TTR.L Regulatory News (TTR)

2 Mar 2006 07:01

32Red Plc02 March 2006 32Red Plc("32Red" or "the Company") Maiden Preliminary resultsYear ended 31 December 2005 32Red announces 67% rise in revenues 32Red Plc, the UK focused online gaming company, announces its maidenpreliminary results for the year ended 31 December 2005. The Company was listedon the Alternative Investment Market on 23 September 2005. 82% of 32Redcustomers are based in the UK and Ireland. Financial highlights • Gaming revenues up 67% to £9.77m (2004: £5.87m) - Casino revenues up 57% to £8.94m (2004: £5.68m) - Poker revenues up 339% against the prior year to £0.83m • Profit before interest and tax* up 82% to £2.04m (2004: £1.12m) • Basic earnings per share up 16% to 2.76 pence (2004: 2.38 pence) Key performance indicators • Total active players increased by 102% to 17,587 • Total new players recruited rose by 91% to 14,451 • Annual yield per casino player of £843 (2004: £826) • Cost per acquisition of real money players of £147 (2004: £174) Operational highlights • Japanese language 32Red casino launched • Investment in new data centre • Voted Best Casino 2005 by Casinomeister for third consecutive year * before charging IPO and share option costs Commenting on the results, Ed Ware, CEO said: "32Red has a strong UK focused brand that continues to attract new players anddeliver growth for shareholders. The Company had an excellent 2005 and thecurrent year has begun well on all fronts. 32Red is a highly scaleable businesswith the capacity to grow organically and via acquisition. Being a listedcompany brings many benefits and we intend to make full use of our PLC status inthe coming months." 2 March 2006 Enquiries 32Red plc Tel: 00 350 49 396Ed Ware, CEO College Hill Tel: 020 7457 2020Matthew Smallwood/Tom Baldock Chairman's statement 2005 was a momentous year for 32Red. The Company significantly developed itscasino and poker businesses during the financial year and on the 23rd ofSeptember 2005, listed on the Alternative Investment Market. The Company ispleased to be quoted on the Alternative Investment Market on the London StockExchange and is well positioned to utilise and benefit from its PLC status. Financial review The continuing success of 32Red was marked in 2005 by growth in gaming revenuesof 67% to £9.77m (2004: £5.87 m). This performance was driven by strong growthin Internet casino revenue and supported by an increasing contribution from the32Red poker room. The total number of players placing a real money bet duringthe year increased during the year by 102% to 17,587 (2004: 8,723), and totalnew real money players recruited rose by 91% to 14,451 (2004: 7,567). Casino revenues continued to grow in 2005, showing 57% growth to £8.94m (2004:£5.68m). 32Red's poker product grew rapidly in 2005, generating revenues of£0.83m during the year. The executive team maintains a clear focus with regard to costs. A significantelement of 32Red's expenditure is variable. External software provision isentirely dependent on revenue generation and marketing costs are closely managedin line with business performance. The management of effective internal andexternal marketing expenditure has gone hand-in-hand with the growth in thecasino and poker revenues in 2005. We have also been able to spend tactically oncampaigns and have adapted quickly to opportunities in the market. We continue to invest in the highest quality personnel who interact directlywith players in order that 32Red maintains the excellent standard of service forwhich we are known. We have also invested in a new data centre at ourheadquarters in Gibraltar. This project was successfully completed earlier inthe year and now affords us greater scalability and full disaster recoveryprotection. PBIT for the year prior to IPO and share option costs was £2.04m (2005 operatingprofit of £1.29m is stated after charging IPO costs of £718k and share optioncosts of £35k.) This figure was in line with management expectations. Earningsper share - after IPO and share option costs - were 2.76 pence in 2005 (against2.38 pence in 2004). 32Red continues to generate significant amounts of cash and the balance sheet isstrong. We will ensure that our future dividend policy will be compatible withour commitment to invest in the future development of the Company. Strategy The industry took huge strides forward on a number of fronts in 2005. Theintroduction of more companies to the public markets combined with regulatoryadvances in the United Kingdom significantly increased the profile of gamblingin general and Internet gaming in particular. 32Red is very much a UK-centric business and 82% of our revenues came from thismarket. The executive team is well equipped to further the Company's UKaspirations and the Board intends to pursue a UK marketing focus in 2006. At the same time, we will look to enhance our future prospects by extending thereach of our brand in overseas markets, including Japan and continental Europe.To this end a Japanese language 32Red casino was launched towards the end of2005. We will also continue to look at opportunities to grow and broaden 32Red'srevenue streams through acquisition. We are confident that the technology, the platform and most importantly thepeople are in place for the Company to take advantage of opportunities withinthe wider gambling sector and also to exploit further the strength of the 32Redbrand. Board The Board is pleased to welcome Edward Andrewes to the team. Ed joined 32Red on9 February 2006 in the role of Development Director. Ed's experience andexpertise in the betting and gaming world will be a major asset to the Companyas we move forward and aim to take advantage of business opportunities withinthe remote gambling sector. The formation of three important committees supports our corporate governancepolicies. In addition to Audit and Remuneration Committees we have alsoinstituted a Responsible Gambling Committee, consisting of Chairman PatrickHarrison, Operations Director and non-executive directors John Hodgson and DavidFish, QC. This committee will review our policies and procedures aroundresponsible gambling on a regular basis with the objective of ensuring that theCompany maintains its proactive stance in this area. Its first meeting will beheld on the 30th of March 2006. The professionalism and dedication of all our employees has shone through inthis pivotal year for the Company and on behalf of the Board I would like toexpress my sincere gratitude and appreciation for their unstinting efforts. Outlook The outlook is positive for 32Red with trading in the early part of 2006 buoyantand both the casino and poker businesses flourishing. The Board looks forward to32Red making good progress with its strategic objectives and achieving furthergrowth in 2006. David Fish QCChairman, 32Red Plc CEO's statement 2005 saw 32Red continue along its profit plan path thanks to strong performancesin both our casino and poker products. Our profile has steadily increased bothon and offline and we are pleased to deliver profits in line with expectationsfor the year. 32Red's reputation is founded on top class service and the operations team haveensured our good name amongst the players has been maintained this year. As anInternet-based business, advertising and marketing effectiveness will remain avital part of our growth prospects, but we also greatly value word of mouthrecommendation. The high levels of service we deliver not only generateexcellent yields per player, but also drive new player recruitment thanks topersonal referrals from existing 32Red customers. This was reflected in positive Key Performance Indicator trends during 2005.Total active players during the year grew by 102% to 17,587. Casino activeplayers were up 54% to 10,605 (2004: 7,567), while poker players rose by 277%,(albeit from a low base) to 6,982(2004 1,851). The annual yield per player forcasino grew to £843 (2004: £826) and for poker the increase was from £102 to£117. We are particularly pleased with the Company's yield per casino playerperformance, which compares favourably with industry averages. Cost control focus has remained on variable expenses for the business and theprinciples central to how the business is managed in this area have guided uswell. Cost per acquisition, which is defined as total marketing spend, excludingfree bets, divided by the number of new players across both casino and pokerplatforms was £147. (2004 £174). This remains a key performance indicator forthe Company. We will continue to apply our cost metrics to budget for allvariable expenses in 2006. Our marketing spend grew by over 60% from 2004 to2005, a level of growth we intend repeating in 2006. We have made strides inbuilding our profile both on and offline in the latter part of last year and ourintention is to build on this, whilst maintaining a careful and measuredapproach to new marketing areas and techniques. The Company rolled out new and proprietary affiliate software during 2005 whichbrings benefits to our advertising partners and also aids in the management of32Red's affiliate portfolio. Already the recipient of an affiliate programmeindustry award, the Company expects its investment in the technology driving32RedAffiliates.com to continue successfully in 2006. A Japanese language 32Red Casino was launched towards the end of 2005 and workcontinues to develop our profile and service in this important territory. The 32Red Casino further established itself in the very top tier of onlinecasino operations in 2005. The addition of Japanese language software, a fourthcurrency option (Canadian Dollars) and the development of an enhanced affiliateprogramme backed up efforts in the marketing and operational fronts. Ourlifetime customer values have increased and our challenge is to maintain thislevel of performance as we grow. The recent recognition as Casinomeister's BestCasino for the third year in succession is something of which the Board and ouremployees are rightly very proud. This is a clear indication of 32Red'sexcellent reputation among online gamers. We have further established our poker product in 2005 and we have built up theservice and excitement which we offer to our poker players. New players andpoker revenues have grown accordingly. The year ahead offers us the opportunityto increase our market share and the introduction at the end of last year ofcasino games within the poker room environment will aid our efforts in thisregard. We expect to increase our poker income in 2006 through further expansion of ourmarketing programme, along with product and service development. Whilst ourperformance in 2005 was encouraging, we see significant growth opportunities forthe product both in the United Kingdom and in Europe in the coming year. Ourpartnership with Prima Poker enables us to remain at the forefront of pokersoftware development and the network provides more than adequate liquidity forour players. The level of recruitment has risen markedly over the last fewmonths and we intend to build upon this success. It is likely that 2005 will be remembered as the beginning of the next phase inremote gambling. The United Kingdom was again the centre of further regulatorydevelopment but these advances were overshadowed by some high profile corporatefinance activity in the City of London. 32Red is pleased to be very much part ofan industry generating significant profits at this early stage in itsdevelopment. It has been an excellent year for the Company and I believe we arewell positioned to achieve further strong growth in 2006. Edward WareCEO, 32Red Plc Income Statementfor the year ended 31 December 2005 2005 2004 £ £ Net gaming wins 9,770,770 5,865,877Cost of sales (6,280,899) (3,895,031)Gross Profit 3,489,871 1,970,846 Administrative expenses Other administrative expenses (1,505,325) (857,472) IPO related costs (718,414) - (2,223,739) (857,472)Other operating income 22,831 8,975Operating Result 1,288,963 1,122,349Finance income 11,501 7,648Finance costs - (10,000)Profit before taxation for the year 1,300,464 1,119,997Tax on profit on ordinary activities (225) (225)Net result for the year 1,300,239 1,119,772 Earnings per share (pence) Basic 2.8 2.4 Diluted 2.7 2.3 DividendsDividends paid in the year (pence per share) 3.08 1.67Dividends paid in the year (£) 1,460,100 786,570 32Red Plc (formerly Trafalgar Betting & Gaming Limited)Balance Sheetas at 31st December 2005 2005 2004 £ £AssetsNon-currentIntangible assets 168,165 159,575Property, plant and equipment 425,718 283,983 593,883 443,558CurrentTrade and other receivables 297,283 36,885Cash and cash equivalents 1,471,027 1,286,975 1,768,310 1,323,860 Total assets 2,362,193 1,767,418 EquityEquity attributable to shareholders of 32Red PlcCalled up share capital 94,871 94,200Share premium 942,629 855,800Share option reserve 99,344 6,908Retained earnings (158,614) 561 Total equity 978,230 957,469 LiabilitiesCurrentOther employees obligations 60,128 126,053Trade and other payables 1,323,835 683,896 Total liabilities 1,383,963 809,949 Total equity and liabilities 2,362,193 1,767,418 Approved by the board on 28th February 2006 and signed on its behalf by: Simon Dimmer Edward WareDirector Director 32Red Plc (formerly Trafalgar Betting & Gaming Limited)Statement of Cash Flowsfor the year ended 31 December 2005 2005 2004 £ £ Operating activitiesResults for the year before tax 1,288,963 1,122,349Amortisation 35,559 31,542Depreciation 125,576 77,039Increase in trade and other receivables (260,398) (4,433)Increase in trade and other payables 574,014 224,544Share options granted 93,122 6,323Taxes paid (225) (225) 1,856,611 1,457,139Investing activitiesAdditions to intangible assets (44,149) -Additions to property, plant and equipment (267,311) (192,473)Interest received 11,501 7,648 (299,959) (184,825)Financing activitiesInterest paid - (10,000)Shares issued 302,500 -Share issue costs set against equity (215,000) -Dividends paid (1,460,100) (786,570) (1,372,600) (796,570) Net increase in cash and cash equivalents 184,052 475,744Cash and cash equivalents, beginning of year 1,286,975 811,231Cash and cash equivalents, end of year 1,471,027 1,286,975 This information is provided by RNS The company news service from the London Stock Exchange