International Game Technology PLC (IGT) 2007 Q2 法說會逐字稿

Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Lottomatica 2007 first half earnings results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. (OPERATOR INSTRUCTIONS). At this time, I would like to turn the conference over to Mr. Bruce Turner, CEO of Lottomatica. Mr. Turner, please go ahead.

Okay. Thank you, [Cherie]. And welcome. Good evening to those in Europe. Good morning for those joining us from the United States. With me today on this call is Stefano Bortoli, our Chief Financial Officer. Also joining us for the question and answer segment of the call will be Marco Sala, the Managing Director for Italian Operations, and Jaymin Patel, the Chief Operating Officer of GTECH.

Unfortunately, I am not able to physically be with our team in Rome at the moment, in that I sustained a minor injury recently that's temporarily sidelined me, making air travel just a wee bit difficult.

Now that you have been given the injury report, let me begin the call.

As I have noted in previous calls, and for the sake of clarity during this call, we will refer to Lottomatica in discussing items related to corporate-level performance. And we will differentiate between our operating entities by referring to them as Italy and GTECH when discussing their respective performance and contribution.

I would like to start off today by giving you my perspective on Lottomatica's performance in the first half of 2007, after which we will hear from our CFO, Stefano Bortoli, and then we'll take your questions.

Lottomatica's financial performance in the first half of 2007 met our expectations and, in some areas, exceeded them as well. Overall, we are encouraged by the results. The fundamentals of our business continue to experience positive growth worldwide. As will be discussed, we have taken some bold steps towards achieving the goals we recently set forth in our three-year plan.

I'd now like to give you a more detailed review, beginning first with financial performance.

Revenue for the first half of 2007 were EUR835m, representing a year-over-year increase of approximately 145%. Revenues included EUR428m of contribution from GTECH and EUR407m of contribution from Italy. GTECH revenues were comprised of EUR397m of service revenue and EUR31m associated with respective product sales.

Overall, Italian Lottery sales experienced robust growth, totaling EUR7.3b, up from EUR5.3b in the first half of 2006, a 39% aggregate increase. The Italian instants market continues to make a significant contribution to our success.

In addition, we continued to enjoy high margins in our key verticals, which we believe are sustainable for the future.

First half operating income was approximately EUR289m. We were able to achieve operating income margins of 35%. I should point out that this calculation does exclude the purchase price amortization of intangibles related to the GTECH acquisition.

As I turn our attention to a review of our operations, it's clear that we've had a very successful first half. A number of developments has contributed to that success, which I'd like to review for you briefly. As has been our practice, I'll focus my reviews around the major drivers of the business for today and the future.

GTECH delivered operating performance in line with our expectations. We remain focused on our core lottery business as the principal driver of GTECH growth. Despite lower jackpot activity in the second quarter, same-store revenue grew 4% above the first half of 2006.

As has been widely reported, there has been a great deal of jackpot activity during the current quarter. Just last month, both United States multi-jurisdictional games, Powerball and Mega Millions, each saw jackpots reach well over US$300m. Powerball jackpot hit US$314m on August 25. That was followed by a Mega Millions jackpot on August 31 of US$330m. As most of you know, multi-jurisdictional games of the type I've just outlined are designed to produce bigger payoffs for players and more profit for participating jurisdictions.

As the lottery service provider to 14 of the 31 U.S.-based Powerball jurisdictions and 11 of the 13 Mega Millions jurisdictions, GTECH will benefit from this as well. However, please keep in mind, as we've outlined to you in the past, jackpots are a factor in our business and yet it is one that is subject to quarter-to-quarter variation.

GTECH's business activity continued at a rapid pace. To give you a high-level perspective, during the 12 months since we joined together with Lottomatica, GTECH has participated in 22 competitive global procurements. Of the EUR1.1b in potential business available in those 22 competitive bids, GTECH won approximately EUR830m, or 78% of the total revenue available over the life of these contracts. We're very pleased with that because it's a healthy win rate. We achieved it through responses to RFPs that are designed to demonstrate the value of our solutions as a major differentiator and we bid to make money.

I wanted to make note of this point, so as to keep into perspective the announcement of lottery contract awards. They can vary greatly in value. We believe it is important to build long-term sustainable shareholder value by winning and retaining profitable business. We will continue to do so.

Most notably, GTECH is a major technology supplier to the Camelot Consortium that was chosen to receive the next 10-year license in the United Kingdom. Camelot is respected throughout the world as one of the most sophisticated and innovative lottery operators. The Camelot win is noteworthy because it represents an instance in which we expect to improve our contribution from this relationship with the new license.

As we announced today, under the new license we will provide Camelot with a full suite of products and services, including over 27,500 Imagine terminals, a system conversion to enterprise series, as well as an upgrade to Camelot's existing interactive system. GTECH will also offer assistance in the design and delivery of Camelot's growing portfolio of retail, online, interactive and instant-ticket games through GTECH's Global Marketing Group and our subsidiary, IGI Europrint.

GTECH expects to receive in excess of EUR600m in revenue over the 10-year license term. We look forward to assisting Camelot in the largest conversion in lottery history and helping to meet their commitment to raise GBP20b for good causes.

GTECH also competed for and won a new 10-year online lottery contract with the Kansas Lottery, worth approximately EUR60m.

Although we made note of it in our previous call, the extension of GTECH's contract with the New York Lottery, which has a value of approximately EUR147m, was also awarded during the second quarter.

Additionally, we received orders for our Altura Lottery terminal, which is a member of our family of terminals, from the Denmark and Western Canadian Lotteries, two important reference points for future terminal procurements. Our Altura Terminal also serves as the foundation product for the new Italian sports betting network, which we'll talk about a little bit later.

I also want to point out that we have successfully rolled out our newest terminal family member, the Imagine, in 900 locations in the state of Rhode Island in the United States. We expect to have all 1,235 Imagine terminals installed in Rhode Island over the next couple of weeks.

This next-generation technology, which features digital imaging replacing mechanical read mechanisms, is an industry first. We like industry firsts. It is also notable that this product helps us to improve the cost competitiveness of our point-of-sale offerings. This point-of-sale hardware continues to represent the most significant cost of gaining infrastructure delivery.

The Imagine terminal is an important element of our strategy to offer the most competitive solutions in the industry worldwide. It is an example of how we continue to innovate and create exciting new technology to provide better solutions for our customers. As I have mentioned in the past, maintaining our competitive leadership is a process of continuous improvement and we will have more to report on this topic in the future.

There has been some disappointing news in procurements in New Mexico and South Korea, where we were not selected as the online vendor. I can assure you we analyze such developments quite carefully. We strive to provide the most competitive solutions for each procurement at all levels of the market, at rates that make shareholders money.

Achieving that goal requires constant attention to increasing innovation, such as the Imagine terminal, and constantly through a process of continuous improvement, reducing costs and leveraging our economies of scale. We are making progress in this regard on all fronts and we will be intensifying our efforts towards meeting these important goals.

We also received some unexpected news from Greece. After conducting a lengthy procurement, unfortunately with numerous delays, OPAP, the Greek Lottery license holder, terminated that competition and subsequently entered into a three-year deal with our Greek competitor, INTRALOT. The matter is being pursued through the appropriate legal channels. While the outcome of proceedings of this type may take some time, we are undertaking the effort to ensure that procurements are conducted responsibly, with full transparency. It's just a matter of fundamental fairness.

As to upcoming bids, there are some significant online lottery contract opportunities in the near term. GTECH is the sole bidder for the online contract in Michigan, where we are the incumbent.

We have submitted proposals to Pennsylvania, which is serviced currently by a competitor. The District of Columbia, a current GTECH customer, and the Netherlands, previously a product sale customer that is transitioning to a facilities management type of model, of which we're quite familiar.

In the next few weeks we will be submitting additional proposals to South Carolina and West Virginia, jurisdictions currently supplied by a competitor. Other U.S. jurisdictions, including Ohio, New Jersey, New York, Illinois and South Dakota will issue RFPs in the next few months. Internationally, we expect to see an RFP from Argentina and a very important second lottery license in Russia, also before the end of this year.

Privatization activities in the United States have slowed, due to the fact that most legislatures are not in session until January of this year. They have six-month cycles. It is noteworthy, however, that the Governor of Florida recently floated the idea of privatizing that state's lottery.

As we have mentioned on previous calls, and I will continue to emphasize this, privatization is a highly charged political proposition. It will receive great deals of media attention. It may or may not result in opportunity for us. It is something that's important. We will continue to pay attention to it. We do anticipate, however, that discussion of this meaningful topic will continue for some time.

In the gaming solutions area, we were successful in winning business in Sweden for video lottery terminals and a video lottery terminal central monitoring system, with a total value to GTECH of approximately EUR37m. That win was strategically important in that our customer in Sweden, Svenska Spel, is considered a leader in the application of innovative technical solutions in the VLT space.

And finally, the Ministry of Finance in Taiwan recently indicated the award of the license for a sports betting lottery, the first in Taiwan, to our former lottery partner, Taipei Fubon Bank. From 2001 to 2006, we were partners with Taipei Fubon Bank and Acer in LTSC, the lottery operator for Taiwan at that time. The bank will be issuing an RFP for technology and services in the coming weeks. We look forward to participating in that bid and believe that our technology, service solutions and practical on-the-ground experience in Taiwan position us well to successfully compete for that business.

Now, let's turn briefly to our Italian operations. I think it's fair to say that the Italian market far exceeded our expectations in the first half of 2007. Our market share remained the same as last quarter at 88%, up from 84% last year. Overall lottery sales for the first half of 2007 totaled EUR7.3b versus EUR5.3b in the first half of last year, an increase of 39%. Scratch-and-Win market had record sales of EUR4.2b, compared to EUR1.8b in the first half of last year. That represents stunning growth of over 138%.

I do want to point out that it is important to keep in perspective that we are going through our first full cycle of the rollout of the instant product in Italy. We reasonably expect that growth will begin to moderate over the second half of this year.

Lotto wagers were relatively stable compared to the prior half-year, at EUR3.1b. As we noted in the previous calls, the underlying trend in core numbers provides a useful insight into lotto performance. Core numbers grew again in the second quarter over last quarter, an encouraging trend.

Our new Italian sports betting network, branded as Better, launched during the last week of August. Over 1,000 corner shops are now open for business. Our remaining licensed locations will be 100% operational by the end of this quarter. As was previously reported, Lottomatica received 1,145 licenses for sports betting shops, as well as 500 licenses to offer wagering on horse racing.

We are hopeful that we'll be able to achieve a respectable market share. And as we have stated previously, we anticipate 11% to 12% of the total sports betting market over time. I think that's a reasonable proposition. A compelling brand has been created by our Italian colleagues and we have a great retail distribution network for this product. We'll obviously keep you informed about our results in future calls.

Commercial service offerings in Italy continue to perform well, experiencing 7% increase over the comparable period last year, despite the negative impact of changes in the regulatory framework.

In the Italian gaming solutions segment, we were able to improve our operations there as well. Revenue for the first half, approximately EUR10m, an increase of 113%. We currently have 14,000 AWPs installed and monitored by our system.

Finally, we expect to submit a bid for the license to operate Super EnaLotto by September 28 of this year. It does not have the scale of our existing lottery licenses, but does account for about EUR2b of annual wagers. It would be a natural addition to our core lottery offering.

Now let me turn to a review of the progress we've made towards achieving the goals we set for ourselves in our three-year plan. As you may recall, we had increased our guidance previously this year. We are confident that we will deliver results in line with that guidance. That performance will create a solid foundation to achieve our long-term goals. Stefano will review those numbers in a bit more detail in a few moments.

One of our key strategic goals is to maintain our leadership position in the lottery industry and invest in lottery-led growth opportunities worldwide. Our recent win in the United Kingdom is a tremendous affirmation of the value of our franchise, products and services. Yet, as exciting as that win is for our Company, we are aware of the need to maintain a cost structure that is competitive and continues to deliver industry-leading technological innovation. Our continued growth is dependant upon that. I have challenged our organization worldwide to do even better. And I am confident that we will meaningfully improve our competitive position on all fronts in the future.

In the area of instant tickets, our creative games subsidiary is gaining a little bit of momentum, although it is still in its very early stages of growth. We were successful in gaining a share of the instants business in Connecticut and Rhode Island, and we expect future bids in Florida, Poland, Kansas and Missouri.

Additionally, we made substantial progress in entering the sports betting space, which we hope will allow us to become a major player over time. To that end, we recently completed the acquisition of Finsoft, a leading solutions provider to the sports betting industry.

We'll begin reporting to you on developments in that organization. Recently, they signed agreements to provide sports betting solutions to new clients, including industry leaders William Hill, Betterbet, Pagebet, Touchbet and Corbett. They also received orders from existing current clients, including Betfred, Stan James, Sportingbet and Boylesports. Together with the operational experience we are now gaining in Italy, we expect to establish a meaningful presence in the sports betting space for commercial and government-sponsored customers worldwide.

In the commercial services area, we closed the sale of PolCard, our credit card processing subsidiary in Poland. The sale was yet another example of our commitment to the principles we outlined in our growth plan. We exited a standalone commercial services business, thereby freeing up capital to drive growth in our core business.

Additionally, we are making steady progress towards the closing of Atronic. We've been successful in getting licenses in major gaming jurisdictions, such as the recently granted license in the U.S. jurisdiction of Mississippi. The licensing process in which we are now engaged should be completed towards the end of this year.

Finally, in order to make Lottomatica shares more accessible to the equity markets in the Untied States, we will be implementing an ADR program. Stefano will provide you with greater detail on this subject in a moment.

In regard to stock activity, I'd like to address some matters that may be causing a bit of confusion. Recently, it was reported that there has been insider selling in the shares of Lottomatica stock. It is important to appreciate the underlying reason for those sales.

For the first time in the Company's history, Lottomatica has used fully paid, restricted stock as a part of a long-term incentive program as a means to retain key management. A certain number of shares of the restricted stock annually vest on the anniversary of the GTECH closing. Under U.S. and Italian tax laws, the vesting of restricted stock is a taxable event for the individual recipients.

In keeping with our longstanding practice, our transfer agent withholds shares from each beneficiary, much like you would do in your day-to-day payroll, in an amount equal to the immediately payable income taxes. Those shares are then sold and all proceeds are forwarded to the respective tax authorities, as required by law.

These are the sales, and only these sales, that were recently reported. I want to be clear that there has been no discretionary sale of Lottomatica stock by the management team. The same tax withholding pattern that I just described will occur as restricted stock vests in the future. As we have pointed out in the past, the top managers of Lottomatica are among the largest individual shareholders of this Company. And I can confirm to you that that has not changed.

Now I'd like to turn the call over to Stefano for a review of our financial performance. Stefano?

Thank you, Bruce. Good evening, everyone, and good morning for those in the States. Welcome again to our 2007 first half results conference call.

As you all know, this earnings announcement includes the combined results for Lottomatica Group. In comparison, they remind that the result for the first half of 2006 included six months of Italian standalone operations only.

I am pleased to report we experienced overall positive top-line growth in our key businesses with sustainable high margins. Combined revenues for the first half were EUR835m, which represents a year-over-year increase of approximately 145.4%. First half EBITDA was approximately EUR381m, an increase of approximately 104% versus the same period last year.

EBITDA margins for the semester were 45.6% compared to 54.8% in the first semester of 2006, which included Italian operations only. Please be aware that the change in EBITDA margins compared to last year is principally driven by the inclusion of GTECH results for the first half of 2007. The underlying margins for the Italian and GTECH operations remain consistent, period over period. In addition, I would like to remind you that, typically, Italian Lotto contributes higher margins for the first quarter of the year due to the decollage effect of the lotto game.

For the second quarter alone, combined revenues were EUR400m, which represents a year-over-year increase of more than 166.3%. Second quarter EBITDA was approximately EUR169m, an increase of approximately 126% versus the same period last year. EBITDA margins for the quarter were 42.2% compared to 49.8% in the second quarter of 2006, which included Italian operations only.

Comparing revenues for the first half 2007 with the first half of 2006 indicates combined service revenue growth of EUR464m. GTECH experienced same-store revenue growth of approximately 4% over the same period last year, despite decreased activity on jackpots in the second quarter, as Bruce mentioned.

Product sales in the first half were approximately EUR31m. This includes mainly the sale of lottery terminals to customers in Poland and Belgium, central system conversion and terminal sales to [Swiss Roman] in Switzerland and video lottery terminal sales in Montana and Iceland.

Revenues in the first half from Italian operations increased approximately 20% when compared to the same period last year. Overall, revenues from Italian operations in the first half contributed EUR407m, whilst GTECH operations contributed approximately EUR428m. The growth in Italy during the semester is primarily due to the continued growth in the scratch-and-win business.

Now let's look at revenues by segment, as reported. Italian Lottery revenues increased approximately 20% compared to first half of 2006, driven by the strong performance of instant tickets. Commercial services in Italy increased by approximately 7%.

Gaming solutions for our Italian operations performed very well with an increase of 113%, driven by the installation of approximately 6,000 additional AWP machines, bringing the total machines in our network to approximately 14,000 as of the end of the first semester. The increase in AWPs resulted in total wagers of approximately EUR560m, up over 80% compared to the same period last year.

Slides 13 and 14 reflect the key revenue performance of GTECH operations and the Italian operations separately.

Now I would like to focus your attention on GTECH service revenues for the first half of 2007. A breakdown of service revenues by United States and international regions is shown. Please note that the United States revenues may be divided into Mega Millions state operations and Powerball state operations. For the sake of clarity, Mega Millions group includes some major GTECH customers, such as Texas, New York, California, Illinois, Michigan, Georgia. The Powerball group includes, among others, key contracts with Kansas, North Carolina, Rhode Island.

Same-store revenue growth of approximately 4% for the first half compared to the same period last year was principally driven by robust sales activity in Illinois, Georgia and Michigan. Again, as Bruce stated, overall, the decrease in performance in the second quarter versus the first quarter at the U.S. domestic level is attributable primarily to weaker jackpots activity.

International revenues were driven by the strong performance in the Czech Republic, Poland, Mexico and Morocco.

Moving on to Italian operations, let's look at our Lotto and Instant and Traditional Lottery gross ticket sales performance for the first half of 2007 versus 2006.

Lotto game wagers were EUR3.1b compared to EUR3.5b in the first semester of 2006, due principally to a decline in wagers for late numbers. [Pays] were particularly strong in the first quarter of last year due to a record number of wagers related to Calgary 34. Lotto wagers related to core numbers increased to EUR2.7b compared to EUR2.6b in the same period of last year.

Lotto revenues were EUR204m, compared to EUR228m in the same period of last year, a decline of approximately 10.4%.

Our instant lottery performance continues to be impressive, resulting in gross sales of approximately EUR4.2b compared to sales of approximately EUR1.8b in the first semester of 2006. The number of instant tickets sold in the semester was 1.2b compared to 760m last year. Growth in instant ticket sales was driven principally by the introduction of the Pan-Europe ticket in January of this year, which generated sales of over EUR1.3b alone in the first semester of 2007.

As an example of marketing best practices, I'd like to mention the introduction of the EUR3 Spiderman ticket in April. It is showing how a well-implemented marketing campaign aimed at presenting the new game with the leading theaters of the movie Spiderman 3 could promote additional sales. As of the end of June, this new ticket generated sales of approximately EUR125m alone, with 42m tickets sold. The average price point grew to approximately EUR3.4 compared to EUR2.3 in the prior year.

Revenues for the instants business were approximately EUR148m, compared to EUR63m during the same period last year, an increase of 134.5%.

Now let's review performance by segment. Lottery contributed approximately 88% of total revenue and 92% of EBITDA. EBITDA reflects the allocation of corporate overheads.

Next, you're able to see a summary of the reported results for the six-month period. As was mentioned last quarter, the impact of the purchase price amortization of intangible assets related to the acquisition of GTECH on operating income amounted to EUR49m for the first half. Our future reported results will continue to be impacted by this non-cash expense. For 2007 we have estimated the purchase price amortization in the range of EUR90m to EUR100m.

Again, EBITDA for the first semester was EUR381m, up 104% over the first semester of 2006. Operating income was EUR239m for the semester, up 53.2% over the same period last year. Operating income margin, adjusted for the GTECH purchase price amortization, is 35%. Net income for the first half was approximately EUR68m, up 113.5% compared to EUR32m in the same period last year.

Moving on to financial income and charges, on a net basis we incurred approximately EUR108m of financial charges compared to EUR89m in the first semester 2006.

Total interest expense was EUR98m compared to EUR16m last year, relating primarily to interest expense on our senior credit facility and capital securities. In detail, interest expense on our senior credit facility accounted for EUR54m, and on capital securities for EUR31m.

Net cash flows for the semester were impacted by a number of items, including approximately EUR55m associated with the purchase of sports betting and horse race betting rights in Italy.

Operating cash flow before changes in working capital was approximately EUR361.5m. The use of cash associated with working capital changes is primarily attributable to two factors - the increase of receivables related to the Instant Lotteries performance and the decrease of payables to suppliers related to the ordinary business activity.

Net cash at the end of the period was EUR290m. The second quarter cash generation was strong, and even better than the first quarter. After having paid dividends of approximately EUR120m in May and interest of EUR110m, cash available at the end of the period was EUR290m.

Please note that the cash proceeds to Lottomatica from the sale of PolCard on August 1 were approximately EUR150m.

We are confident that cash already available, together with additional liquidity generated by our free cash flow, will be sufficient to fund our growth.

Reviewing a summary of our balance sheet, you will note that Lottomatica has net invested capital of approximately EUR4.39b, which includes shareholders' equity amounting to EUR1.82b. Net financial position, at EUR2.57b at the end of the period, remains consistent with the first quarter this year. Again, we are pleased with the cash generation for the six months of this year, despite the dividend payment.

Let's look at guidance for the full year of 2007. As a reminder, we have updated our guidance last quarter this year due to the strong performance of scratch-and-win in Italy, and we are very pleased now to reiterate this guidance.

We have announced gross sales for scratch-and-win in the range of EUR7m to EUR7.5m for the full year, and we are comfortable with the high range. We estimate lotto sales in the low range of EUR6.2b to EUR6.4b. At the GTECH level, based on first our semester performance, we estimate same-store sales growth to be in the range of 4% to 5%. Overall, we confirm total revenue to be in the range of EUR1.655b to EUR1.765b.

Operating income, excluding purchase price amortization, is confirmed in the range of EUR490m to EUR500m, with operating income margins in the range of 28% to 29%. Again, we have reiterated EBITDA estimate for the full year to be in the range of EUR700m to EUR710m, with margins of approximately 40% to 42%.

To summarize, the underlying performance of our business remains strong. This performance, combined with positive trading results in the first semester of 2007, gives us confidence in our 2007 outlook and beyond.

Lastly, I want to also point out that we have approved the launching of sponsored level-one American depository receipt program, which will allow our shares to be more accessible to U.S. investors. The Bank of New York has been appointed as the depository bank to administrate the ADR program. Lottomatica ADRs will trade on the U.S. over-the-counter market and each ADR will represent one Lottomatica ordinary share.

Thank you and now we would be more than happy to answer any questions that you may have.

(OPERATOR INSTRUCTIONS). The first question is from Mr. Domenico Ghilotti of Euromobiliare. Please go ahead, sir.

Good afternoon to everybody. My first question is related to the scratch card business in Italy. You revised your guidance after Q1, targeting the EUR7b, EUR7.5b volume for the full year and now you are already at EUR4.2b, with a stable run rate of around EUR2b or above EUR2b. So I wonder if you have revised -- you have changed your -- the target for the full year in terms of scratch cards, probably offset somewhere.

The second question is on the contract with the National Lotto with Camelot. I would like to know if you have the indication on the margins, so if the margins are comparable with the previous contract. And also, if you can confirm that the current contract is generating around EUR45m per year, why you are targeting EUR60m, on average obviously. And also if you can provide some, let's say, indication on the ramp up, so what is the starting level we should expect in end of '08.

Okay. Marco, if you could take the Italian question and, Jaymin, if you could take the Camelot question, please.

Sure. Regarding scratch-and-win, what we can say is that accordingly to our forecast we've experienced in July and August the pace lowering there because of seasonality, exactly as we have experienced last year. For this reason, and according with the fact that we are not going to make a major change in the portfolio in the second half of the year, I believe that EUR7.5b, that is the higher part of our range, is the result that we can achieve. It is now our forecast and I think for the time being that has to be represented as a reasonable target. We will see in September/October and we can review our forecast, but for the time being I think that it is convenient to maintain this target fixed.

Okay. Thank you. And with respect to your question on Camelot, let me just say that we're very pleased, first of all, to announce a new 10-year contract with Camelot, where we'll provide a much expanded range of products and services versus the existing contract that we have, given the number of exciting new products and services in the Camelot license to run the National Lottery in the U.K.

As the press release mentioned, we expect to generate over EUR600m of revenue over the 10-year period, and approximately EUR80m to EUR100m of that revenue will be for product sales, with the balance being for services over the 10-year period. So, on average, the service revenue component will be about EUR50m per year, it won't be nice and linear, but on average it will be EUR50m per year. And the margins we expect from the Camelot contract will be comfortably higher than our corporate average. We don't disclose margins by individual contract, as you know, but as I mentioned, they'll be comfortably higher than our corporate average. (Multiple speakers)

And consistent with the previous -- sorry. And consistent with the previous, let's say, previous contract?

I'm sorry, your question again?

Sorry. And the margins are higher than average and consistent with the previous contract, so similar?

The margins are certainly consistent and slightly improving over the years versus the existing contract.

Okay.

The next question is from Ms. Laura Leonardelli of UBS. Please go ahead, madam.

Good afternoon. I have three questions, please. The first one is related to your net financial position at year end, if you could just provide an indication considering your net working capital performance and the scratch-and-win performance, obviously.

My second question is related to the Italian sports betting. I know that you are not disclosing the profitability by business, but considering it's a start-up business, could you provide the operating losses you have already posted for this game and the implied CapEx excluding the payment of the authorizations?

And finally, in terms of expiring contracts and new opportunities, could you list again the expiring contracts for the second part of 2007 and the potential opportunities you are going to file? Thanks.

Okay. Laura, I'll have Stefano address your net financial position question, Marco will address your Italian sports betting question. Bear in mind that we have not released numbers yet, but we can help you with the operating loss assumption that we talked about previously. And Jaymin can talk about international contract expirations and opportunities.

Okay. About the net financial position at year end, we -- having in mind what we have already said, so that the position at the end of the semester did not include the collection of Brazil and PolCard, and having in mind the business flows in the second half of the semester, we consider that the end of the year might be closing in the range of EUR2.5b net financial position, in line with the position that we had last year.

Regarding sports betting in Italy, first of all, we have related that we started our operation in line with the expectations. That is not a minor point considering the complex implementation of this plan. And so we are already operating with 1,000 points of sales. And it is quite important to share with you that our systems is doing well and distributors are happy, and the operation started in a proper way from the technological standpoint, I can say, for the time being.

Regarding the -- pardon me?

Excuse me, on this point, do you have any visibility on the other competitors? Are they on time or do you perceive delays in the new segment?

For what I'm seeing, I do not see the competitors having established the same range of network we have done so far. And in fact, some of those have already declared that they are planning a slower pace in implementing the network. So that is good news for us, because we have done on time what we were expected to produce in this quarter. So, good for the implementation, good tracking and testing the system. We will see, of course, what are the results.

What I'm saying is that, regarding investments, as you requested, you'll remember that we invested EUR55m to get the rights. And the investment in the infrastructure is something in the range between EUR20m and EUR30m to set up all the systems. So we are in the range globally of EUR80m, not including the advertising support that we intend to invest behind our brand, that is called Better, in the second part of the fourth quarter.

What I have to tell in addition is that we started with the physical network and we will provide the customers with our offer online by November. And therefore we complete the installation of our new furniture within the point of sales, as well as the delivery of the online alternatives of our betting system in November, and therefore I think at that point we can make an assessment on the potential of our revenues in this business.

Thank you.

With respect to your question on GTECH's international contracts, as I mentioned before, the largest single contract that we had internationally, being the U.K, has just been renewed for at least 10 more years. Aside from that, we only have one contract coming up really for the next 12 to 18 months, which is the Argentine national contract, which is a fairly small piece of business for us, representing about $3m of annual revenue.

In terms of new bids in the marketplace in the next 12 months, there are three contracts worthy of note. The first one is Taiwan sports betting. You probably saw that Taipei Fubon Bank was awarded the license to run that business and they will now run a procurement for the provision of technology and services. We expect that RFP will be decided sometime in late October/early November. With respect to Turkey, there will be -- hopefully there will be an RFP soon because the existing consortium, which involves one of our competitors, that contract should expire in March of 2008.

And then lastly, as Bruce mentioned in his script, we are expecting to see an RFP from Russia under the Ministry of Telecommunications, although as you saw yesterday, I'm sure there has been a significant change in the Prime Minister's office in Russia. So there may well be a delay of one or two months before that RFP is issued.

And in the U.S., sorry, you've mentioned some contracts related to other players.

I'm sorry. We didn't quite hear your question.

Sorry. During the presentation, unfortunately I didn't have the presentation, but Mr. Turner mentioned some contracts in the U.S. that are currently managed by other competitors.

Yes, yes. Bruce talked about a couple of contracts in the United States. In the coming weeks we expect to see an RFP submission, or a response to an RFP, in South Carolina and West Virginia, two medium-size U.S. jurisdictions that are run by one of our competitors. And recently we submitted a response to the Pennsylvania RFP, which is a fairly large lottery in the United States. So those bids are either being submitted or have been submitted and we expect to hear from them by the end of this year.

Thank you.

Over and above that, just to complete the question, as again Bruce mentioned, there are a handful of existing contracts for GTECH that will come up in the next 12 to 18 months that include Ohio, New Jersey, New York and Illinois.

(OPERATOR INSTRUCTIONS). The next question is from Mr. Luca Orsini of One Investment. Please go ahead, sir.

I'm actually going through the slides and I'm trying to understand a little bit what was the performance of your U.S. operation in terms of profitability vis-a-vis last year, taking into account the changes in consolidation. Can you help me shedding some light on that?

Stefano, can you try to address that?

So you have to bear in mind that compared to last year information that are available, there is a substantial change because last year we had a contribution from the Brazil contract that was representing a significant proportion of the revenues and EBITDA, which has been terminated as a result of a long dispute at the end of August, 2006. That was not part of our forecast, it was not in our plan and it's different compared to last year. In terms of performances for the contracts that we had last year and we are having this year in our portfolio, there is no substantial difference in profitability at the level of gross margin by a single jurisdiction.

I see. Is there a reason why you don't provide a kind of like-for-like comparison on a pro forma basis?

Yes. We don't do pro formas and we have not. What we have done is, for people that would like to talk about that in more detail, we usually just discuss those with you offline.

Okay, perfect. Thank you very much.

You're welcome.

(OPERATOR INSTRUCTIONS). We have a follow-up question from Mr. Orsini from One Investment. Please go ahead, sir.

Since no one else is taking the line, I'll take advantage for a follow-up question. Can you just tell us, on your guidance, what kind of expectations you have in terms of growth for the, let's call it, formal GTECH business?

Sure. Let me address that for you a bit and Stefano, Jaymin, you may want to supplement this. We have always built into our forecast for the future basically same-store sales growth which is in the range of 4% to 6%, so very consistent with what we're seeing at the present time. I think, as you probably are aware, we run in our international services business a relatively fixed infrastructure cost model. So, same-store sales growth becomes the most important characteristic of that.

Where we have specific identifiable changes in unique contracts, we will build those in. There's not a lot of that at the present time. And then we assume, on average, about one to two new jurisdictional wins per year of a small to medium size. We have none in the current forecast for the next 12 months. Jaymin or Stefano, did I miss anything there?

Something else to add is that from 2008 onwards we will be consolidating 100% of Atronic that will be contributing revenues in the range of EUR170m, EUR180m from 2008 onward, and additional EBITDA to the existing basis of the current business within GTECH.

Just to be clear, is that a full consolidation or you will start to consolidate it the first time on January '08?

The consolidation will impact the 2008 year and that will be a full consolidation.

And in 2007, how many months was it consolidated?

No consolidation will take place in 2007, as we are still in the process of acquiring a 50% stake with controlling interest in the company, which will be completed with effect, at earliest, January 1, 2008.

Yes. What kind of order of magnitude of EBITDA margins do you have in this business?

Stefano?

We have not disclosed EBITDA margins for the Atronic business at this point in time because as a private family-owned business we are not -- we do not have the authority, in fact, to disclose financials. What we can say is that the Atronic business is generating revenues of EUR150m to EUR175m per year and the business is growing quite nicely at 12% plus per year. The EBITDA margins for the business are lower than you would typically expect for a gaming business, because at the moment they are busy spending monies and investments on research and development to build new games and platforms. So we do expect that over a two or three-year period we will see some significant improvements in Atronic's EBITDA margins as they become part of our Group.

Thank you.

The next question is from Mr. Costantinou Evros of Credit Suisse. Please go ahead, sir. Mr. Evros, your line is open, sir.

Hi. I just wanted to ask you for a little more color, if you can give us, on the sports betting side of the operation in Italy. I'm to understand it's only been roughly three weeks that you have had the operations on line there. But in respect of the trends that you're seeing to date, is there any conclusion to be made in respect of what you have indicated before as to the guidance as to the size of the market there in Italy? I'm saying that, given that already you do have a big presence there much ahead of your competitors, so you should have some figures to talk about, I believe.

Evros, I'll ask Marco to address that question. Obviously, it's very early in the market dynamic and, Marco, if you could provide a bit more clarity there.

Evros, the point is that we are talking about three weeks of sales. Therefore we started the operation three weeks ago in real terms and with a completely new network of corners. Therefore, what I can tell you is that for the time being I think the advantage of having -- in these days, while we are talking, we have the most expensive network in Italy in sports betting, because awaiting competitors for the time being we've reached the number one position in terms of active number of point of sales.

I can tell you that I made an internal estimate that is totally unofficial that in this field of time we represent 60% of the turnover generated of the new clients, therefore with the point of sales opened accordingly to the Bersani law. And therefore that is in the beginning. I mean the real point, as I mentioned before, at the very beginning of the operation is to understand that the system is working, we are reacting, we are delivering the service and we are competitive in terms of [heart]. And that is the first feedback we have regarding the market.

I can tell you that, if I look at the internal estimates that we are doing in terms of total share, we are now at 5%, but the market is still very low. And therefore -- and based on really internal estimates we are guessing, considering the number of -- the numbers we have. Therefore, I consider that so far so good, but we will see over the next weeks how a very new distribution network can deliver. What I can tell you that is our point of sales are very much motivated. We see a market there, because there are many customers that are approached by a completely new form of distributing betting. But to make an assessment on results, I think that you cannot agree that we have to wait [at least] weeks.

Okay. Thank you.

The next question is from Mr. [Ralf Jens] of [Radio] Asset Management. Please go ahead, sir.

A very good afternoon, gentlemen. I've got a whole series of questions, but maybe if I can start by following up on the Italian market. The first question is what was the P&L impact of you preparing the Italian rollout in the first six months, if any?

Marco?

Shall we do that first?

No. For the first six months we have the investments, we have to mention, because we didn't have, in the first half, major cost impact. Unless -- without considering the already-mentioned investments in CapEx that are the CapEx to install the network with the Altura terminals. Let me make just a comment. Our distributors are very much happy with the new terminals and -- but apart from that, we do not have major costs upsetting our P&L in the first half of the year.

So there would have been a bit of amortization, maybe a mid-single-digit number, that would have been anything, i.e. amortization of the infrastructure, and I don't whether you've started amortizing the license costs already.

No, we didn't book any depreciation in the first year. And we started in August 29.

Okay. Just --

The depreciation, accordingly, we didn't start.

Absolutely. Just in terms of -- in the way that gentleman earlier asked about what the potential outlook for numbers is, there are some sources expect the Italian sports betting market to reach a size of about EUR4b (multiple speakers) number of years.

No, no, but I understand the sense of the question. As we have already stated, we expect this market that will double at least by 2009. That is what we believe is the most, let me say, consistent forecast because we believe that the combination of distribution enlargement with the promotional investment that will support the product will produce an increase of the market. There are many, many, let me say, forecasts. Let's assume that our forecast is to double the market in a couple of years.

And that is from what base?

Pardon me?

That is from what base? When you say doubling, what's the base number from which you double?

2005.

And what's that number?

Sorry, EUR2.5b. So we will reach EUR5b, we will reach -- the market is expected, from our view, to reach EUR5b in 2009. And as was mentioned, we are now projecting a share slightly above 10%, something around 11%.

So that would be a revenue contribution of about EUR500m?

Yes.

You would book the entire 100%?

In terms of wager. In terms of wager. Do not forget that that is the market and we talking about wagers. If you turn the wagers in our revenues, we are talking about EUR80m.

And what sort of profitability level could one expect on such a level?

Yes, the contribution expected is something in between 25% and 30%, but we have to assess our capability to manage the risk and of compiling. And most of the attitudes of customers are better. Most part of customers we are addressing are completely new customers, and so we have also to say how they intend to approach, in terms of risk, this business.

Absolutely. The other question I had was with regard to the net cash guidance you gave. I think you were referring to -- sorry the net debt, an unchanged number of net debt, i.e. about EUR2.5b. Could you just quickly reconcile that for me and tell me what sort of CapEx assumption you make in that calculation?

Stefano?

And whether you expect a certain free cash absorption in working capital in that number as well?

Well, that number, that estimate, is answering a question before on the estimate for the year-end net financial position, based on the guidance we have given. So this year will be a substantial year of investment, having in mind that we are for the full year investing over EUR80m, as Marco was mentioning before, for the sports betting operations in Italy. And we are considering all the investments for the contracts that GTECH has successfully rebid and for what we call the maintenance investment. So having factored that CapEx into our projections, net of the disposal of PolCard and the acquisition that we have announced, that will end up with a net financial position at the end of 2007 which is in the range of EUR2.5b, exactly in line with the net financial position of last year.

What is that CapEx you're referring to in absolute numbers you expect for the full year?

In absolute numbers, it's in the range of EUR300m.

And that includes the EUR80m?

That includes the --

The EUR80m from --

Yes, one-time investment for the sports betting operation in Italy.

And what was the amount that you paid for the acquisition?

Acquisition of Finsoft, well, we are going to pay the first part of the acquisition, which has a mechanism which is a performance-related type of payment. And the first installment, that should be in the range of EUR40m equivalent.

Okay, and then the CapEx. And with regard to working capital, you expect to have a working capital absorption this year? Clearly, we have seen some of that already in the first half, but for the full year you expect a minor impact (multiple speakers)?

[Don't] anticipate major variations from the position that we have presented as actuals at the end of June.

Right. What tax rate do you expect for the full year for the Group?

The full year tax rate should be in the high 42%/44% range.

With a similar level for future years?

We have a projection of a slight decrease from the plan down to, let's say, low 40%.

Great. I'm almost done. Thanks for bearing with me. Do I understand it correctly that the hardware you produce is mainly produced in high-wage countries and that some of your competitors have, very early on, shifted this to low-cost countries, and that you're pondering yourselves maybe making more use of local sourcing opportunities for your hardware business? Or am I making that up?

No, actually you're not making that up. We traditionally have sourced most of our hardware components out of Rhode Island. With the new Imagine terminal, that product will be sourced outside of the United States and is part of our overall plan. I should also point out that we have software centers of excellence around the world today in Austin, Texas, in Rhode Island, in Moncton, New Brunswick, in Warsaw, Poland and Chennai, India. We have a very deliberate plan of continuing to migrate software development activity to our international centers of excellence, which tend to have a lower embedded cost rate.

And you referred to that subject earlier on in your introduction, by saying you will continue to push the organization to strive for operational excellence. It almost sounded like you think you can squeeze more out in terms of margin. If you look at the opportunities out there which might not have been exploited, including shifting some of your software, some of your hardware sourcing, what sort of margin potential over a two or three-year period do you think is achievable, everything else staying equal?

Well, and Jaymin may want to supplement this answer a bit, but we have built into our aggregate plan for the Company some modest expansion of operating margins of 50 to 100 basis points a year. As part of that plan, we have the various international activities I just referred to as means to leverage our global economies of scale and further increase our competitiveness in the market. Jaymin, would you like to add to that at all?

No, Bruce, I think you've covered the question on margins. I would just add that over the next three years we will see a reduction in the level of maintenance capital required to rebid GTECH's existing contracts, because as we take advantage of lower-cost totals and more outsourced technology, we'll see a lower level of investment going into maintenance capital, which obviously will help our free cash flow position.

Absolutely. And then just one final question, if I may. There are suggestions from some people in the industry that Scientific Games have sort of become less active in tendering and they've sort of retreated back to their scratch card business and whatever they consider to be their core competence. And that, in a way, tendering might even get easier a bit going forward, because it's not three of you fighting it out but only two, although clearly that doesn't mean it will be easier. Is that true? Do you see them slightly less around or being less aggressive? Clearly they used to be very aggressive a few years ago.

Certainly, Ralph, it does, based on their behavior in the marketplace, they have withdrawn from bidding in many places. They still do bid selectively in the online area. We do anticipate that they bid in the Pennsylvania online bid, where they were the incumbent, so they tend to defend. They have not been as active. We -- in our own planning process, we always assume that the marketplace will remain competitive and that, if it's not Scientific Games, someone else will step up to the plate, so we plan accordingly. We haven't seen any meaningful changes in terms of the pricing behavior in the marketplace. It's been consistent really for the last decade and we plan for that consistency.

That's great. Thank you very much for your patience.

We have a follow-up question from Ms. Laura Leonardelli of UBS. Please go ahead, madam.

Hi. Sorry, I have a follow-up question on the global gaming industry. Don't you perceive the implied profitability of the new contract of the recent (inaudible) processes to be lower than in the past because of higher competition levels? If it is the case, I understand that you don't want to play this game because you want to defend your profitability and to retain your current business model, but don't you think that could be a potential threat in the medium to the long term? So my question, basically, is are you positioning your business model on a defensive way within the industry, keeping your profitability, or do you intend to be more aggressive going forward if the competition levels increase further?

Well, that's a very good question. The positioning for the Company is -- on an international basis, will continue to remain the same, and that is lead with the broadest and deepest range of world-class solutions and systems possible, leverage wherever we can opportunities, particularly in Italy, to showcase platforms and solutions. I'll give you a small example of that. The -- our Italian technology colleagues are doing a fantastic job at refining the multimedia platform that we are providing globally and they'll use that in the sports betting area and we're quite impressed with that.

At the same time that we broaden that array of value options for our customers, so that we can represent a one-stop shop, we will continue on a global basis to drive our operating costs lower to further increase our competitiveness and drive our economies of scale.

There has been some pricing activity in the marketplace that, in all fairness, at least in a couple of occasions, appears to us to be irrational, and we are most certain that they are money-losing propositions. We've seen that before. We never see it for very long. The nature of these contracts is one could make a mistake in pricing and not really know the depth of that mistake for several years. We're pretty certain, in specific markets where competitor takeaways have occurred, that our competitor is likely to lose money. I'm not worried about that long term.

We will continue to leverage our market position and, as we have seen with Sci Games, they have abandoned that -- or appear for the moment to have abandoned that strategy, and we'll see what happens to others. So we feel very comfortable about the position we have, but we don't take it for granted. And we always bid with value creation in mind and consider those who bid with market share in mind, following a path that, in time, could destroy their value.

Sorry, only to follow up. I'm not questioning about your technology or your market positioning, but if I look at your business plan announced in January in terms of a list of potential opportunities, most of them realized in the last five months but none of them was a big deal. So I see about a potential change in the business model within the industry. Don't you think that the local authorities and governments are more focused on profit in the short term, rather than an efficient technology in the long term? Maybe I'm totally wrong. You are the industrial expert.

Yes. No, I don't think that's the case. No, there always, Laura, will be situations where, at certain prices, governments may choose to accept the low-cost alternative if the differential savings to them, regardless of execution capabilities, are great enough. Obviously, our bidding history is such that we tend not to be the price leader, though we do believe we are the cost leader. And we value price appropriately to create reasonable spreads.

I don't think there's been a change to the business model. I'm pretty certain that in most of the situations that you were referring to, that the competitor that was selected will lose money. If that's the alternative, we have better uses of capital than that. But that cannot be sustained long term.

So, how could you use your capital if you don't find opportunities in the medium term?

Well, we have a number of things we've talked about in the past in terms of that, and we've done some of those. The acquisition, although modest to start, of Creative Games, and we have publicly talked about a desire to follow that with an organic growth of a state-of-the-art press. We are in the final stages of that selection process now. The acquisition of Finsoft is a good example of that. And the pending acquisition of Atronic. Each of those further allows us to build out our scale in the marketplace to further leverage our market position.

I think, as you are also aware, in Italy, beginning at the end of this year, operators will be allowed to consider incremental licenses in sports betting in excess of the first threshold of 20%; maximum is 25%. We will evaluate that carefully, based on the market conditions there. Marco and his team are doing that now. And if it makes sense to further supplement our position in that regard, we will do so in 2008.

Thank you.

Okay. You're welcome.

The next question is from Mr. Claudio Giacomello of Banca Akros. Please go ahead, sir.

Yes. I would like just to ask you two questions. The first one is if you can give us an update on the filing investigation in Italy that is finally over, if we can say that it's over, the story.

And the second question is about U.S. lottery privatization, I would like to ask you. I read that Florida also is planning to go private. And I would also know if you perceive that the credit crunch, or credit squeeze as you want to call it, has given you a sort of competitive advantage in bidding versus private equity.

Okay. Marco, if you could handle the first, I'll take the second question.

Regarding the issue of gaming machines in Italy, what I can tell you is that we presented our brief to the -- we presented -- sorry, I heard a noise. We presented our brief to the District Prosecutor of Corte di Conti. He has now 120 days to decide how to go ahead. Therefore, you know also that we had also the suspension of the request of our Regulator to pay the sum requested by the State Auditors Department. And we appeal, together with all the other concessionaires, this request, and the administrative tribunal TAR has decided to suspend the payment.

Now, the point is the discussion hearing has not yet been fixed, so we have a couple of appointments over the next month. The first is before the TAR and the second is before the Corte di Conti. The point is we feel comfortable we have all the legal opinions that make us in a position to be very comfortable in facing this situation.

Let me also add that the [six] commission of the Italian Parliament has committed the government to adopt all the necessary measures needed for a complete review of the concession concerning gaming machines, providing, in particular, that penalties be determined in full respect of principle of reasonableness and proportionality, what is missing in all the claims we have received.

Therefore, following also the [very] solution we have initiated together with the Regulator and with the other concessionaires, a discussion aimed at implementing the above resolution that, in other terms, will fix and define the rules for this business. I think that is what I can update you to, unless you have further questions.

No, it's okay. Thank you.

On your Florida privatization question, there is no question that the changes in the debt capital markets will change the return expectations, both for jurisdictions contemplating asset privatizations, and they must by default change the leveraged return expectations of private equity. Now, obviously, you know cycles can change quickly. I don't -- it's hard for us to say how that changes the competitive landscape. It doesn't diminish our interest in this area. Obviously, if this area does move in that direction, we will be a player. And so we'll just have to see how the competitive dynamics play out.

Now, I would like to emphasize again, lottery privatization is a very, very hot political debate. It is a new asset class for consideration in the last 12 months, really. That debate has only just started. So we will be very close to it. We will be appropriately involved in it, whether it's privatization in the U.S. or deregulation in Europe. And then we're going to have to patiently wait and see how that rolls out. We have specific plans, we have appropriately well-heeled financial partners and we remain quite interested in the field.

Okay.

(OPERATOR INSTRUCTIONS). The next question is from Vivi Touba of Fortis. Please go ahead.

Yes. Hello. I have a rather general question. Could you please remind us is there are any restrictions imposed by the Italian authorities as to the amount of leverage you can withstand on balance sheet?

Stefano, could you address that?

Sorry, we didn't hear your question, madam. If you could possibly repeat it, it was too low.

Yes. I was wondering if there are any restrictions imposed by the Italian authorities as to the amount of leverage that you can withstand on the balance sheet. And related to that, where do you see the optimal capital structure going forward?

Well, as you may understand, we have declared that our financial discipline is to be consistently rated from rating agencies, as we have been, as the Group after the transaction has been put in place. So we want to maintain a ratio which is acceptable to the rating agencies, which is in line with the financial discipline that we have assumed in our plan. So that the trend of the ratio is deductible from the numbers we have presented in the plan which encompasses our net debt position at the end of 2009 in the range of EUR2.2b, EUR2.4b, and an EBITDA in line with the guidance that we have confirmed today.

But apart from the rating agencies, you don't actually have any restrictions from the Italian authorities? If you decided to change your capital structure, let's say, two years from now, you wouldn't have any obstacle by the authorities? That is actually my question.

Yes. We have no restrictions from the Italian authorities.

Okay. Thank you.

(OPERATOR INSTRUCTIONS). Mr. Turner, there are no more questions registered at this time, sir.

Okay. Thank you, Cherie. If there are no further questions, let me make just a couple of comments, then we'll close this particular session.

Lottomatica's first half results show that the performance of our business is strong worldwide, and tracking according to our plan. The Italian market continues to thrive and we're very pleased with it. More importantly, the fundamental trends remain strong and our performance, long term, we believe is sustainable. Our first half results provide us continued confidence in the full year outlook. In addition, we're making excellent progress on meeting the goals of our three-year strategic growth plan.

One area to which we've given a great deal of attention is corporate social responsibility and responsible gaming. Now, more than ever, our customers are looking to us for support and for appropriate guidance in this area. By that, I mean more than just advocacy. They need products, they need solutions, they need things that help them meet the mission, critical mission, of providing gaming entertainment to raise money for good causes, while providing meaningful consumer protection.

This is an area in which all the organizations that make up Lottomatica worldwide have a rich history. We intend to continue to provide leadership globally in these matters as well.

Thanks for joining us. On behalf of our 6,000 colleagues worldwide, we look forward to future discussions.

Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.