888's share price jumps as it reveals a special dividend and strong profit growth


The online gaming giant abandoned a takeover bid for William Hill last year (Source: Getty)

Online gaming giant 888's shares jumped nearly 10 per cent after the firm announced a special dividend on the back of strong year-end results.

The figures

For the year to the end of December 2016, 888's pre-tax profit grew 82 per cent to $59.2m (£47.5m). Revenue increased 13 per cent to $520.8m while adjusted core earnings lifted 12 per cent to $90.2m.

Sport revenue was up 49 per cent to $51.9m while casino revenue jumped 21 per cent to $279.3m. Revenue from poker, bingo and emerging offerings each fell compared with 2015.

The board recommended a final dividend of 5.1 cents per share due to the strong results plus an additional special dividend of 10.5 cents per share, bringing the total for the year to 19.4 cents per share compared with 15.5 cents per share in 2015. This is the firm's fifth straight year declaring a special dividend.

Investors were betting on 888 this afternoon as its share price jumped 9.4 per cent at 256p.

Why it's interesting

Over 2016, 888 and casino operator Rank Group abandoned a takeover bid for William Hill which the bookmaker said "substantially undervalued" the company.

After the firm's half-year results, chief executive Itai Frieberger told City A.M. 888 is still pursuing an "organic growth strategy" but that the group does not have "an M&A obsession".

"Realistically, we have an M&A agenda but this is not a driving agenda when our business is performing so well," Frieberger said.

Consolidation in the sector will continue into 2017 and beyond, according to Investec analysts.

"Given 888's size and superior technology offering, as well as its growing sport product vertical, we regard 888 as either a consolidator or key potential take-out target," said Investec analysts, who gave the stock a "buy" rating.

What 888 said

Frieberger said: 

888’s further expansion in the UK, Spain and Italy is a strong demonstration of the group’s ability to drive excellent growth and build leading market positions across regulated markets as the industry continues to head in this direction.

These strong results demonstrate the truly outstanding underlying momentum in the business. In addition, the group’s strong free cash flow and confidence in the outlook has enabled the Board to propose a 25 per cent increase in total dividend for the year.

Current trading since the start of the year remains healthy with average daily revenue more than 11 per cent above the previous year at constant currency.

The board continues to see a number of significant growth opportunities for 888 both in new and existing markets and we look forward to another exciting year of progress.