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Nordic Leisure

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Nordic Leisure: First comment on Q2

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Both sales and profitability came in lower than expected, mainly explained by the sportsbook, which did not deliver in line with our expectations. EBITDA was negatively affected by one-offs related to the staff who left the company in connection with the continued restructuring of the organization (EUR 0.216m). On the positive side, the company’s platform has been certified for the Lithuanian market.

Nordic Leisure’s sales came in at approximately EUR 7.0m (estimated: EUR 8.1m). As mentioned, sales were negatively affected by the sportsbook that did not deliver in line with expectations. In addition, the Media business area showed lower sales than we expected.

Furthermore, earnings were negatively affected by one-offs related to staff who left the company in connection with the continued restructuring of the organization (EUR 0.216m). However, this is expected to generate savings of approximately EUR 0.58m on an annual basis. Excluding one-offs related to staff, the adjusted EBITDA came in at around EUR 2.1m resulting in an adjusted EBITDA margin of 30%.

As mentioned in the preview, the Lithuanian online launch has been negatively affected by regulatory adjustments regarding the company's platform. On the positive side, the platform was certified at the beginning of Q3’18. However, the company has not yet announced when the launch will take place.

An interesting takeaway from the report is the acquisition within the Media business area. The acquired company is an affiliate network focusing on casino operators. Nordic Leisure acquired intellectual property rights such as domain names and brands as well as some existing employees. The purchase price amounted to EUR 0.9m (50% in cash and 50% with newly issued shares in Nordic Leisure).

Following the Q2 report, we will review the case and follow-up with a research update.

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