Leading the Future of Online Gaming 2016
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LEADING THE FUTURE OF ONLINE GAMING 888 HOLDINGS PLC ANNUAL REPORT & ACCOUNTS 2016 WELCOME TO 888: THE NAME CUSTOMERS CAN TRUST 888 is one of the world’s most popular online gaming entertainment and solutions providers. 888’s mission is to supply customers with market-leading online gaming entertainment, above all in a safe and secure environment. At the heart of 888’s business is its cutting- edge proprietary gaming technology and associated platforms which are operated by highly sophisticated business analytics- driven marketing and customer relationship management. These strengths enable 888 to deliver to customers and Business to Business partners alike market-leading and continually innovative online gaming entertainment products and solutions. 888 is always mindful of the complex regulatory environment in which it operates and the social responsibility that comes hand-in-hand with the online gaming industry. 888 continually invests time and resources in caring for and protecting its customers and, by successfully doing this, 888’s business will continue to grow and prosper. OVERVIEW OF 888 Overarching 888 brand 888’s B2C offering 888’s B2B offering This Annual Report may contain statements which are not based on current or historical fact and which are forward looking in nature. These forward looking statements reflect knowledge and information available at the date of preparation of this Annual Report and 888 Holdings plc (the “Company”) and its subsidiaries (together, “888”, or the “Group”) undertake no obligation to update these forward looking statements. Such forward looking statements are subject to known and unknown risks and uncertainties facing 888 including, without limitation, those risks described in this Annual Report and other unknown future events and circumstances which can cause results and developments to differ materially from those anticipated. Nothing in this Annual Report should be construed as a profit forecast. 888 HOLDINGS PLC ANNUAL REPORT & ACCOUNTS 2016 01 HIGHLIGHTS STRATEGIC REPORT STRATEGIC REPORT STRATEGIC Another successful year for 888 Welcome .................................................................. IFC Highlights ...................................................................01 Revenue Revenue – B2C At a Glance ...............................................................02 US$ million US$ million Where we Operate ................................................03 Online Gaming is a 521 546 Revenue at 460 480 Revenue Global Growth Market ......................................... 04 462 constant 399 - B2C at What Makes Us Different ....................................05 currency1 constant Chairman’s Statement ..........................................06 1 up 18% currency Chief Executive Officer’s up 20% Strategic Report ....................................................08 Actual revenue Actual 888’s Business Model ............................................09 2015 2016 2016 up 13% 2015 2016 2016 revenue - 888’s Growth Strategy ..........................................14 Actual Constant Actual Constant B2C 2016 Business and Financial Review ................16 currency currency up 15% Market Review: Growth in Regulated Markets ............................24 Revenue – B2C Casino Revenue – B2C Sport Risk Management Strategy ................................26 GOVERNANCE US$ million US$ million Regulation and General Regulatory Developments ......................................................... 32 Viability Statement ................................................ 35 291 55 Corporate Responsibility.....................................36 279 Revenue - 52 Revenue - 231 B2C Casino 35 B2C Sport at constant at constant currency1 currency1 up 26% up 58% GOVERNANCE Actual Actual 2015 2016 2016 revenue - 2015 2016 2016 revenue - Board of Directors ................................................ 40 Actual Constant B2C Casino Actual Constant B2C Sport Directors’ Report ....................................................42 currency up 21% currency up 49% Directors’ Statement of Responsibilities ..................................................46 Corporate Governance Adjusted EBITDA2 EBITDA Statement..................................................................48 US$ million US$ million STATEMENTS FINANCIAL Directors’ Remuneration Report .........................................................................54 100 89 EBITDA at 90 Adjusted 80 Audit Committee Report .................................... 67 81 EBITDA at constant 1 constant 59 currency currency1 up up 50% 24% EBITDA up 34% FINANCIAL STATEMENTS Adjusted 2015 2016 2016 EBITDA 2015 2016 2016 Independent Auditors’ Report ........................... 71 Constant up 12% Constant Consolidated Income Statement ..................... 78 currency currency Consolidated Statement of Comprehensive Income .................................. 78 Consolidated Balance Sheet .............................. 79 Consolidated Statement Profit Before Tax First Time Depositors of Changes in Equity ............................................80 US$ million (FTDs) % Consolidated Statement of Cash Flows .........81 Notes to the Consolidated Financial Statements ............................................ 82 59 up 82% 114 up 14% Company Balance Sheet .....................................112 100 Company Statement of Changes in Equity ............................................113 33 Company Statement of Cash Flows .............. 114 Notes to the Company Financial Statements ............................................115 2015 2016 2015 2016 Shareholder Information .....................................117 Company Information ........................................IBC 1 As defined in footnote on page 16. 2 As defined in table set out on page 17. > For more information see our website: corporate.888.com 02 888 HOLDINGS PLC ANNUAL REPORT & ACCOUNTS 2016 AT A GLANCE 888 is one of the world’s most popular online gaming entertainment and solutions providers. More than a million customers enjoy our online gaming entertainment across more than 100 countries. MISSION ABOUT US 888’s mission is to exceed its customers’ 888 has been at the forefront of the expectations and provide the most online gaming industry since foundation enjoyable online gaming experience in 1997, providing to players and B2B possible. 888 is mindful of the complex partners an always innovative and regulatory environment in which it world-class online gaming experience. operates and the social responsibility At the heart of 888’s business is its that comes hand-in-hand with the proprietary gaming technology and online gaming industry. 888 always associated platforms, allowing 888 to invests time and resources in caring for differentiate itself from and innovate and protecting its customers and, by ahead of competitors. successfully doing this, 888’s business will continue to grow and prosper. IS AN… ESTABLISHED AND TECHNOLOGY-CENTRIC INCREASINGLY GROWING REGULATED AND At the heart of 888’s business is its cutting-edge, proprietary online gaming DIVERSIFIED In the growing and dynamic global technology that underpins the Group’s online gaming industry, 888 has a ability to deliver a first class gaming The Group has a portfolio of proven track-record of consistent experience across platforms strong, trusted Business to growth and outperformance. Revenue to customers. Customer (“B2C”) brands and in 2016 increased by 13% and 18% a leading Business to Business at constant currency*. (“B2B”) business, Dragonfish. The Group has established leading positions in the Casino, Poker and Bingo markets and is focused on developing the fast-growing 888sport brand. The Group’s is truly diversified with successful operations under ten licences. …GLOBAL INDUSTRY LEADER. * Constant currency in this document as defined on page 16 888 HOLDINGS PLC ANNUAL REPORT & ACCOUNTS 2016 03 WHERE WE OPERATE 888’s strong performance continued in the core UK market as well as in key STRATEGIC REPORT STRATEGIC regulated markets in Spain and Italy. During 2016, 888 received a sports betting licence in Ireland as well as casino, poker and sports betting licences in both Denmark and Romania. UK SPAIN ITALY 888 continued to deliver strong growth In Spain 888 offers its Casino, Sport In Italy, 888 offers Casino and, as of in the core UK market with a revenue and Poker offering across mobile and Q1 2016, Sport on mobile and desktop GOVERNANCE increasing 16% year on year at constant desktop platforms. Spain is now 888’s platforms. 888 continued to grow currency and 5% increase in reported second largest market and revenue in with revenue rising 66% year on year. revenue, driven primarily by continued 2016 continued to grow impressively This was driven by the launch of momentum in Casino and Sport by 45%, further capitalising on the 888sport.it in Q1, supported by online supported by cost efficient marketing introduction of slot games midway and offline marketing campaigns. and effective CRM. through 2015 and its Sport offering. DENMARK IRELAND ROMANIA In Denmark, 888 offers Casino, Poker In 2015, the Group obtained a Sport During 2015, 888 received casino, poker and Sport products across mobile and betting licence in Ireland. and sports betting licences in Romania. desktop platforms. 888 delivered a STATEMENTS FINANCIAL solid performance following the Group’s launch during 2015 and has quickly built momentum in this exciting market supported by effective online and offline marketing activities. USA 888 is the only