GVC benefits from rising margins

Rising sports margins and a slight uplift in wagering turnover helped GVC notch up a 14% constant currency rise on sports net gaming revenue (NGR) per day in the third quarter.

The company said the growth trend had continued into October, which saw a 10% constant currency rise in overall NGR per day against what the company described as a tough pro-forma comparative in the fourth quarter last year.

GVC completed the acquisition of BwinParty in February this year.

Total NGR for the third quarter rose 15% in constant currency terms to €221.5m. On a per day basis, sports NGR rose to €962,000 while gaming rose 15% to €1.45m per day. Daily amounts wagered rose 3% to €11.4m.

The success of GVC in integrating the BwinParty business has been compounded by news at a corporate level regarding an outstanding loan. The company announced in August it had secured new financing facilities to replace an existing €400m loan from Cerberus, which was used to part finance the BwinParty acquisition.

The new financing from €250m Nomura comes with a significantly cheaper interest rate than the Cerberus loan, and loosens the restrictions on the company paying out dividends to shareholders. As a result, the company has also announced a special dividend of 10 cents that will be paid once the new loan comes into effect in February.

Continuing with the divi theme, the company has also announced it will be resuming its regular shareholder payouts, and said that further special dividends or share buybacks would be considered depending on how much excess cash is generated.

Kenneth Alexander, Chief Executive for GVC, said: “As we did following the Sportingbet acquisition, through the rapid integration of BwinParty and a solid trading performance, GVC expects to recommence the payment of dividends ahead of schedule.”

Analyst Richard Stuber at Numis suggested it was a robust trading statement. However, they noted that both November and December were also tough comparatives.

He told clients: “We make no changes to our 2016 NGR forecast of 7%-plus year-on-year, but importantly any revenue outperformance is likely to be reinvested through additional marketing and employee bonuses, and therefore we see little upside to our EBITDA forecast of €204.5m.”

Alongside the sports performance, the BwinParty brands gaming performance has been upgraded in recent months with new games being added from a host of major providers including Realistic Games, Microgaming, Yggdrasil and Play’n GO.