SVENSKA SPEL ANNUAL REPORT 2016 ANNUAL Gaming Shall Gaming Shall Be Enjoyed by All!
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Gaming shall SVENSKA SPEL be enjoyed ANNUAL REPORT 2016 by all! SVENSKA SPEL ANNUAL REPORT 2016 SEK 4.8 billion to the public Contents treasury Business description and CSR report Review of 2016 1 About Svenska Spel 2 CEO’s commentary 4 Interview with the Chairman 6 The Swedish gaming market 7 Value creation 12 Sustainable development 14 14% online growth, Stakeholder dialogue 14 Materiality analysis 16 of which mobile 57% Said about Svenska Spel 17 Strategy – Gaming enjoyment and responsibility 18 The best and safest gaming experience for our customers 18 Our customer-oriented employees 28 Value for owners and society 32 Facts about the CSR report 38 Governance of sustainability efforts 39 Key indicators for responsible gaming 40 GRI index 41 Financial information and governance Directors’ report 44 Group’s financial position and results 47 Risks and risk management 50 Proposed distribution of profits 51 Report on the Company’s measures under the shareholder directive 53 Corporate Governance Report 57 Board of Directors 62 Management 64 Group Consolidated statement of comprehensive income 66 Balance sheet 67 Cash-flow statement 68 Statement of changes in equity 68 Gräsroten – 7,972 Parent Company Income statement 69 sports associations Balance sheet 70 split SEK 50 million Cash-flow statement 72 Statement of changes in equity 72 Notes 73 Board’s signatures 93 Auditor’s Report 94 Assurance Report 97 Five-year summary, the Group 98 Financial and other terms 99 Calendar and contacts 100 SECTION Our responsible gaming tools have effect* Review of 2016 Q1 A new gaming site was launched, with attractive games and services as well as improved responsible gaming tools. Launch of Prispallen. For every internationally earned place on the winners podium, Svenska Spel donates SEK 10,000 to the association that the athlete or team repre- sents. A new key indicator for responsible gaming, the Aware- ness index, was launched as part of the Company’s meas- urement of the effects of measures and tools that are directed at our customers. Q2 A new partnership agreement was signed with the Swedish Bandy Federation. The three-year agreement is valued at about SEK 16 million in total. Launch of a new app that offers a notification service for sports games customers. Q3 Svenska Spel has applied for a permit for new game forms such as e-sport and fantasy sport. SEK 12.5 billion in A new partnership agreement was signed with the Swed- ish Floorball Federation. The three-year agreement is val- winnings to customers ued at about SEK 20 million in total. and 349 new million Triss celebrated its 30th anniversary and this was cele- brated with the release of a new campaign product, Triss winners 90 kr. Q4 Bingo was launched for mobile phones and tablet com- puters. SEK 50 million was paid to sports associations’ youth operations through Gräsroten. The Company is helping to fund the first professor of medicine in gambling addiction in Sweden. A new sponsorship guideline that advocates human rights was launched. 2016 2015 2014 Net profit for the year, (SEK million) 4,866 4,803 4,763 Key indicators Customer satisfaction index (CSI) 68 67 69 Image, % 55 54 54 Market share 40.5 42.5 43.5 Awareness index1 83 — — Work environment index1 72 — — Operating margin, % 22.2 22.6 22.2 1. New measurement figures for 2016, comparative figures missing. Definition, see page 99. * according to survey performed by Ramböll Management Consulting SVENSKA SPEL ANNUAL REPORT 2016 1 About Svenska Spel » Svenska Spel is the biggest, best-known gaming company in Sweden. Our customers interface with Svenska Spel’s products and service in digital and physical environments. Regardless of where the customers play, it is our hope that they have an exciting and safe gaming experience. Svenska Spel’s community involvement is great. Among other things, we are Sweden’s largest sports sponsor. OUR MANDATE CUSTOMER PROMISE Svenska Spel is to promote a healthy and safe gaming market – We are convinced that the best gaming experience is entertain- that is our mandate. We are to safeguard social protection con- ing, safe and secure. We are available on all modern platforms siderations and satisfy demand for attractive gaming. Consid- and our customer service is open and staffed 24 hours a day. It eration for customers and minimising the negative effects of is the gaming experience we want to give to you. We call this gaming weighs more heavily than profits for us. accessibility. Svenska Spel shall not contribute to increasing total gaming With our broad range of unique games, we promise a in society, but offer a more secure environment for the gaming moment of entertainment, dreams, thrills and the chance to that already takes place. This means that we offer games that win. Together with others, if you want. We call this gaming can entail social risks if we deem that our gaming environment enjoyment. can counter or prevent illegal gambling. This is a huge respon- We support our customers and give them the tools to moni- sibility. tor their gaming behaviour. We prioritise customer questions and gaming security. We call this responsible gaming. GAMES OF CHANCE SPORTS GAMES CASINO GAMES 53% 19% 28% OF NET GAMING REVENUES OF NET GAMING REVENUES OF NET GAMING REVENUES Svenska Spel offers products in the categories games of chance, wide spread distribution network of retailers and business sports games and casino. Lotto, Triss, Stryktipset and Oddset partners in both cities and rural areas that sell Svenska Spel’s rank among the well-known brands. Via a new digital platform, products. The Company has four international casinos that customers are offered a broad range of games and services on are located in Stockholm, Gothenburg, Malmö and Sundsvall, mobile phones, computers and tablet devices. The Company’s which provide classic casino games such as Roulette, Black Jack Vegas Video Lottery Terminals (VLTs) are available at restaurants and Poker. and bingo halls throughout the country. Svenska Spel has a 2 SVENSKA SPEL ANNUAL REPORT 2016 VISION Gaming shall be enjoyed by all! MISSION Svenska Spel is to offer a competitive range of exciting and entertaining gaming experiences in a responsible and secure manner. A GAMING COMPANY WITH A UNIQUE HISTORY The foundation for today’s Svenska Spel was laid in 1896, when a lottery was started to help finance Stockholm International Fairs and the Lotteriexpeditionen was formed. There was a change in ownership in 1939 and sales of Penninglotten com- menced under the auspices of the Swedish State. The surplus was appropriated to various cultural projects. AB Tipstjänst was formed in 1934 in an attempt to curb illegal betting in conjunction with competitions and sports. Gaming was to take place under safer conditions and Tipstjänst was given the exclusive right to arrange betting in Sweden. Svenska Spel was founded in 1997 with the merger of AB Tipstjänst and Penninglotteriet. The subsidiary Casino Cosmopol started operations in 2001. Today, the Group has 1,661 employees, of whom 674 are employed in the Parent Company. The head office is in Visby, but the Company also has offices in Solna near Friends Arena. SVENSKA SPEL ANNUAL REPORT 2016 3 CEO’s commentary We invest in the gaming experience of tomorrow » In a market of tough competition, Svenska Spel managed to increase net gaming revenue in 2016 and still holds a strong market position. We focus on improving the customers’ experiences in the different channels, in particular online. POSITIVE FULL-YEAR RESULT – MANY WINNERS investments using the latest technology also extend to the new As in previous years, Svenska Spel reports a positive result for retailer terminals and Vegas video lottery terminals (VLTs) to full-year 2016. Operating profit improved SEK 63 million, or ensure crucial long-term business. 1.3%, providing a profit of SEK 4,866 million, a surplus that is To enhance customers’ experience, we launched a new site paid to our owner the Swedish State. The operating margin was at the beginning of 2016 that offers better service and respon- 22.2%, which is slightly higher than the owner target of 22%. In sible gaming tools as well as an app for sports games custom- total, we paid out SEK 12.5 million in winnings to our customers ers. Customers can use the new app to play, receive goal ser- and Sweden gained 349 new millionaires. vice, see live reports from the games and receive notifications Net gaming revenue rose SEK 32 million or 0.4%. Our focus for all sports games online. The number of objects and amount is to develop the digital customer interaction, primarily for of live games has doubled compared with last year and services mobile phones, which is why it is gratifying to note that net for “live correction” and statistics have improved. gaming revenue for mobile phones increased 57%. Sales online To address current trends and customers’ wishes, we increased in total by SEK 232 million, a 14% growth compared applied in 2016 for permits for a number of new game forms with last year. such as e-sport and fantasy sport as well as higher levels of pay- During the year, we noted a positive trend for our sports out percentage. We have been waiting for a decision regarding games products Stryktipset, Europatipset and Oddset Mixen. our online casino application since 2014. It is my hope that we Among games of chance, Eurojackpot is increasingly position- will receive a positive response to our applications in 2017. The ing itself as a popular customer product, reaching almost SEK permits are important to face the competition and customer 400 million in net gaming revenue, marking a 34% increase.