32Red Online Revenues Soar But Profits Grounded
The financial results declared by 32Red PLCare indicative of what the point of consumption tax (POCT) has done to online gambling in the United Kingdom. The net gaming revenues for 2015 soared, but the increase in profits was marginal. The leading United Kingdom online gaming operator released the details of its 2015 financial performance recently.
A Record Breaking 2015 For 32Red
The working of 32Red can be divided into three segments. The major share comes from the core business from the United Kingdom based operations. Then there are 3Red Italy and Roxy Palace group that was acquired in July 2015. The total net gaming revenues at the core 32Red business rose from £31.0 million in 2014 to £41.7 million in 2015 giving a rise of 35%, which is fantastic in these times. The revenues at 32Red Italy increased from £1.1 million to £1.7 million, up 54%. Roxy Palace contributed £5.2 million in revenues for about half year's working in 2015. There was obviously no contribution in 2014. For 32Red as a whole, total net gaming revenues were up 52% to a record £48.7 million from £32.1 million in the previous year.
The earnings (EBITDA) tell a different story on account of the POCT. The earnings, which were £5.4 million in 2014 rose only to £6.2 million in 2015. The group paid £4.8 million in POCT during 2015 as compared to £0.4 million in 2014. The adjusted earnings per share fell 2% to 6.97p from 7.08p.
32Red Presents Great Outlook For 2016
The future is bright and therefore the board recommended a 17% hike in the full-year dividend to 2.8p from 2.4p, despite lower earnings per share. This was in addition to the special dividend of 3p a share announced on 10 February. Releasing the figures for the first nine weeks of the current year, 32Red said that the like-for-like net gaming revenues were up 35% on the same period in 2015. When the revenues from Roxy Palace were included, the increase was 66%.
Chief executive officer Ed Ware highlighted the importance of the acquisition of the Roxy Palace business in July last year. He pointed out that Roxy Palace complements the strong organic growth in the core business and attracts new customers to the 32Red brand. "Marketing expenditure will be increased again in 2016 as we are well positioned for another year of progress, building on the excellent achievements in 2015," he added. On the basis of this release, the shares rose 3.8% to 163p in the first half-hour of trading.