Foxy Bingo owner GVC Holdings PLC (LON:GVC) is to pay a bigger than expected second special dividend for 2016 on the back of strong underlying trading helped by its acquisition of Bwin which completed last year.
The online sports betting and gaming - which bought Bwin for £1.1bln in September 2015 after a heated bidding war with 888 Holdings PLC (LON:888) - declared a second special dividend of 15.1 euro cents, taking the total payout for the year to 30 euro cents.
In November, the FTSE 250-listed firm had said it would pay a special dividend of 10 euro cents per share for 2016, before bumping it up to 14.9 euro cents in December.
GVC, whose brands also include partypoker and Sportingbet, said full-year 2016 group ‘clean’ underlying earnings (EBITDA) was up 26% to €205.7mln (US$222.09mln), while revenue rose 8% to €873.2mln.
Kenneth Alexander, GVC’s CEO, said: "The acquisition of bwin.party in February 2016 was our most ambitious transaction to date and through the hard work of our people we have once again demonstrated our ability to create significant shareholder value through selected acquisitions.
“Our strategy of pursuing international diversification and scale through leveraging our proprietary technology, is more appropriate today than at any time in our history. The organic growth opportunity is equally exciting and we are confident of delivering further growth in 2017."
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In a note to clients, analysts at Liberum Capital said: “FY16 Results are at the top end of previous expectations and FY17 has started very strongly - a further special dividend is an additional sign of confidence.”
They added: “We see future scope for upgrades in addition to an upwards re-rating; a P/E of 11x FY18 is very attractive given we forecast EPS to more than double between FY16 and FY18.”
The analysts said: “GVC has been our top pick amongst the operators in the sector; its business is well diversified across growth markets and is supported by a significant proportion of proprietary technology.”
Liberum reiterated a ‘buy’ rating and 830p price target on GVC.
In early trading, GVC shares were up 2.1%, or 15p at 723p.
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