If the rationale for GVC (GVC) pursuing the takeover of rival Bwin Party wasn't clear before, it is now. The management nous at the parent company combined with Bwin's bespoke technology has already yielded results. Chief executive Kenny Alexander said it was a "major advantage" and had been "key in securing the Betfred contract", its largest business-to-business deal to date. And GVC's marketing expertise pushed spending on advertising and recruiting customers down to 21 per cent of net gaming revenue, which Mr Alexander said was lower than rivals. Even a likely long-term average of 23-24 per cent would still be better than competitors, he added.
Mr Alexander says there is "no disputing" the group will reach €125m (£107m) in cost savings this year, a target set shortly after the deal was announced. He said technology, staff and head office costs would fall and marketing activities he felt "were not attractive" on a relative-returns basis would also be cut. Beyond this, capital expenditure would come in about a third less than the €64m pro forma figure, which combines the two entities' spending in 2015.
Analysts at Cenkos upgraded forecasts for the year to December 2016 and now expect pre-tax profit of €104.2m leading to EPS of 33.2¢ (€46.7m and 71.3¢ in 2015).
| GVC (GVC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 734p | MARKET VALUE: | £2.15bn | |
| TOUCH: | 734-735p | 12-MONTH HIGH: | 739p | LOW: 371p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 493p** | NET DEBT: | 11% | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢)* |
|---|---|---|---|---|
| 2015 | 120 | 16.8 | 0.3 | 26.5 |
| 2016 | 382 | -84.2 | -0.3 | 0.0 |
| % change | +218 | - | - | - |
Ex-div: na Payment: na *Excludes special dividend of 1.5¢ in first-half 2015 **Includes intangible assets of €1.66bn or 568¢ a share £1=€1.17 | ||||
