15th Apr 2014 13:31
LONDON (Alliance News) - Online gaming company GVC Holdings PLC is hoping to use the football World Cup as its spring board for expanding in South America as early as the fourth quarter of this year, and will then take a look at moving into Scandinavia and Asia, its chief executive says.
GVC bought e-gaming operator Sportingbet in March last year, excluding its Australian business which was acquired by William Hill PLC. The acquisition has been a game changer for GVC, which has more than tripled its revenues since the acquisition, increased its profits, and boosted its geographical footprint.
Now that Sportingbet has been fully integrated into the business, and the group has cut is costs base significantly, Chief Executive Kenny Alexander said that the group it is ready for the next stage in development and further geographic expansion through organic growth and acquisitions.
"We have the scale of infrastructure now, and we are looking at a whole range of things now, including other geographies," Alexander told Alliance News in an interview Monday.
"We are trying to maximise our presence in Brazil for the time being, and once the World Cup is finished, then will focus on growing out in other Latin America market. We will press the button on expansion in the fourth quarter of this year and heading into 2015," he said.
Alexander said that the group is also seeking to accelerate its penetration in Brazil as it prepares for the World Cup finals in June, and is investing a considerable amount of money into marketing in the country.
"The World Cup is a fantastic opportunity. What we are doing in Brazil is we are spending a decent amount of money in a TV campaign for Sportingbet. Although we have two brands in Brazil, the vast majority of investment is around Sportingbet," said Alexander.
The company now has four brands: Sportingbet, CasinoClub, ParadisePoker and betboo, which is the second brand being heavily marketed in Brazil ahead of the World Cup.
GVC is also hoping to penetrate other Latin American markets on the back of growth in Brazil, the CEO said.
"Definitely in medium term we want to expand into Latin America, and this time next year we would of done that. We have a small business in Chile, but the vast amount of revenue is from Brazil," said Alexander.
After the South America expansion, the group is looking at potentially expanding into other markets such as Asia and Scandinavia.
"We have a fair amount of geographical coverage as we speak, however we are open to possibly doing something in Asia and the Scandinavian markets, where we have very limited coverage in at the moment," said Alexander.
As well as geographic expansion, GVC is hoping to grow revenues through its mobile channels significantly. Alexander said that 20% of overall revenues currently come from mobile, a figure he hopes to see rising as the company goes forward. Rival Betfair Group Ltd said mobile contributed 50% of sports revenues in its most recent half year, and Bwin.party Digital Entertainment PLC which said that in 2013 mobile and touch represented 19% of sports gaming revenues.
"Mobile is a priority for us, and we have invested in it in terms of technology and marketing, and as a result we have seen the ratio increasing. We are coming from a pretty low base, and they are not as good as some of our competitors, so we are playing catch up," said Alexander.
"This time next year, I will be disappointed if we don't have it that figure north of 25%," he added.
Last week the online gaming service provider more than doubled its total dividend for 2013 to EUR48.5 cents, after reporting a strong increase in revenues and profits for the year thanks to its acquisition of Sportingbet and as it cut costs.
GVC reported net gaming revenue of EUR168.4 million, a significant increase from the EUR60.3 million it reported in 2012, boosted by an increase in sports and gaming revenues, and a pretax profit of EUR13.0 million, up from EUR10.8 million in 2012.
"First of all we removed a significant amount of cost out the business, curtailing a lot of the marketing, which was wasteful. We have also managed to enjoy a lot of synergies and reduced headcount, as well as the closing down of our Guernsey operations and moving operations to Malta," Alexander told Alliance News on Monday.
GVC Holdings said that current trading in its new financial year is at record levels, with net gaming revenues exceeding EUR50 million in the first quarter, compared with EUR35.6 million the prior year, with an average of more than EUR556,000 per day.
"We are confident for the next year, and expect to see growth, and that is reflected in our dividend last week. We are in pretty good shape," said Alexander.
GVC shares were up 1.3% Monday afternoon at 405.50 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
GVC.L