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OPAP Q1’19 Results; VLTs, Lottery Games and Stoixima reversion to growth support top-line



OPAP’s Q1’19 results came in slightly above our call at top line and adj. EBITDA level. In general, quarterly figures were mainly driven by the increased VLTs contribution of c€26m y-o-y (€69m in Q1’19 vs €43m in Q1’18) in GGR terms, and were also positively affected by the solid lottery performance and the reversion to growth of Pame Stoixima.

Note that 19,965 VLTs were installed in total by end-March’19, implying that c1,021 new machines commenced operation within Q1’19 through both Gaming Halls & OPAP’s agencies - OPAP still targets for a total of c25k machines installed by YE’19. On the flip side, pressure on Betting Games continued for 2nd consecutive quarter and ellenic Lotteries continued to underperform due to VLTs canibalization on Kino

All in, group Q1’19 GGR grew by c5% y-o-y to €396m. Going down the P&L, group reported EBITDA grew by c28% y-o-y to €112m, positively affected by 41.3% lower, albeit non-recurring, IT expenses (attributable to a renegotiated contract with Intralot), and the exclusion of €2.1m rental costs, according to the IFRS 16. On a comparable basis (i.e. excluding €10.7m one-off gain mostly related to litigation provisions) adj. EBITDA was higher by c16% y-o-y to €101m, exceeding slightly our call (Exx at €98m).Moreover, OPAP’s reported net profits were up 42.5% y-o-y to €57.2m from €39.8m in Q1’18, while on adjusted basis, net Income was 25.3% higher to €50m.

Q1’19 FCF settled at €49.2m from -€2.3m in Q1’18, mainly on strong OCF of €52.2m from €32.2m a year ago, due to increased operating profitability and lower taxes payable, while net debt eased by €28.4m settling at €410.5m.

On VLTs, OPAP said that on 2April’19, the Council of the State issued a ruling that annulled the Hellenic Gaming Commission’s (HGC) decision which set out the VLTs Regulation. However this court ruling is purely procedural, deming that this regulation should have been originally issued through a Presidential Decree. According to OPAP, the court did not make any judicial assessment of the substantive grounds invoked by the applicants or the VLTs Regulation itself. Hence, OPAP operates the existing VLT network normally, while only the rollout of any additional VLT machines is currently on hold. This decision does not affect the legislative framework and exclusive concession agreement under which OPAP operates the VLTs.

Conference Call today - at 16:00 local time (14:00 UK time). Dial in numbers: GR: +30 211 180 2000, UK: +44 (0) 800 368 1063 and USA: +1 516 447 5632. We expect the management to provide an update on the deployment of VLTs, while also looking for an update on the latest run-rates of Virtuals/ SSBTs/Lottery/Scratch tickets and the trends prevailing OPAP’s two flagship legacy games namely, Stihima and Kino.



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