ZEAL publishes 2020 Annual Report, confirms dividend policy and provides guidance for 2021

• Preliminary figures for 2020 confirmed
• Targeted cost synergies fully implemented
• Market share expanded
• EUR 246 million for good causes

(Hamburg, 25 March 2021) ZEAL Network SE (lotto24.de, tipp24.com) today published its Annual Report 2020 and confirmed the strong preliminary figures for the financial year 2020 already published on 26 January 2021:
With growth of 40%, billings of the ZEAL Group rose to EUR 652.8 million in the fiscal year 2020 (2019: EUR 466.7 million). In addition to the first full consolidation of LOTTO24, the positive jackpot development and the associated strong acquisition of new customers contributed to this. For contractual reasons, the billings of the ONCE business in Spain are not included in the total. Due to the expected dis-synergies in the course of the business model change, revenue decreased by 23% year-on-year to EUR 87.0 million (2019: EUR 113.5 million). At 12.3%, the gross margin in the Germany segment was above the previous year's level (2019: 11.7%).

In addition, ZEAL was able to acquire 918 thousand new registered customers in the Germany segment (2019: 274 thousand) at acquisition costs per new registered customer (cost per lead, CPL) of EUR 27.79 (2019: EUR 33.64). The average number of monthly active users (MAU) and average billings per user (ABPU) also increased in the Germany segment to 986 thousand and EUR 55.07 respectively (2019: 640 thousand and EUR 48.99).
Due to the revenue dis-synergies associated with the change of business model and the increased marketing investment, adjusted EBITDA of EUR 12.7 million was below the previous year's figure (2019: EUR 29.4 million), as expected, but above the already raised guidance. At EUR 5.4 million, EBIT was also down on the previous year (2019: EUR 9.1 million). Due to the EUR 3.4 million increase in the financial result and the EUR 6.6 million reduction in tax charges, net profit of EUR 7.9 million was well above the prior-year figure (2019: EUR 1.7 million).

Targeted cost synergies fully implemented
ZEAL also succeeded in further reducing the cost base: personnel expenses and other operating expenses together fell by EUR 13.8 million to EUR 78.2 million in 2020 (2019: EUR 91.9 million) - despite an increase in marketing expenses of EUR 10.5 million to EUR 32.2 million in order to take advantage of the favourable market and jackpot environment (2019: EUR 21.7 million).
The planned annual synergies of at least EUR 57.0 million played a major role in achieving these cost savings. The aim was to reach 80% of these cost synergies within one year and 100% within two years of completing the LOTTO24 takeover - in other words, by May 2020 and May 2021. Due to the strict implementation of the planned measures, ZEAL achieved its target much earlier than planned: in May 2020, the Company had already generated 91% of the targeted cost synergies and realised 100% in the fourth quarter of 2020. With total expenses incurred for achieving the planned cost synergies of EUR 15.0 million, the ZEAL Group was also at the lower end of the targeted range of EUR 15.0 million to EUR 20.0 million and expects no further relevant costs.

"We have delivered on our promises and already fully realised the planned cost synergies in the fourth quarter 2020. At the same time we have grown our business and launched new products. We are delighted that all this is also reflected in our share price performance", says Jonas Mattsson, CFO of ZEAL Network SE.

Market share expanded
According to information published by the German Association of State Lottery Companies (DLTB) and the German Lottery Association (DLV), online revenue of the 16 state lottery companies and private lottery brokers with permits rose to EUR 1,587 million in 2020 (2019: EUR 1,035 million). This corresponds to a significantly increased online share of the total lottery market of 20% (2019: 14%). Whereas stakes generated online by all state-owned companies together grew by 40% to EUR 913 million (2019: EUR 651 million), ZEAL's online lottery brokerage business (including charity lotteries) with the brands LOTTO24 and the first full-year billings of Tipp24 rose by 78% to EUR 652 million (2019: EUR 366 million, full-year LOTTO24 billings and Tipp24 billings as of the Business Model Change on 15 October 2019). Consequently, the Company was able to further expand its online market leadership with a market share of 41% (2019: 35%).

EUR 246 million for good causes
According to a DLTB statement, approximately 40% of stakes are allocated to good causes. In 2020, over EUR 3.1 billion (2019: over EUR 2.9 billion) was thus transferred to the respective state budgets or the beneficiaries in the form of taxes and duties. This corresponds to over EUR 8.6 million per day for good causes throughout Germany - money which is vital for the financing of numerous projects in the field of welfare, sport and culture, as well as landmark and environmental protection. In the case of charity lotteries, such as 'Deutsche Fernsehlotterie' and 'freiheit+', at least 47% of stakes are channelled to good causes via taxes and duties. In the fiscal year 2020, ZEAL therefore provided a total of EUR 246 million for important social and community projects through its brokerage activities (2019: EUR 94 million).

83 big winners, of which nine millionaires
Many of our LOTTO24 and Tipp24 customers were among the winners once again this year: with an overall pay-out of around EUR 237 million, a total of 1.7 million customers were delighted to receive the news of their winnings. The 83 big winners with prizes of EUR 100,000 or more include nine newly created millionaires - two of them from playing the new charity lottery 'freiheit+'. The largest single prize of almost EUR 13 million went to a winner in Saxony-Anhalt.

Dividend policy confirmed
Due to the positive liquidity situation of the ZEAL Group and the expected further increase in profitability, ZEAL will propose a total pay-out of EUR 20.2 million (2019: EUR 17.9 million) to the Annual General Meeting on 1 June 2021. This corresponds to a dividend of EUR 0.90 per share for the fiscal year 2020 (2019: EUR 0.80). Depending on the economic development of the ZEAL Group, the Company has set itself the target, in line with the published dividend policy, of proposing a dividend of EUR 1.00 per share to the shareholders at the Annual General Meeting in 2022.

Guidance 2021
In fiscal year 2021, ZEAL plans to further expand its market leadership as an online provider of state lottery and other permitted lottery products. Depending on the general conditions, in particular the jackpot development, the Company expects billings of at least €700 million for the Germany segment. Following exceptionally strong jackpots in the previous year, ZEAL has assumed an average jackpot development, resulting in a lower growth rate than in the previous year. Moreover, the Company expects revenue to be at least €95 million in fiscal year 2021. With similarly high marketing investments as in the previous year of around €32 million to acquire new registered customers, adjusted EBITDA is expected to reach at least €20 million.

Dr Helmut Becker, CEO of ZEAL Network SE: "With our combination of commercially sensible marketing investments, high new customer growth, powerful technology and exciting product innovations, we have set the course for a highly promising future."

About ZEAL Network SE: ZEAL Network SE, Germany's leading online provider of lottery products, is a Hamburg based e-commerce Group which mainly brokers customers' tickets to the state lottery companies through the brands lotto24.de and tipp24.com, for which it receives a commission. The offerings include among others »LOTTO 6aus49«, »Spiel 77«, 'Super 6', 'EuroJackpot', 'GlücksSpirale', lotto clubs, 'Keno', the 'Deutsche Fernsehlotterie' and 'freiheit+'. Founded in Germany in 1999, it was initially set up as a lottery broker. In 2005, it was floated on the Frankfurt Stock Exchange (Prime Standard) and became one of the most successful initial public offerings (IPOs) in Germany at the time. In 2009, the Group changed its focus from lottery brokerage to the secondary lottery business. It moved its registered office to London and was renamed as ZEAL Network SE in November 2014. In May 2019, ZEAL completed the takeover of LOTTO24 AG, returned its Tipp24 secondary lottery to the German brokerage business in October 2019 and relocated its registered office back to Germany in the same month.

Contact:
Frank Hoffmann
Investor Relations
T: +49 (0)40 809036042
frank.hoffmann@zealnetwork.de