Interim Results

 32Red Plc

("32Red'' or ''the Company")

Interim results for the six months ended 30 June 2014

32Red, the award-winning online gaming operator, today reports Interim results for the six months ended 30 June 2014.

Key Financials:

Headlines:

· Record revenues and EBITDA in the six month period

· Italian business doubled in size and readied for increased marketing from Q4 onwards

· Successful launch of new sportsbook, 32Red Sport, in June 2014

· Revenues from 32Red mobile casino up 124% and now represent 32% of total casino sales (2013: 17%)

· Increased marketing investment, including three year deal to sponsor Rangers Football Club

· Successful integration of Go Wild UK facing database, acquired after the period end

· Interim dividend up 25%

· Current trading strong, with underlying revenues up 23%

· Confident of meeting full year expectations

Key performance indicators

· Active casino players in first 6 months up 20% to 50,890 (H1 2013: 42,455)

· Casino player yield £400 (H1 2013: £398)

· New Casino players recruited up 35% to 23,566 (H1 2013: 17,459) 

· Casino cost per acquisition: £180 (H1 2013: £159)

Current trading

The second half of the year has started strongly with gross gaming revenues for the first 12 weeks up 23% on the corresponding period in 2013. The Board continues to progress its growth strategy, through increased and targeted marketing and maintaining its reputation for unrivalled customer service.

Ed Ware, CEO commented:

"We are delighted to report yet another record performance with 20% growth in net gaming revenues leading to a 22% growth in EBITDA. It is very important to us that the quality of our service and the experience we provide to our players keeps pace with the growth in the business."

"The recently launched 32Red Sports betting site is performing well and complements our growing sponsorship in British horseracing and our exciting partnership with Rangers Football Club. Current trading is strong and I look forward to a good finish to 2014.''

24 September 2014

Enquiries:

*Underlying EBITDA is Earnings before Interest, Tax, Depreciation and Amortisation derived from the continuing 32Red business i.e. excluding results from its new Italian operations and is stated before share option costs and exceptional items.

** Adjusted Earnings Per Share is calculated on Underlying Earnings adding back exceptional items, share option costs and amortisation and uses the weighted average number of ordinary shares for diluted earnings as calculated in note 3 to this interim statement.

32Red plc

Performance Summary

As reported in our trading update on 23 July 2014, 32Red is pleased to announce another strong performance in the first half, with Gross Gaming Revenue (''GGR'') for the six months ended 30 June 2014 increasing 19% to £22.6m (H1 2013: £19.0m). In the 2013 Annual Report, the Company announced that it had reviewed its revenue recognition policy and now reports Net Gaming Revenue (''NGR'') rather than GGR. During the first six months of 2014, NGR increased by 20% to £15.2m (H1 2013: £12.7m).

Top line growth has resulted in 22% growth in EBITDA to £2.3m (H1 2013: £1.9m). After adding back losses from the investment in Italy of £0.4m (H1 2013: £0.6m), underlying EBITDA* increased 9% to £2.7m (H1 2013: 2.5m) and reflects the increased marketing investment in the period. The amortisation charge relating to acquired intangible assets, including the ''I'm a Celebrity...Get Me Out of Here'' licence, increased to £0.51m in the first half (H1 2013: £0.26m). Profit before taxation totalled £1.2m (H1 2013: £1.3m) and earnings per share totalled 1.63p (H1 2013: 1.77p). Adjusted Earnings Per Share** increased by 8% to 3.32p (H1 2013: 3.07p).

The Company today declares an interim dividend of 1.0p per share (H1 2013: 0.8p) to be paid on 31 October 2014 to all shareholders on the Company's share register on 3 October 2014.

Casino 

The 32Red casino remains the core of the business, generating 95% of underlying GGR in the first half of the year (H1 2013: 91%).

In line with the strategy outlined in the 2013 Annual Report, the Company increased its investment in marketing in the first half and recruited 23,566 new players (H1 2013: 17,459). The strong growth in new players, allied with improved player retention and reactivation activities, resulted in a 20% increase in total active players to 50,890 (H1 2013: 42,455). It is particularly encouraging to see player GGR yields remain steady given the increased levels of new and active players. 

The 32Red mobile casino continues to flourish with revenues up 124% on H1 2013, representing 32% of total casino revenues (H1 2013: 17%) and attracting approximately half of all new players.

32Red.it

GGR from the 32Red Italian Casino is up 130% to £1.05m (H1 2013: £0.46m) and NGR up 94% to £0.51m (H1 2013: £0.26m). A total of 3,084 new players were recruited in the first half (H1 2013: 1,435) bringing the total number of active players to 5,793 (H1 2013: 1,887). The Company has limited marketing investment in Italy ahead of anticipated positive changes in the regulated market due at the end of 2014. 

32Red Sport

On 30 April 2014, the Company announced that it had entered into an agreement with Kambi Sports Solutions, a leading B2B sportsbook supplier, to deliver a fully managed sportsbook solution to 32Red. The agreement enables 32Red to offer a significantly upgraded sports betting experience to its customers through online and mobile channels. The new sportsbook is fully integrated with 32Red's Microgaming platform, enabling players to move funds seamlessly between casino and sports and was launched, as previously guided, in early June 2014, ahead of the World Cup. Initial trading results and levels of new player recruitment have been encouraging and focus is centred on cross selling the casino products to new sportsbook players.

Sponsorship of Rangers Football Club

In April 2014, the Company announced that it had entered into a three year agreement to sponsor Rangers Football Club. In keeping with similar successful sponsorship agreements including Aston Villa Football Club and Swansea City Football Club, the agreement provides 32Red with shirt sponsorship, extensive visibility in the stadium and across the Club's digital and media platforms and access to Scotland's largest football fan base.

UK Licensing Regime and Point of Consumption Taxation

On 12 September 2014, the Gibraltar Betting and Gaming Association (GBGA) was granted permission to bring its legal challenge to the planned new UK licensing regime and a hearing of the matter began yesterday in the High Court. 

Go Wild acquisition

On 9 September 2014, the Company announced that it had acquired the UK customer database of the Go Wild casino from Go Wild Malta Ltd. Go Wild's UK customers were successfully migrated to the 32Red platform on 15 September 2014 and the integration process went very smoothly.

Current Trading and Outlook

The second half of the year has started strongly with GGR for the first 12 weeks up 23% on the same period in 2013. The Board continues to progress its growth strategy, through increased and targeted marketing and maintaining its reputation for unrivalled customer service.

The Board believes that 32Red has commercially viable opportunities to grow both organically and by making acquisitions in the sector. As the regulatory landscape continues to evolve we remain encouraged by developments in potential new markets, both in Europe and the US.

With the strong start to the second half of the year and the recent acquisition of the UK customer database of Go Wild the Board is confident in meeting its expectations for the full year.

*Underlying EBITDA is Earnings before Interest, Tax, Depreciation and Amortisation derived from the continuing 32Red business i.e. excluding results from its new Italian operations and is stated before share option costs and exceptional items.

** Adjusted Earnings Per Share is calculated on Underlying Earnings adding back exceptional items, share option costs and amortisation and uses the weighted average number of ordinary shares for diluted earnings as calculated in note 3 to this interim statement.

32Red Plc

Statement of profit or loss and other comprehensive income

for the six months ended 30 June 2014

32Red Plc

Consolidated Statement of Financial Position

as at 30 June 2014

32Red Plc

Consolidated Statement of Cash Flows

for the six months ended 30 June 2014

Notes:

1. Accounting policies

The consolidated annual financial statements are prepared in accordance with the measurement principles of applicable International Financial Reporting Standards (''IFRSs'') as adopted by the EU. The accounting policies have remained unchanged from the previous year, as set out in the Annual Report for the year ended 31 December 2013, available on www.32redplc.com, except for the application of the following standards, effective from 1 January 2014:

· IFRS 10 Consolidated Financial Statements

· IFRS 11 Joint Arrangements

· IFRS 12 Disclosure of Interests in Other Entities

· IAS 27 Separate Financial Statements (2011)

· IAS 28 Investments in Associates and Joint Ventures (2011)

· Transition guidance: Amendments to IFRS 10, IFRS 11 and IFRS 12

· Annual Improvements to IFRSs - 2009-2011 Cycle

The accounting policies as at 31 December 2013 and the standards effective 1 January 2014 have been applied in the preparation of the interim financial results, with the exception of some of the disclosures required by IAS 34 Interim Financial Reporting.

2. Exceptional item

During the period, legal costs of £150,000 (H1 2013: nil) were incurred in respect of legal and strategic advice received in connection with the UK Government's proposed new UK remote gambling regulatory regime.

3. 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 72,209,962 shares (2013: 70,937,049).

To calculate the diluted earnings per share figure, the weighted average of employee share options and awards made under the Long Term Incentive Plan expected to vest has been added. This number represents management's best estimate at 30 June 2014, which is also used for calculating employee payments relating to share based payment transactions. At 30 June 2014, the weighted average number of share options expected to vest was 5,591,501 (2013: 4,913,633).

4. Taxation

5. Intangible assets

6. Property, plant and equipment