888 hands out special dividend, eyes acquisitions

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By Neil Maidment

LONDON, March 24 (Reuters) - Online gambling firm 888 Holdings, which ended talks on a takeover by larger rival William Hill (Other OTC: WIMHF - news) last month, said it was looking at acquisitions of its own to bolster growth.

888, which offers casino, poker and bingo games and is expanding its sports betting business, has enjoyed strong growth as gamblers increasingly move online. However, it and rivals expects to see profits clipped by higher taxes in some markets.

"We are constantly appraising opportunities," 888 Chief Executive Brian Mattingley told Reuters on Tuesday after announcing a 33 percent rise in 2014 earnings and a special dividend of 7 U.S. cents.

"Infill acquisitions are something that, if you are a company of our size in the industry, you need to get critical mass, and to buy back some of the core earnings lost to UK Point of Consumption (PoC) Tax."

He would not say if the firm, which ended 2014 with no debt and a $163 million cash position, was close to any deals.

Britain's PoC tax came into force in December. It taxes profits from bets made by British-based customers, closing a loophole that had allowed companies to cut their bill by basing their operations offshore in places like Gibraltar.

The industry is also braced for tax changes in other markets across continental Europe. These are expected to spark a period of consolidation in the gambling sector as small competitors struggle and larger ones look to support growth.

Shares (Berlin: DI6.BE - news) in 888 were up 2.5 percent to 156.5 pence at 1120 GMT after it said 2014 core earnings rose by a third to $101 million, ahead of an average forecast of $91.9 million, according to Reuters data.

The performance was driven by a 14 percent rise in revenue, with trade at its core casino business strong.

The firm said it would pay a final dividend of 4.5 cents per share, and recommended an additional one-off dividend of 7 cents per share, bringing the total for the year to 15 cents.

Trading in its first quarter so far had been in line with its expectations, it said, with new customer numbers up strongly but average daily revenue down 6 percent year-on-year.

888's core earnings for 2015 are on average expected to fall $30 million to $70 million, according to Reuters data.

Talks with Britain's biggest bookmaker William Hill concerning a 720 million pound takeover deal ended on Feb. 16 after a disagreement over price with a key stakeholder. (Editing by Keith Weir)