TTR.L Regulatory News (TTR)

31 Aug 2006 07:01

32Red Plc31 August 2006 32Red Plc("the Company") Interim results for the six months ended 30th June 2006 32Red Plc, the award-winning online casino, poker and sportsbetting operator,that derives 92% of its revenues outside the USA, today reports interim resultsfor the half year ended 30 June 2006, which include the figures and KPI'sreported in the Group's pre-close statement on 11 July 2006. Key financials: • Total revenues up 48% on H1 2005 to £ 6.2 million • Casino revenues of £5.0m, an increase of 27% on H1 2005 • Poker revenues rose by 134% against the prior half year to £0.6 million • Bet Direct revenues, derived from 3 weeks of ownership were £0.6m • 92% of revenues from outside of the United States • 32Red Casino and Poker PBT of £1.1m (2005: £1.0m) • Group PBT of £0.51m including Bet Direct operations to 30th June 2006 • Trading since 30 June has been mixed and may result in market expectations for the full year not being met • Casino slower than anticipated to recover from World Cup, but now encouraging signs • Poker showing revenue growth in July and August • In common with other bookmakers, Sportsbetting suffered a difficult Goodwood Meeting Key Performance Indicators: • Total active customers grew to 44,539 (2005: 8,832) - Casino active players - 9,556, up 63.41 % on 2005 - Poker active players - 9,936, up 232.98 % on 2005 - Bet Direct active customers - 25,047 active (since 7th June) • Total new casino and poker players increased by 125.16 % to 13,253 (2005: 5,886) • Total new Bet Direct customers of 2,904 (since 7th June) • Average 32Red Casino player yields of £420 per quarter in H1 2006 • Quarterly 32Red Poker revenue per active player of £48 in H1 2006 • 32Red Casino Cost per Acquisition (CPA) of real money players of £160, 32Red Poker CPA of £31, Combined 32Red CPA of £63 Ed Ware, CEO commented: "Despite the negative influence of the World Cup inJune, the 32Red online gaming business has shown revenue growth in the periodand our Key Performance Indicators demonstrate encouraging trends for thefuture. However trading in the second half to date has not recovered as quicklyas anticipated from the gaming industry-wide World Cup slowdown. We believe thatthe acquisition of Bet Direct in June will significantly enhance the scale anddiversity of the business although a tough Goodwood and the one-off costs andexpenses incurred have impacted our profitability. We are confident that 2007 and beyond present significant opportunities for thenew enlarged group and that our strategy of marketing to our main market, theUnited Kingdom, with the full complement of betting and gaming products will bea foundation for continuing progress and further success". 31 August 2006 Enquiries 32Red plc Tel: 00 35 049 396Ed Ware, CEOSimon Dimmer, Finance Director College Hill Associates Tel: 020 7457 2020Matthew Smallwood Notes to Editors 32Red is an award-winning online casino and poker operator licensed, regulatedand based in Gibraltar. The Company is allied to best of breed partnersincluding Microgaming Software Systems, BarclayCard Merchant Services andGibTele.Com. For the past 3 years 32Red has been awarded Best Casino by Watchdogand Player Advocate site Casinomeister. The Company attracts players from around the world but has a predominantly UKplayer base, with 74% of revenues at www.32red.com and www.32redpoker.com comingfrom the UK. On 23rd September 2005 the Company listed on the London Stock Exchange'sAlternative Investment Market. In the first half of 2006 the Company completedthe acquisition of UK sportsbetting and gaming firm, Bet Direct, and becameofficial main club sponsor to FA Premiership Club Aston Villa. Performance Summary Casino operations showed a 27% increase in gross win over the first half of 2005despite a dip in volumes throughout the period of the World Cup in June. Thenumber of active players in the period grew by over 60%; however the averagevalue of each player showed a drop to £523. This key area of yield per playercontinues to receive close attention although with the significant uplift inplayer numbers, a fall in yields was anticipated. 32Red recruited over 6,000 newreal money casino players in the first half of 2006. The cost of acquiring newplayers fell from £176 in the second half of 2005 to £160 in this period. OurCPA figures include all costs associated with external marketing spend includingaffiliate commissions. The 32Red Poker Room continues to grow substantially from its low base in 2005.The first half of 2006 saw revenues more than double, active players and newplayers more than triple. Nevertheless, we have experienced a softer performancethan anticipated with the 2005 growth path not continuing. Market factors suchas the launch of the Swedish Government's online poker room and aggressiverakeback offers from competitors have impacted revenues negatively from midMarch onwards. The 2006 World Cup resulted in a material decline in activitylevels in the month of June. Bet Direct was acquired on 7th June 2006 for a total consideration of £12.5m(less customer balances). Bet Direct offers online, interactive TV, mobile andtelephone based sportsbetting, as well as remote gaming products. During thethree weeks of ownership within the period, both Royal Ascot and the World Cupwere traded by the company. Gross Win from sportsbetting activities was £100kbehind plan with business taken at Royal Ascot producing a small negativemargin. World Cup performance during the period was successful and yielded a9.8% gross win margin. Expenses attributed to the initial integration andacquisition of Bet Direct have been allocated to June's accounts. Strategy Our focus remains on the United Kingdom and 74% of revenues are derived fromthat market. European revenues for the period amounted to 11%. Our US exposureis low at 8% and is limited to 32Red gaming platforms only, with payments alsobeing limited to electronic wallet transactions. Bet Direct revenues originatealmost completely from the UK, US players are prohibited entirely. This stancewill continue. Overall, 92% of the group's revenues come from outside the UnitedStates, a figure which will increase as Bet Direct revenues form a larger partof our income. We continue to focus marketing at the UK market both online andoffline and our sponsorship of Aston Villa FC is a measured and significant stepforward for the 32Red brand. Early signs are that the partnership will be acommercial success for the Company. The completion of the Bet Direct acquisition closes the initial phase of ourmove into sportsbetting and providing our customers with a full suite of remotegambling products. Whilst much remains to be done to develop and optimise theBet Direct business, we are pleased with the acquisition and are encouraged bythe opportunities presented by it. The passion for delivering excellent servicecontinues to be our focus in driving performance across all of our platforms,along with growing our profile in the UK through value for money marketing dealsand activity. Board Changes We continue to strengthen the team at Executive Director level in order to meetthe needs of the business and our expanding portfolio of activities. MartinSaunders, 46, joins the Company in October as Trading Director with directresponsibilities over Sportsbetting trading activities. Martin has over 20 yearsexperience with Ladbrokes, most recently as Managing Director of LadbrokesInternational Limited in Gibraltar. Our current Finance Director, Simon Dimmeris leaving the Company for family reasons and departs in October. Simon hasserved the Company tirelessly over the past 3 years and leaves 32Red onexcellent terms and the Board wishes him and his family the very best for thefuture. We expect to make an announcement regarding a new Finance Directorshortly. Outlook Work continues apace on Bet Direct services, most notably a revamped onlinesportsbook service, a Microgaming powered online casino and poker room, and areview of existing channels including interactive TV activities. DashCasino.com,a second casino brand, has been developed and positioned behind our flagship32Red casino proposition. Dash launched in August and our new Bet Direct onlinegaming platforms are being soft-launched at the time of writing. Once complete,gaming services will be operated from Gibraltar (the inherited Boss Mediapowered Bet Direct casino and poker continue to operate from Curacao),maximising our valuable Gibraltar licence, support team and operating systems. Our Internet Sportsbook, BetDirect.net will be relocated to Gibraltar in earlySeptember and work is well underway to completely overhaul the existing onlinebetting service. We believe that a significant amount of further revenue can begenerated by these Internet services and we are looking forward to growth inthis area. An operational review of Bet Direct activities in Liverpool has been concludedto ensure that the business is optimised and that synergies across the group canbe identified and implemented in a sensible and timely manner. Trading Update Casino gaming revenues remained subdued in July although active players, newplayer recruitment and gross win all improved on June's performance. We believethat the effects of the final stages of the World Cup taking place along withfine weather in the United Kingdom have impacted performance. August is strongerfor our UK casino with new player recruitment and active player levels beingparticularly pleasing. 32Red Poker, which we reported previously as being slow, recovered in July andshowed revenue growth ahead of the previous 3 months. August has seen anextension of that trend and is ahead of all previous months as at close ofbusiness 25th August 2006. In common with other bookmakers, Bet Direct suffered a difficult trading periodaround the Glorious Goodwood racing meeting (accounted for in July). August hastraded extremely positively at Bet Direct in the month to date. After taking these factors into account and having reviewed the currentsituation, the Board has concluded that market expectations for the year ending31st December 2006 may not be met. However, we are confident that 2007 andbeyond present significant opportunities for the new enlarged group and that ourstrategy of marketing to our main market, the United Kingdom, with the fullcomplement of betting and gaming products will be a foundation for continuingprogress and further success. 32Red Plc Consolidated Income Statement for the six months ended 30 June 2006 Six months Six months Year ended ended ended 30-Jun 30-Jun 31-Dec 2006 2005 2005 Unaudited Unaudited Audited Notes £ £ £Net gaming wins 6,211,797 4,216,450 9,770,770Cost of sales (4,178,996) (2,564,101) (6,280,899)Gross Profit 2,032,801 1,652,349 3,489,871Distribution costs - - -Administrative expensesOther administrative expenses (1,561,505) (680,581) (1,505,325)IPO related costs - - (718,414)Other operating income 4,773 9,904 22,831Operating Result 476,069 981,672 1,288,963Finance income 60,968 6,055 11,501Finance costs (25,272) - -Profit on ordinary activities before taxation 511,765 987,727 1,300,464Tax on ordinary activities 3 (450) (225) (225)Profit after taxation for the period 511,315 987,502 1,300,239 Earnings per share (£) 2Basic 0.010 0.021 0.028Diluted 0.010 0.020 0.027 32Red Plc Consolidated Balance Sheet as at 30th June 2006 Six months ended Six months ended Year ended 30-Jun 30-Jun 31-Dec 2006 2005 2005 Unaudited Unaudited Audited Notes £ £ £AssetsNon-currentGoodwill 4 4,754,557 - -Intangible assets 4 8,681,798 163,966 168,165Tangible assets 5 1,439,428 455,304 425,718 14,875,783 619,270 593,883Current assetsTrade and other receivables 1,109,249 57,347 297,283Cash and cash equivalents 8,266,768 1,624,805 1,471,027 9,376,017 1,682,152 1,768,310 Total assets 24,251,800 2,301,422 2,362,193 EquityEquity attributable to shareholders of 32RedPlcCalled up share capital 112,550 94,200 94,871Share premium 11,408,077 855,800 942,629Share option reserve 140,280 20,312 99,344Retained earnings 352,701 328,663 (158,614) Total equity 12,013,608 1,298,975 978,230 LiabilitiesNon-currentBank Loan due after one year 4,333,333 - - CurrentOther employees obligations 185,498 53,390 60,128Bank Loan due within one year 2,166,667Trade and other payables 5,552,694 949,057 1,323,835 7,904,859 1,002,447 1,383,963 Total liabilities 12,238,192 1,002,447 1,383,963 Total equity and liabilities 24,251,800 2,301,422 2,362,193 32Red Plc Consolidated Statement of Cash Flows for the six months ended 30 June 2006 Six months Six months ended Year ended ended 30-Jun 31-Dec 30-Jun 2005 2005 2006 Unaudited Unaudited Audited £ £ £Operating activitiesResults for the year before interest and tax 476,069 981,672 1,288,963Amortisation 26,612 17,128 35,559Depreciation 116,138 67,015 125,576Loss on disposal of fixed assets 915 - -Change in trade and other receivables (274,994) (20,462) (260,398)Change in trade and other payables 1,217,005 192,498 574,014Share options granted 40,936 13,404 93,122Taxes paid (450) (225) (225) 1,602,231 1,251,030 1,856,611Investing activitiesAcquisition of subsidiaries (11,624,430) - -Additions to other intangible assets (50,717) (21,519) (44,149)Additions to tangible assets (150,166) (238,336) (267,311)Interest received 60,968 6,055 11,501 (11,764,345) (253,800) (299,959)Financing activitiesProceeds from share issue 11,287,263 - 302,500Share issue costs set against equity (804,136) - (215,000)Increase in bank loans 6,500,000 - -Interest paid (25,272) - -Dividends paid - (659,400) (1,460,100) 16,957,855 (659,400) (1,372,600) Cash and cash equivalents, beginning of period 1,471,027 1,286,975 1,286,975Net increase in cash and cash equivalents 6,795,741 337,830 184,052Cash and cash equivalents, end of period 8,266,768 1,624,805 1,471,027 Notes: 1. Basis of preparation The consolidated interim financial statements have been prepared in accordancewith IAS 34 "Interim Financial Reporting". A summary of the accounting policiesapplied in the preparation of the interim financial statements is given below.These policies have been consistently applied to all the periods presented andremain unchanged from the financial statements for the year ended 31 December2005. 2. Earnings per share Basic earnings per share have been calculated by dividing the net profitattributable to ordinary shareholders by the weighted average number of sharesin issue during the relevant financial periods. On 23 September 2005, the dateof flotation, each £1 share was split into 500 £0.002 ordinary shares. The weighted average number of shares used for basic earnings per share amountedto 56,275,000 shares (2005: 47,100,000 restated) To calculate the diluted earnings per share figure, the weighted average ofemployee share options expected to vest have been added. This number representsmanagement's best estimate at the balance sheet date, which is also used forcalculating employee payments relating to share based payment transactions. At30 June 2006, 1,867,500 shares (2005: 1,437,500 shares restated) were expectedto vest. Six months Six months Year ended ended ended 30-Jun 30-Jun 31-Dec 2006 2005 2005 £ £ £Net profit attributable to ordinary shares 511,315 987,502 1,300,239 Weighted average number of ordinary shares:for basic earnings 49,942,664 47,100,000 47,180,999for diluted earnings 51,589,706 48,248,500 48,681,381Basic earnings per share 0.010 0.021 0.028 Diluted earnings per share 0.010 0.020 0.027 Weighted average number of ordinary shares for basic 49,942,664 47,100,000 47,180,999earningsWeighted average options 1,647,042 1,148,500 1,500,382Weighted average number of ordinary shares for diluted 51,589,706 48,248,500 48,681,381earnings 3. Taxation Six months Six months Year ended ended ended 30-Jun 30-Jun 31-Dec 2006 2005 2005 £ £ £Tax on profit on ordinary activities 450 225 225 The company has been granted tax exempt status under the Companies (Taxation andConcessions) Ordinance. Under the terms of such status an annual charge of £450(2005: £225) is payable to the Government. Provided the company continues tosatisfy the necessary criteria it should continue to benefit from tax exemptstatus until 31 December 2010 in accordance with an agreement reached betweenthe Government of Gibraltar and the EU Commission. 4. Intangible assets Goodwill Domain Names & Website Software Total Players Database Development License £ £ £ £ £CostAt 1 January 2006 - - 107,822 172,636 280,458Additions - - 50,717 - 50,717Acquisition of Bet 4,754,557 8,200,000 - 657,806 13,612,363DirectDisposals - - - - -At 30 June 2006 4,754,557 8,200,000 158,539 830,442 13,943,538 AmortisationAt 1 January 2006 - - 55,150 57,143 112,293Provided during the - - 12,498 14,114 26,612periodProvided on assets - - - 368,278 368,278from Bet DirectAt 30 June 2006 - - 67,648 439,535 507,183 Net book valueAt 30 June 2006 4,754,557 8,200,000 90,891 390,907 13,436,355At 30 June 2005 - - 40,187 123,779 163,966 5. Property, plant and equipment Motor Computer and Office Leasehold Total Vehicles Equipment Improvements £ £ £ £CostAt 1 January 2006 110,000 568,308 20,811 699,119Additions - 150,166 - 150,166Acquisition of Bet Direct - 1,939,133 46,374 1,985,507Disposals - (1,098) - (1,098)At 30 June 2006 110,000 2,656,509 67,185 2,833,694 DepreciationAt 1 January 2006 29,687 238,115 5,599 273,401Charge for the period 11,000 102,284 2,854 116,138Acquisition of Bet Direct 998,396 6,514 1,004,910On disposals - (183) - (183)At 30 June 2006 40,687 1,338,612 14,967 1,394,266 Net book valueAt 30 June 2006 69,313 1,317,897 52,218 1,439,428At 30 June 2005 91,323 347,037 16,944 455,304 This information is provided by RNS The company news service from the London Stock Exchange