Zeal Network SE — Earnings Release 2006

Mar 26, 2007

News Details

Corporate | 26 March 2007 10:21

Tipp24 once again posts record earnings

Tipp24 AG / Final Results

Release of a Corporate-announcement, transmitted by DGAP - a company of
EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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Press release

Fiscal year 2006

Tipp24 once again posts record earnings

Consolidated earnings more than doubled – steep increase in customer
figures – market leadership extended – strong progress despite difficult
situation on German gaming market

(Hamburg, March 26, 2007) The Tipp24 Group added a new chapter to its
success story in 2006. There was a strong increase of 448 thousand in the
number of registered customers to 1,770 (prior year: 1,322) thousand, due
largely to a favorable jackpot situation in the second half of the year.
Billings – consisting mainly of brokered lottery tickets – grew to € 264.2
(204.7) million, an increase of 29.1 percent. With growth of 32.6 percent
to € 34.6 (26.1) million, Tipp24’s revenue was within the forecast range.
Earnings before interest and taxes (EBIT) improved by 20.0 percent to € 7.2
(6.0) million. The EBIT margin amounted to 21.0 (23.2) percent. The slight
year-on-year decline of 2.2 percentage points resulted from three special
items: first and foremost, above-average marketing expenses during the
record jackpot period, as well as the omission of the 'ExtraLotto' New
Year’s Eve lottery and additional costs for lobbying activities.

Consolidated net profit was well above expectations, increasing by 124.2
percent to € 7.4 (3.3) million.

Tipp24 continued to expand the dominant position it enjoys in its core
German market. The company previously held a market share of 40 to 50
percent, ahead of the online services of state lottery companies and other
private suppliers. Toward the end of fiscal 2006, however, Tipp24’s market
share grew to over 60 percent as Germany’s state lottery companies – with
the exception of Lower Saxony and North Rhine-Westphalia – temporarily
discontinued their online activities in connection with regulatory
discussions.

The proportion of revenue generated outside Germany grew by 4.2 percentage
points to 12.7 (8.5) percent. With a contribution to earnings of € -83
(-952) thousand, the Group’s foreign subsidiaries almost reached break-even
in the period under review. The fact that the Group’s Spanish subsidiary is
now operating profitably proves that Tipp24’s model can be successfully
transferred to other national markets.

Dr. Hans Cornehl, CFO of Tipp24 AG: 'Our company continued to display
stable and sustainable growth in 2006 despite adverse market conditions
caused by ongoing political and legal discussions about Germany’s gaming
market.'

Easing of legislative pressure – promising market changes

On March 22, 2007, the EU Commission censured the current Draft State
Gaming Treaty in Germany, and in particular its prohibition of online
gaming brokerage. Tipp24 now believes that significant amendments will have
to be made to the German draft treaty.

With the announcement of the Placanica verdict by the European Court of
Justice on March 6, 2007, the EU has sent a strong signal in favor of
deregulating the European gaming market. Jens Schumann, CEO and founder of
Tipp24 AG: 'Despite all the short-term risks currently being discussed, we
expect deregulation in Europe to add additional impetus to our European
growth.'

The Executive Board believes that Tipp24 is well positioned to actively
exploit this potential. This is underlined by the share buy-back program
launched in February 2007, which is primarily intended to provide shares
for use as an acquisition currency.

Positive outlook

With annual growth forecasts of 27 percent world-wide, the online lottery
market offers tremendous sustained growth potential. The company plans to
stabilize its market share in this dynamic environment and expects billings
and revenues to continue to grow at around 30% – assuming its activities in
Germany remain legally permissible. In addition to growth in Tipp24’s core
market of Germany, further products are also to be added to the company’s
portfolio.

Tipp24 expects to gain 300,000 to 400,000 new registered customers in 2007.
Due to the scalability of its business model, the Executive Board of Tipp24
AG expects a correspondingly strong increase in EBIT.

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
anonymously. 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) and Puntogioco24
(www.puntogioco24.it) in Italy.

Key figures for Q.IV 2006

Q.IV 2006 2005 Change
Billings € million 77.9 55.6 + 40.1%
- Germany € million 72.0 52.5 + 37.1%
- Abroad € million 5.9 3.1 + 90.3%
Revenue € million 10.2 7.4 + 37.8%
- Germany € million 8.9 6.6 + 34.8%
- Abroad € million 1.4 0.7 + 100.0%
Operating expenses € million 7.9 5.4 + 46.3%
EBITDA € million 2.3 2.0 + 15.0%
EBIT € million 2.1 1.8 + 16.7%
EBT € million 2.6 2.1 + 23.8%
Net profit € million 1.7 1.0 + 70.0%

Key figures for FY2006

Fiscal year Q.I-IV 2006 2005 Change
Billings € million 264.2 204.7 + 29.1%
- Germany € million 246.9 196.0 + 26.0%
- Abroad € million 17.3 8.7 + 98.9%
Revenue € million 34.6 26.1 + 32.6%
- Germany € million 30.2 23.9 + 26.4%
- Abroad € million 4.4 2.2 + 100.0%
Operating expenses € million 26.6 19.4 + 37.1%
EBITDA € million 8.0 6.7 + 19.4%
EBIT € million 7.2 6.0 + 20.0%
EBT € million 8.4 6.5 + 29.2%
Net profit € million 7.4 3.3 + 124.2%
Registered customers at year-
end in thousands. 1,770 1,322 + 33.9%

(Rounding differences due to disclosure in € million)

Press contact:

Tipp24 AG
Andrea Fratini
Head of Media and Public Relations
Tel.: +49 40 32 55 33-660
E-mail: presse@tipp24.de
Internet: www.tipp24.de/presse/

DGAP 26.03.2007

Language: English
Issuer: Tipp24 AG
Straßenbahnring 11-13
20251 Hamburg Deutschland
Phone: +49 (0)40 325533-0
Fax: +49 (0)40 325533-77
E-mail: office@tipp24.de
www: www.tipp24-ag.de
ISIN: DE0007847147
WKN: 784714
Indices:
Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in
Berlin-Bremen, Düsseldorf, Hamburg, München, Stuttgart

End of News DGAP News-Service

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