GVC gains 11-year high on 'remarkable' Bwin turnaround

Helped by favourable results in the Euro 2016 football tournament and particularly strong growth in both wagering and gaming in the second quarter, GVC Holdings generated an 11% increase in like-for-like revenue in the six months to 30 June.

With the acquisition of Bwin.party completed on 1 February, GVC will gain a premium listing on the full list of the London Stock Exchange in August and looks likely to be added to the FTSE 250 at the next quarterly review.

The trading statement from GVC ahead of its interim results announcement in September confirmed total net gaming revenue (NGR) on a reported-currency pro forma basis, which treats revenue as if Bwin had been acquired in January, was up 8% to €439m. Or on a reported basis, as Bwin in fact joined a month later, it was up 223% to €388m.

NGR per day grew 7% on a pro forma basis after an 11% jump in the second quarter compared to the prior year, with GVC brands such as FoxyBingo and Sportingbet expanding 24% and Bwin.party brands by 12%. On a constant currency basis, NGR per day was up 16%.

After the UK's Brexit vote, GVC felt it should point out that it has more than 90% of its customer base outside the UK and expects "little or no material impact on the group".

Chief executive Kenneth Alexander added: "The restructuring of the enlarged group is progressing well with synergy targets being achieved, accompanied by strong underlying growth.

"We are very encouraged by the positive performance to date, however, it is still early days and there is much work to be done, nevertheless, the board remains confident for the remainder of 2016."

Broker Canaccord hailed GVC management's "extraordinary turnaround" of bwin.party, which generated a 7.5% compound annual revenue decline in the period 2010 to 2015 but has now reported three consecutive quarters of strong growth.

While management remains confident for the remainder of 2016, analysts said they were keeping forecasts unchanged, cautioning that "it is approaching the period of maximum integration risk, with the transition of GVC sportsbook customers over to the bwin platform in the next few months".

"In addition, we would expect gross win margins to normalise in H2, while Q3 wagering activity could be impacted by the customer unfriendly results from the Euros."

Shares in GVC were up 2.5% to 629.5p just before 1000 BST on Wednesday, its highest level since 2005.