Strong EBITDA driven by VLTs and cost controls

OPAP 7 June 2019 Update
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OPAP

Strong EBITDA driven by VLTs and cost controls

Q119 results

Travel & leisure

7 June 2019

Price

€9.46

Market cap

€3,018m

Net debt (€m) at end March 2019

410.5

Shares in issue

319m

Free float

67%

Code

OPAP

Primary exchange

ASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(2.7)

4.9

(1.4)

Rel (local)

(5.2)

(9.2)

(5.7)

52-week high/low

€9.85

€7.60

Business description

OPAP was founded in 1958 as the Greek national lottery and it is the exclusive licensed operator of all numerical lotteries (seven games), sports betting (four games) and horse racing. OPAP listed in 2001 and was fully privatized in 2013. Sazka Group has a 23.7% stake and significant board representation.

Next events

Q219 results

11 September 2019

Analysts

Victoria Pease

+44 (0)20 3077 5740

Richard Williamson

+44 (0)20 3077 5700

OPAP is a research client of Edison Investment Research Limited

Q119 gross gaming revenues (GGR) increased 5% to €396.0m, OPAP’s strongest Q1 performance since 2010. This was driven by a 58.9% increase in video lottery terminals (VLT) GGR (17% of GGR). The core lottery business was steady at €191.7m, although sports betting declined by 5.3%. Sustainable cost containment contributed to an adjusted EBITDA margin of 25%. Our headline forecasts are broadly unchanged, and we assume that the VLT roll-out will continue as previously planned. Cash generation remains strong, net debt/LTM EBITDA is only 1.1x and the company recently announced a scrip dividend option for shareholders. OPAP trades at 8.3x EV/EBITDA and 15.6x P/E with a 7.9% dividend yield for FY19.

Year end

GGR
(€m)

EBITDA
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/17

1,455.5

306.5

0.42

1.10

22.3

11.6

12/18

1,547.0

353.6

0.52

0.70

18.2

7.4

12/19e

1,701.8

413.6

0.61

0.75

15.6

7.9

12/20e

1,865.1

461.2

0.68

0.88

14.0

9.3

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

5% GGR growth, 25% adjusted EBITDA margin

Q119 GGR grew 5.0% to €396m, driven by a 58.9% increase in VLT GGR. Lottery was up 1.6%, as new Kino features offset VLT substitution and the recent introduction of online Joker should help momentum. Betting GGR declined by 5.3% but, importantly, the core Pame Stoiximan product reverted to 1.9% growth due to product enhancements and a 27% rise in live betting. For the group, sustainable cost containment contributed to a c 250bp EBITDA margin expansion and we expect relatively stable fixed costs going forward. We assume that the VLT roll-out will resume as planned (following a temporary suspension) and our headline forecasts are broadly unchanged. Our forecasts also assume full consolidation of Stoiximan from H219, although approval from the regulator is still pending.

Strong cash flow, scrip dividend option

OPAP reported Q119 net debt of €410.5m vs €459.0 at FY18. This equates to 1.1x net debt/LTM EBITDA and 17.4x interest cover. We forecast net debt of €512.7m at end FY19, which includes a further €100m debt to pay for the Stoiximan acquisition. In terms of dividends, OPAP has historically distributed the bulk (or more) of FCF as dividends and recently introduced a five-year optional scrip dividend programme. For the FY18 final dividend, the scrip election period ends on 11 July, when we will amend forecasts.

Valuation: 7.9% FY19 dividend yield

OPAP’s shares trade at 15.6x P/E and 8.3x EV/EBITDA for FY19e. This is appropriately towards the top end of the gaming sector, as OPAP benefits from exclusive licences, high barriers to entry and additional growth from VLTs. With low net debt and strong cash generation, the dividend payout ratio has historically been very generous, leading to an attractive 7.9% FY19e dividend yield. Key variables are Greek GDP and sentiment surrounding the upcoming elections.

Strongest Q1 GGR performance since 2010

Results summary

Gross gaming revenues – increased by 5.0%, driven by 58.9% growth in VLTs

Q119 GGR increased 5.0% to €396.0m, helped by a 58.9% increase in VLTs (17.4% of revenues). An improved Kino performance contributed to stable lottery revenues of €191.7m (48.4% of revenues). Betting declined by 5.3% to €101.7m, although it is encouraging that the main Pame Stoixima product has reverted to 1.9% growth, after many quarters of decline. Instants and passives were also weaker, posting a 10.8% decline.

New, larger shops are driving growth

During the quarter, the number of OPAP stores in Greece declined from 3,910 to 3,884, which includes 147 new stores. Since the beginning of 2018, OPAP has opened over 650 new stores and average store sizes have increased by 22% since 2015, to 128m2. OPAP has stated that the newer stores perform over 20% better than the previous formats and the average agent’s commission has increased by 4.4% in Q119 vs the prior year.

Adjusted EBITDA margin of 25% – helped by cost containment and IFRS 16

Q119 adjusted EBITDA increased by 15.7% to €100.9m, representing a 25.5% margin (vs 23.1% in the prior year). This excludes €10.7m of one-off items, primarily relating to the reversal of a legal provision. The adjusted margin increase was largely attributable to IT cost containment, although there was also a €2m positive contribution from lower rental costs (due to IFRS 16).

Dividends – now with a scrip option

OPAP’s dividend policy is to pay out the ‘bulk’ of FCF as dividends and it has recently announced a five-year scrip dividend programme (2019–23), such that shareholders will have the option to receive the total dividend in cash or to reinvest their selected amount into new shares. The election period for FY18’s final dividend is between 28 June and 11 July. We would expect about half of shareholders to elect a scrip and we will adjust our figures once the final results are announced.

Forecasts – broadly unchanged

Management has stated that it is well placed to deliver another positive year in FY19 and, apart from IFRS 16 adjustments, we are leaving our headline forecasts broadly unchanged. Within the revenue mix, a slightly lower Instant & Passives is offset by growth in VLTs and stability in the core Lottery business. As detailed below, our forecasts assume that the VLT roll-out programme will be resumed in the near future (hence no change to numbers) and that the Stoiximan acquisition (which is still pending regulatory approval) is fully consolidated from H219 onwards (€60m GGR for H219).

Exhibit 1: Estimate changes

Revenue (GGR) (€m)

EBITDA (€m)

Adjusted EPS (€)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2019e

1,704.2

1,701.8

(0.1)

407.8

413.6

1.4

0.62

0.61

(1.6)

2020e

1,867.2

1,865.1

(0.1)

451.6

461.2

2.1

0.70

0.68

(2.8)

Source: OPAP, Edison Investment Research

Lottery (48.4% of GGR): 1.6% increase

Lottery GGR increased by 1.6% to €191.7 in Q119, helped by Kino side bets and increased Joker revenues. Looking ahead, the introduction of online products should help to mitigate the substitution from VLTs. Joker online was launched in March 2019 and has c 75,000 registrations to date, with online penetration already at 2%. Kino online and Lotto online should follow later in FY19, pending regulation. We continue to forecast a 2% increase in lottery GGR for FY19.

Betting (25.7% of GGR): 5.3% decline

Betting GGR declined by 5.3% to €101.7m vs Q118. This was slightly disappointing, although better than the 11.4% decline in Q418. The decline was driven by a maturing Virtuals business and management has stated that the core Pame Stoixima product has reverted to positive growth of 1.9%, due to an increased number of self-service betting terminals (SSBTs) and more live betting. These have successfully modernised the offer and should enhance growth going forward. In terms of wagers, SSBTs comprised 15.3% of total wagers (vs 6.7% in the prior year) and 28% of total live betting wagers. Live betting grew 27% y-o-y and comprised 36% of total wagers. Online comprised 9% of wagers and 2% of GGR, as win margins are typically lower for online.

There are no major competitions (eg World Cup) in 2019 and, despite the improvement in Pame Stoixima, we continue to forecast a 3% revenue decline in FY19, returning to 5% growth in FY20, as the new online offering begins to gain traction.

Instant & Passives (8.5% of GGR), 10.8% decline

GGR in this division declined by 10.8% to €33.7m, due to weakness in both instants and scratch. Management has stated that this performance is expected to normalise, but we now forecast a 3% decline for this division for FY19.

VLTs (17.4% of GGR): Roll-out temporarily suspended

At end Q119, OPAP operated 19,965 VLTs in 364 Play Gaming Halls and 1,955 agencies. There were c 20,000 VLTs operational at 5 June 2019 but, following a procedural situation, the roll-out of the last c 5,000 VLTs is currently on hold. The procedural delay relating to the final roll-out does not affect the legislative framework or the exclusive contract, and while the matter is being discussed, OPAP is continuing to plan for the final expansion and management is hopeful that the roll-out will be resumed in the near term. This is in line with our forecasts, although there is clearly a risk that there may be a delay or finite end to the roll-out plan.

VLT GGR increased by 58.9% to €68.9m, although GGR/VLT/day has declined to €41 vs €46 in the previous period (note that Q119 includes almost double the number of machines compared to the previous year). Momentum is expected to pick up with a new VLT jackpot offering (from April 2019) and we forecast broadly stable GGR per machine going forward.

Exhibit 2: Divisional summary

2014

2015

2016

2017

2018

2019e

2020e

2021e

Lotteries

817.3

829.9

841.3

818.0

779.9

795.5

803.5

811.5

Sports Betting

456.3

411.9

397.2

421.1

406.2

394.1

413.8

426.2

Instant and Passives

104.1

157.9

159.1

158.9

152.2

147.6

147.5

147.5

VLTS

0.0

0.0

0.0

57.6

208.7

304.6

350.3

367.9

Stoiximan

0.0

0.0

0.0

0.0

0.0

60.0

150.0

165.0

Gross Gaming Revenues

1,377.7

1,399.7

1,397.6

1,455.5

1,547.0

1,701.8

1,865.1

1,918.0

GGR Contribution and other levies

(404.5)

(412.0)

(466.7)

(482.6)

(507.1)

(553.2)

(609.2)

(626.7)

% GGR

-29%

-29%

-33%

-33%

-33%

-33%

-33%

-33%

NGR

973.1

987.7

930.8

972.9

1,039.9

1,148.7

1,255.9

1,291.3

Agents Commission

(359.7)

(362.4)

(358.4)

(369.9)

(381.1)

(403.1)

(419.7)

(428.8)

% of NGR

-37%

-37%

-39%

-38%

-37%

-35%

-33%

-33%

Other NGR related commission

0.0

0.0

(26.3)

(38.3)

(53.0)

(65.2)

(71.7)

(74.4)

% of NGR

0%

0%

-3%

-4%

-5%

-6%

-6%

-6%

Lottery

375.3

380.7

345.7

337.7

330.3

337.6

341.8

345.3

Sports Betting

193.3

176.5

147.1

155.2

159.2

157.1

165.2

170.2

Instant and Passives

46.7

69.5

54.7

54.8

51.5

49.9

50.1

50.1

VLTs

0.0

0.0

0.0

18.4

66.2

98.1

112.8

118.4

Other

(1.8)

(1.4)

(1.4)

(1.4)

(1.4)

(1.4)

(1.4)

(1.4)

Stoiximan

0.0

0.0

0.0

0.0

0.0

39.0

96.0

105.6

Gross profit from gaming operations

613.5

625.3

546.2

564.7

605.9

680.3

764.6

788.2

Total gross profit

613.5

625.3

570.1

592.6

642.7

718.9

805.1

832.6

Payroll

(58.6)

(46.1)

(56.2)

(63.8)

(76.1)

(79.9)

(91.8)

(93.7)

% NGR

-6%

-5%

-6%

-7%

-7%

-7%

-7%

-7%

Marketing

(78.9)

(69.5)

(65.9)

(67.4)

(65.8)

(79.0)

(90.9)

(92.7)

% of NGR

-8%

-7%

-7%

-7%

-6%

-7%

-7%

-7%

Other operating expenses

(129.5)

(132.7)

(140.4)

(155.0)

(147.2)

(146.5)

(161.2)

(162.8)

% NGR

-13%

-13%

-15%

-16%

-14%

-13%

-13%

-13%

Adjusted EBITDA

346.5

377.1

307.5

306.5

353.6

413.6

461.2

483.5

EBITDA margin

25%

27%

22%

21%

23%

24%

25%

25%

Source: OPAP, Edison Investment Research

Cash flow and balance sheet

The business model is very cash generative, given the franchise model, the limited working capital risk and the fact that all licence payments have been made.

Capex: the 2017–19 investment programme (technology, slot machines, SSBTs) is coming to an end. Q119 capex of 3m was lower than we expected, but management continues to guide to capex of c €30m in FY19 and 15–25m in FY20.

Net debt: Q119 net debt of 410.5m compares to 459.0m at FY18 and equates to 1.1x net debt/LTM EBITDA and 17.4x interest cover. For FY19, our forecasts include an additional 100m debt for the Stoiximan acquisition (after a €48m net payment in December 2018) and, assuming no special dividends, the net debt level goes to €512.7m in FY19. Once the results of the scrip programme have been announced, the net debt level will very likely decrease further (50% would be about 100m) and we will amend our forecasts at that stage.

Exhibit 3: Financial summary

€m

2014

2015

2016

2017

2018

2019e

2020e

2021e

31-December

ISA

ISA

ISA

ISA

ISA

ISA

ISA

ISA

INCOME STATEMENT

GGR

 

 

1,377.7

1,399.7

1,397.6

1,455.5

1,547.0

1,701.8

1,865.1

1,918.0

NGR

 

 

973.1

987.7

930.8

972.9

1,039.9

1,148.7

1,255.9

1,291.3

Cost of Sales

(764.2)

(774.3)

(827.5)

(862.9)

(904.3)

(982.9)

(1,060.1)

(1,085.4)

Gross Profit

613.5

625.3

570.1

592.6

642.7

718.9

805.1

832.6

EBITDA

 

 

346.5

377.1

307.5

306.5

353.6

413.6

461.2

483.5

Normalised operating profit

 

 

289.6

318.1

252.4

218.8

258.4

301.8

341.1

361.6

Impairments

7.5

(14.1)

0.0

(2.7)

(17.5)

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

10.7

0.0

0.0

Share-based payments

(0.9)

(1.2)

(3.1)

(1.5)

(1.6)

(1.6)

(1.6)

(1.6)

Reported operating profit

296.2

302.8

249.3

214.6

239.3

310.9

339.5

360.0

Net Interest

1.6

(4.7)

(13.3)

(21.1)

(23.5)

(25.2)

(26.5)

(25.5)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

3.0

0.0

0.0

Other

7.8

1.5

1.0

(0.3)

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

299.0

314.9

240.0

197.5

234.9

279.5

314.6

336.1

Profit Before Tax (reported)

 

 

305.6

299.6

236.9

193.2

215.9

288.7

313.1

334.5

Reported tax

(106.4)

(89.7)

(64.1)

(61.6)

(70.6)

(83.7)

(90.8)

(97.0)

Profit After Tax (norm)

212.3

223.6

170.4

140.2

166.8

198.5

223.4

238.6

Profit After Tax (reported)

199.2

209.9

172.9

131.6

145.3

204.9

222.3

237.5

Minority interests

(4.2)

0.8

(2.6)

(5.4)

(2.0)

(4.8)

(7.3)

(7.9)

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

208.1

224.4

167.8

134.8

164.8

193.7

216.1

230.7

Net income (reported)

195.0

210.7

170.2

126.2

143.3

200.2

215.0

229.6

Basic average number of shares outstanding (m)

319

319

319

318

318

319

319

319

EPS - basic normalised (€)

 

 

0.65

0.70

0.53

0.42

0.52

0.61

0.68

0.72

EPS - diluted normalised (€)

 

 

0.65

0.70

0.53

0.42

0.52

0.61

0.68

0.72

EPS - basic reported (€)

 

 

0.61

0.66

0.53

0.40

0.45

0.63

0.67

0.72

Dividend (€)

0.70

0.40

1.29

1.10

0.70

0.75

0.88

0.93

Revenue growth (%)

1.6

(-0.2)

4.1

6.3

10.0

9.6

2.8

Gross Margin (%)

44.5

44.7

40.8

40.7

41.5

42.2

43.2

43.4

EBITDA Margin (%)

25.2

26.9

22.0

21.1

22.9

24.3

24.7

25.2

Normalised Operating Margin

21.0

22.7

18.1

15.0

16.7

17.7

18.3

18.9

BALANCE SHEET

Fixed Assets

 

 

1,343.4

1,318.9

1,330.3

1,356.5

1,368.7

1,519.3

1,417.6

1,314.1

Intangible Assets

1,284.2

1,237.2

1,231.0

1,218.5

1,157.2

1,209.1

1,127.6

1,044.4

Tangible Assets

44.2

56.2

67.6

109.3

111.5

126.2

106.0

85.7

Investments & other

15.0

25.5

31.7

28.7

100.0

184.0

184.0

184.0

Current Assets

 

 

409.4

389.9

437.4

440.4

381.2

447.5

525.5

610.2

Stocks

3.0

4.2

12.5

7.9

10.7

20.7

20.7

20.7

Debtors

92.3

55.2

80.6

127.8

137.4

142.4

147.4

152.4

Cash & cash equivalents

297.4

301.7

273.5

246.1

191.5

237.7

310.7

390.4

Other

16.7

28.8

70.8

58.5

41.7

46.7

46.7

46.7

Current Liabilities

 

 

(457.9)

(325.0)

(390.2)

(482.0)

(295.0)

(290.0)

(280.0)

(270.0)

Creditors

(170.4)

(127.1)

(149.3)

(173.9)

(176.7)

(166.7)

(156.7)

(146.7)

Tax and social security

(178.2)

(129.9)

(55.5)

(89.8)

(73.1)

(78.1)

(78.1)

(78.1)

Short term borrowings

(0.0)

(32.1)

(118.7)

(169.2)

(0.2)

(0.2)

(0.2)

(0.2)

Other

(109.3)

(35.9)

(66.7)

(49.2)

(45.0)

(45.0)

(45.0)

(45.0)

Long Term Liabilities

 

 

(59.8)

(181.0)

(305.3)

(556.7)

(695.4)

(879.4)

(879.4)

(879.4)

Long term borrowings

0.0

(115.0)

(263.0)

(513.1)

(650.3)

(750.3)

(750.3)

(750.3)

Other long-term liabilities

(59.8)

(66.0)

(42.3)

(43.6)

(45.1)

(129.1)

(129.1)

(129.1)

Net Assets

 

 

1,235.1

1,202.8

1,072.2

758.2

759.5

797.4

783.7

774.9

Minority interests

(67.4)

(41.0)

(37.0)

(43.4)

(36.8)

(38.0)

(42.0)

(44.0)

Shareholders' equity

 

 

1,167.7

1,161.8

1,035.3

714.8

722.8

759.4

741.7

730.9

CASH FLOW

Op Cash Flow before WC and tax

347.4

378.3

310.7

308.0

355.2

415.1

462.8

485.1

Working capital

7.0

(41.0)

(71.9)

(9.2)

(25.0)

(15.0)

(15.0)

(15.0)

Exceptional & other

1.0

9.1

(12.4)

(0.4)

1.1

0.0

0.0

0.0

Tax

(68.8)

(142.5)

(116.9)

(31.4)

(51.7)

(73.7)

(80.8)

(87.0)

Net operating cash flow

 

 

286.6

203.9

109.4

266.9

279.6

326.4

367.0

383.1

Capex

(18.6)

(39.6)

(42.9)

(96.3)

(51.9)

(30.0)

(20.0)

(20.0)

Acquisitions/disposals

(18.6)

(0.8)

(0.0)

(31.5)

(47.9)

(96.9)

0.0

0.0

Net interest

1.6

(4.2)

(11.9)

(19.6)

(24.6)

(25.2)

(26.5)

(25.5)

Equity financing

(8.3)

(24.2)

(11.9)

(1.8)

(5.5)

0.0

0.0

0.0

Dividends

(79.8)

(277.3)

(292.8)

(446.1)

(154.0)

(223.3)

(239.8)

(250.0)

Other

48.1

(0.7)

(12.7)

0.3

(18.6)

(4.8)

(7.3)

(7.9)

Net Cash Flow

211.0

(142.9)

(262.8)

(328.0)

(22.8)

(53.8)

73.5

79.7

Opening net debt/(cash)

 

 

(86.4)

(297.4)

(154.5)

108.3

436.2

459.0

512.7

439.3

FX

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(297.4)

(154.5)

108.3

436.2

459.0

512.7

439.3

359.6

Source: Company data, 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 £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

1,185 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 £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

1,185 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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