GVC cancels its dividend with half-year profits falling 13%

Gaming and sports betting company GVC (LON:GVC) announced it would cancel its dividend after a challenging half-year of pandemic trading.

The company saw first-half revenues fall year-on-year by 11% from £1.78 billion to £1.58 billion. This drop led to similar drops including a slide in earnings, with underlying EBITDA falling 5% from £367 million to £349 million. Similarly, the company reported a gross profit of £1.03 billion, contracting 13% year-on-year from £1.18 billion during the first half of FY19.

GVC stated, however, that the difficult trading period had been somewhat cushioned by strong activity in its online gambling division, with the company’s online earning rising by 53% during the period.

Despite this, the company said it recognised the difficulties it would face in what would continue to be an uncertain market, and as such, it had decided to conserve cash by cancelling its interim dividend, which had stood at 17.6p a share at the end of H1 FY19. Similarly, shareholders would see their dividend cover shrink further with basic EPS falling from a 0.6p loss per share, to 1.0p loss per share, while adjusted diluted EPS fell from 31.3p to 28.7p year-on-year.

GVC response

Commenting on the results and outlook, company CEO Shay Segev stated:

“Given the unprecedented trading environment, GVC has delivered an encouraging performance in the first half, underlining the strength of our diversified business model and the expertise, adaptability and dedication of our people.”

“These results show that we have a strong foundation. As a technologist, I have huge admiration for what Kenny and the rest of my colleagues have achieved but I am also determined to pursue a programme of continuous improvement as we focus on our four technology-enabled priorities.”

“These are leading the US market, organic growth, expanding into new markets, and being the most responsible operator in our industry. Our industry-leading technology will enable us to grow responsibly and sustainably, using our data-driven customer insights to ensure all of our customers have an enjoyable and safe experience while gaming with us. That is how we will deliver greater and more sustainable value for all our stakeholders.”

Investor insights

Following the announcement, GVC shares dipped slightly by 0.61% or 4.80p, to 780.60p per share 13/08/20 12:59 BST. This is comfortably below its 12-month target price of 1,080.00p, while also a 40% increase on its price on this day last year. The company’s p/e ratio stands at 12.06.

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.