GVC share price pops as it declares a second special dividend for 2016 on strong results and the integration of Bwin

 
Courtney Goldsmith
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The online gaming giant declared a special divi for the second time this year (Source: Getty)

Gaming services provider GVC Holdings will pay a second special dividend for 2016 as the firm told City A.M. the acquisition and integration of Bwin "couldn't have gone better".

The figures

Net gaming revenue (NGR), or income on punters' wagers minus payouts, grew nine per cent to €894.6m (£772.6m) in the year to the end of December 2016.

GVC's profit before tax increased to €93.8m from €46.4m in 2015, and the business secured long-term refinancing that allowed it to declare a second special dividend of 15.1 cents per share for a total of 30 cents per share in 2016.

The firm told City A.M. it's had a "very, very strong" start to 2017 with daily NGR increasing 15 per cent in the first quarter.

The FTSE 250 firm's shares lifted 2.9 per cent at 728.5p in morning trading.

Why it's interesting

The gambling services provider successfully integrated online gaming site Bwin this year after snapping it up for £1.1bn, and its sports labels were key drivers of business last year. Gaming NGR from acquired Bwin sports labels was up 26 per cent while value of first time deposits was up 37 per cent.

GVC, whose brands include Sportingbet, PartyPoker and Foxy Bingo, said revenue from its games labels, which are historically the most challenged, declined to €89m from €109.6m the previous year due to a number of factors, including increased gaming taxes, VAT and investment in PartyPoker.

The company's organic growth potential is much greater than previously expected, chief executive Kenneth Alexander told City A.M.

"Our number one focus is organic growth, but if we see opportunities in terms of [mergers and acquisitions] than we wouldn't be shy of exploiting that," Alexander said, adding the firm is likely to engage in some M&A activity in the next 12 months.

Read more: GVC hits the jackpot in its final quarter

What GVC said

Alexander said:

"The acquisition of Bwin.party in February 2016 was our most ambitious transaction to date and through the hard work of our people we have once again demonstrated our ability to create significant shareholder value through selected acquisitions.

"Our strategy of pursuing international diversification and scale through leveraging our proprietary technology, is more appropriate today than at any time in our history. The organic growth opportunity is equally exciting and we are confident of delivering further growth in 2017."

What analysts said

Analysts at Liberum said GVC is leading the pack.

GVC has been our top pick amongst the operators in the sector; its business is well diversified across growth markets and is supported by a significant proportion of proprietary technology. 2016 results are at the top end of previous expectations and 2017 has started very strongly - a further special dividend is an additional sign of confidence.

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