Presentation to Investors - June 2017 - Intralot
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Presentation to Investors June 2017
Disclaimer
By reading or attending the presentation that follows, you agree to be bound by the following limitations.
This presentation has been prepared by INTRALOT S.A. and its subsidiaries (the “Company” or “We”) solely for informational purposes and does not constitute, and should not be
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The Company has included non-IFRS financial measures in this presentation. These measurements may not be comparable to those of other companies. Reference to these non-IFRS
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The information contained in this presentation has not been subject to any independent audit or review. A significant portion of the information contained in this presentation, including all
market data and trend information, is based on estimates or expectations of the Company, and there can be no assurance that these estimates or expectations are or will prove to be
accurate. Our internal estimates have not been verified by an external expert, and we cannot guarantee that a third party using different methods to assemble, analyse or compute market
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Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict and outside of the control of the
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information currently available to us, if any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While we do not know what
impact any such differences may have on our business, if there are such differences, our future results of operations and financial condition, could be materially adversely affected. You
should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made. The Company
expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect events or circumstances after the date on which such
statement is made, or to reflect the occurrence of unanticipated events.
June 2017 | Page 2
Agenda 1. Overview 2. Key Strengths 3. Company Strategy 4. Performance Overview & Financials 5. Conclusion 6. Appendix
1. Overview
June 2017 | Page 4
Global Gambling Market – 2016 Snapshot
Global GGR, 2016E Global GGR per region, 2016E
11% 4% 10%
19%
€117b
€355b €110b €98b
North
Global Asia Europe
America
GGR GGR GGR
GGR
89% 81%
96% 90%
Bingo
/ Other
Betting
13 14% 6% 6%
51 Casino
122 €10b
€355b €17b €3b
Global South
Oceania Africa
65 GGR GGR
America
GGR
GGR
104 86% 94% 94%
Gaming
Machines
Lotteries Interactive Retail
Source: H2 Gambling Capital Summary May’16
June 2017 | Page 5
Regulatory and Industry Trends Overview
Key Sector Trends INTRALOT’s Position
Regulation Initiatives
Global regulation changes, driven by country and state budget deficits and
increased demands for social welfare spending fuel: Leading partner for organizations
that want to compete in a
Liberalizations of gaming markets, mainly Internet and mobile markets regulated interactive competitive
Privatizations of state owned lotteries environment
Crackdowns on illegal gaming
End-to-End player experience
New business models focus on growing consumer demand for entertainment
Offers a personalized player
Personalized game offering and content experience
Customer analytics
Technology convergence
Robust, efficient and versatile
An ‘All-in-one’ gaming platform delivering a unified customer experience gaming platform that converges
Convergence of land based and interactive channels land-based and interactive channels
Distribution channels
Mobile is now the primary access point to online retail for most consumers Omni-Channel Approach
Competition
Offers extensive business support
Major international competitors shift focus to VLT market and achieving
for optimal customer experience
synergies
June 2017 | Page 6Global Presence - INTRALOT at a Glance
Europe
U.S.A.
€23.4bn wagers
handled
More than 51,000 Retailer terminals 71,500 Retailer terminals Oceania
26,000 VLT Systems 36,000 Horizon Monitors Asia
130 Patents 8,200 Self-service terminals
34,000 Horizon Monitors
22,000 Retailer terminals
Africa 30,000 VLT Systems
South 11,500 Horizon Monitors
America
3,400 Retailer terminals
2,300 Horizon Monitors
6,900 Retailer terminals
160 VLT Systems
3,500 Horizon Monitors
306,000
INTRALOT Retail
Solutions WORLDWIDE
32 55 87 3,4501 1.32 bn
Countries Jurisdictions Contracts Employees Revenues in 2016
INTRALOT is the leading supplier of integrated gaming and transaction systems, innovative game content, sports betting, and interactive
gaming services to state Lotteries worldwide
1A global workforce of approximately 5,300 employees (3,450 of which in subsidiaries and 1,850 in associates)
June 2017 | Page 7Overview of INTRALOT – A Global Gaming Technology
and Service Company
Business Description Our Three Pillars
INTRALOT is a global leader in the supply of integrated gaming systems
and services
Designs, develops, operates and supports customized software and
hardware for the gaming industry
Provides innovative technology and services to state and state-
licensed lottery and gaming organizations worldwide Licensed Operations Management Contracts Technology
Holds licences for full games operation
Founded in 1992 and listed on the Athens Stock Exchange since 1999
Operates a diversified and stable portfolio of 87 contracts and licenses
across 55 jurisdictions and 5 continents Operation and Day to day Provision of
INTRALOT has a strong track record of contract renewal control over every operations hardware, software,
aspect of the gaming management and telecom
Revenues of €1,323.6m and EBITDA of €175.8m (13.3% margin) in FY16 offering solutions to state or
Includes marketing,
Average sovereign rating of operations in the high BBB/ Baa to low A area POS optimisation, state-licensed
risk management operators
FY16 Revenue Breakdown Installation,
maintenance and
By Geography By Business Activity support
Technology
RoW
16%
Typical contract Typical contract Typical contract
19%
structure structure structure
Europe Open-ended Multi-year with Multi-year with
40%
market licence renewal options renewal options
Licensed
Operations Revenues Fixed percentage Fixed percentage
Management
75% Contracts generated of wagers of wagers
America 9%
41% through wagers
June 2017 | Page 8INTRALOT Certifications & Memberships
Responsible & Reliable Partner Highlights
1st Vendor to
Achieve WLA
As member of the UN Global Compact, SCS Certification
INTRALOT is a global corporate citizen
committed to sustainable development, 1st Vendor to
Responsible
and is an active proponent of the Achieve ISO
principles of responsible gaming, 20000
possessing the WLA Responsible Certification
Gaming Framework Certificate 17 operations
certified as per
both WLA (SCS)
and ISO 27001
The Company maintains the highest security
security certification certifications.
Reliable INTRALOT is the first international
vendor in the gaming sector that has
Leading member in all major Lottery and Gaming Associations
been certified according to the WLA globally:
Security Control Standard in 2012
Moreover, the Company has been
certified with the ISO 27001 for its
(ISMS) Information Security Platinum
Contributor
Premium
Partner
Top
Sponsor
Star
Contributor
Management System and maintains the
ISO 20000-1 certification on Information
Technology Service Management
Gold Gold
Member
Sponsor Member
June 2017 | Page 92. Key Strengths
June 2017 | Page 10Strengths Overview
7 1
Management experienced
Attractive industry with
at renewing contracts and
sustainable future growth
delivering revenue and
prospects
EBITDA growth
6 2
Leading position in the
Competitive EBITDA sector with technological
Margins innovations creating
significant barriers to entry
5 3
Shift to asset-light model Diversification and scale
and stronger cash flow across geographies and
generation 4
business activities
Highly visible recurring
revenues secured by long-
term contracts
June 2017 | Page 111 Attractive Industry with Sustainable Future Growth Prospects
Focus on lottery and betting
Global Gaming Market GGR Evolution per product (€bn) CAGR
11-15 16-20
390 402
379 +1.6% +1.9%
357 355 367 14.1
337 347 349 13.8 +1.6% +2.6%
324 13.4 13.7
12.5 12.7 13.1 69.5 71.4
12.2 12.5 67.7
11.9 62.1 64.4 66.1 +0.6% +3.6%
61.2 61.0 63.1
59.2 +5.2% +4.3%
136.4 140.6
127.7 132.3 +2.2% +2.7%
131.7 133.6 122.2 122.0
119.5 126.2
Others
55.4 57.2 60.2
47.2 48.7 50.9 52.8
39.8 41.2 43.2 Gaming Machines
95.7 98.2 101.9 102.0 104.3 107.1 109.7 112.7 116.1 Casino
93.4
Betting
2011A 2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E Lotteries
Focus on the interactive channel/ Strengthen INTRALOT’s footprint through AMELCO agreement
Global Interactive Gaming Market GGR Evolution per region (€bn) CAGR
53 11-15 16-20
49
46 +5.5% +18.4%
42 10.6
+9.1% +5.9%
38 9.6
8.9
35 7.7 +10.9% +8.0%
32 14.2
28 5.4
26 5.2 12.7
13.4 +13.6% +5.9%
24 4.8 12.0
4.3 11.3
4.1 10.5 Americas
4.2 9.8
9.0
7.4
8.3
24.9
Asia
21.7 23.0
18.3 19.8
15.1 16.5 Europe
10.9 12.1 13.3
2.3 2.5 2.7 2.8 3.0 3.2 3.4 RoW
1.5 1.7 1.7
2011A 2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
Source: H2 Gambling Capital Summary May’16. Data for the Fiscal Years 2016-2020 are estimated by H2GC.
June 2017 | Page 12Leading Position in the Sector with Technological Innovations Creating
2 Significant Barriers to Entry
Licensed Operations
Country % of 12M16 EBITDA
#1 market position 24.3%
Leading market
position 13.0%
Total 10 countries1 37.4%
INTRALOT enjoys leading positions in licensed gaming in many of its countries of operations
1 INTRALOT also operates in Slovakia
June 2017 | Page 132
Global Leader in the Global Gaming Industry
Technology and Management contracts
Leading Positions Across the World
• Well diversified portfolio with balanced presence in developed
Probability of
Won
(through new sales channels) and developing markets (high Processes that we submitted the
Successful Contract winning offer
GDP growth) Acquisition for any
Given Bidding 18%
• Approximately 24% market share in the US in IT to lotteries Process (excluding Lost
(11 states) and c.48% in Argentina (11 states) in IT to lotteries Processes that were awarded
pending/ cancelled 36% to another bidder
processes):
• Provider of IT to Lotteries in Taiwan, South Korea, New South
Wales (Australia), etc. Cancelled/ Pending
42% Processes that did not result to
• Recurring revenues – average contract term of 8 years an award yet or have been
46% cancelled
• In 2016, Greece represented less than 3.0% of the Group’s
Revenue
Source: INTRALOT, 2013 – 2016 (Sample of 28 Opportunities)
Well Established Player in the IT to lotteries US market
MN
WA MT ND
ID SD ME
OR WI
VE
MI
WY
NE
NY NH INTRALOT Inc. (US)
IA
IL PA CT
NV UT
CO MO
IN OH
NJ
RI
Established Dec 2001 Source: INTRALOT
CA KS
KY WV VA MD DE
AR TN NC
● 60M population coverage
AZ NM OK
SC
M AL GA
LA S DC INTRALOT
● 24% market share (contracts in 10 states + DC)1
TX
FL
1 Intralot has presence also in GA through a VLT monitoring contract
INTRALOT IGT SGI NO LOTTERY
INTRALOT is one of the global leaders in technology for the gaming industry, with leading positions in many
countries
June 2017 | Page 143 Diversification and Scale Across Geographies and Business Activities
EBITDA by Business Activity
Diversified portfolio with 87 contracts and Technology
licenses, with presence across 55 jurisdictions in 28%
32 countries Licensed
Operations
41%
Well diversified portfolio with balanced presence
in developed (through new sales channels) and
developing markets (high GDP growth) Management
Contracts
31%
Majority of revenues, cash resources and debt FY16 EBITDA: €175.8m
obligations outside Greece, thereby mitigating
individual sovereign risk EBITDA by Geography2
Approximately €23.4bn wagers handled annually New Zealand; 1% Russia
1%
Other
1%
Netherlands; 3%
Morocco
Approximately 3,4501 people employed 6%
Turkey
worldwide Malta 20%
6%
Average sovereign rating of operations in the Jamaica
6%
high BBB/ Baa to low A area Azerbaijan; 8%
United States
20%
Argentina
8%
Australia Bulgaria
8% 12%
FY16 EBITDA: €175.8m
1 5,300 in total, of which 3,450 in subsidiaries and 1,850 in associates
2 Countries with negative EBITDA have been excluded from the chart
June 2017 | Page 154 Highly Visible Recurring Revenues Secured by Long-Term Contracts
Major Contract Expiry (Without Renewal Options)
Contract type % of FY16EBITDA1,2
85% of revenues secured through 6%
Morocco 2018
multi-year contracts or renewable
licenses until 2021 Turkey (Inteltek) 2018 14%
Average contract term of 8 4%
Greece (OPAP) 2018
years
1%
Strong track record of contracts New Zealand 2022
renewal
Malta 2022 6%
11 licensed operations in 10
countries with leading market Argentina (13 Contracts) 2023 8%
position in the majority of them
Azerbaijan 2025 8%
Contracts with long-term duration,
providing stability to revenue Greece (Hellenic Lotteries) 2026 1%
stream
US (14 Contracts) 2027 20%
Unique operational model in
countries allowing INTRALOT to Bulgaria 12%
Open
micro tailor products for distribution Market
Jamaica License 6%
Competition (where applicable) is
local – no global competitor in
licensed operations markets
Licensed Operations Management Contracts Technology
1 Excludingcountries with negative EBITDA
2 Management estimation incorporating direct expenses and apportionment of indirect expenses related to the project/ country
June 2017 | Page 165 Shift to Asset-Light Model and Stronger Cash Flow Generation
Two pillars to the shift to asset-light Less CAPEX Intensive Business Model
business model Capital expenditure1 (€m) Capital expenditure1/
71
Syndicate risk and reduce capex by 67 GGR
63 61
entering into JVs with local partners 58
allowing for minimum equity check
9.6%
while maintaining and selling new 7.4%
9.0%
7.3% 7.3%
contracts
Optimize product development by
minimizing customization
requirements 2013A 2014A 2015A 2015A 2 2016A 2
Various criteria to select local partners
FY 2016A total cost breakdown
Local experience in industry and
ability to deliver Other fixed
15% Game tax
Other variable 15%
Extensive distribution chain
costs
Well capitalized and long-term Winnings 29% Agents
payout HR costs commissions
presence 55% 21% 14%
E.g. large utility or Fixed costs Direct COS
telecommunication companies 16% 18%
Other
variable
Highly flexible cost base with c.85% of 17%
costs variable
1 Purchases of tangible and intangible assets
2 Excluding Italy and Peru discontinued operations
June 2017 | Page 175 Strong & Established Partnerships in the Gaming Sector
Rationale for Entering Into JVs List of Partnerships
Attractive point of entry in a given FY16 1Q17
market, with limited capital Country INTRALOT stake Contract type EBITDA EBITDA
Contribution Contribution
expenditure requirements
compared to full-scale M&A Turkey
45.00% Management contract 16% 13%
(Inteltek)
Opportunity to establish strategic
Turkey
partnerships with local players 50.01% Management contract 7% 7%
(Bilyoner)
which offer substantial market
knowledge, well-established Bulgaria 49.00% + option
sales network and recognized (Eurofootball for additional Licensed operation 13% 13%
Group) 2.00%
brand names
49.00% + option
Bulgaria
for additional Licensed operation 1% 4%
(Eurobet Group)
Ability to invest in companies in 2.00%
which local partners see upside
and are therefore willing to retain a Azerbaijan 22.95% Licensed operation 9% 10%
controlling stake in
Jamaica 24.97% Licensed operation 8% 10%
12 facilities management (IT)
contracts with state lottery
Argentina 50.01% 9% 9%
operators & 1 licensed
operation
Total 63% 66%
June 2017 | Page 186 Competitive EBITDA Margins
Revenues (€m)
EBITDA margin (%)
5,000 45.0%
4,500 37.9% 38.3%
40.0%
4,000 35.0%
34.1%
3,500 27.8% 30.0%
25.8%
3,000
23.0% 25.0%
2,500
20.0%
2,000
15.0%
1,500 13.2% 13.3%
1,000 10.0%
642
500 5.0%
682
0 0.0%
Peer A Peer B Peer C Peer D Peer E Peer F
GGR (Net Revenues) Payout Gross EBITDA Margin Net EBITDA Margin
On a GGR basis, INTRALOT’s profitability is at gaming industry averages
1PeersSample (in Alphabetical order): Aristocrat Leisure Ltd., Everi Holdings, International Game Technology plc, Ladbrokes Coral Group, Penn National Gaming & Scientific Games Corporation
Source: Companies’ Annual Reports & Press Releases
June 2017 | Page 19Management Experienced at Renewing Contracts and Delivering
7
Revenue and EBITDA Growth
Revenue1 Evolution by Region (€m)
Management has achieved Revenue and EBITDA
Europe Americas RoW
growth despite changes in gaming regulatory
landscape
1,853 1,915
On a like for like basis, 2016A Revenue and
1,539 292
EBITDA grew by +19.2% and +20.6% respectively 1,374 356
1,324
1,202 1,235
compared to 2015A2,3 246
296
549
659
252
134 292
459
Experienced team has demonstrated in-depth 376 451
540
555
knowledge of the gaming sector dynamics 948 964
692 677 784
532
Keys wins 388
- Strong track record of contracts’ renewals 2011A 2012A 2013A 2014A 2015A 2015A 3 2016A
- 42% win rate in international tenders EBITDA Evolution by Region (€m)
(2013-2016) Europe Americas RoW
- Successfully entered and gained market share
on the US market 178
195
175 177 176
165
154
- Successful implementation of internal 48
56
19
restructuring measures aimed at improving 47 51
73 80
80 88
efficiency 60
58
68 58 65
- Established strong and promising partnerships 88
70
88
44 29 27 23
2011A 2012A 2013A 2014A 2015A 2015A 3 2016A
1 Revenue values include eliminations
2 LFL basis excluding FX impact
3 Excluding Italy and Peru discontinued operations
June 2017 | Page 203. Company Strategy
June 2017 | Page 21Strategy Focusing on Higher Margins and Lower Debt Loads
EBITDA impact Cash Flow impact
New distribution channels (Self Service Terminals,
Products & Services Mobile)
focus Sport betting
VLT monitoring
Core system
Technology as
Global offering enabler Content management
CRM
Operational Referencing in 50+ jurisdictions
excellence Fertilization
(“know how”)
In existing Examples
business Local relations/ know how
Intralot de Peru
Regulatory constraints
Local partnerships Capital release (equity/ capex)
Intralot Italia
Eurobet
In new Topline and cost synergies
ventures
Globalization
Operational Synergies
Operating leverage
Non core asset disposal
Efficiencies Asset WC optimization
De-leverage
Financing Debt re-pricing
Shift to “asset-light” business model generating positive EBITDA and Cash Flow impact
June 2017 | Page 22Progress against strategic objectives
Year 1
Progress Progress Level
EBITDA € +11m
Cash Flow1 € +24 m
Net Debt / EBITDA 2.8 2017 Target is
to focus on
Strategic partnership with AMELCO operational
Global offering
Lotos 10 completion is expected within 2017 efficiencies
Successful
Merger of activities in Italy with Gamenet
Sale of 80% of INTRALOT de Peru
Local partnerships
Acquisition of 49% stake in Eurobet
Delay
Oceania transaction
Successful refinancing with decreased servicing
Efficiencies cost and increased committed lines in the new
RCF
1
Low Medium High
Assuming that all new EBITDA is cash; Benefits from refinancing will be visible from 2017 onwards
June 2017 | Page 234. Performance Overview & Financials
June 2017 | Page 24Recent Business Milestones
Key Events Over the Last Twelve Months
Amelco – INTRALOT and AMELCO announced the signing of a definitive agreement for a strategic
partnership to develop a suite of next-generation sports betting products
Mar
Greece (OPAP) – After 20 years of successful partnership, INTRALOT’s contract with OPAP may end in
2017
2018
Feb
USA (Idaho) – Signed contract to become the Idaho Lottery provider for a 10-year term with the option to
extend for up to a maximum of two (2) additional 5-year terms
Jan
Chile – Successful Go Live of the 10 year term contract with the State Lottery organization
Nov
Peru – Completion of the Intralot de Peru transaction (Nexus Group)
Morocco – Signed a 1-year extension with both lotteries
Sep
Successful early Refinancing of a €250m bond with significantly better terms and increased RCF lines by
€40m
Aug
Australia and New Zealand – INTRALOT entered into discussions on an exclusive basis with
Tatts regarding a potential sale of INTRALOT’s Australian and New Zealand businesses
Jul
2016
Bulgaria – Completion of the acquisition of a 49% stake in Eurobet, a numerical and instants tickets
operator in Bulgaria
Jun
Italy – Completion of the Gamenet transaction
May
Philippines - Renewal of the contract with Pacific Online Systems Corporation (POSC) for a 3 year term
Apr
Netherlands - Renewal of the contract with the Nederlandse Staatsloterij/De Lotto for a 3 year term
Mar
Brazil - Renewal of the contract in with Minas Gerais for a 6 year term
June 2017 | Page 25Healthy FY16 Performance
Key Metrics (€mm) Key Takeaways
Revenues Healthy revenue growth both in FY16 and 4Q16 (+7.1% and +7.5%
respectively, compared to the same prior year period)
+7.1%
1,235 1,324 Increased sales in Bulgaria, Turkey and North America more than
counterbalanced decreased sales in Azerbaijan and South America
+7.5%
341 366 (Argentina, Jamaica and Brazil)
EBITDA in the twelve-month period grew by 6.6%, whereas 4Q16
12M15 12M16 4Q15 4Q16
EBITDA increased by 18.6%
EBITDA On a yearly basis, EBITDA margin, from continuing operations,
Margin: 13.3% 13.3% 12.8% 14.1% remained steady at 13.3%, showcasing operating profitability
resilience as the Group fully absorbed a payout ratio increase of
165 176
+18.6% 3.5pps
44 52
Operating Cash-flow increased significantly in FY16 at €168.1m vs.
12M15 12M16 4Q15 4Q16 €113.8m in FY15. The growth is mainly attributed to WC
improvement (+€46.8m vs. FY2015) due to efficient management
Operating cash flow and WC normalization
168
114 “The strongly positive results of 2016 in both growth and profitability
reflect important transformations that have taken place over the past
couple of years across operational capabilities, project management,
cost structure, and Products and Services portfolio investments. A
12M15 12M16
series of M&A transactions greatly enhanced our business
Net capex1 development potential through strong local partnerships and diversified
portfolio offering. The past year was also marked by tremendous
69
improvements in INTRALOT’s financial structure in a way that secures
63 future savings and a clear funding horizon until 2021 while affirming
international investors’ confidence in future value creation.”
12M15 12M16 Antonios Kerastaris, Group CEO
Note: FY and 4Q results do not include discontinued operations in Italy, Peru and Russia
1 Purchases of tangible and intangible assets less proceeds from sales of tangible and intangible assets
June 2017 | Page 261Q17 Performance
Key metrics (€m) Key takeaways
Revenues Revenue growth in 1Q17 (+20.6% compared to the same period for
+20.6% the prior year)
368
305 Increased sales in Bulgaria, Azerbaijan, and Jamaica more than
counterbalanced decreased sales in the US due to last year’s
excessive Powerball effect
1Q16 1Q17 EBITDA in the three month period grew by 4.3% compared to 1Q16
EBITDA On a yearly basis, EBITDA margin, from continuing operations,
14.6%
decreased to 12.6% compared to 14.6% in 1Q16, as a result of the
Margin: 12.6%
product mix change and last year’s Powerball effect
47
45 Operating Cash-flow posted a decrease in 1Q17 at €39.1m vs.
€41.2m in 1Q16. On a pro-forma basis, i.e. excluding the operating
cash-flow contribution of our Italian and Peruvian entities in 1Q16
1Q16 1Q17 (€7.0m), there is a significant improvement (€39.1m vs. €34.2m
Operating Cash Flow pro-forma) driven by better EBITDA performance, less taxes and
improved working capital compared to the prior year
41
34
39 “Robust revenue growth and improved profits registered in
1Q2017 is driven by our strategic decisions to focus on key
markets as well as products & services portfolio
1Q16 1Q16 Pro-Forma2 1Q17
diversification. All the transformational initiatives undertaken
over the last two years are depicted both at profit and cash-
Net Capex1
flow levels, considerably improved from a year ago. With a
€11.7m significantly improved financial structure and operational
25
towards the performance, we are also reaping the fruits of lower debt
11 11 AMELCO servicing costs and enhancing our credit grade outlook by
agreement rating agencies that boost our confidence going forward.”
2
1Q16 1Q16 Pro-Forma 1Q17 Antonios Kerastaris, Group CEO
1 Purchases of tangible and intangible assets less proceeds from sales of tangible and intangible assets
2 Figures excluding the operating cash-flow & net CAPEX contribution of our Italian and Peruvian entities in 1Q16 (€7.0m & €0.5m respectively)
June 2017 | Page 27Key Performance Highlights
Revenues EBITDA and EBITDA margin
EBITDA EBITDA Margin
€m €m
1,915 14.6%
1,853 13.3% 13.3%
12.7% 12.6%
1,539
1,324 9.5% 9.3%
1,235
195 175 177 176
305 368 165
45 47
1 1 1 1
2013A 2014A 2015A 2015A 2016A 2016Q1 2017Q1 2013A 2014A 2015A 2015A 1 2016A 1 2016Q1 2017Q1
Operating cash flow and capex Net debt2 and Net debt / EBITDA3
€m Operating CF CAPEX €m Net Debt Net Debt/EBITDA
168 2.9x 2.9x 2.9x
153 2.8x
139
2.1x 2.2x
114
67 71 65
58 495 509
478 487
41 39 403 381
25
11
4
2013A 2014A 2015A 2016A 2016Q1 2017Q1 2013A 2014A 2015A 2016A 2016Q1 2017Q1
1 12M15,12M16 & 1Q16 results do not include discontinued operations in Italy, Peru and Russia
2 Net debt calculated as Long-term debt plus Short-term debt and current portion of long-term debt plus Financial Leases less Cash and cash equivalents
3 Calculated as Net debt divided by LTM EBITDA
4 2016Q1 Net Debt & LTM excludes the contribution of Italy and Peru
June 2017 | Page 28Loan Portfolio
7yr Senior Unsecured Notes Global Coordinators:
Nominal
€250 mil.
amount Joint Book runners:
Expiration May 15, 2021 – NC 3
Coupon 6.00%
5yr Senior Unsecured Notes
Nominal Joint Book runners:
€250 mil.
amount
Expiration September 15, 2021 – NC 2
Co-Managers:
Coupon 6.75%
Committed Facilities
Amount
Approved lines €240 mil.
Expiration Dec. 2019 Participant banks:
Interest Rate 4.00%-5.50% + Euribor
June 2017 | Page 29Rating Agencies and INTRALOT
“Our assessment of Intralot's business risk
profile is constrained by its significant
exposure to emerging markets…we
acknowledge that the disposals in Italy
and Peru have improved group margins
and somewhat reduced its exposure to
emerging markets”
S&P Global Ratings
“Intralot's corporate family rating (CFR)
primarily reflects… the reduced company's
size following recent M&A
activity…significant exposure to certain
emerging markets…”
MOODY’s Investors Service
GR
Rating agencies Rating Outlook Change1 Sovereign
Rating
“Although Intralot’s high gross B Stable Β-
leverage remains not fully
aligned with a ‘B+’ rating, the B+ Stable CCC
business profile is
commensurate with a ‘BB’
rating category for the sector” B1 Negative Pending Caa3
Fitch Ratings
1Change compared to 2016 rating
June 2017 | Page 30Financial Policy
Maximum leverage Aiming at a net leverage below 2.0x within the next years. INTRALOT can tolerate a peak leverage at up to
tolerated 3.00x. Limits to be reviewed post M&A and expectations on new projects
Cash, liquidity and Maintain strong liquidity at all times. Most of the cash held in the UK, The Netherlands & Luxembourg whereas
debt management our reliance on the Greek banking system is limited to less than 7% of total deposits
INTRALOT’s new strategy is expected to result in a lower level of capex. INTRALOT maintains flexibility in its
CAPEX
capex plan to meet its financial policy guidelines.
Acquisition strategy No material acquisitions contemplated in the medium term
INTRALOT is currently not paying any dividends to its shareholders and does not intend to pay dividends in the
Dividend policy
future until target leverage is achieved
Working capital has improved significantly in 2016 following the spike in 2015 and is not expected to have
Working capital
significant spikes in the next years
Currency and risk Surplus cash is regularly converted from local currencies into EUR or USD (> 50% of deposits) whereas FX risk
management related to the payment of dividends is mitigated via Forwards .
IFRS standards, matching all international standards for corporate governance, reporting systems aligned to
Accounting
listed companies
June 2017 | Page 315. Conclusion
June 2017 | Page 32INTRALOT – A Global Gaming Technology and Service
Company
1 Presence in 32 countries on 5 continents balanced between developed markets and developing markets
Developed markets offer access via long term contracts to stable recurring revenues while developing markets provide exposure
Global offering to higher GDP growth
with local No country contributes more than 20% of FY16 EBITDA1
partnerships Strong contract diversity
Portfolio of 87 contracts and licenses across 55 jurisdictions and 5 continents
Focus on profitable markets and contracts
2 Global leader with more than 130 patents in gaming technology and gaming management contracts
In IT lotteries, 24% market share in the US (10 states + DC) and c.48% market share in Argentina (11 states)
Gaming
technology Innovative end to end solutions in every business activity
leadership Focus on core areas of expertise primarily recurring long-term managed services and technology contracts which do not require
significant capital investments
1st Vendor to Achieve WLA SCS Certification; 17 operations certified as per both WLA (SCS) and ISO 27001 security certifications
3 Contracts with long-term duration provide stability to revenue streams
Revenue Until 2021, 85% of revenues are secured through multi-year contracts or renewable licenses
visibility and Average contract term of 8 years
improved Strong track record of contracts renewal
margins Shift to “asset-light” business model driving higher margin, lower capex performance and higher cash flow resiliency
Highly flexible cost base with c.85% of costs variable
4 Sustainable Cash proceeds from business sales and asset-light shift used to reduce debt
capital Group to benefit from lower interest costs
structure Focus on more conservative financial policy
5 Maintain strong liquidity at all times
Most of the cash is held in the UK, The Netherlands & Luxembourg whereas reliance on the Greek banking system is limited to
less than 7% of total deposits
Financial
New asset-light shift is expected to result in lower and more flexible level of capex
policy
No material acquisitions contemplated in the medium term
INTRALOT is currently not paying any dividends to its shareholders and does not intend to pay dividends in the future until target
leverage is achieved
1 Excluding countries with negative EBITDA
June 2017 | Page 336. Appendix
June 2017 | Page 34Financial Performance – P&L
in €m 2013A 2014A 2015A 2015A1 2016A1
Revenue 1,539.4 1,853.1 1,914.9 1,235.5 1,323.6
Cost of sales -1,271.5 -1,582.9 -1,653.3 -1,001.7 -1,090.5
Gross profit 267.9 270.2 261.6 233.7 233.1
Other operating income 17.4 18.6 24.9 23.1 33.1
Selling expenses -40.2 -60.3 -66.4 -56.6 -56.3
Administrative expenses -120.8 -119.9 -125.0 -89.7 -87.4
Research and development expenses -7.0 -7.2 -6.1 -6.1 -4.7
Other operating expenses -14.0 -13.3 -10.0 -5.2 -9.9
EBIT 103.3 88.1 79.0 99.3 107.9
% margin 7% 5% 4% 8% 8%
EBITDA 194.8 175.4 177.2 164.9 175.8
% margin 13% 10% 9% 13% 13%
Income/(expenses) from participations and investments 12.4 0.0 -0.2 -0.2 -17.5
Gain/(loss) from assets disposal, impairment and write-off -3.0 -1.5 -2.0 -0.7 -8.6
Interest and similar charges -55.4 -70.8 -68.6 -67.8 -87.5
Interest and related income 10.4 12.5 18.0 17.9 11.8
Exchange differences -11.1 10.6 3.6 3.5 3.1
Profit/(loss) from equity method consolidation -3.0 -2.3 -4.1 -4.1 -4.6
Operating profit/loss before tax from continuing operations 53.6 36.6 25.7 47.9 4.8
Taxes -32.2 -44.2 -46.4 -45.1 -32.5
Net profit/loss from continuing operations 21.4 -7.6 -20.7 2.8 -27.8
Net profit/loss from discontinued operations 0.0 0.0 0.0 -23.4 72.6
Net profit/loss (continuing & discontinued operations) 21.4 -7.6 -20.7 -20.7 44.9
Other comprehensive income/(expense) after tax -33.9 5.6 -7.2 -7.2 -8.7
Total income after tax -12.6 -2.1 -27.8 -27.8 36.1
1 Excluding Italy and Peru discontinued operations
June 2017 | Page 35Financial Performance – Balance Sheet
in €m 2013A 2014A 2015A 2016A
Assets
Non-current assets
Tangible fixed assets 199.4 182.8 166.4 127.0
Investment property 0.0 0.0 5.8 6.0
Intangible assets 353.4 348.9 328.8 329.6
Investment in subsidiaries and associates 25.8 32.6 40.9 180.8
Other financial assets 43.5 36.9 26.1 21.9
Deferred tax assets 14.7 9.0 9.1 6.8
Other long term receivables 77.5 60.6 70.2 22.4
Current assets
Inventories 48.3 52.0 42.6 32.3
Trade and other short-term receivables 221.3 215.1 202.7 170.0
Other financial assets 3.6 0.3 0.0 0.0
Cash and cash equivalents 1,43.3 416.9 276.6 164.4
Total assets 1,130.8 1,355.1 1,169.3 1,061.1
Equity and liabilities
Share capital 47.7 47.7 47.7 47.7
Treasury shares 0.0 -0.5 -0.5 -1.7
Other reserves 63.8 59.8 62.2 56.0
Foreign currency translation -61.0 -57.1 -59.4 -61.2
Retained earnings 215.8 167.6 79.6 86.7
Minority interest 77.4 100.0 77.8 68.9
Total equity 343.7 317.5 207.4 196.5
Non-current liabilities
Long-term debt 350.3 557.4 716.1 643.9
Staff retirement indemnities 6.9 7.1 6.9 5.4
Other long-term provisions 13.7 6.1 6.6 10.9
Deferred tax liabilities 8.1 14.7 16.1 16.0
Other long-term liabilities 12.1 14.2 19.1 17.3
Finance lease obligation 19.2 8.6 2.0 0.7
Current liabilities
Trade and other short-term liabilities 181.4 175.4 135.3 128.1
Short-term debt and current portion of long-term debt 176.9 232.3 36.2 14.7
Current income taxes payable 11.3 13.6 15.0 17.6
Short-term provision 7.2 8.2 8.6 10.0
Total liabilities 787.1 1037.6 961.9 864.6
Total equity and liabilities 1,130.8 1,355.1 1,169.3 1,061.1
June 2017 | Page 36Financial Performance – Cash Flow Statement
in €m 2013A 2014A 2015A 2016A
EBITDA 194.8 175.4 177.2 175.8
Interest and similar expenses -55.4 -70.8 -68.6 -87.5
Interest and related income 10.4 12.5 18.0 11.8
Exchange differences -11.1 10.6 3.6 3.1
Profit/(loss) equity method consolidation -3.0 -2.3 -4.1 -4.6
Gain/(loss) from assets disposal, impairment and write-off -3.0 -1.5 -2.0 -8.6
Income/(expenses) from participations and investments 12.4 0.0 -0.2 -17.5
Depreciation and amortization -91.5 -87.3 -98.2 -67.9
Net profit before taxation from continuing operations 53.6 36.6 25.7 4.8
Net profit before taxation from discontinued operations – – - 84.5
Net profit before taxation from total operations 53.6 36.6 25.7 89.3
Depreciation and amortization 91.5 87.3 98.2 86.9
Provisions 14.6 10.8 9.6 25.4
Results from investing activities -2.6 -10.5 -0.2 -88.9
Interest and similar expenses 55.4 70.8 68.6 88.8
Interest and related income -10.4 -12.5 -18.0 -12.0
Decrease/(increase) of Inventories -3.9 -5.2 1.2 2.8
Decrease/(increase) of Receivable Accounts -67.3 14.9 -19.2 -9.2
(Decrease)/increase of Payable Accounts (except Banks) 43.7 -10.2 -23.9 11.2
Income tax paid -35.5 -29.0 -28.2 -26.2
Net Cash from Operating Activities 139.1 153.0 113.8 168.1
(Purchases)/Sales of subsidiaries, associates, joint ventures and other investments -22.9 7.5 -5.3 4.5
Purchases of tangible and intangible assets -58.2 -67.3 -70.8 -65.4
Proceeds from sales of tangible and intangible assets 0.4 0.3 2.1 2.6
Interest received 8.6 13.6 12.3 7.7
Dividends received 2.6 1.0 1.9 1.0
Net Cash from Investing Activities -69.5 -44.9 -59.8 -49.6
Subsidiary's capital return 0.0 0.0 0.0 -3.3
Purchase of treasury shares 0.0 -0.4 0.0 -1.2
Cash inflows from loans 492.4 521.2 61.4 303.8
Repayment of loans -472.3 -255.5 -58.8 -388.4
Bond buy backs – -6.3 -40.9 -3.7
Repayment of leasing obligations -6.9 -12.2 -11.5 -6.8
Interest and similar expenses paid -37.8 -66.1 -64.8 -83.5
Dividends paid -16.6 -23.7 -67.7 -42.2
Net Cash from Financing Activities -41.2 157.0 -182.3 -225.3
Net increase/(decrease) in cash and cash equivalents for the period 28.4 265.1 -128.3 -106.8
June 2017 | Page 37. A GLOBAL LEADER
. YOUR LOCAL PARTNER
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