32Red Plc
30 October 2007
32Red Plc
('the Company')
Sale of Betdirect brand for £5.75m
Interim results for the six months ended 30 June 2007
32Red Plc, the award-winning online casino, poker and sportsbetting operator,
today reports interim results for the half year ended 30 June 2007 and announces
that it has exchanged contracts to unconditionally sell the Betdirect brand,
Betdirect customer database and certain assets of the Betdirect business to Stan
James (Gibraltar) Ltd for a total consideration of £5.75m.
£5.75m Sale of Betdirect to Stan James (Gibraltar) Ltd
• Following the successful launch of the 32Red sportsbook in April 2007, the
Company currently operates casino, poker and sportsbetting products under
both the 32Red and the Betdirect brand
• Further to a strategic review of both brands and a review of potential
business development opportunities for the Company, 32Red has accepted an
offer of £5.75m from Stan James (Gibraltar) Ltd for the Intellectual
Property and certain assets of the Betdirect business
• 32Red will continue to offer an integrated online sportsbetting product to
its customers. Discussions are underway in connection with a white label
online sportsbetting service arrangement with Stan James.
• Proceeds from the sale will be used to continue to expand the 32Red brand
profile through casino, poker, and sportsbetting products, to support
activities in the UK and to invest in new opportunities in other
territories. The proceeds will also be used to reduce debt levels now that
the Company is cash generative.
• Consideration paid as follows: £575,000 deposit on exchange of contracts
today; £4,675,000 on completion, which is unconditional and is scheduled for
10 December 2007; and a further £500,000 after a 6 month period.
• Stan James has over 30 years experience in the betting and gaming sector
and operate online, telephone and mobile betting services.
Interim results for 6 months ended 30 June 2007 - Key financials*:
• Total revenues up 47.2% on H1 2006 to £9.2 million
• Casino revenues of £4.6m, a like for like increase of 1.7% on H1 2006
• Poker revenues decreased by 3.8% like for like, against H1 2006 to £0.6
million
• Betdirect Gross Win totalled £4.0m, an increase of 27.1% on the £3.1m
derived from the 6 months ended 31 December 2006
• 32Red Casino and Poker PBT of £0.646m (2006: £0.791m)
• Group EBITDA of (£0.92m) including Bet Direct EBITDA of (£1.77m) and
EBITDA from 32Red casino and poker operations of £0.85m
• Casino and Poker trading since 30 June has been positive and July and
August Gross win are up 21.4%, like for like, on 2006.
* 2006 H1 comparatives exclude any revenues derived from US customers in the
period (circa 8%)
Key Performance Indicators:
• Active customers grew to 75,911 (H1 2006: 44,539)
- Casino active players 10,818, up 13.2% on 2006
- Poker active players 10,662, up 7.3% on 2006
- Bet Direct active customers 54,431, up 18.0% on 6 months ended 31
Dec 2006
• New customers grew to 31,329 (H1 2006: 16,157)
- New Casino players 7,291, up 15.0% on 2006
- New Poker players 6,850, down 0.9% on 2006
- New Bet Direct players 17,188
• Player yield
- Casino player yield £426, down 18.7% on 2006 as expected with
customer growth
- Poker player yield £57, down 12.3% on 2006 as expected with
customer growth
- Bet Direct customer yield £73
• Cost per Acquisition (inclusive of affiliate costs)
- Casino & poker cost per acquisition £82 (2006: £93)
- Casino cost per acquisition £155 (2006: £160)
- Poker cost per acquisition £4 (2006: £31)
Ed Ware, CEO commented: 'The sale of the Betdirect brand allows us to channel
our marketing and management focus on the core 32Red brand, which continues to
offer the full complement of casino, poker and sportsbetting products to its
customers. 32Red will also add mobile telephone gaming services and an
integrated Bingo offering to its product range in the final quarter of 2007.
Whilst the recent UK legislative changes effective from 1 September 2007 allow
greater access to the UK market, we have identified a number of new territories
into which we intend to market the 32Red brand. Our Key Performance Indicators
demonstrate encouraging trends in the underlying business and we are confident
that, following the divestment of Betdirect, we can continue to deliver
shareholder value. '
30 October 2007
Enquiries:
32Red Plc Tel: 00 35 049 396
Ed Ware, CEO
Jon Hale, Finance Director
Numis Securities 020 7260 1000
Lee Aston
Chris Wilkinson
College Hill Associates
Matthew Smallwood Tel: 020 7457 2020
Performance Summary
Despite increasing competition in our main UK market, 32Red casino performance
has grown over 2006 and allied to encouraging trends in active player numbers
and new player recruitment, the mainstay of the Group continues to increase
revenues. Yield per player is solid at £426 but down on 2006 and whilst some
comfort can be drawn from lower acquisition costs for casino players, this
remains an area of focus for the Company. Our continued good growth in player
recruitment has depressed the yield per player number. Despite the competition
in the UK, 32Red acquired a total of 7,291 new real money casino players in the
first half of 2007.
Following excellent growth in 2006, poker growth, as seen in many parts of the
industry, has slowed. This particularly applies to UK-focused poker rooms where
increased competition from hitherto US-facing operators, now focusing away from
US, has increased in our home market. These market forces have resulted in a
small decline in poker revenues and new player recruitment over the
corresponding period in 2006. 32Red continues to provide an excellent service to
its poker players and active players have grown by over 7%, representing over
10,000 poker players in the period.
The launch of the new Betdirect online sportsbook in March this year preceded
excellent growth through this channel. Telephone betting operations have
continued to be optimised and the entire business relocated to Gibraltar at the
end of the first half, albeit several weeks behind schedule. Whilst the sale of
the Betdirect business enables the Group to re-focus and re-invest in the 32Red
brand, online sportsbetting remains an important part of future development and
will continue to form part of the 32red product range.
Strategy
United Kingdom
32Red continues to provide the full suite of betting and gaming products which
offer the Group the platform to continue to develop its UK market presence. The
addition of Bingo and a mobile casino product will further support our strategy.
Brand recognition continues to be pleasing and opportunities to further increase
the profile of 32Red on a cost-effective basis will be maximised. In the UK,
where advertising opportunities have expanded considerably since 1st September
and the implementation of the Gambling Act, we will be looking to support
existing activities which include the sponsorship of Aston Villa. The divestment
of the Betdirect brand allows the Company to focus marketing on the single,
resonant and core 32Red brand.
New Territories
The sale of Betdirect will allow the Company to explore investment opportunities
in new territories. The Board believes that the 32Red brand identity and its
values has the potential to establish a stronger presence in territories outside
of the United Kingdom and a number of prospective propositions both in Europe
and market-specific activities in the Far East are being investigated. We look
forward to providing further updates on these opportunities in due course.
Outlook
The passion for delivering excellent service continues to be our focus in
driving performance across all of our platforms, along with investing in our
brand profile in the UK through value for money marketing deals and activity.
Whilst developments away from our main market are at preliminary stages, the
Group believes it has now enhanced its agility and is able to grasp
opportunities to expand its international reach. The addition of a new channel
for the 32Red Casino on mobile devices and the launch of an integrated 32Red
Bingo product, in the final Quarter of 2007, will further support cross-selling
of services, improve customer loyalty and longevity, as well as provide new
revenue streams.
Trading Update
32Red Gaming revenues continue to perform strongly with like for like revenues
in Q3 2007 total £2.6m (up 11.8% on 2006), generated from 16,341 active players
in the quarter (up 16.9% on Q3 2006). Combined casino and poker yield was £160
per active player during the quarter (£167 in Q3 2006).
Summary
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 returns the
Company to a cash generative position. The re-shaped business now has the
ability and flexibility to expand the 32Red brand moving into new gaming related
products and territories whilst underpinning activities with the continued
delivery of excellent service to our customers.
Consolidated Income Statement
for the six months ended 30 June 2007
Discontinued Discontinued
Operations Operations
Six months ended Six months Six months Six months
ended ended ended
30-Jun 30-Jun 30-Jun 30-Jun
2007 2007 2006 2006
Unaudited Unaudited Unaudited Unaudited
£ £ £ £
Net gaming wins 3,973,669 5,218,118 559,230 5,652,567
Cost of sales (2,603,683) (3,707,600) (327,580) (3,851,416)
Gross Profit 1,369,986 1,510,518 231,650 1,801,151
Administrative expenses (4,389,350) (798,452) (511,163) (1,050,342)
Other operating income 106,450 (26,531) - 4,773
Operating (loss)/profit (2,912,914) 685,535 (279,513) 755,582
Finance income - 103,179 - 60,968
Finance costs - (143,209) - (25,272)
Loss recognised on remeasurement to fair (8,186,315) - - -
value
Profit/(loss) on ordinary activities before (11,099,229) 645,505 (279,513) 791,278
taxation
Tax on ordinary activities - (450) (450)
Loss on discontinued operation (11,099,229) (11,099,229) (279,513) (279,513)
(Loss)/profit for the period (10,454,174) 511,315
(Loss)/earnings per share (£)
Basic -0.18 -0.17 -0.01 0.01
Diluted -0.18 -0.17 -0.01 0.01
Discontinued operations relate to the betdirect business which was sold on 29 October 2007
Consolidated Balance Sheet
As at 30th June 2007
Total Total
30-Jun 30-Jun
2007 2006
Unaudited Unaudited
£ £
Assets
Non-current
Intangible assets 188,408 13,436,355
Property, plant & equipment 510,381 1,439,428
698,789 14,875,783
Current assets
Trade and other receivables 299,382 1,109,249
Assets classified as held for 5,200,000 -
sale
Cash and cash equivalents 3,797,990 8,266,768
9,297,372 9,376,017
Total assets 9,996,161 24,251,800
Equity
Equity attributable to shareholders of
32Red Plc
Called up share capital 137,650 112,550
Share premium 14,055,532 11,408,077
Share option reserve 273,476 140,280
Retained earnings (14,326,335) 352,701
Total equity 140,323 12,013,608
Liabilities
Non-current
Bank loan due after one year 1,708,333 4,333,333
Current
Other employees obligations 304,320 185,498
Bank loan due within one year 1,750,000 2,166,666
Trade and other payables 6,093,185 5,552,695
8,147,505 7,904,859
Total liabilities 9,855,838 12,238,192
Total equity and liabilities 9,996,161 24,251,800
Consolidated Statement of Cash Flows
for the six months ended 30 June 2007
Six months Six months
ended ended
30-Jun 30-Jun
2007 2006
Unaudited Unaudited
£ £
Operating activities
Results for the period before interest (10,414,144) 475,619
Amortisation 877,393 26,612
Depreciation 384,998 116,138
Loss on disposal of fixed assets - 915
Change in trade and other receivables 49,052 (274,994)
Change in trade and other payables (486,714) 1,217,005
Share options granted 44,686 40,936
Loss recognised on remeasurement to fair value 8,186,315 -
(1,358,414) 1,602,231
Investing activities
Acquisition of subsidiaries - (11,624,430)
Additions to other intangible assets 30,625 (50,717)
Additions to tangible assets (496,837) (150,166)
Interest received 103,179 60,968
(363,033) (11,764,345)
Financing activities
Proceeds from share issue 3,000,000 11,287,263
Share issue costs set against equity (324,646) (804,136)
Proceeds from borrowings - 6,500,000
Repayment of borrowings (1,958,334) -
Interest paid (143,209) (25,272)
573,811 16,957,855
Cash and cash equivalents, beginning of period 4,945,626 1,471,027
Net increase in cash and cash (1,147,636) 6,795,741
equivalents
Cash and cash equivalents, end of period 3,797,990 8,266,768
This information is provided by RNS
The company news service from the London Stock Exchange
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