Latest Results

Interim Results

Gaming VC Holdings S.A., (AIM:GVC) a leading European online gaming company, today announces its interim results for the six months ended 30 June 2009.

Interim Highlights
Chief Executive's Statement
Group Finance Director's Statement
Consolidated Income Statement
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cashflows
Notes to the Interim Financial Information

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Interim Highlights

  • Net Gaming Revenue ("NGR") of €26.5 million, up €2.5 million (10%) on H2-08 and €0.4 million on H1-08
  • Gross profits increased 4.4% to €22.0 million (H1-08: €21.1 million)
  • Clean EBITDA* up to €8.9 million from €8.7 million in H2-08
  • Basic earnings per share of €0.26 (H1-08: €0.33)
  • Interim dividend per share of €0.20 unchanged, and payable on 6 November 2009
  • Net cash resources increased to €20.8 million, equivalent to approximately 60p per share

* before share option charges and exceptional items


Q3 2009 Highlights

  • Entered South American market with acquisition of betboo.com for €3 million
  • Proposed redomiciliation of the Group from Luxembourg to the Isle of Man

Commenting on the results, Kenneth Alexander, Chief Executive of Gaming VC, said: "I am pleased to report that, despite the challenging economic conditions, we have achieved a strong set of interim results including improvements in both Net Gaming Revenue and gross profit compared to the same period last year, and more importantly to the second-half of 2008. Our strategy of geographic diversification continues and has been underpinned by our move into South America through the completion of our acquisition of betboo.com. I am encouraged with current trading in the third quarter and remain confident about our prospects for the second half of the year."

 

Chief Executive's Statement

Introduction and financial overview

I am pleased to announce a strong set of interim results against the background of a global recession and reduced consumer spend across Europe. Compared with the six months to 31 December 2008, where many other e-gaming companies reported a drop in revenues, the Group's Net Gaming Revenue ("NGR") rose to €26.5 million from €24.0 million. NGR was also higher than in the first six months of 2008 (€26.1 million).

Player numbers in the six months to 30 June 2009 have not decreased, but Gaming VC has seen some reduction in yields from high roller customers in its German casino, casinoclub.com. This business had over 13,000 unique real-money customers during the six month period, and over 4,800 customers spending (or winning) over €500 during the period.

Stakes on sports events rose to €31.8 million, up from €22.5 million in H1-08 and €28.3 million in H2-08. Sportsbook margins, for the six months ended 30 June 2009 were 16.3% (H1-08: 14.7%), but adverse Italian football results at the end of the season resulted in margins for Q2-09 being 8.8% (Q2-08: 13.9%).

The Group's product and geographical diversification strategy is bearing fruit, with Germany now only representing 45% of NGR (H1-08: 61%), and sports representing 18% (H1-08: 12%). The Board is extremely excited about the Group's recent acquisition of Betboo; not only does it cement Gaming VC's geographic diversification but it also provides the Group with an entry point into the Latin American marketplace which we believe will be one of the fastest growing e-gaming markets..

As more fully reported in the financial review, clean ebitda at €8.9 million was higher than H2-08 (€8.7 million) but lower than H1-08 (€10.9 million), as expected by the Board given the overall economic weakness in the European economies. Operating costs remained flat.

Current trading

Current trading has been encouraging. Despite the high percentage of favourites winning in the early weeks of the football season, Q3-09 sports margins exceeded 12% in the 85 days to 23 September 2009. Daily average gaming revenues for the 85 day period to 23 September 2009 were at a similar level to Q3-08.

Post acquisition, Betboo has continued to grow and trade well. For the first 85 days of Q3-09, average daily revenues were Brazilian Reais 33k (€12k), 25% higher than the same period last year. The launch of casino and poker has now been successfully integrated into the sportsbook and bingo product.

Cash at bank and in hand, at 18 September 2009 (the last date when consolidated figures are available) was €20.5 million (approximately GBP 0.60p per share).

Regulation

The Board continues to monitor the regulatory framework closely. The outcome of the recent Bwin/Portugal case does not directly affect the Group and its operations.

Redomiciliation to Isle of Man

In August 2009, the Group announced its intention, pending formal approval from shareholders, for a redomiciliation from Luxembourg to the Isle of Man. Under the AIM rules, a circular will be sent to shareholders pertaining to the Group's proposed redomiciliation.

Dividend

The Board has declared an interim dividend per share of €0.20 (2008: €0.20) payable on 6 November 2009 to holders on the register at the close of business on 6 October 2009.

Additional analysis and comments on the financial performance and financial position are included in the Financial Director's Report.

We remain confident about our prospects for the rest of the year.

Kenneth Alexander
Chief Executive
25 September 2009

 

Group Finance Director's Statement

Net Gaming Revenue ("NGR")

NGR is stated after ordinary winnings, jackpot winnings, chargebacks, and promotional bonuses. Revenues for the first half of 2009 were €26.5 million, €2.5 million (11%) higher than H2-08 and €0.4 million higher than the same period last year (€26.1 million). The break down between gaming and sports revenues is as follows:

  H1 2009 H1 2008 H2 2008
  € million € million € million
Gaming revenues €21.6 €22.9 €20.9
Sport revenues €4.9 €3.2 €3.1

Non-German revenues continue to increase, and reached €14.6 million representing 55% of total revenues, compared to €10.2 million (39%) in the first half of 2008 and €12.7 million (55%) in the second half of 2008.

Sports margins held up at 16.3% (H1-08: 14.7%; H2-08: 11.9%). This was despite the unfavourable impact arising from the soccer results in the closing weeks of the season.

Gross profits

Gross profit percentages at 83% were consistent with H2-08 and marginally higher than H1-08.

Contribution

Contribution is defined as gross profits less marketing costs and affiliate commissions and similar.

Contribution, at €13.5 million was 8% higher than H2-08 (€12.5 million), but lower than H1-08 (€15.4 million). This reflects a greater proportion of lower margin non-German business. Encouragingly, contribution from sports rose 110% from €0.7 million in H1-08 to €1.5 million, in H1-09.

Operating expenses

The total operating expenses, which now include the costs for Winzingo, were €5.5 million, 6% higher than H1-08, mainly as a result of €0.3 million of exceptional charges relating to restructuring the Italian and Tel Aviv operations. Share option charges under IFRS 2 fell as more options reached the end of their vesting period.

All other operating expenses were flat at €4.6 million. Personnel costs, at €2.5 million, were lower than H1-08 (€2.6 million) but higher than H2-08 (€2.2 million) largely reflecting the costs for Winzingo. Professional fees, €0.6 million, dropped by a third over H1-08 (€0.9 million) and remained flat with H2-08. Office running costs, €1.2 million were higher than both H1-08 (€0.8 million) and H2-08 (€1.0 million), reflecting a full period of operations in Malta, Italy and Tel Aviv. An analysis of these costs is shown below:

  €000's
6 months
To June
2009
  €000's
6 months
To June
2008
  €000's
12 months
To Dec
2008
           
Personnel expenses (other than share option charges) 2,465   2,634   4,817
Professional fees - Fort Knox -   (32)   (384)
Professional fees - Other 598   924   1,486
Office running 1,184   756   1,755
Foreign exchange differences 104   13   36
Other 288   280   674
Total 4,639   4,575   8,384

Foreign exchange differences arose principally on the settlement of certain GBP accruals, translated at the year-end rate of 1.0342 Euro to GBP. They were settled when the GBP had strengthened to around 1.15 Euro.

The Group's operating and accounting currency is the Euro, but it has a small exposure to both GBP and Israeli Shekels. Following the acquisition of Betboo, the Group has a currency exposure to the Brazilian Reais, but this is expected to be minimal for the next 24 months. On an exceptional basis, the Group hedges its currency exposures, as it did for the forward purchase of the initial purchase price for Betboo (€3 million).

Depreciation and amortisation

Charges for the period were €0.4 million, which is level with H2-08 (€0.4 million) but a little higher than the first half of 2008 (€0.3 million)

Financial income and expense

The dramatic reduction in global interest rates has led to a fall in interest earnings in the first half of 2009 to €0.1 million, down from €0.3 million in H1-08 and €0.3 million in H2-08.

Corporate Taxation

The Group's tax charge was derived primarily from its operations in Malta, where it started trading in August 2007 and became profitable in 2008. Tax is charged at 35% and reduced to 4.17% via a reclaim made by the holding company.

Property, plant and equipment

The Group continued to upgrade its plant and equipment, making additions of €0.2 million during the period.

Intangible assets

A further €0.1 million of additions was made during the period in order to upgrade various websites.

Net current assets, cash and treasury matters

The Group had €21.2 million of net current assets at 30 June 2009 (30 June 2008: €18.9 million), an increase of 12.2%.

The components of the cash balances, €20.8 million (30 June 2008: €18.6 million) were, in Euro equivalents:

€000’s
30 June
2009
€000’s
30 June
2008
€000’s
31 Dec
2008
Own funds 19,751   17,995   17,502
Client funds 1,037   615   997
Funds held in escrow for founder shareholders -   -   335
20,788 18,610 18,834
And split by currency:          
Euros 17,795   18,456   18,651
US dollars 112   51   22
GB Pounds 2,879   103   147
Other 2   -   14
20,788 18,610 18,834
And analysed by bank:          
Barclays 15,764   16,046   17,185
Bank of Valetta 4,735   2,437   1,000
Other 289   127   649
20,788 18,610 18,834

Since 31 December 2008, cash balances have increased by €2.0 million. The constituents of this increase are shown below:



Profits before tax
    €000's

8,109
Add back: Depreciation 351  
  Amortisation 70  
  Share option charges 88  
      509
       
Deduct Purchase of non-current assets   (231)
  Payment of taxes (net)   (1,305)
  Escrow funds remitted   (335)
       
Movement in working capital     1,434
       
Net increase in funds before
Payment of dividends
   
8,181
       
Dividends paid     (6,227)
       
Increase in cash and cash equivalents     1,954
       
Cash at 30 June 2009     20,788
Cash at 31 December 2008     18,834
      1,954

Receivables and prepayments at 30 June 2009 were €4.5 million, down €1.6 million from €6.1 million at 30 June 2008. €1.0 million of this reduction was attributable to the write-down, in the second half of 2008, of the working capital loan to Winzingo.

Trade and other payables were €4.7 million at 30 June 2009, down €0.7 million from €5.4 million at 30 June 2008. Around €0.5 million of this reduction was due to the Malta/Italy set-up costs, incurred in H1-08 and accrued at the time, but paid subsequently.

At 30 June 2009, the Group had tax recoverable of €2.0 million and tax payable of €1.2 million. The tax recoverable is from the Maltese tax authorities and the timetable for refund is in Q2-10. The tax is payable at around the same time.

Taxation arises as the Group's principal operating subsidiary is GVC Corporation Limited, a company incorporated in Malta and granted a license by the LGA (the Lotteries and Gaming Authority). The headline rate of corporation tax is 35%. Reclaims of tax are possible provided that the profits of this company are distributed. The post-refund rate of tax nets to 4.17%.

Taxation on activities in the Netherlands Antilles is at 2%, but is sheltered by tax losses created by the write-down of intangible assets in 2006.

To the extent that the Group's subsidiary in Cyprus (which in turn owns 100% of the shares in the Netherlands Antilles company and the Group's Jersey company) receives dividends from profits deemed to have been earned from "non-trading" income, then a non-recoverable 10% withholding tax applies.

As announced on 27 August 2009, the Company will be seeking shareholder approval to re-domicile to the Isle of Man. This should lead both to financial advantages (no 15% withholding tax on dividends) and to operational advantages (shares become CREST eligible). At the same time, the Group is also currently undertaking some internal corporate restructuring to reduce the number of companies in the Group and to improve its ability to upstream profits without incurring withholding tax.

On 2 July 2009, the Group paid US$4 million (€3 million) as initial purchase consideration for the business and assets of betboo.com. The acquisition comprised an initial consideration and an earn-out, payable in three stages, dependent on profits in the three accounting periods ending 30 June 2010, 2011, and 2012. The maximum earn-out is US$26 million. The cash out-flows in respect of the earn-out are anticipated to be negligible until the final earn-out period (year ended 30 June 2012) and any earn-out for this will be payable in Q4-12.

Richard Cooper
Group Finance Director
25 September 2009

 

Consolidated Income Statement

For the six month period ended 30 June 2009

    Six month
period
ended 30
June 2009
(Unaudited)
  Six month
period
ended 30
June 2008
(Unaudited)
  Year
ended
31 Dec
2008
(Audited)
  Notes €000’s   €000’s   €000’s
             
Net Gaming Revenue 3 26,509   26,126   50,085
Cost of sales 4 (4,479)   (5,025)   (9,163)
Gross profits 4 22,030   21,101   40,922
Marketing and affiliate costs 5 (8,511)   (5,666)   (12,990)
Contribution 5 13,519   15,435   27,932
Operating costs (as below) 6 (5,464)   (5,159)   (11,574)
           
Other operating costs   (4,639)   (4,575)   (8,384)
Share option charges   (88)   (276)   (557)
    (4,727)   (4,851)   (8,941)
Exceptional items 7 (316)   -   (1,917)
Depreciation and amortisation   (421)   (308)   (716)
           
Operating profit   8,055   10,276   16,358
Financial income   54   261   551
Financial expense   -   -   (6)
Profit before tax   8,109   10,537   16,903
Taxation (charge)/income 8 (166)   (218)   (360)
Profit after taxation   7,943   10,319   16,543
           
Earnings per share      
Basic 9 0.255   0.331   0.531
           
Diluted 9 0.251   0.323   0.521
       

 

Consolidated Statement of Comprehensive Income

For the six month period ended 30 June 2009

 

  6 month period ended 30 June 2009 (Unaudited)   6 month period
ended 30 June 2008 (Unaudited)
  Year ended
31 Dec 2008 (Audited)
  €000’s   €000’s   €000’s
         
Profit and total recognised income and expense for the period
7,943
 
10,319
 
16,543

 

Consolidated Statement of Financial Position

As at 30 June 2009
    30 June 2009 (Unaudited)   30 June 2008 (Unaudited)   31 Dec 2008 (Audited)
    €000’s   €000’s   €000’s
Assets          
Property, plant and equipment 10 1,356   1,469   1,538
Intangible assets 10 55,871   55,976   55,879
Deferred tax asset 8 5   11   11
Total non-current assets   57,232   57,456   57,428
           
Receivables and prepayments 11 4,516   6,058   6,367
Corporation Tax reclaimable 8 2,001   -   2,611
Cash and cash equivalents   20,788   18,610   18,834
Total current assets   27,305   24,668   27,812
         
Liabilities          
Trade and other payables 12 (4,712)   (5,401)   (5,477)
Corporation Taxes payable 8 (1,205)   (236)   (2,982)
Other taxes payable   (186)   (157)   (173)
Deferred tax liability 8 (22)   -   -
Total current liabilities   (6,125)   (5,794)   (8,632)
         
Current assets less current liabilities  
21,180
 
18,874
 
19,180
         
Total assets less current liabilities   78,412   76,330   76,608
         
As represented by:          
         
Equity          
Issued share capital 13 38,608   38,608   38,608
Share premium   8,748   13,832   13,832
Retained earnings   31,056   23,890   24,168
Total equity attributable to equity holders of the parent  
78,412
 
76,330
 
76,608
           

 

Consolidated Statement of Changes in Equity

For the six month period ended 30 June 2009
Attributable to equity holders of the parent company Share
Capital
Share
Premium
Retained
earnings
Total
  €000's €000's €000's €000's
         
Balance at 1 Jan 2008 38,608 51,977 (18,623) 71,962
Share option charges - - 276 276
Transfer between reserves - (38,145) 38,145 -
Dividend paid - - (6,227) (6,227)
Total comprehensive income - - 10,319 10,319
Balance as at 30 June 2008 38,608 13,832 23,890 76,330
         
Balance at 1 July 2008 38,608 13,832 23,890 76,330
Share option charges - - 281 281
Dividend paid - - (6,227) (6,227)
Total comprehensive income - - 6,224 6,224
Balance at 31 Dec 2008 38,608 13,832 24,168 76,608
         
Balance at 1 Jan 2009 38,608 13,832 24,168 76,608
Share option charges - - 88 88
Dividend paid - (5,084) (1,143) (6,227)
Total comprehensive income - - 7,943 7,943
Balance at 30 June 2009 38,608 8,748 31,056 78,412

 

Consolidated Statement of Cashflows

For the period ended 30 June 2009
  6 month
period
ended
30 June
2009
(Unaudited)
  6 month
period
ended
30 June
2008
(Unaudited)
  Year
ended
31 Dec
2008

(Audited)
  €000’s   €000’s   €000’s
         
Cash flows from operating activities          
Cash receipts from customers 30,766   25,939   47,528
Cash paid to suppliers and employees (21,145)   (15,700)   (30,703)
Taxes paid (note 8) (1,305)   -   (8)
Net cash from operating activities 8,316   10,239   16,817
         
Cash flows from investing activities        
Interest received 63   261   542
Acquisition of property, plant & equipment (note 10)
(169)
 
(1,084)
 
(1,453)
Acquisition of intangible assets (62)   (424)   (435)
Net cash from investing activities (168)   (1,247)   (1,346)
         
Cash flows from financing activities        
Interest paid   -   (6)
Dividend paid (6,227)   (6,227)   (12,454)
Net cash from financing activities (6,227)   (6,227)   (12,460)
         
Net increase in cash and cash equivalents 1,921   2,765   3,011
Cash and cash equivalents at beginning of the year 18,834   15,859   15,859
Effect of exchange rate fluctuations on cash held 33   (14)   (36)
Cash and cash equivalents at end of the year 20,788   18,610   18,834

 

Notes to the Interim Financial Information

The notes are available in the PDF download.

 

 

Page last up-dated: 28 September 2009
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