Jumbo Announces Record Half Year Profit

Mar 16, 2006

ASX RELEASE – Thursday 16th March 2006

Leading Australian online lotteries and ecommerce company, Jumbo Corporation Limited, today announced a 70% increase in net proft to a record $477,410 for the six months to 31 December 2005, compared to the previous corresponding period.

Jumbo also reported total revenues of $7.78 million - up 85%, while EBITDA was $673,130 – a 128% improvement.   Jumbo’s Net Asset position reached $4.85 million, which has since been further strengthened by an additional $2.82 million following an enthusiastic response in January this year to the Company’s Shareholder Share Purchase Plan.
  “Jumbo’s record profit and growth reflects the positive impact our online retailing skills and customer database brought to the newly acquired online lottery business,” Jumbo Chief Executive Officer, Mr Mike Veverka, said.   “Since 1995 when the company was founded, we have accumulated 11 years of online marketing experience and online customers, significantly boosting sales of online lottery tickets from our flagship web site www.ozlotteries.com”, he said.   “The company has shifted its focus from general retailing to online lotteries to make the most of the early market position we have in this fast growing industry”, he said.
  “Ozlotteries.com now has more website traffic, more signups, more regular players and ultimately more sales than in May 2005, when Jumbo acquired the business.”   The highlights of the latest half year are as follows:  
  Half Year Period   December 2003   December 2004   December 2005   Growth 2004 - 05
  Revenue   $3.3 million   $4.2 million   $7.78 million  

85%

  EBITDA   $153,715   $295,670   $673,130  

128%

  PROFIT (NPAT)   $115,408   $281,607   $477,410  

70%

  Mr Veverka said the expertise Jumbo had brought to ozlotteries.com, following its acquisition by the Company in May 2005, were best highlighted by the following figures in the six months to 31 December 2005;
  • Website customer traffic increased 45%
  • Customer signups increased 36%
  • Active regular customers increased 91%.
  Jumbo’s marketing activities are based on the following principles.  
  • Conversion of existing online customers to ozlotteries.com
  • Partnership with “Affiliates” who are independent online marketers that drive customer traffic to ozlotteries.com and are paid on a performance basis (jumboaffiliates.com).
  • Promotions to encourage customers to try the ozlotteries service via improved signup bonuses.
  • Improvements to the ozlotteries.com website to increase customer loyalty.
Mr Veverka said CasinoCity.com, an independent US-based online gaming review site, has ranked ozlotteries.com the number one most popular lottery web site (http://online.casinocity.com/lotteries).   The ranking is unpaid and is determined independently by CasinoCity.com.
  Financial Position   The strengthening of the companies financial position is demonstrated in the following table.  
  Half Year Period   December 2003   December 2004   December 2005
  Cash at Bank   $1.03 million   $1.70 million   $4.46 million
  Net Assets   $50,000   $2.00 million   $4.85 million
  Net Tangible Assets   $38,000   $1.77 million   $1.52 million
  A further $2.82 million is cash was added in January 2006 following the conclusion of the Shareholder Share Purchase Plan.   Mr Veverka said the Company now had over $7 million in cash, and was in a strong position to take advantage of further growth opportunities in the online lottery and gaming sector.   Lottery Tender   On the 4th March 2005, Jumbo announced that it was invited to participate in a Tender Submission for an Australian Lottery business.   A change in direction by the lottery business during the tender process resulted in delays and an ultimate decision not to award the tender to any participants.   Jumbo continues to seek further opportunities in Australia and Overseas.   Private Lottery Network   Following the acquisition of TMS Global Services Pty Limited in May 2005, Jumbo also gained control over a private network of lottery outlets through a number of Pacific Islands, including Fiji, the Cook Islands and Norfolk Island.
  The outlets are linked via a proprietary computer system to Australia. Improvements were made during the half year to this network and a decision was made to continue supporting this business unit with further improvements.   “The private network is a steady profit earner that grew 28% in the 6 months to December 2005”, Mr Veverka said.   “While the growth is lower than the ozlotteries.com web site, I expect the growth to continue and the private network to continue to make a significant contribution to group results,” he said.   Betting Exchange Opportunities   On the 9th November 2005, Jumbo announced its plans to seek opportunities in the Betting Exchange industry following the decision by the Tasmanian State Government to license the countries first betting exchange.   Since that time, Jumbo has been in discussions to license the BetexWare software application to a number of potential betting exchange operators. As yet no licenses have been granted as no operator has obtained the necessary betting exchange license.   “Jumbo’s intention is to partner with a betting exchange operator and as yet no operator has been granted a second license from Tasmania”, said Mr Veverka.   “I believe Betting Exchanges are the likely future for online wagering and Jumbo will continue to investigate opportunities”, he said.   Investment in Global Approach Limited (GLO)   In January 2006, Jumbo exercised its 2.58 million options in Global Approach Limited (ASX:GLO) – an online gaming company with 2 online casinos and 1 poker room - to increase its shareholding from 8,648,817 shares to 11,228,817 shares (17.4% of GLO), and increasing its total investment to $958,549.   Based on an 11c closing share price on 15 March 2006, the investment is now worth $1,235,170.

  Growth   Jumbo is continually seeking further growth opportunities through partnerships and/or acquisitions in the online lottery and gaming sector both in Australia and overseas.   Online gambling worldwide totaled about US$12 billion (AUD$16 billion) last year, according to Christiansen Capital LLC, with lottery games representing about 15 percent of the total. By 2010, the consulting firm is forecasting that online gambling will total US$24.5 billion (AUD$32 billion) worldwide, with lotteries accounting for US$4 billion (AUD$5.3 billion), or 16.5 percent.   ”The online lottery industry is in its infancy and significant growth opportunities will arise as the industry matures”, said Mr Mike Veverka.     MEDIA CONTACT: Mike Veverka                                                                 Sean Whittington Chief Executive Officer                                                Senior Consultant Jumbo Corporation                                                      Field Public Relations (07) 3831 3705                                                               (08) 8234 9555     (0412) 591 520

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