LeoVegas Abandons Malta Move in Cost-Saving Bid
LeoVegas has abandoned a planned move to Malta as part of its strategic cost-saving measures. Even so, it will still cost the company €6.1m that will be measured against Q4 profit.
It is part of an overall plan which saw the company close the Royal Panda brand in the UK in January. This is all after the UK implemented stricter compliance demands and higher gambling taxes. They already swallowed a €10 million loss on the Royal Panda buy and now this move cancellation will definitely hurt their profit for the year.
LeoVegas stated its struggles were not only related to tighter regulations, but also due to the internal structure of the company. The brand had three UK-facing operations all on different tech platforms and was simply an unsustainable model.
They have now shifted all Rocket-X brands to the same tech platform called Rhino. This means they will now all be on the same level. This is expected to save the company €2m a year, with things like payments and customer service now streamlined.
The LeoVegas CEO, Gustaf Hagman said explained in a statement;
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. – Gustaf Hagman, LeoVegas, CEO
Overall, these two combined measures, the cancelled move and the tech merger, will save LeoVegas nearly €4 million a year. Naturally, the restructuring costs, and the loss of Royal Panda are larger and more significant costs, but these will be one-off totals applied to the Q4 report.
The operator is expected to publish the Q4 financial results during February which will give a clearer picture as to the true costs of these measures. All resutructuring is expected to be completed by the end of Q1 this year.
Other products in the LeoVegas group have been performing a lot better, with 21.co.uk and BetUK the pick of the bunch (there are 13 brands under the LeoVegas umbrella!) growing 15 percent in the final quarter. There is optimism that these are signs that LeoVegas can still generate a decent profit within the UK and these overall savings should have a long-term positive impact on the company.
The gambling world is waiting to see the financial results and similar cost-saving restructuring could become common place over the next few years throughout the industry.