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In the wake of Covid-19 pandemic, the businesses worldwide are adopting several measures to manage the challenges in an unprecedented period of uncertainty. In this article, we will focus on business updates declared by an online gaming provider, 888 Holdings PLC and health services provider, UDG Healthcare PLC. 888 Holdings has released its full-year results and the stock plunged by over 4 per cent, while UDG Healthcare has announced its trading update today and the share plummeted by around 5 per cent (at the time of writing, GMT 9:20 AM). Considering their respective business model and financial performance, we will discuss their latest updates.

888 Holdings PLC (LON:888)

888 Holdings PLC is an FTSE All-Share listed company. The company is operating as an online gaming provider with diversified solutions for business-to-business (B2B) division, namely Dragonfish and holds a portfolio of business-to-consumer (B2C) brands. The company was founded in 1997, and currently it is operating with 13 geographic licenses.

(Source: Company Website)

Company’s Business to Consumer operations represents the following sections:

• Casino
• Sport
• Poker
• Bingo

Whilst, the company had established its B2B operations in 2007 under the brand called Dragonfish. The B2B line of business offers flexible and dynamic gaming solutions by leveraging software, technology, operations and advanced marketing tools to its partners and clients.

Building a Solid Brand in Sustainable Market

888 targets to generate incremental shareholder value by being profitable, both organically and inorganically. The following core objectives underpin company’s long-term strategy:

• Bolstering its position as the leading business to consumer operator.
• Aspire to be the leading business to business provider by tapping new opportunities and keeping an eye over new entrants.
• Enhancing market position inorganically through acquisitions.
• Exploiting the market changes and follow the market trends while adhering to the regulatory policies.
• Build the brand as the most responsible player in the sector.

Recent Actions to Grow Business Organically and Inorganically

• 24^th March 2020: The group has affirmed that its Casino and Poker vertical have been performing resiliently; however, their sports vertical (which represented 16% of revenue in 2019) has been impacted due to coronavirus outbreak since their sports events have been either cancelled or postponed.
• 4^th March 2019: 888 had acquired the sports betting platform, BetBright for GBP 15 million, which is likely to strengthen 888’s long-term strategic capability for its sports vertical.

Financial Highlights for the Year Ended 31st December 2019 – Reflecting the Expansion in Regulated Markets, with an Increase in Revenue and New Customer Acquisition

• Group revenue surged by 6% (up 10% at constant currency) to US$560.3 million (FY18: US$529.9 million). During 2019, 888's 74% revenue was generated from regulated and taxed markets, with revenue from regulated markets, improved 22% at constant currency. B2C revenue for 2019 rose by 11% (up 15% at constant currency) to US$530.5 million (2018: US$479.3 million), due to an increase in B2C Casino, B2C Sport, and B2C Bingo revenue, however, there was a decline in B2C Poker revenue. The revenue from B2B division declined by 41% to US$29.8 million (2018: US$50.6 million).
• Adjusted EBITDA decreased to US$85.6 million (FY18: US$107.1 million), and it was impacted mainly by US$25.6 million of additional gaming duties in part reflecting the 888's growth in FX headwinds and regulated markets, while EBITDA was reported at US$84.2 million (2018: US$129.1 million).
• Final dividend per share of 3.0 cents (2018: 6.0 cents), reflecting a total dividend per share for the year 2019 to 6.0 cents (2018: 12.2 cents). The Group delivered a robust balance sheet with $99.5 million of cash and cash equivalents at the period end.
• Continued investment in the developing US market. In New Jersey, the group launched the Orbit platform in July 2019 with an additional 129 new games added.

(Source: Company Website)

Share Price Performance

Daily Chart as of April 15th, 2020, before the market close (Source: Thomson Reuters)

888’s shares, at the time of writing before the market close (at 8:30 AM GMT) on 15th April 2020, were trading at GBX 132. Stock's 52 weeks High is GBX 183.30 and Low is GBX 68.40.

Current Trading and Business Outlook

The company has delivered a decent performance in FY19 and was in line with the management's anticipations during 2020 so far. On 24th March 2020, the company announced that the group's Board is monitoring the spread of coronavirus (COVID?19) closely. While it is unclear how this current situation will evolve over the upcoming weeks/months, and it is very difficult to forecast how customers will react throughout this period of unprecedented crisis. The online gaming market in which the group operates is continuously evolving at a rapid pace and is full of growth opportunities. The group has a decent balance sheet and is confident to manage these challenges.

UDG Healthcare PLC (LON:UDG)

UDG Healthcare PLC is an FTSE-250 listed healthcare service provider. It provides services related to healthcare advisory, communication, commercial, clinical and packaging services. The Company differentiate its business into two operating divisions – Ashfield and Sharp.

(Source: Company Website)

Geographically, the group’s revenue was split in 2019, as follows:

• North America – 64 per cent.
• United Kingdom – 19 per cent.
• Rest of World/ Other – 17 per cent.

The group generates more than 60 per cent of revenue from North America.

Let’s briefly discuss the two business segments of UDG below:

• Ashfield
  • Represented 73 per cent of the Group’s revenue in 2019.
  • Employs 7,000 people.
  • Comprises services related to Advisory, Commercial & Clinical and Communications.
• Sharp
  • Represented 27 per cent of the Group’s revenue in 2019.
  • Employs 1,700 people.
  • Comprises services related to Packaging, Clinical, Manufacturing and Technology.

Strategic Pillars of Sustainable Development and its Progress in 2019

• Maintaining and Improving its position as Market Leader
  • In 2019, the group had completed the acquisitions of Putnam and Incisive Health, which strengthened its capability in Communications and Advisory vertical of Ashfield division.
  • MSCI ESG ratings assessment had assigned ‘AA’ ratings to UDG.
• Transforming the business through people
  • Increased focus towards succession planning and defining career pathways.
  • UDG’s value-based leadership programme was completed by 98% leaders.
• Continuous Improvement
  • To accelerate the client’s performance, the group had launched complementary commercial and medical projects under the STEM aXcellerate programme.
  • EPS was improved by 5% in 2019 to 48.44c. from 45.94c in 2018 while the Net margin stood at 14.2% in 2019.

Significant Developments of 2020

• 7^th April 2020: UDG has announced that they are supporting the development of potential vaccine of Covid-19 by providing clinical trial, labelling and distribution services.
• 28^th January 2020: With effect from 1^st February 2020, the group has announced a non-executive director position to Liz Shanahan.
• 24^th January 2020: The Carbon Disclosure Project has awarded UDG a ‘B’ grade on the scale of A to D while the global average is C. This grade proves that UDG has been operating as a responsible company environmentally.

Trading Update – Reflecting Decent First Half of the Financial Year 2020

• The company has made a robust start to the financial year 2020, with constant currency profit before tax for the first half of 2020 was well-positioned from the corresponding period of the last year, reflecting the benefit of acquisitions made in 2019 and good underlying growth.
• Ashfield's operating profit was on-track as compared with the same period last year. Communications and Advisory continued to perform robustly with operating profit well ahead of the corresponding period of the last year, due to the benefit of acquisitions completed in 2019 and single digit underlying operating profit growth. The operating profit from Commercial and Clinical's was in line with the same period of the previous year. Sharp underlying operating profit delivered double-digit growth.
• In H2 FY20, the company’s performance will be impacted by COVID-19, and it is also withdrawing the FY20 financial guidance, due to current uncertainty.
• The company has a solid balance sheet and liquidity position, with net debt to EBITDA ratio of around 0.3x on 31 March 2020. But it has suspended the interim dividend.

(Source: Annual Report)

Share Price Performance

Daily Chart as of April 15th, 2020, before the market close (Source: Thomson Reuters)

UDG’s shares, at the time of writing before the market close (at 8:30 AM GMT) on 15th April 2020, were trading at GBX 592. Stock's 52 weeks High is GBX 846.00 and Low is GBX 423.40.

Good Prospects for Future Investment

Despite the current challenging environment created by COVID-19, UDG Healthcare has delivered another decent first-half performance, driven by the performance of both Sharp and Ashfield. Recently, the company has completed three acquisitions, including the acquisition of the United States strategic scientific communications agency, Canale Communications. The company has a global presence and solid market position, which could enhance its business growth rate. The Group focuses on its strategic investments to support its sustainable growth.

Disclaimer

The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.