Gambling Industry Acquisitions, Mergers and Financial News — Weekly Round-up for February 15, 2019

GiG Delivers Revenue Growth In The Double Digits

Reaping benefits of tech and product development, CEO says

Gaming Innovation Group (GiG) has reported a 26 percent increase in full year 2018 revenues amounting to Euro 151.4 million (FY2017: Euro 120.4 million) and EBITDA of Euro 16.1 million, up 28 percent over 2017.

A further decrease in the number of employees in Q4 2018 resulted in an 8 percent decrease in other operating expenses quarter-on-quarter .

Robin Reed, CEO, Gaming Innovation Group:

“In Q4, we matched our previous all-time-high in revenues and for the full year 2018, we grew revenues and EBITDA with nearly 30% over 2017.

“After investing around €16m into tech and product development in 2018, we have now closed the circle and are offering products and services across all major verticals in the iGaming value chain.

“We have started our expansion into regulated markets with big brand partners, and we have launched our online and retail sports betting platform in the USA.

“I am really proud of what we have achieved and am looking forward to 2019.”

Stride Gaming Up For Sale?

Bankers allegedly instructed to find a buyer

According to the UK Sunday Times, Stride Gaming has “put itself up for sale” instructing its nominated adviser and sole corporate broker, Investec Bank plc, to find a buyer.

The AIM-listed online bingo firm is reportedly valued at GBP 78.5 million and in a recent trading update, reported performance in line with board expectations despite continued challenging trading conditions.

Stride Gaming, along with subsidiary Daub Alderney, found itself in hot water with the UK Gambling Commission in 2018 who applied a GBP 7.1 million fine in November 2018 for failings in the company’s anti-money laundering and social responsibility procedures (see previous InfoPowa reports).

Stride Gaming Enters Offer Period (Update)

Reviewing all strategic options, and no offers currently on the table

In response to press speculation, Stride Gaming plc has confirmed it is currently reviewing all strategic options in order to maximise value for its shareholders, and as such as entered in to an ‘Offer Period’ (see previous InfoPowa reports).

The Board said it remains confident in Stride’s ability to manage ongoing fiscal and regulatory market pressures and leverage its unique infrastructure to capitalise on significant growth opportunities in the dynamic UK market.

Against this backdrop, the Board is reviewing, amongst other things:

  • a more aggressive UK and international organic expansion strategy;
  • expanding the group’s operations through acquisition in the UK and/or international markets to take advantage of the disruption in the online gaming market resulting from fiscal and regulatory changes; and
  • whether Stride should seek to participate in potential industry consolidation through a
    sale of the Company.

“The Board believes the Group will continue to be highly cash generative and the Board remains committed to its revised dividend policy to distribute at least 50% of Adjusted net earnings in dividends,” a company statement reads.

PlayAGS Completes Integrity Gaming Acquisition

Boosts portfolio with addition of 2,700 games

Gaming supplier PlayAGS has completed its acquisition of Integrity Gaming Corp bolstering its portfolio with the addition of a further 2,700 games.

InfoPowa readers will recall AGS acquired all issued and outstanding common shares of Integrity Gaming Corp. for a cash payment valued at $49 million, which included repaying U.S. $35 million of Integrity’s outstanding debt.

Integrity’s installed base of more than 2,700 Class III and Class II games in Oklahoma and Texas includes slot machines manufactured by various slot suppliers, including AGS, in approximately 30 tribal casinos.

Integrity’s brand, operations, and team will be integrated under AGS, with centralised service and support managed from AGS’ Oklahoma City, Oklahoma offices.

AGS Senior Vice President of Slot Products, Andrew Burke:

“We are thrilled to have so quickly closed this deal and are ready to provide Integrity’s customers with exceptional service and support. Every Integrity customer is also an AGS customer, so this should be a relatively seamless transition and one that gives us an opportunity to work with operators to ensure they are getting the best performance from their Integrity-placed games.”

NetEnt Delivers Solid Full Year Performance

Will ramp up games development to increase volume

NetEnt delivered a solid full year 2018 performance reporting a revenue rise to SEK 1,782 million and EBITDA of SEK 816 million.

Key performance highlights:

  • Revenues for the full year amounted to SEK 1,782 million (2017: SEK 1,636 million)
  • EBITDA was SEK 816 million (2017: SEK 740 million), a margin of 45.8 percent (2017: 45.2 percent).
  • Adjusted for reorganization-related costs in the fourth quarter and severance pay for the previous CEO, EBITDA was SEK 844 million, a margin of 47.4 percent.
  • Operating profit (EBIT) was SEK 601 million (2017: SEK 582 million), a margin of 33.7 percent (SEK 35.6 percent).
  • Adjusted for aforementioned costs and the write-down of a VR-project, EBIT was SEK 634 million (2017: SEK 582 million), a margin of 35.6 percent (2017: 35.6 percent).
  • Profit after tax of SEK 577 million (2017: SEK 547 million).
  • Earnings per share of SEK 2.40 (2017: SEK 2.28) before and after dilution.
  • Proposed cash return to shareholders of SEK 2.25 (2017: SEK 2.25) per share
  • 31 (2017: 37) new customer agreements signed, and 38 (2017: 35) new customers’ casinos launched.

Locally regulated markets accounted for 37 (33) percent of NetEnt revenues in the fourth quarter. Including Sweden, more than half of revenues were from locally regulated markets.

In December 2018, InfoPowa readers will recall the company underwent a corporate restructure towards a more decentralized organisation with clearer areas of priority and accountability. Key management positions were strengthened across the group and a new head of Live Casino appointed – an area that NetEnt says it will continue to invest in.

A key focus in the coming year includes ramping up development to facilitate between 30 and 35 new games, compared to 21 in 2018.

55 full-time jobs, primarily in Stockholm and in the corporate support area, will be cut in order to keep costs under control and to allow for continued investments into increased production, the company said.

Growth In 2018 Slows For LeoVegas

But 2019 off to a positive start

LeoVegas Group CEO, Gustaf Hagman, has described 2018 as the most challenging the company has every encountered in its fourth quarter 2018 report, despite a welcome boost in December which delivered an all-time-high in revenue following three sequential quarters of slow growth.

Key performance indicators for the three month period ending December 31, 2018 include:

  • Revenue increased by 25 percent to Euro 84.5 million (Q4/2017: Euro 67.8 million).
  • Organic growth in local currencies was 7 percent. Organic growth in local currencies excluding the UK was 14 percent.
  • EBITDA was Euro 8.1 million (Q4/2017: Euro 6.1 million), corresponding to an EBITDA margin of 9.6 percent (Q4/2017: 9.0 percent).
  • Net Gaming Revenue (NGR) from regulated markets was 33 percent (Q4/2017: 29 percent) of total NGR.
  • The number of depositing customers was 327,156 (Q4/2017: 253,299), an increase of 29 percent.
  • The number of returning depositing customers was 181,747 (Q4/2017: 124,890), an increase of 46 percent.
  • Earnings per share were Euro 0.22 (Q4/2017: Euro 0.02) before dilution and Euro 0.22 (Q4/2017: Euro 0.01) after dilution.

”After a challenging 2018 we now see improved momentum with a record strong December and a positive start to 2019. Entering the new year we have full focus on expansion, cost control, increased profitability and to continue building the world’s best mobile casino,” Hagman said.

The company announced the postponement of its financial targets from 2020 to 2021 due to developments in the UK market. However, the direction remains unchanged with financial targets in absolute numbers to reach Euro 600 million in revenue and Euro 100 million in EBITDA.

A total dividend of SEK 1.20 per share (Q4/2017: SEK 1.20) has been proposed, to be paid out on two occasions during the year.

“2018 was the most challenging year in LeoVegas’ history,” Hagman concluded. “We bumped into challenges that we have not previously encountered and saw a slowdown in growth as a result.

“It was also a year in which we carried out a number of strategically crucial projects that have taken us large steps forward on our growth journey. There is much left to do, and there’s no doubt we can and will improve in many areas.

“We have learned a lot, and our position for achieving our long-term vision – to be the global market leader in mobile casino – is good.”

Changes in the Group Management team will support LeoVegas’ strategy into 2019. Richard Woodbridge was recruited as Chief Operating Officer, effective January 7, Avshalom Lazar was recruited as Chief Compliance & Legal Officer, and a new role has been added to the group of Chief Product and Technical Officer (CPTO).

Mattias Wedar has been appointed in the CPTO role and is tasked with increasing effectiveness and cooperation with the group in terms of product and technology. Wedar will join the company from MRG GameTech where he serves as CEO.

A trading update for the month of January 2019 indicated a positive start to the year with revenue amounting to Euro 28.7 million (JAN17: Euro 24.8 million), representing growth of 16 percent.

Former VE Global Exec Woos Investors For New iGaming Venture

Seeking to raise GBP 77 million for new BetWarrior iGaming platform

Former VE Global executive Morten Tonnesen is reportedly wooing investors for the further development and expansion of a new iGaming platform dubbed BetWarrior.

Tonnesen is looking to raise an eyebrow-raising GBP 77 million acquisition war chest, the Belfast Telegraph reports which it is thought will be used for acquisitions of technology providers, sports news companies and smaller operators.

According to the report, Tonnesen’s new company will be headquartered in Malta but will also establish a presence in Barcelona and London.

Cherry Delivers 89 Percent Increase EBITDA During 2018

Increases profit four-fold

Cherry AB’s latest annual report for full year 2018 details a substantial increase in consolidated revenue, profit and EBITDA.

Key performance highlights for the 12 months ending December 31, 2018 include:

  • Consolidated revenue increased by 44 percent to SEK 3,236 million (2017: SEK 2,252 million), of which organic growth amounted to 3 percent. Corporate acquisitions contributed 1 percentage point and currency 8 percentage points.
  • Profitability improved and EBITDA increased by 89 percent to SEK 813 million (SEK 429 million) and the EBITDA margin was 25 percent (2017: 19 percent).
  • Profit for the period amounted to SEK 487 million (2017: SEK 110 million). The value reassessment of Cherry’s Highlight Games subsidiary positively affected Profit by SEK 50 million.
  • Earnings per share before and after dilution amounted to SEK 4.45 (2017: SEK 0.53) and SEK 4.44 (2017: SEK 0.53) respectively.

Acting CEO, Gunnar Lind:

“Cherry’s development in 2018 can be summarized with one word: excellent. On almost all measurements, our operations delivered in line with our expectations.”

Looking to the future, InfoPowa readers will recall European Entertainment Intressenter BidCo AB’s (“EE Intressenter”) public cash offer of SEK 87 per share to Cherry AB shareholders. EE Intressenter is a company jointly controlled by a consortium consisting of Bridgepoint Advisers Limited, acting as manager for and on behalf of, Bridgepoint Europe VI Fund, major shareholders in Cherry AB and others.

EE Intressenter holds, at present, approximately 98.2 percent of the total number of shares in Cherry and will initiate a compulsory acquisition procedure regarding the remaining shares, after which application will be made to have all shares delisted.

“I would like to thank all of the shareholders, employees, partners and other stakeholders who have participated in Cherry’s journey thus far,” Gunnar Lind, Acting CEO for Cherry AB, said. “I am convinced that Cherry and its Group companies will remain significant players in the gaming and entertainment industry for many years to come and I look forward to following developments.

Kindred Group Pleased With Progress

Releases full year 2018 annual report

Kindred Group showcased a solid performance for the full year 2018 period and an all-time-high performance in Gross winnings revenue during the fourth quarter 2018.

Key performance indicators for the 12 month period ending December 31, 2018, include:

  • Gross winnings revenue amounted to GBP 907.6 million (2017: GBP 751.4 million) for the full year 2018.
  • Underlying EBITDA for the full year 2018 was GBP 203.7 million (2017: GBP 185.0 million)
    .
    Profit before tax amounted to GBP 149.5 million (2017: GBP 132 million).
  • Profit after tax amounted to GBP 131.6 million (2017: GBP 117.4 million).
  • Earnings per share were GBP 0.580 (2017: GBP 0.516).
  • Number of active customers during the fourth quarter was 1,568,574 (2017: 1,329,124).

The Board of Directors are proposing a dividend of GBP 0.496 (2017: GBP 0.551) per share/SDR, which is approximately SEK 5.92 (SEK 6.48) per share/SDR, and amounts to a proposed distribution to shareholders of GBP 112.5 million (2017: GBP 125.6 million) which is 75 per cent of the Group’s free cash flow for 2018.

The dividend will be paid out in two equal instalments in order to facilitate a more efficient cash management.

Henrik Tjärnström, CEO of Kindred Group:

“Strong levels of activity and all-time high in active customers resulted in all-time high for Gross winnings revenue.”

“Despite the exceptional sportsbook margin in the fourth quarter of 2017 making the comparatives for this quarter very tough, we still managed to grow the business by 5 per cent.”

“Of the Group’s Gross winnings revenue, 45 per cent came from locally regulated markets. For the full year 2018, betting duties increased by 40 per cent with an EBITDA margin of 22 per cent which shows the Group’s ability to absorb betting duties through its focus on scalability and cost control.”

In a trading update for the January 1, 2019 to February, 10 2019, Kindred’s upward momentum continues with daily average Gross winnings revenue in GBP 17 per cent higher (18 per cent in constant currency) YoY.

Kambi Flys High In 2018 Full Year Results

Well placed to leverage positive momentum, CEO says

Kambi Group plc’s full year 2018 results reported a strong performance bolstered by several retail sportsbook installations in the burgeoning US market.

Performance highlights include:

  • Revenue amounted to Euro 76.2 million (2017: Euro 62.1 million, up 14 percent.
  • Operating profit (EBIT) was Euro 12.7 million (2017: Euro 7.7 million), with a margin of 16.7 percent (2017: 12.4 percent).
  • Profit after Tax amounted to Euro 9.8 million (2017: Euro 5.9 million).
  • Earnings per share were Euro 0.326 (2017: Euro 0.198).
  • Cash flow from operating and investing activities (excluding working capital) amounted to Euro 8.6 million (2017: Euro 4.7 million)

The Board will propose no dividend payout at the company’s AGM in May 2019.

“With the US market high on Kambi’s priority list, our ability to demonstrate our high-quality on-property Sportsbook and prompt time-to-market leaves us well-placed moving forward, particularly considering the emphasis US operators and state regulators place on the retail channel,” Kristian Nylén, Chief Executive Officer commented.

“When also factoring in the early success we have had online in New Jersey, I’m not surprised Kambi is now seen as the leading multi-channel sports betting supplier in this burgeoning market.

“Reflecting on the year as a whole, 2018 will be remembered as one of achievement and one in which Kambi reached new heights. And although much hard work remains in front of us, the strong foundations we have put in place leave me confident Kambi can remain on this upward trajectory throughout 2019.”

Yggdrasil Delivers Strong Performance In 2018

Focus on expansion and strategic business development bears fruit

Games developer Yggdrasil delivered a strong 2018, an annual report released this week details.

The company reached SEK 274.2 million in total operating revenues marking a 62 percent increase on 2017 and a rise in EBIT of 18 percent to SEK 69.5 million with an EBIT margin of 25 percent.

2018 saw a 100 person increase in total employees to reach 285, a strategy that will continue in retaining top talent in the long-term, Yggdrasil said.

A focus on expansion and strategic business development bore fruit with the launch of two new product verticals, entry into several new markets, the establishment of its new business YGS Masters and the signing of 48 new customers.

“I am thrilled on the outcome of these initiatives and how they will support us in creating synergies with our current product portfolio and in-game promotional tools,” Yggdrasil founder and CEO Fredrik Elmqvist, said.

“Despite a more competitive and complex market environment with a regulatory landscape changing at a faster phase than ever before, we have been successful in capturing further market share. We believe this is the ultimate proof of our concept and clearly demonstrates that our business is in the game for the long run.”

Betsson Reports Strong Full Year 2018 Performance

December 2018 delivers all time high in revenue and EBIT for third consecutive quarter

Betsson reported a 15 percent rise in group revenue for the full year 2018, reaching SEK 5,419.8 million (2017: SEK 4,716.5 million), with an organic growth of 11 percent.

Operating income (EBIT) increased 35 percent to reach SEK 1,193.7 million (2017: SEK 882.2 million), while Net Income was up 35 percent to SEK 1,078.1 million (2017: SEK 786.5 million), corresponding to SEK 7.79 (2017: SEK 5.68) per share. Operating cash flow was SEK 1,273.3 million (2017: SEK 946.7 million).

On the back of these results, Betsson’s Board of Directors has proposed a dividend of SEK 3.89 per share (2017: SEK 2.84) be distributed to shareholders – equating to the distribution of SEK 539 million (2017: SEK 393.1 million).

Pontus Lindwall, President and CEO:

“For the third consecutive quarter Betsson delivered all-time high revenue and EBIT and proved 2018 to be a turning point.

“I am happy to see how we have been able to show continuous results from the ”Back on track” program during the year. A year ago we announced the plan that involved the entire organisation. Since then, the focus has been on the development of products and technology to continue to deliver the best customer experience. At the same time, there has been a strong determination to improve efficiency in marketing and in internal processes to increase profitability.”

Aspire Global Ceo Hails ‘Amazing’ Year

After record fourth quarter 2018

Stockholm-listed iGaming firm Aspire Global has hailed a record fourth quarter concluding ‘an Amazing Year’.

Key performance highlights for the 12 month period ending December 31, 2018 include a 45.5 percent increase in revenue year-over-year (YoY) to reach Euro 104.6 million and an increase of 52.6 percent in B2B Revenues which amounted to Euro 56.6 million.

EBITDA increased by 48.6 percent to Euro 21.2 million (2017: 14.3 million) and EBITDA margin amounted to 20.3 percent (2017: 19.8 percent).

EBIT increased to Euro 19.3 million (2017: Euro 13 million), and Earnings after tax from continued operations increased to Euro 16.2 million (2017: Euro 9.8 million).

Earnings per share after tax from continued operations increased to Euro 0.36 (2017: Euro 0.23).

Cash flow from operating activities increased by 42.8 percent YoY to Euro 22.9 million, while first time depositors (FTDs) increased 50.5 percent.

Aspire’s Board of Directors has proposed a dividend of approximately SEK 1.27 SEK per share.

Tsachi Maimon, CEO Aspire Global:

“The fact that we will be exceeding previous financial targets ahead of schedule is the result of an amazing progress in 2018, following our growth strategy.”

Looking to the future, Aspire Global said it would remain focused on B2B, B2C and game development.

“Aspire Global will continue to pursue strong growth, both organically and through acquisitions, with a consistent focus on improving the offering, strengthening partnerships and seizing attractive opportunities in regulated markets,” Maimon said.

Aspire said it will be initiating ‘considerable’ investments in the company platform from its tech site in Ukraine, beginning with the recent appointment of a group CTO and further recruitments to strengthen the tech-team, to support its aspirations.

Evolution Gaming Report Strong Performance In Year End 2018 Report

Driven by strength of Nordic markets

Live dealer provider, Evolution Gaming, has published its full year 2018 report outlining a strong performance that saw operating revenues increase by 38 percent to Euro 245.4 million, a 34 percent rise in EBITDA to Euro 107.7 million, and profit of Euro 83.5 million (2017: Euro 62.1 million).

Earnings per share amounted to Euro 2.32 (2017: Euro 1.73) and the board proposed a dividend of Euro 1,20 per share.

Looking further, Evolution intends to propose a share buy-back programme at its upcoming AGM.

Martin Carlesund, CEO:

“All in all, we can look back at yet another amazing year in the Evolution history with expansion outside Europe and many successes in innovation and created customer value.

“With a new studio in Malta and all games that will be launched, I am confident that we are in excellent shape to continue increasing our market leadership going forward.

“In that context, we can also conclude that the first quarter has been off to a good start.”