(PRESS RELEASE) -- Cherry has released its interim report for Jan. 1 to June 30, 2015.
Second quarter: 61% growth for Online Gaming and 119% growth for Yggdrasil – Strong EBITDA improvement.
· Group revenue increased by 40% to MSEK 106.7 (76.4). Online makes up 63% (54) of the group revenue.
· EBITDA improved and amounted to MSEK -0.4 (-4.1). EBIT amounted to MSEK -5.2 (-7.7).
· The result after tax amounted to MSEK -6.8 (-7.1), equivalent to SEK -0.49 (-0.56) per share after dilution.
· Online Gaming grew by 61% and deposits increased by 82%.
· Restaurant Casino increased turnover by 13% and EBITDA increased by 32% to MSEK 5.3 (4.0).
· Yggdrasil Gaming grew by 119% and EBITDA amounted to MSEK -1.2 (-0.6).
· In April, only two months after Cherry acquired Game Lounge, the joint white label brand Sveacasino
· During the second quarter a sportsbook was launched on NorgesSpill Casino
· In June, Yggdrasil Gaming won the “Software Rising Star” prize at the EGR B2B Awards.
Six-month interim period: Strong growth within all business areas and highly improved EBITDA.
· Group turnover increased by 35% compared to the previous year and amounted to MSEK 202.0 (149.4). Online makes up 63% (54) of the group revenue.
· EBITDA amounted to MSEK -4.9 (-8.4). EBIT amounted to MSEK -14.1 (-15.3).
· The result after tax amounted to MSEK -18.6 (-15.2) equivalent to SEK -1.37 (-1.15) per share after dilution.
· Online Gaming grew by 55% and deposits increased by 68%.
· Restaurant Casino increased turnover by 10% and EBITDA increased by 29% to MSEK 9.2 (7.1).
· Yggdrasil Gaming grew by 136% and EBITDA amounted to MSEK -1.6 (-1.8).
· In January 2015, a controlling interest in the affiliate company Game Lounge Ltd was acquired by Cherry. This is expected to enable Cherry to rapidly increase its volumes at a significantly lower cost per customer than before.
Important events after the end of the quarter: In July, Cherry added strategic acquisitions to its core business.
· In July, Cherry acquired 71% of the shares in the Malta-based company Almor Holding Limited (Almor) – a leading online casino in German-speaking markets. The business will be consolidated by Cherry from July 1. Cherry already has the right to the profits from May 1, and the business has developed positively during May and June. This will strengthen the cash position of Cherry with about EUR 700,000.
· On July 27, Cherry-owned Game Lounge acquired a prominent Finnish affiliate’s domains and affiliate agreements. The acquisition is expected to increase EBITDA figures by more than EUR 600,000 annually, bring in more than 10,000 new depositing customers to Cherry and other operators over three years and quickly increase volumes on current Cherry brands. The acquisition is fully financed by Game Lounge operations and the deal is expected to generate ROI in less than two years. The business will be consolidated from the third quarter.
· In July, Online Gaming has been developing positively with good growth and positive EBIT, also when excluding Almor. The business area is expected to show a positive EBITDA for the third quarter.
CEO comments on the second quarter:
The second quarter showed continued strong growth and the Group’s turnover increased by 40%. We have improved our earnings considerably, which is a result of the growth Cherry has had primarily within Online Gaming but also because of strong improvements within Restaurant Casino. Cherry’s online business continues to grow and now represents 63% of group sales and is expected to grow faster than the market going forward. We see that the steps Cherry has taken, focusing on core business and supporting strategic acquisitions, is now beginning to show results.
Today, Cherry’s business area Online Gaming is well positioned, with a well-functioning and flexible platform, where new products can easily be integrated and new skins added. We can therefore, with limited costs, increase both volume and profits. After the reporting period, Cherry has added some strategic acquisitions to its portfolio, partly through the acquisition of 71% of Almor Holding, an online casino with a leading position in the German-speaking markets. The acquisition has, during the first six months, reported an EBITDA of approximately EUR 1,000,000. The acquisition will contribute strongly both in terms of increased growth and increased profits for Cherry. In addition to this Game Lounge, owned by Cherry, has acquired a leading Finnish affiliate’s domains and affiliate agreements. This is expected to increase EBITDA with more than EUR 600,000 per year and bring in more than 10,000 new depositing customers to Cherry and other operators during a three-year period, rapidly increasing volumes of existing brands. If Almor Holding had been consolidated during the second quarter, the Group, as well as Online Gaming, would have reported positive EBITDA. Almor Holding and the acquired Finnish domains and affiliate agreements will be consolidated as of the third quarter.
During the second quarter, Online Gaming has shown a strong growth by 61%, and significantly improved its earnings. Our work to improve the gaming experience, to deliver joy of playing and strengthen customer loyalty, now begins to show results. We see strong growth in mobile gaming and will continue to improve our mobile offerings. During the quarter, we launched our first white label brand, SveaCasino.com, and re-launched EuroLotto
, now hosting the biggest lotteries in the world. Cherry currently has three licenses via Malta, Curacao, and Schleswig Holstein and intends to obtain local licenses in those markets where Cherry has a large volume or in new markets where Cherry expects a strong growth. In July, Online Gaming has been developing positively with good growth and a positive EBIT, also when excluding Almor. Cherry expects to report a positive EBITDA for the business area for the third quarter.
Yggdrasil has increased its revenues by 119% and signed two new contracts, including BetClic Everest Group. Yggdrasil’s roadmap for 2015 looks exciting and, during the quarter, slot games "Cyrus The Virus
" and “Joker Millions
” were released. Joker Millions is Yggdrasil’s first progressive jackpot game, and today three operators are live, of which two went live early in the third quarter. After the quarter, the new game "Chibeasties
" was released, which has so far been a success. Yggdrasil has taken the decision to release all of the games on the new iSENSE 2.0 platform, based on HTML5, providing the opportunity to release the games simultaneously on computer, tablet and mobile, and giving the games a better and faster performance. This allows operators a greater opportunity to reach their players in connection with marketing campaigns. A proof of Yggdrasil’s success came in June, when they won "Software Rising Star" at the EGR B2B Awards. There’s much more to come with Yggdrasil, as we roll out their full library of games to operators. As new operators are deployed, additional games are launched to existing customers, and the game portfolio grows, Yggdrasil’s revenues will increase.
Restaurant Casino continues to impress with a positive developments. In the second quarter, the business delivered stable growth and increased its profits by 39%. In July, the payroll taxes for young people were raised, which over time will affect the industry and Restaurant Casino’s profitability. The increase in payroll taxes for young people will be shared with the restaurateurs but it will also lead to more gaming locations becoming unprofitable. Therefore, a raise in stake, within Restaurant Casino, from today’s SEK 70 to SEK 200, is required. With this raise the industry could generate around 1,000 new entry-level jobs. Cherry will lobby for a stake raise.
A new order is required on the Swedish gaming market. Sweden has quite rightly been taken to the European Court, after having too long delayed a re-regulation. The latest development is a new Swedish gaming legislation that will be in place by July 1, 2018. Cherry welcomes a gaming market that is open for everyone with transparent and responsible stakeholders. We want to eliminate the anachronistic and failed gaming monopoly. We want to create more jobs and compete on fair conditions.
Cherry’s goal is to grow faster than the market both through acquisitions and organically, focusing on rapidly increasing profitability. Now we look forward to continue to spread joy of playing, both online and at the pub!
Fredrik Burvall, CEO
For further information please see the full Interim Report 2, 2015 at http://cherry.se/en/financial-reports/.
This is a translation of the Swedish original.