TTR.L Regulatory News (TTR)

12 Mar 2008 07:01

32Red Plc12 March 2008 32Red Plc("32Red" or "the Company") Preliminary results for the year ended 31 December 2007 32Red, the award-winning casino operator today announces preliminary results forthe year ended 31 December 2007. Key points • Return to cash generative operation following the sale of Betdirect on 10 December 2007• Underlying 32Red gaming business robust• Management refocused on returning 32Red to previous growth path• French Casino and Mobile Casino launched in February, Bingo imminent Key performance indicators Significant customer growth • Active Customers increased by 17% to 33,745• Total new Customers grew 14.3% to 25,640• Average cost per customer acquisition reduced dramatically to £87 (2006: £114) Casino • Active casino players up 26.6% to 18,992• New casino players up 19.3% to 14,586• Cost per Acquisition reduced to £137 (2006: £184) Poker • Active poker players increased to 6.6% to 14,753• New poker players up 8.2% to 11,054• Cost per Acquisition reduced to £22 (2006: £29) Financial highlights 2007 2006Net gaming win £16.36m £14.44mOperating profit from continuing operations 1.26m £1.22mProfit before tax from continuing operations 1.36m 1.39mLoss before taxation (£12.86m) (£3.74m)Loss earnings per share (20.0p) (7.0p) Current trading • Excellent start to the year with encouraging growth seen Commenting on the results Ed Ware, Chief Executive Officer, said: "The sale of Betdirect has refocused the group on its core products of Casinoand Poker and has in 2008 returned the group to a cash positive position.Management are focused on building growth, expanding our product range andmoving into new territories through the 32Red brand. We have seen a very encouraging start to 2008 with excellent growth at the 32RedCasino. We have surpassed several important milestones in the first few weeks of2008 and look forward with confidence to an exciting year." 12 March 2008 Enquiries: 32Red plc Tel: +350 49 396Ed Ware, CEO Jon Hale, Finance DirectorCollege Hill Tel: +44 (0) 020 7457 2020Matthew Smallwood Numis Securities Tel: +44 (0) 20 7260 1200Chris WilkinsonLee Aston Chairman's Statement I am pleased to set out below my review of the Directors' Report andConsolidated Financial Statements of 32Red Plc ("The Company") for the yearended 31 December 2007. Following the sale of the Betdirect business to Stan James (Gibraltar) Ltd whichwas completed on 10 December 2007, the results for 2007 and for 2006 have beenapportioned between continuing 32Red operations and discontinued Betdirectoperations. Comparatives The financial results for the continuing operations of 32Red Plc are for theyear ended 31 December 2007, with comparatives for the year ended 31 December2006. The financial results for the discontinued operations of Betdirect are forthe 49 weeks trading prior to its sale on 10 December 2007 and the comparativesare for the results for the 29 weeks from acquisition of Betdirect on 7 June2006 until 31 December 2006. For the purposes of this financial review, trade from the US prior to theenactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) has alsobeen stripped out from comparatives in this review. Financial review Net gaming wins for 32Red Plc, 32Red Ltd, Bet Direct Ltd and Bet Direct N.V (theGroup) during the year ended 31 December 2007 increased by 13.3% to £16.36m. Continuing Operations - Like for like previous year gaming wins from the 32RedCasino and Poker operations totalled £10.2m up 5.6%. The operating profit fromcontinuing operations for the year 2007 totalled £1.3m (year ended 31 December2006: £1.2m). Discontinued Operations - Net gaming wins include gross win of £6.16m fromBetdirect for the 49 weeks ended 10 December 2007 (29 weeks ended 31 December2006: £3.96m). The operating loss from discontinued operations in the 49 weeksended 10 December 2007 totalled £6.7m and the results include a loss on disposalof £7.3m (29 weeks ended 31 December 2006 operating loss: £4.9m). As a direct result of the poor performance of the Betdirect business and thesubsequent write-down of tangible and intangible fixed assets to theirrealisable value following the sale, the Group made a loss for the year of£12.9m for the year ended 31 December 2007 (2006: £3.7m). The Board does not recommend the payment of a dividend for the financial yearended 31 December 2007 (2006: nil). Sale of Betdirect Further to a strategic review of both brands and a review of potential businessdevelopment opportunities for the Company, 32Red accepted an offer of £5.75mfrom Stan James (Gibraltar) Ltd on 30 October 2007 for the intellectual propertyand certain assets of the Betdirect business. The consideration was paid asfollows: £575,000 paid on exchange of contracts on 30 October 2007; £4,675,000on completion on 10 December 2007 (including £1.9m of net player balancesassumed by Stan James); and a further £500,000 held in escrow to be paid on 10June 2008. 32Red will continue to offer an integrated online sportsbettingproduct to its customers via a white label online sports-betting servicearrangement with Stan James. Strategy Core 32Red products - 32Red continues to provide the full range of betting andgaming products which affords the Group the platform to continue to develop itsUK market presence. Brand recognition continues to be strong and advertisingopportunities have expanded considerably in the UK since 1st September and theimplementation of the Gambling Act. The sale of the Betdirect brand allows theCompany to focus marketing on the single, resonant and core 32Red brand. New 32Red products - The Board believes that the 32Red brand translates to otherproducts and the Group looks forward to the launch of its 32Red Bingo product inthe Spring. The online Bingo market has experienced rapid growth during 2007 andis now attracting a younger audience with 25% of players under 35 years old. TheCompany launched its mobile casino service in February 2008. New Territories - The Board believes that the 32Red brand identity and itsvalues have the potential to establish a stronger presence in territoriesoutside of the United Kingdom. During February 2008, the Company launched a32Red French language service and is currently considering legislativedevelopments in other European countries. The Company continues to evaluatemarket-specific activities in the Far East and will provide further updates onthese opportunities in due course. Board During the year, the Company announced the resignations of Bruno Callaghan asnon-executive Director on 10 April 2007 and Ed Andrewes as Development Directoron 20 December 2007. I would like to take this opportunity to thank both Brunoand Ed for their hard work and wish them every success in the future. Outlook The sale of the Betdirect business sees a re-focusing of the Company's effortsto accelerate the growth of the 32Red business and immediately return theCompany to a cash generative position. The re-shaped business now has theability and flexibility to expand the 32Red brand into new gaming relatedproducts and territories whilst underpinning activities with the continueddelivery of excellent service to our customers. I would like to take thisopportunity to congratulate and thank all our employees for their continued hardwork and commitment during 2007. Their enormous efforts have been recognised by32Red being named "The Best Casino of the Year" for the fifth consecutive yearby independent watchdog Casinomeister. I look forward with confidence to anexciting year in 2008. David Fish Chairman, 32Red Chief Executive's Statement 2007 has been a challenging year for the Company with the Betdirect sale tenderprocess dominating the summer months. The disposal of the Betdirect businessallows the entire 32Red team and especially senior management to focus on thecore 32Red product and moving into new territories. In the first quarter of 2008we have prepared the launch of new products including 32Red Bingo and a mobilecasino service. 32Red Key Performance Indicators Comparatives for 2006 have been restated between continuing and discontinuedBetdirect operations. For the purposes of this statement, trade from the USprior to the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA)has also been stripped out from comparatives in this review. Total revenues from Casino and Poker increased by 5.6% to £10.2m, generated froma total of 33,745 active customers during the year, up 17.0% on 2006. Total newcustomers grew to 25,640 (2006: 22,442) with average cost per acquisition downto £87 (2006: £114). Casino The 32Red Casino continues to dominate the Group's trading and is central to ourgrowth plans. Total casino revenues increased by 7.6% to £9.0m during the year,representing 88% of total Group revenues from continuing operations. The numberof active casino players during the year totalled 18,992, up 26.6% with newcasino players totalling 14,586, an increase of 19.3% over the prior year.Predictably with such a large number of new players, casino player yieldtotalled dipped 14.9% on 2006 to £474. Cost per acquisition reduced to £137 per new casino player during the year(2006: £184). The fall in cost per acquisition is pleasing and reflects theGroup's cost-effective approach to marketing. Casino customers continue to beloyal to 32Red in recognition of the unrivalled customer service delivered byour dedicated Player Support team. 32Red's fifth consecutive Casinomeister BestCasino Award is unprecedented and testament to the quality of the servicedelivered by 32Red. In 2008, 32Red intends to expand its European casino profile and we launched aFrench Language Casino service on 8 February 2008. This is the first of a numberof entries into targeted European territories and this move follows the launchof the 32Red mobile casino earlier in the 2008. Poker The number of active poker players increased to 14,753 in 2007, up 6.6% on theprior year. Cost per acquisition decreased to £22 during 2007 (2006: £29).However, in line with industry trends Poker player yield decreased to £82 (2006:£95) reflecting the increasingly competitive poker market resulting in a smalloverall decrease in Poker revenues to £1.2m, down 7.3% on 2006. We continue to evaluate all aspects of the 32Red Poker experience in the face ofcompetitive conditions. Again we will examine new European markets for poker in2008. Bingo We have long held the belief that our brand sits comfortably in the eyes ofprospective Bingo players. The arrival of the Microgaming Bingo platform nowprovides us with a solution without integration challenges and strong in theprovision of slots games. 32Red Bingo launches in March 2008. Sportsbetting Following the sale of the Betdirect business, 32Red will offer sportsbetting toits customers via a white label agreement with Stan James (Gibraltar) Limited.While the Group's strategy is to focus on the roll out of the 32Red brand to newterritories and to successfully develop its new Bingo product, a number of othersportsbetting opportunities are being evaluated. Trading Update Further to a sharpened focus on the 32Red Casino following the disposal ofBetdirect, I am pleased to report an excellent start to the year. Severalimportant milestones have been surpassed in the first part of the year andgrowth is very encouraging. We intend to make this renewed focus and ability toact nimbly and aggressively count in 2008. Edward Ware, Chief Executive Officer 32Red Plc Consolidated Income Statementfor the year ended 31 December 2007 Notes Discontinued Discontinued Operations Operations 2007 2007 2006 2006 £ £ £ £ Net gaming wins 3 6,158,708 10,206,007 3,960,863 10,482,596Cost of sales (4,419,080) (7,456,540) (2,341,935) (7,739,538) Gross Profit 1,739,628 2,749,467 1,618,928 2,743,058Administrative expenses (8,606,602) (1,492,562) (6,523,478) (1,522,871)Other operating income 208,261 - - - Operating (loss)/profit 2 (6,658,713) 1,256,905 (4,904,550) 1,220,187Finance income 4 - 104,660 - 169,071Finance costs 4 (245,136) - (229,463) -Loss recognised on sale of Betdirect 9 (7,312,466) - - - (Loss)/Profit on ordinaryactivities before taxation (14,216,315) 1,361,565 (5,134,013) 1,389,258 Tax on ordinary activities 6 - (450) 26,981 (450) Loss on discontinued operations (14,216,315) (14,216,315) (5,107,032) (5,107,032) Loss for the period (12,855,200) (3,718,224) Loss per share (£)Basic 5 -0.22 -0.20 -0.10 -0.07Diluted 5 -0.22 -0.20 -0.10 -0.07 Continued operations (£)Basic earnings per share 5 0.02 0.03Diluted earnings per share 5 0.02 0.03 Discontinued operations relate to the Betdirect business which was sold on 10December 2007. The notes form an integral part of these financial statements. Consolidated Statement of Changes in EquityFor the year ended 31 December 2007 Equity attributable to equity holders of 32Red Plc Share capital Share premium Share Retained earnings Total Equity options reserve £ £ £ £ £ Balance at 1 January 2006 94,871 942,629 99,344 (158,614) 978,230Loss for the period - - - (3,718,224) (3,718,224) Total recognised incomeand expense 94,871 942,629 99,344 (3,876,838) (2,739,994)Shares issued 18,479 11,278,783 - - 11,297,262Share options charge - - 137,873 - 137,873Share options exercised - - (4,677) 4,677 -Share issue expenses - (820,684) - - (820,684) Balance 31 December 2006 113,350 11,400,728 232,540 (3,872,161) 7,874,457Loss for the period - - - (12,855,200) (12,855,200) Total recognised income and expense 113,350 11,400,728 232,540 (16,727,361) (4,980,743) Shares issued 24,000 2,976,000 - - 3,000,000Shares options lapsed - - (126,638) 126,638 -Share options charge - - 88,862 - 88,862Share options exercised 600 6,900 (18,212) 18,212 7,500Share issue expenses - (221,803) - - (221,803) Balance 31 December 2007 137,950 14,161,825 176,552 (16,582,511) (2,106,184) The notes form an integral part of these financial statements. Consolidated Balance SheetAs at 31 December 2007 Notes 2007 2006 £ £AssetsNon-currentIntangible assets 7 170,738 12,636,497Property, plant and equipment 8 463,318 1,731,813 634,056 14,368,310 CurrentOther receivables 880,214 861,405Cash and cash equivalents 1,392,001 4,945,626 2,272,215 5,807,031 Total assets 2,906,271 20,175,341EquityEquity attributable to shareholders of 32Red PlcCalled up share capital 137,950 113,350Share premium 14,161,825 11,400,728Share option reserve 176,552 232,540Retained earnings (16,582,511) (3,872,161)Total equity (2,106,184) 7,874,457 Current liabilitiesSocial security and other taxes 613,634 94,194Bank loan due within one year - 5,416,667Trade and other payables 4,398,821 6,484,929Provisions for other liabilities and charges - 305,094Total liabilities 5,012,455 12,300,884 Total equity and liabilities 2,906,271 20,175,341 Consolidated Statement of Cash FlowsFor the year ended 31 December 2007 2007 2006 £ £Operating activitiesLoss for the year before interest and after tax (12,714,724) (3,657,832)Amortisation 1,756,340 857,606Depreciation 268,490 531,617Profit on disposal of property, plant and equipment - (13,516)Change in trade and other receivables 315,545 (63,625)Change in trade and other payables 33,411 2,399,506Share options charged 88,862 137,873Loss on disposal of discontinued operations 7,312,466 - (2,939,610) 191,629Investing activitiesProceeds from Disposal of discontinued operations 3,320,000 -Disposal costs (588,648) -Acquisition of subsidiaries - (11,607,546)Additions to other intangible assets (433,480) (98,737)Additions to property, plant and equipment (140,441) (883,276)Disposal of property, plant and equipment - 39,676Interest received 104,660 169,071 2,262,091 (12,380,812)Financing activitiesProceeds from share issue 3,000,000 11,297,262Share issue costs set against equity (221,803) (820,684)Share options exercised 7,500 -Proceeds from borrowings - 6,500,000Repayment of borrowings of discontinued operations (5,416,667) (1,083,333)Interest paid of discontinued operations (245,136) (229,463) (2,876,106) 15,663,782 Cash and cash equivalents, beginning of period 4,945,626 1,471,027Net (decrease)/increase in cash and cash equivalents (3,553,625) 3,474,599 Cash and cash equivalents, end of period 1,392,001 4,945,626 The notes form an integral part of these financial statements. 1 Accounting policies The financial statements have been prepared in accordance withInternational Financial Reporting Standards ('IFRS') as adopted by the EuropeanUnion and issued by the International Accounting Standards Board ('IASB'). Theaccounting policies that have been applied in the opening balance sheet havealso been applied through out all periods presented in these financialstatements. These accounting policies comply with each IFRS that is mandatoryfor accounting periods ending on 31 December 2007. The financial statements havebeen prepared under the historical cost convention, except for financial assetsand liabilities which are carried at amortised cost and share options which arerecognised at fair value on the grant date, and on a going concern basis. The Directors have reviewed the accounting policies used by the Groupand consider them to be the most appropriate. No changes have been made from theprior year. Critical accounting judgements and key sources of estimationuncertainty The preparation of the financial statements in conformity with IFRSrequires management to exercise certain critical accounting judgements andestimates in the process of applying the Group's accounting policies. Thedirectors consider the main accounting judgement to be the preparation of thesefinancial statements on the going concern basis. Going concern The financial statements have been prepared on a going concern basis.Following the sale of the loss-making Betdirect business to Stan James(Gibraltar) Ltd for gross proceeds of £5.75m on 10 December 2007, the Group hasrepaid its bank borrowing in full and has no debt outstanding at the year end.The continuing 32Red activities are generating positive cash flows, enabling theGroup to meet its liabilities as they fall due. Use of estimates It should be noted that accounting estimates and assumptions are usedin preparation of the financial statements. Although these estimates are basedon management's best knowledge of current events and actions, actual results mayultimately differ from those estimates. The Directors believe the models and assumptions used to calculate the fairvalue of the share-based payments are the most appropriate for the Company. Notes to the Financial StatementsFor the year ended 31 December 2007 2 Operating (loss)/profit 2007 2006 £ £This is stated after charging:Auditor's remuneration - audit fees 47,500 50,000 - taxation 18,500 12,500 - due diligence 50,000 75,000 - corporate finance fees 200,000 -Depreciation of owned property, plant and equipment 268,490 531,617Amortisation of other intangible fixed assets 1,756,340 857,606Operating lease rentals 219,716 219,716Foreign exchange losses 57,905 57,252 Amortisation and depreciation are charged to administrative expenses. 3 Segment information Business segment The Group had three business segments during the year. On 10 December 2007 theBetdirect business was sold to Stan James (Gibraltar) Limited. This comprisedmainly of sportsbook customers but also included the Betdirect casino and pokeroperations. Performance can be analysed as follows: 2007 2007 2006 2006 £ £ £ £ Discontinued Continuing Discontinued Continuing Operations Operations Operations OperationsCasinoNet gaming wins 537,254 8,996,053 261,788 9,179,260Segmental gross profit before marketing costs 135,059 4,509,536 215,976 4,716,913PokerNet gaming wins 215,987 1,209,954 188,196 1,303,336Segmental gross (loss)/profit before marketing costs (68,103) 478,947 155,262 551,586SportsbookNet gaming wins 5,405,467 - 3,510,879 -Segmental gross profit before marketing costs 3,907,252 - 2,771,354 -ConsolidatedNet gaming wins 6,158,708 10,206,007 3,960,863 10,482,596Gross profit before marketing costs 3,974,208 4,988,483 3,142,592 5,268,499Marketing costs (2,234,580) (2,239,016) (1,523,664) (2,525,441)Administrative expenses and other operating income (8,398,341) (1,492,562) (6,523,478) (1,522,871)Operating (loss)/profit (6,658,713) 1,256,905 (4,904,550) 1,220,187 The Directors consider that is neither possible nor meaningful todistinguish aggregate marketing costs, administrative expenses or otheroperating income between the three business segments. Aggregate net assets are split between the three business segments asfollows: 2007 2006 £ £CasinoOther receivables 567,886 137,656Cash and cash equivalents 1,357,534 4,414,859Trade and other payables (2,160,109) (607,277) (234,689) 3,945,238PokerOther receivables 2,801 3,139Cash and cash equivalents 34,467 31,991Trade and other payables (324,631) (345,611) (287,363) (310,481)SportsbookGoodwill, domain names and player database - 12,167,673Other receivables 309,527 720,610Cash and cash equivalents - 498,776Trade and other payables (1,914,081) (5,532,041)Provisions - (305,094) (1,604,554) 7,549,924Consolidated net assets (2,126,606) 11,184,681Other non-current assets 634,056 2,200,637Social security and other taxes (613,634) (94,194)Bank loan - (5,416,667) (2,106,184) 7,874,457 Non-current assets are used by all the business segments and ameaningful split is not possible. Furthermore "other employee obligations"relate to all business segments equally and can not be split in a meaningfulway. Geographical segment The Group's performance can also be reviewed by considering thegeographical markets in which the Group operates. Discontinued Continuing Discontinued Continuing Operations Operations Operations Operations 2007 2007 2006 2006 £ £ £ £Net gaming wins by geographicalmarketUK & Ireland 6,158,708 8,205,500 3,960,863 8,023,172Europe - 1,128,598 - 1,187,678Rest of the world - 871,909 - 1,271,746 6,158,708 10,206,007 3,960,863 10,482,596 2007 2006 £ £ Net (liabilities)/assets by geographical locationUK - (4,385,901)Gibraltar (2,106,184) 12,260,358 (2,106,184) 7,874,457 Non-current assets of nil (2006: £13,847,001) in the UK and £573,921(2006: £362,213) in Gibraltar were acquired during the year. 4 Finance income and costs The following amounts have been included in the income statement forthe reporting periods presented: 2007 2006 £ £ Interest income from short term deposits 104,660 169,071Interest paid on loans 245,136 229,463 5 Earnings per share Basic earnings per share have been calculated by dividing the netresults attributable to ordinary shareholders by the weighted average number ofshares in issue during the relevant financial periods. The weighted average number of shares used for basic earnings pershare amounted to 65,352,055 shares (2006: 53,077,615). Diluted earnings per share is calculated by adjusting the weightedaverage number of ordinary shares outstanding to assume conversion of alldilutive potential ordinary shares. For share options, a calculation is done todetermine the number of shares that could have been acquired at fair value(determined as the average annual market share price of the Company's shares)based on the monetary value of the subscription rights attached to theoutstanding share options. The number of shares calculated as above is comparedwith the number of shares that would have been issued assuming the exercise ofthe share options. The effect of dilutive share options has been excluded from thedilutive earnings per share calculation for 2006 and 2007 as their inclusionwould be anti-dilutive. 2007 2007 2006 2006 Continuing Discontinued Continuing Discontinued operations operations operations operations Net profit/(loss) attributable to £1,361,115 (£14,216,315) £1,388,808 (£5,107,032)ordinary sharesWeighted average number of ordinaryshares: for basic earnings 65,352,055 65,352,055 53,077,615 53,077,615 for diluted earnings 66,963,436 66,963,436 55,060,615 55,060,615Basic earnings per share £0.02 (£0.22) £0.03 (£0.10)Diluted earnings per share £0.02 (£0.22) £0.03 (£0.10)Weighted average number of ordinary shares for basic earnings 65,352,055 65,352,055 53,077,615 53,077,615Weighted average options 1,611,381 1,611,381 1,983,000 1,983,000Weighted average number of ordinary shares for diluted earnings 66,963,436 66,963,436 55,060,615 55,060,615 6 Taxation 2007 2006 £ £ Analysis of charge in periodCurrent tax: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 chargeof £450 is payable to the Government of Gibraltar. Provided the Company complieswith the necessary criteria, payment of such charges will satisfy the company'stax obligation in Gibraltar in relation to the year ended 31 December 2007. 2007 2006 £ £ Loss before taxation (12,854,750) (3,744,755)Add : UK tax losses not utilised 4,249,371 3,424,451Add : tax exempt loss 8,605,379 320,304Taxable loss - - Deferred Tax - (26,981)Tax exempt fee 450 450 Tax charge 450 (26,531) The Group has UK tax losses of approximately £7.7 million (2006: £3.4million) available to offset against future taxable profits in the UK. 7 Intangible assets Goodwill Domain Names & Website Software Total Player Database Development License £ £ £ £ £ Cost At 1 January 2006 - - 107,822 172,636 280,458 Additions - - 98,193 544 98,737 Fair value of assets on acquisition of Betdirect 4,737,673 8,200,000 - 289,528 13,227,201 At 31 December 2006 4,737,673 8,200,000 206,015 462,708 13,606,396 Additions - - 4,890 428,590 433,480 Disposal of Betdirect (4,737,673) (8,200,000) (711,278) (13,648,951) At 31 December 2007 - - 210,905 180,020 390,925 Amortisation At 1 January 2006 - - 55,150 57,143 112,293 Provided during the year - 770,000 31,948 55,658 857,606 At 31 December 2006 - 770,000 87,098 112,801 969,899 Provided during the year - 1,640,000 41,285 75,055 1,756,340 Provided on assets from - (2,410,000) - (96,052) (2,506,052) Bet Direct At 31 December 2007 - - 128,383 91,804 220,187 Net book value At 31 December 2007 - - 82,522 88,216 170,738 At 31 December 2006 4,737,673 7,430,000 118,917 349,907 12,636,497 8 Property, plant and equipment Motor Vehicles Computer and Office Leasehold Total Equipment Improvements £ £ £ £ Cost At 1 January 2006 110,000 568,308 20,811 699,119 Additions 47,795 835,481 - 883,276 Acquisition of Bet Direct - 980,596 - 980,596 Disposals (25,000) (14,676) - (39,676) At 31 December 2006 132,795 2,369,709 20,811 2,523,315 Additions - 114,556 25,885 140,441 Sale of Betdirect - (1,568,818) - (1,568,818) At 31 December 2007 132,795 915,447 46,696 1,094,938 Depreciation At 1 January 2006 29,687 238,115 5,599 273,401 Charge for the year 23,630 503,825 4,162 531,617 On disposals (13,333) (183) - (13,516) At 31 December 2006 39,984 741,757 9,761 791,502 Charge for the year 26,559 233,455 8,476 268,490 Sale of Betdirect - (428,372) - (428,372) At 31 December 2007 66,543 546,840 18,237 631,620 Net book value At 31 December 2007 66,252 368,607 28,459 463,318 At 31 December 2006 92,811 1,627,952 11,050 1,731,813 9 Discontinued operations The Betdirect business was sold to Stan James (Gibraltar) Limited on10 December 2007. The liabilities of Betdirect were not included in the sale,except for the net amounts owed to players. A loss of £7.3m on this sale has been recognised, which was calculatedas follows: 2007 £ Assets disposed:Intangible assets 11,142,899Property, plant & equipment 1,140,446 12,283,345Gross sales proceeds 5,750,000Less: provision for unrecoverable receivables (190,473)Less: disposal expenses (588,648)Net consideration 4,970,879Loss on disposal 7,312,466 The net consideration includes £1.9 million of net player liabilities assumed byStan James. A final payment of £500,000, net of unrecovered customer credit balances, is duein June 2008. Cash flows from discontinued operations were as follows: 2007 2006 £ £ Cash flows from/(used in) discontinued operationsNet cash used in operating activities (6,406,515) (1,245,355)Net cash from/(used in) investing activities 3,320,000 (11,870,756)Net cash (used in)/from financing activities (5,661,803) 6,270,537Net cash used in discontinued operations (8,748,318) (6,845,574) The loss on disposal has been amended following the issue of theinterim statement for the six months ended 30 June 2007, to reflect the finalassets disposed and costs of disposal. 10 Publication of Non-Statutory Accounts The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined under Gibraltar company law. The summarised balance sheet at 31 December 2007 and the summarised incomestatement, summarised statement of changes in equity, summarised cash flowstatement and associated notes for the year then ended have been extracted fromthe Group's 2007 statutory financial statements upon which the auditor's opinionis unqualified and unmodified. Those financial statements have not yet been delivered to the registrar ofcompanies. This information is provided by RNS The company news service from the London Stock Exchange