senior loan facility from Cerberus Business Finance LLC has a number of components other than simple interest and therefore there are significant differences between the cash profile of the payments and the accounting recognition. Firstly the deal and associated fees need to be allocated to each portion of the draw-down; secondly, they need to be expensed over the two year period of the loan facility. The simple interest on the loan is 11.5% above a 1% EURIBOR floor. This floor has been identified as an “embedded derivative”, which is not material at 31 December 2015 in respect of the initial draw-down and will be evaluated again when the second tranche is drawn down in 2016. The tables below show each of the fee components, how they are allocated and in which year the charges would arise.

Table 11: Allocation of the fees to each draw-down

Fee %Initial 
4 Sept 2015
€000’s
Final
2 Feb 2016
€000’s
Total
€000’s
Principal amount20,000380,000400,000
Facility fee1.0%2003,8004,000
Draw-down fee2.0%4007,6008,000
Extension fee0.5%2,0002,000
Anniversary fee*1.0%2003,8004,000
18 month fee*2.5%5009,50010,000
Exit fee3.0%60011,40012,000
Legal fees981,8531,950
Total arrangement fees 1,99839,95341,950

* these items are required to be accounted for in 2015 whether or not the loan remains in place at 2 February 2017 or 2 August 2017

Table 12: Accounting allocation and cash profile (assuming the loan reaches maturity on 4 September 2017)

Fee %2015
€000’s
2016
€000’s
2017
€000’s
Total
€000’s
Accounting allocation
Facility fee1.0%332,2881,6794,000
Draw-down fee2.0%654,5773,3588,000
Extension fee0.5%1,1528482,000
Anniversary fee1.0%332,2881,6794,000
18 month fee2.5%815,7214,19810,000
Exit fee3.0%986,8655,03712,000
Legal fees161,1168191,950
Total arrangement fees32524,00717,61841,950
Maintenance fees€100k/qtr100400232733
Interest12.5%81946,61134,17481,604
Total anticipated finance charge 1,24571,01852,024124,287
Cash profile     
Fees8,4798,00026,20342,683
Interest62538,65342,32681,604
  9,10446,65368,530124,287

Table 13: Loan components in 2015

Borrowed
in year
€000’s
Payments
in year
€000’s
Interest 
charge
€000’s
Prepaid
€000’s
Total
€000’s
Principal amount20,00020,000
Fees(8,479)4267,680(373)
Interest(625)819194
 20,000(9,104)1,2457,68019,821
   Note 4Included
in note 11
Note 14.1

PART TWO – POST BALANCE SHEET EVENT: THE ACQUISITION OF BWIN.PARTY

The acquisition completed on 1 February 2016. The GVC share price used to account for the acquisition will be £4.67. The share price at which the related £150 million placing of new ordinary shares was effected and the strike price at which share options were issued pursuant to the 2015 LTIP was £4.22. The rate of exchange between sterling and the Euro used for the acquisition accounting will be £1 = €1.3205.

The number of bwin.party shares subject to the mix and match election was 843,469,689, and the number of shares placed by GVC was 35,545,024. The offer for bwin.party was 0.231 GVC shares and 25 pence for each bwin.party share. In addition, there was the cost of cashing out the cash-settled options of £21.4 million.

The gross acquisition value of bwin.party is therefore:

Equity component843,469,689 x 0.231 = 194,841,498 shares at £4.67 =£909.9m
+
Cash component843,469,689 x 0.25 =£210.9m
+
Option component£21.4m
£1,142.2m@
1.3205 =
€1,508.2m

Our early work on the acquisition balance sheet suggests a purchase price allocation of €608 million for the brand, platform and customer relationships.

The acquisition, plus additional working capital, and funds to settle inherited debts and pay acquisition costs was financed through a combination of:

Shares issued to bwin.party shareholders£909.9m
Shares issued to placees£150.0m
Total GBP components£1,059.9m
Translated into Euro at 1.3205€1,399.6m
Senior debt facility from Cerberus Business Finance LLC€400.0m
Total finance raised€1,799.6m
Less:
Share and cash offer to bwin.party share and option holder(€1,508.2m)
Existing bwin.party debt discharged*(€56.7m)
Deal costsBwin.partyGVC
– Discharged before 31 December 2015€4.2m€13.5m
– Discharged since 1 January 2016€8.8m€16.9m
(€43.4m)
Other liabilities contractually discharged at or near deal close(€3.2m)
FUNDS AVAILABLE FOR WORKING CAPITAL AND RESTRUCTURING€188.1m

* includes any and all amounts repaid since 31 December 2015 including any interest and break fees

I can now turn to the condensed aggregated balance sheet, income statement and cash flow statement of the combined entities as they would have looked for the year ended 31 December 2015, making adjustments for the businesses which bwin.party disposed of during 2015.
The aggregated statements do not reflect the accounting for the business combination, whereby assets and liabilities acquired will be fair valued, and goodwill will be recognised by the Group, nor the funding for the acquisition, with consequential impacts on the income statement. Please note that the aggregated balance sheet, income statement and cash flow statement have not been prepared on the same basis as the Unaudited Pro Forma Information of the Enlarged Group included in Part 7 of the Prospectus prepared by GVC in connection with the bwin.party acquisition.

The figures of GVC Group have been aggregated with the bwin.party figures which have been audited by their respective independent auditors.

A balance sheet prepared as an aggregation of the enlarged Group at 31 December 2015 is shown below:

AGGREGATED BALANCE SHEET   
As at 31 December 2015BwinGVCAggregated
€ millions(audited) (Unaudited)
Non-current assets   
 Intangible assets512.3155.1667.4
 Property plant and equipment48.61.450.0
 Available for sale financial assets3.72.66.3
 Other investments1.11.1
 Deferred consideration receivable6.46.4
Deferred tax2.02.0
574.1159.1733.2
Current assets   
 *Cash, cash equivalents and short-term investments166.428.2194.6
 *Payment processor balances30.921.752.6
 Deferred consideration receivable6.06.0
 Assets held for sale14.53.818.3
 Income taxes receivable6.06.0
Other receivables and prepayments63.412.976.3
281.272.6353.8
Current liabilities   
 *Customer liabilities(106.3)(14.8)(121.1)
 *Progressive prize pools(8.6)  (8.6)
 Accrued deal costs
 Trade and other payables(110.2)(32.0)(142.2)
 Income and gaming taxes payable(34.7)(9.3)(44.0)
 Hedging instrument liability(9.9)(9.9)
 Share option liability(9.7) (9.7)
 *Loans and borrowings(6.8)(3.7)(10.5)
 Provision for onerous contracts(8.1)(8.1)
Contingent consideration payable(0.8)(1.6)(2.4)
(275.5)(81.0) (356.5)
Non-current liabilities   
 Contingent consideration payable and similar(4.4)(0.7)(5.1)
 *Loans and borrowings(49.7)(19.8)(69.5)
 Share option liability(2.1)(2.1)
Deferred tax(26.1)(26.1)
(80.2)(22.6)(102.8)
Total net current assets5.7(8.4)(2.7)
Total of net current assets less non-current liabilities(74.5)(31.0)(105.5)
Total net assets499.6128.1627.7
   
*Net cash/(net debt)25.911.637.5

There are a number of liabilities which are split between current and non-current. The table below summarises these:

As at 31 December 2015BwinGVCAggregated
€ million(audited) (Unaudited)
Memorandum: total of deferred consideration payable(5.2)(2.3)(7.5)
Memorandum: total of loans and indebtedness(56.5)(23.5)(80.0)
Memorandum: share option liability discharged on acquisition(11.8)(11.8)
    

 

An Income statement, aggregated as if bwin.party had been acquired on 1 January 2015, would appear as below:

 

AGGREGATED INCOME STATEMENT      
Year ended 31 December 2015
€ millions
BwinDisposalsReclassificationBwin restatedGVCAggregated
(Unaudited)
 
Sports wagers2,708.52,708.51,683.04,391.5
Sports margin %9.02%9.02%9.16%9.07%
Sports margin244.3244.3154.1398.4
Sports NGR220.6220.6113.9334.5
Gaming355.8(14.3)341.5133.8475.3
TOTAL REVENUES576.4(14.3)562.1247.7809.8
Variable costs(278.8)7.0 (271.8)(112.3) (384.1)
Contribution297.6(7.3)290.3135.4425.7
Contribution %51.6%51.0%51.6%54.6%52.6%
 
Expenditure(189.1)5.23.0 (180.9)(81.3) (262.2)
 
 Clean EBITDA108.5 (2.1)3.0109.454.1163.5
     
Deal costs and similar*(25.3) (25.3)(23.3) (48.6)
Other exceptional items*(9.8) (9.8) (9.8)
Retrospective gaming taxes*(8.9) (8.9)(1.2) (10.1)
Net financial income/(expense)1.4(3.0) (1.6)(2.3) (3.9)
Depreciation, Amortisation(68.0) (68.0)(5.0) (73.0)
Impairments and similar items(7.9) (7.9)3.6 (4.3)
Share option charges(33.2) (33.2)(0.4) (33.6)
Other costs3.03.03.0
 Profit before tax (40.2) (2.1) (42.3)25.5 (16.8)
Taxation(4.2) (4.2)(0.8) (5.0)
Profit/(loss) for the year(44.4)(2.1) (46.5)24.7 (21.8)
 
Normalised profit for the year (* added back)46.7


A cash flow, aggregated as if bwin.party had been acquired on 1 January 2015, would appear as below:

AGGREGATED CASH FLOW      
Year ended 31 December 2015
€ millions
 Bwin Disposals Reclassification Bwin restated GVC Aggregated
(Unaudited)
 Clean EBITDA108.5 (2.1)3.0109.454.1163.5
Plant and equipment(38.3) (38.3)(1.2) (39.5)
Capitalised development costs(19.4) (19.4)(5.0) (24.4)
Exceptional items incurred in cash(1.5) (1.5)
Debt & Lease repayments(3.6) (3.6)(5.0) (8.6)
Investments made and similar2.82.82.8
Earn-out repayments(2.4) (2.4)
Cash settled share options(0.5) (0.5)
Loans drawn down (gross)20.020.0
Draw down fees, interest and legal expenses(9.0) (9.0)
Other deal related professional fees(13.5) (13.5)
FX option premium paid, less return of premium received0.30.3
Net finance expenses(0.8) (0.8) (0.8)
Net payment of taxes(8.2) (8.2) (8.2)
Net issue of shares0.20.20.2
Working capital movements(10.1) (10.1)8.4 (1.7)
Cash movement for the year before dividend31.1(2.1)3.032.044.776.7
Dividend paid(43.2) (43.2)(34.3) (77.5)
Cash movement for year(12.1)(2.1)3.0 (11.2)10.4 (0.8)
Cash at start of year164.413.5177.917.8195.7
 Cash at end of year152.3 (2.1)16.5166.728.2194.9
 Clean net operating cash flow31.731.752.984.6

 

Future trading updates and financial calendar

It is anticipated that GVC will make further announcements on or around the following dates:

W/c 25 April 2016Publication of Report and Accounts on the Company’s website, www.gvc-plc.com
30 April 2016Posting of Report and Accounts and Notice of AGM
24 May 2016AGM trading update, Result of AGM
July 2016H1 trading update
September 2016Interim results

 

Richard Cooper
Group Finance Director
22 April 2016

PRINCIPAL RISKS AND UNCERTAINTIES

There are a number of potential risks and uncertainties which could have a material impact on the Group’s future performance. To mitigate against these risks, the Group conducts a continuous process of assessments that examine whether any risk has increased, decreased or become obsolete; identify new risks; and evaluate the likelihood of each risk occurring and the impact it would have on the Group.

The key risks and how we seek to manage them are set out below:

Risks and uncertaintiesMitigation
Technology
The Group may be threatened by Denial of Service attacks or similar.The Group has highly advanced preventative measures with world-class technology firms.
Natural or man-made disasters may affect continuity of operations, undermining player confidence.Disaster recovery and business continuity solutions are in place and tested regularly.
With technological advances and continuous shifts in how consumers access our services, maintaining and improving technology may become more complex.Focus on developing customer experience, for example through an expanded mobile offering.
Following the acquisition of bwin.party, the Group is undertaking a significant technology platform migration, which carries a project risk.Close monitoring by management; reporting up to the Board regularly.
Regulatory
Conflict between jurisdictions in which the customer resides and where the service is provided; risk of enforcement action.Strict adherence to the laws of the jurisdiction in which the service is provided and the rules and protocols in nationally regulated markets.
In some markets regulation is not clearly defined or adopted; there may be changes in regulation in all markets.Close monitoring of regulatory developments and assessment of their longer term impact.
Maintenance of a diversified product portfolio.
Taxation
Imposition of additional gaming or other indirect taxes.May not be possible to mitigate. However, payment of additional taxes may create opportunities to work with governments and gain market benefits.
Transfer pricing between group entities could be challenged by the tax authorities.Intra-group transactions are documented and take place on commercial terms.
Regular review of all tax arrangements and update transfer pricing when required.
Changes in VAT rules within the EU impacting the digital economy.Monitor the situation, as significant uncertainty remains.
Economic
Conditions in the Eurozone remain challenging and this may erode customer base confidence and spending power.Customer retention programmes.
Broader geographic spread of products.
Foreign exchange movements; risk of certain countries exiting the Euro.The Group tries to match its income and cost exposures to create a natural hedge.
Regular evaluation of low cost hedging opportunities.
Wherever practical, financial assets held within certain countries are limited so they do not exceed the financial liabilities in that jurisdiction.
Brexit: if the outcome of the June referendum is that the UK leaves the EU, this may increase the volatility of global currency and financial markets. In addition, it may reduce the Group’s ability to operate in certain EU markets without a change in domiciliation, which could carry a higher tax burden.Monitor the situation. The Group has licences in a number of EU countries including: Malta, Denmark, Italy, France, Romania, Greece, Germany, as well as licences in the Brexit zone (UK, Gibraltar).
Financial
Increases in EURIBOR will increase the interest cost for the Group. The loan arrangements contain covenants which, if breached, would trigger early repayment of the facility.Maintenance of cash headroom mitigates some interest rate risk and provides flexibility of early repayment. Covenants are monitored on a monthly basis.
Operational
The market place becomes more competitive via new entrants or more attractive products available from those or existing competitors.Monitoring of the competitive landscape.
Working with software providers to enhance the product offering.
Withdrawal of payment processing facilities.Multiple payment processing methods used by the Group.
Reliance on third party payment and multi-currency processing systems.Spreading of risk across payment processors with varying deposit and withdrawal methods.
Dependence on third party software.Long-term contracts in place with key suppliers.
Dependence on key personnel.There is a broad base of executives below Board level which has been strengthened with recent joiners.
Loss of major introducer of business.Competitive revenue sharing models applied and monitored regularly. Key introducers are offered long-term revenue prospects with the Group to ensure alignment of financial interests.
Loss of major customer.Highly diversified customer base with thousands of customers across all brands.
Poor sports results.Sports represents c.50% of the Group’s net gaming revenue and as a matter of policy they are not hedged as over the longer term sports results trend to the Group’s expected margin percentage.
Operational (continued)
Abnormal jackpot wins.Revenues from some business lines have a jackpot insurance policy; others do not, as a matter of policy.
Business integration process following the acquisition of bwin.party: risk of business disruption and the impact on staff; risk of unexpected costs or constraints on delivering expected synergies.Regular monitoring by management.

For and on behalf of the Board of GVC Holdings PLC.

 

Richard Cooper
Group Finance Director
Registered office: 32 Athol Street, Douglas, Isle of Man, IM1 1JB

 

Consolidated Income Statement
For the year ended 31 December 2015

   20152014
 Notes€000’s€000’s
Net Gaming Revenue2247,730224,801
Cost of sales(112,369)(101,513)
Contribution2135,361123,288
Administrative costs3(81,284)(74,126)
Clean EBITDA54,07749,162
Share option charges3(449)(736)
Exceptional items3(24,496)
Depreciation and amortisation3, 6(4,985)(3,912)
Impairment of available for sale asset7(1,216)(1,593)
Changes in the fair value of derivative financial instruments84,817
Operating profit27,74842,921
Financial income4416
Financial expense4(2,246)(1,646)
Profit before tax25,50641,291
Taxation expense(847)(728)
Profit after tax24,659 40,563
   
Earnings per share 
Basic50.4020.664
  
Diluted50.3830.614

 

Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015

 20152014
 €000’s€000’s
Profit for the year24,65940,563
Total comprehensive income for the year24,65940,563

The notes below form part of these financial statements.

 

Consolidated Statement of Financial Position
at 31 December 2015

  20152014
 Notes€000’s€000’s
Assets
Property, plant and equipment1,4281,147
Intangible assets6155,153154,260
Available for sale financial asset72,5853,801
Total non-current assets159,166159,208
 
Trade and other receivables34,61827,605
Winunited option asset83,808
Income taxes reclaimable5,9723,925
Other tax reclaimable12139
Cash and cash equivalents28,17017,829
Total current assets72,58049,498
 
Total assets 231,746208,706
 
Current liabilities 
Trade and other payables(32,016)(26,777)
Balances with customers(14,808)(13,036)
Amounts due under finance leases(691)(1,362)
Non-interest bearing loans and borrowings9(3,020)(2,735)
Deferred consideration on Betboo(1,606)(2,347)
Share option liability11(9,740)(184)
Forward contract liability3(9,877)
Income taxes payable(7,251)(5,014)
Other taxation payable(2,020)(1,338)
Total current liabilities(81,029)(52,793)
 
Current assets less current liabilities(8,449)(3,295)
 
Non-current liabilities 
Interest bearing loans and borrowings9(19,821)(327)
Non-interest bearing loans and borrowings9(2,777)
Share option liability11(2,036)
Betit option liability8(736)(1,745)
Deferred consideration on Betboo(1,606)
Total non-current liabilities(22,593)(6,455)
 
Total net assets128,124149,458
 
Capital and reserves 
Issued share capital10613613
Merger reserve1040,40740,407
Share premium1085,38085,380
Translation reserve10359359
Retained earnings101,36522,699
Total equity attributable to equity holders of the parent128,124 149,458

The financial statements were approved and authorised for issue by the Board of Directors on 22 April 2016 and signed on their behalf by:

K.J. Alexander
(Chief Executive Officer)
R.Q.M. Cooper
(Group Finance Director)

The notes below form part of these financial statements.

 

Consolidated Statement of Changes in Equity
For the year ended 31 December 2015

Attributable to equity holders of the parent company:

Share CapitalMerger ReserveShare
Premium
Translation ReserveRetained Earnings*Total
Notes€000’s€000’s€000’s€000’s€000’s€000’s
Balance at 1 January 201460940,40784,53035915,191141,096
Share option charges**552552
Share options exercised4850854
Dividend paid(33,607)(33,607)
Transactions with owners4850(33,055)(32,201)
Profit for the year40,56340,563
Total comprehensive income for the year40,56340,563
Balance as at 31 December 201461340,40785,38035922,699149,458
 
Balance at 1 January 201561340,40785,38035922,699 149,458
        
Share option charges**11509509
Share options surrendered11(12,183)(12,183)
Share options exercised11
Dividend paid(34,319)(34,319)
Transactions with owners(45,993)(45,993)
Profit for the year24,65924,659
Other comprehensive income for the year
Total comprehensive income for the year24,65924,659
Balance as at 31 December 2015 61340,40785,3803591,365128,124

*the share option reserve included within retained earnings at 31 December 2015 amounted to a debit balance of €6,955,345, largely due to the surrender of fully vested share options during 2015, now recognised as a liability.

**total share option charge per the Consolidated Income Statement amounted to €449,231, the difference being a net credit to the cash settled share option expense of €59,282 which is not taken directly to retained earnings.

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 (section 49, Companies Act Isle of Man 2006).

The notes below form part of these financial statements.

 

Consolidated Statement of Cashflows
For the year ended 31 December 2015

  20152014
Notes€000’s€000’s
Cash flows from operating activities  
Cash receipts from customers 248,227221,048
Cash paid to suppliers and employees(208,600)(172,581)
Corporate taxes recovered1,256
Corporate taxes paid(657)(1,740)
Net cash from operating activities38,97047,983
 
Cash flows from investing activities 
Interest received416
Acquisition earn-out payments (Betboo)(2,401)(4,339)
Investment in Betit8(3,649)
Acquisition of property, plant and equipment(1,156)(802)
Capitalised development costs6(5,003)(3,343)
Net cash used in investing activities(8,556)(12,117)
 
Cash flows from financing activities 
Proceeds from interest bearing loan (Cerberus)919,375
Non-interest bearing loan (from William Hill)9(3,245)(2,856)
Proceeds from issue of share capital854
Repayment of borrowings(1,768)(1,149)
Dividend paid(34,319)(33,607)
Net cash used in financing activities(19,957)(36,758)
 
Net increase/(decrease) in cash and cash equivalents10,457(892)
Exchange differences(116)(87)
Cash and cash equivalents at beginning of the year 17,82918,808
Cash and cash equivalents at end of the year 28,170 17,829

The notes below form part of these financial statements.

 

Notes

The notes are available in the PDF download.