Tune in for a detailed overview of the latest 2023 888 Holdings half year financial Results. Reduced debt, increased EBITDA, but a £33 million! (Photo by Josh Appel on Unsplash)
888Holdings released its half year financial results with a mixed bag of results to divulge. For investors, the turmoil of the last 12 months, which saw the company’s shares plummet, may be over, but the company is still not in open water financially.
Overall, there is a net loss of £33 million, which in the grand scheme of things isn’t that much considering the firm’s market cap of 498.37 million and a reported 1.24 billion in revenue. I assume this includes the hefty £19.2 million fine by the UKGC. Therefore, that’s a realistic loss of £13.6 million. Yet, the previous H1 2022 saw a profit of £12 million, so numbers are still down.
According to the latest 888 Holdings half-year financial results, the acquisition has helped 888 Holdings increase revenue by 165% to £882 million. It also means a pro forma group adjusted EBITDA of +9% and a margin increase of +2.66 pts up to 17.7%. This created a +211% to £156m Adjusted EBITDA, with a particular note in the report dedicating this uptick to the William Hill acquisition.
The good news is that the company reports cash synergies for H1-23 of £66 million and shows its target of £150 million is well within schedule. However, the pro forma group revenue across all businesses is down 7%.
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Summary of 888 Holdings Half Year Financials
| Metric/Event | H1-23 or Description |
|---|---|
| Reported Group revenue | +165% to £882m |
| Adjusted EBITDA1 | +211% to £156m (due to William Hill acquisition) |
| Loss after tax | £33m (compared to profit of £12m in H1-22) |
| Factors for loss | Increased interest costs, amortisation of intangibles, one-off costs related to acquisition |
| Pro forma Group revenue | -7% |
| Reasons for Pro forma revenue decline | Compliance changes, refined marketing, changed market focus |
| Q2 2023 revenue source | 95% from locally regulated or taxed markets |
| Pro forma Group Adjusted EBITDA | +9% |
| Pro forma Adjusted EBITDA margin | +2.6ppts to 17.7% |
| Cash synergies in H1-23 | £66m |
| Expected full target benefit of cash synergies | £150m by 2024 (a year earlier than prior expectations) |
| Net debt as of 30 June 2023 | Reduced by £68m to £1,660m |
| Cash (net of customer balances) as of 30 June 2023 | Increased by £11m to £188m |
| Leverage as of Jun-23 | Reduced from 5.6x at Dec-22 to 5.1x |
| Total liquidity | Over £300m (Undrawn £150m RCF included) |
| FY23 Adjusted EBITDA expectations | Significantly higher year on year, margin of at least 20% (2022: 16.8%), leverage slightly below 5x |
| New CEO appointment | Per Widerström from 16 October 2023 |
| GB Gambling Commission licence review | No expected impact on operations; Engagement with the regulator continues |
According to a report by thisismoney.co.uk, 14.9% of punters in the United Kingdom use William Hill; a figure up from the previous year reporting 14.1%.
888 Holdings Debt – Highly geared but under control?
Indeed, the long-term debt is still highly geared, mainly due to the firm’s reverse takeover of the William Hill Brand. It is also not unusual for casino companies to operate under such large debt, as gambling entertainment is seen as a resilient economy.
The debt mainly came via the William Hill reverse takeover deal. This came with high street betting stores, William Hill online casino and sports, and Mr Green casino and sports. And it seems it has paid off so far. One of the issues is that it was just before the pandemic (yes, that old chestnut again – yawn). With high street shops closed down, the company’s new investment suffered greatly, yet as per the latest 888 Holdings half-year financial results, that investment is now showing its worth.
Furthermore, the debt sourced to unite the William Hill brand under 888 Holdings is falling. This is as promised in the 888 Holdings 2022 Revenue Report, in which the debt was one of the major concerns. However, the company reduced its total debt to £1.66 billion, paying off £68 million. The payoff means the gambling company has now reduced its leverage from 5.6x in December 2022 down to 5.1x as H1 2023.
Is 888 Holdings Debt Under Control? It would seem so. It is a huge amount to take on, but the William Hill brand along with Mr Green, William Hill online, 888Sports, 888Casino, 888Poker, and other brands, the company still looks promising. If this rate continues, by the end of 2023, £136 million should have been paid off. In theory, paying off the total liability should take 12 years.
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