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GVC Holdings PLC

GVC Holdings PLC strong growth and market share gains in all major territories

GVC Holdings PLC (LON: GVC), the multinational sports-betting and gaming group, today announced a trading update for the period 1 July 2018 to 30 September 2018.

Key highlights Q31:

· Continued strong growth and market share gains in all major territories

· Online NGR +28%

o Sports brands NGR +31%

o Games brands NGR +19%

· UK Retail like-for-like (“LFL”)2 NGR -2% helped by a good second half of the World Cup

· European Retail NGR +24% with strong growth in Italy

· Total Group NGR +14%

· Integration of the Ladbrokes Coral businesses progressing well

Key highlights year-to-date1:

· Group NGR +10% with Online NGR +21% and European Retail NGR +28%

· The Group remains in-line with its expectations for the year

Q3 growth (1 July 2018 to 30 September 2018)1

YTD growth (1 January 2018 to 30 September 2018)1

Total NGR

Total NGR CC3

Sports Wagers

Sports Margin

Total NGR

Total NGR CC3

Sports Wagers

Sports Margin

Online

Sports brands

31%

31%

16%

+0.8pp

23%

24%

11%

+1.1pp

Games brands

19%

18%

15%

16%

B2B

10%

8%

25%

27%

Total Online

28%

29%

21%

23%

UK Retail (LFL2)

(2%)

(2%)

(4%)

(0.2pp)

(3%)

(3%)

(5%)

(0.1pp)

European Retail

24%

22%

18%

+0.9pp

28%

24%

10%

+2.4pp

Other

2%

2%

(15%)

(14%)

Total Group

14%

14%

10%

10%

 

Kenneth Alexander, CEO of GCV said:

“The Group’s performance in the quarter was very pleasing with momentum continuing across the Online and European Retail divisions. As highlighted in our H1 results, we will look to consolidate our position in markets where we are taking market share through the reinvestment of excess returns, and the board is confident in its full year expectations. We believe our sports-betting joint venture with MGM is best placed to be the market leader in the US and we have taken the first steps on that journey with the soft-launch of our sports-betting app in New Jersey. We have also recently announced a series of CSR measures including a multi-million pound commitment to responsible gambling initiatives and a call for a pre-watershed ban of TV advertising in the UK around football and other live sports.

The industry continues to evolve and whilst there are challenges there are also many exciting opportunities. Through our proprietary technology, portfolio of brands, leading product and talent, GVC is well placed to continue to deliver shareholder value.”

Q3 Trading commentary:

Online:

Online NGR was 28% ahead driven by strong growth across all major territories and helped by a good end to the World Cup. After adjusting for the estimated impact of the World Cup and the acquisition of Crystalbet, Online NGR was 21% ahead.

Sports brands NGR grew 31%, with sports wagers 16% ahead and sports margin up 0.8pp. Legacy GVC brands continued their strong growth with NGR +43% driving significant market share gains across our major territories; NGR was 30% ahead in Germany (+29% cc), +14% ahead in Italy (+13% cc) and 13% ahead in Brazil (+39% cc), driven by leading product, good customer user experience and innovative brand marketing. The Crystalbet business continues to grow strongly contributing 10pp to the legacy GVC sports brands NGR growth and 4pp to overall sports brands NGR growth. Growth in the acquired Ladbrokes Coral brands was also strong; in the UK both Ladbrokes.com +23% and Coral.co.uk +29% posted very pleasing NGR growth with sports wagering 9% ahead, and sports margin +1.3pp helped by a particularly strong margin in September. In Italy, Eurobet.it NGR was 21% ahead (+19% cc) while in Australia, Ladbrokes.com.au staking growth of 17% (+24% cc) was offset by a softer margin (-0.7pp) resulting in NGR growth of 5% (+11% cc).

Games brands NGR was 19% ahead with partypoker +43% benefiting from its extensive live event tournaments and continued marketing investment. Gala brands NGR and GVC casino brands NGR were both +18% driven in part by strong levels of first-time-depositors.

UK Retail (LFL2):

UK Retail LFL NGR was 2% behind last year. LFL OTC wagers were 4% behind, and after adjusting for the World Cup, were around 6% behind, while OTC gross win margin was 0.2pp behind last year. Machines LFL NGR was 1% ahead.

European Retail:

European Retail NGR was 24% ahead of last year (+22% cc) with growth in all regions. Eurobet Retail NGR was 33% (+31% cc) ahead of last year helped by the World Cup (contributing 6pp of growth) and by good underlying wagering growth of 17% (+15% cc) excluding the World Cup.

US:

During the quarter the joint venture between GVC and MGM Resorts soft-launched its New Jersey Android mobile app. The launch of an iOS version is imminent (and is currently awaiting Apple Store approval). Upon iOS launch, a full “playMGM” marketing campaign will commence.

The joint venture has also signed a market access agreement with the United Auburn Indian Community which in the event that California legislates sports-betting, will enable the joint-venture to access the Californian market with its brands.

Triennial Review:

We expect the Government to provide an update on its plans to increase Remote Gaming Duty in the Budget on 29 October 2018. We also expect clarity on the implementation date for the cut in B2 stakes to £2. We anticipate that the Triennial Review legislation will be enacted this year.

CFO succession planning:

The Group has today announced that Rob Wood has been appointed Deputy Chief Financial Officer with immediate effect, prior to succeeding Paul Bowtell as GVC’s Chief Financial Officer (“CFO”) following his decision to step down from the Board on 5 March 2019.

After seven years as CFO of first Gala Coral, then Ladbrokes Coral plc and now GVC, Paul Bowtell has decided to leave the Company in order to take up a role with Alchemy Partners, the private equity firm. He will step down on 5 March 2019, when GVC expects to announce its 2018 annual results. Rob Wood has been with the Group for six years and is the CFO of the Ladbrokes Coral UK Retail business, the largest division in GVC.