888 Holdings could step away from the German market, after the igaming operator suffered a big hit to its year-end profits due to a historical tax issue.
A potential VAT bill of US$45.3m relating to activity in Germany before 2015 was added to the company’s 2017 results as an exceptional charge, along with a US$5.5m fine from the UK’s Gambling Commission for failing to protect vulnerable customers.
As a result, profit before tax was down to US$18.8m from US$59.2m in 2016. It has led to a warning from the FTSE 250 company.
“Following a recent ruling by the Federal Administrative Court of Germany, the Board of 888, together with the Group's legal counsel, is assessing the status and breadth of its offerings in the German market,” the firm stated.
888 Holdings also reported a strong performance in sport and increased growth in Spain and Italy, with revenue up 34 per cent in both of those markets. Overall revenue increased by four per cent to US$541.8m (2016: US$520.8m) and excluding the UK, revenue was up by 26 per cent in regulated markets.
Casino revenue was up and sport revenue rose by 45 per cent to US$75.5m. Adjusted earnings before interest, tax, depreciation and amortisation rose by 12 per cent to US$100.7m, up 19 per cent on a constant currency basis.
Itai Frieberger, CEO of 888, said: "888 has delivered another year of progress achieving record revenues of US$541.8 million and a 12 per cent increase in adjusted EBITDA. The Group's growth was driven by further expansion in casino, sport and across regulated markets.
“This very robust outcome was achieved despite the Group's withdrawal from certain markets during the year and demonstrates 888's resilience and agility that is underpinned by first-class technology and an outstanding team.
“The Group has continued to reap the rewards of its investments in recent years in several growth markets including Spain and Italy. These markets helped to drive very strong revenue growth in regulated markets excluding the UK of 26%. The Group continues to gain momentum in sport where revenue increased an impressive 45%.
“Current trading since the start of the year is in line with our expectations with average daily revenue 6% above the previous year, representing an 8% increase when adjusted for the withdrawn markets.
“888 is a resilient and diversified operator with scalable proprietary technology. The Group has a number of significant growth opportunities ahead and the board is confident of another year of operational progress."
