GVC online revenues up 21% as Lads Coral beats expectations
London-listed operator reports 9% net gaming revenue growth for 2018 and will move gaming servers to Ireland after Brexit
GVC Holdings has reported 9% growth in pro forma net gaming revenue (NGR) to £3.57bn for 2018, as EBITDA increased by 13% to £755m.
The operator detailed “very strong growth in online with market share gains in all territories” as online NGR rose by 21% to £1.87bn, after a 22% rise in sports brands and 16% on gaming brands.
GVC made a loss before tax of £18.9m in 2018 compared to a £22.6m loss last year, despite £434m of additional charges including the regulatory clampdown in the UK and an ongoing tax case in Greece.
Underlying operating profit increased by 19% to £610m and European retail NGR increased by 14%. UK NGR was down 3% though as the operator predicted 1000 shop closures through FOBT losses which could negatively impact EBITDA by £135m in 2019.
The integration of the merged Ladbrokes Coral business is “progressing well” according to the firm, and is on track to deliver £130m cost synergies, while the recent Playtech agreement will speed things up and allow for greater flexibility. GVC now operates 19 different brands across multiple territories.
GVC CEO Kenny Alexander
GVC CEO Kenny Alexander said current trading was also strong with group NGR up 11% in Q1 2019, alongside a 22% increase in online NGR.
Alexander said: “2018 was a transformational year for the group with the completion of the Ladbrokes Coral acquisition in March making the Group the largest online-led sports-betting and gaming operator in the world.
“Excellent operational execution, effective marketing and a good World Cup helped both the legacy GVC and the acquired Ladbrokes Coral businesses perform ahead of expectations and materially ahead of the market, delivering market share gains in all our major territories.”
Other strategic developments during the period saw GVC withdraw its online betting and gaming brands from the Swiss market and pledge to move its gaming servers to Ireland as part of an ongoing Brexit contingency plan.
Regulus Partners analyst Paul Leyland said: “GVC has welded together a business not only of scale but also of relatively high levels of resilience: no one regulatory problem is likely to sink the ship, assuming it is contained to the cash flow ‘bulkhead’ of one territory.
“Indeed, even bad news from Germany on top of the known issues with the UK is likely to be weathered, albeit at significant potential cost, given the operational momentum achieved.
“This is a hugely impressive feat for a business that started out as an act of financial engineering built around a very high risk German magazine-marketed online casino niche that was still generating only £50m of NGR as recently as 2012,” he added.