Acceleration of online with growing market shares for all segments of the brand. Increased the 2023 guidance

The Board of Directors of Lottomatica Group SpA has approved the condensed consolidated interim financial statements for the six months ended June 30, 2023 (1).

Results for the first half of 2023

● Collection of Euro 14,6 billion for the first six months of 2023, +20% compared to the same pro forma period (2) of 2022 (+34% reported)
● GGR (3) of Euro 1.953,2 million in the first half of 2023, +9% compared to the same pro forma period of 2022 (+13% reported)
o iSports market share: equal to 19,0% in Q2 (+1,7pp compared to FY 2022)
o iGaming market share: equal to 20,5% in Q2 (+3,3pp compared to FY 2022)
● Revenues equal to Euro 820,1 million for the first six months of 2023, +15% compared to the same pro forma period of 2022 (+20% reported)
o Online at Euro 246,9 million, +27% compared to H1 2022 pro forma (+51% reported)
o Sports Franchise at Euro 204,9 million, +18% compared to H1 2022
o Gaming Franchise at Euro 368,2 million, +7% compared to H1 2022
● Adjusted EBITDA (4) equal to Euro 298,8 million for the first six months of 2023, +19% compared to the same pro forma period of 2022 (+28% reported)
● Operating cash flow equal to Euro 256,9 million for the first six months of 2023
● Pro forma net financial debt (5) to Euro 1.216 million equal to 2,2x LTM run rate Adjusted EBITDA (6).

Guidance for FY 2023 increased

Based on the excellent results achieved so far, the Group has revised upwards its expectations for 2023:

• Revenues of Euro 1.630 – 1.690 million (from Euro 1.570 – 1.670 million)
• Adjusted EBITDA to Euro 570 – 590 million (7) (from Euro 550 – 570 million)
  or c. 50% of Adjusted EBITDA contributed by the Online operating segment
• Investment expectations remain unchanged (around Euro 65 million for recurring investments, around Euro 45 million for concessions, around Euro 30 million for one-offs for growth and around Euro 35 million for potential deferred payments).

William Angelozzi (pictured), Chief Executive Officer of Lottomatica Group, commented: “We recorded another quarter of strong double-digit growth, mainly driven by our Online operating segment, where we consolidated our leadership and continued to increase our market share across all our segments and brands. These results testify to the excellent execution of our strategy and the successful implementation of the turnaround of the Better e brands Lottomatica.it. In light of the results of these first six months of the year, we have therefore raised our expectations for the year 2023. We will continue to focus on growing our business and implementing key strategic initiatives, leveraging our product, our technology and our talents”.

Main consolidated results for H1 2023

Please note the consolidated figures (“rep”, “reported”) include Betflag from 1 December 2022. Therefore, the results of the first half 2023 are commented against the pro forma numbers (“PF”) of the first half 2022, assuming that the acquisition of Betflag had taken place on January 1, 2022.

In the first six months of 2023, the collection of Lottomatica Group amounted to Euro 14,6 billion, +20% compared to the same period of 2022 pro forma (+34% reported). The Online operating segment was the one with the greatest growth with +36% compared to the same period of 2022 pro forma (+78% reported).

Revenues amounted to Euro 820,1 million in the first six months of 2023, compared to Euro 712,3 million in the same period of 2022 pro forma, with an increase of 15% pro forma (+20% reported).

The Online operating segment achieved revenues of Euro 246,9 million, +27% compared to the same period of 2022 pro forma (+51% reported), with a sequential acceleration in the second quarter, driven by the increase in market share in all segments and brands, including Better and Lottomatica.it, which have been migrated to the Group's systems since Q2022 XNUMX and now contribute to the strong performance of the Group. Furthermore, the performance of the Online operating segment was supported by: the increase in the offer of online games, the continuous improvement of technology (eg the inclusion of virtual games in the sports betting app), the enhancement of CRM and omnichannel to increase the retention, reactivation and acquisition of new customers from the retail channel.

The Sports Franchise operating segment recorded an 18% increase in revenues in the first six months of 2023 compared to the same period of the previous year, with revenues of Euro 204,9 million, mainly driven by market growth, despite the expansion of the online segment, and the rationalization of the network in view of the implementation of the "POS Project" (8).

Revenues of the Gaming Franchise operating segment amounted to Euro 368,2 million in the first half of 2023, recording +7% compared to the same period of 2022, with VLTs also driving growth in the second quarter, despite a dense base for comparison since the lifting of the Covid-related restrictions took place in the second quarter of 2022.

Adjusted EBITDA stood at Euro 298,8 million in the first six months of 2023, an increase of 19% compared to the same period of 2022 pro forma (+28% reported). The Adjusted EBITDA margin on revenues stood at 36,4%, compared to 35,4% in the same period of 2022 pro forma (34,2% reported), mainly driven by the higher contribution of the Online business.

Operating cash flow in the first six months of 2023 amounted to Euro 256,9 million, compared to Euro 205,6 million in the same period of 2022, due to the increase in Adjusted EBITDA partially offset by payments relating to concessions .

Pro forma net financial debt at June 30, 2023 amounted to Euro 1.216 million, following the refinancing of Euro 1.115 million of the bonds maturing in 2025 through the issue of a new bond, of which Euro 550 million at a floating rate ( with a 3-month EURIBOR coupon +4,125%) and Euro 565 million at a fixed rate (with a 7,125% coupon), both maturing in 2028. The pro forma financial leverage calculated on an LTM run rate Adjusted Ebitda basis fell to 2,2x as at 30 June 2023 from 2,4x as at 31 March 2023.

Dividend distribution

In compliance with the provisions of the Instructions to the Rules of the Markets Organized and Managed by Borsa Italiana (Title IA.2, Section IA.2.1), Lottomatica Group informs that the month envisaged for the payment of any dividend based on the results for the 2023 financial year is May 2024. Lottomatica Group underlines that no decision has been taken regarding the possible distribution of the dividend or its payment, which is left to the exclusive competence of the shareholders' meeting which will be convened to approve the 2023 financial statements. the communication is therefore made exclusively to fulfill the provisions of Borsa Italiana SpA and this does not assume any forecasting value with regard to the existence of the conditions for the distribution of the dividend during the current year or in future years.

Significant events that occurred after the reporting period

Repayment of bond loans

On June 1, 2023, Lottomatica SpA has issued a senior guaranteed bond loan for a total amount of Euro 1.115 million, of which (i) Euro 565 million bearing interest at an annual fixed rate of 7,125%, with coupon paid every six months starting from 1 December 2023, and (ii) Euro 550 million (issued below par at 99%), interest-bearing equal to the sum of the three-month EURIBOR (with a 0% floor) plus 4,125% per annum, and with coupon paid quarterly starting from 1 September 2023. A portion of the net proceeds was used to finance the repayment of the remaining Euro 200 million of the floating rate portion of the floating rate senior guaranteed bond loan maturing in 2025, while the remainder was transferred to an escrow account in the name of Lottomatica SpA, pending the satisfaction of the "Escrow Release Conditions", as contractually defined.

On 17 July 2023, following the satisfaction of the aforementioned "Escrow Release Conditions", these proceeds were used, together with the available liquidity, to finance (i) the definitive early repayment of the senior guaranteed bonds issued by Lottomatica SpA respectively on 23 July 2020 and 1 April 2021 for a total residual amount of Euro 915 million, plus accrued and unpaid interest; and (ii) the make-whole payment due to the early repayment for Euro 12,7 million.

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(1) "H1" is equivalent to the first half year, "Q2" is equivalent to the second quarter and "reported" is equivalent to actual data.
(2) Pro forma or PF calculated as if the acquisition of Betflag took place on January 1, 2022, applies to the entire document.
(3) Gross Gaming Revenues “GGR” calculated as wagers net of the payout. iSports includes online sports, virtual and horse bets. iGaming includes online casino.
(4) Adjusted EBITDA is calculated as the net result for the period adjusted for: income taxes; financial income; Financial charges; charges/(income) from valuation of equity investments in other companies using the equity method; depreciation and write-downs; ancillary costs for the purchase of equity investments and related to international activities; integration charges (which include corporate restructuring charges and redundancy incentives); and other income and expenses which, by their nature, are not reasonably expected to recur in future periods. This applies to the entire document.
(5) Pro forma for refinancing and IPO costs.
(6) LTM run rate Adjusted EBITDA is calculated as the Adjusted EBITDA for the twelve month period ended June 30, 2023 pro forma for the Betflag acquisition, equal to Euro 544 million, plus the run rate value of the synergies related to the acquisition of the B2C businesses of IGT excluding lotteries, and Betflag for a total of Euro 15 million.
(7) Assuming the payout in sports in line with the historical average of the last 3 years.
(8) Project aimed at replacing the less performing points of sale ("POS") with c. 300 new highly performing POS.
(9) Pro forma net financial debt as at June 30, 2023 differs from actual net financial debt as it is adjusted by Euro 56 million of refinancing costs and IPO payable after June 30.
(10) Includes underwriting costs, OIDs, transaction costs, breakage costs (net of swaps).
(11) LTM run rate Adjusted EBITDA is calculated as the Adjusted EBITDA for the twelve month period ended June 30, 2023 pro forma for the Betflag acquisition, equal to Euro 544 million, plus the run rate value of the synergies related to the acquisition of the B2C businesses of IGT excluding lotteries, and Betflag for a total of Euro 15 million.

https://www.jamma.tv/en/mercato/lottomatica-group-continua-crescita-a-doppia-cifra-nel-secondo-trimestre-2023-303267