1 September 2021

888 Holdings Plc

("888" or "the Group")

Half Year Results for the six months ended 30 June 2021

Record first half revenue and profit, strong strategic progress, increased full year expectations

888 (LSE: 888), one of the world's leading online betting and gaming companies, announces its half-yearly results for the six months ended 30 June 2021 (the "period").

Financial Highlights

-       Group revenue +39% (+29% cc) with double-digit B2C growth in all major regulated markets, demonstrating the continued success of the Group's product-leadership strategy and effective data-driven investments

o  B2C Gaming² +35% (+25% cc)

o  B2C Betting² +82% (+71% cc)

o  Total B2C +41% (+31% cc)

o  B2B +8% (+1% cc)

-       Revenue from regulated and taxed markets represented 75% of Group revenue (H1 2020: 73%), with over 50% growth in regulated markets revenue 

-       Adjusted EBITDA of $97.4 million (H1 2020: $70.1 million), with the Adjusted EBITDA margin stable at 18.4% (H1 2020: 18.5%)

-       Adjusted basic earnings per share of 18.3c (2020: 12.2c), Basic earnings per share of 13.7c (H1 2020: 12.4c)

-       Interim regular dividend of 4.5c per share (H1 2020: 3.2c)

-       Cash and cash equivalents, net of customer balances, of $114.4 million (H1 2020: $77.4 million)

Operational and Strategic Highlights

-       Strong market share trends in key markets:

o  Over 80% growth in Italy, with new customer growth of 11% reflecting the strength of 888's brands and the success of its differentiated products

o  Over 50% growth in UK revenues, reflecting strong acquisition trends and customer activity across all product verticals

-       Product-leadership strategy delivering strong results:

o  888sport platform rolled out across the majority of markets, supporting strong betting revenue growth. Our cutting-edge sportsbook platform enables customers to play and bet with unique products such as BetFinder, BetFeed and BetBuilder in addition to personalised recommendations

o  Ongoing evolution of 888casino product with the launch of over 435 new games. Section8, 888's in-house game studio, continues to produce high quality games with customers now enjoying more than 140 exclusive titles, which consistently rank among some of the most popular games

-       Strategic US partnership with Sports Illustrated provides 888 with a platform for strong US growth:

o  Long-term partnership with iconic American sports brand, providing a high-volume and low-cost customer acquisition opportunity

o  SI Sportsbook due to go live in Colorado this month, with further launches planned in the coming months

o  B2B extended into Pennsylvania, supporting the expansion of the WSOP brand and powering the U.S. market's only interstate shared player liquidity poker network

-       Data-driven investments driving strong returns:

o  B2C new customer acquisition increased 6% despite the prior year period including the benefit of a structural shift in online usage

o  Increased investment in optimisation tools including improved search tools and AI-powered pre-login game recommendations

-       Continued focus on developing and improving safer gambling processes:

o  Continued rollout of the Control Centre, giving customers a one-stop-shop for safer gambling tools. The platform provides customers with ground-breaking levels of transparency about their gambling activity in real-time, as well as quick and simple tools to control spend

o  New responsible gaming thresholds implemented, providing heightened levels of player protection

Current trading & outlook

-      Revenues throughout July and August increased by mid-single digit percentage relative to the prior year period, with the slowdown in the rate of growth reflecting the impact of retail and leisure venues reopening across international markets, and the previously disclosed expected impact of regulatory and compliance changes

-      For the remainder of the year, the Board remains mindful of the tougher comparables in the fourth quarter, a period that enjoyed an exceptionally strong performance in both betting and gaming revenues during 2020. However, with 888's product-leadership strategy, the Board is confident that revenues and Adjusted EBITDA in the full year will be slightly ahead of its prior expectations

Itai Pazner, CEO of 888, commented:

"The strong momentum from 2020 continued into the first half of 2021, with growth driven primarily by regulated markets, where we believe ongoing market share gains continue to reflect our product-leadership strategy, highly effective data-driven marketing, and our excellent content.

We made significant strategic progress in the first half, securing a long-term strategic partnership with Sports Illustrated to strengthen our position in the US. We also continued to execute our product leadership plan, delivering further improvements in the usability and quality of products across sports and gaming, all the while maintaining our persistent focus on delivering our safer gambling priorities.

The Board remains confident that, with 888's advanced technology, products and diversification across markets, the Group remains well positioned to deliver further strategic progress during 2021 and beyond."

Notes

¹ Constant currency ("cc") growth is calculated by retranslating the non-dollar denominated component of H1 2021 revenues at H1 2020 exchange rates

² B2C revenues had historically been split out into the component products of Casino, Poker, Sport and Bingo. The Group has now decided to combine Casino, Poker and Bingo revenues under one heading of Gaming, to better reflect how the business is managed and in line with how peer companies present results (no change to Sport, which is now referred to as Betting)

Enquiries and further information:

- Ends -

About 888 Holdings Plc:

888 Holdings plc (and together with its subsidiaries, "888" or the "Group") is one of the world's leading online betting and gaming companies. 888's mission is to develop state-of-the-art technology and products that provide fun, fair and safe digital gambling products to players globally. Safer gambling is a core focus for the Group and, at the beginning of 2020, 888 launched its 'Safer. Better. Together' safer gambling strategy and commitments.

888 has been at the forefront of the online gaming industry since its foundation in 1997, leveraging its proprietary technology to provide players and B2B partners an innovative and world-class online gaming experience.

In 2020, the company was proud to be recognised at the 2020 Gaming Intelligence awards as the winner in the Casino Operator of the Year category. In 2020, 888 also won two prestigious awards for its poker platform at the 2020 Poker Listings Operator Awards in the Most Improved Software and Best Beginner Software categories.

The Group is structured into two lines of business: B2C, under the 888 brands, and B2B, conducted through Dragonfish, which provides partners a leading platform through which to establish an online gaming presence and monetise their own brands in a safe and responsible manner.

888's consumer facing websites offer more than just online betting and gaming. They are entertainment destinations: places where people can enjoy a truly interactive experience and be part of an online community that shares common interests. 888's strong and trusted brands are all accessible through www.888.com.

Find out more about 888 at http://corporate.888.com/.

CEO REPORT

INTRODUCTION

888 achieved a record performance in the first half of the financial year, with 39% growth in both revenue and Adjusted EBITDA. This performance was underpinned by continued success across the Group's key regulated markets, resulting in the proportion of Group revenue generated from regulated and taxed markets increasing to 75% (H1 2020: 73%). 888's continuous investment in product leadership, successful data-driven approach to marketing and customer relationship management ("CRM"), and the Group's highly skilled global team remained the key drivers behind the Group's progress during the Period.

In addition to this strong financial performance, the Group continued to make strong strategic progress during the Period, particularly in the US market. This included the announcement of an exciting long-term partnership with Authentic Brands Group and its iconic American sports brand, Sports Illustrated, towards the end of the Period. The Board believes this combination provides an outstanding brand to match the Group's proven and high-quality products and technology that together provide an exceptional foundation to achieve long-term growth in the developing US market. 

PRODUCT AND CONTENT LEADERSHIP

The Group's proprietary technology and steadfast focus on developing market-leading gaming products remains key to 888's continued expansion and growth. 888 continues to focus all product development on the following key principles:

1.   Safety - All of 888's products must, above all else, keep gambling safe and fun. Meeting regulatory requirements is a bare minimum for 888 and we continually strive to put the same levels of focus on our safer gambling tools, processes and controls as we do on our gaming content.

2.   Usability - One of the most important principles we apply to all product development is that the products must be quick, simple and intuitive to use. We measure ourselves against the best-of-breed consumer technology products across entertainment, banking, and all other digital services, not just gaming operators.

3.    Content-rich - Our products must also be content rich, thereby enabling customers to access the different types of games and entertainment they want. Today 888 offers its customers almost 2,000 different casino games, over 100 different poker formats and tables, multiple bingo rooms, and a huge variety of sports events to bet on.

4.   Entertainment - The range of content and events we offer our customers is just half of the story. We must utilise our analytics capabilities and AI to ensure that we serve and make accessible the most relevant gaming content to each customer.

5.   Scalability - We have customers in dozens of countries across multiple different brands and languages. We develop new products and deploy these across our brands and multiple territories, all in line with local regulations. This provides 888 with economies of scale and thereby drives superior return on investment.

SAFER GAMBLING

888 firmly believes that providing a safe environment for customers is not only the right thing to do but puts the Group in a stronger position to continue generating long-term value for all stakeholders. During the Period, 888 maintained its focus on safer gambling and delivering progress against the safer gambling priorities set out in the 2020 Annual Report.

A key part of 888's safer gambling approach is an ongoing focus on developing and deploying technologies to help customers stay safe and reduce the potential for gambling-related harm. During the Period, the Group continued to enhance and roll out the Control Centre, its proprietary consumer-facing, safer gambling feature. The Control Centre provides 888's customers with high levels of transparency and real-time data about their activity, thereby helping those customers make informed decisions about their gambling, with a range of safer gambling tools to help control their spending and manage their activity. Consumer reaction has been positive, with half of users engaging with the feature multiple times, helping to drive a 23% uplift in the usage of safer gambling tools for those who engaged with the Control Centre.

888 participated in the Revealing Reality safer gambling project, funded by GambleAware, the findings of which were published during the Period. The project aims to change the way the industry approaches safer gambling. The independent project was developed based on a brief by the Responsible Gambling Strategy Board, with input from the Gambling Commission. 888 was one of five industry operators to participate in the project, conducted over nine months spanning 2019 and 2020.

DATA DRIVEN INVESTMENTS

888's investments in marketing and product development are underpinned by its sophisticated usage of data. 888 continues to develop leading brands across betting (Sport) and online gaming verticals (Casino, Poker and Bingo) by focusing on providing customers with a safe and enjoyable online gaming entertainment experience. Its investments in efficient and responsible marketing is critical to the development of its brands, and marketing investment increased by 71% in the Period, leveraging 888's data and analytics to optimise spend across a broad range of marketing channels.

Customer data is also used to support 888's development of its products and CRM. The Group continued to invest in the 888casino product, which remains important to both attracting new customers and keeping them engaged with the 888 brands. 888 launched over 435 new games on the platform during the Period, and customers are now enjoying more than 140 exclusive games from Section8, 888's in-house games studio that produces high-quality games, which consistently rank among some of the most popular games with 888 customers.

During the period, 888 continued to roll out its proprietary 888sport platform across most markets, supporting the strong Betting revenue growth. The cutting-edge sportsbook platform offers customers a wide variety of betting markets and unique products such as BetFinder, BetFeed and BetBuilder, as well as personalised recommendations. 888's investment in the product will continue as the Group develops new products fit for 888's customers' needs.

EXPANSION IN REGULATED MARKETS

888's strategic focus is to invest in the most attractive regulated markets, leveraging its data capabilities, strong brand and proprietary products to build strong market share positions. During the Period, the Group delivered revenue growth of 54% across its regulated markets, with regulated and taxed markets representing 75% of revenues (H1 2020: 73%). 

The Group continues to focus on appraising new, attractive regulated markets and during the Period the German regulator awarded a sports-betting licence to 888. Whilst the transition to the new regulatory regime in Germany has caused a short-term revenue headwind, it remains an attractive regulated market that presents a long-term growth opportunity for the Group.

OUTLOOK & CURRENT TRADING

Revenues throughout July and August increased by a mid-single digit percentage relative to the prior-year period. Against strong prior year comparatives this is a slowdown in the growth rate, reflecting the impact of retail and leisure venues reopening across international markets and the previously disclosed expected impact of regulatory and compliance changes.

In the second half of the year, 888 expect to move forward on its operational plan for the German market under the new sports-betting licence and to invest in building the 888sport product in the newly regulated market during Q4. The Group is also excited about the upcoming launch of SI Sportsbook in the US market and continuing to build its US footprint.

For the remainder of the year, the Board remains mindful of the tougher comparables in the upcoming fourth quarter, a period that enjoyed an exceptionally strong performance in both betting and gaming revenues during 2020. With continued strong underlying momentum, driven by 888's product-leadership strategy, the Board is confident that revenues and Adjusted EBITDA in the full year will be slightly ahead of its prior expectations.

CFO REPORT

Alternative Performance Measures ("APMs") used in this document do not have standardised meanings and therefore may not be comparable to similar measures presented by other companies.

Reconciliation of operating profit to Adjusted EBIT, Adjusted profit before tax and adjusted net profit

¹     The presentation of the Consolidated Income Statement for the six months ended 30 June 2020 was changed in a manner that allows for further understanding of the underlying financial performance of the Group and in order to be consistent with how Group management and peers analyse the results of online gambling. Further information is provided in note 2.

²      Excluding depreciation of US$7.3 million (H1 2020: US$7.2 million), amortisation of US$10.8 million (H1 2020: US$9.5 million) and share benefit charges of US$5.7 million (H1 2020: US$2.3 million).

³     Adjusted EBITDA and Adjusted EBIT are the main measures the analyst community uses to evaluate the Company and compare it to its peers. The Group presents adjusted measures (including Adjusted profit before tax) which differ from statutory measures due to the exclusion of exceptional items and the application of adjustments. It does so because the Group considers that it allows for further understanding of the underlying financial performance of the Group.

⁴      Exceptional charges of US$11.6 million (H1 2020: exceptional income of US$2.9 million), as set out in note 3 to the financial statements.

Revenue

Group revenue increased by 39.4% to US$528.4 million (H1 2020: US$379.1 million), driven by a 40.9% increase in B2C revenue. This growth reflects the Group's continued momentum across several regulated markets during the period. Performance was strong across both Gaming and Betting, which recorded revenue growth of 35.2% and 82.3% respectively.

B2B revenue increased by 8.3% to US$19.3 million (H1 2020: US$17.8 million) as a result of good progress across the Group's Bingo B2B network.

In line with the Group's strategic focus, revenue generated from regulated markets increased to 71% (H1 2020: 64%). The proportion of revenue generated from regulated and taxed markets increased to 75% of Group revenue (H1 2020: 73%).

The table below shows the Group's revenue by geographical market:

UK

UK revenue increased 57% during the period, partly benefiting from favourable foreign exchange movements, but principally reflecting continued solid market share progress in this highly competitive market. This has been driven by a resolute focus on product and content quality. During the period the Group continued to invest in entertaining recreational customers, while remaining committed to ensuring all play is safe and fun, with a series of new safer gambling thresholds implemented.

EMEA (excluding the UK and Italy)

Revenue from EMEA (excl. the UK and Italy) increased 9% during the first half of 2021, with standout performances in Romania (+138%), Ireland (+126%), Portugal (+47%) and Spain (+13%), partially offset by the impact of the new regulatory regime in Germany as previously flagged.

Italy 

Italy delivered continued strong revenue growth of 82%, reflecting encouraging performances in both Gaming and Betting with an overall new customer growth of 11% despite the strong comparatives in H1 2020.

US and Americas

In June, the Group announced an exciting long-term partnership with Authentic Brands Group and its iconic American sports brand, Sports Illustrated (SI). The partnership will provide a high-volume and low-cost customer acquisition opportunity for SI-branded betting and gaming products. SI Sportsbook is due to launch this month in Colorado, with additional launches planned over the coming months in addition to further integration across SI's platforms.

Revenue from US and Americas increased by 60% to US$65.1 million (H1 2020: US$40.6 million). US revenue increased 7% to US$10.7 million with growth mainly in Gaming. Betting grew at lower levels than historically as a result of reduced investment in the 888sport brand ahead of the launch of SI Sportsbook.

At the beginning of the year, 888 agreed to a multi-year extension of its exclusive B2B poker partnership with Caesars Interactive Entertainment. The extension will see 888 continue to power the World Series of Poker ("WSOP") brand's online poker rooms and the US market's only interstate shared player liquidity poker network. In July 2021, WSOP, powered by the Group's latest poker platform, was also launched in Pennsylvania.

Gaming taxes and duties

Gaming duties increased by 44.5% to US$100.5 million (H1 2020: US$69.6 million). This is a result of the Group's strong revenue growth in several regulated markets, mainly in UK and Italy. Gaming duties ratio increased slightly from 18.4% in H1 2020 to 19.0% in H1 2021.

Other cost of sales

Other cost of sales increased by 28.9% to US$75.5 million (H1 2020: US$58.6 million) and the ratio of cost of sales from revenue decreased to 14.3% (H1 2020: 15.5%). This is due to scale benefits and the increased use of our in-house sportsbook platform.

Other costs of sale mainly comprise commissions and royalties to third parties, chargebacks, payment service provider ("PSP") commissions and certain costs related to operational risk management and customer due diligence services.

Gross profit

Gross profit increased by 40.4% to US$352.4 million (H1 2020: US$250.9 million) and gross margin increased slightly from 66.2% to 66.7%.

Marketing expenses

One of the key drivers of 888's business is effective and innovative marketing spend. The marketing ratio as a proportion of revenue reached 32.3% (H1 2020: 26.4%), in line with the Group's strategy to build momentum in the business by investing more in growth marketing and long-term brand building. Overall marketing expenses increased by 70.7% to US$170.9 million (H1 2020: US$100.1 million)

Contribution

Contribution, which represents Gross profit less Marketing expenses, increased by 20.3% to US$181.5 million (H1 2020: US$150.8 million), while Contribution margin decreased to 34.4% (H1 2020: 39.8%), reflecting the increased marketing investment during the period to support future growth plans.

Operating expenses

Operating expenses¹ (which mainly comprise employment costs, professional services, development costs, IT services and infrastructure maintenance) amounted to US$84.1 million (H1 2020: US$80.7 million). The increase compared to the previous period reflects the enhanced scale of the business, including continued R&D investment and investing for expansion in the US market.

Operating expenses margin was 15.9% (H1 2020: 21.3%) reflecting the strong revenue growth and the gearing effect driven by the Group's effective cost control throughout the period.

¹ Excluding depreciation of US$7.3 million (H1 2020: US$7.2 million), amortisation of US$10.8 million (H1 2020: US$9.5 million) and share benefit charges of US$5.7 million (H1 2020: US$2.3 million).

Adjusted EBITDA

Adjusted EBITDA for the period increased 38.9% to US$97.4 million (H1 2020: US$70.1 million), resulting in an Adjusted EBITDA margin of 18.4% (H1 2020: 18.5%). Adjusted EBITDA was primarily impacted by the strong increase in Contribution, coupled with the operating expenses gearing, as explained above.

Exceptional items

(1)    Restructuring costs, comprises employee's redundancy costs related to the Group's decision to close its Antigua site that was completed in the period, as well as additional costs from disposal of property, plant and equipment.

(2)    The Group incurred legal and professional costs of US$1.7 million associated with non-recurring corporate development efforts.

(3)    The Group recorded an exceptional retroactive charge of US$6.8 million following a reassessment of potential gaming duties relating to activity in prior years.

Finance income and expenses

Finance income of US$0.1 million (H1 2020: US$0.1 million) less finance expenses of US$4.2 million (H1 2020: US$3.1 million) resulted in a net expense of US$4.1 million (H1 2020: US$3.0 million).

Finance expenses mainly comprised of US$0.6 million non-cash interest expenses resulting from IFRS 16, US$3.3 million non-cash currency exchange differences and US$0.3 million interest charge.

Profit before tax

Profit before tax increased to US$57.9 million (H1 2020: US$50.9 million) mainly as a result of higher contribution as described above. Adjusted Profit before tax increased 49% to US$75.2 million (H1 2020: US$50.4 million).

Taxation

Taxation for the period was US$7.2 million (H1 2020: US$5.4 million) as a result of the higher profit generated in the period and higher effective tax rate.

Adjusted Profit after tax and Profit after tax

Profit after tax was US$50.7 million (H1 2020: of US$45.5 million). Adjusted profit after tax¹ increased 51% to US$68.0 million (H1 2020: US$45.0 million).

¹ As defined in note 5 to the H1 2021 financial statements.

Earnings per share

Basic earnings per share increased to 13.7¢ (H1 2020: 12.4¢ per share). Adjusted basic earnings per share was 18.3¢ (H1 2020: 12.2¢). Further information on the reconciliation of adjusted basic earnings per share is provided in Note 4 to the H1 2021 financial statements.

Dividend

The Board has declared an interim dividend of 4.5¢ per share in accordance with 888's dividend policy. (H1 2020: 6.0¢ per share, out of which 2.8c one-off). The 40% increase in regular dividend reflects the strong performance of the Group during the first half of the year.

Balance sheet

Total assets as at 30 June 2021 amounted to US$504.9 million (31 December 2020: US$486.7 million).

Current assets as at 30 June 2021 amounted to US$291.3 million (31 December 2020: US$274.6 million) and current liabilities were US$301.9 million (31 December 2020: US$298.9 million).

888's net cash position as at 30 June 2021 was US$192.9 million (31 December 2020: US$190.0 million).

The balance of cash owed to customers as at 30 June 2021 was US$78.5 million (31 December 2020: US$74.0 million).

Cash flow

Net cash generated from operating activities before working capital was US$94.2 million (H1 2020: US$68.6 million).

Net cash generated from operating activities was US$69.4 million (H1 2020: US$94.2 million). During the Period there was a decrease of US$21.2 million in working capital (H1 2020: increase of US$28.9 million). The change in working capital is mainly driven by a US$10.0 million prepayment made in June 2021, while in the previous period working capital was affected by an increase in trade and other payables, reflecting sharp increase in trading activity during Q2-2020.

Net cash used in investing activities was US$17.9 million (H1 2020: US$16.9 million) and mainly includes the acquisition of property, plant and equipment of US$4.5 million and internally generated intangible assets of US$11.7 million.

Net cash used in financing activities was US$49.4 million (H1 2020: US$33.1 million) related mainly to a dividend payment during the period of US$44.5 million (H1 2020: US$11.1 million).

Going concern

Following a review of the Group's forecasts and its access to financing, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore, the Directors continue to adopt the going concern basis in preparing these interim financial statements. Further detail on the considerations of the Directors is given in Note 1.1.

Board changes

·     Anne de Kerckhove was appointed Senior Independent Director on 17 March 2021.

·    On 1 April 2021, Lord Jon Mendelsohn was appointed Chairman of the Board, replacing Brian Mattingley. On the same date, Limor Ganot joined the Audit Committee and Remuneration Committee replacing Lord Mendelsohn.

·     An ESG Committee was established on 15 April 2021, chaired by Lord Mendelsohn.

·     Zvika Zivlin stepped down as a Non-executive Director at the Annual General Meeting on 20 May 2021.

Workforce

The Group employees, '8sters', are all committed to 888's shared vision of being a leading betting and gaming operator globally. It is their collaboration, commitment and knowledge sharing that has supported these results during the first half of the year.

Following the partnership with Sports Illustrated, the Group is currently aiming to recruit various roles into a joint team with Sports Illustrated to drive the partnership's long-term success.

PRINCIPAL RISKS AND UNCERTAINTIES

In addition to the risks faced by businesses generally and online businesses in particular, the Group is exposed to specific risks arising from its operations. The following key principal risks and uncertainties remain consistent with those included on pages 22-29 of the 2020 Annual Report and Accounts: 

·       Regulatory risk

·       Information Technology and cyber risks

·       Data protection risk

·       Taxation risk

·       Retention of key personnel and succession risk

·       Business disruption due to pandemics such as COVID-19

·       Reputational risk

·       Partnership risk

·       Acquisition risks

·       Liquidity risks   

The Board has reconsidered and updated the description of the Group's regulatory risk with respect to H1 2021 as follows:

In part as a response to the COVID-19 pandemic, various jurisdictions adopted last year a more stringent approach to player protection, primarily to avoid emergence of problem gambling patterns amongst those sheltering at home, and to curtail excessive spending on gambling during a period of economic downturn. In various jurisdictions, this took the form of advertising restrictions, or the imposition of stricter player protection and responsible gambling measures, either temporarily or on a permanent basis.

The UK Gambling Commission ("UKGC") continued to take a strict approach towards compliance, tightening requirements, adopting more stringent policies and regulations, increasing the level of oversight over licensees and penalizing operators for failing to meet regulatory requirements and standards. The primary areas of focus for the UKGC were responsible gambling, affordability, consumer protection, and anti-money laundering. In January 2021, the UKGC published a letter to the industry pertaining to the restrictions imposed in response to COVID-19, setting out that extra operator vigilance is needed due to the renewed national lockdown. In February 2021, the UKGC announced new strict measures aimed at strengthening the protections and controls for players on online slots games, including introducing limits on spin speeds and the permanent ban of features speeding up play or celebrating losses as wins. The new measures are required to be fully implemented by online operators by 31 October 2021. In May 2021, the UKGC published an update on the consultation on remote customer interaction, which covered the issues of potential customer affordability checks, vulnerable person identification mechanisms and increased time management control for customers, which concluded that stronger requirements are needed for operators to identify harm indicators and take early appropriate action. The Group continued to work closely with the UKGC on compliance matters, and to update its policies and procedures to ensure compliance within the business, investing significant resources in regulatory compliance measures. The UKGC assessment, commenced in October 2020, is ongoing and the Group is engaged in dialogue and is working cooperatively with the UKGC to address all concerns raised with regard to the Group's operations.

In Germany, the regulatory landscape underwent the most drastic change in a decade in 2020 with the introduction of federal sports betting licences and the adoption of a temporary toleration regime for online casino gambling (with which 888 is compliant). In 2021 additional changes were made including the introduction of online slots and poker licences under the Interstate Treaty 2021, in the state of Saxony-Anhalt (for which 888 has applied). The Group was awarded a federal sports betting licence in 2021. Compliance with the conditions of the new licensing, toleration regimes and joint guidelines (technical standards) required various modifications and alignments of the group's German offering, which will impact the profitability of its operations in that jurisdiction. 888 has been successful in having certain prohibition orders previously issued against it withdrawn, and having certain others suspended, as it continues to litigate against outstanding prohibition orders in various German states. The emergence of the licensing regime for online casino and the current sports betting licence the Group was awarded may, in the foreseeable future, render these prohibition orders obsolete. During 2021, the Group submitted an application for an online slots and poker licence. Per the consensus reached by the German states and the subsequent regulatory reform that allowed for the online slots and poker licensing, the offering will be subject to certain restrictions (e.g. deposit limits, maximum wagers, advertising restrictions, etc.).

In the Netherlands, where a law was approved in February 2019 to liberalize the market, the local regulator continues to take a proactive and strict approach towards enforcement of existing laws against operators whose operations are conducted in violation of the "prioritization criteria" for enforcement issued by the authorities, and which were updated with additional criteria during 2019. Several operators received significant fines due to the conduct of operations in a manner violating these criteria. Operators fined or overtly targeting the market may also be barred from participating in the liberalized market or have their eligibility for licensing delayed. The Group has been studying these developments closely to ensure its offering is in line with the criteria as updated. On 1 April 2021, the Online Gambling Act entered into force, launching the online gambling licence application process and 888 intend to apply for a licence.

In Sweden, the Group has been operating under a local licence since 2019. The Swedish regulator initially showed itself to be strict and proactive in enforcing regulatory standards, and on occasion informed the industry of its position on compliance by penalizing operators it perceived as non-compliant. 888 continues to ensure that its operations are in line with local requirements.

2021 also saw a continuation of a rising trend of civil litigation claims in Austria against foreign-licensed operators, claiming refunds due to lack of local licensing. This trend is backed by case law amongst the higher Austrian courts. In addition, claim-financing bodies started gathering claims against operators. The Group is dealing with these civil claims with help from its local legal advisors.

In January 2021, the federal Court of Appeals for the First Circuit denied an appeal by the US Department of Justice seeking to uphold a 2019 memo on the scope of the federal Wire Act. By denying the appeal, the Court confirmed the previous opinion from 2011, which concluded that the Act applies only to sports betting. The case may eventually reach the US Supreme Court, depending on the position of the new Biden administration on the issue. If left unchallenged, this development would help serve 888 and the online industry in providing a more legally sound basis for internet gaming activity in the US. More generally, the US continued to move towards increased regulation of various forms of online gambling. The Group was licensed in the Pennsylvania in September 2020 and received a temporary licence in Colorado in December 2020, and continues to seek licensure in other US jurisdictions.

In Canada, during 2021 the province of Ontario began the process of introducing a legal framework for online gambling under a licensing regime for private companies, replacing the current state-run monopoly. In July 2021, ""iGaming Ontario" was established as a subsidiary of the Alcohol and Gaming Commission of Ontario to contract with casino and sports betting operators. It is considered that the licensing requirements will be finalized, and licence applications will begin to become accepted during Q4 of 2021. The Group intend to apply for a licence once the application process is launched.

Condensed Consolidated Income Statement

For the six months ended 30 June 2021

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

The notes below form part of these condensed consolidated financial statements.