An impressive post-close trading update from Coral and Ladbrokes owner GVC Holdings (GVC) showed net gaming revenues down only 10% and earnings sharply ahead of analysts’ expectations.

However, the good news was overshadowed by the abrupt departure of long-standing chief, Kenny Alexander, pushing the shares 4.5% lower to 873p.

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Alexander will leave tomorrow (17 July) to be replaced by Shay Segev, GVC’s current chief operating officer. Specialist advisory firm Regulus Partners showered praise on the outgoing chief executive, saying he ‘transformed GVC from a niche outsourced magazine-marketing based German-facing casino business that owned almost nothing, to a global omni-channel powerhouse.’

Russ Mould, investment director at AJ Bell commented, ‘shareholders have been made very rich as a result of GVC’s ascent up the gambling industry ladder so they might be nervous about his successor’s ability to keep striking the right notes.’

Segev has overseen the integration of acquisitions and forged operational improvement across the business, so looks well prepared to take over the reins.

ONLINE STRENGTH

During the turbulent second quarter, online gaming revenues grew 23% in constant currencies despite the widespread cancellation of sporting events, but even this performance couldn’t totally offset the 86% drop from the UK retail estate and the 90% fall in Europe.

Over the first half, online net gaming revenues were 21% higher driven by a 32% increase in gaming which mitigated a 50% drop in UK and similar fall in European retail. Prior to the lockdowns, European retail saw a 24% increase in revenues.

First-half earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to be in the range of £300 million to £310 million, not far below last year’s outcome of £323 million, demonstrating the resilience of the business and swift action on cost control.

Analysts at Shore Capital are penciling in a broadly similar second-half outcome, resulting in full-year EBITDA around £700 million which is 7% ahead of current market expectations according Refinitiv data.

Alexander’s parting comments were, ‘I have given 13 years to GVC and I now want to give some time to my family. Whilst it is never easy to hand the baton on, it has been very clear for a number of years now that Shay is the right person to succeed me.’

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Issue Date: 16 Jul 2020