Cherry AB (PLC) Interim Report January 1 June 30, 2012

Transcription

1 Cherry AB (PLC) Interim Report January 1 June 30, 2012 Cherryföretagen has become Cherry. Check in and experience new Cherry on Cherry offers fun and excitement on land, at sea and online. 1

2 Highlights Six month interim period - Turnover increased with 13 percent and EBIT increased with 503 percent Group turnover increased with 13 percent and amounted to MSEK (207.1). EBITDA increased with 174 percent and amounted to MSEK 24.1 (8.8). EBIT increased with 503 percent and amounted to MSEK 18.1 (3.0). The result after tax amounted to MSEK 14.6 (5.6) equivalent SEK 1.14 (0.48) per share after minority interests. Second quarter A strong profit growth all business areas increased Group turnover increased with 5 percent and amounted to MSEK (109.7). EBITDA increased with 455 percent and amounted to MSEK 12.2 (2.2). EBIT increased significantly and amounted to MSEK 9.1 (-0.7). Online Gaming increased EBIT with 156 percent and amounted to MSEK 8.7 (3.4). Restaurant Casino increased EBIT with 63 percent and amounted to MSEK 2.6 (1.6). Maritime Gaming increased EBIT and amounted to MSEK 0.3 (-0.1). The result after tax amounted to MSEK 7.6 (1.8) equivalent SEK 0.59 (0.15) per share. Cherry has applied for a license in Malta and is preparing for a launch of Euroslots.com. Cherryföretagen AB (PLC) changed name to Cherry AB (PLC) on 9 of May. Events after the end of the quarter Cherry overtook the casino operation from City Casino AB and Snättringe Restaurang AB in mid July 2012 During August Cherry signed an agreement with Corsica Ferries. Key performance indicators Q Q Jan-June 2012 Jan-June 2011 Full year 2011 Full year 2010 Full year 2009 Revenues 115,5 109,7 234,6 207,1 444,0 374,9 269,0 Other operating income - additional purchase price Online Gaming 23,8 Sum operating revenues 115,5 109,7 234,6 207,1 467,8 374,9 269,0 Operating profit/loss (EBIT) 9,1-0,7 18,1 3,0 36,6 23,3 3,2 Earnings per share after dilution (SEK) 0,59 0,15 1,14 0,48 2,81 1,63 0,51 Online Gaming Spel: Number of registered customers at end of period Number of active players during the period Deposit amount (SEK million) during the period 158,2 155,0 305,3 307,0 627,3 563,0 Restaurantcasino Number of venues Cherry operates casino in Sweden Maritime Gaming: Number of vessels Cherry operates Maritime Casino A word from CEO, Emil Sunvisson It is with great satisfaction that Cherry presents the results from the second quarter. All business areas report higher operating income compared to the same period last year and the strong growth, in the segment of Online Gaming, continues. Online Gaming - Stable growth and strong profit Cherry's focus on online slot machines has generated continued growth and profit. Operations are carried out in cooperation with strong and competent partners. The business focuses primarily on the Scandinavian market. Preparations are underway to address new European markets with EuroSlots.com, which is a prerequisite for continued profitable growth. Meanwhile, Cherry has with the product EuroLotto, focused on activating the large customer base that was built up during last year. This has also, during the first half of the year, resulted in decreased marketing costs. Restaurant Casino - Very Strong start for 2012 During the first half of 2012, Restaurant Casino has delivered a very solid result and at the same time turnover rose by 7 percent. In July, the acquisition of Snättringe and City Casino s businesses were completed. The acquisition will have a positive impact on sales and earnings from the third quarter. Cherry thereby further consolidates its leading position within the area of restaurant casino. Maritime Gaming - Turned profitable In the second quarter, the maritime segment turned profitable and despite the challenging conditions in southern parts of Europe. Operations in the Baltic are developing well, while the activities around the British Islands and Mediterranean remains a challenge. It is pleasing that Cherry, in August, signed a new contract with Corsica Ferries, which will improve the profitability in the Mediterranean. 2

3 The Group Second quarter The Group's revenue increased by 5 percent and amounted to MSEK (109.7). The increase in revenues is primarily related to business area Online Gaming, but also to another strong quarter from Restaurant Casino. EBITDA increased with 455 percent and amounted to MSEK 12.2 (2.2) and EBIT increased significantly to MSEK 9.1 (-0.7). The group s consolidated profit after financial items amounted to MSEK 8.1 (0.5) and profit after tax amounted to MSEK 7.6 (1.8), equivalent of SEK 0.59 (0.15) per share after dilution and minority interest. Six-month interim period The Group's turnover increased by 13 percent and amounted to MSEK (207.1). The increase in revenues is primarily related to business area Online Gaming and a strong first half year for Restaurant Casino. EBITDA for the Group increased with 174 percent and amounted to MSEK 24.1 (8.8) and EBIT amounted to MSEK 18.1 (3.0). The groups consolidated profit after financial items increased to MSEK 15.7 (4.4) and profit after tax amounted to MSEK 14.6 (5.6) equivalent of SEK 1.14 (0.48) per share after minority interest. Return on equity was 4 percent (2) and on total assets 4 percent (1). The Groups consolidated cash amounted to MSEK 26.2 (15.1) at the end of the period and equity/assets ratio percent was 70 (65). Business Segment Cherry s operations are divided into three business segments and development projects Online Gaming Cherry operates Online Gaming through the sites SverigeAutomaten.com, NorgesAutomaten.com, DanmarksAutomaten.com, PlayCherry.com, EuroLotto.com and affiliate operations from CherryAffiliates.com, all operated by subsidiaries in Malta. Restaurant Casino - traditional casino table games (blackjack, roulette) operated in approximately 220 Swedish restaurants, nightclubs and hotels. Cherry also offers Event Casino for companies and private individuals. Maritime Gaming operates games (slot machines and table games) on 66 vessels, of which 9 in the Mediterranean Sea and the Black Sea, 41 vessels in the Baltic Sea and 16 in the English Channel / North Sea and Irish Sea. Development Projects - the various development projects within the Group are aimed at creating new services and products to support Cherry's business concept and strategy. Until the product/service has been launched and established, the costs are taken centrally in the Group and are reported for the segment as "Development Projects" to make it transparent how much is being generated by the Group's business segments. Online Gaming - Second quarter/six-month interim period During the second quarter of 2012, revenues rose with 11 percent and amounted to MSEK 60.9 (55.0). EBIT increased with 156 percent and amounted to MSEK 8.7 (3.4). For the six-month interim period revenues increased with 24 percent to MSEK (103.8) and EBIT increased with 101 percent to MSEK 17.3 (8.6). NorgesAutomaten, SverigeAutomaten and Danmarks- Automaten deliver stable results. Revenues from CherryAffiliate.com increased significantly during the first six months of the year. During the second quarter Cherry has focused on developing the large acquired EuroLotto customer base and marketing costs has been lowered compared to first six months, Cherry continues with a significant growth in customer intake and at the end of the quarter the number of new customers amounted to (21 806) and number of registered customers within Online Gaming amounted to ( ). During the second quarter the deposits increased to MSEK (155.0) and the number of active clients amounted to (37 181) customers. Important events during the second quarter and the sixmonth interim report: Cherry has through its subsidiaries applied for a license from LGA (Lotteries and Gaming Authority) on Malta and is preparing to launch EuroSlots.com during the third quarter of The decision means that Cherry will get full control of the product offering and also get a better financial leverage with a low variable cost, which over time will enhance the margin of the Online Gaming business. Cherry Malta will continue to work together with our strong and competent partners for our established brands. Cherry maintains its growth focus within Online Gaming with continued investments in new innovative products, which is the foundation for future value creation. Cherry Malta and its subsidiary Inprom Ltd has terminated the agreement with Betsson Ltd. for renegotiation. The agreement covers the sites NorgesAutomaten.com, SverigeAutomaten.com and DanmarksAutomaten.com. 3

4 Restaurant Casino Second quarter/six-month interim period In the second quarter 2012, revenues increased with 4 percent and amounted to MSEK 30.6 (29.4). EBIT increased with 63 percent and amounted to MSEK 2.6 (1.6). The increase in revenue and EBIT improvement can mainly be explained by the fact that Cherry has been taking gaming locations from its competitors. Cherry has also invested in credit card machines at all of the gaming locations, which has resulted in increased turnover. For the six-month interim period revenues increased with 7 percent and amounted to MSEK 62.5 (58.4). EBIT increased with 62 percent and amounted to MSEK 5.5 (3.4). Important events during the six-month interim report: Cherry overtook the casino operation from City Casino AB and Snättringe Restaurang AB which comprises 16 locations. The agreement is based on a revenue sharing over a limited time period. Cherry estimate that the revenue will increase with MSEK 8 on yearly basis related to the deal, and that there will be a positive impact on the result, starting from the takeover. The locations are based around Stockholm area and the most known gaming locations that are included are, Collage, Vasakoppen Café, O Learys Södertälje and Soft Bar & Kök etc. Cherry s market share is 55 percent (53) of the active gaming tables according to the 2012 June statistics from the Swedish Lotteries and Gaming Authority. Cherry had at the end of the second quarter casinos at 222 gaming locations (224) with a total of 317 tables (317) Cherry has during the second quarter entered into nine new restaurant casino agreements in Sweden. Cherry closed 7 casino locations in Q2 due to poor profitability, bankruptcy and concept changes for the gaming location. Cherry has signed an agreement concerning Gröne Jägaren in Stockholm which is one of Stockholm most famous pubs. The operation started 1 st of July. Maritime Gaming Second quarter/six-month interim period During the second quarter of 2012 revenues amounted to MSEK 24.0 (25.3) and EBIT improved and amounted to MSEK 0.3 (-0.1). During the second quarter, the outcome of a court decision, regarding a theft in Denmark, in 2008, has had an impact on revenues and profit by MSEK 0.7. During the six-month interim period revenues amounted to MSEK 43.6 (44.9) and EBIT amounted to MSEK -0.2 (-1.3). Some recovery of the revenues has been observed in Scandinavia, at the same time the situation is stabilized around the British Islands, while the Mediterranean continues to have a difficult situation. Since most of the Maritime sales are in Euros and GBP, the stronger SEK has an immediate impact on the Group's revenues and result. The business unit continues to focus on acquiring new customers, improving efficiency, optimizing gaming environments and cost control to meet the current economic situation. Cherry is a market leader in Europe within Maritime Gaming. In Scandinavia Cherry has about 40 percent (40) of the market, measured in number of ships that currently has on board gaming. In the Mediterranean, Cherry estimates that the market share is about 20 percent (18) and in the English Channel / North Sea / Irish Sea the market share is approximately 28 percent (25). Important events during the second quarter and the sixmonth interim report: The court in Fredriksberg has ruled in favor of Cherry against Höst Retail regarding a theft at a gambling hall in Denmark, which took place in 2008, where equipment was destroyed and cash was stolen. Cherry has acquired all shares in Cherry Services Ltd (Cyprus) and in Briseis Development Corporation (Liberia) Important events after the second quarter and the Sixmonth interim period: Cherry has signed a new agreement with Corsica Ferries to operate gaming onboard their ferries in the Mediterranean. The Ferries operate between Italy and Corsica. Cherry will start the operation gradually during 2012 and Cherry estimates that the agreement will give a positive contribution to Cherry s result as of Q Cherry estimates the annual revenue from the operations will be approximately 250 KEuro Development projects Cherry focuses on finding profitable products/services that support the Group's business concept and long-term strategy. During the first six months 2012 revenues within the development projects amounted to MSEK 0.0 (0.0) and EBIT to MSEK -0.1 (-0.1). Cash, financing and financial position The Group s consolidated cash amounted to MSEK 26.2 (15.1) on June 30. Cherry has during the second quarter, paid dividend amounting to MSEK 9.6 and amortized MSEK 6.7 on the bank credit. Interest bearing liabilities amounted to MSEK 8.8 (13.4). Staff and Organization The average number of employees for the Group (calculated as fulltime positions) during the period was 205 (199). The total number of employees at the end of the period was 694 (684). 4

5 Risks and Uncertainties For a description of the risks and uncertainties please see the 2011 Annual Report. During 2011 Cherry AB received a claim from The Norwegian Gaming and Foundation Authority, where they demand Cherry to cease with the marketing and offering of the game EuroLotto.com to Norwegian players. Cherry believes the Norwegian Gaming and Foundation Authority demands are incorrect as they target the parent company Cherry AB and not Eurolslots Ltd. Cherry has contested the demands of the Norwegian Gaming and Foundation Authority 5 of May, The Norwegian Gaming and Foundation Authority pursue the matter on the Euro lottery July 8, 2011, through to Lotterinemnda in Norway, (The Lottery Board). On October 28, 2011, The Norwegian Gaming and Foundation Authority announced that its injunction against Cherry stands firm. On January 9, 2012, the Kulturdepartementa announced that its injunction against Cherry stands firm. No fine has been set. Cherry is considering the appeal in the matter in a public court in Norway. The Parent Company The parent company provides and sells internal services to other group companies in the areas of finance, accounting, administration and management, and also has some external licensing revenues. Sales for the full year amounted to MSEK 1.0 (0.9) and profit after financial items amounted to MSEK -6.6 (-6.5). The parent company's investments in non-current assets amounted to KSEK 45 (418) for the reporting period. Cash and cash equivalents amounted to MSEK 11.8 (-12.1) at the closing date. Outlook The segment Online Gaming is expected to grow in line with the online gaming market. In September 2011, H2 Gambling Capital estimated that the European online gaming market would grow by 18.4 percent to 18.5 billion USD in Online gaming is exposed to intense competition and subject to a regulatory environment that may change rapidly in the different European countries. Cherry will launch several products/services that fall within the business development projects and that supports Cherry s business concept and long term strategy. The legal situation for gaming on the Internet changes continuously by geographical markets. There is continued pressure on countries within the EU to adapt their domestic legislation to applicable EU law, with free movement of goods and services. Several countries have announced that they work with new legislation that will be consistent with EU requirements. The market for restaurant casino is shrinking every year. An increase in maximum allowed bets could generate growth and jobs. Cherry sees long-term positive trend in the business area Maritime gaming and growth can be achieved both organically and through acquisitions. The industry is cyclical and is affected at present by the current recession, especially in the south of Europe. Cherry has not issued a forecast for the full year Financial calendar 2012 Cherry intends to distribute financial reports and statements on the dates below. Interim report 3, Tuesday, November 13, 2012 Year End report 2012, Interim report 4, Tuesday, February 19, 2013 Accounting principles Cherry applies IFRS which is adopted by the EU. This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The Parent Company applies the same principles as the Group apart from the exceptions in paragraph of RFR 2; Reporting for legal persons. Information about the Group's accounting and valuation principles, the annual report 2011, published April 18th, 2012, is available on the company website. This report has not been subject to a review by the auditors. All figures in this report are in million SEK unless otherwise specified. Numbers in parenthesis indicate the amount of the corresponding period for the previous year. Stockholm, 28 of August, 2012 Emil Sunvisson President and CEO Cherry AB (PLC) Phone , , emil.sunvisson@cherry.se Cherry in brief Cherry is a Swedish gaming company established in 1963 specialized in online casinos and online slot machines; (SverigeAutomaten.com, NorgesAutomaten.com, DanmarksAutomaten.com, EuroLotto.com and PlayCherry.com), through subsidiaries in Malta, casinos in restaurants in Sweden and gaming on board vessels in Northern Europe as well as in the English Channel / Irish Sea and in the Mediterranean. Cherry employs around 700 people and has more than shareholders. The Company's B-shares are listed on AktieTorget. 5

6 Amounts in SEK million unless otherwise specified C onsolidated income statement Q Q Jan-June 2012 Jan-June 2011 Full year 2011 Full year 2010 Full year 2009 Revenues 115,5 109,7 234,6 207,1 444,0 374,9 269,0 Other operating income - additional purchase Online Gaming 0,0 0,0 0,0 23,8 0,0 0,0 T otal operating revenues 115,5 109,7 234,6 207,1 467,8 374,9 269,0 Operating expenses -103,3-107,5-210,5-198,3-419,8-340,7-254,2 Operating income (EBITD A ) 12,2 2,2 24,1 8,8 48,0 34,2 14,8 Depreciation and amortisation -3,1-2,9-6,0-5,8-11,4-10,9-11,6 Operating pro fit/ loss (EBIT ) 9,1-0,7 18,1 3,0 36,6 23,3 3,2 Financial items -1,0 1,2-2,4 1,4-1,3-3,1-0,1 P rofit before tax 8,1 0,5 15,7 4,4 35,3 20,2 3,1 Tax -0,5 1,3-1,1 1,2-1,5-0,2-1,4 P rofit after tax 7,6 1,8 14,6 5,6 33,8 20,0 1,7 A ttributable to : Parent company shareholders 7,6 2,0 14,6 6,2 36,0 20,9 2,1 Minority interest 0,0-0,2 0,0-0,6-2,2-0,9-0,4 P rofit after tax 7,6 1,8 14,6 5,6 33,8 20,0 1,7 Earnings per share befo re dilution (SEK) 0,59 0,15 1,14 0,48 2,81 2,10 0,52 Earnings per share after dilution (SEK) 0,59 0,15 1,14 0,48 2,81 1,63 0,51 Statement of total inco me Q Q Jan-June 2012 Jan-June 2011 Full year 2011 Full year 2010 Full year 2009 Profit/loss for the period 7,6 1,8 14,6 5,6 33,8 20,0 1,7 Translation gains/losses on consolidation, overseas operations -2,9 8,5-6,8 5,6-2,1-35,4-2,1 T otal income for the period 4,7 10,3 7,8 11,2 31,7-15,4-0,4 Group per segment/ business area Q Q Jan-June 2012 Jan-June 2011 Full year 2011 Full year 2010 Full year 2009 R evenues Restaurant Casino 30,6 29,4 62,5 58,4 125,8 124,2 114,9 Maritime Gaming 24,0 25,3 43,6 44,9 99,1 116,0 150,3 Online Gaming 60,9 55,0 128,5 103,8 219,1 133,8 0,0 Other operating income - additional purchase Online Gaming 0,0 0,0 0,0 0,0 23,8 0,0 0,0 Group-wide 0,0 0,0 0,0 0,0 0,0 0,0 0,5 Development Projects 0,0 0,0 0,0 0,0 0,0 0,9 3,3 The Group 115,5 109,7 234,6 207,1 467,8 374,9 269,0 Operating pro fit/ lo ss (EB IT ) Restaurant Casino 2,6 1,6 5,5 3,4 10,1 10,1 10,4 Maritime Gaming 0,3-0,1-0,2-1,3-2,7-1,7 1,4 Online Gaming 8,7 3,4 17,3 8,6 17,3 25,3 0,0 Other operating income - additional purchase Online Gaming 0,0 0,0 0,0 0,0 23,8 0,0 0,0 Group-wide -2,4-5,6-4,4-7,6-11,7-8,1-5,5 Development Projects -0,1 0,0-0,1-0,1-0,2-2,3-3,1 The Group 9,1-0,7 18,1 3,0 36,6 23,3 3,2 6

7 Amounts in SEK million unless otherwise specified Consolidated balance sheet Intangible assets 347,8 364,8 353,0 Property, plant and equipment 26,3 28,5 28,7 Other long-term receivables 0,4 0,4 0,6 Deferred tax receivables 0,2 0,2 0,2 Inventories 0,9 1,0 1,0 Current receivables 56,4 57,3 54,1 Cash and cash equivalents 26,2 15,1 30,4 T otal assets 458,2 467,3 468,0 Shareholders' equity 322,3 304,6 325,5 Long-term interest bearing liabilities 1,4 6,7 8,4 Other long-term liabilities 73,8 96,2 72,8 Deferred tax payables 0,4 1,2 0,4 Current interest bearing liabilities 7,4 6,7 7,4 Other current liabilities 52,9 51,9 53,5 T otal equity and liabilities 458,2 467,3 468,0 Consolidated cash flow statement Jan-June 2012 Jan-June 2011 Full year 2011 Profit after financial items 15,7 4,4 35,3 Adjustments for non-cash items 7,6 4,1-13,0 Taxes paid -0,2-1,4 0,2 Cash flow from operating activities before changes in working capital 23,1 7,1 22,5 Changes in working capital -3,8 1,6 2,3 Cash flow from operating activities 19,3 8,7 24,8 Net investments -5,6-3,9-6,1 Investment in acquisition of subsidiaries -1,4 0,0 - Change in long-term receivables 0,2 0,0-0,1 Cash flow from investing activities -6,8-3,9-6,2 New share issue 0,0 0,0 0,4 Dividend -9,6-9,6-9,6 Change in long-term liabilities -7,0-6,7-5,3 Cash flows from financing activities -16,6-16,3-14,5 Change in cash and cash equivalents -4,1-11,5 4,1 Cash and liquid assets at beginning of period 30,4 26,4 26,4 Exchange rate differences -0,1 0,2-0,1 Cash and liquid assets at end of period 26,2 15,1 30,4 Changes in Group equity Opening balance 325,5 303,0 New share issue -1,4 0,0 Dividend -9,6-9,6 Total profit/loss 7,8 11,2 Equity, end of period 322,3 304,6 Attributable to: Parent company shareholders 322,3 300,5 Minority interest 0,0 4,1 T otal equity 322,3 304,6 7

8 Amounts in SEK million unless otherwise specified Group key performance indicators Jan-June 2012 Jan-June 2011 Full year 2011 Full year 2010 Full year 2009 Full year Number of outstanding shares at the end of the period (thousands) Average number of outstanding shares during the period (thousands) Number of own shares 0,0 0,0 0,0 0,0 0,0 0,0 Number of registered shareholders Published price at the end of the period (SEK) 28,00 25,90 17,70 28,00 14,00 9,20 Earnings per share before dilution (SEK) 1,14 0,48 2,81 2,10 0,52-0,24 Earnings per share after dilution (SEK) 1,14 0,48 2,81 1,63 0,51-0,24 Cash flow per share (SEK) 1,17-0,90 0,33 1,58 0,05-1,27 Equity per share (SEK) 25,17 23,79 25,42 23,67 14,43 14,57 Executed dividend per share (SEK) 0,75 0,75 0,75 0,00 0,0 0,0 Return on equity (percent) Return on total capital (percent) Return on capital employed (percent) Operating margin (EBITDA, percent) 10,2 4,3 10,3 9,1 5,5 6,0 Operating margin (EBIT, percent) 7,7 1,5 7,8 6,2 1,2 1,0 Profit margin (percent) 6,7 2,1 7,5 5,4 1,2 1,1 Equity/assets ratio (percent) Quick ratio (percent) Net investments (SEK million) 7,0 3,9 6,1 59,5 16,0 16,6 Cash and liquid assets (SEK million) 26,2 15,1 30,4 26,4 11,1 10,9 Average number of employees (full-time equivalents) Number of employees at end of period Restaurantcasino Number of venues Cherry operates casino in Sweden Maritime Gaming: Number of vessels Cherry operates Maritime Casinos on Online Gaming: Q Q Q Q Q Q Number of registered customers at end of period Number of new registered customers during the period *Number of active players during the period Deposit amount (SEK million) during the period 158,2 147,1 155,8 164,5 155,0 152,0 *An active customer is defined as a customer who has played for money, during the last three months. 8