COVID lifts VGW to $72m profit

Perth tech company VGW Holdings has reported spectacular growth in annual revenue and profit from its online gaming operations, with shareholders rewarded with a bumper dividend.

The privately-owned company posted a net profit after tax of $71.9 million for the year to June 2020, up from $28.9 million in the previous financial year, according to annual returns lodged with ASIC.

The higher profit was on revenue of $778 million, more than double the previous year.

The annual report stated that the six months to June 2020 was an exceptional period for the company, with COVID restrictions being the main driver.

“An environment of reduced travel, working from home, and more flexible time have all contributed to increased demand for our offerings,” the directors’ report stated.

The company declared an annual dividend of six cents per share on 30 July, amounting to $34.8 million.

The main beneficiary was company founder and executive chairman Laurence Escalante, who is understood to hold about 63 per cent of the company’s stock.

This followed dividend payments of $11.3 million in April 2020 and $8.4 million in the previous year.

This implies Mr Escalante has received about $35 million in dividend payments over the past three years.

The company’s only other directors are Sydney-based chief marketing officer Mats Johnson and non-executive director Lorenzo Escalante, who is understood to be Laurence’s father.

The biggest earner for the company, which has most of its customers in North America, was its Chumba Casino game, which more than doubled annual revenue to $531 million.

Its Global Poker game had a small increase in revenue to $142 million while its newest game, Luckyland Slots, had revenue of $104 million, up from just $5 million previously.

The biggest expense for VGW is ‘sweepstakes’ prizes, which increased to $495 million.

The company continued to be a big spender on marketing and advertising, with this expense increasing to $58 million.

The majority is spent via Facebook.

Another big expense item was employee benefits, which increased to $44.5 million.

The company did not provide any details on its staffing, but has previously disclosed it has about 400 staff working across Australia, the US, the Philippines and Malta, where the company holds its gaming authority licence.

VGW ended the financial year in a strong financial position, with cash and cash equivalents of $142 million as at 30 June (prior to the latest dividend).

After adjusting for various liabilities, it had net assets of $75.6 million.

VGW was established in Perth in 2010 and reported its maiden profit in the year to June 2018.