Member Info for Velo

Apologies over my error in stating the GVC Share price has ben falling since April 2018.

It peaked right to the very end of late July 2018 and has been steadily falling non-stop since commencing August 2018 for well over more than half a year now.

Switched to a longer time frame 4 year chart to see the bigger picture and in my haste mistakenly took the small A for August on the chart, as A for April. (Doh! Me bad)

The thrust of my point remains intact though about sentiment. Bearish sentiment towards the GVC share price has been evident consistently ever since August 2018 - to date.

Last week Kenny, just purely and simply, added fuel to the bearish sentiment towards GVC.

F1 - Price to free cashflow is utterly, utterly, appalling. But what do I know, as the exasperated are wont to say. Whatever, I don't have the downers on GVC the company, only GVC the share price which currently has the added bearish sentiment heaped on it by the saviour and guru of all GVC investors - Kenny Alexander.

It's all about him. Examining the balance sheeet and performance metric is unending. He has destroyed sentiment in one day flat, even though sentiment has been waning for coming up to almost a full year now. "Had" to sell because of demands from an institution? Demands? Believe that and you'll ........

Shares have been falling in price continuously since last April 2018!. The marlet is awash with GVC shares, that's why the SP has been falling - investors unloading them unrelentingly for almost a year. And the great man comes out with, well 'the institution needed the shares' (you mean there wasn't a glut of shares being willingly offerred for sale on the open market?) Aww poor institution, trying to byt £20m worth of shares in a £3.42b market cap company. What a sacrifice "our" Kenny has made. Bless him. What next a stint on Red nose day? He's so generous helping others, is he not?

"Velo, you do know GVC purchased Ladbrokes-Coral last year, right?"

LOL!

Black/T - I assume you're quoting the account figures from either as reported in the RNS or one of the free screener sites? I hold a differing outlook to the figures in your post. For example operating profit of £610m I have as I've stated below as only £67.3m

Quite a diffference. I obtain my figures from a subscription site that strips out all the excuses, "adjustments" and notes to the notes of the accounts and just gives the end results. No latte version. Just the show me the money version.

The RNS on this site shows the so called labelled "underlying" operating profit (why not just operating profits, what's with this "underlying"?) as you state of £610.1m with a numeric note numer added to it, explaining the "underlying" carry on. So I go down to the note no 5 and it says:

"5) Stated pre separately disclosed items"

Rather unhelpfully you're expected to know what seperate adjustments were already posted in previous updates.
pre seperately disclosed? Hmm. Whom does it benefit to muddy the waters? Just show me the money - not due to pre sepertately disclosed items, adjustments and not any one-off, I-promise-this-will-only-be-a-one-off occurance thing

I have £67.3m as operating profit which on revenue of £2.935b gives the 2.29% operating margin. Again huge doifference from the 17% quoted in your post.

And there you have it. Two wildly differring accounts of the operating profit and the operating margin. Rather than argue which is correct and which is not, let's just accept that there are different interpretations and leave posters opinions to reflect those differences. After all, if the acounts have to have notes to explain why certain figures are represented differently to expected, the field is wide open to interepretations.

The CEO has unloaded some 75% of his holding last week. I don't believe I have anywhere near the entreprunerial acumen of the great Kenny Alexander, so why argue he is wrong to dump the vast majority of his holdings? (for the time being; he may buy back cheaper in the future).

I've followed suit as he knows more than I or anyone else when it comes to GVC. Sold 2 tranches this morning. As I bought in 2004 at £4.27 it's all profit (still) and I'm not one of those bemoaning losses. (Previously sold 3 tranches between £9 odd and £11 odd, but got greedy and held back waiting for £12 - I was still well overweight even after those profitable sales). I completed my planned further tranches of sales this morning, with more to come should the SP rise leading up to Thursday.

I don't have losses with GVC only profits. But may well sell 100% the remaining, I was overweight by a huge amount previously. More or less balanced after this morning. Kenny has spooked the hell out of me what with that and the months old continued retracing of the SP. GVC is not "over" I just think it will take longer to get back on the horse for GVC.

1pm and just sipping a late night cuppa to wind down and then defo turning in :)

Dividends!
Bet everyone thinks at least they're safe. Well for the last 3 years they've not been covered at all, and instead have been financed out of the debt pile ie., added to the debt pile, thus just increasing it more.

Before anyone thinks ah but free cash flow will cover it - nope there's hardly any free cash flow of note. We haven't "earned" those dividends. We've been paid off to remain uncritical. Hush money if you will.

PS.
No one should be "shocked" at this year's huge debt. As this year estimates for the debt were circa £1,766b So hardly a surprise out of the blue.

Guess I wasn't paying close enough attention. I was just putting it all down to acquisitions - which would all sort itself out.

Anyway, by closde on Tuesday the market was happy. It's not the balance sheet that has caused the retrace in the SP, despite it looking overly debt laden with tiny profit margins for the year.

F1j - quick post before turning in.

I never pay any attention to EBITA - neither does Warren Buffet nor his mate Chatrlie Munger (Google you'll see they detest EBITA).

Agree on cashflow and it is poor going forward. The ratio industry average for companies like GVC is 16.6 also the same for all FTSE average - yet GVC comes in double that at 33.6 - terrible.

Operating margin is way out of line with industry average at a lowly 2.29% (Industry average is 7,67% That's despite after 2 years of iperating loss, 2018 came in with an operating profit at £67.3m - the highest ever - due to that £2.935b revenue achieved.

However that's too low for such a large revenue and resulted in an overall net loss this year. The operating margin at 2.9% as stated, is unacceptably low hence the loss instead of net profit. All therse things I could be persuaded to look at differently (acquisitions etc.,) but it's this year's debt that blows the mind. Put it in context -

Net debt
2013 to 2015 - there wasn't any - each year closed in surplus!
2016 came in with £41.5m - not a problem , generally you can't run a large business without some debt.
2017 came in better with only £10.6m debt, again not a problem.

But maybe this is what explains the first hours indecision by the market on Tuesday results announcement. Net debt for 2018 just ended was revealed as a staggering £1.809 BILLION. - WTF !?!

Again I'll wait until I read of a good rebuttal to the humungous debt increase, but it is a shocker. Right I'm done for this evening.

F1j - quick post before turning in.

I never pay any attention to EBITA - neither does Warren Buffet noir his mate Chatrlie Munger (Google you'll see they detest EBITA).

Agree on cashflow and it is poor going forward. The ratio industry average for companies like GVC is 16.6 also the same for all FTSE

Okay. Start with the good news. Analysts/company forecasts for the next 2 years - (and they're well good). A quick reminder:

Historically right up to year ending 2017, GVC has shown very pleasing annual increasing revenue - but due to company size, only ever triple figure millions for revenue. From £144.3m revenue in 2013 they'd climbed satisfyingly each year until achieving £785.5m in 2017.

And for the year 2018 as reported by Kenny last Tuesday, they'd finally hit the billions with 2018 closing on a staggering £2.935 BILLION in revenue - and gone for good are the years and years of steady triple figure millions in revenue - from now on you talk in billions in revenue, not millions, billions!

Net profit for 2013 was £10.4m climbing to £17.9m in 2015
- AND that was the last net profit seen from that day to this.
The following year 2016 came in with a net loss of £113.3m,
with 2017 also coming in with a not loss of £34.4m. At least the loss was decreasing.

So in came the 2018 results and it's now three years in a row of losses but increasing back up to close with a £62.5m loss - After starting out with revenue of £2.935b. Disappointing but there's integration of acquisition costs et al.

But look at the future based on analysts estimates:
2019E = £3.439b revenue and
2020E = £3544b revenue.
Good or what?

But it gets better, look at the estimates for net profit -
2019E = £350.5m net profit (Revenue didn't even get past £350m odd until 2016!!!)
2020E = £411.4m net profit.

No mention of losses anywhere. All profit from 2019 onwards. Pause and salivate there before I return to what confounds about these analysts estimates. It's this:

The estimates for 2018 I had were showing revenue for 2018 as estimated as £3.901b
That's £1b higher than was actually achieved.

The estimate for 2018 net profit was not a third year of another loss but a net profit of no less than £502.4m
- 2018 as we all know is a loss (£62.5m loss)

Haven't checked all the media analysts reports but the first that day reported analysts earnings estimates having been met , but when I read it all it talked about was Ebita earnings - not ACTUAL earnings. So I'm confounded. I have excellent figures on what to expect for the next 2 years ahead, but it seems they change the estimates which are suddenly announced on the day as being met!

Does anyone have any projections/estimates for 2019 and 2020? If so, are they forecast to be significantly different to what I've posted?

There's a general consensus (from the forums and media reports) that on results day Tuesday, March 5th, that the annual results were well received by the market. For those of you online that day from 8:00am and for the following 2 hours - that was not how it felt. There was disappointment on various forums, people saying they wished they sold etc., the reason being that from the open, the SP trended down touching as low as 637p (from 660p open) before finally finding a floor around 8:30am ( approx 640p-ish) and stabilised around that level until approx 8:40am. If you were viewing that day, disappointment of the SP performance was the tune. The results were presented as bullish by Kenny, but some online comments were "but why is the SP red?"

If you stop right there you can appreciate how difficult it can be to interpret results. From 8:40am-ish the SP started gently rising. But it wasn't until almost 10:00am that the SP was only near back to the opening SP!

I remember being distinctly disappointed. GVC has always for the past 5 years I've owned them - always - been well received by the market on results day. Something was wrong.

After 10:00am (and the live presentation by Kenny) the SP continued rising and all of a sudden "It must have been the fault of those who sell on the results no matter what" as the SP began climbing past that day's opening SP, and clearly above the previous day's close to finish Tuesday nicely up at 697p. At last! And it continued on Wednesday. Investors were all set for good things to get the SP out of this malaise.

So initially the results were not a unanimous thumbs-up from the get-go. You had to be there, live on the day, watching, to appreciate that - as reading the media reports within hours it was all "results please the market" etc., etc.,
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It's XD day next Thursday; so it's reasonable to expect some lift to the SP up to that date - yes?
Even if this fall initially continues retracing on Monday, perhaps approaching XD day will lift the SP a bit?

- But after Thursday?? Anyone's guess. You can expect a proportionate drop to reflect the divi content, but in circumstances like this the fear is 'will it come back up after payment day and hence out of XD period?' or not? Again anyone's guess in the current circumstances.

I'm intrigued by the media analysts expectations being met, will pick up on that as I have analysts estimates figures that confound me, that shouldn't have met with that response but will post that separately as this post is long enough for the moment.

Good point fiji5.

Can't remember where I read it, but it was opined that of all the execs buys or sells those by the CFO were the most indicative and telling of the state of a company, but generally the 2 most important exec buy/sells revolve around both the CEO and the CFO as the main two "in the real know" to the true state of a company.

So execs such as the chairman buy/sells are rarely indicative of anything.

And also if a cluster of execs sell or buy in the same direction, in the same time period, is the most meaningful of all, and unmistakeable. A cluster being 3 or more. So if the CFO makes a significant sale next week - then we're all toast! :)

I read that the new CFO bought in December. 100,000 I think. Has he bought higher than that, before or since? (trying to acertain if his amounts are significant, although 100,000 shares can hardly be termed 'token' can they?)

So I suppose if the CFO bought a significant amount in the next week or so, while the price is on low offer, that would be the green light (assuming he's got loads of spare cash lying around that is :)

Want something with a tad more positive spin (maybe) on today's events to maybe lift the spirits?

Bits from the FT -

" The directors’ sell-off prompted speculation that the pair were looking to move on from the company but a spokesperson for GVC said that the sale was done to “satisfy an institutional buyer”.

[[ Hmm. ]]

The company spokesman pointed out that Mr Alexander’s holding in the company as a percentage of his salary — even after the sale — was still eight times more than the average for industry chief executives.

[[ Hmm again. ]]

Mr Alexander sought to reassure investors about his and Mr Feldman’s position, saying in a statement: “We have both held large personal shareholdings in GVC for a long time and continue to do so. Both of us remain fully committed to GVC and, whilst I continue to have the support of our shareholders, I’m here for the long term and at the very least I have a current plan that will take three plus years to accomplish.”

A person familiar with the matter said that Mr Alexander was committed to bedding in the acquisition of Ladbrokes Coral. “He’s still got skin in the game,” the person said.

[[ Not going to say 'hmm' again. ]]

From Pro Active Investor:

" On Tuesday, GVC Holdings CEO Kenny Alexander offered to bet me £10,000 that he'd get the betting group back in the FTSE 100 within six months. Perhaps I should have taken the bet: shares down 15% after CEO and chairman dumped almost £20m of stock

— Dominic Walsh (@walshdominic) March 8, 2019
Bookie GVC Holdings PLC (LON:GVC), down 16% at 577p, and that man Russ Mould, who is paid to have opinions, has a view on this as well.

“There is a widely used phrase in investing that says ‘follow the money’. In GVC’s case, shareholders are following this advice to the letter as the gambling company’s share price dives amid news of hefty share sales by directors.

“Chief executive Kenneth Alexander has sold £13.7m worth of stock and chairman Lee Feldman has dumped nearly £6mln of his personal holding. Investors are clearly spooked by this news and are also selling down.

“The two directors have pledged not to sell any more while they ‘continue’ at GVC. Investors may have read that statement as implying the pair aren’t going to be around that long,” Mould suggested."

I should add that Kenny's £20m includes not only his salary but all the entitlements as a total compensation package. It's not £20m salary then share save schemes added. £20 million is the total "compensation" as CEO.

"There could be all sorts of reasons why they sold, "

- Of course there is; as they see it, they want to invest the proceeds in a far better investment than where it was currently sitting.

Whatever you think that's the only reason. A better place for their money.
With a £20 million renumeratiom package per year Kenny has no fear of wedding, swimming pools, tax or new house expenses.

Geezus can't stop feckin' swearing! Feck! Feck! Feck!

Just had a text from a mate asking what's going on as it's headling on the BBC business news.

Beggsie (sorry ment Kenny, not the wee Scots thug from Trainspotting) has mugged us! Just like his alter ego Beggsie!

It's not as if Kenny needs the money. He gets paid an annual salary of £20m per year - every year! He's always paid himself an obscene amount - then there's the free shares awarded to all of them. Nothing much said over the years as investors were rewarded with big divi's and SP appreciaton, so much so that Kenny achieved guru status with investors, and put him beyond critisim. - And has always even back in the AIM days paid himself more than many/most FTSE CEO's!

Results day, tomorrow?

Well 'progressive dividend policy' is corporate-speak for an annually increasing dividend where increasing profits allow such. However, need to see what the earnings are for the year just finished and the projected earnings for financial year 2019.

1.4 cover is reasonably safe without causing undue financial stress to the company.

For instance a divi cover of just 1.0 is borderline and means ALL the earnings , the net profit, have been used up in their entirety to pay shareholders a dividend. A cover of 1.4 means there's a considerable amount of net profit left over for other projects for the company to engage in.

A divi cover of below 1.0 is like entering death valley in the desert; meaning money has to be borrowed to finance dividends, as all the net profit has been used up and there's still not enough to meet the dividend payments promised to shareholders (see VOD; they're well under 1.0 and using free cashflow to cover the gaping hole, not really desireable state of affairs to do that year after year as VOD are doing).

Actually to be really safe, a divi cover of 2.0 or higher is regarded in some quarters as the ultimate safe cut off point, and means, usually just a.pittance in divis paid out to shareholders. It would mean only half the earnings were handed over to shareholders in dividends.

1.4 is "acceptable", but with what this company has gone through it could have been a little higher for more protection. Obviously the company is keen to get pension funds and such like onboard. But a company that's been put through the financial wringer as PFG has done would please shareholders more by ensuring they're sailing in a tight ship and not a leaky vessel.

1.4 is good, no danger. Personally I would have offerred shareholders a minimum of 1.5 but preferrably higher (smaller dividend payments) for a belts and braces approach. Security and sound finances are what shareholders want to see; they're not asking for divis before the company has completed rehabilitation; but it does show confidence by the board.

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Back above 600p tonight..... Ahh.. that's more like it :) :) :)