OPAP ups interim dividend

OPAP, Europe’s largest gaming company, will pay a higher interim dividend this year after a better performance of its flagship fixed-odds betting game Stoichima, OPAP Chief Executive Vassilis Neiadas said yesterday. OPAP, which holds a monopoly in the Greek gaming market until 2020, is seeking to expand outside Greece and to offer non-gaming services through its 5,400 outlets, such as payment services for utility bills, to secure new revenue sources. «The interim dividend for the 2006 financial year will possibly be slightly higher than some market expectations of 0.50 to 0.52 euro per share,» Neiadas told Reuters in an interview. OPAP, which has a market value of 9.2 billion euros ($11.7 billion), paid a 0.48 euro per share interim dividend in 2005. «We see the strong trends Stoichima posted in the first six months of the year continuing in the nine months as well, after the addition of Greek soccer matches in the coupon,» he said. OPAP added Greek soccer matches to Stoichima in August to make it more attractive to Greek players. Stoichima, which also offers bets on foreign soccer matches and other sporting events, accounted for about half of OPAP’s 2.3 billion euros in revenues in the first half of this year. Cost savings OPAP decided earlier in the year to take the operation of the game in-house from 2007 in order to squeeze costs. Last week, the betting monopoly took a further step to ensure the success of the move in-house, agreeing to pay lottery firm Intralot 65 million euros to help with the transition. Intralot currently manages Stoichima and gets a commission of about 10 percent on the game’s sales. Neiadas said the deal would boost OPAP’s financial results in the coming years, as the company was expected to save more than half of Stoichima’s current operating costs by 2010. The contract with Intralot expires in January next year and OPAP had the right to renew it for another three years. «A three-year renewal of the current contract would have resulted in a much higher cost for OPAP,» Neiadas said. «Now, the cost for the game’s risk management could be in the range of 1.5 to 2.0 percent of Stoichima sales at the end of the next three years.» He said OPAP would be interested in taking over the operation of a scratch ticket lottery game in Greece if the government launched a tender under favourable terms. «The scratch ticket would be an additional (source of) revenue for OPAP and it is in line with the philosophy of the lottery games it currently operates,» he said. Greek scratch ticket lotteries produced revenues of about 180 million euros in 2002. The government has launched two tenders since 2003, when Intralot’s contract to operate the game ended. Both were canceled due to lack of interest. OPAP trades at 17.3 times estimated 2006 earnings compared to multiples of 17 for British bookmaker Ladbrokes and and 14 for William Hill, according to Reuters Estimates.

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