2019 Interim Results

Jay DossetterNews

15 August 2019

GVC Holdings PLC
(“GVC” or the “Group”)

Strong operational momentum, full year outlook ahead of expectations

To download  a PDF of the full release click here

GVC Holdings PLC (LSE: GVC), the global sports-betting and gaming Group, is pleased to announce its Interim Results for the six months ended 30 June 2019.

Group

Reported1

Proforma2

Six months to 30 June

2019

Pre IFRS16 2019

2018

2019

Pre IFRS16 2019

2018

Change10

CC3

£m

£m

£m

£m

£m

£m

%

%

Net gaming revenue (NGR)

1,810.6

1,810.6

1,125.1

1,810.6

1,810.6

1,717.0

5%

6%

Revenue

1,782.1

1,782.1

1,105.9

1,782.1

1,782.1

1,694.3

5%

6%

Gross profit

1,184.1

1,184.1

763.2

1,184.1

1,184.1

1,163.4

2%

Underlying EBITDAR4

376.8

376.8

265.8

376.8

376.8

406.4

(7%)

Underlying EBITDA4

366.8

323.4

235.0

366.8

323.4

349.5

5%

Underlying operating profit5

260.3

241.9

188.6

260.3

241.9

277.9

(6%)

Underlying profit before tax5

212.1

202.2

162.1

Profit / (loss) after tax

2.1

(13.0)

113.8

Diluted EPS (p)

(0.6)

(3.2)

24.9

Continuing adjusted diluted EPS6 (p)

31.3

29.9

32.2

Dividend per share (p)

17.6

17.6

16.0

Highlights:

  • Very strong operational performance:
    • Online proforma2 NGR +17% (+18% cc3) and market share gains in all major territories
    • UK Retail Like-for-Like7 NGR -10%, ahead of expectations
    • European Retail proforma2 NGR +7% (+8% cc3) with growth in all territories
  • Full year EBITDA4/8 and Operating profit5/8 now expected to be a further £10m ahead of expectations
  • Interim dividend of 17.6p per share (H1 2018: 16.0p), an increase of 10% year-on-year
  • Net Debt / EBITDA (pre IFRS 16) leverage full year guidance improved to 2.9x
  • Significant Responsible Gambling commitments:
    • Ten-fold increase in contributions to Responsible Gambling causes
    • Voluntary whistle-to-whistle television advertising ban in the UK
    • Withdrawal of all marketing associated with English and Scottish football teams, and donation of existing shirt sponsorships to ‘Children with Cancer’ charity
  • US: New Jersey full online launch on-track for the start of the 2019 NFL season in September
  • The Group expects to continue to offer online sports-betting and gaming into Germany in the period through to the new regulatory framework in 2021

Financial highlights (proforma basis2 pre IFRS 16):

  • Proforma Group NGR up 5% at £1,810.6m
  • Proforma Group underlying EBITDA4 down 7% at £323.4m but 11% ahead after adjusting for the estimated impact of the Triennial Review and incremental Online taxes9
  • Online underlying EBITDA4 was 22% ahead after adjusting for the estimated impact of incremental taxes9
  • Excluding net debt arising on IFRS 16 of £350.3m, adjusted net debt at 30 June 2019 was £1,929.3m (2.6x LTM underlying proforma EBITDA4)

Financial highlights (reported basis1)

  • Reported Group NGR up 61% at £1,810.6m
  • Reported Group profit after tax of £2.1m after charging £183.8m (£224.4m pre-tax) of separately disclosed items, of which £184.3m relates to the non-cash amortisation of acquired intangibles
  • Continuing adjusted diluted EPS6 of 31.3p down 3%

Kenneth Alexander (CEO) commented8:

“The Group’s performance in the first half was extremely pleasing with Group proforma NGR 5% ahead. 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.

In UK Retail, efficient execution of mitigation plans resulted in a Triennial Review impact that was better than initial expectations, with like-for-like NGR 10% behind last year, prompting a further upgrade to our Triennial Review EBITDA guidance. European Retail proforma NGR was 7% ahead with good growth in all territories. The US JV, 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. We were the first operator to commit to a ten-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. We also committed to not sponsoring any English or Scottish football teams, and donated our existing shirt sponsorships of Sunderland AFC and Charlton Athletic to our 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.”

Outlook8:

The strong trading performance of the Online business means that any potential costs in 2019 associated with the new sports-betting licences in Germany are expected to be fully mitigated. With the outperformance in UK Retail, and Online and European Retail trading in-line with expectations, the Board now expects the Group to deliver full year 2019 EBITDA8 within a £650m-£670m range.

Notes

  • 2019 and 2018 reported results are unaudited and reflect the acquisition of the Ladbrokes Coral Group plc on 28 March 2018
  • The Group’s proforma results are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 Jan 2018. The results of Crystalbet and Neds are included from the dates of acquisition (11 April 2018 and 28 November 2018 respectively)
  • Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2019 exchange rates
  • EBITDAR is defined as earnings before interest, tax, depreciation and amortisation, rent and associated costs, share based payments and share of JV income. EBITDA is defined as EBITDAR after charging rent and associated costs. Both EBITDAR and EBITDA are stated pre separately disclosed items
  • Stated pre separately disclosed items
  • Adjusted for the impact of separately disclosed items, foreign exchange movements on financial indebtedness and losses/gains on derivative financial instruments (see note 8 in the interim financial statements)
  • UK Retail numbers are quoted on a LFL basis. During H1 there was an average of 3,432 shops in the estate, compared to an average of 3,563 in the same period last year
  • References to profit expectations are made on a pre IFRS 16 basis
  • After rebasing the prior year for the adverse EBITDA impact of incremental taxes (UK RGD, Italian taxes and Australian POCT) of £18.8m, and adjusting the current year for the estimated £45.0m adverse impact of the Triennial Review
  • Proforma 2019 (including the impact of IFRS 16) change v proforma 2018

Conference call

An analyst call will be held at 9:30am (BST) today. The corresponding presentation will be posted on the Group’s website shortly before the call: https://gvc-plc.com/investor-relations/results-centre/

Participants may join the call by dialing one of the following numbers approximately 10 minutes before the start of the call:

UK Toll: +44 3333000804 or UK Toll Free: 08003589473

PIN: 54846844#

URL for international dial in numbers: http://events.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf

There will be a live audio webcast available via the following link:

https://webcasting.buchanan.uk.com/broadcast/5d381ba248a6d52f84f6afc5

To download  a PDF of the full release click here

Enquiries:

GVC Holdings PLC

Kenneth Alexander, Chief Executive Officer

Rob Wood, Chief Financial Officer

Paul Tymms, Director of Investor Relations & Corporate Communications

(investors@gvc-plc.com)

Media enquiries:

Buchanan Communications

David Rydell / Jamie Hooper

Tel: +44 (0) 20 7466 5066

Forward-looking statements

This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, results of our operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. These forward-looking statements include all matters that are not historical facts. By their nature, these statements involve risks and uncertainties since future events and circumstances can cause results and developments to differ materially from those anticipated. Any such forward-looking statements reflect knowledge and information available at the date of preparation of this document. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation (596/2014), the Listing Rules, the Disclosure Guidance and Transparency Rules and the Prospectus Rules), the Company undertakes no obligation to update or revise any such forward-looking statements. Nothing in this document should be construed as a profit forecast. The Company and its directors accept no liability to third parties in respect of this document save as would arise under English law.

About GVC Holdings PLC

GVC Holdings PLC is one of the world’s largest sports-betting and gaming groups, operating both online and in the retail sector.  The Group owns a comprehensive portfolio of established brands; Sports Brands include bwin, Coral, Crystalbet, Eurobet, Ladbrokes, Neds and Sportingbet; Gaming Brands include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, partypoker and PartyCasino. The Group owns proprietary technology across all of its core product verticals and in addition to its B2C operations provides services to a number of third-party customers on a B2B basis. The Group has also entered into a joint-venture with MGM Resorts to capitalise on the sports-betting and gaming opportunity in the US.  The Group, incorporated in the Isle of Man, is a constituent of the FTSE 250 index and has licences in more than 20 countries, across five continents.

For more information see the Group’s website: www.gvc-plc.com

LEI: 213800GNI3K45LQR8L28