GVC Holdings update

Recently re-domiciled on the Isle of Man and listed on London’s AIM market, internet gambling group GVC Holdings plc released a trading update for the period 1 October 2010 to 15 December this week, including within it an update on the group’s long-running litigation against Boss Media.
Management appear to be optimistic that the company will reach its expected targets, noting that the Casino Club brand has proved to be resilient with average daily NGR at Euro 78 000 in Q4-2010, down slightly from Euro 81 000 in Q4-2009. Online casino operations have apparently enjoyed a particularly strong December, however, where daily NGR has averaged Euro 83 000.
Q4 sports wagers rose by 41 percent to Euro 205 000, well ahead of the same period last year, when Euro146 000 was recorded.  Sports margins over the year have averaged 12.6 percent, down on 2009 when 16.8 percent was achieved. Q4 margins have been worse at 6 percent following a run of unfavourable sports results.
Over the period 1 October 2010 to 15 December 2010 the average daily statistics for Q4-2010 were:
Sports wagers up 41 percent at Euro 205 000 (Q4-2009: Euro 146 000)
Sports hold 6 percent (Q4-2009: 22 percent)
Sports NGR Euro 11 000 (Q4-2009: Euro 32 000)
Gaming NGR Euro131 000 (Q4-2009: Euro 129 000)
Total NGR Euro 142 000 (Q4-2009: Euro 161 000)
The average daily statistics for 2010 were:
Sports wagers Euro 193 000 (2009: Euro 149 000)
Sports hold 12.6 percent (2009: 16.8 percent)
Sports NGR Euro 24 000 (2009: Euro 24 000)
Gaming NGR Euro 126 000 (2009: Euro 124 000)
Total NGR Euro 149 000 (2009: Euro 150 000)
Growth is anticipated through GVC’s ventures into Latin America through its proprietary software powered Betboo subsidiary, which is expected to be self-funding in 2011 as marketing investment is boosted. The management is based in Malta, and this has led to an improvement in margins at the short-term expense of volume.
In Q4-2010 the group migrated its Casino and Poker platform to an alternative provider which has also had a short-term impact on volumes.
GVC’s litigation against GTechG2 subsidiary, Boss Media, which GVC is suing for breach of confidentiality, continues. A court hearing on jurisdiction was held in Malta on 2 December 2010, and Boss Media has launched separate arbitration proceedings in Sweden against GVC Corporation BV.
On 2 December 2010, the Maltese court accepted GVC’s position that the proceedings in Malta and Sweden are totally separate and should not be tied together.
The Maltese Court has allowed Boss Media to present further evidence in relation to the issue of jurisdiction by 25 January 2010 and adjourned the hearing on jurisdiction until 24 February 2010.
In Sweden, the date for oral submissions on jurisdiction to the tribunal has been preliminarily set for 20/21 June 2011.

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