The report shows that in the first half of 2020, Novomatic Group’s revenues amounted to EUR 805.4 million, compared to EUR 1,259.4 million in the same period of 2019. The decline in revenues by EUR 454.0 million (-36.1 percent) was attributable to almost all markets: Italy (EUR -102.8 million), Eastern Europe (EUR -71.3 million), Germany (EUR -71.2 million), Austria (EUR -61.3 million), Other Markets (EUR -54.3 million), United Kingdom (EUR - 52.3 million), Spain (EUR -48.6 million) and Netherlands (EUR -23.6 million). Due to the far-reaching lockdown measures, which almost completely interrupted the operations of slot arcades, casinos, and betting sites for about 2 months, the online segment was able to achieve a significant increase (EUR +31.4 million).
The largest decrease in revenues in absolute figures was recorded in the area of revenues from the operation of gaming machines, which declined by EUR 262.1 million (-43.9 percent). Germany (EUR -64.2 million), Eastern Europe (EUR -52.3 million) and the United Kingdom (EUR -43.1 million) accounted for the largest share of this decline.
In addition to revenues from the operation of gaming machines, the income from rent and management services also decreased significantly by EUR 79.7 million (-30.0 %) to EUR 186.1 million. A large part of this is attributable to Italy which recorded a drop by EUR 38.5 million. The regions Other Markets (EUR -12.8 million) and Eastern Europe (EUR -10.3 million) also suffered sharp declines.
Further pandemic-related year-on-year declines were recorded in the areas of betting revenues (EUR -19.5 million), other revenues (EUR -12.9 million), catering and hospitality revenues (EUR -12.7 million) and live gaming revenues (EUR -8.8 million). Only eBusiness revenues benefited from the current environment, resulting in an increase by EUR 33.3 million.
Sales revenues also decreased and at EUR 94.4 million came in about EUR 103.3 million (-52.3 percent) below the previous year’s level. The regions Other Markets (EUR -56.6 million), Spain (EUR -17.1 million) and Austria (EUR -12.9 million) in particular recorded a significant decline in revenues in this area against the previous year
According to the company's management report, the current reporting period was strongly impacted by the consequences of the COVID-19 pandemic. In the majority of Novomatic Group’s core markets, national governments introduced measures, in particular temporary lockdowns, from March 2020 onwards to stem the spread of COVID-19. Among other things, these measures included the temporary closure of gaming facilities (casinos, slot arcades and single sites/bars) operated by the Novomatic Group. The closure also affected the Group’s Gaming Technology business, resulting in lower sales of gaming machines as well as lower rental income due to the revenue sharing model applied in many markets.
Due to these underlying conditions, Group revenues (before gaming taxes and betting fees) fell from EUR 1,259.4 million in the previous year to EUR 805.4 million in 2020, marking a decrease of EUR 454.0 million (-36.1 percent). At EUR -108.1 million, the result for the period came in EUR 142.4 million below the previous year’s level.
The total number of operated locations declined by approximately 30 against the previous year to around 1,940 sites. This was due to regulatory issues as well as economic decisions in individual markets. The number of operated and currently open locations (including casinos, sports betting outlets and bingo facilities) as of the reporting date declined to around 1,600 locations due to the temporary closure of gaming facilities that is still in effect in several countries and markets. Due to partial closures, the number of operated gaming devices came in at approximately 41,500.
The Group’s rental portfolio shrank by around 5,100 units to approximately 149,000 machines compared with the same period in the previous year. The decline is mainly due to the regulatory framework in Germany (State Treaty Amending the Gaming Act, accompanying state laws on gaming arcades, amendment of the Gaming Ordinance), which led to an ongoing reduction in locations and gaming machines on the market. The framework conditions meant that the number of rented gaming machines in Germany decreased by around 3,900 units.
However, some of the reported rented machines remained temporarily out of operation at the end of the reporting period due to various measures such as social distancing regulations. Since a revenue sharing model is applied in several markets in which the Novomatic Group is active, the average rental income per unit in this reporting period does not present a representative picture of the underlying situation.
Italy was impacted by further legal changes in the first half of 2020. On January 1, 2020, the gaming tax was increased to 8.5 percent of the stake for VLT devices and to 23.9 percent for AWP devices.
In the United Kingdom, the maximum stake for fixed-odds betting terminals (FOBTs) in licensed betting offices (LBOs) was reduced from GBP 100.00 to GBP 2.00 as of April 1, 2019, thereby being brought in line with the level of the maximum stakes in adult gaming centers (AGCs). This change in the law has already led to numerous closures of LBOs, which has had a positive effect on the revenue development of AGCs. Novomatic is the market leader for AGCs in the UK and does not operate LBOs.
Due to the pandemic and the resulting reduced business activities, earnings before interest, taxes, depreciation and amortization (EBITDA) for the first half of 2020 amounted to EUR 131.2 million, reflecting a decrease of EUR 168.5 million (-56.2 percent) against the previous year’s result. Operating profit (EBIT) decreased from EUR 51.0 million in the previous year by EUR 149.5 million (-293.3 percent) to EUR -98.6 million.
"Besides this ongoing global pandemic, the Group continued on its consolidation course. Having sold the Novomatic Lottery Solutions Group, the OTIUM Group as well as several smaller investments in various markets in the previous year, the sale of the shares in Casinos Austria AG was completed on June 26, 2020. In February 2020, 100 percent of the shares in HTL Montenegro d.o.o. and its subsidiary MNA Gaming d.o.o. were sold. Furthermore, a majority stake in an Austrian company and its subsidiary, which mainly performed manufacturing activities, was sold," the company explained.
See the company's full Interim Financial Report here.