Development Boost for Net Entertainment in Third Quarter

Income grows by 21 percent in Q3

Johan Öhman, President and CEO of gaming software provider Net Entertainment recently stated that the company "saw good development during Q3/2010 with a 21 percent growth in revenue (35 percent in local currency) which should be compared with the 14 percent market growth predicted by H2 Gaming Capital for the full year of 2010."

Some of the major Q3 report points were the following:

- An increase of 20.8 percent was noted in revenues, which amounted to SEK 91.6 (Q3/2009: 75.8) million

- Operating profit increased by 13.8 percent to SEK 34.1 (Q3/2009:30.0) million

- Operating margin was set to 37.2 (Q3/2009:39.5) percent

- Tax deducted profit reached SEK 30.0 (Q3/2009:20.8) million

- Before and after dilution, the earnings per share amounted to SEK 0.76 (Q3/2009:0.53)

- Two new license agreements were reached and inked

In the first nine months of 2010:

- There was a 25.2 percent growth in revenues for the first nine months, which went to SEK 268.7 (214.6) million

- Operating profit increased by 21.0 percent to SEK 102.7 (84.8) million

- Operating margin was set to 38.2 (39.5) percent

- Tax deducted profit reached SEK 91.4 (75.3) million

- Before and after dilution, the earnings per share were SEK 2.31 (1.90)

- The company inked eight new license agreements (some of which involve Gioco Digitale/bwin.it, Interwetten, Intralot and Stan James), and launched eight new customers' casinos.

Crucial Events in Q3/2010:

In comparison with the same tame last year, the revenue growth for the third quarter was 35.1 percent in local currency and 6.0 percent compared to the previous quarter. The strengthening of the Swedish currency has restrained the revenue growth in SEK.

During this quarter, Italy continued to regulate casino games online, raising the expectations for the market to open by the end of the year; the integration continued as well.

The company inked agreements with an operator from South America, an area which holds prospect of becoming a big online gambling market in the future. The preparations to launch Stan James are going as planned, so it should enter the market in the fourth trimester.

The license it received allows Net Entertainment to put its casino solution in the market of gaming operators licensed by the Alderney gaming authority or other reputable gaming authorities, at the same time giving it a chance to reinforce the customer offering by providing alternative hosting in case of serious disturbances (so called disaster recovery).

Statements made by Johan Öhman, President and CEO:

We saw good development during the third quarter with a 21 percent revenue growth (35 percent in local currency) which should be compared with the 14 percent market growth predicted by H2 Gaming Capital for the full year of 2010.

The announced agreement with Universal will allow us to develop games based on well recognized brands where the first release will be made during the first half of 2011.

The regulatory development in Italy is progressing well and the first casino licenses are expected to be awarded around year end. Operators holding an existing license in Italy will be first out which will benefit Net Entertainment as several of the licensed operators are existing customers to us.

Significant efforts have gone into setting up a hosting facility in Alderney which will be commissioned during the fourth quarter. The Alderney Gaming Commission issued license which was received during the fourth quarter will enable us to better address certain markets such as the UK but equally to provide disaster recovery services to our existing licensees.