High-yielding GVC worth a bet
Online gaming operator
is different to most public companies because, although it obviously aims to make a profit, the number one objective is to pay not less than 75 per cent of net operating cash flow (€11.38m in 2011) to shareholders as dividends. Not only that but executive bonus plans are "only" triggered by dividend payments. One look at the share registrar reveals why this is the case since 60 per cent of the shares are owned by three Anglofile private equity funds based in the Channel Islands. These fund managers particularly appreciate the fact that GVC is resident in the Isle of Man and they can receive the dividends without a withholding tax.
But understanding how
can afford to be so generous when 2011 results don't impress is a different matter. The best guide to underlining trading performance is "clean cash profits", which fell from €12.16m in 2011 to €10m. The divisional figures show that recently sold southern Europe sports betting subsidiary, Betaland, reported poorer trading figures, but the new fast-growing Brazilian gambling and sports betting business, Betboo, reported 74 per cent growth in sports wagers even though there were no major international football tournaments in 2011. Of interest, too, is GVC's first business-to-business deal in the form of a support contract to manage Sportingbet's former Turkish online betting business. Initial revenues are said to be encouraging.
|ORD PRICE:||149p||MARKET VALUE:||£46.9m
|TOUCH:||145-153p||12-MONTH HIGH:||170p||LOW: 99.5p
|DIVIDEND YIELD:||11.5%||PE RATIO:||na
|NET ASSET VALUE:||181¢†||NET CASH:||€9.85m
|Year to 31 Dec||Turnover (€m)||Pre-tax profit (€m)||Earnings per share (¢)||Dividend per share (¢)
Ex-div: 9 May
Payment: 25 May
Aim: Casinos & gambling
†Includes intangible assets of €67.2m, or 214¢ a share
*Excludes special dividend of 50¢ a share
Analysts are taking time to forecast 2012 figures but a healthy dividend is the primary attraction here and a yield of 11.5 per cent takes some beating. Income buy.
Last IC view: Buy, 111.5p, 4 Oct 2011
By Nigel Bolitho,
27 April 2012