LONDON (Alliance News) - Online gaming company 32Red PLC Thursday raised its full-year dividend 29% after reporting double-digit growth in 2013 profits and revenues, driven by a strong performance from its casino products, growth in mobile gaming, and contributions from its fledgling business in Italy.
It also gave a positive outlook for 2014, saying it expects further growth, although revenue growth slowed in the first few weeks of the year against strong comparative figures.
Despite the strong report, 32Red was down 8.7% at 75.75 pence Thursday morning, one of the biggest declines on AIM. Analysts put the move down to profit taking after the stock performed strongly over the last year of exceptional growth.
32Red declared a final dividend of 1.0 pence, up from 0.75 pence in 2012, bringing the total dividend for the year to 1.8 pence, up from 1.4 pence. Its pretax profit rose 12% to GBP2.3 million, from GBP2.0 million in 2012, as total gross gaming revenue rose 21% to GBP38.8 million, and total net gaming revenue rose 15% to GBP25.4 million.
"Trading in the first nine weeks of (2014) has been good with both gross and net revenues up 5% against challenging prior year comparatives," it said, suggesting that revenue growth is slowing compared with the strong 2013 growth levels.
"There are regulatory challenges as well as opportunities this year but we anticipate another strong year of growth in the core 32Red casino, supported by increased contributions from Italy, betting and other products," it added in a statement.
32Red said 2013 revenues we driven by a combination of factors, primarily a 24% increase in active casino players, as well as revenue contributions from Italy, a market it continues to invest in.
For its first full year of contributions, 32Red said gross gaming revenues from Italy totalled GBP1.3 million, with net gaming revenues of GBP0.6 million. It incurred a loss of GBP1.2 million in respect of its Italian operations during the year, compared with a loss of GBP0.3 million in 2012, as it increased investment.
Like peers, 32Red reported strong growth in mobile revenues, which more than doubled. Mobile revenues now rpresenting 21% of total casino revenues, compared with 10% in 2012.
32Red booked a total of GBP397,524 in exceptional items in 2013, more than double the GBP175,406 it booked in 2012, as it incurred further legal costs and other expenses associated with its successful proceedings against three of William Hill PLC's companies in respect of the online casino, 32Vegas.
After a successful trial and damages enquiry spanning several years, the William Hill-owned 32Vegas business was held to have infringed two of 32Red's European Community trade marks.
The group said it increased its marketing spend in the fourth quarter of the year in order to drive new player recruitment, and said it will continue to increase investment in regulated markets, particularly Italy, in terms of marketing and personnel.
32Red signed a number of new marketing contracts during the year, including a 12 months partnership with Channel 4 to sponsor ''Late Night Film'' on Film4, an agreement to be one of four main sponsors of the All-Weather Horse Racing Championships, and an agreement to sponsor The Paul O'Grady Show on ITV. It also announced a three year licence with ITV Brand Extensions to develop and promote an ''I'm a Celebrity...Get Me Out Of Here!'' slot machine game exclusively to 32Red customers.
"These marketing initiatives have increased brand awareness and stimulated new customer recruitment with 20,574 new depositing players recruited by the 32Red casino in the second half of the year alone. This recruitment contributed to the strong finish to 2013 and the return on this investment should continue to be realised in 2014," the company said.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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