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

EntainAnnouncement

28/08/2015 07:02

RNS Number : 3793X
GVC Holdings PLC
28 August 2015
GVC Holdings PLC
("GVC", the "Company" or the "Group")
Interim Results 
GVC Holdings PLC (AIM:GVC), the multinational sports betting and gaming group, today releases its unaudited interim results for the six months ended 30 June 2015.
Financial highlights*
 Wagers - up 18.6% to 824 million (H1-2014: 694 million)
 Sports Gross Margin - 8.8% (H1-2014: 9.9% )
 Net Gaming Revenue ("NGR") - up 15.1% to 121 million (H1-2014: 105 million)
 Contribution - up 15.3% to 65 million (H1-2014: 57 million)
 Clean EBITDA - up 14.0% to 25.5 million (H1-2014: 22.4 million)
 Total dividend declarations to date - up 5% to 42cps on the same period in the prior year
 Deposit values - up 18% on H1-2014
 In-play - generating 73% of Sports Gross Margin (H1-2014: 63%)
 Mobile - generating 38% of Sports Gross Gaming Revenue ("GGR") (H1-2014: 22%)
 Adjusted, diluted Earnings Per Share - growth of 25% to 33.3 cps
Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings PLC, said:
"GVC continues to show strong financial performance, with growth in revenue, clean EBITDA and dividends. The Board would like to thank our talented and motivated staff for helping us to maintain this. We are highly confident for the rest of the year.
"With our track record of delivering value through organic growth and acquisitions we are determined that GVC will play an important role in the continuing consolidation of the online gaming sector. We expect to update the market soon about our discussions with bwin.party digital entertainment plc."
- 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
Cenkos Securities Plc 
Tel: +44 (0) 20 7397 8900
Mark Connelly, Stephen Keys, Camilla Hume
Media enquiries:
Bell Pottinger
David Rydell, James Newman, Anna Legge, Laura Jaques
Tel: +44 (0) 20 3772 2496
About GVC Holdings PLC
GVC Holdings PLC is a leading e-gaming operator in both b2c and b2b markets. Its core brands are Sportingbet, Betboo and CasinoClub. The Group has around 650 employees, is headquartered in the Isle of Man and is licensed in Malta, Denmark, UK, South Africa, Philippines and the Dutch Caribbean.
Further information on the Group is available at www.gvc-plc.com
* Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised figures.
Chief Executive's Report
The Group has had an excellent first half of 2015 and is confident for continued strong performance for the full year.
As early as January this year, the Group declared a dividend of 12.5 cents per share ("cps"). This was followed by a declaration of 15.5 (14.0 ordinary + 1.5 special) cps in March 2015 and 14 cps on 8th July 2015, bringing the total dividend declarations to 42 cps for the year to date, being 5% higher than the same period in 2014. The Group anticipates declaring a second interim dividend along with its Q3-2015 trading results in Q4-2015.
Trading KPI summary
000's
Sports wagers
per day
Sports NGR
per day
Gaming NGR
per day
Total NGR
per day
Q1-2014
3,765
278
281
559
Q2-2014
3,907
296
306
602
H1-2014
3,836 
287 
293 
580
Q1-2015
4,558
318
347
665
Q2-2015
4,543
289
382
671
H1-2015
4,551
303
365
668
YoY increase
19%
6%
25%
15%
Of the sports Gross Gaming Revenue ("GGR") in-play now amounts to 73% (H1-2014: 63%) and mobile represents around 38% (H1-2014: 22%). During H1-2015, deposit values were up 18% on the same period last year and active and new depositing customers were up 14% and 7% respectively on the same period last year
Negotiations to acquire bwin.party digital entertainment plc
As the market and investors are already aware from our announcements from 15 May 2015 to 24 August 2015, the Company is in discussions with the board of bwin.party digital entertainment plc ("bwin.party") to acquire the whole of the company's share capital through a scheme of arrangement. Were this acquisition to complete, it would, under the AIM rules, constitute a reverse takeover, and would therefore require the consent of the GVC shareholders. It is anticipated that the acquisition would be accompanied by a move from AIM to the Official List (standard segment) and the Main Market of the London Stock Exchange at the time of completion.
If successful, this reverse takeover would be a further transformational step for the Group and its shareholders. In pursuance of this goal, the Group has of course incurred costs in undertaking due diligence, synergy review, tax planning, and extensive legal workstreams amounting to 3.8 million as at 30 June 2015. These costs have been shown within exceptional items. By 30 June 2015 a total of 1.0 million of these costs had been paid.
Regulatory update
The Group is making an application to be licensed in Romania. As part of this licensing process, the Romanian authorities impose back taxes. GVC's estimate of the back-tax liability is 0.9 million and has been treated as an exceptional item in these financial statements. The ongoing tax impact is likely to be in the region of 0.5 million per year. 
Outlook
After experiencing softening in the Greek market following the well-publicised economic problems in Greece, and as reported on 8 July 2015, GVC is now encouraged by signs of greater customer activity. GVC remains confident on the future prospects of the Greek market, which will continue to be important for the Group. 
Current trading for the Group as a whole remains strong, even with the absence of the World Cup this year. The Board remains highly confident for the remainder of 2015, such confidence being underpinned by our declarations to date this year of dividends amounting to 42 cps. We look forward to providing further positive trading updates in October 2015 and January 2016.
Kenneth Alexander
Chief Executive
27 August 2015
Group Finance Director's Report
Consistent with prior disclosures we summarise the business model of the Group and express this into "figures per day." This accords with our preferred KPI disclosures. Section 2 of the 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 H1-2015
(Subject to rounding)
000's
Total
Per Day
H1-2015
Per Day
H1-2014
Wagers per day
823,703
4,551
3,836
Sports margin
8.8%
8.8%
9.9%
Gross margin
72,842
402
380
Gaming revenues less customer bonuses
48,074
266
200
Total revenue
120,916
668
580
Contribution margin
54%
Contribution
65,401
Expenditure
(39,916)
Clean EBITDA
25,485
Clean EBITDA margin
21.1%
Other operating cashflows
(2,512)
Clean Net Operating Cashflow ("CNOC")
22,973
Other cash outflows
(2,202)
Net Cashflow before dividends
20,771
Dividends paid in period
17,160
% of CNOC distributed
75%
SECTION 2: Summary of financial disclosures
(In  millions)
H1-2015
H1-2014
INCOME STATEMENT EXTRACTS
Clean EBITDA
25.5
22.4
Non-cash operating costs
(2.4)
(3.5)
Exceptional items
(4.7)
-
Financial expense
(1.3)
(0.9)
Profit before tax 
17.1
18.0
Key ratios
Contribution margin (contribution/revenue)
54.0%
54.0%
Clean EBITDA margin (clean EBITDA/revenue)
21.1%
21.3%
CASHFLOW EXTRACTS
H1-2015
H1-2014
Clean EBITDA
25.5
22.4
Capitalisation of internally developed software
(2.6)
-
Purchase of non-current assets
(0.4)
(0.2)
Trade investment in Betit (including costs)
-
(3.6)
Finance lease payments
(0.9)
(0.5)
Corporate tax, payments net of receipts
(0.2)
(0.2)
Other working capital movements
1.6
(0.8)
CLEAN NET OPERATING CASHFLOW ("CNOC")
23.0
17.1
Payment of exceptional items relating to offer for bwin.party
(1.0)
-
Betboo earn-out payments
(1.2)
(3.1)
NET CASHFLOWS
20.8
14.0
Cash at start of period
17.8
18.8
Dividends
(17.2)
(16.8)
Cash at end of period
21.4
16.0
Dividends as % of CNOC
75%
98%
 
CNOC / Clean EBITDA
90%
76%
Net cashflow / Clean EBITDA
82%
63%
Group revenues at 120.9 million were 15.1% ahead of the same period last year.
Contribution at 65.4 million rose by 15.3%. The contribution margin was 54%. This was after the new imposition of the UK point of consumption tax of 15% on Sports GGR and 15% of Gaming NGR, and German VAT of 19% on certain aspects of Gaming Revenues. 
Clean EBITDA rose 3.1 million to 25.5 million (H1-2014: 22.4 million) an increase of 14.0% over the prior year period.
Exceptional items, which totalled 4.7 million (H1-2014: nil), comprised 3.8 million of fees relating to the potential acquisition of bwin.party and a provision of 0.9 million for back-taxes relating to the Romanian licensing regime application.
Non-cash items of operating expenditure (charges for share options and the Betit put option, together with, depreciation and amortisation etc.) reduced to 2.4 million from 3.5 million.
Financial expenses totalled 1.3 million (H1-2014: 0.9 million). The bulk of the increase is due to foreign exchange differences arising on the translation of finance leases and the William Hill loan which, as at 30 June 2015, stood at an underlying amount of 4.6 million (30 June 2014: 6.2 million). The pertinent FX rates were:
 
30 June 2014
1 = 1.2477
31 December 2014
1 = 1.2780
30 June 2015
1 = 1.4057
STATEMENT OF FINANCIAL POSITION
Non-current assets rose to 160.6 million at 30 June 2015 from 159.2 million at 31 December 2014 following the investment in product (2.6million; H1-2014 nil) and the purchase of equipment (1.0 million, H1-2014 1.0 million), net of amortisation and depreciation of 2.2 million, (H1-2014 1.8 million).
Customer liability coverage With payment processor balances of 17.7 million at 30 June 2015, and cash and cash equivalents of 21.4 million, compared to customer liabilities of 12.1 million, there was a surplus of 27.0 million (30 June 2014: 20.0 million), a coverage ratio of 223% (30 June 2014: 154%)
STATEMENT OF CASHFLOWS
From a Clean EBITDA of 25.5 million, 23.0 million of Clean Net Operating Cashflow ("CNOC") was delivered and 20.8 million of net cash inflows were generated from which 17.2 million was paid to shareholders as in the form of dividends during the period.
The cash-conversion ratio (CNOC/Clean EBITDA) rose to 90% from 76% in H1-2014 and overall net cashflow (before dividends) was 82% of Clean EBITDA (H1-2014: 63%). 
Richard Cooper
Group Finance Director
27 August 2015
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2015
Six months
ended
30 June
2015
Six months
ended
30 June
2014*
Year
ended
31 Dec
2014
(Unaudited)
(Unaudited)
(Audited)
Notes
000's
000's
000's
Revenue
2
120,916
105,066
224,801
Variable costs
(55,515)
(48,344)
(101,513)
Contribution
2
65,401
56,722
123,288
Operating costs (as below)
3
(47,028)
(37,856)
(80,367)
Other operating costs
3
(39,916)
(34,367)
(74,126)
Share based payments
(202)
(124)
(736)
Depreciation and amortisation
(2,202)
(1,772)
(3,912)
Exceptional items
(4,708)
-
-
Effect of valuing the Betit put option
13
-
(1,593)
(1,593)
Operating profit
18,373
18,866
42,921
Financial income
-
8
16
Financial expense
4
(1,306)
(855)
(1,646)
Profit before tax
17,067
18,019
41,291
Taxation charge
5
(322)
(447)
(728)
Profit after tax
16,745
17,572
40,563
Earnings per share
Basic
Total
6
0.273
0.288
0.664
Diluted
Total
6
0.260
0.267
0.614
*restated - see note 14 for details
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2015
Six months
ended
30 June
2015
Six months
ended
30 June
2014*
Year
ended
31 Dec
2014
(Unaudited)
(Unaudited)
(Audited)
000's
000's
000's
Profit and total comprehensive income for the period
16,745
17,572
40,563
*restated - see note 14 for details
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
30 June
2015
30 June
2014*
31 Dec
2014
(Unaudited)
(Unaudited)
(Audited)
Notes
000's
000's
000's
Assets
 Property, plant and equipment
1,634
864
1,147
 Intangible assets
155,205
152,360
154,260
 Available for sale financial asset
13
3,801
3,801
3,801
 Total non-current assets
160,640
157,025
159,208
 Receivables and prepayments
7
22,806
24,237
27,605
 Income taxes reclaimable
5,473
3,881
3,925
 Other tax reclaimable
101
201
139
 Cash and cash equivalents
8
21,440
15,995
17,829
 Total current assets
49,820
44,314
49,498
Current liabilities
 Trade and other payables
9
(28,301)
(22,545)
(26,961)
 Balances with customers
(12,109)
(13,060)
(13,036)
 Interest bearing loans and borrowings
(1,406)
(945)
(1,362)
 Non-interest bearing loans and borrowings
11
(6,214)
(2,735)
(2,735)
 Share option liability
10
(6,826)
-
-
 Income taxes payable
(6,672)
(4,946)
(5,014)
 Other taxation liabilities
(1,854)
(2,344)
(1,338)
 Total current liabilities
(63,382)
(46,575)
(50,446)
Current assets less current liabilities
(13,562)
(2,261)
(948)
Non-current liabilities
 Share option liability
10
(5,251)
-
-
 Interest bearing loans and borrowings
(182)
(747)
(327)
 Non-interest bearing loan and borrowings
11
-
(5,352)
(2,777)
 Betit option liability
13
(1,745)
(1,745)
(1,745)
 Deferred consideration on Betboo
(2,779)
(4,842)
(3,953)
Total non-current liabilities
(9,957)
(12,686)
(8,802)
Total net assets
137,121
142,078
149,458
Capital and reserves
Issued share capital
12
613
609
613
Merger reserve
40,407
40,407
40,407
Share premium
85,380
84,571
85,380
Translation reserve
359
359
359
Retained earnings
10,362
16,132
22,699
Total equity attributable to equity holders of the parent
137,121
142,078
149,458
*restated - see note 14 for details
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2015
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 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 (restated)
-
-
-
-
17,572
17,572
Balance as at 30 June 2014 (restated)
609
40,407
84,571
359
16,132
142,078
Balance at 1 July 2014 (restated)
609
40,407
84,571
359
16,132
142,078
Share option charges
-
-
-
-
428
428
Share options exercised
4
-
809
-
-
813
Dividend paid
-
-
-
-
(16,852)
(16,852)
Transactions with owners
4
-
809
-
(16,424)
(15,611)
Profit and total comprehensive income
-
-
-
-
22,991
22,991
Balance as at 31 December 2014
613
40,407
85,380
359
22,699
149,458
Balance at 1 January 2015
613
40,407
85,380
359
22,699
149,458
Share option charges
-
-
-
-
261
261
Share option cash out
-
-
-
-
(12,183)
(12,183)
Share options exercised
-
-
-
-
-
-
Dividend paid
-
-
-
-
(17,160)
(17,160)
Transactions with owners
-
-
-
-
(29,082)
(29,082)
Profit and total comprehensive income
-
-
-
-
16,745
16,745
Balance as at 30 June 2015
613
40,407
85,380
359
10,362
137,121
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 2015
Six months
ended
30 June
2015
Six months
ended
30 June
2014
Year
ended
31 Dec
2014
(Unaudited)
(Unaudited)
(Audited)
000's
000's
000's
Cash flows from operating activities
Cash receipts from customers
125,507
106,316
221,048
Cash paid to suppliers and employees
(99,335)
(84,685)
(172,668)
Corporate taxes recovered
-
-
1,256
Corporate taxes paid
(213)
(220)
(1,740)
Net cash from operating activities
25,959
21,411
47,896
Cash flows from investing activities 
Interest received
-
8
16
Earn-out payments made - Betboo
(1,200)
(3,140)
(4,339)
Investment in Betit (note 13)
-
(3,649)
(3,649)
Acquisition of property, plant and equipment
(407)
(229)
(802)
Capitalised development costs
(2,633)
-
(3,343)
Net cash from investing activities
(4,240)
(7,010)
(12,117)
Cash flows from financing activities
Non-interest bearing loan (from William Hill)
-
-
(2,856)
Proceeds from issue of share capital
-
41
854
Finance lease payments
(948)
(500)
(1,149)
Dividend paid
(17,160)
(16,755)
(33,607)
Net cash from financing activities
(18,108)
(17,214)
(36,758)
Net increase / (decrease) in cash and cash equivalents
3,611
(2,813)
(979)
Cash and cash equivalents at beginning of the period
17,829
18,808
18,808
Cash and cash equivalents at end of the period
21,440
15,995
17,829
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 30 June 2015
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 2015 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 2015. 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 2014.
The comparative figures for the year ended 31 December 2014 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. SEGMENTAL REPORTING
2,1 Reporting by Segment 
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
STATEMENT OF TURNOVER
Sports wagers
823,703
694,320
1,463,523
Sports margin
8.8%
9.9%
9.8%
Gross margin
72,842
68,744
143,544
Sports NGR
54,849
52,034
110,199
Gaming NGR
66,067
53,032
114,602
TOTAL REVENUE
120,916
105,066
224,801
SEGMENTAL REPORTING
Total revenue 
120,916
105,066
224,801
Variable costs
(55,515)
(48,344)
(101,513)
Contribution
65,401
56,722
123,288
Contribution margin
54%
54%
55%
Other operating costs (note 3)
 Personnel expenditure
(23,440)
(20,667)
(43,055)
 Costs other than personnel
(15,590)
(13,660)
(30,731)
 Foreign exchange differences
(886)
(40)
(340)
(39,916)
(34,367)
(74,126)
Clean EBITDA
25,485
22,355
49,162
Exceptional items (note 3.1)
(4,708)
-
-
Share option charges
(202)
(124)
(736)
Effect of valuing the Betit put option 
-
(1,593)
(1,593)
EBITDA
20,575
20,638
46,833
Depreciation and amortisation
(2,202)
(1,772)
(3,912)
Financial income (note 4)
-
8
16
Financial expense (note 4)
(1,306)
(855)
(1,646)
Profit before tax
17,067
18,019
41,291
Taxation
(322)
(447)
(728)
Profit after tax
16,745
17,572
40,563
Total assets
210,460
201,339
208,706
Total liabilities
(73,339)
(59,261)
(59,248)
2.2 Performance by quarter
Number of sports wagers 
Value of Sports wagers
Sports margin %
Sports NGR
Gaming NGR
Total Revenue
Contribution
000's
000's
000's
000's
000's
000's
Q1-2014
19,896
338,805
10.0%
25,068
25,248
50,316
27,585
Q2-2014
19,298
355,515
9.8%
26,966
27,784
54,750
29,137
H1-2014
39,194
694,320
9.9%
52,034
53,032
105,066
56,722
Q3-2014
18,915
367,550
10.5%
30,348
29,892
60,240
32,843
Q4-2014
22,834
401,653
9.0%
27,817
31,678
59,495
33,723
H2-2014
41,749
769,203
9.7%
58,165
61,570
119,735
66,566
FY-2014
80,943
1,463,523
9.8%
110,199
114,602
224,801
123,288
Q1-2015
22,008
410,220
9.0%
28,592
31,244
59,836
32,059
Q2-2015
19,513
413,483
8.7%
26,257
34,823
61,080
33,342
H1-2015
41,521
823,703
8.8%
54,849
66,067
120,916
65,401
3. OPERATING COSTS
Six months
ended
30 June
2015
Six months
ended
30 June
2014
Year
ended
31 Dec
2014
Notes
000's
000's
000's
Wages and salaries
11,566
10,698
21,744
Incentive schemes, including directors
8,084
6,103
13,865
Amounts paid to long term contractors
1,586
1,703
3,270
Compulsory social security contributions
1,044
1,107
2,137
Compulsory pension contributions
343
313
627
Health and other benefits
385
351
758
Recruitment and training
432
392
654
Personnel expenditure (excluding share option charges)
23,440
20,667
43,055
Professional fees
2,080
1,637
4,489
Technology costs
11,564
10,170
20,991
Office, travel and other costs
1,946
1,853
5,251
Foreign exchange losses
886
40
340
Other operating costs
39,916
34,367
74,126
Equity settled share option charges
261
124
552
Cash settled share option charges
(59)
-
184
Exceptional items
3.1
4,708
-
-
Effect of valuing the Betit put option
-
1,593
1,593
Depreciation
413
282
675
Amortisation
1,789
1,490
3,237
47,028
37,856
80,367
3.1 Exceptional items
Six months
ended
30 June
2015
Six months
ended
30 June
2014
Year
ended
31 Dec
2014
Notes
000's
000's
000's
Costs arising on proposed acquisition of bwin.party digital entertainment plc
a
3,793
-
-
Romanian back tax and license fees
b
915
-
-
4,708
-
-
Note a: On 15 May 2015, the Group confirmed it had submitted a proposal with a view to the Group acquiring the entire issued (and to be issued) share capital of bwin.party digital entertainment plc. Professional fees relating to the proposed acquisition have been shown as an exceptional item due to their materiality.
Note b: Under the licensing regime enacted for Romania, entities that have in the past operated in that country are obligated to make a "tax amnesty" settlement should they wish to be considered for a new license. The Group has made a provision for these back-tax costs and treated the expense as an exceptional item.
4. FINANCIAL INCOME AND EXPENSE
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
Financial income
Interest receivable
-
8
16
-
8
16
Financial expense
Unwinding of discount on non-interest bearing loan
(116)
(119)
(238)
Finance lease interest
(53)
(26)
(67)
Unwinding of discount on deferred consideration
(27)
(400)
(710)
Foreign exchange revaluation
(1,110)
(306)
(627)
Other expense
-
(4)
(4)
(1,306)
(855)
(1,646)
The foreign exchange differences above arose as follows:
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
Retranslation of the William Hill non-interest bearing loan
(587)
(306)
(467)
Retranslation of amounts due in respect of finance leases
(107)
-
(160)
Retranslation of share option cash out liability
(416)
-
-
(1,110)
(306)
(627)
5. TAXATION
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
Current tax expense
Current year
322
447
840
Prior year
-
-
(112)
322
447
728
Deferred tax
Origination and reversal of temporary differences
-
-
-
Total income tax expense in Income Statement
322
447
728
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
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
Profit for the period attributable to ordinary shareholders
16,744,558
17,572,000
40,563,268
Weighted average number of shares
61,276,480
60,912,801
61,099,894
Basic earnings per share (in )
0.273
0.288
0.664
Profit for the year attributable to ordinary shareholders before exceptional items
21,452,500
17,572,000
40,563,268
Basic earnings per before exceptional items (in )
0.350
0.288
0.664
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
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
Profit for the period attributable to ordinary shareholders
16,744,558
17,572,000
40,563,268
Weighted average number of shares
61,276,480
60,912,801
61,099,894
Effect of dilutive share options
3,170,759
4,876,210
5,010,290
Weighted average number of dilutive shares
64,447,239
65,789,011
66,110,184
Diluted earnings per share (in )
0.260
0.267
0.614
Profit for the year attributable to ordinary shareholders before exceptional items
21,452,500
17,572,000
40,563,268
Diluted earnings per share before exceptional items (in )
0.333
0.267
0.614
7.  RECEIVABLES AND PREPAYMENTS
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
Balances with payment processors
17,696
17,156
22,222
Trade receivables
10
138
111
Other receivables
1,224
1,189
1,500
Total receivables
18,930
18,483
23,833
Prepayments
3,876
5,754
3,772
22,806
24,237
27,605
Payment processor balances described as receivables are funds held by third party collection agencies subject to collection, or balances used to make refunds to players. Some of the balances should be considered as working capital floats in certain markets.
8. CASH AND CASH EQUIVALENTS
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
Restricted cash subject to regulator constraints
3,935
1,092
3,506
Other cash
17,505
14,903
14,323
21,440
15,995
17,829
9. TRADE AND OTHER PAYABLES
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
Other trade payables
10,076
10,581
12,166
Accruals
18,225
11,964
14,795
28,301
22,545
26,961
10.  LIABILITY TO SHARE OPTION SETTLEMENT
As announced by the Company on 27 March 2015 three of its directors surrendered 3,200,000 fully-vested and "in the money" share options granted in 2010 and 2012 at the prevailing market price at that time (average of 1.83895). The surrender price was 4.64067, being the average of the middle market closing prices of the Company's shares for the thirty dealing days up to and including the date of surrender.
In light of the surrender of share options described above by Kenneth Alexander, Richard Cooper and Lee Feldman (the "Senior Team"), the Company has implemented a new retention plan for the Senior Team (the "Retention Plan").
The Retention Plan is focused on ensuring that the Senior Team are compensated for the surrender of their fully vested share options. Accordingly, each member of the Senior Team will receive cash payments which in total equal the "in-the-money" value of their surrendered share options.
Under the Retention Plan:
 Total cash payment due to each director shall be paid evenly over a period of two years.
 The directors' dividend bonuses derived from the share options will decrease in a straight-line over the 24 month period of the retention plan.
 In the event a director's service is terminated by the Company for cause (as defined in their service agreement or letter of appointment) or he resigns during the two year period (other than due to serious illness or repudiatory breach by the Company of his service agreement), he will not be entitled to receive any further Retention Plan payments.
 All payments will become payable on a change of control of the Company.
IFRS 2 Share based payments, states that the liability is recognised on the surrender through retained earnings. The recognition of this liability is shown below:
Six
months
ended
30 June
2015
Six
months
ended
30 June
2014
Year
ended
31 Dec
2014
000's
000's
000's
Amounts falling due in one year
6,826
-
-
Amounts falling due after one year
5,251
-
-
12,077
-
-
11. NON-INTEREST BEARING LOAN
As part of the Group's acquisition of Sportingbet plc in March 2013, 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 balances, expressed in euros, are shown below:
30 June
2015
30 June
2014
31 Dec
2014
Original principal amount in 
6,862
6,862
6,862
Repayments made
(2,271)
-
(2,271)
Principal amount outstanding at period end
4,591
6,862
4,591
Prevailing exchange rate
1.4057
1.2477
1.2780
Principal amount expressed in 
6,454
8,562
5,867
The second instalment of 2,295k is repayable in December 2015 with the final instalment of 2,296k repayable in June 2016.
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 installment as well as the impact of the discount are shown below: 
Total
000's
Loan balance at 1January 2015
5,867
Revaluation at 30 June exchange rate
587
6,454
Discount on recognition of the loan
(780)
Unwinding of discount at 30 June 2015
540
Loan balance at 30 June 2015
6,214
Future discount
240
6,454
12. SHARE CAPITAL
Number of shares
At 1 January 2015 and 30 June 2015
61,276,480
Share options currently in issue are:
Exercise price
Number of shares
Directors and executives*
1p
3,450,000
Provided to third parties following underwriting commitments made at the time of the Sportingbet acquisition**
2.335p
156,947
*350,000 of these share options relate to cash settled share options. The remaining balance relates to equity settled share options.
13. INVESTMENT IN BETIT SECURITIES LIMITED 
On 14 May 2014, the Group acquired a 15% stake in Betit Holdings Limited ('BHL') from Betit Securities Limited ('BSL'). The consideration was 3.5 million, which together with professional fees incurred at the time amounted to a total upfront cost of 3.6 million. The Group has a call option to acquire the balance of the outstanding shares. There is also a put option. These options, are, under IAS 39, required to be valued, and are shown within both Non-current assets and non-current liabilities.
30 June
2015
30 June
2014
31 Dec
2014
Available for sale financial asset
Original cost
-
3,500
-
Incidental acquisition costs
-
149
-
Put option at fair value
-
1,745
-
Effect of 
-
(1,593)
-
Balance at start of period
3,801
-
3,801
Balance at end of period
3,801
3,801
3,801
Non-current liability to put option
(1,745)
(1,745)
(1,745)
There were no significant changes in the fair value of the asset or the options as at 31 December 2014 or 30 June 2015. Accordingly no adjustments have been made to the carrying value of the asset since inception. 
14. RESTATEMENTS
The Group has made two modest restatements to the 30 June 2014 interim financial statement due to clarification of accounting treatments associated with the investment in Betit.
14.1 Restatements in the Consolidated Income Statement
Six months ended 30 June 2014
Reference
Original
Restatements
Restated
000's
000's
000's
Revenue
105,066
-
105,066
Cost of sales
(48,344)
-
(48,344)
Contribution
56,722
-
56,722
Other expenditure
(34,367)
-
(34,367)
Share based payments
(124)
-
(124)
Depreciation and amortisation
(1,772)
-
(1,772)
Effect of valuing the Betit put option
a
-
(1,593)
(1,593)
Financial income
8
-
8
Financial expense
(855)
-
(855)
Profit before tax
19,612
(1,593)
18,019
Taxation
(447)
-
(447)
Profit after tax
19,165
(1,593)
17,572
14.2 Restatements in the Consolidated Statement of Financial Position
Reference
Original
Restatements
Restated
000's
000's
000's
Investments
a
3,649
152
3,801
Trade and other payables
b
(26,225)
3,680
(22,545)
Interest bearing loans and borrowings
b
-
(945)
(945)
Non-interest bearing loans and borrowings
b
-
(2,735)
(2,735)
Betit option liability
a
-
(1,745)
(1,745)
All other assets and liabilities
166,247
-
166,247
143,671
(1,593)
142,078
a. 
Represents the entries to recognise the fair value of the put and call options associated with Betit as discussed in note 13 above. At the time the 2014 interim financial statements were published the fair value exercise had not been completed.
b. 
Represents reclassifications of the current portions of the William Hill interest free loan and finance lease liabilities which were included within trade and other payables in the 2014 interim financial statements. The reclassifications aid comparison with the 31 December 2014 audited consolidated Statement of Financial Position.
15. SUBSEQUENT EVENTS
On 2 July 2015, GVC received notice that 37 Entertainment Inc, a company incorporated in Quebec, had filed legal proceedings against GVC Holdings plc in Quebec. GVC believes the claim is without merit and intends to robustly contest the claim.
- Ends -

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