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Edited Transcript of OPAP.AT earnings conference call or presentation 12-Sep-19 1:00pm GMT

Q2 2019 Greek Organisation of Football Prognostics SA Earnings Call

Athens Sep 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Greek Organisation of Football Prognostics SA earnings conference call or presentation Thursday, September 12, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Damian Cope

Greek Organization of Football Prognostics S.A. - CEO & Executive Director

* Michal Houst

Greek Organization of Football Prognostics S.A. - Deputy CEO, CFO & Director

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Conference Call Participants

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* Iakovos Kourtesis

Piraeus Securities S.A., Research Division - Research Analyst

* Manos Chatzidakis

Beta Securities S.A., Research Division - Analyst & Head of Research

* Stamatios Draziotis

Eurobank Equities Investment Firm S.A., Research Division - Research Analyst

* Virendra Singh Chauhan

AlphaValue - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the OPAP conference call to present and discuss the OPAP S.A. second quarter 2019 interim management statements conference call. (Operator Instructions) And the conference is being recorded. (Operator Instructions)

At this time, I would like to turn the conference over to Mr. Damian Cope, CEO of OPAP S.A. Mr. Cope, please proceed.

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [2]

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Thank you very much, operator, and good morning, or good afternoon, to everybody. I am delighted to welcome you to OPAP's Q2 2019 Investor Conference Call. Today, we are also joined on the call for the first time by our incoming CFO, Pavel Mucha, who officially starts in his new role on the 1st of October. As you will be aware, this is the last investor call for our current CFO, Michal Houst. It would therefore be remiss of me not to comment on the huge contribution that he has made during his time with us. Michal was heavily involved in the privatization of the company back in 2013, and since then has been a key part of the significant progress that has been achieved by OPAP.

On behalf of everyone at OPAP, I would like to thank him for his commitment and dedication during that time, and we wish him further success in his future career.

With that, I'll hand over to Michal himself, who will comment on the quarter's financial results, and I'll then provide you with an update of our business progress and future developments. We'll then answer any questions you may have. Michal, over to you.

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Michal Houst, Greek Organization of Football Prognostics S.A. - Deputy CEO, CFO & Director [3]

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Thank you, Damian. Good afternoon to everybody. Starting with macro developments. For yet another quarter, most major indicators reported sizable growth year-on-year with GDP growing by almost 2% in line with consensus and expectations. Going to the individual KPIs performance, total consumption increased by a bit more than 1%, driven though by increased government spending rather than the subdued household spending, which is still struggling. When it comes to leading economics indicators, economic sentiment and consumer confidence have been improving. Finally, retail sales headline figures trended higher after quite some time, although some pressure was evident in certain sectors, such as department stores.

Linking the above with our performance. Although it's true that quarter after quarter OPAP has been a clear outperformer, we feel the fact that our Q2 headline figures reported growth in every line is still quite an achievement. We further believe that OPAP's growth would continue throughout the year as well.

Going to the details. GGR increased by 6.5% for the quarter, actually further improving Q1 run rate by 1.5 percentage points. Note that this growth came despite tough year-on-year comparable due to the World Cup in June 2018. It is also worth noting that Q2 performance hit a second quarter multiyear high, clearly demonstrating that the company has been successful into addressing the severe economic circumstances over the past couple of years.

Equally importantly, gross profit from gaming's operations rose by even higher at 8.6%, providing tangible evidence of a well thought plan that is bringing margin expansion and a growth of our overall profitability.

Going further down, the profitability line, EBITDA marked a 24% increase coming in at EUR 87 million in the second quarter, leading to a 22.7% EBITDA margin, up by an impressive 3.2 percentage points year-on-year.

On top, when adjusting for one-off cost of EUR 2.8 million related to a [VSP] (inaudible) in the quarter, adjusted EBITDA growth came in at 28% considerable increase in the run rate of Q1, which was 16% on adjusted level.

We clearly think that this kind of growth is supporting our confidence for a meaningful increase for the full year as well. Q2, although depicted beyond any doubt, meaningful cost efficiencies evident across the spectrum of all our cost base. IT costs decline continued along the path of the Q1 run rate, lower by 40% year-on-year. As mentioned in the past, this is the result of the conclusion of our technology transformation, which set aside the material cost savings is gradually bringing in higher flexibility and self-dependence in our IT projects. Going forward, you could assume that IT costs, as an absolute number, would stay close to Q2 figures.

Marketing costs were also contained in Q2, standing at EUR 16.6 million versus EUR 20.5 million in Q2 2019 (sic) [2018], lower by 19%. Following an increase in Q1, the second quarter's number is supporting our commitment for a full year figure that is expected to hover around 2018 levels, despite the launch of several new projects and initiatives.

On the payroll front, the relevant expense reached EUR 22.7 million, higher by 11% owing solely to termination compensation of EUR 2.8 million. After adjusting for this one-off nature, like-for-like payroll costs were slightly reduced leading to a just a minor increase in the overall H1 numbers.

Below the EBITDA line, net profit growth accelerated further reaching for Q2 higher by 32% year-on-year on the back of Stoiximan contribution, [drove the] net interest expense of EUR 5.8 million, slightly lower effective FX rate and despite a higher D&A of EUR 29.4 million.

With regards to our investments, cash outflow from investing activities increased to EUR 14.9 million for the first half and is expected to reach around EUR 30 million in the end -- till the end of the year. Obviously, it's not including the second part of the Stoiximan transaction. CapEx from 2020 onwards should normalize around EUR 20 million, excluding any opportunities that we currently do not foresee. The significant increase of our profitability together with rather low CapEx let our net debt position to EUR 362 million, thus shaping a prudent net debt to last 12 months EBITDA ratio of 0.9x.

On the dividend front, we distributed an additional EUR 0.60 per share on the top of already distributed EUR 0.10 last October. Since the distribution introduced the ability of fully optional scrip dividend, please note that the scrip take-up reached 22% of the free float.

Going forward, we plan to continue our balanced dividend approach and plan to distribute an interim dividend in the coming quarters.

On a separate note, Sazka Group, which is OPAP leading shareholder, has launched a voluntary tender offer addressed to all shareholders. The prospectus now is subject to approval by HCMC. While it's officially reported in the prospectus, Sazka intention is to keep OPAP listed in the Athens Stock Exchange.

Turning to our segments. We are quite pleased with our games performance, which in the most part reported sizable like-for-like growth. Lottery continued its streak of positive quarters at the same time accelerating the growth rate, which reached 2.7% for the quarter versus 1.6% in Q1. This outcome is mostly a result of KINO's performance and double-digit growth in JOKER.

In our eyes, this growth curve is more great when considering the significantly higher number of VLTs and is mostly a result of KINO's structural resilience and successful rejuvenation through KINO side bets.

On sports betting, although headlines call for a minus 5%, the drop has been solely a result of a drop in virtual games. On the contrary, we are satisfied with Stoiximan as like-for-like comparison excluding the impact of World Cup was clearly positive year-on-year. On top, some of Stoiximan individual KPIs, such as live betting and SSBT contribution, have been consistently gaining ground, thus making our offering more competitive and appealing to our players.

Staying on sports betting, but turning to Stoiximan, the second part of the acquisition is still pending, waiting regulatory approval. However, our 37.5% participation is already contributing to our financials with an EBITDA benefit of EUR 1.4 million. Stoiximan is, on its own, generating impressive GGR growth, almost 40% in H1 coupled with a record high quarterly EBITDA while activates -- active players reached 170,000 in August.

As for Hellenic lotteries, the material Q-on-Q improvement of the drop rate from 10.8% in Q1 to minus 4.3% in Q2 is a result of certain initiatives that continue in Q3 and should further improve the segment picture for the full year.

Finally, VLT wise, Q2 revenues reached EUR 71 million, improving mildly the quarterly level at the same time setting a new record high. GGR of the machines that have been operational for the full course of the quarter stood at EUR 40 a day. Gaming growth continued to outperform versus OPAP shops at the same time achieving sustainable returns for the franchisees.

Just before passing the word back over to Damian, I would like to take 1 more minute of your time. This is because, as Damian mentioned, after 6 years as CFO for OPAP, I decided to leave and to seek other business opportunities. Going back to 2013, when Emma Delta bought a 33% stake of what at that point was state-controlled entity, we knew that we had to do quite a lot of things in order to bring OPAP at par with the largest listed companies of our sector. Six years later, I can say with confidence that we did a little more than that. As a team we have fully transformed the company in basically all the fields. I was personally and with all the joy involved in many areas other than finance and helping to navigate through numerous challenges and business decisions, such as Stoiximan's acquisition that will hopefully shape an even better future. I have generally enjoyed my time working at OPAP with all the great very professional and hard-working colleagues.

So I am confident that OPAP will continue its successful path, further solidifying its unique position, which involve the gaming spectrum and the Greek Society. Thank you all. Thank you all as well, which are listening to us, for your patience and cooperation for all these years.

So Damian, over to you.

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [4]

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Thank you, Michal. So coming back to the results, and these mark the 3-year anniversary since we launched our 2020 vision of becoming a world-class gaming entertainment company driven by 8 strategic priorities. So with that, we're now 3/4 of the way through our transformation plan.

In the last quarter, Q2, I think, we've demonstrated once again how this vision and our long-term plans, supported in turn by a broad range of initiatives and investments, are delivering positive results across the organization, but most notably in our financial performance.

While we had no major sports event on which we could rely on to deliver increased traffic to our shops in Q2, with our customers living through the inevitable pre-election uncertainty, we nevertheless demonstrated progress in many areas.

So starting first on Slide 16 of the presentation deck with our retail network, you can see the numbers of our new shop openings or shop upgrades increased to over 300 at the end of the first half, which together with what we've achieved in the past couple of years means that about 1/3 of our network of almost 3,900 shops is either completely new or has been upgraded and renovated within the last 3 years. So we'll carry on with both our program of new shop openings as well as our broader retail excellence program, or REX 2020, throughout 2019, significantly improving player experience through leveraging digital technologies, adding new services and developing our agents.

As a result of these actions, customer satisfaction when visiting an OPAP shop has increased over the past few years considerably improving our shops' attractiveness as an entertainment destination. We believe that this increase has been one of the main factors behind OPAP's significant outperformance versus the domestic retail sector as a whole, and has led average revenue for new shops to increase by over 20%. Meanwhile across the whole network, we saw average agent commissions rise by 2% in the first half of the year.

Turning now to VLTs on Slide 17, and starting with an update on the rollout, where we're now standing at around 20,300 VLTs as April's ruling from the Council of State had put the rollout of any additional VLTs on hold until relatively recently. However, following a legislative act, which gave the relevant regulation the force of law as well as the subsequent ratification of this act on August 9, we're now in a position to continue with the installation of the remaining VLT machines. As we said on the last call, we believe that this interruption was purely a procedural issue, so we maintain the ongoing planning of our rollout, including the selection of the appropriate locations and negotiating with candidate gaming hall agents and operators. As a result of the aforementioned preparatory work, our aim is to have within October a total of between 22,000 and 23,000 machines installed and in the field.

As a reminder, OPAP has to install all of the 25,000 VLTs by the end of 2019. Our comprehensive planning combined with our past rollout experience, particularly in the last few months of both 2017 and 2018, make us confident that we will achieve this target.

Performance wise, and as you can see on Slide 18, we managed to sustain the level of customer registrations despite almost no new locations being opened in Q2. Maintaining monthly actives over 100,000 for yet another quarter was also an important achievement. You'll see that the level of player spend is also consistent at responsible levels of around EUR 29 per visit.

On Slide 19, you will see that we set another record, just, with quarterly VLT GGR exceeding EUR 70 million, and with GGR per VLT per day stable at around EUR 40. And here we continue to see higher average spend in gaming halls compared to OPAP stores.

During the summer, and shown on Slide 20, we also launched our first major summer outdoor campaign, which generated considerable interest and had excellent engagement levels with over 40% of all active customers participating. Over the next few months and in the runup to the seasonally busy Christmas period, we'll be undertaking further promotional activity together with the launch of a number of new games, which we will believe -- we believe will maintain high levels of customer engagement.

Turning to sports betting, Slide 21, we're pleased to report that despite a fall-off in virtual's activity, our core sports betting continues to perform well despite the absence of a major event this year. Still on a like-for-like basis, sports betting reported high numbers in the first half on the back of a constantly increasing percentage of live and SSBT activity, which now account for 41% and 18% of the total turnover, respectively.

And now I'd just like to provide a brief update on several of our key strategic themes for OPAP this year. The first is entertainment, where during 2019 we've begun to deliver a number of new initiatives, which we believe will further enhance the interest of many of our customers. We've recently started a new weekly TV show called Game Time where every Friday with invited celebrity guests, we discuss the upcoming weekend sporting events, which is then distributed through our internal agent network and widely across various social media channels.

As you also know, we launched a new VLT Jackpot product in Q2 and so far we've had over 15,000 lucky winners with prizes from a few hundred euros up to a maximum potential of EUR 100,000.

We've also started pilots for 2 new broadcast services, one a live sports betting channel with content from around the world, and separately a new presenter-led KINO Show, where we hope to add some more content and interactivity for our retail customers. Both are still being trialed, but we will continue to develop this video-based type of content in the future.

Turning now to online, and we provide updated figures on slides 22 and 23 of our dual strategy approach. Within OPAP, we've had a busy period in the first half of the year with the first-ever online launch in Greece of any kind of lottery product. The launch of Tzoker online has generated considerable interest and a notable jump in our active player base. What's also encouraging is that we see we already have a meaningful number of players who played both sports betting and lottery products. Overall, during Q2, we have monthly average actives of around 30,000 per month and so far in Q3, numbers are comfortably ahead of that level.

As a reminder, our online Tzoker product is the same game as the one we offer in our shops. And based on ticket sales, the online penetration is currently standing, after just a few months, at around 3% and has considerable room to grow when taking into account EU benchmarks that on an average exceed 10%.

Stoiximan, too, is delivering good growth both at GGR and customer levels, and it appears that our initial investment pertaining to the 36.75% of the holding company is doing well. In the first half of 2019, GGR after bonuses reached EUR 103.7 million with solid growth in all countries of operations and in both verticals, so both sports and gaming. During Q2, Stoiximan launched a new service in Portugal with early signs that make us cautiously optimistic for the future.

In terms of the secondary investment in Stoiximan, we're still waiting for the necessary approvals of the transaction that would increase our share in the Greek and Cypriot operations to 69%. We expect that, that decision from the authorities should come sooner rather than later and look forward to their ruling.

Looking at our new non-gaming activities as seen on Slide 25, TORA's portfolio of services is performing well, with bill payment transactions growing strongly in Q and setting a new record high in July. Our network of certified agents that offer TORA services is exceeding 2,600 shops, coming close to the target of around 2,900 to 3,000 shops. The gradual activation of a high number of agencies is a necessary element for success, but even more importantly, the brand's awareness increased meaningfully through the launch of a highly successful viral video, featuring 2 well-known Greek soap stars with more than 1.5 million views across all media.

It's clear the bill payment service is gradually becoming a structural part of the overall services offered in a considerable number of our agencies, driving higher footfall into our shops, and we expect this trend will intensify in the last quarter of the year.

Going forward, we plan in Q4 to pilot our TORA mobile app, offering a wide range of everyday services, coupled with gaming-related options that will supplement our customers' experience.

Let me finish with a few words about our CSR program. So far during 2019, we've recruited 10 new small companies and rewarded participating organizations during the OPAP Forward awards. We've completed 7 sports academy festivals for a total of more than 11,000 children, while OPAP in the Neighborhood program has been useful for more than 15,000 of our fellow citizens. In addition, you remember that we launched new works in both children's hospitals in Athens, continuing this highly appreciated initiative.

Finally, and particularly for those of you based in Athens, I kindly invite you to attend OPAP's first hosted music event, which will be taking place on Sunday, the 22nd of September at our Markopoulo horseracing venue just outside Athens and where ticket sales will lead to donations to the Make-A-Wish foundation.

With that, I am concluding my opening statement. Michal and I are now ready to answer any questions you might have. Thank you for your patience and your attention.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Draziotis, Stamatios with Eurobank Equities.

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Stamatios Draziotis, Eurobank Equities Investment Firm S.A., Research Division - Research Analyst [2]

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A couple of questions, please. Firstly, in the presentation you reiterated your focus on this sort of omnichannel ecosystem aimed at improving the player experience and rendering OPAP shops an entertainment destination. How is this strategy progressing? Have you seen any meaningful uptick of traffic in your stores? And what percentage of your betting outlets have been upgraded to offer new elements of in-store customer experience, i.e., refreshments, et cetera? So that was the first question. And secondly, could you remind us what product enhancement actions you have in the pipeline for the coming quarters, please, for example, online KINO? And also how recent actions targeting VLT customers, such as the SMS campaigns and loyalty offers, have been received so far, please?

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [3]

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Okay. Stamatios, I know omnichannel is a bit of buzz word, I'm fairly sure I didn't mention it, but I'm happy to touch on all things entertainment. It's something that we talked about, I think, at the start of the year. And as you've seen, it's still relatively early days. So we're piloting 2 different channels in our stores. And the Game Time content is something that we think we can develop in future as a source of unique added value, if you like, pre-match research that we know a lot of our sports betting customers like to undertake. I guess one of the key elements is the VLT Jackpot, which is available now to all VLT customers across all machines and we've certainly seen a lot of interest in that. I would say overall the feedback from these shops where we are piloting the new video services and for all of the network with the Game Time content has been very positive indeed. I think the power of video in any kind of entertainment is known the world over and you've obviously seen that in different industries with Apple Plus and Disney and other guys going to get into video generally, but we believe we've got a long way to go, but we definitely want to use video as an important element of both the offering and promotion of our gaming products. I think the other part of that first question was around how many of the stores have it? I would say, as I referred to before, we've got about 1/3 of our entire network is now new or renovated, a significant number of those are fully REX 2020. I know you will have visited some of them yourself. So they have all of the technology, all of the facilities to be able to receive any of this new content. And over time, we want to make any content we create, any new video entertainment channels available to all of our stores, that depends on satellites and connections and things like that. But certainly the good thing is the bulk of the CapEx associated what's required has already been undertaken in previous years as part of our investment program. And in terms of specific numbers, it's too early to quantify what we've got, but I would say feedback is good, and we think we're definitely heading in the right direction.

Second question I think was around product improvement specifically, I mean, we've got several in lots of different areas. I think I mentioned new VLT games, there will be a number of those coming out over the next 3 to 6 months. We have some functionality with our retail sports betting product, where we've just started and we'll continue to launch a number of new promotional activities, including things that are fairly standard in other markets, things like accumulator insurance where if you get 4 correct matches out of 5, but you have 1 losing selection and you get a free bet and things like that. So there'll be a number of those coming out later in the year. We're still looking at our online roadmap, which again is very much subject to what happens with the online law, which I'm sure will be a question that comes from somebody later. Again, maybe getting ahead of that, we're looking forward to the government taking steps to clarify the current situation. And once we're clearer, we'll be clearer about our online product roadmap. But I think, even with the products we've got sports betting and Tzoker, I think there's a lot more that we can do there.

So I think, we've got a number of new products improvements coming in lots of different areas and we expect our customers to enjoy them over the next 3 to 6 months in particular.

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Stamatios Draziotis, Eurobank Equities Investment Firm S.A., Research Division - Research Analyst [4]

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Just as a follow-up, you mentioned online regulation. Just realistically, do you think that there is a chance that we will have a proper and holistic online framework in 2020?

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [5]

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I think that seems more likely than it's felt for a long time. Prime Minister Mitsotakis, so I know the new government may clearly have a very busy agenda, but I think they've made it pretty clear, they want to bring an end to this rather unclear situation. So we are pretty confident that there will be a much clearer picture during 2020, certainly by 2020.

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Stamatios Draziotis, Eurobank Equities Investment Firm S.A., Research Division - Research Analyst [6]

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Okay. That's great. And Michal, best of luck in your next career step.

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Michal Houst, Greek Organization of Football Prognostics S.A. - Deputy CEO, CFO & Director [7]

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Thank you.

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Operator [8]

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Our next question is from the line of Chauhan, Virendra with AlphaValue.

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Virendra Singh Chauhan, AlphaValue - Analyst [9]

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Damian and Michal, I have a couple of questions. One is, could you just explain the significant drop in rentals and advertising expenditure? So why do we have a significant drop on a year-on-year basis on these 2?

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [10]

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Sorry, just to double check, you said rental and marketing expenses, is that correct?

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Virendra Singh Chauhan, AlphaValue - Analyst [11]

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Yes. The advertising expenditure, right.

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Michal Houst, Greek Organization of Football Prognostics S.A. - Deputy CEO, CFO & Director [12]

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Well, it's -- like I said, it's clear, so it's implementation of the -- in U.S. I would say IFRS 16. And I think we highlighted that the impact on EBITDA level is around EUR 4 million on a half a year basis, which basically moves from direct OpEx from EBITDA, it moves to the depreciation and that's why rental dropped basically. And on net income, this is basically has zero impact, so net of further depreciation and the tax, so it is a zero impact.

And then with regard to the advertisement, as I said, in the, let's say, in the opening speech, we are still guiding for the full year advertisement expense somewhere around level of 2018, so it's just the volatility of the advertisement, it's about the product launches. Last year, there was a World Cup in the first half so definitely there was an advertisement campaign connected with the World Cup and so on and so on. But let's say our guidance for the full year is pretty stable marketing cost.

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Virendra Singh Chauhan, AlphaValue - Analyst [13]

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Okay. And I have another question on the GGR per VLT per day. So now that we are probably in the last bit of the rollout because we have less than 20% to be deployed, so I'd like to believe that the current trends are pretty much representative of what we would see at maturity. But then if I look back at the trends in this -- on a year-on-year basis for at least like the last 4 or 5 quarters, we have seen a year-on-year drop in GGR per VLT per day. So like, one, what's causing this kind of a trend? And secondly, like, what steps can be taken to probably improve that? Because what I see is, like, once we have the incremental VLT addition stopping, then we would need significant improvement in this metric for the VLT growth to continue, so that's the question on VLTs.

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [14]

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Okay, I'll take it. So you've seen on Slide 19, we've deliberately -- we like to sort of remind everybody where we've come from since we started this VLT journey sort of 2.5 years ago. And I guess from that, you can see the trends very clearly. The obvious thing that stands out is Q4 is very strong, we expect that to be the case again this year, as you get to sort of the Christmas period. And I think you should also recognize that we have now had a pretty solid, or let's say, consistent base for the last 2 quarters, so we had I think around 19,000 at the end of 2018 and we now have around 20,000, so fairly consistent. So we believe certainly this is the sort of base for a larger state. I would say you shouldn't forget that we are a very, very large network, the largest in Europe with our connected Jackpot, and by the time we finish, we'll have 25,000. So there may be some numbers in distant forecast on spreadsheets, we still think this is a good foundation. But we would also say there's certainly room for further growth. We know that there is still illegal gaming out there that definitely causes us issues. We still think we've got lots of improvements to come in the future, particularly around introducing promotional elements to our games, which we hope to deliver during 2020. We think there's still quite a lot of optimization we can do around the location of our machines. So we are still quietly confident that we can gradually grow the metrics in this business for some time to come. So I perhaps wouldn't be quite so negative as perhaps you implied.

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Virendra Singh Chauhan, AlphaValue - Analyst [15]

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Okay. Yes, so that's very helpful. And just one final one, on the incremental stake that OPAP was attempting to buy in Stoiximan Group. And I mean, is there any regulatory tick or move -- or progress on that front?

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [16]

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Not that we're able to share with you today. It is where it has been for some time, it's with the authorities. We are very patiently waiting for a decision. As you may or may not be aware, the Board of the Competition Authority in Greece was changed completely and so obviously that's caused a bit of a delay, but we will await for the new board to reach their decision and hopefully that will come sooner than later.

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Operator [17]

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Our next question is from the line of with Kourtesis, Iakovos with Piraeus Securities.

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Iakovos Kourtesis, Piraeus Securities S.A., Research Division - Research Analyst [18]

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A couple of questions from my side. You mentioned -- you commented on the performance of Tzoker online, which seems to go very well in 2018. If you can remind us what are your plans for additional online offerings in 2020? I think you mentioned in the past about KINO and Lotto, where do we stand at this moment? Second question has to do with your VLTs performance in the -- during the third quarter. Traditionally the third quarter is a weak one for VLTs, would you see that in -- in terms of a net drop per VLT per day, do you see an improved performance until now versus the previous year, which was at EUR 38, if I remember it well. And in terms of VLTs, what is your feeling about the illegal market? You are in this business for 2 years now, would you say that since you commenced operations on VLTs, do you see a significant containment of the illegal market? Would you say that things remain the same? Do you have reasons to be optimistic about the illegal market and how the authorities deal with it?

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [19]

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So let's start with the first point. So new products online, I think I've touched on this already actually. We're reviewing the roadmap because again it could be heavily affected by what comes in the online law. As a long-term aspiration, we expect at some point to offer the products we have exclusive rights to, we expect to offer them online at some point in the future. If I am honest, our focus for the rest of this year is on optimizing the products we have already. And then 2020 roadmap would depend very much on what it looks like is coming out from the government in terms of the new law. And then on VLTs, I'll probably hand it over to you, although as you can probably guess we're not going to say too much about Q3.

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Michal Houst, Greek Organization of Football Prognostics S.A. - Deputy CEO, CFO & Director [20]

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Yes. So I think Damian partially answered this question before, but let's say on the Q3 separately. We have seen quite a good performance in VLTs in August and July, and so it's -- I think it's quite promising before the start of the new season, I mean the September, so needless to say strong 2 months that we have seen in the VLTs. And as Damian mentioned, there's still plenty of things that we want to do with regards to the performance of the VLTs. And now we are fully focused on finalizing the rollout in 2020, definitely there's a lot levers that we can use to improve the performance. And then with regard to the illegals, yes, we see, let's say, decreased, I would say in terms of physical venues in the in illegal market and it's probably the consequence of probably better enforcement of police, better knowledge of all the people in the market about the illegal market, including our work on making and pointing it out, and as well there is economic pressure coming from the competitor -- competition -- with legal competition, let's say, our play stores and casinos, which are picking up, I would say, in the last few months as well.

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Operator [21]

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Our next question from the line of Mr. Chatzidakis, Manos with Beta Securities.

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Manos Chatzidakis, Beta Securities S.A., Research Division - Analyst & Head of Research [22]

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Just one question from my side. Given that the interest rate environment remains favorable in Greece, are you planning to call back your corporate bond in 2020?

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Michal Houst, Greek Organization of Football Prognostics S.A. - Deputy CEO, CFO & Director [23]

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You mean our retail bond?

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Manos Chatzidakis, Beta Securities S.A., Research Division - Analyst & Head of Research [24]

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Yes.

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Michal Houst, Greek Organization of Football Prognostics S.A. - Deputy CEO, CFO & Director [25]

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I think we don't want to comment on this. But of course, we are looking into the interest rates and development, and we are looking into what is happening in Europe in general. And absolutely, great improvement of the GGB yields in Greece. So we would need to be considering all the options for the future. I cannot exclude it.

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Operator [26]

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(Operator Instructions) Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Cope for any closing comments. Thank you.

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Damian Cope, Greek Organization of Football Prognostics S.A. - CEO & Executive Director [27]

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Thank you very much to everyone for joining us today, and we look forward to talking to you again soon. Thanks. Bye.

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Operator [28]

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