GVC’s full-year profits fell 38% in 2015 mainly because of the costs associated with the online gaming group’s £1.1bn takover of loss-making rival bwin.party.
GVC, which already owned the Sportingbet brand, said profits fell to €25.5m (£19.8m) after a €23m charge related to the purchase of bwin, the group behind PartyPoker. The charge mainly comprised legal and professional fees, plus the cost of a euro/pound hedge. GVC fought off a rival offer for bwin from 888 Holdings.
The figures include no contribution from bwin since the deal was completed in February, two months after GVC’s year end. But on a standalone basis bwin lost €42.3m in 2015. Both GVC and bwin were hit by the point of sale consumption tax introduced on UK gaming revenues – a 15% levy no matter where bets are placed in the world – and by VAT imposed by the EU.
Since its year end, GVC said revenue per day had risen 13% for the combined group, with GVC brands up 18% and bwin up 11%. PartyPoker recorded its first year-on-year quarterly growth for five years.
GVC’s chief executive, Kenny Alexander, said: “The bwin.party acquisition in early 2016 affords us an opportunity to take the group to the next level. GVC has never been in a stronger position going forward. The enlarged group is already enjoying encouraging trading … There is much work to be done [but] with GVC and bwin.party brands growing, together with synergy benefits, we look forward with confidence to another successful year.”
Alexander said the positive start to the year reflected the fact that bwin’s business was beginning to stabilise and return to growth after a number of difficult years.“I have visited all the key [bwin] operations and am very encouraged by what I have seen,” he added.
Banking and asset management firm Investec, issued a buy note for GVC and raised its target price from 545p to 592p. Investec analyst Alistair Ross said : “GVC management has already started to reorganise bwin, product improvements are underway and the group is confident of realising €125m of synergies in 2018. Pro-forma results to the 20 April are ahead of our expectations and we have upgraded our forecasts to reflect stronger growth.”
GVC’s shares jumped nearly 5% to 548.5p.
