ZEAL significantly increases profitability - Important milestones for further growth reached

Mar 24, 2022 7:30 AM

ZEAL Network SE / Key word(s): Annual Report
ZEAL significantly increases profitability - Important milestones for further growth reached

24.03.2022 / 07:30
The issuer is solely responsible for the content of this announcement.

ZEAL significantly increases profitability - Important milestones for further growth reached

  • Stable business volume despite weak jackpot situation
  • Adjusted EBITDA of € 27.7 million (2020: € 12.7 million)
  • € 246 million generated for the common good
  • ZEAL proposes € 2.10 dividend to shareholders

(Hamburg, 24 March 2022) ZEAL Network SE (LOTTO24, Tipp24) published today its Annual Report 2021 and confirmed another successful financial year in a weak market environment: ZEAL increased billings slightly by 1% to € 656.5 million 1 in 2021 (2020: € 652.8 million). Revenues (plus insurance reimbursements to offset jackpot winnings from the freiheit+ charity lottery, which are included in other operating income) remained stable at € 86.8 million (2020: € 87.0 million 2). At 12.2%, the gross margin remained at the previous year's level (2020: 12.3%). Despite unfavourable market development due to few attractive jackpots, ZEAL managed to keep the business volume stable and gain 544 thousand new registered customers (2020: 918 thousand). ZEAL has thus built a good foundation to grow further as soon as the jackpot environment becomes more attractive.

Profitability significantly increased
As ZEAL's marketing activities are designed in line with the respective jackpot development, lower expenditures in turn led to an increase in profitability. The adjusted EBITDA of € 27.7 million therefore significantly exceeded the previous year's figure of € 12.7 million. EBIT, at € 19.0 million, was also significantly above its previous year's value (2020: € 5.4 million), as was the net profit, which rose to € 11.4 million (2020: € 7.9 million) despite the € 4.8 million decrease in the financial result and the € 5.3 million increase in the tax burden.

"In 2021 we have proven that we can be successful even in a difficult market environment," says Jonas Mattsson, CFO of ZEAL Network SE.

Costs trimmed for efficiency
Due to the weak jackpot situation, opportunities to acquire a higher number of new customers while maintaining good advertising effectiveness were limited. In this respect, total marketing expenses were significantly lower than the previous year at € 22.4 million in the 2021 financial year (2020: € 32.2 million), with a comparable CPL. As soon as the jackpot environment becomes more attractive, ZEAL plans to invest more in marketing measures again. At the same time, ZEAL has also succeeded in achieving cost savings in other areas, as a result of which personnel costs and other operating expenses (including marketing) together fell by € 18.0 million to € 60.2 million in 2021 (2020: € 78.2 million).

Key milestones achieved
ZEAL has reached important milestones for the further development of its business: On the one hand, the Group has successfully converted its German internet portals to the legal and technical requirements of the new Gambling State Treaty and is thus well prepared for an expansion of its offering into other gambling segments such as virtual slot machines. On the other hand, ZEAL has launched a second new charity lottery in the German market after "freiheit+" with the "German Dream House Lottery", thus strengthening its position as the largest provider of online lotteries in Germany.

"Overall, we see ourselves well equipped to successfully continue ZEAL's growth in the future," says Helmut Becker, CEO of ZEAL Network SE.

Stock market withdrawal of LOTTO24 AG ("delisting")
On 21 July 2021, ZEAL decided to offer to the shareholders of LOTTO24 AG to acquire all shares in LOTTO24 AG not directly held by ZEAL Network SE against payment of € 380.97 per LOTTO24 share. The purpose of this public delisting offer was to enable LOTTO24 AG to apply for the revocation of the admission of the LOTTO24 shares to trading on the stock exchange. The acceptance period ran from 16 August 2021 to 13 September 2021 and the offer was accepted for a total of 22,834 LOTTO24 shares (corresponding to 1.42% of the share capital). At the end of 13 September 2021, the listing of the LOTTO24 shares ended. After settlement of the offer on 23 September 2021, ZEAL now holds 1,527,520 LOTTO24 shares, corresponding to a share of approximately 94.9% of the share capital of LOTTO24 AG. As a result of the termination of the stock exchange listing, a number of legal requirements, such as those relating to the financial reporting of LOTTO24 AG, will no longer apply in the future and thus the corresponding workload and associated costs will also be eliminated.

€ 246 million generated for the common good
About 40 % 3 of the stakes in the state lottery products go to the common good. In 2021, more than € 3.2 billion (2020: more than € 3.1 billion) were generated by lottery sales in Germany and paid in form of taxes and duties to beneficiaries and to state budgets for use for charitable purposes. That is more than € 8.8 million for good causes every day - money without which many projects in the areas of welfare, sport and culture as well as in the preservation of historical monuments and in environmental protection in Germany would not be able to be financed. In the case of charity lotteries such as freiheit+ and the Deutsche Fernsehlotterie, at least 47% of the stakes are donated to the public good in form of taxes and direct social contributions. All in all, the ZEAL raised more than a quarter of a billion for social and community projects by selling lottery tickets under the LOTTO24 and Tipp24 brands in 2021.

95 big winners, including 10 millionaires
Once again, numerous LOTTO24 and Tipp24 customers were among the winners in 2021: with total winnings of around € 293 million paid out, a total of 1.3 million customers were able to enjoy their winnings. Among the 95 big winners, who won amounts of € 100,000 or more, were also 10 millionaires and another 5 big winners of the charity lottery freiheit+. In September 2021, ZEAL was able to pass on the largest individual pay-out in the Group's history to date, € 49.3 million, to a 40-year-old customer from Bavaria.

Dividend policy confirmed
The Executive Board and Supervisory Board will propose to the Annual General Meeting on 30 June 2022 the payment of a dividend of € 2.10 (2020: € 0.90 per share), which means a distribution to shareholders of approximately € 47.0 million (2020: € 20.1 million). The dividend consists of a basic dividend of € 1.00 as well as a special dividend of € 1.10. The payment of the special dividend is a further step towards optimising the company's capital structure.

Outlook 2022
In the financial year 2022, ZEAL plans to maintain its market position as the leading provider of online lotteries as well as to introduce new products, including "online games" under the newly applied permit for virtual slot games. Depending on the general conditions, ZEAL expects billings of at least € 750 million for the Germany segment - assuming an average jackpot development. Furthermore, ZEAL assumes that revenues will amount to at least € 105 million in the financial year 2022. ZEAL expects adjusted EBITDA to be at least € 30 million. Compared to the previous year, ZEAL plans to invest significantly more in new customer acquisition and expects marketing expenses of around € 30 million.

About ZEAL: ZEAL Network SE, the leading online provider of lottery products in Germany, is an e-commerce group of companies based in Hamburg, which mainly brokers customers' tickets to state and charity lotteries under the brands LOTTO24 and Tipp24. Its product range includes LOTTO 6aus49, Spiel 77, Super 6, Eurojackpot, GlücksSpirale, lottery syndicates, Keno, the Deutsche Fernsehlotterie, the German Dream House Lottery and freiheit+. Founded in Germany in 1999, ZEAL started out as a German lottery broker under the name Tipp24. In 2005, it went public on the Frankfurt Stock Exchange (Prime Standard) as one of the most successful IPOs in Germany at the time. In 2019, ZEAL took over LOTTO24 AG.

Frank Hoffmann
Investor Relations
T: +49 (0)40 809036042

The billings of the Spanish ONCE business are not included here for contractual reasons.
2 As the Spanish ONCE business is not included in the billings but only in the revenues, our margin development is better reflected in the Germany segment than at Group level.
3 Source: German State Lotteries (Deutscher Lotto- und Totoblock ("DLTB"))

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Language: English
Company: ZEAL Network SE
Straßenbahnring 11
20251 Hamburg
Phone: +49 (0)40 8090360-42
Fax: +49 (0)40 822239-77
E-mail: frank.hoffmann@zealnetwork.de
Internet: www.zealnetwork.de
Indices: SDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange
EQS News ID: 1310153

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1310153  24.03.2022