Zeal Network SE — Earnings Release 2019

May 7, 2019

ZEAL Network SE

Investor Call, Quarterly Release as of 31/03/19 London, 7 May 2019

This presentation has been produced by ZEAL Network SE (the "Company") and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person.

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Contents

• 1. ZEAL at a Glance
• 1. Business Update
• 1. Financial Update
• 1. Appendix

Q1 2019 at a glance // Satisfactory start

• ➢ Billings and TOP impacted by closure of Ventura24 and lower jackpot environment
• Billings down 7% YoY but less than 2% on like-for-like
• Adjusted EBIT up 26% YoY

➢ Further improvement net cash position

• Net cash up 36% YoY to €102.1m
• ➢ Efficient marketing activities
• New registered customers of 182k, up 30% vs 2018 mainly from German market
• ➢ Total costs of operations fell by 4.9m (-16%) vs 2018
• ➢ ZEAL on track to reunite with Lotto24 – Germany's largest private digital lottery broker

Business Update

Lottery Betting segment

• Billings marginally down for the year
• 25% more new registered customers acquired vs 2018
• Customer acquisition costs on the same level as in 2018
• UK lottery betting began scaletesting

Lottovate segment

• Spanish lottery services business continues to grow profitably
• Closure of Ventura24's consumer facing business impacted billings
• Acquired further 15% stake in Wshful – increased stake held by ZEAL to 20%
• Cost base reduced by 37% from €4.3m to €2.7m

Areas of focus

• Complete Lotto24 reunification

• Gain most possible profit out of current business model

• Continue improving marketing efficiency

Billings negatively impacted by closure of Ventura24

• Billings of €67.4m for the Group; down 7% on previous year
• − Driven by the closure of the Ventura24 B2C business and also a lower jackpot environment
• − On a like-for-like basis, billings decreased by only 2%
• Compared to Q4 2018 billings down 20% due to lower jackpot environment and the loss of the Christmas business

TOP and Revenue impacted by closure of Ventura24

• TOP and statutory revenue down 6% YoY
• Driven partly by weaker billings and closure of Ventura24 and Lotto Network; down 4% on a like-for-like basis
• TOP and statutory revenue down 18% and 16% respectively compared to Q4 2018 mainly due to lower billings

Like-for-like costs following downward trend

• Like-for-like costs down by 16% YoY
• Exceptional items of €1.8m due to the takeover offer of Lotto24 AG, offset by decrease of personnel expenses of €2.2m and other costs of operations of €3.0m

EBIT

• Adjusted EBIT* of €11.6m & Normalised Adjusted EBIT of €10.2m
• Statutory EBIT of €9.8m (2018: €9.2m)
• Net profit of €6.9m (2018: €6.3m)
• Earnings per share (EPS) up 11% to €0.83 (2018: €0.75)

Further improvement in net cash position

• Net Cash has increased by €27.1m YoY
• €21.4m increase in cash and short-term deposits
• €8.6m decrease in hedging reserve due to adjustments to the current hedging risk structure
• (€2.9m) change in other working capital balances.

¹ Definition of Net Cash: Cash (without pledged cash) + Short-term financial assets + Other current assets and prepaid expenses, less Trade payables, Other liabilities, Income tax liabilities, provisions, lease liability and a €21.4m hedging reserve

6 million customers and current combined billings of > €600m

Accelerating growth of online brokerage in Germany

Substantial de-risking and synergies of €57m p/a and €4m internal restructuring program

Well positioned to pursue international growth

ZEAL shareholders approved transaction on 18 Jan 2019

All closing conditions of the offer have been satisfied

93% of Lotto24 shares tendered to date

Transaction set to complete on 14 May 2019

Brexit Brexit uncertainty continues. EU and UK agree on Brexit postponement until end of October.

Case filed with the court. First court decision is expected soon. We remain confident that ultimately the outcome will be favourable for the Group.

Satisfactory start in 2019

Further improvements in cash position – up 36% vs 2018

Like-for-like costs on downward trend; our efforts paying off

Created a sustainable growth path by reuniting with Lotto24

Appendix

Anticipated transaction timeline

Consolidated Income Statement and Balance Sheet in €k

		31/03/19	31/03/18	Change in %
t n e m e at St e m o c n I	Revenue	36,462	38,700	(5.8)
	Total operating performance	37,373	39,830	(6.2)
	Total costs of operations	(27,597)	(30,671)	(10.0)
	EBITDA	12,201	9,458	+29.0
	EBIT adjusted	11,568	9,159	+26.3
	EBIT	9,776	9,159	+6.7
	Earnings before taxes	9,837	9,008	+9.2
	Profit	6,886	6,281	+9.6

et e h S e c n a al B		31/03/19	31/12/18	Change in %
	Current assets	158,474	162,280	(2.3)
	Non-current assets	13,371	6,932	+92.9
	ASSETS	171,845	169,212	+1.6
	Current liabilities	32,793	42,096	(22.1)
	Non-current liabilities	9,126	3,918	+132.9
	Equity	129,926	123,198	+5.5
	EQUITY & LIABILITIES	171,845	169,212	+1.6

Business Unit Segment Reporting as of 31/03/19 in €k

	Lottery betting	Lottovate	Business unit total	Normalisation adjustments	Other adjustments	Statutory
Revenue from secondary lottery	26,184	–	26,184	1,190	46	27,420
Revenue from instant win games	3,733	–	3,733	217	–	3,950
Revenue from ticket sales and commission	3,823	1,269	5,092	–	–	5,092
Other operating income	882	90	972	(35)	(26)	911
Total operating performance	34,622	1,359	35,981	1,372	20	37,373
EBITDA	12,188	(1,184)	11,004	1,372	(175)	12,201
Depreciation/amortisation	(496)	(137)	(633)	–	–	(633)
Adjusted EBIT	11,692	(1,321)	10,371	1,372	(175)	11,568
Exceptional costs	–	–	(1,792)	–	–	(1,792)
EBIT	–	–	8,579	1,372	(175)	9,776
Financial result	–	–	–	–	61	61
EBT	–	–	8,579	1,372	(114)	9,837
Income tax	–	–	–	–	(2,951)	(2,951)
Net Profit/loss	–	–	8,579	1,372	(3,065)	6,886

Statutory / Normalised Revenue & Adjusted EBIT in €k

e		31/03/19	31/03/18	Variance
u n e v e	Statutory	36,462	38,700	(2,238)
	Normalised	35,055	39,206	(4,151)
R	Variance	1,407	(506)

		31/03/19	31/03/18	Variance
T BI	Statutory	11,568	9,159	2,409
E	Normalised	10,196	10,244	(48)
	Variance	1,372	(1,085)

Billings (in €m)	Q1 2017	Q2 2017	Q3 2017	Q4 2017	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019
	64.1	64.0	61.7	72.4	68.3	65.5	67.8	77.7	67.2
ABPU (in €)	Q1 2017	Q2 2017	Q3 2017	Q4 2017	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019
	54.4	56.2	60.3	59.7	58.0	53.3	58.0	60.4	57.5
MAU (in k)	Q1 2017	Q2 2017	Q3 2017	Q4 2017	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019
	393	380	341	405	392	410	384	427	389

Publication of Q1 Report	7 May 2019
Annual General Meeting	27 June 2019
Publication of Q2 Report	14 August 2019
Publication of Q3 Report	13 November 2019

Frank Hoffmann, CEFA Investor Relations Manager

ZEAL 5 th Floor - One New Change London EC4M 9AF

T +44 (0) 203 739 7123 M +49 (0) 175 2673420 F +44 (0) 203 739 7099

frank.hoffmann@ZEAL-network.co.uk www.ZEAL-network.co.uk