2008-02-20 07:50:34

INCREASED PROFIT FOR BETTING PROMOTION

October – December
· Betting turnover: SEK 3,075 million (2,582)
· Net turnover: SEK 21.2 million (17.9)
· Gross margin: 0.69% (0.69)
· Operating income: SEK 15.9 million (13.0)
· Operating margin: 74% (72)
· Net income: SEK 16.3 million (12.4)
· Profit per share: SEK 0.08

January - December
· Betting turnover: SEK 10,728 million (8,058)
· Net turnover: SEK 71.7 million (65.4)
· Gross margin: 0.67% (0.81)
· Operating income: SEK 53.9 million (46.7)
· Operating margin: 74% (70)
· Net income: SEK 49.5 million (42.5)
· Profit per share: SEK 0.25

Managing Director comments
“Betting turnover increased in the fourth quarter whilst the gross margin remained at an expected level. Soccer, in particular, continued to show a high gross margin. I am confident that the technical improvements made during the fourth quarter will be beneficial to the gross margin from live betting”, commented Johan Moazed, Managing Director of Betting Promotion.

Overview October – December 2007
This is the most important quarter of the year as all major soccer leagues are active. Turnover and profit increased by approximately 20% compared to the previous year. During the same period technical communications with the exchanges were improved. Development focused on the speed of communications between the company’s trading system and the market. Communication speed is particularly important for live events.
Overview 2007
The company continued to experience strong growth in 2007 as well as large fluctuations in the gross margin. The growth in betting turnover during the year was just over 30% which means that Betting Promotion is growing faster than the market in general.

The first quarter was strong with regards to both the margin and the betting turnover, but the second quarter was much weaker. During the second half of the year the margin was back to expected levels which demonstrates that the margin can vary considerably between quarters. However, on an annual basis the company expect a stable margin of between 0.6 and 0.8 percent.

Betting Promotion’s goal is to continuously expand its offering. During 2007 a number of minor soccer leagues and other sports were added to the company’s offering. Live betting is experiencing strong growth and the company’s development in this area is satisfactory. The company continues to work on increasing turnover and margins within this sector.
GameVillage
GameVillage is a soft gaming company of which Betting Promotion owns 50%. In the fourth quarter 2007, a further SEK 3.0 million was invested in the company. The total investment in GameVillage as at 31 December 2007 amounted to SEK 18.0 million. In addition to the investment Betting Promotion has also extended a loan of SEK 1.6 million to GameVillage.

Following a review of the overall strategy of the company, the board of Betting Promotion have initiated a process to sell GameVillage.
Market Sectors
Betting Promotion provides a breakdown of results between various market sectors. An important part of Betting Promotion’s business concept is to deliver full market-making services even if some market sectors offer better margins than others. Market making is the core of Betting Promotion’s business and is comparable to businesses that guarantee liquidity for different sorts of financial instruments.
Soccer
Soccer is the foundation of Betting Promotion’s business and represents 64% of the total betting turnover. Both in the fourth quarter and historically, soccer showed a higher margin than the other market sectors. The margin achieved in the quarter was in line with the historical margin. The growth of this market sector was in line with Betting Promotion’s total growth.

Live betting
Live betting is presently offered in soccer only. During the quarter, the turnover from live betting was 23% of the total turnover from soccer. The margin achieved during the quarter was poor. The development work that has been done on the communication speed between the company’s trading system and the market will improve the margin.
Other
“Other” includes a number of different sports, e.g. tennis, ice hockey, rugby, basketball and American football. Betting Promotion continuously tries to develop and improve the gaming models in order to raise the margins on these markets.

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