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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 2017Reading Time: 6 minutes

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, anders.holmgren@cherry.se
Christine Rankin, CFO, Tel.: +46 765 399 492, christine.rankin@cherry.se
Anders Antonsson, IR & Communications, Tel.: +46 709 994 970, anders.antonsson@cherry.se

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


Source: European Gaming Media and Events

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Russian Online Casinos Supply the Donbass Separatists

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Russian Online Casinos Supply the Donbass SeparatistsReading Time: 1 minute

Pro-Russian separatist groups of the Donbass War (Eastern Ukraine) receive material funds from illegal gambling business, states a recent article published in the Russian Sobesednik magazine. According to article, part of the illegal profits of the online casinos is used to finance the ongoing conflict in Ukraine.

As reported by GC Alor analysts, the black turnover of these Russian online casinos is around 200 billion RUR (2,725,065,200.00 Euro). The Majority of these online casinos are registered in foreign administrations, like Azino777 being registered in Curacao.

As experts say, many online casinos are physically based in Ukraine, where the legislation is slightly more loyal than Russian. It is allowed, for example, to develop gaming software for third-party customers. Lucky Labs company, which is linked to the online casino “Vulcan”, operates in Ukraine as software developer.

According to the Security Service of Ukraine, which conducted searches at the office of the company lately, Lacky Labs also controls the websites of CasinoX and Joycasino. The company’s office is big. It is a 4-storey building designed for 150 people. There is also a basement area where there is a kitchen and a dining room, a gym.

Lucky Labs was founded by two Russians. Because of the sanctions imposed by the President of Ukraine Petro Poroshenko, now they are not allowed to enter the country. However, Lucky Labs continues to exist. Now the company is registered by an Ukrainian citizen.

If some of the profits of illegal online casino go to pro-Russian patriotic purposes, it becomes clear why Roskomnadzor does not block their Internet addresses. The correspondent of “Sobesednik” managed to access the mentioned online casinos without any obstacles, using no VPN or “mirrors”.

 

Source: sobesednik.ru


Source: European Gaming Media and Events

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Play’n GO ‘Slots’ Into 1st Place!

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Play'n GO 'Slots' Into 1st Place!Reading Time: 2 minutes

Company celebrates EGR victory with Slot Provider of the Year Award

 

June 22, 2018 – Play’n GO were honoured at the EGR B2B Awards on Wednesday (20thJune) as they took home the highly coveted Slot Provider of the Year Award, beating out some strong competition.

The awards, held in London’s prestigious Hurlingham Club, “celebrates and rewards the very best service suppliers in the online gaming industry” and Play’n GO were honoured to have been nominated in numerous categories including Innovation in Mobile and Best Multi-Channel Supplier.

Play’n GO were recognised for their remarkable offerings in the slot market over the past year including innovative games such as Viking Runecraft, Sweet Alchemy and Moon Princessas well as many other popular titles.

CEO Johan Törnqvist was delighted to pick up the win, and believes it is a reflection of the company’s hard work.

“It’s an honour to pick up such a sought-after award, especially with the level of competition in the category. As a company we work hard to put out the finest, most entertaining, offering to our partners in the market, and winning this award is a testament to that. We have consistently been recognised in the industry for the innovative products we release and it’s our job not to rest on our laurels, but to continue innovating”

 

About Play’n GO

Play’n GO is an award-winning supplier of high quality gaming content to many of the world’s leading casino brands.  Its genuine omni-channel solution can be tailored to suit the needs of individual online and land-based partners, regardless of geographical, regulatory, or market-specific requirements. Its games are developed in HTML5 to provide an enhanced user experience on all devices and operating systems. These are complemented by superior back-office administration tools which provide expansive reporting and marketing capabilities, ensuring operators are equipped to provide the ultimate gaming experience. The supplier’s extensive portfolio was recently recognised by the award of the IGA Slot Provider of the Year 2017 title. Play’n GO currently hold offices in Sweden, Malta, Hungary, and the UK. Please visit http://www.playngo.com for more details.


Source: European Gaming Media and Events

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Poland: Accepted Changes In Taxes, Including Gambling

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Poland: Accepted Changes In Taxes, Including GamblingReading Time: 1 minute

Poland’s lower house (Sejm) has voted down five Senate amendments to a comprehensive amendment to several tax bills, including gambling.

The adopted amendments may be applied retroactively, which is to the income earned from January 1 2018.
Gamblers will be treated in a uniform manner after the changes.

Adopted by the Sejm on May 10th of this year extensive amendment to the Personal Income Tax Act (PIT), the Corporate Income Tax Act (CIT) and the Act on flat-rate income tax on certain revenues earned by natural persons; that all winnings on machines will be exempt from PIT, the tax relief for creators will be extended to the next creative professions, the real estate income tax will be larger. This applies to provisions adopted last autumn and effective from January 1st 2018.

Unlike the regulations adopted in autumn, the amendment assumes for example, that participants of legal gambling will be treated in a uniform manner. Regardless of whether the games are organized by casino operators or a company performing a state monopoly in this area, which would be Totalizator Sportowy. In line with the provisions changed by the Sejm and approved by the Senate on Thursday, winnings in slot machine games, card games, dice games and cylindrical games – regardless of which legally operating entities organize them – will be exempt from personal income tax.

In the remaining scope, the rules of taxing winnings (in numerical games, cash lotteries, mutual bets, etc.) are to remain unchanged in relation to the provisions currently in force. Pursuant to the amendment of October 27th 2017, winnings in gambling are subject to a l0% PIT tax on winning if their one-time value of winning exceeds PLN 2,280 (528 Euro).


Source: European Gaming Media and Events

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