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 for the 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

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 Casino and Poker and has in 2008 returned the group to a cash positive position. Management are focused on building growth, expanding our product range and moving into new territories through the 32Red brand.

We have seen a very encouraging start to 2008 with excellent growth at the 32Red Casino. We have surpassed several important milestones in the first few weeks of 2008 and look forward with confidence to an exciting year.”

11 March 2008

Enquiries:

Chairman’s Statement

I am pleased to set out below my review of the Directors’ Report and Consolidated Financial Statements of 32Red Plc (“The Company”) for the year ended 31 December 2007.
Following the sale of the Betdirect business to Stan James (Gibraltar) Ltd which was completed on 10 December 2007, the results for 2007 and for 2006 have been apportioned between continuing 32Red operations and discontinued Betdirect operations.

Comparatives

The financial results for the continuing operations of 32Red Plc are for the year ended 31 December 2007, with comparatives for the year ended 31 December 2006. The financial results for the discontinued operations of Betdirect are for the 49 weeks trading prior to its sale on 10 December 2007 and the comparatives are for the results for the 29 weeks from acquisition of Betdirect on 7 June 2006 until 31 December 2006.

For the purposes of this financial review, trade from the US prior to the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) has also been 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 (the Group) 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 32Red Casino and Poker operations totalled £10.2m up 5.6%. The operating profit from continuing operations for the year 2007 totalled £1.3m (year ended 31 December 2006: £1.2m).

Discontinued Operations – Net gaming wins include gross win of £6.16m from Betdirect for the 49 weeks ended 10 December 2007 (29 weeks ended 31 December 2006: £3.96m). The operating loss from discontinued operations in the 49 weeks ended 10 December 2007 totalled £6.7m and the results include a loss on disposal of £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 the subsequent write-down of tangible and intangible fixed assets to their realisable 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 year ended 31 December 2007 (2006: nil).

Sale of Betdirect

Further to a strategic review of both brands and a review of potential business development opportunities for the Company, 32Red accepted an offer of £5.75m from Stan James (Gibraltar) Ltd on 30 October 2007 for the intellectual property and certain assets of the Betdirect business. The consideration was paid as follows: £575,000 paid on exchange of contracts on 30 October 2007; £4,675,000 on completion on 10 December 2007 (including £1.9m of net player balances assumed by Stan James); and a further £500,000 held in escrow to be paid on 10 June 2008. 32Red will continue to offer an integrated online sportsbetting product to its customers via a white label online sports-betting service arrangement with Stan James.

Strategy

Core 32Red products – 32Red continues to provide the full range of betting and gaming products which affords the Group the platform to continue to develop its UK market presence. Brand recognition continues to be strong and advertising opportunities have expanded considerably in the UK since 1st September and the implementation of the Gambling Act. The sale of the Betdirect brand allows the Company to focus marketing on the single, resonant and core 32Red brand.

New 32Red products – The Board believes that the 32Red brand translates to other products and the Group looks forward to the launch of its 32Red Bingo product in the Spring. The online Bingo market has experienced rapid growth during 2007 and is now attracting a younger audience with 25% of players under 35 years old. The Company launched its mobile casino service in February 2008.

New Territories – 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. During February 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.

Board

During the year, the Company announced the resignations of Bruno Callaghan as non-executive Director on 10 April 2007 and Ed Andrewes as Development Director on 20 December 2007. I would like to take this opportunity to thank both Bruno and 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 efforts to accelerate the growth of the 32Red business and immediately return the Company to a cash generative position. The re-shaped business now has the ability and flexibility to expand the 32Red brand into new gaming related products and territories whilst underpinning activities with the continued delivery of excellent service to our customers. I would like to take this opportunity to congratulate and thank all our employees for their continued hard work and commitment during 2007. Their enormous efforts have been recognised by 32Red being named “The Best Casino of the Year” for the fifth consecutive year by independent watchdog Casinomeister. I look forward with confidence to an exciting year in 2008.

David Fish
Chairman, 32Red

Chief Executive’s Statement

2007 has been a challenging year for the Company with the Betdirect sale tender process dominating the summer months. The disposal of the Betdirect business allows the entire 32Red team and especially senior management to focus on the core 32Red product and moving into new territories. In the first quarter of 2008 we have prepared the launch of new products including 32Red Bingo and a mobile casino service.

32Red Key Performance Indicators

Comparatives for 2006 have been restated between continuing and discontinued Betdirect operations. For the purposes of this statement, trade from the US prior 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 from a total of 33,745 active customers during the year, up 17.0% on 2006. Total new customers grew to 25,640 (2006: 22,442) with average cost per acquisition down to £87 (2006: £114).

Casino

The 32Red Casino continues to dominate the Group's trading and is central to our growth plans. Total casino revenues increased by 7.6% to £9.0m during the year, representing 88% of total Group revenues from continuing operations. The number of active casino players during the year totalled 18,992, up 26.6% with new casino players totalling 14,586, an increase of 19.3% over the prior year. Predictably with such a large number of new players, casino player yield totalled 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 the Group's cost-effective approach to marketing. Casino customers 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.

In 2008, 32Red intends to expand its European casino profile and we launched a French Language Casino service on 8 February 2008. This is the first of a number of entries into targeted European territories and this move follows the launch of 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 the prior 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 small overall 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 of competitive conditions. Again we will examine new European markets for poker in 2008.

Bingo

We have long held the belief that our brand sits comfortably in the eyes of prospective Bingo players. The arrival of the Microgaming Bingo platform now provides us with a solution without integration challenges and strong in the provision of slots games. 32Red Bingo launches in March 2008.

Sportsbetting

Following the sale of the Betdirect business, 32Red will offer sportsbetting to its 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 new territories and to successfully develop its new Bingo product, a number of other sportsbetting opportunities are being evaluated.

Trading Update

Further to a sharpened focus on the 32Red Casino following the disposal of Betdirect, I am pleased to report an excellent start to the year. Several important milestones have been surpassed in the first part of the year and growth is very encouraging. We intend to make this renewed focus and ability to act nimbly and aggressively count in 2008.

Edward Ware, Chief Executive Officer
32Red Plc

Consolidated Income Statement for the year ended 31 December 2007

Discontinued operations relate to the Betdirect business which was sold on 10 December 2007.
The notes form an integral part of these financial statements.

Consolidated Statement of Changes in Equity For the year ended 31 December 2007

The notes form an integral part of these financial statements.

Consolidated Balance Sheet as at 31 December 2007

Consolidated Statement of Cash Flows for the year ended 31 December 2007

The notes form an integral part of these financial statements.

1. Accounting policies

The financial statements have been prepared in accordance with International Financial Reporting Standards (`IFRS') as adopted by the European Union and issued by the International Accounting Standards Board (`IASB'). The accounting policies that have been applied in the opening balance sheet have also been applied through out all periods presented in these financial statements. These accounting policies comply with each IFRS that is mandatory for accounting periods ending on 31 December 2007. The financial statements have been prepared under the historical cost convention, except for financial assets and liabilities which are carried at amortised cost and share options which are recognised at fair value on the grant date, and on a going concern basis.

The Directors have reviewed the accounting policies used by the Group and consider them to be the most appropriate. No changes have been made from the prior year.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with IFRS requires management to exercise certain critical accounting judgements and estimates in the process of applying the Group's accounting policies. The directors consider the main accounting judgement to be the preparation of these financial 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 has repaid its bank borrowing in full and has no debt outstanding at the year end. The continuing 32Red activities are generating positive cash flows, enabling the Group to meet its liabilities as they fall due.

Use of estimates

It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

The Directors believe the models and assumptions used to calculate the fair value of the share-based payments are the most appropriate for the Company.

Notes to the Financial Statements for the year ended 31 December 2007

2. Operating (loss)/profit

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 the Betdirect business was sold to Stan James (Gibraltar) Limited. This comprised mainly of sportsbook customers but also included the Betdirect casino and poker operations. Performance can be analysed as follows:

The Directors consider that is neither possible nor meaningful to distinguish aggregate marketing costs, administrative expenses or other operating income between the three business segments.

Aggregate net assets are split between the three business segments as follows:

Non-current assets are used by all the business segments and a meaningful split is not possible. Furthermore “other employee obligations” relate to all business segments equally and can not be split in a meaningful way.

Geographical segment

The Group's performance can also be reviewed by considering the geographical markets in which the Group operates.

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 for the reporting periods presented:

5. 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 65,352,055 shares (2006: 53,077,615).

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For share options, a calculation is done to determine 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 the outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

The effect of dilutive share options has been excluded from the dilutive earnings per share calculation for 2006 and 2007 as their inclusion would be anti-dilutive.

6. Taxation 

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 year ended 31 December 2007.

The Group has UK tax losses of approximately £7.7 million (2006: £3.4 million) available to offset again