$50 million charges deep cut 888 Holdings 2017 results

The governance of FTSE250 listed 888 Holdings, is assessing its future strategic options as regulatory charges of $50 million have drastically impacted the firm’s full-year 2017 profits.

Publishing its FY2017 results, 888 reported a 4% group revenue increase to $541 million, supported by the double-digit growth of its sports betting division up 45% to $75.5 million (FY2016: $51.9 million).

Despite facing ‘heightened regulatory scrutiny in the UK market’, 888 details strong progress and a strengthened commercial pipeline within the majority of its regulated/taxed territory activity.

Closing 2017 accounts, 888 would declare a corporate adjusted EBITDA of $100 million up 12% on corresponding FY2016’s $90.2 million.

Nevertheless, as reported in H1 2017, 888 has been forced to absorb a combined $50 million in ‘exceptional charges’, relating to $45 million VAT penalty for its German market activity prior to 2015, alongside its $5.5 million relating to its UKGC social responsibility settlement.

The penalty charges would see 888 declare FY2017 profits of $18 million, down 65% on FY2016’s $59 million.

At present, 888’s governance and its legal counsel, are reviewing the firm’s regulated market positions, with a focus on its German market activity.

“Following a recent ruling by the Federal Administrative Court of Germany, the Board of 888, together with the Group’s legal counsel, is assessing the status and breadth of its offerings in the German market.”

Despite 888’s profit woes for 2017, Itai Frieberger Group CEO remains positive of the firm’s future outlook stating that 888 operations had been resilient against adverse conditions.

“888 has delivered another year of progress achieving record revenues of US$541.8 million and a 12 per cent increase in Adjusted EBITDA. The Group’s growth was driven by further expansion in Casino, Sport and across regulated markets. This very robust outcome was achieved despite the Group’s withdrawal from certain markets during the year and demonstrates 888’s resilience and agility that is underpinned by first-class technology and an outstanding team.

The Group has continued to reap the rewards of its investments in recent years in several growth markets including Spain and Italy. These markets helped to drive very strong revenue growth in regulated markets excluding the UK of 26%. The Group continues to gain momentum in Sport where revenue increased an impressive 45%. Current trading since the start of the year is in line with our expectations with average daily revenue 6% above the previous year, representing an 8% increase when adjusted for the withdrawn markets. 888 is a resilient and diversified operator with scalable proprietary technology. The Group has a number of significant growth opportunities ahead and the Board is confident of another year of operational progress.”

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