Earnings Call

Annual Report 2021

24 March 2022

Content

SUMMARY

BUSINESS UPDATE

ESG

FINANCIAL UPDATE

GUIDANCE

KEY TAKE-AWAYS

ZEAL NETWORK SE EARNINGS CALL | MARCH 2022 2

Summary 12M 2021

➢ Stable business despite a weak jackpot situation
Strong improvement in profitability
➢ Successful stock market withdrawal of LOTTO24 AG
➢ The largest price ever paid out by ZEAL – €49m for a winner in Bavaria
➢ Investing in future growth
Launched second charity lottery
Applied for games license
Launched first B2B deal. Partnership for instant win games with LOTTO Hessen
Successfully renegotiated our contract with our Spanish partner ONCE

Ambition

DEFINE THE FUTURE OF LOTTERY

ZEAL is a lottery technology company. We combine user insights, lottery expertise and eCommerce excellence to define the future of lottery.

Purpose

WE LET PEOPLE DREAM. WE CONTRIBUTE TO SOCIETY.

With our work we let people dream big. And with every lottery-ticket sold we contribute to society. Either directly by supporting social causes through social lotteries or indirectly through state lotteries.

Second charity lottery successfully launched

Deutsche Traumhauslotterie

Draw every week on Thursday at 6:00 p.m.
€ 1 per ticket for a good cause
Winning probability 1 : 4 million
7 prize classes
Jackpot: Dream house worth € 1 million
Unique lottery in Germany that focuses on a dream home

freiheit+

Draw every week on Monday at 6:00 p.m.
30% per ticket for a good cause
Winning probability 1 : 7 million
5 prize classes
Jackpot: Instant prize of € 250,000 plus a monthly permanent prize of € 5,000 for 15 years

Partnership with Lotto Hessen

Lotto Hessen is selling games provided by ZEAL to their online customers
Lotto Hessen got the approval for these games by the hessian gambling authority to be operated as 'instant lotteries' ('Sofortlotterien')
Revenue Share based Games-as-a-Service Deal (tiered share depending on volume)
GoLive on Sep 29th 2021 on lotto-hessen.de and LOTTO24 sites (brokerage)
14 Games went live till end of 2021; more games will likely follow in 2022
Out of these 3 games are owned by ZEAL while 11 games are developed by third party suppliers who are integrated in ZEAL's Remote Game Service
Initial term of the contract: 2 years (automatically extended to add. 12 months when not terminated before)

Market leadership1)

1) According to information of the German Association of State Lottery Companies (»Deutscher Lotto- und Totoblock, DLTB«) and calculations of the German Lottery Association (»Deutscher Lottoverband, DLV«)

2) Total sales of the DLTB lottery market: 2013: €7.0 billion, 2020: €7.9 billion, 2021: €7.9 billion

Current regulation - Licensing procedure

New GlüStV 2021

No expiry date (can't be terminated before 2028)
Opportunities: Games, Sports Betting

Games License

All documents submitted
All requirements fulfilled
Licence expected in Q2/2022

Broker License

Lotto24 broker permit valid until June 2022
All documents submitted
All requirements fulfilled
Licence expected in Q2/2022

ESG

Sustainability at ZEAL

Corporate strategy at a glance

Even though our products are of limited risk, we have the highest demands with regards to preventing addiction and ensuring responsible gambling.

Products with social added value

40% of every lottery-ticket sold is passed on to the public through taxes and duties. Our brokerage services generated €246m for good causes in 2021.

Sustainable growth

We ensure our long-term growth by investing in our people, innovative technologies and an attractive, secure gaming experience.

Our customers win

High social acceptance: Number lotteries are by far the most popular form of gambling in Germany: more than ten million Germans play them every week.

Low risk: According to the results of various studies, this type of gambling and other classic lotteries only pose a low risk of addiction.

How we care: We have developed a social concept comprising a variety of measures that address the risks of addiction, fraud, manipulation, and crime, and prevent the socially harmful effects of gambling.

Focus actions:

General terms and conditions

• Easily accessible information on control mechanisms, exclusions, risks, and support programs for players

Gaming history

• Informing of customers about gaming history with cumulative stakes, winnings, and losses each day when they first log in

Limits

Monthly deposit limit of € 1,000
Individually selectable betting, deposit, and loss limits

Exclusion

Multi-stage age verification process to exclude minors
Procedure to easily block players with problematic gaming behavior

We rewarded prize money for 1.3 million customers totaling €293m in 2021

Our environment wins

We contribute to climate and environmental protection. Our main fields of action are:

Energy consumption

ZEAL more than halved its electricity consumption over the past three years

We significantly increased our share of renewable energies

2020 2021 100% (data center) 100% (data center)

72% (office site) 98% (office site)

Waste

We reduced our packaging waste

1.16 tons 1.12 tons

2020 2021

ZEAL reduced its paper consumption with the introduction of various digital tools

IT hardware

ZEAL focuses on durability and energy efficiency when procuring IT hardware

We donate old hardware devices, e.g. to schools, to extend the lify cycle

Financial Update

Jackpot development - only 3 peaks in 2021 vs. 11 in 2020

in €m	Average	Peak
YTD 2021	10.8	0
YTD 2020	13.4	5

* Since 23 September 2020, the amount of the jackpot has been limited to a maximum of 45 million euros each and is no longer paid out after twelve consecutive draws

YTD 2021	34	3
YTD 2020	41	6

MAU varies up to 300.000 depending on jackpot situation

ZEAL Income Statement 12M 2021 - condensed

	in € thousand	12M 2021	12M 2020	Change in %
	Revenue + Income from jackpot insurance	86,784	87,023	-0.3
	Personnel expenses	-19,048	-21,870	-12.9
	Other operating expenses	-41,115	-56,292	-27.0
nt e m e at St e m o c n I	Marketing expenses	-22,359	-32,183	-30.5
	Direct operating expenses	-9,579	-10,840	-11.6
	Indirect operating expenses	-9,177	-13,269	-30.8
	Adjusted EBITDA	27,734	12,744	+117.6
	Amortisation and depreciation	-8,689	-11,956	-27.3
	Non-recurring income and expenses	-	+4,587	n.a.
	EBIT	19,045	5,375	+254.3
	Net profit after taxes	11,404	7,893	+44.5

Comments
➢	Revenue: • Revenue and Income from jackpot insurance was at the previous year's level
➢	Total costs of operations: • Total costs of operations decreased by 23% compared to previous year
	➢ Personnel expenses: • The 13% decrease in costs is mainly due to the revaluation of the long-term incentives to match the current share price and the reduction of employees from 161 to 155 FTE's
	➢ Marketing expenses: • Decrease in Marketing expenses as a result of the significantly weaker jackpot development
	➢ Direct operating expenses: • Decrease of 12% due in part to the termination of software licenses and savings on telecommunication costs
	➢ Indirect operating expenses: • Decline in indirect operating expenses of 31%, mainly due to savings in services and external staff costs as

➢ Adjusted EBITDA:

• EBITDA increased by 118% driven by savings Total costs of operations

well as the release of provisions in respect of litigation.

ZEAL NETWORK SE EARNINGS CALL | MARCH 2022 17

Other performance indicators I

Despite weak jackpots, billings maintained at last year's level

Gross margin maintained at last years level despite lower sales of premium products

Other performance indicators II

More than 500k customers acquired despite significantly lower marketing investments

Other performance indicators III

Dividend 2022

Dividend Proposal

ZEAL will propose to the Annual General Meeting on 30 June 2022 the payment of a dividend of € 2.10 (2020: € 0.90 per share), which means a distribution to the shareholders of approximately € 47 million. This will consist of a basic dividend of € 1.00 and a special dividend of € 1.10.

Management undertakes to constantly review its dividend policy in line with the performance of the company.

Total pay-out p.a. in € million

The payment of the special dividend in 2022 is a further step towards optimising the company's capital structure.

Guidance 2022

Consolidated Guidance 2022

in €m	2022 Guidance	2021 Actual	Growth rates
Billings (Germany segment)	at least 750	656.5	> +14%
Revenue	at least 105	86.5	> +21%
EBITDA	at least 30	27.7	> +8% > +60%1)

1) Adjusted for one-off effects and marketing savings in 2021

In our fiscal year 2022, we plan to maintain our position as the leading online provider of lottery products. Depending on the general conditions – and an average jackpot development – we anticipate billings of at least €750 million for the Germany segment. Moreover, we expect revenue to be at least €105 million in fiscal year 2022. Adjusted EBITDA is expected to reach at least €30 million. Compared to the previous year, we plan to invest significantly more in the acquisition of new customers and expect marketing expenses of around €30 million.

Key Take-Aways

KEY TAKE AWAYS

Profitability significantly increased

Repayment of €47m to shareholders

Successful stock market withdrawal of LOTTO24 AG

We adapt our marketing measures to the respective market situation

Investing in future growth

Questions

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Answers

Disclaimer

The information contained herein must not be relied upon for any purpose and may not be redistributed, reproduced, published, or passed on to any other person or used in whole or in part for any other purpose.

This document contains certain forward-looking statements relating to the businesses, financial performance and results of the Companies and/or the industry in which the Companies operate. Such forward-looking statements, including assumptions, opinions and views of the Companies and statements from third parties, are uncertain and subject to risks. A multitude of factors can cause actual events to differ significantly from any anticipated development. The Companies do not guarantee that the assumptions underlying such forward-looking statements are free from errors, nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments.

No representation or warranty (express or implied) is made as to, and no reliance should be placed upon, any information, including projections, estimates, targets and opinions contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Companies or any of their subsidiary undertakings or any of such person's officers, employees or advisors accepts any liability whatsoever arising directly or indirectly from the use of this document.

By accepting this presentation, you acknowledge that you will be solely responsible for your own assessment of the market and the market position of each of the Companies and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of each of the Companies' businesses.

This presentation is for information only and shall not constitute investment advice. It is not intended for solicitation purposes but only for use as general information..

This presentation is dated March 2022. Neither the delivery of this presentation nor any further discussions of any of the Companies with any of the recipients, shall, under any circumstances, create any implication that there has been no change in the affairs of any of the Companies since such date.

Appendix

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Consolidated Income Statement and Balance Sheet in €k

		12M 2021	12M 2020	Change in %
t n e m	Revenue + Income from jackpot insurance	86,784	87,023	-0.3
e at	Total costs of operations	-60,210	-77,912	-22.7
St e	Adjusted EBITDA1)	27,734	12,744	+117.6
m o	EBIT	19,045	5,375	+254.3
c n	Profit before taxes	16,654	7,856	+112.0
I	Net Profit	11,404	7,893	+44.5

		31/12/21	31/12/20	Change in %
et	Current assets	176,331	104,432	+68.8
e h	Non -current assets	327,067	387,601	-15.6
S e	ASSETS	503,398	492,034	+2.3
c n	Current liabilities	48,660	36,051	+35.0
a al	Non -current liabilities	69,796	62,721	+11.3
B	Equity	384,942	393,262	-2.1
	EQUITY & LIABILITIES	503,398	492,034	+2.3

1) Earnings before interest, taxes, depreciation, amortisation and non -recurring expenses

Business Unit Segment Reporting as of 31/12/21 in €k

	Germany	Other	Total
Revenue	78,473	4,862	83,334
Other operating income	4,596	14	4,610
EBITDA	26,493	1,242	27,734
Depreciation/amortisation	–	–	-8,689
EBIT	–	–	19,045
Financial result	–	–	-2,091
Share of loss from associates			-300
EBT	–	–	16,654
Income tax	–	–	-5,251
Net Profit/loss	–	–	11,404

KPIs

Billings (in €m)	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021	Q3 2021	Q4 2021
	134.5	140.0	174.4	157.3	181.0	163.3	169.5	160.4	163.3

ABPU (in €)	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021	Q3 2021	Q4 2021
	48.4	49.5	54.5	54.9	61.3	56.3	58.3	54.4	58.0

MAU (in k)	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021	Q3 2021	Q4 2021
	925	942	1,065	954	984	966	968	982	938

CPL (in €)	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021	Q3 2021	Q4 2021
	41.31	26.00	27.77	28,96	28.79	33.48	32.12	17.65	29.61

Financial calendar 2022

Publication of Annual Report 2021	24 March 2022
Publication of Q1 Quarterly Statement	12 May 2022
Annual General Meeting	30 June 2022
Publication of Half-Year Report	11 August 2022
Publication of Q3 Quarterly Statement	10 November 2022

Contact:

Frank Hoffmann, CEFA

Senior Investor Relations Manager

ZEAL

Straßenbahnring 11 20251 Hamburg

T +49 (0)40 809 036 - 042 M +49 (0)175 267 3420

[email protected] www.zealnetwork.de