888 hit by increased taxes as EBITDA drops 17%
Underlying trading remains strong as operator cites PoC and VAT in Europe for fall in H1 profits
888 Holdings this morning reported a 17% fall in EBITDA across the first six months of the year after seeing profits hit by the UK Point of Consumption tax (PoC) and Europe’s new VAT levy.
Total EBITDA for the period ended 30 June was US$49m (£32m), a sum the operator described as an “impressive result” given the burden of the two additional taxes which amounted to $19.5m (£13m).
Reported revenues fell, albeit marginally, from $225.1m (£146m) to $220.1m (£143m), however excluding the impact of a strong dollar and new taxes like-for-like revenues were up 9% to $244.9m (£159m), 888 said.
Revenues within its B2C division also fell on a reported basis from $192.8m (£125m) to $191.1m (£124m), although on a like-for-like comparison there was an 11% increase to $213.6m (£139m).
888’s flagship B2C casino saw little in the way of growth during the period as revenues nudged up slightly from $107.6m to $108.7m while poker and bingo, two verticals the operator had recently managed to grow in tough markets, fell 4% to $46.2m and 6% to $22.6m respectively.
One bright note was the operator’s emerging offering, which saw revenues increase 41% to $18.5m. Emerging offering includes its Kambi-powered sportsbook, which the firm said enjoyed 81% revenue growth during the period.
At the end of the period, 888 had 19.2m casino, poker and sport real-money registered customer accounts, which represented an increase of 7% from 31 December 2014.
888 executive chairman Brian Mattingley described the H1 results as “a very encouraging performance” and took satisfaction from growth in the underlying business and continued progress in European regulated markets.
“Operational progress has continued with strong increases in active players and first time depositors despite the external headwinds of a new PoC tax in the UK, VAT in certain European markets and adverse currency movements,” Mattingley said.
“We have made further progress across regulated markets in Spain, following the introduction of mobile, sport and, more recently, video slots and in Italy, driven by our mobile offering and new casino content,” he added.
According to Peel Hunt analyst Nick Batram, the results showed 888 was in good health and expected to meet full-year expectations.
“Underlying trading has been strong in the first half, despite PoC tax and EU VAT coming into play in the period,” Batram said.
“The momentum doesn’t look like cooling off with average daily revenue +5% (YoY). Management expect to meet FY expectations though given the H2 weighting and tight cost control, we expect this may translate to upgrade to FY EBITDA estimates to c$75m,” he added.
Mattingley also said that 888 remained the preferred bidder in the race to acquire bwin.party and would later publish a prospectus containing more detail of the offer.
Rival bidder GVC Holding also issued a trading update this morning in which it reported a 14% increase in EBITDA and 15% increase in net gaming revenues for the first half of the year.
The 888 share price remained unchanged at 162p after early morning trading.