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Zeal hopeful of ‘minimal’ Brexit impact

| By iGB Editorial Team
Lottery operator posts sharp rise in EBIT following cost controls

A continuing focus on cost control has allowed Zeal Group to prepare for potential headwinds in 2019, including the impact of Brexit, according to chief financial officer Jonas Mattsson.

The Frankfurt-listed group – whose brands include Lottovate and myLotto24 – today (Thursday) reported revenue of €111.2m (£98m/$126.4m) in the three months through to the end of September – an 8% year-on-year rise.

With a 54% increase in new customers to 418,000, the operator, formerly known as Tipp24, posted a sharp rise in earnings before interest and tax of €29.1m, up from €12.5m in the corresponding period last year.

“Our continued focus on cost control has enabled us to reduce costs for three consecutive quarters,” Mattsson said in a conference call.

“Our costs were 6% lower in Q3 than the third quarter of last year, and that has helped to drive a very strong EBIT performance that exceeded expectations.”

Zeal’s marketing costs edged up in the UK and Ireland, which represents a growing market for the company. However, the operator’s overall marketing expenditure in the first nine months of 2018 fell by €726,000.

When questioned about marketing budgets for the final quarter of the year, Mattsson said: “We will continue at the same pace as we have done in the first three quarters and there is no reason to assume there will be dramatic changes in 2019 as we have achieved great margin this year.”

He added: “We have made preparations for Brexit and we are confident that any impact will be minimal for the group.”

In addition, a long-running case involving potential German tax liabilities for myLotto24 is unlikely to be heard until towards the end of Q1 next year, Mattsson said.

Meanwhile in Spain, following a legal dispute, the company said that it could face a fine after the country's gaming regulator, the DGOJ, ordered Ventura24 to cease operating its B2C business. 

However, again, Mattsson said that any impact should be “minimal”.

The Q3 results follow on from a successful first half for Zeal, after which the firm said it was aiming to build on growth and expand into new markets.

Zeal CEO Helmut Becker added: “We continue to deliver strong profitable growth; focusing firmly on controlling costs while also improving customer acquisition and activity.

“In our core business, customer numbers, billings and revenues are all significantly up, while our acquisition costs per customer have halved. This is the result of the optimisations and investments we have continued to make.

“With positive performance also coming through from our start-ups in Norway and the UK, Zeal is excellently positioned to capitalise on the global lottery sector’s growth potential.”

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