Gaming VC in 'Final Stages' of South American Acquisition Talks

22 April 2009
On its full-yearly results this week, Gaming VC Holdings S.A., the Germany-facing online operator, said it could acquire a South American sports betting and gaming business.

"We're in the final stages of negotiation -- it may go through, it may not -- but we're obviously hopeful that it will," the company's chief executive, Kenneth J. Alexander, told IGamingNews by telephone Wednesday.

Regulatory uncertainty in Germany -- and the low earnings multiple it's engendered -- has seen the company diversify into other geographies.

In 2008 net income from Germany -- which comprised 53 percent of total revenue -- fell 16.3 percent against 2007, while Southern Europe and Other Europe grew by 517 percent and 178 percent, respectively.

"We don't have any lines in the sand as to what markets should represent a percentage of revenue," said Mr. Alexander, when asked about the company's diversification strategy. "We look toward growing every market we've got to its absolute maximum."

Net gaming revenue for the year, meanwhile, came in at 50 million euros, up 17.3 percent over 2007.

Revenue from gaming -- which includes income from the company's flagship offering, Casino Club -- rose 5 percent to 43.8 million euros.

Sports revenue grew significantly to 6.1 million euros from 1.1 million euros a year ago, with net win margins in at 13.2 percent. Poker also rose markedly to 6.3 million euros from 3.4 million euros during the same period.

Richard Q.M. Cooper, the company's chief financial officer, attributed poker's growth to the product having started from a low base.

Profits before tax rose slightly 16.6 million euros after affiliate costs more than doubled. Personnel costs also rose by 40 percent as the company brought its customer relations management and customer services in house.

Subject to shareholder approval, Gaming VC intends to pay a dividend of 20 euro cents.

The company said first-quarter trading has been slightly ahead of expectations across all divisions, and that net gaming revenue, 14.9 million euros, was up 26 percent on the fourth quarter of last year.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.