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OPAP S.A., the Greek gaming giant,
reported another strong set of financial results
for the twelve-month period ended December 31, 2004,
as revenues for the period grew to $4,261.41m, 39.2%
up on 2003, with adjusted EBITDA for the period
amounting to $883.85m, up 39.1% on 2003 excluding
income from the release of provisions of $198.5m
in the year and the provision charge of $110.6m
in the same period last year relating to previously
expected potential damage claims to Intralot.
Revenues increased by 39.2% from
$3,061.27m in 2003 to $4,262.35m in 2004, largely
due to the increase in revenues from numerical games,
which were up 171.4% to $1,989.78m (from $733.288m
in 2003) largely driven by the successful completion
of the roll-out of Kino throughout our network of
agents. As a result, numerical games represented
46.7% of total revenues in 2004 compared to 24.0%
in 2003.
KINO
boosts revenue
KINO was introduced in Attica on
October 4, 2004 completing the roll-out plan in
our agent network. Daily KINO revenues per agent
in the fourth quarter were approximately $1,140,
whilst following the increase in playing hours from
5 to 7 hours per day on January 17, 2005, it has
been observed that daily revenues for the game per
agent now reach $1,274 per day.
Profit from operations increased
by 114.1% from $487.517m in 2003 to $1,043m in 2004.
However, profit from operations after adjusting
for the effect of the Intralot arbitration provisions
and the subsequent reversal of these, as well as
unfunded pension liabilities, increased by 40.0%
from $603.1m in 2003 to $844.9m in 2004.
Net profits
reach record high
The net profit for the period increased
by 115.1% from $315.3m in 2003 to $678.2m in 2004.
Adjusted net profit for 2004 increased by 40.6%
to $549.2m from $390.5m in 2003, after adjusting
for the effect of the Intralot arbitration provisions
and subsequent reversal of these, as well as unfunded
pension liabilities registered in 2003. In turn,
profit from operations increased by 114.1% from
$487.5m in 2003 to $1,043.4m in 2004.
Keeping the dividend
up
OPAP’s Board of Directors decided
on February 17, 2005 to recommend to the Annual
General Meeting of shareholders the distribution
of a dividend in respect of 2004 of $1.98 per share,
representing a 102.7% increase compared to the dividend
paid in respect of 2003.
Excluding the interim dividend of $0.73 per share
already paid, the net payment to shareholders is
$1.24 per share, or $398.14m, which represents the
maximum permissible payout in accordance with Greek
corporate law and calculated under Greek GAAP.
Tender
for central systems and terminals
In November 11, 2004 the Company
announced the formation of a committee which will
determine the specifications of the tender for the
purchase, installation and maintenance of IT equipment
for central systems and terminals, as well as supporting
equipment and services. Work is progressing on this
project and they will communicate the tender specifications
in due course. As mentioned previously, delivery
of the system is expected after approximately 16
to 22 months following the publication of the tender
and the actual cost will be determined after the
completion of the tender following the evaluation
of submitted offers.
Measures
against illegal betting
Over the past six months, the company
has intensified its efforts to combat illegal betting
in Greece through the creation of a taskforce which
monitors illegal betting activity and proposes appropriate
measures to management and, where applicable, the
competent authorities.
As part of this effort, OPAP has recently filed
for restrictive measures against certain internet
providers for advertising illegal betting services.
In addition, the company has notified the media
that it will discontinue advertising with those
who accept advertisements for illegal betting.
Analysts
react to the good news
Following the announcement of results,
investment banks were quick to move on the news.
Credit Suisse Analyst Tassos Stassopoulos raised
his target price for the sixth time in 15 months,
starting his note with the observation "Op
Ap and Away!".
Deutsche Bank, UBS and most Greek
brokers also followed suit, in the realization that
the OPAP story is far from over, and that new revenue
generators loom on the horizon.
Of particular importance to analysts are the defensive
characteristics of the OPAP share. Having reached
a new all-time high of $30 in February, the stock
continues to offer significant returns to investors,
as not only do they benefit from the rising share
price, but also from the extremely strong dividend.
September also promises to be another
milestone in the company’s evolution. The prospect
of introducing Greek football teams on the fixed-odds
sports-betting game "Stihima" already
seems to have investors excited, as the consensus
forecast mentions a potential $1.3bn a year boost
to revenues.
Looking
to a brighter future
OPAP Management appears content with
the results, looking forward to further growth.
As OPAP S.A. CEO Kostakos mentioned in a conference
call with analysts following the results, "We
are very pleased with the performance of our business
in 2004. Having completed the roll-out of KINO and
exceeded our expectations for this phase of our
development, we remain confident as to the fundamentals
of our business and have commenced an internal review
of the strategic alternatives that will underpin
our future growth."
Asked whether he believed that the
OPAP success story was nearing its plateau, he was
also quick to point out the benefits of investing
in the company:
"For years now, there has always been the expectation
that the OPAP "story" would soon run out
of steam. As we have proven, this is far from the
case. We are a company which has no debt, a strong
balance sheet, we operate in a mature and booming
market, and are not vulnerable to the same kind
of risks which other companies in mature markets
may be exposed to.
On the contrary, we are gearing ourselves
towards expanding abroad, therefore securing new
virgin markets, whilst at the same time we ensure
that we provide the company with all the necessary
amenities, such as the new IT system, in order to
facilitate the move into the future".
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Greece 
