Zeal Network SE — Interim / Quarterly Report 2016

Nov 11, 2016

ZEAL Network SE

Investor Call Quarterly Report as of 30/09/16

London, 11 November 2016

Important Notice

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.

This document contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which the Company operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements, including assumptions, opinions and views of the Company or cited from third party sources, contained in this presentation are solely opinions and forecasts, which are uncertain and subject to risks. A multitude of factors can cause actual events to differ significantly from any anticipated development. The Company does not guarantee that the assumptions underlying such forward-looking statements are free from errors, nor does it 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 on, 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 Company or any of its subsidiary undertakings or any of such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.

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This presentation speaks as of November 2016. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients, shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.

This presentation is neither an offer for sale of securities nor an offer for purchase of securities. Securities may not be offered nor sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The Company does not intend to conduct any public offering of or for securities in the United States.

Highlights 9M 2016

€m Statutory	9M 2016	9M 2015	Change %
Billings	204.1	195.2	+5
Total operating performance	101.2	91.9	+10
EBIT	23.3	20.7	+12

€m Normalised1	9M 2016	9M 2015	Change %
Revenue	106.3	104.5	+2
EBIT	34.5	35.3	(2)

1 'Normalised' revenue is defined as statutory revenue adjusted for statistical fluctuation differences

• Billings showed underlying growth of 5% from €195m to €204m
• Double-digit growth in Total Operating Performance

• Strong EBIT increase of 12%

• 'Normalised'¹ Revenue increased by €1.8m to €106.3m despite the distraction from Euro 2016

• 'Normalised'¹ EBIT €34.5m decreased by €0.8m

September 2016, Management Presentation November 2016, Earnings Call Quarterly Report as of 30/09/16

Business Unit Update – B2C

September 2016, Management Presentation September 2016, Management Presentation November 2016, Earnings Call Quarterly Report as of 30/09/16

Business Unit Update - BBG

Other Topics

German

VAT

Continuously monitoring the development

No change in situation and no materially new information since Annual Report 2015

The future relationship between UK and EU remains unclear, but in all scenarios we expect that the impact will be minimal

September 2016, Management Presentation November 2016, Earnings Call Quarterly Report as of 30/09/16 Brexit

Development of Billings

in million €

• Billings increased by 5% compared to previous year
• Healthy underlying growth in core business
• Successful rollout of instant win games
• Higher average levels of spend from customer base

Development of Revenue and TOP in million €

1) Negatively impacted by high prize pay-outs

• Statutory Revenue increased by 45%

• Impacted by higher prize pay-outs in 2015 compared to 2016
• 'Normalised' Revenue increased by 2%

• 'Normalised' Revenue in Q3 increased by 8.8 % compared to Q2

• Total Operating Performance increased by 10% compared to previous year

• Successful rollout of instant win games and higher average levels of spend from the customer base

Development of Expenses

in million €

Personnel cost:

• Modest increase of €0.8m

Other Operating Expenses:

• Increase of €1.9m marketing spend
• Increase in direct costs of €5.1m
• €2.2m irrecoverable VAT
• €3.0m special jackpot insurances

Other:

• Negative forex movements of €2.3m on GBP
• Non-recurring charge of €1.3m (Geo investments)
• Partly offset by lower depreciation charges and other costs of operations (€4.6m)

Development of EBIT and Net Profit in million €

1) Negatively impacted by high prize pay-outs

2) Negatively impacted by non-cash charge for the Geo investments

• Statutory EBIT increased by 12% to €23.3m

• 'Normalised' EBIT decreased by €0.8m due to higher cost base explained previously

• Net profit increased by 89% compared to previous year due to stronger EBIT
• Consolidated tax rate of 30% (2015: 53%)
• Earnings per share (EPS) of €1.84 (2015: €0.97)

September 2016, Management Presentation September 2016, Management Presentation November 2016, Earnings Call Quarterly Report as of 30/09/16

Development of Net Cash

in million €

Net Cash after retention was impacted in the first 9 months by:

• €18m dividend payments in 9M 2016
• €17m from high payout in the 2nd Quarter
• Refund of €10m from the Spanish Tax Authority in 1st Quarter

¹ Definition of net cash: Cash (less pledged cash) + Short-term financial assets + Other current assets and prepaid expenses, less Trade payables, Other liabilities, Income tax liabilities and a €50m hedging reserve

Dividend Policy

Guidance 2016

Guidance 2016
Total Operating Performance	€ 125 - 135m
EBIT	€ 25 - 35m
Dividend	€ 2.80 per share

Appendix

Consolidated Income Statement and Balance Sheet

in €k

		30/09/16	30/09/15	Change in %
t n e	Revenue	75,338	51,869	+45.2
m e	Total operating performance	101,248	91,891	+10.2
at	Other operating expenses	(53,557)	(47,701)	+12.3
St e m o	EBITDA	25,046	26,022	(3.8)
	EBIT	23,255	20,686	+12.4
c n I	Earnings before taxes	22,056	17,502	+26.0
	Profit	15,439	8,161	+89.2

et		30/09/16	31/12/15	Change in %
	Current assets	128,168	132,156	(3.0)
e h	Non-current assets	6,999	8,198
S e c n a al B	ASSETS	135,167	140,354	(3.7)
	Current liabilities	39,355	43,711	(10.0)
	Non-current liabilities	2,243	1,474	+52.2
	Equity	93,569	95,169	(1.7)
	EQUITY & LIABILITIES	135,167	140,354	(3.7)

Business Unit Segment Reporting as of 30/09/16 in €k

	B2C	B2B/B2G	Business unit total	Reconcili ation to stats	- thereof normalisation adjustments	- thereof other	Statutory
	[A]	[B]	[A]+[B]=[C]	[D]+[E]=[F]	[D]	[E]	[C]+[F]
Revenue	101,532	4,635	106,167	(30,829)	(31,006)	177	75,338
Other operating income	2,137	248	2,385	23,525	19,754	3,771	25,910
Total operating performance	103,669	4,883	108,552	(7,304)	(11,252)	3,948	101,248
EBITDA	45,085	(7,188)	37,897	(12,851)	(11,252)	(1,599)	25,046
Depreciation/amortisation	(1,304)	(487)	(1,791)	-	-	-	(1,791)
EBIT	43,781	(7,675)	36,106	(12,851)	(11,252)	(1,599)	23,255
Financial result	-	-	-	(1,199)	-	(1,199)	(1,199)
EBT	-	-	36,106	(14,050)	(11,252)	(2,798)	22,056
Income tax	-	-	-	(6,617)	-	(6,617)	(6,617)
Net Profit/loss	-	-	36,106	(20,667)	(11,252)	(9,415)	15,439

Statutory / Normalised Revenue & EBIT in €k

e		9M 2016	9M 2015	Variance
u n	Statutory	75,338	51,869	23,469
e v e	Normalised	106,344	104,521	1,823
R	Variance	(31,006)	(52,652)

		9M 2016	9M 2015	Variance
T BI	Statutory	23,255	20,686	2,569
E	Normalised	34,507	35,253	(746)
	Variance	(11,252)	(14,567)

Publication of Q3 Report	11 November 2016
Publication of Annual Report 2016	March 2017
Publication of Q1 Report	May 2017
Annual General Meeting	June 2017
Publication of Q2 Report	August 2017
Publication of Q3 Report	November 2017

Frank Hoffmann 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