Zeal Network SE — Interim / Quarterly Report 2017

Aug 11, 2017

ZEAL Network SE

Investor Call H1 Report as of 30 June 2017

London, 11 August 2017

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.

ZEAL Group includes all subsidiaries of ZEAL Network SE and the companies of the independent shareholding MyLotto24 Ltd.

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 contained in this presentation, including assumptions, opinions and views of the Company or cited from third party sources, 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 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 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.

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

This document does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for or purchase any securities, and neither this document nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever.

This presentation is relevant as of August 2017. 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.

Contents

• 1. ZEAL at a Glance
• 1. Business Unit Update
• B2C
• B2B/B2G
• New Ventures
• Other Topics
• 1. Financial Update
• 1. 2017 Guidance
• 1. Appendix

Expansion of B2C product portfolio with "Danke Million" & "Cash4Life"

B2B/B2G Business Unit – Norway is launched!

Second strategic acquisition - Omaze

Continued investment in our internationalisation strategy

B2C Update

Billings (in €m)	H1	Q2
2017	128.1	64.1
2016	124.1	62.6
ABPU (in €)	H1	Q2
2017	55.24	56.27
2016	57.26	57.65
MAU (in k)	H1	Q2
2017	386.5	380.3
2016	361.0	361.3

Highlights KPIs What's to come

Continue our successful Internationalisation strategy

Further expansion of product portfolio

BBG Update

New Ventures Update

By strategically placing ourselves at the forefront of industry developments, we will be best placed to take advantage of the next evolution of this emerging industry

Other Topics

German VAT

Case filed with the court. No significant news.

We remain confident that the outcome will be favourable for the Group – even though it will take several years to be ultimately resolved

Following the invocation of Article 50, the Company is making the Brexit necessary preparations to ensure that the impact will be minimal

• Continued underlying growth
• Continued marketing investment into 2017 is reaping rewards
• More customers are playing with us

Development of Revenue and TOP in million €

Total Operating

1) Negatively impacted by high prize pay-outs 1)

Due to rounding of quarterly results, there may be minor differences between the figures in the graphs above and those presented in the Interim Financial report

• Statutory Revenue increased by more than 100% for Q2 due to high prize pay-outs in Q2 2016
• 'Normalised' Revenue increased by 7% for Q2

• Total Operating Performance increased 79% compared to previous period driven by increased customer activity, as well as high prize pay-outs in Q2 2016

Development of Expenses in million €

Expenses increased by €6.4m in Q2 relative to the prior year comparative period– primarily made up of:

• Increased marketing investment of €0.7m. Further marketing investments are expected in the forthcoming quarters
• Increase in direct (mainly hedging) costs of €5.7m
• Positive forex movements on GBP of €0.5m
• Reduction in other costs of operation of €0.9m
• Increase in personnel expenses of €1.4m

Development of EBIT and Net Profit in million €

(2.4) 9.1 10.6 0.2 5.4 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 >100% 1 1

• Statutory EBIT increased to €7.7m for Q2

• 'Normalised' EBIT of €5.7m in Q2

• Net profit increase of €7.8m for Q2 compared to previous comparative period

• Earnings per share (EPS) of €0.65 for Q2 (2016: (€0.28))

1) Negatively impacted by high prize pay-outs

Due to rounding of quarterly results, there may be minor differences between the figures in the graphs above and those presented in the Interim Financial report

Development of Net Cash in million €

Net Cash was impacted since Q1 2017 by €3.1m net cash inflow, including the following significant cash events:

• €1.5m receipt (inflow) from Lotto24
• €1.8m investment (outflow) in Omaze

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

Guidance 2017	Guidance
Total Operating Performance	€ 130 - 140m
EBIT	€ 15 - 25m
Dividend	€ 1.00 per share

Appendix

Consolidated Income Statement and Balance Sheet as at 30 June 2017 in €k

		H1 2017	H1 2016	Change in %
t n e	Revenue	62,351	38,330	+62.7
m e	Total operating performance	64,976	61,444	+5.7
at	Other operating expenses	(40,340)	(33,613)	+20.0
St e	EBITDA	8,554	11,640	(26.5)
m o	EBIT	7,899	10,264	(23.0)
c n I	Profit before income tax	8,000	9,041	(11.5)
	Profit	5,600	6,329	(11.5)

		30 June 2017	31 December 2016	Change in %
et	Current assets	130,408	131,339	(0.7)
e h	Non-current assets	6,747	4,677	+44.3
S e	ASSETS	137,155	136,016	+0.8
c n	Current liabilities	30,932	36,259	(14.7)
a al	Non-current liabilities	3,055	2,199	+38.9
B	Equity	103,168	97,558	+5.8
	EQUITY & LIABILITIES	137,155	136,016	+0.8

	B2C [A]	B2B/B2G [B]	Business unit total [A]+[B]=[C]	Normalisation and other adjustments [D]+[E]=[F]	Normalisation adjustments [D]	Other Adjustments [E]	Statutory [C]+[F]
Revenue	67,817	3,572	71,389	(9,038)	(9,150)	112	62,351
Other operating income	3,049	167	3,216	(591)	(609)	18	2,625
Total operating performance (TOP)	70,866	3,739	74,605	(9,629)	(9,759)	130	64,976
EBITDA	23,466	(5,114)	18,352	(9,798)	(9,759)	(39)	8,554
Depreciation and amortisation	(501)	(154)	(655)	-	-	-	(655)
EBIT	22,965	(5,268)	17,697	(9,798)	(9,759)	(39)	7,899
Financing and investment result	-	-	-	101	-	101	101
EBT	-	-	17,697	(9,697)	(9,759)	62	8,000
Income tax	-	-	-	(2,400)	-	(2,400)	(2,400)
Profit (Loss) for the period	-	-	17,697	(12,097)	(9,759)	(2,338)	5,600

e		H1 2017	H1 2016	Change
u n	Statutory	62,351	38,330	24,021
e v e	Normalised	71,501	69,473	2,028
R	Normalisation Effect	(9,150)	(31,143)

		H1 2017	H1 2016	Change
T BI	Statutory	7,899	10,264	(2,365)
E	Normalised	17,658	21,377	(3,719)
	Normalisation Effect	(9,759)	(11,113)

Publication of Annual Report 2016	24 March 2017
Publication of Q1 Report	12 May 2017
Annual General Meeting	30 June 2017
Publication of Q2 Report	11 August 2017
Publication of Q3 Report	10 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