26 Aug 2008 07:00
32Red Plc
("32Red'' or ''the Company")
Interim results for the six months ended 30 June 2008
32Red Plc, the award-winning online gaming operator, today reports interim results for the half year ended 30 June 2008.
As detailed in the trading update issued on 23 July 2008, the Board has been pleased with the Company's performance during the first six months of 2008. The Company has enjoyed a record level of Gross Win for the period and as a result of its cost effective marketing, has experienced significant growth in Gross Profit Margins, resulting in improved profit before taxation.
All comparatives are for continuing 32Red operations and exclude any results derived from the Betdirect business, sold on 30 October 2007.
Highlights:
Total gaming revenues of £6.6m, an increase of 26% on H1 2007 and 32% on H2 2007
EBITDA before share option costs totalled £1.0m for the first 6 months, up 17% on H1 2007 and up 13% on H2 2007
Casino revenues of £6.0m, an increase of 31% on H1 2007 and 38% on H2 2007
Active casino players in the first 6 months : 12,283, up 14% on H1 2007 and up 9% on H2 2007
Casino yield per active player in the first 6 months : £491, up 15% on H1 2007 and up 26% on H2 2007
New casino players in the first 6 months: 8,189, up 12% on H1 2007 and up 12% on H2 2007
Casino cost per acquisition in the first 6 months of £137, down 12% on H1 2007 and down 3% on H2 2007
Successful launch of 32Red Bingo product in May 2008
Successful launch of 32Red mobile phone gaming platform and a French language casino service
Key Performance Indicators:
| H1 2008 | H2 2007 | H1 2007 | |
| Casino Revenues | £6.0m | £4.4m | £4.6m |
| Active Players | 12,283 | 11,238 | 10,818 |
| Casino Yield per active player | £491 | £390 | £426 |
| New casino players | 8,189 | 7,304 | 7,291 |
| Cost per acquisition | £137 | £140 | £155 |
| Poker Revenues | £0.6m | £0.6m | £0.6m |
| Active Players | 8,668 | 8,802 | 10,662 |
| Poker Yield per player | £64 | £68 | £57 |
| Total Group Revenues | £6.6m | £5.0m | £5.2m |
| Active Players | 20,951 | 20,040 | 21,480 |
| Group Yield per active player | £314 | £249 | £243 |
| PBT before share option costs | £0.9m | £0.8m | £0.7m |
| EBITDA before share option costs | £1.0m | £0.9m | £0.8m |
Ed Ware, CEO commented:
"I am pleased to report an excellent performance during the first half of the year. The re-focusing of our efforts to accelerate the growth of the 32Red business has delivered immediate results, both in terms of revenue growth and improved bottom line profit. The strong growth in the 32Red casino has been driven by both increased active player numbers and an improved yield per player. The positive current trading leads the Board to conclude that prospects for the year are very encouraging.
In addition to the successful launch of a mobile phone gaming service, we have introduced an integrated Bingo offering and a French language casino during the first half of the year. We continue to investigate possible new gaming-related products to add to our existing portfolio, although we remain focused on taking 32Red's Casino business to the next level.'
26 August 2008
Enquiries:
| 32Red Plc | Tel: 00 35 049 396 |
| Ed Ware, CEO | |
| Jon Hale, Finance Director | |
| Numis Securities | Tel: 020 7260 1000 |
| Lee Aston, NOMAD | |
| Chris Wilkinson, Corporate Broking | |
| College Hill Associates | Tel: 020 7457 2020 |
| Matthew Smallwood | |
| Jamie Ramsay |
Performance Summary
Trading during the first six months of 2008 has been encouraging with total Gaming Revenues of £6.6m, an increase of 26% on H1 2007 and an increase of 32% on H2 2007. EBITDA before share option costs was £1.0m, up 17% on H1 2007 and up 13% on H2 2007.
This strong performance has been driven by 31% growth in casino revenues and is a direct result of the re-focus by management on the core 32Red product following the disposal of Betdirect.
Casino
Casino operations have delivered strong growth in H1 2008 with Gross Win of £6.0m, up 31% on H1 2007 and up 38% on H2 2007. 32Red Casino continues to dominate the Group's trading, representing 92% of total group revenues and remains central to our growth plans. The impressive growth in Casino revenues reflects the double-digit percentage growth in both player numbers and in yield per player.
The number of active casino players during the six months totalled 12,283, up 14% on H1 2007 and up 9% on H2 2007. New players attracted during the period totalled 8,189 up 12% on H1 2007 and were acquired at a lower cost of £137 (H1 2007: £155), reflecting the Group's cost-effective approach to marketing.
Player yield per active player was £491 during the period, up 15% on H1 2007 and up 26% on H2 2007. 32Red consistently delivers yields in excess of industry averages and casino players continue to be loyal to 32Red in recognition of the unrivalled customer service delivered by our dedicated Player Support team. 32Red's fifth consecutive Casinomeister Best Casino Award is unprecedented and testament to the quality of the service delivered by 32Red.
Poker
Poker operations have generated revenues of £0.6m (H1 2007: £0.6m) representing just 8% of total Group revenues. The board continues to evaluate all aspects of the 32Red Poker experience in an increasingly competitive poker market.
Poker yield per player totalled £64 during H1 2008, an increase of 12% on H1 2007. The number of active poker players decreased to 8,668 in H1 2007, down 19% on H1 2007, but in line with the 8,802 active players in H2 2007.
Bingo
32Red Bingo was launched during May 2008 and initial results from a small television advertising campaign are encouraging, confirming our belief that the 32Red brand sits comfortably as a bingo proposition and has potential. While it is too early to assess the likely financial impact of the Bingo product on the group, the opportunities presented by cross-selling of instant win games and mini slots are a source of encouragement.
Strategy
Core 32Red products - 32Red brand recognition continues to be strong and the Board believes that significant growth opportunities remain in the UK and selective European markets. The prominent sponsorship of Aston Villa Football Club ceased as planned in May 2008 and while the benefits of this sponsorship will be felt for some time to come, other advertising opportunities have become more attractive in the UK following the full
implementation of the Gambling Act in September 2005.
New 32Red products - The Board intends to promote its 32Red Bingo product with a targeted marketing campaign in the autumn, following the launch of complementary instant win and mini slot games on the site. The Board is pleased with the initial uptake of its mobile casino service, launched in February 2008 and will continue to monitor technological developments in this field. The Board is currently in negotiations with third parties which may lead to further product differentiation in the coming months.
New Territories - During H1 2008, the Company launched a 32Red French language service and is currently considering legislative developments in other European countries. The Company continues to evaluate market-specific activities in the Far East and will provide further updates on these opportunities in due course. The Board believes that the 32Red brand identity and its values have the potential to establish a stronger presence in territories outside of the United Kingdom.
Current Trading
The second half of the year has started encouragingly with Group Gross Win for the 7 weeks ended 18 August 2008 up 22% on the corresponding period in 2007. The year on year growth is driven by the continued excellent performance of the 32Red casino during the traditionally quieter summer months.
The positive current trading performance allied with the exciting opportunities presented by new products and new territories, has led the Board to conclude that prospects for the full year are very encouraging.
32Red Plc
Consolidated Income Statement
for the six months ended 30 June 2008
| Notes | Six months ended 30 June 2008 | Six months ended 30 June 2007 | ||
| Unaudited | Unaudited | |||
| £ | £ | |||
| Net gaming wins | 6,577,856 | 5,218,118 | ||
| Cost of sales | (4,274,869) | (3,707,600) | ||
| Gross Profit | 2,302,987 | 1,510,518 | ||
| Administrative expenses | (1,383,149) | (757,516) | ||
| Other operating expenses | (64,655) | (26,531) | ||
| Share option costs | (78,176) | (40,936) | ||
| Operating profit | 777,007 | 685,535 | ||
| Finance income | 47,591 | 103,179 | ||
| Finance costs | (33,088) | (143,209) | ||
| Profit on ordinary activities before taxation | 791,510 | 645,505 | ||
| Tax on ordinary activities | 3 | (450) | (450) | |
| Loss on discontinued operation | - | (11,099,229) | ||
| Profit / (Loss) for the period | 791,060 | (10,454,174) | ||
| Earnings / (Loss) per share (p) | ||||
| Basic | 2 | 1.1p | (16.8p) | |
| Diluted | 2 | 1.1p | (16.8p) | |
32Red Plc
Consolidated Balance Sheet
as at 30th June 2008
| Six months ended 30-Jun 2008 Unaudited | Six months ended 30-Jun 2007 Unaudited | |||||
| Notes | £ | £ | ||||
| Assets | ||||||
| Non-current | ||||||
| Intangible assets | 4 | 187,511 | 188,408 | |||
| Tangible assets | 5 | 397,659 | 510,381 | |||
| 585,170 | 698,789 | |||||
| Current assets | ||||||
| Trade and other receivables | 222,394 | 299,382 | ||||
| Assets classified as held for sale | - | 5,200,000 | ||||
| Cash and cash equivalents | 1,926,668 | 3,797,990 | ||||
| 2,149,062 | 9,297,372 | |||||
| Total assets | 2,734,232 | 9,996,161 | ||||
| Equity | ||||||
| Equity attributable to shareholders of 32Red Plc | ||||||
| Called up share capital | 138,250 | 137,600 | ||||
| Share premium | 14,165,276 | 14,055,532 | ||||
| Share option reserve | 254,728 | 273,476 | ||||
| Retained earnings | (15,791,451) | (14,326,335) | ||||
| Total equity | (1,233,197) | 140,323 | ||||
| Liabilities | ||||||
| Non - current |
| |||||
| Bank loan due after one year | - | 1,708,333 | ||||
| Current | 3,967,429 | 8,147,505 | ||||
| Total liabilities | 3,967,429 | 9,855,838 | ||||
| Total equity and liabilities | 2,734,232 | 9,996,161 | ||||
32Red Plc
Consolidated Statement of Cash Flows
for the six months ended 30 June 2008
| Six months ended 30-Jun 2008 Unaudited | Six months ended 30-Jun 2007 Unaudited | ||
| £ | £ | ||
| Operating activities | |||
| Results for the year before interest and after tax | 776,557 | (10,414,144) | |
| Amortisation | 32,234 | 877,393 | |
| Depreciation | 109,633 | 384,998 | |
| Change in trade and other receivables | 657,820 | 49,052 | |
| Change in trade and other payables | (1,545,025) | (486,714) | |
| Share options costs | 78,176 | 40,936 | |
| Loss recognised on measurement to fair value | - | 8,136,315 | |
| 109,395 | (1,362,164) | ||
| Investing activities | |||
| Additions to other intangible assets | (49,007) | 30,625 | |
| Additions to tangible assets | (43,974) | (496,837) | |
| Interest received | 47,591 | 103,179 | |
| (45,390) | (363,033) | ||
| Financing activities | |||
| Proceeds from share issue | - | 3,000,000 | |
| Share issue costs set against equity | - | (324,646) | |
| Share options exercised | 3,750 | 3,750 | |
| Proceeds from borrowings | 500,000 | - | |
| Repayment of bank loans | - | (1,958,334) | |
| Interest paid | (33,088) | (143,209) | |
| 470,662 | 577,561 | ||
| Cash and cash equivalents, beginning of period | 1,392,001 | 4,945,626 | |
| Net increase in cash and cash equivalents | 534,667 | (1,147,636) | |
| Cash and cash equivalents, end of period | 1,926,668 | 3,797,990 |
Notes:
1. Accounting policies
The consolidated financial statements have been prepared in accordance with the measurement principles of applicable International Financial Reporting Standards as adopted by the EU and International Financial Reporting Standards as issued by the International Financial Reporting Standards Board (IFRS). The accounting policies have remained unchanged from the previous year, as set out in the Annual Report for the year ended 31 December 2007, available on www.32redplc.com.
2. Earnings per share
Basic earnings per share have been calculated by dividing the net results attributable to ordinary shareholders by the weighted average number of shares in issue during the relevant financial periods.
The weighted average number of shares used for basic earnings per share amounted to 69,083,563 shares (2007: 62,120,833).
To calculate the diluted earnings per share figure, the weighted average of employee share options expected to vest has been added. This number represents management's best estimate at the balance sheet date, which is also used for calculating employee payments relating to share based payment transactions. At 30 June 2008, the weighted average number of share options expected to vest was 3,245,707 (2007:1,566,796).
| Six months ended | Six months ended | |||
| 30-Jun | 30-Jun | |||
| 2008 | 2007 | |||
| £ | £ | |||
| Net profit / (loss) attributable to ordinary shares | 791,060 | (10,454,174) | ||
| Weighted average number of ordinary shares: | ||||
| for basic earnings for diluted earnings | 69,083,563 | 62,120,833 | ||
| 72,329,270 | 63,387,629 | |||
| Basic earnings per share | 1.1p | (16.8p) | ||
| Diluted earnings per share | 1.1p | (16.8p) | ||
| Weighted average number of ordinary shares for basic earnings | 69,083,563 | 62,120,833 | ||
| Share options | 3,245,707 | 1,566,796 | ||
| Weighted average number of ordinary shares for diluted earnings | 72,329,270 | 63,687,629 |
3. Taxation
| Six months ended | Six months ended | |||
| 30-Jun | 30-Jun | |||
| 2008 | 2007 | |||
| £ | £ | |||
| Tax on profit on ordinary activities | 450 | 450 |
The Company has been granted tax exempt status under the Companies (Taxation and Concessions) Act. Under the terms of such status an annual charge of £450 is payable to the Government of Gibraltar. Provided the Company complies with the necessary criteria, payment of such charges will satisfy the company's tax obligation in Gibraltar in relation to the period.
4. Intangible assets
| Website Development | Software License | Total | ||||
| £ | £ | £ | ||||
| Cost | ||||||
| At 1 January 2008 | 210,905 | 180,020 | 390,925 | |||
| Additions | 12,899 | 36,108 | 49,007 | |||
| At 30 June 2008 | 223,804 | 216,128 | 439,932 | |||
| Amortisation | ||||||
| At 1 January 2008 | 128,383 | 91,804 | 220,187 | |||
| Provided during the period | 21,768 | 10,466 | 32,234 | |||
| At 30 June 2008 | 150,151 | 102,270 | 252,421 | |||
| Net book value | ||||||
| At 30 June 2008 | 73,653 | 113,858 | 187,511 | |||
| At 30 June 2007 | 82,522 | 105,886 | 188,408 | |||
5. Property, plant and equipment
| Motor Vehicles | Computer and Office Equipment | Leasehold Improve-ments | Total | ||||
| £ | £ | £ | £ | ||||
| Cost | |||||||
| At 1 January 2008 | 132,795 | 915,447 | 46,696 | 1,094,938 | |||
| Additions | - | 12,554 | 31,420 | 43,974 | |||
| At 30 June 2008 | 132,795 | 928,001 | 78,116 | 1,138,912 | |||
| Depreciation | |||||||
| At 1 January 2008 | 66,543 | 546,840 | 18,237 | 631,620 | |||
| Charge for the period | 13,280 | 89,763 | 6,590 | 109,633 | |||
| At 30 June 2008 | 79,823 | 636,603 | 24,827 | 741,253 | |||
| Net book value | |||||||
| At 30 June 2008 | 52,972 | 291,398 | 53,289 | 397,659 | |||
| At 30 June 2007 | 66,252 | 415,670 | 28,459 | 510,381 |