news release gtech announces 2013 fourth … q4 earnings release final.pdfnews release gtech...
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NEWS RELEASE
GTECH ANNOUNCES 2013 FOURTH QUARTER AND FULL YEAR RESULTS
Consolidated Financial and Business Highlights
New organization in place, significant wins, and strong pipeline; €50 million in expected annual cost savings from reorganization
Levered free cash flow of €326 million, up 8% over 2012
Proposed cash dividend of €0.75 per share, up 2 euro cents over 2012
Interest in Italian Scratch & Win to grow from 51.5% to 64% through
buyout of UniCredit stake
GTECH 2013 Fourth Quarter and Full Year Results Comparison
Consolidated Income Statement (€/M)
4Q 2013 4Q 2012 % change Full Year
2013 Full Year
2012 % change
Revenues 773.1 812.5 (4.8) 3,062.8 3,075.7 (0.4)
EBITDA 244.6 245.8 (0.5) 1,036.7 1,031.8 0.5
Operating Income 103.8 126.1 (17.7) 559.1 583.1 (4.1)
Net Income Attributable to Owners
1.3 62.8 -- 175.4 233.1 (24.8)
Diluted Earnings Per Share 0.01 0.36 -- 1.01 1.35 (25.2)
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) – PROVIDENCE, RHODE ISLAND (US), March 13, 2014 – 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,
2013. The Board will propose to the Annual Shareholders’ Meeting a cash dividend of €0.75 per
share, with an ex-dividend date of May 19, 2014, payable on May 22, 2014.
“During 2013, GTECH met or exceeded its key performance objectives and made significant
gains in strategic growth segments while successfully executing a major reorganization,” said
Marco Sala, CEO of GTECH S.p.A. "For the coming year, we expect to sustain our momentum
as we build on these achievements. We continue to advance our interactive capabilities, notably
in the mobile gaming space, to address some of the fastest growing areas of the market. We are
also well positioned to secure new international operator opportunities."
“We generated full-year significant levered free cash flow of €326 million, up 8% over 2012,” said Alberto Fornaro, CFO of GTECH S.p.A. “Our Net Financial Position improved to €2.51
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billion compared to €2.55 billion. Over the next two years we expect to achieve approximately
€50 million of annual recurring cost savings, through a number of initiatives that we have
identified and started to implement.”
Fourth Quarter Consolidated Results
Consolidated Revenues were €773 million compared to €813 million in the fourth quarter of
2012. At constant currency, revenues would have been €790 million. Total Service Revenues
were in line with the prior year level at €722 million. Product sales were €51 million versus €90
million in the same period last year when the Company recorded significant machine gaming
product sales in Canada.
EBITDA, at €245 million, was in line with the 2012 fourth quarter level.
Operating Income was €104 million, versus €126 million in the fourth quarter of 2012,
principally due to lower product sales and €15 million in restructuring charges related to the
2013 group-wide reorganization.
During the quarter, the Company reached an agreement to resolve three tax matters in Italy
resulting in a one-time settlement of €34.7 million, of which €6.3 million had previously been
provisioned by the Company.
Net Income attributable to the owners was €1 million, compared to €63 million in the 2012
fourth quarter, due principally to the lower level of operating income and the one-time tax
settlement.
Diluted Earnings-Per-Share (EPS) was €0.01, compared to €0.36 in the fourth quarter of last
year.
Capital Expenditures in the quarter were €73 million.
Net Financial Position (NFP) in the quarter improved by €86 million.
Fourth Quarter Segment Comparison
Americas
Revenues in the Americas segment were €238 million versus €242 million in 2012. At constant
currency, Americas’ revenues would have been €252 million. Service revenues were €209
million, up €23 million compared to the prior year. The higher revenues were driven by an
increase in same store revenues of €7 million along with higher service revenues from lottery
management agreements in Illinois, Indiana, and New Jersey. Same store revenue growth was
principally driven by the Mega Millions game, which had the second largest jackpot in history at
$648 million in December 2013, the introduction of Powerball in California, higher instant-ticket
sales, principally in California where they were driven by the introduction of a $20 price point
ticket, and higher revenues in Latin America. Product sales were €29 million in the quarter
compared to €54 million last year, when the Company recorded significant product sales in
Canada. EBITDA in the Americas segment was €57 million in the quarter compared to €60 million
in the prior year.
During the quarter, GTECH signed contracts to provide lottery technology and services to the
Colorado Lottery and additional VLTs to the Oregon Lottery.
International
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Revenues from the International segment were €85 million, versus €103 million in the prior year
when GTECH recorded a peak in product deliveries in France, Lithuania and other countries.
Revenues were also impacted by lower EuroMillions jackpot activity and foreign exchange.
EBITDA in the International segment was €23 million in the quarter compared to €21 million in
the prior year.
GTECH recently launched 65 interactive games for Norsk Tipping in Norway, the largest launch of
its kind in Norsk Tipping’s history. The Company was also selected by OPAP as its strategic
partner for OPAP’s expansion into online betting in Greece.
Italy
Revenues from the Italy segment were €450 million, compared to €467 million in the fourth
quarter of 2012. Higher total core wagers and lower sports betting payouts partially offset the
reduction in revenues from gaming machines.
Lotto wagers for the quarter were up 3.2% to €1.68 billion, compared to €1.63 billion in 2012,
driven by higher wagers from 10eLotto, partially offset by lower late numbers. Instant-ticket
wagers were €2.41 billion compared to €2.44 billion last year. Early results from the re-launch of
the Miliardario ticket-family are encouraging.
Machine gaming revenues were €151 million versus €170 million in the previous year, mainly
due to the impact of the VLT tax increase to 5% from 4% last year.
Revenues from sports betting were in line with last year at €44 million.
EBITDA was stable at €172 million. The positive Lotteries performance and the favorable impact
of cost reduction actions taken during the year offset the full impact of higher VLT taxation.
Full Year Consolidated Results
For the full year 2013, Revenues were €3.06 billion, compared to €3.08 billion in 2012. At
constant currency, revenues would have been €3.11 billion. Service revenues were €2.78 billion
versus €2.82 billion in 2012. Product sales were up 10% to €279 million driven by a higher
portion of the Canadian replacement cycle taking place in 2013 compared to the prior year.
Americas Lottery same store revenues grew 3.1% to €518 million, benefiting from multistate
jackpot activity, as well as continuous growth of instant ticket sales principally in Texas,
California and North Carolina.
Despite unfavorable jackpot activity, International Lottery same store revenues were up slightly
to €109 million when compared to 2012, driven by continued strong performance in the Czech
Republic.
Lotto wagers in Italy were up 2% to €6.33 billion compared to €6.22 billion in 2012. 10eLotto
wagers totaled €2.97 billion, up over 6% versus the prior year. Lotto late number wagers grew
21% to €654 million, compared to €540 million in 2012. Instant-ticket wagers were €9.57 billion,
compared to €9.73 billion in the previous year. Machine Gaming wagers were €11 billion versus
€12 billion in 2012.
EBITDA was up approximately 1% to €1.04 billion. Excluding the €30 million one-time machine
gaming settlement in Italy in 2013, EBITDA was €1.07 billion compared to €1.03 billion in 2012.
Operating Income of €559 million was approximately 4% ahead of the 2012 level when taking
into consideration the machine gaming settlement and restructuring costs related to the 2013 group-wide reorganization.
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The Company’s effective income tax rate was 46.8% compared to 37.4% in the prior year.
Absent the tax settlement announced in December 2013, the Company’s effective tax rate was
39.8% in 2013.
Net income attributable to the owners was €175 million, compared to €233 million in the full
year 2012.
Diluted Earnings-Per-Share (EPS) was €1.01, compared to €1.35 in 2012. Pro-forma EPS
was €1.59, in line with 2012 pro-forma EPS of €1.59.
Cash from Operations was €696 million, compared to €763 million in the prior year. Cash from
operations, adjusted for the one-time tax and machine gaming settlements in Italy, was in line
with 2012.
Capital Expenditures were €359 million. Of that amount, €92 million was used for the up-front
payment under the 15-year services agreement with the New Jersey Lottery. This was partially
funded by a €62 million equity contribution from other Northstar New Jersey joint venture
members. Net of such equity contribution, Capital Expenditures totaled €297 million.
Levered free cash flow reached €326 million in 2013, up 8% from €303 million in 2012.
The Board will propose a dividend distribution of approximately €131 million, or 40% of 2013
levered free cash flow, consistent with the Company’s dividend policy.
At December 31, 2013, Consolidated Shareholders’ Equity totaled €2.60 billion. GTECH had a
Net Financial Position (NFP) within the guidance range at €2.51 billion, compared to €2.55
billion as of December 31, 2012.
Full-Year Stand-Alone Results
GTECH’s stand-alone Net Income in 2013 was €34 million compared to €38 million in 2012. Total
Equity and Liabilities in 2013 were €5.55 billion versus €5.55 billion in 2012. Cash and Cash
Equivalents at the end of 2013 were €159 million compared to €315 million in 2012.
2014 Guidance and 2014-2015 Synergies Plan
The Board of Directors reviewed a guidance update for 2014 which is provided below.
(€/M) 2013A 2014E
Revenues 3,063 3,150 – 3,250
EBITDA 1,037 1,060 – 1,100
Operating income 559 550 – 590
Capital Expenditures
of which maintenance
359
169
350 - 380
235 - 250
Net Financial Position 2,507 2,470 – 2,530
Average USD/EUR 1.34 1.30
GTECH also started implementing a new synergies plan which is expected to generate €50 million in annual cost savings between 2014 and 2015 on a recurring basis. The plan envisages a
number of actions in three main areas: sourcing, manufacturing and supply chain; technology;
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and footprint. In order to achieve this target, GTECH is expected to incur approximately €35
million - €40 million in restructuring costs, €21 million of which was incurred in 2013.
Other Information
The Board of Directors also resolved to exercise, during the first half of 2014, its call option to
buy-back from Unicredit its entire 12.5% interest in the instant ticket concession in Italy, for a
total cash consideration of €72 million, using GTECH’s available financial resources. In late 2010,
Unicredit had made an indirect equity investment in the Scratch & Win concession in Italy,
managed by Lotterie Nazionali. Further to such buyout of Unicredit’s interest, GTECH will
increase its direct and indirect ownership of Lotterie Nazionali from 51.5% to 64%. The Board of Directors also convened the Annual Shareholders’ Meeting for May 8 and 9, 2014, respectively on first and second call, to approve the stand-alone financial statements for the year
ended December 31, 2013, the proposed dividend payment, the Company’s compensation policy with
two new stock-based incentive plans for selected Company employees, and a new share buy-back plan, as well as to appoint the Board of Directors, the Board of Statutory Auditors, and the audit firm, whose mandates are due to expire at such Meeting. The above-mentioned stock-based incentive plans reserved for GTECH S.p.A. and/or its subsidiaries’ employees, pursuant to article 114-bis of the Consolidated Financial Act, consist of the 2014-2020
stock option plan and the 2014-2018 share allocation plan. The plans are focused on medium to long term strategic targets and link the compensation of the beneficiaries to value creation for shareholders, while encouraging loyalty and retention. Pursuant to Italian Stock Exchange recommendations, vesting of the plans shall be subject to achievement of 3-years consolidated EBITDA targets. Among the beneficiaries, the CEO and other Executives with Strategic Responsibilities shall retain a part of the stock received/arising from the exercise of options for a further 3 years.
The above-mentioned share buy-back plan, if approved by the Annual Shareholders’ meeting, would renew the authorization to the Board of Directors for the acquisition and disposal of ordinary shares of
the Company that expired in November 2013. The authorization would be renewed to purchase, in bulk or in several stages, on a revolving basis, the maximum number of ordinary shares permitted by the law, i.e. an interest not exceeding 20 percent of the Company’s share capital. The treasury shares would be purchased to stabilize the share price and the trading performances, to serve extraordinary
transactions, if any, and stock based incentive plans, as well as to offer shareholders an additional way to monetize their investment. The authorization to purchase treasury shares is proposed for the maximum period of time permitted by the law, i.e. 18 months from the date of the Shareholders’ Meeting, while disposal of treasury shares would be permitted with no time limit. The shares must be purchased subject to the price conditions specified in article 5, paragraph 1, of European Commission Regulation (EC) 2273/2003 of 22 December 2003. The disposal of shares, and in particular the sale,
shall not be carried out at a price lower by more than 10% of the benchmark recorded price on Italian Stock Exchange, in the trading session prior to each transaction. Exceptions to the above thresholds are provided by the plan in specified events. As at the date hereof neither the Company nor its subsidiaries hold treasury shares nor does the Board of Directors currently intend to immediately execute the buy-back plan in light of, among other things, quantitative constraints set forth in the Company’s existing financing agreements, trading trends of the Company’s stock, and the Company’s
focus on debt reduction.
For further information on the stock-based incentive plans, please refer to the memoranda available at the Company’s registered office and on GTECH's website, www.gtech.com, under the Governance
section - Documents and reports -Shareholders’ Meeting, May 8 and 9, 2014, where the remaining documentation related to the items on the agenda of the Shareholders’ Meeting will be made available to the public in accordance with applicable laws and regulations.
Related news releases: December 24, 2013; November 8 and 5, 2013; October 15, 2013; December 14, 2010; and November 15, 2010
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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 press release corresponds to the document results, books, and accounting records.
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 Milan Stock Exchange under the trading symbol “GTK” and is majority owned by De Agostini S.p.A. In
2013, GTECH had €3.1 billion in revenues and 8,600 employees in approximately 60 countries. 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 2013 follow:
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GTECH S.P.A. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(thousands of euros) 2013 2012
Service revenue 722,445 722,026
Product sales 50,675 90,479
Total revenue 773,120 812,505
Raw materials, services and other costs 425,245 443,782
Personnel 150,243 150,052
Depreciation 66,463 66,360
Amortization 48,196 46,487
Impairment loss, net 8,083 6,227
Capitalization of internal construction costs - labor and overhead (28,895) (26,521)
Total costs 669,335 686,387
Operating income 103,785 126,118
Interest income 939 622
Equity income (loss) (772) 309
Other income 141 286
Other expense (4,951) (2,030)
Foreign exchange loss, net (104) (1,265)
Interest expense (41,926) (38,235)
(46,673) (40,313)
Income before income tax expense 57,112 85,805
Income tax expense 49,912 16,389
Net income 7,200 69,416
Attributable to:
Owners of the parent 1,277 62,759
Non-controlling interests 5,923 6,657
7,200 69,416
Earnings per share/ADRs
Basic - net income attributable to owners of the parent 0.01€ 0.36€
Diluted - net income attributable to owners of the parent 0.01€ 0.36€
December 31,
For the three months ended
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GTECH S.P.A. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(thousands of euros) 2013 2012
Service revenue 2,783,727 2,822,279
Product sales 279,107 253,406
Total revenue 3,062,834 3,075,685
Raw materials, services and other costs 1,585,303 1,611,173
Personnel 568,266 539,346
Depreciation 254,599 249,921
Amortization 189,684 185,909
Impairment loss, net 6,058 6,227
Capitalization of internal construction costs - labor and overhead (100,208) (100,038)
Total costs 2,503,702 2,492,538
Operating income 559,132 583,147
Interest income 3,334 2,462
Equity income (loss) (965) 1,015
Other income 1,131 3,686
Other expense (11,177) (9,729)
Foreign exchange loss, net (2,309) (1,214)
Interest expense (163,074) (155,364)
(173,060) (159,144)
Income before income tax expense 386,072 424,003
Income tax expense 180,837 158,778
Net income 205,235 265,225
Attributable to:
Owners of the parent 175,434 233,136
Non-controlling interests 29,801 32,089
205,235 265,225
Earnings per share/ADRs
Basic - net income attributable to owners of the parent 1.01€ 1.35€
Diluted - net income attributable to owners of the parent 1.01€ 1.35€
December 31,
For the year ended
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GTECH S.P.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Restated (a)
December 31, December 31,
(thousands of euros) 2013 2012
ASSETS
Non-current assets
Systems, equipment and other assets related to contracts, net 899,536 946,255
Property, plant and equipment, net 76,382 84,749
Goodwill 3,095,466 3,188,753
Intangible assets, net 1,257,297 1,333,948
Investments in associates and joint ventures 26,894 10,162
Other non-current assets 48,777 27,354
Non-current financial assets 28,886 23,395
Deferred income taxes 14,000 11,030
Total non-current assets 5,447,238 5,625,646
Current assets
Inventories 146,406 164,304
Trade and other receivables, net 904,248 809,894
Other current assets 190,517 181,177
Current financial assets 12,273 8,915
Income taxes receivable 3,574 19,509
Cash and cash equivalents 419,118 455,762
Total current assets 1,676,136 1,639,561
Non-current assets classified as held for sale - 12,063
TOTAL ASSETS 7,123,374 7,277,270
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Issued capital 173,992 172,455
Share premium 1,717,261 1,703,923
Retained earnings 292,847 235,858
Other reserves 15,812 155,565
2,199,912 2,267,801
Non-controlling interests 403,620 374,464
Total equity 2,603,532 2,642,265
Non-current liabilities
Long-term debt, less current portion 2,641,260 2,778,764
Deferred income taxes 134,278 138,755
Long-term provisions 17,499 45,204
Other non-current liabilities 62,098 51,059
Non-current financial liabilities 60,600 42,407
Total non-current liabilities 2,915,735 3,056,189
Current liabilities
Accounts payable 978,598 1,000,703
Short-term borrowings 851 541
Other current liabilities 361,740 355,668
Current financial liabilities 21,503 10,620
Current portion of long-term debt 214,496 181,276
Short-term provisions 1,185 1,900
Income taxes payable 25,734 28,108
Total current liabilities 1,604,107 1,578,816
TOTAL EQUITY AND LIABILITIES 7,123,374 7,277,270
(a) As adjusted to reflect the early adoption of IFRS 11 Joint Arrangements
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GTECH S.P.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of euros) 2013 2012
Cash flows from operating activities
Income before income tax expense 386,072 424,003
Adjustments for:
Depreciation 254,599 249,921
Intangibles amortization 189,774 186,001
Interest expense 163,074 155,364
Share-based payment expense 8,611 12,349
Impairment loss, net 6,058 6,227
Non-cash foreign exchange loss, net 938 1,159
Interest income (3,334) (2,462)
Provisions (5,304) 9,141
Other non-cash items 15,015 7,376
Cash foreign exchange loss, net 1,372 55
Income tax paid (170,943) (193,442)
Cash flows before changes in operating assets and liabilities 845,932 855,692
Changes in operating assets and liabilities:
Inventories 14,423 (19,974)
Trade and other receivables (108,594) (143,678)
Other current assets (13,021) (71,028)
Accounts payable (45,220) 114,899
Accrued expenses 11,055 (13,836)
Deferred revenue 22,265 16,298
Advance payments from customers (29,466) 18,811
Other assets and liabilities (1,125) 6,145
Net cash flows from operating activities 696,249 763,329
Cash flows from investing activities
Purchases of systems, equipment and other assets related to contracts (183,878) (211,833)
Purchases of intangible assets (134,919) (30,336)
Investment in associate (19,800) -
Purchases of property, plant and equipment (10,370) (10,193)
Acquisition, net of cash acquired (7,345) -
Italy segment contingent consideration (324) (2,693)
Cash proceeds related to impairment recovery 3,807 4,455
Interest received 7,307 5,101
Other 3,951 (5,798)
Net cash flows used in investing activities (341,571) (251,297)
Cash flows from financing activities
Interest paid (143,390) (184,479)
Dividends paid (125,920) (122,220)
Principal payments on long-term debt (102,810) (320,423)
Return of capital - non-controlling interest (40,087) (42,562)
Dividends paid - non-controlling interest (34,062) (32,116)
Repayments of short-term borrowings (170) (15,218)
Proceeds from exercise of stock options 15,746 121
Capital increase - non-controlling interest 71,973 -
Cash paid on interest rate swaps - (15,901)
Proceeds from issuance of long-term debt - 501,618
Other (19,733) (12,356)
Net cash flows used in financing activities (378,453) (243,536)
Net increase (decrease) in cash and cash equivalents (23,775) 268,496
Effect of exchange rate changes on cash (12,869) (2,838)
Cash and cash equivalents at the beginning of the year 455,762 190,675
Cash and cash equivalents at the end of the year 419,118 456,333
December 31,
For the year ended
Page 11 of 27
GTECH S.P.A. AND SUBSIDIARIES
KEY FINANCIAL INDICATOR COMPARISONS
2013 2012 € %
Revenue 773,120 812,505 (39,385) (4.8)
EBITDA 244,612 245,846 (1,234) (0.5)
Operating income 103,785 126,118 (22,333) (17.7)
Net income attributable to owners of the parent 1,277 62,759 (61,482) (98.0)
Diluted earnings per share 0.01 0.36 (0.35) (97.2)
EBITDA
Operating income 103,785 126,118 (22,333) (17.7)
Depreciation 66,463 66,360 103 0.2
Amortization 48,196 46,487 1,709 3.7
Restructuring costs 15,104 202 14,902 >200.0
Impairment loss, net 8,083 6,227 1,856 29.8
Other 2,981 452 2,529 >200.0
244,612 245,846 (1,234) (0.5)
ChangeDecember 31,
For the three months ended
Page 12 of 27
GTECH S.P.A. AND SUBSIDIARIES
KEY FINANCIAL INDICATOR COMPARISONS
2013 2012 € %
Revenue 3,062,834 3,075,685 (12,851) (0.4)
EBITDA 1,036,709 1,031,841 4,868 0.5
Operating income 559,132 583,147 (24,015) (4.1)
Net income attributable to owners of the parent 175,434 233,136 (57,702) (24.8)
Diluted earnings per share 1.01 1.35 (0.34) (25.2)
EBITDA
Operating income 559,132 583,147 (24,015) (4.1)
Depreciation 254,599 249,921 4,678 1.9
Amortization 189,684 185,909 3,775 2.0
Restructuring costs 20,544 811 19,733 >200.0
Impairment loss, net 6,058 6,227 (169) (2.7)
Other 6,692 5,826 866 14.9
1,036,709 1,031,841 4,868 0.5
2013 2012 (a) € %
Net financial position 2,507,319 2,548,931 (41,612) (1.6)
ChangeDecember 31,
For the year ended
December 31, Change
Page 13 of 27
CONSOLIDATED REVENUE BREAKDOWN
(thousands of euros) 2013 2012 € %
Operating Segments
Americas 238,392 241,785 (3,393) (1.4)
International 84,492 103,215 (18,723) (18.1)
Italy 450,104 467,367 (17,263) (3.7)
772,988 812,367 (39,379) (4.8)
Purchase accounting 132 138 (6) (4.3)
773,120 812,505 (39,385) (4.8)
For the three months ended
December 31, Change
(thousands of euros) 2013 2012 € %
Operating Segments
Americas 994,085 872,429 121,656 13.9
International 331,117 386,969 (55,852) (14.4)
Italy 1,737,090 1,815,931 (78,841) (4.3)
3,062,292 3,075,329 (13,037) (0.4)
Purchase accounting 542 356 186 52.2
3,062,834 3,075,685 (12,851) (0.4)
For the year ended
December 31, Change
Page 14 of 27
GTECH S.P.A. AND SUBSIDIARIES AMERICAS SEGMENT
(thousands of euros) 2013 2012 € %
Lottery 163,479 153,980 9,499 6.2
Machine Gaming 35,919 64,048 (28,129) (43.9)
Lottery Management Services 30,642 16,079 14,563 90.6
All Other 8,352 7,678 674 8.8 Total revenue 238,392 241,785 (3,393) (1.4)
Service revenue 209,313 186,756 22,557 12.1
Product sales 29,079 55,029 (25,950) (47.2) Total revenue 238,392 241,785 (3,393) (1.4)
For the three months ended
December 31, Change
Lottery Same-Store Revenues 131,503 124,491 7,012 5.6
Wins 4,139 - 4,139 -
Gaming & Other 53,871 46,186 7,685 16.6
Lottery Management Services 31,826 16,079 15,747 97.9
Foreign Exchange Impact (12,026) - (12,026) -
Total Service Revenue 209,313 186,756 22,557 12.1
(thousands of euros) 2013 2012 € %
Lottery 640,028 625,508 14,520 2.3
Machine Gaming 232,545 152,414 80,131 52.6
Lottery Management Services 91,523 66,226 25,297 38.2
All Other 29,989 28,281 1,708 6.0 Total revenue 994,085 872,429 121,656 13.9
Service revenue 800,959 755,727 45,232 6.0
Product sales 193,126 116,702 76,424 65.5 Total revenue 994,085 872,429 121,656 13.9
For the year ended
December 31, Change
Lottery Same-Store Revenues 518,063 502,447 15,616 3.1
Wins 10,444 - 10,444 -
Gaming & Other 207,264 187,054 20,210 10.8
Lottery Management Services 94,489 66,226 28,263 42.7
Foreign Exchange Impact (29,301) - (29,301) -
Total Service Revenue 800,959 755,727 45,232 6.0
Page 15 of 27
GTECH S.P.A. AND SUBSIDIARIES INTERNATIONAL SEGMENT
(thousands of euros) 2013 2012 € %
Lottery 51,873 58,737 (6,864) (11.7)
Machine Gaming 18,999 24,723 (5,724) (23.2)
All Other 13,620 19,755 (6,135) (31.1) Total revenue 84,492 103,215 (18,723) (18.1)
Service revenue 63,425 69,361 (5,936) (8.6)
Product sales 21,067 33,854 (12,787) (37.8) Total revenue 84,492 103,215 (18,723) (18.1)
For the three months ended
December 31, Change
Lottery Same Store Revenue 28,567 29,673 (1,106) (3.7)
Gaming & Other 36,722 39,688 (2,966) (7.5)
Foreign Exchange Impact (1,864) - (1,864) -
Total Service Revenue 63,425 69,361 (5,936) (8.6)
(thousands of euros) 2013 2012 € %
Lottery 195,966 235,966 (40,000) (17.0)
Machine Gaming 85,961 87,412 (1,451) (1.7)
All Other 49,190 63,591 (14,401) (22.6) Total revenue 331,117 386,969 (55,852) (14.4)
Service revenue 247,980 258,914 (10,934) (4.2)
Product sales 83,137 128,055 (44,918) (35.1) Total revenue 331,117 386,969 (55,852) (14.4)
For the year ended
December 31, Change
Lottery Same Store Revenue 109,375 109,230 145 0.1
Gaming & Other 143,633 149,684 (6,051) (4.0)
Foreign Exchange Impact (5,028) - (5,028) -
Total Service Revenue 247,980 258,914 (10,934) (4.2)
Page 16 of 27
GTECH S.P.A. AND SUBSIDIARIES ITALY SEGMENT
(thousands of euros) 2013 2012 € %
Lotto 103,555 101,999 1,556 1.5
Instant tickets 96,090 96,266 (176) (0.2)
Lottery 199,645 198,265 1,380 0.7
Machine Gaming 151,142 170,214 (19,072) (11.2)
Sports Betting 44,440 45,331 (891) (2.0)
Commercial Services 34,961 33,139 1,822 5.5
Interactive Games 19,916 20,418 (502) (2.5) Total revenue 450,104 467,367 (17,263) (3.7)
For the three months ended
December 31, Change
(thousands of euros) 2013 2012 € %
Lotto 407,612 401,840 5,772 1.4
Instant tickets 377,434 382,274 (4,840) (1.3)
Lottery 785,046 784,114 932 0.1
Machine Gaming 583,718 673,567 (89,849) (13.3)
Sports Betting 158,739 139,849 18,890 13.5
Commercial Services 132,111 131,122 989 0.8
Interactive Games 77,476 87,279 (9,803) (11.2) Total revenue 1,737,090 1,815,931 (78,841) (4.3)
For the year ended
December 31, Change
Page 17 of 27
GTECH S.P.A. AND SUBSIDIARIES ITALY SEGMENT
2013 2012 Wagers %
Lotto (millions of euros)
Core wagers 1,477.7 1,403.9 73.8 5.3
Wagers for late numbers 200.2 222.5 (22.3) (10.0) 1,677.9 1,626.4 51.5 3.2
Instant Tickets
Total sales (in millions) € 2,408.6 € 2,439.9 (€ 31.3) (1.3)
Total tickets sold (in millions) 483.3 513.3 (30.0) (5.8)
Average price point € 4.98 € 4.75 € 0.23 4.8
Machine Gaming (millions of euros)
VLT wagers 1,578.8 1,953.4 (374.6) (19.2)
AWP wagers 1,192.2 1,165.6 26.6 2.3
Total wagers 2,771.0 3,119.0 (348.0) (11.2)
(Installed at the end of December)
VLTs installed 10,596 10,535 61 0.6
AWP machines installed 70,203 65,345 4,858 7.4
Total machines installed 80,799 75,880 4,919 6.5
Sports Betting (millions of euros)
Fixed odds sports betting and other wagers 233.8 253.7 (19.9) (7.8)
Interactive Games (millions of euros)
Interactive game wagers 525.4 501.5 23.9 4.8
For the three months ended
December 31, Change
Page 18 of 27
GTECH S.P.A. AND SUBSIDIARIES ITALY SEGMENT
2013 2012 Wagers %
Lotto (millions of euros)
Core wagers 5,678.5 5,680.9 (2.4) (0.0)
Wagers for late numbers 654.2 540.3 113.9 21.1 6,332.7 6,221.2 111.5 1.8
Instant Tickets
Total sales (in millions) € 9,573.8 € 9,729.0 (€ 155.2) (1.6)
Total tickets sold (in millions) 1,970.8 2,098.2 (127.4) (6.1)
Average price point € 4.86 € 4.64 € 0.22 4.7
Machine Gaming (millions of euros)
VLT wagers 6,458.5 7,654.9 (1,196.4) (15.6)
AWP wagers 4,532.4 4,483.3 49.1 1.1
Total wagers 10,990.9 12,138.2 (1,147.3) (9.5)
(Installed at the end of December)
VLTs installed 10,596 10,535 61 0.6
AWP machines installed 70,203 65,345 4,858 7.4
Total machines installed 80,799 75,880 4,919 6.5
Sports Betting (millions of euros)
Fixed odds sports betting and other wagers 778.5 885.3 (106.8) (12.1)
Interactive Games (millions of euros)
Interactive game wagers 1,990.9 2,134.7 (143.8) (6.7)
For the year ended
December 31, Change
Page 19 of 27
GTECH S.P.A. AND SUBSIDIARIES NET FINANCIAL POSITION
(thousands of euros) 2013 2012 (a) Change
Cash at bank 416,787 455,386 (38,599)
Cash on hand 2,331 376 1,955
Cash and cash equivalents 419,118 455,762 (36,644)
Current financial receivables 12,273 8,915 3,358
Facilities 125,901 105,267 20,634
Capital Securities 46,406 46,406 -
2010 Notes (due 2018) 24,549 24,549 -
2012 Notes (due 2020) 14,408 1,223 13,185
2009 Notes (due 2016) 2,926 2,926 -
Short-term borrowings 851 541 310
Other 21,809 11,525 10,284
Current financial debt 236,850 192,437 44,413
Net current financial cash (194,541) (272,240) 77,699
2009 Notes (due 2016) 756,558 759,616 (3,058)
Capital Securities 743,803 741,148 2,655
2010 Notes (due 2018) 496,128 495,307 821
2012 Notes (due 2020) 492,851 491,842 1,009
Facilities 150,446 288,922 (138,476)
Other 62,074 44,336 17,738
Non current financial debt 2,701,860 2,821,171 (119,311)
Net financial position 2,507,319 2,548,931 (41,612)
(a) As adjusted to reflect the early adoption of IFRS 11 Joint Arrangements
December 31,
Page 20 of 27
GTECH S.P.A. AND SUBSIDIARIES DEBT
(thousands of euros) 2013 2012
Long-term debt, less current portion
2009 Notes (due 2016) 756,558 759,616
Capital Securities 743,803 741,148
2010 Notes (due 2018) 496,128 495,307
2012 Notes (due 2020) 492,851 491,842
Facilities 150,446 288,922
Other 1,474 1,929
2,641,260 2,778,764
Short-term borrowings
Short-term borrowings 851 541
851 541
Current portion of long-term debt
Facilities 125,901 105,267
Capital Securities 46,406 46,406
2010 Notes (due 2018) 24,549 24,549
2012 Notes (due 2020) 14,408 1,223
2009 Notes (due 2016) 2,926 2,926
Other 306 905
214,496 181,276
Total debt 2,856,607 2,960,581
December 31,
Page 21 of 27
GTECH S.P.A. AND SUBSIDIARIES INTEREST EXPENSE
(thousands of euros) 2013 2012
Capital Securities (16,133) (16,133)
2009 Notes (due 2016) (9,374) (9,497)
2010 Notes (due 2018) (6,928) (6,918)
2012 Notes (due 2020) (4,631) (1,292)
Facilities (2,889) (3,395)
Other (1,971) (1,000)
(41,926) (38,235)
December 31,
For the three months ended
(thousands of euros) 2013 2012
Capital Securities (64,531) (64,319)
2009 Notes (due 2016) (37,395) (38,634)
2010 Notes (due 2018) (27,696) (27,652)
2012 Notes (due 2020) (18,509) (1,292)
Facilities (11,360) (16,703)
Other (3,583) (6,764)
(163,074) (155,364)
December 31,
For the year ended
Page 22 of 27
GTECH S.P.A. AND SUBSIDIARIES OPERATING SEGMENT INFORMATION
(thousands of euros) 2013 2012 2013 2012
Operating Segments
Americas 238,392 241,785 994,085 872,429
International 84,492 103,215 331,117 386,969
Italy 450,104 467,367 1,737,090 1,815,931
772,988 812,367 3,062,292 3,075,329
Purchase accounting 132 138 542 356
773,120 812,505 3,062,834 3,075,685
(thousands of euros) 2013 2012 2013 2012
Operating Segments
Americas 20,469 23,690 121,992 88,589
International 10,257 10,119 50,827 55,673
Italy 114,568 120,567 499,661 541,552
145,294 154,376 672,480 685,814
Corporate support (27,383) (12,973) (56,065) (41,184)
Purchase accounting (14,126) (15,285) (57,283) (61,483)
103,785 126,118 559,132 583,147
December 31, December 31,
For the three months ended
Third-party revenue
For the twelve months ended
Operating income
For the three months ended For the twelve months ended
December 31, December 31,
Page 23 of 27
GTECH S.P.A. AND SUBSIDIARIES OPERATING SEGMENT INFORMATION
(thousands of euros) 2013 2012 2013 2012
Operating Segments
Americas 33,800 36,159 136,566 133,980
International 4,907 5,885 18,885 19,988
Italy 21,304 18,278 75,395 71,714
60,011 60,322 230,846 225,682
Corporate support 4,864 4,024 16,321 15,314
Purchase accounting 1,588 2,014 7,432 8,925 66,463 66,360 254,599 249,921
(thousands of euros) 2013 2012 2013 2012
Operating Segments
Americas 1,452 - 1,452 -
International 1 (349) 3 822
Italy 36,558 34,313 139,977 132,288
38,011 33,964 141,432 133,110
Corporate support 97 190 406 944
Purchase accounting 10,088 12,333 47,846 51,855 48,196 46,487 189,684 185,909
(thousands of euros) 2013 2012 2013 2012
Operating Segments
Americas - - - -
International 5,470 5,145 3,445 5,145
Italy - - - -
5,470 5,145 3,445 5,145
Corporate support - - - -
Purchase accounting 2,613 1,082 2,613 1,082 8,083 6,227 6,058 6,227
December 31,
Impairment loss, net
For the three months ended For the twelve months ended
December 31,
Amortization
For the three months ended For the twelve months ended
For the twelve months ended
December 31,
December 31,
Depreciation
For the three months ended
December 31, December 31,
Page 24 of 27
GTECH S.P.A. AND SUBSIDIARIES GEOGRAPHIC INFORMATION
(thousands of euros) 2013 2012
Total Revenue
Italy 1,752,545 1,839,384
United States 719,918 667,172
Canada 117,860 52,585
United Kingdom 66,448 87,837
Colombia 42,062 47,387
Other 364,001 381,320
3,062,834 3,075,685
For the year ended December 31,
(thousands of euros) 2013 2012
Non-Current Assets
United States 3,298,051 3,421,419
Italy 1,784,834 1,834,803
Sweden 80,533 91,406
United Kingdom 60,177 55,608
Other 153,863 177,823
5,377,458 5,581,059
December 31,
Page 25 of 27
- GTECH S.p.A. –
December 31,
2013
December 31,
2012
INCOME STATEMENTS
(Euro)
Revenues 402,784,250 396,217,644
Other revenues 141,272,612 121,815,447
Total revenues 544,056,862 518,033,091
Capitalization of Internal Construction - Labour
(2,838,993) -
Raw material, services and other costs 202,334,199 203,438,180
Personnel costs 116,982,985 111,522,057
Depreciations and amortizations 30,115,598 19,002,972
Credit writedown 60,000 -
Total costs 346,653,789 333,963,209
Operating income 197,403,073 184,069,882
Dividends
42,389,813
13,945,218
Enhancing participation at Equity
659,213
905,407
Interest incomes and other incomes
22,390,877
15,486,745
Interest expenses and other expenses
(165,656,314)
(149,435,639)
Foreign exchange gains (loss)
(110,631)
(94,475)
(100,327,042)
(119,192,744)
Financial assets value adjustments
-
(4,663)
Gross income 97,076,031 64,872,475
Income taxes
(62,737,362)
(26,637,197)
Net income 34,338,669 38,235,278
Attributable to:
Owners of the parent 20,257,754 22,766,049
Non-controlling interests 14,080,915 15,469,229
34,338,669 38,235,278
Earning per share/ADRs
Basic - net income attributable to owners of the parent € 1.01 € 1.35
Diluted - net income attributable to owners of the parent € 1.01 € 1.35
Page 26 of 27
GTECH S.p.A.
December 31,
2013
December 31,
2012
STATEMENT OF EQUITY AND FINANCIAL POSITION
(Euros)
ASSETS
Not current assets
System, equipment and other assets related to contracts, net 80,093,228 51,845,355
Goodwill 622,896,606 622,896,606
Intangible assets, net 20,798,964 14,743,284
Investments in associates and other companies 3,739,732,808 3,772,557,121
Equity investments 632,120 772,907
Other non-current assets 601,051,527 525,678,473
Total non current assets 5,065,205,253 4,988,493,746
Current assets
Inventories 2,395,411 1,534,109
Trade and other receivables 116,516,118 106,236,594
Current financial assets 193,730,664 124,344,864
Other current assets 10,240,815 11,753,815
Cash and cash equivalents 158,558,735 315,018,214
Total current assets 481,441,743 558,887,596
TOTAL ASSETS 5,546,646,996 5,547,381,342
LIABILITIES
Equity
Share capital 173,992,168 172,454,507
Legal Reserve 34,490,901 34,428,159
Share premium reserve 1,717,261,380 1,703,922,911
Other reserves 75,585,504 66,214,884
Profit (loss) carried forward 27,198,202 114,945,610
Profit (loss) for the period 34,338,669 38,235,278
Total equity 2,062,866,824 2,130,201,349
Not current liabilities
Long term debt, less current portion 2,586,794,131 2,568,270,128
Staff severance fund (TFR fund) 6,143,612 5,558,106
Deferred tax liability 89,737,796 68,166,291
Long term provisions 169,979 20,205,517
Total non current liabilities 2,682,845,518 2,662,200,042
Current liabilities
Trade and other payables 154,017,944 140,308,521
Short term borrowings 519,473,753 507,635,998
Current portion of long term debt 88,289,701 75,104,758
Other current liabilities 35,709,962 30,716,518
Income tax payables 3,443,294 1,214,156
Total current liabilities 800,934,654 754,979,951
TOTAL EQUITY AND LIABILITIES 5,546,646,996 5,547,381,342
Page 27 of 27
GTECH S.p.A.
CASH FLOW STATEMENT
(Euros)
For the year ended December 31,
2013 2012
Net cash flows from operating activities 168,946,220 187,259,757
Cash flows from investing activities
Dividends collected from reserves 45,695,516 50,862,854
Dividends collected from net income 43,189,813 14,082,718
Unpaid purchases 19,251,113 10,126,861
Proceeds from sale of assets 266,836 138,429
Guarantees 150,301 (2,664,079)
Venture capital investment (793,552) (796,046)
Reserve payments to Related Parties (4,100,000) (17,134,337)
Purchases last exercises, paid in the current exercise (8,225,246) (5,664,000)
Purchases of intangible assets (14,400,467) (11,645,498)
Purchases of fixed assets (20,989,646) (18,332,034)
Net cash flow from investing activities 60,044,668 18,974,868
Cash flows from financing activities
Related party receivables (129,250,047) (73,096,754)
Dividends paid (125,919,946) (122,219,966)
Interests paid on Capital Securities (61,875,000) (61,875,000)
Interests paid on Euro Bond 750 (due 2016) (40,312,500) (40,312,500)
Interests paid on Euro Bond 500 (due 2018) (26,875,000) (31,440,000)
Related party liabilities (8,932,104) (27,382,138)
Financial lease paid (6,519,916) -
Interests paid on Euro Bond 500 (due 2020) (4,315,000) -
Revolver Facility commissions (1,282,828) (1,149,967)
Other interests paid (827,061) (12,507,121)
Interests on financial leases (681,600) -
Interests paid on Revolver Facility (29,500) (963,413)
2012 Notes (due 2020) - 492,945,307
Interests paid on Mandatory - (31,821,000)
Bank liabilities 703,298 -
Interests on receivables 789,978 134,418
Swap option collected 4,131,529 3,078,618
Stock options 15,745,330 121,177
Net cash flow from (used in) financing activities (385,450,367) 93,511,661
Net increase (decrease) in cash and cash equivalents (156,459,479) 299,746,286
Cash and cash equivalents at the beginning of the year 315,018,214 15,271,928
Cash and cash equivalents at the end of the year 158,558,735 315,018,214