Earlier this month, gaming group GVC (GVC) acquired the less profitable bits of Sportingbet, while William Hill (WMH) took over the Australian operations and will also possibly take over the Spanish ones in six months' time. The takeover will transform GVC. Not only does it add 24 online gaming and sports betting territories, but significantly increases the percentage of revenues from sports betting.
The takeover negates an annual €28m (£23.8m) earn-out between Sportingbet and its former Turkish online betting business but, in return, GVC has given itself 12 to 18 months to reduce Sportingbet's high central costs, notably IT, offices and duplicate trading platforms. For example, its South American gambling and sports betting business, Betboo, will move on to Sportingbet's platform. And whether you look at the deal as a cheap way to acquire 75 per cent of the Turkish business, or paying €39m for interests producing annual revenues of €104m, this is, as broker Daniel Stewart says, "a cracking deal".
It also overshadows GVC's annual results, which did not bear 2011's exceptional costs of €3.9m. "Clean" cash profits increased from €8.4m to €15.5m thanks to a jump in business-to-business profits from €0.2m to €7.3m following a 2011 deal with Sportingbet linked to the Turkish operations. For 2013, Daniel Stewart forecasts turnover of €154m, pre-tax profits of €24.4m and EPS of 44.1c.
GVC (GVC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 251.5p | MARKET VALUE: | £232m | |
| TOUCH: | 248-255p | 12-MONTH HIGH: | 270p | LOW: 137p |
| DIVIDEND YIELD: | 7.4% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 185c* | NET CASH: | €6.6m | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (c) | Dividend per share (c) |
|---|---|---|---|---|
| 2008 | 50.1 | 16.9 | 53.1 | 40.0 |
| 2009 | 52.1 | 14.0 | 43.1 | 20.0† |
| 2010 | 54.9 | 4.1 | 12.4 | 20.0 |
| 2011 | 44.3 | -0.4 | -2.0 | 21.0 |
| 2012 | 59.6 | 10.8 | 32.8 | 22.0 |
| % change | +35 | - | - | +5 |
Ex-div: 20 Feb Payment: 1 Mar Aim: Gambling *Includes intangible assets of €65.4m, or 71c a share †Excludes special dividend of 50c a share £1 = €1.1786 | ||||
