REG - GVC Holdings PLC - Half-year Report <Origin Href="QuoteRef">GVC.L</Origin> - Part 2
14/09/2017 07:31
- Part 2: For the preceding part double click ID:nRSN6927Qa
1,394.2
Resulting from the acquisition of bwin.party - - - - - - (1.2) (1.2)
Transactions with owners 2.3 - 1,392.2 - 5.1 1,399.6 (1.2) 1,398.4
Loss for the period attributable to the parent - - - - (84.0) (84.0) - (84.0)
Loss for the period attributable to the non-controlling interest - - - - - - (0.2) (0.2)
Other comprehensive expense attributable to the parent - - - (3.1) - (3.1) - (3.1)
Other comprehensive income attributable to the non-controlling interest - - - - - - - -
Total comprehensive income for the period - - - (3.1) (84.0) (87.1) (0.2) (87.3)
Balance as at 30 June 2016 (unaudited) 2.9 40.4 1,477.6 (2.8) (77.5) 1,440.6 (1.4) 1,439.2
Balance at 1 January 2017 (audited) 2.9 40.4 1,478.4 (2.0) (120.9) 1,398.8 (1.5) 1,397.3
Share based payments - - - - 11.0 11.0 - 11.0
Share options surrendered - - - - - - - -
Share options exercised 0.1 - 25.5 - - 25.6 - 25.6
Dividends paid - - - - (88.8) (88.8) - (88.8)
Transactions with owners 0.1 - 25.5 - (77.8) (52.2) - (52.2)
Loss for the period attributable to the parent - - - - (7.3) (7.3) - (7.3)
Loss for the period attributable to the non-controlling interest - - - - - - (0.2) (0.2)
Other comprehensive expense attributable to the parent - - - (2.5) - (2.5) - (2.5)
Other comprehensive income attributable to the non-controlling interest - - - - - - - -
Total comprehensive income for the period - - - (2.5) (7.3) (9.8) (0.2) (10.0)
Balance as at 30 June 2017 (unaudited) 3.0 40.4 1,503.9 (4.5) (206.0) 1,336.8 (1.7) 1,335.1
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, 2006 Companies Act Isle of Man).
The notes on pages 19 to 30 form part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2017
Period Ended 30 June 2017(Unaudited) Period Ended 30 June 2016(Unaudited)
Notes Em Em
Cash flows from operating activities
Cash receipts from customers 499.5 398.1
Cash paid to suppliers and employees (419.4) (407.3)
Interest paid including initial costs and loan servicing 9 (32.2) (20.9)
Corporate taxes paid (12.4) (5.2)
Net cash generated (used) in operating activities 35.5 (35.3)
Cash flows from investing activities
Interest received 0.6 0.9
Dividends received - 3.1
Acquisition earn-out payments (Betboo) - (1.2)
Acquisition of bwin.party (net of cash acquired) - (186.9)
Acquisition of property, plant and equipment (7.1) (4.4)
Proceeds from disposal of assets held for sale 8 29.0 6.6
Capitalised development costs and other intangibles 7 (14.2) (12.6)
Decrease in short term investments 0.5 8.1
Net cash generated (used) in investing activities 8.8 (186.4)
Cash flows from financing activities
Proceeds from interest bearing loans 9 500.0 380.0
Repayment of non-interest bearing loan (from William Hill) - (3.0)
Proceeds from issue of share capital, net of costs 25.6 192.0
Repayment of borrowings 9 (636.5) (39.0)
Dividends paid 10 (88.8) -
Net cash (used) generated from financing activities (199.7) 530.0
Net (decrease) increase in cash and cash equivalents (155.4) 308.3
Exchange differences - 1.0
Cash and cash equivalents at beginning of the period 367.0 28.2
Cash and cash equivalents at end of the period 211.6 337.5
Cash and cash equivalents
The balance at 30 June 2016 of E337.5 million consists of E302.9 million cash and cash equivalents as shown on the face of
the condensed consolidated statement of financial position and E34.6 million of cash and cash equivalents recognised within
assets held for sale.
The notes on pages 19 to 30 form part of these financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 30 June 2017
1. Basis of preparation
2. Segmental reporting
3. Operating costs
4. Financial expense
5. Taxation
6. Earnings per share
7. Intangibles
8. Assets and liabilities classified as held for sale
9. Loans and borrowings
10. Dividends
11. Share option schemes
12. Related parties
13. Contingent liabilities and capital commitments
1. BASIS OF PREPARATION
1.1 General information and accounting policies
GVC Holdings PLC is a company registered in the Isle of Man and was incorporated on 5 January 2010. It is the successor
company of Gaming VC Holdings S.A., a company which had been incorporated in Luxembourg, and took the assets of Gaming VC
Holdings S.A. on 21 May 2010 after formal approval by shareholders. The condensed consolidated financial statements of the
Group for the six months ended 30 June 2017 comprise the Company and its subsidiaries (together referred to as the
'Group'). The condensed consolidated financial statements are unaudited but have been reviewed by the auditor, whose
report is set out in this document.
The condensed consolidated financial statements have been prepared under IAS 34 'Interim Financial Reporting' and those
parts of the Isle of Man Companies Act 2006 applicable to companies reporting under International Financial Reporting
Standards (IFRS). They do not constitute full accounts within the meaning of the Isle of Man Companies Act 2006, and should
be read in conjunction with the financial statements for the year ended 31 December 2016, which have been prepared in
accordance with IFRS as adopted by the EU. Those financial statements have been reported on by the Group's auditor and are
included in the Group's Annual Report 2016, available in the Investor Relations section of the Group website at
www.gvc-plc.com. The auditor's report on those financial statements was unqualified.
The condensed consolidated financial statements are prepared on the basis of the accounting policies stated in the Group's
Annual Report 2016 and were approved by the Board of Directors on 13 September 2017. The condensed consolidated financial
statements are presented in the Euro, rounded to the nearest E0.1 million, and are prepared on the historical cost basis
with the exception of those assets and liabilities carried at fair value.
1.2 Going Concern
After making enquiries and after consideration of the Group's existing operations, financing arrangements, cash flow
forecasts and assessment of business and regulatory risks, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt
the going concern basis in preparing the condensed consolidated financial statements.
1.3 Seasonality
The Group's overall profitability is sensitive to sporting events and results. In addition, there is underlying
seasonality for online activity which also depends on geographical location of players.
1.4 Standards in issue, not yet effective
At the date of authorisation of these financial statements, certain new standards, and amendments to existing standards
have been published by the IASB that are not yet effective, and have not been adopted early by the Group. Information on
those expected to be relevant to the Group's financial statements is provided below.
1.4.1 IFRS 9 'Financial Instruments' (2014)
The International Accounting Standards Board (IASB) has released IFRS 9 'Financial Instruments' (2014), representing the
completion of its project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. The new standard
introduces extensive changes to IAS 39's guidance on the classification and measurement of financial assets and introduces
a new 'expected credit loss' model for the impairment of financial assets together with new guidance on the application of
hedge accounting. The new standard is required to be applied for annual reporting periods beginning on or after 1 January
2018. The Group's management are currently reviewing the various classifications of financial instruments used by the
Group but do not believe that any material changes to the Group's results in future periods will arise as a result of any
changes of classification. The Group's treasury officials will consider the implications of this new standard when
reviewing the hedging instruments it will utilise going forward.
1.4.2 IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 'Revenue', IAS 11 'Construction
Contracts', and several revenue-related Interpretations. The new standard establishes a control-based revenue recognition
model and provides additional guidance in many areas not covered in detail under existing IFRSs, including how to account
for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase
options, and other common complexities. IFRS 15 is effective for reporting periods beginning on or after 1 January 2018.
The Group's management do not consider that there will be any material impact on the Group's policy of recognising revenue
but will review the impact of the standard on the Group's 2017 results during this financial year.
1.4.3 IFRS 16 'Leases'
IFRS 16 presents new requirements for the recognition, measurement, presentation and disclosure of leases, replacing IAS 17
'Leases'. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities
for all leases of over 12 months unless the underlying asset has a low value. Lessors continue to classify leases as
operating or finance leases, with minimal changes from IAS 17. The new standard applies to annual reporting periods
beginning on or after 1 January 2019. The Group's management consider that the adoption of this standard will likely
result in an increase in the non-current assets (representing 'right-of-use' assets) and a corresponding increase in
liabilities, both current and non-current on the Statement of Financial Position of the Group and will fully review the
impact in the 2018 financial year.
2. SEGMENTAL REPORTING
Management review the business across five operating segments, being Sports brands, Games brands, B2B, Non-core and
Corporate. These operating segments are monitored and strategic decisions are made on the basis of overall operating
results. Management also monitors revenue by geographic location of its customers.
2.1 Geographical Analysis
The Group's revenues and other income from external customers are divided into the following geographic areas:
Period ended 30 June 2017 Period ended 30 June 2016
Em Em
Germany 110.9 87.9
Turkey 47.6 50.0
UK 48.9 32.0
Other 265.4 212.2
Total 472.8 382.1
Revenues from external customers have been identified on the basis of the customer's geographical location.
2.2 Reporting by Segment
Period ended 30 June 2017:
Sports brands Games brands B2B Total core Non-core Corporate Total
Em Em Em Em Em Em Em
NGR 355.1 112.4 7.6 475.1 11.1 - 486.2
EU VAT (9.8) (3.6) - (13.4) - - (13.4)
Revenue 345.3 108.8 7.6 461.7 11.1 - 472.8
Variable costs (151.1) (69.6) 0.1 (220.6) (11.4) - (232.0)
Contribution 194.2 39.2 7.7 241.1 (0.3) - 240.8
Contribution margin 55% 35% 101% 51% (3%) - 50%
Other operating costs:
Personnel expenditure (51.4) (4.3) (9.3) (65.0)
Professional fees (1.7) (0.5) (6.6) (8.8)
Technology costs (23.8) (0.8) (0.3) (24.9)
Office, travel and other costs (2.6) (0.4) (6.8) (9.8)
Foreign exchange differences (1.0) (0.3) 2.9 1.6
Clean EBITDA 160.6 (6.6) (20.1) 133.9
Period ended 30 June 2016:
Sports brands Games brands B2B Total core Non-core Corporate Total
Em Em Em Em Em Em Em
NGR 287.5 88.4 5.6 381.5 9.1 - 390.6
EU VAT (7.1) (1.4) - (8.5) - - (8.5)
Revenue 280.4 87.0 5.6 373.0 9.1 - 382.1
Variable costs (122.8) (48.8) (0.1) (171.7) (9.5) - (181.2)
Contribution 157.6 38.2 5.5 201.3 (0.4) - 200.9
Contribution margin 55% 43% 98% 53% (4%) - 51%
Other operating costs:
Personnel expenditure (47.7) (5.0) (9.0) (61.7)
Professional fees (2.4) (0.4) (5.5) (8.3)
Technology costs (31.6) (0.8) (0.1) (32.5)
Office, travel and other costs (3.1) (0.9) (6.7) (10.7)
Foreign exchange differences 0.6 - 2.9 3.5
Clean EBITDA 117.1 (7.5) (18.4) 91.2
Management do not review the performance of each segment below the level of Clean EBITDA.
3. OPERATING COSTS
Period ended 30 June 2017 Period ended 30 June 2016
Notes Em Em
Wages and salaries, including Directors 54.8 48.8
Staff costs capitalised in respect of intangible asset additions (9.8) (6.7)
Outsourced consultants 10.8 10.5
Compulsory social security contributions 5.2 6.1
Pension contributions 0.5 0.4
Health and other benefits 2.5 1.9
Recruitment and training 1.0 0.7
Personnel expenditure (excluding share based payment charges) 65.0 61.7
Professional fees 8.8 8.3
Technology costs 24.9 32.5
Office, travel and other costs 9.8 10.7
Foreign exchange differences on operating activity (1.6) (3.5)
Administrative costs 106.9 109.7
Equity settled share based payments charges 11 10.0 5.9
Cash settled share based payments charges 11 0.5 0.6
Exceptional items 3.1 15.7 89.3
Impairment of available for sale asset - 4.8
Impairment of assets held for sale 1.6 -
Movement in the fair value of derivative financial instruments 9 22.5 (14.1)
Depreciation 8.7 10.4
Amortisation 7 65.4 55.1
Total operating costs 231.3 261.7
3.1 Exceptional Items
The Group incurred expenditure on exceptional items of E15.7 million (period ended 30 June 2016: E89.3million). These are
items which are exceptional in size or nature.
Period ended 30 June 2017 Period ended 30 June 2016
Em Em
Professional fees 2.3 13.4
Currency option, including fair value adjustment - 10.8
Bonuses and share options - 21.9
M&A costs 2.3 46.1
Premium listing application costs - 4.4
Reorganisation costs 11.1 5.1
Accelerated depreciation - 12.5
Progressive jackpots - 7.6
Foreign exchange on deposit 0.3 13.6
Legal settlements 0.8 -
Other 1.2 -
Total exceptional items 15.7 89.3
Reorganisation costs reflect costs following the acquisition of bwin.party as Management restructures the combined
business.
4. FINANCIAL EXPENSE
Period ended 30 June 2017 Period ended 30 June 2016
Em Em
Interest on Cerberus loan* 4.2 21.1
Interest on Nomura bridging loan* 0.4 -
Interest on Term Loan* 2.7 -
Amortisation of loan fees 9.2 10.2
Amortisation of the early repayment option - (1.9)
Other interest 0.2 -
16.7 29.4
*Interest on the various financing loans represents the effective interest on the loan which includes interest at the
contracted rates and charges for exit and similar fees obliged to be accounted for.
5. TAXATION
GVC Holdings PLC is an international business incorporated in the Isle of Man and the Group's two largest trading entities
are in Gibraltar and Malta. As a result, there are significant differences between the Group's effective rate of tax and
the UK Corporation tax rate.
The effective rate in respect of ordinary activities after exceptional items is 13.6% (six months ended 30 June 2016:
2.2%). The effective tax rate for the period is different from that which would result from applying the standard rate of
UK Corporation Tax of 19.0% (2016: 20.0%) due to the geographic spread of the income earned by the Group and other tax
adjustments.
5.1 Deferred Taxation Amounts Recognised in the Statement of Financial Position
Total
Em
Balance at 1 January 2016 -
Acquired in business combination (79.6)
Deferred tax credit 11.8
Transfer to liabilities held for sale 3.8
Foreign exchange and other movements (1.6)
Balance at 31 December 2016 (65.6)
Deferred tax credit 7.3
Foreign exchange and other movements 0.3
Balance at 30 June 2017 (58.0)
The deferred tax balance of E58.0m includes deferred taxation liabilities of E59.2m and deferred taxation assets of E1.2m.
6. EARNINGS PER SHARE
6.1 Basic Earnings Per Share and Adjusted Earnings Per Share
Basic earnings per share has been calculated by taking the profit attributable to ordinary shareholders and dividing by the
weighted average number of shares in issue. Adjusted earnings per share has been calculated by taking the profit before
tax, adding back certain costs that are not directly related to trading activities in the period and dividing by the
weighted average number of shares in issue.
Period ended 30 June 2017 Period ended 30 June 2016
Loss for the period attributable to ordinary shareholders (Em) (7.3) (84.0)
Weighted average number of shares (m) 296.1 251.3
Basic loss per share (E) (0.02) (0.33)
Loss before tax (6.6) (86.1)
Exceptional items 15.7 89.3
Change in value of available for sale asset - 4.8
Change in fair value of derivative financial instruments 22.5 (14.1)
Impairment of assets held for sale 1.6 -
Dividend income - (3.1)
Acquired intangible amortisation 59.5 52.2
- Effect of tax thereon - -
Debt fee amortisation 9.2 10.2
Early repayment amortisation - (1.9)
Corporation and similar taxation (7.8) (1.2)
Adjusted profit for the period (Em) 94.1 50.1
Adjusted earnings per share (E) 0.32 0.20
6.2 Diluted Earnings Per Share and Adjusted Diluted Earnings Per Share
Diluted earnings per share has been calculated by taking the profit attributable to ordinary shareholders and dividing by
the weighted average number of shares in issue as diluted by share options. Adjusted diluted earnings per share has been
calculated by taking the profit before tax, adding back certain costs that are not directly related to trading activities
in the period and dividing by the weighted average number of shares in issue, as diluted by share options.
Period ended 30 June 2017 Period ended 30 June 2016
Loss for the period attributable to ordinary shareholders (Em) (7.3) (84.0)
Weighted average number of shares (m) 296.1 251.3
Effect of dilutive share options (m) 6.2 -
Weighted average number of dilutive shares (m) 302.3 251.3
Diluted loss per share (E) (0.02) (0.33)
Adjusted profit for the period (see note 6.1) (Em) 94.1 50.1
Adjusted diluted earnings per share (E) 0.31 0.20
Share options that could potentially dilute basic earnings per share but were not included in diluted earnings per share
because they are antidilutive for the period ended 30 June 2017 amounted to nil effective shares (2016: 1.3 million
effective shares).
7. INTANGIBLES
Software Licences Goodwill Trade-marks & Trade Name Consulting & Magazine Non-contractual Customer Relationships Total
Em Em Em Em Em Em
Cost
At 1 January 2016 32.5 166.2 17.0 4.9 2.4 223.0
Additions 19.0 - - - - 19.0
Acquisition of subsidiaries 224.0 963.9 176.0 - 208.0 1,571.9
Reclassified as held for sale (2.0) (6.5) - - (12.0) (20.5)
Foreign exchange (0.2) - - - - (0.2)
At 31 December 2016 273.3 1,123.6 193.0 4.9 198.4 1,793.2
Additions 13.8 - - - - 13.8
Foreign exchange (0.1) - - - (0.3) (0.4)
At 30 June 2017 287.0 1,123.6 193.0 4.9 198.1 1,806.6
Amortisation and Impairment
At 1 January 2016 25.8 33.3 1.5 4.9 2.4 67.9
Amortisation 62.1 - 13.6 - 40.8 116.5
Reclassified as held for sale (0.1) - - - (0.5) (0.6)
At 31 December 2016 87.8 33.3 15.1 4.9 42.7 183.8
Amortisation 35.9 - 7.4 - 22.1 65.4
At 30 June 2017 123.7 33.3 22.5 4.9 64.8 249.2
Net Book Value
At 31 December 2016 185.5 1,090.3 177.9 - 155.7 1,609.4
At 30 June 2017 163.3 1,090.3 170.5 - 133.3 1,557.4
Certain intangible assets are deemed to have an indefinite useful life as there is no foreseeable limit to the period over
which the asset is expected to generate net cash inflows for the entity. The carrying amounts of such assets at 30 June
2017 were as follows:
30 June 2017 31 December 2016
Em Em
Trademarks & Trade Names 15.1 15.1
Impairment Tests for Cash-Generating Units Containing Goodwill and Trademarks
An assessment of the Group's goodwill was carried out for the period ended 30 June 2017 to identify whether there were any
indicators of impairment. The goodwill relates to Betboo, CasinoClub, Sportingbet, bwin.party Sports brands and bwin.party
Games brands which had all been assessed for impairment at 31 December 2016. No indicators of impairment were found.
The following units have significant carrying amounts of goodwill:
30 June 2017 31 December 2016
Em Em
Betboo 8.3 8.3
CasinoClub 40.4 40.4
Sportingbet 84.2 84.2
bwin.party Sports brands 849.1 849.1
bwin.party Games brands 108.3 108.3
Total Goodwill 1,090.3 1,090.3
8. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
The Group had classified and transferred its Kalixa business, a fully integrated digital payments company, as held for sale
as at 31 March 2016 after its acquisition as part of the bwin.party group. The Group completed the sale of the majority of
the Kalixa business during the period, completing this disposal on 31 May 2017. It realised initial consideration of
E29.0m in the period together with deferred consideration of E2.6m which will be receivable in the second half of the year
after paying down certain balances owing between the business groups. As a result of fees and other trading movements, an
impairment charge of E1.1m was recorded prior to the disposal of the business.
The remaining Kalixa business was disposed of after the period end on 1 August 2017, realising consideration of E0.9m. An
impairment charge of E0.5m was recorded during the period to reflect the net realisable value.
During the prior year the Group disposed of its joint venture investment in Conspo, a provider of sports content, which had
also previously been classified as held for sale.
No further assets are considered as held for sale.
The movements in assets and liabilities held for sale are shown in the table below:
Assets held-for-sale Liabilities held-for-sale Total
Em Em Em
As at 31 December 2015 - - -
Acquired in business combination 12.3 - 12.3
Reclassified as held-for-sale 55.7 (22.9) 32.8
Trading, working capital and revaluation movements 4.0 0.2 4.2
Disposal of Visa shares (8.4) - (8.4)
Disposal of Conspo (3.9) - (3.9)
As at 31 December 2016 59.7 (22.7) 37.0
Trading, working capital and revaluation movements (3.3) (3.5) (6.8)
Disposal of Kalixa (52.8) 25.1 (27.7)
Impairment (1.6) - (1.6)
As at 30 June 2017 2.0 (1.1) 0.9
9. LOANS AND BORROWINGS
On 4 September 2015, the Group entered into an agreement with Cerberus Business Finance LLC for a loan of up to E400m, in
order to part-fund the acquisition of bwin.party. The Cerberus loan was repaid in January 2017 and an alternate bridge
financing facility of E250m provided by Nomura International plc was drawn down. All associated fees were charged to the
income statement at this time including the remaining value of the early repayment option on the Cerberus loan of E22.5m.
This bridging loan was then replaced with a long term institutional loan in March 2017 comprising of a E320m Senior Secured
Term and Revolving Facility, composed of a E250m term loan (maturity 6 years) and a E70m revolving credit facility
(maturity 5 years). The E70m credit facility was not drawn down during the period.
IAS 39 Financial Instruments: Recognition and Measurement, states that all financial liabilities should initially be
measured at their fair value and subsequently measured at amortised cost using the effective interest rate method. The
effective interest has been calculated using the internal rate of return on the cash outflows across the period of the
loan.
Principal Interest and fees EarlyRepaymentoption Total
Em Em Em Em
Loan balance at 1 January 2016 20.0 (0.2) - 19.8
Loan drawdown 380.0 - - 380.0
Arising on business combinations 39.4 - - 39.4
Revaluation of loan balances (0.4) - - (0.4)
Loan repayment (52.5) - - (52.5)
Arrangement fees and loan services fees paid in the prior year - (7.6) - (7.6)
Arrangement fees and loan services fees paid in the current year - (7.9) - (7.9)
Fair value of embedded derivatives - - 7.4 7.4
Interest charged - 46.0 - 46.0
Interest instalments paid - (39.7) - (39.7)
Amortisation of loan fees - 23.3 - 23.3
Unwinding of early repayment option - - (4.3) (4.3)
Loan balance at 31 December 2016 386.5 13.9 3.1 403.5
Loan drawdown 500.0 - - 500.0
Arrangement fees and loan services fees paid - (15.5) - (15.5)
Loan repayment (636.5) - - (636.5)
Interest charged - 7.3 - 7.3
Interest instalments paid - (16.5) - (16.5)
Amortisation of loan fees - 9.2 - 9.2
Unwinding of early repayment option - - (3.1) (3.1)
Loan balance at 30 June 2017 250.0 (1.6) - 248.4
Split between the following as at 31 December 2016:
Current liabilities 403.5
Non-current liabilities -
Split between the following as at 30 June 2017:
Current liabilities 1.8
Non-current liabilities 246.6
The interest and fees balance of E1.6m includes loan fees outstanding of E4.7m netted against accrued loan interest of
E3.1m.
10. DIVIDENDS
Period ended 30 June 2017 Period ended 30 June 2016
Em Em
First special dividend paid 42.8 -
Second special dividend paid 46.0 -
88.8 -
During the period, two special dividend payments were made. These consisted of a first special dividend paid on 14 February
2017 of 14.9 Ec per share and a second special dividend paid on 12 May 2017 of 15.1 Ec per share equating to total
dividends paid in the period of E88.8m (2016: nil).
The Board of Directors has declared an interim dividend of 16.5 Ec per share, payable on 19 October 2017.
11. SHARE OPTION SCHEMES
At 30 June 2017, the Group had the following share options schemes for which options remained outstanding:
i. Options were granted to Directors and employees under the existing and already approved LTIP on 2 June
2014. Under this scheme, 2,450,000 options held by Directors were cancelled under the arrangements for the acquisition of
bwin.party and as at 30 June 2017, 75,000 employee share options remained outstanding.
ii. Options were granted to Directors under the terms of the 2015 LTIP, as set out in the 13 November 2015
prospectus pages 325 to 329.
iii. Options were granted under a Management Incentive Plan under the same terms of the 2015 LTIP.
Under the terms of the share option plan, the Group can allocate up to 10% of the issued share capital, although it must
take allowance of the shares issued or issuable post the acquisition of bwin.party, as a consequence of rights to subscribe
for shares under the 2015 LTIP or any other employees' share scheme. The following options to purchase E0.01 ordinary
shares in the Company were granted, exercised, forfeited or existing at the period end:
Date of Grant Exercise Price Existing at 1 January 2017 Granted in the period Forfeited in the period Exercised in the period Existing at 30 June 2017 Exercisable at 30 June 2017 Vesting criteria
02 Jun 2014 1p 75,000 - - (75,000) - - Note a
02 Feb 2016 422p 10,264,420 - (2,932,691) (2,443,909) 4,887,820 - Note b
02 Feb 2016 467p 3,421,473 - - (977,564) 2,443,909 - Note c
02 Feb 2016 422p 200,000 - - - 200,000 57,144 Note d
16 Dec 2016 422p 8,658,334 - - (1,661,112) 6,997,222 299,999 Note e
30 Mar 2017 422p - 750,000 - - 750,000 333,333 Note f
30 Mar 2017 1p - 699,835 - (658,513) 41,322 41,322 Note g
Total all schemes 22,619,227 1,449,835 (2,932,691) (5,816,098) 15,320,273 731,798
The existing share options at 30 June 2017 are held by the following employees and consultants:
Option price 1p 422p 467p 422p 422p 1p
Grant date 02-Jun-14 02-Feb-16 02-Feb-16 19-Dec-16 30-Mar-17 30-Mar-17 Total
Kenneth Alexander - 4,887,820 - - - - 4,887,820
Lee Feldman (c) - - 2,443,909 - - - 2,443,909
Norbert Teufelberger (d) - 200,000 - - - - 200,000
Paul Miles (f) - - - - 350,000 - 350,000
Employees - - - 5,624,446 400,000 41,322 6,065,768
Consultants - - - 1,372,776 - - 1,372,776
- 5,087,820 2,443,909 6,997,222 750,000 41,322 15,320,273
Note a: These equity-settled options were granted to certain Directors and employees. The awards vested in full (and
became 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 the date of grant.
Note b: These equity-settled awards were issued on completion of the acquisition of bwin.party. The options vest and
became exercisable, subject to the satisfaction of a performance condition, over 30 months, with one-ninth vesting six
months after the date of grant and a further ninth vesting at each subsequent quarter. The options lapse, if not exercised,
on 2 February 2026. The performance condition is the total shareholder return ("TSR") of the Group against the FTSE 250.
Each ninth of the shares will have its TSR condition reviewed from the date of grant until the relevant testing date. To
the extent the TSR is not met at that time, it is tested again the following quarter and, if necessary, at the end of the
30-month vesting period. In order to vest, the TSR of the Group must rank at median or above against the FTSE 250.
Note c: These equity-settled awards were issued on the same basis as the awards in note b but at a higher exercise price
which represents the market value of the shares as at the date the scheme became effective. In order to compensate Lee
Feldman for the higher exercise price, the Company has agreed to pay him a cash bonus of £2.0m over the 30 month vesting
period of the option, but only upon option vesting and satisfaction of the performance condition described above, and he
has to reinvest 50% of this in GVC shares.
Note d: These awards were issued on completion of the acquisition of bwin.party. The equity-settled options, which are
not subject to a performance condition, vest and become exercisable over 24 months, with one seventh vesting six months
after the date of grant and a further seventh vesting at each subsequent quarter. The options lapse, if not exercised, on
2 February 2026
11. SHARE OPTION SCHEMES (continued)
Note e: These equity-settled awards were issued on the same basis as the awards in Note b and granted on 16 December
2016.
Note f: These equity-settled awards were issued on the same basis as the awards in Note b and granted on 30 March 2017.
Note g: These cash-settled awards were issued in accordance with the Group's annual share bonus plan 2016 and granted on
30 March 2017.
The charge to share-based payments within the consolidated income statement in respect of these options in 2017 was E10.5m
(2016: E6.5m plus a charge of E12.8m within exceptional items). Of the share-based payment charge, E10.0m related to
equity settled options (2016: E5.9m) and E0.5m to cash settled options (2016: E0.6m).
11.1 Weighted Average Exercise Price of Options
The number and weighted average exercise prices of share options is as follows:
Weighted average exercise price 30 June 2017 Number of options 30 June 2017 Weighted average exercise price 31 December 2016 Number of options 31 December 2016
Outstanding at the beginning of the period 416p 22,619,227 11p 3,481,946
Granted during the period 219p 1,449,835 422p 26,621,149
Exercised during the period 376p (5,816,098) 126p (6,360,255)
Forfeited in the period 422p (2,932,691) 422p (1,123,613)
Outstanding at the end of the period 15,320,273 416p 22,619,227
Exercisable at the end of the period 731,798 1,869,445
The options outstanding at 30 June 2017 have a weighted average contractual life of 8.6 years (31 December 2016: 9.1
years).
11.2 Valuation of Options
The fair value of services received in return for share options granted were measured by reference to the fair value of
share options granted. The Group engaged a third party valuation specialist to provide a fair value for the options.
The 2014 options were valued using a Monte Carlo model due to the performance conditions associated with the options. The
2014 cash-settled options were revalued using a Monte Carlo model at 31 December 2015.
The 2016 and 2017 schemes were valued using a correlated simulation comparing the Group and the peer Group of the FTSE250
at the grant date on a risk neutral basis. For simulations that meet the vesting conditions the share price at the vesting
date is discounted back to the present.
In 2016 the Group operated an annual share bonus plan for certain employees. On 30 March 2017 these awards were granted
with an exercise price of 1p. The number of options granted was
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