Shares soar after GVC issues trading update

The UK-based online gambling group GVC Holdings plc issued a trading update Friday, forecasting higher cost synergies from its GBP 4 billion acquisition of bookmaker Ladbrokes Coral, and posting a 17 percent growth rate in online gaming revenue.

Shares of the company rose as much as 4.6 percent to an all-time high of 1,028 pence on the London Stock Exchange following the update.

The owner of the Sportingbet, Bwin, PartyPoker and Foxy Bingo brands, said it expected cost synergies from the Ladbrokes deal to be at GBP 130 million annually by 2021, compared with GBP 100 million pounds projected at the time of acquisition deal.

Total group net gaming revenue for the period from Jan. 1 to May 20 was up 7 percent, with the biggest boost coming from online channels.

The update covers the first 20 weeks of the current year together with the release of pro forma financials for 2016 and 2017.

GVC announced that effective immediately it has changed its reporting currency from Euros to GBP.

Key highlights of the update include:

* Completion of Ladbrokes Coral Group acquisition on 28 March 2018;
* Cost synergies upgraded to at least £130m (from £100m) by 2021;
* Double-digit Online NGR growth continues, +18 percent in constant currency;
* Sports Brands NGR +16 percent (+18 percent cc);
* Games Brands NGR +16 percent (+18 percent cc)
* Legacy GVC and Ladbrokes Coral businesses both double-digit growth;
* UK Retail Like-for-like NGR -5 percent impacted by adverse weather;
* European Retail NGR +32 percent (+28 percent cc) boosted by a strong performance from Eurobet;
* Total Group NGR +7 percent.

Drilling down into the online gambling part of the update, GVC reported that pro forma online NGR grew +17 percent against the same period in 2017. Sports Brands total NGR growth was +16 percent, with a gross win margin of 10.4 percent (2017: 9.2 percent), whilst amounts wagered grew by 4 percent. Games Brands also enjoyed a strong start to the year with NGR +16 percent.

GVC legacy brands continued to grow strongly during the period, with NGR +19 percen (+21 percent cc). Sports Brands NGR increased by 17 percent (+19 percent cc), with sports +23 percent and gaming +12 percent. Sports gross win margin was 11.0 percent (2017: 9.4 percent). Amounts wagered were up 1 percent year-on-year, however, adjusting for regulatory changes in some Eastern European markets, wagers grew by 6 percent.

Looking ahead to the FIFA World Cup in Russia, bwin has recently launched a ground-breaking marketing campaign, starring amongst others, Diego Maradona. Games Brands NGR growth was +20 percent (+23 percen cc), with partypoker continuing to be a key driver (+41 percent), also supported by a good performance from the casino brands. Meanwhile, the acquisition of 51 percent of Crystalbet was completed on 13 April with good early performance of the business. Since acquisition, amounts wagered are up 45 percent year on year (year to date +34 percent) at Crystalbet, with NGR +83 percent (75 percent year to date).

Ladbrokes Coral online brands grew 14 percent (+16 percent cc) over the 20 week period. Sports Brands NGR growth was 15 percent, with sports NGR +20 percent driven partly by an improvement in gross win margin to 10.0 percent (2017: 9.1 percent). Amounts wagered grew by 5 percent. Gaming revenues from Sports Brands grew 9 percent.

In the UK, Coral continued to perform well with NGR +15 percent over the period. Ladbrokes.com’s performance has begun to improve with NGR +6 percent, as the brand benefits from corrective measures implemented in 2017. Ladbrokes Australia continued to gain market share, with NGR up 18 percent (+27 percent cc). Eurobet also enjoyed a strong performance with NGR +44 percent (+39 percent cc), benefiting from a better gross win margin of 11.1 percent, versus the weak comparative in 2017 (7.8 percent). Finally, in a competitive UK market Gala NGR grew 8 percent.

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.”

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