Annual Report 2018 Annual Report 2018

ANNUAL REPORT 2018 CONTENTS INTRODUCTION 46 2018 HIGHLIGHTS / VENLO 2 <ul style="display: flex;"><li style="flex:1">47 Our people </li><li style="flex:1">3</li></ul>45 Message from the CEO 2018 in figures Key figures 52 2018 HIGHLIGHTS / GRONINGEN 54 Our society 57 Holland Casino management team 58 In control statement 80 ABOUT HOLLAND CASINO FINANCIAL STATEMENTS 789 Company profile Mission & strategy Strategic pillars GOVERNANCE 60 Composition Supervisory Board 62 Foreword by the chairman of the Supervisory Board 10 Value creation model REPORT OF THE EXECUTIVE BOARD 64 Supervisory Board report REPORT OF THE EXECUTIVE BOARD 66 Corporate governance 12 Foreword Executive Board 15 Financial developments 18 2018 HIGHLIGHTS / EXPERIENCE ZONE 20 Our environment 70 Risk management FINANCIAL STATEMENTS 80 Financial statements 2018 133 Other information 623 Stakeholder overview 26 SWOT analysis ABOUT HOLLAND CASINO 27 Materiality matrix 28 Relationship material aspects & strategic pillars 29 2018 HIGHLIGHTS / AMSTERDAM-WEST 31 Operational developments 36 2018 HIGHLIGHTS / ADDITIONAL INFORMATION 142 Locations GOVERNANCE 143 Five-year summary 144 About this report 145 List of abbreviations 146 Colophon ELFSTEDENZWEMTOCHT 38 Developments at casinos 39 Outlook 59 40 Our guests 11 2BUILDING ON A STRONG FOUNDATION We are pleased to present Holland Casino’s annual report for 2018. It was a special year for a special Company. It was a successful year, too, as after a number of turbulent years we found the calm and the focus again to devote our full attention to working on our strategy HC 2020. midst of these dynamic developments is an enormous tribute to our employees. Holland Casino takes its responsibility to its guests and employees very seriously and continues to work – together with its partners – on a safe and pleasant gaming environment, fulfilling our social task as might be expected. We invested in new casinos, in our guest experience and in the <ul style="display: flex;"><li style="flex:1">development of our staff. We managed to stabilise our market </li><li style="flex:1">Holland Casino operates at the heart of society and welcomes </li></ul>share in the competitive leisure and entertainment market and visitors from all walks of life. We gladly contribute to a healthy made major progress in the renewal of our range of games. We can see the effects of these efforts in our financial results, which were both positive and robust with higher gross revenues than in 2017. The fact that the result before corporate income tax did not increase in line with gross revenues was primarily due to a later insurance payment related to ‘Groningen’ and the increase in the gaming tax rate. society through a range of partnerships and contributions to good causes. The most prominent of these in 2018 was our support as founding father for Maarten van der Weijden’s Elfstedenzwemtocht, which will be continued in 2019, and our employees’ sponsorship campaigns in support of the Dutch Cancer Society (KWF). ‘With the new locations, our casino family is complete again.’ The opportunities and challenges that lie ahead for Holland Casino are numerous. We continue to keep a very close eye on our environment, where the stakes are high and political decisions on privatisation remain uncertain for the time being. We will continue to focus fully on the realisation of our strategic objectives. This strategy will help us build a strong and future-proof company, with compelling concepts for new and existing guests and promising propositions. We also want to remain an attractive employer for our talented colleagues. Following the opening of our new casino in Amsterdam West-Sloterdijk and the opening of the temporary pop-up casino in Groningen, our family of 14 casinos is once again complete. And with the drastic renovation of Holland Casino Valkenburg, and the ground-breaking ceremony for our new casino in Venlo, we continue to develop the most modern and sustainable casinos across the Netherlands. We also had a dynamic year, as we continued to build on our online platform and on the multidisciplinary teams that are working on our strategic priorities. So rather than waiting for things to happen, we have taken matters into our own hands to ensure that we are prepared for new gaming legislation. The fact that we did not lose sight of our daily guests in the In 2019, we will continue to build on the strong foundations we laid in 2018 with conviction. We are looking to the future of Holland Casino with great confidence. Erwin van Lambaart – CEO Holland Casino 32018 IN FIGURES COMPARED TO 2017 <ul style="display: flex;"><li style="flex:1">ꢃ 656ꢀ5 MLN </li><li style="flex:1">29 </li><li style="flex:1">ꢃ 114 </li></ul><ul style="display: flex;"><li style="flex:1">Total revenue </li><li style="flex:1">NET Promotor Score </li></ul>30 Average spending per visit <ul style="display: flex;"><li style="flex:1">2ꢀ7 </li><li style="flex:1">4ꢀ6 </li></ul><ul style="display: flex;"><li style="flex:1">ꢃ 82ꢀ7 MLN </li><li style="flex:1">ꢃ 265ꢀ8 MLN </li><li style="flex:1">ꢃ ꢂ40ꢀ0 MLN </li></ul><ul style="display: flex;"><li style="flex:1">Result before corporate income tax </li><li style="flex:1">Revenue table games </li><li style="flex:1">Revenue slot machines </li></ul>*<ul style="display: flex;"><li style="flex:1">15ꢀ6 </li><li style="flex:1">3ꢀ9 </li><li style="flex:1">2ꢀ3 </li></ul><ul style="display: flex;"><li style="flex:1">1ꢀ1 MLN </li><li style="flex:1">5ꢀ7 MLN </li><li style="flex:1">5ꢀ2 ꢄ </li></ul><ul style="display: flex;"><li style="flex:1">Guests </li><li style="flex:1">Visits </li><li style="flex:1">Visit frequency </li></ul><ul style="display: flex;"><li style="flex:1">1,ꢀ2 </li><li style="flex:1">1ꢀ7 </li></ul>5ꢀ2 <ul style="display: flex;"><li style="flex:1">2,920 FTE </li><li style="flex:1">4ꢀ9 ꢁ </li><li style="flex:1">2ꢂ,950 </li></ul>Employees <ul style="display: flex;"><li style="flex:1">Absenteeism </li><li style="flex:1">Monitoring (PAK) interviews </li></ul><ul style="display: flex;"><li style="flex:1">21,324 </li><li style="flex:1">77,,ꢀ559 </li><li style="flex:1">3ꢀ7 </li></ul><ul style="display: flex;"><li style="flex:1">49ꢂ,05ꢂ </li><li style="flex:1">2,7ꢂꢂ,199 848,460 </li><li style="flex:1">5,576,221 </li></ul><ul style="display: flex;"><li style="flex:1">Cups of coffee </li><li style="flex:1">Table settings </li><li style="flex:1">Glasses of draught beer </li><li style="flex:1">Bitterballen </li></ul>4*See Financial developments, p. 15 KEY FIGURES CONSOLIDATED INCOME STATEMENT Amounts in millions of euro, unless stated otherwise Revenue before gaming tax Gaming tax STATEMENT OF FINANCIAL POSITION <ul style="display: flex;"><li style="flex:1">2018 </li><li style="flex:1">2017 </li><li style="flex:1">2018 </li></ul>222.8 17.2 2017 211.3 17.3 656.5 -182.4 639.2 -170.5 Equity Non-current liabilities <ul style="display: flex;"><li style="flex:1">Current liabilities </li><li style="flex:1">Net revenue </li><li style="flex:1">474.1 </li><li style="flex:1">468.7 </li><li style="flex:1">102.4 </li><li style="flex:1">102.3 </li></ul><ul style="display: flex;"><li style="flex:1">Insurance claim </li><li style="flex:1">11.4 </li><li style="flex:1">29.0 </li></ul><ul style="display: flex;"><li style="flex:1">Total revenue </li><li style="flex:1">485.5 </li></ul>-403.3 82.2 0.4 497.7 -400.2 97.5 -OTHER KEY FIGURES 2018 448 2017 417 Operating expenses Number of gaming tables Operating result <ul style="display: flex;"><li style="flex:1">Number of slot machines (in casinos) </li><li style="flex:1">6,490 </li><li style="flex:1">5,701 </li></ul>Financial income and expenses Share of profit of equity-accounted investees, net of tax Result before corporate income tax Corporate income tax <ul style="display: flex;"><li style="flex:1">0.1 </li><li style="flex:1">0.5 </li></ul>Visits 82.7 -23.2 59.5 -98.0 -24.5 73.5 - Number of visits (in thousands) Spending per visit (in euro) 5,743 114 5,840 109 Result after corporate income tax Other comprehensive income net of tax Total comprehensive income Employees at year-end <ul style="display: flex;"><li style="flex:1">59.5 </li><li style="flex:1">73.5 </li></ul>Number of employees (excluding stand-by employees and trainees) of whom Gaming & Casino Services 3,949 50 3,699 0<ul style="display: flex;"><li style="flex:1">Cash flow from operating activities </li><li style="flex:1">133.4 </li></ul>12.6 83.5 15.7 Full-time equivalents (fte) of whom Gaming & Casino Services 2,920 49 2,708 0Profitmargin (in %) (Result after tax / net revenue) x 100 Employee benefits (as a percentage of operating expenses) <ul style="display: flex;"><li style="flex:1">59.9 </li><li style="flex:1">56.4 </li></ul><ul style="display: flex;"><li style="flex:1">Net revenue per average fte (in thousands of euro) </li><li style="flex:1">166 </li><li style="flex:1">179 </li></ul>The key figures are not part of Holland Casino’s financial statements. 5ABOUT HOLLAND CASINO 6PROFILE OF THE COMPANY The Dutch government awarded Holland Casino an exclusive licence to provide tables games in 1975 in an effort to provide the Netherlands with a safe and regulated gaming environment. We opened our first casino in 1976. From 1986, our licence was extended to include slot machines. We offer our guests exciting, surprising and reliable games in a familiar and exceedingly hospitable environment. These same principles will remain in place once Holland Casino is allowed to provide online games, which we expect to be in effect from 2020. SUPERVISORY BOARD AUDIT EXECUTIVE BOARD ꢌOꢃꢊS COUNCIL Following the opening of Amsterdam WestSloterdijk and the re-opening in Groningen, we once again have all 14 casinos in operation. Spread right across the country and with the exclusive right to provide table games. in the future. Holland Casino provides three product groups: table games, supervised by specially trained and qualified croupiers, a wide range of slot machines, including video, roulette, bingo and poker machines, and Food & Beverage (F&B). The core activities Table games and Slot machines account for the bulk of our revenue. F&B is becoming an increasingly important part of our core activities and indispensable to providing the optimum guest experience. <ul style="display: flex;"><li style="flex:1">ꢈAꢄINꢈ ꢂ SꢁꢃꢅICꢁS </li><li style="flex:1">ꢀINANCꢁ ꢂ CONTꢃOL </li></ul><ul style="display: flex;"><li style="flex:1">HUꢄAN ꢃꢁSOUꢃCꢁS </li><li style="flex:1">INꢀOꢃꢄATION SꢁꢃꢅICꢁS </li></ul>This makes Holland Casino the only real casino in the Netherlands. Holland Casino’s head office, opened in 2017, is located in Hoofddorp. Holland Casino employs a total of 3,899 employees, 50 of whom at Gaming & Casino Services, the Company we acquired in 2018. <ul style="display: flex;"><li style="flex:1">ꢄAꢃꢊꢁTINꢈ ꢂ ꢁꢋCOꢄꢄꢁꢃCꢁ </li><li style="flex:1">SꢁCUꢃITꢆ ꢂ ꢃꢁSꢇONSIBLꢁ ꢈAꢄINꢈ </li></ul>COꢃꢇOꢃATꢁ LꢁꢈAL ꢂ COꢄꢇLIANCꢁ COꢃꢇOꢃATꢁ COꢄꢄUNICATIONS Secretary to the Board Holland Casino occupies a unique position in the Dutch and European gaming market, with more than 40 years of experience and a trendsetting, internationally recognised and award-winning responsible gaming policy. Holland Casino stands out thanks to its personal attention, high-quality hospitality and extensive care for all of its guests. Holland Casino’s slot machines help the Company to differentiate itself from other operators, such as arcades and the catering industry. Both the maximum stake and the payment percentage are higher, and Holland Casino has no maximum when it comes to prizes on individual machines or additional progressive prizes. This is due to the fact that our responsible gaming policy and the Dutch Prevention of money laundering and financing of terrorism Act (Wwft) are designed specifically for that purpose. ꢇUꢃCHASINꢈꢉ ꢃISꢊꢉ ꢇꢄO <ul style="display: flex;"><li style="flex:1">NORTH NETHERLANDS </li><li style="flex:1">SOUTH NETHERLANDS </li></ul>Amsterdam Centre Amsterdam West-Sloterdijk Enschede Breda Eindhoven Nijmegen Rotterdam Valkenburg Venlo GAMING & CASINO SERVICES BꢀVꢀ Groningen Leeuwarden Scheveningen Utrecht Zandvoort In 2018, Holland Casino recorded total revenue of EUR 656.5 million. Holland Casino is also aiming to obtain a licence for online gaming, now that legislation will make that possible 7MISSION & STRATEGY <ul style="display: flex;"><li style="flex:1">VISION </li><li style="flex:1">MISSION </li></ul>AMꢁITION STRATEGꢀ <ul style="display: flex;"><li style="flex:1">Gaming is a part of life. </li><li style="flex:1">We provide the most </li></ul>exciting gaming experience, always welcoming and engaged. We understand the needs of our guests like no other and We develop long-term, personal relationships with our guests. exceed expectations. Our strategy is based on five pillars: employees society guests innovation partnerships 8STRATEGIC STRATEGIC EMPLOꢀEES PILPLIALLRASRS Clear division of tasks between head office and casinos Sustainable and up-to-date employment terms Leadership and talent development SOCIETꢀ High-grade responsible gaming policy PARTNERSHIPS Social engagement through hospitality, social connection and local relevance Strategic partnerships strengthen Holland Casino in a dynamic market Attention for sustainability GꢁESTS Investing in guest experience Optimum and responsible use of data Respond to the wishes of new generations INNOVATION Innovating and improving concepts and products Realising online proposition Choice for omni-channel approach 9VALVUAELUCERCERAEATITOIONN MMOODDELEL <ul style="display: flex;"><li style="flex:1">INPꢀT </li><li style="flex:1">OꢀTPꢀT </li></ul>CORE VALꢀES FINANCIAL Engaged Surprising Friendly Reliable Solid financial position HꢀMAN REALISING SOCIAL OꢁꢅECTIVES ꢁꢂ CREATING A SAFE GAMING ENVIRONMENT Service-oriented employees Execution responsible gaming policy PRODꢀCTION TOOLS RETꢀRN FOR OꢀR SHAREHOLDERS Gaming tables Slot machines F&B Casinos OFFER OꢀR GꢀESTS A ꢃꢄ EXPERIENCE ꢁꢀSINESS ACTIVITꢂ INTELLECTꢀAL Responsible gaming policy Hospitality Internal education / training In-house / own concepts / innovation ENGAGED EMPLOꢂEES <ul style="display: flex;"><li style="flex:1">Slot machines </li><li style="flex:1">Food & Beverage </li><li style="flex:1">Gaming tables </li></ul>GOOD REPꢀTATION AND STRONG ꢁRAND SOCIAL AND RELATIONSHIPS Embedded in society Active relationship / contact with stakeholders Licences Government / legislation STRATEGIC PILLARS Employees Society Innovation Partnerships Guest 10 REPORT OF THE EXECUTIVE BOARD 11 READY FOR THE FUTURE Holland Casino continued to build on its strong foundations in 2018, with the opening of new casinos, a sharp focus on our guest experience and a strong internal organisation. CEO Erwin van Lambaart and CFO Ruud Bergervoet explain. How would you describe this past year? Erwin van Lambaart: I’ve referred to this past period as a triple jump. Following a period of crisis, we returned to a structurally upward line in 2017 and defined our HC2020 strategy. Last year, we continued our recovery at warm summer period obviously had an impact on the number of visits. However, we were able to largely compensate for that in the second half of the year, partly on the back of targeted guest promotions and campaigns. That was quite an achievement. Our NPS <ul style="display: flex;"><li style="flex:1">score (guest satisfaction) also remains high. </li><li style="flex:1">full throttle and we made progress in the </li></ul>realisation of our strategy. And we remained on course, despite of catching up we had to do. Ruud Bergervoet: Last year was a year in We will have to make ‘the leap’ in 2019/2020, to actually make us the best casino operator in Europe. This will place enormous demands on the resilience of our organisation. Our employees deserve a huge compliment for the fact that we continued to perform well in these dynamic times. which we returned to calmer waters and worked on our priorities with renewed focus. We were able to execute our 2020 strategy without any unexpected hurdles, which was great. The good thing is that we were able to accelerate the process and make investments, while our results remained solid. We invested more than EUR 56 million in the new-build casino and the renovation of other casinos, plus slot machines, gaming concepts, our future online platform and system and process improvements. The (re-)opening of our casinos in Groningen and Amsterdam West-Sloterdijk will make a significant What do you consider the highlights of 2018? Van Lambaart: From Las Vegas to Monaco, casinos are asking themselves: how do we appeal to the next generation? I am very proud of the concept we developed in-house: the Experience Zone in Utrecht. This is a tailormade concept for new players that includes explanations of games, reduced stakes and We have to make a leap in 2019 contribution to the continued growth of our results in 2019. The unprecedented long, /2020. 12 ‘Great to see our colleagues in Groningen have a ‘home’ again after the fire.’ entertainment. The atmosphere, setting and experience are very deliberately different from the rest of our offerings. This concept is very distinctive and it has been highly successful. You know it’s special when people from our peer casinos all over Europe are now visiting us to see how successful this concept is. I also look back with a great deal of pleasure to the very stylish opening of our new casino Amsterdam West-Sloterdijk, something our 1,500 invitees are still talking about to this day. of the service activities of Gaming Support B.V. and we are very pleased with how these activities have been integrated. We replaced old systems and processes and improved our IT support for the casinos. Plus we made serious investments in the renewal of our games: we replaced no less than a sixth of our slot machines in 2018, so our guests can enjoy the latest in games. That is exactly what we stand for, after all. We also made progress in the way we work with each other. We’ve set up multidisciplinary teams in which colleagues from different departments work together on specific components of our strategy. Each of these teams helps to improve our guests’ experience – the so-called guest journey – when they visit Holland Casino. This journey will look quite different in the future, mainly due to digitalisation and the omni-channel approach. Our return to Groningen was a unique achievement. Within 16 months, we put together an atmospheric, temporary casino on Sontplein, the first pop-up casino in the world. It is great to see how our 15 colleagues have found a ‘home’ again after the fire in 2017. That was a very emotional moment for our employees, who have been remarkably flexible in working at other casinos after the fire. We also renovated our casino in Valkenburg, broke ground for our new casino in Venlo and

Annual Report 2018 Annual Report 2018

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