GVC’s share price rose on news of its 2010 results even though profits fell sharply. The reasons for that decline included much increased marketing and affiliated costs as the company protects its CasinoClub interests in the big but highly competitive German casino gaming market. At the same time increasingly large amounts of money are being spent on marketing the new Betboo Latin American bingo and sports betting site. It was purchased for up to $30m in July 2009. There was also a big increase in exceptional costs as GVC switched base from Luxembourg to the Isle of Man to avoid a 15 per cent withholding tax - 75 per cent of its shares are held by offshore investors who want income.
But most investors’ eyes were fixed on the first quarter 2011 numbers. Aggressive marketing has bolstered CasinoClub net gaming revenues (NGRs) together with much better results from the southern European casino and sports brand Betaland. But the most interesting figures are a jump in Betboo’s NGR. Thereis also a small initial Betboo-linked NGR contribution from other emerging markets led by Russia and Turkey. Broker Arbuthnot forecasts 2011 NGR of €60.4m (a modest target), adjusted profits €1m lower at €7.5m and earnings four cents down at 22¢.
GVC (GVC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 114.5p | MARKET VALUE: | £35.7m | |
| TOUCH: | 113-116p | 12-MONTH HIGH: | 194p | LOW: 91p |
| DIVIDEND YIELD: | 17% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 201¢* | NET CASH: | €6.61m | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2006 | 40.6 | -28.8 | -93.0 | 38.0 |
| 2007 | 42.6 | 16.6 | 53.0 | 44.0 |
| 2008 | 50.1 | 16.9 | 53.1 | 40.0 |
| 2009 | 52.1 | 14.0 | 43.1 | 20.0† |
| 2010 | 54.9 | 4.1 | 12.1 | 20.0 |
| % change | +5 | -71 | -72 | - |
Ex-div: 13 April Payment: 19 May Aim: Gambling. £1 = €1.1373. *Including intangible assets of €62.9m, or 202¢ a share. †Excludes special dividend of 50¢ per share. | ||||
