GVC's strong first half boosts confidence for full year

Fresh from being added to the FTSE 250 on Monday, online gaming and gambling group GVC Holdings said it was confident of achieving a result at the upper end of market expectations for 2016 after a strong first half result.

Having completed the acquisition of larger rival Bwin.Party in February, GVC more than doubled adjusted pre-tax profit to €51.3m in the first six months of the year and said organic growth opportunities from the acquisition were greater than it had initially expected but would need to be extracted through increased marketing investment.

Integration of Bwin was said to be on target to secure €125m of annualised synergies by the end of 2017.

On the back of a 4% rise in pro forma sports wagers and 8% in net gaming revenue, pro forma revenue was lifted 8% to €432m, or 12% at constant currencies, with actual revenues more than doubled to €382.1m from €120m last year.

Adjusted basic earnings per share were down to €0.198 from €0.332 in 2015 due to the €1.2bn of stock issued as part of the takeover.

Since Bwin has been added GVC has increased its sports margin to 10.0% from the 7.7% for the same period in 2015, helped in part by favourable sports results have been a factor, while cross-selling has seen gaming revenues from bwin sports labels increase 27% thanks to the addition of more casino products and improved marketing.

The enlarged group also secured its largest B2B service agreement yet, with bookmaker Betfred, though the benefits are unlikely to be realised until late 2017 and beyond.

Third quarter trading was said to have started "positively", helped by a strong end to the Euro 2016 football tournament, with average daily net revenue for the 11 weeks up to 15 September 12% higher on a pro forma basis and 15% in constant currency.

An experienced new head of bingo has been appointed as part of the board's aim of stepping up the bingo business as well as extending the Foxy brand into an improved Foxy Casino offer.

Chief executive Kenneth Alexander said: "The group operates in a highly competitive, increasingly regulated and taxed environment, GVC has never been better placed to face these challenges.

"Indeed, we believe the organic growth potential of the Group is now greater than originally anticipated at the time of the bwin.party transaction acquisition."