Market Report: 32Red’s strong numbers 'could make it a target'

There would appear to be little left to play for in the gambling sector after a string of big deals over the past year.

But larger bookies looking to grow their online and mobile businesses might be taking a closer look at 32Red after strong annual results from the online casino operator, whose games are voiced by actress Patsy Kensit.

Total net gaming revenues rose 52% to £48.7 million last year. The original 32Red business made up most of that with growth of 35%, and the takeover of Roxy Palace in July added an extra £5.2 million to the pot.

Underlying earnings were up 76% to £11.2 million before the new point of consumption tax that takes a 15% cut of all bets by UK customers, regardless of where the operator is based — in 32Red’s case, Gibraltar. Taking the new duty into account, underlying earnings rose 7% to £6.4 million.

Shareholders were quids-in as the stock rose 6p to 163p. Eric Opara, an analyst at Edison, said the results were excellent and suggested the company might now be on the radar of larger rivals. “Its success won’t have gone unnoticed and we would not be surprised to see 32Red become a takeover target for larger peers,” he said.

Trading volumes were thin on the ground ahead of the main economic event of the week — the ECB’s latest policy update — and the FTSE 100 drifted down 17.56 points to 6128.76.

Investors warmed to Costa Coffee owner Whitbread, listening to advice from Jefferies, which claimed the recent share slump does not now factor in a potential spin-off of its popular coffee chain. The shares bubbled 65p higher at 3766p after the broker’s upgrade to Hold.

An investor day for Euromoney Institutional Investor went down well with analysts and the shares were 12.5p richer at 942.5p.

Investec was among those impressed by the masterplan of new chief executive Andrew Rashbass, upgrading the financial magazine publisher to Buy. Daily Mail and General Trust, which owns 68% of Euromoney, was 1p wealthier at 649.5p.

Ukraine-focused iron ore pellet firm Ferrexpo, a former FTSE 100 constituent, was left 4.67p lighter at 33.83p after its annual results. Profits and revenues both took a hit as expected, but it was net debt rising to $868 million (£610 million) which was the big concern.