© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to the GVC Q3 Update Call. [Operator Instructions] Just to remind you, the call is being recorded. I'll now hand the floor to our host, Kenny Alexander, Chief Executive; and Paul Bowtell, Chief Financial Officer. Gentlemen, please begin.
Morning all. It's Kenneth Alexander here, the CEO. And I've got Paul with me as well, CFO. So I'll kick on with some of the highlights from Q3. Obviously, we reported only about 4 or 5 weeks ago, but now we've got the full quarter, we have a nine split. The trends have continued, very strong quarter and gaining market share in all of our major territories. Our Online NGR in the quarter was up 26% (sic) [ 28% ], sports brands were up 31% and the games brands were up 19%. The U.K. retail continues to stabilize. Like-for-like is down, now only 2%, obviously helped by the latter parts of the World Cup, that decent performance of the U.K. Retail. Continued strong performance of European Retail, up 24%, driven mainly by continued strong growth in Italy. And overall, NGR was up at 14%. And we said this morning, the integration of the Ladbrokes Coral business continues to progress well. And quite frankly, I can say what -- all sorts of things but the numbers tell the story. Since we've done the deal with Ladbrokes Coral, it's gone very well, and things couldn't have really have gone any better. And then I'll pass you on to Paul Bowtell. Obviously, the announcement today that Paul is leaving, it's disappointing news. But I did encourage or persuade Paul to come on board this time last year. I think it's very important that he came on board. He was the only Ladbrokes Coral director to come on board. And he has been -- contributed, obviously, to the fact that it has gone so smoothly and has had a very good start to the integration, et cetera. He's been a great help to me during the last 9 or 12 months -- 9 months, I should say, and he's moving on to pastures new. And the succession planning there with Rob Wood, who he's worked with for a long period of time and who is his natural successor. So you can ask Paul a question in a minute, but that's where we are there. And I'll pass you on to Paul, actually. I'll pass you on to him right away.
Thanks, Kenny. Yes, just a brief comment on the succession, obviously. Not necessarily an easy decision, but I've been doing this sort of role for the best part of 14.5 years and just felt it was probably time to do something different. A lot of you have met Rob in the past when you've done store visits or been to the trading floor in Stratford. I've worked with Rob for 6 years. He's an incredibly impressive individual and has around him, or will have around him, an incredibly strong finance team. So I think the business is in very good hands from that perspective.We're going to just have a short Q&A session now. Learning from the interims, we are going to limit you to one question per analyst. So if you ask 3, we will only answer the first one. Otherwise, we'll still be here in 3.5 hours. So with that, I'll hand you back to the moderator.
[Operator Instructions] Our first question comes from the line of Tal Grant of Crédit Suisse.
So yes, I asked you already at the H1 interims, but I just wanted to kind of further -- get some further clarification on it. We're continuing to see some of your competitors' post some very negative or very bad online numbers in the U.K. because of new due diligence and KYC measures that they're having to take. Can you just give us reassurance again that this isn't going to hit you, and maybe just explain why you would have done it? I think at the H1 results, you said you had done some implementations on some of these measures before everyone else. So why would you have done it before every one and why is everyone sort of being so slow to catch up now? And I guess just reassurance that you're not going to have to do anything later this year or next year.
Okay, I'll take that one. I'm not going to comment on what other people are saying. I'm not too sure what they've been seeing, really. But we have implemented all the necessary KYC source of funds regulations, et cetera. Did we put them in place, or did Ladbrokes Coral put them in place before others? Possibly. I don't know. We don't have the complete information. But we are adhering to the rules 100% and have repeatedly said we have a very healthy relationship with the U.K. Gambling Commission. Year to date, the Ladbrokes brand is up 10%. The Coral brand is up 16%. If you combine the 2 of them, it's probably about 13%. The growth has accelerated during the year. There's no changes that we're expecting to make on that in terms of source of funds in KYC and all that, and we're very -- we're pretty bullish about the U.K. ongoing.
I think it's also worth just remembering that, go back 12 months, Ladbrokes.com was not in a good place, right, and was actually going backwards. And that was partly through some own goals, through the integration and a number of other things that were going on at the time. So it is coming off of the back of a weaker period a year ago, and it's now back to something that resembles more normal strength. So I think that it's worth bearing that in mind.
Our next question comes from the line of the David Holmes of Bank of America Merrill Lynch.
Just wanted to ask on the online NGR performance. Clearly, you're at 23% now. At H1, you're talking 10% for the full year. How are you thinking about Q4? I appreciate there's a little group comp that zero-factors a reasonable amount of buffer in there to hit that 10% number.
Q4 is the toughest comparator, I think, the industry's has probably had for many years. We still believe we can get growth in Q4 Online. And in terms of the 10% over the year, absolutely. We're very, very confident. We've good momentum. I can't do anything about the comparators. It's the same comparative, I've said this, [ entirely ]. It's the same comparative for everybody else. However, what we need to do is make sure we continue to grab market share where we get digital growth in Q4. But who knows what the results are going to be. With normalized results, yes, we do believe we will get to that target for the full year, 100%. Yes, we're very confident. We're in good shape.
Our next question comes from the line of Gavin Kelleher of Goodbody.
Just in terms of Australia, can you give the update on the competitive landscape down there just given Betstar's rebranding of the 2 brands to BetEasy. Is there anything happening there that you'd kind of note? I know you kind of said that margin's been back year-on-year, but anything on the competitive landscape in Australia at present?
I mean, look, we're in a critical period, Gavin. As you know, in Australia, we're kind of into Spring Carnival now, and obviously, that's quite a big acquisition period. And look, I think it's fair to say the guys are seeing some increased activity. It is competitive. But nothing -- I wouldn't say anything that I would say is hugely disruptive or extreme. It's a competitive period, as you'd expect to see around the [ Chelmem or entry ] or the derby or whatever else it might be. And yes, they're definitely on the front foot, but we wouldn't have expected anything different, really.
The one thing I would add to that is some of it -- obviously, this business is a bit new in terms of in Australia. But I've been very impressed with the management team. And I think one of the reasons why, as I say, Australia Betstar growth -- Betstar is up 24% and in Q3, it was up 26% year-to-date. I do think the management team over there is very, very strong. They've got sort of -- as I said a few times, from looking -- from those I've been looking at, I've always been impressed by how Ladbrokes Coral have done in Australia. They seem to always be punching above their weight. And since I've been in the business and known the business, I've very impressed with them. I think they do a very, very good job. And yes, I think they've probably got a very, very strong management team, which is meaning that -- or delivering the results we are. But it is competitive, there's no doubt about it. But I think we're pretty bullish about Australia.
Sorry, one just follow-up on that. Have you changed your promotional activity at all? Or was the gross win margin shift, was that all results driven?
Results driven.
Our next question comes from the line of Patrick Coffey of Barclays.
One question from me with one part. Just looking at the U.K. results in Q3, retail margins were down year-on-year on a soft comp, but online gross win margins were up. So just generally, how much of that online gross win margin improvement year-on-year is product? How much is soft comp? And how much is net so that you have less exposure to the Premier League and from competitors? I guess what I'm driving at is, is the improvement here more driven by product or comp?
It's, I mean, a very, very difficult question to answer, Patrick, to be frank. I mean, I'm not sure I could spit it. I mean, the -- we definitely know that the comp for Ladbrokes is a little bit softer than some of the competition. It goes back to the earlier question. I also think that we have got some multi-type products that are going down very well with customers. And we're doing our best to promote those to customers, and they're being taken up, and that's obviously helping the margin. Possibly horseracing, that certainly came back in the quarter, and September was okay horseracing-wise. We probably got higher horseracing mix than some of the competitors given the heritage of the 2 brands, but I can't split it percentage wise in that sense. It's not possible.
And our next question comes from the line of Alistair Ross of Investec.
I'm just wondering whether you'd be willing to give us total group revenue Q3 '18, Q3 '17?
No. Sorry.
[Operator Instructions] Our next question comes from the line of Michael Campbell of Whitman Howard.
Just a quick one on the U.S. from my side. The agreement in California with United Auburn, I mean, it seems quite early to make that agreement. Is there anything in particular going on sort of on the ground? Are you hearing anything in terms of legislation that's made you done that?
No, nothing particular. Nothing particular that was on the ground that made us do it. I mean, that's -- as I said repeatedly, we want to have market access. That's one of the main reasons for doing it. Our approach to the U.S. remains the same. We got a good deal with MGM. We're putting in the building bricks as we speak. Early numbers that we're getting out of New Jersey are encouraging. But it's early days. We've struck the deal that if you take a 5-year view, we will be the market leader, we believe, and that's really it in terms of the U.S.
If I could do then just a quick follow-up, Kenny, on that. Just on New Jersey. The IRS version is imminent. When you say imminent, is that -- are we talking 2, 3 days, a week or 2? What's imminent? Can you give us estimate?
Next few weeks.
Our next question comes from the line of the Ivor Jones of Peel Hunt.
In the press release, you talk about investing excess returns to keep the profits down for this year. Is there anywhere in particular you'd call out that you're reinvesting in them? Where you're seeing particularly good return, to help us think through how the geographic mix might be changing.
It's no different either from what we said at the half year. So we put a bit into Italy because, obviously, there's an advertising ban coming in at the end of the 2018/'19 football season, and we want to maintain share of voice. We definitely are putting a bit more into Australia to support the strong growth that we've seen there. We're definitely taking share, as Kenny has already referred to. We've put a bit into the U.K. to support the Ladbrokes brand as it -- we finally have got that motoring again. And Georgia, where, again, we're taking share. We are think we're up to #2 now and we want to keep growing. So those are the 4 territories.
And we have one further question coming through, that's from the line of Richard Stuber of Numis.
Just a very quick one. In terms of exposure to Ireland, given the increase in taxes which were announced. I guess, it's a small part of the business, but could you give a -- in terms of pounds, maybe in terms of what that headwind will be next year, please.
It's about GBP 4 million, Richard. That's -- and as I said, very small, and that's without any sort of mitigation or doing anything. But yes, so relatively insignificant.
And as that's our final question, we'll hand back to our speakers for the closing comments.
Okay. Okay. So as I said, very good results here. Disappointing news about Paul. As I said and Paul reiterated, we've got a first-class candidate to take over in Rob Wood, complete confidence in him. His time has come, and Paul is going off to pastures new. And we're in very good shape. And I wish Paul all the best and Rob every success in the new role. I'm sure he's going to smash it. Okay. Thanks, guys. Bye.
This now concludes the conference. Thank you all very much for attending. You may now disconnect.