Fortuna strategy puts cash into investment rather than dividend

Fortuna strategy puts cash into investment rather than dividend

Thursday, April 9, 2015 Totally Gaming

Fortuna Entertainment will not pay out a dividend this year as its new management team focuses on investment across infrastructure and product.

The online betting company, which operates in the Czech Republic, Hungary, Poland and Slovakia, is under new management after major changes in 2014 and said that the decision not to pay out was reached during a meeting of the firm’s board of directors last week.

Fortuna said its dividend policy is under review due to planned investments that will focus on various areas such as a new IT platform enabling multi-channel, multi-product and multi-country capability, as well as operational excellence and people. 

"These investments will strengthen the company’s current position as the leading Central European licensed sports betting operator," a Fortuna spokesperson said.  

"It will also support Fortuna in its ambition to become the undisputable leader in the regulated Central and Eastern European sports betting and gaming sector with the most trusted and exciting multi-channel betting and gaming brand, scalable platform and outstanding customer experience.

"The management will continue to work on defining a long-term dividend policy that will take into account building a sustainable competitive advantage for Fortuna. Revised dividend policy is to be announced after the end of the financial year 2015."

Fortuna appointed Per Widerstrom as its new chairman and chief executive in 2014, while there were also changes as chief financial officer and chief marketing officer.

Widerstrom joined the company from Gala Coral, where he had been managing director of Gala Interactive, with the company saying in September that his main goal is to develop Fortuna´s "multichannel strategy".

Last month the company said earnings before interest, tax, depreciation and amortisation (EBITDA) would drop 20-25 per cent this year because of investments and the end of a handling fee in its Slovak markets.

At the time, chief financial officer Jaroslava Hirschova said the company planned a "substantial increase" in investments from between €3m ($3.2m) and €4m seen in the previous year. 

"We are still having discussions but definitely at least two to three times more what was before, roughly," Hirschova said when asked about expected capital expenditure in 2015 and 2016.

Fortuna's previous policy was to payout 70-100 per cent of consolidated net profit, with the company last month announcing that net profit for 2014 was up 2.3 per cent to €15.9m.

In 2014, Fortuna recorded EBITDA of €28.4m, up 6.4 per cent year on year, while total amount staked was €672.4 million (up 18.5 per cent). Total gross win reached €132.6m, an increase of 13.9 per cent compared with 2013, while gross win from online betting increased substantially by 31.2 per cent to €67m.

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