NetEnt | Better Gaming

Interim report January-June 2010


-Revenues for the second quarter increased by 27.2 % to SEK 89.2 (70.1) million
-Operating profit increased by 29.7 % to SEK 32.8 (25.3) million
-Operating margin was 36.8 (36.1) %
-Profit after tax amounted to SEK 30.4 (22.6) million
-Earnings per share amounted to SEK 0.77 (0.57)
-Four new license agreements were signed, including Interwetten, Intralot and
Stan James and four new customers’ casinos were launched

-Revenues for the first six months increased by 27.6 % to SEK 177.1 (138.8)
-Operating profit increased by 25.0 % to SEK 68.6 (54.9) million
-Operating margin was 38.7 (39.5) %
-Profit after tax amounted to SEK 61.4 (54.5) million
-Earnings per share amounted to SEK 1.55 (1.38)
-Six new license agreements were signed, including Gioco Digitale/,
Intralot and Stan James, and seven new customers’ casinos were launched

Growth for the second quarter was 42.3 in local currency compared to the second
quarter 2009 and 4.6 percent compared to the previous quarter. The strengthened
Swedish currency has held back revenue growth in SEK.

Regulation of online gaming in Italy has been further delayed and the market is
now estimated to open at year-end. The integration has continued during the
quarter together with the preparations for licensing of existing games.

Net Entertainment holds license agreements with several large operators for the
Italian market, such as Gioco Digitale/, Microgame and Intralot
Interactive. Together, these operators are estimated to hold more than half of
the online gaming market in Italy.

France recently introduced a licensing system for online gaming which had a
negative impact on revenues from French players in June.

Traditionally, the second quarter offers lower growth potential due to seasonal
effects, which this year was strengthened by the football world cup decreasing
player activity for the casino segment during the matches. Despite this,
revenues increased by 27.2 percent (42.3 percent in local currency) compared to
the same period last year.

The industry for online gaming is changing to a regulated and more mature
market which leads to near-term challenges and significant opportunities in the
longer term. This means increased costs for Net Entertainment, driven by
adjustments for the regulatory demands and more complex integrations.
Meanwhile, we have a stable order backlog, consisting of Stan James and Expekt
who will start to generate revenues primarily in the fourth quarter.

The additional delays announced by the Italian gaming authority (AAMS) mean
that the agreements we have signed are estimated to start generating revenues
at year-end. Our close working dialogue with AAMS and the customer base we have
established in Italy creates a very strong position for Net Entertainment when
the market is allowed to open. The regulatory development in France has
resulted in challenges for some of our customers which impacted our business
during the quarter.

We continue to reap the results of our sales success and during this quarter we
signed three agreements with leading gaming operators. In addition, an
important bridgehead to the South American market was established by signing a
new license agreement with one of the largest gaming operators in South
America, Betboo, in July. South America is one of many interesting geographical
regions on which we will increase our focus going forward. For all of the three
Tier 1 operators with whom we signed agreements during the quarter, we will
replace the existing casino supplier which is very pleasing.

Organizationally, work is ongoing to create conditions for further growth. 35
new employees were recruited during the quarter, mostly to our development
unit. We are gradually increasing the share of development activities carried
out abroad while speeding up the pace of development in order to deliver more
games and also broaden our product portfolio to include new gaming segments,
and thereby create bases for new revenue streams. We have also signed an
agreement for a more appropriate office in Malta, a natural step as the number
of employees within sales and account management increases.

The average gaming activity in the beginning of the third quarter is somewhat
lower than during the second quarter, primarily due to the development in
France. Excluding France, the activity level has increased.

Net Entertainment is a premium supplier of digitally distributed gaming systems
used by some of the world’s most successful online gaming operators. The core
product, CasinoModule™, is a complete gaming platform comprising high quality
games and a powerful administration tool. Operators are provided a customized
solution that is easily integrated ensuring short time to market and a cost
efficient operation. Revenues consist of royalties based on revenues generated
by the company’s products and setup fees when new agreements are signed. Net
Entertainment is a pure development company and thus does not conduct any
gaming operations of its own. The company’s brand is internationally recognized
and associated with innovation, service, and quality.
All technical development is carried out at the Group’s Stockholm office and
all commercial operations: sales, marketing, and product management are carried
out from the Malta office. The company also has an office in Gibraltar.
The parent company is listed on NASDAQ OMX Stockholm since January 2009. Prior
to this, the Company’s share was listed on the Nordic Growth Market (NGM)

For additional information please contact;
Johan Öhman, CEO Net Entertainment; Phone +46 8 57 85 45 00

Bertil Jungmar, CFO Net Entertainment; Phone +46 8 57 85 45 00