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GERMAN ONLINE LOTTERY BAN CONTINUES TO PLAGUE JAXX AG

11/12/09 - The treaty between German states banning online lottery operations continues to have a profoundly adverse impact on German lottery service provider Jaxx AG as the group struggles to reposition itself as a betting rather than a lotteries company.
 
Financial results for the last nine months tell a dismal story, showing a loss of Euro 3.863 million alongside a Euro 1.156 millon deficit for the third quarter '09.
 
On the positive side, consolidated revenues rose to Euro 88.9 million YTD, mainly due to a 25.6 percent rise in sportsbetting revenues.
 
Revenues for the third quarter of 2009 totalled Euro 29.4 million, representing year-on-year growth of 2.8 percent, with 70 percent of earnings for the first nine months coming from sportsbetting, 16 percent from lotteries and 14 percent from horserace wagering.
 
However, EBITDA for the nine-month period was Euro 2.3 million - down 58.7 percent year-on-year - with depreciation and amortisation declining fell by 8 percent to Euro 5.9 million compared to the same period in 2008 as a result of JAXX’s exit from the German syndicate business.
 
“The fourth quarter is generally considered to be the strongest due to seasonal factors,” Management reported. “The football season is in full swing and the sales figures for tickets for the Spanish Christmas lottery traditionally soar in the final few weeks of the year. Spain's most popular lottery comes to a spectacular climax each year one evening before Christmas with the draw for the jackpot known as El Gordo, when winnings in the region of two billion Euros are up for grabs.
 
“Revenues and financial performance in the fourth quarter are expected to show a general improvement on the second and third quarters. In the first few weeks, there have already been clear signs that this will be the case.
 
“It is, nevertheless, unlikely that the profit targeted for the fourth quarter will be able to compensate fully for the accumulated loss of the first nine months. However, the management of Jaxx AG is confident that the turnaround kicked off at the start of the financial year can be completed next year, based on the measures in progress to expand business and reduce costs.”



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