Great Results For Sportingbet
Published: Monday, February 28, 2005 Online-Casinos.com
GREAT RESULTS FOR SPORTINGBET
Earnings boost from Paradise purchase
Bloombergs reported this week that Sportingbet plc, the major U.K. Internet
betting company whose shares have tripled in five months, has announced a second-quarter
profit jump of 84 percent as earnings benefited for the first time from November's
purchase of Paradise Poker.
Net income rose to GBP 15.6 million ($30
million), or 3.6 pence a share, in the three months through January from GBP 8.5
million, or 2.8 pence, a year earlier. Paradise Poker contributed GBP 8 million
of operating profit, Sportingbet said.
"Paradise Poker is running
considerably ahead of expectations," said Paul Leyland, an analyst at Seymour
Pierce in London with a "hold'' rating on Sportingbet stock. "Calendar
2005 should see a doubling of the poker market, which Sportingbet should outperform
due to cross-selling its customer bases."
The $298 million acquisition
of Paradise Poker, the world's third-biggest online poker operator, doubled Sportingbet's
size and reduced the company's dependence on sports events such as the Wimbledon
tennis tournament. Sportingbet is seeking to make more acquisitions, Chief Executive
Nigel Payne said in an interview.
"This industry will continue to
consolidate very quickly," Payne said. "We have always said that once
we digested Paradise we would be back in the market for the right deal at the
right price. We would be interested in growing the business further."
Shares of Sportingbet rose on the news and gave the company a market value
of about GBP 932 million, and DBS Advisors Ltd., from whom the company acquired
SportsBook in 2001, sold 18.8 million Sportingbet shares, cutting its stake from
8.4 percent to less than 3 percent, according to a separate statement. The stock
was sold to institutional clients of Dresdner Kleinwort Wasserstein, spokesman
George Hudson said.
Payne said the company's next acquisition is likely
to involve online casinos or sports betting, rather than poker. A transaction
may not need to be funded with new equity, he said.
"It would be
entirely possible to fund a medium-term deal through cash flow," he said.
"It's not necessarily the case that we would need to dilute the equity base
any further."
Business at Sportingbet in the first three weeks of
the fiscal third quarter has been strong, Payne said. Sports- betting volumes
have risen at an encouraging rate, while casinos, gaming and poker performed well,
he said.
Almost 4 percent of British adults who have access to the Internet
have gambled online in the past two years, according to the Gaming Board for Great
Britain, which regulates U.K. casinos. A sixth of them used the Internet to play
casino-style games.
Sportingbet's first-half sales rose 30 percent to
825 million pounds, including 12.5 million pounds from Paradise Poker.
The
company plans to pay its first dividend later this year.
