Intralot: Business will not return to normal until November

24 April 2020

Intralot believes the impact of novel coronavirus (Covid-19) on the business is yet to reach its peak, and does not expect to return to normal levels of activity until November this year.

The lottery and gaming solutions provider admitted the peak impact of the pandemic is yet to be felt, something it expects will hit in April, running into May.

Having analysed data for March and early April, as well as lockdown forecasts for territories in which it operates, Intralot said that the pandemic will impact its earnings before interest, tax, depreciation and amortisation (EBITDA) by between €25.0m (£21.8m/$26.9m) and €30.0m.

National lockdown measures, store closures and the lack of sports betting content – due to the cancelation and postponement of almost all major sporting events – have affected operations, it said. In particular this impact has been felt in Malta, Australia and Morocco, with a partial impact in the US, the Netherlands and Chile.

However, Intralot also said that as it expects some activity to rebound from June, this would mean that it would return to previously budgeted figures by November or December.

“The Covid-19 pandemic has affected economic and business activity around the world,” Intralot explained. “The extent of its impact will depend on its duration, government policy in key jurisdictions regarding restrictions implemented and the current and subsequent economic disruption that the pandemic will cause.

“In the US operation, March and early April data show a high degree of resilience given that in many states a significant portion of the retail network remains open. However, the lack of sports betting content has led to delays in the anticipated contribution to the US operation EBITDA from the nascent sports betting revenue stream.”

To help mitigate the impact of the pandemic, Intralot has implemented out a number of mitigation measures. It has shifted 80% of its personnel to remote working, in line with authorities’ instructions to avoid social contact.

Intralot warned that this may lead to some delays in the roll-out of new product, and in the production of new hardware equipment in Asia, as well as other disruptions in the supply chain from third parties.

Meanwhile, the provider said its subsidiaries have applied for governmental support programs related to personnel furloughs in Australia and Malta, while further mitigation measures have been taken in all operations on a risk-based approach.

Intralot said this resulted in estimated deferral in capital expenditure of around €13.0m and reductions in operating expenses of €15.0m in 2020.

In addition, Intralot retained Evercore Partners as financial advisors, and Allen & Overy as legal advisors, to review and implement strategic alternatives for the business.

This process will include assessing all available financial and strategic options that may be available to optimise capital structure, with a view to helping the provider capture growth opportunities in key markets and boost stakeholder value.

“The company is constantly reviewing the situation in order to protect the safety of its employees and the integrity of its operation and will offer updates when conditions change materially,” Intralot said.