Net Entertainment
Interim report January – June 2012
Net Entertainment 13.07.2012 07:30 --------------------------------------------------------------------------- Revenues reached all time high Second quarter 2012 -- Revenues for the second quarter increased by 32.2 % to SEK 132.0 (99.9) million -- Operating profit amounted to SEK 39.6 (27.2) million -- Operating margin was 30.0 (27.2) % -- Profit after tax amounted to SEK 36.7 (25.1) million -- Earnings per share amounted to SEK 0.93 (0.64) before and after dilution -- Five new license agreements were signed and four new customers' casinos were launched First six months 2012 -- Revenues for the first six months increased by 33.0 % to SEK 259,5 (195.1) million -- Operating profit amounted to SEK 79.7 (53.5) million -- Operating margin was 30.7 (27.4) % -- Profit after tax amounted to SEK 71.4 (48.0) million -- Earnings per share amounted to SEK 1.80 (1.21) before and after dilution -- Ten new license agreements were signed and eight new customers' casinos were launched Important events in the second quarter Revenues increased by 32 percent in the second quarter compared to the second quarter 2011. The increase is mainly derived from increased volumes which are primarily driven by existing customers' growth and new customer agreements signed. The amount of set-up fees for the quarter also contributed positively to the revenue increase. The Italian market continued to contribute positively to the company's revenues during the second quarter. The Italian gaming authority AAMS has announced that slot games online will be allowed in Italy from December 2012. The number of game transactions amounted to 2.9 billion in the second quarter which is a decrease of approximately 3 percent compared to previous quarter. The decrease is a result from seasonal variations as the summer months traditionally have a lower activity level in combination with exceptionally high activity from two games in the first quarter that have now normalized. However, the average bet level during the quarter increased which affected revenues positively. The game transactions increased by approximately 53 percent compared to the same period 2011. During the second quarter Net Entertainment signed agreements with five new customers. Two agreements were also signed with existing customers for the Danish market and one agreement for the Italian market. During the second quarter, development continued on the mobile platform in order to be compatible with android units. This work has progressed well and two customers were initially launched for delivery of NetEnt Touch(TM) via android. During the second quarter bwin.it was launched for delivery of Net Entertainment's casino in Italy. Comments from Per Eriksson, President and CEO Net Entertainment continued to show a solid development during the second quarter. Revenues increased by 32.2 percent and operating profit increased by 46.0 percent compared to the same period last year. Increased volumes with existing customers was the main reason for the revenue increase in combination with set up fees from five new customer agreements, mobile games and agreements with existing customers on regulated markets. In order to give the company additional prerequisites to act swift and effectively on a dynamic market a reorganization was carried out during the second quarter. The purpose of the changes was primarily to make the decision making process more effective through a flatter organizational hierarchy and meant that certain management positions were eliminated, such as the CTO. The reorganization resulted in non recurring costs of SEK 2.5 million in the second quarter. Several strategic projects are currently ongoing in Net Entertainment, such as Live Casino, the entry on the UK market and establishment on regulated markets. These projects have not yet started to generate any new revenues to the company, or have not yet reached the full potential, such as in Italy, but are expected to generate significant value for Net Entertainment in the future. As these projects are completed the investments will in certain cases decrease while other projects will require further development to maintain competitiveness. In addition, Net Entertainment will continue to invest as new opportunities arise and we believe that the investments will develop approximately in-line with current levels with the exception of seasonal effects, at least throughout 2012. As the company grows and various authorities imposes new requirements on the company's products and operations in conjunction with regulation the need to further develop Net Entertainments processes, systems and organization remains and we do not currently see a decrease in the need to recruit personnel to the company in general. In addition, we have initiated recruitment of studio personnel for Live Casino where a number of personnel will commence their employment during the third and fourth quarter. The launch of mobile games has been successful and we see a strong growth within this area, however from low levels as launch took place in December 2011. There is a high interest on the market and the company has signed a total of 17 contracts since launch, of which eleven are live. During the quarter, development of mobile games for android units continued and we have now launched two customers. The Italian market has continued to perform positively and the Italian gaming authority AAMS has announced that slot games online will be allowed in Italy from December 2012. Net Entertainment will initially launch a selection of slot games when the market opens. For additional information please contact; Per Eriksson, CEO Net Entertainment; Phone +46 8 57 85 45 00 per.eriksson@netent.com About Net Entertainment Net Entertainment is a premium supplier of digitally distributed gaming systems used by some of the world's most successful online gaming operators. The Net Entertainment casino is a complete gaming solution comprising both a complete management platform and a full suite of high quality games. Operators are provided a customized casino that is easily integrated ensuring short time to market and a cost efficient operation. Net Entertainment is listed on Nasdaq OMX Stockholm (NET-B). More information about Net Entertainment is available at www.netent.com. News Source: NASDAQ OMX 13.07.2012 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: Net Entertainment Sweden Phone: Fax: E-mail: Internet: ISIN: SE0001989252 WKN: End of Announcement DGAP News-Service ---------------------------------------------------------------------------
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