2008-10-22 08:46:23

INTERIM REPORT JAN-SEP 2008

Improved margin

July – September
• Betting turnover: SEK 1,791 million (2,440)
• Net turnover after fees: SEK 13.2 million (15.8)
• Gross margin: 0.74% (0.65)
• Operating income: SEK 8.0 million (11.8)
• Operating margin: 61% (75)
• Net income: SEK 7.8 million (9.9)
• Profit per share: SEK 0.04
January – September
• Betting turnover: SEK 7,951 million (7,653)
• Net turnover after fees: SEK 31.0 million (50.5)
• Gross margin: 0.39% (0.66)
• Operating income: SEK 14.9 million (38.0)
• Operating margin: 48% (75)
• Net income: SEK 13.1 million (33.2)
• Profit per share: SEK 0.07


Managing Director comments
“The trials to find optimal parameters for our existing gaming models produced positive results. Based on these findings changes were implemented gradually during the second and third quarters and I am now looking forward to tracking the results in the important fourth quarter”, says Johan Moazed, Managing Director of Betting Promotion.

Overview July – September 2008
In the last two quarters various changes have been made to the gaming models. One effect of this has been to reduce certain trading activities which increased risk without necessarily increasing profit. The company believes that as well as reducing risk the changes are likely to have a positive effect on total betting profits. The changes, which have been implemented gradually during the second and third quarters, render comparisons to previous betting turnover figures of no further relevance. The ongoing work to increase margins on live betting continues.
Gross Margin including trading fees
Betting Promotion has commercial agreements with a number of different betting exchanges. Most are based on commission-free trading but on exchanges with higher turnover a trading fee is paid by Betting Promotion. During Q3 Betting Promotion paid MSEK 1.9 as fees to betting exchanges. These fees are reflected in the gross margin and will be itemised in the income statement.
Buy Back of own shares
At the annual general meeting of shareholders in May 2008, it was decided that the company would be allowed to buy back shares on the stock market. The authorization of this buyback program will be valid until the next annual general meeting. Betting Promotion is authorized to buy up to 10 % of the outstanding shares. The lowest price that will be paid for a share is 1 SEK and the highest is 1.8 SEK. This program was put into effect on the 24 July 2008. The company is not allowed to buy back shares during a period of one month before the release of a report and therefore the program was suspended during the period 22 September – 22 October. The total amount of shares that were bought until 22 September was 688,000 with an average price of 1.4 SEK. The amount of shares purchased is published daily on the company’s website.
GameVillage
GameVillage is a soft gaming company of which Betting Promotion owns 50%. During Q3 2008 Betting Promotion extended an additional MSEK 1.6 to GameVillage. The aggregated total investment, as per the 30 September 2008 amounts to 18.6 MSEK. Betting Promotion has also extended a loan of 6.9 MSEK. In the third quarter, GameVillage has showed growth in player acquisition as well as continued positive results.

The board of Betting Promotion has decided to invest an additional 2.0 MSEK in GameVillage taking its shareholding to 52.4%.The new shares will be non-voting so the 50% voting rights will remain unchanged. The board was encouraged to make the investment following the positive results which they believe will be further enhanced by the application of the additional capital into marketing activities.

Betting Promotion’s long-term objective is to sell its shares in GameVillage as investment in soft gaming companies is no longer part of Betting Promotion’s business strategy.

NGM
Due to the decision of the Swedish financial authority to revoke NGM’s licence to run an exchange, the board of Betting Promotion has decided to intensify the list changing process.

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 remains at the core of Betting Promotion’s business and during the third quarter accounted for turnover of MSEK 1.196, representing 67% of the total betting turnover. The margin for soccer was 0.91%, higher than the two previous quarters and in line with what the company expects from the optimized trading model.
Live Betting
Live betting is presently offered in soccer only. During the quarter, the turnover from live betting was MSEK 355, 23% of the total turnover from soccer. The margin for the live betting sector was 0.20%, lower than anticipated over a longer period. Betting Promotion is prioritizing the improvement of these margins.
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. Turnover for this sector was MSEK 240. The gross margin was 0.67%.

For complete report see attached file. DOWNLOAD COMPLETE DOCUMENT