Looking straight at the bottom line it could be assumed 32Red (TTR) has lost control of the roulette wheel. Cash profits dropped 45 per cent to £1.2m due to a point of consumption tax (PoCT) charge of £2m and the group's investment in Italy, where it is seeking market share. But underlying revenue, excluding Italy, rose by a fifth to £17.7m, driven in part by a 22 per cent rise in the number of active casino players to 62,214.
Chief executive Ed Ware said he was "not worried about being able to cope with PoCT" and suggested it could "actually be a positive, dare I say it". This was, he added, because the levy had prompted many smaller businesses to exit the industry and forced some of the company's larger competitors to curb their marketing spend to offset the cost increase.
Mr Ware said the market had also "not perceived" how advanced 32Red's marketing ability was, now it has moved to a return on investment approach that relies on data and is far more targeted. He said the company now usually recouped the money spent on recruiting a customer in 60 days.
Numis, which upgraded its revenue predictions on these results, expects pre-tax profits of £5.6m in the full year, leading to EPS of 6.5p, compared with £5.7m and 7.1p for 2014.
| 32RED (TTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 76p | MARKET VALUE: | £63m | |
| TOUCH: | 75.8-76.5p | 12-MONTH HIGH: | 78p | LOW: 35p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 5.9p* | NET CASH: | £6.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 15.2 | 1.2 | 1.6 | 1.0 |
| 2015 | 18.6 | 0.1 | 0.1 | 1.1 |
| % change | +22 | -91 | -94 | +10 |
Ex-div: 1 Oct Payment: 30 Oct *Includes intangible assets of £2.16m, or 2.6p a share | ||||
