Strong start to the year creates good conditions for the future

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Kerry Webster
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Interim report for the period 1 January 31 March 2017 All amounts in the report relate to the Group and are stated in SEK thousands unless otherwise indicated.

Strong start to the year creates good conditions for the future First quarter Revenue amounted to SEK 40,964 (4,048) thousand, an increase of 912%.

1 Interim report for the period 1 January 31 March 2017 All amounts in the report relate to the Group and are stated in SEK thousands unless otherwise indicated. Figures in brackets refer to the corresponding period in the previous year. Strong start to the year creates good conditions for the future First quarter Revenue amounted to SEK 40,964 (4,048) thousand, an increase of 912%. Operating profit before depreciation (EBITDA) was SEK 25,042 (-584) thousand. Operating profit (EBIT) was SEK 24,797 (-721) thousand. Significant events after the first quarter SEK 8,999, of the convertible debenture has been converted into 1,999,999 new shares. Strong start to Q2, with revenue significantly above the normal seasonality. CEO s comments have seen an improvement in our search engine rankings for selected high-value keywords. This has meant that we have also seen an increase in incoming traffic to our sites and consequently an increase in leads (traffic from our sites to the igaming operators). The impact on revenue normally comes a little later has begun in the best possible way, with continuing strong growth and good profitability. Our Q1 revenue amounted to SEK 41 million, an increase of 912% compared with the same period the previous year, while EBITDA amounted to SEK 25 million in the first quarter of 2017, which was a significant increase from the same period the previous year. The operating margin also increased to 61%. Since the acquisition of Highlight Media was finalised, we have been working hard to systematically improve ourselves at all levels of the organisation. The initiatives we have implemented this year have produced direct effects in virtually all markets. We There has been a clearly positive start to the second quarter. Revenue and operating profit have been in line with the first quarter, even though the second quarter is normally the weakest quarter in the year due to seasonal variations. In terms of the increase in leads in April, the underlying trend is even more distinct. This means that I feel very confident in our ability to deliver full-year results for 2017 that will show continuing strong earnings growth. We have good momentum in our daily machinery, we have a charted path for 2017 and I will continue to work on our clear growth strategy. In more concrete terms, this also means that we want to continue to play an active role in the consolidation taking place in the market. There is no doubt that we have interesting times ahead of us! Marcus Teilman, President and CEO 1/11

2 Consolidated Statement of Comprehensive Income Revenue, affiliate operations 37,469 - Revenue, gaming operations 3,495 4,048 40,964 4, , Marketing expenses -3,559-2,393 Other external expenses -4, Personnel expenses -7, , Total revenue Operating expenses, gaming operations Capitalised work for own account Other operating income Other operating expenses EBITDA Depreciation and amortisation Operating profit/loss (EBIT) 24, Interest and similar income -11, , Profit/loss before tax 13, Tax -5,144 7, Earnings per share (SEK) Earnings per share after dilution (SEK) 0.09 Interest and similar expenses Other financial items Net financial items Profit/loss for the year Other comprehensive income, income and expenses recognised directly in equity Exchange differences on translation of foreign operations , Comprehensive income per share (SEK) Comprehensive income per share after dilution (SEK) 0.09 Other comprehensive income for the year Total comprehensive income for the period 2/11

3 Consolidated Statement of Financial Position 31/12/ , ,254 5,626 5,707 5,718 ASSETS Non-current assets Property, plant and equipment Goodwill Other intangible assets Other non-current receivables Deferred tax assets Total non-current assets 5,962 6,911 36,300 36, , ,971 5,749 13,654 14, ,257 10, Current assets Trade receivables Other current assets Cash and bank balances 82,144 58,999 2,987 Total current assets 105,055 84,197 4,019 TOTAL ASSETS 523, ,168 9,768 12,659 4,456-1,861 52,612 52, , ,409 9,654 10, , ,407 1,602 3, Liabilities to Parent Company 3,283 3,243 2,275 Tax liabilities 7,824 1,337 EQUITY AND LIABILITIES Equity Provisions Other provisions Non-current liabilities Other non-current liabilities Deferred tax liabilities Total non-current liabilities Current liabilities Trade payables Other current non-interest-bearing liabilities 103,160 95,751 8,677 Total current liabilities 115, ,580 11,629 TOTAL EQUITY AND LIABILITIES 523, ,168 9,768 3/11

4 Consolidated Statement of Changes in Equity Opening equity, 1 Jan 2016 Other Retained Share paid-in Translation earnings Total capital capital reserve incl. year s equity 28,559-1,921-42, Equity component of convertible debenture 8,169 8,169 Deferred tax on equity component -1,797-1,797 Comprehensive income for the year Closing equity, 31 Dec ,931-2,897-42,535 4,456 Opening equity, 1 Jan ,931-2,897-42,535 4, ,955 8,203 34,931-2,649-34,580 12,659 Comprehensive income for the period Closing equity, 31 Mar 2017 Consolidated Cash Flow Statement 31/12/ ,204 19, Cash flow from investing activities , Cash flow from financing activities Cash flow for the period 225, ,118 Cash & cash equivalents at beginning of period Cash flow from operating activities Cash and cash equivalents assumed on acquisition Translation differences on consolidation of subsidiaries Cash & cash equivalents at end of period 41, ,999 2,453 2,453 14, ,144 58,999 2,987 4/11

5 Key figures, Group Operating margin Equity/assets ratio Return on equity 61% neg 2% -19% 92.96% neg Number of shares at beginning of period Number of shares at end of period Average number of shares during period Number of shares on maximum dilution 86,636,111 Market price per share at end of period 9.75 Equity per share, SEK 4.50 Definitions of key figures Operating margin Operating profit/loss as a percentage of sales. Equity/assets ratio Equity as a percentage of total assets. Return on equity Profit/loss after tax divided by average equity. Earnings per share, SEK Profit/loss after tax divided by the average number of shares. Equity per share, SEK Equity divided by the number of shares outstanding. 5/11

6 Income Statement Parent Company Revenue Total revenue Personnel expenses Other operating income OPERATING EXPENSES Other external expenses Operating profit/loss Profit/loss from financial items Profit/loss from investments in Group companies Other interest and similar income 3, Interest and similar expenses -11, Profit/loss after financial items -8, , Tax on profit/loss for the year Profit/loss for the year 6/11

7 Balance Sheet Parent Company Amounts in SEK thousands ASSETS 31/12/2016 Non-current assets Financial assets Investments in Group companies Non-current receivables from Group companies Other non-current receivables 324, , , ,286 12,574 5,962 6,911 Total financial assets 446, ,759 12,585 Total non-current assets 446, ,759 12,585 28,385 24, Current assets Current receivables Receivables from Group companies Other current assets 5,331 5, Cash and bank balances Total current assets 19,445 20, ,161 50, , ,147 13,470 18,700 26,952 10,156 52,612 52, , ,409 1,524 1, , ,079 TOTAL ASSETS EQUITY AND LIABILITIES Equity Provisions Other provisions Non-current liabilities Other non-current liabilities Deferred tax liabilities Total non-current liabilities Current liabilities Trade payables Liabilities to Parent Company Liabilities to Group companies ,283 3,243 2,275 1,041 1,043 Other current non-interest-bearing liabilities 89,148 79, Total current liabilities 93,841 84,391 3, , ,147 13,470 TOTAL EQUITY AND LIABILITIES 7/11

8 Statement of Changes in Equity Parent Company Share Retained Share premium capital earnings Total reserve incl. year s equity Parent Company Opening equity, 1 Jan 2016 Equity component of convertible debenture 8,169 Deferred tax on equity component -1,797 Profit/loss for the period 10,375 10,375 Closing equity, 31 Dec ,372 5,623 26,952 Opening equity, 1 Jan ,372 5,623 26,952-8,252-8,252 6,372-2,629 18,700 31/12/2016 Cash flow from operating activities , Cash flow from investing activities -203,930 Cash flow from financing activities 245, , , ,444 20, Profit/loss for the period Closing equity, 31 Mar ,751 10,206 8,169-1,797 Condensed Cash Flow Statement Parent Company Cash flow for the period Cash & cash equivalents at beginning of period Cash & cash equivalents at end of period 8/11

9 Segment reporting Management has determined the operating segments based on the reports reviewed by the Parent Company s CEO and submitted to the Board. These are used to make strategic decisions. The key yardstick for the Parent Company s CEO and Board of Directors in evaluating the operating segments operations is EBITDA. The Group reports in two main operating segments gaming operations and affiliate operations. Gaming operations consist of PokerLoco Malta Limited and its subsidiary Loco Online Entertainment N.V. Affiliate operations consist of HLM Malta Limited and its subsidiaries Rock Intention Malta Limited, Chance Publications Malta Limited, Match Publications Malta Limited and Mortgage Loan Directory and Information LLC, Delaware, USA. The Parent Company Net Gaming Europe obtains its revenue from consulting services in IT, marketing, financial services, control and management. The Other segment, shown in the table below, includes the dormant Group companies Valdemo Trading Limited, Eurobet Operation Limited and Loco Marketing Sociedad Anonima, and eliminations of intragroup transactions. Net Gaming Affiliate Gaming operations operations Other Total 102 3,495 37, ,964 Operating expenses, gaming operations Capitalised work for own account Jan Mar 2017 Revenue EBITDA , ,042 Profit/loss before tax -8, , ,099 Profit/loss after tax -8, , ,955 Property, plant and equipment Goodwill 370, ,254 Other intangible assets 5,626 5, , ,587 Assets Financial assets Deferred tax assets Current assets Total assets of which intragroup assets Assets excl. intragroup assets 36,300 36,300 53,161 3,257 78, , ,748 8, , , , , ,237 30,738 8, , ,865 52,612 52, ,071 13, ,489 2, ,880 Liabilities and provisions Provisions Other non-current liabilities Deferred tax liabilities Current liabilities 1,524 8,130 9,654 93,842 11,269 39, ,926 Total liabilities and provisions 481,049 24, ,434 2, ,072 of which intragroup liabilities -1,041-15, ,357-2, , ,008 9,121 22, ,206 Liabilities and provisions excl. intragroup liabilities 9/11

10 Gaming 1 Jan Mar 2016 Net Gaming operations Other Total 344 4, ,048 Operating expenses, gaming operations -1,420-1,420 Capitalised work for own account EBITDA Profit/loss before tax Profit/loss after tax ,470 9, ,056-13, , , ,768 Revenue Assets of which intragroup assets Assets excl. intragroup assets Liabilities 3,314 21,570 2,192 27,076-13,255-2,192-15,447 3,314 8,315 11,629 of which intragroup liabilities Liabilities excl. intragroup liabilities Related party transactions Parent Company Sales of services to subsidiaries Interest income from subsidiaries Interest expenses to other related parties Receivables from subsidiaries Accumulated impairment of receivables from subsidiaries Carrying amount of receivables from subsidiaries Liabilities to other related parties , ,913 15,720-2,465-2, ,448 13,255 3,283 2,275 10/11

11 Upcoming financial reports The Annual General Meeting will be held in Stockholm on 30 May Interim report : 24 August 2017 Interim report : 23 November 2017 Year-end report 2017: 22 February 2018 Accounting policies This interim report has been prepared in accordance with IAS 34. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, IFRS. This interim report has not been reviewed by the Company s auditors. Stockholm, 18 May 2017 Board of Directors For further information, contact Marcus Teilman, President and CEO, telephone or mobile marcus.teilman@netgaming.se 11/11

21% EBITDA growth, Q1

21% EBITDA growth, Q1 - Interim Report Q1 2018 Strong profit growth and underlying growth First quarter 2018 Revenue increased to SEK 43.9 (41.0) million. Revenue from affiliate operations increased to SEK 43.1 (37.5) million.