Zeal Network SE — Interim / Quarterly Report 2021

Aug 12, 2021

Investor Call Half-Yearly Report as of 30 June 2021

12 August 2021

Content

• 1. Summary
• 2. Financial Update
• 3. Guidance 2021
• 4. Key Take-Aways

Summary

6M 2021

• ➢ Continued growth at a weaker jackpot situation
• ➢ Increased billings and revenue
• ➢ Stable gross margin achieved
• ➢ Profitability significantly improved

➢ AGM

• ➢ All resolutions adopted at the AGM
• ➢ ZEAL Network SE undertakes to make a delisting purchase offer to the shareholders of Lotto24 AG
• ➢ ZEAL strengthens Management Board

Financial Update

ZEAL Income Statement 6M 2021 - condensed

in € thousand	6M 2021	6M 2020	Change in %
Revenue	44,517	43,570	+2.2
Personnel expenses	-10,249	-11,195	-8.5
Other operating expenses	-23,682	-30,073	-21.3
Marketing expenses	-13,761	-18,328	-24.9
Direct operating expenses	-5,135	-4,903	+4.7
Indirect operating expenses	-4,786	-6,842	-30.0
Adjusted EBITDA	10,668	3,250	+228.2
Amortisation and depreciation	-4,387	-5,164	-15.0
Non-recurring income and expenses	-	-108	n.a.
EBIT	6,281	-2,022	n.a.
Net profit after taxes	5,676	377	+1,405.6

	Comments
➢	Revenue: − Revenue increased by 2%
➢	Total costs of operations: − Total costs of operations decreased by 17% compared to previous year
	➢ Personnel expenses: − Number of employees decreased from 156 FTE's to 151 FTE's − The 8.5 % decrease in costs is mainly due to the revaluation of the long-term incentives to match the
	current share price ➢ Marketing expenses: − Decrease in Marketing expenses as a result of the significantly weaker jackpot development
	➢ Direct operating expenses: − Increase of 5% in line with 6% billings growth
	➢ Indirect operating expenses: − Decline in indirect operating expenses of 30%, mainly due to savings in services and external staff costs
➢	Adjusted EBITDA: − EBITDA increased by 228% driven by savings in marketing expenses and indirect operating expenses, as well as by the increase in revenue

Other performance indicators I

Other performance indicators II

New registered customers (Germany segment)

Other performance indicators III

• 1) MAU (monthly average active users is the number of unique users who have either purchased a ticket or participated in a draw in a given month (incl. free bets)) provides a measure of the Company's ability to retain and attract new customers.
• 2) ABPU (average billings per user per month is the average net billings received from each active customer in a given month. It is calculated by dividing monthly net billings by average monthly active users) and provides a measure of the Company's ability to increase loyalty and value from our customers.

Guidance 2021

in €m	2021 Guidance	2020 Actual
Billings (Germany segment)	At least 700	651.8
Revenue	At least 95	87.0
Adjusted EBITDA1)	At least 20	12.7

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

In fiscal year 2021, we plan to further expand our market leadership as an online provider of state lottery and other lottery products with the LOTTO24 and Tipp24 brands.

Depending on the general conditions, in particular the jackpot development, we expect billings of at least €700 million for the Germany segment. Following an exceptionally strong jackpot development in the previous year, we have assumed an average jackpot development, resulting in a lower growth rate than in the previous year.

Moreover, we expect revenue to be at least €95 million in fiscal year 2021. With similarly high marketing investments as in the previous year of €32 million to acquire new registered customers, adjusted EBITDA is expected to reach at least €20 million.

• Due to the positive liquidity situation of the ZEAL Group and the expected further increase in profitability, we have paid-out a total of €20.1 million (2019: €17.9 million) respectively €0.90 per share (2019: €0,80) in dividends to our shareholders in June 2021
• Depending on the economic development of the ZEAL Group, we have set ourselves the target of proposing a dividend of €1.00 per share to the shareholders at the Annual General Meeting in 2022

Key Take-Aways

Good billings growth despite comparatively low jackpots

Profitability significantly increased

New German State Treaty on Gambling came into force on 1 July 2021

ZEAL strengthens Management Board

Questions

Answers

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 12 August 2021. 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

Consolidated Income Statement and Balance Sheet in €k

t n		6M 2021	6M 2020	Change in %
e m	Revenue	44,517	43,570	+2.2
e at	Total costs of operations	-34,221	-41,094	-16.7
St	Adjusted EBITDA1)	10,668	3,250	+228.2
e m	EBIT	6,281	-2,022	n/a
o c	Profit before taxes	7,385	-215	n/a
n I	Net Profit	5,676	377	+1,405.6

		30/06/21	31/12/20	Change in %
et	Current assets	92,154	104,432	-11.8
e h	Non-current assets	385,278	389,902	-1.2
S e	ASSETS	477,432	494,334	-3.4
c n	Current liabilities	33,917	36,051	-5.9
a al	Non-current liabilities	62,078	62,721	-1.0
B	Equity	381,437	395,562	-3.6
	EQUITY & LIABILITIES	477,432	494,334	-3.4

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

	Germany	Other	Total
Revenue	41,831	2,686	44,517
Other operating income	370	2	372
EBITDA	9,775	893	10,668
Depreciation/amortisation	–	–	-4,387
EBIT	–	–	6,281
Financial result	–	–	1,196
Share of loss from associates			-92
EBT	–	–	7,385
Income tax	–	–	-1,710
Net Profit/loss	–	–	5,676

KPIs

				Broker Business
Billings (in €m)	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021
	112.0	153.3	134.0	140.0	174.4	157.3	181.0	163.3	169.5
ABPU (in €)	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021
	60.5	57.3	48.4	49.5	54.5	54.9	61.3	56.4	58.4
MAU (in k)	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021
	365	917	925	942	1,065	954	984	966	968

Publication of Annual Report 2020		25 March 2021
Publication of Q1 Report		7 May 2021
Annual General Meeting		1 June 2021
Publication of Half-Year Report		12 August 2021
Publication of Q3 Report		11 November 2021

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

frank.hoffmann@zealnetwork.de www.zealnetwork.de