Gambling Industry Acquisitions and Financial News — Weekly Round-up for February 25, 2018

Cherry Group – Growth Through Innovation

Online gambling group posts FY and Q4 2017 results showing significant improvements in revenue

The Cherry online gambling group has published a strong set of Q4 and FY 2017 results, showcasing the following KPIs:

Q4-2017

• Group revenue increased by 17 percent year-on-year to MSEK 607 (519), with organic revenue growth amounting to 16 percent (41).
• Profitability improved and EBITDA increased by 37 percent to MSEK 141 (103) on a margin of 23.3 percent (20.5).
• Profit for the period declined markedly to MSEK 18 (68).
• The switch of listing from AktieTorget to Nasdaq Stockholm’s main list was completed and, effective from 18 October, Cherry’s B shares have been traded on the Mid Cap list.
• Change of management in subsidiary group ComeOn was implemented on 26 October.
• On 1 November, Cherry adjusted its full-year forecast.
• Acquisition of an additional 12.5 percent of the shares in Highlight Games brought the Cherry shareholding in the company to 37.5 percent.
• Acquisition of the majority of the shares outstanding in Game Lounge was completed. Cherry owns 95 percent of the shares effective from 1 January 2018.

FY 2017

• Group revenue increased by 104 percent to MSEK 2,252 (1,102), with organic revenue growth amounting to 27 percent (32).
• Profitability improved and EBITDA increased by 146 percent to MSEK 429 (174) on margin of 19 percent (15.8).
• Profit for the period was down at MSEK 110 (125), impacted adversely by a more difficult than anticipated integration of the ComeOn acquisition. .
* For the second year running, Cherry AB’s Board of Directors proposed that no dividend be paid for the 2017 financial year.
• On 29 January 2018, Game Lounge acquired US site Slottracker.com.

CEO Anders Holmgren hailed progress in 2017 as strong, with increased market share.

“We will continue to focus on companies run by extremely strong and ambitious individuals with a mix of entrepreneurs and specialists with a strong spirit of innovation. Creativity and hard work drive the products forward, also allowing Cherry’s business areas to grow faster than their respective markets,” he said.

Commenting on the progress in Sweden towards a more liberalised online gambling market, Holmgren observed:

“The timetable stands firm, with a licensing system to be in place from 1 January 2019. Cherry repeated its view that the proposed tax rate of 18 percent is excessive. Legalization of the gaming market, with a high degree of channelling, should be the main purpose of regulation. The UK has successfully achieved a 95 percent channelization, with a tax rate of 15 percent. Unfortunately, we have also received indications that Svenska Spel is preparing for re-regulation by, for example, establishing a business area for licensed gaming. It is our assessment that this will complicate the effective implementation of the new regulations.

“Cherry also takes the view that the proposal to increase the maximum wager will not be sufficient to offset the proposed sharp increases in the taxes on gaming tables and in the license fee. As a result, we believe the risk is high that the proposal will lead to fewer jobs and a concentration of operations and tourism to the major cities.”

Yggdrasil Posts 2017 Results

Cherry subsidiary enjoys a strong performance in both FY and Q4 periods

The Cherry Group’s games development subsidiary Yggdrasil has published its Q4 and FY 2017 performance numbers, showcasing growth in revenues and EBITDA.

Q4 2017 highlights include:

* Revenues up 61 percent at MSEK 51.2 (Q4 2016: 31.8);
* EBITDA for the period increased to MSEK 21.5 (13.2), yielding a margin of 42 percent;
* EBIT for the period increased to MSEK 17.5 (9.3), yielding a margin of 34 percent;
* Number of player transactions (rounds) increased by 87 percent y-o-y to 1,184 million;
* Mobile gaming now delivers 59 percent of total gross game win;
* Six new licence agreements were signed, including Pinnacle, Tabcorp, Rank Group and Snaitech;
* Plans to enter the Danish market through deals with Jackpotjoy Group, Danske Spil/Bwin.dk and LeoVegas;
* Two new games were released: Pumpkin Smash and Reptoids;
* Plans to enter a new product vertical, bingo;
* Launched Euro 500,000 Christmas Calendar campaign for operators;
* Two jackpots dropped – Euro 3.48 million for Joker Millions and Euro 1.12 million for Empire Fortune.

2017 Full Year Highlights

* Revenues up 95 percent to MSEK 169.1 (2016: 86.9);
* EBITDA up significantly at MSEK 71.5 (2016: MSEK 40.1), yielding a margin of 42 percent;
* EBIT up at MSEK 58.8 (2016: MSEK 27.4), yielding a margin of 35 percent;
* Released 11 new network games and one operator exclusive game;
* Signed 40 licence agreements;
* Plans to enter the Italian market;
* Revamped technical platform iSENSE2.0+;
* Launched a new game mechanic, Fusion Realms, with the game Jungle Books;
* Launched new business development initiative – Yggdrasil Dragons.

Notable events after the fourth quarter

* Launched new game, Ozwin’s Jackpots;
* Jackpot of Euro 1.9 million fell on Joker Millions;
* Signed two new operators, including Bet25.dk;
* Plans to enter the Spanish market through a deal with GVC;
* Plan to launch table games product;

Fredrik Elmqvist, CEO of Yggdrasil, described 2017 as a landmark year for Yggdrasil with new sign-ups, new games and products and new markets combining to deliver the highest number of gaming transactions yet for the company.

“This level of activity has required a further expansion to the team,” Elmqvist reported. “We welcomed 26 new people to the Yggdrasil family during Q4, taking our team up to 191 people.

“It has been a remarkable 12 months, but I am even more excited about the possibilities and opportunities that lay ahead in 2018. We have a world-class team, an industry-leading product set and the best customers in the business, and we will be building upon this throughout the year and beyond,” he concluded.

Solid Third Quarter For Loto-Quebec

Operations generate revenue up 5.6 percent y-o-y at Cdn$ 2.759 billion in fiscal 2017-2018

Quebec’s provincial government owned betting and lotteries enterprise Loto-Quebec has reported revenues to date in its fiscal year up 5.6 percent year-on-year at Cdn$ 2.759 billion, with net income up 9.2 percent at Cdn$ 1.019 billion following what a spokesman claimed was the eleventh successive quarterly improvement.

The lottery division reported that increased revenue flowed from sales of the new terminal-based Grande Vie lottery (+Cdn$ 38.6 million), launched in October 2016, whilst instant lottery sales grew (+Cdn$ 32.7 million), as did event betting sales (+Cdn$ 8.1 million).

In 2017, Loto‑Québec paid out more lottery prizes worth over Cdn$ 1 million than ever before, awarding 107 such prizes and producing 132 millionaires.

The group’s four casino operations reported revenues up between 5 and 11 percent, with total visits up 4.6 percent or 320,000 individuals.

Revenue from other gaming establishments rose slightly due to good gaming hall performance, where patronage continued to grow. Gaming halls welcomed some 42,000 more visitors (+6.5 percent) than for the same period last year.

The reconfiguration of the video lottery terminal (VLT) network in bars and brasseries continues as planned. By the program’s halfway mark, over 500 VLTs had been withdrawn from the network.

Loto‑Québec’s online gaming site Espace Jeux has generated Cdn$ 82.9 million since the start of the fiscal year representing a favourable variance of Cdn$ 24.6 million. Online lottery sales improved 39.3 percent year-on-year to Cdn$ 37.3 million, while online casino revenue jumped 44.4 percent to Cdn$ 45.6 million.

Loto-Québec raked in Cdn$ 340.5 million in profits in its fiscal third quarter, an increase of nearly 16 percent compared with the same period last year.

Revenues followed a similar course, totalling Cdn$ 945 million over the 91-day period ending Dec. 25, a y-o-y increase of more than 10 percent.

Sports Betting Boosts Portugal’s Q4-2017 Figures

Overall online revenues up almost Euro 10 million year-on-year

The Portuguese online gambling regulator Serviço Regulação e Inspeção de Jogos do Turismo de Portugal (SRIJ) has released Q4-2017 financials in respect of online gambling, revealing that revenues rose Euro 10 million compared with Q4-2016 to reach Euro 36.5 million.

Online sports betting accounted for much of the increase at Euro 20.5 million (26 percent up on the same period in 2016) despite government’s harsh 12 percent tax on turnover for the vertical.

Seven licensed operators are supervised by the regulator, and the fourth quarter numbers bring total revenues from online gambling for 2017 to Euro 122.6 million. Portugal is notorious for its punitive online tax regime, and the government will make a total of Euro 54.3 million from the operators – a significant 44.2 percent cut.

In FY 2017 terms, online sports betting revenues contributed 55.5 percent of all revenues at Euro 68.1 million.

Football generated the most betting revenue at 76 percent, with tennis and basketball distant favourites with the punters.

The online casino and poker vertical in Q4 delivered Euro 16 million, bringing overall FY 2017 numbers to Euro 54.4 million.

Online slots were the stars of the show, bringing in 45 percent of the vertical’s revenue and trailed by online poker cash games (19.7 percent). Online poker tournament action generated just 6.7 percent of revenues.

During Q4-2017 Portuguese-licensed operators attracted 132,000 new online punters, boosting the number of registered players in the market to 800,000. Self-exclusions in the quarter totalled 17,600 or 2.2 percent of those registered.

Topbetta To Raise A$1 Million In Share Placement

Proceeds will be used for working capital

Australian online betting group TopBetta Holdings has announced that it has received commitments from institutional investors to raise A$1 million through a placement of its shares at A$0.285 each.

Management says that the proceeds of the placement will be used as working capital and to strengthen the company’s cash flow.

TopBetta’s The Global Tote offers a system that enables wagering operators, including corporate bookmakers and tote operators from all over the world to participate in a global pool.

InfoPowa readers may recall that in December last year The Global Tote signed a deal with UK tote pool operator Totepool Alderney Limited which allows UK wagering operators to offer punters access to Global Tote pools on Australasian racing for the first time via the Totepool platform.

Totepool is currently integrated into over 9,000 betting shops in the UK and Ireland, as well as 5,000 outside of the UK, and is on some of the world’s biggest betting company websites such as Betfred, Betfair, Skybet and Paddy Power.

In January this year, The Global Tote secured a licence agreement with global wagering market technology company, International Racing Data Limited which covers all thoroughbred, harness and greyhound events, and will initially concentrate on all forms of Australian racing to accompany the distribution deals that The Global Tote already has in place.

Aspire Global Achieve Record Revenues And EBITDA In 2017

New sportsbook and upcoming B2B launches make for a good start to 2018

iGaming solutions provider Aspire Global revealed a solid performance in its recent fourth quarter report which set the stage for record revenue and EBITDA for the full year 2017 period.

Key performance markets for full year 2017 include:

– Revenues up 18 percent to EUR 71.9 million (2016: Euro 61 million)

– 24 percent increase in B2B Revenues which amounted to Euro 37.1 million (2016: Euro 30 million)

– EBITDA increased by 25 percent to Euro 14.3 million (2016: Euro 11.4 million)

– EBITDA margin increased to 20 percent (2016: 19 percent)

– EBIT increased by 22 percent to Euro 13.0 million (2016: Euro 10.6 million)

– Earning after tax amounted to Euro 12.3 million (2016: Euro 11.6 million)

– First Time Depositors (FTDs) increased 37 percent to 246,000 (2016: 179,400)

Aspire Global CEO, Tsachi Maimon, said:

“2017 was a game changer for Aspire Global. We went from being a private player to becoming a public listed company, from having a few key accounts to widening of our customer base, and finally from general expansion to further strengthening our focus on regulated markets.”

The company is pinning continued momentum on the recent addition of its sports betting vertical and several upcoming B2B launches through Mr Play and Nossa Aposta in Portugal.

“Sports is a central pillar of the company’s long-term growth plan and through this addition, including unique features, we become the first provider of a full turnkey solution to sports betting operators well in time for the World cup, let alone with access to six regulated markets,” Maimon added.

Aspire’s Board of Directors has proposed a divdiend of SEK 0.85/share to be paid for the 2017 financial year.

Playtech Full Year Results Deliver

2017 sets strong platform for future strategic growth

Playtech reported its full year 2017 results Thursday delivering double digit revenue growth despite significant headwinds.

The company said it has improved the quality of earnings and made strategic progress in key growth areas.

Key performance highlights for the year ending December 31, 2017 include:

– Total revenues up 14 percent y-o-y to reach Euro 807 million (2016: Euro 708.6 million). 18 percent revenue growth at constant currency or 5 percent growth excluding acquisitions and at constant currency.

– Improved quality of earnings resulted in 54 percent Group regulated revenue (2016: 48 percent).

– Adjusted EBITDA up 7 percent to Euro 322 million (2016: Euro 302 million) on a reported basis and 11 percent at constant currency.

– Adjusted Group EBITDA margin of 40 percent (2016: 43 percent), in line with guidance. B2B Gaming margin was 49 percent (2016: 50 percent).

– Reported Net Profit of Euro 248 million (2016: Euro 193 million), up 29 percent. Adjusted Net Profit was Euro 231 million (2016: 202.9 million), up 14 percent.

– Adjusted diluted EPS up 14 percent on a reported basis and 8 percent at constant currency.

– Gross cash at year end of Euro 584 million (2016: Euro 544.8 million) and Euro 413 million when adjusted (2016: Euro 392 million).

– Total dividend per share was up 10 percent.

“Management is confident 2017 has delivered a strong platform for strategic progress in 2018 through execution of organic opportunities and M&A,” Alan Jackson, Chairman of Playtech, commented.

Habanero Boasts A Good Start To 2018

Games developer says gaming revenue set to double this year, but does not provide specific numbers

Online gambling games developer Habanero did a little chest beating Thursday, boasting that it has started the new year running as it expands its European market penetration, particularly in Italy.

Without revealing specific figures, the company says that it expects revenues from gaming to double this year as it builds on a successful 2017 in which it secured 29 new clients.

The company has high hopes for the Italian market, where it has secured games certification from regulator AAMS and recently went live with top operator SKS.

Habanero head of European business Arcangelo Lonoce said in a company statement that Eurobet.it has signed up for its games, with further agreements in the pipeline.

“2018 has already been a fantastic year for us, which was kick-started by our expansion into Italy,” Lonoce said, revealing that at least 10 new slot games will be launched during 2018.

Habanero currently offers over 80 video slots titles, 11 table games, and 10 video poker titles, all in HTML5, integrated with over 60 operators and aggregators and available in 24 European and Asian languages.