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UK – GVC focussing on organic growth following bwin buyout

By - 27 March 2017

GVC Holdings has said it is feeling the benefits of its 1.1bn buyout of bwin despite having to post significant losses due to the transaction.

The Isle of Man-based operator, which runs sites such as Sportingbet and Foxy Bingo, reported a pre-tax loss of €138.6m in the year to December 31. Management preferred though to focus on growth in revenues. Strong trading performance over the six month period to 30 June 2016 saw sports wagers come in at €2,107.4m, up from €823.7m and headline net gaming revenue of €390.6m compared to €120.9m for the corresponding period in 2015.

Kenneth Alexander, CEO said: “I am delighted to report another period of significant growth. It is GVC’s combination of hardworking, talented people and unique proprietary technology platform that has allowed us to achieve so much in such a short period. The Group operates in a highly competitive, increasingly regulated and taxed environment, GVC has never been better placed to face these challenges. Indeed, we believe the organic growth potential of the Group is now greater than originally anticipated at the time of the bwin.party transaction acquisition. The integration of bwin.party will be completed by the end of Q2 2017 and the annualised synergy target of €125m secured. Moreover, the ongoing capital expenditure requirement of the enlarged Group is expected to be around one third less than the €64m pro forma spent in 2015.”

“Whilst the first half has been busy on the corporate front, we have remained focused on the operations of the business. On a pro forma basis, sports wagers grew four per cent (eight per cent in constant currency) to €2,329.7m and headline NGR was €441.8m, representing growth of eight per cent (12 per cent in constant currency). We achieved this growth despite investing just 21 per cent of NGR on marketing, this in part reflects the strength of the brands but also more efficient spend,” he added.
Mobile has been a key driver of growth. Sports wagers via mobile rose 55 per cent in H1, whilst casino and games grew 98 per cent.

“With an active pipeline of new products and technology improvements we are confident that mobile can continue to grow strongly,” Mr Alexander said.

A positive start to the year saw an acceleration in Q2 helped by a strong performance during Euro 2016.

Mr. Alexander explained: The 2016 Euro Championships were a key highlight in the first half, with the Group taking some €162m in wagers on the event across the whole of the tournament, with a gross win margin of 18.3 per cent (65 per cent of gross win fell into H1). Sports wagers in H1 increased 153 per cent year on year on a reported basis and five per cent in pro forma terms. Our number one priority is organic growth, but we have built this business on the back of mergers and acquisitions. If we find the right deal, then we will definitely do it and our shareholders will want us to do it. We always expected we could return bwin to growth. But the growth potential for the group has been greater than we expected. I think there’s more to come.”

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