18-10-2007 Sportingbet reports strong growth in European sports betting operations

The online sports betting and gaming group announced its financial results for the year ended 31 July 2007, during which turnover from continuing operations increased 13% to almost £1.1bn, with gross margin up 13.3% to £120.8m and operating profit up 76.2% to £7.4m. After a number of exceptional charges, including £14.2m for the migration of Paradise Poker onto the Boss Media network, £7.4m for the move of European operations to Dublin and the Channel Islands and £3.6m for the merger of the Sportingodds and Sportingbet brands, continuing Sportingbet operations reported a loss before tax of £26.8m.

Sports betting turnover in Europe was £599.8m (2006: £473.6m), earning a gross profit of £49.7m (2006: £30.0m), corresponding after deduction of customer bonuses to a margin for the year of 8.3% up from 6.9% in 2006.
The number of customers who bet on the region's sports betting websites during the year rose by 14.3% to 436,779, with the total number of sports bets placed by these customers up 30.6% to 46.1m at a rate of 106 bets per active customer per year (2006: 92bets). The average sports bet size was £13.10 (2006: £13.80), while the yield per sports active customer increased from £95 to £125 as a result of increased margin and increased number of bets made per customer.

Australian sports betting turnover was £439.3m (2006: £346.6m), earning a gross profit of £12.4m (2006: £12.9m), with a disappointing gross margin of 2.9% down from 3.8% a year earlier. The number of customers who bet with Sportingbet Australia increased by 30.2% to 23,094, with the number of sports bets placed by these customers up 65.2% to 7.6m at a rate of 327 bets per customer (2006: 259 bets). The average sports bet size was lower at A$136 (2006: A$181), reflecting the increased activity on the more leisure-oriented internet platform. During the year, the proportion of bets taken over the internet rose to 82.3% (2006: 77.3%).

Other business highlights following the loss of the US-facing operations included the acquisition of a Turkish marketing partner, further investment in Sportingbet Italia, successful migration of Paradise Poker players to the Boss Media platform and the reorganization of European operations including the transfer of all customer operations personnel to Dublin and all licensable operations to the Channel Islands, under a license granted by the Alderney Gambling Control Commission.

Andrew McIver, Group Chief Executive, commented: "Given the enormity of the change and restructuring that has taken place at Sportingbet, I am pleased to report a strong increase in gross win in the continuing business and especially pleased with the growth in our core European sports betting business of 48%. To lose 75+% of our business following the US legislation but still record an operating profit for the year is, in my opinion, a highly creditable achievement."

Sportingbet revealed in its statement to the stock exchange that the new financial year started well, with trading across the group significantly ahead of 2007. In Europe, sports turnover is up 7% year on year in August and 23% in September, while in Australia the business is performing well, despite an outbreak of Equine Influenza which, to date, has had little impact on trends within the region. The online betting group also said that it will continue to invest and consider targeted acquisitions in countries in which it is under-represented.