ANNUAL
REPORT
AND
ACCOUNTS
2022
Strategic Report
888 HOLDINGS IS ONE OF THE WORLD’S LEADING BETTING
AND GAMING COMPANIES AND OWNS AND OPERATES A
RANGE OF INTERNATIONALLY RENOWNED BRANDS INCLUDING
WILLIAM HILL, 888, MR GREEN AND SI SPORTSBOOK.
OUR
PURPOSE
TO ENTERTAIN AND EXCITE CUSTOMERS WITH THE BEST
GAMBLING EXPERIENCE IN THE WORLD.
Read more on page 4
OUR
MISSION
TO LEAD THE GAMBLING WORLD IN CREATING THE BEST BETTING
AND GAMING EXPERIENCES, BRINGING UNRIVALLED MOMENTS OF
EXCITEMENT TO PEOPLE’S DAY-TO-DAY LIVES. WE ACHIEVE THIS BY
DEVELOPING STATE-OF-THE-ART TECHNOLOGY AND CONTENT-RICH
PRODUCTS THAT PROVIDE FUN, FAIR AND SAFE BETTING AND
GAMING ENTERTAINMENT TO CUSTOMERS WORLDWIDE.
Read more on page 4
CONTENTS
STRATEGIC REPORT
01 Highlights 2022
02 At a Glance
04 Strategic Roadmap
05
Investment Case
06 Chair’s Statement
12 Business Model
14 Strategic Overview
24 Key Enablers
24 Product and content
leadership
26 World class brands
27 Customer excellence
28 KPIs
32 Stakeholder Engagement
34 Sustainability
36 Players
40 People
44 Planet
46 TCFD Overview
48 CFO’s Report
56 Risk Management
67 Viability Statement
68 Task Force on Climate-related
Financial Disclosures
(TCFD) Report
GOVERNANCE
90 Board of Directors
92 Corporate Governance
Report
98 Nominations Committee
100 ESG Committee
102 Audit Committee
108 Remuneration Committee
111 Directors’ Remuneration
Report
126 Directors’ Report
FINANCIAL STATEMENTS
134 Independent Auditor’s
Report
145 Consolidated Income
Statement
146 Consolidated Statement
of Comprehensive Income
147
Consolidated Statement
of Financial Position
148 Consolidated Statement
of Changes in Equity
149 Consolidated Statement of
Cash Flows
150 Notes to the Consolidated
Financial Statements
200 Company Balance Sheet
201 Company Statement
of Changes in Equity
202 Company Statement
of Cash Flows
203 Notes to the Company
Financial Statements
205 Shareholder Information
205 Company Information
Highlights* 2022
Reported Revenue £m
Pro forma Revenue £m
£1,239m +74%
£1,850m -3%
2021: £712m
2022
2021
EBITDA £m
£116m +29%
2021: £90m
2022
2021
2021: £1,907m
1,239
2022
712
2021
Pro forma Adjusted EBITDA £m
£311m +15%
2021: £270m
116
90
2022
2021
1,850
1,907
311
270
Average monthly players (millions)
1.6m +1%
2021: 1.6m
2022
2021
1.6
1.6
* EBITDA is defined as earnings before interest, tax, depreciation and amortisation.
Adjusted EBITDA is defined as EBITDA excluding share based payment
charges, foreign exchange losses and exceptional items and other defined
adjustments. Further detail on exceptional items and adjusted measures is
provided in note 3 to the financial statements.
Pro forma metrics, which are unaudited, reflect the results as if 888 had
owned William Hill for each of the periods and excludes the results of the
888 Bingo business for all periods.
To see full details of our KPIs please go to page 28
888 Holdings PLC Annual Report & Accounts 2022
01
STRATEGIC REPORT
STRATEGIC REPORT
AT A GLANCE
AT A GLANCE
A global leader with
world class brands
888 HOLDINGS IS ONE OF THE WORLD’S LEADING BETTING
AND GAMING COMPANIES.
In 2022, the Group acquired the international (non-US) business of William Hill to create one of the
world’s leading global betting and gaming operators. Incorporated in Gibraltar and headquartered
in the UK, the Group operates from offices worldwide and employs over 11,000 people globally.
The Group owns and operates internationally renowned brands, including William Hill, 888casino,
888poker, 888sport, and Mr Green. In addition, the Group operates the SI Sportsbook and SI Casino
brands in the US in partnership with Authentic Brands Group.
The Group’s operations are split into Retail, UK Online and International Online, all of which house world-
class brands, and offer leading products to excite and engage our customers.
A RANGE OF LEADING BRANDS
Read more on page 26
DIVERSIFIED REVENUE BY PRODUCT (PRO FORMA)1
Retail
Gaming
52%
Read more on page 5052+
20%
28%
888 Holdings PLC Annual Report & Accounts 2022
Betting
02
1. Pro forma numbers, which are unaudited, reflect the results as
if 888 had owned William Hill for the entire period, and exclude
the bingo business.
28
+
20
OUR LOCALLY LICENSED OPERATIONS AND OFFICES
11
13
8
5
11
9
13
1
3
6
4
12
7
24
6
12
1
8
10
9
7
15
22
20
18
17
21
19
14
16
14
3
5
10
Locally licenced markets:
1. UK
2. Gibraltar
3. Ireland
4. Jersey
5. Germany
6. Romania
7. Spain
8. Italy
9. Denmark
10. Malta
11. Sweden
12. Portugal
13. Latvia
14. Colombia
15. Canada (Ontario)
US:
16. Nevada
17. Delaware
18. New Jersey
19. Colorado
20. Pennsylvania
21. Virginia
22. Michigan
Offices:
1. Bulgaria
2. Ceuta
3. Colombia
4. Gibraltar
5. India
6. Ireland
7. Israel
8. Latvia
9. Malta
10. Philippines
11. Poland
12. Romania
13. UK
14. US
OUR OPERATING DIVISIONS
UK&I
ONLINE
RETAIL
International
ONLINE
Our sports betting and gaming brands
are some of the most popular in the
UK&I market. William Hill and 888casino
are our flagship brands here, offering
market leading products to millions of
customers every month.
Our William Hill retail estate has been
a permanent fixture on the UK high
street for over 50 years. We now have
a portfolio of 1,386 shops offering
exciting betting and gaming products
to millions of customers all across the
UK, complementing our online offering.
We serve customers in over 100
countries worldwide using our range
of world-class brands, with a primary
focus on our other core markets of
Italy and Spain, together with exciting
growth markets such as Canada,
Denmark and Germany.
Revenue / Pro forma1 revenue
Revenue / Pro forma1 revenue
Revenue / Pro forma1 revenue
£456m / £717m
£256m / £519m
£508m / £614m
Pro forma average
monthly actives
Number of Licensed
Betting Offices at Dec-22
Pro forma average
monthly actives
1.1m
1,386
0.5m
1. Pro forma numbers, which are unaudited, reflect the results as if 888 had owned William Hill for the entire period, and exclude the bingo business.
888 Holdings PLC Annual Report & Accounts 2022
03
STRATEGIC REPORT STRATEGIC ROADMAP
Realising our potential
LEVERAGING OUR FUNDAMENTAL STRENGTHS AND ADDRESSING
OUR CHALLENGES HEAD ON WITH SWIFT ACTIONS AND A CLEAR PLAN,
AS WE SET THE PLATFORM FOR FUTURE SUCCESS
GOAL
Grow EPS & Deleverage
STRATEGIC
PRIORITIES
Integration
Market focus
KEY
ENABLERS
Product
and content
leadership
World
class brands
Customer
excellence
Disciplined capital allocation and
more streamlined and profitable
business to generate strong returns
Read more on page 14
A clear plan to create a more
efficient and effective business
to realise our potential
Read more on pages 16 to 20
Achieving our aims by
leveraging our sources of
competitive advantage
Read more on page 24
CRITICAL
FOUNDATIONS
Players
People
Planet
Building a sustainable business
for the future
Read more on page 34
Governance
Our updated strategic roadmap is based around three phases:
• Position (2022): A newly combined business with world-class brands and
market-leading positions across some of the most attractive betting and
gaming markets globally. However, we operate across multiple platforms
and teams, with brands that are often competing against each other,
leading to profit margins lower than industry peers. Additionally, financial
leverage is significantly above our mid-term target of 3x.
• Plan (2023-2025): With clear strategic priorities of integration and
market focus, we will create a more scalable and efficient business model,
operating at higher profit margins and focused on select markets where
our combination of high-quality products, exceptional brands, and proven
operating capabilities provide strong potential for success. A highly
disciplined capital allocation plan will target net debt / EBITDA of less than
3.5x by end of 2025.
• Potential (2025+): With a powerful platform for future growth, scaled
business operations, and a robust and defensible suite of competitive
advantages, we will be well positioned to deliver strong, long-term, and
sustainable growth.
04
888 Holdings PLC Annual Report & Accounts 2022
Across the leadership team
we have completely clear
focus on what we must deliver
in terms of our integration,
deleveraging, and ensuring we
are relentless in our pursuit of
unlocking the huge potential
from this combination.
Lord Mendelsohn
Executive Chair
STRATEGIC REPORT INVESTMENT CASE
Potential
OUR POSITION – PLAN – POTENTIAL STRATEGIC ROADMAP WILL
CREATE THE PLATFORM FOR THE NEXT DECADE OF GROWTH,
DELIVERING HIGH RETURN ON EQUITY
POSITION
Newly combined business
High leverage
Low EBITDA margins
PLAN
Grow EPS and deleverage through
clear strategic priorities
POTENTIAL
A global-leader with high growth
potential and attractive upside
potential for equity holders
Integrate
Businesses and
realise synergies
Focus
On select markets
and key growth
opportunities
Invest
In our sources
of sustainable
competitive
advantage
Support
Sustainable growth
through Players
People Planet
foundation
Prioritise
Debt reduction
through ruthless
focus on capital
efficiency
2025 FINANCIAL TARGETS
Pro forma revenue
Adjusted EBITDA Margin
Leverage
>£2bn
>23%
<3.5X
Adjusted EPS
>35p
CLEAR DRIVERS OF POTENTIAL EPS GROWTH
Revenue growth
+1p
per 1ppt
Focus on a smaller
number of the most
attractive markets
globally in order to
deliver our revenue
growth plans
Adjusted
EBITDA Margin
+3p
per 1ppt
Clear levers to drive
higher margins,
including synergies,
optimisation of
operations and brand
strategy, and increased
focus on key markets
Debt reduction
+2p
per £100m repaid
Capital allocation
model will prioritise
debt reduction with
a clear plan to reach
3x leverage
Debt
optimisation
+3p
per 100 bps
Some flexibility in the
debt structure enabling
the Group to capture
the future benefits of
deleveraging
888 Holdings PLC Annual Report & Accounts 2022
05
STRATEGIC REPORT CHAIR’S STATEMENT
2022 was a
transformational year
WE ARE FOCUSED ON BUILDING ON OUR FUNDAMENTAL STRENGTHS
AND REALISING THE STRONG POTENTIAL FROM THE WILLIAM HILL
ACQUISITION AS WE LOOK TO BECOME A GLOBAL LEADER
INTRODUCTION
2022 was a landmark year for the
Group. The transformational acquisition
of William Hill, which completed in
July for a revised total consideration
of £1.95bn, was a bold step that
sets the Group on a clear course
to becoming a global leader in our
industry. The enlarged Group will benefit
from significantly increased scale,
greater revenue diversification, and an
increased proportion of regulated and
taxed revenues underpinned by stronger
positions across our core markets of the
UK, Italy, and Spain.
For more than 25 years, 888 has grown
and developed as a technology-led
gaming business. It has built a world-
class and scalable global technology
platform alongside outstanding digital
marketing and data capabilities.
Additionally, 888 is one of the leading
online casino brands in the world.
On the other hand, William Hill is a
bookmaker by DNA, with an iconic
brand that is instantly recognised across
the UK, supported by a top-class retail
estate. The highly complementary
nature of these two businesses was
reinforced by the materially increased
synergy target of £150m we disclosed
towards the end of the year. Throughout
this Annual Report we outline in detail
the significant benefits and value
creation opportunities that will be
delivered through the combination
of these two highly complementary
businesses, as well as update on the
positive early progress made in the
integration process.
technical complexity to the Group, so
the strategic disposal came at the
right time for us to renew our focus
on our core B2C betting and gaming
products, and direct investment toward
our goal of a building a scalable single
global platform. We thank our valued
bingo colleagues for their contributions
to the 888 business over several years,
and wish them well for the future.
Whilst 2022 was a year of significant
strategic progress, the trading
backdrop undoubtedly presented
several challenges for the Group and
indeed our wider industry. Global
macroeconomic conditions – in
particular following Russia’s invasion
of Ukraine in February 2022 – shifted
considerably. As a result, both the
Group and its customers faced high
rates of inflation and higher interest
rates. As an entertainment business,
we are mindful of the potential impact
of these cost-of-living pressures on
our players.
Notably, since the acquisition of William
Hill, the Group is now more exposed
to the effect of higher interest rates
due to its current high levels of debt.
The ultimate structure of the William
Hill acquisition resulted in the Group’s
net debt being higher than had been
anticipated when the acquisition
was initially announced in 2021. As a
result, the Group was more exposed
to material changes in interest rates
in the year, which in turn impacted
its ability to reinvest excess cash
flow into accelerating growth in the
short term.
As well as completing the acquisition of
William Hill, we also completed the sale
of our bingo business in July 2022. The
bingo business operated on a separate
platform and added operational and
Meanwhile, overall market growth
rates across the Group’s key online
markets moderated during the year.
At the outset of the global COVID-19
pandemic in 2020, consumers around
As a newly combined business
we have significant scope for
improving our operating model
and delivering efficiencies.
Over the next two years
we plan to fully integrate
our business – creating a
bigger, stronger and better
organisation with higher profit
margins. We are focused
on building a customer-led
business with a portfolio of
world class brands that provide
complementary offerings,
supporting our ambitions to
drive market share growth in
some of the most attractive
betting and gaming markets in
the world. This will be enabled
by a scalable, unified proprietary
technology stack that will
underpin our product and
content leadership focus.
Lord Jon Mendelsohn
Executive Chair
06
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT £150m
Expected synergies from the
William Hill acquisition
~£20bn
Total addressable market of
our core and growth markets
>35p
2025 Adjusted Earnings
Per Share target
the world pivoted quickly towards
e-commerce and digital forms of
entertainment. This in turn drove
significantly higher growth rates for
the Group over the course of 2020
and 2021 compared to what had been
previously achieved. As pandemic-
related social restrictions have eased,
growth rates in our online business
have moderated, albeit with customer
activity remaining higher than pre-
pandemic levels.
Against this dynamic and testing
backdrop, I would like to thank
everyone across the enlarged business
for their continued commitment
during the year. The Group has made
very positive early progress with the
integration process, including raising
its synergy targets materially and
setting out a clear strategic roadmap
towards ambitious financial targets
for 2025. The Group has a clear
plan to maximise the value creation
opportunity from combining these
two world-class businesses and the
Board remains highly confident that
this will underpin sustained growth
and shareholder value creation over
the medium and long term.
BOARD FOCUS AREAS
As a Board, our role is to represent
our shareholders and broader
stakeholders, and to ensure that we
are holding management to account
to deliver long-term, sustainable,
shareholder value creation. To this
end, the Board has three key priorities.
The first is to ensure that the Group
executes a successful integration, and
the Board is confident that the Group
is taking the right actions to create a
more streamlined, more profitable, and
more nimble business going forward.
The Board’s second key focus is on
building and reinforcing the teams
across the Group. We significantly
strengthened the operational
management team during the year
with a broad and diverse range of
talent from the William Hill team, as
well as several important external hires.
The Board’s third focus is to ensure
that management is always thinking
about the long-term direction of the
business. As part of this, the Board
builds ESG and sustainability into
all its planning, whether that is by
ensuring that the Group does the right
thing by its players by maintaining
strong safer gambling standards, or
by providing a great workplace for its
people, or by doing its bit to support
the environment and fight the climate
emergency. Led by the Board’s ESG
Committee, the Board has full oversight
of the Group’s ESG strategy, targets,
and progress. Further information on
the Group’s ESG activities during the
year can be found on pages 34-45.
888 Holdings PLC Annual Report & Accounts 2022
07
STRATEGIC REPORT CHAIR’S STATEMENT CONTINUED
BOARD CHANGES
Following the completion of the
acquisition of William Hill, in July 2022 we
were pleased to strengthen the Board
of Directors with the appointments of
Andrea Gisle Joosen and Andria Vidler
as Independent Non-Executive Directors,
and Ori Shaked as a Non-Executive
Director. Each new Board member has
brought extensive and highly relevant
skills and experience to the business that
I know will continue to be of significant
benefit to the Group as it delivers its
long-term strategic objectives.
Following the year end the Group
announced further directorate changes
with regard to executive directors,
which are discussed in more detail in
the post year end developments later
in this statement.
CLEAR STRATEGIC ROADMAP:
POSITION-PLAN-POTENTIAL
The Group’s strategic roadmap over
the coming years is firmly focused on
unlocking the significant potential from
the combination of 888 and William
Hill. However, to do this we must first
acknowledge and address the key
challenges that come with our current
position as a newly combined Group.
Firstly, we recognise that our debt levels
are high, and furthermore the cost of our
debt is higher than we had anticipated
due to material changes in interest
rates and debt market conditions
since the initial announcement of the
deal in 2021. As a result, we are currently
restricted when it comes to reinvesting
excess cash flow into accelerating near
term growth. Accordingly, we know
that deleveraging must be a key priority
for the Group, and we have set ourselves
a clear target of reducing our net debt
to EBITDA ratio from 5.6x at the end of
the Period to below 3.5x by the
end of 2025.
We also have a combination of three
main platforms across 888, William Hill
and Mr Green and in some markets,
our brands are directly competing
against each other. This fragmented
approach and duplicate operating
and technology structure means our
margins are lower than peers and
that’s something that we must change.
We have a clear plan to address
these challenges and to achieve our
potential as a more profitable business
that is sustainably positioned for
the next decade of growth. Central
to this plan is our refined strategic
framework with two clear strategic
priorities: integration and market focus.
These priorities are underpinned by
our focus on continually developing our
three key strategic enablers: product
and content leadership, world class
brands, and customer excellence.
Strategic priority 1: Integration
The first of our strategic priorities is
to deliver a successful integration
programme.
During the second half of the year,
following completion of the acquisition,
we immediately began working hard on
our technology migration programme.
We analysed every aspect of the
enlarged Group’s different product
platforms and took the swift decision
to use 888’s technology as the
Group’s core platform going forward.
We also identified certain market-
leading components from William Hill’s
technology that we will incorporate
into the core platform. These include
William Hill’s global trading and retail
technology platforms.
I am pleased to report that we are
making good progress with our
technology integration, with Mr Green
launched in Germany on our core
platform. The next stage is migrating
Mr Green in Sweden on to the 888
platform in the coming months, which
will be the first major milestone for the
technology integration program as we
aim to deliver our platform of the future
over the next few years.
Not only will our platform of the future
deliver a significant cost advantage
to the Group, but we also believe
there is an important revenue upside
opportunity as we bring together our
best-in-class product and content
from across betting and gaming.
One example of this is within our sports
offering, where William Hill currently
provides over 50,000 more in-play
football markets each year than
888sport. We are confident that by
expanding the range of betting options
at 888sport and SI Sportsbook we will
drive higher customer engagement
and revenue. Similarly, 888 has a
world-class games development
studio, Section8, which creates some of
the most successful 888casino content.
We are on track to be able to offer
this content to both William Hill and
Mr Green customers across various
markets in 2023.
Strategic priority 2: Market focus
The second of our strategic priorities
is ensuring that we have a very clear
focus on the key market opportunities
for the Group that will deliver superior
returns on investment.
This process categorises each of
the Group’s geographic markets
into one of four market archetypes.
Firstly, our core markets of the UK,
Italy, and Spain. Cumulatively these
countries represented around 70%
of the Group’s online revenue in 2022
and offer a total addressable market
of more than £10 billion. These are all
markets with tightening regulations
and rising barriers to entry, and where
we believe the Group can further build
market share by strengthening our
key competitive advantages. During
the year the Group made significant
investments in proactive safer
gambling measures in the UK, which
we believe positions us well ahead of
the anticipated white paper on UK
gambling regulation. Coupled with
the tough comparative period that
was aided by COVID related digital
migration, these factors led to a 20%
year-over-year decline in UK online
revenues across the Group. We look
forward to the white paper and
subsequent level playing field that it
should bring to the UK market, and are
confident that our leading brands and
sustainable recreational customer base
will see us succeed in this market.
Our second market archetype is
our growth markets, which includes
Denmark, Germany, Ireland, Ontario
in Canada, and the USA. These are
regulated but less mature markets for
the Group where we believe we can
grow significantly through disrupting
and building on the strong initial
positions we have developed, or
by taking advantage of our unique
customer propositions. Across this
group of markets our focus is on rapid
growth, which will be achieved by
reinvesting all underlying profitability
generated across this cohort of
markets back into the most attractive
growth opportunities. Over time, as
we grow our share in these markets,
our intention is that some of these will
become additional core markets for
the Group where we will then aim to
consolidate market leading positions
and drive profitability. During the year
we launched the SI Sportsbook brand
in Virginia and Michigan in the US and
launched 888 under a local licence in
Ontario, Canada, further successfully
bolstering the Group’s growth market
portfolio. Early in 2023 we launched
newly licensed offerings with SI casino in
Michigan and Mr Green in Germany as
we further support our growth markets.
Thirdly, we have our optimise markets.
The Group currently offers its products
across a huge range of global markets
08
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT and, as we have a global and scalable
platform, we can do this profitably
and successfully in both regulated
and offshore markets. Our optimise
markets are ones where either the
market opportunity is not compelling,
or where we do not currently see an
opportunity to be one of the dominant
players in that market. As a result, our
focus is on providing our products to
customers in the most cost-efficient,
profitable manner.
Finally, we have our pipeline markets.
These are regions or countries
where there is an attractive growth
opportunity, but where we need a
different model to unlock the potential
opportunity. A great example of this
is in Africa, where during the year we
launched a joint venture, 888AFRICA, to
operate 888 brands in online betting
and gaming markets across selected
regulated markets in Africa. We were
pleased to report that Tanzania,
Zambia, Mozambique and Kenya
all successfully launched during the
second half of the year, in time for
the FIFA World Cup, and we have seen
some very positive early momentum.
The Group has a minority stake in
888AFRICA, with the option to increase
this to take control and ultimately own
up to 100% of the venture in the future.
KEY STRATEGIC ENABLERS
The Group’s market share gains will
be underpinned by our sources of
sustainable competitive advantage,
which act as strategic enablers.
These are product and content
leadership, world-class brands
and customer excellence.
Product and content leadership
888’s proprietary technology across
all products provides a clear strategic
advantage against our competitors
and enables complete flexibility over
the user experience. Our focus on clear
product development principles allows
us to offer best-in-class products,
differentiated content and AI-powered
personalisation. Read more about our
progress this year on page 24.
World-class brands
The Group owns and operates some
of the most recognised betting and
gaming brands in our core and growth
markets, including William Hill, 888, and
Mr Green. We harness the power of
our world-renowned brands, together
with our highly effective, automated,
and flexible data-driven marketing
machine, to acquire, retain and
engage customers in a unique way.
Read more about our progress this
year on page 26.
Customer excellence
Understanding customer needs and
building our product, marketing, and
offers to create the best experiences
possible is critical to our growth plans.
A key part of our relentless focus on
customer experience is delivering
quick and effective customer service.
We are investing in this area all the
time and through integration will be
able to improve customer experience
even more. Read more about our
progress this year on page 27.
CRITICAL STRATEGIC
FOUNDATIONS
We know that without getting the
following three critical strategic
foundations right, we will not be able
to succeed in executing on our vision
for the combined Group.
888 Holdings PLC Annual Report & Accounts 2022
09
STRATEGIC REPORT CHAIR’S STATEMENT CONTINUED
CRITICAL STRATEGIC
FOUNDATIONS CONTINUED
People and culture
Nurturing the right corporate culture
and building the right team will be
central to our future success. This
starts with our strong executive team,
which comprises the best leadership
talent from across 888 and William Hill
as well as some important new hires
who joined the business during the
Period. These include Harinder Gill,
the Group’s new Chief Risk Officer, and
Anna Barsby, our new Chief Product
and Technology Officer.
As we progress further through the
integration process, we are focused
on building a strong team culture that
brings together the best attributes
of both businesses and ensures
that the sum of these great, historic
businesses creates a combination that
is stronger together. A powerful, agile,
engaged, and unified team culture is
critical to this.
Player safety
The second of our critical strategic
foundations is player safety. We strive
to build seamless customer journeys
that enable players to easily track and
limit their spending, while also enabling
us as the operator to intervene when
there is a risk of harm. By doing this,
we will create an even more trusted
relationship with our players, who in
turn know that they can enjoy their
betting and gaming with us in a safe
and sustainable manner.
Over recent years, we have made
important progress in the critical area
of safer gambling. This includes making
significant investments in our team and
technology, which are central to our
plans to continue to reduce the risks
related to player safety. The Group’s
risk and compliance team, led by
Harinder Gill, has more than doubled
in size in the last three years to almost
400 employees and is now one of our
largest departments.
One of our key goals is to make
safer gambling a normal part of
the customer experience. This
is why we are pleased to report
an 8.5 percentage point year on
year increase in the number of the
Group’s players with safer gambling
limits in place, with over 45% of
our global customers now utilising
limits to help ensure both a safer
and more entertaining betting and
gaming environment.
When it comes to safer gambling, we
know that we are on a journey of
continual improvement, and we
acknowledge that the Group has not
always got this right. We know that we
must strive to do better and, in the year
ahead, we are focused on enhancing
the Group’s overall approach to risk
management, improving core processes,
integrating teams, and aligning the
slightly different safer gambling
approaches that exist across our
different platforms.
10
888 Holdings PLC Annual Report & Accounts 2022
Planet
The Group acknowledges that the
urgency and importance of the climate
crisis requires everyone to play their
part, and we continue to build on the
progress we have made in this area.
2022 has been a year of transition
for the group, as we work to combine
the 888 and William Hill businesses.
Our carbon footprint has expanded
following the William Hill acquisition,
but we have continued to evolve both
in understanding our climate impact
and working to address our carbon
footprint. We have continued to make
progress in delivering on our climate
goals and have been rewarded with
improved ratings from various key ESG
ratings bodies. In 2022 we retained
membership of the FTSE4Good Index
as well as achieved much improved
scores in the CDP rating, achieving a
B- rating up from a previous rating of F.
In early 2023 we achieved a CSA rating
of 34, up from our prior year score of
26, an above average score for our
sector. I am pleased with progress
in this area but there is more to do
in order for us to continue to ensure
we are supporting the global fight
against climate change You can read
more about our progress this year
on page 44.
POST YEAR-END
DEVELOPMENTS
Directorate Changes
After the year-end the Group
announced that Itai Pazner, Chief
Executive Officer and Executive
Director, was leaving office as CEO and
as a Director with immediate effect on
30th January 2023. On behalf of the
Board, I would like to thank Itai for his
significant contributions to the business
over more than 20 years, including the
last four as CEO. Itai has played a very
important role in building a business
with powerful proprietary technology
and has overseen successful early
stages to the William Hill integration
process. We wish him well in his
future endeavours.
Since that date, I have assumed the
role of Interim Executive Chairman
while the Board searches for a
permanent CEO. In this role I have
assumed the responsibilities of the
CEO and am fully focused on actively
driving the business forward and
leading our team to deliver our clear
strategic plans. Across the leadership
team we have completely clear focus
on what we must deliver in terms of
our integration, deleveraging, and
STRATEGIC REPORT ensuring we are relentless in our pursuit
of driving market share gains in our
key markets.
Also in January 2023 we announced
that Yariv Dafna, the Group’s CFO
would leave the business at the end of
2023. On behalf of the Board, I would
like to thank Yariv for his significant
input to 888’s progress in recent years
and we look forward to his continued
contributions to the Board during the
remainder of the year.
We have a very strong operational
management team in place, and
a Board priority right now is the
appointment of a permanent CEO.
We have been pleased with the depth
and calibre of the candidates that
we are engaging with and are making
good progress with our search.
We are absolutely committed to
appointing a CEO that will lead the
team to deliver the potential of this
business. The focus of the board is
therefore on making the right selection,
rather than just making a quick selection.
Compliance and safer gambling
We have invested significantly in our
compliance team, with the drive for
higher standards headed by our new
Chief Risk Officer, Harinder Gill, who
joined the Group last summer. The
compliance team has new personnel,
procedures and policies and are
charged with the mission to drive
higher standards across all areas of
risk and safer gambling and, as a
Board and leadership team, we are all
fully committed to this.
In late January, our internal team
identified failures where our
safer gambling policies were not
being effectively applied. Further
investigations identified similar
accounts which were later confirmed
to be a broader issue within a specific
cohort of players, namely our VIPs in
the Middle East. The Board once fully
briefed took the prudent decision to
suspend all of these accounts while
the compliance team investigated the
situation further.
Whilst this was a very disappointing
development, I am pleased with how
the business responded and that we
have been able to quickly remedy
the failings. Furthermore, I am highly
confident that our policies and
procedures are robust, and this failure
was isolated to a very specific cohort
of players. We have found no further
issues and do not anticipate any
further actions here. I am also pleased
to say that we have successfully
started reopening accounts and
revenues in the region are beginning
to recover.
On the 28th March 2023 the GB
Gambling Commission (“GBGC”)
announced a £19m regulatory
settlement in lieu of a financial penalty
had been reached with William Hill
in relation to historic player safety
failings.
The failings occurred before we owned
William Hill, so we could have had
no bearing on the areas that were
investigated. However, the team had
already taken significant remedial
action, and we have further reinforced
this following the acquisition. As a
result, the business is now in a far
stronger position from a compliance
perspective, and with the improvement
actions having already been taken, the
announcement of the settlement has
no further impact on our operations or
revenue expectations in the UK.
These historic failings are not
acceptable to me or the Board, and
the entire Group shares the GBGC’s
commitment to improve compliance
standards across the industry. We will
continue to work collaboratively with
the regulator and other stakeholders
to achieve this.
UK Gambling Act Review
We continue to await the outcome of a
review of the Gambling Act, which could
potentially lead to major changes in UK
regulation, albeit the extent and timing
of any potential changes remains
unclear. We have continued to take
proactive steps during 2022 to increase
the level of safer gambling interventions,
including lowering thresholds for
intervention and stepping up affordability
checks, as well as lowering the max
stake limits on our slots. We believe all
of this positions the business well for
any future changes through the
white paper and any associated
consultations that will likely follow.
OUTLOOK
Whilst – as outlined above – the Group
faces some near-term challenges with
our debt position and cost of debt,
I am confident in our clear strategic
plan to create shareholder value and
achieve our exciting potential. Over
the coming years the Group’s absolute
focus will be on delivering our synergy
targets, deleveraging, and delivering
a successful integration process that
creates a highly efficient, unified
business model.
At our Capital Markets Day towards the
end of 2022, the Group outlined four key
financial targets for FY25 which the
Board is confident will underpin strong
shareholder returns. These are as follows:
• Revenue of more than £2bn
reflecting our refined strategic focus
on a smaller number of key markets;
• Adjusted EBITDA margin of more
than 23%, up from 17% in the Period,
which will be driven by a successful
integration programme;
• Leverage of less than 3.5x,
down from 5.6x at the end of the
Period, which will be driven by an
extremely disciplined approach to
capital allocation, with a focus on
deleveraging; and
• Adjusted earnings per share of more
than 35p, reflecting the strength and
benefits of the combined Group.
The management team continues to
make very good progress with the
integration and synergy programme.
Whilst there is still much work to be
done, we are pleased with what has
been achieved so far, from critical
early decisions taken around the
technology platform and migration
plan, to defining our market focus and
bringing the teams together to execute
on this. Our new operating model
has been rolled out and the Board is
pleased with how all our colleagues
are now working together to achieve
our common goals. The Board is
confident that this progress will support
a superior EBITDA margin for the Group
in 2023 compared to 2022.
Whilst there remain several well-
known macroeconomic and industry
challenges as outlined above,
the Board is confident that the
combination with William Hill will unlock
significant potential for the enlarged
Group and all its stakeholders.
This will be underpinned by its superior
technology, talent, brands, scale,
and more diversified revenue streams.
Your Board and executive leadership
team will continue to ensure that the
Group remains resolutely focused on
enhancing long-term value creation
for shareholders and we look forward
making further progress in the
year ahead.
Lord Mendelsohn
Executive Chair
14 April 2023
888 Holdings PLC Annual Report & Accounts 2022
11
STRATEGIC REPORT STRATEGIC REPORT
BUSINESS MODEL
A model for growth
HOW WE GENERATE REVENUE
BETTING
Traditional bookmaking where we make a margin from
bets placed by customers on the outcome of events.
Given the variance and unpredictability in sporting
results, this can be volatile in the short term.
GAMING
Games of chance such as online casino, slots, and
machine gaming terminals involving customers playing
against the house, where we generate a margin.
In poker, players play against each other and we
charge a commission from each hand or entry fees
for tournaments.
Winnings
withdrawn
New funds
/deposits
WINNINGS
RECYCLED
GROSS GAMING REVENUE
Less: free bets and promotions
RETURN TO
PLAYER
CUSTOMER
DEPOSITS
CUSTOMER
PLAYS
REVENUE
Less: cost of sales
GROSS PROFIT
Less: marketing costs
CONTRIBUTION
Less: other operating costs
GROSS GAMING REVENUE
EBITDA
12
888 Holdings PLC Annual Report & Accounts 2022
HOW WE ENABLE GROWTH
THE VALUE WE CREATE*
PRODUCT
AND CONTENT
LEADERSHIP
Read more on
page 24
PEOPLE,
PLAYERS,
PLANET
Read more on
page 34
WORLD-CLASS
BRANDS
Read more on
page 26
CUSTOMER
EXCELLENCE
Read more on
page 27
Taxes
£588m
Betting and gaming duties,
VAT, corporate tax and
employee taxes
Sport contributions
£114m
Levies, sponsorship
and picture payments
Industry
£6.4m
Voluntary contributions
to research, education
and treatment of gambling
related harm
Employees
+8
Employee net promoter score
across all our colleagues
* All of the metrics above are given on a
pro forma basis as if 888 had owned William
Hill for the full year
888 Holdings PLC Annual Report & Accounts 2022
13
STRATEGIC REPORT STRATEGIC OVERVIEW
Clear strategic
priorities
OUR UPDATED STRATEGIC
ROADMAP SEEKS TO BUILD ON
OUR FUNDAMENTAL STRENGTHS
WITH A CLEAR PLAN, ENABLING
THE GROUP TO REALISE ITS
STRONG POTENTIAL...
POSITION
Fragmented business operations
Multiple tech platforms
Duplicate functions
PLAN
Streamlined and efficient
operating model
Single unified tech stack
Player + people focus
POTENTIAL
Improved profitability
Market leading customer experience
Platform for future growth
14
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT ...WITH CLEAR STRATEGIC PRIORITIES AS WE BUILD A GLOBAL LEADER
INTEGRATE
businesses and
realise synergies
SCALE
core markets,
improving
market share
& margins
I N TEGRATION
CREATE
a streamlined
operating model
and unified, global
tech stack
DELIVER
&
DELEVER
INVEST
to build leading
positions in
growth markets
MARKET FOC U S
CULTIVATE
unified team,
collaborative
work culture
OPTIMISE
cash flow from global
markets leveraging
scale
888 Holdings PLC Annual Report & Accounts 2022
15
STRATEGIC REPORT STRATEGIC OVERVIEW CONTINUED
Integration
WE ARE FOCUSED ON DELIVERING VALUE THROUGH SYNERGIES
Through the successful integration
of William Hill and 888, we will create
a global industry leader with world
class brands, scalable technology,
and premier betting and gaming
content for our customers. Soon after
bringing the two businesses together,
we identified further opportunities for
synergies, and materially increased
our cost synergy target from the
original £100m to approximately
£150m. As well as increasing the
target, we also accelerated the
timeline for delivery and now expect
to achieve approximately £87 million
of EBITDA synergies in 2023 (previous
expectations of £54m).
The increased synergy opportunity
reinforces the highly attractive
strategic rationale for bringing the two
complementary 888 and William Hill
businesses together. The integration
process will create a much larger
business that leverages a single,
unified technology stack and a wide
range of global functions, including
customer services, payments, and
digital marketing. The Board believes
the streamlined operating model will
create an even stronger, higher margin
business with scalability and significant
further growth potential.
The management team’s clear focus
is on delivering a smooth integration
process and creating an enlarged
Group that is bigger, better, and
stronger together.
WE WILL LEVERAGE 888’S
WORLD-CLASS TECHNOLOGY
At 888, we have a long and
established history of developing
our own technology and have spent
years building one of the strongest
proprietary platforms in the sector that
has successfully scaled across almost
20 regulated markets.
As a result, we made an early decision
to use 888’s technology as the Group’s
single technology platform moving
forward. We will benefit from the
platform’s proven capabilities and will
continue to evolve it by incorporating
market leading components from
William Hill’s technology, particularly
in relation to trading capabilities
and retail.
As we migrate all our brands on to
our future platform over the coming
years, we will deliver two clear benefits.
Firstly, there will be a significant cost
advantage, as we will no longer run
parallel platforms. Secondly, we believe
there will be an important revenue
opportunity as we combine best-in-
class product and content across both
betting and gaming.
To support in the execution of our
technology migration, we were
delighted to recruit Anna Barsby as
the Group’s new Chief Product and
Technology Officer towards the end
of the year. Anna has significant
experience with complex technology
integrations and migration projects
and is closely overseeing the first major
technology migration of Mr. Green in
Sweden on to the core platform, which
we expect to complete during 2023.
OUR INTEGRATION
PROGRAMME IS CENTRED
AROUND FIVE CLEAR
GUIDING PRINCIPLES:
1.
2.
3.
4.
We have established our
executive leadership team early,
providing clear targets and
accountability for delivery
We will not compromise on
our compliance and regulatory
requirements throughout the
integration process
We will deliver cost synergies
as soon as possible
We are clearly prioritising
integration projects, while
seeking to minimise disruption
to business as usual growth
5.
We are focused on identifying
and retaining the best talent
across the enlarged business
As we got into the details of
the integration, we uncovered
further opportunities for
savings, and increased our
cost synergy target, from
the original £100 million to
approximately £150 million.
Elena Chambers
Chief Operations Officer
16
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Q&A
Integration: creating opportunities
provides actionable insight so we can
make changes in real time to really
make our employees voices heard. We
immediately set about rolling this out
across the 888 business as well, and
the executive teams are also holding
listening sessions and acting on the
regular feedback our colleagues
are providing.
Employee engagement is critical for us,
and our employee net promoter score is
one of our group OKRs. There is always
more to do on employee engagement,
but it remains a key focus as we deliver
on our plans.
Q/ What stage of the integration program
are we at from a people perspective?
A/ Any integration process naturally
creates uncertainty for people, so
providing early clarity was critical.
Following completion in July we
quickly rolled out the first stage of the
organisational design, with the executive
and operational management teams in
place from day one. By November we
had confirmed all the direct reports to
the executive team.
Following further changes to our wider
macro and market environment in
the second half of 2022 we took the
decision to accelerate the synergy
delivery program, including making
the decision to use 888’s proprietary
technology as the future platform for
the group. This led to certain changes
from a people perspective, and meant
we had to make tough decisions and
say goodbye to a number of valued
colleagues.
In early 2023 we rolled out the second
phase of the organisational design, with
clearer reporting lines around country
focused functions, rather than the legacy
product and brand approach of 888.
Along with the rollout of a combined
Group-wide reward and performance
structure for 2023 this means we are
now in a strong position from a people
perspective, and while change is never
easy, we now have clarity around how
each of our colleagues will be driving
our strategy forward.
Q/ What are the key focus areas
for the people team as you go
through integration?
A/ People are critical to everything we
do and putting our thousands of
colleagues at the heart of the decision-
making process is key to ensuring a
successful integration. Our work has
centred around four key areas, being
change management, engagement,
organisational culture, and building out
our future people strategy.
Listening to and acting on feedback
from our colleagues is vital as we
progress through integration, and we
are using our listening sessions and
regular colleague surveys to ensure we
are addressing any concerns.
Find out more about what we have
been doing in the people section on
pages 40-43.
Q/ What is your approach to culture
and values within the newly
combined business?
A/ Prior to the combination both 888 and
William Hill had strong and distinctive
employment cultures, and it’s important
we don’t lose sight of what made each
business successful in its own right.
We also have a really diverse range
of cultures across our office locations
around the world and it’s equally
important not to lose this local sense
of belonging.
Our priority for shaping the culture
of the new business is to draw on
the strengths of both organisations,
maintaining and nurturing the values
and behaviours which made them great
places to work, while at the same time
ensuring we are guided by a core set
of values or principles that form the
foundations of our overall culture as a
new business.
We have conducted comprehensive
culture reviews and held various
workshops and group sessions across
the business. Through 2023 our objective
is to roll out a common set of values
to bring together the best of both
organisations, and then really focus
on ensuring the business is living these
values.
Q/ What are your longer term
people ambitions?
A/ Our people are critical to our future –
building a diverse and inclusive team,
with great growth potential and high
engagement underpins our plans to
execute at pace, and build a bigger,
stronger and better business.
We have set an ambitious 2025 people
strategy centred on being the best
place to work in the industry, where
people want to join and love to stay,
with a strong identity that sets the
standard for what great looks like.
To do this we will be focused on defining
our culture and empowering colleagues,
adding skills and capabilities to the
team so we can achieve our goals, and
ensuring we celebrate our differences
with a diverse and inclusive environment.
You can read more about our plans on
pages 40-43.
888 Holdings PLC Annual Report & Accounts 2022
17
Mark Skinner
Chief People Officer
One of the key drivers of our
future is building the right
corporate culture and creating
an environment that motivates
and engages our colleagues
with a diverse and inclusive
team. This is particularly
important as we embark on
an integration journey, that
can often lead to nervousness
and uncertainty among our
people, but also creates
exciting opportunities.
Mark Skinner
Chief People Officer
Q/ How do you keep employees engaged
through the integration process?
A/ One of the key aims right from day one
was to be as proactive as possible with
communication around the integration,
sharing key messages, introducing
teams to each other, and being as
transparent as we can around the
future plans. An example of what we’ve
done here is a global ‘all offices’ virtual
gathering on day one with all of the
executives in our offices hosting a round
the world get together.
Understanding employee sentiment
and measuring engagement is also
critical at a time like this, particularly
in a hybrid work environment where
it’s sometimes harder to get a feel for
the office buzz. We used a Workday
tool called Peakon in William Hill for
the last few years which is a monthly
survey of all colleagues where we
can tailor questions and get a real
understanding of what is going well
and where there are any concerns. This
STRATEGIC REPORT
STRATEGIC REPORT
STRATEGIC OVERVIEW CONTINUED
Market focus
WE ARE WELL POSITIONED TO TAKE
ADVANTAGE OF INDUSTRY TRENDS
An effective strategy relies on reacting to, and positioning
our business to benefit from, changing external
circumstances. We face into a wide range of major
drivers in our industry, but we believe the four most
important ones are:
In the context of our business, where
we have huge global capabilities and
can deliver our products and brands
almost anywhere, strategy is all about
helping our business leaders drive focus
so we can maximise our long-term
value creation.
Vaughan Lewis
Chief Strategy Officer
1. REGULATORY CHANGE
2. M&A
Compared to 10 and 20 years ago, regulation within
our industry is almost unrecognisable. Regulatory
tightening is raising standards, and also raising
the barriers to entry, making it more and more
challenging to compete. This can benefit operators
like us with established market leading positions
and brands.
The industry is consolidating rapidly, but it is still
highly fragmented relative to more mature industries.
We have seen the significant benefits of M&A
across the sector over the years, and we have a
clear plan in place to deliver the benefits of our
transformational M&A.
3. CHANNEL SHIFTS AND
INCREASING MATURITY
4. ENVIRONMENTAL, SOCIAL,
AND GOVERNANCE
In our biggest market the UK, nearly 60% of gambling
is online already, so the market is maturing and
growth will be slower. In the less developed markets,
there is still huge growth potential and positioning our
business to take advantage of both trends is critical.
Customers, regulators and broader society are more
engaged with safer gambling than ever before.
Our people need clear growth and development
plans and a diverse and inclusive workplace. We
are a global business and want to contribute to the
communities we are part of. It is also crucial that we
play our part in addressing the climate crisis and
ensure we are minimising our impact on the planet.
18
888 Holdings PLC Annual Report & Accounts 2022
WE OPERATE IN A LARGE AND GROWING MARKET
Global gambling market size £bn
£78bn
estimated online gambling market
size in 2022
£78.2bn
29.8
£70.6bn
27.0
£56.2bn
£45.3bn
22.4
£40.2bn
15.8
24.3
17.7
27.6
43.6
48.4
33.8
£123.1bn
51.1
£112.9bn
47.3
72.1
65.6
£99.3bn
39.4
£86.8bn
33.0
59.9
53.8
2018
2019
2020
2021
2022
2023
2024
2025
2026
Betting
Gaming
Source: H2 Gambling Capital
A global growth opportunity
H2 Gambling Capital estimates that
the total addressable market for
online betting and gaming (excluding
lotteries) was £78 billion in gross
gaming revenue in 2022, having grown
at a CAGR of 18% from 2018-2022.
The industry benefits from powerful
structural growth drivers, including
digital migration from land-based
gambling, ongoing improvements in
technology, increasing internet and
mobile penetration, and the regulation
of online betting and gaming, such
that H2 estimates the addressable
market will grow at a CAGR of 12% from
2022-2026.
In 2022 H2 estimates that circa 28% of
all gambling was done online, reflecting
a significant acceleration in digital
migration driven by government policy
responses to the COVID-19 pandemic,
in particular lockdowns around the
globe. While most countries reverted
back to normal operating conditions in
2022, including the reopening of retail
gambling venues, this step change in
digital adoption has largely remained,
with customer activity online remaining
elevated, and the COVID-19 unwind
effect on revenue largely relating
to reductions in spend per head as
customers spread their leisure spend
across a wider range of activities.
Despite the recent acceleration in
digital adoption, there remains a long
runway of growth ahead, and our
business is well positioned within the
most attractive end markets to take
advantage of these trends.
888 Holdings PLC Annual Report & Accounts 2022
19
STRATEGIC REPORT STRATEGIC OVERVIEW CONTINUED
GGR market size of top 10 regulated markets or regulating markets
£6,577m
£4,962m
£3,856m
888/WH present
United States
United Kingdom
Australia
Italy
France
Germany
Canada
Sweden
Netherlands
£2,592m
£2,428m
£2,299m
£1,406m
£1,368m
Spain
£1,052m
Source: H2 Gambling Capital
Online as %
total gambling
£12,486m
12%
58%
28%
28%
41%
27%
30%
82%
51%
19%
We are present in seven of the top 10 regulated or regulating markets, the majority of which have a long runway of potential growth from further online migration.
Market focus means that we
are spending our time, our
team’s time and our resources
on the opportunities where we
have the greatest chance of
success, and where we can
deliver the strongest long-
term returns.
Vaughan Lewis
Chief Strategy Officer
A focus on locally
regulated markets
Our strategic focus is on regulated
markets, as these represent the best
opportunity for sustainable growth.
We support the development of
local regulatory regimes across our
markets, as regulation typically drives
better outcomes for customers, for the
business, and for wider stakeholders.
Locally regulated or taxed markets
represented 87% of online revenue
in 2022, and 90% of total group
including retail.
Overleaf we discuss our market focus
framework, but with all of our core and
growth markets being locally regulated
markets, together with the continued
adoption of local regulatory regimes
in some of our dotcom markets, we
expect the percentage of revenue
coming from locally regulated markets
should continue to increase. Post the
year end we suspended activities of
the VIP segment of customers in our
Middle East markets following the
discovery that best practices were
not being followed with regard to our
internal policies and processes for KYC
and AML documentation. Following
these changes, only approximately 8%
of revenue now comes from markets
served by our multi-jurisdictional point
of supply licences, with no individual
offshore market greater than 2% of
revenue. We believe this increases
the sustainability of the business,
while at the same time enabling us to
benefit from the scale advantages of
our platform to provide our services
globally and drive incremental
cashflow.
Regulatory update
Across our key markets there were
several regulatory developments during
2022, including:
UK: In June 2022 the Gambling
Commission updated its consumer
protection guidance for online
operators to cover additional
information on a range of areas
including the identification
of vulnerable customers and
indicators of harm.
In October 2022 new rules on
advertising came into effect that
prohibit the use of celebrities who are
likely to appeal to under 18s.
We continue to await the outcome
of a review of the Gambling Act,
which could potentially lead to major
changes in UK regulation, albeit the
extent and timing of any potential
changes remains unclear. We have
continued to take proactive steps
during 2022 to increase the level of
safer gambling interventions, including
lowering thresholds for intervention and
stepping up affordability checks, as
well as lowering the max stake limits on
our slots. We believe all of this positions
the business well for any future
changes through the white paper and
any associated consultations that will
likely follow.
20
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Italy: In October 2022 a range of new
sports betting regulations that apply
to sports outside of horse racing
were enacted including a reduction
in the minimum stake from €2 to €1,
an increase in maximum winnings
from €10k to €50k, permitting cash-
out and draw no bet options for
bettors, and permitting odds to three
decimal places.
Spain: While no major changes took
place during 2022, the market could be
subject to significant changes in 2023
following the potential introduction of
the new Royal decree on Responsible
Gambling, which will amend the
Gambling Law of 2011, and is expected
to be approved in H1 2023. New
requirements are set to be introduced
for operators to implement robust
policies and processes for detecting
problem gambling and ensure timely
prevention of gambling related harm.
Ireland: In December 2022 the
government published the Gambling
Regulation Bill. The key focus of the
new legislation will be the creation
of a new regulator and enhanced
player protection, through the
introduction of restrictions on stakes,
payment methods, self-imposed
limits, advertising, sponsorships and
promotions.
Germany: A new German gambling
regulator, Glücksspielbehörde (GGL),
gained enforcement powers from 1
July 2022 and assumed full regulatory
authority from 1 January 2023. In early
2023 the Group received its gaming
(poker + slots) licence from the GGL
and launched the Mr Green brand
under this licence in March 2023.
Canada: The Group obtained a licence
in the newly regulated Canadian
province of Ontario in March 2022,
launching its services on the day
licensed operations were permitted
(4 April 2022). It is still uncertain if
additional online licensing will be
introduced locally by other Canadian
provinces.
The US: We obtained local licences
and launched SI Sportsbook in
Virginia and Michigan during 2022
and launched SI Casino in Michigan
in early 2023. The US business is also
in the process of bidding to extend
its operation as the sole technology
provider to the Delaware lottery.
888 Holdings PLC Annual Report & Accounts 2022
21
STRATEGIC REPORT STRATEGIC OVERVIEW CONTINUED
WE HAVE A CLEAR MARKET FOCUS FRAMEWORK
Our clear market focus framework is
a critical component of our corporate
strategy. It helps us to identify the
markets where we have the greatest
chance of success, and where we
believe we can deliver the strongest
long-term returns. Across all of our
target markets, we plan to increase
share by leveraging the Group’s
investments in its key competitive
advantages, namely product and
content leadership, world class brands
and customer excellence.
We have a really disciplined data-led
approach to ensure we spend our time
and our money in the right markets.
We call it our market consideration
framework, and we use it to group all
our countries into four archetypes.
CORE
GROWTH
OPTIMISE
PIPELINE
% OF FY22 ONLINE REVENUE
~70%
~10%
~20%
N/A
TOTAL MARKET SIZE (2022)*
£10.4bn
£9.2bn
£59.8bn
MARKET GROWTH CAGR (22-26)*
3.5%
11.5%
13.7%
TARGET MARKET SHARE
10-15%+
5-10%+
<5%
N/A
GROWTH FOCUS
PROFIT FOCUS
* Source: H2 Gambling Capital (GGR)
Core markets
The UK, Italy and Spain – these make
up around 70% of our online revenues.
The market size across these three
markets is £10 billion, and we already
have over 10% market share. Here we
are focused on building our market
share by delivering and strengthening
our competitive advantages. These are
all markets with tightening regulations
and rising barriers to entry, and
where our position and plan deliver
us sustainable market leading positions
in highly attractive markets.
Growth markets
Ontario, Denmark, Germany, Ireland
and the US – these make up about
10% of our online revenues. These are
all regulated markets, but are less
mature than our core markets, and we
have the opportunity to grow rapidly
and build on our strong initial positions.
Our focus is on growth here, so we will
reinvest all our underlying profits into
growth, and operate this group at
around breakeven at a contribution
level, targeting 5-10% market share.
Optimise markets
As we have a global and scalable
platform, we can offer our products in
a huge range of markets profitably in
both regulated and offshore markets.
But these are markets where either
the opportunity is not compelling, or
our assets don’t currently give us the
chance to be a top-3 player. Our main
focus in these markets is to provide our
products in a cost efficient manner,
and reap the benefits of our scalable
business.
Pipeline markets
There is a long pipeline of exciting future
growth markets. These are markets or
regions where there is an attractive
growth opportunity, but where we
need a different model to unlock this
opportunity. The best example of
this is 888AFRICA, which is covered
on page 23.
All of our core, growth and pipeline
markets are locally regulated
markets, and this drives our
long-term sustainable plans.
Our growth markets will become our
core markets of the future, with high
and sustainable profits.
And in our optimise group, all the
countries are essentially competing to
become a growth market and receive
increased focus and investment from
the group.
22
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT CASE STUDY PIPELINE MARKETS: 888AFRICA
Delivering a lower capital-
intensive route to potentially
large value creation
888AFRICA JOINT VENTURE
Africa is a region that has very attractive growth potential,
but one where we didn’t have the assets and capabilities to
maximise our chance of success.
To address this, and to take advantage of this strong market
opportunity, we created a new entity in 888AFRICA where
we partnered with a highly experienced and entrepreneurial
team, which is focused on driving growth in this region.
Currently we own just under 20% of the business with an
option to eventually own 100%.
RAPID PROGRESS AND STRONG EARLY
PERFORMANCE
Having set up the business in March 2022, we went live in
four regulated countries (Tanzania, Zambia, Mozambique,
and Kenya) by September 2022, and we are delighted with
the early signs of progress in the first few months, seeing
exponential growth in both actives and stakes.
The key to this is our focus on localisation; delivering
product, promotions and offers that truly resonate
with betting audiences, and doing it in an authentic
way, delivered by local teams in Tanzania, Kenya and
Mozambique.
For instance, the Dabo Dabo promotion gives players the
opportunity to win things like motorbikes and TVs – there are
prize draws for this on local TV, and this builds our brand
awareness and trust.
Another example is our World Cup campaigns, which used
insights and competitive data from each of our markets to
build our brand awareness through low-cost, high reach
local channels.
It is still early days, but we have entertained over 500,000
players already, and we are really confident that we will
build leading positions in our target countries, which will
deliver strong shareholder value.
>£1bn
20%
estimated total addressable market
from our initial 4 markets1
four current markets set to grow
~20% CAGR through to 20261
1. Regulus Partners
888 Holdings PLC Annual Report & Accounts 2022
23
STRATEGIC REPORT STRATEGIC REPORT
KEY ENABLERS
Product and
content leadership
THE BEST OF BOTH BUSINESSES
THE BEST OF BOTH
BUSINESSES
888 is a gaming business by DNA
and is widely recognised as one of, if
not the, premier online casino brand
in the world. William Hill on the other
hand is a bookmaker by DNA, with a
world class sports betting offering and
trading capabilities. A key benefit from
the combination of 888 and William Hill
is that we will bring together the best
of both businesses. By moving to a
unified technology platform, we will be
able to offer customers the very best
of sports and gaming content across
all of our brands.
CONTINUED PRODUCT
INNOVATION
Our product development isn’t solely
focused on the integration though, with
both 888 and William Hill launching
several exciting new products in 2022,
as we look to deliver a best-in-class
product experience and drive customer
engagement. We look forward to being
able to offer these features across the
brands following the integration – as
we unlock the huge potential from the
combination.
The betslip is one of the key areas of
any betting app, and during the year
we upgraded the William Hill interface
to improve the customer journey.
Customers can even boost or insure
their odds pre-match, all within the
betslip, increasing value perception
and improving customer engagement.
On 888sport we redesigned our
football pages to enable quicker acca
building and further integrate in-play
markets, leading to a 20% increase in
the number of players including in-play
markets within their accumulators.
On the William Hill gaming side we
have developed a proprietary real time
promotions framework which enables
targeted interactions with our gaming
players across all game providers –
this drives engagement for customers
and enhances their entertainment
experience. We’ve also made the whole
gaming experience more personal
and relevant for our customers with
targeted games content in the lobby,
which has improved our customer
experience, value perception and
player retention.
Within 888 gaming, we have upgraded
our core platform and significantly
increased speed, introduced our in-
house AI recommendation engine and
enabled higher levels of customisation
to further improve the customer
experience. We also launched an AI-
driven bonus distribution mechanism
supported by real-time data to award
players with surprise bonuses and
increase retention.
24
888 Holdings PLC Annual Report & Accounts 2022
Product and content leadership
is a critical competitive
advantage. The combination
of 888 and William Hill will
enable us to offer best-in-breed
betting and gaming products
across all our brands.
Anna Barsby
Chief Product and Technology Officer
We have also invested heavily in
ensuring we have the best content
available on the platform, including
launching over 600 games during
2022, bringing the total games
available to around 2,800. It’s
particularly pleasing that nearly 40%
of our top 20 slots are in-house games
developed by our Section 8 studio, and
we look forward to introducing that
top class content onto the William Hill
platform in 2023.
Both William Hill and 888 have
continued to improve automated
chatbot facilities with a strong focus
on increasing speed and ease of use
in customer support, driving scalable
cost efficiency. William Hill’s chatbot
now handles the equivalent volumes of
40 full time employees.
#BUILDYOURODDS
SAFER GAMBLING TOOLS
DAILY WISH WHEEL
One of our key product
improvements this year was the
enhancements to William
Hill’s bet builder product
#BuildYourOdds.
Bet builder is one of the most
popular products and we made
key improvements including the
addition of leg tracking and real
time views of bet status. Enabling
customers to track their bets is
a really important part of the
customer experience, and our
players can now see the status
of each individual leg, in real-
time, and whether it is winning
or losing.
As well as being a great way
to follow the action, it allows
our customers to take informed
actions – such as
cashing out.
During 2022 we continued
to invest heavily in tools and
features to improve player safety.
These improvements include
a smart profit and loss tool,
improved player risk algorithms,
our unique control centre product
and a best-in-class player
help centre.
We will continue to innovate,
learn and improve in this area.
Right now, we are working
through all of these tools and
customer insights to understand
how we can best utilise and
improve our existing tools, as well
as how we can better develop
new technology.
We continue to strive to use
technology as a force for good,
leveraging our
data and AI
capabilities
to personalise
player safety.
2022 saw the launch of an
exciting new free to play game
on 888casino across our key
markets – the daily wish wheel.
Each day, a player gets a free
spin on the wheel, and can win
free spins, cash or other prizes.
This supports our recreational
play strategy and offers our
customers another layer of
engagement and excitement.
We have a range of wheels
available including a Millionaire
Genie wheel – hosted by one
of our most popular Section8
characters, Millionaire Genie,
which is a smash hit series of
slots and games that can only be
played at 888.
Our Millionaire Genie wheel gives
players a reason
to come back to
us every day, and
is also a reminder
of our unique, high
quality games.
888 Holdings PLC Annual Report & Accounts 2022
25
STRATEGIC REPORT STRATEGIC REPORT
KEY ENABLERS CONTINUED
World class brands
888 HOLDINGS OWNS AND OPERATES SEVERAL GLOBALLY RENOWNED SPORTS
BETTING AND GAMING BRANDS, INCLUDING WILLIAM HILL, 888CASINO, 888SPORT,
888POKER AND MR GREEN. WE ALSO OPERATE THE SI SPORTSBOOK AND SI CASINO
BRANDS IN THE US IN PARTNERSHIP WITH AUTHENTIC BRANDS GROUP.
Founded in the UK in 1934, William
Hill is an iconic sports betting
and gaming brand operating
internationally, and one of the
leading brands in the UK. It has
a strong retail heritage, with over
1,350 instantly recognisable high
street shops.
Founded in 1997 as one of the
first online casinos, 888casino
has since grown to be one of the
largest, multiple award-winning,
online casino brands globally. We
offer almost 3,000 games, from a
combination of top providers and
our own exclusive games developed
in house by our Section8 studio, as
well as one of the largest selections
of live casino tables in the world.
888sport was established in
2008 and in a category that
is largely dominated by a few
well-established legacy brands
in each market, we continue to
position 888sport as a challenger
brand by connecting with our
players through an innovative,
cutting-edge sports experience.
888poker was launched in 2002
and has become one of the world’s
most popular poker sites offering
an award-winning online poker
environment that enables players
of all abilities to enjoy a wide variety
of games on mobile or desktop.
Mr Green, launched in 2008, is one
of the category’s most distinctive
and premium online gaming
brands. Instantly recognisable, and
multiple award-winning, we offer
a wide range of casino and slot
games with a particularly strong
Nordic presence.
SI Sportsbook and SI Casino are
the group’s US brands and the
newest brands in our portfolio.
Established in 2021 through a joint
venture with Authentic Brands
Group (who own the Sports
Illustrated brand), our goal is
to leverage the iconic Sports
Illustrated brand and bring unique
experiences to players in the highly
competitive US sports betting and
gaming market.
26
888 Holdings PLC Annual Report & Accounts 2022
Customer excellence
Customer excellence underpins
our whole philosophy.
Understanding our customers
and what they want, as well
as how we can engage them
and create great experiences
for everyone, is critical to
our success.
Phil Walker
UK & Ireland MD
BRILLIANT BASICS: A
RELENTLESS FOCUS ON THE
CUSTOMER EXPERIENCE
To us, customer excellence means
delivering the best possible customer
experience. Whether that’s by ensuring
we have the best products and
content on the market or delivering
the best possible service, we know
that by continually building customer
excellence, we will increase player
loyalty and improve engagement.
Digital entertainment businesses in all
areas of consumers’ lives, from media
and entertainment to travel and banking,
are consistently raising the standards
for superior customer experiences.
As a result, our customers’ expectations
of their experiences with our brands
are also increasing. Consequently, we
continue to focus on enhancing multiple
areas of our products including
interfaces, improving loading times,
developing responsible gaming tools,
and delivering quality customer support
to ensure that our customers enjoy the
best possible experiences with our
brands. We benchmark ourselves against
leading brands across entertainment,
banking, and all other digital services,
not just gaming operators.
One of the key focus areas at William Hill
over recent periods has been on
improving customer journeys by focusing
on optimising the basic things that
players do the most. This could be
resetting a password, depositing and
betting, tracking bets, or changing
player safety limits. We focus on
understanding the flow of these
customer journeys and constantly
testing different options with our
customers to make their experience
as seamless as possible.
We call this concept “brilliant basics”
and have made significant improvements
across both William Hill and 888 during
2022 and this is a key focus area
going forward as well. We know that by
getting the basics right and improving
our customer service we can drive
higher retention and player value.
A FIRST-CLASS RETAIL
EXPERIENCE
Our customer excellence philosophy
is critical to the success of our William
Hill shops. Our more than 6,500
shop colleagues are custodians
of the William Hill brand, and are
responsible for providing high quality,
retail experiences for our customers.
This is supported by our continuous
investment in in-store technology and
training, particularly in safer gambling
which is an intrinsic part of the retail
customer experience.
888 Holdings PLC Annual Report & Accounts 2022
27
STRATEGIC REPORT STRATEGIC REPORT
KPIs
Measuring our progress
WE TRACK THE FOLLOWING KEY
FINANCIAL AND NON-FINANCIAL
PERFORMANCE INDICATORS (“KPIS”).
These KPIs allow us to assess our progress against the
Group’s strategy and help inform decision making. These
KPIs are also some of the most commonly used KPIs for
external stakeholders, particularly our shareholders,
when assessing the performance of the Group.
Pro forma metrics reflect the performance of the Group as
if it had owned William Hill for all periods, and exclude the
results of the 888 bingo business for all periods.
FINANCIAL KPIS
Pro forma Revenue £m
Definition:
£1,850m -3%
Revenue represents the total amount staked or wagered by
customers, less amounts paid out to customers, free bets
and promotional credits, and VAT. B2B revenue reflects fees
receivable for the provision of gaming services.
22
21
1,850.1
1,907.0
Why we measure it:
This measures the Group’s ability to generate return on its
marketing investment and grow market share across its key
geographies and products, in line with the market focus
pillar of our strategy.
Performance:
Reported revenue increased by 74% in 2022, driven by the
acquisition of William Hill, which completed on 1 July 2022.
Pro forma revenue decreased by 3% in 2022, with a 54%
increase in retail revenue following the reopening of shops
post lockdown, more than offset by a 15% decline in online
revenue, primarily driven by proactive safer gambling
measures in the UK and the closure of the Netherlands.
Definition:
EBITDA represents total earnings before interest, tax,
depreciation, and amortisation generated from our
operations. Adjusted EBITDA also excludes any exceptional
items which are typically non-recurring in nature.
Why we measure it:
This measures the underlying profitability of our business
driven by our investment choices and our ability to
effectively manage costs and leverage our growing scale.
Performance:
Reported EBITDA increased by 29% in 2022, driven by the
acquisition of William Hill.
Pro forma Adjusted EBITDA increased by 15% in 2022, driven
by the benefit of retail reopening post lockdowns, and the
early delivery of some synergy benefits.
Reported Revenue £m
£1,239m +74%
22
21
Pro forma Adjusted EBITDA £m
£311m +15%
22
21
Reported EBITDA £m
£116m +29%
22
21
1,238.8
712.3
310.6
269.9
115.5
89.6
28
888 Holdings PLC Annual Report & Accounts 2022
Adjusted EBITDA Margin (%)
Definition:
17%
22
21
16.8%
14.2%
Adjusted EBITDA Margin reflects pro forma Adjusted EBITDA
divided by pro forma Revenue.
Why we measure it:
Adjusted EBITDA Margin is a measure of the profitability of
our business, and measures how much of our revenue we
convert into underlying profitability. Improving Adjusted
EBITDA Margin is a key strategic priority for the business.
Performance:
Adjusted EBITDA Margin of 16.8% was an increase of
2.6ppts compared to 2021, driven by retail reopening post
lockdowns, and the early delivery of some synergy benefits.
Adjusted Basic Earnings Per Share (pence)
Definition:
15.1p -32%
22
21
Reported Basic Earnings Per Share (pence)
(28.3)p
22
21
15.1p
22.2p
(28.3)
13.4
EPS represents net earnings divided by the weighted
average number of shares. Adjusted basic EPS
represents earnings excluding exceptional items, share
benefit charges and share of post-tax loss of equity
accounted associate.
Why we measure it:
This measures the effectiveness with which the Group
achieves long-term value for our shareholders in line with
the Group strategy.
Performance:
Basic earnings per share decreased to a loss of 28.3p
(2021: profit of 13.4p) due to the exceptional items
resulting from the William Hill acquisition. Adjusted EPS
of 15.1p decreased by 32% in 2022 with the increase
in Adjusted EBITDA being more than offset at a net
profit level by additional interest charges following the
acquisition of William Hill.
Leverage ratio (net debt / Adjusted EBITDA)
Definition:
5.6x
22
21
5.6
N/A
Leverage ratio is calculated as net debt divided by trailing
12-month pro forma Adjusted EBITDA. Net debt comprises
the principal outstanding balance of borrowings, accrued
interest on those borrowings and derivatives held for
hedging debt instruments less cash and cash equivalents
(excluding customer balances).
Why we measure it:
Deleveraging is a key strategic priority for the Group and
the leverage ratio is a measure of our capital allocation and
ability to achieve our potential. We have set a 2025 target
for leverage ratio to be below 3.5x.
Performance:
Leverage increased significantly in 2022 following the largely
debt-funded acquisition of William Hill.
888 Holdings PLC Annual Report & Accounts 2022
29
STRATEGIC REPORT KPIs continued
NON-FINANCIAL KPIS
Average monthly players (millions)
Definition:
1.6m +1%
22
21
Customer net promoter score
19% +2ppts
22
21
1.6
1.6
19
17
Average monthly players (AMPs) represents the total number
of players who have placed and/or wagered a stake and/
or contributed to rake or tournament fees during the month.
The figure reflects the average of the monthly figures for the
relevant reporting period.
Why we measure it:
Customer engagement is a key driver of long-term growth,
and is useful in assessing performance against strategic
objectives, which are centred around customer experience.
Performance:
AMPs are stated on a pro forma basis and increased by 1%
in 2022 reflecting continued expansion of our recreational
customer base across core markets despite the tough
comparative period.
Definition:
Customer NPS asks customers if they would recommend us
and is measured as the percentage of detractors (scoring 0
to 6) subtracted from the percentage of promoters (scoring
9 or 10) to give the net promoter score.
Why we measure it:
Customer NPS measures whether we are delivering good
experiences for our customers, which is core to our strategy.
Performance:
Customer NPS here reflects William Hill only while we are in
the process of rolling out tracking group wide. NPS increased
by 2ppts in 2022 reflecting product improvements and a
continued focus on improving customer service.
Employee net promoter score
Definition:
+8
22
21
+8
N/A
Employee engagement is measured by eNPS, which looks
at how likely colleagues are to recommend 888 William Hill
as a place to work on a scale of 0-10. The percentage
of detractors (scoring 0 to 6) is subtracted from the
percentage of promoters (scoring 9 or 10) to give the net
promoter score.
Why we measure it:
We believe eNPS is a true reflection of our People initiatives.
It encapsulates the employee experience and, particularly
through a period of change, allows us to understand whether
we are supporting colleagues in the right way.
Performance:
eNPS of +8 for the Group as a whole is a positive outcome
considering the Group is going through a period of change
following the acquisition. Read more about our People
initiatives on pages 40-43.
30
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT 888 Holdings PLC Annual Report & Accounts 2022
31
STRATEGIC REPORT Strategic Report
STRATEGIC REPORT
STAKEHOLDER ENGAGEMENT
Who are our stakeholders?
WHY?
HOW?
CUSTOMERS
COLLEAGUES
REGULATORS
Our business and livelihood depend
upon our customers. Building strong
relationships with them, using the
expertise of our teams, ensures we
gain a deep understanding of their
needs, allowing us to identify areas
of support.
Our competitive customer offering is
achieved by protecting customers,
improved product personalisation
and innovation and best-in-class
customer support.
By understanding what our
customers think about our brand,
products and services, we can focus
on continuous improvements that
align with their priorities.
The priority for our customers is
a superior betting and gaming
experience. This means playing
great products, enjoying quality
customer service and having
confidence that they are playing in
a safe and secure environment.
We regularly measure the quality of
our service performance through
customer satisfaction, Net Promoter
Scores, surveys and web analytics.
Our customer services teams and
retail colleagues are in contact with
our customers daily. We operate
multiple communications channels
to generate feedback, to gain
insight and to understand their
preferences and needs.
We use data analytics and
AI together with our customer
communications channels to
promote safer gambling.
More information about Safer
Gambling can be found in our
Sustainability Report on page 34
The talent, commitment and skill
of our colleagues around the world
underpins our ability to deliver our
strategic priorities.
Regulators across various territories
give the Group a licence to operate
and set the terms for providing
services in their markets.
We are proud of our colleagues
and want to provide them with a
workplace where they can flourish.
Empowerment, career development,
health and well-being and social
responsibility are all areas our
colleagues have told us they
consider important in the workplace.
We have an inclusive informal
culture, rooted in respect, care and
commitment.
We need absolute clarity on their
regulations to ensure we align with
their priorities. Regulators have an
important role in promoting a safer
gaming environment, which benefits
all operators such as 888 that are
committed to responsible models
of operation. As such, it is valuable
for the business to maintain regular
dialogue with regulators.
Regulators must be reassured that
operators are using the full scope of
their resources to comply with local
market regulations and deliver a
safe gaming environment.
Our workplaces are informal, open
and collaborative underpinned by
high professional standards.
We engage in regular and
transparent dialogue with regulators
across our global markets.
We participate in industry events
and forums to better understand
the requirements of the regulators
wherever we operate.
Read more on page 59
Regular “Town Halls” are held to
update on business developments
and allow questions and feedback.
All colleagues have the opportunity
to provide feedback through
employee engagement surveys,
forums and apps such as Slido.
eNPS is measured group wide
following the acquisition of William
Hill, with a current score of +8.
We are committed to proactive,
timely and transparent internal
communications with our team on
an ongoing basis.
We continue to monitor and develop
our approach to performance
management, to promote a culture
of continuous improvement.
Read more on page 40
32
888 Holdings PLC Annual Report & Accounts 2022
The Company views stakeholder engagement as an important part of its ongoing
governance arrangements. As a Gibraltar company the UK Companies Act 2006 does not
apply, however we continue to comply with the requirements of section 172. In accordance
with the UK Corporate Governance Code 2018, the Company’s key stakeholders are
considered in Board discussions and decision-making with all board papers including an
explanation of how the impact to stakeholders has been considered.
WHY?
HOW?
SHAREHOLDERS
COMMUNITIES
PARTNERS
As investors in the business we
want to ensure we understand
the views of our shareholders and
debtholders.
The relationship between the
Board and its investors is based on
trust, transparency and the timely
disclosure of information.
The Board recognises the
importance of demonstrating a high
level of openness and engagement
to maintain confidence in our ability
to create value.
Investors seek clear evidence
that the company has a strategy
for value-creation across the
short, medium and long-term.
They demand transparency as
the foundation of a trust-based
relationship and expect clarity on
the Board’s approach to maximising
opportunities and managing risks.
We recognise that the local
communities where we operate can
be a business’s greatest advocates,
particularly when it comes to
recruitment.
To maintain a positive relationship,
we need to listen to local issues
and understand how we can have a
positive impact.
The communities around our global
offices look for the company to
demonstrate its commitment to the
local area by being a responsible
corporate citizen.
Our retail estate depends on the
support of our local communities.
We aim to build lasting relationships
within the communities in which we
operate and our retail colleagues
know and understand their
customers.
We work with partners in various
areas of our business.
It is imperative we maintain an open
dialogue with our partners in order
to operate effectively together and
ensure that our interests are aligned.
Our partnerships rely on our track
record for effective management,
value creation and responsible
business operations.
Our partners want to know that this
reputation is secure for the long-
term and that they can trust our
team to deliver a mutually beneficial
partnership.
We have an open dialogue and
regularly meet with our major
shareholders and debtholders to
get their views and feedback.
We provide regular investor updates
through the publication of trading
updates, half and full year results.
Market views and shareholder
analysis is included as a standing
Board item.
We ensure an ongoing conversation
with investors through our financial
reporting as well as events such as
our Annual General Meeting and
Capital Markets Events.
Read more on page 96
We have a well-established
community involvement programme.
We encourage colleagues
to be involved in community
events and participate in local
charities. Colleagues dedicate
time sponsored by the company
to these causes.
William Hill provides financial
support for colleagues facing
financial hardship, with 11 grants
given in 2022.
As a Group our economic
contribution is significant, including
a pro forma total tax contribution of
£588m in 2022.
Read more on page 43
We have an open, constructive
and effective relationship with all
partners through regular meetings
which provide both parties the
ability to feedback on successes,
challenges and the future roadmap
The Group’s whistleblowing hotline is
available to suppliers to allow them
to raise any concerns anonymously
and all issues are tracked and
monitored.
888 Holdings PLC Annual Report & Accounts 2022
33
STRATEGIC REPORT STRATEGIC REPORT
SUSTAINABILITY
ESG framework –
Players, People, Planet
OUR APPROACH TO ESG AND SUSTAINABILITY IS FUNDAMENTAL TO THE
GROUP’S LONG-TERM GROWTH AMBITIONS, AS WE CONTINUE TO BUILD
THE BUSINESS INTO A GLOBAL ONLINE BETTING AND GAMING LEADER.
Both the 888 and William Hill
businesses have made significant
progress in these areas in recent
years and as a combined Group
things are no different – we take
our responsibilities seriously and
this is a critical foundation to all our
strategic plans.
As we work through the integration of
the two businesses, we have reviewed
our respective approaches to ESG
matters and have begun work on
creating a bigger and bolder holistic
framework that encapsulates the
global nature of our business, along
with ensuring we do the right thing for
the millions of players we entertain
each year and the thousands of staff
we employ throughout the world.
Our ESG framework, called Players,
People, Planet is now the bedrock for
our broader corporate strategy moving
forwards. We realise that if we do not
invest in this area, we will not reach
our overall business goals. We also
strive to run our business the right way,
caring for our players, our colleagues,
the communities we are part of, and
the planet we live on. We strive to
have long-term and mutually fruitful
relationships with our players, ensure
our colleagues can thrive at work and
ensure we are protecting the planet
we live on.
We continue to increase investment in
this area building on the great work
done by both businesses in recent
years. The ESG Committee of the
board meets regularly, and during
the year was led by the Chair of the
Board, Lord Mendelsohn. In January
2023, Andria Vidler took over as Chair
of the ESG Committee following Lord
Mendelsohn’s move to an Executive
position on an interim basis.
Part of the evolution of our ESG
framework, and our bigger and
bolder ambitions, will involve the
establishment of a range of goals
related to different areas, against
which the board will receive regular
updates about progress. Our wider
executive team are intimately involved
in our ESG plans and will have relevant
targets related to our goals in this
area included as part of their annual
bonus plan.
We also strive to run our
business the right way, caring
for our players, our colleagues,
the communities we are part of
and the planet we live on.
Phil Walker
UK & Ireland MD
34
888 Holdings PLC Annual Report & Accounts 2022
THE EVOLVED FRAMEWORK FOR OUR ENLARGED BUSINESS
COVERS THE FOLLOWING AREAS:
Players
PREVENTING HARM THROUGH SAFER GAMBLING,
AND ENGAGING PLAYERS WITH POSITIVE EXPERIENCES
Players: Work continues across all brands as we aim to make player safety an
integral part of customers using our products. During the year we launched an
intuitive Profit & Loss product feature to the William Hill app and enhanced the
control centre product on 888 apps giving users further control over their play. We
continue to invest in new tools, processes and technology to ensure that we build
safe and sustainable gambling experiences.
People
AN ENGAGING AND INCLUSIVE ENVIRONMENT
WHERE COLLEAGUES CAN THRIVE
People: 2022 has been a year of significant change for colleagues across the Group
as we brought the two businesses together. During the first half of the year it was all
about supporting colleagues in advance of completion, and following completion
is has been about transparent communications and regular updates on integration
progress. We also rolled out employee engagement tracking to all 888 colleagues so
we now have a group wide view of how our colleagues are feeling. This is crucial as we
enter a period of significant change with the rollout of our new operating model, and
as we look to build a winning culture for the future.
Planet
PROTECTING OUR ENVIRONMENT,
INCLUDING NET ZERO CARBON
Planet: Work continues to reduce our carbon emissions in line with our net
zero goals. Key highlights include 888 achieving a B- CDP rating, and retaining
membership of the FTSE4GOOD index, which shows us to be making coordinated
action on ESG issues. William Hill also made significant progress in this area prior
to the completion of the acquisition including becoming certified as carbon neutral
this year across its Scope 1 and Scope 2 emissions – a fantastic achievement
considering the size of our large retail estate.
In 2023, we will continue to strive to deliver against our ESG goals. We are aiming
to increase our impact in all areas to ensure we are running a truly socially
responsible business.
888 Holdings PLC Annual Report & Accounts 2022
35
STRATEGIC REPORT SUSTAINABILITY CONTINUED
As we work to integrate the two
businesses, player safety will remain
critical to everything we do. We strive
to maintain long term relationships with
our players, which we know must be
built on ensuring customers gamble in
a safe and sustainable way.
As part of the ‘Players’ pillar of
our ESG framework, teams across
the business are working on a new,
holistic approach to player safety
that can be consistently applied
across all of our brands, platforms
and geographies, subject of course to
ensuring compliance with specific local
requirements where relevant. Safer
gambling is an area both businesses
have not always got right in the past,
but under new leadership we are re-
doubling our efforts to ensure player
safety is embedded at the heart of
everything we do and enhancing our
approach in this area is a key part
of the plan.
During 2022, and partly in anticipation
of the gambling white paper being
published by the government in the
United Kingdom, we continued to
enhance our player protection strategy
across our brands in the UK. The wider
group has taken on William Hill’s prior
top tier membership of the trade
association, the Betting and Gaming
Council (BGC) in the United Kingdom.
The BGC has worked hard to drive
standards in the UK in recent years
delivering cross industry collaboration
on such projects as:
• Whistle to whistle ban – restricted
gambling adverts during sporting
events before 9pm;
• Ad-tech – using the latest online
advertising technology to reduce
exposure to gambling content in the
young and ensure that targeted ads
are seen by players aged over 25;
• Research, Education and Treatment
(RET) spend – increasing voluntary
funding year on year up to 1%
of GGY in 2024 from the biggest
brands, including William Hill; and
• Ongoing work around piloting new
cross industry initiatives such as a
single customer view.
Account creation
• All accounts fully age verified
• GAMSTOP database screening
• Global spend limits mandated
• Know Your Customer checks
• Education on safer gambling
UK example: Always on player
monitoring system
Control environment invisible to the
average recreational customer who
can play freely
High spend
Behavioural change
• Spending alerts
• Financial vulnerability
checks via Transunion
• Strict limits for those at risk
of financial harms
• Enhanced due
diligence checks
• Source of funds checks
• Behavioural analysis
checks daily
• Alerts based on different
behavioural triggers
• Account reviews undertaken
by highly trained team
Interactions
• Automated ‘nudges’ based
• Phone interactions for higher
on behaviour
risk customers
Options range from:
• Account closure
• Temporary cool-off
Interventions
• Enforced limit
• Industry data sharing
36
888 Holdings PLC Annual Report & Accounts 2022
PlayersSTRATEGIC REPORT On the 28th March 2023 the GBGC
announced that a £19m regulatory
settlement in lieu of a penalty had
been reached with William Hill in
relation to historic player safety
failings.
The failings occurred before we owned
William Hill, so we could have had
no bearing on the areas that were
investigated. However, the team had
already taken significant remedial
action, and we have further reinforced
this following the acquisition. As a
result, the business is now in a far
stronger position from a compliance
perspective.
KEY TRENDS
The usage of deposit limits by
customers continued to rise across
all our brands. Deposit limits are an
important safer gambling tool, and
adoption increased from 36.6% in 2021
to 45.1% in 2022 as we continued to
encourage customers to set their own
limits, while also proactively imposing
limits on some customers where we felt
prudent to do so.
We increased our interactions with
customers through different contact
methods. Interactions with customers
helps us to identify and prevent
harmful play before it occurs, and
in 2022 we recorded over 2.7 million
customer interactions across our
brands, which represented an 18.6%
increase year on year.
In retail we pride ourselves on our safer
gambling focus and the relationships
our highly trained colleagues can build
with customers. In 2022 we conducted
88,308 safer gambling interactions,
up from 37,704 in 2021, albeit the retail
estate was closed for much of 2021.
The global roll out of 888’s proprietary
Control Centre safer gambling product,
which empowers players to make
more informed decisions about their
gambling through intuitively presented,
real time data, continued at pace, with
72% of 888 brand players worldwide
now having access to the product, up
from 39% this time last year.
We also continued to deliver safer
gambling training to all colleagues
across the business, regardless of
role, to strengthen our culture of
player protection.
Financial vulnerability checks using
third party service providers were
rolled out in the United Kingdom for
all customers at low levels of spend
across all of the Group’s brands – with
over 500,000 of these checks taking
place in 2022.
KEY ACHIEVEMENTS IN 2022
Work continued throughout the year
to advance the Group’s approach to
player safety across all brands and
channels.
Reflecting on our progress we have
delivered several key initiatives across
the three focus areas of our player
safety framework:
Prevent: Instil safer gambling principles
across the player base and with
colleagues to help prevent gambling
related harm before it occurs.
Identify: Use best in-class proprietary
and third party technology to identify
risky players quickly.
Act: Interact with players at different
risk levels at the right time using the
right contact method.
Progress against each of these
focus areas is listed below. Alongside
this we have continued to invest in
strengthening our Compliance and
Safer Gambling teams, which now
comprise more than 400 professionals.
We also continue to invest in the
technology and product required to
ensure we are offering our players
a safe and sustainable gambling
experience and ensuring safer
gambling is an intrinsic part of playing
with our brands.
Prev
e
n
t
t
c
A
Human: e.g.
personal
interaction; further
monitoring
Automated:
e.g. marketing
suppression
targeted comms
Education
and
awareness
Player
safety
Personalised
risk profiling
Safer
gambling
tools
Monitoring
of markers
of harm
n tif y
e
I d
888 Holdings PLC Annual Report & Accounts 2022
37
PlayersSTRATEGIC REPORT
SUSTAINABILITY CONTINUED
PREVENT
We believe that a core principle
of safer gambling is the upfront
prevention of harm. We do this through:
Education and awareness: Ensure
players know the risks of gambling
and normalise discussions about safer
gambling. We also strive to ensure
colleagues are informed about the
potential risks a small proportion of
our players can face from using our
products, so they are better positioned
to identify vulnerable players and
prevent the risk of harm.
Safer gambling tools: Drive mass
adoption of safer gambling tools
that help players control spend and
provide alerts regarding their betting
behaviour.
In 2022 we saw good progress in this
area with the adoption of deposit limits
by our players increasing by 36% to
45% of our total player base. Processes
have also been adopted to add in
mandatory limits for players early in
their account life and to ensure the
limits available are appropriate.
William Hill has continued to improve its
profit and loss tool by making it more
intuitive, with simple and clear visuals of
a player's activity. The tool is also now
more prominent across its products,
making it much more visible to players
throughout the customer journey.
Along with the Control Centre product
on 888 brands these features give
us great data and insight into what
customers interact with, what works
and what doesn’t. We will continue to
innovate, learn and improve.
In retail, a new system of alerts have
been built into machines to flag to
retail colleagues if a customer may be
exhibiting concerning behaviours.
We continued to normalise the use
of safer gambling tools by including
messaging in above the line TV
adverts and direct player marketing
campaigns across all our brands.
Finally, training of colleagues across
the business has continued at pace
with all colleagues now participating in
safer gambling training each year.
IDENTIFY
We believe technology is a key driver
of a successful safer gambling strategy
and we have continued to invest in
building up our capabilities in this area.
Our focus here is twofold:
Monitoring of markers of harm:
Timely analysis of player behaviour to
highlight potential risk factors.
Personalised risk profiling: We want
to ensure players get an individualised
gambling experience that relates to
them directly.
Across William Hill’s retail estate, we
continued to advance our technology,
with new player safety warnings now live
to colleagues via the EPOS till system.
The Group’s retail presence is a huge
strength of our business, particularly
for safer gambling interactions. Our
trained retail colleagues can interact
face to face with any customers who
might exhibiting signs of harmful
gambling and can do so in a one
to one, effective manner. Our shop
colleagues carried out over 80,000
safer gambling interactions in 2022.
With the number of brands in our
portfolio we now have a complex
ecosystem across multiple different
platforms. Key work has been
undertaken to start to align our
platforms, including sharing self-
exclusion information and account
closures around our brands, ensuring
players are better protected across
the Group.
In the United Kingdom the issue of
affordability continues to be a critical
point of discussion across stakeholders
including operators, the regulator and
politicians. We made significant strides
in introducing automated checks within
our ecosystem in partnership with third
party service providers. These checks
use technology alongside financial
markers of harm, such as bankruptcy
and county court judgement data to
help us identify players who may be at
elevated risk of financial harm.
ACT
We believe that multiple different forms
of interactions with customers must
take place to ensure we create a truly
safe gambling eco system. We believe
that we must build a system that utilises
automated nudge interactions as well
as harnessing the power of our highly-
trained colleagues to talk to customers
on a one-to-one basis. We use an
increasing number of automated
interactions at the lower end of the
player risk spectrum, but where the risk
is higher, we use a mix of human and
automated interactions to ensure we are
doing everything in our power to support
the player. A great strength of the retail
model is the ability to have a human
interaction with almost every customer
that walks through the door and
indeed our retail teams build up strong
relationships with regular customers.
Our work across the act pillar focuses
across two key interaction types:
Human: We carry out thousands
of one-to-one interactions with our
players on a daily basis. We want our
colleagues to have the best training
available to ensure they are in the
best position to deliver meaningful and
impactful interactions.
Automated: We are a business of
scale that has millions of players
around the world. In order to effectively
communicate with such a large
player base, we must have a scalable
technology solution to be able to
interact with our players at multiple
points in their gambling journey.
In 2022 we continued to evolve our
interaction abilities in both areas. We
invested in enhanced training, reduced
thresholds which trigger interactions,
and introduced mandatory safer
gambling interactions in retail. Online
we continued to grow our team across
38
888 Holdings PLC Annual Report & Accounts 2022
Players continuedSTRATEGIC REPORT Compliance and Player Safety to
ensure we have the appropriately sized
team to deal with our growth plans.
We also modernised how we review a
player’s account and have deployed a
new bespoke player case management
system to improve our record keeping
and accuracy when reviewing a player’s
account. For 888 brands, the Observer,
our proprietary player monitoring
system, continued to drive effective
automated interactions with players,
supporting a 4 % increase in automated
interactions at 888’s brands in 2022.
RET FUNDING SUMMARY
888 Holdings is a Category A member of
the Betting and Gaming Council (BGC),
the industry trade body for the United
Kingdom. As part of their commitment
to safer gambling, the core BGC
members have committed to increased
funding for organisations supporting
research, education, and treatment of
problem gambling. This commitment
has seen spending at William Hill grow
from 0.1% of GGY in 2018/19 to an
enhanced level of spending of 0.75%
in 2022/23 to reach a target of 1% in
2023/24. The primary beneficiaries of
our RET spend in 2022 were:
Gambleaware: An independent charity
which commissions treatment and
prevention programmes across the
United Kingdom, including funding the
National Gambling Treatment Service.
Funding continues to be provided
as part of the Betting and Gaming
Council’s long-term commitment to
guarantee funding for the charity.
EPIC Risk Management: A training,
education, and advisory company that
specialises in using lived experience of
gambling harm to deliver programmes
around how to prevent gambling-
related harm. We partnered with EPIC
to deliver a game changing gambling
harm minimisation programme for the
horse racing industry. The focus on
this educational programme will be on
how professional and amateur jockeys,
and individuals working in multiple
roles across the horse racing industry,
interact with gambling and gambling
related messages.
Anonymind: Anonymind is a provider of
both online and residential treatment
and therapy for individuals suffering
from gambling harm. We supported its
treatment programmes, ensuring those
that need support can get it quickly.
Gamcare/YGAM: We support
the funding of the national Young
People’s Gambling Harm Prevention
Programme, a joint national education
programme for young people around
the United Kingdom. This is a four year
programme that runs from April 2020
until April 2024 across the country.
Gordon Moody Association: Gordon
Moody is a charity providing support
and treatment for gambling addiction.
We supported Gordon Moody’s female
residential treatment programme. The
programme, which is a world first, was
launched at the end of 2021.
Betknowmore: Betknowmore is a
charity that provides gambling support
and training services. William Hill has
supported their Gambling Outreach and
Living Support programme. This is a
community outreach programme initially
launched in two London boroughs.
NEXT STEPS IN 2023
As we move into 2023 our focus turns
to evolving and enhancing our safer
gambling plans to ensure they support
our bigger and bolder ambitions as
a new, enlarged business. We aim to
bring together the best of all of our
brands to evolve our offer and develop
a best-in-class player protection
framework for our brands across the
world. Compliance with the regulations
around the world is a minimum
requirement, we aim to go above and
beyond to ensure our revenues are
sustainable and we retain our player
base for years to come.
888 Holdings PLC Annual Report & Accounts 2022
39
Players continuedSTRATEGIC REPORT SUSTAINABILITY CONTINUED
2022 has been a year of significant
change for colleagues across the
Group. With the acquisition of William
Hill non-US business completing on
1 July the year has been divided into
two distinct periods. The first saw
both legacy organisations supporting
their colleagues in preparation for the
acquisition and the expected impact
on teams. The second has been a
period of change with the impact of
the acquisition beginning to be felt
across the Group as we work to bring
both businesses together.
Bringing together over 11,000
colleagues in our new combined
business has challenged the leaders
in our business and the People team
who support them, with a focus on
four key areas.
• Integration and change: The
need to quickly establish the
operating model and structures
of our combined business to
enable the business to achieve
ambitious synergy targets meant
rapid and significant change for
our colleagues.
• Engagement: Maintaining
engagement levels through periods
of change is a key challenge for
the business, making clear and
regular communications meaningful,
supportive and transparent.
• Organisational culture: Both legacy
organisations have their own unique
cultures, our priority looking forward
is to build our new winning culture
where people want to join and
love to stay.
• Future People strategy: There are
consistent themes within the people
strategies of William Hill and 888,
the focus now is to create a new
strong identity and set out our
ambition for the future.
INTEGRATION AND CHANGE
The first priority for the Group following
the acquisition of William Hill was to
establish the strong leadership team
who would guide the business through
change. On 1 July we announced our
new Executive Team, combining the
previous William Hill and 888 teams to
create a new management team with
vast experience and a track record of
success in the industry.
Following these appointments the
Executive Team began their work to
design and build their new operating
models to understand the structure
of their new leadership teams. In
November we were able to announce
our new senior leadership team,
putting in place the individuals who
would support the Executive Team in
delivering their strategies. In doing
this we were able to draw on the large
and experienced combined talent
pool of the Group, ensuring a balance
between both legacy organisations
and diversity across our locations.
In early 2023 we announced the
immediate departure of our CEO, with
Lord Mendelsohn stepping in on an
interim basis as Executive Chair, and
the intended future departure of our
CFO. Given the plans that had already
been put in place, and the stability
within the wider executive and senior
management team, we are confident
our people can navigate through this
additional element of change.
With accelerated plans to deliver
synergies across the business in late
2022 through into 2023 the business
then began plans for change. Several
key initiatives were delivered through
the second half of the year with
highlights including:
• Business operations and customer
service model
Although we are only in the early
stages of bringing the customer
operation teams of the two legacy
organisations together, we have
already started to look at how the
different processes, systems and
teams can be aligned to support all
customers. Our People team across
several of our locations including
the UK, Gibraltar, Romania, Bulgaria
and the Philippines have been an
integral part of this work.
• Bolder in Retail
This initiative aimed to restructure
the William Hill UK Retail business to
change the way we work ensuring
the sustainability and profitability of
retail into the future. We appointed
a revised retail leadership team with
a refreshed regional model and
introduced new roles to our shop
teams with changed responsibilities.
This meant over 1,000 colleagues
stepping into the new role of Team
Leader, with extensive support from
our retail People team to help them
transition into this new role.
• Product and technology
Our Product and Technology team
continues to play a vital role in
the business. The appointment of
Anna Barsby as Chief Product and
Technology Officer, an experienced
transformation leader with a strong
track record of delivering large
scale change, was a key first step
in the integration of our platforms
and products. Anna moved quickly
to determine the future of the
Group’s technology and product
infrastructure, with decisions relating
to future platforms and structures
made soon after her appointment.
These decisions had a significant
impact on teams within her business
area, and the People team were
vital in supporting individuals in
many of our locations.
ENGAGEMENT
Management recognise that
maintaining colleague engagement
through a period of significant change
will be a key challenge for the business.
Prior to the acquisition both 888 and
William Hill had been through several
years of change and uncertainty and
there was unanimous agreement that
the second half of 2022 into 2023 and
beyond would be no different.
The first priority for the Group was
to ensure we were able to measure
and track engagement in a way that
was consistent across both legacy
organisations as we worked to bring
them together. Very soon after
acquisition we were able to launch
Workday Peakon, the platform through
which William Hill had previously
delivered its engagement surveys, to
colleagues across the whole Group.
This established a regular cadence of
surveys to understand how colleagues
were experiencing the change across
the business. These surveys allow
colleagues to answer a series of
questions about the business as well
as leaving comments and feedback
for leaders to acknowledge and
respond to, creating a consistent
two-way communication channel.
Our engagement surveys are issued
40
888 Holdings PLC Annual Report & Accounts 2022
PeopleSTRATEGIC REPORT WHAT IS ENPS?
eNPS is measured by asking
colleagues to score the question
“How likely is it you would
recommend 888 William Hill as
a place to work?” on a scale
of 0-10. The percentage of
detractors (scoring 0 to 6) is
subtracted from the percentage
of promoters (scoring 9 or 10) to
give the net promoter score.
We believe that a positive eNPS
is a true demonstration of the
success of our People initiatives.
It encapsulates the employee
experience and, particularly
through a period of change,
allows us to understand whether
we are supporting colleagues
in the right way. We are proud
to have finished 2022 with an
eNPS of +8 across the combined
Group, with a score of +28 and
+29 in the non-retail businesses of
William Hill and 888 respectively.
Recognising the importance of
this measure, eNPS has been
included in the remuneration
targets for the Directors,
Executive Committee and other
senior leaders to promote a
collaborative approach to
engaging colleagues across
the Group. We anticipate
many significant challenges to
engagement in 2023 – large
scale people change as we
deliver the new organisational
design, continued external
economic pressures on customers
and colleagues, and ongoing
regulatory challenges in our
key markets. We aim to at least
maintain our current engagement
levels with plans in place to build
on this strong foundation.
For 2023 our key objective is to define
and embed a common set of values
to bring together the best of both
organisations. To be authentic these
values must be embedded into the
day to day experience, owned and
role modelled by leaders, celebrated,
and used as a means to hold ourselves
and each other to account. We are
now developing a plan to create
these values with a consultative and
collaborative process with the business,
led by our centres of expertise in HR.
FUTURE STRATEGY
There are consistent, shared themes
across the legacy People strategies of
888 and William Hill. Our focus since
acquisition and into 2023 has been on
creating the new, and we have started
with our 2025 People Ambition.
Across both organisations we believe
it is clear that there are three priority
areas of focus to build the foundations
of everything we do:
• Defining the working culture of
our organisation, tied to the new
values of the Group, empowering
colleagues to work in the way that
suits them best and supporting
them in every aspect of their
lives. This includes our approach
to flexible working, the health
and wellbeing support we extend
to colleagues, and developing
empathetic and supportive leaders;
to 100% of our colleagues via the
Workday Peakon platform, with an 80%
response rate.
The key measure of success identified
as the main focus for the Group is our
employee net promoter score, or eNPS.
ORGANISATIONAL CULTURE
Prior to the acquisition both 888 and
William Hill had strong and distinctive
employment cultures. Our priority
for shaping the culture of the new
business was to draw on the strengths
of both organisations, maintaining and
nurturing the values and behaviours
which made them such successful
businesses in their own right.
The first step on this journey was to
undertake a comprehensive review
of the culture of both organisations,
to enable the development of a
well-informed plan for change
and engagement. To do this we
engaged third party consultants
to independently assess each
organisation, exploring the two
heritages with the aim of providing a
shared understanding of their culture
in relation to values, leadership and
People team.
The outcome of this review gave us
key insights into our shared values.
The core principles of collaboration,
respect, transparency, authenticity
and caring underpinned those
values and the behaviours each
organisation expected of its leaders. It
is these principles which will form the
foundations of our new culture and
our plan to continue to integrate the
two businesses.
888 Holdings PLC Annual Report & Accounts 2022
41
PeopleSTRATEGIC REPORT SUSTAINABILITY CONTINUED
FUTURE STRATEGY CONTINUED
• Adding the skills and capabilities
that the Group will need as we
move forward to achieve our
ambitions, investing in nurturing
and developing our talent to set
the standard across the industry.
This gives colleagues access to
the industry’s best development
programmes and makes sure we
support the career ambitions of all
of our colleagues; and
• Ensuring that we celebrate our
differences and have a culture
where all colleagues, no matter their
background and experiences, feel
represented and respected. Here
we focus on inclusion and belonging
with the natural consequence of
diversifying our business across
every level of the organisation.
MEASURING OUR PROGRESS
Alongside the focus on integration and
our people plans around this, both
legacy organisations continued with a
range of people initiatives throughout
the year, alongside tracking a range
of people related metrics, the data
for which is set out below. Given the
transaction completed on 1 July 2022,
the data presented below (unless
otherwise specified) is taken as
the combined position as if we had
been one company for the whole of
2022. We will use the 2022 numbers
presented here as a baseline and
during 2023 as we create a combined
people strategy, we will look to define
specific objectives and targets related
to certain of these metrics.
DIVERSITY AND INCLUSION
Both legacy organisations have
strong commitments to developing
inclusive cultures rooted in respect.
We know that an integral part of our
success is diversity of background,
experience and perspective and we
actively promote inclusivity, including
ensuring there is no less favourable
treatment on the grounds of sex, sexual
orientation, gender re-assignment,
marital or civil partnership status,
race (including colour, nationality,
ethnic or national origin), disability,
religion or belief, age, or pregnancy
and maternity. We strive to ensure
reasonable adjustments are provided
for people with disabilities who are
applying to or already working with us.
Key highlights of 2022
• William Hill added an Inclusive
Leadership module to the
Leadership Essentials programme,
requiring all new people leaders to
develop their understanding of why
diversity and inclusion is integral
to organisational success and how
they can be an inclusive leader.
• In October 2022, many of our
locations around the world
introduced a global menopause
policy, with other locations set to
introduce it in 2023.
• In November 2022, we continued the
evolution of our family leave policies,
launching our new Neonatal policy
in the UK, providing full pay for the
duration of a neonatal admission.
• Our Product & Tech department
also employed several women
through the company Code First
Girls, who provide free coding
courses to women across the UK.
• We continue to celebrate and
mark key dates in the Diversity
and Inclusion calendar with global
events and internal communication
campaigns including International
Women’s Day, Men’s Health
Awareness, Pride, Mental Health
Awareness and Black History Month,
among others.
As we continue to build on the
strengths of our two businesses, our
priority remains building an inclusive
organisation where individuals are
respected and valued for who they
are. Our focus for 2023 will be driving
progress through our new DE&I
governance structure which will provide
a framework for all DE&I activity across
the new, combined organisation.
The new structure will include the
introduction of a group wide steering
committee, providing strategic
direction and guidance for all DE&I
activity; the launch of an employee
led Inclusion Council to provide
employee voice and input to shape our
DE&I approach; and the creation of
multiple employee networks, bringing
colleagues with shared experiences
and interests across all areas of the
organisation together.
Diversity at 888 William Hill
Employees worldwide
Female employees
% of female employees
Part time employees
% part-time employees
Number of contractors
% of women on the Board of Directors
% of women in senior management positions
% of women in junior management positions
% of women in STEM positions
% of women in management positions in revenue-generating functions
2022
11,861
5,622
47%
4,097
35%
141
44%
32%
33%
22%
39%
Workforce by age
14+
11,861
25-34 35%
18-24 14%
42
888 Holdings PLC Annual Report & Accounts 2022
35-44 25%
45-54 14%
55-64 10%
65+ 2%
People continuedSTRATEGIC REPORT35
+
25
+
14
+
10
+
2
+
M
Our 2025 ambition is to be
the best place to work in the
industry, with a strong identity
that sets the standard for
what great looks like. We
celebrate individuality, care
for each other and invest in
developing talent
* How have senior management, junior
management, STEM and management positions
in revenue-generating functions been defined?
Senior management:
Executive team and their direct reports.
Junior management:
Women in non-senior management roles.
STEM:
Women in Technology roles, excluding Trading.
Management in revenue generating functions:
Colleagues that work directly for our P&L
functions (UK&I Market (including Retail & Online),
International Market).
COMMITTED TO COLLEAGUE
DEVELOPMENT
Learning support is available to every
colleague via a suite of blended
learning solutions that is tailored to
either role, function, or level within
the organisation e.g., individual
contributor/people leader/senior
leader, as well as a variety of other
content to support personal and
competency development. Every new
colleague receives a tailored induction
which includes access to learning
content that is location specific. Every
colleague has access to a Learning
Management System, which hosts all
company required learning, optional
personal and skills development
content, and the ability to book onto
live webinars or courses that are
delivered by our internal experts.
In 2022 every level of leadership in
the WH business had access to a
structured leadership development
programme, which will be broadened
to the wider 888 WH audience in
2023. During 2022, 888 used external
suppliers to support development
progress for colleagues and leaders.
In our Product & Technology function,
colleagues have access to O’Reilly,
a global and best in class online
learning platform that offers a range
of learning paths, conferences,
online live events, and sandboxes for
colleagues to learn about the most
up to date developments and in the
global industry.
Talent at 888 William Hill
Total number of new hires
Total number of new hires
from internal candidates
Total employee
turnover rate
Voluntary employee
turnover rate
2022
4,395
1,235
35%
29%
ECONOMIC AND COMMUNITY
CONTRIBUTIONS
The Group employs a significant
number of people across over 1,350
retail outlets and offices in more than
14 territories. As such, our economic
footprint is significant and in 2022, we
contributed £588m in taxes and duties
across our countries of operation.
During the year the William Hill
hardship fund awarded 11 grants for
employee hardship, with an average
value of over £2,000, ensuring our
colleagues are cared for when they
need it most.
We are part of communities all over
the world and we want to play a key
role in giving back in those areas.
As part of that colleagues from all
our brands have volunteered across
numerous projects worldwide. In the
United Kingdom, William Hill have
built a partnership with Neighbourly,
a platform that provides volunteering
opportunities for colleagues across the
country. As part of the first year of this
programme 92 colleagues participated
in 18 projects across the country
focusing on supporting work covering
the themes of wellbeing, sport and the
environment. Across our 888 brands
colleagues volunteered supporting
such causes as typhoon relief, animal
shelters and other charities chosen
by colleagues that were relevant to
their location.
Pro forma contributions at
888 William Hill
Total tax contribution
Sports sponsorship, levies
and picture payments
Employee hardship
fund grants
2022
£588m
£114m
£22,390
888 Holdings PLC Annual Report & Accounts 2022
43
People continuedSTRATEGIC REPORT
SUSTAINABILITY CONTINUED
2022 was a year of transition for the
Group as we began work to combine
the 888 and William Hill businesses.
The Group’s carbon footprint
expanded significantly with the
William Hill acquisition due to its large
retail estate, and we have continued
to evolve both in understanding
our climate impact and working to
address our carbon footprint. Focus
on addressing environmental impact
has been increasing across both
businesses in recent years and we
intend to build on this as a combined
Group moving forwards.
We will be reviewing our environmental
goals and targets reflecting our
priorities and operations as a
combined Group. We recognise that
climate change is one of the greatest
challenges of our time and we want
to ensure we are playing our part by
minimising our impact on the planet
and setting strong, challenging,
emission reduction goals.
We are proud of our progress so far
which has been recognised across
various ESG Ratings bodies though we
recognise there is more work to do to
reduce our impact on the environment.
KEY ACHIEVEMENTS IN 2022
• Net zero by 2030: achieve 80%
reduction in Scope 1 & 2 (2019
baseline) – 888 (excluding William
Hill) – 44% reduction in Scope 1 and
2 (market-based) emissions from
2019 baseline.
• Net zero target across value chain
by 2035 – 888 (excluding William
Hill) – 10% reduction in Scope 3
emissions from 2021.
• ESG ratings – improvements in our
CSA and CDP ratings alongside
maintaining our strong MISC and
FTSE4GOOD ratings.
• William Hill became one of the first
operators in the sector to become
certified as carbon neutral (Scope 1
and 2 emissions).
• First qualitative climate-related
scenario analysis performed and
climate is recognised in the Group
Risk Register for the first time.
TCFD SUMMARY
We again publish our Task Force on
Climate-related Financial Disclosures
(TCFD) report, building on our work last
year, with a summary provided in this
section and more detailed information
about the climate related governance,
strategy, risk management (including
scenario analysis) and metrics and
targets available in the dedicated
TCFD Report found on page 68.
Governance
Our climate governance begins with
the Board’s approval of the strategy
and targets set out in the Zero Carbon
Report 2022 (available on our website).
The Group has an established system
of ESG governance which is embedded
throughout the organisation, with the
Board being ultimately accountable
for the implementation and delivery of
the transition plan. The ESG Committee
of the Board has oversight of all ESG
matters across the three pillars of our
framework (including Planet) and the
Group’s ESG governance structure is
outlined on page 69.
Our ESG governance structure evolved
to include a Risk and Sustainability
Committee, a monthly executive
management committee which
provides oversight to support the ESG
Committee of the Board in managing
risks to 888’s long-term strategic
objectives. In March 2023, an ESG and
Sustainability Director was appointed
who has executive responsibility for
the Group’s overall ESG framework. The
ESG and Sustainability Director leads
the ESG Forum, a cross-functional
forum through which ESG issues can
be managed and escalated to the
Risk and Sustainability Committee
as appropriate.
In 2023, climate-based targets will
be linked to executive remuneration
for the first time, with Initial targets
included covering the three pillars of
the ESG framework: Players, People,
Planet. As the ESG Committee of the
Board reviews the implementation of
the ESG strategy, it will consider the
appropriateness of these targets and
whether additional ESG metrics and
targets should be incorporated into
executive remuneration.
Strategy
Climate change is a key focus area
of our ESG framework. In 2021, we
set an ambitious climate goal to
reach net zero greenhouse gas
(GHG) emissions by 2035. For us,
‘net zero’ means ensuring that the
GHG emissions associated with our
business are reduced towards zero as
far as possible, with residual emissions
balanced by quality carbon removal
initiatives, thereby achieving a ‘net
zero’ position. Our data centres, retail
estate, offices, and business travel are
the main sources of our GHG emissions.
Our net zero strategy was first
published in the ‘Zero Carbon Report
2021’1. This year’s progress against
the 2021 net zero strategy and
development of 888’s transition plan is
published in the Zero Carbon Report
2022 found on our website.
Risk management
Climate-related scenario analysis was
conducted for the first time this year
to inform our climate-related strategy
and risk management. The climate-
related scenario analysis considers the
risks from transitioning to a low-carbon
economy or transition risks (which may
entail policy and legal, technology,
market, and reputational risks) and the
physical risks resulting from climate
change. Physical risks can be event
driven, such as extreme weather events,
or longer-term shifts in climate patterns.
The climate-related scenario analysis
demonstrates that the material risks
and opportunities the Group faces
from climate change include both
physical and transition risks in the
global markets in which we operate.
To respond to these risks, we will
take enterprise-wide action and
build resilience by managing the
physical (sites, supply chain) and
transition (market, policy & legal, and
reputational) risks and opportunities in
the value chain, through mitigation and
adaptation and business continuity
planning. We believe we already have
strong business continuity planning in
place after the impact of COVID-19,
and these foundations can be built on
as the climate challenge evolves.
44
888 Holdings PLC Annual Report & Accounts 2022
PlanetSTRATEGIC REPORT Based on the scenario analysis results,
climate was included in the Group’s
Risk Register for the first time this
year and the material climate-related
risks have been mapped against
other business risks according to
the materiality, nature, and size of
their impact.
ACQUISITION AND
DIVESTMENT ACTIVITY
In comparison with other sectors,
our overall environmental impact is
relatively low as our products are
largely virtual. Our carbon footprint
changed during 2022 as a result of our
acquisition of William Hill and the sale
of 888’s bingo business.
Welcoming William Hill into the Group
means our overall carbon footprint
has increased due to the brand’s large
UK retail estate and ten global offices
(William Hill has approximately 10,000
employees and over 1,350 shops).
The sale of 888’s bingo business had
an immaterial impact on the Group’s
carbon footprint as it involved the
transfer of only a small number of
employees at two existing sites.
Historically William Hill’s carbon footprint
has been carefully managed and
it has already started the journey
towards reaching net zero. In May
2022, William Hill achieved its goal
to become a certified carbon-
neutral business across Scope 1 and
2 emissions2. In 2022, smart meters
for electricity were fully installed
across the UK retail estate to enable
monitoring of energy usage and to
drive down energy consumption.
The impact on the Group’s GHG
emissions from acquiring William Hill’s
carbon footprint has therefore been
reduced for Scope 1 and 2 emissions.
The focus area for the transition plan is
therefore reducing William Hill’s Scope
3 emissions, with further detail included
in our Zero Carbon Report 2022.
Metrics and targets (set in 2021,
excluding William Hill)
• Net zero by 2030: 80% reduction in
Scope 1 & 2 (2019 baseline).
• Net zero target across 888’s value
chain by 2035.
Against the net zero targets, 888
(excluding William Hill) achieved a
44% reduction in total Scope 1 and 2
(market-based) emissions from a 2019
baseline and a 29% reduction on prior
year. The material drivers for reducing
Scope 1 and 2 emissions on prior year
are the re-classification of emissions
to Scope 3 for subletting part of the
Israel office, reduction in energy use
in Gibraltar, cessation of the UK data
centre, and a reduction in energy
supplied to European data centres.
Across our wider value chain, 888
(excluding William Hill) achieved a 10%
reduction in Scope 3 emissions from
prior year mainly due to a reduction
in spend with high emitting suppliers
(spend-based assessment used)
and lower emission factors used in
the GHG accounting calculations.
Due to COVID-19 restrictions in place
during 2021, there is a significant
year on year increase in emissions
this year for business travel and
employee commuting, which have
been calculated for all offices this
year whereas last year only Israel was
included. Focusing on engaging with
suppliers to reduce Scope 3 emissions
will be a cornerstone of our transition
plan next year.
In 2023, William Hill’s emissions data
will be fully integrated, and we will
re-calculate the baseline values for
our net zero targets. Once we have
recalculated the baseline, we will
seek third-party validation over our
commitments and may consider third
party assurance of our emissions data.
We have made significant progress in
this area and we have been recognised
as such by the various ESG Ratings.
The business achieved an improved
rating of 34 in the CSA, up from 26 the
previous year and above the sector
average of 21.
Our CDP rating was B-, again improved
year on year and well ahead of
industry averages.
We also retained membership of the
FTSE4GOOD Series Index, achieving a
rating of 3.9/5. This is a high score for
a business in the Travel and Leisure
subsector, with high ratings achieved
across the social and governance
elements of the scoring.
Our AA rating was also maintained in
the MCSI ESG rating.
ALIGNMENT WITH THE TCFD
REPORTING FRAMEWORK
Overleaf we summarise the 2022
alignment with the TCFD reporting
framework, with further detail
included in the TCFD Report on
page 68. We are aligned with the
TCFD’s recommendations, subject
to the following areas, which need
further work due to the timing of the
acquisition of William Hill, and the
scenario analysis (completed Nov-22):
• Strategy, parts b) & c); and
• Metrics and Targets, parts a) & c).
Where our disclosure is not consistent
with TCFD recommendations, the
reasons for this are outlined in the full
TCFD Report and a plan is in place
to improve the maturity of the TCFD
reporting in future reporting periods.
NEXT STEPS IN 2023
As we move forwards as a
wider business our focus on our
environmental impact is clear. After
good progress in 2022, particularly
across our Scope 1 and Scope 2
emissions, we must re-examine our
climate targets, ensuring we are doing
the most we can to minimise our
carbon production. Scope 3 emission
reduction will become a focus and we
will work with our suppliers to ensure
that they have proactive plans in place
to reduce their emissions.
We must also work to ensure we
effectively merge our climate data
groupwide to allow us to re-baseline
our targets for the new, larger business.
Once that has been achieved, we
will seek third party validation of
our climate commitments and may
consider third party assurance of our
emissions data.
We will also continue to work with
external ratings agencies to sense
check our progress across both
industry peers and other comparable
businesses as we work towards
reducing our environmental impact.
888 Holdings PLC Annual Report & Accounts 2022
45
PlanetSTRATEGIC REPORT TCFD OVERVIEW
888’S ALIGNMENT WITH THE TCFD FRAMEWORK
Disclosure Level:
Full
Partial
Omitted
TCFD Recommendation
Reference/Further work
Governance
a) Describe the Board’s oversight of climate-
related risks and opportunities.
• TCFD Report, page 68
• Governance, page 90
• Zero Carbon Report 2022, page 20
b) Describe management’s role in assessing and
managing climate related risks and opportunities.
Strategy
a) Describe the climate-related risks and
opportunities the organisation has identified over
the short, medium, and long term.
• TCFD Report, page 68
• Planet Pillar, ESG Report, page 44
• Zero Carbon Report 2022, page 14
b) Describe the impact of climate-related
risks and opportunities on the organisation’s
businesses, strategy, and financial planning.
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario.
• Further work is required to integrate the
outputs of the scenario analysis into the
business strategy and financial planning
cycles moving forward including developing
metrics to monitor climate-related risks and
potential financial impacts as required.
• TCFD Report, page 68
• Further work is required on the consideration
of the potential impact of climate-related
issues on financial performance and position
across different climate scenarios, together
with sensitivity analysis.
Risk
Management
a) Describe the organisation’s processes for
identifying and assessing climate-related risks.
• TCFD Report, page 68
• Risk Management section, page 56
• Zero Carbon Report 2022, page 18
b) Describe the organisation’s processes for
managing climate-related risks.
c) Describe how processes for identifying,
assessing, and managing climate-related risks
are integrated into the organisation’s overall
risk management.
Metrics
and Targets
a) Disclose the metrics used by the
organisation to assess climate-related risks and
opportunities in line with its strategy and risk
management process.
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and
the related risks.
c) Describe the targets used by the organisation
to manage climate-related risks and opportunities
and performance against targets.
• TCFD Report, page 68
• Zero Carbon Report 2022, page 25
The Group has started to qualify the
financial impact of climate-related risks, but
quantified scenario analysis needs to be
conducted.
• Zero Carbon Report 2022, page 25
• ESG Supplementary Information, page 82
•
In 2023, the Group will integrate William
Hill’s data, exclude 888’s bingo business
data, and re-calculate the baseline values
for its net zero targets. The Group may
also consider applying William Hill’s wider
environmental metrics to 888.
46
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT 888 Holdings PLC Annual Report & Accounts 2022
47
STRATEGIC REPORT CFO’S REPORT
Setting the platform for
future growth
WE ARE VERY FOCUSED ON DELIVERING A LEANER, HIGHER MARGIN, MORE
EFFICIENT BUSINESS, THAT WILL DRIVE RAPID DE-LEVERAGING AND UNLOCK
THE STRONG POTENTIAL OF OUR BUSINESS
SUMMARY
Reported revenue for the year was
£1,239m (+74%) with the main driver
being the completion of the acquisition
of William Hill on 1 July 2022. On a pro
forma basis revenue of £1,850m and
Adjusted EBITDA of £311m were both
in line with the guidance given at our
capital markets day in November 2022.
Alongside the transformation in our
revenue and earnings, our balance
sheet has significantly changed
following the acquisition, with the
predominantly debt-funded deal
leading to a highly leveraged balance
sheet with debt of £1.7bn and a net
debt to Adjusted EBITDA ratio of
5.6x at 31 December 2022. Given
the deterioration in debt capital
market conditions between signing
and completing the acquisition, the
ultimate structure of the William
Hill acquisition left the Group more
exposed to changes in interest rates,
which continued to increase through
the second half of 2022 following
completion. We were pleased to
successfully issue £347m equivalent of
new debt in December 2022 to repay
some of the initial deal financing, and
increase the level of hedging we have
in place such that approximately 70%
of interest is fixed for at least the next
three years.
Increased interest costs, the current
macroeconomic climate and the
impact of high inflation on the cost
base, is putting pressure on the profit
margins and cash generation of
the Group. This restricts our ability
to reinvest excess cash flow to
accelerate near term growth and
means our focus in the short term
is on improving profitability through
synergies and other cost savings
generated from the transformation and
integration programme. This will allow
us to enhance cash generation and
deleverage which is the key priority of
the Group.
The integration and transformation
programmes encompass both the
programme to integrate the William Hill
business into the 888 Group, unlocking
approximately £150m cash synergies
per annum, and wider transformation
initiatives across the combined Group
to drive efficiencies in operations.
The programme is expected to
continue until 2025, albeit many of the
initiatives are expected to complete
in 2023. There is an expected £100m
of cash costs to achieve synergies
expected to be incurred across the
integration programme; with the
expense expected to be greater than
this due to non-cash items, such as
impairments of software assets not
required as the technology stack of
the two businesses are integrated,
and costs associated with the wider
transformation programme.
As the Group executes these plans
to improve profitability margins and
deleverage, this will enable further
investment in the growth opportunities
available to the Group, in order to
achieve the key financial targets for
FY 2025 as outlined within the Capital
Markets Day in November 2022 and
which the Board remain confident in
achieving:
• Revenue of more than £2bn
• Adjusted EBITDA margin above 23%
• Leverage of less than 3.5x
• Adjusted earnings per share of
more than 35p
Our plan is improve
profitability and ensure
we are really disciplined
with our capital
allocation, prioritising
debt reduction. This has
the potential to deliver
superior shareholder
returns with a target of
at least 35p of adjusted
EPS by 2025.
Yariv Dafna
Chief Financial Officer
48
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Reconciliation of Statutory EBITDA to Adjusted EBITDA, Adjusted profit before tax and Adjusted net profit
Revenue
Cost of sales
Gross profit
Marketing expenses
Operating expenses
Share of post-tax profit of equity
accounted associate
EBITDA*
Depreciation and amortisation
(Loss)/Profit before interest and tax
Finance income and expenses
(Loss)/Profit before tax
Taxation
(Loss)/Profit after tax
Basic earnings per share
Adjusted results
Exceptional items
and adjustments
Statutory results
2022
£'m
1,238.8
(440.4)
798.4
(257.8)
(323.0)
0.3
217.9
(63.6)
154.3
(73.8)
80.5
(16.3)
64.2
15.1
2021
£'m
712.3
(242.3)
470.0
(222.6)
(127.7)
0.0
119.7
(26.4)
93.3
(4.2)
89.1
(6.5)
82.6
22.2
2022
£'m
0.0
(0.1)
(0.1)
0.0
(102.3)
0.0
(102.4)
(56.7)
(159.1)
(37.1)
(196.2)
11.4
(184.8)
2021
£'m
0.0
(10.9)
(10.9)
0.0
(19.2)
0.0
(30.1)
0.0
(30.1)
0.0
(30.1)
(2.5)
(32.6)
2022
£'m
1,238.8
(440.5)
798.3
(257.8)
(425.3)
0.3
115.5
(120.3)
(4.8)
(110.9)
(115.7)
(4.9)
(120.6)
(28.3)
2021
£'m
712.3
(253.2)
459.1
(222.6)
(146.9)
0.0
89.6
(26.4)
63.2
(4.2)
59.0
(9.0)
50.0
13.4
* EBITDA is defined as earnings before interest, tax, depreciation and amortisation.
Adjusted EBITDA is defined as EBITDA excluding share based payment charges, foreign exchange losses and exceptional items and other defined adjustments.
Foreign exchange losses and share benefit charges were excluded to allow for further understanding of the underlying financial performance of the Group.
Further detail on exceptional items and adjusted measures is provided in note 3 to financial statements.
In the reporting of financial information, the Directors use various APMs. These APMs should be considered in addition to, and are not intended to be a substitute
for, IFRS measurements. As they are not defined by International Financial Reporting Standards, they may not be directly comparable with other companies’ APMs.
The Directors believe these APMs provide additional useful information for understanding performance of the Group. They are used to enhance the comparability
of information between reporting periods and are used by management for performance analysis and planning. An explanation of our adjusted results, including
a reconciliation to the statutory results is provided in note 3 to the financial statements.
Revenue
Adjusted Cost of sales
Gross profit
Marketing expenses
Adjusted operating expenses
Share of post-tax profit of equity accounted associate
Adjusted EBITDA
Pro forma
2021
£'m
1,907.0
(646.4)
1,260.6
(433.0)
(558.5)
0.8
269.9
2022
£'m
1,850.1
(599.2)
1,250.9
(331.8)
(608.7)
0.2
310.6
Change
(3.0%)
(0.8%)
15.1%
* Pro forma information presented in the financial summary (including the associated narrative) is not part of the audit of financial information performed by the
Independent Auditor. These are defined on page 50.
In FY23 specifically, we currently
expect revenue to decline by low to
mid single digits but EBITDA margin,
on an adjusted basis, to improve to
greater than 20%. This is a significant
increase compared to the pro forma
adjusted EBITDA margin of 16.8% in
FY 2022, reflecting the realisation of a
large proportion of the synergies from
the acquisition.
In the UK market, we look forward to
the Gambling Act white paper and
subsequent level playing field that it
should bring, and are confident that
our leading brands and sustainable
recreational customer base will see us
succeed in this market. The acquisition
of William Hill has also meant the
Group is more diversified with a Retail
business and an improved position
internationally, in particular in our
core markets of Italy and Spain. This
creates a more sustainable business in
a changing regulatory environment.
Revenue for the first quarter of 2023
was £446m, representing an increase
of 168% on a reported basis and
decrease of 5% on a pro forma basis.
The reduction on a pro forma basis
reflects strong growth in retail of
+8%, more than offset by UK&I Online
being down 9% with the continued
impact of safer gambling changes,
and International Online being down
11% as a result of our refined market
focus and compliance changes in the
Middle East.
888 Holdings PLC Annual Report & Accounts 2022
49
STRATEGIC REPORT
CFO'S REPORT CONTINUED
SUMMARY CONTINUED
Pro-forma results
The results of the Bingo business that
was sold during the year are presented
within ‘Other’.
Given the significance of the
acquisition of William Hill midway
through the year, the statutory results
do not provide a clear comparison of
performance to the previous period as
they consolidate results of the William
Hill business for the second half of
the year in FY 2022. As such, in the
analysis below, focus is given to the
pro forma results showing a clearer
performance of the Group in FY 2022
compared to FY 2021.
Within these pro forma unaudited
results which do not form part of the
audited financial statements, the FY
2021 financials cover the 52 week
period from 30 December 2020 to 28
December 2021 for William Hill. Since
the acquisition, the William Hill business
has aligned to the monthly financial
calendar of the Group and, therefore,
the FY 2022 financials cover the
period from 29 December 2021 to 31
December 2022.
Change in presentation currency
The Group has changed the currency
in which it presents its financial results
from US Dollar to UK pound sterling
(GBP) with effect from 1 January 2022,
in consideration of the William Hill
acquisition and current business mix
which has now significantly higher
GBP exposure and with 888 US Dollar
denominated earnings a relatively
lower proportion of overall earnings.
The opening balance sheet and
comparatives have all been translated
and re-presented to GBP following this
change in presentational currency.
Segmental change
The Group has changed its operating
segments within the year to reflect
geographic divisions as opposed to
segments by product as disclosed in
previous years. This reflects the way
in which results are monitored and
reported in the enlarged Group.
Following the acquisition of
William Hill, the business has been
restructured to be managed as a
UK business, comprising UK Retail
and UK&I Online segments, and an
International business with both
supported by a Corporate centre. The
US business is disclosed within the
International segment and the Irish
business is managed within the UK&I
Online segment.
The comparatives have been
re-presented to display the results
in these new reportable segments.
CONSOLIDATED INCOME
STATEMENT
Revenue
Revenue for the Group was £1,238.8m
for FY 2022 on a statutory basis; an
increase of 74% to FY 2021 of £712.3m
with the consolidation of William Hill
revenues across H2 2022.
On a pro forma basis, revenue was
£1,850.1m; a decrease of 3% compared
to £1,907.0m in FY 2021.
The decline in revenue primarily
reflects the additional player safety
checks implemented in the UK&I Online
business across both brands over
the previous two years with a 20%
reduction in UK&I Online revenue in FY
2022 compared to FY 2021.
The International business declined by
9%, mainly due to regulatory changes
across a range of markets, most
notably the impact of the Netherlands
business closing at the end of Q3 2021.
This is partly offset by a 54% increase
in Retail revenues driven by a full
year with a full Retail estate trading
compared to lockdowns and other
restrictions particularly across H1 2021.
Online sports betting revenue of
£363.1m reflected a decline of 24%,
and online gaming revenue of £968.0m
reflected a decline of 11%. Performance
across both products was principally
driven by the same factors as above,
with the decline larger in sports due to
country mix, with more of the sports
business being in the UK. Alongside this
FY 2022 had a tough comparator from
a sporting fixture perspective, with
2021 containing additional fixtures as
major football leagues caught up post
COVID-19 disruption.
Cost of sales
Cost of sales mainly comprise gaming
taxes and levies, commissions and
royalties payable to third parties,
chargebacks, payment service
provider ("PSP") commissions and
costs related to operational risk
management and customer due
diligence services. Cost of sales
has increased on a statutory basis
to £440.5m from £253.2m due to
the acquisition of William Hill. On
50
888 Holdings PLC Annual Report & Accounts 2022
a pro forma basis, cost of sales
has decreased by 7.3% to £599.2m
reflecting the reduction in revenue, with
cost of sales representing 32.4% of
revenues (FY 2021: 33.9%).
Gross profit
On a statutory basis, gross profit has
increased to £798.3m from £459.1m
with the consolidation of the results
of William Hill for the second half
of FY 2022.
On a pro forma basis, gross profit has
decreased by 0.8% from £1,260.6m to
£1,250.9m but with an increase in the
gross margin from 66.1% to 67.6%.
Marketing expenses
Marketing is a significant investment
for our Group to drive growth through
investing in our leading brands, as
well as customer acquisition and
retention activities. On a statutory
basis marketing increased to £257.8m
compared to £222.6m in FY 2021 with
a marketing ratio of 20.8%, which
decreased from 31.3%, driven by the
inclusion of the retail business, which
has significantly lower marketing ratio.
On a pro forma basis, marketing
decreased by 23.4% from £433.0m
to £331.8m. Certain marketing is
demand driven and flexible so part
of the reduction is as a result of the
reduced revenue noted above, with
further marketing savings being
achieved following the acquisition with
a refined brand marketing strategy to
focus marketing on specific brands
in specific countries. The marketing
to revenue ratio has decreased
from 22.7% in FY 2021 to 17.9% in FY
2022. This partly reflects the mix of
revenue with more generated from the
Retail business where the marketing
investment is lower. Excluding the
Retail segment, the marketing ratio
decreased from 27.1% to 24.4%
reflecting the refined brand marketing
strategy.
Operating expenses
Operating expenses mainly comprise
employment costs, property costs,
technology services and maintenance
and legal and professional fees. On
a statutory level, operating expenses
increased to £448.5m from £160.2m
in FY 2021. This increase is due to the
acquisition of William Hill with the
Retail business having a much higher
proportion of operating expenses to
revenue given the employment and
property costs required to operate.
STRATEGIC REPORT On a pro forma basis, operating
expenses excluding depreciation
and amortisation have increased
by 9.0% from £558.5m in FY 2021 to
£608.7m in FY 2022. The main reason
for this increase is due to inflationary
pressures, in particular the impact
of utility cost inflation in the Retail
business.
Adjusted EBITDA
Reported EBITDA increased by 28.9%
from £89.6m to £115.5m. On an adjusted
basis, the increase was 82.0% to
£217.9m from £119.7m, with an increased
margin of 17.6% compared to 16.8%
in FY 2021.
On a pro forma basis, adjusted EBITDA
increased by 15.1% to £310.6m in FY
2022 compared to £269.9m in FY 2021.
The adjusted EBITDA margin increased
from 14.2% in FY 2021 to 16.8% in FY
2022 driven by the focus on cost
efficiency alongside the early benefits
of synergy delivery, particularly
marketing savings from the optimised
brand marketing strategy across
different markets.
Income statement by segment
The below table shows the Group’s performance by segment:
Revenue
Adjusted EBITDA
As reported
Retail
UK&I Online
Total UK
International
Other
Corporate
2022
£'m
255.5
455.5
711.0
508.3
19.5
—
Total
1,238.8
Retail
UK&I Online
Total UK
International
Other
Corporate
Total
2022
£'m
519.0
717.4
1,236.3
613.7
—
—
1,850.1
% of
reported
Revenue
(2022)
20.6%
36.8%
57.4%
41.0%
1.6%
—
% of
reported
Revenue
(2022)
28.1%
38.8%
66.8%
33.2%
Change from
previous
year
2021
£'m
—
255.2
255.2
410.4
46.7
—
712.3
78.5%
178.6%
23.9%
(58.2%)
—
Change from
previous
year
2021
£'m
54.1%
(20.2)%
0.1%
(8.6)%
336.8
898.9
1,235.6
671.4
—
—
1,907.0
(3.0)%
100.0%
2022
£'m
41.2
61.6
102.8
118.3
1.7
(4.9)
217.9
Change from
previous
year
700.0%
>1,000%
3.7%
(76.7%)
(47.9%)
% of
Adjusted
EBITDA
(2022)
18.9%
28.3%
47.2%
54.3%
0.8%
(2.2)%
82.0%
100.0%
2021
£'m
—
7.7
7.7
114.1
7.3
(9.4)
119.7
2022
£'m
90.7
111.9
202.6
136.0
—
(28.1)
310.6
Change from
previous
year
>1,000%
(32.2)%
22.5%
(7.8)%
% of
Adjusted
EBITDA
(2022)
29.2%
36.0%
65.2%
43.8%
(34.7)%
15.1%
(9.0)%
100.0%
2021
£'m
0.3
165.2
165.4
147.5
—
(43.0)
269.9
73.9%
100.0%
Pro forma
Revenue
Adjusted EBITDA
For the commentary on divisional performance below, the focus is given to the pro forma financials in order to give a clearer
comparative of performance compared to the previous period. Furthermore, it reflects adjusted results, since that is the basis
on which these are reported internally and in our segmental analysis. An explanation of our adjusted results, including a
reconciliation to the statutory results, is provided in note 3 to the financial statements.
888 Holdings PLC Annual Report & Accounts 2022
51
STRATEGIC REPORT
CFO'S REPORT CONTINUED
UK
UK&I Online
On a statutory basis, revenue
increased by 78.5% to £455.5m and
Adjusted EBITDA increased by £53.9m
compared to the previous period.
On a pro forma basis, revenue declined
by 20.2% to £717.4m mainly due to
the additional player safety measures
implemented across 888 and William Hill
brands across the previous two years.
In addition to this there was a positive
substitution impact from Retail in the UK&I
Online business in the first months of 2021
during the lockdown in the UK. Pro forma
adjusted EBITDA has declined by £53.3m
or 32.2% with the Adjusted EBITDA margin
declining as a result of a high fixed cost
base, which is being addressed through
the integration programme.
Retail
On a statutory basis, Retail generated
revenue of £255.5m and Adjusted
EBITDA of £41.2m as the Retail business
continued to deliver robust financial
performance and strong cash
generation following its re-opening.
On a pro forma basis, revenue
increased by 54.1% to £519.0m as 2022
was a return to a full year of trading
Exceptional items and Adjustments
with a lockdown until April 2021 in the
prior year. Pro forma adjusted EBITDA
increased by £90.4m to £90.7m in FY
2022, again reflecting the increased
profitability from a full year of an open
trading Retail estate. At the same time
the Retail estate had a particularly
large impact from the inflationary
pressures and specifically rising utilities
costs in FY 2022.
There were 1,386 shops open at the end
of FY 2022 compared to 1,407 at the
end of FY 2021. The small reduction to
the already well optimised estate largely
reflects the impact of inflationary cost
increases making certain shops no
longer commercially viable.
INTERNATIONAL
On a statutory basis, the International
business revenue increased by 23.9%
to £508.3m and Adjusted EBITDA
increased by £4.2m compared to the
previous period.
On a pro forma basis revenue declined
by 8.6% to £613.7m, in part due to the
closure of the Netherlands market in
September 2021, as well as additional
regulatory impacts and other smaller
market closures. The two core markets
within the International business, Italy
and Spain, were both flat compared
to 2021. Pro forma adjusted EBITDA
declined by £11.5m to £136.0m with
the Adjusted EBITDA margin declining
as a result of a high fixed cost base,
which is being addressed through the
integration programme.
Within the International business, the
US business revenue was £20.4m, an
increase of 27% compared to the
previous period. Adjusted EBITDA was a
loss of £12.3m in the period compared
to a loss of £12.1m in the previous
period with the continued investment in
marketing and other costs to grow the
business.
CORPORATE COSTS
On a statutory basis, corporate costs
were £4.9m in FY 2022 compared to
£9.4m expense in FY 2021. This is due
to the timing of the release of staff
incentive accruals across the Group
including those accrued prior to
acquisition within William Hill.
On a pro forma basis, there was
a reduction in corporate costs of
£14.9m to £28.1m due to the removal
of staff incentive accruals for FY 2022
compared to FY 2021 and certain
synergies being generated through the
integration programme.
Exceptional items
Retroactive duties and associated charges
Acquisition related costs
Transformation costs
Disposal of 888 Bingo
Impairment of US Goodwill and other assets
Revaluation of deferred consideration
Total exceptional items before interest and tax
Bond early redemption fees
Gain on settlement of bonds
Total exceptional items before tax
Tax on exceptional items
Total exceptional items
Adjustments
Amortisation of finance fees
Amortisation of acquired intangibles
Foreign exchange
Share benefit charge
Total adjustments before tax
Tax on adjustments
Total adjustments
Total exceptional items and adjustments
52
888 Holdings PLC Annual Report & Accounts 2022
2022
£'m
(3.9)
24.5
14.4
11.7
55.7
(9.2)
93.2
14.1
(7.1)
100.2
2.8
103.0
7.4
56.7
26.7
5.2
96.0
(14.2)
81.8
184.8
2021
£'m
4.2
10.9
2.2
—
—
—
17.3
—
—
17.3
2.5
19.8
—
—
6.7
6.1
12.8
—
12.8
32.6
STRATEGIC REPORT
Total exceptional items in the year
were £103.0m in FY 2022 compared to
£19.8m in FY 2021.
Exceptional items are defined as those
items which are considered to be one-
off or material in nature to be brought
to attention to better understand the
Group’s financial performance. Refer to
note 3 to the financial statements for
further detail.
There were £24.5m of costs incurred to
complete the acquisition of the William
Hill business, predominantly comprising
adviser fees.
Furthermore, £14.4m of costs were
incurred relating to the on-going
transformation and integration of the
William Hill business. This includes
£12.5m of cash costs incurred to
achieve synergies, which is still
expected to total £100m across the
integration. There were also £1.9m
of additional transformation costs
relating to a restructure of the Retail
operating model to drive further
efficiencies, albeit these efficiencies
are not classified as synergies.
The transformation and integration
programme is expected to take three
years until 2025 and is currently
expected to generate synergies of
approximately £150m, an increase of
£50m over our initial target.
During the year, as part of the
annual impairment review, the Group
has impaired the goodwill of its US
business. As such, the goodwill of the
US business has been impaired in full,
totalling £25.7m. In addition to this
there were non-cash impairment costs
of £30.0m relating predominantly
to the write off of software acquired
with the William Hill business that is
not planned to be used by the Group
following the decision to use the
existing 888 platform as the Group’s
platform going forward.
We completed the sale of the Bingo
business to Saphalata Holdings
Ltd., a member of the Broadway
Gaming Group, for a total cash
consideration of £37.4m with the loss
on disposal of £11.7m recognised as an
exceptional item.
As a part of the transaction agreement
with Caesars for the purchase of
William Hill, an amount of up to £100m
consideration was deferred subject
to the enlarged group hitting specific
EBITDA metrics. This was fair valued
on acquisition at £9.6m and revalued
at the year-end date to £0.4m,
leading to a release in this contingent
consideration of £9.2m.
The final operating exceptional item
was a credit of £3.9m relating to
the reversal of previous regulatory
provisions after a settlement of a
specific liability relating to Spain;
with the credit recognised as
an exceptional item to ensure a
consistent accounting treatment to the
recognition of the original provision.
There were also £7.0m of non-
operating exceptional items within
finance costs. This reflects £14.1m
of costs associated with the early
settlement of the William Hill Senior
Unsecured Notes representing
early redemption fees and the the
accelerated write off of unamortised
finance fees, offset by a credit of £7.1m
representing the reduction in value on
settlement of the William Hill Senior
Unsecured Notes compared to the fair
value recognised on acquisition.
Adjustments were those items that
are recurring items that are excluded
from internal measures of underlying
performance in order to provide clear
visibility of the underlying performance
across the Group. They are items
that are therefore excluded from
Adjusted EBITDA, Adjusted PAT and
Adjusted EPS.
The amortisation of the specific
intangibles assets recognised on
acquisitions has been presented as an
adjusted item, totalling £56.7m relating
to the William Hill acquisition. This
amortisation is a recurring item that
will be recognised over its useful life.
The other items that have been
presented as adjusted items are
foreign exchange losses of £26.7m
(£6.7m in FY 2021), share based
payment charges of £5.2m (£6.1m in FY
2021) and amortisation of finance fees
of £7.4m (£nil in FY 2021).
FINANCE INCOME AND
EXPENSES
Net finance expenses of £110.9m
(2021: £4.2m) related predominantly
on the interest expense from the
debt on acquisition of William Hill
(£75.0m). There were also exceptional
net finance charges of £7.0m related
to the bond early redemption fee
and gain on settlement of bonds as
explained within Exceptional items
and Adjustments section above.
The finance expense resulting from
operating leases was £3.0m (2021:
£0.9m) with the increase due to the
acquired Retail business within William
Hill and the finance expense from
hedging activities was £3.3m.
PROFIT BEFORE TAX
The net loss before tax for 2022 was
£115.7m (2021: net profit before tax of
£59.0m). On an adjusted basis, profits
decreased by 10% to £80.5m (2021:
net profit before tax of £89.1m) with
the increased financing costs from
the debt on acquisition of William Hill
offsetting the increased earnings from
the enlarged Group.
TAXATION
On a statutory basis, the Group
recognised a tax charge of £4.9m on
a loss before tax of £115.7m, giving
an effective tax rate of 4.2% (2021:
tax charge of £9.0m and an effective
tax rate of 15%). The tax charge and
therefore the tax rate is higher than the
expected tax credit arising on the loss
of 19% primarily due to the lack of tax
relief on exceptional costs associated
with the acquisition of William Hill and
which is offset by prior year credits
in respect of additional tax relief
obtained on interest costs.
On an adjusted basis, the Group
recognised a tax charge of £16.3m on
a profit before tax of £80.5m, giving
an effective tax rate of 20.2%. (2021:
tax charge of £6.5m and an effective
tax rate of 7%). The tax charge and
therefore the tax rate is broadly in line
with the expected tax rate of 19%.
The Group’s adjusted effective tax rate
for 2023 is now expected to be c8%.
888 Holdings PLC Annual Report & Accounts 2022
53
STRATEGIC REPORT CFO'S REPORT CONTINUED
NET (LOSS)/PROFIT AND
ADJUSTED NET PROFIT
The net loss for 2022 was £120.6m
(2021: net profit of £50.0m). On an
adjusted basis, profits decreased to
£64.2m from £82.6m in 2021.
EARNINGS PER SHARE
Basic earnings per share decreased
to a loss of 28.3p (2021: profit of 13.4p)
as a result of the reduction in net
profits in 2022 predominantly due to
the exceptional items surrounding
transaction and transformation
related costs.
On an adjusted basis, basic earnings
per share decreased by 32% to 15.1p
(2021: 22.2p). Further information on
the reconciliation of earnings per share
is given in note 10 to 2022 financial
statements.
DIVIDEND
The Board of Directors is not
recommending a dividend to be
paid in respect of the year ended
31 December 2022 (2021: 3.2p per
share), in light of the Board’s decision
to suspend payments of dividends until
leverage is at or below 3x, as previously
announced following the acquisition.
ACCOUNTING FOR THE
ACQUISITION OF THE WILLIAM
HILL BUSINESS
As part of the accounting for the
£1.95bn acquisition of the William Hill
business, it is necessary to allocate the
acquisition value between acquired
assets and liabilities. As such the
Group have valued the acquired assets
and liabilities of William Hill to fair value
as at the 1 July 2022 acquisition date.
This has led to the recognition
of certain separately identifiable
intangible assets on the consolidated
statement of financial position of the
Group in addition to other fair value
adjustments on other recognised
assets and liabilities.
The separately identifiable intangible
assets include the value of the William
Hill brand of £574.4m, the value of
customer relationships of £595.1m
and £8.5m in respect of licences.
These assets are amortised, with
the amortisation recognised as an
Adjusting item within Exceptional
items and Adjustments to aid further
understanding of the underlying
financial performance of the Group.
The remaining value of the transaction
after recognising the fair value of all
identifiable assets and liabilities has
been allocated to goodwill, with the
value of £785.6m recognised. This
goodwill value represents a number of
factors such as the future growth of
the William Hill business, potential to
achieve buyer specific synergies and
the value of the workforce.
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
The consolidated statement of
financial position consolidated the
acquired William Hill business from
1 July 2022 and as such there are
significant differences in the 31
December 2022 position compared to
the 31 December 2021. Note 16 to the
financial statements shows the assets
and liabilities acquired which explain a
majority of the differences.
Non-current assets increased by
£2,297.2m to £2,457.1m compared to
£159.9m at FY 2021, predominantly due
to assets recognised on the acquisition
of the William Hill business of £2,614.8m
including goodwill (£785.6m); brand
(£574.4m); customer relationships
(£595.1m); licences (£8.5m); software
and technology (£226.2m); property,
plant and equipment (£109.5m); right
of use lease assets (£72.3m) and
investments and associates (£40.0m).
Within the period there were material
impairments relating to the US B2C
business of £25.7m, due to changing
market and economic conditions
leading to a revised strategy in the US
business and an increased discount
rate driving an impairment. In addition
to this there were non-cash impairment
costs of £30.0m relating predominantly
to the write off of software acquired
with the William Hill business that is
not planned to be used by the Group
following the decision to use the
existing 888 platform as the Group’s
platform going forward. Within this
£28.1m specifically related to the
impairment of the Unity platform that
had been under development within
William Hill.
Current assets are £494.4m, an
increase of £254.2m compared to
£240.2m at FY 2021. Within this cash
and cash equivalents has increased
to £317.6m from £189.4m, although this
includes £141.3m of client funds held
compared to £60.1m at FY 2021 due
to the additional client liabilities in the
William Hill business. Excluding client
funds, cash and cash equivalents have
increased by £47.0m from £129.3m in
FY 2021 to £176.3m in FY 2022.
Total current liabilities have increased
by £451.5m from £251.9m at FY 2021 to
£703.4m at FY 2022. This includes the
increase of client funds held and the
trade and other payables acquired on
acquisition of the William Hill business
of £382.3m. Provisions have increased
to £111.5m from £19.0m. This includes
the current portion of the provision for
customer claims, as well as a provision
of £19.2m for the regulatory settlement
agreed between William Hill and the
GB Gambling Commission. There are
then additional provisions of £61.7m
for gaming tax in Austria; £2.0m of
provisions relating to shop closure
costs and £3.7m of restructuring costs.
Non-current liabilities are £2,088.9m, an
increase of £2,065.2m to the balance
of £23.7m in FY 2021. This increase
is predominantly due to funding the
acquisition of William Hill of £1,697.5m.
In addition, the deferred tax liability
has increased by £218.5m mainly
driven from the acquisition accounting
and the lease liabilities have increased
by £46.9m with the acquisition of
the Retail estate in William Hill. This
includes the non-current portion of
the provision for customer claims
of £86.2m, predominantly in Austria
and predominantly recognised on
acquisition of William Hill as part
of acquisition accounting where
previously held contingent liabilities
were recognised on the statement
of financial position in line with the
business combinations accounting
standards.
Net assets of £159.2m is an increase
of £34.7m compared to £124.5m at
FY 2021. The equity includes the net
proceeds of £158.5m from the share
issue in April 2022 to partly fund the
acquisition of the William Hill business.
54
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Cash flows
Cash generated from operating activities before working capital
Working capital movements
Net cash (used in)/generated from operating activities
Acquisitions
Disposals
Capital expenditure
Net movement in borrowings incl loan transaction fees
Proceeds from equity placing
Interest paid
Dividends paid
Other movements in cash incl FX
Net cash inflow
Cash balance at 31 December
Gross Debt
Net Debt
2022
£'m
139.6
(169.8)
(30.2)
(386.8)
33.0
(76.8)
527.6
158.5
(75.6)
—
(21.5)
128.2
317.6
(1,815.0)
(1,727.7)
2021
£'m
98.0
(1.4)
96.6
—
—
(23.0)
—
—
(0.5)
(43.8)
(2.9)
26.4
189.4
0.0
106.4
Overall the Group had a cash inflow
of £128.2m in the year, compared to
an inflow of £26.4m in FY 2021. This
resulted in a cash balance of £317.6m
as at 31 December 2022 (£189.4m
at 31 December 2021) although this
included client funds and other
restricted cash of £141.3m such that
unrestricted cash available to the
Group was £176.3m compared to
£129.3m in FY 2021.
The cash inflow in the year
predominantly reflected the financing
for and acquisition of the William Hill
business. The inflows from the net
borrowings after payment of loan
transaction fees and the refinancing
of the debt within the William Hill
business was £527.6m coupled with
the proceeds from the equity issue
in April 2022 of £163m, before fees
with net proceeds of £158.5m. The
acquisition of William Hill was for a
cash equity value of £386.8m, net of
cash acquired, which nets to an inflow
of £299.3m. Cash interest payments on
the borrowings were £75.6m.
The disposal of the Bingo business to
Saphalata Holdings Ltd., a member
of the Broadway Gaming Group,
generated cash of £37.4m with
£0.5m generated from the sale of
property, plant and equipment in the
Retail business.
Cash flow from operations was a
£30.2m outflow compared to an inflow
of £96.6m in FY 2021. This reduction
was partly due to significant working
capital outflows in the period coming
from the acquired balance sheet from
William Hill and the exceptional items
in the year causing a statutory loss
before tax as well as a reduction of
staff incentive accruals and reduced
marketing spend driven from the brand
marketing synergies.
DEBT
Borrowings
Loan transaction fees
Gross Borrowings
Lease liability
Cash (excluding customer balances)
Net Debt
EBITDA
Leverage
2022
(1,702.3)
(112.7)
(1,815.0)
(89.0)
176.3
(1,727.7)
310.6
5.6x
The gross borrowings balance as at
31 December 2022 was £1,815.0m. The
earliest maturity of this debt is in 2026,
which is £11m, with the vast majority
of the debt maturing across 2027 and
2028. In addition to this, the Group has
access to a £150m Revolving Credit
Facility maturing in January 2028,
which is currently undrawn.
The debt is across GBP sterling; Euro
and US Dollar with 50% of the debt
in Euro; 43% in GBP and 7% in USD.
The Group have undertaken hedging
activities such that 70% of the interest
costs is at fixed costs and 30%
at floating rates with the hedging
relationships in place for three years.
The net debt balance at 31 December
2022 was £1,727.7m with a net debt to
EBITDA ratio of 5.6x. The Group has the
target to bring this down to less than
3.5x by FY 2025.
Yariv Dafna
Chief Financial Officer
14 April 2023
888 Holdings PLC Annual Report & Accounts 2022
55
STRATEGIC REPORT
RISK MANAGEMENT
Improving
sustainability
OUR TOP PRIORITY IS TO ENSURE THE LONG-TERM STABILITY AND SUCCESS OF
THE BUSINESS, AND EFFECTIVE RISK MANAGEMENT PLAYS A CRITICAL ROLE IN
ACHIEVING THIS GOAL
The effective
understanding,
measurement,
acceptance, and
mitigation of risk is
fundamental to the
Group achieving its
strategic priorities.
Harinder Gill
Chief Risk Officer
INTRODUCTION
Following the acquisition of William
Hill, the Board took an important
strategic decision to create the new
role of Chief Risk Officer. This helps
put the culture of risk management
and compliance truly at the heart of
its activities and drives continuous
improvement in risk management best
practice across the business.
Our top priority is to ensure the
long-term stability and success
of the business, and effective risk
management plays a critical role in
achieving this goal. We continue to
operate in a dynamic and challenging
environment with macroeconomic,
political and social uncertainties,
increasingly demanding regulatory
obligations and, a competitive
landscape needing innovation within
product and content leadership.
While the business continues to take its
regulatory and compliance obligations
very seriously, aiming for minimal risk
exposure, we are prepared to take
risks in other areas, where we can
create value through selective risk
taking in accordance with our risk
appetite. A condition is that we have
the necessary tools and capability to
effectively manage the exposure.
A critical part of my role will be
to ensure we continue to invest in
resources to build a sustainable
business and adapt to the changing
regulatory and competitive landscape,
while ensuring we continuously strive to
improve risk management processes
and policies, fostering a culture of
transparency and accountability.
During 2022 the risk profile of the
Group was impacted by both the
acquisition of William Hill and the
sale of the B2B and B2C bingo
operations. The sale of the bingo
business reduced the Group’s
dependency on B2B relationships,
and thereby its partnership risk,
as well as reducing regulatory and
technological complexity.
The acquisition of William Hill gave rise
to certain risks to which the Group had
not previously been exposed, such as
risks around the acquisition financing,
integration, and operating an estate
of LBOs in the UK. Alongside this there
were areas of risk to which the Group’s
exposure materially increased, such as
regulatory risks and increased sports
betting exposure.
The Group issued a prospectus dated
29 April 2022, which is available on
our website, and which sets out in
detail the assessment of the risks to
which the Group is exposed following
completion of the acquisition.
Early in 2023 we saw the benefits of our
enhanced compliance culture and
processes when it was self-identified
by the compliance team that certain
best practices had not been followed
regarding KYC and AML for certain
888 VIP customers in the Middle East.
The ensuing actions we have taken
reflect the proper functioning of the
Group’s enhanced compliance culture
and serve as a good example of
what a proactive approach to risk
management looks like. The process
of reopening accounts is based on
an assessment of customer accounts,
policies, procedures and controls
against the company’s developed
compliance standards and alignment
with industry best practice, rather than
limiting ourselves just to compliance
with the legal and regulatory
requirements applicable in Gibraltar.
56
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT KEY SUCCESSES IN 2022
• Addressing player protection and safer gambling:
A culture of player safety and sustainability is being
established while maintaining competitive advantage
and achieving operational excellence.
• Strengthened AML framework: Enhancements have
been made to strengthen the AML risk assessment
framework as the business seeks to develop a
unified approach across the merged entities and the
jurisdictions within which it operates.
• Management governance and oversight: The
Group has improved governance oversight with the
introduction of an Executive Risk & Sustainability
Committee, which is chaired by the Chief Risk Officer
and enhances second-line of defence oversight.
KEY PRIORITIES FOR 2023
• Continuing compliance with regulations and industry
standards: The growing complexity of the Group’s
regulatory footprint means a robust understanding
of the legal and regulatory position in key locations
worldwide is crucial to mitigating this risk, combined
with strong relationships with regulators. The Group
continues to engage routinely with independent legal
advisers and specialist third parties to review our
internal risk and control framework and related operations.
• Strengthening the Group’s risk management
processes: The Group continues to focus on the
development and embedding of an enterprise risk
management framework, including investing in a
Governance, Risk and Compliance ('GRC') system and
a broader and more extensive compliance monitoring,
testing and evaluation programme.
• Managing and mitigating emerging risks: As the
business and economic environment continues to
evolve, the business must stay attuned to new and
emerging risks that may impact the organisation.
This includes risks related to the regulatory landscape,
technology and cyber security, geopolitical
instability, and more.
• Solidifying a strong risk culture: Ensuring risk
management is understood and prioritised by every
employee as the business continues to promote
accountability and ownership and encourage risk
reporting and transparency.
In the following risk report, we detail our approach to risk management and seek to explain the principal risks and uncertainties
in our business and how these risks are managed, with the aim of ensuring the Group maintains an appropriate risk profile.
888 Holdings PLC Annual Report & Accounts 2022
57
STRATEGIC REPORT RISK MANAGEMENT CONTINUED
RISK MANAGEMENT STRATEGY
The effective understanding,
measurement, acceptance and
mitigation of risk is fundamental to
the Group achieving its strategic
priorities. The Group’s approach to its
risk management strategy is strongly
focused on improving its ability to
identify, evaluate, monitor and manage
its principal risks as well as responding
to the challenges presented by new
and emerging risks.
The risk management strategy is
underpinned by a robust governance
structure and a culture of transparency
and accountability. It involves:
• Having a comprehensive risk
management plan in place to
identify and assess potential risks,
including emerging risks, as well
as the implementation of controls
to mitigate, manage or avoid
adverse impacts;
• The continuous monitoring,
assessment, and review of risks
to ensure they are kept at an
acceptable level, including financial
risks to ensure the company can
withstand market fluctuations
and unexpected events, such as
economic downturns;
• The implementation of strict
compliance and regulatory
measures to ensure the company
is compliant with relevant laws
and regulations;
• Having a crisis management plan
in place to respond to unexpected
events, such as natural disasters
or security breaches, to minimise
damage and quickly return to
normal operations;
• Effective communication and
training provided to all employees
to ensure they understand their
role in identifying and managing
risks; and
• Staying abreast of industry trends,
competitor activities and market
conditions to make informed
decisions and adapt to changes
within the operating environment.
The Group is committed to maintaining
a culture of risk awareness and
continuous improvement in its risk
management practices.
RISK APPETITE
The organisation is committed to
achieving its strategic objectives,
maintaining a strong focus on risk
management. The business recognises
that taking on certain levels of risk is
necessary to achieve its goals, but it
also understands the importance of
managing these risks effectively.
The Group’s risk appetite is to take
on calculated and manageable risks
that are aligned with the strategic
objectives and that the business
has the capabilities to mitigate. The
company will not take on risks that
could have a material impact on the
Group’s ability to achieve its objectives
or that could threaten its viability.
The risk appetite encapsulates both
financial, such as credit, market and
operational risk, and non-financial
risks such as regulatory, reputational,
and environmental and social risks. It
is formally articulated through the Risk
Appetite Statement (RAS) and consists
of both qualitative statements and
quantitative metrics.
The following principles guide
the Group’s overarching appetite
for risk and determine how these
are managed:
STRATEGIC
• The Group’s strategic goal is to
grow earnings per share and
deleverage, underpinned by the
strategic priorities of integrating
William Hill and a disciplined market
focus. Whilst the business has a low
appetite to risks that jeopardise its
brand and reputation, where it has
discretion, the business is willing to
assume more risk to remain agile
in meeting the challenges of an
evolving business, and a changing
external and regulatory landscape.
• The company is dedicated to
building a sustainable business
for the future and the Group has
a low tolerance to risks that could
disrupt the critical foundations
of its strategy encompassing its
people, players, planet and the core
governance that underpins these.
FINANCIAL POSITION
• The Group aims to deliver on its
growth plans by focusing on a
small number of the most attractive
global markets and by driving
higher margins through synergies
and optimisation of its business and
operating model.
• The business aims to maintain
a strong capital, liquidity and
funding position by ruthless focus
on capital efficiency, with our
capital allocation plans centred
on prioritising debt reduction
and deleveraging.
OPERATIONAL ACTIVITIES
• The business aims for a more
cost-efficient operating model by
generating returns in line with its risk
appetite and focusing on delivering
synergies through evaluating cost
of sales, marketing and other
operating costs.
• The Group expects its people to
uphold the highest ethical and
legal standards, encouraging
employees to act with integrity
and to act in accordance with the
law. The Group therefore has zero
tolerance for deliberate attempts to
defraud, misappropriate property
or circumvent regulations, law or
company policies or procedures.
• As an online B2C and B2B business,
the availability and integrity of 888
Holdings IT infrastructure is crucial
to the supply of its offerings and
compliance with its regulatory
obligations and to the maintenance
of customer loyalty. The business
therefore has a low appetite for
technology failure or disruption
due to outage, degradation and/
or inaccurate data being consumed
by the Company, which could
cause significant impact to core
business activities.
• Understanding customer needs
and building product, marketing,
and offers to create the best
experiences possible is critical to
business growth plans. A key part
of the Group’s relentless focus on
customer experience is delivering
quick and effective customer
service and creating the safest
possible gambling experience.
58
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT EMERGING RISKS
Emerging risks are new and developing
risks that are often difficult to quantify
but may materially affect the
operations of the business. These are
usually uncertain risks external to the
business or which relate to changes
in the markets in which the Company
operates. The Group takes a proactive
approach to managing them, with the
objective of mitigating their impact on
the delivery of its strategy. Examples of
emerging risks include global economic
changes, the ongoing war in Ukraine,
technological advancement, and
climate change.
REGULATORY COMPLIANCE
• The Group’s markets operate in an
increasingly complex regulatory
environment. The business continues
to invest in its Risk and Compliance
function to ensure compliance with
applicable laws and regulations.
• The business takes its AML and
CTF responsibilities very seriously
and has a rigorous risk assessment
framework with direct oversight by
the Board. It is important to us to
unify the risk assessment processes
across the entities and jurisdictions
that we operate in.
• Player safety is at the heart of
what the business does, and we
strive to embed this in products
and customer experience, using
data and analytical insights to drive
continuous improvement.
888 Holdings PLC Annual Report & Accounts 2022
59
STRATEGIC REPORT RISK MANAGEMENT CONTINUED
GOVERNANCE
The risk management governance
framework to oversee and manage all
business activities includes specific
roles, responsibilities, and decision-
making processes. It ensures that the
company’s risk management strategy
is being implemented effectively and
efficiently and that the risk strategy is
aligned with overall company goals and
objectives. Our three lines of defence
model consists of three distinct lines
of responsibility and provides a clear
and transparent risk management and
reporting framework to support the
board in its oversight responsibilities.
An overview of the Group's risk
management governance structure
along with key responsibilities is
outlined right.
BOARD OF DIRECTORS
BOARD AUDIT COMMITTEE
BOARD ESG COMMITTEE
EXECUTIVE RISK AND SUSTAINABILITY COMMITTEE
DIVISIONAL COMMITTEES AND FORUMS
BOARD OF DIRECTORS
The Board of Directors is responsible for
approving and aligning the company’s
strategic objectives with its risk appetite
and overseeing the effectiveness of
the risk management framework. This
includes reviewing and approving
the Company’s risk management
and internal controls system, policies
and practices as well as reviewing
management reports on the company’s
risk profile and mitigating factors.
BOARD AUDIT COMMITTEE
The Board Audit Committee has overall
responsibility for ensuring that the Group
maintains a sound system of internal
control. It develops and maintains an
approach to assess the adequacy of
risk management that incorporates risk
appetite and tolerance, the framework
within which risk is managed and the
responsibility and procedures pertaining
to the application of the policy.
BOARD ESG COMMITTEE
The Board ESG Committee will provide
Board-level oversight of 888’s ESG
strategy, targets and progress against
key performance indicators.
EXECUTIVE RISK AND
SUSTAINABILITY COMMITTEE
The Executive Risk Committee was
introduced in 2022 to oversee the
implementation and effectiveness of
the risk management framework, and
expanded its role to include additional
Sustainability duties. The Committee
provides appropriate executive
management oversight to support
the Board in managing principal and
emerging risks to its long-term strategic
objectives, including its impact on
environment, social and governance
issues as part of its sustainability
strategy. The Committee will monitor the
Company performance against Board
risk appetite, review the effectiveness
of the Company’s risk management
framework and ensure risk management
decisions are aligned to long term goals.
DIVISIONAL COMMITTEES
AND FORUMS
Committees and Forums are either
already in / being put in place with
delegated authority from the Executive
Risk and Sustainability Committee
to support the Group Chief Risk
Officer in exercising specific risk
management responsibilities. Dedicated
Committees include, a Financial Crime
Committee, Compliance Committees,
Data Governance forum and other
forums related to delivering specific
change initiatives following internal or
external reviews.
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888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties that are considered to have a potentially material impact on the Group’s future
performance, sustainability and strategic objectives are set out on the following pages, along with more detailed
commentary and a summary on how the Group mitigates these risks. This list is not exhaustive but encompasses
management’s assessment of those risks which require considered response at this time.
Links to strategic objectives
1.
2.
Integrate Businesses and
realise synergies
3.
Invest in our sources of sustainable
competitive advantage
5. Prioritise debt reduction through
ruthless focus on capital efficiency
Focus on select markets and key
growth opportunities
4. Support sustainable growth through
Players People Planet framework
Risk link
S Strategic risks
F Financial risks O Operational risks R Regulatory & compliance risks
Risk level
Low
Moderate
High
Increase
Decrease
Stable
Trend
Risk Category
Risk
Summary
Links to
strategy
Potential
Impact
Trend from
prior year
Strategic
risks
Reputational
Risk that the business’s brand and image
is adversely impacted by compliance or
operational weaknesses
2, 3, 4
ESG
Risk that the business does not meet
its environmental, sustainability or
governance objectives
Financial
risks
Market Risk
Risk of poor liquidity, debt management
or FX fluctuations that lead to issues with
suppliers and lenders, increased costs and
reduced profitability
Taxation
Risk that taxes and duties increase the
Group’s cost base impacting profitability
4
3, 5
3, 5
Operational
risks
People
Risk that the business fails to retain key
colleagues or recruit sufficient experienced
employees to achieve its targets and objectives
All
Integration
Cyber &
Technology
Partnership
Risk that the integration of William Hill
will not deliver all or substantially all the
expected benefits and against the expected
delivery timelines
Risk of cyber-attacks or technology failures
leading to reduction in availability of services
and/or disruption to core operations and
customer access to our products and services
Risk that contractual obligations are
not met to/from strategic partnerships or
suppliers impacting the long-term viability
of our operations
Regulatory
and
compliance
risks
Regulatory and
Compliance
Developments
Risk of changes in regulations and laws that
can impact the organisation's operations
and financial performance or risk of failure
to meet our compliance obligations
Data Protection
and e-privacy
Risk that personal data processes are
determined to be in contravention of data
protection regulations or risk of unauthorised
access to or loss of customer, employee, or
other stakeholder data
1,2,3,5
N/A
All
All
All
All
888 Holdings PLC Annual Report & Accounts 2022
61
STRATEGIC REPORT RISK MANAGEMENT CONTINUED
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Risk link
S Strategic risks
F Financial risks O Operational risks R Regulatory & compliance risks
Risk level
Low
Moderate
High
Increase
Decrease
Stable
Trend
REPUTATIONAL
ESG
Risk link S
Trend
Risk link S
Trend
Impact
Owner: Chief Strategy Officer
Impact
Owner: Chief Strategy Officer
The Group relies on its world class brands across its key
markets, with brand reputation being a key driver
of customer choice. As such, maintaining a strong
reputation is critical to the ongoing success of the Group.
There continues to be a trend in a number of jurisdictions
where the business operates to strengthen regulations
over safer gambling and customer protection, particularly
in regard to those underage and players who are vulnerable
or at an increased risk of harm. There is also an emphasis
on enhancing controls over anti money laundering and
anti-terrorist funding activities across the industry.
Media reporting on the industry as a whole has seen
continuing and indeed increased criticism of how individual
customers have been treated. This has led to further
calls for additional regulation, particularly around
responsible gambling, affordability and advertising, Any
failure to ensure the business is fully compliant would
result in significant reputational damage, in addition to
any sanctions imposed by its regulators.
How we manage and mitigate the risk
The business has strengthened its governance policies,
procedures and processes in place to ensure it meets its
regulatory obligations and to protect customers when
they use its services.
The Group continually reviews governance and oversight
arrangements and the control environment to prevent
any non-compliance and to identify and manage
any potential areas needing improvement. All staff
are trained to provide a safer gaming experience to
customers and to recognise and take appropriate
actions if they identify potentially harmful or underage
activity across online and retail operations.
The Group offers a range of tools and support to
potentially vulnerable customers and it provides
customers with other information regarding responsible
gaming. The Group works with gambling protection
experts and regulators as well as its own internal teams
to ensure that it adopts, embeds and monitors social
responsibility guidelines and that it undertakes proactive
responsible gaming communications and measures for
all customers.
The business continually strives to protect the hard-won
reputation of all its brands and the corporate affairs
team, marketing, compliance and legal teams all work
closely with operational and front-line management to
ensure that all employees are well trained and engaged
to ensure that the business acts in a responsible way
with all its internal and external stakeholders.
62
888 Holdings PLC Annual Report & Accounts 2022
The Group is committed to the policies, procedures and
controls over the delivery of its Environmental, Social
and Governance (ESG) objectives.
ESG issues include risks such as climate change, player
protection, diversity & inclusion, cybersecurity concerns
and social responsibility not just to employees and
customers but also to the communities where the
business bases its operations and retail outlets. Unlike
most other risk types, certain aspects of ESG risks are
often emerging with unique characteristics. Climate-
related risks for example tend to have little relevant
historical data associated with them and tend to be
non-linear in nature.
Nevertheless, The Group has identified several ESG
objectives and has developed sustainability metrics
and targets to monitor progress against these. The ESG
framework is called ‘Players, People, Planet,’ and the
Group’s progress and targets are detailed on pages 34–45
in this Annual Report. The Group’s strategic focus is on
protecting our players from gambling related harm,
creating an engaging and inclusive environment where
colleagues can thrive and protecting the environment
by achieving net zero carbon emissions by 2030.
How we manage and mitigate the risk
Key ESG policies, procedures and controls to support
the ESG framework are reviewed and updated on an
ongoing basis, with overall oversight provided by an ESG
committee of the Board.
The business maintains oversight of the Group’s
performance against its sustainability strategy (as
defined in the Company’s ESG Framework and as
amended from time to time), including the monitoring
of any material risks which could threaten the financial
and operational performance of the Company and
its strategic objectives, including its commitment to
corporate social responsibility.
The Group has developed sustainability metrics and
measures to monitor progress on performance against
management initiatives and any sustainability related
commitments communicated externally in support of
the Company’s objectives.
Management constantly review global developments
and consider the Company’s position on emerging
sustainability issues as well as reviewing any other
matters relevant to sustainability or ESG issues raised.
STRATEGIC REPORT Risk link
S Strategic risks
F Financial risks O Operational risks R Regulatory & compliance risks
Risk level
Low
Moderate
High
Increase
Decrease
Stable
Trend
MARKET RISK
TAXATION
Risk link S
Trend
Risk link S
Trend
Impact
Owner: Chief Financial Officer
Impact
Owner: Chief Financial Officer
The acquisition of William Hill was financed using a
combination of sources, including significant debt
facilities. The Group has entered into a range of
hedging arrangements such that approximately 70%
of interest costs are fixed for the next three years,
and the currency profile of the debt was more closely
aligned to the currency profile of the Group. However,
the Group is still exposed to risks related to interest
rate changes and currency fluctuations, which could
increase the cost of the Group’s borrowings, and
this could divert resources from investing in growth,
marketing and delivery of new products and projects.
The Group is also exposed to foreign exchange rate
fluctuations and risks in its financial reporting. A
substantial part of the Group’s deposits and revenues
are generated in GBP, EUR and other currencies, whilst
the Group’s operating expenses are largely incurred
in local currencies, primarily GBP, EUR, ILS, and USD,
with incremental operating cost exposure across our
offices in Philippines, Romania, Bulgaria and Poland.
The Group also has debt servicing costs which are
denominated in USD and EUR, partially hedged in GBP.
How we manage and mitigate the risk
Actions have been taken to reduce risks related to
floating interest rates with 70% of the Group’s loans
now hedged against interest changes. Additionally, the
treasury team continues to seek more optimisation of
the debt based on market opportunities. The business
continues to focus on the group’s operational cashflow
forecasting capabilities and management of cash in
the business, report on unrestricted and available cash
balances, and ensure we remain within our banking
covenants. Management also evaluates the current
liquidity buffer and monitor and report on liquidity
headroom on a regular basis, modelling liquidity
downside sensitivities and scenarios.
The Group has mitigated this risk by adopting policies
to hedge certain costs to GBP, including negotiating
with suppliers to change invoicing to GBP. The Group
has entered into FX or cross currency swaps in order
to hedge part of its ongoing USD and EUR exposure
arising due to the acquisition financing and its ongoing
EUR exposure under outstanding notes. Forward deals
are also in place to hedge ILS against revenue in
Canadian Dollars and GBP.
The Group is subject to a range of taxes, duties
and levies in many of the countries where we have
operations or in which our customers are located.
These taxes have changed over time and continue to
be subject to change. In addition to tax rate changes, the
Group’s international footprint brings added complexity
to its tax and duty positions, which requires careful
management to ensure the business fulfils its obligations.
The nature of tax affairs can be complicated with
differing legal interpretation regarding the scope
and scale of taxation, which alongside potential rate
changes mean the levels of taxation to which the
Group is exposed may change in the future, creating
a risk of additional costs. There is also a risk of
audits of the Group’s tax filings and/or challenges
to the filing/non-filing positions the Group is taking
in certain locations. Any adjustments made by tax
authorities to the Group’s filed positions may also lead
to opportunities for governments to apply financial
penalties and interest – this action may impact the
company’s reputation with customers, the capital
markets and key stakeholders such as compliance
and regulatory bodies who issue and monitor its
operating licences.
How we manage and mitigate the risk
The business has dedicated tax experts within the
business, supported by its legal team and external
specialists where appropriate to carefully monitor
proposed changes to its taxation base and rates
and to communicate early any implications to
senior management.
To mitigate the risk of a transfer pricing challenge
by authorities, the Group seeks to ensure that all
transactions between related parties are appropriately
documented and priced on an arm’s length basis,
which where necessary, is supported by third
party evidence.
Management aim to ensure that each legal entity
within the Group is tax resident of a jurisdiction
in accordance with the local applicable tax laws
and that there is no taxable presence in any other
jurisdiction. Regular reviews are undertaken to
assure management that appropriate governance
supports business decision making being taken in the
relevant location.
888 Holdings PLC Annual Report & Accounts 2022
63
STRATEGIC REPORT
RISK MANAGEMENT CONTINUED
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Risk link
S Strategic risks
F Financial risks O Operational risks R Regulatory & compliance risks
Risk level
Low
PEOPLE
Moderate
High
Increase
Decrease
Stable
Trend
INTEGRATION
Risk link S
Trend
Risk link S
Trend
Impact
Owner: Chief People Officer
Impact
Owner: Chief People Officer
Our colleagues across all of our business functions
are vital to ensuring our day to day operations are
undertaken efficiently and effectively and also to the
successful delivery of our strategic business objectives.
Competition for highly qualified personnel is intense
in many of the locations in which the Group is based.
Ensuring our colleagues are well remunerated,
managed and supported is fundamental to the
success of the business.
The integration activities following the acquisition of
William Hill have introduced some uncertainty for our
colleagues across the business, which does carry a
risk with regard to staff retention in particular, but also
recruitment in the short term.
How we manage and mitigate the risk
The Group continually benchmarks remuneration and
benefits packages against similar businesses to ensure
we remain competitive, and which helps to ensure we
retain key employees, and continue to attract new
quality recruits to support the delivery of our strategy.
Management ensure that regular communication is
held with all our colleagues so that they are aware
of any organisational changes resulting from our
integration activities as soon as possible, particularly
for those affected either directly or indirectly.
Our HR functions have a number of strategies in place
to ensure that we do our utmost to protect both the
physical and mental wellbeing of all our colleagues.
The Board has an active Nominations Committee,
which is responsible for succession planning at the
Board and senior management levels and is supported
as necessary by external executive recruitment
agencies. Succession planning is also undertaken for
our other management positions and for key personnel
across all business functions.
64
888 Holdings PLC Annual Report & Accounts 2022
The Group is in the process of integrating the William Hill
business into its corporate structure, with the strategy
to integrate operations and technology and deliver
cost synergies whilst retaining its customer base and
experienced and qualified personnel.
The integration is supported by strong governance,
oversight and dedicated management teams. However,
risks inherently remain to the delivery and timing of all or
substantially all the expected benefits and to the timely
delivery of these benefits. The delivery of these synergies
involves complexity, and associated costs to revising
current systems and organisational structures. As such there
is a risk that these costs could exceed our current cost
estimates, impacting on anticipated integration benefits.
Consolidating multiple technology systems can be
complex and challenging, and may lead to potential
disruptions in our operations and require us to take on
higher levels of risk in the short term.
Integration risks also include the unexpected loss of key
personnel, the erosion of our existing customer base and
issues in integrating financial and operational policies,
processes, procedures and controls. There are challenges
in managing the increased scope, geographic diversity
and complexity of the Group’s operations. Third-party
partners and suppliers may look to terminate or alter
their existing contracts with the Group.
There are also risks associated with the management
of conflicting interests within the Group and failure
to mitigate contingent or assumed liabilities, as well
as diversion of management and resources from the
Group’s core business activity due to personnel being
required to assist in the integration process.
How we manage and mitigate the risk
The integration plans have strong governance
arrangements in place with oversight by specific
integration program managers, particularly with
regard to technology, as well as both the Executive
management team and the Group Board.
Dedicated management teams are in place across all
the business divisions and Group functions supported by
experienced integration programme managers.
Detailed integration plans are in place and are being
delivered across the Group, with regular reporting,
supported by Finance, on the progress of the delivery of
these plans together with associated synergies and costs,
which are tracked and monitored against forecasts. This
allows any variances to expected benefits and costs to
be quickly identified and mitigated.
STRATEGIC REPORT
Risk link
S Strategic risks
F Financial risks O Operational risks R Regulatory & compliance risks
Risk level
Low
Moderate
High
Increase
Decrease
Stable
Trend
CYBER AND TECHNOLOGY
PARTNERSHIP
Risk link S
Trend
Risk link S
Trend
Impact
Owner: Chief Product & Technology Officer
Impact
Owner: Chief Financial Officer
There is a continual risk that our technology systems and
as a result our operations may be impacted by cyber-
attacks such as Distributed Denial of Service (DDoS) by
malicious third parties, the theft or misuse of customer and
business data by internal or external agents or natural or
manmade disasters affecting our offices and operational
locations or those of our key suppliers.
Cyber-attacks leading to data theft could expose the
Group to “ransom” demands or regulatory sanctions
including fines and reputational damage, which could lead
to loss of customer confidence in the business.
The loss of availability of our technology and
communication systems, or those in our key suppliers’
infrastructure could cause significant disruption and cost
to the business, and lead to revenue loss both during the
incident and in the aftermath if customers move their
business to our competitors. Lengthy down-time could also
cause us to breach regulatory obligations.
How we manage and mitigate the risk
Measures to mitigate the risks to our business and
technology infrastructure include the procurement and use
of anti-DDoS services and anti-virus protection from leading
suppliers. Physical and logical network segmentation
is also used to isolate and protect our networks and to
restrict malicious activities. To ensure systems are protected
properly and effectively, external security scans and
assessments (e.g. PCI DSS) are carried out on a regular
basis. To minimise dependence on telecommunication
service providers, the Group invests in network infrastructure
redundancies whilst regularly reviewing its service providers.
888.com has a disaster recovery site to ensure full recovery
in the event of a major incident. In the event of loss of
functionality of 888’s critical services, the business can
be fully recovered through the resources available at the
disaster recovery site. As part of integration plans, the
Group is planning to migrate William Hill and Mr Green
systems to the existing 888 platform which will strengthen
the Business Continuity and Disaster Recovery options
currently available to these parts of the Group.
Systems are in place which are designed to identify and
alert management to problems related to systems, key
business indicators and issues around customer service.
Changes, incidents and service level agreement key
performance indicators are tracked to ensure a consistent
and well managed customer experience. Capacity
headroom and system-wide availability is measured and
monitored so that actions can be proactively taken to
manage any risks to service availability. Network-related
performance issues are addressed by rerouting traffic
using different routes or providers.
To effectively deliver our products and services
to customers the Group has reliance upon certain
critical suppliers of technology, payment services,
marketing, gaming products, sports content and
media. The effective management of critical third party
relationships and performance is key to delivering
our strategic objectives. Any failure of our suppliers to
provide services to us may have a significant adverse
impact our own operations.
The Group also has certain strategic partnerships
where we supply third party operators with business
to business (B2B) gambling services in the United
States which have strategic importance for the longer
term growth in our US business. Any risks to our B2B
partnerships or meeting our contractual obligations
with them have to be managed to ensure the long-term
viability of our operations linked to these relationships,
and to ensure we are able to meet our strategic
growth targets.
How we manage and mitigate the risk
The risk related to B2B operations was significantly
reduced during 2022 following the sales of our B2B and
B2C bingo operations, enabling the Group to increase its
focus on its core betting and gaming operations.
The business ensures that we manage and maintain
all our B2B partnerships commercially, including the
functionality and technology of the B2B platforms
offered, competitive pricing, maintaining an ongoing
relationship with B2B partners, and ensuring that 888
has good relationships with all our strategic partners so
that we have a clear understanding of the requirements
and expectations of our B2B partners and their
stakeholders.
Key suppliers are managed through relationship
management with procurement and operational
managers and through regular reviews of performance
against SLAs, with mitigating action taken where
variances are identified.
888 Holdings PLC Annual Report & Accounts 2022
65
STRATEGIC REPORT
RISK MANAGEMENT CONTINUED
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Risk link
S Strategic risks
F Financial risks O Operational risks R Regulatory & compliance risks
Risk level
Low
Moderate
High
Increase
Decrease
Stable
Trend
REGULATORY AND COMPLIANCE
DATA PROTECTION AND E-PRIVACY
Risk link S
Impact
Trend
Owner: Chief Risk Officer
Risk link S
Impact
Trend
Owner: Chief Risk Officer
The integrity of the Group’s data protection framework
including the holding, processing and protection of
customer’s, third party and sensitive business data
is crucial to the supply of its services to customers
and the Group’s compliance with regulatory and
legal obligations.
The Group is exposed to the risk that data breaches
could result in financial loss, reputational damage,
and potential regulatory enforcement including financial
penalties.
The betting and gaming sector is under increased
scrutiny from data protection regulators globally and
particularly in the UK where the ICO specifically called
out the betting and gaming industry’s use of adtech,
social media and general use of personal data as an
area of focus for the next three-years in the ICO25
strategy document.
How we manage and mitigate the risk
The Company has appointed a Group Data Protection
Officer to manage the Company’s compliance with
associated privacy and data protection regulations.
The Data Protection function is tasked with advising
on and monitoring compliance with key regulations,
recommending and implementing key controls such
as policy and training where required.
The Company recognises that the Data Protection
function is a supporting advisory function and
accountability for determining the nature, scope,
context and purpose of processing in a compliant
manner remains with the Company at large. It does this
with the consultancy support of the Data Protection
function and the policy, process and training resources
that have been implemented. As such, measures have
been deployed to ensure that: Customer personal
data is protected; People are informed about how the
Company uses their data; People’s data rights are
complied with; and, Third parties process personal
data compliantly.
Compliance with regulatory requirements is critical
to maintaining the Group’s licences, protecting our
customers and driving growth. With most of our
revenue generated from licensed jurisdictions and more
countries looking to regulate, the importance of such
licenses to the business is constantly increasing.
Regulatory requirements in key markets are subject to
change, sometimes at short notice, which could benefit
or have an adverse impact on the Group and additional
costs may be incurred in order to comply with any new
laws or regulations. During the year the Group was
subject to additional regulatory requirements across
a number of its markets, including newly regulated
markets in which it launched its products for the first
time such as Ontario in Canada and certain US states.
Regulatory changes during 2022 are explained in more
detail in the market focus section on page 18.
How we manage and mitigate the risk
The Group Compliance, Legal and other operational
teams regularly consult with regulators and external
legal advisers in markets where the business operates
and in particular in jurisdictions where it generates
significant revenue. The Group ensures that frequent
and routine updates on legal and regulatory changes in
these jurisdictions are obtained, and in any others that
may offer growth opportunities.
The Group continually adapts its services and its
compliance activities to ensure that it remains
compliant with the latest legal and regulatory
requirements. As part of the integration of 888 and
William Hill the Group has implemented governance,
organisational and procedural changes to deliver
compliance with obligations and requirements which
apply to the newly combined Group. The business has
already begun to implement best practices across
Compliance teams in order to strengthen management
oversight and improve co-operation across the business
to ensure that regulatory requirements take priority over
commercial interests.
The Group continues to invest in technology and
product developments to automate processes and
controls across compliance related activities. It aims to
improve management information and oversight and
reduce the reliance on manual controls. This will improve
customer protection and mitigate associated risks.
66
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT
VIABILITY STATEMENT
In accordance with provision 31 of the
2018 UK Corporate Governance Code
(the 2018 Code), the Group has assessed
their prospects over a longer period than
the 12 months required by the Going
Concern assessment.
The Directors confirm that they have a
reasonable expectation that the Group
will continue to operate and meet its
liabilities as they fall due, over a three-
year period to December 2025. In making
this statement, the Board has assessed
the Company’s current position, its
prospects and its strategy, as well as
performed a robust assessment of the
principal risks facing the Company both
individually and in aggregate, including
those risks that could potentially threaten
the Group’s business model, future
performance, solvency or liquidity.
The nature of the risks and opportunities
faced by the Group (in particular, the
actual or possible impact of future fiscal
and regulatory changes, regulatory
actions and the pace of technological
change) limits the Directors’ ability to
make reliable longer-term predictions.
Accordingly, the Board has agreed to
maintain a three-year horizon to allow
for a greater degree of certainty in its
assumptions.
The Directors’ assessment includes a
financial review, which is derived from the
Group’s detailed bottom-up budget for
2023 and from the medium-term Group’s
top-down five-year forecast for 2024
and 2025, being the most recent Board-
approved forecasts. It identifies the
expected cash flows, net debt headroom
and funding covenant compliance
throughout the three years under review.
• Delivery and timing of the integrated
Group synergies that results in
costs that exceed our current cost
estimates; and
• The impact of increasing interest
rates on the Group’s floating
rate debt.
Sensitivity analysis on these risks has
been undertaken to stress test the
resilience of the Group. The sensitivity
analysis considers all of the Group’s
principal risks and models the impact of
those considered relevant to the Group's
viability. This modelling tests a number
of the main assumptions underlying the
forecasts, as well as effective mitigation
that could occur to avoid or reduce
the impact or occurrence of the risk.
The mitigations identified by the Group
include but are not limited to drawing
down on the revolving credit facility
(£150m maturing January 2028, which
currently remains undrawn), stopping
or decreasing non-essential capital
investment and variable costs including
marketing spend.
Through this analysis, the Directors
have a reasonable expectation that no
single event or plausible combination of
events would be sufficient to impact its
viability, and even under the most severe
but plausible combination of events
the Group will be able to continue in
operation and meet its liabilities as they
fall due over the three-year period of
assessment.
With respect to the period assessed, the
Directors have considered:
• The Group’s resilience to threats
to its viability in a broad range of
severe but plausible scenarios; and
• Both qualitative and quantitative
analyses, including the combined
impact of the crystallisation of
multiple risks simultaneously, which
the Directors consider sufficiently
robust to make a sound statement.
The principal risks facing the Group,
and how the Group addresses such risks,
are described in this Strategic Report,
and the key risks are summarised in the
section ‘Principal risks and uncertainties’
which can be found on pages 56–66.
The most relevant of these risks to the
viability of the Group were
considered to be:
• Changing regulation in Online,
and specifically: the impact
of a potential introduction of
affordability measures in the UK;
a maximum stake on online slot
machines in the UK; the impact
of potential new regulations in
the European countries in which
we operate; the impact of any
breach of licence conditions or that
underlying contracts in question
are null and void given local
licencing regimes;
• Reputational impact and fines from
regulators if we have a breach in our
compliance procedures that results
in a failure to meet the expectations
of regulators, our shareholders and
broader stakeholders;
• A major cyber-attack and/or data
protection violation, resulting in
the loss of availability of our online
offering, reputational damage
and fines for breach of GDPR
regulations;
888 Holdings PLC Annual Report & Accounts 2022
67
STRATEGIC REPORT TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORT
THIS REPORT PROVIDES 888’S CLIMATE-RELATED DISCLOSURES
IN LINE WITH THE TCFD’S GUIDANCE AND RECOMMENDATIONS.
A SUMMARY OF THE CLIMATE-RELATED FINANCIAL DISCLOSURES
HAS BEEN INTEGRATED INTO THE SUSTAINABILITY SECTION OF
THE ANNUAL REPORT ON PAGE 34.
In addition to this TCFD report,
further detail on the greenhouse gas
emissions can be found in the Zero
Carbon Report 2022 and the ESG
Supplementary Information section
on page 82. Throughout this report
we refer to the Zero Carbon Report
2022, which is available on our
corporate website, and other areas of
this annual report, including the ESG
supplementary information.
The information contained within the
Planet and TCFD sections of the report
(pages 44–45 and 68–88) has not been
assured or independently verified.
All information included has been
compiled by the business and taken
from sources that we deem to accurate
and reliable. All reasonable care has
been taken to ensure the data is
accurate but no independent
verification of the data has taken
place to assure its accuracy or
completeness.
As recommended by the TCFD,
scenario analysis has been used this
year as a tool through which to better
understand the potential impact of
climate change on the business.
GOVERNANCE
The Group has an established system
of ESG governance agreed to by the
Board, which is embedded throughout
the business proportionate to the
nature, scale, and complexity of
888’s operations.
Board oversight of climate-
related risks and opportunities
The Board provides oversight of 888’s
climate-related risks and opportunities
supported by the Group’s executive
committees and management (see
Figure 1).
Figure 1: the Board’s oversight of climate-related risks and opportunities.
ESG governance
Board of
Directors
ESG
Committee
of the Board
The Board is accountable for all climate-related risks and opportunities impacting the Group
and for the net zero targets set. In July 2022, Andria Vidler was appointed to the Board, bringing
her extensive ESG experience. In 2022, the Board considered climate-related matters when
acquiring William Hill, reviewing the ESG strategy and the Group’s Risk Register. A non-executive
director was also present during this year’s climate-related scenario analysis workshops. In
2022 the Board received updates on climate issues from the ESG Committee of the Board via
the Chairman, who was both the Chair of the Board and the Chair of the ESG Committee of the
Board. In January 2023, Andria Vidler took over the role of Chair of the ESG Committee. ESG
updates are now also a standing agenda item at board meetings.
In 2021, 888 established an ESG Committee of the Board, comprising Senior Independent
Director, Anne de Kerckhove, Non-Executive Director, Mark Summerfield, and the Chairman,
Lord Mendelsohn. The ESG Committee of the Board has oversight of all ESG matters (inclusive of
climate) including strategy; targets and key performance indicators; budgets; capex and setting
performance objectives. Materiality is the threshold at which ESG issues become sufficiently
important to 888’s investors and other stakeholders that they should be publicly reported
and includes anything that is materially different from expectations and requires a significant
change in strategy or creates a material change in financial results or position. The threshold
of materiality for ESG issues is continually assessed by the ESG Committee of the Board as
stakeholders’ needs evolve over time.
The Chief Risk Officer, who leads the Risk and Sustainability Committee, and the Chief Strategy
Officer provide updates to the ESG Committee of the Board at every Board meeting. In 2022,
the ESG Committee of the Board met at least three times to discuss the Zero Carbon Report
and how the Group’s progress towards net zero should be tracked. The scenario analysis results
were presented to the ESG Committee of the Board in November 2022. Climate-related issues
were also considered during the acquisition of the William Hill business, and they continue to be
discussed as this new business is integrated into the Group. The Group plan to consider climate-
related issues during any future acquisitions or divestments, and to consider carbon emissions
when making any new investments, such as siting new facilities.
68
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Management’s ownership of climate-related risks and opportunities
The executive team is responsible for managing climate-related risks and opportunities on a day-to-day basis. Figure 2
outlines 888’s overall ESG governance structure.
Figure 2: 888’s ESG governance organogram
Board of Directors
ESG Committee of the Board
Risk and Sustainability Committee
ESG Forum (ESG Director)
Chief
Procurement
Officer
Chief Strategy
Officer
Chief
People
Officer
Corporate
affairs
Head of
Product
Compliance
External ESG Consultants
Business functions
Chief Risk
Officer
Company
Secretary
External Risk
Consultants
Key
Advise, escalate, report
Delegates
Oversight & challenge
Information sharing
Board and oversight
Group Governance
ESG Governance
Business functions
External Advisers
Assessment and monitoring of climate-related risks and opportunities is embedded in the Group’s
executive committees and business functions. In 2022, the Group’s ESG governance structure evolved to
include a Risk and Sustainability Committee. In March 2023, an ESG and Sustainability Director was also
appointed, who has executive responsibility for the Group’s ESG strategy.
888 Holdings PLC Annual Report & Accounts 2022
69
STRATEGIC REPORT TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORT CONTINUED
GOVERNANCE CONTINUED
Management’s ownership of climate-related risks and opportunities continued
Figure 3: Management’s ownership of climate-related risks and opportunities
ESG governance
Risk and
Sustainability
Committee
ESG Forum
The Risk and Sustainability Committee is a monthly executive management committee, which
provides oversight to support the ESG Committee of the Board in managing risks to 888’s long-
term strategic objectives. The committee will monitor the Group’s performance against the
Board’s risk appetite, review the effectiveness of the risk management framework and ensure
risk management decisions are aligned to long-term goals (see the terms of reference available
on 888’s corporate website). The Risk and Sustainability Committee is chaired by the Chief Risk
Officer, who owns the Group Risk Register. The Chief Risk Officer reports to the ESG Committee of
the Board at regular intervals.
In March 2023, the Group appointed an ESG and Sustainability Director, who has executive
responsibility for the Group’s ESG strategy. The ESG and Sustainability Director leads the ESG
Forum, a cross-functional forum which implements the Group’s ESG and climate strategy,
including representatives from Procurement, Strategy, People, Corporate Affairs and Product
Compliance. The ESG Forum serves as a medium through which ESG issues (including climate)
can be managed and escalated to the Risk and Sustainability Committee by the ESG and
Sustainability Director.
In 2023, the ESG Forum will meet at least quarterly to discuss ESG issues, progress against
targets and updates on current and planned initiatives. The environmental data is tracked
internally by 888 using a dashboard (Carbon Footprint Dashboard) to assess progress against
climate goals. The Carbon Footprint Dashboard is presented periodically by facilities to the ESG
Forum. William Hill also has an internal MI tracker to monitor progress against environmental
targets. In 2023, the ESG Forum will review the how the environmental data, processes and
procedures will be integrated for the Group.
The Group’s
functions
Procurement, led by the Chief Procurement Officer, has ownership of all environmental issues,
including climate. Specifically, Procurement owns Scope 1, 2 and 3 GHG emissions and develops
the strategies for driving-down absolute GHG emissions across the business. Procurement will be
leading a strategy from 2023 onwards encompassing best practice in monitoring and ultimately
driving down emissions both in the Group and the supply chain. The Facilities Manager and
Vice President for Finance also discuss any climate-related issues and Facilities monitor and
report on environmental targets, metrics and KPIs. External consultants also assist management
as required.
Future priorities
Strategy
888’s transition plan
In 2023, the Group will continue
to integrate the climate-related
governance processes of 888 and
William Hill, and may consider
focusing on:
• the ESG Committee of the Board
receiving more regular updates from
management on climate;
• evolving how the Board and
management monitor and oversee
progress against goals and targets
for addressing environmental
matters and climate-related
issues; and
• updating the Group’s internal
policies and procedures to embed
the transition plan to net zero
throughout the organisation.
Climate change is a key focus area
under the Planet pillar of the ESG
Strategy. The Group is committed to
transitioning its business model to one
that aligns with a 1.5°C world and a
net zero carbon economy and it has
developed a transition plan (Zero
Carbon Report 2022). The Group’s
strategic response focuses on the
associated transition and physical
climate-related risks and opportunities
which are material to 888.
The Group is committed to contributing
to the global economy’s transition
to a low carbon reality. In the Zero
Carbon Report 2021, 888 set the
ambitious targets of being net zero
by 2030 (Scope 1 and 2 emissions)
and across its value chain by 2035
(Scope 3 emissions). These targets
are integrated into the strategy,
with four priority actions covering
888’s operations and the wider value
chain. The Group believes that early
action to drive aggressive reductions
in emissions will lead to a more
competitive business overall.
70
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT To avoid potential regulatory shocks
and proactively manage the climate-
related risks, the Group has committed
to meeting net zero by 2035, which is 15
years earlier than the UK government’s
mandate to be net zero by 2050.
as monitoring energy efficiency.
Priority 1: urgently cut Scope 1 and
2 emissions by 80% by 2030 (2019
baseline), principally using renewable
energy and also targeting absolute
emissions reductions.
The Zero Carbon Report 2022 (second
release) is an update with our progress
along the pathway to reach net
zero emissions. It also outlines the
development of 888’s transition plan
to align our business model with a
world in which the global average
temperature is allowed to rise by no
more than 1.5°C above pre-industrial
levels. 888 acknowledges that in 2022
the UK Transition Plan Taskforce (‘TPT’)
developed a sector neutral framework
for transition plan disclosures. The
Group may consider aligning its
disclosures with the TPT’s guidance for
transition plans in future iterations of
its plan.
888 strives to incorporate its net
zero commitments into all parts of
its operations. To deliver these net
zero targets, 888 will apply several
business levers across four priorities
(outlined below) and business as usual
activities will also be employed, such
Priority 2: by 2025, both large and
smaller vendors representing 60% of
the Group’s third-party supplier spend
should have carbon reduction plans
in place to target an 80% fall in their
emissions by 2035 (the ‘80 by 60’
strategy).
Priority 3: encourage the use of
greener transport for employees
commuting and travelling for business,
targeting a reduction of 80% in
emissions by 2035 (2021 baseline).
Priority 4: invest in high quality carbon
removal offsets for the remaining 20%
of Scope 1 and 2 emissions (by 2030)
and remaining indirect emissions
(by 2035).
For details of progress undertaken
in 2022 against these targets and
future actions, please refer to the
Zero Carbon Report 2022. The risks
of meeting the net zero targets
and challenges of the transition
plan are also discussed in the Zero
Carbon Report 2022. In 2023, the
Group will re-calculate the baseline
values for its net zero targets based
on the acquisition and divestment
activity in 2022.
Climate-related scenario analysis
This year, the Group conducted
qualitative scenario analysis to
inform its climate strategy and risk
management, and climate has been
included in the Group Risk Register
for the first time for monitoring by
the Board.
Climate-related risks and
opportunities identified over the
short-, medium- and long-term
Due to the inherent uncertainty
and pervasive nature of the risks
associated with climate change, the
Group modelled multiple time horizons
and performed scenario analysis under
three climate scenarios to assess its
exposure to physical and transition
risks up to 2100.
The following expected timescales for
impact were selected:
Short-, medium- & long-term time horizons disclosed by 888
2022
2025 2026
2037
2100
SHORT-TERM
MEDIUM-TERM
LONG-TERM
These time horizons were chosen with the understanding that climate-related issues tend to manifest over the long-term
but medium- and short-term implications may also be seen. The scenario analysis assumptions and methodology are
found in the ESG Supplementary Information section of the Annual Report.
888 Holdings PLC Annual Report & Accounts 2022
71
STRATEGIC REPORT TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORT CONTINUED
GOVERNANCE CONTINUED
Climate scenarios
Following the advice of external advisers, management chose to model three climate scenarios (including a 2°C or lower
scenario as recommended by the TCFD) to ensure that a range of different climate transition pathways were represented
(see Figure 4).
Figure 4: Climate-related scenarios used in the scenario analysis and sources
h
g
H
i
s
k
s
i
r
l
a
n
o
i
t
i
s
n
a
r
T
w
o
L
Early action
(1.5-2.0°C)
Limited action
(2.0-3.0°C)
No action
(3.0-4.0°C)
Low
Physical risks
High
Early action
(1.5-2.0°C)
Physical aspects
Limited action
(2.0-3.0°C)
Physical aspects
No action
(3.0-4.0°C)
Physical aspects
•
Increase in the intensity and frequency
of extreme weather events
• Manageable changes across
most regions
• Shifts in agriculture practices may
be observed
Transitional aspects
•
Implement policy changes to limit
warming to below 1.5°C
• Rapid decarbonisation of infrastructure
and technology is implemented in high
emitting sectors
• Common use of fossil fuels is ruled out
with extremely limited use by 2040
• Further increased intensity and
• Prolonged, extreme weather conditions
frequency of extreme weather events
•
In some global regions conditions are
unmanageable under extreme physical
conditions
• Considerable ecological
impacts expected
• Shifts in agriculture practices observed
• Low lying regions become vulnerable to
sea-level rise
Transitional aspects
• Some new climate policies expected to
be implemented
• Limited decarbonisation in high
emitting sectors
• Governmental policies not consistently
aligned to mitigating climate change
• Areas uninhabitable
• Large ecological destruction
• Climate feedback effects enforce
rapid physical changes and produce
high uncertainty around magnitude of
impacts from feedback
Transitional aspects
• Very few climate policies are introduced
• Emissions are reduced gradually
through efficiencies only
• Reasonable reliance globally on
fossil fuels
Below is a high level overview of the key features of each warming scenario
Early action
(1.5-2.0°C)
SSP1-2.6
Limited action
(2.0-3.0°C)
SSP2-4.5
No action
(3.0-4.0°C)
SSP3-7.0
• Net-zero emissions expected from
2050 onwards.
• Emissions expected to peak by 2050
but do not reach net zero by 2100.
• Emissions continue to rise and are
expected to double by 2100.
• Warming stays well below 2°C by 2100,
with the aim of staying within the 1.5°C
threshold.
Other published scenarios:
IEA WEO Net Zero (~1.5°C) and Sustainable
Development (<2 °C)
Scenarios. IPCC RCP 1.9 (1.5°c) and
2.6 (<2°C)
• Warming is estimated to be around
• Warming is estimated to be around
2.7°C by 2100.
3.6°C by 2100.
Aligns with the more ambitious pledges
made under the Paris Agreement.
Other published scenarios:
IPCC RCP 6 (3-4°C)
Other published scenarios:
IEA WEO Announced Pledges (~2.1°C) and
Stated Policies (~2.6°C) scenarios. IPCC
RCP 3.4 (2-2.4°C) and 4.5 (2-3°C)
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888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT
Climate-related risks and opportunities identified and risk management
A comprehensive list of potential climate-related risks and opportunities was developed and refined during the scenario
analysis to focus on those that could materially impact the Group (see Figure 5). The risks and opportunities the Group
faces from climate change include not only the physical aspects but also legal, policy and commercial changes in the
global markets in which 888 operates. To respond to these risks, the Group will need to take enterprise-wide action and build
resilience through mitigation, adaptation, and business continuity planning. The Group already has strong business continuity
planning in place after the impact of COVID-19, and these foundations can be built on as the climate challenge evolves.
Figure 5: 888’s material climate-related risks identified during the scenario analysis
TRANSITION RISKS
PHYSICAL RISKS
Market
• Temporary increases to the cost of
living during the transition to low carbon
technologies
Policy and legal
• Legislation introduced to ban fossil fuel
use for fuel and energy generation and
to favour renewable energy generation
Reputation
• Market/stakeholder pressure to switch
all sites onto renewable energy to meet
pledged carbon reduction and net
zero targets
Acute Physical
• Increase in extreme acute weather
events locally and flash flooding events
from increased/prolonged participation
• Increased frequency and intensity of
acute weather events globally
Chronic Physical
• Coastal flooding driven by sea level rises
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GOVERNANCE CONTINUED
Climate-related risks and opportunities identified and risk management continued
Figure 6: material physical climate-related risks and opportunities identified during the scenario analysis
Risk
Impact/Opportunity
Coastal flooding
driven by sea
level rise
Safety risk to employees from travel and infrastructure
flood damage to offices, LBOs and employee homes
located in coastal regions. Increase in costs for building
repairs and reinforcement to mitigate against future
events e.g., flood defences and insurance costs or refused
reinsurance in vulnerable areas.
Increase in extreme
acute weather events
locally e.g., hurricane
intensity, frequency
and geographical
disparity, flash
flooding events
as a result of
increased/prolonged
precipitation.
Potential disruption to business services due to energy
supply and communication services disruption e.g.,
telecoms and phone lines due to damage. Health
and Safety risk to employees located in offices, LBOs
and homes due to damage and potential increase in
employee absence or requirement to work from home.
Increased overhead costs for building repairs.
Opportunity: reduce emissions from commuting
and mitigate of employee absence due to improved
capacity for remote working, established during global
COVID-19 restrictions.
Loss of revenue as a result of the cancellation or
rescheduling of sporting events.
Increased
frequency and
intensity of extreme
acute weather
events globally.
Climate
scenario (°C)
3-4
Materiality
Likelihood
Likely
(60%)
Expected
timescale
for impact
Level of action
required to
manage risk
Management approach and adaptive capacity
L
Action
Assess sites in coastal regions through mapping across retail estate.
required in the
Where necessary consideration will be given to changing site locations
medium term
for sites in flood plains to mitigate this risk.
3-4
2-3
3-4
2-3
Very Likely
(80%)
S M L
Maintain current
Ensure Business Continuity Plans are updated and tested accordingly
processes to
for each office location to ensure risk is mitigated. Ensure key staff have
manage risk
ability to work remotely and from home to naturally reduce this risk.
Virtually certain
(99-100%)
M L
No action
required to
manage risk
The business model needs to pivot accordingly to any change in
sporting timetable. The organisation’s ability to adapt to sporting
disruption has been demonstrated under other circumstances such as
COVID-19 and 888 is well equipped to continue this, based on lessons
already learned from previous challenges.
Materiality
Low
Medium
High
Very High
Timeline
S <5 years
M 5-15 years
L 15 years+
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GOVERNANCE CONTINUED
Climate-related risks and opportunities identified and risk management continued
Figure 6: material physical climate-related risks and opportunities identified during the scenario analysis
Risk
Impact/Opportunity
Climate
scenario (°C)
Materiality
Coastal flooding
driven by sea
level rise
Safety risk to employees from travel and infrastructure
3-4
flood damage to offices, LBOs and employee homes
located in coastal regions. Increase in costs for building
repairs and reinforcement to mitigate against future
events e.g., flood defences and insurance costs or refused
reinsurance in vulnerable areas.
Increase in extreme
acute weather events
locally e.g., hurricane
intensity, frequency
and geographical
disparity, flash
flooding events
as a result of
increased/prolonged
precipitation.
Potential disruption to business services due to energy
supply and communication services disruption e.g.,
telecoms and phone lines due to damage. Health
and Safety risk to employees located in offices, LBOs
and homes due to damage and potential increase in
employee absence or requirement to work from home.
Increased overhead costs for building repairs.
Opportunity: reduce emissions from commuting
and mitigate of employee absence due to improved
capacity for remote working, established during global
COVID-19 restrictions.
Loss of revenue as a result of the cancellation or
rescheduling of sporting events.
Increased
frequency and
intensity of extreme
acute weather
events globally.
3-4
2-3
3-4
2-3
Likelihood
Likely
(60%)
Expected
timescale
for impact
Level of action
required to
manage risk
Management approach and adaptive capacity
L
Action
required in the
medium term
Assess sites in coastal regions through mapping across retail estate.
Where necessary consideration will be given to changing site locations
for sites in flood plains to mitigate this risk.
Very Likely
(80%)
S M L
Maintain current
processes to
manage risk
Ensure Business Continuity Plans are updated and tested accordingly
for each office location to ensure risk is mitigated. Ensure key staff have
ability to work remotely and from home to naturally reduce this risk.
Virtually certain
(99-100%)
M L
No action
required to
manage risk
The business model needs to pivot accordingly to any change in
sporting timetable. The organisation’s ability to adapt to sporting
disruption has been demonstrated under other circumstances such as
COVID-19 and 888 is well equipped to continue this, based on lessons
already learned from previous challenges.
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Climate-related risks and opportunities identified and risk management continued
Figure 7: material transition climate-related risks and opportunities identified during the scenario analysis
Risk
Impact/Opportunity
Climate
scenario (°C)
Materiality
Temporary increases
to the cost of living
during the transition
to low-carbon
technologies.
Economic constraints mean clients may have less
disposable income to spend on leisure and gambling
activities, resulting in a loss of revenue for the business.
Increased risk of vulnerability to harmful gambling for
clients in high-risk groups.
Demand from employees, especially those on national
living wages, for increase to wages due to wide-scale
increase in cost of living.
Legislation
introduced to place
a ban on fossil fuel
use for fuel and
energy generation
and introduction of
legislation to favour
renewable energy
generation.
Loss of profit, driven by an increase in overhead energy
costs (commercial and domestic) and concerns around
energy security issues (e.g. restricted periods of energy
use/blackouts) affecting service delivery, and client
access to services, especially at LBOs.
Opportunity: Long term energy security within localised
energy grids from renewable energy generation,
with the potential to stabilise market energy prices.
Opportunity to identify peak times for energy
consumption and aim to reduce this, saving costs and
lowering the carbon footprint of these sites.
1.5-2
2-3
1.5-2
2-3
1.5-2
Likelihood
Very Likely
(80%)
Likely
(60%)
Very Likely
(80%)
S M
S M
S M L
S M L
S M
manage risk
No action
required to
manage risk
processes to
manage risk
Expected
timescale
for impact
Level of action
required to
manage risk
Management approach and adaptive capacity
Maintain current
On-going review of economic conditions in main markets to analyse
processes to
effects on customer disposable income.
Thresholds for spend and affordability checks to be reviewed periodically.
Maintain current
Review of retail colleague pay in line with changing economic conditions.
Maintain current
Use previous situations e.g., COVID-19 as a proxy for modelling potential
processes to
impact. Other options to be reviewed as part of the Planet pillar of the
manage risk
ESG strategy.
Transition to green energy for global sites can be difficult
due to limited infrastructure in place, and often comes
at a higher overhead cost.
2-3
Very Likely
(80%)
S M
processes to
in all locations.
manage risk
Maintain current
Procurement to assess and aim to source renewable energy
Longer term strategy to be reviewed as part of the Planet pillar
of the ESG Framework.
Requirement to
switch all sites under
888’s control onto
renewable energy
due to market/
stakeholder pressure
and to meet pledged
carbon reduction and
Net Zero targets.
Materiality
Low
Medium
High
Very High
Timeline
S <5 years
M 5-15 years
L 15 years+
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GOVERNANCE CONTINUED
Climate-related risks and opportunities identified and risk management continued
Figure 7: material transition climate-related risks and opportunities identified during the scenario analysis
Risk
Impact/Opportunity
Climate
scenario (°C)
Materiality
Temporary increases
to the cost of living
during the transition
to low-carbon
technologies.
Economic constraints mean clients may have less
disposable income to spend on leisure and gambling
activities, resulting in a loss of revenue for the business.
Increased risk of vulnerability to harmful gambling for
clients in high-risk groups.
Demand from employees, especially those on national
living wages, for increase to wages due to wide-scale
increase in cost of living.
Legislation
introduced to place
a ban on fossil fuel
use for fuel and
energy generation
and introduction of
legislation to favour
renewable energy
generation.
Loss of profit, driven by an increase in overhead energy
costs (commercial and domestic) and concerns around
energy security issues (e.g. restricted periods of energy
use/blackouts) affecting service delivery, and client
access to services, especially at LBOs.
Opportunity: Long term energy security within localised
energy grids from renewable energy generation,
with the potential to stabilise market energy prices.
Opportunity to identify peak times for energy
consumption and aim to reduce this, saving costs and
lowering the carbon footprint of these sites.
1.5-2
2-3
1.5-2
2-3
1.5-2
Requirement to
switch all sites under
888’s control onto
renewable energy
due to market/
stakeholder pressure
and to meet pledged
carbon reduction and
Net Zero targets.
Likelihood
Very Likely
(80%)
Likely
(60%)
Very Likely
(80%)
Expected
timescale
for impact
Level of action
required to
manage risk
Management approach and adaptive capacity
S M
S M
S M L
S M L
S M
Maintain current
processes to
manage risk
No action
required to
manage risk
Maintain current
processes to
manage risk
On-going review of economic conditions in main markets to analyse
effects on customer disposable income.
Thresholds for spend and affordability checks to be reviewed periodically.
Review of retail colleague pay in line with changing economic conditions.
Maintain current
processes to
manage risk
Use previous situations e.g., COVID-19 as a proxy for modelling potential
impact. Other options to be reviewed as part of the Planet pillar of the
ESG strategy.
Transition to green energy for global sites can be difficult
2-3
due to limited infrastructure in place, and often comes
at a higher overhead cost.
Very Likely
(80%)
S M
Maintain current
processes to
manage risk
Procurement to assess and aim to source renewable energy
in all locations.
Longer term strategy to be reviewed as part of the Planet pillar
of the ESG Framework.
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THE IMPACT OF IDENTIFIED CLIMATE-RELATED RISKS AND OPPORTUNITIES ON 888’S BUSINESSES,
STRATEGY, AND FINANCIAL PLANNING
Through wider strategy measures to drive energy efficiency and its transition plan, the Group has already started to reduce
its exposure to some of the material transition risks.
Overall, the priorities for the Group in transitioning to a low-carbon economy are to focus on addressing the identified
transitional risks across operations, reducing the global carbon footprint, assessing the efficiency of resources, and improving
the efficiency with which energy is used. These priorities are discussed further in the Group’s Zero Carbon Report 2022.
A high-level view of the impact of climate-related issues across the Group’s strategy and businesses is provided in Figure
8 below. Management will review the opportunities for mitigating the impacts of the risks identified in the climate-related
scenario analysis, particularly those deemed to be of significant risk.
Figure 8 – summary of the impact of climate-related issues on the Group’s strategy and businesses
Category
Impact on strategy and businesses
Products and
services
Supply
chain and
value chain
Operations
Acquisitions
or divestments
and access to
capital
Betting, especially online gambling, uses a service business model with little to no physical
products. As a result, the Group’s core digital product offering has a low environmental impact.
Although the Group will continue to strive to reduce GHG emissions from its offices, retail units
and data centres, changes to the core product offering as the Group transitions to a low-carbon
economy are not being considered. Likewise, investment in research and development for the
development of low-carbon products/services, is not currently being considered. The potential
impact on 888’s services is outlined in the scenario results (Figures 6 and 7), together with
management’s mitigation approach.
The transition risks identified by the scenario analysis in a low-carbon economy will also be
faced by the Group’s supply chain and wider value chain, which may lead to increases in prices
(due to inflationary pressures) and further cost increases for the Group. The importance of the
Group’s supplier engagement activities and engaging with others in the value chain is key during
the transition and discussed in the transition plan.
To manage 888’s exposure in the 3-4°C scenario where physical risk dominates, the priority for
the organisation is to focus on actions to preserve the continuity of the business should any of
the material physical risks materialise. The impact on operations and location of facilities will
need to be reviewed in response to the coastal flooding risk identified, and a mapping exercise
undertaken to assess this risk and consideration given to changing site locations if required.
The climate-related risks and opportunities identified by the scenario analysis will be considered
during any future acquisitions, divestments, or access to capital decisions made as part of the
ESG Committee of the Board’s overall decision-making process.
The Group needs to undertake further work to fully integrate the outputs of the scenario analysis into the strategy and
financial planning cycles moving forward and develop metrics to monitor climate-related risks and potential financial
impacts as required (to meet the TCFD Recommendation for Strategy, part b). The Group may look to disclose quantitative
climate-related scenario analysis outputs in future reporting periods.
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STRATEGIC REPORT THE RESILIENCE OF 888’S
STRATEGY TO CLIMATE
CHANGE CONSIDERING
DIFFERENT CLIMATE-RELATED
SCENARIOS
The Group’s ESG strategy is validated
annually by the Board and periodically
by the ESG Committee of the Board
to ensure it remains relevant and
resilient. Due to the dynamic nature
of the economy and climate change,
scenario analysis will be reperformed
every three years or after any material
business changes, in line with guidance
from the Department for Business,
Energy and Industrial Strategy. Elements
of the strategy may be refreshed
earlier if there are significant changes
in the external or internal environment.
The Group believes its net zero plan,
and the actions it is developing to
mitigate climate risks will support the
resilience of the business to the varying
climate change scenarios considered.
However, consideration of the potential
impact of climate-related issues on
financial performance and position,
across different climate scenarios,
needs to be considered and sensitivity
analysis performed (to meet the TCFD
Recommendation for Strategy, part c).
RISK MANAGEMENT
Climate change has been integrated
into the Group’s risk management
framework and the Group’s processes
for identifying, assessing, and
managing climate-related risks is
described below.
As part of the Group’s risk
management procedures, the Board
takes account of the significance
of environmental matters (including
climate) to the business. The Board
factors into the risk assessment impact,
likelihood, and appetite considerations,
and risk is managed across the Group
in the context of the Board’s overall risk
appetite. Business risks are identified,
assessed, managed, monitored, and
reported in accordance with the Risk
Management Policy (see the Risk
Management Strategy section of the
Annual Report). As part of this process,
management are advised by external
advisers on emerging regulatory
risks. Business Functions also identify
climate-related risks and opportunities,
and these issues are cascaded
upwards by the Heads of Functions
for discussion at the ESG Forum for
consideration and assessment by the
ESG and Sustainability Director.
This year, climate-related scenario
analysis has been performed for the
first time. The risks and opportunities of
transitioning to a low-carbon economy
have been discussed and analysed
by management during the scenario
analysis, and a non-executive director
was also present during the scenario
analysis workshops. The climate-
related scenario analysis results were
presented to the ESG Committee of
the Board, and this has influenced the
climate strategy for the Zero Carbon
Report 2022, which is approved by
the Board. In 2022, climate risk has
been added to the Group Risk Register
for the first time for monitoring by
the Board, and the material climate-
related risks have been mapped
against other business risks according
to the materiality, nature, and size of
their impact.
FUTURE PRIORITIES
In 2023, the Group may complete the
following work on its climate strategy
to further enhance and increase the
quality of its TCFD disclosures:
• The scenario analysis output will
inform strategic and financial
planning cycles moving forward
and metrics to monitor climate-
related risks and potential financial
impacts developed as required (to
meet the TCFD Recommendation for
Strategy, part b).
• Climate change risk mitigation
and adaptation strategies will be
developed, whilst also considering
policies that take advantage of any
opportunities identified.
• The appropriateness of a granular
review of climate change risks and
opportunities to look at the different
geographies and business models
utilised throughout the Group, using
a divisional, brand and Group lens
will be considered.
In the longer-term, a more detailed
quantitative scenario analysis approach
will be developed to enhance future
TCFD reporting disclosures.
Throughout 2023, the Group will
continue to develop the climate risk
management processes and may
consider the following actions:
• The Group may develop a
different risk register for different
geographical regions (such as the
US) where the regulatory landscape
is different.
• The ESG and Sustainability Director
will oversee the dissemination of
responsibilities for the material
climate-related risks and
opportunities identified during the
scenario analysis.
• The climate-related risks will be
reviewed on a regular basis to
ensure they are up to date with the
most recent scientific understanding
and legislative requirements.
METRICS AND TARGETS
The data for the Group’s climate-
related metrics and targets and
its streamlined energy and carbon
reporting requirements are found in
the ESG Supplementary Information
section. Decarbonisation metrics and
the risks involved in reducing the GHG
emissions are also discussed in the
Zero Carbon Report 2022.
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MONITORING 888’S PROGRESS – TCFD CROSS-INDUSTRY CLIMATE-RELATED METRICS AND TARGETS
The Group continually reviews its climate metrics and targets to ensure the underlying data is accurate and complete, and
to ensure the metrics are providing the information the business and stakeholders need to monitor performance and review
888’s progress. Following the completion of this year’s climate scenario analysis, the Group is considering its position in
respect of developing further TCFD cross-industry climate-related metrics and targets. Figure 9 below outlines the Group’s
approach and progress with the TCFD cross-industry metrics.
Figure 9: 888’s approach and progress with the TCFD cross-industry metrics
TCFD cross-industry
metric category
888’s approach
2022 progress and future priorities
GHG emissions
Metrics
The Group’s absolute GHG emissions
and emissions intensity ratios are
found in the ESG Supplementary
Information section. Decarbonisation
metrics and the risks involved in
reducing the GHG emissions are
discussed in the Zero Carbon
Report 2022. The methodology for
calculating the GHG emissions is
contained within Appendix 2 of the
Zero Carbon Report 2022.
888’s targets set in 2021 (excluding
William Hill):
Net zero target (Scope 1 and
2) by 2030 – by achieving an
80% reduction in Scope 1 and 2
emissions and using 20% carbon
removal offsets.
Net zero target (Scope 3) by 2035 –
by achieving the ‘80 by 60 strategy’
and using high-quality carbon
removals. Both targets outlined in the
Zero Carbon Report 2022.
Scenario analysis was completed in
2022, which identified three material
transition risks, including:
• Regulations being introduced to
place a ban on fossil fuels and/
or the introduction of legislation
to favour renewable energy
generation; and
• Economic constraints in a low-
carbon economy may result in
customers having less disposable
income to spend on leisure and
gambling activities.
Transition risks
888’s progress with meeting the net zero targets is
outlined in the Zero Carbon Report 2022. In 2023,
the Group needs to integrate William Hill’s data,
exclude 888’s bingo business data, and re-baseline
all targets (TCFD Recommendation for Metrics
and Targets, parts a, and c). The GHG accounting
methodology should also be updated for William
Hill. Once the Group has recalculated the baseline
for the emissions targets, it intends to seek third-
party validation over its commitments and may
consider third party assurance over emissions data.
The Group may also consider the need to develop a
robust climate reporting controls framework to align
with financial reporting.
Environmental metrics and targets
888’s wider environmental initiatives are monitored
and tracked internally but have not been reported
to date. In 2019, William Hill set environmental
targets and progress to date is shown in the ESG
Supplementary Information section. In 2023, the
Group may also consider including metrics and
targets associated with water, waste management
etc. (where relevant and applicable) across the
enlarged Group.
Priority 1 of the transition plan will reduce 888’s
exposure to regulatory transition risks (see Zero
Carbon Report 2022 for further detail). A renewable
energy metric is disclosed to track the 888’s progress
against the switch to renewable energy.
Following the scenario analysis, and as the
transition plan develops, the Group will review
the appropriateness of developing future metrics
surrounding the amount and extent of the business
activities vulnerable to transition risks. For example,
the Group may also consider the use of modelling
around average customer disposable income, by
country or region, to understand the impact of low-
carbon economic constraints on future revenues.
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888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT TCFD cross-industry
metric category
Physical risks
Climate-
related
opportunities
Capital
deployment
Internal
carbon prices
Executive
remuneration
888’s approach
2022 progress and future priorities
Scenario analysis was completed in
2022, which identified three material
physical risks.
One of the physical risks related
to coastal flooding driven by sea
level rise.
Following the scenario analysis and as the
transition plan develops, the Group will review
the appropriateness of developing future metrics
surrounding the amount and extent of the business
activities vulnerable to physical risks. For example,
the Group will consider mapping which sites will be
impacted directly by flooding and develop a metric
for tracking vulnerable sites.
Scenario analysis was completed
in 2022, which identified material
climate-related opportunities, including:
• reducing emissions from employee
commuting; and
• energy efficiency and long- term
energy security from renewable
energy generation.
Priority 3 of the Zero Carbon Report 2022 tracks
progress against the Greener Travel priority
(including employee commuting). Priority 1 of the
Zero Carbon Report 2022, tracks progress against
the switch to renewable energy. Smart meters have
been installed across the UK retail estate to track
energy efficiency and investment in renewable
energy generation is being considered. The
Group will review whether any further metrics for
climate-related opportunities are required in future
reporting periods.
The ESG Committee of the Board will
review and approve the expected
cost of delivering on the Group’s
decarbonisation ambitions over
time, which is likely to be the biggest
climate-related requirement for
capital deployment.
The Group is considering the financial plans for its
decarbonisation ambitions and whether to develop
a long-term green energy strategy and budget, to
ensure investment in renewable energy is maintained.
The Group will consider whether any further metrics
and targets for capital deployment are required in
future reporting periods.
An internal carbon price has not
been adopted by the Group to
date as the focus has been on
integrating the William Hill business
and implementing the three priority
initiatives to reduce GHG emissions.
In 2023, the Group will continue to review and
evaluate whether the use of internal carbon prices
would be appropriate to assist to incentivise
decarbonisation across its operations given the
scale of the consolidated GHG emissions for 888
and William Hill.
The ESG Committee of the Board
reviews the implementation of the
ESG strategy and considers the
extent to which additional ESG
metrics and targets (including
climate) should be incorporated into
executive remuneration.
2022’s executive bonus structure includes some ESG
components across the 3 pillars of the strategy.
In 2023, climate-based targets will be included
in the executive bonus remuneration, alongside
a safer gambling metric. Should any additional
climate metrics and targets be incorporated into
executive remuneration, this will be disclosed in future
reporting periods.
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ESG SUPPLEMENTARY INFORMATION
Climate reporting – GHG emissions (TCFD reporting)
Data presentation
The data shown for the GHG absolute emissions is measured in tonnes of CO2e (‘tCO2e’). The acquisition of William Hill
completed on 1 July 2022, and as such, William Hill’s GHG emissions are only consolidated for the period of the Group’s
ownership, for the six months from 1 July 2022 to 31 December 2022. The Group also sold 888’s bingo business on 7 July
2022 and its historical emissions include those for 888’s bingo business. The Group is choosing to report the emissions data
for FY22 separately for 888 and William Hill to make the emissions comparable to 2021 reporting and to highlight progress
against 888’s targets. The targets will be re-baselined next year to reflect the acquisition of William Hill and the divestment of
888 bingo.
All figures are reported under the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol)
and Scope 3 emissions were calculated using the GHG Protocol Corporate Value Chain. The calculation methodology for
GHG emissions is outlined in full in Appendix 2 to the Zero Carbon Report 2022.
Figure 10: 888’s net zero targets (excluding William Hill) and absolute GHG emissions
Scope
Targets
888 (excluding William Hill) A
2019
Baseline
(tCO2e)
FY22 J
Global
emissions
(tCO2e)
FY21
Global
emissions
(tCO2e)
FY21/22
% change
Scope 1 D
Scope 2
(market based) E
Total Scope 1-2
(market-based)
Scope 2
(location-based) E
Net zero by 2030: achieve 80%
reduction in Total Scope 1 & 2 from 2019
baseline (market-based) G
745
30
1
2900%
3,152
2,171
3,088
(30%)
3,897
2,201
3,089
(29%)
44% reduction
from 2019)
3,152
2,300
3,088
(26%)
Scope 3 F
Net Zero by 2035: using the ‘80 by 60’
strategy H
N/a
23,419
26,020
(10%)
82
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Scope
Targets
2019
Baseline
(tCO2e)
FY22 J
Global
emissions
(tCO2e)
FY21
Global
emissions
(tCO2e)
FY21/22
% change
William Hill B
Scope 1 D
Scope 2
(market-based) E
Scope 2
(location-based) E
Scope 3
(market-based) F
Scope 3
(location-based) F
Targets for the enlarged 888 Group
to be re-baselined in FY23 I
N/a
William Hill was outside
of 888’s operational
control in FY21
473
397
5,572
35,416
37,501
888 Group (including William Hill) C
Scope 1) D
Targets for the enlarged 888 Group
to be re-baselined in FY23 I
N/a
503
William Hill was outside
of 888’s operational
control in FY21
Scope 2
(market-based) E
Scope 2
(location-based) E
Scope 3
(market-based) F
Scope 3
(location-based) F
2,568
7,872
58,835
60,920
a-c All figures reported under the GHG Protocol and the GHG Protocol Corporate Value Chain. The Group is choosing to report the emissions data separately for
888 (excluding William Hill), William Hill and the consolidated Group position, to make the emissions comparable to 2021 reporting and to highlight progress
against targets set by 888 in 2021. The targets will be re-baselined next year to reflect the acquisition of William Hill and the divestment of 888 Bingo. The 888
Group positionc is calculated by adding the emissions of 888 (excluding William Hill)a to William Hill’s emissions for the period of six months from 1 July 2022 to
31 December 2022b. It is acknowledged that the pro-rata method ignores the seasonality of the underlying data.
d
e
f
g
h
i
Total direct (Scope 1) GHG emissions from assets and activities under operational control. The Scope 1 calculation methodology for FY22 is detailed in
Appendix 2 of the Zero Carbon Report 2022. The 2900% increase in Scope 1 emissions from FY21 is due to the introduction of gas in the Romania office in 2022.
Total indirect GHG emissions (Scope 2) from consumption of purchased electricity, heat or steam energy using both the location-based and market-based
approach as applicable. Scope 2 location-based emissions are 2,300 tCO2e. 888’s Romania office is powered by renewable energy so on a market-based
approach it has zero emissions, and the Scope 2 emissions are only 2,171 tCO2e. William Hill’s UK retail estate is powered by renewable energy so on a market-
based approach, it has zero emissions and the residual Scope 2 emissions of 397 tCO2e are for the international sites. Scope 2 emissions on a location-based
approach are 5,572 tCO2e for the UK retail and international sites. The Scope 2 calculation methodology for FY22 is detailed in Appendix 2 of the Zero Carbon
Report 2022.
Total other indirect GHG emissions (Scope 3) not covered in Scope 2 that occur in the value chain, including both upstream and downstream emissions. First
comprehensive study of 888’s Scope 3 footprint conducted in 2021. The Scope 3 calculation methodology for FY22 is detailed in Appendix 2 of the Zero Carbon
Report 2022. Scope 3, Category 3 shown using the market-based and location-based methods and Figure 11 contains the Scope 3 emissions per category.
The 2019 baseline for total Scope 1 and 2 GHG emissions for 888 (excluding William Hill) was 3,897 tonnes of CO2e. The Group plans to use carbon removal offsets
for the remaining 20% of emissions to achieve net zero by 2030.
The ’80 by 60’ strategy – by 2025 both large and smaller vendors representing 60% of 888’s third-party supplier spend should have carbon reduction plans
in place and that these plans will be targeting an 80% fall in their emissions by 2035. The Group will invest in carbon removal offsets for the remaining indirect
emissions to reach net zero by 2035.
The Group will re-baseline its targets in FY23 after William Hill’s data has been fully integrated into the Group and 888 Bingo’s data has been excluded. Note that
future acquisition and divestments could have a material impact on meeting the targets.
j
Estimates for the full 2022 reporting year were still being finalised at the time of reporting and may be revised in subsequent reporting.
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Climate reporting – GHG emissions (TCFD reporting) continued
Data presentation continued
Figure 11 – 888’s Scope 3 emissions per category
888 Group (including William Hill) A-C
Purchased Goods & Services
Business Travel
Investments
Capital Goods
Upstream Transportation & Distribution
Employee Commuting
Fuel & Energy-related Activities
Waste Generated in Operations
Downstream Leased Assets
Total Scope 3 (market-based) A
FY22
Global
emissions
(tCO2e)
% of
Total
Scope 3
emissions
48,181
2,066
1,943
1,846
1,834
1,681
1,018
159
107
82%
4%
3%
3%
3%
3%
2%
0%
0%
58,835
100%
a Scope 3 emissions were calculated using the GHG Protocol Corporate Value Chain. The Scope 3 calculation methodology for FY22 is detailed in Appendix 2 of
the Zero Carbon Report 2022. The emissions shown are for the consolidated 888 Group. The 888 Group positionc is calculated by adding the emissions of 888
(excluding William Hill)a to William Hill’s emissions for the period of six months from 1 July 2022 to 31 December 2022b.
Streamlined energy carbon reporting requirements (SECR)
The Group’s streamlined energy and carbon reporting requirements (SECR) are shown in Figure 12. The methodology used is
the GHG Protocol. The energy and carbon reports are aligned with the boundaries of the financial statements (i.e., reporting
only includes William Hill’s energy and carbon data for the six-month period of ownership by the Group). Energy efficiency
actions taken are detailed in the Zero Carbon Report 2022 and include smart electricity meters being rolled out across
William Hill’s UK retail estate and better monitoring of energy consumption.
Intensity ratio
For SECR reporting purposes, 888 (excluding William Hill) has historically reported its:
• GHG emissions per headcount (tCO2e/employee);
• emissions per turnover in USD (tCO2 e/US $m); and
• emissions per square metre area of offices (tCO2e/m2).
William Hill has historically reported its emissions intensity ratio in relation to turnover (tCO2 e/£1 million of group turnover).
Due to data constraints following the integration of William Hill, this year the Group is reporting only one emissions intensity
ratio – the emissions intensity per turnover (tCO2e/£ million).
The Group’s emissions intensity measurement increased significantly this year due to the acquisition of William Hill and its
large UK retail estate, which has increased the Group’s GHG emissions. The Group’s energy consumption also increased due
to this acquisition.
888’s historical emissions intensity ratios are outlined in Figure 13 for year-on-year comparison purposes only. Excluding the
impact of the acquisition of William Hill, 888’s emissions intensity per turnover ratio reduced to 2.53 this year from 4.20 in the
prior year due to a 25% reduction in total Scope 1 and 2 emissions (location-based) and a reduction in 888’s turnover.
84
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Figure 12 – 888’s energy and GHG emissions intensity ratio
888 Group A-C
Energy consumption (kWh) D
Scope 1 emissions (tCO2e)
Scope 2 emissions (tCO2e)
Total Scope 1 and 2 emissions (tCO2e)
Emissions per turnover tCO2e/£m F
2022
2021
Global
UK &
offshore H
Global
(excluding
UK &
offshore)
Global
UK &
offshore H
36,258,669
503
7,872
8,375
6.76
(£1,239 m)
28,191,674
344
5,179
5,523
12.68
(£435 m)
8,066,995
159
2,693
2,852
3.55
(£804 m)
8,246,662
1
3,088
3,089
4.20
(£736 m)
606,540
—
128 E
128 E
0.44
(£287 m)
Global
(excluding
UK &
offshore)
7,640,122
1
2,960
2,961
6.60
(£449 m)
a-c All figures reported under the GHG Protocol. Scope 2 emissions calculated using the location-based method. The calculation methodology for FY22 is detailed in
Appendix 2 of the Zero Carbon Report 2022. The 888 Group position c is calculated by adding the data of 888 (excluding William Hill) a to William Hill’s data for the
period of six months from July to December 2022 b.
d
e
f
g
h
FY22 UK energy consumption data shown for William Hill only. 888’s UK data centre closed in September 2021 and the UK office consumption is immaterial
because 888’s UK office closed in July 2022.
FY21 energy consumption for UK office restated from 14 tCO2e to 128 tCO2e (UK data centre of 114 tCO2e is now included).
Turnover for the Group re-stated for FY21 in GBP (previously reported in USD – Global revenue $996m, UK revenue $389m) using an exchange rate of 1: 0.739, USD:
GBP from 31 December 2021.
Estimates for the full 2022 reporting year were still being finalised at the time of reporting and may be revised in subsequent reporting.
‘UK & offshore area’ includes UK data (excluding the British Overseas Territory, Gibraltar).
Figure 13 – 888’s global energy and GHG emissions intensity ratios (excluding William Hill)
888 (excluding William Hill) A
Global energy consumption (kWh)
Scope 1 emissions (tCO2e)
Scope 2 emissions (tCO2e)
Total Scope 1 and 2 emissions (tCO2e)
Emissions per turnover tCO2e/£m C
Emissions per headcount tCO2e/employee
Emission per square metre area of offices tCO2e/m2 office area
2022
2021
Ratio
Parameter
amount
Ratio
Parameter
amount
7,001,279
30
2,300
2,330
£624.5 m
1,808 emp
18,793 sqm
2.53
1.29
0.12
8,246,662
1
3,088
3,089
£736 m
1,900 emp
21,150 sqm
4.20
1.60
0.15
a All figures reported under the GHG Protocol. Location-based method used for Scope 2 emissions. Total Scope 1 and 2 emissions are 2,201 tCO2e on a market-
based approach. Data shown is for 888 (excluding William Hill) for comparison purposes only. The calculation methodology for FY22 is detailed in Appendix 2
of the Zero Carbon Report 2022. Energy consumption reduced based on prior year due to the closure of the UK data centre and a reduction in activity at the
European data centre.
b Estimates for the full 2022 reporting year were still being finalised at the time of reporting and may be revised in subsequent reporting.
c Turnover for the Group re-stated for FY21 in GBP (previously stated in USD – Global revenue $996m) using an exchange rate of 1: 0.739, USD: GBP from
31 December 2021.
Environmental initiatives
The Group is focused on reducing waste, water usage and plastic across its operations. In 2023, the Group will review the
appropriateness of disclosing wider environmental metrics and targets to track performance after the integration of William
Hill’s environmental data.
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888’s key wider environmental initiatives in 2022:
• Paper: progress has been made by employing ‘DocuSign’ for employee contracts to reduce paper consumption.
• Waste: there has been a review of waste segregation in the Israel office.
• Water: in the Romania office, motion sensors were introduced to reduce water loss.
• Plastic: 888 partnered with ECOSEC, the provider of tamper evident security solutions, to use its biodegradable poker chip
bags at live events, starting with 888poker LIVE in Barcelona. This was the first time that the Group, or any major operator
in the sector, had incorporated biodegradable chip bags at a live event. The initial purchase will remove approximately
130 kilograms of plastic from circulation.
William Hill’s environmental initiatives (set prior to acquisition by 888)
In 2019 and prior to the acquisition by 888, William Hill set five-year environmental targets for 2024 (2019 baseline) and
this year’s progress against these targets is shown in Figure 14. Energy efficiency actions taken by William Hill and key
environmental initiatives in 2022 are shown below:
• Energy – a full retail rollout of smart electricity metering across the UK retail estate, which will allow better monitoring of
energy consumption to lower energy usage and overall carbon. An Energy Focus week ran in Retail to make sure staff are
promoting good energy control and using best practice of its energy saving initiatives. This year there has been a 2%
increase in global energy consumption compared to FY21 because William Hill was closed for three months in 2021 (due
to COVID-19 restrictions). William Hill also achieved its goal and became certified as carbon neutral in 2022 (see GHG
emissions discussion below).
• Waste – significant progress has been made on the target to reduce William Hill’s waste to landfill by 30% and to make
sure that 95% of waste never goes to landfill. In 2022, William Hill achieved a 73% improvement compared to the 2019
baseline for waste to landfill, and landfill diversion currently sits at 92%, compared to the target of 95%. The total waste
tonnes increased slightly by 28% on prior year because of the impact of COVID-19 rules (William Hill was closed for three
months of the year in 2021).
• Vehicles – real progress has been made on the target to make the transport fleet 30% electric/hybrid. In 2022, 24% of the
fleet is electric/hybrid compared to only 19% in 2021, due to policy and employee choice initiatives. In 2022, the company
vehicle fleet reduced from 180 to 139 vehicles, which was due to policy changes and further scrutiny on employee vehicle
requirements.
• Water – reducing William Hill’s water consumption is a focus area and water consumption fell by 21% in 2022. This is partly
related to the impact of COVID-19 in 2021 (when William Hill was closed for three months), water saving initiatives and
subsequent re-billing from suppliers.
• Video Conferencing – to reduce business travel, William Hill set a pre-COVID-19 target in 2018 to increase its utilisation of
video conferencing by 400%. In 2022, there has been an estimated 445% increase in the use of video conferencing since
2018 as hybrid working business practices have evolved.
• Paper – William Hill launched a new innovative and digital-focused shop, which is paperless, as a pilot in Leeds to reduce
paper consumption. The success of this pilot will be reviewed in 2023.
86
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT Figure 14: William Hill’s environmental targets and FY22 progress
Corporate metric A
2024 Target
Annual global energy use
(kW/h)
Waste to landfill (tonnes)
Landfill diversion (tonnes)
Landfill %
Fleet target to be electric/
plug-in hybrid/
electric vehicle
Water (m3) B
Annual global energy use
(kW/h)
30% improvement from
2019 baseline
See below
95% landfill diversion
30% of fleet to be electric/
plug-in hybrid
Water baselined to assess
water saving initiatives
Video Conferencing
(no. of monthly meetings) C
Increase of 400%
from 2018
587
(2019)
N/a
81%
N/a
270,000
(1,414
shop
estate)
76,043
(2018)
Base
line
FY22
Absolute
amount
FY21
Absolute
amount
FY20
Absolute
amount
FY21/22
Movement
N/a
54,862,751
53,670,742 45,008,806
158
(73%)
1,769
92%
24%
137
1,382
91%
19%
257
2,520
83%
13%
2%
15%
28%
1%
26%
332, 581
222,915
(21%)
365,000
336,149
13%
262,095
(1,407
shop
estate)
414,138
(445%
increase
from 2018)
a Historical data shown for FY20-21 for William Hill Limited (formerly William Hill PLC) for the full twelve months in the reporting period. William Hill was acquired by
888 Holdings PLC on 1 July 2022 and the data shown is William Hill’s operational data for the full twelve months in 2022.
b Comparator for FY21 re-stated to a more accurate value of 332,581 m3 from 339,649 m3 which was based on an estimate for December 2021 figures. William Hill now
owns 1,407 shops in the retail estate.
c William Hill changed third party providers for video conferencing facilities during the year. This total represents the data for the old provider plus an estimate for
the full year for the new provider (as data is only stored for 6 months – 83,569 meetings in that period). Comparator for FY21 re-stated to 365,000 from 367,791
meetings, which was based on an estimate for December 2021 figures.
William Hill’s GHG emissions
William Hill achieved its goal and became certified as carbon neutral in 2022 (Scope 1 and 2) through investing in carbon
offsetting projects. William Hill’s total Scope 1 and 2 emissions (location-based) decreased by 9% from prior year (see Table
Figure 13). The larger decrease in Scope 1 and 2 (location based) emissions compared to the 2% increase in global energy
use, is explained by electricity grids becoming greener. This leads to an average reduction in emission factors in countries
where William Hill operates (for example, in the UK there has been a 9% decrease in the emissions factor for FY22/21 due to a
decrease in coal use in electricity generation and an increase in renewable generation).
Figure 15: William Hill’s absolute GHG emissions
GHG emissions A
Scope 1 (tCO2e) B
Scope 2 (tCO2e) B (market-based)
Scope 2 (tCO2e) B (location-based)
Total Scope 1 &2 B (market-based) (tCO2e)
Total Scope 1 &2 (location-based) (tCO2e) B
Scope 3 (market-based) (tCO2e)
Scope 3 (location-based) (tCO2e)
FY22
Absolute
amount
945
795
11,144
1,740
12,089
70,831
75,002
FY21
Absolute
amount
FY20
Absolute
amount
FY21/22
Movement
1,025
1,390
12,218
2,416
13,243
69,216
73,246
1,263
N/a
11,237
N/a
12,499
N/a
N/a
(8%)
(43%)
(9%)
(28%)
(9%)
2%
2%
a All figures reported under the GHG Protocol and the GHG Protocol Corporate Value Chain. Historical data shown for FY20-21 for William Hill Limited (formerly
William Hill PLC) for the full twelve months in the reporting period. William Hill was acquired by 888 Holdings PLC on 1 July 2022 and the data shown is William Hill’s
operational data for the full twelve months in 2022. Scope 2 emissions shown on both a location-based and market-based approach, and the difference is due to
the UK retail estate which has zero emissions on the market-based approach as it is supplied by renewable energy.
b FY21 Scope 1 and 2 emissions include the US emissions which are excluded from the FY22 calculations (William Hill vacated the US in 2022). The FY21/22 movement
in Scope 1 emissions on a like-for-like basis (excluding the US) relates to an increase in the use of company vehicles and air conditioning in the UK. The FY21/22
movement in the Scope 2 (market-based) emissions on a like-for-like basis (excluding the US) is mainly due to a fall in electricity use in Gibraltar. On a location-
based method, the FY21/22 Scope 2 movement is mainly due to a fall in electricity use in the UK.
William Hill calculated its Scope 3 emissions (which include indirect emissions across its value chain) for the first time this
year and the baseline year is 2021. William Hill’s Scope 3 emissions (market-based) increased by 2% on the prior year and
the most significant emission category is Purchased Goods and Services (including Capital Goods) (see Figure 16). The most
significant increase in Scope 3 emissions since the previous year is associated with Upstream Transportation and Distribution
(mainly for courier services for the retail estate), Employee Commuting and Business Travel (particularly air travel and hotel
stays) as restrictions from COVID-19 were relaxed this year.
888 Holdings PLC Annual Report & Accounts 2022
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William Hill’s GHG emissions continued
Figure 16: William Hill’s Scope 3 emissions per category
Scope 3 Category A
Purchased Goods & Services (including Capital Goods)
Upstream Transportation and Distribution
Employee Commuting
Business Travel B
Fuel & Energy-related Activities
Investments
Waste Generated in Operations
Total Scope 3 (market-based)
FY22
Absolute
amount
% of Total
Scope 3
emissions
62,357
3,668
2,354
1,889
252
194
117
70,831
88%
5%
3%
3%
0%
0%
0%
100%
a Scope 3 emissions were calculated using the GHG Protocol Corporate Value Chain. The Scope 3 calculation methodology for FY22 is detailed in Appendix 2 of
the Zero Carbon Report 2022. William Hill was acquired by 888 Holdings PLC on 1 July 2022 and the data shown is William Hill’s operational data for the full twelve
months in 2022.
b Business Travel is the sum of the emissions for flights, hotels, rail travel, taxi travel and employees’ grey fleet.
Climate scenario analysis methodology (TCFD reporting)
The Group has performed climate-related scenario analysis for the first time this year under the guidance of external
advisers and the methodology used is outlined below.
The scenario analysis was completed in line with recommendations published by the TCFD and aligns closely with ISO 14091
(2021) and other reference publicly available resources. A qualitative approach was used and the level of action required
to respond to the risk was identified. This approach was used to ensure that a clear narrative around the scenarios and the
associated risks was developed first before attempting extensive quantification, which without the former may have been
arbitrary. The key features of the climate scenarios are detailed in Figure 4 and the results of the scenario analysis are shown
in the TCFD Report Figures 6 and 7.
Limitations of the scenario analysis process
The following limitations were identified by external advisers during the scenario analysis process:
• The definition of likelihood is assigned based on qualitative (opinions using scientific understanding of climate change
and timescales) rather than quantitative aspects. This may allow for inconsistencies in determining likelihood, which is
subsequently used to rank risks by materiality. When revisiting scenario analysis in the future other variables in place of
‘likelihood’ could be used to assign materiality such as ‘impact on company objectives vs level of action required’.
• The scenarios are built around published climate models, reports, and other resources. There are limitations within the
climate models themselves and the narrative these generate due to the high levels of scientific uncertainties embedded
into climate change.
• The scenario analysis considers three time horizons, one of which (short) is only up to 5 years. Company strategy is often
built around short time horizons (financial forecasts and company objectives etc.) rather than long time horizons (e.g. up
to 2050) timescales due to increased uncertainty. Considering long time horizons is often unfamiliar and uncomfortable for
organisations but is a requirement when considering impacts of climate change. This should be an area for improvement
when reviewing climate scenario analysis in the future and 888 should begin to consider a wider range of time horizons.
The following climate-related risk terminology has been used in the scenario analysis:
• Materiality: A simple materiality matrix based on likelihood and level of action required was developed using orders
of magnitude. An uplift based on the warming scenario being considered was applied to account for a higher level of
physical risk under more extreme warming conditions, and higher transitional risk under lower warming scenarios.
• Transitional risk: Policy and legislation changes and advances in infrastructure and technology that are driven by
climate-change.
• Mitigation: Avoiding and reducing emissions of GHG emissions into the atmosphere to prevent the planet from warming
to more extreme temperatures.
• Physical risk (acute): Short-term events that have the potential for significant physical impact to the local environment
e.g., hurricane, storm surge, wildfire.
• Physical risk (chronic): Long-term physical processes that have the potential for significant physical impact on either
a wider geographical scale and/or for prolonged periods of time.
• Adaptation: Adaptation relates to actions that reduce the negative impact of climate change, while taking advantage
of potential new opportunities.
88
888 Holdings PLC Annual Report & Accounts 2022
STRATEGIC REPORT 888 Holdings PLC Annual Report & Accounts 2022
89
STRATEGIC REPORT Governance
BOARD OF DIRECTORS
An experienced Board
2022 WAS YEAR OF EXCEPTIONAL CHANGE FOR
THE GROUP. DURING THE FIRST HALF OF THE
YEAR THE FOCUS OF THE BOARD WAS ON THE
TRANSFORMATIONAL ACQUISITION OF WILLIAM HILL.
Following completion of the acquisition, the appointment of three additional
board members has not only brought extensive and highly relevant skills and
experience to the Board, but it has also further strengthened the Group’s
corporate governance structure. This has been of significant benefit to the Group
during the second half of 2022 as it laid out a competitive plan at its Capital
Markets Day, to delivers its long-term strategic objectives as an enlarged business
following the acquisition of William Hill.
1 /
4 /
A
E
N
G
R
7 /
E
2 /
A
E
N
R
5 /
A
R
8 /
3 /
G
6 /
A Audit Committee
E
ESG Committee
N Nominations Committee
G
Gaming Compliance
Committee
R Remuneration Committee
C Chair
Board gender
diversity
Independence
Male 4
Female 4
iNEDs 5
NEDs 1
Executive Directors 2
90
888 Holdings PLC Annual Report & Accounts 2022
1 / Lord Mendelsohn
Executive Chair
Lord Mendelsohn was appointed as
Non-Executive Chair of the Board in
March 2021. He is a highly experienced
gambling sector professional with more
than 20 years’ industry experience that
includes co-founding Oakvale Capital
LLP, a leading M&A and strategic
advisory boutique focusing on the
gaming, gambling and sports sectors.
He also serves as Senior Adviser to Value
Retail Plc and RG Advisors.
He cofounded LLM Communications, a
corporate and public affairs consultancy
which was acquired by Financial
Dynamics and served as a Managing
Director and later as Chair of the Global
Issues Division, including after it was
acquired by FTI Consulting. He is an
investor in early stage and start-up
companies in various sectors including
technology, leisure and energy.
Lord Mendelsohn is a Working Life
Peer who has been a member of the
House of Lords since October 2013.
He has served as a Shadow Minister
for Business, International Trade and
Innovation and Skills.
Lord Mendelsohn was a member of the
Audit and Remuneration Committees
until his appointment as Chair of the
Board in March 2021. He was Chair of the
ESG Committee until his appointment as
Executive Chair in January 2023.
Age 56.
2/ Anne de Kerckhove
Independent Non-Executive Director,
Senior Independent Director
Anne was appointed Senior Independent
Director on 17 March 2021, and is
Chair of the Company’s Nominations
and Remuneration Committees and a
member of the Company’s Audit and ESG
Committees. Anne was also appointed as
the Workforce Engagement Designated
Non-Executive in July 2022.
Anne was until recently the CEO of
Freespee, a fast growing company in
the conversational commerce space.
Previously, she was the CEO of Iron Capital
and the Managing Director EMEA for
Videology, Global Director of Reed
Elsevier, and COO and International
Managing Director at Inspired Gaming
Group. Anne is an angel investor and
mentor for early-stage start-ups and
entrepreneurial funds including CRE
and Daphni. She holds a Bachelor of
Commerce from McGill University and
an MBA from INSEAD.
Age 50.
GOVERNANCE NON-EXECUTIVE SKILLS AND EXPERIENCE
Lord
Mendelsohn
Anne De
Kerckhove
Mark
Summerfield
Limor
Ganot
Andrea
Gisle
Joosen
Andria
Vidler
Ori
Shaked
Finance, audit and risk management
Remuneration
Technology
M&A and capital markets
Gambling/gaming
Marketing/Branding
International business
Consumer services
3/ Yariv Dafna
Chief Financial Officer
5/ Limor Ganot
Independent Non-Executive Director
7/ Andria Vidler
Independent Non-executive
Limor was appointed as a Non-executive
Director of the Company in August 2020
and in April 2021, was appointed to the
Company’s Audit and Remuneration
Committee. She is managing partner
of Gefen Capital, a US-Israeli venture
capital fund that invests in disruptive
technologies, a board member of Diners
Club Israel, and former co-CEO of Alon
Blue Square Israel. She is a certified
public accountant who started her
professional journey in the corporate
finance division at KPMG, and received
her Bachelors of Science in Accounting
and Economics from Tel Aviv University.
Age 50.
6/ Andrea Gisle Joosen
Independent Non-Executive Director
Andrea was appointed as a non-
executive director of the Company in
July 2022. She is a highly experienced
non-executive director, having held
leadership positions across multiple
international technology and consumer
industries companies. She currently
serves as a Non-executive Director for
Currys plc and Billerud AB. She previously
chaired Sweden-headquartered Acast
AB and was a Non-executive Director at
ICA Gruppen, James Hardie Industries
plc and Mr Green & Co, the online
gaming business which was acquired
by William Hill plc in 2018. During her
executive career, Andrea has held
numerous leadership roles in the media
and technology sectors including as CEO
of Boxer TV Sweden and as Managing
Director of Nordics for Panasonic,
Chantelle Group and Twentieth
Century Fox.
Andrea has a BSc in Business
Administration and MSc in International
Marketing from Copenhagen Business
School. She has also completed
Executive Education at Harvard Business
School in both Effective Negotiations
and Audit Committees in a New Era
of Governance.
Age 59.
Andria was appointed as non-executive
director in July 2022 and Chair of the
ESG Committee in January 2023. She has
30 years’ experience in marketing and
technology, focusing on re-energising
brands through consumer engagement
and digital innovation. Since 2020
she has been the CEO of Tag EMEA,
the independent end-to-end creative
production partner for brands and
agencies. Andria leads the global ESG
strategy for Tag. Andria was previously
CEO of Centaur Media PLC. Prior to
Centaur, Andria spent four years as
CEO for EMI Music UK & Ireland and has
held senior roles at Bauer Media and
the BBC. She was a Non-executive for
Gamesys PLC where she chaired the ESG
committee. She has previously served
as a Trustee for the Media Trust and the
Roundhouse Trust and as Chair of the
Marketing Group of Great Britain.
Andria has a BA (Hons) in History
from Anglia Ruskin University and an
MBA from the University of Bradford.
In 2021 she also undertook the Oxford
University Leading Sustainable
Corporations Programme.
Age 56.
8/ Ori Shaked
Non-Executive Director
Ori was appointed to the board in
September 2022. He is a gaming
entrepreneur and experienced game
producer. He was previously employed
by the Group until 2017 as a game
producer, online marketer and business
development manager. Ori acts as an
early-stage investor in gaming and
blockchain start-up companies. He holds
a BA in Business Management from
Tel Aviv University. Ori is not considered
independent following his appointment
by the Group’s largest shareholder, Salix
Trust Company (BVI) Limited, in bare trust
on behalf of Dalia Shaked, in line with its
right to appoint a non-executive director.
Age 39.
Yariv was appointed as CFO of the
Company and joined the Board on
1 November 2020. Yariv was appointed
as a member of the Gaming Compliance
Committee in May 2021.
Yariv held a number of positions with Telit
Communications plc since 2003, taking
an active role in its IPO in 2005 and
subsequent fundraisings. His positions
at Telit included Group CFO from 2007
to 2012, Chief Corporate Development
Officer with responsibility for all M&A
activity, and subsequently also COO,
with responsibility for all operation and
purchasing activities. In November
2017, he was appointed to Telit’s Board
as Finance Director with responsibility
for finance, legal, IT and corporate
development activities.
Yariv started his career in 1999 at
Deloitte Israel and holds a BA in Business
Administration and Accounting from
the College of Management Academic
Studies, an MBA from Tel Aviv University,
and is a Certified Public Accountant.
Yariv will step down from his role at the
end of 2023.
Age 49.
4/ Mark Summerfield
Independent Non-Executive Director
Mark worked as a Chartered Accountant
for KPMG in the UK and US for 29 years,
18 as a partner. His roles included Global
Head of Gaming, UK Head of Audit
for Technology, Media and Telecoms
(“TMT”) and UK Head of Assurance. He
has extensive knowledge and experience
in auditing, financial reporting and
governance, as well as mergers and
acquisitions and capital market transactions.
Mark spent most of his career working
for companies in the TMT and leisure
sectors and built KPMG’s gaming practice,
working with a number of online gaming
operators. He was also William Hill’s
interim CFO for 15 months, helping set
the Group’s strategic direction and
assisting with its transformation and
technology programmes.
Mark was appointed as Non-Executive
Director and Chair of the Audit
Committee in September 2019. He is
also a member of the Company’s ESG,
Remuneration, Nominations and Gaming
Compliance Committees.
Age 56.
888 Holdings PLC Annual Report & Accounts 2022
91
GOVERNANCE CORPORATE GOVERNANCE REPORT
Leading the way
Our commitment to corporate
governance is fundamental to
ensuring we operate in a responsible
and transparent manner, delivering
long-term value to our stakeholders,
including our shareholders, employees,
customers, and the communities in
which we operate. With the joining of
888 and William Hill, our governance
framework plays a key role to ensure
that our combined business is
managed effectively, that the Board
has appropriate oversight of strategic
matters and to facilitate an effective
decision-making process.
Although the Company is incorporated
in Gibraltar, the UK Corporate
Governance Code 2018 (the “Code”
or “UK Corporate Governance Code”)
applies pursuant to the UK Listing Rules
as the Company’s Ordinary Shares are
admitted to the premium segment of
the UK Official List and to trading on
the London Stock Exchange’s main
market for listed securities.
This statement also includes items
required by the UK Listing Rules
and the Disclosure Guidance and
Transparency Rules, including how the
“Main Principles” of the UK Corporate
Governance Code have been applied.
For the year ended 31 December
2022, the Company fully complied
with the provisions set out in the Code.
However, following the departure of
Itai Pazner as CEO in January 2023,
Lord Mendelsohn was appointed as
Executive Chair on an interim basis
while a permanent CEO is recruited.
The Board acknowledges that this
does not comply with the provision
of the Code requiring that the roles
of Chair and CEO be exercised
separately. However, it has considered
that this interim measure is in the
best interests of the Company and
its stakeholders to ensure robust
leadership during this transition period.
BOARD LEADERSHIP
The Board of Directors is responsible
for overseeing the management of
the Company and setting its strategic
direction. As at 31 December 2022,
our Board comprised 7 non-executive
directors and 2 executive directors,
all of whom have a range of relevant
skills and experience to bring to
the Company.
The non-executive directors bring
independent judgement to bear on
issues of strategy, performance, and
risk, and provide constructive challenge
to the executive directors. The
executive directors are responsible for
implementing the Company’s strategy
and delivering its performance.
Meetings and attendance
There are six regularly scheduled
board meetings planned per year.
However, when urgent decision-
making is required between meetings
on matters reserved for the Board,
there is a process in place to facilitate
discussion and decision making. The
Directors regularly communicate and
exchange information irrespective of
the timing of meetings.
Set out below are details of the
Directors’ attendance record at Board
and Committee meetings in 2022. All
meetings in 2022 were held in person
in London apart from the July Board
meeting which was held at 888’s office
in Bucharest in order for the Board
to see local operations and meet
with employees.
Total held in year
Lord Mendelsohn
Itai Pazner
Yariv Dafna
Anne de Kerckhove
Mark Summerfield
Limor Ganot
Andrea Gisle Joosen2
Andria Vidler2
Ori Shaked3
Randy Freer4
Director meeting attendance for year ended 31 December 2022
Board
Audit
Committee
Remuneration
Committee
Nominations
Committee
ESG
Committee
Gaming
Compliance
Committee1
6
6
6
6
6
6
6
2
3
2
—
5
—
—
—
4
5
5
—
—
—
—
4
—
—
—
4
4
4
—
—
—
—
2
—
—
—
2
2
—
—
—
—
—
3
3
—
—
3
3
—
—
—
—
—
4
—
—
4
—
4
—
—
—
—
—
1. Mr. Michael Alonso is Chair of the Gaming Compliance Committee but is not a Board member.
2. Andrea Gisle Joosen and Andria Vidler were appointed to the Board on 5 July 2022.
3. Ori Shaked was appointed to the Board on 13 September 2022.
4. Randy Freer was appointed to the Board on 5 July 2022 and stepped down on 31 August 2022 and did not attend any board meetings.
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888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE The Board delegates certain matters
to its principal committees who provide
reports and make recommendations to
the Board. The terms of reference for
each committee are available on the
Company’s website.
Board activities 2022
During 2022, the Board has overseen
the strategic development of the
Company including the acquisition
of William Hill. It has reviewed and
monitored the operational, trading
and financial performance of the
Company, including how it creates
value over the long term.
The Chair has responsibility for
ensuring that agendas for Board
meetings are set in advance. Board
papers are issued to Directors
sufficiently in advance of meetings to
facilitate both informed debate and
timely decisions. If a Director is unable
to attend a meeting, he or she is given
the opportunity to raise any issues
and give any comments to the Chair
in advance.
None of the Directors have raised
any concerns about the running of
the Company or a proposed action
which needed to be recorded in the
Board minutes of the Company or in a
statement to the Chair for circulation
to the Board.
Meetings with Non-Executive
Directors
At each Board meeting, the Chair
designates time for the Non-Executive
Directors to meet without the Executive
Directors being present.
The Non-Executive Directors also
meet once per year without the
Chair present in order to appraise
the performance of the Chair and
take into account the views of the
Executive Directors. This process is led
by the Senior Independent Director
in accordance with the UK Corporate
Governance Code. This took place in
March 2022.
Board responsibilities and
procedures
The Directors consider it essential
that the Company should be both
led and controlled by an effective
Board. The Board focuses upon the
Company’s long-term objectives,
strategic and policy issues. It formally
and transparently considers the
management of key risks facing the
Group, as well as determining the
nature and extent of significant risks
it will take in achieving its strategic
objectives. It maintains and reviews
annually the effectiveness of the
Company’s risk management and
internal control systems. The Board
is responsible for acquisitions and
divestments, major capital expenditure
projects and considering the
Company’s budgets and dividend
policy. The Board also determines key
appointments. The Board receives
regular updates on shareholders’ views.
The Board has an established
calendar of business which covers the
financial calendar, strategic planning,
annual budgets and performance self-
assessments, as well as the conduct
of standing business. The calendar
forms the basis for effective integration
of business activities as between the
Board and its principal committees,
which individually consider their own
operating frameworks against the
Board’s business programme.
Audit
Committee
ESG
Committee
Remuneration
Committee
Nominations
Committee
Gaming Compliance
Committee
Assists the Board
in discharging its
responsibilities
for the integrity
of the Company’s
financial statements,
risk management,
assessment of the
effectiveness of the
system of internal
control and the
effectiveness of Internal
and External Auditors.
Assist the Board in
defining and reviewing
the Company’s strategy
relating to ESG matters,
setting relevant KPIs,
developing ESG policies
and compliance
with legal and
regulatory requirements.
Determines the
Company’s policy on
the remuneration of
Executive Directors,
other members of the
Executive Committee
and the Chair of the
Board.
The Committee also
reviews workforce
policies and practices.
Assists the Board by
keeping the Board
composition under
review and makes
recommendations
in relation to Board
appointments. The
Committee also assists
the Board on issues
of Executive Director
succession planning,
conflicts of interest and
independence.
In accordance with
Nevada Gaming Control
Board requirements
the committee is
entrusted with making
sure that the Group’s
licensed gaming activity
is carried out with
honesty and integrity,
in accordance with
high moral, legal and
ethical standards, and
free from criminal and
corruptive elements.
Read more on
pages 102 to 107
Read more on
pages 100 to 101
Read more on
pages 108 to 110
Read more on
pages 98 to 99
Read more on
page 97
888 Holdings PLC Annual Report & Accounts 2022
93
GOVERNANCE CORPORATE GOVERNANCE REPORT CONTINUED
BOARD LEADERSHIP
CONTINUED
Board activities 2022 continued
At every meeting the Board receives
and discusses updates from
the CEO, CFO, CSO and CRO on
progress against strategy, financial
performance, operational matters and
compliance and regulation. In 2022
the Board spent a significant amount
of time considering the acquisition
of William Hill and the integration
of the two businesses following the
acquisition.
Also, at each meeting the Board
undertook the following:
• scrutinised the operational
performance of the Group;
• reviewed the Company’s risk
management and compliance
processes;
• received updates on our People
and culture;
• monitored the Company’s safer
gambling activities;
• received updates on shareholder
views; and
• monitored regulatory developments.
In addition to the above, the Board
also considered the following key
activities.
January
• Deep dive review and approval of the Company’s updated “Made to Play” branding proposition
• Reviewed, considered and approved the equity raise for the acquisition of William Hill
• Received updates on UK Gambling Act Review and other regulatory developments
• Reviewed and considered further strategic development opportunities
March
• Approved the Prospectus issued in relation to the funding of the acquisition of William Hill
• Received the findings from the external board evaluation
• Reviewed, considered and approved the 888Africa joint venture
• Approved the FY21 annual report and financial statements
May
• Deep-dive review of the Section8 in-house games studio
• Received an update on the US strategic partnership with ABG/Sports Illustrated
• Update on the completion of the William Hill acquisition
• Reviewed plans for the integration of William Hill and 888
• Deep-dive review of Spectate – the 888 Sportsbook
• EGM to obtain shareholder approval of the William Hill acquisition
July
• Appointed of Andria Vidler, Andrea Gisle Joosen and Randy Freer as directors
• Visit to Romania office including site tour and overview of operations
• Review of the Compliance function including introduction to new Chief Risk Officer
• Appointed Anne de Kerckhove as the workforce designated non-executive
• Approval of sale of bingo business
• Reviewed integration and transformation plans for the combined business
September
• Appointed Ori Shaked as director
• Deep-dive review of consumer insight
• Updated on synergies, William Hill integration and organisational design
November
• Review of marketing strategy and approach
• Deep-dive review of the retail estate
• Reviewed and approved strategic projects and synergy optimisation
• Approved debt refinancing and hedging
• Reviewed and approved the FY23 budget
• Reviewed and approved plans and presentations for the Capital Markets Day
94
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE DIVISION OF
RESPONSIBILITIES
Chair, Chief Executive Officer and
Senior Independent Director
Notwithstanding the current position
described below, there is a clear
division of responsibilities between
the Chair and the CEO, which the
Board considers an important part
of its corporate governance. This is
documented and available on the
Group’s website and also include
the responsibilities of the Senior
Independent Director.
The role of the Senior Independent
Director is to provide a sounding board
for the Chair, to evaluate the Chair’s
performance and lead the Board’s
succession planning, and to serve as
an intermediary for the other Directors
where necessary.
Following Itai Pazner’s departure as
CEO in January 2023, Lord Mendelsohn
was appointed Executive Chair on an
interim basis whilst a replacement is
recruited. Whilst in this position, Lord
Mendelsohn will take on both roles
and will be supported by the Executive
Committee, Senior Independent
Director and the Board.
Reserved powers and delegation
A schedule of matters reserved to
the Board has been adopted and is
reviewed and updated regularly to
align it with operational needs and the
Board’s preference to monitor and,
where appropriate, approve matters
of substance to the Group as a whole.
The most recent review and update
was May 2021 and is available on the
Group’s website.
2022 evaluation recommendations Progress
Independent Directors
Board succession
More than half of the Board, excluding
the Chair, are Non-Executive Directors
determined by the Board to be
independent for the purposes of the
UK Corporate Governance Code.
The Board is confident that Mark
Summerfield, Limor Ganot, Anne
de Kerckhove, Andrea Gisle Joosen
and Andria Vidler are and remain
independent in character and
judgement and that there are no
relationships or circumstances which
are likely to affect, or could appear to
affect, their judgement.
COMPOSITION, SUCCESSION
AND EVALUATION
Board composition
During 2022, the composition of
the Board was enhanced with the
appointment of four additional non-
executive directors. It comprised the
following Non-Executive Directors:
Lord Mendelsohn (Chair), Anne de
Kerckhove (Senior Independent
Director), Mark Summerfield, Limor
Ganot, Andrea Gisle Joosen (from 5
July 2022), Andria Vidler (from 5 July
2022), Randy Freer (from 5 July 2022
to 31 August 2022) and Ori Shaked
(from 13 September 2022), as well as
Executive Directors Itai Pazner (to
29 January 2023) as Chief Executive
Officer, and Yariv Dafna as Chief
Financial Officer.
The biographical details of all of the
Directors, setting out their relevant skills
and experience and their professional
commitments, are given on pages 90
and 91.
Succession planning is delegated
to the Nominations Committee and
more information can be found on
page 98. Matters within the remit
of the Nominations Committee are
also on occasion considered by the
Board. Non-Executive Directors are
currently appointed to the Board for
an initial three-year term, extendable
by a further two additional three-
year terms. The terms and conditions
of appointment of Non-Executive
Directors and the service contracts
of Executive Directors are available
to shareholders for inspection at the
Company’s registered office during
normal business hours and at the AGM.
Board evaluation
The Board has established a formal
process for the annual evaluation of
its performance, and the performance
of its committees and individual
Directors. The evaluation process
covers a range of issues such as
Board processes, composition, roles
and responsibilities, agendas and
committee processes, as well as Board
dynamic and communication.
In accordance with the Code and the
FRC Guidance on Board Effectiveness,
we annually evaluate the performance
of the Board and its Committees to
assess their effectiveness. Led by the
Chair, the performance evaluation
considers the balance of skills,
experience and independence of
the Board. The annual performance
evaluation is externally facilitated
every three years. The January 2022
performance evaluation was externally
facilitated by Fidelio Partners and an
update on progress of the actions
arising from this review is set out below.
Establish a clear understanding
of the work of the Board with
the business
Guidance provided to executive team on role of the board and reporting requirements.
Updated roles and responsibilities document produced. Terms of reference reviewed
annually.
Ensure Board Reporting
requirements are well
understood
Build out employee
engagement plan
Increase the size of the Board
paying close attention to
dynamic and effectiveness
Deep dive topics for year and key themes build into board calendar. Template for board
reporting and guidelines prepared and rolled out. Board and committee calendars agreed
for 2023 and 2024.
Workforce designated NED appointed and is scoping the engagement programme.
Employee engagement questionnaires provided to the Board.
Additional non-executive directors appointed with appropriate skills and experience in
gaming, remuneration and ESG. Induction programme developed and rolled out.
Develop Committee
effectiveness
Review of Committee make-up underway. Additional executive capability in place to support
the Remuneration Committee.
Keep under review stakeholder
engagement and D&I
Stakeholder map updated following acquisition. Regulatory and safer gambling framework
updated.
888 Holdings PLC Annual Report & Accounts 2022
95
GOVERNANCE CORPORATE GOVERNANCE REPORT CONTINUED
COMPOSITION, SUCCESSION
AND EVALUATION CONTINUED
Board evaluation continued
In 2023 the Board undertook an
internal evaluation facilitated by the
Company Secretary. Following the
evaluation, the Board was satisfied
that each of the Non-Executive
Directors continues to be effective and
to demonstrate commitment to their
respective roles, and proposes them
for re-election or election at the 2023
Annual General Meeting.
Shareholder Engagement
The Company maintains an active
and regular dialogue with principal
and institutional shareholders and
sell-side analysts through a planned
programme of investor relations
and financial PR activity. The Board
keeps up to date with the views of
major shareholders through meetings
and discussions with shareholder
representatives and receives regular
feedback directly from investor
relations reports and broker updates at
each board meeting. The programme
of engagement includes formal
presentations of full year and interim
results, analysts’ conference calls and
periodic roadshows and discussion
of the Company’s strategy and
governance. The Company Secretary
engages with proxy advisers in
advance of any shareholder meetings.
In addition, throughout the year, the
Chair of the Remuneration Committee
has consulted with major shareholders
on proposed Executive Director
remuneration. Details of engagement
with shareholders during 2022 are set
out on page 96.
The Non-Executive Directors are
available to talk to shareholders if they
have any issues or concerns or if there
are any matters where contact with
the Chair, Chief Executive Officer and
Chief Financial Officer is inappropriate
or where such contact has failed to
resolve the issue.
Key Stakeholders
The Company’s key stakeholders are
its shareholders and debtholders,
customers, regulators, colleagues and
partners as well as the communities
in which it does business. The
Board takes care to engage with its
stakeholders, as detailed on pages
32 and 33 and within the ESG Report
on page 34 and the Remuneration
Report on page 108. All papers
presented at board meetings include
details of how the interests of the
Company’s key stakeholders are
considered in Board discussions and
decision-making as required by the
UK Corporate Governance Code and,
whilst as a Gibraltar company, the UK
Companies Act 2006 does not apply
to the Company, the matters set out in
section 172 are taken into account by
the Board in its decision-making to the
extent permitted under Gibraltar law.
EGM May 2022
In May 2022 an Extraordinary General
Meeting of the Company took place
at which the sole resolution proposed
was to approve the acquisition of
William Hill. In advance of this meeting
there was extensive engagement
with shareholders, particularly
regarding the means of funding this
transformational acquisition.
The acquisition was overwhelmingly
supported by the Company’s
shareholders with over 99% of total
votes cast in favour.
1. References in this Annual Report to Company Secretary refer to Elizabeth Bisby and for Gibraltar corporate purposes Straits Secretaries (Gibraltar) Limited.
96
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE AGM 2022
Information and support
Gaming Compliance Committee
All resolutions proposed at the AGM
in June 2022 were overwhelmingly
supported with at least 91% of total
votes cast in favour. The next AGM
will be held in May 2023 and the
majority of Board members will
attend the meeting and be available
to answer questions.
Directors’ insurance cover
The Company has arranged and
maintains, at its expense, a directors’
and officers’ liability insurance policy
in respect of legal actions against its
Directors, as recommended by the
UK Corporate Governance Code. To
the extent permitted by Gibraltar law,
the Company may also indemnify the
Directors. Neither the insurance nor
the indemnity provides cover where
a Director has acted fraudulently or
dishonestly.
Development and advice
The Chair regularly agrees and
reviews each Director’s training and
development needs. Members of the
Board committees receive specific
updates on matters that are relevant
to their role. Members of the Executive
Committee with responsibility for
the Group’s business make periodic
presentations at Board meetings about
their functions, performance, markets
and strategy.
All Directors have access to the
advice and services of the Company
Secretary1 and the Company’s
nominated advisers, who are
responsible for ensuring that Board
procedures are followed. Directors are
able to seek independent professional
advice, if required, at the Company’s
expense provided that they have first
notified the Company of their intention
to do so.
Under the direction of the Chair, the
Company Secretary’s responsibilities
include ensuring information flows
within and between the Board, its
Committees and the executive team,
as well as facilitating induction,
evaluation and professional
development activities, and advising
the Board on corporate governance,
legal and procedural matters.
Conflicts of interest
Conflicts of interest of the Directors
are dealt with in accordance with
the procedures set out in the Articles
and are monitored by the Chair.
Specifically, a Director does not vote
on Board or Committee resolutions
in which they or persons connected
with them have an interest (other than
by virtue of a shareholding in the
Company) which is to their knowledge
material, except in specific limited
circumstances. The Board is confident
that the appropriate checks and
balances are in place to identify and
minimise potential conflicts of interest.
In accordance with Nevada Gaming
Control Board requirements, the Board
has appointed a Gaming Compliance
Committee. Its current members are
Mark Summerfield and Yariv Dafna, in
addition to an external leading Nevada
lawyer, Michael Alonso, who chairs
the Committee.
The Gaming Compliance Committee
is entrusted with making sure that the
Group’s licensed gaming activity is
carried out with honesty and integrity,
in accordance with high moral, legal
and ethical standards, and free from
criminal and corruptive elements. As
such, the Committee is responsible
and has the power to identify and
evaluate situations arising in the course
of the Company’s and its affiliates’
business that may adversely affect the
objectives of gaming control.
The Committee is not intended to
displace the Board or the Company’s
executive officers with decision-making
authority, but is intended to serve as
an advisory body to better ensure
achievement of the Company’s goals
of avoiding unsuitable situations and in
entering into relationships exclusively
with suitable persons.
The Committee’s work is being done
independently and impartially. To this
end, its members are appointed by
and report directly to the Board of
Directors.
Other Disclosures
The following matters can be found in this report on the following pages:
Applicable sub-paragraph within LR 9.8.4
(1) Interest capitalised by the Group
(2) Publication of unaudited financial information
(3) Details of long-term incentive schemes only involving a Director
(4) Waiver of emoluments by a Director
(5) Waiver of future emoluments by a Director
(6) Non pro-rata allotments for cash (issuer)
(7) Non pro-rata allotments for cash by major subsidiaries
(8) Parent participation in a placing by a listed subsidiary
(9) Contracts of significance
(10) Provision of services by a controlling shareholder
(11) Shareholder waivers of dividends
(12) Shareholder waivers of future dividends
(13) Agreements with controlling shareholders
On behalf of the Board:
Lord Mendelsohn
Executive Chair
14 April 2023
Disclosure
provided
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
888 Holdings PLC Annual Report & Accounts 2022
97
GOVERNANCE NOMINATIONS COMMITTEE
Nominations Committee
Anne de Kerckhove
Chair of the Nominations Committee
KEY ACTIVITIES 2022
• Reviewing the composition of the
Board including assessing any
gaps in the balance of skills and
experience.
• Selection of additional non-executive
directors taking account of the
above composition review.
• Development of tailored induction
plan for new non-executive directors.
• Monitoring the board evaluation
process which is described
on page 95.
• Implementing the Board’s diversity
policy which is described on page
99 (including considering the
gender balance of senior executives
and their direct reports).
• Supporting the development of a
diverse pipeline of candidates for
senior management.
Membership in 2022
Anne de Kerckhove
(Chair)
Mark Summerfield
Meeting
attendance
2/2
2/2
Following the announcement in
January 2023 that Itai Pazner
was leaving the business, he was
immediately succeeded by Lord
Mendelsohn as Executive Chair to
ensure continuity of leadership. The
Nominations Committee has taken the
lead in the search for a new CEO with
a focus on the skills and experience
required to lead the combined group.
The Committee is also managing the
recruitment of a new CFO to replace
Yariv Dafna when he steps down at the
end of 2023.
Appointment of new
non-executive directors
Following a review by the Committee
in 2021, it was agreed to search for
two additional directors based on
an agreed skills matrix. The Board
appointed the search firms Russell
Reynolds Associates and Odgers
Berndtson to assist the Nominations
Committee’s work. Both firms are
independent and have no connection
with the Company.
Due to the exceptional candidates,
Randy Freer, Andrea Gisle Joosen
and Andria Vidler were appointed on
5 July 2022. Due to other commitments,
Randy Freer stepped down on
31 August 2022. In addition, Ori Shaked
was appointed on 13 September 2022
Group’s largest shareholder exercising
its right to appoint a non-executive
director. All the new non-executive
directors completed a tailored
induction process facilitated by the
Company Secretary with oversight
from the Chair.
DEAR SHAREHOLDER
On behalf of the Board, I am pleased
to present the Nominations Committee
Report for the year to 31 December
2022. The Committee has been busy
this year with the selection and
onboarding of 3 new Non-Executive
Directors who bring additional skills
and experience to enhance the
Board’s strategic approach and
decision-making. The Committee has
also reviewed the changes to the
Executive Committee following the
acquisition of William Hill and their
direct reports.
The Nominations Committee, as
a sub-committee of the Board of
Directors, is responsible for monitoring
the composition and diversity of the
Board, overseeing the process of
selecting and nominating directors,
ensuring they receive an appropriate
induction and determining succession
plans for the Chair, CEO and other key
roles. The Nominations Committee’s
terms of reference are available on the
Company’s website.
In 2022 the Nominations Committee
was comprised of Independent Non-
Executive Directors Anne de Kerckhove
(Chair) and Mark Summerfield.
Succession Planning
The Committee regularly reviews
succession plans for the Board,
including the structure, composition
and skills required to support the
Group’s strategy. The Committee also
considers succession planning for
the Executive Committee and other
key roles within the senior leadership
team, as well as initiatives underway
to develop talent internally.
At both Board and Executive level,
2022 was a year of significant change
with the strengthening of the Board
through the appointment of 3 additional
non-executives and the establishment
of a group Executive Committee made
up of senior leaders from both 888 and
William Hill, together with new recruits.
The establishment of the Executive
Committee was a key part of the
integration process as outlined in the
People Section of our Sustainability
Report on page 40 and provides strong
leadership across the business.
98
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE New director induction programme:
Board diversity policy
• each new non-exec was assigned
with a mentor from the current
Board as a point of contact and
sounding board;
• introduction to the Executive Team
with deep dive sessions on their
key areas including operations,
retail estate, strategic overview,
corporate culture;
• briefing session on the financial
structure of the organisation,
key financial metrics, principal
risks and the Company’s internal
control framework;
• training provided on corporate
governance including PLC
requirements, directors’ duties, share
dealing, inside information, Listing
Rules and Market Abuse Regulations;
• product test accounts
were provided;
• briefing provided on regulatory
compliance and licencing in various
jurisdictions including licencing
obligations of directors;
• introductions to the Company’s
external advisers;
• briefing notes on investor
relations, market perceptions and
key stakeholder engagement
was provided;
• provided with key corporate
documents including the Articles
of Association, previous board
papers and minutes, the Schedule
of Matters Reserved for the
Board and details of where other
resources could be attained as
necessary; and
• provided with details of the Directors
and Officers Insurance.
The Nominations Committee is also
responsible for pursuing diversity within
the scope of its mandate, including
setting measurable objectives and
monitoring progress on achieving such
objectives. The Group has adopted
a Board Diversity Policy which takes
account of the requirements of the
Code, the Parker Review on ethnicity
and the Hampton Alexander Review
on gender diversity and is available
on our website. We aim to have a
Board that is well balanced and has
the appropriate skills, knowledge,
experience and diversity for the needs
of the business without compromising
on the quality or merit of candidates
including their aptitude and ability. In
considering new Board appointments,
the Committee considers diversity in
the broadest sense including diversity
of thought, age, gender, nationality,
independence, educational and
professional background, social and
ethnic background, business and
geographic experience in order to
create an appropriate balance.
The Board is pleased to confirm
that it has exceeded the Hampton-
Alexander Review target of 33% female
representation on the Board. Details of
the Company’s diversity position and
involvement of women in management
of the Group are set out in the
Sustainability section of the Strategic
Report on pages 34 to 45.
The geographic diversity of the Board
is representative of the operational
centres of the Group and includes
directors with British, Israeli and
European backgrounds. However, the
Board is also cognisant of the Parker
Review recommendations regarding
ethnic diversity and has at least
one director from an ethnic minority
background on the Board. It will also
take these considerations into account
in our future appointment as it wants to
continue to improve diversity on both
the Board and in the senior leadership
of the Group. Further information on
the Group’s diversity objectives are
contained in the Sustainability section
on page 42.
Commitment
The terms of appointment for each
Non-Executive Director, including
expected time commitment are
available for inspection at the
Company’s registered office during
normal business hours and at the AGM.
Non-Executive Directors are required to
allocate sufficient time to perform all
applicable roles and to both disclose
any external appointments and consult
with the Company prior to accepting
any new major external appointments.
It is the Committee’s view that all
Directors have allocated sufficient
time to fulfil their commitment and
to meet their Board obligations
and responsibilities.
Re-election and appointment
of Directors
The effectiveness and commitment of
each of the Non-Executive Directors is
reviewed by the Committee annually.
The Committee has satisfied itself
as to the individual skills, relevant
experience, contributions and time
commitment of all the Non-Executive
Directors, taking into account their
other offices and interests held. The
Board is recommending the election or
re-election to office of all Directors at
the 2023 AGM.
Anne de Kerckhove
Chair of the Nominations Committee
14 April 2023
888 Holdings PLC Annual Report & Accounts 2022
99
GOVERNANCE ESG COMMITTEE
ESG Committee
Safer Gambling
Safer gambling continues to be a
key focus for the Committee and
Player Safety is a core pillar of our
ESG framework. The Committee
received regular updates on safer
gambling and related matters and the
significant changes and improvements
implemented throughout 2022 to
encourage safer gambling with new
tools and technology.
Workforce Engagement
In 2022 the Committee reviewed
methods of engagement and Anne
de Kerckhove was appointed as the
Non-Executive Director designated
as the workforce engagement
representative. The acquisition of
William Hill has significantly altered
the location, demographic and
number of colleagues in the Group
from last year. With the combination
of two corporate cultures, it has never
been more important to ensure that
the Board listen to and understand
the views, interests and concerns
of the workforce and take these
into consideration prior to making
decisions. There has been increased
communication with colleagues to
keep them updated on business
changes and regular anonymous NPS
surveys to allow ongoing feedback
and temperature checks on employee
sentiment. The results of which are
shared with the Committee and Board.
Further details are set out on pages 40
and 41.
DEAR SHAREHOLDER
On behalf of the Board, I am pleased
to present the ESG Committee Report
for the year to 31 December 2022.
During this period the Committee was
chaired by Lord Mendelsohn, who
stepped down upon his appointment
as Executive Chair in January 2023. I
would like to thank him for his service
and for guiding the huge amount of
work done by the 888 and William
Hill teams to align our ESG strategies
and processes and to ensure that
the combined group has the right
frameworks in place to support
sustainable growth.
Membership
The ESG Committee is composed of
three independent non-executives,
with other board members including
the Executive Chair and CFO are
invited to attend the Committee
meetings. The Chief Strategy Officer
and Chief Risk Officer also attend the
meetings and provide operational
updates to the Committee. The Group
has also recently appointed an ESG
and Sustainability Director who has
executive responsibility for the Group’s
ESG strategy.
The Committee’s terms of reference are
available on the Group’s website.
The Committee is responsible for
reviewing the Group’s ESG strategy
and setting relevant KPIs, developing
and reviewing relevant policies and
practices and providing oversight of
the implementation of these plans.
In 2022, the CEO was the executive
responsible for monitoring ESG activity
and progress within the Group, with
the Executive Chair now taking over
this responsibility.
Following the acquisition of William
Hill an updated ESG framework was
developed for the Group. Further
details of which are contained in the
Sustainability on pages 34 to 45.
Andria Vidler
Chair of the ESG Committee
KEY ACTIVITIES IN 2022
• Review and approval of “Made for
the Future” ESG framework.
• Reviewed plans for implementation
of the carbon reduction plan.
• Received updates on the progress
on KPIs including on safer gambling,
people and the environment.
• Reviewed scores by rating agencies
and plans for improvements.
• Reviewed and approved evolved
ESG framework for the combined
group – “Players, People, Planet” see
page 35 for more details.
• Approved new ESG governance
structure and terms of reference for
the ESG & Sustainability Committee.
• Reviewed and considered the
climate related scenario analysis
report see page 68 for the
TCFD Report.
Membership in 2022
Lord Mendelsohn (Chair)
Anne de Kerckhove
Mark Summerfield
Meeting
attendance
3/3
3/3
3/3
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888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE Climate change and
the environment
The Committee recognises the
importance of minimising the
business’ environmental footprint. In
comparison to other sectors the 888
group’s impact on the environment
is relatively low as our product is
largely digital. 888 achieved a B- CDP
rating, and retaining membership of
the FTSE4GOOD index. William Hill
also made significant progress in
this area prior to the completion of
the acquisition including becoming
certified as carbon neutral this year
across its Scope 1 and Scope 2
emissions – a fantastic achievement
considering the size of our large retail
estate. Our carbon reduction plan has
been updated for the combined group
and scenario analysis conducted by
a cross functional team together with
Board representation was completed
in 2022. While we still have work to
do, good progress has been made to
develop additional risk planning and
incorporate these into group strategy
and long-term plans. Further details
are included in the Sustainability report
on pages 34 to 45.
Andria Vidler
Chair of the ESG Committee
14 April 2023
Q&A
ESG: At the heart
of decision making
Q/ Having recently taken over as Chair of the ESG
Committee, what will your focus be over the next 12 months?
A/ Following the acquisition of William Hill in 2022 we have
evolved our ESG framework taking account of the new
combined business. That framework is called Player,
People & Planet and through it we have bigger, bolder
ambitions and my focus will be on ensuring that we have
the strategy and structure in place to achieve those
objectives whilst challenging the executive team to
deliver on their plans. The focus for the next 12 months
will be developing ESG KPIs for the combined group and
implementing the strategies required to deliver on them.
Player protection needs to be at the forefront of our
thinking and we need to ensure we are doing out utmost
to protect the small but important number of vulnerable
customers who are at risk of harm from gambling.
Q/How does ESG factor into the Board’s decision making?
A/We have developed an ESG governance process to
ensure that key decisions are brought to the ESG
Committee who have oversight our three framework
pillars. The Board has ultimate accountability and
understands that to build a sustainable business and
achieve our goals we must build long term, mutually
beneficial relationships with players, ensure our
colleagues thrive and ensure we protect the planet. The
impact of the Board’s decisions on these and our other
key stakeholders are considered in every item brought
to the Board. Safer gambling is a key pillar of our ESG
framework. We believe gambling to be entertainment,
a fun, leisure activity. All decisions made by the Board
are underpinned by our safer gambling approach. It is
integrated into our day to day operations through formal
controls such as risk assessments and also through
embedding a safer gambling focused culture in our
colleagues. We are establishing a range of goals related
to different areas against which the Board will receive
regular updates about progress. The executive team will
also have ESG targets included as part of their annual
bonus.
Q/ What have you been most impressed with in relation to
ESG since you have joined the Board?
A/ In this challenging year with the combination of two
businesses, I have been impressed with how colleagues
across the group have worked together to understand
each other’s operations and develop our new ESG
framework. From a people perspective, the engagement
of colleagues in our integration and plans for the future
has been positive to see. In relation to player safety, I’ve
been struck by the passion with which colleagues care
about customer protection. From a product perspective
we have some good features to build on; we launched an
intuitive Profit & Loss product feature to the William Hill
app and enhanced the control centre product on 888.
Finally, I joined colleagues from across the business for
two climate related scenario analysis workshops and I
was impressed by the outputs which will build into our
future risk management strategy.
888 Holdings PLC Annual Report & Accounts 2022
101
GOVERNANCE AUDIT COMMITTEE
Audit Committee
DEAR SHAREHOLDERS
On behalf of the Board, I am pleased to
present the Audit Committee report for
the financial year-ended 31 December
2022. This has been a transformational
year for the Group, with the acquisition
of the William Hill business and the
changing shape of the Group’s financial
statements. The Committee’s primary
functions were unchanged this year
and included assessing the integrity
of the Company’s financial statements,
maintaining an appropriate relationship
with and reviewing the independence
and effectiveness of the Company’s
external auditor, and reviewing the
Company’s system of internal controls
and risk management. I would once
again like to thank my colleagues, Anne
de Kerckhove and Limor Ganot for their
support during another busy year!
In this letter I explain to shareholders
the responsibilities of the Committee,
highlighting those of particular importance
this year. The pages following contain
more detail on the matters considered.
During the year, the Audit Committee has
continued to carry out a key role within
the Group’s governance framework,
supporting the Board in monitoring
and reviewing the systems for risk
management, internal control and
financial reporting.
At the request of the Board, the
Committee reviewed this Annual Report
and advised it considers sufficient
information has been provided to
give shareholders a fair, balanced
and understandable account of the
business and allow them to assess its
position and performance, business
model and strategy. It also assessed
the Group’s viability, in line with the
Code requirements, prior to reporting
to the Board for approval. Further,
the Committee ensured that the
financial performance aspects of all
communications with shareholders
were carefully considered.
While risk management remains a
Board responsibility, the Committee
has worked with the Board and
Group management to ensure that
significant risks are considered on an
ongoing basis and that appropriate
responsibilities and accountabilities for
the related controls have been set. An
associated Committee responsibility
is to review the scope, nature and
effectiveness of the work of the
internal audit team, as well as ensuring
that the business responds to the
recommendations made.
Internal audit work was conducted
by Deloitte across the 888 business
and by the William Hill internal audit
team, supported by Grant Thornton,
for the William Hill business. The scope
of their plans were agreed with both
management and the Committee to
ensure they help the Board consider
the effectiveness of controls over
certain of the significant risks disclosed
in these accounts. Going forward the
internal audit work and plan will be
managed by the Group’s Internal Audit
team, which will agree the plan with the
committee. The plan will be delivered
with the support of the Deloitte internal
audit team.
The Committee monitors and reviews
the effectiveness and key aspects of
the external audit process, including the
annual audit plan and audit findings,
as well as the auditors’ independence
and objectivity. It also recommends
the audit fee to the Board and sets
the Company’s policy on the provision
of non-audit services by the external
auditor. EY UK is the auditor for the
purposes of the Company preparing
financial statements as required
pursuant to the UK Listing Rules and
the Disclosure and Transparency Rules.
EY Gibraltar is the Company’s statutory
auditor including for the purposes of
issuing an audit report pursuant to the
Gibraltar Companies Act 2014.
Further information on the Committee’s
responsibilities and the way they were
discharged are available on 888’s
corporate website: corporate.888.com.
In light of the migration of tax
residence of 888 Holdings plc to the UK
in January 2022, the Committee’s terms
of reference were amended to allow for
meetings of the Committee also to be
held in the UK.
We seek to respond to shareholders’
expectations in our reporting and
would welcome feedback. I am
available to speak with shareholders
at any time and shall also be available
at the Annual General Meeting in May
2023 to answer any questions.
Sincerely,
Mark Summerfield
Chair of the Audit Committee
14 April 2023
Mark Summerfield
Chair of the Audit Committee
KEY ACTIVITIES 2022
• The Audit Committee has continued
to carry out a key role within the
Group’s governance framework,
supporting the Board in monitoring
and reviewing the systems for risk
management, internal control and
financial reporting.
• Reviewed the updated risk register
and framework following the
acquisition of William Hill.
• Approved the internal audit plan for
the year and received the internal
audit reports.
• Reviewed and recommended to
the Board for approval the FY2021
annual report and accounts and
FY2022 half year results.
• Received reports from the external
auditors on key audit findings.
• Reviewed and approved updates to
policies including the Whistleblowing
Policy, Anti-Bribery & Corruption
Policy and Business Continuity Plan.
• Oversaw the response to the UK
Gambling Commission compliance
assessments and remedial actions.
Member of Committee
Mark Summerfield
Limor Ganot
Anne de Kerckhove
Meetings
attended
5
5
4
102
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE HIGHLIGHTS OF THE COMMITTEE’S WORK DURING YEAR WERE CONSIDERATIONS OF:
Topic
Challenges Raised
The impact of changes to the
complex legal and regulatory
environment in which the Group
operates on its business, sector
and market, together with the
Group’s ongoing engagement with
regulatory bodies.
The assessment of the risks facing
the business.
Integration and exceptional items
The viability statement and
going concern statement prepared
by management.
The Group’s exposure to corporation
tax, gaming duties, VAT and similar
taxes
Valuation of assets and liabilities
acquired within William Hill business
The carrying value (including
goodwill) of the US business
The Committee examined management’s assessment of legal and regulatory risks
in key markets, focusing on any changes in the environment and communication
with regulators, together with the appropriateness of the Group’s response. During
the year there has been considerable engagement with the regulators in the UK
and Gibraltar. While the committee has worked closely with the Group’s new Chief
Risk Officer on the approach to the matters raised, the Group’s response to the
regulators has been primarily handled at Board level.
The Committee reviewed the risk register and risk appetite statement, updated to
reflect the enlarged Group after the acquisition of William Hill to ensure that it is
an accurate and relevant reflection of the Board’s approach to risk management.
Moving forward, the committee is working with the Chief Risk Officer to embed
enhanced risk management within the group. It is anticipated that once the new
framework is complete, the Committee will become the Audit and Risk Committee.
The Committee reviewed the integration plans; ensuring the structure and
governance of the programme was appropriate and that controls continue to be
maintained throughout the integration programme.
The Committee reviewed the treatment of exceptional items, in particular those
associated with the integration programme and agreed with management’s
presentation of costs as exceptional.
The Committee reviewed management’s analysis of the Company’s going concern
and viability statement, including updated forecasts, downside scenarios including
an assessment of mitigations available to the Group and a reverse stress test and
advised the Board accordingly. The Board has concluded that the Company has
adequate resources to continue in operational existence for the foreseeable future.
The acquisition of William Hill and the planned integration of the two businesses
allowed the opportunity for the Committee to review the tax arrangements in
place within both business and approve an appropriate tax structure for the Group
presented by management. A new UK Tax Strategy has been agreed and published
on our website and the integration has been planned with tax considerations a
key element.
The Committee reviewed the analysis of the valuation of the assets and liabilities
acquired within the William Hill business and the corresponding goodwill generated
from the acquisition. This included the split of goodwill between segments and
the valuation of specifically identified intangible assets on acquisition such as
brand and customer relationships. It concurred with management’s view on the
valuations and the corresponding goodwill value of £786m generated from the
acquisition representing a number of factors such as the future growth of the
William Hill business, potential to achieve buyer specific synergies and the value of
the workforce. The Committee also reviewed the impairment testing of the goodwill
acquired on the William Hill acquisition and concurred with management’s view
that there were no impairments of this goodwill.
The Committee carefully considered the prospects of the US business given market
developments and the changing economic environment. The latter has led to a
significant increase in discount rates compared to the prior period. As such, and
despite the opportunities provided by the regulation of certain US states, the
Committee concurred with management’s view that an impairment of the US B2C
business was required.
The Group’s anti-bribery,
anti-money laundering and
whistleblowing obligations.
The Committee reviewed the Company’s policies to ensure they remain relevant
to the Company’s business and the regulatory environment in which it operates. A
new whistleblowing policy, incorporating best practice across both businesses, has
been agreed and announced.
888 Holdings PLC Annual Report & Accounts 2022
103
GOVERNANCE AUDIT COMMITTEE CONTINUED
HIGHLIGHTS OF THE
COMMITTEE’S WORK DURING
YEAR WERE CONSIDERATIONS
OF: CONTINUED
The Group’s corporate governance
arrangements, including the risk
register, going concern and viability
statements and corporate policies have
been reviewed and updated in 2022 as
a result of the acquisition of William Hill
and the accompanying financing.
COMMITTEE COMPOSITION
During 2022, the Committee comprised
three independent non-executive
directors, being Mark Summerfield,
Limor Ganot and Anne de Kerckhove.
Two members constitute a quorum. The
Committee requires the inclusion of at
least one financially qualified member
with recent and relevant financial
experience. The Committee Chair
fulfilled that requirement. The Committee
has competence relevant to the online
gaming sector and all members of the
Committee have an understanding of
financial reporting, the Group’s internal
control environment, relevant corporate
legislation, the functions of internal and
external audit and the regulatory and
compliance framework of the business.
Specifically, Mr. Summerfield was both
an auditor and worked within the sector,
Ms. de Kerckhove has extensive strategy,
entrepreneurial and sector experience,
and Ms. Ganot is both a qualified CPA
and has extensive experience as a
venture capital fund manager.
In addition to scheduled meetings, the
Committee Chair met with the Chief
Financial Officer and the internal
and external auditors on several
occasions. Although not members of
the Committee, the Chair of the Board,
Chief Executive Officer and Chief
Financial Officer attend meetings,
together with representatives from the
internal and external auditors.
OUR WORK IN 2022
In planning its work, the Committee has
reference to the significant risks that
may have an impact on the financial
statements. During the year there were
no matters where there was significant
disagreement between management,
the external auditor and the
Committee, or unresolved issues that
required referring to the Board. The key
matters discussed by the Committee
during the year were as follows:
Legal and regulatory environment
The Group operates within an
increasingly regulated marketplace
and is challenged by regulatory
requirements across all areas of its
business. This creates risk for the
Group as non-compliance can lead
to financial penalties, reputational
damage and the loss of licences to
operate. As part of this process, the
Board and Audit Committee received
updates from management and
discussed follow-up actions in response
to regulatory matters relating to
customer activity in prior periods. The
Group manages its regulatory risk with
input from its legal advisers in order
to operate its business in compliance
with relevant regulatory requirements.
The Group works with its lawyers and
Chief Risk Officer to produce regular
updates so that the Board and
Audit Committee understand what is
happening in the regulatory landscape.
During 2022, the Board and Audit
Committee received regulatory
briefings from the Company’s
lawyers and reviewed updates on
the management of regulatory risk
from the Chief Risk Officer, as well as
reviewing the status of litigation and
regulatory reviews involving the Group
and the related accounting for the
Group’s obligations in the financial
statements. The Committee considered
the evolving risk environment and
approved the proposed alignment
of approaches between 888 and
William Hill as regards Austrian
player litigation. It has also approved
changes to compliance and quality
assurance controls in other markets
where the regulatory regime has
evolved. Please refer to note 22 of the
financial statements for further detail
on Austria player litigation specifically.
The Audit Committee also had a key
role during 2022 working with the
Board in overseeing the Company’s
response to the UK Gambling
Commission compliance assessments
and ensuring all remediation actions
were executed by management
in response to the Gambling
Commission’s findings. The Committee
was also involved in the engagement
with the UKGC regarding the license
review of William Hill, despite the fact
that it was related to activity before
the acquisition date.
Acquisition accounting
As set out on note 16, the acquired
assets and liabilities of William Hill
have been valued on acquisition with
the remaining value recognised as
goodwill. The Committee reviewed
the analysis of the valuation of the
assets and liabilities acquired within
the William Hill business and the
corresponding goodwill generated
from the acquisition. This included the
split of goodwill between segments and
the valuation of specifically identified
intangible assets on acquisition such
as brand and customer relationships. It
concurred with management’s view on
the valuations and the corresponding
goodwill value of £786m generated
from the acquisition representing a
number of factors such as the future
growth of the William Hill business,
potential to achieve buyer specific
synergies and the value of the
workforce.
Taxation
The Board oversees and sets the
Group’s tax strategy and evaluates
tax risk. In undertaking this task, the
Group’s internal tax team is supported
by external legal and tax advisers.
During the year, the Group’s Head of
Tax has kept the Board and Audit
Committee apprised of both existing
and emerging tax risks as well as an
assessment of the tax risks across the
enlarged Group, in particular as the
organisational design of the Group has
evolved.
In 2022, the Board and Audit Committee
discussed the Group’s tax related
matters including the Group’s tax and
intellectual property holding structure.
and the tax impact of organisational
and operational change across
the new combined business. The
Committee also received detailed
updates on the tax implications of
migrating the tax residency of 888
Holdings plc to the UK which was
effected in January 2022 and a report
from advisers on the indirect tax
issues relating to the Group’s Spanish
operations. The Committee noted
that the Group registered for taxes in
relevant jurisdictions in order to ensure
timely reporting and payment on
the correct basis, while reserving its
position concerning contesting possible
existence of a liability in appropriate
cases. For further information, see notes
9 and 26 to the financial statements.
Goodwill and impairment reviews
As set out in note 12 to the consolidated
financial statements, the Group
has significant goodwill and other
intangible assets identified on
acquisition relating to the acquisitions
of William Hill and the US B2C
businesses.
The Committee reviewed the cash
flow forecasts supporting the carrying
value of goodwill and other intangible
assets including the key assumptions
104
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE and estimates as well as the impact
of the recent and potential regulatory
developments and the impact of
the external economic environment
on discount rates. This led to an
impairment required in relation to the
carrying value of the US B2C business
driven by the market developments
and developing strategy of the US
business as well as increasing discount
rates. There were no impairments
noted relating to the goodwill
recognised on acquisition of William Hill.
The Committee reviewed whether there
were other triggers for impairment
across the remainder of the Group
with an impairment noted surrounding
specific items of software acquired
with William Hill that is not required by
the Group going forward.
Revenue Recognition and
Development Costs Capitalisation
Revenue recognition and the
capitalisation of development costs
are areas of material risk in relation
to the preparation of the financial
statements. The Committee has
considered the Group’s accounting
policies in these areas, including
the respective policies of 888 and
William Hill and the alignment of these
policies and has concluded that the
Group’s recognition of income and
capitalisation of development costs is
appropriate.
IT systems
888’s IT systems are complex and
predominantly developed in-house
and the current framework is more
complex as the integration of IT
systems between 888 and William Hill
is still in progress. The success of the
business relies on the development
of IT platforms that are innovative
and appealing to customers. In
addition, the integrity and security
of the IT systems are vital from a
commercial standpoint as well as to
ensuring a robust control environment.
The 888 and William Hill businesses
currently operate on different ERP
finance systems. The Committee has
considered this within the context
of the preparation of the financial
statements and notes the transition
onto one ERP finance system as part of
the integration programme.
The Audit Committee oversaw internal
audit’s continuing review of the Group’s
cyber incident response capability and
as an outcome of this process the
Company obtained the ISO14001 in 2022.
Internal controls and risk
management
The Board has overall responsibility for
ensuring that the Group maintains a
sound system of internal control. There
are inherent limitations in any system
of internal control and no system can
provide absolute assurance against
material misstatements, loss or failure.
Equally, no system can guarantee
elimination of the risk of failure to meet
the objectives of the business. Against
this background, the Committee has
together with the Board developed
and maintained an approach to risk
management that incorporates risk
appetite and tolerance, the framework
within which risk is managed and
the responsibility and procedures
pertaining to application of the policy.
The Group is proactive in ensuring that
corporate and operational risks are
identified, assessed and managed
by identifying suitable controls. A
corporate risk register is maintained
which details
1.
The risks and impact they may have;
2. Actions to mitigate risks;
3.
Risk scores to highlight the
likelihood and implications
of occurrence;
4. The owners of risks; and
5. Target dates for actions to mitigate.
A description of the principal risks is
set out on pages 61 to 66.
The Board, supported by the Audit
Committee, has confirmed that it has
carried out a robust assessment of
the principal risks facing the Group,
including those which threaten its
business model, future performance,
solvency or liquidity.
In addition to the matters described
above, the work of the Committee
during the year included:
• Reviewing the draft interim and
annual reports and considering:
1.
The accounting principles,
policies and practices adopted
and the adequacy of related
disclosures in the reports;
2. Application of IAS 36 and 38;
3.
The significant accounting
issues, estimates and
judgements of management in
relation to financial reporting;
4. Whether any significant
adjustments were required
arising from the audit;
5. Compliance with statutory tax
obligations and the Company’s
tax policy;
6. Whether the information set
out in the Strategic Report was
balanced, comprehensive, clear
and concise and covered both
positive and negative aspects
of performance; and
7.
Whether the use of “alternative
performance measures”
obscured IFRS measures.
• Meeting with internal and external
auditors, both with and in the
absence of the executive directors.
• Reporting to the Board on how it
has discharged its responsibilities.
• Making recommendations to the
Board in respect of its findings in
respect of all of the above matters.
• Review and approval of the external
audit fee.
The Board considers that the processes
undertaken by the Audit Committee
continue to be appropriately robust
and effective and in compliance with
the guidance issued by the FRC.
The Committee believes that
appropriate internal controls are
in place through the Group. As 888
and William Hill are integrated, the
organisational structure is being
brought together to ensure that
there are clear lines of responsibility
and bringing together the most
effective control processes across
both businesses. The Committee
also believes that the Company
complies with the FRC Guidance
on Risk Management, Internal
Control and Related Financial and
Business Reporting.
GOING CONCERN AND
FINANCIAL VIABILITY
During 2022, the Committee reviewed
the appropriateness of adopting the
going concern basis of accounting
in preparing the full year financial
statements, and assessed whether the
business was viable in accordance with
the Code. As part of the assessment,
the Committee closely scrutinised the
Group’s major risks, both individually
and how they might occur in
combination, their financial impact,
how they are managed, the availability
of finance and the appropriate
period for assessment. This included
detailed modelling of the Company’s
assumptions underlying its forecast.
888 Holdings PLC Annual Report & Accounts 2022
105
GOVERNANCE
AUDIT COMMITTEE CONTINUED
GOING CONCERN AND
FINANCIAL VIABILITY
CONTINUED
In its going concern assessment, the
Directors have considered a range of
plausible downside scenarios as well
as considering separate reverse stress
tests. It has also considered the further
actions available to the Group to
conserve cash to mitigate the impact
of any severe but plausible downside
scenarios occurring.
The Committee challenged the
identification of these scenarios linked
to significant risks and the assumptions
comprising the viability analysis carried
out by management, and deemed
appropriate the going concern basis
of accounting and disclosure around
both going concern and the viability
statement. The Group’s viability
statement is on page 67.
FAIR, BALANCED
AND UNDERSTANDABLE
The Committee considered whether the
2022 Annual Report is fair, balanced
and understandable, and whether it
provides the necessary information
to shareholders to assess the Group’s
performance, business model and
strategy. The Committee considered
management’s assessment of items
included in the financial statements
and the prominence given to them
and ensured it followed a framework
which supports the inclusion of key
messaging, market and segment
reviews, performance overviews,
principal risks and other governance
disclosures. The Committee also
ensured that sufficient forward-looking
information is also provided and a
balance is sought between describing
potential challenges and opportunities.
The Committee and subsequently
the Board were satisfied that, taken
as a whole, the 2022 Annual Report
and Accounts are fair, balanced
and understandable. The Committee
ensured the steps undertaken by
management were performed
such that the Annual Report and
Accounts remains fair, balanced and
understandable including the following
processes:
• The Group’s Finance Department,
Director of Investor Relations,
Company Secretary and legal
advisers initiate the process in
coordination with the Group’s
public relations advisers, focusing
on main themes and financial
trends which primarily inform
the Executive Chair’s Statement,
Strategic Report and Business
& Financial Review. The draft
statements are then reviewed and
comments provided by Group
senior management. Input was
also provided by the Company’s
Risk team, Reward team and
Remuneration and ESG consultants.
• The Group’s Company Secretary
leads the process of compiling
the relevant legal and corporate
governance sections, and obtains
input from Group legal advisers,
senior management and Board
members as required.
• The Group’s Risk team draft the
regulatory review and risk report
supported by legal advice received
by the Group and developments in
relevant risks and risk discussions
held by the Board.
• The Group’s remuneration consultant
drafts the Directors Remuneration
Report (including the Remuneration
Policy) which is then reviewed by
the Group’s Reward team and the
Remuneration Committee.
• The Group’s Finance Department
prepares the accounts. These
are audited by the Company’s
auditors, who check amongst
other matters that the Group
has given appropriate attention
to any relevant changes in
accounting policies.
• The Group’s CFO, Group Financial
Controller and Director of Investor
Relations review the entire Annual
Report & Accounts and lead an
iterative process pursuant to
which the relevant internal and
external stakeholders review and
provide comments.
• The draft Annual Report & Accounts
is presented to the Committee,
which is also in possession
of a detailed report from the
external auditor, where a detailed
discussion is held regarding key
disclosures and the Committee’s
recommendations are provided to
the Board.
• The Annual Report & Accounts is
finally reviewed by the full Board
for approval.
• Adequate time is given to each of
the above steps to allow for full and
meaningful review.
PERFORMANCE OF
AUDIT COMMITTEE
The Audit Committee’s performance
was evaluated as part of the external
Board evaluation in 2022 as detailed
on page 106. The overall conclusion
106
888 Holdings PLC Annual Report & Accounts 2022
of the review was that the Committee
remains effective in discharging its
functions and reporting to the Board.
INTERNAL AUDITORS
The Internal Audit team provides
independent assurance over the
Group’s risk management and internal
control processes. The 888 internal
audit function has historically been
outsourced to Deloitte Israel, including
in the period prior to the acquisition
of William Hill and therefore Deloitte
Israel were responsible for providing
the Internal Audit plan. The Audit
Committee reviewed and monitored
the internal audit plan in accordance
with the principal risks to 888’s business
as set out in the Risk Register.
Since the acquisition of William Hill, the
incumbent William Hill Head of Internal
Audit took responsibility as Head of
Internal Audit across the 888 Group
and has worked with Deloitte Israel
across the remainder of the year.
The Committee has reviewed reports
from both the in-house Internal
Audit team and Deloitte Israel in
relation to all internal audit work
carried out during the year and
monitored responses and follow ups
by management to internal audit
findings. In 2022, the Committee have
received reports on Customer Due
Diligence procedures, GAMSTOP –
General IT Controls, Whistleblowing
Policy, Accounts Payable processes;
Payroll processes; Anti-bribery and
corruption; procurement; integration;
third party management and software
management as well as presenting
the 2023 internal audit plan. The
Committee also received reports
from FTI consulting, a UK compliance
specialist, who were engaged to review
888 UK compliance controls and the
Committee monitored responses and
follow ups by management to their
findings.
Certain matters were identified which
required modifications to procedures
and improved controls, which either
have been or are being implemented
by management.
EXTERNAL AUDITORS
EY has been the Company’s external
auditor since their appointment in
2014. The partners responsible for the
external audit are Angelique Linares,
a partner in EY’s Gibraltar office, and
Marcus Butler, a partner in EY’s London
office. Angelique and Marcus have
been responsible for 888’s audit since
2018 and 2021 respectively.
GOVERNANCE The Committee has reviewed the
performance of EY in relation to the
888 audit, a process which involved all
Board members and senior members
of 888’s finance function. Specific
consideration was given to:
• Ensuring that safeguards put
in place by the auditor against
independence threats are sufficient
and comprehensive;
• Ensuring that the quality and
transparency of communications
from the external auditors are
timely, clear, concise and relevant
and that any suggestions for
improvements or changes are
constructive;
• Determining whether they had
exercised professional scepticism,
with regards to the reliability
of evidence provided, the
appropriateness and accuracy
of management responses to
questions, considering potential
fraud and the need for additional
procedures and the willingness
of the auditor to challenge
management assumptions;
• Considering if the quality of the
audit engagement team is sufficient
and appropriate – including the
continuity of appropriate industry,
sector and technical expertise.
Feedback is provided to the external
auditor by the Audit Committee
through one-to-one discussions
between the Chair of the Audit Committee
and the audit firm partner. Each year,
the results of the review of the EY audit
practice by the regulator is discussed
with the audit team to determine the
relevance to the 888 audit and how the
team needs to respond.
The conclusions reached by the
Committee were that EY had
performed the external audit in
a professional manner, and it
was therefore the Committee’s
recommendation that the
reappointment of EY be proposed to
shareholders at the Annual General
Meeting to be held in May 2023.
The Committee reviewed the
reports prepared by the external
auditors on key audit findings and
any significant deficiencies in the
financial control environment, as
well as the recommendations made
by EY to improve processes and
controls together with management’s
responses to those recommendations.
EY highlighted a small number of
specific internal control weaknesses
and management has committed
to making appropriate changes to
controls in areas highlighted by EY.
AUDIT TENDER
The Company is proposing to
undertake an audit tender exercise, the
result of which will not be known until
after the 2023 AGM has been held. In
the interim period, EY has indicated its
willingness to continue to act as the
Company’s auditor until the outcome
of the tender has been concluded. An
update on the outcome of the tender
exercise will be communicated once it
has been completed.
The audit contract was last tendered
for the year ended 31 December
2014 and no contractual obligations
existed that acted to restrict the
Audit Committee’s choice of external
auditors. Under the EU Audit
Regulation and the Competition
and Markets Authority “The Statutory
Audit Services for Large Companies
Market Investigation (Mandatory Use
of Competitive Tender Processes and
Audit Committee Responsibilities)”
Order 2014, the Company is required
to run a competitive tender process
in respect of auditor appointment no
later than 31 December 2023 year
end. The Board is planning to perform
an audit tender process starting in
Q2 2023 and concluding in Q3 2023.
The Committee notes and confirms
compliance with the other provisions
of the Competition & Markets Authority
Order 2014 in respect of statutory audit
services for large companies.
AUDIT AND NON-AUDIT WORK
The Audit Committee remains mindful
of the attitude investors have to the
auditors performing non-audit services.
The Committee has clear policies
relating to the auditors undertaking
non-audit work and monitors the
appointment of the auditors for any
non-audit work involving fees above
£25k, with a view to ensuring that
non-audit work does not compromise
the auditors’ objectiveness and
independence. The Committee is
committed to ensuring that fees for
non-audit services performed by
the auditors will not exceed 70% of
aggregate audit fees measured over a
three year period.
Fees payable to the auditor for audit
and non-audit services are set out in
note 5 to the Financial Statements on
page 165..
This year, in undertaking the circular
and prospectus for the proposed
acquisition of William Hill and associated
capital raise and debt issuances in
2022, the Company required the work
of a reporting accountant, including
an independent report on the working
capital statement.
While the Audit Committee believed
that EY, as our auditor, was best
placed to perform this service,
it was conscious of not wanting
to compromise EY’s auditor
independence and therefore engaged
with both EY and the FRC on this
matter. Having obtained the FRC’s
clearance for EY to perform this work,
the Audit Committee approved EY
being appointed. Given the timing of
the work, clearance was obtained to
exceed the 70% non-audit fee cap for
both the year ending 31 December
2021 and the year ending 31 December
2022.
As a result of EY’s work on the circular
and prospectus for the acquisition of
William Hill and associated capital
raise and debt issuances, total fees for
non-audit services represented 34%
(2021: 296%) of the total audit fees.
Factors considered by the Audit
Committee in being satisfied as to
EY’s continued auditor independence
in relation to undertaking this work
included:
• The nature of the work and the
relevant independence threats
and safeguards put in place by
EY. For example, the working
capital exercise was carried out
by a separate team and led by a
separate engagement partner. In
addition, there was no self-review
threat as EY did not prepare any
information used for financial
reporting;
• The reporting accountants work
provided is permissible under the
FRC Ethical Standard; and
• EY have not performed perform
any other significant non-audit
services for the year ending 31
December 2021 or the year ending
31 December 2022.
In conclusion, the Committee remains:
• Satisfied with the effectiveness
of the external audit and the
interaction between the auditors
and the Committee;
• Satisfied as to the auditor’s
qualifications, expertise and
resources; and
• Confident that EY’s objectivity and
independence are not in any way
impaired by the provision of non-
audit services.
888 Holdings PLC Annual Report & Accounts 2022
107
GOVERNANCE REMUNERATION COMMITTEE
Remuneration Committee
In my Annual Statement last year I said
that the Committee would review the
Executive Director’s Remuneration
Policy and operation of policy to
ensure it continued to be appropriate
in light of our business combination.
The Committee carried out the review
during the year, noting that the Policy
is subject to its triennial vote at our
2024 AGM, and concluded that no
changes are required for 2023.
The only Policy matter that the Committee
committed to consider as part of the
Policy review is annual bonus deferral.
The Executive Directors are currently
required to defer bonus over 100%
of salary into shares that will vest in
three equal tranches over 1, 2 and 3
years and the Committee has noted
investor preference for a portion of any
bonus paid to be deferred. As such, the
Committee has determined that when
the Policy is renewed at the 2024 AGM
it will provide that at least one-third of
any bonus paid is deferred into shares
and will ensure that any bonus paid to
new Executive Directors for 2023 prior
to our Policy renewal will be voluntarily
deferred on the same basis.
The Committee will consider again
during the course of 2023 whether any
other changes to Policy are required
in advance of the 2024 triennial AGM
policy vote.
BOARD CHANGES
We announced on 30 January 2023
that our Chief Executive Officer,
Mr Pazner, stepped down from his role
with immediate effect and he left the
business on 3 March 2023. All unvested
deferred share bonus awards and
long-term incentive awards lapsed on
cessation. Salary and normal benefits
will be paid for the duration of the
notice period. Certain relocation
payments will also continue. There will
be a duty to mitigate all payments.
DEAR SHAREHOLDER,
I am pleased to present the Directors’
Remuneration Report for the year ended
31 December 2022. This report sets out:
• my statement on the activities and
decisions of the Remuneration
Committee during the year;
• the annual report on remuneration,
which explains how the current
directors’ remuneration policy was
implemented in 2022 and how
the policy will be implemented
in 2023; and
• the directors’ remuneration policy
which was approved in May 2021.
As a company incorporated in
Gibraltar, 888 Holdings plc is not
bound by UK law or regulation in the
area of Directors’ remuneration to
the same extent that it applies to UK
incorporated companies. However, by
virtue of 888’s Premium Listing on the
London Stock Exchange and reflecting
the Committee’s approach to good
governance and investor expectation,
we have prepared this report in line
with the requirements of the Directors’
Remuneration Reporting regulations.
OVERVIEW OF 2022
AND REVIEW OF POLICY
2022 has been a transformational year
for 888 with the acquisition of the non-
US business of William Hill in July. The
acquisition has resulted in a significant
increase in the business’ scale and
complexity, diversifying our offering
and providing a powerful platform for
sustained growth over the medium and
long-term. 2022 has also been a difficult
year with our operating environment
becoming more challenging and
moderation in market growth rates.
Furthermore, in early 2023 we also
announced the departure of our CEO
and CFO with our CFO remaining with
the business until the end of the 2023.
Looking forward, 2023 will be another
year of change for the business as
we continue to progress with the
integration of the two businesses to
create an improved operating model
delivering efficiencies, higher profit
margins and shareholder return.
Anne de Kerckhove
Chair of the Remuneration
Committee
KEY ACTIVITIES 2022
• Review of the Executive Directors’
Remuneration Policy in light of the
acquisition of William Hill
• Review of performance targets for
in-flight LTIP awards in light of the
William Hill acquisition
• Review of long-term incentive
plan rules
• Determination of 2022
remuneration outcomes
• Review of application of
policy for 2023
• Investor consultation on Executive
remuneration matters for
2022 and 2023
• Determination of leaving
arrangements for the former CEO
• Determination of remuneration
arrangements for the CFO
Member of Committee
Anne de Kerckhove
Mark Summerfield
Limor Ganot
Meetings
attended
4/4
4/4
4/4
108
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE Following the CEO’s departure, our
non-executive Chair Lord Mendelsohn
assumed the role of Executive Chair
on a full-time interim basis until a new
CEO is appointed. As Executive Chair,
Lord Mendelsohn will receive a fee
of £670,000 p.a. He will not receive
pension, annual bonus or long-term
incentives. His fee will revert to
£320,000 p.a. when his role transitions
back to non-executive Chair.
As announced on 13 January 2023, the
Board and Mr Dafna, Chief Financial
Officer, mutually agreed that he will
step down from the Board and as Chief
Financial Officer. Mr Dafna will continue
as Chief Financial Officer during
his notice period until a new CFO is
appointed. His remuneration for FY23 is
set out below in the section explaining
the operation of policy for FY23. He will
be treated as a good leaver in respect
of his unvested deferred bonus share
awards and LTIP awards. Unvested
deferred bonus shares will be retained
in full and vest on the usual vesting
date and LTIP awards will be subject to
time-prorating and performance, also
vesting at the usual time with the post-
vesting holding period still applicable.
The Board was pleased to announce
in 2022 the appointment of Andrea
Gisle Joosen and Andria Vidler in
July 2022 as Non-Executive Directors.
Randy Freer was also appointed as
a Non-Executive director but stood
down on 31 August 2022 as a result
of increased time commitments. In
addition, following the Group’s largest
shareholder, Sinitus Nominees Limited
in trust on behalf of Dalia Shaked,
exercising its right to appoint a
Non-Executive director, Ori Shaked
was appointed as a Non-Executive
Director in September 2022. The
Non-Executive Directors receive fees
which are in line with the fees for other
Non-Executive Directors.
REVIEW OF INCENTIVE
TARGETS IN LIGHT OF
WILLIAM HILL ACQUISITION
The Committee has reviewed the
performance targets for 2021 and
2022 in-flight LTIP awards following the
business combination and considered
if any adjustments are appropriate
to take into account the expected
performance of the larger business.
No adjustments are required for the
TSR elements of in-flight awards, and
therefore the performance target
range will remain as median to median
+10% p.a.
For the 2021 award, the 2020 EPS
is rebased to 21.27 pence to reflect
the performance of the combined
business with the Committee agreeing
that no changes should be made
to the 3% to 9% CAGR target range.
For the EPS element of these awards
to vest an adjusted EPS of 23.24 pence
for threshold and 27.54 pence for
maximum vesting is required in FY23.
For the 2022 award, the 2021 EPS is
rebased to 19.85 pence to reflect the
performance of the combined business
with both threshold and maximum
targets increased to 26.25 pence to
29.13 pence being a range of 9.8%
CAGR at threshold to 13.6% CAGR at
maximum reflecting strong EPS growth
expectations for FY24 and taking into
account our commitment to deliver EPS
of at least 35 pence by 2025.
REMUNERATION OUTCOMES
FOR 2022
The annual bonus for 2022 was
based on 888 (excluding William Hill)
performance with 50% based on
adjusted EBITDA, 20% on revenue
excluding the US business and 30%
on the achievement of strategic
objectives. Adjusted EBITDA and
revenue were below threshold.
Performance against the strategic
objectives accounting for 30% of
the bonus was determined at 47.5%
of maximum and 14.25% of the total
bonus. However, given there is no
payment under either of the financial
elements, the underlying performance
of the business and the shareholder
experience, the Committee determined
that no bonus should be payable.
Full details of the targets and actual
performance are set out on page 119.
The LTIP awards granted in 2020
were based 50% on relative TSR
performance and 50% on adjusted
EPS performance measured over
three financial years to 31 December
2022. 888’s TSR was -37.4% over the
performance period resulting in no
vesting of that element. Given the
timing of the business combination
with only 6 months before the end of
the 3 year performance period (ending
31 December 2022), the Committee
determined that there should be no
changes to the targets for the 2020
LTIP with performance against targets
assessed on the 888 business alone.
Adjusted EPS growth over the
performance period, based on 888
only, was 15.3% CAGR which is above
the maximum target of 9% CAGR,
and therefore this element will vest in
full. The Committee has considered
carefully whether the level of vesting
is appropriate. The CEO’s 2020 LTIP
award has lapsed on his cessation of
employment. The CFO’s 2020 award
was pro-rated on grant to reflect his
appointment in October 2020 with
a delayed grant date in March 2021
at a grant share price of £3.49. The
Committee is comfortable that the
level of vesting is appropriate for the
CFO, taking into account performance
against the targets and adjusted EPS
achieved for the 888 business. The
Committee also noted the lapsing
of the TSR element of the award
reflecting the shareholder experience
and the overall vesting value of the
award of £16,318 as well as wider
remuneration decisions and outcomes,
including no bonus payment for 2022
and a scaled back LTIP award for
2023. The Committee is satisfied there
is no windfall gain to be considered
noting both the current share price,
the number of shares subject to the
award as a result of the pro-rating
and the share price of £3.49 on grant.
The CFO’s award will not vest until
March 2024 because of the delayed
grant providing ongoing alignment to
shareholder interests.
888 Holdings PLC Annual Report & Accounts 2022
109
GOVERNANCE for all share awards. This will enable
us to manage our share dilution while
providing LTIP awards beyond our
most senior colleagues as well as our
all employee share plan. The maximum
performance share plan award limit
in the LTIP is 300% of salary providing
flexibility to grant market competitive
incentives in all our markets including
those where packages may have
a significantly greater weighting to
long-term incentives. Our AGM notice
provides further details about this
plan which aligns to standard market
practice.
CONCLUSION
The Committee is comfortable that the
remuneration policy has operated as
intended for 2022.
Looking to 2023, the Board has
commenced searches to identify
successors for both Executive
Directors and the remuneration for
the individuals to be appointed will
be in line with the current shareholder
approved policy. As the integration
of 888 and William Hill progresses
ahead of our next policy vote at the
2024 AGM, the Committee will review
the Policy to ensure it provides the
structure and necessary flexibility to
enable us to incentivise and reward
management for the successful
integration and growth of our business.
The policy review will be led by Andrea
Joosen, who will become Committee
Chair in my stead at the 2023 AGM.
I look forward to shareholders’ support
for the shareholder resolution for my
Annual Statement and our Annual
Report on Remuneration, and for the
renewal of our long-term incentive plan
at our Annual General Meeting to be
held on 23 May 2023.
Anne de Kerckhove
Chair of the Remuneration Committee
14 April 2023
REMUNERATION COMMITTEE CONTINUED
APPLICATION OF POLICY
FOR 2023
The salaries of our former CEO and
CFO were not increased for 2023. With
the departure of our CEO and our CFO
working his notice period, he will be
eligible for a bonus in 2023, based on
his normal annual bonus opportunity
of 150% of salary. The annual bonus
will be determined as to 60% on Group
operational targets equally weighted
between revenue, EBITDA, EBITDA
margin, regulatory compliance and
ESG scorecard (weighted 50% safer
gambling, 25% environmental impact,
25% employee engagement) and 40%
by specific integration objectives with
40% weighted to operational cashflow
and the remainder to critical business
integration priorities.
The measures for 2023 ensure a
continued focus on top and bottom
line noting the importance of cashflow,
servicing and reducing debt as well as
other continuing integration priorities.
The bonus measures also acknowledge
the importance and significant focus
required on compliance, regulation and
safer gambling as well as broader ESG
sustainability and employee engagement.
Investors will understand how critical
2023 is for the business to establish the
basis for future earnings growth and
to achieve our commitment to deliver
EPS of at least 35 pence by 2025. For
this reason the Committee has agreed
exceptionally to award a 2023 LTIP
to the CFO, which comprises 180,812
shares. The number of shares has
been calculated based on a pro-rated
award of 50% of salary, discounted
by 30% to reflect the significant fall in
share price since the awards granted
in 2022, and based on the share price
on 14 February of 67p. This results in
an LTIP award of 35% of salary. The
LTIP award will be subject 50% to
adjusted earnings per share growth
targets of 33.4 pence to 36.6 pence
which are aligned to our 2025 EPS
commitment and 50% on relative TSR.
The award will vest at the normal time
and be subject to a two-year post-
vesting holding period. The Committee
understands that it is unusual to grant
an LTIP award to an executive director
during their notice period. However,
noting the period of time it is expected
the CFO will be working with the business,
the criticality of performance for 2023
as the basis for growth to 2025 as
well as the departure of our CEO, the
Committee has determined that this is
appropriate in all the circumstances.
The Committee retains the discretion to
scale back the formulaic outcome of all
incentive awards taking into account
matters such as underlying business
performance and the shareholder
experience.
WIDER WORKFORCE
REMUNERATION
Our approach to the workforce salary
review for 2023 took into account the
considerable uncertainty in the global
economy with high inflation and cost
of living pressures affecting colleagues
in all of our locations as well as overall
cost pressures within the business.
The salary budget for 2023 is focused
on our less senior colleagues, with
increases taking into account both
seniority and location. In addition,
for our UK retail colleagues, we were
pleased to increase the hourly rate to
a minimum of £10.90 which reflects the
Real Living Wage in the UK in 2023.
Our all employee Save As You Earn
share option scheme was approved by
shareholders at our 2022 AGM and it is
expected participation will be offered
to colleagues later in 2023.
RENEWAL OF LTIP
Our current long-term incentive plan
expires in 2025 and the Committee
is taking the opportunity to renew
the plan at the 2023 AGM to ensure
we have the necessary flexibility for
the grant of LTIP awards to our below
board colleagues. The long-term
incentives for our Executive Directors
will continue to be covered by our
shareholder approved remuneration
policy. The new plan is substantially
in the same format as the current
LTIP but provides flexibility to make
deferred bonus share awards and
enables us to adapt both vesting
and performance periods for below
board LTIP participants to support our
remuneration strategy and ensure we
are providing incentives that are both
market competitive in all the markets
in which we operate and effective
in incentivising the performance of
the business and shareholder return.
We use our LTIP as a mechanism for
incentivisation and retention and
make awards to colleagues within
the business and not just at our most
senior management tiers. For this
reason our new plan removes the 5%
dilution limit but retains the 10% limit
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GOVERNANCE DIRECTORS’ REMUNERATION REPORT
REMUNERATION POLICY TABLE
The table below sets out the remuneration policy which was approved by shareholders at the Annual General Meeting held
on 20 May 2021. The policy is intended to apply for the three-year period from the 2021 AGM.
APPROACH AND CONSIDERATIONS IN REVIEWING THE DIRECTORS’ REMUNERATION POLICY
The review of the Policy is carried out by the Remuneration Committee, in the absence of the Executive Directors
where necessary to manage potential conflicts of interest, and with the advice of our remuneration consultant Korn Ferry.
The Committee’s review process includes consideration of how the current policy aligns to and supports the business
strategy. The Committee considers market, regulation and governance developments as well as wider pay context, such
as pay ratios and group reward arrangements. The Committee also considers the guidelines of shareholder representative
bodies and proxy agencies and investor expectations. As part of this process the Committee will also consult with its largest
shareholder and consider feedback received.
FACTORS CONSIDERED IN REVIEWING THE POLICY AND CONSIDERING ITS OPERATION
The Committee considered as part of its most recent review, and is comfortable that, the Remuneration Policy and its
implementation are fully consistent with the factors set out in Provision 40 of the UK Corporate Governance Code (set
out below):
• Clarity: The Policy and the way it is implemented is clearly disclosed in this policy section of the Remuneration Report
and the Annual Statement and supporting reports.
• Simplicity: The Policy is simple and straightforward, based on a mix of fixed and variable pay. The annual bonus and LTIP
include performance conditions which are aligned with key strategic objectives of the business.
• Risk: Performance targets for the incentive schemes provide appropriate rewards for stretching levels of performance
without driving behaviour which is inconsistent with the Company’s risk profile. Reputational risk from a perception of
“excessive” pay-outs is limited by the maximum award levels set out in the Policy and the Committee’s discretion to adjust
formulaic remuneration outcomes. To avoid conflicts of interest, no Executive Director or other member of management is
present when their own remuneration is under discussion.
• Predictability: The Policy includes full details of the individual limits in place for the incentive schemes as well as
“scenario charts” which set out potential pay-outs in the event of different levels of performance, based on a number
of reasonable assumptions.
• Proportionality: There is a clear link between individual awards, delivery of strategy and our long-term performance.
In addition, the significant role played by incentive/’at-risk’ pay and the presence of malus and clawback provisions
ensures that poor performance is not rewarded.
• Alignment to culture: The approach to Directors’ remuneration is consistent with the Group’s culture and values.
Base Salary
Purpose and Link
to Strategy
To recruit, motivate and retain high-calibre Executive Directors by offering salaries at market
competitive levels. Reflects individual experience and role.
Operation
Reviewed annually with any changes normally effective from 1 January. Positioning and annual
increases are influenced by:
• our sector, where the market for executive talent is intense;
• the experience and performance of the individual;
• changes in responsibility or position;
• changes in broader workforce salary; and
• the performance of 888 as a whole.
Opportunity
Benchmarking is carried out on a total remuneration basis and takes into account pay levels for
comparable roles at a range of organisations of similar size and sector – including pay practices in
other UK listed companies and in the international gaming industry.
Any increase to directors’ salaries will generally be no higher than the average increase for other
employees. However, a higher increase may be proposed in the event of a role change or promotion,
or in other exceptional circumstances.
888 Holdings PLC Annual Report & Accounts 2022
111
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
FACTORS CONSIDERED IN REVIEWING THE POLICY AND CONSIDERING ITS OPERATION CONTINUED
Benefits
Purpose and Link
to Strategy
Operation
Market competitive structure to support recruitment and retention.
Medical cover aims to ensure minimal business interruption as a result of illness.
Executive Directors may receive various benefits in kind as part of their employment terms. These
may include an accommodation allowance (where 888 has required the executive to relocate), use
of a company car (or car allowance), health insurance (or a contribution towards a health insurance
scheme), “study fund” (a common savings benefit in Israel), disability and life assurance, relocation
expenses, directors’ indemnities and directors’ and officers’ insurances to the extent permitted by law
and other ad hoc benefits at the discretion of the Committee.
Opportunity
The value of benefits is based on the cost to 888 and there is no pre-determined maximum limit.
The range and value of the benefits offered is reviewed periodically.
Pension
Purpose and Link
to Strategy
Operation
Opportunity
Annual Bonus
Purpose and Link
to Strategy
Contribution towards the funding of post-retirement life.
888 offers a defined contribution pension scheme (via outsourced pension providers) or cash in lieu
of pension.
Up to 15% of base salary. The Committee will align pension to the workforce average taking into
account market practice and legal requirements in the country of the executive and the wider
workforce pension.
Rewards the achievement of annual financial and non-financial strategic targets.
Operation
Bonus targets (percentage of salary) are based on objective and disclosable calculations where possible.
The precise weightings between metrics may differ each year, although there will always be a greater
focus on financial as opposed to non-financial performance.
Any bonus payment in excess of 100% of salary is deferred into shares which vest in equal tranches
after one, two and three years. The deferral period continues on cessation of employment.
The Committee may adjust the formula-driven outturn of the annual bonus calculation in the event
that the Committee considers that it does not reflect underlying performance, overall shareholder
experience or employee reward outcome. Any such use of discretion would be detailed in the Chair’s
annual statement and Annual Report on Remuneration.
A dividend equivalent provision operates enabling dividends to be accrued (in shares) on unvested
deferred bonus shares or options and only in truly exceptional circumstances cash.
The bonus is subject to recovery and withholding provisions which may be applied if the financial
statements of 888 were materially misstated, an error occurred in assessing the performance conditions
of a bonus, if the Executive ceased to be a Director or employee due to gross misconduct, or in an
event of corporate failure, failure of risk management or reputational damage.
Opportunity
The maximum opportunity is 200% of base salary.
Performance
Metrics
The level of pay-out for the achievement of target performance, as set by the Committee is 50% of the
maximum amount. The threshold level of payment may be up to 25% of the maximum.
Financial Performance
The financial component is based on 888’s key financial measures of performance.
A sliding scale of targets applies for financial performance targets which are measured annually.
The degree of stretch in targets may vary each year depending on the business aims and the broader
economic or industry environment at the start of the relevant year.
Non-financial Performance
Non-financial performance conditions will be based on KPIs in line with the business plan which the
Committee considers will enhance future financial performance, the long-term sustainability of the
business and shareholder value.
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888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE Long Term Incentives (LTIP)
Purpose and Link
to Strategy
Rewards Executive Directors for achieving superior returns and sustainable growth for
shareholders over a longer-term timeframe.
Operation
Enables Executive Directors to build a meaningful shareholding over time and align goals
with shareholders.
LTIP awards are made annually in the form of nil cost options or conditional awards with vesting
dependent on the achievement of performance conditions over at least three financial years,
commencing with the year of grant.
A post-vesting holding period applies to awards granted in or after 2019, which requires vested
shares (or shares acquired on the exercise of vested options) to be retained for two years post-
vesting (except for any earlier sale of shares to meet any tax liabilities triggered on vesting).
This holding period continues on cessation of employment.
The Committee may adjust the formula-driven outturn of an LTIP award in the event that the
Committee considers that it does not reflect underlying performance, overall shareholder
experience or employee reward outcome. Any such use of discretion would be detailed in the
Chair’s Annual Statement and Annual Report on Remuneration.
Awards are subject to recovery and withholding provisions which may be applied if there is a
material misstatement in 888’s financial statements, an error in the calculation of any performance
conditions, if the Executive Director ceases to be a Director or employee due to gross misconduct
or in an event of a failure of risk management, corporate failure or reputational damage.
A dividend equivalent provision operates enabling dividends to be accrued (in shares) on LTIP
awards to the extent they vest and only in truly exceptional circumstances cash.
Opportunity
Award levels are determined primarily by seniority. A maximum individual grant limit of 200% of
salary applies, based on the face value of shares at the date of grant.
Performance Metrics
Awards vest at the end of a three-year performance period based on performance measures
reflecting the outputs of the long-term strategy of the business at the time of grant.
Awards will vest based on a range of challenging financial, total shareholder return (TSR), or
strategic measures. Strategic measures, if used, will represent a minority of the award.
The Committee will review the weightings between measures and the target ranges prior to
each LTIP grant to ensure that the overall balance and level of stretch remains appropriate.
A sliding scale of targets applies for financial or TSR metrics with no more than 25% of the
award vesting at threshold performance.
Share Ownership Guidelines
Executive Directors are expected to build and maintain an interest equivalent in value to no less than two times salary.
Beneficially owned shares, fully vested unexercised nil-cost options (valued on a net of tax basis) and unvested awards
subject to a service requirement for vesting only (valued on a net of tax basis) will be included when determining the extent
to which the guideline holding is achieved. Until such time as the guideline threshold is achieved. Executive Directors are
required to retain 50% of the net of tax value of awards that vest under the LTIP or deferred annual bonus.
Post cessation of employment, Executive Directors will be required to retain shares from FY21 and future incentive awards
equal to 100% of salary for one year post cessation and 50% of salary for the second year post cessation, subject to the
Committee amending this requirement in exceptional circumstances.
Chair and Non-Executive Directors’ (NEDs) fees
Purpose and Link to Strategy To recruit, motivate and retain a Chair and Non-Executive Directors of a high calibre by offering
Operation
a market competitive fee level and which takes account of the specific circumstances of 888.
The Chair and the Executive Directors determine the fees paid to the Non-Executive Directors.
The Chair’s fees are determined by the Remuneration Committee with reference to prevailing
fee rates amongst other gaming companies. Fees paid to the Non-Executive Directors are
set by reference to an assessment of the time commitment and responsibility associated with
each role, and prevailing fee rates amongst other gaming companies. Levels take account of
additional demands placed upon individual Non-Executive Directors by virtue of their holding
particular offices, such as Committee Chair and/or Senior Independent Director, and travel time
to Board meetings (which are held outside the UK). Additional fees may be paid as appropriate
to reflect increased time commitments of the role.
The Chair and the Non-Executive Directors are not eligible to participate in any bonus plan,
pension plan, share plan, or long-term incentive plan of 888. The Chair and Non-Executive
Directors are entitled to be reimbursed for any reasonable travel and accommodation and
other expenses incurred in the performance of their duties (including any tax incurred thereon)
including any expense deemed a taxable benefit in kind and the tax payable thereon.
Opportunity
No maximum.
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113
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
DISCRETIONS RETAINED BY THE COMMITTEE IN OPERATING ITS INCENTIVE PLANS
The Committee will operate the annual bonus plan, deferred share bonus plan and LTIP according to their respective rules.
The Committee retains discretion in a number of regards to the operation and administration of these plans. These include,
but are not limited to, the following:
• the determination of vesting and the extent to which performance targets have been met;
• the determination of the treatment of leavers;
• determination of the extent of vesting in the event of a change of control; and
• adjustments required in certain circumstances (e.g. rights issues, corporate restructuring events and special dividends).
APPROACH TO SETTING REMUNERATION FOR A NEW RECRUIT
The remuneration package for a new Executive Director would take into account the skills and experience of the individual,
the market rate for a candidate of that experience and the importance of securing the relevant individual. Salary would be
provided at such a level as is required to attract the most appropriate candidate while paying no more than is necessary.
The annual bonus and LTIP award would be in line with the Policy with a maximum of 200% of salary annual bonus
opportunity and a maximum 200% of salary LTIP award level. In addition, the Committee may offer additional cash and/or
share based elements to replace benefits, deferred or incentive pay forfeited by an executive leaving a previous employer.
It would ensure that these awards would be consistent with awards forfeited in terms of delivery mechanism (cash or shares),
vesting periods, expected value and performance conditions. For an internal Executive Director appointment, any variable
pay element awarded in respect of the prior role may be allowed to pay out according to its terms or adjusted as relevant
to take into account the appointment. In addition, any other ongoing remuneration obligations existing prior to appointment
may continue. The Committee may agree that 888 will meet relocation expenses or match other benefits received by the
Executive Director in his previous employment, as appropriate.
REMUNERATION AWARDED PRIOR TO THE EFFECTIVE DATE
For the avoidance of doubt, authority is given to the Company to honour any commitments entered into with current or
former Directors under a previous shareholder approved policy that have been disclosed to shareholders in previous
remuneration reports.
SERVICE CONTRACTS AND LOSS OF OFFICE PAYMENT POLICY FOR EXECUTIVE DIRECTORS
Executive Directors have service contracts with up to 12-month notice periods. In the event of termination, the Executive
Directors’ contracts provide for compensation up to a maximum of base salary plus the value of any benefits (including
pension). 888 seeks to apply the principle of mitigation in the payment of compensation on the termination of the service
contract of any Executive Director. There are no special provisions in the service contracts for payments to Executive
Directors on a change of control of 888. In the event of an exit of an Executive Director, the overriding principle will be to
honour contractual remuneration entitlements and determine on an equitable basis the appropriate treatment of deferred
and performance linked elements of the package, taking account of the circumstances. Failure will not be rewarded.
If an Executive Director resigns or is summarily dismissed, salary, pension and benefits will cease on the last day of
employment and there will be no further payments. There are no other obligations to pay remuneration, or which could
impact remuneration, contained in any service contract other than the terms of the Executive Directors’ service agreements
described herein. Directors’ service agreements are available for inspection at 888’s registered office and at each annual
general meeting.
REMUNERATION FOR LEAVERS
Fixed pay
Salary, pension and benefits will be paid up to the length of the agreed notice period or agreed period of gardening leave.
Variable pay
Where a Director leaves for certain specified reasons such as retirement, as a result of injury, illness or disability or otherwise
with the agreement of the Committee (sometimes referred to as “good leaver” reasons) the following will apply:
Annual bonus and annual bonus deferred shares
Subject to performance, a bonus may be payable at the discretion of the Committee pro-rata for the portion of the
financial year worked. Unvested deferred bonus shares will ordinarily vest in full at the end of the normal vesting period.
The Committee has discretion to permit in exceptional circumstances such unvested awards to vest early rather than
continue on the normal vesting timetable, taking into account the Company’s policy for bonuses from 2019, and for
Executive Directors to retain an interest in shares in the Company for two years post-employment.
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888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE LTIPs
Unvested awards under the 888 Long Term Incentive Plan 2015 would normally vest on the normal vesting date unless the
Committee determines that such awards shall instead exceptionally vest at the time of cessation, taking into account the
Company’s policy for awards granted from 2019 for Executive Directors to retain an interest in shares in the Company for two
years post-employment. Unvested awards will only vest to the extent that the performance conditions have been satisfied
(over the full or curtailed period as relevant). A pro-rata reduction in the size of awards would normally apply, based upon the
period of time after the grant date and ending on the date of cessation of employment relative to the normal vesting period.
Where a Director leaves for any other reason, all annual bonus, annual bonus deferred shares and LTIP awards will lapse
immediately on cessation.
Depending upon circumstances, the Committee may consider other payments to settle statutory entitlements, legal claims or
potential legal claims, in respect of an unfair dismissal award, outplacement support and assistance with legal fees, including
the statutory obligation in Israel to make a severance payment on cessation for any reason equal to one month’s gross
salary for every year of service.
TERMS OF APPOINTMENT FOR NON-EXECUTIVE DIRECTORS
The Non-Executive Directors serve subject to letters of appointment and are appointed subject to re-election at each annual
general meeting. The Non-Executive Directors are typically expected to serve for three years, although the Board may invite
a Non-Executive Director to serve for an additional period. Their letters of appointment are available for inspection at 888’s
registered office and at each annual general meeting.
DIRECTORS’ SERVICE CONTRACTS
The unexpired term of the directors’ service contracts or appointment letters are as follows:
Name
Position
Unexpired Term of Service Contract
Lord Mendelsohn
Chair
Until 22 September 2023. No remuneration is payable in respect of any
unexpired portion of the term of the Chair’s appointment, including if the
Chair is asked to step down from the Board.
Yariv Dafna
Chief Financial Officer
Service contract terminates and notice period ends on 12 January 2024.
Anne de Kerckhove
Non-executive Director
Mark Summerfield
Non-executive Director
Limor Ganot
Non-Executive Director
Andria Vidler
Non-Executive Director
Andrea Gisle Joosen
Non-Executive Director
Ori Shaked
Non-Executive Director
Until 27 November 2023. No remuneration is payable in respect of any
unexpired portion of the term of the Director’s appointment, including
if the Director is asked to step down from the Board.
Until 5 September 2025. No remuneration is payable in respect of any
unexpired portion of the term of the Director’s appointment, including
if the Director is asked to step down from the Board.
Until 1 August 2023. No remuneration is payable in respect of any
unexpired portion of the term of the Director’s appointment, including
if the Director is asked to step down from the Board.
Until 4 July 2025. No remuneration is payable in respect of any unexpired
portion of the term of the Director’s appointment, including if the Director
is asked to step down from the Board.
Until 4 July 2025. No remuneration is payable in respect of any unexpired
portion of the term of the Director’s appointment, including if the Director
is asked to step down from the Board.
Until 12 September 2025. No remuneration is payable in respect of any
unexpired portion of the term of the Director’s appointment, including
if the Director is asked to step down from the Board.
Until 11 January 2022, each of Lord Mendelsohn’s and Limor Ganot’s director’s fees were paid to their respective personal
service companies and their respective personal service companies had accordingly entered into service agreements with
the Company. Such agreements were terminated with effect from 11 January 2022 and accordingly, since 11 January 2022,
Lord Mendelsohn and Limor Ganot have been directly engaged by the Company.
888 Holdings PLC Annual Report & Accounts 2022
115
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
HOW THE VIEWS OF SHAREHOLDERS ARE TAKEN INTO ACCOUNT WHEN DETERMINING
DIRECTORS’ PAY
888 engages with investors regarding remuneration issues and in respect of any proposed changes to the Directors’
Remuneration Policy and significant changes to operation of that policy and intends to continue doing so. Views of
shareholders and their representative bodies expressed at the annual general meeting and feedback received at other times
will be considered by the Committee. The Annual Report on Remuneration sets out specific engagement for any one year.
HOW THE VIEWS OF EMPLOYEES ARE TAKEN INTO ACCOUNT WHEN DETERMINING DIRECTORS’ PAY
888 has not consulted with employees regarding the current Directors’ Remuneration Policy. The Annual Report on
Remuneration sets out engagement activities with stakeholders during the year of report.
In determining the remuneration policy for Executive Directors, the Committee takes account of the policy for employees
across the workforce. In particular, when setting base salaries for executives, the Committee takes into account the salary
increases being offered to the workforce as a whole. The overall structure of the remuneration policy for Executive Directors
is broadly consistent with that for other senior employees, but reflects the additional risks and responsibilities borne by the
Executive Directors as well as market practice in competitor businesses and the locations within which it operates. Executive
remuneration and remuneration of senior employees has a significant focus on performance-related pay. 888’s Executive
Committee all participate in the same annual bonus and LTIP arrangements as the Executive Directors and 888’s Business
Leadership Forum also participate in a long-term equity plan.
ILLUSTRATION OF APPLICATION OF CURRENT REMUNERATION POLICY
The following charts illustrate the operation of the Directors’ Remuneration Policy for the Executive Chair and the CFO, under
three different performance scenarios: ‘Fixed pay’, ‘Target’, and ‘Maximum’.
Executive Chair – Lord Mendelsohn
Maximum
Target
Minimum
100% £670
100%
£670
100%
£670
£’000
£0
£100
£200
£300
£400
£500
£600
£700
CFO – Yariv Dafna
£1,090
Maximum
41%
48% 11%
£1,151
Target
58%
34% 8%
£766
Minimum
100%
£443
£’000
£0
£200
£300
£600
£800 £1,000 £1,200 £1,400
Fixed
Short-term incentive
Long-term incentive
LTIP value with 50% share price growth
Assumptions:
• Fixed: Shows fixed remuneration only, base salary or fee for 2023, taxable benefits (as disclosed for the previous financial
year and excluding any benefits related to relocation for the CFO) and pension for the CFO.
• Target: Shows fixed remuneration plus for the CFO 50% of the maximum annual bonus and 50% of maximum Long-term
incentive opportunity.
• Maximum: Shows fixed remuneration plus for the CFO 150% of salary maximum annual bonus and 35% of salary Long-term
incentive award.
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888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE
ANNUAL REPORT ON REMUNERATION
This Annual Report on Remuneration together with the Chair’s Annual Statement, will be subject to an advisory vote at the
Annual General Meeting to be held on 23 May 2023. The information on page 118 with respect to Directors’ Emoluments and
onwards through page 125 has been audited.
OPERATION OF REMUNERATION POLICY FOR 2023
Base salaries
The Executive Chair’s fee is £670,000 p.a. effective from 30 January 2023 (£320,000 for the period 1 January to 29 January)
reflecting his full-time role until a new CEO is appointed and he returns to his Non-Executive Chair role.
No salary increases were awarded to our former CEO and CFO for 2023.
Director
2023
2022
Increase
Executive Chair
CFO
£670,000
£350,000
Non-Executive Chair fee £320,000 p.a. to 29 January 2023
£350,000
0%
ANNUAL BONUS
The CFO’s maximum bonus opportunity is 150% of salary. The Executive Chair will not participate in the annual bonus plan.
The annual bonus for our CFO will be determined as to 60% on Group operational targets equally weighted between Revenue,
EBITDA, EBITDA margin, regulatory compliance and ESG scorecard (weighted 50% safer gambling, 25% environmental
impact, 25% employee engagement) and 40% by specific integration objectives with 40% weighted to operational cashflow
and the remainder to critical business integration priorities.
The annual bonus targets are considered by the Committee to be commercially sensitive at this time. Full retrospective
disclosure of targets and performance against them will be disclosed in next year’s report.
The Committee will review and set appropriate annual bonus metrics for our new CEO and CFO on their appointment taking
into account progress, at the time of their joining, against the business strategy for the year and the key critical areas of
focus for the remainder of the year.
LONG-TERM INCENTIVE PLAN
The Executive Chair will not participate in the LTIP.
As explained in the Committee Chair’s Annual Statement, our CFO will be granted an LTIP for 2023 to provide effective
incentivisation on those critical areas of 2023 performance that are needed to deliver the longer term growth on which the
vesting of the 2023 LTIP will depend. The LTIP award will be based on a prorated 50% of salary award reflecting the CFO’s
employment with the business for one year of the three year performance period. The number of shares subject to the award
will be 180,812 which is a 30% discount to the number he would have received based on the share price on 14 February of 67
pence and reflecting the significant fall in share price since awards were granted in 2022. This equates to an award of 35%
of salary. The Committee understands that it is unusual to grant an LTIP award to an executive director during their notice
period. However, noting the period of time the CFO will be working with the business, the criticality of performance for 2023 as
the basis for growth to 2025 as well as the departure of our CEO, the Committee has determined that this is appropriate in all
the circumstances. The Committee retains the discretion to scale back the formulaic outcome of incentive awards taking into
account matters such as underlying business performance and the shareholder experience.
The performance conditions will continue to be based 50% on adjusted earnings per share growth targets and 50% on
relative TSR. An additional TSR peer group has been added for the 2023 award such that the TSR performance condition will
be tested 50% against the sector peer group and 50% against the FTSE 250 excluding investment trusts.
The performance targets for the 2023 award are set out below. Straight line vesting will occur between target points.
Measure
Weighting
(% of max award)
Threshold
(25% of max vesting)
Maximum
(100% of max vesting)
Relative TSR versus sector
peers*
25%
Relative TSR versus FTSE 250
excluding Investment Trusts
25%
Median
Median
Median + 10% p.a. compounded
Upper quartile
Adjusted EPS
50%
20.3% CAGR 33.4p
24.0% CAGR 36.6p
* The TSR sector peer group for 2023 comprises Bally’s Corporation., Betsson AB, Flutter Entertainment plc, Entain plc, Kambi Group plc, Kindred Group plc, Playtech plc
and Rank Group plc.
PENSION AND BENEFITS
The Executive Chair will be entitled to receive travel related benefits in relation to carrying out his role.
The CFO’s pension and benefits remain as described in last year’s report.
888 Holdings PLC Annual Report & Accounts 2022
117
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
NON-EXECUTIVE DIRECTORS FEES
The Non-Executive Director fees remain unchanged from 2022.
• Non-executive Chair fee (once Chair resumes non-executive role): £320,000
• Non-executive Director fee: £90,000
• Senior Independent Director fee: £20,000
• Chair of a Board committee (inclusive of membership fee): £15,000 and
• Membership of Audit, Remuneration or ESG committee: £5,000
REMUNERATION PAID TO EXECUTIVE DIRECTORS FOR SERVICES IN 2022
The following table presents the Executive Directors’ emoluments in respect of the year ended 31 December 2022
(all amounts are in £‘000).
Executive
Directors
Itai Pazner,
CEO
Yariv Dafna,
CFO
Salary (2)
£’000
Taxable
Benefits (3)
£’000
Annual
Bonus (4)
£’000
Long-Term
Incentives (5)
£’000
Pension (6)
£’000
2022
2021
2022
2021
687
643
350
320
747
88
273
308
—
—
1,040
1,103
—
422
16
—
42
96
53
48
Total
£’000
1,476
2,970
692
1,098
Total
Fixed Pay
£’000
Total
Variable Pay
£’000
1,476
827
676
676
—
2,143
16
422
1. For 2022 the Directors’ remuneration where applicable is converted from New Israeli Shekels into GBP at the average rate of exchange for the relevant month it
was paid. For 2021 the average GBP/USD FX rate in 2021 has been applied to the figures disclosed in the 2021 remuneration report or the actual GBP amount has
been used as applicable.
2. Mr Pazner’s salary for 2022 was paid in New Israeli Shekels ILS 1,938,916 for the period to 31 August and from 1 September £225,333.
3. Benefits for Mr Pazner include relocation related payments including housing and schooling, taxation and immigration support and one-off costs in association
with his move from Israel to the UK (£405,282). An amount of £210,076 is also included in benefits which represents a contractual payment that was triggered
under Israeli law when he moved from an Israeli contract to a UK contract on relocation to the UK. This payment would otherwise have been required to be made
under Israeli law on his actual cessation from the business. Other benefits payable include convalescence and health insurance for Mr Pazner and his family
and disability and life insurance, specific Israeli “study fund” contributions up to the Israeli tax-free ceiling, car allowance and meals allowance;
Benefits for Mr Dafna include relocation related payments including housing and schooling (total £232,750), as well as car allowance and health, disability and
life insurance.
4. No bonus is payable for 2022.
5. Performance-based long-term incentives are disclosed in the financial year in which the performance period ends. The CFO’s LTIP for the single total figure in 2022
is the value of the 2020 LTIP award, for which the performance period ended on 31 December 2022, and will vest in 2024 due to the prorated award in respect of
his year of appointment in 2020 being granted at the same time as the 2021 LTIP award. The value is based on the average share price for the last three months
of FY22 of £0.95. This price compares to a share price on the date of grant of £3.485.
The 2019 LTIP value has been restated to reflect the actual share price on vesting of £1.95.
6. 888 offers a defined contribution pension scheme (via outsourced pension providers) or cash in lieu of pension. In accordance with standard practice in Israel,
Mr Pazner received personal pension scheme contributions in an amount of 6.57% of base salary, which reduced to 5% of salary on his relocation to the UK.
Mr Dafna receives a cash payment in lieu of pension in the amount of 15% of base salary.
NON-EXECUTIVE DIRECTORS’ AND CHAIR’S FEES
Non-Executive Directors
Anne De Kerckhove1
Mark Summerfield1
Limor Ganot2
Lord Mendelsohn3
Randy Freer4
Andria Vidler5
Andrea Gisle Joosen6
Ori Shaked7
Fee
£’000
Other
£’000
Total Fee
£’000
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
180
140
145
114
100
97
335
276
14
—
44
—
44
—
29
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
180
140
145
114
101
97
335
276
14
—
44
—
44
—
29
—
1. Both Mark Summerfield and Anne de Kerckhove received an additional non-executive director fee of £30,000 for 2022 for the additional time they spent during
the year on integration matters.
2. Limor Ganot received reimbursed grossed up expenses of £1,232.
3. Lord Mendelsohn received an additional fee of £15,000 for Chairing the ESG Committee.
4. Randy Freer was appointed as a non-executive director on 5 July 2022 but stood down on 31 August 2022 as a result of increased time commitments. Randy Freer
waived his fee for 2022.
5. Andria Vidler was appointed as a non-executive director on 5 July 2022.
118
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE
6. Andrea Gisle Joosen was appointed as a non-executive director on 5 July 2022.
7. Ori Shaked was appointed as a non-executive director on 13 September 2022 following the Group’s largest shareholder, Sinitus Nominees Limited in trust on behalf
of Dalia Shaked, exercising its right to appoint a non-executive director.
ANNUAL BONUS PAYMENTS IN RESPECT OF 2022 PERFORMANCE
• The annual bonus opportunity was 200% of salary for the CEO and 150% of salary for the CFO. The financial metrics were
based on 888 performance excluding the William Hill business with 50% based on adjusted EBITDA targets, 20% revenue
excluding the US business and 30% strategic objectives.
• The adjusted EBITDA and revenue targets were not met. The scoring of the strategic element of the bonus resulted in a
formulaic outcome of 14.25% of the total bonus being payable. However, the Committee determined, given underlying
business performance and wider stakeholder experience that no bonus will actually be paid for 2022.
FINANCIAL PERFORMANCE
• The 2022 adjusted EBITDA and revenue performance targets and performance against them is as follows:
Performance Measures
Weighting
Threshold
(25% pay-out)
Target
(50% pay-out)
Max
(100%
pay-out)
Actual
performance
Adjusted EBITDA
50%
£123m
£129m
£135m
£98m
Revenue excluding the US business
20%
£713m
£773m
£790m
£605m
Note: The targets were set in US$ and have been converted to pounds sterling using a rate of 1:0.806452.
STRATEGIC PERFORMANCE
Set out below are the strategic objectives set for the Executive Directors and performance against them.
Objective
Weight
Objectives set
Performance
US expansion 25%
a) Launch 3 or more new states under
the B2C business
b) Achieve at least 90% of the US revenue
according to the 2022 budget plan
in December 2022
a) Virginia & MI launched. Indiana
ready to launch however launch
impacted by external factors
outside of managements control.
b) US revenue targets not achieved.
25%
a) Management of multiple accounts’
a) Progress made.
Regulatory
compliance
Bonus
awarded for
that element
0% of
maximum
0% of
maximum
Score
12.5% out
of 25%
0% out
of 25%
risk in the UK
b) Completion of all objectives, actions
and priority items of arising from 2021
Regulatory review.
b) Actions completed.
Regulatory Compliance continues to be
a focus for 888 and whilst all actions and
priority items from the 2021 regulatory
review were completed, there is still
more work to do to ensure an effective
execution of proactive commitments
made to improve compliance standards.
Safer
gambling
20%
a) Complete Control Centre rollout in
a) Achieved.
regulated markets for at least 90% of 888’s
non-US regulated revenues
b) Not achieved.
5% out
of 20%
b) Board approval and commencement
of Safer Gambling strategic and
operational plan
William Hill
integration
30%
a) Agreed actions to realise targeted
a) Synergy plan approved
synergies for 2022-2023
and communicated in CMD.
30% out
of 30%
b) Approval and commencement
of overhead savings plan
b) Plan agreed as part of restructuring
plan with ongoing implementation
c) Approval and commencement
c) Operating model agreed
implementation of operational model
for combined business
with ongoing implementation.
Overall
100%
47.5%
888 Holdings PLC Annual Report & Accounts 2022
119
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
TOTAL BONUS PAYABLE FOR 2022
The Committee exercised discretion to reduce the formulaic bonus outcome to zero in light of business performance and
wider stakeholder experience.
Adjusted EBITDA
(% payout of
50%)
0%
0%
Revenue
excluding US
business
(% payout of
20%)
0%
0%
Strategic
objectives
(% payout of
30%)
14.25%
14.25%
Formulaic
payout
(% of maximum)
14.25%
14.25%
Payout after
Committee
exercise of
discretion
0%
0%
Total payout
£’000
£0
£0
Director
Itai Pazner
Yariv Dafna
LONG-TERM INCENTIVE AWARDS WITH PERFORMANCE PERIOD ENDING IN THE YEAR ENDED
31 DECEMBER 2022
The 2020 LTIP awards have a performance period that ended on 31 December 2022. The awards are based 50% on TSR
performance and 50% on adjusted EPS targets.
The table below sets out the achievement against the TSR and adjusted EPS performance condition, resulting in total vesting
of 50% of maximum.
Performance level
Below threshold
Threshold
Stretch or above
Actual achieved
TSR 1
Adjusted EPS2,3
Performance required
% vesting
Performance required
% vesting
Below median
Median = 41.6%
33% above median =
88.5%.
-37.4%
0%
25%
100%
0%
Less than 3% CAGR
3% CAGR
9% CAGR
15.3% CAGR
0%
25%
100%
100%
1. TSR peer group comprises Entain, Sportech, Playtech, Flutter Entertainment, Betsson AB, Kindred Group and Rank Group.
2. The adjusted EPS performance condition was based on 888 adjusted EPS not including the William Hill business on the basis the William Hill business was acquired
only 6 months prior to the 3 year performance period ending.
3. The adjusted EPS for the 888 (excluding William Hill) business was 16.7 pence per share, which results in maximum vesting.
Details of the level of vesting and the actual number of shares and estimated value in respect of the awards granted
under the 2020 LTIP, based on the above, is shown in the table below. Mr Pazner’s award lapsed following his cessation of
employment on 3 March 2023.
Executive
Itai Pazner3
Yariv Dafna4
Number of shares
at grant
Number of shares
to lapse
Number of shares
to vest
Dividend accrual on
vested share value 1
£
Value of shares
excluding
Dividend Accrual 2
£
898,332
34,433
898,332
17,217
0
17,216
0
0
0
16,318
1. Dividends accrue on awards at the date of a dividend payment to the date of vesting and upon exercise the value of the accrued dividends is paid to the
employee on the number of vested awards.
2. The value of the vested shares is based on the share price of £0.95 being the average share price for the last three months of 2022.
3. The CEO’s LTIP award which had a value of £425,745 has lapsed on his cessation of employment on 3 March 2023.
4. The CFO received a pro-rated LTIP award for 2020 reflecting his date of joining in 2020, the award was however granted in 2021 and will vest in March 2024.
120
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE SCHEME INTERESTS AWARDED DURING THE YEAR
The table below sets out the grants under the 888 Holdings plc Long Term Incentive Plan in 2022, and the Deferred Share
Bonus Plan awards made in relation to the 2021 bonus. The awards to Mr Pazner subsequently lapsed on his cessation of
employment on 3 March 2023.
Executive
Award Type
Itai Pazner
LTIP2
Deferred share bonus3
Yariv Dafna
LTIP2
Deferred share bonus3
Number of
awards granted
Face value of
awards granted 1
Face value of
awards as %
salary
% vesting at
threshold
performance
728,529
£1,378,377
196,141
277,484
54,123
£371,099
£525,000
£102,401
200%
N/A
150%
N/A
25%
NA
25%
NA
Grant Date
10-Mar-22
10-Mar-22
10-Mar-22
10-Mar-22
1. The share price used to determine the number of shares granted was the share price on the day prior to grant (£1.892 on 9 March 2022). The awards to Mr Pazner
were conditional awards of Ordinary Shares and to Mr Dafna share options.
2. This award is due to vest subject to performance conditions being met at the end of the performance period ending 31 December 2024.
The performance conditions for the 2022 LTIP are split equally between earnings per share (‘EPS’) targets and relative total shareholder return (‘TSR’) targets.
Vesting begins for achievement of the threshold target for which 25% of the award vests and increases on a straight line basis to the maximum target for which
100% of the award vests for achievement of the target or above. No vesting occurs below the threshold target. Performance is measured over three years
beginning 1 January 2022.
The EPS targets set at grant were: Threshold – 3% CAGR and Maximum – 9% CAGR. These targets were amended by the Committee following the acquisition of the
William Hill business to Threshold 26.25 pence and Maximum 29.13 pence or 9.77% CAGR to 13.64% CAGR from a restated 2021 base of 19.85 pence.
The TSR targets are: Threshold – Median (888’s TSR performance in line with the median TSR of the peer group) and Maximum – Median + 10% p.a. compounded
(888’s TSR performance in line with the median TSR of the peer group + 10% p.a. compounded)
The TSR peer group comprises the following companies: Bally’s Corporation, Betsson AB, Flutter Entertainment plc, Entain plc, Kambi Group plc, Kindred Group plc,
LeoVegas AB, Playtech plc & Rank Group plc
3. Granted on 10 March 2022 by way of deferral of the excess portion of the 2021 annual bonus into shares in accordance with the Company’s Remuneration Policy
and pursuant to the Company’s Deferred Bonus Share Plan, and vesting in equal tranches over one, two and three years. No further performance conditions apply
to the vesting of the awards.
LOSS OF OFFICE PAYMENTS AND PAYMENTS TO PAST DIRECTORS
Mr Pazner, Chief Executive Officer, stepped down from his role on 30 January 2023 and left the business on 3 March 2023.
All unvested deferred share bonus awards and long-term incentive awards lapsed on cessation. Mr Pazner will be paid his
normal salary of £676,000, pension of £33,800, and benefits of £100,074 for his 12 month notice period in total £809,874 with
insurance benefits continuing for the notice period. He will also continue to receive accommodation and schooling support
totalling £735,000. There will be a duty to mitigate all payments.
Mr Dafna, Chief Financial Officer, will step down from the Board once a new Chief Financial has been appointed. His notice
period ends on 12 January 2024. His remuneration for FY23 is set out in the previous pages of this report. Mr Dafna will retain
his unvested incentive awards with deferred bonus awards vesting at the usual time and for LTIP awards, performance
tested, time pro-rating and vesting at the usual time. Once he ceases to be a Director, full details of his remuneration will be
disclosed on the Company’s website and included in the 2023 Remuneration Report.
888 Holdings PLC Annual Report & Accounts 2022
121
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT CONTINUED
DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS
The Executive Directors are required to build and maintain a shareholding in 888 worth two times their annual salary as set
out in the Remuneration Policy.
Details of the Directors’ interests (and of their connected persons) in shares as at 31 December 2022 are shown in the table
below. There were no changes in the Directors’ interests in shares between 31 December 2022 and the date of this Report and
3 February 2023 for Mr Pazner.
Number of Ordinary Shares At 31 December 2022
Unvested
shares with
performance
conditions
Unvested
shares
without
performance
conditions
Unvested
options 1
with
performance
conditions
Unvested
options 1
without
performance
conditions
Legally
owned
Vested
unexercised
options 1
Total for
shareholding
guideline 2
Total
%
achievement
against
shareholding
guideline 2
1,259,291
20,000
1,985,671
—
32,412
—
100,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
449,650
245,813
58,076
35,607
1,977
3,526,382
529,703
1,408,444
51,828
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
32,412
—
100,000
—
—
—
—
—
—
—
—
—
—
—
—
—
181%
13%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Director
Itai Pazner
Yariv Dafna
Mark
Summerfield
Anne De
Kerckhove
Lord
Mendelsohn
Limor Ganot
Randy Freer
Andria
Vidler
Andrea
Joosen
Ori Shaked
1. Nil Cost Options.
2. The Executive Directors are required to build and maintain a shareholding equivalent to 200% of base salary. Shares counting towards this guideline include
legally owned shares, unvested options without performance conditions (valued on a net of tax basis), and fully vested but unexercised nil-cost options (valued
on a net of tax basis). Achievement against the guideline holding is calculated using the share price at 31 December 2022. Following Mr Pazner’s cessation of
employment on 3 March 2023, all his unvested awards lapsed.
3. Share price at 31.12.2022 was £0.87
No Director was materially interested during the year in any contract which was significant in relation to the business of 888.
PERFORMANCE GRAPH
The following graph shows 888’s performance*, measured by TSR, compared with the performance of the FTSE 250 Index.
The directors consider that the FTSE 250 Index is the most appropriate comparator benchmark as it has been a member
of this index for a significant period of the time covered by the chart.
450
400
350
300
250
200
150
100
50
0
31 Dec
2012
31 Dec
2013
31 Dec
2014
31 Dec
2015
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2021
31 Dec
2022
888 Holdings
FTSE 250
* 888 Holdings plc Ordinary Shares of GBP 0.005 each, being the shares of the Company’s equity share capital whose listing or admission to dealing has resulted in
the Company falling within the definition of “quoted company”.
122
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE
TOTAL REMUNERATION HISTORY FOR CEO
The table below sets out the total single figure remuneration for the CEO over the last ten years with the annual bonus paid
as a percentage of the maximum and the percentage of long-term share awards where the performance period determining
vesting ended in the year.
2013
2014
2015 1
2016 2
2017
2018
2019 2
Itai
Frieberger
2019 3
Itai
Pazner
2020
2021
2022 4
Total remuneration
(£000s)
815
808
3,544
1,369
8,358
1,886
364
1,354
2,000
2,970
1,476
Annual bonus (%)
100%
100%
100%
LTIP vesting (%)
0%
0%
59%
100%
100%
100% 29.2%
74.6%
74.6% 92.5% 78.0%
100% 73.8%
30.6% 30.6% 89.9% 88.5%
0.0%
0.0%
1. Brian Mattingley’s total remuneration in 2015 included a phantom award granted to him on 27 March 2012 and which vested on 27 March 2015. Reflects Brian
Mattingley’s tenure as CEO until 13 May 2015.
2. Mr Frieberger was appointed as CEO on 2 March 2016 and stepped down as CEO on 23 January 2019. Remuneration is salary, benefits, pension and annual bonus
for the period as CEO and the total LTIP value for 2019.
3. Mr Pazner was appointed as CEO on 24 January 2019. Remuneration is salary, benefits, pension and annual bonus for the period as CEO and the total LTIP value for 2019.
4. Mr Pazner’s 2020 LTIP award lapsed on his cessation of employment and is not therefore included in his Total Remuneration for 2022. The LTIP vesting level was
50% of maximum.
PERCENTAGE CHANGE IN DIRECTOR REMUNERATION COMPARED TO THE AVERAGE FOR
OTHER EMPLOYEES
The following table sets out the percentage change in salary, taxable benefits and annual bonus from financial year 2019
to financial year 2022, for Directors and employees of the Group, taken as a whole.
Change 2022 vs 2021
Change 2021 vs 2020
Change 2020 vs 2019
Base
salary/fee
Benefits
Bonus
Base
salary/fee
Benefits
Bonus
Base
salary/fee
Benefits
Bonus
Itai Pazner
Yariv Dafna
Mark Summerfield
Anne De Kerckhove
Lord Mendelsohn
Limor Ganot
Randy Freer
Andria Vidler
Andrea Joosen
Ori Shaked
Employees
4%
9%
28%
28%
22%
3%
N/A
N/A
N/A
N/A
8%
749%
-11%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
7%
-100%
-100%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-100%
9%
N/A
4%
26%
N/A
N/A
N/A
N/A
N/A
N/A
-2%
10%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-1%
23%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-14%
4%
N/A
N/A
12%
N/A
N/A
N/A
N/A
N/A
N/A
0%
-2%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-7%
29%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
88%
1. The CEO’s benefits have increased because of the relocation benefits he has received on his relocation to the UK.
2. Mark Summerfield’s fee has increased because he received an additional fee for 2022 of £30,000 for the additional time spent during the year on integration matters.
3. Anne De Kerckhove’s fee has increased because she received an additional fee for 2022 of £30,000 for the additional time spent during the year on integration matters.
4. Lord Mendelsohn’s fee increase reflects his appointment as Chair of the Board on 31 March 2021.
5. Randy Freer was appointed as a non-executive director on 5 July 2022 but stood down on 31 August 2022 as a result of increased time commitments.
6. Andria Vidler was appointed as a non-executive director on 5 July 2022.
7. Andrea Gisle Joosen was appointed as a non-executive director on 5 July 2022.
8. Ori Shaked was appointed as a non-executive director on 13 September 2022 following the Group’s largest shareholder, Sinitus Nominees Limited in trust on behalf
of Dalia Shaked, exercising its right to appoint a non-executive director.
9. Employee numbers were calculated on a per average head count basis.
The salary figure includes base salary together with other payments made to the employees (e.g. sick pay, vacation pay), but excluding discretionary bonuses.
The benefits figure includes benefits granted to employees which are not part of salary (e.g. medical insurance, meals, further education funds).
Pension amounts are not included in benefits.
The short term incentives figure solely includes bonuses, which are based on an estimation by the company based on the bonus accrual, since bonuses are
generally paid to Group employees in April in respect of the previous financial year.
888 Holdings PLC Annual Report & Accounts 2022
123
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT CONTINUED
CEO PAY RATIO
2022
2021
2020
2019
Method
25th percentile
50th percentile
75th percentile
A
A
A
A
1:22
1:62
1:33
1:25
1:18
1:48
1:26
1:19
1:13
1:35
1:19
1:15
CEO
25th percentile
50th percentile
75th percentile
Salary
Total pay and benefits
£687,000
£1,476,000
£51,000
£66,000
£67,000
£84,000
£91,000
£113,000
The table above sets out the CEO pay ratio for 2019 to 2022. The ratios have been calculated as far as practicable following
the methodology in Option A, as this is the most accurate method of calculation. The CEO pay is compared to the pay of our
Israeli employees at the 25th, 50th and 75th percentile. The CEO relocated from Israel to the UK in September 2022 and the
pay ratio for 2022 continues to be based on the Israeli workforce. For 2023 the comparison will move to the UK workforce.
The decrease in the ratio for 2022 is as a result of no bonus for 2022 and the CEO’s 2020 LTIP award lapsing on cessation
of his employment. The overall structure of the remuneration policy for Executive Directors is broadly consistent with that
for other senior employees, i.e. with a significant focus on performance related pay, but reflects the additional risks and
responsibilities borne by the Executive Directors.
The reward policies and practices for our employees are aligned to those set for the Executive Directors, including the CEO
and on this basis the Committee is satisfied that the median pay ratio is consistent with the pay, reward and progression
policies across the 888 Group employees.
RELATIVE IMPORTANCE OF SPEND ON PAY 2022 VS 2021
$m
250
200
150
100
50
0
119
+121%
103
109
+6%
FY21
FY22
Employee pay and benefits
888
William Hill
44
FY21
0
FY22
Dividends
-100%
The graph above sets out the actual expenditure by 888 in financial years 2021 and 2022 on dividend and remuneration to
Group employees.
No other comparables were chosen for the disclosure in this 2022 Remuneration Report because of the difficulty of providing
comparable data from 2021 to 2022 given the William Hill acquisition.
The calculation of the comparables is as set out in the 2022 Consolidated Income Statement and Notes to the Financial
Statements. For FY21 we have shown the 888 business only and for FY22 we have shown two comparisons, one for 888 only
and one for 888 and William Hill combined (representing the acquisition of William Hill in July 2022).
COMMITTEE MEMBERS, ATTENDEES AND ADVICE
The Remuneration Committee consists solely of Non-Executive Directors. Ms Anne de Kerckhove chairs the Committee and
Committee members during the year were Mr Mark Summerfield and Ms Limor Ganot. Details of attendances at Committee
meetings are contained in the statement on Corporate Governance on page 92. The Chair of the Board attends meetings
by invitation. Members of the management team attend meetings by invitation, and where appropriate, but no individual is
present when their own specific remuneration arrangements are determined.
The Remuneration Committee’s remit is set out in its Terms of Reference which are available at https://corporate.888.com/
who-we-are/governance/board-committees.
124
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE
REMUNERATION COMMITTEE ADVISER
Korn Ferry was appointed Remuneration Committee adviser to 888 on 30 November 2018 following a tender process.
The primary role of the adviser to the Committee is to provide independent and objective advice and support to the
Committee’s Chair and members. Korn Ferry has discussions with the Committee Chair on a regular basis to discuss executive
and wider group remuneration matters, reporting, regulation, investor views and process. Korn Ferry has provided other
human capital services to the Group during the year through separate parts of the business. The Committee is comfortable
that the controls in place at Korn Ferry do not result in the potential for any conflicts of interest to arise. The Committee
undertakes due diligence periodically to ensure that its advisers remain independent and is satisfied that the advice that
it receives from Korn Ferry is objective and independent. Korn Ferry also is a signatory to the Remuneration Consultants
Group Code of Conduct which sets out guidelines for managing conflicts of interest and has confirmed to the Committee its
compliance with the Remuneration Consultants Group Code.
The total fees paid to Korn Ferry in respect of its services to the Committee for the year ending 31 December 2022 were
£120,000 (2021: £80,000). Fees are charged on a ‘time spent’ basis.
ENGAGEMENT WITH STAKEHOLDERS
The Committee includes as part of its annual agenda consideration and review of workforce policies and practices
and invites members of the management team to attend Committee meetings to provide input into the Committee’s
considerations. A key part of the Chief People Officer’s role, supported by the CEO and the non-executive director for
engagement, is to engage with the wider workforce, with views and feedback on remuneration provided to the Committee
and wider Board. The approach to workforce engagement has been reviewed for 2023 and an engagement plan will be led
by the designated director for workforce engagement, Ms Anne de Kerckhove, with the Chief People Officer and supported
by the Chair of the Board.
The Committee is committed to having a transparent and constructive dialogue with our investors and consults with its
investors to seek feedback on any proposed policy changes and significant operation of policy changes. In early 2023,
the Remuneration Committee Chair carried out engagement with investors to discuss the businesses’ overall approach to
remuneration and the operation of policy for 2023. This engagement was curtailed by changes to the Board but will continue
again as the Committee reviews the Directors’ Remuneration Policy in advance of the triennial vote at the 2024 AGM.
STATEMENT OF SHAREHOLDER VOTING AT AGM
Details of votes cast for and against the resolutions to approve the Annual Report on Remuneration at the 2022 AGM and the
Remuneration Policy at the 2021 AGM are shown below.
Advisory Vote to approve Annual Report on
Remuneration (at 2022 Annual General Meeting)
Advisory Vote to approve Remuneration Policy
(at 2021 Annual General Meeting)
Total number of votes
% of votes cast
Total number of votes
% of votes cast
For
Against
Vote Withheld
317,227,305
8,337,888
0
97.44%
2.56%
215,388,197
69,066,028
2,757,202
75.72%
24.28%
Approved by the Board of Directors and signed on behalf of the Board:
Anne de Kerckhove
Chair of the Remuneration Committee
14 April 2023
888 Holdings PLC Annual Report & Accounts 2022
125
GOVERNANCE Governance
DIRECTORS’ REPORT
THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2022
COMPRISES PAGES 126 TO 133 OF THIS REPORT, TOGETHER WITH THE
SECTIONS OF THE ANNUAL REPORT INCORPORATED BY REFERENCE. THE
CORPORATE GOVERNANCE REPORT SET OUT ON PAGES 92 TO 97 IS
INCORPORATED BY REFERENCE INTO THIS REPORT AND, ACCORDINGLY,
SHOULD BE READ AS PART OF THIS REPORT.
As permitted by legislation, some of the
matters required to be included in the
Directors’ Report have instead been
included in the Strategic Report on
pages 2 to 88, as the Board considers
them to be of strategic importance.
Specifically, these are:
• the Strategic framework on pages
2 to 33, which provides detailed
information relating to the Group,
its business model and strategy,
operation of its businesses, future
developments and the results and
financial position for the year ended
31 December 2022;
• future business developments
(throughout the Strategic Report);
• details of the Group’s policy on
addressing the Principal Risks and
uncertainties facing the Group,
which are set out in the Strategic
Report on pages 56 to 66;
• information on the Group’s GHG
emissions for the year ended
31 December 2022, contained within
our TCFD section on pages 68 to 88;
• how we have engaged with our
stakeholders on pages 32 to 33; and
• the Section 172 Statement
on page 96.
Furthermore, as a company
incorporated in Gibraltar, 888 Holdings
plc is not required by UK law or
regulation to prepare the Directors’
Remuneration or Strategic reports
under regulation that applies to UK
incorporated companies. However, by
virtue of 888’s Premium Listing on the
London Stock Exchange and reflecting
the Director’s approach to good
governance and investor expectation,
we have prepared these reports in line
with the requirements under the UK
Companies act 2006.
The Directors’ Remuneration Report,
set out on pages 111 to 125, has been
voluntarily prepared in accordance
with sections 420 to 422 UK Companies
act 2006.
The information given in the Strategic
Report, set out on pages 2 to 88,
has been voluntarily prepared in
accordance with section 414 UK
Companies act 2006.
• Limor Ganot (first appointed
1 August 2020).
• Andria Vidler (appointed
5 July 2022)
• Andrea Gisle Joosen (appointed
5 July 2022)
• Randy Freer (appointed 5 July 2022,
stepped down 31 August 2022)
• Ori Shaked (appointed
13 September 2022)
The beneficial and non-beneficial
interests of the Directors and their
closely associated persons (pursuant
to Article 19 of the European Market
Abuse Regulation) in shares of the
Company are set out in the Directors’
Remuneration Report on pages 111 to
125. There has been no change in the
interests of Directors in shares of the
Company between 31 December 2022
and 31 March 2023 which is the last
practicable date prior to the release
of this Report. Except as noted above,
none of the Directors had any interests
in the shares of the Company or in any
material contract or arrangement with
the Company or any of its subsidiaries.
RESULTS
The Group’s loss after tax is £120.6m
(2021: profit of £50.0m) is reported in
the consolidated income statement on
page 145. The Board of Directors is not
recommending a final dividend to be
paid, in light of the Group’s leverage
position following the acquisition of
William Hill and consistent with its
previous announcements.
DIRECTORS AND THEIR
INTERESTS
Biographical details of the current
Board of Directors, setting out their
relevant skills and experience and their
professional commitments, are shown
on pages 90 and 91.
The Directors who served during the
year are shown below. In line with
the UK Corporate Governance Code
and as required by the Company’s
Memorandum & Articles of Association
(“Articles”), all Directors retire at each
Annual General Meeting and those
who wish to continue to serve offer
themselves for re-election.
• Lord Mendelsohn (first appointed
23 September 2020 as Chair
Designate, appointed as Chair
on 31 March 2021 and appointed
as Executive Chair on 29
January 2023).
• Itai Pazner (first appointed
8 March 2019, stepped down
29 January 2023).
• Yariv Dafna (first appointed
1 November 2020, will step down
at the end of 2023).
• Mark Summerfield (first appointed
on 5 September 2019).
• Anne de Kerckhove (first appointed
28 November 2017).
126
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE • and shall expire upon the earlier of:
(i) the conclusion of the next Annual
General Meeting of the Company
after passing the resolution, save
that the Company may before such
expiry make an offer or agreement
which would or might require equity
securities to be allotted after such
expiry and the Board may allot
equity securities in pursuance of
such an offer or agreement as if the
power conferred thereby had not
expired; and (ii) 30 June 2023.
In paragraph (c) “specified capital
investment” means one or more
specific capital investments in
respect of which sufficient information
regarding the effect of the transaction
on the Company, the assets the
subject of the transaction and (where
appropriate) the profits attributable
to those assets is made available to
shareholders to enable them to reach
an assessment of the potential return.
SHARE CAPITAL
Changes in share capital of the
Company during the financial year are
given in the Consolidated Statement of
Changes in Equity. As at 31 December
2022, the issued share capital of the
Company comprised 446,331,656
ordinary shares of GBP £0.005 each
(“Ordinary Shares”).
On 7 April 2022, the Company
undertook a non-pre-emptive placing
of 70.8 million new ordinary shares
of £0.005 each in the capital of the
Company, representing approximately
19% of the issued ordinary share
capital and raising £162.9m to partly
fund the acquisition of William Hill.
At the Annual General Meeting held in
June 2022, the Board was empowered
to allot securities of a value up to
66.66% of the Company’s ordinary
share capital in issue as at 30 April
2022, provided that, in accordance
with institutional guidelines issued by
the Investment Association, this would
permit up to a maximum nominal value
of £1,487,401.50 (66.66%) to be allotted
pursuant to a rights issue. Furthermore,
the Board was empowered to allot
equity securities of the Company for
cash without application of pre-emptive
rights under the Articles, provided that
such power is limited:
• to the allotment of equity securities
in connection with an offer or issue
of equity securities to or in favour
of: (i) Ordinary Shareholders where
the equity securities respectively
attributable to the interests of
all Ordinary Shareholders are
proportionate (as nearly as may
be) to the respective numbers of
Ordinary Shares held by them; and
(ii) holders of other equity securities
if this is required by the rights of
those securities, or if the Directors
consider it necessary, as permitted
by the rights of those securities; so
that the Directors may make such
exclusions or other arrangements as
they consider expedient in relation
to treasury shares, fractional
entitlements, record dates, shares
represented by depositary receipts,
legal or practical problems under
the laws in any territory or the
requirements of any relevant
regulatory body or stock exchange
or any other matter;
• to the allotment (otherwise than
pursuant to sub-paragraphs (a)
above and (c) below) of equity
securities up to an aggregate
nominal value of £111,566.27; and
• to the allotment (otherwise than
pursuant to sub-paragraphs (a)
and (b) above) of equity securities
in connection with an acquisition
or specified capital investment up
to an aggregate nominal value
of £111,566.27;
888 Holdings PLC Annual Report & Accounts 2022
127
GOVERNANCE DIRECTORS’ REPORT CONTINUED
SHARE BUY BACK AUTHORITY
At the Annual General Meeting held in
June 2022, the Board was authorised
to make market purchases of up to
44,626,508 of its ordinary shares at a
minimum price per share (exclusive of
expenses) of £0.005 and a maximum
price per share (exclusive of expenses)
of the highest of 105% of the average
of the middle market quotations of
an ordinary share in the Company
as derived from the London Stock
Exchange Daily Official List for the five
business days immediately preceding
the day on which the ordinary share is
contracted to be purchased, the price
of the last independent trade of an
ordinary share, and the highest current
independent bid for an ordinary
share in the Company as derived
from the London Stock Exchange
Trading System.
The authority expires upon the earlier
of: (i) the conclusion of the next annual
general meeting of the Company; and
(ii) 30 June 2023, unless previously
renewed, varied or revoked by the
Company at a general meeting; and
a contract to purchase shares under
the authority may be made prior
to the expiry of the authority, and
concluded in whole or in part after
the expiry of the authority, and the
Company may purchase its ordinary
shares in pursuance of any such
contract. In 2022, the Company did
not seek exercise any of the foregoing
powers and authorities.
RIGHTS ATTACHING TO
ORDINARY SHARES IN THE
COMPANY
The rights and obligations attaching
to ordinary shares are set out in
the Articles.
Holders of Ordinary Shares are entitled
to attend and speak at general
meetings, to appoint one or more
proxies and to exercise voting rights.
Holders of Ordinary Shares may
receive a dividend and on liquidation
may share in the Company’s assets.
Holders of Ordinary Shares are entitled
to receive the Annual Report. Subject
to meeting certain thresholds, holders
of Ordinary Shares may requisition a
general meeting or the proposal of
resolutions at general meetings.
MEMORANDUM & ARTICLES
OF ASSOCIATION
The Articles can only be amended
by a special resolution at a general
meeting of shareholders. A special
resolution to amend the Articles will be
proposed at the 2023 AGM in order
to change the Company’s UK address
stated within them.
RESTRICTIONS ON TRANSFER
OF SHARES AND LIMITATIONS
ON HOLDINGS
There are no restrictions on transfer or
limitations on the holding of Ordinary
Shares other than under restrictions
imposed by law or regulation (for
example, insider trading laws) or
pursuant to the Company’s share
dealing code.
REQUIREMENTS OF GAMING
REGULATIONS
Many jurisdictions where the Group
currently holds, or in the future may
secure a licence, require any person
who acquires beneficial ownership
of more than a certain percentage
(typically 5%, and in some cases a
smaller percentage) of the Company’s
securities, to report the acquisition to
the gaming authorities and apply for
a finding of suitability. Many gaming
authorities allow an “institutional
investor” to apply for a waiver that
allows such institutional investor to
acquire up to a certain percentage
of securities without applying for a
finding of suitability, subject to the
fulfilment of certain conditions. In some
jurisdictions, suitability investigations
may require extensive personal and
financial disclosure. The failure of any
such individuals or entities to submit
to such background checks and
provide the required disclosure could
jeopardise the Group’s eligibility for a
required licence or approval.
The criteria used by relevant regulatory
authorities to make determinations
as to suitability of an applicant for
licensure varies from jurisdiction to
jurisdiction, but generally require
the submission of detailed personal
and financial information followed
by a thorough investigation. Gaming
authorities have very broad discretion
in determining whether an applicant
(corporate or individual) qualifies for
licensing or should be found suitable.
Any person who is found unsuitable by
a relevant gaming authority may be
prohibited by applicable gaming laws
or regulations from holding, directly or
indirectly, the beneficial ownership of
any of the Company’s securities.
The Articles include provisions to
ensure that the Company has the
required powers to continue to comply
with applicable gaming regulations.
These provisions include providing
the Company, in the event of a
Shareholder Regulatory Event (as
defined in the Articles), with the
right to:
(a) suspend certain rights of its
members who do not comply
with the provisions of the gaming
regulations (the Affected Members);
(b) require such Affected Members
to dispose of their Ordinary
Shares; and
(c) subject to (b) above, dispose
of the Ordinary Shares of such
Affected Members.
The Company considers that these
rights are required in order to mitigate
the risk that an interest in Ordinary
Shares held by a particular person
could lead to action being taken by
a relevant Regulatory Authority (as
defined in the Articles) which in turn
could lead to the withdrawal of existing
licences held by the Group or the
exclusion of being awarded further
licences in other jurisdictions that the
Group seeks to pursue. This potential
Regulatory Authority action could
therefore cause substantial damage
to the Group’s business or prospects.
ENTITIES HOLDING COMPANY
SHARES ON BEHALF OF
GROUP EMPLOYEES
At 31 December 2022, Virtual Share
Services Limited (a wholly owned
subsidiary of the Company) held
744,410 Ordinary Shares in its
administrative capacity in connection
with the 888 Holdings plc Long Term
Incentive Plan 2015 and Deferred Share
Bonus Plan. Full details are set out on
page 189.
128
888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE SUBSTANTIAL SHAREHOLDINGS
The Company has been notified of the following interests in 5% or more of its share capital under Disclosure Guidance and
Transparency Rules (DTR) Rule 5 of the UK Financial Conduct Authority:
Principal Shareholders
As at 31 December 2022
Salix Trust Company (BVI) Limited in trust on behalf of Dalia Shaked
Parvus Asset Management LLP
Helikon Investments
Bank Leumi Le Israel BM
Following 31 December 2022 and 31 March 2023 which is the latest practicable
date prior to publication of this Annual Report
Salix Trust Company (BVI) Limited in trust on behalf of Dalia Shaked
Parvus Asset Management LLP
Other than as stated above, between
31 December 2022 and 31 March
2023 which is the last practicable
date prior to the publication of this
Annual Report, no further notifications
were received regarding holdings
comprising 5.0% of the Company’s
issued share capital. Information
provided to the Company pursuant
to the DTRs is publicly available via
the regulatory information services
and the Company’s corporate website
corporate.888.com.
SHAREHOLDER AGREEMENTS
AND CONSENT REQUIREMENTS
There are no known arrangements
under which financial rights are held
by a person other than the holder of
the shares.
Relationship Agreement
The Company is a party to a
relationship agreement with, among
others, Salix Trust Company (BVI)
Limited as trustee for Dalia Shaked
(“DS Trust”) dated 14 September
2005 which was amended on 16 July
2015 (the “Amended Relationship
Agreement”). The O Shaked Shares
Trust and the Ben Yitzhak Family
Shares Trust (together with Dalia
Shaked Bare Trust, the “Principal
Shareholder Trusts”) are also party to
the Amended Relationship Agreement
but are no longer bound by certain
material provisions since they
are no longer shareholders of the
Company. Salix Trust Company (BVI)
Limited replaced Sinitus Nominees
Ltd as trustee for the DS Trust on
31 August 2022.
The Amended Relationship Agreement
includes the following provisions in
respect of the independence of the
Company (in accordance with the
UK Listing Rules) which provide that
DS Trust shall, and shall procure
as far as it is legally able, that its
respective associates:
• conduct all transactions and
relationships with 888 Holdings plc
and any member of the Group on
an arm’s length basis and on a
normal commercial basis;
• not take any action which precludes
or inhibits 888 Holdings plc, or any
member of the Group, from carrying
on its business independently of it;
• not take any action that would
have the effect of preventing the
Company, or any member of the
Group, from complying with its
obligations under the UK Listing
Rules; and
• not propose or procure the proposal
of any shareholder resolution
which is intended, or appears to be
intended, to circumvent any proper
application of the UK Listing Rules.
It further provides that the DS Trust will
not solicit Group employees without
consent, that only independent
directors can vote on proposals
to further amend the Amended
Relationship Agreement, that the
DS Trust will consult the Company
prior to disposing of a significant
number of shares in order to maintain
an orderly market and shall not
disclose confidential information unless
required to do so by law or relevant
regulation or having first received the
Company’s consent.
The Amended Relationship Agreement
also includes restrictions on the DS
Trust’s power to appoint Directors and
includes obligations on the DS Trust to
Number
of shares/
applicable
financial
instruments
86,283,534
41,448,548
25,356,787
22,729,179
% issued
share
capital
Nature
of Holding
19.33%
9.29%
5.68%
5.09%
Indirect
Indirect
Indirect
Indirect
86,283,534
44,061,986
19.33%
9.85%
Indirect
Indirect
exercise its voting rights to ensure that
the majority of the Board, excluding
the Chair, is independent.
The DS Trust can nominate a non-
executive director for appointment to
the Board. In the event that this right
is exercised and it results in fewer than
half the Board (excluding the Chair
of the Board) being Independent
Directors, such appointment shall
only become effective upon the
appointment to the Board of an
additional Independent Director
acceptable to the Nominations
Committee. The DS Trust exercised this
right in July 2022 and Ori Shaked was
appointed as a non-executive director
on 13 September 2022.
Such restrictions and obligations apply
in respect of the DS Trust whilst it holds
not less than 7.5% of the issued share
capital of the Company.
The obligations of the parties to the
Amended Relationship Agreement
are at all times subject to all relevant
legal and regulatory requirements and
obligations of the parties thereto in the
United Kingdom, Gibraltar or elsewhere.
Confirmation of independence
The Board confirms that as of the date
of this Annual Report, and during the
entirety of 2022, the Company had
no controlling shareholder. Therefore,
no confirmation of independence
is required pursuant to UK Listing
Rule 9.8.4 R (14).
Shareholders’ Agreements
There are no known Shareholders’
Agreements in force between
shareholders of the Company.
888 Holdings PLC Annual Report & Accounts 2022
129
GOVERNANCE 2017 (or subsequently, with respect to
subsequently appointed directors) and
remain in force.
GOING CONCERN AND
VIABILITY STATEMENTS
The going concern and viability
statements required to be included in
the annual report pursuant to the UK
Corporate Governance Code are on
pages 151 and 67 respectively, and are
incorporated in this Directors’ Report
by reference.
PRINCIPAL SUBSIDIARY
UNDERTAKINGS
The principal subsidiary undertakings
are listed on note 33
RESEARCH AND
DEVELOPMENT ACTIVITIES
Product and content leadership is
a key pillar of the Group’s growth
strategy, and as such, investment
in research and development is a
critical area of focus for the Group.
Our mission is to lead the industry
in creating the best betting and
gaming experiences, and the Group
places significant emphasis on the
development of best-in-class products.
Further details of the outputs of our
research and development activities
this year are set out on pages 24 and
25.
POST-PERIOD EVENTS
In January 2023 it was announced that
the Group’s CEO, Itai Pazner would
step down with immediate effect. Lord
Mendelsohn assumed the interim role
of Executive Chair whilst a new CEO
is recruited.
It was also announced that the Group’s
CFO, Yariv Dafna, would step down at
the end of 2023.
In March 2023 it was announced
that following a periodic compliance
assessment of William Hill, undertaken
by the UK Gambling Commission
(“UKGC”) in July and August 2021, prior
to the company’s acquisition, William
Hill had agreed to pay a regulatory
settlement of £19.2m in relation to
historic player safety failings.
DIRECTORS’ REPORT CONTINUED
CHANGE OF CONTROL
A change of control in the Company
may, in the event of failure to fulfil
any applicable consent requirement,
give rise to certain revocation or
termination rights under the Group’s
gaming licences or certain contracts to
which Group companies are a party.
POLITICAL DONATIONS
In accordance with its Political
Involvement Policy which is available
on the corporate website, the Group
did not make any donations to any
political party (including any non-
EU political party) or organisation or
independent election candidate or
incur any political expenditure during
the year.
POLITICAL INVOLVEMENT AND
ANTI-CORRUPTION ACTIVITIES
The Group has a zero-tolerance
approach to bribery and corruption
and complies strictly with all relevant
laws. The Group has adopted an
Anti-Bribery Policy which applies to
all employees and is overseen by the
Board. The policy includes the Group’s
rules with regard to the giving and
receiving of gifts, business hospitality
and other payments, with particular
focus on transactions with government-
related entities and intermediaries. The
policy can be read in full on the group’s
corporate website. The Group carries
out a comprehensive due diligence
process of potential high-risk business
associates, which includes certain
government related transactions and
certain intermediaries. The Group also
clearly communicates its policy to its
suppliers and employees and carries
out staff training on the topic.
During 2022, no instances of
noncompliance with the policy
arose, and no fines, penalties or
settlements were received or entered
into in connection with bribery and
corruption matters. We have also
adopted a political involvement
policy, which is publicly available on
the corporate website. Under this
policy, we do not generally engage
in political matters other than lawful
lobbying in connection with our
business. The Group was not involved
in political matters and did not make
fiscal contributions.
Respecting local tax regimes and
paying our fair share is a fundamental
responsibility of the Company to the
communities on which we rely. Further
information on our wider contributions
to communities is included in our
ESG and Sustainability Report. As
a Group our economic contribution
is significant, including a total tax
contribution of £588m in 2022
(2021: US$196.4 million).
FINANCIAL INSTRUMENTS
The Board considers the Group’s
exposure to financial risks as part
of its risk management strategy.
Further details can be found in the
Risk Management section of this
report on page 56. In order to finance
the acquisition of William Hill, the
Company took on significant debt.
Hedging arrangements were put in
place in order to fix around 70% of
interest costs for the next three years.
The Group is also exposed to foreign
exchange as the Group’s deposits
and revenues are generated in GBP,
EUR and other currencies, whilst the
Group’s operating expenses are largely
incurred in local currencies.
The Group has mitigated foreign
exchange risk by adopting policies to
hedge certain costs in GBP. The Group
has also entered into FX or cross
currency swaps in order to hedge part
of its ongoing USD and EUR exposure
arising due to the acquisition financing
and its ongoing EUR exposure under
outstanding notes. Forward deals are
also in place to hedge ILS against
revenue in Canadian Dollars and GBP.
The Board reviews these risks on an
ongoing basis with a view to taking
such action as required from time
to time. Further information on the
Group’s use of financial instruments
is set out in note 25 to the annual
accounts on page 185 to 187.
DIRECTORS’ INDEMNITIES
The Articles permit the Company
to indemnify its Directors in certain
circumstances, as well as to provide
insurance for the benefit of its
Directors. The Company has entered
into qualifying third-party indemnity
arrangements for the benefit of all
of its Directors in a form and scope
which comply with the requirements
of the UK Companies Act 2006 and
the Gibraltar Companies Act 2014
which were in force from 1 November
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888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE AUDIT COMMITTEE
The Board has established an Audit
Committee. Details of the Audit
Committee’s functions, together with
its specific activities in 2022, are set
out in the Audit Committee Report
on page 102.
During the year the Company’s
Audit Committee comprised Mark
Summerfield (Chair), Independent
Non-Executive Directors Anne de
Kerckhove and Limor Ganot.
Prior to the acquisition of William Hill,
Deloitte carried out the Company’s
internal audit function, reporting to the
Audit Committee. However following
the acquisition, the William Hill internal
audit team led the internal auditing
with the assistance of Deloitte. During
2022, the internal auditor provided
twelve reports to the Audit Committee
and discussed the internal audit
working plan for 2023.
Details of the Company’s risk
management strategy and the Board’s
assessment of the Group’s viability in
light of its risks are set out on pages 58
and 67 respectively.
AUDITORS
A resolution for the reappointment of
Ernst and Young LLP and EY Limited,
Gibraltar, (together, EY), as auditors of
the Company will be proposed at the
2023 Annual General Meeting.
During the year ended 31 December 2022,
Ernst and Young LLP was reappointed
as auditor for the purposes of
the Company preparing financial
statements as required pursuant to
the UK Listing Rules and the DTRs. EY
Limited, Gibraltar, which is approved
as a registered auditor under the
Gibraltar Financial Services Act 2019, is
the statutory auditor of the Company
including for the purposes of issuing an
audit report pursuant to the Gibraltar
Companies Act 2014.
Details of audit and non-audit fees
charged by EY to the Company are
set out on page 107 of the Audit
Committee Report.
The Company’s audit was last
tendered for the year ended
31 December 2014. In accordance
with the EU Audit Regulation and the
Competition and Markets Authority
rules, the Company is required to
run a competitive tender process in
respect of auditor appointment no
later than 31 December 2023 year end.
As such, the intention is to run an audit
tender process in Q2 2023 for the FY
2024 audit.
RISK MANAGEMENT AND
INTERNAL CONTROL
The Board acknowledges that they are
responsible for the Company’s system
of internal control, for setting policy on
internal control and risk management,
and for reviewing the effectiveness of
internal control and risk management.
The Board monitors the Group’s
systems of internal control and risk
management on an ongoing basis,
including identifying, evaluating and
managing the significant risks faced
by the Group. The Board believes
that its risk management process
accords with the FRC Guidance on
Risk Management, Internal Control
and Related Financial and Business
Reporting and carries out an annual
review of its effectiveness covering all
material controls, including financial,
operational and compliance controls.
The annual review considers individual
risk control responsibilities, reporting
lines and qualitative assessments
of residual risks. Such a review was
carried out in respect of the processes
that were in place throughout 2022 up
until the date of approval of the Annual
Report and Accounts. No significant
failings or weaknesses were identified
in the review.
It is management’s role to implement
Board policies on risk and control,
including reporting. The system of
internal control is designed to manage
rather than eliminate the risk of failure
to achieve business objectives and
can only provide reasonable, and not
absolute, assurance against material
misstatement or loss.
The Audit Committee also reviews the
appropriateness and adequacy of
systems of internal control and risk
management in relation to the financial
reporting process on an ongoing basis
and makes recommendations to the
Board based on its findings.
The Group’s internal control and risk
management systems in relation to
the process of preparing consolidated
accounts include the following:
• Identification of significant risk and
control areas of relevance to Group-
wide accounting processes;
• Controls to monitor the consolidated
accounting process and its results
at the level of the Board and
at the level of the companies
included in the consolidated
financial statements;
• Preventative control measures in the
finance and accounting systems of
the Company and of the companies
included in the consolidated
financial statements and in the
operative, performance-oriented
processes that generate significant
information for the preparation
of the consolidated financial
statements including the Strategic
Report, including a separation of
functions and pre-defined approval
processes in relevant areas;
• Measures that safeguard proper
IT-based processing of matters and
data relevant to accounting; and
• Reporting information of companies
around the Group which enable the
Company to prepare consolidated
financial statements including
management accounts.
The reporting structure relating to
all the companies included in the
consolidated financial statements
requires that significant risks are to be
reported immediately to the Board on
identification.
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131
GOVERNANCE DIRECTORS’ REPORT CONTINUED
WHISTLEBLOWING POLICY
The Group’s whistle-blowing policy
sets out the overall responsibility
of the Board (through its Audit
Committee) for implementation of the
policy, but notes that the Board has
delegated day-to-day responsibility
for overseeing and implementing it
to the Group Internal Audit function
with additional oversight from Group
Legal and Compliance functions.
The policy was harmonised following
the acquisition of William Hill and
approved in January 2023.
The policy provides that where an
employee is not comfortable making
an identified disclosure in the standard
manner (i.e. to his/her respective direct
line manager, another manager in his/
her subsidiary, the human resources
department or the compliance
manager), disclosure can be made
anonymously through a third party,
Navex, and reporters can either
raise their case via online forms or
dedicated phone numbers.
Whilst employees are permitted
to make disclosures anonymously,
disclosing employees are encouraged
to reveal their identity to the
compliance officer in order to allow a
full and proper investigation to take
place. Where a disclosing employee’s
identity is revealed, the Group will
make its best effort, considering the
circumstances and applicable law,
to preserve confidentiality of such
disclosure. The Board commits to
investigating all disclosures fully, fairly,
quickly and, where circumstances
permit, confidentially. Undertakings
are made to employees who raise
genuinely held concerns in good faith
under the procedure that they will
not be dismissed or subject to any
discrimination or victimisation as a
result of his/her action. Employees of
the Group are regularly sent reminders
regarding the whistle-blowing policy
as part of general refreshers of various
Group policies.
REMUNERATION COMMITTEE
The Board has overall responsibility
for determining the framework of
executive remuneration and its
cost. It is required to take account
of any recommendation made by
the Remuneration Committee in
determining the remuneration, benefits
and employment packages of the
Executive Directors and Executive
Committee and the fees of the Chair.
During the year the Company’s
Remuneration Committee comprised
Independent Non-Executive Directors
Anne de Kerckhove (Chair), Mark
Summerfield, and Limor Ganot.
The Remuneration Committee
determines the Chair’s and Executive
Directors’ fees, whilst the Chair and
the Executive Directors determine
the fees paid to the Non-Executive
Directors. Further details are provided
on page 92.
The Remuneration Committee was
advised during 2022 by Korn Ferry.
The remuneration consultant has no
other connection with 888 or any of the
Directors. Further details are provided
on page 118.
All new long-term incentive schemes
and significant changes to existing
long-term incentive schemes are put
to the shareholders of the Company
for approval before they are adopted
(save for certain circumstances as set
out in the Listing Rules).
The Directors’ Remuneration Report,
which outlines the Remuneration
Committee’s work and details
of Directors’ remuneration, is on
pages 111 to 125. The Remuneration
Committee’s terms of reference
are available on the Company’s
website, corporate.888.com.
COMPLIANCE WITH
STATUTORY PROVISIONS
As the Company is registered in
Gibraltar, it is subject to compliance
with Gibraltar statutory requirements.
The main corporate legislation relevant
to the Company in Gibraltar is the
Gibraltar Companies Act 2014. The
Company is in full compliance with the
Gibraltar Companies Act.
DIVIDEND POLICY
The Company’s policy, as stated in its
IPO Prospectus, is to distribute 50%
of its adjusted profit after tax each
year. On 7 April 2022 it was announced
that the Board intends to suspend
dividends until such time that net
leverage is at or below 3x.
DIRECTORS’ STATEMENT
OF RESPONSIBILITIES
The directors are responsible for
preparing the annual report and the
financial statements in accordance
with applicable Gibraltar law
and regulations.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law,
the directors have elected to prepare
the group and parent company
financial statements in accordance
with UK adopted international
accounting standards in conformity
with the requirements of the Gibraltar
Companies Act 2014. Under company
law, the directors must not approve the
financial statements unless they are
satisfied that they give a true and fair
view of the state of affairs of the group
and the company and of the profit or
loss of the group and the company for
that period.
Under the Financial Conduct
Authority’s Disclosure Guidance
and Transparency Rules, group
financial statements are required to
be prepared in accordance with UK
adopted international accounting
standards.
In preparing these financial statements
the directors are required to:
• select suitable accounting
policies in accordance with IAS 8
Accounting Policies, Changes in
Accounting Estimates and Errors
and then apply them consistently;
• make judgements and accounting
estimates that are reasonable
and prudent;
• present information, including
accounting policies, in a
manner that provides relevant,
reliable, comparable and
understandable information;
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888 Holdings PLC Annual Report & Accounts 2022
GOVERNANCE DIRECTORS’ RESPONSIBILITY
STATEMENT (DTR 4.1)
The directors confirm, to the best of
their knowledge:
• that the consolidated financial
statements, prepared in
accordance with UK adopted
international accounting standards
in conformity with the requirements
of the Gibraltar Companies Act
2014 and UK adopted international
accounting standards give a true
and fair view of the assets, liabilities,
financial position and profit of the
parent company and undertakings
included in the consolidation taken
as a whole;
• that the annual report, including
the strategic report, includes a
fair review of the development
and performance of the business
and the position of the Company
and undertakings included in the
consolidation taken as a whole,
together with a description of the
principal risks and uncertainties that
they face; and
• that they consider the annual
report, taken as a whole, is fair,
balanced and understandable and
provides the information necessary
for shareholders to assess the
company’s position, performance,
business model and strategy.
All of the current Directors have
taken all the steps that they ought
to have taken as Directors to make
themselves aware of any information
needed by the Company’s auditors
for the purposes of their audit, and to
establish that the auditors are aware
of that information. The Directors
are not aware of any relevant audit
information of which the auditors
are unaware.
On behalf of the Board:
Lord Mendelsohn
Executive Chair
14 April 2023
• provide additional disclosures
when compliance with the specific
requirements in IFRSs is insufficient
to enable users to understand the
impact of particular transactions,
other events and conditions on
the group and company financial
position and financial performance;
• in respect of the group financial
statements, state whether
international accounting standards
in conformity with the requirements
of the Gibraltar Companies Act
2014 and UK adopted international
accounting standards have been
followed, subject to any material
departures disclosed and explained
in the financial statements;
• in respect of the parent company
financial statements, state
whether UK adopted international
accounting standards in conformity
with the requirements of the
Gibraltar Companies Act 2014,
have been followed, subject to
any material departures disclosed
and explained in the financial
statements; and
• prepare the financial statements
on the going concern basis unless it
is appropriate to presume that the
company and/ or the group will not
continue in business.
The directors are responsible for
keeping adequate accounting
records that are sufficient to show
and explain the Company’s and
Group’s transactions and disclose with
reasonable accuracy at any time the
financial position of the Company and
the Group and enable them to ensure
that the company and the group
financial statements comply with the
Gibraltar Companies Act 2014. They
are also responsible for safeguarding
the assets of the Group and parent
company and for taking reasonable
steps for the prevention and detection
of fraud and other irregularities.
Under applicable law and regulations,
the directors are also responsible for
preparing a strategic report, directors’
report, directors’ remuneration
report and corporate governance
statement that comply with that law
and those regulations. The directors
are responsible for the maintenance
and integrity of the corporate and
financial information included on the
Company’s website.
888 Holdings PLC Annual Report & Accounts 2022
133
GOVERNANCE Financial Statements
INDEPENDENT AUDITOR’S REPORT
To the members of 888 Holdings PLC
OPINION
In our opinion:
• 888 Holdings plc’s Group Financial Statements and Parent Company Financial Statements (the “Financial Statements”)
give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2022 and of
the Group’s loss for the year then ended;
• the Group and Parent Company Financial Statements have been properly prepared in accordance with UK adopted
International Accounting Standards; and
• the Financial Statements have been prepared in accordance with the requirements of the Gibraltar Companies Act 2014
as applied in accordance with the provisions of the Gibraltar Act 2014.
We have audited the Financial Statements of 888 Holdings plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for
the year ended 31 December 2022 which comprise:
Group
Consolidated income statement for the year ended
31 December 2022
Consolidated statement of comprehensive income for
the year then ended
Consolidated balance sheet as at 31 December 2022
Consolidated statement of changes in equity for the year
then ended
Consolidated statement of cash flows for the year
then ended
Related notes 1 to 33 to the financial statements, including
a summary of significant accounting policies
Parent company
Balance sheet as at 31 December 2022
Statement of changes in equity for the year then ended
Statement of cash flows for the year then ended
Related notes 1 to 10 to the financial statements including
a summary of significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international
accounting standards and, as regards the Group and parent company financial statements, as applied in accordance with
the provisions of the Gibraltar Companies Act 2014.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (ISAs) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
INDEPENDENCE
We are independent of the Group and parent in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company
and we remain independent of the Group and the parent company in conducting the audit. We confirm that there are
appropriate safeguards in place and that we remain independent.
CONCLUSIONS RELATING TO GOING CONCERN
In accordance with the terms of our engagement letter with the Company, in auditing the financial statements, we have
concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is
appropriate. Our evaluation of the directors’ assessment of the Group and parent company’s ability to continue to adopt the
going concern basis of accounting included:
• We confirmed our understanding of 888’s going concern assessment process, including how principal and emerging risks
are considered. We understand the review controls in place for the going concern model, forecasting and management’s
Board memoranda.
• We tested the mathematical integrity of management’s going concern model, including ensuring arithmetic accuracy
and agreeing the prospective financial information to that used in other areas of the business, such as impairment
assessments. We also evaluated the potential impact of any contingencies, including the likelihood of their occurrence.
• We performed procedures to test the reasonableness of cash flow forecasts, through reconciliation to the budget
approved by the Board, comparison with recent performance and external benchmarking, as well as their consistency
with other areas of the audit including impairment assessments. We independently assessed other key assumptions,
namely the potential impact of interest rate and macroeconomic risks, the timing of settlement of provisions and accruals
and achievability of integration synergies.
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888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS
CONCLUSIONS RELATING TO GOING CONCERN CONTINUED
• We read the Group’s facility and syndication agreements executed during the period and re-calculated the financial
covenant relating to the Group’s revolving credit facility to ensure it remained available to the Group throughout the going
concern period.
• We searched for sources of contradictory evidence in our assessment of management’s forecasting, including assessing
recent budgeting accuracy, current trading, industry trends and the broader macroeconomic outlook.
• We considered the mitigating factors included in the cash flow forecasts. This included understanding the Group’s variable
and discretionary costs and evaluating the Group’s ability to control these outflows as mitigating actions if required. We
considered the achievability of planned synergies and any incremental costs of executing the integration.
• We performed our own assessment of plausible downside scenario focused on the timing of cash outflows not solely at
the Groups discretion. We also performed a reverse stress test in order to assess the flexibility of the business model and
identify what factors would lead to the Group utilising all liquidity during the going concern period and the probability of
such events of occurring.
• We assessed the appropriateness of the duration of the going concern assessment period and consider the existence of
any significant events or conditions beyond this period.
• We assessed the appropriateness of disclosures in the Annual Report and Accounts by comparing the disclosures against
the requirements under International Financial Reporting Standards and the UK Corporate Governance Code.
Our key observations:
• The directors’ assessment forecasts that the Group will maintain sufficient liquidity throughout the going concern
assessment period. This included the utilisation of the Group revolving credit facility, undrawn as at 31 December 2022.
• The Group is exposed to certain legal and regulatory risks, some of which will result in cash outflows during the going
concern assessment period or increase the uncertainty associated with cash inflows. However, even under adverse
scenarios described above, the directors’ assessment forecasts the Group to maintain liquidity headroom throughout the
going concern period.
• Controllable mitigating actions are available to management to increase liquidity over the going concern assessment
although, some of these actions may impact the Group’s profitability and cash generation over a longer time horizon.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and parent company’s ability to continue as a going
concern for the period to 30 June 2024.
In relation to the Group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the Group’s ability to continue as a going concern.
OVERVIEW OF OUR AUDIT APPROACH
Audit scope
Key audit matters
• We performed an audit of the complete financial information of eight components,
and audit procedures on specific balances for a further one component.
• The components where we performed full audit procedures accounted for 96% of
Adjusted EBITDA, 99% of Revenue and 94% of Total assets.
• Regulatory and legal risks
• Revenue recognition
• Acquisition accounting
• Impairment of goodwill and other assets
Materiality
• Overall Group materiality of £4.3m, which represents 2% of Adjusted EBITDA
888 Holdings PLC Annual Report & Accounts 2022
135
FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 888 Holdings PLC
AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP AUDITS
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our
audit scope for each entity within the Group. Taken together, this enables us to form an opinion on the consolidated financial
statements. We take into account size, risk profile, the organisation of the Group and effectiveness of Group-wide controls,
changes in the business environment and other factors when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, of the reporting components of the Group, we selected nine
components covering entities within the UK, Gibraltar, Malta and Israel, which represent the principal business units within
the Group.
Of the nine components selected, we performed an audit of the complete financial information of eight components
(“full scope components”) which were selected based on their size or risk characteristics. For the remaining component
(“specific scope component”), we performed audit procedures on specific accounts within that component that we
considered had the potential for the greatest impact on the significant accounts in the financial statements because
of the size.
The reporting components where we performed audit procedures accounted for 96% (2021: 100%) of the Group’s Adjusted
EBITDA, 99% (2021: 100%) of the Group’s Revenue and 96% (2021: 100%) of the Group’s Total assets. For the current year,
the full scope components contributed 125% (2021: 52%) of the Group’s Adjusted EBITDA, 99% (2021: 100%) of the Group’s
Revenue and 94% (2021: 100%) of the Group’s Total assets. The specific scope component contributed EBITDA of -29%
(2021: -52%) on the basis it is a cost centre. The audit scope of this component may not have included testing of all
significant accounts of the component but will have contributed to the coverage of significant accounts tested for the Group.
Of the remaining components that together represent 4% of the Group’s Adjusted EBITDA, none are individually greater
than 2% of the Group’s Adjusted EBITDA. For these components, we performed other procedures, including analytical review,
testing of consolidation journals and intercompany eliminations and foreign currency translation recalculations to respond
to any potential risks of material misstatement to the Group financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Adjusted
EBITDA
964
96% Full & Specific
scope component
M 991
99% Full & Specific
scope component
Revenue
M 946
94% Full & Specific
scope component
Total assets
4% Other procedures
1% Other procedures
6% Other procedures
Changes from the prior year
There was significant change in Group structure during the period resulting from the Group’s acquisition of William Hill
International on 1 July 2022. As a result of this acquisition, we selected additional full scope components from the William Hill
International Group, including in its Retail, UK Online and International Online businesses.
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FINANCIAL STATEMENTSM
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken
at each of the components by us, as the Group audit engagement team, or by component auditors from other EY global
network firms operating under our instruction. Of the eight full scope components, audit procedures were performed on one
of these directly by the primary audit team. For the other seven full scope components and the specific scope component,
where the work was performed by a component auditor, we determined the appropriate level of involvement to enable us to
determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.
The non-statutory audit partner has experience serving clients in a variety of public UK-listed companies, including those
with the majority of their operations overseas. He reviewed the experience and expertise of the engagement team to ensure
that the team had the appropriate competence and capabilities, which included the use of a specialist where appropriate.
The statutory audit partner also has experience in the gaming industry and has worked on the 888 engagement for a
number of years. The team had discussions during planning and throughout the audit in respect of the evolving gaming
regulatory environment.
The Group audit team followed a programme of planned visits to the UK, Gibraltar, Malta and Israel that has been designed
to ensure that the Non-Statutory Auditor, the Statutory Auditor, and other Group partners, visited all full scope and specific
scope locations. During the current year’s audit cycle, visits were undertaken by the primary audit team to the component
teams in Gibraltar, Malta and Israel. These visits involved discussing the audit approach with the component team and any
issues arising from their work, meeting with local management and reviewing relevant audit working papers on risk areas. The
primary team interacted regularly with the component teams where appropriate during each stage of the audit, reviewed
relevant working papers and were responsible for the scope and direction of the audit process.
At critical periods of the audit, we increased the use of online collaboration tools to facilitate team meetings, information
sharing and the evaluation, review, oversight and participation in the component audit team’s planning, including its
discussion of fraud and error and was responsible for the scope and direction of the audit process. We requested more
detailed deliverables from component teams, and we utilised fully the interactive capability of EY Canvas, our global audit
workflow tool, to review remotely the relevant underlying work performed. Given the nature of our engagement, some of
these measures have been implemented in previous years, providing an appropriate base from which to expand these
forms of interactions and facilitate our oversight of the component audit team. This, together with the additional procedures
performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.
CLIMATE CHANGE
Stakeholders are increasingly interested in how climate change will impact 888 Holdings PLC. The Group has determined
that the most significant future impacts from climate change on their operations will be from energy prices as the Group
and global economy transition to greener sources. These are explained on pages 68 to 88 in the Task Force for Climate
related Financial Disclosures and on pages 61 to 66 in the principal risks and uncertainties. They have also explained their
climate commitments on pages 44 to 45. All of these disclosures form part of the “Other information,” rather than the audited
financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they
are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise
appear to be materially misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
The Group has explained in the basis of preparation on page 150 their articulation of how climate change has been reflected
in the financial statements and how they have reflected the impact of climate change in their financial statements including
how this aligns with their commitment to achieve net zero emissions by 2035. Consideration of significant judgements and
estimates relating to climate change are included in note 1.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating
management’s assessment of the impact of climate risk, physical and transition, their climate commitments, the effects
of material climate risks disclosed on page 79 and 152 and the significant judgements and estimates disclosed in note 1 and
whether these have been appropriately reflected in asset values and associated disclosures where values are determined
through modelling future cash flows, being the impairment tests of the Retail, UK online, International online and US B2C cash
generating units.
We also challenged the Directors’ considerations of climate change in their assessment of going concern and viability and
associated disclosures. Based on our work we have not identified the impact of climate change on the financial statements
to be a key audit matter or to impact a key audit matter.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
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137
FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 888 Holdings PLC
RISK: REGULATORY AND LEGAL RISKS
At 31 December 2022, the Group has provided £127.5 million (2021: US$£19.0 million) in respect of ongoing legal and
regulatory matters principally in Austria, the UK and Gibraltar and a further £78.7 related to indirect taxes.
Refer to the significant accounting policies (Note 1 on page 154); and Notes 22 and 31 to the consolidated financial
statements (pages 177 and 194).
Given the industry and jurisdictions in which the Group operates there is a risk that the Group operates without the
appropriate licences, has existing licences adversely affected through the imposition of licence conditions or threat of
licence revocation, or is subject to regulatory sanctions resulting from breaches of licence conditions. There is also a risk that
the Group does not pay or accrue for gaming taxes on an appropriate basis.
Judgement is also applied in estimating amounts payable to regulatory authorities, or customers, in certain jurisdictions.
This gives rise to a risk over the accuracy of accruals, provisions and disclosure of contingent liabilities and the related
income statement effect. There is also a risk that management may influence these significant estimates and judgements
in order to meet market expectations or bonus targets.
The legal and regulatory risk increased during 2022 following the acquisition of William Hill. Refer to the Risk management
strategy (on page 58).
Our response to the risk
• We assessed the processes and controls over legal and regulatory risk from the management of legal and regulatory risks
to the evaluation of matters and the quantification and recording of a provision or disclosure of a contingent liability.
• Enquired of management and the Group’s external legal advisers, where appropriate, about any known instances of
material breaches in regulatory or licence compliance and the potential consequences of any such breach to inform
our assessment of the Group’s disclosures and our evaluation of provisions to be recorded.
• Inspected the Group’s correspondence with regulators and tax authorities to identify any legal or regulatory concerns, to
assess the completeness of matters evaluated by the Group and to inform the likelihood of any actual or potential licence
restrictions.
• For certain matters, we engaged EY forensic accounting specialists to evaluate whether breaches identified were
indicative of pervasive process deficiencies and control failings or specific to certain markets or other factors.
• In respect of the regulatory provisions, we obtained an understanding of any updates to fact patterns through discussions
with management and the Group’s external legal advisers, read their legal confirmations and performed our own
searches for contradictory evidence. We agreed provisions to third party support, for example post year end settlement
agreements and/or confirmation from the Group’s external legal advisers that they consider the quantum of the provisions
for regulatory matters to be reasonable.
• Evaluated management’s interpretation and application of relevant laws and regulations and assessed the risks in respect
of the Group’s operations outside of regulated markets.
• Circularised confirmations to management’s relevant external legal experts to test the completeness of outstanding legal
or regulatory issues as at 31 December 2022.
• Tested the completeness of the Group’s legal expenses, in coordination with the discussions with Group’s legal advisers, to
ensure the completeness of circularised confirmations.
• Engaged EY gaming tax specialists to assist us in understanding the risks in respect of gaming duties and fines in
jurisdictions where the appropriate tax treatment is uncertain.
• Assessed appropriateness of disclosures in note 22 and 31 of the consolidated financial statements by comparing the
disclosures against the requirements under UK adopted international accounting standards.
Key observations communicated to the Audit Committee
Based on our audit procedures on the Group’s accounting conclusions in each of its major jurisdictions, we concluded that
the provision and accruals in respect of probable amounts payable to regulatory authorities, and related income statement
accounts, are appropriate and that the disclosures of probable and possible outflows in the financial statements meet the
requirements of IAS 37.
RISK: REVENUE RECOGNITION
The Group recognised revenue of 1,238.8 million in 2022 (2021: £712.3 million).
The Group’s revenue recognition process for all revenue streams is highly dependent on the Group’s complex gaming systems
and gaming servers, which process a high volume of transactions. Systematic errors in calculations in aggregate could result
in incorrect reporting of revenue.
There is a risk that management may override operational controls in respect of revenue recognition leading to revenue
being materially different to cash receipts or overstated in order to meet market expectations.
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FINANCIAL STATEMENTS RISK: REVENUE RECOGNITION CONTINUED
The acquisition of William Hill increases revenue recognition risk as the Group operates new and unintegrated gaming
systems and for the first time Licenced Betting Offices.
Refer to the significant accounting policies (Note 1 on pages 154 and 155); and Note 2 to the Consolidated Financial
Statements (page 162).
Our response to the risk
• Enquired about the Group’s processes and related controls in respect of revenue recognition and obtained support to
confirm our understanding. We understood the IT general control environment and based on that understanding tested
the design and operating effectiveness of certain applications that we considered to be supportive of a control reliance
approach. We also tested certain manual controls over data from the Group’s principal gaming systems.
• We performed a correlation analysis between revenue and cash receipts and revenue to confirm that in aggregate, the
revenues recognised were equivalent to the cash receipts adjusted for known timing differences.
• We applied IT-based auditing techniques to re-perform manual reconciliations between the Group’s gaming revenue and
cash and for online revenues the customer accounts.
• We performed transaction testing for each revenue stream to test the interface between gaming servers, production
systems and cash processing system with the Datawarehouse.
• We performed detailed substantive testing on a sample of revenue transactions, including validation of bets/wins,
deposits/withdrawals and aggregated cash receipts from PSPs and shops.
• We performed computer assisted audit techniques to search for other material manual adjustments to revenue and
audited the fair value of bet positions.
• We assessed the appropriateness of the disclosures in note 1 and 2 of the consolidated financial statements by comparing
the disclosures against the requirements under UK adopted international accounting standards.
Key observations communicated to the Audit Committee
Based on our audit work we conclude that the revenue recognised is appropriate and in accordance with IFRS 9 and IFRS 15.
RISK: ACQUISITION ACCOUNTING
The Group recorded net liabilities on the William Hill acquisition of £225.9 million, resulting in goodwill of £780.2 million.
The valuation of intangible assets involves significant judgement as it requires management’s use of assumptions including
revenue growth, theoretical royalty rates used to value trade names, customer churn rates and the application of a discount
rate that is reflective of the risks of the business.
Other fair value adjustments, including those for provisions and contingent consideration, involve a high degree of judgement.
Refer to the significant accounting policies (Note 1 on page 153); and Note 16 to the Consolidated Financial Statements
(page 174).
Our response to the risk
• We enquired about the Group’s processes and related controls to confirm our understanding of how the Group ensures the
completeness and accuracy of data and assumptions used to develop the fair value estimates.
• For specialists engaged by management , we evaluated their competence, capabilities and objectivity. With assistance
from our valuation specialists, we read their valuation report and identified corroborating or contradictory evidence to
challenge the fair value estimates.
• We obtained management’s specialist’s valuation report and underlying models. We challenged the assumptions used by
management, with input from our valuation specialists, by comparing to board approved budgets, historically observed
inputs and third party sources, particularly in respect of forecast growth rates and searched for internal and external
information that may be contrary to management’s assessment.
• With assistance from our valuation specialists, for each individual asset identified, we evaluated the appropriateness of
the valuation methodology applied.
• We performed sensitivity analysis, including on key inputs such as short-term and long-term growth rates and the
discount rate. In doing so, we developed our own independent valuation range using our valuation specialist-determined
discount rates.
• We continued to search for contradictory information identified in the post-acquisition period, remaining alert to events,
transactions and the results of our enquiries of management which may contradict the key assumptions / judgements and
the value of assets recorded.
• We assessed the appropriateness of the disclosures in note 1 and 16 of the consolidated financial statements by
comparing the disclosures against the requirements under UK adopted international accounting standards.
888 Holdings PLC Annual Report & Accounts 2022
139
FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 888 Holdings PLC
RISK: ACQUISITION ACCOUNTING CONTINUED
Key observations communicated to the Audit Committee
Based on our audit procedures in relation to the purchase price allocation, including our own independently developed
range, we concluded that assets, including tangible and intangible assets and the resulting goodwill, have been appropriately
identified, valued and recorded. The disclosures in the financial statements are in accordance with IFRS 3.
RISK: IMPAIRMENT OF GOODWILL AND OTHER LIFE-LONG ASSETS
The Group had goodwill of £780.2 million relating to US B2C and the acquisition of William Hill £25.7 million; long-life assets
acquired as part of the William Hill acquisition include customer relationships, brand names and gaming licences.
The recoverable amount and headroom/impairment on the Group’s CGUs and groups of CGUs tested for impairment are
disclosed in note 12.
There is a risk that these assets are not supported by either the future cash flows they are expected to generate or their fair
value less costs of disposal, resulting in an impairment charge that has not been recognised by management. In respect of
US B2C there is a risk that the forecast growth rates are not achievable.
Judgement is also required in determining the cash generating units to which the goodwill is allocated.
Refer to the significant accounting policies (Note 1 on page 153); and Note 12 to the Consolidated Financial Statements
(pages 170 to 172).
Our response to the risk
• We enquired about the Group’s processes and related controls to confirm our understanding of how the Group ensures the
completeness and accuracy of data and assumptions used in the impairment assessments.
• We reviewed management’s assessments of indicators of impairment. Where identified, this informed our audit of
management’s impairment tests, by comparing indicators identified with other information obtained during our audit and
enquired further in cases where the performance of certain products was below management’s and external expectations.
• We evaluated whether CGU identification and allocation of goodwill is appropriate based on our understanding of the
business and the requirements of applicable accounting standards.
• We compared model inputs to current trading conditions, board approved forecasts, consistency with the key assumptions
applied in the valuation of acquired intangible asset as part of the purchase price allocation exercise for the William Hill
acquisition and searched for external information that may be contrary to management’s assessment.
• We involved valuation specialists to assess the discount rates used in each value-in-use calculation by performing an
independent calculation of a range of acceptable discount rates and comparing this with the rate utilised by the Group.
• We evaluated the assumptions used by management by comparing to board approved budgets, external data sources
and/or historically observed inputs, particularly in respect of forecast growth rates.
• We performed sensitivity analysis including on key inputs such as short-term and long-term growth rates and the discount
rate and in doing so developed our own independent valuation range using EY specialist determined discount rates.
• We assessed the appropriateness of the disclosures in note 1 and 12 of the consolidated financial statements by
comparing the disclosures against the requirements under UK adopted international accounting standards.
Key observations communicated to the Audit Committee
Based on our audit work, including our own independently developed range and the sensitivities applied, we are satisfied
that that no impairment is required in respect of the Retail, UK online or international online Groups of CGUs as at
31 December 2022.
An impairment charge of £25.7 million was appropriately recorded on the US B2C CGU following an increase in market rates
and a change in Group strategy.
An impairment charge of £2.6 million was appropriately recorded over the assets of specific retail shops and a further
£28.0m in relation to tech assets made obsolete by the integration of 888 and William Hill.
An impairment charge of £25.7 million was appropriately recorded on the US B2C CGU following an increase in market rates
and a change in Group strategy.
An impairment charge of £11.2 million also resulted from the sale of Bingo assets be-low their carrying value, in line with the
dis-closure in the prior year annual report and accounts.
The disclosures in the financial statements are in accordance with IAS 36.
In the current year, we have identified one new key audit matter. Acquisition accounting was identified as a key audit matter
due to the scale of the acquisition of the William Hill business during 2022 and the associated judgements and estimates.
140
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements
on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the
nature and extent of our audit procedures.
We determined materiality for the Group to be £4.3 million (2021: £4.2 million), which is 2% of Adjusted EBITDA (2021: 5% of
adjusted profit before tax). We believe that Adjusted EBITDA provides us with the most relevant performance measure to
the stakeholders of the Group. This reflects a change from the previous year audit where we used adjusted profit before
tax. The reason for the change in the materiality basis used is that the Group was lossmaking in the reporting period post
the acquisition of William Hill greatly and therefore the use of adjusted profit before tax as the materiality basis was no
longer appropriate. We determined that another earnings-based measure would be appropriate and following a review of
the Group’s KPIs, we identified that Adjusted EBITDA was the most relevant performance measure to the stakeholders of
the Group.
We determined materiality for the Parent Company to be £5.2 million (2021: £1.78 million), which is 2% (2021: 2%) of Equity.
During the course of our audit, we reassessed our initial materiality of £4.4m. We revised materiality downwards ahead of our
year end fieldwork to reflect the actual reported performance during the year.
• Adjusted EBITDA of £217.9 million
Starting
basis
• Share benefit charges of £5.2 million
Adjustments
• Foreign exchange losses of £4.0 million
• Totals £208.7 million (Adjusted EBITDA)
Materiality
• Materiality of £4.3 million (2021: £4.2 million), representing 2%
of Adjusted EBITDA
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement
was that performance materiality was 50% (2021: 75%) of our planning materiality, namely £2.1 million (2021: £3.1 million).
We have set performance materiality at this lower percentage due to the acquisition of William Hill resulting in a significant
change to the scale of the business, associated changes in management and our lack of previous experience with the
William Hill components, which we audited for the first time in 2022, meaning that we could not form an expectation that
there would be a low level of misstatements at the Group level.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement
accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for each
component is based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk
of misstatement at that component. In the current year, the range of performance materiality allocated to components was
£0.4m to £1.4m (2021: £1.4m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £213,000
(2021: £208,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our opinion.
888 Holdings PLC Annual Report & Accounts 2022
141
FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 888 Holdings PLC
OTHER INFORMATION
The other information comprises the information included in the annual report set out on pages 1 to 133, including Strategic
Report, the Directors’ Report and the Corporate Governance Report set out on pages 92 to 97, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
OPINION ON OTHER MATTER PRESCRIBED BY THE GIBRALTAR COMPANIES ACT 2014
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements and has been properly prepared in accordance with the Act.
OPINIONS ON OTHER MATTERS IN ACCORDANCE WITH THE TERMS OF OUR ENGAGEMENT LETTER
WITH THE COMPANY
In our opinion, based on the work undertaken in the course of the audit:
• the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the basis
of preparation.
• the information given in the strategic report for the financial year for which the financial statements are prepared
is consistent with the financial statements and those reports have been prepared in accordance with the basis
of preparation;
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION AS PRESCRIBED BY THE
GIBRALTAR COMPANIES ACT 2014
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the
course of the audit, to report by exception whether we have identified material misstatements in the Directors’ Report
We have nothing to report in respect of the following matters where the Gibraltar Companies Act 2014 requires us to report to
you if, in our opinion we have not received all the information and explanations we require for our audit.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION IN ACCORDANCE WITH THE
TERMS OF OUR ENGAGEMENT LETTER WITH THE COMPANY
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the
course of the audit, we have not identified material misstatements in strategic report.:
We have nothing to report in respect of the following matters if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made.
142
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the Group and company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 130;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the
period is appropriate set out on page 67;
• Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and
meets its liabilities set out on pages 67 and 130;
• Directors’ statement on fair, balanced and understandable set out on page 133;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 131;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 105; and;
• The section describing the work of the audit committee set out on page 102
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 132, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have
no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance
of the company and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined
that the most significant are those related to gambling regulations and related gaming and indirect taxes in different
countries where the Group is operating, including the UK, Spain, Gibraltar, Malta, Austria and other countries, those related
to relevant tax compliance regulations in the UK, Gibraltar, Malta, Spain and Israel and related to the financial reporting
framework (UK adopted international accounting standards, UK Corporate Governance Code, Gibraltar Companies Act
2014 the Listing Rules of the London Stock Exchange and the Bribery Act 2010).
• We understood how 888 Holdings plc is complying with those frameworks by making enquiries of management and the
company’s external legal and tax advisers. We corroborated our enquiries through our review of board minutes, discussion
with the Audit Committee and any correspondence with regulatory bodies and tax authorities, and our audit procedures in
respect of “Regulatory and legal risk” (as described above).
888 Holdings PLC Annual Report & Accounts 2022
143
FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 888 Holdings PLC
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud continued
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might
occur by meeting with management to understand where they considered there was susceptibility to fraud, including
in respect of revenue recognition. We also considered performance targets and their influence on efforts made by
management to manage earnings or influence the perceptions of analysts. Where this risk was considered to be higher,
we performed audit procedures to address each identified fraud risk. These procedures included testing journal entries.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations,
including anti-money laundering. The Group operates in the gaming industry which is a highly regulated environment and
our procedures involved audit procedures in respect of “Regulatory and legal risk” (as described above), as well as review
of board minutes to identify non-compliance with such laws and regulations, review of reporting to the Audit Committee on
compliance with regulations and enquiries of management and the Group’s local legal counsel and tax advisers.
• In respect to the UK, Gibraltar, Malta and Israel component teams, any instances of non-compliance with laws and
regulations were communicated to the Primary team as they arose and were followed up with management by the
Primary team.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
OTHER MATTERS WE ARE REQUIRED TO ADDRESS
• We were appointed by the company on 30 June 2014 to audit the financial statements for the year ending 31 December
2014 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and
reappointments is 9 years, covering the years ending 31 December 2014 to 31 December 2022. Our audit engagement
letter was refreshed on 12 April 2023. The non-audit services prohibited by the FRC’s Ethical Standard were not provided
to the Group or the parent company and we remain independent of the Group and the parent company in conducting
the audit.
• The audit opinion is consistent with the additional report to the Audit Committee.
USE OF OUR REPORT
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with
Section 257 of the Gibraltar Companies Act 2014 and our engagement letter dated 12 April 2023 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Marcus Butler (Non-Statutory Auditor)
For and on behalf of Ernst & Young LLP, London
14 April 2023
Angelique Linares (Statutory Auditor)
For and on behalf of EY Limited, Registered Auditors, Gibraltar
14 April 2023
144
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2022
Revenue
Gaming duties
Other cost of sales
Exceptional items – cost of sales
Cost of sales
Gross profit
Marketing expenses
Operating expenses
Share of post-tax profit of equity accounted associate
Exceptional items – operating expenses
Operating (loss)/profit
Adjusted EBITDA1
Exceptional items – cost of sales and operating expenses
Foreign exchange
Share benefit charge
Depreciation and amortisation
Operating (loss)/profit
Finance income
Finance expenses
(Loss)/profit before tax
Taxation
(Loss)/profit after tax
Adjusted profit after tax1
Exceptional items – cost of sales and operating expenses
Exceptional items – finance expenses
Amortisation of finance fees
Amortisation of acquired intangibles
Tax on exceptional items
Foreign exchange
Share benefit charge
(Loss)/profit after tax
Attributable to equity holders of the parent
Attributable to non-controlling interests
(Loss)/earnings per share
Basic (pence)
Diluted (pence)
Note
2
3
4,14
3
5
3
28
12,13
5
7
8
9
3
3,8
28
10
10
2022
£ million
1,238.8
(256.3)
(188.1)
3.9
(440.5)
798.3
(257.8)
(448.5)
0.3
(97.1)
(4.8)
217.9
(93.2)
(4.0)
(5.2)
(120.3)
(4.8)
0.8
(111.7)
(115.7)
(4.9)
(120.6)
64.2
(93.2)
(7.0)
(7.4)
(56.7)
11.4
(26.7)
(5.2)
(120.6)
(120.5)
(0.1)
(28.3)
(28.3)
2021
£ million
712.3
(133.7)
(115.3)
(4.2)
(253.2)
459.1
(222.6)
(160.2)
—
(13.1)
63.2
119.7
(17.3)
(6.7)
(6.1)
(26.4)
63.2
—
(4.2)
59.0
(9.0)
50.0
82.6
(17.3)
—
—
—
(2.5)
(6.7)
(6.1)
50.0
49.9
0.1
13.4
13.2
1. Adjusted EBITDA and adjusted profit after tax are Alternative Performance Measures (“APMs”) which do not have an IFRS standardised meaning. The Group
presents these two measures since they are the main measures the analyst community uses to evaluate the Group and compare it to its peers. The Group presents
adjusted measures because it allows for a further understanding of the underlying financial performance of the Group.
888 Holdings PLC Annual Report & Accounts 2022
145
FINANCIAL STATEMENTS Note
2022
£ million
(120.6)
2021
£ million
50.0
6
29
25
25
15
2.5
1.7
(0.8)
0.6
(14.4)
1.0
(1.0)
(10.4)
(130.9)
(0.1)
1.3
2.2
—
—
—
—
—
3.5
53.4
0.1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
(Loss)/profit for the year
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Items that will not be reclassified to profit or loss
Remeasurement of severance pay liability
Actuarial remeasurement in defined benefit pension scheme
Tax on severance pay liability
Movement in cash flow hedging position
Movement in cost of hedging reserve
Movement in equity investment designated at fair value through OCI
Total other comprehensive (loss)/income for the year
Total comprehensive (loss)/income for the year attributable to equity holders of the parent
Total comprehensive (loss)/income for the year attributable to non-controlling interests
The notes on pages 150 to 199 form part of these consolidated financial statements.
146
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2022
Assets
Non-current assets
Goodwill and other intangible assets
Right-of-use assets
Property, plant and equipment
Investment in sublease
Investment in associates
Non-current prepayments
Derivative financial instruments
Deferred tax assets
Current assets
Cash and cash equivalents1
Trade and other receivables
Income tax receivable
Derivative financial instruments
Assets held for sale
Total assets
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital
Share premium
Treasury shares
Foreign currency translation reserve
Hedging reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Liabilities
Non-current liabilities
Borrowings
Severance pay liability
Retirement benefit liability
Provisions
Deferred tax liability
Derivative financial instruments
Lease liabilities
Current liabilities
Borrowings
Trade and other payables
Provisions
Derivative financial instruments
Income tax payable
Lease liabilities
Customer deposits
Total equity and liabilities
Note
2022
£ million
2021
£ million
12
13
13
14, 15
19
25
26
20
19
25
17
27
27
25
23
6
29
22
26
25
18
23
21
22
25
9
18
21
2,197.0
81.9
110.4
1.4
38.4
6.2
16.6
5.2
2,457.1
317.6
132.7
35.2
2.0
6.9
494.4
2,951.5
2.2
160.7
(0.9)
24.6
(13.4)
(14.0)
159.2
—
159.2
1,697.5
1.2
1.2
86.2
220.4
17.4
65.0
2,088.9
4.8
368.0
111.5
20.8
33.0
24.0
141.3
703.4
2,951.5
123.9
18.7
9.3
—
—
5.8
—
2.2
159.9
189.4
50.8
—
—
—
240.2
400.1
1.9
2.5
(0.9)
22.1
—
98.8
124.4
0.1
124.5
—
3.7
—
—
1.9
—
18.1
23.7
—
145.3
19.0
—
22.7
4.8
60.1
251.9
400.1
1. Cash and cash equivalents includes customer funds which represent bank deposits matched by customer liabilities of an equal value. Cash and cash equivalents
excludes restricted short-term deposits of £21.6 million which are presented in Trade and other receivables (31 December 2021: £7.0 million).
The consolidated financial statements on pages 145 to 149 were approved and authorised for issue by the Board of Directors
on 14 April 2023 and were signed on its behalf by:
Yariv Dafna
Chief Financial Officer
The notes on pages 150 to 199 form part of these consolidated financial statements.
Lord Mendelsohn
Executive Chair
888 Holdings PLC Annual Report & Accounts 2022
147
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Share
capital
£ million
Share
premium
£ million
Treasury
shares
£ million
Foreign
currency
translation
reserve
£ million
Hedging
reserve
£ million
Cost of
hedging
reserve
£ million
Retained
earnings
£ million
Non-
controlling
interests
£ million
Balance at 1 January 2021
Profit after tax for the year
Other comprehensive expense
for the year
Total comprehensive income
Dividend paid (note 11)
Equity settled share benefit
charges (note 28)
Acquisition of treasury shares
Exercise of deferred share
bonus plan
Balance at 31 December 2021
Loss after tax for the year
Other comprehensive income/
(expense) for the year
Total comprehensive income/
(expense)
Issue of shares (equity placing)
Equity settled share benefit
charges (note 28)
Acquisition of treasury shares
Exercise of deferred share
bonus plan
1.9
—
—
—
—
—
—
—
1.9
—
—
—
0.3
—
—
—
2.5
—
—
—
—
—
—
—
2.5
—
—
—
158.2
—
—
—
Balance at 31 December 2022
2.2
160.7
(0.4)
—
—
—
—
—
(0.7)
0.2
(0.9)
—
—
—
—
—
(0.7)
0.7
(0.9)
20.8
—
1.3
1.3
—
—
—
—
22.1
—
—
—
—
—
—
—
—
—
—
—
2.5
(14.4)
2.5
—
—
—
—
(14.4)
—
—
—
—
24.6
(14.4)
—
—
—
—
—
—
—
—
—
—
1.0
1.0
—
—
—
—
1.0
85.5
49.9
2.2
52.1
(43.8)
5.2
—
(0.2)
98.8
—
0.1
—
0.1
—
—
—
—
0.1
Total
£ million
110.3
50.0
3.5
53.5
(43.8)
5.2
(0.7)
—
124.5
(120.5)
(0.1)
(120.6)
0.5
—
(10.4)
(120.0)
—
(0.1)
—
(131.0)
158.5
7.9
—
(0.7)
(14.0)
—
—
—
—
7.9
(0.7)
—
159.2
The following describes the nature and purpose of each reserve within equity.
Share capital – represents the nominal value of shares allotted, called-up and fully paid.
Share premium – represents the amount subscribed for share capital in excess of nominal value.
Treasury shares – represent reacquired own equity instruments. Treasury shares are recognised at cost and deducted
from equity.
Foreign currency translation reserve – represents exchange differences arising from the translation of all Group entities that
have functional currency different from £.
Hedging reserves – represents changes in the fair value of derivative financial instruments designed in a hedging relationship.
Retained earnings – represents the cumulative net gains and losses recognised in the consolidated statement of
comprehensive income and other transactions with equity holders.
The notes on pages 150 to 199 form part of these consolidated financial statements.
148
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Cash flows from operating activities
(Loss)/profit before income tax
Adjustments for:
Depreciation of property plant and equipment and right-of-use assets
Amortisation
Interest income
Interest expenses
Income tax paid
Share of post-tax loss of equity accounted associate
Non-cash exceptional items
Movement on Ante-post and other financial derivatives
Loss on disposal of property, plant and equipment
Share benefit charges
Cash generated from operating activities before working capital movement
Increase in receivables
(Decrease)/increase in customer deposits
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Net cash (used in)/generated from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of William Hill (net of cash acquired)
Proceeds from sale of investment in Bingo
Proceeds from sale of property, plant and equipment
Interest received
Acquisition of intangible assets
Internally generated intangible assets
Dividend received from associate
Net cash used in investing activities
Cash flows from financing activities
Issue of shares – equity placing
Payment of lease liabilities
Interest paid
Proceeds from loans
Loan transaction fees
Repayment of loans
Acquisition of treasury shares
Dividends paid
Net cash generated from/(used in) financing activities
Net Increase in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The notes on pages 150 to 199 form part of these consolidated financial statements.
Note
2022
£ million
2021
£ million
(115.7)
30.8
89.5
(0.8)
111.7
(35.1)
(0.3)
52.3
2.3
(0.3)
5.2
139.6
(50.3)
(9.2)
(100.3)
(10.0)
(30.2)
(8.9)
(386.8)
32.5
0.5
0.8
(2.4)
(65.5)
0.9
(428.9)
158.5
(21.5)
(75.6)
2,163.1
(132.3)
(1,503.2)
(0.7)
—
588.3
129.2
(1.0)
189.4
317.6
13
12
7
8
28
13
16
16
7
14
27
18
23
23
23
11
20
20
59.0
10.3
16.1
—
4.2
(5.1)
—
7.4
—
—
6.1
98.0
(16.9)
4.7
6.1
4.7
96.6
(4.2)
—
—
—
—
(1.7)
(17.1)
—
(23.0)
—
(5.2)
(0.5)
—
—
—
(0.8)
(43.8)
(50.3)
23.3
3.1
163.0
189.4
888 Holdings PLC Annual Report & Accounts 2022
149
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GENERAL INFORMATION
Company description
888 Holdings PLC (the “Company”) and its subsidiaries (together the “Group”) was founded in 1997 in the British Virgin Islands
and since 17 December 2003 has been domiciled in Gibraltar (Company number 90099). On 4 October 2005, the Company
listed on the London Stock Exchange.
DEFINITIONS
In these financial statements:
The Company
888 Holdings PLC
The Group
888 Holdings PLC and its subsidiaries.
Subsidiaries
Companies over which the Company has control (as defined in IFRS 10 – Consolidated Financial
Statements) and whose accounts are consolidated with those of the Company.
Related parties As defined in IAS 24 ‘Related Party Disclosures’
Associates
As defined in IAS 28 ‘Investments in Associates and Joint Ventures’
1 ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of the consolidated financial statements are as follows:
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with UK adopted international
accounting standards in accordance with the requirements of the Gibraltar Companies Act 2014. The consolidated financial
statements have been prepared on a historical cost basis, except where certain assets or liabilities are held at amortised
cost or at fair value as described in the Group’s accounting policies.
All values are rounded to the closest hundred thousand, except when otherwise indicated.
The significant accounting policies applied in the consolidated financial statements in the prior year have been applied
consistently in these consolidated financial statements, except for the amendments to accounting standards effective for
the annual periods beginning on 1 January 2022 and representation of expenses analysis in the income statement. These
are described in more detail below.
As a company incorporated in Gibraltar, 888 Holdings plc is not required by UK law or regulation to prepare the Directors’
Remuneration or Strategic reports under regulation that applies to UK incorporated companies. However, by virtue of 888’s
Premium Listing on the London Stock Exchange and reflecting the Director’s approach to good governance and investor
expectation, we have prepared these reports in line with the requirements under the UK Companies act 2006.
The Directors’ Remuneration Report, set out on pages 111 to 125, has been voluntarily prepared in accordance with sections 420
to 422 UK Companies act 2006.
The information given in the Strategic Report, set out on pages 2 to 88, has been voluntarily prepared in accordance with
section 414 UK Companies act 2006.
Change in presentation currency of the Group
The Group has changed the currency in which it presents its financial results from US Dollar to Pound sterling (GBP)
with effect from 1 January 2022, in consideration of the William Hill acquisition and current business mix which now has
significantly higher GBP exposure. 888 US dollar denominated earnings, are a relatively lower proportion of overall earnings.
Given the current composition of the Group’s activities, this change is expected to reduce the impact of currency movements on
reported results. Accordingly, to satisfy the requirements of IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’, the reported
results for the year ended 31 December 2022 have been translated from US Dollar to GBP using the following procedures:
• Assets and liabilities denominated in non-GBP currencies were translated into GBP at the relevant closing rates
of exchange;
• The trading results of subsidiaries whose functional currency was other than GBP were translated into GBP at the relevant
average rates of exchange;
• Movements in other reserves were translated into GBP at the relevant average rates of exchange;
• Share capital, share premium, treasury shares/own shares and dividends were translated at the historic rates prevailing on
the date of each transaction; and
• The cumulative translation reserve was set to nil at 1 January 2004, being the earliest practicable date and the date of
transition to IFRS, and has been restated on the basis that the Group had reported in GBP since that date.
The opening balance sheet and all comparatives have been re-presented in GBP following the change in presentation currency.
150
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
Going concern
Background
The financial statements have been prepared using the going concern basis of accounting. As at the year end the Group
had net assets of £159.2m (31 December 2021: £124.5m) and incurred a statutory loss before tax of £115.7m during the year
(31 December 2021: £59.0m profit). The Group also had net current liabilities of £209.0m (31 December 2021: £11.7m).
A full description of the Group’s business activities, financial position, cash flows, liquidity position, committed facilities
and borrowing position, together with the factors likely to affect its future development and performance, is set out in the
Strategic Report on pages 2 to 88, and in notes 23 to 25 to these financial statements.
Business planning and performance management
Following the acquisition of William Hill, the Group has developed its forecasting and monitoring processes to reflect the
combined group and the new reporting structure. These consists of weekly monitoring and careful management of liquidity,
an annual budget and a long-term plan, which generates income statement and cash flow projections for assessment by
management and the Board. Forecasts are regularly compared with prior forecasts and current trading to identify variances
and understand their future impact so management can take action where appropriate. Analysis is undertaken to review and
sense check the key assumptions, including the integration and transformation programmes, underpinning the forecasts.
Whilst there are risks to the Group’s trading performance (as summarised in the Risks section of the Strategic Report on
pages 56 to 66), the Group has established risk management processes to identify and mitigate risks, and such risks have
been considered when undertaking the going concern evaluation for the period to 30 June 2024.
The Group’s future prospects
As highlighted in note 24 to the financial statements, the Group meets its day-to-day working capital requirements from
the positive cash flows generated by its trading activities and its available cash resources. The Group holds cash and cash
equivalents excluding customer balances and restricted cash of £176.3m as at 31 December 2022 (31 December 2021: £129.3m).
In addition to this the Group has access, until 31 December 2027, to a £150m Revolving Credit Facility which is currently undrawn.
The Group entered into significant debt arrangements within the year to fund the acquisition of the William Hill business (also
described in note 24). Other than an annual £4.8m repayment on the TLB facility, no borrowings are due within the period of
the going concern evaluation or in the period soon after it. The next due date on the Group’s debt is in 2026 and the majority is
repayable in 2027-28. The Group’s Revolving Credit Facility contains a Net Leverage covenant which is not restrictive in the base
case, downside or reverse stress test scenarios. The remainder of the Group’s debt does not contain any financial covenants.
The Group’s forecasts, for the going concern evaluation period to 30 June 2024, based on reasonable assumptions including,
in the base case, a 3% decline in 2023 revenue on a pro forma basis and lower than expected EBITDA synergies in 2023,
indicate that the Group will be able to operate within the level of its currently available and expected future facilities for
this period to 30 June 2024. Under the base case forecast, the Group has sufficient cash reserves and available facilities to
enable it to meet its obligations as they fall due, for this going concern evaluation period to 30 June 2024.
The Group has also assessed a range of downside scenarios to evaluate whether any material uncertainty exists relating to
the Group’s ability to continue as a going concern. The forecasts and scenarios consider severe but plausible downsides that
could impact the Group, which are linked to the business risks identified by the Group. These scenarios, both individually and
in combination, have enabled the Directors to conclude that the Group has adequate resources to continue to operate for
the foreseeable future.
Specifically, the Directors have given careful consideration to the regulatory and legal environment in which the Group
operates. Downside sensitivities have been run, individually and in aggregate to assess the impact of the following scenarios:
• The adverse impact of suspension of 888 VIP customers in the Middle East region;
• Reductions in profitability for the whole Group of 10% to reflect potential regulatory, macroeconomic or competitive pressures;
• An increase in interest expense as a result of higher interest rates on the Group’s remaining floating rate debt;
• The phasing of cash outflows relating to regulatory and other provisions and accrual settlements; and
• The adverse impact of potential measures that may be imposed following the UK Gambling Act review.
Management has performed a separate reverse stress test to identify the conditions that would be required to compromise
the Group’s liquidity. Having done so, management has identified further actions to conserve or generate cash to mitigate
any impact of such a scenario occurring. Management has calculated mitigating cost savings that can be implemented by
reducing variable operating expenditure to offset a reduction in cash generation resulting from lower profitability. Following
these actions, the Group could withstand a decrease in forecast EBITDA of 31%. The Board considers the likelihood of a
decline of this magnitude to be remote. Other initiatives, not directly in the Group’s control at the date of approval of these
financial statements, could be considered including the disposal of non-core assets and investments.
Should a more extreme downside scenario occur, or mitigations and initiatives not be achieved, further mitigating actions
that can be executed in the necessary timeframe could be taken, such as a temporary reduction of marketing expenditures.
Conclusion
Based on the above considerations, the Directors continue to adopt the going concern basis in preparing these financial statements.
888 Holdings PLC Annual Report & Accounts 2022
151
FINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
1.1 Basis of preparation continued
New standards, interpretations and amendments adopted by the Group
In preparing the Group financial statements for the current period, the Group has adopted the following new IFRSs,
amendments to IFRSs and IFRS Interpretations Committee (IFRIC) interpretations. All standards do not have a significant
impact on the results or net assets of the Group. Changes are detailed below:
IAS 16 (amended)
IAS 37 (amended)
IAS 39 (amended)
IFRS 1 (amended)
IFRS 3 (amended)
IFRS 7 (amended)
IFRS 9 (amended)
IFRS 16 (amended)
Property, plant and equipment: proceeds before intended use
Onerous contracts: cost of fulfilling a contract
Interest rate benchmark reform – Phase 2
Annual improvements to IFRS Standards 2018-2020
Reference to the conceptual framework
Interest rate benchmark reform – Phase 2
Derecognition of financial liabilities
Annual improvements to IFRS standards 2018-2020
Annual improvements to IFRS standards 2018-2020
Interest rate benchmark reform – Phase 2
Standards in issue but not effective
At the date of authorisation of the Group financial statements, the following Standards, amendments and Interpretations,
which have not been applied in these Group financial statements, were in issue but not yet effective:
New Standards
IFRS 17
Amendments and interpretations
Insurance Contracts (effective 1 January 2023)
IAS 1 (amended)
IAS 8 (amended)
IAS 12 (amended)
IFRS 16 (amended)
Disclosure of accounting policies (effective 1 January 2023)
Classification of liabilities as current or non-current (effective 1 January 2024)
Definition of accounting estimates (effective 1 January 2023)
Deferred tax related to assets and liabilities arising from a single transaction
(effective 1 January 2023)
Lease liabilities in a sale and leaseback (effective 1 January 2024)
The Group does not currently believe that the adoption of these new standards or amendments would have a material effect
on the results or financial position of the Group.
Impact of climate change
The business continues to consider the impact of climate change in the consolidated and company financial statements
and recognise that the most impactful risks are around the cancellation of sporting events due to extreme weather and the
longer-term cost of energy. These costs have been factored into future forecasts and the carrying value of assets in these
financial statements. The Directors do not believe these risks represent a material risk to managements forecasts this year.
Further the group has assessed the impact of climate change in the work on going concern, viability statement and
impairment reviews and considers that the above risk of longer-term cost of energy has been factored into these future
forecasts. The Group constantly monitors the latest government legislation in relation to climate related matters. At the
current time, no legislation has been passed that will impact the Group. The Group will adjust key assumptions in value in use
calculations and sensitise these calculations should a change been required.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described below, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised where it affects only that period or in the period and future periods
if it affects both current and future periods.
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888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
Critical accounting judgements
Internally generated intangible assets
Costs relating to internally generated intangible assets are capitalised if the criteria for recognition as assets are met.
The initial capitalisation of costs is based on management’s judgement that technological and economic feasibility criteria
are met. In making this judgement, management considers the progress made in each development project and its latest
forecasts for each project. Other expenditure is charged to the consolidated income statement in the year in which the
expenditure is incurred. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation
and any accumulated impairment losses. For further information see note 12.
IFRS 16
Management addresses the key judgements, including the assessment of the lease term at the point where the lessee can be
reasonably certain of its right to use the underlying asset.
Given the continued uncertainty surrounding the Retail estate, management determined the lease term under IFRS 16 across
the Retail estate as the next available break date, as this means the Group is not ‘reasonably certain’ that any lease break
will not be exercised. The Group has recognised a lease liability of £89.0m at 31 December 2022.
Exceptional and adjusted items
The Group classifies and presents certain items of income and expense as exceptional items. The Group presents adjusted
performance measures which differ from statutory measures due to exclusion of exceptional items and certain non-cash
items as the Group considers that it allows a further understanding of the underlying financial performance of the Group.
These measures are described as “adjusted” and are used by management to measure and monitor the Group’s underlying
financial performance. Non-cash items that are excluded from adjusted performance measures of underlying financial
performance include amortisation of acquired intangibles, amortisation of finance fees, share benefit charges and foreign
exchange differences.
The Group considers any items of income and expense for classification as exceptional if they are one off in nature and
by virtue of their size. The items classified as exceptional (and are excluded from the adjusted measures) are described in
further detail in note 3.
Key accounting estimates
Identification and valuation of William Hill intangible assets
The Group acquired the International (non-US) business of William Hill on 1 July 2022 for an enterprise value of £1.73bn.
As part of the purchase price allocation the Group recognised separately identifiable acquired intangibles comprising
brands (£574.4m); customer relationships (£595.1m) and gambling licences (£8.5m). Goodwill of £785.6m was recognised
on acquisition. The estimate of the value of each class of asset described above is based on recognised valuation
methodologies such as the “relief from royalty” method for brands, recognised industry comparative data and the Group’s
industry experience and specialist knowledge, and is therefore a key accounting estimate. A 5% increase/decrease in
estimated customer churn rates would (decrease)/increase the fair value of customer relationships by £(123.0)m/£176.0m
respectively. Note that consideration of provisions and contingent liabilities identification and valuation on acquisition are
considered in the provision, contingent liabilities and regulatory matters section below.
This has been an area where the Group has made significant accounting estimates during the year. However, the Group
recognises that it is not an accounting estimate where there are major sources of estimation uncertainty at 31 December
2022 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within
the next financial year.
Further, the Group exercised judgement in determining the intangible assets acquired and their fair value on the William Hill
business combination, with the support of external experts to support the valuation process, where appropriate. See Note 16
for additional information.
Impairment of goodwill and other long-life intangible assets
For the purposes of impairment testing under IAS 36 Impairment of Assets, CGUs are grouped to reflect the level at which goodwill
is monitored by management. The key judgement is the level at which the impairment tests are performed. Management have
allocated Goodwill to Retail on a group of CGUs basis, International on a group of CGUs basis and UK Online as its own CGU
as this is the lowest level at which it is practical to monitor goodwill. These are the levels at which goodwill is assessed for
impairment. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units
to which the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows
expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Cash flows
are typically forecast for periods up to five years. For some cash-generating units it is appropriate to use forecasts extending
beyond five years where future investment in the business is expected to result in a long-term growth being achieved outside
of five years. For further information see note 12.
888 Holdings PLC Annual Report & Accounts 2022
153
FINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
Taxation
The Group holds a number of provisions for uncertain tax positions on the basis of amounts expected to be paid to the
tax authorities. If for example, the tax authorities in the relevant jurisdictions do not regard the arrangements between
any of the group companies as being made at arm’s length or insofar as changes occur in transfer pricing regulations
or in the interpretation of existing transfer pricing regulations, including through changes to the OECD’s guidelines and/
or recommendations, the amount of tax payable by the Group may increase. The Group’s current tax liabilities reflect
management’s best estimate of the future amounts of corporation tax that would be settled. However, the actual outcome
could be different to the estimate made, as the ultimate tax liability cannot be known until a resolution has been reached
with the relevant tax authority, or the issue becomes time barred.
Provisions, contingent liabilities and regulatory matters
The Group makes a number of estimates in respect of the accounting for, and disclosure of, expenses and contingent
liabilities for customer claims. Provisions are described in further detail in note 22 and contingent liabilities in note 31.
In common with other businesses in the gambling sector the Group receives claims from customers relating to the provision
of gambling services. Claims have been received from customers in a number of (principally European) jurisdictions and
allege either failure to follow responsible gambling procedures, breach of licence conditions or that underlying contracts in
question are null and void given local licencing regimes. The Group expenses customer claims as they are resolved or finally
determined in customers’ favour and provides for such claims where an outcome in favour of the customers in question
is probable.
Specifically, the Group has recognised a provision and contingent liability for customer claims in Austria where the Business
has been subject to a particular acceleration of claims since 2020 following marketing campaigns by litigation funders in
that jurisdiction. Claims have continued to be received throughout 2021 and 2022 at a broadly consistent rate with a slight
acceleration across 2021 and 2022. Customers who have obtained judgement against the Business’ entities in the Austrian
courts have sought to enforce those judgements in Malta and Gibraltar. These are being defended on the basis of a public
policy argument. The provisions held for the Group relating to these claims is £86.2m, mostly related to the Mr Green brand.
The value of the provision and contingent liability are both estimates based on the number and individual size of claims
received to date and assumptions based on such observations as can be derived from those claims and include an estimate
of claims the Group assess it probable, for the provision, and possible, for the contingent liability, that it will receive in the
future. If these rate of receipt of claims were to increase by 25% compared to our expectation the value across the provision
recognised and contingent liability disclosed would increase by £7.0m before consideration of potential gaming tax reclaim.
Basis of consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. The subsidiaries are
companies controlled by 888 Holdings PLC. Control exists where the Company has power over an entity; exposure, or rights,
to variable returns from its involvement with an entity; and the ability to use its power over an entity to affect the amount of
its returns. Subsidiaries are consolidated from the date the Parent gained control until such time as control ceases.
The financial statements of subsidiaries are included in the consolidated financial statements using the purchase method of
accounting. On the date of the acquisition, the assets and liabilities of a subsidiary are measured at their fair values and any
excess of the fair value of the consideration over the fair values of the identifiable net assets acquired is recognised as goodwill.
Intercompany transactions and balances are eliminated on consolidation.
The financial statements of subsidiaries are prepared for the same reporting period as the Parent Company, using consistent
accounting policies.
Revenue
Revenue is measured at the fair value of the consideration received or receivable from customers and represents amounts
receivable for goods and services that the Group is in business to provide, net of discounts, marketing inducements and VAT,
as set out below.
In the case of licensed betting offices (“LBO”) (including gaming machines), online sportsbook and telebetting and online
casino (including games on the Online arcade and other numbers bets) revenue represents gains and losses from gambling
activity in the period. This revenue is treated as a derivative under IFRS 9 ‘Financial Instruments’ and is therefore out of scope
of IFRS 15 ‘Revenue from Contracts with Customers’. Open positions are carried at fair value, and gains and losses arising on
this valuation are recognised in revenue, as well as gains and losses realised on positions that have closed.
Revenue from the Online poker business is within the scope of IFRS 15 ‘Revenue from Contracts with Customers’ and reflects
the net income (rake) earned when a poker game is completed, which is when the performance obligation is deemed to
be satisfied.
Revenue from B2B is mainly comprised of services provided to business partners. B2B also includes fees from the provision
of certain gaming related services to partners. Customer advances received are treated as deferred income within current
liabilities and released as they are earned.
154
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
Revenue continued
For services provided to business partners through its B2B unit, the Group examines whether the nature of its promise is a
performance obligation to provide the defined goods or services itself, which means the Group is a principal and therefore
recognises revenue as the gross amount of the revenue generated from use of the Group’s platform in online gaming activities
with the partners’ share of the revenue charged to marketing expenses; or to arrange that another party provide the goods or
services which means the Group is an agent and therefore recognises revenue as the amount of the net commission from use
of the Group’s platform.
The Group is a principal when it controls the promised goods or services before their transfer to the customer. Indicators
that the Group controls the goods or services before their transfer to the customer include, inter alia, as follows: The Group
is the primary obligor for fulfilling the promises in the contract; the Group has inventory risk before the goods or services are
transferred to the customer; and the Group has discretion in setting the prices of the goods or services.
Cost of Sales
Cost of sales consists primarily of gaming duties, payment service providers’ commissions, chargebacks, commission and
royalties payable to third parties, all of which are recognised on an accruals basis.
Operating expenses
Operating expenses consist primarily of marketing, staff costs and corporate professional expenses, both of which are
recognised on an accruals basis.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
For defined benefit retirement schemes, the cost of providing benefits is determined using the Projected Unit Credit Method,
with actuarial valuations being carried out at each period end date. Actuarial remeasurements are recognised in full in the
period in which they occur. They are recognised outside profit or loss and presented in the Consolidated Statement of Other
Comprehensive Income.
The net retirement benefit asset or obligation recognised in the Consolidated Statement of Financial Position represents the
present value of the defined benefit obligation as adjusted for unrecognised past service costs and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is limited to past service costs plus the present value of
available refunds and reductions in future contributions to the plan.
Foreign currency
Monetary assets and liabilities denominated in currencies other than the functional currency of the relevant company are
translated into that functional currency using year-end spot foreign exchange rates. Non-monetary assets and liabilities are
translated using exchange rates prevailing at the dates of the transactions. Exchange rate differences on foreign currency
transactions are included in financial income or financial expenses in the Consolidated Income Statement, as appropriate.
The results and financial position of all Group entities that have a functional currency different from pound sterling are
translated into the presentation currency at foreign exchange rates as set out below. Exchange differences arising, if any, are
recorded in the Consolidated Statement of Comprehensive Income as a component of other comprehensive income.
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance
sheet; and
(ii) income and expenses for each income statement are translated at an average exchange rate (unless this average is
not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions).
Finance income
Finance income relates to interest income and is accrued on a time basis, by reference to the principal outstanding and the
effective interest rate applicable.
Finance costs
Finance costs arising on interest-bearing financial instruments carried at amortised cost are recognised in the Consolidated
Income Statement using the effective interest rate method. Finance costs include the amortisation of fees that are an
integral part of the effective finance cost of a financial instrument, including issue costs, and the amortisation of any other
differences between the amount initially recognised and the redemption price.
888 Holdings PLC Annual Report & Accounts 2022
155
FINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the
Consolidated Income Statement because it excludes items of income or expense that are taxable or deductible in other
periods, and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the period end date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is
accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates,
except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each period end date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted at the period end date. Deferred tax is charged or credited in
the Consolidated Income Statement, except when it relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Goodwill
Goodwill represents the excess of the fair value of the consideration in a business combination over the Group’s interest in the
fair value of the identifiable assets, liabilities and contingent liabilities acquired. Consideration comprises the fair value of any
assets transferred, liabilities assumed and equity instruments issued.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the Consolidated
Income Statement and not subsequently reversed. Where the fair values of identifiable assets, liabilities and contingent
liabilities exceed the fair value of consideration paid, the excess is credited in full to the Consolidated Income Statement
on the acquisition. Changes in the fair value of the contingent consideration and direct costs of acquisition are charged or
credited immediately to the Consolidated Income Statement.
Intangible assets
Acquired intangible assets
Intangible assets arising on acquisitions are recorded at their fair value.
Amortisation is provided at rates calculated to write off the valuation, less estimated residual value, of each asset on a
straight-line basis over its expected useful life, as follows:
Acquired brands
Assessed separately for each asset, with lives ranging up to 20 years.
Customer relationships
Between 18 months and 13 years.
Bookmaking and mobile technology
Between three and five years.
Licences
10 to 20 years.
Amortisation of assets arising on acquisition is recognised as an adjusted item, please see note 3 for further information.
Internally generated intangible assets
An internally generated intangible asset arising from the Group’s development of computer systems is recognised only if all of
the following conditions are met:
• an asset is created that can be identified (such as software and new processes);
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
Expenditure incurred on development activities of gaming platforms is capitalised only when the expenditure will lead to new
or substantially improved products or processes, the products or processes are technically and commercially feasible and
the Group has sufficient resources to complete development. All other development expenditure is expensed. Subsequent
expenditure on intangible assets is capitalised only where it clearly increases the economic benefits to be derived from the
asset to which it relates. The Group estimates the useful life of these assets as between three and five years.
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888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS
1 ACCOUNTING POLICIES CONTINUED
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation. Assets are assessed at each
balance sheet date for indicators of impairment.
Depreciation is calculated using the straight-line method, at annual rates estimated to write off the cost of the assets less
their estimated residual values over their expected useful lives. The annual depreciation rates are as follows:
Freehold buildings
Long leasehold properties
Short leasehold properties
50 years
50 years
Over the unexpired period of the lease
Short leasehold improvements
The shorter of ten years or the unexpired period of the lease
Fixtures, fittings and equipment and motor vehicles
At variable rates between three and ten years
Right-of-use asset
Reasonably certain lease term
Impairment of non-financial assets
An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the
asset may be impaired. At each period end date, the Group reviews the carrying amounts of its goodwill, property plant and
equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future pre-tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have
not been adjusted. This process is described in more detail in note 12 to the financial statements.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an
expense immediately.
Other than for goodwill, where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable amount, but only to the point that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (or cash-generating unit) in prior periods. A reversal of an impairment loss is recognised as income immediately.
Fair value measurement
The Group measures certain financial instruments at fair value at each balance sheet date. The fair value related disclosures
are included in notes 24 and 25. Fair value is the price that would be received or paid in an orderly transaction between
market participants at a particular date, either in the principal market for the asset or liability or, in the absence of a
principal market, in the most advantageous market for that asset or liability accessible to the Group.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
IFRS 13 ‘Fair Value Measurement’ emphasises that fair value is a market-based measurement, not an entity-specific measurement.
Therefore, fair value measurements under IFRS 13 should be determined based on the assumptions that market participants
would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value
measurements, IFRS 13 establishes a fair value hierarchy that distinguishes between market participant assumptions based
on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1
and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs
classified within Level 3 of the hierarchy).
• Level 1 inputs utilise quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has
the ability to access.
• Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well
as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange
rates, and yield curves that are observable at commonly quoted intervals.
• Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions,
as there is little, if any, related market activity. In instances where the determination of the fair value measurement is
based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire
fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its
entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgement and considers factors specific to the asset or liability.
888 Holdings PLC Annual Report & Accounts 2022
157
FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES CONTINUED
Assets held for sale
Assets categorised as held for sale are held on the Consolidated Statement of Financial Position at the lower of the book
value and fair value less costs to sell. This assessment is carried out when assets are transferred to held for sale. The impact
of any adjustment as a part of this assessment is booked through the Consolidated Income Statement.
Cash and cash equivalents
Cash comprises cash in hand and balances with banks and on-demand deposits. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash. They include short-term deposits originally
purchased with maturities of three months or less.
Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost and principally
comprise amounts due from credit card companies and from e-payment companies. The Group has applied IFRS 9’s
simplified approach and has calculated the expected credit losses (‘ECLs’) based on lifetime of expected credit losses. Bad
debts are written off when there is objective evidence that the full amount may not be collected.
Equity
Equity issued by the Company is recorded as the proceeds received from the issue of shares, net of direct issue costs.
Treasury shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity.
No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity
instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in the share
premium account.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is
when declared by the Board of Directors and paid. In the case of final dividends, this is when approved by the shareholders
at the Annual General Meeting.
Equity-settled Share benefit charges
Where the Company grants its employees or contractors shares or options, the cost of those awards, recognised in the
Consolidated Income Statement over the vesting period with a corresponding increase in equity, is measured with reference
to the fair value at the date of grant. Market performance conditions are taken into account in determining the fair value at
the date of grant. Non-market performance conditions, including service conditions, are taken into account by adjusting the
number of instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised
over the vesting period is based on the number of instruments that eventually vest.
Cash-settled transactions
A liability is recognised for the fair value of cash-settled transactions. The fair value is measured initially and at each
reporting date up to and including the settlement date, with changes in fair value recognised within employee benefits
expenses. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability.
Further details of which are given in note 28. The approach used to account for vesting conditions when measuring equity-
settled transactions also applies to cash-settled transactions.
Severance pay schemes
The Group operates two severance pay schemes:
Defined benefit severance pay scheme
The Group operates a defined benefit severance pay scheme pursuant to the Severance Pay Law in Israel. Under this
scheme Group employees are entitled to severance pay upon redundancy or retirement. The liability for termination of
employment is measured using the projected unit credit method.
Severance pay scheme surpluses and deficits are measured as:
• the fair value of plan assets at the reporting date; less
• plan liabilities calculated using the projected unit credit method, discounted to its present value using yields available for
the appropriate government bonds that have maturity dates appropriate to the terms of the liabilities.
Remeasurements of the net severance pay scheme assets and liabilities, including actuarial gains and losses on the scheme
liabilities due to changes in assumptions or experience within the scheme and any differences between the interest income
and the actual return on assets, are recognised in the Consolidated Statement of Comprehensive Income in the period in
which they arise.
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888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
Defined contribution severance pay scheme
In 2017 the Group introduced a defined contribution plan pursuant to section 14 to the Severance Pay Law. Under this
scheme the Group pays fixed monthly contributions. Payments to defined contribution plans are charged as an expense as
they fall due.
Borrowings
The Group records bank and other borrowings initially at fair value, which equals the proceeds received, or acquired in a
business transaction, net of direct issue costs, and subsequently at amortised cost. The Group accounts for finance charges,
including premiums payable on settlement or redemption and direct issue costs, using the effective interest rate method.
Derivatives and hedging activities
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate, foreign
exchange rate and inflation risks.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether or not the derivative is designated for hedge accounting.
Hedge accounting
The Company designates certain derivatives as hedging instruments as either:
• hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges); or
• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges); or
• hedges of a net investment in a foreign operation (net investment hedges).
At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and
the hedged item along with its risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge, and on an ongoing basis, the Company documents whether a hedging
relationship meets the hedge effectiveness requirements under IFRS 9 and whether there continues to be an economic
relationship between the hedged item and the hedging instrument.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income and accumulated under the heading of cash flow hedge reserve. The gain or loss
relating to the ineffective portion is recognised immediately within profit and loss.
Amounts previously recognised in other comprehensive income are reclassified to earnings in the periods when the hedged
item is recognised in profit and loss. These earnings are included within the same line of the Consolidated Income Statement
as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial
asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated
in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or
non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no
longer meets the criteria for hedge accounting. Any gain or loss recognised in the cash flow hedge reserve remains in equity
and is recognised in profit or loss when the forecast transaction is ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument
that does not qualify for hedge are recognised immediately in profit or loss and are included in “finance income/expense”.
888 Holdings PLC Annual Report & Accounts 2022
159
FINANCIAL STATEMENTS 1 ACCOUNTING POLICIES CONTINUED
Leasing
At inception of a contract, the Group considers whether the contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The lease liability is initially
measured at the present value of the lease payments that have not been paid at the commencement date, discounted using
an appropriate discount rate. The discount rate used to calculate the lease liability is the rate implicit in the lease, if it can
be readily determined, or the lessee’s incremental borrowing rate if not. The Group uses an incremental borrowing rate for
its leases, which is determined based on the margin requirements of the Group’s revolving credit facilities as well as country
specific adjustments. A right-of-use asset is also recognised equal to the lease liability and depreciated over the period from
the commencement date to the earlier of, the end of the useful life of the right-of-use asset or the lease term. The Group
has assessed the lease term of properties within its retail estate to be up to the first available contractual break within the
lease. The Group has deemed that it cannot be reasonably certain that it will continue beyond this time given the continued
uncertainty surrounding the Group’s retail business.
The Group has also applied the below practical expedients:
• exclude leases from measurement and recognition where the lease term ends within 12 months from the date of initial
application and account for these leases as short-term leases;
• exclude low value leases for lease values less than £5,000;
• apply a single discount rate to a portfolio of leases with similar characteristics;
• use hindsight to determine the lease term if the contract contains options to extend or terminate; and
• exclude initial direct lease costs in the measurement of the right-of-use asset.
The Group has a small number of sublet properties. In these instances, leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified
as operating leases. Where the Group is an intermediate lessor, the sublease classification is assessed with reference to the
head lease right-of-use asset. Amounts due from lessees under finance leases are recorded as receivables at the amount
of the Group’s net investment in the lease. Finance lease income is allocated to accounting periods to reflect a constant
periodic rate of return on the Group’s net investment in the lease. Rental income from operating leases is recognised on a
straight-line basis over the term of the lease. IFRS 16 requires lessees to recognise right-of-use assets and lease liabilities for
most leases.
Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost.
Provisions
Provisions are recognised when the Group has a present or constructive obligation as a result of a past event from which it is
probable that it will result in an outflow of economic benefits that can be reasonably estimated.
Liabilities to customers
Liabilities to customers comprise the amounts that are credited to customers’ bankroll (the Group’s electronic “wallet”),
including provision for bonuses granted by the Group, less fees and charges applied to customer accounts, along with full
progressive provision for jackpots. These amounts are repayable in accordance with the applicable terms and conditions.
160
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS Financial Statements
2 SEGMENT INFORMATION
The Board has reviewed and confirmed the Group’s reportable segments in line with the guidance provided by IFRS 8
‘Operating Segments’. The segments disclosed below are aligned with the reports that the Group’s Chief Executive Officer
and Chief Financial Officer as Chief Operating Decision Makers review to make strategic decisions.
During the year ended 31 December 2022, subsequent to the acquisition of William Hill, the Group changed its segments to
be Retail, UK Online and International. As such, the comparative information below has been re-presented from the prior year
to display results under the new reported segments.
The Retail segment comprises all activity undertaken in LBOs including gaming machines. The UK Online segment comprises
all online activity, including sports betting, casino, poker and other gaming products along with telephone betting services
that are incurred within the UK and Ireland. The International segment comprises all online activity, including sports betting,
casino, poker and other gaming products along with telephone betting services that are incurred within all territories
excluding the UK. There are no inter-segmental sales within the Group.
Segment performance is shown on an adjusted EBITDA basis, with a reconciliation from adjusted EBITDA to statutory results
for clarity. Information for the year ended 31 December 2022 is as follows:
2022
Revenue1
Gaming duties and other cost of sales
Adjusted Gross Profit
Marketing
Contribution
Operating expenses
Associate income
Adjusted EBITDA
Depreciation
Amortisation (excluding acquired
intangibles)
Amortisation of acquired intangibles
Exceptional items – cost of sales and
operating expenses
Share benefit charges
Foreign exchange
Finance expenses
Finance income
Loss before tax
Retail
£ million
UK Online
£ million
International
£ million
Other 2
£ million
Corporate
£ million
Total
£ million
255.5
(55.0)
200.5
(3.3)
197.2
(156.0)
—
41.2
455.5
(163.7)
291.8
(148.1)
143.7
(82.1)
—
61.6
508.3
(184.7)
323.6
(105.2)
218.4
(100.1)
—
118.3
19.5
(10.5)
9.0
(2.5)
6.5
(4.8)
—
1.7
—
—
—
—
—
(5.2)
0.3
(4.9)
1,238.8
(413.9)
824.9
(259.1)
565.8
(348.2)
0.3
217.9
(30.8)
(32.8)
(56.7)
(93.2)
(5.2)
(4.0)
(111.7)
0.8
(115.7)
1. Revenue recognised under IFRS 9 is £255.5m in Retail, £455.5m in UK Online, £502.7m in International and £10,9m in Other. Revenue recognised under IFRS 15 is £nil
in Retail, £nil in UK Online, £5.6m in International and £8.6m in Other.
2. ‘Other’ represents the Bingo business that was disposed of during the year. See note 16 for further information.
Total segment assets
Total segment liabilities
Included within total assets:
Goodwill
Interests in associates
Capital additions
Retail
£ million
UK Online
£ million
International
£ million
Other
£ million
Corporate
£ million
542.6
176.3
99.4
—
13.4
1,395.5
341.6
360.4
—
24.6
961.3
562.3
326.2
—
68.3
—
—
—
—
—
11.7
1,458.7
—
38.4
1.1
Total
£ million
2,911.1
2,538.9
786.0
38.4
107.4
888 Holdings PLC Annual Report & Accounts 2022
161
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2 SEGMENT INFORMATION CONTINUED
2021
Revenue1
Gaming duties and other cost of sales
Adjusted Gross Profit
Marketing
Contribution
Operating expenses
Associate income
Adjusted EBITDA
Depreciation
Amortisation (excluding acquired
intangibles)
Exceptional items – cost of sales and
operating expenses
Share benefit charges
Foreign exchange
Finance income
Finance expenses
Profit before tax
Retail
£ million
UK Online
£ million
International
£ million
Other 2
£ million
Corporate
£ million
Total
£ million
—
—
—
—
—
—
—
—
255.2
(88.7)
166.5
(118.9)
47.6
(39.9)
—
7.7
410.4
(129.2)
281.2
(97.4)
183.8
(69.7)
—
114.1
46.7
(24.4)
22.3
(6.2)
16.1
(8.8)
—
7.3
—
—
—
—
—
(9.4)
—
(9.4)
712.3
(242.3)
470.0
(222.5)
247.5
(127.8)
—
119.7
(10.3)
(16.1)
(17.3)
(6.1)
(6.7)
—
(4.2)
59.0
1. Revenue recognised under IFRS 9 is £nil in Retail, £255.2m in UK Online, £410.4m in International and £28.6m in Other. Revenue recognised under IFRS 15 is £nil in
Retail, £nil in UK Online, £nil in International and £18.1m in Other.
2. ‘Other’ represents the Bingo business that was disposed of during 2022. See note 16 for further information.
Total segment assets
Total segment liabilities
Included within total assets:
Goodwill
Interests in associates
Capital additions
Retail
£ million
UK Online
£ million
International
£ million
Other
£ million
Corporate
£ million
—
—
—
—
—
79.4
132.2
36.9
—
0.6
304.6
100.7
23.2
—
22.1
—
—
—
—
—
13.9
18.1
—
—
—
Total
£ million
397.9
251.0
60.1
—
22.7
Geographical information
The Group’s performance can also be reviewed by considering the geographical markets and geographical locations within
which the Group operates. This information is outlined below:
Revenue by geographical market (based on location of customer)
United Kingdom
Rest of World
Italy
Spain
Non-current assets by geographical location
United Kingdom
Gibraltar
Rest of World
2022
£ million
2021
£ million
711.9
343.1
116.4
67.4
1,238.8
2022
£ million
536.0
1,194.9
721.0
2,451.9
300.6
276.6
86.0
49.1
712.3
2021
£ million
45.8
58.8
53.1
157.7
3 EXCEPTIONAL ITEMS AND ADJUSTMENTS
In determining the classification and presentation of exceptional items we have applied consistently the guidelines issued by
the Financial Reporting Council (‘FRC’) that primarily addressed the following:
• Consistency and even-handedness in classification and presentation;
• Guidance on whether and when recurring items should be considered as part of underlying results; and
• Clarity in presentation, explanation and disclosure of exceptional items and their relevance.
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FINANCIAL STATEMENTS
3 EXCEPTIONAL ITEMS AND ADJUSTMENTS CONTINUED
In preparing the ARA, we also note the European Securities and Markets Authority (‘ESMA’) guidance on Alternative
Performance Measures (APM), including:
• Clarity of presentation and explanation of the APM;
• Reconciliation of each APM to the most directly reconcilable financial statement caption;
• APMs should not be displayed with more prominence than statutory financials;
• APMs should be accompanied by comparatives; and
• The definition and calculation of APMs should be consistent over time.
We are satisfied that our policies and practice conform to the above guidelines.
Adjusted results
The Group reports adjusted results, both internally and externally, that differ from statutory results prepared in accordance
with IFRS. These adjusted results, which include our key metrics of adjusted EBITDA and adjusted EPS, are considered to be a
useful reflection of the underlying performance of the Group and its businesses, since they exclude transactions which impair
visibility of the underlying activity in each segment. More specifically, visibility can be impaired in one or both of the following
instances:
• a transaction is of such a material or infrequent nature that it would obscure an understanding of underlying outcomes
and trends in revenues, costs or other components of performance (for example, a significant impairment charge); or
• a transaction that results from a corporate activity that has neither a close relationship to the Group’s operations nor any
associated operational cash flows (for example, the amortisation of intangibles recognised on acquisitions).
Adjusted results are used as the primary measures of business performance within the Group and align with the results shown
in management accounts, with the key uses being:
• management and Board reviews of performance against expectations and over time, including assessments of segmental
performance (see note 2 and the Strategic Report);
• in support of business decisions by the Board and by management, encompassing both strategic and operational levels
of decision-making.
The Group’s policies on adjusted measures are consistently applied over time, but they are not defined by IFRS and,
therefore, may differ from adjusted measures as used by other companies.
The Consolidated Income Statement presents adjusted results alongside statutory measures, with the reconciling items being
itemised and described below. We discriminate between two types of reconciling items: exceptional items and adjusted items.
Exceptional items
Exceptional items are those items the Directors consider to be one-off or material in nature that should be brought to the
reader’s attention in understanding the Group’s financial performance.
Exceptional items are as follows:
Cost of sales
Retroactive duties and associated (credit)/charges
Exceptional items – cost of sales
Operating expenses
Acquisition related costs
Integration and transformation costs
Disposal of 888 Bingo
Impairment of US Goodwill and other assets
Revaluation of contingent consideration
Exceptional items – operating expenses
Finance expenses
Senior Unsecured Notes early redemption fees
Gain on settlement of Senior Unsecured Notes
Exceptional items – finance expenses
Total exceptional items before tax
Tax on exceptional items
Total exceptional items
2022
£ million
2021
£ million
(3.9)
(3.9)
24.5
14.4
11.7
55.7
(9.2)
97.1
14.1
(7.1)
7.0
100.2
2.8
103.0
4.2
4.2
10.9
2.2
—
—
—
13.1
—
—
—
17.3
2.5
19.8
Total tax on exceptional items and adjustments is a credit of £11.4m, £14.2m of which relates to adjustments.
888 Holdings PLC Annual Report & Accounts 2022
163
FINANCIAL STATEMENTS 3 EXCEPTIONAL ITEMS AND ADJUSTMENTS CONTINUED
Retroactive gaming duties and associated charges
The industry in which the Group operates is subject to continuing scrutiny by regulators and other governmental authorities,
which may, in certain circumstances, lead to enforcement actions, sanctions, fines and penalties or the assertion of private
litigations, claims and damages. In 2021, a provision was recognised in 888 relating to a liability in Spain of £4.2m. In the year
£0.3m was settled, leading to a release of £3.9m.
Acquisition related costs
The Group has incurred legal and M&A costs associated with the acquisition of William Hill of £24.5m (2021: £10.9m).
Integration and transformation costs
Following the acquisition of the William Hill International (non-US) business, the integration and transformation program
began and is expected to take three years until 2025. The cash costs to achieve the targeted integration synergies are
expected to cost approximately £100.0m over the lifetime of the programme. In 2022, there were a total of £8.8m of costs
relating to the integration programme, namely redundancy costs of £5.8m and legal and consultancy fees of £3.0m and a
further £3.7m of platform separation and other integration costs.
Alongside this, the transformation of the Retail operating model has led to a £1.9m charge, albeit the savings from this are
not classified as synergies. In the prior year, the Group incurred £2.0m of redundancy costs related to the decision to close
the Antigua office, as well as £0.2m relating to the disposal of property, plant and equipment.
Disposal of 888 Bingo
On 7 July 2022, the Group announced that it had completed the sale of its entire Bingo business to Saphalata Holdings Ltd.,
a member of the Broadway Gaming group, for a total cash consideration of £37.4 million (US$45.25 million), out of which
£35.7 million was paid on completion and a further £1.7 million will unconditionally be paid in one year. As a result, the Group
reclassified Bingo assets and liabilities as ‘Held for sale’ and recognised an impairment loss of £11.2 million. An additional
£0.5m loss was recorded on the disposal of the business. Refer to note 16.
Impairment of US Goodwill and other assets
During the year, as a part of the annual impairment review, management performed a value in use calculation to assess
the recoverable amount of the Group’s US business, using that business’s underlying cash flow forecasts. The recoverable
amount was lower than the book value of its assets and, as such, the Group impaired the goodwill on the US business in full,
totalling £25.7m.
Additionally as part of the integration, the business intends to use the existing 888 technology platform as the basis for the
future platform of the Group, leading to a write off of the Unity platform, a proprietary technology system William Hill was
building that is no longer needed, at a cost of £28.1m. A further £1.4m of smaller technology assets were written off. £0.5m
of freehold assets were written off when reclassified to held for sale at the year end, due to the assets being tested for
impairment as a result of the transfer.
Revaluation of contingent consideration
As a part of the transaction agreement with Caesars for the purchase of William Hill, an amount of up to £100.0m consideration
was contingent subject to the enlarged group hitting specific EBITDA metrics. This was fair valued on acquisition at £9.6m and
revalued at the year-end date to £0.4m, leading to a release in this contingent consideration of £9.2m.
Senior Unsecured Notes early redemption fees
As part of the William Hill acquisition, the Group acquired certain Senior Unsecured Notes, £350.0m 4.875% due May 2023
and £350.0m 4.75% due May 2026. Subsequent to the acquisition, the £350.0m Note due May 2023 was fully redeemed as
well as a partial redemption amounting to £339.5m of the Note due May 2026.
The total cost to the Group of settling the Notes consisted of £12.2m in early redemption fees together with a combined £1.9m
of unamortised finance fees, which were written off to profit and loss immediately on redemption of each note. All of the
costs were considered as exceptional due to their one-off nature.
Gain on settlement of Senior Unsecured Notes
The Senior Unsecured Notes acquired in the acquisition of William Hill were accounted for at fair value. Subsequently these
Notes have been settled and as such the gain on settlement of these Notes of £7.1m has been recognised.
Adjusted items
Adjusted items are recurring items that are excluded from internal measures of underlying performance and which are not
considered by the Directors to be exceptional. This relates to the amortisation of specific intangible assets recognised in
acquisitions, foreign exchange and share benefit charges. These items are defined as adjusted items as it is believed it
would impair the visibility of the underlying activities across each segment as it is not closely related to the businesses’ or
any associated operational cash flows. Each of these items are recurring and occur in each reporting period and will be
consistently adjusted in future periods. Note that the adjusted items are all shown on the face of the consolidated income
statement in the reconciliations of both adjusted EBITDA and adjusted profit after tax.
164
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 4 SHARE OF RESULTS OF ASSOCIATES
Share of post-tax profit of equity accounted associate
2022
£ million
0.3
2021
£ million
—
The above represents the Group’s share of the results of Sports Information Services (Holdings) Limited (see note 14) for the
period in which the Group owned the associate.
5 OPERATING PROFIT
Operating profit is stated after charging:
Gaming duties
Marketing expenses
Staff costs (including Executive Directors)
Exceptional items – cost of sales
Exceptional items – operating expenses
Depreciation (within operating expenses)
Amortisation (within operating expenses)
Auditor remuneration
Audit of Company
Audit of Group
Total fees for audit services
Audit related assurance services – half year review
Other assurance services
Total assurance services
Other non-audit services
Total fees for non-audit services
Total fees
Notes
2022
£ million
2021
£ million
256.3
257.8
227.4
(3.9)
97.1
30.8
89.5
133.7
222.6
112.9
4.2
13.1
10.3
16.1
6
3
3
13
12
2022
£ million
2021 1
£ million
1.0
2.0
3.0
0.1
0.1
0.2
0.8
1.0
4.0
0.6
0.1
0.7
—
0.2
0.2
2.0
2.2
2.9
1. Non-Audit fees for the year ended 31 December 2021 have increased by £0.3 million compared to the amount previously reported due to fees agreed during the
year ended 31 December 2022 but which related to the year ended 31 December 2021.
The auditor acted as reporting accountants in connection with the Company’s circular and prospectus for the acquisition
of William Hill International and Capital Raise that will be published during Q2 2022. Total non-audit fees payable to Ernst &
Young for permissible non-audit services relating to the transaction are £0.9m. Total fees for non-audit services represented
34% (2021: 296%) of the total fees for audit services. Further considerations in respect of the audit and non-audit fees for the
year are set out in the Audit Committee Report.
6 STAFF COSTS
Staff costs, including Executive Directors’ remuneration, comprises the following elements:
Wages and salaries
Social security
Employee benefits and severance pay scheme costs
2022
£ million
2021
£ million
196.8
17.4
13.2
227.4
101.0
5.5
6.4
112.9
In the consolidated income statement, total staff costs, including share benefit charges of £5.2m (2021: £6.1m), are included
within the Operating expenses.
The average number of employees during the year was 12,0191 (2021: 1,759).
1. The current year includes an average of 10,213 William Hill staff from 1 July 2022.
888 Holdings PLC Annual Report & Accounts 2022
165
FINANCIAL STATEMENTS 6 STAFF COSTS CONTINUED
Severance pay scheme – Israel
The Group has a defined contribution plan pursuant to section 14 to the Severance Pay Law under which the Group pays
fixed contributions and will have no legal or constructive obligation to pay further contributions if the fund does not hold
sufficient amounts to pay all employee benefits relating to employee service at the date of their departure. The Group
recognised an expense in respect of contribution to the defined contribution plan during the year of £1.9m (2021: £1.6m).
The Group’s employees in Israel, who are not subject to section 14 to the Severance Pay Law, are eligible to receive certain
benefits from the Group in specific circumstances on leaving the Group. As such the Group operates a defined benefit
severance pay plan which requires contributions to be made to separately administered funds. The funds are held by an
independent third-party company.
The current service cost and the present value of the defined benefit obligation are measured using the projected unit
credit method. Under this schedule, the Company contributes on a monthly basis at the rate of 8.3% of the aggregate of
members’ salaries.
The disclosures set out below are based on calculations carried out as at 31 December 2022 by a qualified
independent actuary.
The following table summarises the employee benefits figures as included in the consolidated financial statements:
Included in the balance sheet:
Severance pay liability
Included in the income statement:
Current service costs (within Operating expenses)
Included in the statement of comprehensive income:
Gain on remeasurement of severance pay scheme liability
Movement in severance pay scheme asset and liability:
Severance pay scheme assets
At beginning of year
Interest income
Contributions by the Group
Benefits paid
Return on assets less interest income already recorded
Exchange differences
At end of year
Severance pay plan liabilities
At beginning of year
Interest expense
Current service costs
Benefits paid
Actuarial (gain)/loss on past experience
Actuarial gain on changes in financial assumptions
Exchange differences
At end of year
2022
£ million
2021
£ million
1.2
1.9
3.7
2.6
(2.3)
(2.5)
2022
£ million
2021
£ million
19.2
0.6
1.9
(4.2)
(1.0)
(0.3)
16.2
18.0
0.5
2.0
(4.4)
2.3
0.8
19.2
2022
£ million
2021
£ million
23.0
0.7
1.8
(4.4)
(0.2)
(3.1)
(0.4)
17.4
24.5
0.7
2.5
(4.5)
0.9
(1.2)
0.1
23.0
As at 31 December 2022 the net accounting deficit of the defined benefit severance pay plan was £1.2m (2021: £3.7m). The
Scheme is backed by substantial assets amounting to £16.2m at 31 December 2022 (2021: £19.3m). The net accounting deficit
of defined benefit severance plan is a result of:
• Potential liability to pay further contributions to employees who will be made redundant, if the fund does not hold
sufficient assets to pay all benefits relating to employee service at the date of their departure.
• Volatility of Israeli government bond rates may have substantial impact in absolute terms on the net liability. An increase
in the discount rate from 3.45% in 2021 to 5.54% in 2022 resulted in a £3.1m decrease of the plan liabilities.
A further increase in the discount rate by 0.25% per annum (i.e. 5.54% to 5.79%) would decrease the plan liabilities by £0.1m
(2021: £0.4m).
166
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 6 STAFF COSTS CONTINUED
Severance pay scheme – Israel continued
The impact of the severance deficit on the level of distributable reserves is monitored on an on-going basis. Monitoring
enables planning for any potential adverse volatility and helps the Group to assess the likely impact on distributable reserves.
Employees can determine individually into which type of investment their share of the plan assets are invested, therefore the
Group is unable to accurately disclose the proportions of the plan assets invested in each class of asset.
The expected contribution for 2023 is £1.9m.
The main actuarial assumptions used in determining the fair value of the Group’s severance pay plan are shown below:
Discount rate (nominal)
Estimated increase in employee benefits costs
Voluntary termination rate
Inflation rates based on Israeli bonds
2022
%
5.54
5.05
75
2.68
2021
%
3.45
5.14
75
2.54
Sensitivity of balance sheet at 31 December 2022
IAS 19 calculations could result in volatility in the Consolidated Statement of Financial Position principally because the market
value of assets (with significant exposure to equities) is being compared with a liability assessment derived from corporate
bond yields.
The table below shows the sensitivity of the IAS 19 balance sheet position to changes in some of the assumptions. Where one
assumption has been changed all the other assumptions are kept as disclosed above.
Discount rate less 0.25%
Estimated increase in employee benefits costs plus 1%
Voluntary termination rate decrease 5%
Inflation rates up 0.25%
7 FINANCE INCOME
Total finance income
8 FINANCE EXPENSES
Interest expenses related to lease liabilities
Bank loans and bonds
Amortisation of finance fees
Hedging activities
Interest expenses related to settlement of tax liability
Interest expenses related to severance pay liability, net
Foreign exchange on financing activities
Other finance charges and fees
Finance expenses – underlying
Senior Unsecured Notes early redemption fees
Gain on settlement of Senior Unsecured Notes
Finance expenses – exceptional
Total finance expenses
Resulted
(surplus)/
deficit
£ million
Change
from
disclosed
£ million
(1.5)
(2.3)
(1.3)
(1.1)
(0.3)
(1.1)
(0.1)
(0.1)
2022
£ million
0.8
2021
£ million
—
Note
2022
£ million
2021
£ million
3.0
74.9
0.1
3.3
—
—
22.7
0.7
104.7
14.1
(7.1)
7.0
111.7
3
3
3
0.9
—
—
—
2.8
0.1
—
0.4
4.2
—
—
—
4.2
888 Holdings PLC Annual Report & Accounts 2022
167
FINANCIAL STATEMENTS 9 TAXATION
Corporate taxes
Current taxation
UK corporation tax at 19%
Other jurisdictions taxation
Adjustments in respect of prior years
Deferred taxation
Origination and reversal of temporary differences
Adjustments in respect of prior years
Taxation expense
Deferred taxation related to items recognised in OCI
Remeasurement of severance pay liability
Current taxation
Gibraltar corporation tax at 12.5%
Other jurisdictions taxation
Adjustments in respect of prior years
Deferred taxation
Origination and reversal of temporary differences
Adjustments in respect of prior years
Taxation expense
Deferred taxation related to items recognised in OCI
Remeasurement of severance pay liability
2022
£ million
6.5
17.8
1.3
25.6
(3.0)
(17.7)
(20.7)
4.9
0.6
2021
£ million
0.7
8.6
(0.1)
9.2
(0.2)
—
(0.2)
9.0
0.2
The Group previously reported its current tax with Gibraltar taxation as the headline tax and the Gibraltar tax rate as the
rate to which the actual tax charge was reconciled. In 2022, 888 Holdings PLC became tax resident in the UK by virtue of its
central management and control being situated in the UK and as a result the Group has changed its disclosures to refer to
the UK tax as the headline tax and the UK tax rate for the reconciliations.
The effective tax rate in respect of ordinary activities before adjusting and exceptional items for the year ended 31 December
2022 is 20.0%. The effective tax rate in respect of ordinary activities after exceptional items is -4.2% (31 December 2021: 15%).
The Group monitors developments in respect of the global design, consultation and implementation of Pillar Two, which is
the OECD term for a global minimum tax rate. Pillar Two is expected to lead to further corporation tax being payable by the
Group in the future giving its online operating model. The Group expects that the UK will substantively enact Pillar Two in the
first half of 2023 and that Pillar Two will impact the Group’s current tax starting in 2024.
The Group’s effective tax rate for 2023 is expected to be 7.7%.
168
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 9 TAXATION CONTINUED
Corporate taxes continued
The difference between the total tax charge shown above and the amount calculated by applying the standard rate of UK
corporation tax to the (loss)/profit before tax is as follows:
(Loss)/profit before taxation
Standard tax rate in UK (19.0%)
Difference in effective tax rate in other jurisdictions
Expenses not allowed for taxation
Accrual of liabilities for uncertain tax positions
Tax on share of result of associate
Deferred tax not recognised
Difference in current and deferred tax rate
Non-taxable income
Adjustments to prior years’ tax charges
Total tax charge for the year
(Loss)/profit before taxation
Standard tax rate in Gibraltar (12.5%)
Difference in effective tax rate in other jurisdictions
Expenses not allowed for taxation
Deferred tax not recognised
Losses utilised previously not recognised for deferred tax
Non-taxable income
Adjustments to prior years’ tax charges
Total tax charge for the year
2022
£ million
(115.7)
(22.0)
2.5
32.9
5.2
0.1
0.4
5.1
(2.9)
(16.4)
4.9
2021
£ million
59.0
8.1
4.1
0.7
(1.5)
(0.2)
(2.1)
(0.1)
9.0
The expenses not allowed for tax purposes mainly relate to the acquisition of William Hill for which no tax relief is available. The
difference in effective tax rates in other jurisdictions primarily reflect the lower effective tax rate in Gibraltar. The adjustments in
respect of prior periods mainly relate to a higher than expected restriction on interest deductions in the UK in earlier periods.
10 EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share (EPS) has been calculated by dividing the profit attributable to ordinary shareholders by the
weighted average number of shares in issue and outstanding during the year.
Diluted earnings per share
The weighted average number of shares for diluted earnings per share takes into account all potentially dilutive equity
instruments granted, which are not included in the number of shares for basic earnings per share. Potential ordinary shares
are excluded from the weighted average diluted number of shares when calculating IFRS diluted loss per share because they
are not dilutive. The number of equity instruments included in the diluted EPS calculation consist of 6,235,340 Ordinary Shares
(2021: 6,315,271) and no market-value options (2021: nil).
The number of equity instruments excluded from the diluted EPS calculation is 1,986,155 (2021: 577,979).
Profit for the period attributable to equity holders of the parent (£ million)
Weighted average number of Ordinary Shares in issue and outstanding
Effect of dilutive Ordinary Shares and Share options
Weighted average number of dilutive Ordinary Shares
Basic earnings per share (pence)
Diluted earnings per share (pence)
2022
2021
(120.5)
426,536,392
6,235,340
49.9
371,383,109
6,315,271
432,771,732 377,698,380
(28.3)
(28.3)
13.4
13.2
The diluted loss per share in the current year is the same as the basic loss per share as the potentially dilutive share options
are considered antidilutive as they would reduce the loss per share and therefore, they are disregarded in the calculation.
888 Holdings PLC Annual Report & Accounts 2022
169
FINANCIAL STATEMENTS 10 EARNINGS PER SHARE CONTINUED
Adjusted earnings per share
The Directors believe that EPS excluding exceptional and adjusted items and tax on exceptional and adjusted items
(“Adjusted EPS”) allows for a further understanding of the underlying performance of the business and assists in providing
a clearer view of the performance of the Group.
Adjusted profit after tax (£ million)
Weighted average number of Ordinary Shares in issue
Weighted average number of dilutive Ordinary Shares
Adjusted basic earnings per share (pence)
Adjusted diluted earnings per share (pence)
11 DIVIDENDS
Dividends paid
2022
64.2
2021
82.6
371,383,109
426,536,392
432,771,732 377,698,380
15.1
14.8
22.2
21.9
2022
£ million
—
2021
£ million
43.8
The Board of Directors does not recommend a final dividend to be paid in respect of the year ended 31 December 2022.
No final dividend was recommended as at 31 December 2021.
The 2020 final dividend of 10.4¢ (7.4p) per share plus an additional one-off 1.6¢ (1.1p) per share was paid on 24 May 2021
totalling US$44.5 million (£31.8m) and the 2021 interim regular dividend of 4.5¢ (3.2p) per share in accordance with 888’s
dividend policy was paid on 13 October 2021 of US$16.8 million (£12.0m).
12 GOODWILL AND OTHER INTANGIBLES
Cost or valuation
At 31 December 2021
Additions via business combinations
Additions
Disposals
Effect of foreign exchange rates
At 31 December 2022
Amortisation and impairments:
At 31 December 2021
Amortisation charge for the year
Impairment charge for the year
Disposals
Effect of foreign exchange rates
At 31 December 2022
Carrying amounts
At 31 December 2022
At 31 December 2021
Brands,
customer
relationships
and licences
£ million
Goodwill
£ million
Software
£ million
Total
£ million
134.3
785.6
—
(124.2)
16.0
811.7
74.2
—
36.9
(94.5)
9.1
25.7
61.0
1,178.0
2.3
(17.4)
6.9
107.4
226.2
65.1
(6.4)
11.0
302.7
2,189.8
67.4
(148.0)
33.9
1,230.8
403.3
2,445.8
34.0
45.9
—
(10.4)
4.0
73.5
70.6
43.6
29.5
(5.5)
11.4
149.6
178.8
89.5
66.4
(110.4)
24.5
248.8
786.0
60.1
1,157.3
27.0
253.7
36.8
2,197.0
123.9
170
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 12 GOODWILL AND OTHER INTANGIBLES CONTINUED
Goodwill
Goodwill recognised on the acquisition of William Hill was £785.6m as outlined in note 16. Based on the estimated synergies
from the combination management has allocated this goodwill between Retail (£99.4m), UK Online (£360.4m) and
International (£325.8m). This represents the lowest level at which goodwill is monitored for internal management purposes.
The Group previously had £25.7m goodwill related to its US B2C CGU which has been impaired at year end. See impairment
reviews below for more detail. As part of the disposal of the Group’s Bingo business, an £11.2m impairment charge was
recognised at the half year against the goodwill in the Bingo business, representing the difference between the agreed sales
price and the carrying value of the Bingo businesses net assets. Upon completion of the sale in the second half of the year,
the remaining £29.7m of goodwill was disposed.
Brands, customer relationships and licences
This category of assets includes brands, customer relationships and licences primarily recognised in business combinations.
As outlined in note 16, in 2022 the Group acquired William Hill and recognised brands of £574.4m, customer relationships
of £595.1m and licences of £8.5m. These assets are being amortised over 20-30 years for brands, 7-13 years for customer
relationships and 20 years for licences.
Software
This category relates to the cost of both acquired software, through purchase or acquisition, as well as the capitalisation of
internally developed software. On the acquisition of William Hill, the Group acquired software with a fair value of £226.2m. The
software acquired primarily consisted of proprietary software platforms owned by William Hill. Subsequent to the acquisition,
the decision was made to migrate a number of William Hill platforms onto the existing 888 platforms, resulting in an asset
impairment of £29.5m.
Impairment reviews
The Group performs an annual impairment review for goodwill, by comparing the carrying amount of these assets with
their recoverable amount. This is an area where the directors exercise judgement and estimation, as noted on pages 152 to
154. Testing is carried out by allocating the carrying value of these assets to CGUs or group of CGUs and determining the
recoverable amount of those CGUs through value in use calculations. Where the recoverable amount exceeds the carrying
value of the assets, the assets are considered as not impaired.
For the purposes of impairment testing under IAS 36, CGUs are grouped in order to reflect the level at which goodwill is
monitored by management. In the previous period, the Group defined its groups of CGUs as Bingo B2C and US B2C. In the
year, the Group completed the acquisition of William Hill and disposed of the Group’s Bingo business which changed the
groups of CGUs to which goodwill is allocated and monitored. The goodwill generated from the acquisition of William Hill is
monitored in line with the Group’s segments, being Retail, UK Online and International. Prior to the impairment of the CGU,
the pre-existing goodwill relating to the US B2C CGU continued to be monitored at the US B2C CGU level consistent with the
previous period.
Value in use calculations are based upon estimates of future cash flows derived from the Group’s profit forecasts by
segments. Profit forecasts are derived from the Group’s annual strategic planning or similarly scoped exercise.
The principal assumptions underlying our cash flow forecasts are as follows:
• management assume that the underlying business model will continue to operate on a comparable basis, as adjusted for
known regulatory or tax changes and planned business initiatives;
• management’s forecasts anticipate the continuation of recent growth or decline trends in staking, gaming net revenues
and expenses, as adjusted for changes in the Group’s business model or expected changes in the wider industry
or economy;
• management’s forecasts include assumptions on synergy cost savings as a result of the William Hill acquisition, which have
been removed to the extent they were not committed at 31 December 2022;
• management assume that the Group will achieve its target sports betting gross win margins as set for each territory, which
management base upon its experience of the outturn of sports results over the long term, given the tendency for sports
results to vary in the short term but revert to a norm over a longer term; and
• in management’s annual forecasting process, expenses incorporate a bottom-up estimation of the Group’s cost base. For
employee remuneration, this takes into account staffing numbers and models by segment, while other costs are assessed
separately by category, with principal assumptions including an extrapolation of recent cost inflation trends and the
expectation that the Group will incur costs in line with agreed contractual rates.
The Board approved the 2023 budget for each segment in November 2022, as well as a further four-year strategic forecast
covering years 2024 to 2027. These five years form the basis of our value in use calculation. Cash flows beyond that five-year
period were extrapolated using long-term growth rates as estimated for each group of CGUs separately.
888 Holdings PLC Annual Report & Accounts 2022
171
FINANCIAL STATEMENTS 12 GOODWILL AND OTHER INTANGIBLES CONTINUED
Impairment reviews continued
The other significant assumptions incorporated into our impairment reviews are those relating to discount rates and
long-term growth assumptions, as noted below separately for each CGU or group of CGUs:
CGUs
Retail
UK Online
International
US B2C
2022
Discount
rate
%
2022
Long-term
growth rate
%
13.3
12.1
13.8
18.0
0.0
2.5
5.0
2.0
Discount rates are applied to each CGU or group of CGU’s cash flows that reflect both the time value of money and the risks
that apply to the cash flows of that CGU or group of CGUs. Discount rates are calculated using the weighted average cost of
capital formula based on the CGU’s or group of CGU’s leveraged beta. The leveraged beta is determined by management as
the mean unleveraged beta of listed gaming and betting companies, with samples chosen where applicable from comparable
markets or territories as the CGU or group of CGUs, leveraged to the Group’s capital structure. Further risk premia and discounts
are applied, if appropriate, to this rate to reflect the risk profile of the specific CGU or group of CGUs relative to the market in
which it operates. Our discount rates are calculated on a post-tax basis and converted to a pre-tax basis using the tax rate
applicable to each CGU or group of CGUs. Discount rates disclosed below are pre-tax discount rates.
The long-term growth rates included in the impairment review do not exceed the observed long-term growth rate for each
respective CGU or group of CGUs.
Results of impairment reviews
The recoverable amount and headroom above carrying amount or impairment below carrying amount based on the
impairment review performed at 31 December 2022 for each CGU or group of CGUs are as follows:
CGUs
Retail
UK Online
International
US B2C
2022
Recoverable
amount
£ million
Headroom/
(impairment)
£ million
668.6
1,534.5
1,725.2
19.4
165.5
359.3
996.2
(25.7)
As a result of a revision in the growth projections for the US B2C CGU, the entire goodwill balance of £25.7m has been
impaired, as the projected cash flows no longer support the carrying value of the CGU.
Sensitivity of impairment reviews
For the Retail and UK Online group of CGUs, the following reasonably possible changes in assumptions upon which
the recoverable amount was estimated, would lead to the following changes in the recoverable amount of the CGU
or group of CGUs:
Retail
UK Online
20% fall in cash flows
1% increase in discount rate
Reduction in
recoverable
amount
£ million
Remaining
headroom
£ million
Reduction in
recoverable
amount
£ million
Remaining
headroom
£ million
(133.7)
(306.9)
31.8
52.4
(45.2)
(142.9)
120.3
210.1
For the International group of CGUs, no impairment would occur under any reasonable possible changes in assumptions
upon which the recoverable amount was estimated.
A 1% increase in the long-term growth rate in the US B2C CGU would have resulted in a reduction to the impairment of £4.0m.
A 1% reduction in the discount rate used would have resulted in a reduction to the impairment of £7.0m.
172
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 13 PROPERTY, PLANT AND EQUIPMENT
Cost
At 31 December 2021
Additions via business combinations
Additions
Disposals
Transferred to assets held for sale
Effect of foreign exchange rates
At 31 December 2022
Accumulated depreciation
At 31 December 2021
Charge for the period
Disposals
Transferred to assets held for sale
Effect of foreign exchange rates
At 31 December 2022
Carrying amounts
At 31 December 2022
At 31 December 2021
Land and
buildings
£ million
Fixtures,
fittings and
equipment
£ million
Right-of-use
asset
£ million
Total
£ million
13.5
28.3
1.2
(0.6)
(7.5)
1.7
36.6
11.2
3.2
(0.5)
(0.1)
1.4
15.2
21.4
2.3
35.9
81.2
10.0
(0.9)
—
4.2
31.1
72.3
9.3
(3.2)
—
3.9
80.5
181.8
20.5
(4.7)
(7.5)
9.8
130.4
113.4
280.4
28.9
9.2
(0.7)
—
4.0
41.4
89.0
7.0
12.4
18.4
(1.1)
—
1.8
31.5
81.9
18.7
52.5
30.8
(2.3)
(0.1)
7.2
88.1
192.3
28.0
In addition to the amounts above, the Group holds £6.9m of land and buildings that were classified as assets held for sale
(see note 17).
The net book value of land and buildings comprises:
Freehold
Long leasehold improvements
Short leasehold improvements
2022
£ million
2021
£ million
3.7
5.9
11.8
21.4
—
2.3
—
2.3
14 INTERESTS IN ASSOCIATES
The Group holds an associate interest in Sports Information Services (Holdings) Limited (SIS), at a value of £38.4m.
The Group uses the equity method of accounting for associates. The following table shows the aggregate movement in the
Group’s interests in its associate:
Acquired on acquisition at 1 July 2022
Share of results before interest and taxation
Share of interest
Share of taxation
Dividend received
At 31 December 2022
£ million
39.0
0.3
0.1
(0.1)
(0.9)
38.4
888 Holdings PLC Annual Report & Accounts 2022
173
FINANCIAL STATEMENTS 14 INTERESTS IN ASSOCIATES CONTINUED
SIS
At 31 December 2022, William Hill Organization Limited, a principal subsidiary of the Company, held an investment of 19.5%
of the ordinary share capital of SIS, a company incorporated in Great Britain. The Group is able to exert significant influence
over SIS by way of its 19.5% holding and its seat on the Board of Directors.
The SIS group of companies provides real time, pre-event information and results, as well as live coverage of horseracing, greyhound
racing and other sporting activities and events via satellite. The statutory financial statements of SIS are prepared to the year
ending 31 March. The results recognised are based on statutory accounts to March 2022 and management accounts thereafter.
The following financial information relates to SIS as at 31 December 2022 and for the period owned by the Group:
Total assets
Total liabilities
Total revenue
Total profit after tax
£ million
124.1
(65.6)
116.6
1.1
15 INVESTMENTS
Good Luck Have Fun Group AB (‘GLHF Group’) shares
On 1 July 2022, as a part of the acquisition of William Hill, the Group obtained an investment in Good Luck Have Fun Group
AB. The Group has a 4.3% holding in the equity in GLHF Group and it is held as a financial asset and designated as fair value
through other comprehensive income, in line with the previous William Hill designation. Subsequent to the acquisition, and as
a result of updates in the strategy by the GLHF Group management team, the Group has considered the recoverability of
the investment. As a part of this assessment of recoverability, the Group has written off the investment of £1.0m in its entirety
through other comprehensive income. The Group therefore holds £nil value in this investment at the balance sheet date.
16 ACQUISITIONS & DISPOSALS
Acquisitions
On 1 July 2022, the Group acquired all of the equity interests in William Hill. Total consideration for the transaction was
£554.3m, consisting of £544.7m cash consideration and up to £100.0m of contingent consideration, fair valued on acquisition
date at £9.6m. The contingent consideration is based on the enlarged Group hitting specific EBITDA metrics and is fair
valued using a probability weighting analysis. Based on the performance of the combined Group since the acquisition, the
fair value of this contingent consideration at 31 December 2022 is £0.4m, with £9.2m being released to the Income Statement,
see note 3 for further detail.
Identifiable assets acquired and liabilities assumed
Intangible assets
Property, plant and equipment
Right-of-use assets
Investment in sublease
Investments and investments in associates
Cash and cash equivalents
Trade and other receivables
Income tax asset
Assets held for sale
Trade and other payables
Provisions and contingent liabilities
Derivative financial instruments
Lease liabilities
Retirement benefit liability
Deferred tax liabilities
Long term debt
Total net identifiable liabilities
Goodwill
Consideration transferred
Provisional
Fair Value 1
1,404.2
109.5
72.3
1.4
40.0
157.9
32.9
10.8
0.2
(399.3)
(178.8)
(3.5)
(76.6)
(0.4)
(236.2)
(1,165.7)
(231.3)
785.6
554.3
1. The Group has invested significant resources during the year in performing the purchase price allocation for the William Hill acquisition, including involving experts
where appropriate. However, the Group acknowledges that, given the size and scale of the acquisition, the fair values of assets acquired and liabilities assumed
remain provisional and may change within the measurement period.
In the period from 1 July 2022 to 31 December 2022, the acquired business contributed revenue of £614.3m and a loss after
tax of £45.7m. If the acquisition had occurred on 1 January 2022, the contributed revenue and loss before tax would have
been £1,225.1m and £56.7m respectively.
174
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 16 ACQUISITION & DISPOSALS CONTINUED
Intangible assets
Acquired identifiable intangible assets include £574.4m in respect of brands, £595.1m in respect of customer relationships
and £8.5m in respect of licences. Software and technology of £226.2m, inclusive of a fair value uplift of £70.6m has also been
recognised on acquisition. Management considers the residual goodwill of £785.6m to represent a number of factors including
the future growth of the William Hill business and the potential to achieve buyer specific synergies and workforce.
The fair value of the brand assets was assessed by considering the benefit to the Group’s future revenue of the acquired brand
and assessing the royalty costs that would be incurred in deriving the same benefit. The key assumptions in the assessments are
the forecast revenue growth and royalty cost applied. A royalty cost of 5.0% of revenue was applied. The fair value of the customer
relationships was assessed using the multi-period excess earnings methodology. The key assumption in the assessments is customer
retention rates. The fair value of the licences has been derived by calculation a replacement cost for each individual
licence. A 5% increase/decrease in estimated customer churn rates would (decrease)/increase the fair value of customer
relationships by £(123.0)m/£176.0m respectively.
Provisions and contingent liabilities
A contingent liability with a fair value of £80.6m has been recognised on acquisition to reflect the possible future economic
outflow resulting from customer claims in Austria. The contingent liability has been fair valued in line with IFRS 3 based on the
expected cash outflow of settled claims and recognised on the basis that it is a possible future liability. Additional provisions
of £115.2m have been recognised based on pre-existing provisions within William Hill. The carrying amount at acquisition was
assessed to be the fair value. Refer to note 22 for further details on these acquired provisions.
Other fair value adjustments
A fair value uplift of £1.1m has been recognised on property, plant and equipment, representing the depreciated replacement
cost of the assets in comparison to their pre-acquisition net book value.
A fair value uplift of £0.8m has been recognised on the acquired right-of-use assets, representing favourable market positions
on William Hill’s portfolio of leases. This has been offset by a £6.8m reduction to the right-of-use asset and £6.4m reduction
to the lease liability that reflects matching the right-of-use asset to the new fair value of the lease liability, based on a new
discount rate for the liability at the acquisition date.
The fair value of the Group’s investment in SIS (refer to note 14) was increased by £27.4m to a fair value of £39.0m, reflecting
the Group’s holding and the estimated market value of the entity at the acquisition date.
The fair value of the Group’s outstanding listed debt was increased by £7.1m, reflecting the current market price of the debt
at acquisition date.
Deferred tax liabilities of £216.9m have been recognised on the resultant fair value uplifts to assets.
The fair value of all other assets and liabilities acquired are considered to be equal to their net book value as at the acquisition date.
Disposals
On 7 July 2022, the Group disposed of its entire Bingo business to Saphalata Holdings Ltd., a member of the Broadway Gaming
group, for a total cash consideration of £37.4m (US$45.25m), out of which £35.7m was paid on completion and a further £1.7m
will unconditionally be paid in one year. As at 30 June 2022, the Group reclassified the Bingo business assets and liabilities as
‘Held for sale’, at which time an impairment loss of £11.2m was recognised on the Bingo goodwill, representing the difference
between the carrying value of the businesses net assets and the fair value at the date of reclassification to held for sale.
Consideration received
Deferred consideration
Less:
Cash disposed of
Net proceeds on disposal
Less:
Net assets disposed of (excluding cash):
Intangible assets
Trade and other receivables
Trade and other payables
Net assets disposed of (excluding cash)
Loss on disposal
2022
£ million
35.7
1.7
(3.2)
34.2
(37.6)
(0.5)
3.3
(34.7)
(0.5)
888 Holdings PLC Annual Report & Accounts 2022
175
FINANCIAL STATEMENTS 17 ASSETS HELD FOR SALE
In the year, the Group began the process of auctioning 75 freehold properties in a sale and leaseback transaction. At the year
end, all properties were underwritten with a reserve price and were awaiting auction dates in the first quarter of 2023. As a result
of the proposed sales, the properties have been reclassified as assets held for sale. The carrying value of the properties prior to
reclassification was £7.4m. Upon classification as assets held for sale, the fair value of the properties was assessed against the
carrying value, resulting in a £0.5m impairment of the overall property value, which has been classified within exceptional items
in the consolidated income statement. The properties classified as held for sale are part of the Retail segment.
18 LEASES
The Group recognises a right-of-use asset and a lease liability at the lease commencement date.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the
commencement date, discounted using an appropriate discount rate. The discount rate used to calculate the lease liability is
the rate implicit in the lease, if it can be readily determined, or the lessee’s incremental borrowing rate if not. The Group uses
an incremental borrowing rate for its leases, which is determined based on a series of inputs including a risk-free rate based
on our debt portfolio as well as country-specific adjustments.
A right-of-use asset is also recognised equal to the lease liability and depreciated over the period from the commencement
date to the earlier of, the end of the useful life of the right-of-use asset or the lease term.
The Group has assessed the lease term of properties within its Retail estate to be up to the first available contractual break
within the lease. The Group has deemed that it cannot be reasonably certain that it will continue beyond this time given the
continued uncertainty surrounding the Retail business.
The Group note that leases not included due to either being low value or having a term of less than 12 months are
deemed immaterial.
The Group has a small number of sublet properties which have been assessed in accordance with IFRS 16 and have been
deemed immaterial. The accounting policy applied to these small number of sublet properties can be seen on page 160.
The Group will continue to monitor both the above scenarios and disclose these if they are deemed material to users of the
Annual Report and Accounts.
Right-of-use asset depreciation
Finance costs
A maturity analysis of the contractual undiscounted cash flows is as follows:
Due within one year
Due between one and two years
Due between two and three years
Due between three and four years
Due between four and five years
Due beyond five years
19 TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Loans receivable
Prepayments
Restricted short-term deposits
Current trade and other receivables
Non-current prepayments
2022
£ million
2021
£ million
18.4
3.0
5.3
0.9
2022
£ million
2021
£ million
29.4
23.0
17.3
13.4
7.5
8.7
5.0
4.3
4.1
4.1
4.1
3.9
2022
£ million
2021
£ million
56.7
18.4
3.9
32.1
21.6
132.7
6.2
138.9
19.2
11.3
—
13.3
7.0
50.8
5.8
56.6
Restricted short-term deposits represent amounts held by banks primarily to support guarantees in respect of regulated
markets licence requirements and office leases.
Non-current prepayments refer to prepayment to partners in relation to costs and certain fees to be recognised over a
period longer than 12 months.
The carrying value of trade receivables and other receivables approximates to their fair value as the credit risk has been
addressed as part of impairment provisioning and, due to the short-term nature of the receivables they are not subject to
ongoing fluctuations in market rates. Note 24 provides credit risk disclosures on trade and other receivables.
176
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 20 CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Less:
Customer deposits
Cash (excluding customer balances)
2022
£ million
2021
£ million
317.6
141.3
176.3
189.4
60.1
129.3
Customer deposits represent bank deposits matched by liabilities to customers of an equal value (see note 21).
21 TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Total trade and other payables
2022
£ million
2021
£ million
61.1
208.0
98.9
368.0
26.8
87.6
30.9
145.3
The carrying value of trade and other payables approximates to their fair value given the short maturity date of these balances.
Customer deposits of £141.3m (31 December 2021: £60.1m) represents deposits received from customers, customer winnings
and progressive prize pools. This is offset by an equivalent or greater amount of cash held, which is included in cash and
cash equivalents (see note 20).
22 PROVISIONS
At 31 December 2021
Acquired on acquisition 1 July 2022
Charged/(credited) to profit or loss
Additional provisions recognised
Provisions released to profit and loss
Utilised during the year
Foreign exchange differences
At 31 December 2022
Indirect tax
provision
£ million
Legal and
regulatory
£ million
Shop closure
provision
£ million
Other
restructuring
costs
£ million
—
57.0
12.7
(3.2)
(6.0)
1.2
61.7
19.0
111.5
12.3
(5.1)
(9.9)
(0.3)
127.5
—
5.8
0.8
—
(1.8)
—
4.8
—
4.5
—
—
(0.8)
—
3.7
Total
£ million
19.0
178.8
25.8
(8.3)
(18.5)
0.9
197.7
Customer claims provisions of £86.2m within legal and regulatory are classified as non-current. The remaining provisions are
all classified as current.
Indirect tax provision
As part of the acquisition of William Hill, the Group acquired a provision relating to a gaming tax liability in Austria, where
the Austrian tax authority believes that foreign gaming companies should be liable to pay gaming taxes in Austria. Post-
acquisition, the Group has continued to provide for the gaming taxes including interest, as management considers that an
outflow is probable. The Group is in constructive discussions with the Austrian tax authority over the timing of settlement.
Legal and regulatory provisions
The Group has recorded a provision in respect of legal and regulatory matters, including customer claims, and updated it
to reflect the Group’s revised assessment of these risks in light of developments arising during 2022 such that this represents
management’s best estimate of probable cash outflows related to these matters.
The industry in which the Group operates is subject to continuing scrutiny by regulators and other governmental authorities,
which may, in certain circumstances, lead to enforcement actions, sanctions, fines and penalties or the assertion of private
litigations, claims and damages. Within this provision, there is a provision acquired relating to a periodic compliance
assessment undertaken by the UK Gambling Commission (“UKGC”) in July and August 2021 of the William Hill business. William
Hill has been subject to an ongoing licence review and has addressed certain action points raised by the UKGC in relation
to William Hill’s social responsibility and anti-money laundering obligations. The Group has agreed a regulatory settlement
of £19.2m, including divestments of £0.7m. This provision was acquired at 1 July 2022 and is expected to be settled in 2023.
888 Holdings PLC Annual Report & Accounts 2022
177
FINANCIAL STATEMENTS 22 PROVISIONS CONTINUED
Legal and regulatory provisions continued
In common with other businesses in the gambling sector, the Group receives claims from consumers relating to the provision
of gambling services. Claims have been received from consumers in a number of (principally European) jurisdictions and
allege either failure to follow responsible gambling procedures, breach of licence conditions or that underlying contracts in
question are null and void given local licencing regimes. The Group expenses consumer claims as they are resolved or finally
determined in consumers’ favour and provides for such claims where an outcome in favour of the consumers in question is
probable.
Within this provision, there is a provision for customer claims in Austria where the Business has been subject to a particular
acceleration of claims since 2020 following marketing campaigns by litigation funders in that jurisdiction. Claims have
continued to be received throughout 2021 and 2022 at a broadly consistent rate with a slight acceleration across 2021 and
2022. Consumers who have obtained judgement against the Business’s entities in the Austrian courts have sought to enforce
those judgements in Malta and Gibraltar. These are being defended on the basis of a public policy argument. The provisions
held for the Group relating to these claims is £86.2m, which includes a provision of £80.6m relating to the William Hill and Mr
Green brands and £5.6m relating to 888.
The £80.6m relating to the William Hill and Mr Green brands was recognised on acquisition representing the fair value of the
contingent liability at that point in time, recognised on the basis that it was a possible future liability and in line with IFRS 3.
Please refer to note 16 for further detail.
Since acquisition, there has been an alignment in strategy and accounting treatment with William Hill and Mr Green aligning
to the 888 strategy. William Hill and Mr Green have therefore recognised a provision for probable legal claims they expect
to receive and a contingent liability for possible legal claims they may receive. As at 31 December 2022, the provision is
estimated at £67.0m and the contingent liability is estimated at £13.5m (note 31). Note that the provision is less than the
liability recognised on acquisition but the liability recognised on acquisition is not released to the income statement until
the final outcome of the customer claims is resolved and as such the liability of £80.6m remains the balance provided.
The calculation of the customer claims liability includes provision for both legal fees and interest but is gross of gaming tax.
Management have assessed that it is probable as opposed to virtually certain that the tax will be reclaimed and therefore a
contingent asset of up to £24.3m has been disclosed for the tax reclaims, please refer to note 31 for further detail.
The timing and amount of the outflows is ultimately determined by the settlement reached with the relevant authority.
There has also been a similar uptick in claims in Germany, but to a much lesser extent.
Shop closure provisions
As a result of the acquisition of William Hill, the Group holds provisions relating to the associated costs of closure of 713 shops
in 2019, 119 shops in 2020, and certain shops that ceased to trade as part of normal trading activities.
Other restructuring costs
The Group has recognised certain provisions for staff severance as a result of restructuring due to the acquisition of
William Hill.
23 BORROWINGS
Borrowings at amortised cost
Bank facilities
€473.5m term loan facility
$575.0m term loan facility
£150.0m Equivalent Multi-Currency Revolving Credit Facility
Loan Notes
€582.0m Senior Secured Fixed Rate Notes
€450.0m Senior Secured Floating Rate Notes
£350.0m Senior Unsecured Notes
Total Borrowings
Less: Borrowings as due for settlement in 12 months
Total Borrowings as due for settlement after 12 months
Interest
rate
%
31 December
2022
£ million
Maturity
EURIBOR + 5.5%
CME term SOFR + 5.35%
—
7.56
EURIBOR + 5.5%
4.75
2028
2028
2028
2027
2028
2026
392.6
420.7
—
498.6
379.9
10.5
1,702.3
4.8
1,697.5
The Group had no borrowings in 2021 and as such no comparative is presented in the above table.
178
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 23 BORROWINGS CONTINUED
Bank facilities
Term loan facilities
In July 2022, the Group entered into a Senior Facilities Agreement in connection with the William Hill Group acquisition, under
which the following term loan facilities were made available:
• a 6-year euro-denominated bullet term facility of €473.5 million, of which €6.4m was repaid in September 2022.
• a 6-year sterling-denominated delayed-draw bullet term facility of £351.8 million which was partially drawn in September
2022 (“GBP Term Loan”) and used to partially prepay the William Hill Group’s £350m 4.75% Senior Unsecured Notes due
2026 and partially prepay the Group’s euro-denominated bullet term facility.
• a 6-year US Dollar-denominated term facility of $500.0 million.
In December 2022, the GBP Term Loan was prepaid and partially replaced with a $75.0m increase under the Group’s 6-year
US Dollar-denominated term facility, with the remaining amount replaced with senior secured note issuances.
At 31 December 2022, the following amounts were outstanding under the term facilities made available to the Group under
the Senior Facilities Agreement:
• €467.1 million under the Group’s 6-year euro-denominated term facility.
• $573.7 million under the Group’s 6-year US Dollar-denominated term facility
Loan notes
Senior Secured Notes
(i) €582m 7.558% Senior Secured Fixed Rate Notes due July 2027
In July 2022, as part of the William Hill Group acquisition funding, the Group issued €400m of guaranteed senior secured
fixed rate notes and used the net proceeds to finance the William Hill Group acquisition. The notes, which are guaranteed by
certain members of the Group and certain of the Group’s operating subsidiaries, mature in July 2027.
In December 2022, a further €182m in principal amount was issued under the same terms as the initial €400m issuance and
used to partially refinance the GBP Term Loan.
(ii) €450m Senior Secured Floating Rate Notes due July 2028
In July 2022, the Group issued €300m of guaranteed senior secured floating rate notes and used the net proceeds to
partially finance the William Hill Group acquisition. The notes, which are guaranteed by certain members of the Group and
certain of the Group’s operating subsidiaries, mature in July 2028.
In December 2022, a further €150m in principal amount was issued under the same terms as the initial €300m issuance to
partially refinance the GBP Term Loan.
Senior Unsecured Notes
£350m 4.875% Senior Unsecured Fixed Rate Notes due 2023 & £350m 4.75% Senior Unsecured Fixed Rate
Notes due 2026
The Group acquired two separate listed Senior Unsecured notes, due 2023 and 2026 respectively as at 1 July 2022. The
acquisition triggered a change in control and the exercise of a put option by a number of Noteholders (refer below). The
£350m 4.875% Senior Unsecured Notes due 2023 were settled in full and, on 22 September 2022, Noteholders of £339.5m out
of £350.0m 4.75% Senior Unsecured Notes due 2026 took the option to exercise. As a result, this reduced the £350.0m 4.75%
Senior Unsecured Notes due 2023 to £10.5m at 31 December 2022. The cash purchase price of both notes was equal to
101 per cent of the principal amount together with the interest accrued.
Finance fees and associated costs incurred on the issue of both notes were held in the William Hill Statement of Financial
Position at acquisition, which were subsequently fair valued which led to an increase of £7.1m, reflecting the current market
price of the debt at acquisition date. This is being amortised over the life of the respective notes using the effective interest
rate method. On redemption of the Notes, any unamortised fees were written off to profit and loss as exceptional costs
(see note 3).
Change of control
Following the occurrence of a change of control, either (i) each lender under the Senior Facilities Agreement shall be entitled
to require prepayment of outstanding amounts and cancellation of its commitments within a prescribed time period or (ii)
the Group may elect that all outstanding undrawn commitments of each lender shall be cancelled and outstanding drawn
commitments shall become due and payable.
In addition, the Group will be required to make an offer to purchase all of the Fixed Rate Notes, the Floating Rate Notes and
the 4.75% senior unsecured notes due 2026 as a result of such change of control at a price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest.
888 Holdings PLC Annual Report & Accounts 2022
179
FINANCIAL STATEMENTS 23 BORROWINGS CONTINUED
Undrawn credit facilities
At 31 December 2022, the Group had the following undrawn credit facilities:
£150m Equivalent Multi-Currency Revolving Credit Facility
In July 2022, as part of the William Hill Group acquisition, the Group entered into a new Senior Facilities Agreement under
which its £50m revolving credit facility was replaced with a multi-currency revolving credit facility. The replacement facility
has an aggregate principal amount of £150m with a five and a half year maturity (maturing 31 December 2027). The drawn
balance on this facility at 31 December 2022 was £nil.
Financial Covenant
The Revolving Credit Facilities are subject to a Senior Facilities Agreement whereby any applicable revolving Incremental
Senior Facilities (together the “Financial Covenant Facilities”) are tested at the Financial year end to ensure that they do
not exceed a pre-agreed threshold to be agreed with the Mandated Lead Arrangers prior to the entry into the Senior
Facilities Agreement.
The directors are satisfied that, at the year-end, the net leverage ratio has not exceeded the pre-agreed threshold and,
as a consequence, the Financial Covenants have not been breached.
Overdraft facility
In July 2022, as part of the William Hill Group acquisition, the Group acquired an overdraft facility with National Westminster
Bank plc of £5.0m. The balance on this facility at 31 December 2022 was £nil.
Weighted average interest rates
The weighted average interest rates paid, including commitment fees, were as follows:
€473.5m term loan facility
$575.0m term loan facility
€582.0m Senior Secured Fixed Rate Notes
€450.0m Senior Secured Floating Rate Notes
£350.0m Senior Unsecured Fixed rate Notes
The Group had no borrowings in 2021 and as such no comparative is presented in the above table.
Net debt reconciliation
Debt
2023 Senior Unsecured Notes
2026 Senior Unsecured Notes
£351.8m term loan facility
£461.5m asset bridge loan
€473.5m term loan facility
$575.0m term loan facility
€582.0m Senior Secured
Fixed Rate Notes
€450.0m Senior Secured
Floating Rate Notes
Opening
£m
Inflows
£m
Acquired
£m
Outflows
£m
Fees on
debt
£m
Non-cash
£m
FV
adjustment
£m
—
—
—
—
—
—
—
—
—
—
—
347.0
—
420.4
479.1
517.0
399.6
2,163.1
352.3
351.9
—
461.5
—
—
—
—
(349.0)
(339.0)
(347.0)
(461.5)
(5.7)
(1.0)
—
—
1,165.7
(1,503.2)
—
—
—
—
(23.5)
(57.4)
(18.9)
(20.3)
(120.1)
—
—
—
—
1.7
3.5
0.9
0.9
7.0
(3.3)
(2.4)
—
—
—
—
—
—
(5.7)
31 December
2022
%
7.25%
11.47%
8.47%
7.58%
4.75%
FX
£m
—
—
—
—
(0.3)
(3.6)
Total
£m
—
10.5
—
—
392.6
420.6
(0.3)
498.7
(0.3)
(4.5)
379.9
1,702.3
180
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS
24 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks. Financial risk management is primarily carried out by the
Group’s Treasurer with reference to risk management policies approved by the Board and supervised by the Chief Financial
Officer. The Board approves written principles for risk management. The principal financial risks faced by the Group
comprise liquidity risk, financing risk, credit risk, interest rate risk, currency risk and pensions risk. These risks are managed
as described below.
The main financial instruments used by the Group, on which financial risk arises, are as follows:
• Cash and cash equivalents;
• Trade and other receivables;
• Investment in associates
• Trade and other payables;
• Customer deposits;
• Lease liabilities;
• Borrowings;
• Derivative financial instruments;
Detailed analysis of these financial instruments is as follows:
Assets at amortised cost
Investment in associates (note 14)
Cash and cash equivalents (note 20)
Trade and other receivables (note 19)
Designated cash flow hedging relationships
Derivative assets designated and effective as cash flow hedging instruments: (note 25)
– Cross-currency swaps
– Interest rate swaps
Total financial assets
Non-financial assets
Total assets
Fair value through the Income Statement
Ante post bets (note 25)
Liabilities at amortised cost
Borrowings (note 23)
Trade and other payables (note 21)
Customer deposits (note 21)
Lease liabilities (note 18)
Designated cash flow hedging relationships
Derivative assets designated and effective as cash flow hedging instruments: (note 25)
– Cross-currency swaps
– Interest rate swaps
Total financial liabilities
Non-financial liabilities
Total liabilities
Net assets
2022
£ million
2021
£ million
38.4
317.6
100.6
17.7
0.9
475.2
2,476.3
2,951.5
7.8
1,702.3
160.0
141.3
89.0
30.4
—
2,130.8
661.5
2,792.3
159.2
—
189.4
50.8
—
—
240.2
159.9
400.1
—
—
145.3
60.1
22.9
—
—
228.3
47.3
275.6
124.5
888 Holdings PLC Annual Report & Accounts 2022
181
FINANCIAL STATEMENTS
24 FINANCIAL RISK MANAGEMENT CONTINUED
Capital management and financing risk
The Group seeks to maintain an appropriate capital structure which enables it to continue as a going concern, supports its
business strategy and takes into account the wider economic environment. The Group’s capital comprises equity and debt
finance, and these elements are managed to balance the requirements of the Business and the interests of debt providers.
The Group manages its capital structure through cash flows from operations, the raising or repayment of debt and the
raising of equity capital from investors.
Financing risk is the risk that the Group is unable to access sufficient finance to refinance its debt obligations as they fall due.
The Group manages this risk by maintaining a balance between different funding sources including equity and debt. It seeks
to mitigate its debt financing risk by diversifying its sources of debt capital. The Board also seeks to mitigate the Group’s
refinancing risk by having an appropriately balanced debt maturity profile.
Credit risk
The Group is exposed to credit risk from counterparties defaulting on their obligations, resulting in financial loss to the Group.
It arises in relation to transactions with commercial counterparties and financial institutions. It also arises from customers who
have been granted access to credit facilities.
The Group manages its counterparty risk by closely monitoring and, where appropriate, limiting the amount that can
be deposited or accumulated with any one counterparty. The Group will only deposit funds with pre-approved financial
institutions with specified minimum credit ratings or strong balance sheet. The Group’s policy is to mitigate its credit risk with
respect to derivative transactions by using a number of different counterparties for material transactions.
Trade receivables
The Group’s credit risk is primarily attributable to trade receivables, most of which are due from the Group’s payment service
providers (PSP). These are third party companies that facilitate deposits and withdrawals of funds to and from customers’
virtual wallets with the Group. These are mainly intermediaries that transact on behalf of credit card companies.
The risk is that a PSP would fail to discharge its obligation with regard to the balance owed to the Group. The Group reduces
this credit risk by:
• Monitoring balances with PSPs on a regular basis;
• Arranging for the shortest possible cash settlement intervals;
• Replacing rolling reserve requirements, where they exist, with a Letter of Credit by a reputable financial institution;
• Ensuring a new PSP is only contracted following various due diligence and “Know Your Customer” procedures; and
• Ensuring policies are in place to reduce dependency on any specific PSP and as a limit any concentration of risk.
The Group considers that based on the factors above and on extensive past experience, the PSP receivables are of good
credit quality and there is a low level of potential bad debt as at the year-end amounting to £0.4m arising from a PSP failing
to discharge its obligation (2021: £0.4m). This has been charged to the consolidated income statement.
An additional credit risk the Group faces relates to customers disputing charges made to their credit cards (“chargebacks”)
or any other funding method they have used in respect of the services provided by the Group. Customers may fail to fulfil
their obligation to pay, which will result in funds not being collected. These chargebacks and uncollected deposits, when
occurring, will be deducted at source by the PSPs from any amount due to the Group. As such the Group provides for these
eventualities by way of an impairment provision based on analysis of past transactions. This provision is set off against trade
receivables and at 31 December 2022 was £1.0m (2021: £1.1m).
The Group’s in-house Fraud and Risk Management department carefully monitors deposits and withdrawals by following
prevention and verification procedures using internally-developed bespoke systems integrated with commercially-available
third party measures.
Cash and cash equivalents
The Group controls its cash position from its Gibraltar headquarters. Subsidiaries in its other main locations maintain minimal
cash balances as required for their operations. Cash settlement proceeds from PSPs, as described above, are paid into bank
accounts controlled by the Treasury function in Gibraltar.
The Group holds the majority of its funds with highly reputable financial institutions and will not hold funds with financial
institutions with a low credit rating save for limited balances for specific operational needs. The Group maintains its cash
reserves in highly liquid deposits and regularly monitors interest rates in order to maximise yield.
Client funds
Client funds are matched by customer liabilities and progressive prize pools of an equal value.
182
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 24 FINANCIAL RISK MANAGEMENT CONTINUED
Credit risk continued
Restricted short-term deposits
Restricted short-term deposits are short-term deposits held by banks primarily to support guarantees in respect of regulated
markets licence requirements and office leases.
The Group’s maximum exposure to credit risk is the amount of financial assets presented above, totalling £479.7m
(2021: £240.2m).
Liquidity risk
Liquidity risk is the risk that the Group has insufficient funds available to settle its liabilities as they fall due. The Group
generates strong operating cash flows and aims to maintain sufficient cash balances to meet its anticipated working
capital requirements based on regularly updated cash flow forecasts. Liquidity requirements that cannot be met from
operational cash flow or existing cash resources would be satisfied by drawings under the Group’s revolving credit facility and
overdraft facility.
The following table details the contractual maturity analysis of the Group’s financial liabilities (undiscounted payments):
Trade and other payables
Customer deposits
Borrowings
Derivatives and embedded derivatives
Lease liabilities – IFRS 16
Trade and other payables
Customer deposits
Lease liabilities – IFRS 16
On
demand
£ million
Less than
1 year
£ million
—
141.3
—
7.8
—
149.1
160.0
—
129.9
14.2
29.4
333.5
On
demand
£ million
Less than
1 year
£ million
—
60.1
—
60.1
145.3
—
5.0
150.3
2022
1 to 5
years
£ million
—
—
1,062.7
273.3
61.0
1,397.0
2021
1 to 5
years
£ million
—
—
16.6
16.6
More
than
5 years
£ million
—
—
1,319.5
—
8.7
Total
£ million
160.0
141.3
2,512.1
295.3
99.1
1,328.2
3,207.8
More
than
5 years
£ million
—
—
3.9
3.9
Total
£ million
145.3
60.1
25.5
230.9
Market risk
Currency risk
A substantial part of the Group’s deposits and revenues are generated in Pounds Sterling (‘GBP’), Euro (‘EUR’) and other
currencies, and its operating expenses are largely incurred in local currencies, primarily EUR, Israeli New Shekel (‘ILS’),
US Dollar (‘USD’), Canadian Dollar (‘CAD’) and Romanian leu (‘RON’), with incremental exposure to operating expenses in
Swedish krona and Polish Złoty (‘PLN’). The Group has debt servicing costs, which are denominated in USD and EUR. As a
result of this, the Group is exposed to the impact of foreign currency fluctuations. The Group mitigates its exposure to the
impact of foreign exchange fluctuations on its cost base by adopting policies to hedge certain costs. During 2022, the Group
entered into FX or cross currency swaps in order to hedge its ongoing USD and EUR exposure under the Senior Facilities
Agreement and its ongoing EUR exposure under the Existing Notes and Additional Notes. However, there can be no assurance
that such hedging will eliminate the potentially material adverse effect of such fluctuations.
The Group’s financial risk arising from exchange rate fluctuations is mainly attributed to:
• Mismatches between customer deposits, which are predominantly denominated in GBP, and the net receipts from
customers, which are settled in the currency of the customer’s choice.
• Mismatches between reported revenue, which is mainly generated in GBP (the Group’s reporting currency and the
functional currency of the majority of its subsidiaries), and a significant portion of deposits settled in local currencies.
• Expenses that are denominated in foreign currencies.
The Group continually monitors the foreign currency risk and takes steps, where practical, to ensure that the net exposure
is kept to an acceptable level. This includes the potential use of foreign exchange forward contracts designed to fix the
economic impact of known liabilities when considered appropriate.
888 Holdings PLC Annual Report & Accounts 2022
183
FINANCIAL STATEMENTS 24 FINANCIAL RISK MANAGEMENT CONTINUED
Market risk continued
Currency risk continued
The tables below detail the monetary assets and liabilities by currency:
Cash and cash equivalents
Trade and other receivables
Derivatives and embedded derivatives
Monetary assets
Trade and other payables
Customer deposits
Borrowings
Derivatives and embedded derivatives
Lease liabilities – IFRS 16
Monetary liabilities
Net financial position
Cash and cash equivalents
Trade and other receivables
Monetary assets
Trade and other payables
Customer deposits
Lease liabilities – IFRS 16
Monetary liabilities
Net financial position
2022
EUR
£ million
USD
£ million
Other
£ million
Total
£ million
119.2
47.7
15.4
182.3
(70.2)
(43.0)
(1,271.1)
(10.5)
(7.5)
(1,402.3)
(1,220.0)
55.1
12.3
3.2
70.6
(43.1)
(50.5)
(420.7)
(21.0)
(0.5)
(535.8)
(465.2)
2021
143.3
40.6
—
183.9
(46.7)
(47.8)
(10.5)
(6.7)
(81.0)
317.6
100.6
18.6
436.8
(160.0)
(141.3)
(1,702.3)
(38.2)
(89.0)
(192.7)
(2,130.8)
(8.8)
(1,694.0)
EUR
£ million
USD
£ million
Other
£ million
Total
£ million
48.4
17.2
65.6
(23.2)
(15.0)
(8.3)
(46.5)
19.1
70.9
3.7
74.6
(39.3)
(28.5)
(0.1)
(67.9)
6.7
70.1
29.9
100.0
(82.8)
(16.6)
(14.5)
(113.9)
(13.9)
189.4
50.8
240.2
(145.3)
(60.1)
(22.9)
(228.3)
11.9
Sensitivity analysis
The table below details the effect on profit before tax of a 10% strengthening (and weakening) in the GBP exchange rate
at the balance sheet date for balance sheet items denominated in Euros:
10% strengthening
10% weakening
EUR
£ million
28.9
(28.9)
There is no comparative shown as the Group’s balance sheet was translated from USD in that year.
Interest rate risk
The Group’s exposure to interest rate risk is limited to the interest-bearing deposits in which the Group invests surplus funds.
The Group’s policy is to invest surplus funds in low-risk money market funds and in interest bearing bank accounts. The Group
arranges for excess funds to be placed in these interest-bearing accounts with its principal bankers in order to maximise
availability of funds for investments.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and
borrowings affected. With all other variables held constant, the Group’s profit before tax is affected through the impact on
floating rate borrowings, as follows:
Increase/(decrease) in profit
Increase/(decrease) in equity reserves
The Group had no borrowings in 2021 and therefore had no exposure to interest rate risk.
184
888 Holdings PLC Annual Report & Accounts 2022
2022
Increase of
100 basis
points
£ million
Decrease of
100 basis
points
£ million
3.4
3.4
3.4
3.4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 24 FINANCIAL RISK MANAGEMENT CONTINUED
Cross Currency Swaps and Interest Rate Swaps
The Group has executed a series of USD to GBP cross-currency swaps and EUR to GBP cross-currency swaps in order to
hedge certain of its USD and floating rate exposure under Euro and USD debt.
As at 31 December 2022, the Group had entered into cross currency swaps in total of US$ 407m and €482m to hedge both
the currency risk and interest rate risk. In addition, the Group entered into an Interest swap of €150m to hedge the interest
rate risk.
25 FINANCIAL INSTRUMENTS
On acquisition, under IFRS 3 ‘Business Combinations’, the assets and liabilities of William Hill were recorded at fair value. Refer
to note 16 for details of values and valuation methods used.
The hierarchy (as defined in IFRS 13 ‘Fair Value Measurement’) of the Group’s financial instruments carried at fair value as at
31 December 2022 was as follows:
Financial assets
Cross-currency swaps
Interest rate swaps
Financial liabilities
Cross-currency swaps
Interest rate swaps
Ante post bet liabilities
Contingent consideration (note 16)
Contractual
/notional
amount
£ million
397.1
132.2
529.3
365.3
—
—
100.0
465.3
2022
Level 1
£ million
Level 2
£ million
Level 3
£ million
—
—
—
—
—
—
—
—
17.7
0.9
18.6
30.4
—
—
—
30.4
—
—
—
—
—
7.8
0.4
8.2
The Group did not have any financial instruments carried at fair value during the year ended 31 December 2021.
Ante post bets
Ante post bets are a liability arising from an open position at the period end date in accordance with the Group’s
accounting policy for derivative financial instruments. Ante post bets at the period end totalled £7.8m and are classified
as current liabilities.
Ante post bet liabilities are valued using methods and inputs that are not based upon observable market data and all fair
value movements are recognised in revenue in the Income Statement. Although the final value will be determined by future
betting outcomes, there are no reasonably possible changes to assumptions or inputs that would lead to material changes
in the fair value determined. The principal assumptions relate to the Group’s historical gross win margins by betting markets
and segments. Although these margins vary across markets and segments, they are expected to stay broadly consistent
over time, only varying in the short term. The gross win margins are reviewed annually at period end. As at 31 December 2022,
the gross win margins ranged from 2%-25%.
A reconciliation of movements in the ante post bets liability in the year is provided below.
At 31 December 2021
Acquired via business combination
To profit or loss
At 31 December 2022
Ante post
bet
liabilities
£ million
—
3.5
4.3
7.8
Total
£ million
—
3.5
4.3
7.8
888 Holdings PLC Annual Report & Accounts 2022
185
FINANCIAL STATEMENTS
25 FINANCIAL INSTRUMENTS CONTINUED
Hedging activities
The table below illustrates the effects of hedge accounting on the consolidated statement of financial position and
consolidated income statement by disclosing separately by risk category each type of hedge and the details of the
associated hedging instrument and hedge item. These are for items designated as in a cash flow hedging relationship.
Change in
fair value
in period for
calculating
ineffectiveness
(hedging
instrument)
£ million
Cash
settlements
and accruals
in the period
(hedging
instrument)
£ million
Change in
fair value
in period for
calculating
ineffectiveness
(hedged item)
£ million
Cash
settlements
and accruals
in the period
(hedged
item)
£ million
Hedge
ineffectiveness
in the period
£ million
1.0
1.0
5.1
(17.8)
(12.7)
—
—
(1.4)
(2.3)
(3.7)
0.9
0.9
4.7
(18.7)
(14.0)
—
—
(1.4)
(2.3)
(3.7)
(0.1)
(0.1)
(0.4)
(0.9)
(1.3)
Carrying
amount
£ million
1.0
1.0
5.1
(17.8)
(12.7)
Interest rate swaps
EUR trades
Total
Cross-currency swaps
EUR trades
USD trades
Total
The Group did not have any hedge accounting during the year ended 31 December 2021.
Cash flow hedging reserve
The following table identifies the movements in the cash flow hedging reserve during the year for items designated as in
a cash flow hedging relationship:
Reclassification in the period
Opening
balance
£ million
Change in
fair value
recorded
in OCI
£ million
Fixed
assets
£ million
Interest
expense
£ million
FX
remeasurement
£ million
Missed
forecast
£ million
Closing
balance
£ million
—
—
—
—
—
(0.8)
(0.8)
(3.3)
22.2
18.9
—
—
—
—
—
—
—
(1.4)
(3.4)
(4.8)
—
—
12.7
(11.7)
1.0
—
—
—
—
—
(0.8)
(0.8)
8.0
7.2
15.2
Interest rate swaps
EUR trades
Total
Cross-currency swaps
EUR trades
USD trades
Total
Cost of hedging reserve
The following table identifies the movements in the cash flow hedging reserve during the year for items designated as in a
cash flow hedging relationship:
Opening balance
Time
value
£m
Currency
basis
£m
Change in fair value
recorded in OCI
Reclassifications
during the period
Time
value
£m
Currency
basis
£m
Time
value
£m
Currency
basis
£m
Closing balance
Time
value
£m
Currency
basis
£m
Designated cash
flow hedging
relationships
Cross-currency
swaps
EUR trades
USD trades
Total
—
—
—
—
—
—
—
—
—
(0.1)
(1.2)
(1.3)
—
—
—
—
0.3
0.3
—
—
—
(0.1)
(0.9)
(1.0)
186
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS
25 FINANCIAL INSTRUMENTS CONTINUED
Contractual maturity analysis
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities for net and gross settled derivative financial instruments.
The amounts disclosed in the table are the contractual undiscounted cash flows:
Interest rate swaps
Cross currency swaps
EUR trades
USD trades
Total
On
demand
£ million
Less than
1 year
£ million
—
—
—
—
—
(6.2)
(8.0)
(14.2)
2022
1 to 5
years
£ million
—
316.9
(43.6)
273.3
More
than
5 years
£ million
—
—
—
—
Total
£ million
—
310.7
(51.6)
259.1
26 DEFERRED TAX
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. The Group’s deferred tax assets
and liabilities resulting from temporary differences, some of which are expected to be settled on a net basis, are as follows:
As at
1 January
2022
£ million
Acquisition of
William Hill
£ million
Prior year
adjustments
£ million
Exchange
differences
£ million
Credit/
(charge)
to income
£ million
Exceptional
credit
to income
£ million
Exceptional
charge
to OCI
£ million
As at
31 December
2022
£ million
Fixed asset
temporary
differences
Intangible
assets
Other
temporary
differences
Restricted
interest
Tax credits
Tax losses
Total
1.6
0.6
(2.7)
(252.0)
1.4
—
—
—
0.3
3.5
11.6
—
0.1
(236.2)
As at
1 January
2021
£ million
1.1
(2.6)
1.8
—
—
—
0.3
3.0
1.9
(0.8)
13.1
0.4
—
17.6
0.3
0.7
(0.1)
—
(0.2)
—
0.7
(6.6)
12.7
(4.9)
(10.3)
(0.2)
3.9
(5.4)
—
8.4
—
—
—
—
8.4
—
—
(1.1)
(231.0)
(0.6)
(1.5)
—
—
—
14.4
—
4.0
(0.6)
(215.2)
Prior year
adjustments
£ million
Exchange
differences
£ million
Credit/
(charge)
to income
£ million
Exceptional
credit
to income
£ million
Exceptional
charge
to OCI
£ million
As at
31 December
2021
£ million
Fixed asset temporary
differences
Intangible assets
Other temporary differences
Restricted interest
Tax credits
Tax losses
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.5
(0.1)
(0.2)
—
—
—
0.2
—
—
—
—
—
—
—
Reflected in the statement of financial position as follows:
Deferred tax assets
Deferred tax liabilities
—
—
(0.2)
—
—
—
(0.2)
1.6
(2.7)
1.4
—
—
—
0.3
2022
£ million
2021
£ million
5.2
(220.4)
2.2
(1.9)
888 Holdings PLC Annual Report & Accounts 2022
187
FINANCIAL STATEMENTS 26 DEFERRED TAX CONTINUED
Tax rates
The enacted future rate of UK corporation tax of 25.0% (31 December 2021: 19%), the Gibraltar statutory income tax rate of
12.5% (31 December 2021: 12.5%), the Maltese effective tax rate of 35.0% (31 December 2021: 5%) and the Irish effective tax
rate of 12.5% (31 December 2021: 12.5%) have been used to calculate the amount of deferred tax.
Tax losses
The Group has recognised £5.2m (31 December 2021: £2.8m) of deferred tax assets, including £4.0m (31 December 2021: £nil)
in respect of unutilised tax losses which are available in companies which are anticipated to make future profits.
The losses in Gibraltar arising in 2022 of £4.0m are due to a temporary tax incentive for capital expenditure in Gibraltar and
the Group’s operations in Gibraltar remain profitable in the absence of this adjustment and show forecast accounting and
taxable profits for 2023 and future periods. 2022 is the last year in which the temporary tax incentive is expected to apply.
All losses and tax credits, recognised and unrecognised, may be carried forward indefinitely.
Management have based their assessment of the recognition of deferred tax assets on unused tax losses of £63.8m
(31 December 2021: £32.0m) at the period end on the forecast also used for the impairment review.
Restricted interest
Restricted interest represents a deferred tax asset of £14.4m (31 December 2021: £nil) in relation to interest restrictions
for which an asset has been recognised to the extent that sufficient taxable temporary differences exist at the balance
sheet date.
Other temporary differences
Certain deferred tax assets and liabilities have been offset in the above analysis. The deferred tax liability for other
temporary differences of £1.5m includes deferred tax assets of £0.8m offset by deferred tax liabilities in other
jurisdictions of £2.3m.
Included within other temporary differences is a liability of £1.8m (31 December 2021: nil) which has been recognised in
respect of taxes that will be due on a repatriation of funds from the Groups overseas operations.
Unrecognised deferred tax attributes
Deferred tax is not recognised in respect of the value of the Group’s investments in subsidiaries and interests in joint ventures
where we are able to control the timing of the reversal of the temporary differences and it is probable that such differences
will not reverse in the future. The amount of the temporary differences for which deferred tax has not been recognised was
£17.2m (and tax thereon £1.5m) (31 December 2021: nil).
The Group has unutilised tax losses of £63.8m (31 December 2021: £32.0m) in entities which are not anticipated to make
profits in the foreseeable future and for which no deferred tax has been recognised.
27 SHARE CAPITAL
Share capital comprises the following:
Ordinary Shares of £0.005 each
1,026,387,500 1
1,026,387,500
5.1
5.1
1. Including 447,020 treasury shares held by the Group as at 31 December 2022 (2021: 307,422).
Authorised
31 December
2022
Number
31 December
2021
Number
31 December
2022
£ million
31 December
2021
£ million
Ordinary Shares of £0.005 each at beginning of year
Issue of Ordinary Shares of £0.005 each
31 December
2022
Number
372,759,202
73,572,454
Ordinary Shares of £0.005 each at end of year
446,331,656
372,759,202
Allotted, called up and fully paid
31 December
2021
Number
31 December
2022
£ million
31 December
2021
£ million
369,017,422
3,741,780
1.9
0.3
2.2
1.9
—
1.9
The narrative below includes details on issue of Ordinary Shares of £0.005 each as part of the Group’s employee share
option plan during 2022 and 2021:
On 7 April 2022 the Company issued 70.8 million new ordinary shares to partly fund the acquisition of the international (non-US)
business of William Hill, representing approximately 19% of its issued capital, at £2.30 per share. After issue costs of £4.3 million,
the net proceeds were £158.5 million. Issue costs directly attributable to the transaction have been accounted for as a
deduction from share premium.
188
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 28 SHARE BASED PAYMENTS
Equity-settled share benefit charges
As at 31 December 2022 the Group has equity-settled employee shares and share options granted under two equity-settled
employee share incentive plans – the 888 All-Employee Share Plan (“AEP”), which expired according to its terms in August 2015, and
the 888 Long-Term Incentive Plan 2015 (“LTIP”) which was adopted at the Extraordinary General Meeting on 29 September 2015.
The 888 Long-Term Incentive Plan 2015 is open to employees (including Executive Directors) and full-time consultants of the
Group, at the discretion of the Remuneration Committee. Awards under this scheme will vest in instalments over a fixed period
of at least three years subject to the relevant individuals remaining in service. Certain of these awards are subject to additional
performance conditions imposed by the Remuneration Committee at the dates of grant, further details of which are given in
the Directors’ Remuneration Report.
In addition, on 8 May 2017, the Board adopted a Deferred Share Bonus Plan (“DSBP”) in order to allow the Company to
comply with the requirement contained in its Remuneration Policy pursuant to which any annual bonus payment made to
an Executive Director in excess of 100% of such Executive Director’s annual salary is deferred into equity awards of the
Company in the form of nil cost options or share awards.
After the acquisition of William Hill, certain equity-settled employee share incentives were granted to members of William
Hill’s senior management. Awards under this scheme will vest in instalments over a three-year period, subject to the relevant
individuals remaining in service. These incentives are included as a part of the LTIP scheme referenced above.
The Company grants equity awards under which shares of the Company are issued to employees at nil consideration.
The nominal value of such shares is covered internally.
Details of equity settled shares as part of the AEP, the LTIP and the DSBP are set out below:
Ordinary Shares granted (without performance conditions)
Outstanding future vesting equity awards at the beginning of the year
Future vesting equity awards granted during the year
Future vesting equity awards lapsed during the year
Shares issued upon vesting during the year
Outstanding future vesting equity awards at the end of the year
Averaged remaining life until vesting
Deferred Share Bonus Plan
Outstanding future vesting equity awards at the beginning of the year
Future vesting equity awards granted during the year
Shares exercised during the year
Outstanding future vesting equity awards at the end of the year
Averaged remaining life until vesting
2022
Number
2021
Number
5,446,420
3,269,343
(821,961)
(1,340,207)
6,553,595
1.27 years
5,541,569
2,801,667
(286,830)
(2,609,986)
5,446,420
1.68 years
2022
Number
307,422
220,225
(217,379)
2021
Number
196,488
220,225
(109,291)
310,268
0.81 years
307,422
0.62 years
The aforementioned grants under the DSBP were approved by the Board as part of the annual bonus award to the Executive
Directors and Operational Management for 2016–2021, pursuant to which an amount equal to 100% of salary was granted in
cash, with any addition exceeding 100% of salary deferred into shares of the Company. The outstanding future vesting equity
awards at the end of the year are set out below:
(i) 10 March 2022 to the CEO (196,141 Shares), the CFO (54,123 Shares) and Operational Management (106,713 Shares),
(ii) 18 March 2021 to the CEO (42,490 Shares) and the CFO (3,953 Shares),
(iii) 16 April 2020 to the CEO (7,182 Shares), the then former CEO and CFO (36,418 Shares).
Ordinary Shares granted for future vesting are valued at the share price at grant date, which the Group considers
approximates to the fair value. The Group recognised the following as treasury shares as of 31 December 2023:
(i) 11 March 2022, the Group purchased 356,977 shares on the open market at an average price of 193.0¢ per share,
(ii) 22 March 2021, the Group purchased 220,225 shares on the open market at an average price of 362.0¢ per share,
(iii) 29 April 2020, the Group purchased 130,796 shares on the open market at an average price of 143.7¢ per share, of which
43,599 shares were exercised during the year.
888 Holdings PLC Annual Report & Accounts 2022
189
FINANCIAL STATEMENTS 28 SHARE BASED PAYMENTS CONTINUED
Ordinary shares granted (subject to performance conditions)
Outstanding at the beginning of the year
Shares granted during the year
Lapsed future vesting shares
Shares issued during the year
Outstanding at the end of the year
Averaged remaining life until vesting
2022
Number
2021
Number
3,208,384
1,006,013
(353,333)
(1,425,743)
3,936,354
530,976
(127,152)
(1,131,794)
2,435,321
1.28 years
3,208,384
0.84 years
Shares granted during the year were 1,006,013 (2021: 530,976). The share price at the grant date was 187.2¢. Shares
outstanding at the end of the year consist of 2,435,321 shares subject to 50% EPS growth target, and 50% total shareholder
return (TSR) compared to a peer group of companies.
Further details of performance conditions that have to be satisfied on these awards are set out in the directors’ remuneration
report. The EPS growth target is taken into account when determining the number of shares expected to vest at each
reporting date, and the TSR target is taken into account when calculating the fair value of the share grant.
Valuation information – shares granted under TSR condition:
Shares granted during the year:
Share pricing model used
Determined fair value
Number of shares granted
Average risk-free interest rate
Average standard deviation
Average standard deviation of peer group
Valuation information – shares granted
Weighted average share price at grant date
Weighted average share price at issue of shares
2022
2021
Monte Carlo Monte Carlo
£2.45
265,488
0.1%
46%
48%
£1.15
503,007
0.1%
46%
53%
2022
2021
Without
performance
conditions
With
performance
conditions
Without
performance
conditions
With
performance
conditions
£1.55
£2.08
£1.87
£1.95
£3.67
£3.69
£3.49
£3.53
Ordinary shares granted for future vesting with EPS growth performance conditions are valued at the share price at grant
date, which the Group considers approximates to the fair value. The restrictions on the shares during the vesting period,
primarily relating to non-receipt of dividends, are considered to have an immaterial effect on the share option charge.
In accordance with IFRS 2 a charge to the consolidated income statement in respect of any shares or options granted under
the above schemes is recognised and spread over the vesting period of the shares or options based on the fair value of the
shares or options at the grant date, adjusted for changes in vesting conditions at each balance sheet date. These charges
have no cash impact.
Share benefit charges
Equity-settled charge for the year
Cash-settled charge for the year
Total share benefit charges
2022
£ million
2021
£ million
7.9
(2.7)
5.2
5.2
0.9
6.1
190
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 29 RETIREMENT BENEFIT SCHEMES
William Hill pension schemes
On acquisition, the Group acquired a number of defined contribution and defined benefit pension schemes, operated by
William Hill. The UK schemes are operated under a single trust and the assets of all the schemes are held separately from
those of the Group in funds under the control of trustees.
The respective costs of these schemes are as follows:
Defined contribution schemes (charged to operating(loss)/profit)
Defined benefit scheme (charged to operating(loss)/profit)
2022
£ million
4.3
1.3
Defined contribution schemes
The defined contribution schemes, to which both the Group and employees contribute to fund the benefits, are available for
all eligible employees. The only obligation of the Group with respect to these schemes is to make the specified contributions.
The total cost charged to income in respect of these schemes represents contributions payable to the schemes by the Group
at rates specified in the rules of the respective schemes. At 31 December 2022, contributions of £nil due in respect of the
current reporting period were outstanding to be paid over to the schemes.
Defined benefit scheme
The Group also operates a defined benefit scheme in the UK for eligible employees which closed to new members in 2002.
Under the scheme, employees are entitled to retirement benefits varying between 1.67% and 3.33% of final pensionable pay
for each year of service on attainment of a retirement age of 63. With effect from 1 April 2011, the defined benefit scheme
was closed to future accrual but maintains the link for benefits accrued up to 31 March 2011 with future salary increases (up
to a maximum of 5% per annum). Employed members of this scheme were automatically transferred into one of the defined
contribution schemes. The costs of administering the scheme are borne by the Group.
For the purposes of preparing the information disclosed in these accounts, a full actuarial valuation of the scheme was
carried out at 30 September 2019 and updated to 31 December 2022 by a qualified independent actuary. The present values
of the defined benefit obligation and the related current service cost were measured using the projected unit credit method
and by rolling forward the results of the 30 September 2019 technical provisions using actuarial techniques, allowing for
cash flows and interest over the period, differences between the assumptions used to set the technical provisions and those
selected for accounting under IAS 19, experience from making an allowance for actual deferred revaluation and pension
increases in payment over the period and the PIE exercise carried out in 2019.
Pension buy-in
During 2021, prior to the acquisition by the Group of William Hill, William Hill agreed a buy-in of the scheme’s liabilities. On
28 June 2021, a transaction was completed which insured the liabilities of the scheme with Rothesay Life. As a result of the
transaction, the scheme holds annuities with Rothesay Life which are qualifying insurance policies as defined in IAS 19.8
‘Employee benefits’. The income from these policies exactly matches the amount and timing of all benefits to those members
covered under the policies. As with other bulk annuity purchases the Scheme has carried out, the change was treated as a
change in investment strategy.
At the year-end date, the estimated Defined Benefit Obligation (‘DBO’) for all insured members was £255.4m. The value of
the buy-in policies was determined to be £254.2m, as the effects of GMP equalisation was not included in the contract value
of the buy-in insurance policy. As a result, £1.2m is recognised in the Statement of Financial Position as a non-current liability.
Funding valuation
The general principles adopted by the Trustees for the purposes of this funding valuation are that the assumptions used,
taken as a whole, will be sufficiently prudent for pensions already in payment to continue to be paid and to reflect the
commitments which will arise from members’ accrued pension rights. The William Hill group agreed to pay £1.9m per annum
in respect of the costs of insured death benefits, expenses and levies until September 2025.
The William Hill group has the right to a refund of any surplus on wind up of the scheme.
In April 2018, the Trustees of the William Hill pension scheme signed a buy-in bulk annuity policy. The policy was taken out to
insure a proportion of the defined benefit pension scheme obligation against the risk of rising costs in the future. As a result
of the buy-in transaction in the period, the entire scheme obligations are now insured.
888 Holdings PLC Annual Report & Accounts 2022
191
FINANCIAL STATEMENTS
29 RETIREMENT BENEFIT SCHEMES CONTINUED
William Hill pension schemes continued
Disclosure of principal assumptions
The financial assumptions used by the actuary in determining the present value of the defined benefit scheme’s
liabilities were:
Rate of increase of salaries
Rate of increase of pensions (non-pensioner)
Rate of increase of pensions (pensioner)
Discount rate
Rate of RPI inflation (non-pensioner)
Rate of RPI inflation (pensioner)
Rate of CPI inflation
2022
%
n/a
3.0
3.3
4.7
3.1
3.4
2.5
In accordance with the relevant accounting standard, the discount rate has been determined by reference to market yields
at the period end date on high-quality fixed income investments at a term consistent with the expected duration of the
liabilities. Price inflation is determined by the difference between the yields on fixed and index-linked Government bonds with
an adjustment to allow for differences in the demand for these bonds, which can distort this figure. The expected rate of
salary growth and pension increases are set with reference to the expected rate of inflation. No change has been made to
the basis of inflation applied to pension increases in the scheme.
The mortality assumption is kept under review and has been updated. The current life expectancies for a member underlying
the value of the accrued liabilities are:
Life expectancy at age 65
Male retiring now
Male retiring in 25 years’ time
Female retiring now
Female retiring in 25 years’ time
The assets in the scheme are set out in the table below.
Total market value of assets
Present value of scheme liabilities
Deficit in scheme at end of year
Analysis of the amount charged/(credited) to adjusted profit before interest and tax:
Current service cost
Administration expenses
Total operating charge
Analysis of the amounts recognised in the Consolidated Statement of Comprehensive Income:
Actual return less expected return on pension scheme assets
Actuarial gain on demographic assumptions
Actuarial loss on experience adjustment
Actuarial loss arising from changes in financial assumptions
Actuarial loss remeasurements
2022
years
21.9
23.6
23.9
25.8
2022
£ million
254.2
255.4
1.2
2022
£ million
0.4
0.9
1.3
2022
£ million
36.2
(0.8)
3.0
(38.1)
0.3
192
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 29 RETIREMENT BENEFIT SCHEMES CONTINUED
William Hill pension schemes continued
Disclosure of principal assumptions continued
Movements in the present value of defined benefit obligations in the period were as follows:
At acquisition 1 July 2022
Movement in period:
Service cost
Interest cost
Remeasurements – changes in financial assumptions
Remeasurements – changes in demographic assumptions
Remeasurements – experience adjustments
Benefits paid
Insurance premium for risk benefits
At end of year
Movements in the present value of fair value of scheme assets in the period were as follows:
At acquisition 1 July 2022
Movement in period:
Interest income on plan assets
Remeasurements – return on plan assets (excluding interest income)
Contributions from sponsoring companies
Administration expenses charged to operating (loss)/profit
Benefits paid
Insurance premium for risk benefits
At end of year
2022
£ million
293.1
0.4
5.3
(38.1)
(0.8)
3.0
(7.1)
(0.4)
255.4
2022
£ million
292.7
5.3
(36.2)
0.8
(0.9)
(7.1)
(0.4)
254.2
Sensitivity analysis of the principal assumptions used to measure scheme liabilities
The sensitivity of the present value of the scheme’s liabilities to changes in the principal assumptions used to measure these
liabilities is illustrated in the table that follows. The illustrations consider the single change shown, with the other assumptions
assumed to be unchanged. In practice, changes in one assumption may be accompanied by offsetting changes in another
assumption (although this is not always the case). The change to the inflation sensitivity allows for changes to pension
increases in deferment and in payment. Although the analysis does not take account of the full distribution of cash flows
expected, it does provide an approximation of the sensitivity of the assumptions shown.
In addition, as the scheme is now fully bought-in, any changes in the value of the scheme’s liabilities due to changes in the
underlying assumptions will be matched by changes in the value of the scheme’s assets (which are measured in line with the
obligations). There would therefore be a nil net balance sheet impact from these sensitivities.
Assumption
Changes in assumption
Impact on defined benefit obligation
Discount rate
Discount rate
Rate of increase in inflation
Rate of increase in inflation
Life expectancy
Decrease by 0.25% p.a.
Increase by 0.25% p.a.
Increase by 0.25% p.a.
Decrease by 0.25% p.a.
Members assumed to live one year longer
Increase by £9.0m
Decrease by £9.0m
Increase by £6.0m
Decrease by £7.0m
Increase by £10.0m
The sensitivity to price inflation includes the corresponding impact on CPI, revaluation in deferment and pension increases
in payment. It does not include any adjustments to future salary increases.
Nature and extent of the risks arising from financial instruments held by the defined benefit scheme
Through the scheme, following the buy-in, the main risk that the Group has is counterparty risk, with the Insurance company
backing the majority of the policies with the exception GMP equalisation which is not included in the contract value of the
buy-in insurance policy.
At the year-end date, the estimated Defined Benefit Obligation (‘DBO’) for all insured members was £255.4m. The value of the
buy-in policies was determined to be £254.2m.
888 Holdings PLC Annual Report & Accounts 2022
193
FINANCIAL STATEMENTS 29 RETIREMENT BENEFIT SCHEMES CONTINUED
William Hill pension schemes continued
Funding
Alongside the risk assessment above, on 30 September 2020, the Group agreed an ongoing funding requirement with the
Trustees which expires on 30 September 2025.
The weighted average duration of the scheme’s defined benefit obligation as at 31 December 2022 is 15 years.
The undiscounted maturity profile of the defined benefit obligation between one and ten years is shown below:
Less than one year
Between one and two years
Between two and five years
Between five and ten years
2022
£ million
12.7
13.4
45.7
71.7
No allowance is made for commutation lump sums or individual transfers out due to the fluctuating nature of these payments.
30 RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note. Transactions between the Group and its associate are disclosed below.
Trading transactions
Associates
As part of the William Hill acquisition, the Group acquired Sports Information Services (Holdings) Limited, an associate of
the William Hill Group. From 1 July to the balance sheet date, the Group made purchases of £15.8m from Sports Information
Services Limited, a subsidiary of Sports Information Services (Holdings) Limited. At 31 December 2022, the amount payable
to Sports Information Services Limited by the Group was £nil.
Remuneration of Key Management Personnel
The aggregate amounts payable to key management personnel, considered to be the Directors of the Company, as well
as their share benefit charges, are set out below:
Short-term benefits
Post-employment benefits
Share benefit charges – equity-settled
2022
£ million
2021
£ million
2.9
0.1
2.4
7.4
3.6
0.1
1.0
4.7
Further details on Directors’ remuneration are given in the Directors’ Remuneration Report.
31 CONTINGENT LIABILITIES
Legal claims
In common with other businesses in the gambling sector the Group receives claims from consumers relating to the provision
of gambling services. Claims have been received from consumers in a number of (principally European) jurisdictions and
allege either failure to follow responsible gambling procedures, breach of licence conditions or that underlying contracts in
question are null and void given local licencing regimes. The Group expenses consumer claims as they are resolved or finally
determined in consumers’ favour and provides for such claims where an outcome in favour of the consumers in question
is probable.
The Business has been subject to a particular acceleration of claims in Austria since 2020 following marketing campaigns by
litigation funders in that jurisdiction. Claims have continued to be received throughout 2021 and 2022 at a broadly consistent
rate with a slight acceleration across 2021 and 2022. Consumers who have obtained judgement against the Business’ entities
in the Austrian courts have sought to enforce those judgements in Malta and Gibraltar. These are being defended on the
basis of a public policy argument. The provisions held for the Group relating to these claims is £86.2m, which includes a
liability measured at fair value on acquisition of £80.6m relating to the William Hill and Mr Green brands and provision of
£5.6m relating to 888. Please refer to note 22 for further detail.
The £80.6m relating to the William Hill and Mr Green brands was recognised on acquisition representing the fair value of the
contingent liability at that point in time, recognised on the basis that it was a possible future liability and in line with IFRS 3.
Please refer to note 16 for further detail.
Since acquisition, there has been an alignment in strategy and accounting treatment with William Hill and Mr Green aligning
to the 888 methodology. William Hill and Mr Green have therefore recognised a provision for probable legal claims and
a contingent liability for possible legal claims it expects to receive. As at 31 December 2022, the provision is estimated at
£67.0m and the contingent liability is estimated at £13.5m. The contingent liability for the 888 business is estimated at £5.2m.
194
888 Holdings PLC Annual Report & Accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 31 CONTINGENT LIABILITIES CONTINUED
Legal claims continued
The calculation of the customer claims liability includes provision for interest but is gross of gaming tax. Management have
assessed that it is probable as opposed to virtually certain that the tax will be reclaimed and therefore a contingent asset
has been disclosed for the tax reclaims. The contingent asset relating to the tax reclaim on the total liability (both provided
for and disclosed as a contingent liability) is a range in value of up to £24.5m.
Regulatory compliance
Given the nature of the legal and regulatory landscape of the industry, from time to time the Group has self-reported or
received notices, communications and legal actions from regulatory authorities and other parties in respect of its activities.
The Group is furthermore subject to regular compliance assessments of its licensed activities, from time to time. The Group’s
policy is to engage in dialogue with regulators and address any concerns raised in such assessments, to work cooperatively
with the regulator and to take action to address any concerns raised as part of the assessment as soon as possible. The
Group takes legal advice as to the manner in which it should respond and the likelihood of success of such actions. Based on
this advice and the nature of the actions, for the majority of these matters the Board is unable to quantify reliably the outflow
of funds that may result, if any.
For matters where an outflow of funds is probable and can be measured reliably, amounts have been recognised in the
financial statements within Provisions. Except for the regulatory matters described in note 22, these amounts are not material
at 31 December 2022.
32 EVENTS AFTER THE REPORTING DATE
In January 2023, an internal compliance team self-identified failures where the Group’s safer gambling policies were not being
effectively applied. Further investigations identified similar accounts which were later confirmed to be a broader issue within
a specific cohort of players, namely 888 VIPs in the Middle East. The Board, once fully briefed, took the prudent decision to
suspend all of these accounts while the compliance team investigated the situation further. The investigation has concluded
and the Group has remedied the failings and is confident that its policies and procedures are robust, and this failure was
isolated to a very specific cohort of players. It has successfully started reopening accounts and currently expects to recover
40-50% of this revenue.
888 Holdings PLC Annual Report & Accounts 2022
195
FINANCIAL STATEMENTS 33 INVESTMENTS IN SIGNIFICANT SUBSIDIARIES
The consolidated financial statements include the following principal subsidiaries of 888 Holdings plc:
Country
Malta
Gibraltar
Delaware
Gibraltar
Cayman Islands
Gibraltar
Malta
Malta
Malta
Malta
Percentage
of equity
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Nature of business
Holds Irish online betting licence
Acquisition vehicle for the William Hill purchase
Dormant Company
Holds New Jersey CSIE licence
Holding Company
Dormant Company
Holds Danish online gaming licence
Dormant Company
Holds German online gaming licences
Holds Italian online gaming licence
Name
888 (Ireland) Limited
888 Acquisitions Limited
888 Acquisitions LLC
888 Atlantic Limited
888 Cayman Finance Limited
888 CZ Limited
888 Denmark Limited
888 France Limited
888 Germany Limited
888 Italia Ltd
888 Liberty Ltd
888 Netherlands Limited
888 Online Games España, S.A.
888 Portugal Ltd
888 Romania Limited
888 Sweden Limited
888 UK Limited
888 US Holdings Inc.
888 US Inc.
888 US Ltd
888 US Services Inc.
Gibraltar
Malta
Ceuta
Malta
Malta
Malta
Gibraltar
Delaware
Delaware
Gibraltar
Delaware
888 VHL UK Holdings Limited
A.J.Schofield Limited (in liquidation)
AAPN Holdings LLC
AAPN New Jersey LLC
Ad-Gency Limited (in liquidation)
Admar Services (Gibraltar) Limited
Admar Services (Malta) Limited
Alfabet S.A.S
Arena Racing Limited
B.B.O'Connor (Lottery) Limited
B.J.O'Connor Holdings Limited
B.J.O'Connor Limited
United Kingdom
United Kingdom
Delaware
New Jersey
Israel
Gibraltar
Malta
Colombia
United Kingdom
Jersey
Jersey
Jersey
United Kingdom
United Kingdom
Gibraltar
United Kingdom
United Kingdom
United Kingdom
Baseflame Limited (in liquidation)
Bradlow Limited
Brigend Limited
Brooke Bookmakers Limited
Camec (Scotland) Limited
Camec (Southern) Limited
(in liquidation)
Camec Limited
Cassava Enterprises (Gibraltar) Ltd
Cassava Holdings Limited
Cellpoint Investments Limited
City Tote Limited (in liquidation)
Concession Bookmakers Limited
(in liquidation)
Dansk Underholdning Limited
Deluxe Online Limited (in liquidation) United Kingdom
United Kingdom
Deviceguide Limited
Antigua & Barbuda
Dixie Operations Limited
Malta
Entertainment Ventures Europe
2019 Limited
Evenmedia Limited (In liquidation)
United Kingdom
Gibraltar
Antigua & Barbuda
Cyprus
United Kingdom
United Kingdom
United Kingdom
Malta
196
888 Holdings PLC Annual Report & Accounts 2022
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Holds Delaware CSIE licence
Holds Netherlands online gaming licence
Holds Spanish online gaming licence
Holds Portuguese online gaming licence
Holds Romanian online gaming licence
Holds Swedish online gaming licence
Holds UK online gaming licence
Holding company
Holding company
Holds Nevada IGSP licence
Employs NJ-based personnel and hold servers/IT
equipment in the US.
Holding Company
In liquidation
Holding company
Holds New Jersey CSIE licence
In liquidation
100%
Obtaining affiliate marketing payments
100% Provides the provision of marketing services to other
companies within William Hill Group
Columbian operations
Dormant Company
Dormant Company
Property investment and management
The operation of Licensed Betting Offices (LBOs)
& is also licensed
In liquidation
Dormant Company
100%
100% Bingo business operator pursuant to Gibraltar licence
Dormant Company
100%
Dormant Company
100%
In liquidation
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Dormant Company
Dormant Company
Held lease of Antigua offices
Group service company
In liquidation
In liquidation
Dormant Company
In liquidation
Dormant Company
Operated a call centre in Antigua
Maltese licence holder
In liquidation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 33 INVESTMENTS IN SIGNIFICANT SUBSIDIARIES CONTINUED
Name
Evoke Gaming Ltd
Fordart Limited
Country
Malta
Gibraltar
Fred Parkinson Management Limited United Kingdom
Gaming Ventures Europe 2019 Limited Malta
Gisland Limited
Goodfigure Limited (in liquidation)
Grand Parade Limited
Grand Parade Sp. z o.o.
Gibraltar
United Kingdom
United Kingdom
Poland
Green Gaming Group PLC
GUS Carter (Cash) Limited
GUS Carter Limited
Ivy Lodge Limited
James Lane (Bookmaker) Limited
James Lane (Turf Accountants)
Limited
James Lane Group Limited
Laystall Limited
Live 5 Holdings Limited
Live 5 Limited
Matsbest Limited
Matsgood Limited
Mr Green & CO AB
Mr Green & Co Optionsbarare AB
Mr Green Consultancy Services Ltd.
Mr Green Consulting AB
Mr Green Limited
Malta
United Kingdom
United Kingdom
Guernsey
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Sweden
Sweden
United Kingdom
Sweden
Malta
MRG IP Limited
Malta
MRG Spain PLC
New Wave Virtual Ventures
Nimverge Tech India Private Limited
Online Entertainment Limited
Phonethread Limited
Random Logic Limited
Random Logic Ventures Limited
Regency Bookmakers
(Midlands) Limited
Selwyn Demmy (Racing) Limited
SIA Mr Green Latvia
Sparkware Technologies SRL
Spectate Limited
St James Place Limited
T H Jennings (Harlow Pools) Limited
Trackcycle Limited
VDSL (International) Limited
Malta
Gibraltar
India
Gibraltar
United Kingdom
Israel
Israel
United Kingdom
United Kingdom
Latvia
Romania
Ireland
Guernsey
United Kingdom
United Kingdom
Gibraltar
VHL America, LLC
VHL Colorado, LLC
VHL Financing (Malta) Limited
Delaware
Colorado
Malta
Percentage
of equity
interest
Nature of business
100%
100%
100%
100%
100%
Operates a remote gaming licence- Licences: ROI,
Malta, Sweden & ROW Customers.
Enters into B2B contracts pursuant to Gibraltar
licence and general commercial business activities
Dormant Company
Maltese licence holder
Payment transmission services
In liquidation
Contract Software Development
Software Writing and Maintenance +
Project Management
100% Holding company for most legal entities located in Malta
Dormant Company
100%
100%
Dormant Company
Property Holding company
100%
Dormant Company
100%
Dormant Company
100%
100%
100%
Dormant Company
100%
Dormant Company
100%
100%
Holding company
100% Games studio. Licensed and regulated entity by the
UK Gambling Commission.
Dormant Company
100%
Dormant Company
100%
Dormant Company
100%
Dormant Company
100%
Dormant Company
100%
Dormant Company
100%
100% Operates a remote gaming licence & holds the MGA
licence for the Mr Green Brand
Holds intellectual property developed for the
Mr Green Brands.
Holds a licence in Spain.
Holds mobile gaming applications
Providing Tech Services to the group.
Held domains, presently dormant
Dormant Company
Research, development and marketing
service company
Holding company
Dormant Company
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
95.01%
100%
100%
Dormant Company
Gaming entity regulated by the Latvian regulator
and servicing the Latvian (Mr Green) market
Software development
Research & development centre in Ireland
Property Holding Company.
Dormant Company
Dormant Company
Operator of the gaming sites pursuant to Virtual
Global Digital Services Limited's Gibraltar licence for
Canadian customers
Holding company for US B2C
Holds Colorado online gaming licence
Dormant company
888 Holdings PLC Annual Report & Accounts 2022
197
FINANCIAL STATEMENTS 33 INVESTMENTS IN SIGNIFICANT SUBSIDIARIES CONTINUED
Name
VHL Financing Limited
VHL Indiana, LLC
VHL Iowa, LLC
VHL Louisiana, LLC
VHL Maryland, LLC
VHL Massachusetts LLC
VHL Michigan, LLC
VHL Missouri, LLC
VHL New Jersey
VHL Ohio, LLC
VHL Ontario Limited
VHL Virginia, LLC
Vickers Bookmakers Limited
(in liquidation)
Virtual Digital Services Limited
Country
Gibraltar
Indianapolis
Iowa
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
Ohio
Gibraltar
Virginia
United Kingdom
Malta
Virtual Emerging Entertainment Limited Gibraltar
Virtual Global Digital Services Limited Gibraltar
Virtual Internet Services Latam S.L.U. Ceuta
Virtual Internet Services Limited
Gibraltar
Antigua & Barbuda
Gibraltar
Virtual IP Assets Limited
Virtual Marketing Services
(Gibraltar) Limited
Virtual Marketing Services
(Ireland) Limited
Virtual Marketing Services (UK) Limited England & Wales
Virtual Share Services Limited
Vynplex Limited (In liquidation)
WHG (International) Limited
Gibraltar
United Kingdom
Gibraltar
Ireland
WHG (Malta) Limited
Malta
WHG Customer Services
Philippines, INC
WHG IP Licensing Limited
Philippines
Gibraltar
WHG ITALIA SrL
Italy
WHG Online Marketing Spain S.A.
Spain
WHG Services (Bulgaria) Limited EOOD Bulgaria
Gibraltar
WHG Services (Philippines) Limited
WHG Services Limited
United Kingdom
100%
WHG Spain PLC
WHG Trading Limited
Will Hill Limited
William Hill (Alba) Limited
William Hill (Caledonian) Limited
William Hill (Course) Limited
(in liquidation)
William Hill (Edgeware Road) Limited United Kingdom
Malta
Gibraltar
United Kingdom
United Kingdom
United Kingdom
United Kingdom
100%
100%
100%
100%
100%
100%
198
888 Holdings PLC Annual Report & Accounts 2022
Percentage
of equity
interest
100%
100%
100%
100%
90.02%
100%
100%
100%
100%
100%
100%
90.02%
100%
100%
100%
100%
100%
100%
100%
100%
Nature of business
Holding company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Holds Michigan online gaming licence
Dormant Company
Dormant Company
Dormant Company
Holds Ontario online gaming licence
Holds Virginia online gaming licence
In liquidation
Operator of the gaming sites pursuant to Malta
licence – certain European markets
Licensing of brands for Asian market
Operator of the gaming sites pursuant to Gibraltar
licence
Dormant Company
Procurement of internet and bandwidth services for
the group, holds Gibraltar office lease and employs
Gibraltar personnel
IP company
Group marketing acquisition company
Marketing and other services company
100%
Marketing and other services company
100%
100% Holding of shares to satisfy vesting of equity awards
In liquidation
Trading and licensed entity for all brands and
territories except Spain
Dormant and Non trading company. Denmark
Licence applicant
100% Operating entity of Philippines shared service centre
100%
100%
100%
100%
100%
100%
In partnership with WHG (International) Limited,
holds WH Online IP
Payroll related expenses of employees in Italy.
Trading entity that receives income via
Intercompany recharge
Payroll related expenses of employees in Spain.
Trading entity and income is intercompany recharge
The provision of consulting and technical support
Holding company and invoicing conduit for WHG
Customer Services Philippines, Inc
Providing services related mainly to the technical
development of William Hill Limited's online business.
Operates a Spanish remote gaming license.
Dormant Company
Holding Company
Dormant Company
Dormant Company
In liquidation
Dormant Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS 33 INVESTMENTS IN SIGNIFICANT SUBSIDIARIES CONTINUED
Name
Country
Percentage
of equity
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Isle of Man
United Kingdom
Malta
United Kingdom
United Kingdom
United Kingdom
United Kingdom
William Hill (Effects) Limited
William Hill (Essex) Limited
William Hill (Football) Limited
William Hill (Goods) Limited
William Hill (IOM) No. 3 Limited
William Hill (London) Limited
William Hill (Malta) Limited
William Hill (Midlands) Limited
William Hill (North Eastern) Limited
William Hill (North Western) Limited
William Hill (Northern) Limited
(in liquidation)
William Hill (Products) Limited
(in liquidation)
William Hill (Resources) Limited
William Hill (Scotland) Limited
William Hill (Southern) Limited
William Hill (Strathclyde) Limited
(in liquidation)
William Hill (Supplies) Limited
(in liquidation)
William Hill (Wares) Limited
William Hill (Western) Limited
William Hill Bookmakers (Ireland)
Limited
William Hill Call Centre Limited
William Hill Cayman Holdings Limited Cayman Islands
United Kingdom
William Hill Credit Limited
United Kingdom
William Hill Employee Shares
Trustee Limited
William Hill Finance Limited
William Hill Gametek AB
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Ireland
United Kingdom
Sweden
United Kingdom
Ireland
William Hill Global PLC
Malta
William Hill Holdings Limited
William Hill Investments Limited
William Hill Latvia SIA
William Hill Limited
William Hill Malta PLC
William Hill Offshore Limited
William Hill Organization Limited
United Kingdom
United Kingdom
Latvia
United Kingdom
Malta
Ireland
United Kingdom
William Hill Steeplechase Limited
William Hill Trustee Limited
Willstan Properties Limited
Gibraltar
United Kingdom
United Kingdom
Ireland
Willstan Racing (Ireland) Limited
United Kingdom
Willstan Racing Holdings Limited
Willstan Racing Limited
United Kingdom
Windsors (Sporting Investments) Limited United Kingdom
Wise Entertainment DK ApS
Denmark
Wizard's Hat Limited
Malta
Nature of business
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Dormant Company
In liquidation
In liquidation
Dormant Company
Dormant Company
Dormant Company
In liquidation
In liquidation
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Holding Company
Dormant Company
Dormant Company
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
Holding Company
Limited operations, provides technical and support
services in relation to the platforms/games
Holds the MGA license for the WH Brand & is the
main operating company in Malta
Holding Company
Holding Company
Main license holder in Latvia.
Previously listed WH Group operating company
Malta Gaming entity regulated by the MGA
Dormant Company
Operation of Licensed Betting Offices (LBOs) and,
through its subsidiary companies, the provision
of online and telephone betting services in the
United Kingdom. UK operating entity
100%
Special purpose vehicle for financing purposes
100% Acting as Trustee to the William Hill Pension Scheme
Property Investment and Management in
100%
Northern Ireland
Dormant Company
Dormant Company
Dormant Company
Dormant Company
Consulting assistance and entry into sales/
marketing agreements for content providers
Dormant Company
100%
100%
100%
100%
100%
100%
888 Holdings PLC Annual Report & Accounts 2022
199
FINANCIAL STATEMENTS COMPANY BALANCE SHEET
At 31 December 2022
Assets
Non-current assets
Investments in subsidiaries
Loan to subsidiaries
Amounts due from related parties
Deferred tax assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Treasury shares
Retained earnings1
Total equity
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Amounts due to related parties
Loan payable to subsidiaries
Non-current liabilities
Loan payable to subsidiaries
Deferred tax liabilities
Total liabilities
Total equity and liabilities
Note
2022
£ million
2021
£ million
2
10
3
4
4
4
5
9
48.8
163.9
112.9
—
325.6
18.0
—
18.0
343.6
2.2
160.7
(0.9)
90.6
252.6
2.3
0.5
67.8
—
70.6
20.4
—
20.4
91.0
343.6
40.8
—
—
—
40.8
78.7
—
78.7
119.5
1.9
2.5
(0.9)
85.3
88.8
5.0
1.3
—
6.6
12.9
17.5
0.3
17.8
30.7
119.5
1. Includes net profit of the Company for the year ended 31 December 2022 of £2.7m (31 December 2021: £49.1m).
The financial statements on pages 200 to 202 were approved and authorised for issue by the Board of Directors on
14 April 2023 and were signed on its behalf by:
Lord Mendelsohn
Executive Chair
Yariv Dafna
Chief Financial Officer
The notes on pages 203 and 204 form part of these financial statements.
200
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Balance at 1 January 2021
Profit and total comprehensive income for the year
Dividend paid (note 9)
Acquisition of treasury shares
Exercise of deferred share bonus plan
Equity settled share benefit charges (note 8)
Balance at 31 December 2021
Loss for the year
Issue of shares
Acquisition of treasury shares
Exercise of deferred share bonus plan
Equity settled share benefit charges (note 8)
Balance at 31 December 2022
Share
capital
£ million
Share
premium
£ million
Treasury
shares
£ million
Retained
earnings
£ million
Total
£ million
1.9
—
—
—
—
—
1.9
—
0.3
—
—
—
2.2
2.5
—
—
—
—
—
2.5
—
158.2
—
—
—
160.7
(0.4)
—
—
(0.7)
0.2
—
(0.9)
—
—
(0.7)
0.7
—
(0.9)
76.9
47.4
(43.8)
—
(0.2)
5.1
85.4
(0.9)
—
—
(0.7)
6.8
80.9
47.4
(43.8)
(0.7)
—
5.1
88.9
(0.9)
158.5
(0.7)
—
6.8
90.6
252.6
The following describes the nature and purpose of each reserve within equity.
Share capital – represents the nominal value of shares allotted, called-up and fully paid for.
Share premium – represents the amount subscribed for share capital in excess of nominal value.
Treasury shares – represent reacquired own equity instruments. Treasury shares are recognised at cost and deducted
from equity.
Retained earnings – represents the cumulative net gains and losses recognised in the parent company statement of
comprehensive income and other transactions with equity holders
The notes on pages 203 and 204 form part of these financial statements
888 Holdings PLC Annual Report & Accounts 2022
201
FINANCIAL STATEMENTS COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Cash flows from operating activities:
(Loss)/profit before tax
Adjustments for:
Interest on loans to subsidiaries
Share benefit charges
Dividend receivable
Income tax paid
Cash used in operating activities before working capital movement
Movements in working capital
(Increase)/decrease in amounts owed by subsidiaries
Increase/(decrease) in amounts owed to subsidiaries
Increase in other receivables
Decrease in trade and other payables
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Loan to subsidiaries
Dividends received
Net cash (used in)/generated from investing activities
Cash flows from financing activities:
Issue of shares
Acquisition of treasury shares
Repayment of loans payable to subsidiaries
Dividends paid
Net cash generated from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The notes on pages 203 and 204 form part of these financial statements.
Note
2022
£ million
2021
£ million
(2.0)
36.9
8
3
5
9
4
4
9
(5.4)
—
—
—
(7.4)
(34.5)
67.8
(10.5)
(2.7)
20.1
(163.9)
—
(163.9)
158.5
(0.7)
(6.6)
—
151.2
—
—
—
—
0.1
(37.8)
(0.8)
(1.6)
17.0
(9.9)
(6.6)
(2.4)
(3.5)
—
55.2
55.2
—
(0.8)
(7.1)
(43.8)
(51.7)
—
—
—
202
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
1 GENERAL INFORMATION AND ACCOUNTING POLICIES
A description of the Company, its activities and definitions are included in note 1 to the consolidated financial statements.
The Company’s financial statements have been prepared in accordance with UK adopted international accounting
standards in accordance with the requirements of the Gibraltar Companies Act 2014. The financial statements have been
prepared on a historical cost basis, except where certain assets or liabilities are held at amortised cost or at fair value as
described in the Company’s accounting policies.
All values are rounded to the closest hundred thousand, except when otherwise indicated.
The significant accounting policies applied in the financial statements in the prior year have been applied consistently in
these financial statements, except for the amendments to accounting standards effective for the annual periods beginning
on 1 January 2022 and representation of expenses analysis in the income statement. These are described in more detail in
note 1 to the consolidated financial statements.
As a company incorporated in Gibraltar, 888 Holdings plc is not required by UK law or regulation to prepare the Directors’
Remuneration or Strategic reports under regulation that applies to UK incorporated companies. However, by virtue of 888’s
Premium Listing on the London Stock Exchange and reflecting the Director’s approach to good governance and investor
expectation, we have prepared these reports in line with the requirements under the UK Companies act 2006.
Change in presentation currency of the Company
The Company has changed the currency in which it presents its financial results from US Dollar to Pound sterling (GBP)
with effect from 1 January 2022, in consideration of the William Hill acquisition and current business mix which now has
significantly higher GBP exposure.
Given the current composition of the Company’s activities, this change is expected to reduce the impact of currency
movements on reported results. Accordingly, to satisfy the requirements of IAS 21 ‘The Effects of Changes in Foreign
Exchange Rates’, the reported results for the year ended 31 December 2022 have been translated from US Dollar to GBP
using the following procedures:
• Assets and liabilities denominated in non-GBP currencies were translated into GBP at the relevant closing rates of exchange;
• Movements in other reserves were translated into GBP at the relevant average rates of exchange;
• Share capital, share premium, treasury shares/own shares and dividends were translated at the historic rates prevailing on
the date of each transaction; and
• The cumulative translation reserve was set to nil at 1 January 2004, being the earliest practicable date and the date of
transition to IFRS, and has been restated on the basis that the Group had reported in GBP since that date.
The opening balance sheet and all comparatives have been re-presented in GBP following the change in
presentation currency.
Investment in subsidiaries
The Company’s investments in subsidiaries are carried at cost less provisions resulting from impairment.
Share-based payments
The financial effect of awards by the Company of options over its equity shares to employees of subsidiary undertakings
is recognised by the Company in its individual financial statements as an adjustment to its investment in subsidiaries with
an opposite adjustment to equity. The subsidiary, in turn, will recognise the IFRS 2 adjustment in its income statement with
a credit (debit) to equity to reflect the deemed capital contribution from (dividend to) the Company.
Critical accounting estimates and judgements – impairment testing of investments in and amounts due
from subsidiaries
The Company’s investments in and amounts due from subsidiaries have been tested for impairment by comparison against
the underlying value of the subsidiaries’ assets.
2 INVESTMENTS IN SUBSIDIARIES
The Company’s principal subsidiaries are listed in note 33 to the consolidated financial statements. In the Company’s
financial statements, investments in subsidiaries are held at cost less provision for any impairment. The Group applies IFRS 2
– Share-based Payment. Consequently, the Company recognises as a cost of investment the value of its own shares that it
makes available for the purpose of granting share options to employees or contractors of its subsidiaries. The net movement
in investment in subsidiaries during the year was £8.1m (2021: £5.6m) included within this were share-based payment charges
of £3.3m in 2021 (2021: £5.0m), which is net of £nil intragroup recharges related to share based payment schemes (2021: £6.8m).
The Company made no capital contributions during the year (2021: £7.3m ) in respect of incorporation of new subsidiaries.
888 Holdings PLC Annual Report & Accounts 2022
203
FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
3 TRADE AND OTHER RECEIVABLES
Other receivables and prepayments
Restricted short-term deposits
2022
£ million
2021
£ million
1.9
16.1
18.0
1.1
6.4
7.5
The carrying value of trade and other receivables approximates to their fair value. An expected credit loss assessment for
material balances had been performed. None of the balances included within trade and other receivables are past due and
no material expected credit loss provision is required. Amounts due from subsidiaries are payable on demand.
4 SHARE CAPITAL
The disclosures in note 27 to the consolidated financial statements are consistent with those for the Company, including
capital management in note 24 to the consolidated financial statements.
5 TRADE AND OTHER PAYABLES
Trade payables
Amounts due to subsidiaries
Other payables and accrued expenses
2022
£ million
2021
£ million
0.1
—
2.2
2.3
0.1
—
4.9
5.0
The carrying value of trade and other payables approximates to their fair value. All balances included within trade and other
payables are repayable on demand.
6 FINANCIAL RISK MANAGEMENT
To the extent relevant to Company’s financial assets and liabilities (see notes 3 and 5), the Company’s financial risk management
objectives and policies are consistent with those of the Group as disclosed in note 24 to the consolidated financial statements.
Interest-bearing loans and borrowings are disclosed in note 23 to the consolidated financial statements.
Loan payable to subsidiaries are made on terms equivalent to those that prevail in arm’s length transactions.
7 CONTINGENT LIABILITIES
The disclosures in note 31 to the consolidated financial statements are consistent with those for the Company.
8 SHARE BENEFIT CHARGES
The disclosures in note 28 to the consolidated financial statements are consistent with those for the Company except that
the charge for the year is partly taken to investment in subsidiaries, as set out in note 2.
9 RELATED PARTY TRANSACTIONS
The aggregate amounts payable to key management personnel, considered to be the Directors of the Company, as well as
their share benefit charges is detailed in note 23 to the consolidated financial statements.
During the year, the Company did not pay dividends to its shareholders (2021: £43.8m) (see note 11 to the consolidated
financial statements). During the year, the Company did not receive any dividends from its subsidiaries (2021: £37.8 million).
During the year, share benefit charges in respect of options and shares of the Company awarded to employees of subsidiaries
totalled £6.8m (2021: £5.1m). During the year, the Company did not charge its subsidiary for cost of awards (2021: £6.8m).
During the year, the Company repaid £6.2m to its subsidiaries (2021: £7.1m) and recorded £0.8m (2021: £1.0m) interest
expenses in respect of the loan which were recharged to other Group entities.
At 31 December 2022, the net amounts owed by subsidiaries to the Company were £276.8m (2021: £72.9m).
The Company has a loan receivable with a subsidiary, Gisland Limited. The balance of this loan at 31 December 2022 is £163.9m
(31 December 2021: £nil). This loan accrues interest at a rate of 4.4% for which the Company recognises as interest income. This
loan is not repayable on demand and has no fixed date of settlement, it is therefore classified as a non-current asset.
The Company has a loan payable to a subsidiary, Random Logic Limited. The balance of this loan at 31 December 2022 is £20.4m
(31 December 2021: £17.5m). This loan accrues interest at a rate of 4.4% for which the Company recognises as interest expense.
This loan is not repayable on demand and has no fixed date of settlement, it is therefore classified as a non-current liability.
10 DEFERRED TAXES
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. Following a change in the company’s
tax residence to the United Kingdom, deferred tax is recognised at the UK tax rate. As at 31 December 2022, the Company has
a deferred tax liabilities of £nil (2021: £1.3 million) partially offset by deferred tax asset of £nil (2021: £1.0 million).
204
888 Holdings PLC Annual Report & Accounts 2022
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Shareholder services
All enquiries relating to Ordinary
Shares, Depository Interests, dividends
and changes of address should be
directed to the Group’s Transfer Agent:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
UK
Tel: 0871 664 0300
www.signalshares.com
Principal bankers
Barclays Bank Plc
1 Churchill Place
London
E14 5HP
UK
Legal advisers
Latham & Watkins
99 Bishopsgate
London
EC2M 3XF
UK
Hassans
7/63 Line Wall Road
Gibraltar
Herzog Fox Neeman
Asia House
4 Weizman Street
Tel Aviv
Israel 64239
Company secretary
The company secretary
is Elizabeth Bisby.
Email:
corporate.secretary@888holdings.com
Strait Secretaries Limited
57/63 Line Wall Road Gibraltar
External auditors
Ernst & Young LLP
1 More London Place
London
SE1 2AF
United Kingdom
EY Limited
PO Box 191 Regal House
Queensway
Gibraltar
Corporate brokers
Jefferies International Limited
J.P. Morgan
COMPANY INFORMATION
Registered office
888 Holdings Plc
Suite 601/701 Europort
Europort Road Gibraltar
Tel: +35020049800
888 Holdings Plc
1 Bedford Avenue
London
WC1B 3AU
Further information
Further information about the Group
can be found on our corporate website
corporate.888.com
To contact the Investor Relations team
email ir@888holdings.com
To contact the company
secretary email
corporate.secretary@888holdings.com
888 Holdings’ commitment to environmental issues is reflected in
this Annual Report, which has been printed on Magno Satin, an FSC®
certified material.
This document was printed by Park Communications using its
environmental print technology, which minimises the impact of printing
on the environment, with 99% of dry waste diverted from landfill. Both
the printer and the paper mill are registered to ISO 14001.
888 HOLDINGS PLC
Suite 601/701 Europort
Europort Road
Gibraltar
corporate.888.com