Quarterly Report • Apr 25, 2018
Quarterly Report
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| SEK m | Q1 2018 | Q1 2017 | ∆ | Jan-Dec 2017 |
|---|---|---|---|---|
| Revenue | 1,210.0 | 1,102.0 | 10% | 4,716.5 |
| Gross profit | 864.3 | 806.3 | 7% | 3,419.4 |
| Operating income (EBIT) | 211.4 | 240.9 | -12% | 882.2 |
| EBIT margin | 17.5% | 21.9% | 18.7% | |
| Net income | 187.9 | 214.4 | -12% | 786.5 |
| Earnings per share (SEK) | 1.36 | 1.55 | -12% | 5.68 |
| Operating cash flow | 312.2 | 204.9 | 55% | 946.7 |
| Casino revenue | 922.8 | 822.9 | 12% | 3,437.9 |
| Sportsbook gross turnover | 5,773.1 | 6,006.1 | -4% | 23,117.5 |
| Sportsbook revenue | 263.5 | 250.3 | 5% | 1,140.3 |
| Sportsbook margin after free bets | 6.6% | 6.1% | 6.9% | |
| Deposits | 4,190.3 | 3,789.2 | 11% | 16,308.0 |
| Active customers | 607,785 | 607,333 | 0% |
We will continue to systematically implement further improvements.
Pontus Lindwall CEO Betsson AB
"Revenue for the first quarter 2018 was SEK 1,210.0 (1,102.0) million, an increase of 10 percent compared to the same quarter 2017. Organic growth was 4 percent for the quarter. The growth was mainly from casino, where we saw continued growth in Western Europe. Sportsbook in the Nordics grew by 22 percent, but the region Central and Eastern Europe & Central Asia (CEECA) declined mainly due to currency effects.
Operational income for the quarter was SEK 211.4 (240.9) million, a decline of 12 percent compared to the same quarter 2017. Increased marketing spend, currency effects and contribution from acquired companies had a negative impact on earnings. Marketing spend was focused on markets where we see growth opportunities, meaning that Betsson increased spend in Spain where Betsson.es recently launched sportsbook whilst marketing spend in the UK was pulled back. The operational expenses also include a non-recurring cost of SEK 15 million for the organisational restructuring implemented in the first quarter.
We follow a detailed plan and took several actions within different areas in the first quarter, aiming at getting Betsson back on track. The recent restructuring was made to increase efficiency in Betsson's operations. We will continue to systematically implement further improvements. However, I want to repeat my message from last quarter that it will take time until we can see any material effects.
The Swedish government has presented a bill regarding re-regulation of the gambling market. A big concern with the bill is that Svenska Spel's businesses are not clearly separated. Fair competition is the most important aspect in creating a successful gaming regulation where gaming is conducted within the licensed system.
The need for fair competition is also relevant for the Netherlands, where we are still waiting for a re-regulation. Many large European operators have targeted Dutch customers under EU licence and I hope that the Dutch authorities understands the importance of finding a realistic way to channelize these customers into the new regulation.
The second quarter has begun with revenues slightly lower than average daily revenue for the second quarter last year. The weaker start is due to a decline in an acquired company and a weaker than average sportsbook margin in the beginning of the quarter."
Ticker: BETS B
Betsson Group operates 17 brands
Betsson AB's B share is listed on Nasdaq Stockholm Large Cap
Gaming licences in 11 jurisdictions.
Betsson AB (publ) is a holding company that invests in and manages fast-growing companies within online gaming. The company is one of the largest in online gaming in Europe and has the ambition to outgrow the market, organically and through acquisitions. This should be done in a profitable and sustainable manner, primarily in locally regulated markets. Betsson AB is listed on Nasdaq Stockholm Large Cap (BETS).
Betsson's operational subsidiaries' vision is to deliver the best customer experience in the industry. They offer casino, sportsbook and other games via gaming licences in eleven countries in Europe and Central Asia. The business model is to offer gaming under multiple brands, including Betsson, Betsafe, Nordicbet and Casinoeuro. The brands are operated on a proprietary platform, which is the core of the offer and the customer experience.
Being a responsible operator in relation to customers, suppliers, authorities, investors and other stakeholders is a cornerstone of the Betsson's business. Betsson is a member of the European Gaming and Betting Association (EGBA), ESSA (Sports Betting Integrity) and G4 (The Global Gambling Guidance Group).
Learn more about the Group on www.betssonab.com
Group revenue was SEK 1,210.0 (1,102.0) million, an increase of 10 percent, with 4 percent organic growth. The revenue increase was mainly from Sportsbook growth in region Nordics, Casino growth in Western Europe and acquisitions. A decrease in revenue from other products had a negative impact on organic growth. Currency fluctuations had a positive impact on revenues of SEK 7 million due to the weakening of the SEK.
Licence revenue for system deliveries to the gaming operator Realm Entertainment ltd. (Realm) amounted to SEK 80.9 (128.2) million, corresponding to 7 (12) percent of total Group revenue. Currency fluctuations had a negative impact on licence revenue related to Realm by SEK 11 million, compared with the first quarter 2017.
Mobile revenue amounted to SEK 721.3 (533.0) million, an increase of 35 percent. Mobile revenue was 60 (48) percent of total revenue.
Casino revenue amounted to SEK 922.8 (822.9) million, an increase of 12 percent, of which 5 percent was organic. Casino represented 76 (75) percent of Group revenue.
Growth in mobile Casino revenue was 46 percent and amounted to a total of SEK 532.7 (365.2) million.
Sportsbook revenue in the first quarter amounted to SEK 263.5 (250.3) million, an increase of 5 percent with 7 percent organic. Sportsbook represented 22 (23) percent of the Group's revenue.
Gross turnover in Sportsbook, in all Betsson's gaming solutions, amounted to SEK 5,773.1 (6,006.1) million. Organic gross turnover was flat compared to the same quarter previous year.
The margin after free bets in Sportsbook was 6.6 (6.1) percent. The eight-quarter rolling average margin was 6.8 percent.
Mobile Sportsbook revenue amounted to SEK 182.7 (156.8) million, an increase of 17 percent. Mobile accounts for 69 percent of Sportsbook revenue.
Revenue from other products represented 2 percent of total revenues and amounted to SEK 23.6 (28.8) million. This product category includes poker.
Revenue from region Nordics was SEK 568.3 (530.3) million. The growth was 7 percent, 6 percent organic, as a result of growth in Sportsbook.
Revenue from region Western Europe amounted to SEK 390.0 (281.6) million, an increase of 38 percent, of which 14 percent was organic growth.
Revenue from region Central & Eastern Europe and Central Asia (CEECA) amounted to SEK 215.3 (252.7) million, a decline of 15 percent, organic decline was 10 percent.
Locally taxed revenue (revenue from markets where Betsson pays local betting duties) has increased by 39 percent since the first quarter last year and amounted to SEK 310.0 (223.2) million, corresponding to 25.6 (20.3) percent of total revenue. The share of locally taxed revenue is expected to increase as the Company obtains additional local gaming licences.
60%
Mobile share of revenue
Revenue by product
Sportsbook (22%) Other (2%)
Revenue by region
Nordic (47%) Western Europe (32%)
Cost of services provided were at SEK 345.6 (295.7) million for the quarter, an increase of 17 percent. This is attributable to increased betting duties, an increase in total licence fees to game providers and increased commission for affiliates and partners. Currency exchange rate fluctuations had a negative impact of SEK 5.7 million on Cost of services provided. See table on page 18.
Gross profit amounted to SEK 864.3 (806.3) million, corresponding to a gross margin of 71.4 (73.2) percent. The decrease in gross margin is attributable to changes in the revenue mix.
Operating expenses amounted to SEK 652.9 (565.4) million. The increase was mainly attributable to acquired companies, negative exchange rates and a non-recurring cost related to the organisation restructuring.
Marketing expenses amounted to SEK 244.4 (211.4) million, the organic marketing expense was SEK 214.8 million.
Personnel expenses amounted to SEK 209.5 (179.1) million, the organic personnel expense was SEK 194.3 million. In the quarter a restructuring cost of SEK 15.3 million impacted the personnel expenses.
Other external expenses, which primarily include sportsbook costs, consultants and software licences, amounted to SEK 182.3 (166.7) million, the organic other external expenses were SEK 166.0 million.
Capitalised development costs amounted to SEK 55.1 (54.0) million. Amortisation of capitalised development was SEK 55.8 (45.8) million. Depreciation for the quarter was SEK 15.5 (14.8) million.
Betsson's operating expenses are mainly in EUR and the exchange rates fluctuations had a negative impact of SEK 17 million in the first quarter compared with the same period last year.
Operating income (EBIT) amounted to SEK 211.4 (240.9) million, and the operating margin was 17.5 (21.9) percent. The organic operating income was SEK 241.9 million.
Net financial items amounted to SEK -10.0 (-10.6) million and are mainly attributable to interest costs.
The Group's income before tax amounted to SEK 201.4 (230.4) million and net income amounted to SEK 187.9 (214.4) million, corresponding to SEK 1.36 (1.55) per share.
The reported corporate tax amounted to SEK 13.5 (16.0) million, corresponding to 6.7 (6.9) percent of profit before taxes. For the full-year 2017, the corporate tax was 6.7 percent of profit before taxes. The effective tax rate may fluctuate between quarters, depending on the tax base in the countries where Betsson has subsidiaries. For example, corporate taxes in certain countries are based on dividend distribution which may result in a difference between the effective and statutory rate.
Operating income (EBIT)
Cash and cash equivalents at the end of March 2018 amounted to SEK 446.2 (874.4) million. Customer liabilities, including reserves for accumulated jackpots, amounted to SEK 432.3 (382.0) million. Gaming regulations require the Company to reserve a certain share of cash to cover player liabilities and accumulated jackpots. Current receivables from payment providers for unsettled customer deposits were SEK 409.1 (308.3) million.
Cash flow from operating activities during the quarter amounted to SEK 312.2 (204.9) million.
Betsson has a strong cash flow from operating activities and only uses external financing for acquisitions. As per 31 March 2018, total available bank credit facilities were SEK 745.0 (1,300.1) million, whereof SEK 411.3 (592.5) million were utilised. During the quarter, Betsson repaid SEK 259.9 million of its bank loans, including full repayment of the EUR 35 million RCF that expired in February. In addition, the Company has issued a bond amounting to SEK 994.7 (991.6) million.
| Credit facility | Amount | Utilised | Unutilised | Maturity date |
|---|---|---|---|---|
| RCF (SEK m) | 700.0 | 411.3 | 288.7 | Jun, 2018 |
| Bank overdraft (SEK m) | 45.0 | 0.0 | 45.0 | - |
| Bond (SEK m) | 994.7 | 994.7 | 0.0 | Nov, 2019 |
The Board of Directors has proposed to the annual general meeting (AGM) that SEK 393.1 (658.9) million, which corresponds to SEK 2.84 (4.76) per share, is distributed to shareholders through an automatic redemption process at the end of the second quarter.
Customer deposits in all Betsson's gaming solutions during the quarter amounted to SEK 4,190.3 (3,789.2) million, an increase of 11 percent. Development in deposits should be evaluated over a longer period than a quarter due to normal quarterly variances.
By the end of the first quarter, the number of registered customers was 13.3 (12.2) million, an increase of 9 percent.
Active customers during the quarter amounted to 607,785 (607,333). Trends in active customers should be evaluated over a longer period than a quarter due to normal quarterly variances.
In January, Betsson announced that it would restructure and streamline the organisation with the ambition to make it more efficient. As a consequence, total headcount in the Group will be reduced by approximately 160 employees. Annual net savings is estimated to be around SEK 50-60 million. A restructuring cost of SEK 15 million was booked in the first quarter 2018.
With effect from 1 January 2018, Malta has changed its VAT treatment of certain gambling services, in principle bringing some casino-type games into the scope of VAT. For Betsson, these changes will have the main effects that Maltese VAT of 18 percent will be charged on these games where they are provided to players established in Malta, and that any input VAT incurred in relation to the provision of taxable games can be recovered, regardless of where the player is established. The changes are not expected to have any significant effect on Betsson's financial statements.
During the first quarter 2018, Betsson received an infringement report from the Dutch regulator alleging Betsson's infringement of the 1964 Dutch Betting and Gaming Act. The offence alleged within the report is that Betsson has provided the opportunity to participate in games of chance without a licence in the Netherlands. The Netherlands has not yet introduced a liberalised licensing system and such licences are unavailable. Betsson will legally challenge any sanction, if received, on the grounds that such enforcement is inconsistent and discriminatory.
There have been no other significant events during the period.
The daily revenue in the second quarter 2018 up until 23 April was 1 percent (3 percent organic) lower than the average daily revenue of the full second quarter 2017. This trading update is not a forecast for the revenue of the second quarter, but an indication of how the quarter has started.
The Swedish Government has presented a bill regarding re-regulation of the Swedish gaming market. The new regulation is expected to come into force in January 2019.
On April 24th, it was announced that the opposition parties in the Norwegian parliament intend to put forward a proposal to seek to introduce further limitations of online gaming.
There have been no other significant events after the end of the reporting period.
The company is making product improvements and will focus marketing investments on core markets to capitalise on the increased interest in gaming around the football World Cup 2018. The World Cup takes place 14 June to 15 July and therefore results from the first half of the World Cup will be included in Q2 and the finals in Q3. This may result in sportsbook margin volatility between quarters.
The management expects that revenues from regulated markets will continue to grow and thereby increased betting duties paid. Betting duties are mainly recognised in Cost of Services Provided.
| Average FTE | Q1 2018 | Q1 2017 |
|---|---|---|
| Employees | 1,679 | 1,848 |
| Contractors | 195 | 212 |
At the end of the first quarter, the Group had 1,567 (1,902) employees. The average number of employees in the Group during the first quarter amounted to 1,679 (1,848) of which 964 (1,018) were based in Malta. The restructuring of the organisation reduced headcount in the Group with approximately 160 employees, in addition headcount in Georgia has been reduced by approximately 80 persons as a result of outsourcing in the offline business.
In addition, the Group employed 195 (212) full-time consultants at the end of the quarter, mainly within product development. The cost of consultants is recognised under Other external costs.
The Parent Company Betsson AB's (publ) business consists of investing in and administering shareholdings in companies, which, through partners or by themselves, offer games to end users online. The Company provides and sells internal services related to financing, communication, accounting and administration to certain Group companies.
Revenue for the first quarter 2018 amounted to SEK 5.1 (11.7) million, and earnings before tax amounted to SEK -13.6 (-7.8) million.
Cash and cash equivalents in the Parent Company was SEK 116.6 (365.0) million.
Equity in the Group amounted to SEK 4,123.7 (3,746.8) million, corresponding to SEK 29.79 (27.07) per share.
The Company's Series B shares are listed on Nasdaq Stockholm Large Cap List (BETS). At the end of the period, the Company had 38,158 (43,474) shareholders.
The total number of shares and votes in Betsson amounts to 144,493,238 and 290,833,238, divided into 16,260,000 Series A shares with ten votes each, 122,155,730 Series B shares with one vote each and 6,077,508 Series C shares which may not be represented at general
meetings of shareholders. Betsson treasury shares amounted to 1,084 Series B shares, which have been acquired in previous years at an average price of SEK 19.42, and 6,077,508 Series C shares.
| Name | A shares B and C shares | Votes (outstanding) |
% Capital (total capital) |
% Votes (votes outstanding) |
|
|---|---|---|---|---|---|
| Hamberg family and companies | 5,098,500 | 225,000 | 51,210,000 | 3.7% | 18.0% |
| Danske Bank International S.A | 3,731,000 | 654,753 | 37,964,753 | 3.0% | 13.3% |
| Knutsson family and companies | 2,710,000 | 4,350,000 | 31,450,000 | 4.9% | 11.0% |
| Lundström family and companies | 2,557,500 | 1,950,400 | 27,525,400 | 3.1% | 9.7% |
| Lindwall, Berit | 1,683,000 | 70,000 | 16,900,000 | 1.2% | 5.9% |
| Swedbank Robur Funds | 0 | 12,147,539 | 12,147,539 | 8.4% | 4.3% |
| DNB Technology | 0 | 5,101,651 | 5,101,651 | 3.5% | 1.8% |
| Svenska Handelsbanken For PB | 450,000 | 103,900 | 4,603,900 | 0.4% | 1.6% |
| Försäkringsaktiebolaget Avanza pe | 0 | 4,238,783 | 4,238,783 | 2.9% | 1.5% |
| Handelsbanken Fonder | 0 | 3,955,000 | 3,955,000 | 2.7% | 1.4% |
| Other | 30,000 | 89,357,620 | 89,657,620 | 61.9% | 31.5% |
| Betsson treasury shares | 0 | 6,078,592 | 0 | 4.2% | 0.0% |
| Total | 16,260,000 | 128,233,238 | 284,754,646 | 100.0% | 0.0% |
Industry market data indicates that the entire gaming market, including offline and online gaming, is worth close to EUR 380 billion with an expected growth of 2 percent annually up until 2021. Online gaming is expected to increase its share of the total market to increase from 10 percent in 2017, to a predicted share of 12 percent in 2021.
Annual growth in Betsson's core markets in Europe, which in aggregate are worth close to EUR 12 billion, is expected to be 7 percent during the years 2017-2021. Sweden is expected to show strong growth in 2019 as a result of the re-regulation of the Swedish gaming market, which is expected to come into effect in January 2019. (Data source: H2GC.)
The growth in the online gaming market is driven by higher e-commerce in general, as well as parallel usage of several screens such as a mobile phone, computer and tablet. Customers also expect to have games easily accessible when and where they want.
Another important driving force is that an increasing number of European countries are introducing local regulations for online gaming. The licence gives gaming companies the chance to compete on equal terms and to gain access to more effective marketing channels and payment solutions. Local regulations entail increased demands, and benefit operators that have a scalable, proprietary platform. This is resulting in increased consolidation in the locally regulated markets, which creates acquisition opportunities for Betsson.
Betsson's subsidiaries are operating under licences in Malta and ten more local jurisdictions. There are lasting values in offering regulated gaming services within the EU and other markets from Malta.
The Swedish government is planning to present a bill regarding re-regulation of the online gaming market and a new regulation in Sweden is expected to be implemented in 2019.
The new Dutch government has the ambition to introduce a new gaming regulation in the Netherlands, which could come into force in 2019.
Estimated CAGR on Betsson's core markets in Europe 2017-2021
The gaming sites operate on an in-house developed platform, which is the core of the offer and the customer experience. It processes and hosts payments, customer information, accounts, customer transactions and games. The games are mainly casino and sportsbook, but the offer also includes poker, scratch cards, bingo and other games. First class customer experiences are crucial and Betsson continuously invests in innovation and technology to reinforce its leading position.
Betsson's Casino offers 2,700 different games in total, of which more than 2,000 are available on mobile devices. The Betsson brands offer a selection of games targeting their specific customer segments. Slots is the largest games category in Betsson's Casino followed by live casino.
The offering in Betsson's proprietary sportsbook is continuously improved. In the first quarter, Betsson added markets in football and other major sports, as well as increased its live offering in e-sports.
The OBG frontend framework is launched on mobile web for Betsson's core brands. The rollout of apps built on OBG has started and the launch of OBG for desktop is expected to begin later this year.
Betsson has also focused on ensuring that all products are ready for the EU-wide General Data Protection Regulation (GDPR) that will come into force in May. This ensures that Betsson's customers' data is protected in line with the latest best practices.
Responsible gaming is one of the most important parts of Betsson's sustainability work. Betsson ordered an independent review of its responsible gaming tools and processes in December 2017. The report recognises that Betsson has high ambitions within responsible gaming, but it also points out potential enhancements.
Two of the key factors of responsible gaming are employee training and giving players tools to control their gaming. Betsson has taken measures to raise awareness and encourages new depositing customers to set a deposit limit.
In the first quarter 2018, 111 (169) employees received responsible gaming training and 12.7 (14.0) percent of all new depositing customers (NDC's) choose to set a deposit limit.
The Annual General Meeting of shareholders in Betsson AB will be held on Tuesday, 15 May 2018, at Scandic Haymarket Stockholm at 10:00 CET.
Shareholders who would like to make proposals to the Nomination Committee may do so by email to [email protected] or by post to Betsson AB, Nomination Committee, Regeringsgatan 28, 111 53 Stockholm, Sweden.
Stockholm, 25 April 2018
Pontus Lindwall President and CEO
This year-end report has not been subject to review by the Company's auditors.
| SEK m | Q1 2018 | Q1 2017 | Jan-Dec 2017 |
|---|---|---|---|
| Revenue | 1,210.0 | 1,102.0 | 4,716.5 |
| Cost of services provided | -345.6 | -295.7 | -1,297.1 |
| Gross profit | 864.3 | 806.3 | 3,419.4 |
| Marketing expenses | -244.4 | -211.4 | -969.6 |
| Personnel expenses | -209.5 | -179.1 | -786.4 |
| Other external expenses | -182.3 | -166.7 | -719.4 |
| Capitalised development costs | 55.1 | 54.0 | 214.1 |
| Amortisation and depreciation | -71.3 | -60.6 | -267.6 |
| Other operating income/expenses | -0.6 | -1.3 | -8.3 |
| Operating expenses | -652.9 | -565.4 | -2,537.2 |
| Operating income | 211.4 | 240.9 | 882.2 |
| Financial income and expenses | -10.0 | -10.6 | -39.3 |
| Income before tax | 201.4 | 230.4 | 842.9 |
| Tax | -13.5 | -16.0 | -56.5 |
| Net income | 187.9 | 214.4 | 786.5 |
| SEK m | Jan-Mar 2018 | Jan-Mar 2017 | Jan-Dec 2017 |
|---|---|---|---|
| Net income | 187.9 | 214.4 | 786.5 |
| Other comprehensive income | |||
| Revenue/expenses recognised directly in equity: | |||
| Hedge of net investments in foreign currency incl. deferred tax | -0.8 | 0.3 | -11.5 |
| Exchange differences in translating foreign operations | 269.3 | 27.7 | 44.4 |
| Other comprehensive income of the period (after tax) | 268.5 | 28.0 | 32.9 |
| Total comprehensive income for the period | 456.5 | 242.4 | 819.3 |
| SEK m | 31/03/2018 | 31/03/2017 | 31/12/2017 |
|---|---|---|---|
| Intangible fixed assets | 5,219.9 | 4,923.2 | 4,943.4 |
| Property, plant and equipment | 97.3 | 88.6 | 97.7 |
| Financial assets | 7.4 | 11.5 | 9.2 |
| Deferred tax receivables | 44.3 | 39.6 | 43.8 |
| Other longterm receivables | 0.0 | 0.0 | 2.6 |
| Total non-current assets | 5,368.8 | 5,062.8 | 5,096.6 |
| Current receivables | 1,366.6 | 954.5 | 1,241.9 |
| Cash and cash equivalents | 446.2 | 874.4 | 479.5 |
| Total current assets | 1,812.7 | 1,828.8 | 1,721.3 |
| Total assets | 7,181.6 | 6,891.7 | 6,817.9 |
| Equity | 4,123.7 | 3,746.8 | 3,666.9 |
| Provision gaming tax | 12.1 | 20.1 | 12.9 |
| Deferred tax liabilities | 32.4 | 10.1 | 29.3 |
| Total Provisions | 44.5 | 30.2 | 42.2 |
| Bond | 994.7 | 991.6 | 993.9 |
| Non-current liabilities to credit institutions | 0.0 | 592.4 | 0.0 |
| Total non-current liabilities | 994.7 | 1,584.0 | 993.9 |
| Current liabilities to credit institutions | 411.3 | 0.0 | 663.9 |
| Other current liabilities | 1,607.3 | 1,530.6 | 1,451.0 |
| Total current liabilities | 2,018.6 | 1,530.6 | 2,114.9 |
| Total equity and liabilities | 7,181.6 | 6,891.7 | 6,817.9 |
| SEK m | 31/03/2018 | 31/03/2017 | 31/12/2017 |
|---|---|---|---|
| Income after financial items | 201.4 | 230.4 | 842.9 |
| Adjustments for non-cash items | 73.7 | 62.7 | 274.5 |
| Taxes paid | -5.4 | -34.5 | -58.5 |
| Cash flow from operating activities | |||
| before changes in working capital | 269.7 | 258.5 | 1,058.9 |
| Changes in working capital | 42.4 | -53.6 | -112.2 |
| Cash flow from operating activities | 312.2 | 204.9 | 946.7 |
| Investments | -76.7 | -62.1 | -282.9 |
| Acquisition of cash and cash equivalents | 0.0 | 81.9 | 81.9 |
| Acquisition of shares in subsidiaries | 0.0 | -28.6 | -323.0 |
| Cash flow from investing activities | -76.7 | -8.8 | -524.0 |
| Cash paid upon redemption of warrants | 0.0 | 0.0 | -0.3 |
| Paid gaming tax provision | 0.0 | 0.0 | -7.2 |
| Settled purchase consideration | -20.3 | -26.1 | -54.7 |
| Changes in bank loans | -259.9 | 261.3 | 333.6 |
| Guarantees | 0.0 | 0.0 | -2.6 |
| Share redemption programme | 0.0 | 0.0 | -658.9 |
| Warrant premiums received | 0.0 | 0.7 | 0.3 |
| Cash flow from financing activities | -280.2 | 235.9 | -389.7 |
| Changes to cash and cash equivalents | -44.8 | 432.1 | 32.9 |
| Cash and cash equivalents at beginning of period | 479.5 | 444.3 | 444.3 |
| Exchange differences | 11.5 | -2.0 | 2.3 |
| Cash and cash equivalents at end of period | 446.2 | 874.4 | 479.5 |
| SEK m | 31/03/2018 | 31/03/2017 | 31/12/2017 |
|---|---|---|---|
| Opening balance | 3,666.9 | 3,502.9 | 3,502.9 |
| Total comprehensive income for the period | 456.5 | 242.4 | 819.3 |
| Total change excluding owner transactions | 456.5 | 242.4 | 819.3 |
| Share redemption programme | 0.0 | 0.0 | -658.9 |
| Warrants paid premium | 0.0 | 0.7 | 0.3 |
| Payment on exercise of options | 0.0 | 0.0 | -0.3 |
| Share options - value of employee services | 0.3 | 0.8 | 3.5 |
| Equity at end of period | 4,123.7 | 3,746.8 | 3,666.9 |
| Attributable to: | |||
| Parent company's shareholders | 4,123.7 | 3,746.8 | 3,666.9 |
| SEK m | Jan-Mar 2018 | Jan-Mar 2017 | Jan-Dec 2017 |
|---|---|---|---|
| Revenue | 5.1 | 11.7 | 29.9 |
| Operating expenses | -14.7 | -24.2 | -71.9 |
| Operating income | -9.6 | -12.5 | -42.0 |
| Financial items | -4.0 | 4.7 | 1,040.9 |
| Income before tax | -13.6 | -7.8 | 998.9 |
| Net income | -13.6 | -7.8 | 998.9 |
| SEK m | 31/03/2018 | 31/03/2017 | 31/12/2017 |
|---|---|---|---|
| Property, plant and equipment | 1.9 | 2.5 | 2.1 |
| Financial assets | 4,967.6 | 5,035.6 | 4,967.6 |
| Total non-current assets | 4,969.5 | 5,038.0 | 4,969.7 |
| Current receivables | 530.2 | 491.5 | 809.8 |
| Cash and cash equivalents | 116.6 | 365.0 | 145.2 |
| Total current assets | 646.8 | 856.5 | 955.0 |
| Total assets | 5,616.3 | 5,894.5 | 5,924.6 |
| Restricted equity | 350.4 | 350.3 | 350.4 |
| Unrestricted equity | 3,724.2 | 3,390.0 | 3,737.8 |
| Total equity | 4,074.6 | 3,740.3 | 4,088.2 |
| Bond | 994.7 | 991.6 | 993.9 |
| Non-current liabilities to credit institutions | 0.0 | 575.0 | 0.0 |
| Total non-current liabilities | 994.7 | 1,566.5 | 993.9 |
| Current liabilities to credit institutions | 387.4 | 0.0 | 647.3 |
| Other current liabilities | 159.6 | 587.7 | 195.2 |
| Total current liabilities | 547.0 | 587.7 | 842.5 |
| Total equity and liabilities | 5,616.3 | 5,894.5 | 5,924.6 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
|---|---|---|---|---|---|---|---|---|
| SEK m | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Revenue | 1,210.0 | 1,256.4 | 1,180.6 | 1,177.5 | 1,102.0 | 1,118.5 | 1,063.3 | 935.4 |
| Cost of services provided | -345.6 | -353.5 | -321.6 | -326.4 | -295.7 | -288.0 | -256.2 | -240.9 |
| Gross profit | 864.3 | 903.0 | 859.0 | 851.1 | 806.3 | 830.6 | 807.0 | 694.6 |
| Marketing expenses | -244.4 | -269.2 | -242.5 | -246.5 | -211.4 | -206.3 | -200.1 | -219.2 |
| Personnel expenses | -209.5 | -208.4 | -195.8 | -203.2 | -179.1 | -175.9 | -171.2 | -160.6 |
| Other external expenses | -182.3 | -184.6 | -186.2 | -182.0 | -166.7 | -166.4 | -167.2 | -156.7 |
| Capitalised development costs | 55.1 | 51.9 | 51.4 | 56.8 | 54.0 | 55.6 | 59.5 | 50.8 |
| Amortisation and depreciation | -71.3 | -70.4 | -69.1 | -67.5 | -60.6 | -61.8 | -56.0 | -49.3 |
| Other operating income/expenses | -0.6 | -3.9 | -1.0 | -2.2 | -1.3 | -10.6 | 0.9 | -1.3 |
| Operating expenses | -652.9 | -684.6 | -643.0 | -644.2 | -565.4 | -565.5 | -534.2 | -536.3 |
| Operating income | 211.4 | 218.4 | 216.0 | 206.9 | 240.9 | 265.1 | 272.9 | 158.3 |
| Financial items, net | -9.9 | -8.7 | -9.7 | -10.3 | -10.6 | -5.5 | -1.8 | -1.9 |
| Income before tax | 201.4 | 209.6 | 206.3 | 196.6 | 230.4 | 259.6 | 271.1 | 156.4 |
| Tax | -13.5 | -10.8 | -19.3 | -10.5 | -16.0 | -16.0 | -17.0 | -10.1 |
| Net income | 187.9 | 198.9 | 187.0 | 186.1 | 214.4 | 243.6 | 254.1 | 146.4 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
|---|---|---|---|---|---|---|---|---|
| SEK m | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Non-current assets | 5,368.8 | 5,096.6 | 5,084.9 | 5,188.0 | 5,062.8 | 4,760.8 | 4,372.1 | 4,256.2 |
| Current assets | 1,812.7 | 1,721.3 | 1,463.9 | 1,324.9 | 1,828.8 | 1,501.7 | 1,576.3 | 1,457.1 |
| Total assets | 7,181.6 | 6,817.9 | 6,548.9 | 6,512.9 | 6,891.7 | 6,262.5 | 5,948.4 | 5,713.2 |
| Equity | 4,123.7 | 3,666.9 | 3,389.3 | 3,301.7 | 3,746.8 | 3,502.9 | 3,343.3 | 3,028.1 |
| Provisions and non-current liabilities | 1,039.3 | 1,036.1 | 1,016.3 | 1,023.0 | 1,614.2 | 1,346.7 | 721.2 | 701.0 |
| Current liabilities | 2,018.6 | 2,114.9 | 2,143.2 | 2,188.3 | 1,530.6 | 1,412.9 | 1,883.9 | 1,984.2 |
| Total equity and liabilities | 7,181.6 | 6,817.9 | 6,548.9 | 6,512.9 | 6,891.7 | 6,262.5 | 5,948.4 | 5,713.2 |
| Consolidated cash flow statement | ||||||||
| Operating cash flow | 312.2 | 278.9 | 220.4 | 242.4 | 204.9 | 332.2 | 294.4 | 211.9 |
| Cash flow from investing activities | -76.7 | -75.6 | -70.9 | -368.8 | -8.8 | -426.1 | -82.2 | -78.1 |
| Cash flow from financing activities | -280.2 | -166.3 | -183.2 | -276.1 | 235.9 | 20.4 | -115.2 | -182.3 |
| Total cash flow | -44.8 | 37.1 | -33.7 | -402.5 | 432.1 | -73.5 | 97.1 | -48.6 |
| 2018 Q1 |
2017 Q4 |
2017 Q3 |
2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
|
|---|---|---|---|---|---|---|---|---|
| Key financial ratios | ||||||||
| Gross Margin (% of revenue) | 71.4 | 71.9 | 72.8 | 72.3 | 73.2 | 74.3 | 75.9 | 74.2 |
| EBITDA-margin (% of revenue) | 23.4 | 23.0 | 24.2 | 23.3 | 27.4 | 29.2 | 30.9 | 22.2 |
| EBIT-margin (% of revenue) | 17.5 | 17.4 | 18.3 | 17.6 | 21.9 | 23.7 | 25.7 | 16.9 |
| Profit margin (% of revenue) | 16.6 | 16.7 | 17.5 | 16.7 | 20.9 | 23.2 | 25.5 | 16.7 |
| Marketing expenses (% of revenue) | 20.2 | 21.4 | 20.5 | 20.9 | 19.2 | 18.4 | 18.8 | 23.4 |
| Basic earnings per share (SEK) | 1.36 | 1.44 | 1.35 | 1.34 | 1.55 | 1.76 | 1.84 | 1.06 |
| Diluted earnings per share (SEK) | 1.36 | 1.44 | 1.35 | 1.34 | 1.55 | 1.76 | 1.84 | 1.06 |
| Equity per share (SEK) | 29.79 | 26.49 | 24.49 | 23.85 | 27.07 | 25.31 | 24.15 | 21.88 |
| Executed dividend/redemption per share (SEK) | 0.00 | 0.00 | 0.00 | 4.76 | 0.00 | 0.00 | 0.00 | 4.51 |
| Equity/assets ratio (%) | 57 | 54 | 52 | 51 | 54 | 56 | 56 | 53 |
| Return on equity (%) | 5 | 5 | 5 | 6 | 6 | 7 | 7 | 5 |
| Return on total capital (%) | 3 | 3 | 3 | 3 | 4 | 4 | 5 | 3 |
| Return on capital employed (%) | 4 | 4 | 4 | 5 | 5 | 4 | 6 | 4 |
| Net debt (SEK m) | 970 | 1,208 | 1,404 | 1,553 | 1,061 | 955 | 780 | 974 |
| Shares | ||||||||
| Average share price (SEK) | 66.06 | 64.46 | 74.38 | 77.29 | 80.50 | 88.47 | 79.61 | 94.88 |
| Share price at end of period (SEK) | 63.12 | 60.50 | 74.25 | 73.00 | 78.00 | 87.90 | 94.80 | 70.10 |
| Highest share price (SEK) | 70.40 | 76.00 | 80.50 | 82.40 | 91.95 | 96.05 | 96.20 | 128.30 |
| Lowest share price (SEK) | 60.04 | 57.70 | 68.30 | 72.85 | 73.10 | 79.25 | 63.05 | 63.35 |
| Number of shareholders at end of period | 38,158 | 40,009 | 41,312 | 42,847 | 43,474 | 41,056 | 42,237 | 41,492 |
| Number of shares outstanding at end of period | ||||||||
| (million) | 138.4 | 138.4 | 138.4 | 138.4 | 138.4 | 138.4 | 138.4 | 138.4 |
| Number of shares at end of period (million) | 144.5 | 144.5 | 144.5 | 144.5 | 144.5 | 144.5 | 143.1 | 143.1 |
| Personnel | ||||||||
| Average number of employees (accumulated) | 1,679 | 1,867 | 1,889 | 1,878 | 1,848 | 1,661 | 1,595 | 1,624 |
| Number of employees at end of period | 1,567 | 1,873 | 1,888 | 1,887 | 1,902 | 1,821 | 1,680 | 1,766 |
| CUSTOMERS | ||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Registered customers (000's) | 13,288 | 12,993 | 12,705 | 12,381 | 12,159 | 10,101 | 9,676 | 9,489 |
| Active customers (000's) | 608 | 615 | 619 | 551 | 607 | 573 | 515 | 563 |
| CUSTOMER DEPOSITS | ||||||||
| 2018 Q1 |
2017 Q4 |
2017 Q3 |
2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
|
| Customer deposits (SEK m) | 3,450.5 | 3,564.4 | 3,349.7 | 3,240.0 | 3,024.1 | 3,090.8 | 2,737.1 | 2,624.1 |
| Customer deposits, all gaming solutions (SEK | ||||||||
| m) | 4,190.3 | 4,362.4 | 4,100.1 | 4,056.3 | 3,789.2 | 3,947.1 | 3,521.2 | 3,472.8 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
|---|---|---|---|---|---|---|---|---|
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Gross turnover, all gaming solutions (SEK m) | 5,773.1 | 5,965.4 | 5,391.0 | 5,755.0 | 6,006.1 | 6,117.7 | 5,548.0 | 6,008.7 |
| of which gross turnover live betting (SEK m) | 3,904.8 | 4,126.0 | 3,864.8 | 3,982.2 | 4,353.2 | 4,492.0 | 4,216.9 | 4,326.1 |
| Margin after free bets (%) | 6.6 | 8.2 | 7.1 | 6.4 | 6.1 | 6.6 | 7.6 | 5.7 |
| Revenue (SEK m) | 263.5 | 359.3 | 275.1 | 255.6 | 250.3 | 264.4 | 300.2 | 223.0 |
| Gross margin, Sportsbook (%) ¹⁾ ¹⁾ Margin after allocated costs |
4.6 | 6.0 | 5.1 | 4.4 | 4.2 | 4.3 | 5.4 | 3.7 |
| REVENUE BY PRODUCT | ||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Revenue (SEK m) | ||||||||
| Casino | 922.8 | 867.3 | 871.1 | 876.6 | 822.9 | 823.7 | 731.8 | 683.2 |
| Sportsbook | 263.5 | 359.3 | 275.1 | 255.6 | 250.3 | 264.4 | 300.2 | 223.0 |
| Other products | 23.6 | 29.8 | 34.4 | 45.3 | 28.8 | 30.4 | 31.3 | 29.2 |
| Total | 1,210.0 | 1,256.4 | 1,180.6 | 1,177.5 | 1,102.0 | 1,118.5 | 1,063.3 | 935.4 |
| 2018 Q1 |
2017 Q4 |
2017 Q3 |
2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
|
| Share of total revenue (%) | ||||||||
| Casino | 76 | 69 | 74 | 74 | 75 | 74 | 69 | 73 |
| Sportsbook | 22 | 29 | 23 | 22 | 23 | 24 | 28 | 24 |
| Other products | 2 | 2 | 3 | 4 | 3 | 3 | 3 | 3 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Growth, compared with previous quarter (%) | ||||||||
| Casino | 6 | -0 | -1 | 7 | -0 | 13 | 7 | 2 |
| Sportsbook | -27 | 31 | 8 | 2 | -5 | -12 | 35 | -24 |
| Other products | -21 | -13 | -24 | 57 | -5 | -3 | 7 | -24 |
| Total | -4 | 6 | 0 | 7 | -1 | 5 | 14 | -6 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Growth, compared with same period previous year (%) |
||||||||
| Casino | 12 | 5 | 19 | 28 | 23 | 20 | 11 | 11 |
| Sportsbook | 5 | 36 | -8 | 15 | -15 | -15 | 9 | 8 |
| Other products | -18 | -2 | 10 | 55 | -25 | -32 | -22 | -20 |
| Total | 10 | 12 | 11 | 26 | 10 | 7 | 9 | 9 |
| 2018 Q1 |
2017 Q4 |
2017 Q3 |
2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
|
|---|---|---|---|---|---|---|---|---|
| Sportsbook (SEK m) | ||||||||
| Nordics | 130.2 | 190.6 | 133.0 | 118.2 | 106.3 | 118.0 | 152.5 | 80.0 |
| Western Europe | 34.0 | 45.3 | 32.5 | 34.4 | 24.8 | 11.5 | 15.6 | 7.6 |
| Central & Eastern Europe and Central Asia | 83.2 | 102.1 | 94.3 | 90.7 | 106.8 | 127.1 | 119.1 | 128.3 |
| Other | 16.1 | 21.3 | 15.3 | 12.3 | 12.4 | 7.8 | 13.0 | 7.1 |
| Total | 263.5 | 359.3 | 275.1 | 255.6 | 250.3 | 264.4 | 300.2 | 223.0 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Other products - casino and other games (SEK m) |
||||||||
| Nordics | 438.1 | 416.1 | 429.4 | 440.5 | 424.0 | 438.9 | 402.1 | 355.2 |
| Western Europe | 356.1 | 316.9 | 322.7 | 317.4 | 256.8 | 244.3 | 202.7 | 200.8 |
| Central & Eastern Europe and Central Asia | 132.0 | 139.0 | 128.9 | 135.8 | 145.9 | 152.0 | 139.7 | 138.8 |
| Other | 20.3 | 25.2 | 24.4 | 28.3 | 25.0 | 18.9 | 18.6 | 17.6 |
| Total | 946.4 | 897.1 | 905.5 | 921.9 | 851.7 | 854.1 | 763.1 | 712.4 |
| 2018 Q1 |
2017 Q4 |
2017 Q3 |
2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
|
| Total per region (SEK m) | ||||||||
| Nordics | 568.3 | 606.6 | 562.4 | 558.7 | 530.3 | 556.9 | 554.6 | 435.1 |
| Western Europe | 390.0 | 362.2 | 355.2 | 351.8 | 281.6 | 255.9 | 218.3 | 208.4 |
| Central & Eastern Europe and Central Asia | 215.3 | 241.1 | 223.2 | 226.5 | 252.7 | 279.1 | 258.7 | 267.2 |
| Other Total |
36.4 1,210.0 |
46.5 1,256.4 |
39.7 1,180.6 |
40.6 1,177.5 |
37.3 1,102.0 |
26.6 1,118.5 |
31.6 1,063.3 |
24.7 935.4 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Share per region (%) | ||||||||
| Nordics | 47 | 48 | 48 | 47 | 48 | 50 | 52 | 47 |
| Western Europe | 32 | 29 | 30 | 30 | 26 | 23 | 21 | 22 |
| Central & Eastern Europe and Central Asia | 18 | 19 | 19 | 19 | 23 | 25 | 24 | 29 |
| Other | 3 | 4 | 3 | 3 | 3 | 2 | 3 | 3 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Growth, compared with previous quarter (%) | ||||||||
| Nordics | -6 | 8 | 1 | 5 | -5 | 0 | 27 | -7 |
| Western Europe | 8 | 2 | 1 | 25 | 10 | 17 | 5 | -14 |
| Central & Eastern Europe and Central Asia | -11 | 8 | -1 | -10 | -9 | 8 | -3 | -0 |
| Other | -22 | 17 | -2 | 9 | 40 | -16 | 28 | 16 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Growth, compared with same period previous year (%) |
||||||||
| Nordics | 7 | 9 | 1 | 28 | 14 | 17 | 22 | -1 |
| Western Europe | 39 | 42 | 63 | 69 | 16 | 5 | -8 | 3 |
| Central & Eastern Europe and Central Asia | -15 | -14 | -14 | -15 | -6 | -8 | -2 | 36 |
| Other | -3 | 75 | 26 | 64 | 76 | 49 | 71 | 3 |
| 2018 | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |
|---|---|---|---|---|---|---|---|---|
| COST OF SERVICES PROVIDED | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Licence fees | 117.7 | 116.6 | 111.3 | 108.9 | 96.8 | 99.3 | 88.6 | 80.7 |
| Betting duties | 56.6 | 56.2 | 52.1 | 53.9 | 43.3 | 35.4 | 33.5 | 31.2 |
| Affiliates and partners commission | 96.1 | 102.1 | 83.5 | 92.3 | 85.8 | 84.6 | 72.5 | 72.0 |
| Other cost of services provided | 75.3 | 78.6 | 74.7 | 71.2 | 69.7 | 68.7 | 61.6 | 56.9 |
| Total | 345.6 | 353.5 | 321.6 | 326.4 | 295.7 | 288.0 | 256.2 | 240.9 |
| 2018 | 2017 | 2017 | 2017 | 2017 | |
|---|---|---|---|---|---|
| Q1 | Q4 | Q3 | Q2 | Q1 | |
| Reported revenues | 1,210.0 | 1,256.4 | 1,180.6 | 1,177.5 | 1,102.0 |
| - Revenue from aquisitions 1) | -53.5 | -74.1 | -91.9 | -103.6 | -32.6 |
| - Currency effects | -7.4 | 48.2 | 32.4 | 8.3 | 4.0 |
| Organic revenues | 1,149.1 | 1,230.5 | 1,121.1 | 1,082.2 | 1,073.4 |
| Organic growth (YoY) | 4% | 10% | 5% | 16% | 7% |
| Reported growth (YoY) | 10% | 12% | 11% | 26% | 10% |
| Reported operating income (EBIT) | 211.4 | 218.4 | 216.0 | 206.9 | 240.9 |
| - Result from aquisitions1) | 15.2 | 15.5 | 5.0 | -6.8 | -3.9 |
| - Currency effects | 15.3 | 34.0 | 27.4 | 17.8 | 19.1 |
| Organic operating income | 241.9 | 267.9 | 248.4 | 217.9 | 256.1 |
| Organic growth (YoY) | 0% | 1% | -9% | 38% | 2% |
| Reported growth (YoY) | -12% | -18% | -21% | 31% | -4% |
1) For 2018, Netplay and Premier Casino.
2017 Q4) Racebet, Netplay and Premier Casino.
2017 Q2 & Q3) Tonybet, Racebet, Netplay and Premier Casino.
2017 Q1) Tonybet, Racebet, and Premier Casino.
Betsson complies with IFRS standards and interpretations (IFRIC) as adopted by the EU. This Interim Report has been prepared in accordance with IAS 34, Interim Financial Reporting. The Parent Company's financial statements have been prepared in accordance with RFR 2.
The accounting policies applied are consistent with those presented in the Annual Report for 2017. Detailed information about the Group's accounting and valuation principles can be found in the Annual Report for 2017 (Note 2), which is available on www.betssonab.com or at the Company's head office.
As of 1 January 2018 IFRS 15 Revenue from contracts with customers and IFRS 9 Financial instruments are applicable. During 2017 a project was initiated in order to analyse the potential effects of these standards. The project was completed during Q4 2017.
IFRS 9 Financial instruments address the classification, valuation and recognition of financial assets and liabilities. This replaces those parts of IAS 39 that deal with the classification and valuation of financial instruments. IFRS 9 retains a mixed valuation model, but simplifies certain aspects. There will be three valuation categories for financial assets; accrued acquisition cost, fair value through other comprehensive income and fair value through the income statement. The classification of an asset is based on the Company's business model and the characteristics of the instrument's contractual cash flows.
Betsson is primarily an online casino operator and the revenue streams mainly result from casino games and sports book activities. The payout for wagers placed on these gaming activities typically is known at the time the wager is placed. This form of wagering is referred to as "fixed odds wagering." Such wagering contracts meet the definition of a financial instrument within the scope of IFRS 9 Financial Instruments and are excluded from the scope of IFRS 15. Applying IFRS 9 instead of IFRS 15 does not impact the revenue recognition or the financial statements since timing, amounts etc. remains the same regardless of which standard is applied. Betsson deems that IFRS 9 is to be applied to contracts relating to fixed odds wagering and IFRS 15 is not applicable with regards to these revenue streams. The company concludes that this is in line with the view of IASB. No effects in the financial statements have been identified when applying IFRS 9.
IFRS 15 Revenue from contracts with customers addresses the manner in which revenues are to be reported. According to IFRS 15, revenue is to be recognised when the customer assumes control over the sold item or service and has the ability to use and obtain benefit from those items or services. Within Betssons operations there is revenue streams relating to license fee of which IFRS 15 is applied. Betsson has assessed the effects and the conclusion is that IFRS 15 will not have any effects of the Groups Financial Statement.
As of 2019, IFRS 16 Leases will be enforced. IFRS 16 require that assets and liabilities attributable to all leases, with some exceptions, be reported in the balance sheet. This accounting is based on the view that the lessee has a right to use an asset during a specific period of time and at the same time an obligation to pay for this right. IFRS 16 replaces IAS 17 Leases and associated interpretations IFRIC 4, SIC-15 and SIC-27. The standard is applicable for fiscal years commencing January 1, 2019 or later, the company will not use early application. The standard is adopted by the EU. The standard will primarily affect the accounting of the Group's operating leases, and the effects are under evaluation.
This interim report refers to certain key performance indicators, which Betsson and others use when evaluating the performance of Betsson. These are referred to as alternative performance measures (APMs) and are not defined under IFRS. The figures give management and investors important information to enable them to fully analyse the Betsson business and trends. The APMs are not meant to replace but to complement the performance measures defined under IFRS.
In the majority of national markets, gambling is regulated by the law, and all such operations, in principle, require permits. Betsson operates its businesses under gaming licences in Malta, as well as in Denmark, Estonia, Georgia, Spain, Germany, Ireland, Italy, Latvia, Lithuania and the UK. Political decisions, new interpretations of laws and new regulations can significantly affect Betsson's earnings and financial position since operations are subject to licences.
Pressure continues to be put on EU countries to adapt their national legislation to comply with applicable EU law, and a number of countries have announced that they are working on new legislation in line with EU requirements. When new legislation is adopted it is often unclear if there will be requirements, in relation to receiving a licence or in general at the time of regulating or re-regulating of markets, demanding the settlement of any form of historic obligation and also the size of any such obligation.
Since 2010, Norway has implemented a prohibition against the execution of payments for gaming arranged outside Norway. This negatively affects, banks in particular, as providing redemption services in conjunction with the payment of gaming via credit, and payment cards with foreign gaming companies is prohibited. Betsson's assessment is that this legislation is in conflict with EU law.
The Swedish government has presented a bill regarding re-regulation of the gaming market and a new regulation in Sweden is expected to come into effect 1 January 2019.
The European Commission has previously questioned whether the Dutch gambling framework is compliant with EU law. The EU commission stated in late 2017 that all infringement cases relating to gambling would be closed on grounds of policy and that operators should instead look to the European Courts for redress. The new Dutch government has the ambition to introduce a new regulation, which could come into force in 2019.Betsson is watching the developments carefully to ensure compliance with EU law.
In 2007, Turkey introduced legislation against internet gaming that did not fall within the local regulatory framework and it reinforced parts of this legislation in 2013. A Betsson associate, which has its own gaming licence in Malta and is owned and managed separately, accepts that Turkish gamblers bet under this licence. Pursuant to the legal situation described above, income originating from Turkey can be regarded as comprising a higher operational risk than income from other markets.
Seasonal variations can significantly affect the Company's operations during periods of lower gaming activity and fluctuating results in different sporting events. Economic fluctuations have not affected the operations to any significant degree. Betsson is an international company with operations that are constantly exposed to various currencies. Changes in exchange rates affect Group income.
For a more detailed description of the risks mentioned above and other risks and uncertainties, please refer to the Annual Report for 2017.
The exchange rates below are applied in the interim report.
| 2018 | 2017 | ∆ | |
|---|---|---|---|
| EUR/SEK | 9.964 | 9.507 | +4.8% |
| GBP/SEK | 11.279 | 11.049 | +2.1% |
| GEL/SEK | 3.263 | 3.432 | -4.9% |
| NOK/SEK | 1.034 | 1.058 | -2.2% |
| TRY/SEK | 2.125 | 2.414 | -12.0% |
| 31/03/2018 | 31/03/2017 | ∆ | |
|---|---|---|---|
| EUR/SEK | 10.2931 | 9.5464 | +7.8% |
| GBP/SEK | 11.7617 | 11.1273 | +5.7% |
| GEL/SEK | 3.4430 | 3.6548 | -5.8% |
No significant transactions took place between Betsson and related parties that affected Betsson's financial position and performance in the period. The extent and nature of transactions with related parties in the period are consistent with previous year's transactions with related parties, as described in the annual report 2017.
The Board of Directors proposes to the annual general meeting (AGM) that SEK 393.1 (658.9) million, which corresponds to SEK 2.84 (4.76) per share, is distributed to shareholders through an automatic redemption process. This is according to the dividend policy. It should be noted that if the number of shares change it will affect the amount per share.
Active customers: Number of customers who have played on any of Betsson's gaming sites in the past three months, without any deposit requirement.
All gaming solutions: In the term All Betsson's gaming solutions, KPIs attributable to Betsson are consolidated with KPIs attributable to B2B associates.
Average number of employees: Number of employees expressed as full-time equivalent (full year's work).
Average number of shares outstanding: Weighted average number of shares outstanding during the period.
Betting duties: Includes point of consumption tax attributable to local licences to operate gaming. Fixed fees for gaming licences are not included.
Deposits: Customers' deposits to gaming accounts.
Dividend per share: Actual/proposed dividend. Also includes share redemption programmes.
Earnings per share after dilution: Income after tax, divided by the weighted average number of shares outstanding during the year, adjusted for additional number of shares for options with dilutive effect.
Earnings per share: Income after tax in relation to the average number of shares outstanding during the period.
EBITDA margin: Operating income plus depreciation as percent of revenue.
Equity per share: Equity as a percentage of the number of shares outstanding at the end of the period.
Equity/assets ratio: Equity at the end of the period as a percentage of the balance sheet total at the end of the period.
Gross profit: Revenues, as above, less commission to partners and affiliates, gaming taxes, licensing fees to games suppliers, payments to payment suppliers and fraud (unapproved payments).
Mobile revenue: Revenues customers using mobile devices.
Net debt: Financial liabilities (bond, bank and remaining purchase considerations from acquisitions) less Cash and cash equivalents.
Number of employees: Number of employees on last month's payroll.
Number of shareholders: Number of direct shareholders and shareholders listed through a nominee shareholder registered in the shareholder register kept by Euroclear Sweden AB.
Number of shares outstanding: Number of shares outstanding (excluding repurchased shares) at the end of the period.
Operating margin (EBIT): Operating income after financial items as a percentage of revenue for the period.
Operational expenses: Includes expenses for marketing, personnel, other external expenses, amortisation and depreciation, capitalized development costs and other operating income/expenses.
Organic: Excluding effects from currency fluctuations, in relation to the comparable period, and contribution from acquired entities over the past 12 months.
Profit margin: Income after financial items as a percentage of revenue for the period.
Revenues: Revenues from gaming business is reported after payment/payout of players' winnings, with deductions for jackpot contributions, loyalty programs and bonuses and other operating income. Licence fees from B2B partners consists of invoiced revenue for providing technical platforms for external gaming operators.
Annual General Meeting 15 May 2018 January-June and Q2 2018: 19 July 2018 January-September and Q3 2018: 24 October 2018 Year-end report and Q4 2018: 7 February 2019
Betsson invites media, analysts and investors to Betsson's office at Regeringsgatan 28, Stockholm, Sweden, on Wednesday, 25 April, 2018 at 09:00 CET, for the presentation of the interim report with CEO Pontus Lindwall and CFO Kaaren Hilsen. The presentation will be held in English and followed by a questions and answers session. It is also available via webcast and conference call.
To participate by phone, please dial: UK: +44 2033645374 SE: +46 850556474 US: +1 8557532230 To watch the webcast of the presentation, visit www.betssonab.com or https://edge.media-server.com/m6/p/kbhcp23s
Pontus Lindwall, President and CEO +46 (0)8 506 403 00
Kaaren Hilsen, CFO +46 (0)8 506 403 00, [email protected]
Pia Rosin, VP Corporate Communications +46 (0)736 00 85 00, [email protected]
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