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BetonSports announces full year 2005/2006 and first quarter 2006/2007 results

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The US and Asia-facing online sportsbook said 2005/2006 had been a successful year and the KPIs indicated that the strong performance continued in the first quarter 2006/2007.

Preliminary results for the year ended 5 February 2006 show a gross margin of $84.6m, up 22% on 2005, an operating profit on continuing operations of $20.1m, up 65%, a profit before tax of $14.9m, up 12%.

During the year 84,436 (2005: 71,750) customers, including 39,771 new registrations, placed 40.1m bets (2005: 28.4m) with the sportsbooks, generating a gaming volume of $1,836.8m (2005: $1,451.6m). American football represented 39% (2005: 39%)) of annual volume, basketball 34% (2005: 36%) and baseball 17% (2005: 22%).

The company continues to target the recreational market and the average bet size was of $46 (2005: $51). Internet accounted for 10.4m (2005: 7.0m) bets placed and telephone 2.5m (2005: 2.9m). Risk control and know your customer protocols dictate that any sports bet with stakes over $3,000 must be placed by phone.

The BoSCasino website was incorporated into the Real Time Gaming online platform in late November. During the year, 15,978 (2005: 11,225) customers played in the online casino, placing 27.3m (2005: 18.4m) bets at an average size of $19 (2005: $18) and generating a monetary volume of $525.4m (2005: $332.9m).

BoSPoker joined the Tribeca Tables Poker Network in October 2005. In the first half of the financial year, the poker rake and fees generated income of $1.2m, which increased to $2.4m in the second half of the year to give an annual income of $3.6m (2005: $0.7m).

The acquisition of Easy Bets has provided an excellent platform for the group to enter the Asian region. While the acquisition of the VO Group has further strengthened the US facing business. Millennium (which was acquired at the time of float) has finally been integrated into the main Costa Rican operating structure and the original management have been replaced. The UK operations too have been reorganized and are now controlled by the Easy Bets team who are more directly involved in UK sports betting as a result of Asian interest in this area.

BetonSports has closed the Dominican Republic premises which were used to offer telemarketing and market research services to external companies, a business that generated income in the year of $3.3m (2005: $3.8m). Going forward this income stream is expected to decline as the surplus space in Costa Rica will be used by the core business to service growth and expansion.

The group\’s Mexican and Guatemalan projects continue to perform well and BoS was granted the only license to operate internet and call centre wagering in Argentina.

Most KPIs for the first quarter to 6 May 2006 were ahead of last year. In particular new customer sign-ups were up 128% to 9,126, cash deposits were up 131% to $48.3m, gaming bets were up 150% to 15.6m, active players up 74% to 49,199, customers playing more than one product up 31.5% to 28.4%, bet volume up 171% to $735.1m, gross win margin up 64% to $26.0m. The only negative was gross win percentage margin which was down to 3.5% from 5.8% in the same period last year.

In separate news, BetonSports announced the acquisition of China facing sportsbooks Hooball and 777ball for up to $38m, to be paid $12m in BoS\’ shares and $26m in cash, including a deferred payment of up to $16m depending on the profitabilty of the business in the current year. The addition of these brands, which will be integrated into the existing Easy Bets operating structure in Malaysia, effectively doubles the group\’s Asian market presence. Hooball and 777ball reported profit before tax to 31 December 2005 for $3.6 million on gross handle of approximately $120 million.

During the 15 months ending 31 March 2006 the business had 28,274 sign ups, 40% of which were real money sign ups with deposits. Active clients (being unique customers wagering in a month) between January 2005 and March 2006 remained relatively stable at approximately 6,500 a month.

“This acquisition is not merely earnings enhancing. We see China as a must-be-in market and with Hooball and 777ball consolidating our Easy Bets presence, our first mover advantage is significantly increased. The diversification of revenue streams away from the US further mitigates the seasonality of activity in our US facing business,” said David Carruthers, Chief Executive of BetonSports.

“These brands meet our criteria of proven profitability, territory expertise, straightforward IT integration and robust processing channels combined with effective risk management. We strongly anticipate that the benefits of integration with Easy Bets in terms of cross selling, marketing, skill sets and cost savings will rapidly become apparent. Immediately prior to a World Cup doesn\’t look like the worst of times to be acquiring such a strongly soccer-centric sportsbook,” he added

Max Hsiun, former CEO at Hooball and now Easy Bets\’ Business Development Manager commented: “I am delighted to be part of BetonSports\’ Asian plan and teaming up with a quality brand like Easy Bets with its resources and reputation can only be good for the long term future and the successful development of the Hooball business.”