Gamenet Group 2014 Nine Months Results Rome, November 28 th 2014
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Agenda 1. Business Update Guglielmo Angelozzi CEO 2. 2014 9M Results Mario Bruno CFO 3. Q&A
1. Business Update Guglielmo Angelozzi CEO
Gamenet Highlights 9M 2014 9M 2014 Adjusted EBITDA (net of 1.6M worth of extraordinary impairment of receivables booked in 1Q 2014) of 51.1M, 5.1M down vs. 9M 2013: driver of first nine months Adjusted EBITDA performance versus last year mostly AWP related. Because of the uncertainty around the AWP3 related legal framework, Gamenet Renting was unable to compensate the loss of AWPs experienced in 2013 (due to the certification process and assignment of 8,000 VLT right in September 2013) Total Revenues and Income of 402.4M only -1.6% ( 6.5M), as payout management for VLT and Betting growth were able to mostly offset decrease of AWP bet (down by 17.7%, due to the above mentioned drivers) and of VLT bet (down by 14.9%, due to consumer spend driven by Italy s macroeconomic situation). Contribution Margin of 69.3M is down 6.6% vs. 9M 2013 ( 4.9M) mostly due to the effort to maintain distribution chain revenues and to more expensive VLT platform mix Significant year on year improvement in Betting and Online, which is now positive also at Ebitda level Substantial improvement of Direct Gaming halls management top line (1.7x), although not reflected in the Ebitda due to start-up cost / re-launch of new / re-opened locations Free cash flow Adj: 11.6M increase, from 2.9M in 9M 2013 to 14.5M in 9M 2014 Net debt of 188.4M, not including tax asset related to the deductability of the Corte dei Conti settlement ( 24.3M) 5
Gamenet Key Results 9M 2014 9M'13 9M'14 Change Change % LTM ( million) Bet 4,641.6 3,916.8 (724.8) -15.6% 5,395 Total Revenues and Income 408.9 402.4 (6.5) -1.6% 540.5 Contribution Margin 74.1 69.3 (4.9) -6.6% 92.2 Adjusted EBITDA (1) 56.2 (3) 51.1 (2) (5.1) -9.1% 68.9 Free Cash Flow 2.9 (4) 14.5 11.6 n.a Net Debt 118.6 188.4 69.8 n.m. (2) (3) (1) Reported Adjusted EBITDA: 56.2M in 9M 2013 and 49.5M in 9M 2014 (2) Net of extraordinary impairment of receivables booked in Q1 2014 ( 1.6M) (3) Excluding Corte dei Conti Settlement (4) Before the repayment of the Shareholders loans ( 60M) 6
2. 2014 9M Results Mario Bruno CFO
Summary Results 9M 2014 million 1 BET 2 Total Revenues & Income -15.6% 3 Contribution Margin 4 Adjusted EBITDA (net of extraordinary impairment of receivable) 8
Total Revenues & Income Bridge 9M 2013 vs. 9M 2014 M - 6.5M The decrease in AWP revenues is due to the lower average number of AWPs (-19.6%) partially compensated by higher unit revenues (up by 8.4%; less performing AWPs were shut down as part of the certification process) The increase in VLT revenues is driven by: 1. the higher number of average rolled out VLTs (+1.8% from 7,283 to 7,417) 2. increased unit revenues (+3.2%) due to lower payout more than offsetting lower unit bet The increase in Betting and Online is due to the asset management on existing betting corners, the roll-out of new betting licenses and the start-up of virtual games Vs. 9M 13 (%) -12.8% +4.5% >100% >100% 9
Contribution Margin Bridge 9M 2013 vs. 9M 2014 M - 4.9M Difference between Contribution Margin and Revenue decrease (-19.2% vs. -12.8%) due to the increase in distribution network costs (from 11.3% to 12.1% of total bet) generated by overall market conditions Difference between Contribution Margin and Revenue evolution (-2.9% vs. +4.5%) due to the increased number of rolled out Adria VLTs (with a different revenue structure) and to a different platform mix Year on year contribution margin improvement due to the roll-out of new licenses, the asset management of existing rights and the start-up of virtual games Mainly related to the start up of the gaming halls business Vs. 9M 13 (%) -19.2% -2.9% >100% >100% 10
Adj EBITDA (net of extraordinary impairment of receivable) Bridge 9M 13 vs. 9M 14 million - 5.1M As explained earlier, the difference is primarily due to the AWP segment Increase in indirect costs related to overhead and general costs incurred for the overall operations of the group 11
Consolidated Key Balance Sheet Figures FY'13 9M'14 ( million) Property, plant and equipment 30.3 26.4 Goodwill 22.5 21.3 Intangible assets 122.9 112.2 Net working capital and other assets/liabilities 33.7 40.1 Net Invested Capital 209.4 200.0 Net Debt 202.9 188.4 Equity 6.5 11.5 Financial Liabilities & Equity 209.4 200.0 Figures reported in the 2013 Audited Condensed Financial Statements have been reclassified to allow a more immediate understanding of the underlying business events. Reclassification details available upon request 12
Cash Flow Statement 9M'13 9M'14 ( million) Net income for the period (34.3) 5.1 Amortisation, depreciation and impairments 18.7 22.3 Change in net working capital (15.3) (7.1) Other (₁) 51.7 2.6 Operating Cash Flow 20.9 22.9 Capex (20.9) (6.5) of which investments (20.3) (6.5) of which acquisitions (0.7) (0.0) Change in receivables and other financial assets 3.0 (1.9) Main items: i) Payment of residual amounts due to Romagna Giochi in connection to gaming halls acquisitions: - 1.7M: ii) Timing of concession fees (every other month): - 4.7M; iii) Impact of bet seasonality on preu payables: - 6.8M; iv) 3 months worth of 2014 AAMS Deposit ( +11.2M). This is the difference between the 12 months receivable at the end of 2013 ( 30.5M), cashed in May 2014, and the 9 months receivables as of the end of September 2014 ( +19.3M) v) - 3M in trade payables (capex related) Main item: i) + 2.9M net change in deferred tax assets Investing Cash Flow (18.0) (8.3) Free Cash Flow Before Shareholders Loans Repayment 2.9 14.5 Shareholders' loans (60.0) 0.0 Free Cash Flow (57.1) 14.5 (1) Other includes change in provisions for risks and losses, change in Employees termination pay fund, net change in deferred tax assets, impairment of receivables and change in receivables 13
Net Financial Position FY'13 9M'14 Liquidity (2) 9.5 14.2 9.5 14.2 Bank borrowings Existing Senior Secured Credit Facility - - Credit facilities 6.0-6.0 - Senior Secured Notes Due to bondholders - capital 200.0 200.0 Due to bondholders - interest 6.2 2.5 206.2 202.5 Other Borrowings Other financial liabilities 0.2 0.2 Shareholder Loans Other shareholder loans - - Total debt 212.4 202.6 Net debt [1] 202.9 188.4 Does not include the tax asset related to the deductability of the Corte dei Conti settlement ( 24.3M) (1) Net debt is calculated as total consolidated debt net of cash at banks, investments in bonds and financial assets related to restricted cash (2) Including Financial Assets 14
3. Q&A