Allwyn AG (“Allwyn” or the “Company”, and, together with its subsidiaries, joint ventures and associates, the “Group” or “we”) announces its preliminary unaudited financial results for the three and six months ended 30 June 2022 and provides an update on recent developments and current trading.
Preliminary unaudited financial results for the Company’s subsidiary Allwyn International a.s. (“Allwyn International”, formerly SAZKA Group a.s.), the issuer or parent guarantor of the Group’s bonds, can be found at the end of this press release.
Selected consolidated financial data (Q2/Q2)
|€ millions||Q2 2022||Q2 2021||Δ|
|Gross gaming revenue (“GGR”)||901.7||735.9||23%|
|Net gaming revenue (“NGR”)||550.9||444.9||24%|
|Adjusted EBITDA margin||50%||53%||-3 p.p.|
Selected consolidated financial data (H1/H1)
|€ millions||H1 2022||H1 2021||Δ|
|Gross gaming revenue (“GGR”)||1,771.0||1,257.9||41%|
|Net gaming revenue (“NGR”)||1,085.3||723.6||50%|
|Adjusted EBITDA margin||50%||52%||-2 p.p.|
Selected Pro rata *1 financial data (Q2/Q2)
|€ millions||Q2 2022||Q2 2021||Δ|
|Gross gaming revenue (“GGR”)||707.8||600.2||18%|
|Net gaming revenue (“NGR”)||361.6||279.7||29%|
|Adjusted EBITDA margin||49%||52%||-4 p.p.|
Selected Pro rata financial data (H1/H1)
|€ millions||H1 2022||H1 2021||Δ|
|Gross gaming revenue (“GGR”)||1,409.2||1,120.8||26%|
|Net gaming revenue (“NGR”)||711.5||493.6||44%|
|Adjusted EBITDA margin||49%||50%||-1 p.p.|
Taking into account open market purchases of OPAP shares after the end of Q2 and OPAP’s treasury shares - implying an economic interest of 50.05% in OPAP as of the date of this press release - Pro rata Adjusted EBITDA would be €177.6 million for Q2, €351.1 million for H1 and €709.0 million on an LTM basis.
Pro rata metrics do not reflect any pro-forma contribution from the increase of the Group’s interest in Kaizen, which is expected to close during Q4 2022.
*1 Pro rata metrics are calculated as the sum of individual segmental metrics as if the segment was fully consolidated multiplied by the Group’s interest in each segment at the end of the reported period. In the case of our Greece and Cyprus segment, this is not adjusted for the effect of treasury shares held by OPAP, ie the share count is not adjusted to exclude such treasury shares.
Trading update and outlook
Since the end of Q2 our business has continued to perform and develop well despite a background of weaker general consumer sentiment.
In aggregate, our trading since the start of the year and since the end of Q2 has been broadly in line with our expectations at the beginning of the year, with somewhat stronger performance in some products markets broadly offsetting somewhat weaker performance in others.
Assuming a continuation of current trends and no significant change in the environment further described below, and the closing of our acquisition of the interest in Kaizen before the end of the year as expected, the Company expects 2022 Pro rata Adjusted EBITDA of €740-760 million.
All our businesses are currently operating without material impact from COVID-19 related restrictions for the first time since the beginning of the pandemic.
War in Ukraine
We have not been materially impacted by the war in Ukraine. We do not have any operations in Ukraine, Russia or Belarus, and our suppliers have not experienced any material disruptions.
Current inflation and rising energy prices have a limited impact on our costs, with our largest cost categories directly linked to revenue (e.g. gaming taxes, agents’ commissions) and energy accounting for a small proportion of our costs.
The above mentioned macroeconomic and political developments continue to have some impact on consumer sentiment in general in the countries where we operate.
However, the impact on demand for our products has been limited, reflecting their low price point and low average spend per customer, as well as our large number of regular players.
Current trends are in line with the resilience of our revenues during previous periods of weaker general consumer sentiment - for example the early period of the COVID-19 epidemic, the Greek crisis and the global financial crisis - when demand for our products remained resilient, especially in comparison with other consumer sectors.
Similar to other periods when general consumer sentiment has been subject to shocks, our revenues were impacted to a limited extent in the immediate aftermath of the Russian invasion of Ukraine and the rapid increase in energy prices. However, once the period of the initial shock had passed and consumers’ behaviour had normalised, sales of most of our products in most of our geographies demonstrated a strong recovery.
Historically, our revenues have demonstrated an element of seasonality, with the second half of the year and the fourth quarter in particular being the strongest periods. We expect a similar pattern in the second half of this year.
Robert Chvatal, Allwyn CEO, commented:
“I am pleased to report that in the second quarter of 2022, Allwyn delivered yet another set of strong financial results and continued to make good progress on key strategic initiatives as part of our organic and inorganic growth strategies.
We reached an agreement with OPAP to acquire OPAP’s 36.75% interest in Kaizen. Kaizen is a fast- growing online sports betting and iGaming operator using proprietary gaming technology, founded by the same team that founded Stoiximan. The company operates under the Betano brand and is present in seven markets, with a particularly strong presence in Romania and Portugal and a rapidly growing business in Brazil. I have great admiration for what the team has achieved at Stoiximan and am excited about the future of Betano. Closing of the transaction is pending customary regulatory approvals and is expected in Q4.
Following the March announcement that we have been selected as the Preferred Applicant for the fourth UK National Lottery licence by the UK Gambling Commission, we continue with our preparations to take over as operator of the UK National Lottery once the Gambling Commission confirms the award of the fourth license. We look forward to the Court of Appeal hearing in September of the current operator’s appeal of the High Court’s decision to allow the license award to proceed and the formal transition period to begin.
In addition to continued delivery of our inorganic growth strategy, I am very happy to report once again that our organic growth initiatives continue to bear fruit, as reflected in our financial performance in an environment that was largely unimpacted by COVID-19. Our consolidated GGR for Q2 2022 increased by 23% year-on-year to €901.7 million and we saw strong top-line growth in most geographies.
I am particularly pleased that our focus on online sales continues to pay off, with the online channel contributing a record 44% of GGR in the Czech Republic. We see the shift to online as an unprecedented opportunity to grow revenues through upselling and cross selling, at the same time as improving our profitability and as an enabler of safer gaming.
Finally, the strong performance of the business during an unprecedented shock to consumer sentiment has once again demonstrated the resilience of demand for our products and the resilience of our profitability and cashflow generation.
Once again, we have continued to see the value of our geographical, channel and product diversification, with strong performance compared to our expectations at the start of the year in some markets compensating for somewhat weaker performance in others.
Our operations have not been materially impacted by the war in Ukraine. However, we are deeply concerned and saddened by the situation in Ukraine. I am proud that the Group has provided donations for humanitarian aid to Ukraine and continues to support Ukrainian refugees.
Overall, I am very pleased with Allwyn’s financial performance and strategic developments in the quarter and I look forward with confidence and excitement to the next quarters and a very bright future.”