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Allwyn Ag

Q22021

9/15/2021

speaker
Constantinos
Course Call Operator

Ladies and gentlemen, thank you for standing by. I'm Constantinos, your course call operator. Welcome and thank you for joining the OPAP-SA conference call and live webcast to present and discuss the second quarter 2021 earnings results and online business focus. All participants on the audio conference will be in a 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.

speaker
Jan Karas
CEO of OPAP SA

Good afternoon, ladies and gentlemen. Welcome to our financial results call today in the very special format where you can not only hear us, but in case you connected through the web link, also see us. Please rest assured that we have taken all the safety measures that you may enjoy watching us without the masks. The key reason for that special format today is besides the usual agenda, we would like to share with you also more of the forward-looking trends focusing on how we plan to explore our opportunities in online. And that, accompanied with some more details on the subject of our dividend policy and the addendums. For that reason, besides the usual presenter, our CFO, Pavel Mucha, we have with us today also several important guests. Starting from the right, James Kerven, our Chief Online Officer in OPAP. And on my left side, George Daskalakis, Founder and the CEO of Sychymen. And Pavlos Kanelopoulos, CFO of Sychymen. Gentlemen, welcome. We will start with the usual agenda, where Pavel and I will take you through the H1 financial results. And then I will hand over to my colleagues to share with you the additional topics we have prepared for you. Let me start right away with the key highlights of the last six months. Despite the fact that the COVID-related circumstances have raised a series of challenges on our business, you may remember that our last communication involved a fair degree of cautious optimism about the future outlook. We are excited that our reported results moved along the express lines of confidence due to strong online contribution, encouraging retail recovery, aided by full commercial back-to-the-game plan, and very importantly, persisting VLT momentum. We will speak about these later in our presentation. Now, operationally wise, the launch of our loyalty program that we spoke about before in April has brought intangible results. The digitalization of our retail network offering is continuing at full speed, and we are now ready to launch our new exciting op-up store app, enabling the in-store play on the customer device. Now, that's for the quick intro. I'm handing over now to Pavel to take you through the financial results of the first half of the year.

speaker
Pavel Mucha
CFO of OPAP SA

Thank you, Jan, and good afternoon, everybody. Q2 was indeed a very strong quarter, and several KPIs have been significantly improved. But before going to the numbers and starting, as always, with macro developments, it is true that delta wave brings us some uncertainty. But all other indicators, early tourism numbers in July and August, indicate very strong recovery and it's also supported by consumer confidence and economic sentiment figures and all that implies that the GDP projections will most probably be met and possibly even surpassed. Now moving on to Q2 results, the total GGR in Q2 came at our Q2 figures were characterized by retail reopening and strong contribution of online with GGR more than doubling compared to the respective period in last year. In Q2 21, our total GGR came in at 396 million, which is up by 120% year on year. Moving on to the first half of the year, the total GGR came in at 570 million. Stichyman full consolidation led the half-year figures grow by 12%, despite the fact that our shops in the first half of 2021 were closed almost for the double of the period, double of the days, versus the same period in 2020. Now, focusing on the individual segments, the lottery rose by 46% in Q2, on the back of the retail reopening on April 12th, while online joker continued upward trend for yet another quarter, constantly attracting the new customers. Betting increased to $132 million, with Sticheman being obviously a large part of that, and op-ups online also growing, while online casino reached almost €49 million. Finally, VLTs came in at €36 million, which, given the long-term shutdown in the previous period, is more than satisfying performance, and we believe it sets the tone for the remainder of the year. When it comes to the distinction between the channels, It is evident that retail reopening was successful, while online continued to perform well as well. Both OPAP Online and Sticheman managed to increase considerably their revenue on year-on-year level, with OPAP's quarterly performance reaching $16 million higher, that is by 60% year-on-year, at the same time staying close to all-time highs despite the retail reopening. Stichemann growth in the first half of the year reached 81%, with the company generating really exceptional numbers on every front and customers exceeding the 200,000 threshold. Jumping on to the cost side, the full consolidation of Stichemann is obviously distorting overall figures on a group basis. Q2 payroll decreased by 11% on a like-for-like basis at 17.7 million, while marketing costs reached 18 million euro on a like-for-like basis versus 10.8 in Q2 2020, which reflects the revamp of our marketing actions and also support of our shops, shops reopening and also the Euro event. Finally, other OPEX decreased to €25.8 million, lower by 12% year-on-year on a like-for-like basis. And please note that our P&L continues to be burdened by the decision to record Hellenic Lottery's increased GGR contribution according to the annual contractual threshold of €50 million, so as to stay prudent despite the fact that we have already filed an arbitration request. All in all, the combined impact of revenue growth along with efficient cost control and the positive P&L impact of the concession extension shaped the Q2 EBITDA of $143 million and the relevant margin of 36.2%, which should grow further assuming a normal and uninterrupted full year. Net profit reached 71.9 million, which in turn led to a strong operating cash flow in the first half of the year of 140 million. Investment-wise, we spent 19 million related to the acquisition of Stichemann, as well as 10 million for the acquisition of new five-year online licenses in both sports betting and casino. Overall, our strong profitability, together with limited investment, but more importantly, higher visibility going forward, led us to the decision to distribute interim dividend per share of 10 euro cents on top of the 55 euro cents which were distributed just one month ago. Our net debt to EBITDA as of 30th of June stands at 1.3 times, And this, going forward, our substantially strong financial position, together with a bright outlook, makes us fully confident that our dividend policy will remain more than rewarding for our shareholders. We will share a bit more information on that in one of the next sections of our presentation. With that, I'm passing you back to Jan.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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