Operator talk: Cash rich 32Red explains special dividend payment

Operator talk: Cash rich 32Red explains special dividend payment

Thursday, February 11, 2016 Totally Gaming
Jon Hale said that the decision was made due to the company's cash reserves and its hopes of attracting further investment

32Red finance director Jon Hale has told TotallyGaming.com that the company’s “thriving” performance, strong balance sheet and requirement for further investment to continue growth are the chief reasons behind the decision to award a special dividend to shareholders. 

Hale said that the impressive start to 2016, as revealed in a statement last month, gave the company confidence to make today’s (Thursday) announcement that it would offer shareholders 3.00p per share. 

The payment comes on top of the scheduled ordinary dividend, and comes after the company said that revenues for the first 19 days of 2016 were up 27 per cent on the corresponding period in 2015 and up 54 per cent including contribution from Roxy Palace, the brand it bought for £8.4m (€10.7m/$12.1m) last July.

“32Red is a fast growing, cash rich business that has just reported record revenue for 2015,” Hale said. “The company has no debt and its priority is to ensure it has access to sufficient funds to increase marketing investment to continue the growth of all parts of the business.”

Last month, 32Red announced record annual net gaming revenues of £48.6m for 2015, up 51 per cent on the previous year, with growth of 34 per cent in net gaming revenues over the course of the year.

Commenting on the results, chief executive Ed Ware said at the time: "This excellent outcome is a reflection of the strength of the 32Red business, our talented and dedicated team, as well as our first class marketing and appealing brands.”

32Red has undoubtedly been a success story in both gaming and the stock market in recent times, and was selected as one of four gambling sector shares to watch by Shares Magazine last August. The investment publication backed 32Red for its “strong growth and cash generation”.

In an interim statement released in July 2015, 32Red said it had total assets of £10.7m, which included £6.7m in cash, which was 39 per cent up on the previous year.

Hale admits that the company has been cautious in its dividend strategy, although he also pointed out that a special payment of 2.50p was made in 2013. The company announced its first 1.00p ordinary dividend as recently as December 2013, with a payment of 1.40p at the end of 2014. 

Hale added: “In January, 32Red reported that LFL revenue was up 27 per cent in the first 19 days of the year and the announcement of a special dividend should be seen as further indication from management that the business is thriving.

“The company has grown its ordinary dividend at a modest rate over the last five years and while we will continue to do this, the board believe that any excess cash should be returned to shareholders via special dividend.” 

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