Political and legal situation still unresolved

In the first three months of its fiscal year 2008, Tipp24 AG raised earnings before interest and taxes (EBIT) by 22.3 percent to EUR 2.7 (2.2) million, compared with the same period last year. The EBIT margin fell by 1.1 percentage points to 23.6 percent. EBIT was burdened above all by the negative contribution of the Abroad segment, due mainly to start-up costs in the UK. Initial investments for the new Skill-Based Games division and increased expenses for legal and consultation services resulted in a higher cost basis. The EBIT margin in Germany was up 4.7 percentage points to 32.3 percent.

The introduction of the new State Treaty on Gaming on 1 January 2008 resulted in two special items: Tipp24 is obliged to tighten its mechanisms for the protection of minors when registering new customers. This involves checks with the German credit reference agency (“Schufa”) and successfully passing the “PostIdent” identification process. Tipp24 also fulfilled higher authentication requirements. These regulations significantly impede the development of new customer figures and result in greatly increased customer acquisition costs in Germany.

At the same time, Tipp24 discontinued its marketing of the state-run sporting bet Oddset and the Keno lottery. According to the new State Treaty on Gaming, Internet marketing of these products is no longer allowed. In fiscal year 2007, these products accounted for around 5 percent of domestic billings.

Renewed growth in revenue and billings

Due to the more difficult registration process, year-on-year growth in registered customers amounted to just 33 (69) thousand. At EUR 86.8 million, billings were up 26.2 percent over the previous year. Revenues – consisting mainly of commissions and additional fees – rose by 27.7 percent to EUR 11.4 (8.9) million in the period under review.

Jens Schumann, Chairman of the Executive Board of Tipp24 AG, states: “Four months after its introduction, the legality of the new State Treaty on Gaming – which severely restricts key areas of Tipp24’s business activities or even completely forbids them – is more contested than ever. In addition to formal infringement proceedings brought against the Federal Republic of Germany by the EU Commission in late January, numerous German administrative courts have since questioned the legality of the State Treaty. At the same time, the first state lotteries are reporting significant income losses. The original aims of the State Treaty – legal certainty and income security – have not been achieved. We believe it is therefore essential that politicians put an end to these unwanted excesses by modifying the State Treaty on Gaming.” 

Opportunity: deregulation conceals growth potential

Recently announced verdicts on a European level and various proceedings at German administrative courts, also with reference to European law, may also result in steps towards deregulation in the medium term with an impact on lotteries. As an internationally aligned company, Tipp24 may benefit more than average from such a development.

Deregulation would also probably result in a complete clarification of the legal situation in Italy and thus provide our Italian subsidiary Puntogioco24 with the opportunity to freely pursue its business interests.

Key figures for Q.I 2008

Q.I		2008	2007	Change
Billings	€ million	86.8	68.8	+ 26.2%
- Germany	€ million	79.9	63.7	+ 25.3%
- Abroad	€ million	6.9	5.0	+ 37.4%
Revenue	€ million	11.4	8.9	+ 27.7%
- Germany	€ million	9.8	7.7	+ 26.8%
- Abroad	€ million	1.6	1.2	+ 32.9%
Operating expenses	€ million	- 8.4	- 6.5	+ 29.0%
EBITDA	€ million	3.0	2.4	+ 24.0%
EBIT	€ million	2.7	2.2	+ 22.3%
EBT	€ million	3.3	2.7	+ 20.5%
Net profit	€ million	1.9	1.6	+ 14.6%

(Rounding differences due to presentation of figures in Euro million)

About Tipp24 AG: Tipp24 was established in 1999 and is now the market leader for lottery products in the Internet on the basis of billings. The company has succeeded in achieving impressive growth rates right from the start. Almost all state lottery products are supplied. It only takes a few mouse clicks to buy a lottery ticket – round the clock, quickly and reliably. The ticket receipt is kept safely, winners are notified about their prizes automatically by text message and e-mail and prizes are credited automatically. Subsidiaries of Tipp24 (www.tipp24.de) are Ventura24 in Spain (www.ventura24.es), Puntogioco24  in Italy (www.puntogioco24.it) and MyLotto24  in the UK (www.mylotto24.co.uk). Shares in Tipp24 AG have been traded at the Frankfurt Stock Exchange since 2005.

Press contact:
Tipp24 AG
Andrea Fratini
Head of Media and Public Relations
Phone: +49 40 32 55 33-660
Fax: +49 40 32 55 33-5600

E-Mail:

Internet: www.tipp24-ag.de/presse

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