Annual Report and Accounts 2020 We are one of Europe’s largest and fastest growing lottery companies 2020 Highlights Amounts staked Gross gaming revenue (“GGR”) €6.8bn €2.0bn GGR growth Adjusted EBITDA 6% €538m Adjusted EBITDA margin % GGR from lotteries 44% 60% Online GGR (Czech Republic) Number of countries (lottery operations) 32% 5 Contents Strategic Report Introduction and contents 1 Our business at a glance 2 Business and strategic review 8 Business model 12 Financial review 14 Responsible gaming 34 Social responsibility 35 Risk factors 38 Governance Board of Directors 44 Senior management 45 Forward-looking statements 46 Financial Statements Consolidated Financial Statements 48 Notes to the consolidated financial statements 54 Separate Financial Statements 146 Notes to the separate financial statements 150 Independent Auditor’s report 183 Further regulatory disclosures 194 Sazka Group Annual Report and Accounts 2020 1 Strategic Report Our business at a glance Our platform SAZKA Group (the “Group”) is one of Europe’s largest and fastest growing lottery companies. Our businesses operate lotteries in most of the European countries where lotteries are privately operated, including Austria, the Czech Republic, Greece and Cyprus and in Italy. We focus on the lottery segment, including numerical lotteries (draw‑based games) and instant lotteries (scratch cards), and also provide complementary products, including sports betting and digital‑only games. We sell our products through both extensive retail networks and digital platforms. Our platform allows us to share best practice and experience and realise synergies across the group, driving organic and inorganic growth by sharing best practice and experience, including: Product innovations Marketing perspectives Online and digital Technology strategy capabilities and implementation Scale with suppliers Regulatory and responsible gaming learnings Reinvestment of cashlows Growth via M&A and tenders 2 Sazka Group Annual Report and Accounts 2020 Strategic Report 2–43 Governance 44–46 Financial Statements 47–224 Our business at a glance Our operations We benefit from iconic and long‑established brands, unrivalled POS networks and vast experience of operations. Our businesses have long‑term and often exclusive licences and concessions, allowing us leading and often exclusive positions in our markets. Austria In Austria, we are the exclusive operators of lotteries, land-based casinos and onshore online gaming. Czech Republic In the Czech Republic, we are the market leader for both numerical lotteries and instant lotteries. Greece and Cyprus In Greece, we have exclusive licences to operate lotteries, land-based sports betting and video lottery terminals (“VLTs”) and we own the leading online gaming business. We also have a licence to operate lotteries in Cyprus. Italy In Italy, we have an interest in LOTTOITALIA, a joint venture which is the exclusive operator of fixed odds numerical lotteries. Sazka Group Annual Report and Accounts 2020 3 Strategic Report Our business at a glance Where we currently operate Austria Czech Republic #1 Lottery and casino #1 Lottery operator operator in Austria in the Czech Republic Exclusive lottery licence and 94% market share in numerical operator of casinos lotteries Exclusive online gaming licence Other gaming operations include online sports betting Other gaming operations and digital-only games include sports betting and VLT 10,500 POS 5,100 POS Brands Brands Vienna Prague Austria Czech Republic Greece and Cyprus Italy #1 Lottery operator 32.5% stake in Greece and Cyprus #1 Numerical lottery Exclusive lottery, land-based operator in Italy sports betting and VLT licences Exclusive licence for fixed odd Acquired the leading online numerical lotteries gaming operator in 2020 33,600 POS 13,000 POS Brands Brands Athens Rome Greece Italy 4 Sazka Group Annual Report and Accounts 2020 Strategic Report 2–43 Governance 44–46 Financial Statements 47–224 Our business at a glance Our history 2011–2012 2015 2017–2018 2019 Acquisition of Acquisition of Acquisition of KKCG and Emma Capital 100% 11.3% additional stakes agree on the split of the of SAZKA a.s. stake in CASAG in CASAG, bringing assets in SAZKA Group, total economic and KKCG becomes the interest to sole owner of SAZKA 38.3% Group Acquisition of additional 7.3% stake in OPAP via a voluntary tender offer 2013 2016 2020 Acquisition of Acquisition of Acquisition of 33% 11.6% 17.2% stake in stake in stake in CASAG, OPAP through Austrian bringing total privatisation Lotteries economic interest to 55.5% Acquisition of 32.5% OPAP’s stake in stake in Stoiximan Group’s LOTTOITALIA Greek and Cypriot business increased to 84.5% Acquisition of additional 4.11% economic interest in OPAP Sazka Group Annual Report and Accounts 2020 5 Strategic Report Our business at a glance Our strategy We continue to implement our strategy to solidify our position as Growth in digital business, Product innovation Inorganic growth Constant focus on Be a good corporate the leading lottery focused gaming focus on data operational efficiency citizen operator in Europe, leveraging on our unique platform to capture opportunities in our existing markets and markets adjacent to them. Our existing operations are highly cashflow generative. We seek to invest this cash to create value through organic growth and accretive complementary acquisitions and participation in tenders. We aim to continue to increase our In each of our existing markets we Our M&A strategy is based on a We are highly focused on cashflow Responsible gaming is a key principle regulated mobile and online gaming constantly evaluate opportunities to rigorous set of return criteria and generation and see operational of our business. We believe that we presence as consumers shift towards introduce new products and optimize analysis of risks. We focus on regulated, efficiency as an important driver of are already leaders in responsible online or multi-channel gaming, and our current offerings. We aim to offer developed markets, lottery and cash flow. gaming and make significant government policy and legislation our consumers a full range of best in complementary products. contributions to the countries where We have a strong track record of increasingly favour onshore operators class products and a unique we operate, and we believe that this We evaluate opportunities to expand increasing profitability at businesses in the online channel. entertainment experience. will become increasingly crucial to our stakes in our existing businesses which we have acquired and costs their success. Our digital initiatives benefit from our We seek to develop and launch on an ongoing basis. In a number of are always a key focus at existing operations. trusted brands, our existing customer innovative new lottery games such cases we have increased our stakes All of our operations implement In addition to leveraging best practice relationships with a large proportion as daily numerical games, annuity in businesses through a series of responsible gaming principles including: from across the Group to grow of the population, our rapidly growing games and multinational pooled transactions, allowing us to acquire (i) creating a safe environment for revenues, we target purchasing, first-party data and analytics, and jackpot games, penetrating new controlling stakes at attractive valuations players; (ii) protecting minors and marketing and cost synergies across extensive traffic to our apps and customer segments and increasing and at a lower risk. other vulnerable groups; and (iii) the Group, for example in technology websites from players who purchase sales to our existing customers. educating the general public about We also analyse opportunities to and content.We also monitor their tickets through land-based channels. problem gambling. Alongside lottery products, we make selective bolt-on acquisitions opportunities to optimise personnel We leverage these advantages to continue to launch complementary in adjacent areas which allow us to costs, particularly in land-based We play an active role in the communities target our marketing activities and products, including digital-only games. expand our product range or strengthen businesses. For example, in 2020 we of the markets in which we operate, to cross-sell to other online gaming our position in complementary areas. introduced a restructuring programme contributing to good causes such as Our trusted brands, extensive app verticals. We continue to invest to at CASAG which is expected to deliver medical care, sports and culture, as and website traffic and unparalleled We have acquired several of our boost our CRM and leverage cost savings of c.€45 million a year well as to government revenues. physical distribution networks, customer current businesses through complex customer data. from 2022. We focus our marketing relationships with a large portion of M&A processes, leveraging our industry expenditure by leveraging first-party A substantial and rapidly growing the population and extensive data knowledge, our access to internally data to generate the highest portion of sales are already online in are a significant competitive advantage generated and external capital and incremental revenues. the Czech Republic and Austria and for cross-selling these products to our M&A expertise. These acquisitions in certain products in Greece. We are our existing customers. include the acquisition of SAZKA a.s. focused on expanding online sales in when it was in