Greek Organistn Football

Ladies and gentlemen, thank you for standing by. I am Gail, your course call operator. Welcome and thank you for joining the OPAP-SA conference call and live webcast to present and discuss the full year 2020 financial results. All participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Jan Karas, CEO of OPAP-SA. Mr. Karas, you may now proceed.

Thank you very much, operator, and good afternoon and good morning to everybody. Welcome to the OPAP 2020 Investors Conference call. As you may remember, in our last communication back in November, we were indicating that the COVID-19 red emergence felt like a deja vu, and although that's exactly what happened in the course of the following month, OPAP's performance is once again proving that the company has what it takes in order to emerge strong from this turbulence. In a year where our shops were fully closed for more than four months, we managed to generate lower but still significant profitability, maintain a strong balance sheet and boost our online content and performance. Without further ado, our CFO, Pavel Mucha, will now provide you with an overview of our financials, and I will then update you on our business progress, but more importantly, on our fast-forward long-term strategy, which will shape our future for the years to come. We will then answer any questions you might have. Pavel, over to you.

Thank you, Jan, and good afternoon to everybody. Following a relatively normal Q3, The Q4 quickly brought in a revival of the pandemic, which led initially to local closures and later to a national lockdown as of November 7. As a result, it was no surprise that all major macro KPIs dropped further in Q4. According to ELSTAT provisional data, the GDP contracted by 5.9% in Q4, fully reflecting the restrictive measures applied since November's, While 2020 GDP came in better versus expectations but still dropped heavily by 8.2%. Total consumption declined by 3.7% in Q4 driven by a private consumption drop of minus 6.9% year on year. Finally, leading indicators demonstrated mixed signs with economic sentiment growing albeit still from low levels, while consumer confidence retreated, reflecting the escalation of the restrictive measures. Going forward, the visibility remains limited. MinFin official estimate calls for a 4.8% GDP growth and a 3% private consumption increase in 2021. However, as the lockdown period gets extended, uncertainty is growing. Independent estimates come with a wide range of GDP growth between 1 and 5%, and it will be obviously determined by vaccination rates, the economy's opening pace and the government support package, which has been already revised upwards to 13 billion euro. Going now to OPAP, the constant shift between closures and openings is distorting any potential comparison with macro data. That said, it's no secret that on the one hand, being a predominantly retail business, the imposed lockdowns have taken a heavy toll on performance, but on the other hand, it's also fair to say that when being opened, our performance has been encouraging. All in all, full year 20 GGR declined by 30.3%, with Q4 down by 48.3%, with a mixed regional picture as different measures and restrictions were applied across different areas. In that sense, on slide eight, we are depicting how lockdowns affected our business and subsequently our revenue throughout the year, and this is excluding any contribution from Kaizen. We defined three individual periods. The first one pertains to the 283 days of 2020, whereby our shops were fully opened, despite the fact that more than half of those days they carried some sort of restrictions. Our performance on a year-on-year basis stood at a satisfying plus 1%. When it comes to partial lockdowns, this period includes 48 days in which our VLT estate was closed and 20 days of local lockdowns. Our performance for this period stood at minus 20.6%, whereas the full lockdown, which accounted for roughly one-third of the year, led to a minus 92.3% year-on-year drop, with online being the only revenue stream. When addressing our key segment's performance on slide 9, we would like to note that it's the first time that OPAP is incorporating reporting-wise the online casino segment, which brought in €19 million in Q4. With this addition, we believe that we are now offering one of the most complete portfolios in the industry, with a well-balanced mix between lottery, VLTs and betting, this all in retail and online, while our reporting is also following a more precise segmentation. The casino figure on its own is a blended outcome of both OPAP, online casino, and Kaizen Gaming, Greece-Cyprus, since we managed to consolidate the latter's figures since December. Kaizen Gaming consolidation is also the main reason behind the fact that betting outperformed versus the remaining segments. In detail, betting in Q4 dropped by minus 27%, whereas the rest of our segments dropped between minus 59% to minus 67%. Because of the lockdown impact, we will not as usually analyze each segment's performance on an individual level, but Jan will make sure in his part of the presentation to refer to the key developments per segment. Going further down the profitability line, set aside the revenue drop, Our GGR contribution line has been disproportionately burdened by the prudent decision to record Hellenic Lottery's increased GGR contribution so as to meet the contractual threshold of €50 million. That said, taking into account that the closure of the related network and the subdued operational activity was beyond Hellenic Lottery's control, we have submitted a request of arbitration to the International Court of Arbitration, asking that GGR tax is calculated based on our actual performance. With that in mind, EBITDA for the quarter dropped by reaching €52.7 million versus €107.6 million in Q4 2019, as the revenue-related drop was partially counterbalanced by the incorporation of €42.5 million from the recognition of income relating to the new GGR contribution regime as provisioned by the Concession Extension Contract, which was commenced in October 2020 and will last till 2030. On full-year level and on a like-for-like basis, Excluding one of items, full-year 2020 EBITDA dropped by 32.4% year-on-year, which we believe is a substantial achievement given that our network was closed for more than four months. Note that Kaizen Gaming contributed €28.1 million on our EBITDA line, with more to come this year due to its full consolidation from December 2020 onwards. Finally, net profit in Q4 2020 reached €132.1 million versus €61.8 million in Q4 2019 due to a one-off gain of €142.7 million from the re-measurement of Kaizen Gaming's previously held equity stake. We believe that the re-measurement vindicates our acquisition decision and comes naturally as a result of the company's impressive performance in the last few years. After excluding one-offs, Q4 2020 like-for-like net profit dropped by 74.3%, whereas for the full year like-for-like net profit dropped by 51.4% year-on-year. As regards to cost efficiencies, our reported OPEX line came higher year on year, but this is entirely due to the full consolidation of Kaizen in Q4. As seen at slide 11, when excluding Kaizen, then our cost efficiencies have been well on track as we were able to realize OPEC savings in each and every quarter post-COVID emergence with the overall figure shaping at minus 4.1%. while on a like-for-like basis after excluding one of items, the drop stood at minus 12.7%. Cashflow wise and moving to slide 13, despite the lockdown and other restrictions, we managed to generate an operating cashflow of 186 million Euro for the year, thus providing with a tangible evidence that despite our retail operation, OPAP is able to generate cash even in the harshest of times. On the investment side, we spent €79 million, mostly due to the acquisition of the additional stake in Kaizen, which together with dividend distribution and debt repayments shaped our cash position to €507 million and our net debt to EBITDA ratio a bit higher, but still very comfortable, two times. It is this financial strength that enables us to propose a full year 2020 dividend per share of 45 euro cents in the upcoming annual general meeting, which we believe, given the circumstances, is a rewarding return to our shareholders. Sending to slide 14, OPAP Online has taken the pole position for the year. As evident, our strategy to enrich our portfolio very early in the initial lockdown has led to a material increase of our online activity. Our customers are at all-time highs, and that is despite the fact that the lack of retail activity is on its own taking an impact on Joker jackpots. In a nutshell, our average weekly online GGR during the second lockdown has well exceeded €1.5 million, while as seen on slide 15, every segment's online contribution has increased by a multiple. Reporting-wise, on slide 16, organic growth together with Stichemann full consolidation has led to online GGR to reach 24.4% of our total revenues in Q4 2020 from just 0.7% in full year 2019, while the portfolio mix is well diversified between betting, casino and lottery. Since Q1 2021 was another quarter that our retail estate remained closed for most of the days, our online and that is both OPAP branded and Kaizen Gaming remained the biggest contributor to our performance. Having said that and concluding my part on slide 18, for every full lockdown month, the GGR impact stands at between 130 to 140 million euro, while EBITDA impact at 45 to 50 million euro. With that, I'm passing you back to Jan.

Thank you, Pavel. Following up on the financial part, I'd like to start right away by providing the latest update with regards to the COVID status of our business. In a nutshell, as you can see on slide 21, our network in Greece remains closed since November the 7th, with the Cypriot network being open with social distancing measures in place, and starting today also with seating available, but obviously only on the outside. As such, and given the quite prolonged period of the Greek stores closure and lockdown, we took all the appropriate measures in order to support our network. We allowed for extension of payment of their financial obligations at a later stage in monthly installments. We provided with guidance so that we make sure that they benefit from the various government stimulus measures and we offered support for the payment of the telecom bills. On top, as our GGR contribution rate on the legacy years has since mid-October moved to 30%, our agents' NGR-based mobilization is also enjoying a sizable benefit. Staying for a bit more on our agents' network and slide 22, I feel proud that despite of COVID, we were able to open or upgrade more than 300 stores within 2020. At the end of last year, our retail estate size was 3,849 op-up stores in Greece and Cyprus, 1,000 of those already offering advanced audiovisual experience, and another 374 Play Stores. I would also like to stress the growing importance of our indirect sales network, which has grown materially over the past couple of months, and we hope that it will soon be complemented by reopening of OPAP stores. Going forward, as I will also mention in the fast-forward strategy part of our presentation, we will continue along the same direction, aiming for providing the best gaming entertainment experience possible. We will also put a lot of efforts in simplification and automation of retail processes and introduce additional in-store content management tools for our agents to further increase easiness and flexibility of their operation. These will also be important success factors in our aim to further enhance our digital and cashless solutions footprint within the shop. Product portfolio-wise and page 23, 2020 was beyond any doubt a successful year. We managed to bring forward the launch of online virtual games and casino and introduce these to our customers already during the first lockdown, thus providing with the timely and long-desired enhancement of our online portfolio. Joker also demonstrated the growth of its base sales, driven by the addition of the third weekly draw earlier in the year and the improved performance of online. We have also enhanced our retail portfolio. We introduced Power Spin and in Q4 we added Virtual Basket, having a meaningful positive impact on our customer satisfaction as well as our revenues. We offered new payment methods in the face of PayPal, in online and new digital options to our retail players, such as the real-time scores update when scanning the slip on their mobile. We are also running preparations for our new loyalty reward scheme to be launched in Q2 that aims to increase customers' engagement through personalized offering and rewards. Lastly, we continue our successful campaigns and promos leading to several thousands of winners when it comes to VLTs. The lottery is obviously the segment that has been hit the most with the lockdown, but our early Q4 performance when gaming halls were still open allows for confidence. Active players increased to 128k, despite the fact that the seasonally important Christmas period was entirely lost. We launched 15 new games, now reaching a total of 111. We further optimized the machine's footprint and remained committed into providing a safe and inviting environment to our players, once circumstances allowed. When it comes to sports and slide 25, SSBTs offering the paperless customer journey continued to gain weight in the mix with live betting weight constantly exceeding 40% of total wagers, despite the fact that it was negatively affected by stores early closing hours prior to when most of the main events were happening. One of our latest additions, namely Power Spin, continued past its dynamic debut with its performance being 40% higher quarter-on-quarter, while virtuals also increased their share up by 12% quarter-on-quarter, establishing virtual sports as one of our key betting categories. When it comes to online, slide 25, as also mentioned by Pavel, our streak of new heights continues to in Q4, continued in Q4, with new records in terms of both GGR and active customers growth across all verticals, resulting to more than doubling of OPP's online market share. Product wise, we were able to add hundreds of casino games to different providers. We increased our betting offering in terms of events and side markets. We launched a quick play and pay functionality on Joker, while at the same time enhance our CRM related activities and important promo offers. Going forward, you may remember that we shared our optimism for online in our previous earnings call, and that's exactly what we will do today as well, as we believe that our persistent focus will bear more fruits in the following month. New advanced CRM campaign management tools, additional promo capabilities for our casino product, new vendors and games, improved frontends, simplified onboarding for our customers, Further improvements of our customer care and many other initiatives will help us towards this direction. The second pillar of OPAP's group dual strategy, namely Kaizen Gaming, demonstrated numbers that exceeded our expectations with 2020 resulting to be another record year both in terms of performance and customer base. Betting increased in 2020 by 32% despite the absence of sports content for almost two months during the early lockdown period, while casino more than doubled. Greek and Cypriot operations in the year 2020 accounted for almost 73% of Group CGR, while OPAP's financial benefit reached almost €28 million, aided by increased stake and full consolidation of Greek and Cypriot operations since December 2020. Finally, on slide 28, it is worth noting that throughout everything we do, we are still committed to fulfill all requirements of globally recognized corporate responsibility standards. I am proud to share with you that this has been affirmed just a few days ago with MSCI upgrading OPAP's ECG rating to AA and thus being in the top tier of the broader international gaming universe. Just before turning to our fast-forward strategy part, I'll briefly mention also our actions on the CSR front, as 2020 was really an exceptional year. We have concluded 88% of the renovation of the two pediatric hospitals in Athens, and we are keeping up. We realized several thousands of children's wishes through our Wishing Ornaments program. We recruited and supported 10 new SMEs in our OPAP Forward program. We delivered sports apparel to thousands of deprived children across Greece. And more importantly, we fully supported COVID-19 related needs by donating medical equipment and hygiene materials to reference hospitals and different municipalities. Now, Having concluded with the latest business update, I would like to share with you OPAP's fast-forward strategy for the next years, a strategy that we prepared with the senior management the past month and was approved by the board of directors following my appointment as CEO of OPAP at the beginning of 2021. Each one of us has lately experienced in various aspects how much our lives have changed. The pandemic still makes us face a number of challenges, but we have to move on with determination, looking at the positive side. The transition from offline to online has been accelerated. Technology and digitalization open new opportunities. Customers look after great experiences, and their expectations evolve faster than ever. Our world evolves, and as OPAP, we need to set the tone. We need to react and accelerate fast forward in everything we do. Building strong relationships and taking into consideration all our key stakeholders, from customers and agents, to the Greek state, to society and the investment community, we aim to successfully create value for the whole ecosystem in a sustainable way. Our vision remains to provide world-class gaming entertainment to our customers in online and retail, and our new fast-forward strategy sets a clear direction for ensuring OPAP's long-term success with focus in six areas. I will now briefly summarize each one of them. First is around the customer. We always put customer at the center of our focus in everything we do, as customer-centric mindset is key to our success. This journey towards better customer understanding will contribute to the success for better gaming entertainment across all of our channels. We will achieve this by collecting the right data about our online, VLTs and retail activities, creating deep customer insights, reflecting these in our actions and always measuring the impact. We aspire to deliver more of social interactions through sharing experiences with others, more fun, more content and entertainment by offering an experience that goes beyond bad placements. More of personalized content, more of digitalization through the enhancement of digital customer journeys in retail and online, while always ensuring a safe and responsible environment. The second pillar is around our brand. OPAP and the individual game brands are amongst our strongest assets, so we intend to keep them relevant to our customers and expand them into the digital world, redefining and delivering our digital brand identity. through new and enriched experiences in our websites, apps, social media, and even inside our retail stores with the new digital customer journeys. OPAP brand represents and supports our aim to offer world-class gaming entertainment across all touchpoints where the customer interacts. TV, online, shop, communication, PR, social networks, even in discussions among friends. OPAP brand aims to be fun and social, engaging with even more focus on customer interactions in digital and social media, rewarding, appreciating our customers' loyalty, and always looking for positive emotional connection, and all these in the framework of responsibility, helping customers to enjoy the fun of gaming safely. We will make sure our brand remains relevant to existing and prospective customers, further contributing to the overall growth. In this context, we envision our brand tone of voice to be more conversational, more contextual, personalized, and fun. Turning now to the third area, online. Our ambition is to boost our online world presence. We want to become a top tier online player and turn our online into a second strong pillar of our business. Our top online priorities and key levels of growth are mainly represented by enhancing product proposition, taking advantage of custom insights and CRM and upgrading to high-performing front-ends. We will then focus on the brand and communication, the operational excellence, as well as continuously upgrade the entertainment element of our offering. Technology will be our key enabler by choosing the right vendors, and technology is set up for agile delivery and operational excellence. Also, at all times, we will cooperate with relevant authorities on regulatory matters, ensuring equal market conditions and fair practices. When it comes to 2021 in specific, we will focus on enhancing the exclusive lottery portfolio with new content, upgrading the user experience with focus on mobile content design and experience, and further improve the essentials of sports betting while expanding the variety of promo offers. Please note that set aside OPA-branded online offering, our investment in Kaizen Gaming has grown farther. We now own 84.45% in Greek and Cypriot operations operating under the Stich Human brand, as well as 36.75% of the international operations under Betano. The latest COVID-related developments have accelerated digital penetration, and Stich Human has been a key beneficiary. Sticheman will continue along the same path with further exploitation of gaming technology so as to maintain its leading position in both the Greek and Cypriot markets, grow in all verticals and continue to be the customer's option of choice. The fourth key area of our strategy is to maintain our strong position in retail and explore further opportunities for growth. We aim to achieve this by further evolving the local entertainment destination experience and enhancing it with the digital touch. With continuous innovation of our customer proposition with rich audiovisual gaming entertainment, new paperless and cashless customer journeys, along with unique real-life experiences such as the live events in our stores, we intend to offer our customers more reasons to come stay, play, and very importantly, have fun together. More specifically for 2021, we aim to continue to develop the network, delivering another 300 new and upgraded stores, introducing new remuneration scheme model for agents and their employees, new area-based performance management, and also expanding the digitalization of our back office and contact center. Moving from the product and transaction-centric to the insights-driven customer-centric model, our 2021 Retail Focus finds us introducing three innovative propositions aiming to elevate overall customer in-store experience. The Loyalty Rewards Scheme, coming really soon, the OPAP Live Show, and the new Retail App with new play-on-device gamification, loyalty, and communication features. The fifth key area is technology, undoubtedly an important enabler to deliver better customer solutions and improve our productivity and efficiency. Our key initiatives will be in five areas, CRM, operational excellence, elastic and scalable infrastructure, innovation in enterprise solutions and open gaming ecosystems. We aim to make use of new technologies and innovative tools such as artificial intelligence automations and machine learning analytics so as to improve the efficiency of our processes and support business and corporate decision making. Rich player experiences and best agent experience via constant improvements of our operations, upgrades of central and store infrastructure and equipment to software-defined network technologies and problem resolution capabilities paved the way towards our operational excellence target. Last but not least, our people continue to play a more than significant role in order to achieve our goals. There is much more work we can do to transform our mindset, culture and way of work so that we safeguard the necessary flexibility and speed for change's adaptation. We aspire to fast forward with a young and dynamic spirit, gain agility in our business through structure optimization, reskill and upskill our people, develop talents, as well as embed the desire, culture, and engagement feeling throughout the company alongside leadership commitment. Throughout our strategy implementation and along with the six key areas of our strategy stands a sustainable mindset. Environmental, social and governance considerations are part of our business and decision-making process, as we acknowledge their impact on our ambition to increase stakeholders' value over the long term. Corporate social responsibility and support of society consists an integral part of OPAP's DNA, positioning the company as a CSR leader in Greece and Cyprus. We are continuing supporting health, employment, sports and sensitive social group, expanding further our community trust with a new pillar, education. Additionally, responsible gaming is deeply embedded in all our commercial activities, providing fair, reliable and safe gaming experience. Developing and supporting our people, aligning our people's needs with the company's targets and optimizing our environmental footprint concludes our sustainable approach, promoting trust and protecting our corporate reputation. With that, I have concluded the outline of our strategy for the next few years. We are working hard to implement everything that derives from the strategy, everything that will drive us to a better and bigger OPAP, and create increased shareholders' value. Expanding our knowledge over our customers, maintaining our strong business in retail, alongside becoming a top-tier online player, and providing additional customer experiences also in our stores, will shape OPAP's bright future. Thank you for your patience and attention. With that, I'm concluding my opening statement and I'm opening the floor for your questions.

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 one at this time. One moment for the first question, please. The first question is from the line of Draziotis Tamatis with Eurobank Equities. Please go ahead.

Hello to everyone. Thank you for taking my questions. Hope you are all safe and healthy. I have quite a few, actually, so maybe we can start by going through the the first couple, and we can then continue, I guess, with a couple more. So firstly, just on the dividend, could you maybe help us understand how you approached this dividend proposal? On the one hand, we obviously have the stores in Greece remaining closed, as you said. On the other hand, we are hoping for a reopening in the coming weeks. Also, there was really no cash burning in 2020, notwithstanding the shutdowns. Vaccinations are also ramping up. So could you just maybe help us understand how you approach all these issues? And I guess whether if indeed things return to normal soon, there might be scope for you to actually top up the DV vaccine. at the AGM in June. So that was a rather long first question. And a second one, quite obvious actually, has to do with trading in Q1. You talked about the lockdown for the most part of the first quarter, local lockdowns as well. Could you just give us an idea of what to expect in the first quarter, please? Thank you.

Okay, thank you for the question. First question about the dividend. We had a lot of considerations and thinking about the dividend, obviously, but we have a long-standing dividend policy which continues to be valid, and that is to distribute the bulk of the free cash flow, excluding investment as a dividend. So really, 45 euro cents is reflecting this long-standing dividend policy, so to distribute the bulk of the cash flow. Obviously, we were taking very cautious decision because of the lockdown in Q1 2021. We have the recent news from yesterday and reconfirmed by the government again today that if things go well, our stores will reopen on the 12th of April. Obviously, it's dependent on the COVID situation. This may be revised. But despite of that, we did quite a number of cash flow scenarios for 2021. And we believe 45 euro cents, even with the conservative cash flow forecast, is a reasonable return for shareholders given the COVID situation. And it's according to our dividend policy. Now, the second part of the questions is, if things improve, whether we top up anything. I really don't want to speculate at all. We have no idea when we will reopen, how we will be trading, so we don't think anything in this respect. It's just 45 euro cents. That's it for the moment. And the second question on the Q1 trading update. Well, it's really a very difficult situation because We had a full lockdown in January in Greece and Cyprus. Then Cyprus reopened in February with limitation. About 40% of op-op stores were closed during the whole of February, and it was changing, different regions reopening, closing every week. This continued into the March, but ultimately, very early in March, again, the whole of Greece was closed down, and for the whole of Q1, since November the 7th, all the play stores were closed. They never reopened, and the VLTs and OPAP stores were closed as well since the 7th of November. So we have been doing very well online, as Jan already explained, Obviously, we have an independent retail channel going for a little bit of scratch, and we have Cyprus doing reasonably well with the limitations, but obviously we are missing the core part of the GGR, and that's really definitely going to impact the numbers. What I have to say that the 40% of the OPAP stores which were opened during February and early March they were showing despite all the restrictions, COVID restrictions, they were showing really encouraging numbers that they were immediately able to pick up decent revenues like what we saw in 2020 after the reopening.

That's great. Just to confirm, you said that 40% of the stores were operating in February, correct?

Or closed. Let me put it more precisely. It's stores generating 40% of revenues that are operating. So it's not exactly numerically 40% of stores, but basically stores generating 40% of revenues.

That's very clear. Thank you. And maybe... Maybe a couple of more questions, if I may please. So my other question has to do with this new law which was implemented from March regarding the taxation on player winnings, which effectively changes the basis of taxation for the players. So not directly related to you, but in any case, if you could just give us some insight as to what you expect the impact on your business to be if you have a view on that. And the last question would be if you could comment a bit on the non-gaming businesses and how their profit contribution developed versus the previous year, please.

Okay, so in terms of the new law about the players' tax on the winnings, it was really a surprise for the whole industry because it was published by the government suddenly without really having wider discussion with the gaming industry, with the gaming operators. So really, it needs a lot of definition work, work on the definition and lots of analyzing because It's a bit ambiguous in many areas. It changes the player stacks from columns to slips, but the definition of slips is totally unclear. It's subject to subjective interpretation, so we are really now trying to understand it, what is it that we need to do, and then to implement this technically is very difficult. We have complex IT environment to really implement this, and it's the same for all the all the players, all the gaming companies. So at the moment we are analyzing it and trying to see how we implement it. I just remind that it should be valid from the 1st of July.

And your question... Okay, so is it going to be implemented, you said, 1st of July, because I thought it was 1st March. I haven't realized that this has changed.

The law was published in December. Originally, it was supposed to be valid from March, but it was moved to be valid from 1st of July. But as I say, it's a long way really to implement it because we're still not sure what we should be implementing. Okay? Okay. Then your question about non-gaming contribution, I mean this is really financially, it's a peanut so to speak, it's not substantial. What's important though, it's important, all these non-gaming activities are important traffic builder, And it's been very good that we have this portfolio of the services because in the COVID situation, while many people are used to pay not via web banking, but really paying in cash at the post office or in a bank with our wide network of 3,700 stores, really, people can go to op-op stores and relieve the burden of the of the post office and of the bank. So it's very good that we are offering these services. And although they don't contribute financially significantly, it's a good traffic builder for the cross-sell also to our gaming portfolio.

That's very helpful. Thank you so much.

The next question is from the line of Chachan Virendra with Alpha Value. Please go ahead.

Good afternoon or evening. So I have a couple of questions. One, is the implied lockdown impact that you have in your slide, is that reflective of a fully shut down state or is it for the current situation with a mix of the national lockdown in Greece and partial lockdown in Cyprus? So could you just clarify that for me? That would be one. And secondly, with respect to online, could you give some clarity about the technology driving this three-month operation? So since this business was spun out of the former TCD group, if I can phrase it that way, who owns the technology powering the SMGC products, I mean the online products? And then I have another question, is that do you see if the technology is owned by SMGC, do you see any room for synergies between SMGC and OPAP organic online product? So that's it from my side. Thank you.

I'm sorry, can management hear us?

Yes, sorry, we are trying to, we didn't hear very well, so we are trying to figure out among ourselves what the questions were, so give us one minute.

Yes, thank you.

Sorry, we were trying to, we didn't hear very well the questions, but we believe we figured out what the questions were. So the slide about the impact of the lockdowns, yes, that assumes the full lockdown for the whole group, not partial lockdown or not partial opening in Cyprus. So it's just assuming the full impact of the lockdown. That's the first question. Now, in terms of online, obviously, Kaizen is doing extremely well, and partly because they have a good business strategy, good execution, and they put excellent platform for their players. And they are planning to enhance it further. And in terms of the third question, definitely we want to have a look at it. We haven't yet decided anything or agreed anything. But it's just natural that if Kaizen has such an excellent platform, of course they are not acting, and so far they haven't been acting as a B2B platform provider, but we definitely want to have a discussion with Kaizen whether OPAP could leverage and utilize that platform.

Just a follow-up, if I may. So what isn't clear is whether SMGC owns their technology. So do they own their technology? That's one. And secondly, on the first question with respect to the impact, so what you have on the slide is probably the worst case impact. Is that the right way to think about it?

Yes, Kaizen is using partly owned, partly some vendors, but is moving, started to move to fully owned technology. So really, I can say going forward, Kaizen is working based on the fully owned technology. If that answers your question. The second, can you please repeat that? Because we couldn't really hear it at all.

Okay. On the second question, with respect to your comments on the COVID impact again, so what I understand is this is probably the worst case impact that can happen and not necessarily reflective of what's currently the mix that's out there.

Yes, correct. This is the worst possible impact, which pretty much happened, let's say, in January. February, March was slightly better because part of the estate, as I mentioned, was open for the whole of February and at least part of March.

Thank you so much. Okay, that's clear.

The next question is from the line of Mascara. Meet with Safira Gem Equity. Please go ahead.

Hi, my question has been answered. Thank you. Sorry, sorry, if I may. Sorry, just one thing. So did you say... on the reopening. The 12th is the date when you expect stores to be reopened based on as you know or is it still not fully clear?

It is still not fully clear. That is the best possible date that we see realistic April 12th.

Thank you.

You're welcome.

The next question is from the line of Young Ed with Morgan Stanley. Please go ahead. Mr. Young Ed from Morgan Stanley, can you hear us?

Can you hear me now?

Yes, sir, we can hear you now. You can proceed with your question, please.

Great, thank you. It's Ed Young from Morgan Stanley. I've got one question really around your technology plan from the fast forward presentation. I guess it's got several parts though. There's an awful lot in there in terms of clearly wanted to drive particularly the online product forward a lot and you've got a lot about technology in there. Can you just give us a picture for how much of that will be done through development with a B2B provider or selection maybe of new B2B providers? And how much of that will be done in-house? And for the elements that will be done in-house, how well resourced are you currently in terms of product and technology teams and CapEx? And are there any technology capabilities or product capabilities you might look to acquire to achieve your aims? Thanks.

This is a good question, but it's a bit preliminary for us to make any firm statement as to what exactly will be the plan, because your question is very right and it indicates exactly what we are looking into these days. What is the best technology mix for the future? It will certainly be a combination of a third-party solution together with our own in-house development. What we are very certain about right now is we certainly want to go down the direction of owning the front ends and doing that part of development ourselves. Regarding the rest, it still remains to be seen. But we will always look for the most efficient combination of the benefits of in-house development versus the speed to development of taking over a ready-made third-party solution. But more on that soon.

Okay. Could I perhaps ask a follow-up then, which is where are you now in terms of, you know, how many developers are there in the company or how much CapEx do you currently spend on product and technology for online?

This is now predominantly an outsourced, sorry, this is predominantly outsourced agenda, but that's something we want to change going forward.

Okay, thanks very much.

The next question is from the line of Tsukalia Fani with Wood & Co. Please go ahead.

Hello from iSight as well and thank you for the presentation. One question from iSight. So with respect to Kaizen acquisition, I was wondering if you could provide us with an estimate on their 2020 earnouts to be paid in 2021. Thank you.

Basically, it's some dozens of million euro. That is around now 2020, which is not entirely paid in 2021. Part of it is paid only in 2022. Also, we are in the process of paying for the control premium. So it's some dozens of million Euro, the payments for Kaizen in 2021.

Can you specify on the payment for the sole control? Can you remind us of the amount? I mean, it's independent of the earnouts, right?

Yes, it's independent. And in total, it's €30 million.

In total, only the sole control or also the earnouts? No.

Only for the sole control, €30 million. Okay. Earnout is on top of that.

Okay, okay. Thank you so much. That was all from my side.

Okay.

The next question is from the line of Memisogno's Mon with Ambrosia Capital. Please go ahead.

Hello, many thanks for your time. Just wanted to see if you could give us some color on Kaizen's recent trends. You kindly provide us on slide 14 a nice chart for OPAP online. Just wondering, December obviously seasonality also must have helped with lockdowns as well. How is Kaizen doing? Should we assume it's building up or was December really benefiting from seasonality? That's One question, and then related to that maybe a bit more conceptually, you have this dual brand strategy in online. Is there any potential change to that eventually? Are you considering to stick to it? If you could elaborate on it a bit more, that would be, I think, helpful. Thank you.

Well, I can say certainly that Kaizen has good growth figures, and they are, like many other online companies, benefiting from the lockdown. So the trends are what we like to see and good ones. In terms of the geo strategy, that is certainly something that is remaining to be the case and stays in place. We may review that strategy in the far future, but for now, that's not on the table.

And if I could follow up for Betano, can you give us any color on their financials? For example, were they EBITDA break-even in 2020? And I guess for both, I mean, how to for 2021? Particularly, maybe I connect that with the saga of the online licensing and competition. If you could give us, share us your views on that.

Yes, Betano is a growing business from a smaller base. Kaizen is very successful with their international expansion. Every market where they enter are maturing, so the numbers are improving. And Betano was not a break-even, it was already positive in 2020. Continues to grow in the market where it operates currently and And Kaizen is looking at expanding the international footprint into additional markets as well. So it's a good business on a growing trajectory.

And regarding competition and outlook, obviously with COVID, you could have some switch to the retail network, but any color on what you expect from competition? Whether it's going to happen this year, I guess, is one question. And if it happens, what are some actions, I guess, you could take? Is it more marketing spending? Or you mentioned some of the products you've been working on, and potentially there are others. Any color on that front?

So I hope I understood your question correctly.

You're probably referring to an intensification of the competition with the award of the new licenses expected in summer. Obviously, more competition means more fight for the same customer base, more marketing spend. So we expect that it will be tougher, but we are prepared for that. And as we have presented in our strategy, Both Stickem and OPAP certainly have growth aspirations, so we expect we will be the winning ones in this fight.

Okay, thank you. And maybe finally, what's the CapEx outlook other than the earn-out and the sole control? Something around 20 million, is that a good number to think about?

Yes, we said that on an ongoing basis, OPAP needs to be really to invest around 20 million. It was a bit less. We made a conscious capex saving in 2020 because of COVID. And obviously now also because of COVID, we are very careful and reconsidering the number of projects. So we will not go above the 20 million mark in 2021.

Thank you.

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

Yes, hello, and thank you for your time. A couple of questions, please. One is how do you see Kaizen EBITDA margins evolving in the future? And also I see a lot of growth on the online from your own online business. And if you look, for example, at the fourth quarter figures, I see online having almost half the active players that Kaizen has. But in terms of GGR, there seems to be a lot of catch-up to do. So maybe you can tell us why do we have a divergence between the number of phase and the GGR on the online, on the pub side? Is it that you need to introduce more product or what else can be done in order for the business to gradually catch up?

The explanation is quite simple and straightforward. In our active base, you see not only the sports betting and casino active players, but also the lottery games, namely Joker customers. So we share the total amount of active players that are playing any of our games. So that obviously is a bit different customer base than the human one. That explains. Regarding the expectations on development of the profit margins, I would like to abstain from speculation on that for now.

Okay, thank you.

Once again, to register for a question, please press star and 1 on your telephone. 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. Gadas for any closing comments. Thank you.

Thank you very much, everyone. Thank you for your patience. It was a bit longer today than usually thanks to the fast-forward strategy, but I hope it was useful for you to hear it from us. As always, our team is looking forward to interact with you offline and discuss any pending questions that might come in the future. Thank you very much, and most importantly, stay sound and safe. Have a good time. Have a good rest of the day. Bye.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant evening.