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Betsson

Quarterly Report Jul 18, 2014

3010_ir_2014-07-18_326e5632-7089-4fd7-94ff-0d1cd4f1feca.pdf

Quarterly Report

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Interim Report for the period 1 January – 30 June 2014

ALL FIGURES IN THIS REPORT ARE EXPRESSED IN SEK. FIGURES IN PARENTHESES REFER TO THE CORRESPONDING FIGURES FOR THE PREVIOUS YEAR, UNLESS STATED OTHERWISE. THIS INFORMATION APPLIES TO THE GROUP, UNLESS STATED OTHERWISE.

Revenues for the second quarter increased by 30 percent

Second quarter

  • Revenue increased by 30 percent and amounted to SEK 752.3 (579.2) million, an organic growth of 15 percent.
  • Gross profit in Casino increased by 37 percent and amounted SEK 433.6 (316.0) million, an organic growth of 13 percent.
  • Operating income amounted to SEK 190.4 (137.8) million. Income before tax amounted to SEK 187.5 (137.5) million.
  • Net income amounted to SEK 176.6 (128.3) million, corresponding to SEK 3.84 (2.95) per share.
  • Customer deposits in all of Betsson's gambling solutions amounted to SEK 2,613.4 (2,017.8) million.
  • The brands Oranje and Kroon Casino contributed SEK 87.8 million to the Group's revenues and SEK 55.3 million to net income.
  • Betting on the FIFA World Cup comprised 4 percent of the Group's revenues in the second quarter, contributing positively to the Group's net income.

The Interim Period

  • Revenue increased by 18 percent to SEK 1,438.3 (1,217.9) million.
  • Operating income amounted to SEK 361.5 (298.9) million.
  • Income before tax amounted to SEK 354.1 (297.5) million.
  • Net income amounted to SEK 334.3 (280.2) million, corresponding to SEK 7.41 (6.49) per share.

Key Performance Indicators (MSEK)

Q 2 Q 2 Jan-Jun Jan-Jun Full year
2014 2013 2014 2013 2013
Total
Revenues 752.3 579.2 1,438.3 1,217.9 2,476.7
Gross Profit 629.7 482.7 1,208.4 1,022.9 2,073.9
of which Sportsbook 166.6 126.6 342.4 290.6 577.4
Operating income 190.4 137.8 361.5 298.9 601.1
Liquid funds 433.2 317.5 433.2 317.5 562.5
Active customers (thousands) 381.4 428.7 381.4 428.7 401.4
Registered customers (thousands) 7,475.4 6,354.9 7,475.4 6,354.9 6,732.7
Customer deposits 1,939.4 1,445.9 3,510.2 2,957.1 6,064.5
Customer deposits, all gaming solutions 2,613.4 2,017.8 4,826.0 4,131.7 8,421.1
B2C Sportsbook 1
Gross turnover, Sportsbook 1,474.2 1,129.9 2,805.2 2,360.6 5,024.0
Gross margin, Sportsbook 5.3% 5.2% 5.8% 6.0% 5.7%
Gross profit, Sportsbook 78.6 58.9 164.1 141.7 288.0
B2B Sportsbook 1
Gross turnover, Sportsbook 2,666.2 2,317.7 5,115.9 4,960.7 9,791.3
Gross margin, Sportsbook 3.3% 2.9% 3.5% 3.0% 3.0%
Gross profit, Sportsbook from third party 88.0 67.7 178.3 148.9 289.4

1) Refers to margin after allocated expenses. The margin after free bets in all gambling solutions amounted to 7.0 (6.5) percent.

The strategic initiatives and the FIFA World Cup resulted in strong organic growth

  • Betsson posted organic growth of 15 percent during the second quarter, which proves that the Company's strategic initiatives are continuing to show results and that the Company provides a world class customer experience. The FIFA World Cup had a positive effect and attracted many new and old customers, which is also favourable longer term. Furthermore, gross turnover for all gambling solutions within Sportsbook increased by 20 percent. The recently acquired Dutch brands also contributed strongly, with a growth of 13 percent. Betsson´s focus in profitable growth gives the highest margins in the industry over time, says Magnus Silfverberg, the President and CEO of Betsson.

Presentation of the Interim Report

Today, Friday 18 July at 09:00 CET, Betsson's CEO, Magnus Silfverberg, will present the Interim Report from Betsson's office at Regeringsgatan 28, and through webcast on www.betssonab.com or http://www.mediaserver.com/m/p/yohv937y or by phone on +46 (0)8 505 564 74 (Sweden), +44 (0)203 364 53 74 (UK), or +1 (0) 855 753 22 30 (US). The presentation will be in English and followed by a question and answer session.

BETSSON AB'S CORE BUSINESS CONSISTS OF THE OWNING AND ADMINISTRATION OF SHAREHOLDINGS IN COMPANIES THAT, THROUGH PARTNERS OR BY THEMSELVES, OFFER GAMES TO THE END CUSTOMER VIA THE INTERNET. BETSSON AB OWNS BETSSON MALTA WHICH OPERATES GAMBLING TO END CUSTOMERS THROUGH BOTH ITS OWN WEBSITES AND THROUGH PARTNERSHIPS. BETSSON MALTA OFFERS POKER, CASINO, SPORTS BETTING, SCRATCH CARDS, BINGO AND GAMES. CUSTOMERS MAINLY ORIGINATE FROM THE NORDIC COUNTRIES AND OTHER PARTS OF EUROPE. BETSSON AB IS LISTED ON NASDAQ OMX NORDIC MID CAP LIST, (BETS).

Second quarter 2014

Group revenue amounted to SEK 752.3 (579.2) million. Gross profit was SEK 629.7 (482.7) million. Operating income amounted to SEK 190.4 (137.8) million and the operating margin was 25.3 (23.8) percent. The Group's income before tax was SEK 187.5 (137.5) million and net income was SEK 176.6 (128.3) million, which is equivalent to SEK 3.84 (2.95) per share.

Revenues were impacted by unfavourable currency movements amounting to SEK 9.4 million, compared with the rates applied in the comparative figures last year. Betsson's revenues are primarily affected by currency movements in EUR, NOK and TRY in relation to the SEK. Organic growth adjusted for currency movements was 16 percent.

Marketing expenses amounted to SEK 220.5 (172.4) million, representing an increase of 28 percent. This increase is primarily explained by marketing activities in conjunction with the FIFA World Cup, company acquisition and increased marketing in line with company growth. Management believes that there are opportunities for growth in locally and internationally selected regulated markets. Materialising these opportunities requires continued market investments which in the coming quarters are expected to be in line with the marketing level in relation to revenues for the first six months.

Personnel costs amounted to SEK 109.3 (89.3) million, representing an increase of 22 percent. The increase from the previous year relates to the additional personnel costs associated with acquisitions and new recruitments to create and meet future growth. This item is expected to continue to increase in line with the Company's growth during the remainder of the year.

Other external expenses amounted to SEK 101.8 (82.5) million. The increase is primarily due to the improved Livestream offering and increased use of real-time results in Sportsbook which both aims at improving the attractiveness of the Betsson offering. The new office in Malta also contributed to higher external costs.

Capitalised development costs amounted to SEK 28.2 (25.4) million. Betsson's operating subsidiaries continuously invest in improvements in their offerings to end users and partners, creating the conditions for growth. Furthermore, the Company is investing in migrating a number of gambling solutions to a single technical platform, contributing in the long term, to cost-effective operations.

The Interim Period January - June 2014

Group revenue amounted to SEK 1,438.3 (1,217.9) million, an increase of 18 percent. Gross profit was SEK 1,208.4 (1,022.9) million, an increase of 18 percent. Operating income increased to SEK 361.5 (298.9) million and the operating margin was 25.1 (24.5) percent. Income before tax increased to SEK 354.1 (297.5) million and net income increased SEK 334.3 (280.2) million.

Acquisition of Oranje and Kroon Casino

During the second quarter, the acquired operations have contributed SEK 87.8 million to Group revenue, equivalent to a growth of 13 percent in Oranje and Kroon. The acquisition has, also,

contributed SEK 58.2 million to Group operating income.

The acquisition of Oranje and Kroon Casino has resulted in an accounting effect as of 4 March 2014. Since that day and until the end of June, the unit has contributed SEK 111.2 million to Group revenues and SEK 61.5 million to Group operating income. The Group's net income result was affected by acquisition costs amounting to SEK 10.1 million in the first quarter. Further, additional amortisation of the customer base of SEK 4.2 million has impacted net income as a result of the acquisition.

If Oranje and Kroon Casino would have been acquired for the full six months, Betsson's revenues would have amounted to SEK 1,495.6 million, instead of SEK 1,438.3 million, and operating income would have amounted to SEK 406.6 million, instead of SEK 361.6 million, excluding acquisition costs of SEK 10.1 million in the first quarter, but including the additional amortisation of the acquired customer base, SEK 2.1 million.

Operations

Through its subsidiaries on Malta, Betsson offers Internet gambling to end customers via partner cooperations and its own gambling portals. Betsson also offers systems solutions to other operators.

Betsson believes that there is lasting value in both the locally newly re-regulated, as well as in the previously internationally regulated, markets. Selected international regulated markets constitute, for the foreseeable future, a base for strong growth and profitability. Meanwhile, the newly re-regulated markets with local gambling licenses have become increasingly important for Betsson where the company has local licenses in Belgium, Denmark, Estonia and Italy. Furthermore, the acquisition of Oranje and Kroon Casino is expected to lead to a substantial increase in revenue from locally regulated markets after next year's expected reregulation in Holland.

The high growth in the use of smartphones and tablets contributes to a strong demand for mobile gambling solutions. Betsson has developed and now provides one of the market's broadest and most advanced gambling solutions for portable devices. Mobile revenue amounted to SEK 129.5 million in the second quarter, corresponding to 17 percent of total revenues and an increase of 28 percent from the previous quarter. The strong growth in Betsson.com, after the launch of a new mobile solution in the second quarter 2013, has continued. The mobile revenues of that brand increased by 26 percent compared with the previous quarter, representing an increase of 809 percent compared to the second quarter last year. During the FIFA World Cup, Betsson.com had 46 percent mobile revenues within Sportsbook.

B2C - second quarter

Gross profit from B2C in the second quarter amounted to SEK 484.8 (358.7) million, a growth of 35 percent. During the quarter, the acquisition of Oranje and Kroon Casino contributed SEK 76.5 million. Adjusted for acquisition, growth was 14 percent.

The Nordic Region represented 70 (81) percent of the segment in the second quarter, while EU outside the Nordic Region represented 29 (18) percent.

At the end of the second quarter, a new casino aimed at the British market, Mr Smith, was launched, replacing Harry Casino. The new casino has experienced strong initial trading.

B2B – second quarter

Gross profit from B2B amounted to SEK 144.9 (124.0) million, an increase of 17 percent.

Betsson will continue to further develop its cooperation with a Chinese state-owned company regarding Internet-based lottery and sports betting business. During the quarter, there has not been any concrete new information about a future licensing system for online games in China. However, Betsson has a continued positive outlook on future market opportunities.

Products

During the second quarter, gross profit in Casino amounted to SEK 433.6 (316.0) million, an increase of 37 percent. The acquisition of Oranje and Kroon Casino contributed SEK 76.5 million during the quarter. Adjusted for acquisition, growth was 13 percent. This implies that Betsson, in relation to the estimated market growth of between 7-8 percent, gained market shares in the important casino segment. Overall, Casino represented 69 (66) percent of the Group's gross profit.

Gross turnover in Sportsbook, in all of Betsson's gambling solutions amounted to SEK 4,140.4 (3,447.6) million, an increase of 20 percent. The margin after free bets in all of Betsson's gambling solutions in Sportsbook was 7.0 (6.5) percent. Gross profit from Sportsbook during the quarter totalled SEK 166.6 (126.6) million, representing an increase of 32 percent. Gross profit from Sportsbook includes SEK 88.0 (67.7) million referring to licensing revenues and gambling contributions to gross profit from B2B. The FIFA World Cup comprised 4 percent of the Group's revenue and Sportsbook margins after free bets during the World Cup were in line with overall margins during the quarter. Sportbook's share of the Group's gross profit amounted to 27 (26) percent.

Gross profit from Poker during the quarter amounted to SEK 18.5 (22.0) million. The decline was due to a continued decreased level of activity in poker networks, as well as due to Betsson terminating its cooperation with unprofitable poker customers.

Gross profit from Other products amounted to SEK 11.1 (18.1) million during the second quarter.

Customer deposits

In the second quarter, SEK 1,939.4 (1,445.9) million was deposited, an increase of 34 percent. Deposits in all of Betsson's gambling solutions for the quarter amounted to SEK 2,613.4 (2,017.8) million. All of Betsson's gambling solutions includes B2B partnerships which are run based on their own license.

Customers

At the end of the quarter, the number of registered customers amounted to SEK 7.5 (6.4) million, an increase of 18 percent. The key ratio of active clients demonstrates activity in Betsson's solutions without any required deposit. The key ratio

continued to decline as a result of Betsson's efforts to continue to focus on value- adding players, rather than on free spin promotions. During the quarter, the number of active customers amounted to 381,406 (428,703). The KPI improved however compared with previous quarter.

An active customer is defined as a customer who played in the past three months. This definition includes players who have played on free offers and never made a deposit.

Equity

Equity in the Group amounted to SEK 2,543.0 (1,704.1) million, representing SEK 55.26 (39.24) per share.

Liquid funds and customer liabilities

Cash and cash equivalents by end of June amounted to SEK 433.2 (317.5) million. Liabilities to credit institutions amounted to SEK 717.3 (349.7) million and unused credit facilities amounted to SEK 110.4 (136.2) million.

Customer liabilities, including the provision for accumulated jackpots, amounted to SEK 314.8 (303.4) million. This amount may limit the utilisation of the Company's cash and cash equivalents as a result of the Maltese gambling authority's regulations. Short-term receivables with payment providers regarding unsettled payments from customers amounted to SEK 296.3 (215.9) million.

Personnel

At the end of the quarter the Company had 877 (756) employees. During the first six months of the year, the average number of employees amounted to 839 (721) in the Group, of which 589 (473) persons in Malta.

In addition, at the end of the quarter the Group employed 161 full-time consultants.

Parent Company

The operations of the Parent Company, Betsson AB (publ), consist of owning and administering shareholdings in companies which, on their own or through partnerships, offer end customers gambling over the Internet. The Company provides and sells internal finance, accounting and administration services to certain Group companies.

Revenues for the period amounted to SEK 8.6 (4.9) million and income before tax SEK -40.1 (122.8) million.

Cash and cash equivalents amounted to SEK 35.7 (54.6) million.

Ownership structure

The Company's Series B shares are listed on NASDAQ OMX Nordic Mid Cap List, (BETS). At the end of the period, the Company had 21,148 (19,447) shareholders. The largest owners (with more than 10 percent of the votes) were Per Hamberg including companies with 3.8 percent of the capital and 17.9 percent of votes, the Knutsson family with companies with 4.9 percent of the capital and 10.2 percent of the votes and Rolf Lundström with companies with 3.1 percent of the capital and 9.6 percent of votes.

Shares outstanding

Since 10 April, the total number of shares and votes in Betsson amounts to 46,539,527 and 95,319,527, divided into 5,420,000 Series A shares with ten votes each, 40,597,827 Series B shares with one vote each and 521,700 Series C shares which may not be represented at the general meeting. This includes Betsson's holding of 397 Series B treasury shares which have been acquired in previous years at an average price of SEK 58.27 and 521,700 shares of Series C.

Events after the end of the period

The third quarter started with revenue somewhat above the average level of the previous quarter. This is explained by activity and good margins in relation with the end of the FIFA World Cup.

Otherwise, there has been no other significant events after the end of the period.

Accounting principles

Betsson complies with the EU-approved IFRS standards and interpretations (IFRIC). This 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.

Betsson's B2C segment is defined by activity from players whom Betsson has acquired, itself, as well as activity from players from affiliated websites (www.affiliatelounge.com). Anything that does not fall within this definition is classified as B2B within Betsson.

A gain or loss in an effective hedging instrument is recognised as other comprehensive income. The gain or loss relating to the ineffective portion is recognised in the income statement.

The accounting policies applied are consistent with those presented in the Annual Report 2013. Detailed information about the Group's accounting and valuation principles can be found in the annual report for 2013 (Note 2) which is available on www.betssonab.com or at the headquarters.

Risks and factors of uncertainty

The legal situation for online gambling is constantly changing, both on an EU level and in the various geographical markets. There is continued pressure on countries in the EU to bring their legislation in line with applicable EU law, especially regarding restrictions in the free movement of goods and services. A number of countries have reported that they are working on new legislation which will be compatible with EU requirements, and certain countries have presented proposals for concrete legislation. There is still uncertainty as to the point in time at which such legislation will be introduced into those of Betsson's main markets which are yet to be re-regulated, with the exception of the Netherlands.

New legislation could result in market conditions regarding, for example, changes in taxes, product range and local licensing fees, change and this might have a negative impact on Betsson's profitability. On the other hand, new legislation may lead to a significant market growth, as well as possibly providing Betsson with increased

opportunities for marketing and an increased presence on the market.

In early June 2010, Norway expanded its ban on promoting gambling organised from abroad. The ban hits banks through the fact that cashier services in connection with payments of games via credit and debit cards for online gambling have been outlawed. After the elections in September 2013, there has been a parliamentary majority to re-regulate the Norwegian market. However, based on what is known today, the management of Betsson believe that it is unlikely that there will be a new regulation in Norway within the next few years. Betsson views the development positively, although it is still too early to judge how this will affect the Company.

Today, there is a consensus among proponents of various parliamentary parties to re-regulate the Swedish gambling market. It is too early to draw concrete conclusions from this, but many observers believe that efforts to introduce new regulations may begin after the parliamentary election in 2014. This implies that any new regulation would be in place, at the earliest, in 2016/2017.

Betsson has license revenues for system delivery to, amongst others, a gambling operator, for which parts of the revenues derive from players in Turkey. These license revenues are reported as B2B. Revenues arising from these individuals may be considered to have higher operational risk than revenues from other markets. In 2013, Turkey adopted a bill regarding changes in gambling legislation. This has largely been implemented.

For a detailed description of the above risks and other risks and uncertainties, see the Annual Report for 2013.

Transactions with related parties

There were no transactions between Betsson and related parties that significantly affected Betsson's position and performance in the quarter.

Future prospects

Betsson estimates that the market for online gambling will continue to develop strongly. The number of Internet users is growing rapidly worldwide, which is a driving force for the industry. In the regions where Internet is available, confidence in the Internet increases as more people use the Internet for banking and stock trading, insurance matters and other purchases. This changing behaviour and increasing confidence in e - commerce is important for market development.

Betsson believes that, from a risk perspective, there is a lasting value in both the locally, newly reregulated markets as well as in the previously internationally regulated markets. Selected international regulated markets constitute, for the foreseeable future, a base for strong growth and profitability. Based on the analysis from, inter alia, H2 Gambling, management believes that Betsson's main markets, combined, will grow by 7-8 percent in 2014. Betsson intends, over time, to continue to grow faster than the market.

Management believes that the mobile revenues will continue to grow strongly over the next twelve months.

Annual General Meeting 2014

The Annual General Meeting of shareholders in Betsson AB was held Thursday 8 May 2014 at Regeringsgatan 28, Stockholm.

All Board members were re-elected.

Financial calendar

Betsson intends to publish its financial reports as follows. The interim report for the third quarter will be made public on 24 October and the Year-End Report for 2014 (fourth quarter) on 6 February 2015.

Presentation of the Interim Report

Today, Friday 18 July at 09:00 CET, Betsson's CEO, Magnus Silfverberg, will present the Interim Report from Betsson's office at Regeringsgatan 28, and through webcast on www.betssonab.com or http://www.media-server.com/m/p/yohv937y or by phone on +46 (0)8 505 564 74 (Sweden), +44 (0)203 364 53 74 (UK), or +1 (0) 855 753 22 30 (US). The presentation will be in English and will be followed by a question and answer session.

A copy of the presentation is available at www.betssonab.com as of Friday 18 July.

Stockholm, 18 July 2014

Magnus Silfverberg President and CEO

Betsson AB (publ), Regeringsgatan 28, 111 53 Stockholm Registered offices of the Board: Stockholm, Corporate Identity Number: 556090-4251

For further information, please contact Magnus Silfverberg, President and CEO, tel. +46 (0) 8 506 403 00, [email protected] or Fredrik Rüdén, CFO, tel. +46 (0) 8 506 403 00, [email protected].

This interim report has not been subject to review by the auditors.

The information in this Interim Report is information which Betsson AB (publ) is to publish in accordance with the Securities Market Act and / or the Financial Instrument Trading Act. Submitted for publication on 18 July 2014 at 7:30 CET.

This document is a translation of the Swedish original.

Acquisitions of Oranje and Kroon Casino

On 4 March, Betsson acquired 100 percent of the shares of Class One Holding Ltd. With the acquisition, Betsson gained a strategic foothold in the Dutch market and will be one of the biggest players targeting that market.

The Company operates the brands Oranje and Kroon Casino targeting the Dutch market. In 2013, the revenues from Oranje and Kroon were EUR 32.5 million and EBIT was EUR 22.1 million, corresponding to an EBIT margin of 67.8 percent. The number of registered customers amounts to 209,000.

Betsson acquired the shares for an initial purchase price of EUR 100 million (enterprise value), of which EUR 60 million was paid in the form of newly issued shares and EUR 40 million in cash. The initial purchase price is equivalent to 4.5 times the EBIT in 2013. Apart from the initial purchase price, an additional cash amount could be paid, based on the outcome of the anticipated re-regulation in Holland. A more favourable regulation for Betsson means a higher purchase consideration. The additional purchase price may not exceed EUR 45 million, representing a total purchase consideration of up to EUR 145 million, excluding acquired liquid funds.

The acquisition was financed with a new share issue, own cash and bank financing. The following table summarises the consideration paid and the fair value of assets acquired and liabilities assumed. The acquired customer base is valued at SEK 37.6 million and depreciation of this will be charged to the consolidated profit over 3 years.

Integration and cost synergies regarding the development of the acquired gambling platform and revenue synergies explains, taken together, the value of goodwill. No portion of the reported goodwill amount is expected to be deductible in terms of income tax.

Accounting effects

During the second quarter, the acquired operations have contributed SEK 87.8 million to Group revenue, equivalent to a growth of 13 percent in Oranje and Kroon. The acquisition has, also, contributed SEK 58.2 million to Group operating income.

The acquisition of Oranje and Kroon Casino has resulted in an accounting effect since 4 March 2014. Since that date and until the end of June, the acquired business contributed SEK 111.2 million to Group revenues and SEK 61.5 million to Group operating income. During the first quarter, the effect of the acquisition costs on the Group's net income amounted to SEK 10.1 million. In addition, amortisation of the customer base of SEK 4.2 million has affected Group's net income.

If Oranje and Kroon Casino would have been acquired throughout the full six-months, Betsson's revenues would have amounted to SEK 1,495.6 million instead of SEK 1,438.3 million and operating income would have amounted to SEK 406.6 million instead of SEK 361.6 million, excluding acquisition costs of SEK 10.1 million in the first quarter but including additional amortisation of SEK 2.1 million of the acquired customer base.

Acquisition analysis (MSEK)

Purchase consideration

Liquid funds 374.5
Own equity instruments (2,563,028
Series B shares)
531.2
Total purchase price paid
Deferred purchase consideration
905.7
(conditional) 398.3
Total purchase price 1,304.0

Reported amount of identified acquired assets and assumed liabilities

Cash and cash equivalents 36.0
Tangible fixed assets 3.8
Other intangible fixed assets 4.0
Customer base 37.6
Brands 588.5
Current receivables 84.5
Current liabilities -72.7
Total identifiable net assets 681.7
Goodwill 622.4

Additional purchase price NGG

In connection with the acquisition of NGG in 2012, a maximum purchase consideration amounting to EUR 20 million was reserved. The value of the debt is affected by the ongoing dispute with the seller of NGG regarding the fulfilment of the conditions for the additional purchase price and the exchange rate between EUR and SEK. The final settlement of the debt may be made by agreement or judicial review concerning compliance with the conditions, either through delivery of shares or by payment in cash. An amount of less than EUR 20 million may be payable if part of the conditions are met. If the conditions were not deemed to be satisfied at all, no additional consideration will be payable.

Consolidated income statement, MSEK Q2
2014
Q 2
2013
Jan-Jun
2014
Jan-Jun
2013
Full year
2013
Revenue 752.3 579.2 1,438.3 1,217.9 2,476.7
Cost of sales -122.6 -96.5 -229.9 -195.0 -402.9
Gross profit/loss 629.7 482.7 1,208.4 1,022.9 2 073,9
Marketing expenses -220.5 -172.4 -411.2 -371.7 -734.5
Personnel expenses -109.3 -89.3 -211.9 -181.4 -373.2
Other external costs -101.8 -82.5 -211.0 -167.1 -352.4
Capitalized development costs 28.2 25.4 53.6 49.0 92.9
Depreciation -34.2 -27.6 -63.7 -55.0 -107.1
Other operating income/expenses -1.7 1.4 -2.7 2.3 1.5
Operating expenses -439.3 -344.9 -846.9 -723.9 -1,472.8
Operating profit/loss 190,4 137.8 361.5 298.9 601.1
Financial items, net -2.8 -0.3 -7.4 -1.4 -4.9
Income before tax 187.5 137.5 354.1 297.5 596.2
Tax -10.9 -9.2 -19.8 -17.4 -34.2
Profit/loss for the period 176.6 128.3 334.3 280.2 562.0
Earnings per share before dilution (SEK) 3.84 2.95 7.41 6.49 12.98
Earnings per share after dilution (SEK) 3.83 2.95 7.41 6.49 12.98
Operating margin (in percent of income) 25.3 23.8 25.1 24.5 24.3
Operating margin (in percent of gross profit/loss) 30.2 28.5 29.9 29.2 29.0
Profit margin (percent) 24.9 23.7 24.6 24.4 24.1
Average number of outstanding shares (million) 46.0 43.4 45.1 43.1 43.3
Number of outstanding shares at the end of the period (million) 46.0 43.4 46.0 43.4 43.4
Return on equity (percent) 15 17 31
Return on total assets (percent) 9 10 19
Return on capital employed (percent) 10 11 21
Consolidated statement of comprehensive income
(MSEK) Q 2 Q 2 Jan-Jun Jan-Mars Full year
2014 2013 2014 2013 2013
Net income for the period 176.6 128.3 334.3 280.2 562.0
Other comprehensive income
Income/expenses carried directly in equity
Hedging of net investments in foreign currencies, incl. deferred
tax
-27.7 -19.6 -34.4 -6.0 -13.3
Exchange rate differences on translation of foreign operations 102.7 97.4 117.7 35.0 88.0
Other comprehensive income for the period (after tax) 75.0 77.8 83.3 29.1 74.7
Total comprehensive income for the period 251.6 206.1 417.6 309.2 636.7

Consolidated balance sheet MSEK 30 Jun 2014 30 Jun 2013 31 Dec 2013

Intangible fixed assets
Tangible fixed assets
Financial fixed assets
Deferred tax recoverables
Total current assets
3,397.9
52.3
23.5
22.9
3,496.5
1,996.9
26.5
13.1
13.8
2,050.3
2,037.9
53.8
26.6
11.7
2,129.9
Current receivables 842.3 750.4 823.5
Cash and bank balances 433.2 317.5 562.5
Total current assets 1,275.4 1,067.9 1,386.0
Total assets 4,771.9 3,118.2 3,515.9
Equity 2,543.0 1,704.1 2,032.2
Deferred tax liabilities 3.4 6.1 4.1
Liabilities to credit institutes 717.3 - -
Total long-term liabilities 720,8 6.1 4.1
Liabilities to credit institutes - 349.7 315.7
Other current liabilities 1,508.1 1,058.4 1,163.8
Other current liabilities 1,508.1 1,408.0 1 479.5
Total equity and liabilities 4,771.9 3,118.2 3,515.9
Consolidate cash flow statement, MSEK Jan-Jun Jan-Jun Full year
2014 2013 2013
Income after financial items 354.1 297.5 596.2
Adjustment for non-cash items 66.3 58.8 111.8
Paid tax -32.9 -24.4 -4.3
Cash flow from operating activities
Before changes in working capital 387.5 331.9 703.7
Changes in working capital -10.7 -15.9 -20.2
Cash flow from operating activities 376.8 316.0 683.5
Investments -58.4 -61.3 -138.5
Acquired liquid assets 36,0 - -
Acquisition of shares, subsidiary -374,5 - -15.8
Cash flow from investing activities -396,9 -61.3 -154.3
Cash paid upon redemption of warrants -16.9 -8.5
New share issue upon redemption of warrants - 11.3 12.3
Additional purchase consideration (Automaten brands) -60.0 - -
Loans raised 378.0 - -
Repayment of bank loans - 0 -39.6
Share redemption program -421.5 -410.9 -410.9
Expenses for share redemption program - -0.2 -0.2
Cash flow from financing activities -120.4 -408.2 -447.5
Change in cash and bank balances -140.5 -153.4 81.7
Cash and bank balances at beginning of the period 562.5 467.2 467.2
Exchange rate differences, cash and bank balances 11.2 3.8 13.6
Cash and bank balances at the end of the period 433.2 317.5 562.5
Changes in Group equity, MSEK Jan-Jun Jan-Jun Full year
2014 2013 2013
Opening balance 2 032.2 1 577.8 1 577.8
Total comprehensive income for the period 417.6 309.2 636.7
Total change, excluding transactions with shareholders 417.6 309.2 636.7
Share redemption program -421.5 -410.9 -410.9
Expenses for share redemption program after tax -0.1 -0.2 -0.2
New share issue 531.2 225.0 225.0
Warrants –paid premiums - - 1.0
Repurchase of warrants -16.9 -8.5 -9.2
Share issue, exercise of warrants - 11.3 11.3
Share options – value of employee services 0.5 0.3 0.5
Equity at end of the period 2,543.0 1,704.1 2,032.2
Attributable to:
Parent Company's shareholders 2,543.0 1,704.1 2,032.2
Minority interest - - -
Total equity 2,543.0 1,704.1 2,032.2
Parent Company Income Statement, MSEK Jan-Jun Jan-Jun Full year
2014 2013 2013
Revenues 8.6 4.9 10.2
Operating expenses -40.4 -19.4 -39.1
Operating income -31.8 -14.5 -29.0
Financial items -8,2 137.3 714.4
Income before tax -40,1 122.8 685.5
Tax 0.0 -2.0 -4.0
Net income for the period -40,1 120.8 681.5
Parent Company Balance Sheet, MSEK 30 Jun 2014 30 June 2013 31 Dec 2013
Tangible fixed assets
Financial fixed assets
1.8
3,656.2
3.2
2,354.2
2.5
2,352.2
Total fixed assets 3,657.9 2,357.4 2,354.7
Current receivables 57.4 54.8 474.9
Cash and bank balances 35.7 54.6 165.7
Total current assets 93.0 109.4 640.6
Total assets 3,751.0 2,466.8 2,995.3
Restricted equity 346.4 339.9 340.1
Unrestricted equity 2,085.8 1,479.0 2,039.8
Total equity 2,432.2 1,819.0 2,379.9
Liabilities to credit institutes 690.5
Current liabilities to credit institutes - 353.3 312.4
Other current liabilities 628.3 294.5 303.0
Total current liabilities 628.3 647.8 615.3
Total equity and liabilities 3,751.0 2,466.8 2,995.3

Group Overview

Group income statements

(MSEK) 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
(continuing operations) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Revenue 752.3 686.0 655.5 603.4 579.2 638.7 651.9 529.5 486.2 2,476.8
Cost of sold services -122.6 -107.3 -106.9 -100.9 -96.5 -98.6 -103.1 -90.8 -79.0 -402.8
Gross profit 629.7 578.7 548.6 502.5 482.7 540.1 548.8 438.7 407.2 2,073.9
Marketing expenses -220.5 -190.7 -195.2 -167.5 -172.4 -199.4 -189.4 -152.4 -149.8 -734.5
Personnel expenses -109.3 -102.6 -101.8 -89.9 -89.3 -92.2 -85.8 -73.5 -71.3 -373.2
Other external expenses -101.8 -109.2 -96.9 -88.4 -82.5 -84.6 -89.6 -80.4 -79.2 -352.4
Capitalized development costs 28.2 25.4 24.7 19.2 25.4 23.6 22.0 17.9 25.7 92.9
Depreciation/amortization -34.2 -29.5 -25.8 -26.3 -27.6 -27.4 -31.7 -28.0 -23.2 -107.1
Other operating income/expenses -1.7 -1.1 -3.5 2.7 1.4 1.0 -0.8 -2.2 0.1 1.6
Total operating expenses -439.3 -407.6 -398.5 -350.3 -344.9 -379.0 -375.4 -318.7 -297.7 -1,472.8
Operating income 190,4 171.2 150.0 152.2 137.8 161.1 173.4 120.0 109.5 601.2
Financial items, net -2.8 -4.6 -1.0 -2.5 -0.3 -1.0 0.0 -1.7 1.3 -4.9
Income before tax 187.5 166.6 149.0 149.7 137.5 160.1 173.4 118.3 110.9 596.2
Tax -10.9 -8.9 -8.1 -8,7 -9.2 -8.2 -6.5 -5.2 -5.5 -34.2
Income after tax 176.6 157.7 140.9 140.9 128.3 151.9 166.9 113.1 105.4 562.0
Consolidated balance sheets,
MSEK 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Fixed assets 3,496.5 3,394.1 2,129.9 2,034.2 2,050.3 1,960.0 1,736.8 1,692.6 1,754.0 2,129.9
Current assets 1,275.4 1,519.4 1,386.0 1,175.2 1,067.9 1,287.1 1,219.9 989.2 1,088.8 1,386.0
Total assets 4,771.9 4,913.5 3,515.9 3,209.4 3,118.2 3,247.2 2,956.7 2,681.8 2,842.7 3515.9
Equity 2,543.0 2,727.2 2,032.2 1,827.8 1,704.1 1,908.9 1,577.8 1,382.4 1,347.7 2,032.2
Non-current liabilities 720.8 698.7 4.1 7.2 6.1 344.7 353.8 410.8 439.4 4.1
Current liabilities 1,508.1 1,487.6 1,479.5 1,374.4 1,408.0 993.6 1,025.0 888.6 1,055.6 1,479.5
Total equity and liabilities 4,771.9 4,913.5 3,515.9 3,209.4 3,118.2 3,247.2 2,956.6 2,681.8 2,842.7 3,515.9
Cash Flow Statements, MSEK
2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Operating cash flow 223.7 153.1 192.0 175.4 150.7 165.4 326.3 -23.7 265.6 683.5
Cash flow from investing activities -31.7 -365.2 -57.9 -35.1 -34.8 -311.5 -48.1 -21.6 -547.4 -154.3
Cash flow from financing activities -435.9 315,5 -0.6 -38.8 -410.9 287.8 -67.0 -39.2 36.2 -447.5
Total cash flow -243.9 103.4 133.5 101.5 -295.1 141.7 211.2 -84.5 -245.7 81.7
Key ratios 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
(Continuing operations) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Growth (revenues) per quarter (percent)
Growth compared with the same period in
10 5 9 4 -9 -2 23 9 -9
the previous year 30 7 1 14 19 19 27 14 44 12
Gross margin (percent of revenues) 83.7 84.4 83.7 83.3 83.3 84.6 84.2 82.9 83.7 83.7
EBITDA margin (percent of revenues) 29.8 29.3 26.8 29.6 28.6 29.5 31.5 28.0 27.3 28.6
EBITDA margin (percent of gross profit) 35.7 34.7 32.1 35.5 34.3 34.9 37.4 33.7 32.6 34.2
Operating margin (percent of revenues)
Operating margin (percent of gross profit)
25.3
30.2
25.0
29.6
22.9
27.4
25.2
30.3
23.8
28.5
25.2
29.8
26.6
31.6
22.7
27.4
22.5
26.9
24.3
29.0
Profit margin (percent of revenues) 24,9 24.3 22.7 24.8 23.7 25.1 26.6 22.3 22.8 24.1
Profit margin (percent of gross profit) 29.8 28.8 27.2 29.8 28.5 29.6 31.6 27.0 27.2 28.7
Marketing (percent of revenues) 29.3 27.8 29.8 27.8 29.8 31.2 29.1 28.8 30.8 29.7
Marketing (percent of gross profit) 35.0 32.9 35.6 33.3 35.7 36.9 34.5 34.7 36.8 35.4
Earnings per share (SEK) 3.84 3.52 3.24 3.25 2.95 3.54 3.95 2.68 2.54 12.98
Operating cash flow per share (SEK) 4.86 3.42 4.42 4.04 3.47 3.86 7.73 -0.56 6.29 15.79
Equity per share (SEK)
Executed dividend/ redemption per share
55.26 59,28 46.79 42.08 39.24 43.95 36.33 32.75 31.92 46.79
(SEK) 9.16 9.46 9.42 9.46
Average share price (SEK) 231.59 204.87 197.76 179.32 176.78 213.50 177.78 189.09 210.34 191.59
Share price at end of the period (SEK)
Highest share price (SEK)
231.00
251.00
235.50
238.50
204.00
213.50
190.50
196.50
170.00
210.00
209.50
224.50
200.50
200.50
174.50
207.00
206.00
234.00
204.00
224.50
Lowest share price (SEK) 222.50 178.00 182.50 167.50 159.50 200.00 158.50 164.00 195.00 159.50
Equity/assets ratio (percent) 56 56 58 57 55 59 53 52 48 58
Investments (MSEK) 31.8 26.6 57.9 19.3 34.8 26.5 33.1 21.6 29.1 138.5
Average number of employees
(accumulated)
839 835 789 756 721 739 591 527 464 789
Number of employees at the end of the
period
Number of shareholders at the end of the
877 857 839 815 756 743 748 723 610 839
period 21,148 19,770 18,825 19,909 19,447 17,388 17,225 16,195 15,246 18,825
Customers 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Number of registered customers
(thousand) 7,475.4 7,283.9 6,732.7 6,623.2 6,354.9 6,044.2 5,777.9 5,633.7 5,418.0 6,732.7
Growth per quarter (percent)
Growth compared with the same period in
3 8 2 4 5 5 3 4 39
the previous year (percent) 18 21 17 18 17 55 58 65 68 17
Number of active customers (thousand) 381.4 360.8 401.4 423.6 428.7 479.2 520.4 463.6 508.7 401.4
Growth per quarter (percent)
Growth compared with the same period in
5.7 -10.1 -5.2 -1.0 -10.5 -7.9 12.3 -8.9 25.6
the previous year (percent) -11 -25 -23 -9 -16 18 29 21 51 -23
Active/registered customer ratio 5 5 6 6 7 8 9 8 9 6
Customer deposits 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Deposits (MSEK) 1,939.4 1,570.7 1,613.6 1,493.8 1,445.9 1,511.1 1,586.5 1,362.9 1,097.8 6,064.5
Quarterly growth (percent) 23 -3 8 3 -4 -5 16 24 5
Growth compared with the same period in
the previous year (percent) 34 4 2 10 32 45 45 21 45 19
Customer deposits, all gaming solutions
(MSEK) 2,613.4 2,212.5 2,262.3 2,027.1 2,017.8 2,113.9 2,154.8 1,756.0 1,509.5 8,421.1
Quarterly growth (percent) 18 -2 -5 -2 23 16 3
Growth compared with the corresponding 12 0
period in the previous year (percent) 30 5 5 15 34 44 45 18 31 22
Gross margin, Sportsbook 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Gross revenue, all gaming solutions 4,140.4 3,780.8 4,094.6 3,398.5 3,447.6 3,873.6 3,782.8 2,921.4 2,744.8 14,814.3
Quarterly growth (percent) 9.5 -7.7 20.5 -1.0 -11.0 2.4 29.5 6.4 3.8
Growth compared with the same period in
the previous year (percent)
20 -2 8 16 26 47 74 61 52 23
Of which gross revenue from Live Betting
(MSEK) 2,847.2 2,618.2 2,770.9 2,365.2 2,393.2 2,667.3 2,476.8 1,910.9 1,904.8 10 ,96.5
Share of Live Betting (percent)
Growth per quarter (percent)
68.8
8.7
69.2
-5.5
67.7
17.2
69.6
-1.2
69.4
-10.3
68.9
7.7
65.5
29.6
65.4
0.3
69.4
9.5
68.8
Growth compared with the same period in
the previous year (percent) 19 -2 12 24 26 53 85 78 59 27
Marginal efter fria vad (procent) 7.0 8.0 6.2 6.9 6.5 7.3 7.4 5.5 4.6 6.7
Gross profit, Sportsbook (MSEK)
Gross margin, Sportsbook (percent) 1)
166.6
4.0
175.9
4.7
146.3
3.6
140.7
4.1
126.6
3.7
164.0
4.2
165.5
4.4
89.8
3.1
68.9
2.5
577.6
3.9
Segment reporting 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Gross profit(MSEK)
B2B, Business to business 144.9 145.1 132.4 104.9 124.0 165.4 147.4 120.8 115.3 526.7
B2C, Business to consumers 484.8 433.7 416.2 397.6 358.7 374.7 401.4 317.9 291.9 1,547.2
Total 629.7 578.8 548.6 502.5 482.7 540.1 548.8 438.7 407.2 2,073.9
Other adjustments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total gross profit 629.7 578.8 548.6 502.5 482.7 540.1 548.8 438.7 407.2 2,073.9
Share of total gross profit (percent)
B2B
23.0 25.1 24.1 20.9 25.7 30.6 26.9 27.5 28.3 25.4
B2C 77.0 74.9 75.9 79.1 74.3 69.4 73.1 72.5 71.7 74.6
Growth per quarter (percent)
B2B 0 10 26 -15 -25 12 22 5 -19
B2C 12 4 5 11 -4 -7 26 9 -8
Total
Growth compared with the same period
9 6 9 4 -11 -2 25 8 -11
in the previous year
B2B 17 -12 -10 -13 8 16 11 -2 -7 0
B2C 35 16 4 25 23 19 33 19 92 17
Total 30 7 0 15 19 18 27 13 48 12
Gross profit per prouct
2014
Q2
2014
Q1
2013
Q4
2013
Q3
2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2013
Full year
Gross profit (MSEK)
Casino 433.6 372.0 364.1 329.9 316.0 325.4 335.8 301.7 303.1 1,335.4
Poker 18.5 23.4 25.4 21.2 22.0 30.6 31.6 32.2 25.4 99.2
Sportsbook 166.6 175.9 146.3 140.7 126.6 164.0 165.5 89.8 68.9 577.6
Other products 11.1 7.4 12.8 10.7 18.1 20.1 15.9 15.0 9.8 61.7
Total gross profit 629.7 578.7 548.6 502.5 482.7 540.1 548.8 438.7 407.2 2,073.9
Share of total gross profit (percent)
Casino
68.9 64.3 66.4 65.7 65.5 60.2 61.2 68.8 74.4 64.4
Poker 2.9 4.0 4.6 4.2 4.6 5.7 5.8 7.3 6.2 4.8
Sportsbook 26.5 30.4 26.7 28.0 26.2 30.4 30.2 20.5 16.9 27.9
Other products 1.8 1.3 2.3 2.1 3.7 3.7 2.9 3.4 2.4 3.0
Growth per quarter (percent)
Casino 17 2 10 4 -3 -3 11 0 -2
Poker -21 -8 20 -4 -28 -3 -2 27 -8
Sportsbook -5 20 4 11 -23 -1 84 30 -36
Other products 50 -42 20 -41 -10 26 6 53 -36
Total all products
Growth compared with the same period
9 5 9 4 -11 -2 25 8 -11
in the previous year
Casino 37 14 8 9 4 6 16 10 50 7
Poker -16 -24 -20 -34 -13 11 27 50 49 -15
Sportsbook 32 7 -12 57 84 52 70 7 67 34
Other products
Total all products
-39
30
-63
7
-19 -29 31
84 -24 79 -35 10
0 15 19 18 27 13 48 12
B2C per geographic area 2014 2014 2013 2013 2013 2013 2012 2012 2012 2013
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Gross income (MSEK)
Nordic countries 339.9 344.0 353.3 339.7 291.9 302.3 330.2 253.4 238.7 1,287.2
EU, excluding Nordic countries 140.9 83.6 58.2 55.1 63.5 69.1 68.1 58.3 49.7 245.9
Rest of Europe
Rest of the world
2.3
1.6
2.7
3.4
2.5
2.2
1.4
1.4
2.1
1.2
1.4
1.9
1.3
1.8
2.4
3.8
1.5
1.9
7.4
6.7
Total gross profit 484.8 433.7 416.2 397.6 358.7 374.7 401.4 317.9 291.9 1,547.2
Share of total gross income(percent)
Nordic countries
EU, excluding Nordic countries
70.1
29.1
79.3
19.3
84.9
14.0
85.4
13.9
81.4
17,7
80.7
18.4
82.3
17.0
79.7
18.3
81.8
17.0
83.2
15.9
Rest of Europe 0.5 0.6 0.6 0.4 0.6 0.4 0.3 0.8 0.5 0.5
Rest of the world 0.3 0.8 0.5 0.4 0.3 0.5 0.4 1.2 0.7 0.4
Growth per quarter (percent)
Nordic countries -1 -3 4 16 -3 -8 30 6 -8
EU, excluding Nordic countries 69 44 6 -13 -8 1 17 17 3
Rest of Europe -13 8 79 -33 50 8 -46 57 39
Rest of the world -52 55 57 17 -37 6 -53 96 -75
Total all countries
Growth compared with the same period
12 4 5 11 -4 -7 26 9 -8
in the previous year
Nordic countries 16 14 7 34 22 17 38 27 106 19
EU, excluding Nordic countries 122 21 -15 -5 28 43 23 1 42 10
Rest of Europe 11 93 92 -42 37 27 63 71 119 17
Rest of the world
Total all countries
35
35
79
16
22
4
-63
25
-38
23
-76
19
-68
33
-49
19
287
92
-57
17

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