Online gaming company 888 (888) benefited from a much improved performance in its casino and poker gaming units after a shake up of the management team, and a series of market share gains in new markets, produced the desired results. Overall, this helped cash profits to grow by 7 per cent to $38.6m and offset what looks like a serious industry-wide slump in bingo profitability.
Operationally, poker and casino games posted year-on-year revenue growth of 13 per cent to $46.9m and $94.1m, respectively. By contrast, a cut-throat market for bingo games has seen operators slash margins in order to compete and revenues there slumped 18 per cent to £22.1m. One-off items in the first half last year skews the reported figures, but on an adjusted basis broker Investec expects pre-tax profits to rise from $49.5m to $58.1m for the full year to lift EPS from 12.6¢ to 14.7¢.
The potential for a sustainable return to the US gaming market has dominated the debate over 888's prospects this year, although there was little new detail on the company's US deals in these results. However, chief executive Brian Mattingley said the US strategy involved offering services and technology to home-grown operators and not holding equity on anything other than a joint-venture basis, which is the sort of deal that 888 signed with venture capital company Avenue Capital in March to launch its poker products in the US.
888 (888) | ||||
|---|---|---|---|---|
| ORD PRICE: | 143.5p | MARKET VALUE: | £504m | |
| TOUCH: | 143-143.5p | 12-MONTH HIGH: | 187p | LOW: 76p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 45¢* | NET CASH: | $89.3m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 186 | 18.4 | 4.50 | 2.50 |
| 2013 | 200 | 35.5 | 9.20 | 3.00 |
| % change | +7 | +93 | +104 | +20 |
Ex-div: 4 Sep Payment: 4 Oct *Includes intangible assets of $150m, or 43¢ a share £1=$1.55 | ||||
