Don't be confused by our recent sell advice (160p, 26 February 2015): we always knew 2014 figures from online gambling group 888 Holdings (888) would be strong. And so it has turned out: last year revenues increased by 13 per cent. Combined with robust margins, that pushed operating profit up 42 per cent to $80m (£54m).
The casino division accounted for much of this improvement. Revenues there rose 16 per cent to $221m as 888 held on to its "market-leading" position in the UK and grew its foothold in Spain. But the "emerging offering" - largely reflecting the 2013 relaunch of 888 Sport - also did well, with sales of $30m, up 22 per cent. The poker market is still challenging: management describes flat revenues of $94m as a "resilient" performance.
But the coming year is a big concern for all gambling operators. There was no update on current trading in these results, but the new UK point of consumption tax is likely to weigh heavily on growth, and chief executive Brian Mattingley said the company could see similar regulatory changes in the Netherlands and Romania in 2015. Accordingly, brokerage Numis expects pre-tax profits of $49m, giving EPS of 12ȼ - down from $76m and 19ȼ, respectively.
| 888 HOLDINGS (888) | ||||
|---|---|---|---|---|
| ORD PRICE: | 160p | MARKET VALUE: | £567m | |
| TOUCH: | 160-160p | 12-MONTH HIGH: | 186p | LOW: 109p |
| DIVIDEND YIELD**: | 6.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 52ȼ* | NET CASH: | $96m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 262 | 10.6 | 2.3 | nil |
| 2011 | 331 | 5.8 | 0.6 | nil |
| 2012 | 376 | 40.8 | 10.2 | 7.0 |
| 2013 | 401 | 53.2 | 14.2 | 14.4 |
| 2014 | 455 | 67.9 | 16.1 | 15.0 |
| % change | +13 | +28 | +13 | +4 |
Ex-div: 16 Apr Payment: 15 May *Includes intangible assets of $157m, or 44ȼ a share **Includes special dividend of 7ȼ a share £1=$1.49 | ||||
