Quarterly Report • Sep 24, 2015
Quarterly Report
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For the period ended June 30, 2008 based on the International Financial and Reporting Standards
1st Semester of 2008
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| Representation of the Members of the Board of Directors……………………………………3 | ||
|---|---|---|
| Semi-annual Board of Directors Management Report…………………………………4 | ||
| Review Report on Interim Financial Information…………………………………………………13 | ||
| 1. | Condensed income statements (consolidated & single)……………………………………14 | |
| 2. | Condensed balance sheets (consolidated & single)…………………………………………15 | |
| 3. | Condensed statements of changes in equity (consolidated & single)……………………17 | |
| 4. | Condensed cash flow statements (consolidated & single)…………………………………21 | |
| 5. | General information - Approval of the Financial Statements……………………………….22 | |
| 6. | Significant Accounting Policies………………………………………………………………….23 | |
| 7. | Disclosure of compliance…………………………………………………………………………38 | |
| 8. | Accounting policies………………………………………………………………………………38 | |
| 9. | New standards, interpretations and amendments of published standards……………38 | |
| 10. Revenue Per Segment………………………………………………………………………….….42 | ||
| 11. Contingent liabilities……………………………………………………………………………….42 | ||
| 12. Other selected explanatory notes……………………………………………………………….43 | ||
| 13. Supplementary information: | ||
| 13.1. | Business Combination (Table of Companies Consolidated)………………46 | |
| 13.2. | Tax Authorities Fiscal Control……………………………………………………49 | |
| 13.3. | Real Liens…………………………………………………………………………50 | |
| 13.4. | Provisions……………………………………………………………………………50 | |
| 13.5. | Legal Issues Pending……………………………………………………………….50 | |
| 13.6. | Personnel Employed………………………………………………………………56 | |
| 13.7. | Related Party Disclosures………………………………………………………….57 | |
| 13.8. | Other Information…………………………………………………………………….58 | |
| 14. Subsequent events…………………………………………………………………………………60 |
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The
a. Sokratis P. Kokkalis, Chairman of the Board of Directors
b. Con/nos G. Antonopoulos, Vice - Chairman of the Board of Directors and CEO
c. Sotirios N. Filos , Member of the Board of Directors
a. as far as we know, the interim separate and consolidated financial statements of the company "INTRALOT S.A." for the period 1st January 2008 to 30th June 2008, prepared according to the International Financial Reporting Standards, present truly and fairly the assets and liabilities, the equity and the financial results of the Company, as well as of the consolidated companies, for the period then ended, according to par. 3 - 5 of article 5 of L. 3556/2007.
b. as far as we know, the semi - annual Board of Directors Management Report presents in a true and fair view the information required according to par. 6 of article 5 of L. 3556/2007.
c. the attached Interim Financial Statements are those approved by the Board of Directors of "INTRALOT S.A." at 26 August 2008 and have been published to the electronic address www.intralot.com.
The designees
S. P. Kokkalis Chairman of the Board of Directors
C. G. Antonopoulos Vice - Chairman of the Board of Directors and CEO
Sotirios N. Filos Member of the Board
Page 3 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
We submit to all interested the 1st semester 2008 financial statements according to the International Financial Reporting Standards as adopted by the European Union, along with the present Report for the period from January 1st to June 30, 2008.
The present Report of the Board of Directors of the company "INTRALOT S.A. INTEGRATED LOTTERY SYSTEMS AND SERVICES" has been composed according to the provision of par. 6, article 5 of the Law 3556/2007 and to the published executive resolutions 1/434/3-7-2008 and 7/448/11.10.2007 of the Capital Market Commission' Board of Directors
During the first half of 2008 INTRALOT continued its expansion in the gaming sector, succeeding among others to prevail in a series of significant international tenders in Madrid, the Netherlands and in the US and also to acquire two companies in Slovakia and in Italy.
At the same time, it achieved a substantial increase of revenues coupled with increased profits despite the considerable start-up and business development costs during the period for setting up the new projects in countries such Italy, Spain (Madrid), the Netherlands, Australia (Victoria) and the US (New Mexico, South Carolina, Ohio).
Specifically, consolidated revenues during the first half of 2008 reached €547.5 mil., posting a 44.5% increase compared to the same period last year. The significant increase in the Group revenues is attributed to the contribution of the subsidiary in Italy that commenced betting operations in the country in the second half of 2007, the contribution of South Africa that started to offer lottery and instant ticket games from the end of September 2007 and the high organic growth in countries such as Bulgaria, Turkey, Romania and Poland.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) during the period settled at €126.7 mil. from €120.6 mil. in the first half of 2007, recording an increase of 5.1%. Earnings Before Taxes (EBT) reached €112.4 mil. compared to €103.7 in 1H 2007 posting a 8.4% increase. Earnings After Taxes (EAT) increased by 4.6% to €60.3 mil. from €57.6 mill. in 1H 2007.
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Regarding parent company results, revenues were €98.9 mil. in 1H 2008, 3.5% lower than 1H 2007. EBITDA decreased by 54.3% to €19.2 mil., Earnings Before Taxes (EBT) decreased by 48.8% to €43.7 mil., while Earnings After Taxes (EAT) reached €36.3 mil. posting a decrease of 51.6% year on year.
In February 2008, INTRALOT's subsidiary in Poland, TOTOLOTEK, was granted a license by the Polish Government to operate the European Pool of the Swedish Horse Racing Totalisator Board, ATG.
Also, in February 2008, INTRALOT's subsidiary in Turkey, INTELTEK, signed a contract with the Turkish State Organization, Spor Toto, to continue the operation of the sports betting game "Iddaa" for up to one year.
In April 2008, INTRALOT signed an agreement to acquire a 51% stake in Slovenske Loterie, a company based in the Slovak Republic, holding licenses issued by the Slovak Ministry of Finance for the operation of Video Lottery Terminals (VLTs) and Automated Roulettes. INTRALOT has the right to increase its equity participation up to 81% through the exercise of call option rights in the next two years. The overall transaction is expected to have a total value of €3.1 million, mainly through a capital increase in the company, which will dilute existing shareholders as they will waive their right to participate.
In April 2008, INTRALOT Iberia, the subsidiary of INTRALOT S.A. in Spain, was awarded a license to manage Sports Betting games throughout the territory of the Autonomous Community of Madrid. The duration of the license is 5 years with an automatic renewal of 5 years each time.
In the end of April, INTRALOT's subsidiary, INTRALOT Nederland, following a dual international tender, signed a contract with both leading lotteries of the Netherlands, De Lotto and De Nederlandse Staatsloterij., having a total turnover of €1,1 billion in 2007. The term of the Agreement is 7 years with an option to extend for 3 more one-year terms. The new system will initiate operation in the third quarter of 2009.
In May 2008, INTRALOT's subsidiary, INTRALOT Inc, was selected by the Ohio Lottery as the preferred bidder to operate the agency's gaming system services, following which the Company signed a one-year conversion contract that started on July 1st, 2008. The project will launch on
Page 5 of 60
July 1st 2009. After the conversion the contract will have an initial term of two years with up to four, two-year renewals. The contract entails the initial provision of 8,800 new clerk operated Point of Sales terminals and 2,000 player activated, self-service terminals. With this contract, the sixth in the US, INTRALOT enters one of the top US markets that has a population of about 11.5 million people and ranks 10th in the U.S. in 2007 with total sales of \$ 2.258 billion.
In June 2008, INTRALOT signed a Memorandum of Understanding with Ho Chi Minh City Lottery Company to cooperate on an exclusive basis for the project of modernization of Ho Chi Minh City Lottery, which is the largest lottery in Vietnam, with a turnover of 140 million USD in 2007.
Also, in June 2008, following the license awarded in the state of Victoria, INTRALOT Australia Pty Ltd, a subsidiary of INTRALOT, granted a Foreign Games Permit to operate in Tasmania a variety of lottery and instant games. The operations are expected to start soon in more than 80 points of sale, in a population of about 500.000 inhabitants.
Finally, in the beginning of July, INTRALOT, through its subsidiary INTRALOT Italia spa, acquired 100 percent of the Italian Joint Venture company, William Hill Codere Italia Srl. (WHCI), thus further strengthening its position in the Italian betting market. The gross consideration agreed was €5.5 million. Through this acquisition, INTRALOT Italia enriches its current portfolio with 55 additional licenses for horseracing and sports betting points of sale in the Italian market, where is on of the top three betting companies.
The capital expenditures of the Company during the first half of 2008 for the financing of the new projects and acquisitions reached € 46.3 mil. The cash balance reached € 295.3 mil. in 1H 2008, while bank debt plus the € 200 mil. convertible bond reached €447.0 mil., shaping net debt at € 151.7 mil.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The progress of the Group in the second half of 2008 will depend, among others, on the course of the international markets where it operates and mainly on the course new markets such as:
Italy, INTRALOT's subsidiary is expected to continue its expansion in the betting market of the country during 2H 2008. The progress of the subsidiary will be enhanced by the additional licenses for sports betting points of sale that it acquired with the acquisition of the Italian joint venture William Hill Codere Italia Srl. in July 2008.
Madrid, Spain, in the beginning of August, the first ten (10) betting shops commenced operations, following the license awarded to INTRALOT in the territory.
Victoria, Australia, where INTRALOT has won a license to operate lottery and instant games, the operations started on the 1st of July, 2008.
The US, in the states of New Mexico and South Carolina will commence operations with INTRALOT's central systems and terminals in November, 2008.
In Turkey, the tender for the new management contract of the betting game in the country the next ten years, is in progress. INTRALOT is participating in the tender.
The group's international activities expose to a variety of financial risks, including foreign exchange, interest rate, credit and liquidity risks. Risk management programme is a continuous and developing process, which focuses on the volatility of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. Risk management is carried out by a central treasury department under policies approved by the Board of Directors.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The Group does not have significant credit risk concentration because of the wide dispersion of its customers and the fact that credit limits are set through signed contracts. The maximum exposure of credit risk amounts to the aggregate values presented in the balance sheet. The Group, in order to minimize the potential credit risk exposure arising from cash and cash equivalents, sets limits regarding the amount of credit exposure to any financial institution and deals with well-established financial institutions of high credit standing. Moreover, in order to secure further its transactions, the Group adopted an internal rating system, regarding credit rating evaluation, using the relevant financial ratios.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group based on strong financial figures had foreseen to obtain from the banking system, a significant amount of committed credit facilities, for the proceeding years. Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available.
Fluctuations in exchange rates can have significant effects on the Group's currency positions. Group transactions are carried out in more than one currency and therefore there is a high exposure in foreign exchange rate fluctuations against the main underlying economic currency the EURO. On the other hand, the Group's activity abroad, helps also to create a significant advantage in foreign exchange risk management, due to the diversification in the currency portfolio. This kind of risk mainly results from commercial transactions in foreign currency as well as investments in foreign entities. For managing this type of risk, the Group enters into derivative financial instruments with various financial institutions. Group policy regarding the foreign exchange risk concerns not only the parent company but also the Group's subsidiaries.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The Group's exposure to market risk for changes in interest rates relates to the long and short term borrowings. For managing this type of risk the Group enters into derivatives financial instruments. Group policy regarding the interest rate risk concerns not only the parent company but also debt that the Group's subsidiaries have raised in either Euro or local currency.
Aiming to ensure the best possible work conditions in a pleasant and functional environment, supportive of the staff's training and further evolution in their career, fully compliant with health and safety regulations, INTRALOT has invested significantly in time and resources to strengthen its organizational structure. As a result, the company has been distinguished between large multinational companies as one of the Best Workplaces in Greece for 2007, by the "Great Place to Work" International Institute in Greece. Furthermore, in 2008, INTRALOT's HR department received the Human Resources award by KPMG in the field of "Use of Information Technology in People Management" for their commitment to excellence in HR management through new technologies.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The most important transactions between the Company and related parties as per IAS 24 relate
to transactions between the Company and the following subsidiaries (related parties as per article
42e of Law 2190/20), shown on the table below.
| Company | Group | Company | Group | Company | Group | Company | Group | ||
|---|---|---|---|---|---|---|---|---|---|
| Company | Receivables | Payables | Expenses | Income | |||||
| 1 | Inteltek Internet AS | -70 | - | 4 | - | - | - | 13.681 | - |
| 2 | Intralot De Chile SA | 1.936 | - | - | - | - | - | 127 | - |
| 3 | Intralot De Peru SAC | 3.206 | - | 20 | - | - | - | 6 | - |
| 4 | Intralot International LTD | 2.000 | - | - | - | - | - | - | - |
| 5 | Intralot ΙNC | 6.046 | - | 1 | - | - | - | 643 | - |
| 6 | Intrarom SA | - | - | 177 | 177 | 709 | 709 | - | - |
| 7 | Loteria Moldovei SA | 1.646 | - | - | - | - | - | 27 | - |
| 8 | Lotrom SA | -3.771 | - | 325 | - | 1.952 | - | 2.813 | - |
| 9 | Νika SA | 47 | 47 | - | - | - | - | - | - |
| 10 | Pollot Sp. Z o. o | 4.055 | - | - | - | - | - | 236 | - |
| 11 | Yugolot LTD | - | - | 564 | - | - | - | - | - |
| 12 | Betting Company SA | 5.252 | - | 8.905 | - | 6.885 | - | 19.000 | - |
| 13 | Instant Lottery SA | 1.316 | 1.316 | - | - | - | - | 33 | 33 |
| 14 | Bilyoner Interaktif Hizmelter AS |
- | 41 | - | - | - | 11 | - | - |
| 15 | Eurofootball LTD | - | - | - | - | - | - | 36 | - |
| 16 | Ιntralot Operations LTD | 22.712 | - | - | - | - | - | 11.164 | - |
| 17 | Royal Highgate LTD | 1.090 | - | - | - | - | - | 41 | - |
| 18 | Maltco Lotteries LTD | - | - | - | - | - | - | 2.385 | - |
| 19 | Intralot do Brazil SA | 24 | 115 | - | - | - | - | - | - |
| 20 | Intralot Business Development LTD |
352 | - | - | - | - | - | 94 | - |
| 21 | Yuvenga CJSC | 1 | - | - | - | - | - | - | - |
| 22 | Uniclic LTD | 4.344 | 3.774 | - | 3.773 | - | - | - | - |
| 23 | Intralot New Zealand LTD |
3.674 | - | - | - | 7 | - | 125 | - |
| 24 | Lebanese Games SAL | - | - | - | 207 | - | - | - | - |
| 25 | Lotrich Information Co LTD |
6.245 | 6.245 | - | - | - | - | 734 | 734 |
| 26 | Betting Cyprus LTD | - | - | 4.265 | - | 774 | - | - | - |
| 27 | Intralot Holdings International LTD |
82.107 | - | - | - | - | - | 2.069 | - |
| 28 | Best Net | - | - | - | - | - | - | 2 | 2 |
| 29 | AEDIL SA | - | - | - | - | - | - | 2 | 2 |
| 30 | Intracom SA Infromation Technology & Com. |
- | 2 | 1.679 | 1.945 | 1 | 8 | - | - |
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INTEGRATED LOTTERY SYSTEMS AND SERVICES
Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| Company | Group | Company | Group | Company | Group | Company | Group | ||
|---|---|---|---|---|---|---|---|---|---|
| Company | Receivables | Payables | Expenses | Income | |||||
| 31 | Intracom SA Telecom Solutions |
4.505 | - | 13.778 | - | 26.922 | - | 2.412 | - |
| 32 | Intracom Holdings SA | - | - | 631 | 631 | 89 | 89 | - | - |
| 33 | Intracom Sa Defence Electronic Systems |
- | - | 1 | 1 | 1 | 1 | - | - |
| 34 | Intracom Group USA INC | - | - | - | 177 | - | 14 | - | - |
| 35 | Amina Insurance Brokers SA |
- | - | 107 | 107 | 135 | 135 | - | 2 |
| 36 | Content and Databank SA | - | 153 | 21 | 21 | - | 128 | - | - |
| 37 | Firich Enterprises Co LTD | - | - | - | 4.516 | - | - | - | - |
| 38 | Conklin Corporation | - | 9 | - | 23 | - | 20 | - | - |
| 39 | Ιntralot Asia Pacific LTD | 152 | - | - | - | - | - | - | - |
| 40 | Hellas on Line SA | - | - | - | 9 | - | - | - | 23 |
| 41 | Intralot Australia PTY LTD | 2.876 | - | - | - | - | - | 2.825 | - |
| 42 | Eurosadruzie LTD | - | 5.815 | - | 2.536 | - | - | - | - |
| 43 | Turkcell Bilisim Servisleri AS Group |
- | 33 | - | 2.126 | - | 5.268 | - | 94 |
| 44 | First Data Systems INC | - | - | - | 154 | - | - | - | - |
| 45 | Yugobet LTD | 2.353 | - | 1 | - | - | - | 500 | - |
| 46 | Intralot Luxembourg SA | 52 | - | - | - | 2.252 | - | 1 | - |
| 47 | Gidani LTD | 151 | 49.650 | - | - | - | - | 185 | 1.453 |
| 48 | Gaming Solutions International LTD |
638 | - | - | - | - | - | 31 | - |
| 49 | Gaming Solutions International SAC |
5.374 | - | - | - | - | - | 1.725 | - |
| 50 | Intracom Doo Belgrade | - | 3 | - | - | - | - | - | - |
| 51 | Intralot Iberia SAU | 3.637 | - | - | - | - | - | 149 | - |
| 52 | Intralot South Africa LTD | 2.769 | - | 107 | - | 107 | - | 3.935 | - |
| 53 | Intralot Italia SRL | 1.050 | - | - | - | - | - | 502 | - |
| 54 | Tecno Accion SA | 87 | - | 1.099 | - | 43 | - | 86 | - |
| 55 | Intracom Telecom Holdings Ιnternational LTD |
1 | 4.506 | - | 13.792 | - | 26.927 | - | 2.412 |
| 56 | Intralot Finance UK LTD | 1.676 | - | - | - | - | - | - | - |
| 57 | Intralot South Korea LTD | - | - | 381 | - | 581 | - | - | - |
| 58 | Intralot de Colombia LTD | 45 | - | 32 | - | - | - | 1 | - |
| Total | 167.579 | 71.709 | 32.098 | 30.195 | 40.457 | 33.310 | 65.574 | 4.755 |
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The BoD and Key Management Personnel transactions and fees for the Group and the Company for the period 01.01-30.06.2008 were € 4,6 mio. and € 2,7 respectively. From the information stated above and from the Financial Statements you are able to have a complete picture of the Company for the period 1/1/2008-6/30/2008
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
We have reviewed the accompanying balance sheet of "INTRALOT S.A. INTEGRATED LOTTERY SYSTEMS AND SERVICES" (the Company) as well as the accompanying consolidated balance sheet of The Company and its Subsidiaries (the Group) as at June 30th 2008, and the related statements of income, changes in equity and cash flows for the six-month period then ended, as well as the selected explanatory notes that constitute the interim information which is an integral part of the interim financial report under the article 5 of L. 3556/2007. Management is responsible for the preparation and presentation of this interim condensed financial information in accordance with International Financial Reporting Standards (I.F.R.S) as adopted by the European Union (E.U.) and apply to interim financial information ("I.A.S. 34"). Our responsibility is to express a conclusion on this interim condensed financial information based on our review.
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", to which the Greek Auditing Standards refer. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Greek Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with International Financial Reporting Standard "I.A.S. 34".
Further to the above interim financial information we have reviewed and all the other data of the interim financial report under article 5 of L. 3556/2007 and the authorized by this Law, Decisions of the Capital Market Commission. From the above review we ascertained that this interim financial report includes the data and information that are prescribed by the Law and the Decisions and is consistent with the accompanying financial information.
Athens August 28, 2008 Certified Public Accountant Auditor
Georgios A. Karamichalis SOEL Reg. No 15931 SOL S.A. 3, Fok. Negri Street – Athens, Greece Phone: 2108691100 SOEL Reg. No 125
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| Amounts reported in thousands € |
GROUP | GROUP | COMPANY | COMPANY | ||||
|---|---|---|---|---|---|---|---|---|
| 1/1- 30/6/2008 |
1/1- 30/6/2007 |
1/4- 30/6/2008 |
1/4- 30/6/2007 |
1/1- 30/6/2008 |
1/1- 30/6/2007 |
1/4- 30/6/2008 |
1/4- 30/6/2007 |
|
| Sale Proceeds | 547.461 | 378.817 | 290.867 | 199.001 | 98.888 | 102.505 | 70.840 | 62.056 |
| Less: Cost of Sales | -383.310 | -233.565 | -216.355 | -121.256 | -72.342 | -51.043 | -53.838 | -32.611 |
| Gross Profit /(Loss) | 164.151 | 145.252 | 74.512 | 77.745 | 26.546 | 51.462 | 17.002 | 29.445 |
| Other Income | 3.031 | 7.745 | 1.790 | -12.692 | 10 | 25 | 7 | 20 |
| Selling Expenses | -17.633 | -17.373 | -9.209 | -8.769 | -3.867 | -3.523 | -2.099 | -1.924 |
| Administrative Costs | -34.663 | -26.123 | -18.905 | -16.142 | -4.818 | -5.919 | -2.690 | -3.321 |
| Research and Development Costs |
-3.615 | -3.956 | -2.086 | -2.098 | -3.610 | -3.965 | -2.080 | -2.107 |
| Other Operating Expenses |
-788 | -256 | -554 | -119 | 0 | 0 | 0 | 0 |
| EBIT | 110.483 | 105.289 | 45.548 | 37.925 | 14.261 | 38.080 | 10.140 | 22.113 |
| EBITDA | 126.708 | 120.569 | 54.163 | 46.476 | 19.234 | 42.074 | 12.624 | 24.118 |
| Interest and similar Charges |
-12.343 | -12.627 | -7.592 | -5.810 | -7.851 | -8.375 | -3.863 | -3.856 |
| Interest and related Income |
14.912 | 12.951 | 7.028 | 5.648 | 38.660 | 53.475 | 19.589 | 35.028 |
| Exchange Differences | -1.008 | -1.737 | -857 | -1.552 | -1.350 | 2.172 | 768 | 1.186 |
| Profit or loss from participations accounted for using the equity method |
358 | -165 | 0 | -111 | 0 | 0 | 0 | 0 |
| Operating Profit Before Tax |
112.402 | 103.711 | 44.127 | 36.100 | 43.720 | 85.352 | 26.634 | 54.471 |
| Less: Taxes | -24.222 | -22.648 | -8.585 | -9.460 | -7.465 | -10.469 | -2.291 | -6.790 |
| Net Profit / Loss from Continuing Operations (a) |
88.180 | 81.063 | 35.542 | 26.640 | 36.255 | 74.883 | 24.343 | 47.681 |
| Net Profit / Loss from Discontinuing Operations (b) |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Net Profit / Loss (Continuing and Discontinuing Operations) (a) + (b) |
88.180 | 81.063 | 35.542 | 26.640 | 36.255 | 74.883 | 24.343 | 47.681 |
| Attributable to: | ||||||||
| Equity holders of the parent |
60.259 | 57.609 | 24.340 | 23.491 | 36.255 | 74.883 | 24.343 | 47.681 |
| Minority Interest | 27.921 | 23.454 | 11.202 | 3.149 | 0 | 0 | 0 | 0 |
| Earnings after taxes per share (in €) |
||||||||
| -basic | 0,38 | 0,37 | 0,15 | 0,15 | 0,23 | 0,48 | 0,16 | 0,31 |
| -diluted | 0,38 | 0,37 | 0,15 | 0,15 | 0,23 | 0,47 | 0,16 | 0,30 |
| Weighted Average Number of Shares 1 |
158.942.093 | 157.587.922 | 158.942.093 | 157.587.922 | 158.942.093 | 157.587.922 | 158.942.093 | 157.587.922 |
1 The difference in the number of shares for the fiscal year 2007 for the Group and the Company is a result of an increase in the number of share of the Group and the Company due to a split during 2007.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| Amounts reported in thousands € | GROUP | COMPANY | ||||
|---|---|---|---|---|---|---|
| 30/06/2008 | 31/12/2007 | 30/06/2008 | 31/12/2007 | |||
| ASSETS | ||||||
| Non Current Assets | ||||||
| Tangible fixed assets | 101.740 | 85.385 | 24.122 | 26.220 | ||
| Intangibles | 163.278 | 158.230 | 26.019 | 20.123 | ||
| Investment in subsidiaries and associates |
11.360 | 10.985 | 140.837 | 140.611 | ||
| Other financial assets | 8.065 | 6.981 | 568 | 676 | ||
| Deferred Tax asset | 9.355 | 12.243 | 1.531 | 4.106 | ||
| 100.797 | 110.684 | 20.895 | 41.286 | |||
| Other long term receivables | 394.595 | 384.508 | 213.972 | 233.022 | ||
| Current Assets | ||||||
| Inventories | 44.262 | 48.739 | 39.245 | 43.675 | ||
| Trade and other short term receivables | 204.188 | 139.394 | 234.857 | 165.566 | ||
| Cash and cash equivalents | 295.338 | 284.753 | 26.310 | 57.618 | ||
| 543.788 | 472.886 | 300.412 | 266.859 | |||
| TOTAL ASSETS | 938.383 | 857.394 | 514.384 | 499.881 | ||
| EQUITY AND LIABILITIES | ||||||
| Share Capital | 47.683 | 47.683 | 47.683 | 47.683 | ||
| Share premium | 12.184 | 12.184 | 12.182 | 12.182 | ||
| Treasury shares | 856 | 856 | 856 | 856 | ||
| Other reserves | 85.475 | 69.089 | 53.101 | 53.408 | ||
| Foreign currency translation | -9.378 | 523 | 0 | 0 | ||
| Retained earnings | 160.355 | 145.461 | 77.207 | 69.247 | ||
| 297.175 | 275.796 | 191.029 | 183.376 | |||
| Minority interest | 58.887 | 93.235 | 0 | 0 | ||
| Total equity | 356.062 | 369.031 | 191.029 | 183.376 |
Page 15 of 60
Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| Non Current Liabilities | ||||
|---|---|---|---|---|
| Long term loans | 404.321 | 317.111 | 262.810 | 259.914 |
| Staff retirement indemnities | 1.819 | 1.719 | 1.199 | 1.077 |
| Other long term provisions | 7.196 | 6.441 | 5.582 | 5.634 |
| Deferred Tax liabilities | 2.702 | 2.206 | 0 | 0 |
| Other long term liabilities | 296 | 6.134 | 1 | 2 |
| Finance lease obligation | 11.105 | 1.549 | 0 | 0 |
| 427.439 | 335.160 | 269.592 | 266.627 | |
| Current Liabilities | ||||
| Trade and other short term liabilities | 96.422 | 89.877 | 47.570 | 47.511 |
| Short term debt and current portion of long term debt |
31.278 | 37.501 | 0 | 0 |
| Current income taxes payable | 17.114 | 15.004 | 6.093 | 2.367 |
| Short-term provision | 10.068 | 10.821 | 100 | 0 |
| 154.882 | 153.203 | 53.763 | 49.878 | |
| TOTAL LIABILITIES | 582.321 | 488.363 | 323.355 | 316.505 |
| TOTAL EQUITY AND LIABILITIES | 938.383 | 857.394 | 514.384 | 499.881 |
Page 16 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| ST AT EM EN T O F C HA NG ES IN EQ UI TY IN TR AL OT G RO UP ( d in Am nt te ou s r ep or ho ds f € ) t us an o |
Sh Ca ita l ar e p |
Sh ar e Pr iu em m |
Re se rv e Tr ea su ry Sh ar es |
Le al g Re se rv e |
Ot he r Re se rv es |
Re in ed ta Ea in rn g s |
To l ta |
Mi rit no y In te st re |
G nd ra To l ta |
|---|---|---|---|---|---|---|---|---|---|
| Op ing B lan en a ce / / 01 01 20 08 |
4 7. 6 8 3 |
1 2. 1 8 4 |
8 5 6 |
2 6. 4 8 0 |
4 2. 6 0 9 |
1 4 5. 9 8 4 |
2 7 5. 7 9 6 |
9 3. 2 3 5 |
3 6 9. 0 3 1 |
| Ad ju he ing stm ts t en on op en ba lan ce s |
0 | 0 | |||||||
| fe ha ita l Tr r t an s o s re ca p |
0 | 0 | |||||||
| Eq ity ho d C l. e ity et nt u m on so |
0 | 0 | |||||||
| lid d E it ies Ne Co at nt w ns o e |
0 | 0 | |||||||
| Su bs id iar S ha Ca ita l re p y In cre as e |
8 | 8 | -8 | 0 | |||||
| Pe rio d 's Re lts su |
6 0. 2 5 9 |
6 0. 2 5 9 |
2 7. 9 2 1 |
8 8. 1 8 0 |
|||||
| Va lua ion f a ila b le t et o ss s a va fo le r s a |
2 0 |
2 0 |
2 6 |
4 6 |
|||||
| f D Va lua t ion iva t ive o er s |
-3 0 9 |
-3 0 9 |
-3 0 9 |
||||||
| S ha Ca ita l I fr re p nc rea se om ha ium S re pr em |
0 | 0 | |||||||
| S ha ho lde ' d its re rs ep os |
0 | 0 | |||||||
| St k O ion s R t oc p es er ve s |
0 | 0 | |||||||
| Div ide nd s |
-2 8. 3 2 4 |
-2 8. 3 2 4 |
1. 0 0 9 -5 |
9. 3 3 3 -7 |
|||||
| Di t ly Eq ity rec u |
2 | -2 3 3 |
-6 6 |
9 -2 7 |
2 5 |
-2 7 2 |
|||
| fe Tr r t an s o r es er ve s |
-2 6 1 3 |
1 9. 5 1 7 |
-1 6. 9 0 4 |
0 | 0 | ||||
| lat ion iff Tr D an s er en ce s |
2 | -9 9 8 0 |
-9 9 8 7 |
-1 1. 3 0 3 |
-2 1. 2 8 1 |
||||
| Ba lan t 3 0 / 06 / 08 ce s a s a |
4 7. 6 8 3 |
1 2. 1 8 4 |
8 5 6 |
2 3. 8 7 1 |
6 1. 6 0 4 |
1 5 0. 9 7 7 |
2 9 7. 1 7 5 |
5 8. 8 8 7 |
3 5 6. 0 6 2 |
| ST AT EM EN T O F C HA NG ES IN EQ UI TY IN TR AL OT G RO UP ( d in Am nt te ou s r ep or ho ds f € ) t us an o |
Sh Ca ita l ar e p |
Sh ar e Pr iu em m |
Re se rv e Tr ea su ry Sh ar es |
Le al g Re se rv e |
Ot he r Re se rv es |
Re in ed ta Ea in rn g s |
To l ta |
Mi rit no y In te st re |
G nd ra To ta l |
|---|---|---|---|---|---|---|---|---|---|
| Op ing B lan en a ce / / 01 01 20 07 |
2 9. 1 5 4 |
2 3. 9 5 7 |
8 5 6 |
9. 1 2 2 |
3 5. 9 7 7 |
1 0 4. 8 1 0 |
2 0 3. 8 7 6 |
8 6. 1 7 6 |
2 9 0. 0 5 2 |
| Ad ju he ing stm ts t en on op en ba lan ce s |
-3 9 0 4 |
-3 9 0 4 |
3. 9 0 4 |
0 | |||||
| Tr fe ha ita l r t an s o s re ca p |
0 | 0 | |||||||
| Eq ity ho d C l. e ity et nt u m on so |
0 | 0 | |||||||
| Co lid d E it ies Ne at nt ns o e w |
-5 5 |
-5 5 |
2. 6 0 8 |
2. 5 5 3 |
|||||
| bs id iar ha ita l Su S Ca y re p In cre as e |
0 | 0 | |||||||
| rio d 's lts Pe Re su |
5 7. 6 0 9 |
5 7. 6 0 9 |
2 3. 4 5 4 |
8 1. 0 6 3 |
|||||
| Va lua ion f a ila b le t et o ss s a va fo le a r s |
0 | 0 | |||||||
| lua ion f D iva ive Va t t o er s |
1. 1 7 2 |
1. 1 7 2 |
1. 1 7 2 |
||||||
| S ha Ca ita l I fr re p nc rea se om S ha ium re pr em |
0 | 0 | |||||||
| S ha ho lde ' d its re rs ep os |
0 | 0 | |||||||
| k O ion St t s R oc p es er ve s |
0 | 0 | |||||||
| Div ide nd s |
-2 9. 1 8 8 |
-2 9. 1 8 8 |
-5 2. 6 5 4 |
-8 1. 8 4 2 |
|||||
| Di ly ity t Eq rec u |
0 | 0 | |||||||
| fe Tr r t an s o r es er ve s |
1 2. 4 9 9 |
-5 | -1 2. 4 9 4 |
0 | 0 | ||||
| Tr lat ion D iff an s er en ce s |
-2 | -6 4 |
1. 4 3 2 |
1. 3 6 6 |
3. 1 8 3 |
4. 5 4 9 |
|||
| lan / / Ba t 3 0 06 07 ce s a s a |
2 9. 1 5 4 |
2 3. 9 5 5 |
8 5 6 |
2 1. 5 5 7 |
3 7. 1 4 4 |
1 1 8. 6 2 4 |
2 3 1. 2 9 0 |
6 6. 2 5 7 |
2 9 7. 5 4 7 |
Page 18 of 60
Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008
Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| ST AT EM EN T O F CH AN GE S I N EQ OT UI TY IN TR AL CO MP AN Y ( d Am nt te ou ep or s r in ho ds f € ) t us an o |
Sh Ca ita l ar e p |
Sh Pr iu ar e em m |
Re se rv e Tr ea su ry Sh ar es |
Le al g Re se rv e |
Ot he r R es er ve s |
Re ta in ed E ni ar ng s |
To ta l |
|---|---|---|---|---|---|---|---|
| Op ing B lan en a ce / / 01 01 20 08 |
4 7. 6 8 3 |
1 2. 1 8 2 |
8 5 6 |
1 3. 3 8 4 |
4 0. 0 2 4 |
6 9. 2 4 7 |
1 8 3. 3 7 6 |
| Ad ju he stm ts t en on ing ba lan op en ce s |
0 | ||||||
| fe ha Tr r t an s o s re ita l ca p |
0 | ||||||
| ity ho d Eq et m u Co l. E ity nt ns o |
0 | ||||||
| Co lid d Ne at ns o e w En it ies t |
0 | ||||||
| Su bs id iar S ha y re ita l I Ca p nc rea se |
0 | ||||||
| rio d 's lts Pe Re su |
3 6. 2 5 5 |
3 6. 2 5 5 |
|||||
| Va lua ion f a t et o ss s ila b le fo le av a r s a |
0 | ||||||
| f Va lua t ion o riv ive De at s |
-3 0 9 |
-3 0 9 |
|||||
| S ha Ca ita l re p In fro cre as e m ha ium S re pr em |
0 | ||||||
| ha ho lde S re rs de its po s |
0 | ||||||
| St k O ion t oc p s Re se rve s |
0 | ||||||
| Div ide nd s |
-2 8. 3 2 4 |
-2 8. 3 2 4 |
|||||
| Di ly ity t Eq rec u |
2 | 2 9 |
3 1 |
||||
| fe Tr r t an s o r es er ve s |
0 | ||||||
| lat ion Tr an s Di ffe re nc es |
0 | ||||||
| lan Ba t ce s a s a 30 / 06 / 08 |
4 7. 6 8 3 |
1 2. 1 8 2 |
8 5 6 |
1 3. 3 8 6 |
3 9. 7 1 5 |
7 7. 2 0 7 |
1 9 1. 0 2 9 |
| ST AT EM EN T O F CH GE S I EQ AN N UI TY IN TR AL OT C OM PA NY ( d in Am nt te ou s r ep or ho ds f € ) t us an o |
Sh Ca ita l ar e p |
Sh ar e Pr iu em m |
Re se rv e Tr ea su ry Sh ar es |
Le al Re g se rv e |
Ot he r Re se rv es |
Re in ed E ni ta ar ng s |
To l ta |
|---|---|---|---|---|---|---|---|
| Op ing B lan en a ce 01 / 01 / 20 07 |
2 9. 1 5 4 |
2 3. 9 5 5 |
8 6 5 |
9. 8 7 1 |
3 3. 1 4 5 |
6 3. 8 5 5 |
6 0. 3 1 4 1 |
| Ad ju stm ts t he en on ing ba lan op en ce s |
0 | ||||||
| fe ha Tr r t an s o s re ita l ca p |
0 | ||||||
| ity ho d C l. Eq et m on so u t ity en |
0 | ||||||
| Ne Co lid d at w ns o e it ies En t |
0 | ||||||
| bs id iar ha Su S y re Ca ita l I p nc rea se |
0 | ||||||
| rio d 's lts Pe Re su |
8 8 7 4. 3 |
8 8 7 4. 3 |
|||||
| lua ion f a Va t et o ss s ila b le fo le av a r s a |
0 | ||||||
| lua ion f Va t o De riv ive at s |
1. 1 7 2 |
1. 1 7 2 |
|||||
| S ha Ca ita l I re p nc rea se fro S ha ium m re pr em |
0 | ||||||
| S ha ho lde ' d its re rs ep os |
0 | ||||||
| St k O ion t oc p s Re se rve s |
0 | ||||||
| Div ide nd s |
-2 9. 2 7 1 |
-2 9. 2 7 1 |
|||||
| Di ly Eq ity t rec u |
0 | ||||||
| fe Tr r t an s o r es er ve s |
-2 6 7 |
2 6 7 |
0 | ||||
| lat ion Tr an s Di ffe re nc es |
0 | ||||||
| Ba lan / 06 / 07 t ce s a s a |
2 9. 1 5 4 |
2 3. 9 5 5 |
8 5 6 |
9. 4 5 1 |
3 4. 3 1 7 |
1 0 9. 4 6 4 |
2 0 7. 1 9 7 |
Page 20 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| STATEMENT OF CASH FLOWS | GROUP | COMPANY | |||
|---|---|---|---|---|---|
| 30/06/08 | 30/06/07 | 30/06/08 | 30/06/07 | ||
| Cash flows from operating activities | |||||
| Net Profit before Taxation | 112.402 | 103.711 | 43.720 | 85.352 | |
| Plus/Less adjustments for: | |||||
| Depreciation and Amortization | 16.225 | 15.280 | 4.973 | 3.994 | |
| Impairment | 0 | 0 | 0 | 0 | |
| Provisions | 1.665 | 437 | 70 | 206 | |
| Exchange rate differences | -16.326 | 5.099 | 0 | 171 | |
| Results from Investing Activities | -823 | 2.837 | -35.165 | -49.966 | |
| Debit Interest and similar expenses | 12.343 | 12.626 | 7.851 | 8.375 | |
| Credit Interest | -14.752 | -12.951 | -3.696 | -2.405 | |
| Plus/Less adjustments of working capital to net cash or related to operating activities: |
|||||
| Decrease/(increase) of Inventories | 3.773 | -8.225 | 4.430 | -7.858 | |
| Decrease/(increase) of Receivable Accounts | -62.003 | -52.711 | -48.900 | -54.799 | |
| (Decrease)/increase of Payable Accounts (except Banks) | -6.845 | -27.602 | -10 | -26.181 | |
| Less: | |||||
| Interest Paid and similar expenses paid | 8.947 | 9.865 | 4.954 | 5.615 | |
| Income Tax Paid | 18.184 | 23.861 | 1.033 | 10.015 | |
| Net Cash from Operating Activities (a) | 18.528 | 4.775 | -32.714 | -58.741 | |
| Investing Activities | |||||
| (Purchases) / Sales of subsidiaries, associates and other investments |
82 | -5.900 | -226 | -15.395 | |
| Purchases of tangible and intangible assets | -46.292 | -74.390 | -8.772 | -1.316 | |
| Proceeds from sales of tangible and intangible assets | 21 | 43 | 0 | 0 | |
| Interest received | 12.750 | 12.951 | 3.696 | 2.404 | |
| Dividends received | 0 | 0 | 34.964 | 51.070 | |
| Net Cash from Investing Activities (b) | -33.439 | -67.296 | 29.662 | 36.763 | |
| Financing Activities | |||||
| Cash inflows from Share Capital Increase/Share Premium deposits |
0 | 244 | 0 | 0 | |
| Cash outflow from Share Capital Decrease | 0 | 0 | 0 | 0 | |
| Cash inflows from loans | 137.221 | 32.808 | 0 | 0 | |
| Repayment of loans | -33.217 | -10.416 | 0 | -22.000 | |
| Repayment of Leasing Obligations | -1.780 | -358 | 0 | 0 | |
| Dividends paid | -76.728 | -81.842 | -28.256 | -29.188 | |
| Net Cash from Financing Activities (c) | 25.496 | -59.564 | -28.256 | -51.188 | |
| Net increase / (decrease) in cash and cash equivalents for the period (a) + (b) + (c ) |
10.585 | -122.085 | -31.308 | -73.166 | |
| Cash and cash equivalents at the beginning of the year | 284.753 | 467.902 | 57.618 | 242.016 | |
| Cash and cash equivalents at the end of the year | 295.338 | 345.817 | 26.310 | 168.850 |
Page 21 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
INTRALOT S.A. – 'Integrated Lottery Systems and Gaming Services', with the distinct title «INTRALOT» is a business entity that was established based on the Laws of Hellenic Republic and whose shares are traded in the Athens Stock Exchange. Reference to «INTRALOT» or the «Company» includes INTRALOT S.A. whereas reference to the «Group» includes INTRALOT S.A. and its fully consolidated subsidiaries, unless otherwise stated. The Company was established in 1992 and has its registered office in Maroussi of Attica.
INTRALOT, is the 2nd biggest supplier of integrated gaming and transaction processing systems, innovative game content and value added services to state-licensed gaming organizations worldwide. With presence in more than 40 countries, INTRALOT is a 5 continents company with more than 5.027 people and revenues of € 835,5m, in 2007, dominating the European Market, and holding a significant position in South America and is present in N. America, Asia, Africa and Oceania.
It's broad portfolio of products & services, its know-how of Lottery, Betting & Video Lottery operations, its experience in sports games and its leading-edge technology, give INTRALOT a competitive advantage, which contributes directly to customers' efficiency, profitability and growth.
The Board of Directors of INTRALOT SA approved the accompanying interim IFRS financial statements for the company and the Group for the period ended 30 June 2008, on 26 August 2008.
Page 22 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The consolidated financial statements comprise the financial statements of INTRALOT S.A. and its subsidiaries as at 31 December of each year. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.
Adjustments are made to bring in line any dissimilar accounting policies that may have existed.
All intercompany balances and transactions, including unrealized profits arising from intra-group transactions, have been eliminated in full. Unrealized losses are eliminated unless costs cannot be recovered. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is a loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting year during which INTRALOT SA has control.
The functional and presentation currency of INTRALOT S.A. and its subsidiaries which are located in Greece is the euro (€). Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All resulting differences are taken to the consolidated income statement with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognized in the consolidated income statement. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of initial transaction. Non-monetary items measured at fair value in a foreign currency shall be translated using the exchange rates at the date when the fair value was determined.
The functional currency of the overseas subsidiaries is the currency of the country in which these subsidiaries are located and operate. As at the reporting date, the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of INTRALOT SA at the rate of exchange ruling at the balance sheet date and, their income statements are translated at the weighted average exchange rates for the year. The resulting exchange differences arising on the retranslation are taken directly to a separate component of equity. On disposal of a foreign entity,
Page 23 of 60
the deferred cumulative amount recognized in equity relating to that particular foreign operation shall be recognized in the income statement.
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
| Owned Buildings | 20 to 30 years |
|---|---|
| Installations on third party property | Over the duration of the lease but not less than 5% per annum |
| Equipment | 5 to 15 years |
| Computer Hardware | 20% to 30% per annum |
| Motor vehicles | 7 years or 15% per annum |
| Trucks etc. | 5 years or 20% per annum |
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cashgenerating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using an after-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in the income statement.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item is de-recognized.
In regards of hardware and software lease as operating lease these assets, in the group balance sheet are disclosed in acquisition cost values and been depreciated using the straight line method and according to the lower period between the useful life and the contract life. In cases of
Page 24 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
the respective contracts renewal the assets' remaining net book value is depreciated according to the renewed contract life.
Borrowing costs are recognized as an expense when incurred.
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Any goodwill arising on the acquisition of a foreign subsidiary and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate accordingly.
The Group made use of the exception provided by IFRS 1 'First Time Adoption of IFRS' relating to business combinations that occurred before the transition date (1 January 2004). For those business combinations IFRS 3 'Business Combinations' is not applied. Instead, in accordance with IFRS 1 the Group kept the same classification as in its previous GAS financial statements. For business combinations prior to the transition date, the Group had recognized the resulting goodwill as a deduction from equity in its previous GAS financial statements. Therefore the Group did not recognize that goodwill in its opening IFRS balance sheet. Any adjustments to the assets and liabilities of the subsidiaries for IFRS purposes are taken to retained earnings.
The Group, based on previous GAS, had not consolidated certain subsidiaries that had been acquired in past business combinations. On first adoption of IFRS and in accordance with the exceptions of IFRS 1, the Group adjusted the carrying amounts of the subsidiary's assets and liabilities to the amounts that IFRS would require in the subsidiary's balance sheet. The deemed cost of goodwill equals the difference at the date of transition to IFRS between the parent's interest in those adjusted carrying amounts; and the cost in the parent's separate financial statements of its investment in the subsidiary. The resulting goodwill is recorded in the transition balance sheet (1 January 2004) and is tested for impairment.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Based on IFRS 3 'Business combinations', Goodwill is not amortized. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination's synergies. Impairment is determined by assessing the
Page 25 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
recoverable amount of the cash-generating unit, to which the goodwill relates. Where recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognized. Where goodwill forms part of a cash generating unit and part of the operation within that unit are disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Intangible assets acquired individually, are capitalized at cost and those acquired through a business combination at fair values at the acquisition date. After initial recognition, intangibles are valued at cost less accumulated amortization. Useful lives of these intangibles are assessed to be either finite or indefinite. Intangibles with finite useful lives are amortized as follows:
| • | Software platforms | Over | the | duration | of | the | longest |
|---|---|---|---|---|---|---|---|
| • | Central operating software | contract | |||||
| • | Central Network software | ||||||
| • | Licenses | ||||||
| • | Rights | ||||||
| • | Other software | 3 to 5 years |
Amortization of finite life intangibles are recognized as an expense in the Income Statement apportioned to the related cost centers.
Intangibles, except Development costs internally generated, are not capitalized and the costs are included in the Income Statement in the year they are incurred.
Intangible assets are tested for impairment annually, either individually or at the cash generating unit level. Useful lives are also assessed annually and any revisions are made on a prospective basis.
Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured. Following the initial recognition of the development expenditure the cost model is applied
Page 26 of 60
INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Any expenditure carried forward is amortized over the period of expected future sales from the related project.
The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.
Investments in subsidiaries, associates and joint ventures are stated in the individual and consolidated financial statements at their cost less any impairment in value.
All investments are initially recognized at cost, being the fair value of the consideration given, including any acquisition related costs.
After initial recognition, investments (except investments in subsidiaries, associates and joint ventures) which are classified as 'valued at fair values through income statement', or as 'available for sale' are measured at fair values. Gains or losses on investments classified as 'valued at fair values through Income Statement' are recognized in the income statement. Gains or losses on 'available for sale' investments are recognized in a separate component within Equity until the investment is either disposed or the investment is considered to have been impaired at which time any accumulated gains or losses are transferred to the Income Statement.
Other financial assets, except derivatives, with fixed or determinable payments and fixed maturity, are classified as «held to maturity», when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this category. The «held to maturity» monetary items, such as bonds, are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated taking into consideration any premium or discount on acquisition, over the period to maturity. For investments carried at amortized cost, gains or losses are recognized in the Income Statement when the investments are disposed or impaired and also through amortization.
For investments that are actively traded in organized markets, fair values are determined in relation to the closing traded values at the balance sheet. For investments where these is no quoted market price, fair values are determined by reference to the current market value of
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
another item substantially similar, or is estimated based on the expected cash flows of the underlying net asset base of the investment otherwise in the acquisition cost.
Inventories are valued at the lower of cost and net realizable value.Costs incurred in bringing each product to its present location and condition are accounted for using the average price method.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to completion and the estimated costs necessary to make the sale.
Trade receivables are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when all possible legal actions have been exhausted.
When the inflow of cash or cash equivalents is deferred, the fair value of the consideration may be less than the nominal amount of cash received or receivable. When the arrangement effectively constitutes a financing transaction, the fair value of the consideration is determined by discounting all future receipts using the prevailing interest rate for a similar instrument of an issuer with a similar credit rating. The difference between the fair value and the nominal amount of the consideration is recognized as interest revenue in accordance with IAS 39 'Financial Instruments: Recognition and Measurement'.
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and shortterm deposits with an original maturity of three months or less.
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, without the netting of outstanding bank overdrafts.
All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
Gains and losses are recognized in net profit or loss when the liabilities are derecognized or impaired, as well as through the amortization process.
All long term liabilities are initially recognized at cost. Following initial recognition, liabilities that are denominated in foreign currency are valued at the closing exchange rate at the reporting date. Any interest cost is recognized on an accruals basis.
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain the expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a borrowing cost.
Contingent liabilities are not recognized in the financial statements but are disclosed, except if the probability of a potential outflow of funds is remote. Contingent assets are not recognized but are disclosed when the probability of a cash inflow is possible.
Provisions are recognized on each financial statements date (annual and interim) based on the best and reliable estimate for potential excess of cost (payments to winners) in games with predetermined odds as this is provided by the contracts between the company and the clients. The provision amount arising from this calculation for each reporting period is recognized and booked in the reporting period profit and loss account as an expense.
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease
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payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.
In cases of hardware and software leasing through operating lease, these assets are included in the company's tangible and intangible assets and the income that occurs is recognized on a straight line through the contract period.
Treasury shares represent shares of the parent company held by the Group. Treasury shares are stated at cost and disclosed as a separate component in Equity. Upon acquisition, disposal, issuance or cancellation of treasury shares no gain or loss is recognized in the Income Statement. The consideration given or received and the related gains or losses from the settlement are recognized directly in Equity.
IFRS 2 'Share-based Payment' requires an expense to be recognized where the Group buys goods or services in exchange for shares or rights over shares ('equity-settled transactions'), or in exchange for other assets equivalent in value to a given number of shares or rights over shares ('cash-settled transactions'). The main impact of IFRS 2 on the Group is the expensing of employees' and directors' share options and other share based incentives by using an option-pricing model.
Staff retirement indemnities are measured at the present value of the Company's defined benefit obligations at the balance sheet date, through the recognition of the employees' right to benefits based on years of service over their expected working life. The above liabilities are calculated using financial and actuarial assumptions and are determined based on an actuarial valuation method (Projected Unit Credit Method). The net expense for the period is included within staff costs in the accompanying Income Statement and consists of the present value of the benefits earned during
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
the year, interest cost on the benefit liability, past service cost, actuarial gains or losses recognized and any other additional pension costs. The past service costs are recognized as an expense on a straight line basis over the average period until the benefits become vested. The unrecognized actuarial gains or losses are recognized over the remaining working life of active employees, and are included as part of the net annual pension cost of each year, if at the beginning of the period they exceed 10% of the future estimated liability for benefits. The Company's pension benefit schemes are not funded.
The Company employees are covered by the main State Insurance Organization for the private sector (IKA) that provides pension and medical benefits. Each employee is obliged to contribute a percentage of the monthly salary to IKA while part of the total contribution is covered by the Company. On retirement, IKA is responsible for the payment of pensions to employees. Consequently, the Company does not have any legal or constructive obligation for the payment of future benefits based on this scheme.
Revenue is recognized in the period they are realized and the related amounts can be reliably measured. The following specific recognition criteria must also be met during the recognition of the revenue.
This category includes the supply of hardware, software and technical support services (gaming machines, central computer systems, gaming software, communication systems, installation services etc.) to Lotteries so that they can operate their on-line games. Revenue is recognized by the Company either as a direct sale of hardware and software or as operating lease for a predetermined time period according to the contract with the customer.
In the first case the income from the sales of hardware and software (in a determined value) is recognized when the significant benefits and risks arising from the ownership are transferred to the buyer.
In the second case it consists income from operating lease, it is defined as a percentage on the Lottery Organization's gross turnover received by the player-customer. Income recognition occurs the moment that the player-customer places the related consideration in order to participate in a game.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The Group undertakes the provision of value added services, such as the design, organization and/ or management of games, advertising and sales promotion, establishment of sales network, risk management (for fixed odds games) etc to organizations internationally. Group revenues mainly consist of a percentage of the turnover of the games for which the above services are provided, the size of which is contractually determined based on the market size, the type of services rendered, the duration of the contract and other parameters. Revenue recognition occurs the moment that the player-customer pays the related consideration in order to participate in a game and equals to an amount calculated as a percentage on the total amount received by the lottery games organization from the player-customer.
In this category, the Group has the full game operating license in a country. In the case of operating the game the Company undertakes the overall organization of the games provided (installation of information systems, advertising and promotion, establishment of sales network, collections and payment of winnings to players, etc). Revenue recognition in this category occurs the moment that the player-customer pays the related consideration in order to participate in a game and equals to the total amount received from the player-customer.
Current and deferred income taxes are calculated based on the financial statements of each entity included in the consolidated financial statements, based on the Greek tax laws or other tax frameworks within which the foreign subsidiaries operate. Income tax is calculated based on the profits of each entity as adjusted on their tax returns, additional taxes arising from audits performed by the tax authorities and deferred taxes based on enacted or substantially enacted tax rates.
Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences:
•Except where the deferred income tax liability arises from goodwill amortization or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilized:
• Except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred income tax is not measured by the Group in regards with the undistributed profits of subsidiaries, branches, associates and joint ventures due to intercompany profits, from relevant transactions, eliminations in the consolidation process.
Income tax relating to items recognized directly in equity are recognized in equity and not in the income statement.
• Where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• Receivables and payables are stated with the amount of sales tax included.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
The basic earnings per share (EPS) are calculated by dividing net profit attributed to the equity holders of the parent by the weighted average number of ordinary shares outstanding during each year, excluding the average number of ordinary shares of the parent held by the Group as treasury shares.
The diluted earnings per share are calculated by dividing the net profits attributable to the equity holders of the parent company by the weighted average number of ordinary shares outstanding (adjusted for the effect of the average number of share option rights outstanding during the year).
The financial assets and financial liabilities of the balance sheet include cash and cash equivalents, receivables, other short term liabilities and Derivative Financial Instruments. The accounting policies for recognition and measurement of financial assets and financial liabilities are detailed in the corresponding paragraphs of this Note.
The financial instruments are presented as assets, liabilities or Equity items based on their substance and content of the related contracts from which they derive. Interest, dividends, gains and losses arising from financial instruments characterized as assets or liabilities, are recognized as expense or income in the income statement. The payment of dividends to equity holders is deducted directly from equity. The financial instruments are offset when the Company, has a legally enforceable right to set off the recognized amounts and intends to settle them on a net basis or to realise the asset and settle the liability simultaneously.
The Group uses derivative financial instruments such as forward currency contracts and Interest Rate Swaps to hedge its risks associated with interest rate and foreign currency fluctuations. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
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Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to net profit or loss for the year.
The fair value of forward currency contracts is calculated by reference of the market value and is verified by the financial institutions. For the purpose of hedge accounting, hedges are classified as: fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability; cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecast transaction; or hedges of a net investment in a foreign operation.
A hedge of the foreign currency risk of a firm commitment is accounted for as a cash flow hedge. At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Fair value hedges are hedges of the Group's exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect profit or loss. For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged, the derivative is remeasured at fair value and gains and losses from both are taken to profit and loss. For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through profit and loss over the remaining term to maturity. Any adjustment to the carrying amount of a hedged financial instrument for which the effective interest method is used is amortised to profit and loss. Amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit and loss. The changes in the fair value of the hedging instrument are also recognised in profit and loss. The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. Any adjustment to the carrying amount of a hedged financial instrument for which the effective interest method is used is amortised to profit and loss. Amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
Cash flow hedges are a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect profit and loss. The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profit and loss. Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when hedged financial income or financial expense is recognised or when a forecast sale or purchase occurs. Where the hedged item is the cost of a non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability. If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to profit and loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken to profit and loss.
Certain derivatives, although characterized as effective hedges based on Group policies, do not meet the criteria for hedge accounting in accordance with the provisions of IAS 39 and, therefore, gains or losses are recognized in the statements of income.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The Group's exposure to market risk for changes in interest rates relates to the long and short term borrowings. The Group partially hedged against its interest rate risk in the period ended 30 June 2008 since management assessed that any change in historically low interest rates in conjunction with the low borrowing levels would give the chance to keep funding costs at a low level.
The Group sells goods and provides services in various currencies including the Euro. Therefore, it is exposed to movements in foreign currency exchange rates against its reporting currency, the Euro. The Group in assessing the related risk used derivative financial instruments in the period ended 30 June 2008 in order to reduce its exposure to foreign currency change risk. At 30 June 2008 there were open positions in derivative financial instruments.
The management has decided to hedge foreign exchange risk for changes in forward rates and not in spot rates. The hedging designation was decided at the inception of the hedging instrument and is followed till the maturity. The effect of the forward points goes to equity reserves.
The Group does not have significant credit risk concentration because of the wide dispersion of its customers and the fact that credit limits are set through signed contracts. The maximum exposure to credit risk amounts to the aggregate values presented in the balance sheet.
The carrying amounts of cash and cash equivalents, short term receivables and short term liabilities in the balance sheet approximate their fair values due to their short term nature. The fair value of short term loans is not significantly different from their carrying values due to the use of variable interest rates.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through and adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available.
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A financial instrument is derecognized when the Group no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party.
The interim consolidated financial statements for the interim six months period ended June 30, 2008 have been prepared in accordance to IAS 34-Interim Financial Reporting. These interim financial statements should be reviewed along with the annual financial statements of the year ended at December 31, 2007.
For the preparation of the interim consolidated financial statements for the interim six months period ended June 30, 2008, the same accounting policies and methods of computation have been followed as compared with the most recent annual consolidated financial statements (December 31, 2007).
Up to the date of the approval of the financial statements certain new Standards, Interpretations and Revised Standards have been published that are mandatory for accounting periods beginning on or after January 1, 2008. The Group's management estimate in relation to the effects of the adoption of the new standards and interpretations is as follows:
The amended IAS 1 has been issued – Presentation of Financial Statements, on September 2007 and is applied for the annual accounting periods starting from or after January 1st 2009.The Standard's amendment for better readability reasons, requires the separate presentation of changes in Equity that derive from shareholders' transactions (e.g. dividends), from the rest Equity changes that derive from third parties' transactions and a new comprehensive Income Statement is introduced.
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The revised standard includes changes in the titles of specific Financial Statements in order for their disclosure function to be clearly illustrated. Furthermore, a new requirement is imported, regarding the restatement of financial statements or the retrospective application of new accounting policies to be presented from the beginning of the previous comparative period. The Group is in the evaluation procedure regarding the impact of the amended standard in the Financial Statements.
The amendment of the Standard has not yet been adopted by the European Union.
The amendment clarifies two issues: The definition of 'vesting condition', introducing the term 'non-vesting condition' for conditions other than service conditions and performance conditions. It also clarifies that the same accounting treatment applies to awards that are effectively cancelled by either the entity or the counterparty. The Group expects that this Interpretation will have no impact on its financial statements. The amended IFRS 2 becomes effective for financial years beginning on or after January 2009.
As regards IFRS 3, this will apply to business combinations occurring in those periods and its scope has been revised to include combinations of mutual entities and combinations without consideration (dual listed shares). IFRS 3 and IAS 27, inter alia, require greater use of fair value through the income statement and cement the economic entity concept of the reporting entity. Furthermore, these standards also introduce the following requirements (i) to remeasure interests to fair value when control is obtained or lost, (ii) recognising directly in equity the impact of all transactions between controlling and non-controlling shareholders where loss of control is not lost and, (iii) focuses on what is given to the vendor as consideration rather than what is spent to achieve the acquisition. More specifically, items such as acquisition-related costs, changes in the value of the contingent consideration, share-based payments and the settlement of pre-existing contracts will generally be accounted for separately from the business combination and will often affect the income statement. The revisions to the Standards have not yet been endorsed by the EU. The revised IFRS 3 and IAS 7 become effective for financial years beginning on or after January 2009.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
IFRS 8 replaces IAS 14 (Segment Reporting) and sets different disclosure requirements regarding the information by activity sectors. IFRS 8 is effective from the 1st January 2009 and is expected to be adopted by the Group.
In the revised standard, the previous benchmark treatment of recognising borrowing costs as an expense has been eliminated. Instead, borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets form part of the costs of the asset. The revised version of IAS 23 Borrowing Cost needs to be applied for annual periods beginning on or after 1st January 2009.
The amendment to IAS 32 requires certain puttable financial instruments and obligations arising on liquidation to be classified as equity if certain criteria are met. The amendment to IAS 1 requires disclosure of certain information relating to puttable instruments classified as equity. The Group does not expect these amendments to have an impact on its financial statements. The amendment to IAS 32 becomes effective for financial years beginning on or after January 2009.
This interpretation is effective for annual periods beginning on or after 1 March 2007 and clarifies the treatment where employees of a subsidiary receive the shares of a parent. It also clarifies whether certain types of transactions are accounted for as equity-settled or cash-settled transactions. This interpretation is not expected to have any impact on the Group's financial statements.
IFRIC 12 handles the way with which the concession managers of a service concession must apply IFRS to account for the liabilities they undertake and the rights provided to them in the service concession agreements.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The International Financial Reporting Interpretations Committee (IFRIC) issued a new interpretation relating to the application of IAS 18 Revenue Recognition. IFRIC 13 "Customer Loyalty Programmes" clarifies that where entities grant award credits (e.g. loyalty points or reward miles) as part of a sales transaction and customers can redeem those award credits in the future for free or discounted goods or services, IAS 18 paragraph 13 applies. This requires that the award credits are treated as a separate component of the sales transaction and an amount of the consideration received or receivable needs to be allocated to the award credits. The timing of the recognition of this element of revenue is deferred until the entity satisfies its obligations relating to the award credits, either by supplying the rewards directly or by transferring the obligation to a third party. IFRIC 13 needs to be applied for annual periods beginning on or after 1st January 2008.
IFRIC 14 gives guidance on how entities should determine the limit placed by IAS 19 Employee Benefits on the amount of a surplus in a pension plan they can recognise as an asset. Furthermore, it explains how the assets or the liabilities can be affected by a defined or contractual minimum funding requirement.
This interpretation is effective for annual periods beginning on or after 1 January 2009 and addresses the diversity in accounting for real estate sales. Some entities recognise revenue in accordance with IAS 18 (i.e. when the risks and rewards in the real estate are transferred) and others recognise revenue as the real estate is developed in accordance with IAS 11. The interpretation clarifies which standard should be applied to particular. This interpretation is not relevant to the Group's operations.
This interpretation is effective for annual periods beginning on or after 1 October 2008 and applies to an entity that hedges the foreign currency risk arising from its net investments in foreign operations and qualifies for hedge accounting in accordance with IAS 39. The interpretation provides guidance on how an entity should determine the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item. This
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
interpretation is not relevant to the Group as the Group does not apply hedge accounting for any investment in a foreign operation.
| in million € | Geographical Sales Breakdown | Gross Margin Breakdown |
|||||
|---|---|---|---|---|---|---|---|
| 1H08 | 1H07 | Difference % |
1H08 | 1H07 | Difference % |
||
| European Union |
494,53 | 336,63 | 46,91% | 124,68 | 104,9 | 18,86% | |
| Other Europe | 2,44 | 2,50 | -2,32% | 0,58 | 0,21 | 176,19% | |
| America | 23,89 | 20,82 | 14,73% | 8,97 | 7,13 | 25,78% | |
| Other | 72,42 | 51,66 | 40,18% | 50,16 | 42,66 | 17,57% | |
| Eliminations | -45,82 | -32,80 | - | -20,24 | -9,64 | - | |
| Total Consolidated Sales |
547,46 | 378,81 | 44,52% | 164,15 | 145,26 | 13,01% |
No significant changes in contingent liabilities status since the last annual balance sheet date (31/12/2007).
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
ci) Changes in estimates of amounts reported in prior interim periods of the current financial year, if those changes have a material effect in the current interim period:
No such.
cii) Changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period:
No such.
d) Issuances, repurchases and repayments of debt and equity securities:
Ι. Share Option:
According to the decision of the General Assembly of Shareholders on October 24th, 2007, the share capital (Ministry of Development Decision K2-15700/31-10-2007) was increased by € 18.122.611,03 through the capitalization of reserves and the increase of the nominal value of the share of the company by € 0,23 and by the same aforementioned resolution , it was resolved to decrease the nominal value of each share from € 0,60 to € 0,30 and to issue 78.793.961 new shares with a nominal value of € 0,30 each ,which were distributed freely to the old shareholders, at a ratio of one new share for each existing one respectively.
Following the partial exercise of the share option, during 2007, the share capital was increased by A) €1.242 with the issue of 4.140 nominal shares at a nominal value of € 0,30 each. Payment of this amount was confirmed by the Board of Directors on 19/12/2007 while the share capital increase and confirmation of this amount were
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approved by decisions K2-18339/11-1-2008 and K2-18338/11-1-2008 of the Ministry of Development and B) € 405.009,30 with the issue of 1.350.031 nominal shares with a nominal value of € 0,30 each. Payment of this amount was confirmed by the Board of Directors on 19/12/2007 while the share capital increase and confirmation of this amount were approved by decisions K2-18340/11-1-2008 and K2-18337/11-1-2008 of the Ministry of Development.
Investment in:
INTRALOT SOUTH KOREA LTD with percentage 100% (direct) INTRALOT FINANCE UK PLC with percentage 100% (direct)
Increase in Intralot De Argentina's Share Capital by € 255 thousands.
Such changes have not a significant effect on the consolidated total assets, on the consolidated revenues and on the consolidated earnings after tax.
For information reasons, although the effect of this change in the consolidated figures is not material, it is notified that Innovative Sol. Cons. Group., consolidated with the equity method, until the previous period, is not included in this consolidation, due to its sale (loss to the group: €14 thousands).
g. Acquisitions and disposals of tangibles and intangible assets:
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Net addition for the Group, due to acquisitions and disposals of tangibles and intangible assets as at June 30, 2008 amounts to € 46.291 thousands, while the respective proceeds were approximately € 21 thousands.
The amounts of expense/income included directly in the Equity of the Group on 30/06/2008 regard foreign exchange differences of € (21,3) mil., derivative valuation of € (309) mil., valuation of available for sale financial assets that amount to € 46 thousand and € (272) thousands that regard reverse of accountable tax from income tax return and tax from distribution of nontaxable reserves.
The respective figures for the Company amount to € (309) thousands that regard the valuation of derivatives and € 31 thousands, that regard reverse of accountable tax from the income tax return.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
The companies included in the consolidation, with the relevant addresses and the relevant participation percentages are the following:
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| COMPANY | BASE | DIRECT PARTICIPATION PERCENTAGE |
INDIRECT PARTICIPATION PERCENTAGE |
|
|---|---|---|---|---|
| INTRALOT SA | Maroussi, Attica | Parent | Parent | |
| 5. | BETTING COMPANY SA | N. Iraklion, Attica | 95% | 5% |
| 10. | BETTING CYPRUS LTD | Nicosia, Cyprus | 100% | |
| INTRALOT DE CHILE SA | Santiago, Chile | 99,99% | ||
| INTRALOT DE PERU SAC | Lima, Peru | 99,98% | ||
| INTRALOT INC. | Atlanta, USA | 85% | ||
| INTRALOT BETTING OPERATIONS (CYPRUS) LTD |
Nicosia, Cyprus | 54,95% | ||
| 1. | ROYAL HIGHGATE LTD | Paralimni, Cyprus | 3,82% | 29,39% |
| POLLOT Sp.zo.o | Warsaw, Poland | 100% | ||
| ΜALTCO LOTTERIES LTD | Valetta, Malta | 73% | ||
| ΙΝTRALOT HOLDINGS INTERNATIONAL LTD |
Nicosia, Cyprus | 100% | ||
| 2. | LOTROM SA | Bucharest, Romania | 60% | |
| 2. | YUGOLOT LTD | Belgrade, Serbia&Montenegro |
100% | |
| 2. | YUGOBET LTD | Belgrade, Serbia&Montenegro |
100% | |
| 2. | BILOT EOOD | Sofia, Bulgaria | 100% | |
| 3. | EUROFOOTBALL LTD | Sofia, Bulgaria | 49% | |
| 4. | EUROFOOTBALL PRINT LTD |
Sofia, Bulgaria | 49% | |
| 2. | INTRALOT INTERNATIONAL LTD |
Nicosia, Cyprus | 100% | |
| 5. | INTRALOT OPERATIONS LTD |
Nicosia, Cyprus | 100% | |
| 2. | INTRALOT BUSINESS DEVELOPMENT LTD |
Nicosia, Cyprus | 100% | |
| 2. | INTRALOT TECHNOLOGIES LTD |
Nicosia, Cyprus | 100% | |
| 14. | INTELTEK INTERNET AS | Istanbul, Turkey | 20% | 25% |
| LOTERIA MOLDOVEI SA | Chisinau, Moldova | 47,90% | ||
| 6,7,8. | TOTOLOTEK SA | Warsaw, Poland | 58,80% | |
| 2. | WHITE EAGLE INVESTMENTS LTD |
Hertfordshire, United Kingdom |
100% | |
| 2. | BETA RIAL Sp.zo.o | Warsaw, Poland | 100% | |
| 9. | YUVENGA CJSC | Moscow, Russia | 24,50% | |
| 2. | UNICLIC LTD | Nicosia, Cyprus | 50% | |
| 9. | DOWA LTD | Nicosia, Cyprus | 30% |
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| COMPANY | BASE | DIRECT PARTICIPATION PERCENTAGE |
INDIRECT PARTICIPATION PERCENTAGE |
|
|---|---|---|---|---|
| INTRALOT NEW ZEALAND LTD |
Wellington, New Zealand |
100% | ||
| 2. | INTRALOT EGYPT LTD | Nicosia, Cyprus | 88,24% | |
| 11,2. | E.C.E.S SAE | Cairo, Egypt | 75,01% | |
| 2. | INTRALOT OOO | Moscow, Russia | 100% | |
| POLDIN LTD | Warsaw, Poland | 100% | ||
| INTRALOT ASIA PACIFIC LTD |
Hong Kong, China | 100% | ||
| INTRALOT AUSTRALIA PTY LTD |
Melbourne, Australia | 100% | ||
| INTRALOT SOUTH AFRICA LTD |
Johannesburg, S.Africa |
72,95% | ||
| INTRALOT LUXEMBOURG S.A |
Luxembourg, Luxembourg |
100% | ||
| 2. | INTRALOT ITALIA SRL | Rome, Italy | 85% | |
| 13. | SERVICIOS TRASDATA SA |
Lima, Peru | 100% | |
| INTRALOT IBERIA SAU | Madrid, Spain | 100% | ||
| INTRALOT IBERIA HOLDINGS S.A. |
Madrid, Spain | 100% | ||
| TECNO ACCION S.A | Buenos Aires, Argentina |
50,01% | ||
| 15. | GAMING SOLUTIONS INTERNATIONAL SAC |
Lima, Perou | 99,9% | |
| 2. | GAMING SOLUTIONS INTERNATIONAL LTD |
Bogota, Colombia | 99% | 1% |
| INTRALOT BEIJING Co LTD |
Beijing, China | 100% | ||
| 2. | NAFIROL S.A. | Montevideo, Uruguay | 100% | |
| 16. | INTRALOT ARGENTINA S.A |
Buenos Aires, Argentina |
99% | 1% |
| 2. | LEBANESE GAMES S.A.L | Beirut, Lebanon | 99,99% | |
| 17. | VENETTA SERVIZI S.R.L. | Mogliano Veneto, Italia |
85% | |
| INTRALOT SOUTH KOREA LTD |
Seoul, S. Korea | 100% | ||
| INTRALOT FINANCE UK PLC |
London, United Kingdom |
100% |
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| COMPANY | BASE | DIRECT PARTICIPATION PERCENTAGE |
INDIRECT PARTICIPATION PERCENTAGE |
|
|---|---|---|---|---|
| BILYONER INTERAKTIF HIZMELTER AS (former LΙBERO INTERAKTIF AS) |
Istanbul, Turkey | 25% | ||
| LOTRICH INFORMATION CO. LTD |
Taipei, Taiwan | 40% | ||
| 13. | GIDANI LTD | Johannesburg, S.Africa |
16,41% |
2: Intralot Holdings International Ltd 11: Intralot Egypt Ltd
6: Pollot Sp.Zoo 15: Nafirol S.A.
9: Uniclic Ltd
3: Bilot EOOD 12: Intralot South Africa Ltd
The companies Loteria Moldevei and Inteltek Internet AS are consolidated using the full consolidation method since the preconditions of IAS 27 are met.
Intralot has been audited by the Tax Authorities up to 31/12/2007. On July 2007 the regular tax audit of the fiscal years 2006 and 2007 has been completed from which additional taxes of € 1,23 mio were imposed. The company has already made cumulative tax provision during the previous periods of € 1,05 mio. The tax difference was stated in the income tax of the first semester of 2008.For the tax audit of the current period the company makes sufficient provision for additional taxes.
Regarding Intralot's subsidiaries their books have not been audited for the one (1) to five (5) last fiscal years.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
There are no real liens.
The amount of provisions that had been made up to 30/06/2008 in the Group and refer to tax unaudited fiscal years is € 490K and the rest provisions is € 16,8 mio. Respectively the company has made provision for tax unaudited periods of € 100 k and rest provisions of € 5,8 mio.
There has been no provision made for legal issues pending in the Group and Company.
a. On 05.09.05 an action was served to the company, filed by the company "IPPOTOUR S.A.", against the company and the company "OPAP S.A.". Τhe plaintiff "IPPOTOUR S.A." requested to be acknowledged that the contract signed between OPAP S.A. and the Company should not grant to the latter the right to operate any kind of wagering game on Greek or foreign horse racing, that "OPAP S.A" should not have the right to operate any kind of wagering game on horse racing and that "OPAP S.A." and the Company should be excluded from the operation and organization of betting games on horse racing. The hearing of the case had been set for 14 February 2008 when the hearing was postponed for 08 October 2009. By virtue of the above mentioned action the plaintiff withdrew of the action filed against the Company on 10 January 2003 with the same content, which was set to be heard on 18 May 2005, on which date the said hearing was cancelled.
b. On 4 January 2005 OPAP S.A. submitted a notice of proceedings to "Betting Company S.A." regarding a lawsuit that was filed against OPAP S.A. before the Multi Member First Instance Court of Athens, with which the plaintiff claims the payment of the amount of €3.668.378,60 plus accrued interests from OPAP S.A., pleading that OPAP S.A. should pay this amount to him as profit, in addition to the amount already paid to him. Since
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
"Betting Company S.A." has a legitimate interest in OPAP S.A. winning the lawsuit, "Betting Company S.A.", the companies INTRALOT S.A., INTRALOT INTERNATIONAL LTD and the joint venture "INTRALOT S.A.-Intralot International Ltd" proceeded to an additional joint intervention in favor of OPAP S.A.; this was scheduled for hearing on 3 May 2005 but following a petition of the plaintiff the case was heard on 1 December 2005. By its decision No 2412/2006 the Multi Member First Instance Court of Athens ruled in favour of the lawsuit of the plaintiff and, following the restriction by the plaintiff of his petition to a lawsuit for acknowledgement of the debt, the Court acknowledged the obligation of OPAP S.A to pay to the plaintiff the amount of € 3.668.378,60. OPAP S.A and the aforementioned companies filed an appeal which had been rejected by the Athens Court of Appeals with its decision no. 6377/2007. The defendants filed an appeal before the Supreme Court but no hearing date has been scheduled until now. For the above case a provision has been made.
c. INTRALOT filed before Multi Member First Instance Court of Athens its civil lawsuit dated 12 May.2005 against Mr. K. Thomaidis, claiming the payment of sum of € 300.000 as pecuniary compensation for moral damage. The case was scheduled for hearing on 26 January 2006. On 18 January 2006 the company was served with an action filed by Mr. K. Thomaidis on 9 January 2006, before the Multi Member First Instance Court of Athens with which the plaintiff claims the payment of sum of € 300.000 as pecuniary compensation for moral damage. The case is scheduled for hearing on 14 December 2006. The suit of INTRALOT against Mr. K. Thomaidis was postponed to be heard on 14 December 2006. The two lawsuits have been heard together and the decision no 7936/2007 was issued declaring the lawsuit dated 9 January 2006 of Mr. Thomaidis as cancelled and accepting partially Intralot's lawsuit dated 12 May 2005.
d. On 6 August, 2007 a recourse (Law 2522/2007) dated 6 August 2007 filed by the Union of the Companies "G-TECH Corporation" and "G-TECH Global Services Corporation Ltd" before the Board of Directors of OPAP SA against the resolution of the BoD of OPAP SA dated 31 July 2007 (which had resolved for the conclusion of an agreement with INTRALOT), was served to INTRALOT; with the said recourse it is requested that the above resolution of the BoD of OPAP SA as well as any other relevant act are eliminated. On 27 August 2007 an application for interim measures (injunctions) filed by the above mentioned Union of Companies against OPAP SA was served to INTRALOT; with this application it was requested that the execution of the above mentioned resolution of the BoD of OPAP SA and of the contract signed between OPAP SA and INTRALOT, to be suspended. The date of the hearing has been scheduled for 11
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September 2007; INTRALOT intervened in this case in favor of OPAP SA. The Court by its decision no. 7597/2007 rejected the application of the Union of the Companies "G-TECH Corporation" and "G-TECH Global Services Corporation Ltd".
e. Against (a) publishing company "I. Sideris – Andreas Sideris Sons O.E.", (b) the Foundation of Economic and Industrial Researches (IOBE), (c) Mr. Theodosios Palaskas, Director of Research of IOBE, (d) the Kokkalis Foundation, and (e)INTRALOT a lawsuit of Mr. Charalambos Kolymbalis resident of Neos Skopos Serron, was filed on 8/3/2007 before the Multi Member Athens First Instance Court; date of the hearing was set the 20th February 2008 when it was postponed for 4 March 2009. With his lawsuit, the plaintiff requests to be recognized as the sole creator of the project entitled "The financial consequences of sports in Greece" and his intellectual property right on this, and that the amount of € 300.000 to be paid to him as monetary compensation for moral damages.
f. In Turkey, the tender on fixed odds betting tender related to establishment and operation of risk management center head agency held by Spor Toto (Genclik ve Spor Genel Mudurlugu -GSGM) and the Fixed Odds Betting contract dated 2 October 2003 singed as a result of the said tender between GSGM and Inteltek Internet Teknoloji Yatırım ve Danışmanlık Ticaret A.Ş» (Inteltek) (which is a 45% subsidiary company) were challenged by Reklam Departmani Basin Yayin Produksiyon Yapimcilik Danismanlik ve Ticaret Limited Sirketi ("Reklam Departmani") and Gtech Avrasya Teknik Hizmet ve Musanirlik AS ("Gtech") with the claim of suspension of execution and annulment.
For the lawsuit initiated by Gtech, Council of State (Danistay) decided for the suspension of the tender. Following this decision, the Fixed Odds Betting contract dated 2 October 2003 between GSGM and Inteltek was terminated by GSGM based on the said decision of Council of State and the L. 5583/2007 came into effect which allowed GSGM to hold a new tender and sign a new contract which would be valid until 1 March 2008. On 15 March 2007, GSGM held a new tender, at which Inteltek became the preferred bidder and reacquired the right to operate until 1 March 2008. On the other hand, Inteltek initiated two lawsuits against GSGM on the ground that the termination of the Fixed Odds Betting Contract dated 2 October 2003 was unjustified and to determine that the aforementioned contract is valid under law and is in force. The court decided to reject Inteltek's claim on 10 July 2007. Inteltek appealed the court's decision. Inteltek's appeal was rejected by the Court on 5 February 2008 and Inteltek applied for correction of decision. The Court's examination on correction of decision request is still pending.
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On 27 February 2008, the Turkish parliament passed a new law that allowed GSGM to sign a new Fixed Odds Betting contract with Inteltek, having the same terms and conditions with the latest contracts signed with GSGM and to be valid for up to one year, until operations start under the new tender which GSGM is allowed to hold in accordance with the same law. Inteltek signed a new Fixed Odds Betting contract with GSGM, which took effect on 1 March 2008. GSGM proclaimed a new tender on 8 July 2008 having a deadline for the submission of the offers the 12th August 2008. Inteltek participated in the new tender.
g. In Turkey, GSGM filed on 23 January 2006 before the First Instance Court of Ankara a declaratory action against the 45% subsidiary company Inteltek requesting to be recognized that the calculation of the player's excess payout of the fixed odds betting games, as per their contract, is effected at the end of each separate semester (as opposed to on a cumulative basis for all semesters at the end of the contract). Next hearing following the appointment of experts had been set for November 16, 2006 when the hearing was postponed for January 30, 2007 when it has been heard. The decision issued by the First Instance Court of Ankara vindicated Inteltek. GSGM filed an appeal. On 18 October 2007, Inteltek was notified that the appeal was rejected and, consequently, the decision of the First Instance Court of Ankara is final. GSGM filed an appeal against this decision which was rejected and the case file was sent back to the First Instance Court and the decision was finalized. Inteltek had made a provision of 3,3 million TRY(1,7 million Euro) (plus 1,894 million TRY relating to interest-980 thousands Euro) in its financial statements due to the probability of a negative outcome of the case which henceforth has been removed following the First Instance Court of Ankara decision. Moreover, Inteltek claimed the amount of TRY 2,344 million (1,213 million Euro) (plus interest) which was paid in the 1st and 3rd reconciliation periods. Inteltek has initiated a lawsuit on 21 February 2008 to collect this amount and the date of the hearing was scheduled to be 22 April 2008; at that date the case was rescheduled to be heard on 24 June 2008 and on that date was rescheduled for 6 November 2008 in order that further evidences to be collected.
h. In Turkey, the court Sayistay inspecting the accounts of GSGM of 2005, ruled that there were exceeding payments to Inteltek for specific operational expenses of one thousand terminals of the system, under the terms of the contracts dated 30 July 2002 and 2 October 2003, of an amount of TRY 10.670.528,789 (€ 5.523.048,02). For this reason it
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
sent to GSGM a letter dated 19 January 2007 which was served to GSGM on 26 January 2007. Beginning 2007, GSGM started to withhold (and to keep in escrow) this amount from the amount Inteltek is entitled to under the contract dated 30 July 2002. Inteltek filed a declaratory action before the civil courts of Ankara requesting to be recognized that there is charge for same services under the two contracts and to return to itself the amounts withheld. Sayistay's investigation file has resulted in favor of Inteltek and whereon GSGM released to Inteltek the withheld in escrow amount of 2,494 million TRY(€1,291 million) corresponding the period until 26.3.2007. Following the above, at the hearing date 29 April 2008, the Court decided that there is no reason to issue a decision regarding this case.
i. - In Poland an ex-employee of the subsidiary TotolotekSA has requested the payment of the amount of PLN 11.200.000 (€3.342.286) for creation of a software that the company utilizes. According to the opinion of the lawyers handling this case, the possibility that the lawsuit is accepted is not high.
In Poland, Totolotek SA, according to a decision of the court of appeals issued on 10 April 2008, has to pay the equivalent in PLN of 1000K USD (€634K) with the legal interest to the consultants' company IDC. The total amount for capital and interests amounts to PLN 4.049.930 (€1.208.574). The case relates to a letter of guarantee of the consultants' company IDC that Totolotek SA had requested and succeeded to be drawn in 1999. The amount of PLN 4.049.930 (€1.208.574) has already encumbered the financial statements of Totolotek SA and Totolotek SA examines the possibility to file further legal means.
Also in Poland, on 10 April 2008, a decision of the competent arbitration court was issued regarding a) the claim for loss of profit of Telenor Software (TTCOMM) against Totolotek SA for the amount of PLN 85.526.710 (€25.522.742) and the claim for an amount of PLN 4.445.480,83 (€1.326.613) for issued invoices after their agreement since 26.4.2000 and b) the counter claim of the company Totolotek SA against Telenor Software (TTCOMM) for restitution of damages (loss or profit) for the amount of PLN 93.532.601,74 (€27.911.847,73). The arbitration court partially accepted the claim of Telenor Software (TTCOMM) awarding in its favor the amount of PLN 6.778.852,87 (€2.022.934,31)plus interest calculated as from 18.2.2006, while it rejected the claim of Totolotek SA against Telenor Software (TTCOMM). A large part of this amount (PLN 4.822.000-€1.438.973) has already encumbered the financial results of Totolotek SA, although the possibility to file further legal means against this decision before the civil courts is examined.
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j. In South Africa, the Court which reviewed the application of Uthingo has found that there were shortcomings in the information provided to the Minister by the National Lotteries Board in relation to the individual shareholders in both Uthingo and Gidani (in which INTRALOT through its subsidiary INTRALOT SOUTH AFRICA PTY participates in) and therefore the Minister had to reconsider the process in relation to the above. Following such reconsideration, the license for the operation of the National Lottery of South Africa was awarded again to Gidani and the operation of the National Lottery has already started.
k. In Cyprus, against indirectly subsidiary, thirteen plaintiffs have filed a lawsuit requesting the payment to them of the total amount of CYP 283.000 (€ 483.512) as profit of a bet relating to the non-classification of Formula 1 cars at the race of Indianapolis, USA held on 19.6.2005. Since for this race there was the information that some racing teams would not start the race because there were problems with their tyres (which actually happened) and since the plaintiffs knew this before placing their bets, the company refuses the payment of the above amount. Due to dispute on the matter of the arbitrator's appointment, the matter will be resolved by the Cypriot Courts. No hearing date has been scheduled yet. The Board of Directors of the company decided, following the relevant legal advise of the local lawyers, that no reason exists in order to proceed to a provision for the above lawsuit or for the remaining lawsuits which have been filed against companies belonging to the indirect subsidiary (which are of a total amount of CYP 144.904 (€247.572)).
l. In Argentina, the subsidiary company "Tecno Acción S.A." filed before the Tax Court recourses against penalties of a total amount (including interest) of 4.557.069,03 Argentinean Pesos(€954.959,98) (on which further penalties -of an amount that cannot be currently determined- may be imposed). It is noted that the litigant parties have the right of recourse to the ordinary justice against the decision of the Tax Court. At this stage, the legal advisors of the subsidiary company in Argentina cannot issue a legal opinion for the outcome of the case. According to the terms of the Share Purchase Agreement relating to the shares of "Tecno Acción S.A." dated 30 December 2006, an amount of 3.250.000 US dollars (€2.061.659) has been deposited to an escrow account and part of this amount will cover the abovementioned tax obligations.
m. In Colombia, Intralot, on 22 July 2004, entered into an agreement with an entity called Empresa Territorial para la salud ("Etesa"), under which it was granted with the right to operate games of chance in Colombia. In accordance with terms of the abovementioned agreement, Intralot has submitted an application to initiate arbitration proceedings against
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Etesa requesting to be recognized that there has been a disruption to the economic balance of abovementioned agreement to the detriment of Intralot (and for reasons not attributable to Intralot) and that Etesa to be compelled to the modification of the financial terms of the agreement in the manner specified by Intralot as well as to pay damages to Intralot (including damages for loss of profit); or alternatively to terminate now the agreement with no liability to Intralot. The arbitration panel has not been formed and no hearing date has been scheduled yet.
n. In United States of America, GTech Corp. filed an action against Ohio Lottery Commission ("Lottery"), Michael Donlan in his capacity as Executive Director of the Lottery and Intralot Inc., before the Franklin County Court of Common Pleas.
This action was brought by the plaintiff for declaratory and injunctive relief. Plaintiff seeks a preliminary and permanent injunction against the Lottery and Intralot, Inc. from performing under the The Agreement for Contractual Services entered into between the Lottery and Intralot Inc. on or about June 16, 2008. Additionally, the plaintiff seeks a Declaratory Judgment declaring that the Director of the Lottery abused his discretion in the evaluation of submitted proposals and the ultimate award of the contract, pursuant to the RFP, to Intralot, Inc. No hearing date has been set yet for this case but it is expected that such date will be during the two months period October-November 2008.
Until 20 August 2008, apart from the above, any other legal issues do not have a material effect on the financial position of the Group.
The personnel employed by the Company and the Group as at the end of the first six months of 2008 were 527 and 4.440 respectively. For the first six months of 2007, the personnel employed by the Company and the Group were 427 and 3.665 respectively.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
| 30/6/2008 | |||
|---|---|---|---|
| Amounts reported in thousands of € | Group | Company | |
| a) Income | |||
| -to subsidiaries | - | 62.205 | |
| -to other related parties | 4.755 | 3.369 | |
| b) Expenses | |||
| -from subsidiaries | - | 12.600 | |
| -from other related parties | 33.310 | 27.857 | |
| c) Receivables (i) | |||
| -from subsidiaries | - | 155.290 | |
| -from other related parties | 71.709 | 12.289 | |
| d) Payables | |||
| -to subsidiaries | - | 15.704 | |
| -to other related parties | 30.195 | 16.394 | |
| e) BoD and Key Management Personnel | |||
| transactions and fees | 4.611 | 2.741 | |
| f) BoD and Key Management Personnel | |||
| receivables | 49 | - | |
| g) BoD and Key Management Personnel | |||
| payables | 166 | - | |
| (i) Total due from related entities | 71.709 | 167.579 | |
| (less) long term portion | 48.602 | 20.500 | |
| Due from related entities | 23.107 | 147.079 |
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This contract has been signed following the recent vote in the Turkish parliament of a law regulating sports betting operation in Turkey. According to this law, a call for tenders shall be launched during 2008 to award sports betting operation in Turkey to a contractor for the next 10 years.
g. The Polish government granted to TOTOLOTEK, the subsidiary of INTRALOT in Poland, the license to operate in that country the European Pool of the Swedish Horse Racing
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Totalisator Board, ATG, which offers betting on Swedish horse races in a number of countries.
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INTEGRATED LOTTERY SYSTEMS AND SERVICES Interim Condensed Financial Statements (Group and Company) for the period 1 January until 30 June 2008 Public Companies (S.A.) Reg. No. 27074/06/B/92/9
a) INTRALOT SA, through its subsidiary Intralot Italia SPA has acquired 100% of the italian Joint Venture company, William Hill Codere Italia Srl (WHCI), thus further strengthening its position in the Italian betting market. The gross consideration agreed is € 5,5 million
Through this acquisition, Intralot Italia enriches its current portfolio with 55 additional licenses for horseracing and sports betting points of sale.
b) In Turkey, the tender for the new management contract of the betting game in the country the next ten years, is in progress. INTRALOT is participating in the tender.
THE CHAIRMAN OF THE BOARD THE VICE CHAIRMAN OF DIRECTORS OF THE BoD AND CEO
S.P. KOKKALIS C.G. ANTONOPOULOS ID. No. Π 695792 ID. No. M 102737
FINANCE AND BUSINESS DEVELOPMENT
THE GENERAL DIRECTOR OF THE ACCOUNTING DIRECTOR
Ι.Ο. PANTOLEON Ε. Ν. LANARA ID. No. Σ 637090 ID. No. AB 606682 H.E.C. License No. 133/A' Class
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