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Future Gaming Group

Fast-growing player in affiliation and online gaming

Future Gaming Group (FGG) is a fast growing iGaming company. Its main focus is on affiliation, but it also has an operator business in online casino and sports betting. The affiliation is mainly done through paid media (PPC) in regulated markets, which means the company is paying for traffic to its customers, i.e. the operators. Due to a broad customer base with exposure to several different verticals, FGG runs various revenue models depending on the customer’s characteristics, e.g. a revenue-share model, CPA (cost per acquisition) or a hybrid of these. FGG has an active M&A agenda and aims to capitalize on the fragmented market.

The iGaming market is highly fragmented, which offers attractive M&A opportunities. The market is characterized by high growth, mainly due to a shift from offline to online gambling. This shift is notable in all segments, i.e. sports betting, casino, poker etc. Recently there have been several favorable news articles about FGG in the US, which we see as an attractive market for the company in the near future. Since FGG is mainly active in paid media, we think establishing itself in new markets could be done fairly easily. Also, further expansion into other verticals could be a driver going forward.

The main risk for Future Gaming Group is that it has recently taken on a lot of debt. Also, several acquisitions have been completed. If these acquisitions perform worse than anticipated, the company could find itself in a distressed financial position. Another risk is that the company’s current group structure is relatively immature, due to diversion of the older operations and new appointed management. Furthermore, sales can be volatile q-o-q, and as the market matures, increased competition could affect prices and therefore margins.

SEKm 2018 2019e 2020e
Sales 73 80 84
Sales growth (%) 363,9 10,3 4,8
EBITDA 24 22 26
EBITDA margin (%) 33,1 27,7 31,3
EBIT adj 11 20 24
EBIT adj margin (%) 15,1 24,4 27,9
Pretax profit -5 7 10
EPS rep 0 0,01 0,01
EPS growth (%) 106,5 168,7 58,9
EPS adj -0,01 0,01 0,01
DPS 0 0 0
EV/EBITDA (x) 7,9 6,7 5,2
EV/EBIT adj (x) 17,3 7,6 5,8
P/E (x) 43,5 7,8 4,9
P/E adj (x) -17,7 7,8 4,9
EV/sales (x) 2,6 1,9 1,6
FCF yield (%) -0,7 -17,5 24,8
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 3,9 4,6 3,5
SEKm 2018 2019e 2020e
Sales 73 80 84
COGS 0 0 0
Gross profit 73 80 84
Other operating items -49 -58 -58
EBITDA 24 22 26
Depreciation on tangibles 0 0 0
Depreciation on intangibles -13 -3 -3
EBITA 11 20 24
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 11 20 24
Other financial items 0 0 0
Net financial items -17 -13 -13
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -5 7 10
Tax 1 -1 -1
Net profit -4 6 9
Minority interest 0 0 0
Net profit discontinued 6 0 0
Net profit to shareholders 2 6 9
EPS 0 0,01 0,01
EPS Adj -0,01 0,01 0,01
Total extraordinary items after tax 0,3 0 0
Tax rate (%) -19,5 -10 -10
Gross margin (%) 100 100 100
EBITDA margin (%) 33,1 27,7 31,3
EBITA margin (%) 15,5 24,4 27,9
EBIT margin (%) 15,5 24,4 27,9
Pretax margin (%) -7,2 8,2 12,4
Net margin (%) -5,8 7,4 11,2
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 363,9 10,3 4,8
EBITDA growth (%) 277,2 -7,7 18,4
EBIT growth (%) 165,3 73,6 19,8
Net profit growth (%) 78,1 241 58,9
EPS growth (%) 106,5 168,7 58,9
Profitability 2018 2019 2020
ROE (%) 2,8 7,2 10,5
ROE Adj (%) -6,9 7,2 10,5
ROCE (%) 7,1 10,9 12,6
ROCE Adj(%) 6,9 10,9 12,6
ROIC (%) 4,8 9,9 11,6
ROIC Adj (%) 4,6 9,9 11,6
Adj earnings numbers 2018 2019 2020
EBITDA Adj 24 22 26
EBITDA Adj margin (%) 32,6 27,7 31,3
EBITA Adj 11 20 24
EBITA Adj margin (%) 15,1 24,4 27,9
EBIT Adj 11 20 24
EBIT Adj margin (%) 15,1 24,4 27,9
Pretax profit Adj -6 7 10
Net profit Adj -4 6 9
Net profit to shareholders Adj -4 6 9
Net Adj margin (%) -6,2 7,4 11,2
SEKm 2018 2019e 2020e
EBITDA 24 22 26
Net financial items -17 -13 -13
Paid tax 1 -1 -1
Non-cash items 0 0 0
Cash flow before change in WC 9 9 12
Change in WC -8 -11 0
Operating cash flow 2 -2 13
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -2 -6 -1
Acquisitions and disposals 0 0 0
Free cash flow -1 -8 11
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -1 0 0
Decrease in net IB debt -2 -8 11
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 159 158 158
Indefinite intangible assets 12 12 11
Definite intangible assets 0 0 0
Tangible fixed assets 1 1 1
Other fixed assets 0 0 0
Fixed assets 172 171 169
Inventories 0 0 0
Receivables 17 16 15
Other current assets 0 0 0
Cash and liquid assets 39 31 43
Total assets 229 218 227
Shareholders equity 79 85 95
Minority 0 0 0
Total equity 79 85 95
Long-term debt 134 134 134
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 15 3 3
Other current liabilities 0 -5 -5
Total liabilities and equity 30 268 229
Net IB debt 95 103 92
Net IB debt excl. pension debt 95 103 92
Capital invested 174 184 182
Working capital 2 13 13
EV breakdown 2018 2019 2020
Market cap. diluted (m) 96 46 46
Net IB debt Adj 95 103 92
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 191 149 138
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 29,4 36,1 37,9
Capital invested turnover (%) 38,2 45 46,1
Capital employed turnover (%) 45,8 44,4 45
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 21,6 10,9 3,1
Working capital / sales (%) -2,3 9,5 15,3
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 120 121,1 96,9
Net debt / market cap (%) 51,7 223,3 198,4
Equity ratio (%) 34,7 39,1 41,6
Net IB debt adj. / equity (%) 120 121,1 96,9
Current ratio (%) 379,7 -2571,7 -2942,8
EBITDA / net interest (%) 145,8 170,1 201,1
Net IB debt / EBITDA (%) 393,9 462,9 347,6
Interest cover (%) 68,5 150,2 179,7
SEKm 2018 2019e 2020e
Shares outstanding adj. 799 905 905
Fully diluted shares Adj 905 905 905
EPS 0 0,01 0,01
Dividend per share Adj 0 0 0
EPS Adj -0,01 0,01 0,01
BVPS 0,1 0,09 0,1
BVPS Adj -0,1 -0,08 -0,07
Net IB debt / share 0,1 0,1 0,1
Share price 0,23 0,05 0,05
Market cap. (m) 184 46 46
Valuation 2018 2019 2020
P/E 43,5 7,8 4,9
EV/sales 2,62 1,86 1,63
EV/EBITDA 7,9 6,7 5,2
EV/EBITA 16,9 7,6 5,8
EV/EBIT 16,9 7,6 5,8
Dividend yield (%) 0 0 0
FCF yield (%) -0,7 -17,5 24,8
P/BVPS 1,07 0,54 0,49
P/BVPS Adj -1,06 -0,64 -0,73
P/E Adj -17,7 7,8 4,9
EV/EBITDA Adj 8 6,7 5,2
EV/EBITA Adj 17,3 7,6 5,8
EV/EBIT Adj 17,3 7,6 5,8
EV/cap. employed 1,1 0,8 0,7
Investment ratios 2018 2019 2020
Capex / sales 3,1 7,1 1,4
Capex / depreciation 17,7 219,2 42,9
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 0 0 0

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Main shareholders

Future Gaming Group

Main shareholders Share capital % Voting shares % Verified
Cronus Holding AB 20.8 % 20.8 % 31 Dec 2018
Avanza Pension 6.2 % 6.2 % 31 Dec 2018
Nordea Liv & Pension 5.9 % 5.9 % 31 Dec 2018
New Equity 4.5 % 4.5 % 31 Dec 2018
Björn Mannerqvist 2.2 % 2.2 % 31 Dec 2018
Mexon Holding AB 2.0 % 2.0 % 31 Dec 2018
Marcus Johansson 1.8 % 1.8 % 31 Dec 2018
Swedbank Försäkring 1.7 % 1.7 % 31 Dec 2018
Bo Erik Filip Sehlstedt 1.4 % 1.4 % 31 Dec 2018
Rosénssons Consulting AB 1.1 % 1.1 % 31 Dec 2018
Source: Holdings by Modular Finance AB

Insider list

Future Gaming Group

Name Quantity Code Date
Tobias Fagerlund +2 500 000 BUY 28 Feb 2019
Alexander Adam Martin Pettersson +1 500 000 BUY 28 Feb 2019
Alexander Adam Martin Pettersson + 650 000 BUY 29 Aug 2018
Alexander Adam Martin Pettersson +3 350 000 BUY 29 Aug 2018
Tobias Fagerlund + 724 354 BUY 29 Aug 2018
Alexander Adam Martin Pettersson + 500 000 BUY 28 Aug 2018
Christian Bönnelyche +1 099 910 TILLD 20 Sep 2017
Christian Bönnelyche +1 099 910 TILLD 20 Sep 2017
Stefan Vilhelmsson + 366 635 TECKN 20 Sep 2017
Björn Mannerqvist +9 090 910 TILLD 19 Sep 2017

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