Company Presentation February 2019
Agenda History Company Overview Financial Overview Strategy Social Responsibility Summary
The Story so far 1958 Launch of PROPO (The Greek Football Pools Game) 1999 20 years exclusive-license contract with the Hellenic State Launch of PAME STIHIMA (sports-betting) 2001 Launch of KINO 2011 Establishment of the Greek Organization of Football Prognostics 1959 OPAP incorporated as a Societe Anonyme 2000 Listed in the Athens Stock Exchange 2003 Extension of exclusive license until 2030 Award of Video Lottery Terminals (VLT) license 2013 Transfer of 33% stake to Emma Delta Hellenic Holding for 652m. Q2 2014 Horse Races operations commencement & launch of horse races mutual betting 2017 New online sports-betting platform Acquisition of Hellenic lotteries 12-year concession Q4 2013 Launch of Hellenic Lotteries & Online Q1 2016 Operations commencement of VLTs Launch of Virtual Games & SSBTs Q4 2018 3
Company Overview As of 11 October 2013, OPAP is Exclusive concession extended up until 2030 The leading Greek 100% private under new management Historic high dividend pay-out policy gaming company Market cap on Athens Exchange c. 2.7 bn (Feb. 2019) Presence in Cyprus 4 c. 70.2% of the total Greek gaming market of 2017 Gross Gaming Revenue (GGR) Largest retail network in Greece As of 01.01.16 subject to 35% GGR contribution 2017 Revenues (GGR) of 1,455.5m and EBITDA of 306.5m
Public offerings - Shareholder Structure Emma Delta Hellenic Holdings Ltd 33,00% Out of which 23,7% owned by Sazka Group Largest Pan-European lottery operator Presence in Czech Republic, Greece & Cyprus, Austria, Italy and Croatia Active in countries representing more than 24% of EU lottery GGR Entrepreneurial ownership: KKCG (75%) & EMMA Capital (25%) Synergies with OPAP Free Float 67,00% Date (%) Offering price ( ) 25 April 2001 5,36% Initial Public Offering (IPO) 5,5 18 July 2002 18,90% Secondary offering 8,44 14 July 2003 24,45% Secondary offering 9,44 21 July 2005 16,44% Secondary offering 24,14 11 October 2013 33,00% Public tender 6,2 5
The Greek Gaming Market: A Comparative Review Greek Gross Gaming Revenue (GGR) as % of the GDP compares favorably vs. European peers 2017 GGR ( bn and % of GDP (1) ) 1,18% 20,1 0,73% 16,4 0,43% 0,45% 0,74% 0,34% 0,49% 0,72% 0,90% 1,12% 0,90% 0,87% 0,38% 0,29% Average: 0.68% 0,46% 0,82% 13,9 10,4 8,6 In bn 2,5 2,2 2,1 2,0 2,0 1,7 1,7 1,7 1,3 1,3 0,1 In % of 2017 GDP Italy UK Germany France Spain NetherlandsSweden Ireland Finland Greece PortugalChech RepBelgium Ponland Denmark Cyprus 479 437 388 299 283 269 253 246 2017 GGR per adult (2)(3) ( ) 226 223 210 200 193 191 189 183 Ireland Finland Italy UK Denmark Sweden Cyprus SloveniaLuxembourg Spain Greece Portugal France GermanyCzech Rep. Belgium 6 The Greek gaming market is a fundamentally attractive market : 2017 GGR at 1.12% of GDP (2nd highest amongst the graph s sample; used to be the highest before the domestic macro crisis) 2017 GGR per adult of 210 Source: H2GC, Mar. 2018. Greek data: OPAP s reported numbers (Greek operations only), H2GC & Hellenic Gaming Commission Note: Charts include top-15 EU-28 countries for GGR and GGR/per adult respectively. Gross gaming revenue including offline and online (onshore and offshore) gaming. (1) Current price GDP (2) Inhabitants over 18 years old (3) Excluding Malta
Greek Retail & Online Gaming market GGR/GDP is gradually reaching pre crisis levels on the back of new products introduction (Scratch in 2014 & VLTs in 2017) that have attracted previously illegal spending & new leisure players. Stihima & KINO introduction lead to growth>gdp Lack of innovation New games 3,000 2,500 2,000 1.18% 1.12% 1.10% 1.14% 1.12% 0.87% 0.93% 0.97% 0.94% 0.99% 1.07% 1.05% 1.06% 1.10% 1.12% 1.00% 0.97% 0.96% 1,500 1,000 500 0 7 OPAP market share 62,6% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 OPAP Instant & Passives Horse Racing Casinos Online GGR/GDP During the macro turbulence, the market declined by c. 38% while OPAP gained significant market share Source: OPAP s reported numbers (Greek operations only); H2 Gambling Capital for online market, Hellenic Gaming Commission Reports Note: since 2014 Instant and passive lotteries and since 2016 Horse racing are being operated by OPAP OPAP market share 70,2%
Online Horse Racing Instant & Passives VLTs Lottery & Betting Significant exclusive concessions secured through heavy investments in the past years More than 50 years of exclusive concessions backlog already paid for Total upfront cost of license (100% already paid by OPAP) Oct 2000 May 2014 Jun 2014 Jan 2016 Jan 2017 Oct 2020 May 2026 Jan 2027 Oct 2030 Jan Jan 2035 2036 323mn Concession Agreement (20 years) 375mn License fee to be negotiated on a case by case basis Right of first refusal for any other game to be licensed by the Hellenic Gaming Commission Concession Extension Agreement (10 years) 560mn 2011 VLT License (18 years) + Right to renew 127mn (1) 2013 State Lotteries Concession Agreement (12 years) 40.5mn 2016 Horse Racing Concession Agreement (20 years) Included in upfront payments for legacy licenses Exclusive Right for online offering of OPAP s exclusive lottery games Exclusive offering of onshore online sports betting 8 (1): Total consideration of 190mn paid by consortium including OPAP, Scientific Games and Intralot, of which 127mn was paid by OPAP for its 67% stake
Network The largest commercial network in Greece with its modernization well on track Gaming Halls OPAP Stores FY 18 figures 4,456 POS* in Greece & Cyprus 9 Petrol stations Gas stations New Opap Stores constructed 505 Post Bank Bank Bank Bank Average store size increase within the last 3 years +17% *as of 31.12.2018. Hellenic Lotteries products are distributed through additional 8,503 POS & Street Vendors
OPAP s Greek Revenue (GGR) Breakdown m 2.000 1.800 GDP CAGR: -6.3% OPAP CAGR: -9.2% GDP CAGR: +0.4% OPAP CAGR: +3.9% VLTs 1.600 1.400 1.200 1.000 800 Sports betting Instant & Passives 600 400 200 Lotteries 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Before Privatization After 10
Games Product Matrix Instant & Passives VLTs GGR breakdown 14% 13% 8% 10% 10% 11% 12% 8% 50% Mutual Fixed Odds 29% 52% 51% 51% 29% 26% 26% Betting Lottery Q4 17 Q1 18 Q2 18 Q3 18 Stihima Joker Lotto Propo Proto Super 3 Extra 5 Propo- Goal Kino Virtual Games Scratch Laiko Ethniko VLTs Agent Commission 2017: 39% of NGR* 2018: 37% of NGR* 2019-2021: 35%+1% of NGR* as bonus. 2019 adjustment is conditional upon achieving 6% average NGR* growth vs. 2016 8% 12% 12% of wagers GH: 36% of NGR Agencies: 25% of NGR Frequency of play 11 Daily Twice weekly Twice weekly * NGR: GGR - GGR contribution Three times weekly Twice weekly Ten draws daily Two draws daily Once a week Every 5 minutes Every 5 minutes On going Once a week 18 draws annually On going
Financials It s all about numbers 12
Financial Overview Revenue (GGR) EBITDA & EBITDA margin on GGR 2.000 1.500 1.000 500 0 1.220 CAGR: +5.8% CAGR: +9.8% 1.378 1.400 1.398 1.456 1.620 13 14 15 16 17 18 consensus 400 200 0 18,2% 222 25,2% 27,0% 347 377 22,0% 21,1% 308 307 21,9% 355 13 14 15 16 17 18 consensus Strong top-line performance & incremental growth driven by: Introduction of Scratch & passives in 2014 Introduction of VLTs and Virtuals in 2017 Revenue increase & cost optimization brought in material l-f-l EBITDA growth post the privatization. GGR contribution increased in 2016 to 35% from 30% previously. Adjusted 2017 Ebitda would stand at 364m Growth is expected to persist in 2019 Total Opex (Gaming operations only) Net Profit 400 300 200 200 100 274 258 235 254 274 100 141 195 211 170 126 0 13 14 15 16 17 0 13 14 15 16 17 13 Total Opex (gaming operations) remained flat despite the commencement of several material projects (Hellenic Lotteries, Horse Racing, VLTs & virtual games) Amount in m
Financial Results 9M 2018 (1/2) Department Stores +1,5% OPAP s 9M GGR outperforming domestic macro Supermarkets +4,4% Retail Sales (excl. fuels) 9M 2018 +2,3% Pharmaceuticals +2,9% Greek GDP 9M 2018 +2.03% Furniture & Household Equipment +6,5% Gross Gaming Revenue ( m) +5.8% EBITDA ( m) Net Profit ( m) +9.4% +12.8% 1.200 1.000 800 600 400 1046 1106 300 250 200 150 100 224 245 120 100 80 60 40 93 105 200 50 20 14 0 9M17 9M18 0 9M17 9M18 0 9M17 9M18
Financial Results 9M 2018 (2/2) 9M EBITDA ( m) +9,4% EBITDA margin on GGR 300 250 200 150 100 50 0 26.0% 21.9% 23.6% 21.4% 22.1% -6,1% +11,6% 224 245 93 78 87 Q3 2017 Q3 2017* Q3 2018 9M 2017 9M 2018 27.0% 22.0% 17.0% 12.0% 7.0% 2.0% -3.0% 9M Net Profit ( m) +12,8% Net Profit margin on GGR 120 100 80 60 40 20 0 12.2% 9.2% 10.6% 8.9% 9.5% -10,1% +18,4% 93 105 44 33 39 Q3 2017 Q3 2017* Q3 2018 9M 2017 9M 2018 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 15 * Adj. for one-off reversal of litigation provisions in Q3 17
Balance Sheet Net Debt position ( m) 436 462-77 -296-155 108 263 513 651 165 115 119 169 1 32-242 -297-302 -274-246 -189 2013 2014 2015 2016 2017 9M2018 Short-term Debt Long-term Debt Cash Net Debt/(Cash) 16 Prudent leverage & solid balance sheet structure Average cost of lending: Fixed 3,4% 1,4x Net Debt /EBITDA 13,5x Interest Coverage Based on LTM 9M 18 figures
Dividend Policy Both longer & short term history demonstrate consistent & rewarding shareholders returns Dividend per share ( ) 1 Average dividend yield since the IPO ( 01-17) 10% 0,57 0,70 0,25 0,50 0,60 0,43 0,30 0,20 0,17 0,12 0,10 2 Average dividend payout since listing 105% Dividend per share Dividend payout (%) 2013 2014 2015 2016 2017 0.25 0,70 0,40 1.29 1,10 59.6 112.4 60,5 241,4 277,0 3 Committed to distribute the bulk of FCF post investments Interim Dividend Remaining Dividend Special Dividend 17
OPAP Strategy To establish OPAP as a world class gaming entertainment company Embedding Customer Obsession Investing In Our Network Developing Our People Building a World-class Portfolio of Products & Services Leveraging the latest Digital & Technology Capabilities Committing to Our Communities Expanding the Power of Our Brand Rebuilding healthy relationships with the State, Regulator and other bodies Our Q3 performance confirms OPAP s steady progress in the delivery of our 2020 Vision. Despite some unfavourable sports results, including the World Cup Final match itself, and the ongoing macroeconomic challenges, the OPAP team delivered strong like-for-like EBITDA growth, plus year on year revenue growth for the 5th quarter in a row. Our VLTs operations once again increased their contribution while we continue to maintain a close control on costs across the company. During Q4, we have further enhanced our retail offering with new products in our Numerics and Betting categories, both of which have been well received by our customers. In addition our new online betting platform is now live and we are finalising development plans for a busy 2019 ahead. As we approach the seasonally busiest period of the year we remain confident in meeting both our own expectations and the long-term ambition of establishing OPAP as a world class gaming entertainment company. 18 Commenting on the Q3 2018 financial results, OPAP s CEO, Mr. Damian Cope, noted that:
Video Lottery Terminals (VLTs) License Agreement Fully paid 18 years exclusive license of 560m for the operation of 25,000 VLTs VLTs will add a growth engine to OPAP s performance potential and is expected to be amongst the most significant contributors to OPAP s EBITDA in the long-term HR to receive 30%-35% of GGR in the form of royalties Max. allowed number of VLTs per venue: 50 in Gaming Halls and 15 in existing OPAP agencies Deployment deadline: December 31, 2019 19
Video Lottery Terminals (VLTs) Steady rollout progress coupled with material contribution on the financials Roll-out profile Performance overview 1 GGR ( m) GGR / VLT / DAY ( ) 2 c.19k VLTs operational on Dec. 2018 One of the fastest store roll-out in Europe 1 Takes into account machines fully operational at the first week of each quarter 2 Machines operated in Q1. Calculation based on weighted avg. Post-holiday period: Last week of August and full month of September 20
VLTs enhancement Introduce new play games Engage with promo events From 39 to 71 unique Play games Xmas campaign Ladies night Party night Match of the day Lucky draws Pizza night Different stores formats & more typologies Communication tools & CRM initiatives Low budget store with up to 25 VLT s 1 2 Standard store with 30-50 VLT s 3 Flagship store with differentiated design 4 Block with OPAP store and Gaming Hall 21
Social Responsibility The largest social contributor in Greece measured in overall expenditure and variety of actions Promoting trust strategic framework COMMUNITY TRUST Health Sports Employment Sensitive Groups WORK PLACE Employee Engagement MARKET PLACE Responsible Gaming ENVIRON- MENT Environmental Footprint Level 4 (highest) Certificate in Responsible Gaming by the World Lottery Association 22 OPAP S.A. is a member of the World Lotteries Association (WLA) and the European Lotteries (EL) as well as the Global Lottery Monitoring Systems (GLMS), independent unions composed of state or state-licensed lottery companies.
OPAP in Summary Sole Concessions Sales Network Significant Cash Flows A 50+year exclusive concessions backlog with the earliest expiration in 2026 Largest retail network in Greece Bulk of FCF (excl. any investment) will continue to be distributed as dividends Significant growth coming from the ongoing VLTs rollout, online & rejuvenation of current products Ongoing focus on cost efficiencies demonstrating tangible results & delivering additional savings Possesses significant expertise, local know-how and knowledge of the gaming industry Strong Fundamentals Ongoing cost control Solid Management Team 23
Contacts Nikos Polymenakos Investor Relations Director George Vitorakis Business Development & Strategic Research Director polymenakos@opap.gr Tel : +30 210 5798929 vitorakis@opap.gr Tel : +30 210 5798976 24
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