Cherry Gaming reports strong growth in H1-2016

The Cherry online and land gambling group has released its H1-2016 figures, highlighting the following second quarter stats:

* Revenues grew up 80 percent at SEK 191.7 million;

* Online made up 81 percent (63 percent in Q2-2015) of the group revenues;

* Profitability improved and EBITDA amounted to SEK 14.8 million (Q2-2015: loss of SEK 400,000) but performance was burdened with acquisition costs for ComeOn and Nasdaq listing costs of SEK 4 million;

* The Q2 result after tax was SEK 8.4 million equivalent to SEK 0.21 per share after dilution and minority interests;

* Online gaming grew by 113 percent and EBITDA amounted to SEK 8.6 million – not including ComeOn.

* Yggdrasil Gaming grew by 810 percent and EBITDA amounted to SEK 9.8 million; the company signed agreements with five new operators, including Bwin.party and Interwetten.

* Cherry signed an agreement to buy 49 percent of the shares in ComeOn Malta Ltd with an option to acquire the remaining 51 percent and expects the acquisition to strengthen Cherry’s position substantially in the Scandinavian market. The acquisition is expected to have a significantly positive effect on Cherry’s earnings per share from 20 July 2016.

* Group consolidated cash amounted to SEK 67.8 million at the end of the second quarter 2016 (H1-2015 SEK 24 million).

Half-year highlights included:

* Revenues up 83 percent at SEK 369 million, with a positive EBITDA of SEK 40.5 million;

* Group turnover increased by 83 percent compared to the previous year, with online contributing 80 percent;

* Profitability improved considerably and EBITDA amounted to SEK 40.5 million;

* Profit after tax of SEK 25.9 million was recorded, a major improvement on the comparative figure in 2015, when a loss of SEK 18.6 million was reported;

* Over the half year online gaming operations grew by 115 percent and EBITDA amounted to SEK 25.1 million (not including ComeOn);

* Yggdrasil Gaming grew by 661 percent and EBITDA rose to SEK 17.7 million (H1-2015: -SEK 1.6 million);

Events occurring after the reporting period include the acquisition of 49 percent of the ComeOn online gambling group, The relaunch of EuroSlots and the launch of Yggdrasil games on Bet365.

Cherry subsidiary GameLounge also acquired the assets of affiliate company Interclick Limited, which has been active in the German and British markets for 14 years. The consideration was US$ 1.5 million and the enterprise is expected to deliver a payback time of less than 1.5 years, increasing turnover by approximately Euro 1.3 million per year.

Cherry CEO Fredrik Burvall, said in a statement that Cherry has continued to combine strong organic growth with strategic acquisitions, especially in the second quarter, which delivered a significant increase in profits. The online component grew faster than the market norms and currently represents 81 percent of group sales.

Referring to the ComeOn acquisition, Burvall said that management expects a turnover of between SEK 930 to SEK 1,130 million and an operating profit of between SEK 180 and SEK 220 million.

He said that online gambling growth had been especially strong at 113 percent, commenting:

“The activity on our gaming sites grew strongly and the number of active customers increased by as much as 202 percent. Compared to the second quarter of 2015, deposits increased by 110 percent.

“During the period, we continued to upgrade our gaming sites with our latest technology and new product verticals. Among many things, Lotto was introduced on CherryCasino and sports betting was implemented on Sunmaker.

“Cherry iGaming will, in addition to the licences it already has, continue to seek local licences where we expect strong growth, and we have initiated an application process to obtain an operator’s license in the UK, which is expected to be in place during the second half of 2016.”

Burvall singled out subsidiary Yggdrasil for special mention, noting that the game developer continued to experience outstanding performance in the second quarter, as revenues grew by 810 percent and the EBITDA margin amounted to 49 percent, with bet turnover up by 1,434 percent.

“Our ambition is to continue to grow faster than the market and we are well equipped to do this both through organic growth and acquisitions,” Burvall concluded. “Our strategy, in combination with differentiated business areas, will create excellent opportunities for continued high growth, high profitability and strong value growth.”

See the full report here:http://cherry.se/en/financial-reports/