LeoVegas AB Q2: Quarterly Report from January 1 to March 31, 2022

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SECOND QUARTER 2022: APRIL 1–JUNE 30

  • Sales increased by 1% to reach €98.0 m (96.8).
  • Excluding the Netherlandsrevenues increased by 9%.
  • Adjusted EBITDA was €9.0 m (10.6), corresponding to an EBITDA margin of 9.2% (10.9).
  • The number of depositing customers was 442,647 (460,697), a decrease of 4%.
  • Earnings per share were EUR -0.01 (0.01) before and after dilution, while adjusted earnings per share were EUR 0.05 (0.06).

QUARTER EVENTS

  • The process for MGM Resorts International’s takeover bid is ongoing and the acceptance period expires on August 30.
  • On April 4, the gaming market was re-regulated in Ontario, Canada. LionVegas was one of the first operators to relaunch its offer on the regulated market.
  • LionVegas chose to suspend its expansion for New Jersey following the offer of MGM. If the offer is not accepted, LionVegas can take over the project with a short start-up period.
  • The LeoVegas AGM was held on May 19, 2022 where the proposed resolutions were approved.
  • LionVegas won “Online Casino of the Year” at the Global Gaming Awards and “Online Gaming Operator of the Year” at the International Gaming Awards.

EVENTS AFTER THE END OF THE QUARTER

  • Preliminary revenue for July was €32.8 m (32.8), representing unchanged growth of 0% and 8% excluding the Netherlands.
  • The gambling commission in the UK (UKGC) issued a penalty fee of £1.3 m (€1.6 my LionVegas relating to shortcomings in the procedures during the period October 2019 at October 2020. At the time of the assessment, LionVegas had already taken steps to improve and update procedures and processes. A provision was made for the sanction costs, which were charged to EBITDA in the second quarter.

COMMENT BY GUSTAF HAGMAN – GROUP CEO

SECOND QUARTER
It was a busy quarter for the LeoVegas Group. LionVegas was launched as one of the first operators in the newly regulated market of Ontario, Canadaand we released our first proprietary games through Blue game studio Guru Games. We have implemented major efficiency improvements through the automation of our CRM activities, which will also create a more personalized gaming experience. At the beginning of May, the American company MGM announced a public tender offer for all the shares of LionVegas. It seems likely that the offer will be accepted, which would lead to the company’s shares being delisted from Nasdaq Stockholm later this year. Regardless of the outcome of the bid, business remains business as usual and we continue to work tirelessly to create the industry’s premium gaming experience for our customers.

During the second quarter, the Group’s turnover increased by 1%. Excluding the Netherlands, growth was 9%. During the period, 79% of our revenues were regulated and/or taxed locally. The growth in the share of regulated turnover is in line with our strategy and demonstrates our strength in operating in regulated markets with complex and locally adapted regulations. Adjusted EBITDA was €9.0 m, which was charged during the period by items affecting comparability which were mainly attributable to the bidding process with MGM. US expansion expenses were charged to EBITDA with EUR 1.0 M. As we wrote in our previous report, we have increased marketing investments mainly related to re-regulation in Ontario. We have also intensified our initiatives in certain other markets where we have seen good returns on our marketing. Our operating expenses increased during the quarter, in part due to new hires in our technology organization with the opening of two new technology hubs in Warsaw and Malagaand in part by expenses related to the planned expansion into the US market.

SPORTS BETTING
We continue to increase our strategic focus on sports and our sports betting brands Expekt and BetUK recorded record revenues in the quarter. Sports betting as a whole also recorded record revenues. We intend to secure several football sponsorships in the near future. This should provide us with a global reach to a relevant and partly new target group, and we are able to produce unique content with clubs and their players, which should attract new customers and retain existing customers.

MARKETS
Most major markets continue to do well and we see no signs so far that the current macroeconomic situation with high inflation and rising interest rates is having an impact on our players’ habits. Once again, Sweden held up during the quarter with strong performance for the LionVegas and the Expekt brands.

The expansion project in the United States and New Jersey was paused at the end of the quarter due to the ongoing offering and the initiatives and obligations that MGM already has in the US market. The assessment is therefore that the most responsible course of action is to hold off expansion until we know if the offer on LionVegas will be accepted. If a launch is made possible in the future, we can resume expansion in the United States with a short start-up period.

In April, the gaming market was re-regulated in Ontario and we relaunched the LionVegas and the Royal Panda brands. We look positively to the future and have the prerequisites in place to be one of the market leaders. LionVegas also applied for a license in the Netherlands and preparations are continuing with a launch planned for the fall.

THIRD QUARTER COMMENTS
Preliminary revenue for July was €32.8 m (32.8), i.e. unchanged growth and 8% excluding the Netherlands.

REPORT PRESENTATION – TODAY AT 09:00 CET

  • To participate in the conference call and thus be able to ask questions, please call one of the following numbers: SE: +46 (0) 856 642 651, UK: +44 (0) 333 300 0804, USA: +1 631 913 1422, confirmation code: 36743362# or register on the web https://edge.media-server.com/mmc/p/h4mff8se
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