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.