GVC reports 31% revenue rise in Q4 but faces Germany questions
Operator’s strongest quarterly performance since bwin acquisition offsets regulatory concerns in Germany
GVC has reported an underlying revenue rise of 31% for Q4 driven primarily by a sports margin of 13.1%, well above the typical 9%.
The strong Q4 figures, boosted by a 40%cc rise in sports net gaming revenue (NGR) is likely to result in NGR of €1,009m for the whole of 2017, an increase of 13% from 2016, or +18% underlying (the actual figures are affected by the sale of GVC’s Turkey business).
GVC’s NGR in Q4 amounted to €279.5m, a record since the acquisition of bwin.party in February 2016 while clean EBITDA is expected to be at the top end of management expectations.
Gaming NGR increased by 22% during the period, and on an underlying basis was +18%, with partypoker in particular maintaining “impressive growth”.
GVC CEO Kenny Alexander said: “We have once again demonstrated our ability to integrate significant acquisitions, realise material synergies and at the same time deliver top line growth.
“The recommended transaction with Ladbrokes Coral presents an exciting opportunity for both sets of shareholders, creating a global gaming group with a portfolio of strong brands across all major regulated online markets, together with proprietary technology and proven management.”
Despite the strong Q4 performance, EGR undersands there is some internal concern over GVC’s Germany-facing business, which generates around a quarter of group revenue according to Regulus Partners.
Novomatic pulled out of online gaming in the country over regulatory concerns, with a spokesperson saying yesterday there was a need for German regulators to revamp online gambling rules as the current situation was “unclear”.
Paul Leyland, analyst at Regulus Partners added: “Our concern remains that the only material region of remote market outperformance, outside a relatively limited UK, is in German-speaking territories, two of which, Germany and Switzerland, could provide very severe regulatory shocks.
Switzerland’s plans to block the domains of internationally licensed online gambling operators appear headed for a voter referendum.
Leyland added: “While this risk provides a compelling reason to seek greater levels of genuinely regulated exposure through the LCL deal, it also creates an additional significant regulatory risk to the DMCS review for LCL.”