Lottomatica revenues totaled 3.08 billion euros for the year ended December 31

The Board will propose to the Annual Shareholders’ Meeting a cash dividend of 0.73 euros per share, with an ex-dividend date of May 20, 2013, payable on May 23, 2013.

For the year ended December 31, 2012, revenues totaled 3.08 billion euros, up 3.4% compared to 2.97 billion euros in 2011. At constant currency, revenues were 3 billion euros. Consolidated revenue growth was mainly driven by GTECH Lottery and SPIELO International, and favorable foreign exchange rates. GTECH same store service revenues grew approximately 8% in 2012 versus the prior year, due in part to record first quarter jackpot activity in the U.S. and the continued growth of instant-ticket sales, particularly in California, Texas, and Illinois.

SPIELO International service revenue grew 9% due to higher revenues from the Italian VLT market, participation markets in the U.S., and central systems.  The 44 million euros increase in SPIELO’s product sale revenue was principally due to the sale of a new central system and terminals in Sweden and terminals to customers in the Canadian market. SPIELO’s 100% success rate in all 11 procurements in Canada will continue providing positive contributions to the Group in 2013 and beyond. 

The 6.3% increase in EBITDA was attributable to growth across all three business segments. At constant currency, EBITDA was up 4.4%.  Higher revenues and profits from the GTECH Lottery and SPIELO International segments and Machine Gaming in Italy, along with operational efficiencies in Italy, and favorable foreign exchange rates, contributed to the 62 million euros increase over 2011.

Operating Income increased 44 million euros to 583 million euros in 2012, which, together with a 13 million euros decrease in interest expense and a more favorable effective tax rate, were the main contributors to the increase in Net Income attributable to the parent which grew from 173 million euros in 2011 to 233 million euros. On a per share basis, EPS grew 34% from 1.01 to 1.35 euros.
The Board will propose a dividend distribution of approximately 126 million euros, or 41% of levered free cash flow, consistent with the Group’s dividend policy. Levered free cash flow was 303 million euros, compared to 281 million euros in 2011.
 
During the year, Capital Expenditures totaled 256 million euros, down from 345 million euros in 2011. Capital Expenditures were at the lower end of the guidance range provided in 2012. The timing of certain items anticipated in 2012 has now shifted to 2013.

At December 31, 2012, Consolidated Shareholders’ Equity totaled 2.64 billion euros. Lottomatica Group had a Net Financial Position (NFP) of 2.55 billion euros, compared to 2.74 billion euros as of December 31, 2011.

“Lottomatica Group had another good year in which we achieved growth in all of our businesses and major geographies. Our GTECH and SPIELO subsidiaries continue to deliver solid gains helping to better diversify our sources of growth and achieve our 3-year plan guidance ahead of schedule,” said Marco Sala, CEO of Lottomatica Group. “In the year ahead, we expect significant contributions from our success in the Canadian VLT replacement cycle, continued GTECH same store sales growth, and new initiatives in the Italian market. Our recently announced plan to further integrate all our subsidiaries into a unified, customer-facing organization under the GTECH banner will strengthen our leadership in the industry, as we achieve faster growth, generate greater synergies and create more value.”

“EPS grew 34% in 2012, and, through the continued execution of our strategy, we generated significant levered free cash flow of 303 million euros,” said Alberto Fornaro, CFO of Lottomatica Group. “In addition, our consolidated Net Financial Position improved by nearly 200 million to 2.55 billion euros.”

New group structure
The Group, under the new unified customer-facing structure announced in January, will be aligned around three global geographic regions – the Americas, International, and Italy – and supported by a central products and services structure.  These changes, which will be completed before year-end, are aimed at supporting growth, improving efficiency and enhancing profitability across operations, stepping up the pace of internationalization of the Group to better capture its full potential.

The central products and services structure will be responsible for product development and marketing, manufacturing, and delivery for all product lines. Synergies and efficiencies are currently being quantified and will mainly stem from procurement centralization and integration, product development, platform integration, and data center and corporate IT services consolidation. These actions are not expected to materially impact 2013 results and efficiency improvements are expected over the following three years.

In 2013, the Group expects revenues to grow across all business segments, with the Canadian VLT replacement cycle as the main contributor. In the current economic environment in Italy, a number of initiatives are in place including marketing efforts, product innovation, and retailer optimization. The Group also expects a Lotto late number contribution in line with the past five-year average and a lower sports-betting payout compared to last year. Same store sales from the U.S. and International lottery businesses are expected to benefit from continued improvements in instant ticket sales as well as an increased customer focus on growth initiatives. The transition to the new Integrated Services model in Indiana is expected to take place in the second half of 2013. The Group also expects to see expansion opportunities in the areas of private management for lotteries; government and commercial gaming machine replacement; as well as in the onset of Internet wagering in the U.S. and growth of nationally-regulated markets in the Interactive sector.

Maintenance Capital Expenditures are expected to be in the 235 million euros - 250 million euros range, given the relatively limited number of contracts up for renewal, or approximately 23% of 2013 guidance mid-point EBITDA. The Group also plans to pursue a number of new growth initiatives including investments in Indiana, and potentially New Jersey, as well as selectively expanding the Group’s presence in Italy in sports betting and supporting SPIELO’s expansion of VLTs.

Therefore, the group expects discretionary investments, or growth Capital Expenditures, in the range of 115 million euros - 130 million euros. Total Capital Expenditures for 2013 are therefore expected in the range of 350 million euros - 380 million euros.

Full-year results by segment

Italian operations
Total revenues from Italian operations were approximately 1.79 billion euros in 2012, compared to 1.88 billion euros in 2011. Revenues were impacted by increased VLT taxation, higher sports betting payouts, and lower Lotto late number wagers, however benefited from commercial services and interactive expansion. EBITDA grew by 14 million euros to 736 million euros, due to cost efficiencies and contributions from all product lines excluding sports betting, which was impacted by exceptionally high payouts.

GTECH Lottery and SPIELO International
Total GTECH Lottery revenues grew 15.8% from 857 million euros in 2011 to 993 million euros in 2012. At constant currency, revenues were 930 million euros. Total revenues for SPIELO International were 338 million euros, up 20.9% versus last year, primarily due to higher product sales which were up 36.8%.  Service revenue for SPIELO increased 15 million euros in 2012 versus 2011 principally due to higher revenue from the VLT markets in Italy and the U.S. Combined EBITDA grew 48 million euros as a result of same store revenue growth, higher product sales and favorable foreign exchange, partially offset by contract repricing, which is not expected to have a material impact in 2013.

In 2012, GTECH successfully completed 29 system conversions and integration projects for its customers across the globe.  It won lottery operator contracts in Indiana and Costa Rica, as well as new lottery contracts in New Zealand, Lithuania, Argentina, and Colombia. GTECH also received extensions from customers in the United Kingdom, Finland, Ireland, Oregon, South Dakota, and Arizona. Also during the year, SPIELO secured interactive and/or sports betting contracts with customers in Norway, Spain, Denmark, Canada, and North America.