Bingo boosts 888`s otherwise poor results

GIBRALTAR - The performance of 888`s bingo business was a bright spot in an otherwise poor performance in the first six months of 2010. 888 operate Wink Bingo, Posh Bingo and 888 Bingo as well as providing the bingo software for well known online bingo brands such as Foxy Bingo, Cheeky Bingo and UK Bingo.

Bingo provided revenues of $23.5 million in the first six months of 2010, up from $5.1 million in the first six months of 2009. But since then 888 bought Wink Bingo and Posh Bingo, which provided $19 million of those revenues.

The rest of 888`s business was hit by declining poker revenues, which had fallen sharply during the World Cup, although the company did say there had been an upturn in August. Profits of $8.4 million for the first six months were down 44 per cent on the $14.9 million earned in the first half of 2009.

888 said it would scrap its dividend in order to conserve cash for acquisitions; it is widely thought that the online gaming market will see some major consolidations in the second half of 2010, following Party Gaming and Bwin`s merger.

Gigi Levy, 888`s chief executive, saidd: "Our business experienced a difficult first half against the backdrop of a challenging economic environment, with trading impacted by a number of factors including general online poker weakness, adverse F/X movements and, in relation to Poker and Casino in Q2, the FIFA World Cup. A cost reduction programme has been implemented to help mitigate against this impact, the benefit of which will be seen in H2. A reorganisation of the technology and product divisions and a re-focusing of certain aspects of the business is also underway to better position the business for the future.

"Despite the economic environment, we committed additional research and development spend to innovative new products and increased marketing spend, which has generated some increase in revenues and a rise in real money registered accounts. However, this important investment for future growth has impacted H1 EBITDA.

"Trading in August has been significantly stronger than in July, with a double digit daily revenue increase especially in casino and poker. Boosted by the release of the new platform, Poker has seen an increase of more than 15% in revenue in August.

"We will continue to innovate our B2C offering and attract and retain players to 888`s brands. Dragonfish also continues to win new contracts and industry accolades underlining the strength of its Total Gaming Services offer. Particular progress has been made in regulated markets, and notable deals have been signed in Italy and France.

"With full service operator capabilities, strong brand, technology and unique B2B platform, we remain confident in the underlying fundamentals of the business and believe that the move of 888, and the industry, to become a locally-regulated gaming entertainment operator presents significant opportunities for growth and M&A activity.

"In order to continue investing for future growth, and to support potential acquisitions, the board has decided not to declare an interim dividend at this time and finalise the full year dividend when the full year results are available."

Shares in 888 remained unchanged at 37 pence in early trading, giving 888 a market capitalisation of £128 million, way down on the £830 million valuation it achieved in May 2006.