Latest Results
Interim Results
GVC Holdings PLC (AIM:GVC), a leading online gaming company, today announces its interim results for the six months ended 30 June 2011.
Download |
Interim Highlights
- Betboo - rapid growth with Net Gaming Revenue ("NGR") up 140%
- 7% (€1.0 million) increase in revenue from core CasinoClub brand
- Group operating profit up 80% at €3.6 million
- Profit before tax increased to €2.5 million (H1-2010: €1.5 million)
- Interim dividend declared of 10€ cents (H1-2010: 10€ cents)
- Robust Q3 trading NGR 15% ahead of corresponding period last year
Commenting on the results, Kenneth Alexander, Chief Executive of GVC Holdings PLC, said:
"As previously announced, the Group is in discussions with Sportingbet PLC to acquire their Turkish language sportbook and gaming offering. In light of these discussions it would be inappropriate for GVC to comment on this potential transaction until it is either put to shareholders for their approval, or talks with Sportingbet cease.
"The Group's prospects are directly affected by the regulatory framework in the markets in which we operate and we continue to monitor regulatory developments closely. Trading remains encouraging against a backdrop of challenging economic conditions and we remain cautiously optimistic about our prospects for the rest of the year."
CHIEF EXECUTIVE'S STATEMENT
The Group's successes in H1-2011 include:
- Expansion of the Betboo brand as a result of increased marketing investment has seen Betboo NGR increase by 140% to €5.2 million (H1-2010: €2.2 million)
- Resilient performance by CasinoClub, the Group's core German casino with NGR increasing by 7% (€1.0 million) to €14.6 million (H1-2010: €13.6 million)
- Revision of the Betboo earn-out to spread the cash payments over a longer period
- Group operating profit up 80% to €3.6 million (H1-2010: €2.0 million)
As more fully reported in the Statement of the Group Finance Director, Group NGR increased 8% to €30.3 million (H1-2010: €28.0 million), and with the absence of exceptional costs experienced in H1-2010, operating profit at €3.6 million was 80% higher than H1-2010 (€2.0 million).
| NGR per day | Q1-2010 | Q2-2010 | Q3-2010 | Q4-2010 | Q1-2011 | Q2-2011 | Q3-2011* |
| CasinoClub | 79 | 73 | 68 | 82 | 82 | 80 | 81 |
| Betaland | 68 | 67 | 60 | 48 | 62 | 53 | 49 |
| Betboo | 10 | 14 | 18 | 16 | 24 | 34 | 45 |
| 157 | 154 | 146 | 146 | 168 | 167 | 175 |
*For the period from 1 July 2011 to 25 September 2011
CasinoClub
The investments in marketing made by GVC over the last 18 months are bearing fruit, with revenue growing again, although at a lower contribution margin as more new business is being sourced through affiliates. Average daily revenues in H1-2011 were €81k (H1-2010: €76k, H2-2010: €75k). In the period from 1 July 2011 to 25 September 2011 average daily revenues were €81k (1 July 2010 to 25 September 2010: €70k).
Betboo
GVC's emerging markets brand uses its own software for sports and Bingo and buys-in third-party software for casino and poker. An aggressive media campaign, including TV coverage, was launched in Q2-2011 in Brazil and the benefits of this are being seen with a significant increase in revenues. Average daily revenues in H1-2011 were €29k (H1-2010: €12k, H2-2010: €17k). In the period from 1 July 2011 to 25 September 2011 average daily revenues rose further to €45k. This represents a percentage increase of 150% compared to the corresponding period last year (1 July 2010 to 25 September 2010).
Betaland
Despite the absence of the World Cup (summer 2010), Betaland continues to perform well generating average daily revenues in H1-2011 of €58k (H1-2010: €68k, H2-2010: €54k). In the period from 1 July 2011 to Sunday 25 September 2011, the average daily revenues were €49k (1 July 2010 to 25 September 2010: €64k which included the latter stages of the World Cup).
Outlook
As shareholders will know, the Group is in discussions with Sportingbet PLC to acquire their Turkish language sportbook and gaming offering. In light of these discussions it would be inappropriate for GVC to comment on this potential transaction until it is either put to shareholders for their approval, or talks with Sportingbet cease.
The Group's prospects are directly affected by the regulatory framework in the markets in which we operate and we continue to monitor regulatory developments closely. Trading though remains encouraging against a backdrop of challenging economic conditions and we remain cautiously optimistic about our prospects for the rest of the year.
A dividend of 10€ cents per share will be paid on 4 November 2011 to shareholders on the register at the close of business on the record date of 7 October 2011. As has been normal practice, the dividend is declared in Euro and paid in Sterling. The foreign exchange transaction will take place in the week of 7 October 2011 and will be announced via the Group's website.
Kenneth Alexander
Chief Executive
29 September 2011
GROUP FINANCE DIRECTOR'S STATEMENT
Financial Highlights of H1
- Betboo - rapid growth with Net Gaming Revenue ("NGR") up 140%
- 7% (€1.0 million) increase in revenue from core CasinoClub brand
- Group operating profit up 80% at €3.6 million
- Profit before tax increased to €2.5 million (H1-2010: €1.5 million)
- Interim dividend declared of 10€ cents (H1-2010: 10€ cents)
- Robust Q3 trading NGR 15% ahead of corresponding period last year
Summary of income statement
| Six months ended 30 June 2011 | Six months ended 30 June 2010 | |
| €million | €million | |
| Sports turnover | 49.3 | 39.0 |
| Group NGR | 30.3 | 28.1 |
| Contribution | 11.8 | 11.7 |
| Operating costs | (6.6) | (5.1) |
| Clean Ebitda | 5.2 | 6.6 |
| Exceptional items | ||
| - Legal costs incurred on Boss dispute | (0.2) | (0.3) |
| - Other | - | (3.0) |
| Ebitda | 5.0 | 3.3 |
| Depreciation, amortisation, share option charges | (1.4) | (1.3) |
| Operating profit | 3.6 | 2.0 |
| Net financial expense | (1.1) | (0.5) |
| Profit before tax | 2.5 | 1.5 |
The successful expansion of Betboo in South America and other emerging markets together with a recovery of revenues in our CasinoClub brand helped to offset the reduction in Betaland revenues which were boosted in 2010 by the FIFA World Cup.
Group NGR
Betboo revenues increased by 140% to €5.2 million (H1-2010: €2.2 million) and CasinoClub revenues increased by 7% to €14.6 million (H1-2010: €13.7 million). In the case of Betaland, in the absence of the World Cup, sports turnover fell by 16% to €26.0 million, but a strong sports margin of 17% coupled with robust casino revenues saw NGR only fall by 14% to €10.5 million (H1-2010: €12.2 million).
Contribution
The Group contribution margin fell slightly to 39% (H1-2010: 42%) reflecting planned marketing investments in both CasinoClub and Betboo.
Operating costs
Operating costs (excluding non-cash items) increased by €1.5 million (30%) to €6.6 million, mainly as a result of resourcing up for the expansion of the Betboo brand.
EBITDA
Clean EBITDA decreased to €5.2 million (H1-2010: €6.6 million) reflecting the lower contribution margin and increased operating costs as detailed above. In the absence of exceptional items (apart from some modest legal expenses incurred on the dispute with Boss Media), EBITDA increased by 56% to €4.8 million (H1-2010: €3.1 million).
The Group continues to incur legal costs as the dispute with Boss Media is continuing. These costs have been taken to the income statement as an exceptional item.
Net financial expense/Betboo earn-out
The acquisition of Betboo in July 2009 carries with it deferred consideration. As announced in February this year, the terms of this earn-out, (capped at a maximum of US$30 million) were changed to spread the payments over a longer period, from October 2012 to March 2015.
The change in the earn-out arrangements has resulted in some accounting changes too; the original assessment of the value of this business has increased from €12.1 million to €21.7 million; the deferred discount has changed from €4.1 million to €8.6 million; and therefore the charge in the income statement in the six months to June 2011 has increased from €0.5 million to €1.2 million. Ongoing, the charge for the current full year should be €2.4 million and €2.2 million for the full 2012 year.
Profits before tax
Profits before taxation have increased by 65% to €2.5million (H1-2011, €1.5 million, with earnings per share up to 7.7 €cents per share (H1-2010 3.1 €cents).
Cash flow
Summary of movements in cash and cash equivalents
| €million | |
| At 1 January 2011 | 6.6 |
| Operating profit before non-cash items | 5.0 |
| Less: spent on property, plant and equipment and intangible fixed assets | (1.0) |
| Less: absorbed in working capital | (1.7) |
| Less: dividends | (3.1) |
| At 30 June 2011 | 5.8 |
Cash per share at 30 June 2011 was 12.1 €cents. As the business expands more of the Group's funds will be absorbed in to working capital including in particular payment processes. Since the period end, costs of around €0.7million have been incurred in professional fees associated with the potential acquisition of the Turkish language business of Sportingbet plc, and monthly payments of the Betboo earn-out have commenced.
Richard Cooper
Group Finance Director
29 September 2011
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2011
| Six months ended 30 June 2011 | Six months ended 30 June 2010 | Year ended 31 Dec 2010 | ||||
| (Unaudited) | (Unaudited) | (Audited) | ||||
| Notes | €000's | €000's | €000's | |||
| Net gaming revenue | 3 | 30,282 | 28,057 | 54,907 | ||
| Cost of sales | (5,936) | (4,994) | (9,812) | |||
| Gross profits | 24,346 | 23,063 | 45,095 | |||
| Marketing and affiliate costs | (12,517) | (11,400) | (21,766) | |||
| Contribution | 3 | 11,829 | 11,663 | 23,329 | ||
| Operating costs (as below) | 4 | (8,194) | (9,648) | (18,171) | ||
| Other operating costs | 4 | (6,613) | (5,089) | (11,165) | ||
| Share option charges | 4 | (225) | (189) | (482) | ||
| 4 | (6,838) | (5,278) | (11,647) | |||
| Exceptional items | 4 | (189) | (3,308) | (4,428) | ||
| Depreciation and amortisation | 4 | (1,167) | (1,062) | (2,096) | ||
| Operating profit | 3,635 | 2,015 | 5,158 | |||
| Financial income | 2 | 5 | 8 | |||
| Financial expense | (1,150) | (516) | (1,088) | |||
| Profit before tax | 2,487 | 1,504 | 4,078 | |||
| Taxation charge | 5 | (83) | (114) | (222) | ||
| Profit after taxation from continuing operations | 2,404 |
1,390 |
3,856 |
|||
| Loss after taxation from discontinued operations | - |
(410) |
(411) |
|||
| Profit after tax | 2,404 | 980 | 3,445 | |||
| Earnings per share | € | € | € | |||
| Basic | ||||||
| Profit from continuing operations | 0.077 | 0.044 | 0.124 | |||
| Loss from discontinued operations | - | (0.013) | (0.013) | |||
| Total | 6 | 0.077 | 0.031 | 0.111 | ||
| Diluted | ||||||
| Profit from continuing operations | 0.076 | 0.042 | 0.121 | |||
| Loss from discontinued operations | - | (0.012) | (0.013) | |||
| Total | 6 | 0.076 | 0.030 | 0.108 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2011
| Six months ended 30 June 2011 | Six months ended 30 June 2010 | Year ended 31 Dec 2010 | |||
| (Unaudited) | (Unaudited) | (Audited) | |||
| €000's | €000's | €000's | |||
| Profit and total comprehensive income for the period | 2,404 |
980 |
3,445 |
CONSOLIDATED BALANCE SHEET
As at 30 June 2011
| 30 June 2011 | 30 June 2010 | 31 Dec 2010 | ||||
| (Unaudited) | (Unaudited) | (Audited) | ||||
| Notes | €000's | €000's | €000's | |||
| Assets | ||||||
| Property, plant and equipment | 229 | 515 | 363 | |||
| Intangible assets | 67,943 | 63,165 | 62,927 | |||
| Deferred tax asset | 38 | 224 | - | |||
| Total non-current assets | 68,210 | 63,904 | 63,290 | |||
| Receivables and prepayments | 8 | 7,311 | 6,110 | 4,833 | ||
| Income taxes reclaimable | 2,111 | 847 | 1,356 | |||
| Other tax reclaimable | 19 | - | 19 | |||
| Cash and cash equivalents | 10 | 5,799 | 6,644 | 6,614 | ||
| Total current assets | 15,240 | 13,601 | 12,822 | |||
| Current liabilities | ||||||
| Trade and other payables | 9 | (6,305) | (7,318) | (5,469) | ||
| Income taxes payable | (2,366) | (1,128) | (1,525) | |||
| Other taxation liabilities | (203) | (151) | (264) | |||
| Total current liabilities | (8,874) | (8,597) | (7,258) | |||
| Current assets less current liabilities | 6,366 | 5,004 | 5,564 | |||
| Long term liabilities | ||||||
| Deferred consideration on Betboo | 7 | (12,375) | (5,870) | (6,170) | ||
| Total net assets | 62,201 | 63,038 | 62,684 | |||
| Capital and reserves | ||||||
| Issued share capital | 311 | 311 | 311 | |||
| Merger reserve | 40,407 | 40,407 | 40,407 | |||
| Retained earnings | 21,483 | 22,320 | 21,966 | |||
| Total equity attributable to equity holders of the parent | 62,201 |
63,038 |
62,684 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2011
Attributable to equity holders of the parent company:
| Share Capital |
Merger Reserve |
Share Premium |
Retained Earnings |
Total |
||
| €000's | €000's | €000's | €000's | €000's | ||
| Balance at 1 January 2010 | 38,608 | - | 8,748 | 30,465 | 77,821 | |
| Transfer to merger reserve | (38,297) | 55,975 | (8,748) | (8,930) | - | |
| Share option charges | - | - | - | 188 | 188 | |
| Share options cancelled | - | - | - | (383) | (383) | |
| Dividend paid | - | (15,568) | - | - | (15,568) | |
| Transactions with owners | 311 | 40,407 | - | 21,340 | 62,058 | |
| Profit and total comprehensive income | - | - | - | 980 | 980 | |
| Balance as at 30 June 2010 | 311 | 40,407 | - | 22,320 | 63,038 | |
| Balance at 1 July 2010 | 311 | 40,407 | - | 22,320 | 63,038 | |
| Share option charges | - | - | - | 294 | 294 | |
| Dividend paid | - | - | - | (3,113) | (3,113) | |
| Transactions with owners | 311 | 40,407 | - | 19,501 | 60,219 | |
| Profit and total comprehensive income | - | - | - | 2,465 | 2,465 | |
| Balance as at 31 December 2010 | 311 | 40,407 | - | 21,966 | 62,684 | |
| Balance at 1 January 2011 | 311 | 40,407 | - | 21,966 | 62,684 | |
| Share option charges | - | - | - | 225 | 225 | |
| Dividend paid | - | - | - | (3,112) | (3,112) | |
| Transactions with owners | 311 | 40,407 | - | 19,079 | 59,797 | |
| Profit and total comprehensive income | - | - | - | 2,404 | 2,404 | |
| Balance as at 31 December 2011 | 311 | 40,407 | - | 21,483 | 62,201 |
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.
CONSOLIDATED STATEMENT OF CASHFLOWS
For the six months ended 30 June 2011
| Six months ended 30 June 2011 | Six months ended 30 June 2010 | Year ended 31 Dec 2010 | |||
| (Unaudited) | (Unaudited) | (Audited) | |||
| €000's | €000's | €000's | |||
| Cash flows from operating activities | |||||
| Cash receipts from customers | 27,906 | 27,363 | 53,771 | ||
| Cash paid to suppliers and employees | (24,579) | (25,956) | (48,217) | ||
| Corporate taxes recovered | - | 3,195 | 3,189 | ||
| Corporate taxes paid | (35) | (2,674) | (2,664) | ||
| Net cash from operating activities | 3,292 | 1,928 | 6,079 | ||
| Cash flows from investing activities | |||||
| Interest received | 2 | 5 | 8 | ||
| Acquisition of business and earn out | - | - | (271) | ||
| Disposal of business | - | - | (411) | ||
| Acquisition of property, plant and equipment | (81) | (318) | (148) | ||
| Acquisition of intangible assets | (915) | (143) | (957) | ||
| Net cash from investing activities | (994) | (456) | (1,779) | ||
| Cash flows from financing activities | |||||
| Dividend paid | (3,113) | (15,568) | (18,681) | ||
| Net cash from financing activities | (3,113) | (15,568) | (18,681) | ||
| Net decrease in cash and cash equivalents | (815) | (14,096) | (14,381) | ||
| Cash and cash equivalents at beginning of the period | 6,614 |
20,995 |
20,995 |
||
| Effect of exchange rate fluctuations on cash held | - |
(255) |
- |
||
| Cash and cash equivalents at end of the period | 5,799 |
6,644 |
6,614 |
Notes
The notes are available in the PDF download.
Page last up-dated: 29 September 2011