Svenska Spel Interim report January September 2020: Strong quarter despite closed casinos

in Lottery

"We have good profitability and revenues are increasing for two of our three business areas. Our sports games are going really well and we are also increasing revenues from number games and lotteries. The fact that the Group's total revenues are declining is due to the fact that our physical casinos have been closed throughout the quarter. Despite this, we thus have good profitability for the group as a whole, which shows strength and stability, says Patrik Hofbauer, President and CEO of Svenska Spel.

Svenska Spel reports a strong third quarter with good profitability for the Group and increased revenues in both sports games and number games and lotteries. The quarter's major product launches Trav & Galopp and BilTriss exceed expectations and have been well received by customers. In addition, the gaming responsibility has an effect, among other things in the form of a large increase in the number of completed self-tests, which means that customers can play safely and securely. This is shown by Svenska Spel's interim report for January – September 2020, which is presented today.

- We have good profitability and revenues are increasing for two of our three business areas. Our sports games are going really well and we are also increasing revenues from number games and lotteries. The fact that the Group's total revenues are declining is due to the fact that our physical casinos have been closed throughout the quarter. Despite this, we thus have good profitability for the group as a whole, which shows strength and stability, says Patrik Hofbauer, President and CEO of Svenska Spel.

Net gaming revenues for the Sport & Casino business area increased by seven percent compared with the same quarter last year. This is despite the government's ordinance on new temporary gambling liability measures for online casinos from 2 July, which is pushing revenue. The Tur business area increases by five percent and has a continued good development of the customer base and the digital business. The digital business now accounts for 48 percent of the Group's revenues.

The Group's net gaming revenues for the third quarter are SEK 1,848 million, which is lower than the same quarter last year (2,012). This is due to the Casino area Cosmopol & Vegas' business area decreasing by 59 percent as all physical casinos have been closed as a result of covid-19 and the ATMs in Vegas continue to be affected by the fact that many restaurants have had to close. Vegas is also affected by the new temporary gambling liability measures.

Operating profit of SEK 531 million (639) means a decrease compared with the same period last year, which is due to Casino Cosmopol reporting a sharply deteriorating operating profit of just over SEK 215 million, which includes a winding-up cost of the casino in Sundsvall of SEK 81 million. This in turn has had a negative impact on the operating margin, which is 29 percent (32).

Highlights during the quarter are two major product launches. Svenska Spel Trav & Galopp is a completely new gaming category with games in French and international horse racing offered through cooperation with the French PMU, one of Europe's largest players in horse games. The daily high-stakes game High Five is most easily played through the quick game PIX! and customers can follow all races live both in-store and online, which increases the entertainment value.

The other big news is that Triss has got a new variant with a product win - BilTriss with a chance to win a Tesla. The lottery has quickly become a success and since the launch, several customers have already scratched out a Tesla on their BilTriss. It is currently the most popular gift product.

Svenska Spel continues to deliver million winnings to the Swedish people. This year, Stryktipset has already delivered 47 million profits, a record for the past five years. In number games and lotteries, Svenska Spel has so far this year distributed 242 million winnings totaling more than one billion kronor.

Svenska Spel's work with gaming responsibility continues with undiminished intensity. In 2020, more than 4,500 care conversations were conducted with customers who exhibited risky gambling behavior. The number of self-tests performed has increased by 57 percent compared with the same quarter last year. An expert group has also followed risk and problem gambling extra closely since the outbreak of covid-19 and has not seen any increased risk gambling for any form of gambling among Svenska Spel's customers, neither during the second nor third quarter of 2020 compared with the first quarter.

Summary of the third quarter

Net gaming revenues for the Group amounted to SEK 1,848 M (2,012), a decrease of SEK 164 M or 8%. Closed physical casinos have had a major impact on net gaming revenue. Net gaming revenues excluding casino operations amounted to SEK 1,848 M (1,767), an increase of SEK 81 M or 5%.
Operating profit for the Group amounted to SEK 531 M (639), a decrease of SEK 108 M or 17%. Operating profit, excluding casino operations, amounted to SEK 711 M (603), an increase of SEK 107 M or 18%.
The result for the Group amounted to SEK 441 M (1,223), a decrease of SEK 782 M. The deviation is mainly due to an item affecting comparability of SEK 687 million, which refers to a deferred tax income in 2019.
The operating margin was 29% (32).
Public confidence in Svenska Spel is increasing. The image value amounted to 53% (+ 3% units compared with the third quarter of 2019) and is still the highest among gaming companies.
The Tur business area has launched a new variant of Triss with a profit - BilTriss.
New gaming category Trotting & Galloping has been launched by the Sport & Casino business area in collaboration with the French PMU.
The Sport & Casino business area has launched a new Stryktipset League service where customers can create or join leagues to challenge friends or other bettors.
Svenska Spel's Board of Directors has decided to wind up the casino operations in Sundsvall, which entails a non-recurring cost of SEK 81 million.
Summary of the period January – September

Net gaming revenues for the Group amounted to SEK 5,546 M (6,103), a decrease of SEK 558 M or 9%.
Operating profit for the Group amounted to SEK 1,705 M (1,692), an increase of SEK 13 M or 8%.
The result for the Group amounted to SEK 1,326 M (2,048), a decrease of SEK 722 M or 35%.
The operating margin was 31% (28).
In March, Svenska Spel's Board of Directors decided to withdraw its proposed dividend as the effects of covid-19 are difficult to review.
The Swedish Competition Authority's investigation into the complaint that Svenska Spel is abusing its dominant position has been completed and the case is being written off.
Since March 29, Casino Cosmopol, due to covid-19, has closed all casinos.
Here you can read the Interim Report January – September 2020 .

https://om.svenskaspel.se/koncernnyheter/delarsrapport-januari-september-2020-starkt-kvartal-trots-stangda-casinon/