Filed by GTECH S.p.A.

pursuant to Rule 425 under the Securities Act of 1933

and deemed to be filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: GTECH S.p.A.; International Game Technology

Filer's SEC File No.: 333-146050

Date: March 9, 2015

 

GRAPHIC

 

NEWS RELEASE

 

GTECH ANNOUNCES 2014 FOURTH QUARTER

AND FULL YEAR RESULTS

 

·                  Solid Q4 driven by strong product sales in the Americas and International; stable service revenues overall

 

·                  Sharp growth in Q4 Operating Income excluding one-off items related to IGT transaction

 

·                  Full-year results (EBITDA, CapEx, Operating Income, NFP) at or ahead of guidance excluding one-offs

 

·                  IGT acquisition currently expected to close on April 7, 2015

 

GTECH 2014 Fourth Quarter and Full Year Results Comparison

 

Consolidated Income
Statement (€/M)

 

Q4 2014

 

Q4 2013

 

% chg

 

Full Year
2014

 

Full Year
2013

 

% chg

 

Revenues

 

809.5

 

773.1

 

4.7

 

3,069.7

 

3,062.8

 

0.2

 

EBITDA

 

261.1

 

244.6

 

6.7

 

1,078.4

 

1,036.7

 

4.0

 

Operating Income

 

97.0

 

103.8

 

(6.6

)

567.0

 

559.1

 

1.4

 

Net Income (Loss) Attributable to Owners

 

(92.8

)

1.3

 

 

83.3

 

175.4

 

(52.5

)

Diluted Earnings (Loss) Per Share

 

(0.54

)

0.01

 

 

0.48

 

1.01

 

(52.5

)

 

EBITDA is principally comprised of operating income plus depreciation, amortization, and impairment. EBITDA is considered an alternative performance measure that is not a defined measure under International Financial Reporting Standards (“IFRS”) and may not take into account the recognition, measurement and presentation requirements associated with IFRS. We believe that EBITDA assists in explaining trends in our operating performance, provides useful information about our ability to incur and service indebtedness and is a commonly used measure of performance by securities analysts and investors in the gaming industry. EBITDA should not be considered as an alternative to operating income as an indicator of our performance or to cash flows as a measure of our liquidity. As we define it, EBITDA may not be comparable to other similarly titled measures used by other companies.

 

ROME (ITALY) and PROVIDENCE, RHODE ISLAND (US) — March 9, 2015 — GTECH S.p.A.’s Board of Directors, chaired by Mr. Lorenzo Pellicioli, today reviewed both the fourth quarter and full year consolidated results, and approved the financial statements for the year ended December 31, 2014.

 

“We ended 2014 on another robust quarter, with strong product sales in the Americas and International and steady service revenues overall,” said Marco Sala, CEO of GTECH S.p.A.  “We are finalizing the acquisition of IGT, ready to initiate the integration of our two companies, and to consolidate our leadership of the global gaming industry.”

 

1



 

“Our underlying operating performance was very solid in the fourth quarter,” said Alberto Fornaro, CFO of GTECH S.p.A. “Excluding one-off items primarily related to the IGT acquisition, we achieved or exceeded guidance in all our key full-year metrics: EBITDA, CapEx, Operating Income, and Net Financial Position.”

 

Consolidated Revenues were €809 million, up approximately 5% from €773 million in the fourth quarter of 2013. This increase was principally driven by product sales which rose to €86 million in the quarter from €51 million in the fourth quarter of 2013, chiefly reflecting higher product deliveries in the International and Americas segments. Service revenues were up slightly to €723 million versus the same period last year.

 

EBITDA was up 7% to €261 million compared to €245 million in the fourth quarter of last year.

 

Operating Income was €97 million compared to €104 million last year. Operating Income was up 22% to €127 million excluding one-off items which consist of transaction costs of €22 million associated with the pending IGT acquisition and an €8 million adjustment to goodwill related to the sale of the ticketing business in Italy.

 

Interest Expense was €65 million compared to €42 million last year, the increase being principally due to the bridge facility which was entered into in anticipation of the closing of the IGT acquisition.

 

Net loss attributable to the owners was €93 million, compared to net income of €1 million in the 2013 fourth quarter, primarily attributable to the make-whole on the early redemption of the 2016 Notes, higher interest expense related to the bridge facility, a higher effective income tax rate primarily related to additional taxation related to the Italian reorganization, as well as the tax settlement and non-deductible costs associated with the IGT acquisition. Diluted loss-per-share was €0.54 compared to income of €0.01 in the fourth quarter of last year. Excluding the one-off items primarily related to the IGT acquisition, net income attributable to the owners was €53 million up from €29 million and Diluted EPS was €0.31 up from €0.17 last year.

 

Capital Expenditures in the quarter were €66 million.

 

Fourth Quarter Results by Segment

 

Americas

 

Revenues in the Americas segment were up 10% to €262 million in the quarter, compared to €238 million in the fourth quarter of 2013. Product sales in the quarter were €43 million, up €14 million compared to the same period last year, mainly attributable to VLT sales in Oregon. Strong instant ticket sales revenue offset the drop in multistate jackpot activity.

 

The increase in Operating Income from the Americas segment to €25 million, from €20 million in the fourth quarter of last year, was due to product deliveries in Oregon and Latin America casinos, as well as the contribution from a larger installed base of gaming machines. Operating income was impacted by the settlement related to the termination of Northstar’s private management agreement in Illinois.

 

During the quarter, Pronosticos Para La Asistencia Publica in Mexico awarded GTECH a new long-term facilities management contract. After the close of the quarter, the Company was also awarded a new contract from the Minnesota Lottery. Additionally, GTECH provided interactive technology and content for the Georgia Lottery’s interactive games, and signed an agreement with MGM Resorts International for GTECH’s first planned Nevada land-based Sports Betting and GTECH OnPremise mobile gaming deployment in the U.S.

 

2



 

International

 

Revenues in the International segment were €113 million versus €85 million last year, up 34%, driven by product sales in Belgium, higher machine sales to casino customers in EMEA, and higher systems sales in Europe.

 

International Lottery same store revenues were up approximately 5% compared to the same period in 2013, driven by jackpot game performance across the region and by growth in instant ticket sales in the United Kingdom with the rollout of GTECH’s compact terminals to new retailers. SAZKA in the Czech Republic launched the multijurisdictional game EuroJackpot and also experienced strong instant ticket sales growth.

 

Operating Income in the International segment was €35 million versus €10 million in the fourth quarter of last year, principally due to higher product sales, the prior year restructuring of a contract in Spain, and cost synergies.

 

During the quarter, the Company was awarded up to 5,550 of the initial 16,500 VLTs by OPAP in Greece.

 

Italy

 

Revenues in Italy were €434 million compared to €450 million in the fourth quarter of 2013, principally due to a higher sports betting payout.

 

Total Lotto wagers for the quarter were up 4% to €1.75 billion, compared to €1.68 billion last year, driven by 10eLotto, which more than compensated for a weaker late-number pattern. Instant-ticket wagers were up over 1% to €2.44 billion versus €2.41 billion last year, due to the successful launch of a new family of tickets under the brand “Super Settimana,” a new concept of “Annuity” tickets with a weekly prize over a 20-year period.

 

Machine gaming revenues were €148 million versus €151 million last year.

 

Revenues from sports betting were €36 million versus €44 million last year, a decrease entirely driven by a higher payout versus the same period last year, while wagers were up 7% mostly driven by virtual betting.

 

Operating Income of €93 million compared to €115 million last year was impacted by the decrease in gaming machine wagers combined with higher remuneration of the retail chain in order to protect the long term relationships with key partners, and by relevant marketing costs associated with the launch of the new annuity tickets.

 

Full Year Consolidated Results

 

For the full year 2014, Revenues were up slightly to €3.07 billion, compared to €3.06 billion in 2013. Service revenues increased by €32 million or over 1% compared to 2013, driven by good performance in the Americas’ segment. Americas’ service revenues grew over 3% to €828 million.

 

Despite unfavorable jackpot activity, Americas Lottery same store revenues were up slightly to €516 million, benefiting from instant ticket performance in multiple jurisdictions including California, North Carolina, Indiana and Michigan.

 

International Lottery same store revenues grew 2% driven by continued strong performance in the United Kingdom, Czech Republic and Poland. Product sale revenues were up 9% to €91 million primarily due to a delivery in Belgium.

 

3



 

Lotto wagers in Italy were up 5% to €6.6 billion compared to €6.3 billion last year.  10eLotto wagers grew 22% to €3.6 billion, compared to €3.0 billion last year.  Instant-ticket wagers were €9.4 billion, compared to €9.6 billion last year. Total betting wagers were up 15% to €893 million versus the same period last year, driven by the take-up of virtual betting.

 

EBITDA was up 4% to €1.08 billion versus €1.04 billion last year and Operating Income grew 1.4% to €567 million versus €559 million in the prior year. When excluding the one-time machine gaming settlement and the provision reversal for litigation resolved in the Company’s favor in Italy last year, EBITDA was up 2%. When excluding the aforementioned items, costs relating to the IGT acquisition, and the sale of the ticketing business in Italy, Operating Income was up approximately 3%.

 

The effective income tax rate was 66.1% compared to 46.8% in the prior year.  Excluding one-off items in 2014 and 2013, the effective income tax rate would have been 38% and 39%, respectively.

 

Net income attributable to the owners was €83 million, compared to €175 million in the same period last year. Diluted Earnings-Per-Share (EPS) was €0.48 versus €1.01 last year. Net income attributable to the owners, when excluding one-off items, was €250 million versus €216 million last year, while Diluted EPS was €1.44 versus €1.25 in 2013.

 

Net of working capital timing benefits in Italy, Cash from Operations was €821 million, compared to €696 million in the prior year.

 

Capital Expenditures for the full year were €254 million which includes the previously reported investment in Probability Plc, as well as investments in Americas’ Lotteries and Italy’s Gaming and Lotteries product lines.

 

At December 31, 2014, Consolidated Shareholders’ Equity totaled €2.62 billion.  GTECH had a Net Financial Position (NFP) of €2.59 billion versus €2.51 billion as of December 31, 2013. Excluding one-off items primarily related to the IGT acquisition, NFP would have outperformed guidance at €2.42 billion.

 

Full Year Stand-Alone Results

 

GTECH’s stand-alone Net Income in 2014 was €143 million compared to €34 million in 2013.  Total Equity and Liabilities in 2014 were €6.17 billion versus €5.53 billion in 2013.  Cash and Cash Equivalents at the end of 2014 were €10 million compared to €159 million in 2013.

 

Other Information

 

Following payment on January 21, 2015 of the interim dividend as of November 30, 2014, no additional dividend payment shall be proposed to the Annual General Meeting, whose call remains subject to the failure to consummate, within the first half-year period, the cross-border merger of the Company into International Game Technology PLC (formerly Georgia Worldwide PLC), in connection with the acquisition of IGT.

 

To this aim, the Company and International Game Technology PLC intend to file an application with the High Court of England & Wales for the cross-border merger to take effect on April 7, 2015.

 

GTECH also announced that those shares for which cash exit rights were exercised and not purchased through the pre-emptive offer ended on January 9, 2015, will not be offered on the Mercato Telematico Azionario organized and managed by Borsa Italiana S.p.A. and will therefore be purchased by GTECH.

 

GTECH management currently expects the closing of the IGT acquisition on April 7, 2015, subject to the receipt of certain customary regulatory and other approvals, including U.K. Court clearance and NYSE listing authorization, among others.

 

4



 

Related news releases: January 13, 2015; December 17, 2014

 

Declaration

 

The manager responsible for preparing GTECH’s financial reports, Alberto Fornaro, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this news release corresponds to the document results, books, and accounting records.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This communication contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning GTECH, IGT, and International Game Technology PLC (“NewCo”) the proposed transactions and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of GTECH, NewCo and IGT as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,”, “shall”, “continue”, “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or the negative or other variations of them. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance or achievements. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the parties’ control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) failure to obtain applicable regulatory or shareholder approvals in a timely manner or otherwise; failure to satisfy other closing conditions to the proposed transactions; risks that the new businesses will not be integrated successfully or that the combined companies will not realize estimated cost savings, value of certain tax assets, synergies and growth or that such benefits may take longer to realize than expected; failure to realize anticipated benefits of the combined operations; risks relating to unanticipated costs of integration; reductions in customer spending, a slowdown in customer payments and changes in customer demand for products and services; unanticipated changes relating to competitive factors in the industries in which the companies operate; ability to hire and retain key personnel; the potential impact of announcement or consummation of the proposed transactions on relationships with third parties, including customers, employees and competitors; ability to attract new customers and retain existing customers in the manner anticipated; reliance on and integration of information technology systems; changes in legislation or governmental regulations affecting the companies; international, national or local economic, social or political conditions that could adversely affect the companies or their customers; conditions in the credit markets; risks associated with assumptions the parties make in connection with the parties’ critical accounting estimates and legal proceedings; and the parties’ international operations, which are subject to the risks of currency fluctuations and foreign exchange controls. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the parties’ businesses, including those described in NewCo’s registration statement on Form F-4 and other documents filed from time to time with the Securities and Exchange Commission (the “SEC”) and those described in GTECH’s annual reports, registration documents and other documents filed from time to time with the Italian financial market regulator (CONSOB), as well as those included in IGT’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Except as required under applicable law, the parties do not assume any obligation to update these forward looking statements. Nothing in this announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per GTECH share or IGT share for the current or any future financial years or those of the combined group, will necessarily match or exceed the historical published

 

5



 

earnings per GTECH share or IGT share, as applicable. All forward-looking statements contained in this communication are qualified in their entirety by this cautionary statement. All subsequent written or oral forward-looking statements attributable to GTECH or NewCo, or persons acting on their behalf, are expressly qualified in its entirety by the cautionary statements contained throughout this communication. As a result of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements.

 

Important Information for Investors and Shareholders

 

This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and applicable European regulations. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, the public offer will not be made directly or indirectly, in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including without limitation, facsimile transmission, telephone and the internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction. NewCo has filed with the SEC a registration statement on Form F-4, which was declared effective on 2 January 2015 (file number 333-199096), which includes the proxy statement of IGT that also constitutes a prospectus of NewCo (the “proxy statement/prospectus”). The registration statement on Form F-4 is available at www.sec.gov under the name “International Game Technology PLC”. INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, AND OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, IN THEIR ENTIRETY CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT IGT, GTECH, NEWCO, THE PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors and shareholders are able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC by the parties through the website maintained by the SEC at www.sec.gov. In addition, investors and shareholders are able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC by the parties by contacting Investor Relations, IGT (for documents filed with the SEC by IGT) or Investor Relations, GTECH (for documents filed with the SEC by NewCo).

 

Italian CONSOB Regulation No. 17221

 

Pursuant to Article 6 of the CONSOB Regulation no. 17221 of March 12, 2010 (as amended, the “CONSOB Regulation”), NewCo is a related party of GTECH, being a subsidiary of GTECH. The merger agreement providing for the GTECH-NewCo merger — which exceeds the thresholds for “significant transactions” pursuant to the Regulation — was approved unanimously by the GTECH board of directors.

 

The merger agreement and the GTECH-NewCo merger are subject to the exemption set forth in Article14 of the CONSOB Regulation and Article 3.2 of the “Disposizioni in materia di operazioni con parti correlate” (“Procedures for transactions with related parties”) adopted by GTECH on July 31, 2014 and published on its website (www.gtech.com). Pursuant to this exemption, GTECH will not publish an information document (documento informativo) for related party transactions as provided by Article 5 of the CONSOB Regulation. In connection with the meeting of GTECH shareholders on November 4, 2014 to approve the GTECH-NewCo merger, GTECH has published an information document pursuant to Article 70, paragraph 6, of the CONSOB Regulation on Issuers (CONSOB Regulation no. 11971 of May 24, 1999, as amended), in accordance with applicable terms.

 

Participants in the Distribution

 

IGT, GTECH and NewCo and their respective directors, executive officers and certain other member of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of IGT in respect of the proposed transactions contemplated by the proxy

 

6



 

statement/prospectus. Information regarding the persons who may, under the rules of the SEC, be participants in the solicitation of the shareholders of IGT in connection with the proposed transactions, including a description of their direct or indirect interests, by security holdings or otherwise, are set forth in the proxy statement/prospectus filed with the SEC. Information regarding IGT’s directors and executive officers is contained in IGT’s Annual Report on Form 10-K for the year ended 27 September 2014 and its Proxy Statement on Schedule 14A, dated 24 January 2014, which are filed with the SEC.

 

GTECH S.p.A. is a leading commercial operator and provider of technology in the regulated worldwide gaming markets, delivering best-in-class products and services, with a commitment to the highest levels of integrity, responsibility, and shareholder value creation. The Company is listed on the FTSE MIB at the Italian Stock Exchange under the trading symbol “GTK” and is majority owned by De Agostini S.p.A. In 2014, GTECH had approximately €3.1 billion in revenues and 8,800 employees with operations in approximately 100 countries on six continents. For more information, please visit www.gtech.com.

 

For further information:

 

Robert K. Vincent

Simone Cantagallo

GTECH S.p.A.

GTECH S.p.A.

Corporate Communications

Media Communications

T. (+1) 401 392 7452

T. (+39) 06 51899030

 

This news release and those archived are available at www.gtech.com

 

Financial Statements for the fourth quarter and full year of 2014 follow:

 

7



 

GTECH S.P.A. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

 

 

 

For the three months ended

 

 

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

Service revenue

 

723,504

 

722,445

 

Product sales

 

85,982

 

50,675

 

Total revenue

 

809,486

 

773,120

 

 

 

 

 

 

 

Raw materials, services and other costs

 

433,317

 

425,245

 

Personnel

 

159,894

 

150,243

 

Depreciation

 

66,388

 

66,463

 

Amortization

 

54,825

 

48,196

 

Impairment loss (recovery), net

 

(1,091

)

8,083

 

Capitalization of internal construction costs - labor and overhead

 

(31,124

)

(28,895

)

Unusual expense, net

 

30,306

 

 

 

 

712,515

 

669,335

 

 

 

 

 

 

 

Operating income

 

96,971

 

103,785

 

 

 

 

 

 

 

Interest income

 

1,361

 

939

 

Equity income (loss), net

 

247

 

(772

)

Other income

 

856

 

141

 

Other expense

 

(73,288

)

(4,951

)

Foreign exchange gain (loss), net

 

2,739

 

(104

)

Interest expense

 

(65,005

)

(41,926

)

 

 

(133,090

)

(46,673

)

 

 

 

 

 

 

Income (loss) before income tax expense

 

(36,119

)

57,112

 

 

 

 

 

 

 

Income tax expense

 

57,258

 

49,912

 

 

 

 

 

 

 

Net income (loss)

 

(93,377

)

7,200

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Owners of the parent

 

(92,810

)

1,277

 

Non-controlling interests

 

(567

)

5,923

 

 

 

(93,377

)

7,200

 

 

 

 

 

 

 

Earnings (loss) per share/ADRs

 

 

 

 

 

Basic - net income (loss) attributable to owners of the parent

 

(0.54

)

0.01

 

Diluted - net income (loss) attributable to owners of the parent

 

(0.54

)

0.01

 

 

8



 

 

 

For the year ended

 

 

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

Service revenue

 

2,815,410

 

2,783,727

 

Product sales

 

254,243

 

279,107

 

Total revenue

 

3,069,653

 

3,062,834

 

 

 

 

 

 

 

Raw materials, services and other costs

 

1,548,934

 

1,585,303

 

Personnel

 

571,618

 

568,266

 

Depreciation

 

249,477

 

254,599

 

Amortization

 

206,336

 

189,684

 

Impairment loss (recovery), net

 

(2,195

)

6,058

 

Capitalization of internal construction costs - labor and overhead

 

(100,788

)

(100,208

)

Unusual expense, net

 

29,242

 

 

 

 

2,502,624

 

2,503,702

 

 

 

 

 

 

 

Operating income

 

567,029

 

559,132

 

 

 

 

 

 

 

Interest income

 

3,658

 

3,334

 

Equity loss, net

 

(1,514

)

(965

)

Other income

 

4,007

 

1,131

 

Other expense

 

(79,977

)

(11,177

)

Foreign exchange loss, net

 

(1,413

)

(2,309

)

Interest expense

 

(204,211

)

(163,074

)

 

 

(279,450

)

(173,060

)

 

 

 

 

 

 

Income before income tax expense

 

287,579

 

386,072

 

 

 

 

 

 

 

Income tax expense

 

189,970

 

180,837

 

 

 

 

 

 

 

Net income

 

97,609

 

205,235

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Owners of the parent

 

83,309

 

175,434

 

Non-controlling interests

 

14,300

 

29,801

 

 

 

97,609

 

205,235

 

 

 

 

 

 

 

Earnings per share/ADRs

 

 

 

 

 

Basic - net income attributable to owners of the parent

 

0.48

 

1.01

 

Diluted - net income attributable to owners of the parent

 

0.48

 

1.01

 

 

9



 

GTECH S.P.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

 

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

ASSETS

 

 

 

 

 

Non-current assets

 

 

 

 

 

Systems, equipment and other assets related to contracts, net

 

910,095

 

899,536

 

Property, plant and equipment, net

 

77,394

 

76,382

 

Goodwill

 

3,402,201

 

3,095,466

 

Intangible assets, net

 

1,151,472

 

1,257,297

 

Investments in associates and joint ventures

 

24,474

 

26,894

 

Other non-current assets

 

75,495

 

48,777

 

Non-current financial assets

 

21,557

 

28,886

 

Deferred income taxes

 

22,026

 

14,000

 

Total non-current assets

 

5,684,714

 

5,447,238

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

 

152,042

 

146,406

 

Trade and other receivables, net

 

757,444

 

904,248

 

Other current assets

 

255,288

 

190,517

 

Current financial assets

 

10,386

 

12,273

 

Income taxes receivable

 

5,459

 

3,574

 

Cash and cash equivalents

 

261,184

 

419,118

 

Total current assets

 

1,441,803

 

1,676,136

 

 

 

 

 

 

 

TOTAL ASSETS

 

7,126,517

 

7,123,374

 

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

Issued capital

 

174,976

 

173,992

 

Share premium

 

1,651,498

 

1,717,261

 

Treasury shares

 

(40,211

)

 

Retained earnings

 

171,065

 

292,847

 

Other reserves

 

378,947

 

15,812

 

 

 

2,336,275

 

2,199,912

 

Non-controlling interests

 

281,814

 

403,620

 

Total equity

 

2,618,089

 

2,603,532

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Long-term debt, less current portion

 

1,725,738

 

2,641,260

 

Deferred income taxes

 

177,296

 

134,278

 

Long-term provisions

 

13,038

 

17,499

 

Other non-current liabilities

 

57,728

 

62,098

 

Non-current financial liabilities

 

60,518

 

60,600

 

Total non-current liabilities

 

2,034,318

 

2,915,735

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

1,022,194

 

978,598

 

Short-term borrowings

 

8,895

 

851

 

Other current liabilities

 

356,414

 

361,740

 

Current financial liabilities

 

275,019

 

21,503

 

Current portion of long-term debt

 

786,878

 

214,496

 

Short-term provisions

 

991

 

1,185

 

Income taxes payable

 

23,719

 

25,734

 

Total current liabilities

 

2,474,110

 

1,604,107

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

7,126,517

 

7,123,374

 

 

10



 

GTECH S.P.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

For the year ended

 

 

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

Cash flows from operating activities

 

 

 

 

 

Income before income tax expense

 

287,579

 

386,072

 

Adjustments for:

 

 

 

 

 

Depreciation

 

249,477

 

254,599

 

Intangibles amortization

 

206,427

 

189,774

 

Interest expense

 

204,211

 

163,074

 

Make-whole paid in connection with the early extinguishment of debt

 

72,999

 

 

Share-based payment expense

 

7,768

 

8,611

 

Disposal of goodwill

 

7,752

 

 

Provisions

 

(655

)

(5,304

)

Impairment loss (recovery), net

 

(2,195

)

6,058

 

Non-cash foreign exchange (gain) loss, net

 

(3,081

)

938

 

Interest income

 

(3,658

)

(3,334

)

Other non-cash items

 

14,288

 

12,197

 

Cash foreign exchange loss, net

 

4,494

 

1,372

 

Income tax paid

 

(161,508

)

(170,943

)

Cash flows before changes in operating assets and liabilities

 

883,898

 

843,114

 

Changes in operating assets and liabilities:

 

 

 

 

 

Inventories

 

3,312

 

14,423

 

Trade and other receivables

 

127,234

 

(108,594

)

Accounts payable

 

(396

)

(45,220

)

Other assets and liabilities

 

(33,437

)

(7,474

)

Net cash flows from operating activities

 

980,611

 

696,249

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchases of systems, equipment and other assets related to contracts

 

(191,895

)

(183,878

)

Acquisitions, net of cash acquired

 

(26,230

)

(7,345

)

Purchases of intangible assets

 

(24,689

)

(134,919

)

Purchases of property, plant and equipment

 

(7,892

)

(10,370

)

Interest received

 

3,791

 

7,307

 

Investment in associate

 

 

(19,800

)

Other

 

8,609

 

7,434

 

Net cash flows used in investing activities

 

(238,306

)

(341,571

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Principal payments on long-term debt

 

(1,058,420

)

(102,810

)

Interest paid

 

(158,577

)

(143,390

)

Dividends paid

 

(130,525

)

(125,920

)

Make-whole paid in connection with the early extinguishment of debt

 

(72,999

)

 

Acquisition of non-controlling interest

 

(72,328

)

 

Return of capital - non-controlling interest

 

(55,163

)

(40,087

)

Payments on bridge facility

 

(52,713

)

 

Treasury shares purchased

 

(40,211

)

 

Dividends paid - non-controlling interest

 

(33,079

)

(34,062

)

Capital increase - non-controlling interest

 

6,188

 

71,973

 

Net proceeds from (repayments of) short-term borrowings

 

8,079

 

(170

)

Proceeds from financial liabilities

 

47,823

 

 

Proceeds from issuance of long-term debt

 

737,788

 

 

Other

 

(26,034

)

(3,987

)

Net cash flows used in financing activities

 

(900,171

)

(378,453

)

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(157,866

)

(23,775

)

Effect of exchange rate changes on cash

 

(68

)

(12,869

)

Cash and cash equivalents at the beginning of the year

 

419,118

 

455,762

 

Cash and cash equivalents at the end of the year

 

261,184

 

419,118

 

 

11



 

GTECH S.P.A. AND SUBSIDIARIES

KEY FINANCIAL INDICATOR COMPARISONS

 

 

 

For the three months ended

 

 

 

December 31,

 

Change

 

 

 

2014

 

2013

 

 

%

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

809,486

 

773,120

 

36,366

 

4.7

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

261,061

 

244,612

 

16,449

 

6.7

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

96,971

 

103,785

 

(6,814

)

(6.6

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to owners of the parent

 

(92,810

)

1,277

 

(94,087

)

>200.0

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

(0.54

)

0.01

 

(0.55

)

>200.0

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

 

 

 

 

Operating income

 

96,971

 

103,785

 

(6,814

)

(6.6

)

Depreciation

 

66,388

 

66,463

 

(75

)

(0.1

)

Amortization

 

54,825

 

48,196

 

6,629

 

13.8

 

Impairment loss (recovery), net

 

(1,091

)

8,083

 

(9,174

)

(113.5

)

Restructuring costs

 

8,299

 

15,104

 

(6,805

)

(45.1

)

Unusual expense, net

 

30,306

 

 

30,306

 

 

Other

 

5,363

 

2,981

 

2,382

 

79.9

 

 

 

261,061

 

244,612

 

16,449

 

6.7

 

 

12



 

 

 

For the year ended

 

 

 

December 31,

 

Change

 

 

 

2014

 

2013

 

 

%

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

3,069,653

 

3,062,834

 

6,819

 

0.2

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

1,078,433

 

1,036,709

 

41,724

 

4.0

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

567,029

 

559,132

 

7,897

 

1.4

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to owners of the parent

 

83,309

 

175,434

 

(92,125

)

(52.5

)

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

0.48

 

1.01

 

(0.53

)

(52.5

)

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

 

 

 

 

Operating income

 

567,029

 

559,132

 

7,897

 

1.4

 

Depreciation

 

249,477

 

254,599

 

(5,122

)

(2.0

)

Amortization

 

206,336

 

189,684

 

16,652

 

8.8

 

Unusual expense, net

 

29,242

 

 

29,242

 

 

Restructuring costs

 

18,398

 

20,544

 

(2,146

)

(10.4

)

Impairment loss (recovery), net

 

(2,195

)

6,058

 

(8,253

)

(136.2

)

Other

 

10,146

 

6,692

 

3,454

 

51.6

 

 

 

1,078,433

 

1,036,709

 

41,724

 

4.0

 

 

 

 

December 31,

 

Change

 

 

 

2014

 

2013

 

 

%

 

Net financial position

 

2,585,478

 

2,507,319

 

78,159

 

3.1

 

 

13



 

GTECH S.P.A. AND SUBSIDIARIES

OPERATING SEGMENT RESULTS

 

 

 

For the three months ended

 

 

 

December 31, 2014

 

December 31, 2013

 

Change

 

(€ thousands)

 

Italy

 

Americas

 

International

 

Total

 

Italy

 

Americas

 

International

 

Total

 

Italy

 

Americas

 

International

 

Total

 

Service revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lottery

 

201,997

 

163,661

 

51,023

 

416,681

 

199,645

 

149,265

 

45,308

 

394,218

 

2,352

 

14,396

 

5,715

 

22,463

 

Lottery Management Services

 

 

18,715

 

 

18,715

 

 

30,521

 

 

30,521

 

 

(11,806

)

 

(11,806

)

Total Lottery

 

201,997

 

182,376

 

51,023

 

435,396

 

199,645

 

179,786

 

45,308

 

424,739

 

2,352

 

2,590

 

5,715

 

10,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Machine Gaming

 

147,428

 

22,766

 

6,382

 

176,576

 

150,613

 

17,826

 

7,059

 

175,498

 

(3,185

)

4,940

 

(677

)

1,078

 

Sports Betting

 

35,715

 

1,892

 

2,146

 

39,753

 

44,440

 

574

 

1,405

 

46,419

 

(8,725

)

1,318

 

741

 

(6,666

)

Commercial Services

 

30,198

 

9,081

 

4,368

 

43,647

 

34,960

 

9,607

 

4,941

 

49,508

 

(4,762

)

(526

)

(573

)

(5,861

)

Interactive Gaming

 

18,457

 

2,594

 

6,934

 

27,985

 

19,917

 

1,520

 

4,712

 

26,149

 

(1,460

)

1,074

 

2,222

 

1,836

 

Total service revenue

 

433,795

 

218,709

 

70,853

 

723,357

 

449,575

 

209,313

 

63,425

 

722,313

 

(15,780

)

9,396

 

7,428

 

1,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lottery

 

 

8,251

 

19,213

 

27,464

 

 

10,985

 

6,547

 

17,532

 

 

(2,734

)

12,666

 

9,932

 

Machine Gaming

 

695

 

34,514

 

19,596

 

54,805

 

529

 

18,094

 

11,939

 

30,562

 

166

 

16,420

 

7,657

 

24,243

 

Sports Betting

 

 

 

2,008

 

2,008

 

 

 

1,931

 

1,931

 

 

 

77

 

77

 

Interactive Gaming

 

 

 

1,705

 

1,705

 

 

 

650

 

650

 

 

 

1,055

 

1,055

 

Total product sales

 

695

 

42,765

 

42,522

 

85,982

 

529

 

29,079

 

21,067

 

50,675

 

166

 

13,686

 

21,455

 

35,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment revenue

 

434,490

 

261,474

 

113,375

 

809,339

 

450,104

 

238,392

 

84,492

 

772,988

 

(15,614

)

23,082

 

28,883

 

36,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase accounting

 

 

 

 

 

 

 

147

 

 

 

 

 

 

 

132

 

 

 

 

 

 

 

15

 

Total revenue

 

 

 

 

 

 

 

809,486

 

 

 

 

 

 

 

773,120

 

 

 

 

 

 

 

36,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

92,515

 

25,191

 

34,717

 

152,423

 

114,568

 

20,484

 

10,242

 

145,294

 

(22,053

)

4,707

 

24,475

 

7,129

 

Corporate support (1)

 

 

 

 

 

 

 

(39,710

)

 

 

 

 

 

 

(27,383

)

 

 

 

 

 

 

(12,327

)

Purchase accounting

 

 

 

 

 

 

 

(15,742

)

 

 

 

 

 

 

(14,126

)

 

 

 

 

 

 

(1,616

)

Operating income

 

 

 

 

 

 

 

96,971

 

 

 

 

 

 

 

103,785

 

 

 

 

 

 

 

(6,814

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating margin

 

21.3

%

9.6

%

30.6

%

18.8

%

25.5

%

8.6

%

12.1

%

18.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income margin

 

 

 

 

 

 

 

12.0

%

 

 

 

 

 

 

13.4

%

 

 

 

 

 

 

 

 

 


(1)         Corporate support expenses are principally comprised of general and administrative expenses and other expenses that are managed at the corporate level, including Restructuring, Corporate Headquarters and Board of Directors expenses.

 

14



 

 

 

For the year ended

 

 

 

December 31, 2014

 

December 31, 2013

 

Change

 

(€ thousands)

 

Italy

 

Americas

 

International

 

Total

 

Italy

 

Americas

 

International

 

Total

 

Italy

 

Americas

 

International

 

Total

 

Service revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lottery

 

795,097

 

606,521

 

170,568

 

1,572,186

 

785,046

 

588,406

 

175,730

 

1,549,182

 

10,051

 

18,115

 

(5,162

)

23,004

 

Lottery Management Services

 

 

95,467

 

 

95,467

 

 

91,402

 

 

91,402

 

 

4,065

 

 

4,065

 

Total Lottery

 

795,097

 

701,988

 

170,568

 

1,667,653

 

785,046

 

679,808

 

175,730

 

1,640,584

 

10,051

 

22,180

 

(5,162

)

27,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Machine Gaming

 

569,918

 

79,811

 

24,910

 

674,639

 

580,874

 

74,899

 

27,098

 

682,871

 

(10,956

)

4,912

 

(2,188

)

(8,232

)

Sports Betting

 

178,533

 

2,944

 

7,864

 

189,341

 

158,739

 

2,463

 

5,937

 

167,139

 

19,794

 

481

 

1,927

 

22,202

 

Commercial Services

 

127,677

 

36,209

 

18,161

 

182,047

 

132,111

 

37,907

 

19,234

 

189,252

 

(4,434

)

(1,698

)

(1,073

)

(7,205

)

Interactive Gaming

 

71,407

 

6,612

 

23,163

 

101,182

 

77,476

 

5,882

 

19,981

 

103,339

 

(6,069

)

730

 

3,182

 

(2,157

)

Total service revenue

 

1,742,632

 

827,564

 

244,666

 

2,814,862

 

1,734,246

 

800,959

 

247,980

 

2,783,185

 

8,386

 

26,605

 

(3,314

)

31,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lottery

 

 

56,154

 

27,290

 

83,444

 

 

35,480

 

20,219

 

55,699

 

 

20,674

 

7,071

 

27,745

 

Machine Gaming

 

2,548

 

104,985

 

54,879

 

162,412

 

2,844

 

157,646

 

58,862

 

219,352

 

(296

)

(52,661

)

(3,983

)

(56,940

)

Sports Betting

 

 

 

6,147

 

6,147

 

 

 

3,390

 

3,390

 

 

 

2,757

 

2,757

 

Interactive Gaming

 

 

 

2,240

 

2,240

 

 

 

666

 

666

 

 

 

1,574

 

1,574

 

Total product sales

 

2,548

 

161,139

 

90,556

 

254,243

 

2,844

 

193,126

 

83,137

 

279,107

 

(296

)

(31,987

)

7,419

 

(24,864

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment revenue

 

1,745,180

 

988,703

 

335,222

 

3,069,105

 

1,737,090

 

994,085

 

331,117

 

3,062,292

 

8,090

 

(5,382

)

4,105

 

6,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase accounting

 

 

 

 

 

 

 

548

 

 

 

 

 

 

 

542

 

 

 

 

 

 

 

6

 

Total revenue

 

 

 

 

 

 

 

3,069,653

 

 

 

 

 

 

 

3,062,834

 

 

 

 

 

 

 

6,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

543,467

 

88,599

 

73,756

 

705,822

 

499,661

 

122,164

 

50,655

 

672,480

 

43,806

 

(33,565

)

23,101

 

33,342

 

Corporate support (1)

 

 

 

 

 

 

 

(83,170

)

 

 

 

 

 

 

(56,065

)

 

 

 

 

 

 

(27,105

)

Purchase accounting

 

 

 

 

 

 

 

(55,623

)

 

 

 

 

 

 

(57,283

)

 

 

 

 

 

 

1,660

 

Operating income

 

 

 

 

 

 

 

567,029

 

 

 

 

 

 

 

559,132

 

 

 

 

 

 

 

7,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating margin

 

31.1

%

9.0

%

22.0

%

23.0

%

28.8

%

12.3

%

15.3

%

22.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income margin

 

 

 

 

 

 

 

18.5

%

 

 

 

 

 

 

18.3

%

 

 

 

 

 

 

 

 

 


(1)    Corporate support expenses are principally comprised of general and administrative expenses and other expenses that are managed at the corporate level, including Restructuring, Corporate Headquarters and Board of Directors expenses.

 

15



 

GTECH S.P.A. AND SUBSIDIARIES

AMERICAS SEGMENT

 

The following tables set forth changes in service revenue and product sales in the three months ended December 31, 2014 compared to the same period in 2013, on a constant currency basis:

 

 

 

Service Revenue Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Lottery Management Services

 

(13,167

)

1,361

 

(11,806

)

Commercial Services

 

(330

)

(196

)

(526

)

Lottery

 

261

 

14,135

 

14,396

 

Interactive Gaming

 

1,054

 

20

 

1,074

 

Sports Betting

 

1,283

 

35

 

1,318

 

Machine Gaming

 

3,179

 

1,761

 

4,940

 

 

 

(7,720

)

17,116

 

9,396

 

 

 

 

Product sales Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Machine Gaming

 

15,459

 

961

 

16,420

 

Lottery

 

(2,648

)

(86

)

(2,734

)

 

 

12,811

 

875

 

13,686

 

 

 

 

For the three months ended

 

 

 

December 31,

 

Change

 

(€ thousands)

 

2014

 

2013

 

 

%

 

 

 

 

 

 

 

 

 

 

 

Lottery Same-Store Revenues

 

131,972

 

132,271

 

(299

)

(0.2

)

Wins

 

1,018

 

 

1,018

 

 

Gaming & Other

 

51,395

 

46,667

 

4,728

 

10.1

 

Lottery Management Services

 

17,208

 

30,375

 

(13,167

)

(43.3

)

Foreign Exchange Impact

 

17,116

 

 

17,116

 

 

Total Service Revenue

 

218,709

 

209,313

 

9,396

 

4.5

 

 

16



 

The following tables set forth changes in service revenue and product sales in the year ended December 31, 2014 compared to the same period in 2013, on a constant currency basis:

 

 

 

Service Revenue Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Lottery

 

17,789

 

326

 

18,115

 

Lottery Management Services

 

5,721

 

(1,656

)

4,065

 

Machine Gaming

 

5,589

 

(677

)

4,912

 

Commercial Services

 

1,126

 

(2,824

)

(1,698

)

Interactive Gaming

 

897

 

(167

)

730

 

Sports Betting

 

515

 

(34

)

481

 

 

 

31,637

 

(5,032

)

26,605

 

 

 

 

Product Sales Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Machine Gaming

 

(48,611

)

(4,050

)

(52,661

)

Lottery

 

23,637

 

(2,963

)

20,674

 

 

 

(24,974

)

(7,013

)

(31,987

)

 

 

 

For the year ended

 

 

 

December 31,

 

Change

 

(€ thousands)

 

2014

 

2013

 

 

%

 

 

 

 

 

 

 

 

 

 

 

Lottery Same-Store Revenues

 

515,719

 

514,278

 

1,441

 

0.3

 

Wins

 

6,115

 

 

6,115

 

 

Gaming & Other

 

213,639

 

195,279

 

18,360

 

9.4

 

Lottery Management Services

 

97,123

 

91,402

 

5,721

 

6.3

 

Foreign Exchange Impact

 

(5,032

)

 

(5,032

)

 

Total Service Revenue

 

827,564

 

800,959

 

26,605

 

3.3

 

 

17



 

GTECH S.P.A. AND SUBSIDIARIES

INTERNATIONAL SEGMENT

 

The following tables set forth changes in service revenue and product sales in the three months ended December 31, 2014 compared to the same period in 2013, on a constant currency basis:

 

 

 

Service Revenue Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Lottery

 

2,652

 

3,063

 

5,715

 

Interactive Games

 

2,123

 

99

 

2,222

 

Sports Betting

 

636

 

105

 

741

 

Machine Gaming

 

(428

)

(249

)

(677

)

Commercial Services

 

(517

)

(56

)

(573

)

 

 

4,466

 

2,962

 

7,428

 

 

 

 

Product Sales Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Lottery

 

12,321

 

345

 

12,666

 

Machine Gaming

 

7,626

 

31

 

7,657

 

Interactive Games

 

987

 

68

 

1,055

 

Sports Betting

 

(70

)

147

 

77

 

 

 

20,864

 

591

 

21,455

 

 

 

 

For the three months ended

 

 

 

December 31,

 

Change

 

(€ thousands)

 

2014

 

2013

 

 

%

 

 

 

 

 

 

 

 

 

 

 

Lottery Same Store Revenue

 

28,215

 

26,773

 

1,442

 

5.4

 

Wins

 

659

 

 

659

 

 

Gaming & Other

 

39,017

 

36,652

 

2,365

 

6.5

 

Foreign Exchange Impact

 

2,962

 

 

2,962

 

 

Total Service Revenue

 

70,853

 

63,425

 

7,428

 

11.7

 

 

18



 

The following tables set forth changes in service revenue and product sales in the year ended December 31, 2014 compared to the same period in 2013, on a constant currency basis:

 

 

 

Service Revenue Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Lottery

 

(7,605

)

2,443

 

(5,162

)

Machine Gaming

 

(1,315

)

(873

)

(2,188

)

Commercial Services

 

(1,096

)

23

 

(1,073

)

Sports Betting

 

1,537

 

390

 

1,927

 

Interactive Gaming

 

2,797

 

385

 

3,182

 

 

 

(5,682

)

2,368

 

(3,314

)

 

 

 

Product Sales Change

 

 

 

Constant

 

Foreign

 

 

 

(€ thousands)

 

Currency

 

Currency

 

Change

 

 

 

 

 

 

 

 

 

Lottery

 

6,692

 

379

 

7,071

 

Sports Betting

 

2,337

 

420

 

2,757

 

Interactive Gaming

 

1,528

 

46

 

1,574

 

Machine Gaming

 

(4,691

)

708

 

(3,983

)

 

 

5,866

 

1,553

 

7,419

 

 

 

 

For the year ended

 

 

 

December 31,

 

Change

 

(€ thousands)

 

2014

 

2013

 

 

%

 

 

 

 

 

 

 

 

 

 

 

Lottery Same Store Revenue

 

106,411

 

104,286

 

2,125

 

2.0

 

Wins

 

3,235

 

 

3,235

 

 

Gaming & Other

 

132,652

 

143,694

 

(11,042

)

(7.7

)

Foreign Exchange Impact

 

2,368

 

 

2,368

 

 

Total Service Revenue

 

244,666

 

247,980

 

(3,314

)

(1.3

)

 

19



 

GTECH S.P.A. AND SUBSIDIARIES

ITALY SEGMENT

 

 

 

For the three months ended

 

 

 

December 31,

 

Change

 

(€ thousands)

 

2014

 

2013

 

 

%

 

Service revenue

 

 

 

 

 

 

 

 

 

Lotto

 

105,360

 

103,555

 

1,805

 

1.7

 

Instant tickets

 

96,637

 

96,090

 

547

 

0.6

 

Lottery

 

201,997

 

199,645

 

2,352

 

1.2

 

 

 

 

 

 

 

 

 

 

 

Lotto (€ millions)

 

 

 

 

 

 

 

 

 

Core wagers

 

1,652.8

 

1,477.7

 

175.1

 

11.8

 

Wagers for late numbers

 

93.3

 

200.2

 

(106.9

)

(53.4

)

 

 

1,746.1

 

1,677.9

 

68.2

 

4.1

 

 

 

 

 

 

 

 

 

 

 

Instant Tickets

 

 

 

 

 

 

 

 

 

Total sales (in millions)

 

2,436.5

 

2,408.6

 

27.9

 

1.2

 

Total tickets sold (in millions)

 

496.1

 

483.3

 

12.8

 

2.6

 

Average price point

 

4.91

 

4.98

 

(0.07

)

(1.4

)

 

 

 

 

 

 

 

 

 

 

Machine Gaming (€ millions)

 

 

 

 

 

 

 

 

 

VLT wagers

 

1,429.8

 

1,578.8

 

(149.0

)

(9.4

)

AWP wagers

 

1,182.9

 

1,192.2

 

(9.3

)

(0.8

)

Total wagers

 

2,612.7

 

2,771.0

 

(158.3

)

(5.7

)

 

 

 

 

 

 

 

 

 

 

(Installed at the end of December)

 

 

 

 

 

 

 

 

 

VLT’s installed

 

10,956

 

10,596

 

360

 

3.4

 

AWP machines installed

 

65,316

 

70,203

 

(4,887

)

(7.0

)

Total machines installed

 

76,272

 

80,799

 

(4,527

)

(5.6

)

 

 

 

 

 

 

 

 

 

 

Sports Betting (€ millions)

 

 

 

 

 

 

 

 

 

Fixed odds sports betting and other wagers

 

250.4

 

233.8

 

16.6

 

7.1

 

 

 

 

 

 

 

 

 

 

 

Interactive Gaming (€ millions)

 

 

 

 

 

 

 

 

 

Interactive gaming wagers

 

456.2

 

525.4

 

(69.2

)

(13.2

)

 

20



 

 

 

For the year ended

 

 

 

December 31,

 

Change

 

(€ thousands)

 

2014

 

2013

 

 

%

 

Service revenue

 

 

 

 

 

 

 

 

 

Lotto

 

424,932

 

407,612

 

17,320

 

4.2

 

Instant tickets

 

370,165

 

377,434

 

(7,269

)

(1.9

)

Lottery

 

795,097

 

785,046

 

10,051

 

1.3

 

 

 

 

 

 

 

 

 

 

 

Lotto (€ millions)

 

 

 

 

 

 

 

 

 

Core wagers

 

6,170.6

 

5,678.5

 

492.1

 

8.7

 

Wagers for late numbers

 

458.7

 

654.2

 

(195.5

)

(29.9

)

 

 

6,629.3

 

6,332.7

 

296.6

 

4.7

 

 

 

 

 

 

 

 

 

 

 

Instant Tickets

 

 

 

 

 

 

 

 

 

Total sales (in millions)

 

9,403.3

 

9,573.8

 

(170.5

)

(1.8

)

Total tickets sold (in millions)

 

1,902.9

 

1,970.8

 

(67.9

)

(3.4

)

Average price point

 

4.94

 

4.86

 

0.08

 

1.6

 

 

 

 

 

 

 

 

 

 

 

Machine Gaming (€ millions)

 

 

 

 

 

 

 

 

 

VLT wagers

 

5,599.9

 

6,458.5

 

(858.6

)

(13.3

)

AWP wagers

 

4,510.9

 

4,532.4

 

(21.5

)

(0.5

)

Total wagers

 

10,110.8

 

10,990.9

 

(880.1

)

(8.0

)

 

 

 

 

 

 

 

 

 

 

(Installed at the end of December)

 

 

 

 

 

 

 

 

 

VLT’s installed

 

10,956

 

10,596

 

360

 

3.4

 

AWP machines installed

 

65,316

 

70,203

 

(4,887

)

(7.0

)

Total machines installed

 

76,272

 

80,799

 

(4,527

)

(5.6

)

 

 

 

 

 

 

 

 

 

 

Sports Betting (€ millions)

 

 

 

 

 

 

 

 

 

Fixed odds sports betting and other wagers

 

893.3

 

778.5

 

114.8

 

14.7

 

 

 

 

 

 

 

 

 

 

 

Interactive Gaming (€ millions)

 

 

 

 

 

 

 

 

 

Interactive gaming wagers

 

1,812.2

 

1,990.9

 

(178.7

)

(9.0

)

 

21



 

GTECH S.P.A. AND SUBSIDIARIES

NET FINANCIAL POSITION

 

 

 

December 31,

 

 

 

(€ thousands)

 

2014

 

2013

 

Change

 

 

 

 

 

 

 

 

 

Cash at bank

 

256,757

 

416,787

 

(160,030

)

Cash on hand

 

4,427

 

2,331

 

2,096

 

Cash and cash equivalents

 

261,184

 

419,118

 

(157,934

)

 

 

 

 

 

 

 

 

Current financial receivables

 

10,386

 

12,273

 

(1,887

)

 

 

 

 

 

 

 

 

Capital Securities

 

747,658

 

46,406

 

701,252

 

Dividends payable

 

129,594

 

 

129,594

 

Other

 

193,613

 

190,444

 

3,169

 

Current financial debt

 

1,070,865

 

236,850

 

834,015

 

 

 

 

 

 

 

 

 

Net current financial debt (cash)

 

799,295

 

(194,541

)

993,836

 

 

 

 

 

 

 

 

 

Facilities

 

721,938

 

150,446

 

571,492

 

2010 Notes (due 2018)

 

484,837

 

496,128

 

(11,291

)

2012 Notes (due 2020)

 

472,229

 

492,851

 

(20,622

)

Capital Securities

 

45,207

 

743,803

 

(698,596

)

2009 Notes (due 2016)

 

 

756,558

 

(756,558

)

Other

 

61,972

 

62,074

 

(102

)

Non current financial debt

 

1,786,183

 

2,701,860

 

(915,677

)

 

 

 

 

 

 

 

 

Net financial position

 

2,585,478

 

2,507,319

 

78,159

 

 

22



 

GTECH S.P.A. AND SUBSIDIARIES

DEBT

 

 

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

Long-term debt, less current portion

 

 

 

 

 

Revolving Credit Facilities

 

721,938

 

 

2010 Notes (due 2018)

 

484,837

 

496,128

 

2012 Notes (due 2020)

 

472,229

 

492,851

 

Capital Securities

 

45,280

 

743,803

 

2009 Notes (due 2016)

 

 

756,558

 

Facilities

 

 

150,446

 

Other

 

1,454

 

1,474

 

 

 

1,725,738

 

2,641,260

 

 

 

 

 

 

 

Short-term borrowings

 

 

 

 

 

Short-term borrowings

 

8,895

 

851

 

 

 

8,895

 

851

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

 

 

 

Capital Securities

 

747,585

 

46,406

 

2010 Notes (due 2018)

 

24,549

 

24,549

 

2012 Notes (due 2020)

 

14,408

 

14,408

 

Revolving Credit Facilities

 

189

 

 

Facilities

 

 

125,901

 

2009 Notes (due 2016)

 

 

2,926

 

Other

 

147

 

306

 

 

 

786,878

 

214,496

 

 

 

 

 

 

 

Total debt

 

2,521,511

 

2,856,607

 

 

23



 

GTECH S.P.A. AND SUBSIDIARIES

INTEREST EXPENSE

 

 

 

For the three months ended

 

For the year ended

 

 

 

December 31,

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Capital Securities

 

(16,133

)

(16,133

)

(64,531

)

(64,531

)

Bridge facility

 

(24,524

)

 

(41,753

)

 

2009 Notes (due 2016)

 

(6,651

)

(9,374

)

(34,501

)

(37,395

)

2010 Notes (due 2018)

 

(7,238

)

(6,928

)

(28,041

)

(27,696

)

2012 Notes (due 2020)

 

(4,945

)

(4,631

)

(18,852

)

(18,509

)

Facilities

 

(1,997

)

(2,889

)

(9,183

)

(11,360

)

Revolving Credit Facilities

 

(2,280

)

 

(2,280

)

 

Other

 

(1,237

)

(1,971

)

(5,070

)

(3,583

)

 

 

(65,005

)

(41,926

)

(204,211

)

(163,074

)

 

OPERATING SEGMENT INFORMATION

 

 

 

Third-party revenue

 

 

 

For the three months ended

 

For the year ended

 

 

 

December 31,

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

2014

 

2013

 

Operating Segments

 

 

 

 

 

 

 

 

 

Italy

 

434,490

 

450,104

 

1,745,180

 

1,737,090

 

Americas

 

261,474

 

238,392

 

988,703

 

994,085

 

International

 

113,375

 

84,492

 

335,222

 

331,117

 

 

 

809,339

 

772,988

 

3,069,105

 

3,062,292

 

 

 

 

 

 

 

 

 

 

 

Purchase accounting

 

147

 

132

 

548

 

542

 

 

 

809,486

 

773,120

 

3,069,653

 

3,062,834

 

 

 

 

Operating income

 

 

 

For the three months ended

 

For the year ended

 

 

 

December 31,

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

2014

 

2013

 

Operating Segments

 

 

 

 

 

 

 

 

 

Italy

 

92,515

 

114,568

 

543,467

 

499,661

 

Americas

 

25,191

 

20,484

 

88,599

 

122,164

 

International

 

34,717

 

10,242

 

73,756

 

50,655

 

 

 

152,423

 

145,294

 

705,822

 

672,480

 

 

 

 

 

 

 

 

 

 

 

Corporate support

 

(39,710

)

(27,383

)

(83,170

)

(56,065

)

Purchase accounting

 

(15,742

)

(14,126

)

(55,623

)

(57,283

)

 

 

96,971

 

103,785

 

567,029

 

559,132

 

 

24



 

GTECH S.P.A. AND SUBSIDIARIES

OPERATING SEGMENT INFORMATION

 

 

 

Depreciation

 

 

 

For the three months ended

 

For the year ended

 

 

 

December 31,

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

2014

 

2013

 

Operating Segments

 

 

 

 

 

 

 

 

 

Italy

 

20,145

 

21,304

 

74,280

 

75,395

 

Americas

 

36,086

 

33,799

 

135,730

 

136,566

 

International

 

5,484

 

4,907

 

19,507

 

18,885

 

 

 

61,715

 

60,010

 

229,517

 

230,846

 

 

 

 

 

 

 

 

 

 

 

Corporate support

 

3,886

 

4,865

 

14,940

 

16,321

 

Purchase accounting

 

787

 

1,588

 

5,020

 

7,432

 

 

 

66,388

 

66,463

 

249,477

 

254,599

 

 

 

 

Amortization

 

 

 

For the three months ended

 

For the year ended

 

 

 

December 31,

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

2014

 

2013

 

Operating Segments

 

 

 

 

 

 

 

 

 

Italy

 

37,546

 

36,559

 

145,639

 

139,977

 

Americas

 

1,642

 

1,452

 

6,136

 

1,452

 

International

 

154

 

1

 

154

 

3

 

 

 

39,342

 

38,012

 

151,929

 

141,432

 

 

 

 

 

 

 

 

 

 

 

Corporate support

 

380

 

96

 

832

 

406

 

Purchase accounting

 

15,103

 

10,088

 

53,575

 

47,846

 

 

 

54,825

 

48,196

 

206,336

 

189,684

 

 

 

 

Impairment loss (recovery), net

 

 

 

For the three months ended

 

For the year ended

 

 

 

December 31,

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

2014

 

2013

 

Operating Segments

 

 

 

 

 

 

 

 

 

International

 

(1,091

)

5,470

 

229

 

3,445

 

 

 

(1,091

)

5,470

 

229

 

3,445

 

 

 

 

 

 

 

 

 

 

 

Purchase accounting

 

 

2,613

 

(2,424

)

2,613

 

 

 

(1,091

)

8,083

 

(2,195

)

6,058

 

 

25



 

GTECH S.P.A. AND SUBSIDIARIES

GEOGRAPHIC INFORMATION

 

 

 

For the year ended December 31,

 

(€ thousands)

 

2014

 

2013

 

Total Revenue

 

 

 

 

 

Italy

 

1,753,422

 

1,752,545

 

United States

 

800,396

 

719,918

 

United Kingdom

 

77,732

 

72,843

 

Canada

 

33,352

 

117,860

 

Other

 

404,751

 

399,668

 

 

 

3,069,653

 

3,062,834

 

 

 

 

December 31,

 

(€ thousands)

 

2014

 

2013

 

Non-Current Assets

 

 

 

 

 

United States

 

3,668,770

 

3,298,051

 

Italy

 

1,622,020

 

1,784,834

 

United Kingdom

 

94,960

 

60,177

 

Sweden

 

71,651

 

80,533

 

Other

 

159,256

 

153,863

 

 

 

5,616,657

 

5,377,458

 

 

26



 

GTECH S.p.A.

STATEMENT OF FINANCIAL POSITION

(thousand of euro)

 

 

 

December
31, 2014

 

December
31, 2013

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Not current assets

 

 

 

 

 

System, equipment and other assets related to contracts, net

 

59,113

 

80,093

 

Goodwill

 

436,662

 

622,897

 

Intangible assets, net

 

20,156

 

20,799

 

Investments in associates and other companies

 

3,631,727

 

3,739,733

 

Equity investments

 

896

 

632

 

Other non-current assets

 

275,480

 

601,052

 

Total non-current assets

 

4,424,035

 

5,065,205

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

 

1,825

 

2,395

 

Trade and other receivables

 

1,553,841

 

96,413

 

Current financial assets

 

158,362

 

193,731

 

Other current assets

 

24,686

 

10,241

 

Cash and cash equivalents

 

10,038

 

158,559

 

Total current assets

 

1,748,753

 

461,338

 

TOTAL ASSETS

 

6,172,787

 

5,526,543

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

174,976

 

173,992

 

Legal Reserve

 

34,798

 

34,491

 

Share premium reserve

 

1,651,498

 

1,717,261

 

 

 

 

 

 

 

Treasury shares

 

(40,211

)

 

Other reserves

 

1,061,975

 

75,586

 

 

 

 

 

 

 

Profit (loss) carried forward

 

7,549

 

27,198

 

Net income

 

142,730

 

34,339

 

Total equity

 

3,033,315

 

2,062,867

 

 

 

 

 

 

 

Not current liabilities

 

 

 

 

 

Long-term debt, less current portion

 

1,158,633

 

2,586,794

 

Staff severance fund (TFR fund)

 

7,156

 

6,144

 

Deferred income taxes

 

99,224

 

89,738

 

 

 

 

 

 

 

Long-term provisions

 

1,184

 

170

 

Total non-current liabilities

 

1,266,197

 

2,682,846

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

146,182

 

118,336

 

Short-term borrowings

 

855,086

 

519,474

 

Current portion of long-term debt

 

785,170

 

88,290

 

Other current liabilities

 

70,870

 

51,288

 

Income taxes payable

 

15,967

 

3,443

 

Total current liabilities

 

1,873,275

 

780,831

 

TOTAL EQUITY AND LIABILITIES

 

6,172,787

 

5,526,543

 

 

27



 

- GTECH S.p.A. —

INCOME STATEMENTS

(thousand of euro)

 

 

 

December 31,

 

December
31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

Revenues

 

418,962

 

402,784

 

Other revenues

 

162,309

 

141,273

 

Total revenues

 

581,271

 

544,057

 

 

 

 

 

 

 

Capitalization of internal construction costs - labour

 

(1,475

)

(2,839

)

Raw material, services and other costs

 

199,198

 

202,334

 

Personnel costs

 

120,197

 

116,983

 

Depreciations and amortizations

 

38,024

 

30,116

 

 

 

 

 

 

 

Credit writedown

 

(3

)

60

 

Total costs

 

355,941

 

346,654

 

 

 

 

 

 

 

Unusual operating costs

 

7,169

 

 

 

 

 

 

 

 

Operating income

 

218,162

 

197,403

 

 

 

 

 

 

 

Dividends

 

203,079

 

42,390

 

 

 

 

 

 

 

Equity income (loss)

 

914

 

659

 

 

 

 

 

 

 

Interest incomes and other incomes

 

22,820

 

22,391

 

 

 

 

 

 

 

Interest expenses and other expenses

 

(182,086

)

(165,656

)

 

 

 

 

 

 

Foreign exchange gains (loss)

 

129

 

(111

)

 

 

 

 

 

 

Unusual financial expenses, net

 

(64,678

)

 

 

 

(19,821

)

(100,327

)

 

 

 

 

 

 

Financial assets value adjustments

 

(3,833

)

 

Gross income

 

194,507

 

97,076

 

 

 

 

 

 

 

Income tax expense

 

(51,777

)

(62,737

)

Net income

 

142,730

 

34,339

 

 

28



 

GTECH S.p.A.

CASH FLOW STATEMENT

(Euros)

 

 

 

For the year ended December 31,

 

 

 

2014

 

2013

 

Net cash flows from operating activities

 

217,781,936

 

168,946,220

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Dividends collected from reserves

 

 

45,695,516

 

Dividends collected from net income

 

203,729,262

 

43,189,813

 

Unpaid purchases

 

7,309,392

 

19,251,113

 

Proceeds from sale of assets

 

45,456

 

266,836

 

Guarantees

 

35,280

 

150,301

 

Venture capital investment

 

(1,374,424

)

(793,552

)

Reserve payments to Related Parties

 

54,272,396

 

(4,100,000

)

Purchases last exercises, paid in the current exercise

 

(10,048,756

)

(8,225,246

)

Purchases of intangible assets

 

(10,023,735

)

(14,400,467

)

Purchases of fixed assets

 

(5,818,101

)

(20,989,646

)

Capital increases

 

(30,690,000

)

 

Companies constitution

 

(638,885

)

 

Piano di Buy Back

 

(40,211,262

)

 

Net cash flow from investing activities

 

166,586,623

 

60,044,668

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Related party receivables

 

371,349,560

 

(129,250,047

)

Dividends paid

 

(130,525,003

)

(125,919,946

)

Interests paid on Capital Securities

 

(61,875,000

)

(61,875,000

)

Interests paid on Euro Bond 750 (due 2016)

 

(40,313,000

)

(40,312,500

)

Interests paid on Euro Bond 500 (due 2018)

 

(26,875,000

)

(26,875,000

)

Redemption Euro Bond 750 (due. 2016)

 

(810,402,000

)

 

Related party liabilities

 

88,849,636

 

(8,932,104

)

Financial lease paid

 

(6,972,394

)

(7,201,516

)

Interests paid on Euro Bond 500 (due 2020)

 

(17,500,000

)

(4,315,000

)

Revolver Facility commissions

 

(1,793,637

)

(1,282,828

)

Other interests paid

 

(921,778

)

(827,600

)

SW Holding S.p.A. quotes

 

(72,183,236

)

 

Revolver line

 

150,000,000

 

 

Debt related to Bridge Facility not paid

 

13,972,910

 

 

Interests paid on Revolver Facility

 

 

(29,500

)

Bank liabilities

 

8,201,793

 

703,298

 

Interests on receivables

 

279,272

 

789,978

 

Swap option collected

 

 

4,131,529

 

Stock options

 

3,818,826

 

15,745,330

 

Net cash flow from (used in) financing activities

 

(532,889,051

)

(385,450,906

)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(148,520,492

)

(156,459,479

)

Cash and cash equivalents at the beginning of the year

 

158,558,735

 

315,018,214

 

Cash and cash equivalents at the end of the year

 

10,038,243

 

158,558,735

 

 

29