AFX News Limited
Sportingbet sees no sign of poker slowdown - UPDATE
10.12.2005, 07:20 AM
(Adds further CEO comment, other detail)
LONDON (AFX) - Sportingbet PLC posted a 190 pct leap in annual profit, buoyed by last year's acquisition of Paradise Poker, and the British online gaming group attempted to ease concerns industry growth rates may be flagging.
'I can only call it as I see it and right now I can't call a slowdown in any activity,' chief executive Nigel Payne told reporters on a conference call.
'I think there are a lot of operators out there who are very pleased with the way their poker business continues to progress,' he added in a thinly-veiled swipe at bigger rival PartyGaming PLC.
Sportingbet shares rose 18.5 pence, or 6.4 pct, to 305.5 by 10.50 am, valuing the company at around 1 bln stg.
The stock had lost 22 pct of its value over the past five weeks, in tandem with sector peers, after PartyGaming, owner of the world's biggest poker site, warned of a collapse in revenue growth rates.
That alert, less than three months after it had floated on the London Stock Exchange, has seen analysts guessing whether it was indicative of a wider malaise and questioning sky-high share valuations in the sector.
'They (Sportingbet) are trying to dispel the myth that poker is a bubble. The statement offers only a mildly guarded two-fingers-up to PartyGaming,' Daniel Stewart & Company analyst James Hollins said.
Operating profit before tax, goodwill and exceptional items, rose to 60.5 mln stg from 20.8 mln on revenues up 30 pct to 1.5 bln. Financial analysts had expected profit of around 58 mln.
Sportingbet said Paradise Poker, the world's third-biggest online poker site which it bought last November for 196 mln stg, had boosted operating profit by 28.4 mln stg.
Payne was eager to point out that poker rates were up 22 pct year-on-year in the latest 10 weeks, broadly in line with the previous year's growth rate, as the company signed up 37,680 new active poker accounts, up 85 pct.
The average cost of acquiring each customer was virtually flat at 132 usd. By contrast, PartyGaming spends 286 usd to attract players to its site.
Payne, who envisages further rapid consolidation of the online gaming industry, indicated that he remains on the lookout for acquisition targets.
But though he says a fresh approach for Empire Online Ltd remains a possibility, no move is likely in the near term.
Last month, he scrapped plans to launch a 791 mln stg bid for Empire which drives punters to third parties' websites.
Gross profit margins at Sportingbet's sports-betting arm rose 8.6 pct to 71.6 mln stg, while fees from other casino-style games contributed 45.2 mln to gross profits, up 43 pct.
Net profit surged to 39.9 mln stg from 5.4 mln, while diluted earnings per share climbed to 10.1 pence from 1.8.
A maiden dividend of 1 pence per share is proposed.
rob.branch@afxnews.com