Ladies and gentlemen, thank you for standing by. I am Kelly, your Chorus Call operator. Welcome, and thank you for joining the Intralot conference call and live webcast to present and discuss the first half 2022 financial results. All participants will be in listen only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and 0 on your telephone. At this time, I would like to turn the conference over to Mr. Chrysostomos Sfatos, Deputy Group CEO of Intralot. Mr. Sfatos, you may now proceed.
Thank you. Welcome to the earnings call for the first half of 2022. I would like to pass the floor to the Group CFO, Mr. Andreas Chrysos, for his report.
Good afternoon, ladies and gentlemen. The first half of 2022 was characterized by the stabilization of the business, evident by the stable top line performance and EBITDA compared to the previous year. Major highlights on the operational front are the accumulated effects of the efforts that the management has undertaken on the cost side in the last few years, especially at headquarters perimeter. The full rebound from the effects of the pandemic that had an impact in the respective period of 2021 in some of our markets, such as Argentina and Australia, smaller, though, compared to 2020. Thirdly, the ramp up of the projects that went live in 2021, such as Croatia.
On the financing front, after the completion of the capital structure optimization of 2021, the first half of 2022 was marked by Intralot's continuous efforts to further optimize its capital structure and create value for all stakeholders as committed by the management. As you are aware, Intralot completed a share capital increase of up to EUR 129 million in July, with full subscription, with cash payment and preemptive right in favor of existing shareholders. As part of this process, a new cornerstone investor has entered the shareholding structure of the group. This new group, Standard General, and its wholly owned subsidiary, CT Holding Company, acquired 32.9% of the stake of Intralot S.A., by injecting EUR 71 million.
The proceeds of the share capital increase were used to buy back shares from the minority shareholders of Intralot, Inc. Also, on July 28th, Intralot, Inc. signed a credit agreement with KeyBank National Association as administrative agent and issuing lender and a syndicate of U.S. financial institutions for a three-year term loan of $230 million, plus a committed revolving facility of $50 million. The proceeds of which were used to fully refinance the 2025 PIK toggle notes, which subsequently were canceled. Apart from the repayment of the 2025 notes, the new credit agreements bear lighter terms and covenant package compared to the previous notes, while the revolving credit facility provides flexibility to the company in relation to its liquidity needs.
Apart from the strategic importance of all those actions that will put Intralot in a stable course for new opportunities in the future, the effect of the recent restructuring exercise that was completed successfully in August 2021 also affected positively the P&L, with the debt servicing cost being materially lower versus a year ago, while the leverage ratio of the group was also improved substantially as a result of both better net debt but also EBITDA metrics. On the contract renewals front, during the first half of 2022, Intralot extended its current contract with La Marocaine des Jeux et des Sports for one more year, which is now due to expire at the end of 2023, and with Magnum Corporation in Malaysia for two more years, which now expires in June 2024.
Furthermore, a five-year extension option has been exercised with the Wyoming Lottery, according to which Intralot, Inc., our subsidiary in the U.S., will continue to provide its lottery operating system and services for the operation of the lottery through August 2029. With this said, we are moving on to the first half of 2022 financial presentation. Turning to page number five, we see the results of our licensed operations, which have been improved by 6.5% or EUR 4 million. Performance attributed to our better performance of business in Argentina, partly counterbalanced by a lower performance in Malta. Turning to page number six , we see a stable performance in the revenues generated by our technology contracts.
The key takeaways in this activity line are, first of all, the high revenue in Australia since last year's respective quarter was still affected by lockdown restrictions and were fully lifted in the next months of 2021. Same trend in Croatia, following the go live of the lottery contract solution that commenced after the first quarter of 2021 and ramped up throughout the remaining months of 2021. In the U. S., we have a deficit of EUR 5.9 million or 7.5% compared to the respective periods of 2021. The non-existence of a jackpot in the first quarter of 2021, the higher merchandise sale in the first half of 2021, and the anticipated correction in the lottery segment performance were the primary reasons for the lower revenue of 2022 compared to the respective periods of last year.
By nature, of course, the frequency and magnitude of jackpots cannot be predicted, so being the main reason for the seasonality and peaks of the lottery top line movements. Lastly, moving to page number seven, we see the performance of our management contract activity, which was reduced by 10.2% or EUR 2.5 million, which was solely an effect coming from the Turkish market attributed to the foreign exchange currency implications. Though in local currency, current year results posted an increase of 49.4%. All other effects were minor and counterbalanced each other. Turning to page number eight, we see the overall P&L performance metrics for the first quarter of 2022 versus a year ago. Takeaways on the operational front are the following: Stable performance in the revenue line year-over-year, which has been analyzed in the previous slides.
Secondly, the GGR line is slightly better due to a lower average payout ratio versus the respective half of 2021. Thirdly, the gross profit line is slightly lower compared to previous year performance, but better by EUR 2 million if excluding the depreciation, which is included in this line. Fourth, the OpEx line performance worse by EUR 4 million, and if excluding the depreciation here as well, it's EUR 2.8 million, primarily attributed to some cost overruns in the U.S. Fifth, all the above resulted to a stable EBITDA performance of EUR 55.1 million in the first half of 2022, slightly better compared to the first half of 2021. Lastly, the EBITDA margin of sales remained at the same high levels as it was in 2021 at around 27%.
Moving down to the EBT line, it was better by EUR 18.4 million year-over-year. Focusing on the main reasons for this performance, apart from the slightly positive EBITDA variance, the rest positive variance in this line were the following. First of all, the non-existence of the reorganization expenses that hit the first half of 2021, being better in this line by EUR 10.9 million. The second thing was the gains of EUR 9.1 million on the monetary position, arising from the first time application of IAS 29 due to hyperinflationary economy in Turkey, which is a non-cash item. Thirdly, the lower interest expense directly affected by the debt restructuring, which was better by EUR 3.9 million.
Lastly, the absence of impairments and write-offs that took place in the first half of 2021, so this line being better by EUR 3.9 million. On the negative variance side, we had the following. First of all, the negative impact from the FX results, which was worse by EUR 3.9 million, the higher depreciation and amortization by EUR 4.6 million. And lastly, the recognition of losses versus gain from participations and investments, primarily due to the sale of Peru that took place in the first half of 2021. I'm sorry.
Turning to page number nine, the other graphs have already been analyzed in detail, so focusing on the bottom left of the slide, the operating cash flow stood at EUR 41 million in the first half of 2022 versus EUR 51 million in 2021. This was because, 2021 was positively affected by a one-off income tax returns received by the parent company in the first quarter, specifically. Net CapEx at slightly higher absolute figure versus last year, but almost similar. On the bottom right of the slide, we see the implication of the net debt and the leverage ratio being EUR 509 million or 4.6x respectively, which is a direct effect of the restructuring exercise that took place in 2021.
Turning to page number 11, lastly, we see the contributions per region in our revenues and EBITDA. As always, and in line with our strategy, in the last few years to shift our activity towards more developed markets, most of our revenues and EBITDA are produced in the more developed parts of the world, namely North America, Europe, and Oceania. With this said, at this stage, the presentation of the first half of 2021 results is finished and the Intralot executive team is at your disposal for any questions you may have.
Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Daniel Welford with Morgan Stanley. Please go ahead.
Yeah. Hi, good afternoon, everyone, and congratulations on the successful capital raise. Well done. Looking forward, in regards to your outlook, I mean, you are around this EUR 110 million EBITDA level. Do you feel like you have growth potential from there? If so, what are some of the areas of growth that you see?
Yeah. This is Chrysostomos Sfatos. We are definitely looking and evaluating our options and opportunities right now. Basically, starting from the areas where we are already active. U. S. and Australia will be the primary, you know, countries where we have the strongest base. Right now, we don't have much to share in terms of, you know, quantitative targets. We're very happy that in the midst of this environment and especially the pandemic, that we are able to maintain this level of EBITDA over EUR 100 million at group level. Definitely certain growth opportunities from the areas that I mentioned, we'll be able to quantify more specifically in the coming period. Basically now the company has the runway that we sought for in order to address all these opportunities.
Okay. Thank you for that. Maybe one quick follow-up question. I mean, with your new debt facility in the U.S., which obviously also very cheap, do you have the flexibility to move cash freely around from the U.S. into headquarters? Thank you very much.
Well, first of all, we now have 100% of the U.S., which significantly increases our access to the dividend. Our plan is to collect the dividend, which is now possible from the U. S., and definitely follow a prudent cash management. First of all, as you realize, we have a revolving facility which gives us tremendous flexibility in the U.S., to open and close it, and definitely meet any CapEx needs through that, but also minimize the expenses on the debt servicing. Yes, the answer, I mean, the bottom line to your question is we do have now plenty of capacity to move the cash from the U. S. to the parent structure, if there are such needs.
At the same time, you should notice that the cost structure at parent level is significantly lower and therefore the needs for cash pooling from the U. S. are much more limited than in the past couple of years.
Thank you.
The next question is from the line of Jemma Permalloo with J.P. Morgan. Please go ahead.
Hi. Good afternoon, and thank you for taking my questions, and also congratulations on getting the transaction done. A couple of questions from me. I think first of all, given your exposure as well to Europe, I was just wondering if you could provide some color on any sort of change in consumer sentiment that you're seeing across the board. Secondly, your EBITDA of around ballpark EUR 110 million, any guidance going into your year-end? And then just finally, given your net leverage of 46x, could you remind us if you have or had provided any sort of leverage target in the past? Thank you.
I think the leverage right now is 4.6. Right? Is that what you said? Okay.
Yes. That's what I said.
Yeah. Well, it's significantly better than in the past. Of course, obviously we're trying to reduce it. The other question was about the EBITDA, if we have any guidance. Do you mean for 2022?
Yes. Going full year and 2022, if any guidance as well going into next year, but appreciate that might be a bit early.
Well, as I said, we are happy that we are able to be north of EUR 100 at the moment. We think that something like last year's performance or thereabout is possible. There is some seasonality, as you realize, in the income from the U. S. Last year, in the first half, we had two major jackpots. These jackpots do occur, and they did not occur in the first half of 2022. This seasonality will positively affect the income from the U.S. in the second half. Taking everything into account, we think that this target is feasible.
Thank you. If I may, just on the first question, if you're seeing any change in sort of player or consumer sentiment given inflationary pressures as well that we're seeing in Europe? Thank you.
We haven't seen a change in the sentiment yet. It's not unlikely, but the impact is more likely to be on the cost side rather than on the revenue side. Actually, in the two markets where we had hyperinflation phenomena like in Turkey and in Argentina, we saw an increase in the turnover that to a very large extent covered the loss from the effects. We have analyzed these things in the presentation. You know, it's hard to predict how inflation will play out on the top line, but no major waves right now on this.
Great. Thank you very much.
The next question is from the line of Felix Wolfgang with Sarria Asset Management. Please go ahead.
Yes, hi, my questions are actually mostly been answered at this stage. One small question, can I ask you to repeat the terms of that new financing that you've got in the U.S. The coupon, if there's any ring-fencing at all. I think you've just said there isn't, but I don't know if there's any sort of other kind of language attached to it. That would be really good. Maybe if you have what your plans are now from a corporate or financing perspective, if you're having any plans to raise debt elsewhere, perhaps refinance here and there. Yeah. Thank you very much.
Well, to start from the last question, as you realize, we just completed three mega transactions. First of all, we have the capacity to do such transactions.
I figured that. Yes.
On the U.S. new term loan, it's a term loan, so it's a secured facility issued by Intralot, Inc. The spread on SOFR is three points, as you saw, and this spread is locked for a year. It follows the performance of the company, but we expect to stay in that area of the three points. That's a much better package in terms of the coupon compared to the previous bond that we had, which was 7.1 and was bound to increase to 8.3, I believe, in the second year and 8.9 in the third year.
Also the other thing that's of note here is that this is a three-year term loan while the previous bond had a springing maturity to 2024. Now the 2024 is the next maturity, clearly. Whether we can raise debt, we have to think about our options right now. I'm not in a position to make any comments about such future exercises, but definitely we are happy that we have built a relationship with a bank consortium in the U. S. The structure of this loan is something that gives us the flexibility on top of the relations with the banking institutions. It's a very young relation, just one month old, and we definitely want to build on it.
Can I ask, what is the security package of the new U.S. loan?
It's similar to the previous one.
Okay. Thank you.
As a reminder, if you would like to ask a question, please press star and one on your telephone. Once again, to register for a question, please press star and one on your telephone. As a final reminder, to register for a question, please press star and one on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.
Thank you very much. We are, as we said, we're very confident about now the prospects of the company. We review for the third quarter results at the end of November.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good evening.