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LOTTOMATICA ANNOUNCES 2007 FIRST-QUARTER RESULTS ENDED MARCH 31, 2007
First-Quarter 2007 Revenues of €435 million, compared to €190 million of Lottomatica's Italian stand-alone operations in first quarter of 2006
EBITDA of €211 million and Operating Income of €140 million, compared to €112 million and €94 million, respectively, in first quarter of 2006
Net Income of €45 million, compared to €41 million in first quarter of 2006
Revises Guidance Upward for 2007
Organizational Changes
Jaymin Patel Named GTECH President and COO; Stefano Bortoli Named Lottomatica Group CFO
ROME (ITALY) - PROVIDENCE, RHODE ISLAND (US), May 03, 2007 - The Board of Directors of Lottomatica S.p.A., chaired by Mr. Lorenzo Pellicioli, approved today the consolidated accounts of Lottomatica Group for the first quarter ended March 31, 2007.
" Lottomatica's financial performance in the first quarter was good, and we are pleased with the results," said W. Bruce Turner, CEO of Lottomatica Group. "We also have had some important new business developments and made significant progress toward achieving our strategic goals that were set out in our three-year plan. We are working to drive new growth through acquisitions and partnerships, and we will continue to focus on M&A transactions that enhance our offerings in the online and instant channels, sports betting, gaming machines, and the full range of interactive channels. All of these activities will bring us closer to achieving our ultimate goal: to become a fully-diversified, world-class gaming company."
"I am pleased to report that we experienced solid progress in all of our businesses, and our performance has exceeded our initial expectations," said Jaymin B. Patel, CFO of Lottomatica Group. "As a result, we are updating our 2007 guidance, increasing the expected revenues and profits for the year. With our sustainable high margins and the continued positive performance in our key verticals, we remain confident in our 2007 outlook and beyond."
Lottomatica Group First-Quarter Results
Lottomatica Group
Consolidated Income Statements (€/M) |
March 31, 2007 |
March 31, 2006 |
Revenues |
435.3 |
190.2 |
EBITDA |
211.2 |
111.8 |
EBITDA % |
49% |
59% |
Operating Income |
139.6 |
93.8 |
Net Income |
45.0 |
41.4 |
Note: 2007 Results include three months of Lottomatica's Italian stand-alone operations and three months of GTECH operations; 2006 reflects three months of Lottomatica stand-alone operations.
Revenues for the first quarter ended March 31, 2007 totaled €435.3 million, including approximately € 224.6 million from three months of GTECH operations. Overall, revenues grew 128.8% year-over-year, while revenue from Lottomatica's Italian operations grew 10.7% year-over-year.
EBITDA was €211.2 million, up 88.9% over the first quarter of 2006. Operating Income was €139.6 million for the quarter, up 48.9% over the same period last year. Operating Income margins, excluding the purchase price amortization of intangibles related to the GTECH acquisition, was approximately 38%.
Net Income was €45.0 million for the quarter ended March 31, 2007, up 8.7% over the first quarter of 2006.
GTECH Operating Results and Business Highlights
Revenue contribution for the three months of GTECH operations was €224.6 million, with approximately €200.4 million from the Lottery segment, €12.8 million from Gaming Solutions, and approximately €11.4 million from Commercial Services.
In the first quarter of 2007, GTECH made considerable progress in executing against its growth strategy by defending and growing the core business, implementing lottery overlay Commercial Services activities, and preparing for sports betting operator and technology opportunities.
GTECH signed a three-year online contract extension with the New York Lottery to continue providing products and ongoing services through February 2010. GTECH was also awarded Instant Ticket Vending Machine (ITVM) contracts with customers in Missouri and Massachusetts, following competitive procurements. The Company expects to receive over €165 million in revenues over the life of these contracts.
In the Commercial Services segment, GTECH launched an extensive network in Colombia, in partnership with Citibank, that will offer banking services to low and middle income areas of the country. The network is operated under GTECH's VIA brand and will be available at more than 3,200 locations, where GTECH has existing lottery terminals.
In keeping with GTECH's overall business strategy to move away from stand-alone Commercial Services opportunities, the Company announced the sale of its POLCARD subsidiary to First Data International, for an enterprise value of approximately €243 million, on a debt-free, cash-free basis. The transaction is expected to be completed by early third quarter of 2007.
Italian Operating Results and Business Highlights
Lottomatica's Italian operations experienced significant revenue growth in the first quarter of 2007, both in the Lottery and the Commercial Services businesses.
Revenues grew approximately 10.7% to €210.7 million, from €190.2 million in the first quarter of 2006.
Lottery wagers grew approximately 29% to €3.8 billion in the first quarter of 2007, from €2.9 billion for the same period last year, as strong Instants lottery performance more than offset the decrease in Lotto.
Lotto game wagers reached €1.6 billion, a drop of 21.6% against €2.0 billion in the first quarter of 2006, due to an exceptional late numbers trend in the first quarter last year. Lotto revenues were €104.4 million, compared to €132.6 million in the same period last year.
The continued strong performance of instant tickets, resulted in sales of approximately €2.1 billion, compared to sales of approximately €855.4 million, in the first quarter of 2006. The number of Scratch & Win tickets sold equaled 636 million, compared to 354 million in the same period last year. The average price point grew to approximately €3.4, compared to €2.4 in the prior year, mainly driven by the introduction of the €10 lottery ticket. Revenues for the Instant and Traditional Lotteries business totaled €76.5 million compared with €31.0 million during the first quarter of 2006, an increase of 146.6%. Growth in instant ticket sales was driven principally by the introduction of the new € 10 instant lottery ticket in January, which generated new sales of €739 million during the quarter ended March 31, 2007.
Revenues from Commercial Services improved by 14.5% over the same period last year, driven primarily by growth in traditional mobile top-ups, along with growth in other product lines including stamp duties and bill payments.
In the Italian sports-betting segment, Lottomatica is progressing toward the launch of its new sports-betting network. Of the 1,644 retailer licenses received, contracts for specific locations have been signed with over 1,200 retailers. The Company expects to commence operations in the third quarter of 2007.
Consolidated Cash Flow and Net Financial Position
At the close of the quarter, Lottomatica Group had a Net Financial Position of €2.5 billion, with Cash and Equivalents of approximately € 318.2 million at the end of period. Net Cash Flows from Operating Activities generated €59.8 million.
Consolidated Shareholders' Equity
Consolidated shareholders' equity totaled €1.9 billion.
Financial Outlook
Lottomatica updated its guidance for the full year of 2007.
Lottomatica expects service revenues in the range of €1.665 billion to €1.765 billion, for the year ending December 31, 2007.
Operating Income, excluding purchase price amortization, is expected to be in the range of €490 million to €500 million, with margins of 28% to 29%.
EBITDA for the full year is expected to be in the range of €700 million to €710 million, with margins of 40% to 42%.
Organizational Changes
Today, Lottomatica also announced that Jaymin Patel has been appointed to the newly-created position of President and Chief Operating Officer, GTECH Corporation, reporting to W. Bruce Turner. Mr. Patel has been with GTECH for over 12 years in senior leadership roles and served as the GTECH Chief Financial Officer during a period of tremendous growth and success starting in the year 2000. Most recently, Mr. Patel led the restructuring efforts while serving as the Chief Financial Officer for Lottomatica, S.p.A.
Mr. Turner will continue as Chief Executive Officer of Lottomatica S.p.A. and GTECH, and will increase his focus on the market opportunities and the innovations needed to successfully address the Company's growth in the global gaming industry.
Stefano Bortoli will assume the position of Senior Vice President and Chief Financial Officer for Lottomatica S.p.A. being vacated by Mr. Patel. Since September 2006, Mr. Bortoli has served as the Chief Financial Officer for Lottomatica's Italian operations. Mr. Bortoli will relocate to GTECH's Providence, Rhode Island, headquarters.
"One of our business strengths is our ability to adapt our organizational model with changing business conditions while leveraging the many talents of our people," said Mr. Turner. "I am very confident that our new structure and team will ensure our continued success."
Other Information
The Board of Directors approved terms and conditions of two new stock-based plans for employees of Lottomatica S.p.A. and/or its subsidiaries already resolved by the April 23, 2007 Shareholders' meeting: the 2007 - 2015 stock-option plan has a maximum of 2,100,000 options, equal to 1.4% of the current share capital; the 2007 - 2010 stock granting plan is for a maximum of 400,000 ordinary shares of the Company, equal to 0.26% of the current share capital.
Upon delegation of the October 18, 2006 and of the April 23, 2007 Shareholders' meetings, the Board of Directors also approved two share capital increases up to an aggregate nominal amount of €2,073,061.00, respectively serving the above said 2007 - 2015 stock-option plan as well as the so called "retention plan 2006-2011" resolved by the October 18, 2006 Shareholders' meeting.
Lottomatica is one of the world's largest commercial lottery operators and a market leader in the Italian gaming industry. GTECH is a leading gaming technology and services company, providing innovative technology, creative content, and superior service delivery. GTECH and Lottomatica together create a fully integrated lottery operator and gaming technology solutions provider - a combined company with worldwide scale, considerable financial strength, and industry-leading customer solutions. Lottomatica is majority owned by De Agostini, which belongs to a century-old publishing, media, and financial services group. Lottomatica is publicly traded on the Italian Stock Exchange (LTO), and in 2006, had more than €1.6 billion in revenues and 6,000 employees in over 50 countries when combined with GTECH.
For further information:
AD HOC Communication Advisors 02/7606741
Mario Pellegatta - Matteo Cidda 335/1415585
This press release and the previous ones are available on the web site: www.adhoccommunication.it
Lottomatica web site: www.gruppolottomatica.it
GTECH contact: Robert K. Vincent Public Affairs 1-401-392-7452
GTECH web site: www.gtech.com
Lottomatica Group Consolidated Financial Statements to follow:
