REG - GVC Holdings PLC - Interim Results and Q3 Trading Update <Origin Href="QuoteRef">GVC.L</Origin> - Part 1

EntainAnnouncement

29/10/2014 13:19

RNS Number : 1934S
GVC Holdings PLC
22 September 2014
Press Release
22 September 2014
GVC Holdings PLC
("GVC" or the "Group")
Interim Results and Q3 Trading Update
GVC Holdings PLC (AIM:GVC), the multinational sports betting and gaming group,today announces its Interim Results for the six-months ended 30 June 2014 together with its quarterly dividend and a special dividend.
Dividend
Quarterly dividend of 12.5 cents (2013: 10.5 cents)
Additional special dividend of 2.5 cents (2013: nil)
Total quarterly dividend is 15 cents, up 43% on same quarter last year (2013: 10.5 cents)
Cumulative dividends payable in calendar year 2014, 55 cents. Total up 96% over prior year (2013: 28 cents)
Financial highlights
Wagers up 38% to 694 million (H1-2013: 502 million)
Sports margin 9.9% (H1-2013: 10.3%)
Net Gaming Revenue ("NGR") up 44% to 105 million (H1-2013: 73 million)
Contribution up 25% to 57 million (H1-2013: 46 million)
Clean EBITDA up 26% to 22.4 million (H1-2013: 17.8 million)
Strong start to Q3-2014: trading per day, at 628k is 20% higher than Q3-2013 (523k)
Operational metrics
A leading operator of in-play markets with over 4,000 concurrent markets
A market leading sports-trading team generating 10% margin
Current number of active customers up 22% on prior year
New depositing customers, 56k in Q3-2014,up 30% on Q3-2013
Deposits up 22% on Q3-2013
Enhancement of mobile product and sportsbook planned for 2015
In-play generating 70% of sports gross margin
Mobile generating 22% of sportsbook revenues
Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings plc, said: "GVC operates in numerous markets in both casino and sports betting and as a group is well diversified and highly cash generative. GVC is now in a very strong position with exciting growth prospects as we continue to develop our market leading in-house sportsbook and mobile platform. The Group remains highly confident for the outcome of this current financial year and this confidence is reflected in the enhanced dividend that we have announced today."
- Ends -
For further information:
GVC Holdings PLC

Kenneth Alexander, Chief Executive
Tel: +44 (0) 1624 652 559
Richard Cooper, Group Finance Director
www.gvc-plc.com
Daniel Stewart & Company Plc
Tel: +44 (0) 20 7776 6550
Paul Shackleton / Mark Treharne
www.danielstewart.co.uk
Media enquiries:
Abchurch

Henry Harrison-Topham / Jamie Hooper
Tel: +44 (0) 20 7398 7702
henry.ht@abchurch-group.com
www.abchurch-group.com
About GVC Holdings PLC
GVC Holdings PLC is a multinational sports betting and gaming group. Its core brands are CasinoClub, Betboo and Sportingbet. The Group has over 600 employees and is headquartered in the Isle of Man and is licensed in Malta, Germany, Denmark, UK, South Africa, Italy, Alderney and the Dutch Caribbean.
Further information on the Group is available at www.gvc-plc.com


Chief Executive's Report
The Group has had an excellent 2014 so far, with a very strong performance during the World Cup, which has built on the success of the complete restructuring of the Sportingbet business that GVC acquired in 2013.
The Board is delighted to announce today a second special dividend in this year, this time allowing our shareholders to participate in GVC's successful World Cup performance during which, customer acquisition accelerated, sports margins were strong and systems proved very robust.
During 2014 the Group has declared a dividend of 11.5 cents per share ("cps") in January 2014, 16.0 (12.5+3.5) cps in April 2014, 12.5 cps in July 2014 and now 15 cps (12.5+2.5) in September 2014, bringing the total dividend declarations to 55 cps for the year to date, and being 96% higher than in 2013 despite an additional 30 million shares in issue.
GVC's commitment to highly cash generative markets does not however come at the expense of investing in the future. GVC will continue to invest and develop its in-house sportsbook and mobile technology to maximise the Group's growth prospects and generate the cash crucial to its aggressive dividend policy.
The Group's Latam business continues to grow impressively and remains the market leader in Latam for sports betting. Furthermore, the Group demonstrated its commitment to widening its geographical offering by the 15% investment in the Scandinavian start-up venture, Betit, who in the short space of time since its launch has captured meaningful market share in the Scandinavian online casino market across its brands.
GVC's relentless focus on the customer journey is applied across all markets and the Group's customer facing teams are incentivised to deliver a positive experience to our customers. 
KPI summary
000's
Sports wagers
per day
Sports NGR
per day
Gaming NGR
per day
Total NGR
per day
Q1-2013
1,894
209
185
394
Q2-2013
3,637
275
273
548
H1-2013
2,771
242
229
472





Q3-2013
3,335
267
256
523
Q4-2013
3,926
244
285
529
H2-2013
3,631
255
271
526







Q1-2014
3,765
278
281
559
Q2-2014
3,907
296
306
602
H1-2014
3,836
287
293
580
YoY increase
38.4%
19%
27%
23%





Q3-2014*
3,894
325
303
628
YoY increase
17%
22%
18%
20%
* to midnight Thursday 18 September 2014
 based on pro-forma revenues
Both sports wagers and NGR per day have increased quarter on quarter and NGR per day is now averaging 628k.
The relative mix between sports NGR and other revenues has remained relatively static at just under 50% (H1-2013: 51%; H2-2013: 49%), but in-play now amounts to 70% of wagering, and mobile was around 22% up from a low base of 8% in H1-2013 before GVC started investing in it.
Operationally, current trading across all measures is at least 20% higher than in 2013:
 Deposit values were up 22% in Q3-2013;
 Active and new depositing customers were up 30% on the same period last year.
Platform ability
Under GVC's tenure, the Sportsbook platform has been developed to give significantly greater latency, response time and volume capability. In the last quarter the uptime has been 99.999%, handling over 4,000 concurrent events, more than 100% higher than the same period in 2013. The number of sports bets placed per day during Q2-2014 averaged 212,000 up 27% on Q2-2013 which averaged 167,000.
Dividend
The quarterly and special dividend totalling 15 cent per share will be payable on Monday 3 November 2014 to shareholders on the register ("the record date") on Friday 10 October 2014. The shares will go "ex-dividend" on Thursday 9 October 2014.


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


Group Finance Director's Report
I start my report by summarising the business model of the Group and expressing this into "figures per day." This accords with our preferred KPI disclosures. Section 2 of my report summarises the primary Financial Statements along with a short explanation behind material movements in the figures.
SECTION 1: Summary of business model based upon H1-2014
(Subject to roundings)
000's
Total

Per Day
H1-2014
Wagers per day
694,320

3,836
Sports margin %
9.9%

-
Gross margin
68,744

380
Add-on revenue less all bonuses
21,187

116




Sportsbook revenue
89,931

496
CasinoClub revenue
15,135

84




Total revenue
105,066

580
EBITDA margin
21.3%

-




EBITDA
22,355


Non-P&L outflows*
(4,040)






Net cashflow available for other uses
18,315






Dividends paid in period
16,755


% of available cashflow distributed
91%


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

SECTION 2: Summary of financial disclosures
(In  millions)
H1-2014

H1-2013
INCOME STATEMENT EXTRACTS



Sports wagers
694.3

501.5




Pro-forma revenue
105.1

85.3
Total revenue
105.1

73.2




Contribution
56.7

45.6
Other operating costs
(34.3)

(27.8)
Clean EBITDA
22.4

17.8
Non-cash operating costs
(1.9)

(2.0)
Exceptional items
-

(13.8)
Financial income
0.0

0.8
Financial expense
(0.9)

(0.9)
Profit before tax 
19.6

1.9




Key ratios



Contribution margin (contribution/pro-forma revenue)
54.0%

53.4%
Clean EBITDA margin (clean EBITDA/proforma revenue)
21.3%

20.9%




BALANCE SHEET EXTRACTS
30.6.14

30.6.13
Non-current assets
156.9

152.5
Net current assets before loans and leases
1.4

7.6
Loan from William Hill
(8.1)

(7.3)
Finance leases
(1.7)

-
Betboo deferred consideration
(4.8)

(10.6)
Total net assets
143.7

142.2




CASHFLOW EXTRACTS
H1-2014

H1-2013
Clean EBITDA
22.4

17.8
Exceptional items, contribution and costs relating to the acquisition of Sportingbet
-

(13.8)
Contribution from William Hill to the acquisition of Sportingbet
-

42.6
Loan from William Hill
-

8.0
Working capital movements including liabilities pursuant to the acquisition
(0.8)

(28.3)
Betboo earn-out payments
(3.1)

(2.5)
Purchase of non-current assets
(0.2)

-
Trade investment in Betit (including costs)
(3.6)

-
Finance lease payments
(0.5)

-
Net corporate tax payments
(0.2)

(0.1)
Share option subscriptions
-

0.2
Cash at start of period
18.8

6.6
Dividends
(16.8)

(2.2)
Cash at end of period
16.0

28.3
Group revenues at 105.1 million were 43.6% ahead of the same period last year.


Contribution at 56.7 million rose by 24.5%. The contribution margin was 54%. This reflects the investments made ahead of and during the World Cup, particularly in Latin America where the Group raised marketing expenditure by 4.5 million in this one region alone.
Clean EBITDA rose 4.6 million, 25.6% or 7.5 cents per share to 22.4 million.
Non-cash items of operating expenditure(share option charges, depreciation and amortisation) fell to 1.9 million from 2.0 million.
Exceptional items H1-2014: zero. H1-2013 reflected restructuring costs following the Sportingbet acquisition.
Financial income. The credit in H1-2013 is attributable to a one-off imputed interest credit on the interest-free loan from William Hill, drawn-down in H1-2013. It is a non-cash item.
Net current assets before betting tax accruals and loan instruments, have fallen due a higher value of dividend paid during the period (16.8 million in H1-2014 compared to 2.2 million in H1-2013).
Betting tax accruals have naturally increased substantially as GVC is paying betting taxes in six markets, where local taxes are levied.
William Hill loan. This has remained static in underlying terms, but a strengthening in GBP since 30 June 2014 (1.25, up from 1.17 at 30 June 2013) has increased the liability as measured in Euros.
Cashflow. The key points on the Group's cashflow are:
 15% stake in Betit, 3.5 million plus associated costs
 A modest amount repayable to finance lease houses (0.5 million; H1-2012 nil) in furtherance to acquisitions of computer hardware for the Group's growing data centers.
 Continuation of working capital absorption as the Group grows.


Share capital
The Group issued 216,513 shares to employees and consultants between 30 June 2013 and 30 June 2014. On 1 July 2014, a further 343,053 shares were issued to third parties following their underwriting commitments pursuant to the Sportingbet acquisition in 2013.
As announced on 2 June 2014, the Company granted a total of 3,100,000 nil cost share options; 2,100,000 to directors and 1,000,000 to senior executives. The awards will vest in full and become exercisable on the share price being equal to or exceeding 6.00 per share for a continuous period of 90 calendar days at any time from 30 May 2014.
During H1-2014, 26,667 share options at an exercise price of 1.26 were exercised and the resulting cash receipt was translated into Euros as 41,187 which when rounded is reported in the above analysis as 0.0k.
Richard Cooper
Group Finance Director
22 September 2014


CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2014


Six months
ended
30 June
2014
Six months
ended
30 June
2013*
Year
ended
31 Dec
2013*


(Unaudited)
(Unaudited)
(Audited)

Notes
000's
000's
000's
Revenue
2
105,066
73,182
169,959
Variable costs

(48,344)
(27,632)
(67,328)
Contribution
2
56,722
45,550
102,631
Operating costs
3
(36,263)
(43,542)
(88,513)





Analysed as:




Other operating costs
3
(34,367)
(27,750)
(64,332)
Share based payments

(124)
(224)
(730)
Exceptional items
3.1
-
(13,797)
(19,711)
Depreciation and amortisation

(1,772)
(1,771)
(3,740)





Operating profit

20,459
2,008
14,118
Financial income

8
785
813
Financial expense

(855)
(934)
(1,917)
Profit before tax

19,612
1,859
13,014
Taxation charge
5
(447)
(316)
(711)
Profit after tax

19,165
1,543
12,303





Earnings per share

Basic




Total
6
0.315
0.032
0.225





Diluted




Total
6
0.291
0.031
0.220
*restated - see note 13 for details
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2014

Six months
ended
30 June
2014
Six months
ended
30 June
2013
Year
ended
31 Dec
2013

(Unaudited)
(Unaudited)
(Audited)

000's
000's
000's
Profit for the period
19,165
1,543
12,303
Items that may be reclassified subsequently to profit or loss:



Exchange differences on translation of foreign operations
-
123
359
Profit and total comprehensive income for the period
19,165
1,666
12,662


CONSOLIDATED BALANCE SHEET
As at 30 June 2014



30 June
2014
30 June
2013*
31 Dec
2013



(Unaudited)
(Unaudited)
(Audited)

Notes

000's
000's
000's
Assets





Property, plant and equipment


864
649
918
Intangible assets


152,360
151,874
153,850
Investments
12

3,649
-
-
Total non-current assets


156,873
152,523
154,768






Receivables and prepayments
7

24,237
23,527
23,579
Income taxes reclaimable


3,881
1,582
1,877
Other tax reclaimable


201
-
306
Cash and cash equivalents
8

15,995
28,298
18,808
Total current assets


44,314
53,407
44,570






Current liabilities





Trade and other payables
9

(26,225)
(28,968)
(24,089)
Balances with customers


(13,060)
(13,807)
(13,298)
Income taxes payable


(4,946)
(2,351)
(2,722)
Other taxation liabilities


(2,344)
(671)
(4,182)
Total current liabilities


(46,575)
(45,797)
(44,291)






Current assets less current liabilities


(2,261)
7,610
279






Long term liabilities





Interest bearing loans and borrowings


(747)
-
(1,221)
Non-interest bearing loan
10

(5,352)
(7,306)
(5,148)
Deferred consideration on Betboo


(4,842)
(10,601)
(7,582)






Total net assets


143,671
142,226
141,096






Capital and reserves





Issued share capital
11

609
607
609
Merger reserve


40,407
40,407
40,407
Share premium


84,571
84,397
84,530
Translation reserve


359
123
359
Retained earnings


17,725
16,692
15,191
Total equity attributable to equity holders of the parent


143,671
142,226
141,096
*restated - see note 13 for details


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2014
Attributable to equity holders of the parent company:

Share
Capital
Merger
Reserve
Share
Premium
Translation reserve
Retained
Earnings
Total

000's
000's
000's
000's
000's
000's







Balance at 1 January 2013
316
40,407
611
-
17,137
58,471







Share option charges
-
-
-
-
230
230
Lapsed share options
-
-
-
-
(6)
(6)
Share options exercised
1
-
158
-
-
159
Issue of share capital for the acquisition of Sportingbet PLC
290
-
83,628
-
-
83,918
Dividend paid
-
-
-
-
(2,212)
(2,212)
Transactions with owners
291
-
83,786
-
(1,988)
82,089







Profit and total comprehensive income
-
-
-
123
1,543
1,666







Balance as at 30 June 2013
607
40,407
84,397
123
16,692
142,226







Balance at 1 July 2013
607
40,407
84,397
123
16,692
142,226







Share option charges
-
-
-
-
506
506
Share options exercised
2
-
133
-
-
135
Dividend paid
-
-
-
-
(12,767)
(12,767)
Transactions with owners
2
-
133
-
(12,261)
(12,126)







Profit and total comprehensive income
-
-
-
236
10,760
10,996







Balance as at 31 December 2013
609
40,407
84,530
359
15,191
141,096







Balance at 1 January 2014
609
40,407
84,530
359
15,191
141,096







Share option charges
-
-
-
-
124
124
Share options exercised
-
-
41
-
-
41
Dividend paid
-
-
-
-
(16,755)
(16,755)
Transactions with owners
-
-
41
-
(16,631)
(16,590)







Profit and total comprehensive income
-
-
-
-
19,165
19,165







Balance as at 30 June 2014
609
40,407
84,571
359
17,725
143,671
Under The Isle of Man Companies Act 2006, distributions are not governed by reserves but by the Directors undertaking an assessment of the Company's solvency at the time of distribution.


CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 June 2014

Six months
ended
30 June
2014
Six months
ended
30 June
2013
Year
ended
31 Dec
2013

(Unaudited)
(Unaudited)
(Audited)

000's
000's
000's
Cash flows from operating activities



Cash receipts from customers
106,316
85,022
173,885
Cash paid to suppliers and employees
(84,685)
(100,106)
(181,592)
Corporate taxes recovered
-
-
1,143
Corporate taxes paid
(220)
(89)
(1,580)
Net cash from operating activities
21,411
(15,173)
(8,144)




Cash flows from investing activities 



Interest received
8
5
33
Acquisition earn-out payments
(3,140)
(2,541)
(6,378)
Investment in Betit (note 12)
(3,649)
-
-
Acquisition of Sportingbet (note 12.2)
-
64,792
64,755
Non-interest bearing loan
-
8,020
8,020
Acquisition of property, plant and equipment
(229)
-
(37)
Acquisition of intangible assets
-
-
(4)
Net cash from investing activities
(7,010)
70,276
66,389




Cash flows from financing activities



Proceeds from issue of share capital
41
159
294
Repayment of borrowings (note 12.2)
-
(31,384)
(31,384)
Finance lease payments
(500)
-
-
Dividend paid
(16,755)
(2,212)
(14,979)
Net cash from financing activities
(17,214)
(33,437)
(46,069)




Net (decrease)/increase in cash and cash equivalents
(2,813)
21,666
12,176
Cash and cash equivalents at beginning of the period
18,808
6,632
6,632
Cash and cash equivalents at end of the period
15,995
28,298
18,808


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 30 June 2014
1. SIGNIFICANT 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. (incorporated on 30 November 2004 and listed on AIM on 21 December 2004) and took the assets of Gaming VC Holdings S.A. on 21 May 2010 after the formal approval by shareholders to re-domicile the Group. The consolidated financial statements of the Group for the interim period ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the 'Group').
These interim condensed consolidated financial statements are for the six months ended 30 June 2014. They have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2013.
The comparative figures for the year ended 31 December 2013 are extracted from GVC Holdings PLC's consolidated financial statements, which are available on the company's website. An unmodified audit opinion was issued on these consolidated financial statements.
The financial statements are presented in the Euro, rounded to the nearest thousand. They are prepared on the historical cost basis.


2. Reporting by Segment and detail of Income and Expenditure Account
Six months ended 30 June 2014



Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013

000's
000's
000's
STATEMENT OF TURNOVER



Sports wagers
694,320
501,481
1,169,505
Sports margin
9.9%
10.3%
9.6%
Gross margin
68,744
51,664
112,081




Sports NGR
52,034
43,858
90,823
Gaming NGR
53,032
41,490
91,302

105,066
85,348
182,125




Revenue recognised by GVC
105,066
73,182
169,959
Revenue recognised by B2B partners
-
12,166
12,166

105,066
85,348
182,125




SEGMENTAL REPORTING



Total revenue (notes 2.2)
105,066
73,182
169,959
Variable costs
(48,344)
(27,632)
(67,328)
Contribution
56,722
45,550
102,631
Contribution margin
54%
62%
60%
Other operating costs (note 3)



 Personnel expenditure
(20,667)
(14,441)
(32,507)
 Costs other than personnel
(13,660)
(12,840)
(29,891)
Sub-total of costs
(34,327)
(27,281)
(62,398)
Foreign exchange differences
(40)
(469)
(1,934)
Clean EBITDA
22,355
17,800
38,299
Exceptional items
-
(13,797)
(19,711)
Share option charges
(124)
(224)
(730)
EBITDA
22,231
3,779
17,858
Depreciation and amortisation
(1,772)
(1,771)
(3,740)
Financial income (note 4)
8
785
813
Financial expense (note 4)
(855)
(934)
(1,917)
Profit before tax
19,612
1,859
13,014
Taxation
(447)
(316)
(711)
Profit after tax
19,165
1,543
12,303
Total assets
201,187
205,930
199,338
Total liabilities
(57,516)
(63,704)
(58,242)


2.2 Performance by quarter

Number of
Sports
wagers
(000s)
Value of Sports wagers
Sports margin %
Sports NGR
Gaming NGR
Total pro-forma revenue
Total Revenue
Contribution


000's

000's
000's
000's
000's
000's
Q1-2013
18,656
170,476
12.5%
18,825
16,666
35,491
23,325
15,521
Q2-2013
15,235
331,005
9.2%
25,033
24,824
49,857
49,857
30,029
H1-2013
33,891
501,481
10.3%
43,858
41,490
85,348
73,182
45,550









Q3-2013
15,475
306,803
9.9%
24,555
23,585
48,140
48,140
29,116
Q4-2013
19,676
361,221
8.4%
22,410
26,227
48,637
48,637
27,965
H2-2013
35,151
668,024
9.0%
46,965
49,812
96,777
96,777
57,081









FY-2013
69,042
1,169,505
9.6%
90,823
91,302
182,125
169,959
102,631









Q1-2014
19,896
338,805
10.0%
25,068
25,248
50,316
50,316
27,585
Q2-2014
19,298
355,515
9.8%
26,966
27,784
54,750
54,750
29,137
H1-2014
39,194
694,320
9.9%
52,034
53,032
105,066
105,066
56,722
3. OPERATING COSTS


Six months
ended
30 June
2014
Six months
ended
30 June
2013
Year
ended
31 Dec
2013

Notes
000's
000's
000's
Wages and salaries

16,801
11,205
24,776
Amounts paid to long term contractors

1,703
1,563
3,763
Compulsory social security contributions

1,107
854
1,794
Compulsory pension contributions

313
379
751
Health and other benefits

351
221
701
Recruitment and training

392
219
722
Personnel expenditure (excluding share option charges)

20,667
14,441
32,507





Professional fees

1,637
943
2,523
Technology costs

10,170
8,121
19,795
Office, travel and other costs

1,853
2,242
5,146
Third party service costs

-
1,534
2,427
Costs other than personnel

13,660
12,840
29,891





Foreign exchange losses

40
469
1,934





Total of Other operating costs

34,367
27,750
64,332





Share option charges

124
224
730
Exceptional items
3.1
-
13,797
19,711
Depreciation

282
184
504
Amortisation

1,490
1,587
3,236


36,263
43,542
88,513


3.1 Exceptional Items
The Group incurred expenditure on exceptional items. These are items which are both exceptional in size and nature.

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013

000's
000's
000's
Costs arising on the acquisition of Sportingbet PLC



- Total professional fees arising on the acquisition of Sportingbet PLC
-
6,268
6,398
- Underwriting
-
810
810
- Stamp duty and stock exchange fees
-
639
639
- Other costs, net of the economic benefit arising from the management of the Sportingbet Spanish business
-
133
(8)

-
7,850
7,839
Redundancies, retentions and similar
-
5,134
9,017
Contract buyouts
-
813
2,855

-
13,797
19,711
4. FINANCIAL INCOME AND EXPENSES

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013

000's
000's
000's
Financial income



- Discount on non-interest bearing loan
-
780
780
- Interest receivable
8
5
33

8
785
813




Financial expense



- Unwinding of discount on non-interest bearing loan
(119)
(66)
(186)
- Unrealised foreign exchange loss on revaluation of non-interest bearing loan
(306)
-
-
- Unwinding of discount on deferred consideration
(400)
(859)
(1,677)
- Finance lease interest
(26)
-
(43)
- Other expense
(4)
(9)
(11)

(855)
(934)
(1,917)
Note:
The impact on cash of the financial income expenses in the six months ending 30 June 2014 was an outflow of 22k (H1-2013: 4k).


5. TAXATION

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013

000's
000's
000's
Current tax expense



Current year
447
222
524
Prior year
-
11
104

447
233
628
Deferred tax



Origination and reversal of temporary differences
-
83
83
Total income tax expense in income statement
447
316
711
6. EARNINGS PER SHARE
6.1 Basic Earnings Per Share and Basic Earnings Per Share Before Exceptional Items
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. Basic earnings per share from continuing operations before exceptional items has been calculated by taking the profit attributable to ordinary shareholders and adding back the cost of exceptional items in the year and dividing by the weighted average number of shares in issue.

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013
Profit for the period attributable to ordinary shareholders
19,165,000
1,543,000
12,303,000
Weighted average number of shares
60,912,801
48,296,772
54,586,391
Basic earnings per share (in )
0.315
0.032
0.225
Exceptional items
-
13,797,000
19,711,000
Profit for the year attributable to ordinary shareholders before exceptional items
19,165,000
15,340,000
32,014,000
Basic earnings per before exceptional items (in )
0.315
0.318
0.586


6.2 Diluted Earnings Per Share and Diluted Earnings Per Share Before Exceptional Items
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. Diluted earnings per share from continuing operations before exceptional items has been calculated by taking the profit attributable to ordinary shareholders and adding back the cost of exceptional items and dividing by the weighted average number of shares in issue, as diluted by share options.

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013
Profit for the period attributable to ordinary shareholders
19,165,000
1,543,000
12,303,000
Weighted average number of shares
60,912,801
48,296,772
54,586,391
Effect of dilutive share options
4,876,210
1,273,738
1,419,914
Weighted average number of dilutive shares
65,789,011
49,570,510
56,006,305
Diluted earnings per share (in )
0.291
0.031
0.220
Exceptional items
-
13,797,000
19,711,000
Profit for the year attributable to ordinary shareholders before exceptional items
19,165,000
15,340,000
32,014,000
Diluted earnings per share before exceptional items (in )
0.291
0.309
0.572
7. RECEIVABLES AND PREPAYMENTS

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013

000's
000's
000's
Balances with payment processors
17,156
16,983
18,270
Trade receivables
138
344
274
Other receivables
1,189
4,047
1,341
Total receivables
18,483
21,374
19,885
Prepayments
5,754
2,153
3,694

24,237
23,527
23,579




Payment processor debtor days



- On revenue per income statement
30 days
42 days
39 days
- On pro-forma revenue
30 days
36 days
37 days
Payment processor balances described as receivables are funds held by third party collection agencies subject to collection after one month, or balances used to make refunds to players.


8. CASH AND CASH EQUIVALENTS

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013

000's
000's
000's
Balances with customers
13,060
13,807
13,298
Other cash
2,935
14,491
5,510

15,995
28,298
18,808
9. TRADE AND OTHER PAYABLES

Six
months
ended
30 June
2014
Six
months
ended
30 June
2013
Year
ended
31 Dec
2013

000's
000's
000's
Other trade payables
10,581
9,511
9,586
Finance leases
945
-
945
Non-interest-bearing loan from William Hill PLC (see note 10)
2,735
-
2,514
Accruals
11,964
19,457
11,044

26,225
28,968
24,089
10. NON INTEREST-BEARING LOAN
As part of the Group's acquisition of Sportingbet PLC, a credit facility was made available to the Group by William Hill PLC to fund working capital.
The principal amount, together with the prevailing exchange rate between the  and the  and the resultant balance, expressed in  is shown below:

30 June
2014
30 June
2013
31 Dec
2013
Principal amount in 
6,862
6,862
6,862
Prevailing exchange rate
1.2477
1.1687
1.2031
Principal amount expressed in 
8,562
8,020
8,256
Repayment profile (base currency)



By 31 December 2014
2,287
2,287
2,287
By 31 December 2015
2,287
2,287
2,287
By 30 June 2016
2,288
2,288
2,288

6,862
6,862
6,862
IAS 39 Financial Instruments: Recognition and Measurement, states that all loans and receivables should initially be measured at their fair value. The loan has therefore been discounted at a rate of 4% and will be unwound over the period of the loan.
The facility is repayable in three instalments and should GVC declare dividends in excess of 58 cents per share, William Hill are entitled to receive an accelerated repayment equal to the excess of the actual dividend over 58 cents per share. The instalments as well as the impact of the discount are shown below: 



Amount in Euro's

Total
Current liabilities
Non-current liabilities

000's
000's
000's
Loan balance on initial recognition
8,020


Revaluation at 30 June exchange rate
542



8,562


Discount on recognition of the loan
(780)
(424)
(356)
Unwinding of discount at 30 June 2014
305
305
-
Loan balance at 30 June 2014
8,087
2,735
5,352
Future discount
475
119
356

8,562
2,854
5,708
11. SHARE CAPITAL

Number of shares
At 1 January 2014
60,906,760
Shares issued pursuant to the exercise of options by Directors (admitted to trading on 21 May 2014)
26,667
At 30 June 2014
60,933,427
Shares issued pursuant to the exercise of options by third parties** (admitted to trading on 1 July 2014)
343,053
At 1 July 2014
61,276,480
Share options currently in issue are:
Directors and Executives:
1,600,000*
at 2.13
1,600,000*
at 1.5479
3,100,000
at 0.01
6,300,000
61,276,480
Provided to third parties following underwriting commitments made at the time of the acquisition:
156,947**
at 2.335
* These share options attract a dividend credit payable by way of bonuses and through the payroll.
**These share options have the exercise price reduced by the value of any dividends declared up to the point of exercise.
12. ACQUISITIONS
12.1 TRADE INVESTMENT IN BETIT SECURITIES LIMITED
The Group announced on 14 May 2014 that it had paid 3.5 million for a 15% stake in Betit Holdings Limited ("Betit").
The Group has a call option to acquire the balance of the outstanding shares. The call option can be exercised no earlier than 1 July 2017 and no later than 30 September 2017, and would be subject to further LGA clearance and the AIM Rules (principally the rules on a Reverse Takeover if applicable). The minimum call option price is 70 million, and the actual price would be determined by the mix of revenues between regulated and non-regulated markets and certain multiples attaching thereto which at our current multiple levels would lead to the transaction being accretive for shareholders.
If the Group decides not to exercise its call option then Betit may require the Group to acquire its shares in Betit at a price determined by the mix of revenues between regulated and non-regulated markets and certain multiples thereof (but absent any floor on the price). Completion of this purchase would be subject to certain conditions including the Group's ability to raise the necessary financing. Should the Group fail to raise the required financing, Betit Securities Limited may acquire the Group's shares in Betit for nominal consideration.
The Group, as a 15% shareholder in Betit, does not have the power to govern the financial and operating policies of the company. On this basis the Group will not be consolidating the results of the company into the Group's financial statements and has recognised the investment as a non-current asset at cost. This in accordance with IFRS 10 (Consolidated Financial Statements). A review of the accounting treatment of the investment will be carried out in the full year accounts made up to the 31 December 2014.
12.2 Acquisition of Sportingbet plc
Sportingbet plc was acquired on 19 March 2013. During the period ended 30 June 2013, a total of 15,108k of costs were incurred, defrayed by 1,311k of gain from the disposal (to William Hill plc) of the Sportingbet Spanish business.
The acquisition balance sheet of Sportingbet plc, for IFRS accounting purposes, included the contribution made from William Hill (36.5 million @FX rate of 1.1661). In more conventional terms the acquisition arrangements looked like:

Total
000's
Other assets
000's
Cash & debt
000's
Current assets
43,929
21,700
22,229*
Current liabilities
(93,537)
(62,153)
(31,384)




Net balance sheet deficit
(49,608)
(40,453)
(9,155)
Contribution from William Hill
42,563
-
42,563*

(7,045)
(40,453)
33,408




* reported in the acquisition balance sheet as a combined figure 66,834k as subsequently restated to exclude the cash associated with the Spanish business (2,042k) and thus netting to 64,792k reported in the acquisition balance sheet as "Bank borrowings and similar".
13. RESTATEMENTS
The Group has made three modest restatements to the 30 June 2013 interim financial statement chiefly due to clarification of accounting treatments associated with the acquisition of Sportingbet plc in March 2013.
13.1 Restatements in Statement of Consolidated Income
Six months ended 30 June 2013
Reference
Original
Restatements
Restated


000's
000's
000's
Revenue
a
72,335
847
73,182
Cost of sales
a
(26,785)
(847)
(27,632)
Contribution

45,550
-
45,550
Other expenditure

(29,745)
-
(29,745)
Exceptional items
b
(15,108)
1,311
(13,797)
Income from assets available for re-sale
b
1,311
(1,311)
-
Financial income
c
5
780
785
Financial expense
d
(868)
(66)
(934)
Profit before tax

1,145
714
1,859
Taxation

(316)
-
(316)
Profit after tax

829
714
1,543
Year ended 31 December 2013
Reference
Original
Restatements
Restated


000's
000's
000's
Revenue
a
168,407
1,552
169,959
Cost of sales
a
(65,776)
(1,552)
(67,238)
Contribution

102,631
-
102,631
13.2 Restatements in Consolidated Balance Sheet

Reference
Original
Restatements
Restated


000's
000's
000's
Intangible assets
e
146,968
4,906
151,874
Non-interest bearing loan
c+d
(8,020)
714
(7,306)
All other assets and liabilities

(2,342)
-
(2,342)


136,606
5,620
142,226
13.3 Restatement to the Consolidated Statement of cashflows

Reference
Original
Restatements
Restated


000's
000's
000's
Cash paid to suppliers & employers

(102,148)
2,042
(100,106)
Acquisition of Sportingbet
b
66,834
(2,042)
64,792
All other cashflows

63,612
-
63,612
Cash and cash equivalent at end of period

28,298
-
28,298
a. 
Represents income from customers previously netted-off with cost of sales.
b. 
Represents a reclassification of the contribution from the Sportingbet Spanish business, which, at the time of the 2013 interim financial statements was an asset for resale, and was sold after the period end, thus disclosed within exceptional items. The cash movement is the cash acquired with the business.
c. 
Represents the imputed value of interest (under IAS 39) on the interest-free loan from William Hill plc
d. 
Represents the pro-rata release of the above interest.
e. 
Retranslation of shares using the price on the first day of post-acquisition trading as opposed to the price on the day on which the shares were suspended.
[(2.48-2.335) x 29,018,075 x FX rate of 1.1661 = 4,906k]
14. SUBSEQUENT EVENTS
There have been no subsequent events between 30 June 2014 and the date of the signing of these accounts that merit inclusion.
- Ends -

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IR SEMSUSFLSEIU