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Cherry year-end report 2018

George Miller

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Cherry year-end report 2018
Reading Time: 6 minutes

 

An eventful year with continued good development in the final quarter

 

FOURTH QUARTER

• Consolidated revenue increased by 49 percent to MSEK 904 (608), with organic revenue growth amounting to 41 percentage points. Corporate acquisitions contributed 0.5 percentage point and currency 7.5 percentage points.
• Profitability improved and EBITDA increased by 40 percent to MSEK 198 (141) and the EBITDA margin was 22 percent (23).
• Profit for the period amounted to MSEK 120 (18).
• Earnings per share before and after dilution amounted to SEK 1.14 (0.05) and SEK 1.14 (0.05) respectively.
• European Entertainment Intressenter BidCo AB (“EE Intressenter”), a company jointly controlled by a consortium of Bridgepoint and major shareholders in Cherry AB, announced a takeover bid for SEK 87 in cash per Class A and B share in Cherry AB. The independent bid committee for Cherry recommended that shareholders accept the public offer.
• Companies in the Online Gaming business area secured a total of eight Swedish gaming licenses in December.
• An Extraordinary General Meeting in November elected Rolf Åkerlind as a new member of the Board and approved the decision to acquire the remaining five percent of the shares in Game Lounge Sweden AB.

FULL-YEAR

• Consolidated revenue increased by 44 percent to MSEK 3,236 (2,252), of which organic growth amounted to 3 percent. Corporate acquisitions contributed 1 percentage point and currency 8 percentage points.
• Profitability improved and EBITDA increased by 89 percent to MSEK 813 (429) and the EBITDA margin was 25 percent (19).
• Profit for the period amounted to MSEK 487 (110). Profit was affected positively by an item affecting comparability of MSEK 50 regarding the reassessment of the value of Highlight Games.
• Earnings per share before and after dilution amounted to SEK 4.45 (0.53) and SEK 4.44 (0.53) respectively.
• As for the 2017 financial year, Cherry AB’s Board of Directors proposes to the Annual General Meeting that no dividend be paid for the 2018 financial year.

EVENTS AFTER THE END OF THE PERIOD

• On 12 February, EE intressenter announced that it controls approximately 98.2 percent of the total number of shares in Cherry AB (publ) after the expiry of the final acceptance period, and that EE Intressenter intends to initiate a compulsory acquisition procedure and to promote a delisting of the shares of series B in Cherry AB from Nasdaq Stockholm.
• On 12 February, Cherry announced the initiation of early redemption of senior secured callable bonds. In connection with the redemption, the bonds will be delisted from Nasdaq Stockholm.

Comments by the CEO

An excellent year for all companies in the Cherry Group

Cherry’s development in 2018 can be summarized with one word: excellent. On almost all measurements, our operations delivered in line with our expectations. Financially, we have performed well with total growth of 44 percent, and full-year revenue amounting to MSEK 3,236 (2,252) with an EBITDA margin of 25 percent (19).

For a significant part of the year, we worked to prepare for the re-regulation of the Swedish gaming market. We were involved right from the inquiry phase prior to the legislation being drafted and have participated in issues on which we have specialist knowledge on an ongoing basis. We are satisfied with the framework, which should contribute to a high level of channelization, which is important for the long-term perspective that our market needs to be able to develop in a way that assures all stakeholders the security they need.

It is reasonable that gaming companies be taxed and, to some extent, controlled when it comes to marketing, but the legislators must be aware that this is an industry in which customers are aware of their options and can therefore quickly shift their preferences. This can result in tax revenue and preventive actions from game addiction being lost. The more laws there are and the more detailed the regulations, the greater the risk that companies position themselves outside the licensing system, with the effect that everyone loses.

We now have only a few weeks’ experience of the Swedish regulations and it is too early yet to have a clear idea of how development is progressing for Cherry and the rest of the industry. Our experience of similar changes in other countries is that the companies and brands that cope best are those with a clear digital strategy, that are at the forefront in technology and their customer relationships, and are led by entrepreneurs. This is the core of Cherry’s business model and the companies within our Group hold strong positions, are strongly focused on what they do and are quick to grasp opportunities.

Marketing investments are often in focus among investors. During the quarter, business area Online Gaming accounted for the largest share, MSEK 253, and we can see that these investments continued to yield good returns. The business area’s revenue for the fourth quarter rose by 48 percent, to MSEK 722 (485) and the EBITDA result amounted to MSEK 141 (92). During the quarter, expenses affecting the comparison between periods were incurred, relating to doubtful receivables and gaming tax of MSEK 45.2, and impacting earnings. Underlying EBITDA amounted to MSEK 186.7 and the underlying EBITDA margin was 25.9 percent.

A few days ago, the ICE trade fair closed. This is one of the industry’s foremost meeting places, and Yggdrasil once again held a prominent position there as the leading game developer. Its attendance at ICE is the company’s largest initiative in presenting itself and its new games. For the third consecutive year, Yggdrasil received the industry’s “Innovator of the year” award.

The other company in business area Game Development, Highlight Games, has now launched its virtual football game in Italy together with some of the country’s largest gaming operators, Eurobet and Sisal. We believe that this game can quickly capture market share in one of Europe’s foremost football nations.

On 18 December 2018, European Entertainment Intressenter BidCo AB (“EE Intressenter”), announced a public cash offer of SEK 87 per share to Cherry AB shareholders. EE Intressenter is a company jointly controlled by a consortium consisting of Bridgepoint Advisers Limited, acting as manager for and on behalf of, Bridgepoint Europe VI Fund, major shareholders in Cherry AB and others.

The Board of Directors’ independent bid committee recommended that Cherry’s shareholders accept the bid from EE Intressenter. In its assessment, the recommendation took into account factors including the thorough analysis performed by the company’s financial advisers Carnegie. Key components of the bid committee’s assessment were the consideration of the bid premium over an extended time frame, the major shareholders’ decision to participate and changed market environments for listed gaming companies in Sweden.

On 25 January 2019, EE Intressenter announced that the offering was accepted by shareholders holding 45,425,416 shares, corresponding to approximately 43.0 percent of the shares in Cherry. The shares submitted in the offering, together with the shares controlled by the Consortium, totalled 4,988,000 Class A shares and 90,537,784 Class B shares in Cherry, corresponding to approximately 90.4 percent of the total number of shares and 93.3 percent of the total number of votes in Cherry AB. EE Intressenter extended the acceptance deadline to 8 February and announced on 12 February that it had secured approximately 98.2 percent of the total number of shares in Cherry. EE Intressenter intends to initiate a compulsory acquisition procedure regarding the shares in Cherry that were not tendered in the offer and to promote a delisting of the shares of series B in Cherry from Nasdaq Stockholm, the operations will continue in a private setting.

In a way, Cherry can be said to be Sweden’s oldest gaming company. The Group’s roots date back to 1963, when Bill Lindwall and Rolf Lundström initiated gaming operations under the name Restaurang AB Rouletter. In 1968, cooperation was initiated with AB Roulett konsult & Spelautomater, which had been founded Per Hamberg and Lars Kling. In 1972, the name of the company was changed to Cherry, and the cherry symbol began to be used as a trademark. The period as a listed company began in 1997, with the company’s listing on the SBI list, and after the current planned delisting of the company’s series B shares from Nasdaq Stockholm, Mid Cap list, to continue the business in a private setting.

The foundation of Cherry’s development has been, and remains, to have a clear focus on entrepreneurial spirit and innovation, as well as offering the best workplace and development opportunities for all of our employees. We will now work with partly new owners to implement the existing strategy, while, at the same time, being able to implement efficient investments to safeguard Cherry’s market position.

I would like to thank all of the shareholders, employees, partners and other stakeholders who have participated in Cherry’s journey thus far. I am convinced that Cherry and its Group companies will remain significant players in the gaming and entertainment industry for many years to come and I look forward to following developments.

Gunnar Lind
Acting 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 in related business areas and geographic markets within Europe and beyond.

The Group focuses on generating value for shareholders by participating actively 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 on 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.

George Miller started his career in content marketing and has started working as an Editor/Content Manager for our company in 2016. George has acquired many experiences when it comes to interviews and newsworthy content becoming Head of Content in 2017. He is responsible for the news being shared on multiple websites that are part of the European Gaming Media Network.

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Super League and Betfred Extend Their Partnership

Niji Narayan

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Super League and Betfred Extend Their Partnership
Photo Source: superleague.co.uk
Reading Time: 1 minute

 

Super League and Betfred have extended the current three-year partnership until the end of the 2021 season. The announcement follows recent title sponsorship deals between Betfred and other major sports competition brands. As part of the new sponsorship, Super League and Betfred will continue to support the “Gamble Responsible” campaign, which is currently promoted at Super League games.

“We’re thrilled to continue our partnership with Betfred who have become synonymous with Super League. They have been a vital part of our journey over the last three years and we look forward to working with them in what is a hugely exciting time for Super League and the sport. To have the support of someone like Fred who is so passionate about Super League and who shares our vision for its future is fantastic,” Robert Elstone, Chief Executive Super League said.

“This is a historic and ground-breaking deal for the sport and shows a huge commitment from Fred, his senior management team, and all his staff who are so passionate about Super League. It is a significant increase on previous sponsorships and reflects the growing popularity and value of the Super League brand,” Rhodri Jones, Chief Commercial Officer Super League said.

“The real passion for this game shown by the players, the media and, most importantly, the fans, is for me the main reason why this has proved to be such a great sponsorship for us. Therefore, I had no hesitation in extending the deal for a further two years and Betfred look forward to working with Super League to help grow the terrific game of rugby league,” Fred Done, the Boss of Betfred said.

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Miss FashionTV Gaming World 2019 to be Crowned this Month in Malta

George Miller

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Miss FashionTV Gaming World 2019 to be Crowned this Month in Malta
Reading Time: 2 minutes

 

Revolutionising the online gaming industryFashionTV Gaming Group brings together the virtual world of online gaming with the high fashion and glamorous real world of FashionTV with an evening of opulence on the 30th May.

Known for always doing things differently, FashionTV Gaming Group will be hosting its first Miss FashionTV Gaming World awards on the 30th May in Malta at the iconic Fort St Elmo in Valletta.

Miss FashionTV Gaming World 2019 is being held in collaboration with Malta Fashion Week and will culminate the week-long fabulous programme of events with a one-of-a-kind FashionTV glam party.

The event will include a cocktail reception followed by the Miss FashionTV Gaming World contest, with models competing from all over the world.

There will also be a fashion show and live entertainment before announcing this year’s winner who will be crowned on the night and rewarded with a cash prize and the opportunity of becoming the face of FashionTV Gaming World for 2019.

The event is powered by FashionTV Gaming Group and its main sponsor is one of the world most successful online gaming giants, the award winning- BetConstruct who also powers VBet.

An evening of lavish FashionTV entertainment is set to follow, with an exclusive networking reception that will allow industry leaders, models, celebrities, influencers, popular designers, and fashionistas to come together within the walls of a truly magnificent venue under the stars.

Aviva Baner, Head of Media, at FashionTV Gaming Group noted: “Miss FashionTV Gaming 2019 is definitely an industry first of its kind and will  represent one of the major highlights of the global online gaming industry this year.

“We look forward to welcoming our guests and treating them in FashionTV style as we wait to crown our brand ambassador for the forthcoming year. Apart from representing FashionTV Gaming Group, this year’s winner will also gain the international exposure that comes with a mega brand like FashionTV, and we’re excited to being a part of the journey”.

Malta Fashion Week, Airmalta and VisitMalta.com are also sponsoring the event.

Following a series of successful launches across the world during 2019, in Europe, India, Africa, and more recently, Asia, backed by the Global TV Network giant with over 2 billion viewers around the world, FashionTV Gaming Group, one of the fastest growing companies  in the online gaming industry , aims to create a  new era of games through its  “FashionTV Gaming World”, by creating a world of FTV branded games and websites, across all verticals , via its unique B2B sublicensing model for this mega brand and its vision.

This concept allows operators and suppliers around the world to run FashionTV branded gaming products, as well as develop and produce their own FashionTV branded games, websites, including but not limited to Casino, Live Dealer, Sports betting and Games. Other FashionTV branded opportunities include FashionTV poker, bingo, scratch cards, fantasy sports, social games, and games of skill, all of which will become a part of the new and innovative vision of FashionTV Gaming World, with massive global exposure.

Being part of this franchise means that operators and suppliers are able to capitalise on the global reach and power of the FashionTV mega brand to significantly reduce the high marketing costs incurred when bringing a new online gaming operation or branded game to market.

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MGA Attends Annual Conference of GREF 2019

Niji Narayan

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MGA Attends Annual Conference of GREF 2019
Photo Source: mga.org.mt
Reading Time: 1 minute

 

The Malta Gaming Authority has participated in the annual conference of the Gaming Regulators European Forum (GREF), held in Limassol, Cyprus.

The conference was exclusively attended by many gaming regulators. The conference has included topics relating to alternative payment methods, payment blocking measures, the parallels between gambling products and gambling-like financial products, as well as virtual currencies.

The MGA’s Chief Legal Counsel, Carl Brincat, delivered a presentation during a session entitled “Virtual currencies and gambling regulation: the Maltese case.” Carl Brincat was joined by Gerd Sapiano, Senior Analyst within the Securities and Market Supervision Unit within the Malta Financial Services Authority, as well as Nicholas Warren, a private financial services and blockchain consultant.

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