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Sequential improvement in Q321

OPAP 30 November 2021 Update
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OPAP

Sequential improvement in Q321

Q321 results

Travel & leisure

30 November 2021

Price

12.33

Market cap

4,351m

Net debt (€m) at 30 September 2021 post IFRS 16 (net debt pre IFRS 16 €378m)

435

Shares in issue

352.9m

Free float

53.75%

Code

OPAP

Primary exchange

ASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.3)

(5.2)

27.8

Rel (local)

(5.5)

(0.5)

8.0

52-week high/low

13.85

9.45

Business description

OPAP was founded in 1958 as the Greek national lottery and is the exclusive licensed operator of all numerical lotteries, sports betting, instant and passives, VLTs and horse racing. It was listed in 2001 and fully privatised in 2013. Sazka Group has a 46.25% stake and significant board representation.

Next events

FY21 results

February 2022

Q122 results

May 2022

Analysts

Russell Pointon

+44 (0)20 3077 5700

Richard Finch

+44 (0)20 3077 5700

OPAP is a research client of Edison Investment Research Limited

OPAP’s Q321 results showed a strong sequential (quarter-on-quarter) improvement as all verticals were open throughout the period and unaffected by COVID-19-related closures that affected H121. The year-on-year growth in gross gaming revenue (GGR) due to M&A and improvement in online were complemented by ongoing control of operating costs and the income related to the extension of the concession agreement to drive a significant increase in net profit and free cash flow generation and a reduction in the net position. New restrictions introduced by the Greek government to restrict the spread of COVID-19 will hamper GGR growth in Q421, therefore we trim our forecasts for FY21 and assume some continuation of the restrictions in FY22. Our DCF-based valuation reduces to €16.3/share (€16.6 previously).

Year end

GGR*
(€m)

EBITDA**
(€m)

EPS**
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

1,619.9

411.2

0.68

1.30

18.0

10.5

12/20

1,129.8

263.6

0.32

0.55

38.4

4.5

12/21e

1,525.8

544.6

0.78

1.00

15.8

8.1

12/22e

1,994.0

720.9

1.14

1.14

10.8

9.2

12/23e

2.034.1

725.0

1.15

1.15

10.7

9.3

Note: *GGR, gross gaming revenue. **EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Q321: Revenue growth and cost control

OPAP’s Q321 GGR increased by c 20% y-o-y to €470m and EBITDA grew by 67% to €175m. OPAP benefited from the contribution of Stoiximan and good control of operating costs. The partial introduction of new operating restrictions by the Greek government in Q321, to restrict the spread of COVID-19, hampered some land-based revenue growth. Tighter restrictions post the period-end will continue to weigh on the growth outlook in the absence of the restrictions becoming less onerous, and consistent with prior periods. The significant improvement in net profit, 87% on a like-for-like basis, led to a strong improvement in free cash flow and a reduction in net debt to €435m (H121: €481m).

FY21–23: Tougher restrictions, modest downgrades

We take a more cautious stance on OPAP’s forecasts due to the new operating restrictions that have been imposed by the Greek government to limit the spread of COVID-19 infections. We reduce our prior GGR assumptions for land-based activities in Q421 by 10% on a pro-rata basis from November. In addition, we reduce FY22 forecasts for land-based GGR by c 3%, assuming the same restrictions may continue through the winter months. In aggregate these lead to reductions in our estimates for GGR of 1.8–3.5% and EBITDA of 2–4% for FY21–23.

Valuation: DCF-based valuation €16.3/share

Our lower EBITDA forecasts for FY21–23, offset by OPAP’s lower net debt position at the end of Q321, lead to a modest reduction in our DCF-based valuation to €16.3/share (from €16.6). The new dividend commitment was reaffirmed despite the more challenging outlook for the operating environment, therefore the FY21e dividend yield of 8.1% remains attractive.

Q321 results: Strong recovery, recent new restrictions

There was a strong sequential (ie quarter-on-quarter) improvement in OPAP’s performance in Q321 as all business lines were unaffected by the COVID-19 related closures that affected H121 results. However, there are some ongoing negative effects on GGR in land-based activities from consumer caution about enclosed spaces, and ongoing restrictions on the number of people allowed in stores. Q321 had a tougher comparative than Q121 and Q221, as there was a good recovery in revenue in Q320 as the Greek economy emerged from the first national lockdown, which began in Q120.

Operationally, management indicated OPAP Rewards, the loyalty scheme, has been well received with more than 50% of regular land-based customers having enrolled since the April 2021 launch. It is finding enrolled customers are increasing their monthly activity, generating incremental revenue. Management believes it should help to drive future growth by helping with new product development and customer relationship management. In addition, the soon-to-be-launched OPAP Store app, with an initial focus on Kino, Pame Stoixima and Stoixima Virtual Sports games, is likely to improve customers’ in-store journey, for example by limiting interactions needed, and will help to build OPAP’s omni-channel presence.

Revenue and profit growth helped by M&A and cost control

Exhibit 1: Summary income statement

€m

H120

Q320

9M20

Q121

Q221

H121

Q321

9M21

Lottery

257.5

179.1

436.6

36.6

150.3

186.9

178.4

365.3

Growth y-o-y

(32%)

(9.3%)

(24.3%)

(76%)

46%

(27%)

(0%)

(16%)

Sports Betting

128.4

104.6

233.1

12.0

77.7

89.7

90.3

180.0

Growth y-o-y

(33%)

13.9%

(17.9%)

(86%)

92%

(30%)

(14%)

(23%)

Instants & Passives

33.6

27.1

60.7

7.9

29.2

37.1

24.1

61.2

Growth y-o-y

(51%)

(14.1%)

(39.3%)

(59%)

103%

10%

(11%)

1%

VLTs

88.4

80.1

168.5

0.0

36.1

36.1

84.4

120.6

Growth y-o-y

(37%)

10.0%

(20.8%)

(100%)

66%

(59%)

5%

(28%)

Online Betting

70.4

53.9

124.2

50.8

175.0

Growth y-o-y

N/A

N/A

N/A

N/A

N/A

Other Online

47.3

48.6

96.0

42.0

137.9

Growth y-o-y

N/A

N/A

N/A

N/A

N/A

GGR

507.9

391.0

898.9

174.2

395.9

570.1

470.2

1,040.3

Growth y-o-y

(35%)

(0.7%)

(23.4%)

(47%)

120%

12%

20%

16%

Net gaming revenue (NGR)

335.2

259.6

594.8

105.6

268.0

373.7

323.7

697.4

Growth y-o-y

(36%)

(2.1%)

(24.8%)

(51%)

127%

11%

25%

17%

Gross profit from gaming

191.1

147.1

338.2

75.6

173.2

248.8

201.8

450.6

Gross margin

37.6%

37.6%

37.6%

43.4%

43.8%

43.6%

42.9%

43.3%

Payroll

(39.9)

(19.8)

(59.7)

(18.6)

(20.3)

(38.9)

(20.2)

(59.1)

As % of GGR

7.9%

5.1%

6.6%

10.7%

5.1%

6.8%

4.3%

5.7%

Marketing

(23.4)

(11.6)

(35.0)

(16.0)

(28.3)

(44.4)

(17.5)

(61.8)

As % of GGR

4.6%

3.0%

3.9%

9.2%

7.2%

7.8%

3.7%

5.9%

Other operating expenses

(53.9)

(25.9)

(79.8)

(42.0)

(49.7)

(91.7)

(55.6)

(147.3)

As % of GGR

10.6%

6.6%

8.9%

24.1%

12.6%

16.1%

11.8%

14.2%

Total operating expenses

(117.3)

(57.3)

(174.6)

(76.6)

(98.3)

(174.9)

(93.4)

(268.3)

As % of GGR

23.1%

14.7%

19.4%

44.0%

24.8%

30.7%

19.9%

25.8%

Other income

45.5

55.3

100.8

57.9

158.7

EBITDA (OPAP definition)

102.5

105.0

207.6

61.3

143.5

204.8

175.0

379.9

Margin

20.2%

26.9%

23.1%

35.2%

36.2%

35.9%

37.2%

36.5%

Source: OPAP

On a reported basis (ie not adjusting for the Stoiximan consolidation), OPAP’s Q321 GGR increased by c 20% y-o-y to €470m, gross profit from gaming by 25% to €202m and EBITDA by 67% to €175m. The improved performance took the GGR growth for the first nine months of 2021 (9M21) to 16% y-o-y (€1,040m versus €899m in 9M20), and EBITDA to 16% (€380m versus €208m in 9M20). Note, the company’s definition of EBITDA, including associate income and one-off items, is slightly different to our own, but these were not material (negative €150k) in the period.

Excluding the first-time contribution of Stoiximan, from December 2020, OPAP’s underlying GGR declined by 1% (c €4m) in Q321 to €387m and EBITDA increased by 65% (c €64m) to €164m. The absolute delta between the change in revenue and EBITDA of €68m was due to the new ‘other income’ (€58m), which reflects the new accounting for the licence prepayment, and general good control of operating costs.

Exhibit 2: Business split

€m

H120

Q320

9M20

Q121

Q221

H121

Q321

9M21

GGR

507.9

391.0

898.9

174.2

395.9

570.1

470.2

1,040.3

– OPAP underlying

507.9

391.0

898.9

71.2

305.3

376.5

387.1

763.6

Growth y-o-y

(78.3%)

70.0%

(25.9%)

(1.0%)

(15.1%)

– Stoiximan

103.0

90.6

193.6

83.1

276.8

Growth y-o-y

N/A

N/A

N/A

N/A

N/A

EBITDA

102.5

105.0

207.6

61.3

143.5

204.8

175.0

379.9

Margin

20.2%

26.9%

23.1%

35.2%

36.2%

35.9%

37.2%

36.5%

– OPAP underlying

99.8

99.5

199.4

N/A

N/A

165.8

163.9

329.7

Margin

19.7%

25.5%

22.2%

44.0%

42.3%

43.2%

– Stoiximan

2.7

5.5

8.2

N/A

N/A

39.0

11.1

50.1

Margin

N/A

N/A

N/A

20.2%

13.4%

18.1%

Source: OPAP

Broadly, OPAP benefited from the strong growth of online, which represented €97m GGR in Q321 or c 21% of the group total, due to the first-time consolidation of OPAP. Land-based GGR declined by c 2% y-o-y as there are ongoing negative effects from some customer caution of enclosed public spaces, and restrictions on the number of players that are allowed in store, etc.

Lottery GGR was broadly flat in Q321 versus the prior year with positive growth for Kino, offset by unfavourable jackpot rollovers for Tzoker.

Sports Betting GGR declined by c 14% y-o-y to €90m due to a less favourable sporting calendar, ie Q320 benefited from sports events that were postponed from the initial outbreak of COVID-19. In addition, management highlights a good improvement in pre-game bets, but ongoing restrictions on the number of people allowed in store continues to dampen in-game bets.

The strong recovery in Video Lottery Terminals GGR from Q221 began to be hampered by new restrictions imposed by the Greek government from 13 September 2021. The new restrictions allowed customers to enter a PLAY store if they could provide either: proof of double vaccination, a sickness certificate (ie they had COVID-19 in previous six months and therefore have good immunity) or a negative PCR or ”rapid” test. The restrictions came into force across the rest of OPAP’s estate from 6 November (ie after the period end). Management estimates the restrictions led to an average initial impact of a 10% reduction in GGR with a gradual improvement thereafter. The level of impact varied by geography and by game, for example a greater impact on Lottery (longer dwell time in store) than for Sports Betting (shorter dwell time). The restrictions were tightened further from 22 November when a negative PCR or “rapid” test alone is no longer considered sufficient for a customer to gain entry to a store. OPAP’s physical locations are operating under the same (tighter) restrictions as restaurants and bars rather than the less strict restrictions that other retailers, must adhere to. In prior periods, OPAP’s locations were considered as a retailer and operated under the required restrictions. Management considers the difference in restrictions versus previous periods to be unfair, and the store agents are in discussions with the government to have its operating restrictions reduced. The new restrictions are likely to have a greater revenue impact on OPAP’s than those introduced from September, but there is limited initial data to report at the time of the results presentation.

Instant & Passives GGR declined by c 11% in Q321 as it continues to be negatively affected by the ongoing safety protocols to contain the spread of COVID-19.

Total online GGR in Q321 of €97m (Stoiximan €83m and OPAP €14m), represented c 28% y-o-y growth on an underlying basis. In absolute terms it was lower than Q121’s €122m and Q221’s €106m. Both OPAP and Stoiximan reported a sequential increase in the number of active players. However, a less favourable sporting calendar, higher tax, new €2/bet spending limits and increased competition post the award of new licences negatively affected revenue. Management points to industry-wide weakness in October 2021 due to more favourable player wins.

OPAP’s gross margin from gaming operations increased to 42.9% in Q321 from 37.6% in Q320 due to the increased contribution of higher-gross margin online gaming revenues, offset by a disproportionate (ie full provision) for GGR contribution for Hellenic Lotteries, which continues to be contested by OPAP. As a reminder, management believes a lower contribution should be paid due to the force majeure of COVID-19 related closures on its revenue.

The strong operating cost control is evident in the year-on-year, like-for-like decline in payroll expenses of 4.9% (headcount reductions) and marketing expenses of 11.3%, with only a modest increase in other operating expenses of 1.3%.

Further down the P&L, the strong growth in EBITDA and the lower nominal corporate tax rate of 22% fed through to an 87% increase in net profit on a like-for-like basis.

Cash flow and balance sheet: Improving cash flow generation

The strong growth in OPAP’s net profit led to a significant increase in free cash flow generation of €130m in Q321 (equivalent to 40% of NGR) versus €85m in Q320 (33% of NGR), due mainly to the higher EBITDA margin. This took OPAP’s 9M21 free cash flow to €258m versus 9M20’s €153m. In the first nine months, OPAP’s operating cash flow of €273m has funded investing cash flow of €32m and dividend payments of €85m, increasing its cash balance to €663m from €507m (FY20).

The period end net debt position (excluding IFRS 16 liabilities) of €378m (0.9x last 12 months’ EBITDA) compares with €423m at the end of H121 and €529m at the end of FY20. Including IFRS 16 liabilities of €53m, total net debt at the end of Q321 was €435m.

New forecasts: More cautious due to new restrictions

We take a more cautious stance on OPAP’s forecasts due to the new operating restrictions that have been imposed by the Greek government to limit the spread of COVID-19 infections.

Exhibit 3: Changes to estimates

GGR (€m)

EBITDA (€m)

DPS (€)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2021e

1,581.6

1,525.8

(3.5)

567.7

544.6

(4.0)

1.00

1.00

0.0

2022e

2,042.2

1,994.0

(2.4)

739.4

720.9

(2.5)

1.19

1.14

(4.2)

2023e

2,071.7

2,034.1

(1.8)

740.0

725.0

(2.0)

1.18

1.15

(2.5)

Source: Edison Investment Research

In line with management’s comments that GGR in land-based activities was initially negatively affected by 10% when the new restrictions came in to force, but improved thereafter, and the most recent restrictions are likely to have had a more negative affect, we have reduced our prior GGR assumptions for land-based activities in Q421 by 10%. In addition, we reduce FY22 forecasts for land-based GGR by c 3%, assuming the same restrictions may continue through the winter months. In aggregate these lead to reductions in our estimates for GGR of 1.8–3.5%, EBITDA of 2–4%, and DPS of 0–4.5% in FY21–23.

Valuation: DCF-based valuation of €16.3/share

The combination of the modest EBITDA downgrade and lower reported net debt lead to a reduction in our DCF-based valuation for OPAP to €16.3 per share, from €16.6 previously.

Exhibit 4: Financial summary

€m

2018

2019

2020

2021e

2022e

2023e

Year end 31 December

ISA

ISA

ISA

ISA

ISA

ISA

INCOME STATEMENT

Revenue

 

 

1,547.0

1,619.9

1,129.8

1,525.8

1,994.0

2,034.1

NGR

 

 

1,039.9

1,086.2

737.3

1,030.4

1,362.5

1,387.6

Cost of Sales

(912.0)

(946.9)

(662.4)

(828.2)

(1,102.6)

(1,121.0)

Gross Profit

635.0

673.0

467.4

697.5

891.3

913.1

Other Income

42.5

225.3

238.0

237.4

EBITDA

 

 

356.6

411.2

263.6

544.6

720.9

725.0

Operating profit (before amort. and excepts.)

 

261.4

305.2

148.7

402.6

577.1

581.2

Impairments

(17.5)

(8.7)

(36.8)

0.0

0.0

0.0

Exceptionals

(3.0)

(7.1)

(21.5)

0.0

0.0

0.0

Share-based payments

(1.6)

(1.6)

(0.8)

(0.8)

(0.8)

(0.8)

Reported operating profit

239.3

287.8

89.6

401.8

576.3

580.3

Net Interest

(23.5)

(27.1)

(33.5)

(35.2)

(35.2)

(35.2)

Joint ventures & associates (post tax)

0.1

8.5

18.2

0.2

0.2

0.2

Profit Before Tax (norm)

 

 

238.0

286.6

133.4

367.6

542.1

546.2

Profit Before Tax (reported)

 

 

215.9

269.2

74.3

366.8

541.3

545.4

Reported tax

(70.6)

(67.1)

(17.6)

(88.2)

(130.1)

(131.1)

Profit After Tax (norm)

169.0

217.8

101.4

279.4

412.0

415.1

Profit After Tax (reported)

145.3

202.1

56.7

278.6

411.2

414.3

Minority interests

(2.0)

0.3

6.0

(8.3)

(9.8)

(10.6)

Net income (normalised)

167.0

218.1

107.4

271.1

402.2

405.5

Net income (reported)

143.3

202.4

62.7

270.3

401.4

403.7

Average Number of Shares Outstanding (m)

318

318

334

347

353

353

EPS - normalised (c)

 

 

52.57

68.50

32.11

78.11

113.99

114.92

EPS - normalised fully diluted (c)

 

 

52.57

68.50

32.11

78.11

113.99

114.92

EPS - basic reported (€)

 

 

0.45

0.64

0.19

0.78

1.14

1.14

Dividend (€)

0.70

1.30

0.55

1.00

1.14

1.15

Revenue growth (%)

6.3

4.7

(30.3)

35.0

30.7

2.0

Gross Margin (%)

41.0

41.5

41.4

45.7

44.7

44.9

EBITDA Margin (%)

23.1

25.4

23.3

35.7

36.2

35.6

Normalised Operating Margin

16.9

18.8

13.2

26.4

28.9

28.6

BALANCE SHEET

Fixed Assets

 

 

1,384.8

1,370.1

1,805.9

1,707.1

1,687.5

1,567.8

Intangible Assets

1,157.2

1,096.0

1,578.9

1,500.0

1,500.4

1,400.7

Tangible Assets

111.5

162.3

127.5

107.5

87.6

67.6

Investments & other

116.1

111.7

99.5

99.5

99.5

99.5

Current Assets

 

 

388.6

869.9

629.1

847.3

955.8

1,072.7

Stocks

10.7

7.0

6.2

8.3

10.9

11.1

Debtors

140.2

161.2

68.5

122.1

179.5

203.4

Cash & cash equivalents

182.0

633.8

506.9

669.3

717.9

810.5

Other

55.7

67.9

47.6

47.6

47.6

47.6

Current Liabilities

 

 

(314.0)

(326.4)

(366.1)

(399.7)

(436.0)

(440.4)

Creditors

(177.5)

(184.1)

(149.4)

(183.1)

(219.3)

(223.8)

Tax and social security

(12.8)

(1.8)

(27.8)

(27.8)

(27.8)

(27.8)

Short term borrowings

(0.2)

(13.9)

(40.7)

(40.7)

(40.7)

(40.7)

Other

(123.6)

(126.7)

(148.2)

(148.2)

(148.2)

(148.2)

Long Term Liabilities

 

 

(699.8)

(1,141.6)

(1,288.8)

(1,276.9)

(1,263.9)

(1,248.7)

Long term borrowings

(650.3)

(1,103.2)

(1,057.9)

(1,059.7)

(1,009.7)

(959.7)

Other long term liabilities

(49.5)

(38.4)

(230.9)

(217.2)

(254.2)

(289.0)

Net Assets

 

 

759.5

771.9

780.1

877.8

943.5

951.4

Minority interests

(36.8)

(18.1)

(41.1)

(45.3)

(51.0)

(57.5)

Shareholders' equity

 

 

722.8

753.8

739.1

832.5

892.5

893.9

CASH FLOW

Op Cash Flow before WC and tax

358.2

412.9

264.4

545.4

721.7

725.8

Working capital

(25.0)

(16.5)

(34.8)

(22.1)

(23.7)

(19.8)

Exceptional & other

(1.9)

(13.8)

4.0

(14.5)

36.2

34.0

Tax

(51.7)

(78.9)

(12.1)

(88.2)

(130.1)

(131.1)

Operating Cash Flow

 

 

279.7

303.6

221.4

420.5

604.1

608.9

Net interest

(24.6)

(22.3)

(32.5)

(35.2)

(35.2)

(35.2)

Capex

(52.1)

(34.7)

(18.9)

(25.0)

(25.0)

(25.0)

Acquisitions/disposals

(48.0)

(22.0)

(90.2)

(19.0)

(100.0)

0.0

Equity financing

(12.1)

(0.1)

(0.1)

0.0

0.0

0.0

Dividends

(130.7)

(168.4)

(214.7)

(176.9)

(341.4)

(402.2)

Net new borrowings

(32.3)

399.7

(12.1)

1.8

(50.0)

(50.0)

Other

(34.6)

(4.0)

20.0

(3.9)

(3.9)

(3.9)

Net Cash Flow

(54.8)

451.8

(126.9)

162.4

48.6

92.6

Opening cash

 

 

236.8

182.0

633.8

506.9

669.3

717.9

Closing cash

 

 

182.0

633.8

506.9

669.3

717.9

810.6

Closing net debt/(cash)

 

 

468.5

483.3

591.7

431.1

332.5

189.8

Source: OPAP, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by OPAP and prepared and issued by Edison, in consideration of a fee payable by OPAP. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by OPAP and prepared and issued by Edison, in consideration of a fee payable by OPAP. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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