Greek Organistn Football

Ladies and gentlemen, thank you for standing by. I am Gaylee, your course call operator. Welcome and thank you for joining the OPAP-SA conference call and live webcast question and answer session to discuss the second quarter 2023 financial results. Please note a video presentation has been distributed and is also available on the OPAP Investor Relations website. All participants will be in listen-only mode and the conference is being recorded. At this time, I would like to turn over the conference to Mr. Jan Karas, CEO of Opapese. Mr. Karas, you may now proceed.

Thank you, Gali. Good evening or good morning to everyone, and welcome to our regular Q2 2023 results conference call. I'm very pleased with the set of results that we have announced, delivering strong upward stop-line performance across all channels and verticals. We continue also to record solid operating profitability, allowing us to be confident on the delivery of our communicated outlook for the year. On the operational front we are very glad with the tangible progress we are showing, upgrading further our customer experience and rejuvenating our recreational mix. The first steps of our OPAPonline.gr entertainment hub, the upgrade of our retail sportsbook platform and the continuous evolvement of the OPAP Store app, supported also by our new free win-gain, was amongst the few successes that we presented to you earlier in the presentation that we have shared with you. We are also happy to announce a record interim dividend of €1 per share to be paid in November. Continuing our generous shareholder remuneration while at the same time we are looking to further complement our shareholders remuneration by expanding it with the share buyback program funded by any additional surplus cash after maximum dividend has been paid. For the remainder of the year we are having a very busy and solid commercial plan towards delivering sustainable value to all our shareholders. Hopefully, you have reviewed and enjoyed the results, the recorded video we shared with you earlier today. So we will jump directly to our Q&A session. Kelly, over to you.

Thank you, Mr. Karas. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and 1 at this time. One moment for the first question please. The first question is from the line of with your bank equities. Please go ahead.

Hello there. Thank you very much for taking my questions. Here I have just a couple if I may please. Could we start with the shareholder remuneration, if you could describe us your thought process regarding the interim dividend distribution. I guess the obvious question is what this means for total shareholder returns out of 2023 numbers, profits. Or I guess what I'm wondering is whether it's reasonable to assume that you will top up the interim dividend with the profits that you will generate in the second half of the year. So that's the first question. And secondly, yeah, just on online, I mean, this posted quite healthy growth rates in the second quarter. I'm just wondering what has the experience been from the launch of online Kino? Have you seen any meaningful changes migration so far to the online channel and you had given some targets I think they were a couple of years ago about online are they the same because you've proceeded with the revamp of your product offering So I'm just wondering what you expect in terms of online penetration in the coming years. Thank you so much.

Good afternoon from Pavel Mucha. I will take the first question about interim dividend. So to answer you, definitely you can expect remaining dividend to be eight next year. Basically, we've announced in the past that you were used to us paying twice a year interim in the autumn and remaining dividend in the summer following year. So it is very reasonable to assume that we will distribute the second half year profits as a remaining dividend for the 2023.

Thank you. On the online side, what is the experience of online kino so far? So on your question regarding kino, we are referring here for the rest of the audience to the opaponline.gr, our entertainment hub that we have launched a few months back. Kino is one of the games that we are offering as part of our online lottery portfolio now, obviously one that is getting a lot of customer interest. We are in the first stage. All of the online players that we had before, they certainly appreciate and explore the new broad portfolio. portfolio and we are excited about their engagement with the other games and the development of their time spent on the website as well as the amount of games they play. So that's so far going in a positive way but we obviously don't stop here. As you may have noticed we have started back in July communication, so ATL campaign for our opuponline.gr platform and as such we are expecting in the periods to come especially now with the back to school period kicking in more and more audiences and new customers joining this new proposition and exploring its So that's where we are today and we hope we have only the most positive expectations going forward because obviously online and online gaming is a trend and we don't want to stay behind and that's why we enriched this portfolio and we will continue to do so. So there is much more coming in the world of hopuponline.gr and alongside of those evolutions we expect also accordingly the online share on the total lottery gaming to grow towards double digit numbers.

I got it and I guess what this means for the online channel as a whole within your mix are you still targeting You know, something similar to what you had referred to a couple of years ago regarding your own digital offering or has anything changed?

I'm not sure what exactly you refer to in several years ago target, but our ambition, like I said, is a double-digit share of Lottery.

If you are asking what exactly is that number... I think it was close to 200 million, if I remember correctly, something like that, 180, 190...

I would like to abstain now from specific numerical commitments as to where our online will be. But the important thing is that we explore this opportunity to the max. And like I said, and if you also look around Europe, the double-digit share, lower double-digit share is the trend. And we expect that we will go down that road ourselves as well. Keep in mind also part of your question was how it's influencing retail. The important opportunity of online that we want to explore is an incremental business. Those are incremental opportunities for current customers to play on occasions that they couldn't play in retail, especially given its impact. space and time limitations and very importantly also attracting customers who for any reason don't want to engage with retail and other customers and they want to enjoy the game on their own this is a new opportunity for them as well so there are both current customers being developed from retail customer to a hybrid customer is one important group but likewise it's attracting completely new customers to our games Got it. Thank you very much. Thank you very much for the question.

The next question is from the line of Botan Rosso with Edison Group. Please go ahead.

Good afternoon, everyone. Thank you for taking the questions. I've got three or four, if that's okay. My first one, could you talk in terms of how perhaps the fires in Greece might have tempered your expectations from earlier in the year? And has there been any notable change in customers' behavior? My second question is, in terms of free win, could you just talk about the economics of that to you and the potential financial benefits? Because it's obviously easy to see there's a cost in terms of the payouts that you give to customers. But what are the financial positives? I think in your presentation, you talk about customers for the app. My third question is in terms of VLTs. There was a slight step back in the quarterly run rate of the revenue there, so could you just talk about that? And my final question is with respect to the share buyback. Could you just talk about why you're going for share buyback rather than further the reinvestment plan that you've had previously? Thanks.

Thank you very much. I got a second, third, and fourth question. Could you please repeat again the first one?

Yeah, it's really just about how, you know, the tragic fires have been happening in Greece over the last few months. You know, has that tempered your outlook a bit?

You're referring to fires. All right. Yes. Now I understand. Yes. Thank you. So starting with that. Obviously the very unfortunate events of extreme heat that unfortunately led into extreme fires and according to many of those were probably worse. fires in last at least 15 years with a lot of negative implications. For us it was obviously also for our business it was obviously a disruption as well as many areas have been affected. Several stores have been closed for several days, and very importantly, it certainly influenced the psychology of customers in the affected areas. So, yes, it had an influence. We obviously are not able to exactly say as to what influence it was, but it was certainly not a usual summer, unfortunately. By the way, speaking on that front, we as OPAP have also provided a lot of help to the affected communities, as many others did, to help this extraordinary situation. On your second point regarding the free win logic, it's relatively simple. We want to attract customers to our stores. We want to attract those who come, generate ideas for customers to come more often and give them a reason to come more often. So one thing and the other thing is further promote the important element of our business and that is affordable entertainment. With us no matter how much money you are prepared to spend from few euros to more euros. We have options for everyone. And we decided to take it to the extreme. And the ultimate definition of affordable entertainment is the ability to play for free. And that's what we want to offer to our customers. To play, come, play for free. Once a day, you have a chance to win €100,000 through an exciting and engaging game provided through the digital app of OPAP Stores. What's in it for us? Point number one, we are acquiring customers. We are bringing them more often. Point number two, when they are winning, we are giving them While we are giving them money, we are giving them also an opportunity to play and they want to play and they enjoy to play. Most of the winnings that people are collecting are single or low double digit Euros and most people just want to maximize their chances to win and they keep recycling and playing and enjoy what we offer them in the wider perspective of the whole portfolio. So that's the whole thing. People come more often and play. So activity is the name of the game and that's where the return on investment as well is. Assessment of the whole business case and how much are forecasts which are certainly even for this free win game positive in terms of P&L implication is something that we will come back to in the next month because we are now in the early days of the whole proposition. Third question was around VLT activity. Indeed we see a little bit slowdown but at this moment nothing that would significantly concern us because it's largely connected with the activity of players and how often they come and that was that was affected during Q2 but not to an extent that would make us anyhow concerned. We have counteracted this with a dedicated campaign focused on activity of players and we see continuous solid performance on VLT aligned with our expectations so hopefully we will not have any surprises on that front. For the fourth question, I will hand over to Pavel.

Yes, thank you. Well, our thinking about Scribd program and Share Buyback was quite simple really. Scribd dividend program, it was very successful five-year running program which we had approved, which now has come to its end. And we were thinking how to take it forward and reflecting our good continuing operational performance and cash flow generation, we were thinking how to further complement our shareholder remuneration and we decided to expand it with the share buyback program. However, we want to use only any additional surplus cash after we still continue to pay the maximum dividend. With the script program, it was very popular and many of the free float shareholders were participating fully or partially. We've heard from some shareholders who didn't participate that they get diluted. So we decided basically to move forward with the share buyback program where pretty much all the shareholders benefit from this as a complementary remuneration on top of maximum dividend which we continue to pay and intend to pay in future.

Thank you.

Did we succeed to cover your questions?

Yes, that's great. Thank you.

Thank you very much.

Once again, to register for a question, please press star and 1 on your telephone. As a reminder, if you would like to ask a question, please press star and 1 on your telephone. The next question is from the line of with Abrozia Capital. Please go ahead.

Hello, many thanks for the presentation and your time. Just wanted to touch upon the cost side and the output, given that we've seen some increase in Q2, particularly on the marketing expenses side. How shall we expect this to unfold over the next few quarters? Thank you.

Okay. Obviously, we have certain phasing of the costs during the year. So what we assured you and what Jan repeated at the beginning of this call, we are definitely aiming to achieve the range outlook, which is quite narrow, which we provided. So there is nothing unusual in Q2 marketing expenses. We were doing a lot of activations within the Q2. It's all related to the new launches which we had We launched OPAP online. We had a new platform in the sports betting. So I would say it's a normal stuff. And even with these increased Q2 expenses, they are sometimes a bit higher, sometimes a bit lower, depending on how the plans are faced during the year. And we will deliver the outlook which we provided.

Thank you. I guess if I could follow up on that. You are, given the momentum in the top line, you're probably feeling comfortable about the top end of your EBITDA range. Would that be fair to say?

We've provided quite narrow range, so I don't want to speculate at this stage whether it's at the top range. We are definitely comfortable that we will be within the range provided. Understood. Thank you.

Once again, to register for a question, please press Char and 1 on your telephone. As a final reminder, to register for a question, please press Char and 1 on your telephone. I apologize. The next question is from the line of Buri Karan with JP Morgan. Please go ahead.

Hi, everyone. Congrats on the good set of results. I was just wondering, below EBITDA line items, in terms of net finance expense, I mean, it came in much better than expected. How should we be thinking about it for the full year, just to get an idea of forward trends there?

Okay. If I understood well the question, Well, we've been constantly repaying the debt during last year, and even at the beginning of this year, our cost of funding remains to be very low in the region of 2.5%, so that's why we have very good development of the finance costs below EBITDA, if that answers your question.

Yeah, thank you so much.

As a final reminder, to register for a question, please press star and 1 on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments. Thank you.

Thank you, Gali. Thank you very much to all of you for being with us today. We will be looking forward to talk to you again in a couple of months in middle of November. upon the Q3 2023 results announcement. Thank you very much for your time, for your questions, and have a great day. Thank you, Gali, as well.

Thank you, Mr. Gadas. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.