TTR.L Regulatory News (TTR)

30 Oct 2007 07:02

32Red Plc30 October 2007 32Red Plc("the Company") Sale of Betdirect brand for £5.75m Interim results for the six months ended 30 June 2007 32Red Plc, the award-winning online casino, poker and sportsbetting operator,today reports interim results for the half year ended 30 June 2007 and announcesthat it has exchanged contracts to unconditionally sell the Betdirect brand,Betdirect customer database and certain assets of the Betdirect business to StanJames (Gibraltar) Ltd for a total consideration of £5.75m. £5.75m Sale of Betdirect to Stan James (Gibraltar) Ltd • Following the successful launch of the 32Red sportsbook in April 2007, the Company currently operates casino, poker and sportsbetting products under both the 32Red and the Betdirect brand • Further to a strategic review of both brands and a review of potential business development opportunities for the Company, 32Red has accepted an offer of £5.75m from Stan James (Gibraltar) Ltd for the Intellectual Property and certain assets of the Betdirect business • 32Red will continue to offer an integrated online sportsbetting product to its customers. Discussions are underway in connection with a white label online sportsbetting service arrangement with Stan James. • Proceeds from the sale will be used to continue to expand the 32Red brand profile through casino, poker, and sportsbetting products, to support activities in the UK and to invest in new opportunities in other territories. The proceeds will also be used to reduce debt levels now that the Company is cash generative. • Consideration paid as follows: £575,000 deposit on exchange of contracts today; £4,675,000 on completion, which is unconditional and is scheduled for 10 December 2007; and a further £500,000 after a 6 month period. • Stan James has over 30 years experience in the betting and gaming sector and operate online, telephone and mobile betting services. Interim results for 6 months ended 30 June 2007 - Key financials*: • Total revenues up 47.2% on H1 2006 to £9.2 million • Casino revenues of £4.6m, a like for like increase of 1.7% on H1 2006 • Poker revenues decreased by 3.8% like for like, against H1 2006 to £0.6 million • Betdirect Gross Win totalled £4.0m, an increase of 27.1% on the £3.1m derived from the 6 months ended 31 December 2006 • 32Red Casino and Poker PBT of £0.646m (2006: £0.791m) • Group EBITDA of (£0.92m) including Bet Direct EBITDA of (£1.77m) and EBITDA from 32Red casino and poker operations of £0.85m • Casino and Poker trading since 30 June has been positive and July and August Gross win are up 21.4%, like for like, on 2006. * 2006 H1 comparatives exclude any revenues derived from US customers in the period (circa 8%) Key Performance Indicators: • Active customers grew to 75,911 (H1 2006: 44,539) - Casino active players 10,818, up 13.2% on 2006 - Poker active players 10,662, up 7.3% on 2006 - Bet Direct active customers 54,431, up 18.0% on 6 months ended 31 Dec 2006 • New customers grew to 31,329 (H1 2006: 16,157) - New Casino players 7,291, up 15.0% on 2006 - New Poker players 6,850, down 0.9% on 2006 - New Bet Direct players 17,188 • Player yield - Casino player yield £426, down 18.7% on 2006 as expected with customer growth - Poker player yield £57, down 12.3% on 2006 as expected with customer growth - Bet Direct customer yield £73 • Cost per Acquisition (inclusive of affiliate costs) - Casino & poker cost per acquisition £82 (2006: £93) - Casino cost per acquisition £155 (2006: £160) - Poker cost per acquisition £4 (2006: £31) Ed Ware, CEO commented: "The sale of the Betdirect brand allows us to channelour marketing and management focus on the core 32Red brand, which continues tooffer the full complement of casino, poker and sportsbetting products to itscustomers. 32Red will also add mobile telephone gaming services and anintegrated Bingo offering to its product range in the final quarter of 2007.Whilst the recent UK legislative changes effective from 1 September 2007 allowgreater access to the UK market, we have identified a number of new territoriesinto which we intend to market the 32Red brand. Our Key Performance Indicatorsdemonstrate encouraging trends in the underlying business and we are confidentthat, following the divestment of Betdirect, we can continue to delivershareholder value. " 30 October 2007 Enquiries: 32Red Plc Tel: 00 35 049 396 Ed Ware, CEO Jon Hale, Finance Director Numis Securities 020 7260 1000 Lee Aston Chris Wilkinson College Hill Associates Matthew Smallwood Tel: 020 7457 2020 Performance Summary Despite increasing competition in our main UK market, 32Red casino performancehas grown over 2006 and allied to encouraging trends in active player numbersand new player recruitment, the mainstay of the Group continues to increaserevenues. Yield per player is solid at £426 but down on 2006 and whilst somecomfort can be drawn from lower acquisition costs for casino players, thisremains an area of focus for the Company. Our continued good growth in playerrecruitment has depressed the yield per player number. Despite the competitionin the UK, 32Red acquired a total of 7,291 new real money casino players in thefirst half of 2007. Following excellent growth in 2006, poker growth, as seen in many parts of theindustry, has slowed. This particularly applies to UK-focused poker rooms whereincreased competition from hitherto US-facing operators, now focusing away fromUS, has increased in our home market. These market forces have resulted in asmall decline in poker revenues and new player recruitment over thecorresponding period in 2006. 32Red continues to provide an excellent service toits poker players and active players have grown by over 7%, representing over10,000 poker players in the period. The launch of the new Betdirect online sportsbook in March this year precededexcellent growth through this channel. Telephone betting operations havecontinued to be optimised and the entire business relocated to Gibraltar at theend of the first half, albeit several weeks behind schedule. Whilst the sale ofthe Betdirect business enables the Group to re-focus and re-invest in the 32Redbrand, online sportsbetting remains an important part of future development andwill continue to form part of the 32red product range. Strategy United Kingdom 32Red continues to provide the full suite of betting and gaming products whichoffer the Group the platform to continue to develop its UK market presence. Theaddition of Bingo and a mobile casino product will further support our strategy.Brand recognition continues to be pleasing and opportunities to further increasethe profile of 32Red on a cost-effective basis will be maximised. In the UK,where advertising opportunities have expanded considerably since 1st Septemberand the implementation of the Gambling Act, we will be looking to supportexisting activities which include the sponsorship of Aston Villa. The divestmentof the Betdirect brand allows the Company to focus marketing on the single,resonant and core 32Red brand. New Territories The sale of Betdirect will allow the Company to explore investment opportunitiesin new territories. The Board believes that the 32Red brand identity and itsvalues has the potential to establish a stronger presence in territories outsideof the United Kingdom and a number of prospective propositions both in Europeand market-specific activities in the Far East are being investigated. We lookforward to providing further updates on these opportunities in due course. Outlook The passion for delivering excellent service continues to be our focus indriving performance across all of our platforms, along with investing in ourbrand profile in the UK through value for money marketing deals and activity.Whilst developments away from our main market are at preliminary stages, theGroup believes it has now enhanced its agility and is able to graspopportunities to expand its international reach. The addition of a new channelfor the 32Red Casino on mobile devices and the launch of an integrated 32RedBingo product, in the final Quarter of 2007, will further support cross-sellingof services, improve customer loyalty and longevity, as well as provide newrevenue streams. Trading Update 32Red Gaming revenues continue to perform strongly with like for like revenuesin Q3 2007 total £2.6m (up 11.8% on 2006), generated from 16,341 active playersin the quarter (up 16.9% on Q3 2006). Combined casino and poker yield was £160per active player during the quarter (£167 in Q3 2006). Summary The sale of the Betdirect business sees a re-focusing of the Company's effortsto accelerate the growth of the 32Red business and immediately returns theCompany to a cash generative position. The re-shaped business now has theability and flexibility to expand the 32Red brand moving into new gaming relatedproducts and territories whilst underpinning activities with the continueddelivery of excellent service to our customers. Consolidated Income Statementfor the six months ended 30 June 2007 Discontinued Discontinued Operations Operations Six months ended Six months Six months Six months ended ended ended 30-Jun 30-Jun 30-Jun 30-Jun 2007 2007 2006 2006 Unaudited Unaudited Unaudited Unaudited £ £ £ £ Net gaming wins 3,973,669 5,218,118 559,230 5,652,567Cost of sales (2,603,683) (3,707,600) (327,580) (3,851,416)Gross Profit 1,369,986 1,510,518 231,650 1,801,151Administrative expenses (4,389,350) (798,452) (511,163) (1,050,342)Other operating income 106,450 (26,531) - 4,773Operating (loss)/profit (2,912,914) 685,535 (279,513) 755,582Finance income - 103,179 - 60,968Finance costs - (143,209) - (25,272)Loss recognised on remeasurement to fair (8,186,315) - - -valueProfit/(loss) on ordinary activities before (11,099,229) 645,505 (279,513) 791,278taxationTax on ordinary activities - (450) (450) Loss on discontinued operation (11,099,229) (11,099,229) (279,513) (279,513) (Loss)/profit for the period (10,454,174) 511,315 (Loss)/earnings per share (£) Basic -0.18 -0.17 -0.01 0.01 Diluted -0.18 -0.17 -0.01 0.01 Discontinued operations relate to the betdirect business which was sold on 29 October 2007 Consolidated Balance SheetAs at 30th June 2007 Total Total 30-Jun 30-Jun 2007 2006 Unaudited Unaudited £ £ AssetsNon-currentIntangible assets 188,408 13,436,355Property, plant & equipment 510,381 1,439,428 698,789 14,875,783Current assetsTrade and other receivables 299,382 1,109,249Assets classified as held for 5,200,000 -saleCash and cash equivalents 3,797,990 8,266,768 9,297,372 9,376,017 Total assets 9,996,161 24,251,800 EquityEquity attributable to shareholders of32Red PlcCalled up share capital 137,650 112,550Share premium 14,055,532 11,408,077Share option reserve 273,476 140,280Retained earnings (14,326,335) 352,701 Total equity 140,323 12,013,608 LiabilitiesNon-currentBank loan due after one year 1,708,333 4,333,333 CurrentOther employees obligations 304,320 185,498Bank loan due within one year 1,750,000 2,166,666Trade and other payables 6,093,185 5,552,695 8,147,505 7,904,859 Total liabilities 9,855,838 12,238,192 Total equity and liabilities 9,996,161 24,251,800 Consolidated Statement of Cash Flowsfor the six months ended 30 June 2007 Six months Six months ended ended 30-Jun 30-Jun 2007 2006 Unaudited Unaudited £ £ Operating activitiesResults for the period before interest (10,414,144) 475,619Amortisation 877,393 26,612Depreciation 384,998 116,138Loss on disposal of fixed assets - 915Change in trade and other receivables 49,052 (274,994)Change in trade and other payables (486,714) 1,217,005Share options granted 44,686 40,936Loss recognised on remeasurement to fair value 8,186,315 - (1,358,414) 1,602,231Investing activitiesAcquisition of subsidiaries - (11,624,430)Additions to other intangible assets 30,625 (50,717)Additions to tangible assets (496,837) (150,166)Interest received 103,179 60,968 (363,033) (11,764,345)Financing activitiesProceeds from share issue 3,000,000 11,287,263Share issue costs set against equity (324,646) (804,136)Proceeds from borrowings - 6,500,000Repayment of borrowings (1,958,334) -Interest paid (143,209) (25,272) 573,811 16,957,855 Cash and cash equivalents, beginning of period 4,945,626 1,471,027Net increase in cash and cash (1,147,636) 6,795,741equivalentsCash and cash equivalents, end of period 3,797,990 8,266,768 This information is provided by RNS The company news service from the London Stock Exchange