888 Holdings, the online gambling operator from the UK, decided to shift some of its operations to Spain, in order to deal with its plummeting profits properly. They plan to move some of their operations to the tax-friendly Spanish city of Ceuta.
Last week, 999 reported that their adjusted earnings fell 14% to $44.9m and pre-tax profits declined 63% to $22m.
Investors started panicking and 888’s shared went down for 10% immediately that day. Although it took some time for operator to get back on its feet, shared were steadily falling for some time.
The operator’s B2C revenue rose 6% to $262.5m in H1, although poker didn’t fare well. It revenue fell by one quarter to $23.1m. Eventually the profits started going up again. The mainstay casino vertical got back on its feet, improving 9% to $175.4m, sports betting also went up 19% to $44.5m and bingo improved 10% to $19.5m.
888’ B2B revenue wasn’t that good. It fell 44% to $14.8m thanks to the acquisition of Costa Bingo.
The main reason for such bad results was the company’s presence in the UK and Italian markets. The taxes crippled the company, plus their expansion in Sweden, Portugal and Germany also went bad.
Expenses sky rocketed, including R&D (+10%), selling and marketing (+2%) and administrative (+24%).
The company’s share price dropped drastically because of all this. Luckily, the “Ceuta maneuver” may turn the company’s fortunes around. Spain is, after all, 888’s single largest market outside the UK.
888 CEO Itai Pazner stated that the transfer is in progress and that company won’t change its approach toward Ceuta and Gibraltar operations.