TIDMTTR
RNS Number : 9285Y
32Red Plc
09 March 2017
9 March 2017
32Red Plc
("32Red" or the "Group" or the "Company")
'A record year for revenue and profit'
Final results for the year ended 31 December 2016
32Red, the award-winning online gaming operator, today announces
its final results for the year ended 31 December 2016
Key highlights:
-- Record revenue performance with total net gaming revenues up
28% to GBP62.3m (2015: GBP48.7m)
-- EBITDA* increased 102% to GBP10.6m (2015: GBP5.2m)
-- PBT increased 511% to GBP6.5m (2015: GBP1.1m)
-- 77% of net gaming revenues derived from regulated and taxed markets (2015: 80%)
-- 32Red moves to profitability in Italian market
-- Successful launch of new responsive, multi-platform website in April 2016
-- Extended contract with improved and more flexible terms signed with Microgaming
-- Mobile revenues represent 57% of total casino revenues (2015: 44%)
-- Exclusive licence to promote casino games for ITV flagship brands featuring Ant and Dec
-- British Horse Racing sponsorship agreements with racecourses and brand ambassadors
-- Strong start to 2017 with net gaming revenues for the first
nine weeks of the year up 20% on the same period in 2016
-- Post Period end, 32Red announced the recommended cash offer
from Kindred Group plc for the entire issued and to be issued share
capital of 32Red at 196p per share
Key Financials:
2016 2015 %
----------------------------- ---------- ---------- -------
Net Gaming Revenue (NGR)
----------------------------- ---------- ---------- -------
Casino NGR GBP58.5m GBP46.3m +26%
Other products NGR GBP3.8m GBP2.4m +60%
Total NGR GBP62.3m GBP48.7m +28%
----------------------------- ---------- ---------- -------
EBITDA* GBP10.6m GBP5.2m 102%
PBT GBP6.5m GBP1.1m 511%
----------------------------- ---------- ---------- -------
Earnings per share
Basic 7.46p 1.23p 507%
Diluted 6.93p 1.14p 508%
----------------------------- ---------- ---------- -------
Full year dividend 5.3p 2.8p +89%
----------------------------- ---------- ---------- -------
Cash balance at 31 December GBP10.1m GBP10.3m -1%
----------------------------- ---------- ---------- -------
Commenting on the results, Ed Ware, Chief Executive Officer,
said:
"It is once again a pleasure to announce another record annual
performance from 32Red. In 2016 the Group delivered continued
strategic progress across the business with outstanding growth on
mobile, further successful product enhancements and highly
successful marketing investment, all the while maintaining one of
the highest levels of regulated revenue amongst our peers. This
outstanding operational progress has resulted in another hugely
successful financial outcome with EBITDA* more than doubling and
revenues rising by an impressive 28% to exceed prior records.
Momentum into 2017 has remained strong with NGR up 20% year on
year. Underpinned by the strength of the brand, 32Red has an
exceptional platform to drive continued growth across the business
and increase market share both in the UK and Italy.
The recommended offer for the business by Kindred Group plc post
the Period end reflects the strength of the 32Red brand as well as
its significant growth opportunities as a casino focused operator.
We are confident that Kindred would provide the right fit both
operationally and culturally to continue the Group's growth.
The Group's outstanding performance in 2016 is, above all,
testament to the efforts of our outstanding team. Their passion,
skill and dedication continues to drive the business forward. 2017
is set to be another landmark year for 32Red and I would like to
thank all of my colleagues for their continued dedication and hard
work."
Enquiries:
32Red Plc Tel: +00 350 200
49396
Ed Ware, CEO
Jon Hale, CFO
Numis Securities Limited Tel: +44 (0) 20 7260
1000
Michael Meade (Nominated Adviser)
Chris Wilkinson (Corporate Broking)
Michael Burke (Corporate Broking)
Hudson Sandler Tel: +44 (0) 207
796 4133
Alex Brennan 32Red@hudsonsandler.com
Bertie Berger
*Underlying EBITDA is Earnings before Interest, Tax,
Depreciation and Amortisation derived from the 32Red & Roxy
Palace businesses i.e. excluding results from its Italian
operations and is stated before share option costs and exceptional
items.
CHAIRMAN'S STATEMENT
Another year of outstanding growth
I am pleased to report another record breaking year for 32Red.
The Group's outstanding performance in 2016 was again testament to
the strength of the 32Red brand, the quality of our product
offering, the effectiveness of our targeted, returns-driven
marketing and the efforts of our outstanding people.
Financial Review
32Red's strong operational momentum continued throughout 2016
resulting in the Group delivering total net gaming revenues ("NGR")
up 28% to a record GBP62.3m (2015: GBP48.7m). This very strong
performance was driven by continued growth across our core 32Red
business (+19% on 2015) as well as a healthy full year contribution
from the Roxy Palace business that was acquired in July 2015.
In this report (and going forward) the Group is reporting and
intends to report its NGR as split between Total Casino NGR and
Other Products NGR. With 32Red Casino in Italy now profitable and
Roxy Palace successfully integrated into the Group, the Board
believes this disclosure better reflects the business and its
growth opportunities as a predominantly remote casino operator.
Total Casino NGR increased 26% to GBP58.5m in 2016 (2015:
GBP46.3m) and represented 94% of total NGR (2015: 95%). This very
strong growth reflected increased and effective marketing
investment in 32Red Casino, a full year's contribution from Roxy
Palace Casino, and good growth from 32Red Casino in Italy.
Revenue from 32Red Other Products continued to grow strongly,
primarily driven by 32RedSport which is continuing to develop as an
increasingly important customer acquisition and retention
channel.
Total NGR 2016 2015 Var
-------------------------- --------- --------- -----
Total Casino NGR GBP58.5m GBP46.3m +26%
-------------------------- --------- --------- -----
Other Products NGR GBP3.8m GBP2.4m +60%
-------------------------- --------- --------- -----
Total Net Gaming Revenue GBP62.3m GBP48.7m +28%
-------------------------- --------- --------- -----
This record revenue performance resulted in an increase in
EBITDA of 102% to a record GBP10.6m (2015: GBP5.2m). Profit before
taxation of GBP6.5m in 2016 (2015: GBP1.1m) generates a basic
earnings per share of 7.46p (2015: 1.23p).
The Group had a net cash balance of GBP10.1m as at 31 December
2016 (2015: GBP10.3m) and had no borrowings.
Recommended Cash Offer by Kindred for 32Red
On 23 February 2017, the Company announced that it had reached
agreement with Kindred Group plc ("Kindred") on the terms of a
unanimously recommended cash offer under which Kindred would offer
to acquire the entire issued and to be issued share capital of
32Red, such offer to be implemented by way of a takeover offer in
accordance with the laws of Gibraltar (the "Offer").
Under the terms of the Offer, Kindred is offering to acquire the
entire issued and to be issued share capital of 32Red for 196 pence
in cash for each 32Red share. In addition, 32Red shareholders, as
at the record date of 3 March 2017, will also be entitled to
receive and retain a second interim dividend per 32Red share of 4
pence to be paid to 32Red shareholders on 23 March 2017. The Offer
values the entire issued and to be issued share capital of 32Red on
a fully diluted basis at approximately GBP175.6 million.
Since being admitted to trading on AIM in 2005, 32Red has
successfully pursued its clear and focused strategy to exploit both
organic and selective M&A opportunities and deliver sustainable
long-term growth for all its stakeholders. This strategy has been
focused, primarily, upon growing its brands in its core UK market
and expansion in new regulated markets where 32Red could exploit
its marketing strength. This strategy has delivered strong net
gaming revenue growth and increased profitability for
shareholders.
However, whilst the 32Red Directors continue to believe in its
stated growth strategy and the strength of the 32Red brand, they
also believe that 32Red would now be better placed as part of a
larger group. Kindred represents a strong strategic and cultural
fit for 32Red and the 32Red Directors believe a combination will
build on 32Red's long-standing presence and well-established brand
in the UK casino market.
In making its assessment of the merits of the Offer, the 32Red
Board has taken into account:
-- the level of the cash consideration payable under the Offer,
being at a level above 32Red's all-time high closing share price
and (including the Approved Dividend) at a premium of 39.5 per
cent. to the volume weighted average closing price per 32Red Share
of 143.4 pence in the three months prior to the start of the Offer
Period;
-- the Offer representing an attractive valuation when
considered against 32Red's historic earnings and prospects;
-- the relative lack of liquidity in 32Red Shares and the fact
that the Offer provides 32Red Shareholders with a certain
opportunity to realise their investment in 32Red wholly for cash;
and
-- the level of irrevocable undertakings to accept (or procure
the acceptance of) the Offer, representing, in aggregate 71.1 per
cent. of the 32Red Shares.
Following this assessment and for the reasons set out above, the
32Red Board is unanimously recommending that 32Red Shareholders
accept the Offer.
Operational progress
Underpinning the Group's financial success has been continued
strong progress against 32Red's strategic objectives. During 2016,
we continued to innovate and develop our product offering with a
notable highlight being the successful launch of our new 32Red
Casino responsive multi-platform website in April. This has
contributed to enhanced player retention, increased deposit levels
and accelerated mobile casino growth, which now represents 57% of
total casino revenues (2015: 44%).
In line with our continued focus on driving growth in
sustainable regulated markets, revenue from regulated markets
remained amongst the highest levels of our peers at 77% (2015:
80%).
During 2016, as mentioned above, as anticipated the Group turned
to profitability in Italy and the Board continues to see exciting
potential in this major online gaming market.
Effective from 1 November 2016, the Group was delighted to
extend its contract with innovative commercial terms with digital
gaming solutions partner, Microgaming. This important new
arrangement is enabling 32Red to develop its strength in regulated
markets whilst retaining its broad appeal across the target
audience.
Edward Ware outlines the Group's progress in further detail in
the CEO's Strategic Review.
People
Central to the growth and success of the 32Red business is our
excellent team. Their talent and dedication means that we continue
to achieve our goal of always exceeding customer expectations. I
would like to take this opportunity to thank the entire 32Red team
for their continued hard work and skill that remains critical to
the Group's growth.
Current Trading and Outlook
32Red has excellent momentum with record growth in 2016 being
driven by our core Casino products. We have continued to deliver
progress against our strategy underpinned by effective ROI-driven
marketing and an enhanced customer proposition.
32Red is firmly focused on driving growth in regulated markets
which offer sustainable, long term prospects for the Group. The
Group remains focused on delivering opportunities in our core UK
market as well as in Italy where we are confident of successfully
building on the platform we have established.
In August 2017 the online gaming market in the UK is
anticipating changes in remote gaming duty in relation to customer
bonuses. Whilst this will offer a headwind to the industry, the
Board is confident that with 32Red's strong brand, marketing
capabilities and operational momentum the Group is well positioned
to minimalise the impact of these changes on the Group as well as
capitalising on potential opportunities presented by any changes in
market dynamics.
Trading during the current financial year has been strong across
all areas of the business with like-for-like net gaming revenues
for the first 9 weeks of the year up 20%% on the same period in
2016. Underpinned by this continued momentum, the Board remains
confident that 32Red is well positioned for the future.
CEO's Strategic Review
Delivering our focused growth strategy
32Red is a fast-growing, casino-focused online gaming operator
with one of the highest levels of regulated income amongst its peer
group. Underpinning the Group's continued success are its strong
and trusted brands; unwavering customer focus; return on
investment-driven marketing expertise; and a clear growth
strategy.
The strategy is aimed at successfully exploiting organic
opportunities and therefore delivering sustainable long-term growth
for all stakeholders. This strategy revolves around three core
pillars:
Growing our brands in our core UK market
The Company is focused on growing its brands in our core UK
market, where we continue to see significant growth potential for
32Red. We will do this through developing and implementing return
on investment-driven marketing campaigns that deliver real value
for the 32Red business and by continuing to enhance and improve our
customer offer.
Expansion in regulated markets
The Company is focused on growing its presence in regulated
online gaming markets where the Board feels that 32Red has
commercially viable opportunities and can exploit its full
marketing and operational strength.
Continue to do what's right for our customers
At the very core of everything we do is a focus on looking after
our customers. 32Red has a heritage in pure online gaming and the
Company has established a strong reputation by innovating for its
customers' enjoyment as well as protecting them. This is not only
the right thing to do but it strengthens our trusted brand in the
marketplace, in turn driving more customers to our business and
keeping them for longer.
32Red's progress against this strategy is underpinned by the
Group's core expertise in marketing its products and brands. This
allows the Group to recruit increased customer numbers to the
business in the most cost efficient manner possible. Then, by
offering a first class experience and service as well as relevant
communications and offers, we are able to keep these customers
playing with 32Red's products for longer.
Return on investment-driven multi-channel marketing
The 32Red brand is one of the most recognised in the industry
through its carefully positioned and efficient return on investment
('ROI') driven marketing. Since the Group's inception in 2002, the
team at 32Red has developed and grown a distinct, leading brand
that is recognised as a trusted online casino market leader.
2016 saw an 26% increase in total marketing investment,
reflecting the significant growth opportunities that we continue to
see for the Group.
During the year, we increased 'above the line' investment in
marketing the 32Red brand and, in August 2016, the Group aired its
first TV advert promoting its sports book, reflecting the
importance of the Group's multi-product strategy. During the year,
the Company signed a twelve month deal to advertise around live
sport on Sky, including a number of half-time adverts in live
Premier League football matches. In May 2016, the Company announced
a three year agreement to sponsor Leeds United Football Club,
providing 32Red with shirt sponsorship, access to Leeds United's
global fan base and extensive brand visibility throughout the
club's iconic Elland Road stadium as well as across its digital and
media platforms. This sponsorship complements our existing shirt
sponsorship of Rangers Football Club who, in 2016, returned to top
flight football in Scotland.
32Red has been a major sponsor of horse racing for a number of
years and in 2016 we added two significant events to our
sponsorship roster: The King George Winter Festival on Boxing Day
and Haydock Park's prestigious Group 1 Sprint Cup. 32Red also
renewed its commitment to the sponsorship of the All Weather
Championship for the next two seasons.
Strategic partnerships
In September 2016, 32Red was pleased to announce that it agreed
a new and extended contract with innovative commercial terms with
digital gaming solutions partner, Microgaming. Under the new
agreement, which is effective from 1 November 2016, the
relationship cements Microgaming as 32Red's central and major
technical and content supplier. The new deal also gives 32Red the
flexibility to utilise alternative providers in order to enable the
Company to ensure it is able to attract and retain the full
spectrum of casino players to the 32Red brand in both the UK and
other regulated markets.
The Group continues to partner with Kambi Sports Solutions who
provide a fully managed sportsbook solution for the Group under the
32Red brand. In May 2016, the Company renewed its commercial
agreement with Kambi which will support the Group's growth plans in
this increasingly important and fast-growing product vertical.
32Red Casino Products
32Red is a casino focused operator with a rare heritage and
reputation in this product vertical. In 2016, 94% of Group revenues
were generated from Casino activities. Mobile remains a key growth
driver behind the Casino Products performance and now represents
57% of total 32Red Casino revenues (2015: 44%).
We continue to invest in and develop our Casino offer and, in
April, 32Red was proud to launch a new responsive website that has
enhanced the functionality and user experience across both desktop
and mobile platforms. Our customers now enjoy a more personalised
experienced based on their preferences and behaviour and, since
launch, the Group has experienced a strong uplift in customer
retention and deposit levels.
We have continued to invest in our gaming content to ensure
32Red always offers the freshest and most engaging entertainment.
In September the Group was pleased to announce a new three year
partnership with ITV Commerce & Ventures which saw two of the
broadcaster's biggest brands extend their exclusive game content
with the Group. A new "I'm a Celebrity...Get Me Out Of Here!(TM)"
slot game, featuring well-known features from the show including
Ant and Dec themselves and of course a Bushtucker Trial themed
bonus game, enhances 32Red's existing game offering. In addition,
32Red's "Ant & Dec's Saturday Night Takeaway" slot game brings
all the favourite parts of the award-winning entertainment show to
life for our customers including clips and imagery from the
show.
The Group's development in Italy has been pleasing and, in line
with our expectations, 32Red.it turned to profitability during
2016. Net gaming revenues increased by 33% to GBP2.3m (2015:
GBP1.7m). Italy remains a competitive but attractive market for
32Red and we continue to examine further ways to broaden our
product offering and drive further growth.
32Red Other Products
Whilst 32Red remains a dominantly Casino-led operator, revenue
from 32Red Other Products continued to grow strongly, up 60%
year-on-year. This growth was primarily driven by 32RedSport which
benefitted from increased marketing investment and is developing as
an increasingly important customer acquisition and retention
product for the Group. The Group's Poker and Bingo operations
continue to benefit from the investment in and visibility of the
32Red brand as well as from increased activity levels at 32Red
Casino.
Looking ahead
32Red is well positioned as an established and fast-growing
Casino focused operator with the vast majority of its revenue
generated from regulated markets. Building on its strong platform
we expect the brand to deliver a year of further progress in
2017.
Edward Ware,
Chief Executive Officer, 32Red Plc
32Red Plc
Consolidated Statement of Comprehensive
Income
for the year ended 31 December
2016
Notes 2016 2015*
GBP GBP
Net gaming revenue 3 62,270,345 48,660,355
Cost of sales 10 (28,003,320) (21,705,032)
------------- -------------
Gross profit 34,267,025 26,955,323
Administrative expenses (23,704,810) (21,719,247)
EBITDA before share option
costs and exceptional items 10,562,215 5,236,076
----------------------------------------- ------ ------------- -------------
Share option costs (750,659) (555,981)
Depreciation and amortisation (3,224,504) (2,687,549)
Loss on impairment 8 - (356,188)
Operating profit before exceptional
items 2 6,587,052 1,636,358
Exceptional items 4 (57,963) (587,322)
------------- -------------
Operating profit after exceptional
items 6,529,089 1,049,036
Finance income 5 11,623 22,206
------------- -------------
Profit on ordinary activities
before taxation 6.540,712 1,071,242
Tax on ordinary activities 7 (234,978) (106,944)
------------- -------------
Profit and total comprehensive
income for the year 6,305,734 964,298
============= =============
Earnings per share (p)
Basic 6 7.46p 1.23p
Diluted 6 6.93p 1.14p
*As amended (see note 10)
32Red Plc
Consolidated Statement
of Changes in Equity
for the year ended 31 December
2016
Equity attributable to
equity holders of 32Red
Plc
Share EBT
Share Share options reserve Retained Total
capital premium reserve earnings equity
GBP GBP GBP GBP GBP GBP
Balance 1 January
2015 147,360 447,218 876,159 (156,576) 4,431,951 5,746,112
Shares options
lapsed/exercised - - (21,184) - 21,184 -
Share options
charge - - 555,981 - - 555,981
Shares issued
for cash 20,000 6,380,000 - - - 6,400,000
Shares acquired
by the EBT - - - (402,022) - (402,022)
Shares transferred
from the EBT - - - 78,326 (35,501) 42,825
Dividends paid - - - - (1,952,051) (1,952,051)
------------- ------------- ------------ ------------ ------------ ------------
Transactions with
owners 20,000 6,380,000 534,797 (323,696) (1,966,638) 4,644,733
Profit and total
comprehensive
income for the
year - - - - 964,298 964,298
------------- ------------- ------------ ------------ ------------ ------------
Balance 31
December
2015 167,360 6,827,218 1,410,956 (480,272) 3,429,881 11,355,143
============= ============= ============ ============ ============ ============
Balance 1 January
2016 167,360 6,827,218 1,410,956 (480,272) 3,429,881 11,355,143
Shares options
lapsed/exercised - - (871,537) - 871,537 -
Share options
charge - - 750,659 - - 750,659
Shares issued 3,335 - - - - 3,335
Shares acquired
by the EBT - - - (481,666) - (481,666)
Shares transferred
from the EBT - - - 382,626 (128,107) 254,519
Dividends paid - - - - (5,039,230) (5,039,230)
------------- ------------- ------------ ------------ ------------ ------------
Transactions with
owners 3,335 - (120,878) (99,040) (4,295,800) (4,512,383)
Profit and total
comprehensive
income for the
year - - - 6,305,734 6,305,734
------------- ------------- ------------ ------------ ------------ ------------
Balance 31
December
2016 170,695 6,827,218 1,290,078 (579,312) 5,439,815 13,148,494
============= ============= ============ ============ ============ ============
32Red Plc
Consolidated Statement
of Financial Position
as at 31 December 2016
Notes 2016 2015
GBP GBP
Assets
Non-current
Intangible assets 8 7,485,893 8,814,700
Property, plant and equipment 9 1,239,002 1,061,493
8,724,895 9,876,193
Current
Other receivables 2,736,537 1,393,243
Cash and cash equivalents 10,120,414 10,255,347
----------- -----------
12,856,951 11,648,590
----------- -----------
Total assets 21,581,846 21,524,783
=========== ===========
Equity
Equity attributable to shareholders
of 32Red Plc
Called up share capital 170,695 167,360
Share premium 6,827,218 6,827,218
Share option reserve 1,290,078 1,410,956
EBT Reserve (579,312) (480,272)
Retained earnings 5,439,815 3,429,881
Total equity 13,148,494 11,355,143
----------- -----------
Non-current liabilities
Trade and other payables 547,177 -
----------- -----------
547,177 -
=========== ===========
Current liabilities
Social security and other
employee taxes 14,004 82,774
Trade and other payables 7,872,171 10,086,866
7,886,175 10,169,640
----------- -----------
Total liabilities 8,433,353 10,169,640
=========== ===========
Total equity and liabilities 21,581,846 21,524,783
=========== ===========
32Red Plc
Consolidated Statement of
Cash Flows
for the year ended 31 December
2016
2016 2015
GBP GBP
Cash flows from operating
activities
Profit and total comprehensive
income for the year 6,305,734 964,298
Adjustments for:
Amortisation of intangible
assets 2,776,030 2,210,979
Depreciation of property,
plant and equipment 448,474 476,570
Impairment loss on intangible
fixed assets - 356,188
Share options charge 750,659 555,981
Interest income (11,623) (22,206)
Tax expense 234,978 106,944
10,504,252 4,648,754
Change in other receivables (1,343,294) (463,128)
Change in trade and
other payables (1,830,233) 5,258,441
---------------- ------------
Cash generated from
operating activities 7,330,725 9,444,067
Corporation tax paid (141,033) (139,932)
---------------- ------------
Net cash from operating
activities 7,189,692 9,304,135
---------------- ------------
Investing activities
Interest received 11,623 22,206
Additions to intangible assets (1,447,223) (2,076,723)
Cash used in business combinations - (1,000,000)
Additions to property, plant
and equipment (631,698) (739,179)
Disposal of property,
plant and equipment 5,715 7,053
---------------- ------------
Net cash used in investing
activities (2,061,583) (3,786,643)
---------------- ------------
Financing activities
Shares issued for cash 3,335 -
Proceeds on disposal
of shares by the EBT 254,519 42,825
Shares acquired by the
EBT (481,666) (402,022)
Dividends paid during
the year (5,039,230) (1,952,051)
---------------- ------------
Net cash used in financing
activities (5,263,042) (2,311,248)
---------------- ------------
Cash and cash equivalents,
beginning of the year 10,255,347 7,049,103
Net increase in cash and cash
equivalents (134,933) 3,206,244
---------------- ------------
Cash and cash equivalents,
end of the year 10,120,414 10,255,347
================ ============
Notes:
1 Accounting policies
The financial statements have been prepared in accordance with
International Financial Reporting Standards ('IFRSs') as adopted by
the European Union and issued by the International Accounting
Standards Board ('IASB'). These accounting policies comply with
each IFRS that is mandatory for accounting periods commencing on or
after 1 January 2016. The financial statements have been prepared
under the historical cost convention and on a going concern
basis.
Operating profit before
2 exceptional items 2016 2015
GBP GBP
This is stated after charging
the following administrative
expenses:
Auditor's remuneration
- audit fees 47,750 53,500
Depreciation of owned property,
plant and equipment 448,474 476,570
Amortisation of other
intangible assets 2,776,030 2,210,979
Loss on impairment of
intangible fixed assets - 356,188
Operating lease rentals 291,547 234,900
Share options charge 750,659 555,981
Foreign exchange (gains)
/ losses (236,007) 87,517
========== ==========
3 Segment information
Business segment
For management purposes and for transacting with customers, the
Group's operations can be segmented into the following reporting
sections:
2016 2015
GBP GBP
Casino
Net gaming revenue - underlying 45,612,929 39,361,681
Net gaming revenue - Italy 2,279,278 1,716,390
Net gaming revenue - Roxy Palace 10,569,312 5,205,341
------------- --------------
58,461,519 46,283,412
------------- --------------
Segmental gross profit before
marketing costs - underlying 25,783,718 21,764,943
Segmental gross profit before
marketing costs - Italy 953,177 602,307
Segmental gross profit before
marketing costs - Roxy Palace 6,117,566 3,787,008
------------- --------------
32,854,461 26,154,258
------------- --------------
Other products
------------- --------------
Net gaming revenue 3,808,826 2,376,943
------------- --------------
Segmental gross profit before
marketing costs 1,412,564 801,065
------------- --------------
Consolidated
------------- --------------
Net gaming revenue 62,270,345 48,660,355
============= ==============
Gross profit before marketing
costs 34,267,025 26,955,323
============= ==============
Administrative expenses (27,679,973) (25,318,965)
Exceptional items (57,963) (587,322)
Operating profit 6,529,089 1,049,036
============= ==============
The directors consider that it is not meaningful
to distinguish aggregate marketing costs and
administrative expenses between the business
segments. With the exception of Italy, geographical
segment information is not used by management
for the measurement of operating performance
and is not readily available.
Aggregate net assets are split between the business
segments as follows:
2016 2015
GBP GBP
Casino
Other receivables - underlying 2,736,537 1,347,698
Other receivables - Italy - 20,647
Other receivables - Roxy
Palace - 22,892
Cash and cash equivalents
- underlying 9,244,876 9,444,199
Cash and cash equivalents
- Italy 51,748 122,615
Cash and cash equivalents
- Roxy Palace 784,725 675,981
Trade and other payables
- underlying (6,888,788) (9,028,979)
Trade and other payables
- Italy (74,045) (43,740)
Trade and other payables
- Roxy Palace (165,227) (316,067)
================= ==============
5,689,826 2,245,246
================= ==============
Other products
Other receivables - underlying - 2,006
Cash and cash equivalents
- underlying 39,065 12,552
Trade and other payables
- underlying (744,111) (698,080)
(705,046) (683,522)
================= ==============
Consolidated net assets 4,984,780 1,561,724
Other non-current assets 8,724,895 9,876,193
Other no-current liabilities (547,178)
Social security and other
taxes (14,004) (82,774)
13,148,493 11,355,143
================= ==============
Non-current assets are used by all the business segments and a
split has not been made by segment because management internally
review the assets and liabilities in aggregate. Furthermore "social
security and other taxes" relate to all business segments and
cannot be split in a meaningful way.
4 Exceptional items
2016 2015
GBP GBP
GBGA legal costs 57,963 96,973
Due Diligence costs - 126,988
Restructuring costs - 363,541
------- --------
57,963 587,322
======= ========
During the year, legal costs of GBP57,963 (2015: GBP96,973) were
expensed in respect of industry lobbying and legal advice received
in connection with the UK Government's proposed Point of
Consumption Tax and regulation. As a result of the acquisition and
subsequent relocation of the Roxy Palace business during 2015, the
Company incurred due diligence costs of GBP126,988 and
restructuring costs of GBP363,541 in the prior year.
Finance income and
5 costs
The following amounts have been included in the income statement
for the reporting periods presented:
2016 2015
GBP GBP
Interest income
from
short term
deposits 11,623 22,206
============================================== ============================================
6 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 84,484,016 shares (2015: 78,337,590).
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.
2016 2015
GBP GBP
Net profit attributable
to ordinary shares 6,305,734 964,298
=========== ===========
Weighted average number
of ordinary shares:
for basic earnings 84,484,016 78,337,590
=========== ===========
for diluted earnings 90,933,203 84,412,146
=========== ===========
Basic earnings per share 7.46p 1.23p
=========== ===========
Diluted earnings per share 6.93p 1.14p
=========== ===========
Weighted average number of
ordinary shares for basic
earnings 84,484,016 78,337,590
Weighted average options
and warrants 6,449,187 6,074,556
Weighted average number of
ordinary shares for diluted
earnings 90,933,203 84,412,146
=========== ===========
7 Taxation 2016 2015
GBP GBP
Analysis of charge
in period
Current tax:
Tax on profit on ordinary
activities 234,978 106,944
======== ========
In 2016, assessable income is taxed in Gibraltar at the
mainstream corporate income tax rate of 10% (2015: 10%). The
Group's wholly owned subsidiary, 32Red Limited, is liable to
corporation tax in the UK at a rate of 20%
2016 2015
GBP GBP
Taxable profit 6,540,712 1,071,242
Profit on ordinary activities
multiplied by the standard
rate of corporation
tax in Gibraltar of
10% (2012: 10%) 654,071 107,124
Effects of:
Depreciation in excess
of capital allowances 287,007 273,823
Expenses not deductible
for tax purposes - 49,053
Income not subject to
corporation tax (706,099) (323,056)
---------- ----------
Tax charge 234,978 106,944
---------- ----------
Effective tax rate 3.6% 10.0%
8 Intangible assets
Brand Software
and domain Player Website and other
names database develop-ment licences Total
GBP GBP GBP GBP GBP
Cost
At 1 January 2015 1,013,079 813,015 385,623 2,248,681 4,460,398
Additions acquired
through business
combinations 3,971,047 4,428,953 - - 8,400,000
Additions acquired
during the year 778,347 - 43,294 255,082 1,076,723
Disposals during
the year (1,167,146) (672,807) (318,489) (759,073) (2,917,515)
------------ ---------- -------------- ----------- ------------
At 31 December
2015 4,595,327 4,569,161 110,428 1,744,690 11,019,606
Additions acquired
during the year 127,102 - 20,516 1,299,605 1,447,223
At 31 December
2016 4,722,429 4,569,161 130,944 3,044,295 12,466,829
============ ========== ============== =========== ============
Amortisation
At 1 January 2015 458,193 690,975 385,623 1,020,463 2,555,254
Charge for the
year 948,183 519,443 34,594 708,759 2,210,979
Loss on impairment 356,188 - - - 356,188
Disposals during
the year (1,167,146) (672,807) (318,489) (759,073) (2,917,515)
------------ ---------- -------------- ----------- ------------
At 31 December
2015 595,418 537,611 101,728 970,149 2,204,906
Charge for the
year 1,130,530 913,832 25,592 706,076 2,776,030
At 31 December
2016 1,725,948 1,451,443 127,320 1,676,225 4,980,936
============ ========== ============== =========== ============
Net book value
At 31 December
2016 2,996,481 3,117,718 3,624 1,368,070 7,485,893
============ ========== ============== =========== ============
At 31 December
2015 3,999,909 4,031,550 8,700 774,541 8,814,700
============== =========== ============
9 Property, plant and equipment
Computer
and office Leasehold
Motor vehicles equipment improvements Total
GBP GBP GBP GBP
Cost
At 1 January
2015 204,179 2,103,492 319,726 2,627,397
Additions during
the year 52,174 506,640 180,363 739,177
Disposals during
the year (35,264) (95,570) (277,485) (408,319)
--------------- ------------ -------------- ----------
At 31 December
2015 221,089 2,514,562 222,604 2,958,255
Additions during
the year 78,541 538,314 14,843 632,698
Disposals during
the year (90,585) - - (90,585)
At 31 December
2016 209,045 3,052,876 237,447 3,499,368
=============== ============ ============== ==========
Depreciation
At 1 January
2015 115,888 1,482,466 223,104 1,821,458
Charge for the
year 42,575 354,313 79,682 476,570
Disposals during
the year (28,211) (95,570) (277,485) (401,266)
At 31 December
2015 130,252 1,741,209 25,301 1,896,762
Charge for the
year 42,535 362,528 43,411 448,474
Disposals during
the year (84,870) - - (84,870)
At 31 December
2016 87,917 2,103,737 68,712 2,260,366
=============== ============ ============== ==========
Net book value
As at 31 December
2016 121,128 949,139 168,735 1,239,002
=============== ============ ============== ==========
As at 31 December
2015 90,837 773,353 197,303 1,061,493
=============== ============ ============== ==========
10 Reclassification of comparatives for changes in presentation
Certain prior year amounts have been reclassified for
consistency with current period presentation. These
reclassifications had no effect on the reported results of
operations. The reclassifications move certain items of marketing
expenditure which were previously considered costs of sale to
administrative expenses, better reflecting the fact that they
represent variable expenditure and do not correlate directly with
net gaming revenue.
As previously
2015 (GBP) stated Reclassification As restated
Net Gaming Revenue 48,660,355 - 48,660,355
Cost of Sales (35,843,110) 14,138,078 (21,705,032)
Gross Profit 12,817,245 14,138,078 26,955,323
Administrative expenses (7,581,169) (14,238,078) (21,719,247)
EBITDA before share
option costs 5,236,076 - 5,236,076
============== ================= =============
11 Post Balance Sheet Event
Recommended Cash Offer for 32Red Plc by Kindred Group plc
On 23 February 2017, the Company announced that it had reached
agreement with Kindred Group plc ("Kindred") on the terms of a
recommended cash offer pursuant to which Kindred will offer to
acquire the entire issued and to be issued share capital of the
Company (the "Offer").
Under the terms of the Offer, 32Red Shareholders will be
entitled to receive 196p for each 32Red share and will also be
entitled to receive and retain a second interim dividend of 4 pence
per share (as declared on 23 February 2017). The Offer values the
entire issued and to be issued share capital of 32Red on a fully
diluted basis at approximately GBP175.6 million.
12 Publication of Non-Statutory Accounts
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined
under Gibraltar company law.
The summarised Consolidated Statement of Financial Position at
31 December 2016 and the summarised Consolidated Statement of
Comprehensive Income, summarised Consolidated Statement of Changes
in Equity, summarised Consolidated Statement of Cash Flows and
associated notes for the year then ended have been extracted from
the Group's 2016 statutory financial statements upon which the
auditor's opinion is unqualified and unmodified. The full 2016
statutory financial statements are detailed on the Company's
website www.32Redplc.com.
Those financial statements have not yet been delivered to the
registrar of companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKFDBCBKDCNK
(END) Dow Jones Newswires
March 09, 2017 02:00 ET (07:00 GMT)
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