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

Transcription

1 Cherry AB (PLC) Interim Report January 1 September 30, 2012 EuroSlots.com European slots online 1

2 Highlights Third quarter Turnover in Online Gaming and Restaurant Casino reached all time high Group turnover increased with 9 percent and amounted to MSEK (118.3). EBITDA increased with 10 percent and amounted to MSEK 12.4 (11.3). EBIT increased with 23 percent and amounted to MSEK 10.8 (8.8). Online Gaming turnover increased with 24 percent and EBIT increased with 46 percent to MSEK 9.8 (6.7). Restaurant Casino turnover increased with 4 percent and EBIT increased with 7 percent to MSEK 3.3 (3.1). The market share increased to 58 percent (54) of the active gaming tables. The result after tax amounted to MSEK 7.5 (6.7) equivalent SEK 0.59 (0.53) per share. Cherry overtook the casino operation from Snättringe and City Casino. During August Cherry signed an agreement with Corsica Ferries. Nine month interim period Turnover increased with 12 percent and EBIT increased with 145 percent Group turnover increased with 12 percent and amounted to MSEK (325.4). EBITDA increased with 82 percent and amounted to MSEK 36.5 (20.1). EBIT increased with 145 percent and amounted to MSEK 28.9 (11.8). The result after tax amounted to MSEK 22.1 (12.3) equivalent SEK 1.73 (1.01) per share after minority interests. Events after the end of the quarter Cherry AB completed on the 8th of November the sale of business area Maritime Gaming to Bell Casino AB. Cherry will during November launch a new gaming site, Euroslots.com, with focus on slot machines online. EuroSlots is built on a new proprietary platform with its own license on Malta issued by the LGA (Lotteries and Gaming Authority). Key perfo rmance indicato rs Q Q Jan-Sep 2012 Jan-Sep 2011 Full year 2011 Full year 2010 Full year 2009 Revenues 128,6 118,3 363,2 325,4 444,0 374,9 269,0 Other operating income - additional purchase price Online Gaming 23,8 Sum o perating revenues 128,6 118,3 363,2 325,4 467,8 374,9 269,0 Operating profit/loss (EBIT) 10,8 8,8 28,9 11,8 36,6 23,3 3,2 Earnings per share after dilution (SEK) 0,59 0,53 1,73 1,01 2,81 1,63 0,51 Online Gaming Online Spel: Number of registered customers at end of period Number of active players during the period Deposit amount (SEK million) during the period 182,9 164,5 488,2 471,5 627,3 563,0 R estaurantcasino Number of venues Cherry operates casino in Sweden M aritime Gaming: Number of vessels Cherry operates M aritime Casino A word from the CEO, Emil Sunvisson Cherry's business areas; Online Gaming and Restaurant Casino continue to develop positively, while the situation within Maritime Gaming remained challenging during the quarter. The sale of the business area Maritime Gaming, which took place after the third quarter, will result in better margins on Group level and enabling greater focus on the growth area; Online Gaming. The sale will also help to improve the Group's liquidity. Online gaming Planning for the launch of EuroSlots.com Online Gaming continues to grow stable with improved operating margins. The focus on developing EuroSlots.com has been intensive. In October, Cherry's Maltese subsidiary received a license from the LGA in Malta, and in November EuroSlots.com will be launched. The work on developing and licensing has taken longer than expected, on the other hand we are very proud of the results. We cannot overestimate the importance, that prior to initiating new markets, to have our own platform, so we can fully control the product range. EuroSlots is not expected to contribute significantly to the growth in Restaurant Casino - Continued positive trend with improved operating result Restaurant Casino continues to deliver strong results. The growth during the quarter is satisfactory and Cherry has further increased its market share. During the quarter, the acquisition of the business from Snättringe and City Casino took place, which has affected both sales and earnings positively. Maritime Gaming - Challenging conditions The conditions in Maritime Gaming remained challenging, especially due to the strained economy in southern Europe. We are very pleased having been able to contribute to the necessary consolidation in the industry, since Bell casino has acquired Cherry's subsidiaries that operate in the area of Maritime Gaming. 2

3 The Group Third quarter The Group's turnover increased by 9 percent and amounted to MSEK (118.3). The increase in revenues is primarily related to business area Online Gaming, but also to another strong quarter from Restaurant Casino. Both Online Gaming and Restaurant Casino reported the highest turnover for a quarter ever. EBITDA increased with 10 percent and amounted to MSEK 12.4 (11.3) and EBIT increased with 23 percent to MSEK 10.8 (8.8). The group s consolidated profit after financial items amounted to MSEK 7.7 (8.0) and profit after tax amounted to MSEK 7.5 (6.7), equivalent of SEK 0.59 (0.53) per share after dilution and minority interest. Nine-month interim period The Group's turnover increased by 12 percent and amounted to MSEK (325.4). The increase in revenues is primarily related to business area Online Gaming and a strong first nine months for Restaurant Casino. EBITDA for the Group increased with 82 percent and amounted to MSEK 36.5 (20.1) and EBIT increased with 145 percent and amounted to MSEK 28.9 (11.8). The groups consolidated profit after financial items increased to MSEK 23.4 (12.4) and profit after tax amounted to MSEK 22.1 (12.3) equivalent of SEK 1.73 (1.01) per share after minority interest. Return on equity was 7 percent (4) and on total assets 6 percent (3). The Groups consolidated cash amounted to MSEK 39.5 (24.3) at the end of the period and equity/assets ratio percent was 70 (68). Business Segment Cherry s operations are divided into three business segments and development projects Online Gaming Cherry operates Online Gaming through the sites Euroslots.com, 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 230 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 65 vessels, of which 9 in the Mediterranean Sea and the Black Sea, 40 vessels in the Baltic Sea and 16 in the English Channel / North Sea and Irish Sea. Cherry completed on the 8th of November the sale of all subsidiaries within Maritime Gaming and the business segment will be dismantled. 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 - Third quarter/nine-month interim period During the third quarter of 2012, turnover rose with 24 percent and amounted to MSEK 70.6 (56.8) which is all time high. EBIT increased with 46 percent and amounted to MSEK 9.8 (6.7). For the nine-month interim period turnover increased with 24 percent to MSEK (160.6) and EBIT increased with 77 percent to MSEK 27.1 (15.3). NorgesAutomaten, SverigeAutomaten and Danmarks- Automaten continue to deliver stable results. The revenue from CherryAffiliate.com continues to develop positively. During the third quarter Cherry has focused on developing the large acquired EuroLotto customer base and marketing costs has been lowered compared to the first nine months, During the third quarter the deposits increased with 11 percent to MSEK (164.5) and the number of active clients amounted to (40 994) customers. During the quarter number of new customers amounted to (31 900) and the number of registered customers within Online Gaming amounted to ( ) at the end of the quarter. Important events after the nine-month interim report: Cherry will during November launch a new gaming site, EuroSlots.com, with focus on slot machines online. EuroSlots is built on a new proprietary platform with its own license on Malta issued by the LGA (Lotteries and Gaming Authority). The people behind the successful products of Norges- and SverigeAutomaten.com have developed EuroSlots. EuroSlots offers many innovative features and games from Net Entertainment and Microgaming. Cherry therefore remains focused on growth in the areas of online gaming with continued focus on innovative new products, which is essential for creating future value. Cherry will continue to promote our established brands online in cooperation with our partners. Customers on PlayCherry.com will however be transferred to EuroSlots during 4th quarter, and Cherry s partnership with IGT regarding PlayCherry.com will be phased out. 3

4 Restaurant Casino Third quarter/nine-month interim period During the third quarter 2012, turnover increased with 4 percent and amounted to MSEK 34.4 (33.2). EBIT increased with 7 percent and amounted to MSEK 3.3 (3.1). The segment reported its highest turnover ever. The increase in revenue and EBIT improvement can mainly be explained by the fact that Cherry has been taking gaming locations from its competitors, and also the takeover of Snättringe and City Casino from July For the nine-month interim period turnover increased with 6 percent and amounted to MSEK 96.9 (91.6). EBIT increased with 35 percent and amounted to MSEK 8.8 (6.5). Important events during the nine-month interim report: Cherry s market share increased and amounted to 58 percent (54) of the active gaming tables according to the 2012 September statistics from the Swedish Lotteries and Gaming Authority. Cherry had at the end of the third quarter casinos at 233 gaming locations (224) with a total of 334 tables (320) Cherry has during the third quarter entered into 23 new restaurant casino agreements in Sweden. Cherry closed 7 casino locations in Q3 due to poor profitability, bankruptcy and concept changes for the gaming location. Five gaming location has been closed for the season. Jan R Andersson (M) has submitted a motion to the Parliament (2012/13: Kr221) implying that the maximum bet for Black Jack should be adjusted to SEK 200 from the current level of around SEK 70. The motion is expected to be dealt with by the Ministry of Culture during the spring of An increase in the bet level is expected to provide new employment opportunities for young people between the ages 18 and 25, so-called entry-level jobs. In addition to this, indirect employment opportunities in the restaurant industry due to better profitability may arise. Maritime Gaming Third quarter/nine-month interim period During the third quarter of 2012 revenues amounted to MSEK 23.6 (28.3) and EBIT amounted to MSEK -0.2 (0.9). During the nine-month interim period turnover amounted to MSEK 67.2 (73.2) and EBIT amounted to MSEK -0.4 (-0.4). Some recovery of the revenues has been observed in Scandinavia, while the British Islands and the Mediterranean continues to have a difficult situation. Important events during the third quarter and the ninemonth interim report: During August Cherry signed a new agreement with Corsica Ferries to operate gaming onboard three of their ferries in the Mediterranean. Important events after the third quarter and the ninemonth interim period: Cherry completed on the 8th of November the sale of business area Maritime Gaming and all shares in Cherry Maritime Gaming AB, Astral Maritime Services Ltd and Cherry Services Ltd to Bell Casino AB. Overall, Cherry has received MSEK 36.3 through the purchase consideration, dividends from the sold subsidiaries and from repayment of debt to the parent company and Cherry s net cash position increased with MSEK Cherry estimates that the transaction will not have any material effect on the result for Development projects Cherry focuses on finding profitable products/services that support the Group's business concept and long-term strategy. During the first nine 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 39.5 (24.3) on September 30. Interest bearing liabilities amounted to MSEK 8.6 (15.8). Staff and Organization The average number of employees for the Group (calculated as fulltime positions) during the period was 202 (199). The total number of employees at the end of the period was 683 (701). 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 EuroSlots Ltd. Cherry has contested the demands of the Norwegian Gaming and Foundation Authority 5 of May, 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 first nine-months 2012 amounted to MSEK 1.5 (1.4) and profit after financial items amounted to MSEK (-2.5). The parent company's investments in non-current assets amounted to KSEK 120 (458) for the reporting period. Cash and cash equivalents amounted to MSEK 14.9 (8.8) at the closing date. 4

5 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 has not issued a forecast for the full year Financial calendar 2012 Cherry intends to distribute financial reports and statements on the dates below. Year End report 2012, Interim report 4, Tuesday, February 19, 2013 Nomination committee In accordance with the decision at Cherry s annual general meeting held on May 9, 2012, the following members of the Nomination Committee for AGM 2013 have been appointed: Per Hamberg, co-founder of Cherry. Morten Klein, co-founder founder of AutomatGruppen. Lars Kling, co-founder of Cherry. Rolf Åkerlind, Chairman of Cherry. The Nomination Committee shall, for to the next AGM in 2013, submit proposals on; the number of directors to be elected, the directors' remunerations, the composition of the Board of directors, a Chairman of the board, auditor (-s), remuneration for the auditor (-s) and the Chairman at the AGM. Furthermore the Nomination Committee shall submit a proposal on a new instruction for the Nomination Committee at the next AGM. 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. Translation This is a translation of the Swedish original. Stockholm, 13 of November, 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; (EuroSlots.com, SverigeAutomaten.com, NorgesAutomaten.com, DanmarksAutomaten.com, EuroLotto.com and PlayCherry.com), through subsidiaries in Malta and casinos in restaurants in Sweden. Cherry employs around 700 people and has more than shareholders. Cherry s B-shares are listed on AktieTorget. 5

6 Amounts in SEK million unless otherwise specified Co nso lidated income statement Q Q Jan-Sep 2012 Jan-Sep 2011 Full year 2011 Full year 2010 Full year 2009 Revenues 128,6 118,3 363,2 325,4 444,0 374,9 269,0 Other operating income - additional purchase Online Gaming 0,0 0,0 0,0 23,8 0,0 0,0 Total operating revenues 128,6 118,3 363,2 325,4 467,8 374,9 269,0 Operating expenses -116,2-107,0-326,7-305,3-419,8-340,7-254,2 Operating income (EBIT DA) 12,4 11,3 36,5 20,1 48,0 34,2 14,8 Depreciation and amortisation -1,6-2,5-7,6-8,3-11,4-10,9-11,6 Operating profit/ loss (EB IT ) 10,8 8,8 28,9 11,8 36,6 23,3 3,2 Financial items -3,1-0,8-5,5 0,6-1,3-3,1-0,1 P rofit before tax 7,7 8,0 23,4 12,4 35,3 20,2 3,1 Tax -0,2-1,3-1,3-0,1-1,5-0,2-1,4 P rofit after tax 7,5 6,7 22,1 12,3 33,8 20,0 1,7 A ttributable to : Parent company shareholders 7,5 6,7 22,1 12,9 36,0 20,9 2,1 M inority interest 0,0 0,0 0,0-0,6-2,2-0,9-0,4 P rofit after tax 7,5 6,7 22,1 12,3 33,8 20,0 1,7 Earnings per share before dilution (SEK) 0,59 0,53 1,73 1,01 2,81 2,10 0,52 Earnings per share after dilution (SEK) 0,59 0,53 1,73 1,01 2,81 1,63 0,51 Statement of total inco me Q Q Jan-Sep 2012 Jan-Sep 2011 Full year 2011 Full year 2010 Full year 2009 Profit/loss for the period 7,5 6,7 22,1 12,3 33,8 20,0 1,7 Translation gains/losses on consolidation, overseas operations -12,8 5,5-19,6 11,1-2,1-35,4-2,1 Total income for the period -5,3 12,2 2,5 23,4 31,7-15,4-0,4 Group per segment/ business area Q Q Jan-Sep 2012 Jan-Sep 2011 Full year 2011 Full year 2010 Full year 2009 R evenues Restaurant Casino 34,4 33,2 96,9 91,6 125,8 124,2 114,9 Maritime Gaming 23,6 28,3 67,2 73,2 99,1 116,0 150,3 Online Gaming 70,6 56,8 199,1 160,6 219,1 133,8 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 128,6 118,3 363,2 325,4 467,8 374,9 269,0 Operating pro fit/ lo ss (EB IT ) Restaurant Casino 3,3 3,1 8,8 6,5 10,1 10,1 10,4 Maritime Gaming -0,2 0,9-0,4-0,4-2,7-1,7 1,4 Online Gaming 9,8 6,7 27,1 15,3 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 -2,1-1,9-6,5-9,5-11,7-8,1-5,5 Development Projects 0,0 0,0-0,1-0,1-0,2-2,3-3,1 The Group 10,8 8,8 28,9 11,8 36,6 23,3 3,2 6

7 Amounts in SEK million unless otherwise specified C o nso lidated balance sheet Intangible assets 335,1 366,3 353,0 Property, plant and equipment 25,1 30,8 28,7 Other long-term receivables 0,4 0,4 0,6 Deferred tax receivables 0,1 0,2 0,2 Inventories 0,8 0,9 1,0 Current receivables 53,6 45,9 54,1 Cash and cash equivalents 39,5 24,3 30,4 T o tal assets 454,6 468,8 468,0 Shareholders' equity 317,1 316,8 325,5 Long-term interest bearing liabilities 1,2 8,5 8,4 Other long-term liabilities 73,1 94,6 72,8 Deferred tax payables 0,3 0,5 0,4 Current interest bearing liabilities 7,4 7,3 7,4 Other current liabilities 55,5 41,1 53,5 T o tal equity and liabilities 454,6 468,8 468,0 C o nso lidated cash flo w statement Jan- Sep 2012 Jan-Sep 2011 Full year 2011 Profit after financial items 23,4 12,4 35,3 Adjustments for non-cash items 11,6 7,2-13,0 Taxes paid -0,4-0,6 0,2 C ash flo w fro m o perating activities befo re changes in wo rking capital 34,6 19,0 22,5 Changes in working capital 1,8 0,4 2,3 C ash flo w fro m o perating activities 36,4 19,4 24,8 Net investments -7,6-5,4-6,1 Investment in acquisition of subsidiaries - 1,4 - - Change in long-term receivables 0,2 0,0-0,1 C ash flo w fro m investing activities - 8,8-5,4-6,2 New share issue 0,0 0,0 0,4 Dividend - 9,6-9,6-9,6 Change in long-term liabilities - 7,1-7,1-5,3 C ash flo ws fro m financing activities - 16,7-16,7-14,5 C hange in cash and cash equivalents 10,9-2,7 4,1 Cash and liquid assets at beginning of period 30,4 26,4 26,4 Exchange rate differences - 1,8 0,6-0,1 C ash and liquid assets at end o f perio d 39,5 24,3 30,4 C hanges in Gro up equity Opening balance 325,5 303,0 New share issue - 1,4 0,0 Dividend - 9,6-9,6 Total profit/loss 2,6 23,4 Equity, end o f perio d 317,1 316,8 A ttributable to : Parent company shareholders 317,1 312,6 M inority interest 0,0 4,2 T o tal equity 317,1 316,8 7

8 Amounts in SEK million unless otherwise specified Group key performance indicato rs Jan-Sep 2012 Jan-Sep 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) 28,70 17,30 17,70 28,00 14,00 9,20 Earnings per share before dilution (SEK) 1,73 1,01 2,81 2,10 0,52-0,24 Earnings per share after dilution (SEK) 1,73 1,01 2,81 1,63 0,51-0,24 Cash flow per share (SEK) 0,85-0,21 0,33 1,58 0,05-1,27 Equity per share (SEK) 24,76 24,74 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) 10,1 6,2 10,3 9,1 5,5 6,0 Operating margin (EBIT, percent) 8,0 3,6 7,8 6,2 1,2 1,0 Profit margin (percent) 6,5 3,8 7,5 5,4 1,2 1,1 Equity/assets ratio (percent) Quick ratio (percent) Net investments (SEK million) 9,0 5,4 6,1 59,5 16,0 16,6 Cash and liquid assets (SEK million) 39,5 24,3 30,4 26,4 11,1 10,9 Average number of employees (full-time equivalents) Number of employees at end of period R estaurantcasino Number of venues Cherry operates casino in Sweden M aritime Gaming: Number of vessels Cherry operates M aritime Casinos on Online Gaming: Q 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 182,9 158,2 147,1 155,8 164,5 155,0 152,0 *An active customer is defined as a customer who has played for money, during the last three months. 8