Betting giant 888 has said its acquisition of William Hill has helped boost its revenue up 165 per cent.
The firm said in the six months ended 30 June, revenue flew up 165 per cent, with adjusted earnings before interest, tax, depreciation and amortisation up 211 per cent thanks to its purchase of world’s biggest bookmaker, William Hill International.
888 bought William Hill last July for £2bn, taking on its 1400 betting shops as well as its online gaming brands – in addition to a hefty amount of debt to finance the deal, causing investors to fret.
In the trading update this morning, 888 said it reduced net debt by £68m to £1,660m.
However, loss after tax was £32.5m – compared to profit after tax of £12m in the first half of 2022 – due to higher interest costs and “certain one-off costs” from the acquisition.
888 shares dropped over three per cent on Tuesday morning.
The London-listed gambling company said they now expect to reach their £150m target of synergies a year early in 2024, as £66m worth of cash synergies were delivered in the first half of the year, ahead of target.
Lord Mendelsohn, executive chair of 888, said the company “successfully” navigated business, market and regulatory volatility and “made very strong progress with the execution of our integration plan”.
“We now expect to realise the full £150m of synergies in 2024, a year earlier than the original plan.”
“We have successfully delivered against our focused market strategy, changing the mix of our revenue and creating a more profitable and sustainable platform for future growth,” he added.
In 888’s UK&I Online market, active users rose 10 per cent but revenue fell nine per cent, reflecting the introduction of player safety measures introduced in the government’s gambling white paper in April, which make it harder for punters to bet with large amounts of cash.
A shift in player base to lower spending groups provides “a more sustainable and profitable base to drive future growth in the UK, as well as putting the Group in a strong position ahead of any changes from the White Paper”, 888 explained.
It comes after 888 has taken a beating from two recent scandals.
Last month, the gambling watchdog launched a review into the bookie’s licence to operate in the UK.
In the announcement this morning, 888 said the ongoing licence review by the Gambling Commission is “not expected to have any impact on operations”.
Previously in January, an internal money laundering investigation into the firm’s Middle Eastern business led to former boss Itai Pazner stepping down.
888 appointed Per Widerström as chief executive last month, who is set to take over in mid October.
Mendelsohn said he will be “working closely with Per to ensure a smooth handover” over the coming weeks.
“Until recently you wouldn’t have bet on 888,” said Julie Palmer, partner at Begbies Traynor. “But today’s results look like steadying the horses.”
However, she said the “biggest challenge” is the cost of living crisis hitting consumers.
“The company makes about two thirds of its revenues in the UK and if interest rates continue to rise and inflation fails to ease, then customers will prioritise the roof over their head rather than a flutter,” Palmer explained.
Peel Hunt analyst Ivor Jones said it is “slightly disconcerting that 888 has managed an announcement without any shocks, but we will take it at face value”.
“We reiterate our Buy recommendation and 150p target price.”