SPORTINGBET FIGHTS BACK FROM U.S. CRISIS

2 March 2007

Betting group has taken its lumps....now it's focused on Europe and Asia

Sportingbet plc reported its latest results this week with both good and bad news. The bad is that pre-tax losses in the six months ended January 2007 were substantial at GBP 243 million, including a one-off charge of GBP 252 million from the shutdown of US operations in the wake of the UIGEA; the good is that the company has survived this massive knock and is now reporting strong revenues from operations refocused on Europe and Asia.

The British betting group reported a 54 percent increase in second quarter operating profit from its non-U.S. operations, and said the third quarter had started well. Operating profit was GBP2 million in the second quarter to January 31, compared to GBP1.3 million a year earlier.

Sportingbet sold a substantial chunk of its business last year for a token dollar after its main market, the United States, banned Internet gambling financial transactions and the then chairman, Peter Dicks was briefly detained by US authorities whilst visiting New York.

CEO Andy McIver says the company is now focused on growth in Europe, and told reporters that the group has bought its Turkish marketing partner, Maslin Properties for GBP 3.5 million, plus a payment in shares dependent upon performance. Sportingbet has also increased its investment in its Italian joint venture, taking its holding from 50 percent to 90 percent at a cost of Euro 4.25 million (GBP2.9 million).

MacIver addressed the current French situation, where it appears from recent news reports that anti-online gambling moves are being made by French authorities.

Analysts believe French authorities are looking to interview about 20 online gaming firms including Unibet and 888.com executives, and the UK newspaper The Guardian reported today that online poker giant Party Gaming quietly closed its website to French customers last week (see InfoPowa report). Party Gaming reports its current results tomorrow.

McIver told reporters French authorities had not requested a meeting with him and less than 2 percent of Sportingbet's business comes from France. "We've never really targeted France," he said.

Including its former U.S. operations, Sportingbet reported a group operating loss of GBP243.9 million pounds in the six months to January 31, compared to a profit of GBP43.1 million a year earlier.

Sportingbet shares on the London market rose 1.8 percent to 43 pence, valuing the group at around GBP185 million on the positive non-US picture. Whilst still a mere shadow of its value prior to the US debacle, the results showed the group has resilience and future potential.

"Management has managed to successfully restructure the business and already taken GBP56 million of annualised costs out of the business," said analysts at Dresdner Kleinwort. They upgraded their 2008 earnings per share forecast by 30 percent to 4.2 pence.

The report also confirmed that Sportingbet is to move its offices to Dublin (see previous InfoPowa reports) and said trading in the third quarter had gotten off to a good start. The next phase of its restructuring programme will involve migrating its Paradise Poker sites to a single software platform with Boss Media and moving its customer service wing to Dublin is reported to be "well underway".

Online Casino News courtesy of InfoPowa

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