How To Understand And Understand The Financial Situation Of A Gaming Company

Transcription

1 LISTING MEMORANDUM JUNE 2013 MR GREEN & CO AB (publ)

2

3 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 3

4 Important Information This memorandum (the Memorandum ) has been prepared in connection with the application by the Board of Directors of Mr Green & Co AB (publ) (the Company or Mr Green & Co ) for listing of the shares in Mr Green & Co on AktieTorget. The Memorandum does not contain and does not constitute an offer or invitation to acquire shares. The Board of Directors of Mr Green & Co is responsible for the information in this Memorandum. This Memorandum contains forward-looking statements reflecting the Company s view on future events and financial and operative development based on the Company s current plans, estimates, forecasts and expectations. Although currently reasonable, these plans, estimates, forecasts and expectations may prove to be incorrect. As with any forward-looking statements based on assumptions and circumstances, the forward-looking statements contained herein are associated with risks and uncertainty, therefore the reader should not rely on the forward-looking statements contained herein to an unreasonable extent. A large number of circumstances may cause actual results, revenues and development in general to materially deviate from results, revenues and development which are accounted for, explicitly or implicitly, in the forward-looking statements provided by the Company. Consequently, the Company, its Board of Directors or Management, cannot guarantee the accuracy or completeness of any of the forward-looking statements contained in this Memorandum, nor whether predicted events will occur. The Company explicitly resigns, except when prescribed by law, from any responsibility to update forward-looking statements and to adjust them in the light of future events or future developments. The Memorandum contains historical market information, including information about the size of the markets in which Mr Green & Co s investments are active. The information has been obtained from a number of sources and Mr Green & Co is not responsible for the accuracy of the representation of such information. Although Mr Green & Co regards these sources as reliable, no independent verification has been performed and, as a result, the accuracy or completeness of the information cannot be guaranteed. As far as Mr Green & Co is aware, and can gain assurance of through comparison with other information that has been published by the parties from which the information has been obtained, no information that would make the represented information incorrect or misleading has been excluded from this Memorandum. This Memorandum has not been subject to review or approval by the Swedish Financial Supervisory Authority. As of November 1, 2007, AktieTorget has been authorised by the Swedish Financial Supervisory Authority to operate a Multilateral Trading Facility. AktieTorget has its own rules and regulations, imposing the companies to present a memorandum which, in principle, corresponds to the Swedish Financial Supervisor Authority s prospectus requirements. This Memorandum has been approved by AktieTorget s Connection Committee. The approval of the Memorandum by AktieTorget s Connection Committee does not guarantee the accuracy or completeness of the factual information contained in this Memorandum. The shares in Mr Green & Co are not subject to trading in any country other than Sweden and no application to engage in such trading has been made. The shares in Mr Green & Co have not been registered, and are not intended to be registered, under the United States Securities Act of 1933, as amended or any other foreign equivalent. It is incumbent on each and every one to adhere to any restrictions regarding this Memorandum according to laws and regulations outside of Sweden. This Memorandum is available at Mr Green & Co s head office and on Mr Green & Co s website The Memorandum will also be available, in connection with the distribution date, on AktieTorget s website Mr Green & Co s Articles of Association will, in connection with the distribution date, be available in electronic format on Mr Green & Co s website. This Memorandum is governed by Swedish law without giving effect to conflicts of law provisions. The courts of Sweden have exclusive jurisdiction to settle any dispute arising out of, or in connection with, this Memorandum. In several countries, particularly the US, Canada, Hong Kong, Japan, Australia and South Africa, distribution of this Memorandum may be subject to restriction. In conformity therewith, this Memorandum may not be distributed or published in any jurisdiction unless it is made in accordance with applicable rules and legislation. 4 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

5 Contents TABLE OF CONTENTS Risk Factors 6 Background and Reasons 9 CEO s Comments 10 Mr Green & Co AB The Holding Company 12 The Online Casino Mr Green 13 Mr Green & Co AB - Financial History 16 Market Description 18 Share Capital and Ownership Structure 21 Board of Directors, Senior Management and Auditors 23 Legal Considerations and Supplementary Information 32 Financial Information 34 Pro Forma Financials 38 The Auditor s Report 43 Articles of Association 44 Tax issues in Sweden 46 Addresses 48 DEFINITIONS AktieTorget AktieTorget AB, Corp. Reg. No , is a Multilateral Trading Facility (MTF) under the supervision of the Swedish Financial Supervisory Authority. Euroclear Sweden AB The Swedish Central Depository, Corp. Reg. No Green Gaming Group or GGG: Green Gaming Group Plc, Corp. Reg. No. C45567 Iacta Management Iacta Management AB, Corp. Reg. No , name changed to Mr Green & Co AB Mr Green Ltd Mr Green Ltd, Corp. Reg. No. C43260, a subsidiary of GGG The Company, Mr Green & Co or Mr Green & Co AB (publ): Mr Green & Co AB (publ), Corp. Reg. No The Group Mr Green & Co and subsidiaries LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 5

6 Risk Factors The risks described below must be carefully considered together with other information in this Memorandum. The risks described below may not be the only ones faced by the Group. Additional risk factors not currently known or currently deemed immaterial may also affect the operations. The Group s business, financial conditions, results of operations or prospects could be materially adversely affected by any of these risks. The risk factors relate to the entire Group, i.e. Mr Green & Co and subsidiaries. FINANCIAL RISK Currency Exchange Rate Fluctuations The Group is a Swedish holding company operating and reporting transactions in SEK. The Group has invested in companies operating in a multi-currency environment whose financial performance is not reported in SEK. For this reason, the Group is exposed to effects from currency fluctuations in both its operations and on consolidation. Credit Risk and Fraud The Group s financial transactions give rise to credit risks related to financial counterparties. Mr Green & Co has no significant concentration of credit risks. The principal credit risk that the Group faces in its gaming operations is derived from the risk of fraudulent transactions and the resulting charge-backs from banks and other payment providers. The Group is also exposed to credit risk insofar that its banking and payment solutions are concentrated to Malta. Tax Risks Mr Green & Co and subsidiaries operates internationally and, as a consequence, the Group is subject to a variety of national tax laws. The operations are conducted in accordance with the advice and recommendations of local and international advisors in relevant tax jurisdictions regarding tax law pertaining to the Group. While the Group s operations are not driven by tax considerations, they are always taken into account as part of any major business decisions and before entering into agreements with suppliers. Where considered necessary, external advisors are consulted to ensure that the Company operates in compliance with applicable laws. Neither Mr Green & Co nor its subsidiaries are currently subject to any tax litigation. Risks Associated with Distribution and Listing on AktieTorget Prior to the listing of Mr Green & Co on AktieTorget, the Company s share was not traded. However, the listing does not guarantee the liquidity of the share. Variations in Mr Green & Co s earnings and financial position, changes in stock market expectations regarding future earnings, as well as supply and demand for the share and the general economic trend, are factors that may affect the price of the share. These factors mean that the price of the share may fluctuate over time. Competition The Company competes with a large number of competitors who have substantially larger financial and operational resources than the Group. Moreover, additional competitors are entering the market. Failure to successfully respond to such competition could affect the Group s profit and financial position. Mr Green & Co s vision is to be a leading global investor in fast-growing i-gaming companies. RISKS EXPOSURE FROM SUBSIDIARIES AND INVESTMENTS Technology Failures Mr Green & Co s investments and subsidiaries are dependent on continuity to provide undisrupted services. Failure in technology could result in serious damage to the business and have a negative effect on the Group s revenues. Dependence on Key Personnel, Employees and Technical Knowledge The success of the subsidiaries is dependent on their ability to employ staff with a high level of technical expertise, and to retain and recruit staff with extensive knowledge of game development and supporting technology. In addition, Mr Green & Co and subsidiaries are dependent on certain key individuals at management level. The loss of certain key individuals may temporarily have a negative impact on the Group s profits and financial position. The Group works actively to acquire and retain committed and loyal staff through continuous training and by providing opportunities for advancement within the organisation. 6 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

7 External Suppliers Subsidiaries of Mr Green & Co offer services supplied by external providers, such as game suppliers and payment service providers, and are therefore dependent on the performance of and relationship with these external providers. Client Base The Group s profitability is dependent on its ability to expand its client base to increase revenues. Losing clients will have a negative impact on the Group s earnings and financial position. Intellectual Property Rights The Group holds copyrights and other intellectual property rights for software, its website and related components. The regulations included in employment and consultation agreements are highly significant for limiting the risk of employees or consultants claiming copyrights on products developed by the Group. The Group believes that the regulations in the employment and consultancy agreements are sufficient for ensuring that the necessary rights are retained and maintained within the Group. In addition, key trademarks and web domains are held by Mr Green & Co, its subsidiaries or third parties on the basis of agreements that ensure that intellectual property rights are kept within the Group s control. Regulatory Risks The majority of the Group s revenue is derived from markets within the European Union, meaning that their domestic regulations are subject to EU law principles, such as free movement of services. The Group s subsidiary, Mr Green Ltd., is based in Malta and licensed and regulated by the Lotteries and Gaming Authority (LGA) in Malta. While clients residing in other countries are generally free to use Mr Green Ltd s services, some of them may reside in territories that do not recognise the Company s license, or have reserved the gaming market for designated operators. The main risks are that new laws are introduced in the respective countries in which the Group s clients reside which could affect the operations of the Group s subsidiaries by introducing new duties (levies), set special restrictions on for example opening hours, bet levels or marketing. The introduction of such a regulated environment could also have significant positive effects, for example on the possibility to market the services in more marketing channels or at a lower cost. It is also a possibility that national courts in the respective countries issue decisions against Mr Green & Co and its subsidiaries. It is however, the Group s assessment that in the current legal environment there is no ground for such claims and that such adverse judgments would be overruled in higher courts on the basis of precedents and the basis of EU law principles common to all EU member states. The referred principles restrict Member States ability to introduce new legislation to for example protect state monopolies on i-gaming. In June 2012, the European Commission announced that pending infringements and complaints against Member States whose gambling regulations are in violation of EU law would be reactivated. The Group continually monitors legal developments pertaining to the i-gaming industry on a country-by-country basis, consulting local experts where necessary. The Group s international strategy is based on its understanding of the full legal framework applicable to its operations. Mr Green & Co and subsidiaries also applies a consistent policy of not allowing customers from certain jurisdictions to register as clients. Regulatory Decisions The subsidiaries of Mr Green & Co are active on the i-gaming market. In many national markets, the provision and marketing of gaming services is subject to extensive regulation. Regulatory decisions and changes in legislation may significantly impact the Group s operations and, in particular, its ability to provide and market its services in specific countries. Regulatory decisions may also have an indirectly adverse effect by restricting customers use of gaming websites, or by requiring financial institutions to prevent transactions between customers and gaming operators. A potential gaming tax could also have a negative impact on the Group s profitability, even though a regulation also has several positive dynamic effects. Additionally, an increasing number of countries have also started to issue local gaming licenses, which gaming companies are required to hold in order to operate or to market their services in those countries. Such development may open new market opportunities for Mr Green & Co and subsidiaries, but could also significantly increase the Group s costs by fragmenting the international gaming market into national markets with a multitude of different requirements relating to such aspects as products, technology and reporting to authorities. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 7

8 Operations Subject to Official Approval Mr Green & Co s subsidiary Mr Green Ltd is licensed and regulated by the LGA in Malta. The LGA license authorises Mr Green Ltd to offer its online casino services through any means of distance communications. The licenses are continuosly renewed through approval from the LGA. Maintaining the existing licenses and/or obtaining similar licenses from the LGA or other licensing authorities is considered essential to ensure continuity of the Group s operations. Gambling Addiction People suffering from gambling addiction could attempt to take legal action against the Group s subsidiaries as the gaming originator and facilitator. While such claims are likely to be dismissed, they could give rise to substantial costs, adversely impact confidence in Mr Green & Co and its subsidiaries and potentially lead to a decline in revenues. No such claim is ongoing at present. 8 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

9 Background and Reasons Prior to the listing of Mr Green & Co, a restructuring of the Group was implemented in order to form the new Group. Mr Green & Co AB was founded in February 2012 and is the holding company of the Group. The largest and currently most important holding is the online casino Mr Green (Mr Green Ltd). The Company s mission is to invest in companies that build unique capabilities and further outgrow competition to build long-term shareholder value. The Board of Mr Green & Co has decided to list the shares on AktieTorget. The listing of Mr Green & Co enables shareholders to trade on an official transparent platform and obtain an accurate market value of the Company. In addition, the Board considers AktieTorget a suitable platform for gaining access to capital markets, raising awareness of the Company and enabling future acquisitions. The Company has been approved for trading on AktieTorget. Trading in the Mr Green & Co share is expected to commence on or about June 28, Mr Green & Co does not intend to apply for listing of the share on any other exchange or marketplace. No new shares in Mr Green & Co will be issued and no additional funding for specific investments will be generated as part of the listing process. The Board of Directors of Mr Green & Co AB (publ), which is responsible for this Memorandum, has taken all reasonable measures to ensure that the information provided is, to the best of their knowledge, is in accordance with known facts and contains, to the knowledge of the Board of Directors of Mr Green & Co, no omission likely to affect the evaluation of the Company. Tommy Trollborg, Chairman of the Board Henrik Bergquist, Member of the Board Hans Fajerson, Member of the Board Fredrik Sidfalk, Member of the Board The Board of Directors Mr Green & Co AB (publ) June 26, 2013 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 9

10 CEO s Comments MR GREEN & CO INVESTING IN THE FUTURE OF I-GAMING We are very proud to list Mr Green & Co at AktieTorget. Mr Green & Co is the Parent Company of our Group. The largest and currently most important holding is the online casino Mr Green (Mr Green Ltd). We launched the online casino Mr Green (mrgreen.com) because we believed that the market lacked an i-gaming company with a focus on entertainment. We felt that no other company had succeeded in creating an atmosphere with focus on the game experience and the feeling of excitement, strengthened by a safe and pleasant environment. We wanted to create a strong relationship with our clients a relationship that would encourage their loyalty. Clients join the online casino Mr Green to enjoy a moment of excitement and pleasant relaxation in an environment with a genuine casino feeling and atmosphere. We wanted to create the online world s equivalent to Monte Carlo, the feeling of being in a real casino, by combining our intense focus on a world-class graphical interface with a large supply of games and strong themes. The online casino Mr Green is all about entertainment, and not just about games and winning opportunities. When we founded the online casino Mr Green, we were highly confident that such an i-gaming company would appeal to many people, despite the intense competition from hundreds of i-gaming companies. We also felt that no one was taking casino clients seriously by offering them some excitement in a safe and attractive environment. As experienced entrepreneurs in the i-gaming industry, we were convinced that we - through Mr Green - could offer something that we and others were missing. Today, we can see that our initial assessment has proven to be accurate. The company has grown strongly since our online casino Mr Green opened in August We have proven to the market that there is room for an i-gaming company focusing on developing and maintaining its relationships with its clients. As it turns out, we were not alone many clients were lacking an Internet-based casino offering the right experience. Our brand, Mr Green, embodies our casino and all that our company stands for. Mr Green is a modern gentleman who treats his surroundings with respect. He carries our values. He is honest, clear and fair values which we find to be in demand in the i-gaming industry. The online casino Mr Green currently offers some 200 games in seven languages. To date, a total of 660,000 clients have enjoyed a pleasant break from their daily routines through our online casino Mr Green. Since launching, the company s Game Win have increased an average of 70 percent annually. In the first quarter of 2013, the Game Win totalled EUR 12.8 million. Last year, Mr Green Ltd s management team was substantially strengthened with the addition of Mr Marcus Nylén as CEO (former CEO of Bredbandsbolaget), and is currently operating independently of the original trio of founders. The company aims to maintain its high-paced organic expansion and outperform the market average. The company will be directing its focus on new countries, and also expects its market share to increase as more clients discover that the online casino Mr Green offers an experience that is a cut above the usual. It is not only the clients who appreciate that we represent something new, but also the independent evaluators. For the fifth consecutive year, we have been at the top of Internetworld s ranking of gaming companies. The egaming Review 1 has credited Mr Green Ltd with Socially Responsible Operator of the Year and Best Customer Experience. International Gaming Awards 2 has named Mr Green Ltd as the Best Online Casino. Mr Green Ltd treats its gaming responsibilities with the utmost seriousness. This is not only positive for the clients, but also for the company, which strives to establish loyalty and a sense of trustworthiness among its clients. The company has developed a concept called Green Gaming, where the client, when registering on the the website, establishes a budget for his/her activities at the casino. During a set period of one week, the client can not deposit more funds than the amount initially specified. Mr Green Ltd works continuously on expanding its operations to offer games based on other platforms such as smartphones and tablet devices. Our approach and strong brand enable us to continue offering a gaming environment that is aimed at providing the client with a moment of 1 egaming Review magazine is one of the leaders in business-to-business information provision for the online gaming industry, more information is available at 2 The International Gaming Awards are managed by Clever Duck Media Ltd. Clever Duck Media is an event management company with a unique understanding of the gaming industry, more information is available at 10 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

11 pleasurable recreation and excitement. The launch of games on new platforms will benefit from the strong and positive relationships we have with many of our clients. Marketing activities will be enhanced by the fact that many people are already familiar with the quality that Mr Green offers. Although Mr Green & Co s main holding is shares in Mr Green Ltd, we have also started to explore other opportunities in the i-gaming industry through initiatives that include investments in a social-gaming concept and a new brand in the casino industry. Although our current main asset is the online casino Mr Green, we are always looking into new and exciting opportunities within the industry that are closely related to our specialised area of i-gaming. Mr Green & Co will be distributing a significant share of the Group s free cash flow as dividend - our target is 50 percent. The stock market will now have the opportunity to familiarise itself with Mr Green when trading in the Mr Green & Co share commences at AktieTorget. We are confident that our investors relationship with Mr Green & Co will be as strong as that of Mr Green Ltd s casino clients. Mikael Pawlo, CEO Mr Green & Co AB (publ) LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 11

12 Mr Green & Co AB The Holding Company The core investment of Mr Green & Co is the online casino Mr Green Ltd. Mr Green & Co AB holds a 100-percent shareholding in the following companies 3 : Green Gaming Group Plc (GGG), which owns the online casino Mr Green. The online casino is based in Malta and is licensed and regulated by the Lotteries and Gaming Authority of Malta (LGA). Mr Green & Co Technology AB (former Iacta Development AB), a technical supplier. Iacta Marketing AB, a market research provider. BACKGROUND AND HISTORY Mr Green & Co was founded under the name Iacta Management AB as a wholly owned subsidiary of Transferator AB (publ). At that time, Transferator AB had a 17.2-percent stake in GGG and wanted to assist GGG in its effort to procure technical consultancy and development. Through its subsidiary, Iacta Development AB, Iacta Management AB successfully helped to procure services from technical developers who assisted in building additional functionality and stability into the website of the online casino Mr Green. Iacta Management AB also helped GGG acquire marketing research and analysis through its other subsidiary, Iacta Marketing AB. In December 2012, Transferator sold its 17.2-percent stake in GGG to Iacta Management, which opened up the possibility for Iacta Management to contemplate a future as an independent holding company active in the i-gaming sector. This was realized when Transferator distributed its holding in Iacta Management, now under the new name of Mr Green & Co AB (publ), to its shareholders. Prior to the distribution, Iacta Management s holding in GGG was more than 50 percent. VISION Mr Green & Co s vision is to be a leading global investor in fast-growing i-gaming companies. MISSION The Company s mission is to invest in companies that build unique capabilities and further outgrow competition to build long-term shareholder value. OBJECTIVE Mr Green & Co s objective is to generate long-term growth and profitability to provide shareholders with the best possible return. STRATEGIC PLAN Mr Green & Co and its subsidiaries will grow organically, or via acquisitions, in the global market. ORGANISATION EMPLOYEES Mr Green & Co AB is an investment company and currently has two employees: the CEO and the CFO. They manage investor relations, monitor the performance of existing investments and evaluate new business opportunities. LEGAL STRUCTURE The Group consists of the Parent Company, Mr Green & Co, and its wholly owned subsidiaries. Mr Green Ltd (Malta) Green Gaming Group Plc (Malta) Marketing Strategies Ltd (Nevis) Mr Green & Co AB (Sweden) Mr Green & Co Technology AB (Sweden) Iacta Marketing AB (Sweden) Since Mr Green & Co AB is a recently founded company, it is relevant to describe the background of the subsidiary Mr Green Ltd, which constitutes an important part of Mr Green & Co. 3 According to Maltese law, a limited liability company must have a minimum of two shareholders. Accordingly, Mr Green & Co owns 275,962 shares in GGG and the Chairman of the Board, Tommy Trollborg, owns one share. 12 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

13 The Online Casino Mr Green BACKGROUND The online casino Mr Green (Mr Green Ltd) was founded in late 2007 by three Swedish entrepreneurs: Fredrik Sidfalk, Henrik Bergquist and Mikael Pawlo. With the birth of the World Wide Web, gambling companies started to explore the opportunity to operate in the new digital environment, so-called i-gaming. Many i-gaming companies evolved in the initially unregulated environment. There were even some early examples back in the 1990s of companies offering casino online and different types of card games. The major opportunity was capitalizing on the advantage of not having to deal with physical spaces or distances. It was possible to sit anywhere in the world and play at a server placed elsewhere. Today, most of the business is carried out by well-established and respected companies, some of which are listed on stock exchanges. The i-gaming activities are mostly licensed, sometimes locally, sometimes within an EU state such as Malta or the United Kingdom, or outside the EU. In this environment, Mr Sidfalk and Mr Bergquist discovered an opportunity. Mr Sidfalk and Mr Bergquist had experience from the i-gaming sector from founding the company, brand and website of Betsson ( together with Mr Anders Holmgren back in 2001, and then managing that venture for a period of about five years. Most companies at the time where offering portal solutions, meaning that they were offering full-service i-gaming products. For example, they offered a sports book, poker and casino in one package, under one brand. The general opinion at that time was that the market was saturated and that it was impossible to start a new i-gaming company. Moreover, the general consensus in the industry was that casino was a complementary product - something that was offered jointly with a sports book or a poker client. The brands at the time would often include the word bet. Very few operators back in offered a standalone, branded casino where clients would play solely casino games. Furthermore, there were no operators in the market working towards a total i-gaming experience, where the look and feel and the brand was incorporated into the i-gaming experience. No one went for a mass-market stand-alone casino. Furthermore, the i-gaming operator s web design was not up to speed with the latest web technologies and they did not focus on look and feel as a key element of the product offering. Accordingly, there was substantial scope for improvement. In the founding team, Mr Sidfalk and Mr Bergquist provided extensive experience from the i-gaming sector, while the third founder, Mr Pawlo, provided experience from the PR and marketing sector and brought fresh ideas to the table. Together, they built a strong team with a lot of energy and new ideas based on solid experience and knowledge of the sector. The result threw down the gauntlet to the entire i-gaming sector. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 13

14 FINDING THE POSITION The three founders put together a development team that worked hard to find the right concept for a stand-alone casino. During the initial years, the founders actively avoided employing people with i-gaming experience to ensure that all ideas would be fresh and not tainted by preconceived notions of i-gaming products and development. Being different was - and remains - important to Mr Green Ltd. It was decided that the company should be among the best in terms of customer experience and satisfaction among its peers. The product offering should be centered on user experience with considerable focus on look and feel. To achieve this, the company concentrated intensely on usability design and the general themes and graphics presented on the website, and entered a multi-vendor agreement to supply a wide range of high class casino games. The team also built one of the first seamless wallet solutions in the i-gaming industry, whereby it was no longer necessary to exchange chips to play games from different vendors. Within the concept, it was also decided that the online casino Mr Green should be adapted to each local market. By being localized, the company aimed to attract additional clients by providing a sense of security and loyalty. Mr Green Ltd s concept of Green Gaming works in the same way, where the client is prompted to consider his/her own budget and has the option to set a deposit limit upon registration. For one week from this date, the client cannot change the deposit limit. Green Gaming is good for the clients and for the company, since it builds loyalty and credibility. Mr Green is aimed at the mass-market. The company will address the dream of the big win and try to attract high rollers, but the primary focus is the mass-market looking for everyday excitement. Mr Green will provide them with this excitement and the feeling of risk but still in a very safe, contained environment. It is therefore important that the company communicates the security and safety of its offering. Green Gaming is an important part of this. Each of these aspects by themselves may not constitute a unique selling point standing alone, but together they formed a concept not previously seen in the market. There has been no need to invent new business models as such. I-gaming works and can operate in most jurisdictions. Casino games are very popular in all regions where Mr Green Ltd operates and, contrary to the general opinion of the industry at the time, they do not need supporting products like poker or sports book. Then there was the matter of the name. When the founders were looking for a name for the casino playground they were creating, they wanted to build an entire experience around the brand. They wanted to build a position. They wanted a distinguishing name. They wanted an edge. They wanted something that stood out. They wanted Mr Green. Green can stand for many things in the casino world. In American English, the slang for money is greens. The bank in the French Roulette is green. Green is the color of the cloth in many table games. The name came up by mistake in a web search, but it stuck. The founders developed a concept that involved Mr Green being a gentleman, but not a snob. He came from simple upbringing, like Mr James Bond in Casino Royale or Mr Danny Wilde in The Persuaders, but would as an adult find his way into the company of both women and nobility. He would preferably drink dry martinis without vermouth, but also a beer on occasions. He loves a good cigar, but avoids the Cubans for political reasons. He would love his clients and treat them right, with gentleman s rules and tips on gaming and strategies, much like the character played by Humphrey Bogart in the Hollywood classic Casablanca. The Mr Green brand has many attributes: the man, his hat, his umbrella, his cufflinks and so forth, making it a vibrant brand that can be used efficiently in marketing. This also further strengthens customer loyalty. The founders had a global perspective from the start, with a focus on rapid expansion. A second market was opened within one month of the launch of the first market. It was considered important to become a major player quickly to be able to address possible regulation of the market, development needs, to secure favourable prices from suppliers and so forth. 14 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

15 The product comes first and this has always been a key element for Mr Green Ltd. The product is the key to creating loyalty and recruiting new clients. This is because we compete for the clients attention every second. Mr Green Ltd s services are, to some extent, generic in terms of games, and therefore everything outside of the games needs to hold a high standard. This means that the sales funnel, client acquisition tools, interface, look and feel, the method used to deposit money, etc. always needs to be improved, polished and re-thought to continuously provide a first-class casino experience. Change and exploration is in the company s DNA, positioning it well for future challenges and technology changes. MOVING ON The company has served some 660,000 clients since its inception. The Game Win in the first quarter of 2013 was EUR 12.8 million. The company s Game Win has a compounded annual growth rate of 70 percent over the past four years. Mr Green Ltd now offers over 200 games in seven languages. Over the past year, the Management team has been considerably strengthened. The company is managed by CEO Marcus Nylén (formerly CEO of Bredbandsbolaget), CFO Keld Knudsen (formerly of Unibet), CMO Henrik Svensson (formerly of Betsson) and CPO Markus Aurala (formerly of PAF). The founders participate at the board and advisory level. The new team carries the torch forward, always challenging its competitors and striving to identify and explore new opportunities and developing the casino offering in in new ways and for new platforms. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 15

16 Mr Green & Co AB Financial History FINANCIAL PROGRESSION The Parent Company was incorporated in February 2012 and, as a result, the Group has only a limited financial history. However, the main operating company within the Group, Mr Green Ltd, has been in operation since To fully understand the progression of the Group, an unaudited financial summary for the period is presented below as if the Group had been in existence since SEK 000 s Actual Actual Actual Actual Game Win 46, , , ,850 Other revenue Revenue 46, , , ,532 Cost of sales 12,212 37,514 44,482 59,466 Marketing 16,709 66, , ,989 Operating expenses 32,386 39,154 45,961 77,058 EBITDA (14,415) 5,215 13,124 47,019 Capital investment 2,740 2,070 23,759 34,973 Ratios Cost of sales 26.0% 25.2% 21.8% 18.7% Marketing 35.6% 45.0% 49.2% 42.4% Operating expenses 69.1% 26.3% 22.5% 24.2% EBITDA (30.7%) 3.5% 6.4% 14.8% Capital investments 5.8% 1.4% 11.7% 11.0% Year-on-year revenue growth 217.5% 36.9% 55.9% GAME WIN (REVENUE GENERATED FROM GAMING ACTIVITIES) Game Win represents bets less winnings, jackpot contribution and free bets (bonuses and free spins). Game Win growth has been strong and significantly higher than generally accepted market growth in the online casino industry. OTHER REVENUE Represents consultancy services provided to companies outside the Group. SEK 000s 350, , , , , ,000 50,000 0 Game Win LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

17 COST OF SALES (CURRENTLY GENERATED FROM GAMING ACTIVITIES ONLY) Cost of sales represents betting duties, royalties to gaming and platform providers and the net cost of payment processing. These costs are variable, depending on business activity, and Mr Green & Co continues to benefit from economies of scale generated by business growth. the cost of sales ratio has declined every year since the start of the Company due to improved economies of scale, which has facilitated the signing of more favorable contracts with suppliers. MARKETING EXPENDITURE (CURRENTLY GENERATED FROM GAMING ACTIVITIES ALONE) Marketing expenditure represents traditional marketing activities, affiliate marketing and other internet-based marketing activities. In the current phase of the business development, Mr Green & Co is expecting higher expenditure than what is considered normal for the industry to support future expansion and growth, which are expected to outperform the market. EMPLOYEES AND CONTRACTORS At the end of 2012, Mr Green & Co (pro forma Group) employed or subcontracted 101 people. The business is located in four different locations across Europe. The majority of employees/contractors work in Malta, managing the operation of the online casino Mr Green Employees and Contractors OPERATING EXPENSES Operating expenses comprise the administrative overheads for employees, infrastructure, advisers, etc. Over time, the relative efficiency of the operating expenses is expected to improve. CAPITAL INVESTMENTS Capital investments, which includes website and infrastructure development, are implemented through a combination of internal and external development activities to support the i-gaming site and general infrastructure investment required to operate the business. All development activities to support the i-gaming site are capitalised and amortised over the expected useful life of the development. As seen in the table, 11 percent of Game Win was used for investment in the Group s future growth. The Group has invested, and will continue to invest, significant resources in technology and website design to ensure that all businesses are best-inclass and innovative. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 17

18 Market Description The strategy for Mr Green & Co and its subsidiaries is to grow organically, or via acquisitions, globally. Since the core business of the Group is i-gaming (online gaming), this chapter will describe the market situation within the i-gaming industry. Real money gaming and social gaming are converging, but market statistics remain focused on the individual parts. Additionally, because both industries are in their infancy and unregulated to a large extent, it is difficult to obtain a precise overview of their potential. Online gaming, including mobile gaming, remains the fastest-growing segment of the global gaming industry (MarketLine Industry Profile Global Online Gambling, July 2012). It is a highly fragmented market with a large number of operators. REAL MONEY GAMING The online gaming market includes a large variety of games. Betting, casino, and poker constitute the largest gaming products. Since commencement, the online casino Mr Green (Mr Green Ltd.) has focused exclusively on online casino games, a niche that has provided solid growth and profitability. Historically, gaming businesses have tended to focus on their own local markets. Today, changes in the market are presenting opportunities for businesses to become multinational. In the past, the main drivers for growth in the online gaming industry were increased broadband penetration, the move from offline to online, increased confidence in online payment services, and a greater sense of comfort in the digital world. Although these factors are still highly significant, innovation is now the second most important driver of growth in the industry after regulations (Morgan Stanley report Online Gaming: Industry in Transition, 2012). Some analysts claim that numerous established markets in Europe have already reached their peak. Even though the market has matured, online gaming remains a relatively new phenomenon and the market is still growing. One of the objectives of the online casino Mr Green is to expand into markets where there is a high penetration of Internet usage and broadband. The mobile channel is now an important driver of growth in the industry. The introduction of smartphones and tablets makes gaming more accessible, thereby reaching out to a wider target group and exposed to different consumer behaviour. According to H2 Gambling Capital 3, the global mobile gaming market was valued at EUR 3.4 billion (USD 4.43 billion) in 2012, or about 15 percent of the total online gaming market. COMPETITORS The online casino Mr Green s competitors range from government monopolies to private competitors, including both listed and unlisted companies. The Company faces competition primarily from social gaming and other online gaming operators. Competition in the online marketplace is intense and is expected to continue to increase as new operators enter the market and existing operators improve and expand their product offerings. The competitive environment remains subject to change depending on regulatory and technological developments. While the barriers for new companies to enter the market are relatively low, it is difficult for them to achieve substantial market share without significant infrastructure and specialist expertise, marketing investment and customer relationship management capabilities. Mr Green & Co also regards other forms of entertainment outside gaming to represent competition to its subsidiaries. Historical evidence shows that adding new content and products are a significant drivers of revenues. New products offer existing clients more gaming opportunities with only marginal additional costs and no marketing costs for the operator. As a consequence, there is very high operational gearing in relation to profits LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

19 GLOBAL MARKET VALUE FORECAST According to MarketLine (Industry Profile - Global Online Gambling, July 2012), the forecast value of the online gambling industry is USD 49.2 billion in 2016, an increase of 46.3 percent since The market value is expected to continue to grow. The compound annual growth rate of the industry for the period is estimated at 7.9 percent. Table: Global online gaming industry value forecast: USD billion, Year USD billion EUR billion Growth % % % % % % GLOBAL CATEGORY SEGMENTATION Table: Global online gaming industry category segmentation: USD billion, 2011 Category 2011 % Sports Betting % Casino % Poker % Bingo % Lotteries % Total % SOURCE: MARKETLINE Figure: Global online gaming industry category segmentation: % share by value, ,8% 6,6% 4,3% CAGR: % SOURCE: MARKETLINE 25,5% Figure: Global online gaming industry value forecast: USD billion, Lotteries Bingo Casino 48,9% % growth 14% 12% 10% 8% 6% 4% 2% 0% USD billion % growth $ billion Poker Sports betting SOURCE: MARKETLINE SOURCE: MARKETLINE LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 19

20 GEOGRAPHIC SEGMENTATION Category 2011 % Europe % Asia-Pacific % Americas % MEA % Total % SOURCE: MARKETLINE Figure: Global online gaming industry geography segmentation: % share, by value 2011 INDUSTRY REGULATION A few years ago, most European countries were trying to monopolise their gaming markets to protect state-run operators, and some countries prohibited online gaming altogether. Since then, a large number of European countries have implemented regulation of online gaming. This regulation ranges from the strengthening of monopolies to implementation of a fully regulated competitive environment. Regulatory acceptance of online gaming is growing across the world, since there is a realisation that a properly regulated environment can contribute to society. Mr Green & Co fully supports and encourages implementation of legislation that supports a trusted and regulated business environment. 26,7% 22,8% SOCIAL GAMING Europe MEA Asia-Pacific Americas 48,9% 2,9% Social gaming is a type of online entertainment that is often played through social networks and is built around social relationships. It takes advantage of the social graph to include real-life friends into the game experience. Social gaming typically features multiplayer and asynchronous gameplay mechanics. SOURCE: MARKETLINE 20 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

21 Share Capital and Ownership Structure GENERAL The registered and issued share capital of Mr Green & Co amounts to SEK 35,849,413, distributed among 35,849,413 shares. According to the current Articles of Association, the maximum capital amounts to SEK 60,000,000 and the maximum number of shares is 60,000,000. The shares are denominated in SEK and have been issued in accordance with the Swedish Companies Act. The Company has one class of shares and the shares are freely transferable. Each share entitles the holder to one vote. Each share confers equal right to distribution of dividends and a possible surplus in case of liquidation. An amendment of the shareholder s voting right or right to the Company s profit requires an amendment of the Articles of Association, which requires resolution at a general meeting of the shareholders. The shares are not subject to mandatory bids, the right to compulsory purchase or right of sale. The shares have not been subject to a takeover bid during the current or previous financial year. The shares in Mr Green & Co are issued to the holder and registered in a computerised account system for registration of shares, which is managed by Euroclear with the postal address: Euroclear Sweden AB, Box 191, SE Stockholm. Accordingly, no share certificates have been issued for the shares in Mr Green & Co. The ISIN code for the shares in Mr Green & Co is SE The par value of each share is SEK Table: Share Capital Development February 2012 Founding 500 April 2013 Split 1:100 49,500 April 2013 Bonus Issue 6,107,335 June 2013 New Issue contribution in kind or set-off 29,692,078 Total Share Capital 35,849,413 DIVIDEND POLICY All shares carry equal rights to dividends. Any person who is registered with Euroclear Sweden as a shareholder on the record date for the dividend shall be deemed authorised to receive dividends. In the event a shareholder cannot be reached via Euroclear Sweden, the shareholder s claim for the dividend amount remains and is solely limited by the relevant statute of limitations. If the limitation period is exceeded, the entire amount will be allotted to the Company. There are no restrictions concerning dividends or special procedures for shareholders residing outside Sweden and payments are made through Euroclear Sweden (or equivalent) in the same manner as for shareholders residing in Sweden. The dividend policy for Mr Green & Co is to pay a dividend and/or execute share buy backs of up to 50 percent of the Group s free cash flow unless such cash is deemed necessary for the fulfilment of the Company s strategy or to secure extra reserves if capital market conditions so demand. In addition, the Board can propose to distribute one-off dividends or execute share buy backs if management and the Board consider that the Company has generated surplus cash that is not required to fund its normal operation, acquisitions or other corporate development projects. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 21

22 OWNERSHIP STRUCTURE The ownership structure of Mr Green & Co as per June 28, 2013 is set forth in the table below: Table : Ownership Structure, directly and through companies and including holdings of close family members Shareholder Number of shares Percent Henrik Bergquist 6, 738, % Hans Fajerson 6,609, % Fredrik Sidfalk 6, 2 1 1, % Mikael Pawlo 2, 009, % Martin Trollborg 1, 566, % Guntis Brands 1, 125, % Tommy Trollborg 1, 013, % Karl Trollborg 983, % Henrik Stridsman 600, % Anette Rasch 532, % Others (approx 740 shareholders) 8, 458, % Total 35, 849, % MANDATES FROM ANNUAL GENERAL MEETING The Board is authorised, on one or more occasions until the next Annual General Meeting, to issue new shares, convertible bonds or warrants totaling an amount that does not exceed the limit determined by the Company for its share capital and number of shares. The authorisation includes the right for the Board to issue these instruments with or without deviation from the shareholders preferential rights. The authorisation shall include the right to issue shares, convertibles or warrants with payment in kind or through right of set-off. The basis for the issue price shall be the share s market value at the time of the issue. The purpose of this authorisation is to increase the Company s financial flexibility. LISTING ON AKTIETORGET The Company has been approved for trading on AktieTorget. Trading in the Mr Green & Co share is expected to commence on or about June 28, The ticker code for the share is MRG. SHAREHOLDER AGREEMENT To the best knowledge of the Board of Directors, there are no shareholder agreements or similar agreements to achieve a controlling influence of the Company. INCENTIVE PROGRAMMES Key employees within the Mr Green & Co Group are granted option schemes, which have not been finalised. For this purpose, the Extraordinary Shareholders Meeting on June 12, 2013 authorised the Board, on one or more occasions, with or without preferential rights for shareholders, to resolve on the issue of warrants with cash payment, or payment in kind or offset, involving an increase in the share capital of not more than SEK 1,000,000 on full exercise. 22 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

23 Board of Directors, Senior Management and Auditors BOARD OF DIRECTORS GENERAL The Members of the Board were elected at the Annual General Meeting on March 22, 2013 for the period until the Annual General Meeting The Board consists of four members. The intention is to appoint at least one additional independent Board member at the next Annual General Meeting. There are no specific agreements between larger shareholders, suppliers or other parties pursuant to which Members of the Board or Senior Management have been elected or appointed. During the past five years, none of the Board Directors or Senior Management has been found guilty in any fraudrelated cases, been involved in any bankruptcy, liquidation or receivership as a member of a company s administration, management or controlling bodies, been subject to official accusations or sanctions by inspection or legislative or designated professional bodies or been prohibited by a court of law to be active as member of a board or management or controlling body of a company. There are no family ties between the Members of the Board and Senior Management stated in the section below. Neither are there any conflicts of interest between these persons or between their own and the Company s interests, other than what is described in the chapter Legal Considerations and Supplementary Information. None of these persons have accepted any restrictions in the right to dispose of their shares in the Company. All these persons can be reached at the address of the Company s head office, refer to the Addresses section. The Company is not obliged to comply with the Swedish Code of Corporate Governance. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 23

24 TOMMY TROLLBORG (born 1939) CHAIRMAN OF THE BOARD SINCE 2012 Mr Trollborg graduated from the Stockholm School of Economics in 1963, with a BSc in Business and Economics. During , he was active as a chartered accountant, CEO and main partner in Wahlbergs Revisionsbyrå, Stockholm. Mr Trollborg was the founder, director and a member of the executive committee of the international group of accountants that now operates under the name of Baker Tilly International until Based in Randogne, Switzerland, Mr Trollborg has been active in several national and international Boards since In addition to his Board positions, Mr Trollborg is an active consultant in the area of finance, M&A and Management & Board issues through his consultancy company Magnolia Consulting Sàrl. Mr Trollborg is the Chairman of the Audit Committee in GGG. Number of shares in Mr Green & Co owned by Mr Trollborg, directly or through companies: 1,013,090 Except from his assignment at Mr Green & Co, Tommy Trollborg has the following assignments and/or is a shareholder (more than 5 percent) in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Biosensor Applications Sweden AB (publ) Sweden Chairman of the Board Fastighets AB Brobyholm Sweden Chairman of the Board Green Gaming Group Plc Malta Board member Magnolia Consulting Sàrl Switzerland Chairman of the Board/Shareholder Mr Green Ltd Malta Board member Promobilia Cursum SA Luxembourg Board member Promobilia Foundation Sweden Board member/secretary general Promobilia Quantum AG Switzerland Board member Provinsor Fastigheter AB (publ) Sweden Chairman of the Board Transferator AB (publ) Sweden Chairman of the Board Åkers Krutbruk Protection AB Sweden Chairman of the Board Biosensor Applications Sweden AB and Transferator AB are listed on AktieTorget. Since 2008, Tommy Trollborg has been active in, and completed, assignments in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Fingerprint Cards AB (publ) Sweden Chairman of the Board WSAB Oy Finland Board member Fingerprint Cards AB is listed on NASDAQ OMX 24 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

25 HENRIK BERGQUIST (born 1973) BOARD MEMBER SINCE 2013 Henrik Bergquist holds a BSc in Electronics and BSc in Graphical Technologies from the Royal Institute of Technology in Stockholm. His Internet career started in 1995 when he co-founded his first Internet consultancy company. From 1996, Henrik worked at Ericsson for three years, where he started project-managing applied research at Ericsson Research Internet Division, and then continued as Project Manager for Internet-related products. In 1999, he co-founded deo.com a pan-european digital music company where he served as Chief Technical Officer until At an early stage of deo.com s development, the business was sold to a publicly traded record company. In 2001, Mr Bergquist co-founded Betsson, one of Scandinavia s leading gambling companies, where he served as both Technical Director and Product Director with overall responsibility for the website and product, and provided extensive hands-on experience. Together with Mr Pawlo and Mr Sidfalk, he co-founded Mr Green in Number of shares in Mr Green & Co owned by Mr Bergquist directly or through companies: 6,738,180 Except from his assignment at Mr Green & Co, Henrik Bergquist has the following assignments and/or is a shareholder (more than 5 percent) in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Drömgården - DreamFarm International AB Sweden Deputy Board member Green Farm Ltd Malta Shareholder Nils-Henrik Investment AB Sweden Board member/shareholder Social Holdings Ltd Malta Shareholder LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 25

26 HANS FAJERSON (born 1965) BOARD MEMBER SINCE 2013 Mr Fajerson graduated from Colby College, Waterville, Maine, USA with a BA in Philosophy and also holds a BA in Mathematics. He is a recipient of the John Alden Clark Prize in philosophy. Mr Fajerson is a private equity investor and a private real estate investor. He served as a director of several London-based property companies until Mr Fajerson has also been a member of the Institute of Directors. In the early 1990s, Mr Fajerson was the Director of Budapest-based Frohburg Union Finance and Commerce Rt, with interests in real estate, insurance and banking in Hungary. Mr Fajerson is a member of the Audit Committee in GGG. Number of shares in Mr Green & Co owned by Mr Fajerson directly or through companies: 6,609,934 Except from his assignment at Mr Green & Co, Hans Fajerson has the following assignments and/or is a shareholder (more than 5 percent) in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Actant AG Switzerland Shareholder Admetos AB Sweden Board member Green Gaming Group Plc Malta Board member Grondwerk Corporation Ltd Anguilla Shareholder Hillside Corporation Ltd Anguilla Shareholder Mossa Corporation Ltd Anguilla Shareholder 26 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

27 FREDRIK SIDFALK (born 1974) BOARD MEMBER SINCE 2013 Mr Sidfalk holds a DIHM in Marketing and Economics from the IHM Business School. He started his Internet career in 1994 as an Internet consultant. In 1997, he co-founded Boxman one of the first high-profile Internet companies in the Nordic region. Two years later, he started deo.com, a pan-european digital music company. At an early stage of deo.com s development, the business was sold to a publicly traded record company. In early 2001, he co-founded Betsson, one of Scandinavia s leading gambling companies, where he served as the Marketing Director and Deputy Managing Director until until he resigned at the end of He co-founded Mr Green in 2007 and has been a member of the Board of GGG since Number of shares in Mr Green & Co owned by Mr Sidfalk directly or through companies: 6,211,787 Except from his assignment at Mr Green & Co, Fredrik Sidfalk has the following assignments and/or is a shareholder (more than 5 percent) in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Drömgården - DreamFarm International AB Sweden Board member Green Farm Ltd Malta Shareholder Green Gaming Group Plc Malta Board member Revolutionary Investment Group in Solna AB Sweden Board member/shareholder Social Holdings Ltd Malta Shareholder LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 27

28 SENIOR MANAGEMENT Mr Green & Co s senior executives are presented below. MIKAEL PAWLO (born 1973) CEO Mikael Pawlo has a solid Internet and open-source background. He was one of the founders of BitoS (the Swedish Association for Content and Service Providers in the Online Market) and co-founded the IT consultancy Municel in 1999, which was later acquired by TietoEnator in He was the founding editor of Internetworld at IDG Sweden. Before joining Mr Green in 2008, he was also a partner in the public relations and corporate communications firm Hedberg & Co. Mikael Pawlo has served on the Boards of Peerialism and Voxbiblica, and is currently a member of the Advisory Board of Load Impact, and Chairman of the Boards of Happy Pancake and SMSgrupp. He is also a member of the Board of FundedByMe. Number of shares in Mr Green & Co owned by Mr Pawlo directly or through companies: 2,009,800 Except from his assignment in Mr Green & Co, Mikael Pawlo has the following assignments and/or is a shareholder (more than 5 percent) in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER 6502 Processor AB Sweden Board member/shareholder Derzhava Holding Ltd Cyprus Shareholder DSRPTV Gaming Ventures Ltd Malta Shareholder FundedByMe AB Sweden Board member Happy Pancake AB Sweden Chairman of the Board SMSGrupp i Stockholm Holding AB Sweden Chairman of the Board SMSGrupp Africa AB Sweden Chairman of the Board Since 2008, Mikael Pawlo has been active, and completed assignments, in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Green Gaming Group Ltd Malta Board member Hedberg & Co Sweden Shareholder Magasinet Neo AB Sweden Board member Mr Green Ltd Malta Board member Peerialism AB Sweden Board member Piggelino AB Sweden Shareholder Remente AB Sweden Shareholder Voxbiblica AB Sweden Board member WeMind AB Sweden Shareholder 28 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

29 MARJATTA SKOGH (born 1948) CFO Ms Skogh graduated from the University of Stockholm in 1984 with a BSc in Economics and Business Administration. Ms Skogh has worked as CFO in a finance company in Sweden and a real estate company in Hungary. Before joining Mr Green & Co AB in 2012, she worked as the Financial Manager at Trio Enterprise AB, where she was involved in thelisting of the company on the Stockholm Stock Exchange (today NASDAQ OMX Stockholm) in 1996, and participated in several M&As and company restructures. Ms Skogh has also been elected as a member of the Board or deputy in several companies in the Trio Group. Ms Skogh is a member of the Audit Committee in GGG. Number of shares in Mr Green & Co owned by Ms Skogh directly or through companies: 33,072 Except from her assignment at Mr Green & Co, Marjatta Skogh has the following assignments and/or is a shareholder (more than 5 percent) in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Mr Green Technology AB Sweden Board member Iacta Marketing AB Sweden Board member Since 2008, Marjatta Skogh has been active, and completed assignments, in the following companies: COMPANY COUNTRY POSITION/SHAREHOLDER Enghouse Interactive AB Sweden Deputy Board member Trio Danmark AS Denmark Board member Trio Norge A/S Norway Board member Mr Green & Co AB Sweden Board member Social Thrills AB Sweden Board member LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 29

30 AUDITORS At the Annual General Meeting of Mr Green & Co on March 22, 2013, Per Nilsson from Baker Tilly Stint AB was re-elected as auditor of the Company. Mr Nilsson became an authorised public accountant in 1989 and is a member of FAR SRS. CORPORATE GOVERNANCE Mr Green & Co is a Swedish public company approved for trading on AktieTorget. The Company s corporate governance is regulated by law, the rules and regulations of the marketplace, the Company s internal guidelines, best practices in the market and the Company s Articles of Association. Companies with shares listed on a regulated market in Sweden must comply with the Swedish Code on Corporate Governance ( the Code ). Since AktieTorget is not a regulated market, Mr Green & Co is not obligated to comply with the Code. However, work has been initiated within the Group with the intention of applying the Code in full by the end of The description below reflects the Company s situation at the time of the listing on AktieTorget. GENERAL MEETINGS The General Meeting is the Company s highest decisionmaking body. The Annual General Meeting is held not later than six months after the end of the fiscal year. Extraordinary General Meetings are normally convened by the Board of Directors of the Company. General meetings, both annual and extraordinary, are held in Stockholm, Sweden. Written notice must be given at least four weeks before an annual general meeting and two weeks before an extraordinary general meeting, unless the agenda includes a proposal to change the article of association in which case written notice must be given at least four weeks before the meeting. According to the Company s Article of Association, notice to attend a general meeting is to be published in the Swedish Official Gazette (Post- och Inrikes Tidningar) and on the Company s website. It will also be announced in Dagens Industri that a notice to attend a general meeting has been issued. Notices include information concerning the place, date and time of the meeting and whether any resolutions are to be proposed. According to the Articles of Association, each share in the Company entitles the holder to one (1) vote at any general meeting of the Company. NOMINATION COMMITTEE The Nomination Committee proposes decisions on electoral and remuneration issues to the general meeting and, where applicable, procedural issues for the appointment of the following year s Nomination Committee. A member of the Nomination Committee represents the interests of all shareholders. In addition to the Chairman of the Board, who shall be a member, the three largest shareholders are each entitled to appoint one member of the Nomination Committee. AUDIT COMMITTEE The role of the Audit Committee is to assist the Board of Directors by assuring the quality of the financial reports. This includes internal control, regulatory compliance, control of reported accounts, control of estimates and other factors that may have an effect on financial reporting. The Audit Committee meets the auditors regularly and assists the Nomination Committee in the election of auditors. At Mr Green & Co, the Board of Directors acts as the Audit Committee. No remuneration has been decided for Audit Committee work during SPECIAL AUTHORISATION UNTIL NEXT ANNUAL GENERAL MEETING The Board is authorised, on one or more occasions until the next Annual General Meeting, to issue new shares, convertible bonds or warrants totaling an amount that does not exceed the limit determined by the Company for its share capital and number of shares. The authorisation includes the right for the Board to issue these instruments with or without deviation from the shareholders preferential rights. The authorisation shall include the right to issue shares, convertibles or warrants with payment in kind or through right of set-off. The basis for the issue price shall be the share s market value at the time of the issue. The purpose of this authorisation is to increase the Company s financial flexibility. 30 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

31 THE BOARD The Board of Directors shall comprise not less than three and not more than ten members, and not more than ten deputy members. The Directors are elected annually at the Annual General Meeting for the period until the next Annual General Meeting. The principle tasks of the Board of Directors include establishing the overall operational goals and strategy of the Company, appointing and evaluating the CEO, ensuring an effective system for follow-up and control of the Company s operations and a satisfactory process for monitoring the Company s compliance with laws and other regulations relevant to operations. Since the Company went public in April 2013, the Board has held seven minuted meetings at which the issues addressed included the listing process, budgets, investments, funding, personnel and contractual issues. The Board of Directors will hold six (6) Board meetings annually at a minimum. REMUNERATION AND BENEFITS REMUNERATION TO THE BOARD OF DIRECTORS IN THE COMPANY The Annual General Meeting on March 22, 2013 resolved that remuneration paid to the Board of Directors for the period until the end of the next Annual General Meeting shall be SEK 200,000 to the Chairman, Tommy Trollborg, and SEK 100,000 to each of the Directors - Henrik Bergquist, Hans Fajerson and Fredrik Sidfalk. The remuneration shall be paid quarterly in arrears. In 2012, no remuneration was paid to the Board of Directors. OTHER REMUNERATION TO BOARD MEMBERS Tommy Trollborg is a Director of the Board of GGG, for which annual remuneration of EUR 20,000 is paid. For consultancy work in Mr Green & Co and its subsidiaries in 2012, Mr Trollborg invoiced SEK 460,800 through his company, Magnolia Consulting Sarl, and EUR 27,051 for Mr Green Ltd. For 2013, Magnolia Consulting Sarl has an agreement with Mr Green & Co to invoice SEK 40,000 per month for consulting fees. Henrik Bergquist and Fredrik Sidfalk are remunerated for consultancy work. In 2012, consultancy fees totalled EUR 676,000, while consultancy fees for the period January- June 2013 were EUR 137,729. Fredrik Sidfalk is a Director of the Board of GGG, for which he receives annual remuneration of EUR 20,000. Hans Fajerson is a Director of the Board of GGG, for which he receives annual remuneration of EUR 20,000. The Directors do not receive any pension benefits or sharebased benefits from the Company. There are no agreements between the Company and the Members of the Board or Management regarding pensions or other benefits payable following termination of employment. REMUNERATION TO SENIOR MANAGEMENT Mikael Pawlo, CEO, has received a salary of SEK 50,000 per month from the Company since May He also receives SEK 10,000 per month as a pension benefit. In 2012, Mr Pawlo s salary from Mr Green Ltd amounted to EUR 263,026 and he invoiced the Group a total amount of EUR 95,326 for consultancy work. For the period January- May 2013, Mr Pawlo invoiced EUR 126,088 for consultancy work. Marjatta Skogh, CFO, was employed in August Her total salary from Mr Green & Co in 2012 was SEK 218,000, including the benefit of a company car. Pension premiums paid amounted to SEK 66,216. In 2012, remuneration for board membership in subsidiaries was SEK 95,000. For the period January-April 2013, the total salary paid to Marjatta Skogh from the Company was SEK 168,000, while Board member fees from subsidiaries totaled SEK 27,500. REMUNERATION TO THE AUDIT COMMITTEE Tommy Trollborg, Hans Fajerson and Marjatta Skogh are members of the Audit Committee of Green Gaming Group Plc. Total fees paid to the Audit Committee for 2012 and 2013 were EUR 100,000. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 31

32 Legal Considerations and Supplementary Information GENERAL Mr Green & Co does not conduct any operations, and only holds shares in other companies. One of Mr Green & Co s subsidiaries is the Malta-registered holding company Green Gaming Group PLC (GGG), which in turn is the holder of the issued shares of the Malta-registered subsidiary Mr Green Ltd. Mr Green Ltd operates online casino and conducts gaming via remote means of communications, such as Internet and mobile. REGULATORY MATTERS Mr Green & Co s indirect subsidiary Mr Green Ltd is licensed and regulated by the Lotteries and Gaming Authority(LGA) in Malta, which is the single regulatory body responsible for the regulation and governance of all gaming activities in and from Malta. Mr Green Ltd holds the following remote gaming licenses issued by the LGA: LGA/CL1/434/2007 issued on December 16, 2009, LGA/CL1/521/2008 issued on January 6, 2010, and LGA/CL1/772/2011 issued on March 21, The LGA licenses authorise Mr Green Ltd to offer its online casino services to end-users through any means of distance communications. Maintaining the existing licenses and/or obtaining similar licenses from the LGA or other licensing authorities in other jurisdictions is considered essential to ensure the continuity of Mr Green Ltd s operations. AGREEMENTS Mr Green & Co has no other agreements than those covering its day-to-day operations, for example, an office lease agreement, employment agreements, Euroclear and Aktie- Torget. DISPUTES Mr Green & Co is not party to any legal or arbitration proceedings that could materially affect Mr Green & Co s financial position or profitability. INSURANCES The subsidiaries of Mr Green & Co have an employers liability policy, a public liability policy and an industrial allrisks insurance policy in place. A public liability policy in case of accidental damage to the visiting offices on Malta of third parties is in place through the lessor. Mr Green & Co is currently in the process of obtaining an insurance policy covering directors and management. RELATED-PARTY TRANSACTIONS The Company or its subsidiaries have service agreements with the related parties below. All service agreements with related parties terminate by the end of RELATED PARTY COMPANY NAME TYPE OF SERVICE Tommy Trollborg Magnolia Consulting Sàrl Consultancy Tommy Trollborg Magnolia Consulting Sàrl Audit Committee Hans Fajerson Magnolia Consulting Sàrl Audit Committee Marjatta Skogh Magnolia Consulting Sàrl Audit Committee Henrik Bergquist Revolutionary Ideas AB Consultancy Fredrik Sidfalk Revolutionary Ideas AB Consultancy Mikael Pawlo 6502 Processor AB Consultancy For remuneration, refer to the chapter: Board of Directors, Senior Management and Auditors. 32 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

33 The Company has related-party relationships with its subsidiaries. Transactions with related parties are priced at market rates. No services have been provided free of charge. The Company has started a project regarding Transfer Pricing matters and plans to have a Transfer Pricing documentation in place before the end of Services sold between the Company and its subsidiaries mainly refer to management fees and consultancy. The Company has not purchased any services from its subsidiaries during 2012 and 2013, but has sold services to its subsidiaries for SEK 2,800,000 in 2012 and for SEK 1,300,000 in 2013 up to and including May. The Group is committed to investing EUR 500,000 in a new online casino managed by the CEO of the Company, of which EUR 200,000 was provided in the second quarter of GGG has a call option to purchase 100 percent of the new online casino until April 2016 for a fixed amount of EUR 500,000 plus a variable fee based on future earnings. The Company has a liability of EUR 1 million to GGG. The Company does not have any receivables from subsidiaries other than running monthly invoices. TANGIBLE ASSETS The Group does not own real estate. The Group owns and leases technical equipment of material importance to its operations; mainly computers and other hardware in its server park. REGISTRATION AND LEGAL FORM Mr Green & Co AB, Corporate Registration Number , is a public limited company registered on February 3, DOCUMENTS KEPT AVAILABLE FOR INSPECTION Annual reports, year-end reports, quarterly reports, press releases, the Articles of Association and other information are available on the Company s website This information may also be ordered from the head office at the following address: Sibyllegatan 17, SE Stockholm, Sweden. INTELLECTUAL PROPERTY RIGHTS Mr Green & Co and subsidiaries hold copyright and other intellectual property rights to the gaming sites (e.g. www. mrgreen.com) and their elements that are developed within the Group. There are provisions in the employment and consultancy agreements to ensure that Mr Green & Co and subsidiaries retain proprietary rights to the developed works. In addition, key trademarks and web domains are held by Mr Green & Co or its subsidiaries. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 33

34 Financial Information GENERAL INFORMATION CONCERNING THE FINANCIAL INFORMATION The financial information in this Memorandum is limited as the Group was created in Prior to the listing of Mr Green & Co, a restructuring of the Group was implemented in order to form the new Group. The Group was created on February 3, 2012 when Iacta Management started its operations. Iacta Management acquired percent of Green Gaming Group Plc (GGG) in December, 2012, and changed the Company s name to Mr Green & Co. In April 2013, Mr Green & Co acquired another percent of GGG, and finally, in June 2013, GGG became a fully owned subsidiary of Mr Green & Co. Today, Mr Green & Co AB is the holding company of the Group with 100 percent ownership of the following companies: Green Gaming Group Plc (GGG), which owns the online casino Mr Green. The online casino is based in Malta and is licensed and regulated by the Lotteries and Gaming Authority of Malta. Mr Green & Co Technology AB, a technical supplier. Iacta Marketing AB, a market research provider. The financial statements below are pro forma, and based on the assumption that the Group has been in operation since January 1, 2012, and its share capital was raised on December 31, The information has been prepared in accordance with IFRS and is based on the audited annual reports for 2012 for the Group companies and the audited quarterly report for Q1, The pro forma statement below for the Group is presented as quarterly accounts as if the acquisition of GGG had been completed on December 31, 2011, and the share capital of Mr Green & Co AB was raised on December 31, 2011, to enable the reader to understand the progression of the Company. The pro forma format is an audited hypothetical statement of the historic performance of the Group as if it had been in existence for the whole period in question. For additional financial information, please refer to the chapter Mr Green & Co AB - Financial History.. ACCOUNTING PRINCIPLES STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU ( the applicable framework ). The financial statements have also been prepared and presented in accordance with the Laws of Sweden, to the extent that such provisions do not conflict with the requirements of the applicable framework, save insofar as such provisions remove the requirement under IAS 27, Consolidated and Separate Financial Statements, of preparing and presenting consolidated financial statements of the Group of which the Company is the parent. BASIS OF PREPARATION The financial statements are presented in SEK. They are prepared on the historical cost basis. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions 34 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

35 are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The Management are of the opinion that the accounting estimates, assumptions and judgements made in the course of preparing these financial statements are not difficult, subjective or complex to a degree which would warrant their description as critical in terms of the requirements of IAS 1 (revised) - Presentation of financial statements. BASIS OF CONSOLIDATION The Group financial statements include the financial statements of Mr Green & Co AB subsidiaries. Intra group balances and transactions were eliminated on consolidation. The consolidation is done according to the purchase method. GOODWILL Goodwill is the difference between the purchase price for shares in a subsidiary and the equity in the purchased company after having allocated the purchase value to the component bought at fair value. Goodwill is not amortized but subject for minimum yearly impairment test. INTANGIBLE ASSET The intangible asset consists of an internally generated website. The work performed to date primarily includes the integration of game providers, integration of payment providers, database improvements and the design of the complete website. Intangible assets are to be amortised over a period of three years. PROPERTY, PLANT AND EQUIPMENT Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided using the straight-line method at rates calculated to write off the cost less residual value of each asset over its expected useful life, as follows: Electronic equipment: -20 percent Office equipment: percent REVENUE Gaming revenues (Game Win) have been recognised on the basis of the total amount wagered on all games less all winnings payable to players, bonuses allocated and jackpot contributions. Other revenue represents non gaming services provided to 3rd parties INVESTMENTS Investments in Subsidiaries Investments in subsidiary undertakings are stated at cost less any impairment value. Investments in subsidiaries are not re-measured after initial recognition. Investments in Associates Investments in associates shall be recognised using the equity method. Under the equity method, on initial recognition the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the investor s share of the profit and loss of the investee after the date of the acquisition. The investor s share of the investee s profit or loss is recognised in the investor s profit or loss. IMPAIRMENT The carrying amounts of the Company s assets, other than investment property, inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 35

36 For assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement unless the asset is carried at the revalued amount, in which case the impairment is treated as a revaluation decrease, to the extent of the credit balance on the revaluation reserve. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash, available balances at banks, balances at payment providers and short-term liquid investments and other investments maturing within 3 month or less. PENSION OBLIGATIONS In Mr Green & Co as well as in the Swedish subsidiaries there are defined contribution pension schemes. This means that the size of the pension will depend mainly on the premium amounts that have been paid in. INCOME TAX Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not be reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised and/or sufficient taxable temporary differences are available. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currencies are converted at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are converted to EUR at the foreign exchange rate ruling at that date. Foreign exchange differences arising on conversion are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are converted using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are converted to Swedish at foreign exchange rates ruling at the dates on which the fair value was determined. When the functional currency of the foreign operations is different from the reporting currency of the Group, the assets and liabilities of these foreign operations are converted into the presentation currency of the Group (SEK) at the rate of exchange ruling at the balance sheet date and, their income statements are converted at the weighted average exchange rates for the year. The exchange differences arising on the conversion are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. 36 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

37 TRADE AND OTHER RECEIVABLES Trade receivables are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for impairment is made when there is objective evidence (such as the financial difficulties of a debtor) that the Group will not be able to collect the full amount due. Impaired debts are derecognized when they are assessed as uncollectible. TRADE AND OTHER PAYABLES Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration paid for goods and services received. FINANCIAL INSTRUMENTS The financial assets of the Group comprise receivables, other debtors, cash and bank balances and balances at payment providers, whereas financial liabilities comprise trade and other creditors. Accounting policies for these assets and liabilities are set out in these Accounting Principle notes. The Group s activities potentially expose it to a variety of financial risks, including currency risk, interest rate risk, credit risk, and liquidity risk. The Group s overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group s financial performance. The Group did not make use of derivative financial instruments to hedge risk exposures during the current year and preceding financial years. Interest Rate Risk As the Company and the Group do not have interest bearing assets and liabilities, the Company s income and operating cash flows are substantially independent of changes in market interest rates. Credit Risk Credit risk arises from deposits with banks plus transactions and deposits with payment providers. The Group does not provide credit to customers as part of the normal process of its business, so the main risks are generated from fraudulent transactions and chargebacks from banks and payment providers. Internal processes and controls are implemented to reduce the risk of fraudulent transactions and chargebacks. The Group limits its risk by ensuring that funds are only placed with and transacted through quality institutions. Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal or stressed conditions, without incurring unacceptable losses or risking damage to the Group s reputation. Fair Values For reporting periods included in the pro forma below, the carrying amounts of financial assets and liabilities approximated their fair value. Currency Risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities which are denominated in a currency that is not the Group s functional currency. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 37

38 Pro Forma Financials INCOME STATEMENT SEK 000s Q1 Q2 Q3 Q4 FY Q1 Game Win 71,266 64,765 81, , , ,901 Other revenue Revenue 71,266 65,365 81, , , ,901 Cost of sales 14,823 12,999 15,319 16,326 59,466 19,821 Marketing 40,007 32,645 25,585 36, ,989 43,037 Operating expenses 20,928 16,073 18,562 21,494 77,058 21,475 EBITDA (4,492) 3,648 21,676 26,187 47,019 24,567 Depreciation & amortisation 2,914 2,509 3,483 4,292 13,198 4,864 EBIT (7,406) 1, ,193 21,895 33,821 19,703 Financial items (151) (5) 4 0 (151) (11) Corporation taxes (1,858) (2,338) (3,370) (1,551) Result of the period (6,800) 1,202 16,340 19,557 30,299 18,141 Year-on-year Game Win 53% 38 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

39 BALANCE SHEET SEK 000s Q1 Q2 Q3 Q4 Q1 Goodwill 682, , , , ,806 Intangible assets 18,345 25,222 30,232 33,540 38,159 Plant & equipment 2,610 2,962 3,718 5,086 5,487 Investments in associated company ,020 Non-current assets 703, , , , ,472 Prepayment 18,856 9,258 3,704 8,923 5,540 Other receivables 2,400 5,735 5,161 3,986 3,894 Loan to asssociated company 0 0 6,000 10,000 4,936 Cash & cash equivalent 34,269 29,919 36,672 65,113 72,993 Current assets 55,526 44,911 51,537 88,022 87,363 Trade creditors 28,222 27,489 14,655 24,181 17,601 Other payables 14,705 12,910 14,575 21,138 20,506 Accruals 14,399 12,113 17,121 22,079 26,113 Deffered taxation (262) (259) (260) 1,545 1,506 Current liabilities 57,064 52,252 46,090 68,944 65,727 Borrowing Non-current liabilities Share capital 35,849 35,849 35,849 35,849 35,849 Share premium 674, , , , ,005 Exchange rate difference (864) (750) 1, (233) Retained earnings (6,769) (5,455) 10,850 30,347 48,488 Equity 702, , , , ,109 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 39

40 CASH FLOW STATEMENT SEK 000s Q1 Q2 Q3 Q4 Q1 Cash flow from operating activities: (7,557) 1,134 18,198 21,895 19,691 Profit/(Loss) before taxation: (7,557) 1,134 18,198 21,895 19,691 Adjusted for: Depreciation and amortisation 2,914 2,509 3,483 4,292 4,864 Net interest income (151) (5) 4 0 (11) Net unrealised difference on exchange 16 (36) (82) Movement in receivables (11,533) 6,264 6,127 (4,044) 3,475 Movement in payables 27,214 (4,812) (6,162) 18,658 (4,768) Taxation (437) 0 Net interest paid (4) (0) 11 Net cash flow from operating activities 11,055 5,059 21,799 40,948 23,182 CASH FLOW FROM INVESTING ACTIVITIES: Cashflows to related companies 0 0 6,000 4,007 4,949 Purchase of fixed and intangible assets 7,019 9,738 9,249 8,967 9,885 Net outflow from investing activities: 7,019 9,738 15,249 12,974 14,834 CASH FLOW FROM FINANCING ACTIVITIES: Movement in shareholders funds Proceeds from issue of share capital Net inflow from financing activities: Net movement in cash and cash equivalents 4,036 (4,679) 6,550 27,973 8,348 Foreign exchange difference (41) (468) Cash and cash equivalents at the beginning of the period 30,274 34,269 29,918 36,672 65,113 Cash and cash equivalent at end of period 34,269 29,918 36,672 65,113 72, LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

41 KEY RATIOS Q1 Q2 Q3 Q4 FY Q1 Cost of sales 20.8% 19.9% 18.9% 16.2% 18.7% 18.2% Marketing 56.1% 49.9% 31.5% 36.5% 42.4% 39.5% Operating expenses 29.4% 24.6% 22.9% 21.3% 24.2% 19.7% EBITDA (6.3%) 5.6% 26.7% 26.0% 14.8% 22.6% Proforma no of shares at period end 35,849,413 35,849,413 35,849,413 35,849,413 35,849,413 35,849,413 EBITDA per share (SEK) (0.13) Earnings per share (SEK) (0.19) Equity per share (SEK) Cash per share (SEK) Equity/Assets ratio 92.5% 93.1% 94.0% 91.5% 91.5% 92.0% FINANCIAL REVIEW GAME WIN (REVENUE GENERATED FROM GAMING ACTIVITIES) Game Win represents bets less winnings, jackpot contribution and free bets (bonuses and free spins). The progression during the period included in the audited pro forma statement, shows the normal seasonal trend for an online casino business. Q had significant underlying growth, which has continued in Q with a 53 percent year-on-yeargrowth. COST OF SALES (CURRENTLY GENERATED FROM GAMING ACTIVITIES ONLY) Cost of sales represents betting duties, royalties to gaming and platform providers, and the net cost of payment processing. These costs are variable depending on business activity and Mr Green & Co continues to benefit from the economies of scale generated from the growth of the business. There will be fluctuation due to one-off items such as supplier gaming mix, exceptional cost of processing with payment providers and similar items. MARKETING EXPENDITURE (CURRENTLY GENERATED FROM GAMING ACTIVITIES ONLY) Marketing expenditure represent traditional marketing activities, affiliate marketing and other internet based marketing activities. In the current phase of the business development Mr Green Ltd which is generating all marketing expenditure at the moment is thriving to allocate 40 percent of Game Win to support future expansion. This target is set on a full year level, so there will be a variance from quarter to quarter. In Q Mr Green achieved a spending of 39.5 percent mainly due to stronger growth than expected. OPERATING EXPENSES Operating expenses represents the administrative overhead in people, infrastructure, advisers, etc. Operating expenses for the Group comprise a combination of costs related to supporting the sales and operation of the online casino Mr Green website and to reviewing new opportunities to support the future expansion of the Group. Over time, we should see improvements in the relative efficiency of Operating expenses. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 41

42 CAPITAL INVESTMENTS Capital investments comprising website and infrastructure development are conducted through a combination of internal (Mr Green & Co Technology AB) and external development activities to support the online gaming site and general infrastructure investment required to operate a business. All development activities related to supporting the online gaming site are capitalised and amortised over the expected useful life of the development. As seen from the above numbers, the Group has and will continue to invest significant resources in technology and website design to ensure that all the businesses are best in class and innovative. During Q1 2013, investments in the website and fixed assets of SEK 9.9 million shows the significant investment being performed and planned for the future. This represents 9.1 percent of Game Win for Q OTHER INVESTMENTS GGG has invested SEK 14.9 million in a social media company through capital and loans to Social Holdings Ltd, an associated company in which GGG holds a percent stake. Further investment is likely to be required before profitability can been achieved. Additionally, the Group has committed to an investment of EUR 0.5 million for the launch of a new online casino. This project is being managed by Mr Green & Co s CEO Mikael Pawlo independently of the Group. GGG has a call-option to purchase 100 percent of the new online casino until April 2016 for a fixed amount of EUR plus a variable fee based on future earnings. CASH FLOW The profitability of the Group, coupled with improved cash flow management that continued throughout 2012 and Q1 2013, ensured that the Group generated free cash flow. This operational cash flow has been used to continue investments in the technology infrastructure supporting the online casino Mr Green, but also to support new ventures, such as a social media company, through the incubation stage. Additionally, in April 2013, the Green Gaming Group was able to pay a dividend of approximately SEK 18.7 million (EUR 2.2 million) to its shareholders. This transaction was performed prior to the purchase of GGG by Mr Green & Co AB. Current cash flow is considered sufficient to support the organic growth of the Company. There are currently no plans to request external funding from shareholders or financial institutions. However, as the Company is constantly reviewing new opportunities within the online gaming sector to expand its current businesses or invest in new opportunities, future funding may be considered. TRENDS There are no known internal trends, uncertainty factors, claims, commitments or events which may reasonably be expected to have a material effect on the Company s prospects, at least in the current financial year. EMPLOYEES On March 31, 2013, 115 people were employed by, or contracted to, the Group to support its various activities. The majority of them are based in Malta to manage the operations of the online casino Mr Green. 42 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

43 The Auditor s Report THE AUDITOR S REPORT ON PRO FORMA FINANCIAL INFORMATION To the Board of Directors of Mr Green & Co AB (publ) THE AUDITOR S REPORT ON THE PRO FORMA FINANCIAL INFORMATION I have audited the pro forma financial information set out on pages for Mr Green & Co AB s (publ) Memorandum dated June 28, The pro forma financial information has been prepared only to provide information about how the acquisition of GGG Plc will impact the consolidated balance sheet for Mr Green & Co AB and the consolidated income statement for Mr Green & Co AB for the period from January 1, 2012 until March 31, The Board of Directors Responsibility It is the Board of Directors responsibility to prepare the pro forma financial information to provide a true and fair view of the financial position of the Mr Green & Co AB group s performance in accordance with accounting principles included. The Auditor s Responsibility It is my responsibility to provide an opinion on the Director s fulfilment of their responsibilities. I am not responsible for expressing any other opinion on the pro forma financial information or any of its constituent elements. I accept no responsibility for any financial information used in the compilation of the pro forma financial information beyond the responsibility that I have for auditor s reports regarding historical financial information issued in the past. Work Performed I performed my work in accordance with FAR s Recommendation RevR 5, Examination of Prospectuses. My work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the historical information, assessing the evidence supporting the pro forma adjustments and discussing the pro forma financial information with company management. I planned and performed my work so as to obtain the information and explanations I considered necessary in order to obtain reasonable assurance that the pro forma financial information has been compiled on the basis stated on pages 34-42, and in accordance with the accounting policies applied by the company. Opinion In my opinion, the pro forma financial information has been properly compiled on the basis stated on pages and in accordance with the accounting policies applied by the company. Stockholm, June 26, 2013 Per Nilsson Baker Tilly Stint AB LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 43

44 Articles of Association Mr Green & Co (corporate registration number ) is a Swedish public company and is governed by the Swedish Companies Act and the Company s Articles of Association. Adopted by the Extraordinary Shareholders Meeting on June 12, (Translated from Swedish) 1 Name The Company s name is Mr Green & Co Aktiebolag. The Company is a public limited company (plc). 2 Domicile The Board of Directors has its registered office in Stockholm. 3 Objects The Company shall through subsidiaries or associates operate within IT, software development, as well as consulting and support operations targeting the gaming industry and related business. 4 Share capital The share capital shall amount to not less than SEK 15 million and not more than SEK 60 million. 5 Number of shares The number of shares of the Company shall be not less than 15 million and not more than 60 million. 6 Board of Directors The Board of Directors shall consist of no fewer than three and no more than ten members and no more than ten deputy members. It is elected annually at the Annual General Meeting for the period until the close of the next Annual General Meeting. 7 Auditors The Company shall appoint no fewer than one and no more than two auditors and with or without the same number of deputy auditors. An authorised Accounting Firm can be appointed. 8 Notice of a general meeting Notice of a general meeting will be announced in the Swedish Official Gazette (Post- och Inrikes Tidningar) and on the Company s website. At the same time, it will be announced in Dagens Industri that notice of a general meeting has been issued. 44 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

45 9 General meetings The general meeting is held annually within six months after the end of the financial year. The annual general meeting shall address the following business: 1 Election of a chairman for the general meeting. 2 Preparation and approval of the voting list. 3 Approval of the agenda. 4 Election of one or two persons to check the minutes. 5 Confirmation that the meeting has been duly summoned. 6 Presentation of the Annual Report and any Auditor s Report as well as where appropriate, the Consolidated Annual Accounts and any Consolidated Auditor Report. 7 Resolution regarding: a. adoption of the Income Statement and Balance Sheet as well as, where applicable, the consolidated Income Statement and consolidated Balance Sheet b. distribution of the profit or loss according to the approved Balance Sheet c. discharge of the Board of Directors and CEO from responsibility as appropriate 8 Determination of the amounts of fees for the Board of Directors, and when required, determination of the remuneration to the auditors. 9 Election of the Board of Directors and auditors, and any deputy auditors. 10 Consideration of any other business that is incumbent upon the general meeting under the Swedish Companies Act or the Articles of Association. At the general meeting each person is entitled to vote for the entire amount of shares owned and represented, without limitation to the number of votes. 10 Right to participate in General Meeting In order to be entitled to participate in a general meeting, shareholders must be registered in a printout or other presentation of the complete share register referred to in Chapter 7 Section 28 Paragraph 3 of the Swedish Companies Act (2005:551), regarding conditions five weekdays before the general meeting, and notify the Company of their intention to attend the meeting not later than on the day stated in the notice of the meeting. This day must not be a Sunday, other public holiday, Saturday, Midsummer Eve, Christmas Eve or New Year s Eve and must not fall earlier than the fifth working day before the meeting. Shareholders may be accompanied at the meeting by one or two persons to assist them, but only if the shareholder notifies the Company of the number of accompanying persons in the manner stated in the previous paragraph. 11 Financial year The Company s financial year is the calendar year. 12 Record day provision The shares of the Company shall be registered in a record day register pursuant to the Financial Instrument Accounts Act (1998:1479). LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 45

46 Tax Issues in Sweden The following is a summary of the taxation consequences that may arise under current Swedish tax regulations due to the holding of shares in the Company. This summary addresses shareholders who have unlimited tax liability in Sweden, unless stated otherwise. The summary is intended as a general guide and is not a complete examination of all taxation issues that may arise in the context. The assessment of the tax situation of each individual shareholder depends partly on the respective shareholder s or owner s specific circumstances. The share has for some shareholders been subject to a share swap, and specific rules may apply for these shareholders, something that is not addressed in this summary. This summary does not, for example, address the special regulations regarding what are referred to as qualified shares in closely held companies or partnership rights owned by trading companies or limited partnership companies or such legal entities whose holding of partnership rights is regarded as current assets in a business operation. Certain tax consequences which are not described may also arise for other categories of shareholders, including investment companies, mutual funds and individuals who are not tax residents in Sweden. Each shareholder is urged to consult a tax advisor for information regarding the tax consequences that may arise as a result of owning shares in the Company, for example, as a result of foreign regulations, taxation agreements or other special regulations. TAX CONSIDERATIONS IN CONJUNCTION WITH THE SALE OF SHARES INDIVIDUALS Individuals and estates of deceased persons who have unlimited tax liability in Sweden are taxed for the entire capital gain as income from capital from the sale of shares. Tax is levied at a rate of 30 percent of the capital gain. The gain or loss is calculated as the difference between the sales profits, after deducting sales costs, and the tax basis. The tax basis is determined in accordance with the average cost method. Capital losses may generally be deducted at a rate of 70 percent. Capital losses on shares may be fully deducted against capital gains that arise in the same year on listed and unlisted shares, and on other listed securities that are taxed as shares. If a deficit arises in income from capital, a tax reduction is allowed at a rate of 30 percent of the amount of the deficit that is less than SEK and at a rate of 21 percent for any deficit in additional of SEK The tax reduction is settled against municipal and national income tax and against real estate tax and municipal real estate charges. Deficits may not be carried forward to a later fiscal year. LEGAL ENTITIES Limited liability companies and other legal entities, except for estates of deceased individuals, are taxed for all income as income from business operations at a tax rate of 22.0 percent. Deductions for capital losses on shares are only allowed against taxable capital gains on shares and other securities that are taxed as shares. In certain cases, these capital losses can be deducted against capital gains on partnership rights within a group of companies, provided that the requirements for group contributions are met. Capital losses that could not be offset in this manner in a particular year may be carried forward and deducted against taxable capital gains on shares and other securities that are taxed as shares in following fiscal years, without limitation in terms of time. Though, for limited liability companies and economic associations, capital gains on the sale of shares may be tax exempt if the holdings are considered to be business related. Capital losses on business related holdings are not deductible. Nonlisted holdings are always considered to be held for business. Listed holdings are considered to be held for business if the holding corresponds to at least 10 percent of the votes or if the holding is essential for the business. The tax exempt status of capital gains on listed holdings also requires that the holdings are not sold within one year from becoming considered to be held for business purposes. Though, capital losses on listed holdings held for business purposes which are held for less than one year are deductible. 46 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

47 TAX CONSIDERATIONS IN CONJUNCTION WITH THE HOLDING OF SHARES TAX ON DIVIDENDS For individuals and the estates of deceased individuals, dividends received are taxed in their entirety at a rate of 30 percent. For legal entities, except for estates of deceased individuals, the tax rate is 22.0 percent. For limited liability companies and economic associations, dividends on holdings for business purposes are tax exempt. The tax exempt status of dividends on listed holdings also demands that the holdings are held for a continuous period of at least one year from becoming considered to be held for business purposes. The requirement for the holding period does not necessarily have to be fulfilled at the payment date for dividends. Though, if the holdings are sold before the holding period requirement is met, dividends paid out may be included for taxation in a following fiscal year. SHAREHOLDERS WITH LIMITED TAX LIABILITY IN SWEDEN Shareholders who are not liable for tax in Sweden are normally not taxed in Sweden for the sale of Swedish shares, subscription rights or warrants. Even though shareholders who are not liable for tax in Sweden are normally not taxed in Sweden for the sale of Swedish shares there is an exemption in respect of individuals who used to be liable for tax in Sweden due to being resident or having their habitual abode in Sweden. According to the so called 10 year rule Sweden may tax shareholders for the sale of Swedish shares up to 10 years after the move from Sweden. The time may be shortened according to the tax treaty entered between Sweden and the country the individual has moved to. Foreign legal entities are normally not liable for tax in Sweden for capital gains on shares, subscription rights and warrants as long as the capital gain is not attributable to a permanent place of business in Sweden. In the case of permanent places of business in Sweden, the new rules regarding tax-exempt capital gains and non-deductible capital losses apply, although there are certain limitations. For shareholders who are not domiciled in Sweden for the purpose of taxation, Swedish witholding tax is normally payable on all dividends from Swedish limited liability companies at a rate of 30 percent. However, this tax rate is generally reduced via tax treaties that Sweden has with other countries in order to avoid double taxation. The shareholder may also be liable for tax in the country in which the shareholder is domiciled. Should there be a tax treaty situation this needs to be handled by the tax agreement. LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 47

48 Addresses MR GREEN & CO AB Sibyllegatan 17 SE Stockholm Sweden AUDITORS Per Nilsson Baker Tilly Stint AB Kammakargatan 7 SE Stockholm Sweden LEGAL ADVISOR Advokatfirman Fylgia Nybrogatan 11 Box SE Stockholm Sweden 48 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

49 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 49

50 50 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB

51 LISTING MEMORANDUM, JUNE 2013, MR GREEN & CO AB 51

52