Half Year Report 2011 - Fortuna Entertainment Group EU

In April 2011, as a reaction to the financial difficulties of Sazka, the incumbent lottery provider in the Czech
Republic, Fortuna decided to accelerate the launch of its lottery project. The commercial sale of scratch tickets
was brought forward to May 2011 and the launch of numerical lottery games to July 2011, i. e. almost three
months earlier than initially planned.
On 16 May 2011 Fortuna started selling scratch tickets through its distribution network consisting of almost
1,000 sales points. The penetration of scratch tickets in the Czech Republic is low (single digit number) in
comparison to Western Europe where it has a 20% market share in the numerical lotteries market and represents
an unique window of opportunity for Fortuna Loto.
At the end of May 2011, Fortuna submitted an official bid to takeover Sazka´s lottery business to the bankruptcy
administrator of Sazka. In this offer, Fortuna responded to the declaration of Sazka´s insolvency and offered
between two and two and a half billion Czech crowns (CZK 2 – 2.5 billion) for Sazka, depending on the due
diligence results of the company’s assets. The Company also officially confirmed its interest in the event of a sale
of individual assets of the bankrupt Sazka.
In June 2011, Fortuna signed contracts with distributors for the first 1,000 lottery terminals. These are retail chains
such as Geco, HDS Retail, Citi-Tabák, Valmont and Peal, a number of individual retailers and approximately
100 Fortuna branches. Intralot will deliver hundreds of terminals to Fortuna each month including the mini
“Microlot”. By the end of the year, up to 1,000 sales points will be added and by the end of 2012, the
distribution network should consist of up to 3,000 points. In addition, Fortuna is extending the distribution
network for the highly successful scratch tickets.
On 18 July 2011, Fortuna launched the new Loto lottery in the Czech Republic. After more than 50 years,
the first new, fully-fledged Loto lottery was brought to the people by Fortuna. Approximately every fourth ticket
will be a winner; a jackpot worth tens of million Czech crowns can be won with a single column bet costing
just CZK 20. The Fortuna Lottery also restores the original purpose of the lottery and supports worthy causes
for disadvantaged children. Among the first partners are Centrum Paraple, Fond ohrožených dětí and Konto
Bariéry.
Loto is a simple and attractive game and the rollover jackpot starts at CZK 10 million and is anticipated to be
paid out several times a year. Overall, nine prizes will be split; players know in advance the amount they can
win (except the jackpot as these are fixed and not divided among a large number of potential winners). The first
lottery draw took place on 20 July and thereafter takes place twice a week each Wednesday and Saturday.
The lottery draw is broadcast by TV Nova in the prime broadcasting time of 8 PM.
10