SAZKA Group Q3 2021 Operational and Financial Review and Update on Current Trading

14 Dec 21

SAZKA Group a.s. (“SAZKA Group” or the “Company”, and, together with its subsidiaries, joint ventures and associates, the “Group” or “we”) announces its financial results for the three months to 30 September 2021 and provides an update on recent developments and current trading.

  • Record quarterly Consolidated Gross gaming revenues of €876m, +18% vs Q2, +14% YOY and +88% vs Q3 2019
  • Consolidated Adjusted EBITDA margin of 53%
  • Online channel contributed 40% of Gross gaming revenues in Czech Republic, compared with 21% in Q3 2019

Q3 2021 financial highlights

  • Consolidated Gross gaming revenue (“GGR”) increased by 14% year-on-year to €876.2 million.
  • Consolidated Adjusted EBITDA increased by 40% year-on-year to €285.1 million.
  • Consolidated Adjusted Free cash flow was €275.5 million.

9M 2021 financial highlights

  • Consolidated GGR increased by 51% year-on-year to €2,142.6 million.
  • Consolidated Adjusted EBITDA increased by 71% year-on-year to €682.3 million.
  • Consolidated Adjusted Free cash flow was €644.8 million.

Q3 2021 pro-rata financial highlights

  • Pro-rata GGR increased by 18% year-on-year to €650.0 million.
  • Pro-rata Adjusted EBITDA increased by 37% year-on-year to €163.9 million.
  • Pro-rata Adjusted Free cash flow was €157.1 million.

9M 2021 pro-rata financial highlights

  • Pro-rata GGR increased by 26% year-on-year to €1,781.1 million.
  • Pro-rata Adjusted EBITDA increased by 56% year-on-year to €433.5 million.
  • Pro-rata Adjusted Free cash flow was €410.4 million.

Pro-rata LTM Q3 2021 highlights

  • Pro-rata net debt was €1,305.2 million and LTM Adjusted EBITDA was €524.4 million; Pro-rata net debt / LTM Adjusted EBITDA was 2.5x.
  • On a pre-IFRS 16 basis, Pro-rata net debt / LTM Adjusted EBITDA was 2.6x and Pro-rata priority net debt / Adjusted EBITDA was -0.3x at 30 September 2021.

Key strategic initiatives

  • After the end of the period, in October 2021, the Group submitted its proposal to operate the fourth UK National Lottery concession.

Trading update and outlook

Q3 2021 was the first quarter since Q4 2019 with no material COVID impact on any of our businesses.

After the end of the quarter, governments in Europe have introduced some new restrictions in response to increasing number of COVID-19 cases and the Omicron variant. In addition, certain jurisdictions, for example Austria and Greece, have introduced mandatory vaccination.

Compared to previous periods, these restrictions have generally been more limited in scope and period, with governments aiming to avoid wide-ranging strict lockdowns.

  • The Group's casinos in Austria were closed for 3 weeks from late November as a result of nationwide restrictions. As of the date of this press release, 11 out of 12 casinos have reopened. After reopening, customers are required to show evidence of vaccination or previous infection.
  • In Greece, the Group's land based points of sale remain open and continue to offer a full range of products. Customers are required to show evidence of vaccination or previous infection to gain access to OPAP's agents' stores and VLT halls, which has had some limited impact on footfall and revenues. Based on previous experience, management expect traffic to partially recover as customers adjust and to recover quickly after the removal of restrictions. In other geographies and the online channel, trading remains solid and in line with prior expectations:
  • As in previous quarters, the restrictions have not had any material impact on availability of the Group’s product through physical point of sale network in Austria, the Czech Republic and Italy
  • Sales through the online channel have continued to perform well, supported by the significant growth in the Group’s online userbase and improvements to the online product offering and user interfaces in the last several quarters

Robert Chvatal, SAZKA Group CEO, commented:

“I am delighted to report that SAZKA Group delivered yet another strong performance in Q3. Our GGR increased by 14% year on year and our Adjusted EBITDA increased by 40% with a margin of 53%, an 8 percent point improvement year on year.

As a result, both our GGR and our EBITDA reached record levels in the quarter, significantly above pre-COVID levels.

The third quarter was the first quarter in 2021 when all our businesses operated without material COVID-19 related restrictions. Our physical retail businesses in Greece and Cyprus and casinos in Austria and internationally, which were adversely impacted by restrictions in H1, demonstrated a very rapid recovery, in line with our expectations.

I am especially pleased about a significant improvement in profitability levels in our Austrian business following the successful execution of our restructuring program, which is expected to deliver annual savings of €45 million.

While governments have introduced some new restrictions after the end of the period, these are much more limited than in previous periods and have in the case of Austria already been relaxed again. We remain optimistic about the outlook for Q4, supported by strong trading in most of our businesses and in the online channel.

We have also continued our solid progress on our strategic objectives, including rapid expansion of our online business, digitalisation of physical retail, and submission of our proposal to operate the fourth UK National Lottery concession.

After the end of the period, our parent company SAZKA Entertainment announced that it is rebranding as Allwyn, to create a unified and global brand that will support our continued international expansion. Allwyn will retain the iconic local brands that are cherished by both its consumers and employees and have been a key factor driving the strong organic growth of the Company.

Overall, I am very pleased with SAZKA Group’s continuing strong performance in Q3 2021 and I look forward with confidence and excitement to a great fourth quarter and 2022 as our strong trading momentum persists and we continue to make progress on our strategic objectives.”