LeoVegas has called off plans to move into new offices in Malta as part of a cost-cutting operation it hopes will save the company €3.7m a year.
The decision follows on from LeoVegas’s decision to shut down its Royal Panda brand within the UK, instead focusing on Europe and the rest of the world, impacted by stricter demands on compliance and higher gambling taxes.
The number of full-time employees at LeoVegas has dropped from 900 to 800 during the past year and instead of moving as intended to new, larger premises in Malta in 2021, the group will instead stay in its existing facilities during the coming five-year period.
In addition, the brands Rocket X provided managed services for are being migrated instead to the group’s own technical platform as LeoVegas strives to simplify its internal structuring.
The changes – intended to create “a more focused and efficient operation that fully uses economies of scale in technology, product and organisation” – will incur one-off restructuring costs of €6.1m, LeoVegas stated, which will be charged against operating profit for the fourth quarter. LeoVegas has also sustained an approximate €10m impairment loss on its investment in Royal Panda.
Gustaf Hagman, LeoVegas group CEO, 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 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 multi-brand 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.”
