Greek Organization of Football Prognostics S.A. (OTCPK:GOFPY) Q2 2022 Earnings Conference Call September 8, 2022 9:00 AM ET
Company Participants
Jan Karas – Chief Executive Officer
Pavel Mucha – Chief Financial Officer
Conference Call Participants
Stamatios Draziotis – Eurobank Equities
Osman Memisoglu – Ambrosia Capital
Nestoras Katsios – Optima Bank
Operator
Ladies and gentlemen, thank you for standing by. I am Galli, your Chorus Call operator. Welcome and thank you for joining the OPAP S.A. Conference Call and Live Webcast question-and-answer session to discuss the Second Quarter 2022 Financial Results. Please note, a video presentation has been distributed and is also available on the OPAP Investor Relations website. [Operator Instructions]
And the conference is being recorded. At this time, I would like to turn the conference over to Mr. Jan Karas, Chief Executive Officer of OPAP S.A. Mr. Karas, you may now proceed.
Jan Karas
Thank you very much. Good evening or good morning to everyone and welcome in our regular Q2 2022 results conference call. I’m happy to share with you another set of solid results for OPAP on the back of our retail estate being fully operational throughout 2022 and resilient demand alongside of strong online contribution.
Despite weaker general consumer sentiment and inflationary pressures, we are glad seeing gaming being resilient versus the Greek retail market and specifically leisure activity. Hopefully, you have reviewed and enjoyed the results recorded video we shared with you earlier today. So we will jump directly to your questions in our Q&A session.
Galli, over to you.
Question-and-Answer Session
Operator
[Operator Instructions] The first question is from the line of Draziotis Stamatios with Eurobank Equities.
Stamatios Draziotis
Firstly, one on your retail operations which have retraced closer to 2019 levels. You went from minus 13% in Q4 to minus 11% in Q1 and minus 9% in Q2. Just wondering what have you been seeing during the summer. Has the situation improved further? Are we moving towards a mid-single-digit decline? Secondly, if you could just update us on the stage of the sale of the minority interest in Betano? Are we still on track for the wrapping up of the transaction in Q3? And lastly — yes, just wondering where we stand in terms of some initiatives saying that further enriching your product offering, for example, online KINO?
Jan Karas
Thank you very much for your question. So we’ll take it one by one. Starting with the retail performance trends. Indeed, your observations are correct, in comparison to 2019, the performance has been improving. And summer so far, especially August, has been quite strong and encouraging given the circumstances and situation. We shouldn’t forget though that we were quite lucky in this recent period with the Joker Jackpot being very high. That obviously impacted not only this vertical but also other games due to increased visitation in our stores. But generally, we see a positive recovery continuing and that is something that is well counterbalancing the generally challenging macro front. But overall, especially in comparison to some other retail businesses and especially in comparison to some other forms of entertainment, we are happy to see once again our business being more resilient than others. On the second one, Pavel will comment, the Betano.
Pavel Mucha
Good afternoon from me. The stage of sales of Betano basically, as we announced in April, the closing of the transaction is dependent on receipt of all regulatory approvals on one hand and second condition is corporate separation of the Betano business from the Greek and Cypriot business. Both of them are in hands of authorities or regulators. The second one, we filed all the documents for the merger at the end of August. And by corporate law in Malta, the merger must be completed by the end of November. So that takes us to a closing potentially in Q4, providing we indeed get all the regulatory approvals. So our expectation is to close the transaction, if things go well with these authorities, in Q4, not in Q3.
Jan Karas
And on the third question about the extension of our online offering on the lottery side, indeed, we certainly remain both interested as well as committed to expand our iLottery propositions. And we expect that already next year, they should have tangible impacts in our numbers. Until then, number of technical, legal, regulatory and, very important, commercial processes have to be completed. And we will, obviously, keep you posted on an evolution in our portfolio as we always do.
Operator
The next question is from the line of Katsios Nestoras from Optima Bank. Mr. Katsios, can you hear us? Mr. Katsios, I’m sorry, we cannot hear you. [Operator Instructions] The next question is from the line of Memisoglu Osman with Ambrosia Capital.
Osman Memisoglu
Just coming back to the guidance in the video presentation, the €700 million for EBITDA. Are you able to provide us with the revenue expectation? And also how — what are the assumptions broadly? Are you expecting a slowdown in Q4? And specifically for Q3 and more for betting which had slowed down also on base effect, are you seeing anything different this quarter because of some leagues starting earlier? Any color would be appreciated.
Pavel Mucha
Okay. In terms of the GGR, we obviously revised downwards in line with the slight reduction which we have on the EBITDA. We found that the most important KPI for you — basically, the revision is if you take the mid of the range which we provided, between €700 million and €740 million, the reduction in EBITDA is some 4%. If you take it from the lower range which we indicated in last quarter, it’s like minus 2.8%. The reduction in revenues will be corresponding percentage, perhaps a bit higher. It’s a bit difficult to forecast exactly because we have World Cup upcoming. It has typically very high payout in terms of the betting. But we assume that our revenue should end up around €2 billion mark, possibly slightly positive plus from the €2 billion mark. In terms of the assumptions for the revenue and EBITDA guidance, unfortunately, we haven’t seen really the improvement in the macro assumptions, as was our indication or key assumption in the — in our update in Q1.
Quite the opposite, the macro remains challenging with very high inflation impacting the player behavior, although it’s more easily — and than the rest of the leisure industry. But on the other hand, we do not assume a really worsening of the situation in Q4. And specifically, your question about betting and the revenues from betting, obviously, I mentioned we have the World Cup coming at the end of the year which typically has higher payout. On the other hand, we have recently tried to really change our strategy in terms of the odds and bringing bigger playability to the players. So with all of that, those are the key assumptions we leverage which led us to the reduction of the EBITDA guidance to the level of around €700 million.
Osman Memisoglu
Can I follow up, if you don’t mind? On a sequential basis from Q2 to Q3, you’re expecting VLTs to pick up, if I’m not mistaken. On betting specifically, should we expect improvement quarter-on-quarter?
Jan Karas
If I may comment, we certainly expect improvement and that primarily driven on the back of what Pavel has mentioned, the two things. We have — listening to our customers, we have significantly improved the competitiveness of odds in retail, so that makes the proposition much more attractive in comparison to online compared to the previous period. So that is certainly something that should attract both existing customers to play more and move some of their spend from online to retail because majority of them are hybrid customers, as well as attract new customers to retail that are possibly today playing only in online.
So that should have a positive impact. It is certainly our expectation. And that boosted and combined with the with the usually positive effect of World Cup should lead into further growth of this vertical.
Operator
The next question is from the line of Katsios Nestoras with Optima Bank.
Nestoras Katsios
Yes. I was wondering — just trying to say but since you talk of the interim dividend to higher than last year and there is no right now towards this month to be paid, so is it safe to assume that you will — your final dividend will be greater than last year?
Pavel Mucha
Yes. Basically, our dividend policy to distribute as a minimum of net profit and to be at the floor of minimum €1 total dividend, that remains to be in place. We basically distributed — we have distributed higher interim dividend really to provide the cash — earlier cash returns to our shareholders. But I don’t want — at this stage, we have still several months to go. I don’t want to speculate on the amount of dividend. This is subject to Board decision much later and also depending on the year result. So I really don’t want to speculate that we would be paying a higher dividend than last year. But what remains is our commitment to pay at least €1 total dividend.
Operator
[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments.
Jan Karas
Thank you very much. Thank you all for being with us today. We look forward to talking to you again in November for our Q3 2022 results. Thank you very much and have a great day.
Operator
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a good evening.
Be the first to comment