GVC operating and pre-tax profit down
GVC Holdings saw its NGR grow last year, but its operating and pre-tax profit dropped 31% and 70% respectively.
GVC Holdings posted a 5% growth in net gaming revenue (NGR) last year to 54.9m from 52.1m in 2009, but operating and pre-tax profit dipped 31% and 70% respectively due to increased marketing spend and costs associated with its re-domiciliation and litigation with Boss Media.
Gaming NGR was up 8% to 46.2m from 42.9m across its CasinoClub, Betaland and Betboo brands. Sports wagers grew 18% to 69.3m, helped by a strong football World Cup, although a lower sports margin of 13.8% from 17.2% led to a marginal dip in sports NGR to 8.7m, from 9.2m.
Clean EBITDA however fell 31% year-on-year to 12.2m, from 17.7m in 2009, following planned market investment of 4.8m in the German-facing Casino Club brand. Pre-tax profit fell 71% due to costs associated with its redomiciliation from Luxembourg to the Isle of Man and legal costs associated with legal proceedings initiated against Boss media over alleged infringement of its intellectual property.
However, the company said the investment in CasinoClub was “already bearing fruit” with Q1-2011 NGR being 10% higher at 172k per day than the same period last year (157k), and 19% higher than the previous quarter. The company said its investment in CasinoClub would continue throughout 2011.
On its Betboo Latin American business, chief executive Kenneth Alexander said: “Betboo in Latin America and in Emerging Markets has performed more strongly than expected, and the re-structuring of the earn-out should encourage further growth and allow greater investment in Latin America. The building of the Betboo brand outside Latin America will continue in 2011 and the Board expects that this will move into profitability in H2 2012.”
Welcoming the group’s “positive start” to 2011, Alexander said the group remained “cautiously optimistic for the forthcoming financial year” given regulatory changes across Europe, particularly in Germany.
“The regulatory landscape has seen a number of changes during 2010, few of which have had an impact on GVC’s core business. The Interstate Treaty in Germany expires at the end of the year and discussions amongst the German Länder have been taking place in 2011. It is too early to predict the outcome of these discussions.”