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Betsson

Quarterly Report Apr 26, 2013

3010_10-q_2013-04-26_6701b8b4-bbec-4fbb-85ca-f2a58b4247ed.pdf

Quarterly Report

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Interim Report for the period 1 January – 31 March 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.

First quarter operating income increased by 19 percent

First quarter

  • Revenues amounted to SEK 638.7 (536.1) million, equivalent to an increase of 19 percent.
  • Operating income amounted to SEK 161.1 (174.1) million.
  • Gross profit in Casino amounted to SEK 325.4 (308.3) million, which is lower than expected. This is among other things explained by lower activity after the fall out of a pooled record high jackpot by end of January at a competitor site.
  • Marketing amounted to SEK 199.4 (135.2) million. The increase is related to NGG and increased marketing investments in the Nordic to meet higher competition and future growth prospects.
  • Gross turnover in Sportsbook, including all gaming solutions, amounted to SEK 3,873.6 (2,644.1) million, representing an increase of 47 percent.
  • The Sportsbook margin after free bets was 6.7 (7.2) percent
  • Income before tax amounted to SEK 160.1 (171.0) million
  • Net income amounted to SEK 151.9 (162.3) million, corresponding to SEK 3.54 (3.91) per share.
  • Customer deposits in all of Betsson's gaming solutions amounted to SEK 2,113.9 (1,468.6) million, which represents an increase of 44 percent.
  • Betsson acquired the brands www.Sverigeautomaten.com, www.Norgesautomaten.com and www.Danmarksautomaten.com during the quarter.

Key Performance Indicators

(MSEK) Q1
2013
Q1
2012
Full year
2012
Totals
Revenues 638.7 536.1 2 203.7
Gross Profit 540.1 459.0 1 853.7
of which Sportsbook 164.0 107.8 432.0
Operating Income 161.1 174.1 577.1
Liquid funds 606.4 588.4 467.2
Active Customers (thousands) 479.2 405.0 520.4
Registered Customers (thousands) 6 044.2 3 906.3 5 777.9
Customer Deposits 1 511.1 1 045.3 5 092.4
Customer Deposits, all gaming solutions 2 113.9 1 468.6 6 888.9
B2C
Gross Turnover Sportsbook 1 230.6 645.5 3 735.5
Gross Margin Sportsbook 1) 6.7% 6.9% 5.7%
Grossprofit Sportsbook 82.8 44.6 214.5
B2B
Gross Turnover Sportsbook 2 643.0 1 998.6 8 357.6
Gross Margin Sportsbook 1) 3.1% 3.2% 2.6%
Gross profit Sportsbook 81.2 63.2 217.5

1) Refers to margin after allocated expenses. The margin after free bets in all gaming solutions amounted to 6.7 (7.2) percent.

Well-positioned for re-regulations

"- Betsson continues to prepare for the re-regulations by investing in marketing and in more cost effective operations. Due to previous investments in among other things mobile solutions, we have seen organic growth in both B2B gross profit of 16 percent and in Sportsbook turnover of 26 percent. Meanwhile, the company has full focus on increasing the growth in Casino, for instance through further mobile development. Altogether, Betsson sees good growth opportunities both in the short and long-term and plans to maintain its position as one of the world's most influential gaming operators." states Magnus Silfverberg, President and CEO of Betsson.

Presentation of the Interim Report

Today, Friday 26 April, 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/jc1afn2g 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).

First quarter 2013

Group revenue amounted to SEK 638,7 (536,1) million. Gross profit was SEK 540,1 (459,0) million. Operating income amounted to SEK 161.1 (174.1) million and the operating margin was 25.2 (32.5) percent. The Group's income before tax was SEK 160.1 (171.0) million and net income was SEK 151.9 (162.3) million, which is equivalent to SEK 3.54 (3.91) per share.

Revenues were negatively impacted by SEK 17.3 million due to exchange rate fluctuations, compared with the rates applicable during the first quarter of 2012. However, the impact of these fluctuations on operating income has been marginal, as the corresponding revaluations of expenses offset the negative effects to a considerable degree. Net income has been negatively impacted by one-off expenses of SEK 3.8 (-) million attributable to restructuring measures.

Marketing expenses amounted to SEK 199.4 (135.2) million. This is an increase of 47 percent, which is explained by both the acquisition of NGG and increased investments in the Nordic markets, undertaken to counter increased competition and to take advantage of future growth potential. The investments in marketing in the newly regulated Danish and Italian markets have continued during the quarter but the cost for this have decreased compared with the previous quarter. Management's assessment is that overall marketing activities during the year will remain at current levels in proportion to revenues.

Personnel costs amounted to SEK 92.2 (60.2) million, an increase of 53 percent. This increase is primarily attributable to the acquisition of NGG, and the expenses of SEK 3.8 (-) million attributable to restructuring measures undertaken in conjunction with the acquisition.

Other external expenses amounted to SEK 84.6 (80.1) million.

Capitalized development costs amounted to SEK 23.6 (15.3) million. Betsson's operating subsidiaries consistently invest in improvements in their offerings to end users and partners, creating the conditions for growth. Furthermore, the subsidiary is investing in migrating an increasing number of gaming solutions to one and the same technical platform, contributing, in the long term, to cost-effective operations. The net amount of capitalized development costs and depreciation thereof had a marginal impact on net income for the quarter.

Acquisition of the Automaten brands

During the first quarter, Betsson AB acquired the Sverigeautomaten.com, Norgesautomaten.com and Danmarksautomaten.com brands from Cherry, for a purchase consideration of SEK 286 million, of which SEK 60 million represents an additional purchase consideration. In practice, the transaction implies that Betsson AB's subsidiary on Malta, which had already been responsible for the operation of the sites before the transaction, now also takes over the brands, as well as taking responsibility for marketing activities. At the same time, Cherry acquired the Cherrycasino.com brand from Betsson's Maltese subsidiary, for a purchase consideration of SEK 1 million, which is reported as other operating income during the first quarter.

The initial net purchase consideration of SEK 225 million was settled by means of the transfer of 1,063,895 newly-issued Class B shares in Betsson. The additional purchase consideration will be settled on the basis of liquid funds after 12 months.

The Automaten brands generated revenues of SEK 168.2 million during 2012, which have been fully incorporated in Betsson's revenues. All in all, the acquisition, based on the 2012 activity level, implies annual cost savings of SEK 52.7 million per year. This is calculated after the net effect of lower profit sharing to Cherry and additional marketing expenses undertaken by Betsson.

The purchase transaction will provide a positive contribution to the Group's net income as of the second quarter.

Operations

Betsson's subsidiaries on Malta offer Internet gaming to end customers via partner co-operations 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. Although the system has certain flaws, such as restrictions to the gaming on offer and an unreasonably 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. The various gaming solutions offered by Betsson on the newly re-regulated Danish market have continued to develop well, with good growth and ever stronger margins being seen during the first quarter. The development of the Italian casino site, Starcasino.it, has been somewhat more subdued than expected. Nonetheless, Management is of the opinion that there are definite possibilities to establish successful operations in Italy.

A high demand for mobile solutions has followed in the wake of strong growth in the use of smartphones. Betsson has previously developed and now provides one of the market's broadest and most advanced gaming solutions for smartphones. During the fourth quarter, end users bet SEK 397.3 million via mobile Sportsbook, comprising 10 percent of total gross turnover in Sportsbook across all gaming solutions. Revenues from mobile gaming solutions comprised 8 percent of total revenues.

B2C - First quarter

Gross revenue for B2C in the first quarter amounted to SEK 374.7 (316.2) million, an increase of 19 percent.

During the fourth quarter, the Nordic Region comprised 81 (82) percent of the segment, while EU outside Nordic Region represented 18 (15) percent.

B2B – First quarter

Gross profit from B2B amounted to SEK 165.4 (142.8) million. The underlying activity, spread among a number of partnerships, is steadily increasing, where, for example, gross turnover in sports gaming amounted to SEK 2,643.0 (1,998.6)

million, equivalent to an organic increase of 32 percent.

Betsson's technical gaming platform allows for the management of several brands and facilitates the offering of complete gaming solutions with a high number of daily transactions.

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

Products

Gross profit in Casino during the first quarter amounted to SEK 325.4 (308.3) million, which represented 60 (67) percent of the Group's total gross profit. Revenues from Casino during the first quarter were lower than anticipated. This is due to lower activity in the wake of a large jackpot paid out at the end of January. 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 3,873.6 (2,644.1) million, an All-time high (ATH) and an increase of 47 percent. Gross turnover in Live betting in Sportsbook, including all of Betsson's gaming solutions, was SEK 2,667.3 (1,740.1) million, equivalent to an increase of 53 percent. The margin after free bets in all of Betsson's gaming solutions in Sportsbook amounted to 6.7 (7.2) percent. Gross profit in Sportsbook during the quarter totaled SEK 164.0 (107.8) million, an increase of 52 percent. Gross profit in Sportsbook includes SEK 81.2 (63.2) million regarding licensing revenues and gaming contributions to gross profit from B2B. Sportsbook's share of the Group's gross profit amounted to 30 (24) percent.

Gross profit in Poker during the quarter came in at SEK 30.6 (27.5) million.

Gross profit in Other products amounted to SEK 20.1 (15.4) million during the first quarter.

Customer deposits

Betsson has noticed more frequent deposits and withdrawals from the end users after the launch of more customer friendly payment functionality, which in itself affects the relation between deposits and revenues. Customer deposits vary between the quarters but, in a longer perspective, the deposits show a correlation with the activities in Betsson's various offerings.

During the first quarter, a total of SEK 1,511.1 (1,045.3) million was deposited. This amount has been negatively impacted by exchange rate fluctuations amounting to SEK 48.1 million, compared with the corresponding quarter during the previous year. Deposits in all of Betsson's gaming solutions amounted to SEK 2,113.9 (1,468.6) million during the quarter. This amount has also been negatively impacted by exchange rate fluctuations compared with the corresponding quarter during the previous year, in an amount of SEK 73.4 million.

Customers

At the end of the quarter, the number of registered customers was 6.0 (3.9) million players. The number of active customers during the quarter increased to 479,200 (405,000).

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 1,908.9 (1,604.4) million, equivalent to SEK 43.95 (38.20) per share.

Liquid funds and customer liabilities

At the end of the quarter, liquid funds totaled SEK 606.4 (588.4) million. Liabilities to credit institutions amounted to SEK 344.0 (-) million and unutilized credits totaled SEK 128.6 (-) million.

Customer liabilities, including the provision for earned jackpots, amounted to SEK 288.5 (168.8) 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 208.1 (223.0) million.

Personnel

At the end of the first quarter, there was a total of 743 (459) employees. The average number of employees during the quarter was 739 (439) in the Group, of which 489 (360) were employed in Malta.

In addition to these employees, the Group had, at the end of the quarter, 195 consultants employed on a full-time basis, of which 65 were based in Kiev.

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 2.3 (3.8) million and loss before tax for the interim period amounted to SEK 7.4 (16.4) million.

The Parent Company's investments in tangible fixed assets amounted to SEK 0.0 (0.0) million during the period. Liquid funds amounted to SEK 106.5 (256.7) 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 17,388 (14,568) shareholders. The largest owners (owners with more than 10 percent of votes) were Per

Hamberg including company, with 8.1 percent of the capital and 20.4 percent of votes, the Knutsson family with company, with 5.9 percent of capital and 10.8 percent of votes and Rolf Lundström with 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.

Outstanding shares

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

The total number of shares and votes in Betsson amounts to 43,433,003 and 92,213,003, respectively, of which 5,420,000 are Class A shares representing 10 votes per share and 38,013,003 are Class B shares, representing 1 vote per share.

Proposed dividend

The Board of Directors proposes that the Annual General Meeting resolves in favor of a dividend to the shareholders in the amount of SEK 9.46 per

share. The proposal corresponds to a distribution of SEK 410.9 million. In the event that the number of outstanding shares increases prior to the record day, the distributed amount may be altered in proportion to the change.

Events after the end of the first quarter

The start of the second quarter has seen lower average revenues than the first quarter, which is expected and is a result of seasonal variations.

To go with the livescore-apps launched previously, Betsson' first natively-developed gaming app approved by Apple was brought out in April. This implies a faster response time and entirely new functionality.

On the 20th of April, a pooled jackpot of 6,7 million Euro fell out. This has no direct effect on profits, since the jackpot has already been reserved for.

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 in line with those applicable on the Danish market. It is too early to draw any concrete 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 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 behavior 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.

Annual General Meeting 2013

The annual general meeting of shareholders in Betsson AB will be held at 10.00 CET on 8 May 2013, at Betsson's office, Regeringsgatan 28, Stockholm.

Shareholders wishing to attend the Annual General Meeting must

  • be registered in the shareholder register maintained by Euroclear Sweden AB by Thursday, 2 May 2013, and
  • have notified the Company of their intention to participate in the Annual General Meeting by no later than noon on Friday, 3 May 2013.

Notification of attendance at the Annual General Meeting must be made in writing to the Company at Betsson AB, Regeringsgatan 28, 111 53 Stockholm, by phone on +46 8506 403 00, or via e-mail: [email protected]

Shareholders wishing to submit proposals for the Nomination Committee may do so via email to [email protected] or by post to the address; Betsson AB, Valberedning, Regeringsgatan 28, 111 53 Stockholm.

Financial calendar

Betsson intends to publish its financial reports as follows. The interim report for the second quarter will be made public on 19 July, for the third quarter on 25 October and the Year-End Report for 2013 (fourth quarter) on 7 February 2014.

The Annual Report for 2012 is available at www.betssonab.com.

Presentation of the Interim Report

Today, Friday 26 April, 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/jc1afn2g 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 26 April.

Stockholm, 26 April 2013

Magnus Silfverberg President and CEO

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 26 April 2013, 07:30 CET.

This document is a translation of the Swedish original.

Business combination

On 19 February, Betsson entered into an agreement to acquire the brands Sverigeautomaten.com, Norgesautomaten.com and Danmarksautomaten.com from Cherry, for a purchase consideration of SEK 286 million, of which SEK 60 million represents additional purchase consideration. In practice, the transaction implies that Betsson AB's subsidiary on Malta, which was already responsible for the operation of the sites before the transaction, has now also taken over the brands themselves, as well as marketing activities. At the same time, Cherry acquired the Cherrycasino.com brand from Betsson's Maltese subsidiary, for a purchase consideration of SEK 1 million.

The initial net purchase consideration of SEK 225 million was settled by means of the transfer of 1,063,895 newly-issued Class B shares in Betsson. The additional purchase consideration will be settled with liquid funds after 12 months.

The Automaten brands generated revenues of SEK 168.2 million during 2012, which were fully incorporated in Betsson's revenues. All in all, the acquisition, based on the 2012 activity level, implies annual cost savings of SEK 52.7 million per year, after the net effect of savings on the profit sharing to Cherry under the previous partnership agreement and additional marketing commitments from Betsson's side.

No portion of reported goodwill is expected to be tax deductible upon taxation of income. The table below summarizes the purchase price paid and the fair value of the acquired assets and assumed liabilities.

Acquisition analysis (SEK million)

Purchase consideration

Divestment of brand 1.0
Own equity (1,063,895 B shares) 225.0
Total settled purchase consideration 226.0
Additional purchase consideration 60.0
Total purchase consideration 286.0
Value on identified acquired assets
Brand 38.1
Total identified net assets 38.1
Goodwill 247.9
Consolidated Income Statement (MSEK) Q1
2013
Q1
2012
Full year
2012
Revenues 638.7 536.1 2 203.7
Cost of Sale -98.6 -77.1 -350.0
Gross Profit 540.1 459.0 1 853.7
Marketing expenses
Personnel expenses
Other external expenses
Capitalized development costs
Depreciation
Other operating income/-expenses
-199.4
-92.2
-84.6
23.6
-27.4
1.0
-135.2
-60.2
-80.1
15.3
-22.1
-2.6
-626.8
-290.9
-329.3
81.0
-105.0
-5.6
Operating expenses -379.0 -284.9 -1 276.6
Operating income 161.1 174.1 577.1
Financial items, net -1.0 -3.1 -3.5
Income before tax 160.1 171.0 573.6
Tax -8.2 -8.7 -25.8
Net income 151.9 162.3 547.8
Earnings per share before dilution (SEK)
Earnings per share after dilution (SEK)
3.54
3.54
3.91
3.91
13.04
12.98
Operating margin (percent of Revenues)
Operating margin (percent of Gross Profit)
Profit margin (percent)
25.2
29.8
25.1
32.5
37.9
31.9
26.2
31.1
26.0
Average number of outstanding shares (millions)
Number of outstanding shares at end of period (millions)
42.9
43.4
41.5
42.0
42.0
42.3
Return on equity (percent)
Return on total capital (percent)
Return on capital employed (percent)
9
5
6
11
8
8
38
22
24
Consolidated Statement of Q1 Q1 Full year
Comprehensive Income (MSEK) 2013 2012 2012
Net income 151.9 162.3 547.8
Other comprehensive income
Hedge of net investments in foreign currency incl deferred tax
Exchange differencies on translating foreign operations
13,64
-62.44
-13.1 10.7
-57.0
Other comprehensive income of the period (after
tax)
-48.8 -13.1 -46.3
Total comprehensive income for the period 103.1 149.2 501.5
Consolidated Balance Sheet (MSEK 2013-03-31 2012-03-31 2012-12-31
Intangible fixed assets 1 893.0 969.1 1 664.6
Tangible fixed assets 27.5 24.1 28.5
Financial fixed assets 23.7 27.4 25.2
Deferred tax receivables 15.8 - 18.4
Total non-current assets 1 960.0 1 020.7 1 736.8
Current receivables 680.7 750.8 752.7
Cash and liquid assets 606.4 588.4 467.2
Total current assets 1 287.1 1 339.2 1 219.9
Total assets 3 247.2 2 359.9 2 956.7
Equity 1 908.9 1 604.4 1 577.8
Deferred tax liabilities 10.7 7.8 9.3
Liabilities to financial institutes 334.0 - 344.5
Total non-current liabilities 344.7 7.8 353.8
Other current liabilities 993.6 747.7 1 025.0
Total current liabilities 993.6 747.7 1 025.0
Total equity and liabilities 3 247.2 2 359.9 2 956.7
Consolidated Cash Flow Statement (MSEK) YTD
2013
YTD
2012
Full year
2012
Income after financial items 160.1 171.0 573.6
Adjustments for non-cash items 28.8 27.7 110.4
Taxes paid -20.9 -21.8 2.7
Cash flows from operating activities
before changes in working capital
168.0 176.9 686.6
Changes in working capital -2.6 -78.9 -20.6
Cash flows from operating activities 165.4 97.9 666.1
Investments -312.5 -17.3 -101.0
Sale of intangible assets 1.0 - -
Acquisition of shares, subsidiaries - - -518.4
Acquisition of shares, associated companies
Cash flows from investing activities
-
-311.5
-
-17.3
-15.0
-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 aquisition of shares in subsidiaries (the Automaten brands)
Remaining purchase consideration (the Automaten
225,0 - -
brands) 60.0 - -
Bank loan
Repayment of bankloan
-
-
-
-
431.8
-74.1
Share redemption programme - - -395.6
Dividend - - -21.8
Cash flows from financing activities 287.8 - -70.2
Changes to cash and liquid assets 141.7 80.6 -38.4
Cash and liquid assets at beginning of period
Exchange rate differences
467.2
-2.5
509.7
-1.8
509.7
-4.1
Cash and liquid assets at end of period 606.4 588.4 467.2
Change in Group Equity (MSEK) YTD
2013
YTD
2012
Full year
2012
Opening balance 1 577.8 1 334.3 1 334.3
Total comprehensive income for the period 103.1 149.2 501.5
Total change, excluding transactions
with company owners 103.1 149.2 501.5
Dividend - 0.0 -21.8
Share Redemption Program - 0.0 -395.6
New share issue
Change of equity share in associated companies
225.0
0.0
115.3
5.1
159.6
10.1
Payment at exercise of options -8.5 0.0 -11.5
New share issue, redemption of warrants 11.3 0.0 -
Share options - value of employee services 0.2 0.4 1.2
Equity at end of period 1 908.9 1 604.4 1 577.8
Attributable to:

Parent company's shareholders 1 908.9 1 604.4 1 577.8 Minority Interest - - - Total equity 1 908.9 1 604.4 1 577.8

Parent Company
Income Statement (MSEK)
YTD
2013
YTD
2012
Full year
2012
Revenues 2.3 3.8 15.9
Operating expenses -9.8 -17.1 -59.7
Operating Income -7.5 -13.4 -43.8
Financial items 0.1 -3.1 619.6
Income before tax -7.4 -16.5 575.7
Tax 0.0 0.1 2.1
Net income -7.4 -16.4 577.8
Parent Company
Balance Sheet (MSEK)
2013-03-31 2012-03-31 2012-12-31
Tangible fixed assets 3.6 4.8 4.0
Financial assets 2 356.2 1 258.4 2 071.2
Total non-current assets 2 359.8 1 263.2 2 075.1
Current receivables 326.0 179.9 305.1
Cash and liquid assets 106.5 256.7 114.2
Total current assets 432.5 436.6 419.3
Total assets 2 792.3 1 699.8 2 494.5
Restricted equity
Unrestricted equity
340.1
1 761.7
337.3
1 341.1
337.8
1 543.6
Total equity 2 101.8 1 678.4 1 881.4
Untaxed reserves 354.4 - 353.8
Current liabilities 336.1 21.4 259.3
Total equity and liabilities 2 792.3 1 699.8 2 494.5

Group Review

Consolidated Income
Statement (MSEK) 2013 2012 2012 2012 2012 2011 2011 2011 2012 2011
(Continuing operations) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year Full year
Revenues 638.7 651.9 529.5 486.2 536.0 515.2 465.8 338.2 2 203.7 1 736.6
Cost of Sale -98.6 -103.1 -90.8 -79.0 -77.1 -81.9 -76.7 -62.5 -350.0 -307.7
Gross Profit 540.1 548.8 438.7 407.2 458.9 433.3 389.1 275.7 1 853.6 1 428.9
Marketing expenses -199.4 -189.4 -152.4 -149.8 -135.2 -123.1 -100.6 -70.9 -626.8 -414.8
Personnel expenses -92.2 -85.8 -73.5 -71.3 -60.2 -56.3 -60.5 -37.2 -290.9 -197.0
Other external expenses -84.6 -89.6 -80.4 -79.2 -80.1 -73.5 -56.5 -56.7 -329.3 -232.8
Capitalized development costs 23.6 22.0 17.9 25.7 15.3 13.4 9.4 7.5 80.9 41.4
Depreciation -27.4 -31.7 -28.0 -23.2 -22.1 -22.3 -21.9 -15.7 -105.0 -73.8
Other operating income/-
expenses
1.0 -0.8 -2.2 0.1 -2.6 0.8 -6.2 0.1 -5.5 7.8
Operating expenses -379.0 -375.4 -318.7 -297.7 -284.9 -261.0 -236.3 -172.9 -1276.6 -869.2
Operating income 161.1 173.4 120.0 109.5 174.0 172.3 152.8 102.8 577.0 559.7
Financial items, net -1.0 0.0 -1.7 1.3 -3.0 0.6 -6.3 0.6 -3.4 -4.3
Income before tax 160.1 173.4 118.3 110.9 171.0 172.9 146.5 103.4 573.6 555.4
Tax -8.2 -6.5 -5.2 -5.5 -8.7 -7.1 -8.1 -5.4 -25.8 -27.6
Net income (continuing
operations)
151.9 166.9 113.1 105.4 162.3 165.8 138.4 98.0 547.7 527.8
Consolidated Balance
Sheet (MSEK) 2013 2012 2012 2012 2012 2011 2011 2011 2012 2011
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year Full year
Non-current assets 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 1 033.8
Current assets 1 287.1 1 219.9 989.2 1 088.8 1 339.2 1 239.3 1 140.7 872.8 1 219.9 1 239.3
Total assets 3 247.2 2 956.7 2 681.8 2 842.7 2 359.9 2 273.1 2 200.5 1 925.0 2 956.7 2 273.1
Equity 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 1 334.3
Non-current liabilities
344.7 353.8 410.8 439.4 7.8 8.0 8.7 8.7 353.8 8.0
Current liabilities 993.6 1 025.0 888.6 1 055.6 747.7 930.8 979.6 1 005.8 1 025.0 930.8
Total equity and liabilities 3 247.2 2 956.6 2 681.8 2 842.7 2 359.9 2 273.1 2 200.5 1 925.0 2 956.7 2 273.1
Group Review
Consolidated Cash Flow
Statement (MSEK)
2013 2012 2012 2012 2012 2011 2011 2011 2012 2011
(Continuing operations) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year Full year
Operating cashlow 165.4 326.3 -23.7 265.6 97.9 54.2 352.5 79.1 666.1 537.2
Cashflow from investing activities -311.5 -48.1 -21.6 -547.4 -17.3 -24.4 -63.6 -150.6 -634.4 -248.5
Cashflow from financing activities 287.8 -67.0 -39.2 36.2 0.0 2.7 0.0 -276.5 -70.2 -273.8
Totals 141.7 211.2 -84.5 -245.7 80.6 32.5 288.9 -348.0 -38.4 14.9
2013 2012 2012 2012 2012 2011 2011 2011 2012 2011
Key Ratios Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year Full year
Quarterly top-line growth (%) -2 23 9 -9 4 11 38 -19
Growth to same period last year (%) 19 27 14 44 28 6 21 -8 27 8
Gross Margin (percent of Revenues) 84.6 84.2 82.9 83.7 85.6 84.1 83.5 81.5 84.1 82.3
EBITDA-margin (percent of Revenues)
EBITDA-margin (percent of Gross
29.5 31.5 28.0 27.3 36.6 37.8 37.5 35.0 30.9 36.5
Profit) 34.9 37.4 33.7 32.6 42.7 44.9 44.9 43.0 36.8 44.3
EBIT-margin (percent of Revenues) 25.2 26.6 22.7 22.5 32.5 33.4 32.8 30.4 26.2 32.2
EBIT-margin (percent of Gross Profit) 29.8 31.6 27.4 26.9 37.9 39.8 39.3 37.3 31.1 39.2
Profit margin (percent of Revenues) 25.1 26.6 22.3 22.8 31.9 33.6 31.5 30.6 26.0 32.0
Profit margin (percent of Gross Profit) 29.6 31.6 27.0 27.2 37.3 39.9 37.7 37.5 30.9 38.9
Marketing (percent of Revenues) 31.2 29.1 28.8 30.8 25.2 23.9 21.6 21.0 28.4 23.9
Marketing(percent of Gross Profit) 36.9 34.5 34.7 36.8 29.5 28.4 25.9 25.7 33.8 29.0
Earnings per share (SEK) 3.54 3.95 2.68 2.54 3.91 4.01 3.40 2.48 13.04 13.12
Operating cashflow per share (SEK) 3.86 7.61 0.56 6.29 2.36 1.31 8.66 2.00 15.86 13.35
Equity per share (SEK) 43.95 36.33 32.75 31.92 38.20 32.24 29.29 22.58 37.33 32.15
Executed redemption per share (SEK) - - - 9.42 - - - 7.00 9.42 7.00
Average share price (SEK) 213.5 177.8 189.1 210.3 181.2 146.3 132.9 142.5 190.0 136.5
Last paid share price (SEK) 209.5 200.5 174.5 206.0 194.5 151.5 129.5 151.0 200.5 151.5
Highest share price (SEK) 224.5 200.5 207.0 234.0 199.5 159.5 157.5 162.0 234.0 162.0
Lowest share price (SEK) 200.0 158.5 164.0 195.0 152.0 125.3 109.8 126.5 152.0 109.8
412
12 507
2011
Full year
3 662.4
16
403.6
34
11
2011
Full year
3 931.6
1
5 237.9
35

Equity/asset ratio (percent) 59 53 52 48 68 59 55 47 53 59 Investments (MSEK) 312.5 33.1 21.6 29.1 17.3 13.5 13.8 8.2 101.0 50.9

Sportbook Margin 2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2012
Full year
2011
Full year
Gross Turnover, all solutions (MSEK)
Quarterly growth (%)
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 7 580.4
Growth to same period last year (%) 47 74 61 52 48 15 49 46 60 42
Of which Gross Turnover Live (MSEK) 2 667.3 2 476.8 1 910.9 1 904.8 1 740.1 1 336.1 1 072.4 1 199.5 8 032.5 4 727.4
Live Betting portion
Quarterly growth (%)
68.9
8
65.5
30
65.4
0
69.4
9
65.8
30
61.5
25
59.0
-11
66.5
7
66.4 62.4
Growth compared to same period last
year (%) 53 85 78 59 55 17 46 71 70 60
Margin after free bets (%) 6.7% 7.4% 5.5% 4.6% 7.2% 8.1% 7.6% 5.9% 6.2% 7.5%
Gross Profit (MSEK)
Gross Margin Sportsbook (%) 1)
164.0
4.2%
165.5
4.4%
89.8
3.1%
68.9
2.5%
107.8
4.1%
97.2
4.5%
84.1
4.6%
41.3
2.3%
432.0
3.6%
326.9
4.3%
1) Margin after allocated costs
Segment Reporting 2013 2012 2012 2012 2012 2011 2011 2011 2012 2011
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year Full year
Gross Profit (MSEK)
B2B, Business to business
165.4 147.4 120.8 115.3 142.8 132.6 123.0 124.0 526.3 568.0
B2C, Business to consumers 374.7 401.4 317.9 291.9 316.2 300.7 266.1 151.7 1 327.4 860.9
Total Gross Profit 540.1 548.8 438.7 407.2 459.0 433.3 389.1 275.7 1 853.7 1 428.9
Share of total Gross Profit (%)
B2B 30.6 26.9 27.5 28.3 31.1 30.6 31.6 45.0 28.4 39.8
B2C 69.4 73.1 72.5 71.7 68.9 69.4 68.4 55.0 71.6 60.2
Quarterly Growth (%)
B2B 12 22 5 -19 8 8 -1 -34
B2C -7 26 9 -8 5 13 75 7
Totals -2 25 8 -11 6 11 41 -17
Growth compared to same period
last year (%)
B2B 16 11 -2 -7 -24 -44 -32 -19 -7 -22
B2C 19 33 19 92 122 96 119 10 54 54
Totals 18 27 13 48 39 11 29 -5 30 11
Gross Profit by Products 2013 2012 2012 2012 2012 2011 2011 2011 2012 2011
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year Full year
Gross Profit (MSEK)
Casino
325.4 335.8 301.7 303.1 308.3 290.4 275.1 202.1 1 248.8 955.9
Poker 30.6 31.6 32.2 25.4 27.5 24.8 21.5 17.1 116.7 83.9
Sportsbook 164.0 165.5 89.8 68.9 107.8 97.2 84.1 41.3 432.0 326.9
Other products
Total Gross Profit
20.1
540.1
15.9
548.8
15.0
438.7
9.8
407.2
15.4
459.0
20.9
433.3
8.4
389.1
15.2
275.7
56.1
1 853.7
62.2
1 428.9
Share of total Gross Profit (%)
Casino
Poker
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
66.9
5.9
Sportsbook 30.4 30.2 20.5 16.9 23.5 22.4 21.6 15.0 23.3 22.9
Other products 3.7 2.9 3.4 2.4 3.4 4.8 2.2 5.5 3.0 4.4
Quarterly Growth (%)
Casino -3 11 0 -2 6 6 36 7
Poker
Sportsbook
-3
-1
-2
84
27
30
-8
-36
11
11
15
16
26
104
-17
-60
Other products 26 6 53 -36 -26 149 -45 -14
Total all products -2 25 8 -11 6 11 41 -17
Growth compared to same period
last year (%)
Casino 6 16 10 50 64 34 58 16 31 28
Poker
Sportsbook
11
52
27
70
50
7
49
67
34
3
-7
-24
-12
-6
-32
-47
39
32
-21
-11
Other products 31 -24 79 -35 -13 5 -38 4 -10 0
Total all products 18 27 13 48 39 11 29 -5 30 11
B2C by Geographical Area 2013 2012 2012 2012 2012 2011 2011 2011 2012 2011
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Full year Full year
Gross Profit (MSEK)
Nordic Countries 302.3 330.2 253.4 238.7 259.0 239.0 199.4 115.7 1 081.3 659.6
EU, outside Nordic region 69.1 68.1 58.3 49.7 48.2 55.3 57.9 34.9 224.3 183.1
Others Europe 1.4 1.3 2.4 1.5 1.1 0.8 1.4 0.7 6.3 3.9
Rest of the world 1.9 1.8 3.8 1.9 7.9 5.6 7.4 0.5 15.4 14.4
Total Gross Profit 374.7 401.4 317.9 291.9 316.2 300.7 266.1 151.8 1 327.4 861.0
Share of total Gross Profit (%)
Nordic Countries 80.7 82.3 79.7 81.8 81.9 79.5 74.9 76.2 81.5 76.6
EU, outside Nordic region 18.4 17.0 18.3 17.0 15.2 18.4 21.8 23.0 16.9 21.3
Others Europe 0.4 0.3 0.8 0.5 0.3 0.3 0.5 0.5 0.5 0.5
Rest of the world 0.5 0.4 1.2 0.7 2.5 1.9 2.8 0.3 1.2 1.7
Quarterly Growth (%)
Nordic Countries -8 30 6 -8 8 20 72 10
EU, outside Nordic region 1 17 17 3 -13 -4 66 0
Others Europe 8 -46 57 39 38 -43 100 -30
Rest of the world 6 -53 96 -75 41 -24 1 380 -44
Total all countries -7 26 9 -8 5 13 75 7
Growth compared to same period last
year (%)
Nordic Countries 17 38 27 106 145 108 111 18 64 59
EU, outside Nordic region 43 23 1 42 38 34 108 2 23 32
Others Europe 27 63 71 119 10 129 180 -22 62 1 850
Rest of the world -76 -68 -49 287 778 5 700 717 -90 7 188
Total all countries 19 33 19 92 122 96 119 10 54 54

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