ZEAL Network SE ( -) 
ZEAL shows first successes after Lotto24 acquisition in first half of 2019 
 
14-Aug-2019 / 07:36 CET/CEST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
*ZEAL shows first successes after Lotto24 acquisition in first half of 2019* 
 
  ? Lotto24 now fully consolidated 
 
  ? First cost synergies realised 
 
  ? EBITDA almost doubled 
 
  ? Guidance provided for 2019 
 
(London, 14 August 2019) In the first half of 2019, ZEAL Network SE ('ZEAL') 
successfully completed the acquisition of Lotto24 AG ('Lotto24') and thus 
established the ZEAL Group as the leading online provider of state-run 
lotteries in Germany. 
 
*Lotto24 now fully consolidated* 
ZEAL has fully consolidated Lotto24 AG since the acquisition date, 14 May 
2019. Billings and total operating performance (TOP) of the ZEAL Group 
increased by 26% to EUR 179.4 million (2018: EUR 141.9 million) and by 6% to 
EUR 79.3 million (2018: EUR 74.9 million) in the first six months of 2019. 
This was mainly driven by the positive contribution from Lotto24 but partly 
offset by negative effects from the closure of Lotto Network Limited and 
Ventura24 S.L.U. in November and December 2018. 
 
The jackpots of the lotteries 'Lotto 6aus49', EuroJackpot and EuroMillions 
only partially supported this growth: although the German lottery 'Lotto 
6aus49' developed better than in the previous year, the European lotteries 
EuroJackpot and EuroMillions were significantly below or only at the 
previous year's level. The EuroJackpot lottery, in particular, showed a 
comparatively weak trend with only one jackpot of EUR 90 million (2018: 
eight). 
 
*First cost synergies realized* 
As promised, ZEAL has also succeeded in significantly reducing its cost 
base: at EUR 11.2 million (2018: EUR 15.2 million) and EUR 36.8 million 
(2018: EUR 43.3 million), both personnel expenses and other operating 
expenses were significantly lower than in the previous year. The planned 
reduction in the number of employees from the original 350 to 271 also 
contributed to this. Since the necessary personnel measures have already 
been initiated and communicated to the employees concerned, the company is 
confident that it will have achieved its target of around 200 employees by 
mid-2020. 
 
Against this background, ZEAL confirms the planned annual cost synergies of 
at least EUR 57 million, of which 80% are to be realized after the end of 
the first year and 100% after the end of the second year following 
completion of the Lotto24 takeover. Even though around 60% of the savings - 
as well as the expected dis-synergies - will only take effect in the course 
of the business model change, the planned reductions in personnel expenses 
and other operating expenses within the combined company account for around 
40% of the expected total cost synergies. 
 
With marketing expenses of EUR 11.0 million in the first half of 2019 (2018: 
EUR 9.8 million), the ZEAL Group gained 377 thousand new registered 
customers (2018: 293 thousand); Lotto24 accounted for 42 thousand of these 
customers. At 370 thousand, average customer activity measured in monthly 
active users (MAU) was below the previous year's figure (2018: 401 thousand) 
due to the comparatively weak jackpot trend. However, average billings per 
user (ABPU) rose to EUR 61 (2018: EUR 56). 
 
*EBITDA almost doubled* 
With growth of 84% to EUR 31.2 million (2018: EUR 17.0 million), EBITDA of 
the ZEAL Group almost doubled. Since depreciation - mainly due to the 
capitalization of intangible assets after the acquisition of Lotto24 and the 
application of IFRS 16 - rose to EUR 2.5 million (2018: EUR 0.6 million), 
profitability of the new ZEAL Group is better reflected in EBITDA. The 
company will therefore concentrate on this key figure in future. 
EBIT rose by 30% to EUR 21.4 million (2018: EUR 16.4 million) despite 
extraordinary expenses of EUR 7.4 million (2018: EUR - million). At EUR 7.9 
million, exceptional items were incurred mainly in connection with the 
takeover of Lotto24, but were reduced by the reversal of provisions of EUR 
0.5 million in connection with the closure of Ventura24 S.L.U. After 
implementation costs of EUR 3.8 million were already incurred in 2018, EUR 
11.7 million of the total planned EUR 15 - 20 million have already been 
expensed as at 30 June 2019. 
 
*Guidance provided for 2019* 
In addition to the future jackpot development for major lottery products, 
the exact timing of the planned business model change - in connection with 
the takeover of Lotto24 AG in May 2019 - is of decisive importance for the 
ZEAL Group's forecast. Since the more profitable secondary lottery business 
will be converted to the brokerage business permitted in Germany from this 
date, ZEAL expects negative effects on revenue and profitability in the 
fourth quarter of 2019. 
 
Based on the expectation of a business model change in October 2019, the 
effects on the customer base that cannot be conclusively assessed from 
today's perspective and the big price pay-out on 10 August 2019, ZEAL 
anticipates TOP for the 2019 financial year significantly below the previous 
year (2018: EUR 160 million) and EBITDA between EUR 18 and 21 million (2018: 
EUR 48 million). 
 
The dividend policy for 2019 remains under review. 
 
'Even though we still have a lot of work to do, we are well on our way to 
achieving reunification with Lotto24 and the transformation of our German 
core business into online lottery brokerage as planned,' says Jonas 
Mattsson, CFO of ZEAL. 'We are convinced that the combination of the two 
companies will provide the best path to sustainable growth for the ZEAL 
Group and will lead to tangible added value for our customers, employees and 
shareholders'. 
 
The relocation of the corporate seat back to Germany is also planned for 
October 2019. 
 
*Selected financial key figures to 30 June 2019**:* 
 
                  *H1 2019*         *H1 2018** 
Billings          EUR 179.4 million EUR 141.9 million 
Statutory Revenue EUR 77.5 million  EUR 73.0 million 
TOP               EUR 79.3 million  EUR 74.9 million 
EBITDA            EUR 31.2 million  EUR 17.0 million 
Exceptional items EUR (7.4) million EUR - 
Statutory EBIT    EUR 21.3 million  EUR 16.4 million 
Net Profit        EUR 14.3 million  EUR 11.1 million 
EPS               EUR 1.21          EUR 1.32 
 
_*Not including Lotto24_ 
 
*Contact:* 
Frank Hoffmann 
Investor Relations Manager 
T: +44 (0)20 3739 7123 
frank.hoffmann@zeal-network.co.uk 
 
*About ZEAL Network SE*: 
 
1) _ZEAL is an international digital lottery group._ 
 
2) _The company was founded in 1999. Renamed as ZEAL Network SE in 2014. _ 
 
3) _The company is headquartered in London._ 
 
4) _Its shares are listed on the Prime Standard of the Frankfurt Stock 
Exchange._ 
 
5) _Since its incorporation, ZEAL Group has generated stakes of more than 
EUR3 billion and paid out more than EUR1.5 billion in winnings. _ 
 
6) _ZEAL Group includes all subsidiaries of ZEAL Network SE and the 
affiliated companies of the independent shareholding myLotto24 Ltd._ 
 
ISIN:           GB00BHD66J44 
Category Code:  IR 
TIDM:           - 
LEI Code:       391200EIRBXU4TUMMQ46 
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited 
                reviews 
Sequence No.:   16747 
EQS News ID:    857281 
 
End of Announcement EQS News Service

(END) Dow Jones Newswires

August 14, 2019 01:36 ET (05:36 GMT)

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