Company Presentation October 2020 - OPAP
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The Story so far… 20 years exclusive-license contract with the Hellenic Launch of Acquisition of Launch of PROPO State KINO Hellenic lotteries (The Greek Football Pools Game) 12-year concession Launch of PAME STIHIMA 1958 1999 (sports-betting) 2001 2011 Extension of exclusive Establishment of 2000 1959 2003 license until 2030 2013 the Greek OPAP Organization of incorporated as Listed in the Athens Stock Award of Video Football a Societe Exchange Lottery Terminals (VLT) Prognostics Anonyme license Transfer of 33% stake Horse Races operations Further investment in Acquisition of to Emma Delta commencement & launch Stoiximan group to reach 36.75% of Hellenic Holding for of horse races mutual 84.5% in Greek & Cypriot Stoiximan Group €652m. betting operations and 36.75% in Q2 2014 2017 2019 international operations Operations Q4 2013 Launch of Q1 2016 commencement of VLTs 2018 Launch of 2020 Hellenic Lotteries Tzoker products (Scratch Launch of Virtual online & Passives) Games & SSBTs © OPAP 3
Company Overview The As of 11 October 2013, Exclusive concession OPAP is extended up until 2030 leading Greek gaming company Historic 100% private under new management high dividend pay-out policy Market cap on Athens Exchange Presence in c. €2.6 bn Cyprus (Sept. 2020) Largest c. 70% retail network in Greece of the total Greek gaming 2019 market of 2019 Gross Gaming Revenues (GGR) of Revenue (GGR) €1,619.9m and EBITDA of As of 01.01.16 subject to €412.6m 35% GGR contribution © OPAP 4
Public offerings - Shareholder Structure • Largest Pan-European lottery operator • Presence in Czech Republic, Greece & Cyprus, Austria and Italy • Active in countries representing more than 24% of EU lottery GGR • Entrepreneurial ownership: KKCG • Synergies with OPAP * voting rights 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 © OPAP 5
The Greek Gaming Market: A Comparative Review • Greek Gross Gaming Revenue (GGR) as % of the GDP compares favorably vs. European peers 1,16% 1,02% 0,89% Average: 0.62% 0,85% 2019 0,72% 0,75% 18,1 GGR (€bn and % 0,50% 0,52% 0,51% 0,47% 0,42% 0,38% 0,42% 0,40% of GDP(1)) 0,30% 14,3 12,2 8,9 In €bn 3,1 2,4 2,2 2,0 1,9 1,9 1,7 1,6 1,5 1,4 0,2 In % of 2019 Italy Ger ma ny France Spa in Netherland s Swede n Gre ece Finland Belg ium Por tug al Ireland Austria Pon land Denmark Cyp rus GDP 440 381 347 307 287 272 262 236 230 224 223 223 217 216 216 2019 GGR per adult(2)(3)(€) Finland Ireland Italy Denmark Swede n Cyp rus Sloven ia Luxembou rg Gre ece Spa in France Latvia Austria Netherland s Por tug al The Greek gaming market is a fundamentally attractive market : • 2019 GGR at 1.16% of GDP (highest amongst the graph’s sample) • 2019 GGR per adult of €230 Source: H2GC, Apr. 2020. Greek data: OPAP’s reported numbers (Greek operations only), Hellenic Gaming Commission Note: Charts include top-15 EU-27 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 © OPAP 6 (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 1,18% 1,12% 1,12% 1,14%1,16% 2.500 1,10%1,14% 1,10%1,12% 1,07% 1,05%1,06% 0,97%0,94%0,99% 1,00%0,97%0,96% 0,93% 2.000 0,87% 1.500 1.000 OPAP OPAP market market share share 500 62,6% 69,4% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 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, Hellenic Gaming Commission Reports Note: since 2014 Instant and passive lotteries and since 2016 Horse racing are being operated by OPAP © OPAP 7
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 Oct May Jun Jan Jan Oct May Jan Oct Jan Jan (100% already paid by OPAP) 2000 2014 2014 2016 2017 2020 2026 2027 2030 2035 2036 €323mn Concession Agreement (20 years) Lottery & Betting Concession Extension Agreement (10 €375mn years) License fee to be negotiated Right of first refusal for any other game to be on a case by case basis licensed by the Hellenic Gaming Commission VLTs €560mn 2011 VLT License (18 years) Instant & Passives €127mn(1) 2013 State Lotteries Concession Agreement (12 years) Racing Horse €40.5mn 2016 Horse Racing Concession Agreement (20 years) Exclusive Right for online offering of OPAP’s exclusive lottery games Online Included in upfront payments for legacy licenses Exclusive offering of onshore online sports betting (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. © OPAP 8 Current OPAP’s stake at 83.5%
Network The largest commercial network in Greece with its modernization well on track FY’19 figures Gaming Halls 4,406 OPAP Stores POS* in Greece & Cyprus Gas stations Post Bank Bank Bank Petrol Bank stations *as of 31.12.2019. New & upgraded Opap Stores Average store size increase constructed since 2018 since 2015 Hellenic Lotteries products are distributed through additional 9,469 POS & Street Vendors 9 c.1,600 +23% © OPAP
OPAP’s Greek Revenue (GGR) Breakdown GDP CAGR: -6.3% GDP CAGR: +0.9% €m OPAP CAGR: -9.2% OPAP CAGR: +4.4% 2.000 1.800 VLTs 1.600 1.400 1.200 Instant & Passives 1.000 Sports betting 800 600 400 200 Lotteries 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Before Privatization After © OPAP 10
Games Product Matrix GGR breakdown VLTs 23% 20% Instant 18% & Passives 19% 6% 8% 50% 9% 48% 46% 9% 47% Mutual Fixed Odds 23% 25% 27% 22% Lottery Betting Q3’19 Q4’19 Q1’19 *Referring to full re-opening period Q2’20* (8-30 Jun) Propo- Virtuals & Stihima Joker Lotto Propo Proto Super 3 Extra 5 Kino Scratch Laiko Ethniko VLTs Goal Powerspin 2017: 39% of NGR* GH: 36% of Agent 2018: 37% of NGR* NGR 8% 12% 12% Commission 2019-2021: 35%+1% of NGR* as bonus. Agencies: the 1% bonus adjustment is conditional upon achieving 6% average NGR* growth vs. FY 2016 of wagers 25% of NGR Three Three Ten Two Frequency of Twice Twice Once a Every 5 Every 4 Once a 18 draws Daily times times draws draws On going On going play weekly weekly week minutes minutes week annually weekly weekly daily daily © OPAP 11 * NGR: GGR - GGR contribution
Financials It’s all about numbers © OPAP 12
Financial Overview Revenue (GGR) EBITDA & EBITDA margin on GGR 2.000 CAGR: +4.8% CAGR: +10.9% 1.500 23,2% 400 25,2% 27,0% 22,9% 1.000 22,0% 21,1% 1.547 1.620 18,2% 1.378 1.400 1.398 1.456 1.220 500 200 377 413 347 308 307 354 222 0 13 14 15 16 17 18 19 0 13 14 15 16 17 18 19 Strong top-line performance & incremental growth driven by: • Revenue increase & cost optimization brought in material l-f-l • Introduction of Scratch & Passives in 2014 EBITDA growth post the privatization (2013-2015). • Introduction of VLTs and Virtuals in 2017 • GGR contribution increased in 2016 to 35% from 30% previously. • Growth and cost containment is evident in 2018 & 2019 as well Total Opex (Gaming operations only) Net Profit 400 200 300 200 100 195 211 202 274 258 254 274 268 255 170 100 235 141 143 126 0 13 14 15 16 17 18 19 0 13 14 15 16 17 18 19 • Total Opex (gaming operations) reduced despite the commencement of several material projects (Hellenic Lotteries, Horse Racing, VLTs & virtual games) Amount in €m © OPAP 13
Financial Results Q2 2020 (1/2) Department Encouraging recovery post lockdown Stores with strong financial position preserved -16.5% Greek GDP Retail Sales Supermarkets (excl. fuels) Pharmaceuticals H1 2020 +7.2% H1 2020 +7.5% -2.8% -8.55% Furniture & Household Equipment -0,7% Gross Gaming Revenue (€m) EBITDA (€m) Net Profit (€m) -34.8% -49.1% -77.7% 250 100 1.000 200 80 800 600 150 60 92 400 780 100 201 40 508 200 50 103 20 20 0 0 0 H1'19 H1'20 H1'19 H1'20 H1'19 H1'20 © OPAP 14
Financial Results Q2 2020 (2/2) H1/Q2 EBITDA* (€m) -43,4% -74,7% 23,8% 24,8% 21,5% 12,8% 194 91 109 23 EBITDA Q2 2019 Q2 2020 H1 2019 H1 2020 margin on GGR *Excl. one-off items H1/Q2 Net Profit* (€m) -64,5% 100 80 11,1% 9,6% 60 40 86 6,0% 20 37 31 Net Profit 0 -5 margin on GGR -20 Q2 2019 Q2 2020 H1 2019 H1 2020** © OPAP 15 * Excl. one-off items
Balance Sheet Net Debt position (€m) 436 459 517 409 108 -77 -155 -296 840 1.046 513 650 263 115 169 305 165 32 119 1 -242 -297 -302 -274 -246 -191 -644 -628 2013 2014 2015 2016 2017 2018 2019 H1 2020 Short-term Debt Long-term Debt Cash Net Debt/(Cash) Prudent leverage & solid balance sheet structure • Average cost of lending: Fixed c.2,8% • 1,6x Net Debt /LTM EBITDA • 8,5x Interest Coverage © OPAP 16
Dividend Policy Both longer & short term history demonstrate consistent & rewarding shareholders returns Dividend per share (€) 1 0,57 Average dividend yield since the IPO (‘01-’19) 9% 0,70 1,00 0,50 0,60 0,60 2 0,23 0,30 0,25 0,30 Average dividend payout 0,20 0,17 0,12 0,10 0,10 since listing 104% 2013 2014 2015 2016 2017 2018 2019 2020 Dividend per 0.25 0,70 0,40 1.29 1,10 0,70 0,30 share 3 Dividend 59.6 112.4 60,5 241,4 277,0 155,2 47,2 Committed to distribute the payout (%) bulk of FCF post investments Interim Dividend Remaining Dividend Special Dividend © OPAP 17
OPAP Strategy To establish OPAP as a world class gaming entertainment company “ 2020 has been an extremely demanding year so far, with the coronavirus pandemic leading to unprecedented challenges for both businesses and society. The decisive and prompt actions taken by OPAP to mitigate the pandemic’s impact for all of its stakeholders have been • Embedding Customer Obsession reflected in the company’s financial results, which were once more sound, as well as in its evolving socioeconomic • Investing In Our Network footprint. • Developing Our People When it comes to the financials, Q2 moved alongside our • Building a World-class Portfolio of Products & Services demanding expectations, leading to cash generation even • Leveraging the latest Digital & Technology Capabilities during the harshest of times. Going forward, initiatives such as the constant enhancement of our online offering, • Committing to Our Communities prompt cost control actions, the swift adaptation to a new • Expanding the Power of Our Brand working norm, and the ongoing support of our network • Rebuilding healthy relationships with the State, Regulator and other bodies and our social stakeholders remain at the forefront of our attention. Undoubtedly, there will be additional hurdles on the road to recovery, but we are confident that we are well positioned to face any challenges ” Commenting on the Q2 2020 financial results, OPAP’s acting CEO, Mr. Jan Karas, noted that: © OPAP 18
Video Lottery Terminals (VLTs) License Agreement • Fully paid 18 years exclusive license of €560m for the operation of 25,000 VLTs • VLTs has added a “growth engine” to OPAP’s performance potential and is already 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 • Full deployment of 25k VLTs since end of 2019 © OPAP 19
Video Lottery Terminals (VLTs) Rollout completed as planned and on schedule – focus now on optimisation Performance overview Customers Overview 440,2 480,4 487,2 288,3 148,5 115,8 131,3 116,6 27,8 74,77 FY '17 FY '18 FY '19 Q1 '20 Q2 '20 Active Players / monthly avg. ('000) Registered base ('000) Age Group 70% 30% Rollout complete: All 25,000 installed and certified 19% 26% by regulator Above 45yrs (Male) Record customers: Registered base >500k as of Below 45yrs (Male) 11% 31.08.2020, monthly actives constantly >100k Above 45yrs (Female) Expanded Product Portfolio: Increased number of Below 45yrs (Female) new VLT games 44% © OPAP 20
Video Lottery Terminals (VLTs) Delivering a truly entertaining gaming experience Operational Highlights (Q2 ‘20) Avg. spending per visit Communication Opt-in rate 32€ 76%
VLTs enhancement Introduce new play games & features Engage with promo events From 39 to… 100 unique Play games Launch of VLT Jackpot Xmas Ladies Party campaign night night across all machines Match of Lucky the day Pizza draws night Different stores formats & more typologies Promotional activities & CRM initiatives 1 Low budget 2 Standard store store with up to with 30-50 VLT’s 25 VLT’s 4 3 Flagship store Block with OPAP with differentiated store and Gaming design Hall © OPAP 22
Leveraging on on-line gaming market development Parallel & district strategies to capitalize on this growing online market trend On-line segment is the most fast Stoiximan Group Investment growing part of Greek gaming market Transaction’s perimeter 3.6% Online CAGR: 14,0% 19.4% Acquisition of a 36.75% stake in the mother company of Stoiximan Group, TCB Concluded 1 Holdings Ltd, for a consideration of €50m Phase Acquisition of additional stake in Greek & 2 Cypriot operations reaching 69% Net Concluded 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 consideration: €90.2m X% Share of on-line market Land-based On-line Acquisition of additional stake to reach • pending final 84.5% and sole control of Greek & OPAP Online 3 Cypriot operations. approval from competent • Pame Stoixima, Joker & recently Net consideration: €73.2m authorities virtuals and casino games already available online • The leading online operator in Greece (c.49% market share, 2019) and amongst market leaders in Cyprus and Romania. • 140k Q2’20 monthly avg. active customers, €38m Group 155k with international evidence pointing out to €242.7m Q2’20 higher penetration in the future FY’19 GGR €44m GR/CY active players/ • Significant opportunity to leverage OPAP’s (after deducting bonuses) FY’19 Ebitda monthly avg. strong brand name H1’20: Total GGR +39% y-o-y amid significant hit in betting due to Covid-19 © OPAP 23
Social Responsibility The largest social contributor in Greece measured in overall expenditure and variety of actions Promoting trust strategic framework COMMUNITY TRUST Health Sports Sensitive Employment Groups WORK MARKET ENVIRON- PLACE PLACE MENT Employee Responsible Environmental Engagement Gaming Footprint Level 4 (highest) Certificate in Responsible Gaming by the World Lottery Association “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 24
OPAP in Summary Sole Concessions Sales Network Significant Cash Flows • A 50+year exclusive • Largest retail network in • Bulk of FCF (excl. any concessions backlog with the Greece investment) will continue to be earliest expiration in 2026 distributed as dividends • Significant growth coming • Ongoing focus on cost • Possesses significant from VLTs, new products, efficiencies demonstrating expertise, local know-how and online & rejuvenation of tangible results & delivering knowledge of the gaming current products additional savings industry Strong Fundamentals Ongoing cost control Solid Management Team © OPAP 25
Contacts Investor Relations Team ir@opap.gr Tel : +30 210 5798930 https://investors.opap.gr © OPAP 26 [Business/Internal Use]
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