Earnings Release • Jul 19, 2017
Earnings Release
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Sustainable revenue increased by 58 percent and betting duties amounted to SEK 53.5 (31.3) million.
Revenue increased by 18 percent to SEK 2,279.4 million. Casino revenue increased by 26 percent.
| KEY DATA | |||||||
|---|---|---|---|---|---|---|---|
| SEK m | Q2 2017 | Q2 2016 | ∆ | Jan-Jun 2017 | Jan-Jun 2016 | ∆ | Jan-Dec 2016 |
| Revenue | 1,177.5 | 935.4 | 26% | 2,279.4 | 1,935.5 | 18% | 4,117.3 |
| Gross profit | 851.1 | 694.6 | 23% | 1,657.4 | 1,440.4 | 15% | 3,078.0 |
| Operating income (EBIT) | 206.9 | 158.3 | 31% | 447.8 | 408.4 | 10% | 946.4 |
| EBIT margin | 17.6% | 16.9% | - | 19.6% | 21.1% | - | 23.0% |
| Net income | 186.1 | 146.4 | 27% | 400.5 | 380.3 | 5% | 878.0 |
| Earnings per share (SEK) | 1.34 | 1.06 | 26% | 2.89 | 2.75 | 5% | 6.34 |
| Operating cash flow | 242.4 | 211.9 | 14% | 447.3 | 541.9 | -17% | 1,168.5 |
| Casino revenue | 876.6 | 683.1 | 28% | 1,699.5 | 1,352.3 | 26% | 2,907.8 |
| Sportsbook turnover | 5,755.0 | 6,008.7 | -4% | 11,761.1 | 12,726.4 | -8% | 24,392.1 |
| Sportsbook revenue | 255.6 | 223.0 | 15% | 505.9 | 515.8 | -2% | 1,080.4 |
| Sportsbook margin after free bets | 6.4% | 5.7% | - | 6.2% | 5.9% | - | 6.5% |
| Deposits | 4,056.3 | 3,472.8 | 17% | 7,845.5 | 6,989.4 | 12% | 14,457.6 |
| Active players, 000's | 551 | 563 | -2% | - | - | - | - |
Betsson is larger and is a significantly more wellbalanced business with higher growth rates, compared to one year ago.
Ulrik Bengtsson
"The revenue growth in the second quarter was 26 percent, with an organic growth of 15 percent. Betsson continues to gain market share, both in in the highly competitive Nordic region and in Western Europe. The continuous product development is clearly paying off as both casino and sportsbook have developed strongly. Operating Income (EBIT) grew by 31 percent. Operating income shows strong growth, despite increased betting duties, a continuing currency headwind and increased marketing expenses, again showing the scalability of the business model over time. It is also a good indication of the stability and balance of the business. Betsson is larger and a significantly more well-balanced business with higher growth rates, compared with a year ago.
In 2016, we made a step change in our product development and launched a very successful new mobile Casino based on Betsson's proprietary OBG framework in the third quarter, resulting in three consecutive quarters with Casino growth above 20 percent. We also made some significant improvements to the sportsbook, including increased market depth, more simultaneous live events, improved functionality such as cash-out, and most recently, the launch of an improved racing offer. This has enabled the strong sportsbook growth of 48 percent in the Nordics. The next big initiative is a new mobile sportsbook developed on OBG, which is currently being rolled out. We believe we will see the full effect of this in the sportsbook revenue in the fourth quarter and onwards.
Betsson continues to deliver on its strategy with an increasing share of sustainable revenue. The development of the technical platform continues, in order to outgrow the market also in the future, and to absorb the increasing cost of regulations. Betsson will also continue to be active in the consolidation of the online gaming market.
The daily revenue in the beginning of the third quarter was, as expected, much higher than the average daily revenue for the full third quarter 2016. Operating income in the third quarter last year was very strong for Betsson, partly due to a strong finish to Euro 2016 with a higher than average sportsbook margin. This year Betsson will, as previously indicated, invest more in marketing to capitalise on the improved product offering and the momentum we have in the Nordics and Western Europe."
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
Founded in 1963
Stockholm Large Cap
Ticker: BETS B
Betsson Group operates 17 brands
Betsson AB's B share is listed on Nasdaq
Betsson AB (publ), interim report January-June 2017 2
Group revenue totaled SEK 1,177.5 (935.4) million, an increase of 26 percent of which 15 percent was organic growth. Gross profit amounted to SEK 851.1 (694.6) million. The increase was mainly attributable to strong growth in Casino, strong growth in Regions Nordics and Western Europe, and acquisitions. Currency fluctuations had an immaterial positive impact on revenue.
During the quarter, licence revenue for system deliveries to the gaming operator Realm Entertainment ltd. (Realm) amounted to SEK 113.5 (135.6) million, corresponding to 9.6 (14.5) percent of total revenue. Continued negative currency fluctuations affected licence revenue related to Realm by SEK 17.3 million, compared with the second quarter 2016. Revenue attributable to Realm declined by 4 percent in local currency.
Mobile revenue in the second quarter amounted to SEK 625.5 (383.1) million, an increase of 63 percent. Mobile revenue was 53 (41) percent of total revenue.
Casino revenue in the second quarter amounted to SEK 876.6 (683.2) million, an increase of 28 percent, whereof 20 percent was organic. Casino represented 74 (73) percent of Group revenue.
Growth in mobile Casino revenue was 76 percent.
Gross turnover in Sportsbook, in all Betsson's gaming solutions, amounted to SEK 5,755.0 (6,008.7) million. Currency fluctuations in TYR have had a negative impact of SEK 392.5 million on Gross turnover in Sportsbook. The share of Sportsbook turnover generated from mobile devices amounted to 65 (61) percent. The margin after free bets in Sportsbook was 6.4 (5.7) percent. The eight-quarter rolling average margin was 6.6 percent.
Sportsbook revenue in the second quarter amounted to SEK 255.6 (223.0) million, an increase of 15 percent, of which 2.5 percent was organic. Acquisitions had no effect on the Sportsbook growth in the Nordics. Sportsbook represented 22 (24) percent of the Group's revenue.
Mobile sportsbook revenue amounted to SEK 180.1 million, an increase of 41 percent.
Other revenue amounted to SEK 45.3 (29.2) million. This product category includes poker.
Revenue from region Nordics was at an all-time high, despite the second quarter being seasonally weak, and amounted to SEK 558.7 (435.1) million, an increase of 28 percent. Betsson's growth in the highly competitive Nordic region has accelerated and Betsson is now gaining market shares in all the Nordic countries.
Revenue from region Western Europe amounted to SEK 351.8 (208.4) million, an increase of 69 percent, of which 31 percent was organic growth.
Revenue from region Central & Eastern Europe and Central Asia (CEECA) amounted to SEK 226.5 (267.2) million. Sportsbook revenue amounted to 90.7 (128.3) million, the decrease was mainly a result of continued negative currency fluctuations from TRY and unusually weak sportsbook margin in Georgia.
Sustainable revenue, i.e. revenue from locally licensed and/or taxed markets where Betsson pays local betting duties, has increased by 58 percent since the second quarter of the previous year and amounted to SEK 280.3 (177,4) million, corresponding 23.8 (19.0) percent of total revenue. The ongoing conversion of the revenue base to an increased share of sustainable revenue is in line with the Company's strategy.
Group revenue totaled SEK 2,279.4 (1,935.5) million, an increase of 18 percent. Gross profit amounted to SEK 1,657.4 (1,440.4) million.
Revenue by product
Casino (74%) Sportsbook (22%) Other (4%)
Revenue by region
Nordic (47%) Western Europe (30%) CEECA (23%)
Total revenue
Betting duties related to local gaming licences amounted to SEK 53.5 (31.3) million, the majority of which was reported under Cost of services provided. Currency exchange rate fluctuations had a negative impact of SEK 7.7 million on Cost of services provided.
Operating expenses amounted to SEK 644.2 (536.3) million. The increase is mainly attributable to acquired companies and negative currency fluctuations.
Currency fluctuations had a negative impact of SEK 18.4 million on operating expenses, compared with the exchange rates applied in the same period the previous year. Betsson's expenses are mainly in EUR.
Marketing expenses amounted to SEK 246.5 (219.2) million. The increase is attributable to acquired entities and negative currency fluctuations. Marketing expenses adjusted for acquisitions amounted to SEK 217.5 million, which then is a small decrease from last year where there were heavy marketing activities connected to the European championship in football. In addition, the commission for affiliates and partners, reported under Cost of services provided, amounted to SEK 92.3 (72.0) million.
Personnel expenses amounted to SEK 203.2 (160.6) million. The increase compared with the previous year is mainly attributable to acquired entities and further investments in technology and product development. Personnel costs adjusted for acquisitions amounted to SEK 186.9 million.
Other external expenses amounted to SEK 182.0 (156.7) million. The increase is primarily related to contribution from acquired entities and negative currency fluctuations. Other external expenses adjusted for acquisitions amounted to SEK 165.9 million.
Capitalised development costs amounted to SEK 56.8 (50.8) million. Amortisation of capitalised development was SEK 48.8 (35.8) million. Capitalised development increases at a lower pace than amortisation of capitalised development. The reason for that is that today's capitalisation is based on a lower cost base and that a high level of capitalised projects are in a commercial phase where amortization starts. This will vary overtime and is depending on the type of project our tech resources work with and when those projects go into a commercial phase.
Operating income (EBIT) amounted to SEK 206.9 (158.3) million, corresponding to a growth of 31 percent, and the operating margin was 17.6 (16.9) percent. The operating income adjusted for the past 12 months' acquisitions amounted to SEK 200.1 million, corresponding to an organic growth in operating income of 26 percent.
Currency fluctuations had a negative impact of SEK 17.8 million on operating income. EBIT in constant currency amounted to SEK 224.6 million.
The conversion of the revenue base has a negative impact on the operating income as the share of highly profitable license revenue for system deliveries to the gaming operator Realm decreased and betting duties increased.
Acquired entities over the past four quarters contributed to the operating income with SEK 6.8 million.
Net financial items amounted to SEK 10.3 (1.9) million; the increase is mainly attributable to interest costs related to the bond issued in November 2016.
The Group's income before tax amounted to SEK 196.6 (156.4) million and net income amounted to SEK 186.1 (146.4) million, corresponding to SEK 1.34 (1.06) per share.
Operating income for the first half year amounted to SEK 447.8 (408.4) million, corresponding to 10 percent growth. Net income amounted to SEK 400.5 (380.3) million, corresponding to SEK 2.89 (2.75) per share.
Cash and cash equivalents at the end of June 2017 amounted to SEK 470.1 (412.8) million. Customer liabilities, including reserves for accumulated jackpots, amounted to SEK 368.1 (423.3) million. Due to the regulations of gaming authorities, this amount limits utilisation of the Company's cash and cash equivalents. Current receivables from payment providers for unsettled customer deposits were SEK 325.2 (286.0) million.
Cash flow from operating activities during the quarter amounted to SEK 242.4 (211.9) million.
Betsson has a strong cash flow from operating activities and only uses external financing for acquisitions. At the end of the second quarter, available credit facilities amounted to SEK 1,083.6 (1,312.3) million, of which SEK 972.6 (1,136.8) million was utilised and SEK 111.0 (175.5) million was unutilised. In addition, Betsson has issued a senior unsecured bond which after deduction of fees amounted to SEK 992.4 million.
| Credit facility | Amount | Unutilised | |
|---|---|---|---|
| RCF (EUR m) | 35.0 | 33.0 | 2.0 |
| RCF (SEK m) | 700.0 | 653.4 | 46.6 |
| RCF (SEK m) | 45.0 | 0.0 | 45.0 |
| Bond (SEK m) | 992.4 | 992.4 | 0.0 |
Customer deposits in all Betsson's gaming solutions during the quarter amounted to SEK 4,056.3 (3,472.8) million, an increase of 17 percent, of which 10 percent was organic growth. Growth in deposits should due to normal quarterly variances be evaluated over a longer period than a quarter.
By the end of the second quarter, the number of registered customers was 12.4 (9.5) million, an increase of 31 percent. The KPI includes the net of additional customers related to acquisitions, restructuring of customer bases and organic growth.
Active customers during the quarter amounted to 551,181 (563,247). The strong comparative figure for 2016 relates to the increased activity level in connection with the European football championships.
Active players
In April, it was announced that Kaaren Hilsen had been appointed CFO of Betsson AB and takes up her position on 1 October 2017. It was also announced that Abby Rachel Cosgrave had been appointed Vice President Legal for Betsson AB and General Counsel Betsson Malta.
In June, a further strengthening of Group management was announced. Fredric Lundén was appointed Vice President Governance, Risk and Compliance and will assume the position on 1 September 2017. Petra Zackrisson was appointed Vice President Corporate Development. She has been on the management of Betsson Malta since 2013.
On 11 May, the Annual General Meeting (AGM) adopted the re-election of Pontus Lindwall, Patrick Svensk, Kicki Wallje-Lund, Martin Wattin and Jan Nord, as members of the Board of Directors. Pontus Lindwall was re-elected as Chairman of the Board of Directors. The AGM also adopted a distribution of SEK 658.9 million, corresponding to SEK 4.76 per share, to shareholders. In addition, the AGM resolved to authorise the Board of Directors to issue shares and/or convertible bonds for payment in kind or by way of set-off, involving the issue of or conversion into up to 14.4 million Class B shares (corresponding to a dilution of about 10.0 percent of the share capital and about 5.1 percent of the shareholders votes). For full information on the AGM's resolution, please see the Company website.
There have been no other significant events during the period.
The daily revenue in the quarter up until 17 July was higher than the average daily revenue of the full second quarter 2017 and, as expected, much higher than the average daily revenue of the full third quarter 2016. Please note that this trading update is not a forecast for the revenue of the third quarter, but an indication of how the quarter has started.
In July, Betsson filed an official complaint to the European Commission requesting the reopening of infringement proceedings against the Netherlands that were intitiated in 2006.
On 14 July, Betsson invited shareholders of Betsson AB to an Extraordinary General Meeting (EGM) to be held on Monday, 7 August 2017. The purpose of the EGM is to decide on the election of a new member of the Board of Directors.
There have been no other significant events after the end of the reporting period.
The company will continue to grow and plans to invest more in marketing to capitalise on the improved product offering and the current market momentum. Total operating expenses in the third quarter 2017 are expected to grow in the range of 5 percent, provided no material currency fluctuation, compared to the total operating expenses for the second quarter 2017.
The management expects that revenue from regulated markets will continue to grow and thereby increased betting duties paid. Betting duties are mainly recognised in Cost of Services Provided. Local regulation creates improved possibilities for continued growth and management views the conversion of our revenues to long-term sustainable and valuable revenues as a positive development.
| Name | Q2 2017 | Q2 2016 |
|---|---|---|
| Employees | 1,878 | 1,624 |
| Contractors | 214 | 209 |
At the end of the second quarter, the company had 1,887 (1,766) employees including 188 employees related to newly acquired companies. The average number of employees in the Group during the second quarter amounted to 1,878 (1,624), of which 1,032 (871) were based in Malta.
In addition, the Group employed 214 (209) 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 second quarter amounted to SEK 6.3 (4.1) million, and earnings before tax amounted to SEK -1.2 (-2.3) million.
Cash and cash equivalents in the Parent Company totalled SEK 42.5 (69.3) million.
Equity in the Group amounted to SEK 3,301.7 (3,028.1) million, corresponding to SEK 23.85 (21.88) 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 42,847 (41,492) 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.
| Votes | % Capital (total |
% Votes (votes |
|||
|---|---|---|---|---|---|
| Name | A shares B and C shares | (outstanding) | capital) | 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 | 669,443 | 37,979,443 | 3.0% | 13.3% |
| Knutsson family and companies | 2,710,000 | 4,350,000 | 31,450,000 | 4.9% | 11.0% |
| Novobis AB | 2,557,500 | 1,860,000 | 27,435,000 | 3.1% | 9.6% |
| Lindwall, Berit Anita | 1,683,000 | 70,000 | 16,900,000 | 1.2% | 5.9% |
| Swedbank Robur Funds | 0 | 13,146,466 | 13,146,466 | 9.1% | 4.6% |
| Handelsbanken Luxembourg | 450,000 | 589,326 | 5,089,326 | 0.7% | 1.8% |
| Försäkringsaktiebolaget Avanza | |||||
| pension | 0 | 4,439,269 | 4,439,269 | 3.1% | 1.6% |
| Didner & Gerge Funds | 0 | 3,921,959 | 3,921,959 | 2.7% | 1.4% |
| Lazard Frères Gestion | 0 | 3,203,566 | 3,203,566 | 2.2% | 1.1% |
| Other | 30,000 | 89,679,617 | 89,979,617 | 62.1% | 31.6% |
| Betsson treasury shares | 0 | 6,078,592 | 0 | 4.2% | 0.0% |
| Total | 16,260,000 | 128,233,238 | 284,754,646 | 100.0% | 100.0% |
The entire gaming market, including both offline and online gaming, is worth close to EUR 300 billion, and it is growing by approximately 2 percent per year. Online gaming only constitutes 11 percent of the entire gaming market. Annual growth in Betsson's core markets in Europe is expected to be 8.5 percent during the years 2017-2021. (Data source: H2 Gambling Capital.)
The growth 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 whereby gaming companies can apply for a local licence and thus pay local gaming tax. The licence gives gaming companies the chance to compete on equal terms and to gain access to more effective marketing channels and payment solutions. The markets that have introduced local regulations have also experienced a substantial growth increase in the years following regulation. 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.
The Swedish government is planning to present a bill regarding re-regulation of the online gaming market in March 2018. Betsson estimates that a new regulation in Sweden could be implemented in the second half of 2019.
8.5%
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 comprises 2,096 (1,442) different games, of which 1,503 (593) are available on mobile devices. In the second quarter, Betsson added casino games to its offer, including games from the provider Novomatic.
Betsson has integrated acquired company Racebet's horse racing product to the Betsson sportsbook platform and in the second quarter, racing was launched on the Betsafe brand for UK and Ireland. Roll-out of the new mobile sportsbook, built on the OBG framework, started in the second quarter and will be completed within the coming months.
The Board and the CEO in Betsson AB hereby confirm that this interim report gives a fair view of the operations, balance sheet and income statement of the Parent Company and the Group and that it describes the material risks faced by the Company and the Group.
Stockholm, 19 July 2017
Ulrik Bengtsson Pontus Lindwall
President and CEO Chairman of the Board
Board member Board member
Martin Wattin Jan Nord Board member Board member
Patrick Svensk Kicki Wallje-Lund
This interim report has not been subject to review by the auditors. This document is a translated copy of the Swedish original.
During the first quarter, Betsson entered the Spanish market by acquiring the locally licenced online gaming operator Premier Casino. Premier Casino is a pure-play casino operator, but also holds General licences for sports betting and other games online. The operator has 260,000 registered customers.
The acquisition has no material impact on Betsson's short-term financials, but enables long-term profitable growth in the Spanish market. Betsson will, going forward, operate the business under the brand StarCasino (starcasino.es) in Spain.
The purchase price payable in cash was EUR 3.0 million and the acquisition was closed in March 2017.
In February, Betsson made a public offer for the British gaming operator NetPlay TV plc ("NetPlay"). The offer was accepted by the required majority of shareholders and Betsson subsequently acquired all shares in NetPlay at the end of March.
The acquisition strengthened Betsson's position in the UK, which is the world's largest locally regulated gaming market. NetPlay operates three brands, Jackpot247, Supercasino and Vernon's, using mainly third-party systems for backend and content. Betsson has a long-term view on NetPlay and will achieve significant cost synergies and operational improvements over time.
The purchase consideration was GBP 26.4 million.
Premier Casino was consolidated in the first quarter 2017, while NetPlay was consolidated from the start of the second quarter 2017. Goodwill amounting to SEK 218.6 million is attributable to expected cost and revenue synergies. Goodwill is not expected to be tax deductible.
During the second quarter, these acquired entities contributed SEK 70.4 million to revenue and SEK 0.7 million to operating income. In the first half of the year, these acquired entities contributed SEK 71.2 million to revenue and minus SEK 8.3 million to operating income.
If these acquired entities had been consolidated from 1 January, Betsson's revenue would have been SEK 2,354.5 million instead of the reported SEK 2,279.4 million and operating income would have been SEK 456.5 million instead of the actual reported SEK 447.8 million. This includes amortisation of the customer base from 1 January 2017, which arises in the acquisitions, but excludes any acquisition cost related to the acquisitions of NetPlay TV and Premier Casino.
| Total purchase price (SEK m) | 323.0 |
|---|---|
Reported amount of identifiable acquired assets and taken over liabilities:
| Cash and cash equivalents | 81.9 |
|---|---|
| Property, plant and equipment | 7.7 |
| Intangible assets | 39.5 |
| Customer base | 9.9 |
| Brands | 74.2 |
| Current receivables | 51.5 |
| Current liabilities | -156.8 |
| Total identifiable net assets | 104.4 |
Goodwill 218.6
| SEK m | Q2 2017 | Q2 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jan-Dec 2016 |
|---|---|---|---|---|---|
| Revenue | 1,177.5 | 935.4 | 2,279.4 | 1,935.5 | |
| Cost of services provided | -326.4 | -240.9 | -622.0 | -495.1 | -1,039.3 |
| Gross profit | 851.1 | 694.6 | 1,657.4 | 1,440.4 | 3,078.0 |
| Marketing expenses | -246.5 | -219.2 | -457.8 | -415.9 | -822.3 |
| Personnel expenses | -203.2 | -160.6 | -382.3 | -310.7 | -657.9 |
| Other external expenses | -182.0 | -156.7 | -348.7 | -304.7 | -638.4 |
| Capitalised development costs | 56.8 | 50.8 | 110.8 | 96.7 | 211.8 |
| Amortisation and depreciation | -67.5 | -49.3 | -128.2 | -94.0 | -211.9 |
| Other operating income/expenses | -2.2 | -1.3 | -3.4 | -3.3 | -12.9 |
| Operating expenses | -644.2 | -536.3 | -1,209.6 | -1,032.0 | -2,131.6 |
| Operating income | 206.9 | 158.3 | 447.8 | 408.4 | 946.4 |
| Financial income and expenses | -10.3 | -1.9 | -20.8 | -3.1 | -10.4 |
| Income before tax | 196.6 | 156.4 | 427.0 405.3 |
936.0 | |
| Tax | -10.5 | -10.1 | -26.4 | -25.0 | -58.0 |
| Net income | 186.1 | 146.4 | 400.5 | 380.3 | 878.0 |
| SEK m | Q2 2017 | Q2 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jan-Dec 2016 |
|---|---|---|---|---|---|
| Net income | 186.1 | 146.4 | 400.5 | 380.3 | 878.0 |
| Other comprehensive income | |||||
| Revenue/expenses recognised directly in equity: Hedge of net investments in foreign currency incl. |
|||||
| deferred tax | -3.2 | -12.9 | -2.9 | -16.7 | -51.6 |
| Exchange differences in translating foreign operations | 29.9 | 106.0 | 57.6 | 133.3 | 143.9 |
| Other comprehensive income of the period (after tax) | 26.7 | 93.2 | 54.7 | 116.7 | 92.3 |
| Total comprehensive income for the period | 212.8 | 239.5 | 455.2 | 497.0 | 970.3 |
| SEK m | 30/06/2017 | 30/06/2016 | 31/12/2016 |
|---|---|---|---|
| Intangible fixed assets | 5,049.0 | 4,146.3 | 4,627.5 |
| Property, plant and equipment | 87.0 | 70.2 | 85.9 |
| Financial assets | 10.4 | 14.6 | 12.6 |
| Deferred tax receivables | 41.7 | 25.1 | 34.9 |
| Total non-current assets | 5,188.0 | 4,256.2 | 4,760.8 |
| Current receivables | 854.8 | 1,044.5 | 1,057.4 |
| Cash and cash equivalents | 470.1 | 412.8 | 444.3 |
| Total current assets | 1,324.9 | 1,457.1 | 1,501.7 |
| Total assets | 6,512.9 | 5,713.2 | 6,262.5 |
| Equity | 3,301.7 | 3,028.1 | 3,502.9 |
| Provision gaming tax | 20.1 | 0.0 | 20.1 |
| Deferred tax liabilities | 10.6 | 1.0 | 1.0 |
| Total Provisions | 30.7 | 1.0 | 21.0 |
| Bond | 992.4 | 990.8 | |
| Non-current liabilities to credit institutions | 700.0 | 334.8 | |
| Total non-current liabilities | 1,965.0 | 700.0 | 1,325.6 |
| Current liabilities to credit institutions | 972.7 | 436.8 | |
| Other current liabilities | 1,215.6 | 1,547.4 | 1,412.9 |
| Total current liabilities | 1,215.6 | 1,984.0 | 1,412.9 |
| Total equity and liabilities | 6,512.9 | 5,713.2 | 6,262.5 |
| SEK m | 30/06/2017 | 30/06/2016 | 31/12/2016 |
|---|---|---|---|
| Income after financial items | 427.0 | 405.3 | 936.0 |
| Adjustments for non-cash items | 131.5 | 101.0 | 217.8 |
| Taxes paid | -36.8 | -64.0 | -101.9 |
| Cash flow from operating activities | |||
| before changes in working capital | 521.7 | 442.3 | 1,051.9 |
| Changes in working capital | -74.4 | 99.6 | 116.6 |
| Cash flow from operating activities | 447.3 | 541.9 | 1,168.5 |
| Investments | -136.5 | -143.5 | -316.7 |
| Sale of property, plant and equipment | 2.8 | 2.8 | |
| Acquisition of cash and cash equivalents | 81.9 | 0.0 | 35.0 |
| Acquisition of shares in subsidiaries | -323.0 | 0.0 | -370.0 |
| Cash flow from investing activities | -377.6 | -140.7 | -648.9 |
| Cash paid upon redemption of warrants | -0.7 | ||
| Paid gaming tax provision | -90.2 | -90.2 | |
| Bond issue | 993.0 | ||
| Settled purchase consideration | -26.1 | -180.7 | -430.7 |
| New bank loans | 644.1 | 373.0 | |
| Repayment of bank loans | -464.8 | ||
| Share redemption programme | -658.9 | -624.3 | -624.3 |
| Warrant premiums received | 0.7 | 0.7 | |
| Cash flow from financing activities | -40.2 | -522.2 | -617.0 |
| Changes to cash and cash equivalents | 29.5 | -121.0 | -97.4 |
| Cash and cash equivalents at beginning of period | 444.3 | 524.9 | 524.9 |
| Exchange differences | -3.8 | 8.9 | 16.8 |
| Cash and cash equivalents at end of period | 470.1 | 412.8 | 444.3 |
| SEK m | 30/06/2017 | 30/06/2016 | 31/12/2016 |
|---|---|---|---|
| Opening balance | 3,502.9 | 3,153.7 | 3,153.7 |
| Total comprehensive income for the period | 455.2 | 497.0 | 970.3 |
| Total change excluding owner transactions | 455.2 | 497.0 | 970.3 |
| Share redemption programme | -658.9 | -624.3 | -624.3 |
| Warrants paid premium | 0.7 | 0.7 | |
| Payment on exercise of options | -0.7 | ||
| Share options - value of employee services | 1.6 | 1.6 | 3.1 |
| Equity at end of period | 3,301.7 | 3,028.1 | 3,502.9 |
| Attributable to: | |||
| Parent company's shareholders | 3,301.7 | 3,028.1 | 3,502.9 |
| SEK m | Jan-Jun 2017 | Jan-Jun 2016 | Jan-Dec 2016 |
|---|---|---|---|
| Revenue | 18.0 | 8.4 | 17.2 |
| Operating expenses | -40.6 | -27.2 | -62.7 |
| Operating income | -22.6 | -18.8 | -45.4 |
| Financial items | 13.5 | -6.1 | 964.7 |
| Income before tax | -9.0 | -24.9 | 919.3 |
| Net income | -9.0 | -24.9 | 919.3 |
| SEK m | 30/06/2017 | 30/06/2016 | 31/12/2016 |
|---|---|---|---|
| Property, plant and equipment | 2.3 | 2.0 | 2.6 |
| Financial assets | 4,954.2 | 3,912.7 | 4,741.6 |
| Total non-current assets | 4,956.5 | 3,914.7 | 4,744.2 |
| Current receivables | 263.9 | 50.0 | 572.1 |
| Cash and cash equivalents | 42.5 | 69.3 | 45.3 |
| Total current assets | 306.4 | 119.2 | 617.4 |
| Total assets | 5,262.9 | 4,034.0 | 5,361.6 |
| Restricted equity | 350.3 | 348.7 | 349.6 |
| Unrestricted equity | 2,729.9 | 2,455.2 | 3,397.8 |
| Total equity | 3,080.2 | 2,803.9 | 3,747.4 |
| Bond | 992.4 | 990.8 | |
| Non-current liabilities to credit institutions | 700.0 | 313.6 | |
| Total non-current liabilities | 992.4 | 700.0 | 1,304.4 |
| Current liabilities to credit institutions | 957.7 | 410.7 | 0.0 |
| Other current liabilities | 232.6 | 119.4 | 309.8 |
| Total current liabilities | 1,190.4 | 530.1 | 309.8 |
| Total equity and liabilities | 5,262.9 | 4,034.0 | 5,361.6 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
|---|---|---|---|---|---|---|---|---|
| SEK m | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 |
| Revenue | 1,177.5 | 1,102.0 | 1,118.5 | 1,063.3 | 935.4 | 1,000.1 | 1,041.1 | 972.9 |
| Cost of services provided | -326.4 | -295.7 | -288.0 | -256.2 | -240.9 | -254.3 | -369.6 | -237.6 |
| Gross profit | 851.1 | 806.3 | 830.6 | 807.0 | 694.6 | 745.8 | 671.4 | 735.3 |
| Marketing expenses | -246.5 | -211.4 | -206.3 | -200.1 | -219.2 | -196.7 | -215.2 | -205.5 |
| Personnel expenses | -203.2 | -179.1 | -175.9 | -171.2 | -160.6 | -150.2 | -152.1 | -138.7 |
| Other external expenses | -182.0 | -166.7 | -166.4 | -167.2 | -156.7 | -148.0 | -127.9 | -127.1 |
| Capitalised development costs | 56.8 | 54.0 | 55.6 | 59.5 | 50.8 | 45.9 | 42.5 | 40.1 |
| Amortisation and depreciation | -67.5 | -60.6 | -61.8 | -56.0 | -49.3 | -44.7 | -44.7 | -43.1 |
| Other operating income/expenses | -2.2 | -1.3 | -10.6 | 0.9 | -1.3 | -2.0 | 0.4 | -0.7 |
| Operating expenses | -644.2 | -565.4 | -565.5 | -534.2 | -536.3 | -495.7 | -497.1 | -475.1 |
| Operating income | 206.9 | 240.9 | 265.1 | 272.9 | 158.3 | 250.1 | 174.4 | 260.2 |
| Financial items, net | -10.3 | -10.6 | -5.5 | -1.8 | -1.9 | -1.2 | -3.0 | 2.7 |
| Income before tax | 196.6 | 230.4 | 259.6 | 271.1 | 156.4 | 248.9 | 171.4 | 262.9 |
| Tax | -10.5 | -16.0 | -16.0 | -17.0 | -10.1 | -14.9 | -12.3 | -15.9 |
| Net income | 186.1 | 214.4 | 243.6 | 254.1 | 146.4 | 234.0 | 159.1 | 247.0 |
| BALANCE SHEET | ||||||||
| SEK m | 2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
2016 Q1 |
2015 Q4 |
2015 Q3 |
| Non-current assets | 5,188.0 | 5,062.8 | 4,760.8 | 4,372.1 | 4,256.2 | 4,126.2 | 4,075.5 | 4,151.4 |
| Current assets | 1,324.9 | 1,828.8 | 1,501.7 | 1,576.3 | 1,457.1 | 1,601.0 | 1,651.8 | 1,537.0 |
| Total assets | 6,512.9 | 6,891.7 | 6,262.5 | 5,948.4 | 5,713.2 | 5,727.2 | 5,727.4 | 5,688.4 |
| Equity | 3,301.7 | 3,746.8 | 3,502.9 | 3,343.3 | 3,028.1 | 3,412.1 | 3,153.7 | 3,087.2 |
| Provisions and non-current liabilities | 1,023.0 | 1,614.2 | 1,346.7 | 721.2 | 701.0 | 677.7 | 620.9 | 968.6 |
| Current liabilities | 2,188.3 | 1,530.6 | 1,412.9 | 1,883.9 | 1,984.2 | 1,637.4 | 1,952.7 | 1,632.6 |
| Total equity and liabilities | 6,512.9 | 6,891.7 | 6,262.5 | 5,948.4 | 5,713.2 | 5,727.2 | 5,727.4 | 5,688.4 |
| Consolidated cash flow statement | ||||||||
| Operating cash flow | 242.4 | 204.9 | 332.2 | 294.4 | 211.9 | 330.0 | 278.2 | 412.2 |
| Cash flow from investing activities | -368.8 | -8.8 | -426.1 | -82.2 | -78.1 | -62.6 | -54.8 | -494.3 |
| Cash flow from financing activities | -276.1 | 235.9 | 20.4 | -115.2 | -182.3 | -339.8 | -203.3 | 243.2 |
| Total cash flow | -402.5 | 432.1 | -73.5 | 97.1 | -48.6 | -72.3 | 20.1 | 161.1 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
|---|---|---|---|---|---|---|---|---|
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Key financial ratios | ||||||||
| Gross Margin (% of revenue) | 72.3 | 73.2 | 74.3 | 75.9 | 74.2 | 74.6 | 64.5 | 75.6 |
| EBITDA-margin (% of revenue) | 23.3 | 27.4 | 29.2 | 30.9 | 22.2 | 29.5 | 21.0 | 31.2 |
| EBIT-margin (% of revenue) | 17.6 | 21.9 | 23.7 | 25.7 | 16.9 | 25.0 | 16.7 | 26.8 |
| Profit margin (% of revenue) | 16.7 | 20.9 | 23.2 | 25.5 | 16.7 | 24.9 | 16.5 | 27.0 |
| Marketing expenses (% of revenue) | 20.9 | 19.2 | 18.4 | 18.8 | 23.4 | 19.7 | 20.7 | 21.1 |
| Basic earnings per share (SEK) | 1.34 | 1.55 | 1.76 | 1.84 | 1.06 | 1.69 | 1.15 | 1.78 |
| Diluted earnings per share (SEK) | 1.34 | 1.55 | 1.76 | 1.84 | 1.06 | 1.69 | 1.15 | 1.78 |
| Equity per share (SEK) | 23.85 | 27.07 | 25.31 | 24.15 | 21.88 | 24.65 | 22.78 | 22.30 |
| Executed dividend/redemption per share (SEK) | 4.76 | - | - | - | 4.51 | - | - | - |
| Equity/assets ratio (%) | 51 | 54 | 56 | 56 | 53 | 60 | 55 | 54 |
| Return on equity (%) | 6 | 6 | 7 | 7 | 5 | 7 | 5 | 7 |
| Return on total capital (%) | 3 | 4 | 4 | 5 | 3 | 4 | 3 | 4 |
| Return on capital employed (%) | 5 | 5 | 4 | 6 | 4 | 5 | 3 | 5 |
| Net debt (SEK m) | 1,553 | 1,061 | 955 | 780 | 974 | 460 | 633 | 877 |
| Shares | ||||||||
| Average share price (SEK) | 77.29 | 80.50 | 88.47 | 79.61 | 94.88 | 125.14 | 145.12 | 141.94 |
| Share price at end of period (SEK) | 73.00 | 78.00 | 87.90 | 94.80 | 70.10 | 126.00 | 155.50 | 140.80 |
| Highest share price (SEK) | 82.40 | 91.95 | 96.05 | 96.20 | 128.30 | 153.00 | 160.00 | 157.00 |
| Lowest share price (SEK) | 72.85 | 73.10 | 79.25 | 63.05 | 63.35 | 104.30 | 127.10 | 120.40 |
| Number of shareholders at end of period | 42,847 | 43,474 | 41,056 | 42,237 | 41,492 | 36,771 | 35,156 | 30,878 |
| 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 | 143.1 | 143.1 | 143.1 | 143.1 | 139.6 |
| Personnel | ||||||||
| Average number of employees (accumulated) | 1,878 | 1,848 | 1,661 | 1,595 | 1,624 | 1,554 | 1,584 | 1,610 |
| Number of employees at end of period | 1,887 | 1,902 | 1,821 | 1,680 | 1,766 | 1,631 | 1,639 | 1,692 |
| CUSTOMERS | ||||||||
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Registered customers (000's) | 12,381 | 12,159 | 10,101 | 9,676 | 9,489 | 9,244 | 9,022 | 8,805 |
| Active customers (000's) | 551 | 607 | 573 | 515 | 563 | 538 | 526 | 492 |
| CUSTOMER DEPOSITS | ||||||||
| 2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
2016 Q1 |
2015 Q4 |
2015 Q3 |
|
| Customer deposits (SEK m) | 3,240.0 | 3,024.1 | 3,090.8 | 2,737.1 | 2,624.1 | 2,630.7 | 2,605.0 | 2,439.8 |
| Customer deposits, all gaming solutions (SEK | ||||||||
| m) | 4,056.3 | 3,789.2 | 3,947.1 | 3,521.2 | 3,472.8 | 3,516.6 | 3,471.4 | 3,237.7 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
|---|---|---|---|---|---|---|---|---|
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Gross turnover, all gaming solutions (SEK m) | 5,755.0 | 6,006.1 | 6,117.7 | 5,548.0 | 6,008.7 | 6,717.7 | 6,428.8 | 5,506.1 |
| of which gross turnover live betting (SEK m) | 3,982.2 | 4,353.2 | 4,492.0 | 4,216.9 | 4,326.1 | 5,029.4 | 4,715.1 | 4,294.9 |
| Margin after free bets (%) | 6.4 | 6.1 | 6.6 | 7.6 | 5.7 | 6.1 | 7.1 | 7.3 |
| Revenue (SEK m) | 255.6 | 250.3 | 264.4 | 300.2 | 223.0 | 292.8 | 312.6 | 276.0 |
| Gross margin, Sportsbook (%) ¹⁾ | 4.4 | 4.2 | 4.3 | 5.4 | 3.7 | 4.4 | 4.9 | 5.0 |
| ¹⁾ Margin after allocated costs | ||||||||
| REVENUE BY PRODUCT | ||||||||
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Revenue (SEK m) | ||||||||
| Casino | 876.6 | 822.9 | 823.7 | 731.8 | 683.2 | 669.1 | 684.0 | 656.8 |
| Sportsbook | 255.6 | 250.3 | 264.4 | 300.2 | 223.0 | 292.8 | 312.6 | 276.0 |
| Other products | 45.3 | 28.8 | 30.4 | 31.3 | 29.2 | 38.2 | 44.5 | 40.1 |
| Total | 1,177.5 | 1,102.0 | 1,118.5 | 1,063.3 | 935.4 | 1,000.1 | 1,041.1 | 972.9 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Share of total revenue (%) | ||||||||
| Casino | 74 | 75 | 74 | 69 | 73 | 67 | 66 | 68 |
| Sportsbook | 22 | 23 | 24 | 28 | 24 | 29 | 30 | 28 |
| Other products | 4 | 3 | 3 | 3 | 3 | 4 | 4 | 4 |
| 2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
2016 Q1 |
2015 Q4 |
2015 Q3 |
|
| Growth, compared with previous quarter (%) | ||||||||
| Casino | 7 | -0 | 13 | 7 | 2 | -2 | 4 | 6 |
| Sportsbook | 2 | -5 | -12 | 35 | -24 | -6 | 13 | 34 |
| Other products | 57 | -5 | -3 | 7 | -24 | -14 | 11 | 10 |
| Total | 7 | -1 | 5 | 14 | -6 | -4 | 7 | 13 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Growth, compared with same period previous year (%) |
||||||||
| Casino | 28 | 23 | 20 | 11 | 11 | 14 | 18 | 25 |
| Sportsbook | 15 | -15 | -15 | 9 | 8 | 34 | 62 | 24 |
| Other products | 55 | -25 | -32 | -22 | -20 | -15 | 7 | 11 |
| Total | 26 | 10 | 7 | 9 | 9 | 18 | 28 | 24 |
| 2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
2016 Q1 |
2015 Q4 |
2015 Q3 |
|
|---|---|---|---|---|---|---|---|---|
| Sportsbook (SEK m) | ||||||||
| Nordics | 118.2 | 106.3 | 118.0 | 152.5 | 80.0 | 112.0 | 113.0 | 91.5 |
| Western Europe | 34.4 | 24.8 | 11.5 | 15.6 | 7.6 | 41.6 | 51.1 | 43.2 |
| Central & Eastern Europe and Central Asia | 90.7 | 106.8 | 127.1 | 119.1 | 128.3 | 131.8 | 145.1 | 136.3 |
| Other | 12.3 | 12.4 | 7.8 | 13.0 | 7.1 | 7.4 | 3.4 | 4.9 |
| Total | 255.6 | 250.3 | 264.4 | 300.2 | 223.0 | 292.8 | 312.6 | 276.0 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Other products - casino and other games (SEK m) |
||||||||
| Nordics | 440.5 | 424.0 | 438.9 | 402.1 | 355.2 | 355.1 | 362.4 | 361.7 |
| Western Europe | 317.4 | 256.8 | 244.3 | 202.7 | 200.8 | 202.1 | 192.3 | 194.9 |
| Central & Eastern Europe and Central Asia | 135.8 | 145.9 | 152.0 | 139.7 | 138.8 | 136.3 | 159.4 | 126.7 |
| Other | 28.3 | 25.0 | 18.9 | 18.6 | 17.6 | 13.9 | 14.4 | 13.6 |
| Total | 921.9 | 851.7 | 854.1 | 763.1 | 712.4 | 707.4 | 728.5 | 696.9 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Total per region (SEK m) | ||||||||
| Nordics | 558.7 | 530.3 | 556.9 | 554.6 | 435.1 | 467.1 | 475.5 | 453.3 |
| Western Europe | 351.8 | 281.6 | 255.9 | 218.3 | 208.4 | 243.7 | 243.3 | 238.1 |
| Central & Eastern Europe and Central Asia | 226.5 | 252.7 | 279.1 | 258.7 | 267.2 | 268.1 | 304.5 | 263.0 |
| Other | 40.6 | 37.3 | 26.6 | 31.6 | 24.7 | 21.2 | 17.9 | 18.5 |
| Total | 1,177.5 | 1,102.0 | 1,118.5 | 1,063.3 | 935.4 | 1,000.1 | 1,041.1 | 972.9 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Share per region (%) | ||||||||
| Nordics | 47 | 48 | 50 | 52 | 47 | 47 | 46 | 47 |
| Western Europe | 30 | 26 | 23 | 21 | 22 | 24 | 23 | 24 |
| Central & Eastern Europe and Central Asia | 19 | 23 | 25 | 24 | 29 | 27 | 29 | 27 |
| Other | 3 | 3 | 2 | 3 | 3 | 2 | 2 | 2 |
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Growth, compared with previous quarter (%) | ||||||||
| Nordics | 5 | -5 | 0 | 27 | -7 | -2 | 5 | 4 |
| Western Europe | 25 | 10 | 17 | 5 | -14 | 0 | 2 | 18 |
| Central & Eastern Europe and Central Asia | -10 | -9 | 8 | -3 | -0 | -12 | 16 | 34 |
| Other | 9 | 40 | -16 | 28 | 16 | 19 | -3 | -23 |
| 2017 Q2 |
2017 Q1 |
2016 Q4 |
2016 Q3 |
2016 Q2 |
2016 Q1 |
2015 Q4 |
2015 Q3 |
|
| Growth, compared with same period previous year (%) |
||||||||
| Nordics | 28 | 14 | 17 | 22 | -1 | 7 | 6 | 1 |
| Western Europe | 69 | 16 | 5 | -8 | 3 | 45 | 42 | 66 |
| Central & Eastern Europe and Central Asia | -15 | -6 | -8 | -2 | 36 | 18 | 70 | 49 |
| Other | 64 | 76 | 49 | 71 | 3 | 21 | 24 | 20 |
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 2016. Detailed information about the Group's accounting and valuation principles can be found in the Annual Report for 2016 (Note 2), which is available on www.betssonab.com or at the Company's head office.
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. It is still unclear when such new legislation will be introduced in Betsson's major markets, but when this does take place, Betsson will have more opportunities for marketing and market presence. Furthermore, it is 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.
Sweden has taken a step towards liberalisation and in the official report on the re-regulation of the gaming market, a path for re-regulation has been proposed.
The Dutch gambling framework is not compliant with EU law. That is why infringements were initiated by the EU Commission in 2006. As the re-regulation of the online gaming market in the Netherlands has not moved forward as promised by the Nethherlands, Betsson has filed an official complaint with the EU Commission asking it to re-open infringement proceedings against the Netherlands. There is a possibility that there will not be a re-regulation of the Dutch gaming market until after the next election in 2021.
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 fluctu-
ations 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 2016.
The exchange rates below are applied in the interim report.
Income Statement (average year-to-date rate)
| 2017 | 2016 | ∆ | |
|---|---|---|---|
| EUR/SEK | 9.5923 | 9.2992 | +3.2% |
| TRY/SEK | 2.4357 | 2.8520 | -14.6% |
| GEL/SEK | 3.5399 | 3.5865 | -1.3% |
| NOK/SEK | 1.0459 | 0.9870 | +6.0% |
| 30/06/2017 | 30/06/2016 | ∆ | |
|---|---|---|---|
| EUR/SEK | 9.6734 | 9.4164 | +2.7% |
| TRY/SEK | 2.3989 | 2.9257 | -18.0% |
| GEL/SEK | 3.5714 | 3.6550 | -2.3% |
| NOK/SEK | 1.0099 | 1.0081 | +0.2% |
No transactions took place between Betsson and related parties that significantly affected Betsson's financial position and performance in the quarter.
Revenues: Revenues from gaming business are reported after payment/payout of players' winnings, with deductions for jackpot contributions, loyalty programmes and bonuses and other operating income. Revenues from Sportsbook are also reduced by gaming taxes and licence charges to game suppliers. Licence charges from invoicing for the maintenance of technical platforms to external game suppliers.
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).
Betting duties: Includes point of consumption tax attributable to local licences to operate gaming. Fixed fees for gaming licences are not included.
Operational expenses: Includes expenses for marketing, personnel, other external expenses, amortisation and depreciation, capitalized development costs and other operating income/expenses.
EBITDA margin: Operating income plus depreciation as percent of revenue.
Operating margin: Operating income after financial items as a percentage of revenue for the period.
Profit margin: Income after financial items as a percentage of revenue for 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.
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.
Organic: Excluding contribution from acquired entities over the past 12 months.
Average number of employees: Number of employees expressed as full-time equivalent (full year's work).
Number of shares outstanding: Number of shares outstanding (excluding repurchased shares) at the end of the period.
Average number of shares outstanding: Weighted average number of shares outstanding during the period.
Earnings per share: Income after tax in relation to the average number of shares outstanding during the period.
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.
Equity per share: Equity as a percentage of the number of shares outstanding at the end of the period.
Dividend per share: Actual/proposed dividend. Also includes share redemption programmes.
Number of shareholders: Number of direct shareholders and shareholders listed through a nominee shareholder registered in the shareholder register kept by Euroclear Sweden AB
Active customers: Number of customers who have played on any of Betsson's gaming sites in the past three months, without any deposit requirement.
Deposits: Customers' deposits to gaming accounts.
All gaming solutions: in the term All Betsson's gaming solutions, KPIs attributable to Betsson are consolidated with KPIs attributable to B2B associates.
January-September and Q3 2017: 20 October 2017 Year-end report and Q4 2017: 8 February 2018
Betsson invites media, analysts and investors to Betsson's office at Regeringsgatan 28, Stockholm, Sweden, on Wednesday, 19 July, 2017 at 09:00 CET. The presentation will also be available via webcast and conference call. CEO and President Ulrik Bengtsson will present the report. The presentation will be held in English and followed by a questions and answers session.
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 http://edge.media-server.com/m/p/pfzjeujt
Ulrik Bengtsson, President and CEO +46 (0) 8 506 403 00
Fredrik Rüdén, 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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