32Red
Plc ("32Red" or "the
Company")
Key points:
-
Management refocus on 32Red Casino product has
had immediate and positive impact
- Net gaming wins for the business have increased
27%
- Earnings before interest, tax, depreciation,
amortisation and share option costs ahead of market
expectations
- Profit before tax and share option costs in
line with market expectations
- 32Red Bingo, 32Red Mobile and
32Red Spreadbet all successfully
launched with 32Red Bet
sportsbook planned for 2009
-
TV advertising and launch of new initiative set
to deliver further new income in 2009
- Best casino award from Casinomeister for sixth
consecutive year
Key casino performance
indicators
- Net gaming wins (000's) up 30.1% to
£11,704 (2007: £8,996)
- Active casino players
up 14.8% to 21,808 (2007: 18,992)
- New casino players up 6.7% to
15,567 (2007: 14,586)
- Cost per acquisition reduced
to £119 (2007:£137)
Financial
|
2008 |
2007 |
Net gaming win |
£13.0m |
£10.2m* |
Gross profit |
£4.4m |
£2.7m* |
EBITDA before share option costs |
£1.8m |
£1.6m* |
Profit before tax and share
option costs |
£1.5m |
£1.5m * |
Profit /
(loss) before taxation |
£1.3m |
(£12.9m) |
Earnings /
(Loss) per
share |
1.83p |
(19.67p) |
*2007 comparatives exclude the results of the discontinued
Betdirect business
Current trading
- Business continuing to perform well and
in line with
expectations
- Management anticipate a successful year in
2009
Commenting on the results Ed
Ware, Chief Executive
Officer, said:
"2008 has been a year of
consolidation for us and the benefits of this are already bearing fruit. The refocus on the core product,
32Red Casino, has yielded encouraging results. 32Red Bingo,
32Red Mobile and 32Red Spreadbet have all been added to our platform and
are helping us to grow our customer base.
The business continues to perform
encouragingly in 2009 and provides encouragement that
our sector is proving to be resilient in the current economic
climate. An increasing number of
offline marketing opportunities are becoming available at
cost-effective rates and management
anticipate a successful 2009."
32Red plc |
Tel: +350 20049357 |
Ed Ware, CEO |
|
Jon Hale, Finance Director |
|
|
|
College Hill |
Tel: +44 (0) 020 7457 2020 |
Matthew Smallwood |
|
Jamie Ramsay |
|
|
|
Numis Securities |
Tel: +44 (0) 20 7260
1200 |
Chris Wilkinson; Corporate Broking |
|
Lee Aston; NOMAD |
|
Chairman's
Statement
I am pleased to set out below my review of the
Directors' Report and Consolidated Financial Statements of 32Red
Plc ("the Group") for the year
ended 31 December 2008.
Financial review
The re-focusing of the Group's activities has
had an immediate, positive impact and I am delighted to report an
increase of 27% in the Group's net gaming wins for the 12 months to
31st December 2008 to
£13.0m (2007:
£10.2m*).
This significant growth in revenue has resulted
in an operating profit before share
option costs for the year of £1.5m (2007:
£1.3m*) and earnings before
interest, taxation, depreciation, amortisation and share option
costs (clean EBITDA) of £1.8m (2007:
£1.6m*).
Profit after taxation of
£1.3m (2007: loss of
£12.9m) for the Group supports
the Board's decision to dispose of the loss-making Betdirect
business in 2007, which contributed an exceptional loss of
£14.2m in that period. The Board
does not recommend the payment of a dividend for the financial year
ended 31 December 2008 (2007:
nil).
Strategy
The focus remains on expanding the profile of
our core casino product to a wider audience through targeted and
cost effective marketing campaigns. The regulated and expanding
market in the United
Kingdom continues to be 32Red's main source of
new players and revenue which enables the Group to be progressive but sure-footed
with marketing investment and activity.
Our brand continues to be attractive to our
target audiences and early interest in our mobile casino and
32RedBingo.com are encouraging. Other new gaming-related services
and products will be launched in the first half of 2009, all of
which are activities modelled to leverage the 32Red brand. However,
shareholders can rest assured that the launch of these new products
require minimal up-front investment and will not distract us from
our main enterprise, the 32Red Casino.
32Red Spreadbet, a financial spread betting platform
will be launched on 9th March 2009 and 32Red Bet, our new online sportsbook in partnership with
Global Betting Exchange, will launch imminently. The Group is also exploring other new gaming
product opportunities.
Resolutions proposed at
forthcoming AGM and EGM
I would like to draw attention to the special
resolutions proposed at the forthcoming Annual and Extraordinary
General Meetings to be held back to back on Wednesday 15th April, 2009. In particular,
I would urge shareholders to join the Board in voting in favour of
the following special resolutions:-
Resolution 7 proposed at the Annual General
Meeting seeks to renew the authority of the Board to buy back its
own shares through the market, a strategy which the Board believes
will deliver value to shareholders at a time when difficult market
conditions can lead to the undervaluation of
companies.
Resolutions 1
and 2 proposed at the Extraordinary General Meeting
seek shareholder approval to offset retained losses derived from
the performance of the Betdirect business against the share premium
account. This accounting entry will bring forward the date by which
the Company will have distributable reserves and be able to
re-instate its dividend policy.
Further details of all resolutions are
contained in the Notice to the Meetings.
Best Casino Award for sixth
successive year
The 32Red proposition is founded on providing
excellent player support and offering a distinctive and
distinguished service to casino players. We were therefore
delighted to have the prestigious "Best Casino of the Year" award
bestowed upon us for an unprecedented sixth consecutive year by
independent watchdog and player advocate site, Casinomeister. I
would like to take this opportunity to congratulate and thank all
our employees for their continued hard work and commitment during
2008.
Current Trading and
Outlook
Our business continues to perform encouragingly
and in line with market expectations. We anticipate a successful
year ahead with 2009 proving to be another step forward for
32Red.
David Fish Chairman, 32Red Plc
* 2007 comparatives exclude the results of the
discontinued Betdirect business
Chief Executive's
Statement
The year ended 31 December
2008 was one of consolidation and re-focusing on
our core activity of operating an industry-leading online casino. I
am delighted to report that a renewed management focus on the core
32Red Casino product, following the
sale of the Betdirect business in December 2007, has yielded
encouraging results. Net gaming wins for the 32Red business as a
whole increased by 27%, principally as a result of a 30% increase
in net gaming wins from the 32Red Casino. I believe that this trading performance
justifies the strategy implemented at the start of the year. We are
once again cash generative and delivered record levels of income.
Clearly the business has taken a significant step forward following
a turbulent period in our history.
32Red Key Performance
Indicators
Casino
The 32Red Casino continues to dominate the
Group's trading representing 90% of
total Group revenues (2007:
88%*). Total casino revenues increased by
30% to £11.7m (2007:
£9.0m) during the year, a
direct result of an increase in active player levels and higher
yield per active player.
32Red Casino
|
2008
|
2007
|
Variance
|
Net gaming wins (000s) |
£11,704 |
£8,996 |
30.1% |
Active players |
21,808 |
18,992 |
14.8% |
New players |
15,567 |
14,586 |
6.7% |
Yield per active player |
£537 |
£474 |
13.3% |
Cost per acquisition |
£119 |
£137 |
(13.1%) |
It is particularly pleasing to see the
increased yield per active player, which at £537 (2007:
£474) is one of the highest
reported yield per player performances in the gaming industry and
underlines the quality of service provided to players by the 32Red
team. This yield, allied with the higher number of active players,
demonstrates both the focus and commitment to out-perform our
competitors in a key discipline which ultimately delivers
shareholder value. To be recognised once again by such an esteemed
authority as Casinomeister is extremely satisfying for all involved
at 32Red.
Cost per acquisition (CPA) reduced to
£119 (2007: £137) per new casino player during the year
partly influenced by the conclusion of 32Red's successful
sponsorship of Aston Villa FC in May 2008. The Group continues to
adopt a cost-effective approach to marketing, but expects an
increased CPA in 2009 as 32Red enhances its brand awareness with
more offline activity.
Other products
Revenues from our poker operation, which
represents 8% of total Group revenue for 2008, have fallen by 13%
on 2007 which is unsurprising given the wider pressures on the
poker market during the year. Our decision to increase casino
marketing and decrease poker marketing has proved
to be well founded.
The poker industry remains challenging as the
market matures, with the impact of operators accepting bets from US
customers having a negative impact on player liquidity. Our
strategy of focusing on existing loyal players has seen our yield
per active player increase by 45% to £119. We continue to
evaluate all aspects of the 32Red Poker experience in the face of
competitive conditions and are mildly encouraged by trading levels
in the first two months of 2009.
32Red Bingo launched in the early part of 2008
and, whilst we still have several areas of this business to
develop, performance has been relatively pleasing (revenues at
£0.2m in 2008). Key to Bingo revenues will be the continued
development in the offering of casino games in our Bingo
environment. This allied with further TV advertising in
the UK and the launch of new
initiatives will deliver further new income for 32Red in
2009.
32Red Spreadbet - 32Red announces the launch of 32Red
Spreadbet on 9 March
2009, a platform for financial spread betting and
contracts for difference (CFDs). 32Red Spreadbet is the result of a
partnership with CMC Spreadbet
Plc and CMC Markets UK Plc who
are authorised and regulated by the Financial Services
Authority. This partnership offers 32Red customers access to
a multitude of financial markets around the globe.
Edward Ware, Chief Executive
Officer 32Red Plc
*2007 comparatives exclude the results of the
discontinued Betdirect business
32Red Plc |
|
|
|
|
|
|
|
Consolidated Income
Statement |
|
|
|
|
|
for the year ended 31 December 2008 |
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
|
|
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gaming wins |
|
|
3 |
|
12,963,134 |
|
10,206,007 |
Cost of sales |
|
|
|
|
(8,563,765) |
|
(7,456,540) |
Gross Profit |
|
|
|
|
4,399,369 |
|
2,749,467 |
Administrative expenses |
|
|
|
(2,920,677) |
|
(1,403,700) |
Share option costs |
|
|
|
|
(199,365) |
|
(88,862) |
Operating profit |
|
|
2 |
|
1,279,327 |
|
1,256,905 |
Finance income |
|
|
4 |
|
74,353 |
|
104,660 |
Finance costs |
|
|
4 |
|
(86,539) |
|
- |
Profit on ordinary activities
before taxation |
|
|
1,267,141 |
|
1,361,565 |
Tax on ordinary activities |
|
6 |
|
(450) |
|
(450) |
|
|
|
|
|
|
|
|
|
Loss on discontinued
operations |
9 |
|
- |
|
(14,216,315) |
|
|
|
|
|
|
|
|
|
Profit / (loss) for the
period |
|
|
|
1,266,691 |
|
(12,855,200) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/
(loss) per share (p) |
|
|
|
|
|
|
Basic |
|
|
|
5 |
|
1.83 |
|
(19.67) |
Diluted |
|
|
|
5 |
|
1.72 |
|
(19.20) |
|
|
|
|
|
|
|
|
|
Continuing earnings/ (loss) per
share (p) |
|
|
|
|
|
Basic |
|
|
|
5 |
|
1.83 |
|
2.08 |
Diluted |
|
|
|
5 |
|
1.72 |
|
2.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32Red Plc
|
Consolidated Statement of Changes
in Equity for the year ended 31 December 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to equity
holders of 32Red Plc |
|
Total Equity |
|
Share capital |
Share premium |
Share options reserve |
Retained earnings |
|
|
|
£ |
£ |
£ |
£ |
|
£ |
|
|
|
|
|
|
|
Balance at 1 January 2007 |
113,350 |
11,400,728 |
232,540 |
(3,872,161) |
|
7,874,457 |
Loss 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 |
- |
- |
|
3,000,000 |
Share options lapsed |
- |
- |
(126,638) |
126,638 |
|
- |
Share options charge |
- |
- |
88,862 |
- |
|
88,862 |
Share options exercised |
600 |
6,900 |
(18,212) |
18,212 |
|
7,500 |
Share issue expenses |
- |
(221,803) |
- |
- |
|
(221,803) |
|
|
|
|
|
|
|
Balance 31 December 2007 |
137,950 |
14,161,825 |
176,552 |
(16,582,511) |
|
(2,106,184) |
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
1,266,691 |
|
1,266,691 |
Total recognised income and
expense |
137,950 |
14,161,825 |
176,552 |
(15,315,820) |
|
(839,493) |
Shares options lapsed |
- |
- |
(5,056) |
5,056 |
|
- |
Share options charge |
- |
- |
199,365 |
- |
|
199,365 |
Share options exercised |
800 |
9,200 |
(38,372) |
38,372 |
|
10,000 |
|
|
|
|
|
|
|
Balance 31 December 2008 |
138,750 |
14,171,025 |
332,489 |
(15,272,392) |
|
(630,128) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32Red Plc |
|
|
|
|
|
Consolidated Balance
Sheet |
|
|
|
|
|
as at 31 December 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
2008 |
|
2007 |
|
|
|
£ |
|
£ |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Non-current |
|
|
|
|
|
Intangible assets |
7 |
|
195,532 |
|
170,738 |
Property, plant and equipment |
8 |
|
299,428 |
|
463,318 |
|
|
|
494,960 |
|
634,056 |
|
|
|
|
|
|
Current |
|
|
|
|
|
Other receivables |
|
|
326,097 |
|
880,214 |
Cash and cash equivalents |
|
|
909,615 |
|
1,392,001 |
|
|
|
1,235,712 |
|
2,272,215 |
|
|
|
|
|
|
Total assets |
|
|
1,730,672 |
|
2,906,271 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Equity attributable to shareholders
of 32Red Plc |
|
|
|
Called up share capital |
|
|
138,750 |
|
137,950 |
Share premium |
|
|
14,171,025 |
|
14,161,825 |
Share option reserve |
|
|
332,489 |
|
176,552 |
Retained earnings |
|
|
(15,272,392 ) |
|
(16,582,511) |
Total equity |
|
|
(630,128) |
|
(2,106,184) |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Social security and other taxes |
|
|
438,056 |
|
613,634 |
Bank loan due within one year |
|
|
250,000 |
|
- |
Trade and other payables |
|
|
1,672,744 |
|
4,398,821 |
Total liabilities |
|
|
2,360,800 |
|
5,012,455 |
|
|
|
|
|
|
Total equity and
liabilities |
|
|
1,730,672 |
|
2,906,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32Red Plc |
|
|
|
|
|
|
Consolidated Statement of Cash
Flows |
|
|
|
for the year ended 31 December 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
|
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
Profit/(loss) for the year |
|
|
1,266,691 |
|
(12,855,200) |
Interest adjustments |
|
|
12,186 |
|
140,476 |
Amortisation |
|
|
|
66,983 |
|
1,756,340 |
Depreciation |
|
|
|
221,148 |
|
268,490 |
Change in trade and other
receivables |
|
554,117 |
|
315,545 |
Change in trade and other payables |
|
(2,901,655) |
|
33,411 |
Share options charge |
|
|
199,365 |
|
88,862 |
Loss on disposal of discontinued
operations |
- |
|
7,312,466 |
|
|
|
|
|
(581,165) |
|
(2,939,610) |
Investing activities |
|
|
|
|
|
|
Proceeds from disposal of discontinued
operations |
- |
|
3,320,000 |
Disposal costs |
|
|
|
- |
|
(588,648) |
Additions to other intangible
assets |
|
(91,777) |
|
(433,480) |
Additions to property, plant and
equipment |
(57,258) |
|
(140,441) |
Interest received |
|
|
|
74,353 |
|
104,660 |
|
|
|
|
|
(74,682) |
|
2,262,091 |
Financing activities |
|
|
|
|
|
|
Proceeds from share issue |
|
|
- |
|
3,000,000 |
Share issue costs set against
equity |
|
- |
|
(221,803) |
Share options exercised |
|
|
10,000 |
|
7,500 |
Proceeds from borrowings |
|
|
900,000 |
|
- |
Repayment of borrowings |
|
|
(650,000) |
|
(5,416,667) |
Interest paid |
|
|
|
(86,539) |
|
(245,136) |
|
|
|
|
|
173,461 |
|
(2,876,106) |
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of
period |
1,392,001 |
|
4,945,626 |
Net decrease in cash and cash
equivalents |
(482,386) |
|
(3,553,625) |
Cash and cash equivalents, end of
period |
|
909,615 |
|
1,392,001 |
|
|
|
|
|
|
|
|
Notes:
The financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European
Union. These accounting policies comply with each IFRS that is mandatory for accounting
periods ending on or after 31 December
2008. The financial statements have been prepared
under the historical cost convention and on a going concern
basis.
2 |
Operating result |
|
2008 |
|
2007 |
|
|
|
£ |
|
£ |
|
This is stated after charging: |
|
|
|
|
|
|
|
|
|
|
|
Auditor's remuneration - audit fees |
|
41,250 |
|
47,500 |
|
- taxation |
|
7,315 |
|
18,500 |
|
- due diligence |
|
- |
|
50,000 |
|
- corporate finance fees |
|
- |
|
200,000 |
|
Depreciation of owned property, plant and
equipment |
221,148 |
|
268,490 |
|
Amortisation of other intangible
assets |
|
66,983 |
|
1,756,340 |
|
Operating lease rentals |
|
| |