The shareholders of LeoVegas AB (publ), reg. no. 556830-4033, are hereby convened to an extra general meeting to be held on Wednesday 28 August 2019, at 5.30 p.m. at Baker & McKenzie’s premises on Vasagatan 7 in Stockholm. The doors to the meeting will open at 5.00 p.m.

Right to attend the Extra General Meeting and notice 

Shareholders wishing to attend the Extra General Meeting must:

• on the record date, which is on Thursday 22 August 2019, be registered in the share register maintained by Euroclear Sweden AB. Shareholders, whose shares are registered in the name of a nominee, must temporarily register the shares in their own name at Euroclear Sweden AB. Shareholders whose shares are registered in the name of a nominee must, no later than on Thursday 22 August 2019, via their nominee, temporarily register the shares in their own name in order to be entitled to participate at the general meeting;

• notify the participation at the extra general meeting no later than on Thursday 22 August 2019. Notice of participation at the extra general meeting may be given by regular mail to Baker & McKenzie Advokatbyrå KB, Att: Ian Gulam, Box 180, 101 23 Stockholm (please mark the envelope “LeoVegas EGM 2019”), or by e-mail to ian.gulam@bakermckenzie.com. Upon notification, the shareholder should state their full name, personal identification number or corporate registration number, address and telephone number, and, where applicable, details of representatives, proxy holders and advisors. A shareholder who wishes to be represented by proxy shall issue a written and dated proxy to the proxy holder. If the proxy is issued by a legal entity, a certified copy of the registration certificate or corresponding document (“Registration Certificate“) shall be enclosed. The proxy must not be more than one year old, however, the proxy may be older if it is stated that it is valid for a longer term, maximum five years. The proxy in original and the Registration Certificate, if any, must be available at the extra general meeting and a copy should well before the meeting be sent to the Company by regular mail to Baker & McKenzie Advokatbyrå KB, Att: Ian Gulam, Box 180, 101 23 Stockholm (please mark the envelope “LeoVegas EGM 2019”), or by e-mail to ian.gulam@bakermckenzie.com, and should, in order to facilitate the entrance to the extra general meeting, be at the Company’s disposal no later than on Thursday 22 August 2019. A form proxy will be available for downloading on the Company´s website www.leovegasgroup.com.

Proposed agenda:

1        Opening of the meeting and election of the chairman of the general meeting

2        Preparation and approval of voting list

3        Election of one or two person to certify the minutes

4        Determination of whether the general meeting has been duly convened

5        Approval of the agenda

6        Resolution regarding warrant program and issue of warrants 2019/2022

1. Issue of warrants to the Subsidiary 2019/2022
2. Approval of transfer of warrants
3. Further information regarding the warrant program

7        Closing of the meeting

Proposals for resolutions: 

Item 1: Opening of the meeting and election of chairman of the general meeting
The nomination committee proposes that Carl Svernlöv, attorney at law, Baker & McKenzie Advokatbyrå, is appointed as chairman of the Extra general meeting.

Item 6: Resolution regarding warrant programme through issuance of warrants 2019/2022
The board of directors of the Company proposes that the extra general meeting resolves to implement an incentive program through issuance of warrants in accordance with below.

Background and purpose
The purpose of the proposal, as of previous incentive programs, is to establish conditions to recruit and maintain qualified personnel in the company group and increase the motivation of the participants. The board of directors finds that it is in all shareholders’ interest that current and future senior executives, other employees and other key persons have a long term interest in developing a high value of the Company’s share. A long term ownership engagement is expected to stimulate an increased interest for the business and result in a whole as well as to increase the motivation for the participants and to create a common interest for the Company’s shareholders and the participant.

A. Issue of warrants 2019/2022
The Board of Directors proposes that the EGM resolves to issue of a maximum of 1,000,000 warrants, entailing an increase in the share capital upon full exercise by a maximum of EUR 12,000. The following terms shall apply to the issuance:

1. The right to subscribe for the warrants shall, with deviation from the shareholders’ preferential rights, be given to the indirectly wholly owned subsidiary Gears of Leo AB, reg. no. 556939-6459 (the “Subsidiary”), with the right and obligation to transfer the warrants to employees within the group as per below.
2. Oversubscription may not take place.
3. The purpose for deviation from the shareholders’ preferential right is to implement an incentive programme whereby employees, through a personal investment, will participate and contribute in a positive development in the value of the Company’s shares during the period that the proposed programme covers, and to help the group to maintain and recruit qualified and engaged employees.
4. The warrants shall be issued without any consideration.
5. Subscription of the warrants shall take place not later than the day after the EGM.
6. The board of directors has the right to extend the subscription period.
7. Each warrant entitles to subscription of one new share in the Company. Subscription of new shares shall take place during the period commencing on 1 September 2022 up to and including 30 September 2022, or the earlier or later date as set out by the terms of the warrants in item 11 below.
8. The subscription price per share shall correspond to 130 percent of the volume-weighted average price according to the Nasdaq OMX Stockholm official price list for the share for the 5-day trading period immediately prior to the EGM. The EGM is on 28 August 2019, which means that said period of 5 trading days immediately prior to the EGM will be 21 August 2019 up to and including 27 August 2019. However, the subscription price per share shall be at least SEK 50.
9. The shares subscribed for by exercise of the warrants shall carry entitlement to participate in dividends for the first time on the next record date for dividends which occurs after subscription is effected.
10. Warrants held by the Subsidiary that are not transferred as per below or that are repurchased from participants shall be cancelled after a decision by the Company’s board of directors. Cancellation shall be reported to the Swedish Companies Registration Office for registration.
11. Other terms are set out in Appendix 1A.

B: Approval of transfers of warrants
The board of directors proposes that the EGM resolves to approve that the Subsidiary transfers the warrants in accordance with the following terms.

The right to acquire warrants from the Subsidiary shall be given to a maximum of 50 persons from the group management, senior executives and key persons selected by the board of directors of the Company (the “Participants”).

The board of directors of the Company and the founders Gustaf Hagman and Robin Ramm-Ericson will not participate in the programme.

1. Initially, each Participant will be offered to acquire warrants in accordance with the table set out below. For cases where one or more Participant do not acquire their full allotment, the Subsidiary has the opportunity to offer other Participants to acquire the remaining warrants. Such right shall primarily be given to Participants in Category A, secondarily to Participants in Category B, and thirdly to Participants in Category C.

2. The warrants shall be transferred on market terms at a price (premium) that is set based on an estimated market value of the warrants that has been calculated by an independent valuation institute using the Black & Scholes valuation model. The value has preliminarily been calculated at approximately EUR 0.40 per warrant based on a share price of EUR 3.51 and a subscription price of EUR 4.65.

3. In other respects, the warrants shall be subject to market terms including a right for the Company and the Subsidiary to repurchase warrants if a Participant’s employment with the Company ends.

4. Transfers to Participants require that the acquisition of warrants can be lawfully made and that this can be done with what the board of directors deems to be a reasonable administrative and economic effort.

5. Application to acquire warrants shall be made by 11 September 2019 at the latest. However, the Company’s board of directors shall have the right to extend the application period for acquisitions.

C: More detailed information about the warrant programme

1. Dilution – Assuming full subscription and exercise of all warrants offered, 1,000,000 new shares can be issued, corresponding to dilution of approximately 1.0% of the total number of existing shares and votes in the Company, but with reservation for the recalculation of the number of shares that each warrant entitles to subscribe for that may take place as a result of certain issues, etc.
2. Costs and effects on key figures, etc. – The Company’s earnings per share will not be affected by the issue, since the warrants’ strike price exceeds the current market value of the shares at the time of the issue. The Company’s future earnings per share may be affected by the potential dilutive effect of the warrants in the event the Company reports a positive result and the strike price is lower than the market value. The warrants will be transferred at market value, which means that no taxable benefit value will arise and thus no social fees for the Company. The warrant programme will give rise to certain, limited costs in the form of external consulting fees and administration of the warrant programme.
3. Calculation of market value. – The independent valuation institute/accounting firm Deloitte AB is calculating the market value of the warrants using the Black & Scholes valuation model.
4. Drafting and preparations for the warrant programme. – The warrant programme has been prepared by the board of directors and members of the group management and external advisors and in accordance with guidelines for remuneration to senior executives adopted by the AGM 2018 as well in accordance with guidelines from the remuneration committee, and in consultations with major shareholders. The board of directors has thereafter decided to submit this proposal to the EGM. Apart from the executives who have participated in the drafting of this matter as per instructions from the Board of Directors, no employee who may be included in the programme has participated in the drafting of the terms.
5. Other share-based incentive programmes, etc. – For a description of the Company’s other share-based incentive programmes, please refer to the 2018 Annual Report and the Company’s website. No other share-based incentive programmes are in effect.
6. Authorisations and decision-making rules. – The EGM assigns the board of directors to execute the decision according to point B above. The board of directors, or the party designated by the board of directors, is authorised to make such minor adjustments that are necessary for the decision’s registration with the Swedish Companies Registration Office and Euroclear Sweden AB. The EGM’s resolution on this point is valid only if approved by shareholders with at least nine-tenths (9/10) of the votes and shares represented at the EGM. The resolution on the transfer of the warrants shall also be approved by a general meeting of the Subsidiary.

Number of shares and votes
The total number of shares in the Company as of the date hereof amounts to 101,652,970 shares, with a corresponding number of votes. The Company holds no own shares. 

Further information
Complete proposals and other documents that shall be available in accordance with the Swedish Companies Act are available at the Company at Luntmakargatan 18 in Stockholm and at the Company’s website www.leovegasgroup.com, at least three (3) weeks in advance of the extra general meeting and will be sent to shareholders who request it and provide their e-mail or postal address.

The shareholders hereby notified regarding the right to, at the annual general meeting, request information from the board of directors and managing director according to Ch. 7 § 32 of the Swedish Companies Act.

Processing of personal data
For information on how personal data is processed in relation the meeting, see the Privacy notice available on Euroclear Sweden AB’s website: https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammorengelska.pdf. 

LeoVegas interim report for the second quarter 2019 will be published at 08:00 CET on August 14, 2019. A webcast telephone conference will be held at 09:00 CET the same day, where Gustaf Hagman, CEO, and Stefan Nelson, CFO, will present the results.

A possibility will be given to ask questions via the webcast and follow the presentation live. The webcast will be accessible at:

• https://edge.media-server.com/m6/p/fas3by79

To participate in the conference call by phone, 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
• Bekräftelse kod: 5793609

The webcast, which afterwards also will be available on demand, and presentation material will be published on LeoVegas website, www.leovegasgroup.com under Investor Relations.

Dates for upcoming reports:

• LeoVegas Q3 report – 7 november 2019

About LeoVegas Mobile Gaming Group:
LeoVegas’ passion is “Leading the way into the mobile future”. LeoVegas is the premier GameTech company and is at the forefront of using state-of-the-art technology for mobile gaming. A large part of this success can be credited to an extreme product and technology focus coupled with effective and data-driven marketing. Technology development is conducted in Sweden, while operations are based in Malta. LeoVegas offers casino, live casino and sports betting, and operates two global and scalable brands – LeoVegas and Royal Panda – as well as a number of local brands in the UK. LeoVegas is a global group in which LeoVegas AB (publ) is the parent company. LeoVegas AB (publ) does not conduct any gaming operations; rather, operating activities are conducted by subsidiaries within the Group. The company’s shares are listed on Nasdaq Stockholm. For more about LeoVegas, visit www.leovegasgroup.com. 

“LeoVegas has had a good start to the year – customer loyalty and the inflow of new customers has never been better!”– Gustaf Hagman, Group CEO

First quarter 2019: 1 January– 31 march 2019

•  Revenue increased by 12% to EUR 86.3 m (77.4).
•  Organic growth in local currencies was 4%.
•  Organic growth in local currencies excluding the UK was 19%.
•  EBITDA was EUR 7.2 m (9.5), corresponding to an EBITDA margin of 8.3% (12.3%).
•  Net Gaming Revenue (NGR) from regulated markets was 50% (35%) of total NGR.
•  The number of depositing customers was 370 209 (302 014), an increase of 23%.
•  The number of returning depositing customers was 196 863 (155 951), an increase of 26%.
•  Earnings per share were EUR 0.00 (0.02) before and after dilution.

Events during the quarter

•  Sweden launched as a regulated market and the assessment is that LeoVegas is taking market shares.
•  The Group’s Pixel.bet brand was granted a five-year license for casino and sports betting in Sweden.
•  The Group is seeing positive effects of a pronounced internal focus on efficiency and cost control.
•  LeoVegas launched its proprietary multibrand platform to further complement its brand portfolio.
•  The new GoGoCasino brand was launched in the end of March and has been well-received.
•  Strategic evaluation of LeoVentures continues. The portfolio company Authentic Gaming is growing strongly and achieved a positive result for the first time in March and is expected to continue generating profits.

Events after the end of the quarter

•  Preliminary revenue in April amounted to EUR 30.5 m (29.1), representing growth of 5%.
•  Richard Woodbridge, COO, and Avshalom Lazar, CCLO, has started their employment with the Group, while Mattias Wedar, CPTO, will assume his position during the second quarter. The new Group Management team is thereby complete.
•  LeoVegas’ 2018 Annual Report published on www.leovegasgroup.com.
•  LeoVegas Annual General Meeting to be held on 29 May 2019.
•  Nomination Committee has presented its recommendation for the new Board of Directors. Per Brilioth, Barbara Canales Rivera and Patrik Rosén have declined re-election, while Fredrik Rüden has been nominated to be elected as a new director.
•  14 August 2019 set as new date for the second quarter interim report.

COMMENT FROM GUSTAF HAGMAN – GROUP CEO

Positive start to 2019
During the first quarter we once again delivered sequential growth and posted record performance on a number of key performance indicators. This, combined with the fact that our customer base is growing in a sound and sustainable way, has given us a good start to 2019. We are maintaining a high pace of expansion and innovation at the same time as we are focusing on cost efficiency and scalability in the Group. This makes us well positioned for a year of continued profitable growth.

First quarter results
Revenue during the first quarter amounted to EUR 86.3 m (77.4), an increase of 12%. Organic growth in local currencies was 4%. Growth during the first quarter continued to be affected by the regulatory tightening that took place in the UK last year. Excluding the UK, organic growth for the Group was 19%, which reflects stable underlying growth in general for the Group. In March we posted the highest revenue and in February the lowest revenue for the period.

EBITDA totalled EUR 7.2 m (9.5), corresponding to an EBITDA margin of 8.3% (12.3%). Our marketing investments remained at a high level during the first quarter, among other reasons to secure our leading position in Sweden. Royal Panda increased its pace of investment following a very low level of marketing during the preceding quarter. We paid EUR 11.5 m in gaming duties during the first quarter, which is an increase of EUR 4.3 m compared with the preceding quarter, which affected the operating margin for the period.

We are seeing positive effects from our highlighted focus on efficiency and cost control within the Group. We continue to work on renegotiating supplier agreements in gaming, payments and marketing, among other areas, where we are benefiting from our size and position as one of Europe’s leading casino operators. At the same time, we are continuously reviewing our internal operating costs and processes. The effects of this work are expected to begin showing gradually in 2019 in the form of increased scalability on a growing revenue base.

Sweden
Sweden has now been regulated for a quarter. We are generally satisfied with our performance during the period, where we had record-high customer activity and believe to have taken market shares. Our organic revenue decreased by 16% during the first quarter, adjusted for currency movements, partly owing to short-term effects of the market’s regulation in January. At the same time our depositing customer base grew 23% compared with the same period a year ago. Revenue in Sweden during the quarter has been growing month on month, and this trend has continued into the second quarter.

The new regulation in Sweden entailed a number of changes for our customers and for the industry, resulting in short- as well as long-term effects. I’m referring in particular to changes in the customer experience, competition, gaming duties, and new marketing channels and payment solutions. As is always the case when a market becomes regulated, it will take some time for the industry and customers to adapt, and thereafter we expect a more stable and predictable market.

Regulation has sparked an intensive debate on the amount of marketing. We also agree that the volume right now is too high, which at the same time is natural in a recently regulated market in which new players, such as the state-run companies, are launching new products. Therefor we are working to diversify our marketing mix to other channels than commercial radio and TV, and we are conveying the responsible gaming message more in our advertising.

Over time, a regulated market tends to lead to fewer operators. We have already begun to see this trend, as smaller operators are now leaving or reducing their focus in Sweden. This means that the amount of marketing is gradually expected to decrease.

What makes it difficult for the industry to self-regulate is when the government urges operators to apply for licences only to shortly after consider major changes in the terms as soon as the licence system is in place. In this case it applies to marketing. We are now awaiting the findings of a study into how marketing is to be handled. The study is expected to be ready by October 2020, and we are looking forward to clearer guidelines. One should keep in mind that it is in the state’s interest to protect the licence system and its channelisation. The greatest benefit for licensed operators, who pay local taxes and adhere to local rules, is the ability to market themselves. A restriction of marketing opportunities would make it challenging to protect the channelisation.

UK
The UK market remains challenging in the near term, but we are gradually making progress, and our customer acquisition is growing at Group level compared with the preceding quarter. In particular, the brands we have gathered under Rocket X are showing clear improvements, with sequential revenue growth paired with good profitability. Royal Panda, on the other hand, had a weaker quarter in the UK, partly coupled to the lower level of marketing in earlier quarters as well as necessary regulatory adaptations in line with the rest of the Group.

Our acquisitions in the UK have generally resulted in greater complexity coupled to synchronisation of databases, routines and processes between the different Group brands. To manage this in the best way and comply with the regulatory requirements, LeoVegas has an action plan that was initiated last year. LeoVegas takes compliance with the utmost seriousness and is working consistently to ensure a safe experience for our customers in all markets, all to uphold our position as a credible, long-term and reliable operator.

Scale-up markets
One market that stuck out during the first quarter is Germany, where we expect to be granted extended gaming licences in Schleswig-Holstein, which gives us a competitive advantage. Finland, Denmark and Canada also delivered good quarters, and in Italy we are taking market shares.

LeoVentures
LeoVentures’ portfolio companies developed well during the period. The companies are in various phases of rapid growth and investment, but despite this, together they succeeded in making a positive contribution to EBITDA for the Group during the month of March. For the first time, the portfolio company Authentic Gaming also achieved a positive result in March, and it is expected to continue generating profits. In line with previous communication, we are continuing with our strategic evaluation of LeoVentures.

New brand on proprietary multibrand platform
During the quarter we launched our proprietary multibrand platform. Owing to our multibrand functionality, we can now flexibly launch and scale up new brands. The first such brand that was launched is called GoGoCasino. The start and customer response have been positive and are proof of how we are successfully capitalising on the Group’s strengths, experience and economies of scale. During the year we expect to launch GoGoCasino in more markets.

Comments on the second quarter
The month of April has developed well with preliminary revenue of EUR 30.5 m (29.1), representing a growth of 5%. Our current estimate is that marketing costs in relation to revenue will decrease during the second quarter compared with the first quarter.

LeoVegas has entered the second quarter with full focus on sustainable, profitable growth.

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 5069 2180, UK: +44 (0) 20 71 92 80 00, US: +1 63 15 10 74 95, Confirmation code: 2488668 or join at the web https://edge.media-server.com/m6/p/kfovvaak

About the LeoVegas mobile gaming group:
LeoVegas’ passion is “Leading the way into the mobile future”. LeoVegas is the premier GameTech company and is at the forefront of using state-of-the-art technology for mobile gaming. A large part of this success can be credited to an extreme product and technology focus coupled with effective and data-driven marketing. Technology development is conducted in Sweden, while operations are based in Malta. LeoVegas offers casino, live casino and sports betting, and operates two global and scalable brands – LeoVegas and Royal Panda – as well as a number of local brands in the UK. LeoVegas is a global corporate group in which LeoVegas AB (publ.) is the parent company. LeoVegas AB (publ.) doesn ́t conduct any gaming operations. The operational work is carried out in the subsidiaries within the Group. The company’s shares are listed on Nasdaq Stockholm. For more about LeoVegas, visit www.leovegasgroup.com.