GVC Holdings lifts expectations after decent first half
By Josh White
Date: Thursday 15 Aug 2019
(Sharecast News) - GVC Holdings said its reported group net gaming revenue was up 61% at £1.81bn for the six months ended 30 June on Thursday, with reported group profit after tax standing at £2.1m after charging £183.8m of separately disclosed items, of which £184.3m related to the non-cash amortisation of acquired intangibles.
The FTSE 250 gambling giant said its reported continuing adjusted diluted earnings per share fell 3% to 31.3p.
On a proforma basis, before the effects of IFRS 16, GVC said group net gaming revenue was ahead 5% at £1.81bn.
Proforma group underlying EBITDA fell 7%, however, to £323.4m, although it was up 11% after adjusting for the estimated impact of the triennial review and incremental online taxes.
Online underlying EBITDA was 22% higher after adjusting for the estimated impact of incremental taxes.
Excluding net debt arising on IFRS 16 of £350.3m, adjusted net debt as at 30 June stood at £1.93bn, or 2.6x last 12 months underlying proforma EBITDA.
Looking at its operations, GVC said it was performing "very strongly", with online proforma net gaming revenue rising 17%, and the board reporting market share gains in all major territories.
UK retail like-for-like7 net gaming revenue was down 10%, which was still ahead of expectations, with European retail proforma net gaming revenue 7%, higher, with growth in all territories.
The board said full-year EBITDA and operating profit was now expected to be a further £10m ahead of expectations, and recommended an interim dividend of 17.6p per share, up 10% year-on-year.
The company said its net debt-to-EBITDA leverage full year guidance had also improved, to 2.9x.
On the subject of responsible gambling, GVC said it had made "significant" commitments, reporting a 10-fold increase in contributions to responsible gambling causes, and noting its participation in the voluntary whistle-to-whistle television advertising ban in the UK.
It also noted the withdrawal of all marketing associated with English and Scottish football teams, and the donation of existing shirt sponsorships to the 'Children with Cancer' charity.
In the United States, GVS said a full online launch in New Jersey was on-track for the start of the 2019 NFL season in September.
The group also said it expected to continue to offer online sports-betting and gaming into Germany in the period, through to the new regulatory framework in 2021.
"The group's performance in the first half was extremely pleasing with group proforma net gaming revenue 5% ahead," said chief executive officer Kenneth Alexander.
"Online momentum remains very strong with proforma NGR 17% ahead, delivering continued market share gains across all major territories.
"Our online operating model is proving highly effective, building on the sustainable competitive advantages of our wholly owned technology platform, leading product, cutting-edge marketing, leading brands and local execution, which are all delivered with an unrivalled understanding of the markets in which we operate."
Alexander said that in UK retail, the "efficient execution" of mitigation plans had resulted in a triennial review impact that was better than initial expectations, with like-for-like net gaming revenue 10% behind last year, prompting a further upgrade to the firm's triennial review EBITDA guidance.
He also pointed to the 7% growth in European retail proforma net gaming revenue, with "good growth" described in all territories.
"The US joint venture, Roar Digital, is on track for its full launch in New Jersey in September and, building on the combination of proprietary technology, powerful brands and our marketing expertise, is well-placed to succeed.
"The group made a number of significant responsible gambling commitments in the period," Alexander added.
"We were the first operator to commit to a 10-fold increase in contributions to Responsible Gambling causes, alongside calling for a total ban on sports-betting television advertising in the UK.
"We donated all our marketing assets held at 42 English and Scottish football clubs, including perimeter hoardings, to GambleAware's 'Bet Regret' safer gambling campaign."
The chief executive also pointed out the company's commitment to not sponsoring any English or Scottish football teams, and the donation of its existing shirt sponsorships of Sunderland AFC and Charlton Athletic to its charity partner, Children with Cancer.
"These are decisive actions, and we will continue to work on a collaborative basis with other leading operators to enhance player protection across the industry."
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