Cherry Interim Report January–March 2018
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Strong growth and earnings performance
• Group revenue increased by 26 percent to SEK 681 million (541), with organic revenue growth amounting to 25 percent (44).
• Profitability improved and EBITDA increased by 131 percent to SEK 192 million (83) and the EBITDA margin was 28 percent (15).
• Profit for the period amounted to SEK 89 million (36).
• Earnings per share before and after dilution amounted to SEK 0.96 (0.24) and SEK 0.96 (0.24).
• On 1 January 2018, ComeOn acquired Get Lucky Ltd.
• On 29 January 2018, Game Lounge acquired the website Slottracker.com.
EVENTS AFTER THE END OF THE PERIOD
• On 12 April, Game Lounge acquired the SEO specialist TodaysWeb.
• On 16 April, the owners of Cherry’s senior secured bond loan 2016/2020 of up to EUR 200 million (ISIN SE0008321616), established the proposed Group internal restructuring schedule.
• On 25 April, Lahcene Merzoug was appointed new Managing Director of ComeOn.
• On 26 April, Cherry announced a revised date for its Annual General Meeting: 30 May 2018.
• On 30 April, Cherry called on the option to acquire an additional 7.5 percent of the shares in Almor Holding Ltd, including the brands Sunnyplayer and Sunmaker. Following the acquisition, Cherry holds 90.0 percent of the shares in Almor.
Comments by the CEO
We can look forward to another eventful year
The first quarter of 2018 shows that Cherry’s business model yields good results. Growth continued with increased profitability, and we see good prospects for 2018 becoming a good year for Cherry’s shareholders.
Cherry’s business concept is to create shareholder value by owning and developing fast-growing gaming, entertainment and media companies. In 2017, we have taken steps, large and small, to strengthen existing market positions – at the same time as we have invested in the future. I am proud of the entrepreneurial power of the employees within all of the Group’s companies. This is one of the most important reasons for being able to offer our customers good products as well as for having a stable financial basis for continued development.
The first quarter of 2018 was a good start to the year, and I see good prospects of this year becoming an eventful one. There are ongoing efforts within Cherry’s business areas to launch several new products that we believe will create interest among existing customers. Equally important are the efforts several of the companies are making in new market segments. For our industry as a whole, 2018 will be a year with several significant events. We are seeing ongoing discussions regarding regulation of the gaming market in different countries, legislation that in various ways affects the gaming companies operating in the industry, as well as customer demand and expectations that are changing faster than ever before.
STRONG DEVELOPMENT IN THE BEGINNING OF 2018
The Group’s revenue in the first quarter of 2018 increased by 26 percent, of which 25 percent was organic growth. EBITDA increased by 131 percent, from SEK 83 million to SEK 192 million. In addition to the continuous work to strengthen profitability, this improvement is mainly due to ongoing efficiency enhancement measures within ComeOn, a company in the business area Online Gaming. The business area’s revenue for the first quarter increased by 18 percent compared with the corresponding quarter in 2017, while earnings improved significantly, from SEK 57 million to SEK 143 million, an increase of 151 percent.
After the end of the period, ComeOn has appointed Lahcene Merzoug new Managing Director. I am pleased that the company has found a strong candidate for this important position and look forward to welcoming Lahcene. I am also glad that the Interim Managing Director, Tomas Johansson, will stay on as advisor to the Cherry Group, supporting Lahcene and the company’s management group as well as contributing to strengthening and broadening Cherry’s position as an innovating and fast-growing company with operations in gaming, entertainment and media.
All companies are developing well, and I particularly want to highlight the turnaround that ComeOn’s new management has accomplished in a short time, as well as Yggdrasil Gaming, which has continuously delivered games and tools that have set the standard, and which all established gaming operators must have in their offering. Yggdrasil had a significant market presence at the industry’s biggest meeting event, ICE, in London, and many took the opportunity to play the company’s new table game in a 3D environment. The third company that is developing particularly strongly is Game Lounge, which has strong organic growth and has made some additional acquisitions, such as Slottracker.com and, in April, search engine specialist TodaysWeb.
In the coming months, Highlight Games will launch its game, SOCCERBET, in Italy, which is one of Europe’s largest gaming markets. The game is a sportsbook based on a unique combination of filmed clips from European league football and can be played both online and in game stores, closely approximating the feeling of watching live football matches. We expect the game to reach both existing and new customer categories and to be introduced in additional countries.
With its curiosity and market expertise, Cherry will strengthen and develop its position within gaming, entertainment and media. We want to be the obvious partner for entrepreneurs working in this industry. Cherry can offer a strong platform and support for ideas and products, from start to market launch as well as establishment of a sustainable and long-term business. I look forward to participating in Cherry’s ventures to create many new business opportunities and companies that will continue to lead the development as Cherry has done since its inception in 1963.
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 of Europe.
The Group’s focus is on creating shareholder value by being an active participant in the development of new and existing companies within 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.
Source: European Gaming Industry News