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Betsson

Quarterly Report Jul 19, 2013

3010_ir_2013-07-19_329f63fa-4ef3-42fd-8105-53d07b675ecf.pdf

Quarterly Report

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Interim Report for the period 1 January – 30 June 2013

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.

Second quarter operating income increased by 26 percent

Second quarter

  • Revenues amounted to SEK 579.2 (486.2) million, equivalent to an increase of 19 percent.
  • Operating income amounted to SEK 137.8 (109.5) million which is equivalent to an increase of 26 percent. Gross profit in the Sportsbook including all gaming solutions amounted to SEK 3,447.6 (2,744.8) million,
  • which is an equivalent to an increase of 26 percent.
  • Income before tax amounted to SEK 137.5 (110.9) million which is equivalent to an increase of 24 percent.
  • Net income amounted to SEK 128.3 (105.4) million, corresponding to SEK 2.95 (2.54) per share.
  • Deposits in all of Betsson's gaming solutions amounted to SEK 2,017.8 (1,509,5) million which is equivalent to an increase of 34 percent.
  • During the quarter Betsson executed a technical upgrade when the brand Betsson was migrated to a common technical platform. This migration was successful.

Interim report

  • Revenues increased by 19 percent to SEK 1,217.9 (1,022.2) million.
  • Operating income amounted to SEK 298.9 (283.5) million.
  • Income before taxes amounted to SEK 297.5 (281.9) million.
  • Net income amounted to SEK 280.2 (267.7) million, corresponding to SEK 6.49 (6.41) per share.

Key Performance Indicators

Q2 Q2 YTD YTD Full year
2013 2012 2013 2012 2012
Totals
Revenues 579.2 486.2 1 217.9 1 022.2 2 203.7
Gross Profit 482.7 407.2 1 022.9 866.1 1 853.7
of which Sportsbook 126.6 68.9 290.6 176.7 432.0
Operating Income 137.8 109.5 298.9 283.5 577.1
Liquid funds 317.5 342.3 317.5 342.3 467.2
Active Customers (thousands) 428.7 508.7 428.7 508.7 520.4
Registered Customers (thousands) 6 354.9 5 418.0 6 354.9 5 418.0 5 777.9
Customer Deposits 1 445.9 1 093.5 2 957.1 2 138.8 5 092.4
Customer Deposits, all gaming solutions 2 017.8 1 505.1 4 131.7 2 973.7 6 888.9
B2C
Gross Turnover Sportsbook 1 129.9 731.1 2 360.6 1 376.6 3 735.5
Gross Margin Sportsbook 5.2% 4.0% 6.0% 5.4% 5.7%
Grossprofit Sportsbook 58.9 29.4 141.7 74.0 214.5
B2B
Gross Turnover Sportsbook 2 317.7 2 013.7 4 960.7 4 012.3 8 357.6
Gross Margin Sportsbook 2.9% 2.0% 3.0% 2.6% 2.6%
Grossprofit Sportsbook 67.7 39.5 148.9 102.7 217.5

1) Refers to margin after allocated expenses. The margin after free bets in all gaming solutions amounted to 6.5 (4.6) percent.

Stable organic growth with market-leading profitability

" Betsson continues to make investments in order to optimize its operations. During the second quarter a successful migration of Betsson.com to the common platform was executed. After this, the majority of Betssons revenues are generated on the new platform. This has strengthened the mobile offering and enables an advanced further development of the gaming experience as well as cost-efficient operations. At the same time Betsson delivers stable organic growth and one of the market's strongest profit margins." states Magnus Silfverberg, President and CEO of Betsson.

Presentation of the Interim Report

Today, Friday 19 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 at www.betssonab.com or http://storm.zoomvisionmamato.com/player/betsson/objects/91a38d5r or by phone on +46 (0)8 505 564 74 (Sweden) or +44 (0) 203 364 53 74 (UK). The presentation will be in English and will be followed by a question and answer session.

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

Second quarter 2013

Group revenue amounted to SEK 579.2 (486.2) million. Gross profit was SEK 482.7 (407.2) million. Operating income amounted to SEK 137.8 (109.5) million and the operating margin was 23.8 (22.5) percent. The Group's income before tax was SEK 137.5 (110.9) million and net income was SEK 128.3 (105.4) million, which is equivalent to SEK 2.95 (2.54) per share.

Revenues were negatively impacted by SEK 22.9 million due to unfavourable exchange rate fluctuations compared with the exchange rates applied in the second quarter 2012. This gives however a marginal negative effect on operating income as an equivalent revaluation of expenses offsets the negative impact. Organic growth adjusted for exchange rates amounted to 7.1 percent.

Marketing expenses amounted to SEK 172.4 (149.8) million which is equivalent to an increase of 15 percent. Management deems that there are good growth possibilities and plans, during the remainder of 2013, on continuing to make marketing investments, measured in percent of revenues, at the same level as undertaken in the first quarter.

Personnel costs amounted to SEK 89.3 (71.3) million, an increase of 25 percent. This increase compared with last year is primarily explained by the NGG acquisition. Personnel costs increased marginally compared with the first quarter, excluding the first quarter's restructuring costs of SEK 3.8 million. During the quarter, the number of employees increased by 2 percent which is explained by the planned switch from external consultants to new personnel and other recruited personnel, in order to create and meet future growth.

Other external expenses amounted to SEK 82.5 (79.2) million.

Capitalized development costs amounted to SEK 25.4 (25.7) million. Betsson's operating subsidiaries consistently invest in improvements in their offerings to end users and partners, creating the conditions for growth. Furthermore, one of the subsidiaries is investing in migrating a number of gaming solutions into a new common technical platform. In the long run that will contribute to costeffective operations.

Interim period January- June 2013

Group revenue amounted to SEK 1,217.9 (1,022.2) million, which is equivalent to an increase of 19 percent. Gross profit amounted to SEK 1,022.9 (866.1) million which is equivalent to an increase of 18 percent. Operating income increased to SEK 298.9 (283.5) million and the operating margin was 24.5 (27.7) percent. Income before tax increased to SEK 297.5 (281.9) million and net income increased to SEK 280.2 (267.7), equivalent to 6.49 (6.41) per share.

Acquisition of the Automaten brands

The acquisition of the Automaten brands had an impact on the accounts since the first of April 2013. Since that date and up until the end of June, the acquisition contributed to the Group's operating income with SEK 11.5 million, due to the net effect of new marketing obligations from Betssons side and removed revenue share to Cherry.

If the Automaten brands had been owned during the entire interim period, Betsson's total operating income would have amounted to SEK 311.0 million, instead of SEK 298.9 million, excluding acquisition costs of SEK 0.5 million in the first quarter.

If Betsson had owned the Automaten brands during the entire interim period, the acquisition would have contributed SEK 23.5 million to operating income.

Operations

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

New gaming legislation was introduced in Denmark during the beginning of the previous year, which gave gaming operators the opportunity to apply for a gaming license. Even if the system has certain flaws, such as restrictions on product offering and high tax rate, the regulations act as a basis for evaluating the new gaming legislation which may potentially be implemented on Betsson's main markets. Betsson's operations in Denmark continue to show a stable development. During the second quarter, the Italian casino site, Starcasion.it, has developed positively. Management deems that there are good premises to establish, over time, successful operations in Italy.

The high level of growth in the use of Smartphones contributes to a strong demand for mobile gaming solutions. Betsson has developed and provides, today, one of the market's broadest and most advanced gaming solutions for smartphones. Mobile revenues comprises, during the second quarter, 9 percent of all revenues, which is an increase from 8 percent in previous quarter. However, mobile penetration varies significantly between the brands where Betsafe has the largest share, 16 percent. The mobile offering were during the quarter more spread within the group due to the technical migration of the Betsson brand. The Betsson brand's mobile development has been strong after this migration.

B2C – Second quarter

Gross revenue for B2C in the second quarter amounted to SEK 358.7 (291.9) million, an increase of 23 percent. The Automaten brands have been included in B2C since the first of April and contributed, during the second quarter, with SEK 32.7 million.

During the second quarter, the Nordic Region comprised 81 (82) percent of the segment, while EU outside Nordic Region represented 18 (17) percent.

B2B – Second quarter

Gross profit from B2B amounted to SEK 124.0 (115.3) million. The Automaten brands were previously reported in B2B but since the first of April

are included in B2C, and contributed to that segment with SEK 32.7 million. The underlying activity, spread among a number of partnerships, is steadily increased, where gross turnover in sports gaming amounted to SEK 2,317.7 (2,013.7), which is equivalent to an organic growth of 15 percent.

Betsson's technical gaming platform enables costefficient operations in which a number of different brands can be maintained and further developed over time.

The software development in China continued during the second quarter. The Company does not anticipate any significant revenues from the Chinese market over the coming quarters.

Products

Gross profit in Casino during the second quarter amounted to SEK 316.0 (303.1) million, which represented 66 (74) percent of the Group's total gross profit. Operational Management has implemented a number of measures designed to increase activity, which are expected to have positive results during the rest of the year.

Gross turnover in Sportsbook, in all of Betsson's gaming solutions, amounted to SEK 3,447.6 (2,744.8) million, which is an increase of 26 percent. Gross turnover in Live betting in Sportsbook, including all of Betsson's gaming solutions, was SEK 2,393.2 (1,904.8) million, equivalent to an increase of 26 percent. The margin after free bets in all of Betsson's gaming solutions in Sportsbook amounted to 6.5 (4.6) percent. Gross profit in Sportsbook during the quarter totalled SEK 126.6 (68.9) million, an increase of 83 percent. Gross profit in Sportsbook includes SEK 67.6 (39.5) million regarding licensing revenues and gaming contributions to gross profit from B2B. Sportsbook's share of the Group's gross profit amounted to 26 (17) percent.

Gross profit in Poker during the quarter came in at SEK 22.0 (25.4) million.

Gross profit in Other products amounted to SEK 18.1 (9.8) million during the second quarter.

Customer deposits

During the second quarter, a total of SEK 1,445.9 (1,097.8) million was deposited. Deposits in all of Betsson's gaming solutions amounted to SEK 2,017.8 (1,509.5) million during the quarter.

Customers

At the end of the quarter, the number of registered customers was 6.4 (5.4) million players. The number of active customers during the quarter increased to 428,703 (508,700). Active customers fluctuates between quarters due to executed marketing campaigns and seasonal patterns.

An active customer is defined as a customer who has played for cash during the last three months. This definition also includes players who have played on the basis of free of charge offerings.

Equity

Equity in the Group amounted to SEK 1,704.1 (1,347.7) million, equivalent to SEK 39.24 (31.92) per share.

Liquid funds and customer liabilities

At the end of the quarter, liquid funds totalled SEK 317.5 (342.3) million. Liabilities to credit institutions amounted to SEK 349.7 (431.8) million and unutilised credits totalled SEK 136.2 (54.5) million. During the quarter, a total of SEK 410.9 million, equivalent of SEK 9.46 per share, have been transferred in the form of liquid funds to the shareholders.

Customer liabilities, including the provision for earned jackpots, amounted to SEK 303.4 (330.7) million. This amount may impose restrictions on the utilization of the Group's liquid funds, due to stipulations in the Maltese gaming authority's regulations. The Group's current receivables with payment providers referring to unsettled client payments total SEK 215.9 (251.3) million.

Personnel

At the end of the second quarter, there was a total of 756 (610) employees. The average number of employees during the quarter was 721 (464) in the Group, of which 473 (375) were employed in Malta.

In addition to these employees, the Group had, at the end of the quarter, 200 consultants employed on a full-time basis.

Parent Company

The operations of the Parent Company, Betsson AB (publ), consist of the ownership and administration of shares in companies through which Betsson, itself or through partner co-operation, offers games to end users via the Internet. The Company provides and sells internal services to certain Group companies regarding finance, accounting and administration.

Turnover for the period amounted to SEK 4.9 (8.7) million and income before tax for the interim period amounted to SEK 122.8 (164.6) million.

Liquid funds amounted to SEK 54.6 (77.6) million.

Ownership structure

The Company's Class B shares are listed on the NASDAQ OMX NORDIC MID CAP LIST, (BETS). At the end of the period, the Company had 19,447 (15,246) shareholders. The largest owners (owners with more than 10 percent of votes) were Per Hamberg and company, with 5.8 percent of the capital and 19.3 percent of votes, the Knutsson family and company, with 5.9 percent of capital and 10.8 percent of votes and Rolf Lundström and company, with 3.7 percent of capital and 10.1 percent of votes.

Claims for damages

In 2001, Betsson reported the Swedish Government to the Chancellor of Justice (JK) as the government had not notified its prohibition on prize and wheel of fortune games and also failed to apply reasonable transition regulations. This neglect has cost Betsson considerable sums. Betsson requested that the Chancellor of Justice investigate whether the state was liable for these losses. The Chancellor of Justice ruled, in 2003, that this was not the case. The reason for the decision was not clearly defined and Betsson has, therefore, sought external legal expertise in order to investigate the possibility of suing the state and claiming damages for breach of EU law. The findings of this study established that the Swedish state was, in fact, in the wrong when it failed to notify the 1997 legislative changes (Wheel of Fortune) under the provisions on technical regulations stipulated in Directive 98/34 EC. The ban is, consequently, void and cannot be applied to Betsson. The Swedish government has, in this context, been guilty of a breach of EU law. Based on this assessment, there are, consequently, good prospects for the success of a claim for damages regarding the 1997 amendments. This conclusion finds further support in recent rulings of the EU Court and the Supreme Court. On 1 November 2006, Betsson filed a lawsuit against the Swedish state making a claim for damages of SEK 102 million plus interest. In September 2010, the Stockholm District Court ruled against Betsson, in spite of the fact that the Court acknowledged the illegality of the ban. Betsson appealed the ruling to the Svea Court of Appeal, which granted leave to appeal. The Court of Appeal upheld the District Court's ruling in November 2011. Betsson appealed to the Swedish Supreme Court, but the Supreme Court announced in March 2013 that leave to appeal would not be granted. Parallel with making this attempt at an appeal, Betsson has commenced proceedings by which it is directly petitioning the Swedish Supreme Court on, in principle, the same issue, but in a separate claim for damages from the Swedish Government. This claim is now being considered. The main proceedings at the Swedish Supreme Court are expected to be carried out late in the autumn of 2013. The ruling can be expected to be made in the winter of 2014. An eventual negative ruling would not generate any cost for Betsson.

Outstanding shares

Betsson's holding of own shares amounts to 638 Class B shares, which were acquired during previous years at an average price of SEK 58.27 per share.

The total number of shares and votes in Betsson amounts to 43,433,003 (42,219,183) and 92,213,003 (90,999,183), respectively, of which 5,420,000 (5,420,000) are Class A shares representing 10 votes per share and 38,013,003 (36,799,183) are Class B shares, representing 1 vote per share.

Dividend

During the quarter, a total of SEK 410.9 million, equivalent of SEK 9.46 per share, has been transferred in the form of liquid funds to the shareholders.

Events after the second quarter

The start of the third quarter has seen lower average revenues than in the previous quarter. As a result of seasonal variations, July and August are usually weak months.

There have been no other significant events after the end of the period.

Accounting principles

Betsson complies with the IFRS standards adopted by the EU, as well as with the interpretations of those standards (IFRIC). This Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's Recommendation RFR 2.

Betsson's B2C segment is defined as games by players acquired by the Company itself and games from players originating from Betsson's network of affiliated websites (www.affiliatelounge.com). Betsson classes anything which cannot be included in these categories as B2B.

The portion of a gain or loss on a hedging instrument which is deemed to be an effective hedge is reported under Other comprehensive income. The gain or loss which is attributable to the ineffective portion is reported in the income statement.

In other respects, the accounting principles remain unchanged from the preparation of the Annual Report for 2012. Further information regarding the Group's accounting and valuation principles can be found in Note 2 of the Annual Report for 2012, which is available at www.betssonab.com or at the head office.

Risks and factors of uncertainty

The legal situation regarding online gaming is constantly changing in different geographical areas. There is continued pressure on countries in the EU to bring their legislation in line with applicable EU law, with unrestricted mobility for 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 implement regulatory adjustments.

New legislation could result in changes to market conditions regarding, for example, taxes, the product range and local licensing fees and such changes might have a negative impact on Betsson's profitability. Meanwhile, new legislation may lead to a significant growth in Betsson's gaming markets, as well as possibly providing Betsson with increased opportunities for marketing and an increased presence on the market.

At the start of June 2010, Norway introduced its ban on promoting games arranged from abroad. This ban impacts banks in that payment services for

transactions to gaming companies using debit and credit cards, have been classified as unlawful.

Today, there seems to be a consensus among representatives of the various Swedish political parties to introduce new regulations on the Swedish gaming market. It is too early to draw any substantial conclusions from this situation, although a common assessment is that new regulations are unlikely to be introduced before the next general election in 2014.

After the divestment of the Turkish customer base, Betsson has license revenues for, among other things, system delivery to a gaming operator, for which parts of the revenues derive from players in Turkey. These license revenues are reported under B2B. Revenues arising from Turkey may be considered to have higher operational risk than revenues from other markets. A new proposal for a change in existing gaming legislation was approved in Turkey, in 2013. It is still to early to judge the potential effects from this legislation.

A more detailed description of the risks above and other risks and uncertainties can be found in the Annual Report for 2012.

Transactions with related parties

No transactions significantly affecting Betsson's financial position and results for the quarter have been undertaken between Betsson and related parties.

Future prospects

Betsson is of the opinion that the online gaming market will continue to develop strongly. The number of Internet users across the globe is growing rapidly, which is a fundamental driver for the business. The confidence in Internet and ecommerce is increasing as more people use the Internet to perform their banking and stock market transactions, insurance business and other purchases. This changing behaviour and increasing confidence in e-commerce is important for the online gaming industry.

H2 Gambling Capital made the assessment in November 2012 that the global Internet gaming market will increase by 9.1 percent during 2013. Betsson intends to continue growing at a rate faster than the market rate.

Management is of the opinion that revenues from mobile devices will increase significantly during the coming twelve-month period.

A period of growth, combined with more brands and an improved product range, has given Betsson a stronger position. This, combined with the high demand for Betsson's products, creates a sound base for continued positive growth within both B2B and B2C. During the second quarter, the Betsson trademark was incorporated into the same technology platform, which improves the trademark's opportunities for mobile growth.

Annual General Meeting 2013

The annual general meeting of shareholders in Betsson AB was held on 8 May 2013, at Betsson's office, Regeringsgatan 28, Stockholm. The Annual General Meeting vote against the Board's proposal of employee share-option plans. Other proposals on the agenda were adopted.

All Members of the Board, with the exception of Per Hamberg who had declined re-election, were reelected as Members of the Board.

Financial calendar

Betsson intends to publish its financial reports as follows. The interim report for the third quarter on 25 October and the Year-End Report for 2013 (fourth quarter) on 7 February 2014.

Presentation of the Interim Report

Today, Friday 19 July, at 09.00 CET, Betsson's CEO Magnus Silfverberg will present the Interim Report at Betsson's office on Regeringsgatan 28, as well as through webcast at www.betssonab.com or http://storm.zoomvisionmamato.com/player/betsso n/objects/91a38d5r or by phone at +46 (0)8 505 564 74 (Sweden) or +44 (0) 203 364 53 74 (UK). This 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 19 July.

Assurance

The Board and the CEO hereby declare that this interim report provides a true and fair picture of the operations, financial position and results of the Company and the Group, and that it describes significant risks and uncertainty factors facing the Company and the Group.

Stockholm, 19 July 2013

Pontus Lindwall Carl Lewenhaupt Styrelseordförande Ledamot

Lars Linder-Aronson Patrick Svensk Ledamot Ledamot

Kicki Wallje-Lund John Wattin Ledamot Ledamot

Magnus Silfverberg VD och koncernchef

Betsson AB (publ), Regeringsgatan 28, 111 53 Stockholm Registered office: Stockholm Corporate Identity Number 556090-4251

For more information, please contact: Magnus Silfverberg, President and CEO Tel, +46 702714700, [email protected] or Fredrik Rüdén, CFO, Tel, +46 733-11 72 62, [email protected].

The information in this Interim Report is information which Betsson AB (Publ) shall publish in accordance with the Securities Market Act and /or the Financial Instruments Trading Act. The information was presented for publication on 19 July 2013, 07:30 CET.

Business combinations

On 19 February Betsson AB entered into an agreement to acquire the brands Sverigeautomaten.com, Norgesautomaten.com and Danmarksautomaten.com from Cherry for a total purchase consideration of SEK 286 million, of which SEK 60 million refers to a supplementary purchase price. In practice, this transaction implies that Betsson AB's subsidiary on Malta, which had already previously been responsible for the operations of these sites, now, after the transaction, also has taken over the brands and the responsibility for the marketing of these sites. At the same time, Cherry acquired the brand, Cherrycasion.com from Betsson's Maltese subsidiary for a purchase price of SEK 1 million.

The initial net purchase price of SEK 225 million was settled through the delivery of the equivalent of 1,063,895 newly issued Class B Betsson shares. The supplementary purchase price will be settled on the basis of a cash payment after 12 months.

In 2012, the Automaten brands generated revenues of SEK 168.2 million, which are already included in Betsson's reported total revenue. All in all, the transaction implies that Betsson, based on 2012's activity level, will save, annually, SEK 52.7 million in costs through the net effect of new marketing obligations from Betssons side and no longer needing to make a profit distribution to Cherry which had been stipulated in the previous cooperation agreements.

No portion of the reported goodwill is expected to be tax deductible. The following table shows a summary of the paid purchase price and fair value of the acquired assets and assumed liabilities.

Accounting effects

The acquisition of the Automaten brands has impacted the accounts since the first of April 2013. Since that date and up until the end of June, the acquisition contributed to the Group's operating income with SEK 11.5 million, due to the net effect of new marketing obligations from Betssons side and removed revenue share to Cherry.

If the Automaten brands would have been owned during the entire interim period, Betsson's total operating income would have amounted to SEK 311.0 million, instead of SEK 298.9 million, excluding acquisition costs of SEK 0.5 million in the first quarter.

If Betsson had owned the Automaten brands during the entire interim period the acquisition would have contributed SEK 23.5 million to operating income.

Acquisition analysis (MSEK)

Purchase consideration

Sold brand 1.0
Own capital instruments (1,063,895
Class B shares)
225.0
Total purchase price paid
Supplementary purchase price (non
226.0
conditional) 60.0
Total purchase price 286.0
Reported amount of identified
acquired assets and assumed liabilities
Brands 38.1
Total identifiable net assets 38.1

Goodwill 247.9

Consolidated income statement, MSEK Q2
2013
Q2
2012
Jan-Jun
2013
Jan-Jun
2012
Full year
2012
Income 579.2 486.2 1217.9 1,022.2 2,203.7
Cost of sold services -96.5 -79.0 -195.0 -156.1 -350.0
Gross profit/loss 482.7 407.2 1022.9 866.1 1,853.7
Marketing costs -172.4 -149.8 -371.7 -285.0 -626.8
Personnel costs -89.3 -71.3 -181.4 -131.5 -290.9
Other external expenses -82.5 -79.2 -167.1 -159.3 -329.3
Capitalized development costs 25.4 25.7 49.0 41.0 81.0
Depreciation/amortisation -27.6 -23.2 -55.0 -45.3 -105.0
Other operating income/-costs 1.4 0.1 2.3 -2.5 -5.6
Operating expenses -344.9 -297.7 -723.9 -582.6 -1276.6
Operating profit/loss 137.8 109.5 298.9 283.5 577.1
Financial income and expenses -0.3 1.3 -1.4 -1.7 -3.5
Result before taxes 137.5 110.9 297.5 281.9 573.6
Tax -9.2 -5.5 -17.4 -14.2 -25.8
Profit/loss for the period 128.3 105.4 280.2 267.7 547.8
Earnings per share basic (SEK) 2.95 2.54 6.49 6.41 13.04
Earnings per share after dilution (SEK) 2.95 2.54 6.49 6.41 12.98
Operating margin (percent of income) 23.8 22.5 24.5 27.7 26.2
Operating margin (percent of gross profit/loss) 28.5 26.9 29.2 32.7 31.1
Profit margin (percent) 23.7 22.8 24.4 27.6 26.0
Average number of outstanding shares (million) 43.4 41.5 43.1 41.8 42.0
Number of outstanding shares at end of period (million) 43.4 42.2 43.4 42.2 42.3
Return on equity (percent) 17 20 38
Return on total equity (percent) 10 11 22
Return on capital employed (percent) 11 12 24
Consolidated Statement of Q 2 Q 2 Jan-Jun Jan-Jun Full year
Comprehensive Income (MSEK) 2013 2012 2013 2012 2012
Net income 128.3 105.4 280.2 267.7 547.8
Other comprehensive income
Income/costs carried directly in equity
Hedge of net investments in foreign currency incl deferred tax -19.6 5.4 -6.0 5.4 10.7
Exchange differences on translation of foreign operations 97.4 -16.3 35.0 -29.4 -57.0
Other comprehensive income for the period (after
tax)
77.8 -10.9 29.1 -24.0 -46.3
Total comprehensive income for the period 206.1 94.5 309.2 243.7 501.5
Consolidated balance sheet, MSEK 30 Jun 2013 30 Jun 2013 31 Dec 2012
Intangible non-current assets 1,996.9 1,697.8 1,664.6
Tangible fixed assets 26.5 29.6 28.5
Financial fixed assets 13.1 12.6 25.2
Deferred tax assets 13.8 13.9 18.4
Total fixed assets 2,050.3 1,754.0 1,736.8
Current receivables 750.3 746.4 752.7
Cash and cash equivalents 317.5 342.3 467.2
Total current assets 1,067.9 1,088.7 1,219.9
Total assets 3,118.2 2,842.7 2,956.7
Equity 1,704.1 1,347.7 1,577.8
Deferred income tax liabilities 6.1 7.6 9.3
Liabilities with credit institutions - 431.8 344.5
Total long-term liabilities 6.1 439.4 353.8
Liabilities with credit institutions 349.7
Other current liabilities 1,058.4 1,055.6 1,025.0
Total current liabilities 1,408.0 1,055.6 1,025.0
Total equity and liabilities 3,118.2 2,842.7 2,956.7
Cash Flow Statement for the Group, MSEK Jan-Jun Jan-Jun Full year
2013 2012 2012
Income after financial items 297.5 281.9 573.6
Adjustment for non-cash items 58.8 49.0 110.4
Taxes paid -24.4 -22.1 2.7
Cash flows from operating activities
before changes in working capital 331.9 308.8 686.6
Changes in working capital -15.9 54.7 -20.6
Cash flows from operating activities 316.0 363.5 666.1
Investments -61.3 -46.4 -101.0
Sale of intangible assets 1.0 - -
Acquisition of shares, subsidiaries -286.0 -518.4 -518.4
Acquisition of shares, associated companies - - -15.0
Cash flows from investing activities -346.3 -564.7 -634.4
Cash paid upon redemption of warrants -8.5 - -10.4
New share issue upon redemption of warrants 11.3 - -
New share issue upon acquisition of shares in subsidiaries (the Automaten
brands)
Remaining purchase consideration (the Automaten brands)
225.0
60.0
-
-
-
-
Bank loan - 431.8 431.8
Repayment of bank loan - -74.1
Share redemption programme -410.9 -395.6 -395.6
Cost of share redemption programme after tax -0.2 - -
Dividends - - -21.8
Cash flows from financing activities -123.2 36.2 -70.2
Changes to cash and liquid assets -153.4 -165.1 -38.4
Cash and liquid assets at beginning of period 467.2 509.7 509.7
Exchange rate differences 3.8 -2.2 -4.1
Cash equivalents at end of period 317.5 342.3 467.2
Change in consolidated equity, MSEK Jan-Jun Jan-Jun Full year
2013 2012 2012
Opening balance 1,577.8 1,334.3 1,334.3
Total comprehensive income for the period 309.2 243.7 501.5
Total change, excluding transactions
with company owners 309.2 243.7 501.5
Dividends - - -21.8
Share Redemption Program -410.9 -395.6 -395.6
Cost of share redemption program after tax -0.2 -0.1
New share issue 225.0 159.7 159.6
Change of equity share in associated companies - 5.3 10.1
Payment at exercise of options -8.5 -11.5
New share issue, redemption of warrants 11.3 -
Share options - value of employee services 0.3 0.4 1.2
Equity at end of the period 1,704.1 1,347.7 1,577.8
Attributable to:
Parent Company's shareholders
Minority interest
1,704.1
-
1,347.7
-
1,577.8
-

Total equity 1,704.1 1,347.7 1,577.8

Parent Company
Income Statement (MSEK)
Jan-June
2013
Jan-June
2012
Full year
2012
Revenues
Operating expenses
4.9
-19.4
8.7
-34.7
15.9
-59.7
Operating Income -14.5 -26.0 -43.8
Financial items 137.3 190.6 619.6
Income before tax 122.8 164.6 575.7
Tax -2.0 0.0 2.1
Net income 120.8 164.6 577.8
Parent Company
Balance Sheet (MSEK)
30 Jun 2013 30 Jun 2012 31 Dec 2012
Tangible fixed assets
Financial fixed assets
3.2
2,354.2
4.3
2,066.4
4.0
2,071.2
Total non-current assets 2,357.4 2,070.8 2,075.1
Current receivables
Cash and cash equivalents
54.8
54.6
40.1
77.6
305.1
114.2
Total current assets 109.4 117.7 419.3
Total assets 2,466.8 2,188.5 2,494.5
Restricted equity
Unrestricted equity
339.9
1,479.0
337.7
1,169.4
337.8
1,543.6
Total equity 1,819.0 1,507.1 1,881.4
Non-current liabilities to credit institutions 431.8 353.8
Current liabilities with credit institutions 353.3
Other current liabilities 294.5 249.6 259.3
Total current liabilities
Total equity and liabilities
647.8
2,466.8
249.6
2,188.5
259.3
2,494.5
Group Review
Consolidated Income
statements (MSEK)
(continuing operations)
2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2012
Full year
Revenue 579.2 638.7 651.9 529.5 486.2 536.0 515.2 465.8 338.2 2,203.7
Cost of sold services -96.5 -98.6 -103.1 -90.8 -79.0 -77.1 -81.9 -76.7 -62.5 -350.0
Gross profit 482.7 540.1 548.8 438.7 407.2 458.9 433.3 389.1 275.7 1,853.6
Marketing expenses -172.4 -199.4 -189.4 -152.4 -149.8 -135.2 -123.1 -100.6 -70.9 -626.8
Personnel expenses -89.3 -92.2 -85.8 -73.5 -71.3 -60.2 -56.3 -60.5 -37.2 -290.9
Other external expenses
Capitalized development costs
-82.5
25.4
-84.6
23.6
-89.6
22.0
-80.4
17.9
-79.2
25.7
-80.1
15.3
-73.5
13.4
-56.5
9.4
-56.7
7.5
-329.3
80.9
Depreciation/amortisation
Other operating income/expenses
-27.6
1.4
-27.4
1.0
-31.7
-0.8
-28.0
-2.2
-23.2
0.1
-22.1
-2.6
-22.3
0.8
-21.9
-6.2
-15.7
0.1
-105.0
-5.5
Operating expenses -344.9 -379.0 -375.4 -318.7 -297.7 -284.9 -261.0 -236.3 -172.9 -1276.6
Operating income 137.8 161.1 173.4 120.0 109.5 174.0 172.3 152.8 102.8 577.0
Financial items, net -0.3 -1.0 0.0 -1.7 1.3 -3.0 0.6 -6.3 0.6 -3.4
Income before tax 137.5 160.1 173.4 118.3 110.9 171.0 172.9 146.5 103.4 573.6
Tax -9.2 -8.2 -6.5 -5.2 -5.5 -8.7 -7.1 -8.1 -5.4 -25.8
Net income (continuing operations) 128.3 151.9 166.9 113.1 105.4 162.3 165.8 138.4 98.0 547.7
Consolidated Balance sheet
(MSEK)
2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2012
Full year
Non-current assets 2,050.3 1,960.0 1,736.8 1,692.6 1,754.0 1,020.7 1,033.8 1,059.8 1,052.2 1,736.8
Current assets
Total assets
1,067.9
3,118.2
1,287.1
3,247.2
1,219.9
2,956.7
989.2
2,681.8
1,088.8
2,842.7
1,339.2
2,359.9
1,239.3
2,273.1
1,140.7
2,200.5
872.8
1,925.0
1,219.9
2,956.7
Equity 1,704.1 1,908.9 1,577.8 1382.4, 1,347.7 1,604.4 1,334.3 1,212.2 910.5 1,577.8
Non-current liabilities 6.1 344.7 353.8 410.8 439.4 7.8 8.0 8.7 8.7 353.8
Current liabilities
Total equity and liabilities
1,408.0
3,118.2
993.6
3,247.2
1,025.0
2,956.6
888.6
2,681.8
1,055.6
2,842.7
747.7
2,359.9
930.8
2,273.1
979.6
2,200.5
1,005.8
1,925.0
1,025.0
2,956.6
Group Review
Consolidated Cash Flow statements
(MSEK)
2013 2013 2012 2012 2012 2012 2011 2011 2011 2012
(Continuing operations) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full
year
Operating cash flow 150.7 165.4 326.3 -23.7 265.6 97.9 54.2 352.5 79.1 666.1
Cash flow from investing activities -34.8 -311.5 -48.1 -21.6 -547.4 -17.3 -24.4 -63.6 -150.6 -634.4
Cash flow from financing activities -410.9 287.8 -67.0 -39.2 36.2 0.0 2.7 0.0 -276.5 -70.0
Total cash flow -295.1 141.7 211.2 -84.5 -245.7 80.6 32.5 288.9 -348.0 -38.4
Key ratios 2013 2013 2012 2012 2012 2012 2011 2011 2011 2012
Full
(Continuing operations) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 year
Quarterly top-line growth (%)
Growth compared with the same period last year
-9 -2 23 9 -9 4 11 38 -19
(%) 19 19 27 14 44 28 6 21 -8 27
Gross Margin (percent of Revenues) 83.3 84.6 84.2 82.9 83.7 85.6 84.1 83.5 81.5 84.1
EBITDA-margin percent of Revenues)
EBITDA-margin (percent of Gross profit)
28.6
34.3
29.5
34.9
31.5
37.4
28.0
33.7
27.3
32.6
36.6
42.7
37.8
44.9
37.5
44.9
35.0
43.0
30.9
36.8
EBIT-margin (percent of Revenues)
EBIT-margin (percent of Gross Profit)
23.8
28.5
25.2
29.8
26.6
31.6
22.7
27.4
22.5
26.9
32.5
37.9
33.4
39.8
32.8
39.3
30.4
37.3
26.2
31.1
Profit margin (percent of Revenue)
Profit margin (percent of Gross Profit)
23.7
28.5
25.1
29.6
26.6
31.6
22.3
27.0
22.8
27.2
31.9
37.3
33.6
39.9
31.5
37.7
30.6
37.5
26.0
30.9
Marketing (percent of Revenues) 29.8 31.2 29.1 28.8 30.8 25.2 23.9 21.6 21.0 28.4
Marketing(percent of Gross Profit) 35.7 36.9 34.5 34.7 36.8 29.5 28.4 25.9 25.7 33.8
Earnings per share (SEK)
Operating cash flow per share (SEK)
2.95
3.47
3.54
3.86
3.95
7.73
2.68
-0.56
2.54
6.29
3.91
2.36
4.01
1.31
3.40
8.66
2.48
2.00
6.49
15.44
Equity per share (SEK)
Executed redemption per share (SEK)
39.24
9.46
43,95 36.33 32.75 31.92
9.42
38.20
-
32.24
-
29.29
-
22.58
7.00
37.33
9.42
Average share price (SEK) 176.78 213.50 177.78 189.09 210.34 181.23 146.29 132.91 142.49 190.05
Last paid share price (SEK)
Highest share price (SEK)
170.00
210.00
209.50
224.50
200.50
200.50
174.50
207.00
206.00
234.00
194.50
199.50
151.50
159.50
129.50
157.50
151.00
162.00
200.50
234.00
Lowest share price (SEK) 159.50 200.00 158.50 164.00 195.00 152.00 125.25 109.75 126.50 152.00
Equity/assets ratio (percent) 55 59 53 52 48 68 59 55 47 53
Investments (MSEK) 34.8 26.5 33.1 21.6 29.1 17.3 13.5 13.8 8.2 101.0
Average number of employees (accumulated) 721 719 591 529 464 439 340 317 282 591
Number of employees at the end of the period
Number of registered shareholders at the end of
756 743 748 723 610 459 412 378 385 748
the period 19,447 17,388 17,225 16,195 15,246 14,568 12,507 11,936 11,151 17,225
Customers 2013 2013 2012 2012 2012 2012 2011 2011 2011 2012
Full
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 year
Registered Customers (thousands) 6,354.9 6,044.2 5,777.9 5,633.7 5,418.0 3,906.3 3,662.4 3,424.1 3,229.5 5,777.9
Quarterly growth (%) 5 5 3 4 39 7 7 6 25
Growth to same period last year (%) 17 55 58 65 68 51 16 21 19 58
Active Customers (thousands)
Quarterly growth (%)
428.7
-11
479.2
-7.9
520.4
12.3
463.6
-8.9
508.7
25.6
405.0
0
403.6
5
382.9
14
335.9
0
520.4
Growth to same period last year (%) -16 18 29 21 51 21 34 50 16 29
Active/Registered customers (%) 7 8 9 8 9 10 11 11 10 9
Customer Deposits 2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2012
Full
year
Customer Deposits (MSEK)
Quarterly growth (%)
1,445.9
-4
1,511.1
-5
1,586.5
16
1,362.9
24
1,097.8
5
1,045.3
-4
1,093.5
-3
1,122.6
48
756.5
-21
5,092.4
Growth to same period last year (%) 32 45, 45, 21 45, 9 -1 23 -17 30
Customer Deposits, all solutions (MSEK) 2,017.8 2,113.9 2,154.8 1,756.0 1,509.5 1,468.6 1,484.5 1,483.6 1,148.2 6,888.9
Quarterly growth (%)
Growth to same period last year
-5
34
-2
44
23
45,
16
18
3
31
-1
31
0
34
29
62
2
26
32
Sportsbook Gross Margin 2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2012
Full year
Gross sales, all gaming solutions
Quarterly growth (%)
Growth compared with the same
3,447.6
-11.0
3,873.6
2.4
3,782.8
29.5
2,921.4
6.4
2,744.8
3.8
2,644.1
22
2,171.3
20
1,816.6
1
1,805.0
1
12,093.1
period last year (%) 26 47 74 61 52 48 15 49 46 60
of which gross sales from Live Betting
(MSEK)
Live betting portion (%)
Quarterly growth (%)
2,393.2
69.4
-10.3
2,667.3
68.9
7.7
2,476.8
65.5
29.6
1,910.9
65.4
0.3
1,904.8
69.4
9.5
1,740.1
65.8
30
1,336.1
61.5
25
1,072.4
59.0
-11
1,199.5
66.5
7
8,032.5
66.4
Growth compared with the same
period last year (%)
26 53 85 78 59 55 17 46 71 70
Margin after free bets (%)
Gross profit Sportsbook (MSEK)
Gross margin Sportsbook (%) 1)
1) Margin after allocated costs
6.5%
126.6
3.7%
6.7%
164.0
4.2%
7.4%
165.5
4.4%
5.5%
89.8
3.1%
4.6%
68.9
2.5%
7.2%
107.8
4.1%
8.1%
97.2
4.5%
7.6%
84.1
4.6%
5.9%
41.3
2.3%
6.2%
432.0
3.6%
Segment Reporting 2013 2013 2012 2012 2012 2012 2011 2011 2011 2012
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year
Gross profit (MSEK)
B2B, Business to business 124.0 165.4 147.4 120.8 115.3 142.8 132.6 123.0 124.0 526.3
B2C, Business to consumers 358.7 374.7 401.4 317.9 291.9 316.2 300.7 266.1 151.7 1,327.4
Total 482.7 540.1 548.8 438.7 407.2 459.0 433.3 389.1 275.7 1,853.7
Share of total Gross Profit (%)
B2B
B2C
25.7
74.3
30.6
69.4
26.9
73.1
27.5
72.5
28.3
71.7
31.1
68.9
30.6
69.4
31.6
68.4
45.0
55.0
28.4
71.6
Quarterly Growth (%)
B2B -25 12 22 5 -19 8 8 -1 -34
B2C
Total
-4
-11
-7
-2
26
25
9
8
-8
-11
5
6
13
11
75
41
7
-17
Growth compared to same period
last year (%)
B2B 8 16 11 -2 -7 -24 -44 -32 -19 -7
B2C
Total
23
19
19
18
33
27
19
13
92
48
122
39
96
11
119
29
10
-5
54
30
Gross Profit by Products 2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2012
Full year
Gross profit (MSEK)
Casino 316.0 325.4 335.8 301.7 303.1 308.3 290.4 275.1 202.1 1,248.8
Poker
Sportsbook
22.0
126.6
30.6
164.0
31.6
165.5
32.2
89.8
25.4
68.9
27.5
107.8
24.8
97.2
21.5
84.1
17.1
41.3
116.7
432.0
Other products 18.1 20.1 15.9 15.0 9.8 15.4 20.9 8.4 15.2 56.1
Total Gross Profit 482.7 540.1 548.8 438.7 407.2 459.0 433.3 389.1 275.7 1,853.7
Share of total Gross Profit(%)
Casino
Poker
65.5
4.6
60.2
5.7
61.2
5.8
68.8
7.3
74.4
6.2
67.2
6.0
67.0
5.7
70.7
5.5
73.3
6.2
67.4
6.3
Sportsbook 26.2 30.4 30.2 20.5 16.9 23.5 22.4 21.6 15.0 23.3
Other products 3.7 3.7 2.9 3.4 2.4 3.4 4.8 2.2 5.5 3.0
Quarterly Growth (%)
Casino
-3 -3 11 0 -2 6 6 36 7
Poker -28 -3 -2 27 -8 11 15 26 -17
Sportsbook
Other products
-23
-10
-1
26
84
6
30
53
-36
-36
11
-26
16
149
104
-45
-60
-14
Total all products -11 -2 25 8 -11 6 11 41 -17
Growth compared to same period
last year (%)
Casino
Poker
4
-13
6
11
16
27
10
50
50
49
64
34
34
-7
58
-12
16
-32
31
39
Sportsbook 84 52 70 7 67 3 -24 -6 -47 32
Other products
Total all products
84
19
31
18
-24
27
79
13
-35
48
-13
39
5
11
-38
29
4
-5
-10
30
B2C by Geographical Area 2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2012
Full year
Gross profit (MSEK)
Nordic Countries 291.9 302.3 330.2 253.4 238.7 259.0 239.0 199.4 115.7 1,081.3
EU, outside Nordic Region 63.5 69.1 68.1 58.3 49.7 48.2 55.3 57.9 34.9 224.3
Rest of Europe 2.1 1.4 1.3 2.4 1.5 1.1 0.8 1.4 0.7 6.3
Rest of the world 1.2 1.9 1.8 3.8 1.9 7.9 5.6 7.4 0.5 15.4
Total Gross Profit 358.7 374.7 401.4 317.9 291.9 316.2 300.7 266.1 151.8 1,327.4
Share of total Gross Profit (%)
Nordic countries 81.4 80.7 82.3 79.7 81.8 81.9 79.5 74.9 76.2 81.5
EU, outside Nordic Region 17.7 18.4 17.0 18.3 17.0 15.2 18.4 21.8 23.0 16.9
Rest of Europe 0.6 0.4 0.3 0.8 0.5 0.3 0.3 0.5 0.5 0.5
Rest of the world 0.3 0.5 0.4 1.2 0.7 2.5 1.9 2.8 0.3 1.2
Quarterly Growth (%)
Nordic countries -3 -8 30 6 -8 8 20 72 10
EU, outside Nordic Region -8 1 17 17 3 -13 -4 66 0
Rest of Europe 50 8 -46 57 39 38 -43 100 -30
Rest of the world -37 6 -53 96 -75 41 -24 1,380 -44
Total all countries -4 -7 26 9 -8 5 13 75 7
Growth compared to same period
last year (%)
Nordic countries 22 17 38 27 106 145 108 111 18 64
EU, outside Nordic Region 28 43 23 1 42 38 34 108 2 23
Rest of Europe 37 27 63 71 119 10 129, 180 -22 62
Rest of the world -38 -76 -68 -49 287 778 5,700 717 -90 7
Total all countries 23 19 33 19 92 122 96 119 10 54

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