Market Briefs - Feb. 27 - March 3, 2006

PartyGaming Plc (PRTY.L) has reported a 63 percent improvement in revenue to US$977.7 million for the full year 2005, fueled by 55 percent growth in poker and 143 percent growth in casino gaming. Annual EBITDA improved 49 percent over 2004 and reached $583.7 million. The company has recommended a final dividend of $200 million or 5.25 cents per share. As a result of the upbeat report, PartyGaming's house broker Dresdner Kleinwort Wasserstein has upped its 2006 fully diluted earnings per share forecast to 16.1 cents from 15.9 cents. The brokerage firm also noted in a research report, "PartyGaming is undervalued, in our view, at a 2006E P/E of 14.4x with EPS growth of 50 percent in 2005 in 2006E where risks to our numbers are firmly on the upside."

PartyGaming also revealed last week that its CEO Richard Segal is resigning from the company because he does not wish to relocate to Gibraltar.

Spread betting and financial services company London Capital Group Holdings Plc (LCG.L) two weeks ago delivered its maiden preliminary results for 2005, boasting an 85 percent improvement in turnover to £4.86 million (2.62 million in 2004) and operating profit before exceptional items of £1.86 million, which compares to a loss of £60,000 in 2004. London Capital Group was admitted to the Alternative Investment Market of the London Stock Exchange in December 2005, raising £12 million by placing shares at 82p each.

Canada-based horse racetrack and wagering operator Magna Entertainment Corp. (MECA) reported a net loss of US$105.3 million in 2005, which compares to a net loss of 95.6 million in 2004. The company is encouraged that the losses slowed in the second half of the year and hopes a new subsidiary that will deliver substantially positive operating results within two or three years. Magna has launched a new subsidiary called PariMax, Inc., that will oversee development of Magna's various electronic distribution platforms including XpressBet, HRTV, MagnaBet, RaceONTV and its 30 percent stake in AmTote International Inc. PariMax will focus on the development of complete wagering solutions and will concentrate on serving the global wagering market by developing product lines which meet the needs of both distribution partners and end consumers worldwide.

Arena Leisure Plc (ARE.L), England's largest operator of horseracing fixtures, has reported a 30 percent increase in operating profit to a record £6.7 million for fiscal 2005. Turnover increased over the period by 9.4 percent to reach £40.7 million. Arena's joint venture partnership with British Sky Broadcasting--the At The Races dedicated horse racing television channel--generated over £1.6 million for its racecourse partners in the form of media rights payments. Arena has proposed a total dividend of 0.45p per share.

Although an 18 percent increase in turnover to 1.37 billion euros in 2005 indicates that Paddy Power Plc (PAP.L) is certainly a healthy company, it reported a 3 percent decrease in profit due to adverse racing results and increased competition. Operating profit from Paddy's online properties rose by 92 percent and accounted for close to 60 percent of the year's earnings. CEO Patrick Kennedy predicts his company's retail business will achieve a gross win percentage of between 11 and 13 percent in 2006, and that Internet and phone operations will achieve between 8 and 9 percent.

Overall profit on ordinary activities before exceptional items and finance charges rose 5 percent to £246 million in 2005 for William Hill Plc (WMH.L). Although it was another tough year bookies, Internet poker and fixed odds betting terminals helped propel the company forward. Interactive gross win increased 16.2 percent to £123.3 million and interactive profit increased 18.4 percent to £61.2 million. The strongest growth in gross win came from poker, which increased 90 percent.

Gaming firm Rank Group Plc (RNK.L) has reported a 14 percent decline in profit for the year 2005 and announced that it would buy back shares for £200 million. The company was not only unable to sell its loss-making Deluxe Media division, but it also had to redraft its dividend policy following the sale of Deluxe Film in January, which will lead to a 50 percent cut in 2006. Internet poker and casino gaming operations surpassed sports betting for the first time at Blue Square, but Blue Square, like a lot of bookmakers, was struck by unfavorable results and consequently it reported a £1.7 million loss.

32Red Plc (TTR.L), which floated on London's Alternative Investment Market in September 2005, has announced its maiden preliminary results for the year 2005. The company reports a 67 percent increase in revenues to £9.77 million compared to 2004, with casino gaming representing £8.94 million (57 percent increase) and poker representing £0.83 million (339 percent increase). Profit before tax rose 82 percent to £2.04 million and total active players improved 102 percent to 17,587.