Basile J. Neiadas CEO of OPAP

PM Communications: Looking at other blue chip companies in the Stock Exchange, OPAP has performed tremendously well. To what do you attribute the success of your company?

Mr. Neiadas: The success of the company is one thing and the trust of the shareholder is another. We started with the placement last year in May because we had to prepare the whole procedure and we had to organise a road show in Japan, the USA and Europe.

At that time, we were suffering from the illegal competition and losing sales in one of our major games, the famous and popular Stihima sport betting game. When I talk about illegal competition, I mean that it is illegal in Greece, but it can be legal in its country of origin. Some reputable Internet sites provide gambling online with companies based in England, or Ireland, which are exempted from the constraints within the European Union. Some companies are based in tax havens around the world and they are harder to prosecute. So practically in the first semester of 2005 we had lost 275 million € of sales to the illegal betting.

When I joined OPAP on the 23rd of March 2005, I immediately made this issue a top priority. There are two ways of fighting illegal competition. One is to enforce the law, and we are proud to have done this efficiently in comparison to state lotteries of other countries. The second is to rejuvenate the game and make it more competitive, because enforcing the law has some limits - you cannot always be 100% efficient. So we developed a very specific strategy to rejuvenate our old games. On top of that we presented a plan to completely replace our IT infrastructure through an international tender, which has become very famous. On the 16th of January we opened the proposals for this tender and we are very proud to say that the three largest companies in the world have participated - for us, this was very rewarding as we have designed and executed a very interesting call of interest.

The other strategy was the launching of a brand new game, Bingo Lotto, which we like a lot because it is an entertainment and amusement game. It has never been accused of being addictive and therefore, it can be heavily advertised. At the same time we decided to do the draws through a weekly show broadcasted live from a national TV channel. The two reasons why we like this game are: firstly, it targets to groups which do not frequent our agencies right now, like women and elderly people. Secondly, if we manage to have a successful game with a successful show, it will give us a good communication tool, which will help us not only to promote this game but also the other games of OPAP together with our social responsibility programmes. At the same time, by having a successful show you can generate significant income from third party advertising and cover a lot of your production costs.

This was all part of our strategy and we decided to communicate it to the institutional investors around the world. It appears that we were convincing and this was proven by the stock performance. In the beginning of the year the stock value was 20 €, the placement was very successful because the demand was covered 3.8 times. We collected 1.226 billion € with the market price of the stock of 24.14 €. It was by far the largest placement ever made by a public company in Greece and the government was very satisfied. But what is even more amazing is that after the placement on the 23rd of May, we see our stock today, only 7 months later, reaching 31€, rewarding our investors for their choice.

We have all the reasons to be satisfied and now we need to communicate the results of our efforts in 2005. We will present our 12-month results at the end of February, and at the conference in London on the 3rd of March I will be able to make some very interesting announcements, both to your readers and our existing investors, as well as to other potential investors in England.

PM Communications: And when do you expect the new IT system you are implementing to be up and running and what benefits do you expect it to bring to your organisation?

Mr. Neiadas: The16th of January was the deadline for the proposals and as I already mentioned, we had three very important proposals. The evaluation committee includes five university professors, the general manager of IT in OPAP and the representative of the managers and the work force of the company. Seven people will judge on which is the best offer for OPAP and this will take 2-3 months. From the moment we have the company that will take on the project, we need an additional 1-2 months to sign the very detailed contract of execution. And from the moment of signature, according to the call of interest this company has 12 months to produce the hardware and the software to implement it and install 15,500 terminals in our 5,500 agencies all over Greece and Cyprus. According to international practice, overnight we will switch off the old system and switch on the new one - so as not to lose even an hour of betting. We will be operating one of the most modern and complete IT systems not only in Europe but also in the world by mid 2007.

This system will be state of the art and both our agencies and the players will easily operate the terminal. There will be two types of terminals. One where the player can put his coupon in and immediately see if he has won and how much. The second is a complete self-service terminal where the player can put a banknote and his coupon in, and get his validation without any contact with the agent. We are also looking at improved rapid transactions and are including provisions for the system to support other types of betting, like interactive TV, mobile phone betting and internet betting, when and if they will be permitted by law. Because right now we are only playing through a printed coupon, but we want to look forward and be able to implement all modern ways of betting when and if they are approved by law.

PM Communications: Changes in the law will present opportunities. Hyatt Regency SA, Greece's biggest casino business, opened up Albania's first casino last month. Countries such as the U.K., Turkey, and Russia allow entry to foreign gaming companies for the first time. What opportunities do these new developments present for OPAP?

Mr. Neiadas: There are many opportunities for the future, like Internet betting for example. We can also introduce new games like backgammon, which is very popular in Greece. This new system can offer the Stihima game and our lotto game to the Greeks living abroad in countries where you don't have restrictions or in countries where you easily obtain a permission to operate, like UK or Australia (Melbourne is the third largest Greek city in terms of population!). Through satellite we can offer our games online to the Greeks living abroad. We have also other tremendous opportunities like introducing Kino, our second most popular game, in all types of boats that sail in Greece and the area around. We have the liners coming from Italy and Turkey to Greece, we have all the boats leaving Piraeus and going to the islands and we have many boats cruising in the Mediterranean. They could all be connected with satellite and passengers having trips from 2-7 hours could kill the time by playing our games. This would give us tremendous opportunities because we have approximately 13 agencies right now, but they surely get on a boat to go to their favourite island. All this will be possible with our new system.

There are also other possibilities; we could expand outside of Greece, however, it is not our top priority right now. In 2006 we would like to focus on performing well with IT, on rejuvenating our existing games and introducing successfully the Bingo Lotto. However, we do not close our eyes and ears to the opportunities outside of Greece, and later on we could also consider the possibility of International Lotto, like the Euro Millions in Western Europe. OPAP is in the position of creating International Lotto in the South East Mediterranean area. We already have some interests from the Italians, we could also include Turkey and maybe our northern neighbours, so we could create something international, attractive to our players too. We are very careful in doing one step at the time, without rushing into something unsuccessful, and we are looking forward to expanding our activities.

PM Communications: Is there anything else that you would highlight to the readers of The Telegraph or those attending the conference about the attractiveness of OPAP as an investment? I am thinking, for instance, of OPAP's concession to operate and manage any new sports betting games in Greece as well as the right of first refusal to operate and manage any new games permitted by the Hellenic Republic for the next fifteen years.

Mr. Neiadas: There is a lot of confusion on this issue. The monopoly does not belong to OPAP; it belongs to the government. The Ministers of Sport, with the exception of England and Ireland, always wanted to keep European borders closed for gambling. We respect this and do not offer our games for gambling to other countries, in the same way the Germans and Italians do not offer their games in Greece. The monopoly of the Greek government is given towards several companies. The exclusive rights to offer horseracing belongs to ODIE, which is an organisation owned by the government; the Scratch Lottery also belongs to the government, they haven't decided yet what to do with it; the Printed Lottery belongs to another organisation, called the National Organisation of Public Tickets and the government has also given 9 casino licenses to private corporations all over Greece. Finally OPAP has the sole concession for operating all numeric lottery games and all sport betting games, also having the right of first refusal for any other game proposed directly to the government, or to us. So, OPAP has a contract with the government for which it has paid six years ago. As long as the EU has the monopoly awarded to the governments of each country, and as long as the free flow of services excludes gambling from the general concept of the EU, we can say that this monopoly of the government is safeguarded and of course the government will respect the contract that it has with us. We don't see any threat in the near future of losing this exclusivity for Greece. We are very careful in meeting the requirements of the decisions of the Supreme Court all over Europe, that say that the responsible state lottery will have to return some of the income to the government, to cultural activities, to athletic activities in the form of sponsorships, taxes, donations, etc… Plus, I remind you that by law, the government has a stake in OPAP of 34% minimum, which allows us to give dividends to the government. And these dividends go by law to the account of the Ministry of Culture, which proves the social responsibility of the company.

At the same time we are very careful in instructing our agents not to accept players younger than 18. We haven't advertised Kino at all, because it is considered as an addictive game and so we handle it very carefully. We think that OPAP is following all the prerequisites to keep this exclusivity.

PM Communications: The markets welcomed your appointment as CEO of OPAP. Indeed, OPAP's stock climbed 2.7% to 23.52 Euros after you were named as CEO. Mr. Neiadas, what do you feel that you bring to this company?

Mr. Neiadas: I worked for 20 years in the pharmaceutical and chemical industry. In December 2001, I accepted the invitation of the Organising Committee of the Athens 2004 Olympic Games to become the General Manager of the Committee with particular responsibility for the services provided during the games. Allow me to remind you that this is a very important sector and in the past, many successful committees failed in this issue. Therefore, we focused a lot on the services, as we wanted everything to be perfect. We worked hard and it was a great experience for all of us. I must say that those were the three most interesting years of my career, because we were dealing with problems where no one could help us and we had to use all our imagination. We had to cooperate very close with the government, the citizens and the professionals to keep the standards very high and make it possible for a small country like Greece to organise successfully the games.

As soon as I finished my contract, the government honoured me by assigning me to OPAP. The gambling industry is very interesting and it has great opportunities for the future helped by the technological evolution. I was very enthusiastic, I read a lot and learnt many new things. I want to thank the people working in OPAP and the management who supported me a lot. They helped me understand what was going on and today we believe that we have a good team. When you like what you do, you can expect good results, and I love my job.

PM Communications: I'd like to give you the opportunity to send a final, direct message to the readers of The Sunday Telegraph. Please go ahead…

Mr. Neiadas: The majority of our foreign shareholders come from Great Britain, mainly from London, as it is a big financial centre. However, I want to say that we do not want to promise extraordinary things, and I have seen analyst reports that are so optimistic that we want to stop them a bit. We want to be on the safe side, it is better to say little and to do a lot. We want to improve slowly but steadily, and that's what we are doing right now and we hope that it will continue like that in the future.

PM Communications: And do you enjoy gambling yourself, Mr. Neiadas?

Mr. Neiadas: I must admit I am not very fanatic with gambling, but I had to learn and play in order to understand the game. I always joke by saying it is the only time in my career that I can enter a casino or gambling place in Greece and abroad for educational reasons! Some of the games are very amusing too, as you don't get an addiction or lose too much money. You can spend half an hour in one of our agencies playing Kino, or if there is a big Jackpot it is fun to target 10 millions. Of course there are not many people winning, but some did in the past. After a rolling Jackpot of 6-7 times you have prices of 10-12 million € and there is always somebody who wins. It is the industry of dreams and we are selling hope.

Not all the players play for large amounts, some players in the Stihima play very conservatively. We have a targeted pay out of 66%, this means every 100€ you play in the long run you get back the 66€ average. Many players play little amounts and win little amounts but it is the amusement that counts. It is better for us to have many of these players because we feel that we have sales to many people and not so many people lose much money.

That is how we do it and that is also how we target Bingo Lotto. It is going to be a cheap game, we are targeting 1 or 2 € per ticket and the prices will not be too big. Internationally the lotto prices are 5-10 000 €, which is not such a big winning challenge, but it is an amusing game and that's what we like to - amuse our players.

Greece is among the seven biggest gambling nations in the world. We are competing with Australia, Hong Kong and China. The Greeks like to gamble; we even gamble on the first day of the New Year, when we cut the pie with coin so see who is the lucky chap of the family! In specific periods, for example in Christmas time, we have increased the Kino hours in our agencies.

We have also created two big Jackpots from the winnings that were not collected during the year. The big winnings are always collected - I can assure you that! But many small amount winnings of 1-2 € are often not collected and according to the law, they must be returned to the players. That is how we financed very attractive prices of 4-5 million € for the Jackpots at the end of the year. The players were really in the mood of playing and liked it a lot.