Cherry group – growth through innovation

Online gambling group posts FY and Q4 2017 results showing significant improvements in revenue.

The Cherry online gambling group has published a strong set of Q4 and FY 2017 results, showcasing the following KPIs:

Q4-2017

• Group revenue increased by 17 percent year-on-year to MSEK 607 (519), with organic revenue growth amounting to 16 percent (41).
• Profitability improved and EBITDA increased by 37 percent to MSEK 141 (103) on a margin of 23.3 percent (20.5).
• Profit for the period declined markedly to MSEK 18 (68).
• The switch of listing from AktieTorget to Nasdaq Stockholm’s main list was completed and, effective from 18 October, Cherry’s B shares have been traded on the Mid Cap list.
• Change of management in subsidiary group ComeOn was implemented on 26 October.
• On 1 November, Cherry adjusted its full-year forecast.
• Acquisition of an additional 12.5 percent of the shares in Highlight Games brought the Cherry shareholding in the company to 37.5 percent.
• Acquisition of the majority of the shares outstanding in Game Lounge was completed. Cherry owns 95 percent of the shares effective from 1 January 2018.

FY 2017

• Group revenue increased by 104 percent to MSEK 2,252 (1,102), with organic revenue growth amounting to 27 percent (32).
• Profitability improved and EBITDA increased by 146 percent to MSEK 429 (174) on margin of 19 percent (15.8).
• Profit for the period was down at MSEK 110 (125), impacted adversely by a more difficult than anticipated integration of the ComeOn acquisition. .
* For the second year running, Cherry AB’s Board of Directors proposed that no dividend be paid for the 2017 financial year.
• On 29 January 2018, Game Lounge acquired US site Slottracker.com.

CEO Anders Holmgren hailed progress in 2017 as strong, with increased market share.

“We will continue to focus on companies run by extremely strong and ambitious individuals with a mix of entrepreneurs and specialists with a strong spirit of innovation. Creativity and hard work drive the products forward, also allowing Cherry’s business areas to grow faster than their respective markets,” he said.

Commenting on the progress in Sweden towards a more liberalised online gambling market, Holmgren observed:

“The timetable stands firm, with a licensing system to be in place from 1 January 2019. Cherry repeated its view that the proposed tax rate of 18 percent is excessive. Legalization of the gaming market, with a high degree of channelling, should be the main purpose of regulation. The UK has successfully achieved a 95 percent channelization, with a tax rate of 15 percent. Unfortunately, we have also received indications that Svenska Spel is preparing for re-regulation by, for example, establishing a business area for licensed gaming. It is our assessment that this will complicate the effective implementation of the new regulations.

“Cherry also takes the view that the proposal to increase the maximum wager will not be sufficient to offset the proposed sharp increases in the taxes on gaming tables and in the license fee. As a result, we believe the risk is high that the proposal will lead to fewer jobs and a concentration of operations and tourism to the major cities.”

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