TIDMGVC
RNS Number : 2630P
GVC Holdings PLC
25 May 2018
25 May 2018
GVC Holdings PLC
("GVC", the "Company")
Trading update and historic pro forma financials
GVC Holdings PLC (LSE: GVC), the multinational sports betting
and gaming group, is pleased to announce a trading update for the
first 20 weeks of the current year together with the release of pro
forma(1) financials for 2016 and 2017. The historic pro forma
financial data will be available later this morning on the GVC
website
(https://gvc-plc.com/investor-relations/presentations/).
The Group also announces a change in reporting currency to
sterling, effective immediately, having previously reported in
euros.
Pro forma(1) trading update for the period 1 January to 20 May
2018
Key highlights:
-- Completion of Ladbrokes Coral Group acquisition on 28 March 2018
-- Cost synergies upgraded to at least GBP130m (from GBP100m) by 2021
-- Double-digit Online NGR growth continues, +18% in constant currency ("cc(2) ");
o Sports Brands NGR +16% (+18% cc)
o Games Brands NGR +16% (+18% cc)
o Legacy GVC and Ladbrokes Coral businesses both double-digit
growth
-- UK Retail Like-for-like ("LFL")(3) NGR -5% impacted by adverse weather
-- European Retail NGR +32% (+28% cc) boosted by a strong performance from Eurobet
-- Total Group NGR +7%
The Group has enjoyed a good start to the year, notwithstanding
the well publicised impact on UK retail businesses from the adverse
weather.
Year
to date
growth
(1 Jan
2018
to 20
May 2018)(1)
------------------- ------------------------------------------------
Total Total Sports Sports Change
NGR NGR Wagers Margin in Margin
CC(2)
------------------- ------ ------- -------- -------- -----------
Online
Sports Brands 16% 18% 4% 10.4% 1.2pp
Games Brands 16% 18%
B2B 46% 48%
Total Online 17% 18%
UK Retail (LFL(3)
) (5%) n/a (9%) 18.3% 0.2pp
European Retail 32% 28% 4% 18.1% 3.8pp
Other (26%) (26%)
Total Group 7% 7%
Trading commentary:
Online:
Pro forma online NGR grew +17% against the same period in 2017.
Sports Brands total NGR growth was +16%, with a gross win margin of
10.4% (2017: 9.2%), whilst amounts wagered grew by 4%. Games Brands
also enjoyed a strong start to the year with NGR +16%.
GVC legacy brands continued to grow strongly during the period,
with NGR +19% (+21% cc). Sports Brands NGR increased by 17% (+19%
cc), with sports +23% and gaming +12%. Sports gross win margin was
11.0% (2017: 9.4%). Amounts wagered were up 1% year-on-year,
however, adjusting for regulatory changes in some Eastern European
markets, wagers grew by 6%. Looking ahead to the FIFA World Cup in
Russia, bwin has recently launched another groundbreaking marketing
campaign, starring amongst others, the legendary Diego Maradona.
Games Brands NGR growth was +20% (+23% cc), with partypoker
continuing to be a key driver (+41%), also supported by a good
performance from the casino brands. Meanwhile, the acquisition of
51% of Crystalbet was completed on 13 April (consolidated from that
date) and we are delighted with the early performance of the
business. Since acquisition, amounts wagered are up 45% year on
year (year to date +34%) at Crystalbet, with NGR +83% (75% year to
date).
Ladbrokes Coral online brands grew 14% (+16% cc) over the 20
week period. Sports Brands NGR growth was 15%, with sports NGR +20%
driven partly by an improvement in gross win margin to 10.0% (2017:
9.1%). The higher gross win margin did have an impact on recycling
but nevertheless amounts wagered grew by 5%. Gaming revenues from
Sports Brands grew 9%. In the UK, Coral continued to perform well
with NGR +15% over the period. Ladbrokes.com's performance has
begun to improve with NGR +6%, as the brand benefits from
corrective measures implemented in 2017. We are excited by the
opportunity to reinvigorate one of the UK's leading sports-betting
brands. Ladbrokes Australia continues to gain market share, with
NGR up 18% (+27% cc). Eurobet also enjoyed a strong performance
with NGR +44% (+39% cc), benefiting from a better gross win margin
of 11.1%, versus the weak comparative in 2017 (7.8%). Finally, in a
competitive UK market Gala NGR grew 8%.
UK Retail (LFL(3) ):
UK Retail NGR was 5% behind last year with OTC net revenue 8%
behind, impacted by severe weather. During the 20 week period, 12%
of all planned horse racing fixtures were cancelled. Volumes were
also adversely impacted by lower levels of recycling at the start
of the period due to the exceptionally strong gross win margins at
the end of Q4 2017. OTC gross win margin of 18.3% was marginally
ahead of last year (2017: 18.1%). Machines NGR was 2% behind last
year and given the high profile of the Triennial Review revenues
could remain under pressure.
European Retail:
European Retail NGR was 32% ahead of last year with growth in
all regions. Eurobet NGR was 53% ahead of last year helped by good
wagering growth and the weak gross win margins in the comparative
period (constant currency +49%).
Triennial Review:
The Government announcement on 17 May 2018 that maximum stakes
on FOBTs will be cut to GBP2 marks the end of uncertainty on FOBT
staking limits. Regulation is expected to be enacted later this
year, with DCMS recognising the technical challenges involved and
the requirement for a suitable implementation period. The focus in
the UK Retail operation over the last two years has been to create
a business that is well placed to face these structural and
regulatory headwinds. As such we expect to be able to reposition
the business within two years following implementation, with an
anticipated fully mitigated impact of cGBP120m on Group EBITDA
secured by the end of this period. In the first full year the
impact on Group EBITDA is anticipated to be in the region of
GBP160m. Therefore, we expect to retain a profitable and highly
cash generative UK Retail estate. Furthermore, our proven leading
multi-channel expertise presents additional opportunities to drive
online growth.
Integration and Synergies update:
It is only two months since the completion of the acquisition of
the Ladbrokes Coral Group and we are at the very early stages of
integration. A new senior reporting structure has been established
with key operational heads appointed. Work on firming-up synergies
and identifying additional opportunities is ongoing and at the time
of the interim results in September we will give a further, more
detailed update. However, we do now expect synergies to be at least
GBP130m per annum (previously GBP100m) by 2021.
GVC and Playtech plc ("Playtech") are in discussions to update
the existing services agreement between the two companies, in order
to secure a long-term mutually beneficial relationship. This would
allow Playtech access to new significant brands, revenue streams
and secure long term revenues, whilst providing GVC operational
flexibility to realise its synergies plan. In the meantime, GVC
will continue to honour the existing Playtech contract and maintain
the positive working relationship.
US:
The recent United States Supreme Court judgement to repeal
PASPA, presents the potential for a significant expansion in the
regulated sports betting market. Through Stadium, the Group is
already the leading B2B provider of sportsbook technology in
Nevada, whilst in New Jersey GVC technology supports MGM online
casino and poker offerings. The Group continues to evaluate a
number of potential opportunities to expand its presence in the US
through a disciplined approach.
Kenneth Alexander (CEO) said:
"It is very early days since the completion of the acquisition
of the Ladbrokes Coral Group, but from what I have seen so far I am
excited about the opportunities and even more confident of
delivering shareholder value. The online operations continue to
grow strongly and this is before we have started to implement best
in practice across the enlarged group. Regulatory challenges across
the industry cannot be ignored but through our scale,
diversification, proprietary technology and people, GVC is very
well placed to continue to succeed."
Notes
(1) The Group's pro forma results are presented as if the
current Group, post the acquisition of Ladbrokes Coral, had always
existed. As such, it excludes the results of the Turkish facing
business which was discontinued during 2017, the 360 shops that the
Ladbrokes Coral Group were required to divest on merger and the
previously discontinued Ladbrokes Coral High Roller segment
(2) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2018
exchange rates
(3) UK Retail numbers are quoted on a LFL basis. During the
period there were an average of 3,563 shops in the estate, compared
to an average of 3,664 in the same period last year
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
- ends -
For further information:
GVC Holdings PLC
Kenneth Alexander, Chief Executive
Paul Bowtell, Chief Financial Officer
Nick Batram, Director of Investor Relations & External Communications
Paul Tymms, Head of Investor Relations (investors@gvc-plc.com)
Media enquiries:
Buchanan Communications
David Rydell/Henry Harrison-Topham/Chris Lane Tel: +44 (0) 20 7466 5066
An analyst call will be held at 9.00 AM today. The corresponding
presentation will be made online on the Group's website shortly
before the call:
https://gvc-plc.com/investor-relations/presentations/
Participants may join the call by dialing one of the following
numbers, approximately 10 minutes before the start of the call:
UK toll-free dial-in: 0808 237 0040
International dial-in numbers:
http://events.arkadin.com/ev/docs/FEL_Events_International_Access_List.pdf
Participant PIN Code: 92468403#
About GVC
GVC Holdings PLC is one of the world's largest sports betting
and gaming groups, operating both online and in the retail sector.
The Group owns a comprehensive portfolio of established brands;
Sports Brands include bwin, Coral, Crystalbet, Eurobet, Ladbrokes
and Sportingbet; Gaming Brands include CasinoClub, Foxy Bingo,
Gala, Gioco Digitale, PartyCasino and partypoker. The Group owns
proprietary technology across all of its core product verticals and
in addition to its B2C operations provides services to a number of
third-party customers on a B2B basis. GVC acquired Ladbrokes Coral
Group plc on 28 March 2018 and is now the UK's largest high street
bookmaker, with over 3,500 betting shops. The Group, incorporated
in the Isle of Man, is a constituent of the FTSE 250 index and has
licences in more than 20 countries, across five continents.
For more information see the Group's website:
www.gvc-plc.com
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END
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