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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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Kinguin Launches API Giving Merchants Access to Inventory and Award Winning Customer Support

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Kinguin Launches API Giving Merchants Access to Inventory and Award Winning Customer SupportReading Time: 2 minutes

 

Kinguin, one of the world’s leading online retailers in the video and PC game industry today announced the launch of the Kinguin application programming interface (API) for e-commerce. The newly released API is free to qualified online retailers and makes it easy to list, price, and sell thousands of video games while using Kinguin’s award-winning Customer Support and automated order-processing.

With the Kinguin e-commerce API, retailers gain access to a virtually endless supply of CD keys via Kinguin’s robust video and PC game catalog, eliminating traditional online store needs of inventory management and control, while offering larger, more diverse selections of products. Retailers can immediately add up to 15,000 games with customizable attributes such as pricing, descriptions and more to their existing store offerings.

Customers pay the participating store directly as normal, then, without any middlemen or delays, orders are automatically processed by Kinguin. Game keys are immediately dispatched once an automated purchase information has been received. Problems regarding game keys or transactions will be handled completely, professionally and immediately via Kinguin’s award-winning customer service channels – simplifying the purchasing experience for merchants and gamers.

“The mission of the Kinguin API for e-commerce is to make it easier for any e-commerce store to distribute virtual products. In this way, businesses can take advantage of the large volume of products available at Kinguin.net quickly, easily, and profitably,” says Kamil Grabowski, Project Manager behind Kinguin’s API for e-commerce. “Our goal is to satisfy the gaming community, both players and merchants, and with this API, it’s going to be easier than ever.”

To apply for the Kinguin API e-commerce solution, please apply here.

About Kinguin:
Founded in 2013, Kinguin has fast become the largest alternative marketplace to Steam, Origin, and Battle.net, with more than 7 million loyal customers globally. Kinguin’s mission is to create an ecosystem built for the gamer. To achieve this, Kinguin provides easy and secure access to games, innovative ways for gamers to trade and conduct commerce, and new ways for developers to reach customers directly. Kinguin is also involved with esports, esports venues, and esports centers of excellence worldwide. Visit https://www.kinguin.net and https://www.kinguin.io for more information.


Source: European Gaming Media

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Leap Gaming launches Instant Football

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Leap Gaming launches Instant FootballReading Time: 1 minute

 

Leap Gaming, a developer of 3D multi-platform casino and gaming solutions, has launched its latest game, titled Instant Football.

It provides an on-demand football experience through both desktop and mobile devices. Its hallmarks are realistic animated action and fast-paced betting options.

The interface is characteristically simple and intuitive. It features 16 teams. Its other features include the option to browse between games, on-demand activation of games and the ability to skip scenes and matches for faster betting.

Instant Football offers a broad range of betting markets, including home and away teams, and Rebet and Rebet*2 on the same teams – all of which are available 24/7.

Video footage has been created using motion capture technology to record professional players and scans of real stadiums, and is voiced with professional commentary.

The game also offers a range of customisable options, including the UI and UX, languages (the game automatically adjusts to location), currency and betting limits.

It is available directly through Leap Gaming, or via 1X2 Network, SG Digital and other selected platforms.

Yariv Lissauer, CEO of Leap Gaming, said: “Instant Football is one of our most complete game to date, and combines stunning graphics with professional commentary with a wide range of betting options to deliver a truly world-class player experience.

“Virtuals are becoming increasingly popular as players demand round the clock access to sports events and games, and we can certainly deliver this via titles such as Instant Football.”

 

Source: interGameOnline


Source: European Gaming Media

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NOVOMATIC Lottery Solutions wins Norsk Tipping’s competition

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NOVOMATIC Lottery Solutions wins Norsk Tipping’s competitionReading Time: 1 minute

 

NOVOMATIC Lottery Solutions (NLS), a full-service lottery provider based in Austria, has won a mini competition conducted by Norsk Tipping to find a suitable supplier of the digital version of the lottery’s most popular scratch game “Million Flax”.

“Million Flax” is one of the core products in Norsk Tipping’s portfolio of physical scratch games and it has won a great brand recognition since its launch in 1995. NLS offered not only a smooth transition of all elements from the physical ticket to its digital version but also proposed attractive and playful animations that can further enhance players’ retention.

“We are very happy that once again our offering has proven to be the best fit for Norsk Tipping’s sophisticated online games portfolio. It was a competitive bid and the fact that we won based on quality is another validation of NLS’ innovative approach to the eInstant game category” – explained Pall Palsson, Director of Product Management at NLS.

This win comes as part of the contract that NLS inked with Norsk Tipping in March 2017, following a competitive tender procedure. Under the terms of the contract, NLS supports the growth and diversity of lottery’s e-Instant portfolio and provides business development expertise in the area of interactive games.


Source: European Gaming Media

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