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Cherry’s year-end report for 2017 – A year of good growth and investments in innovation

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Cherry’s year-end report for 2017
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FOURTH QUARTER 2017
• Group revenue increased by 17% year-on-year to MSEK 607 (519), with organic revenue growth amounting to 16% (41).
• Profitability improved and EBITDA increased by 37% to MSEK 141 (103) and the EBITDA margin was 23.3% (20.5).
• Profit for the period amounted to MSEK 18 (68).
• Earnings per share before and after dilution amounted to SEK 0.05 (0.72) and SEK 0.05 (0.71) respectively.
• 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 ComeOn was implemented on 26 October.
• On 1 November, Cherry adjusted its full-year forecast.
• Acquisition of an additional 12.5% of the shares in Highlight Games. Cherry now owns 37.5% of the shares in that company.
• Acquisition of the majority of the shares outstanding in Game Lounge. Cherry owns 95% of the shares effective from 1 January 2018.

FULL-YEAR 2017
• Group revenue increased by 104% to MSEK 2,252 (1,102), with organic revenue growth amounting to 27% (32).
• Profitability improved and EBITDA increased by 146% to MSEK 429 (174) and the EBITDA margin was 19.0% (15.8).
• Profit for the period amounted to MSEK 110 (125).
• Earnings per share before and after dilution amounted to SEK 0.53 (1.28) and SEK 0.53 (1.27) respectively.
• As for the 2016 financial year, Cherry AB’s Board of Directors proposes to the Annual General Meeting that no dividend be paid for the 2017 financial year.

EVENTS AFTER THE END OF THE PERIOD
• On 10 January 2018, Cherry confirmed its forecast for full-year 2017.
• On 22 January 2018, the bondholders set out new terms for Cherry’s senior covered bond 2016/2020 of up to MEUR 200 (ISIN SE0008321616).
• On 29 January 2018, Game Lounge acquired US site Slottracker.com

Comments by the CEO, Anders Holmgren: “Cherry’s strong development continued in 2017. We have captured market shares and our companies have strengthened their positions.

After a year as President and CEO of Cherry, I am able to confirm that Cherry can report yet another good year, from both a financial and operational perspective. A year ago, I wrote that there remained an incredible amount to be done in the gaming industry and that what is great about Cherry is that its five diversified business areas span the entire gaming industry and that Cherry AB owns and manages highly interesting companies. We have already benefited from this strength and progressed some distance in our plans. 

A year later, I have the same feeling; we have much ahead of us and Cherry is the player that can most naturally benefit from all of the opportunities available. 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.

Beyond the financial results, we can also acknowledge success in comparison with other players in the industry: at the year’s International Gaming Awards, Cherry won the Mobile Operator award, ComeOn received the Sports Betting Operator award and Yggdrasil received the award for Innovator Supplier of the Year.

Favourable development over the year with potential for improvement

In 2017, Cherry delivered well, achieving total revenue growth of 104 percent, of which 27 percent was organic.

Over the year, we integrated the operations of B2C company ComeOn, Cherry’s largest acquisitions over the years, into our Online Gaming business area. For the most part, this process has progressed as planned, although, in mid-2017, we saw that the company’s costs, market focus and management were not living up to our expectations. Following an intensive period in the second half of the year, the company is back on the growth curve that we envisage. Together, ComeOn’s management and I have identified several priority improvement factors for 2018, and these will be implemented over the year.

Towards the end of 2017, ComeOn launched a product that is in demand in the Swedish market – Snabbare.com. At Snabbare.com, players can find an exciting casino experience without time-consuming registration and they can withdraw their winnings faster. The response shows that products like this are appreciated and have considerable market potential.

High level of activity and acquisitions in Game Development 

Yggdrasil completed a strong year with a number of new agreements and launches of several new games, including the revitalized vertical – bingo, that will be launched in 2018 with a host of new features that work smoothly on mobile phones. The company continued to sign important customer license agreements with major, established operators and additional innovative games were announced. The company has made significant investments in marketing and strengthened its relationships with both operators and players. The result was the highest number of game rounds to date and substantial jackpots payouts. In regulated markets, such as Italy, development has exceeded expectations.

During 2018, Yggdrasil will rejuvenate the gaming experience in classic table games such as Blackjack, Roulette and Baccarat. Players will be offered an enhanced experience in a virtual 3D environment and will be able to interact with a digital croupier. First out is Blackjack, a game in which the company has applied its REDUX™ technology, developed in-house. The game will include opportunities for side bets, as well as characteristics and personalities unique to each croupier.

In our assessment, Yggdrasil’s strong development will continue, and the company is now investing in a more robust organization to safeguard growth. In 2017, the number of employees increased by 99, and at the end of the year totaled 191, and a new studio was opened in Stockholm.

We took a strategically important step in the quarter with the acquisition of Highlight Games, which broadened Cherry’s gaming development operations. Highlight Games develops innovative products for the virtual sports gaming market both online and in real, including content from league football. The company is currently at an exciting early stage and is working intensively with both development and preparations for its launch of products in several markets from the second quarter of this year and beyond, meaning it will take some time before the company generates revenue. Cherry stepped in as a major investor and strategic partner, initially by acquiring 25 percent of the company, and now owns 37.5 percent of the shares in Highlight Games.

Online Marketing broadens its market

Game Lounge’s performance-based marketing operations continue to grow at a rapid pace and with good profitability. We are seeing that enhanced search engine optimization, combined with building strong brands, has a positive effect. In the Japanese market, we saw a continued increase in the number of visitors, although these contributed only marginally to fourth quarter results. The plan is to continue expanding the operations into several new geographic markets.

In the fourth quarter, the market broadened in which the company’s expertise is combined with existing infrastructure to put borrowers in contact with lenders offering terms suiting the borrower’s circumstances. The first step into this segment was taken in November with the acquisition of the Finnish loan reference website Lainat.fi.

After the end of the period, Game Lounge invested in another complementary segment – optimizing gaming for accustomed players who seek control of their gaming. With the acquisition of Slottracker.com, Game Lounge will continue to develop strong offers for the gaming industry and other areas where the company’s unique skills make a difference.

Swedish gaming commission in final stages 

In early December, the Swedish Parliament held a hearing on gaming policy. The industry’s various parties met with the Committee on Cultural Affairs to respond to questions and present their views on the proposal submitted to the government by the Gaming Commission. 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.

Investments in innovation

In summary, the fourth quarter showed that Cherry has a strong business model that can deliver good returns even in a shorter period of weak development in one business area. As we continue our efforts to ascertain what the market demands, monitoring consumer behaviour and technological development is crucial. We maintain contacts with entrepreneurs who have good ideas and who seek to grow profitably. The number of acquisition candidates suggests that considerable potential remains. Accordingly, we look forward with confidence to further refining our portfolio of investments in innovative and successful operations that can strengthen our positions throughout the gaming value chain.

PRESENTATION OF YEAR-END REPORT 

The interim report will be commented on by President and CEO Anders Holmgren and CFO Christine Rankin in a telephone conference on 16 February 2018 at 10:00 a.m. CET. The presentation materials will be available approximately one hour earlier at www.cherry.se. The presentation can be followed via www.cherry.se and/or www.financialhearings.com. To participate by phone, call +46 8 5664 2698 (SE) or +44 20 3008 9807 (UK).

For further information, please contact:

Anders Holmgren, CEO, Tel.: +46 708 607 534, [email protected]
Christine Rankin, CFO, Tel.: +46 765 399 492, [email protected]
Anders Antonsson, IR & Communications, Tel.: +46 709 994 970, [email protected]

The complete Year-end report is attached and is published on www.cherry.se.

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Balkans

EGT’s latest innovations to shine at the 15th edition of BEGE Expo

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EGT's latest innovations to shine at the 15th edition of BEGE Expo
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EGT is ready to make another memorable show during this year’s 15th edition of BEGE Expo. The company’s impressive product display will await the guests at booth 4.0. on November 27 and 28.

Several new developments in EGT’s portfolio will be presented to the local gaming audience for the first time. Among them will be the Bell Link 2 multigame, the latest addition to the absolute bestseller Bell Link, as well as the Bell Link Boost jackpot. The mix will introduce visitors to the exciting worlds of 10 titles, 5 of which are brand new, offering them numerous opportunities for winning and entertainment.

Bell Link Boost will also captivate players’ attention with its six exciting games, as well as the Boost feature, which will amplify the amount of the Major and Grand jackpots. The highest levels of Bell Link Boost will be combined with the corresponding levels of Bell Link and Gods & Kings Link, adding even more thrill to the gaming experience.

Two new Asian-themed jackpot solutions will be on display as well. Sheng Sheng Bu Xi will offer players a jackpot combo, giving an extra layer of adventure to their gameplay, and the 4-level Zhao Cai Shuang Yu will further enhance the chances of winning with its Keep & Spin bonus and Free Spins & Wheel feature.

EGT will present its newest multigame series, Supreme Selection, which currently features Supreme Green Selection and Mega Supreme Fruits Selection mixes. Powered by the latest Exciter IV platforms, they will make their local debut during the expo, demonstrating a perfect blend of some of EGT’s most popular titles and brand-new games with enormous potential.

The selection of slot products for the show will be complemented by the General Series cabinets and multigames, as well as the well-known Premium Link, Coin Jackpot and Supreme Combo Link jackpots.

The company will also showcase its ETG solutions. The main highlight will be the new RK6C roulette, which will be presented in Bulgaria for the first time. Including sleek design and advanced features, it will provide guests with comfortable play stations, dynamic LED lighting, and engaging sound effects. The players will also be able to explore the numerous variants for keyboard configurations, American roulette, as well as the option for connectivity to other EGT Automated Roulette units, enhancing the overall experience.

The well-established GS 32 T, G 32 T, and G 27 T terminals will also show their eye-catching design, numerous ergonomic features, and great flexibility, allowing many possible configurations with other devices. They will be equipped with multigame mixes of Supreme and Power Series, as well as top-performer Jackpot Cards.

Numerous AWP and VLT products, designed specifically for different markets, will be at the disposal of the stand’s visitors. They will also be able to get acquainted with the latest modules of EGT’s casino management system Spider, thanks to which the organization of the daily activities in gaming facilities is easier than ever.

EGT Digital will demonstrate its vast array of more than 120 popular slot games, as well as the in-house developed “all-in-one” betting platform X-Nave with its 4 main modules, each of which can function as part of the complete solution or operate independently, as they allow integration with products of third-party developers.

“Taking part in BEGE Expo is always a great experience for us, especially since this year is even more special as the event celebrates its 15th birthday,” shared Nadia Popova, Chief Revenue Officer and VP of Sales & Marketing at EGT. “We will be happy to meet again with our clients and partners from the region and discuss with them all new exciting opportunities for collaboration. We are also anticipating BEGE Awards, in which we are finalists in several categories.”

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eSports

Mortal cements his name as face of Indian gaming, wins ‘Content Creator of the Year’ at global Esports Awards 2024

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Naman Mathur, popularly known as Mortal, has added another feather to his illustrious cap by winning the coveted ‘Content Creator of the Year’ award at the Global Esports Awards 2024 Part 2 in Los Angeles on Friday. The grand ceremony saw Mortal triumph over globally renowned gamers like Tarik Celik, Ibai Llanos Garatea, and Marc ‘Caedrel’ Lamont, solidifying his stature as India’s biggest gamer.

Mortal’s groundbreaking victory marks a significant milestone not only in his personal journey but also for the Indian gaming community at large. The 27-year-old’s illustrious gaming career boasts numerous accolades, including championship titles in BMPS Season 1 (2022) and the PUBG Mobile Club Open (2019) as an esports athlete. He has amassed over 7 million subscribers on YouTube and more than 5.3 million followers on Instagram through his distinctive and impactful content, making him one of India’s most influential gaming personalities.

Speaking on this remarkable achievement, Naman Mathur aka Mortal, Co-founder, S8UL Esports, stated, “Winning this award is an incredible moment of pride, not just for me but for the entire Indian gaming and esports community. My journey began with a simple passion for gaming, and seeing that passion resonate with millions of people is truly humbling. I hope this achievement inspires more young gamers to chase their dreams and believe that they too can earn global recognition through dedication and hard work. I am deeply grateful to S8UL for being the backbone of my journey. This success is not mine alone- it belongs to every fan, every teammate, and every supporter who believed in me and in the potential of Indian esports.”

This was Mortal’s sixth consecutive nomination at the prestigious awards, a feat achieved by no other Indian gamer. Having been nominated for various categories over the years such as ‘Esports Mobile Player of the Year’, ‘Streamer of the Year’ and ‘Esports Personality of the Year’, Mortal’s victory in this edition is a testament to his immense contribution to growing the esports and gaming content ecosystem in India.

“This award holds a deeply personal meaning for me. Watching Mortal achieve this recognition feels like a shared victory- one that takes me back to where it all began. From the late nights to the sacrifices, every moment has led us here. Together, we’re not just creating history; we’re shaping the future of gaming and esports globally. A victory for him, a milestone for Indian esports!” said Animesh Agarwal aka 8Bit Thug, Co-founder, S8UL Esports.

The Esports Awards is the most prestigious night in esports, dedicated to showcasing top-tier performance and innovation from players, teams, media, hardware providers, games, events, and personalities within the scene.

“When we first started this journey, we had no idea how far it would take us, but we always knew we were in this together. Mortal has always been like a brother to me, and seeing him win this award feels like a personal achievement. For him to be honoured with this accolade today is a reflection of the countless hours, effort and heart we’ve poured into building who we are and what we stand for,” commented Lokesh ‘Goldy’ Jain, Co-founder, S8UL Esports.

Mortal’s achievement reaffirms India’s rise as a formidable force in the global esports and gaming content landscape.

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Asia

Goa Introduces an Entirely Online Lottery Platform

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In a move towards modernising India’s lottery sector, the state of Goa has introduced an entirely online lottery platform, sanctioned by the Directorate of Small Savings and Lotteries. This initiative, known as Great Goa Games, aims to bring transparency and convenience to an industry that has long grappled with allegations of mismanagement and fraud.

Ticket sales commenced Monday, with the inaugural draw set for Sunday. Rhiti Group, led by founder Arun Pandey, was granted the license to operate and market the platform. “Our mission is to democratize opportunities through technology,” Pandey stated, emphasizing the secure and user-friendly nature of the app-based system.

Goa government official Narayan Gad lauded the move as a step forward for the Indian lottery sector. “With our online lottery streamlining processes through technology, we are setting a new standard in the lottery industry,” Gad remarked. “The technology-based product will enhance transparency and ensure improved monitoring and regulation of operations.”

This development follows new rules governing online lotteries, introduced by the Goa directorate in February 2023. Currently, 13 states in India, including Goa, allow lottery games, though others have banned them due to concerns over gambling addiction and operational irregularities.

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