10th Mar 2016 10:17
LONDON (Alliance News) - 32Red PLC on Thursday increased its dividend after delivering a record level of revenue in 2015, but said its profit in the year fell due to higher costs and exceptional items.
The online gaming operator saw revenue in 2015 rise 52% to GBP48.7 million from GBP32.1 million in 2014, driven by its acquisition of Roxy Palace during the year and an improved performance from its main UK gaming unit and its Italian operations.
However, that failed to prevent pretax profit falling to GBP1.1 million from the GBP3.4 million reported in 2014, after administrative costs, exceptional items, impairments and depreciation and amortisation charges all rose.
Still, 32Red said its ordinary dividend for 2015 will be 2.8 pence a share, 17% higher than the 2.4p paid in 2014. That is in addition to the 3.0p special dividend announced in February 2015.
Although revenue experienced a huge lift in the year, gross profit only rose to GBP12.8 million from GBP10.9 million.
Administrative expenses increased to GBP7.6 million from GBP5.4 million, leading its earnings before interest, tax, depreciation, amortisation, exceptional items and share option costs to fall to GBP5.2 million from GBP5.4 million.
Depreciation and amortisation charges rose to GBP2.7 million from GBP1.5 million and 32Red also booked a GBP356,188 impairment, something it did not do in the previous year. Exceptional items also increased to GBP587,322 from only GBP150,000.
32Red's main division saw net gaming revenue rise 35% in the year to GBP41.7 million from GBP31.0 million after the company ramped up its marketing efforts. The company said mobile devices remain the fastest growing platform within the division, rising 71% in the year to account for 44% of all revenue derived from 32Red Casino, up from 32% last year.
The company's Italian operations reported a 54% lift in revenue to GBP1.7 million from GBP1.1 million after the company capitalised on regulatory changes early on in the year.
Red32 said it gained 6,413 new players in Italy in 2015, taking the total up to 12,774 players at the end of the year. In 2014, 32Red saw the number of players grow by 5,011 to give it 8,628 players at the end of that year.
Importantly, the Italian operations are still loss-making, but 32Red said it is confident the unit can breakeven this year.
Revenue also received a boost from 32Red's acquisition of Roxy Palace back in July, which contributed GBP5.2 million of revenue in the year.
Roxy Palace has been immediately earnings accretive, and 32Red said the integration of the unit was completed ahead of schedule. The company said the unit will deliver "material cost synergies" this year.
"We are confident that 2016 will be another year of strong organic revenue growth as we continue to increase marketing investment in both the 32Red and Roxy Palace brands. We will monitor the returns on this investment and are fully prepared to accelerate marketing spend if 'payback' averages remain encouraging and satisfy our strict criteria," said Chief Executive Edward Ware.
"The online gaming industry continues to grow, driven by mobile devices and regulation. Consolidation will remain a key feature and the industry and we continue to evaluate potential acquisitions that may complement our strong organic growth," he added.
Trading has remained "very strong" across the group since the start of 2016, with like-for-like gaming revenues 35% higher in the first nine weeks of the year compared to a year earlier. Including Roxy Palace, those revenues are up 66%.
32Red shares were up 1.9% to 159.96 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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