32Red Plc
12 March 2008
32Red Plc
('32Red' or 'the Company')
Preliminary results for the year ended 31 December 2007
32Red, the award-winning casino operator today announces preliminary results for
the year ended 31 December 2007.
Key points
• Return to cash generative operation following the sale of Betdirect on
10 December 2007
• Underlying 32Red gaming business robust
• Management refocused on returning 32Red to previous growth path
• French Casino and Mobile Casino launched in February, Bingo imminent
Key performance indicators
Significant customer growth
• Active Customers increased by 17% to 33,745
• Total new Customers grew 14.3% to 25,640
• Average cost per customer acquisition reduced dramatically to £87
(2006: £114)
Casino
• Active casino players up 26.6% to 18,992
• New casino players up 19.3% to 14,586
• Cost per Acquisition reduced to £137 (2006: £184)
Poker
• Active poker players increased to 6.6% to 14,753
• New poker players up 8.2% to 11,054
• Cost per Acquisition reduced to £22 (2006: £29)
Financial highlights
2007 2006
Net gaming win £16.36m £14.44m
Operating profit from continuing operations 1.26m £1.22m
Profit before tax from continuing operations 1.36m 1.39m
Loss before taxation (£12.86m) (£3.74m)
Loss earnings per share (20.0p) (7.0p)
Current trading
• Excellent start to the year with encouraging growth seen
Commenting on the results Ed Ware, Chief Executive Officer, said:
'The sale of Betdirect has refocused the group on its core products of Casino
and Poker and has in 2008 returned the group to a cash positive position.
Management are focused on building growth, expanding our product range and
moving into new territories through the 32Red brand.
We have seen a very encouraging start to 2008 with excellent growth at the 32Red
Casino. We have surpassed several important milestones in the first few weeks of
2008 and look forward with confidence to an exciting year.'
12 March 2008
Enquiries:
32Red plc Tel: +350 49 396
Ed Ware, CEO
Jon Hale, Finance Director
College Hill Tel: +44 (0) 020 7457 2020
Matthew Smallwood
Numis Securities Tel: +44 (0) 20 7260 1200
Chris Wilkinson
Lee Aston
Chairman's Statement
I am pleased to set out below my review of the Directors' Report and
Consolidated Financial Statements of 32Red Plc ('The Company') for the year
ended 31 December 2007.
Following the sale of the Betdirect business to Stan James (Gibraltar) Ltd which
was completed on 10 December 2007, the results for 2007 and for 2006 have been
apportioned between continuing 32Red operations and discontinued Betdirect
operations.
Comparatives
The financial results for the continuing operations of 32Red Plc are for the
year ended 31 December 2007, with comparatives for the year ended 31 December
2006. The financial results for the discontinued operations of Betdirect are for
the 49 weeks trading prior to its sale on 10 December 2007 and the comparatives
are for the results for the 29 weeks from acquisition of Betdirect on 7 June
2006 until 31 December 2006.
For the purposes of this financial review, trade from the US prior to the
enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) has also
been stripped out from comparatives in this review.
Financial review
Net gaming wins for 32Red Plc, 32Red Ltd, Bet Direct Ltd and Bet Direct N.V (the
Group) during the year ended 31 December 2007 increased by 13.3% to £16.36m.
Continuing Operations - Like for like previous year gaming wins from the 32Red
Casino and Poker operations totalled £10.2m up 5.6%. The operating profit from
continuing operations for the year 2007 totalled £1.3m (year ended 31 December
2006: £1.2m).
Discontinued Operations - Net gaming wins include gross win of £6.16m from
Betdirect for the 49 weeks ended 10 December 2007 (29 weeks ended 31 December
2006: £3.96m). The operating loss from discontinued operations in the 49 weeks
ended 10 December 2007 totalled £6.7m and the results include a loss on disposal
of £7.3m (29 weeks ended 31 December 2006 operating loss: £4.9m).
As a direct result of the poor performance of the Betdirect business and the
subsequent write-down of tangible and intangible fixed assets to their
realisable value following the sale, the Group made a loss for the year of
£12.9m for the year ended 31 December 2007 (2006: £3.7m).
The Board does not recommend the payment of a dividend for the financial year
ended 31 December 2007 (2006: nil).
Sale of Betdirect
Further to a strategic review of both brands and a review of potential business
development opportunities for the Company, 32Red accepted an offer of £5.75m
from Stan James (Gibraltar) Ltd on 30 October 2007 for the intellectual property
and certain assets of the Betdirect business. The consideration was paid as
follows: £575,000 paid on exchange of contracts on 30 October 2007; £4,675,000
on completion on 10 December 2007 (including £1.9m of net player balances
assumed by Stan James); and a further £500,000 held in escrow to be paid on 10
June 2008. 32Red will continue to offer an integrated online sportsbetting
product to its customers via a white label online sports-betting service
arrangement with Stan James.
Strategy
Core 32Red products - 32Red continues to provide the full range of betting and
gaming products which affords the Group the platform to continue to develop its
UK market presence. Brand recognition continues to be strong and advertising
opportunities have expanded considerably in the UK since 1st September and the
implementation of the Gambling Act. The sale of the Betdirect brand allows the
Company to focus marketing on the single, resonant and core 32Red brand.
New 32Red products - The Board believes that the 32Red brand translates to other
products and the Group looks forward to the launch of its 32Red Bingo product in
the Spring. The online Bingo market has experienced rapid growth during 2007 and
is now attracting a younger audience with 25% of players under 35 years old. The
Company launched its mobile casino service in February 2008.
New Territories - The Board believes that the 32Red brand identity and its
values have the potential to establish a stronger presence in territories
outside of the United Kingdom. During February 2008, the Company launched a
32Red French language service and is currently considering legislative
developments in other European countries. The Company continues to evaluate
market-specific activities in the Far East and will provide further updates on
these opportunities in due course.
Board
During the year, the Company announced the resignations of Bruno Callaghan as
non-executive Director on 10 April 2007 and Ed Andrewes as Development Director
on 20 December 2007. I would like to take this opportunity to thank both Bruno
and Ed for their hard work and wish them every success in the future.
Outlook
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 return the
Company to a cash generative position. The re-shaped business now has the
ability and flexibility to expand the 32Red brand into new gaming related
products and territories whilst underpinning activities with the continued
delivery of excellent service to our customers. I would like to take this
opportunity to congratulate and thank all our employees for their continued hard
work and commitment during 2007. Their enormous efforts have been recognised by
32Red being named 'The Best Casino of the Year' for the fifth consecutive year
by independent watchdog Casinomeister. I look forward with confidence to an
exciting year in 2008.
David Fish
Chairman, 32Red
Chief Executive's Statement
2007 has been a challenging year for the Company with the Betdirect sale tender
process dominating the summer months. The disposal of the Betdirect business
allows the entire 32Red team and especially senior management to focus on the
core 32Red product and moving into new territories. In the first quarter of 2008
we have prepared the launch of new products including 32Red Bingo and a mobile
casino service.
32Red Key Performance Indicators
Comparatives for 2006 have been restated between continuing and discontinued
Betdirect operations. For the purposes of this statement, trade from the US
prior to the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA)
has also been stripped out from comparatives in this review.
Total revenues from Casino and Poker increased by 5.6% to £10.2m, generated from
a total of 33,745 active customers during the year, up 17.0% on 2006. Total new
customers grew to 25,640 (2006: 22,442) with average cost per acquisition down
to £87 (2006: £114).
Casino
The 32Red Casino continues to dominate the Group's trading and is central to our
growth plans. Total casino revenues increased by 7.6% to £9.0m during the year,
representing 88% of total Group revenues from continuing operations. The number
of active casino players during the year totalled 18,992, up 26.6% with new
casino players totalling 14,586, an increase of 19.3% over the prior year.
Predictably with such a large number of new players, casino player yield
totalled dipped 14.9% on 2006 to £474.
Cost per acquisition reduced to £137 per new casino player during the year
(2006: £184). The fall in cost per acquisition is pleasing and reflects the
Group's cost-effective approach to marketing. Casino customers continue to be
loyal to 32Red in recognition of the unrivalled customer service delivered by
our dedicated Player Support team. 32Red's fifth consecutive Casinomeister Best
Casino Award is unprecedented and testament to the quality of the service
delivered by 32Red.
In 2008, 32Red intends to expand its European casino profile and we launched a
French Language Casino service on 8 February 2008. This is the first of a number
of entries into targeted European territories and this move follows the launch
of the 32Red mobile casino earlier in the 2008.
Poker
The number of active poker players increased to 14,753 in 2007, up 6.6% on the
prior year. Cost per acquisition decreased to £22 during 2007 (2006: £29).
However, in line with industry trends Poker player yield decreased to £82 (2006:
£95) reflecting the increasingly competitive poker market resulting in a small
overall decrease in Poker revenues to £1.2m, down 7.3% on 2006.
We continue to evaluate all aspects of the 32Red Poker experience in the face of
competitive conditions. Again we will examine new European markets for poker in
2008.
Bingo
We have long held the belief that our brand sits comfortably in the eyes of
prospective Bingo players. The arrival of the Microgaming Bingo platform now
provides us with a solution without integration challenges and strong in the
provision of slots games. 32Red Bingo launches in March 2008.
Sportsbetting
Following the sale of the Betdirect business, 32Red will offer sportsbetting to
its customers via a white label agreement with Stan James (Gibraltar) Limited.
While the Group's strategy is to focus on the roll out of the 32Red brand to new
territories and to successfully develop its new Bingo product, a number of other
sportsbetting opportunities are being evaluated.
Trading Update
Further to a sharpened focus on the 32Red Casino following the disposal of
Betdirect, I am pleased to report an excellent start to the year. Several
important milestones have been surpassed in the first part of the year and
growth is very encouraging. We intend to make this renewed focus and ability to
act nimbly and aggressively count in 2008.
Edward Ware, Chief Executive Officer
32Red Plc
Consolidated Income Statement
for the year ended 31 December 2007
Notes Discontinued Discontinued
Operations Operations
2007 2007 2006 2006
£ £ £ £
Net gaming wins 3 6,158,708 10,206,007 3,960,863 10,482,596
Cost of sales (4,419,080) (7,456,540) (2,341,935) (7,739,538)
Gross Profit 1,739,628 2,749,467 1,618,928 2,743,058
Administrative expenses (8,606,602) (1,492,562) (6,523,478) (1,522,871)
Other operating income 208,261 - - -
Operating (loss)/profit 2 (6,658,713) 1,256,905 (4,904,550) 1,220,187
Finance income 4 - 104,660 - 169,071
Finance costs 4 (245,136) - (229,463) -
Loss recognised on sale of
Betdirect 9 (7,312,466) - - -
(Loss)/Profit on ordinary
activities before taxation (14,216,315) 1,361,565 (5,134,013) 1,389,258
Tax on ordinary activities 6 - (450) 26,981 (450)
Loss on discontinued
operations (14,216,315) (14,216,315) (5,107,032) (5,107,032)
Loss for the period (12,855,200) (3,718,224)
Loss per share (£)
Basic 5 -0.22 -0.20 -0.10 -0.07
Diluted 5 -0.22 -0.20 -0.10 -0.07
Continued operations (£)
Basic earnings per share 5 0.02 0.03
Diluted earnings per share 5 0.02 0.03
Discontinued operations relate to the Betdirect business which was sold on 10
December 2007.
The notes form an integral part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2007
Equity attributable to equity holders of 32Red Plc
Share capital Share premium Share Retained earnings Total Equity
options
reserve
£ £ £ £ £
Balance at 1 January 2006 94,871 942,629 99,344 (158,614) 978,230
Loss for the period - - - (3,718,224) (3,718,224)
Total recognised income
and expense 94,871 942,629 99,344 (3,876,838) (2,739,994)
Shares issued 18,479 11,278,783 - - 11,297,262
Share options charge - - 137,873 - 137,873
Share options exercised - - (4,677) 4,677 -
Share issue expenses - (820,684) - - (820,684)
Balance 31 December 2006 113,350 11,400,728 232,540 (3,872,161) 7,874,457
Loss for the period - - - (12,855,200) (12,855,200)
Total recognised income
and expense 113,350 11,400,728 232,540 (16,727,361) (4,980,743)
Shares issued 24,000 2,976,000 - - 3,000,000
Shares options lapsed - - (126,638) 126,638 -
Share options charge - - 88,862 - 88,862
Share options exercised 600 6,900 (18,212) 18,212 7,500
Share issue expenses - (221,803) - - (221,803)
Balance 31 December 2007 137,950 14,161,825 176,552 (16,582,511) (2,106,184)
The notes form an integral part of these financial statements.
Consolidated Balance Sheet
As at 31 December 2007
Notes 2007 2006
£ £
Assets
Non-current
Intangible assets 7 170,738 12,636,497
Property, plant and equipment 8 463,318 1,731,813
634,056 14,368,310
Current
Other receivables 880,214 861,405
Cash and cash equivalents 1,392,001 4,945,626
2,272,215 5,807,031
Total assets 2,906,271 20,175,341
Equity
Equity attributable to shareholders of 32Red Plc
Called up share capital 137,950 113,350
Share premium 14,161,825 11,400,728
Share option reserve 176,552 232,540
Retained earnings (16,582,511) (3,872,161)
Total equity (2,106,184) 7,874,457
Current liabilities
Social security and other taxes 613,634 94,194
Bank loan due within one year - 5,416,667
Trade and other payables 4,398,821 6,484,929
Provisions for other liabilities and charges - 305,094
Total liabilities 5,012,455 12,300,884
Total equity and liabilities 2,906,271 20,175,341
Consolidated Statement of Cash Flows
For the year ended 31 December 2007
2007 2006
£ £
Operating activities
Loss for the year before interest and after tax (12,714,724) (3,657,832)
Amortisation 1,756,340 857,606
Depreciation 268,490 531,617
Profit on disposal of property, plant and equipment - (13,516)
Change in trade and other receivables 315,545 (63,625)
Change in trade and other payables 33,411 2,399,506
Share options charged 88,862 137,873
Loss on disposal of discontinued operations 7,312,466 -
(2,939,610) 191,629
Investing activities
Proceeds from Disposal of discontinued operations 3,320,000 -
Disposal costs (588,648) -
Acquisition of subsidiaries - (11,607,546)
Additions to other intangible assets (433,480) (98,737)
Additions to property, plant and equipment (140,441) (883,276)
Disposal of property, plant and equipment - 39,676
Interest received 104,660 169,071
2,262,091 (12,380,812)
Financing activities
Proceeds from share issue 3,000,000 11,297,262
Share issue costs set against equity (221,803) (820,684)
Share options exercised 7,500 -
Proceeds from borrowings - 6,500,000
Repayment of borrowings of discontinued operations (5,416,667) (1,083,333)
Interest paid of discontinued operations (245,136) (229,463)
(2,876,106) 15,663,782
Cash and cash equivalents, beginning of period 4,945,626 1,471,027
Net (decrease)/increase in cash and cash equivalents (3,553,625) 3,474,599
Cash and cash equivalents, end of period 1,392,001 4,945,626
The notes form an integral part of these financial statements.
1 Accounting policies
The financial statements have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by the European
Union and issued by the International Accounting Standards Board ('IASB'). The
accounting policies that have been applied in the opening balance sheet have
also been applied through out all periods presented in these financial
statements. These accounting policies comply with each IFRS that is mandatory
for accounting periods ending on 31 December 2007. The financial statements have
been prepared under the historical cost convention, except for financial assets
and liabilities which are carried at amortised cost and share options which are
recognised at fair value on the grant date, and on a going concern basis.
The Directors have reviewed the accounting policies used by the Group
and consider them to be the most appropriate. No changes have been made from the
prior year.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of the financial statements in conformity with IFRS
requires management to exercise certain critical accounting judgements and
estimates in the process of applying the Group's accounting policies. The
directors consider the main accounting judgement to be the preparation of these
financial statements on the going concern basis.
Going concern
The financial statements have been prepared on a going concern basis.
Following the sale of the loss-making Betdirect business to Stan James
(Gibraltar) Ltd for gross proceeds of £5.75m on 10 December 2007, the Group has
repaid its bank borrowing in full and has no debt outstanding at the year end.
The continuing 32Red activities are generating positive cash flows, enabling the
Group to meet its liabilities as they fall due.
Use of estimates
It should be noted that accounting estimates and assumptions are used
in preparation of the financial statements. Although these estimates are based
on management's best knowledge of current events and actions, actual results may
ultimately differ from those estimates.
The Directors believe the models and assumptions used to calculate the fair
value of the share-based payments are the most appropriate for the Company.
Notes to the Financial Statements
For the year ended 31 December 2007
2 Operating (loss)/profit
2007 2006
£ £
This is stated after charging:
Auditor's remuneration - audit fees 47,500 50,000
- taxation 18,500 12,500
- due diligence 50,000 75,000
- corporate finance fees 200,000 -
Depreciation of owned property, plant and equipment 268,490 531,617
Amortisation of other intangible fixed assets 1,756,340 857,606
Operating lease rentals 219,716 219,716
Foreign exchange losses 57,905 57,252
Amortisation and depreciation are charged to administrative expenses.
3 Segment information
Business segment
The Group had three business segments during the year. On 10 December 2007 the
Betdirect business was sold to Stan James (Gibraltar) Limited. This comprised
mainly of sportsbook customers but also included the Betdirect casino and poker
operations. Performance can be analysed as follows:
2007 2007 2006 2006
£ £ £ £
Discontinued Continuing Discontinued Continuing
Operations Operations Operations Operations
Casino
Net gaming wins 537,254 8,996,053 261,788 9,179,260
Segmental gross profit before marketing
costs 135,059 4,509,536 215,976 4,716,913
Poker
Net gaming wins 215,987 1,209,954 188,196 1,303,336
Segmental gross (loss)/profit before
marketing costs (68,103) 478,947 155,262 551,586
Sportsbook
Net gaming wins 5,405,467 - 3,510,879 -
Segmental gross profit before marketing
costs 3,907,252 - 2,771,354 -
Consolidated
Net gaming wins 6,158,708 10,206,007 3,960,863 10,482,596
Gross profit before marketing costs 3,974,208 4,988,483 3,142,592 5,268,499
Marketing costs (2,234,580) (2,239,016) (1,523,664) (2,525,441)
Administrative expenses and other
operating income (8,398,341) (1,492,562) (6,523,478) (1,522,871)
Operating (loss)/profit (6,658,713) 1,256,905 (4,904,550) 1,220,187
The Directors consider that is neither possible nor meaningful to
distinguish aggregate marketing costs, administrative expenses or other
operating income between the three business segments.
Aggregate net assets are split between the three business segments as
follows:
2007 2006
£ £
Casino
Other receivables 567,886 137,656
Cash and cash equivalents 1,357,534 4,414,859
Trade and other payables (2,160,109) (607,277)
(234,689) 3,945,238
Poker
Other receivables 2,801 3,139
Cash and cash equivalents 34,467 31,991
Trade and other payables (324,631) (345,611)
(287,363) (310,481)
Sportsbook
Goodwill, domain names and player database - 12,167,673
Other receivables 309,527 720,610
Cash and cash equivalents - 498,776
Trade and other payables (1,914,081) (5,532,041)
Provisions - (305,094)
(1,604,554) 7,549,924
Consolidated net assets (2,126,606) 11,184,681
Other non-current assets 634,056 2,200,637
Social security and other taxes (613,634) (94,194)
Bank loan - (5,416,667)
(2,106,184) 7,874,457
Non-current assets are used by all the business segments and a
meaningful split is not possible. Furthermore 'other employee obligations'
relate to all business segments equally and can not be split in a meaningful
way.
Geographical segment
The Group's performance can also be reviewed by considering the
geographical markets in which the Group operates.
Discontinued Continuing Discontinued Continuing
Operations Operations Operations Operations
2007 2007 2006 2006
£ £ £ £
Net gaming wins by geographical
market
UK & Ireland 6,158,708 8,205,500 3,960,863 8,023,172
Europe - 1,128,598 - 1,187,678
Rest of the world - 871,909 - 1,271,746
6,158,708 10,206,007 3,960,863 10,482,596
2007 2006
£ £
Net (liabilities)/assets by geographical location
UK - (4,385,901)
Gibraltar (2,106,184) 12,260,358
(2,106,184) 7,874,457
Non-current assets of nil (2006: £13,847,001) in the UK and £573,921
(2006: £362,213) in Gibraltar were acquired during the year.
4 Finance income and costs
The following amounts have been included in the income statement for
the reporting periods presented:
2007 2006
£ £
Interest income from short term deposits 104,660 169,071
Interest paid on loans 245,136 229,463
5 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 65,352,055 shares (2006: 53,077,615).
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.
The effect of dilutive share options has been excluded from the
dilutive earnings per share calculation for 2006 and 2007 as their inclusion
would be anti-dilutive.
2007 2007 2006 2006
Continuing Discontinued Continuing Discontinued
operations operations operations operations
Net profit/(loss) attributable to £1,361,115 (£14,216,315) £1,388,808 (£5,107,032)
ordinary shares
Weighted average number of ordinary
shares:
for basic earnings 65,352,055 65,352,055 53,077,615 53,077,615
for diluted earnings 66,963,436 66,963,436 55,060,615 55,060,615
Basic earnings per share £0.02 (£0.22) £0.03 (£0.10)
Diluted earnings per share £0.02 (£0.22) £0.03 (£0.10)
Weighted average number of ordinary
shares for basic earnings 65,352,055 65,352,055 53,077,615 53,077,615
Weighted average options 1,611,381 1,611,381 1,983,000 1,983,000
Weighted average number of ordinary
shares for diluted earnings 66,963,436 66,963,436 55,060,615 55,060,615
6 Taxation
2007 2006
£ £
Analysis of charge in period
Current tax:
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 year ended 31 December 2007.
2007 2006
£ £
Loss before taxation (12,854,750) (3,744,755)
Add : UK tax losses not utilised 4,249,371 3,424,451
Add : tax exempt loss 8,605,379 320,304
Taxable loss - -
Deferred Tax - (26,981)
Tax exempt fee 450 450
Tax charge 450 (26,531)
The Group has UK tax losses of approximately £7.7 million (2006: £3.4
million) available to offset against future taxable profits in the UK.
7 Intangible assets
Goodwill Domain Names & Website Software Total
Player Database Development License
£ £ £ £ £
Cost
At 1 January 2006 - - 107,822 172,636 280,458
Additions - - 98,193 544 98,737
Fair value of assets on
acquisition of Betdirect 4,737,673 8,200,000 - 289,528 13,227,201
At 31 December 2006 4,737,673 8,200,000 206,015 462,708 13,606,396
Additions - - 4,890 428,590 433,480
Disposal of Betdirect (4,737,673) (8,200,000) (711,278) (13,648,951)
At 31 December 2007 - - 210,905 180,020 390,925
Amortisation
At 1 January 2006 - - 55,150 57,143 112,293
Provided during the year - 770,000 31,948 55,658 857,606
At 31 December 2006 - 770,000 87,098 112,801 969,899
Provided during the year - 1,640,000 41,285 75,055 1,756,340
Provided on assets from - (2,410,000) - (96,052) (2,506,052)
Bet Direct
At 31 December 2007 - - 128,383 91,804 220,187
Net book value
At 31 December 2007 - - 82,522 88,216 170,738
At 31 December 2006 4,737,673 7,430,000 118,917 349,907 12,636,497
8 Property, plant and equipment
Motor Vehicles Computer and Office Leasehold Total
Equipment Improvements
£ £ £ £
Cost
At 1 January 2006 110,000 568,308 20,811 699,119
Additions 47,795 835,481 - 883,276
Acquisition of Bet Direct - 980,596 - 980,596
Disposals (25,000) (14,676) - (39,676)
At 31 December 2006 132,795 2,369,709 20,811 2,523,315
Additions - 114,556 25,885 140,441
Sale of Betdirect - (1,568,818) - (1,568,818)
At 31 December 2007 132,795 915,447 46,696 1,094,938
Depreciation
At 1 January 2006 29,687 238,115 5,599 273,401
Charge for the year 23,630 503,825 4,162 531,617
On disposals (13,333) (183) - (13,516)
At 31 December 2006 39,984 741,757 9,761 791,502
Charge for the year 26,559 233,455 8,476 268,490
Sale of Betdirect - (428,372) - (428,372)
At 31 December 2007 66,543 546,840 18,237 631,620
Net book value
At 31 December 2007 66,252 368,607 28,459 463,318
At 31 December 2006 92,811 1,627,952 11,050 1,731,813
9 Discontinued operations
The Betdirect business was sold to Stan James (Gibraltar) Limited on
10 December 2007. The liabilities of Betdirect were not included in the sale,
except for the net amounts owed to players.
A loss of £7.3m on this sale has been recognised, which was calculated
as follows:
2007
£
Assets disposed:
Intangible assets 11,142,899
Property, plant & equipment 1,140,446
12,283,345
Gross sales proceeds 5,750,000
Less: provision for unrecoverable receivables (190,473)
Less: disposal expenses (588,648)
Net consideration 4,970,879
Loss on disposal 7,312,466
The net consideration includes £1.9 million of net player liabilities assumed by
Stan James.
A final payment of £500,000, net of unrecovered customer credit balances, is due
in June 2008.
Cash flows from discontinued operations were as follows:
2007 2006
£ £
Cash flows from/(used in) discontinued operations
Net cash used in operating activities (6,406,515) (1,245,355)
Net cash from/(used in) investing activities 3,320,000 (11,870,756)
Net cash (used in)/from financing activities (5,661,803) 6,270,537
Net cash used in discontinued operations (8,748,318) (6,845,574)
The loss on disposal has been amended following the issue of the
interim statement for the six months ended 30 June 2007, to reflect the final
assets disposed and costs of disposal.
10 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 balance sheet at 31 December 2007 and the summarised income
statement, summarised statement of changes in equity, summarised cash flow
statement and associated notes for the year then ended have been extracted from
the Group's 2007 statutory financial statements upon which the auditor's opinion
is unqualified and unmodified.
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