Last year was a difficult one for the gaming industry, but 888 struggled more than most in the shadow of regulatory uncertainty and rising competition.
The dominance of US poker operators has made life difficult for all operators and 888 was no exception, reporting a 26 per cent drop in revenues in its poker business. The group did see a massive improvement in daily poker revenues throughout the second half, which are now nearly double the level of June 2010, and that's created a virtuous circle of liquidity improvement. But the company had to spend big to get there - marketing investment rose from $67m (£42m) to $92m, the main reason why cash profits slumped 37 per cent to $28.6m.
Wink Bingo, which was bought last year, turned in the star performance - as expected - with sales rising five-fold to $50.1m. But that performance means the group is liable for hefty earn-out payments of $72m, which meant no dividend will be paid for the year.
Broker Peel Hunt expects underlying pre-tax profit to recover slowly this year to $22.6m, with EPS of 4.9¢ (2011: $15.1m/3.6¢).
888 HOLDINGS (888) | ||||
|---|---|---|---|---|
| ORD PRICE: | 43p | MARKET VALUE: | £149m | |
| TOUCH: | 42-43p | 12-MONTH HIGH: | 106p | LOW: 35p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 30 | |
| NET ASSET VALUE: | 34¢* | NET CASH: | $61.5m** | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2006 | 157 | 13.4 | 22.1 | 13.4 |
| 2007 | 213 | 38.0 | 10.3 | 6.8 |
| 2008 | 257 | 40.2 | 10.9 | 5.4 |
| 2009 | 247 | 27.6 | 7.2 | 4.0 |
| 2010 | 262 | 10.6 | 2.3 | nil |
| % change | +6 | -62 | -68 | -100 |
*Includes intangible assets of $162m or 47¢ a share **Includes customer balances of $34.7m £1=$1.60 | ||||
