Costs drag 888 Holdings profit lower

Gambling company 888 Holdings posted a drop in first-half profit on Tuesday on the back of rising expenses, as it said trading so far in the second half has been in line with expectations.

In the six months to the end of June, pre-tax profit fell to $22.2m from $60.1m in the first half of last year as 888 incurred exceptional costs of $1.6m versus exceptional income of $12m in 1H18.

This was coupled with lower earnings before interest, taxes, depreciation and amortisation and higher amortisation charges related to the acquisitions of All American Poker Network (AAPN) and a portfolio of bingo brands including Costa Bingo.

Administrative expenses rose to $16.5m from $13.3m, reflecting increases in professional and corporate costs relating to Brexit preparations, 888's launch in new regulated markets and legal costs related to its new revolving credit facility with Barclays.

Group revenue edged up 2% to $277.3m and like-for-like revenue increased by 7%.

B2C revenue rose 6% to $262.5m, while casino revenue was 9% higher at $175.4m and sport revenue grew 19% to $44.5m. Revenue from the bingo business was up 10% to $19.5m, but the company's poker segment saw a 24% drop to $23.1m, while B2B revenue slumped 44% to $14.8m due to the AAPN and Costa bingo brand acquisitions.

888 said trading in the second half of the year to date has been in line with the board's expectations, with average daily revenue up 6% compared to the third quarter of 2018.

Chief executive officer Itai Pazner said: "The group's business in the UK has continued its recovery, which was underpinned by exciting product innovation as well as 888's successful casual customer focus, and further expanded across several regulated European markets including launching its offering in Sweden and Portugal.

"888 has a number of exciting growth opportunities ahead which will leverage the group's new product developments and marketing innovation. As a result, the board remains confident that the outcome for the full year will be in line with its expectations."

At 1055 BST, the shares were down 7% at 156.90p.