Svenska Spel Interim report January-December 2019: Stable business that is well equipped for the future

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The Swedish gaming market as a whole has had a negative growth in 2019. Our result for the quarter is therefore in line with expectations even though the ambition ahead is higher. The most important thing during the year has been to stabilize the business after the major transition to a new gaming market, which we have now done, which means that we are well equipped for the future. We are entering the new year with an aggressive focus going forward, but with continued concern for our customers, ”says Patrik Hofbauer, President and CEO of Svenska Spel

Interim report January-December 2019: Stable business that is well equipped for the future

With the fourth quarter, Svenska Spel ends the most tumultuous year in the history of the Group and the gaming industry following the re-regulation of the gaming market. Svenska Spel's customer bases, digital business and sports and casino business continue to develop positively. Revenue for the quarter is, as expected, but not at the level that is being sought, mainly as a result of fierce competition and increased efforts in gaming responsibility. This shows Svenska Spel's year-end report for 2019, which is presented today.

The Group's net gaming revenue for the fourth quarter is SEK 2,476 million, which is four percent higher than the same quarter last year. Excluding non-recurring income, this is a two percent reduction, which gives a more fair comparison. Due to the new gaming tax, the operating margin of 31 per cent is considerably lower than last year. With adjustment for game tax, it amounted to 50 percent (52).

For the full year 2019, this means net gaming revenue of SEK 8,579 M (8,784), a decrease of two percent and excluding one-off income a decrease of four percent. The result for the Group is SEK 2,716 M (4,522), a decrease which is mainly due to the gaming tax that was introduced in the re-regulation of the gaming market.

- The Swedish gaming market as a whole has had a negative growth in 2019. Our result for the quarter is therefore in line with expectations even though the ambition ahead is higher. The most important thing during the year has been to stabilize the business after the major transition to a new gaming market, which we have now done, which means that we are well equipped for the future. We are entering the new year with an aggressive focus going forward, but with continued concern for our customers, ”says Patrik Hofbauer, President and CEO of Svenska Spel.

Customer growth continues for the Sport & Casino business area, while the customer base for the Business area Tur is now stable after the transition to a new gaming market. Net gaming revenue for the Sport & Casino business area increased by two percent during the fourth quarter, excluding the aforementioned one-time revenue, despite a high repayment to customers. The Tur business area decreases by one percent excluding non-recurring revenue. The Casino Cosmopol & Vegas business area is down by almost ten percent and continues to be affected by customers' move from physical gaming to online, as well as efforts linked to the duty of care and money laundering legislation.

During the quarter, Svenska Spel's digital business increased by eight percent compared to the same quarter last year, of which sales in the mobile phone increased by nine percent. The digital business now accounts for 34 percent of the Group's revenue.

On the product side, the Sport & Casino business area has launched the opportunity for the agents to sell participation games via the Internet, an important part of Svenska Spel's goal to offer entertaining community and shared gaming experience. The same goes for Tips-SM, which went off for the 23rd consecutive year. The Tur business area has launched Second Chance, which means that everyone who plays Lotto with the Joker has a second chance at their already played lines at a draw that happens twice a year.

The rollout of new Vegas vending machines has been completed according to plan and since April more than 4,200 vending machines have been replaced at 1,400 locations. The new machines have a greater gaming experience, as well as increased gaming responsibility and login with Bank ID.

- In 2020, I hope that together in the industry we can agree on a definition of problem gambling and sound revenue. This is necessary to create greater transparency and a more sustainable industry. It is also an important prerequisite for being able to handle our long-term challenge - to strengthen Svenska Spel's position as the company with the best reputation in the gaming market. We have the opportunity to regain consumer confidence, but we must do it together as an industry in order for us to succeed, says Patrik Hofbauer.

The Gambling Index, which measures the percentage of Svenska Spel's customers who are aware of their gambling and make conscious choices, has increased compared to the first half of the year. It is at the high index level of 87 for the second half of 2019.

Another news is that Switzerland is the fourth country to choose Playscan, Svenska Spel's tool for identifying and communicating with risk players. Following an agreement with the Norwegian gaming company Norsk Tipping, the French La Française des Jeux and the Swedish Million Lottery, the Swiss Société de la Loterie de la Suisse Romande has now also gone live with the system.

Summary of the fourth quarter

  • Net gaming revenue for the Group amounted to SEK 2,476 M (2,390), an increase of four percent. In the fourth quarter, non-recurring revenue affected net gaming revenue by SEK 163 million. Excluding the revenue adjustment, net gaming revenue decreased by two percent.
  • The operating profit for the Group amounted to SEK 775 M (1,223), a decrease of SEK 457 M, of which SEK 460 M consists of gaming tax.
  • Profit for the Group amounted to SEK 667 M (1,230), a decrease of SEK 563 M.
  • The operating margin (net) was 31 percent. With adjustment for game tax, the operating margin was 50 percent (52).
  • Swiss Loterie Romande has chosen to integrate our gaming responsibility tool Playscan in its work of identifying and communicating with risk players.
  • The rollout of just over 4,200 new Vegas slots with enhanced gaming responsibilities at 1,400 locations has been completed.

Summary of the period January – December

  • Net gaming revenue for the Group amounted to SEK 8,579 M (8,784), a decrease of two percent or four percent excluding the revenue adjustment.
  • Operating profit for the Group amounted to SEK 2,466 M (4,525), a decrease of SEK 2,059 M, of which SEK 1,620 M consists of gaming tax.
  • Profit for the Group amounted to SEK 2,716 M (4,522), a decrease of SEK 1,807 M.
  • The operating margin (net) was 29 percent. With adjustment for game tax, the operating margin was 48 percent (52).
  • Deferred tax assets have been reported with SEK 687 million as of September 9, 2019 and relate to differences between book values ​​and tax values ​​of intangible assets.
  • Our customer bases continue to develop positively since the division of the customer base as of 1 January.
  • Satisfied customer index amounted to 72, which is an increase with one unit from the previous measurement point.
  • Svenska Spel still has the best reputation in the gaming industry.
  • Launch of Play Together - a service that allows our customers to play together with friends and acquaintances.
  • Svenska Spel has received new financial goals and new assignment goals for Casino Cosmopol and Vegas regarding the marketing and duty of care of the owner.

Here you can read Year-end Report January-December 2019 . 

https://om.svenskaspel.se/koncernnyheter/delarsrapport-januari-december-2019-stabil-verksamhet-som-star-val-rustad-for-framtiden/