"Acquisition of
Royal Panda and a third quarter with continued strong organic
growth and profitability"
Gustaf Hagman, Group CEO and co-founder
Third quarter: 1 July-30 September
2017[1]
-
Revenue increased by 40% to EUR 55.6 m (39.7).
Organic growth was 33%.
-
Revenue from regulated markets accounted for
25.3% (13.2%) of total revenue.
-
Mobile deposits were 70% (67%) of total
deposits, which increased by 56% to EUR 193.1 m (123.7).
-
The number of depositing customers was 202,980
(156,389), an increase of 30%. The number of new depositing
customers was 97,210 (74,638), an increase of 30%. The number of
returning depositing customers was 105,770 (81,751), an increase of
29%.
-
EBITDA was EUR 7.6 m (9.8), corresponding to an
EBITDA margin of 13.7% (24.7%). EBITDA adjusted for items affecting
comparability was EUR 8.4 m (9.8), corresponding to an EBITDA
margin of 15.1% (24.7%).
-
Operating profit (EBIT) was EUR 6.9 m (9.4).
EBIT adjusted for items affecting comparability was EUR 7.6 m
(9.4), corresponding to an adjusted EBIT margin of 13.7%
(23.8%).
-
Earnings per share before and after dilution
were EUR 0.06 (0.09).
Events after the end of the
quarter
-
Net Gaming Revenue (NGR) totalled EUR 14.9 m
(8.8) during the first 23 days of October, representing growth of
70%.
-
LeoVegas acquired the group that operates the
Royal Panda brand. The acquisition of Royal Panda is in line with
the strategy to continue to grow in regulated markets. More than
half of Royal Panda's revenue comes from the UK. The purchase price
was EUR 60 m with a maximum earn-out of an additional EUR 60 m
within one year.
-
The Group has arranged debt financing of EUR 100
m.
-
Due to the acquisition of Royal Panda, the Board
has decided to adjust the financial targets. LeoVegas is removing
the short-term financial targets for 2018 since they were organic
targets.
-
LeoVegas aims to carry out a change in its
listing to Nasdaq Stockholm during the first half of 2018.
-
The subsidiary company IMP (Independent Mobile
Productions) changes its name to LeoVentures.
-
Co-founder Robin Ramm-Ericson is taking on the
role as Managing Director of LeoVentures, leaving the CXO role in
the executive management team, and remains as senior executives in
the Group.
-
The Chief Product Officer (CPO) role has been
added in the executive management team. At the moment, this role is
occupied by Jarl Modén, our former Head of Product, who is now
acting CPO.
Comment from Gustaf Hagman - Group CEO and
co-founder
Strategic
acquisition
After the end of the quarter we carried out a strategic
acquisition. During the past two years we have combed the gaming
market in search of companies that fit in with our overall
expansion strategy, which is to grow in regulated markets and
markets that will soon become regulated. We made our first
acquisition earlier this year, of Winga in the Italian market. We
are now taking the next step with our acquisition of Royal Panda,
which is a great fit with our strategy to establish a strong
presence in the UK - plus they have a great brand!
We have worked hard to carry out this acquisition
and will now focus on integrating it in our operations and make
sure that we are all working towards the same goals. When working
with acquisitions, culture and people are key pieces of the puzzle.
We are convinced that this is a major success factor. This match
exists, and we thus have very good conditions to unite in our
common strategy and continue our development.
Royal Panda - a new global
brand
Royal Panda has in a short time built up an exciting and strong
brand in one of our most important regulated markets - the UK. This
is a major acquisition we are carrying out following a carefully
executed process.
Backed by the strong symbolic value of the Panda,
the company has built a premium brand among players that will serve
as a good complement to LeoVegas. With the acquisition we now have
two great brands that are both global, which makes the scalability
in our continued growth enormous.
Royal Panda is run by people with a long record of
experience in the gaming industry, and what they have achieved is
impressive. The team is strong and very effective, which can be
seen in the company's highly effective marketing.
Royal Panda works with a proprietary technical
platform and recently launched Sportsbook. The launch looks very
promising, and the Royal Panda brand also works well with sports
customers.
Royal Panda's core market is the UK, which
accounted for 50% of its revenue in Q3 2017. If the company had
been part of LeoVegas during the third quarter, it would have added
EUR 4.9 m in revenue from the UK, thereby increasing the Group's
total revenue from the UK market by 73%.
During the third quarter, Royal Panda had EUR 9.8
m in revenue (6.1) and an EBITDA margin of 32%. The acquisition is
being made for a purchase price of EUR 60 m. If certain financial
thresholds are met after 12 months, Royal Panda is entitled to an
earn-out payment up to an additional EUR 60 m. In order to receive
the maximum, earn-out, the company must achieve at least EUR 50 m
in Net Gaming Revenue (NGR), of which EUR 34 m from the UK, and
EBITDA of EUR 15 m. The total purchase price may thus amount to a
maximum of EUR 120 m.
On the back of the acquisition of Royal Panda, the
LeoVegas Group will remove its short-term 2018 financial targets as
these did not consider larger acquisitions.
Financing
LeoVegas has a strong cash position that has been used for the
initial purchase price. In addition, the Group has raised loan
financing of EUR 100 m from the bank in order to have continued
capacity to act on future acquisition opportunities. Of these EUR
100 m, EUR 40 m is a Revolving Credit Facility (RCF). The financing
has a maturity of three years and amortization begins in the second
quarter of 2019 with EUR 10 m per quarter. The interest rate on
financing is approximately 2 %.
LeoVegas has a strong balance sheet and positive
cash flow. The financing ensures that LeoVegas is in a strong
position take part in further consolidation within the
industry.
Our position -
GameTech
Ever since LeoVegas was founded we have been extremely product- and
technology-focused. Our innovative and data-driven marketing has
been instrumental to our success. Everything emanates from
technology, and we therefore see ourselves not only as a gaming
company, but as a tech company in the gaming industry.
Explaining LeoVegas for investors and others with
respect to identity, culture and work approach is expressed best
with the term GameTech. I am proud of our passion - "Leading the
way into the mobile future" - and ability to say that we are
leading development in this part of the industry - GameTech.
Third quarter
Revenue totalled EUR 55.6 m (39.7) during the third quarter, an
increase of 40%. Organic growth was 33%. EBITDA adjusted for items
affecting comparability pertaining acquisitions and work with the
listing on Nasdaq Stockholm was EUR 8.4 m (9.8), corresponding to
an adjusted EBITDA margin of 15.1% (24.7%). Revenue from regulated
markets accounted for 25.3% (13.2%) of total revenue during the
quarter.
Australia closed
As communicated in connection with the second quarter interim
report, we have decided to close our operations in Australia due to
legal changes that have been made. We closed Australia on 10
September. During the third quarter Australia contributed EUR 3.2 m
in revenue. The fourth quarter will thus be the first quarter in
which Australia is excluded entirely. During the fourth quarter of
2016 Australia contributed EUR 5.8 m in revenue.
Focus on LeoVentures and
Management changes
The LeoVegas Mobile Gaming Group strives to be
the most innovative, entrepreneurial and fastest growing company in
our industry. To strengthen this momentum, we give increased focus
to our venture business IMP (Independent Mobile Productions), and
at the same time change the name to LeoVentures.
My co-founder Robin Ramm-Ericson now takes the
role of Managing Director for LeoVentures, leaving the CXO role in
LeoVegas' executive management team, and remains as senior
executives in the Group.
In addition to growing existing investments, we
will expand the portfolio over time with other strategically
important opportunities for the group that are in line with our
passion "Leading the Way into the Mobile Future". At present, this
is a part of LeoVentures:
· Authentic Gaming (Live Casino
Provider)
· 21 Heads-Up (Provider of unique
and innovative card games)
· LiveCasino.com (affiliate and
community activities in Live Casino)
New investments within LeoVentures include
internal and external entrepreneurs who come to us with innovative
ideas, industry knowledge or identify an early market trend, as
well as external companies that we see the potential to scale up
further.
At the same time, the Chief Product Officer
(CPO) position is added to the executive management team. At the
moment, it is our former Head of Product Jarl Modén who will hold
the role. Recruitment to the CPO is ongoing and we look at both
internal and external for candidates
Nasdaq Stockholm's main
list
Since our listing on Nasdaq First North Premier we have been
preparing ourselves for a change in listing to Nasdaq Stockholm's
main list. A listing change will strengthen the company and give us
an even more distinct quality seal in our communication and
cooperation with authorities, licensors and partners. For
institutional investors - both in Sweden but even more so abroad -
we will become more accessible and attractive as a company. Our
plan for the listing change is that it will be completed during the
first half of 2018.
Leo Safe Play
Responsible gaming is an important area that we are working
tirelessly to improve. For example, we now have an automated system
that proactively alerts us about customers who show tendencies
toward unsound gaming. This enables us to more swiftly and
effectively address these customers in a responsible manner.
All aids and tools can be found on Leo Safe Play's
website - www.leosafeplay.com. Lifting this out to a separate
website makes it more visible and easier for our customers to find
the information.
LeoVegas is now also a member of the Swedish
Standards Institute (SIS), which will be setting uniform European
standards for reporting surrounding online gaming. This will
contribute to safer and more secure gaming, which we welcome. It is
also further proof that regulation is the way to a more mature and
sustainable market.
Markets
In Italy we are planning and working to migrate LeoVegas Italy to
our proprietary technical platform, Rhino, next year. We see
economies of scale in this, and it will reduce the complexity in
our daily work. In recent months we have successively phased in the
LeoVegas brand and phased out Winga, and we now market only
LeoVegas in Italy.
Denmark has continued to grow strongly and
represented 8% of revenues in the quarter.
Comments on fourth
quarter
The first 23 days of October have begun with Net Gaming Revenue
(NGR) of EUR 14.9 m (8.8), representing growth of 70%. This fine
start to the fourth quarter shows that even though we have closed
Australia for business, it has not had an appreciable impact on our
revenue. The percentage growth rate of 70% is somewhat boosted by
that October last year was a comparatively weak month in the fourth
quarter and that October this year has had an exceptionally strong
start.
During the fourth quarter, we expect marketing in
relation to revenue to be higher than in the third quarter. We will
most likely reach the highest level during the year as we plan to
invest ahead of the Christmas holiday season.
With a great acquisition, a good start to the
fourth quarter and a continued strong cash position, we continue to
have tremendous opportunities going forward, and we are all looking
forward to an exciting fourth quarter.
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
5352 6408, UK: +44 (0) 20 3427 1914, US: + 1646 254 3364 code:
35 35 667 or join at the
web https://edge.media-server.com/m6/p/4pk3b55e
This information is information
that LeoVegas AB (publ) is obliged to make public pursuant to the
EU Market Abuse Regulation 596/2014. The information was submitted
for publication, through the agency of the contact person set out
below, at 25th of October 2017 CET on 08:00.
For
further information, please contact:
Gustaf Hagman, Group CEO co-founder: +46 70-880 55
22, gustaf.hagman@leovegas.com
Viktor Fritzén, Group CFO: +46 73-612 26 67,
viktor.fritzen@leovegas.com
Philip Doftvik, Head of Investor Relations: +46 73-512 07 20,
philip.doftvik@leovegas.com
Visitors address: Sveavägen 59, Stockholm
Corporate identity number: 556830-4033
About the LeoVegas mobile gaming
group
LeoVegas' vision is to create the ultimate mobile
gaming experience and be number one in mobile casino. The business
is distinguished by award-winning innovation and strong growth.
LeoVegas' technical development is conducted in Sweden, while
operations are based in Malta. The Swedish parent company LeoVegas
AB (publ) invests in companies that offer gaming via mobile devices
and desktop computers along with companies that develop related
technologies. LeoVegas has attracted major international acclaim
and has won numerous awards, including "Nordic Operator of the
year", "Mobile Marketing Campaign of the year", and "Innovation in
Mobile and Tablet of the Year" at the international EGR Awards.
LeoVegas bases its development on "Mobile First" and is at the
forefront of using state-of-the-art technology in the mobile gaming
market. With a foundation in a great gaming experience, long-term
customer relationships and establishment of a strong brand, the
company has attracted a steadily growing customer base through
innovative, effective and data-driven marketing. Since its start,
the mobile gaming company LeoVegas has shown strong
quarter-on-quarter growth. LeoVegas' shares are listed on Nasdaq
First North Premier. Avanza Bank AB is the company's Certified
Adviser. For more about LeoVegas, visit www.leovegas.com
and www.leovegasgroup.com.
[1] Throughout
this report, figures in parentheses pertain to the same period a
year earlier.
Third Quarter 1 July - 30 September
2017
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: LeoVegas AB via Globenewswire
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