Final Results

888 Holdings plc
08 April 2008

Part 1

                      888 Holdings Public Limited Company
                            ('888' or the 'Company')

            Preliminary Results for the year ended 31 December 2007

888, one of the world's most popular online gaming entertainment companies,
announces its preliminary results for the year ended 31 December 2007.



Financial Summary


US$ million                                                   2007                2006          % change
Net Gaming Revenue
    Casino                                                   118.1                88.8                33
    Poker                                                     80.8                68.2                18
    Emerging Offerings                                        14.4                   -                 -
Total Net Gaming Revenue                                    213.41               157.0                36
Other Operating Income                                         3.6                   -                 -
Total Operating Income                                      216.91               157.0                38

Operating Expenses2                                           59.1                45.6
Research and Development Expenses                             23.5                19.4
Selling and Marketing Expenses                                70.9                51.0
Administrative Expenses 3,4                                   17.9                24.6

EBITDA 3,4                                                    45.5                16.4               177

Finance Income and Exchange Gains                              6.1                 9.6
Depreciation and Amortisation                                (5.8)               (3.8)

Profit Before Tax from Continuing Operations 4                45.8                22.2               106
Basic EPS4 (cents)                                            12.6                 5.7               121





Financial Highlights


•         Profit before tax4 from continuing operations up 106% to $46m (2006:
          $22m)

•         EBITDA3,4 up 177% to $46m (2006: $16m)

•         Net Gaming Revenue ('NGR') up 36% to US$213m (2006:US$157m), Total
          Operating Income up 38% to US$217m (2006: US$157m)

•         Casino NGR up 33% to $118m (2006: $89m)

•         Poker NGR up 18% to $81m (2006: $68m)

•         EBITDA3,4 margin up to 21% (2006: 10%)

•         Basic EPS4 up 121% to 12.6 cents (2006: 5.7 cents)

•         Liquid resources US$104m (2006: US$114m)

•         Final dividend 5.0 cents, above stated dividend policy

•         Following a very strong Quarter 4 last year, 2008 started well with
          further growth and the group is confident about our prospects for 2008





1 Rounded

2 Excluding depreciation of US$4.2 million (2006: US$3.8 million) and
  amortisation of US$1.6 million (2006: US$ nil)

3 Excluding exchange gain of US$1.1 million (2006: US$4.7 million)

4 Excluding share benefit charges of US$7.8 million (2006: US$8.8 million)




Operational Highlights



•         Sports betting platform, 888sport, launched in March 2008

•         New Bingo brand, 888Ladies, launched in February 2008

•         First strategic partnerships signed and launched

          -     Rileys Snooker Halls - UK

          -     Tower Torneos - Latin America

          -     LuckyAce - Europe

•         First ever acquisition completed - the Bingo business of Globalcom
          Limited - successfully completed and integrated into 888's umbrella 
          offering

•         Introduction of Backgammon

•         Quarterly Casino and Poker active customers increased by 11% to 209k
          (Q4 2006: 189k)



Commenting, Gigi Levy, CEO of 888 said:



'2007 was a year of transformation for 888, in which we had to restructure our
business following the enactment in the United States of the Unlawful Internet
Gaming Enforcement Act in October 2006. I am very pleased to report that we have
now successfully completed the restructuring and repositioning of the business
and have delivered record results for the year, both in terms of revenue and
profit. This demonstrates the resilience of our business, the strength of our
team and the continued attractiveness of our business model. With many strategic
initiatives now underway, we see a bright future for the business.'



                                    - ends -





An audio replay of the presentation to analysts will be available from the
investor relations section of 888's website (http://www.888holdingsplc.com) from
late afternoon today.





Contacts and enquiries



888

Gigi Levy Chief Executive Officer                                   [phone]
Aviad Kobrine Chief Financial Officer                               [phone]

Bell Pottinger Corporate & Financial
Ann-Marie Wilkinson/Nick Lambert/Andrew Benbow            [phone]




Chairman's Statement



On behalf of the Board of 888 Holdings plc, I am pleased to present the
financial results for the year ended 31 December 2007.  This was our first full
year of operating without our former largest market, the US. We have
successfully re-focused our operations into other markets with fantastic
results. Our success is manifested by our recent return to the FTSE250 and by
industry accolades such as 'Best Betting and Gaming Company' at the Leisure
Report Awards 2007, 'Casino of the Year' and 'Best Land - Links Partnership' at
the eGaming Awards 2007 as well as 'Casino of the Year' at the Gambling Online
Awards 2007.



Our first ever acquisition was completed in May with the purchase of the online
Bingo business of Globalcom Ltd., and has proven to be a great success with
excellent financial results following its integration into 888's offering
umbrella.



The year was marked as a year of innovation and initiatives - we have expanded
our business model by offering our full service on a 'white label' basis to
selected business partners as demonstrated by our strategic alliances with
Rileys Poker in the UK and Tower Torneos in Latin America, obtained an online
sportsbetting licence in Italy, introduced a targeted local offering in Asia
through Live Dealer and released our first ever branded Video Slot Machines to
name a few.



I would like to thank all 888 employees, our management and our customers for
making 2007 an outstanding year.



Financial Results



2007 was a phenomenal year for us. NGR increased 36% to $213 million (2006: $157
million) with Total Operating Income increase of 38% to $217 million (2006: $157
million) driven by turnover growth from both our core Casino and Poker products
and from the introduction of new products, particularly Bingo. Profit Before Tax
* showed remarkable growth and increased 106% to $46 million (2006: $22
million).



Dividend



Given our strong financial results, in addition to our interim dividend of 1.8
cents per share paid in October 2007, the Board has recommended a final dividend
of 5.0 cents per share.



Our Values



During 2007 we outlined and implemented our core values that represent the
philosophy by which we operate. We take pride in our ability to consistently
maintain them. Our values were implemented across all parts of the organization,
and comprise excellence, innovation, caring, customer centricity, leading and
collaboration.



Responsible gaming



Responsible gaming is a fundamental pillar of our business. Our aim is to ensure
our services are used responsibly, and are fair and transparent. We work hard to
raise awareness through education and to provide our staff with first rate tools
for ensuring a responsible gaming environment. In 2007, we were awarded for the
first time 'Gamcare' certification, recognizing 888's dedication to customer
protection.



We also launched our responsible gaming website (www.888responsible.com) where
we offer comprehensive and easily accessible information about responsible
gaming practices, dealing with problem gambling, preventing underage gambling
and more.



Outlook



Building on a great 2007, we have introduced our new Bingo brand, 888ladies, and
launched 888sport, our Sportsbook offering. Quarter 1 of 2008 started well
across our business, particularly in our new Bingo and Sportsbook offering.
Your Board believes we are well positioned to develop and grow our business in
this exciting and expanding space for the foreseeable future.



Richard Kilsby

Chairman





*   Excluding share benefit charges of US$7.8 million (2006: US$8.8 million).
Continuing operations.




Chief Executive's Review

2007 was a year of transformation for 888, in which we had to restructure the
business following the enactment in the United States of the Unlawful Internet
Gaming Enforcement Act ('UIGEA') in October 2006, which resulted in us losing
55% of our revenues almost overnight.



I am very pleased to report that we have now successfully completed the
restructuring and repositioning of the business and have delivered very strong
results for the year, both in terms of revenue and profit. We have emerged a
better company, clearer in our strategy, more diverse and complete in our
offering, with a stronger presence in more markets and much greater local, '
in-country' focus. We have also restructured our senior operational management
team, with a mix of experienced managers from within the Group and seasoned
executives recruited from other industries, enabling us to innovate where the
industry has been slow to change in recent years.



The financial results speak for themselves: the 106% Profit Before Tax* growth
to $46 million and 38%. Total Operating Income growth to $217 million
demonstrate the resilience of our business, the strength of our team and the
continued attractiveness of our business model. With basic earnings per share*
of 12.6 cents and strong 2007 we have fully recovered from the effects of UIGEA.
With various strategic initiatives now underway, we see a bright future for the
business.



These are excellent results and given our strong financial performance, we will
be paying a final dividend of 5.0 cents per share, in addition to the interim
dividend of 1.8 cents per share paid in October 2007.



Delivering on our strategy



Our success in 2007 was based on a clear strategy and business focus coupled
with great execution. Our strategy was founded on the same principles that had
made us successful in previous years but building on these core principles in
order to incorporate several new directions allowing us to accelerate growth. We
continued focusing on acquiring and retaining valuable customers by delivering a
compelling, localised, innovative, unique and entertaining customer experience
while embarking on new initiatives. These initiatives included strategic
partnerships, the use of new and innovative marketing channels, the integration
of third party games, the introduction of enhanced communication and
entertainment features and a revolutionary gaming environment in which customers
can access all games from a single location.



2007 was a phenomenal year in terms of the development of our offering. We
introduced an 'industry-first' with our first fully-integrated gaming
environment, which allows access to all of our games from one location. This
approach clearly enhanced revenues from customers who were able, for the first
time, to play any game they wanted without limitation and enabled us to better
cross-sell and up-sell to our customers. The success of this approach is now
proven and we will continue to provide an integrated environment to more
customers and add more games into this environment.



Another significant development effort centred on opening our platform to easy
integration with games from other providers. Whilst we will continue developing
our own core games and technological infrastructure, we will carefully select
'best-of-breed' partners to provide us with additional games, particularly those
with a local flavour, which will assist us in penetrating local markets. The
first of these games is being introduced and we plan to leverage this
infrastructure investment and integrate various additional games in the coming
years, with a number already in the pipeline for 2008. This capability will
enable us to leverage the Internet's 'long tail' phenomena as we have no 'real
estate' costs in putting more games into our software client. The introduction
of additional games, even if they will only be played by a small percentage of
our customers will have a positive return on investment.



One of the key focuses of our development effort was the integration of a Sport
betting platform into our offering. This process was successfully completed
towards the end of the year and the service was recently launched. We have also
introduced a live-dealer solution with our Asian partner, Entertasia, which will
increase our presence in the Asian market. Early 2008 saw the introduction of
888ladies which is positioned to appeal to a whole new market for the Group.
With these new products we now have a strong and complete portfolio, with our
business based on the four core pillars of Casino, Poker, Sports betting and
Bingo together with supplementary Backgammon and Live-Dealer products.



* Excluding share benefit charges of $7.8 million (2006: $8.8 million).
Continuing operations.




During the year we managed to upgrade and improve all of our existing platforms,
introducing new Casino and Poker versions with additional games, innovative
features and a better overall interactive customer experience. One such
enhancement was the introduction of our first-ever branded game - the 'Blond
Legend' video Slot which was an immediate success, and another was our
innovative Poker client allowing users to choose a 3D or 2D view with a rotating
table and various additional features.



Finally, given the focus on geographic expansion, we succeeded in completing the
translation and localisation of all our Casino games into the 14 languages we
currently support on top of expanding our language proposition with two brand
new languages. This major effort resulted in an immediate increase in revenues
in markets which previously were not supported by a fully localised product.



As in previous years, we were proud to see our innovative, market-leading
offering being selected for various awards, including the prestigious 'Casino of
the Year' award both in the eGaming and the Online Gambling Awards.



From a marketing perspective, 2007 was focused on additional brand building,
innovative marketing tools, loyalty increasing programmes and a significant
drive on local and integrated marketing efforts. Overall we had a very good year
in which we managed to grow our business whilst keeping marketing spend at 33%
of NGR.



In terms of brand building, we have invested in re-launching the 888 brand in
conjunction with our 'Enjoy the Game' tagline across all media channels and
markets. This new campaign delivered our best ever brand awareness as reflected
in surveys conducted in the UK and Spain. This campaign was a milestone in our
brand building efforts.



For the first time ever, in 2007 we invested in web 2.0 marketing channels,
including viral campaigns based on a combination of professionally crafted and
user generated content. We have also integrated various additional innovative
online marketing tools in various areas, especially in the search engine domain,
which allowed us to keep our marketing costs within the challenging budget that
had been set.



Customer Relationship Management ('CRM') has always been one of our core
competencies with our industry leading service levels and the personal service
we are known to provide to our customers. 2007 saw further enhancements with the
publication of the first two issues of our premium customer magazine 'Eight',
our improved loyalty programme and implementation of improved communication and
promotional tools. Coupled with our world-famous VIP programme, our CRM approach
has ensured a very successful 2007 in terms of customers' life time value and
loyalty.



Our marketing success in 2007 relied fully on a localised and integrated
approach. We implemented better co-ordination across the Group and comprehensive
monitoring of our activities in every market. We signed more local TV deals
across Europe, and benefited from extensive international coverage of our
successful sponsorships of the World Snooker Championship and Sevilla Football
Club. The outcome of these localisation efforts is apparent in our numbers,
which show far better geographical diversification, with our European market
increasing to 42%  of our business in 2007 compared to 36% in 2006. We are most
satisfied with our growth across various markets and will continue investing in
localised integrated marketing efforts in 2008 as we continue to penetrate yet
more new markets.

The most significant strategic move in the year was our decision to expand our
pure business-to-consumer business model with a combined approach which includes
working with carefully selected strategic business-to-business partners. Under
the 'Powered by 888' endorsement, we have launched a new line of business as a
service provider to virtual operators.  We launched three new partnerships in
2007 with Riley's in the UK, Tower Torneos in Latin America and LuckyAce in
Europe. More such partnerships will follow with several already in the pipeline.



This new area of our business received a significant boost with our acquisition
of the Bingo assets of Globalcom in May 2007.  This transaction positioned 888
at the forefront of online Bingo service providers, serving leading business
partners such as Cashcade, operating Foxy Bingo, Bingo Scotland and a number of
other well-known brands. We have already secured additional Bingo deals,
including with WinkBingo, a newly launched Bingo network.



While the core of our business remains in the business-to-consumer area, this
new approach enables us to better leverage our investments and generate
additional revenues and profit streams from market segments where penetration
would require significant additional effort and marketing spend. This activity
has already contributed to our bottom line in 2007 and is expected to grow in
importance in the coming years as we announce new deals. Our success resulted in
the 'Best Land-Links Partnership' award in the eGaming awards is a clear
indication of the innovative nature of our approach in this area.



During 2007 we successfully integrated our acquired Bingo assets which now work
as a seamless part of our business. On top of this successful integration, we
have managed to accelerate the growth of the Bingo business which grew
phenomenally throughout the year. This now proven ability to acquire
value-enhancing assets and integrate them into our business underlines the
validity of our M&A approach and therefore we will continue to look for the
right opportunities to supplement our strong organic growth.



In addition to our strong financial results, our overall performance was
acknowledged in our securing, for the first time, the 'Best Betting and Gambling
Company' award in the 2007 Leisure Report awards.



Finally, we continue to be indebted to our fantastic team of employees who have
succeeded in delivering the outstanding 2007 results. We have a phenomenal team
at all levels, with extremely talented individuals who are led by a world-class
management team. To maintain this team and ensure their ongoing motivation we
continue to strive to be the employer of choice.  These efforts have resulted in
successful new recruits into the Group. Our employees will remain a key part of
our focus in the years to come.



Regulation



While the regulatory landscape remains unstable in some regions, 2007 saw some
positive developments. In Europe, the European Court of Justice's ruling in the
Placanica case restated the importance of EU regulations to our industry. This
decision, together with the recent infringement actions and position letters
from the European Commission, marks a very positive development enabling EU
licensed operators, such as 888, to provide their services throughout the
European Union. Moreover, we have seen a trend throughout the year of additional
European jurisdictions embarking on a path to license and regulate online
gaming, a route which we clearly welcome.



Outside of Europe we have seen initial signs of positive regulation both in Asia
Pacific and Latin America, where newly introduced regulations in some
jurisdictions could allow us to benefit from working in a locally licensed
environment. As previously stated, we see these to be very positive developments
as we continue to pursue a clear regulatory framework for all jurisdictions in
which we operate.  We will continue to monitor the regulatory landscape and to
look for opportunities to operate in regulated markets.



As stated in our announcement dated 5th June 2007, we have initiated preliminary
discussions with the United States Attorney's Office for the Southern District
of New York relating to our activity in the US prior to the signing of the
UIGEA. It is too early to assess any particular outcome of these discussions.



Responsible gaming



2007 was also a turning point in our approach to responsible gaming. Whilst 888
has always been a leader in supporting the prevention of problem and underage
gambling we recruited a dedicated executive to handle these important issues.
We have, as a result, introduced both enhanced tools and policies giving us an
even tighter control on problem and underage gamblers. These efforts were
acknowledged by Gamcare who awarded us their responsible gambling certificate.
Recently, our educational efforts developed even further with the introduction
of www.888responsible.com, a website dedicated for providing access to tools
which identify and deal with problem gambling. This industry-first educational
effort and our additional activities in the area mark our continued commitment
to prevent problem and underage gambling.



Our 2008 focus



2008 will see the continued execution of our strategy with accelerated
innovation facilitated by the investment made in our infrastructure in 2007. Now
that we have delivered all of the required products, developed integration
capabilities and white labelling capability together with a far deeper localised
offering, we can focus on the monetisation of these assets.



In terms of our offering, our plans include the introduction of several new
games, with a strong focus on localised games which will continue to support our
push into new markets. We will continue to develop our relationships with third
party games providers to ensure that we will not miss any exciting, potential '
hit' games. We will also introduce various new innovative features such as
increased personalisation, tournaments around Casino games and more content and
entertainment across our product portfolio.



From a marketing perspective, 2008 will see further investment in our brand and
the use of additional innovative marketing channels. We will also introduce some
major events such as the recently launched $3 million World Poker Crown Poker
tournament and a major event planned for the 8 August 2008 - the '888' date!



On the business-to-business front, we aim to sign and launch more strategic
partnership deals as a means to accelerate our growth.



Outlook



2008 has started well, especially with our recently introduced female-oriented
Bingo proposition, 888ladies. This innovative website, which already boasts
thousands of active customers daily, is performing above our expectations.



The recent launch of our Sports betting proposition, 888sport, is already
generating revenues and - coupled with several more planned product launches, we
expect our offering to continue being one of the main growth drivers of our
business.



With our current strategic partnerships performing well, we are progressing with
additional potential partners and we expect at least one new partnership to be
launched in 2008.



Given the positive start to 2008, the successful launch of 888ladies and
888sport, our strategic partnership deals, current trading and our clear
business strategy and focus, we are confident in delivering future growth during
2008.



Gigi Levy
Chief Executive Officer




Enhanced Business Review



Introduction



888 Holdings plc is one of the world's most popular online gaming entertainment
companies. 888 owns and operates various world renowned websites, including
www.888.com, www.Casino-on-Net.com, www.pacificpoker.com, www.888ladies.com and
www.888sport.com.



In 2007, 888 continued to follow its strategy of expanding and diversifying its
business on the basis of this strong foundation. During the year, 888 acquired
the business and assets of a market leading Bingo network operator, it added the
in-house developed Backgammon to its offering and an online Sportsbook licensed
in Italy. Recent additions include the global rollout of an international
Sportsbook offering in six European countries. In a key strategic move, 888 has
also expanded its business model, leveraging its existing assets and brand
reputation, by licensing its software and unique services to carefully selected
'white label' partners who allow 888 to penetrate new markets. 888 is indeed the
home of online gaming entertainment.



2007 was 888's first full year without a contribution from the US market, after
the cessation of its operations in that market in October 2006. It was a year
characterised by rapid growth, with a 38% increase in Total Operating Income and
a 106% increase in Profit Before Tax*, as the Group refocused its activities on
non-US markets by localising its product offerings and releasing more games in
more languages than ever before.



The addition of Casino games into the Poker client has dramatically increased
the revenue stream from 888's traditional core product, and has signalled
continued progress towards the ultimate goal of providing all of its offerings
through a single, unified client. In addition, 888's offering benefited from the
addition of Backgammon to its suite of games, and also enhanced the appeal of
existing games by adding both contemporary and themed games such as the sports
themed 'rough rugby' and Marilyn Monroe inspired 'Blond Legend' Video Slots.



The immediate success of 888's new white label strategy was demonstrated by the
partnerships developed with Tower Torneos in Latin America, Rileys Poker in the
UK, and Lucky Ace in Europe.



888's Italian customers have enjoyed the launch of a dedicated online Sportsbook
proposition which has not only provided invaluable experience from 888's first
foray into this product type but also, through its licensing by the Italian
Government, further validated 888's regulatory and licensing credentials.



* Excluding share benefit charges of US$7.8 million (2006: US$8.8 million).
Continuing operations.


In addition to its organic growth and in-house development, 888 completed its
first ever acquisition through the acquisition of the assets comprising the
online Bingo business of Globalcom Ltd. in May 2007.  This business has now been
successfully integrated into 888's existing operations.



At the end of 2007, 888 entered into a deal with Blue Square which allows the
Group to offer a sportsbetting product to all of its customers in early 2008.
This deal completes the Group's aim to provide a 'one stop' betting and gaming
proposition to its customers.  As an added benefit, 888 has moved closer towards
its goal of providing a full multi-currency offering.



The Bingo acquisition and the partnership with Blue Square represent new,
previously unexplored growth avenues. The addition of the Bingo business is the
first time 888 has opted for growth by acquisition, and demonstrates its ability
to identify, execute and integrate profitable external opportunities.



2007 was 888's tenth anniversary and, as in previous years, 888's excellence and
market leading position was acknowledged by third parties.  888 was recently
awarded 'Best Betting and Gaming Company' at the Leisure Report Awards 2007, '
Casino of the Year' and 'Best Land - Links Partnership' at the eGaming Awards
2007 as well as 'Casino of the Year' at the Gambling Online Awards 2007.





Review of Financial Results



Financial Summary


                                 Year ended               Year ended 31        % change
                                31 December                    December
                                       2007                        2006
                                          $                   $ million               %
                                    million
Net Gaming Revenue
    Casino                            118.1                        88.8              33
    Poker                              80.8                        68.2              18
    Emerging Offerings                 14.4                           -               -
Total Net Gaming Revenue             213.41                       157.0              36
Other Operating Income                  3.6                           -               -
Total Operating Income               216.91                       157.0              38

Operating Expenses2                    59.1                        45.6
Research and Development               23.5                        19.4
Expenses
Selling and Marketing                  70.9                        51.0
Expenses
Administrative Expenses 3              17.9                        24.6

EBITDA 3,4                             45.5                        16.4             177

Finance Income and                      6.1                         9.6
Exchange Gains

Depreciation and
Amortisation                          (5.8)                       (3.8)

Profit Before Tax from                 45.8                        22.2             106
Continuing Operations 4



1 Rounded

2 Excluding depreciation of US$4.2 million (2006: US$3.8 million) and
  amortisation of US$1.6 million (2006: US$ nil)

3 Excluding exchange gain of US$1.1 million (2006: US$4.7 million)

4 Excluding share benefit charges of US$7.8 million (2006: US$8.8 million).




Financial Results



Total Operating Income and NGR



The Group achieved strong financial results in 2007 with NGR increasing by 36%
to $213.4 million (2006: $157.0 million), Total Operating Income increasing by
38% to $216.9 million (2006: $157.0 million), EBITDA* increasing by 177% to
$45.5 million (2006: $16.4 million) and Profit Before Tax* from continuing
operations increasing 106% to $45.8 million (2006: $22.2 million).



NGR increased strongly in both Casino and Poker, and also from the introduction
of new products ('Emerging Offerings'). These products, particularly the newly
acquired Bingo business (since 17 May 2007), generated $14.4 million NGR in
2007. In 2007, the Group introduced, for the first time, the option for
customers to transact in their local currency, and as a result, other operating
income has been generated representing fees from processing customers'
cross-currency deposits and withdrawals effectively reducing costs associated
with payment service providers.



Geographical segmentation



As the table below illustrates, in 2007, Europe (excluding the UK) showed
dramatic growth of 58%, with strong growth from both Poker and Casino, followed
by the UK, which grew by 32%. The Rest of the World, mostly attributable to the
Asia Pacific region, also grew rapidly by 35% compared to 2006. Growth in the
Americas (excluding the USA) was modest.



As a result of the strong revenue growth during the year in Europe (excluding
the UK), this region now represents 42% of 888's total operating income compared
to 36% in 2006.



Total operating income by geographical market:


                              Year ended                    Year ended                2007 Growth
                             31 December                   31 December
                                    2007                          2006
Total operating income          $million      % share         $million       % share            %
UK                                  93.0           43             70.6            45           32
Europe (excl. UK)                   90.1           42             57.1            36           58
Americas (excluding USA)            18.0            8             17.6            11            2
Rest of World                       15.9            7             11.8             8           35
Total                             216.9*          100           157.0*           100           38

* Rounded



Casino



The Casino business was one of the main drivers for the Group's strong revenue
growth in 2007, with a NGR increase of 33% to $118.1 million (2006: $88.8
million). The continued localisation of the Casino software client by providing
the offering in additional languages and the introduction of the Casino games
into the Poker client was an instant success, and was the source of much of this
growth.  This growth demonstrates the high potential for cross-selling services
in a unified offering.


* Excluding share benefit charges of US$7.8 million (2006: US$8.8 million).


Casino growth was driven predominantly by the popularity of 888's ever expanding
selection of Video slot machines.  Video slot bet levels increased year on year
by a staggering 108%. It is expected that this trend will continue well into
2008 and is anticipated to be boosted by the planned integration of a wide
variety of new third party games. The continued popularity of Roulette and
Blackjack supported continued growth that has resulted in an improvement to
overall house edge on Casino games; House edge increased from 2.9% in 2006 to
3.1% in 2007. The Group will continue to encourage customers to migrate towards
its higher margin games.



Poker



The Poker business also delivered strong growth in 2007 with NGR increase of 18%
to $80.8 million (2006: $68.2 million). This growth was driven mainly by the
popular Texas Hold'em and Omaha ring games which appeal to a broad spectrum of
customers. The attraction of ring games resulted in a 25% growth in bet levels
compared to 2006. The Group's tournaments benefited from the introduction in
June of 're-buy' and 'add-on' functionality. Poker growth was also driven by the
introduction of the white label business model - the launch of Rileys Poker and
the Tower Torneos offering.



For consistency, NGR from Poker excludes NGR generated by customers playing
Casino games from the Poker platform, which increased overall revenue and helped
retain customers for longer.



Emerging offerings



Emerging Offerings contributed $14.4 million of NGR during the year,
representing 6.8% of total NGR. This revenue is primarily generated by the Bingo
business (acquired in May 2007), but also by the newly introduced Backgammon
offering (April 2007). It is expected that these new games will generate higher
NGR in 2008.



The Group's Bingo business generates royalty revenue both from its position as a
software licensor and network provider to a number of popular household name
brands such as www.thinkbingo.com and www.foxybingo.com, and also NGR from
customers playing on the Group's own websites including www.888ladies.com and
www.bingoballroom.com.



Over the short time that the Backgammon has been available, its main benefit has
been as a retention tool and an expansion to the range of entertainment products
on offer, enabling the Group to service a dedicated market segment, allowing
casual customers the opportunity to test their skills.



Expenses



Effective cost control during the year has resulted in slower expense growth
than revenue growth, with expenses* increasing by only 22% compared to 38% total
operating income growth.



Salaries and benefits, representing the largest component of operating expenses,
increased by 30% to $31.0 million (2006: $23.8 million). The additional
headcount related to the Bingo business and the expansion of the Group's
regional focus, were a major source of this increase. Modest salary increase and
headcount increases across the business contributed the remainder.



The second largest cost item in operating expenses is commissions paid to
Payment Service Providers, which totalled $13.4 million (2006: $9.1 million)
representing 6.3% of NGR (2006: 5.8%). When stripping out Emerging Offerings,
this ratio stands, in 2007, at a comparable 6.0%.



The Group places strong emphasis on risk management procedures, which resulted
in a decrease in its chargeback ratio to 1.3% of NGR in 2007 (2006: 1.6%).



Intangible assets from the Bingo acquisition were amortised during the year,
which contributed an additional non-cash expense of $1.6 million (2006: nil) to
operating expenses.



The continued investment in the Group's products aimed at expanding the range
and appeal of its offering has resulted in an increase in research and
development expenses in 2007 by 21% to $23.5 million (2006: $19.4 million). This
increase directly relates to headcount expansion and salary increase in order to
attract and retain a highly skilled work-force, as the Group develops most its
proprietary software internally.



* Expenses include operating expenses (excluding share benefit charges),
research and development, selling and marketing and administrative expenses


Marketing expenses during the year reached $70.9 million (2006: $51.0 million),
representing a stable rate of 33% of NGR, demonstrating sustained marketing
efficiency. In 2007, the Group focused on a rapid expansion of its affiliate
channels. This expansion enabled cost control per new customer acquisition and a
means of quickly penetrating new markets. Attracting valuable new customers at
the right cost is a key driver of 888's business profitability. In 2007 the
Group continued to be focused on attracting, and retaining, customers from
selected segments which are most profitable and optimising the recruitment
channel to cost. During the year 888's marketing operations recruited more than
260,000 new Casino and Poker First Time Depositors ('FTD's') from more than a
million new real money registrations with an average Cost Per Acquisition ('CPA
') in 2007 of $225 (2006: $183)*.



Administrative expenses** decreased by 15% to $16.9 million (2006: $19.8
million), mainly driven by the departure of the former Chief Executive Officer
which triggered a non-recurring payment of $2.75 million. Professional fees also
decreased as post-UIGEA the Group looked to balance the change in costs of this
nature.



Share benefit charges



As part of 888's commitment to invest in human capital, eligible management and
employees received in the past equity awards under the 888 All Employee Share
Plan ('Share Plan'). In 2007, as in 2006, the Group continued to award shares
and options to employees under the terms of the Share Plan. The non-cash charge
for 2007 was $7.8 million (2006: $8.8 million), comprising  a $1.8 million
charge relating to grants in the current year (2006: $2.5 million) and $6.0
million relating to grants made in the past.



Finance Income



With the Group continuing to generate and retain cash surpluses throughout the
year, net interest income remained stable at $5.0 million (2006: $4.9 million).



Profit and Earnings per share



As a result of strong revenue growth, stable marketing to turnover ratio,
maintaining strong cost control and better management of resources, Profit
Before Tax** increased dramatically by 106% to $45.8 million (2006: $22.2
million).



Profit Before Tax** from continuing operations delivered a margin of 21% (2006:
14%), further testament to the Group's strong operational gearing throughout the
year, a remarkable achievement given the changes imposed by discontinuing its
offering in the US.



While the Group did not operate in the US in 2007, the small loss from
discontinued operations related to legal fees incurred in connection with its
past activities.



Basic Earnings per share more than doubled at 12.6c in 2007 (2006: 5.6c).



Dividend



The Group's stated policy is that it anticipates adopting an annual dividend
payment ratio of approximately 50% of profit, but the policy would reflect long
term earnings and cash flow potential of the Group. On 31 October 2007, the
Company paid an interim dividend of 1.8 cents per share totalling $6.1 million
(2006 interim dividend totalling $23.1 million) (in 2006, the dividend included
earnings from discontinued operations). Given the strong financial performance
in 2007, the Board recommends a final dividend of 5.0 cents per share.



Cash flow



The Group's strong profitability during the year was matched by strong cash
generation with cash generated from operating activities reaching $46.2 million.



During 2007, the Group made cash payments of $20.0 million in respect of
investing activities (2006: $3.6 million), primarily relating to the Bingo
acquisition.



In addition, the Group returned $36.2 million (2006: $28.7 million) in dividends
to its shareholders consistent with its dividend policy.



The Group's cash position as at 31 December 2007 remained strong at $104.3
million (31 December 2006: $114.4 million). This is a positive position given
that the Group has no debt.



* Excluding customers recruited on a revenue share basis

** 2007 excluding Share benefit charges of $7.8 million (2006: $8.8 million)

Balance Sheet



The Group's balance sheet remains strong, as it has no debt, but retains ample
liquid resources, including the ability to repay all customers' balances on
demand at any time.



As a result of the Bingo acquisition 888 recognised intangible assets and
goodwill totalling $40.7 million after the amortisation of intangibles of $1.5
million in the year. Goodwill, valued at $37.9 million (2006: $nil million), was
not impaired at 31 December 2007 as per a review performed by the Board.



Cash and cash equivalents as at 31 December 2007 remained strong at $104.3
million (31 December 2006: $114.4 million). The slight decrease in the cash
position during the year, despite strong cash inflows from operations of $49.3
million, is a result of the consideration paid in respect of the Bingo
acquisition of $17.1 million, and payment of dividends of $36.2 million (2006:
$28.7 million) to shareholders.



Trade receivables have increased to $13.4 million (2006: $6.2 million), the
increase resulting from higher payment processing activity during the year,
which peaked towards the end of the year. Most balances were fully settled
immediately after the start of 2008.



Deferred consideration of $25.1 million payable in respect of the Bingo
acquisition is the main reason for the increase in trade and other payables by
$35.1 million to $63.0 million (2006: $27.9 million).



Balances owed to customers increased by 17% to $26.4 million (2006: $22.7
million) representing growth in business volume, in part being due to the new
Bingo activity.



888's Strategy



888's goal is to create the largest community of people who play online for
money and grow its annual revenue and profit numbers to a level greater than
when its US business closed in October 2006. To achieve this goal, 888 must give
its customers the ultimate customer experience whilst maintaining focus on
acquiring and retaining customers by delivering a compelling, localised,
innovative and unique offering. Given its 2007 success, 888 remains committed to
its strategy, the main cornerstones of which are:



  • Thinking Global while Acting Local
  • Enhanced and Innovative Offering
  • State of the Art Integrated Marketing
  • Customer Intimacy
  • Market Leading Customer Service
  • Focused, Efficient and Effective Organization
  • Employer of Choice



Thinking Global while Acting Local: Providing the right customer experience must
have a local flavour.



The withdrawal from the US market meant that 888's principle of 'thinking global
while acting local' became more important than ever. Aiming to penetrate new
markets simultaneously, 888 had to quickly enhance its local focus. In 2007, 888
achieved a greater regional focus and localisation than ever before. All of
888's Casino games were provided in 14 languages with full customer support. The
payment system backbone was also upgraded to allow multi-currency deposits and
withdrawals. These features succeeded in generating additional revenues
immediately. 888 will continue to be focused on improving localisation in 2008
and beyond, by enhancing its offering with even more local games.



Enhanced and Innovative Offering: Offering a full range of entertainment options
to customers.



In 2007, 888 launched its acquired Bingo and in-house proprietary Backgammon
offerings, added additional video Slot machines and upgraded the Poker and
Casino versions. The 'one-stop shop' unified offering was introduced enabling
customers to play any game they want with easy access from one platform. In
Quarter 1 of 2008, the sports betting offering was introduced, which completes
the desired range of offerings. 888 aims to add more content, information and
community tools to its offering, and, through partnerships with alternative
platform owners, to spread this offering beyond internet boundaries into hotels,
airplanes and onto mobile telephones.




State of the Art Integrated Marketing: Creating an integrated marketing approach
between channels and across the company.



2007 saw 888 continue its extensive investment in its brand. The 'enjoy the game
' tagline was introduced to the 888 brand, and reached phenomenal levels of
brand recognition in both the UK and Spain. Additional 888 brands were launched
such as '888ladies' and '888sport'. As part of the drive towards both increasing
localisation and a more fully integrated marketing approach, 888 has identified
local consultants in selected key markets for better coordination and monitoring
of its activities in these markets. 888 signed and launched initial strategic
partnerships with Rileys and Tower Torneos which allow it greater penetration to
distinct local markets.  888 plans to sign further similar partnership deals in
2008.



Customer Intimacy: Using knowledge about Customers to optimise their customer
experience while prioritising resource allocation.



888 has continued its focus on studying its customers' online behaviour more
closely, in order to improve its knowledge of their betting habits and
preferences. From direct contact with customers, by market research of their
behaviour and through a detailed analysis of trends using its in-house data
warehouse, 888 has continued to refine how best to engage, thrill and retain its
customers.



Market Leading Customer Service: Providing the industry's best customer service.



The drive towards increased penetration into new markets was coupled with the
need to expand customer support to non-English languages. As part of these
significant changes, 888 achieved its best ever results in its customer
satisfaction surveys.



Focused, Efficient and Effective Organization: Remaining competitive by having
an efficiently run operation maintaining its focus on 888's particular plans and
goals.



2007 saw 888 achieve a 38% increase in revenue with only a 9% increase in
year-end headcount. In 2008, 888 will continue with strong cost control to
ensure high profitability levels are maintained and further improved.



Employer of Choice: Aiming to be the employer of choice.



888's most important asset is its human capital. 888 has a skilled, committed
work force who have remained with the Group since the early days and these have
been joined by highly talented employees who have been recruited during the last
year. It would not have been possible to achieve the phenomenal results in 2007
without the enormous efforts of these employees. 888 aims to retain its
employees, ensure their motivation and to attract further leading talent to
secure future success by continuing to be the employer of choice in the market.



2007 Business developments



Marketing and CRM



2007 was a busy and highly successful year for 888's industry leading marketing
activities. The marketing function was restructured under four key work-streams:
acquisition, retention, branding and white label partnerships. This has enabled
solid performance of the business in terms of acquisition and retention, in
addition to allowing significant focus on the three priority areas:



  • Branding and integrated marketing
  • Customer Relationship Management
  • Strategic partnerships / White labels



Branding

For a number of years, the Group has enjoyed the highest level of brand
awareness in the sector in its key markets.  '888' has always been associated
with reliability, trust and leading customer service, all of which are important
attributes for the success of the business. In 2007, the Group started to build
on this awareness with a strong, differentiated and more emotionally persuasive
brand positioning: www.888.com 'Enjoy the game'.  During 2007, the Group rolled
out its first ever TV campaign supported by press and signage across the UK and
in a number of other territories.  By the end of 2007 the brand saw significant
improvement in key brand attributes.




The clear, focused brand positioning also enabled more integrated marketing.  In
2007, there was considerable focus behind fully integrated marketing campaigns;
leveraging consistent and complementary messages across all marketing channels.
This resulted in communication with a real impact, which attracted more first
time depositors and reinforced retention activities.



Customer Relationship Management

As the Group evolves, it continues to recognise the significance of a well
resourced Customer Relationship Management department. As such, 888 has
continued to invest substantially in both financial and human resource terms in
the CRM department in 2007.



The CRM team is tasked with both creating loyalty and augmenting expenditure by
ensuring that customers both play and stay with the Group for as long as they
continue to enjoy the game: playing more games, more often, and for more time.
This customer loyalty is generated via two departments, one focusing on the
Group's mass market customer base and the other concentrating on VIP customers.

The CRM team continuously seeks to innovate the range of promotions, bonuses and
communication channels, whilst segmentation methods ensure that the relevant
message reaches the right customer at the most opportune time. An excellent
example of this approach is the 888 customer magazine 'Eight' delivered to
customers in the UK.  This magazine is a tool seeking to, reinforce loyalty and,
ultimately, spend ratios.



The VIP department ensures that the Group builds a real one-on-one personal
relationship with VIPs so that 888 remains their online gaming provider of
choice.  This approach has ensured a very successful 2007 in terms of customer
lifespan and their playing revenues with the Group.



These customer relationships have been strengthened by the Group's commitment to
localisation.



In 2008, with the introduction of additional core products, together with
sophisticated new communication and loyalty tools, the CRM team will be able to
even better segment and communicate with its customer base to ensure effective
cross-selling and up-selling of the Group's enhanced portfolio of products.



Strategic Alliances

2007 was the year in which the Group became a 'white label' provider.  Under the
'Powered by 888' endorsement, the Group launched a new line of business as a
service provider to third parties with their particular skill sets and target
audiences.  888 initially entered into three partnerships:



Rileys Poker:  Rileys, famous for their chain of snooker halls, sought to
refocus their business behind in-hall Poker tournaments. 888 created a
distinctive proposition for the Poker community enjoying a unique environment
integrating both the online and offline version of Rileys Poker. This
partnership was acknowledged by the industry when 888 received the 2007 '
Land-Links Partnership of the Year' Award at the eGaming Awards.



Tower Torneos: Tower Torneos ('TT'), are already an established Casino operator
in Latin America with an online Poker room. 888 worked with TT to provide an
improved online offering, and successfully transferred TT's existing customers
to the new gaming client 'Powered by 888'. This created an immediate and strong
foothold in the Latin America region for the Group, generated significant
liquidity for the Poker platform and opened new marketing channels in the region
previously unavailable to the Group.



LuckyAce: LuckyAce is led by a team of gaming industry veterans with a track
record of customer recruitment and traffic generation. LuckyAcePoker and
LuckyAceCasino brands are a powerful combination of 888's added value platform
with the LuckyAce online marketing expertise. LuckyAce is focusing on rapidly
growing European markets, and will operate in parallel to 888's own brands,
boosting market share in these high potential territories.



The new strategic alliances part of 888's business received a significant boost
with the acquisition of the Bingo business, positioning the Group right at the
forefront of Bingo service providers.



While 2007 focused mainly on Poker partnerships; in 2008, 888 will focus on
providing an integrated product offering to business partners, encompassing
Poker, Casino, Bingo and Sportsbetting.  888 intends to launch several new
integrated Poker and Casino partnerships throughout the year.



In addition to these priority areas, other marketing channels have continued to
drive acquisition and retention:



Online

The online marketing department has undergone significant developments in the
past year, recruiting a large portion of the company's new customers through its
multi-department expertise. This department implemented an array of online
branding and direct-response advertising campaigns targeting a wide range of
customer segments.  The department also experimented at the leading edge of
online marketing, running campaigns using viral marketing, user-generated video
content and several other web 2.0 trends.  There was considerable growth in
relationships with technology providers, advertising networks and publishers,
which contributed to increased performance in new and existing online campaigns.



Sales

The affiliates department achieved considerable growth in 2007, led by a drive
to register new affiliates to the Group's programme. There was a focus on
customised sponsorship promotions with new and existing affiliate partners and
this contributed significantly to increased commitment and investment from these
partners.

During Quarter 4, there was a drive to emphasise the role of offline activation
activities for Poker. These new offline marketing techniques and promotions
attracted many new customers, and the Group will continue to invest in a
multitude of new marketing channels in 2008.



Search and Web Optimization Technologies ('SWOT')

SWOT is much more than traditional simple search engine optimisation ('SEO').
2007 was a strong year for SWOT, where acquisition of new customers via search
engine traffic increased significantly across the whole business and especially
in the UK.



2008 will bring new customer acquisition opportunities with the introduction of
the '888sport' Sportsbook and the '888ladies' Bingo brands, and there are a
number of web 2.0 plans in various regions.



Offline

2007 was another successful year for the Group's offline marketing around the
world:



888 launched a number of campaigns in Latin America, including shirt sponsorship
of Club Nationale in Uruguay, TV poker programming across the region behind the
888 and Tower Torneos brands, as well as tournaments supported by a series of
magazine and national press advertising.



In Australia, 888 launched the 888Poker brand offline through a heavyweight
outdoor campaign, in Sydney, on the bus and train networks, supported with
national press and magazine activities.



Across Europe, 888 had another year of major success with the shirt sponsorship
of Sevilla FC.  Sevilla won the UEFA Cup for the second consecutive year, the
Spanish Cup (Copa del Rey) and finished third in the Spanish premier league (La
Liga).



In the UK, the coming into force of the Gambling Act 2005 opened the way for the
Group to launch television advertising.   888 retained London's leading creative
agency, CHI & Partners, to deliver a UK based branding campaign across all
marketing channels behind the new positioning 'Enjoy the game'.



The Group's ongoing sponsorship of the World Snooker Championship in Sheffield
generated over 140 hours of television coverage on the BBC and Eurosport, and
was rebroadcast globally.



888 also generated over 80 hours of its own Poker content in 2007 which is
syndicated globally. In addition to existing content of the UK Poker Open, the
Poker Nations Cup and the Women's Poker Tour, 2007 saw the Group becoming the
presenting sponsor of the World Heads Up Championships held in Barcelona.



2008 will prove to be an even bigger year for the Group as 888 continues to
build upon its brand having launched its Sportsbook, 888sport, and its new Bingo
offering, 888ladies. In addition, 888 will run the biggest ever non-US facing
online Poker event of its kind, branded the World Poker Crown, with a $3 million
guaranteed prize pool.




Offering and R&D



Casino



888's major Casino brand, Casino on Net, has consistently been ranked as the
leading online Casino brand in the world. It continues to generate substantial
business, and despite the recent introduction of 888's Emerging Offerings, still
represented more than 55% of the Group's NGR in 2007 (2006: 57%) with NGR growth
of 33% over the year, and, significantly, with 60% growth between Quarter 4 2007
(US$35.3 million) and Quarter 4 of 2006 (US$22.1 million).



During 2007, 888's tenth anniversary year, the Group focused on retaining a
contemporary feel to the Casino, adding more games, and increasing the level of
localisation while maintaining its core propositions of trust and simplicity
combined with its first class customer service. Listening to its customers, 888
has enhanced the customer experience by providing faster game play, and by
giving the customer greater choice over bet size. 888 also continued to expand
its Casino offering: it introduced  a new gaming 'ecosystem' which enables third
party game developers to integrate their products seamlessly into 888's gaming
environment, provided Casino software to white labels and introduced a live
dealer Casino tailored for certain Asian markets.



The combination of trendy entertainment content consumed by customers worldwide
together with a unique gaming experience is a key factor to 888's success, as it
has increasingly become the entertainment destination of choice for more
customers. To this end, 888 added four new and unique Video Slots to increase
game variety, with the majority available in each of the 14 languages (including
voice localisation) which 888 supports. 888 released its 'Rough Rugby' Slot to
coincide with the Rugby World Cup and, in October 2007, released the 'Blond
Legend' Video Slot. This Video Slot, featuring 'Marilyn Monroe' pictures,
provided by the 'Sam Shaw Collection', has proven very popular among customers.
888 aims to identify further themed content for Casino games. Both games ranked
amongst the 3 most popular Video Slots in 888's Casino immediately upon their
launch, and made themed Video Slots one of the most significant acquisition and
retention tools 888 has. Following this success, 888 is planning to maintain its
front-line position through internal development programs, as well as acquiring
or licensing third party games to be integrated directly into 888's gaming
environment.



2007 saw 888 move product localisation to the next level by enabling the
establishment of partnerships with local providers. These partnerships are
possible as 888 has successfully opened its platform to third party games, by
providing an 'integration platform' layer. This 'integration platform' enables
the swift integration of third party games, and will be used to add additional,
new and localised games, adapted to 888's own high standards, to its Casino
offering during 2008. This will provide its customers with a large variety of
quality entertainment, and will contribute to customer acquisition by appealing
to expanded demographics.  Customer retention will be further re-inforced by the
excitement and the choice of an ever expanding proposition.



The Group's latest partnership was entered into with Entertasia, one of the
leading providers of gaming solutions for the Asian market.  Through this
partnership, 888 has launched in January 2008 a Live Dealer Casino offering
Baccarat, Asian Roulette and Sic Bo. These games are an entry level requirement
to compete in the Asian market and will be a key tool for growing 888's presence
in this region. 888 continues to seek such partnerships and to integrate other
localised games to further target the Asian market.



Once again, 888's Casino has maintained its position as the number 1 online
Casino. The Group was proud to receive the prestigious 'Casino Operator of the
Year' award at the eGaming awards, in addition to the 'Casino of the Year' at
the Gambling Online Awards 2007.



Casino KPIs

Year                                     2006*                                      2007
Quarter                     1          2         3         4          1         2         3          4
NGR (US$'000)            21,496     22,531    22,646     22,088    25,952    27,900     28,992     35,276
Active Customers         54,053     48,425    46,444     41,307    70,769    72,362     72,847     73,737
NGR per Active             398        465       488       535        367       386       398        478
Customer (US$)

* NGR figures rounded.



As can be seen from the previous table, the Casino experienced 60% NGR growth
from Quarter 4 of 2006 to Quarter 4 of 2007. The inclusion of Casino games in
the Poker client at the end of 2006 greatly increased the customer base and thus
the number of quarterly active customers. This resulted in a 4.2% growth in
quarterly active customers between Quarter 1 and Quarter 4 of 2007. The
increased number of active customers resulted in substantially higher growth in
NGR in 2007, particularly in Quarter 4 where NGR increased 22% to $35.3 million.
As a result of the sharp increase in active customer base in Quarter 1 2007, NGR
per active customer decreased, but has been steadily increasing since, and in
Quarter 4 2007, reached $478 per active customer.



During 2008, the Group aims to use its strong technological, CRM, data mining
and optimisation capabilities to provide its customers with an even more
intimate experience tailored to their preferences and playing habits.



While, today, 888's offering is already fully localised, in 2008, the Group
intends to extend this initiative. It will introduce further localised versions
of its popular games together with local games played in specific target
markets.  It will also adapt its traditional Casino games to the local
preferences as best observed today in terrestrial Casinos. Asian and Latin
American customers will continue to be at the core of 888's focus.



Leveraging its multi-million dollar marketing budget and the strongest global
brand in online gaming, in 2008, 888 will launch www.888debut.com, a platform
for third party game developers to debut themselves in the online gaming world
and to make their product available on the stage of the world's largest online
gaming entertainment destination. 888's first integration with a third party
provider is in its final stages, and the first batch of games is aimed to be
released during the first half of 2008.



In order to complete the excitement and competitive environment which 888's
customers seek, and to broaden its offering with additional gaming models, the
Group also plans to introduce Casino races and tournaments. The Group sees these
events as additional marketing methods for enticing new customers, and as a tool
for retaining existing ones. With its expertise in tournament management, 888
expects these events to form key part of its gaming environment.



Poker



Poker operations also enjoyed strong growth in 2007, with NGR increasing by 18%
to US$80.8 million (2006: US$68.2 million) contributing 38% (2006: 43%) of the
Group's NGR. This growth has been achieved by combining the commitment to its
large legacy customer base with the introduction of new software features;
increasing the variety of tables and through the enrichment of 888's existing
tournaments.

During the year, 888 has demonstrated an ever increasing global reach. The Group
has achieved further penetration in territories such as Latin America and Asia
Pacific, and is operating a truly global 24/7 Poker room, in which customers can
find their game of choice at the time of their choice.

888 has moved a step forward in addressing the increased retention requirements
of its existing customers by integrating its Casino games into the Poker client.
The success of Casino in Poker led to the integration of Backgammon and Bingo in
Poker in 2007, with Sportsbook in Poker integration planned for 2008. This
integration strategy is the achievement of the Group's stated goal of delivering
a unified offering and adding new revenue streams to existing ones, and by
capitalising on the synergies between 888's offerings.



Through 2007 and into 2008, the Group has enriched its user experience. In 2007,
888 added 3D tables with avatars alongside its 2D classic view tables. While the
2D addresses the needs of high stake and multiple table Poker customers, the
newly designed 3D tables with avatars have been very popular, and became the
table of choice for the majority of customers. Continuing this effort, 888 is
committed to developing features such as its newly introduced 'chat call-outs',
which allow customers to get closer to a 'live-like' user experience.



In addition, In 2007 888 integrated Backgammon into its unified Poker client, in
order to enhance customer retention. In 2008, 888 plans to increase its
Backgammon liquidity, by further localising the game by targeting new customer
segments. 888 also plans to integrate other local peer to peer games in
different regions, to make its gaming environment a one stop shop, which
includes globally popular games as well as locally popular ones.



2007 has also marked 888's evolution to become a new 'Poker Network' providing a
full, end to end solution for 'white label' Poker operators, making 888 itself a
'Poker Network Operator'. As a Poker Network Operator, 888 stands out by
offering a complete solution, in which existing operators can leverage their
customer base and new operators can grow from scratch using the shared liquidity
offered by 888's network and the robust back office operation that the Group
provides.






Poker KPIs

Year                                    2006*                                         2007
Quarter                   1          2          3          4          1           2           3          4
NGR (US$'000)           17,857    16,322     15,686     18,374     20,918       19,890      18,590     21,419
Active Customers       134,710    122,087    132,995    147,805    168,066     166,772     168,105    170,401
NGR per Active           133        134        118        124        124         119         111        126
Customer (US$)

* NGR figures rounded.



As can be seen from the previous table, 888's Poker NGR grew by 18% in 2007.
During the year, the historical seasonal pattern of a slower Quarter 2 and
Quarter 3 was repeated with a stronger Quarter 4. This continuous growth in NGR
in 2007 is particularly impressive given that the additional revenue derived
from Poker customers playing Casino games is included in Casino NGR. Active
customers increased during the year, showing 15% increase between Quarter 4 2006
to Quarter 4 2007. Finally, quarterly NGR per active customer remained
relatively constant.



In order to drive further growth in 2008, 888 is currently working to improve
the conversion of its play for free 'Demo' customers to real money customers by
including the demo mode play option within the real money environment. The year
has started with the keynote announcement of the 'World Poker Crown', a sequence
of branded events, which will culminate with a $3 million guaranteed prize pool,
offline tournament. To date, this is the largest single event of its kind
offered to the non-US market. This $3 million event is the tournament final and
daily and weekly satellite tournaments are run, customised to match 888's
geographic customer base profiles in terms of game level, risk profile and
financial capability. This activity will ultimately provide 10 qualifiers for
the final.



The Group plans to introduce more features designed to maintain customers'
engagement and commitment throughout the year. Such features include the
addition of advanced community and communication tools, which 888 has already
started to roll out. In 2008, 888 will also introduce the broadcasting of
relevant global and localised TV content, generated both by itself and by its
users. Such content will be made available through 888's various marketing
channels and on its website, through a planned advanced Video Portal. These
enhancements will further strengthen the performance and reach of 888's Poker
room.



Combined Casino and Poker KPIs



With the gradual migration of the Group's customers onto the unified offering,
the distinction between Casino and Poker revenue becomes more and more
difficult. As a result, the Group reports its KPIs for the combined Casino and
Poker activity in the table below.


Year                                    2006*                                       2007
Quarter                    1         2         3         4          1         2          3           4
NGR (US$'000)           39,353    38,853    38,332     40,463    46,870    47,790     47,582       56,695
Active Customers        188,763   170,512   179,439   189,112    205,907   208,876    209,811     209,918
NGR per Active            208       228       214       214        228       229        227         270
Customer (US$)

* NGR figures rounded.



As can be seen from the previous table, the combined Casino and Poker KPIs
reveal strong NGR growth in 2007 compared to 2006, growth which accelerated
during the Quarter 4. This, in part, can be attributed to increased active
customer numbers that have grown in each quarter since the FIFA World Cup in the
summer of 2006, as well as migration into higher edge games. The growth in both
factors has resulted in a stable NGR per active customer for the first three
quarters, followed by a significant increase to $270 per quarter (2006: $214) in
Quarter 4 2007, which benefited from the substantial NGR growth.





Bingo



2007 heralded 888's entry into the online Bingo market with, in May 2007, the
successful Bingo acquisition. The acquired Bingo business constitutes the
provision of software, customer support and payment processing to some of the
premium Bingo partners in the UK, such as:



www.foxybingo.com,
www.mirrorbingo.com,
www.thinkbingo.com,
www.bingoscotland.com,
www.thinkbingoplus.com



In addition to the Bingo business, 888 now operates a white label Bingo network
which has some 50 white labels, including BingoBallroom and PoshBingo.



2007 continued to see growth in online Bingo with a number of new networks and
white label sites entering the market, in which 888 Bingo has continued to be a
dominant customer.



In parallel to increasing the number of 90-ball and 75-ball Bingo rooms, the
Group continued to strengthen the community feel of its offering, and achieved
significant customer satisfaction and retention levels. The community feeling in
888's Bingo rooms is a combination of its friendly, welcoming team of moderators
who follow customers throughout their stay within 888's Bingo rooms, and its
rewarding website that includes a variety of interaction, chat tools and venues.
An example of such features is the Ladies Lounge where 888's customers can find
birthday bulletins, the Bingo glossary, Bingo calls and loyalty point offers.
Loyalty to 888ladies and to the Bingo venues powered by 888, whether one of
888's premium partners or one of its white label partners, is proof of the
pervasiveness of community characteristics of an online Bingo and further
evidence of the appropriateness of 888's stated strategy to continuously invest
in expanding the scope of community services and tools in its Bingo offering.



888's Bingo virtual venues are places that people feel excited to enter into.
Its view on promotions to customers is simply: to constantly give customers a
reason to return. The excitement in 888's Bingo rooms in 2007 took the forms of
monthly guaranteed jackpots, special event jackpots, weekly and bi-weekly
indulging events such as shopping sprees and giveaway of daily prizes that were
part of the games themselves. The other side of excitement is providing
customers with welcome 'surprises'. For this purpose, the Group worked closely
with its game and content providers, and together tailored its gaming so that
they do not only expand its offering but also excite and surprise. This included
a variety of scratch card games, fixed odds games and branded games.



2008 has seen the launch of the new 888 Bingo network: www.888ladies.com. The
site is positioned to appeal to a whole new market for the Group and will
provide women a place where they can enjoy Bingo games, with chat, community
features and indulgent prizes.



In addition to 888ladies, 888's latest licensee has released their Bingo network
www.winkbingo.com in Quarter 1, 2008, which is further evidence of the Group's
desire to grow its business by partnering with more licensees.



Currently with predominately English language customers, the Group plans to
expand into the Spanish market in 2008.  This market is increasingly a major
market for online Bingo, and discussions are already underway with a number of
potential licensees. 888 plans to introduce its Bingo offering in two additional
localised versions of the game for identified high growth markets.



In order to crystallise its position as a leading entertainment and content
destination for women, the Group is planning to scale up its editorial
capabilities. This will turn 888's gaming offering into a more contextual
experience that links between what people read, consume and win on 888 website;
ranging from linking personalised online horoscope, bonuses and invitations to
play on birthdays and lucky days, to games themed after the brands 888's
customers care the most about, whether their favourite TV show or celebrity.



Communities are comprised of customers and the community operator. In 2008, 888
plans to strengthen the ties between the two by taking its community tools to
the next level, through 888's own community platform. This platform is the
culmination of the vast experience obtained by 888's customer retention teams
through chat, interaction with customers and observing their behaviour, combined
with the latest technology developments, including RSS feeds and web 2.0
widgets. 888's community platform will centralise contemporary content editing,
information distribution, sharing spaces and personalisation tools. The Group
believes that this platform will have a positive effect on its business and
ability to cross-sell new offers to its customers.



Italian Sportsbook



In December 2006, the Group was awarded one of the online sports betting
licenses issued by the Italian Government. This license grants the right to
offer online betting facilities to the Italian market in conjunction with a
local partner. This license became operational and the business commenced
trading with a soft launch in late 2007.




Sports Betting



In early 2008, 888 unveiled its new international sports betting service to
compliment its existing product suite. '888sport' is a fully functioning portal
allowing customers to place bets in various currencies via a number of language
specific web sites.



'888sport' offers a full range of Sport betting services, including; UK,
European and International football, horse and greyhound races from around the
world and a whole host of other sporting events such as tennis, rugby, motor
racing, golf and other popular sports, targeting both international and local
markets. '888sport' also features an 'in play' betting service allowing
customers to place bets on live events as they are taking place, in some cases
right up to the final whistle.



The Group's route into this challenging marketplace has been to develop its
product in conjunction with Blue Square, one of the most popular and well
established sportsbooks in the UK. Based in London, Blue Square was launched in
May 1999, and as well as providing internet based sports betting opportunities,
also offers its services through other channels including Interactive TV, WAP
and Telephone Betting. In 2003, Blue Square was acquired by the Rank Group, who
are a major force in land-based gambling, with Casinos and Bingo clubs across
the UK and Europe.



As a result of the partnership with Blue Square, 888 benefits from Blue Square's
experience in trading and risk management to reduce the inherent risks
associated with this business. Instead, 888 can concentrate on marketing to new
customers using its sport related sponsorships, such as Sevilla football club
and the 888 World Snooker Championship, and cross-selling its other products to
these new customers.



The launch of 888's sportsbook in March 2008 was an important milestone for the
Group. The UK version of the sportsbook immediately featured the popular
Cheltenham Festival and Champions League knockout stages, whilst April sees the
climax of the UK domestic football season, the Grand National, the 888 World
Snooker Championships and the U.S. Masters golf from Augusta. In addition to the
UK, 888sport will be launching versions of the sportsbook simultaneously in
Spain, Germany, Austria, Sweden and Denmark and will be featuring prime sporting
events action from these countries. Additional territories will be added
throughout the year in Europe, Asia and South America, each with its own local
sporting events coverage. The Group sees significant opportunities with sports
betting markets such as Spain being largely untapped.



The complementary skills and work cultures of the 888 and Blue Square teams make
888 confident of completing a global rollout by the end of 2008. The
international launch reinforces 888's strategy of creating a large community of
people consuming entertainment content online.



New Platforms



In 2007, 888 has become an interactive entertainment destination with 'real
estate' expanding beyond the www.888.com website, spanning mobile phones through
hotel-room entertainment into in-flight systems. As part of its unified
offering, 888 allows interactive gaming on each of these new platforms with the
same customer account, password and, where allowed, wallet which its customers
use online.



The roll-out of 888's gaming offerings onto these platforms has enabled its
customers to play anytime, anywhere on 888's global network, experiencing the
same branded user experience historically enjoyed only online.



The purpose of developing these new platforms is two-fold: firstly, to improve
retention of existing customers by giving them more ways to interact with 888
and, secondly, to acquire new customers by offering 888's products to audiences
that consume entertainment whilst travelling (airplanes, hotels) or on their
personal communication tool (mobile phone).



For the platform developer and owner, 888's wide game variety and strong brand
enables them to broaden the content they offer to their users by incorporating
888's offering to their customers, thereby increasing their own revenues and
share of customers' time.



During the year, 888 entered into a partnership agreement with one of the
world's leading in-room hospitality system providers. This agreement allowed 888
to develop its first online Casino product, specially designed for internet
enabled hotel room televisions, with its own branded look and feel. In addition,
as part of this partnership, all Wi-Fi access in the hotels that install this
system will feature free access to the www.888.com site for guests using laptops
in the hotel's network. 888 plans to extend its first trial in the UK in 2008,
with the plan to launch this service throughout Europe during the remainder of
the year.



A further deal entered into by 888 in 2007 was with DTI, an in-flight
entertainment industry leader.  This agreement enables 888 to offer its Casino
on in-flight entertainment systems used by major international airlines. 888
will be in a position to offer its gaming services on long-haul flights using
DTI's in-seat entertainment systems as soon as the technology is in place for
in-flight internet connectivity and the necessary regulatory approvals are
obtained.  The product is currently in the final stages of development, and the
plan is to finalise installation on the first airplane in late 2008.



888mobile plans to tap into the huge mobile phone market, by using existing
customer registration details on Mobile Phone Casino which includes Blackjack,
Roulette and Video Slots.  The mobile potential is considerable given that in
excess of one billion mobile phones will be sold worldwide in 2008, compared to
200 million personal computers. An increasing number of these mobile phones have
bigger screens, faster processors, availability and portability which lend
themselves to a great gaming experience. This offering, developed in cooperation
with UK-based Cellectivity and M-Fuse, is available on over 250 models sold in
some 200 countries, and will be distributed through 3, T-mobile, Orange UK and
other mobile portals.



In 2008, 888 intends to focus on Cable TV and IPTV.  This untapped platform is
expected to become an acquisition channel as well as a platform to increase
customer value. 888 is currently in discussions with several partners and is
evaluating the best route to penetrate this market.



Payments and Risk Management



E-payments, Fraud and Risk Management Department ('e-payments') had a
significant role in supporting several strategic growth initiatives undertaken
by 888 in 2007.



In 2007, customers were offered 23 different deposit and 10 different withdrawal
methods. Credit cards and debit cards were the most popular international
payment method, representing 86.5% of total deposits in 2007 (2006: 86.7%), with
each region having its own distribution of preferred local methods.



When customers enter www.888.com they are offered a range of payment options
tailored to suit their local market based on their physical location, from which
they can choose their preferred payment method. The availability of payment
methods is a key element to a localised offering, enabling customers to play
their local entertaining game conveniently through their local preferred payment
method. By an analysis of geographical data and with the assistance of local
knowledge, new payment methods are identified, carefully evaluated and assessed
and, where suitable, implemented.



Deposits and withdrawals are carefully monitored by 888's in-house Fraud and
Payment Risk Management department. This department has a wealth of experience
in fraud prevention from years of operation and has integrated their internally
developed prevention and verification procedures with commercially available
third party measures to enable robust verification.



By constantly reviewing and analysing the performance of the payments process,
the system is optimised to maximize deposit levels, approval rates, control
fraud activity and minimise payment processing costs.



In Quarter 3 2007, 888 launched its state of the art payments processing system;
an in-house developed new financial backbone system with both back office
functionality and user side cashier interface. The new system provides a major
upgrade in processing capability and flexibility, providing better customer
service combined with an improved internal mechanism. This system increases ease
of use for customers, significantly speeds up the integration of new payment
methods and automates various back office procedures for greater efficiency and
cost saving. Currently in trial, the Group intends to release the system to all
its existing and new customers in 2008.



Expanding 888's global business requires tailored treatment for payment and
withdrawal methods. The Group's e-payments business development and account
management teams constantly analyze customer deposit and withdrawal habits in
each country, and ensure customers are presented with their preferred methods as
the primary selections in the cashier and withdrawal module. In 2007, 888's
customers were offered the option to deposit in their local currency, even when
the games themselves were played in US dollars. At the beginning of 2008, Sports
multi-currency was introduced in US Dollars, Euros, Pound Sterling, Danish Krone
and Swedish Krona, to further align the Group's cashier and games with customer
needs and payment preferences. Localisation and multi-currency support in Asia,
Europe and Latin America, will be the Group's focus in 2008 as well as the
integration of new local payment and withdrawal options into the cashier.




Customer Service



The Group remains committed to being market leader in the global online gaming
industry, as measured by customer satisfaction. The Group's dedicated teams of
trained in-house customer support representatives provide the highest levels of
service and support for each of the Group's brands and white labels.



In 2007, the Group continued to invest in the support infrastructure, and
expanded its language portfolio, including expanding its existing English Live
Chat service to cover three new languages. The Group offers first class customer
support via email and telephone, 24 hours a day, seven days a week, to customers
around the world in up to 13 different languages.



The ongoing relationship and dialogue with customers is maintained by Customer
Relationship Management teams in two dedicated contact centres, located in
Gibraltar and Antigua. The main Gibraltar contact centre focuses on providing
support to the Group's principal markets of Europe, Asia/Pacific and Latin
America, with the Antiguan contact centre focused on supporting the Group's main
English speaking markets in Europe, Australia, Asia Pacific and Canada. The
contact centres in Gibraltar and Antigua played a vital role in the successful
launch of the Group's first strategic partnerships; with Rileys in the UK and
Tower Torneos in Latin America.



Operating a dual contact centre system is a cost effective way of managing the
overflow of phone calls, chats and emails and allows efficient balancing of
operational demands. The Group is therefore able to maintain the same high level
of service throughout the day. In addition, the centres complement each other in
a number of respects:



  • Staff schedules are created jointly, taking into consideration business
    trends from previous years and/or anticipated promotional campaigns in a
    particular location
  • Follow up on customer issues can be completed from either location, from a
    shared database, in 888's integrated back office system.



Representatives in each location are cross-trained to provide service for each
of the Groups brands. Their aim is to resolve customers' issues during the first
contact.

The following performance levels were attained in 2007:



Casino in English

  • 94% of all phone calls are answered within 21 seconds
  • 95% of all emails are replied to within 12 hours
  • 91% of all chat contacts are answered within 28 seconds



Poker in English

  • 96% of all calls are answered within 21 seconds
  • 97% of all e-mails are replied to within 12 hours
  • 91% of all chats are answered within 32 seconds



In addition, expert teams in both locations initiate outbound interaction with
new and existing customers experiencing deposit issues. Selected customers are
also contacted about special offers and new products, and to reactivate those
that have become inactive. The launch and upgrade to the new 3D Poker software
and various new Casino games launched in all 13 supported languages provided the
Group's customer support representatives with further opportunities for
cross-selling.



VIP service



The service level provided to individual customers is differentiated with the
Group's best customers receiving more personalised service. This allows the
Group to offer its customers tailor-made incentives to suit their profile and
maximise their lifetime values. A separate, highly skilled team is dedicated to
providing a high level of proactive customer service and hospitality to the
Group's most valued Casino customers.



The VIP department adopts a thorough approach to following up on sensitive and
complex cases. Every VIP customer is provided with a Personal Account Manager
who strives to create a personal relationship with his customers in order to
offer the ultimate in personal service, determine customer's interests and
reward individual customers with gifts tailored to suit their personal tastes.



The VIP team organises targeted, worldwide hospitality events to reward VIPs in
a tangible manner. Events range from horse racing, football and other sporting
events, to weekend breaks, sold-out concerts and social gatherings, which also
give customers the opportunity to meet their Account Managers face-to-face.



The VIP hospitality programme significantly enhances customer loyalty and
individual lifetime value. In 2008, the VIP department is set to expand into
providing their hospitality programme to each of the Group's brands and White
Labels.



Customer Satisfaction



888 continuously monitors customer satisfaction by requesting and analyzing
real-time feedback, and in 2007, conducted a comprehensive survey to benchmark
the Group's service level in its primary markets. Compared to previous studies,
the results show a significant overall increase in customer satisfaction.



Respondents attributed the highest rating to the level of professionalism of
customer support representatives, achieving ratings of 4.27 and 4.15 out of a
maximum of 5 for Casino and Poker respectively. Additional rating include:



  • English Casino customers rated their satisfaction with the quality of
    service at 4.11
  • English Poker customers rated their satisfaction with the quality of
    service at 4.01
  • Overall satisfaction of customers from various other countries and
    languages is similar
  • Response time ratings were 4.29 and 4.16 for Casino and Poker
    respectively.



A vital component in maintaining and exceeding customer expectations is the
ability to access each customer's full and complete history in real time,
optimising customer interactions at all levels. The Group's advanced proprietary
back office application functions as the backbone for the Group's entire
Business Operation. Data from various divisions is integrated and streamlined
into a single point of reference, and provides representatives from every
department - Customer Support, VIP, Risk Management, Business Production and
Finance - the tools to provide superior assistance to customers regardless of
the department the query is directed to.



Customer contacts are strictly monitored to ensure quality and parity. The Group
have retained leading contact centre experts to further enhance the quality of
its customer support, and representatives benefit from ongoing refresher
training courses, including responsible gaming training.



Reporting and Data Mining



The Group has developed outstanding reporting and data mining tools that assist
in identifying and predicting customer behaviour, based on data collected since
the Group was founded in 1997.



Sophisticated customer tracking technology gives the Group the ability to
extract and analyze relevant information that enables it to better target its
offering and marketing activities to customers around the world.



Customers also benefit from the Group's ability to generate tailored statistical
and contact category reports, which identify trends, habits and expectations of
customers in real time highlighting bottlenecks and possible training needs at
an early stage.



Responsible Gaming



'Because we care, responsible gaming means investing time, energy and resources
  in the people we interact with daily - our employees, our customers and our
                                  community!'



The Group's aim is to raise awareness to responsible gaming through education
and research programmes and to provide staff with the right tools to ensure a
responsible gaming environment.



The Group is constantly implementing new ways to create a caring, ethical gaming
environment and to ensure customers are safe. Responsible gaming is a key
feature in the Group's business strategy, reflecting the importance it feels
towards this issue. In acknowledging the risks that the Group's games can pose
for a small minority of people, the Group strives to achieve excellence in its
responsible gaming policy and ethical conduct.



The Group's Director of CSR & Responsible Gaming has wide-ranging
responsibilities that include responsible gaming, fair gaming, outreach
programmes with local charities and donations.




Training



888 believes that responsible gaming begins from within. The Group has therefore
developed a cross-Group global training programme in which all Group employees
have participated throughout the past year.



The Group's responsible training programme includes every department in the
Group. The training has been tailor-made for each department so that responsible
gaming awareness occurs from the first stage of each and every activity within
the Group, including the game development.



Protecting customers



Gamcare, one of the leading authorities on the provision of information, advice
and practical help in addressing the social impact of gambling, has recognised
www.888.com's dedication to responsible gaming and customer protection and has
awarded the Group its certificate this year.

After undergoing an audit covering staff training, underage verification, self
deposit limits, self exclusion, referral processes to relevant agencies and
related issues, the Group was commended for maintaining excellent standards of
practice.



As a responsible, regulated gaming group, 888 also complies with all guidelines
published by eCOGRA, a non-profit, independent, regulatory body based in the UK.
By examination of procedures and controls eCOGRA ensures that approved operators
are properly and transparently monitored to provide customer protection.



www.888.com also adheres to the stringent rules concerning underage gambling
established by the Interactive Gaming Council of which it is a member.



Preventative measures



Keeping in mind its motto 'responsible gaming means investing in the people we
care about', Group staff are trained to respect customer privacy. Should a
problem arise, 888 aims to work together with customers towards the best and
most comfortable solution for them.



The Group has established several measures designed to help prevent gambling
from becoming a problem.



Personal limits are in place across all Group brands, and are voluntarily
available to all members using the new payment system planned to be fully
integrated this year. If, at any stage, a customer becomes concerned about their
play behaviour, they can request to be self-excluded for a chosen period. During
this period, 888 will block the account. Any new accounts the customer might
attempt to open during the exclusion period will also be blocked as soon as
detected. In addition, the Group will take all reasonable measures to make sure
the customer will not receive any promotional material during the designated
time. All customers who reactivate their account following a self-exclusion
period are given the opportunity to set their own limits.



The Group has also added the 'Gambling Therapy' button on its website to provide
its customers with information and support for those who feel their gambling is
a matter of concern. Gambling Therapy provides online support to anyone affected
by problem gambling.



Protecting minors



In accordance with its responsible gambling policy, the Group does not knowingly
allow anyone under the age of 18 to play its games and none of its promotions
are targeted at minors.



Together with Gamcare, the Group trains call centre staff to identify and deal
with anyone who might be underage. The Group has trained staff to be most
sensitive to the possibility of underage gambling; whenever an account is
suspected of belonging to an underage customer, it is suspended until a full
investigation has been carried out. In order to protect minors, verification
systems are used, where applicable, to verify and identify the age and identity
of the customer.




Raising awareness



During 2007, the Group launched a new website dedicated exclusively to
responsible gaming called 888responsible.com  (http://www.888responsible.com/).
888responsible.com offers comprehensive and easily accessible information about
responsible gaming practices, dealing with problem gambling, preventing underage
gambling, charity activities and more.



The new website provides tools with which to address online gaming. Parents can
learn how to identify the signs indicating that their children might have a
problem related to gambling, while customers can take the self-assessment test
to determine their gambling habits, learn how to keep out of debt and even how
to exclude themselves from playing at online Casinos.



Education



During 2007, 888 joined the RIGT (Responsibility in Gambling Trust) and donated
to their new educational programme. The aim of the programme is to help young
people understand the risk of problem gambling and to show them how they can
reduce harm to themselves and their friends by developing skills, attitudes and
knowledge.



Corporate social responsibility policy



Working with the community

As a global Group, 888 aims to reach out to its communities worldwide and to
work with them for a better future.

On 10 October, 2007, in celebration of its tenth birthday, the Group held its
first Charity Day in collaboration with two global charities. The Charity Day
focused on fundraising campaigns to support humanitarian and environmental
projects worldwide.

The day involved all aspects of the Group, from Group employees who volunteered
their time at local charities, to customers, whose losses during the day,
playing Casino, Poker and Bingo, were earmarked for donation. At the end of the
day a total of $100,000 was raised and donated to two global charities:
EarthAction and World for World.



During the day, the Group's employees also volunteered their time to their local
regional charity - Macmillan Cancer Support in the UK, St. Martin's School in
Gibraltar, The Adele School in Antigua and 'Up for the Challenge' in Israel.



This day was only the start of what is expected to be a long lasting
relationship between the Group, its employees and the various charities.



As part of its ongoing CSR initiatives in Spain through our Gibraltar site, the
Group will sponsor a pair of Lynxes, which are new additions to the Castellar
Zoo in Spain, for the next five years.



In March 2008, 888 received formal confirmation from FTSE4GOOD that all
requirements had been met, and that the Group is now part of the index.



Environment



As an on-line company, the Group has a low environmental impact. Nevertheless,
the Group acknowledges that everyday actions may affect the environment with
potentially adverse consequences. The Group's offline operations are primarily
office based, and its main environmental impact stems from transportation and
the use of paper, lighting, heating, air conditioning and IT. 888 has
established a committee to deal with office paper use, waste, recycling and
other relevant environmental issues. The committee, led by the Group's Director
of Global Purchasing and Operations, is responsible for overseeing new
procedures, their practical implementation within the Group, and the exploration
of new ways to minimise environmental footprint.



This year a pilot project designed to use energy and resources as efficiently as
possible was launched at the Group's offices in Israel. As the pilot was
successful, both these actions will be implemented at all Group offices during
the coming year.




As a global business, extensive employee travel is another environmental
challenge with which the Group is faced. In order to minimise travel, the Group
has invested in the latest multi-media technology and encourages employees to
use teleconferencing facilities. For daily commuting, 888 provides its employees
with bus transportation to minimize the use of private vehicles. The Group has
also provided bicycle locking stations in the parking lots and other bicycle
facilities in order to encourage employees to cycle to work. During 2008, the
Group intends to finalise its carbon footprint and process an action plan that
will reduce its carbon release.



Life @ 888.com



888 invests a great deal of time and resources ensuring that customers have
access to a friendly and caring gaming environment, employees and suppliers
enjoy an ethical and rewarding workplace, and the greater community as well as
shareholders benefit from the Group's success. We follow a creed which serves as
a guideline for global work life.


Entertainment@888 - We believe that entertainment is what completes our lives.
After the challenges and routine that occupy most of our time, everyone is
entitled to some fun and excitement.

Customers@888 - We believe that our first responsibility is to provide the best
gaming experience to our customers. This means offering the most entertaining,
innovative, exciting and rewarding opportunities to win, combined with
unparalleled customer service that is available from any location at any given
time. 888 is proud to develop and acquire new products to maintain its edge. We
are always mindful of the complex regulatory environment in which it operates
and the social responsibility that comes with the gaming industry. 888
understand that it must invest time and resources in caring for customers and
protecting the vulnerable.


Employees@888 - We are responsible for our employees who work with us worldwide.
We must provide an enjoyable work environment where people are challenged and
motivated to excel, where flair is rewarded, compensation is fair and the
balance between work and family is respected. Individual development is
encouraged and advancement is based solely on merit. We must always invest in
developing our employees so that they can achieve their personal aspirations.
All employees should expect their managers to be capable, knowledgeable and
motivating. We must always treat our suppliers and other partners with respect,
enabling them to make a fair profit. We will never expose our employees to risks
and all employees should be comfortable that their actions are just and ethical.


Responsibility@888 - We must use our financial success for the greater good. We
are in a wonderful position to invest in the charities and organizations that
are important to our employees and our customers. We must especially encourage
and support the social responsibility that accompanies our work. We are
committed to providing a fair and responsible gaming environment and to guiding
our customers to play responsibly.


Investors@888 - Our final responsibility is to our shareholders. We must strive
to operate as efficiently as possible, achieving profitable excellence, ensuring
that we treat their capital as if it were our own. We must take risks that allow
step-changes in performance while always calculating the risk and measuring our
results, retaining knowledge and learning from our experiences. By doing all of
the above, we will increase shareholder value.



Implementing our values



We set high standards for ourselves, and we take pride in our ability to
consistently maintain them. Following the belief that 'it's in our nature' and
after extensive internal workshops involving employees across the organization,
we have outlined and implemented a set of comprehensive values that represent
the way we operate:


Excellence: We consistently challenge ourselves to reach the highest performance
level in everything we do.

Innovation: We dare to question our own 'way of doing things', keeping an open
mind, experimenting, and constantly creating new and surprising solutions.


Caring: At 888.com, we value every employee, colleague and customer. We show it
by creating a nurturing environment of respect and sensitivity to the needs of
others. We do not forget our commitment to provide a responsible gaming
environment to all.





Customer centricity: Keeping our customers (both internal and external) at the
centre of all decision-making processes, we strive to exceed customer
expectations and provide the best customer experience.



Leading: We strive to remain one step ahead of the competition. This means we
are constantly on our toes, thinking ahead and keeping a close eye on industry
developments.


Collaboration: Our success depends on our ability to work as a single unit while
sharing our knowledge, capabilities and opinions in an open, respectful and
trusting environment.



These values underpin the Group's strategic goals, giving all employees a sense
of identification and a defined way of behaving as well as ensuring alignment
between the organization's business objectives and those of individual
employees. These values serve us as our guidelines, and we strive to obtain a
high level of integrity in the way we work, communicate and act.



Professional development



The Group recognises that investment in the professional development of its
employee is a key factor in its ongoing success. This year, the Group developed
a leadership programme which focused on providing managers with leading global
managerial tools and solutions (e.g. Ken Blanchard and Myers Briggs) for leading
and managing their employees successfully.



The leadership programme focused on coaching managers to adopt appropriate
leadership styles to suit individuals in their team and to develop the behaviour
required by managers to achieve excellent performance and team work.



Building on effective communications, motivation skills and concentrating on the
relationship between manager and employee, the programme succeeded in enabling
managers to analyze and resolve a variety of possible situations that they may
experience and apply themselves in the most appropriate way. This embedded the
Group's value of leadership in its daily operations.



Training



Ensuring that staff have all the skills and knowledge required to perform their
job well and assisting them to develop the next generation of products and
services is crucial to a growing business. The Group is dedicated to the
professional development of its employees so that they can achieve their
personal aspirations. Training is therefore part of [e-mail].



Training initiatives are offered both internally and externally and include
technical skills as well as soft skills training. In 2007, 80% of all Group
employees participated in internal and/or external professional training
seminars.



The training sections were divided into three levels; soft skill training,
technological training and industry training. In each training section, the
Group used professional trainers together with well designed materials.



This year, 888 has also initiated a 'Train the Trainer' internal programme which
focused on assisting expert employees to improve their presentational skills and
their professionalism.



Equal opportunity



The Group believes in promoting equal opportunities through every aspect of the
employment relationship and by providing a workplace that welcomes difference
and enables employees to feel comfortable.



As 888 enjoys a cosmopolitan workforce from a large variety of nationalities all
working side by side, the Group's diversity policy is explicit. The Group does
not tolerate any form of harassment, including any uninvited, unwelcome
behaviour which offends, humiliates or intimidates. 35% of the Group's worldwide
management team is female.



At year end, the Group had 805 employees (2006: 736) at the following locations;
Gibraltar 270, Israel 451, Antigua 68, London 16.




Regulation and General Regulatory Developments



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, many others are
currently contemplating liberalisation and regulation of the industry, and some
have already taken this route.  The Board notes that there are significant
risks, unique to the online gaming industry, including from activity with
customers in the USA prior to the Group's withdrawal from the market in October
2006, where customers of 888 generated 55% of its Net Gaming Revenue. 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.



Gibraltar



888 is licensed and regulated in Gibraltar.



Italy



In Italy, 888 received a sports betting license, which allows it to offer sports
betting services (supervised by the State Monopoly Authority). Following
regulations issued by the Italian authorities in 2007, the license will allow
888 to offer skill games (including Poker tournaments), subject to receiving the
proper authorizations from the Italian authorities.



EU



The European Commission is challenging the online gambling and betting
regulatory regimes of various European States, as the Commission holds that as
regards EU licensed companies, these regimes might infringe the enshrined
freedom to provide services, the freedom of establishment and the concept of
mutual recognition. This effort is reflected in, inter alia, the infringement
proceedings initiated against several EU States - Italy, Denmark, Finland,
Germany, Hungary, the Netherlands, Sweden, France, Austria and Greece; should
these Member States fail to supply adequate reasoning of their gambling
legislation, the Commission may refer the issue with each Member State to the
European Court of Justice. While these proceedings may, in the end, cause the
European States to liberalize their gambling markets, it should be noted that it
could be a very long time before resolutions or judgments are reached (if at
all). In this light, in France, during March 2007, 888's non-executive director
and former Chief Executive Officer, John Anderson, attended an interview with
the French authorities. 888 is in consultation with its legal advisers with
regard to this matter, and closely monitors the situation for any developments.
Specifically as to France, the French Supreme Court annulled a French Court of
Appeals judgment issued against Zeturf, an online gambling operator licensed in
Malta, due to the fact that the Court of Appeals failed to examine whether the
French gambling legislation is compatible with EU law. The Supreme Court ordered
the Court of Appeals to re-examine the issue according to EU law, and also to
consider whether the social goals which justify the gambling monopoly are not
fulfilled by the Maltese gambling legislation.



In addition to these infringement proceedings, the EU Commission is involved in
other instances in which the online gambling and betting regulatory regimes
appear to contravene rights and freedoms of online gambling and betting
operators (e.g., issuing detailed opinions against the enactment of prohibitive
legislation, and intervening in the WTO process described above).



On 6 March 2007, the European Court of Justice issued its judgment in the
Placanica case, which focuses on the compatibility of the Italian gambling
legislation with EU law. The Court ruled, inter alia, that insofar as the
prohibition to offer gambling services which is set within a Member State's
legislation is found to be incompatible with EU law, such Member State may not
apply criminal sanctions to an activity which contravenes this prohibition. The
Court found this to be the case there, as a specific prohibition contained in
the Italian gambling legislation which was reviewed by the Court was found to
contravene EU law. Therefore, the Court ruled that Italy cannot apply criminal
sanctions for breaching this prohibition.



USA/WTO



In the USA, UIGEA added a new section to the United States Code making it
illegal for anyone engaging in the business of betting or wagering to knowingly
accept any credit, electronic funds transfer, check, draft, etc. in connection
with the participation of another person in unlawful internet gaming.  In
essence, the UIGEA act prohibits online gambling operators from receiving the
proceeds of financial transactions in connection with internet gaming if the
gaming is illegal in the state where the bettor is located. In addition, the
United States Secretary of Treasury and Federal Reserve are directed under UIGEA
to promulgate regulations which will require financial institutions to block
transactions in connection with internet gaming (draft regulations were issued
in October 2007). In October 2006, the Group stopped taking bets from US
customers.



On 5 June 2007, the Group announced that it had initiated preliminary
discussions
with the United States Attorney's Office for the Southern District of New York
regarding activity prior to enactment of the legislation. It is too early to
assess any particular outcome of these discussions.



It was recently found by the World Trade Organization that the US legislative
position with respect to Internet Gambling violates US trade commitments.
Following this decision, the US withdrew its trade commitment in the sphere of
gambling; while several trade partners required compensation from the US
following this withdrawal, none of the agreements reached, so far, between the
US and some of these trade partners, have had an impact within the online
gambling market. Antigua and Costa Rica did not reach agreement with the US, and
applied to the WTO to arbitrate a settlement between them and the US, in
connection with the withdrawal of the US commitment.



In December 2007, the Remote Gaming Association (a trade body representing
several online gaming operators, of which the Group is a member) filed a
complaint with the European Union against the US in connection with the breach
of its trade commitments. Following this complaint, the European Commission
decided to open an investigation into whether the United States is in breach of
its WTO obligations in the sphere of gambling (in relation to the period prior
to the withdrawal of its commitment). The investigation is expected to take five
to seven months, at the end of which the Commission will present its findings,
which could lead to the initiation of WTO proceedings.



The Board continues to monitor these developments closely, and is alert to
changes as they may occur in areas where the Group operates.



Risk Report



The Group operates in a new and dynamic business environment. In addition to the
day to day commercial risks faced by most enterprises, the online gaming
industry presents the Group with particular challenges in respect of Regulatory
risk, Reputational risk, Information Technology risk and Taxation risk, each of
which is detailed below.



Regulatory risk



The regulatory framework of online gaming is dynamic and complex. Change in the
regulatory regime in a specific jurisdiction could have a material adverse
effect on business volume and financial performance in that jurisdiction. A
detailed regulatory review is set out below.



Reputational risk



The Group is exposed to the risk of under-age and   problem gamblers accessing
its online real money gaming sites. The Group devotes considerable resources in
putting into place prevention measures coupled with strict internal procedures
designed not to allow under-aged players from accessing its real money sites. In
addition, the Group promotes a safe and responsible gaming environment to its
customers supplemented by its corporate culture. The Group appointed a dedicated
director of CSR & Responsible Gaming tasked with the responsibility of
implementing such policies. Further details about the Group's responsible gaming
initiatives are set out above.



Information technology risks



As a leading online business, the Group's IT systems are critical to its
operation The Group is reliant on the performance of these systems whilst
ensuring exposure to external risks is minimal



Cutting-edge technologies and procedures are implemented throughout the Group's
technology operations designed to protect its networks from malicious attacks
and other such risks.  These measures include traffic filtering, anti-DDoS
(Distributed Denial of Service) devices, Anti-Virus protection from leading
vendors and other such means. Physical and logical network segmentation is used
to isolate and protect the Group's networks and restrict malicious activities.
In order to ensure systems are protected properly and effectively, external
security scan and assessments are carried out in a timely manner.  In addition,
the Group has recently implemented a new high-end storage solution enhancing
storage availability and performance.  All critical data is replicated to
another storage device for disaster recovery purposes and all data is stored
off-site on a daily basis.



In order to minimize dependencies on telecommunication service providers, the
Group invests in network infrastructure redundancies whilst regularly reviewing
its service providers.



As a part of its monitoring system, the Group deploys set user experience tests
which  measure performance from different locations around the world.
Network-related performance issues are addressed by re-routing traffic using
different routes or providers.



888 operate a 24x7 Network Operations Centre (NOC).  The NOC's role is to
conduct real time monitoring of production activities using state-of-the-art
systems. These systems are designed to identify and provide alerts regarding
problems related to systems, key business indicators and issues surrounding
customer usability experience.



Taxation risk



The Group aims to ensure that each legal entity within the Group is a tax
resident of the jurisdiction in which it is incorporated and has no taxable
presence in any other jurisdiction. While the Group's customers are located
worldwide, certain jurisdictions may seek to tax such activity which could have
a material  adverse effect on the amount of tax payable by the Group or on
customers' behaviour.



The Group benefit from favourable fiscal arrangements in some of the
jurisdictions in which it has taxable presence without which its results would
be adversely affected. All gaming activities are based in Gibraltar, where the
Group currently benefits from a tax exempt status. A change of control or
activity of a tax exempt subsidiary would result in the loss of its tax status.
However, this is not expected to have a material adverse effect on the overall
tax rate of the Group. The tax exempt status is due to expire by the end of 2010
when the Government of Gibraltar intends to introduce a new fiscal regime that
complies with EU requirements. The replacement regime is still to be unveiled
although the Gibraltar Government has pledged its commitment to maintain fiscal
competitiveness and a low effective tax rate. The Group is required to pay a
gaming tax, currently set at 1% of gaming yield, with an annual maximum cap of
£425,000 in aggregate, in respect of its Casino, Poker, Bingo and Backgammon
activities. From 2008, additional gaming tax at the same rate is due in respect
of the Group's new Sports offering.



The Group's subsidiary in Israel, Random Logic Limited, and the Israeli branch
of Intersafe Global Limited, have each entered into separate transfer pricing
agreements on an arm's-length basis with the Israeli Income Tax Commissioner.
The arrangements for Random Logic Limited are effective until 2010, while the
arrangement for the Intersafe Global Limited branch has terminated on 31
December 2007. Accordingly, the Group is in the process of discontinuing the use
of this branch and so does not intend to enter into a new agreement.



The operation in Antigua also benefits from a low tax regime  further mitigated
by the current small scale of the operation




Financial Information



Audited Consolidated Income Statement

for the year ended 31 December 2007








                                                                                     Year ended        Year ended
                                                                                    31 December       31 December
                                                                                                             2006
                                                                                           2007
                                                                          Note          US$'000           US$'000
Net Gaming Revenue                                                           2          213,383           157,000
Other operating income                                                       2            3,563                 -
Total operating income                                                                  216,946           157,000

Operating expenses                                                                       64,864            49,448
Research and development expenses                                                        23,496            19,381
Selling and marketing expenses                                                           70,897            51,037
Administrative expenses                                                      4           24,660            28,653
Operating Profit before share benefit charges                                            40,829            17,310
Share benefit charges                                                                     7,800             8,829

Operating Profit                                                             5           33,029             8,481

Finance income                                                                            4,957             4,883
Profit before tax before share benefit charges                                           45,786            22,193
Share benefit charges                                                       19            7,800             8,829

Profit before tax                                                                        37,986            13,364
Taxation                                                                     6            3,199             3,117
Profit from Continuing operations                                                        34,787            10,247
(Loss)/Profit from Discontinued operations                                  23            (552)            64,254
Profit after tax for the year attributable to equity holders of                          34,235            74,501
parent






                                                                                     Year ended        Year ended
                                                                                    31 December       31 December
                                                                                           2007             2006
Earnings per share                                                        Note
Continuing operations                                                        7
Basic                                                                                     10.3c              3.0c
Diluted                                                                                   10.1c              3.0c
Discontinued operations                                                  23(e)
Basic                                                                                    (0.2)c             19.1c
Diluted                                                                                  (0.2)c             18.8c
Total
Basic                                                                                     10.1c             22.1c
Diluted                                                                                    9.9c             21.8c




Audited Consolidated Balance Sheet

at 31 December 2007
                                                                                       31 December     31 December
                                                                                              2007            2006
                                                                            Note           US$'000         US$'000
Assets
Non-current assets
Intangible assets                                                             10            40,656               -
Property, plant and equipment                                                 11            16,496          13,033

Financial assets                                                              12               654               -
Deferred taxes                                                                13               537             546
                                                                                            58,343          13,579
Current assets
Cash and cash equivalents                                                     14           104,308         114,356
Trade and other receivables                                                   15            19,530           9,669
                                                                                           123,838         124,025

Total assets                                                                               182,181         137,604

Equity and liabilities
Equity attributable to equity holders of the parent

Share capital                                                                 16             3,097           3,073

Available for sale reserve                                                                   (105)               -
Retained earnings                                                                           89,735          83,929

Total equity attributable to equity holders of the parent                                   92,727          87,002

Liabilities
Current liabilities
Trade and other payables                                                      17            63,040          27,931

Member deposits                                                                             26,414          22,671
Total liabilities                                                                           89,454          50,602

Total equity and liabilities                                                               182,181         137,604






Audited Consolidated Statement of Changes in Equity

for the year ended 31 December 2007




                                                                           Available for         Retained         Total
                                                                            sale reserve         earnings
                                                                  Share
                                                                capital
                                                                US$'000          US$'000          US$'000       US$'000
Balance at 1 January 2006                                         3,068                -           29,262        32,330
Net Profit for the year                                               -                -           74,501        74,501

Dividend paid                                                         -                -          (28,658)      (28,658)

Issue of shares                                                       5                -              (5)             -
Share benefit charges                                                 -                -            8,829         8,829
Balance at 1 January 2007                                         3,073                -           83,929        87,002
Net Profit for the year                                               -                -           34,235        34,235
Dividend paid                                                         -                -         (36,205)      (36,205)
Issue of shares                                                      24                -             (24)             -
Valuation (losses) of available for sale investments                  -            (105)                -         (105)
Share benefit charges                                                 -                -            7,800         7,800
Balance at 31 December 2007                                       3,097            (105)           89,735        92,727





The following describes the nature and purpose of each reserve within equity.

Share Capital - represents the nominal value of shares allotted, called-up and
fully paid for.

Available for sale reserve - represents the gain or loss arising from a change
in the fair value of an available-for-sale financial assets.

Retained earnings - represents the cumulative net gains and losses recognised in
the consolidated income statement.




Audited Consolidated Statement of Cash Flows

for the year ended 31 December 2007

                                                Year ended  Year ended         Year ended   Year ended
                                               31 December 31 December        31 December  31 December
                                                      2007        2007               2006         2006
                                                   US$'000     US$'000            US$'000      US$'000
Cash flows from operating activities
Profit before income tax                            37,434                         77,618
Adjustments for
Depreciation                                         4,192                          3,801
Loss on sale of property, plant and                      -                             29
equipment
Amortisation                                         1,550                              -
Interest received                                  (5,434)                        (4,879)
Share benefit charges                                7,800                          8,829
                                                    45,542                         85,398

(Increase)/decrease in trade receivables           (7,241)                          6,346
Decrease in related party balances                       -                          1,331
Increase in other accounts receivables             (2,620)                        (1,002)
Increase/(decrease) in trade payables                2,186                        (1,439)
Increase/(decrease) in member deposits               3,743                        (6,654)
Increase in other accounts payables                  7,663                          3,527
Cash generated from operations                      49,273                         87,507
Income tax paid                                    (3,075)                        (3,052)
Net cash generated from operating activities                    46,198                          84,455
Cash flows from investing activities
Acquisition of assets comprising of the
online      bingo business of Globalcom
Limited (see note 9)                              (17,142)                              -
Purchase of property, plant and equipment          (7,574)                        (8,621)
Proceeds from sale of property, plant and                -                             99
equipment
Interest received                                    5,434                          4,879
Acquisition of available for sale assets             (759)                              -
Net cash used in investing activities                         (20,041)                         (3,643)
Cash flows from financing activities
Dividends paid                                    (36,205)                       (28,658)
Net cash used in financing activities                         (36,205)                        (28,658)
Net (decrease)/increase in cash and cash                      (10,048)                          52,154
equivalents
Cash and cash equivalents at the beginning                     114,356                          62,202
of the year
Cash and cash equivalents at the end of the                    104,308                         114,356
year





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