Issue link: https://maltatoday.uberflip.com/i/1489404
2 NEWS 5.1.2023 PAUL COCKS IZI Group plc, owners of the Drago- nara Casino, the IZIBet gaming par- lours and - as of 5 July 2022 - opera- tors of the lotto, Super 5 and national lottery, is predicting revenue will top €77 million in 2023, up from €32 mil- lion in 2022. The group attributes the increase mostly to the commencement of the operation of the National Lottery of Malta. EBITDA in 2023 is projected to be €17.8 million, which is more than dou- ble the EBITDA of FY2022. The group is also forecasting a higher deprecia- tion and amortisation for FY2023 due to the recent heavy investment re- quired for the national lottery. The group is expected to register an operating profit of €2.2 million and is projecting a net loss for FY2023 of €0.3 million. In 2022, the group converted a loss of €1 million in FY2021 to a profit of €0.6 million. The group's performance pivots on its four core strategic key areas: the ability of the Group to accelerate the growth and implementation plan of the National Lottery; the sustained growth at the Dragonara Casino; po- sitioning IZIBET as the sports bet- ting brand of the National Lottery; and further deployment of electronic gaming machines (EGMs) across the retail network. On July 5, 2022, the group success- fully launched the National Lottery operation having taken over the oper- ations from Maltco Lotteries who had operated the lottery for the previous 18 years. The impact of the National Lottery on the group's financial performance has been considerable and has deliv- ered unprecedented growth. But despite the successful transition, the national lottery operation poses several challenges, principally those related to the implementation of the distribution plan. Ove r the past six months of opera- tion, National Lottery p.l.c. has en- countered longer than expected lead times in the implementation of the distribution plan, translating into de- lays in bringing on stream the project- ed number of primary distribution network outlets; activating the Na- tional Lottery Secondary Distribution Network; the projected launch date of the National Lottery e-commerce site; the projected launch date of ScratchIZ (the brand name of the Scratch Card product); and the expected deploy- ment of EGMs across the distribution network. Nevertheless, it is anticipated that this shortfall will be entirely recov- ered within the subsequent financial years due to the accelerated imple- mentation that should take place in the second half of 2023. The weaker than expected perfor- mance brought about by the afore- mentioned delays in the National Lottery has been mitigated by the su- perior performance of the Dragonara Casino and Sports Betting verticals respectively. The accelerated overall recovery of the land-based casino in 2022 and the ability of Dragonara Casino to retain strong market share in the sector, have allowed the casino to attain con- siderable growth. With regards to sports betting, the deployment of new technology in National Lottery shops has impacted positively the revenues generated by these shops, outperforming the initial projections. As more Self-Service Betting Termi- nals (SSBTs) are deployed in the mar- ket the expectations are that sports betting revenues will continue to grow and outperform projections. Assets IZI Group's major assets include: • Goodwill – primarily consist- ing of goodwill recognised upon business combination following the corporate restructuring un- dertaken in December 2021; • Intangible assets - comprising of: (1) Government concessions to manage and operate the Na- tional Lottery of Malta and the Dragonara casino; (2) the fair value of trademarks and do- mains; and (3) software, • Property, plant, and equipment – comprising improvements to leased properties, gaming equipment, office and computer equipment, furniture, electrical and sanitary fittings, works in progress and motor vehicles, • Right of use assets - comprising the leases related to the rented properties as well as the sub-em- phyteusis held over the property comprising the Dragonara Casi- no; and • Cash and cash equivalents – reflecting the Group's cash re- serves as of 30 June 2022 after the successful finalisation of the public bond issue. IZI Group forecasts 2023 revenue to top €77million, up from €32 million Financial Analysis Summary 2022 Page | 7 2. GROUP STRUCTURE The below organisation chart shows the main companies that form part of the Group and that are engaged in providing gaming services. Pursuant to a consolidation exercise, from an operational perspective, the Group has merged Gaming Operations Limited and National Lottery p.l.c., such that both operations are now being managed by National Lottery p.l.c. as duly licenced by the MGA. The operations within Gaming Operations Limited have ceased and the duties and obligations of Gaming Operations Limited have been duly transferred in full by National Lottery p.l.c, and GOL will eventually be merged within National Lotter p.l.c. The main companies that form part of IZI Group and that are engaged in providing gaming services The group is expected to register an operating profit of €2.2 million and is projecting a net loss for FY2023 of €0.3 million