Betting Promotion: INTERIM REPORT Q2 2011

April - June

• Betting turnover: 1,445 SEK million (2,040)
• Net turnover after trading fees: 7.3 SEK  million (9.6)
• Gross margin:  0.51% (0.47)
• Operating income: 1.3 SEK  million (3.6)
• Operating margin:  18% (38)
• Net income: 0.7 SEK  million (4.0)
• Profit per share: 0.08 SEK

Jan - June

• Betting turnover: 3,476 SEK million (4,156)
• Net turnover after trading fees: 3.5 SEK  million (17.6)
• Gross margin:  0.10% (0.42)
• Operating income: -9.4 SEK  million (6.0)
• Operating margin:  N/A (34)
• Net income: -10.4 SEK  million (8.4)
• Profit per share: -1.09 SEK

(For full report and tables, see attached file)

Managing Director Comments

” I note that we have regained stability in our system after the technical upgrade at the beginning of the year that affected us negatively. I look forward to the Bookmaker Product development during the autumn.”, says Johan Moazed, Managing Director of Betting Promotion.

Overview April – June 2011

Net Turnover after trading fees for the second quarter amounted to SEK 7.3 million (9.6). Betting Turnover for the second quarter amounted to SEK 1,445million (2,040). This means that the second quarter shows a gross margin of 0.51% (0.47). All trading activities are done in Euros and as a result comparative figures with previous periods can be misleading.

Pre Live

Betting Turnover for the period decreased by 26% when compared to the same period last year and had a margin of 0.76%.  The reason for the decrease in turnover is partly due to the fact that last year the World Cup contributed to an increase in Betting Turnover during Q2 of 2010.  Furthermore the company was more restrictive in trading of major leagues.  The company has altered its trading strategies in line with historical data where we noticed that there are significant changes in odds in games played at the end of the season. These changes are normally not favorable to the company’s trading.  Gross Margin and theoretical profit for the period confirm that our strategies have been successful. 

Live Betting

Turnover from Live Betting fell by 36% over the corresponding period last year and the margin was -0.21%.  During quarter two, the company launched an automated trading system for Live Betting that makes it possible to substantially increase the supply of live games on offer for the bookmaker operator.  This also means that the company can now focus on improving margins and strategies in the part of the Live Betting that takes place with Betting Exchanges without affecting service levels with the bookmaker operator.  Therefore the company has chosen to reduce the level of turnover while improving our live betting margins and strategies.

Bookmaker Product

The company is continuously enhancing this product and during the period we have increased the number of Live Betting matches significantly.  During the period a few operators have completed the technical integration and we believe that these operators will generate turnover during the third quarter of 2011. At the same time, the company will continue with its marketing efforts to link up additional operators which will contribute to the company’s future turnover and profit. 

Overview January – June 2011

Net Turnover for the first six months amounted to SEK 3.5 million (17.6). Betting Turnover amounted to SEK 3,476 million (4,156). This means that period show a gross margin of 0.10% (0.42). All gaming activities are conducted mainly in Euro so comparisons with previous periods can be misleading because of currency fluctuations.

During the beginning of the year the company did a major upgrade of the technical infrastructure which brought with it some technical problems during the first two months of the year. These are now resolved and pre-live margins after the initial two months of the year proved the stability that has been achieved historically. Live Betting during the period did not reach the expected margins, this is why the company chose to review the strategies used for trading with Betting Exchanges. During the period we have refined and improved the Bookmaker product as well as integrated a few operators. The company believes that there are good opportunities to achieve turnover from the integrated operators during the third quarter and to attract additional operators during the second half of the year.

Products

Market making is the core of Betting Promotion’s business and is comparable to businesses that guarantee liquidity for different sorts of financial instruments. The company provides a breakdown of “Net Turnover after trading fees” and “Gross margin”, calculated as “Net Turnover after trading fees” as percent of “Betting Turnover” between various products.

Pre Live Betting

Soccer

Soccer remains the core of Betting Promotion’s business and during the second quarter accounted for 60% of the total betting turnover and had a margin of 0.76%.

Other

"Other" includes a number of different sports, e.g. tennis, ice hockey, rugby, basketball and American football. 

Live Betting

Live betting is presently offered in soccer and tennis. The margin for live betting during quarter two amounted to -0.21%.

(For full report and tables, see attached file)

For further information please contact:

Johan Moazed, Managing director of Betting Promotion Sweden AB.

Telephone +46 (0) 40 611 84 94