holdings
public limited company
holdings
public limited company
the world’s no1 online casino and poker room
annual report  accounts 2005
suite 601701 europort
europort road
gibraltar
t 350 49800
f 350 48280
e info888holdingsplccom
www888holdingsplccom
888 holdings public limited company annual report  accounts 2005
connecting…to the world’s no1
online casino and poker room the world’s no1 online  
casino and poker room
888 is one of the world’s most popular online gaming entertainment 
companies established in 1997 by pioneers of the online gaming 
industry 888 has developed a strong brand scale and member trust
the business is based on its fully integrated proprietary operating 
software infrastructure backed up by impressive member relationship 
management and diversified payment processing systems 888 benefits 
from industry leading multichannel member acquisition capabilities
888com is our umbrella brand we operate brands 
across a range of online gaming websites such 
as 888com casinoonnetcom pacificpokercom 
and reefclubcasinocom the main products offered 
at these websites include traditional casino table 
games such as blackjack roulette and craps as well 
as slot machines video poker poker ring games and 
poker tournaments
casinoonnet is available in 11 languages 888 also 
enjoys a diversified geographical balance with 45 of 
net gaming revenue from outside the usa 888 
provides members with a trustworthy and fair 
gaming environment
group websites
a range of shareholder information is available in 
the investor relations area of the group’s website 
www888holdingsplccom including
latest information on the group’s share price
information on the group’s financial performance 
news and events
the following websites can also be accessed through 
the group’s main web portal 888com
casino
888’s casino games are offered through its 
casinoonnet and reef club casino offerings
wwwcasinoonnetcom
wwwreefclubcasinocom
poker
888’s poker offering is through pacific poker
wwwpacificpokercom
betmate
offers access to a betting exchange for nonusa members 
only including sporting and nonsporting betting
wwwbetmatecom
888tv
a portal for skill games allowing members to download 
games open accounts and play tournaments
www888tv
888info
allows members to practise their gaming skills for fun 
through a number of key casino and poker games 
www888info
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shareholder information
financial advisers
hsbc bank plc
8 canada square london e14 5hq
principal bankers
the royal bank of scotland plc
280 bishopsgate london ec2m 4rb
solicitors
freshfields bruckhaus deringer
65 fleet street london ec4y 1hs
hassans
5763 line wall road
gibraltar
auditors
bdo stoy hayward llp
chartered accountants
8 baker street
london w1u 3ll
bdo fidecs chartered 
accountants limited
montagu pavilion
810 queensway
gibraltar
contents
01 highlights
02 888 at a glance
04 marketing
06 technology
08 people
10 chairman’s statement
12 chief executive’s review
16 financial review
20 board of directors
22 responsible gaming
23 regulatory and compliance review
24 corporate governance
29 remuneration report
35 directors’ report 
37 independent auditors’ report
38 consolidated income statement
39 consolidated balance sheet
40 consolidated statement of changes in equity
41 consolidated statement of cash flows
42 notes to the consolidated financial statements
56 company balance sheet
57 company statement of changes in equity
58 company statement of cash flows
59 notes to the company financial statements
ibc shareholder information
incorporated in gibraltar with registered 
number 90099
shareholder services
all enquiries relating to ordinary shares 
depository interests dividends and 
changes of address should be directed 
to the group’s transfer agent
capita registrars
the registry 34 beckenham road
beckenham kent br3 4tu 
tel 0870 162 3100
wwwcapitaregistrarscom
further information
for further information please contact
company secretary
888 holdings public limited company
suite 601701
europort europort road
gibraltar
info888holdingsplccom 0 50 100 150 200 250 300
net gaming revenue usmillion
2005
2004
2003
2710
1779
1225
0 20 40 60 80
profit after tax usmillion
2005
2004
2003
652
411
195
0 20 40 60 80 100
net gaming revenue usmillion
q405
q305
q105
q404
q304
q204
q104
q205
772
700
650
588
497
448
418
416
0 30 60 90 120 150 180
net gaming revenue casino usmillion
2005
2004
2003
1612
1386
1145
0 5 10 15 20 25
registered member accounts
at year end million
2005
2004
2003
232
179
132
0 1 2 3 4 5 6
real money registered 
member accounts million
2005
2004
2003
55
37
25
0 20 40 60 80 100 120 140
active casino members ’000
q405
q404
q403
976
661
429
0 40 80 120 160
net gaming revenue poker usmillion
2005
2004
2003
1098
393
80
excluding share benet charges
0 50 100 150 200 250
active poker members ’000
q405
q404
q403
2333
1234
217
highlights
net gaming revenue for the year rose to us271 million an increase of 52 above 2004
net gaming revenue from casino during the year rose to us161 million an increase of 16 above 2004
net gaming revenue from poker during the year rose to us110 million an increase of 179 above 2004
profit after tax for the year rose to us65 million an increase of 59 above 2004
adjusted eps for the year rose to 193¢ an increase of 58 above 2004 
net cash generated from operating activities rose to us88 million an increase of 72 above 2004
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operational highlights financial highlights
01 888 holdings public limited company annual report  accounts 2005 888 at a glance
888 is one of the world’s most 
popular online gaming entertainment 
companies 888 develops and 
manages all significant aspects of its 
business inhouse including software 
development marketing business 
development backoffice payment 
processing risk management and 
member relationship management
operations 888’s operational arm in 
gib ral tar is responsibl e f or th e d ay tod ay 
ru nning of th e grou p’s fl agsh ip gam ing 
b rand s and produc ts includ ing m emb er 
rel ationsh ip m anagem ent prom otions 
l oy al ty programm es and risk m anagem ent
m ark eting 888’s m ark eting is princ ipally 
pl anned sou rc ed and ex ecu ted th rou gh 
its inh ou se m ark eting arm wh ich h as 
accumul ated signif ic ant c reativ e and 
m ark eting ex perienc e f ocu sing on 
ach iev ing h igh retu rn on its inv estm ent
d riv en c am paigns 
tech nol ogy  888 d ev el ops inh ou se all 
of th e c ore tech nol ogy aspec ts of its 
mul tipl ay er casino and p ok er room 
gam ing sof tw are
paym ent solu tions eff ic ient and rel iabl e 
proc essing of paym ents is c ruc ial to 
m emb er acqu isition and retention 888 
off ers its m emb ers a w id e range of 
onl ine real tim e paym ent options
02 net gaming revenue by 
geographical market
1 usa 55
2 uk 20
3 europe 17
4 rest of the world 8    
1
2
3
4
the world’s no1 
onli ne casi no and 
poker r oom
we have over 23 millio n 
r egis tered member a ccounts 
world wide with members 
spanning 177 countries
casi noo nnet is now 
offered to members 
arou nd the world i n 
11 la nguages pa cific 
poker is offered i n  
four la nguages
888 has nearly 900 
enthusias tic and 
tale nted employees 
world wide
03 888 holdings public limited company annual report  accounts 2005 at any one tim e th ere h av e b een hu nd red s 
of ad c am paigns in 10 d iff erent l angu ages 
spanning 30 d iff erent c ou ntries ex posing 
ou r produc ts to th e w id est possibl e 
aud ienc e
b y sponsoring tel ev ised sporting ev ents 
team s and athl etes w e are strength ening 
ou r b rand ou r d eal w ith mi ddl esb rou gh 
foot b all c lub is one of wh ich w e are 
particul arly proud and is now in its 
sec ond y ear
som e 15 new b anners are c reated on 
a d aily b asis and add ed to a b anner 
b ank numb ering m ore th an 20000
in 2005 ou r total m ark eting spend 
exc eed ed us100 m ill ion ac ross ou r 
v ariou s m ark eting ch annel s – onl ine 
m ed ia aff il iates offl ine and oth er 
m ark eting and prom otional initiativ es
marketing
our marketing strategy is driven by 
three key principles
relevant and motivating member 
proposition consumer needs 
underpin our marketing activity 
understanding player behaviour 
informs our product development 
localising our offer by both country 
and consumer segment is a key 
component of driving both trial and 
repeat usage of our products
quality of brand one umbrella brand 
888com serves all our products 
this helps to maintain high 
awareness and ensure flexibility 
in targeted local communication 
whilst guaranteeing global 
consistency in messages
integrated marketing campaigns a 
consistent communication approach 
with tailored activities leveraged 
through all channels for example 
the sponsorship of the “888com 
world snooker championship” 
will feature traditional pr and 
advertising as well as webbased 
and viral marketing activity online
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04 buildi ng a  
truly global 
bra nd
05 888 h as approach ed th e gam ing indu stry as 
an inf orm ation tech nol ogy c om pany rath er 
th an as a b ookm ak er th at is m ov ing onl ine
888’s resil ient sc al abl e and d iv ersif ied 
inf orm ation tech nol ogy inf rastruc tu re 
c om prises hu nd red s of serv ers su pporting 
num erou s w eb sy stem s proprietary 
gam ing pl atf orm s and b ack off ic e sy stem s 
888’s strong inf orm ation tech nol ogy 
pl atf orm is b eing d ev el oped to inc rease 
th e eff ic iency w ith wh ich 888 integrates 
new gam es enabl ing it to ex pand 
organic ally and to inc rease th e 
sc al ab il ity of its operation
eff ic ient and c osteff ec tiv e paym ent 
proc essing h as b ec om e essential f or 
succ ess in th e onl ine gam ing m ark et
technology
having the expertise to develop all 
significant aspects of gaming software 
inhouse allows us to control and 
provide a flexible secure and user
friendly platform for members
our information technology platform 
not only handles over one million site 
visitors a day with more than 10000 
members playing concurrently at 
peak times but it also enables 888 
to provide a distinctive product and 
brand feel 
the frontend playing experience is 
key but robust backoffice systems 
such as payment processing risk 
management and data mining are 
also vital
06 a safe gami ng 
enviro nment
07 th e greatest asset 888 h as is its peopl e 
th e tal ented team b ased arou nd th e w orld 
c reate d esign m anuf ac tu re and d el iv er 
ou r sy stem s
ou r sal es and m ark eting grou ps h av e 
succ eed ed in ch all enging m ark ets w ith 
w id eranging c am paigns going l iv e each 
d ay and m ark et l ead ing sponsorsh ip 
d eal s rec ord ing exc ell ent resul ts
we prov id e 247 c ontinu ou s m emb er 
su pport in 11 l angu ages f or casino onnet 
and f ou r l angu ages f or pac if ic p ok er 
th rou gh ou t th e w orld w ith tollf ree 
numb ers av ail abl e in 25 c ou ntries
th ese peopl e and hu nd red s m ore l ik e th em 
are th e m ain reason why 888 is truly a 
w orld l ead er in th e onl ine gam ing indu stry
people
888 has nearly 900 enthusiastic and 
talented individuals our member 
support team is both multiskilled and 
multicultural enabling us to provide 
continuous support in 11 different 
languages 247
by taking our recruitment “to the 
source” through a variety of global 
open days we enhance the quality  
of our service through the deployment 
of people who truly understand the 
local culture they are serving in all our 
training and development strategies 
and initiatives the primary focus is on 
maintaining excellent member service 
the member is at the centre of all 
our activities 
at 888 we believe that successful 
business progression comes from an 
“inclusive” perspective  we therefore 
strive to ensure that the feelings and 
ideas of all employees are heard 
discussed and where appropriate 
acted upon
2006 will see the launch of the 888 
certification scheme an initiative that 
develops all employees – regardless of 
level – covering a range of disciplines 
unique to our brand through this 
initiative we fully expect to develop  
and motivate our dedicated employees 
even further 
08 r ela tionshi ps 
based o n trus t
09 888 holdings public limited company annual report  accounts 2005 chairman’s 
statement
888 is well pla ced to benefit from 
expansio n into new geogra phic 
marke ts – as i nter net penetra tion 
continues a pace
the board of 888 holdings public 
limited company is pleased to 
present its first set of full year 
results since the company’s 
flotation in october 2005 – a major 
step forward and the successful 
result of a longterm growth plan 
for the business
these results demonstrate the 
strength and growth potential of our 
business which is today one of the 
world’s most popular online gaming 
entertainment companies during 
the year we continued to improve 
our financial performance we 
developed our positions in both 
casino and poker by building on  
our key strengths of an industry 
leading brand a highly diversified 
gaming offering and a widening 
geographic footprint
in the year to 31 december 2005 
we achieved total net gaming 
revenue of us271 million and 
underlying profit after tax excluding 
share benefit charges of us65 
million continuing to build profitable 
sustainable topline momentum is 
key to our longterm success 
our s tre ngths
a proven resilient business 
model
experienced directors 
and long serving senior 
management who are 
industry pioneers
fully integrated proprietary 
operating software 
infrastructure
scalable technology platform
industry leading inhouse 
marketing capabilities
industry leading member 
relationship management
sophisticated effective 
payment processing and risk 
management systems
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richard kilsby chairman
10 by the end of the year we had more 
than 23 million registered member 
accounts and over 330000 active 
members representing 177 different 
countries and supported 11 different 
languages for our casinoonnet 
offering – a real testament to the 
strength and global appeal of our brand
the significant achievements of this 
year would not have been possible 
without the support contribution and 
dedication of our staff whose passion 
knowledge and enthusiasm gives us a 
further competitive advantage in this 
fast moving market
the online gaming market is maturing 
and whilst online regulation is still in its 
infancy we welcome the uk’s entry into 
the online space through the gambling 
act 2005 of note is the gibraltar 
gambling ordinance which introduces a 
bespoke regulatory regime in gibraltar 
for remote gaming and further 
consolidates gibraltar’s position as a 
firstclass online gaming jurisdiction 
generally we are seeing a change  
in emphasis of regulators who are 
looking beyond the grant of licences 
and are focusing more on compliance 
and codes of conduct within the 
industry this is an area where 888 
has sought to take the lead we  
were one of the founding members  
of ecogra ecommerce online 
gaming regulation and assurance  
an independent body which has 
our strategy is clear we aim to 
create sustainable shareholder 
value by becoming the market 
leader in the global online 
gaming industry providing our 
members with a comprehensive 
selection of uniquelycreated 
gaming activities
developed a series of selfregulatory 
guidelines for the online gaming 
industry as online gaming develops 
into a mainstream leisure activity we 
believe further clarification of the 
regulatory position in relation to online 
gaming would be a positive driver  
for growth by enhancing consumer 
confidence and trust in the sector
board
i am pleased to have the opportunity to 
chair 888 and to welcome to the board 
three new nonexecutive directors 
since august 2005 michael 
constantine a former inspector and 
acting commissioner of the gibraltar 
financial services commission and 
brian mattingley former executive 
director of gala group plc and from 
march 2006 amos pickel chief 
executive of red sea hotels ltd
with their outstanding complementary 
experience i am confident that our 
new nonexecutive directors are 
superbly qualified to provide invaluable 
support to our executive team in the 
years ahead
the board’s commitment to the 
highest standards of corporate 
governance and corporate social 
responsibility is detailed in the 
corporate governance section of 
this report on pages 24 to 28
finally on behalf of the board i  
would like to express the group’s 
appreciation to marie stevens for  
her contribution
dividend
the board intends to implement in 
2006 the dividend policy set out in 
the financial review on page 19
outlook
our strategy is clear we aim to create 
sustainable shareholder value by 
becoming the market leader in the 
global online gaming industry providing 
our members with a comprehensive 
selection of uniquelycreated gaming 
activities and offering a secure trusted 
entertainment experience
i am pleased to report that we have 
already begun the new financial year 
with strong organic growth 2006 will 
see continued investment in the 888 
brand through worldwide innovative 
marketing initiatives such as the 
recently announced five year 
sponsorship of the world snooker 
championship which will be known 
as the “888com world snooker 
championship”
888 is well placed to benefit from 
expansion into new geographic 
markets – as internet penetration 
continues apace and we react to local 
regulatory developments we will also 
look to extend the range of products 
so that we can offer members the 
complete online entertainment 
experience all of this gives me great 
confidence about our future prospects
richard kilsby
chairman
11 888 holdings public limited company annual report  accounts 2005 chief executive’s 
review
the two mos t impor tant words 
in our indus try  “trus t me”
john anderson chief executive officer
888 is an industryleading brand 
which is synonymous with quality 
fairness and trust as a business  
it has delivered a number of 
consecutive years of growth in 
profits 2005 was no exception 
and we are delighted to report profit 
after tax for the year excluding 
share benefit charges of us65 
million up 59 on 2004 a more 
than satisfactory increase
our flotation in october on the 
london stock exchange marked  
an important step in our goal to 
become the market leader in the 
global online gaming entertainment 
industry this will enable us to 
increase further our brand profile 
recognition and credibility and  
will also give us an acquisition 
currency this is a key part of  
our strategy and we believe the 
industry has matured to a stage 
where consolidation is inevitable 
and i intend that 888 will be at  
the heart of this our industry  
has arrived and will be here on  
a permanent basis 
the business is in great shape 
and the year to 31 december 2005 
saw us achieve record net gaming 
revenue and profits new member 
registrations in both casino and 
poker were significantly up at 
53 million
the main driver behind our 
outstanding growth has been our 
indepth knowledge and experience 
of the industry built up since our 
inception in 1997 we understand 
what our members want and we are 
continually upgrading our product 
offering to retain existing and 
attract new players most 
importantly we continue to provide 
our s tra tegy
investment in and leverage 
of the 888 brand
expansion into new 
geographic markets
development and expansion 
of software platforms to 
provide a “one stop shop” 
through organic growth and 
selective acquisitions
leveraging 888’s large 
member database to 
maximise crossselling and 
upselling opportunities 
continued development of 
efficient payment processing 
options that suit new target 
markets and audiences
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12 members with a secure and trusted 
environment in which to play in the 
interests of consumer protection we 
were a founding member of ecogra 
the preeminent industry benchmark 
and i am a member of its board
whilst member acquisition is key 
member retention is paramount  
as well as the products we offer we 
have invested in the highest quality 
infrastructure and systems to ensure 
that we sustain our members’ interest 
and do not give them a reason to play 
anywhere else we will continue to add 
new entertainment options through 
selective acquisition or inhouse 
development and we will expand  
our software platforms to allow for 
increased scalability
geographic spread
no business should have an over
reliance on any one particular market 
and those in our industry are no 
exception we don’t believe in having 
all our eggs in the one basket and i 
personally consider our geographic mix 
of business to be the widest in the 
industry by making our product 
available in up to 11 languages we 
have grown our nonusa business  
at such a rate so as to reduce our 
dependence on the usa to 55  
of our business without sacrificing 
volume our second largest revenue 
stream comes from the uk market 
representing 20 of our mix in the 
uk 888 has come from nowhere in 
2003 to become the top brand in the 
industry in 2005 this success is 
mainly due to the highly successful 
offline advertising campaigns we ran  
in the uk and high profile selected 
sponsorships we will be repeating 
this strategy of awareness throughout 
mainland europe in the coming year 
our product offering
during the year we have succeeded in 
growing net gaming revenue and new 
player signups across all our categories 
in 2004 the total amount wagered in 
the online casino market was estimated 
at us539 billion source cca
since its inception in 1997 our casino 
product casinoonnet has continued 
to be the leading online casino brand 
with member numbers now at a level 
of 4 million real money registered 
member accounts 
2005 saw continued growth in net 
gaming revenue from us178 million  
to us271 million an increase of 52 
this is mainly attributable to the 
expansion of our online and offline 
marketing programmes and the 
introduction of new distribution channels 
through our affiliate programmes
we also operate an additional casino 
brand reef club casino that we 
introduced in 2002 by offering 
members another casino brand we 
optimise their choice which in turn 
underpins our member retention by 
keeping players on our sites
in january 2006 888 launched an 
entirely new casino product with a new 
graphical user interface new industry 
leading videoslot machines and 
promotion features to provide  
our members with an even more 
sophisticated visual and interactive 
no business should have an over
reliance on any one particular 
market and those in our industry 
are no exception we don’t believe 
in having all our eggs in the one 
basket and i personally consider 
our geographic mix of business to 
be the widest in the industry
experience to enhance their playing 
environment we also plan to add an 
additional language to our casino in 
the first quarter of 2006 
the online poker market has 
experienced remarkable growth since 
2002 and i have no doubt it is fast 
becoming a mainstream entertainment 
activity poker has always been played 
in the usa and in fact is part of the 
fabric of usa society people of all ages 
including families have always played 
poker as part of their recreational 
time more and more countries 
throughout the globe are playing the 
game and this is resulting in a decline 
in the dominance of the usa market 
poker is cool and here to stay
our poker product pacific poker was 
ranked four in 2005 and in the year 
net gaming revenue from our poker 
business exhibited strong growth 
increasing by 179 to us1098 
million 2004 us393 million this 
result partly reflects an increase in 
888’s marketing efforts but is also a 
byproduct of the exponential growth of 
the phenomenon that is online poker
we are continually upgrading our 
proprietary products and have recently 
upgraded our poker offering with a multi
language format it is now operational in 
english german italian and swedish 
we introduced a new ewallet focusing 
on spain germany netherlands italy 
and france thereby expanding further 
our geographical presence in nonusa 
markets 888 plans to rollout a further 
two new languages and a new jackpot 
feature for pacific poker in the first 
quarter of 2006
13 888 holdings public limited company annual report  accounts 2005 chief executive’s 
review
betmate our betting exchange is a 
white label product in conjunction 
with betdaq the second largest 
betting exchange in the uk it has 
been in operation since 2004 and 
acts as a member retention tool  
by complementing our casino 
offerings it offers access to a 
betting exchange for nonusa 
members only it has performed 
satisfactorily over the period
in order for us to give our members 
a “one stop shopping” experience 
we need to offer them a 
sportsbook we are currently 
examining our options to achieve 
this we will not take sports bets 
from us citizens however we will 
take bets on american sports 
events from nonus citizens
r egulatory developments
whilst the application of existing 
laws to online gaming is still to be 
clarified in most jurisdictions in 
april 2005 the uk government 
passed the gambling act which 
includes the licensing of online 
gaming i believe the uk’s position 
is the first domino in what will 
become a legislative network 
throughout mainland europe
we continue to monitor the 
legislative position in the usa 
where many attempts have been 
made in the past to prevent the 
instruments for the financial 
payment of internet gaming to take 
place it is our view that this will 
continue to be our main challenge 
we also monitor on a continual 
basis all jurisdictions to ensure 
we understand local regulatory 
positions and are alerted early to 
any potential developments the 
world has still to get to grips with 
this industry and the laws which do 
exist can change very rapidly part of 
what we must do as an industry is to 
lobby all of the countries of the world 
so that legalisation and licensing of 
internet gaming becomes the norm 
rather than the exception 
innovative marketing approach
the 888 brand is a core aspect  
of our marketing strategy and is  
key to building and maintaining  
our business strong branding is 
not only critical in differentiating  
our business but a recognisable 
brand builds trust which is a  
key consideration affecting a 
consumer’s choice of provider
our marketing strategy includes both 
online advertising such as search 
engine optimisation and offline 
activities this includes mass media 
advertising direct mail sports 
marketing and sponsorship such as 
that of middlesbrough football club 
where our shirt sponsorship deal 
has been a huge success recently 
we also signed up to be the sponsor 
of the iconic world snooker 
championship the event is held  
at the crucible in sheffield uk and 
is the most important event in the 
snooker calendar our sponsorship 
not only catapults us into emerging 
markets such as china and the far 
east where snooker has a huge 
following but our brand will be fully 
14 future prospects
i have no doubt that this industry  
is here to stay and the market will 
continue to grow in line with increasing 
internet penetration throughout the 
world as stated at flotation our goal 
is to become market leader and offer  
a “one stop shop” online leisure 
experience this expansion will be 
achieved both organically and through 
selective acquisition 
our 2005 results confirm we are 
heading in the right direction to 
achieve this we are confident that the 
continued focus on our strategic goals 
through a systematic and evidence
based approach will provide the 
opportunities to deliver further positive 
results in the future
the albeit early trends in 2006 
confirm our confidence in the future 
this year we will expand into more 
countries with better products and  
we will continue to pursue excellence 
in every facet of our business
john anderson
chief executive officer
exposed for hundreds of hours in the 
uk and europe we consider the deal  
to be a major step in continuing to 
spread global awareness of the 888 
brand as part of this 888 will also be 
an associate sponsor of the masters 
grand prix and uk championship 
snooker events
member r elationship management
888 has a first class reputation for  
its member relationship management 
our member support is as international 
as our member base and we currently 
provide support in up to 11 languages 
available 247 our call centres offer 
interactive services and support toll
freefreephone numbers email and 
webchat platforms as well as online 
selfhelp options our staff are all highly 
trained and undergo an ongoing training 
programme to ensure we remain at the 
cutting edge of service excellence
we have consistently focused on 
maintaining and enhancing our 
member support services and have 
developed a valuable proprietary 
member database of over 23 million 
registered members we believe there 
is significant opportunity in both the 
crossselling and upselling of this 
database to maximise member 
retention and lifetime value 
payment systems
payment systems are the lifeblood of 
our industry the number of options we 
use has increased from four in 2000  
to 22 in 2005 we must continually 
upgrade and seek new systems in order 
to give all of our members in different 
markets local methods enabling them 
to pay and play seamlessly
i cannot emphasise enough the 
importance of making available a  
wide variety of payment methods to 
support members in different locations 
and with different needs this alone 
shatters the myth that barriers to  
entry to our industry are low the fact 
is that barriers to successful entry are 
extremely high
backoffice support
our proprietary backoffice systems 
are state of the art and form an 
excellent base to keep our members 
satisfied we spend a lot of money  
to attract new members and it is vital 
we create a service environment that 
keeps them
people
our people are totally dedicated and 
include many of the pioneers of the 
industry they are not only good at 
what they do and have a tremendous 
track record but are focused on the 
future success of the group i would 
like to add my personal thanks to each 
one of our employees worldwide for 
what they have achieved in 2005  
our success is their success
there is no doubt that this is an 
industry which is here to stay and 
the market will continue to grow 
in line with increasing internet 
penetration
15 888 holdings public limited company annual report  accounts 2005 100
125
150
175
200
225
250
original
250
225
200
175
150
125
100
280905
121005
261005
091105
231105
071205
211205
040106
180106
010206
150206
010306
888 share price
financial review
aviad kobrine chief financial officer
a year of transformation 
growth and diversification
flotation on the london  
stock exchange
2005 saw the transformation of 
888 from private to public company 
and on 4 october 2005 ordinary 
shares of the company were 
admitted to the main list of the 
london stock exchange at an offer 
price of £175 representing a 
market capitalisation of £590 
million on 16 december 2005 
the company was admitted to  
the ftse 250 index and as at 
30 december 2005 the last 
trading day of the year the  
closing share price was £194
growth
the year was characterised by 
record growth with net gaming 
revenue reaching us2710 million 
2004 us1779 million a 52 
increase over 2004 and profit after 
tax excluding share benefit 
highligh ts
2005 was a record year for 
888 characterised by strong 
growth record profits and 
cash generation coupled 
with accelerated geographic 
diversification all achieved 
during a busy ipo year
888 finished 2005 with a 
strong balance sheet and a 
positive cash position
net gaming revenue during 
the year rose to us2710 
million an increase of 52 
above 2004
profit before tax and share 
benefit charges during the year 
rose to us67 4 million an 
increase of 56 above 2004
net cash generated from 
operating activities rose to 
us883 million an increase 
of 72 above 2004
■
■
■
■
■
53 millio n new regis tered 
member a ccounts were o pened 
of which 18 millio n were real 
money member a ccounts
16 1
2
3
4
1
geographic segmentation 
net gaming revenue 2005
1 usa 55
2 nonusa 45
0 10 20 30 40 50 60
the uk net gaming revenue 2002–2005
2005
2004
2003
976
661
429 429
2002 429
geographic segmentation net 
gaming revenue – nonusa 2005
1 uk 44
2 europe 38
3 americas 10
4 rest of the world 8
2
0 40 80 120 160
geographic segmentation 
net gaming revenue 20032005
2005
2004
2003
■ usa    ■ europe    ■ rest of the world
101
54
27
12
9
148
103
64
62
45
22
13
13
1
2
3
4
1
geographic segmentation 
net gaming revenue 2005
1 usa 55
2 nonusa 45
0 10 20 30 40 50 60
the uk net gaming revenue 2002–2005
2005
2004
2003
976
661
429 429
2002 429
geographic segmentation net 
gaming revenue – nonusa 2005
1 uk 44
2 europe 38
3 americas 10
4 rest of the world 8
2
0 40 80 120 160
geographic segmentation 
net gaming revenue 20032005
2005
2004
2003
■ usa    ■ europe    ■ rest of the world
101
54
27
12
9
148
103
64
62
45
22
13
13
1
2
3
4
1
geographic segmentation 
net gaming revenue 2005
1 usa 55
2 nonusa 45
0 10 20 30 40 50 60
the uk net gaming revenue 2002–2005
usmillion
2005
2004
2003
976
661
429 429
2002 429
geographic segmentation net 
gaming revenue – nonusa 2005
1 uk 44
2 europe 38
3 americas 10
4 rest of the world 8
2
0 40 80 120 160
geographic segmentation net gaming 
revenue 2003–2005 usmillion
2005
2004
2003
■ usa ■ europe ■ rest of the world
101
54
27
12
9
148
103
64
62
45
22
13
13
1
2
3
4
1
geographic segmentation 
net gaming revenue 2005
1 usa 55
2 nonusa 45
0 10 20 30 40 50 60
the uk net gaming revenue 2002–2005
usmillion
2005
2004
2003
976
661
429 429
2002 429
geographic segmentation net 
gaming revenue – nonusa 2005
1 uk 44
2 europe 38
3 americas 10
4 rest of the world 8
2
0 40 80 120 160
geographic segmentation net gaming 
revenue 2003–2005 usmillion
2005
2004
2003
■ usa ■ europe ■ rest of the world
101
54
27
12
9
148
103
64
62
45
22
13
13
charges reaching us652 million 
2004 us411 million a 59 
increase over 2004 this growth 
accelerated during the second half of 
the year with net gaming revenue and 
profit after tax excluding share benefit 
charges increasing in comparison  
to the first half of the year by 19  
and 66 respectively
member accounts
the group further increased its 
member base in 2005 53 million  
new registered member accounts were 
the rake from ring games plus 
net tournament fees for poker 
grew rapidly during 2005 
achieving a rake in december 
2005 that was 108 higher 
than in december 2004
recruited the majority of firsttime 
depositors from outside the usa 
members from 177 countries played on 
888’s sites with 55 of net gaming 
revenue derived from the usa 20 
from the uk 17 from the rest of 
europe and 8 from other countries 
whilst growth of net gaming revenue 
in the usa market achieved 44 over 
2004 levels the rest of the world far 
exceeded this growth rate at 64
casino
net gaming revenue for casino 
increased by 16 to us1612 million 
2004 us1386 million and active 
casino members increased by 48 to 
97661 the group’s quarterly net 
gaming revenue per active member 
indicator tends to fluctuate over time 
as a result of various promotion and 
data mining activities some of these 
campaigns are targeted at dormant 
opened 2004 47 million of which 
18 million were real money member 
accounts compared to 2004 at 
12 million as at 31 december 2005 
the group had 232 million registered 
member accounts 2004 18 million 
including 55 million real money 
member accounts 2004 37 million
during the final quarter of the year 
the group recorded 330962 active 
members representing a 75 increase 
over the same period in 2004 an 
active member is a member who  
has made a gamerelated balance 
movement in a real money account
geographic diversification
the group continued its geographic 
diversification in 2005 and further 
diluted concentration of net gaming 
revenue from the usa to 55 2004 
58 further in 2005 the group 
17 888 holdings public limited company annual report  accounts 2005 members or members at the later 
stages of their spend profile who 
tend to spend less than newly 
recruited members due to such 
promotion activities quarterly net 
gaming revenue per active casino 
member in the final quarter of 2005 
was us419
29 million new registered casino 
member accounts were opened 
2004 32 million of which 09 
million were real money member 
accounts compared to 2004 at  
07 million as at 31 december 
2005 the group had 189 million 
registered casino member accounts 
2004 16 million including 41 
million real money member casino 
accounts 2004 32 million
poker
net gaming revenue for poker rose 
dramatically by 179 to us1098 
million 2004 us393 million 
active poker members increased by 
89 to 233301 in the final quarter 
of 2005 quarterly net gaming 
revenue per active member was 
us156
23 million new registered poker 
member accounts were opened 
2004 15 million of which 09 
million were real money member 
accounts compared to 05 million in 
2004 as at 31 december 2005 
the group had 43 million 
registered poker member accounts 
2004 20 million including 15 
million real money poker member 
accounts 2004 06 million
the rake from ring games plus net 
tournament fees for poker grew 
rapidly during 2005 achieving a rake 
in december 2005 that was 108 
higher than in december 2004
expenses
operating expenses
operating expenses for 2005 were 
us730 million representing 27 of 
net gaming revenue a reduction 
compared to 2004 28
research and development
an increase of 65 in research and 
development expenditure in 2005 
from us69 million to us113 
million further demonstrates the 
group’s continued commitment to 
invest in technology this continues 
to enhance the offering of innovative 
gaming products to members
selling and marketing
during the year the group continued 
its long term strategy of investment 
in its global brand 888 which is 
not language dependent by utilising 
a wide variety of marketing channels 
to attract new members to its web 
sites these include online media 
affiliates and offline campaigns as 
well as other innovative promotion 
and marketing activities selling and 
marketing costs were us1000 
million 2004 us645 million 
whilst cost per acquisition 
excluding members recruited by 
affiliates on a revenue share basis 
remained competitive in 2005 at 
us183 2004 us192 
administration
administrative costs excluding share 
benefit charges were us201 
million 2004 us136 million 
representing a slight reduction to 7 
of net gaming revenue 2004 8
financial review
18 investment in human capital
as at year end the group had 886 
employees 2004 689 at the 
following locations gibraltar – 391 
israel – 369 antigua – 115 and 
london – 11 as part of its strategic 
investment in human capital at the 
time of flotation of the company on  
the london stock exchange eligible 
management and employees received 
share awards including share options 
under the 888 allemployee share 
plan in addition the principal 
shareholder trusts made a onetime 
grant of immediately vested shares  
to management and employees 
details of which are set out in the 
remuneration report on page 31  
the grants had no cash impact on  
the group but under the applicable 
accounting standard ifrs 2 this 
results in a charge in respect of share 
benefit against income calculated  
on a phased basis as set out in the 
accounting policies on page 42 these 
two grants resulted in a charge to the 
consolidated income statement of 
us21 million and us151 million 
respectively within the 2005 annual 
report and accounts these are 
collectively referred to as the share 
benefit charges
tax and profit
operating profit before share benefit 
charges for the year was 56 higher  
at us667 million 2004 us428 
million with operating profit margin 
before share benefit charges having 
increased to 25 2004 24 in 2005 
the group continued to benefit from a 
low effective tax rate as a result of  
its exempt status in both gibraltar  
and antigua and a transfer pricing 
agreement with the tax authorities in 
israel as a result the tax charge in 
2005 was unchanged on the prior year 
at approximately us2 million profit 
after tax excluding share benefit 
charges was 59 higher at us652 
million 2004 us411 million
earnings per share
basic earnings per share excluding 
share benefit charges was 193¢ being 
a 58 increase over 2004 diluted 
earnings per share excluding share 
benefit charges was 193¢ being a 
58 increase over 2004 basic 
earnings per share was 142¢
dividends
during the year dividends paid totalled 
us631 million 2004 us261 
million the group has adopted a 
dividend policy whereby it intends to 
pay dividends to holders of ordinary 
shares and depositary interests 
representing 50 of annual profits in 
aggregate approximately one third of 
the amount for the year will be declared 
as an interim dividend the first 
dividend is expected to be declared in 
relation to the results of the group for 
the first six months of 2006 on the 
basis as set out in the prospectus
cash flows and balance sheet
in accordance with the group’s 
practice members are required to 
deposit funds into their accounts prior 
to participating in any real money 
activity as a matter of policy the 
group keeps sufficient liquid resources 
in us dollars to meet the possible 
withdrawal of all member balances  
at any time the group is highly cash 
generative with net cash generated 
from operating activities in 2005 of 
us883 million 2004 us514 
million representing 132 of 
operating profit for the year before 
share benefit charges cash generated 
has been used mainly for dividends 
declared and partly paid prior to 
flotation of us631 million 2004 
us261 million cash increased for 
the year by us219 million 2004 
us107 million resulting in a cash 
position at year end of us622 
million 2004 us403 million  
the group has no debt
accounting standards
the group’s gaming products are  
all denominated in us dollars and 
accordingly the group’s functional  
and reporting currency is the  
us dollar the 2005 financial 
statements are prepared in 
accordance with international  
financial reporting standards
summary and outlook
2005 saw the transformation of 888 
into a public company characterised by 
strong growth profitability and cash 
generation the group’s financial 
strength continued investment in the 
brand and technological innovation 
comprise the robust foundation 
required to achieve our goals
aviad kobrine
chief financial officer
19 888 holdings public limited company annual report  accounts 2005 board of directors
20 1 r ichard kilsby ♥ ♠
nonexecutive chairman
richard kilsby has been chairman 
since march 2006 having previously 
been deputy chairman of the company 
from august 2005 he is currently a 
director of collins stewart tullett plc 
since 2001 he has held several board 
and management positions in various 
private and venturecapital funded 
companies in 2004 he acted as 
independent monitor for the sec and 
usa department of justice from 1999 
to 2002 he was chief executive of 
tradepoint and subsequently executive 
vice chairman of virtx plc from 1995 
to 1998 he was an executive director 
of the london stock exchange prior  
to which he was a managing director 
for bankers trust from 1992 to 1995 
he was also vice chairman of 
charterhouse bank from 1988 to 1992 
and a partner of pricewaterhouse from 
1984 to 1988 age 54
2 john anderson ♠
chief executive officer
john anderson has been the chief 
executive officer of the company since 
september 2000 he is currently  
nonexecutive chairman of burford 
holdings plc and was chief executive 
officer of burford holdings plc from 
1996 to 2000 he is also a board 
member of igc and ecogra he held 
a number of senior executive positions 
within ladbrokes plc and from 1990  
to 1996 he served as an executive 
director age 57
3 aviad kobrine
chief financial officer
aviad kobrine has been chief financial 
officer of the company since june 
2005 and was appointed to the board 
in august 2005 from october 2004 
he was a consultant to 888 
previously he was a banker with the 
media telecoms investment banking 
group of lehman brothers and prior  
to that he was a senior associate  
with slaughter and may he holds a 
masters in finance from the london 
business school distinction a ba in 
economics and an llb from tel aviv 
university age 42
4 shay benyitzhak
chief technical officer
shay benyitzhak is one of 888’s 
founders and has been the chief 
technical officer of the company and 
in charge of research and development 
since the establishment of its research 
and development centre in tel aviv in 
1998 previously he was a software 
engineer for tower semi conductor 
limited and cibam technologies 
limited he holds a bsc in computer 
science from technion – the israel 
institute of technology age 37
5 brian mattingley ♦ ♥ ♣
deputy chairman and senior 
independent nonexecutive director
brian mattingley has been deputy 
chairman since march 2006 having 
been appointed to the board in august 
2005 he is currently nonexecutive 
chairman of the academy music group 
and was previously chief executive of 
gala regional developments limited 
until 2005 from 1997 to 2003 he was 
group finance and strategy director of 
gala group plc prior to which he was 
chief executive of ritz bingo limited 
he has held senior executive positions 
within kingfisher plc and dee 
corporation plc age 54
6 michael constantine ♦ ♥ ♣ ♠
independent nonexecutive director
michael constantine was appointed  
in august 2005 he is a chartered 
accountant and a member of the 
compliance institute from 1996 to 
1998 he was deputy superintendent of 
the turks and caicos islands financial 
services commission and in 1995 he 
was head of the financial supervision 
unit of the mauritius offshore business 
activities authority from 1991 to 1995 
he was an inspector at the gibraltar 
financial services commission latterly 
acting commissioner prior to this he 
was a partner of spain brothers  
company and served in the royal naval 
reserve reaching the rank of 
commander age 67
7 amos pickel ♦ ♥ ♣ ♠
independent nonexecutive director
amos pickel was appointed in march 
2006 he is currently chief executive 
officer and member of the board  
of directors of red sea hotels ltd 
formerly a nonexecutive director  
of gresham hotel group plc he is a 
solicitor holding a masters in law from 
new york university and a ba in law 
from tel aviv university age 39
committee memberships
♦ audit
♥ nomination
♣ remuneration
♠ regulatory and compliance
21 888 holdings public limited company annual report  accounts 2005 as a pioneer in the online gaming industry 888 has sought 
to take the lead in setting the industry standards for 
self‑regulation and is fully committed to responsible gaming
gaming is a form of entertainment enjoyed by many  
people and it is 888’s aim to provide members with a 
comprehensive selection of gaming activities in a secure 
trustworthy environment
selfregulation
888 was a founding member of ecogra e‑ commerce online 
gaming regulation and assurance an independent body 
that has developed a series of self‑ regulatory guidelines 
888’s casinos have adopted the recommendations and 
procedures laid down by ecogra compliance with these 
recommendations and procedures is subject to independent 
review this review bolsters and supplements the internal 
control procedures in place at 888 in order to ensure that 
objectives of player protection fair gaming and responsible 
conduct are met 888 was awarded a seal of approval by 
ecogra for its casinos following a due diligence audit 
process by an independent committee of the board 
of ecogra
888 is a founding member of the gibraltar betting and 
gaming association which has been set up to represent  
the gaming industry in gibraltar
888 is also an active participant in the interactive gaming 
council igc – an online gaming trade association which 
was founded to establish promote and enforce a uniform 
code of conduct across the entire online gaming industry – 
and has adopted the igc’s code of conduct
problem gaming
to promote responsible gaming 888 has a number of 
technological and policy measures in place to identify 
irregular playing patterns systems exist to identify 
behaviour patterns that may indicate problem gaming 
including the following
all our sites have clear and visible links to assist  
with gaming problems gamblers anonymous and 
helping hand
there are progressive limits on deposits as well as  
table limits that are in place to prevent members from 
spending large amounts of money over a short period 
of time
■
■
our member support staff proactively monitor members’ 
activity such as total spend time length and frequency 
of playing sessions in order to identify potential 
problem gamblers
in cases where members are confirmed as having a 
gaming problem or financial difficulties their accounts  
are immediately blocked and can only be opened again 
after a suspension period and after ascertaining that  
the financial or other problems have been resolved and
our member support team is trained in all the above 
issues to be able to identify and deal with such problems 
at the earliest practicable stage
underage gaming
888 takes underage gaming extremely seriously acting 
quickly to close an account and return monies whenever a 
complaint or suspicion is raised regarding a member’s age
888 is involved in continuous dialogue with payment 
processors the industry and industry regulatory bodies 
such as ecogra to establish and implement the best 
possible solutions to prevent underage gaming
in the uk where some debit cards are issued to minors 
we have developed specific systems to deal with underage 
gaming 888 has created its own tools for identifying 
possible underage gaming by solo switch and visa 
electron card holders 
additionally 888 has recently installed the state‑ of‑ the‑ art 
uru you are you system a new e‑ authentication scheme 
for age and identity verification launched by british telecom 
and a data management software provider gb group uru 
does not require members to create an online identity by 
providing personal details to the service which then 
authenticates them but instead uses existing information  
to verify an individual’s identity the system can confirm an 
individual’s identity in seconds by checking a number of 
public and private databases 
888 strives to take the lead in evolving best practice 
developing new systems and keeping its policies and 
procedures under continuous review
■
■
■
responsible gaming
22 regulatory and compliance review
the regulatory framework of online gaming in different 
countries around the world remains as dynamic and rapidly 
evolving as ever while some jurisdictions have moved to 
curtail the activities of online gaming sites others are 
currently contemplating liberalisation and regulation of the 
industry the board note that there are significant risks 
unique to the online gaming industry including in the usa 
where members of 888 generated 55 of our net gaming 
revenue in 2005 the board remains committed to 
monitoring closely and addressing regulatory changes as 
they occur and to fostering so far as possible the trend 
towards liberalisation and regulation of online gaming 
throughout the world
888 is licensed and regulated in gibraltar in december 
2005 the government of gibraltar enacted a new gambling 
ordinance the ordinance introduces a tailor‑ made regime 
for the regulation of remote gaming 888 has actively 
supported the introduction of such legislation and the board 
looks forward to full implementation in the coming months 
which will include the appointment of a new regulator
in the usa several members of congress have proposed 
various bills aimed at prohibiting online gaming in the usa 
or financial transactions with online gaming sites these 
bills are currently in their preliminary legislative stages and 
the board will continue to monitor their progress closely 
in italy authorities have recently ordered local internet 
service providers to prohibit access by italian users to 
foreign gaming sites the board is carefully monitoring this 
development and together with others in the online gaming 
industry is weighing up its potential responses especially 
in light of the fact that this legislation is perceived to be in 
contravention of european law
in israel law enforcement authorities have raided the 
offices of several internet portals and arrested several 
individuals on the suspicion that they had advertised online 
gaming sites in israel in contravention of the israeli penal 
law 888 does not allow israelis to wager on its websites 
and has systems to prevent them doing so 
however 888 has been advised that since it does not 
facilitate offer or provide gaming activities prohibited under 
the penal law to israeli residents the penal law will not be 
applicable to 888 since no offence is committed wholly or in 
part within israeli territory
the board continues to monitor these developments closely 
and is alert to changes as they may occur in areas where 
the group operates
888 holdings public limited company annual report  accounts 2005 23 corporate governance
888 is listed on the london stock exchange but it is not 
technically subject to the uk combined code on corporate 
governance issued in july 2003 the code because it is  
a gibraltar registered company the directors support the 
high standards of corporate governance set out in the  
code and will apply the principles as far as practicable for  
a company based outside the uk this statement sets out 
how the board has applied the principles set out in section 
1 of the code from the date of the company’s flotation on 
4 october 2005
the board
the directors consider it essential that the company should 
be both led and controlled by an effective board
composition
the board consists of three independent non‑ executive 
directors a non‑ executive chairman and three executive 
directors comprising chief executive officer chief financial 
officer and chief technical officer the biographical details 
of all the directors are given on page 21
strategic approach
the board focuses upon the group’s long‑ term objectives 
strategic and policy issues and considers management of 
key risks facing the group the board is responsible for 
acquisitions and divestments major capital expenditure 
projects and considering group budgets and dividend policy 
the board also determines key appointments the board 
receives regular updates on shareholders’ views and more 
detailed briefings are to be given to the board immediately 
following the publication of the company’s annual and 
interim results 
the board has established a calendar of business within 
which it is currently working post flotation to structure the 
conduct of its activities going forward this provides for the 
financial calendar strategic planning annual budgets and 
performance self‑ assessments as well as the conduct of 
standing business the calendar is intended to form the 
basis for effective integration of business activities as 
between the board and its principal committees see pages 
25 and 26 which individually consider their own operating 
frameworks against the board’s business programme
the board plans to meet eight times a year in the period 
from flotation to 31 december 2005 the board met twice 
and all of the directors attended each of the board meetings 
ad‑hoc meetings can be convened to attend to any matters 
requiring board consideration in between regular meetings
the chairman has responsibility for ensuring that agendas 
for board meetings are set in advance board papers  
are where practicable issued to directors sufficiently  
in advance of meetings to facilitate both informed debate 
and timely decision
nonexecutive review and performance appraisal
the chairman plans to hold meetings at least one per year 
with the non‑ executive directors without the executive 
directors being present led by the senior independent 
director the non‑ executive directors also plan to meet 
without the chairman present at least once a year to 
appraise the performance of the chairman in the period 
from flotation to 31 december 2005 no such meetings 
were held the directors have wide ranging business 
experience and no individual or group of individuals 
dominates the board’s decision making
the board considers that brian mattingley michael 
constantine and amos pickel satisfy the criteria of the code 
to act as independent non‑ executive directors the board  
is satisfied that at flotation the former chairman met the 
independence criteria of the code as did richard kilsby  
upon his appointment as chairman the chairman is not 
considered as independent for the purposes of assessing  
the balance of the board pursuant to the code
brian mattingley was appointed deputy chairman and 
senior independent director on 9 march 2006
reserved powers and delegation
a schedule of matters reserved to the board has been 
adopted and its content is being kept under review as the 
business develops 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 
senior executives have given written undertakings to ensure 
compliance within their business operations with the 
board’s formal schedule of matters reserved for itself for 
decision or approval within these parameters a framework 
of delegated authorities is being developed to ensure that 
management can exercise on an ongoing basis requisite 
authority for an effective business operation 
division of responsibilities
the responsibilities of the chairman are clearly and formally 
defined with the chairman being responsible for the 
effective operation of the board as a whole and supporting 
key external relationships 
the executive directors are responsible for the day‑ to‑ day 
management of the business the chief executive officer 
chairs an operations forum which is a working group 
comprising key senior executives its principal function is  
to act as a conduit for communication between different 
areas of the group’s business and allow the interchange  
of ideas as well as feedback between the research and 
development marketing and operational functions across 
the group executive directors meet individually and 
collectively with heads of functions and line management  
to coordinate business priorities
24 other issues
all directors have access to the advice and services of  
the company secretary 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 
their intention to do so the appointment or removal of the 
company secretary is a matter for the board as a whole
the board accepts that there should be a formal rigorous 
and transparent procedure for the induction of new 
directors which is to be formulated with the guidance  
of the nominations committee
the opportunity to hold office as non‑ executive directors of 
other companies enables directors of 888 to broaden their 
experience and knowledge which will benefit the company 
executive directors may be allowed to accept non‑ executive 
appointments with the board’s prior permission so long as 
these are not likely to lead to conflicts of interest directors 
may be required to account for fees received from such 
other companies
the company has arranged insurance cover in respect  
of any legal action against its directors to the extent 
permitted by gibraltar law the company also indemnifies 
the directors neither the insurance nor the indemnity 
provides cover where a director has acted fraudulently 
or dishonestly
reelection of directors
all directors are subject to re‑ appointment by shareholders 
at the first annual general meeting after their appointment 
and thereafter in accordance with the articles of 
association of the company at intervals of no more than 
three years richard kilsby non‑ executive chairman  
brian mattingley michael constantine and amos pickel  
the independent non‑ executive directors are appointed  
for an initial period of three years following re‑ appointment  
if approved by shareholders at the first annual general 
meeting after their appointment 
audit committee
the audit committee comprises three independent  
non‑ executive directors brian mattingley chair michael 
constantine and amos pickel during 2005 richard kilsby 
was chairman of the audit committee until his appointment 
as chairman of the company in march 2006 the board  
is satisfied that brian mattingley has sufficient recent and 
relevant financial experience to chair the audit committee 
normally by invitation the chief financial officer and 
internal auditor attend committee meetings as can 
representatives of the external auditors in 2005 the 
committee met once and all of the committee members 
attended the meeting
the audit committee’s terms of reference are available on 
request to the company secretary and are included on the 
company’s website www888holdingsplccom
in summary the committee assists the board in 
discharging its responsibilities with regard to financial 
reporting external and internal audits and controls 
including reviewing 888’s annual financial statements 
considering the scope of annual audit and the extent  
of non‑audit work undertaken by external auditors 
approving 888’s internal audit programme advising  
on the appointment of external auditors and reviewing  
the effectiveness of internal control systems
following a review in 2005 by the audit committee  
the board adopted on 31 january 2006 a group‑ wide 
framework enabling employees to raise any concerns under 
a formalised “whistleblowing” policy in confidence and 
with the assurance of employment protection under the 
policy the audit committee is responsible for monitoring 
and reviewing the operation of this policy
nominations committee
the nominations committee assists the board in 
discharging its responsibilities relating to the composition  
of the board the nominations committee is responsible  
for reviewing from time to time the structure of the board 
determining succession plans for the chairman and chief 
executive officer and identifying and recommending 
suitable candidates for appointment as directors the 
nominations committee’s terms of reference are available 
on request to the company secretary and are included on 
the company’s website www888holdingsplccom
the nominations committee comprises three independent 
non‑ executive directors michael constantine chair brian 
mattingley amos pickel and richard kilsby chairman  
the nominations committee did not meet during 2005  
and at this early stage from flotation has not undertaken  
a formal evaluation of the balance of skills knowledge and 
experience on the board this extends to director training 
induction and succession planning
the nominations committee will in 2006 be considering  
a structured framework for board committee and director 
evaluations and other matters within a programme of 
activities designed to address its assigned terms 
of reference
888 holdings public limited company annual report  accounts 2005 25 corporate governance
remuneration committee
the company’s remuneration committee was formed at 
flotation and comprises solely independent non‑ executive 
directors brian mattingley chairs the committee and its  
other members are michael constantine and amos pickel 
richard kilsby was a member of the committee up until his 
appointment as chairman of the company the remuneration 
committee met twice during 2005 both meetings of the 
committee were attended by all of the committee members 
during the period it anticipates meeting not less than twice  
in 2006 to address its responsibilities under its formal terms 
of reference through the creation of a considered schedule  
of business 
the committee assists the board in determining its 
responsibilities in relation to remuneration including  
making recommendations to the board on 888’s policy  
on executive remuneration determining the individual 
remuneration and benefits of each of the executive 
directors and recommending and monitoring the 
remuneration of senior management below board level 
the remuneration report which outlines the committee’s 
work and details of directors’ remuneration is on  
pages 29 to 34 the remuneration committee’s terms  
of reference are available on request to the company 
secretary and are included on the company’s website 
www888holdingsplccom
regulatory and compliance committee
although not specifically recommended by the combined 
code the board has established a regulatory and 
compliance committee to assist 888 to conduct its 
operations in accordance with the highest ethical 
standards in particular the regulatory and compliance 
committee assists the board in relation to compliance  
with all current and prospective applicable regulatory  
and legal requirements as well as the development and 
implementation of 888’s internal codes and policies
the committee comprises michael constantine chair  
since march 2006 richard kilsby amos pickel and john 
anderson the committee did not meet during 2005 but has 
done so since the year end to plan a calendar of activities 
and determine interaction with the audit committee
the regulatory and compliance committee’s terms of 
reference are available on request from the company 
secretary and are included on the company’s website 
www888holdingsplccom
risk management and internal control
the directors acknowledge that they are responsible for  
the company’s system of internal control for setting policy 
on internal control and for reviewing the effectiveness  
of internal control 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 regulatory and compliance committee has 
responsibility for assisting in the implementation of  
an effective framework of policies and procedures  
group‑ wide 
the board has delegated responsibility to the audit 
committee to review ongoing the appropriateness  
and adequacy of systems of internal control and make 
recommendations to the board the company has an 
internal auditor who reports to the audit committee  
whose audit program for 2006 has been reviewed by  
the audit committee 
888’s risk management team based in gibraltar has 
developed stringent risk management and fraud control 
procedures the team makes use of external and internal 
systems to manage the risks faced by 888’s operational 
systems detailed procedures exist throughout the 
company’s operations and compliance is monitored  
by operational management and the internal auditor
an extensive risk review was conducted preparatory to  
the flotation in october 2005 part ii of the prospectus 
described risk factors faced by the group the directors 
have reviewed the effectiveness of the group’s systems  
of internal control taking account of key risks identified 
during the flotation process the review considered 
individual risk control responsibilities reporting lines and 
qualitative assessments of residual risks the results  
have been discussed by the audit committee which has 
advised the board on the ongoing development of corporate 
controls the audit committee is guiding internal audit on 
the establishment of a framework for the monitoring of 
management processes operated to develop integrate  
and embed effective group‑ wide controls
relations with shareholders and  
key financial audiences
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 outcome of these meetings  
is reported to the whole board to ensure it keeps in touch 
with shareholder and city opinion the programme includes 
formal presentations of full year and interim results
26 brian mattingley the senior independent director is 
available to shareholders to address any issues that normal 
contact with the chairman chief executive officer and chief 
financial officer has failed to resolve or is inappropriate
all shareholders are welcome to attend the 2006 annual 
general meeting and private investors are encouraged to 
take advantage of the opportunity given to ask questions 
the chairmen or nominated members of the audit 
remuneration nominations and regulatory and compliance 
committees will attend the meeting and be available to 
answer questions
compliance with the code provisions
as 888 holdings public limited company is registered in 
gibraltar it is subject to compliance with gibraltar statutory 
requirements and is not technically bound by the uk 
combined code the main legislation relevant to companies 
in gibraltar is the gibraltar companies ordinance which is 
based on the uk companies act 1929
the board of directors confirm that since flotation the 
company has complied with the majority of the provisions 
set out in section 1 of the combined code the exception  
is the performance evaluation of the board which has not 
been undertaken given that there has been insufficient 
time since flotation for it to be meaningful 
going concern
after reviewing the group’s budget for 2006 and its medium 
term plans the directors are confident that the company 
and the group have adequate financial resources to 
continue in operational existence for the foreseeable future 
they have therefore continued to adopt the going concern 
basis in preparing its financial statements
corporate and social responsibility statement
the group’s chief executive officer is the director 
responsible for monitoring corporate and social 
responsibility within 888 the board receives periodic 
reports on the group’s activities in this area from the  
chief executive officer
members
the board is eager to promote online gaming as a 
responsible self‑ regulating industry which is prepared  
to submit itself to regulatory licensing and believe this is a 
key factor in attracting more participation in online gaming 
activities 888 has sought to take the lead in setting the 
industry standards and a separate report on responsible 
gaming is set out on page 22
other aspects which 888 promotes include
providing the highest levels of service and support  
to the group’s members
protecting member privacy and the proper handling  
and use of data in accordance with applicable law
ongoing training development and motivation of 
employees to retain the widest possible range of 
talented staff and
provision of a safe and healthy workplace in accordance 
with relevant legislation
service and support to members
888 is committed to providing the highest levels of service 
and support to its members there is a dedicated team  
of in‑ house trained member support representatives  
for each of the group’s brands providing support 247  
in up to 11 different languages a separate highly skilled 
team is dedicated to vip members member support 
representatives are strictly monitored and benefit from 
ongoing refresher training courses 888 has retained 
leading call centre experts to further enhance the quality  
of its member support
protecting member privacy
all 888’s online products maintain a privacy policy which  
is clearly accessible from each of the group’s websites 
explaining how the group deals with members’ personal 
data all processing of members’ personal data is 
undertaken in‑ house and where personal data is transferred 
between group companies appropriate intra‑ group 
processing contracts are put in place 
the eu directive on data protection has recently been 
enacted in gibraltar but has not yet been brought into force 
888 has for some time carried out the processing of its 
members’ personal data accordingly in accordance with  
the eu directive
employees
the group respects individuals’ human rights and treats 
individuals with dignity and respect the board supports 
high standards of employment practice including providing 
equal opportunities in the workplace in terms of selection 
promotion training and development and a safe 
environment in which to work the group has reviewed  
its compliance with health and safety legislation in its 
various locations
■
■
■
■
888 holdings public limited company annual report  accounts 2005 27 training and development
training and development is provided to individuals 
throughout their career to enable employees to maintain 
and improve standards of performance deal effectively  
with any changes to the work environment and to develop 
their abilities and realise their potential selection for  
further training and development is based upon individual 
and business needs 2006 will see the launch of the  
888 certification scheme an initiative that develops  
all employees regardless of level covering a range of 
disciplines unique to our brand
equal opportunities
888 is an equal opportunity employer no employee or 
potential employee will therefore receive less favourable 
treatment due to their race creed colour nationality ethnic 
origin religion political or other opinion affiliation gender 
sexual orientation marital status family connections 
membership or non‑ membership of a trade union 
or disability
corporate governance
communication
the board values the involvement of all the group’s 
employees and is committed to communicating effectively 
with them through formal and informal meetings and 
internal publications including in‑ house newsletters  
and employee reports 
community 
sponsorship
888 is a sizeable employer with a visible presence in 
gibraltar and enjoys a good relationship with the local 
community during 2005 the group has reinforced this 
relationship by making contributions to a number of local 
causes primarily educational 
charities
in 2005 the group made regular donations to free the 
children earthaction and netaid the group also made  
a donation to the disasters emergency committee 
tsunami appeal
28 remuneration report
this is the first remuneration report of the board as a  
uk listed public company the company is not required  
to comply with the directors remuneration report 
requirements in schedule 7a to the uk companies act 
1985 but has chosen to prepare this remuneration  
report on the basis of those requirements
the report sets out the structure and details of the 
remuneration of the directors for the year ended 
31 december 2005 it also describes the board’s  
approach to the principles of good governance relating  
to directors’ remuneration
a resolution to approve the remuneration report will be 
proposed annually to shareholders for approval this first 
remuneration report will be put to shareholder vote at the 
2006 annual general meeting
remuneration committee
the remuneration committee consists solely of independent 
non‑ executive directors brian mattingley chair michael 
constantine and amos pickel since flotation up to his 
appointment as chairman of the company richard kilsby 
was also a member of the committee details of attendances 
at committee meetings are contained in the statement on 
corporate governance on page 26 the remuneration 
committee has formal terms of reference which are available 
on request in writing to the company secretary and on the 
company’s website www888holdingsplccom
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 senior management and the fees of the chairman
independent advice
the board intends that executive remuneration policies be 
both formal and transparent it further acknowledges the 
importance of taking into consideration independent advice 
in setting remuneration policies and benefit levels
in the preparatory period for the company’s flotation on  
the london stock exchange the board was advised by  
bdo stoy hayward llp which also acted as reporting 
accountants on its initial policies freshfields bruckhaus 
deringer as english legal counsel and herzog fox  
neeman as israeli counsel since the end of the financial 
year a process has been commenced to identify an 
independent executive remuneration adviser to advise the 
remuneration committee the selected adviser will be 
familiar with benefit structures operated within comparable 
technology businesses with a global spread and the  
leisure sector
remuneration policy
executive directors
remuneration packages must be sufficient to attract retain 
and motivate directors of the calibre appropriate to a global 
business in a competitive environment
the current remuneration packages of the executive directors 
were implemented preparatory to the october 2005 flotation 
each executive director signed a new service agreement on 
14 september 2005 the components of the remuneration 
structure are set out on page 30
at least half of the total potential remuneration of the chief 
executive officer and chief financial officer is represented  
by a variable element dependent on the performance of the 
company the remuneration committee considers that these 
represent achievable and motivational levels of personal 
rewards commensurate with stipulated levels of corporate 
performance the chief technical officer receives only a base 
salary and no additional performance related remuneration 
his significant share interest in 888 is considered to provide 
substantive linkage to corporate performance
the remuneration committee is mandated by the board  
to satisfy itself that the level of the directors’ and senior 
management’s remuneration is appropriate having regard  
to pay and conditions throughout the rest of the group it 
will further satisfy itself that such remuneration aligns with 
the risks and rewards to shareholders in this context the 
remuneration committee will regularly review individual and 
corporate performance targets
the 888 long term incentive plan ltip was approved prior 
to flotation but no awards have been granted under the ltip 
performance criteria are to be set in relation to the planned 
operation of the ltip see pages 30 to 31 and it is 
intended that they will be suitably stretching and linked  
to the company’s performance
in 2006 after taking independent advice and with due 
regard to existing contractual arrangements and relevant 
statements made at flotation the remuneration committee 
will consider and thereafter keep under review the level 
and composition of executive remuneration within 888  
the committee acknowledges the importance of balancing 
fixed and performance‑ related remuneration elements  
such that appropriate targets and aspirational levels for 
executives align with the corporate objectives set and the 
successful operation of business strategies the review will 
take into account the balance between fixed and variable 
remuneration and short and long term components of 
remuneration together with the justification for any salaries 
exceeding a comparator group median
nonexecutive directors
the chairman and the non‑ executive directors receive fees 
only and are not eligible to participate in any bonus plan 
888 holdings public limited company annual report  accounts 2005 29 pension plan share plan or long‑ term incentive plan  
of the company the chairman and the executive  
directors determine the fees paid to the non‑ executive 
directors the chairman’s fee is determined by the 
remuneration committee
fees paid to the non‑ executive directors were set by 
reference to an assessment of the time commitment and 
responsibility associated with each role levels take account 
of additional demands placed upon individual non‑ executive 
directors by virtue of their holding particular offices such  
as committee chairman andor deputy chairman the  
fees paid to each non‑ executive director during 2005  
are disclosed in the directors’ remuneration summary  
on page 32
remuneration structure
base salary and benefits
base salaries are subject to annual review with the first 
review following flotation taking place in june 2006 for  
aviad kobrine and shay ben‑ yitzhak in considering reviews 
in the future it is anticipated that the remuneration 
committee will take into account key factors including 
individual performance appraisals market competitive levels 
geographic issues and the salary levels of other higher paid 
executives across the organisation as a whole
to assist the remuneration committee in their judgements 
benchmark comparator group information comprising the 
company’s principal competitors and other companies  
of similar size and complexity in the ftse 250 is  
to be commissioned for compilation from independent 
remuneration consultants the positioning of 888’s executive 
salary levels within the benchmark group distribution will 
then be submitted to the remuneration committee for 
consideration with independent advice
benefits provided to senior executives include a car 
allowance and health disability and life insurance
annual cash bonus
john anderson and aviad kobrine are each entitled to  
an annual cash bonus subject to the achievement of a 
predetermined level of net earnings by their respective 
employers in the case of john anderson the company and 
in the case of aviad kobrine the company and cassava 
enterprises gibraltar limited the maximum annual cash 
bonus entitlement for john anderson is 200 of basic salary 
and for aviad kobrine 100 of basic salary shay ben‑yitzhak 
is not entitled to an annual cash bonus
pensions
john anderson and aviad kobrine are each entitled to an 
annual contribution to their personal pension schemes  
of 15 of their respective basic salaries in the case of  
aviad kobrine 15 of his basic salary under both service 
agreements shay ben‑ yitzhak is entitled to an annual 
contribution to his personal pension scheme and managers’ 
insurance scheme of 1333 of his basic salary
long term incentives
on 30 august 2005 the company adopted two employee 
share incentive plans which took effect from flotation i the 
888 all‑ employee share plan and ii the 888 long term 
incentive plan on flotation awards were granted under the 
888 all‑ employee share plan during 2005 no awards were 
granted under the 888 long term incentive plan and none 
have been made to date
888 allemployee share plan
all employees and executive directors of the group who  
are not within six months of their normal retirement age are 
eligible to participate in the 888 all‑ employee share plan at 
the discretion of the remuneration committee at the 2006 
annual general meeting shareholder approval will be sought 
to extend the definition of eligible participants to include 
consultants of the company or any of its subsidiaries
awards under the 888 all‑ employee share plan can either be 
granted for nonominal consideration or with a nil exercise 
price or at an exercise price that will normally not be less 
than the market value of an ordinary share at the time of 
grant in countries where an award or option involving real 
shares is not appropriate or feasible for legal regulatory or 
tax reasons a phantom award may be used
the maximum number of ordinary shares that an eligible 
employee may acquire pursuant to share awards or options 
granted to him in any calendar year under the 888 all‑ employee share plan may not have an aggregate market 
value as measured at the date of grant exceeding 200  
of his annual base salary or such higher limits as the 
remuneration committee may determine is appropriate in 
any individual case awards vest in instalments over a fixed 
period of up to four years the remuneration committee may 
determine that the vesting and release or exercise of share 
awards and options under the 888 all‑ employee share plan 
is subject to performance conditions imposed at the time of 
grant the initial grant of awards upon flotation under this 
scheme was not subject to performance conditions other 
than the actual occurrence of the flotation
888 long term incentive plan
all employees and executive directors of the group who  
are not within six months of their normal retirement age are 
eligible to participate in the 888 long term incentive plan  
at the discretion of the remuneration committee
share incentives under the 888 long term incentive plan can 
be awarded either for nonominal consideration or with a nil 
exercise price or granted as an option at an exercise price 
that will normally not be less than the market value of an 
ordinary share at the time of grant in both cases the share 
award or option vests subject to and to the extent that 
performance conditions determined at the time of grant  
are satisfied during the applicable performance period 
performance conditions are not capable of being retested so 
that any proportion of a performance share award or option 
which does not vest on the normal vesting date will lapse
remuneration report
30 in countries where a share award or option involving real 
shares is not appropriate or feasible for legal regulatory or 
tax reasons a phantom award may be used the maximum 
number of ordinary shares that an eligible employee may 
acquire pursuant to share awards or options granted to him 
in any calendar year under the 888 long term incentive plan 
may not have an aggregate market value as measured at  
the date of grant exceeding 200 of his annual base salary 
or such higher limits as the remuneration committee may 
determine is appropriate in any individual case
no share award or option may be granted to an employee 
under the 888 long term incentive plan in any calendar  
year if he has previously been granted a share award  
or option under the 888 all‑ employee share plan in the  
same calendar year 
subject to the satisfaction of applicable performance 
conditions performance share awards and options will 
normally vest in equal tranches over a four‑ year vesting 
period on each anniversary of the date of the grant or on 
such other period or such other basis as the remuneration 
committee may decide
as at the date of this report no awards have been granted 
pursuant to the 888 long term incentive plan in the prospectus 
published at flotation the remuneration committee anticipated 
granting awards under the 888 long term incentive plan to 
members of the senior executive management team including 
the executive directors the remuneration committee has yet 
to consider and determine how many shares will be subject to 
such awards or what performance conditions will apply to them 
it is intended that they be suitably stretching and linked to the 
company’s performance 
policy on long term incentives
the remuneration committee will obtain and consider 
independent advice in setting policy on the grant of options 
and awards the performance criteria to which options and 
awards are subject and the period over which options  
and awards will vest when operating the 888 all‑ employee 
share plan and 888 long term incentive plan in future the 
remuneration committee will also have regard to the total 
remuneration packages of all senior executives and directors 
when determining the amount of share awards
scheme limits
awards and options granted under the 888 all‑ employee 
share plan and the 888 long term incentive plan may be 
satisfied through the issue of new shares in accordance with 
the association of british insurers guidelines on executive 
remuneration grants of options and awards are to be 
planned so as not to exceed 5 of the issued ordinary share 
capital in any rolling 10 year period for the 888 long term 
incentive plan and 10 of the issued ordinary share capital 
in any rolling 10 year period for both the 888 all‑ employee 
share plan and the 888 long term incentive plan the 
committee intends to have regard to appropriate annual flow‑ rates so as to ensure that these limits are not breached
employee trusts
the company has established two trusts to further the 
interests of the company its subsidiaries and shareholders 
by providing share incentives to employees including 
executive directors of any group company to enable the 
group to attract retain and motivate employees
the 888 holdings public limited company share plan  
trust was created pursuant to a trust deed dated 
14 september 2005 and operated in connection with share 
awards made to certain employees upon the 2005 flotation 
the trust currently holds no shares in the company
the 888 ipo share award trust was created pursuant to  
a trust deed dated 14 september 2005 and operated in 
connection with the grant of share awards and nil cost 
options to employees of the group upon the 2005 flotation 
the trust currently holds 211432 ordinary shares in 
the company
director appointments – service contracts  
and directors’ fees
executive directors
in accordance with the combined code each executive 
director’s service agreement is terminable on no more  
than 12 months written notice each executive director’s 
employment can be terminated by making a payment equal 
to the salary and pension contributions and the value of 
other contractual benefits due to the executive director  
in lieu of any unexpired notice period john anderson and 
aviad kobrine continue to be entitled to be paid a bonus 
during any unexpired part of the notice period even if the 
employment is terminated by making payment in lieu of 
notice awards granted under the 888 all‑ employee share 
plan to john anderson and aviad kobrine pursuant to their 
service agreements and conditional upon flotation as 
described in the prospectus shall continue to vest during 
any unexpired part of the notice period and they shall be 
treated as a “good leaver” under the terms of the 888  
all‑ employee share plan where their employment has been 
terminated by making a payment in lieu of notice no other 
benefits upon termination of employment are payable an 
executive director’s entitlement to share awards and share 
options under any share incentive plan on termination of 
employment will be governed by the terms of the relevant 
plan and in the case of john anderson and aviad kobrine  
by the relevant provisions of their service agreements
resignations
peter montegriffo and eyal shaked resigned from the board  
in august 2005 eyal shaked did not have a service contract 
and peter montegriffo served under a letter of appointment 
for a fixed one year term subject to the company’s articles  
of association and the board resolving to re‑ appoint 
mr montegriffo for a further term clive needham whose 
services were provided to the company by skyefid limited 
until his resignation in february 2005 did not have a letter  
of appointment
888 holdings public limited company annual report  accounts 2005 31    annual document
name position employercontracting party salaryfee date
john anderson
1
 chief executive officer the company £475000 14092005
aviad kobrine chief financial officer the company £112500 14092005
aviad kobrine chief financial officer cassava enterprises gibraltar limited
2
 £137500 14092005
shay ben‑ yitzhak chief technical officer random logic limited
2
 us250000 14092005
1 john anderson is non‑ executive chairman of burford holdings plc and is not required to account to the company in respect of his earnings from that company  
he does not receive fees in respect of his directorships of igc or ecogra
2 wholly‑ owned subsidiary companies
3 the unexpired term of the executive directors’ service agreements is 12 months
chairman and non‑ executive directors
the chairman and the non‑ executive directors do not have service contracts but have entered into letters of appointment
non‑ executive directors’ appointments may be terminated by the company without notice in accordance with the company’s 
articles of association and the gibraltar companies ordinance except for the chairman who is required to be given six 
months prior written notice of termination no compensation is payable on the termination of the appointment each of the 
non‑ executive directors is appointed to serve until the 2006 annual general meeting and if renewed at the annual general 
meeting each director’s appointment will continue for a term of three years
   annual document
name position employercontracting party salaryfee date
richard kilsby chairman the company £140000 14032006
brian mattingley deputy chairman the company £80000 14032006
michael constantine non‑ executive director the company £60000 14092005
amos pickel non‑ executive director the company £60000 14032006
directors’ remuneration summary
the cash emoluments or fees received by the directors for 2005 are shown below
  base  annual  total total
  salaryfees bonus benefits 2005 2004
  us’000 us’000 us’000 us’000 us’000
executive
john anderson  847 1100 217 2164 1678
aviad kobrine
2
  147 250 37 434 –
shay ben‑ yitzhak
3
  63 – 12 75 –
eyal shaked  66 42 22 130 148
nonexecutive     
marie stevens  222 – 5 227 –
richard kilsby  46 – – 46 –
brian mattingley  35 – – 35 –
michael constantine  35 – – 35 –
clive needham
4
  3 – – 3 1
peter montegriffo  27 – – 27 31
total  1491 1392 293 3176 1858
1 where directors’ remuneration is denominated in sterling costs have been converted at the applicable rate of exchange at the transaction date
2 part of mr kobrine’s remuneration is paid by one of his employers cassava enterprises gibraltar limited a wholly‑ owned subsidiary of the company
3 mr ben‑ yitzhak’s remuneration was paid by his employer random logic limited a wholly‑ owned subsidiary of the company
4 the fees in relation to the services provided by mr needham were paid to skyefid limited
the bonuses became payable to john anderson and aviad kobrine upon achievement of the corporate performance target 
which requires that net profit excluding share benefit charges for 2005 exceed us60 million
remuneration report
32 directors’ interests in ordinary shares
the notified interests of executive and non‑ executive directors in the issued share capital of the company are
     ordinary shares
   31 december 2005
2
   1 january 2005
1
executive  
john anderson     724758  –
aviad kobrine     55621  –
shay ben‑ yitzhak
3
    57522356  77238562
eyal shaked
3
    86283535  115857845
nonexecutive  
marie stevens    142857  –
richard kilsby    114285  –
brian mattingley    142857  –
michael constantine    22857  –
clive needham    –  –
peter montegriffo    –  –
1 or date of appointment if later and adjusted for the share capital restructures during 2005
2 or date of resignation if earlier
3 these shares are held on trust and are subject to a relationship agreement dated 14 september 2005 between among others the company and the principal shareholder 
trusts further details can be found on page 35 details of share capital restructures made during 2005 are explained in note 14 to the consolidated financial statements
no changes in directors’ share interests have been notified between 31 december 2005 and the date of this report
except where stated all interests were held beneficially
directors’ interests in share awards and share options 
the number of shares subject to share awards or share options granted to the executive directors in 2005 and outstanding 
as at 31 december 2005 are set out below
  earliest
  exercise exercise    exercised awards at
 date of  vesting period exercise awarded vested transferred 31 december
 award date end‑ date price 2005 2005 2005
1
 2005
john anderson
admission bonus 29905 41005 na £nil 1685482 1685482 1685482 –
888 all‑ employee share plan 41005 41006 41015 £nil 421371 – – 421371
 41005 41007 41015 £nil 421371 – – 421371
 41005 41008 41015 £nil 421370 – – 421370
 41005 41009 41015 £nil 421370 – – 421370
aviad kobrine
admission bonus 29905 41005 na £nil 55621 55621 55621 –
888 all‑ employee share plan
2
 29905 41006 na £nil 55621 – – 55621
 29905 41007 na £nil 55621 – – 55621
 29905 41008 na £nil 55621 – – 55621
 29905 41009 na £nil 55621 – – 55621
888 all‑ employee share plan
3
 41005 1106 41015 £nil 45508 – – 45508
 41005 41006 41015 £nil 45508 – – 45508
 41005 41007 41015 £nil 45508 – – 45508
 41005 41008 41015 £nil 45508 – – 45508
 41005 41009 41015 £nil 45508 – – 45508
all awards were made under the 888 all‑ employee share plan during the year none existed on or prior to 1 january 2005 
no consideration was paid for the grant of any awards
1 at the date of exercisetransfer the market price of an ordinary share was 175p
2 awarded as a share award
3 awarded as a nil cost option
33 888 holdings public limited company annual report  accounts 2005 the market value of one ordinary share was 194p at 
30 december 2005 the highest market value during  
2005 was 1975p and the lowest was 134p
no director was materially interested during the year in any 
contract which was significant in relation to the business of 
the company otherwise than as disclosed in the prospectus 
or these report and accounts
graph of total shareholder return
the period between flotation and 31 december 2005 is 
considered too short to provide a meaningful comparison  
of 888 total shareholder return against a benchmark group 
and has not been shown in this first report
approval
this report was approved by the board and signed on its 
behalf by
brian mattingley
chairman of the remuneration committee
16 march 2006
remuneration report
34 the directors submit to the members their annual  
report and accounts of the group for the year ended 
31 december 2005 the report on corporate governance 
and the remuneration report on pages 24 and 29 
respectively form part of this directors’ report
principal activities
during 2005 the group’s principal activities were the 
provision of online gaming entertainment a review of the 
business is given in the chairman’s statement on pages 10 
to 11 the chief executive’s review on pages 12 to 15 and 
the financial review on pages 16 to 19
the principal subsidiary undertakings are listed on page 52
results and dividends
the group’s profit for the financial year of us480 million  
is reported in the consolidated income statement on page 
38 as stated in the prospectus a final dividend will not  
be paid in respect of the financial year but that it is the 
intention of the directors to declare an interim dividend 
payable in october 2006
directors and their interests
biographical details of the current board of directors are 
shown on page 21 the directors who served during the 
year are shown below
john anderson
marie stevens appointed 1 february 2005
 resigned 10 march 2006
aviad kobrine appointed 30 august 2005
shay ben‑ yitzhak appointed 30 august 2005
richard kilsby appointed 30 august 2005 
brian mattingley appointed 30 august 2005
michael constantine appointed 30 august 2005
peter montegriffo resigned 30 august 2005
eyal shaked resigned 30 august 2005
clive needham resigned 16 february 2005
the beneficial and non‑ beneficial interests of the directors 
in shares of the company are set out in the remuneration 
report on pages 29 to 34
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
shay ben‑ yitzhak aviad kobrine richard kilsby brian 
mattingley and michael constantine who were each 
appointed as directors during the year will retire at the 
annual general meeting and being eligible will offer 
themselves for election
directors’ report
john anderson will retire by rotation at the annual general 
meeting and being eligible will offer himself for re‑ election
amos pickel who was appointed as an independent non‑ executive director on 14 march 2006 will retire at the 
annual general meeting and being eligible will offer himself 
for re‑ election
share capital
changes in the company’s share capital during the period are 
given in note 14 to the consolidated financial statements
substantial shareholdings
as at 16 march 2006 the company had been notified of the 
following interests in 3 or more of its share capital
 number of  issued 
 shares share capital
e shaked shares trust 86283535 2560
o shaked shares trust 86283535 2560
ben‑ yitzhak family shares trust 57522356 1706
as disclosed in the prospectus a relationship agreement 
governing the relationship between the above principal 
shareholder trusts and the company was entered into in 
connection with the company’s flotation the relationship 
agreement provides that all transactions between the group 
and the principal shareholder trusts will be on a normal 
business basis that the group will be allowed to carry on 
business independently of them and that the principal 
shareholder trusts will not cause the group to contravene 
the combined code unless required by law or as 
contemplated in the relationship agreement it further 
provides that each of the principal shareholder trusts will 
not solicit group employees without consent that only 
independent directors can vote on proposals to amend the 
relationship agreement that the principal shareholder 
trusts will consult the group 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 or having first received consent 
the relationship agreement also includes restrictions on 
the principal shareholder trusts power to appoint directors 
and obligations to ensure that the majority of the board 
excluding the chairman is independent the principal 
shareholder trusts can nominate a non‑ executive director 
for appointment to the board and the directors will  
consider the appointment of the nominated person to  
the remuneration committee in the event that this right  
is exercised and it results in fewer than half the board 
excluding the chairman of the board being independent 
directors such appointment shall only become effective 
upon the appointment to the board of an additional 
independent director such restrictions and obligations 
apply whilst the e shaked shares trust and o shaked 
shares trust collectively or the ben‑ yitzhak family shares 
trust individually hold not less than 75
888 holdings public limited company annual report  accounts 2005 35 charitable contributions
contributions for charitable purposes were made during the 
year amounting to approximately us70000
directors’ responsibility statement
the directors are responsible for keeping proper accounting 
records which disclose with reasonable accuracy at any time 
the financial position of the company for safeguarding the 
assets for taking reasonable steps for the prevention  
and detection of fraud and other irregularities and for  
the preparation of a directors’ report which complies with the 
gibraltar companies accounts ordinance 1999 the gibraltar 
companies consolidated accounts ordinance 1999 and  
the gibraltar companies ordinance 1930 as amended
financial statements are published on the group’s website 
in accordance with legislation in the uk governing the 
preparation and dissemination of financial statements 
which may vary from legislation in other jurisdictions the 
maintenance and integrity of the group’s website is the 
responsibility of the directors the directors’ responsibility 
also extends to the ongoing integrity of the financial 
statements contained therein
the directors are responsible for preparing the annual 
report and the financial statements the directors are 
required to prepare financial statements for the group in 
accordance with international financial reporting standards 
ifrss and have also chosen to prepare financial 
statements for the company in accordance with ifrss
group and parent company financial statements
company law requires the directors to prepare such 
financial statements in accordance with international 
financial reporting standards and the gibraltar companies 
accounts ordinance 1999 the gibraltar companies 
consolidated accounts ordinance 1999 and the gibraltar 
companies ordinance 1930 as amended
international accounting standard 1 requires that financial 
statements present fairly for each financial year the 
company’s financial position financial performance and 
cash flows this requires the faithful representation of the 
effects of transactions other events and conditions in 
accordance with the definitions and recognition criteria for 
assets liabilities income and expenses set out in the 
directors’ report
international accounting standards board’s “framework for 
the preparation and presentation of financial statements” 
in virtually all circumstances a fair presentation will be 
achieved by compliance with all applicable international 
financial reporting standards a fair presentation also 
requires the directors to
consistently select and apply appropriate accounting 
policies
present information including accounting policies in a 
manner that provides relevant reliable comparable and 
understandable information and
provide additional disclosures when compliance with the 
specific requirements in ifrss is insufficient to enable 
members to understand the impact of particular 
transactions other events and conditions on the entity’s 
financial position and financial performance
auditors
during the year ended 31 december 2005 bdo stoy 
hayward llp were appointed auditors for the purposes of 
the company meeting its obligations to prepare financial 
statements under the listing rules of the uk listing 
authority for the purposes of meeting the company’s 
statutory requirements under section 182 of the gibraltar 
companies ordinance 1930 as amended and the filing of 
the company’s financial statements in gibraltar pursuant to 
section 10 of the gibraltar companies accounts ordinance 
1999 as amended bdo fidecs chartered accountants 
limited have been appointed to act as auditors
a resolution for the re‑ appointment of bdo stoy hayward 
llp and bdo fidecs chartered accountants limited will be 
proposed at the annual general meeting on 10 may 2006
on behalf of the board 
john anderson
chief executive officer
16 march 2006
■
■
■
36 we have audited the group and the company financial 
statements the “financial statements” of 888 holdings 
public limited company for the year ended 31 december 
2005 which comprise the group income statement the 
group and company balance sheets the group and 
company cash flow statements the group and company 
statement of changes in equity and the related notes 1 to 
22 to the consolidated financial statements and notes 1  
to 8 to the company financial statements these financial 
statements have been prepared under the accounting 
policies set out therein
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report 
and the financial statements in accordance with applicable 
law and international financial reporting standards “ifrss” 
as adopted by the european union are set out in the 
statement of directors’ responsibilities 888 holdings public 
limited company has complied with the requirements of 
rules 986 and 988 of the listing rules in preparing its 
annual report as if it was incorporated in the uk
our responsibility is to audit the financial statements in 
accordance with relevant legal and regulatory requirements 
and international standards on auditing uk and ireland 
we report to you our opinion as to whether the financial 
statements give a true and fair view and whether the financial 
statements have been properly prepared in accordance  
with the gibraltar companies accounts ordinance 1999 
gibraltar companies consolidated accounts ordinance 
1999 and the gibraltar companies ordinance 1930 as 
amended and the part of the remuneration report to be 
audited has been properly prepared in accordance with 
schedule 7a of the uk companies act 1985 we also  
report to you if in our opinion the directors’ report is not 
consistent with the financial statements if the company has 
not kept proper accounting records or if we have not received 
all the information and explanations we require for our audit 
or if information specified by the listing rules and gibraltar 
legislation is not disclosed
we review whether the corporate governance statement 
reflects the company’s compliance with the nine provisions 
of the 2003 frc combined code specified for our review  
by the listing rules of the financial services authority and 
we report if it does not we are not required to consider 
whether the board’s statements on internal control cover all 
risks and controls or form an opinion on the effectiveness 
of the group’s corporate governance procedures or its risk 
and control procedures
we read other information contained in the annual report 
and consider whether it is consistent with the audited 
financial statements the other information comprises  
only the directors’ report chairman’s statement chief 
executive’s review financial review regulatory and 
compliance review corporate governance statement and 
remuneration report we consider the implications for our 
report if we become aware of any apparent misstatements 
or material inconsistencies with the financial statements 
our responsibilities do not extend to any other information 
our report has been prepared pursuant to the terms of our 
engagement letter and for no other purpose no person is 
entitled to rely on this report unless such a person is a 
person entitled to rely upon this report by virtue of the terms 
of our engagement letter or has been expressly authorised 
to do so by our prior written consent save as above we do 
not accept responsibility for this report to any other person 
or for any other purpose and we hereby expressly disclaim 
any and all such liability
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the 
auditing practices board an audit includes examination  
on a test basis of evidence relevant to the amounts and 
disclosures in the financial statements and the part of the 
remuneration report to be audited it also includes an 
assessment of the significant estimates and judgements 
made by the directors in the preparation of the financial 
statements and of whether the accounting policies are 
appropriate to the group’s and company’s circumstances 
consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all  
the information and explanations which we considered 
necessary in order to provide us with sufficient evidence to 
give reasonable assurance that the financial statements are 
free from material misstatement whether caused by fraud 
or other irregularity or error in forming our opinion we also 
evaluated the overall adequacy of the presentation of 
information in the financial statements and the part of the 
remuneration report to be audited
opinion
in our opinion
the group financial statements give a true and fair view in 
accordance with ifrss as adopted by the european union 
of the state of the group’s and the company’s affairs as 
at 31 december 2005 and of the group’s profit for the 
year then ended
the financial statements have been properly prepared in 
accordance with the gibraltar companies accounts 
ordinance 1999 gibraltar companies consolidated 
accounts ordinance 1999 and the gibraltar companies 
ordinance 1930 as amended and
the part of the remuneration report to be audited has 
been properly prepared in accordance with schedule 7a 
of the uk companies act 1985
bdo stoy hayward llp bdo fidecs chartered  
chartered accountants accountants limited
8 baker street  montagu pavilion
london w1u 3ll 8‑ 10 queensway 
uk gibraltar
date 16 march 2006
■
■
■
independent auditors’ report to the shareholders  
of 888 holdings public limited company
888 holdings public limited company annual report  accounts 2005 37 	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 note	 us’000	 us’000
net gaming revenue	 	 	 	 2d	 271031	 177904
operating	 expenses	 	 	 	 	 72960	 50141
research	 and	 development	 expenses	 	 	 	 	 11318	 6866
selling	 and	 marketing	 expenses	 	 	 	 	 100009	 64488
administrative	 expenses	 	 	 	 4	 37328	 13586
	 operating	 profit	 before	 share	 benefit	 charges	 	 	 	 66650	 42823
	 charges	 in	 respect	 of	 shares	 granted	 to	 employees	 on	 ipo	 	 	 	 	 	 15087	 –
	 charges	 in	 respect	 of	 share	 and	 option	 awards	 	 	 	 	 2147	 –
	 total	 share	 benefit	 charges	 	 	 	 	 17234	 –
operating	 profit	 	 	 	 5	 49416	 42823
finance	 income	 	 	 	 	 735	 266
profit before tax	 	 	 	 	 50151	 43089
taxation	 	 	 	 6	 2136	 1991
profit after tax for the year attributable to equity holders of parent	 	 	 	 48015	 41098
earnings per share	 	 	 	 basic	 	 	 	 7	 142¢	 122¢
diluted	 	 	 	 	 142¢	 122¢
all	 amounts	 relate	 to	 continuing	 activities
the	 notes	 on	 pages	 42	 to	 55	 form	 part	 of	 these	 financial	 statements
consolidated income statement
for	 the	 year	 ended	 31	 december	 2005
38 consolidated balance sheet
at	 31	 december	 2005
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 note	 us’000	 us’000
assets
noncurrent assets
intangible	 assets	 	 	 	 9	 –	 –
property	 plant	 and	 equipment	 	 	 	 10	 8341	 7242
deferred	 taxes	 	 	 	 11	 361	 –
	 	 	 	 	 8702	 7242
current assets
cash	 and	 cash	 equivalents	 	 	 	 12	 62202	 40335
trade	 and	 other	 receivables	 	 	 	 	 13	 15013	 15225
amounts	 due	 from	 related	 parties	 	 	 	 19	 1649	 2245
	 	 	 	 	 78864	 57805
total assets	 	 	 	 	 87566	 65047
equity and liabilities
equity attributable to equity holders of the parent 
share	 capital	 	 	 	 14	 3068	 3066
share	 benefit	 reserve	 	 	 	 	 2147	 –
retained	 earnings	 	 	 	 	 27115	 27113
total equity attributable to equity holders of the parent	 	 	 	 	 32330	 30179
liabilities
current liabilities
trade	 and	 other	 payables	 	 	 	 15	 25593	 15346
member	 deposits	 	 	 	 	 29325	 19141
amounts	 due	 to	 related	 parties	 	 	 	 19	 318	 381
total liabilities	 	 	 	 	 55236	 34868
total equity and liabilities	 	 	 	 	 87566	 65047
approved	 by	 the	 board	 and	 authorised	 for	 issue	 on	 16	 march	 2006
john anderson   aviad kobrine
chief	 executive	 officer	 	 	 chief 	 financial	 officer
the	 notes	 on	 pages	 42	 to	 55	 form	 part	 of	 these	 financial	 statements
39 888 holdings public limited company	 annual	 report	 	 accounts	 2005 	 	 	 share 	 	 share 	 benefit	 accumulated
	 	 	 capital	 reserve	 profit	 total
	 	 	 us’000	 us’000	 us’000	 us’000
balance at 1 january 2004	 	 	 15443	 –	 12115	 27558
net	 profit	 for	 the	 year	 	 	 –	 –	 41098	 41098
dividend	 paid	 	 	 –	 –	 26100	 26100
capital	 reduction	 	 	 12442	 –	 –	 12442
share	 capital	 issued	 	 	 65	 –	 –	 65
balance at 1 january 2005	 	 	 3066	 –	 27113	 30179
net	 profit	 for	 the	 year	 	 	 – – 48015 48015
dividend	 paid	 	 	 – – 63100 63100
redemption	 of	 preference	 share	 capital	 	 	 1 – – 1
share	 benefit	 charge	 	 	 – 17234 – 17234
transfer	 of	 shares	 granted	 on	 ipo	 	 	 –	 15087 15087 –
redenomination	 translation	 effect	 	 	 3 – – 3
balance at 31 december 2005   3068 2147 27115 32330
the	 notes	 on	 pages	 42	 to	 55	 form	 part	 of	 these	 financial	 statements
consolidated statement of changes in equity
for	 the	 year	 ended	 31	 december	 2005
40 	 	 	 year ended year ended	 year 	 ended	 year 	 ended
	 	 	 31 december 31 december	 31 	 december	 31 	 december
	 	 	 2005 2005	 2004	 2004
	 	 	 us’000 us’000	 us’000	 us’000
cash flows from operating activities
	 profit	 before	 income	 tax	 	 	 50151	 	 43089
adjustments for
	 depreciation	 	 	 2700	 	 2427
	 loss	 on	 sale	 of	 property	 plant	 and	 equipment	 	 	 32	 	 19
	 amortisation	 	 	 20	 	 –
	 impairment	 	 	 832	 	 –
	 translation	 effect	 of	 redenomination	 of	 share	 capital	 	 	 3	 	 –
	 interest	 received	 	 	 683	 	 266
	 share	 benefit	 charges	 	 	 17234	 	 –
	 	 	 70289	 	 45269
decreaseincrease	 in	 trade	 receivables	 	 	 579	 	 2080
increase	 in	 related	 party	 balances	 	 	 638	 	 1286
decreaseincrease	 in	 other	 accounts	 receivable	 	 	 142	 	 1548
increasedecrease	 in	 trade	 payables	 	 	 1177	 	 2350
increase	 in	 member	 deposits	 	 10184	 	 10751
increase	 in	 other	 accounts	 payable	 	 	 	 9680	 	 3699
cash generated from operations	 	 91413	 	 52455
income	 tax	 paid	 	 	 3160	 	 1016
net cash generated from operating activities	 	 	 88253	 	 51439
cash flows from investing activities
	 purchase	 of	 intangibles	 	 	 400	 	 –
	 cash	 acquired	 on	 combination	 with	 actecash	 	 	 263  –
	 purchase	 of	 property	 plant	 and	 equipment	 	 	 3831	 	 1555
	 proceeds	 from	 sale	 of	 property	 plant	 and	 equipment	 	 	 –	 	 78
	 acquisition	 of	 random	 logic	 limited	 net	 of	 cash	 acquired	 	 	 –	 	 937
	 interest	 received	 	 	 683	 	 266
net cash used in investing activities	 	 	 	 3285	 	 2148
cash flows from financing activities
	 reduction	 in	 share	 capital	 	 	 1	 	 12442
	 dividends	 paid	 	 	 63100	 	 26100
net cash used in financing activities	 	 	 	 63101	 	 38542
net increase in cash and cash equivalents	 	 	 	 21867	 	 10749
cash	 and	 cash	 equivalents	 at	 the	 beginning	 of	 the	 year	 	 	 	 40335	 	 29586
cash and cash equivalents at the end of the year	 	 	 	 62202	 	 40335
the	 notes	 on	 pages	 42	 to	 55	 form	 part	 of	 these	 financial	 statements
consolidated statement of cash flows
for	 the	 year	 ended	 31	 december	 2005
41 888 holdings public limited company	 annual	 report	 	 accounts	 2005 1 general information
a company description and activities
888	 holdings	 public	 limited	 company	 the	 “company”	 and	 its	 subsidiaries	 together	 the	 “group”	 was	 founded	 in	 1997	 	 and	 originally	 operated	 as	 a	 holding	 company	 domiciled	 in	 the	 british	 virgin	 islands	 on	 12	 january	 2000	 the	 company	 was	 continued	 in	 antigua	 and	 barbuda	 as	 a	 corporation	 under	 the	 international	 business	 corporation	 act	 1982	 with	 registered	 number	 12512	 on	 17	 december	 2003	 the	 company	 redomiciled	 in	 gibraltar	 with	 the	 company	 number	 90099	 	 on	 4	 october	 2005	 the	 company	 listed	 on	 the	 london	 stock	 exchange
the	 group	 has	 developed	 innovative	 proprietary	 software	 applications	 solutions	 for	 virtual	 casinos	 poker	 rooms	 	 ecommerce	 creditcard	 clearing	 services	 and	 online	 advertising	 methodologies
cassava	 enterprises	 gibraltar	 limited	 a	 subsidiary	 carried	 out	 the	 operations	 of	 the	 group	 during	 the	 year	 principally	 under	 the	 name	 www888com	 under	 the	 terms	 of	 a	 gaming	 license	 issued	 in	 gibraltar	 b definitions
in	 these	 financial	 statements
the	 company	 888 	 holdings	 public	 limited	 company
the	 group	 888 	 holdings	 public	 limited	 company	 and	 its	 subsidiaries
subsidiaries	 companies 	 over	 which	 the	 company	 has	 control	 as	 defined	 in	 international	 accounting	 standard	 27	 “consolidated	 and	 separate	 financial	 statements”	 and	 whose	 accounts	 are	 consolidated	 with	 those	 	 of	 the	 company
related	 parties	 as 	 defined	 in	 international	 accounting	 standard	 24	 –	 “related	 party	 disclosures”
2 significant accounting policies
the	 significant	 accounting	 policies	 applied	 in	 the	 preparation	 of	 the	 financial	 statements	 are	 as	 follows
a basis of preparation
the	 consolidated	 financial	 statements	 of	 the	 group	 have	 been	 prepared	 in	 accordance	 with	 international	 financial	 reporting	 standards	 including	 international	 accounting	 standards	 “ias”	 and	 interpretations	 adopted	 by	 the	 international	 accounting	 standards	 board	 “iasb”	 and	 endorsed	 for	 use	 by	 companies	 listed	 on	 an	 eu	 regulated	 market
the	 significant	 accounting	 policies	 applied	 in	 the	 financial	 statements	 of	 the	 group	 in	 the	 prior	 years	 are	 applied	 consistently	 in	 these	 financial	 statements
the	 financial	 statements	 are	 presented	 in	 thousands	 of	 us	 dollars	 us’000	 because	 that	 is	 the	 currency	 the	 group	 primarily	 operates	 in
the	 consolidated	 financial	 statements	 comply	 with	 the	 gibraltar	 companies	 accounts	 ordinance	 1999	 the	 gibraltar	 companies	 consolidated	 accounts	 ordinance	 1999	 and	 the	 gibraltar	 companies	 ordinance	 1930	 as	 amended
notes to the consolidated financial statements
42 2 significant accounting policies	 continued
b basis of consolidation
the	 consolidated	 financial	 statements	 include	 the	 accounts	 of	 the	 company	 and	 its	 subsidiaries	 the	 subsidiaries	 are	 companies	 controlled	 by	 888	 holdings	 public	 limited	 company	 control	 exists	 where	 the	 company	 has	 the	 power	 to	 govern	 the	 financial	 and	 operating	 policies	 of	 an	 entity	 so	 as	 to	 obtain	 benefits	 from	 its	 activities	 subsidiaries	 are	 consolidated	 from	 the	 date	 the	 parent	 gained	 control	 until	 such	 time	 as	 control	 ceases	 the	 financial	 statements	 of	 the	 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	 acquisition	 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	 and	 using	 consistent	 accounting	 policies
c use of estimates
the	 preparation	 of	 financial	 statements	 in	 conformity	 with	 generally	 accepted	 accounting	 principles	 requires	 management	 to	 make	 estimates	 and	 assumptions	 that	 affect	 the	 amounts	 reported	 in	 the	 financial	 statements	 and	 accompanying	 notes	 actual	 results	 could	 differ	 from	 those	 estimates
d net gaming revenue
revenue	 is	 recognised	 to	 the	 extent	 that	 it	 is	 probable	 that	 economic	 benefits	 will	 flow	 to	 the	 group	 and	 the	 revenue	 can	 be	 reliably	 measured
net	 gaming	 revenue	 is	 defined	 as	 follows
casino
casino	 winnings	 that	 are	 the	 differences	 between	 the	 amounts	 of	 bets	 placed	 by	 members	 less	 amounts	 won	 by	 members
poker
ring	 games	 	 rake 	 which	 is	 the	 commission	 charged	 from	 each	 winning	 hand	 played
tournaments	 entry 	 fees	 charged	 for	 participation	 in	 poker	 tournaments
casino	 winnings	 and	 revenues	 from	 the	 poker	 business	 are	 stated	 after	 deduction	 of	 certain	 bonuses	 granted	 to	 members
	 e foreign currency
monetary	 assets	 and	 liabilities	 denominated	 in	 nonus	 dollar	 currencies	 are	 translated	 into	 us	 dollar	 equivalents	 	 using	 yearend	 spot	 foreign	 exchange	 rates	 nonmonetary	 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	 administrative	 expenses
the	 results	 and	 financial	 position	 of	 all	 group	 entities	 that	 have	 a	 functional	 currency	 different	 from	 us	 dollars	 are	 translated	 into	 the	 presentation	 currency	 as	 follows
i	 monetary 	 assets	 and	 liabilities	 for	 each	 balance	 sheet	 presented	 are	 translated	 at	 the	 closing	 rate	 at	 the	 date	 of	 that	 balance	 sheet
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	 and
iii	exchange 	 rate	 differences	 on	 translation	 of	 group	 entities	 that	 have	 functional	 currencies	 different	 from	 us	 dollars	 are	 included	 in	 administrative	 expenses
43 888 holdings public limited company	 annual	 report	 	 accounts	 2005 2 significant accounting policies	 continued
f research and development costs
research	 and	 development	 expenditure	 is	 charged	 to	 the	 statement	 of	 income	 as	 incurred	 ias	 38	 “intangible	 assets”	 requires	 capitalisation	 of	 certain	 software	 development	 costs	 subsequent	 to	 technological	 and	 commercial	 feasibility	 being	 established	 and	 the	 group	 having	 sufficient	 resources	 to	 complete	 development	 based	 on	 the	 group’s	 productdevelopment	 process	 technological	 feasibility	 and	 therefore	 the	 creation	 of	 substantially	 improved	 product	 is	 only	 established	 upon	 the	 completion	 	 of	 a	 working	 model	 the	 group	 generally	 does	 not	 incur	 any	 significant	 costs	 between	 the	 completion	 of	 the	 working	 model	 	 and	 the	 point	 at	 which	 the	 product	 is	 ready	 for	 general	 release		 g taxation
the	 tax	 expense	 represents	 tax	 payable	 for	 the	 year	 based	 on	 currently	 applicable	 tax	 rates	 deferred	 tax	 assets	 and	 liabilities	 are	 recognised	 where	 the	 carrying	 amount	 of	 an	 asset	 or	 liability	 in	 the	 balance	 sheet	 differs	 from	 its	 tax	 base	 recognition	 of	 deferred	 tax	 assets	 is	 restricted	 to	 those	 instances	 where	 it	 is	 probable	 that	 taxable	 profit	 will	 be	 available	 against	 which	 the	 difference	 can	 be	 utilised	 the	 amount	 of	 the	 asset	 or	 liability	 is	 determined	 using	 tax	 rates	 that	 have	 been	 enacted	 or	 substantially	 enacted	 by	 the	 balance	 sheet	 date	 and	 are	 expected	 to	 apply	 when	 the	 deferred	 tax	 liabilitiesassets	 are	 settledrecovered	 deferred	 tax	 balances	 are	 not	 discounted
h intangible assets
all	 intangible	 assets	 are	 initially	 recognised	 at	 cost
amortisation	 is	 provided	 to	 write	 off	 the	 cost	 less	 estimated	 residual	 values	 of	 all	 intangible	 assets	 evenly	 over	 their	 expected	 useful	 lives	 and	 the	 charge	 is	 included	 within	 operating	 expenses	 intangible	 assets	 are	 reviewed	 annually	 for	 evidence	 of	 impairment	 the	 annual	 amortisation	 rates	 are	 as	 follows
domain	 names	 10
	 i property plant and equipment
property	 plant	 and	 equipment	 is	 stated	 at	 historic	 cost	 less	 accumulated	 depreciation	 carrying	 amounts	 are	 reviewed	 	 at	 each	 balance	 sheet	 date	 for	 impairment
depreciation	 is	 calculated	 using	 the	 straightline	 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	 it	 equipment	 33
office	 furniture	 and	 equipment	 7–15
motor	 vehicles	 15
leasehold	 improvements	 over	 the	 shorter	 of	 the	 term	 of	 the	 lease	 or	 useful	 lives
j impairment of nonfinancial assets
impairment	 tests	 on	 goodwill	 and	 other	 intangible	 assets	 with	 indefinite	 useful	 economic	 lives	 are	 undertaken	 annually	 on	 31	 december	 other	 nonfinancial	 assets	 are	 subject	 to	 impairment	 tests	 whenever	 events	 or	 changes	 in	 circumstances	 indicate	 that	 their	 carrying	 amount	 may	 not	 be	 recoverable	 where	 the	 carrying	 value	 of	 an	 asset	 exceeds	 its	 recoverable	 amount	 ie	 the	 higher	 of	 value	 in	 use	 and	 fair	 value	 less	 costs	 to	 sell	 the	 asset	 is	 written	 down	 accordingly
where	 it	 is	 not	 possible	 to	 estimate	 the	 recoverable	 amount	 of	 an	 individual	 asset	 the	 impairment	 test	 is	 carried	 out	 on	 	 the	 asset’s	 cash	 generating	 unit	 ie	 the	 lowest	 group	 of	 assets	 in	 which	 the	 asset	 belongs	 for	 which	 there	 are	 separately	 identifiable	 cash	 flows
k trade receivables
trade	 receivables	 are	 recognised	 and	 carried	 at	 the	 original	 transaction	 value	 and	 principally	 comprise	 amounts	 due	 from	 the	 creditcard	 companies	 and	 from	 epayment	 companies	 an	 estimate	 for	 doubtful	 debts	 is	 made	 when	 collection	 of	 the	 full	 amount	 is	 no	 longer	 probable	 bad	 debts	 are	 written	 off	 when	 identified
notes to the consolidated financial statements
44 2 significant accounting policies	 continued
l cash and cash equivalents
cash	 comprises	 cash	 in	 hand	 and	 balances	 with	 banks	 cash	 equivalents	 are	 short	 term	 highly	 liquid	 investments	 that	 are	 readily	 convertible	 to	 known	 amounts	 of	 cash	 they	 include	 shortterm	 bank	 deposits	 originally	 purchased	 with	 maturities	 	 of	 three	 months	 or	 less	 m equity
equity	 issued	 by	 the	 company	 is	 recorded	 as	 the	 proceeds	 received	 net	 of	 direct	 issue	 costs
n trade and other payables
trade	 and	 other	 payables	 are	 recognised	 and	 carried	 at	 the	 original	 transaction	 value
o chargebacks and returned echeques
the	 cost	 of	 chargebacks	 and	 returned	 echeques	 is	 included	 in	 operating	 expenses
p leases
leases	 are	 classified	 as	 finance	 leases	 wherever	 the	 terms	 of	 the	 lease	 transfer	 substantially	 all	 the	 risks	 and	 rewards	 	 of	 ownership	 to	 the	 group	 all	 other	 leases	 are	 classified	 as	 operating	 leases	 and	 rentals	 payable	 are	 charged	 to	 income	 	 on	 a	 straightline	 basis	 over	 the	 term	 of	 the	 lease
	 q 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
r financial instruments
the	 carrying	 amounts	 of	 cash	 and	 cash	 equivalents	 related	 parties	 trade	 receivables	 other	 accounts	 receivable	 trade	 payables	 member	 deposits	 and	 other	 accounts	 payable	 approximate	 to	 their	 fair	 value
the	 group	 does	 not	 hold	 or	 issue	 derivative	 financial	 instruments	 for	 trading	 purposes
s segment information
a	 business	 segment	 is	 a	 distinguishable	 component	 of	 the	 group	 that	 is	 engaged	 in	 providing	 an	 individual	 product	 or	 service	 or	 a	 group	 of	 related	 products	 or	 services	 and	 that	 is	 subject	 to	 risks	 and	 returns	 that	 are	 different	 from	 those	 of	 other	 business	 segments	 a	 geographical	 segment	 is	 a	 distinguishable	 component	 of	 the	 group	 that	 is	 engaged	 in	 providing	 products	 or	 services	 within	 a	 particular	 environment	 and	 that	 is	 subject	 to	 risks	 and	 returns	 that	 are	 different	 from	 those	 of	 components	 operating	 in	 other	 economic	 environments	 the	 group	 operates	 in	 the	 following	 online	 gaming	 segments
casino
poker	 t member deposits
member	 deposits	 are	 the	 amounts	 that	 clients	 place	 in	 the	 group’s	 electronic	 “wallet”	 or	 bankroll	 including	 provision	 for	 bonuses	 granted	 by	 the	 group	 less	 management	 fees	 and	 charges	 applied	 to	 member	 accounts	 along	 with	 full	 provision	 	 for	 casino	 jackpots	 these	 amounts	 are	 repayable	 on	 demand
	 ■
■
45 888 holdings public limited company	 annual	 report	 	 accounts	 2005 3 segment information
business segments
	 casino	 poker	 consolidated
	 year ended	 year 	 ended	 year ended	 year 	 ended	 year ended	 year 	 ended
	 31 december	 31 	 december	 31 december	 31 	 december	 31 december	 31 	 december
	 	 2005	 	 2004	 2005	 2004	 2005	 	 2004
	 us’000	 us’000	 us’000	 us’000	 us’000	 us’000
net gaming revenue	 161214	 138587	 109817	 39317	 271031	 177904
result
segment	 result	 79555	 77207 55169	 13218	 134724	 90425
unallocated	 corporate	 expenses
1
	 	 	 	 	 85308	 47602
operating	 profit	 	 	 	 	 49416	 42823
finance	 income	 	 	 	 	 735	 266
income	 tax	 expense	 	 	 	 	 2136	 1991
net	 profit	 for	 the	 year	 	 	 	 	 48015	 41098
assets
unallocated	 corporate	 assets	 	 	 	 	 87566	 65047
total	 assets	 	 	 	 	 87566	 65047
liabilities
segment	 liabilities	 –	 poker	 	 	 	 	 20099	 11613
segment	 liabilities	 –	 casino	 	 	 	 	 9226	 7528
unallocated	 corporate	 liabilities	 	 	 	 	 25911	 15727
total	 liabilities	 	 	 	 	 55236	 34868
1	 including 	 share	 benefit	 charges	 of	 us17234000	 2004	 usnil
other	 than	 where	 amounts	 are	 allocated	 specifically	 to	 the	 casino	 and	 poker	 segments	 above	 the	 expenses	 assets	 and	 liabilities	 relate	 jointly	 to	 both	 segments	 any	 allocation	 of	 these	 items	 would	 be	 arbitrary
	 geographical segments
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
net gaming revenue by geographical market
	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
usa	 	 	 	 148049	 102799
uk	 	 	 	 	 53871	 26585
europe	 	 	 	 	 47289	 35654
americas	 	 	 	 	 12007	 6118
rest	 of	 world	 	 	 	 9815	 6748
	 	 	 	 	 271031	 177904
notes to the consolidated financial statements
46 3 segment information	 continued
assets by geographical location 
	 carrying	 amount	 	 additions	 to
	 of	 segment	 assets	 	 property	 plant
	 by	 location	 and	 equipment
	 	 	 year ended	 year 	 ended	 year ended	 year 	 ended
	 	 	 31 december	 31 	 december	 31 december	 31 	 december
	 	 	 2005	 2004	 2005	 2004
	 	 	 us’000	 us’000	 us’000	 us’000
caribbean	 	 	 235	 457	 72	 –
europe	 	 74589	 53661	 1731	 709
rest	 of	 world	 	 	 12742	 10929	 2028	 846
	 	 	 87566	 65047	 3831	 1555
4 administrative expenses
	 	 	 	 	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 us’000	 us’000
share	 benefit	 charges	 –	 all	 equity	 settled	 	 	 	 17234	 –
other	 administrative	 expenses	 	 	 	 	 	 20094	 13586
administrative expenses	 	 	 	 	 37328	 13586
5 operating profit
	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
operating	 profit	 is	 stated	 after	 charging
staff	 costs	 	 	 	 	 41936	 28916
audit	 fees	 	 	 	 	 357	 168
other	 fees	 paid	 to	 auditors	 	 	 	 	 104	 4
depreciation	 	 	 	 	 2700	 2427
amortisation	 	 	 	 	 20	 –
impairment	 	 	 	 	 832	 –
chargebacks	 and	 returned	 echeques	 	 	 	 18643	 12910
exchange	 lossesgains	 	 	 	 	 423	 268
payment	 service	 providers’	 commissions	 	 	 	 	 17655	 11013
share	 benefit	 charges	 –	 all	 equity	 settled	 	 	 	 	 17234	 –
during	 the	 year	 the	 auditors	 were	 paid	 fees	 for	 work	 done	 in	 respect	 of	 the	 company’s	 listing	 on	 the	 london	 stock	 exchange	 those	 fees	 totalled	 us2759000	 2004	 usnil	 and	 were	 reimbursed	 to	 the	 group	 by	 the	 selling	 shareholders
in	 the	 income	 statement	 total	 staff	 costs	 excluding	 share	 benefit	 charges	 of	 us41936000	 2004	 us28916000	 are	 included	 within	 the	 following	 expenditure	 categories
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
operating	 expenses	 	 	 	 	 24049	 17157
research	 and	 development	 expenses	 	 	 	 9968	 5991
administrative	 expenses	 	 	 	 	 7919	 5768
	 	 	 	 41936	 28916
at	 31	 december	 2005	 the	 company	 employed	 886	 2004	 689	 staff
47 888 holdings public limited company	 annual	 report	 	 accounts	 2005 6 taxation
corporate taxes
	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
current	 tax	 	 	 	 	 2497	 1991
deferred	 tax	 	 	 	 	 	 361	 –
taxation expense	 	 	 	 	 2136	 1991
analysis of current tax for the year
	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
profit	 before	 taxation	 	 	 	 	 50151	 43089
current tax at the effective tax rate for the year	 	 	 	 2497	 1991
deferred	 tax	 note	 11	 	 	 	 361	 –
taxation expense	 	 	  2136	 1991
current	 tax	 is	 calculated	 with	 reference	 to	 the	 profit	 of	 the	 company	 and	 its	 subsidiaries	 in	 their	 respective	 countries	 of	 operation
gibraltar	 –	 888	 and	 its	 gibraltar	 registered	 subsidiaries	 are	 subject	 to	 the	 provisions	 of	 the	 gibraltar	 companies	 taxation	 and	 concessions	 ordinance	 the	 “ctco”	 as	 a	 taxexempt	 company	 subject	 to	 a	 change	 of	 ownership	 or	 activity	 of	 a	 tax
exempt	 company	 the	 grandfathering	 of	 taxexempt	 benefits	 in	 respect	 of	 existing	 taxexempt	 companies	 will	 extend	 up	 to	 31	 december	 2010	 domestic	 corporate	 tax	 in	 gibraltar	 is	 35	 2004	 35
israel	 –	 888’s	 subsidiaries	 in	 israel	 have	 entered	 into	 separate	 transfer	 pricing	 agreements	 on	 an	 arm’slength	 basis	 with	 	 the	 israeli	 income	 tax	 commissioner	 those	 agreements	 are	 effective	 until	 the	 end	 of	 2007	 in	 respect	 of	 the	 israeli	 branch	 of	 intersafe	 global	 limited	 and	 2010	 in	 respect	 of	 random	 logic	 limited	 domestic	 corporate	 tax	 in	 israel	 is	 34	 2004	 35
uk	 –	 888’s	 subsidiary	 in	 the	 uk	 pays	 corporate	 tax	 in	 the	 uk	 at	 the	 applicable	 rate	 of	 30	 2004	 30
7 earnings per share
basic earnings per share
basic	 earnings	 per	 share	 has	 been	 calculated	 by	 dividing	 the	 net	 profit	 attributable	 to	 ordinary	 shareholders	 profit	 for	 the	 year	 by	 the	 weighted	 average	 number	 of	 shares	 in	 issue	 during	 the	 year	 diluted earnings per share
in	 accordance	 with	 ias	 33	 “earnings	 per	 share”	 the	 weighted	 average	 number	 of	 shares	 for	 diluted	 earnings	 per	 share	 takes	 into	 account	 all	 potentially	 dilutive	 shares	 and	 share	 options	 granted	 which	 are	 not	 included	 in	 the	 number	 of	 shares	 for	 basic	 earnings	 per	 share
	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december 31	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
	 	 	 	 	 	 adjusted
net	 profit	 attributable	 to	 ordinary	 shareholders	 	 	 	 48015	 41098
weighted	 average	 number	 of	 ordinary	 shares	 in	 issue
1
	 	 	 	 337 096320 337 096320
basic	 earnings	 per	 share	 	 	 	 142¢	 122¢
diluted	 earnings	 per	 share	 	 	 	 	 142¢	 122¢
1	 comparative 	 weighted	 average	 number	 of	 ordinary	 shares	 in	 issue	 has	 been	 restated	 in	 order	 to	 reflect	 the	 share	 split	 that	 took	 place	 on	 14	 september	 2005
notes to the consolidated financial statements
48 7 earnings per share	 continued
earnings per share excluding share benefit charges
reconciliation	 of	 net	 profit	 to	 net	 profit	 excluding	 share	 benefit	 charges
	 	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
net	 profit	 attributable	 to	 ordinary	 shareholders	 	 	 	 48015	 41098
share	 benefit	 charges	 	 	 	 	 17234	 –
net	 profit	 excluding	 share	 benefit	 charges	 	 	 	 65249	 41098
weighted	 average	 number	 of	 ordinary	 shares	 in	 issue
1
	 	 	  337 096320 337 096320
basic	 earnings	 per	 share	 excluding	 share	 benefit	 charges	 	 	 	 193¢	 122¢
weighted	 average	 number	 of	 dilutive	 ordinary	 shares	 	 	 	 338419476	 337 096320
diluted	 earnings	 per	 share	 excluding	 share	 benefit	 charges	 	 	 	 	 193¢	 122¢
1	 comparative 	 weighted	 average	 number	 of	 ordinary	 shares	 in	 issue	 has	 been	 restated	 in	 order	 to	 reflect	 the	 share	 split	 that	 took	 place	 on	 14	 september	 2005
8 dividends
	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
dividends	 paid	 	 	 	 	 63100	 26100
9 intangible assets 
	 	 	 	 	 domain
	 	 	 	 goodwill	 names	 total
	 	 	 	 us’000	 us’000	 us’000
cost
at	 1	 january	 2005	 	 	 	 –	 –	 –
additions	 	 	 	 452	 400	 852
at 31 december 2005	 	 	 	 452	 400 852
amortisation and impairment
at	 1	 january	 2005	 	 	 	 –	 –	 –
amortisation	 charge	 for	 the	 year	 	 	 	 –	 20	 20
impairment	 charge	 for	 the	 year	 	 	 	 452	 380	 832
at 31 december 2005	 	 	 	 452	 400 852
amortised cost
at 31 december 2005	 	 	 	 –	 – –
at	 31	 december	 2004	 	 	 	 –	 –	 –
goodwill	 relates	 to	 the	 business	 combination	 detailed	 in	 note	 18
49 888 holdings public limited company	 annual	 report	 	 accounts	 2005 10 property plant and equipment
	 	 	 office
	 	 	 furniture 	 and	 motor	 leasehold
	 	 it 	 equipment	 equipment	 vehicles	 improvements	 total
	 	 us’000	 us’000	 us’000	 us’000	 us’000
cost
at	 1	 january	 2005	 	 8194	 1375	 249	 4765	 14583
additions	 	 2420	 702	 272	 437	 3831
disposals	 	 –	 –	 62	 –	 62
at 31 december 2005  10614 2077 459 5202 18352
accumulated depreciation
at	 1	 january	 2005	 	 5946	 288	 34	 1073	 7341
charge	 for	 the	 year	 	 1630	 330	 57	 683	 2700
disposals	 	 –	 –	 30	 –	 30
at 31 december 2005  7576 618 61 1756 10011
depreciated cost
at 31 december 2005  3038 1459 398 3446 8341
at	 31	 december	 2004	 	 2248	 1087	 215	 3692	 7242
 prior year amounts
	 depreciated	 cost	 at	 1	 january	 2004	 	 3123	 1102	 54	 3932	 8211
	 additions	 in	 2004	 	 1058	 92	 176	 229	 1555
	 disposals	 in	 2004	 	 97	 –	 –	 –	 97
	 depreciation	 in	 2004	 	 1836	 107	 15	 469	 2427
	 depreciated	 cost	 at	 31	 december	 2004	 	 2248	 1087	 215	 3692	 7242
11 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	 the	 group’s	 deferred	 tax	 assets	 resulting	 from	 temporary	 differences	 are	 as	 follows
     31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
accrued	 severance	 pay	 	 	 	 	 195	 –
provision	 for	 vacation	 	 	 	 	 154	 –
provision	 for	 convalescence	 	 	 	 	 12	 –
	 	 	 	 	 361	 –
12 cash and cash equivalents
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
cash	 and	 cash	 equivalents	 	 	 	 	 56146	 36574
restricted	 cash	 	 	 	 6056	 3761
	 	 	 	 62202	 40335
restricted	 cash	 primarily	 relates	 to	 deposits	 held	 by	 banks	 for	 guarantees 
notes to the consolidated financial statements
50 13 trade and other receivables
     31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
trade	 receivables	 	 	 	 	 12535	 12605
other	 receivables	 and	 prepayments	 	 	 	 	 2478	 2620
	 	 	 	 	 15013 15225
the	 carrying	 value	 of	 trade	 and	 other	 receivables	 approximates	 to	 their	 fair	 value
14 share capital
share	 capital	 comprises	 the	 following
	 authorised
	 	 	 31 december	 31 	 december	 31 december	 31 	 december
	 	 	 2005	 2004	 2005	 2004
	 	 	 number	 number	 us’000	 us’000
ordinary	 shares	 of	 us1	 each	 	 	 3101000	 –	 3101	 –
effect	 of	 share	 split	 	 	 3101000	 –	 3101	 –
ordinary	 “a”	 shares	 of	 us1	 each	 	 	 –	 3100000	 –	 3100
redeemable	 preference	 “b”	 shares	 of	 us1	 each	 	 	 –	 1000	 –	 1
ordinary	 shares	 of	 £0005	 each	 	 426387500	 –	 3880	 –
	 	 	426387500	 3101000	 3880	 3101
	 allotted	 called	 up	 and	 fully	 paid
	 	 	 31 december	 31 	 december	 31 december	 31 	 december
	 	 	 2005	 2004	 2005	 2004
	 	 	 number	 number	 us’000	 us’000
ordinary	 shares	 of	 us1	 each	 	 	 3064512	 –	 3065	 –
effect	 of	 share	 split	 	 	 3064512	 –	 3065	 –
ordinary	 “a”	 shares	 of	 us1	 each	 	 	 –	 3064512	 –	 3065
redeemable	 preference	 “b”	 shares	 of	 us1	 each	 	 	 –	 1000	 –	 1
ordinary	 shares	 of	 £0005	 each	 	 337096320	 –	 3068	 –
	 	 337096320 3065512	 3068	 3066
on	 10	 february	 2005	 the	 company	 passed	 a	 resolution	 to	 reclassify	 the	 1000	 us1	 preference	 “b”	 shares	 in	 issue	 into	 100000	 us001	 preference	 “b”	 shares
on	 31	 march	 2005	 the	 100000	 us001	 preference	 “b”	 shares	 in	 issue	 were	 redeemed	 in	 full
the	 100000	 authorised	 preference	 “b”	 shares	 were	 subsequently	 converted	 into	 and	 reclassified	 as	 1000	 	 us1	 ordinary	 shares
the	 3100000	 authorised	 ordinary	 “a”	 shares	 were	 also	 reclassified	 into	 3100000	 us1	 ordinary	 shares
on	 14	 september	 2005	 a	 share	 split	 of	 110	 to	 1	 was	 effected	 888’s	 share	 capital	 was	 also	 redenominated	 from	 	 the	 us	 dollar	 to	 pounds	 sterling	 at	 a	 rate	 of	 us182£1	 in	 addition	 the	 authorised	 share	 capital	 was	 increased	 	 by	 the	 creation	 of	 85277500	 ordinary	 shares	 of	 £0005	 each	 the	 combination	 of	 these	 events	 resulted	 in	 888	 	 having	 an	 authorised	 share	 capital	 of	 426387500	 ordinary	 shares	 of	 £0005	 each	 £21	 million	 nominal	 value	 	 and	 an	 issued	 share	 capital	 of	 337096320	 ordinary	 shares	 of	 £0005	 each	 £17	 million	 nominal	 value
	 51 888 holdings public limited company	 annual	 report	 	 accounts	 2005 15 trade and other payables
     31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
trade	 payables	 	 	 	 4550	 3320
corporate	 taxes	 	 	 	 	 766 1429
other	 payables	 and	 accrued	 expenses	 	 	 	 	 20277	 10597
	 	 	 	 25593	 15346
the	 carrying	 value	 of	 trade	 and	 other	 payables	 approximates	 to	 their	 fair	 value
16 investments in subsidiaries
	 percentage of	 	 percentage 	 of	 	  equity interest	 equity 	 interest
	 country	 of	 2005	 2004
name	 incorporation	 	 	 nature	 of	 business
intersafe	 global	 limited	 gibraltar	 100	 100	 payment	 processor
cassava	 enterprises	 limited	 antigua	 100	 100	 member	 call	 centre	 operator
virtual	 services	 limited	 bvi	 100	 100	 advertising
virtual	 holdings	 management	 services	 gibraltar	 limited	 gibraltar	 100	 100	 operates 	 group	 headquarters
intersafe	 global	 europe	 limited	 gibraltar	 100	 100	 payment	 processor
cassava	 enterprises	 gibraltar	 limited	 gibraltar	 100	 100	 gaming	 web	 site	 operator
virtual	 marketing	 services	 uk	 limited	 uk	 100	 100	 advertising
cassava	 sports	 limited	 gibraltar	 100	 100	 domain 	 site	 owner	 through	 which	 	 	 	 	 	 which	 a	 third	 party	 operates	 	 	 	 	 	 a	 betting	 exchange
active	 media	 limited	 bvi	 100	 100	 member 	 call	 centre	 employer
virtual	 marketing	 services	 gibraltar	 limited	 uk	 100	 100	 marketing	 acquisition
dixie	 operation	 limited	 antigua	 100	 100	 member	 call	 centre	 operator
random	 logic	 limited	 israel	 100	 100	 research 	 development	 and	 marketing	 17 sharebased payment
prior	 to	 flotation	 the	 company	 adopted	 two	 equitysettled	 employee	 share	 incentive	 plans	 –	 the	 888	 allemployee	 share	 share	 plan	 and	 the	 long	 term	 incentive	 plan	 awards	 have	 been	 granted	 under	 the	 888	 allemployee	 share	 plan	 conditional	 upon	 flotation	 the	 888	 allemployee	 share	 plan	 is	 open	 to	 all	 employees	 and	 executive	 directors	 of	 the	 group	 who	 are	 not	 within	 six	 months	 of	 their	 normal	 retirement	 age	 at	 the	 discretion	 of	 the	 remuneration	 committee	 awards	 under	 this	 scheme	 will	 vest	 in	 instalments	 over	 a	 fixed	 period	 of	 up	 to	 four	 years
it	 is	 intended	 that	 the	 long	 term	 incentive	 plan	 will	 be	 open	 to	 all	 employees	 and	 executive	 directors	 of	 the	 group	 at	 the	 discretion	 of	 the	 remuneration	 committee	 awards	 under	 the	 long	 term	 incentive	 plan	 will	 be	 subject	 to	 performance	 conditions	 imposed	 by	 the	 remuneration	 committee	 at	 the	 date	 of	 grant	 as	 at	 31	 december	 2005	 no	 awards	 were	 	 made	 under	 the	 long	 term	 incentive	 plan	 notes to the consolidated financial statements
52 17 sharebased payment	 continued
details	 of	 shares	 and	 share	 options	 granted	 as	 part	 of	 the	 888	 allemployee	 share	 plan	 and	 shares	 granted	 vesting	 immediately	 on	 ipo	 and	 thereafter
share options granted
	 	 	 	 31 december 31	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 number	 number
outstanding	 at	 the	 beginning	 of	 the	 year	 	 	 	 	 –	 –
market	 value	 options	 granted	 during	 the	 year	 	 	 	 3578287	 –
outstanding	 at	 the	 end	 of	 the	 year	 	 	 	 3578287	 –
weighted	 average	 exercise	 price	 	 	 	 	 £175	 –
shares granted
	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 number	 number
outstanding	 at	 the	 beginning	 of	 the	 year	 	 	 	 	 –	 –
shares	 granted	 –	 future	 vesting	 	 	 	 	 5292622	 –
shares	 granted	 –	 immediate	 vesting	 	 	 	 5078357	 –
shares	 vested	 during	 the	 year	 	 	 	 5078357	 –
outstanding	 at	 the	 end	 of	 the	 year	 	 	 	 5292622	 –
of	 the	 total	 number	 of	 options	 outstanding	 at	 the	 end	 of	 the	 year	 none	 had	 vested	 and	 were	 exercisable	 at	 the	 end	 of	 	 the	 year
the	 following	 information	 is	 relevant	 in	 the	 determination	 of	 the	 fair	 value	 of	 options	 granted	 during	 the	 year	 under	 the	 equitysettled	 888	 allemployee	 share	 plan
valuation information
	 	 	 	 	 2005	 2004
option	 pricing	 model	 used	 	 	 	 	 binomial	 –
share	 price	 at	 grant	 date	 	 	 	 	 £175	 –
weighted	 exercise	 price	 	 	 	 	 £175	 –
exercise	 period	 of	 the	 market	 value	 options	 is	 from	 vesting	 until	 expiry	 of	 ten	 years	 after	 grant	 date
in	 accordance	 with	 international	 financial	 reporting	 standards	 a	 charge	 to	 the	 income	 statement	 in	 respect	 of	 any	 shares	 or	 options	 granted	 under	 the	 above	 schemes	 will	 be	 recognised	 and	 spread	 over	 the	 vesting	 period	 of	 the	 shares	 or	 options	 based	 on	 the	 fair	 value	 of	 the	 shares	 or	 options	 at	 the	 date	 of	 grant	 adjusted	 for	 changes	 in	 vesting	 conditions	 at	 each	 balance	 sheet	 date	 this	 charge	 has	 no	 cash	 impact
share benefit charges
	 	 	 	 	 year ended	 year 	 ended
	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
charges	 in	 respect	 of	 shares	 granted	 to	 employees	 on	 ipo	 	 	 	 	 15087	 –
charges	 in	 respect	 of	 share	 and	 option	 awards	 	 	 	 	 2147	 –
charge	 for	 the	 year	 	 	 	 	 17234	 –
53 888 holdings public limited company	 annual	 report	 	 accounts	 2005 17 sharebased payment	 continued
the	 source	 of	 the	 shares	 granted	 to	 employees	 on	 ipo	 was	 the	 shareholders	 immediately	 before	 the	 ipo	 rather	 than	 the	 company	 an	 amount	 equalling	 the	 charge	 in	 relation	 to	 these	 shares	 has	 therefore	 been	 transferred	 from	 the	 share	 benefit	 reserve	 to	 accumulated	 profit	 the	 group	 did	 not	 enter	 into	 any	 sharebased	 payment	 transactions	 with	 parties	 other	 than	 employees	 during	 the	 current	 	 or	 previous	 period
18 business combination 
on	 20	 december	 2005	 the	 group	 took	 responsibility	 for	 the	 management	 of	 actecash	 limited	 a	 company	 with	 common	 shareholders	 from	 this	 date	 actecash	 was	 managed	 as	 a	 unit	 of	 the	 group	 and	 utilised	 staff	 employed	 by	 the	 group	 in	 accordance	 with	 ias	 27	 “consolidated	 and	 separate	 financial	 statements”	 the	 group	 is	 deemed	 to	 have	 control	 of	 actecash	 by	 virtue	 of	 the	 fact	 it	 has	 the	 power	 to	 govern	 the	 financial	 and	 operating	 policies	 of	 this	 company	 and	 derives	 economic	 benefit	 from	 doing	 so	 as	 such	 actecash	 has	 been	 consolidated	 as	 part	 of	 the	 group	 the	 principal	 activity	 of	 actecash	 limited	 is	 operating	 an	 ewallet	 service	 as	 a	 company	 registered	 in	 gibraltar	 there	 has	 been	 minimal	 activity	 since	 20	 december	 2005
details	 of	 the	 fair	 value	 of	 the	 identifiable	 assets	 and	 liabilities	 acquired	 are	 as	 follows
	 	 	 	 	 	 us’000
cash	 at	 bank	 	 	 	 	 	 263
trade	 receivable	 	 	 	 	 	 509
balance	 with	 related	 party	 	 	 	 	 	 1171
creditors	 	 	 	 	 	 53
total	 	 	 	 	 	 452
no	 purchase	 consideration	 was	 paid	 in	 respect	 of	 actecash	 limited
therefore	 goodwill	 of	 us452000	 arose	 on	 the	 transaction	 this	 goodwill	 has	 been	 fully	 impaired	 as	 of	 31	 december	 2005
19 related party transactions
at	 31	 december	 2005	 the	 group	 was	 owed	 us1649000	 by	 companies	 controlled	 by	 shareholders	 of	 the	 group	 and	 	 by	 its	 shareholders	 2004	 us2245000	 of	 which	 us1633000	 2004	 usnil	 is	 due	 from	 shareholders	 relating	 to	 flotation	 expenses	 at	 this	 date	 the	 group	 owed	 to	 its	 shareholders	 us318000	 2004	 us381000
during	 the	 year	 the	 group	 paid	 us198768	 2004	 us69000	 in	 respect	 of	 rent	 and	 office	 expenses	 to	 burford	 holdings	 limited	 and	 cabot	 property	 partnership	 companies	 of	 which	 mr	 john	 anderson	 is	 a	 director	 at	 31	 december	 2005	 the	 amount	 owed	 to	 burford	 holdings	 limited	 and	 cabot	 property	 partnership	 was	 usnil	 2004	 usnil
remuneration	 paid	 to	 the	 directors	 in	 the	 year	 totalled	 us3176000	 2004	 us1858000
notes to the consolidated financial statements
54 20 commitments and contingencies
lease commitments
future	 minimum	 lease	 commitments	 under	 property	 operating	 leases	 for	 the	 year	 ended	 31	 december	 2005	 are	 as	 follows
	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
leases	 expiring	 within	 	 	 	 	 	 us’000	 us’000
one	 year	 	 	 	 	 1985	 1386
one	 to	 five	 years	 	 	 	 	 2617	 1563
	 	 	 	 	 4602	 2949
the	 amount	 paid	 in	 the	 year	 was	 us2052463	 2004	 us1419000
lease	 commitments	 on	 the	 group’s	 property	 are	 shown	 to	 the	 date	 of	 the	 first	 break	 clause
21 financial risk management objectives and policies
the	 group	 is	 exposed	 through	 its	 operations	 to	 currencies	 interest	 rate	 and	 credit	 risk	 policy	 for	 managing	 these	 risks	 is	 set	 by	 the	 board	 following	 recommendations	 from	 the	 chief	 financial	 officer	 certain	 risks	 are	 managed	 centrally	 while	 others	 are	 managed	 locally	 following	 guidelines	 communicated	 from	 the	 centre	 the	 policy	 for	 each	 of	 these	 risks	 is	 detailed	 below
currency risk
the	 group’s	 overall	 financial	 risk	 arising	 from	 exchange	 rate	 fluctuations	 to	 the	 group	 is	 minimal	 as	 receipts	 and	 the	 majority	 of	 payments	 are	 transacted	 in	 us	 dollars
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	 downside	 interest	 rate	 risk	 is	 minimal	 as	 the	 group	 has	 no	 borrowings	 management	 monitors	 liquidity	 to	 ensure	 	 that	 sufficient	 liquid	 resources	 are	 available	 to	 the	 group
credit risk
the	 group’s	 credit	 risk	 is	 primarily	 attributable	 to	 receivables	 from	 payment	 service	 providers
22 events subsequent to the balance sheet date
on	 7	 march	 2006	 a	 group	 company	 random	 logic	 limited	 signed	 a	 new	 operating	 lease	 agreement	 for	 its	 rental	 facilities	 	 for	 a	 period	 of	 10	 years		 as	 a	 result	 random	 logic’s	 previous	 operating	 lease	 agreements	 will	 be	 terminated
55 888 holdings public limited company	 annual	 report	 	 accounts	 2005 	 	 	 	 	 31 december	 31 	 december
	 	 	 	 	 2005	 2004
	 	 	 	 note	 us’000	 us’000
assets	 	 	 noncurrent assets	 	 	 investments	 in	 subsidiaries	 	 	 	 2	 2130	 2130
current assets	 	 	 trade	 and	 other	 receivables	 	 	 	 3	 40466	 22846
cash	 and	 cash	 equivalents	 	 	 	 4	 36531	 18100
	 	 	 	 	 76997	 40946
total assets	 	 	 	 	 79127	 43076
equity and liabilities
equity 	 	 	 share	 capital	 	 	 	 5	 3068	 3066
share	 benefit	 reserve	 	 	 	 6	 2147	 –
retained	 earnings	 	 	 	 	 21900	 7357
total equity attributable to equity holders of the parent	 	 	 	 	 27115	 10423
liabilities	 	 	 current liabilities	 	 	 trade	 and	 other	 payables	 	 	 	 7	 51748	 32383
amounts	 due	 to	 shareholders	 	 	 	 	 264	 270
total liabilities	 	 	 	 	 52012	 32653
total equity and liabilities	 	 	 	 	 79127	 43076
approved	 by	 the	 board	 and	 authorised	 for	 issue	 on	 16	 march	 2006
john anderson   aviad kobrine
chief	 executive	 officer	 	 chief 	 financial	 officer
the	 notes	 on	 pages	 59	 to	 60	 form	 part	 of	 these	 financial	 statements
company balance sheet
at	 31	 december	 2005
56 	 	 	 	 share
	 	 	 share	 benefit	 accumulated
	 	 	 capital	 reserve	 profit	 total
	 	 	 us’000	 us’000	 us’000	 us’000
balance at 1 january 2004	 	 	 15443	 –	 7212	 22655
net	 profit	 for	 the	 year	 	 	 –	 –	 26245	 26245
dividend	 paid	 	 	 –	 –	 26100	 26100
capital	 reduction	 	 	 12442	 –	 –	 12442
share	 capital	 issued	 	 	 65	 –	 –	 65
balance at 1 january 2005	 	 	 3066	 –	 7357	 10423
net	 profit	 for	 the	 year	 	 	 – – 62556 62556
dividend	 paid	 	 	 – – 63100 63100
redemption	 of	 preference	 share	 capital	 	 	 1 – – 1
redenomination	 translation	 effect	 	 	 3 – – 3
share	 benefit	 charges	 	 	 – 17234 – 17234
transfer	 of	 shares	 granted	 on	 ipo	 	 	 – 15087 15087 –
balance at 31 december 2005   3068 2147 21900 27115
the	 notes	 on	 pages	 59	 to	 60	 form	 part	 of	 these	 financial	 statements
company statement of changes in equity
for	 the	 year	 ended	 31	 december	 2005
57 888 holdings public limited company	 annual	 report	 	 accounts	 2005 	 	 	 year ended year ended	 year 	 ended	 year 	 ended
	 	 31 december 31 december	 31 	 december	 31 	 december
	 	 2005 2005	 2004	 2004
	 	 	 us’000 us’000	 us’000	 us’000
cash flows from operating activities	 	 	 	 	 lossprofit	 before	 income	 tax	 	 	 544	 	 145
adjustments for	 	 	 	 	 interest	 received	 	 	 751	 	 145
	 translation	 effect	 of	 redenomination	 of	 share	 capital	 	 	 3 	 –	 	 share	 benefit	 charges	 	 	 17234 	 –	 	 increase	 in	 amounts	 owed	 from	 subsidiaries	 	 	 17243 	 3468	 	 increase	 in	 other	 accounts	 receivable	 	 377 	 –	 	 increase	 in	 trade	 payables	 	 555 	 –	 	 increase	 in	 amounts	 owed	 to	 subsidiaries	 	 	 14565 	 32360	 	 increasedecrease	 in	 other	 accounts	 payable	 	 	 4239 	 244	 	 increase	 in	 amounts	 due	 from	 shareholders	 	 	 – 	 589	 cash generated from operations	 	 	 18976	 	 29237
net cash generated from operating activities	 	 	 17681	 	 29237
cash flows from investing activities	 	 	 	 	 acquisition	 of	 random	 logic	 limited	 net	 of	 cash	 acquired	 	 	 – 	 937	 	 interest	 received	 	 	 751 	 145	 	 dividends	 received	 	 	 63100 	 26100	 net cash used in investing activities	 	 	 63851	 	 25308
cash flows from financing activities	 	 	 	 	 reduction	 in	 share	 capital	 	 	 1 	 12442	 	 dividends	 paid	 	 63100 	 26100	 net cash used in financing activities	 	 	 63101	 	 38542
net increase in cash and cash equivalents	 	 	 18431	 	 16003
cash	 and	 cash	 equivalents	 at	 the	 beginning	 of	 the	 year	 	 	 18100 	 2097
cash and cash equivalents at the end of the year	 	 	 36531	 	 18100
the	 notes	 on	 pages	 59	 to	 60	 form	 part	 of	 these	 financial	 statements
company statement of cash flows
for	 the	 year	 ended	 31	 december	 2005
58 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	 has	 applied	 accounting	 policies	 identical	 to	 the	 group’s	 accounting	 policies	 listed	 in	 note	 2	 to	 the	 consolidated	 financial	 statements	 other	 than	 in	 relation	 to	 investments	 in	 its	 subsidiaries	 which	 are	 held	 at	 cost	 less	 	 any	 impairment	 provision	 required
	 	 under	 section	 102	 of	 the	 gibraltar	 consolidated	 accounts	 ordinance	 1999	 the	 company	 is	 exempt	 from	 the	 requirement	 to	 present	 its	 own	 income	 statement
2 investments in subsidiaries
the	 company’s	 subsidiaries	 are	 listed	 in	 note	 16	 to	 the	 consolidated	 financial	 statements	 and	 are	 held	 at	 cost	 less	 provision	 for	 any	 impairment
3 trade and other receivables
	 	 	 	 	 31 december 31	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
amounts	 due	 from	 subsidiaries	 	 	 	 	 40089	 22846
other	 receivables	 and	 prepayments	 	 	 	 	 377	 –
	 	 	 	 	 40466	 22846
4 cash and cash equivalents
	 	 	 	 	 31 december 31	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
cash	 and	 cash	 equivalents	 	 	 	 33497	 17450
restricted	 cash	 	 	 	 	 3034	 650
	 	 	 	 	 36531	 18100
restricted	 cash	 primarily	 relates	 to	 deposits	 held	 by	 banks	 for	 guarantees
notes to the company financial statements
59 888 holdings public limited company	 annual	 report	 	 accounts	 2005 5 share capital
the	 disclosures	 in	 note	 14	 to	 the	 consolidated	 financial	 statements	 are	 identical	 for	 the	 company
6 sharebased payment
the	 disclosures	 in	 note	 17	 to	 the	 consolidated	 financial	 statements	 are	 identical	 for	 the	 company
7 trade and other payables
	 	 	 	 	 31 december 31	 december
	 	 	 	 	 2005	 2004
	 	 	 	 	 us’000	 us’000
trade	 payables	 	 	 	 555	 –
amounts	 due	 to	 subsidiaries	 	 	 	 46926	 32361
other	 payables	 and	 accrued	 expenses	 	 	 	 4267	 22
	 	 	 	 51748	 32383
the	 carrying	 value	 of	 trade	 and	 other	 payables	 approximates	 to	 their	 fair	 value
8 financial risk management objectives and policies
the	 company’s	 financial	 risk	 management	 objectives	 and	 policies	 are	 identical	 to	 those	 of	 the	 group	 as	 disclosed	 in	 	 note	 21	 to	 the	 consolidated	 financial	 statements
notes to the company financial statements
60 the world’s no1 online  
casino and poker room
888 is one of the world’s most popular online gaming entertainment 
companies established in 1997 by pioneers of the online gaming 
industry 888 has developed a strong brand scale and member trust
the business is based on its fully integrated proprietary operating 
software infrastructure backed up by impressive member relationship 
management and diversified payment processing systems 888 benefits 
from industry leading multichannel member acquisition capabilities
888com is our umbrella brand we operate brands 
across a range of online gaming websites such 
as 888com casinoonnetcom pacificpokercom 
and reefclubcasinocom the main products offered 
at these websites include traditional casino table 
games such as blackjack roulette and craps as well 
as slot machines video poker poker ring games and 
poker tournaments
casinoonnet is available in 11 languages 888 also 
enjoys a diversified geographical balance with 45 of 
net gaming revenue from outside the usa 888 
provides members with a trustworthy and fair 
gaming environment
group websites
a range of shareholder information is available in 
the investor relations area of the group’s website 
www888holdingsplccom including
latest information on the group’s share price
information on the group’s financial performance 
news and events
the following websites can also be accessed through 
the group’s main web portal 888com
casino
888’s casino games are offered through its 
casinoonnet and reef club casino offerings
wwwcasinoonnetcom
wwwreefclubcasinocom
poker
888’s poker offering is through pacific poker
wwwpacificpokercom
betmate
offers access to a betting exchange for nonusa members 
only including sporting and nonsporting betting
wwwbetmatecom
888tv
a portal for skill games allowing members to download 
games open accounts and play tournaments
www888tv
888info
allows members to practise their gaming skills for fun 
through a number of key casino and poker games 
www888info
■
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shareholder information
financial advisers
hsbc bank plc
8 canada square london e14 5hq
principal bankers
the royal bank of scotland plc
280 bishopsgate london ec2m 4rb
solicitors
freshfields bruckhaus deringer
65 fleet street london ec4y 1hs
hassans
5763 line wall road
gibraltar
auditors
bdo stoy hayward llp
chartered accountants
8 baker street
london w1u 3ll
bdo fidecs chartered 
accountants limited
montagu pavilion
810 queensway
gibraltar
contents
01 highlights
02 888 at a glance
04 marketing
06 technology
08 people
10 chairman’s statement
12 chief executive’s review
16 financial review
20 board of directors
22 responsible gaming
23 regulatory and compliance review
24 corporate governance
29 remuneration report
35 directors’ report 
37 independent auditors’ report
38 consolidated income statement
39 consolidated balance sheet
40 consolidated statement of changes in equity
41 consolidated statement of cash flows
42 notes to the consolidated financial statements
56 company balance sheet
57 company statement of changes in equity
58 company statement of cash flows
59 notes to the company financial statements
ibc shareholder information
incorporated in gibraltar with registered 
number 90099
shareholder services
all enquiries relating to ordinary shares 
depository interests dividends and 
changes of address should be directed 
to the group’s transfer agent
capita registrars
the registry 34 beckenham road
beckenham kent br3 4tu 
tel 0870 162 3100
wwwcapitaregistrarscom
further information
for further information please contact
company secretary
888 holdings public limited company
suite 601701
europort europort road
gibraltar
info888holdingsplccom holdings
public limited company
holdings
public limited company
the world’s no1 online casino and poker room
annual report  accounts 2005
suite 601701 europort
europort road
gibraltar
t 350 49800
f 350 48280
e info888holdingsplccom
www888holdingsplccom
888 holdings public limited company annual report  accounts 2005
connecting…to the world’s no1
online casino and poker room


Summary:
 chief executive’s 
review
the two mos t impor tant words 
in our indus try  “trus t me”
john anderson chief executive officer
888 is an industryleading brand 
which is synonymous with quality 
fairness and trust as a business  
it has delivered a number of 
consecutive years of growth in 
profits 2005 was no exception 
and we are delighted to report profit 
after tax for the year excluding 
share benefit charges of us65 
million up 59 on 2004 a more 
than satisfactory increase
our flotation in october on the 
london stock exchange marked  
an important step in our goal to 
become the market leader in the 
global online gaming entertainment 
industry this will enable us to 
increase further our brand profile 
recognition and credibility and  
will also give us an acquisition 
currency this is a key part of  
our strategy and we believe the 
industry has matured to a stage 
where consolidation is inevitable 
and i intend that 888 will be at  
the heart of this our industry  
has arrived and will be here on  
a permanent basis 
the business is in great shape 
and the year to 31 december 2005 
saw us achieve record net gaming 
revenue and profits new member 
registrations in both casino and 
poker were significantly up at 
53 million
the main driver behind our 
outstanding growth has been our 
indepth knowledge and experience 
of the industry built up since our 
inception in 1997 we understand 
what our members want and we are 
continually upgrading our product 
offering to retain existing and 
attract new players most 
importantly we continue to provide 
our s tra tegy
investment in and leverage 
of the 888 brand
expansion into new 
geographic markets
development and expansion 
of software platforms to 
provide a “one stop shop” 
through organic growth and 
selective acquisitions
leveraging 888’s large 
member database to 
maximise crossselling and 
upselling opportunities 
continued development of 
efficient payment processing 
options that suit new target 
markets and audiences
■
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12 members with a secure and trusted 
environment in which to play in the 
interests of consumer protection we 
were a founding member of ecogra 
the preeminent industry benchmark 
and i am a member of its board
whilst member acquisition is key 
member retention is paramount  
as well as the products we offer we 
have invested in the highest quality 
infrastructure and systems to ensure 
that we sustain our members’ interest 
and do not give them a reason to play 
anywhere else we will continue to add 
new entertainment options through 
selective acquisition or inhouse 
development and we will expand  
our software platforms to allow for 
increased scalability
geographic spread
no business should have an over
reliance on any one particular market 
and those in our industry are no 
exception we don’t believe in having 
all our eggs in the one basket and i 
personally consider our geographic mix 
of business to be the widest in the 
industry by making our product 
available in up to 11 languages we 
have grown our nonusa business  
at such a rate so as to reduce our 
dependence on the usa to 55  
of our business without sacrificing 
volume our second largest revenue 
stream comes from the uk market 
representing 20 of our mix in the 
uk 888 has come from nowhere in 
2003 to become the top brand in the 
industry in 2005 this success is 
mainly due to the highly successful 
offline advertising campaigns we ran  
in the uk and high profile selected 
sponsorships we will be repeating 
this strategy of awareness throughout 
mainland europe in the coming year 
our product offering
during the year we have succeeded in 
growing net gaming revenue and new 
player signups across all our categories 
in 2004 the total amount wagered in 
the online casino market was estimated 
at us539 billion source cca
since its inception in 1997 our casino 
product casinoonnet has continued 
to be the leading online casino brand 
with member numbers now at a level 
of 4 million real money registered 
member accounts 
2005 saw continued growth in net 
gaming revenue from us178 million  
to us271 million an increase of 52 
this is mainly attributable to the 
expansion of our online and offline 
marketing programmes and the 
introduction of new distribution channels 
through our affiliate programmes
we also operate an additional casino 
brand reef club casino that we 
introduced in 2002 by offering 
members another casino brand we 
optimise their choice which in turn 
underpins our member retention by 
keeping players on our sites
in january 2006 888 launched an 
entirely new casino product with a new 
graphical user interface new industry 
leading videoslot machines and 
promotion features to provide  
our members with an even more 
sophisticated visual and interactive 
no business should have an over
reliance on any one particular 
market and those in our industry 
are no exception we don’t believe 
in having all our eggs in the one 
basket and i personally consider 
our geographic mix of business to 
be the widest in the industry
experience to enhance their playing 
environment we also plan to add an 
additional language to our casino in 
the first quarter of 2006 
the online poker market has 
experienced remarkable growth since 
2002 and i have no doubt it is fast 
becoming a mainstream entertainment 
activity poker has always been played 
in the usa and in fact is part of the 
fabric of usa society people of all ages 
including families have always played 
poker as part of their recreational 
time more and more countries 
throughout the globe are playing the 
game and this is resulting in a decline 
in the dominance of the usa market 
poker is cool and here to stay
our poker product pacific poker was 
ranked four in 2005 and in the year 
net gaming revenue from our poker 
business exhibited strong growth 
increasing by 179 to us1098 
million 2004 us393 million this 
result partly reflects an increase in 
888’s marketing efforts but is also a 
byproduct of the exponential growth of 
the phenomenon that is online poker
we are continually upgrading our 
proprietary products and have recently 
upgraded our poker offering with a multi
language format it is now operational in 
english german italian and swedish 
we introduced a new ewallet focusing 
on spain germany netherlands italy 
and france thereby expanding further 
our geographical presence in nonusa 
markets 888 plans to rollout a further 
two new languages and a new jackpot 
feature for pacific poker in the first 
quarter of 2006
13 888 holdings public limited company annual report  accounts 2005 chief executive’s 
review
betmate our betting exchange is a 
white label product in conjunction 
with betdaq the second largest 
betting exchange in the uk it has 
been in operation since 2004 and 
acts as a member retention tool  
by complementing our casino 
offerings it offers access to a 
betting exchange for nonusa 
members only it has performed 
satisfactorily over the period
in order for us to give our members 
a “one stop shopping” experience 
we need to offer them a 
sportsbook we are currently 
examining our options to achieve 
this we will not take sports bets 
from us citizens however we will 
take bets on american sports 
events from nonus citizens
r egulatory developments
whilst the application of existing 
laws to online gaming is still to be 
clarified in most jurisdictions in 
april 2005 the uk government 
passed the gambling act which 
includes the licensing of online 
gaming i believe the uk’s position 
is the first domino in what will 
become a legislative network 
throughout mainland europe
we continue to monitor the 
legislative position in the usa 
where many attempts have been 
made in the past to prevent the 
instruments for the financial 
payment of internet gaming to take 
place it is our view that this will 
continue to be our main challenge 
we also monitor on a continual 
basis all jurisdictions to ensure 
we understand local regulatory 
positions and are alerted early to 
any potential developments the 
world has still to get to grips with 
this industry and the laws which do 
exist can change very rapidly part of 
what we must do as an industry is to 
lobby all of the countries of the world 
so that legalisation and licensing of 
internet gaming becomes the norm 
rather than the exception 
innovative marketing approach
the 888 brand is a core aspect  
of our marketing strategy and is  
key to building and maintaining  
our business strong branding is 
not only critical in differentiating  
our business but a recognisable 
brand builds trust which is a  
key consideration affecting a 
consumer’s choice of provider
our marketing strategy includes both 
online advertising such as search 
engine optimisation and offline 
activities this includes mass media 
advertising direct mail sports 
marketing and sponsorship such as 
that of middlesbrough football club 
where our shirt sponsorship deal 
has been a huge success recently 
we also signed up to be the sponsor 
of the iconic world snooker 
championship the event is held  
at the crucible in sheffield uk and 
is the most important event in the 
snooker calendar our sponsorship 
not only catapults us into emerging 
markets such as china and the far 
east where snooker has a huge 
following but our brand will be fully 
14 future prospects
i have no doubt that this industry  
is here to stay and the market will 
continue to grow in line with increasing 
internet penetration throughout the 
world as stated at flotation our goal 
is to become market leader and offer  
a “one stop shop” online leisure 
experience this expansion will be 
achieved both organically and through 
selective acquisition 
our 2005 results confirm we are 
heading in the right direction to 
achieve this we are confident that the 
continued focus on our strategic goals 
through a systematic and evidence
based approach will provide the 
opportunities to deliver further positive 
results in the future
the albeit early trends in 2006 
confirm our confidence in the future 
this year we will expand into more 
countries with better products and  
we will continue to pursue excellence 
in every facet of our business
john anderson
chief executive officer
exposed for hundreds of hours in the 
uk and europe we consider the deal  
to be a major step in continuing to 
spread global awareness of the 888 
brand as part of this 888 will also be 
an associate sponsor of the masters 
grand prix and uk championship 
snooker events
member r elationship management
888 has a first class reputation for  
its member relationship management 
our member support is as international 
as our member base and we currently 
provide support in up to 11 languages 
available 247 our call centres offer 
interactive services and support toll
freefreephone numbers email and 
webchat platforms as well as online 
selfhelp options our staff are all highly 
trained and undergo an ongoing training 
programme to ensure we remain at the 
cutting edge of service excellence
we have consistently focused on 
maintaining and enhancing our 
member support services and have 
developed a valuable proprietary 
member database of over 23 million 
registered members we believe there 
is significant opportunity in both the 
crossselling and upselling of this 
database to maximise member 
retention and lifetime value 
payment systems
payment systems are the lifeblood of 
our industry the number of options we 
use has increased from four in 2000  
to 22 in 2005 we must continually 
upgrade and seek new systems in order 
to give all of our members in different 
markets local methods enabling them 
to pay and play seamlessly
i cannot emphasise enough the 
importance of making available a  
wide variety of payment methods to 
support members in different locations 
and with different needs this alone 
shatters the myth that barriers to  
entry to our industry are low the fact 
is that barriers to successful entry are 
extremely high
backoffice support
our proprietary backoffice systems 
are state of the art and form an 
excellent base to keep our members 
satisfied we spend a lot of money  
to attract new members and it is vital 
we create a service environment that 
keeps them
people
our people are totally dedicated and 
include many of the pioneers of the 
industry they are not only good at 
what they do and have a tremendous 
track record but are focused on the 
future success of the group i would 
like to add my personal thanks to each 
one of our employees worldwide for 
what they have achieved in 2005  
our success is their success
there is no doubt that this is an 
industry which is here to stay and 
the market will continue to grow 
in line with increasing internet 
penetration
15 888 holdings public limited company annual report  accounts 2005