GVC CEO exclusive: Operator unlikely to seek another large M & A deal for now

GVC CEO Kenny Alexander speaks exclusively to Gambling Insider on the operator’s 2018, its drive for online, how market sentiment is affecting share prices and its future M & A strategy.


You described 2018 as a transformational year in GVC’s full year report. Could you expand on that?

We had a fantastic 2018. Group revenue was up 8%, EBITDA was up 13% and underlying operating profits were up 19%. We finished the year ahead of the current market expectations for 2018.

We declared another 16p dividend, taking it to 32p; that’s a 7% increase year-on-year and we have committed to a 10% increase to the dividend year-on-year, so again, that’s a positive.

Looking to the future, and in terms of how we’ve kicked off the year, it’s been a very, very good start. Our online net gaming revenue (NGR) was up 22%, so 2019 has kicked off as good as or even better than 2018.

Obviously in 2018, we announced the joint venture with MGM and that’s progressing very well. We’re up to underlying revenue of $100m there and we remain bullish in the long-term prospects of that market.

During the year, we also acquired Neds in Australia and Crystal Bet. Both are doing very well. Crystal Bet got us into Georgia, and Neds has bulked us up in Australia.

Recently, we’ve announced that we came to an agreement with Playtech. It’s a good deal for both parties and allows us to migrate earlier if we wish and it allows us to put Playtech casino content on all of our sites; not just the Ladbrokes Coral businesses but also the GVC brands, most notably Bwin.

Really, 2018 couldn’t have gone any better; we ticked the boxes in everything we wanted to achieve. It was always going to be an interesting year because we acquired Ladbrokes Coral at the start of it, but we’ve done well and in 2019 it’s so far so good.      

When you spoke to Gambling Insider about the US for our CEO special, you said you’ll put the foot down in 2019. What can we expect to see from GVC-MGM this year?

We were planning a big marketing push before the start of the new NFL season. We have our offices set up in New Jersey; I think we’ve got about 25 people and a senior management team in place and we’re going to step up there. I think we should have about 125 people by the end of the year.

We’re working on the product lines, we’re improving the product all the time and they’ll be all singing, all dancing by the end of the year.

Really, we're waiting for all the states to gradually open up. I think there’s eight states opened up at the moment, with further states planned to open up in the rest of this year.

I’ve said this many times; if you do a deal with MGM in the US, with its contacts and brand and with our expertise and technology, I’m very confident we’ll be the market leader, but it’s going to take time. It’s going to take a five-year view. At the moment, only 10% of the US population can bet on sports. But as and when it all opens up, we expect to be the market leader and we expect to make a significant amount of revenue and EBITDA in that market.  

Overall, GVC’s share price has dropped from £8.60 to £6.51 in the last year. How would you assess the performance of the share price?

I’m obviously disappointed with it. If you look at the whole sector, I think everyone has dropped off. If you look at GVC as relative to the other gaming companies, we’ve done alright. When the share price falls, obviously you’re disappointed but we can do no more than what we’re doing.

We are gaining market share in all of our key markets. We did the MGM deal and we’re integrating the business well. There’s nothing else we can do and that is sentiment towards the sector, which isn’t particularly good at the moment.  

We are going to get caught up in that sentiment and we’re going to be punished as well. Not punished as much as everybody else, but still, we’ve come down and we’re disappointed but that, quite frankly, is largely out of our control.

Net gaming revenue in online grew 19%, how does that reflect GVC’s current strategy?

The vast majority of our revenue and EBITDA is online and post the implementation on the drop to £2 on the fixed odds betting terminals (FOBTs), we’ll be completely dominated by online revenue and online EBITDA.

UK retail is still important, because it drives a lot of our digital revenue in the UK. But in terms of the EBITDA, we’re very much an online business.

Do you foresee any more acquisitions for the company in the near future?

I’d go to jail if I told you, but we always look at stuff. We did a couple of bolt-ons last year and if we do anything, we’ll do more of those. We’ll always have the opinion that we don’t need to do M & A, but if the right opportunity comes up to do a bolt-on, we’ll do it, though it’s unlikely to be anything too big.

What gets you most excited when you look ahead to 2019?

I think what gets me most excited is continuing the momentum and gaining more market share in our key markets. Those are the UK, Germany, Australia, Italy and Brazil.

We want to continue to gain the market share in those territories and push on doing what we’re doing. We’re winning at the moment and we expect to continue winning, and hopefully that share price will go back up to where it came from.

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