GVC sees dividend boost as bwin acquisition pays off

On Thursday, the Isle of Man-based group, which also operates sites such as Sportingbet and Foxy Bingo, reported a pre-tax loss of €138.6m in the year to December 31. This was mainly due to costs related to its purchase of bwin, which was completed last year.

However, the FTSE 250 company said overall trading had been boosted by gains in sports betting, which have more than made up for declines among its online casino games brands.

“We always expected we could return bwin to growth,” said Kenneth Alexander, GVC chief executive. “But the growth potential for the group has been greater than we expected . . . I think there’s more to come.”

In an upbeat assessment, the company said its financial performance had beaten its own forecasts. For 2016, GVC said that net gaming revenue — the amount gained in stakes minus payouts — rose 12 per cent on a constant currency basis to €894.6m.

Earnings before interest, tax, depreciation and amortisation rose 26 per cent to €205.7m. GVC’s shares were up 2.4 per cent in early London trading to 725p.

In December, the group issued a special dividend following a trading statement in which it said full-year results were likely to be at the “upper end of market expectations”, forecasting net gaming revenues of between €852m-€885m and ebitda of €202m-€205.5m.

After beating those estimates on Thursday, GVC announced a second special dividend of 15.1 cents, giving a total 2016 dividend of 30 cents.

Analysts at Liberum wrote that GVC had “been our top pick among the operators in the sector . . . a further special dividend is an additional sign of confidence”. 

The company said it remained on track to achieve cost synergies from its bwin merger worth €125m by the end of this year.

The company is known to have considered further acquisitions as part of a wave of consolidation in the UK gambling sector. In December, it emerged that merger talks with Ladbrokes Coral had broken down. 

“Our number one priority is organic growth, but we have built this business on the back of mergers and acquisitions,” said Mr Alexander. “If we find the right deal, then we will definitely do it and our shareholders will want us to do it.”

However, analysts have said most betting companies are awaiting the results of the government review into the industry due later this year, before making further takeover moves.

UK ministers are considering tough new rules for gambling companies, which could face several new curbs, from a ban on daytime TV advertising to reduced stakes on betting machines.