Revenue decline and court settlement hit SNAI’s bottom line in 2013

Italian gaming operator SNAI has reported a 7 per cent drop in total revenue to €478.8m for 2013, with net loss for the year more than doubling to €94.5m following its video lottery terminal (VLT) court settlement with Italian authorities.

SNAI benefited from strong growth from the company’s sports betting and VLT operations, although this was unable to offset a decline from its AWP business in Italy which continues to be impacted by a lower number of gaming machines, lower wagers, as well as the rise in tax to 12.7 per cent.

Revenue from sports betting rose year-on-year following an improvement in payout rates to 78.9 per cent, down from 82.7 per cent in the prior year period. The company also benefited from its growing online gaming business, although it provided no figures for its digital channel. SNAI expanded its offering with the launch of a new virtual sports offering in December.

SNAI reduced costs for services and use of third party assets by 17 per cent to €324.5m, while personnel expenses rose 9 per cent to €36.9m. Other operating costs soared by 204 per cent to €102.6m as a result of the company’s €65.7m court settlement over alleged violations of the terms of their concession agreements dating back to the opening of the country’s VLT market in 2007.

As a result, EBITDA (earnings before interest, tax, depreciation and amortization) fell by 74 per cent to €15.1m. Including financial costs of €60.0m, up 41 per cent year-on-year, net loss for the year more than doubled to €94.5m, from €42.6m a year ago.

2013 Results

SNAI’s board of directors also approved a new plan for 2014/16 which focuses on the company’s development and growth strategies.

This includes a focus on margins through a greater control of sports betting payouts, the full exploitation of virtual sports, growth in online gaming, as well as a new focus on horse racing activities.

“The implementation of the guidelines will contribute toward keeping and maintaining economic and financial stability over time, and ensuring the availability of resources necessary for business development,” said the company in a statement.

As at December 31st the company held cash and cash equivalents of €45.5m compared to €11.0m a year ago.

Shares in SNAI S.p.A (Co. Profile) (MIL:SNA) are currently trading at €1.81 per share in Milan this morning.