Sportingbet, the UK-based egaming powerhouse, has seen its market value soar to US$1.9bn on the back of a huge leap in half-year profits.
Pre-tax profits profit for the six months ending January 2005 was up 117.9% to £18.3m, thanks in part to the first contribution from the newly acquired Paradise Poker.
Paradise Poker, bought for around US$300m in November 2004, contributed £8m to operating profit, which climbed 85.7% to £26m.
But the firm also record hugely impressive organic growth with operating profits excluding the contribution of Paradise up 28.6% to £18m.
Nigel Payne, chief executive of Sportingbet, said the firm was reaping the benefits of its economies of scale with profits up despite a fall in gross win percentage to 5.6% in the US and 7.3% in Europe.
“In a six-month period where sports margins have been below their long-term average, the enhanced scale of the business has nevertheless delivered significant operational leverage,” Payne said.
“An 18% reduction in unit cost to our lowest ever level, together with strong casino, gaming and poker revenues, has yielded record profitability and record cash inflow for the group.”
Shares in Sportingbet climbed almost 6% to a record 305p on the back of the results, which were higher than market expectations.
And it prompted the original owners of sportsbook.com, the Costa Rica-based sportsbook bought by Sportingbet in 2001, to sell a 5.8% share in the group, netting them US$105m.
Sportsbook’s founders retain a long-term interest in the firm thanks to a loan note that is convertible into 83 million shares, which is worth around US$480m at current prices.
The record share value represents a massive turnaround for the Sportingbet, whose shares once traded at just 18p in 2002.
source : egaming review magazine
