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Online Poker News Archives - December 2004

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Copyright 2004 Gale Group, Inc.
Business and Industry
copyright 2004 William Reed, Ltd.
Leisure Report

December 2004

HEADLINE: Sportingbet pays 163m [pounds sterling] to get Paradise.

   Sportingbet, the UK-listed internet betting outfit, bought Paradise Poker for 169m [pounds sterling] ($297.5m), as reported in Leisure Report in November, as part of its hid to become a world leader in the online sports betting and gaming entertainment industry.

   Sportingbet is to pay 105m [pounds sterling] in cash and the rest in shares for Paradise, which is one of the four largest internet poker sites in the world. Established in 1999, Paradise is thought to command a 10% market share of the online poker sector generating turnover of 20.3m [pounds sterling] and an operating profit of 11.6m [pounds sterling] in the first seven months of 2004.

   Nigel Payne, chief executive of Sportingbet, described the deal as a "significant step forward". The deal virtually doubled the size of the company, which now offers sports betting, casino, bingo, gaming and poker under one virtual roof.

   Analysts welcomed the move, which should give Sportingbet steady revenue throughout the year, and also gives the company an opportunity to sell its sports sites to its new poker customers and vice versa. The company's shares rose to a 12-month high following the acquisition and are now trading at around five times their value of a year ago.

   The company also revealed results for the 16-month period to the end of July, summarised below. Altium Securities, the analysts, said the "acquisition de-risks the earnings Group's earnings and should result in lower volatility.
The price paid seems very reasonable particularly when set against the accelerating growth rate of the business. We believe that the cross selling opportunities are substantial across the respective client databases and [the company] can also accelerate Paradise's expansion into the UK, Europe and beyond." Both Altium and Arbuthnot put a 'buy' rating on the shares.

   Sportingbet delayed the publication of its first-quarter results until 25 November while it completed the purchase, but indicated that the figures were

likely to be in line with the consensus forecast.
Sportingbet results summary
                               Results    Altium
16 months to July              reported   estimate   Variance Turnover m [pounds sterling]    1,431.9    1,272.5    +12.5% EBIT m [pounds sterling]           21.7       20.0     +8.5% Adj PBT m [pounds sterling]        20.1       18.6     +8.1% FD EPS                             6.8p       6.0p    +13.3%

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