OPAP hit by provision

OPAP, the lottery games operator, saw its net profits drop by 14.6 percent last year as it set aside a hefty provision to cover damage claims to Intralot resulting from its failure to launch betting on horse and greyhound racing. Net profits fell to 206.1 million euros from 241.1 million euros in 2001 after the company decided to set aside a provision of 65.5 million euros for the period April 2001 to December 2002. Vassilis Vlastarakis, Contalexis Financial Services analyst, said the provision had hit the company harder than expected. «Based on nine-month and half-year results, we had forecast a significantly higher full-year net income for OPAP,» he said. Investors similarly were less than happy with the result, as they took OPAP shares down 2.22 percent yesterday. Early this year, an arbitrator awarded Intralot 37.4 million euros in damages for each year of delay in the introduction of international horse and greyhound racing, with the ruling effective March 2001. OPAP has appealed the claim. Excluding the provision, earnings before interest, tax, depreciation and amortization rose 1.3 percent to 405.8 million euros. Revenues rose 9.3 percent to 1.97 billion euros, with growth driven by fixed-odds betting game Stoichima which had revenues of 1.51 billion euros, an increase of 15 percent. Two new games launched in November, Extra 5 and Super 3, generated revenues of 34 million euros against a target of 20-25 million euros. Analysts said a 37.4-million-euro provision this year could reduce 2003 earnings by about 8 percent. OPAP did not give forecasts for this year. It has proposed a dividend of 67 cents per share against 60 cents in 2001, making for a dividend yield of 7.6 percent based on yesterday’s stock valuation.