LeoVegas has scrapped a planned move to Malta’s office as well as detailed plans to shift Rocket X operated products to its network as part of the UK’s strategic efforts and cost reduction initiatives.
The company anticipates annual cost savings of € 1,7 m by cancelling its deal for new, larger premises in Malta in 2021 and opting instead to remain in its current premises during the coming five-year period.
In addition, products supplied by LeoVegas-owned Rocket X are to be manoeuvred to the group’s own multi-brand Rhino platform, where LeoVegas owns and operates all the equipment.
Annual savings in the UK are estimated to be in the range of € 2 m, expected to generate cost synergies in areas such as marketing, goods, payments and customer service as well as resulting in decreased enforcement complexity.
This is followed by LeoVegas outlining Royal Panda’s withdrawal from the UK market earlier this year, with Q4 UK revenue in the € 1.1 m area and negative profitability, with no prospect of a major upturn in the first quarter of 2020.
Revenue for the remaining UK operations, consisting of 13 brands including LeoVegas, 21.co.uk and BetUK, rose 15 percent from Q3 over the fourth quarter and is said to have demonstrated strong profitability.
Gustaf Hagman, LeoVegas CEO explained: “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 consolidation of brands into one and the same platform will contribute to large economies of scale in the group – both by allowing us to fully utilise our multibrand technology and through a more efficient organisation.
“Already during the second half of last year, the LeoVegas and Rocket X managed brands in the UK began to perform favourably, and 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.”
In addition, LeoVegas expected an annual cost savings of € 3.7 million as a result of the various measures undertaken, including € 1.7 million as a result of the cancellation of contracts for larger premises in Malta.
However, a sum of € 6.1 m due to restructuring costs will be applied to operating profit Q4, with a one-off impairment cost in the region of € 10 m to be felt as a result of the withdrawal from Royal Panda UK.