Intralot hit by Argentina and Bulgaria B2C declines in H1 | Yogonet International
The results also reflect improvement in operating cash flows and liquidity

Intralot hit by Argentina and Bulgaria B2C declines in H1

"The second-quarter results, although still absorbing the business impact of last year’s negative developments, reflect an improvement in operating cash flows and liquidity," says Group Chairman & CEO Sokratis P. Kokkalis.
2019-09-02
Greece
Reading time 3:11 min
The gaming solutions supplier and operator has reported a 7.6% drop in consolidated revenue during the first half of 2019, which was mainly driven by a decline in Argentina and Bulgaria markets.

Intralot announced Friday its financial results for the six-month period ended June 30th, 2019, prepared in accordance with IFRS.

“Intralot announces steady y-o-y improvement in the Group’s operating cash flow, as the Company further absorbs business transition impact,” the company summarized. 

During the six-month period ended June 30th, 2019, Intralot systems handled €10.5b of worldwide wagers (from continuing operations), posting a 16.4% y-o-y increase. North America’s wagers increased by 53.5% (driven by Illinois contract launch), Africa’s by 11.5%, Asia’s by 10.8% (mainly Taiwan), and West Europe’s by 5.2% (driven mainly by Netherlands), while East Europe’s dropped by 7.9% (driven by TRY currency devaluation) and South America dropped by 1.5% (mainly attributed to ARS currency devaluation).

REVENUE

Reported consolidated revenue saw a decrease compared to 1H18, leading to total revenue for the six-month period ended June 30th, 2019, of €378.1m (-7.6%)Sports Betting was the largest contributor to the firm’s top line, comprising 44.9% of our revenue, followed by Lottery Games contributing 42.6% to Group turnover. Technology contracts accounted for 5.8% and VLTs represented 4.2% of Group turnover while Racing constituted 2.5% of total revenue of 1H19.

Reported consolidated revenue for the six-month period are lower by €31.0m year over year. The main factors that drove top-line performance per Business Activity are: - €-25.5m (-10.0%) from the Licensed Operations (B2C) activity line, with the decrease attributed mainly to lower revenue in:

  • Bulgaria (€-17.8m), driven mainly by Sports Betting performance as a result of a conservative payout strategy; Numerical and Racing performance on par with last year.
  • Argentina with lower recorded revenue, in Euro terms, by €8.7m. In local currency, 1H19 results posted a c.+24.9% year over year increase, heavily affected though by the application of the hyperinflationary economy reporting standard, which also affected the FX currency translation (c.85.2% Euro appreciation versus a year ago). Overall, the macro environment in Argentina drives the sale deficit

- €-4.1m (-8.5%) from the firm's Management (B2B/ B2G) contracts activity line with the variance driven by:

  • the deficit, in Euro terms, from Turkish operations (€-1.6m). In local currency, 1H19 revenue showcased a c.+21.9% increase attributed both to the growth of the Sport Betting Market year over year (c.+15.0% in local currency) and the steady shift towards Online Sports Betting (c.65.0% sales mix participation vs. c.61.0% a year ago). Nevertheless, the benefit of the Sports Betting market expansion and mix change has been fully counterbalanced by the devaluation of the local currency (c.28.2% Euro appreciation versus a year ago – in YTD average terms),  
  • The firm’s discontinued contract in Russia €-1.0m, and  
  • Morocco’s (€-1.5m or c.-10.0% yo-y) performance mainly impacted by the decreased Numerical sales following the discontinuation of the contract with one of the two lotteries (SGLN), only partially mitigated by a modest growth in Sports Betting revenue and the top-line boost through the successful introduction of virtual football.

- €-1.4m (-1.3%) from the Technology and Support Services (B2B/ B2G) activity line, with the decrease attributed mainly to:

  • lower sales in Greece (€-10.9m) primarily driven by the transition to the new OPAP contract, after July ‘18, that has a smaller contract value, due to its limited scope (vs. the previous contract), specifically in the field of numerical games,  
  • Argentina’s lower recorded sales in Euro terms (€-3.1m). In local currency, 1H19 results posted a c.+33.5% year over year increase, heavily affected though by the application of the hyper-inflationary economy reporting standard5, which also affected the FX currency translation, as described previously. The macro-environment in Argentina is the key driver for this deficit. 

"The second-quarter results, although still absorbing the business impact of last year’s negative developments, reflect an improvement in operating cash flows and liquidity by successfully implementing our three-pillar strategy for operational improvements, new business, and non-core asset disposals, Group Chairman & CEO Sokratis P. Kokkalis said. We successfully completed the delivery and transition to the Lotos X new central system for our historic client OPAP in July, and came to an agreement with OPAP for the disposal of our 16.5% participation in Hellenic Lotteries for a consideration of €20.0m. The renewal of our contract with the DC Lottery to include Sportsbetting and the award of a new Sportsbetting contract in Morocco demonstrate INTRALOT’s readiness to tap fresh opportunities with cutting-edge new technological solutions."

See the full report here.

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