Nov 27, 2017 SOURCE: PR NewsWire
INTRALOT Announces y-o-y Revenue (+13.4%) and EBITDA (+10.5%) Growth for 9M17
ATHENS, Greece, November 27, 2017 /PRNewswire/ --
INTRALOT SA (RIC: INLr.AT, Bloomberg: INLOT GA), an international gaming solutions and operations leader, announces its financial results for the nine month period ending September 30th, 2017, prepared in accordance with IFRS.
(Photo: http://mma.prnewswire.com/media/610525/INTRALOT_Sep_Revenue.jpg )
OVERVIEW
- Revenue and EBITDA growth of +17.5% and +17.3% year-on-year respectively on a
constant currency basis.
- Group Revenues increased by 13.4% in 9M17, compared to 9M16.
- EBITDA in the nine month period grew by 10.5% year on year.
- EBITDA margin contracted by 0.4pps (at 12.6%).
- EBT margin developed to 3.5% (+1.5pps vs. 9M16).
- NIATMI (Net Income After Tax and Minority Interest) from continuing operations
improved by 39.6% vs. last year, developed to EUR-20.1m from EUR-33.3m.
- Operating Cash-flow generation in line with prior year at EUR120.5m. (EUR+10.1m
organic growth)
- Net Debt stood at EUR497.0m, up EUR2.1m compared to December 31st 2016.
- In September 2017, INTRALOT has successfully priced an offering of EUR500 million,
7-year Senior Notes due 2024 with a coupon of 5.25%, concluding a debt reprofiling
process in the last 3 years that resulted in INTRALOT's funding cost reduction with a
simultaneous extension of average debt life from 3.5 to 6 years.
- In October 2017, INTRALOT de-invested from its Jamaican operations. The transaction
totaled $40.0m, approximately 12 times the annual net profit after tax attributable to
INTRALOT's equity holders.
- In October 2017, INTRALOT agreed to acquire Bit8, a gaming company based in Malta in
which INTRALOT had first invested in 2015.
Consolidated Financal Statements for the 9 Months
Ended September 30th, 2017
(in EUR
million) 9M17 9M16 % 3Q17 3Q16 % LTM
Change Change
Revenues
(Turnover) 1,085.8 957.5 13.4% 352.7 320.6 10.0% 1,451.9
Gross Profit 190.8 168.3 13.4% 63.8 49.1 29.9% 255.6
EBITDA 137.3 124.3 10.5% 45.1 35.3 27.8% 188.9
EBITDA Margin
(%) 12.6% 13.0% -0.4pps 12.8% 11.0% +1.8pps 13.0%
EBT 37.6 19.0 97.9% 10.9 -1.3 - 23.4
EBT Margin
(%) 3.5% 2.0% +1.5pps 3.1% -0.4% +3.5pps 1.6%
NIATMI from
continuing
operations -20.1 -33.3 39.6% -6.4 -18.1 64.6% -58.5
NIATMI from
total
operations -32.0 1.8 - -6.2 -17.6 64.8% -32.9
INTRALOT Group CEO Antonios Kerastaris noted:
"Financial Results for the 9M2017 demonstrate steady progress in all three strategic goals set by the company, namely gains in Operational Performance, the implementation of M&A strategies to improve the profitability of our offering mix while facilitating investments in new products and projects, and Financial Profile Restructuring to secure long-term visibility. INTRALOT's market potential has been manifestly recognized by the success of a 3x-oversubscribed EUR500m bond offering with 7 year maturity period in September 2017. This issue allowed INTRALOT to fully repay its syndicated loans to the Greek banking sector while the diverse mix of investors includes the majority of the highest caliber international investment houses and generates additional confidence and credibility for INTRALOT's prospects."
OVERVIEW OF RESULTS
REVENUE
- Reported consolidated revenues increased by 13.4% compared to 9M16, leading to
total revenues for the nine month period ending in September 30th, 2017, of
EUR1,085.8m.
- The main factors that drove top line performance per region are:
- EUR+43.4m in Europe primarily due to increased sales in Poland, following the recent
regulatory changes, and in Bulgaria, mainly due to Eurobet's consolidation after 1H16.
(Eurobet's effect has been partially offset by the declining sports betting revenue in
Bulgaria due to decreasing payout).
- EUR+50.1m in North and South America, with the increase driven by Jamaica's top line
performance (improved performance of its Numerical games portfolio and the
introduction of horse racing following the acquisition of the Caymanas Track), the
improved performance in Argentina (Numerical and Sports Betting alike), the improved
sales of Brazil (due to Numerical games portfolio performance and positive FX effect)
and the start of INTRALOT's new contract in Chile which fully counterbalanced the top
line deficit from our US operations as a result of last year's record high Powerball
jackpot in 1Q16 (significantly higher than the 3Q17 Powerball jackpot effect) and the
sale of multi-play self-service lottery terminals in Ohio in 2Q16.
- EUR+34.9m stemming from all other regions primarily driven by Azerbaijan's strong
performance, the improved Morocco's results, and the sale of a software license right
in Australia which fully offset the sales gap from Turkey (vs. last year).
- On a quarterly basis, revenues increased by 10.0% compared to 3Q16, leading to total
revenues for the three month period starting in July 1st, 2017, and ending in
September 30th, 2017, of EUR352.7m. Increased revenues for the quarter are primarily
attributed to increased sales in Jamaica, Poland, Azerbaijan, the US (Powerball
jackpot effect in 3Q17), Morocco, and the new Chile contract. The upward trend of
revenues was partially counterbalanced by the revenue shortfall of sports betting in
Bulgaria mainly as a result of the decreased payout.
- Adjusting for Eurobet's consolidation after 1H16 and Chile's new contract[1], total
revenues for the nine month period ending in September 30th, 2017, developed to
EUR1,051.0m (+9.8% y-o-y).
- Constant currency basis: In 9M17, revenues-net of the negative FX impact of
EUR39.4m-reached EUR1,125.2m (+17.5% y-o-y) while in 3Q17 revenues-net of the negative
FX impact of EUR21.7m-at EUR374.3m (+16.8% y-o-y).
- Lottery Games remain the largest contributors to our top line, comprising 43.1% of our
revenues, followed by Sports Betting contributing 40.1% to Group turnover. Technology
contracts accounted for 10.1% and VLTs represented 2.7% of Group turnover while Racing
constituted the 4.0% of total revenues of 9M17.
YoY variance per Main Product
% Change (adjust.
for Eurobet &
% Change Chile)
Lottery Games +16.1% +7.8%
Sports Betting +11.1% +10.8%
- Wagers handled
During the nine month period ending September 30th, 2017, INTRALOT systems handled EUR17.8b of worldwide wagers (from continuing operations), a 2.6% y-o-y increase. South America's wagers increased by 36.6%, Africa's by 14.3%, Asia's by 7.1%, and West Europe's by 5.4%; while East Europe's wagers decreased by 12.3%, and North America's by 2.0%.
PAYOUT/ GROSS MARGIN
- The Payout Ratio in 9M17 increased by 0.2pps vs. 9M16 (69.9% vs. 69.7%) primarily
due to increased payout rates in Poland, Azerbaijan and Jamaica, in part offset by
reduced payout rates in Bulgaria, and Malta. At the same time, GGR from continuing
operations increased by 8.3% (EUR541.1m) mainly due to the top line growth of our B2C
contracts (+18.7% yoy on wagers) that fully balanced the slightly augmented payout
effect. Adjusting for Eurobet and the Chilean contract, GGR increased by EUR26.3m
(+5.3%). In 3Q17, the Payout Ratio decreased by 0.9pps compared to 3Q16, while GGR
increased by 10.9%, to EUR177.7m, as a result of similar B2C and B2B/B2G segments
growth rates, followed by the B2C contracts GGR margin improvement. Adjusting for the
Chilean contract, GGR totaled EUR175.7m (+9.7% vs 3Q16)
- The Gross profit margin in 9M17 was 17.6%, practically unchanged from 9M16. The
increased gross profit margin of our B2B/B2G operations, fully counterbalanced the top
line contract type mix change (9M16 had larger B2B/B2G contribution, i.e. 25.1% vs.
22.4% in 9M17) compared to last year. Overall, Gross Profit increased by 13.4%
(EUR+22.5m) compared to the 9M16 levels. Adjusting for Eurobet and the Chilean
contract, Gross Profit increased by EUR16.2m (+9.6%).
- For the three month period starting on July 1st, 2017, and ending on September 30th,
2017, Gross Profit increased by 29.9% compared to the same period last year, totaling
EUR63.8m. 3Q17 Gross Profit margin increased by 2.8pps (18.1% vs. 15.3%) positively
affected primarily by the higher gross profit margin of our B2B/B2G operations (e.g.
Powerball jackpot, Turkey improved performance and Chile contract start). Adjusting
for the Chilean contract, Gross Profit for 3Q17 increased by 27.4% (EUR+13.5m),
totaling EUR62.9m, compared to 3Q16.
OTHER OPERATING INCOME / OPEX
- Other operating income in 9M17 totaled EUR13.0m compared to EUR14.3m in 9M16;
posting a decrease of 9.1%, mainly driven by a provision reversal related to a
litigation case in Turkey in 1Q16.
- Total operating expenses increased by 8.2%, to EUR117.8m. Adjusting for Eurobet's
first time consolidation after 1H16 and Chile's new project, operating expenses
increased by 5.0% compared to 9M16 (EUR+5.5m). The uplift is mainly driven by
increased advertising expenses in Turkey, Poland, and Azerbaijan, and higher
administrative costs in USA, as well as in Jamaica following the new Horseracing
project start of operations in March 2017. 3Q17 operating expenses trend is aligned
with the YTD run rate.
EBITDA
- EBITDA, from continuing operations, developed to EUR137.3m in 9M17, posting an
increase of 10.5% (EUR+13.0m) compared to the 9M16 results. Adjusting for Eurobet and
the Chilean contract, 9M17 EBITDA developed to EUR133.5m posting a 7.2% increase vs.
last year (EUR124.5m). The Group managed to fully absorb the excessive Powerball
jackpot effect and equipment sale in Ohio in 9M16, supported also by the software
license right sale in Australia in 2Q17 and the Powerball jackpot in 3Q17.
- On a quarterly basis, EBITDA increased by 27.8% (EUR+9.8m) compared to 3Q16. Adjusting
for the Chilean contract for both 2017 and 2016, EBITDA during 3Q17 was reached
EUR44.2m compared to EUR35.4m (+24.9%) in 3Q16.
- LTM EBITDA developed to EUR188.9m posting a 7.4% increase vs. FY16.
- On a yearly basis, EBITDA margin, from continuing operations, decreased to 12.6%
compared to 13.0% in 9M16, as the improved B2B/B2G contract margin (vs. LY) didn't
fully mitigate the contract type mix change. LY margin has been positively impacted by
last year's record Powerball jackpot and Ohio terminals sale effects, compared to this
year's smaller jackpot and software license right sale in Australia. On a quarterly
basis, EBITDA margin improved by 1.8pps to 12.8% compared to 3Q16.
- Constant currency basis: In 9M17 EBITDA, net of the negative FX impact of EUR8.5m,
reached EUR145.8m (+17.3% y-o-y); while in 3Q17 EBITDA, net of the negative FX impact
of EUR4.5m, concluded at EUR49.6m (+40.7% y-o-y).
EBT / NIATMI
- EBT in 9M17 totaled EUR37.6m compared to EUR19.0m in 9M16 positively affected by
the significantly decreased finance expenses (lower by EUR10.3m compared to 9M16) as a
result of the 2016 bond refinancing. In 3Q17 EBT increased by EUR12.2m compared to
3Q16 (EUR-1.3m), positively affected by the improved EBITDA and decreased D&A, as the
positive impact, on interest expenses, from the 2016 bond refinancing fully
counterbalanced the negative FX effect of outstanding balances translation.
- Constant currency basis: In 9M17 EBTAU, adjusted for the FX impact, reached EUR52.3m
from EUR20.4m in 9M16 (+155.8%); while in 3Q17 EBT, net of the negative FX impact of
EUR7.4m, developed to EUR16.8m from EUR-2.9m (EUR+19.7m).
- NIATMI from continuing operations in 9M17 concluded at EUR-20.1m compared to EUR-33.3m
in 9M16 as the positive EBT variance was negatively affected by increased Taxes
(primarily Azerbaijan and Australia) as well as higher Minorities profits. In 3Q17,
NIATMI concluded at EUR-6.4m compared to EUR-18.1m in 3Q16.
- NIATMI (total operations) in 9M17 concluded at EUR-32.0m compared to EUR1.8m in 9M16.
In 3Q17, NIATMI concluded at EUR-6.2m compared to EUR-17.6m in 3Q16.
- Constant currency basis: NIATMI (total operations) in 9M17, on a constant currency
basis, reached EUR-7.3m from EUR3.8m in 9M16. In 3Q17, NIATMI net of the negative FX
impact of EUR3.7m totaled EUR-3.6m compared to EUR-18.7m in 3Q16.
CASH-FLOW
- Operating Cash-flow posted a slight decrease in 9M17 at EUR120.5m vs. EUR121.1m in
9M16. On a pro-forma basis, i.e., excluding the operating cash-flow contribution of
our discontinued operations in Italy and Peru in the nine months of 2016 (EUR10.1m),
there is an improvement of 8.6% in Cash inflows from operating activities (EUR120.5m
vs. EUR111.0m pro-forma) driven by the better EBITDA performance vs. last year.
- Net Capex in 9M17 was EUR59.4m compared to EUR44.6m in 9M16. Headline Capex items
in 9M17 include EUR11.7m towards the strategic partnership with AMELCO, EUR13.4m
towards R&D, EUR11.8m in the US mainly towards the Idaho and Ohio contract renewals,
EUR1.2m in the Philippines, and EUR5.8m in Jamaica mainly towards the acquisition of
Caymanas Track. All other entities net additions amount to EUR15.5m for 9M17.
Maintenance CAPEX for 9M17 stood at EUR15.7m, or 26.4% of the overall capital
expenditure in 9M17 (EUR59.5m).
- Cash and cash equivalents at the end of the 9M17 period increased by EUR325.6m vs.
FY16; Excluding the net cash generated from the refinancing that took place in 3Q2017
(EUR+335.0m) cash and cash equivalents balance decreased by EUR9.4m. Main contributors
to this movement are the AMELCO investment (EUR-11.7m) and the Eurobet PP instalment
payment (EUR-8.1m), the dividend distribution to minorities (EUR-34.0m) partially
offset by the released cash collaterals of EUR14.0m and the cash generated in the
normal course of business.
- Net Debt, as of September 30th, 2017, stood at EUR497.0m, up EUR2.1m compared to
December 31st 2016. Adjusting for the 3Q17 refinancing positive impact (EUR-13.9m -
timing variance), Net Debt was at EUR510.9m, up by EUR16.0m compared to December 31st
2016 as a result of the decision to invest in software (AMELCO) and Eurobet's
acquisition. On a quarterly basis, Net Debt decreased by EUR-19.8m, driven by the 3Q17
refinancing impact and a cash collateral release.
- As of September 30th, 2017, the Company didn't hold any of its bonds.
RECENT/ SIGNIFICANT COMPANY DEVELOPMENTS
- In early September 2017, INTRALOT S.A. Integrated Lottery Systems and Services
announced the successful pricing of an offering of EUR500 million, 7-year Senior Notes
due 2024 with a coupon of 5.25%, (the "Notes"), to be issued by its indirect
subsidiary INTRALOT Capital Luxembourg S.A. More than 170 international institutional
investors from Europe and North America participated in the Offering which was 3x
oversubscribed with tenders exceeding EUR1.5 billon. The proceeds from the offering of
the Notes will be used to fully redeem the Issuer's existing 6.00% senior notes due
2021, repay the outstanding syndicated facilities, pay fees and expenses related
thereto and to the offering and for general corporate purposes. This offering
successfully concludes a debt reprofiling process initiated in early 2014 which has
reduced INTRALOT's funding cost from 8.25% to 5.75% with a simultaneous extension of
average debt life from 3.5 to 6 years.
- On October 2nd, 2017, INTRALOT announced that it has been awarded the World Lottery
Association Security Control Standard (WLA SCS:2016) and ISO/IEC 27001:2013
certification for its operations in Chile and in the States of Louisiana and Montana
in the US, in line with the Group strategic priority to meet the highest global
security standards. The new certifications cover all corporate functions of each
operation, formalizing the existing management systems that control the integrity of
the games and corporate conduct as a whole and are complementary to the WLA SCS, ISO
27001, ISO 20000, ISO 9001, ISO 29990 and ISO 14001 certificates of INTRALOT
Headquarters in Athens, Greece.
- On October 11th, 2017, INTRALOT announced that the signing, of the Share Purchase
Agreement (SPA) with Zodiac International Investments Ltd for the sale of its 50.05%
stake in the INTRALOT Caribbean Ventures Limited which owns 49.9% of Supreme Ventures
Limited - a company listed in the Jamaican Stock Exchange (JSE) has been concluded.
The transaction amounted to USD 40m, correspondingly nearly 12 times to the annual net
profit after tax attributable to the equity holders of INTRALOT.
- On October 19th, 2017, INTRALOT announced the signing of a Share Purchase Agreement to
acquire, via INTRALOT Global Holdings BV, the remaining 65% of Bit8. Bit8 is an
established gaming company with market-tested, award winning gaming platforms,
stand-alone and hosted solutions and a large portfolio of international clients. In
the past two years of INTRALOT's strategic cooperation with Bit8 the technology teams
of the two companies worked closely for the development of INTRALOT's novel CRM
(Customer Relationship Management), platform PULSE, available in Retailer and Player
versions that work seamlessly to enhance the value delivered to both Operators and
Players.
APPENDIX
- <start_table>
Analysis per Business Segments
Business Segments Revenues
(in EUR million)
9M17 9M16 9M17 9M16 %
% on total % on total change
Operation contracts[2] 841.6 715.0 77.5% 74.7% 17.7%
Management contracts 79.5 82.2 7.3% 8.6% -3.3%
HW sales & facilities
management
contracts[2] 164.7 160.3 15.2% 16.7% 2.7%
Total 1,085.8 957.5 100.0% 100.0% 13.4%
<end_table>
- Revenues from Operation contracts (licenses) increased by 17.7% mainly due to the
improved top line in Bulgaria driven by Eurobet's consolidation after 1H16,
Azerbaijan's strong performance, Jamaica's uplift in its Numerical games portfolio and
the recent race track acquisition and Poland's top line improvement following the
recent regulatory changes.
- Sales from Management contracts decreased by 3.3% mainly driven by softer sales in
Turkey and Russia, with Morocco top line increase acting as a counterweight.
- Revenues from HW sales and facilities management increased by 2.7%. This increase was
mainly due to INTRALOT's new contract in Chile. All other entities performance
virtually counterbalanced the revenue contraction in our US operations due to last
year's record Powerball jackpot (in part offset by 3Q17 Powerball Jackpot) and the
sale of multi-play self-service lottery terminals in Ohio in 2Q16. The Argentinian,
Netherlands, and Australia monitoring contracts improved performance, the uptake of
the new Peruvian contract (following last year's M&A activity), and the sale of a
software license right in Australia are the main drivers for mitigating the US sales
gap. In addition, INTRALOT Australia reclassification from the prior characterization
as "Licensed operations" to "Technology and support services" from 1Q17 onwards also
supported in mitigating the USA sales gap vs. last year.
Analysis per Business Segments
Business Segments Revenues
(in EUR million)
9M17 9M16 9M17 9M16 %
% on total % on total change
Operation contracts[2] 841.6 715.0 77.5% 74.7% 17.7%
Management contracts 79.5 82.2 7.3% 8.6% -3.3%
HW sales & facilities
management
contracts[2] 164.7 160.3 15.2% 16.7% 2.7%
Total 1,085.8 957.5 100.0% 100.0% 13.4%
Geographical Sales Breakdown
(in EUR million) 9M17 9M16 % chg
Europe 460.3 426.4 8.0%
Americas 454.0 404.0 12.4%
Other 209.1 174.2 20.0%
Eliminations -37.6 -47.1 -
Total Consolidated Sales 1,085.8 957.5 13.4%
Geographical Gross Profit Breakdown
(in EUR million) 9M17 9M16 % chg
Europe 50.0 44.8 11.6%
Americas 48.8 41.9 16.5%
Other 92.1 82.9 11.1%
Eliminations -0.1 -1.3 -
Total Consolidated Gross Profit 190.8 168.3 13.4%
INTRALOT Parent Company results
Revenues for the period decreased by 8.9% to EUR43.1m. The sales deficit is primarily driven by less intragroup merchandise and services sales which are in part offset by the pickup of our facilities management contract in Peru (following the recent M&A transaction) and the improved contributions of our contract in Kenya.
EBITDA increased to EUR3.1m from EUR1.7m in 9M16. The EBITDA variance is mainly driven by the improved gross profit margin which contributed positively to the results of the Company despite the lower recorded revenues.
Earnings after Taxes (EAT) at EUR-1.3m from EUR-6.9m in 9M16.
Geographical Gross Profit Margin Analysis
% 9M17 9M16 % chg
Europe 10.9% 10.5% +0.4pps
Americas 10.7% 10.4% +0.3pps
Other 44.1% 47.6% -3.5pps
Total Consolidated Gross Margin 17.6% 17.6% +0.0pps
About INTRALOT
INTRALOT, a public listed company established in 1992, is a leading gaming solutions supplier and operator active in 52 regulated jurisdictions around the globe. With EUR1.32 billion turnover and a global workforce of approximately 5,300 employees (3,450 of which in subsidiaries and 1,850 in associates) in 2016, INTRALOT is an innovation - driven corporation focusing its product development on the customer experience. The company is uniquely positioned to offer to lottery and gaming organizations across geographies market-tested solutions and retail operational expertise. Through the use of a dynamic and omni-channel approach, INTRALOT offers an integrated portfolio of best-in-class gaming systems and product solutions & services addressing all gaming verticals (Lottery, Betting, Interactive, VLT). Players can enjoy a seamless and personalized experience through exciting games and premium content across multiple delivery channels, both retail and interactive. INTRALOT has been awarded with the prestigious WLA Responsible Gaming Framework Certification by the World Lottery Association (WLA) for its global lottery operations.
For more info:
Mr. Chris Sfatos, Group Director Corporate Affairs, email: sfatos@intralot.com or
Investors Relation Dept. email: ir@intralot.com
Phone: +30-210-6156000, Fax: +30-210-6106800, www.intralot.com
[http://www.intralot.com ]
[1] Pro-forma assumption: For a like-for-like comparison, 1H17 results of Eurobet and both 9M17 and 9M16 results of the Chilean contract are excluded.
[2] INTRALOT Australia from 1Q17 onwards has been re-classed under "HW sales & facilities management contracts" from "Operation contracts" previously
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