GVC Holdings - Leaping into FTSE 100

By acquiring Ladbrokes Coral (LCL), GVC will become a FTSE 100 global gaming business, with pro forma FY18e revenues of £3.4bn. With strong brands, diversified revenues and a superior technology, GVC is well positioned to benefit from increased scale and we anticipate the deal to be highly accretive, due to the £100m+ cost synergies. At this stage, there are still many moving parts to our pro forma estimates, with particular uncertainty surrounding the outcome of the Triennial Review and ultim...

Update: Q216 trading update – firmly on track

GVC’s July 2016 trading update reveals its early progress after its February acquisition of bwin.party has continued into Q216. Q2 net gaming revenue (NGR) per day rose by 11% y-o-y on a pro-forma basis (+16% on a constant currency basis). Pro-forma H116 NGR was up 8% to €439m (+11% CC) with both GVC and bwin brands delivering growth. Recent operational progress has included a successful application to the Premium Segment of the LSE. Forthcoming challenges to be navigated include the H216 pl...

Update: A strong start

GVC’s 2015 final results showed revenue and adjusted EBITDA both up 10% to €248m and €54m respectively, marking its fifth successive year of revenue, adjusted EBITDA and dividend growth. The accompanying trading update reported group-wide revenues up 13% (ytd to 20 April on a constant currency basis), while also revealing that GVC has wasted no time in beginning the challenge of reinvigorating the bwin.party business. Cost synergies are on track and the bwin.party brands are already growin...

Outlook: Let the Party begin

GVC has now completed its game-changing acquisition of bwin.party, a deal designed to propel the company into the upper reaches of the online gambling industry in terms of size and profitability. The focus now turns to delivering the €125m of projected cost synergies and re-energising bwin’s sizable asset base to drive sustainable growth. We reintroduce our forecasts and expect GVC’s EBITDA to rise from €51m in 2015 to €236.5m in 2017, with strong underlying cash flows driving rapid de...

Update: Strong momentum going into deal close

GVC has reported Q415 daily revenue up 10.0% (constant currency +21.3%) over Q414, revealing a company going into its game-changing acquisition of bwin.party from a position of strength. This follows on from bwin’s recent trading update, which revealed its first quarterly y-o-y growth (up 5%) in more than two years. The bwin.party deal is scheduled to close on 1 February, after which we will reintroduce forecasts. GVC already has a detailed plan in place for achieving €125m of cost synergies...

Update: A step change in scale

The proposed acquisition of bwin.party will be a step change in scale for GVC in a consolidating online gambling market, diversifying it by product and geographically. Management already has a track record of success with Sportingbet (acquired in 2013), including resuming dividends earlier than originally expected. The prospectus sets out a clear plan to achieve the target €125m of synergies, not just through cost cutting, but also by bringing a more entrepreneurial culture to bwin.party’s o...

Update: H115 update and bwin.digital proposal

GVC has announced a positive H115 trading update with net gaming revenue up 14% against a strong FIFA World Cup comparative. It declared a 14.0c quarterly dividend (2014: 12.5c), implying an annualised 9.0% dividend yield. GVC reports that it has registered a softening in player activity in Greece, but the board “remains confident for the outlook for the remainder of the year and beyond”. GVC has today confirmed that it has made a proposal to acquire bwin.party and is working with it to fina...

Outlook: Strong start to 2015

GVC has reported a positive trading update with daily revenue to the end of April 17.5% higher than in 2014. This puts it well on track to meet our full year estimates, which are unchanged from those detailed in our outlook report dated 1 April and which allow for some industry cost headwinds in 2015. We continue to expect organic growth to be augmented by acquisitions at some stage, to further diversify the business and leverage its proprietary platform. The 2015e yield is 9.3% and the EV/EBITD...

Outlook: A platform for growth

GVC has been transformed since its highly earnings-enhancing acquisition of Sportingbet two years ago. Having turned the business around, management has strengthened the product offering and used the 2014 FIFA World Cup as a springboard to step up in scale. 2015 sees some tax headwinds along with the rest of the industry, but Q115 revenue should be up c 18% and cash conversion is high. Further M&A is on the cards to continue to diversify the business and leverage its proprietary platform. The 20...

Institutional Comment: Daily comment

Institutional Comment: Daily comment

Flash note: A strong end to 2014

GVC’s trading update has confirmed a strong end to 2014 (Q414 revenue 22% higher than in Q413) and a third interim dividend of 12.5 cents, in line with our expectations. 2014 revenue of €224.6m was slightly ahead of our €220m estimate but our forecasts are unchanged despite GVC’s commitment to investing in its products. 2015 does not have a football World Cup, and there are some cost headwinds, but the strong sporting calendar should make 2016 another good year. GVC remains strongly cash...

Institutional Comment: Daily comment

Update: Strong trading continues in Q4

GVC has reported a sixth successive quarter of revenue growth, an impressive achievement given the World Cup boost over the summer months. We have left our profit estimates unchanged, allowing for the ongoing investment in new products and geographies. 2016 should be a good year given the strong sporting calendar. Management remains highly cash focused and the prospective dividend yield of more than 8% is comfortably underpinned and remains a key attraction.

Institutional Comment: Daily Comment

Update: World Cup special

GVC has consistently exceeded expectations since its acquisition of Sportingbet 18 months ago, initially with the speed of the turnaround and now with an excellent set of interims, special dividend and strong Q3 trading update. We have increased our 2014e normalised PBT by €1.5m to €44.5m. Despite a strong share price performance, the rating remains well below the peer group and the 2014e yield of 8.7% is a key attraction.

Institutional Comment: Daily comment

Update: World Cup pays dividends

GVC has released another positive update and declared a higher than expected quarterly dividend of 12.5c. H114 revenues were 10% up on the previous six months and the World Cup has brought in a significant number of new customers. Our full year EBITDA estimates are unchanged, but we have increased our full year dividend estimate to 50c (from 47c). Despite a strong share price performance, the rating remains well below the peer group and the 2014e yield of 8.8% is a key attraction.