25th Sep 2013 11:44
LONDON (Alliance News) - GVC Holdings wants to increase revenues via mobile channels significantly over the next few years and considers Sportingbet as a "perfect timing" transformational business deal, Chief Executive Officer Kenneth Alexander told Alliance News Wednesday, following the release of the online gaming-services provider's half-year report.
Looking forward, GVC said that its strategic objectives include taking full advantage of the upcoming 2014 World Cup in Brazil.
"GVC already had a Latin American business, and with the Sportingbet acquisition we acquired that Latin American business also. Undoubtedly the World Cup is the biggest marketing event you can have for a sports book. We are excited, as it is a great opportunity, and we are looking to exploit it to its maximum potential," Alexander said, adding:
"Other strategic objectives are to continue improving our product range, spending wisely on marketing, and grow our revenues through our mobile channels significantly."
GVC Holdings reported a revenue increase of 144% to EUR72.3 million in the half year to June 30, compared with EUR29.6 million a year earlier. GVC said that like-for-like revenues rose 8.5% on the year, averaging EUR594,000 per day.
It also said that trading so far in the third quarter is strong, with group revenues up 249% to EUR516,000 per day, and like-for-like revenues in the third quarter up 3.4% on 2012. It said that its sports margin in the third quarter across all products stands at 9.7%.
"The revenue increase is down to a combination of the recent Sportingbet acquisition, and organic growth from the existing business prior to the acquisition." Alexander said.
Isle of Man-based GVC said that e-gaming operator Sportingbet - the Australian business of which was bought by William Hill PLC - is already profitable and the restructuring of the business has been completed following its March acquisition.
"The business is already making a modest contribution to our cash. We do still have some migratory work to do and some restructuring to complete by the end of the year, but this is not expected to impact our profitability for the rest of the year," Alexander told Alliance News. "The remaining costs are tail-end, not material."
GVC Holdings said that it is confident that it will beat market expectations for the current year, but did not disclose by how much.
"The restructure has gone much better than we expected," Alexander said. "We've taken out more costs than we had hoped, in a quicker time-scale, and the revenues have held up."
The restructuring of the Sportingbet business has allowed it to reduce its inherited costs base by around 50%, GVC said.
"We halved the London footprint, cut a lot of IT costs by outsourcing, and marketing sponsorships have been cancelled," Alexander said. "We have a wide range of domains and territories, but the main way we will continue to grow Sportingbet is to spend money on marketing wisely, and to continue to improve the product range we have."
The group reported a fall in its pretax profit to EUR1.1 million, compared with EUR5.5 million a year earlier, due to costs of EUR9.3 million relating to the acquisition of Sportingbet, and a further EUR5.4 million in restructuring costs. It reported a net profit of EUR829,000, compared with a net profit of EUR4.3 million a year earlier.
Alexander said that any future acquisitions and deals may be of interest, as long as they do not have any detrimental effect on the dividend it returns to its shareholders.
"We will certainly look at more deals in the future, but the priority right now is to continue to manage the existing businesses," he said.
GVC declared its third dividend of 2013 of 10.5 Euro cents per share, raising its total payout for 2013 to 28 cents.
Its shares were up 2.50 pence at midday Wednesday, trading at 321.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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