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LeoVegas AB Q3: Quarterly report 1 July– 30 September 2020

George Miller

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LeoVegas AB Q3: Quarterly report 1 July- 30 September 2020
Reading Time: 4 minutes

 

THIRD QUARTER 2020: 1 julY–30 september

  • Revenue increased by 1% to EUR 88.9 m (88.2). Organic growth in local currencies was 2%.
  • EBITDA was EUR 11.9 m (12.7), corresponding to an EBITDA margin of 13.4% (14.4%).
  • The number of depositing customers was 438,691 (347,464), an increase of 26%.
  • Earnings per share were EUR 0.04 (0.05) before and after dilution, while adjusted earnings per share were EUR 0.08 (0.09).

Events during the quarter

  • GoGoCasino and Livecasino.com launched in Finland. An international launch of both brands is in progress.
  • Operations in Sweden have been affected by the temporary restrictions that were introduced on 2 July as a result of Covid-19
  • LeoVegas increased its ownership in the e-sports betting operator Pixel.bet to 85% from 51% previously.
  • Operating profit for the quarter includes costs of EUR 0.5 m in organisational streamlining and optimisation measures. Yearly net savings from these measures is expected to total EUR 1.5 m starting next year.

Events after the end of the quarter

  • Preliminary revenue in October amounted to EUR 33.0 m (26.0), representing growth of 27%.
  • Royal Panda has relaunched in Finland on the Group’s proprietary technical platform.
  • LeoVegas has launched Bingo as new product category.
  • Ahead of the forthcoming regulation of the German market, effective 15 October a number of changes have been made that affect the customer offering. This had a slight negative impact on revenue in October. LeoVegas expects to receive nationwide licences for the German market once they are available.

 

COMMENT FROM GUSTAF HAGMAN – GROUP CEO

THIRD QUARTER 2020
Once again, we have shown our ability to quickly adapt to new, external circumstances, such as those related to the continuing pandemic and the constant regulatory changes in our various markets. During the third quarter we maintained a high pace of innovation and investment, which is strengthening our long-term position and growth prospects.

During the quarter our customer base again reached a new record level. The number of depositing customers grew 26% compared with the same period a year ago, which confirms the strong development of our business. This is partly attributable to the ongoing structural shift from land-based gaming to online, but above all to our focus on creating the best product and experience for our customers. We continue to optimise scalability and reduce complexity in the organisation. During the quarter, among other measures we realised synergies from previous acquisitions and instituted a clearer organisational and Group structure. This has led to a slight level of staff redundancy, and operating profit was charged with EUR 0.5 m for measures coupled to this. At the same time, we estimate that yearly net savings from these measures will amount to roughly EUR 1.5 m starting with next year. Our efficiency improvement work equips us for continued profitable growth and makes us – combined with greater diversification of the revenue base – more resilient to rapid fluctuations in individual markets.

MARKETS
We had a favourable development in most of our markets during the quarter, with our growing customer base as the main driver. Many markets had double-digit growth compared with the same period a year ago.

In Sweden we are seeing a troubling development in which the unlicensed market continues to grow unhindered. A growing number of operators without licences are actively targeting Swedish players, including those who have been barred by the self-exclusion tool Spelpaus. This has been confirmed by, among others, several organisations that provide help to people with a gambling problem. These organisations have noted that the majority of those seeking help are playing with the unlicensed operators. The problem is big and is shaking the foundation of the entire Swedish licence system. Quick and strong measures are now needed by Swedish politicians and authorities to ensure a well-functioning Swedish gaming market.

In Germany the federal states have agreed to introduce a licence system for gaming, which is expected to be implemented during the second half of 2021. We are looking forward with confidence to Europe’s largest market finally being regulated. Ahead of implementation of the licence system, it is expected that operators will carry out certain limitations in their respective customer offerings in advance. LeoVegas has already begun implementing such limitations, which will initially have a negative impact on revenue. Details on regulation of the German market are provided in the Legal update section in this report. LeoVegas today has a licence in the German state of Schleswig-Holstein and expects to receive nationwide licences once they are available. Germany generated approximately 17% of the Group’s total revenue during the third quarter.

technology and products
The quarter was intense for our technology and product organisation, with the completion of a number of major projects. For example, we implemented the German regulatory requirements on short notice and launched the GoGoCasino and Royal Panda brands in Finland on our proprietary platform. We also are seeing higher demand for broader entertainment games among our players and therefore recently launched our Bingo product.

comments on fourth quarter
Preliminary revenue for the month of October amounted to EUR 33.0 m (26.0), corresponding to annual growth of 27%. The changes introduced in the German market on 15 October have had a slightly negative impact on revenue.

With a positive start to the fourth quarter, a record-large customer base and many exciting initiatives I am looking forward to a strong end to the full year.

Presentation of the report – today at 09:00 CET

  • To participate in the conference call, and thereby be able to ask questions, please call one of the following numbers: SE: +46 (0) 8 50 69 21 80, UK: +44 (0) 20 71 92 80 00, US: +1 63 15 10 74 95, Confirmation code: 2874453 or join at the web https://edge.media-server.com/mmc/p/budae7ar

Industry News

Gaming Realms Signs Licensing Agreement with Pragmatic Play

Niji Narayan

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Gaming Realms Signs Licensing Agreement with Pragmatic Play
Reading Time: < 1 minute

 

Gaming Realms has signed a licensing agreement with Pragmatic Play to produce Pragmatic Play-themed Slingo games.

Under the terms of the agreement, Gaming Realms is to license market-leading brands from Pragmatic Play’s expansive game portfolio, including Sweet Bonanza and Wolf Gold, to create Slingo games.

Michael Buckley, executive chairman of Gaming Realms, said: “This licensing partnership with Pragmatic Play opens up a range of cross-sell benefits to both parties. The collaboration between two organisations with a key focus on content innovation in the digital space is truly exciting.

“Pragmatic Play creates engaging and immersive gaming content that fits perfectly with Slingo; we’re hoping this announcement should excite both operators and players.”

Yossi Barzely, chief business development officer at Pragmatic Play, said: “Creating memorable gaming experiences is a priority for us and Gaming Realms has an excellent reputation through its Slingo portfolio.

“We have an extremely positive feeling about the potential for Pragmatic Play-themed Slingo games and are eager to see this partnership realise its potential.”

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Latest News

Betway and Surrey CCC announce partnership

George Miller

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Betway and Surrey CCC announce partnership
Reading Time: 2 minutes

 

Global online betting and gaming company Betway and Surrey County Cricket Club are proud to announce their new partnership agreement.

As one of the leading counties in English cricket, Surrey showcases some of the best international and English cricket talent at the globally renowned Kia Oval. Producing the likes of Rory Burns, Ollie Pope and Jason Roy, this announcement will see Betway gain access to Surrey CCC talent.

The agreement will also see venue branding at all domestic and international matches, as well as the bookmaker’s logo on all Vitality T20 Blast shirts.

Joining Betway’s impressive cricket portfolio which already includes Cricket South Africa, Cricket West Indies and Kevin Pietersen, this announcement solidifies the brand’s status as the leading online bookmaker within cricket globally.

Anthony Werkman, CEO of Betway said: “We are extremely happy to be announcing our partnership with the Surrey County Cricket Club. It enforces our continued commitment to cricket and we can’t wait to watch the team compete in the Vitality T20 Blast, LV= Insurance County Championship and Royal London One Day Cup.”

Kevin Pietersen, Brand Ambassador for Betway said: “It’s great to see Betway and my old county Surrey going into partnership. I had a great time at the Oval. The atmosphere there is fantastic and always helps to make the cricket an exciting spectacle.

“Surrey are competing for three different county titles, as well as hosting the fourth match of a blockbuster Test series between England and India. It looks set to be a memorable summer of cricket.”

George Hampson, Head of Corporate Sales at Surrey County Cricket Club and The Kia Oval, said: “As we look forward to a hugely exciting season at The Kia Oval we’re very happy to be partnering with Betway, one of the UK’s most exciting and innovative betting companies.”

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Australia

Star Entertainment Submits Proposal to Merge with Crown Resorts

Niji Narayan

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Star Entertainment Submits Proposal to Merge with Crown Resorts
Reading Time: 2 minutes

 

Australia’s Star Entertainment Group has submitted a conditional, non-binding, indicative proposal to merge with Crown Resorts.

According to details released via the ASX, the proposal values Crown’s shares in excess of AU$14 per share – exceeding the value put forward by competing bids in recent weeks which value Crown at closer to AU$12 per share.

Those competing bids include a revised offer from American multinational private equity and hedge fund giant The Blackstone Group, received over the weekend, which increases its bid from an original AU$11.85 per share to AU$12.35 per share.

US global asset management firm Oaktree Capital Management L.P. has also proposed a AU$3 billion offer to acquire the 37% stake in Crown currently held by James Packer’s Consolidated Press Holdings.

However, Star has outlined its case for a merger, with the offer representing a share exchange ratio of 2.68 The Star shares per Crown share with a cash alternative of AU$12.50 per Crown share for up to 25% of Crown’s issued share capital.

“Based on recent trading values of The Star and the substantial value that would be unlocked by a merger, The Star estimates its pro forma share price to be more than AU$5 per share, implying potential value of the Scrip Consideration in excess of AU$14 per Crown share,” it said.

The Star said it believes a merger represents a “compelling value proposition for all shareholders by creating a national tourism and entertainment leader with a world-class portfolio of integrated resorts with enhanced scale and geographic earnings diversification, significant balance sheet strength and free cash flow generation.”

It would also allow for AU$150 million to AU$200 million in cost synergies per annum with an estimated net value of AU$2 billion.

“A merger of The Star and Crown would result in significant scale and diversification and unlock an estimated AU$2 billion in net value from synergies,” Star Chairman John O’Neill said.

“With a portfolio of world-class properties across four states in Australia’s most attractive and populated catchment areas and tourism hubs, the combined group would be a compelling investment proposition and one of the largest and most attractive integrated resort operators in the Asia Pacific region.”

According to Star, a merger would also open the door for potential sale and leaseback opportunities on some of the group’s enhanced property portfolio – leaving the door open for the likes of Blackstone and Oaktree to acquire assets in the future.

Crown said it has not yet formed a view on the merits of the proposal and will commence an assessment process on its merits.

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