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LeoVegas AB Q4: Year-end report 2020

George Miller

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LeoVegas first gaming operator in Google Play Store
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“Yet another record year for LeoVegas with a strong close” – Gustaf Hagman, Group CEO

fourth quarter 2020: 1 october–31 december        

  • Revenue increased by 13% to EUR 98.4 m (87.1). Organic growth in local currencies was 14%.
  • Adjusted EBITDA was EUR 11.5 m (9.2), corresponding to an adjusted EBITDA margin of 11.7% (10.6%). Reported EBITDA includes EUR -3.5 m (5.3) in items affecting comparability.
  • The number of depositing customers was 461,983 (372,032), an increase of 24%.
  • Adjusted earnings per share were EUR 0.08 (0.06).

Events during the quarter

  • LeoVegas was the first company in the gaming industry to offer payments via Open Banking.
  • During the quarter the Group’s unique and record-large jackpot was launched under the name LeoJackPot.
  • LeoVegas secured long-term and diversified financing through a combination of a bank credit facility (RCF of EUR 40 m) and a bond issue of SEK 500 m under a total framework of SEK 800 m.
  • During the quarter, LeoVegas repurchased its own shares for approximately EUR 5 million.
  • Ahead of the forthcoming regulation in Germany, a number of changes were implemented. This led to lower revenue during the quarter, with the greatest effect during the month of December.
  • LeoVegas has changed its interpretation of the calculation of gaming taxes in Denmark for earlier periods. This resulted in a self-correction, and a one-off cost of EUR 3.5 m has been charged against EBITDA.
  • Decision has been taken to migrate the Royal Panda brand to the Group’s proprietary technical platform.

Events after the end of the quarter

  • Preliminary revenue in January amounted to EUR 32.5 m (29.9), representing growth of 9%.
  • The Board of Directors proposes a raised dividend totalling SEK 1.60 per share (1.40), an increase of 14%, to be paid out on four occasions during the year.

 

COMMENT FROM GUSTAF HAGMAN – GROUP CEO

STRONG CLOSE TO 2020
LeoVegas concluded the record year 2020 with its strongest fourth quarter ever. And we did this despite frequent changes to the gaming requirements in our markets in addition to finding ourselves in the midst of a global pandemic. I am proud of our ability to quickly adapt to changed conditions through a high capacity for innovation at the same time as we are building an increasingly solid and diversified business. It is a demonstration of strength that LeoVegas delivered adjusted EBITDA growth of 25% for the full year while the operating cash flow increased almost 90 %. This was achieved despite maintaining a high investment pace with launches of new brands, new markets and product improvements.

During the fourth quarter we increased our revenue organically by 14%. Growth was mainly driven by a continued rise in depositing customers, which grew 24% to a new record level. Adjusted EBITDA increased by 25% during the quarter to EUR 11.5 m.  Reported EBITDA was charged with a one-off provision of EUR 3.5 m related to a changed interpretation of the calculation of gaming taxes in Denmark for earlier periods.

MarkETS
With the exceptions of Sweden and the UK, our core markets showed high double-digit growth during the quarter. Above all I want to highlight Italy, which has now become one of our five biggest markets. During the quarter we launched the Pink Casino brand in Canada. The launch is part of our multibrand strategy, where we are utilising existing resources and our technical platform to expand through scale.

In the German market, LeoVegas has implemented a number of changes ahead of the forthcoming licence system in July 2021. As expected, this affected revenue during the period. Operators in the market are acting differently with respect to the new restrictions, and at present necessary clarity is lacking in the ongoing transitional period, which unfortunately has led to a skewed competitive situation until the licence system has been fully implemented.

TECHNOLOGY AND PRODUCTS
During the quarter we carried out and launched several major projects and innovations. In particular I want to highlight our new exclusive jackpot – LeoJackpot – where our customers can win over SEK 50 m directly from their smartphones. We were also first in the industry to offer payments via Open Banking. This will benefit LeoVegas and our customers in many ways, including through more secure and faster payments and lower transaction costs.

During the quarter we began the migration of Royal Panda to our joint technical platform. As a result, in 2021 all brands will be operated on the same platform. The migration will lead to cost synergies such as lower platform and product costs and a more efficient organisation. The decision has also resulted in impairment of intangible assets attributable to Royal Panda’s platform, which was charged against EBIT in the amount of EUR 1.9 m.

FINANCING AND INVESTMENTS
At the end of the year we secured the Group’s long-term financing needs through the combination of a renewed bank credit facility of EUR 40 m and a newly issued corporate bond of SEK 500 m.

Stable financing combined with a strong balance sheet gives us a solid base for continued expansion, both through organic initiatives and potential acquisitions. During the fourth quarter we carried out share repurchases for approximately EUR 5 m. In addition, the Board of Directors proposes an increase in the dividend to SEK 1.60 per share.

COMMENTS ON FOURTH QUARTER
Revenue for the month of January amounted to EUR 32.5 m (29.9), corresponding to annual growth of 9%. In January revenue was fully impacted by the changes carried out in Germany ahead of the forthcoming regulation.

On the tailwinds of a strong 2020 we are now looking forward to a year with many exciting growth initiatives and an even stronger customer offering.

Compliance Updates

Camelot to Enforce 18+ Age Restriction on UK National Lottery Products from April 22

Niji Narayan

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Camelot to Enforce 18+ Age Restriction on UK National Lottery Products from April 22
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The Camelot Group has announced that it will enforce an 18+ age restriction on all its UK National Lottery products from April 22, six months ahead of the UK Government’s October deadline to introduce the measure.

From that date, anyone under the age of 18 will no longer be able to purchase any of the national lottery operator’s products, whether that be online or in a retail environment.

The UK Government’s Department for Digital, Culture, Media and Sport (DCMS) announced last December that it would be raising the minimum age to play the lottery from 16 to 18 years following the release of its “Review of the Gambling Act 2005 Terms of Reference and Call for Evidence” policy paper.

Originally, online lottery sales to under-18s were to be banned first from April, with a deadline of implementation across retail by October 2021, but now Camelot has acted to enforce the age limit across all verticals sooner than required.

A Camelot spokesperson said: “From 22 April 2021, players must be 18 or over to play National Lottery games online, in-store and on the app. This is in line with the government’s decision to raise the legal minimum age to play The National Lottery, which we fully support.

“Encouraging healthy play is at the heart of everything we do. Remember, you can set limits for the amount you deposit and spend each week, moderate your Instant Win Games play limit or even take a break from playing.”

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Industry News

Betsoft Gaming Goes Live on Paf.es

Niji Narayan

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Betsoft Gaming Goes Live on Paf.es
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Betsoft Gaming has extended its ongoing collaboration with the government-owned Finnish gaming company Paf to the Spanish market. The renowned content provider’s award-winning portfolio is now accessible on Paf’s Spanish platform.

“Paf is a trustworthy operator with a substantial customer base. We look forward to growing our business relationship together. The Spanish market is important to Betsoft, hence our commitment to translation and localisation of our games. We are delighted to see our portfolio going live on Paf.es,” Anna Mackney, Sales Executive at Betsoft Gaming, said.

“Paf is all about giving our clients great entertainment and promoting socially aware and responsible gaming. The games we showcase must reflect this, as our clients trust us to provide both quality and integrity. Partnering with companies like Betsoft is part of our commitment to ensuring this. We are very happy to launch their leading, certified titles across our Spanish platform,” Eric Castro, Head of Content and Casino Games at Paf, said.

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Pragmatic Play Launches New Hold and Spin Adventure: Floating Dragon

George Miller

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Pragmatic Play Launches New Hold and Spin Adventure: Floating Dragon
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Pragmatic Play, a leading content provider to the gaming industry, has unveiled its newest hit, Floating Dragon Hold and Spin.

The Asian-themed, 3×5 slot is packed full of features and fun, with three separate triggerable modes for players to enjoy. The first is the Fish Money feature, which sees each Fish symbol have a cash value attached and can be collected if the Lady lands on the reels. If multiple Lady symbols land, then the value is multiplied by the number of them.

To trigger the Free Spins mode, three or more Scatters must land on the reels. With four stages possible to progress through in the Bonus Round, players must land Ladies on the reels, which continue to collect Fish as in base play. If Four or more ladies are on the reels at the same time, players will progress to the next round. If no Fish land on a spin, then a Firecracker will be thrown onto the reels, guaranteeing a winning spin.

The Hold and Spin mode is initiated if a stack of Three Coin symbols land on the central reel, which then sees them remain on the grid as the four remaining reels rotate in search of more coins. Players get three respins, which can reset if a coin is found on a spin, while there is a minimum guarantee of 20x a player’s stake awarded during the mode.

Floating Dragon is Pragmatic Play’s newest slot hit, joining leading products Wolf Gold, Sweet Bonanza and The Dog House Megaways ™ in the provider’s high-powered collection of titles.

Yossi Barzely, Chief Business Development Officer at Pragmatic Play, said: “We’re consistently looking for innovative new additions to our portfolio and are thrilled to launch our newest Hold and Spin hit.

“Our entire product portfolio continues to grow at an impressive rate as we look to continue to expand globally, with this release marking another positive step for us.”

Pragmatic Play currently produces up to five new slot titles a month, while also delivering Live Casino and Bingo games as part of its multi-product portfolio, available through one single API.

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