Thank you, operator. Welcome, everyone, to the presentation of Evolution's year end report 2018. My name is Matti Carlison, and I'm CEO of Evolution Gaming. And with me today, I also have CFO, Jacob Capa. As always, I will start by giving some comments of our performance in the quarter.
I will then hand over to Jacob for a closer look at financials. And after that, I will hand off with an outlook, this time, 2019 in focus followed by questions. Next slide, please. I'm very happy to conclude a strong end of 2018 and an overall strong year for evolution with many strategic achievements such as building Georgia, launching Light in roulette, expanding in New Jersey, expanding in Canada, continue to increase the gap to our competitors and reaching the milestone of 550 tables to mention a few. It's simply been a fantastic year full of hard work.
I want to take this opportunity to really highlight the thousands of young persons in evolution, which is built off, who is together with management, making all of what you see in figures and products possible. Evolution's core is built of a huge desire to win and to constantly move the bar to the next level. Yes, I'm proud and ever so paranoid. Looking at the Q4, we continue to work with the expansion in our studios to meet market demand as well as our intense focus on product innovation. The hard work is reflected in the Q4 numbers, with a revenue growth of 38% and EBITDA increase of 40% and EBITDA margin of 45% and an EBIT increase of 42%.
Last time we talked, we had 5 on the tables live, and now we have added just 50 more. It's a significant leap in the single quarter, and we continue to see high demand going forward. The margin was slightly strengthened compared to the last quarter, supported by our ongoing work to optimize all tables that have been launched during the year. In the quarter, we carried out our 1st ever acquisition. It's a strategic move that will further extend our presence in North America and provide more resources for continued growth.
We are always interested in value accretive acquisitions, and we will continue to look for new and right targets. However, organic growth through operational excellence and product innovation will continue to be the absolute main priority. During the quarter, we worked intensely with board preparations for year additions of ICE, which was held 2 weeks ago. You can see an image of our stand in the slide. I can't put words on how proud I am of the range of new games that will be launched during the year.
I will talk some more of them later in the presentation. After year end, we have also signed contracts with Lot of Quebec, which is our 2nd customer in Canada that will be launched from our studio in Vancouver. Quebec is the 2nd largest province in Canada, and we will initially serve its mostly French speaking players with 6 dedicated payers. We also signed DraftKings and went live with ATG and Saksen Steel in the beginning of Q1 2019. Overall, we have been off to a strong start in Q1.
We'll get back to an outlook later in the presentation. I should also mention that the Board proposes a dividend of €1.20 per share, equivalent of 52% of the net profit in 2018. Next slide, please. That spot is an indicator of activity in the dilution network, and we saw a healthy growth of 57% in Q4 compared to last year. The reason for the growth being higher than revenue growth is that our latest games like Lightning or Lass attract smaller and softer players and more numerous players.
It's a proof that our strategy to expand to new player types is succeeding. Next slide, please. As we expand our operations, we need more talented people, and the recruitment pace remained on a high level in the quarter. As previously, we have seen the largest increase of people in our studio in Georgia, but we also continue to recruit in other markets. You can see However, at the current pace, we have already passed the 6,000 mark in Q1, an astonishing number actually.
Next slide, please. Looking back at 2018, we have successfully launched 3 studios. Our new central hub in Georgia, which now is our 2nd largest studio after last year our studio in New Jersey, where we already have several operators live and are planning for further expansion and not to forget our studio in Canberra, which went live in January last year and that now serves 2 province run operators. With the studios, we can cater for further growth, both in North America and Europe. However, as we indicated already in the last report, we have also identified the need to expand our presence in Malta, where all international dealers' built type teams are located.
We have now decided to open a new, larger studio there in 2019. In that context, we can mention the Swedish regulation just came to, in fact, and we now see a growing demand for Swedish speaking tables. We now we know by experience that the regulated markets drive the interest in bauxitecnu, thanks to its local look and feel And the possibility could operate as differentiated themselves in the native language. We believe this will continue to be the case as more markets regulate going forward. Next slide, please.
Against our markets in the quarter, the Nordics showed particular strength growth with the rest of Europe. At the same time, UK continues to be a bit slow due to the largest regulatory requirement. However, UK remain our largest market, and we do not only serve online operators, but also having a growing portfolio of land based casinos among our customers. Growth in Rest of the World was somewhat lower in the quarter, mostly related to Asia. North America continued to grow at a good rate.
Next slide, please. If I can single out the most exciting slide in this presentation is this one. I hope no one has missed our extensive lineup of new games that was revealed at IS 2 weeks ago. The best of it all, this is not just new games among hundreds of new games that are the industry creates every year. I truly believe that we are on track to redefine Live Casino as we know it.
Both Monopoly and Deodor Nodie Live are great examples of this. We have created live game shows that are open for anyone to participate at any time. And our ambition is to deliver such level of entertainment that you actually want to watch the games even if you wouldn't participate yourself. We're also, for the first time, introducing dice games in our portfolio, which is a long overdue and also category which we believe has a global appeal. Already in the last report, we talked about the big success of Infinite Blackjack, and it's now live with several European operators.
The reception has been extremely positive. And we are proud to say that the cable is already the most popular blackjack cable in the world by pay accounts. With those 10 year gains, we are now moving into softer segments of the market and by that, expanded into soft segment. This further increased our market in a very positive way. Of course, in all this excitement, it's important to underline that popularity of the game does not come by itself.
Since many sizes are yet to be launched, it's too early to say how large they came to come, but we look upon them with confidence. Now I hand over to Jacob for some look at our financials. Next slide, please.
Thank you, Martin, and good morning to all of you listening in. Just to wrap around the slide financial development. As Martin just mentioned, we had a very good finish to the year, is reflected also in the financials. The blue bars in the chart show that revenue for Q4 is also €70,200,000 That's up from €50,700,000 in the same quarter last year for a growth rate of 38% year on year. Both gaming volumes and demand for new tables have been strong.
We closed the year with 550 live tables. Also, as mentioned just a few minutes ago, we have a very strong pipeline of new games coming to market in 2019, mainly aiming to attract new players to the live segment. But also as we see in the figures of 2018, there's continued very good underlying growth in the core products. Moving on, EBITDA totaled €31,600,000 in the 4th quarter. That's an increase of 40% compared to Q4 2017.
EBITDA margin is 45% in the quarter, maybe slightly better than my own expectation from 3 months ago, and we ended the full year at just under 44% SG and A margin, which is in line with the guidance we gave at the beginning of this year or beginning of 2018, I should say. For 2019, our expectation is to improve margin compared to 2018. We have stated a range of 44% to 46% in the year end report as a guideline for EBITDA margin for the full year 2019. This includes a positive effect from the move to IFRS 16, which means that roughly EUR 2,300,000 of lease expenses that 2018 resided within operating expenses will move to depreciation in 2019. So that will help EBITDA some, while EBIT will be more or less unaffected.
It also includes some pressure on group EBITDA margin from the addition of E2G 2019, which will have a lower margin initially. A couple of moving parts, but more or less offsetting each other as it looks right now. There will be many other changes as the year goes on, and we still see variation quarter to quarter as it's natural for our business and as we've seen in the past. In summary, we think we can improve margins compared to 2018. We will, of course, share our view on the developments during the year and trade gives continuous guidance on where we see margins in the short term.
As a lot of talk about margins, it is important, but as Martin has mentioned many times, we will prioritize top line growth over margins if there is such a trade off, and that's the valid statement also for 2019. Operator, let's move to the next slide. Looking at the more detailed P and L, we can see again revenues for the 3 month period October to December totaled SEK 70,000,000. For the full year 2018, revenues amounted to SEK 245,000,000. That's an increase of 38% compared to 2017.
During 2018, we have added SEK 67,000,000 in revenue compared to the previous year, which is more than we've ever done before. But as the date grows, the percentage does come down a bit percentage growth does come down a bit in 2018 compared to 2017. Moving down in the P and L. Personnel expenses totaled €27,000,000 in the quarter, and that's up 35% compared to the same period last year. Increase in stock is mainly driven by increase in new tables.
Also, the full year increase is 35% in the when it comes to personnel expenses. Depreciation is €4,800,000 in the quarter, increasing 27% compared to previous year, slightly higher increase, 32% for the full year. Other expenses include, among other items, rent, consumable equipment, consultants, and it's up by almost €4,000,000 compared to the same period last year, that's an increase of 45%. Coming up, total operating expenses increased by 36% year on year in the 4th quarter and 40% comparing to full year 2018 into 2017. We have had a year with 3 larger studio build projects, and that drives costs.
Large part is capital expenditure, but it also affects the P and L. Tax for the period includes some one time effect at the end of the year and low at €1,200,000 Best indication going forward is the full year tax rate of about 7%. All this sums up to profit for the period of €25,500,000 equal to an earnings per share of €0.70 per share and for the full year €2.29 per share. We'll go to the next slide, please, showing cash flow and financial resources. To the left in the slide, we have a chart showing capital expenditure.
CapEx in tangible assets, that's mainly our new studios, amount to just over EUR 3,000,000 in the quarter. For the year, it's almost €18,000,000 The main projects are the studio built in Vancouver, Dbilisi and New Jersey that we have talked about all through this year. Looking ahead to 2019, we see a similar level of investment in absolute numbers. However, as the share of revenues will be lower. The main projects this year 2019 are the new Souda in Malta that we talked about, preparing for further expansion in Tbilisi and most likely also Souda in Pennsylvania during the year.
Investment in intangible assets is mainly related to development of new games and features to platform, Has been fairly stable for each quarter this year, and the underlying number it so was in Q4 is around €3,000,000 Posting the figure in Q4 is a reclassification of seats paid earlier related to licenses for some of the newly launched games. This was previously booked as financial assets, but has now been moved to intangibles as the games are moving into production. There was no cash flow effect in the quarter, but it increased intangibles. In the middle of the slide, we show cash flow. Operating cash flow is EUR 22,000,000 at quarter.
Cash conversion for the full year is 66%. That's an improvement from 2017. And to the right in the slide, if you look at the balance sheet, it shows a continued strong financial position. The Board is proposing, as Martin mentioned, the Board is proposing to the AGM to pay, it would be €43,200,000 of the cash as a dividend, equaling €1.2 per share, the payout ratio of 52% of net profit in line with our policy of a 50% payout. That would be under my prepared comments.
I'll hand back to you, Martin, and we'll take questions after that.
Thank you, Jacob. Let's close this up by looking into 2019. With half of the first quarter gone, we can say that we have seen a good start of the year. And we see continued good demand for tables and environments going forward. I'm happy with this.
Also happy to announce the new major clients such as DraftKings, ATG and TransCasteele all live during January. We will, as already stated, launch a new studio in Malta during the year, and we expect investment levels to be on par with 2018 in absolute numbers. Our key focus remains on strengthening our market leadership and drive the live casino industry forward. I think that we have managed to increase the gap to completion in 2018, and we are in a good position to continue on that mission this year, especially looking at the new TAN game that we just launched at ICE. In this context, I would like to thank all Evolution employees, customers and users and our shareholders for a fantastic year, and we look forward to what the future holds.
Thank you all for listening. Now let's move to questions.
First question is from the line of Rasmus Enberg from Handelsbanken. Please go ahead. Your line is open.
Yes. Hi. Good morning and congratulations to another strong report.
Thank you very much.
Can I ask you two questions? Firstly, just trying to understand the buyback mandate. Why would you choose a buyback mandate rather than sort of a straightforward dividend? What are your thoughts around that? That's the first question.
Okay. We can handle that right away and got the second question after that. The board is proposing to the AGM to get such a mandate. We haven't had that in the past. It's that it will be, of course, further detailed in the notice to the AGM.
But I would say it does give a little bit more flexibility both in M and A situations, both in shifts in capital to owners. And we also have an outstanding incentive program where we will issue new shares or there's a possibility to deal with that. So it does give a little bit more flexibility, but that's kind of the thinking.
Okay. And then my second question was if you could sort of outline how your business in the U. K. Is performing, how you see the market? Just are we sort of leveling out in terms of the headwind from stricter enforcement?
Or is there more to come in that? What's your take on that?
It's, of course, very hard to look into the European market 2019. We see a slight improvement during Q4, and we are hoping for a better environment and a clearer picture of UK during 2019. So our hopes are that it would be coming back to a little bit more normal with a little bit more healthy growth, but we don't have any clear view on that.
Okay. Can I ask you one question? I don't know if you feel like answering it, but are you seeing growth in Sweden as we speak?
We won't comment on the actual growth in year, but we have started well, but after the launch of our new operators, we went live like of the 12 in the New Year's Eve. And we're happy with the start so far.
And next question is from the line of Erik Molberg from ABG. Please go ahead. Erik, your line is open.
Hi, Erik. Good morning. Hi Erik. Congratulations on a strong report. Thank you.
First question, in regards to your EBITA guidance, could you elaborate a bit more on this and how you will achieve it? I mean, we will continue to see expansion in North America. And I also assume that the likes of Svenska Spier would like to increase its amount of dedicated tables. On top of this, we also have the acquisition of Etsugi, which appears to be a low margin business.
We see that we have had an expansion year during 2018 with mixed heavy investments. And the major driver for our coming, as we believe, stronger margin will be that we will efficiently use these investments that we have done and get leverage on those.
Okay. Got you. And also in regards to other receivables, it appears to be up over 100% quarter on quarter. What is the main driver behind this?
There is an increase in the countercyclical in the quarter. I would say still kind of a normal fluctuation. We had higher levels earlier this year, and as we've talked about in this testing, we've kind of worked continuously to push that down. So it's that trend with declining receivables is sort of broken in the quarter, but we're still in a good position and a lot better than we were in the beginning of the year.
Yes, absolutely. But I'm not talking about accounts receivable. I'm talking about other receivables because, let's say, a significantly spike from Q3 to Q4. What's the main driver behind this?
Let me look into that, Eric, and get back to you on that. Okay. Let me get back to you on that. 100% quarter on quarter.
Next question is from the line of Oscar
A few questions for me. First of all, just regarding your margin guidance. You mentioned that you will optimize the expansion from last year and use that. Can you say something about the excess capacity in your current studios?
We are constantly tuning that, and we are also expanding the capacity capacity as we speak in Georgia. So that's continuously. We stated earlier that, for example, Georgia, which is the main delivery hub right now, will deliver capacity during 2 to 3 years, which of them 2 years would be remaining. I would stick to that. So when it comes to the major deliveries, it's in that range.
Other studios are in good shape and have the excess capacity that we see that we have a need for. And beyond that, also the possibility to expand further.
Great. And you talked a bit about North America and New Jersey, some quite exciting clients there. What do you think about the outlook for North America and Live?
I think that the outlook for North America and Live in the long run is fantastic. I think that U. S. Will become as big market as Europe or in that range, but it will take time. We already now see that Pennsylvania is pushing a little bit of time lines and other and it's very unclear when different other states would regulate.
In the long run, it will be a fantastic market for life, but it will take time.
Got it. And I mean very impressive showing at ICE! I think a few games that look very interesting. Thank you. What games do you think will have the largest impact?
Just, I mean, based on your geographic exposure, which one do you think yourself will be the most important one in the next few years?
It's a very good question. And of course, but hard to answer. I mean, we all have our favorites. But the Monopoly game, which is a true new game with such fantastic rich user interface with 3 d animations and all multiple RNG elements together with life is, of course, a fantastic thing. For a number of players, it will be the game to play.
Other games like dealer Nordil, more game show like, attracts different types of persons, fantastic games. The studio is one of the most complex that we have ever made, and that is thrilling in itself. But then you also have Dice Games, which is sort of amazing games for a large public of players that hasn't been available in that. So honestly, it's up to you to pick 1.
If you're asking him to pick his favorite child, yes, that's not going to get an out there.
Got it. Thank you. Well, I have my own favorite, so we'll see. And final question for me and the one that has to be asked. I think Rest of World has shown really, really strong momentum over the past quarters sequentially.
And this year this quarter, it was quite flat. Can you mention can you talk a little bit about the dynamics there? And if anything has changed in certain markets? Or what the flat development come from?
Other parts of the business is growing fast. That's also one way of looking at it. So we are growing more or less everywhere. And we have this strategy or tactic that we are following the European license operator in Croatia, and we do so. And we continue doing that.
And it will fluctuate a bit, and some quarters will be strong and others less so.
Got it. That's it for me. Thank you.
Thank you very much.
Next question is from the line of Richard Engberg from Erik Pending Bank. Please go ahead. Your line is open.
Good morning, guys. Good morning. Good morning.
I have a question regarding the absolute number of new tables during 2019. Is it fair to assume that it will be the same as during 2018? Will it be more? We continue to see high demand from our customers of papers. Papers are continuously being filled and gives good return.
We're not guiding on any absolute numbers, but as the demand continues, we are fighting to always deliver what our customers' needs. So that's the answer for that.
And the next question is a follow-up from Erik Molchan from ABG. Please go ahead. Your line is open.
Hi, guys. Just a quick follow-up question here. In regards of the statement that you're following licensed European operators into Asia, do you mean licensed European aggregators? Or do you mean actual operators?
We have both platform aggregators as customers, which are licensed in Europe as well as operators. And in that, we don't make that distinction that it's either or.
Okay. Got you. But are you aware of all the operators that your aggregators integrate your games on?
We rely on that the regulator in Europe sees that each operator and platform is performed accordingly. And in that sense, their operators are, in turn, regulated in the right way. We don't follow each and every brand name or operator that the platform or other have, no?
Okay. But do you know who your 10 largest operators in Asia are as of right now?
We don't go into details to disclose which are biggest in any of the markets.
Okay. Thank you very much, guys. That's all for me.
Thank you. And
there are currently no further questions
Thank you very much for everyone listening and following up. With that, I would like to conclude this Q4 report from evolution, which I think was good. Thank you very much.