Sports betting and gaming group GVC (GVC) is returning to the dividend list ahead of schedule with a €10 cents per share special payout scheduled for February.
The online gambling play also cheers with news it will recommence paying a progressive dividend, returning 50% of free cash flow, from 2017 onwards.
Shares in the e-gaming operator, which has grown through acquisitions from an AIM-listed small cap into a FTSE 250-listed gaming behemoth, are bid up a further 7p (1%) to 693p on news of the impending special payout in respect of the 2016 financial year and the promise of a rising stream of ordinary payouts to follow.
DIVIDEND SURPRISE
GVC is now a major player in a consolidating industry, having acquired underperforming rival Bwin.party in February this year. The Isle of Man-headquartered group's brands include Sportingbet, partypoker, Foxy Bingo and CasinoClub.
Under the terms of a €400m (£356.4m) loan provided by Cerberus Business Finance to help finance the audacious reverse takeover of bwin.party, GVC 'agreed to take a dividend payment holiday in 2016'. However, following a refinancing with Nomura, GVC is in a position to pay off the €386.5m balance of the Cerberus loan before 2 February and business remains brisk with underying cash flow strong.
This means GVC is able to fund the special dividend and plans to distribute 50% of its free cash flow beginning in 2017. The betting operator, a retail investor favourite, says it will also return any surplus cash to shareholders through buybacks and/or special dividends.
'As we did following the Sportingbet acquisition,' comments CEO Kenneth Alexander, 'through the rapid integration of bwin.party and a solid trading performance, GVC expects to recommence the payment of dividends ahead of schedule. Our shareholders have been highly supportive and it is pleasing to be able to reward them with a dividend sooner than we had originally anticipated.'
WINNING RUN
GVC also updates investors on strong third quarter trading, reporting 12% year-on-year growth in daily net gaming revenue (NGR) to €221.5m, 3% year-on-year growth in daily amounts wagered as well as a sports gross win margin of 10.5% in Q3, up from 9.3% a year ago.
Alexander flags a positive start to Q4 trading, with daily NGR up 8% in the period to 31 October, good going given tougher comparatives. Last year's fourth quarter was the standout period of 2015, while this year's third quarter was boosted as punters rushed to place bets on the Euro 2016 football tournament.
Based on the €39.5 cents per share or 35.2p dividend forecast for 2017, including the special dividend, GVC is a compelling income stock, offering a bumper yield of 5.1%.
