Financial News — Weekly Round-up for September 15, 2017

Latest Italian Gambling Market Figures Published

Online gambling growth outstrips retail betting

Financial figures on Italian gambling market progress in August have been published, with online results showing better growth than the retail sector.

Year-on-year highlights from the results include:

* Overall sports betting revenue up 89 percent at Euro 83million;

* General retail betting revenue up 74.7 percent at Euro 43.8 million;

* Online betting up 108.6 percent at Euro 39 million;

* Online casino revenues up 30.6 percent at Euro 44.8 million;

* Online poker tournament entry fees up almost 20 percent at Euro 5.9 percent, but cash game revenue fell 3.8 percent to Euro 5.1 million;

* The government is about to make a new tranche of online gambling licenses available, reportedly around 120 of them at Euro 200,000 each.

Competition remains stiff in the Italian market:

* In online sports betting bet365 led the market in August with an 18 percent market share, followed by Planetwin365 (16 percent);

* Online casino market leader in August was Lottomatica with a 9.08 percent market share, pursued by online casino at 8.93 percent, and with 8.81 percent. Bwin and William Hill trailed with market share at 6.36 percent and 5.39 percent respectively.

* In August online poker tournament action PokerStars led the market with an overwhelming 70.8 market share, and in cash game activity the online poker giant again dominated with a market share of 45.9 percent.

Looked at from a year-to-date perspective, online gambling revenues are up 34 percent, whilst retail revenue growth trails at 7.65 percent.

Gaming Realms Making Progress

Expects to be EBITDA positive by year end

Streamlining operational and marketing efficiencies is assisting progress for Gaming Realms who reported improved EBITDA and reduced losses albeit still reporting the company in the red.

Key performance indicators for the first half period ending June 30, 2017, include:

– Revenue growth of 5 percent to GBP 15.7 million (H1/16: GBP 14.9 million) driven by the continued success from the Company’s proprietary mobile platform (“Grizzly”) and its Slingo IP driven games.

– Steady growth in social publishing, which contributed GBP 4.0 million (H1/16: GBP 3.4 million) of social gaming revenues in H1/17

– Adjusted EBITDA loss reduced by 71 percent to GBP 0.9 million (H1/16: GBP 3.1 million), with Loss before Tax on continuing operations reducing by 30 percent to GBP 4.1 million (H1/16: GBP 5.8 million)

– Continued execution in cost reductions, in particular marketing optimization on real money gaming, was 26 percent lower at GBP 4.8 million (H1/16: GBP 6.5 million), whilst revenues grew 5 percent to GBP 10.7 million (H1/16: GBP 10.2 million) and head count reduction of 28 staff through synergies in social publishing for annualized costs saving of approximately GBP 2.0 million, reflecting both improved operational and marketing efficiency

Looking ahead, the Group has gone live in New Jersey with Resorts Digital Gaming and Rush Street Interactive and will launch their remote game server with Pala Interactive, Caesars Interactive, Betfair and Bwin as well as with Betvictor in the European market during the second half.

Management is confident the Group will be EBITDA positive for 2017 as a whole, and significantly EBITDA positive in H2 2017, with continued cost efficiencies and real money gaming average daily revenue up 11 percent so far in Q3 2017 compared to the same period in 2016. Social publishing is now EBITDA positive

Patrick Southon, Chief Executive, said:

“The Group has made significant progress towards profitability in the first half of 2017, with H1 losses reduced, the Board anticipates that the Group will be EBITDA positive for the year as a whole.

“Our strategy of focusing our resources and capital on real money gaming, whilst continuing to deliver content to other operators, is driving revenue growth. Additionally, our focus on synergies, cost management and reduction is driving improved profitability.”

Net Profit Plunges A Third At OPAP

Q2 results impacted by increased market spend on new products and a decline in revenue

In its Q2-2017 report released Wednesday Greek betting and lottery operator OPAP posted a more than 33 percent y-o-y decline in net profit, attributed to increased marketing spend on new products and a fall in revenue.

Highlights of the report included:

* Revenue down 2.5 percent at Euro 330 million;

* Earnings down almost 24 percent at Euro 52 million;

* Lottery revenue down 8.4 percent to Euro 190 million due to unfavourable jackpot rollovers in OPAP’s Joker product;

* Net profit down 33.7 percent at Euro 22 million.

CEO Damian Cope said that the group’s digital presence is being enhanced by a new online sports betting platform provided by BetGenius, and revealed that new online and mobile products will probably be launched before the end of 2017, supported by a strong and multi-layered marketing campaign.

GVC Group Interim Details Strong Progress

“Quality talent, proprietary technology and proven brands” drive the business forward

Online gambling group GVC Holdings plc has released its interim results for the six months ended 30 June 2017, highlighting:

* NGR up 10 percent at Euro 486.2 million (+12 percent in constant currency) vs pro forma H1 2016;

* Clean EBITDA of Euro 133.9 million, up 28 percent vs pro forma H1 2016 (Euro 104.4 million);

* Adjusted profit before tax of Euro 101.9 million, up 99 percent vs H1 2016 (Euro 51.3 million)

* Statutory loss before tax reduced at Euro 6.6 million (H1 2016 loss Euro 86.1 million);

* Interim dividend 16.5 Euro/c per share

* Long-term refinancing secured

* Net debt as at 30 June 2017 Euro 150.7 million;

Operational highlights:

* Sports Brands gross win margin 9.8 percent (9.1 percent pro forma H1 2016);

* Sports Brands NGR up 11 percent (+13 percent constant currency) vs pro forma H1 2016;

* Games Brands NGR up 8 percent at Euro 110.5 million (+10 percent constant currency) vs pro forma H1 2016;

*PartyPoker revenue up 32 percent, thanks to product improvement and increased marketing;

* On target to achieve Euro 125 million synergy run rate by end of 2017;

* Disposal of Kalixa Group for Euro 29 million completed May 2017 and up to Euro 2.6 million in deferred consideration;

Current Trading (Q3 for period up to 10 September):

* Daily Group NGR up 12 percent (+15 percent constant currency);

* Underlying daily NGR up 20 percent (+23 percent constant currency);

Board now expects Clean EBITDA for the current year to be comfortably ahead of analysts consensus;

CEO Kenneth Alexander reported:

“I am delighted with the strong progress across the group, which has continued to exceed our expectations since last year’s acquisition of A combination of high quality talent, proprietary technology and proven brands are key components driving the business forward. Scale and geographic diversification are increasingly important as the regulatory environment evolves and competition increases. The strong performance of the business together with the smooth integration of continues to present exciting organic growth opportunities. In addition, given its proven track record of creating shareholder value, GVC remains well positioned to continue to play a pivotal role in the industry’s consolidation, should the right opportunities arise.”