Global Gaming 555 AB – Interim report January – June 2019
Second Quarter, April - June 2019
- Revenue for the period amounted to SEK 132.2 (227.8) million.
- Operating profit was SEK -11.1 (41.0) million.
- Operating profit before non-recurring write-downs SEK 0.5 (41.0) million.
- Profit after tax for the period was SEK -11.8 (28.9) million, or SEK -0.29 (0.71) per share.
- Cash flow from operations for the period amounted to SEK -16.8 (39.4) million.
- The Swedish Gambling Authority revoked our subsidiary SafeEnt Ltd’s Swedish licences for online gambling and betting. The decision has been appealed to the Administrative Court, where it is currently being tried.
- The appeal for injunctive relief from the regulator’s decision was rejected by the Administrative Court.
- The group’s auditor KPMG AB, with Auditor in Charge Jonas Nihlberg, notified the company of early termination of the audit assignment in June.
- CEO and President Joacim Möller had to leave his post on April 29.
Half-year, January - June 2019
- Revenue for the period amounted to SEK 294.3 (426.4) million.
- Operating profit was SEK -54,5 (70.3) million.
- Operating profit before non-recurring write-downs was SEK -42.9 (70.3) million.
- Profit after tax for the period was SEK -53.3 (54.7) million, or SEK -1.30 (1.36) per share.
- Cash flow from operations for the period amounted to SEK -58 (94.3) million.
Events after the end of the period
- The appeal for injunctive relief from the regulator’s decision was rejected by the Administrative Court of Appeal and a review permit was not granted by the Supreme Administrative Court.
- Partnership Agreement signed with the Finnplay OY Group, a Finnish developer and provider of technology and platforms for online gaming.
- Nanocasino.com launched in the Swedish market in collaboration with Viral Interactive, a company within Finnplay Group, holder of a Swedish licence.
- Tobias Fagerlund appointed CEO and President.
- At an extraordinary general meeting on 14 August, accounting firm Bdo Mälardalen AB was appointed as the group’s new auditor, with Carl-Johan Kjellman as Auditor in Charge.
- Personnel restructuring plans were established and implemented.
It is no understatement to say that the last three months have been the most turbulent and difficult in the histo-ry of Global Gaming. We published our previous report with the belief that the changes we had made with regard to the CEO post, the general changes in the organization, and the comprehensive and swiftly implemented set of other corrective measures would pave the way for our return to positive figures and growth. When we got to the month of June, we positively thought we could realistically expect to be back into black figures already in the sec-ond quarter, thus achieving the intended turnaround.
Everything changed on the morning of June 17th, when the Swedish Gambling Authority announced that they had withdrawn - with immediate effect - the gaming license that lay at the foundation of the Group’s Swedish op-erations. The Swedish Gambling Authority justified its decision citing serious deficiencies in the business in mat-ters of responsible gaming and Anti Money Laundering measures. Those who have followed the extensive media coverage of the decision know that we do not share the Swedish Gambling Authority’s opinion and have there-fore appealed it.
Like many of our industry colleagues, we too have had shortcomings in the very early days since obtaining the licence. An unclear regulatory framework, lack of detailed instructions from the regulator, as well as their reluc-tance to dialogue concerning perceived shortcomings and their resolution, has unnecessarily led to different in-terpretations of the new legislation by players in the market. However, we are of the absolute opinion that those issues were rectified and operations were conducted fully in line with the requirements of the new gambling legis-lation for operators in Sweden, hence also that the regulator’s decision lacks legal support and is disproportionate.
We have unsuccessfully sought to be allowed to resume operations in Sweden while the courts try the revocation case, which is currently with the Administrative Court. I don’t expect it to be finally decided upon in the foreseea-ble future but am rather preparing for a lengthy process - a process that we will naturally follow through to the end, and in which we are convinced that we will ultimately be successful. No doubt there will be many occasions for me to return to this Summer’s events, and to my reading of the fairness of the regulator’s exercise of authori-ty. It would be naïve of me not to recognise the regulator and the legislator’s need to set a precedent and to prove themselves effective. What is regrettable is that they should do this in a way we consider wrong and unlaw-ful. I am convinced we will be able to demonstrate that this is the case in the court process that is currently un-derway.
Whether one believes the decision to be correct or not, one cannot fail to see that it has enormous consequences for a group of companies like ours. The fact that our Maltese subsidiary is unable to conduct its Swedish opera-tions causes great damages on so many levels. In one fell swoop, most of the group’s revenue was wiped out and, as a not unexpected direct consequence, reactions from suppliers and partners were not late in coming. As an example, the company auditor, KPMG, terminated their contract without any further explanation or notice. These events forced us to act quickly. And act we did.
In addition to securing, updating and informing external relations and gaming authorities in other jurisdictions where we operate, we have adopted a number of very extensive and important measures, and implemented changes in the group’s operations. These include:
• Significantly amplified the previously announced organisational changes: This last month was marked by signifi-cant personnel cuts. During the second quarter, the group employed or otherwise engaged the services of about 190 people, including some 40 consultants and about 150 employees. In the fourth quarter, once we have passed the applicable notice periods and other relevant agreements have expired, the total will be 90 -100 people. We are reducing the number of people in the group by about 50%, which is expected to significantly affect costs accord-ingly. The technology organisation in Sweden will be completely shut down during the remainder of the year, and the organisation in Malta has already shrunk considerably.
• Agreement signed with Finnplay: Through our agreement with the Finnplay group, we gained access to their full range of products. We will be moving operations based on our own licences to their platform, which will allow us to benefit from one of the market’s best and most developed gaming platforms with a great deal of ambition and a plan for development. This enables us to act more quickly and in multiple markets so we can focus on what we historically have been best at: reaching customers and generating traffic. The collaboration gives us a flexibility we are going to need not only to have control over fixed costs but also to improve margins. Without going into detail about the commercial implications, I would like to stress that, in addition to the technical and operational effects of this collaboration, it also makes good financial sense. Our choice to work with Finnplay over alternative partners who had shown an interest in us stems from the fact that, overall, we deemed them to be by far the best alterna-tive for a successful, long-term cooperation.
• Launch of Nanocasino.com in collaboration with Viral Interactive: Finnplay’s subsidiary, Viral Interactive, is the licence holder and is thus fully responsible for operating NanoCasino.com. One of Global Gaming’s subsidiaries acts as the marketing partner, and its role is to provide resources and expertise in matters of marketing, custom-er experience and brand management. This secures many of the marketing commitments the group had made at the beginning of the year and gives us a unique opportunity to continue to follow the Swedish market closely without conducting any operations ourselves. Along with a long list of legal experts, we are of the opinion that Viral Interactive’s operations rest on a very solid and secure legal basis, and that the conditions for the licence to conduct online casino operations granted to them by the regulator are met.
• Internally, we are hard at work defining the strategy for the future of Global Gaming. New markets and brands will play an important part in our future. Although we will do everything in our power to be active in Sweden, in-cluding with our brand NinjaCasino, we need to have a much broader approach, which we need to adopt in the foreseeable future.
The events of this Spring and Summer affect our business in every way, and we are now facing a challenge we have never faced before. Global Gaming has grown at an incredible pace over the past year, yet from where we stand today, we can only acknowledge that we too have made mistakes during the time we grew from a total newcomer to one of Sweden’s most recognisable brands. In the short term, it has been about damage control, cost control, and finding solutions to continue moving forward and creating the conditions for a return to profit-ability.
Considering the uncertainty of our situation, I think that we have acted both quickly and resolutely. With these substantial organisational changes implemented here and now, and with the swift choice of a new technology ap-proach, we have managed to quickly create the conditions that will enable us not only to face but to also operate in our new reality.
Despite the draconian measures and drastic organisational changes we are facing, we cannot fail to notice that, internally, our fighting spirit and will to prevail are very much alive, which in itself creates conditions we should not underestimate. The future will undoubtedly place great demands on us as an organisation, as well as on me as its CEO. We must live with the consequences of past mistakes but we can also learn and grow stronger because of them. What I can promise is that we will do our utmost to get back to profitability and growth – and I believe we’ll be successful.
Tobias Fagerlund, CEO
For further information, please contact:
Tobias Fagerlund, CEO
Phone: +46 (0)704 15 05 85,
Niklas Jönsson, CFO
Phone: +46 (0)8 551 154 31,
About Global Gaming
Global Gaming is a challenger in the iGaming industry, delivering innovative and safe gaming services and operating a number of successful casino brands. Its flagship, Ninja Casino, builds on the PayNPLay technology, allowing players to enjoy a safe and seamless online casino experience by simplifying and shortening the registration process. Global Gaming 555 AB is listed on Nasdaq First North in Stockholm. The company’s Certified Adviser is Redeye AB, with contact information, +46 (0) 8 121 576 90, email@example.com.
The information in this press release is such that Global Gaming 555 is required to disclose under the EU Directive of Market Abuse Regulation. The information was submitted for publication through the agency of the contact persons set out above on 15 August 2019 at 08:00 CET.