Gaming group Cherry is celebrating an “excellent” year featuring growth of 44 per cent and revenue of SEK3.236bn (£272m) – up from SEK2.252bn – with its full-year report also sounding a warning over burdensome regulation.
Profitability improved and EBITDA increased by 89 per cent to SEK813m (SEK429m), with the EBITDA margin of 25 per cent (19 per cent), while profit for 2018 stood at SEK487m (SEK110m), affected positively by an item affecting comparability of SEK50m regarding the reassessment of the value of Highlight Games.
In Q4 2018, EE Intressenter, a company jointly controlled by a consortium of Bridgepoint and major shareholders in Cherry, announced a takeover bid worth SEK87 per share.
Cherry’s acting CEO Gunnar Lind said: “Cherry’s development in 2018 can be summarized with one word: excellent. On almost all measurements, our operations delivered in line with our expectations. Financially, we have performed well with total growth of 44 per cent, and full-year revenue amounting to MSEK3,236 (2,252) with an EBITDA margin of 25 per cent (19).
“For a significant part of the year, we worked to prepare for the re-regulation of the Swedish gaming market. We were involved right from the inquiry phase prior to the legislation being drafted and have participated in issues on which we have specialist knowledge on an ongoing basis. We are satisfied with the framework, which should contribute to a high level of channelisation, which is important for the long-term perspective that our market needs to be able to develop in a way that assures all stakeholders the security they need.
“It is reasonable that gaming companies be taxed and, to some extent, controlled when it comes to marketing, but the legislators must be aware that this is an industry in which customers are aware of their options and can therefore quickly shift their preferences. This can result in tax revenue and preventive actions from game addiction being lost. The more laws there are and the more detailed the regulations, the greater the risk that companies position themselves outside the licensing system, with the effect that everyone loses.
“We now have only a few weeks’ experience of the Swedish regulations and it is too early yet to have a clear idea of how development is progressing for Cherry and the rest of the industry. Our experience of similar changes in other countries is that the companies and brands that cope best are those with a clear digital strategy, that are at the forefront in technology and their customer relationships, and are led by entrepreneurs. This is the core of Cherry’s business model and the companies within our Group hold strong positions, are strongly focused on what they do and are quick to grasp opportunities.
“The gaming market is currently growing strongly and Cherry estimates that demand in the Group’s largest geographic markets will continue to develop favourably. The Group continuously studies conditions for new business in related business areas and geographic markets within Europe and beyond.”
