Company Presentation

Company Presentation
June 2016
Agenda
History – Company Overview
Financial Overview
Strategy
Social Responsibility
Summary
© OPAP
The Story so far…
1958
Establishment of the
Greek Organization of
Football Prognostics
20 years exclusive-license
contract with the Hellenic
State
Launch of PROPO
(The Greek Football
Pools Game)
1959
1999
OPAP incorporated
as a Societe
Anonyme
Extension of exclusive
license until 2030
2003
Launch of
KINO
3
Award of Video
Lottery Terminals (VLT)
license
2011
Launch of PAME STIHIMA
(sports-betting)
2013
Acquisition of
Hellenic lotteries
12-year concession
Transfer
of
33% stake to
Emma Delta
for €652m.
Q4 2013
2000
Q2 2014
Launch of
Hellenic
Lotteries &
Online
2001
Listed in the
Athens Stock
Exchange
Horse Races
operations
commencement
& launch of horse
races mutual
betting
Q1 2016
© OPAP
Company Overview
As of 11 October 2013,
OPAP is
Exclusive concession
extended up until 2030
The
leading
Greek
gaming company
100% private
under new management
Historic
high dividend
pay-out policy
Market cap on Athens Exchange
Presence in
c. €2.4 bn
Cyprus
(June 2016)
c. 72.7%
of the total Greek gaming
market of 2015 Gross Gaming
Revenue (GGR)
Largest
retail network in Greece
€1.399.7 m
As of 01.01.16 subject to
35% GGR contribution
4
2015
Revenues (GGR) of
and EBITDA of
€377.1 m
© OPAP
Public offerings Shareholder Structure
Remaining
free float
61,81%
Date
(%)
Emma Delta
Hellenic
Holdings Ltd
33,00%
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
Baupost
Group L.L.C.
5,19%
5
© OPAP
The Greek Gaming Market:
A Comparative Review
•
Although it has been declining due to macro related factors, Greek Gross Gaming Yield as % of the
GDP continues to compare favorably with many European peers
1,11%
2015
gross gaming
yield
(€bn and % of
GDP(1))
1,06%
0,92%
18,1
0,87%
0,80%
0,73%
0,71%
0,51%
0,45%
17,9
Average: 0.65%
0,74%
0,36%
0,38%
0,35%
0,33%
0,45%
11,0
9,9
8,0
In €bn
2,3
In % of 2015
GDP
Italy
UK
Germany
France
Spain
2,3
1,9
SwedenNetherlands Finland
1,8
1,8
Greece
Ireland
1,5
1,3
1,3
Belgium Chech Rep Portugal
1,3
1,2
Austri a
Denmark
432
351
331
283
2015 gross
gaming yield
per adult(2)(3)(€)
Finland
Ireland
Italy
UK
259
241
237
Sweden Luxembourg Denmark
225
Spain
215
Slovenia
194
Gre ece
186
180
177
163
160
France Slovac Rep Austria Netherlands Belg ium
• The Greek gaming market is a fundamentally attractive market :
1. 9th largest gambling market in the European Union (2015 gross gaming yield of €1.83bn) in absolute value after Italy, United Kingdom,
Germany, France, Spain, Sweden, Netherlands and Finland which all benefit from higher GDP
2. 2015 gross gaming yield per adult of €194 (10th highest in Europe)
3. 2015 gross gaming yield representing 1.06% of GDP (2nd highest amongst the graph’s sample – used to be the highest in 2010)
6
Source: H2GC
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 and Cyprus
© OPAP
Greek Legal Market Wagers Overview
The macroeconomic crisis led
to a market decline of c. 38%
€m
In the same period OPAP
gained 12.9 p.p. market share
10.000
9.000
8.000
34.8%
32.9%
36.5%
7.000
30.1%
34.8%
6.000
28.6%
36.0%
31.4%
38.0%
5.000
38.5%
3.000
56.2%
41.3%
58.2%
56.3%
52.3%
60.4%
65.0%
50.5%
41.5%
44.0%
20.6%
8.0%
9.8%
4.5%
5.9%
8.9%
11.4%
7.5%
4.3%
8.2%
7.2%
4.0%
7.2%
7.0%
3.2%
6.3%
6.2%
5.4%
7.5%
4.7%
4.7%
4.2%
4.1%
3.2%
3.7%
3.2%
3.7%
3.0%
3,9%
2.5%
1999
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2000
Horse Racing
7
62.8%
65.0%
70.9%
71.1%
4.4%
1.4%
2012
4.3%
1,1%
2013
1.1%
2014
0,8%
2015
63,5%
41.5%
37.5%
0
28.0%
40.1%
52.0%
1.000
28.0%
39.7%
4.000
2.000
29.6%
Instant Lotteries
Passive Lotteries
OPAP
4.4%
1.9%
2011
Casinos
Source: OPAP’s reported numbers (Greek operations only); H2 Gambling Capital
Note: since 2014 Instant and passive lotteries wagers are included in OPAP’s numbers
© OPAP
OPAP is the Undisputed Leader of the Greek
Gaming Market
OVERVIEW OF THE GREEK GAMING MARKET
•
2015 GREEK GAMING MARKET (GGR)
The Greek regulated gaming market comprises of three sectors:
• Lottery: OPAP and the Passive Lottery Division
• Casinos: includes all games played within casinos
• Betting: dominated by sports betting (OPAP) but also includes
domestic horserace betting (OPAP since Jan. 2016)
•
International egam ing operators
Horse racing
Like most other European lottery markets, the Greek gaming
OPAP Num erical
Gam es
12%
0,6%
market is regulated and controlled by the Hellenic Gaming
Commission
• Ethniko, Kratiko and Laiko, the passive lottery-style games, represent
Casinos
15%
42%
c. 3% of the market
• Scratch games, were successfully re-introduced in May 2014 by an
OPAP led consortium, generating.
•
The Greek casino market consists of 9 licensed casinos,
generating 15% of the total market’s gross gaming revenue,
dominated by Regency and Loutraki
•
Instant &
Passives
8%
22%
Pari-mutuel horserace betting since January 2016 is being
operated by OPAP S.A. following the acquisition of a relevant 20-
OPAP Sports
Betting
year license for a total consideration of €40.5m
•
Fixed odds sports betting is solely organized by OPAP, yielding
Market size: €1.83bn
€407m of gross gaming revenue in 2015.
Source: OPAP’s reported numbers ; H2 Gambling Capital
8
© OPAP
OPAP’s Competitive Advantage is Based on a
Diversified Product Offering and a Widespread Network
OPAP GAME OFFERING
A WIDESPREAD NETWORK OF AGENTS
% OF 2015 REVENUE (GGR)
STIHIMA
PROPO
SPORTS
BETTING
PROPOGOAL
MONITOR
KINO
JOKER
LOTTO
LOTTERIES
PROTO
SUPER 3
EXTRA 5
GO LUCKY
SCRATCH
INSTANT &
PASSIVES
LAIKO
ETHNIKO

Introduced in 2000

Introduced in 1959

Introduced in 1996

Introduced in 2011

Introduced in 2003

Introduced in 1997

Introduced in 1990

Introduced in 1992

Introduced in 2002

Introduced in 2002

Introduced in 2011

Introduced in 2014

Introduced in 2014

Introduced in 2014
29,4%
59,3%
Source: Company
11,3%
Cyprus accounts for c.5%
of revenues
Source: Company
9
© OPAP
Network
The largest commercial network in Greece
Petrol
stations
Post
Petrol
stations
Bank
Bank
Bank
Bank
From the past to the cohesive corporate branding image of today
10
4,791
POS*
Telecoms
* Greece & Cyprus network as of 31.12.2015
Hellenic Lotteries products are distributed through
additional 5,752 POS & Street Vendors
© OPAP
OPAP’s Greek Revenue (GGR) Breakdown
€m
Instant &
Passives
2.000
1.800
1.600
1.400
Sports betting
1.200
1.000
800
600
Lotteries
400
200
0
2000
2001
2002
2003
2004
Lotteries
11
2005
2006
2007
2008
Sports betting
2009
2010
2011
2012
2013
2014
2015
Instant & Passives
© OPAP
Games Product Matrix
12
Stihima
Joker
Lotto
Propo
Proto
Super 3
Extra 5
PropoGoal
Kino
Monitor
Games
Scratch
Laiko
Ethniko
Agent
Commission
8%
12%
12%
12%
12%
8%
12%
12%
8%
8%
8%
10%
10%
Frequency of
play
Daily
Twice
weekly
Twice
weekly
Three
times
weekly
Twice
weekly
Ten
draws
daily
Two
draws
daily
Once a
week
157
draws
daily
Once a
week
18 draws
annually
On going On going
– Daily
– Daily
© OPAP
Diversified distribution network
Games
Agencies
Gaming Halls
Internet








Street Vendors &
Third Party POS














VLTs *
(Scratch)
Passive Lotteries




* Project suspended
13
© OPAP
Financials
It’s all about
numbers
14
© OPAP
Financial Performance
COMMENTS
OPAP FINANCIAL OVERVIEW
In €m
Wagers
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
3,177 3,695 4,633 5,066 5,520 5,441 5,140 4,359 3,972 3,711 4,259 4,257
Growth% 39.2% 16.3% 25.4% 9.3% 9.0% (1.4%) (5.5%) (15.2) (8.9) (6.6) 14.8 (0.0)
Revenue
(GGR)*
1,242 1,338 1,562 1,597 1,852 1,781 1,654 1,413 1,302 1,220 1,378 1,400
Growth % 28.2
7.7
16.7
2.2
(7.1) (14.5) (7.9) (6.3) 12.9
1.6
EBITDA
659
714
738
860 1,057 967
16.0
911
734
674
222
347
377
Margin
(% of
GGR)
53.0
53.3
47.2
53.9
55.1
51.9
51.7
18.2
25.2
27.0
57.1
(3.8)
54.3
 2003: Introduction of Kino
 2007: Stihima risk management operation was taken in-house
 2005-2008: Development of betting portfolio events through
Net Debt /
(377) (412) (384) (493) (706) (700) (657)
(Cash)
97
(117) (77) (297) (155)
Source: Company reports
* Gross Gaming Revenue
53,3%
47,2% 53,9%
57,1%
54,3% 55,1%
51,9%
18,2% 25,2%
3.177 3.695
 2014: Introduction of Scratch and passive lotteries
 Overall performance affected by satisfactory Kino
51,7%
1
introduction of new features in Stihima and increase of Kino
daily playing hours

2 Recent performance has been impacted by the adverse
economic environment:
WAGERS AND MARGIN EVOLUTION SINCE 2004
53,0%

1 OPAP has recorded strong top line growth since 2003,
mainly driven by:
26,9%
2
5.520 5.441 5.140
4.633 5.066
4.359 3.972
4.259 4.257
3.711
performance, launch of Instant & Passives in 2014, while
Stihima is affected by cyclicality of major football events every
2 years
 January 2013: a 30% GGR contribution is introduced
3
4
 January 2016: GGR contribution increased at 35%
2004
2005
2006
2007
Wagers (in €m)
2008
2009
2010
2011
2012
2013
2014
2015
EBITDA Margin (as % of GGR)
Source: Company reports
15
© OPAP
Financial Overview
Revenue (GGR) (€m) 2001 - 15
EBITDA (€m) 2001 - 15
1.000
2.000
800
1.500
600
1.000
400
500
200
0
0
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 12 13 14 15
'01 '02 '03 '04 '05 '06 07 '08 '09 '10 '11 12 13* 14 15
EBIT (€m) 2001 - 15
Net Profit (€m) 2001 - 15
1.000
800
800
600
600
400
400
200
200
0
0
'01 '02 '03 '04 '05 '06 07 '08 '09 '10 '11 12 13* 14 15
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 12 13* 14 15
2013*: First year of 30% GGR contribution implementation
16
© OPAP
Financial Results Q1 2016 (1/2)
OPAP demonstrated resilient operating
performance in Q1 2016 when compared to
the Greek macroeconomic environment
Department
Stores
+4,0%
Retail Sales
Q1 2016
Food/Tobacco
+3,0%
Greek GDP
Q1 2016
Pharmaceuticals
-1,1%
-4,4%
-1.5%
Furniture &
Household
Equipment
-6,9%
Gross Gaming Revenue (€m)
-4.4%
Wagers(€m)
-6.4%
Net Profit (€m)
-9.0%
EBITDA (€m)
-0.2%
100
70
1.200
400
1.000
600
1.118
1.047
200
400
60
0
356
341
Q1 2016
93
40
79
30
58
53
43
20
20
0
Q1 2015
40
93
100
200
17
50
300
800
60
80
10
0
0
Q1 2015
Q1 2016
Q1 2015
Q1 2016
Q1 2016*
Q1 2015
* Adjusted for GGR contribution increase
Q1 2016
Q1 2016*
© OPAP
Financial Results Q1 2016 (2/2)
(€ ‘m)
EBITDA margin
on GGR
EBITDA
(€ ‘m)
Net Profit
margin on GGR
Net Profit
3,2%*
18
*Adjusted for GGR contribution increase
© OPAP
Dividend Policy
Avg. 15 years dividend yield: 7%
Total dividend paid since listing
€16,35 vs. IPO price of €5,5
Additional
distribution of
retained earning
€0.57 per share,
pending approval
by the EGM
scheduled for
21.06.2016
2,50
2,00
1,40
1,50
1,00
0,50
0,00
Dividend per
share (€)
Dividend payout
(%)
0,43
0,40
0,93
0,94
0,55
0,48
1,03
0,43
0,55
1,10
1,14
0,60
0,80
0,65
0,96
0,58
0,72
0,25
0,20
0,23
0,17
2012
2013
2014
2015
0.72
0.57
0.25
0,70
0,40
42.9%
36.0%
59.6%
112.4%
60,5%
0,27
0,30
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0.60
0.67
0.73
1.48
1.42
1.58
1.74
2.20
1.75
1.54
79.4%
103.7%
99.1%
93.4%
98.8%
98.9%
97.1%
96.3%
94.0%
85.3%
0,17
0,50
0,57
Interim Dividend (€)
Remaining Dividend (€)
19
© OPAP
OPAP Strategy
• Continuous improvement of OPAP’s existing product portfolio
• Continue to invest in OPAP’s brand to drive market share
• Strengthen existing network by increasing content and gaming
options across agencies
• Optimise OPAP’s cost base and improve operational
efficiencies
• Utilize strong cash position to capitalize on development
opportunities
• Leverage OPAP’s expertise and experience to enhance our
position in the European Gaming Sector
20
“
Commenting on the Q1 2016 financial
results, OPAP’s Chairman & CEO, Mr.
Kamil Ziegler, noted that:
As evident in official figures Q1
2016 was marked by persisting
pressure on disposable income &
private consumption, thus
leading our games’ portfolio
revenue to trend towards lower
numbers on a y-o-y level. In
addition, increased GGR
contribution of 35% carried a
severe impact on our reported
numbers despite our ongoing
efforts related to cost
optimization, which would
otherwise lead to stable operating
profitability vs. the same period
last year. Having paid almost
€2bn in taxation in the last three
years and with our tax base
growing even further, we stay
fully focused on our long-term
plan that will benefit the Greek
economy & society as a whole.
”
© OPAP
Land-Based Concession Extension Agreement
A unique opportunity for OPAP to support its leading position in Greece
and strengthen visibility pertaining shareholder value up to 2030
Concession extension fee incorporates prepayment of gross win royalties
as well as the license cost for the concession period
OPAP’S POSITIONING
•
Extension of the original concession contract (ended in 2020) on lotteries and sports betting from 12.10.2020 to 12.10.2030, for the
exclusive benefit of OPAP
Exclusive operation of current games (incl. Super 4 and Bingo Lotto), by any technological means(1)
(1) Excluding only on-line sports betting for the 2020-30 period
•
OPAP to maintain its leading position in the Greek market
TRANSACTION ECONOMICS
21
•
€375m paid following signing of the concession extension agreement and OPAP’s EGM approval
•
5% royalties on gross win will be additionally paid on a yearly basis between 12.10.2020 and 12.10.2030
•
Fair and equitable value sharing with the HR
© OPAP
Video Lottery Terminals (VLTs)
License Agreement
 Suspension of VLTs business activity: as of July 1st 2015 due to radical changes in the regulation by the HGC
 File of a request for arbitration: as of November 26th 2015 with the London Court of International Arbitration for
damages in excess of €1 billion
Highlights

10-year & fully paid exclusive license of €560m for 35,000 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
Exclusive Licensee for 35,000 VLTs
16,500 will be directly operated by OPAP
18,500 will be operated by 4-10
sub-concessioners
New dedicated network of gaming halls
hosting up to 25 VLTs each


More than 2,000 applications from
potential POS operators
More than 5,000 offers for POS leases
 License also includes on-line Random Number Generator (“RNG”) Games
 Based on the law, HR to receive 30%-35% of gross win in the form of royalties
22
© OPAP
Lottery tickets & Scratch cards
Highlights

12-year license

Extensive network including OPAP agencies, retail shops and street vendors

Iconic game embedded in Greek culture, attracting all classes of players

Scratch cards is the 2nd most popular gaming product worldwide
JV Structure
67.0%
16.5%
Key terms
•
Exclusive rights to the production, operation,
circulation, promotion and management of the
Hellenic Lotteries (scratch & passive) in Greece
•
Upfront payment
materialized
•
Committed 30% of GGR with a minimum of €580
million additional payment (minimum annual
payment of €50 million) over the 12-year
concession period
16.5%
Greek State Lotteries
12-year Concession (SPV)
of
€190
million,
already
Cooperation with well-established peers
in the Lottery tickets & Scratch cards project
23
© OPAP
Online betting
User friendly platform
Launch on
June 2nd, 2014
24
Emphasis on sports betting
Easy access
from
computers,
tablets,
mobile
phones
© OPAP
Social Responsibility
Both concession extension and VLTs license have been granted on the ground of OPAP’s social sustainability
• The largest social contributor in
Greece measured in overall
expenditure and variety of actions.
• OPAP supports the Therapy Centre for
Dependent Individuals (KETHEA-ALFA)
for the operation of the help-line 1114.
• Responsible Game: OPAP is offering
entertainment and recreation while
protecting
underage
and
other
vulnerable groups.
• OPAP transforms its business
excellence into social contribution,
through an integrated Corporate Social
responsibility (CSR) Strategy.
• POS exclusive to gaming activities.
• OPAP achieved significant recognition
and awards by a number of
independent agencies & bodies.
• European Responsible Gaming
Standards and Sports betting Code
of Conduct have been adopted by
OPAP.
• OPAP received a level 3 accreditation
by the World Lottery Association
(WLA) for its Responsible Gaming
strategy
“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.
25
© OPAP
OPAP in Summary
Sole Concession until 2030
• Permits OPAP to enjoy the
growth of the Greek Gaming
Market
Sales Network
• Largest retail network in
Greece
Significant Cash Flows
• Secure & stable Dividends and
effective Investment Policy
• Possesses significant
• Favourable Market Dynamics,
Credibility and Growth
Strong Fundamentals
26
expertise, local know-how and
knowledge of the gaming
industry
Solid Management Team
© OPAP
Contacts
27
Nikos Polymenakos
George Vitorakis
Investor Relations Director
Head of Strategic Research
polymenakos@opap.gr
Tel : +30 (210) 5798929
vitorakis@opap.gr
Tel : +30 (210) 5798976
© OPAP