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Friday, 14 December, 2018

GVC boss Alexander vows to keep 'foot to the pedal' after posting strong results

GVC chief executive Kenny Alexander believes retail betting is in structural decline
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Chief executive Kenny Alexander said GVC Holdings would be keeping its "foot to the pedal" as the World Cup in Russia and strong online growth helped the parent company of Ladbrokes Coral post a strong set of results for the first half of the year on Thursday morning.

However, the company warned that the government’s decision to cut FOBT stakes to £2 would lead to them closing 1,000 betting shops.

Group revenues of £1.1 billion were up eight per cent on the previous year with underlying operating profit increasing by 17 per cent to £277.9 million.

Online revenues rose 18 per cent, with Coral ahead of the market with 12 per cent growth and Ladbrokes returning to growth at seven per cent, prompting the company to say it believed the brand was "becoming more relevant again in the UK online market after years of underperformance".

In addition GVC, which completed the purchase of Ladbrokes Coral in March, said it had identified extra savings of £30m from the deal on top of the £130m worth of synergies already identified.

Alexander said: "When you do these deals the first six or seven months set the tone. If you ping the traps it indicates it's going to go well and if you don't then you are going to struggle. It couldn't have gone any better.

"We are grabbing market share, we are growing faster than any of our competitors and we are very, very pleased with it."

In retail, bad weather in the first quarter of the year contributed to  revenues being down five per cent with over-the-counter betting eight per cent down and FOBT revenues three per cent behind.

The World Cup had a "positive impact", while a good Cheltenham Festival was offset by Tiger Roll winning the Grand National – "the worst result in the book".

Tiger Roll lands the Grand National - the "worst result in the book" for GVC
GVC said machines stakes were "undoubtedly impacted" by the "negative coverage" of FOBTs in the run-up to and after the announcement the government would be reducing stakes to £2 from £100.

The company said that decision would result in the closure of around 1,000 Ladbrokes Coral shops from their estate totalling more than 3,500 and that it expected enactment of the new legislation to be complete by the end of this year, although when it would be implemented was less clear.

Alexander said he believed retail betting was in structural decline although his team was putting up a "good fight".

He added: "Post implementation, UK retail profits will be less than 15 per cent of the group. We are very much a global business so UK retail is actually only a small part of the overall group. It is what it is. Let's get it enacted, get it implemented and let's kick on."

In July GVC announced what it described as a "ground-breaking" joint venture with casino group MGM Resorts which it said left the company well placed to take advantage of the liberalised US sports-betting market.

Alexander said: "We have done the deal in the US that everyone wanted to do in my opinion.

"We think we are going to be the market leader in the US in five years and we have got a 50 per cent share of it, there's nothing not to like about the deal we have done with MGM. It will take some time but we are definitely going to create a lot of value from this deal."

Alexander added that the company would not be resting on its laurels.

"We came from absolutely nowhere to where we are. We didn't get here by being shy.

"We are going to continue being aggressive. We've bought a great business in Ladbrokes Coral, it is growing much better than it was before and we are going to keep the foot to the pedal and continue that growth."

Analysts at Goodbody described the update from GVC as "very strong" but shares were down 4p at 1,058p at close of trading on Thursday.

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We are grabbing market share, we are growing faster than any of our competitors and we are very, very pleased with it

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