2nd Sep 2009 07:00
32Red Plc
("32Red'' or ''the Company")
Interim results for the six months ended 30 June 2009
32Red Plc, the award-winning online gaming operator, today reports interim results for the half year ended 30 June 2009.
32Red has continued to accelerate the growth of its player base, reduced the cost of player acquisition, and developed operations for future growth. However, due to the challenging economic environment faced by the UK and the rest of Europe during the first half of the year, overall revenues have fallen 11.2% to £5.8m (down 8.6% on H2 2008).
Highlights:
Active casino players in the first 6 months : 14,490, up 23% on H2 2008 and up 18% on H1 2008
New casino players in the first 6 months : 9,733, up 32% on H2 2008 and up 19% on H1 2008
New casino players attracted at cost of £89 each, a reduction of 16% on H2 2008 and 35% cheaper than H1 2008
Launch of 32Red Rummy on 7 July 2009 and 32Red Spreadbet in March 2009
Launch of PayPal banking service on 1 July 2009 making 32Red one of only a handful of online gaming operators able to offer this payment option, and providing 32Red customers with a new and trusted deposit method
Sponsorship of Championship football team, Swansea City Football Club, until 2011
Investment in both customer-facing and back office technology which is resulting in more effective marketing and operations with anticipated cost savings of c. £400k per annum
Strong current trading with daily average casino revenue for July and August up 16% on the first six months of the year and up 9% on the corresponding period in 2008
Key Performance Indicators:
|
H1 2009 |
H2 2008 |
H1 2008 |
H2 2007 |
H1 2007 |
|
|
Casino Revenues |
£5.2m |
£5.7m |
£6.0m |
£4.4m |
£4.6m |
|
Active Players |
14,490 |
11,818 |
12,283 |
11,238 |
10,818 |
|
Casino Yield per active player |
£360 |
£480 |
£491 |
£390 |
£426 |
|
Casino new players |
9,733 |
7,377 |
8,189 |
7,304 |
7,291 |
|
Cost per acquisition |
£89 |
£106 |
£137 |
£140 |
£155 |
|
Poker Revenues |
£0.5m |
£0.5m |
£0.6m |
£0.6m |
£0.6m |
|
Active Players |
11,054 |
6,508 |
8,668 |
8,802 |
10,662 |
|
Poker Yield per player |
£44 |
£77 |
£64 |
£68 |
£57 |
|
Revenue from emerging products |
£0.1m |
£0.2m |
- |
- |
- |
|
|
|
|
|
|
|
|
Total revenue |
£5.8m |
£6.4m |
£6.6m |
£5.0m |
£5.2m |
|
|
|
|
|
|
|
|
EBITDA before share option costs |
£0.5m |
£0.8m |
£1.0m |
£0.9m |
£0.8m |
|
Earnings/(Loss) per share |
0.3p |
|
1.1p |
|
(16.8p) |
Ed Ware, CEO commented:
"Despite the global recession, 32Red has managed to grow its new casino players by a record 9,733, driven in part by our new television advertising campaign that has helped deliver a lower cost of customer acquisition. 32Red now has an excellent offering for customers covering all aspects of online gaming and is well positioned to take advantage of any improvement in market conditions. During the period we have also signed a sponsorship deal with Swansea City Football Club and look forward to working with them throughout this season and the next.''
2 September 2009
Enquiries:
| 32 Red PlcEd Ware, CEO Jon Hale, Finance Director |
Tel: 00 350 200 49396 |
|
Numis Securities Lee Aston, NOMAD Chris Wilkinson, Corporate Broking |
Tel: +44 (0)20 7260 1000 |
|
College Hill Associates Matthew Smallwood Jamie Ramsay |
Tel: +44 (0)20 7457 2020
|
32Red plc
Performance Summary
The challenging economic conditions faced by UK and European players during the first half of the year has resulted in overall revenues of £5.8m, down 9% on H2 2008 and down 11% on H1 2008.
Casino
Increased investment in selective marketing activities has yielded a record 9,733 new casino players during the first half of the year (8,189 in H1 2008). A large proportion of these new players were recruited by the recently launched television advertising campaign and it is pleasing to see the cost per acquisition of £89, down 16% on H2 2008 and down 35% on H1 2008. This cost-effective recruitment of new customers, along with continued targeted direct marketing campaigns, resulted in 14,490 active casino players in the first half of the year, up 23% on H2 2008 and up 18% on H1 2008.
The impressive growth in both active players and new players is partially offset by a reduction in player yields, which the Board believes is temporary and has been experienced widely in the industry. Casino revenues totalled £5.2m during the first six months of 2009 (H1 2008: £6.0m) and has suffered from reduced high-roller activity during the period, although the Board believe that this is a short term trend and is confident that increased high-roller activity will return later in the year.
32Red was delighted to receive a sixth consecutive Casinomeister Best Casino Award which is testament to the continued unrivalled customer service delivered by 32Red's Player Support team.
Other products
32Red Poker operations have generated revenues of £0.5m in the first half of the year (H1 2008: £0.6m). The Board continues to evaluate all aspects of the poker market and in particular welcomes recent moves to attempt to restrict those operators still accepting illegal bets from the US.
32Red Bingo operations generated £0.1m of revenue in the first half of the year (H1 2008: nil). Results from the initial marketing campaign were encouraging, confirming our belief that the 32Red brand sits comfortably as a bingo proposition and has potential.
32Red Rummy was launched on 7 July 2009 and will also offer its 32Red existing players the chance to play one of the world's best-known and compelling card games. Rummy also provides the Company with the opportunity to reach a new audience.
32Red Spreadbet, a platform for financial spread betting and contracts for difference (CFD's) was launched on 9 March 2009. 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. The partnership offers 32Red customers access to a multitude of financial markets around the globe.
Strategy
32Red will continue to focus on its core casino product while testing the marketability of its emerging products and monitoring regulatory changes in new territories. There are signs that economic conditions for players are improving and the Company will continue to invest in cost-effective marketing opportunities and in performance enhancing new technology.
Investment in marketing
32Red is proud to announce its association and partnership with leading Championship football team, Swansea City, for the next two seasons. The club has enjoyed notable success over recent seasons and we look forward to partnering with them as they continue their success. Swansea's progressive profile attracted 32Red to become main club sponsors through to 2011 which includes the appearance of 32Red's brand on the team's shirts and training kits and around the pitch at the Liberty Stadium.
The Directors believe that the sponsorship of Swansea City Football Club allied with targeted television advertising and other marketing campaigns will result in a steady recruitment of new players at attractive cost per acquisition rates and this bodes well for the Company's future.
Investment in new technology
The Company has recently invested in a direct marketing platform that will be fully live during the final quarter of 2009 facilitating a more detailed segmentation of the player databases and improving targeted email campaigns further enhancing the player experience.
32Red recently rolled out an automated bonus system tailored to meet the requirements of 32Red players. This investment in technology along with some re-structuring across the business has allowed the Company to implement a range of cost savings that will reduce overheads by approximately £400,000 per annum.
Litigation
32Red has initiated legal proceedings against three William Hill companies ("William Hill") in respect of the online casino, 32Vegas. The directors believe that the name 32Vegas infringes various 32Red registered trade marks and other intellectual property rights. 32Red issued a claim in the High Court of Justice on 4 March 2009 and this claim was served on 3 July 2009. Subsequent to service of the claim, William Hill has changed the 32Vegas website name, a move that was welcomed by 32Red.
In respect of the claim, William Hill filed a defence and counterclaim on 11 August 2009 challenging the validity of the 32Red trade marks. 32Red has always registered and protected its valuable trade marks and is fully prepared to defend their validity in the courts if necessary.
Current Trading and Outlook
The Board is encouraged by the key performance indicators detailed above, which allied with significant cost savings resulting from recent technological investments, leaves the Company well positioned for the future.
The second half of the year has started encouragingly with daily average casino revenue for July and August up 16% on the first six months of the year and up 9% on the corresponding period in 2008. Given current trading, the positive Key Performance Indicators detailed above and the cost-saving initiatives implemented during the first half of the year, the Board is confident that trading remains in line with expectations.
32Red Plc
Consolidated Income Statement
for the six months ended 30 June 2009
|
|
|
|
Notes |
|
Six months ended 30 June 2009 |
|
Six months ended 30 June 2008 |
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
|
|
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gaming wins |
|
|
|
5,838,552 |
|
6,577,856 |
|
|
Cost of sales |
|
|
|
(3,976,644) |
|
(4,274,869) |
|
|
Gross Profit |
|
|
|
1,861,908 |
|
2,302,987 |
|
|
Administrative expenses before depreciation and amortisation |
|
|
(1,278,228) |
|
(1,241,282) |
||
|
Other operating expenses |
|
|
(68,291) |
|
(64,655) |
||
|
EBITDA before share option costs |
|
|
515,389 |
|
997,050 |
||
|
Share option costs |
|
|
(82,355) |
|
(78,176) |
||
|
Depreciation and Amortisation |
|
|
(193,007) |
|
(141,867) |
||
|
Profit before tax and finance costs |
|
|
240,027 |
|
777,007 |
||
|
Finance income |
|
|
|
2,069 |
|
47,591 |
|
|
Finance costs |
|
|
|
(7,869) |
|
(33,088) |
|
|
Profit before taxation |
|
|
|
234,227 |
|
791,510 |
|
|
Tax on ordinary activities |
3 |
|
(450) |
|
(450) |
||
|
Profit for the period |
|
233,777 |
|
791,060 |
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (p) |
|
|
|
|
|
||
|
|
Basic |
|
2 |
|
0.3p |
|
1.1p |
|
|
Diluted |
|
2 |
|
0.3p |
|
1.1p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2009
|
|
|
Six months ended 30 June 2009 |
|
Six months ended 30 June 2008 |
|
|
|
Unaudited |
|
Unaudited |
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
Profit and total comprehensive income for the period |
|
233,777 |
|
791,060 |
32Red Plc
Consolidated Statement of Financial Position
as at 30th June 2009
|
|
|
|
Six months ended 30-Jun 2009 Unaudited |
|
Six months ended 30-Jun 2008 Unaudited |
|
|
|
|
Notes |
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
|
Intangible assets |
|
4 |
185,856 |
|
187,511 |
|
|
Tangible assets |
|
5 |
253,319 |
|
397,659 |
|
|
|
|
|
439,175 |
|
585,170 |
|
|
Current assets |
|
|
|
|
|
|
|
Trade and other receivables |
|
|
407,029 |
|
222,394 |
|
|
Cash and cash equivalents |
|
|
1,129,276 |
|
1,926,668 |
|
|
|
|
|
1,536,305 |
|
2,149,062 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
1,975,480 |
|
2,734,232 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Equity attributable to shareholders of 32Red Plc |
|
|
|
|||
|
Called up share capital |
|
|
138,750 |
|
138,250 |
|
|
Share premium |
|
|
14,171,025 |
|
14,165,276 |
|
|
Share option reserve |
|
|
414,844 |
|
254,728 |
|
|
Retained earnings |
|
|
(15,038,615) |
|
(15,791,451) |
|
|
Total equity |
|
|
(313,996) |
|
(1,233,197) |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CurrentTrade and other payables |
|
|
1,789,476 |
|
3,467,429 |
|
|
Bank loans |
|
|
500,000 |
|
500,000 |
|
|
|
|
|
2,289,476 |
|
3,967,429 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,289,476 |
|
3,967,429 |
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
1,975,480 |
|
2,734,232 |
|
32Red Plc
Consolidated Statement of Cash Flows
for the six months ended 30 June 2009
|
|
|
|
|
|
|
Six months ended 30-Jun 2009 Unaudited |
|
Six months ended 30-Jun 2008 Unaudited |
|
|||
|
|
|
|
|
|
|
£ |
|
£ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Operating activities |
|
|
|
|
|
|
|
|||||
|
Results for the year before interest and after tax |
|
239,577 |
|
776,557 |
|
|||||||
|
Amortisation |
|
|
|
|
75,866 |
|
32,234 |
|
||||
|
Depreciation |
|
|
|
|
117,141 |
|
109,633 |
|
||||
|
Change in trade and other receivables |
|
|
(80,932) |
|
657,820 |
|
||||||
|
Change in trade and other payables |
|
|
(321,324) |
|
(1,545,025) |
|
||||||
|
Share option costs |
|
|
|
|
82,355 |
|
78,176 |
|
||||
|
|
|
|
|
|
|
112,683 |
|
109,395 |
|
|||
|
Investing activities |
|
|
|
|
|
|
|
|
||||
|
Additions to other intangible assets |
|
|
(66,190) |
|
(49,007) |
|
||||||
|
Additions to tangible assets |
|
|
|
(71,032) |
|
(43,974) |
|
|||||
|
Interest received |
|
|
|
|
2,069 |
|
47,591 |
|
||||
|
|
|
|
|
|
|
(135,153) |
|
(45,390) |
|
|||
|
Financing activities |
|
|
|
|
|
|
|
|
||||
|
Share options exercised |
|
|
|
- |
|
3,750 |
|
|||||
|
Proceeds from borrowings |
|
|
|
500,000 |
|
500,000 |
|
|||||
|
Repayment of bank loans |
|
|
|
(250,000) |
|
- |
|
|||||
|
Interest paid |
|
|
|
|
(7,869) |
|
(33,088) |
|
||||
|
|
|
|
|
|
|
242,131 |
|
470,662 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Cash and cash equivalents, beginning of period |
|
909,615 |
|
1,392,001 |
|
|||||||
|
Net increase in cash and cash equivalents |
|
219,661 |
|
534,667 |
|
|||||||
|
Cash and cash equivalents, end of period |
|
|
1,129,276 |
|
1,926,668 |
|
||||||
Notes:
1. Accounting policies
The consolidated interim financial results have been 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 2008, available on www.32redplc.com.
2. 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 69,375,000 shares (2008: 69,083,563).
To calculate the diluted earnings per share figure, the weighted average of employee share options expected to vest has been added. This number represents management's best estimate at the balance sheet date, which is also used for calculating employee payments relating to share based payment transactions. At 30 June 2009, the weighted average number of share options expected to vest was 3,953,000 (2008: 3,245,707).
|
|
|
|
|
|
Six months ended |
|
Six months ended |
|
||||
|
|
|
|
|
|
30-Jun |
|
30-Jun |
|
||||
|
|
|
|
|
|
2009 |
|
2008 |
|
||||
|
|
|
|
|
|
£ |
|
£ |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
Net profit attributable to ordinary shares |
|
|
|
233,777 |
|
791,060 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average number of ordinary shares: |
|
|
|
|
|
|
|
|||||
|
for basic earnings for diluted earnings |
|
|
69,375,000 |
|
69,083,563 |
|
||||||
|
|
|
73,328,000 |
|
72,329,270 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||
|
Basic earnings per share |
|
|
|
|
0.3p |
|
1.1p |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
Diluted earnings per share |
|
|
|
|
0.3p |
|
1.1p |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average number of ordinary shares for basic earnings |
|
69,375,000 |
|
69,083,563 |
||||||||
|
Weighted average number of share options |
|
|
|
|
3,953,000 |
|
3,245,707 |
|||||
|
Weighted average number of ordinary shares for diluted earnings |
|
73,328,000 |
|
72,329,270 |
||||||||
3. Taxation
|
|
|
Six months ended |
|
Six months ended |
|
|
|
|
30-Jun |
|
30-Jun |
|
|
|
|
2009 |
|
2008 |
|
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax on profit on ordinary activities |
|
450 |
|
450 |
|
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 period.
4. Intangible assets
|
|
|
|
|
|
|
|
|
|
|
Website Development |
|
Software License |
|
Total |
|
|
|
£ |
|
£ |
|
£ |
|
Cost |
|
|
|
|
|
|
|
At 1 January 2009 |
|
264,883 |
|
217,819 |
|
482,702 |
|
Additions |
|
5,520 |
|
60,670 |
|
66,190 |
|
At 30 June 2009 |
|
270,403 |
|
278,489 |
|
548,892 |
|
|
|
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
|
|
At 1 January 2009 |
|
174,024 |
|
113,146 |
|
287,170 |
|
Provided during the period |
|
26,806 |
|
49,060 |
|
75,866 |
|
At 30 June 2009 |
|
200,830 |
|
162,206 |
|
363,036 |
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
At 30 June 2009 |
|
69,573 |
|
116,283 |
|
185,856 |
|
At 30 June 2008 |
|
73,653 |
|
113,858 |
|
187,511 |
|
|
|
|
|
|
|
|
5. Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
Motor Vehicles |
|
Computer and Office Equipment |
|
Leasehold Improve-ments |
|
Total |
|
|
|
£ |
|
£ |
|
£ |
|
£ |
|
|
Cost |
|
|
|
|
|
|
|
|
|
At 1 January 2009 |
132,795 |
|
941,285 |
|
78,116 |
|
1,152,196 |
|
|
Additions |
- |
|
71,032 |
|
- |
|
71,032 |
|
|
At 30 June 2009 |
132,795 |
|
1,012,317 |
|
78,116 |
|
1,223,228 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
At 1 January 2009 |
93,102 |
|
727,027 |
|
32,639 |
|
852,768 |
|
|
Charge for the period |
12,235 |
|
97,094 |
|
7,812 |
|
117,141 |
|
|
At 30 June 2009 |
105,337 |
|
824,121 |
|
40,451 |
|
969,909 |
|
|
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
|
|
At 30 June 2009 |
27,458 |
|
188,196 |
|
37,665 |
|
253,319 |
|
|
At 30 June 2008 |
52,972 |
|
291,398 |
|
53,289 |
|
397,659 |
|
Related Shares:
TTR.L