GVC sitting with the high rollers
International online gambling company GVC, has released first half results. Following its pre-close update in July, the group has confirmed the second half has started well. This underpins its confidence in delivering full year results in line with prior expectations.
The shares moved slightly higher on the news. The interim dividend rises 9.6% to 16p per share.
Reported results have been significantly boosted by the acquisition of Ladbrokes Coral, which completed in March. To get a more accurate picture of group performance, GVC has also issued proforma results, which are prepared as if the group in its current form had existed since 1 January 2017. On this basis, NGR rose 8% to £1.7bn, with operating profit up 17% to £278m.
George Salmon, Equity Analyst at Hargreaves Lansdown said: “Regulatory changes are the dominant theme at GVC just now. The repeal of PASPA by the U.S. Supreme Court earlier this year provides a significant opportunity. At least initially, casinos will be the go-to location for sports betting, and GVC has wasted no time in moving to team up with a big US high roller, MGM Resorts. Only time will tell if this punt will pay off, but there’s a lot to like about the prospect of combining GVC’s tech know-how with MGM’s globally renowned brands.
“Back in the UK, the full impact of the £2 FOBT limit is starting to hit home. The recently acquired Ladbrokes Coral business depends heavily on machine revenue, and GVC says around 1,000 shops will likely close their doors. These closures will of course come with job losses, but there won’t be many tears shed over the demise of the machines sometimes called the crack cocaine of gambling.
“GVC has an excellent track record on integrations, and it’s good to see synergy targets have actually increased despite the headwinds facing its new UK high street estate.”