GVC Holdings Profits Soar Following bwin.party Acquisition
GVC Holdings Plc today released its interim financial results, covering the first half of 2016, and revealed that its acquisition of struggling rival bwin.party last fall has resulted in an immediate surge in profits. GVC’s share price surged roughly 6.6% following the release of the interim financials, which showed the company’s adjusted profit before tax, compared year over year, jumped from €21.8 million to €51.3 million.
That’s only one of the rosy results for the company within the latest numbers. Net gaming revenue in H1 came in at €441.8 million (over $494 million), an 8% hike over the €408.4 million in revenue GVC posted in the first half of 2015. Clean EBITDA came in at €91.2m, compared to €25.5m in H1 of 2015, translating to a pro forma clean EBITDA growth rate of 42%.
The company also listed a handful of its recent operational highlights in bullet-point fashion:
- Strength of brands reflected by growth achieved with relatively low marketing spend (21% of NGR);
- Mobile sports wagers grew 55%, casino and games 98%;
- Integration of bwin.party on target to secure €125m annualised synergies by end of 2017;
- Significantly strengthened senior management;
- Signed largest B2B deal to date with one of the UK’s best known sports betting brands, Betfred;
- Confirmation of New Jersey gaming licence;
Said GVC’s CEO, Kenneth Alexander, “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.”
Re-fortifying the struggling Party and bwin brands has been a major goal of GVC since acquiring the company. GVC already owned the SportingBet and Foxy Bingo brands, but the acquisition of bwin.party has provide both new-product and new-market opportunities.
GVC itself admits to underestimating how successful the acquisition would be — at least early on. Alexander, speaking to Gambling Insider immediately following the release of the rosy numbers, said, “I think it’s the power of the brands. When we acquired BwinParty, we always knew we were getting some very strong brands, but I think we particularly underestimated how powerful the Bwin brand is in the German-speaking markets.”
It’s also fair to point out how grossly mismanaged the old bwin.party was, literally since the two once-dominant firms merged back in 2011, after many months of hand-holding. That GVC was able to turn around bwin’s and party’s fortunes to the extent it already has serves as added evidence on how hapless the old bwin.party really was.
Of course, there were more elements to GVC’s healthy dash of good news. The company reported increased margins in its various sportsbook operations, up overall to 10.0% from H1 2015’s 7.7%, and a good chunk of that, per various reports, was due to a fine showing by the company on this spring’s and summer’s Euro 2016 action. Not all of GVC’s Euro 2016’s numbers fall into H1, but the company has already announced a fantastic gross win margin of 18.3% on €162m of Euro 2016 wagering action.
Alexander, in his brief interview with GI, also suggested that his company would like to remain active on the merger-and-acquisition scene, but that divesting the Foxy Bingo brand was not among GVC’s near-future plans.
Separately, GVC also announced a bit of executive-level turnover. Current Chief Financial Officer Richard Cooper will be departing the company, effective in February of 2017. GVC has already announced Cooper’s replacement — Paul Miles, currently the CFO at Wonga, a consumer-credit group.