Proactiveinvestors United Kingdom GVC Holdings https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom GVC Holdings RSS feed en Mon, 22 Jul 2019 05:11:42 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[News - Ladbrokes and Coral owner GVC to sell stake in Spanish business Sportium for €70mln ]]> https://www.proactiveinvestors.co.uk/companies/news/224112/ladbrokes-and-coral-owner-gvc-to-sell-stake-in-spanish-business-sportium-for-70mln-224112.html Ladbrokes and Coral owner GVC Holdings PLC (LON:GVC) has agreed to sell its 50% stake in Spanish retail betting business Sportium Apuestas Deportivas S.A. to joint venture partner Cirsa S.A. for €70mln.

GVC, which acquired the stake through the purchase of Ladbrokes Coral last March, said it will become a B2B supplier to Sportium as part of the deal.

READ: Ladbrokes and Coral owner GVC sees net gaming revenue rise in first half despite tough comps and UK rule changes

"GVC is one of the leading online gaming operators in Spain with bwin and the disposal of our interest in Sportium enables us to simplify our business in this market," chief executive Kenneth Alexander said.

"We have enjoyed a good working relationship with Cirsa and are pleased to be able to support them through a new B2B partnership."

Sportium contributed £2.5mln to the group’s proforma operating profit last year.  

The announcement comes a day after GVC reported a 5% rise in net gaming revenue for the first half despite this year's figures running up against the World Cup, which boosted last year's results.

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Thu, 18 Jul 2019 07:47:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/224112/ladbrokes-and-coral-owner-gvc-to-sell-stake-in-spanish-business-sportium-for-70mln-224112.html
<![CDATA[RNS press release - Disposal ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190718070004_14153718/ Thu, 18 Jul 2019 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190718070004_14153718/ <![CDATA[News - Ladbrokes and Coral owner GVC sees net gaming revenue rise in first half despite tough comps and UK rule changes ]]> https://www.proactiveinvestors.co.uk/companies/news/224051/ladbrokes-and-coral-owner-gvc-sees-net-gaming-revenue-rise-in-first-half-despite-tough-comps-and-uk-rule-changes-224051.html Net gaming revenue at Ladbrokes and Coral owner GVC Holdings PLC (LON:GVC) rose 5% in the first half of the year, despite tough comparatives and changes to UK betting shop regulations.

As has been the case for a few years now, gambling apps and websites were the big driver, with online net gaming revenue surging 17% during the six months ended 30 June, which analysts at Peel Hunt described as “remarkable”.

READ: GVC hits back at claims of 'lack of transparency' over Turkish unit disposal

That growth came despite this year’s numbers running up against the World Cup, which was a huge boon for GVC in the same period of 2018.

Unsurprisingly, UK retail like-for-like gaming revenue slumped by 10%, reflecting the government’s recent decision to slash the maximum stake on in-store gaming machines to £2, down from £100 previously.

The drop wasn’t as bad as it could have been though, with customers instead choosing to put some of the money that they would have fed into the machines on sports bets.

Net gaming revenue in GVC’s European betting shops climbed 7% year-on-year, although potential regulatory changes in Germany next month could put a spanner in the works on the continent.

As for the US, the lucrative market that UK betting companies are rushing to exploit, the launch of GVC’s online business is on track to go live for the start of the new NFL season in September.

‘Material market share gains’

“Trading in Q2 remained very strong with the Online division delivering continued material market share gains across all major territories,” said chief executive Kenneth Alexander, who came under fire in March for selling a £20mln stake in the company.

“The transition to a post £2 stakes-cut environment in UK Retail is progressing very well and we believe the Ladbrokes Coral estate is best-placed to take market share.

“In the US, Roar Digital, our JV with MGM Resorts, is on-track for its full online launch ahead of the NFL season in September.”

Shares were down 0.6% to 605p in mid-morning trading on Wednesday, having opened slightly higher.

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Wed, 17 Jul 2019 09:28:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/224051/ladbrokes-and-coral-owner-gvc-sees-net-gaming-revenue-rise-in-first-half-despite-tough-comps-and-uk-rule-changes-224051.html
<![CDATA[RNS press release - H1 Post Close Trading Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190717070003_14152040/ Wed, 17 Jul 2019 07:00:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190717070003_14152040/ <![CDATA[News - GVC hits back at claims of 'lack of transparency' over Turkish unit disposal ]]> https://www.proactiveinvestors.co.uk/companies/news/223530/gvc-hits-back-at-claims-of--lack-of-transparency--over-turkish-unit-disposal-223530.html GVC Holdings PLC (LON:GVC) has hit back at a media report saying the gaming company faces questions over its corporate governance related to the 2017 disposal of its Turkish operations.

According to The Sunday Times, GVC offloaded its unregulated Turkish unit to a business partner of the Ladbrokes owner’s chief executive.

The news drew criticism from campaigners, who attacked a “lack of transparency” at GVC.

In late 2017, GVC announced that it had completed the sale of the division to Ropso Malta, a company backed by investors who already provided IT services to the business.

The deal was worth up to €150mln over five years but GVC ended up waiving the payments to prevent its involvement in the Turkish market from scuppering its £3.2bn cash-and-shares takeover of Ladbrokes Coral Group.

Gambling operators cannot be trusted, says Labour MP

The Sunday Times reported that Ron Watts, one of the three owners of Ropso Malta, now called Dochandoris, co-owns a stud farm in Scotland with GVC boss Kenny Alexander.

Watts and Alexander are both directors of Kenron Ltd, owner of New Hall Stud in Ayrshire, and previously worked with each other at Sportingbet almost 20 years ago.

“They [gambling operators] cannot be trusted,” said Carolyn Harris, Labour MP and chairwoman of the Gambling-Related Harm all-party parliamentary group.

“If they haven’t got any transparency on their business dealings, I don’t believe they are as committed to cleaning up their act as they would have us believe.”

Details of deal were 'fully disclosed', GVC insists 

GVC insisted on Monday that the details of the deal were fully disclosed at the time and the disposal was subject to an “arms-length competitive process”, overseen by Houlihan Lokey investment bank.

“The board today re-iterates the fact that subsequent to the disposal of the group's Turkish-facing business, GVC has no activity either directly or indirectly linked to the Turkish market,” GVC said.

“Furthermore, the board also categorically refutes suggestions that the group, or senior management, continue to benefit from any operations servicing the Turkish market.

“The business continues to perform strongly and is focused on taking a market leading position in the US and other regulated markets.”

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Mon, 08 Jul 2019 16:00:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/223530/gvc-hits-back-at-claims-of--lack-of-transparency--over-turkish-unit-disposal-223530.html
<![CDATA[RNS press release - Statement on Press Coverage ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190708151024_14140508/ Mon, 08 Jul 2019 15:10:24 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190708151024_14140508/ <![CDATA[News - GVC, JPJ and William Hill offer 'deep value', recommends Deutsche Bank ]]> https://www.proactiveinvestors.co.uk/companies/news/223210/gvc-jpj-and-william-hill-offer--deep-value--recommends-deutsche-bank-223210.html After a recent sell-off there is a good opportunity to invest in online gaming stocks, said Deutsche Bank, where the sector is targeting structural growth markets but is trading at a “deep valuation discount”.

“We see the scope to create value from another wave of consolidation, with rising regulatory and marketing costs encouraging a drive for scale, given material cost synergies,” the German bank's analysts said in a note to clients.

Three to buy

Deutsche initiated coverage of the sector with GVC Holdings PLC (LON:GVC) as its top 'buy'-rated pick, with the Ladbrokes and Sportingbet owner offering “premium growth, lower volatility (due to a particularly strong trading platform), a compelling strategy for the US through its MGM partnership and a track record for delivering value through consolidation”. 

While corporate governance concerns have weighed on the stock's valuation, there is 42% potential upside to the target price of 910p, backed by a dividend yield that is forecast to grow from the current 5%.

William Hill PLC (LON:WMH), with a target price of 197p, was another 'buy' as the bookmaker has been underperforming operationally and has implemented what the analysts thing is a “high-risk/high-cost” strategy of rolling out under the William Hill brand in the US. 

Yet, the takeover of Caesars Entertainment Corp (NASDAQ:CZR) by Eldorado Resorts Inc (NASDAQ:ERI) “could be fortuitous” as Eldorado owns 20% of William Hill US, “and we would consider it to be an obvious potential purchaser once it has absorbed Caesars”. 

At the smaller end, Deutsche sees JPJ Group PLC's (LON:JPJ) valuation as “particularly attractive” post a low-risk integration of the £490mln Gamesys acquisition, which is expected to complete in September. 

JPJ, which changed its name from Jackpotjoy as it moved to a premium LSE listing last summer, has “a capital-light model and prodigious free cash flow conversion, which should drive cash returns to shareholders” from the second half of 2020, once leverage drops below 2.5 times. 

JPJ, which should also be added into the FTSE mid-cap index upon completion of the Gamesys deal, was given a target price of 1,000p.

Texas hold-em

Deutsche had more reservations about three other players in the sector, all given 'hold' ratings.

Playtech PLC (LON:PTEC), where the core B2B technology business has been hit hard by a collapse in revenues from unregulated Asian markets, has diversified into online financial trading and Italian retail betting, but it’s not gone as smoothly as hoped, leading to a low valuation, with some risk to forecasts and “less scope for bid interest” compared to others.

888 Holdings PLC (LON:888) is seen as vulnerable to a bid, and has had bid approaches from Ladbrokes and William Hill in the past, with downward pressure expected on EPS forecasts.

Flutter Entertainment PLC (LON:FLTR), the recently renamed Paddy Power Betfair, was flagged by the analysts as a "high-risk play in the US" as it has material start-up losses but a strong brand in the form of FanDuel.

Flutter has a strong balance sheet and "scope for further share buybacks" but share price performance is expected to be "held back by its premium valuation (although it does have the most conservative approach to presenting its numbers)".

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Tue, 02 Jul 2019 13:00:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/223210/gvc-jpj-and-william-hill-offer--deep-value--recommends-deutsche-bank-223210.html
<![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190701100409_14131007/ Mon, 01 Jul 2019 10:04:09 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190701100409_14131007/ <![CDATA[RNS press release - 2019 Annual General Meeting ("AGM") Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190605110003_14099546/ Wed, 05 Jun 2019 11:00:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190605110003_14099546/ <![CDATA[RNS press release - Notification of Major Holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190604172441_14098531/ Tue, 04 Jun 2019 17:24:41 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190604172441_14098531/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190603091609_14095839/ Mon, 03 Jun 2019 09:16:09 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190603091609_14095839/ <![CDATA[RNS press release - Block Listing Six Monthly Return ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190603091527_14095838/ Mon, 03 Jun 2019 09:15:27 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190603091527_14095838/ <![CDATA[RNS press release - Notification of Major Holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190530172942_14093064/ Thu, 30 May 2019 17:29:42 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190530172942_14093064/ <![CDATA[News - GVC boss agrees to pay cut to avoid a shareholder revolt ]]> https://www.proactiveinvestors.co.uk/companies/news/221153/gvc-boss-agrees-to-pay-cut-to-avoid-a-shareholder-revolt-221153.html GVC Holdings PLC (LON:GVC) chief executive Kenny Alexander has offered to take a £150,000 pay cut to avoid a shareholder revolt at next week’s annual meeting.

The company, which owns bookmakers Ladbrokes and Coral, said Alexander has volunteered to have his basic salary reduced to £800,000 from £950,000 after listening to feedback from investors.

The group is hoping to avoid a repeat of last year’s shareholder rebellion when 44% of investors voted against pay packages awarded to its top executives.

Alexander’s total remuneration for the latest financial year was £19.1mln due to a “legacy award” linked to GVC’s acquisition of online gaming firm bwin.party in 2015.

GVC has said these payments have now been made in full and won’t be repeated but the scale of successive awards was expected to see the company knock heads with investors at its annual meeting in Gibraltar on Monday.

In a statement on Thursday, the company sought to address any remaining concerns among investors by saying Alexander would take a £150,000 cut in his basic pay.

“After consulting with GVC’s chairman and remuneration committee chair, GVC’s chief executive officer has volunteered to reduce his annual salary from £950,000 to £800,000,” the company said.

“This offer was made in light of recent shareholder and proxy adviser feedback on GVC’s 2018 remuneration report and on our remuneration committee chair. This change will take effect from 1 June 2019.”

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Wed, 29 May 2019 15:51:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/221153/gvc-boss-agrees-to-pay-cut-to-avoid-a-shareholder-revolt-221153.html
<![CDATA[News - GVC lifts 2020 guidance on Ladbrokes Coral merger synergies and lower hit from betting price cap ]]> https://www.proactiveinvestors.co.uk/companies/news/220416/gvc-lifts-2020-guidance-on-ladbrokes-coral-merger-synergies-and-lower-hit-from-betting-price-cap-220416.html GVC Holdings PLC (LON:GVC) shares advanced after saying it expects a £30mln upgrade to 2020 earnings, boosted by its merger with Ladbrokes Coral and a lower-than-expected impact from tighter regulations on gaming machines.

In a statement ahead of its capital markets day, the gambling firm said it estimates an additional £15mln of cost savings in 2020 from the integration of Ladbroke’s online brands with its own technology. GVC completed the £4bn acquisition of Ladbrokes Coral in March 2018.

READ: Ladbrokes and Coral owner GVC off to “excellent start”, but unsure of recent rule change impact

The company said the impact of new gaming machines regulations on core earnings would be £130mln in 2020, lower than its earlier estimate of £145mln, resulting in a further £15mln uplift to its guidance for that year.

Following a triennial review, the government cut the maximum stake on fixed-odds betting terminals (FOBTs) from £100 to £2, which took effect in April.

GVC said the curbs would result in the closure of up to 1,000 shops and carve £135mln off core earnings in 2019.

The crackdown on FOBTs has prompted GVC and other UK gambling companies to look at expansion in the US, where regulation on sports betting has eased.

GVC forged a joint venture with casino group MGM Resorts International last July to increase its presence in the US market.

GVC confirms 'excellent' start to the year

“We have had an excellent start to the year with strong momentum across all divisions continuing into the second quarter,” GVC's chief executive, Kenneth Alexander said.

He added: “We are making great progress on the Ladbrokes Coral integration and we have a clear roadmap for delivery in the US, where it remains early days, but there is no doubt that this is a great long-term opportunity for GVC."

Shares rose 1.5% to 602.4p in mid-morning trading.

In early March, shares fell as much as 18% after the chief executive and chairman, Lee Feldman, sold a combined three million in shares worth £20mln.

What analysts think of the earnings upgrade

In a note today, analysts at Numis Securities said: “As well as the shares suffering from the CEO and chairman sales in March, the wider sector has come under pressure from sustained regulatory concerns. This upgrade, reinforced by this afternoon's presentations, should be taken positively by the market.”

Numis maintained a ‘buy’ rating and target price of 990p.

Peel Hunt also kept a ‘buy’ recommendation and left its target price at 900p.

The stockbroker's analysts said they thinks it seems “oddly premature”, a few weeks in, to conclude that next year's machine performance will be better.

“It also seems to demonstrate something of a tin ear in relation to the concerns of politicians to say that customers are spending more than expected,” they added.

“We remain bullish on GVC for its international opportunities and expect an excellent presentation from management today. However, it may take more time and out performance for GVC to shake free of the doldrums afflicting the sub-sector.”

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Thu, 16 May 2019 10:51:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/220416/gvc-lifts-2020-guidance-on-ladbrokes-coral-merger-synergies-and-lower-hit-from-betting-price-cap-220416.html
<![CDATA[RNS press release - Capital Markets Event ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190516070002_14075777/ Thu, 16 May 2019 07:00:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190516070002_14075777/ <![CDATA[RNS press release - Management Change ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190502071001_14060314/ Thu, 02 May 2019 07:10:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190502071001_14060314/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190501085839_14058984/ Wed, 01 May 2019 08:58:39 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190501085839_14058984/ <![CDATA[RNS press release - Annual Report and Accounts and AGM Notice ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190501070013_14058443/ Wed, 01 May 2019 07:00:13 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190501070013_14058443/ <![CDATA[RNS press release - NOTIFICATION OF MAJOR HOLDINGS ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190429133516_14055781/ Mon, 29 Apr 2019 13:35:16 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190429133516_14055781/ <![CDATA[RNS press release - Notification of Major Holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190416123709_14043247/ Tue, 16 Apr 2019 12:37:09 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190416123709_14043247/ <![CDATA[News - UK bookmakers need US boost sooner rather than later ]]> https://www.proactiveinvestors.co.uk/companies/news/218058/uk-bookmakers-need-us-boost-sooner-rather-than-later-218058.html This time last year, bookmakers were standing on the edge of the next frontier as US lawmakers prepared to reverse a longstanding nationwide ban on sports betting.

The landmark decision, which arrived in May, was supposed to propel London’s bookmakers to the next level, opening up a new market which had the potential to be the biggest and most lucrative in the world.

READ: GVC off to “excellent start” in 2019, uncertain of FOBT changes impact

Gambling firms rushed to expand across the pond, parting with tens of millions – hundreds in some cases – to take part in the landgrab.

Paddy Power Betfair plc (LON:PPB) immediately snapped up fantasy sports giant FanDuel, William Hill PLC (LON:WMH) partnered up with casino chain Eldorado Resorts, and GVC Holdings PLC (LON:GVC) teamed up with MGM.

888 Holdings PLC (LON:888) agreed to sponsor the New York Jets NFL team after it launched in New Jersey last year.

US boost much needed

The US opportunity came at a good time for these companies, all of whom were starting to feel the drag from increased regulation elsewhere and the shift towards online gambling.

The plan was that American punters would step up and fill the profit hole left by declines in the more established UK and Australian betting markets.

Things haven’t moved quite so quickly in the US though, with only seven states legalising sports betting so far.

Analysts still think the US will come good, but betting groups are likely to endure a few years of initial start-up losses before the American divisions start to contribute to their bottom lines.

The issue facing Paddy Power, GVC et al is that they need an earnings boost now as profits come under pressure amid tighter regulations elsewhere.

FOBT machines targeted by new rules

Earlier this week, the UK government brought in a new law that cut the maximum amount that can be staked on in-store betting machines – fixed-odds betting terminals – down to £2.

Previously, gamblers could bet £100 on each spin of the virtual roulette wheel or deal of new cards.

“March’s trial runs in Birmingham have prompted all sorts of dark rumours, with one suggesting a 55% drop in gross winnings for bookmakers in shops where the new £2 limit was applied,” said AJ Bell investment director Russ Mould.

“Analysts have slashed earnings forecasts to reflect an expected drop in income from the electronic gaming machines, which provided £1.8bn in gross gambling yield (the amount bookmakers keep in profit after paying out any winnings to punters) compared to £1.3bn from actual bets placed over the counter, according to data from the Racing Post.”

 

12-month share

2019E

2019E

2020E

2019E

2019E

 

price change (%)

PE (x)

EPS Growth

EPS Growth

Dividend yield

Dividend cover

Paddy Power

(18.9%)

19.0 x

(16.3%)

12.9%

3.1%

1.67 x

GVC

(40.8%)

9.3 x

(21.5%)

17.0%

6.3%

1.73 x

888

(42.3%)

13.2 x

(21.0%)

15.7%

6.0%

1.26 x

William Hill

(52.4%)

15.1 x

(48.0%)

30.4%

5.5%

1.20 x

Sector

 

13.5 x

(24.7%)

17.2%

4.7%

1.59 x

Source: Company accounts, Sharecast, consensus analysts’ forecasts

The dire forecasts have hit bookmakers’ shares hard. Paddy Power is the ‘best’ performer over the past 12 months despite its stock falling by almost a fifth.

Ladbrokes owner GVC and 888 have both seen more than 40% wiped from their respective values, while William Hill has halved over the past year.

Those falls mirror the companies’ profit forecasts this year: Paddy Power is expected to show the smallest drop in earnings

The FOBT changes are no doubt largely responsible for part of the downbeat outlook: last month, William Hill shocked the markets by claiming the new rules would wipe up to £100mln from its annual profits.

GVC said it was too early to tell what the impact on its business would be, but similar statements to William Hill’s are likely from others over the coming weeks and months.

Double whammy for bookies

“But the anticipated profit plunge is not the result of just the cut to FOBT stakes,” explains Mould.

“The UK government has increased remote gaming duty from 15% to 21% to compensate for tax revenues that will be lost thanks to the drop bookmakers’ takings on gaming machines, as well as regulatory developments elsewhere.

“Key changes here include Australia’s point of consumption tax on online gambling – an issue for Paddy Power Betfair and GVC-owned Ladbrokes.”

Betting firms are also seeing profits in their traditional shops decline as fewer people venture out onto the high street.

Growing online demand is making up for some of those losses, though, but companies will be desperate for the US to start chipping with its fair share soon rather than later.

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Fri, 05 Apr 2019 13:20:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218058/uk-bookmakers-need-us-boost-sooner-rather-than-later-218058.html
<![CDATA[News - Ladbrokes and Coral owner GVC off to “excellent start”, but unsure of recent rule change impact ]]> https://www.proactiveinvestors.co.uk/companies/news/218031/ladbrokes-and-coral-owner-gvc-off-to-excellent-start-but-unsure-of-recent-rule-change-impact-218031.html GVC Holdings PLC (LON:GVC) is confident of hitting profit forecasts in 2019 after an “excellent start” to the year, although the gambling group cautioned it hasn't yet got a handle on what the impact of recent rule changes to its lucrative in-store betting machines will be.

The Ladbrokes and Coral owner posted an 8% rise in net gaming revenue for the three months ended 31 March, driven largely by its online business.

READ: GVC off to a flying start in 2019

That side of the group, which is home to brands such as Foxy Bingo and partypoker, saw revenue surge 17% compared with the first quarter last year. Margins were flat.

Online more than made up for flagging revenue growth in GVC’s retail arm – its 3,400 or so estate of betting shops.

Like many UK retailers, Britain’s bookmakers have struggled with declining footfall on the high street which has dented sales and profits from its stores.

Like-for-like net gaming revenue from GVC’s UK shops was flat year-on-year, although margins slipped 1.1 percentage points.

Its European stores fared better, with revenue climbing 2%, boosted by a 13% rise in sports wagers. As with the UK retail division, margins slipped 1.8 percentage points.

On track to hit targets

“This trading update reflects a continuation of the strong trends reported on 5 March 2019, and represents an excellent start to the year,” said chief executive Kenneth Alexander.

“We continue to see good volume growth across all major online brands and territories and we remain very confident of achieving our target of double-digit online NGR growth.

“The impact of soft gross win margins in Italy and the UK was offset by improved margins in other territories. In UK Retail and European Retail, improved sports wagering growth helped offset softer sports gross win margins.”

‘Several weeks’ before it will know impact of rule changes

Alexander, who came under fire for selling £14mln worth of shares last month, did warn investors it is too early to tell what the impact from the recent changes to fixed-odds betting terminal (FOBT) stakes would be.

On Monday (1 April), the UK government introduced new rules which cut the maximum stake on in-store machines, which have been dubbed the ‘crack cocaine of gambling’, to £2.

Previously, punters could bet as much as £100 for every spin of the virtual wheel or deal of a new hand on the machines.

UK rival William Hill PLC (LON:WMH) said last month it expected the new rules to wipe up to £100mln a year from its profits, although there was no such warning from GVC.

“New B2 machines stakes restrictions were implemented in the UK on 1 April 2019 and we expect it to be several weeks before we can start to assess the impact,” said Alexander.

“At this early stage of the year, the board is confident of delivering EBITDA and operating profit in-line with expectations.”

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Fri, 05 Apr 2019 07:50:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218031/ladbrokes-and-coral-owner-gvc-off-to-excellent-start-but-unsure-of-recent-rule-change-impact-218031.html
<![CDATA[RNS press release - Q1 Trading Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190405070003_14029929/ Fri, 05 Apr 2019 07:00:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190405070003_14029929/ <![CDATA[RNS press release - Director Dealing ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190401140820_14023893/ Mon, 01 Apr 2019 14:08:20 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190401140820_14023893/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190401113231_14023567/ Mon, 01 Apr 2019 11:32:31 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190401113231_14023567/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190329070009_14020463/ Fri, 29 Mar 2019 07:00:09 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190329070009_14020463/ <![CDATA[RNS press release - Confirmation re post-offer intention statements ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190328070003_14018618/ Thu, 28 Mar 2019 07:00:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190328070003_14018618/ <![CDATA[RNS press release - Notice of Q1 Trading Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190327070008_14016935/ Wed, 27 Mar 2019 07:00:08 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190327070008_14016935/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190327070005_14016917/ Wed, 27 Mar 2019 07:00:05 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190327070005_14016917/ <![CDATA[RNS press release - Notification of Major Holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190312070024_13998167/ Tue, 12 Mar 2019 07:00:24 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190312070024_13998167/ <![CDATA[News - GVC in £750mln plunge as CEO and chair trouser £20mln from share sales ]]> https://www.proactiveinvestors.co.uk/companies/news/216089/gvc-in-750mln-plunge-as-ceo-and-chair-trouser-20mln-from-share-sales-216089.html GVC Holdings PLC (LON:GVC) saw more than £700mln wiped from its value on Friday morning after the gambling giant’s chief executive and chairman sold off a huge chunk of their personal stakes.

CEO Kenneth Alexander raked in £13.7mln after selling off more than half of his shares, while chairman Lee Feldman trousered £6.0mln after getting rid of three-quarters of his stake.

READ: GVC off to a flying start in 2019

Alexander tried to reassure investors by stating that both he and Feldman “remain fully committed” to GVC, which owns the Ladbrokes and Coral bookmakers.

“I'm here for the long term and at the very least I have a current plan that will take three-plus years to accomplish,” he added.

“We reported excellent results earlier this week and we both remain convinced of the exciting prospects for the business. Therefore, while we continue at GVC we will not reduce our holdings below the current levels.”

But the share sales – and the sheer size of them – did little to comfort the market, which generally doesn’t react kindly to seeing bosses slash their personal stakes in the businesses they run.

After all, if they were that confident in the company’s future, they probably wouldn’t be cashing in now.

GVC shares tumbled 18.1% to 560.3p, valuing the company at just shy of £3.3bn.

Has GVC’s luck ran out?

“There is a widely used phrase in investing that says ‘follow the money’,” explains AJ Bell investment director Russ Mould.

“In GVC’s case, shareholders are following this advice to the letter as the gambling company’s share price dives amid news of hefty share sales by directors.”

“The market is clearly confused as to why the pair have decided to sell down now if there is still value to be created.”

He added: “The gambling sector continues to come under increasing regulatory pressure, clouding the outlook for earnings.

“GVC has done a great job of buying underperforming businesses and fixing them but has its luck run out given the diminishing number of acquisition targets?”

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Fri, 08 Mar 2019 10:19:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/216089/gvc-in-750mln-plunge-as-ceo-and-chair-trouser-20mln-from-share-sales-216089.html
<![CDATA[RNS press release - Directors' Dealings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190308070005_13994852/ Fri, 08 Mar 2019 07:00:05 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190308070005_13994852/ <![CDATA[RNS press release - Directorate Change ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190305173520_13991279/ Tue, 05 Mar 2019 17:35:20 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190305173520_13991279/ <![CDATA[News - GVC off to a flying start in 2019; Peel Hunt reiterates 'buy' recommendation ]]> https://www.proactiveinvestors.co.uk/companies/news/215782/gvc-off-to-a-flying-start-in-2019-peel-hunt-reiterates--buy--recommendation-215782.html Sports betting and gaming group GVC Holdings PLC (LON:GVC) has been quick out of the traps in 2019 with strong growth in net gaming revenue.

In the first eight weeks of 2019, net gaming revenue rose 11% year-on-year, driven by a 22% increase in online revenues.

READ: GVC jumps as 2018 update comes in ahead of expectations

“2018 was a transformational year for the group with the completion of the Ladbrokes Coral acquisition in March making the group the largest online-led sports-betting and gaming operator in the world,” observed Kenneth Alexander, GVC's chief executive officer.

The acquisition of Ladbrokes Coral also made the 2018 results statement tricky to interpret but fortunately, the company provided pro forma results.

On a reported basis, net gaming revenue in 2018 rose to £2,979.5mln from £815.9mln in 2018, while on a pro forma basis it rose 9% to £3,571.4mln from £3,288.1mln.

Reported underlying earnings (EBITDA) shot up to £640.8mln from £211.3mln the year before, while on a pro forma basis they rose 13% to £755.3mln from £666.5mln in 2018.

Thanks to £453.5mln of exceptional charges, the company reported a loss before tax of £18.9mln, versus a loss the previous year of £22.6mln, when the company took a £173.6mln hit from exceptional items. Most of the exceptional items related to amortisation of acquired intangibles; this time round amortisation was calculated at £322.5mln, whereas last year it was £106.5mln.

GVC said the value of acquired assets had been written down largely as a result of the decision by the UK government to bring the £2 fixed odds betting terminal stakes restriction forward to 1 April 2019.

Market share gains in all major territories 

The full-year dividend was pumped up to 32.0p from 29.8p the previous year.

A strong start to the year for #GVC, with net gaming revenue growing 11% y/y, and at double that rate in the online division.

— Paul Jarvis (@pajemiki) March 5, 2019

“Excellent operational execution, effective marketing and a good World Cup helped both the legacy GVC and the acquired Ladbrokes Coral businesses perform ahead of expectations and materially ahead of the market, delivering market share gains in all our major territories,” declared CEO Alexander.

“The board is confident the group is well-placed to absorb the impact of the Triennial Review and associated tax increases in 2019 and deliver strong EBITDA growth in future years,” he added.

Now a good time to take a look

Channelling the famous Morecambe & Wise sketch featuring the recently deceased Andre Previn, broker Peel Hunt described GVC’s results as “all of the right notes in exactly the right order”.

“We believe that GVC’s know-how, technology and geographic diversity are sources of sustainable advantage. The more often GVC reports market-leading growth, the more we expect investors to be convinced about that sustainability,” the broker's analysts said in a note to clients.

“If we were a little further through the year, we would be upgrading forecasts,” they added, as the analysts noted that year-to-date trading represents an acceleration in the rate at which net gaming revenue is growing year-on-year.

Profits will fall this year, Peel Hunt noted, as a result of the introduction of £2mln maximum stakes on the betting terminals that are often referred to as “the crack cocaine of gambling”.

GVC’s net debt at the end of 2018 was roughly 2.5 times pro forma EBITDA and Peel Hunt expects this to rise to three times at the end of this year.

“Group profits are going to fall, albeit somewhat offset by synergies, and work on restructuring will continue but the valuation multiples are undemanding and Online, the key growth driver, has today again shown its trading momentum. For investors prepared to look through to FY20E, we believe now is a good time to look at GVC,” the Peel Hunt analysts added.

Peel Hunt reiterated a ‘buy’ recommendation and 900p target price on GVC shares, which in late morning trading were 3.8% higher at 675.50p.

 -- Updates share price --

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Tue, 05 Mar 2019 07:42:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215782/gvc-off-to-a-flying-start-in-2019-peel-hunt-reiterates--buy--recommendation-215782.html
<![CDATA[RNS press release - Final results ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190305070016_13989836/ Tue, 05 Mar 2019 07:00:16 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190305070016_13989836/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190301083906_13986956/ Fri, 01 Mar 2019 08:39:06 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190301083906_13986956/ <![CDATA[RNS press release - Playtech plc ("Playtech") Agreement ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190227070007_13982829/ Wed, 27 Feb 2019 07:00:07 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190227070007_13982829/ <![CDATA[RNS press release - Notice of Full Year Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190219070014_13973555/ Tue, 19 Feb 2019 07:00:14 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190219070014_13973555/ <![CDATA[RNS press release - Notification of Major Holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190214181417_13970198/ Thu, 14 Feb 2019 18:14:17 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190214181417_13970198/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190201101526_13955285/ Fri, 01 Feb 2019 10:15:26 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190201101526_13955285/ <![CDATA[News - GVC jumps as 2018 update comes in ahead of expectations ]]> https://www.proactiveinvestors.co.uk/companies/news/212768/gvc-jumps-as-2018-update-comes-in-ahead-of-expectations-212768.html Shares in GVC Holdings PLC (LON:GVC) jumped in early deals Thursday after a full year update forecast earnings would be ahead of market consensus.

The FTSE 100 betting and gaming group, whose brands include Ladbrokes and Coral, said its underlying earnings (EBITDA) for the year would be between £750mln-£755mln, ahead of the current market consensus of £739mln.

READ: GVC says FOBT legislation enactment means contingent value right payment to shareholders to be cancelled

Over the year, GVC said net gaming revenues (NGR) had risen 9%, highlighting strong growth in its online division of 19%.

Within online, NGR for the group’s sports brands was up 20% year-on-year, while games brands grew 16% and business-to-business (B2B) 17%.

The European retail segment jumped 16% YOY, while UK retail was the only outlier posting a decline in NGR of 3%.

The growth figures had been boosted by what the company said was a “strong” final quarter in which total NGR had risen 5% and online NGR 15%.

GVC said the online growth was “very strong” despite a high sports gross win margin in the comparative period last year.

European retail NGR declined 7% in the quarter, which the company attributed to a lower over-the-counter (OTC) gross win margin for its Eurobet Retail business, which was down 7.4 percentage points on an exceptionally high-level last year.

UK retail for the quarter was down 3% on the prior year.

Kenneth Alexander, GVC’s chief executive, said the “strong momentum” from the third quarter had continued into the fourth, adding that the company was “materially outperforming” the market and taking market share in all its major territories.

“As the Group carries this momentum forward into the new year, and starts to deliver the opportunities provided by both the Ladbrokes Coral integration and our sports-betting joint-venture in the US with MGM Resorts, the Board is confident that the Group is very well placed for a successful 2019", he added.

READ: GVC shares slip as Ladbrokes comes under fire for problem gambler hush money

The update, which comes ahead of the group’s full-year results on 5 March, may bring some comfort to shareholders after GVC in December moved to cancel a contingent value right (CVR) payment on the back of the UK government’s decision to cut the maximum staking levels on fixed-odds betting terminals (FOBT) to £2.

This was preceded by a headache for subsidiary Ladbrokes, which found itself in hot water over a scandal involving hush money payments to the victims of a problem gambler.

Results “a timely reminder” of credentials, says analyst

George Salmon, equity analyst at Hargreaves Lansdown, said that amidst major regulatory changes in the UK and US, the update had provided “a timely reminder of GVC’s credentials”.

“Market share is rising in all major geographies, and a better than expected fourth quarter means profit forecasts have been upgraded. With the news coming not long after GVC also raised forecasts for cost-saving around the Ladbrokes Coral integration, there’s a lot to like about how the group is performing.”

Salmon added that the performance would raise hopes that GVC could “repeat the trick” in the recently opened up US market, although uncertainty in the UK market meant investor sentiment remained “reasonably cautious”.

GVC shares were up 1.9% at 686p.

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Thu, 17 Jan 2019 09:10:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/212768/gvc-jumps-as-2018-update-comes-in-ahead-of-expectations-212768.html
<![CDATA[RNS press release - 2018 Post close trading update ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190117070003_13937318/ Thu, 17 Jan 2019 07:00:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190117070003_13937318/ <![CDATA[RNS press release - Cancellation of Contingent Value Rights ("CVRs") ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190107070004_13925005/ Mon, 07 Jan 2019 07:00:04 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190107070004_13925005/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190102103536_13920816/ Wed, 02 Jan 2019 10:35:36 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20190102103536_13920816/ <![CDATA[RNS press release - NOTIFICATION OF MAJOR HOLDINGS ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181224100001_13914852/ Mon, 24 Dec 2018 10:00:01 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181224100001_13914852/ <![CDATA[RNS press release - Directorate Change ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181221091940_13912984/ Fri, 21 Dec 2018 09:19:40 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181221091940_13912984/ <![CDATA[News - GVC says FOBT legislation enactment means contingent value right payment to shareholders to be cancelled ]]> https://www.proactiveinvestors.co.uk/companies/news/211469/gvc-says-fobt-legislation-enactment-means-contingent-value-right-payment-to-shareholders-to-be-cancelled-211469.html GVC Holdings PLC (LON:GVC) has noted that the UK government’s move on Tuesday to enact the cut in maximum staking levels to £2 on fixed-odds betting terminals (FOBT) means it will cancel a contingent value right (CVR) payment to shareholders.

As part of its acquisition of Ladbrokes Coral, which completed in March this year, the FTSE 100-listed firm agreed to pay a CVR linked to the FOBT legislation, which was worth 35p per Ladbrokes Coral share if the legislation was not enacted by 28 March 2019.

READ: GVC shares slip as Ladbrokes comes under fire for problem gambler hush money

In a statement on Wednesday, GVC said the CVR Instrument requires a period of 10 business days to elapse post-enactment of the law before the formal valuation process can be completed by the representatives of GVC and the CVR holders.

The group, therefore, said it expects to be in a position to announce the cancellation of the CVRs on or around 7 January 2019.

In a note last week, analysts at Citigroup said they thought the enactment of the cut would be a "significant positive catalyst" for the GVC shares as it could eliminate the possibility the company would have to pay out around £676mln to CVR shareholders.

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Wed, 19 Dec 2018 08:14:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211469/gvc-says-fobt-legislation-enactment-means-contingent-value-right-payment-to-shareholders-to-be-cancelled-211469.html
<![CDATA[RNS press release - £2 FOBT limit formally enacted by UK Government ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181219070002_13908814/ Wed, 19 Dec 2018 07:00:02 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181219070002_13908814/ <![CDATA[RNS press release - Director's Dealing ]]> https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181217105456_13906084/ Mon, 17 Dec 2018 10:54:56 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8364/LSE20181217105456_13906084/