GVC Holdings PLC Excellent performance in 2018 with strong momentum continuing into Q4

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GVC Holdings PLC (LON: GVC), the multinational sports-betting and gaming group, today announced a post close trading update for the year to 31 December 2018. Following a strong final quarter, the Group expects full year 2018 proforma underlying EBITDA1/2 to be in the range of £750m-£755m, ahead of current market consensus3.

Full year trading highlights1:

· Proforma underlying Group EBITDA2 ahead of expectations3 at £750m to £755m

· Strong growth in Online with NGR +19%

· UK Retail like-for-like (“LFL”)4 NGR -3%

· European Retail NGR +16% with strong growth in Italy NGR +18%

· Total Group NGR +9%

Q4 trading highlights1:

· Continued momentum in Online, despite very tough comparatives, and market share gains in all major territories

· Group NGR +5% with Online NGR +15%

	Proforma¹ Q4 growth (1 October 2018 to 31 December 2018)				Proforma¹2018 Full Year growth (1 January 2018 to 31 December 2018)
	Total NGR	Total NGR CC⁵	Sports Wagers	Sports Margin	Total NGR	Total NGR CC⁵	Sports Wagers	Sports Margin

Online
Sports brands	14%	15%	18%	(1.5pp)	20%	22%	13%	+0.4pp
Games brands	18%	18%			16%	16%
B2B	(3%)	(5%)			17%	18%
Total Online	15%	15%			19%	21%

UK Retail (LFL⁴)	(3%)	(3%)	(7%)	(0.7pp)	(3%)	(3%)	(6%)	(0.2pp)

European Retail	(7%)	(8%)	11%	(3.6pp)	16%	14%	11%	+0.8pp

Other	24%	24%			(6%)	(6%)

Total Group	5%	6%			9%	9%

Kenneth Alexander, GVC CEO said:

“The Group’s performance in 2018 has been excellent with the strong momentum reported at Q3 continuing into Q4. We are materially outperforming the market and taking share in all of our major territories. As the Group carries this momentum forward into the new year, and starts to deliver the opportunities provided by both the Ladbrokes Coral integration and our sports-betting joint-venture in the US with MGM Resorts, the Board is confident that the Group is very well placed for a successful 2019.”

Q4 Trading commentary:

Online:

Online NGR growth of 15% was very strong despite the high sports gross win margin in the comparative period last year.

Sports brands NGR was up 14%; sports wagers growth of 18% was largely offset by a sports gross win margin of 10.7% which was 1.5pp behind last year, while gaming NGR was 35% ahead. Growth remained impressive across all major territories with legacy GVC sports brands NGR 21% ahead and legacy Ladbrokes Coral sports brands NGR 9% ahead, including 12% NGR growth in the UK sports brands.

Games brands NGR was 18% ahead with partypoker +43%, Gala brands +18% and legacy GVC casino brands +13%.

Total Online marketing costs as a % of NGR in the quarter was 22% (Full year: 23%).

UK Retail (LFL4):

UK Retail LFL NGR was 3% behind last year. LFL OTC NGR was 10% behind driven by LFL OTC gross win margin down 0.7pp and LFL OTC wagers 7% behind. LFL machines NGR was 3% ahead.

European Retail:

Belgium Retail NGR was 15% ahead of last year and Republic of Ireland Retail NGR 8% ahead. Overall European Retail NGR was 7% behind the prior year, due to a lower OTC gross win margin in Eurobet Retail, which was 7.4pp down on last year’s exceptionally high level. However Eurobet Retail OTC wagers grew by 15%.

Full Year Results announcement:

GVC Holdings intends to release its preliminary FY18 results on 5 March 2019.

Notes

(1) The Group’s results and growth rates are unaudited and presented on a proforma basis as if the current Group, post the acquisition of the Ladbrokes Coral Group plc, had existed since 1 January 2017. As such, it excludes the results of the Turkish business which was discontinued during 2017 and the 360 shops that the Ladbrokes Coral Group plc was required to divest on the merger of Ladbrokes PLC and the Coral Group. The results of Crystalbet are included from the date of acquisition (11 April 2018) and the results of Kalixa are excluded from the date of disposal (31 May 2017)

(2) Stated pre separately disclosed items and shared based payments

(3) 2018 consensus underlying EBITDA is £739.0m based on Bloomberg consensus as at 16 January 2019

(4) UK Retail numbers are quoted on a LFL basis. During Q4, there were an average of 3,474 shops in the estate, compared to an average of 3,565 in the same period last year. In the full year, there were an average of 3,524 shops in the estate, compared to an average of 3,618 in the same period last year

(5) Growth on a constant currency basis is calculated by translating both 2018 and 2017 performance at the 2018 exchange rates