End Year Report 2016, 1 January – 31 December
Highlights
Fourth quarter: Revenues grew 201% to MSEK 519.4 and profits improved significantly
· Group revenue increased by 201 percent year-on-year to MSEK 519.4 (172.5), with organic revenue growth amounting to 41 percent.
· Profitability improved considerably and EBITDA increased 353% year-on-year to MSEK 106.3 (23.4). EBIT amounted to MSEK 580.6 (16.4). EBIT includes a revaluation of the purchase price for the ComeOn acquisition of MSEK 510.5. Adjusted to this, EBIT amounted to MSEK 70.2 (16.4).
· The result after tax was MSEK 578.2 (12.9). Adjusted for the revaluation mentioned above, the result after tax amounted to MSEK 67.7, equivalent to SEK 3.57 (0.63) per share after dilution and minority interests.
· Online Gaming revenue grew organically by 51 percent. Including ComeOn the revenue grew by 294 percent. EBITDA amounted to MSEK 87.8 (11.5). The number of active customers increased by 339 percent and amounted to 310,706 (70,746). During the fourth quarter, the number of new customers amounted to 1,798,546 (91,275), where the numbers include the ComeOn acquisition.
· Game Lounge’s revenue grew by 138 percent and EBITDA grew by 37 percent to MSEK 5.3 (3.9).
· Yggdrasil Gaming’s revenue grew by 207 percent and EBITDA increased 171 percent to MSEK 13.2 (4.9).
· Restaurant Casino’s revenue amounted to MSEK 42.8 (44.3) and EBITDA amounted to MSEK 4.9 (4.9).
· Cherry continues to invest in gaming assets and launched a new business area in November, Gaming Technology – XCaliber. The business area will be reported separately from the first quarter of 2017.
· In December, Cherry exercised its option to acquire the remaining 51 percent of the shares in ComeOn Malta Ltd. As a result of this acquisition and strong organic growth, Cherry is expected to triple its revenues and the Group expects to generate total revenues for the full year 2017 of between MSEK 2,600 and MSEK 2,700 with an EBITDA of MSEK 550 and MSEK 600.
Full Year 2016: Revenues grew 109% to MSEK 1,102.4 with a strong profit
· Group revenue increased by 109 percent compared to the previous year and amounted to MSEK 1,102.4 (528.7).
· EBITDA increased by 393 percent and amounted to MSEK 177.7 (35.9). EBIT amounted to MSEK 625.6 (13.3). EBIT includes a revaluation of the purchase price for the ComeOn acquisition of MSEK 510.5. Adjusted to this, EBIT amounted to MSEK 115.2 (13.3).
· The result after tax amounted to MSEK 635.2 (6.4) Adjusted for the revaluation mentioned above, the result after tax amounted MSEK 124.7, equivalent to SEK 6.27 (-0.06) per share after dilution and minority interests. The result was burdened with acquisition costs for ComeOn and Nasdaq listing costs of MSEK -10.2.
Important events after the end of the quarter
· The Board of Directors of Cherry AB and CEO Fredrik Burvall have agreed that Burvall will leave his position as CEO due to family reasons. He will remain within the company until summer 2017. The Board of Directors has appointed Anders Holmgren as CEO. Holmgren is one of the founders of Betsson, where he also held the position of CEO for Betsson Malta.
CEO comments on fourth quarter – Cherry + ComeOn = Success
It has been a few weeks since I took over as president and CEO of Cherry AB, having served as a board member for a number of years before that. In 2000, I was one of the three founders of the gaming company Betsson, and I also served as CEO of Betsson Malta during the first eight years. The market then was very new and undeveloped, with only a few players at that time making progress. When I left Betsson in 2011, my belief was that the industry would quickly mature and become regulated. When I returned to the gaming industry after a few years, I realized that changes take time. For people who have ideas and the drive to develop them, the industry is open and there is still an awful lot left to do. When I became a board member at Cherry, I realized what a great company it was and the opportunities that were there. The beauty of Cherry is that the five diversified business areas span over the entire gaming industry, and that it owns and manages a range of very interesting companies. The companies are run by incredibly strong and motivated individuals, with a mix of entrepreneurs and specialists, where the ceilings are high, and where creativity and hard work pushes products forward. This makes the business areas grow faster than their respective markets.
The combination of Cherry iGaming and ComeOn is among the largest B2C companies in online gaming in the Nordic market, and a serious player for the future. The integration between Cherry iGaming and ComeOn continues as planned and with great success. Talented people from both sides, with a common vision of the future, have already begun to act as one business unit. The acquisition of ComeOn and the merger has resulted in a good mix of experienced entrepreneurs and strong individuals with a common vision of how the company will reach new levels. At this year's International Gaming Awards, Cherry was praised for the fourth consecutive year and ComeOn won the "Online Sportsbook Operator of the Year" award. Also at the awards, Cherry Casino won the "Mobile Operator of the Year" prize, which is a clear evidence of the good work done by the organization. From the fourth quarter going forwards, the companies report within the same business unit.
XCaliber is Cherry's latest launch within B2B gaming technology. XCaliber allows Cherry to capitalize on its high-end gaming platform and its payment and affiliate system, by offering these to partners and gaming operators. In 2017 the company expects to sign its first partnership deals with external customers.
Game Lounge continues its outstanding development and is one of the fastest growing companies in performance-based online marketing (leads). In late 2016 at the Malta iGaming Awards, the company received the "Affiliate of the Year" award. This proves that Game Lounge's strategy is working and the company is taking significant steps towards its goal of becoming the market leader in performance-based online marketing for gaming in Europe. Game Lounge has also entered the Japanese market, where it launched its first affiliate page at the end of 2016. The company now operates in nine markets with the ambition to expand even further.
In the fourth quarter, Cherry Spelglädje delivered solid results and improved earnings. At the beginning of 2017, a framework agreement was signed with O'Learys Trademark, which gives Cherry Spelglädje status as a preferred supplier to all O'Learys restaurants in Sweden, while its contract with Harrys Pubs was also extended. The company’s business strategy has once again proved successful and the company is well prepared for the future.
Yggdrasil Gaming continues its outstanding progress in the fourth quarter, delivering the strongest quarter in the company's history. Yggdrasil has signed agreements with several new major operators and has, during the fourth quarter, also introduced a number of innovations to the industry. It won the "Innovator of the Year" award at the International Gaming Awards. After the ICE trade show in London, it was also clear that the company has grown to a level where it is now well positioned and beginning to compete with the industry’s biggest gaming development companies, while retaining the motto that one should be "the best, but not necessarily the biggest. "Yggdrasil has started the process, in accordance with the technical requirements in Italy, to certify its games to allow it to enter the Italian market. During the second quarter of 2017, the first eleven games are expected to be available to the Italian market. Yggdrasil will also pursue opportunities in other regulated markets that make commercial sense. In addition, Yggdrasil also initiated a new business concept to support and cooperate with other gaming companies and entrepreneurs - Yggdrasil Dragons. The idea of the initiative is to give committed gaming companies and entrepreneurs with new, innovative and exciting ideas, access to Yggdrasil’s resources, experience and knowledge, and hand-in-hand, take these concepts from idea to reality.
During the fourth quarter, the organic growth for the Group was 41 percent and the overall growth was 201 percent with significantly improved earnings. The strategy of continuously developing the business areas, combined with adding strategic acquisitions where entrepreneurs continue to be active in the business, is the core of Cherry's great performance. The Company continues its work towards a change of listing to NASDAQ Stockholm during the first half of 2017.
I am thrilled to see that there is still plenty of room for creativity and innovation in the gaming industry. If you want something enough and develop your ideas with the right people and capital, then nothing is impossible. Cherry possesses the size and the right entrepreneurial spirit to be able to act in major regulated markets while promoting innovation and appropriate risk taking. This is a recipe for success in the gaming industry!
/Anders Holmgren, CEO
Dividend
The board intends to delay the decision regarding the distribution of dividends until the ComeOn purchase is finalized. The dividend policy of distributing at least 50 percent of the net profit remains.
Annual General Meeting
In accordance with the decision at Cherry’s annual general meeting held on Tuesday 16 May, 2016 (time and place will be announced later). Shareholders who wish to contact the nomination committee can do so by e-mail to valberedningen@cherry.se or by mail to Cherry AB, Nomination committee, Blekholmstorget 30, 111 64 Stockholm.
Annual Report
The Annual Report for 2016 will be published at the latest on 24 April on the company’s website www.cherry.se and on the website of Aktietorget, www.aktietorget.se.
The information in this press release is information which Cherry AB (publ) is required to disclose under EU Market Abuse Regulation (EU). The information was provided by the below contact persons for publication on January 21, 2016 at 08.30 CET.
Translation
This is a translation of the Swedish original.
For further information, please contact:
Anders Holmgren, acting CEO Cherry AB (publ), Mobile +46 708-607 534, email; anders.holmgren@cherry.se or
Gunnar Modalen, Chef IR & Communication Cherry AB (publ), Mobile +46 702-802 636, gunnar.modalen@cherry.se
Cherry in brief
Cherry is a Swedish innovating and fast growing gaming company established in 1963. The business strategy is to create shareholder value by owning and developing fast-growing and profitable businesses within the gaming and casino industry. Cherry operates within five diversified business areas, Online Gaming through Cherry iGaming, Performance-based Marketing through Game Lounge, Gaming Technology through XCaliber. Game Development through Yggdrasil Gaming and Restaurant Casino through Cherry Spelglädje. The objective is to grow organic in combination with strategic acquisitions of fast-growing companies. Cherry employs around 900 people and has more than 5,600 shareholders. The Company’s B-shares are listed on AktieTorget.