Bwin acquisition boosts GVC earnings, revenue

Sports betting and gaming company GVC Holdings, which received shareholder approval for its merger with Ladbrokes Coral this week, posted a rise in full-year adjusted profit and net gaming revenue on Friday, thanks in part to the acquisition of bwin.party in 2015.

In the year to the end of December 2017, adjusted pre-tax profit jumped 182% to €178.7m on a pro-forma basis while net gaming revenue increased 17% to €925.6m. Meanwhile, total clean earnings before interest, tax, depreciation and amortisation rose 33% % to €274.2m.

On a statutory basis, the company’s loss before tax narrowed to €25.6m from €173.5m due to the exceptional items and amortisation associated with the acquisition of bwin.party.

Net gaming revenue in Sports Brands was up 20% on a pro-forma basis, driven by strong sports and gaming, while Games Brands saw NGR rise 12% on the back of investment in partypoker and a positive performance from casino brands.

GVC said it has enjoyed a "strong" start to the current year, with like-for-like NGR for the period up to 4 March up 16%, or 18% at constant currency, while expectations for the full year remain unchanged.

Chief executive officer Kenneth Alexander said: "GVC achieved a significant amount in 2017 and as these numbers demonstrate, we have delivered material value from the bwin.party acquisition. It is particularly pleasing that we have been able to produce such strong results at the same time as completing the integration of bwin.party and continuing to enhance our product offering.

"Our core markets offer attractive growth prospects but we also recognise the opportunity presented by our proprietary technology to create significant synergies through M&A. The importance of geographic diversification is also a key dynamic given the evolving regulatory backdrop. Thus the acquisition of Ladbrokes Coral Group represents an exciting opportunity, bringing together industry leading online and retail brands. There will be plenty of hard work ahead, but we are confident that GVC will deliver once again."

Berenberg said clean EBITDA was bang in line with its expectations, which were top of consensus. it also said that the 16% gain in NGR so far this year is "very strong" in the context of other gaming companies whic are either not disclosing NGR evolution year-to-date or indicating single-digit growth.

"As a reminder, consensus for GVC points to 5-6% year-on-year NGR growth on a like-for=like basis (i.e. excluding Turkey) for FY 2018. This strong start already suggests that, as usual, consensus numbers are very conservative (note that the World Cup in Q2/Q3 should have a positive impact on wagering, so growth is unlikely to slow down at last until midyear)."

It said GVC’s performance was better than peers in the first quarter because of a mix of structurally better sportsbetting margins, stronger gaming products and geographical diversification.

At 1120 GMT, the shares were up 4.5% to 941p.