GVC delivers winning result and starts 2016 in Party mood

GVC Holdings delivered impressive earnings figures for 2015 and has shot off to a strong start for 2016 since completing the acquisition of Bwin.party at the start of February.

For 2015, fully listed GVC, which moved up from AIM and expanded its board on completion of the deal, generated net gaming revenue (NGR) of €248m that represented a 10% on the prior year.

Earnings before interest, tax, depreciation and amortisation also climbed 10% to a record €54.1m - well ahead of the market's €52m expectations. Meanwhile Bwin delivered €108.5m EBITDA, against a forecast €98.5m.

On profit before tax up 21% to €50.0m, earnings per share before exceptional items rose by the same percentage to 80.2c. Underlying EPS was 71.3c versus the forecast 70.6c.

By 17 April, GVC, which is likely to join the FTSE 250 at the next quarterly review, also had gross cash position of €327m, with group net debt, representing cash less client liabilities less debt of €193m.

Having integrated and turned around lossmaking 2013 acquisition Sportingbet, GVC's management are confident they can do the same with Bwin.

Chief Executive Kenneth Alexander said the completion of the acquisition afforded the group an opportunity to take the group "to the next level".

"GVC has never been in a stronger position going forward," he continued. "The enlarged group is already enjoying encouraging trading, resulting from our unique mix of diversified products and strong brands."

In the first quarter of 2016, the combined total group NGR has risen 180% to €167.7m, helped by friendly sports results.

In an indication of how growth for both GVC and Bwin has accelerated, NGR per day on a like-for-like, constant currency basis was up 9% and up by 13% in the year to 20 April.

Bwin's long-struggling PartyPoker brand has also shown its first year-on-year quarterly growth for five years.

Alexander said the combined group was on track to secure €125m of synergies by the end of 2017.

House broker Canaccord Genuity said momentum was considerably stronger than it had anticipated, given the focus around cost restructuring, which "points to material underlying upgrades".

However, given current momentum within the business, it said it now expected management to "phase delivery of cost savings over a longer period than we had expected, to reduce execution risk" and so reduced projected cost savings in 2016 by €32m.

Canaccord also downgraded its current-year EBITDA to €199.4m from €204.1m, driving EPS down to 39.4c from 40.93c, and 2017 EBITDA to €260.4m from €268.5m, with EPS of 66.9c, a 4% downgrade from 68.5c.

For FY18 the house broker upgraded EBITDA to €285.3m from €275.5m to reflect full delivery of synergies and a stronger underlying profit run rate.

GVC shares were up 3.3% to 541p late on Monday.