Allwyn International Q1 2024 Trading Update and Launch of Offering of Term Loan B in the Principal Amount of $450 Million

The proceeds from the Offering will be used to redeem in full the €400 million in aggregate principal amount outstanding under the Floating Rate Notes due 2028 issued by Allwyn Entertainment Financing (UK) plc, to pay costs, fees and expenses incurred in connection with the Offering, and for general corporate purposes. A substantial portion of the proceeds is expected to be swapped to floating rate EUR.

The Company is providing this trading update ahead of the announcement of its preliminary unaudited financial results for the three months ended 31 March 2024, which will take place on 7 June 2024. No update is provided for the Greece and Cyprus segment (OPAP).

Although the financial results for the three months ended 31 March 2024 are not yet available, this trading update reflects the Company’s current expectations regarding a range of certain financial metrics for the three months ended 31 March 2024, compared with the same period ended 31 March 2023. Please see “Cautionary statement” below.

Trading update: Solid start to 2024

Allwyn’s Revenue from gaming activities (GGR) increased significantly year-on-year in Q1 2024, with solid GGR momentum across most markets, reflecting our continued focus on driving organic growth, in addition to a full quarter of contribution from the United Kingdom segment.

In Austria, GGR continued to progress year-on-year in the quarter, supported by a strong performance in iGaming. In the Czech Republic, GGR growth remained dynamic, up a double-digit percentage year on year on a constant FX basis, with growth across all major products; FX represented a headwind of 6pp, resulting in mid-single-digit percentage growth on a reported basis. In the United Kingdom, GGR was flat year-on-year on a constant FX and comparable presentation basis [1], with Numerical Lotteries outperforming.

Adjusted EBITDA growth was a mid-single-digit percentage year-on-year in Q1 2024, with low single digit percentage Adjusted EBITDA growth and a broadly stable Adjusted EBITDA margin excluding the United Kingdom segment and Allwyn LS Group. In the prior year, the previous operator of the UK National Lottery, Camelot UK, was consolidated from 5 February 2023 and Allwyn LS Group was consolidated from 3 March 2023.

The development in Adjusted EBITDA was supported by strong growth in the contribution from equity method investees, which was partially offset by higher costs in some segments, in particular reflecting marketing campaigns in relation to new product launches and sports events, and somewhat higher personnel cost incurrence in the quarter. In the United Kingdom, the result reflected strong performance in January, which was the last month of the previous UK National Lottery licence, followed by substantially lower profitability in February and March, with the start of the next licence on 1 February 2024 and the introduction of a new incentive and profitability mechanism.

CAPEX was €45.0 million in Q1 2024, €20.5 million higher year-on-year, with the increase relating to higher investment in the United Kingdom, in support of Allwyn’s plans to transform the UK National Lottery, with other segments’ CAPEX at a similar level to the prior year.

Net debt (including leases) was €3,050-3,150 million as of 31 March 2024, with cash outflows in Q1 2024 including a €250.0 million loan to Allwyn AG for further distribution to its shareholder, working capital effects, and dividends to minorities.

Selected preliminary unaudited financial data

Robert Chvatal, Allwyn CEO, commented:

“2024 has started well, with trading broadly in line with our expectations at the start of the year, reflecting good operational and financial performance and our ongoing focus on the delivery of our growth strategies. Solid momentum in GGR growth continued in the first quarter, during which Allwyn successfully started the next 10-year licence period of the UK National Lottery, while we have delivered further progress in Adjusted EBITDA. Allwyn remains well positioned for 2024 and for the next chapters of its growth story.”

Financing and key strategic developments in Q1 2024

Agreement to acquire a majority stake in Instant Win Gaming (IWG)

In February 2024, Allwyn announced an agreement to acquire a 70% ownership interest in IWG, to enhance the Group’s content offering. IWG is a leading supplier of online instant games to lotteries and works with more than 25 national and state lotteries around the globe, having a strong North American presence.

IWG reported EBITDA of £18.2m for the financial year ending 30 April 2023.

The transaction is anticipated to close in the second half of 2024, subject to the satisfaction of customary closing conditions.

Allwyn financing arrangements

In March 2024, the Company increased the size of its syndicated bank loan with accordion facilities of €500.0 million, due in 2030. Concurrent with signing the accordion facilities, the Company cancelled £188.8 million of undrawn commitments under a £380.0 million (€444.4 million equivalent) multi purpose facility available under the syndicated bank loan. In March 2024, the Company drew €240.0 million under the accordion facilities.

Distribution to Allwyn AG

In February 2024, the Company provided a loan of €250.0 million to its parent company Allwyn AG for further distribution to its shareholder.

Greece and Cyprus: OPAP share buyback programme

In October, OPAP initiated purchases under a share buyback programme of up to €150.0 million. As of 31 March 2024, OPAP had purchased shares amounting to 1.08% of total shares outstanding, for total consideration of €62.9 million. As a result, Allwyn’s interest in OPAP increased to 50.98% as of 31 March 2024.

Key developments after the end of Q1 2024

Distribution to Allwyn AG

In April 2024, the Company provided a loan of €50.0 million to its parent company Allwyn AG for further distribution to its shareholder.

Italy: Memorandum of understanding to maintain partnership for upcoming licence tender

Allwyn and IGT Lottery S.p.A. have entered into a memorandum of understanding regarding Lottoitalia S.r.l., the joint venture responsible for managing the Italian Lotto licence, for both shareholders to maintain their partnership for the upcoming Lotto licence tender. It is expected that Allwyn will maintain its 32.5% equity ownership and IGT Lottery, Arianna 2001, and Novomatic Italia will maintain their 61.5%, 4%, and 2% share, respectively, with IGT serving as the principal operating partner. The Italian Lotto, and its associated games 10eLotto and MillionDAY, are deeply rooted in tradition and are among the most popular and successful games in Italy, with annual ticket sales of about €8 billion.

[1] Q1 2023 financial data for the United Kingdom segment disclosed in prior releases, which includes the part of the year prior to the start of consolidation of Camelot UK, is not comparable, as FY 2023 data on this basis includes 53 weeks in the United Kingdom segment.