DJ ZEAL Network SE: Adjustment of EBIT Guidance
Dow Jones received a payment from EQS/DGAP to publish this press release.
ZEAL Network SE (-)
ZEAL Network SE: Adjustment of EBIT Guidance
19-Nov-2018 / 08:29 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
*ZEAL Network SE: Adjustment of EBIT Guidance*
As the following forecasts are prepared on the basis of assumptions about
future events and actions, it naturally entails substantial uncertainties.
The forecasts constitute the forecasts for the financial year 2018 of
Earnings Before Interest and Tax (the '*ZEAL Profit Forecast*') and of Total
Operating Performance (the '*ZEAL Revenue Forecast*'). Because of these
uncertainties it is possible that the actual revenue and/or profit of the
ZEAL Network SE ('*ZEAL*') group may differ materially from the forecasted
numbers.
Based on the following factors and assumptions and associated uncertainties,
ZEAL expects for the financial year 2018 that Earnings Before Interest and
Tax (EBIT) will range between EUR 33 million and EUR 38 million, and Total
Operating Performance (TOP) between EUR 150 million and EUR 160 million.
This is not a statement about facts and should not be interpreted as such by
potential investors. Rather, it is a statement about the expectations of
ZEAL's management in respect of EBIT and TOP of the ZEAL group.
ZEAL defines EBIT as Earnings Before Interest and Tax and Total Operating
Performance as the sum of revenue and other operating income. In this
context, ZEAL considers EBIT to provide a measure of the ZEAL group's
ability to increase the economic value of its operating activity over a
period of time and TOP to provide a measure of the statutory revenue and
other operating income (including income from hedging activities) of the
ZEAL group.
The ZEAL Profit Forecast is based on the assumptions set out below made by
ZEAL's Executive Board for the development of the influencing factors of
EBIT and TOP of the group. The assumptions used in the ZEAL Profit Forecast
relate to factors which (i) cannot be influenced by the ZEAL group and those
which (ii) can, even if only to a limited extent, be influenced by the ZEAL
group. Even if ZEAL believes that these assumptions are reasonable at the
time of the estimate of EBIT and TOP by ZEAL's management, they may prove
erroneous or unfounded. If one or more of these assumption(s) prove(s) to be
erroneous or unfounded, the actual result could deviate materially from the
ZEAL groups' current EBIT and TOP.
The members of the Executive Board of ZEAL confirm that the ZEAL Profit
Forecast is valid, has been properly compiled on the basis of the
assumptions stated and that the basis of accounting used is consistent with
ZEAL's accounting policies.
These forecasts relate to EBIT and TOP in line with guidance previously
provided by ZEAL and as a means of evaluating the financial performance of
the ZEAL Group. Generally ZEAL releases profit forecasts annually. When ZEAL
released its preliminary results for the financial year 2017, it released
its first profit forecast for 2018 - of EBIT between EUR 33 million and EUR
43 million, and Total Operating Performance (TOP) between EUR 150 million
and EUR 160 million. The profit forecast was confirmed in each case when
ZEAL released its results for the first three, six and nine months of 2018.
The adjustment of the upper end of the EBIT forecast range for the financial
year 2018 in the ZEAL Profit Forecast in comparison to the previously
released and confirmed profit forecasts for 2018 from EUR 43 million to 38
million, while maintaining the lower end of the range of EUR 33 million,
includes the impact of transaction costs in connection with the announced
intention of ZEAL to make a public takeover offer for Lotto24 AG as well as
restructuring expenses in connection with an internal cost savings programme
initiated on the date of the announcement.
Except for the narrowing of the previously forecasted EBIT range, the
Executive Board of ZEAL confirms its previously published guidance and
expects the ZEAL group to generate Total Operating Performance (TOP) of EUR
150 million to EUR 160 million in the financial year 2018.
*Explanatory notes to the ZEAL Profit Forecast*
_Basis of Preparation_
The ZEAL Profit Forecast was prepared on the basis of management forecasts
of the results of ZEAL for the financial year ending 31 December 2018.
The accounting policies applied in the preparation of the forecast are
consistent with the accounting policies applied in the preparation of the
ZEAL's annual report for the year ended 31 December 2017 which are explained
in pages 77 to 90 of ZEAL's annual report for the year ended 31 December
2017.
The intended takeover offer for Lotto24 AG is not expected to complete until
after the end of the period covered by the ZEAL Profit Forecast and so, with
the exception of transaction costs of EUR 3.5 million, the impact of the
intended takeover offer has not been included in the ZEAL Profit Forecast.
Additionally, the ZEAL Profit Forecast for EBIT in the range between EUR 33
million and EUR 38 million includes restructuring and severance costs of
approximately EUR 4.5 million which will also be treated as Exceptional
Items in ZEAL's results for the year ended 31 December 2018.
*Assumptions*
The ZEAL Profit Forecast is based on the following assumptions:
_Factors outside ZEAL's influence or control_
The ZEAL Profit Forecast is subject to certain factors outside the influence
or control of ZEAL. The relevant assumptions are described below:
While preparing the forecast, ZEAL's Executive Board assumes that no
significant unforeseeable results will occur that could lead to significant
constraints in its ongoing business operations. In particular, ZEAL's
Executive Board assumes that no or only insignificant changes will occur in
respect of current legal and regulatory framework as it pertains to ZEAL.
- It is assumed that there will be no material changes in legislation or
regulatory requirements impacting on ZEAL's operations or its accounting
policies.
- It is assumed that the market for secondary lotteries, especially in
Germany, will not suffer any negative developments, and that ZEAL will be
able to retain its current competitive positions in the markets in which it
operates.
- It is assumed that the occurrence and size of jackpot prize events in the
markets in which the ZEAL group operates will be in line with long term
trends.
- The ZEAL Profit Forecast is susceptible to the level of pay-outs won by
customers. In preparing the ZEAL Profit Forecast, ZEAL's Executive Board
assumes that statistically expected pay-out levels will be incurred in the
forecast months.
- It is assumed in the ZEAL Profit Forecast that no individually-significant
jackpot prize wins will be borne by ZEAL group in the forecast months before
the end of 2018.
- It is assumed that no financial or economic crisis will occur that affect
Europe and specifically Germany, and that the economic conditions in Germany
will not suffer any negative developments.
- It is assumed that there will be no other material changes to the
conditions of the markets in which ZEAL operates.
- It is assumed that the principal exchange rates to which ZEAL's results
are exposed to fluctuations will remain materially unchanged from the
prevailing rates.
- It is assumed that there will be no material change to the competitive
environment leading to an adverse impact on customer preferences.
_Factors within ZEAL's influence or control_
Other factors that can be influenced or controlled by ZEAL affect the ZEAL
Profit Forecast. The relevant assumptions are described below:
- It is assumed that there will be no material change in ZEAL's ability to
negotiate new business, and that there will be no material change to the
ZEAL's customer base or the ability or willingness of the customer base to
meet its obligations to ZEAL.
- It is assumed that there will be no material change in ZEAL's go-to-market
approach, and that historic trends of customer retention and acquisition
will remain materially unchanged.
- It is assumed that the scale and type of marketing activity to retain
existing customers and acquire new customers will not materially change.
- With the exception of the exceptional transaction and restructuring costs
described above, it is assumed that the level of cost incurred by ZEAL will
not materially change over the remainder of the financial year 2018.
*Examination and Reporting Accountant's Report of the ZEAL Profit Forecast*
The Reporting Accountant's Report by Ernst & Young of the examination of the
ZEAL Profit Forecast for the financial year 2018, which is available for
inspection at the Company's offices, reads as follows:
The Directors
ZEAL Network SE
5th Floor - One New Change
London
EC4M 9AF
Lazard & Co. Limited
50 Stratton Street
London
W1J 8LL
19 November 2018
Dear Sirs
We report on the profit forecast comprising forecast of EBIT of Zeal Network
SE (the 'Company') and its subsidiaries (together the 'Group') for the year
ending 31 December 2018 (the 'Profit Forecast'). The Profit Forecast, and
the material assumptions upon which it is based, are set out in the
announcement titled 'ZEAL Network SE: Adjustment of EBIT Guidance' released
by the Company on 19 November 2018 pursuant to Article 17 MAR of the
Regulation (EU) No 596/2014 (the 'Announcement'). This report is required by
Rule 28.1(a)(i) of The City Code on Takeovers and Mergers (the 'City Code')
and is given for the purpose of complying with that rule and for no other
purpose.
Save for any responsibility that we may have to those persons to whom this
report is expressly addressed, to the fullest extent permitted by law we do
not assume any responsibility and will not accept any liability to any other
(MORE TO FOLLOW) Dow Jones Newswires
November 19, 2018 02:29 ET (07:29 GMT)
person for any loss suffered by any such other person as a result of,
arising out of, or in connection with, this report or our statement,
required by and given solely for the purposes of complying with Rule 23.2 of
the City Code by consenting to its inclusion in the Announcement.
*Responsibilities*
It is the responsibility of the directors of the Company to prepare the
Profit Forecast in accordance with the requirements of the City Code.
It is our responsibility to form an opinion as required by the City Code as
to the proper compilation of the Profit Forecast and to report that opinion
to you.
It is the responsibility of Lazard to form an opinion as required by, and
solely for the purpose of, rule 28.1(a)(ii) of the City Code as to whether
the Profit Forecast has been prepared with due care and consideration and to
report that opinion to you.
*Basis of preparation of the Profit Forecast*
The Profit Forecast has been prepared on the basis stated in the
Announcement and is based on the unaudited interim financial results for the
six months ended 30 June 2018, the unaudited management accounts for the
four months ended 31 October 2018 and a forecast to 31 December 2018. The
Profit Forecast is required to be presented on a basis consistent with the
accounting policies of the Group.
*Basis of opinion*
We conducted our work in accordance with the Standards for Investment
Reporting issued by the Auditing Practices Board in the United Kingdom. Our
work included evaluating the basis on which the historical financial
information included in the Profit Forecast has been prepared and
considering whether the Profit Forecast has been accurately computed based
upon the disclosed assumptions and the accounting policies of the Group.
Whilst the assumptions upon which the Profit Forecast are based are solely
the responsibility of the Directors, we considered whether anything came to
our attention to indicate that any of the assumptions adopted by the
Directors which, in our opinion, are necessary for a proper understanding of
the Profit Forecast have not been disclosed and whether any material
assumption made by the Directors appears to us to be unrealistic.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Profit Forecast has been properly compiled on the basis
stated.
Since the Profit Forecast and the assumptions on which it is based relate to
the future and may therefore be affected by unforeseen events, we can
express no opinion as to whether the actual results reported will correspond
to those shown in the Profit Forecast and differences may be material.
Our work has not been carried out in accordance with auditing or other
standards and practices generally accepted in Germany or other jurisdictions
and accordingly should not be relied upon as if it had been carried out in
accordance with those standards and practices.
*Opinion*
In our opinion, the Profit Forecast has been properly compiled on the basis
stated and the basis of accounting used is consistent with the accounting
policies of the Group.
Yours faithfully
Ernst & Young LLP
*Report on profit forecast by ZEAL Network SE for purposes of Rule
28.1(a)(ii) of the City Code on Takeovers and Mergers*
The Executive Board
ZEAL Network SE
5th Floor - One New Change
London EC4M 9AF
United Kingdom
19 November 2018
Dear Sirs,
*Report on profit forecast by ZEAL Network SE for purposes of Rule
28.1(a)(ii) of the City Code on Takeovers and Mergers*
We refer to the profit forecast comprising a forecast of EBIT of ZEAL
Network SE (the '*Company*') and its subsidiaries for the year ending 31
December 2018 (together, the '*Profit Forecast*') for which the Executive
Board of ZEAL (the '*Directors*' or '*you*') are solely responsible under
Rule 28 of the City Code on Takeovers and Mergers (the '*City Code*').
We have discussed the Profit Forecast and the bases and assumptions on which
it has been prepared and the accounting policies and basis of calculation
for the Profit Forecast with the executive officers of the Company and with
EY as auditors of the Company and reporting accountants whose responsibility
it is to form an opinion as required by Rule 28.1(a)(i) of the City Code
that the Profit Forecast has been properly compiled on the basis stated and
that the basis of accounting used is consistent with the Company's
accounting policies. We have considered EY's letter dated 19 November 2018
addressed to you and us on this matter
You have confirmed to us that all financial and other information relevant
to the Profit Forecast has been disclosed to us. We have relied upon the
accuracy and completeness of all such information and have assumed such
accuracy and completeness for the purposes of providing this letter to you.
Our work did not involve an independent examination of any of the financial
or other information underlying the Profit Forecast. We do not express any
opinion on the achievability of the Profit Forecast.
This letter to you is solely in connection with Rule 28.1(a)(ii) of the City
Code and for no other purpose. We accept no responsibility to the Company or
its shareholders or any person other than the Directors in respect of the
contents of this letter. We are acting exclusively as financial adviser to
the Company and no one else in connection with the transaction in connection
with which the Profit Forecast has been produced and it was solely for the
purpose of complying with Rule 28.1(a)(ii) of the City Code that you
requested us to prepare this letter. No person other than the Directors can
rely on the contents of this letter and accordingly, to the fullest extent
permitted by law, we exclude all liability (whether in contract, tort or
otherwise) to any other person in respect of this letter, its contents or
the work undertaken in relation to this letter, or any of the results or
conclusions that can be derived from this letter or any written or oral
information provided in connection with this letter, and in relation to any
loss suffered by any such person as a result of, or in connection with, this
letter.
On the basis of the foregoing, we consider that the Profit Forecast, for
which you in your capacity as Directors are solely responsible, has been
prepared with due care and consideration by the Directors.
Yours faithfully,
For and on behalf of
Lazard & Co., Limited
Contact:
Frank Hoffmann, CEFA
Investor Relations
ZEAL
5th Floor - One New Change
London EC4M 9AF
T +44 (0) 20 3739-7123
F +44 (0) 20 3739-7199
frank.hoffmann@zeal-network.co.uk
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) DIRECTLY
OR INDIRECTLY IN, INTO OR FROM THE UNITED STATES OF AMERICA OR ANY OTHER
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
LAWS OF SUCH JURISDICTION.
*Important note*
This announcement is for information purposes only and neither constitutes
an offer to purchase or exchange nor an invitation to sell or to make an
offer to exchange, securities of Lotto24 AG ('Lotto24') or ZEAL Network SE
('ZEAL'). The final terms and further provisions regarding the public
takeover offer will be disclosed in the offer document once its publication
will have been approved by the German Federal Financial Supervisory
Authority (Bundesanstalt für Finanzdienstleistungsaufsicht). ZEAL reserves
the right to deviate in the final terms and conditions of the public
takeover offer from the basic information described herein. Investors and
holders of securities of Lotto24 are strongly recommended to read the offer
document and all announcements in connection with the public takeover offer
as soon as they are published, as they contain or will contain important
information.
The offer will be made exclusively under the laws of the Federal Republic of
Germany, in particular under the German Securities Acquisition and Takeover
Act (Wertpapiererwerbs- und Übernahmegesetz (WpÜG)). The offer
will not be made pursuant to the provisions of jurisdictions other than
those of the Federal Republic of Germany. Therefore, no other announcements,
registrations, admissions or approvals of the offer outside of the Federal
Republic of Germany have been filed, arranged for or granted.
The ZEAL shares have not been and will not be registered under the U.S.
Securities Act of 1933, as amended, or with any securities regulatory
authority of any state or any other jurisdiction of the United States of
America ('USA'). Therefore, subject to certain exceptions, ZEAL shares may
not be offered or sold within the USA or in any other jurisdiction where to
do so would be a violation of applicable law. There is no public offering of
ZEAL shares in the USA.
To the extent this announcement contains forward-looking statements, such
statements do not represent facts. Forward-looking statements include all
matters that are not historical facts. They are characterised by the words
'expect', 'believe', 'estimate', 'intend', 'aim', 'assume', 'plan' or
similar expressions. Such statements express the intentions, opinions or
current expectations and assumptions of ZEAL and the persons acting in
conjunction with ZEAL, for example with regard to the potential consequences
of the takeover offer for Lotto24, for those shareholders of Lotto24 who
choose not to accept the takeover offer or for future financial results of
Lotto24. Such forward-looking statements are based on current plans,
estimates and forecasts which ZEAL and the persons acting in conjunction
with it have made to the best of their knowledge, but which do not claim to
be correct in the future. Forward-looking statements are subject to risks
and uncertainties that are difficult to predict and usually cannot be
influenced by ZEAL or the persons acting in conjunction with it. Actual
events or consequences may differ materially from those contained in or
(MORE TO FOLLOW) Dow Jones Newswires
November 19, 2018 02:29 ET (07:29 GMT)
