GVC TO DUMP BETALAND
10th April, 2012 at 04:02:38
Returns on the business no longer justify the risks involved, says parent company
GVC Holdings plc's Maltese subsidiary, GVC Corporation Limited has entered into an agreement with an independent third party company, GVC New Limited to sell the failed Betaland sports book venture for a nominal sum.
The buyer is, according to the GVC Holdings statement, "....not owned by GVC, nor any of its officers, shareholders or directors, but is an entirely independent company incorporated in Malta. Within 24 months of completion the transferee has agreed to change its name to a name which cannot be reasonably interpreted as being associated with the GVC Group."
Explaining the reasons dumping the five-year-old business, GVC Holdings said management has concluded that the returns on Betaland no longer justify the risks involved with its operation, and revealed that the sports book enterprise was historically the lowest margin business of the GVC group and heavily dependent on agency relationships.
The deal is conditional upon the Lotteries and Gaming Authority's assent, and is expected to complete within the next month.
"The proposed disposal is on a debt and cash free basis and for nil consideration," a company spokesman revealed. "The transferee has agreed to take-on the majority of the staff of the business thus saving GVC significant redundancy costs. Notice to terminate the lease housing these Maltese based staff has been terminated effective 30 June 2012 at minimal cost."
In the year ended 31 December 2010, the date of the last audited accounts, Betaland delivered Net Gaming Revenue of Euro 22.2 million and clean EBITDA of Euro 1.9 million. Profit before taxation was Euro1.6 million. The company has net assets of Euro 6,000.
GVC Holdings chief executive, Kenneth Alexander, said that the disposal would not impact the group's dividend strategy, adding: "The declining profitability of Betaland led the board of GVC to conclude it should exit this market.
By transferring Betaland to an independent third party, GVC will have sheltered itself and its shareholders from the costs associated with the closure of this business as well as the potential to settle liabilities to customers directly.
"GVC's remaining B2C brands CasinoClub and Betboo, along with its B2B activities, remain robust"
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