Bwin reports 2006 results

19 April 2007

VIENNA, Austria – (PRESS RELEASE) -- bwin Interactive Entertainment AG financial year 2006:

- Successful start of communicated strategic change

- Impact on earnings in Q1 2007 assuming similar legal framework

- Gross gaming revenues of EUR 381.8 million; up 165.2%

- Nearly 2.1 million active and 1.3 million new active Real Money customers

- EBITDA (before restructuring charges) minus EUR 3.2 million after investment phase (2005: EUR 15.1 million)

- Result after tax of minus EUR 539.6 million (2005: EUR 6.4 million) due to impairment (EUR 516.6 million)

As already communicated, bwin changed its strategic approach with effect from the beginning of Q4 2006 in reaction to the legislative developments in the USA, and in view of the resistance mounted by the monopolies in several European countries. Concentrating on its core business (sports betting and poker) and on established markets in Europe (the EU and EFTA region) has reinforced bwin's standing as the leading continental European online gaming operator. An efficiency enhancement programme embracing all areas of the Company has been initiated. The resulting savings should be reflected in the results with effect from Q1 2007, assuming a similar legal framework.

In 2006, bwin reported gross gaming revenues (betting stakes less customer winnings) of EUR 381.8 million (2005: EUR 144.0 million) from its sports betting, poker, casino and games operations. Excluding the US business, bwin generated gross gaming revenues in the amount of EUR 308.5 million. This figure reflects a continued increase in new customers, driven by a growing interest in online gaming products in continental Europe, and by a successful marketing strategy, particularly the Soccer World Cup campaign. It is also the result of the Company's expansion into the poker market, with the inclusion of results from the initial consolidation of bwin Games AB from 1 January 2006 influencing both revenues and costs.

In the financial year under review, bwin is once again pleased to report strong growth in its customer base. Including bwin Games and US customers, some 2.1 million customers were active in 2006, an increase of 189.7% compared to the same period of the previous year. Of these, 1.3 million (or 1.2 million, excluding the US) were active for the first time.

Given that 2006 was a year of investment, and given the US legislative changes in Q4 2006, earnings before interest, taxes, depreciation and amortization were minus EUR 7.0 million, including restructuring of overheads and related costs amounting to approximately EUR 3.8 million. This compares to EUR 15.1 million in FY 2005.

Following the cessation of the US business, bwin took an impairment charge of EUR 515.1 million due to the non-cash depreciation of the customer base and goodwill as a result of the bwin Games acquisition. Due to regulatory changes in Turkey, resulting in the temporary withdrawal of bwin's range of online gaming products in Q1 2007, bwin completely impaired the Turkish customer base by EUR 1.6 million in Q4 2006. As a consequence, the operating result for 2006 declined to minus EUR 587.5 million compared to EUR 7.7 million in 2005. A loss after tax and minority interests of EUR 539.6 million was reported for financial year 2006, following a profit of EUR 6.4 million the previous year.

Bwin reports 2006 results is republished from