32 RED.COM DISAPPOINTS

(378) (2-September-2006)

Interim results lower

32Red , the Gibraltar-based casino, sportsbook and poker operator, reported disappointing interim results to the end of June.
 
Announcing the results, the company said that trading has been mixed and could result in market expectations for the full year not being met. Casino performance had been slower than anticipated in recovering from the distractions of the FIFA World Cup and despite an increase of 60 percent in the number of active players, the average value of each player declined to GBP 523.

This key performance figure of yield per player continued to receive close attention, the report assured investors.

Poker room operations continued to show substantial growth from a low base in 2005 with revenues more than doubling and active players tripling in the first half of 2006. Despite these encouraging statistics, a "softer" performance than had been expected was evident, with the 2005 growth rate not being maintained.

Contributing factors may have been the launch of Swedish national gambling operator Svenska Spel's online poker room and aggressive rakeback tactics by competitors, both of which had impacted revenues negatively from mid March onwards. The FIFA World Cup 2006 exacerbated the situation and resulted in a material decline in activity levels in the month of June.

Sportsbook operations did not meet expectations following the acquisition of Bet Direct early in June. To the end of June, the Royal Ascot horse racing festival and the FIFA World Cup were traded by 32Red. Gross win was GBP 100 000 off target with Ascot producing a small negative margin. Trading during the FIFA World Cup produced a 9.8 percent gross win margin.

Ed Ware , chief executive of 32Red, said: "The 32Red business has shown revenue growth in the period. However, trading in the second half to date has not recovered as quickly as anticipated from the industry-wide FIFA World Cup slowdown. We believe the acquisition of Bet Direct in June will significantly enhance the scale and diversity of the business although a tough Goodwood and the one-off costs and expenses incurred have impacted our profitability."