Packer16 Posted June 22, 2015 Author Share Posted June 22, 2015 The net debt in your source only includes debt and cash but not ST/LT securities or JVs. These can be quite valuable. For example the Greek JV is going to return 12m this year alone. The total value for these according to the Q12015 balance sheet is 90.7m (42.5m (JVs) + 36.2m (ST/LT securities) + 12m (Greek JV dividend)). As to the minorities the distribution has ranged from 16m to 42m per year (avg 25m) since 2011. In the year-end conference call management discussed a 20m figure as a typical year. This equates to 10% to 13% of EBITDA if the expected 2015 EBITDA and the 20 to 25m range of distributions are used. If a 10% number is subtracted from EBITDA and the MI not included in EV the resulting values are about the same. Packer Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 22, 2015 Share Posted June 22, 2015 Hey Packer, you are right on the Securities and the JV. I agree that they should be taken into account when valuing the company, although it would be nice to have more transparency on what those securities really are (possibly their own bonds they bought back in the past 6 months?). In terms of the minorities, although I agree with the basic numbers I am a little bit more wary in assigning them value at/around Eur 100 mln as you are assuming that the dividends are equal to the attributable EBITDA which I don’t completely agree with. I have tried calculating the exact amount of minorities EBITDA and it looks more like 25/30% of the total figure so if you have the time try to give a look at the annual report in 2014 to see if that looks correct to you (I surely hope that your figure is the right one). Cheers Link to comment Share on other sites More sharing options...
Packer16 Posted June 22, 2015 Author Share Posted June 22, 2015 If you can provide the calc for 25/30% then I can confirm. The 2014 dividends of Euro45m is abnormally high as the dividends have been more in the Euro20 to 25m range historically. Packer Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 22, 2015 Share Posted June 22, 2015 Packer, you can find all the info at page 130-132 of the 2014 annual report where the company disclosed the EBITDA of the companies where they hold minority interests and their stake in percentage terms. Also pls find attached the file with my calculations. cheersMinorities_Inlot.xlsx Link to comment Share on other sites More sharing options...
Packer16 Posted June 22, 2015 Author Share Posted June 22, 2015 Without knowing the specific revenues and profitability of each location it can be misleading to use averages. I think using the total NI to MI is the best proxy for MI EBITDA as the financials show little difference between EBITDA and NI in the financials footnote. These are pretty close to the dividends quoted above for 2013 and 2014. You can be really conservative and use 45m for MI EBITDA and still end up with considerable upside. Packer Link to comment Share on other sites More sharing options...
pdoak Posted June 24, 2015 Share Posted June 24, 2015 Whenever I look at this company, it looks cheap from a Group perspective but then it always appears to me that the minorities get a large share of that value. Below is a rough analysis of the 2014 earnings with an estimated split of the subsidaries. Interestingly, the EBITDA of the subsidaries appears to be very close to the PBT but the annual report does not provide any further detail - if I am missing something, then please let me know. Assuming the EBITDA split is the same proportion as Total Income, the non-controlling EBITDA is about €59m. Applying an EBITDA multiple of 6x, the minority value approx. €360m which is inline with ContrarianNick. What confuses me is the profitability (or lack of) in the Group ex Subs which shows a loss before tax of €67m. In addition, this loss does not result in a tax credit but a charge due to some €25m of non-deductible expenses (€16m in 2013) and subsidiaries' losses for which deferred tax has not been recognised (another €23m). These figures seem quite large when the group is only making an operating profit of €37m. Are these charges one-off or is it something that needs to accounted for in the valuation of the business. The Group ex Subs operating loss of €67m is after Depreciation and Amortisation charge of €87m and Interest of €72m. ContrarianNick has already pointed out that there is scope to reduce the interest charge. Is the Depreciation and Amoritisation a true reflection of the ongoing costs of the business - €27m is Licences and €34m is machinery and equipment. Can anyone shed any light on what ongoing maintenance costs should be? I want to like this investment so, hopefully, someone can point out what I am missing? Link to comment Share on other sites More sharing options...
Packer16 Posted June 24, 2015 Author Share Posted June 24, 2015 I think the issue here is there are a lot of estimates without having the specific financials of the minorities (i.e. there are no consolidating financials). The minorities peaked in 2014 and management has stated the numbers will be closer to 20 to 25m going forward, similar to history before 2014. In addition, the proportionate estimates can be misleading because we don't know the relative sizes of the minorities and how they play out in the financials. What we do know is the amount of earnings applicable to the minorities going forward of 20 to 25 million and taxes at lets say 7 to 8 million so EBITDA of 27 to 33 million. Packer Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 24, 2015 Share Posted June 24, 2015 Hey Pdoak, I can tell you that the maintenance capex for the business is around Eur 60mln (this of course does not include the renewal of licences when they come due, i.e. Italy in 2016/17 will cost an additional Eur 20mln in capex). As for your other points, it certainly is difficult to understand the true earning power of the company ex-minorities, however, I urge you to also look at the cash generation which, at least in 2014, does not paint such a grim picture. Having said that, even if you value the minorities at 6x EV/EBITDA, the upsides from here are still pretty high so, while this theme is to be kept under control, it should not ruin the buy case excessively. cheers Link to comment Share on other sites More sharing options...
pdoak Posted June 24, 2015 Share Posted June 24, 2015 Packer, ContrarianNick - thanks for the response - its very helpful. Packer, Do you know what is changing going forward so that the minorities are going to reduce their share from a Total Income of €45.9m to an EBITDA of €20-25m. ContrarianNick, If maintenance capex is around €60m and amortisation of licences is about €27m then an ongoing maintenance capex including amortisation of licences of just under €90m would seem reasonable. Do you agree? I am trying to get to an "owner earnings" figure. PDoak Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 25, 2015 Share Posted June 25, 2015 Hey Pdoak, unfortunately is not that easy to calculate the MCX with licences as not all of the foreign operations actually require the payment of one and the terms can vary extensively. If you really want to be conservative I guess you could add 10/15 mln to the 60 mln MCX but I would say that is probably too much (and I am a very conservative guy). cheers Link to comment Share on other sites More sharing options...
Phaceliacapital Posted June 30, 2015 Share Posted June 30, 2015 Woudl you guys sell in case of a Grexit? Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 30, 2015 Share Posted June 30, 2015 No, Grexit per se would only be a strong incentive for management to list elsewhere in Europe and possibly create a rerating of the stock. Considering how little Greece weights on the group EBITDA there really is no answer as to why management has not done so earlier. In case of a Grexit the stock would probably collapse thus creating an even better buying opportunity for investor as management would be "forced" to do the most rational thing and change the listing of the company. Link to comment Share on other sites More sharing options...
redhots Posted July 14, 2015 Share Posted July 14, 2015 Intralot bonds post record gains as Greece concedes to demands http://www.ekathimerini.com/199422/article/ekathimerini/business/intralot-bonds-post-record-gains-as-greece-concedes-to-demands Link to comment Share on other sites More sharing options...
investor-man Posted July 14, 2015 Share Posted July 14, 2015 Anyone seen when the exchange is expected to open up again? Link to comment Share on other sites More sharing options...
tombgrt Posted August 14, 2015 Share Posted August 14, 2015 http://www.helex.gr/documents/10180/43440/748_8560_2015_English_2.pdf/0efb2544-0ecc-4b46-9b61-f5ba3e597be9 Hardly impressive at first sight. Link to comment Share on other sites More sharing options...
investor-man Posted September 10, 2015 Share Posted September 10, 2015 Intralot Group CEO Antonios Kerastaris discusses the company being listed in Greece and politics in the country prior to its snap elections. He speaks with Jonathan Ferro on Bloomberg Television’s “On The Move.” http://finance.yahoo.com/video/intralot-ceo-says-no-one-090437339.html Link to comment Share on other sites More sharing options...
ContrarianNick Posted October 1, 2015 Share Posted October 1, 2015 Just wanted to do a little recap: Q2 results were largely unimpressive mostly due to the lack of cash generation (WC and minorities dividends being the main culprits). Management confirmed guidance for the year on EBITDA (Eur 190 mln) and guided for better cash generation in H2 as Italian gaming tax on AWP is reabsorbed (we’ll see how that goes as other Italian companies are not that bullish on a resolution before year end). Company confirmed bond buybacks and alluded to an early call on the 2018 bond (which so far has been the best way to trade on the company). CEO’s comments on greek listing issues are a definite positive and it could lead to a foreign listing in the upcoming months so, to some extent this has become a value story with a catalyst. We’ll see… Link to comment Share on other sites More sharing options...
plato1976 Posted October 4, 2015 Share Posted October 4, 2015 wonder if anyone would like to acquire/merge with this one... Just wanted to do a little recap: Q2 results were largely unimpressive mostly due to the lack of cash generation (WC and minorities dividends being the main culprits). Management confirmed guidance for the year on EBITDA (Eur 190 mln) and guided for better cash generation in H2 as Italian gaming tax on AWP is reabsorbed (we’ll see how that goes as other Italian companies are not that bullish on a resolution before year end). Company confirmed bond buybacks and alluded to an early call on the 2018 bond (which so far has been the best way to trade on the company). CEO’s comments on greek listing issues are a definite positive and it could lead to a foreign listing in the upcoming months so, to some extent this has become a value story with a catalyst. We’ll see… Link to comment Share on other sites More sharing options...
ContrarianNick Posted October 4, 2015 Share Posted October 4, 2015 We are likely going to see an intensification of M&A in Italy once the "Delega Fiscale" has been clarified by the government and when a further round of regulation has occurred (apparently the government is looking to have substitute AWPs with mini-VLTs), but this is not going to happen for a while (I'd say 12 months). However if you look at recent activity, there are certainly signs that players are increasingly looking at other local companies (Snai - Cogetech) and there has been a story about IGT-Sisal (unlikely in my opinion since it would make them the only runner-up for the Lotto license in 2016 and the government is not going to allow it). Given the small scope of Intralot operations in Italy, it wouldn't surprise me if they decided to sell their AWPs and exit from the country all together (I find it difficult to believe that they would try to buy market share given the level of debt and the high cost of capital that they are experiencing as of today). Also I would point out that during the last call, management explicitly stated that "it will be interesting to see what happens in Italy in the next 12 months in terms of M&A". Finally, I would like to leave a suggestion to whom might be interested in other ideas in the gaming sector: have a look at Snai (local italian player) and IGT (international player). Link to comment Share on other sites More sharing options...
tombgrt Posted October 25, 2015 Share Posted October 25, 2015 Interesting comments Nick, thank you. Do you own either IGT or Snai? Both seem to be trading close to 52-week lows. Thank you for the heads up, I'll be looking into Snai. Still holding in to Intralot for the most part but it is starting to become time to see one of those catalysts play out. Link to comment Share on other sites More sharing options...
tombgrt Posted November 24, 2015 Share Posted November 24, 2015 Bought back some shares I sold above €1.65. Earnings on Friday. Anyone else still in this? Very quiet here but of course not much news. Link to comment Share on other sites More sharing options...
investor-man Posted November 24, 2015 Share Posted November 24, 2015 Bought back some shares I sold above €1.65. Earnings on Friday. Anyone else still in this? Very quiet here but of course not much news. I'm still in this. I was going to post that earnings were coming up because it's been so quiet, but I got busy. I'm not buying more - just hanging on to what I've got. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted November 25, 2015 Share Posted November 25, 2015 I see management next wednesday, I'll see if it's interesting enough to take notes. Link to comment Share on other sites More sharing options...
argonaut Posted November 25, 2015 Share Posted November 25, 2015 Just my .02 but I' like to know if they are still considering moving the listing to London or elsewhere ... I think it would be helpful for both the firm and us, its shareholders ... Link to comment Share on other sites More sharing options...
Haasje Posted November 26, 2015 Share Posted November 26, 2015 Im in and following. Link to comment Share on other sites More sharing options...
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