The members of the Board of Directors and of the Board of Statutory Auditors verified the existence of the independence requirements

Transcription

1 PRESS RELEASE THE BOARD OF DIRECTORS APPROVES THE RESULTS AS OF SEPTEMBER 30, % EBITDA GROWTH IN THE FIRST NINE MONTHS OF 2018 (EURO 65.7 MILLION) VS SAME PERIOD LAST YEAR, LAST TWELVE MONTHS (LTM) EBITDA AT EURO 90.3 MILLION NET FINANCIAL DEBT/EBITDA (LTM) AT 2.0x Bet of Euro 5.3 billion, growing with respect to 9M2017 (+ 0.9%) Consolidated revenues of Euro million, growing by 2.6% before PREU increase, compared to Euro million in 9M2017 (-1.9%) EBITDA of Euro 65.7 million, +14.4% compared to Euro 57.4 million in 9M2017, LTM at Euro 90.3 million Net result equal to Euro -4.8 million compared to Euro +0.1 million for 9M2017. The net result of 9M2018 would have been positive and equal to Euro 9.0 million, excluding the extraordinary items, mainly related to a tax audit settlement in the first quarter, costs incurred for the refinancing of the bond in the second quarter and the issue of a new bond in September to finance the acquisition of GoldBet, totaling Euro 13.8 million Leverage at 2.0x compared to 1.9x as of December 31, 2017 and in line with 9M2017. Net financial position of Euro million compared to Euro million as of December 31, 2017 and Euro million as of 9M2017, notwithstanding ca. Euro 18.0 million paid for the dividend in 2Q2018, costs for the two bond issues, disbursements related to the stock option program, and extraordinary costs related to the tax audit settlement Acquisition of 100% of GoldBet successfully completed on October 9, The results reported for the first nine months do not, therefore, include the contribution of GoldBet Strong performance of Gamenet Group + Goldbet: 9M2018 pro forma (*) EBITDA at Euro million, or +36.6% vs 9M2017 pro forma (Euro 78.0 million); LTM pro forma EBITDA at Euro million. Leverage at 2.7x The members of the Board of Directors and of the Board of Statutory Auditors verified the existence of the independence requirements Rome, November 13, 2018 The Board of Directors of Gamenet Group S.p.A. (MTA; Bloomberg ticker: GAME: IM), a company listed on the STAR segment of the Mercato Telematico Azionario organized and managed by Borsa Italiana S.p.A., met today and approved the Consolidated Interim Financial Report as of September 30, (*) Unaudited proforma financial information for the nine months ended September 30, 2018 and 2017 has been prepared in order to reflect retroactively the effects of (i) the GoldBet acquisition completed on October 9, 2018, (ii) the issuance, on September 20, 2018, of Euro 225 million senior secured floating rate notes due 2023 and (iii) the issuance, on April 27, 2018, of Euro 225 million senior secured floating rate notes due 2023, used for the final repayment of all the senior secured notes with a nominal amount of Euro 200 million issued on August 3, 2016 and with maturity originally envisaged for

2 The main economic and financial data of the Consolidated Interim Financial Report are shown below. Main financial and economic indicators ( million) For the period ended September 30, Change (Euro) % Revenues (8.5) -1.9% EBITDA % EBIT % Profit before tax (2.2) 1.7 (3.9) <100% Net profit (loss) for the period (*) (4.8) 0.1 (4.9) <100% Net Financial Position (179.0) (156.5) (22.5) 14.4% (*) Net of extraordinary items, mainly attributable to the costs for the refinancing of the bond, the issue of the new bond to finance the acquisition of GoldBet and the tax audit settlement which took place during the first quarter, totaling Euro million, the Net result for the nine months ended September 30, 2018 is equal to Euro 9.0 million. EBITDA is defined as net profit (or loss) for the year adjusted for: (i) income tax expense, (ii) finance expenses, (iii) finance income, (iv) impairment of financial assets, (v) amortization, depreciation and impairment of tangible and intangible assets; (vi) non monetary costs; (vii) acquisition related transaction costs; (viii) corporate restructuring costs and early retirement incentives; (ix) income and expenses that, by their nature, are not reasonably expected to recur in future periods. EBITDA and EBIT are alternative performance measures. As such, they are not recognized IFRS measures and may, therefore, not take into account IFRS requirements in terms of recognition, measurement and presentation. We believe that EBITDA and EBIT, both commonly used by gaming industry analysts and investors, help explain changes in operating performance and provide useful information regarding the Company s debt management capacity. The results for the first nine months of 2018 clearly demonstrate both the strong growth in the Betting and Online segment as well as the excellent continuation of the distribution insourcing strategy. Sports betting in particular continues to show solid growth and we are very satisfied with both the online and retail performance. These results are even more significant if we consider that they do not include the contribution of GoldBet. In fact, thanks to this acquisition and the related integration plan, Gamenet Group will further expand its business, generating significant synergies and consolidating even more the Italian leadership in sports betting, also making use of the largest commercial network in the country, commented Guglielmo Angelozzi, CEO of Gamenet Group. During the third quarter, we also successfully issued a new bond to finance the acquisition of GoldBet. Overall, the results achieved in the first nine months, which will be given further momentum by the integration of GoldBet, represent a further step towards reaching our year-end financial targets. Key developments and events of Gamenet s Group business during the first nine months of 2018: Bet at Euro 5.3 billion, with particularly positive contributions from online, thanks also to the updating of mobile Betting portals (mobile site + app), (total sports betting bet +37.4% vs 9M2017; from mobile devices +46.2% and Live +39.4%), retail betting and VLTs; Growth in bet from online casino games of 91.2% vs 9M2017; Following the completion of the mandatory AWP reduction, total bet was not negatively impacted and average unit productivity grows by 23.3%; Acceleration of the distribution insourcing strategy from 6,575 directly owned AWPs as of September 30, 2017 to 10,166 AWPs as of September 30, 2018 and of the downstream integration of the Retail segment (70 gaming halls directly managed); Optimization of the betting network with an increase of 1.9% in the number of operating rights and an increase of 33.6% in the number of active online players; Initiated the preliminary activities of the Group integration program, following completion of the GoldBet acquisition. 2

3 Consolidated Results as of September 30, 2018 Consolidated Revenues, before the PREU increase, grew 2.6%. The Group s total reported revenues (including PREU) amounted to Euro million compared to Euro million as of September 30, 2017 (-1.9%). The Betting and Online segment grew (+ 23.1%). The following table shows the breakdown of revenues by operating segment for the nine-month periods ended September 30, 2018 and September 30, For the period ended September 30, Change ( thousand) 2018 % of revenues 2017 % dei ricavi (Euro) % AWP 209, % 226, % (17,534) -7.7% VLT 154, % 155, % (1,286) -0.8% Betting and Online 66, % 53, % 12, % Retail and Street Operation 12, % 14, % (2,230) -15.3% Retail and Street Operation (16) 0.0% (64) 0.0% % Totale 442, % 450, % (8,511) -1.9% Group EBITDA for the first nine months of 2018 increased to Euro 65.7 million from Euro 57.4 million of the same period of last year, an increase of 14.4%. The increase in EBITDA was due to the positive results recorded by sports betting, as well as by the excellent continuation of the distribution insourcing strategy. Group EBIT for the first nine months of 2018 was Euro 21.7 million, growing if compared to Euro 13.8 million for the same period of the previous year. Net financial expenses amounted to Euro 24.0 million in the nine months ended September 30, 2018, an increase of Euro 11.9 million with respect to the net figure of Euro 12.1 million in the same period of the previous year. The increase was due to the refinancing of the high yield bond in April, which resulted both in costs relating to the early reimbursement of the bonds issued in 2016 that were due to mature in 2021 (for about Euro 6.0 million) and the write-off of the residual amortized cost of such bonds (for about Euro 4.1 million). The increase was also due to costs of Euro 2.9 million, mainly relating to the commitment obtained by the Company from UniCredit and Nomura regarding the organization and underwriting of a committed bridge loan to be used to pay the purchase price for the acquisition of 100% of the share capital of Goldbet S.p.A. (The transaction was then mainly financed by the bond issued in September 2018 and the bridge loan was not used). Profit before taxes amounted to Euro -2.2 million compared to Euro 1.7 million in the equivalent period of the previous year. The Net result for the nine months ended September 30, 2018 was Euro -4.8 million, compared to a profit of Euro 0.1 million for the same period of the previous year. The Net result would have been positive and equal to Euro 9.0 million, excluding extraordinary items (mainly relating to the tax audit settlement in the first quarter and costs incurred for the refinancing of the bond in April 2018 and the issue of a new bond in September 2018, as well as other costs relating to the acquisition of GoldBet) totaling Euro 13.8 million. The Net financial position as of September 30, 2018 was Euro million compared to Euro million as of December 31, 2017 and Euro million as of September 30, The consolidated net leverage ratio (Net Financial Position/LTM EBITDA) was 2.0x, compared to 1.9x as of December 31, 2017 and in line with the first nine months of Excluding the impact of the dividend payment in 2Q2018, the tax audit settlement incurred in the first quarter, the extraordinary costs incurred in relation to the refinancing of the bond in April 2018 and the issue of a new bond to finance the acquisition of GoldBet, and disbursements related to the stock option program, the Net Financial Position would have been Euro million and the Net Financial Position/LTM EBITDA would have been 1.8x. 3

4 Operating segments: KPI, Revenues and Contribution Margin AWP For the period ended September 30, ( in millions, except non-financial information and percentages) Revenues Contribution Margin Number of AWPs in operation as of the period end 29,243 42,573 Average number of AWPs in operation for the period 33,626 41,272 AWP Bet (1) 1, ,952.9 Average AWP PREU (as percentage of bet) 19.0% 18.4% (1) The figure does not include the bets generated by gaming halls connected to other concessionaires, amounting to Euro million, which are included in the Retail & Street Operations segment. The average number of operating machines was 33,626 in the nine months ended September 30, 2018, down 18.5% compared to the same period of the previous year, following the completion of the 35% market reduction in the number of operating permits. Such reduction did not, however, impact bet which increased by 0.5%, amounting to Euro 1,962.2 million for the nine months ended September 30, 2018, up from Euro 1,952.9 million for the same period in the previous year. Average productivity per machine also increased by 23.3% (+38.3 average productivity in Q3 18). Revenues for the nine months ended September 30, 2018 amounted to Euro million, compared to Euro million for the same period in the previous year (-7.7%), mainly due to the impact of the increases in the PREU from 17.5% to 19.0% starting from April 24, 2017 and then from 19.0% to 19.25% from September 1, 2018 (for a total of Euro 13.0 million). The positive impact of the increased bet was offset by a temporary increase in payout that will be reversed by the end of the year; (it is recalled in this regard that AWP devices must guarantee winnings - payout of 70%, in an unpredictable way over a cycle of a maximum of 140,000 games and therefore small, temporary differences are possible). Following the sharp reduction in distribution costs, which decreased from Euro million to Euro million (- 10.2%), the segment's contribution margin increased by 20.0% from Euro 17.2 million to Euro 20.6 million, representing approximately 4.7% of consolidated revenues and 17.7% of the Group s total Contribution Margin. It should be noted that the reduction in distribution costs was mainly attributable to the distribution insourcing strategy. VLT For the period ended September 30, ( in millions, except non-financial information and percentages) Revenues Contribution Margin Number of VLT licenses 8,570 8,570 Average number of VLTs in operation for the period 8,353 8,276 Number of VLTs in operation as of the period end 8,369 8,292 VLT in operation as percentage of VLT rights 97.7% 96.8% VLT Bet (1) 2, ,384.7 Average VLT PREU (as percentage of bet) 6.0% 5.8% (1) The figure does not include the bet generated by gaming halls connected to other concessionaires amounting to Euro million, which are included in the Retail & Street Operations segment. As of September 30, 2018, the Group s VLT segment held 8,570 licenses. The average number of operating machines in the nine months ended September 30, 2018 was 8,353, an increase of 0.9% compared to 8,276 in the same period of the previous year. The VLT bet increased compared to the same period of the previous year from Euro 2,384.7 million to Euro 2,445.9 million (+ 2.6%; +4.1% in Q3 18). Segment revenues amounted to Euro million for the nine months ended September 30, 2018, compared to Euro million for the period ended September 30, 2017 (-0.8%). Such result was mainly due to the impact of the increase in the PREU from 5.5% to 6.0% from 24 April 2017 and then from 6.0% to 6.25% from September 1, 2018 (for a total of Euro 5.8 million), partially offset by the slight reduction in payout (a positive impact of Euro 0.8 million) and positive impact (Euro 3.7 4

5 million) of the higher bet. The Contribution Margin in the nine months ended September 30, 2018 was Euro 45.9 million, approximately 10.4% of total consolidated revenues and 39.4% of the Group s total contribution margin, an increase of 3.9% (Euro 1.7 million) with respect to the same period in the previous year. Such increase was mainly due to the one-off positive impact in the first quarter of the VAT reimbursement linked to VLT platform costs (Euro 2.4 million). Betting and Online For the period ended September 30, ( in millions, except non-financial information and percentages) Revenues Contribution Margin Number of licenses/concessions (1) Number of active points of sale (shops and corner) Average number of points of sale in operations (shops and corner) Total retail bet Average bet per point of sale for the period Total online bet (1) The 742 rights do not include the 54 licenses related to horse racing (58 in 2017) Bet increased by 3.8% compared to the same period in the previous year (from Euro million in the first nine months of 2017 to Euro million in the first nine months of 2018). The increase was mainly due to the growth of 5.0% in the online segment, where bet increased from Euro million in the nine months ended September 30, 2017 to Euro million in the nine months ended September 30, The network of operating points of sale as of September 30, 2018 comprised 436 betting shops and 236 betting corners. Total revenues in the Betting and Online segment amounted to Euro 66.5 million for the period ended September 30, 2018, an increase of 23.1% compared to Euro 54.0 million for the period ended September 30, The segment benefited in particular from the positive performance of the payout of retail sports bets, which was equal to 80.2% in the nine months ended September 30, 2018 (compared to a payout of 84.3% in the same period of 2017). The Contribution Margin also benefited from the favorable impact of the payout, amounting to Euro 28.6 million, approximately 6.5% of consolidated revenues and 24.5% of the Group s total Contribution Margin, a sharp increase compared to the previous year. Retail and Street Operations Per il periodo chiuso al 30 settembre (in milioni di, ad eccezione delle informazioni non finanziarie e delle %) Ricavi inclusi "Ricavi ed altri ricavi e proventi intrasettore" Ricavi Margine di contribuzione Numero di sale alla fine del periodo Raccolta VLT Numero medio di macchine VLT 1,471 1,363 Raccolta media VLT per macchina (in migliaia di ) Raccolta AWP Numero medio di macchine AWP 4,884 4,253 Raccolta media AWP per macchina (in migliaia di ) As of September 30, 2018, the Group's Retail operations included 70 directly managed gaming halls of which 44 under the Gamenet Entertainment brand, 3 under the Billions Italia brand, 20 under the Enjoy the Game brand and 2 under the Easy Play brand. Street Operation activities included 3,955 owned AWPs. Bet in the Retail and Street Operations segment decreased from Euro million in the nine months ended September 30, 2017 to Euro million in the nine months ended September 30, 2018, a decrease of 12.4%, mainly due to the transition, during the first quarter of 2018, of a high-performing owned gaming hall (as a result of which the contribution of such hall is included mainly within the VLT 5

6 and AWP segments) to the concessionaire Gamenet S.p.A.. Following the reclassification of the bet on proprietary gaming halls connected to the Gamenet concessionaire, the Retail and Street Operations segment generated bets of Euro million in the nine months ended September 30, 2018, an increase of 17.8% compared to Euro million in the same period of the previous year. The increase was due to the higher bet in owned VLT halls and the AWP businesses acquired in the Street Operations segment, as well as the opening of new owned gaming halls. Revenues (which include only third-party revenues) in the Retail and Street Operations segment amounted to Euro 12.4 million for the period ended September 30, 2018, a decrease of 15.3% compared to Euro 14.6 million recorded for the period ended September 30, This decrease was mainly due to the impact of the increase in the PREU and the effect of the aforementioned transition of the high-performance hall to the concessionaire Gamenet S.p.A.. The Contribution Margin as of September 30, 2018 amounted to Euro 21.5 million, approximately 4.9% of consolidated revenues and 18.5% of the Group s total Contribution Margin. The increase was due to the higher bet in owned VLT halls and the AWP businesses acquired in the Street Operations segment, as well as the opening of new owned halls, partially offset by the negative year on year effect of the increase in the PREU (Euro 1.5 million). Key consolidated results for the quarter ended September 30, 2018 The following table shows key economic and financial indicators between the third quarters of 2018 and Main financial and For the quarter ended September 30, Change economic indicators ( million) (Euro) % Revenues (1.5) -1.1% EBITDA % EBIT % Profit before tax 0.6 (0.5) 1.1 <100% Net profit (0.6) -41.8% Total Group Revenues in the third quarter of 2018, amounted to Euro million, compared to Euro million in the third quarter 2017 (-1.1%). Group EBITDA in the third quarter of 2018 increased to Euro 22.0 million from Euro 21.1 million in in the same period of 2017, an increase of 4.7%. The increase in EBITDA was mainly due to the positive sports betting payout trend. Group EBIT in the third quarter of 2018 was Euro 7.0 million, an increase compared to Euro 3.7 million in the same period of the previous year. The Net result for the third quarter of 2018 was Euro 0.8 million, compared to Euro 1.4 million for the same period of the previous year. The adjusted Net result for the third quarter of 2018 would have been Euro 4.2 million, excluding certain costs related to the acquisition, in particular those related to the committed bridge loan. Key pro forma consolidated results for the nine-month periods ended September 30, 2018 and 2017 The following key pro forma consolidated results for the nine-month periods ended September 30, 2018 and 2017 are shown below to enable a period on period comparison of performance as if the GoldBet acquisition had occurred on January 1, The financial and economic effects of the aforementioned transaction will be included in the scope of consolidation starting from the fourth quarter of

7 Main Pro Forma (*) financial and For the period ended September 30, Change economic indicators 2018PF 2017PF ( million) (Euro) % Revenues % EBITDA % EBIT % Profit before tax >100% Net profit >100% Net Financial Position (412.4) n.a. n.a. n.a. (*) Unaudited proforma financial information for the nine months ended September 30, 2018 and 2017 has been prepared in order to reflect retroactively the effects of (i) the GoldBet acquisition completed on October 9, 2018, (ii) the issuance, on September 20, 2018, of Euro 225 million senior secured floating rate notes due 2023 and (iii) the issuance, on April 27, 2018, of Euro 225 million senior secured floating rate notes due 2023, used for the final repayment of all the senior secured notes with a nominal amount of Euro 200 million issued on August 3, 2016 and with maturity originally envisaged for Total Group pro forma consolidated Revenues for the nine-month period ended September 30, 2018, amounted to Euro million, compared to Euro million for the same period of the previous year (+4.3%). Pro forma Group EBITDA for the nine-month period ended September 30, 2018 increased to Euro million from Euro 78.0 million for the same period of the previous year, an increase of 36.6%. The increase in EBITDA was due to the positive results recorded by sports betting and the introduction of innovative products such as online virtual betting, as well as the excellent continuation of the distribution insourcing strategy. Pro forma Group EBIT for the first nine months of 2018 was Euro 58.0 million, an increase compared to Euro 30.3 million for the same period of the previous year. Pro forma Profit before taxes amounted to Euro 37.0 million compared to Euro 9.3 million for the same period of the previous year. The pro forma Net result for the nine months ended September 30, 2018 was Euro 23.6 million, compared to Euro 4.5 million for the same period of the previous year. The pro forma Net financial position as of September 30, 2018 was Euro million. Recent developments On October 9, 2018, Gamenet Group S.p.A. announced that the wholly owned subsidiary Gamenet S.p.A. had completed the acquisition of 100% of the share capital of GoldBet S.r.l. (which, on the same day, was transformed into GoldBet S.p.A.) (the Acquisition ). GoldBet, an authorized gaming and betting company in Italy, operates a physical network of 990 betting shops rights and holds the concession to collect online games and bets, including via mobile platforms. For further information, please refer to the press releases published on July 24, September 10, 13 and 20, and October 9, Verification of independence requirements The Board of Directors of Gamenet Group S.p.A., meeting today, ascertained with positive results the possession of the independence requirements, provided by the combined provisions of articles 147-ter, paragraph 4 and 148, paragraph 3, of Legislative Decree 24 February 1998, n. 58 and from the art. 3.C. 1 of the Corporate Governance Code adopted by Borsa Italiana S.p.A., by the directors Daniela Saitta, Laura Ciambellotti and Claudia Ricchetti. Furthermore, the Board of Directors announces that on October 30, 2018 the Board of Statutory Auditors of Gamenet Group S.p.A. performed the annual audit of the maintenance of the independence requirements by its members with positive results. 7

8 Conference Call The results as of September 30, 2018 will be presented to the financial community during a conference call to be held today at 14:00 CET, which will subsequently be available, as a recording, on the Group's website: Details to connect to the call are available on the company's website in the Investor Relations / Reports and Results / Call Instructions section. You can take part to the conference call by calling one of the following numbers: ITALY: , UK: , USA: Before the conference call begins, a slides presentation will made available on the website in the section Investor Relations / Reports and Results / Presentations. The documentation used during the presentation will also be available on the storage mechanism This document may contain forward-looking statements relating to future events and operating, economic and financial results of Gamenet Group. These forecasts have by their nature a component of risk and uncertainty, as they depend on the occurrence of future events and developments. Actual results may differ significantly from those announced, due to a multiplicity of factors. The forward-looking statements are however only referable to the date of this document. No obligation to update or modify any of these statements is assumed, either as a result of new information or future events or for any other reason. This document does not constitute an offer, solicitation or invitation to purchase or subscribe financial instruments issued by the Gamenet Group. This document and its distribution must not form the basis or be taken into consideration in relation to any contract or commitment of any kind, nor should it be construed as a recommendation regarding the financial instruments issued by the Gamenet Group. The data relating to EBITDA are not to be considered as an alternative to revenues or any other data deriving from the financial statements prepared in accordance with EU-IFRS or ITAGAAP standards in determining the results. The manager responsible for preparing the Company s financial reports pursuant to Article 154-bis of the Consolidated Law on Finance (TUF), Mr. Mario Bruno, confirms that the information contained in this press release is consistent with the entries in the accounting books and records. *** Gamenet Group, a company listed on the STAR segment of the Italian Stock Exchange, is one of the leading operators in the Italian gaming industry in terms of revenues, which equaled Euro million for the nine months ended September 30, 2018 as a result of its wide and diversified offer of gaming products operated under a multi-license regime in four different business sectors: (i) amusement with prize machines (AWPs); (ii) video lottery terminals (VLTs); (iii) betting and online gambling (Betting & Online); and (iv) management of gaming halls and owned AWPs (Retail & Street Operations). With effect from October 9, 2018, 100% of the activities of GoldBet are included within Group operations. As of September 30, 2018, the Group s portfolio of granted concessions comprised 30,017 AWPs and 8,570 VLT licenses, along with a network of 742 betting licenses and 70 proprietary gaming halls distributed across Italy. *** For further information: Josef Mastragostino Investor Relations j.mastragostino@gamenetgroup.it Gennaro Schettino Press Office g.schettino@gamenetgroup.it Image Building Media Relations gamenet@imagebuilding.it 8

9 The consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the statement of changes in consolidated shareholders' equity, consolidated net financial debt, consolidated EBITDA and the Group's economic performance by business segment are shown below. Gamenet Group S.p.A. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the three months ended September 30, (in thousands of Euro) Revenues 144, ,342 Other income Total revenues and income 145, ,002 Cost of services (115,565) (120,583) Personnel expenses (8,530) (6,890) Other operating costs (1,757) (1,254) Depreciation, amortization and impairments (12,019) (10,168) Accruals and impairments (759) (4,445) Finance income Finance expenses (6,492) (4,287) Share of profit/(loss) of equity accounted investments - - Impairment of financial assets - - Profit before tax 563 (581) Income tax expense 200 1,948 Net profit (loss) for the period 763 1,367 Net profit (loss) for the period attributable to minority interests Net profit (loss) for the period attributable to the owners of the parent 114 1,105 9

10 Gamenet Group S.p.A. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the nine months ended September 30, (in thousands of Euro) Revenues 442, ,661 Other income 2,497 3,064 Total revenues and income 444, ,725 Cost of services (353,273) (376,852) Personnel expenses (23,701) (22,636) Other operating costs (8,854) (6,202) Depreciation, amortization and impairments (34,851) (29,262) Accruals and impairments (2,220) (4,974) Finance income Finance expenses (24,080) (12,285) Share of profit/(loss) of equity accounted investments - (15) Profit before tax (2,227) 1,661 Income tax expense (2,596) (1,544) Net profit (loss) for the period (4,823) 117 Net profit (loss) for the period attributable to minority interests 1,122 (35) Net profit (loss) for the period attributable to the owners of the parent (5,945) 152 Basic EPS (0.20) 0.01 Per i nove mesi chiusi al 30 settembre Utile/(Perdita) del periodo (4.823) 117 Utile / (perdita) attuariale per trattamento di fine rapporto Effetto fiscale (29) (100) Altri componenti di reddito che non saranno riversati a conto economico in esercizi successivi Utile /(Perdita) complessivo del periodo (4.729) 434 Perdita complessiva del periodo di pertinenza delle interessenze di minoranza (35) Utile /(Perdita) complessivo del periodo di pertinenza del gruppo (5.851)

11 Gamenet Group S.p.A. CONSOLIDATED STATEMENT OF FINANCIAL POSITION For the nine months ended September 30 (in thousands of Euro) Intangible assets Goodwill Property, plant and equipment Investment property Non-current financial assets Non-current trade receivables Deferred tax assets Other non-current assets Total non-current assets Inventories Current trade receivables Current financial assets Tax receivables Other current assets Cash and cash equivalents Total current assets Total assets Share capital Other reserves Retained earnings (39.010) (26.552) Total shareholders' equity attributable to the owners of the parent Equity attributable to minority interests Total shareholders' equity Employee benefit liabilities Non-current financial liabilities Non - current trade payables Provisions for risks and charges Other non-current liabilities Total non-current liabilities Current financial liabilities Current trade payables Other current liabilities Total current liabilities Total equity and liabilities

12 Gamenet Group S.p.A. CONSOLIDATED STATEMENT OF CASH FLOWS For the nine months ended September 30, (in thousands of Euro) Profit before tax (2,226) 1,661 Reconciliation of profit before tax with cash flow from operating activities: Depreciation, Amortization and Impairment of intangible assets and property, plant and equipment 34,851 29,262 Accruals and write-downs for impairment losses 2,220 4,974 Other accruals 1,213 1,100 Share of profit/loss of equity accounted investments - 15 Net financial expenses 23,975 12,123 "Prepaymet" amortization 4,104 4,027 Other adjustments for non-cash items 675 1,161 Cash flow from operating activities before changes in net working capital 64,812 54,323 Changees in net working capital Decrease/(increase) in inventories 10 (25) Decrease/(increase) in trade receivables 10,459 (1,084) Decrease/(increase) in trade payables (6,837) 2,302 Other changes in net working capital (15,948) (9,545) Cash flow from changes in net working capital (12,316) (8,352) Income taxes paid (3,005) (1,512) Accruals to employee benefits and provisions for risks and charges (545) (189) Cash flow from operating activities 48,948 44,270 Cash flow from investing activities Investments: (23,435) (20,132) - intangible assets (10,416) (6,432) - property, plant and equipment (13,019) (13,700) Deferred purchase consideration for acquisition of subsidiaries/business units (2,956) (7,773) Acquisition net of cash and cash equivalents (6,175) (5,164) Cash flow from investing activities (32,566) (33,069) Cash flow from financing activities Change in other financial liabilities Increase in credit facility - 5,000 Repayment of credit facility - (5,000) Increase in revolving credit facility 24,000 - Decrease in revolving credit facility (5,000) (5,088) Repayment bank overdraft (134) - Repayment of bond (206,000) - Proceeds from bond issuance 218,000 - Net financial expenses on raising of bond (3,685) - Changes in current and non current financial assets 306 (408) Net financial expenses (12,749) (14,968) Dividends paid (18,530) - Acquisition of treasury shares (3,290) - Other movements Cash flow from financing activities (6,967) (19,311) Net Cash flow 9,415 (8,110) Cash and cash equivalents at the beginning of the period 52,379 49,767 Cash and cash equivalents at the end of the period 61,794 41,657 12

13 Gamenet Group S.p.A. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in thousands of Euro) Share capital Legal Reserve Share Premium Reserve Other Reserves Total Other Reserves Retained Earnings/ (Losses) Total Sharehold ers' Equity Attributab le to Owners of the Parent Equity Attributab le to Minority Interests Total Sharehold ers' Equity As of December 31, ,000 6, ,520 (221,133) 62,387 (26,552) 65,835 2,906 68,741 IFRS 9 (5,749) (5,749) (5,749) As of January 1, ,000 6, ,520 (221,133) 62,387 (32,301) 60,086 2,906 62,992 Net profit/(loss) for the period (5,945) (5,945) 1,122 (4,823) Actuarial gains and losses on employee benefit liabilities Total comprehensive income (5,851) (5,851) 1,122 (4,729) Stock options Dividend distributions (18,000) (18,000) - (18,000) (530) (18,530) Acquisition of treasury shares (3,290) (3,290) (3,290) (3,290) Shareholders contribution Other movements (1,568) (1,568) 1,568 - As of September 30, ,000 6, ,520 (224,423) 41,097 (39,010) 32,087 5,181 37,268 13

14 Gamenet Group S.p.A. CONSOLIDATED FINANCIAL POSITION NET FINANCIAL DEBT For the nine months ended September 30, Cash at banks 61,794 52,379 Financial assets (*) 233,242 10, ,036 62,479 Senior Secured Notes - - Due to bondholders - capital (439,292) (195,935) Due to bondholders - interest (2,157) (4,600) (441,449) (200,535) Bank overdrafts (13,047) (1,182) Other financial liabilities (19,530) (14,014) Total debt (474,026) (215,731) Net financial debt (**) (178,990) (153,252) (*) Net Financial Debt as determined by the Company may be calculated on a different basis from similar measures used by other groups and may, therefore, not be comparable with such information presented by other groups. 14

15 Gamenet Group S.p.A. CONSOLIDATED EBITDA For the quarter ended September 30, ( in thousands) Net profit (loss) for the period 763 1,367 Income tax expense (200) (1,948) Finance income (30) (44) Finance expenses 6,492 4,287 Share of (profit)/loss of equity accounted investments - - Depreciation, amortization and impairment 12,019 10,168 Reclassification to profit or loss of multiannual prepayments 1,607 1,049 Accessory expenses for the purchase of participations 1,248 - Severance costs 23 - Non recurring income/expenses 119 6,180 IPO costs - 2,526 Pre 2013 non-cashed VLT tickets paid to ADM - 19 Extraordinary accruals to doubtfull receivable reserves - 3,500 Non recurring employes benefits VAT reinboursment for the years 2013 and Tax audit settlement: consultancy cost and witholding taxes other non recurring (income) / expense EBITDA 22,041 21,059 15

16 Gamenet Group S.p.A. CONSOLIDATED EBITDA For the nine months ended September 30, ( in thousands) Net profit (loss) for the period (4,823) 117 Income tax expense 2,596 1,544 Finance income (105) (162) Finance expenses 24,080 12,285 Share of (profit)/loss of equity accounted investments - 15 Depreciation, amortization and impairment 34,851 29,262 Reclassification to profit or loss of multiannual prepayments 4,637 3,949 Accessory expenses for the purchase of participations 2,609 1,724 Severance costs Non recurring income/expenses 1,673 8,155 IPO costs - 2,526 Pre 2013 non-cashed VLT tickets paid to ADM - 1,149 Extraordinary accruals to doubtfull receivable reserves - 3,500 Non recurring employes benefits VAT reinboursment for the years 2013 and 2014 (2,418) - - Tax audit settlement: consultancy cost and witholding taxes 3, other non recurring (income) / expense EBITDA 65,652 57,405 16

17 Gamenet Group S.p.A. GROUP ECONOMIC PERFORMANCE - EVOLUTION BY BUSINESS SEGMENT (in thousands, except for percentages) AWP VLT Betting and Online Retail and Street Operations Unallocated/Elimin ation Total 3Q '18 3Q '17 3Q '18 3Q '17 3Q '18 3Q '17 3Q '18 3Q '17 3Q '18 3Q '17 3Q '18 3Q '17 BET 630, , , , , ,640 92, ,235 1,718,949 1,707,363 of wich Retail and Street operation 48,554 36, ,314 82,114 Bet 630, , , ,113 1,455,953 1,445,488 Payout (440,789) (454,240) (724,717) (696,475) (1,165,506) (1,150,715) GGR 189, , ,232 96, , ,773 Tax (PREU, IU, ecc.) (120,227) (123,951) (50,235) (47,586) (170,462) (171,537) NGR 68,988 74,184 50,997 49, , ,236 Non-bet based revenues 253 (157) Revenues toward third parties 69,241 74,027 51,452 49,697 20,494 18,127 3,700 4,493 - (2) 144, ,342 Other income toward third parties (173) Intragoup Revenues and Other income (12) - (19) - 1 (0) 5,540 3,897 (5,509) (3,897) - - Total Revenues and Income 69,300 74,203 51,480 49,707 20,669 17,954 9,709 8,648 (5,503) (3,509) 145, ,004 Third parties distribution costs (60,108) (65,495) (31,132) (29,691) (10,075) (8,586) (243) (204) 5,601 3,882 (95,958) (100,094) Tax- concession fees - other (1,890) (1,957) (2,478) (2,379) (102) (112) (4,469) (4,448) Other distribution & platform costs - - (3,170) (2,920) (714) (585) (3,884) (3,505) Other direct costs (521) (843) (537) (641) (539) 442 (2,408) (2,413) (9) (280) (4,014) (3,734) Contribution margin 6,781 5,908 14,163 14,076 9,239 9,114 7,058 6, ,330 35,222 Contribution Margin/bet 1.1% 0.9% 1.7% 1.8% 5.4% 5.9% 7.7% 5.6% n.a. n.a. 2.2% 2.1% Contribution Margin/Total Revenues and Income 9.8% 8.0% 27.5% 28.3% 44.7% 50.8% 72.7% 69.7% -1.6% -2.6% 25.6% 24.0% Indirect costs (18,284) (21,392) Finance income (12,019) (10,168) Finance expenses Share of profit/(loss) of equity accounted investments (6,492) (4,287) Impairment of financial assets - - Share of profit/(loss) of equity accounted investments - - Profit before tax 564 (581) Income tax expense 200 1,948 Net profit (loss) for the period 764 1,367 GGR refers to gross gaming revenues, defined as total bet minus payout. NGR refers to net gaming revenues, defined as total bet minus winnings minus taxes. Contribution Margin is calculated as the sum of: i) revenues; ii) other income; iii) distribution and platform costs; iv) concession fees; v) other distribution and platform costs; and vi) other direct costs. 17

18 In the following table, bet generated by company owned gaming halls connected to the Gamenet concessionaire is reclassified from the AWP/VLT segment to the Retail and Street Operations segment; accordingly, AWP / VLT segments in this version represent the "pure" business of the Concessionaire. It should be noted that distribution insourcing transactions finalized by the Group are reported within the AWP segment (with the exception of those finalized by the Group subsidiaries carrying out Street Operations, which are reported in the segment of the same name). (in thousands) 3Q'18 Bet 3Q'17 AWP 581, ,777 VLT 702, ,999 Betting and Online 170, ,640 Retail and Street Operations 264, ,947 Total 1,718,949 1,707,363 18

19 Gamenet Group S.p.A. GROUP ECONOMIC PERFORMANCE - EVOLUTION BY BUSINESS SEGMENT (in thousands, except for percentages) AWP VLT Betting and Online Retail and Street Operations Unallocated/Elimin ation Total 9M'18 9M'17 9M'18 9M'17 9M'18 9M'17 9M'18 9M'17 9M'18 9M'17 9M'18 9M'17 BET 1,962,177 1,952,865 2,445,921 2,384, , , , ,150 5,265,386 5,217,087 of wich Retail and Street operation 139, , , ,612 Bet 1,962,177 1,952,865 2,445,921 2,384,664 4,408,098 4,337,529 Payout (1,380,127) (1,367,744) (2,146,799) (2,093,842) (3,526,926) (3,461,586) GGR 582, , , , , ,943 Tax (PREU, IU, ecc.) (373,340) (358,557) (147,434) (137,982) (520,773) (496,539) NGR 208, , , , , ,405 Non-bet based revenues ,422 2,557 2,927 2,739 Revenues toward third parties 209, , , ,397 66,459 53,966 12,383 14,613 (16) (64) 442, ,661 Other income toward third parties , ,525 2,497 3,064 Intragoup Revenues and Other income ,056 11,485 (16,114) (11,515) - - Total Revenues and Income 209, , , ,756 66,947 53,999 29,499 26,793 (15,955) (10,054) 444, ,725 Third parties distribution costs (181,017) (201,681) (92,705) (93,146) (31,552) (29,052) (748) (756) 15,988 11,399 (290,035) (313,236) Concession fees (5,887) (5,859) (7,338) (7,153) (2,859) (2,846) (16,083) (15,858) Platform costs - - (6,835) (8,987) (2,216) (1,777) (9,051) (10,764) Other direct costs (1,938) (2,532) (1,894) (2,267) (1,764) (1,205) (7,245) (6,988) (92) (595) (12,933) (13,587) Contribution margin (*) 20,598 17,159 45,944 44,202 28,556 19,120 21,506 19,050 (59) , ,280 Contribution Margin/bet 1.0% 0.9% 1.9% 1.9% 5.1% 3.6% 7.2% 5.6% n.a. n.a. 2.2% 1.9% Contribution Margin/Total Revenues and Income 9.8% 7.6% 29.7% 28.4% 42.7% 35.4% >100% 71.1% >100% -7.5% 26.2% 22.1% Indirect costs (59,945) (57,219) Finance income (34,851) (29,262) Finance expenses Share of profit/(loss) of equity accounted investments (24,080) (12,285) Impairment of financial assets - (15) Share of profit/(loss) of equity accounted investments - - Profit before tax (2,227) 1,661 Income tax expense (2,596) (1,544) Net profit (loss) for the period (4,823) 117 GGR refers to gross gaming revenues, defined as total bet minus payout. NGR refers to net gaming revenues, defined as total bet minus winnings minus taxes. Contribution margin is calculated as the sum of: i) revenues; ii) other income; iii) distribution and platform costs; iv) concession fees; v) other distribution and platform costs; and vi) other direct costs (*) Net of the one-off positive impact of the VAT reimbursement linked to VLT platform costs, the Contribution Margin amounted to Euro million. 19

20 In the following table, bet generated by company owned gaming halls connected to the Gamenet concessionaire is reclassified from the AWP/VLT segment to the Retail and Street Operations segment; accordingly, AWP / VLT segments in this version represent the "pure" business of the Concessionaire. It should be noted that distribution insourcing transactions finalized by the Group are reported within the AWP segment (with the exception of those finalized by the Group subsidiaries carrying out Street Operations, which are reported in the segment of the same name). (in thousand) Bet 9M M 2017 AWP 1,822,490 1,849,436 VLT 2,091,737 2,157,052 Betting and Online 556, ,408 Retail and Street Operations 794, ,192 Total 5,265,386 5,217,087 20