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Annual Report & Accounts 2016 - Performance of divisions
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18 Performance of divisions continued GVC Holdings PLC Annual Report 2016 Gioco Digitale was the first fully-regulated gaming site on the Italian market launched in 2009. It is positioning itself as a gaming portal for casual gamers, with a focus on bingo and casino products. GAMES LABELS Foxy Bingo was launched in 2005 and is one of the most successful brands in online bingo and is one of the biggest names in the UK bingo market. CasinoClub was originally launched in 2001 and acquired by GVC in 2004, it is a leading online casino website for German-speaking markets with more than 15,000 active customers. partypoker is one of the pioneers of the online poker industry having launched in 2001. It remains one of the industry's most recognised brands, with a particular focus on the UK. partycasino is one of the world's largest online casinos, with 180 mobile games on offer including many of the classic casino games such as blackjack, roulette and a broad variety of slot machines. GVC's key gaming brands include, partypoker, partycasino, Foxy Bingo, Gioco Digitale and CasinoClub. Pro forma NGR was €203.5m in 2016 versus €211.8m in the previous year, with the change in constant currency being 0%. Momentum improved through the year with pro forma NGR in constant currency +4% in H2 over the previous year. Pro forma contribution from Games Labels declined to €89.0m from €109.6m in 2015. The decline reflected a number of factors including increased gaming taxes/VAT and investment in partypoker. Historically, the Games Labels within the bwin.party business had been the most challenged, in particular partypoker and partycasino. Our focus in 2016 was to improve management, increase investment, enhance the product and the customer experience. It is therefore pleasing to report that despite continued structural challenges in the poker market, partypoker NGR in 2016 rose 14% in constant currency, with the growth in H2 over the previous year being 16% in constant currency. In December 2016 we reached a deal with one of Europe's leading poker rooms, Dusk Till Dawn, to launch a new live global poker tour, partypoker LIVE which will feature the headline tournament, the partypoker Million. We also took the decision to restructure partycasino and separate the brand from partypoker, repositioning the offering under a new management team. Taking inspiration from CasinoClub, there is greater emphasis on VIP management and reducing reliance on partypoker in terms of customer acquisition. Significant improvements were made to the product and customer services before relaunching the brand in H2 2016. This included the relaunch of the partycasino frontend, enhancements to our live casino experience, the introduction of new "Pro Series" table games and a number of technical improvements, such as the dramatic reduction of game load times. As a result, along with increased investment, partycasino saw a significant acceleration in new player acquisition through H2, along with lower attrition and increased revenues per customer. December was particularly strong and this positive momentum has continued into 2017. Foxy is one of the UK's best known online bingo brands but has had a challenging few years. In the second-half of 2016 we brought in a new Head of Bingo and significant work has already been undertaken to reinvigorate the brand and customer proposition. New creative and media agencies have been appointed and in March 2017 a new marketing campaign was launched with Hollywood actress Heather Graham promoting the rebranded Foxy Bingo and Foxy Casino. CasinoClub celebrated its 15th anniversary in 2016 with a series of events across Europe. Through its heritage and bespoke club approach, CasinoClub has established a leading position in German speaking markets and benefits from a loyal customer base. Last year also saw the brand take control of its software platform previously provided by a third party, while delivering a positive top line performance. Gioco Digitale is the second largest bingo brand in Italy and a top ten casino brand and is very much aimed at the casual player looking for entertainment. There was some restructuring post acquisition, with improved marketing, promotions, CRM and product. As a consequence, NGR grew strongly, particularly in casino. All of our Games Labels are also benefiting from the many new content deals signed over the past 12 months. As with Sports Labels mobile revenue from Games Labels grew strongly in 2016, and now represents 29% of divisional gross gaming revenue against 20% in 2015. With further product enhancements and additional content we expect mobile revenues to continue to grow strongly. Looking ahead, the focus will be on continued product improvement across all of the brands, along with improved customer service. The improvement to product and customer experience across all of our games is ongoing and supported by more targeted marketing, we expect further progress in 2017 and beyond. Furthermore, in addition to the significant amount of new third party gaming content already secured, the Group is also continuing the development of its own unique in-house products. GAMES LABELS Pro forma Change% Constant currency% Actual 2016 €m 2015 €m 2016 €m 2015 €m Sports wagers 65.2 77.1 (15) (14) 58.9 - Sports margin % 7.7 5.0 7.7 0.0 Sports NGR 4.3 3.2 32 35 3.8 - Gaming/other NGR 199.2 208.5 (5) 0 184.4 32.6 NGR 203.5 211.8 (4) 0 188.3 32.6 EU VAT (6.4) (3.2) (6.2) (0.7) Revenue 197.0 208.6 (6) (1) 182.1 31.9 Contribution 89.0 109.6 (19) 82.9 21.8 Contribution margin % 44 52 44 67