16-03-2006 888 Holdings announces record results

The online gaming group, operating Casino-on-Net& and Pacific Poker, announced results for the year ended 31 December 2005, showing a 52% increase in net gaming revenues, up to $271m, and an operating profit of $50m, compared with $43m a year before.

Net gaming revenues for casino increased by 16% to $161.2 million. Quarterly NGR per active casino member in the final quarter of 2005 was down to $419 (Q4 2004: $521), as a result of various promotions used to re-activate dormant members.

Net gaming revenues for poker rose dramatically by 179% to $109.8 million. In the final quarter of 2005 quarterly NGR per active poker member was up to $156 (Q4 2004: US$124).

Cost per acquisition remained competitive in 2005 at $183 (2004: $192), as 888 continued to diversify its marketing startegy with a multi-channel approach. This includes sports sponsorship, such as that of Middlesbrough Football Club, and the more recent deal with the World Snooker Championship.

888 Holdings increased its member base in 2005 with 5.3 million new registered member accounts, of which 1.8 million were real money accounts, bringing the total to over 23 million registered accounts in 177 different countries.

In the fourth quarter of 2005, the company had 97,661 active casino players, up 48% from the same period in 2004, and 233,301 active poker players, up 89%.

The group continued its geographic diversification, diluting its concentration of net gaming revenues and first time depositors away from the US. In 2005 NGR was split between: USA 55% (2004: 58%), UK 20% (2004: 15%), rest of Europe 17% (2004: 20%) and other countries 8%& (2004: 7%). Whilst growth of NGR in the USA market achieved 44% over 2004 levels, non-US growth exceeded this at 64%. The UK in particular (at 103%) was at the heart of this growth.

"To rely on one country too much is not good, and without reducing volumes, I'd like to get the percentage we're taking from the U.S. down to 20-30 percent as soon as we can," Chief Executive John Anderson told Reuters.

888 continues upgrading its proprietary products and since the year end has launched an entirely new casino product and introduced an updated, multi-language poker product which is now operational in English, German, Italian and Swedish. The addition of French and Danish and a new Jackpot version of poker is due imminently. The group has also introduced a new e-wallet focusing on Spain, Germany, Netherlands, Italy and France and plans a mobile phone initiative during 2006.

The company welcomes the UK's entry into the online space through the 2005 Gambling Act. 888 believes the UK's position is the first domino in what will become a legislative network throughout mainland Europe. Also of note is the Gibraltar Gambling Ordinance which introduces a bespoke regulatory regime in Gibraltar for remote gaming and further consolidates Gibraltar's position as a first-class online gaming jurisdiction.

888 continues to monitor the legislative position in Europe and the USA and noted that there is a change in the emphasis of regulators, who are looking beyond the grant of licenses and are focusing more on compliance and codes of conduct within the industry.

The group was one of the founding members of eCOGRA (e-Commerce Online Gaming Regulation and Assurance), an independent body which has developed a series of self-regulatory guidelines for the online gaming industry. As online gaming develops into a mainstream leisure activity 888 believes further clarification of the regulatory position in relation to online gaming would be a positive driver for growth by enhancing consumer confidence and trust in the sector.

"Since the Company's inception in 1997, 888 has always been at the forefront of responsible gaming and industry self-regulation and will continue to be so," commented Chief Executive John Anderson.

"I am delighted to report that 2006 has started well. The Company is seeing continued growth in new member recruitment, average daily deposits and poker rake and in addition has experienced a positive start in Casino following the new product roll out. Trading is in line with management's expectations and we remain confident in the outlook for the rest of the year, which will see, via a policy of organic growth and selective acquisition, the continued growth of this Company. I am extremely proud of our brand and management which will be key to our continued success," he added.

The acquisition of a non-US sports betting operation is the next priority for Anderson as he looks to diversify revenue streams and reduce dependency on the United States.

"I am looking for a non-US sportsbook. I haven’t found one yet, but I am looking. As well as that, of course I am continually looking around, as I should be, for other things."

Commenting on the US bill passed by the House Financial Services Committee and aimed at prohibiting offshore gambling websites from accepting credit cards, checks and bank transfers in gambling transactions, Anderson remains confident that the bill will ultimately fail.

"We feel confident it won't get through the next stages, and we'll be okay."