NEWS RELEASE GTECH ANNOUNCES 2013 FOURTH QUARTER AND FULL YEAR RESULTS

Transcription

1 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 Q 2012 % change Full Year 2013 Full Year 2012 % change Revenues (4.8) 3, ,075.7 (0.4) EBITDA (0.5) 1, , Operating Income (17.7) (4.1) Net Income Attributable to Owners (24.8) Diluted Earnings Per Share (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 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, 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 /27

2 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 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 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 2/27

3 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 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 At constant currency, revenues would have been 3.11 billion. Service revenues were 2.78 billion versus 2.82 billion in 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 eLotto 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 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 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 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. 3/27

4 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 Net income attributable to the owners was 175 million, compared to 233 million in the full year Diluted Earnings-Per-Share (EPS) was 1.01, compared to 1.35 in Pro-forma EPS was 1.59, in line with 2012 pro-forma EPS of 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 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 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 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 Full-Year Stand-Alone Results GTECH s stand-alone Net Income in 2013 was 34 million compared to 38 million in Total Equity and Liabilities in 2013 were 5.55 billion versus 5.55 billion in Cash and Cash Equivalents at the end of 2013 were 159 million compared to 315 million in Guidance and 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 Capital Expenditures of which maintenance Net Financial Position 2,507 2,470 2,530 Average USD/EUR 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; 4/27

5 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 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 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 stock option plan and the 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 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 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, 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, /27

6 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 For further information: Robert K. Vincent Simone Cantagallo GTECH S.p.A. GTECH S.p.A. Corporate Communications Media Communications T. (+1) T. (+39) This news release and those archived are available at Financial Statements for the fourth quarter and full year 2013 follow: 6/27

7 CONSOLIDATED INCOME STATEMENTS For the three months ended (thousands of euros) Service revenue 722, ,026 Product sales 50,675 90,479 Total revenue 773, ,505 Raw materials, services and other costs 425, ,782 Personnel 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, ,387 Operating income 103, ,118 Interest income Equity income (loss) (772) 309 Other income 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 Diluted - net income attributable to owners of the parent /27

8 CONSOLIDATED INCOME STATEMENTS For the year ended (thousands of euros) Service revenue 2,783,727 2,822,279 Product sales 279, ,406 Total revenue 3,062,834 3,075,685 Raw materials, services and other costs 1,585,303 1,611,173 Personnel 568, ,346 Depreciation 254, ,921 Amortization 189, ,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, ,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, ,003 Income tax expense 180, ,778 Net income 205, ,225 Attributable to: Owners of the parent 175, ,136 Non-controlling interests 29,801 32, , ,225 Earnings per share/adrs Basic - net income attributable to owners of the parent Diluted - net income attributable to owners of the parent /27

9 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Restated (a) (thousands of euros) ASSETS Non-current assets Systems, equipment and other assets related to contracts, net 899, ,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, ,304 Trade and other receivables, net 904, ,894 Other current assets 190, ,177 Current financial assets 12,273 8,915 Income taxes receivable 3,574 19,509 Cash and cash equivalents 419, ,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, ,455 Share premium 1,717,261 1,703,923 Retained earnings 292, ,858 Other reserves 15, ,565 2,199,912 2,267,801 Non-controlling interests 403, ,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, ,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 Other current liabilities 361, ,668 Current financial liabilities 21,503 10,620 Current portion of long-term debt 214, ,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 9/27

10 CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended (thousands of euros) Cash flows from operating activities Income before income tax expense 386, ,003 Adjustments for: Depreciation 254, ,921 Intangibles amortization 189, ,001 Interest expense 163, ,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, Income tax paid (170,943) (193,442) Cash flows before changes in operating assets and liabilities 845, ,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, ,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, 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, ,675 Cash and cash equivalents at the end of the year 419, ,333 10/27

11 KEY FINANCIAL INDICATOR COMPARISONS For the three months ended Change % Revenue 773, ,505 (39,385) (4.8) EBITDA 244, ,846 (1,234) (0.5) Operating income 103, ,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 (0.35) (97.2) EBITDA Operating income 103, ,118 (22,333) (17.7) Depreciation 66,463 66, Amortization 48,196 46,487 1, Restructuring costs 15, ,902 >200.0 Impairment loss, net 8,083 6,227 1, Other 2, ,529 > , ,846 (1,234) (0.5) Page 11 of 27

12 KEY FINANCIAL INDICATOR COMPARISONS For the year ended Change % Revenue 3,062,834 3,075,685 (12,851) (0.4) EBITDA 1,036,709 1,031,841 4, Operating income 559, ,147 (24,015) (4.1) Net income attributable to owners of the parent 175, ,136 (57,702) (24.8) Diluted earnings per share (0.34) (25.2) EBITDA Operating income 559, ,147 (24,015) (4.1) Depreciation 254, ,921 4, Amortization 189, ,909 3, Restructuring costs 20, ,733 >200.0 Impairment loss, net 6,058 6,227 (169) (2.7) Other 6,692 5, ,036,709 1,031,841 4, Change (a) % Net financial position 2,507,319 2,548,931 (41,612) (1.6) Page 12 of 27

13 CONSOLIDATED REVENUE BREAKDOWN For the three months ended Change (thousands of euros) % Operating Segments Americas 238, ,785 (3,393) (1.4) International 84, ,215 (18,723) (18.1) Italy 450, ,367 (17,263) (3.7) 772, ,367 (39,379) (4.8) Purchase accounting (6) (4.3) 773, ,505 (39,385) (4.8) For the year ended Change (thousands of euros) % Operating Segments Americas 994, , , International 331, ,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 ,062,834 3,075,685 (12,851) (0.4) Page 13 of 27

14 AMERICAS SEGMENT For the three months ended Change (thousands of euros) % Lottery 163, ,980 9, Machine Gaming 35,919 64,048 (28,129) (43.9) Lottery Management Services 30,642 16,079 14, All Other 8,352 7, Total revenue 238, ,785 (3,393) (1.4) Service revenue 209, ,756 22, Product sales 29,079 55,029 (25,950) (47.2) Total revenue 238, ,785 (3,393) (1.4) Lottery Same-Store Revenues 131, ,491 7, Wins 4,139-4,139 - Gaming & Other 53,871 46,186 7, Lottery Management Services 31,826 16,079 15, Foreign Exchange Impact (12,026) - (12,026) - Total Service Revenue 209, ,756 22, For the year ended Change (thousands of euros) % Lottery 640, ,508 14, Machine Gaming 232, ,414 80, Lottery Management Services 91,523 66,226 25, All Other 29,989 28,281 1, Total revenue 994, , , Service revenue 800, ,727 45, Product sales 193, ,702 76, Total revenue 994, , , Lottery Same-Store Revenues 518, ,447 15, Wins 10,444-10,444 - Gaming & Other 207, ,054 20, Lottery Management Services 94,489 66,226 28, Foreign Exchange Impact (29,301) - (29,301) - Total Service Revenue 800, ,727 45, Page 14 of 27

15 INTERNATIONAL SEGMENT For the three months ended Change (thousands of euros) % 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, ,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, ,215 (18,723) (18.1) 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) For the year ended Change (thousands of euros) % Lottery 195, ,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, ,969 (55,852) (14.4) Service revenue 247, ,914 (10,934) (4.2) Product sales 83, ,055 (44,918) (35.1) Total revenue 331, ,969 (55,852) (14.4) Lottery Same Store Revenue 109, , Gaming & Other 143, ,684 (6,051) (4.0) Foreign Exchange Impact (5,028) - (5,028) - Total Service Revenue 247, ,914 (10,934) (4.2) Page 15 of 27

16 ITALY SEGMENT For the three months ended Change (thousands of euros) % Lotto 103, ,999 1, Instant tickets 96,090 96,266 (176) (0.2) Lottery 199, ,265 1, Machine Gaming 151, ,214 (19,072) (11.2) Sports Betting 44,440 45,331 (891) (2.0) Commercial Services 34,961 33,139 1, Interactive Games 19,916 20,418 (502) (2.5) Total revenue 450, ,367 (17,263) (3.7) For the year ended Change (thousands of euros) % Lotto 407, ,840 5, Instant tickets 377, ,274 (4,840) (1.3) Lottery 785, , Machine Gaming 583, ,567 (89,849) (13.3) Sports Betting 158, ,849 18, Commercial Services 132, , Interactive Games 77,476 87,279 (9,803) (11.2) Total revenue 1,737,090 1,815,931 (78,841) (4.3) Page 16 of 27

17 ITALY SEGMENT For the three months ended Change Wagers % Lotto (millions of euros) Core wagers 1, , Wagers for late numbers (22.3) (10.0) 1, , Instant Tickets Total sales (in millions) 2, ,439.9 ( 31.3) (1.3) Total tickets sold (in millions) (30.0) (5.8) Average price point Machine Gaming (millions of euros) VLT wagers 1, ,953.4 (374.6) (19.2) AWP wagers 1, , Total wagers 2, ,119.0 (348.0) (11.2) (Installed at the end of December) VLTs installed 10,596 10, AWP machines installed 70,203 65,345 4, Total machines installed 80,799 75,880 4, Sports Betting (millions of euros) Fixed odds sports betting and other wagers (19.9) (7.8) Interactive Games (millions of euros) Interactive game wagers Page 17 of 27

18 ITALY SEGMENT For the year ended Change Wagers % Lotto (millions of euros) Core wagers 5, ,680.9 (2.4) (0.0) Wagers for late numbers , , Instant Tickets Total sales (in millions) 9, ,729.0 ( 155.2) (1.6) Total tickets sold (in millions) 1, ,098.2 (127.4) (6.1) Average price point Machine Gaming (millions of euros) VLT wagers 6, ,654.9 (1,196.4) (15.6) AWP wagers 4, , Total wagers 10, ,138.2 (1,147.3) (9.5) (Installed at the end of December) VLTs installed 10,596 10, AWP machines installed 70,203 65,345 4, Total machines installed 80,799 75,880 4, Sports Betting (millions of euros) Fixed odds sports betting and other wagers (106.8) (12.1) Interactive Games (millions of euros) Interactive game wagers 1, ,134.7 (143.8) (6.7) Page 18 of 27

19 NET FINANCIAL POSITION (thousands of euros) (a) Change Cash at bank 416, ,386 (38,599) Cash on hand 2, ,955 Cash and cash equivalents 419, ,762 (36,644) Current financial receivables 12,273 8,915 3,358 Facilities 125, ,267 20,634 Capital Securities 46,406 46, Notes (due 2018) 24,549 24, Notes (due 2020) 14,408 1,223 13, Notes (due 2016) 2,926 2,926 - Short-term borrowings Other 21,809 11,525 10,284 Current financial debt 236, ,437 44,413 Net current financial cash (194,541) (272,240) 77, Notes (due 2016) 756, ,616 (3,058) Capital Securities 743, ,148 2, Notes (due 2018) 496, , Notes (due 2020) 492, ,842 1,009 Facilities 150, ,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 Page 19 of 27

20 DEBT (thousands of euros) Long-term debt, less current portion 2009 Notes (due 2016) 756, ,616 Capital Securities 743, , Notes (due 2018) 496, , Notes (due 2020) 492, ,842 Facilities 150, ,922 Other 1,474 1,929 2,641,260 2,778,764 Short-term borrowings Short-term borrowings Current portion of long-term debt Facilities 125, ,267 Capital Securities 46,406 46, Notes (due 2018) 24,549 24, Notes (due 2020) 14,408 1, Notes (due 2016) 2,926 2,926 Other , ,276 Total debt 2,856,607 2,960,581 Page 20 of 27

21 INTEREST EXPENSE For the three months ended (thousands of euros) 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) For the year ended (thousands of euros) 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) Page 21 of 27

22 OPERATING SEGMENT INFORMATION Third-party revenue For the three months ended For the twelve months ended (thousands of euros) Operating Segments Americas 238, , , ,429 International 84, , , ,969 Italy 450, ,367 1,737,090 1,815, , ,367 3,062,292 3,075,329 Purchase accounting , ,505 3,062,834 3,075,685 Operating income For the three months ended For the twelve months ended (thousands of euros) Operating Segments Americas 20,469 23, ,992 88,589 International 10,257 10,119 50,827 55,673 Italy 114, , , , , , , ,814 Corporate support (27,383) (12,973) (56,065) (41,184) Purchase accounting (14,126) (15,285) (57,283) (61,483) 103, , , ,147 Page 22 of 27

23 OPERATING SEGMENT INFORMATION Depreciation For the three months ended For the twelve months ended (thousands of euros) Operating Segments Americas 33,800 36, , ,980 International 4,907 5,885 18,885 19,988 Italy 21,304 18,278 75,395 71,714 60,011 60, , ,682 Corporate support 4,864 4,024 16,321 15,314 Purchase accounting 1,588 2,014 7,432 8,925 66,463 66, , ,921 Amortization For the three months ended For the twelve months ended (thousands of euros) Operating Segments Americas 1,452-1,452 - International 1 (349) Italy 36,558 34, , ,288 38,011 33, , ,110 Corporate support Purchase accounting 10,088 12,333 47,846 51,855 48,196 46, , ,909 Impairment loss, net For the three months ended For the twelve months ended (thousands of euros) Operating Segments Americas International 5,470 5,145 3,445 5,145 Italy ,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 Page 23 of 27

24 GEOGRAPHIC INFORMATION For the year ended (thousands of euros) Total Revenue Italy 1,752,545 1,839,384 United States 719, ,172 Canada 117,860 52,585 United Kingdom 66,448 87,837 Colombia 42,062 47,387 Other 364, ,320 3,062,834 3,075,685 (thousands of euros) 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, ,823 5,377,458 5,581,059 Page 24 of 27

25 - GTECH S.p.A. INCOME STATEMENTS (Euro) December 31, 2013 December 31, 2012 Revenues 402,784, ,217,644 Other revenues 141,272, ,815,447 Total revenues 544,056, ,033,091 Capitalization of Internal Construction - Labour (2,838,993) - Raw material, services and other costs 202,334, ,438,180 Personnel costs 116,982, ,522,057 Depreciations and amortizations 30,115,598 19,002,972 Credit writedown 60,000 - Total costs 346,653, ,963,209 Operating income 197,403, ,069,882 Dividends Enhancing participation at Equity Interest incomes and other incomes Interest expenses and other expenses Foreign exchange gains (loss) 42,389,813 13,945, , ,407 22,390,877 15,486,745 (165,656,314) (149,435,639) (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 Diluted - net income attributable to owners of the parent Page 25 of 27

26 GTECH S.p.A. STATEMENT OF EQUITY AND FINANCIAL POSITION (Euros) December 31, 2013 December 31, 2012 ASSETS Not current assets System, equipment and other assets related to contracts, net 80,093,228 51,845,355 Goodwill 622,896, ,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, ,907 Other non-current assets 601,051, ,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, ,236,594 Current financial assets 193,730, ,344,864 Other current assets 10,240,815 11,753,815 Cash and cash equivalents 158,558, ,018,214 Total current assets 481,441, ,887,596 TOTAL ASSETS 5,546,646,996 5,547,381,342 LIABILITIES Equity Share capital 173,992, ,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, ,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, ,308,521 Short term borrowings 519,473, ,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, ,979,951 TOTAL EQUITY AND LIABILITIES 5,546,646,996 5,547,381,342 Page 26 of 27

27 GTECH S.p.A. CASH FLOW STATEMENT (Euros) For the year ended Net cash flows from operating activities 168,946, ,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, ,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, ,418 Swap option collected 4,131,529 3,078,618 Stock options 15,745, ,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, ,018,214 Page 27 of 27