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Annual Report & Accounts 2014 - REPORT OF THE GROUP FINANCE DIRECTOR
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GVC HOLDINGS PLC ANNUAL REPORT 2014 15 as identified in a, b, and c, the group has additional cash out flows. the anticipated amounts (plus those actually incurred in 2013 and 2014) are shown in table 11 below: Table 11: Liability cash outflows In €000's 2013 2014 2015 2016 a.) Betboo deferred consideration 6,378 4,339 2,400 1,617 b.) william hill loan repayment* - 2,856 2,933 2,934 c.) Existing finance leases - 1,149 1,362 327 6,378 8,344 6,695 4,878 * in underlying gBp - 2,287 2,287 2,287 d.) Betit in accordance with the requirements of ias 39, the options embedded in the Betit contract are required to be measured at fair value and recognised in the balance sheet. Based on the valuation at inception and at 31 december 2014, a net liability has been recognised of €1.7 million. the options are potentially exercisable, subject to certain conditions, in 2017 and are discussed in more detail below. SUmmarY oF BaLaNcE ShEEt movEmENtS a bridge between the 2013 and 2014 balance sheets is shown below in table 12: Table 12: Balance Sheet bridge total €000's at 1 January 2014 141,096 profit before tax 41,291 tax charge (728) 40,563 share based payment charges on equity settled options 552 share options exercised 854 dividends paid (33,607) at 31 December 2014 149,458 during the year a total of 369,720 shares were issued. 26,667 shares were issued on 15 may 2014 for a consideration of 1.26 per share as a result of an exercise of director's share options. 343,053 shares were issued on 1 July 2014 for a price of 1.89 per share as a result of an exercise of third party share options issued as part of the sportingbet transaction in 2013. traDE INvEStmENt IN BEtIt on 14 may 2014, the group announced that it had acquired a 15% stake in Betit holdings limited ('Bhl'), a start-up gaming venture focusing on the scandinavian markets headed up by a team of scandinavian gaming market veterans from Betit securities limited ('Bsl'). the stake was for €3.5 million, which, together with professional fees incurred at the time, amounted to a total upfront cost of €3.6 million. the investment was approved by the maltese gaming authority (formerly known as the lga) on 29 may 2014. 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 mga clearance and compliance with the aim rules. 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 prevailing multiple levels would lead to the transaction being accretive for shareholders. if the group decides not to exercise its call option Bsl may require the group to acquire its shares in Bhl 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 raising the necessary financing. should the group not raise the required financing, Bsl may acquire the group's shares in Bhl for nominal consideration. Both of the above options are required to be carried at fair value in accordance with ias 39. commercially the put option can effectively be mitigated should the group at that time not wish to acquire the full asset, by handing back the initial investment to Bsl, yet this cannot be reflected in the fair value calculation although BUSINESS rEvIEw