Intralot Integrated Lottry Sys & Srvs : 3RD QUARTER 2016 RESULTS

3RD QUARTER 2016 RESULTS

3RD QUARTER 2016 RESULTS

'INTRALOT announces aggressive revenue growth 7% and resilient EBITDA growth 2.4% in 9M16'

December 1ST, 2016
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, 2016, prepared in accordance with IFRS.

OVERVIEW

Commenting on the 3Q 2016 Results INTRALOT Group CEO Antonios Kerastaris noted:
'INTRALOT Q3 was marked by aggressive organic revenue growth, as a result of the company strategy for launching new products and services and reaping fruits of new projects. Recent milestone developments of a successful early refinancing of a €250m bond in September with significantly better terms that lead to cumulative savings of up to €65m savings in debt-servicing costs and extension of maturities to 2021 combined with the collection of USD 68.7m in cash from the disposal of 80% of our operation in Peru have drastically improved our financial position and capacity to meet our targets of significantly reduced net debt and improved cash position by the end of 2016.'

OVERVIEW OFRESULTS

REVENUES

• Reported consolidated revenues increased by 16.2% to €320.6m in 3Q16 compared to the same period a year ago, shaping revenues in 9M16 to 957.5m or 7.0% higher y-o-y. Revenues in 3Q16 were boosted from increased sports betting revenues in Bulgaria and the consolidation of the recently acquired Bulgarian lottery company Eurobet in 3Q16.

• The increase in 9M16 derives from: +115.1m in East Europe due to increased sales in Bulgaria and Turkey, +20.9m in North America, +3.2m in West Europe due to higher revenues in Malta and Cyprus and +1.9m in Africa due to increased sales in Morocco, partially counterbalanced by decreased sales of 47.8m in Australasia due to lower sales in Azerbaijan where the local currency suffered severe devaluations and -30.8m in South America due to softer sales in Argentina, Jamaica and Brazil.

• Constant currency basis: In 3Q16 revenues net of a negative FX impact of €35.1m reached €355.7m (+28.9% y-o-y), while in 9M16 revenues net of a negative FX impact of €112.1m shaped at €1,069.6m (+19.5% y-o-y).

• Numerical Games are the largest contributors to our top line, comprising 48.8% of our revenues (+11.1% vs. 9M15), followed by Sports Betting contributing 34.3% to Group turnover (+2.4% vs. 9M15). VLTs/AWPs represented 3.0% of Group turnover (+70.0% vs. 9M15), followed by Technology contracts with 11.4% (+5.8% vs. 9M15) and Racing with 2.6% (-27.7% vs. 9M15).

During the 9M16 period INTRALOT systems handled €17.3 bn. of wagers worldwide (from continuing operations), increased by 1.0% y-o-y. Africa increased by 22.6%, North America increased by 11.7%, East Europe increased by 3.2%, West Europe increased by 1.4%, South America decreased by 13.5% and Asia decreased by 6.5%.

GROSS MARGIN / OPERATING INCOME / OPEX

• The Gross profit margin wasshaped at 17.6% in 9M16 from 18.8% in 9M15, negatively affected mainly by a margin contraction in Bulgaria & Azerbaijan (due to a higher payout) and Turkey, partially counterbalanced by margin expansion in the US. The payout ratio in 9M16 increased by 3.7ppt vs. 9M15, while GGR increased by 4.3% in the same period. In 3Q16, the payout ratio increased by 4.9ppt. vs. 3Q15 (due to Bulgaria and Azerbaijan), while GGR increased by 7.6%.

• Other operatingincome in 9M16 totaled€14.3m compared to €17.0m in 9M15, posting a decrease of 15.8%. The major drivers of this decrease were the non-recurring income in Australia due to the operations sale in 2Q15 (€3.6m) and negative FX impact (€1.0m), partially offset by improved operations in Turkey (€1.7m) and the growth in instant ticket services of our US operations (€1.4m).

• Total operating expenses decreased by 2.8% to €109.9m in line with our strategy to contain costs.

EBITDA

• EBITDA developed to €35.0m in 3Q16, posting a decrease of 14.3% compared to 3Q15. EBITDA in 9M16 shaped at €123.9m, increased by 2.4% y-o-y.
• Constant currency basis: In 3Q16 EBITDA net of a negative FX impact of €5.1m reached €40.1m (-1.8% y-o-y), while in 9M16 EBITDA net of a negative FX impact of €17.2m shaped at €141.1m (+16.6% y-o-y).

EBT / NIATMI

• EBT in 3Q16 was shaped at €-1.8m compared to €5.1m in 3Q15. In 9M16 EBT was €17.8m from €30.8m in 9M15 (€-13.0m), negatively affected by higher net financial costs (€6.9m), increased Exchange differences (€2.9m) and higher investing activities (€2.0m) and asset losses (€2.0m) in 9M16.

• Constant currency basis: In 3Q16 EBΤ net of a negative FX impact reached €1.0m from €9.5m in 3Q15, while in 9M16 EBT net of a negative FX impact shaped at €34.7m (+17.6% y-o-y).

• NIATMI from continuing operations in 3Q16 was shaped at €-18.6m compared to €-14.0m in 3Q15, while in 9M16 it was €-34.5m from €-36.7m in 9M15.

• Constant currency basis: NIATMI from continuing operations in 3Q16 net of a negative FX impact reached €-18.5m from €-9.5m in 3Q15, while in 9M16 it was shaped at €-28.7m from €-37.4m in 9M15.

CASH-FLOW

• Operating Cash-flow almost doubled in 9M16, at €121.1m vs. €64.8m in 9M15. The growth is mainly attributed to the WC improvement (+2.9m in 9M16 from -46.8m in 9M15).

• Net Capex in 9M16 was €44.6m, compared to €53.7m in 9M15. Major Capex items in 9M16 include investments in our business in US of €10.5m, in Chile €4.9m and R&D of €5.2m.

• Net debt in the 3rd quarter increased by €23.0m to €533.8m, due to third party dividends distribution of €9.5m to joint venture partners, M&A activities of €10.0m and negative FX of €1.8m.

• LTM 9M16 Net Debt to EBITDA ratio adjusted for the proceeds from the Peruvian transaction that were received in November 2016 (€62.3m) and the redemption premium regarding the issuance of the 5-year €250m bond (€10.8m), is shaped at 2.88x.

• In September 2016, the company completed the refinancing of the 2018 €325m bond through the issuance of a 2021 €250m bond. Recently the company obtained committed lines of €240m compared to €200m previously. As a result, the company will benefit from recurring annual interest cost savings in the area of €12-13m.

• As of 30.09.2016 the Company didn't hold any of our bonds.

APPENDIX

• Revenues from Operation contracts (licenses) increased by 5.0% mainly due to higher revenues in Bulgaria, Malta and Cyprus, partially counterbalanced by the performance of Azerbaijan, Jamaica, Argentina and Brazil.
• Sales from Management contracts posted an increase of 19.3% mainly driven by the performance of Turkey and Morocco.
• Revenues from HW sales and facilities management increased by 10.5% mainly due to increased revenues in US and Australia, partially counterbalanced by the revenues in Argentina, an IT contract in Malaysia and the revenues from the Hellenic Lotteries.

INTRALOT Parent company results
Revenues for the period decreased by 10.4% to €47.3m.
EBITDA decreased to €1.7m from €37.2m in 9M15.
Earnings After Taxes (EAT) shaped at €-6.9m from €-8.2m in 9M15.