GVC Holdings PLC (AIM:GVC), a leading provider of services to the online gaming industry, is pleased to announce: a trading update; the early restoration of, and increase in, the quarterly dividend; progress with Sportingbet integration and its trading from the acquisition to 30 June 2013; and a trading update of the other GVC brands for the period from 1 January 2013 to 30 June 2013.
Revenues from the all GVC brands, including Sportingbet, have performed well in the period up to 30 June 2013.
For Sportingbet, sports wagers increased by 12% and averaged €2.4 million per day compared with €2.1 million in the same period in 2012; NGR* per day increased by 8% and averaged €265k compared with €246k in the same period in 2012. The increase in NGR is particularly pleasing against the absence of international football competitions (e.g. Euro 2012) in 2013.
For GVC, sports wagers increased 9% to €1.5 million per day (2012: €1.4 million per day), and NGR increased by 17% to €325k per day (2012: €277k per day).
GVC’s management has been able to make material reductions in the inherited Sportingbet cost base. By the end of 2013, the inherited Sportingbet cost base should have reduced by close to 40%.
The combination of cost-cutting, strong trading and tighter financial management, has meant that GVC is able to pay a dividend of 10.5€cents per share to shareholders in August this year – an amount higher, and a calendar quarter earlier, than the Board of GVC anticipated. This brings the total dividends paid to shareholders to 159.5€cents in the last five years.
The dividend will be paid on 1 August 2013 to shareholders on the register on 12 July 2013. The shares will go ex-dividend on 10 July 2013. Future dividend payment dates are likely to be at the beginning of the months of November, February, May and August in any given year.
*NGR is revenues after betting payouts, customer bonuses, betting taxes and chargebacks and in-line with GVC’s published accounting policies.
On 19 March 2013 GVC acquired Sportingbet plc, excluding the Australian business which was acquired by William Hill plc.
In line with the GVC prospectus (“the Prospectus”) published on 25 January 2013, on completion of the acquisition the Board of GVC immediately implemented its strategic plan to restructure the Sportingbet business and return the business to profitability in 2014. The execution of the strategic plan is proceeding very well, better than expected, and at a lower cost than internally forecast at the time of the acquisition. Shareholders may recall from the GVC prospectus (page 296) that in the 12 months to July 2012, Sportingbet’s European operations lost €15.6 million on top of the €9.5 million incurred on central overheads, a total of €25.1 million in addition to €26.9 million of exceptional charges.
Since 19 March 2013, the management team at GVC has completed a review of all areas of the business and has taken the following actions:
- Initiated the outsourcing of the IT infrastructure to lower-cost jurisdictions and stopped any unnecessary IT projects;
- Terminated all acquisition marketing and corporate sponsorships where the return on investment was assessed to be poor;
- Increased focus on customer retention and VIP management;
- Flattened the organisation structure and clarified P&L accountability;
- Implemented much tighter financial controls over expenditure; and
- Repaid £25.6 million of bank facilities and £10 million of overdue supplier payments as well as deal fees for both Sportingbet and GVC of around £12 million.
The cost to implement the restructuring has been lower than anticipated and thus, once the restructuring is completed by the end of 2013, the Sportingbet business is expected to become profitable as a stand-alone business, and more importantly, to become cash generative.
Average per day in €000’s
(GVC, 1 January 2013 to 30 June 2013; SBT 20 March 2013 to 30 June 2013)
|Sports margin %||n/a||10.7||12.3||11.4||7.9|
(GVC, 1 January 2012 to 30 June 2012; SBT 20 March 2012 to 30 June 2012)
|Sports margin %||n/a||8.0||11.5||11.2||8.3|
*NGR is revenues after betting payouts, customer bonuses, betting taxes and chargebacks and in-line with GVC’s published accounting policies. Customer bonuses are allocated pro-rata across sports and gaming.
The Sportingbet business which GVC acquired has shown improved trading under GVC’s management. Overall NGR was 8% higher than the comparable period in 2012 with sports wagers 12% higher, despite 2012 being flattered by the Euro 2012 finals.
CasinoClub revenues saw an increase of 10% to €86k per day (H1-2012: €78k per day).
Revenues in Betboo, the Group’s Latin American brand, rose by 25% to €35k per day (H1-2012: €28k per day).
B2B and the mitigation of earn-out
The B2B division has now been running since 21 November 2011 when a third party company, East Pioneer Corporation BV (“EPC”), acquired Superbahis, a Sportingbet brand. This was contemporaneous with GVC entering into a contract with EPC to provide B2B services.
Prior to the acquisition of Sportingbet by GVC, the revenues for the B2B division were net of the deferred consideration owing by EPC to Sportingbet. This reduced GVC’s revenue share under its service contract with EPC.
In the 78 days from 1 January 2013 to 19 March 2013 the deferred consideration liability amounted to €8.3 million, a 28% increase on the same period in 2012. Subsequent to 19 March 2013, the deferred consideration has been completely eliminated.
Kenneth Alexander, Chief Executive Officer of GVC, said: “The restructuring of Sportingbet was a crucial challenge to GVC following the transformational deal of acquiring this business. I am delighted that as a result of our clear strategic plan and the hard work of our staff in implementing it, we have made excellent progress.
“The Board anticipates that the Sportingbet business should become profitable and cash generative by the end of Q4 2013. During this restructuring and cost cutting I am particularly pleased that we have today reported good trading over all parts of the Group and also that the financial performance of the Sportingbet business has improved under GVC management with both better trading and lower costs. As a result, the Board is cautiously optimistic about the outcome for 2013 and is pleased to make an early restoration in its quarterly dividend. We look forward to updating the market further at the interim results stage.”
Notice of Interim Results
The Group expects to release its Interim Results in the week of 23 September 2013, along with a further trading update and an announcement about its Q3 2013 interim dividend.
For further information:
|GVC Holdings PLC|
|Kenneth Alexander, Chief Executive Officer||Tel: +44 (0) 20 7398 7702|
|Richard Cooper, Group Finance Director||www.gvc-plc.com|
|Daniel Stewart & Company Plc||Tel: +44 (0) 20 7776 6550|
|David Hart / Paul Shackleton / James Felix||www.danielstewart.co.uk|
|Henry Harrison-Topham / Shabnam Bashir||Tel: +44 (0) 20 7398 7702|
About GVC Holdings PLC
GVC Holdings PLC is a leading provider of services to the online gaming industry. The Group is headquartered in the Isle of Man and is licensed in Malta, the UK, South Africa, Italy, Spain, Denmark, Alderney and the Netherlands Antilles.
Further information on the Group is available at www.gvc-plc.com