LeoVegas abandons Malta office move and ignites UK cost-saving strategy
Stockholm-listed operator also writes off €10m in losses on 2017 acquisition of Royal Panda
LeoVegas has ditched its planned move to upgraded offices in Malta as part of strategic cost-saving measures which could cost the operator more than €6m.
The Stockholm-listed firm called off the planned relocation and has also migrated all Rocket X-managed brands to its own tech stack in a bid to achieve annual cost savings of €3.7m.
The cost-saving strategy was implemented by LeoVegas management after stricter compliance demands and higher gambling taxes negatively impacted the operator in the UK market.
One-off restructuring costs of €6.1m will be charged against Q4 profit, while the group has also recognised a €10m loss on its 2017 acquisition of Royal Panda.
LeoVegas pulled its Royal Panda brand out of the UK earlier this month. The casino firm brought in sales of approximately €1.1m during Q4 and reported negative profitability.
As well as tighter regulation, the operator blamed “internal complexity” for its UK struggles.
Since buying IPS for £65m in 2018, LeoVegas has run its UK-facing business on three separate technical platforms from three separate organisations.
The operator addressed this in Q4 by migrating its Rocket X-managed brands to the group’s own multi-brand tech platform, Rhino, meaning all UK business will now be run from the same stack.
The cost-saving measures, including the UK technical migration, are expected to result in annual cost synergies of €2m for LeoVegas in areas including marketing, payments and customer service.
The early termination of third-party agreements and a penalty for the cancellation of its new office lease in Malta are included in the €6.1m estimated cost hit.
All cost-saving measures should be completed in Q1 2020, according to the operator, which will publish its full Q4 financial results on 14 February.
LeoVegas CEO Gustaf Hagman
LeoVegas CEO Gustaf Hagman said: “The strategic initiatives we are now carrying out will create optimal conditions to be successful in the large, but at the same time complex, UK market.
“The new structure gives us a good starting point to increase both growth and profitability in the UK market during 2020.
“At the same time, Royal Panda – which has struggled with weak performance in the UK but has performed well in other markets – can now focus fully on growth outside of the UK and also launch the brand in a couple of new markets in and outside of Europe,” he added.
Source: LeoVegas