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Lottery business and legal proceedings place burden on JAXX SE result for quarter

JAXX SE  / Key word(s): Quarter Results

11.11.2010 08:40

Lottery business and legal proceedings place burden on JAXX SE result for

- 20.5 percent revenue rise in the first nine months thanks to steady
growth of myBet
- Nine-month EBIT of EUR -0.9 million (previous year: EUR -3.0 million) 
- Successful start to fourth quarter

Kiel, November 11, 2010 - The Kiel-based financial holding company JAXX SE
(formerly JAXX AG; Deutsche Börse Prime Standard ISIN DE000A0JRU67) today
publishes its report on the first nine months of the 2010 financial year.
It shows that revenue for the continuing operations rose 20.5 percent to
EUR 93.1 (previous year: 77.2) million compared with the first nine months
of the previous year. EBIT improved by 69.7 percent to EUR -0.9 (-3.0)
million thanks to the good first half of 2010.

The first nine months were shaped by continuing strong growth for the
Maltese investment QED Ventures Ltd. Under the myBet brand, QED operates
numerous sports betting shops in Europe, enjoying a market-leading position
in Germany, and also runs the internet service myBet.com. By contrast,
lottery business was increasingly loss-making.

Earnings before tax (EBT) for the continuing operations amounted to EUR
-0.9 (-3.0) million after nine months. The earnings contribution of the
discontinued operations, which comprises the interest in pferdewetten.de AG
that is available for sale, was EUR -0.7 (-0.6) million. Consolidated
earnings for the first nine months were EUR -2.2 (-3.9) million, with
earnings per share amounting to EUR -0.13 (-0.22). The continuing
operations account for EUR -0.04 (-0.04) of this amount.

Dwindling lottery business burdens result for quarter

In the third quarter, revenue for continuing operations was up 14.4 percent
on the prior-year quarter to EUR 29.4 (previous year: 25.7) million.
Although revenue from betting was again boosted disproportionately by 22.9
percent, the summer break in European football leagues resulted in a
typical seasonal dip of EUR 2.2 million compared with the second quarter of
2010, when the World Cup in South Africa also took place.

As well as the seasonal effect in the Sports Betting segment, third-quarter
earnings were also affected by the impact of the economic crisis on
business in Spain and by gradually dwindling lottery business, which
entails relatively high fixed costs. Third-quarter revenue from commissions
and handling fees, largely constituting the lottery segment, was around 30
percent lower than in the previous year yet the cost basis was virtually
unchanged. Earnings before interest and taxes (EBIT) for the continuing
operations consequently fell to EUR -1.5 (-0.6) million. The result for the
quarter was also burdened by legal proceedings.

Increase in administrative proceedings prior to ECJ ruling

In the weeks prior to the European Court of Justice ruling that overturned
the State Treaty on gaming at the start of September, the German
authorities exercised increasing pressure on private betting providers.
Observers assume that in the run-up to the ECJ ruling the authorities were
attempting to demonstrate the enforceability of the State Treaty on gaming,
which had been seriously doubted. In this connection both JAXX SE itself
and the companies in which it holds investments were plagued with
administrative proceedings and threats of penalty payments. The increase in
administrative proceedings had resulted in a marked rise in legal
consultancy costs and other expenses in the third quarter.

Drastic cost-cutting measures introduced to flank greater focus on sports

In response to the ECJ's positive ruling and the increasing losses incurred
by lottery business, the Management Board extended the restructuring
programme introduced at the end of 2009. In future, the JAXX Group will be
focusing on the high-growth area of sports betting and will cease to invest
in German lottery business. As a result cost-cutting measures, including
drastic moves such as the shedding of around 30 jobs in the JAXX Group,
were introduced in October. The resulting earnings effect is worth around
EUR 3.0 million for 2011.

Good start to final quarter of 2010

The fourth quarter has got off to a highly promising start in all segments.
Consistently strong growth in the sports betting area with good odds to
date, high volumes for the casino and poker products and rapidly
accelerating sales of tickets for the Spanish Christmas lottery all point
to a successful final quarter of 2010.

Against that backdrop, the Management Board continues to expect the 2010
financial year to end with a positive EBIT despite the loss at the
nine-month mark.

9M /Q3 key figures (continuing operations):

                           9M 2010  9M 2009  +/-   Q3      Q3      +/-
                                                   2010    2009
                           EUR      EUR      %     EUR     EUR     %
                           '000     '000           '000    '000
Revenue                    93,085   77,233 +20.5   29,424  25,720  +14.4
 of which betting stakes   72,974   55,953 +30.4   23,100  18,803  +22.9
           Gambling fees   12,308   10,590 +16.2    4,234   3,942   +7.4
  Commissions & handling    7,013   10,091 -30.5    1,963   2,822  -30.4
EBITDA                      1,989    2,628           -532   1,549   
EBIT                         -913   -3,005         -1,511    -635
Consolidated earnings      -2,203   -3,862         -1,529  -1,156
Earnings for discontinued    -728     -649           -229    -361
Earnings per share (EUR)    -0.13    -0.22          -0.08   -0.05
                           30/09/10  31/12/09
Cash holdings               6,266    9,562
Shareholders' equity       15,723   17,093
Equity ratio                42.3%    42.1%

The Nine-Month Report 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 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 JAXX Group generated total revenue of EUR 114.5 million in 2009. 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 11.11.2010 Dissemination of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: JAXX SE Jägersberg 23 24103 Kiel Deutschland Phone: +49 (0)431 88 104-0 Fax: +49 (0)431 88 104-40 E-mail: ir@jaxx.com Internet: www.jaxx-se.com ISIN: DE000A0JRU67 WKN: A0JRU6 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Hamburg, München, Berlin, Düsseldorf, Stuttgart End of Announcement DGAP News-Service ---------------------------------------------------------------------------