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JAXX SE: Continued growth for JAXX in Q1 2011 through sports betting


JAXX SE / Key word(s): Quarter Results

12.05.2011 / 14:30

Continued growth for JAXX in Q1 2011 through sports betting

- Gross revenue rises by 32 percent in first quarter to EUR 42 million

- EBIT positive despite increased marketing expenditure

- All parts of group show positive trend

Kiel, May 12, 2011 -- JAXX SE (Deutsche Börse, Prime Standard, ISIN DE000A0JRU67) maintains its course of growth, having achieved break-even in the first quarter of 2011 despite markedly higher marketing expenses. The gross revenue of the JAXX Group, which is comparable to revenue as previously reported and includes betting stakes, increased by 32.2 percent in the first quarter of 2011 to EUR 42.3 million.

Method of accounting for revenue adjusted

From the start of the 2011 financial year, JAXX SE changed the way it accounts for consolidated revenue in order to provide enhanced scope for comparison industry-wide, satisfy analyst requirements and follow the trend in international accounting standards. To provide even greater transparency, JAXX's report on the first quarter of 2011 now for the first time states net gaming revenue (NGR), which has in effect become established as the benchmark in the betting industry.

20 percent rise in revenue

The revenue from continuing operations, which now comprises exclusively the hold (betting stakes less payouts of winnings), commissions, handling fees and other income, rose by 20 percent from EUR 12.1 million to EUR 14.5 million. The below-average rise in revenue compared with the gross revenue is attributable to a lower bookmaking margin in the first quarter of 2011. The net gaming revenue, from which gaming tax has also been eliminated, climbed from EUR 12.0 million in the first quarter of 2010 to EUR 14.4 in the first quarter of 2011.

myBet.com launches broad-based advertising campaign

myBet.com substantially increased its marketing spending in the first quarter. After stepping up internet marketing activities, it also started its first-ever offline campaign to raise awareness of the brand. myBet.com has been Official Partner of the German Handball Federation (DHB) since March, and poster and radio campaigns were launched in April.

The number of registered customers was significantly boosted as a result of intensified marketing and branding activities. In total, 40,000 new customers were acquired in the first quarter. The number of franchise betting shops climbed to 480 at March 31, 2011. Of this total, 220 were in Germany.

Earnings before interest and taxes (EBIT) from continuing operations fell from EUR 547 thousand in the first quarter of 2010 to EUR 193 thousand in the first quarter of 2011 substantially as a result of the increased marketing expenditure. Analyst estimates had initially anticipated a negative Q1 result.

The consolidated earnings after the first three months of the year amounted to
EUR 76 thousand. In the previous year, the JAXX Group had posted slightly negative earnings of EUR -81 thousand. Earnings per share for the first quarter of 2011 were EUR 0.00, compared with EUR -0.01 in the first quarter of 2010.

Lotteries business, which now has the function of cash cow, surpassed expectations in the first quarter and contributed a total of EUR 0.4 million to the result for the quarter. After a difficult year in 2010, the Spanish subsidiary DIGIDIS is likewise back on track for success and was able to contribute a positive result towards consolidated earnings.

The capital increase in March 2011 pushed up cash holdings to EUR 11.2 million at March 31, 2011.

Outlook

The next few months will see a renewed political debate about the future of the German gaming market. Much will depend on whether Schleswig-Holstein's draft legislation is passed before the parliamentary summer recess, as planned, and whether the state government is able to convince other federal states of the merits of its model. The positive response of the EU Commission to the notification process recently confirmed that the Schleswig-Holstein model is compatible with EU law. There are consequently no reservations about Schleswig-Holstein's draft legislation from the viewpoint of European law. Based on the current status of the debate, however, the other 15 federal states are expected to adhere to their key principles and set the legislative process in motion on that basis, even though their model is clearly in breach of EU and constitutional law because of its internet bans, unrealistic tax rates and an arbitrary cap on the number of licences.

At the operating end, business will weaken again slightly during football's close season over the summer. Because marketing expenses will simultaneously be scaled back considerably, earnings are expected to pick up in the second half. The Women's World Cup, which this year is being held in Germany, will provide a positive stimulus for revenue.

JAXX expects that myBet.com's licence application will be approved by the Italian regulators this summer. The Italian online product range featuring sports betting, casino and poker will then be able to appear on the market in the second half of the year.

In Spain, the rapid approval of the new, liberal regulation is also on the cards. Based on the conditions that then apply, the company will decide whether to take part in the licensing process.

From an economic viewpoint, the Management Board's unchanged expectations are that the 2011 financial year will produce a gross aggregate operating performance in the region of EUR 170 to 200 million, with a positive EBIT of between EUR 1.0 and 2.0 million.

Key figures for Q1/2011 (continuing operations)

  Q1 2011 Q1 2010 Change
  EUR '000 EUR '000 %
Gross revenue (2010: Revenue) 42,279 31,987 +32.2
Revenue 14,549 12,116 +20.1
Sports Betting 6,677 5,604 +19.1
Casino & Poker 4,368 2,720 +60.6
Lotteries 3,164 3,636 -13.0
Net gaming revenue (NGR) 14,420 11,982 +20.4
EBITDA 1,150 1,600 -28.2
EBIT 193 547 -64.7
Consolidated earnings 76 -81  
Earnings per share (EUR) 0.00 -0.01  
       
  31/03/2011 31/12/2010  
Cash holdings 11,240 5,500  
Shareholders' equity 19,982 13,933  
Equity ratio 47.7 % 38.2 %  

 

The Report on the First Quarter will be made available for downloading in the course of today on the websites www.deutsche-boerse.com and www.jaxx-se.com.

About JAXX:

JAXX SE, listed in the Prime Standard of Deutsche Börse, is a financial holding company with holdings in international companies in the gaming industry. JAXX currently holds interests in companies in Germany, the UK, Spain, Austria and Malta. JAXX SE has its headquarters in Kiel. The holding companies cover the entire spectrum of the games and gambling industry. Depending on national regulatory structures, they broker or market sports and horse betting, lotteries, and casino and poker games. The shares of JAXX SE have been traded at Deutsche Börse since 1999 under ISIN DE000A0JRU67.




Contact:
JAXX SE
Investor Relations & Corporate Communications
Stefan Zenker
Tel. +49 (40) 85 37 88 47
Fax +49 (40) 85 37 88 30
Mail stefan.zenker@jaxx.com



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