Cherry AB Q1-2014 Report

Tuesday May 13,2014 : CHERRY SATISFIED WITH FIRST QUARTER 2014 RESULTS

Prioritises growth over profit

Cherry AB said it continues to gain market share in both its online and restaurant casino sectors.

Strong growth in online was recorded over the company's first quarter 2014 period of 43 percent along with a 50 percent increase in deposits, a performance attributed to extensive marketing activities, mainly concentrated on Cherry Casino.com and Spille Automater.com. The increase in marketing costs and the subsequent bonus uptake by new clients, however, has had an effect on turnover results.

Key group performance indicators for the Q1/2014 period include:

Group turnover increased 22 percent to SEK 73.0 million (Q1/2013: SEK 59.8 million).

Group consolidated profit after financial items amounted to SEK - 7.9 Million (Q1/2013: SEK - 2.1 million).

Profit after tax amounted to SEK - 8.1 million (Q1/2013: - 2.0 million) , equivalent to SEK - 0.61 ( - 0.15 ) per share after dilution and minority interest.

EBITDA amounted to SEK -4.3 million (Q1/2013: SEK 0.3 million).

EBIT amounted to SEK - 7.6 million (SEK -1.3 million).

Online Gaming grew 43 percent, deposits increased 50 percent and customer intake increased 33 percent.

Continued positive development in Restaurant casino saw turnover increase 3 percent.

Yggdrasil Gaming signed four new contracts during Q1/2014 and has gone live with the operators Vera&John and LeoVegas.

Group cash amounted to SEK 117.8 million (Q1/2013: SEK 262.7 million) at the end of the period.

The additional purchase price of SEK 60.0 million from the sales of the Automaten sites was paid on February 19.

Emil Sunvission, chief executive officer of Cherry AB is pleased with the positive start to 2014, saying "Cherry continues to gain market share, both online and within restaurant casino."

"Online growth was 43 percent compared with 2013. This means that Cherry's products, with Cherry Casino being in the lead, is growing considerably faster than the market in the Nordic region, which we believe has a growth of about 10 percent."

Online Gaming Sector performance indicators over the Q1/2014 period include:

Turnover increased 43 percent to SEK 39.1 Million (Q1/2013: SEK 27.4 Million).

EBIT amounted to SEK - 5.6 million (Q1/2013: SEK - 0.9 million).

Deposits increased 50 percent to SEK 80.5 million (Q1/2013: SEK 53.8 million).

Active customers increased 11 percent to 22,095 (Q1/2013: 20,001 ).

New customers increased 33 percent to 43,320 (Q1/2013: 32,694 )

Registered customers amounted to 404,342 (Q1/2013: 228,934 ).

Marketing activities amounted to SEK 19.2 million (Q1/2013: SEK 10.3 million ).

Looking ahead, the company said it will increase its focus on maintaining its online customer base and customer loyalty to increase profitability. While Cherry prioritises growth over profit, the company still expects to improve margins for the full 2014 financial period compared to 2013.

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