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Cherry Interim Report January–June 2018

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Cherry Interim Report January–June 2018
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16-Aug-2018:  Continued expansion and innovative investments

SECOND QUARTER
• Group revenue increased by 41 percent to MSEK 753 (536), with organic revenue growth amounting to 39 percent (37).
• Profitability improved, and EBITDA increased by 78 percent to MSEK 165 (93) and the EBITDA margin was 22 percent (17).
• Profit for the period amounted to MSEK 91 (15).
• Earnings per share before and after dilution amounted to SEK 0.77 (0.03) and SEK 0.76 (0.03) respectively.
• The Board of Directors appointed Gunnar Lind as Acting CEO.
• Cherry has completed the acquisition of 44 percent of the shares in the affiliate company, Game Lounge, with Cherry now holding 95 percent of shares outstanding. The purchase consideration amounted to MEUR 9.8 and 1,554,017 newly issued shares in Cherry AB.
• A further 7.5 percent of the shares in the online gaming company Almor Holding were acquired, with Cherry now holding 90 percent of the shares outstanding. The purchase consideration amounted to MEUR 2.2 and 299,504 newly issued shares in Cherry AB.

SIX MONTHS
• Group revenue increased by 33 percent to MSEK 1,434 (1,077), with organic revenue growth amounting to 32 percent (40).
• Profitability improved, and EBITDA increased by 103 percent to MSEK 357 (176) and the EBITDA margin was 25 percent (16).
• Profit for the period amounted to MSEK 180 (51).
• Following new share issues, the number of shares has increased to 4,988,000 Class A shares and 100,680,026 Class B shares, as of 30 June 2018, totalling 105,668,026 shares.
• Earnings per share before and after dilution amounted to SEK 1.56 (0.27) and SEK 1.55 (0.26) respectively.

EVENTS AFTER THE END OF THE PERIOD
• On 3 July, Cherry was granted a sports betting license in Poland.
• On 7 August Cherry exercised its option to acquire an additional 7.8 percent of the shares in the gaming specialist Highlight Games. Cherry also acquired shares corresponding to 15.1 percent in the company and now holds of 60.4 percent of the shares outstanding in Highlight Games.
• On 9 August Game Lounge acquired two premium domains in North America, BetNJ.com for sports betting and casino in New Jersey, and the Mexican domain OnlineCasino.mx.

Comments by the CEO
“Strong and broad operations”

With a revenue increase of 41 percent, of which organic growth amounted to 39 percent, the quarter was characterized by expansion and investment. Investments during the quarter were made primarily in the marketing of existing and new brands, and of games developed in-house by Yggdrasil and Highlight Games. Cherry has strong and broad operations meeting the market’s demand for quality in everything we deliver, and it is gratifying to note that July demonstrated that our investments have generated returns in line with our expectations.

The second quarter of 2018 was characterized by a focus on growth, in the short term as well as long term. Investments in marketing were significant and effective. Online Gaming is expanding and strengthening its position in key markets, while the business area’s new brands are also rapidly building awareness and establishing a good customer base. Game Development and Online Marketing have also acted proactively through increased investment in game development, acquisitions and a clearer presence in Sweden. To me, as acting CEO, this is a secure situation providing opportunities to continue strengthening Cherry in its core markets and, in parallel, to assess complementary growth alternatives.

Over the quarter, the Group’s revenues increased from MSEK 536 to MSEK 753 and EBITDA increased by 78 percent, from MSEK 93 to MSEK 165. The foremost individual explanation for this trend is continued favourable development within the Online Gaming business area. The gaming operator holds a strong market position and has launched new brands meeting the market’s wishes. Beyond this, company management, now with permanent CEO Lahcene Merzoug at the helm, is continuing to optimize the cost base. Cherry’s subsidiary Almor, including the German brands Sunmaker and Sunnyplayer Casino, experienced one of its strongest quarters, thereby strengthening Cherry’s market position in the regulated Schleswig-Holstein market (Germany).

Game developer Yggdrasil had an active quarter that included the launch of five new games, including “Sonya Blackjack”, the first game in the new “Table Games” product vertical. During the quarter, Yggdrasil signed distribution agreements with 13 operators. The number of employees (FTE) of Yggdrasil at the end of the period was 243 (134). Following the end of the period, a global distribution agreement was reached with 888 Holdings, one of the world’s most popular gaming operators. An agreement was also reached with Intralot, which has a strong position in Italy, complementing Yggdrasil’s existing collaboration with Lottomatica. In April, Northern Lights became the first independent game studio to use Yggdrasil’s partner program, YGS Masters, and we make the assessment that this will be an excellent way to collaborate with companies in early phases of development. Following the end of the quarter, Yggdrasil was also certified for the fast-growing Spanish market – an important milestone in Yggdrasil’s strategy to grow in regulated markets.

At the beginning of the year, Highlight Games launched its virtual soccer game, SOCCERBET, in selected African markets, while the company also prepared for its introduction in Italy. During the third quarter, Highlight Games, alongside Eurobet and other leading Italian operators, will launch the game in Italy, where the virtual gaming market is expected to generate sales of some EUR 2 billion in 2018, as assessed by the independent data specialist H2 Gambling Capital. Highlight Games has favourable prospects of capturing significant market share, thus Cherry has acquired additional shares in the company and Cherry’s holdings in August totalled 60.4 percent and, accordingly, consolidated as a subsidiary effective from August 2018.

The Group’s affiliate company, Game Lounge, is developing according to plan. The company has established a new office in Stockholm and has a total of 60 employees. During the quarter, Game Lounge acquired assets, including some 1,500 websites, various search engine optimization (SEO) tools and services, and a team of ten employees with unique SEO expertise to aid the expansion of the company into new verticals. In August, Game Lounge acquired two premium domains in North America, which will be important bridgeheads in New Jersey and Mexico.

In June, we were able to complete the acquisitions of additional shares in subsidiaries Game Lounge and Almor Holding. The payment for the additional 44 percent and 7.5 percent respectively consisted in part of new shares in Cherry AB, now bringing the total number of shares in the company to 105,668,026. Both companies are experiencing a positive development trend, and with Cherry’s support, we perceive good opportunities for them to develop at a higher pace and with a broader offering.

During the quarter, the Board took the decision to terminate Anders Holmgren’s employment as the President and CEO of Cherry. At the same time, the Board resolved to appoint the undersigned as CEO until a permanent CEO has been appointed. With my previous experience as CEO of Cherry and as a Board member in the company, I was able to get started relatively quickly.

The recruitment of a permanent President and CEO has been initiated and includes both internal and external candidates. I am sure the Board of Directors is doing a thorough job and, as its work progresses, I am focusing on developing the Group in accordance with the established strategy, supported well by all employees.

Gunnar Lind
Acting President and CEO

MARKET OUTLOOK
The gaming market is currently growing strongly and Cherry estimates that demand in the Group’s largest geographic markets will continue to develop favourably. The Group continuously studies conditions for new business within the related business areas and geographic markets in and outside Europe.

The Group’s focus is on generating shareholder value by being an active participant in the development of new and existing companies in the gaming, media and entertainment sector. The objective is for the companies to become market leaders in their respective areas by building their core values of entrepreneurship, responsibility and commitment. These are important prerequisites for the Group to be able to achieve its financial targets and to continue its successful profitable growth, through both organic growth and acquisitions, in existing and new verticals and geographic markets.

PRESENTATION OF THE INTERIM REPORT
The company’s Executive Chairman, Morten Klein, Acting President and CEO, Gunnar Lind, and CFO Christine Rankin, will present and comment on the report at a telephone conference at 10:00 a.m. CET on 16 August 2018. 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 8-566 426 97 (SE) or +44 203 008 9807 (UK).

For further information, please contact:

Christine Rankin, CFO, Telephone: +46 76 539 94 92, [email protected]
Anders Antonsson,  IR & Communications, Telephone: +46 709 994 970, [email protected]

 

CHERRY IN BRIEF:

Cherry is an innovative and fast-growing gaming company with operations in gaming, entertainment and media. The company was founded in 1963 and today, Cherry operates through five diversified business areas: Online Gaming, Game Development, Online Marketing, Gaming Technology and Restaurant Casino. The objective is to grow organically in combination with strategic acquisitions of fast-growing companies. Cherry employs some 1,400 people and has about 9,250 shareholders. The company’s class B-share has been listed on the Nasdaq Stockholm exchange, Mid Cap segment since 18 October 2017.

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First-ever Olympic Esports Games to take place in 2025; massive opportunity for Indian esports

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Following the IOC’s partnership with the NOC of Saudi Arabia to host the inaugural Olympic Esports Games, India’s growing esports sector has an opportunity to prove its mettle on the international stage and flourish

In a historic move, the International Olympic Committee (IOC) has announced that the inaugural Olympic Esports Games will take place in Saudi Arabia in 2025. This decision follows the recent proposal by the IOC’s Executive Board and will be presented at the IOC Session ahead of the Paris 2024 Olympic Games.

The IOC has entered a 12-year partnership with the National Olympic Committee (NOC) of Saudi Arabia to host the Olympic Esports Games. As per the official announcement, HRH Prince Abdulaziz bin Turki Al Faisal, Minister of Sport and President of the Saudi Arabian Olympic and Paralympic Committee remarked, “The world is invited to join us in 2025 and celebrate this moment together.”

Indian esports, already on the rise, stands to gain significantly from this development. Following a bronze medal win in DOTA 2 at the 2022 Commonwealth Games in Birmingham and competing in five titles at the 2022 Asian Games in Hangzhou, India’s esports scene is on track for further growth.

Expressing his enthusiasm for the groundbreaking development, Akshat Rathee, Co-founder and MD of NODWIN Gaming, said, “NODWIN Gaming is thrilled that esports has earned its place in the Olympics with its own standalone event, akin to the Summer, Winter, and Paralympics. This recognition allows countries to develop independent esports programs. Together with our partners in the GEF and the EWC, NODWIN Gaming is eager to build esports in our core growth markets, seizing this opportunity for hope and glory.”

The IOC launched its first esports pilot, the Olympic Virtual Series, in 2021 followed by the Olympic Esports Week in Singapore in June 2023. This event brought together over 130 players from around the world, competing in 10 mixed-gender categories, attracting over 500,000 unique participants and six million views, with 75% of the audience aged 13 to 34.

“The IOC’s embrace of the Olympic Esports Games honors the dedication and skill of millions of gamers worldwide. It goes beyond just competition; it elevates esports to a global platform, encouraging international collaboration and potentially ushering in a new generation of athletes. This initiative truly is a landmark moment for esports, bringing it the global recognition it has long earned. The inclusion of esports in the Olympic movement demonstrates its growing influence and cements its place in the future of sports,” commented Roby John, CEO and Co-founder at SuperGaming.

The introduction of the Olympic Esports Games is set to further enhance the credibility of esports in India, establishing it as a viable sport and career option.

“This recognition will further legitimize esports as a career option, more parents will now support their children in pursuing careers in this field, elevating the professional landscape of competitive gaming. We are proud to support the growth of esports in India, giving our players the chance to shine on this prestigious international platform,” further.

With the official announcement of the Olympic Esports Games, work will now begin on selecting the host city and venue, determining the event’s timing, selecting titles, and establishing the qualification process for players. The IOC has emphasized collaboration with International Federations already engaged in e-sports and National Olympic Committees that include esports in their activities.

While the titles for the Olympic Esports Games have not been officially announced, the potential inclusion of games across diverse platforms is expected to stimulate growth in India’s gaming industry. This could lead to a rise in PC and console gaming, diversifying India’s predominantly mobile gaming market as players aim to represent their nation at the largest international multi-sport event.

“We are absolutely elated by the announcement of the Olympic Esports Games which is being hosted in the Kingdom of Saudi Arabia. This marks a monumental step for the industry and all its stakeholders. The Indian esports sector is on an upward trajectory and this will further empower it. Esports being integrated under the banner of the pinnacle of sports events in the world will bring further legitimacy to this form of sport and encourage a new generation of esports talent to rise from the country. We’re excited and look forward to extending our support to the esports community of India so they make a mark at the global event!” said Vishal Parekh, COO, CyberPowerPC India.

Additionally, the IOC will establish a dedicated structure for the Olympic Esports Games, distinct from the traditional Olympic Games model, to address the unique aspects of esports financing and organization.

 

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Legendary skater and entrepreneur to keynote at SBC Summit

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Renowned professional skateboarder turned entrepreneur and iconic video game legend Tony Hawk is slated to deliver a keynote address to 25,000 attendees, at the upcoming SBC Summit.

The keynote titled: “Tony Hawk – What Keeps The Wheels Turning on a Global Brand” is scheduled to open the second core day of the event, which is taking place at the Feira Internacional de Lisboa between the 24th and 26th of September. The highly anticipated keynote will occur on the Super Stage, located in the MEO Arena.

Hawk will offer delegates an in-depth overview of his illustrious career, covering his introduction to the professional sports arena as a teenager, his landmark partnership with Activision game studios, and the founding of his iconic sporting brands. He will also share strategies for maintaining relevance through brand reinvention, providing insights into his approach to sustaining success and innovation over the years.

In anticipation of his upcoming address, Hawk expressed: “I am excited to be headlining SBC Summit in Lisbon this September. Although the worlds of skateboarding and gambling might seem very different, I believe many parallels and lessons can be very relatable to companies in this industry.

“Whether it is forming long-lasting partnerships, establishing a successful and recognisable brand or maintaining relevance in a predominantly digital world, my story can provide valuable insights for all those attending.”

Born in the Golden State of California on May 12, 1968, Tony Hawk received his first skateboard, a blue fibreglass Bahne, from his brother at the age of nine. By the age of 11, Hawk began entering local skateboarding competitions, and in 1982, at just 14 years old, he officially became a professional skater. He signed with the Powell Peralta professional team and starred in the famous Bones Brigade videos, marking the beginning of his illustrious sporting career.

The subsequent 23 years, saw Hawk win 73 competitive titles, including being named the ‘National Skateboard Association (NSA) Vert Champion’ for 12 consecutive years and earning 16 “X Games” medals. Hawk further cemented himself as an innovator of the sport by inventing more than 80 unique skateboarding tricks. Among these tricks are the ollie-to-Indy, the gymnast plant, the frontside 540-rodeo flip, and the Saran wrap.

In one of skateboarding’s defining moments, Hawk executed a 900 twist (2 1/2 turns) at the 1999 X Games, a feat that had never been performed before. In 2003, Tony officially retired from competitive skating.

Away from the deck, Hawk continued to grow the sport with a variety of successful partnerships and branding deals. In 1992, Tony founded Birdhouse Skateboards (originally Birdhouse Projects) with ex-Powell Peralta professional skateboarder Per Welinder. In 1998, Hawk and his family created Hawk Clothing, a line of children’s skate apparel, and in 1999, he founded the media company 900 Films. In 2002, he established The Skatepark Project (formerly the Tony Hawk Foundation), a nonprofit skateboarding organisation that helps communities build public skate parks for youth in underserved communities.

Tony Hawk’s most successful partnership came in 1999 when he teamed up with global gaming giant Activision to release Tony Hawk’s Pro Skater. Activision went on to release 16 more video games under the ‘Tony Hawk’ name and reported a staggering $1 billion in sales, making it one of the most successful video game franchises of all timeBorn in the Golden State of California on May 12, 1968, Tony Hawk received his first skateboard, a blue fibreglass Bahne, from his brother at the age of nine. By the age of 11, Hawk began entering local skateboarding competitions, and in 1982, at just 14 years old, he officially became a professional skater. He signed with the Powell Peralta professional team and starred in the famous Bones Brigade videos, marking the beginning of his illustrious sporting career.

The subsequent 23 years, saw Hawk win 73 competitive titles, including being named the ‘National Skateboard Association (NSA) Vert Champion’ for 12 consecutive years and earning 16 “X Games” medals. Hawk further cemented himself as an innovator of the sport by inventing more than 80 unique skateboarding tricks. Among these tricks are the ollie-to-Indy, the gymnast plant, the frontside 540-rodeo flip, and the Saran wrap.

In one of skateboarding’s defining moments, Hawk executed a 900 twist (2 1/2 turns) at the 1999 X Games, a feat that had never been performed before. In 2003, Tony officially retired from competitive skating.

Away from the deck, Hawk continued to grow the sport with a variety of successful partnerships and branding deals. In 1992, Tony founded Birdhouse Skateboards (originally Birdhouse Projects) with ex-Powell Peralta professional skateboarder Per Welinder. In 1998, Hawk and his family created Hawk Clothing, a line of children’s skate apparel, and in 1999, he founded the media company 900 Films. In 2002, he established The Skatepark Project (formerly the Tony Hawk Foundation), a nonprofit skateboarding organisation that helps communities build public skate parks for youth in underserved communities.

Tony Hawk’s most successful partnership came in 1999 when he teamed up with global gaming giant Activision to release Tony Hawk’s Pro Skater. Activision went on to release 16 more video games under the ‘Tony Hawk’ name and reported a staggering $1 billion in sales, making it one of the most successful video game franchises of all time

Rasmus Sojmark, CEO & Founder of SBC added: “Tony Hawk is undoubtedly one of the most iconic athletes of the 20th century. Not only did Tony revolutionise the world of skateboarding, but through strong branding, incredible athleticism, and genre-defining video games, he brought skateboarding into mainstream pop culture.

“There are certainly many lessons to be learned from this legend, and I am extremely excited to witness Tony’s headline keynote on the Super Stage.”

Operators and affiliates can apply for free passes to the event. Operators can visit here, while affiliates are urged to click here.

The wider industry can secure their spot at the upcoming SBC Summit with a special offer granting access to all three core days of the event, including the exhibition floor, conference content, and evening networking parties, all for the discounted price of just €300.

 

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Bacta undertakes mapping exercise to begin engagement process with new MPs

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Bacta, the trade body representing the UK low-stake gaming and amusement sectors, has begun the process of engaging with the 335 new MPs which have been elected to the House of Parliament following the July 4th General Election.

In an initiative which began as soon as the outcome of the Election was confirmed Bacta is systematically mapping members venues against their constituency MPs. The deep-dive into the political terrain of the UK will also include a sectoral perspective identifying those MPs who have been appointed to the relevant Select Committees.

Expanding on the initiative Bacta Executive Director George McGregor stated: “This is the first occasion certainly in the two decades that I have worked with Bacta that we have systematically mapped MPs with Members. We have used the General Election outcome to create a Geo Political Footprint for the industry.”

Explaining how the mapping exercise will be deployed George McGregor said: “It will be the Central Nervous System guiding our political engagement and is a much more efficient way of putting Bacta members in front of their constituency MPs in order to present the case for the industry in particular the importance of getting the reforms recommended in the White Paper over the line.”

Reflecting on the new Labour Government he confirmed. “Our position is one of partnership and collaboration. We believe that the industry is ideally placed to support the Government’s economic growth objectives both on the high street and at the coast as part of a broader tourism strategy. We are preparing for a relentless 12-months with political engagement at the very top of Bacta’s agenda.”

 

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