GVC’s stand-out online division offsets inevitable UK retail decline

Citing market share gains across all operating territories, FTSE250-listed GVC Holdings has backed its underlying corporate strategy to navigate regulatory complexities both home and abroad. 

Publishing its full-year 2019 results, GVC has recorded a pro-forma net revenue increase of 3% to £3.65bn (FY2018: £3.57bn) driven by the strong growth of its online division and European retail portfolio. 

Despite competing against tough 2018 comparatives, GVC has marked its online division as the stand-out performer, recording a 14% increase in NGR to £2.17bn (FY2018: £1.91bn).

Delivering key technology integrations resulting in ‘real-time CRM and improved gaming cross-sell techniques’, GVC’s online division recorded an underlying EBITDA of £522m (FY2018: £486m).

“Online once again delivered the stand-out performance, with proforma NGR growing 13% to £2,170.7m,” said Group CEO Kenneth Alexander. “The Group achieved double-digit pro-forma NGR growth across all of its core online markets and continued to grow share. 

“Online pro-forma sports NGR was up 16% despite the tough comparison against 2018 which was boosted by the FIFA World Cup.”

GVC has retained confidence in its UK retail unit, which absorbed a year of significant shocks including adjusting to the new £2 FOBT stake limit – enforced on 1 April 2019.

Despite recording a 3% uplift in OTC wagers to £3.18bn (FY2018: £3bn), Ladbrokes Coral’s retail division reported operating declines across all core metrics, as UK retail NGR dropped 15% to £1.12bn (FY2018: £1.32bn). 

In its overview of the division’s performance, GVC detailed that Triennial Review measures had forced it to close 245 UK shops during the year, with the company anticipating a further 200 closures during Q1 2020.   

Alexander added: “The impact of the Triennial Review is estimated to have reduced UK Retail EBITDA by £118.0m in 2019, and we expect it to remain broadly at that level as further lost revenue from the annualisation of the new measures is offset by cost mitigation and competitor closures.” 

Absorbing both UK retail adjustments and significant enlargement costs related to its Ladbrokes Coral acquisition, GVC has seen its group-wide EBITDA decline 10% to £678m (FY2018: £755m). 

Closing its 2019 accounts, GVC governance has declared pro forma underlying profits of £490m, 20% lower than 2018’s corresponding £610m. 

The FTSE betting group has booked £710m of costs related to ‘separately disclosed items’, having recorded after-tax losses of £140m (FY2018: £56m).  

“GVC has a truly global online footprint with licenses in 24 territories,” Alexander concluded. “This diversification provides GVC with a significant competitive advantage and enables us to spread the risk and allocate capital and resource to those markets with the most attractive opportunities. In addition to entering and growing in newer markets, the Group continues to take share in its more established markets.”

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