Annual Report and Accounts 2020
We are one of Europe’s
largest and fastest growing
lottery companies
2020 Highlights
Amounts staked
€6.8bn
Gross gaming revenue (“GGR”)
€2.0bn
GGR growth
6%
Adjusted EBITDA
€538m
Adjusted EBITDA margin
44%
% GGR from lotteries
60%
Online GGR (Czech Republic)
32%
Number of countries (lottery operations)
5
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 195
Contents
1Sazka Group Annual Report and Accounts 2020
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:
Marketing perspectivesProduct innovations
Technology strategy
and implementation
Online and digital
capabilities
Regulatory and
responsible gaming
learnings
Scale with suppliers
Growth via M&A and tendersReinvestment of cashlows
2 Sazka Group Annual Report and Accounts 2020
Strategic Report
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.
Czech Republic
In the Czech Republic, we are the
market leader for both numerical
lotteries and instantlotteries.
Italy
In Italy, we have an interest in
LOTTOITALIA, a joint venture which
is the exclusive operator of fixed
odds numerical 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.
Austria
In Austria, we are the exclusive
operators of lotteries, land-based
casinos and onshore online gaming.
Our business at a glance
Our operations
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
3Sazka Group Annual Report and Accounts 2020
Our business at a glance
Where we currently operate
Austria Czech Republic
#1 Lottery and casino
operator in Austria
Exclusive lottery licence and
operator of casinos
Exclusive online gaming licence
Other gaming operations
include sports betting and
VLT
5,100 POS
#1 Lottery operator
inGreece and Cyprus
Exclusive lottery, land-based
sports betting and VLT licences
Acquired the leading online
gaming operator in 2020
13,000 POS
32.5% stake
#1 Numerical lottery
operator in Italy
Exclusive licence for fixed odd
numerical lotteries
33,600 POS
#1 Lottery operator
in the Czech Republic
94% market share in numerical
lotteries
Other gaming operations
include online sports betting
and digital-only games
10,500 POS
Greece and Cyprus Italy
Rome
Italy
Vienna
Austria
Prague
Czech Republic
Athens
Greece
Brands
Brands
Brands
Brands
4 Sazka Group Annual Report and Accounts 2020
Strategic Report
Our business at a glance
Our history
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
5Sazka Group Annual Report and Accounts 2020
2011–2012
Acquisition of
100%
of SAZKA a.s.
2013
Acquisition of
33%
stake in
OPAP through
privatisation
2015
Acquisition of
11.3%
stake in CASAG
2017–2018
Acquisition of
additional stakes
in CASAG, bringing
total economic
interest to
38.3%
2019
KKCG and Emma Capital
agree on the split of the
assets in SAZKA Group,
and KKCG becomes the
sole owner of SAZKA
Group
Acquisition of additional
7.3%
stake in OPAP via a
voluntary tender offer
2016
Acquisition of
11.6%
stake in
Austrian
Lotteries
Acquisition of
32.5%
stake in
LOTTOITALIA
2020
Acquisition of
17. 2%
stake in CASAG,
bringing total
economic interest
to
55.5%
OPAP’s stake in
Stoiximan Group’s
Greek and Cypriot
business increased
to
84.5%
Acquisition
of additional
4.11% economic
interest in OPAP
Our business at a glance
Our strategy
We continue to implement our
strategy to solidify our position as
the leading lottery focused gaming
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.
Growth in digital business,
focus on data
Product innovation Inorganic growth Constant focus on
operational efficiency
Be a good corporate
citizen
We aim to continue to increase our
regulated mobile and online gaming
presence as consumers shift towards
online or multi-channel gaming, and
government policy and legislation
increasingly favour onshore operators
in the online channel.
Our digital initiatives benefit from our
trusted brands, our existing customer
relationships with a large proportion
of the population, our rapidly growing
first-party data and analytics, and
extensive traffic to our apps and
websites from players who purchase
their tickets through land-based channels.
We leverage these advantages to
target our marketing activities and
to cross-sell to other online gaming
verticals. We continue to invest to
boost our CRM and leverage
customer data.
A substantial and rapidly growing
portion of sales are already online in
the Czech Republic and Austria and
in certain products in Greece. We are
focused on expanding online sales in
Greece and Cyprus, and Italy, where
the online and mobile market accounts
for a relatively low proportion of the
gaming market.
We are also focused on improving
our first-party data on our land-based
customers through loyalty schemes
and other similar products, which
also allow us to target our marketing campaigns.
In each of our existing markets we
constantly evaluate opportunities to
introduce new products and optimize
our current offerings. We aim to offer
our consumers a full range of best in
class products and a unique
entertainment experience.
We seek to develop and launch
innovative new lottery games such
as daily numerical games, annuity
games and multinational pooled
jackpot games, penetrating new
customer segments and increasing
sales to our existing customers.
Alongside lottery products, we
continue to launch complementary
products, including digital-only games.
Our trusted brands, extensive app
and website traffic and unparalleled
physical distribution networks, customer
relationships with a large portion of
the population and extensive data
are a significant competitive advantage
for cross-selling these products to
our existing customers.
We develop some games in house
and also maintain relationships with
leading suppliers of third party content,
allowing us to offer the most compelling
proposition to our customers.
We also constantly seek to apply
innovations and best practice from
individual markets across our
geographies, including in technology,
marketing and product innovation.
Our M&A strategy is based on a
rigorous set of return criteria and
analysis of risks. We focus on regulated,
developed markets, lottery and
complementary products.
We evaluate opportunities to expand
our stakes in our existing businesses
on an ongoing basis. In a number of
cases we have increased our stakes
in businesses through a series of
transactions, allowing us to acquire
controlling stakes at attractive valuations
and at a lower risk.
We also analyse opportunities to
make selective bolt-on acquisitions
in adjacent areas which allow us to
expand our product range or strengthen
our position in complementary areas.
We have acquired several of our
current businesses through complex
M&A processes, leveraging our industry
knowledge, our access to internally
generated and external capital and
our M&A expertise. These acquisitions
include the acquisition of SAZKA a.s.
when it was in financial distress, the
acquisition of our interest in OPAP
during the Greek crisis, the acquisition
of our interest in our Austrian businesses
from multiple sellers over several years.
We monitor opportunities as countries
privatize lotteries or concessions
come up for renewal. We believe that
our long-term investment in relationships
with governments and regulators,
along with our experience, size, track
record of driving profitability and
government revenues, and commitment
to ESG make us an attractive partner
for governments.
We are highly focused on cashflow
generation and see operational
efficiency as an important driver of
cash flow.
We have a strong track record of
increasing profitability at businesses
which we have acquired and costs
are always a key focus at existing operations.
In addition to leveraging best practice
from across the Group to grow
revenues, we target purchasing,
marketing and cost synergies across
the Group, for example in technology
and content.We also monitor
opportunities to optimise personnel
costs, particularly in land-based
businesses. For example, in 2020 we
introduced a restructuring programme
at CASAG which is expected to deliver
cost savings of c.€45 million a year
from 2022. We focus our marketing
expenditure by leveraging first-party
data to generate the highest
incremental revenues.
Responsible gaming is a key principle
of our business. We believe that we
are already leaders in responsible
gaming and make significant
contributions to the countries where
we operate, and we believe that this
will become increasingly crucial to
their success.
All of our operations implement
responsible gaming principles including:
(i) creating a safe environment for
players; (ii) protecting minors and
other vulnerable groups; and (iii)
educating the general public about
problem gambling.
We play an active role in the communities
of the markets in which we operate,
contributing to good causes such as
medical care, sports and culture, as
well as to government revenues.
6 Sazka Group Annual Report and Accounts 2020
Strategic Report
Our business at a glance
Our strategy
continued
Growth in digital business,
focus on data
Product innovation Inorganic growth Constant focus on
operational efficiency
Be a good corporate
citizen
We aim to continue to increase our
regulated mobile and online gaming
presence as consumers shift towards
online or multi-channel gaming, and
government policy and legislation
increasingly favour onshore operators
in the online channel.
Our digital initiatives benefit from our
trusted brands, our existing customer
relationships with a large proportion
of the population, our rapidly growing
first-party data and analytics, and
extensive traffic to our apps and
websites from players who purchase
their tickets through land-based channels.
We leverage these advantages to
target our marketing activities and
to cross-sell to other online gaming
verticals. We continue to invest to
boost our CRM and leverage
customer data.
A substantial and rapidly growing
portion of sales are already online in
the Czech Republic and Austria and
in certain products in Greece. We are
focused on expanding online sales in
Greece and Cyprus, and Italy, where
the online and mobile market accounts
for a relatively low proportion of the
gaming market.
We are also focused on improving
our first-party data on our land-based
customers through loyalty schemes
and other similar products, which
also allow us to target our marketing campaigns.
In each of our existing markets we
constantly evaluate opportunities to
introduce new products and optimize
our current offerings. We aim to offer
our consumers a full range of best in
class products and a unique
entertainment experience.
We seek to develop and launch
innovative new lottery games such
as daily numerical games, annuity
games and multinational pooled
jackpot games, penetrating new
customer segments and increasing
sales to our existing customers.
Alongside lottery products, we
continue to launch complementary
products, including digital-only games.
Our trusted brands, extensive app
and website traffic and unparalleled
physical distribution networks, customer
relationships with a large portion of
the population and extensive data
are a significant competitive advantage
for cross-selling these products to
our existing customers.
We develop some games in house
and also maintain relationships with
leading suppliers of third party content,
allowing us to offer the most compelling
proposition to our customers.
We also constantly seek to apply
innovations and best practice from
individual markets across our
geographies, including in technology,
marketing and product innovation.
Our M&A strategy is based on a
rigorous set of return criteria and
analysis of risks. We focus on regulated,
developed markets, lottery and
complementary products.
We evaluate opportunities to expand
our stakes in our existing businesses
on an ongoing basis. In a number of
cases we have increased our stakes
in businesses through a series of
transactions, allowing us to acquire
controlling stakes at attractive valuations
and at a lower risk.
We also analyse opportunities to
make selective bolt-on acquisitions
in adjacent areas which allow us to
expand our product range or strengthen
our position in complementary areas.
We have acquired several of our
current businesses through complex
M&A processes, leveraging our industry
knowledge, our access to internally
generated and external capital and
our M&A expertise. These acquisitions
include the acquisition of SAZKA a.s.
when it was in financial distress, the
acquisition of our interest in OPAP
during the Greek crisis, the acquisition
of our interest in our Austrian businesses
from multiple sellers over several years.
We monitor opportunities as countries
privatize lotteries or concessions
come up for renewal. We believe that
our long-term investment in relationships
with governments and regulators,
along with our experience, size, track
record of driving profitability and
government revenues, and commitment
to ESG make us an attractive partner
for governments.
We are highly focused on cashflow
generation and see operational
efficiency as an important driver of
cash flow.
We have a strong track record of
increasing profitability at businesses
which we have acquired and costs
are always a key focus at existing operations.
In addition to leveraging best practice
from across the Group to grow
revenues, we target purchasing,
marketing and cost synergies across
the Group, for example in technology
and content.We also monitor
opportunities to optimise personnel
costs, particularly in land-based
businesses. For example, in 2020 we
introduced a restructuring programme
at CASAG which is expected to deliver
cost savings of c.€45 million a year
from 2022. We focus our marketing
expenditure by leveraging first-party
data to generate the highest
incremental revenues.
Responsible gaming is a key principle
of our business. We believe that we
are already leaders in responsible
gaming and make significant
contributions to the countries where
we operate, and we believe that this
will become increasingly crucial to
their success.
All of our operations implement
responsible gaming principles including:
(i) creating a safe environment for
players; (ii) protecting minors and
other vulnerable groups; and (iii)
educating the general public about
problem gambling.
We play an active role in the communities
of the markets in which we operate,
contributing to good causes such as
medical care, sports and culture, as
well as to government revenues.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
7Sazka Group Annual Report and Accounts 2020
Robert Chvátal
Member of the
BoardofDirectors and
ChiefExecutive Officer
I am pleased to report that SAZKA
Group has delivered a robust
performance in a volatile year.
Our Gross gaming revenue (“GGR”)
increased by 6% and our Adjusted
EBITDA margin was a healthy 44%.
Our geographical diversification is
one of our many strengths that has
helped our performance this year as
certain geographies have performed
exceptionally well, helping to offset
weaker trading caused by COVID-19
related restrictions elsewhere.
If we look at the year by quarter, the
first quarter of 2020 started very
positively, with the strong momentum
across our geographies and products
which we saw in 2019 continuing into
the new year. Q2 was most impacted
by COVID-19 with our lottery operations
being impacted in Greece and Italy
and casinos being closed in Austria.
However our physical retail channel
in the Czech Republic and for the
lotteries in Austria was not extensively
disrupted and our online channels
performed very well. All of our
businesses traded well in Q3 as
lockdown measures were eased and
online sales remained high. The swift
return to normal trading in the markets
and channels that were more affected
by restrictions demonstrated resilient
demand for our products and the
agility of our teams. Although we
faced some restrictions in Q4, they
had less impact on our businesses
compared with the first lockdown as
Italy remained open and functional
and our online platforms benefited
from some new product launches.
2020 has shown that we are well
positioned to weather extreme
circumstances. We benefit in particular
from our diverse range of products,
sales channels and geographical
exposure, our favourable cost structure,
the strong cash flow generation of
our business and our strong liquidity
and access to multiple sources of
capital. We also have a wealth of
knowledge and expertise within the
organisation, and the agility and
resilience of our team meant that we
were well placed to deal with and
recover from the pandemic. We are
confident that these same strengths
position us well for future growth
regardless of the development of
the pandemic.
We have made great progress on our
strategic objectives in 2020. I am
particularly pleased with the success
of our online and digital-only offerings.
This was already a major strategic
focus for us and our experience in
the last several months has only
emphasised the benefits that it can
bring. The changes in consumer
behaviour as a result of COVID-19
have allowed us to develop our product
offering and increase our user base
faster than would have otherwise
been the case, with significant increases
in registrations and active users as
well as several exciting product
launches. Importantly, we have
maintained this strong momentum
as restrictions have eased. The best
example of this success is in our Czech
business which delivered 31.5% of its
GGR online. We will continue to invest
in our digital platforms to drive long-
term benefits.
In 2020 we also achieved important
strategic milestones in Austria by
closing the acquisition of an additional
17.2% stake in CASAG and signing a
shareholder’s agreement with ÖBAG
regarding the management of CASAG.
We are now making good progress
in the restructuring of the Austrian
casinos, which we expect to deliver
around €45 million of annual cost
savings, future-proofing the casinos
to deliver a flexible, resilient, and
profitable business.
We further strengthened our digital
offering in Greece by increasing
OPAP’s interest in Stoiximan’s Greek
and Cypriot business to 84.5%.
This further consolidates our position
as the leader in the Greek and Cypriot
markets and is complementary to
OPAP’s growing online presence.
I am also delighted about Apollo’s
strategic investment in SAZKA
Entertainment AG (parent company
of SAZKA Group). The investment
will help to take our business to the
next level and represents a vote of
confidence in our platform and strategy
for future growth from one of the
world’s leading investors in gaming
and largest alternative investment managers.
Overall, I am very pleased with SAZKA
Group’s strong performance and
strategic progress in 2020. I am proud
of the resilience our businesses have
shown and I would like to thank the
entire SAZKA Group team for their
hard work and perseverance, and for
seizing opportunities to progress our
strategic priorities.
Business and strategic review
Chief Executive Officer’s statement
8 Sazka Group Annual Report and Accounts 2020
Strategic Report
Overall, the performance of the
Group has been resilient in 2020
although certain businesses have
been impacted by COVID‑19 related
closures, mainly in Q2 and Q4.
COVID‑19
Before the impact of COVID-19, which
began to a material extent in mid-
March, in the countries in which we
operate, performance across our
businesses had been strong. However,
between mid-March and May, the
Group was impacted by lockdowns,
restrictions and also consumer
behaviour due to the first wave of
government restrictions. Having reopened
from May to November, in the last
few weeks of the year we again faced
some closures as a result of new
government measures.
In the Czech Republic, the majority
of the physical retail network remained
operational throughout the year which
meant that our operations were largely
unaffected. The top line has also been
supported by online sales of lotteries
and Digital-only Games, which were
very strong in Q2 and continued to
grow after the easing of restrictions.
In Greece, OPAP stores and PLAY
gaming halls faced periods of closure
during both the first and second
waves. When lockdowns were removed,
activities continued to be subject to
certain restrictions, including social
distancing, capacity limits and, at
times, prohibition on seating. However,
on a like-for-like basis, trading recovered
well as restrictions were removed.
In Austria, Austrian Lotteries’ business
remained largely unaffected by the
pandemic and delivered strong GGR
both offline and online. However,
land-based casinos and the VLT halls
were closed during both lockdowns
and certain social distancing restrictions
remained in place as activity resumed.
In Italy, sales of our three games were
stopped from March to early May by
the regulator. This did not happen
during subsequent increases in cases
and the majority of our POS network
remained open. Therefore, apart from
the impacted period in Q2, LOTTOITALIA
performed well in 2020.
Innovations and technology
We have also introduced numerous
new products and improvements to
our existing portfolio across geographies,
including launching the main jackpot
game online in Greece, launching
digital only games in Greece, launching
an annuity game in the Czech Republic,
and launching event draws – which
have been very successful in the
Czech Republic - in Austria.
On the tech side, Stoiximan recently
launched our own sports-betting
platform, we have continued to focus
on first party data as a source of value
and for player protection, and we
have made numerous UX improvements,
including launching dedicated apps
for online gaming and sports betting
in the Czech Republic.
Product
In FY 2020, Numerical Lotteries’ GGR
increased by 10% to €1,065 million,
Instant Lotteries’ GGR decreased by
32% to €144 million, Sports Betting’s
GGR decreased by 19% to €328 million,
Digital-only Games’ GGR grew by
463% to €145 million, and VLTs and
Casinos’ GGR increased by 13% to
€336 million. The movements reflect,
among other factors, strong online
sales and sales of Digital-only Games
in the Czech Republic and slower
sales of certain lottery products in Greece.
Czech Republic
While GGR increased by 10%, net
gaming revenue (“NGR”) decreased
by 8% as a result of the increase in
lottery tax from 23% to 35% which
took effect as of 1 January 2020.
Operating EBITDA decreased by 11%
compared with FY 2019 due to the
lottery tax increase and increased
marketing spend on major campaigns.
Greece and Cyprus
FY 2020 GGR and NGR were 30%
and 32% respectively below FY 2019
reflecting the closure of all land-based
activities at certain times during the
year. Operating EBITDA decreased
by 37% compared with FY 2019 due
to these closures but was partly offset
by good cost control and the positive
contribution from an increased interest
in Stoiximan’s Greek and Cypriot business.
Austria
FY 2020 GGR and EBITDA reflect a
strong performance in lotteries and
Digital-only Games but weaker casino
business. EBITDA for the full business
was €147 million which is before an
exceptional restructuring provision
of €51 million relating to the Austrian
casinos. EBITDA for the lottery business
was €151 million.
Equity method investees: FY 2020
equity income reflects a weak Q2
due to closures but otherwise stable
year-on-year performance at LOTTOITALIA.
Business and strategic review
Business review
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
9Sazka Group Annual Report and Accounts 2020
Business and strategic review
Strategic review and case studies
We have made a number of key
strategic transactions in 2020.
As a result of open market purchases
throughout the year, the February
and August scrip dividend, and the
exit of a minority shareholding in one
of the entities through which we hold
our interest, the Group’s ownership
in OPAP increased from 40.01% to
43.12% from 31 December 2019 to
31 December 2020 (equivalent to an
economic interest of 36.10%).
In March, the Group signed a shareholder
agreement with ÖBAG, an entity
owned by the Austrian Government,
regarding the management of CASAG.
In June, SAZKA Group acquired a
17.19% stake in CASAG. As a result,
SAZKA Group’s shareholding in
CASAG increased to 55.48% and
CASAG was fully consolidated as a
subsidiary from 26 June. The Group
also held a fixed-price purchase option
for an additional 4.31% stake (which
we exercised post year end), creating
total economic interest in CASAG of
59.80%.
In July, the Supervisory Board of
CASAG approved a plan to optimise
the cost structure of CASAG’s casino
business in Austria. The restructuring
plan is underway and expected to
generate cost savings of c.€45 million
per year, with the full run-rate achieved
from 2022.
In July and November, the Group’s
subsidiary OPAP acquired a controlling
interest in Stoiximan, the leading
online gaming business in Greece and
Cyprus. As a result of this transaction,
OPAP’s interest in Stoiximan increased
from 36.75% to 84.49%. Through these
acquisitions, OPAP has significantly
strengthened its position in Digital-
only Games in Greece.
Revitalising CASAG’s
Austrian casinos
During 2020 we became the majority
shareholder of CASAG, and have
begun the process of implementing
significant change to reduce costs
and drive revenue growth. One major
initiative, project ReFIT, is focused
on optimisation of the Austrian casinos
as well as creating lean HQ and
corporate support functions.
Historically, the casinos have been
under-managed with an inefficient
cost structure and high personnel
costs. The ReFIT programme was
initiated in cooperation with McKinsey
& Company with the aim of making
the casinos profitable and resilient,
with a more flexible cost structure
and lean operations. ReFIT will include
cost reduction and operational
efficiencies in all 12 Austrian casinos,
as well as at HQ.
Implementation began in 2020 with
total cost savings of c.€45 million
p.a. expected to be realised by 2022.
The majority of savings are expected
in 2021 and we will then aim for
continuous value creation programmes,
in both Casinos and Lotteries, which
we envision will begin in the second
half of 2021, after major parts of
ReFIT have already been put in place.
Going forward, the focus will be on
on value creation through product
innovation and operational efficiency
to create a business with a profitable
and sustainable future.
10 Sazka Group Annual Report and Accounts 2020
Strategic Report
Stoiximan – establishing a leading position across channels in Greece and Cyprus
Business and strategic review
Case studies
continued
Growing online sales
in the Czech Republic
Leveraging our
international experience
– event draws in Austria
At the end of 2018, we completed
the acquisition of a 36.75% interest
in Stoiximan, the leading online gaming
operator in Greece, and Betano, a
fast-growing international online
gaming business. Betano is already
among the market leaders in Romania
and Cyprus, while it has also started
operations in Germany, Austria
and Portugal.
In 2020 we completed the acquisition
of two further interests in Stoiximan,
taking our interest to 84.49% and we
began to consolidate – an example
of our strategy of gradually increasing
our interests in businesses which we
know and like.
The transaction complements our
Greek subsidiary OPAP’s historical
strengths in land-based retail as well
as its growing digital operations,
cementing our position as the leading
gaming operator across products
and channels in Greece.
In 2020, Stoiximan recorded GGR of
€268 million, showing strong
momentum versus 2019.
Digital is a core part of our strategy,
including products developed specifically
for and played via online and mobile
platforms and multi-channel access
to games also offered through our
land-based retail POS network.
Since the launch of our Digital
Entertainment Hub (“DEH”) in March
2017 the Czech Republic has become
one of our most digitally advanced
markets. We currently offer all our
games in the Czech Republic through
online channels as well as many
games only offered online: eLotteries
(lottery-style products designed
specifically for online), eScratches
(scratch card-style products designed
specifically for online) and digital-
only games. The growth since launch
has been very encouraging with
success in online sales of both lottery
products and digital-only games.
In particular, the digital platform has
been a great benefit this year, bringing
existing users online during the
pandemic and reaching new audiences
across all adult age groups.
The percentage of our Czech GGR
which has been derived online
increased from 19.4% in 2019 to 31.5%
in 2020. Importantly, the growing
online sales have been accompanied
by ongoing good performance of
the physical retail channel, where
GGR was flat year on year despite
the challenges of COVID-19.
This momentum has been supported
by successful cross-selling, leveraging
our brands, traffic to our websites and
apps from lottery players and a more
granular knowledge of our customer base.
As a multinational operator, we
constantly look for opportunities to
apply best practices across the
Group, driving revenue growth and
cost savings. In Austria, we introduced
“event draws” for the main jackpot
game Lotto, starting with a Friday
13th theme. Event draws proved
very successful in the Czech Republic,
with fun, tailored marketing linked
to specific dates or events – an
example would be the appearance
of a comet. The results have been
very encouraging and we will increase
the number of Event draws in 2021.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
11Sazka Group Annual Report and Accounts 2020
Business model
How we create value
Inorganic growth
Our assets are highly cash flow
generative, even after investments in
organic growth.
We reinvest the cash they generate
in organic growth initiatives, including
M&A and participation in tenders, as
well as returning cash to shareholders.
Organic growth
We create value through organic
growth by leveraging the unique
strengths of our platform:
•
Sharing best practices and proprietary
insights among markets, including
product, channel and marketing
innovations and operational and
cost efficiency measures;
• Applying our deep understanding
of consumer preferences and trends;
and
•
Capturing the benefits of our scale
to achieve cost savings with suppliers
and optimise access to external financing.
We drive revenue growth by offering
our customers a complete gaming
and entertainment experience,
supported by:
• The strength of our brands;
•
Long-established customer
relationships with a broad cross-
section of the population;
•
Traffic to our sites, apps and physical
POS; and
• Our unique and rapidly increasing
first-party data and advanced analytics.
Investment
in M&A,
tenders and
organic growth
Organic cash
flow from
existing and
new businesses
External
capital
Cash returns to equity
and debt providers
We grow though M&A, tenders and privatisations, and
organic growth
We have acquired all our existing businesses through M&A,
tenders and privatisations, subsequently driving improved revenue
and cost performance organically under our management.
12 Sazka Group Annual Report and Accounts 2020
Strategic Report
Business model continued
Our existing businesses
Our lottery operations operate under
long-term and in most cases exclusive
licences; our other products are
offered under exclusive and non-
exclusive licences, depending on
the product and jurisdictions.
In most markets, our lottery operations
generate revenues from product
sales, primarily via agents and our
own online channels. In Italy, our
joint venture LOTTOITALIA receives
a share of revenues from the sale of
ticket sales collected by the Italian
Government from the games operated
on its behalf.
Our key operating costs, including
taxes and commissions to agents
and content providers, are linked to
our sales; marketing costs, another
major category, are flexible in the
medium term.
Our businesses are asset light, with
the vast majority of our POS network
owned and operated by third parties,
and limited maintenance CAPEX.
Amount staked Amount of wagers placed by customers
A
Commission
Percentage of amount staked retained
as fee for running the lottery
B
Costs
OPEX
SG&A
IT related costs
Other expenses
Personal expenses
Marketing expenses
D
Revenues from contract with customers
x =
A B C
EBITDA
— =
C D E
Amount staked Amount of wagers placed by customers
A
Players’ winnings Winners’ pay-out
B
Gaming taxes
Calculated as tax base (usually GGR) multiplied
by rate; varies based on type of game and country
D
Agent commission
(variable, calculated as a %
of amount staked/NGR)
IT related costs from gaming
suppliers like Intralot, IGT,
Playtech etc. (partially fixed,
partially linked to GGR or NGR)
Other expenses include rental,
content fees and other expense
Personal expenses
Marketing expenses
(flexible in medium term)
Costs
OPEX
SG&A
F
Gross gaming revenue (GGR)
—
=
A B C
Net gaming revenue (NGR)
—
=
C D E
EBITDA
— =
E F G
Italy
Austria Czech Republic Greece Cyprus
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
13Sazka Group Annual Report and Accounts 2020
Kenneth Morton
Chief Financial Officer
Financial review
Chief Financial Officer’s statement
Contents
Chief Financial Officer statement 14
Financial highlights 15
Management’s discussion and analysis 15
1. Significant transactions and developments during 2020 16
2. Comparison of results of operations for the year ended 31 December 2020
and 31 December 2019 19
2.1 Austria – Segment summary 24
2.2 Czech Republic – segment summary 26
2.3 Greece and Cyprus – segment summary 27
2.4 Italy – Segment summary 29
3. Consolidated statement of cash flow 30
3.1 Dividends, shareholder distributions and intragroup interest payments made 30
3.2 Capital expenditures 31
4. Further information 31
History of growth and profitability 33
I am very pleased that despite the
COVID-19 pandemic we achieved
strong operating results and maintained
high profitability in 2020, as well
delivering a number of important
M&A and financing initiatives in a
challenging execution environment.
Our financial performance bears
witness to the resilience of our
businesses and our geographical,
product and channel diversification.
We continued to make good process
strategically, closing several major
acquisitions, including the acquisition
of a 17.2% stake in CASAG in June (as
a result of which we began to consolidate
CASAG), the acquisition of a controlling
stake in Stoiximan, and a further
increase of our interest in OPAP.
In addition to financing our acquisitions,
we continued to simplify and improve
the Group’s capital structure, refinancing
several facilities at operating and
holding entities in the group at the
parent company level, including an
€300m international bond issuance
and a €640m syndicated bank loan
which includes an €200m revolving
credit facility. We are very pleased
by the support that our relationship
banks have shown us in an environment
of significant uncertainty. The Group
is now well positioned to finance
future growth, both organic and
through M&A and participation
in tenders.
Last but not least, we reached an
agreement with Apollo, one of the
world’s leading private investment
funds and leading investors in gaming,
for a €500m investment in new our
immediate parent company, which is
a great vote of confidence in our Group.
14 Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial performance
Our financial performance in certain
geographies was impacted by COVID-19
and related restrictive measures.
These particularly impacted our
physical retail channel in Greece and
Cyprus and casinos in Austria and
internationally (in Q1-2 and Q4), and
our business in Italy (in Q1-Q2, however
not in Q4). Our online businesses
performed very well, with strong
growth in Austria, the Czech Republic,
and at Stoiximan in Greece and Cyprus,
and the physical retail channel in
Austria and the Czech Republic was
largely unimpacted after a short
period of disruption at the beginning
of the first wave, however this only
partially offset the negative impact
on consolidated basis. Excluding the
effect of new acquisitions, our GGR
and NGR dropped 26.3% and 30.3%
respectively. Nevertheless, the resilient
and adaptive nature of our businesses,
together with a high portion of variable
expenses and strong cost control,
allowed us to maintain a 44.4%
Adjusted EBITDA margin. After the
first wave of pandemic restrictions
were relaxed, the affected businesses
showed a strong recovery, visible in
the good results of all our segments
in Q3. The continuing fast paced
growth in our online channel, efficiencies
gained through cost-saving adjustments
and new acquisitions position us well
to deliver strong top-line performance
and profitability in the future periods.
Acquisition of additional
interest and consolidation of
CASAG
In March 2020, we signed a shareholder
agreement with ÖBAG, an entity
through which the Austrian government
holds interests in certain strategically
important companies and the second
largest shareholder of CASAG, the
entity which comprises our Austria
segment and is parent company of
Austrian Lotteries. In June 2020, we
purchased a 17.19% stake in CASAG.
As a result, our shareholding in CASAG
increased to 55.48% and CASAG has
been consolidated as a subsidiary
from 26 June 2020. In 2019 the Group
also held a fixed-price purchase option
for an additional 4.31% stake, creating
total economic interest in CASAG of
59.80%. The call option was exercised
in January 2021
Acquisition of additional
interest and consolidation
ofStoiximan
From 2018 we have held a 36.75%
interest in Stoiximan, the leading
online gaming business in Greece and
Cyprus, and Betano, a fast-growing
international online gaming business.
During 2020, we acquired further
interests in Stoiximan, reaching a total
interest of 84.49%, while retaining
our original minority stake in Betano.
Stoiximan has been consolidated as
a subsidiary from 18 November 2020.
Financing and simplification
of capital structure
During 2020 we undertook a number
of major financing transactions and
continued to implement our strategy
of simplification and optimisation of
the Group’s capital structure.
In February 2020, the Company issued
€300 million of notes due 2027.
This followed our successful debut
international bond issuance in November
2019. We used the proceeds of the
issuance to refinance bank loans at
our subsidiaries CAME and IGH.
In June 2020, CAME drew a €105 million
bank loan with a maturity date of
30 September 2025. The proceeds
were used to pay the consideration
for the acquisition of the 17.19% stake
in CASAG.
In October 2020, OPAP issued
€200 million of 7-year retail bonds,
with a yield of 2.10%.
In November, we drew a €100 million
bilateral bank loan at the Company level.
IIn December 2020, we refinanced
the €100 million bilateral bank loan
at the Company level, €105m CAME
loan and €226 million bank loan of
our Czech business, using the proceeds
from a €640 million syndicated loan
facility. The facility includes a
€200 million RCF, improving our liquidity.
As a result of the two major refinancings
in 2020, the capital structure of the
Group now consists of the syndicated
loan facility and international and
local bonds at the level of the Company,
and debt at OPAP and CASAG.
Previous midco facilities and the
facility at SAZKA a.s. have now been
fully repaid.
Apollo investment
In November 2020 we announced a
€500 million investment by funds
managed by Apollo Global Management,
Inc., one of the world’s leading private
investment fund and leading investors
in gaming, in SAZKA Entertainment
A.G., a newly created holding company
of the Company. The transaction
closed in March 2021.
Financial review
Financial highlights
Management’s discussion
and analysis
The financial and operating
information contained in this
“Management’s discussion and
analysis” comprises information
of SAZKA Group a.s. (“SAZKA
Group” or the “Company” and,
together with its subsidiaries,
joint ventures and associates,
the “Group” or “we”).
This MD&A contains certain
forward-looking statements,
which are based on assumptions
about our future business.
Our actual results could differ
materially from those contained
in forward-looking statements
as a result of many factors,
including, but not limited to,
those described under “Forward-
Looking Statements” and
“Risk Factors”.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
15Sazka Group Annual Report and Accounts 2020
Financial review
Management’s discussion and analysis
1. Significant transactions and developments during 2020
1.1 Financing
In February 2020, the Company completed an offering of €300 million aggregate principal amount of 3 7/8%
Senior Notes due 2027 (the “2027 Senior Notes”). The 2027 Senior Notes were priced at 99.24% of par. The proceeds
were used to repay and cancel debt at CAME and IGH.
In March 2020, OPAP repaid a €200 million bank loan.
In March 2020, OPAP drew a €100 million loan under a revolving facility with a maturity date of 27 March 2021.
The loan was subsequently repaid in October 2020 and remains available as a committed credit line.
In April 2020, OPAP drew a €200 million bank loan with an initial maturity date in October 2020 that was
subsequently extended to April 2021. In July 2020 OPAP repaid €50 million of the loan while the remaining
€150 million was repaid in October 2020.
In May 2020, OPAP signed a new €100 million bank loan. This bank loan has not been drawn.
In June 2020, CAME drew a €105 million bank loan with a maturity date of 30 September 2025. The proceeds
were used to pay the consideration for the acquisition of a 17.2% stake in CASAG. The loan was repaid in
December 2020.
In October 2020, OPAP completed an offering of €200 million of bonds bearing interest of 2.10% and priced at
100% of par. The bonds are due 2027.
In October 2020, the Company signed a €100 million bilateral bank loan. The facility was fully drawn in November
and repaid in December.
In December 2020, the Company signed a €640 million senior facilities agreement with a syndicate of banks.
The financing includes a €220 million amortising facility, a €220 million non-amortising facility and a €200 million
revolving credit facility. In December the Company drew €450 million to refinance the €100 million bank loan at
SAZKA Group, €105 million bank loan at CAME and CZK 5,939 million (€226 million) bank loan at SAZKA a.s.
The loan is secured by pledges of shares in subsidiaries of the Company and intragroup receivables and benefits
from certain guarantees. This security and guarantee package is shared pari passu with the bonds issued by SAZKA
Group a.s. and SAZKA Group Financing a.s., see Note 26 to the Consolidated financial statements.
1.2 Acquisitions
In March 2020, the Group signed a shareholder agreement with ÖBAG, an entity owned by the Austrian government.
In June 2020, the Group purchased a 17.19% interest in CASAG. As a result, the Group’s shareholding in CASAG
increased to 55.48% and CASAG has been consolidated as a subsidiary from 26 June 2020.
In July and November, the Group’s subsidiary OPAP acquired a controlling interest in Stoiximan, the leading online
gaming business in Greece and Cyprus, for cash consideration of €154.7 million plus an estimated contingent
consideration (earn-out) of €128.3 million, which will be paid in the 2021 and 2022, subject to performance criteria.
As a result of this transaction, OPAP’s interest in Stoiximan increased from 36.75% to 84.49%.
1.3 Other developments
In January 2020, OPAP declared an extraordinary dividend of €1.00 per share; the total gross dividend amount
was €319.8 million. The dividend was paid in February 2020.
In June 2020, OPAP declared an ordinary dividend of €0.30 per share; the total gross dividend amount was
€99.9 million. The dividend was paid in August 2020.
In both cases, shareholders had the option of receiving cash or shares under OPAP’s scrip dividend programme.
The Group elected to receive scrip in both cases which resulted in an increase its interest in OPAP by 1.88%.
During 2020, the Group increased its interest in OPAP by 1.88% through open market purchases of shares for an
aggregate price of €54.5 million.
During 2020, the Group further increased its interest in OPAP through intragroup purchases by the Company from
SDHH, a subsidiary in which the Group owns less than 100%, and as a result of a minority investor exiting SDVCIC.
16 Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial review
Management’s discussion and analysis continued
As a result of the above-mentioned scrip dividend programme, open market purchases and the effect of the SDHH
and SDVCIC transactions, the Group’s shareholding in OPAP increased from 40.01% to 43.12% of the total issued
share capital, while the Group’s economic interest increased from 31.99% to 36.10%.
1.4 COVID-19
While all our digital channels continued to operate without interruption, some of our physical retail networks were
affected by the first wave of COVID-19 restrictions in the first half of 2020. Subsequently, all operations resumed
full activity in the third quarter, albeit with some minor restrictions in certain cases. In the fourth quarter, our physical
retail networks faced some restrictions from the second wave of COVID-19, but to a lesser extent compared with
the first wave.
In both waves, the measures had a limited impact on the availability of our lottery products in Austria and the
Czech Republic through their land-based channels, as key categories of points of sale remained open. Our physical
retail channels that were affected were those in Greece and Cyprus and casinos in Austria and internationally (in
Q1-2 and Q4), and our business in Italy (in Q1-Q2, however not in Q4). Our online businesses performed very well,
with strong growth in Austria, the Czech Republic, and at Stoiximan in Greece and Cyprus.
The tables below outline the quarterly development of our operating segments and illustrate the impact which
the COVID-19 restrictions had on our businesses.
Austria 1Q20 2Q20 3Q20 4Q20
GGR1 308.9 225.6 322.8 276.9
% change from comparative period (8%) (28%) (10%) (22%)
Operating EBITDA 46.1 13.9 63.6 23.5
% change from comparative period (11%) (66%) 96% (72%)
1 Includes also revenues from non-gaming business.
of which Austrian Lotteries subsegment 1Q20 2Q20 3Q20 4Q20
GGR 206.3 191.9 216.6 235.1
Operating EBITDA 37.1 36.5 40.2 36.9
Austrian Lotteries performed well and delivered strong growth during the year as a result of strong online sales
and resilience in the physical retail channel, with key categories of points of sale remaining open throughout
the year.
However, non-lotteries activities, primarily casinos in Austria and internationally, were impacted by both waves of
COVID-19 restrictions, having a negative impact on profitability in both the second and the fourth quarter. The impact
of closure was unique in this business due to the relatively high proportion of fixed costs at the casinos compared
to our other businesses.
Czech Republic 1Q20 2Q20 3Q20 4Q20
GGR 77.0 67.0 74.9 96.3
% change from comparative period 25% 0% 5% 12%
Operating EBITDA 22.3 24.0 19.6 17.9
% change from comparative period (3%) 9% (24%) (25%)
Our Czech Republic operations were impacted to a moderate extent by restrictions during the first wave of
COVID-19, especially in April, when there was a limited period of lower sales via our physical points of sale, but
recovered quickly and posted very good performance in the third and fourth quarters. Similar to our Austrian
operations, online sales were very strong, achieving 31.5% share of the GGR compared to 19.4% in 2019, and the
physical retail channel was resilient, with key categories of points of sale remaining open throughout the year.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
17Sazka Group Annual Report and Accounts 2020
Financial review
Management’s discussion and analysis continued
Greece and Cyprus 1Q20 2Q20 3Q20 4Q20
GGR 328.3 179.6 391.0 230.8
% change from comparative period (17%) (53%) (1%) (48%)
Operating EBITDA 86.3 15.9 105.3 52.3
% change from comparative period (24%) (82%) (2%) (50%)
Our Greece and Cyprus operations were impacted by the first COVID-19 restrictions from the end of March to May.
In June and especially during the third quarter, the business recovered and performed strongly, although still
operating under certain limited restrictions, while the second lockdown impacted the business from the middle of
November into the first quarter of the year 2021. The Stoiximan business was not affect by COVID-19 and delivered
strong growth in 2020, however consolidated GGR only includes Stoiximan’s contribution for December.
Italy
In Italy, the regulator suspended lottery draws for some weeks during the first wave of COVID. This was not repeated
when COVID-19 restrictions were reintroduced later in the year, and the vast majority of the distribution network
remained open. Overall, trading recovered well after operations relaunched, with the business delivering a record
performance at the end of the year.
Other impacts
Impairment testing triggered by COVID-19 resulted in an aggregate impairment of non-current assets of €24.4 million
in our Greece and Cyprus operations (related to the Horse Races business) and impairment of €21.1 million in Austria
relating to the Austrian casino business (of which €19.4 million related to the period before we consolidated CASAG).
Our Greece and Cyprus business also recorded impairments of receivables from agents and incurred additional
expenses in the form of support to agents to maintain the distribution network of a total €11.4 million, and as a
result of COVID-19 restrictions, inability to generate GGR from certain products caused an additional write-off of
previously accrued GGR contribution assets of €13.5 million.
Under the concession agreement of our subsidiary Hellenic Lotteries S.A., it has to pay 30% of annual GGR to the
Greek state, subject to a €50 million minimum annual amount. Hellenic Lotteries S.A. believes the €50.0 million
minimum amount is not applicable for 2020 as the force majeure clause in the concession agreement was triggered
by the pandemic-related restrictions imposed by the Greek state, and only €12.3 million (30% of actual 2020 GGR)
is payable. Hellenic Lotteries S.A. has therefore filed a request for arbitration. As a prudent measure, the Group
recorded gaming taxes expense for this outstanding liability of €37.7 million as of 31 December 2020.
On the other hand, our business received some benefits from governmental COVID-19 compensation programmes.
Our Greek business benefited from €1.8 million of lease discounts and €12.3 million tax liability early payment
discount, and our Austria business received €17.2 million in government support for furloughed staff.
1.5 Subsequent events
For developments after year end please refer to the Subsequent events note to the Consolidated Financial Statements.
18 Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial review
Management’s discussion and analysis continued
2. Comparison of results of operations for the year ended 31 December 2020 and
31December 2019
Year ended 31 December Change
Management analysis of consolidated results 2020 2019 abs %
Amount staked 6,831.4 5,456.8 1,374.6 25.2%
Gross gaming revenue (GGR) 2,018.0 1,906.1 111.9 5.9%
Gaming taxes (805.5) (595.0) (210.5) 35.4%
Net gaming revenue (NGR) 1,212.5 1,311.1 (98.6) ( 7. 5 %)
Revenue from non-gaming activities 143.2 147.3 (4.1) (2.8%)
Other operating income 96.8 12.5 84.3 n/m
Agents’ commissions (3 37. 1) (419.8) 82.7 (19.7%)
Materials, consumables and services (309.8) (330.2) 20.4 (6.2%)
Marketing services (124.9) (92.4) (32.5) 35.2%
Personnel expenses (223.2) (106.1) (117.1) n/m
Other operating expenses (7 7.7) (50.6) (27. 1) 53.6%
Share of profit of equity method investees (net of tax) 79.5 120.4 (40.9) (34.0%)
Operating EBITDA 459.3 592.2 (132.9) (22.4%)
Adjusted for:
Inorganic business development costs 14. 8 10.4 4.4 n/m
Adjustments in Greece and Cyprus segment (COVID-19 driven) 66.0 – 66.0 n/m
Other adjustments (2.0) 0.6 (2.6) n/m
Adjusted EBITDA 538.1 603.2 (65.1) (10.8%)
Adjusted EBITDA margin 4 4.4% 46.0% (1.6%)
Depreciation and amortization (158.5) (112.9) (45.6) 40.4%
Impairment of non-financial assets (26.1) (8.7) (17.4) n/m
Restructuring personnel cost (50.6) – (50.6) n/m
Gain from remeasurement of previously held interest in equity method
investee 142.7 – 142.7 n/m
Other gains and losses 8.9 – 8.9 n/m
Profit from operating activities 375.7 470.6 (94.9) (20.2%)
Interest income 2.2 7.5 (5.3) (70.7%)
Interest expense (101.8) (70.3) (31.5) 44.8%
Other finance income and expense (16.0) (50.2) 34.2 (68.1%)
Finance costs, net (115.6) (113.0) (2.6) 2.3%
Profit before income tax 260.1 357.6 (97.5) (27.3%)
Income tax expense (35.7) (46.3) 10.6 (22.9%)
Profit after tax 224.4 311.3 (86.9) (27.9 %)
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
19Sazka Group Annual Report and Accounts 2020
Year ended 31 December Change
Management analysis of results excluding CASAG and Stoiximan 2020 2019 abs. rel.
Amount staked 4,026.4 5,456.8 (1,430.4) (26.2%)
Gross gaming revenue (GGR) 1,404.7 1,906.1 (501.4) (26.3%)
Gaming taxes (491.0) (595.0) 104.0 (17. 5% )
Net gaming revenue (NGR) 913.7 1,311.1 (397.4) (30.3%)
Revenue from non-gaming activities 116.6 147. 3 (30.7) (20.8%)
Other operating income 70.1 12.5 57.6 n/m
Agents’ commissions (286.9) (419.8) 132.9 (31.7%)
Materials. consumables and services (271.1) (330.2) 59.1 (1 7.9 % )
Marketing services (86.8) (92.4) 5.6 (6.1%)
Personnel expenses (106.6) (106.1) (0.5) 0.5%
Other operating expenses (63.1) (50.6) (12.5) 24.7%
Share of profit of equity method investees (net of tax) 49.5 69.5 (20.0) (28.8%)
Operating EBITDA 335.4 541.3 (205.9) (38.0%)
Adjusted for:
Inorganic business development costs 14. 8 10.4 4.4 n/m
Adjustments in Greece and Cyprus segment (COVID-19 driven) 66.0 – 66.0 n/m
Other adjustments (2.0) 0.6 (2.6) n/m
Adjusted EBITDA 414.2 552.3 (138.1) (25.0%)
Adjusted EBITDA margin 45.3% 42.1% 3.2% –
Depreciation and amortization (122.4) (112.9) (9.5) 8.4%
Impairment of non-financial assets (24.4) (8.7) (15.7) n/m
Other gains and loss 7.5 – 7.5 n/m
Profit from operating activities 196.1 419.7 (223.6) (53.3%)
Interest income 2.3 7. 5 (5.2) (69.3%)
Interest expense (97.6 ) (70.3) (27. 3 ) 38.8%
Other finance income and expense (13.9) (50.2) 36.3 (72.3%)
Finance costs. net (109.2) (113.0) 3.8 (3.4%)
Profit before income tax 86.9 306.7 (219.8) (71.7%)
Income tax expense (29.0) (4 6.3) 17. 3 (37.4%)
Profit after tax 57.9 260.4 (202.5) (7 7.8%)
In addition to the impact of COVID-19, consolidated results for 2020 are also impacted by the consolidation of
CASAG following the acquisition of a controlling stake on 26 June 2020, and also by the consolidation of Stoiximan
from 18 November 2020.
Financial review
Management’s discussion and analysis continued
20
Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial review
Management’s discussion and analysis continued
Given the substantial contribution of CASAG to all line items in the second half of the year, consolidated numbers
are not fully comparable. The following commentary therefore also includes comparison of the consolidated
results excluding contributions from CASAG (as a fully consolidated subsidiary from HY 2020 and as an equity
method investee before) and Stoiximan (as a fully consolidated subsidiary from 18 November 2020 and as an
equity method investee before) (“excluding CASAG and Stoiximan”).
Results excluding CASAG and Stoiximan were calculated by deducting, per line item, contribution of Austria
operating segment and Stoiximan, as disclosed in the Note 7 Operating Segments in the Consolidated Financial
Statements, from the consolidated results of the Group. This includes deduction of share of profit of equity
accounted investee for the period before acquisition, see also Note 20 in the Consolidated Financial Statements.
Consolidated results were influenced by the restrictions due to COVID-19, see description in section 1.4 above for
more details.
Gross gaming revenue (GGR)
GGR for 2020 increased by €111.9 million, or 5.9%, to €2,018.0 million, with the effect of consolidation of CASAG
in the second half more than outweighing the impact of COVID-19 restrictions.
Excluding CASAG and Stoiximan, GGR decreased by €501.4 million, or 26.3%, to €1,404.7 million, driven by a
decrease in the amounts staked. While the Czech business delivered a strong performance, growing 10% year-to-
year overall with the rapidly increasing share of the online business, the Greek operations suffered from the COVID-19
restrictions in both pandemic waves.
Gaming taxes
Gaming taxes for 2020 increased by €210.5 million, or 35.4%, to €805.5 million, driven by the effect of consolidation
of CASAG.
Excluding CASAG and Stoiximan, gaming taxes for 2020 decreased by €104.0 million, or 17.5%, to €491.0 million,
following a decrease in GGR and the impact of an increase in the lottery tax in the Czech Republic from the 23%
rate valid in 2019 to 35% from January 2020.
Net gaming revenue (NGR)
NGR for 2020 decreased by €98.6 million, or 7.5%, to €1,212.5 million, driven by the factors set forth above.
Excluding CASAG and Stoiximan, NGR for 2020 decreased by €397.4 million, or 30.3%, to €913.7 million, reflecting
a decrease in GGR and the additional negative impact of the lottery tax increase in the Czech Republic.
Revenue from non-gaming activities
Revenue from non-gaming activities decreased by €4.1 million, or 2.8%, to €143.2 million, with the effect of the
consolidation of CASAG somewhat mitigating the impact of COVID-19 restrictions.
Excluding CASAG and Stoiximan, revenue from non-gaming activities decreased by €30.7 million, or 20.8%, to
€116.6 million, following the GGR trends. Double digit growth in the Czech business could not offset impact of the
lockdown restriction on revenues of the Greek operations.
Other operating income
Other operating income increased by €84.3 million to €96.8 million, driven by the effects of the consolidation of
CASAG together with effect of the GGR contribution prepayment in Greece described below.
Excluding CASAG and Stoiximan, other operating income increased by €57.6 million to €70.1 million. Other operating
income includes €42.5 million of the positive effect of the GGR contribution prepayment in Greece, which represent
an allocation of the aggregate tax prepayment of €1.83 billion over the period of 10 years beginning in October
2020 on an accrual basis plus the income tax compensating effect. See Note 3.f iii. and Note 9 in the Consolidated
Financial Statements.
Agent’s commissions
Agents’ commissions decreased by €82.7 million, or 19.7%, to €337.1 million driven by the factors influencing GGR
and NGR set for the above.
Excluding CASAG and Stoiximan, agents’ commissions decreased by €132.9 million, or 31.7%, to €286.9 million.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
21Sazka Group Annual Report and Accounts 2020
Materials, consumables and services
Materials, consumables and services decreased by €20.4 million, or 6.2%, to €309.8 million, with the effect of the
consolidation of CASAG more than outweighing the impact of cost-savings measures introduced to mitigate the
impact of COVID-19 restrictions.
Excluding CASAG and Stoiximan, materials, consumables and services decreased by €59.1 million, or 17.9%, to
€271.1 million. All our businesses implemented cost-savings measures as a response to COVID-19 restrictions,
however due to the fixed nature of parts of the costs, the relative decrease does not fully match the decrease
in GGR.
Marketing services
Marketing services increased by €32.5 million, or €35.2%, to €124.9 million, where the effect of consolidation of
CASAG and level of marketing services expenses in Austria measure the positive impact of cost-savings measures
as a response to COVID-19 restrictions implemented throughout the Group.
Excluding CASAG and Stoiximan, marketing services decreased by €5.6 million, or 6.1%, to €86.8 million. While we
made savings in marketing in some areas, we also realized targeted spending on campaigns to drive revenue
growth in new product lines and the online distribution channel, with a focus on ROI.
Personnel expenses
Personnel expenses increased by €117.1 million to €223.2 million, driven by the effect of the consolidation of CASAG.
Excluding CASAG and Stoiximan, personnel expenses increased by €0.5 million, or 0.5%, to €106.6 million, due to
the mostly fixed nature in the medium term of personnel expenses.
Other operating expenses
Other operating expenses increased by €27.1 million to €77.7 million, driven by the effect of the consolidation
of CASAG.
Excluding CASAG and Stoiximan, other operating expenses increased by €12.5 million, or 24.7%, to €63.1 million.
There is no single major driver, but a combination of smaller factors such as an increase in trade receivables provision
in our Greece business and €5.2 million special support paid to our agents in Greece, who bore essentially all the
costs of maintaining our dedicated agents’ stores during the period they were not able to open.
Share of profit of equity accounted investees
Share of profit of equity accounted investees decreased by €40.9 million, or 34.0%, to €79.5 million, driven by the
impact of COVID-19 restrictions on CASAG during the first half of the year, while it was accounted using the equity
method, and LOTTOITALIA.
Excluding CASAG and Stoiximan, share of profit of equity accounted investees decreased by €20.0 million, or
28.8%, to €49.5 million, driven by the the impact of COVID-19 restrictions on LOTTOITALIA.
Operating EBITDA
Operating EBITDA decreased by €132.9 million, or 22.4%, to €459.3 million as a result of the factors set forth above.
Excluding CASAG and Stoiximan, operating EBITDA decreased by €205.9 million, or 38.0%, to €335.4 million.
Adjusted EBITDA
Adjusted EBITDA decreased by €65.1, or 10.8%, to €538.1 million.
Excluding CASAG and Stoiximan, Adjusted EBITDA decreased by €138.1 million, or 25%, to €414.2 million, as a
result of the change in Operating EBITDA and the adjustment factors described below:
• During 2020 the Group adjusted EBITDA for costs incurred by the Greece and Cyprus business in connection
with COVID-19 restrictions, including impairments of GGR contribution asset, agents’ receivables write-offs,
additional costs related to GGR contribution and others, in the aggregate amount of €66.0 million. See Greece
and Cyprus segment for more details.
•
During 2020 the Group also adjusted EBITDA for costs associated with inorganic business development, including
costs related to its UK National Lottery bid.
Financial review
Management’s discussion and analysis continued
22
Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial review
Management’s discussion and analysis continued
Depreciation and amortization
Depreciation and amortization increased by €45.6 million, or 40.4%, to €158.5 million, driven primarily by the effect
of the consolidation of CASAG and increase in connection with investments into gaming systems and equipment.
Excluding CASAG and Stoiximan, depreciation and amortization expenses increased by €9.5 million, or 8.4%, to
€122.4 million.
Impairment of non-current assets
Impairment of non-current assets of €26.1 million is primarily driven by the impact of the COVID-19 restrictions on
parts of our Greece business, where an aggregate impairment of €19.0 million was recognized for brand, equipment
and leased assets in the Horse Races part of the business.
Restructuring costs
Restructuring costs of €50.6 million comprises estimated costs of the restructuring plan in CASAG announced in
July 2020, which is expected to generate significant run-rate costs savings from 2021 onward.
Gain from remeasurement of previously held interest in equity method investee
Gain from remeasurement of previously held interest in equity accounted investee of €142.7 comprises a non-cash
upward revaluation of the 36.75% equity accounted interest in Stoximan held prior to the completion of the
acquisition of additional interests in Stoiximan in November 2020 and subsequent consolidation. The fair value
was estimated with reference to the purchase prices of the acquired controlling interest.
Other gains and losses
Other gains and losses of €8.9 million comprises gains from revaluation of non-derivative financial instruments
held accounted at fair value.
Profit from operating activities
Profit from operating activities decreased by €94.9 million, or 20.2%, to €375.7 million as a result of the factors
set forth above.
Excluding CASAG and Stoiximan, profit from operating activities decreased by €223.6 million, or 53.3%, to
€196.1 million.
Interest income
Interest income decreased by €5.3 million to €2.2 million as a result of a decrease in interest-bearing financial
assets during the year 2020 and declines in interest rates.
Interest expense
Interest expense increased by €31.5 million, or 44.8%, to €101.8 million as a result of an increase in external debt,
primarily the issue of new bonds in the Czech Republic and Greece.
Excluding CASAG and Stoiximan, interest expense increased by €27.3 million, or 38.8%, to €97.6 million.
Other finance income and expense
Other finance income and expense decreased by €34.2 million to €16.0 million, driven primarily by the fact that
2019 results included financing fees in relation to the voluntary tender offer (“VTO”) for OPAP S.A. of €40.9 million.
Excluding CASAG and Stoiximan, other finance income and expense decreased by €36.3 million to €13.9 million.
Profit before tax
Profit before income tax decreased by €97.5 million, or 27.3%, to €260.1 million as a result of factors set forth above.
Excluding CASAG and Stoiximan, profit before income tax decreased by €219.8 million to €86.9 million.
Income tax
Income tax expense decreased by €10.6 million, or 22.9%, to €35.7 million, primarily matching the decrease in
taxable profit.
Excluding CASAG and Stoiximan, income tax expense decreased by €17.3 million, or 37.4%, to €29.0 million.
Profit after tax
Profit after tax decreased by €86.9 million, or 27.9%, to €224.4 million, as a result of factors set forth above.
Excluding CASAG and Stoiximan, profit after tax decreased by €495.4 to €57.9 million.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
23Sazka Group Annual Report and Accounts 2020
2.1 Austria – Segment summary
The tables below present the contribution of the Austria business to the Group’s Consolidated Financial Statements,
i.e. results post consolidation plus the share of profit of the business as an equity accounted investee prior
to consolidation.
Year ended 31 December 2020
CASAG
of which
Austrian
Lotteries
Amount staked 2,473.0 2,351.7
Gross gaming revenue (GGR) 573.1 451.8
Gaming taxes (298.7) (249.5)
Net gaming revenue 274.4 202.3
Revenue from non-gaming activities 26.6 1.4
Other operating income 26.7 12.9
Agents’ commissions (50.2) (50.2)
Materials. consumables and services (30.6) (16.9)
Marketing services (33.4) (27. 8)
Personnel expenses (116.6) (32.0)
Other operating expenses (13.1) (12.0)
Share of profit of equity method investees (net of tax) 11.9 –
Operating EBITDA 95.7 7 7.7
Operating EBITDA margin 34.9% 35.4%
Profit/loss from operating activities 8.7 59.1
Year ended 31 December 2020
CASAG
of which
Austrian
lotteries
Gross gaming revenue (GGR) 573.1 451.8
Numerical Lotteries 326.6 326.6
Instant Lotteries 35.9 35.9
Sports Betting 9.7 9.7
Digital-only Games 65.6 65.6
VLTs and Casinos 135.3 14.0
Financial review
Management’s discussion and analysis continued
24
Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial review
Management’s discussion and analysis continued
The tables below present the results of the businesses comprising our Austria segment for the full years 2020
and 2019.
Year ended 31 December Change
Austria segment 2020 2019 abs. rel.
Amount staked 4,656.9 4,553.3 103.6 2.3%
Gross gaming revenue (GGR) 1,077.5 1,245.9 (168.4) (13.5%)
Gaming taxes (563.0) (6 3 7.0) 74.0 (11.6%)
Net gaming revenue (NGR) 514.5 608.9 (94.4) (15.5%)
Revenue from non-gaming activities 56.7 113.2 (56.5) (49.9%)
Other operating income 58.0 19.9 38.1 n/m
Agents´ commissions (94.1) (93.1) (1.0) 1.1%
Materials. consumables and services (55.4) (51.9) (3.5) 6.7%
Marketing services (61.5) (72.8) 11.3 (15.5%)
Personnel expenses (228.0) (264.4) 36.4 (13.8%)
Other operating expenses (43.6) (57.5 ) 13.9 (24.2%)
Share of profit of equity method investees (net of tax) 0.5 8.3 (7.8) (94.0%)
Operating EBITDA 147.1 210.6 (63.5) (30.2%)
Operating EBITDA margin 28.6% 34.6% – –
Profit/loss from operating activities 20.0 152.6 (132.6) (86.9%)
Year ended 31 December Change
of which: Austrian Lotteries 2020 2019 abs. rel.
Amount staked 4,429.2 4,141.4 2 87. 8 6.9%
Gross gaming revenue (GGR) 849.9 834.0 15.9 1.9%
Gaming taxes (466.8) (456.4) (10.4) 2.3%
Net gaming revenue 383.1 37 7.6 5.5 1.5%
Revenue from non-gaming activities 2.9 3.5 (0.6) (17.1%)
Other operating income 26.8 22.8 4.0 17. 5 %
Agents´ commissions (94.1) (93.1) (1.0) 1.1%
Materials. consumables and services (28.8) (20.0) (8.8) 44.0%
Marketing services (51.6) (55.2) 3.6 (6.5%)
Personnel expenses (64.8) (65.7) 0.9 (1.4%)
Other operating expenses (22.8) (44.1) 21.3 (4 8.3%)
Share of profit of equity method investees (net of tax) – – – –
Operating EBITDA 150.7 125.8 24.9 19.8%
Operating EBITDA margin 39.3 % 33.3% – –
Profit/loss from operating activities 132.0 114.3 17.7 15.5%
Different businesses within the Austria operating segment were impacted by the COVID-19 restriction to
various degrees.
Austrian Lotteries performed well and delivered strong growth during the year as a result of strong online sales
and resilience in the physical retail channel, with key categories of points of sale remaining open throughout
the year.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
25Sazka Group Annual Report and Accounts 2020
However, non-lotteries activities, primarily casinos in Austria and internationally, were impacted by both waves of
COVID-19 restrictions, having a negative impact on profitability in both the second and the fourth quarter. The impact
of closure was unique in this business due to the relatively high proportion of fixed costs at the casinos compared
to our other businesses.
Austrian Lotteries delivered a stable performance, growing GGR by 1.9% even throughout the pandemic, and
improving the overall profitability through cost management. Operating EBITDA increased by €24.9 million, or
19.8% to €150.7 million, reaching 39.3% EBITDA margin, primarily benefiting from lower maintenance fees, consulting
fees and certain sales dependent license fees.
The casino business in Austria was closed during almost half of the year, which together with other minor restrictions
resulted in 45% decrease GGR. The management responded by introducing a restructuring plan to reduce the
fixed costs, especially personnel expenses. TThe restructuring plan was announced in July 2020 and related
provisions (reported below Operating EBITDA) impacted net income in the period after acquisition by €50.6 million.
2.2 Czech Republic – Segment summary
Year ended 31 December Change
2020 2019 abs. rel.
Amount staked 748.7 690.9 57.8 8.4%
Gross gaming revenue (GGR) 315.2 286.2 29.0 10.1%
Gaming taxes (114.3) (66.8) (47.5 ) 71.1%
Net gaming revenue (NGR) 200.9 219.4 (18.5) (8.4%)
Revenue from non-gaming activities 16.1 16.6 (0.5) (3.0%)
Other operating income 3.5 0.8 2.7 n/m
Agents’ commissions (31.0) (32.5) 1.5 (4.6%)
Materials. consumables and services (43.9) (49.8) 5.9 (11.8%)
Marketing services (26.0) (24.7) (1.3) 5.3%
Personnel expenses (20.5) (19.9) (0.6) 3.0%
Other operating expenses (15.3) (15.3) – 0.0%
Share of profit of equity method investees (net of tax) – – –
Operating EBITDA 83.8 94.6 (10.8) (11.4%)
Adjusted for:
Gain from cancellation of obligation to acquire IGH (2.0) – (2.0) n/m
Adjusted EBITDA 81.8 94.6 (12.8) (13.5%)
Adjusted EBITDA to NGR margin 40.7% 43.1% (2.4%)
Profit/loss from operating activities 77. 5 90.0 (12.5) (13.9%)
Profit after tax 47.0 63.2 (16.2) (25.6%)
Year ended 31 December Change
2020 2019 abs %
Gross gaming revenue (GGR) 315.2 286.2 29.0 10.1%
Numerical Lotteries 188.1 189.9 (1.8) (0.9%)
Instant Lotteries 63.9 64.0 (0.1) (0.2%)
Sports Betting 7.9 6.6 1.3 19.7%
Digital-only Games 55.3 25.7 29.6 115.2%
The Czech Republic segment showed strong performance, growing GGR by €29 million, or 10.1%. Our Czech
Republic operations were impacted to a moderate extent by restrictions during the first wave of COVID-19, especially
in April, when there was a limited period of lower sales via our physical points of sale, but recovered quickly and
posted very good performance in the third and fourth quarters. Similar to our Austrian operations, online sales
Financial review
Management’s discussion and analysis continued
26
Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial review
Management’s discussion and analysis continued
were very strong, achieving 31.5% share of the GGR compared to 19.4% in 2019, and the physical retail channel was
resilient, with key categories of points of sale remaining open throughout the year.
However, despite the increase in GGR, NGR declined by €18.5 million, or 8.4%, as a result of an increase in gaming
taxes in the Czech Republic from 23% in 2019 to 35% from January 2020.
Operating expenses of the Company decreased by €5.5 million, driven by the cost-savings measures applied in
the light of COVID-19 and renegotiation of supplier contracts. The Group successfully reduced its overall operating
costs, while keeping personnel costs broadly flat and even increasing its marketing spending to support the growth
of new products and the online channel.
Operating EBITDA decreased by €10.8 million as a result of factors set forth above, while Adjusted EBITDA
decreased by €12.8 million, after additional adjustment for non-cash gain from cancellation of an obligation of
€2.0 million recorded within other operating income.
2.3 Greece and Cyprus – Segment summary
Year ended 31 December of which Stoiximan Change (Stoiximan included)
2020 2019 2020 2019 abs. rel.
Amount staked 3,609.7 4,765.9 332.0 – (1,156.2) (24.3%)
Gross gaming revenue (GGR) 1,129.7 1,619.9 40.2 – (490.2) (30.3%)
Gaming taxes (392.5) (528.2) (15.8) – 135.7 (25.7%)
Net gaming revenue (NGR) 737.2 1,091.7 24.4 – (354.5) (32.5%)
Revenue from non-gaming activities 99.7 121.9 – – (22.2) (18.2%)
Other operating income 66.6 11.4 – – 55.2 n/m
Agents’ commissions (255.9) (3 87. 3 ) – – 131.4 (33.9%)
Materials. consumables and services (214.1) (248.7) (8.1) – 34.6 (13.9%)
Marketing services (64.1) (66.9) (4.7) – 2.8 (4.2%)
Personnel expenses (79.6) (83.2) – – 3.6 (4.3%)
Other operating expenses (48.1) (34.8) (1.5) – (13.3) 38.2%
Share of profit of equity method investees
(net of tax) 18.1 8.5 18.1 8.5 9.6 112.0%
Operating EBITDA 259.8 412.6 28.2 8.5 (152.8) (37.0%)
Adjusted for:
Hellenic Lotteries minimum GGR
contribution adjustment 37.7 – – – 3 7.7 n/m
Hellenic Lotteries GGR contribution
impairment 13.5 2.5 – – 13.5 n/m
Litigation provision 5.2 (16.1) – – 5.2 n/m
COVID-19 related support programs (lease
discount) (1.8) – – – (1.8) n/m
COVID-19 related extraordinary costs
(including agents’ receivables write-offs) 11.4 – – – 11.4
Other non-recurring costs and write-offs – 14.2 – – (14.2) n/m
Adjusted EBITDA 325,8 413.2 28. 2 8.5 (87.4) (21,0%)
Adjusted EBITDA to NGR margin 44,19% 37.8 5 % n/m n/m 6,35%
Profit/loss from operating activities 262.8 296.2 28.2 8.5 (33.4) (11.3%)
Profit after tax 210.8 239.3 171.0 8.5 (28.5) (11.9%)
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
27Sazka Group Annual Report and Accounts 2020
Year ended 31 December Change
2020 2019 abs %
Gross gaming revenue (GGR) 1,129.7 1,619.9 (490.2) (30.3%)
Numerical Lotteries 550.7 778.6 (2 27.9) (29.3%)
Instant Lotteries 44.2 1 47.5 (103.3) (70.0%)
Sports Betting 310.4 396.2 (85.8) (21.7%)
Digital-only Games 23.9 – 23.9 n/m
VLTs and Casinos 200.5 2 97.6 (97.1) (32.6%)
Major factors impacting the performance of the segment
Impact of COVID-19 restrictions
Our Greece and Cyprus operations were impacted by the first COVID-19 restrictions from the end of March to May.
In June and especially during the third quarter, the business recovered and performed strongly, although still
operating under certain limited restrictions, while the second lockdown impacted the business from the middle of
November into the first quarter of the year 2021. The Stoiximan business was not affect by COVID-19 and delivered
strong growth in 2020, however consolidated GGR only includes Stoiximan’s contribution for December.
Consolidation of Stoiximan
The 2020 results of the Greece and Cyprus segment include one month of contribution of Stoiximan to GGR and
Operating EBITDA, following the acquisition of a controlling stake in late November. The Stoiximan business’s
performance for the rest of the year is reflected only as a part of the profit of equity accounted investee Kaizen.
Stoiximan’s operations are 100% online and its performance was not impacted by the COVID-19 restrictions other
than by a reduction in the sports calendar in Q1 and Q2. Stoiximan demonstrated a strong and consistent year-to-
year growth in both GGR and profitability and is expected to contribute materially to the profitability of our Greece
and Cyprus operations.
Before 18 November 2020 Stoiximan was part of a Kaizen (36.75% equity accounted investee). Table below presents
the consolidated results of operations of Kaizen including information for Stoximan and Betano business units on
proforma basis, as if Stoiximan was part of Kaizen for the whole year 2020.
Year ended 31 December Change
2020 2019 abs %
Gross gaming revenue (GGR) 360.8 245.2 115.6 47.1 %
- GGR Stoiximan 267. 8 200.8 6 7.0 33.4%
- GGR Betano 80.6 40.0 40.6 101.5%
Net profit 42.9 23.2 19.7 84.9%
Effect of prepayment of GGR contribution
From 13 October 2020 for a period of 10 years, the Greece business will benefit from a prepayment of €1,831 million
of GGR contribution (gaming tax) made in 2011. Under the license extension term the Greece business will only
pay 5% contribution on the GGR from lottery and sports betting in cash, while recognizing a benefit from the
prepayment on accrual basis. During 2020 this represented an income of €42.5 million. See Note 3.f iii. and Note
9 in the Consolidated Financial Statements.
Financial review
Management’s discussion and analysis continued
28
Sazka Group Annual Report and Accounts 2020
Strategic Report
Summary of operating performance and year-to-year comparison
Our Greece and Cyprus segment showed a decrease in GGR of €490.2 million, or 30.3%, to €1,129.7 million primarily
as a result of COVID-19 restrictions described above, which negatively impacted sales through the physical retail
channel. The negative impact was slightly offset by the increasing contribution of the online distribution channel
and the consolidation of Stoiximan from December 2020.
Gaming taxes directionally followed the change in GGR, while they also include additional negative impact of
€37.3 million representing the contractual liability from the difference between the gaming taxes paid on applicable
GGR and the minimum annual amount of €50 million required according to Hellenic Lotteries S.A.’s concession
agreement (see description in section 1.4 above). Consequently, NGR decreased by €354.5 million, or 32.5% on a
year on year basis.
Agent’s commissions followed the decrease in NGR, decreasing by €131.4 million, or 33.9%. The business introduced
cost-saving measures to adjust for the negative impacts of COVID-19 and achieved savings across the cost structure,
including a 4.3% reduction in personnel expenses, however these were more than offset by the impact from
operating restrictions. Moreover, other operating expenses included certain COVID-19 driven one-off expenses of
€11.4 million (including support to agents of €5.2 million and write-off of agents’ receivables of €4.6 million) and
impairment of a GGR contribution asset at Hellenic Lotteries of €13.5 million.
Operating EBITDA decreased by €152.8 million, or 37%, to €259.8 million. Adjusted for impact of one-off or non-
recurring items, Adjusted EBITDA decreased by €87.4 million, or 21%, to €325.8 million.
2.4 Italy – Segment summary
Year ended 31 December Change
Operating performance of LOTTOITALIA 2020 2019 abs. rel.
Revenues from contract with customers 384.4 489.0 (104.6) (21.4%)
Operating EBITDA 310.6 396.1 (85.5) (21.6%)
Operating EBITDA margin 80.8% 81.0% (0.2%)
Profit for the period 152.4 213.9 (61.5) (28.8%)
Total comprehensive income (100%) 152.4 213.9 (61.5) (28.8%)
Group’s share of total comprehensive income 49.5 69.5 (20.0) (28.8%)
In Italy, the regulator suspended lottery draws during the first wave of COVID. This was not repeated when COVID-19
restrictions were reintroduced later in the year, and the vast majority of the distribution network remained open.
Trading recovered well after operations relaunched, with the business delivering a record performance at the end
of the year.
The segment’s favourable cost base ensured that EBITDA and cashflow generation declined in line with revenues.
Financial review
Management’s discussion and analysis continued
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
29Sazka Group Annual Report and Accounts 2020
3. Consolidated statement of cash flows
Year ended 31 December
Consolidated statement of cash flows 2020 2019
Cash generated from operating activities 289.6 473.8
Net cash generated from operating activities 163.1 313.6
Net cash generated from investing activities 239.5 499.2
Net cash generated used in financing activities (2 97.9) (360.8)
Net cash generated from operating activities
Cash generated from operating activities decreased by €184.2 million to €289.6 million, driven primarily by a
decrease in Operating EBITDA.
Net cash generated from operating activities decreased by €150.5 million to €163.1 million, driven by the decrease
in cash generated from operating activities together with negative impact of higher interest payment due to
increased borrowing, which was more than compensated by the positive impact of lower income tax payment,
reflecting lower profitability as a consequence of the COVID-19 impact on the business.
Net cash generated from/used in investing activities
Net cash generated from investing activities decreased by €259.7 million to €239.5 million. The primary driver was
inclusion of the proceeds from sale of the Group’s Croatian business in 2019 together with proceeds from assigned
receivable in connection with this transaction in the aggregate amount of €389.5 million. Excluding this effect, the
prior year comparative would be €109.7 million.
Other factors include net cash gain on consolidation, as the cash balances of CASAG exceeded the cash costs of
obtaining a controlling interest in CASAG and Stoiximan.
Net cash generated from/used in financing activities
Net cash used in financing activities decreased by €62.9 million to €297.9 million, which was primarily driven by
payments of dividend and other distribution to the shareholder of €150.0 million (2019: €569.7 million), higher
dividends paid to non-controlling interest of €226.6 million (2019: €140.8 million), expenditure for increasing of
shareholding in OPAP of €54.5 million (2019: €256.6 million) and net increase in borrowings of €138.3 million
(2019: €663.4 million).
3.1 Dividends, shareholder distributions and intragroup interest payments made
The table below sets out the aggregate amount of dividends, share premium reductions and interest paid on
intragroup loans by the entities below in the periods indicated.
Year ended 31 December
€ millions 2020 2019
Austrian Lotteries 176.7 120.0
CASAG – 15.0
EDHH 6.6 –
LOTTOITALIA 237. 2 350.6
OPAP1 419.7 165.1
SAZKA 37.1 18.7
Stoiximan 18.5 12.0
1 In January 2020, OPAP declared a dividend in the total amount of €319.8 million, out of which €169.6 million was paid in cash and the
remaining part was settled by issuance of new OPAP shares in February 2020. In June 2020, OPAP declared a dividend in the total
amount of €99.9 million, out of which €44.2 million was paid in cash and the remaining part was settled by issuance of new OPAP shares
in August 2020.
Financial review
Management’s discussion and analysis continued
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Sazka Group Annual Report and Accounts 2020
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3.2 Capital expenditures
The table below presents a cash outflow relating to acquisition of property, plant and equipment and intangible
assets for the periods indicated.
Year ended 31 December
€ millions 2020 2019
Acquisition of property, plant and equipment and intangible assets 46.5 3 7.2
4. Further information
For further information on our liquidity and capital resources and a discussion of material commitments and
contingencies and critical accounting policies, please see Notes to our Consolidated Financial Statements.
Liquidity is described in Note 23 “Cash and cash equivalents” and capital resources are described in Note 24
“Equity” and Note 26 “Loans and borrowings”.
Material commitments and contingencies are described in Note 32 “Contingencies”. Note 26 “Loans and borrowings”
and Note 27 “Leases”.
Critical accounting policies are described in Note 3 “Significant accounting policies” and critical accounting estimates
and judgments are described in Note 4 “Significant accounting estimates and judgements”.
Pro-rata financial information is available in the Investor Relations section of the Group’s website.
From time to time, subject to market conditions, the Company (directly or through a subsidiary) may engage in
bond repurchase transactions in the open market or in privately negotiated transactions.
The Company regularly evaluates its financing and other strategic options to grow the business on an opportunistic
basis taking into account prevailing market conditions. which may include potential private funding and public
capital markets transactions. including a listing.
From time to time, subject to market conditions, the Company (directly or through a subsidiary) intends to acquire
shares of OPAP in the open market or in privately negotiated transactions.
Alternative performance measures (“APMs”)
This document contains certain unaudited financial and operating measures that are not defined or recognized
under IFRS that we use to assess the performance of our business. Explanations of these measures are set out
below. For example, in this document, we present non-IFRS financial measures such as amount staked, Operating
EBITDA, Operating EBITDA margin, Adjusted EBITDA, net debt, capital expenditures, free cash flow, which we
use to, among other things, evaluate the performance of our operations, develop budgets, and measure our
performance against those budgets. We present some of these numbers on a pro-rata and / or pre-IFRS 16 basis.
We believe that Operating EBITDA and Adjusted EBITDA assist in understanding our trading performance as they
give an indication of our ability to service our indebtedness.
As there are no generally accepted accounting principles governing the calculation of non-IFRS financial and
operating measures, other companies may calculate such measures differently or may use such measures for
different purposes than we do, and therefore you should exercise caution in comparing these measures as reported
by us to such measures or other similar measures as reported by other companies. An investor should not consider
these non-IFRS measures (a) as a substitute for operating results (as determined in accordance with IFRS) or as
a measure of our operating performance, (b) as a substitute for cash flow from or used in operating, investing and
financing activities (as determined in accordance with IFRS) or as a measure of our ability to meet cash needs or
(c) as a substitute for any other measure of performance under IFRS. These measures may not be indicative of our
historical operating results or financial condition, nor are such measures meant to be predictive of our future results
or financial condition. Even though the non-IFRS financial measures are used by management to assess our financial
position, financial results and liquidity and these types of measures are commonly used by investors, they have
important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis
of our financial position or results of operations as reported under IFRS.
Financial review
Management’s discussion and analysis continued
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
31Sazka Group Annual Report and Accounts 2020
Definitions
In this document:
“Austrian Lotteries” refers to Österreichische Lotterien Gesellschaft m.b.H.
“CAME” refers to CAME Holding GmbH
“CASAG” refers to Casinos Austria AG
“SDHH” refers to Sazka Delta Hellenics Holding Limited (formerly Emma Delta Hellenic Holdings
limited)
“SDVCIC” refers to SAZKA DELTA AIF VARIABLE CAPITAL INVESTMENT COMPANY LTD (formerly
EMMA DELTA VARIABLE CAPITAL INVESTMENT COMPANY LTD)
“KKCG” refers to KKCG AG
“IGH” refers to Italian Gaming Holding a.s.
“LOTTOITALIA” refers to LOTTOITALIA S.r.l.
“OBAG” refers to Österreichische Beteiligungs AG
“OPAP” refers to OPAP S.A.
“POS” refers to point of sale
“Stoiximan”
refers to Stoiximan Greece and Cyprus operations business unit, presently part of Kaizen
Gaming Limited (formerly TCB Holdings Ltd)
“VLT” refers to video lottery terminal
“VTO” refers to the voluntary tender offer by the Company for OPAP shares in 2019, upon conclusion
of which the Group’s economic interest in OPAP was increased to 31.99%
Financial review
Management’s discussion and analysis continued
32
Sazka Group Annual Report and Accounts 2020
Strategic Report
Financial review
History of growth and profitability
Amounts staked
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2016
1,613
2017 2018 2019 2020
4,9 67
5,195
5,457
6,831
GGR
0
500
1,000
1,500
2,000
2,500
2016
591
2017 2018 2019 2020
1,664
1,798
1,906
2,018
NGR
0
200
400
600
800
1,000
1,200
1,400
2016
409
2017 2018 2019 2020
1,134
1,233
1,311
1,213
Operating EBITDA
0
100
200
300
400
500
600
2016
133
2017 2018 2019 2020
427
508
592
459
EBITDA margin
0
10
20
30
40
50
2016
32.6%
2017 2018 2019 2020
37.7%
41.2%
45.2%
37.9%
Profit after tax
0
50
100
150
200
250
300
350
2016
92
2017 2018 2019 2020
190
230
311
224
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
33Sazka Group Annual Report and Accounts 2020
Responsible gaming
At the core of our culture
We seek to contribute to local communities
and the societies where we engage in business.
Responsibility is one of the key differentiators
of how we operate lotteries and other gaming
activities, in particular compared with illegal
competition. We have a clear commitment to
responsible gaming principles and we put
corporate responsibility at the heart of our activities.
We strive to protect the general public and
especially vulnerable social groups from excessive
gaming and protect minors from any participation
in games of chance. However, lotteries are not
generally associated with problem gambling
as ticket prices are moderate, participation is
infrequent, and customers have few near-wins.
We apply responsible gaming principles
throughout our operations and player protection
is our absolute priority. We are focused on
applying data from our digital and hybrid
channels to achieve player protection outcomes.
All of our lottery operators are members of the
World Lottery Association (“WLA”, in the case
of LOTTOITALIA, Lottomatica, the Group’s
partner in LOTTOITALIA, is the certified entity)
and the European Lotteries Association and
operate in accordance with their codes of practice.
SAZKA Group engages with national public
authorities and the European institutions as a
constructive, transparent and accountable
stakeholder, to achieve legitimate, balanced
and sustainable regulations.
SAZKA Group adheres to the EU interest
representatives’ code of conduct and is registered
in the EU.
34 Sazka Group Annual Report and Accounts 2020
Strategic Report
Social responsibility
Contributing to our communities
Supporting culture in Austria
Our Austrian subsidiary Casinos
Austria has been a partner of the
Wiener Festwochen since 1968,
when Casinos Austria was founded.
The Wiener Festwochen is a
multidisciplinary arts festival that
takes place every year for five or
six weeks in May and June. It aims
to present things not yet seen and
not yet heard, and to work as a
content engine linking genres,
thoughts and ideas. The Wiener
Festwochen combines theatre,
performance, dance, music, fine
arts, installation, discourse, participation,
workshops, and new art forms that
cannot yet be categorised. It is a
space for visionary creation that
opens fruitful dialogues between
well established artists and emerging
figures. Its visions and works favour
diversity and nuance, openness
and curiosity.
SAZKA Group is an important contributor to societies
where it operates. We are major supporters of good
causes like sports, culture, health, and education.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
35Sazka Group Annual Report and Accounts 2020
Social responsibility
Contributing to our communities
Supporting sport in the Czech Republic
We are a major supporter of youth
sports in the Czech Republic.
Around 150,000 children participate
in the “Sazka Olympic Multi-contest”
every school year and 1,200
elementary schools participate in
this nation-wide programme.
Children participate in a number
of sporting disciplines which
teachers directly incorporate in
the physical education curriculum.
Each child receives an “Olympic
Diploma”, which includes an analysis
of the child’s sporting talents and
recommendation for sports to
pursue further.
Furthermore, 15,000 Czech sports
clubs are interconnected thanks to
our unique database called “Sports
around you”. More than 400 events
are offered and advertised through
this platform every month.
Last but not least, since 2012, 2,700
children have been supported by
the Czech Olympic Foundation to
allow them to play their favourite sports.
36 Sazka Group Annual Report and Accounts 2020
Strategic Report
Social responsibility
Contributing to our communities
Supporting health in Greece
In 2014, our Greek subsidiary OPAP
began an initiative to renovate the
two oldest and largest Children’s
Hospitals in Greece, Aghia Sophia
and Pan. & Aglaias Kyriakou, which
serve children from all over the
country. Both hospitals, constructed
in the 1940s, were in poor condition
and lacking resources for fundamental
operational requirements.
OPAP’s key objectives have been
to upgrade the nursing units and
clinics and to create a pleasant and
therapeutic environment for the
sick children and their relatives.
The construction and renovation
work has involved the upgrade of
electrical and technical installations
based on the most up-to-date
international standards and
specifications as well as the installation
of equipment for the areas used by
the medical and nursing staff.
To date, 83% of our renovation work
in both children hospitals has been
completed. We have delivered a
total of 27 renovation projects,
including 20 Nursing units, covering
a total area of 12.720 sq. meters with
a capacity of 467 beds.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
37Sazka Group Annual Report and Accounts 2020
Risk factors
Inroductory note
We have identified the following risks and uncertainties, the occurrence of any of which, individually or in
aggregate, could have a material adverse effect on our business, prospects, results of operations and financial
condition. The order in which the risks are presented does not reflect their materiality, potential impact, or
probability of occurrence. Please note that the risks described below are not the only risks we face.
1. The ongoing outbreak of COVID-19
and adopted legislative measures
taken in response
We cannot predict the ultimate effects
that the ongoing outbreak of COVID-19,
as well as future epidemics of new strains
of COVID-19 or of other diseases, and any
resulting unfavourable social, political,
and economic conditions and decrease
in discretionary spending or travel may
have on us.
The measures implemented by relevant
government authorities in response to
the COVID-19 pandemic have included,
among others, suspension of the provision
of public services, travel restrictions,
closure of or restrictions on the normal
operation of shops and other businesses,
border controls and other measures
intended to discourage or prohibit the
movement and gathering of people.
While in summer and early autumn 2020,
many measures taken by European
government authorities were relaxed,
most European governments introduced
new measures beginning in the fourth
quarter of 2020. As a result of such
measures, for some periods in 2020 and
2021, the majority or all of the Group’s
land-based points of sale in Greece and
Cyprus and CASAG’s casinos in Austria
and internationally were closed. In Italy,
draws of LOTTOITALIA’s games were
suspended for certain periods during the
second quarter of 2020. Please refer to
“Business and strategic review” on page
9 et seq., and the “Chief Financial Officers
statement” on page 14 et seq. of this
Annual Report” for further information
on the situation and its financial impact
in the markets where we operate.
There remains considerable uncertainty
when current restrictions will be relaxed,
and a risk that our physical networks will
be subject to further restrictions should
the pandemic worsen, including as a result
of the spread of new variants of COVID-19.
Governments may respond to increases
in infection rates by reintroducing restrictions
such as those described above or by
implementing new restrictions.
The pandemic and responses thereto
have also led to a material deterioration
in both the national economies of the
countries where we carry out our business
activities and the global economy.
The economic downturn may lower
consumer spending on our products, as
reductions in income of our players can
make them less willing to place bets or
decrease the amounts they bet. Reductions in
numbers of tourists may also affect the
numbers of visitors to our points of sale
and economic conditions in some of our
markets.
In addition, the COVID-19 pandemic has
caused and may continue to cause voluntary
changes in behaviour of a large proportion
of the population. Businesses may also
change their operations and policies in
ways which could affect the behaviour
of our customers. For example, sales of
our products through land-based channels
could decrease if customers prefer to
minimise the time they spend in the
locations where our products are sold or
if shops introduce new restrictions on
customer behaviour, or if there is structural
shift to online consumption, and increased
sales of our products through online
channels may not fully compensate for
the impact of these changes.
Our agents and suppliers may be at risk
of decreasing revenue, liquidity issues
and insolvency because of the economic
downturn. Consequently, since our business
is reliant on them (please refer to “Risks
arising from dependence on agents and
technology suppliers” for more details),
the inability of our agents and suppliers
to honour their commitments to us due
to these factors may negatively affect
our ability to reliably provide our products
to customers.
If a significant percentage of our workforce
is unable to work, either because of illness
or travel or government restrictions in
connection with the COVID-19 pandemic,
our operations may be negatively impacted.
The COVID-19 pandemic and responses
thereto have led to a material deterioration
in both the global economy and the
national economies of the countries where
the Group operates. Government restrictions
led to the suspension or cancellation of
substantially all sporting events during
some periods. This has negatively affected
sales in our sports betting operations.
While many events, leagues and sporting
events have already resumed, further
suspensions and cancellation could take
place in the future. The longer such
suspensions last, the greater their adverse
impact on the financial performance of
our business will be. The revenues generated
from games related to events or leagues
that are not cancelled or suspended and
new products might not be sufficient to
cover any resulting revenue shortfall.
The extent to which the COVID-19 pandemic
impacts our businesses will depend on
future developments, which are highly
uncertain, including the scope and duration
of the COVID-19 pandemic and actions
taken by governmental authorities and
other third parties in response to the
COVID-19 pandemic. To date, several
COVID-19 vaccines have been approved
by regulatory authorities around the world
and vaccination efforts have commenced.
However, the COVID-19 pandemic has
been further complicated by the emergence
of new and more contagious strains of
the virus and there are concerns that
vaccines may not work quite as well agaist
these new strains. As a result, governments
may respond by reintroducing relevant
restrictions which may further adversely
affect the Group’s businesses.
Any of the above factors could result in
a material adverse effect on our business,
results of operations, financial condition
and prospects.
38 Sazka Group Annual Report and Accounts 2020
Strategic Report
Risk factors continued
2. Regulatory risks, risk of potential
loss of licenses or exclusive rights to
operate our business activities
The lottery and gaming industry is highly
regulated at the national level in each
jurisdiction in which our subsidiaries are
licensed or operate. Regulations generally
govern the types of games that our
businesses may operate the rules of the
games and the manner in which our
businesses may operate the games.
Our businesses are required to obtain,
maintain and comply with the terms of
licenses and concessions in order to
operate gaming businesses in each country
where we operate. New games often need
to be approved by the relevant regulator.
The terms of licenses may also require
that our direct and indirect shareholders
and other relevant persons, such as
directors, prove to the regulator’s satisfaction
that they are and continue to be suitable
to be associated with the licensed company
or game. Public authorities have the right
to amend the regulatory framework and
terminate licenses or concession contracts
and have the right to impose sanctions
in certain cases. Despite our best efforts
to comply with the relevant regulations
and to cooperate with regulators, our
businesses may be unable to obtain,
maintain and renew all necessary
registrations, licenses, permits and approvals
or could incur fines or experience delays
in the licensing process. Our businesses
are also exposed to the risk of alteration
or termination of their licenses prior to
their expiration, and our licenses may also
be challenged by potential competitors.
OPAP’s licenses in Greece and Cyprus,
CASAG’s licenses in Austria and LOTTOITALIA’s
license in Italy provide them with exclusive
rights to operate certain lottery and
gaming activities in each of their respective
jurisdictions. In most cases, the licenses
and concession agreements in above
mentioned subsidiaries as well as SAZKA
a.s. in the Czech Republic are time-limited
and will eventually expire.
Upon expiration, new licenses or concessions
may be awarded to one or more parties
through a competitive bidding process.
We may be unable to obtain new licenses
to allow us to continue our current
operations or may only be able to do so
on less favourable terms. Our businesses
also face the risk that regulatory changes
may open the market to broader competition.
In February 2021, the Austrian government
announced a proposal to change gambling
regulations (“New Austrian Gaming
Proposals”). As at 27 April 2021, full details
of the potential changes are not yet known.
Our businesses are exposed to risks related
to the potential alteration or termination
of their licenses prior to their expiration,
and such licenses may also be challenged
in court by potential competitors of their
businesses.
We are actively monitoring developments
related to the New Austrian Gaming
Proposals and may take such action as is
necessary and relevant to protect our
position. We also actively monitor potential
introduction of advertising restrictions in
Austria and other countries in which we
operate. Such restrictions may reduce
our ability to successfully market our
products and lead to lower customer
demand. The legal, compliance and
regulatory departments of SAZKA Group
and its subsidiaries strive to ensure
compliance with all applicable rules and
regulations in the relevant jurisdictions
and oversee obtaining and maintaining
of and compliance with the relevant
licenses and concessions. However, if we
are unable to, or fail to, comply with all
applicable regulatory requirements, or if
the applicable regulatory environments
change in a way that is adverse to us, this
could result in a material adverse effect
on our business, results of operations,
financial condition and prospects.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
39Sazka Group Annual Report and Accounts 2020
4. Risks associated with changing
consumer preferences, changes in
technologies, brand loyalty and
competition
The gaming industry is characterized by
rapidly changing technology, including
the increasing importance of online and
mobile channels, which has accelerated
during the COVID-19 pandemic and
lockdowns. The future competitiveness
of our businesses depends on our ability
to respond to technological changes
effectively.
Our success also depends on our ability
to recognize market trends and opportunities
and develop appropriate strategies in
response, including the introduction of
new games or new variations on ways to
play existing games.
The introduction of new games or the
modification of existing games may require
the approval of the relevant regulatory
authorities. We may face regulatory
conditions and restrictions that limit our
ability to create new games, enter into
new market segments or otherwise grow
our business.
Our future success also depends on
attracting and retaining players. In order
to achieve this, we aim to maintain the
value of the key brands that our businesses
own or use in their operations. Failing to
maintain the high profile, positive perception
and consumer recognition of our brands
may prevent expansion of, or lead to losses
in, our existing customer base.
Our businesses compete with other forms
of recreational and leisure activities and
other gaming vendors and venues.
While our businesses hold exclusive
licenses and concessions for land-based
sales of certain products and games, in
certain markets, such as Austria and
Greece, our businesses face online
competition for certain products.
Furthermore, illegal online lotteries, games,
VLTs, slot machines and casino and sports
betting, or games whose legal and
regulatory status is unclear, compete with
our businesses and in some cases their
illegal status may allow them to offer
products which are more attractive than
our products to customers. This competition
may affect our businesses negatively as
it may deprive them of significant volumes
of business and attract a portion of our
customer base.
To mitigate these risks, we aim to increase
engagement and retention of customers
and focus on product development, active
monitoring of trends and customer
behaviour and efficient implementation
of product and technology innovations.
Risk factors continued
3. Risk associated with changes in
taxation and fees for licenses, tax
audits and penalties
Our businesses are required to make
payments to the countries where they
operate through fees for licenses (to
obtain and/or to maintain), taxes on
revenues (including VAT imposed on
non-gaming products) and general
corporate taxes on profits. Our businesses
may be subject to increases in these taxes
or introduction of new taxes. For example,
with effect from 1 January 2020, the Czech
government increased GGR tax from 23%
to 35%. We may also be exposed to Czech
corporate income tax liability on unrealized
foreign exchange gains, which are noncash
revenues. By a way of example if a
concession is granted to OPAP Cyprus
to operate games, the Group expects that
there would be an increase in taxes or
levies that OPAP Cyprus would have to
pay in the Republic of Cyprus. Furthermore,
SAZKA a.s. is part of a VAT group with
MND a.s., a related party of the Group.
If MND a.s. were to fail to pay any VAT it
owes, SAZKA a.s. would be liable to pay
such amounts. In 2020, the total amount
of VAT paid by MND a.s. was EUR
20.8 million. If the VAT group is ended
for any reason, SAZKA a.s. would lose
the benefit it currently receives from this
arrangement.
As a result of the COVID-19 pandemic
many countries are under increased fiscal
pressure, which may increase the probability
of unfavourable changes in general
corporate taxation or taxation of lotteries
and gaming in particular. Such changes
may be more likely to be introduced in
the countries where the general corporate
taxes on profits and/or the gaming sector
taxes, or cash receipts from such taxes,
are at relatively lower levels. For example,
under the OPAP’s Lottery and Gaming
Concession and pursuant to Greek law,
from 13 October 2020, gaming-specific
taxes payable by OPAP to the Greek State
under this concession on a cash basis
amount to 5% of GGR reflecting OPAP’s
prepayment of tax with a value of EUR
1.8bn. By way of further example, pursuant
to the New Austrian Gaming Proposals,
the Austrian government has announced
that it intends to adjust gambling taxes
and levies to bring these in line with
“European levels“. As at 27 April 2021, the
changes that may be introduced in this
regard and its impact on CASAG are not
known.
Our businesses are from time to time
subject to tax audits and investigations
by tax authorities, which include review
of our compliance with the direct tax or
indirect tax regimes affecting our businesses
and transactions. Although our tax
departments aim to ensure compliance
with tax regulations, the tax authorities
may interpret applicable laws and rules
differently or change their interpretation
in ways that we have not anticipated,
which may result in penalties, assessments
of tax for previous periods, and interest
on such amounts.
To minimize the risk of any penalties the
finance departments of SAZKA Group
and relevant subsidiaries together with
our advisors monitor developments in
the taxation policy of each jurisdiction
and create policies and procedures to
ensure full compliance with all applicable
tax regimes.
40 Sazka Group Annual Report and Accounts 2020
Strategic Report
7. Risks associated with our corporate
structure
As a holding company that conducts
business through its subsidiaries and
affiliates and has no significant assets
other than the equity interests and the
intercompany receivables it holds in its
subsidiaries and affiliates, we are dependent
on payments from our subsidiaries and
other affiliates – mainly dividends, which
depend on the profitability and cash flows
of their respective subsidiaries. Even if
our subsidiaries and affiliates generate
sufficient amount of cash from their
operations, their ability to provide funds
to us is subject to, among other factors,
local tax restrictions and local corporate
law restrictions as well as regulatory
restrictions related to earnings, the level
of legal or statutory reserves, losses from
previous years and capitalization
requirements, capital controls and the
terms of any applicable shareholder
agreements, or might be further limited
by measures implemented by local
government authorities, including in
connection with the ongoing COVID-19
pandemic.
5. Political and macroeconomic risks
Our businesses operate primarily in Austria,
the Czech Republic, Greece and Cyprus,
and Italy, and we are exposed to the
political, economic and financial market
conditions in these countries as well as
of the EU and other countries into which
we may expand. For example, Greece has
encountered and continues to encounter
significant fiscal challenges and structural
weaknesses in its economy. In addition,
the government responses to the COVID-19
pandemic have resulted in severe economic
dislocations, including an extreme drop-
in economic activity and higher rates of
unemployment, to varying degrees in the
countries where our businesses operate,
which may lower consumer spending on
our products, as reductions in income
may lead to the players becoming less
willing to place bets or decreasing the
amounts they bet.
Our businesses are also exposed to global
factors and changes such as climate
change which may adversely affect the
political and economic situation of the
countries in which our business operate.
Political and economic events or changes
may result in changes in regulation, taxes,
restrictions on capital flows and dividend
payments and on business in any given
country, as well as other policy decisions.
Macroeconomic factors in the countries
where our businesses operate (such as
gross domestic product growth,
unemployment rates and wage growth)
can affect consumer behaviour and
spending patterns. Any material future
deterioration in global or local economic
conditions in the markets in which our
businesses operate and the surrounding
countries could lead to a decrease in
consumer confidence and spending
affecting our products.
We engage with advisors and monitor
developments in the political and economic
situation, and financial markets on a regular
basis to ensure that our policies and
strategies (short, mid and long term) are
up to date and appropriate.
6. Risks associated with less than
majority ownership of certain
subsidiaries and other shareholders
We indirectly own less than a majority of
the shares of several of the entities that
operate our businesses, including OPAP,
LOTTOITALIA and STOIXIMAN as well as
certain other subsidiaries. We might have
different interests and views on certain
issues from other shareholders (for
example, business strategy and financial
policy, including regarding payment of
dividends).
In some cases we are party to agreements
with the other shareholders prescribing
governance rights and other matters
which limit our ability to control such
entities. As a result, we may in some
circumstances need to reach agreement
with the other shareholders who are party
to these agreements in order to achieve
certain outcomes.
The other shareholders, former shareholders,
and directors nominated by such shareholders
in the entities in which we do not have
100% shareholding interest might face
reputational or financial issues that are
out of our control, but which may negatively
influence the business or reputation or
brands of our businesses and of the Group
itself. Although we screen potential partners
and seek to ensure that they act in
accordance with high professional and
ethical standards, they may not always
do so.
Risk factors continued
8. Risks associated with new
acquisitions and tenders
Any future acquisitions of companies,
investments or partnerships could expose
us to a number of risks or result in additional
liabilities. The process of integrating
businesses may be disruptive to the
operations of our existing and new
businesses due to unforeseen legal,
regulatory, contractual, technological or
other issues, difficulties in realizing operating
synergies, or a failure to maintain the
quality of services.
In addition, there are considerable costs
associated with participation in public
tenders, such as our current participation
in the competition for the 4th licence to
operate the UK National Lottery, and
pursuing potential M&A transactions.
We may not be successful in winning the
tenders or closing the transactions we
pursue. Furthermore, companies acquired
or businesses operated under licenses
which we are awarded through tenders
may not achieve the levels of returns,
profits or productivity expected from
them.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
41Sazka Group Annual Report and Accounts 2020
11. Risks associated with technical
failures and security breaches
The ability of our businesses to successfully
operate and manage their lottery and
gaming products depends on the capacity
and reliability of their network, internet
infrastructure, central system operations
and the security of their computer hardware,
software and online platform infrastructure,
including products and services provided
by third parties. There is a risk of interruption
caused by human error, problems relating
to the network, central systems, software
failure, natural disasters, sabotage, computer
viruses, hacking, malicious software,
phishing attacks and similar events.
A system interruption, including one caused
by third parties, may entitle the relevant
regulatory agencies to revoke a concession
or require us to pay damages or compensation
under the concession as well as degrade
customer experience and cause customers
to lose confidence in our product offerings.
A growing proportion of customers use
our online product offerings (and this
trend is expected to continue) and as it
relates to online platforms, our businesses
are dependent on the interoperability of
such platforms with popular operating
systems, technologies, networks and
standards that we do not control.
Our businesses are subject to regulation
related to the use of customers’ personal
data and their debit and credit card
information, including the obligation to
keep the identity of winners confidential.
Our businesses work with the sensitive
personal data of customers and data about
their agents, suppliers or employees. If we
or our partners fail to protect personal
data of customers, our businesses could
face liability and fines under data protection
laws and loss of goodwill.
Due to the COVID-19 pandemic most of
SAZKA Group employees have been
working from home for a significant period
of time. This brings elevated risks associated
with remote work and use of new applications
to facilitate remote work.
Our businesses have prepared contingency
plans and implemented various mechanisms
to prevent or mitigate the interruption of
their technological infrastructure by the
aforementioned events. Protection of
personal data is covered by close cooperation
between the legal departments and data
protection officers in our key subsidiaries
and technology departments.
Risk factors continued
10. Risks associated with negative
perceptions and publicity about the
lottery and gaming industry
The gaming industry is exposed to negative
perceptions and publicity generated by a
variety of sources, including citizens’ groups,
non-governmental organizations, politicians,
the media, national and local authorities,
and other groups, individuals and institutions.
In particular, public attention has been
drawn to findings or allegations related to
participation or alleged participation in
gaming activities by minors, the location
and concentration of gaming machines,
the features of certain types of gaming
machines, online games and online betting,
risks related to social ills such as addiction
to gaming, risks related to data protection
and payment security in connection with
online gaming and fraud and alleged
associations with money laundering.
Excessive participation in certain games
may for some individuals lead to problem
gambling, which can have a significant
adverse impact on their economic and
psychological well-being. The nature of
lotteries (which account for the majority
of our profit from continuing operations)
limits the frequency players are able to
wager, and prize distributions reduce the
frequency of wins compared to other forms
of gaming, making the player less likely to
form addictive behaviour. This is in contrast
to certain other forms of gaming where
players are more susceptible to addiction
and losing large amounts of money due
to the frequency with which they are able
to play, more frequent wins, and larger
stake sizes. There is however a risk that
the public and political representatives do
not distinguish between lotteries and other
types of gaming and do not recognize that
lower risk is associated with lotteries.
Negative perceptions about lotteries and
the gaming industry in general, and our
business in particular, may result in lower
revenues, loss of brand value, loss of
customer goodwill, changes in regulation
and higher taxes, among other consequences
that may be detrimental to our business.
Our businesses monitor our customer‘s
gaming activity and actively communicate
with the public and other stakeholders
about responsible gaming. The company
and our businesses have adopted compliance
policies and procedures and are focused
on the integrity of their management,
employees and third-party suppliers and
partners.
Responsible gaming principles are applied
throughout our operations. All our subsidiaries
and equity method affiliates which offer
lotteries have been awarded the Level 4
Responsible Gaming Certification, the
highest level of responsible gaming
certification issued by the World Lottery
Association. For more information about
responsible gaming please refer to “Strategic
Report” Section “Responsible Gaming”,
on page 30 et seq. of this Annual Report.
9. Risk of inadequate compliance
procedures and policies
The operations of our businesses are
subject to anti-money laundering,
antibribery, fraud detection, and data
protection laws and regulations, and
economic sanctions programs, including
those administered by national regulators,
the United Nations and the EU. Our businesses
are exposed to the risk of money laundering
and fraudulent activities by our customers,
employees, agents or other third parties
(including criminal organizations), including
with respect to our financial and payment
service offerings. In addition, our businesses
are exposed to a risk of violating
anticorruption laws and sanctions
regulations applicable in those countries
where they, their partners or their agents
operate. Failure to comply with the above
laws and regulations in these jurisdictions
could result in significant fines, loss of
licenses and damage to the reputation
and brand of our businesses. The Group’s
businesses could also be targeted by
third parties, including criminal organisations,
for fraudulent activities, such as attempts
to compromise the systems that process
and collect payment information or to
use the Group’s betting services to engage
in money laundering, bribery or fraud.
Compliance systems are established in
the Group and the relevant key subsidiaries
in order to minimize risks in the aforementioned
areas. Each relevant subsidiary has units/
departments tasked with ensuring
compliance with legislation and license
conditions relating to anti-money laundering,
anti-bribery and other similar matters.
42 Sazka Group Annual Report and Accounts 2020
Strategic Report
12. Risks arising from dependence on
agentsand technology suppliers
Our businesses offer a significant portion
of their lottery and gaming products to
their customers through authorized POS
operators under commercial agency
agreements. The responsibilities of POS
operators include accepting stakes from
customers, paying out small wins, providing
information, promoting sales and handling
complaints and claims.
Certain key products and services required
for the operation of our games (such as
hardware, software, and services and
support provided by staff with specialist
expertise) are provided by a very limited
number of suppliers and in many cases
our businesses only have one supplier of
such services at any particular time.
This dependence on single suppliers and
the small number of such suppliers can
make it difficult or costly to replace them.
Moreover, some of our suppliers might
also be our direct competitors in different
business dealings, including competition
for licenses and concessions.
Our businesses rely on the products and
services of their agents and suppliers to
a significant degree and, in the event that
they do not or are unable to fulfil their
obligations under the applicable contractual
arrangements, they may face delays or
disruptions in their operations if they need
to find a new supplier.
13. Risks associated with online gaming
Although the regulatory regime for land-
based gaming operations is well established
in many countries, regulation in these
countries may not necessarily have been
amended to take account of the ability
to offer gaming services online.
Some jurisdictions have introduced
regulations attempting to restrict or
prohibit online gaming, while others have
taken the position that online gaming
should be licensed and regulated.
The success of the online offering of our
businesses will be affected by, among
other things, developments in social
networks, mobile platforms, legal and
regulatory developments and other factors
that we are unable to predict and which
are beyond our control.
Our businesses have systems and controls
in place seeking to ensure that they offer
their gaming products only to players
who are legally permitted to access our
sites and apps and to purchase our
products in the relevant jurisdictions.
Despite that, there can be no assurance
that our businesses will successfully block
customers from accessing our products
in countries that restrict or prohibit online
gaming or in countries that our respective
businesses are not licensed to conduct
online gaming. Public authorities could
take the view that the systems and controls
of our businesses are inadequate, either
currently or as a result of technological
developments affecting the Internet.
14. Risks from legal, administrative and
arbitration proceedings
Our businesses may be involved in legal,
administrative and arbitration proceedings
or investigations by government authorities.
Such proceedings or investigations may
involve various governmental agencies
and result in judgment or settlement
agreements.
A provision is recognized in the consolidated
statement of financial position if the Group
has a present legal or constructive obligation
that can be estimated reliably, and it is
probable that an outflow of economic
benefits will be required to settle the
obligation. Provisions are recognized at
the expected settlement amount.
For overview of significant court proceedings,
please refer to “Further regulatory
disclosures”, Section “Significant court
proceedings” on page 206 et seq. of this
Annual Report.
Risk factors continued
15. Risks associated with our
indebtedness
We have substantial indebtedness, including
bank loans and bonds which require us
to pay interest and principal amounts
according to a fixed schedule and contain
restrictive covenants and financial
maintenance covenants that limit our
financial and operational flexibility, as well
as events of default and cross-default
provisions. Failure to make payments as
they are due or to adhere to these covenants,
or a deterioration of our financial condition
such that we breach the maintenance
covenants, or ability to secure external
financing to pay amounts due, could cause
insolvency or liquidation or bankruptcy
of SAZKA Group and/or one or more of
its subsidiaries or affiliates.
Events such as a breach of covenants or
an actual or expected deterioration in
financial performance as a result of
COVID-19 or for other reasons, including
loss of licenses or legal proceedings, could
also negatively impact our credit ratings.
Credit rating downgrades could potentially
increase financing costs, or even prevent
us from refinancing debt as it becomes
due.
16. Other financial risks
We are exposed to certain other financial
risks, including currency risk, credit risk
and interest rate risk. For further information
on such risks please refer to the “Notes
to the consolidated financial statements”,
Section “Risk management” on page 123
et seq. of this Annual Report.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
43Sazka Group Annual Report and Accounts 2020
Corporate governance
Board of Directors
Karel Komarek
Chairman of the Board
Pavel Saroch
Member of the Board
Katarina Kohlmayer
Member of the Board
Biography
Karel is the Chairman of the Board of Directors
of SAZKA Group. He has been involved with
SAZKA Group since 2011 when KKCG, the
private investment group that he founded,
became a major shareholder. He is also the
chairman of the boards of directors of companies
forming part of the KKCG Group (including,
among others, KKCG AG, KKCG a.s., and MND
a.s.). He is also the founder of the Promeny
Foundation and the current co-chair of the
Kennedy Center International Committee on
the Arts in Washington DC.
Biography
Pavel is a member of the Board of Directors of
SAZKA Group and current CIO of KKCG Group.
He is a member of the board of directors of
KKCG AG, and of individuaal companies that
belong to SAZKA Group, including OPAP and
SAZKA a.s. where since December 2012 he has
been chairman of the board of directors.
He served in management positions with
securities trading firms such as Ballmaier &
Schultz CZ and Prague Securities. From 1999
to 2001, he was a member of the board of
directors of I.F.B. In 2001, he was appointed
deputy chairman of the supervisory board of
ATLANTIK FT and subsequently became a
member of the company’s board of directors.
Biography
Katarina is a member of the Board of Directors
of SAZKA Group and current CFO of KKCG
Group. She is in charge of KKCG Group’s capital
markets and other financing activities, M&A,
and accounting, control and audit operations
within the KKCG Group. She is alsio member
of the board of directors of KKCG a.s., and of
individual companies that belong to SAZKA
Group, including OPAP and CASAG. Prior to
joining KKCG, she served as managing director
at Morgan Stanley and VTB Capital. During her
professional career, she has specialised in M&A
transactions and their financing in Central and
Eastern European countries, Russia and the
CIS.
Robert Chvatal
Member of the Board ofDirectors
and ChiefExecutive Officer
Biography
Robert is a member of the Board of Directors
of SAZKA Group and the Chief Executive Officer
of SAZKA Group. He is also a member of the
board of directors of individual companies that
belong to SAZKA Group, including OPAP and
SAZKA a.s., of which he is also the Chairman.
He previously worked at Procter & Gamble and
Reckitt Benckiser before moving to T-Mobile
as Chief Marketing Director. He was later
appointed as Chief Executive Officer of T-Mobile
Slovakia and T-Mobile Austria. He is also the
first Vice President of the Association of
European Lotteries.
Audit Committee
The Company has established an Audit Committee in accordance with the requirements of
the Business Corporations Act. The competence of the Audit Committee according to the
applicable legislation is:
• Monitoring the effectiveness of the internal quality control and risk management systems
and monitoring the process of the preparation of financial statements and consolidated
financial statements;
• Recommendations to the Supervisory Board as to the auditors which shall be appointed,
assessment of their independence and the discussion of any threats to the auditor´s
independence if need be, including the adoption of necessary safeguards;
•
Submitting to the Board of Directors or the Supervisory Body recommendations to ensure
the integrity of the accounting and financial reporting and annual reports on the Audit
Committee’s operations; and
The Audit Committee generally meets on a monthly basis; in the year 2020, the Audit
Committee held seven meetings in total. In 2020, the Audit Committee (i) provided several
reports to the Supervisory Board of the Company; (ii) supplied a report to the Public Audit
Oversight Board; (iii) regularly discussed ongoing transactions of the Company or its
subsidiaries in Austria, the Czech Republic, Greece, Italy, and the United Kingdom; (iv)
cooperated on the audit planning for the year 2020; (v) conducted other tasks, as necessary.
The members of the Audit Committee of the Company in the year 2020 were the following
persons:
•
Mr Otakar Hora, independent member – since 15 May 2020 (Chairman of the Audit
Committee since 22 May 2020);
• Mr Jan Hrazdira, independent member – since 15 May 2020; and
• Mr Zdenek Jurak – since 15 May 2020.
44 Sazka Group Annual Report and Accounts 2020
Governance
Corporate governance
Senior management
Robert Chvatal
Member of the Board ofDirectors
and ChiefExecutive Officer
Kenneth Morton
Chief Financial Officer
Stepan Dlouhy
Chief Investment Officer
See previous page.
Biography
Ken was appointed Chief Financial Officer in
February 2020. Previously, he was the head of
corporate finance of KKCG. Before joining
SAZKA Group, Ken worked as an investment
banker at Morgan Stanley and Deutsche Bank
in London, Moscow and Hong Kong, and in
corporate finance at Thames Water.
Biography
Stepan joined SAZKA Group as Chief Investment
Officer in March 2016. He is also the investment
director at KKCG a.s., a role he has held since
2013. Stepan is also a member of the supervisory
board of Austrian Lotteries and was previously
a member of the management board of
LOTTOITALIA. Prior to joining SAZKA Group,
Stepan worked for Chayton Capital and Deloitte
Advisory.
Jan Matuska
Chief Operating Officer
Tony Khatskevich
Chief Technology Officer
Jan Sterba
Chief Marketing Officer
Biography
Jan joined SAZKA Group as Chief Operating
Officer in October 2019. Jan is responsible for
the organic development of SAZKA Group
operating companies, monitoring their
performance and ensuring best practice
exchange within the Group. He oversees and
supports the implementation of SAZKA Group
and operating companies’ major strategic
initiatives. Before joining SAZKA Group, Jan
worked as principal for the global management
consulting firm Kearney.
Biography
Tony joined SAZKA Group as Chief Technology
Officer in September 2018. Tony leads SAZKA
Group’s technology and innovation strategy
for SAZKA Group’s digital platforms and
architecture to maximise the operational success
of the Group. Tony has extensive experience
in Israel, the USA and Estonia heading up the
technology and delivery organisations in a
range of industries, including gaming, telecom,
and information security. For the last six years
before joining SAZKA Group Tony served as
the Vice President at Playtech, the world’s
largest online gaming solutions supplier.
Biography
Jan was appointed as Chief Marketing Officer
of Sazka group in February 2020 having been
responsible for developing the marketing
strategy for all KKCG Group businesses since
January 2013. Before joining KKCG and SAZKA
Group, Jan served as a marketing specialist for
the local brands of the Opavia/Danone Group
before joining Reckitt Benckiser, where he spent
the last four years at the London Head Office
as the Global Marketing Manager responsible
for the strategic development of global brands.
Governance 44–46 Financial Statements 47–224Strategic Report 2–43
45Sazka Group Annual Report and Accounts 2020
This Report contains “forward-looking
statements” within the meaning of
the securities laws of certain jurisdictions.
In some cases, these forward-looking
statements can be identified by the
use of forward-looking terminology,
including the words “believes,”
“estimates,” “anticipates,” “expects,”
“intends,” “may,” “will,” “plans,”
“continue,” “ongoing,” “potential,”
“predict,” “project,” “target,” “seek”
or “should” or, in each case, their
negative or other variations or
comparable terminology or by
discussions of strategies, plans,
objectives, targets, goals, future events
or intentions. These forward-looking
statements include all matters that
are not historical facts. They appear
in a number of places throughout this
Report and include statements
regarding our intentions, beliefs or
current expectations concerning,
among other things, our results of
operations, financial condition, liquidity,
prospects, growth, strategies and the
industry in which we operate.
By their nature, forward-looking
statements involve known and unknown
risks and uncertainties because they
relate to events and depend on
circumstances that may or may not
occur in the future. Forward-looking
statements are not guarantees of
future performance. You should not
place undue reliance on these
forwardlooking statements.
Any forward-looking statements are
only made as of the date of this Report
and we do not intend, and do not
assume any obligation, to update
forward-looking statements set forth
in this Report.
Many factors may cause our results
of operations, financial condition,
liquidity and the development of the
industry in which we operate to differ
materially from those expressed or
implied by the forward-looking
statements contained in this Report.
These factors include, among others:
•
the ongoing outbreak of COVID-19
and legislative measures taken
in response;
•
the impact of regulations, loss of
licenses or exclusive rights to operate
our business activities;
• the impact of changes in taxation
and fees for licenses, tax audits
and penalties;
•
changing consumer preferences,
changes in technologies, brand
loyalty and competition;
•
the impact of politics and macroeconomy;
•
our corporate structure and the
impact of having less than majority
ownership of certain subsidiaries;
• the impact of new acquisitions;
•
inadequate compliance procedures
and policies;
•
negative perceptions and publicity
about the lottery and gaming industry;
•
technical failures and security breaches;
• dependence on agents’ networks
and a few technology suppliers;
•
the impact of regulations and other
factors that affect the success of
our on-line gaming offerings;
• the impact of legal, administrative
and arbitration proceedings;
•
the impact of our indebtedness;
and
•
other factors discussed under
“Risk Factors”.
These risks and others described
under “Risk Factors” are not exhaustive.
Other sections of this Report describe
additional factors that could adversely
affect our results of operations,
financial condition, liquidity and the
development of the industry in which
we operate. New risks can emerge
from time to time, and it is not possible
for us to predict all such risks, nor
can we assess the impact of all such
risks on our business or the extent to
which any risks, or combination of
risks and other factors, may cause
actual results to differ materially from
those contained in any forward-looking
statements. Given these risks and
uncertainties, you should not rely on
forward-looking statements as a
prediction of actual results.
With the use of all reasonable care
and to the best of our knowledge,
we confirm that the Consolidated
Annual Report for the year 2020 gives
a true and fair view of the financial
situation, business activities and
economic results of the Company
and its consolidated group for the
relevant accounting period, and
perspective for future financial situation,
business activities and economic
results of the Company and its
consolidated group.
Date:
30 April 2021
Signature of the authorised representative:
Pavel Šaroch
Member of the Board of Directors
Robert Chvátal
Member of the Board of Directors
and Chief Executive Officer
Forward looking statements
46 Sazka Group Annual Report and Accounts 2020
Governance
Financial Statements
Contents
1. Consolidated Financial Statement s for the year ended 31 December 2020 (in millions of Euro) 48
2. Separate financial statements for the year ended 31 December 2020 (in millions of CZK) 146
3. Independent Auditor’s Report 183
4. Further Regulatory Disclosures 194
Prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
Financial Statements 47–224Strategic Report 2–43
47Sazka Group Annual Report and Accounts 2020
Governance 44–46
Note For 2020 For 2019
Gross gaming revenue (GGR) 8 2,018.0 1,906.1
Gaming taxes 8 (805.5) (595.0 )
Net gaming revenue (NGR) 8 1,212.5 1,311.1
Revenue from non-gaming activities 8 143.2 147. 3
Other operating income 9 96.8 12.5
Agents’ commissions (337.1) (419.8)
Materials, consumables and services 10 (309.8) (330.2)
Marketing services 11 (124.9) (92.4)
Personnel expenses 12 (223.2) (106.1)
Other operating expenses 13 (77.7) (50.6)
Share of profit of equity method investees (net of tax) 20 79.5 120.4
Depreciation and amortisation (158.5) (112.9)
Impairment of tangible and intangible assets including goodwill 18 (26.1 ) (8.7 )
Restructuring cost 14 (50.6 ) –
Gain from remeasurement of previously held interest in equity method investee 5 142.7 –
Other gains and losses 14 8.9 –
Profit from operating activities 375.7 470.6
Interest income 2.2 7.5
Interest expense (101.8) (70.3 )
Other finance income and expense (16.0) (50.2)
Finance costs, net 15 (115.6) (113.0)
Profit before tax 260.1 357.6
Income tax expense 16 (35.7 ) (46.3)
Profit after tax from continuing operations 224.4 311.3
Discontinued operations: gain on disposal of subsidiaries – 27 7. 3
Profit from discontinued operations, excluding gain on disposal – 15.6
Profit after tax from discontinued operations 6 – 292.9
Profit after tax 224.4 604.2
Profit after tax attributable to:
Owners of the Company 92.8 428.5
– continuing operations 92.8 141.8
– discontinued operations – 286.7
Non-controlling interests 131.6 175.7
– continuing operations 131.6 169.5
– discontinued operations – 6.2
Profit after tax 224.4 604.2
Consolidated statement
of comprehensive income
48 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
Prepared in accordance with International Financial Reporting Standards as adopted by the European Union
Note For 2020 For 2019
Items that are or may subsequently be reclassified to profit or loss:
Change in translation reserve 12.9 (3.0 )
Change in translation reserve of foreign operations disposed of
reclassified to profit or loss – (2.5)
Remeasurement of hedging derivatives, net of tax 30 (20.2) 9.9
Net change in hedging derivatives reclassified to profit or loss, net of tax 30 1.2 (3.6 )
Share of other comprehensive income of equity method investees 4.0 (4.1)
Items that will not be reclassified to profit or loss:
Actuarial remeasurements of defined benefit liabilities, net of tax (8.7) (0.2)
Revaluation of equity instruments at fair value through OCI (FVOCI) (4.3) –
Total other comprehensive loss 17 (15.1) (3.5 )
Total comprehensive income 209.3 600.7
Total comprehensive income attributable to:
Owners of the Company 83.2 425.9
– continuing operations 83.2 139.2
– discontinued operations – 286.7
Non-controlling interests 126.1 174.8
– continuing operations 126.1 168.6
– discontinued operations – 6.2
Total comprehensive income 209.3 600.7
The Notes on pages 54 to 145 are an integral part of these consolidated financial statements.
49Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Note 31/12/2020 31/12/2019
Assets
Intangible assets 18 2,403.2 1,879.1
Goodwill 18 1,180.6 600.6
Property, plant and equipment 19 463.3 194.7
Investment property 1.6 1.7
Equity method investees 20 343.2 649.1
Trade and other receivables 21 58.1 29.7
Derivative financial instruments 30 – 9.5
Other financial assets 22 199.6 8.9
Deferred tax asset 16 65.7 20.0
Total non-current assets 4,715.3 3,393.3
Inventories 9.9 7.4
Trade and other receivables 21 224.1 246.0
Derivative financial instruments 30 7.9 3.5
Current tax asset 3.5 5.1
Other financial assets 22 43.3 19.2
Cash and cash equivalents 23 872.2 763.7
Assets held for sale 0.8 –
Total current assets 1,161.7 1,044.9
Total assets 5,877.0 4,438.2
Liabilities
Loans and borrowings 26 2,533.3 2,252.5
Lease liabilities 27 118.8 59.9
Trade and other payables 28 134.4 12.2
Derivative financial instruments 30 2.7 3.7
Provisions 29 59.6 8.5
Employee benefit liability 31 1 27.4 3.0
Deferred tax liability 16 366.5 212.8
Total non-current liabilities 3,342.7 2,552.6
Loans and borrowings 26 129.0 99.4
Lease liabilities 27 24.9 8.3
Trade and other payables 28 745.2 360.7
Derivative financial instruments 30 1.1 –
Current tax liability 68.6 6.9
Provisions 29 45.1 8.2
Employee benefit liability 31 36.9 18.0
Total current liabilities 1,050.8 501.5
Total liabilities 4,393.5 3,054.1
Equity
Share capital 24 0.1 0.1
Capital contributions and other reserves 24 48.3 38.7
Translation reserve (1.2) (15.3 )
Hedging reserve (2.2) 16.7
Retained earnings 342.2 488.0
Total equity attributable to owners of the Company 387. 2 528.2
Non-controlling interest 25 1,096.3 855.9
Total equity 1,483.5 1,384.1
Total equity and liabilities 5,877.0 4,438.2
The Notes on pages 54 to 145 are an integral part of these consolidated financial statements.
Consolidated statement
of financial position
50 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
Consolidated statement
of changes in equity
Note
Share
capital
Capital
contributions
and other
reserves
Translation
reserve
Hedging
reserve
Retained
earnings
Total
equity
attributable
to owners
of the
Company
Non-
controlling
interest
Total
equity
Balance at 1 January 2020 0.1 38.7 (15.3) 16.7 488.0 528.2 855.9 1,384.1
Profit for the year – – – – 92.8 92.8 131.6 224.4
Other comprehensive loss
forthe year – 1.3 14.1 (18.9) (6.1 ) (9.6) (5.5) (15.1 )
Total comprehensive income
for the year – 1.3 14.1 (18.9) 86.7 83.2 126.1 209.3
Transactions with owners,
recorded directly in equity:
Business combinations 5 – – – – – – 321.9 321.9
Purchase of NCI in subsidiaries 2.3 – – – – (36.8 ) (36.8 ) (17.7 ) (54.5 )
Dividends declared – – – – (150.0) (150.0) (265.0) (415.0)
Effect of scrip dividend – – – – – – 37.7 37.7
Effect of change in ownership
due to scrip dividend
programme – – – – (42.5) (42.5) 42.5 –
Other movements in equity – 8.3 – – (3.2) 5.1 (5.1) –
Total transactions with owners – 8.3 – – (232.5 ) (224.2) 114.3 (109.9)
Balance at 31 December 2020 0.1 48.3 (1.2) (2.2) 342.2 387. 2 1,096.3 1,483.5
OPAP S.A. provides shareholders the option of receiving dividends as cash or OPAP S.A. shares via a scrip dividend
programme. The Group elected to receive its dividends as OPAP S.A. shares via a scrip dividend programme (see
Note 2.3). “Effect of change in ownership due to scrip dividend programme” reflects the issuance of these shares
at a price above their book value per share.
Total dividend declared to non-controlling interest (“NCI”) was €302.7 million including withholding tax, comprising
dividend paid in cash to minority shareholders of OPAP S.A. of €265.0 million and dividend settled by issuance
of new OPAP S.A. shares to non-controlling interest under its scrip dividend programme of €37.7 million.
The Notes on pages 54 to 145 are an integral part of these consolidated financial statements.
51Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Consolidated statement
of changes in equity
continued
Note
Share
capital
Capital
contributions
and other
reserves
Translation
reserve
Hedging
reserve
Retained
earnings
Total
equity
attributable
to owners
of the
Company
Non-
controlling
interest
Total
equity
Balance at 1 January 2019 0.1 463.3 (9.8 ) 9.7 3 47. 8 811.1 962.0 1,773.1
Profit for the year – – – – 428.5 428.5 175.7 604.2
Other comprehensive loss
forthe year – (4.1) (5.5 ) 7.0 – (2.6) (0.9) (3.5)
Total comprehensive income
for the year – (4.1) (5.5) 7.0 428.5 425.9 174.8 600.7
Transactions with owners,
recorded directly in equity:
Purchase of NCI in subsidiaries – – – – (142.7) (142.7) (113.9) (256.6 )
Dividends declared – – – – (149.1) (149.1 ) (165.9 ) (315.0 )
Effect of scrip dividend – – – – – – 25.1 25.1
Effect of change in ownership
due to scrip dividend
programme – – – – 3.9 3.9 (3.9 ) -
Distribution of capital
contributions – (420.6) – – – (420.6) – (420.6)
Effect of disposals
ofsubsidiaries – – – – – – (22.4) (22.4)
Other movements in equity – 0.1 – – (0.4) (0.3) 0.1 (0.2)
Total transactions with owners – (420.5) – – (288.3) (708.8 ) (280.9) (989.7)
Balance at 31 December 2019 0.1 38.7 (15.3) 16.7 488.0 528.2 855.9 1,384.1
OPAP S.A. provides shareholders the option of receiving dividends as cash or OPAP S.A. shares via a scrip dividend
programme. The Group elected to receive its dividends as OPAP S.A. shares via cash. “Effect of change in ownership
due to scrip dividend programme” reflects the issuance of these shares at a price above their book value per share.
Total dividend declared to NCI was €191.0 million including withholding tax, comprising dividend paid in cash to
minority shareholders of OPAP S.A. of €165.9 million and dividend settled by issuance of new OPAP S.A. shares to
non-controlling interest under its scrip dividend programme of €25.1 million.
The Notes on pages 54 to 145 are an integral part of these consolidated financial statements.
52 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
Consolidated statement
of cash flows
Note For 2020 For 2019
Operating activities
Profit (+) for the year from continuing operations 224.4 311.3
Profit (+) for the year from discontinued operations 6 – 292.9
Profit (+) for the year 224.4 604.2
Adjustments for:
Income tax expense 35.7 51.5
Depreciation and amortisation 18,19 158.5 114.1
Impairment losses on intangible assets and goodwill 18,19 26.1 8.7
Profit (–) on sale of property, plant and equipment and intangible assets 0.6 –
Profit (–) on disposal of subsidiaries 6 – (27 7. 3 )
Profit (–) on disposal of financial investments 14 (8.0 ) –
Net interest expense (+) 15 99.6 65.5
Other finance expense relating to purchase of non-controlling interest (+) 15 – 40.9
Net FX gains (–) 15 (1.0) (2.2)
Other financial gains (dividends) – (0.1 )
Share of profit (–) of equity method investees 20 (79.5) (120.4)
Revaluation of financial assets at fair value through profit or loss 14 (0.9 ) –
Revaluation of equity method investee to fair value 5 (142.7) –
Non-cash movement in legal and restructuring provisions 29 53.8 –
Operating result before changes in working capital and provisions 366.6 484.9
Increase (+)/decrease (–) in provisions (14.3 ) (29.5)
Increase (–)/decrease (+) in inventories 0.5 3.8
Increase (–)/decrease (+) in trade receivables and other assets 35.0 (5.7)
Increase (+)/decrease (–) in trade and other payables (98.2) 20.3
Cash generated from operating activities 289.6 473.8
Interest paid (100.3) (65.8)
Income tax paid (26.2) (94.4)
Net cash generated from operating activities 163.1 313.6
Investing activities
Acquisition of property, plant and equipment and intangible assets (46.5) ( 3 7.2)
Acquisition of subsidiaries, net of cash acquired 5 115.9 –
Acquisition of equity method investee (9.4 ) –
Acquisition of financial investments 22 (27.7) –
Proceeds from disposal of financial investments 22 95.8 –
Dividends and distribution received from equity method investees 20 103.5 1 3 7.9
Proceeds from sale of subsidiary, net of cash disposed of 6 – 272.4
Proceeds from sale of property, plant and equipment and intangible assets – 0.7
Dividends received from financial investments – 0.1
Interest income received 2.1 7. 4
Net movement in current financial assets 5.8 0.8
Proceeds from assignment of loan receivable – 117.1
Net cash generated from (+)/used in (–) investing activities 239.5 499.2
Financing activities
Transactions with NCI without change of control (54.5 ) (256.6)
Dividends paid to owner of the company (150.0) (149.1)
Dividends paid to NCI 25 (226.6 ) (140.8)
Loans and borrowings received 26 1,424.9 1,0 87. 2
Repayment of loans and borrowings 26 (1,286.6) (423.8)
Distribution of capital contributions – (420.6)
Repayment of principal element of lease liabilities 27 (13.8) (9.1)
Net movement in restricted cash related to financing activities 8.7 ( 7.1)
Other finance expense paid relating to purchase of non-controlling interest 15 – (40.9)
Net cash generated from (+)/used in (–) financing activities (297.9) (360.8 )
Net decrease (–)/increase (+) in cash and cash equivalents 104.7 452.0
Effect of currency translation on cash and cash equivalents 3.8 (1.0)
Cash and cash equivalents at the beginning of the year 23 763.7 312.7
Cash and cash equivalents at the end of the year 23 872.2 763.7
The Notes on pages 54 to 145 are an integral part of these consolidated financial statements.
53Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements
Contents
1. Basis of preparation
55
2. General information about the Group 58
3. Significant accounting policies
62
4. Significant accounting estimates and judgements
80
5. Business combinations
80
6. Disposals of subsidiaries
86
7. Operating segments
86
8. Gross gaming revenue (GGR) and Revenue from non-gaming activities
88
9. Other operating income 89
10. Materials, consumables and services
90
11. Marketing services
90
12. Personnel expenses
90
13. Other operating expenses
90
14. Restructuring costs and other gains and losses 91
15. Finance costs, net
91
16. Taxes
92
17. Other comprehensive loss for the year
95
18. Intangible assets and goodwill
96
19. Property, plant and equipment (“PPE”)
99
20. Equity method investees
100
21. Trade and other receivables 106
22. Other financial assets
106
23. Cash and cash equivalents
107
24. Equity
108
25. Non-controlling interests
108
26. Loans and borrowings
111
27. Leases
114
28. Trade and other payables 115
29. Provisions
116
30. Derivatives and hedging
117
31. Employee benefit liabilities
120
32. Contingencies
122
33. Risk management
123
34. Related parties
138
35. Group companies
140
36. Subsequent events
143
54 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
1. Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in compliance with International Financial Reporting
Standards as adopted by the European Union (“IFRS”).
The accounting policies described in Note 3 were used in preparing the consolidated financial statements for the
year ended 31 December 2020 and in preparing the comparative information as of 31 December 2019.
These consolidated financial statements were approved by the Board of Directors on 30 April 2021.
(b) Basis of measurement
The consolidated financial statements have been prepared on a going concern basis, using the historical cost
method, unless otherwise stated in the accounting policies.
The Group is consistent in applying the accounting policies described in Note 3 unless otherwise stated.
(c) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (its “functional currency”). The functional currency
of the Company is the Czech Crown (CZK). The functional currency of major operating components of the Group
is following:
CASAG Euro (€)
OPAP Euro (€)
SAZKA Czech Crown (CZK)
LOTTOITALIA Euro (€)
These IFRS consolidated financial statements are presented in Euro (€) as this is the functional currency of the
majority of Group companies. All financial information is presented in millions of EUR with one decimal place and
rounded to the nearest hundred thousand , unless stated otherwise.
Any differences between the amounts included in the financial statements and amounts included in the Notes are
attributable to rounding.
(d) Use of estimates and judgements
When preparing the financial statements, the Group’s management makes estimates, judgements and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. These estimates, judgements and assumptions are based on past experience and various other factors
deemed appropriate as at the date of the preparation of financial statements and are used where the carrying
amounts of assets and liabilities are not readily available from other sources or where uncertainty exists in applying
the individual accounting policies. Impacts of changes in estimates are described in the individual notes.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.
(e) Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
Fair value is defined as the price that would be received for the sale of an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date under current market conditions
regardless of whether that price is directly observable or estimated using another valuation technique. Fair values
are obtained, as appropriate, from quoted market prices, discounted cash flow projections and other valuation models.
55Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
1. Basis of preparation continued
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change has occurred.
(f) Significant changes in accounting policies
The accounting policies set out below have been applied consistently to the accounting periods presented in these
financial statements, unless otherwise indicated.
In 2020 the Group adopted the new accounting standards and amendments to accounting standards described
in Note 1.h. There were no other significant changes in accounting policies in 2020 and the Group has consistently
applied the accounting policies to all periods presented in these consolidated financial statements.
(g) Changes in the presentation
i. Operating segments
As a consequence of continuing expansion of the Group through acquisitions, the Group reassessed its operating
segments. Following the acquisition of an additional 17.19% stake in Casinos Austria AG and subsequent consolidation
of Casinos Austria AG and its subsidiaries (see Note 5.a) management monitors performance and decides on
resource allocation by geography rather than by product line. As a result, the Group now identifies the following
operating segments:
• Czech Republic;
• Austria, which includes Austrian Lotteries;
• Greece and Cyprus, which includes Stoiximan; and
• Italy.
Management believes that the change enhances the usefulness of the financial statements for users.
Comparative information in Note 7 “Operating segments” has been restated accordingly.
Management also continues to track performance of individual product lines on a Revenue basis, and relevant
information including comparatives is included in Note 8.
As a result of the change, items of goodwill generated from past acquisitions have been reallocated based on the
new operating segment structure, as the segments represent the lowest level of cash-generating unit aggregation
in which management monitors goodwill. The change does not impact the carrying value of goodwill or materially
change the impairment risk factors or sensitivities.
ii. Employee benefit liabilities
The Group reassessed the presentation of employee benefit liabilities. Previously only post-employment plans
were presented as “Employee benefit liabilities” and current employee benefits were presented as “Payables to
employees” in “Current trade and other payables”. As of 31 December 2019, the Group reclassified “Payables to
employees” to “Current employee benefit liabilities” in the amount of €18.0 million.
Management believes that the change enhances the usefulness of the financial statements for users by presenting
all liabilities related to employee benefits under IAS 19 together on separate balance sheet lines.
56 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
1. Basis of preparation continued
iii. Finance income and expenses
The Group reassessed the presentation of its financial results to show “Interest expense” separately on the face
of the statement of comprehensive income rather than aggregated with other “Finance costs” which are subject
to significant volatility between periods. Full detail of finance income and expenses including for the comparative
period is included in the Notes to the financial statements (see Note 15).
Management believes that the current presentation, where “Interest income” and “Interest expense” are presented
separately and the remaining financial result (which mostly comprise foreign currency gains and losses) is presented
together on a net basis, enhances the usefulness of the financial statements for users.
iv. Transactions with members of the Company’s Board of Directors, Supervisory Board, and key management
personnel
The Group clarified the definitions of members of the statutory bodies and key management personnel in the
related party transactions section to reflect best market practices and guidance issued by the Czech National
Bank. The presentation now includes members of the statutory bodies of the Company and C-level management
of the Company, while it the past the presentation included members of statutory bodies of other Group entities
and other management personnel (see Note 34).
Comparative information has been restated accordingly.
(h) New standards and amendments applicable from 1 January 2020 and 1 June 2020
The Group has applied for the first-time certain standards and amendments to standards which are effective for
annual periods beginning on or after 1 January 2020.
These amendments did not have any material impact on the Group’s consolidated financial statements.
i. Amendment to IFRS 3 “Business combinations”
The amended definition of a business requires an acquisition to include an input and a substantive process that
together significantly contribute to the ability to create outputs. The definition of the term “outputs” is amended
to focus on goods and services provided to customers, generating investment income and other income, and it
excludes returns in the form of lower costs and other economic benefits.
The amendment did not have any material impact on the Group’s consolidated financial statements.
ii. Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest rate benchmark (“IBOR”) reform
The amendments modify some specific hedge accounting requirements to provide relief from potential effects of
the uncertainty caused by the IBOR reform. In addition, the amendments require companies to provide additional
information to investors about their hedging relationships which are directly affected by these uncertainties.
These amendments did not have any material impact on the Group’s consolidated financial statements.
iii. Amendments to IAS 1 and IAS 8 – Definition of material
The International Accounting Standard Board (“IASB”) has made amendments to IAS 1 “Presentation of financial
statements” and IAS 8 “Accounting policies, changes in accounting estimates and errors” which use a consistent
definition of materiality throughout International Financial Reporting Standards (“IFRS”) and the “Conceptual
Framework” for Financial Reporting, clarify when information is material and incorporate some of the guidance in
IAS 1 about immaterial information.
In particular, the amendments clarify:
• That the reference to obscuring information addresses situations in which the effect is similar to omitting or
misstating that information, and that an entity assesses materiality in the context of the financial statements as
a whole; and
• The meaning of “primary users of general purpose financial statements” to whom those financial statements are
directed, by defining them as “existing and potential investors, lenders and other creditors” that must rely on
general purpose financial statements for much of the financial information they need.
These amendments did not have any material impact on the Group’s consolidated financial statements.
57Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
1. Basis of preparation continued
iv. Amendments to References to the “Conceptual Framework” in IFRS Standards
The IASB has issued a revised “Conceptual Framework” which will be used in standard-setting decisions with
immediate effect. Key changes include:
• Increasing the prominence of stewardship in the objective of financial reporting;
• Reinstating prudence as a component of neutrality;
• Defining a reporting entity, which may be a legal entity, or a portion of an entity;
• Revising the definitions of an asset and a liability;
• Removing the probability threshold for recognition and adding guidance on derecognition;
• Adding guidance on different measurement basis; and
• Stating that profit or loss is the primary performance indicator and that, in principle, income and expenses in
Other comprehensive income should be recycled where this enhances the relevance or faithful representation
of the financial statements.
No changes have been made to any of the current accounting standards. However, entities that rely on the
“Conceptual Framework” in determining their accounting policies for transactions, events or conditions that are
not otherwise dealt with under the accounting standards need to apply the revised “Conceptual Framework” from
1 January 2020. These entities need to consider whether their accounting policies are still appropriate under the
revised “Conceptual Framework”.
These amendments did not have any material impact on the Group’s consolidated financial statements.
v. Amendments to IFRS 16 “Leases” – COVID-19 related rent concessions
These amendments were endorsed by the EU on 9 October 2020 and are effective from 1 June 2020.
As a result of the COVID-19 pandemic, rent concessions have been granted to lessees. Such concessions might
take a variety of forms, including payment holidays and deferral of lease payments. In May 2020, the IASB made
an amendment to IFRS 16 “Leases” which provides lessees with an option to treat qualifying rent concessions in
the same way they would if they were not lease modifications.
The Group’s operation in Greece benefited from a 40% discount on payments under leases for certain commercial
premises. The effect of the 40% discount has been recorded as “Other operating income”. The total impact in the
year 2020 was €1.8 million.
2. General information about the Group
2.1 Description
a joint stock company , was established on 2 April 2012 and registered in the Commercial Register maintained by
management, strategic business development and financing activities for the Group and holds interests in other
Group companies.
As of 31 December 2020 and 2019, the immediate 100% parent of the Company was KKCG AG and its ultimate
controlling party pursuant to IFRS standards is VALEA FOUNDATION (see Note 2.5). On 17 March 2021, SAZKA
Entertainment AG, an entity 100% owned by KKCG AG , became the immediate parent of the Company.
2.2 Principal activity
58 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
2. General information about the Group continued
2.3 Composition of the Group
The Group comprises several major operating entities and subgroups, while it also includes number of entities
whose contribution to the consolidation is negligible.
The following table presents the Company’s effective ownership interest in major operating components of the
Group as of 31 December 2020 and 31 December 2019. For a full list of the Group’s ownership interests in subsidiaries,
joint ventures and associates see Note 35.
Economic interest
Note Country 31/12/2020 31/12/2019
Major operating entities:
Casinos Austria AG subgroup* (a) Austria subsidiary 59.80% 38.16%
including Österreichische Lotterien GmbH subgroup (b) Austria subsidiary 53.60% 37.62 %
OPAP S.A. subgroup (c) Greece and Cyprus subsidiary 36.10% 31.99%
including Stoiximan (d) Malta business unit 30.50% 11.75%**
SAZKA a.s.
(e) Czech Republic subsidiary 100.00% 100.00%
LOTTOITALIA S.r.l. (f) Italy associate 32.50% 32.50%
* From 26 June 2020 subsidiary, before as equity method investee.
** As of 31 December 2019, the Group’s interest in Stoiximan comprised only an interest held by the Group’s associate Kaizen Gaming
Limited (formerly TCB Holdings Ltd), thus the Group did not exercise control over the investment.
(a) Casinos Austria AG subgroup (“CASAG”) is the exclusive operator of lotteries, onshore online gaming and
land-based casinos in Austria. Its subsidiaries also operate casinos outside of Austria.
The Group holds a 59.80% economic interest and controlled 55.48% of voting rights in CASAG as of
31 December2020 (31 December 2019: 38.29%) through:
• 38.29% of shares held by the Group’s 100% subsidiary Medial Beteiligungs GmbH;
• 17.19% of shares held by the Group’s 100% subsidiary CAME Holding GmbH (from 26 June 2020); and
•
4.31% of shares for which the Group holds a purchase call option. The Group determines that it bears
substantially all risk and rewards associated with the ownership, therefore includes the shares in its economic
interest in CASAG. The call option was exercised and the shares acquired on 27 January 2021.
The Group has entered into a shareholders’ agreement with Österreichische Beteiligungs AG (“OBAG”), the
second largest shareholder of CASAG. The agreement specifies the governance structure and nomination
rights of both parties in the key governance bodies. The agreement gives OBAG certain protective minority
shareholder rights, while it also gives SAZKA certain tools to break a deadlock.
Under the terms of shareholders’ agreement, the Group can make decisions relating to activities in the normal
course of business, including decisions about business plans and budgets of CASAG and its subsidiaries,
appointment/removal of management board members in some CASAG subsidiaries, taking up additional
financial liabilities up to and within an agreed “Target Leverage Range” and dividend distributions within an
agreed “Dividend Pay-out Range”.
OBAG’s protective minority shareholder rights include mainly those in relation to:
• Major capital expenditures;
• Issuance of shares which would result in a decrease of OBAG’s interest;
•
Ability to issue debt instruments which would increase CASAG’s indebtedness above the Target Leverage Range;
• Related party transactions; and
• Fundamental changes to the CASAG business.
59Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
2. General information about the Group continued
Management assesses that OBAG’s rights, including veto rights, are protective rather than substantive rights
and determines that according to IFRS rules the Group controls CASAG. Therefore, CASAG is fully consolidated
in the Group’s consolidated financial statements.
(b) Österreichische Lotterien GmbH subgroup (“Austrian Lotteries“) holds exclusive licences to provide draw-based
lottery games, instant lotteries, football pools, onshore online gaming and VLTs in Austria.
The Group holds a 53.60% economic interest and controls 73.83% of voting rights in Austrian Lotteries through:
• 73.83% of shares held by the CASAG, creating an economic interest of 44.15%; and
• 26.17% of shares held by equity method holding company Lotto-Toto Holding GmbH, in which the Group
has an economic interest of 36.11%, creating an additional economic interest of 9.45% in Austrian Lotteries.
(c) OPAP S.A. subgroup (“OPAP”) is the exclusive operator of numerical lotteries, instant lotteries, land-based
sports betting, VLTs and horse racing in Greece and also operates in Cyprus.
The Group held a 36.10% economic interest as of 31 December 2020 (31 December 2019: 31.99%) and controlled
43.12% of voting rights (31 December 2019: 40.01%) in OPAP through:
•
32.90% of shares (31 December 2019: 32.73%) held by the Group’s subsidiary SAZKA Delta Hellenic Holdings
Limited (formerly Emma Delta Hellenic Holdings Limited), in which the Group held an economic interest
of 78.64% (31 December 2019: 75.48%), creating an economic interest of 25.87% (31 December 2019: 24.71%);
and
• 10.22% of shares held directly by SAZKA Group a.s. (31 December 2019: 7.28%).
Management determines that according to IFRS rules the Group controls OPAP. The key elements and judgements
when assessing control according to IFRS are:
• Although the Group’s shareholding in OPAP is below 50%, it is by far the largest individual shareholding.
The remaining shares are widely dispersed among numerous public market investors. Since the Group
acquired its first shares in OPAP in 2013, shareholder attendance at OPAP S.A.’s general meetings of
shareholders has never been over 80%, therefore the Group controls the majority of votes present at
such meetings;
• All shareholders’ resolutions proposed at general meetings that the Group has voted in favour of have
been approved; and
• The Group’s appointees make up the majority of the OPAP S.A. Board of Directors (including CEO, CFO
and Executive Chairman).
(d) Stoiximan operates an online gaming business in Greece and Cyprus.
The Group holds a 30.50% economic interest (31 December 2019: 11.75%) and controls 84.49% of voting rights
as of 31 December 2020 in Stoiximan through:
• A 51.00% interest held from 13 July 2020 by the Group’s subsidiary OPAP Investment Ltd, in which the
Group has an economic interest of 36.10%, creating an economic interest of 18.41% (31 December 2019: 0.00%);
and
•
A 33.49% interest held through OPAP’s 68.35% share in Stoiximan’s part of Kaizen Gaming Limited (formerly
TCB Holdings Ltd), who holds remaining 49.00% interest in Stoiximan, in which the Group has an economic
interest of 24.67% (31 December 2019: 11.75%), creating an economic interest of 12.09% (31 December
2019: 11.75%).
The Group consolidates Stoiximan from 18 November 2020, following the acquisition of the additional interest
and, consequently, obtaining an increased influence in Stoiximan which constituted managerial control of
Stoiximan for consolidation purposes within the meaning of IFRS 10.
(e) SAZKA a.s. (“SAZKA”) is the market leader in the Czech Republic for both numerical lotteries and instant
lotteries and a wholly owned subsidiary of the Group.
60 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
2. General information about the Group continued
(f) LOTTOITALIA S.r.l. (“LOTTOITALIA”) is the exclusive operator of fixed odds numerical lotteries in Italy and an
associate of the Group. The Group owns 32.50% of shares and voting rights (31 December 2019: 32.50%).
Major changes in the Group in 2020
Company/Group
companies
Previous
economic
interest
Current
economic
interest Change Type of transaction Date of transaction
CASAG 38.16% 59.80% 21.64% Business combination 26 June 2020
OPAP 31.99% 36.10%
1.88% Scrip dividend 6 February 2020, 11 August 2020
1.88% Open market purchases during the year
0.20% Intragroup re-purchase ofNCI 24 June 2020, 14December 2020
0.15% Increase of interest in SDVCIC 2 October 2020
Stoiximan 11.75% 30.50%
12.91%
Purchase of equity
method investee
13 July 2020
5.84% Business combination 18 November 2020
For a list of all changes in the Group see Note 35.
Acquisition of controlling stake in CASAG
As of 31 December 2019, the Group owned a 38.16% share in CASAG, which was presented as an equity method
investee. On 26 June 2020, the Group acquired an additional 17.19% share in CASAG and from that date the subgroup
is fully consolidated (see Note 5.a).
Increase of shareholding in OPAP
i. Scrip dividend
On 6 February 2020 OPAP S.A. paid an extraordinary dividend of €1.00 per share. Shareholders had the option
of receiving cash or shares under OPAP S.A.’s scrip dividend programme. The Group elected to receive scrip.
On 11 August 2020 OPAP S.A. paid a dividend of €0.30 per share. Shareholders had the option of receiving cash
or shares under OPAP S.A.’s scrip dividend programme. The Group elected to receive scrip.
As a result, the Group’s economic interest in OPAP S.A. increased by 1.88%.
ii. Open market purchases
During 2020, the Company directly acquired additional shares in OPAP S.A. through open market purchases. As a
result, the Group’s economic interest and voting rights increased by 1.88%. These additional purchases are presented
in “Purchase of NCI in subsidiaries” in the Consolidated statement of cash flows.
iii. Intragroup re-purchase of NCI
During 2020, the Company purchased 0.59% of shares in OPAP S.A. held by SAZKA Delta Hellenic Holdings
Limited (formerly Emma Delta Hellenic Holdings Limited) (“SDHH”). Because SDHH is not a fully owned subsidiary,
the Group’s economic interest in OPAP S.A. increased by 0.20% as a result.
iv. Increase of interest in SDVCIC
On 2 October 2020, an investor redeemed its shares in SAZKA DELTA AIF VARIABLE CAPITAL INVESTMENT
COMPANY LTD (formerly EMMA DELTA VARIABLE CAPITAL INVESTMENT COMPANY LTD) (“SDVCIC”). The investor
received OPAP S.A. shares held by SDHH based on the closing price as of 1 October 2020. As a result, the Group’s
economic interest increased by 0.15%.
Acquisition of controlling interest in Stoiximan
As of 31 December 2019, OPAP S.A. held a 36.75% economic interest in Stoiximan through its equity method
investee Kaizen Gaming Limited (formerly TCB Holdings Ltd), equivalent to a 11.75% Group economic interest.
During 2020, the Group increased its economic interest in Stoiximan in several steps, the last of which was completed
on 18 November 2020. As a result of these steps the economic interest held by OPAP increased to 84.49% (see
Note 5.b). As a result of the increase in OPAP’s interest in Stoiximan and the Group’s increased economic interest
in OPAP, the Group’s economic interest in Stoiximan increased to 30.50% as of 31 December 2020.
61Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
2. General information about the Group continued
2.4 Statutory body
The Board of Directors as of 31 December 2020:
Chairman of the Board of Directors: Karel Komárek
Member of the Board of Directors: Pavel Šaroch
Member of the Board of Directors: Robert Chvátal
Member of the Board of Directors: Katarína Kohlmayer
Supervisory Board as of 31 December 2020:
Chairman of the Supervisory Board: Tomáš Porupka
2.5 Shareholder as of 31 December 2020
KKCG AG 100.00% (sole shareholder)
Registered office:
Kapellgasse 21,
6004 Luzern
Switzerland
3. Significant accounting policies
The accounting policies set out below have been applied consistently to the accounting periods presented in these
financial statements, unless otherwise indicated.
(a) Basis of consolidation
i. Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date – i.e. when control
(see ii. Subsidiaries) is transferred to the Group. Critical assumptions and judgements with respect to new acquisitions
are described in Note 4.
Goodwill represents amounts arising on the acquisition of business and is measured as the fair value of the
consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the
net amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the
acquisition date. Goodwill is stated at cost less accumulated impairment losses (see accounting policy 3.n and
Note 18).
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Transaction costs
are expensed as incurred, except if related to the issue of debt or equity securities (see accounting policies 3.m
ii.-iv.).
Any contingent consideration is measured at fair value at the date of acquisition and it is remeasured at fair value
at each reporting date. Subsequent changes in the fair value of the contingent consideration are recognized in
profit or loss.
ii. Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable
returns from its involvement with the entity and has ability to affect those returns through its power over the entity.
In assessing control, only substantive rights and rights that are not protective are taken into account. The Group
may have power over an investee even when it holds less than majority of voting power in an investee. In such a
case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other
vote holders to determine if it has de-facto power over the investee. Protective rights of other investors, such as
those that relate to fundamental changes of investee’s activities or apply only in exceptional circumstances, do
not prevent the Group from controlling an investee. The financial information of subsidiaries is included in the
consolidated financial statements from the date that control commences until the date that control ceases.
iii. Non-controlling interests (“NCI”) (see Note 25)
According to IFRS 3 the Group measures NCI at the acquisition date as a proportion of the acquiree’s identifiable
net assets, or at fair value. The choice of method used is made separately for each acquisition.
62 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
Changes of the Group’s interest in a subsidiary that do not result in a loss of control are accounted for within equity
as transactions with non-controlling interests.
iv. Loss of control
When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, including
the carrying amount of related goodwill, and any related NCIs and other components of equity. All amounts
recognised in Other comprehensive income are accounted on the same basis as would be required if the parent
had directly disposed of the related assets or liabilities. Any resulting gain or loss is recognised in profit or loss.
Any interest retained in the former subsidiary is measured at fair value when control is lost.
v. Acquisitions from entities under common control
Acquisitions from entities under common control are business combinations arising from transfers of interests in
entities that are under the control of the shareholder that controls the Group.
Purchases of subsidiaries from parties under common control are accounted for using the predecessor values
method. Under this method the consolidated financial statements of the combined entity are presented as if the
businesses had been combined from the beginning of the earliest period presented or, if later, the date when the
combining entities were first brought under common control. The assets and liabilities of the subsidiary transferred
under common control are at the predecessor entity’s carrying amounts.
The predecessor entity is considered to be the highest reporting entity in which the subsidiary’s IFRS financial
information was consolidated. Related goodwill inherent in the predecessor entity’s original acquisitions is also
recorded in these consolidated financial statements. Any difference between the carrying amount of net assets,
including the predecessor entity’s goodwill, and the consideration for the acquisition is accounted for in these
consolidated financial statements as an adjustment within equity.
vi.Associates and joint ventures (equity method investees) (Note 20)
Associates are those entities in which the Group has significant influence, but not control, over financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent
of the voting power of another entity. Joint ventures are those entities over whose activities the Group has joint
control. Associates and joint ventures are accounted for using the equity method (presented in financial statements
as equity method investees) and are initially recognised at cost. The Group’s investment includes goodwill identified
on acquisition less impairment losses. The consolidated financial statements include the Group’s share of profit
and other comprehensive income of equity method investees from the date that significant influence or joint
control commences until the date that significant influence or joint control ceases. When the Group’s share of
losses exceeds its interest in equity method investees, the carrying amount of that interest (including any long-
term loans that form part of the net investment) is reduced to nil and the recognition of further losses is discontinued
except to the extent that the Group has an obligation to make payments on behalf of the investee.
vii. Transactions eliminated on consolidation
Intragroup balances and any unrealised income and expenses arising from intragroup transactions are eliminated
in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity method
investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses
are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(b) Foreign currencies
i. Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange
rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end
of the reporting period are translated to the functional currency at the exchange rate at that date. Non-monetary
assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional
currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising
on translation are recognised in profit or loss, except for differences arising on the translation of a financial liability
designated as a hedge of the net investment in a foreign operation, or qualifying cashflow hedges, which are
recognised in Other comprehensive income.
63Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
iI. Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated to the presentation currency of the Group, the Euro, at the closing spot exchange rates at the end
of the respective reporting period. The income and expenses of foreign operations are translated to Euro at average
exchange rates for the period which are reasonable approximation of the exchange rate at the transaction dates.
Foreign currency differences are recognised in Other comprehensive income and accumulated in equity as a
separate component.
(c) Operating segments (Note 7)
Segment information is presented based on the internal management reports and information provided to the
Group management, which examines the Group’s performance both from a geographical and a product line
perspective. Because the Group is primarily managed along the geographical lines, operating segments are
recognised accordingly.
(d) Revenue recognition and accounting for winnings (Note 8)
Revenue is shown net of value added tax and estimated discounts.
i. Revenues from lottery, betting and VLTs
Gaming revenues are reported net as a difference between amounts staked and players winnings as Gross gaming
revenue (GGR).
Stakes received relating to future lottery draws and games are recorded as Prepaid stakes measured at fair value.
Player deposits are funds of “Digital-only Games” product line participants, who can use these funds for future
lottery or other game stakes or withdraw them. Unpaid winnings are recognised based on the date of lottery draw
and presented as other current payables.
Unclaimed prizes (expired winnings that the winners failed to claim) are treated in accordance with applicable
regulation and lottery licence conditions, which differ from country to country. Generally unclaimed prizes remain
recorded as liability, either to the state or to the gaming participants. In some cases, unclaimed winnings are
credited to revenue.
Draw based games (numerical lotteries)
There are two types of draw based games – fixed odds and pari mutuel (jackpot games).
For fixed odds games, the pay-out is a fixed amount. For pari mutuel games a pay-out pool is created and in case
there is no winner in a given draw and the prize is rolled to the next draw and accounted for as accrued liability or
provision based on the level of estimation uncertainty (see Note 3.s ii.).
Revenue is recognised in the period when the draw takes place, net of obligation to pay the game prizes in the
future assessed at fair value.
Instant lotteries (scratch cards)
Revenues from instant lottery ticket sales are recognised in the period when the sale of the lottery ticket occurs,
net of related unpaid winnings obligations. Unpaid winnings obligations are calculated as a percentage of sales,
based on the pay-out ratio given for each particular instant lottery product. In cases when unclaimed prizes can
be recognised as revenue, a provision is recognized instead of unpaid winnings (see Note 3.s iii.).
Betting (odds bets)
Revenue is recognised when the bet event result occurs as Amount staked less actual pay-out. In the case of bets
on a series of events, revenue is recognised when the last event result is known.
VLTs
Revenue is defined as the net result of all players’ sessions within a period. A player’s session begins when the
player inserts his/her card in the machine and ends when he/she takes the card out. Revenue (GGR) is recognised
at net amount (receipts – winnings) of each player’s game session.
Casinos
Revenues from casino games (gaming tables and slot machines) are recognised as the net result of players’ sessions
within the casinos. Casino revenues arise when the gaming tables or slot machines are closed. Sold but not used
chips (tokens) are recognised as a liability.
64 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
ii. Revenue from non-gaming activities
Revenue from mobile virtual network operator services
Revenue is recognised when the flow of voice or data services takes place, regardless of when the payment or
collection is made.
Unused voice and data services from prepaid call cards are deferred and recognised as revenue when the prepaid
period expires.
Revenue from mobile phone top-up
Group acting as principal for the sale of electronic top-up codes to end users: In this category of contracts the
Group acquires the ownership of the electronic codes and assumes the risk of inventory. The revenue is recognized
when the Group’s agents sell the specific codes to end users.
Group acting as agent for the sale of electronic top-up codes to end users: In this category of contracts the Group
does not acquire the ownership of the electronic codes and is considered to act as a representative of the suppliers.
The revenue recognised in this category is the commissions received from the suppliers.
Revenue from commissions
The Greek New Year’s Eve Lottery is issued once a year with the draw on New Year’s Eve. Net revenues from this
lottery are attributed to the Greek State. Hellenic Lotteries S.A. produces, operates, distributes, promotes and
manages it and receives a 17% management fee on amounts staked. The fee includes all company costs related
to the organisation of the New Year’s Eve Lottery. This commission is recognised once a year, during December.
Revenue from other services
Revenues is recognised when the performance obligation is satisfied by transferring goods or services to the
customer. The Group evaluates whether it operates as a principal or as an agent when delivering these services.
When the Group determines that it operates as an agent, revenues are recognised on the net basis.
(e) Gaming taxes and Net gaming revenue (NGR)
Gaming taxes, assessed as a percentage (defined in the legislation of the relevant country or the relevant licence)
of revenue from stakes less wins in the period, are recognised based on recognized Gross gaming revenue (GGR)
in the period.
Net gaming revenue (NGR) is calculated as Gross gaming revenue (GGR) less Gaming taxes.
(f) Other operating income (Note 9)
i. Lease income
Income from the lease of non-residential premises, office space and movable assets is recognised in the Consolidated
statement of comprehensive income as other operating income on a straight-line basis over the term of the lease.
ii. Government grants in connection with COVID-19
The Group presents all government grants obtained in connection with COVID-19 in Other operating income.
Grants are recognised at their fair value where there is a reasonable assurance that the grant will be received and
the Group will comply with all attached conditions.
iii. Effect of prepayment of GGR contribution by OPAP S.A.
From 13 October 2020, new terms of an exclusive licence to conduct, manage, organise and operate numerical
lottery and sports betting games in Greece have become effective for a period of 10 years, based inter alia on an
agreement dated 29 April 2013 between OPAP S.A. and the Greek state.
Based on the agreement, an upfront payment of €375 million made by OPAP S.A. for the licence extension
comprises a licence fee and a prepayment of the future GGR contribution within the extension period in the nominal
amount of €1,831 million. The agreement stipulates that during the extension period, OPAP S.A. will pay a contribution
at a rate of 5% of applicable GGR instead of at a valid rate of 30%.
Any difference between:
•
The €1,831 million, which represents a prepayment of the GGR contribution, plus additional compensation related
to income tax expenses from related accounting gains; and
65Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
• The difference between a GGR contribution at 30% and cash GGR contribution at 5% (i.e. GGR contribution
cash savings);
will be settled on 13 October 2030 either as an additional payable from OPAP S.A. to the Greek state, or a receivable
of OPAP S.A. from the Greek State.
From 13 October 2020 for the period of 10 years, the Group accounts for the effects of the agreement in the
following way:
• Intangible asset of €375 million is amortized over 10 years;
• Other operating income in the amount of €1,831 million plus income tax compensating effects is recognised on
accrual basis over 10 years;
• Non-current receivables or payables are recognised to reflect the difference between gaming tax cash savings
and the amounts recorded in Other operating income. The receivable or payable is discounted to present value
with the effect of discounting recognised in Other finance income or expense as appropriate.
(g) Agents’ commissions
Agents’ commissions are commissions accrued to agents for their services. They are in most cases calculated as
a portion of Amount staked, Gross gaming revenue (GGR) or Net gaming revenue (NGR).
(h) Lease payments (Note 27)
Expense relating to leases includes only leases which have a term of 12 months or less and do not contain a purchase
option, leases where the underlying asset has a low value, and variable payments such as turnover rent, property
taxes paid by the tenant and insurance paid by the tenant.
(i) Finance costs, net (Note 15)
Interest income is recorded for all debt instruments measured at amortised cost on an accrual basis using the
effective interest method. This method defers, as part of interest income, all fees between the parties to the contract
that are an integral part of the effective interest rate.
Interest expense comprises interest expense on loans and borrowings, bonds, leases and unwinding of discount
of non-current provisions and other liabilities.
Other finance income and expense comprises foreign exchange gains/losses and revaluation of derivatives that
do not qualify for hedge accounting (see Note 3.m iv.).
(j) Income tax expense (Note 16)
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except
to the extent that it relates to items recognised directly in Other comprehensive income or directly in equity, in
which case it is recognised in Other comprehensive income or equity.
Current tax is the expected tax payable on taxable profit for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill,
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled
entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the end of the reporting period.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which temporary difference or tax loss carried forward can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
66 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to taxes levied by the same tax authority on the same taxable entity, if there is an intention
to settle current tax liabilities and assets on a net basis or tax assets and liabilities will be realised simultaneously.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability
to pay the related dividend is recognised.
(k) Intangible assets
Intangible assets are carried at acquisition costs less accumulated amortisation and impairment losses, if any.
Intangible assets, except goodwill and other intangibles with indefinite useful lives, are amortised on a straight-line
basis over their estimated useful life from the date they are available for use. The following table shows the expected
useful life of individual classes of intangible assets (Note 18):
Licences The period for which they have been issued/indefinite
Other property rights 6 - 10 years
Customer relationship, customer contracts 4 – 21 years
Software 1 – 7 years
Distribution network (contracts with providers) 20 years
Other intangible assets 3 – 10 years
Intangible assets with indefinite useful life are tested for impairment at least annually, or when there is an indicator
of impairment, which is assessed quarterly.
i.Licences (Note 18)
Licences relate mainly to the Group’s lottery and other gaming businesses. Licences which are determined to be
intangible assets with indefinite useful life are reviewed the assessment annually to assess whether the indefinite
useful life assumption continues to be appropriate.
ii. Customer relationships, customer contracts, Brands and trademarks (Note 18)
The Group capitalises major Customer relationships, customer contracts, Brands and trademarks upon the
acquisition of companies which are party to such contracts or hold such brands and trademarks. The value of
these intangible assets is determined based on an expert’s appraisal prepared at the time of the acquisition.
Customer relationships, customer contracts and Brands and trademarks are assets which can be used in the future.
Capitalised Customer relationships, customer contracts (portfolio of customers, customer base or market share)
are amortised on a straight-line basis.
Capitalised Brands and trademarks are determined to be intangible assets with an indefinite useful life on the basis
of their market strength. The assessment of indefinite life is reviewed annually to determine whether the indefinite
life assumption continues to be appropriate.
iii. Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure, such as maintenance costs, is recognised in the Consolidated
statement of comprehensive income as an expense.
(l) Property, plant and equipment (“PPE”) (Note 19) and Investment property
Property, plant and equipment are carried at acquisition costs less accumulated depreciation and impairment
losses, if any.
The cost of self-manufactured tangible fixed assets includes the cost of materials, wages and a proportion of
overheads directly attributable to the construction. Acquisition cost also includes the estimated cost of dismantling
and removing the tangible assets as well as the cost of land restoration.
Borrowing costs directly attributable to the acquisition of assets are capitalized until the asset is substantially
complete or available for use.
Acquisition cost does not include administrative or other general overheads, or initial operating losses.
67Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
When parts of an item of PPE have different useful lives, they are accounted for as separate items (major components)
of property, plant and equipment.
PPE are depreciated on a straight-line basis. Leased assets are depreciated over the shorter of the lease term and
their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
Land is not depreciated.
The following table shows the expected useful life of individual groups of fixed assets (Note 19):
Appliances and special technical equipment 3 – 20 years
Fixtures and fittings 3 – 14 years
Vehicles 4 – 10 years
Machinery and equipment 3 – 20 years
Buildings and halls 20 – 60 years
Construction improvements to outdoor surfaces 15 – 30 years
Other tangible assets 3 – 20 years
Investment property 25 – 45 years
i. Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both.
Investment property is carried at cost less accumulated depreciation and impairment losses. When the use of a
property changes from the owner-occupied to investment property, the property is reclassified from PPE to
investment property.
ii. Right of use of leased assets
A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. For such contracts, the lessee recognises a right of use asset and a lease liability.
The right of use of asset is depreciated and the liability accrues interest.
A right of use of asset is initially measured in the amount of recognised lease liability, plus advance payments or
related accrued payments. The initial measurement of the right of use assets is increased by the following items,
when significant:
• Initial direct lease costs paid by the lessee; and
• Provision for estimated costs of dismantling and removal of the identified asset or restoration of the site where
the asset was installed.
iii. Assets held for sale
Assets that are very likely to be sold within one year from the reporting period are not included in fixed assets and
are stated in current assets at the lower of their carrying amount and fair value less costs to sell. Such assets are
not depreciated.
iv. Subsequent expenditure
Expenditure incurred to replace part of an item of PPE is capitalised only if it results in an increase in the future
economic benefits generated by the relevant tangible fixed asset. Major overhauls are capitalised as a separate
item into the corresponding class of fixed assets at the moment the overhaul is executed. All other expenditure is
recognised in the Consolidated statement of comprehensive income as an expense.
(m) Financial assets and liabilities
Amortised cost is the amount at which a financial instrument was recognised at initial recognition less any principal
repayments, plus accrued interest, and, for financial assets less any allowance for ECL. Accrued interest includes
amortisation of transaction costs deferred at initial recognition and of any premium or discount to the amount
payable upon maturity using the effective interest method. Accrued interest income and accrued interest expense,
including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any),
are not presented separately and are included in the carrying values of the related items in the Consolidated
statement of financial position.
68 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
The effective interest method is a method of allocating interest income or interest expense over the relevant period,
so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective
interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit
losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the gross carrying
amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments
to the next interest repricing date, except for the premium or discount which reflects the credit spread over the
floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or
discounts are amortised over the whole expected life of the instrument. The present value calculation includes all
fees paid or received between parties to the contract that are an integral part of the effective interest rate. For assets
that are purchased or originated credit impaired (“POCI”) at initial recognition, the effective interest rate is adjusted
for credit risk, i.e. it is calculated based on the expected cash flows on initial recognition instead of contractual payments.
Financial assets, other than financial assets at fair value through profit or loss, are recognised initially on the
settlement date at fair value plus any directly attributable transaction costs.
i. Financial assets at amortised cost
Amortised cost applies to instruments where the business model of the owner is to hold the financial asset to
collect contractual cash flows and the contractual cash flows are solely payments of the principal amount and
the interest.
Loss allowances to receivables are recognised in the amount of expected credit losses on a financial asset and
their creation is reported in other operating expenses. At each reporting date, subsidiaries shall measure the loss
allowance for financial asset in the amount of lifetime expected credit losses if the credit risk related to that financial
asset has increased significantly since initial recognition or in the amount equal to 12-month expected credit losses
(“ECL”) if the credit risk has not increased significantly.
The Group recognise the following financial assets at amortised cost: trade receivables, restricted cash, other
receivables and loans provided.
Restricted cash is cash not available for immediate use. Such cash cannot be used by the Group until a certain
point or event in the future. Restricted cash comprises cash on bank accounts for purpose of guarantees given
under the terms of game licences and for debt service under the terms of facility agreements.
Classification and measurement
Trade and other receivables and loans provided are initially recognised on the date when they are originated and
measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are
measured at amortised cost, less any impairment losses.
When applying amortised cost, any difference between the cost and the value upon redemption is recognised in
the Consolidated statement of comprehensive income over the duration of the asset or liability, using the effective
interest method.
Derecognition
The Group derecognises trade receivables, other receivables and loans provided when the contractual rights to
the cash flows from the asset expire, or when it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.
Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate
asset or liability.
ii. Financial assets at fair value through other comprehensive income (“FVOCI”) (Note 22)
Fair value through other comprehensive income is the classification for debt instruments for which an entity has
a mixed business model, i.e. the business model is achieved by both holding the financial asset to collect the
contractual cash flows and through the sale of the financial assets. The contractual cash flows of instruments in
this category must be solely payments of principal and interest.
The changes in fair value of FVOCI debt instruments are recognised in Other comprehensive income (“OCI”).
Any interest income, foreign exchange gains/losses and impairments are recognised immediately in profit or loss.
Interest income on these assets is calculated using the effective interest rate method. Fair value changes that have
been recognised in OCI are recycled to profit or loss upon disposal of the debt instrument.
69Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
On initial recognition of an equity financial instrument, an entity may make an irrevocable election (on an instrument-
by-instrument basis) to designate the instrument at FVOCI. This option only applies to instruments that are not
held for trading and are not derivatives.
Gains or losses recognised in OCI for such equity instruments are subsequently never reclassified from equity to
profit or loss.
iii. Financial assets at fair value through profit or loss (“FVTPL”) (Note 22)
An instrument is classified as at fair value through profit or loss if it is held for trading or if the business model of
the owner is to manage the financial asset on a fair value basis i.e. to realise the asset through sales as opposed
to holding the asset to collect contractual cash flows. This category represents the “default” or “residual” category
if the requirements to be classified as amortised cost or FVOCI are not met. Upon initial recognition, attributable
transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit
or loss are measured at fair value, and changes therein are recognised in profit or loss in line “Other gains and losses”.
iv. Financial derivatives and hedging instruments (Note 30)
The Group primarily uses derivative financial instruments to hedge its exposure to foreign exchange and interest
rate risks arising from its operational, financing and investment activities. Derivatives that do not qualify for hedge
accounting are accounted for as a other derivatives.
Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative
financial instruments are measured at fair value, and changes therein are accounted for as described below.
Cash flow hedges
All derivative transactions designated as hedging instruments are documented and the effectiveness of individual
hedge relationships is evaluated on continuous basis. As permitted by the transitional provisions of IFRS 9, SAZKA
Group has elected to continue to apply the hedge accounting requirements of IAS 39.
The Group applies hedge accounting if:
• The hedge is in line with the Group’s risk management strategy;
• The hedge relationship is formally documented at the inception of the hedge;
• The hedge relationship is expected to be effective throughout its duration;
• The effectiveness of the hedge relationship can be objectively measured;
• The hedge relationship is effective throughout the accounting period, i.e. changes in the fair value or cash flows
of the hedging instruments attributable to the hedged risk are within a range of 80%-125% of the changes in the
fair value or cash flows of the hedged instruments attributable to the hedged risk; and
• For cash flow hedges, a forecast transaction is highly probable and presents an exposure to variations in cash
flows that could affect profit or loss.
The hedging documentation contains information about the following:
• Hedging instruments;
• Hedge effectiveness; and
• Hedged items and risks that are being hedged.
Changes in the fair value of the derivative hedging instrument or designated non-derivative financial liability
designated as a cash flow hedge are recognised directly in the Other comprehensive income to the extent that
the hedge is effective. The effective portion of changes in fair value of cash flow hedge is accumulated in “Hedging
reserve” in equity. To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss
for the period.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised
in equity as a “Hedging reserve” remains there until the forecast transaction occurs. When the hedged item is a
70 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
non-financial asset, the amount recognised in Other comprehensive income is included in the initial cost or other
carrying amount of the asset or liability.
In other cases, the amount recognised in Other comprehensive income is transferred to profit or loss in the same
period that the hedged item affects profit or loss.
If cash flows relating to recognised foreign currency receivables are hedged by other hedging instruments (e.g.
designating foreign currency payables as the hedging instruments), the accounting treatment is the same as the
treatment for hedging with financial derivatives.
The Group decided to apply cash flow hedge accounting to mitigate the following risks:
Interest rate risk
The hedged items are future interest payments of long-term debts that are hedged by interest rate swaps (the
hedging instruments). For cash flow hedges, a forecast transaction is highly probable and presents an exposure
to variations in cash flows that could affect profit or loss. The risk that is being hedged is arising from interest
rate changes.
Foreign currency rates risk
The hedged items are future foreign transactions that are hedged by other hedging instruments (e.g. designating foreign
currency payables/receivables as the hedging instruments). For cash flow hedges, a forecast transaction is highly
probable and presents an exposure to variations in cash flows that could affect profit or loss. The risk that is being
hedged relates to any change in the future cash flows due to a change in foreign currency rates.
Net investment hedge of foreign operations
A net investment hedge is a specific type of foreign currency cash flow hedge that is used to eliminate or reduce
the foreign exposure that arises from ownership of foreign subsidiaries, associates, joint ventures or branches
(foreign operations). A net investment hedge allows the Group to hedge the currency risk associated with the
translation of the net assets of these foreign operations into the parent entity’s functional currency. The hedging
instrument can be either a derivative instrument or a non-derivative instrument (such as a debt instrument) or a
combination of both.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
effectiveness assessments to ensure that the economic relationship exists between the hedged item and the
hedging instrument.
If the criteria for applying net investment hedge accounting are met, the gain or loss on the hedging instrument
that is determined to be an effective hedge of the net investment is recognised in Other comprehensive income
and is included in equity as “Hedging reserve”.
The cumulative gain or loss on the hedging instrument relating to the effective portion of the hedge that has been
accumulated in “Hedging reserve” is reclassified from equity to profit or loss as a reclassification adjustment on
the disposal (or partial disposal) of the foreign operation.
Other derivatives
Derivatives that do not qualify for hedge accounting are accounted for as other derivatives. Changes in the fair
value of other derivatives are recognised immediately in profit or loss.
Gaming contracts
Gaming contracts are considered to be financial derivatives under IFRS 9 if in the transaction, the gaming institution
takes a position against its customers. The value of the individual contract is contingent on the outcome of a
specified event and the gaming institution is not, therefore, normally guaranteed a specific commission or return.
The contracts are financial derivatives and not insurance contracts, even though the underlying variable is specific
to a party to the contract. The definition of insurance contracts according to IFRS 4 requires exposure to a pre-
existing risk that was present before the contract is concluded, which is not met in the case of gaming bets.
Embedded derivatives in a hybrid contract with a host that is a financial asset are not separated from the host
contract. Instead, the hybrid financial instrument as a whole is assessed for classification. The financial asset is
carried at fair value through profit or loss if the instrument’s cash flows are not solely payments of principal and
interest. Changes in the fair value of such hybrid financial asset are recognised in profit or loss when they occur.
71Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
v. Non-derivative financial liabilities
The Group has the following non-derivative financial liabilities: trade and other payables, interest-bearing loans
and borrowings, and lease liabilities. These financial liabilities, other than financial liabilities at fair value through
profit or loss, are recognised initially on the settlement date at fair value plus any directly attributable transaction
costs and subsequently at amortised cost.
The Group classifies as current any part of non-current loans and borrowings that is due within one year after the
end of the reporting period.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
Any change in contractual terms which results in more than 10% difference in the present value of future cash
flows discounted using original interest rate is accounted as extinguishment of the financial liability, otherwise it
is accounted as a modification of a financial liability with any gain or loss recognised in the profit or loss.
vi. Offsetting of financial assets and liabilities (Note 33.b)
Financial assets and liabilities are offset and the net amount presented in the Consolidated statement of financial
position when the Group has a legal right to offset the amounts and intends to settle the transaction on a net basis
or realise the asset and the liability simultaneously.
When the offsetting is permissible, financial instruments are offset at the level of individual companies.
(n) Impairment and expected credit loss model
i. Non-financial assets and investments in subsidiaries, joint-venture and associates
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, joint ventures and
associates are reviewed at each reporting date to determine whether there is any indication of impairment. If any
such indication exists, then the asset’s recoverable amount is estimated.
For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable
amount is estimated at least annually at the same time (see Note 18).
The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the
smallest identifiable group of assets that generate cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets (the “cash-generating unit” or “CGU”). For the purposes of
goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which
impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting
purposes (segment or lower level). Goodwill acquired in a business combination is allocated to groups of CGUs
that are expected to benefit from the synergies of the business combination.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its recoverable amount.
Impairment losses are recognized in profit or loss.
Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU
(group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is subsequently not reversed. In respect of other assets, impairment
losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
ii. Financial assets (including trade and other receivables)
IFRS 9 requires an expected credit loss (“ECL”) model for recognition and measurement of impairments of financial
instruments and contract assets that are measured at amortised Cost or FVOCI.
72 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
Measurement of ECLs
Current trade and other receivables – simplified approach
For current trade and other receivables from the POS and contract assets the Group generally uses the provisioning
matrix approach. In the provisioning matrix approach, an impairment is calculated as the current amount of
receivables in a predetermined Days Past Due bucket, multiplied by the historical loss rate associated with that
time bucket and adjusted for forward looking information.
Significant receivables are assessed individually using expected discounted cash-flows method and an expert-
based approach.
Trade and other receivables subject to the provisioning matrix approach are measured at lifetime ECL.
Financial assets subject to the provisioning matrix approach are presented in the Consolidated statement of financial
position net of the allowance for ECL.
Non-current trade and other receivables, other financial assets – Standard ECL model
The Group assesses, on a forward-looking basis, the ECL for exposures arising from non-current trade and other
receivables, other financial assets subject to its Standard ECL model. The Group measures ECL and recognizes
net ECLs on financial assets at the end of each reporting period. The measurement of ECL reflects: (i) an unbiased
and probability weighted amount that is determined by evaluating a range of possible outcomes; (ii) the time value
of money; and (iii) all reasonable and supportable information that is available without undue cost and effort at
the end of each reporting period about past events, current conditions and forecasts of future conditions.
Financial assets subject to the Standard ECL model are presented in the Consolidated statement of financial
position net of the allowance for ECL.
The Standard ECL model developed by the Group applies a three stage approach for impairment, based on changes
in credit quality since initial recognition as required by IFRS 9. A financial instrument that is not credit-impaired on
initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal
to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual
maturity, if shorter. If the Group identifies a significant increase in credit risk since initial recognition, the asset is
transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity
but considering expected prepayments, if any (“Lifetime ECL”). If the Group determines that a financial asset is
credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Group’s definition
of credit impaired assets and definition of default is explained below. For financial assets that are purchased or
originated credit-impaired (“POCI Assets”), the ECL is always measured as a Lifetime ECL.
Current accounts and term deposits are placed in strong and stable credit institutions which are meeting all capital
and liquidity requirements as set out by Basel III.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECL, the Group considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Group’s historical experience and informed credit assessment and including forward-looking information.
Significant increase in credit risk is considered to have occurred if the asset is at least 30 days past due, if the
external rating grade or internal rating grade has decreased by 2 notches since initial recognition, or if asset-specific
qualitative information or forward-looking information that suggest that a significant increase in credit risk has
occurred is available.
The Group considers a financial asset to be in default when:
•
The borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions
such as realising security (if any is held); or
• The financial asset is more than 90 days past due.
73Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
For purposes of disclosure, the Group has fully aligned the definition of default with the definition of credit-impaired
assets. The default definition stated above is applied to all types of financial assets of the Group.
The input parameters into the ECL model calculations are based on two approaches:
• External rating-based approach; or
• Internal rating-based approach.
The external rating-based approach is used for loans to and deposits with counterparties with an external credit
rating from one of the major rating agencies. The internal rating approach is used for loans to and deposits with
counterparties without such external credit rating; the credit spread for the individual ratings are calibrated on
regular basis.
The forward-looking information considered by the Group in the Standard ECL model has been derived from
correlation analysis. The information considered is publicly available information about the expected year-to-year
changes of GDP.
Presentation of allowance for ECL in the Consolidated statement of financial position
In determining the carrying value in the Consolidated statement of financial position, loss allowances for financial
assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities
at FVOCI, the loss allowance is charged to profit or loss. The revaluation reserve represents the difference between
amortised cost, net of ECL, and the fair value of the asset.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no
realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have
assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-
off. However, financial assets that are written off could still be subject to enforcement activities.
(o) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories includes the purchase price, import duties and other taxes (except for those that the Group
subsequently reclaims from the tax authorities), freight, handling costs and other expenses directly attributable
to the acquisition of finished goods, materials and services. Cost is reduced by trade discounts, rebates and other
similar items. The cost formula used in the Group is a weighted average.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
(p) Cash and cash equivalents (Note 23)
Cash is cash in hand and deposits on demand. Cash equivalents are highly liquid investments that are readily
convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Investments normally
only qualify as cash equivalent if they have a maturity of three months or less from the date of acquisition.
(q) Share capital (Note 24)
The issued share capital comprises fully paid shares. Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity.
(r) Loans and borrowings (Note 26)
Loans and borrowings are initially recognised at fair value and are subsequently stated at amortised cost. All directly
attributable transaction costs are accounted for in accordance with the effective interest method. Any part of a
long-term loan which is due within one year from the end of the reporting period is classified as a short-term loan.
(s) Provisions (Note 29)
A provision is recognised in the Consolidated statement of financial position if, as a result of a past event, the Group
has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
74 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
Provisions are recognised at the expected settlement amount. Long-term liabilities are recognised as liabilities at
the present value of the expenditures expected to be required to settle the liability. Where the effect of discounting
is material, the discount rate is a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. Any additions and the effects of changes in interest rates are recognised as
finance income or costs in profit or loss.
Changes in estimated provisions may arise in particular due to variances from the originally estimated expenditures
or due to a change in the date of settlement, or in the extent, of the liability. Changes in estimates are generally
recognised in the Consolidated statement of comprehensive income as at the date that the estimate is changed.
Provisions are reviewed on an ongoing basis.
i. Establishment and use of provisions
Additions to provisions are charged to the relevant expense accounts corresponding to the nature of the cost or
loss. Unwinding of the discounting of provisions is charged to financial costs as interest expense. The release of
provisions is recognised as a decrease in the relevant expense accounts.
ii. Jackpot provision
Certain jackpot games have uncertainty about actual winning pay-outs and the Group recognises a provision for
such games. Jackpot games are games with fixed odds where unpaid winnings are transferred to the next draw
as a bonus. In the next draw there are normal, regular winnings from the Amount staked in the current draw as
well as bonuses transferred from the previous draw. This obligation to transfer the unpaid winnings is determined
by the Licence granted by the regulator, specifically in relation to the Gaming Rules (“Herní plán loterií SAZKA”)
which are an integral part of the Licence. The licence is granted for a limited period of time. At the end of the
Licence, if the jackpot is not won in the last draw and the licence is not extended, the jackpot must be paid to the
winner or winners from the last draw. The same jackpot pay-out mechanism is also applied if the game is cancelled
for any other reason during the licenced period. A provision is recognised only for obligations that cannot be
avoided. If the outflow of unpaid winnings is certain then a liability is recognised directly in the financial statements.
iii. Scratch card provision
The Group recognises a provision for certain scratch card games where there is uncertainty about actual winning
pay-outs. In this kind of game, there is a set pay-out ratio for each scratch card series (as a percentage of the total
value of a particular type of cards sold – no matter whether the cards have been sold or not). The difference may
arise between actually pay-outs (based on which cards were sold) and the theoretical pay-out. The difference
between actual and theoretical pay-outs is recognised as revenue. Since there is no liability for the undistributed
portion of wins, the Group uses historical experience to calculate an approximate pay-out in order to recognize a
provision for wins in relation to cards that have already been distributed.
iv. Warranty provision
A warranty provision is recognised upon the sale of a particular product or the provision of a service. The provision
is determined based on historical records of warranty provisions costs, taking into account all possible development
scenarios and their probability.
v. Restructuring provisions
The Group recognises restructuring provision when the general recognition criteria for provisions are met, the
Group has a detailed formal plan for the restructuring and raised a valid expectation in those affected that it will
carry out the restructuring by announcing its main features to those affected. When an element of restructuring
plan relates to employee lay-off costs or partial lay-off costs, the Group recognizes a restructuring personnel
provision. When the payments made in connection with the employee lay-off are incurred in multiple year period,
expected outflows are discounted to present value using a borrowing rate intrinsic to the relevant operating
segment of the Group.
(t) Employee benefit liabilities (Note 31)
i. Post-employment benefit
The accounting treatment and disclosures for post-employment benefit plan rely upon whether it is a defined
contribution or a defined benefit plan.
75Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
Defined contribution plan
Defined contribution plans are the post-employment benefits in which the Group pays fixed contributions into a
separate fund and will have no legal or constructive obligation to pay further contributions if the fund does not
hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
Under this plan, the actuarial and investment risk fall upon the employee.
The contributions are recognised as “Personal expenses” as “Retirement benefit expenses – defined contribution
plan” in profit or loss on an accrual basis.
Defined benefit plan
For defined benefit plans, the value of the liability is equal to the present value of defined benefit payable at the
balance sheet date less the fair value of plan assets. The defined benefit liability and the related expense is estimated
annually by independent actuaries using the projected credit unit method.
The present value of the liability is determined by discounting the estimated future cash flows at the interest rate
of high-quality corporate bonds (for liabilities denominated in EUR) or government bonds (for liabilities in CZK
with similar duration. The costs of liability are recognised in profit or loss during the rendering of services.
The current service cost, past service cost and any gain or loss on settlement are recognised in the profit or loss
in the line “Personal expenses” as “Retirement benefit expenses – defined benefit plan”. Net interest on the net
defined liability (asset) is recognised in the line “Finance costs, net”.
ii. Incentive schemes and bonuses
Incentive schemes and bonus programmes are programmes which should motivate management, Executive
Members of the Board of Directors and other key management personnel of relevant Group subsidiaries to meet
specified targets.
Jubilee bonuses are long-term bonuses which are paid when employees reach a specified number of years of
employment with the Group.
If the bonuses are not expected to be settled wholly before 12 months after the end of the reporting period these
future obligations are reflected as “Long-term bonuses” and are measured using the projected unit credit method.
Any actuarial gains or losses are recognised immediately to profit or loss.
iii. Other employee benefit liabilities
As “Other employee benefit liabilities” are presented liabilities for wages and salaries, holiday pay, sick leave, meal
vouchers and other benefits that are settled wholly within the 12 months after the end of period in which the service
was rendered.
(u) Related parties (Note 34)
A related party is a person or entity that is related to the entity preparing the consolidated financial statements
(the “reporting entity”).
i. A person or a close member of that person’s family is related to the reporting entity if that person:
• Has control of joint control over the reporting entity; or
• Has significant influence over the reporting entity; or
• Is a member of the key management personnel of the reporting entity or its parent.
ii. An entity is related to the reporting entity if any of the following conditions is met:
• The entity and the reporting entity are members of the same group (which means that each parent, subsidiary
and fellow subsidiary is related to the others).
• One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a
group of which the other entity is a member).
• Both entities are joint ventures of the same third party.
• One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
76 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
• The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an
entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are
also related to the reporting entity.
• The entity is controlled or jointly controlled by a person identified in (i).
• A person identified in the first bullet point has significant influence over the entity or is a member of the key
management personnel of the entity (or its parent).
(v) Standards, interpretations and amendments issued before 31 December 2020 but not
yeteffective
The following standards, amendments and interpretations are not yet effective and are not expected to have a
significant impact on the Group’s consolidated financial statements.
Documents that have been endorsed by the EU:
i. Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest rate benchmark (“IBOR”) reform
Phase2
The amendments complement those issued in 2019 and focus on the effects on financial statements when a
company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform.
More specifically, the amendments relate to how a company will account for changes in the contractual cash flows
of financial instruments, how it will account for the change in its hedging relationships and the information it
should disclose.
The IASB effective date is 1 January 2021.
The Group is evaluating the impact of adoption of this amendment.
ii. Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9
The IASB issued amendments to IFRS 4 providing two options for entities that issue insurance contracts within
the scope of IFRS 4:
• An option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the
income or expenses arising from designated financial assets; this is the so-called overlay approach; or
•
An optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing
contracts within the scope of IFRS 4; this is the so-called deferral approach.
The IASB effective date is 1 January 2021.
The Group does not expect that amendments to IFRS 4 will have a significant impact on the Group’s consolidated
financial statements.
iii. Amendments to IFRS 16 “Leases” – COVID-19 related rent concessions beyond 30 June 2021
The amendment provides lessees (but not lessors) with relief in the form of an optional exemption from assessing
whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for rent
concessions in the same way as they would for changes which are not considered lease modifications.
It is expected to be endorsed after its effective date.
The IASB effective date is 1 April 2021.
The Group is evaluating the impact of adoption of this amendment.
77Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
Documents not yet endorsed by the EU:
iv. IFRS 17 “Insurance contracts”
IFRS 17 was issued in May 2017 as replacement for IFRS 4 “Insurance contracts”. It requires a current measurement
model where estimates are remeasured in each reporting period. Contracts are measured using the building
blocks of:
• Discounted probability-weighted cash flows;
• An explicit risk adjustment; and
• A contractual service margin (“CSM”) representing the unearned profit of the contract which is recognised as
revenue over the coverage period.
The standard allows a choice between recognising changes in discount rates either in the Consolidated statement
of profit or loss or directly in Other comprehensive income. The choice is likely to reflect how insurers account for
their financial assets under IFRS 9.
An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for
short duration contracts, which are often written by non-life insurers.
There is a modification of the general measurement model called the “variable fee approach” for certain contracts
written by life insurers where policyholders share in the returns from underlying items. When applying the variable
fee approach, the entity’s share of the fair value changes of the underlying items is included in the CSM. The results
of insurers using this model are therefore likely to be less volatile than under the general model.
The new rules will affect the financial statements and key performance indicators of all entities that issue insurance
contracts or investment contracts with discretionary participation features.
The new standard is expected to be endorsed before its effective date. The IASB effective date is 1 January 2023.
The original effective date of 1 January 2021 was amended based on the fact that amendments to IFRS 17 and an
amendment to IFRS 4 (issued on 25 June 2020 and effective for annual periods beginning on or after 1 January
2023) were issued.
The Group does not expect that IFRS 17 will have a significant impact on the Group’s consolidated financial statements.
v. Amendments to IAS 1 “Presentation of financial statements” – Classification of liabilities as current or non-
current
The amendments specify that the conditions which exist at the end of the reporting period are those which will
be used to determine if a right to defer settlement of a liability exists, and management expectations about events
after the balance sheet date, for example on whether a covenant will be breached, or whether early settlement
will take place, are not relevant.
The amendments clarify the situations that are considered settlement of a liability.
The amendments are expected to be endorsed before their effective date. The IASB effective date is 1 January
2023. The original effective date of 1 January 2022 was amended based on the fact that the Classification of
liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (issued on 15 July 2020 and
effective for annual periods beginning on or after 1 January 2023) were issued.
The Group is evaluating the impact of adoption of this amendment.
vi. Amendments to IFRS 3 “Business combinations” – Reference to “Conceptional framework” & Amendments
to IAS 37 “Provisions, Contingent liabilities and Contingent Assets” – cost of fulfilling a contract
Minor amendments were made to IFRS 3 “Business Combinations” to update the references to the “Conceptual
Framework” for financial reporting and add an exception for the recognition of liabilities and contingent liabilities
within the scope of IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” and Interpretation 21 “Levies”.
The amendments also confirm that contingent assets should not be recognised at the acquisition date.
The amendment to IAS 37 clarifies that the direct costs of fulfilling a contract include both the incremental costs
of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts. Before recognising
a separate provision for an onerous contract, the entity recognises any impairment loss that has occurred on assets
used in fulfilling the contract.
78 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
3. Significant accounting policies continued
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2022.
The Group does not expect these amendments to have a significant impact on the Group’s consolidated
financial statements.
vii. Amendments to IAS 16 “Property, plant and equipment” (“PPE”)
The amendment to IAS 16 “Property, plant and equipment” prohibits an entity from deducting from the cost of
an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its
intended use. It also clarifies that an entity is “testing whether the asset is functioning properly” when it assesses
the technical and physical performance of the asset. The financial performance of the asset is not relevant to this
assessment. Entities must disclose separately the amounts of proceeds and costs relating to items produced that
are not an output of the entity’s ordinary activities.
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2022.
The Group does not expect that these amendments will have a significant impact on the Group’s consolidated
financial statements.
viii. Annual Improvements 2018 – 2020
The following improvements were finalised in May 2020:
•
IFRS 9 “Financial Instruments” – clarifies which fees should be included in the 10% test for derecognition of
financial liabilities;
• IFRS 16 “Leases” – amendment of illustrative example 13 to remove the illustration of payments from the lessor
relating to leasehold improvements, to remove any confusion about the treatment of lease incentives; and
• IFRS 1 “First-time Adoption of International Financial Reporting Standards” – allows entities that have measured
their assets and liabilities at carrying amounts recorded in their parent’s books to also measure any cumulative
translation differences using the amounts reported by the parent. This amendment will also apply to joint ventures
and associates that have taken the same IFRS 1 exemption; and
• IAS 41 “Agriculture” – removal of the requirement for entities to exclude cash flows for taxation when measuring
fair value under IAS 41. This amendment is intended to align with the requirement in the standard to discount
cash flows on a post-tax basis.
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2022.
The Group does not expect that these amendments will have a significant impact on the Group’s consolidated
financial statements.
ix. Amendments to IAS 1 “Presentation of financial statements” – disclosure of accounting policies
The amendments require companies to disclose their material accounting policy information and provide guidance
on how to apply the concept of materiality to accounting policy disclosures.
It is expected to be endorsed before its effective date. IASB effective date is 1 January 2023.
The Group is evaluating the impact of adoption of this amendment.
x. Amendments to IAS 8 “Accounting policies, changes in accounting estimates and errors” – definition of
accounting estimates
The amendments clarify how companies should distinguish changes in accounting policies from changes in
accounting estimates.
It is expected to be endorsed before its effective date. IASB effective date is 1 January 2023.
The Group is evaluating the impact of adoption of this amendment.
79Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
4. Significant accounting estimates and judgements
The Group has made several significant accounting estimates and judgements. These accounting estimates and
judgements are described in detail in the relevant sections of the Notes.
The Group has made the following significant accounting estimates:
• Estimates related to impairment of intangible assets and goodwill (see Note 18);
• Estimates related to valuation of employee benefit liabilities and restructuring provision (see Note 31 and Note
29); and
• Estimates related to fair value of previously held interests in business combinations achieved in stages (Note 5).
The Group has made following significant accounting judgements:
• Judgement about indefinite useful live of certain intangible assets (see Note 18);
• Judgement in respect of control over OPAP S.A. subgroup (see Note 2.3);
• Judgement in respect of control of Casinos Austria AG subgroup (see Note 2.3); and
• Judgement about execution of renewal option in respect of Greece and Cyprus gaming halls (see Note 27).
5. Business combinations
During 2020 the Group acquired interests in the following companies or groups of companies:
Company Note Ownership interest acquired Acquisition date
CASAG (a) 17.19% 26 June 2020
Stoiximan (b) 47.74% 13 July 2020, 18 November 2020
The above stated percentages represent the direct share acquired by the parent company of each company.
Other individually and cumulatively immaterial acquisitions including acquisitions under common control are
described in Note 35 and their cumulative impact is presented in the table below.
80 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
5. Business combinations continued
The acquisition had the following aggregated impact on the Group:
Recognised values on acquisition CASAG Stoiximan**
Other
individually
immaterial Total
Assets
Intangible assets 603.6 – – 603.6
of which Brand 296.8 – – 296.8
of which Licenses 255.6 – – 255.6
of which Consumer base 44.4 – – 44.4
Property, plant and equipment 319.1 – 0.1 319.2
Equity method investees 120.6 – – 120.6
Trade and other receivables 1.6 – – 1.6
Other financial assets 239.3 – – 239.3
Deferred tax assets 20.6 – – 20.6
Total non-current assets 1,304.8 – 0.1 1,304.9
Inventories 3.0 – – 3.0
Trade and other receivables 66.4 3.2 0.9 70.5
Current tax asset 0.2 – – 0.2
Other financial assets 37. 3 – – 37. 3
Cash and cash equivalents 314.4 64.6 0.4 379.4
Assets held for sale 0.8 – – 0.8
Total current assets 422.1 67.8 1.3 491.2
Total assets 1,726.9 67.8 1.4 1,796.1
Loans and borrowings (146.7) – – (146.7)
Lease liabilities (78.0) – – (78.0)
Trade and other payables (15.3) – – (15.3)
Derivative financial instruments (0.6) – – (0.6)
Provisions (26.3) – – (26.3)
Employee benefit liabilities (120.1) – – (120.1)
Deferred tax liability (155.5) – – (155.5)
Total non-current liabilities (542.5) – – (542.5)
Loans and borrowings (3 7.4) – – (3 7.4)
Lease liabilities (15.8) – (0.1) (15.9)
Trade and other payables (386.8) (37.0) (0.5) (424.3)
Derivative financial instruments (1.0) – – (1.0)
Current tax liability (19.6) (10.3) – (29.9)
Provisions (22.3) – (0.1) (22.4)
Employee benefit liabilities (21.5) (0.2) – (21.7)
Total current liabilities (504.4) (47. 5) (0.7) (552.6)
Total liabilities (1,046.9) (47.5) (0.7) (1,095.1)
Net identifiable assets and liabilities 680.0 20.3 0.7 701.0
Goodwill 126.0 466.0 0.1 592.1
Non-controlling interest acquired (318.8) (3.2) – (322.0)
Fair value of previously held interest (343.3) (200.1) – (543.4)
Impact of the acquisition under common control – – 0.1 0.1
Consideration 143.9 283.0 0.9 427. 8
Consideration paid, satisfied in cash 116.2*** 154.7 0.9 271.8
Contingent consideration* 3.4 128.3 – 131.7
Purchase value of shares under of call option 24.3 – – 24.3
Cash acquired (314.4) (64.6) (0.4) (379.4)
Net cash inflow (–)/outflow (+) (206.5) 90.1 0.5 (115.9)
* Variable part (“earn-out”) that will be determined based on subsequent events.
** Subject to ongoing acquisition accounting in Stoiximan. Acquired assets and liabilities on provisional basis.
*** Includes call option paid of €11.2 million of which €8.3 million was paid in previous years and €2.9 million paid in 2020.
81Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
5. Business combinations continued
(a) Acquisition of controlling stake in CASAG
On 31 December 2019, the Group owned a 38.16% share in Casinos Austria AG (“CASAG”), which was presented
as an equity method investee. On 26 June 2020, the Group acquired an additional 17.19% share and from that date
CASAG and its subsidiaries are fully consolidated. For a list of companies within the CASAG subgroup see Note 35.
i. Purchase price
The Group acquired the 17.19% stake for a price of €105.0 million plus contingent consideration estimated by
management at €3.4 million.
The Group held an additional call option over 4.31% shares of CASAG. The Group determined that the risks and
rewards associated with ownership lie with the Group rather than the holder of the shares. Therefore the Group
used the anticipated acquisition method where the option is considered part of the consideration transferred of
€35.5 million.
As part of accounting for a business combination achieved in stages, the acquirer remeasures any previously held
interest at fair value and enters this amount into the purchase price allocation calculation.
CASAG holds a controlling stake in Austrian Lotteries of 73.83%. Non-controlling interest of 26.17% in Austrian
Lotteries comprises the shares held by Lotto-Toto Holding GmbH, in which the Group has an effective interest of
36.11% through its equity method investees CLS Beteiligungs GmbH (“CLS”) and LTB Beteiligungs GmbH (“LTB”),
creating an additional economic interest of 9.45% in Austrian Lotteries. Following the full consolidation of Austrian
Lotteries from 26 June 2020, the fair value of CLS’s and LTB’s interests in Austrian Lotteries became part of the
total consideration on acquisition and is eliminated from the values of the equity method investees.
The Group determined that the fair value of the previously held interest in all material aspects approximated the
carrying value of the investment of €343.3 million, therefore there is no impact on profit or loss in connection with
the remeasurement of the previously held interest.
ii. Acquired assets and assumed liabilities
The Group measured assets acquired and liabilities assumed at fair value. As a result of acquisition accounting,
several newly identifiable intangible assets were recognised, as well as certain changes to fair value of previously
identified assets and liabilities. The Group used 5-year business plans and cash flow forecast discounted at WACC
in the range from 7.8% to 10.0% for the valuations. Major fair value adjustments and relevant factors are
summarised below:
• Brands recognised (€296.8 million) – based on the royalty relief method applying a 5% royalty rate. The brands
are considered to have an indefinite useful life.
•
Gaming licences (€255.6 million) – based on the multiple period excess earnings method. The majority of licences
are considered to have an indefinite useful life.
• Customer base (€44.4 million) – based on the multiple period excess earnings method, with an estimated useful
life of four years.
• Fair value adjustments have been also recognised for values of equity method investees, tangible assets (fair
value of leased assets and items of real estate property) and provisions.
• A net deferred tax liability of €152.4 million resulting from the recognition of intangible assets and revaluation
adjustments was recognised, applying the corporate income tax rate of 25% valid in Austria as the deemed
effective tax rate.
• For the remaining items of assets and liabilities management assessed that their carrying value is equal to their
fair value in all material aspects.
82 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
5. Business combinations continued
iii. Non-controlling interest acquired
The Group elects to measure acquired non-controlling interest (“NCI”) as the proportionate amount of acquired
net assets. The table below shows the reconciliation of acquired NCI.
26/06/2020
Austrian
Lotteries
CASAG (excl.
Austrian
Lotteries) Total
Direct non-controlling interest percentage 46.40% 40.20%
Net assets 617.7 62.3
Subgroup's non-controlling interest 2.7 9.4
Net assets attributable to the Group 615.0 52.9
Non-controlling interest calculation 285.4 21.3
Subgroup's non-controlling interest 2.7 9.4
Carrying amount of non-controlling interest 288.1 30.7 318.8
iv. Goodwill
The goodwill on acquisition is recognised using the partial goodwill method (determined as the difference between
purchase price plus fair value of previously held interest plus non-controlling interest acquired, and net identifiable
assets) is attributable mainly to the value of intangibles not meeting the criteria for recognition and expected future
profitability of the lottery part of the business. Goodwill from the acquisition will not be deductible for tax purposes.
The goodwill is allocated to the Austrian Lotteries CGU, which is part of Austria operating segment.
v. Impact on Consolidated statement of comprehensive income and potential impact if acquisition occurred as
of 1 January 2020
In the period from 26 June 2020 until 31 December 2020 CASAG contributed to “Net gaming revenue (NGR)”
€274.4 million and “Loss for the period after tax” €0.3 million.
Had the acquisition occurred on 1 January 2020, management estimates that consolidated “Net gaming revenue
(NGR)” would have been higher by €240.9 million and consolidated “Profit for the period after tax” would have
been higher by €7.5 million. In determining these amounts, management has assumed that the fair value adjustments,
determined provisionally, that arose on the date of acquisition would have been the same as if the acquisition had
occurred on 1 January 2020.
83Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
5. Business combinations continued
vi. Selected financial information of CASAG business and Austrian Lotteries
Financial information of CASAG and Austrian lotteries were obtained from the IFRS consolidated financial statements
of CASAG and Austrian Lotteries for years 2019 and 2020 matched to the reporting structure of the Group.
The following table presents a consolidated summary of the performance of CASAG (including Austrian Lotteries)
for the full year periods 2019 and 2020:
CASAG (including Austrian Lotteries) 2020 2019
Amount staked 4,656.9 4,553.3
Gross gaming revenue (GGR) 1,07 7. 5 1,245.9
Gaming taxes (563.0) (63 7.0)
Net gaming revenue (NGR) 514.5 608.9
Revenue from non-gaming activities 56.7 113.2
Other operating income 58.0 19.9
Agents’ commission (94.1) (93.1)
Materials, consumables and services (55.4) (51.9)
Marketing services (61.5) (72.8)
Personnel expenses (228.0) (264.4)
Other operating expenses (43.6) (5 7.5 )
Share of profit of equity method investees 0.5 8.3
Operating EBITDA 147.1 210.6
Depreciation and amortisation (55.4) (52.0)
Impairment of tangible and intangible assets including goodwill (21.1) –
Restructuring cost (50.6) (6.0)
Profit from operating activities 20.0 152.6
The following table presents a consolidated summary of the performance of Austrian Lotteries for the full year
periods 2019 and 2020.
Austrian Lotteries 2020 2019
Amount staked 4,429.2 4,141.4
Gross gaming revenue (GGR) 849.9 834.0
Gaming taxes (466.8) (456.4)
Net gaming revenue (NGR) 383.1 3 7 7.6
Revenue from non-gaming activities 2.9 3.5
Other operating income 26.8 22.8
Agents´ commission (94.1) (93.1)
Materials, consumables and services (28.8) (20.0)
Marketing services (51.6) (55.2)
Personnel expenses (64.8) (65.7)
Other operating expenses (22.8) (44.1)
Operating EBITDA 150.7 125.8
Depreciation and amortisation (12.4) (11.0)
Impairment of tangible and intangible assets including goodwill (1.2) –
Restructuring costs (5.1) (0.5)
Profit from operating activities 132.0 114.3
(b) Acquisition of controlling stake in Stoiximan
As of 31 December 2019, OPAP held a 36.75% economic interest in Stoiximan through its equity method investee
Kaizen Gaming Limited (formerly TCB Holdings Ltd) (“Kaizen”), therefore the interest in Stoiximan was not presented
separately in 2019 financials. During 2020 and 2019, Stoiximan did not have a separate legal form, but represented
a business unit of Kaizen.
84 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
5. Business combinations continued
During 2020, the Group increased its economic interest in Stoiximan in several steps :
• On 13 June 2020, OPAP acquired a 51.00% direct stake in Stoiximan from Kaizen, while maintaining its 36.75%
interest in Kaizen, which continued to hold the remaining 49% interest in Stoiximan. As a result of this transaction
OPAP’s economic interest in Stoiximan increased by 32.26% to 69.01%.
• On 18 November 2020, OPAP acquired an additional 31.60% interest in the Stoiximan business unit of Kaizen,
which holds the remaining 49% interest in Stoiximan. As a result of this transaction, OPAP’s economic interest
in Stoiximan increased by 15.48% to 84.49%.
The Group consolidates Stoiximan from 18 November 2020, following the acquisition of the additional interest and,
consequently, obtaining an increased influence in Stoiximan which constituted managerial control of Stoiximan for
consolidation purposes within the meaning of IFRS 10. The Group’s economic interest is 30.50% as of 31 December 2020.
i. Purchase price
OPAP increased its interest in Stoiximan by 47.74% for a price of €154.7 million plus outstanding premium of
€14.6 million plus contingent consideration estimated by management at €113.7 million.
The contingent consideration is payable in cash on 30 June 2021 and 30 June 2022 based on the multiple of
difference between EBITDA targets and actual EBITDA for the years 2020 and 2021.
The fair value of the contingent consideration of €113.7 million was estimated by calculating the present value of
the future expected cash flows. The estimates are based on a discount rate of 2.7%, calculated by reference to
OPAP’s cost of debt.
As part of accounting for a business combination achieved in stages, the acquirer remeasures any previously held
interest at fair value and enters this amount into the purchase price allocation calculation.
The carrying amount of the previously held interest in Stoiximan held through the Group’s interest in Kaizen acquired
in 2018 was €57.4 million on 18 November 2020, while the fair value of this interest was determined to be €200.1 million.
The gain of €142.7 million resulting from the remeasurement of the previously held equity interest to the fair value
is presented within the line “Gain from remeasurement of previously held interest in equity method investee” in
the Consolidated statement of comprehensive income.
ii. Acquired assets and assumed liabilities – provisional basis
The Group measured assets acquired and liabilities assumed at fair value. Acquisition accounting is prepared on
a provisional basis given the acquisition was only one month before the year end.
The Group expects that it will to recognize a newly identifiable intangible asset referring to an internally generated brand.
iii. Non-controlling interest acquired – provisional basis
The Group elects to measure acquired non-controlling interest (“NCI”) as the proportionate amount of acquired
net assets, on a provisional basis. The table below shows reconciliation of acquired NCI.
18/11/2020
Direct non-controlling interest percentage 15.51%
Net assets attributable to the Group 20.3
Carrying amount of direct non-controlling interest 3.1
iv. Goodwill – provisional basis
The goodwill on acquisition is recognised using the partial goodwill method (determined as the difference between
purchase price plus fair value of previously held interest plus non-controlling interest acquired, and net identifiable
assets, on provisional basis) is attributable mainly to expected future profitability of the business. Goodwill from
the acquisition is not expected to be deductible for tax purposes. The goodwill is allocated to the “Stoiximan” CGU
which is part of Greece and Cyprus operating segment.
The procedure of determining the purchase price allocation in accordance with IFRS 3 “Business Combinations”
will be finalised within 12 months from the acquisition date.
85Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
5. Business combinations continued
v. Impact on Consolidated statement of comprehensive income and potential impact if acquisition occurred as
of 1 January 2020
In the period from 18 November 2020 until 31 December 2020 Stoiximan contributed to “Net gaming revenue
(NGR)” €24.4 million and “Profit for the period after tax” €6.0 million.
6. Disposals of subsidiaries
For period ended 31 December 2020
In the period ended 31 December 2020, the Group did not recognise any material disposals.
For period ended 31 December 2019
In the period ended 31 December 2019, the Group sold its business in Croatia (the “Croatian subgroup”) with
regulatory approvals granted on 25 April 2019 and an effective date of 30 April 2019.
Cash consideration for the sale of the Croatian subgroup was €302.6 million.
The Company also assigned receivables of €117.4 million arising from a loan provided to Sazka Group Adriatic d.o.o.
to the purchaser. The consideration paid for the assigned receivable was €117.2 million.
The effect of the disposal is presented in the Consolidated statement of comprehensive income of €277.3 million.
The effect of the disposal is presented in the Consolidated statement of cash flow comprising €302.6 million sales
price less net assets value disposed of €27.8 million and reclassification of foreign currency translation reserve
from other comprehensive income to profit or loss upon disposal €2.4 million totalling to €272.4 million.
Result of discontinued operations
Four months
ended
30April 2019
Amount staked 173.0
Gross gaming revenue (GGR) 47.2
Net gaming revenue (NGR) 37. 2
Total expense and income, net (16.4)
Profit before tax 20.8
Income tax expense (5.2)
Profit after income tax of discontinued operations 15.6
Gain on sale of subsidiary 27 7. 3
Profit from discontinued operations 292.9
Cash flow from (used in) discontinued operations 2019
Net cash flow from (+)/used in (-) operating activities 13.7
Net cash flows from (+)/used in (-) investing activities (2.2)
Net cash flows from (+)/used in (-) financing activities (23.7)
Net decrease (–) in cash generated by the subgroup (12.2)
7. Operating segments
The Group’s operating segments have been changed following the acquisition of CASAG as of 26 June 2020 (see
Note 1.g i.). Comparative information has been restated to reflect the change.
The tables below show the operating performance of the Group’s operating segments. Operating performance
in 2020 in several segments was impacted by restrictions imposed in connection with the COVID-19 pandemic
and therefore does not represent a normal level of economic activity and is not fully comparable with the prior period.
The Austria segment and Stoiximan part of Greece and Cyprus segment only become consolidated during 2020.
Prior to consolidation they were treated as equity accounted investees and their financial results for the period
before consolidation is presented in “Share of profit of equity method investees”. For more information about their
pre-acquisition performance see Note 20.
86 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
7. Operating segments continued
Certain alternative performance measures, which are not defined by the IFRS, are regularly reported to and
monitored by the Group management. Definitions of theses alternative non-IFRS performance measures are as
follows:
“Amounts staked” represents total value of bets before wins are deducted, except for “VLTs and Casinos” and
“Digital-only Games” product lines, where “Amounts staked” is presented net of wins (on GGR level) as the difference
between stakes placed and wins paid during the players session (see Note 3.d).
“Operating EBITDA” is calculated as “Profit before tax” before “Finance cost, net“, “Depreciation and amortization”,
“Impairment of tangible and intangible assets including goodwill”, “Restructuring costs”, “Gain from remeasurement
of previously held interest in equity method investee” and “Other gains and losses”. See reconciliation of Operating
EBITDA to the IFRS reported balances in the table below.
2020
Czech
Republic
Greece
and
Cyprus
of which
Stoiximan Austria
of which
Austrian
Lotteries Italy
Total
reportable
segments
Other and
headquarter
costs Total
Amount staked 748.7 3,609.7 332.0 2,473.0 2,351.7 – 6,831.4 – 6,831.4
Gross gaming revenue
(GGR) 315.2 1,129.7 40.2 573.1 451.8 – 2,018.0 – 2,018.0
Gaming taxes (114.3) (392.5) (15.8) (298.7) (249.5) – (805.5) – (805.5)
Net gaming revenue 200.9 737.2 24.4 274.4 202.3 – 1,212.5 – 1,212.5
Revenue from
non-gaming activities 16.1 99.7 – 26.6 1.4 – 142.4 0.8 143.2
Other operating income 3.5 66.6 – 26.7 12.9 – 96.8 – 96.8
Agents’ commission (31.0) (255.9) – (50.2) (50.2) – (337.1) – (337.1)
Materials, consumables
and services (43.9) (214.1) (8.1) (30.6) (16.9) – (288.6) (21.2) (309.8)
Marketing services (26.0) (64.1) (4.7) (33.4) ( 27.8) – (123.5) (1.4) (124.9)
Personnel expenses (20.5) (79.6) – (116.6) (32.0) – (216.7) (6.5) (223.2)
Other operating expenses (15.3) (48.1) (1.5) (13.1) (12.0) – (76.5) (1.2) (77.7)
Share of profit of equity
method investees – 18.1 18.1 11.9 – 49.5 79.5 – 79.5
Operating EBITDA 83.8 259.8 28.2 95.7 77.7 49.5 488.8 (29.5) 459.3
Depreciation
and amortisation (6.3) (115.3) – (36.1) (12.3) – (1 57.7) (0.8) (158.5)
Impairment of tangible
and intangible assets
including goodwill – (24.4) – (1.7) (1.2) – (26.1) – (26.1)
Restructuring costs – – – (50.6) (5.1) – (50.6) – (50.6)
Gain from remeasurement
of previously held interest
in equity method investee – 142.7 142.7 – – – 142.7 – 142.7
Other gains and losses – – – 1.4 – – 1.4 7. 5 8.9
Profit/loss from
operating activities 77.5 262.8 170.9 8.7 59.1 49.5 398.5 (22.8) 375.7
CAPEX 7.4 21.5 – 17.5 7.2 – 46.4 0.1 46.5
Cash and cash equivalents 56.7 506.9 82.6 262.3 120.4 – 825.9 46.3 872.2
Other financial assets 2.9 4.6 – 224.9 196.2 – 232.4 10.5 242.9
Loans and other borrowings 216.4 1,040.9 – 152.9 – – 1,410.2 1,252.1 2,662.3
Net assets 225.1 1,303.8 26.1 633.6 563.2 – 2,162.5 n/a 1,483.5
87Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
7. Operating segments continued
2019
Czech
Republic
Greece
and
Cyprus
of which
Stoiximan Austria Italy
Total
reportable
segments
Other and
headquarter
costs Total
Amount staked 690.9 4,765.9 – – – 5,456.8 – 5,456.8
Gross gaming revenue (GGR) 286.2 1,619.9 – – – 1,906.1 – 1,906.1
Gaming taxes (66.8) (528.2) – – – (595.0) – (595.0)
Net gaming revenue (NGR) 219.4 1,091.7 – – – 1,311.1 – 1,311.1
Revenue from non-gaming activities 16.6 121.9 – – – 138.5 8.8 1 47.3
Other operating income 0.8 11.4 – – – 12.2 0.3 12.5
Agents’ commission (32.5) ( 3 87.3 ) – – – (419.8) – (419.8)
Materials, consumables and services (49.8) (248.7) – – – (298.5) (31.7) (330.2)
Marketing services (24.7) (66.9) – – – (91.6) (0.8) (92.4)
Personnel expenses (19.9) (83.2) – – – (103.1) (3.0) (106.1)
Other operating expenses (15.3) (34.8) – – – (50.1) (0.5) (50.6)
Share of profit of equity method investees – 8.5 8.5 42.4 69.5 120.4 – 120.4
Operating EBITDA 94.6 412.6 8.5 42.4 69.5 619.1 (26.9) 592.2
Depreciation and amortisation (4.6) (107.7 ) – – – (112.3) (0.6) (112.9)
Impairment of tangible and intangible
assets including goodwill – (8.7) – – – (8.7) – (8.7)
Profit/loss from operating activities 90.0 296.2 8.5 42.4 69.5 498.1 (27. 5) 470.6
CAPEX 4.7 32.5 – – – 37. 2 – 37. 2
Cash and cash equivalents 59.6 633.9 – – – 693.5 70.2 763.7
Other financial assets 3.0 9.9 – – – 12.9 15.2 28.1
Loans and other borrowings 25 7.5 1,056.4 – – – 1,313.9 1,038.0 2,351.9
Net assets 224.0 1,309.2 – – – 1,533.2 n/a 1,384.1
8. Gross gaming revenue (GGR) and Revenue from non-gaming activities
2020 2019
Amount staked 6,831.4 5,456.8
Pay-outs to winners (4,813.4) (3,550.7)
Gross gaming revenue (GGR) 2,018.0 1,906.1
Gaming taxes (805.5) (595.0)
Net gaming revenue (NGR) 1,212.5 1,311.1
Revenue from non-gaming activities 143.2 147.3
Mobile phone top-up services 87.6 97.5
Mobile virtual network operator services 10.6 10.4
Other non-gaming revenue 45.0 39.4
Disaggregation of Gross gaming revenue (GGR) according to operating segment and product line:
2020 Gross gaming revenue (GGR)
Czech
Republic
Greece and
Cyprus
of which
Stoiximan Austria
of which
Austrian
Lotteries Total
Numerical Lotteries 188.1 550.7 – 326.6 326.6 1,065.4
Instant Lotteries 63.9 44.2 – 35.9 35.9 144.0
Sports Betting 7.9 310.4 26.5 9.7 9.7 328.0
Digital-only Games 55.3 23.9 13.7 65.6 65.6 144.8
VLTs and Casinos – 200.5 – 135.3 14.0 335.8
Total 315.2 1,129.7 40.2 573.1 451.8 2,018.0
88 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
8. Gross gaming revenue (GGR) and Revenue from non-gaming activities continued
2019 Gross gaming revenue (GGR)
Czech
Republic
Greece and
Cyprus
of which
Stoiximan Austria
of which
Austrian
Lotteries Total
Numerical Lotteries 189.9 778.6 – – – 968.5
Instant Lotteries 64.0 147. 5 – – – 211.5
Sports Betting 6.6 396.2 – – – 402.8
Digital-only Games 25.7 – – – – 25.7
VLTs and Casinos – 2 97.6 – – – 297.6
Total 286.2 1,619.9 – – – 1,906.1
During 2020 all “Revenue from non-gaming activities” was recognised at a single point in time.
During 2019 “Other non-gaming revenue” of €8.5 million was recognised over the period of time in which the
performance obligation was satisfied. The remaining “Other non-gaming revenue” was recognised at a single point
in time.
For a disaggregation of “Revenue from non-gaming” activities per segment see Note 7.
9. Other operating income
2020 2019
Other operating income 96.8 12.5
Effect of prepayment of GGR contribution 42.5 –
COVID-19 related income 31.3 –
Discount on tax liability 12.3 –
COVID-19 income from subsidies 17. 2 –
COVID-19 related rent concessions 1.8 –
Income from leases 4.3 4.5
Tax returned 2.6 2.0
Income from subsidies 0.3 0.9
Remaining portion of operating income 15.8 5.1
“Effect of prepayment of GGR contribution” represents a portion of the total GGR contribution prepayment of
€1,831 million for the 10-year period starting 13 October 2020 by OPAP S.A. on accrual basis plus related adjustments
to compensate for the impact on income tax (see Note 3.f iii.).
“Discount on tax liability” represents a 25% discount of certain tax liabilities of OPAP S.A. Under measures introduced
by the Greek authorities, OPAP S.A. was eligible to delay payment of these liabilities or receive this discount if it
paid in line with the normal schedule.
“COVID-19 income from subsidies” mainly comprises income from measures implemented by governments to
support furloughed staff during the COVID-19 pandemic in Austria.
“Tax returned” relates to reimbursement of taxes previously paid on dividends received by OPAP S.A.
89Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
10. Materials, consumables and services
2020 2019
Materials, consumables and services (309.8) (330.2)
Non-gaming cost of sales (81.3) (104.1)
Fees to gaming system providers (80.5) (99.5)
Advisory and other professional services (74.2) (71.6)
Cost of IT and software services (21.5) (12.2)
Materials and consumables (14.9) (10.0)
Telecommunication services (14.0) (10.3)
Expense relating to leases (see Note 27) (4.9) (2.2)
Other services (18.5) (20.3)
“Non-gaming cost of sales” relates mainly to “Mobile virtual network operator services” and “Mobile phone top-
up services”.
11. Marketing services
2020 2019
Marketing services (124.9) (92.4)
Advertising (103.7) (71.9)
Sponsorship and donations (21.2) (20.5)
12. Personnel expenses
2020 2019
Personnel expenses (223.2) (106.1)
Wages and salaries (165.5) (81.0)
Social security and health insurance other than pensions (18.4) (6.5)
Social security state pension – defined contribution plan (21.1) (11.7)
Other social expenses (3.3) (2.2)
Retirement benefit expenses – defined benefit plan (7.9) (4.7)
Retirement benefit expenses – defined contribution plan (5.8) –
Other non-current employee benefits expense (1.2) –
“Social security state pension – defined contribution plan” comprises mandatory contributions to state pension
funds as stipulated by the jurisdictions in which the Group operates. The Group’s legal and constructive obligation
for these pension state plans is limited to the contributions.
For description of other non-current employee benefit liabilities and post-employment benefits under defined
benefit and defined contribution plans see Note 31.
13. Other operating expenses
2020 2019
Other operating expenses (77.7 ) (50.6)
Other taxes (18.5) (14.4)
Impairment of GGR contribution tax asset (13.5) (8.0)
Repair and maintenance (7. 2) (5.5)
Write-offs and Change in credit loss provisions for receivables (7.2) (4.8)
Financial support to agents (5.2) –
Remaining portion of operating expenses (26.1) (17. 9)
90 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
13. Other operating expenses continued
“Impairment of GGR contribution tax assets” represents the impairment of a tax assets relating to gaming taxes
payable under the Hellenic Lotteries S.A.’s scratch card concession in Greece. Hellenic Lotteries fully impaired the
asset because there were indications that it would not be recovered before the end of its concession agreement.
“Financial support to agents” represents extraordinary financial support of €5.2 million provided to agents in
Greece in order to reduce the financial impact of COVID-19 on our distribution network in Greece.
“Remaining portion of operating expenses” primarily comprises fees, travel expenses and insurance premium.
14. Restructuring costs and other gains and losses
In July 2020 CASAG’s management announced a restructuring plan in relation to its Austrian casinos business. A
“Restructuring provision” was initially recognised of €53.9 million. As of 31 December 2020, the Group revised the
estimate down by €3.3 million resulting in a total Restructuring costs of €50.6 million. For information about other
movements in “Restructuring provision” see Note 29.
Other gains and losses comprise gain from sale of securities in the amount of €8.0 million and revaluation of fair
value through profit or loss investments (FVTPL) of €0.9 million.
15. Finance costs, net
2020 2019
Interest income 2.2 7.5
Interest expense (101.8) (70.3)
Interest expense on loans, bonds and other liabilities (98.3) (6 7.8)
Interest expense on leases (3.5) (2.5)
Other finance income and expense (16.0) (50.2)
Finance income from modification of loans 8.1 –
Foreign exchange gains/(losses) 1.0 2.2
Other finance income 1.5 1.2
Other finance expenses (26.6) (53.6)
Finance costs, net (115.6) (113.0)
The increase in “Interest expense on loans, bonds and other liabilities” primary relates to new bonds issued by the
Company (see Note 26).
OPAP S.A. renegotiated two of its existing loan facilities to take advantage of lower interest rates which resulted
in the recognition of a modification gain of €8.1 million, which is included in “Finance income from modification
of loans”.
“Other finance expenses” include losses from revaluation of “Other derivatives”, bank fees and certain exceptional
items. For the year 2020, these exceptional items included loss from the termination of interest rates hedges of
€7.8 million in connection with the refinancing of a loan. For the year 2019, they included financing fees in relation
to the voluntary tender offer (“VTO”) for OPAP S.A. of €40.9 million, which does not fulfil the requirements to be
capitalised and shown as part of effective interest expense.
91Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
16. Taxes
Deferred tax assets and liabilities
31/12/2020 31/12/2019
Deferred tax asset 65.7 20.0
Deferred tax liability 366.5 212.8
Deferred tax assets and liabilities relating to income taxes levied by the same taxation authority were offset in
individual companies for the purposes of presentation in the consolidated financial statements
In accordance with the accounting policy stated in Note 3.j, deferred tax was calculated using tax rates applicable
to individual companies. Recoverability of deferred tax assets is substantiated by expected future profitability of
the Group’s businesses.
Change in deferred tax
The following tables show the change in deferred tax recognised in the Consolidated statement of total comprehensive
income and other changes that affected deferred tax assets and liabilities:
Balance at
01/01/2020 Changes in 2020
Balance at
31/12/2020
2020
Deferred tax
liability (–)/
asset (+)
Recognised
in profit
orloss
Recognised
in OCI
Business
combination
Other
changes
Deferred tax
liability (–)/
asset (+)
Deferred tax asset (+)/liability (–) (192.8) 24.3 2.0 (134.9) 0.6 (300.8)
Tangible fixed assets (1.1) (7.8) – (1.8) – (10.7)
Intangible fixed assets (210.6) (4.3) – (144.8) 0.5 (359.2)
Financial assets 0.7 (1.2) – 0.5 – –
Inventories 0.3 (0.3) – – – –
Receivables (1.2) 2.6 – 0.1 – 1.5
Liabilities 17.1 (2.5) 0.8 7.2 – 22.6
Liabilities arising from leases 0.4 5.9 – – – 6.3
Provisions 3.6 15.8 – 3.6 – 23.0
Tax losses carried forward 0.1 16.1 – 0.3 – 16.5
Hedging derivatives (2.1) – 1.2 – 0.1 (0.8)
Balance at
01/01/2019 Changes in 2019
Balance at
31/12/2019
2019
Deferred tax
liability (–)/
asset (+)
Recognised
in profit
orloss
Recognised
in OCI
Business
combination
Other
changes
Deferred tax
liability (–)/
asset (+)
Deferred tax asset (+)/liability (–) (232.0) 29.1 0.1 10.0 – (192.8)
Tangible fixed assets 1.2 (2.3) – – – (1.1)
Intangible fixed assets (256.6) 33.1 – 10.0 2.9 (210.6)
Financial assets 0.8 (0.1) – – – 0.7
Inventories – 0.3 – – – 0.3
Receivables (8.0) 4.1 – – 2.7 (1.2)
Liabilities 21.8 (0.2) 0.1 – (4.6) 17.1
Liabilities arising from leases – 0.4 – – – 0.4
Provisions 10.8 (6.2) – – (1.0) 3.6
Tax losses carried forward 0.1 – – – – 0.1
Hedging derivatives (2.1) – – – – (2.1)
92 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
16. Taxes continued
The Group has not recognised certain deferred tax assets, in accordance with accounting policy 3.j, as it is uncertain
whether sufficient future taxable profits will be available against which they could be utilised. These unrecognised
deferred tax assets are shown in the table below.
2020 2019
Tax losses carried forward for which deferred tax asset is not recognised 142.5 55.6
Total unrecognised deferred tax asset 34.3 13.0
These unrecognised tax losses expire as follows:
2020 2019
Tax losses carried forward 142.5 55.6
Expiring within:
Between 1 and 5 years 81.1 55.6
Unlimited 61.4 –
Income tax
2020 2019
Income tax expense (35.7) (46.3)
Current income tax (60.0) (75.4)
Deferred income tax 24.3 29.1
Income tax expense attributable to: 2020 2019
Continuing operation (35.7) (4 6.3)
Discontinued operation – (5.2)
Deferred tax is calculated using valid tax rates that are also expected to be valid when the asset is realised or the
liability settled. The tax rates are country dependent and follow local legislation.
Current income tax is calculated on the basis of the tax laws enacted, or substantively enacted, at the balance
sheet date in the countries where the company and its subsidiaries operate and generate taxable income.
Current tax comprises the tax estimate for 2020 and adjustment to the tax estimate for 2019.
Changes in corporate income tax by country/region:
There were no significant changes in corporate income tax rates relevant for the Group in 2020.
In Greece, the rate of corporate income tax and the rate used for calculation deferred tax reduced to 24.00% in
2019, while in the prior year income tax expense was calculated at applicable rate of 29.00% and deferred tax was
calculated using enacted rates applicable to future periods from 25.00% to 28.00%. The change is disclosed in
“Different tax rate used to determine current and deferred tax”.
93Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
16. Taxes continued
Reconciliation of effective tax rate
2020 2019
Profit before tax 260.1 357.6
Tax at statutory income tax rate of the Company (19% in 2020 and 2019) 49.4 6 7.9
Tax effect of:
Non-deductible expenses 22.7 47.9
Non-taxable income (1.2) (2 7.2)
Profit or loss of equity method investees (16.3) (23.8)
Different tax rate in companies within the Group 11.4 14.5
Gain from revaluation of equity method investee (34.3) –
Different tax rate used to determine current and deferred tax – (34.5)
Accumulated tax loss claimed in the current period (1.2) (6.7)
Unrecognised deferred tax assets relating to tax losses of current period 7.4 3.9
Other (2.1) 4.3
Actual income tax expense 35.8 46.3
“Non-deductible expenses” primarily comprises non-deductible interest, non-deductible operating costs, and
non-deductible foreign exchange losses on the Company level totalling to €11.5 million.
“Gain from revaluation of equity method investee” refers to the accounting gain created as part of the Stoiximan
acquisition (see Note 5.b).
“Accumulated tax loss claimed in the current period” relates to prior period tax losses, for which deferred tax assets
were not recognised due to uncertainty about future recoverability. Unused losses that could be claimed in the
future amount to €142.5 million.
“Unrecognised deferred tax assets” relating to tax losses in the current period relate to current period tax losses,
for which deferred tax assets were not recognised due to uncertainty about future recoverability.
94 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
17. Other comprehensive loss for the year
Items that are or may be reclassified to profit or loss 31/12/2020 31/12/2019
Change in translation reserve 12.9 (3.0)
Change in translation reserve of foreign operations disposed of reclassified to profit or loss – (2.5)
Translation of foreign operations into the Group’s presentation currency total 12.9 (5.5)
Share of other comprehensive income of equity method investees 4.0 (4.1)
Remeasurement of hedging derivatives, before tax (21.7) 10.7
Deferred tax 1.5 (0.8)
Remeasurement of hedging derivatives, net of tax (20.2) 9.9
Net change in fair value of cash flow hedges transferred to profit or loss, before tax 1.5 (4.5)
Deferred tax (0.3) 0.9
Net change in hedging derivatives reclassified to profit or loss, net of tax 1.2 (3.6)
Items that will not be reclassified to profit or loss
Actuarial gain/loss – before tax (9.5) (0.2)
Actuarial gain/loss – deferred tax 0.8 –
Actuarial remeasurements of defined benefit liabilities, net of tax (8.7) (0.2)
Revaluation of equity instruments at FVOCI (4.3) –
Other comprehensive loss for the year, net of income tax (15.1) (3.5)
2020
Capital
contributions
and other
reserves
Translation
reserve
Hedging
reserve
Retained
earnings
Total
equity*
Non-
controlling
interest
Total
equity
Translation of foreign operations into
the Group’s presentation currency total – 14.1 – – 14.1 (1.2) 12.9
Share of other comprehensive income
of equity method investees 3.9 – – – 3.9 0.1 4.0
Change in fair value of hedging derivatives,
net of tax – – (18.9) – (18.9) (0.1) (19.0)
Revaluation of equity instruments at FVOCI (2.6) – – – (2.6) (1.7) (4.3)
Actuarial gain/loss, net of tax – – – (6.1) (6.1) (2.6) (8.7)
Total Other comprehensive loss for year 2020 1.3 14.1 (18.9) (6.1) (9.6) (5.5) (15.1)
* Attributable to owners of the Company
95Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
17. Other comprehensive loss for the year continued
2019
Capital
contributions
and other
reserves
Translation
reserve
Hedging
reserve
Retained
earnings
Total
equity*
Non-
controlling
interest
Total
equity
Translation of foreign operations into
the Group’s presentation currency total – (5.5) – – (5.5) – (5.5)
Share of other comprehensive income
of equity method investees (4.1) – – – (4.1) – (4.1)
Change in fair value of hedging derivatives,
net of tax – – 7.0 – 7.0 (0.7) 6.3
Actuarial gain/loss, net of tax – – – – – (0.2) (0.2)
Other comprehensive income for the year,
net of tax from continuing operations (4.1) (5.5) 7.0 – (2.6) (0.9) (3.5)
Total Other comprehensive loss for year 2019 (4.1) (5.5) 7.0 – (2.6) (0.9) (3.5)
* Attributable to owners of the Company
18. Intangible assets and goodwill
2020 Note
Licences
and
property
rights
Brands
and
trademarks
Customer
relationships,
customer
contracts Software
Intangible
assets
notyet
available
for use
Other
intangible
assets Goodwill Total
Acquisition cost 1,216.7 798.0 8.0 107.6 0.9 2.4 622.1 2,755.7
Accumulated amortisation
and impairment losses (209.2) – (1.4) (43.0) – (0.9) (21.5) (276.0)
Net book value at 01/01/2020 1,007. 5 798.0 6.6 64.6 0.9 1.5 600.6 2,479.7
Business combination 5 255.6 296.8 44.4 6.5 0.3 – 592.1 1,195.7
Additions 18.0 0.6 – 13.2 1.7 – – 33.5
Disposals – – – – – – – –
Transfers – – – 0.8 (1.0) – – (0.2)
Amortisation expense (72.2) – (6.1) (22.0) – (0.1) – (100.4)
Impairment (4.9) – – (4.8) – – – (9.7)
Effect of currency translation (0.1) (2.3) – (0.2) – (0.1) (12.1) (14.8)
Net book value at 31/12/2020 1,203.9 1,093.1 44.9 58.1 1.9 1.3 1,180.6 3,583.8
Acquisition cost 1,490.2 1,093.1 52.4 127.5 1.9 2.3 1,202.2 3,969.6
Accumulated amortisation
and impairment losses (286.3) – (7. 5) (69.4) – (1.0) (21.6) (385.8)
The most significant additions to intangible assets in 2020 were acquisitions of new software and gaming
system licences.
Following the operational challenges caused by the COVID-19 pandemic, there were indications that the Horse
Races Single-Member S.A. (formerly Horse Races S.A.) (part of the Greece and Cyprus operating segment) licence
carrying value exceeded its recoverable amount and consequently management considered that an impairment
test should be conducted. The Group recognised an impairment of €4.9 million.
As of 31 December 2020, no trademarks were pledged as collateral for borrowings (see Note 32).
96 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
18. Intangible assets and goodwill continued
2019* Note
Licences
and
property
rights
Brands
and
trademarks
Customer
relationships,
customer
contracts Software
Intangible
assets
notyet
available
for use
Other
intangible
assets Goodwill Total
Acquisition cost 1,216.4 852.5 8.0 82.7 0.6 2.5 909.6 3,072.3
Accumulated amortisation
and impairment losses (144.8) – (0.8) (26.5) – (0.8) (17.5) (190.4)
Net book value at 01/01/2019 1,071.6 852.5 7.2 56.2 0.6 1.7 892.1 2,881.9
Additions – – – 28.1 0.9 – – 29.0
Disposals – – – – – – – –
Transfers 0.3 – – 0.3 (0.6) – – –
Amortisation expense (60.4) – (0.6) (19.4) – (0.1) – (80.5)
Impairment (4.0) – – (0.7) – – (4.0) (8.7)
Disposal of subsidiaries – (55.3) – – – – (292.2) (347.5)
Effect of currency translation – 0.8 – 0.1 – (0.1) 4.7 5.5
Net book value at 31/12/2019 1,007.5 798.0 6.6 64.6 0.9 1.5 600.6 2,479.7
Acquisition cost 1,216.7 798.0 8.0 107.6 0.9 2.4 622.1 2,755.7
Accumulated amortisation
and impairment losses (209.2) – (1.4) (43.0) – (0.9) (21.5) (276.0)
* The comparative table of Intangible assets and goodwill has been re-presented to show category of Customer relationships, customer
contracts separately from Other intangible assets.
As of 31 December 2019 trademarks with carrying value of €73.7 million were pledged as collateral for borrowings
(see Note 32).
The most significant additions to intangible assets in 2019 were acquisitions of new software.
(a) Licences and property rights
“Licences and property rights” relates mainly to the Group’s lottery and other gaming businesses. Individually material
licences are as follows:
•
Licence to operate VLT games in Greece held by OPAP S.A. with a carrying amount of €472.4 million (31 December
2019: €506.2 million) with remaining amortisation period of 14 years;
•
Licence to operate lottery games in Greece held by OPAP S.A. with a carrying amount of €365.6 million
(31 December 2019: €381.9 million) with remaining amortisation period of 10 years;
•
Licence to operate lottery games in Greece held by Hellenic Lotteries S.A. with a carrying amount of €84.4 million
(31 December 2019: €100.3 million) with remaining amortisation period of 5 years;
• Licence to operate numerical lotteries in Austria held by Österreichische Lotterien GmbH (“Austrian Lotteries”)
with a carrying amount of €192.1 million, which is deemed to have an indefinite useful life. Based on historical
evidence Austrian Lotteries there is no indication that Austrian Lotteries will not be able to freely obtain the
licence in the foreseeable future. At present, no change in the process to obtain the licence is expected.
Furthermore, no public information exists that the Austrian Government, which is one of the main shareholders
in Austrian Lotteries via its interest in CASAG intends to change the process. Hence it is assumed, that Austrian
Lotteries is able to obtain prolongation of the licence for future periods and thus the licence is expected to
continue as indefinite and is tested for impairment; and
• Vendor licence to operate gaming software purchases in 2020 held by SAZKA a.s. with a carrying amount of
€16.6 million with remaining amortisation period of 11 years.
97Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
18. Intangible assets and goodwill continued
(b) Brands and trademarks
31/12/2020 31/12/2019
Austrian Lotteries 296.8 –
OPAP 724.4 724.4
SAZKA 71.9 73.6
Total 1,093.1 798.0
The determination of the indefinite useful life of “Brands and trademarks” involves historical experience, marketing
considerations and the nature of the industries in which is operated. The brands and trademarks of Austrian
Lotteries, OPAP and SAZKA are all well established in their respective markets and have substantial market shares.
All are mature brands and generate stable cash flows (see Note 7, where OPAP brand represents Greece and
Cyprus and SAZKA is brand of Czech Republic). The Group continues to invest in brand awareness and brand
recognition and expects to use the brands for the foreseeable future. Therefore, the useful life of “Brands and
trademarks” is expected to be indefinite and is annually tested for impairment.
(c) Goodwill
31/12/2020 31/12/2019
Austrian Lotteries 126.0 –
Greece and Cyprus 221.4 221.4
Stoiximan 466.1 –
Czech Republic 367.1 379.2
Total 1,180.6 600.6
Items of goodwill generated from past acquisitions have been reallocated based on the new operating segment
structure (see Note 1.g i.).
(d) Impairment testing
Impairment is determined by estimating the recoverable amount of the cash-generating unit to which goodwill
and other non-depreciable assets relate.
In accordance with IAS 36, the Group test goodwill and indefinite-lived intangible assets (i.e. trademarks) for
impairment annually as of 31 December. Indefinite-lived intangible assets acquired during the year (i.e. Austrian Lotteries
license) were assessed for impairment indicators and no testing was needed.
i. Impairment test of “Brands and trademarks”
Impairment testing of trademarks was carried out by estimating the recoverable amount based on the relief from
royalty method. An explicit cash flow forecast was prepared based on a business plan covering a period of five
years, approved by management and valid at the impairment testing date. To reflect continuity of the trademarks
beyond the explicit forecasting period a terminal value model (calculated using the Gordon growth formula) was
applied. A terminal growth rate of 2% was applied (2019: 2%). Net royalties using a royalty rate of 5% (2019: 5%)
consistent with past experience after tax were discounted using the weighted average cost of capital relevant for
the individual elements of the business (range 7.9% – 10.5% in both years), with an uplift of 1%. Tax amortisation
benefit was also reflected in the calculation.
The resulting recoverable amounts significantly exceeded the carrying amounts of the trademarks, therefore no
impairment of the trademarks was recognised as of 31 December 2020 and 31 December 2019. The Group’s
management also carried out a sensitivity analysis and determined than no reasonable change in the key assumptions
would result in an impairment.
ii. Impairment test of “Goodwill”
Impairment testing is performed on annual basis as of 31 December. The recoverable amount is estimated using
fair value less costs of disposal (“FVLCD”).
98 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
18. Intangible assets and goodwill continued
FVLCD is the amount obtainable from the sale of cash-generating unit in an arm’s length transaction between
knowledgeable, willing parties, less the costs of disposal. The estimate of FVLCD is based on:
•
The market price of the asset/cash-generating unit derived from its trading in an active market. Costs of disposal
are considered as immaterial. Market price is used for evaluation of recoverable amount of Greece and Cyprus
operating segment, representing investment in OPAP, as shares are publicly traded on the Athens Stock Exchange;
and
• The market multiples method. The Group consistently uses EV/EBITDA multiple of 11.7 derived from reference
to publicly traded companies to estimate the respective FVLCD. Costs of disposal are considered as immaterial.
The market multiple method is used for evaluation of recoverable amount of other operating segments (Czech
Republic, Austria) and Austrian Lotteries CGU.
Results
As of 31 December 2020 and 2019 the resulting recoverable amounts calculated based on FVLCD methods
significantly exceeded the respective carrying amounts for all groups of CGUs to which goodwill is allocated.
The Group’s management also carried out a sensitivity analysis and determined that no reasonable change in the
input parameters would result in an impairment.
19. Property, plant and equipment (“PPE”)
2020 Note
Land
– owned
Buildings
– owned
Right
ofuse
– Buildings
Machinery
and
equipment
– owned
Machinery
and
equipment
– Right
ofuse
Tangible
assets
under
construction
Other
tangible
assets Total
Acquisition cost 11.1 43.4 70.9 60.9 5.7 0.2 48.6 240.8
Accumulated depreciation
and impairment losses – (9.2) (7.5) (11.9) (1.7) – (15.8) (46.1)
Net book value at 01/01/2020 11.1 34.2 63.4 49.0 4.0 0.2 32.8 194.7
Business combinations 5 13.9 148.5 82.0 68.1 2.6 4.1 – 319.2
Additions – 8.8 7.3 8.4 4.1 0.8 8.9 38.3
Transfers – 0.6 – 0.1 – (0.6) – 0.1
Disposals – – (5.6) – (0.3) – – (5.9)
Depreciation expense – (11.3) (15.3) (16.6) (2.7) – (12.2) (58.1)
Impairment – – (14.7) (1.7) – – – (16.4)
Effect of currency translation (0.1) (0.7) (0.3) (0.1) – – – (1.2)
Modification of leasing – – (7.4) – – – – (7.4)
Net book value at 31/12/2020 24.9 180.1 109.4 107.2 7.7 4.5 29.5 463.3
Acquisition cost 24.9 200.3 146.6 135.4 12.0 4.5 57.1 580.8
Accumulated depreciation
and impairment losses – (20.2) (37.2) (28.2) (4.3) – (27.6) (117.5)
There were no individually significant additions to PPE in 2020. Additions of PPE primarily comprises regular
replacement of gaming and office equipment.
Following the operational challenges brought on by the COVID-19 pandemic, there were indications that the
carrying value of the licence in of Horse Races Single-Member S.A. (formerly Horse Races S.A.) (part of the Greece
and Cyprus operating segment) exceeds its recoverable amount and consequently management conducted an
impairment test estimating its value in use based on projected cash-flows discounted at WACC of 10.31%. The Group
recognised an impairment of € 14.1 million of “Right of use – Buildings”.
As a result of the impact of the COVID-19 pandemic, there were indications that the carrying value of “Machinery
and equipment – owned” in Austrian Lotteries operating sub-segment exceeded their recoverable amount and
consequently management considered that an impairment test should be conducted. The Group recognised an
impairment of €1.2 million.
99Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
19. Property, plant and equipment (“PPE”) continued
As of 31 December 2020, no PPE was pledged as collateral (see Note 32).
For a description of material leases see Note 27.
2019 Note
Land
– owned
Buildings
– owned
Right
ofuse
– Buildings
Machinery
and
equipment
– owned
Machinery
and
equipment
– Right
ofuse
Tangible
assets
under
construction
Other
tangible
assets Total
Acquisition cost 11.5 45.3 73.4 62.0 4.0 1.0 56.8 254.0
Accumulated depreciation
and impairment losses – (9.6) – (4.1) (0.1) – (20.2) (34.0)
Net book value at 01/01/2019 11.5 35.7 73.4 58.0 3.8 1.0 36.6 220.0
Additions – 0.4 6.3 2.1 2.0 0.2 8.6 19.6
Transfers (0.4) 0.2 – 0.3 – (1.0) – (0.9)
Disposals – – (0.2) (0.3) (0.1) – – (0.6)
Disposals of subsidiaries – – ( 7.7 ) (2.3) – – – (10.0)
Depreciation expense – (2.4) (7.4 ) (8.4) (1.8) – (12.4) (32.4)
Depreciation expense of
discounted operations – – (0.7) (0.4) – – – (1.1)
Effect of currency translation – 0.3 (0.1) – 0.1 – – 0.3
Modification of leasing – – (0.2) – – – – (0.2)
Net book value at 31/12/2019 11.1 34.2 63.4 49.0 4.0 0.2 32.8 194.7
Acquisition cost 11.1 43.4 70.9 60.9 5.7 0.2 48.6 240.8
Accumulated depreciation
and impairment losses – (9.2) (7.5) (11.9) (1.7) – (15.8) (46.1)
There were no individually significant additions to PPE in 2019. Additions of PPE primarily comprise regular
replacement of gaming and office equipment.
During 2019 a transfer has been made from PPE to investment property of €0.9 million.
As of 31 December 2019, the net book value of buildings and adjacent land pledged as collateral (see Note 32),
totals €22.9 million.
20. Equity method investees
31/12/2020 31/12/2019
Equity method investees Note
Effective
ownership
(%) 343.2
Effective
ownership
(%) 649.1
LOTTOITALIA S.r.l. (a) 32.50% 229.5 32.50% 2 57.1
CASAG (b) subsidiary – 38.16% 250.0
Kaizen Gaming Limited (formerly TCB Holdings Ltd) (c) 13.27% 8.1 11.75% 54.2
LTB Beteiligungs GmbH (d) 66.67% – 66.67% 43.9
CLS Beteiligungs GmbH (d) 66.67% – 66.67% 43.9
Other equity method investees of CASAG (e) 105.6 –
Reef Casino Trust 25.12% 26.3 16.03% –
Casino Lugano S.A. 17. 20 % 19.5 10.97% –
Casinos Austria International (Cairns) Pty Ltd. 29.90% 18.9 19.80% –
Casino Copenhagen K/S 29.90% 9.9 19.80% –
Casino Vesterport Copenhagen K/S 29.90% 9.3 19.80% –
Casinos Austria International Mazedonia d.o.o. 20.93% 15.2 13.36% –
Other individually insignificant – 6.5 – –
For the full list of Group joint ventures and associates see Note 35.
100 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
20. Equity method investees continued
Change in value of the equity method investees includes increase in the amount of an investment by the owner
and the share of profit or loss and other comprehensive income of the equity method investees less dividends
declared and distributions made by the equity method investees.
Impairment testing
The Group test equity method investees anually for impairment as of 31 December. The recoverable amounts of
the equity method investees were estimated using one of the following methods:
• Fair value less costs of disposal (“FVLCD”) method, specifically:
– EV/EBITDA market multiple method used for LOTTOITALIA S.r.l. (for description of the valuation method
see Note 18.d); or
– Market value for investments in listed entities used for Reef Casino Trust;
• Value in use method based on discounted cash-flow models for other entities.
The resulting recoverable amount exceeded the carrying amount of the equity method investees, which led to the
conclusion that no impairment on equity method investees had to be recognised as of 31 December 2020 and
31 December 2019.
The following tables represent the assets and liabilities, revenues, profit or loss and total comprehensive income
related to significant equity method investees:
(a) LOTTOITALIA S.r.l
The Group holds a share of 32.50%.
LOTTOITALIA S.r.l.
For the year
ended
31/12/2020
For the year
ended
31/12/2019
Revenues from contract with customers 384.4 489.0
Operating EBITDA 310.6 396.1
Profit for the period 152.4 213.9
Total comprehensive income (100%) 152.4 213.9
Group’s share of total comprehensive income 49.5 69.5
Dividends received by subsidiary of the Company 69.5 66.1
Reserve distribution received by subsidiary of the Company 7.6 47.8
LOTTOITALIA S.r.l. 31/12/2020 31/12/2019
Non-current assets 505.1 606.9
Current assets 255.8 218.0
Non-current liabilities – –
Current liabilities (54.6) (33.8)
Net assets (100%) 706.3 791.1
Group’s share (32.50%) = carrying amount of interest in associate 229.5 257.1
(b) Casinos Austria AG (up to 26 June 2020)
On 26 June 2020, the Group acquired an additional share of 17.19% in Casinos Austria AG. As a result of this
transaction the Group obtained the controlling interest and the company and its subsidiaries started to be fully
consolidated (see Note 2.3).
• As part of accounting for a business combination achieved in stages, the acquirer remeasures any previously
held interest at fair value and enter this amount into purchase price allocation. As of 26 June 2020, the carrying
amount of the Group’s interest in equity method investee CASAG was considered as approximate to fair value
of €258.0 million (see Note 5.a).
101Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
20. Equity method investees continued
The following tables show CASAG’s contribution to the Group only for the period during which CASAG was an
equity method investee:
CASAG
For the
period
ended
26/06/2020
For the year
ended
31/12/2019
Amount staked 2,183.9 4,553.3
Gross gaming revenue (GGR) 504.4 1,245.9
Operating EBITDA 69.1 210.6
Profit for the period 24.1 112.0
of which attributable to shareholders of the equity method investee 11.1 88.0
Total comprehensive income (100%) 34.3 101.2
of which attributable to shareholders of the equity method investee 20.9 78.5
Group’s share of total comprehensive income 8.0 30.1
Dividends received by subsidiary of the Company – 5.7
CASAG
Equity
investee
asof
26/06/2020 31/12/2019
Non-current assets 885.9 915.8
Current assets 422.1 351.9
Non-current liabilities (390.1) (426.4)
Current liabilities (495.4) (431.9)
Net assets 422.5 409.4
Non-controlling interest (61.6) (69.3)
Net assets attributable to Casino Austria AG equity holders 360.9 340.1
Group's share (38.29%) 138.2 130.2
Goodwill 119.8 119.8
of which goodwill from initial economic share 40.0 40.0
of which goodwill from additional economic share 79.8 79.8
Carrying amount of interest in associate 258.0 250.0
(c) Kaizen Gaming Limited (formerly TCB Holdings Ltd) (“Kaizen”)
During 2019 and 2020, Kaizen included two separate business units:
• Stoiximan (Greek and Cypriot business); and
• Betano (international business).
As of 31 December 2019, through its investment in OPAP the Group controlled 36.75% of voting rights, creating
economic interest of 11.75% in both the Stoiximan and Betano businesses.
On 13 July 2020, Kaizen sold a 51% interest in the Stoiximan business to OPAP Investment Ltd while retaining its
remaining 49% interest, and also retaining 100% interest in Betano.
Further in 18 November 2020 following the acquisition of the additional 15.48% interest by OPAP and, consequently,
obtaining an increased influence in Stoiximan which constituted managerial control of Stoiximan for consolidation
purposes within the meaning of IFRS 10. The Group consolidates Stoiximan business from 18 November 2020 (see
Note 5.b).
Consequently, the carrying value of the investment in Kaizen has been split between an investment in Stoiximan
of €57.4 million and an investment in Betano of €8.1 million using the relative fair value approach. The carrying
value of Stoiximan was derecognised from the equity method investee as it was revalued to fair value and considered
as part of the purchase price of the Stoiximan business.
102 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
20. Equity method investees continued
As of 31 December 2020, Kaizen represents solely the Group’s investment in the Betano business (36.75% of voting
rights, economic interest of 13.27%).
The following table shows the summary performance of Kaizen, which comprises of Stoiximan for the period up
to 18 November 2020, and Betano for the full year:
KAIZEN 2020 2019
Gross gaming revenue (GGR) 320.6 245.2
Profit for the period 36.9 23.2
Total comprehensive income (100%) 36.8 23.0
Group’s share of total comprehensive income 18.1 8.5
Dividends received by subsidiary of the Company 6.8 4.5
The Group’s share of total comprehensive income does not mathematically agree to profit and OCI multiplied by
ownership interest percentage due to the changes in interest percentage during the year.
The following table shows movement in the carrying amount of the investment in Kaizen, including derecognition
of Stoiximan’s share of carrying value during acquisition accounting for the Stoiximan consolidation:
Carrying amount of interest in associate as of 1 January 2020 54.2
Share on profit of
Kaizen 10.8
Share on profit Stoiximan (51%) 7.3
Dividends received by subsidiary of the Company (6.8)
Carrying amount of interest in associate Stoiximan as of 18 November 2020 transferring to PPA
(see Note 5.b) (57.4)
Carrying amount of interest in associate as of 31 December 2020 8.1
(d) CLS Beteiligungs GmbH & LTB Beteiligungs GmbH
Through its 100% subsidiary CAME Holding GmbH, the Group holds 66.67% of the shares of CLS Beteiligungs
GmbH (“CLS”) and LTB Beteiligungs GmbH (“LTB”). Neither entity engages in any economic activity except holding
of indirect interests in Österreichische Lotterien GmbH subgroup (“Austrian Lotteries”). CLS and LTB are equity-
method investees based on arrangements in the companies’ Articles of Association.
LTB and CLS each hold 27.08% of the shares of Lotto-Toto-Holding GmbH (“LTH”), which holds 26.17% of shares
in Austrian Lotteries. The Group’s effective interest in Austrian Lotteries through CLS and LTB is 9.45%.
Following the consolidation of CASAG, which includes Austrian Lotteries, from 26 June 2020 (see Note 2.3, Note
5.a) the value of the Group’s investment in Austrian Lotteries through the equity method is eliminated in consolidation.
As of 26 June 2020, the carrying amount of interest in equity method investee CLS was considered as approximate
to fair value of €42.6 million (see Note 5.a).
CLS Beteiligungs GmbH
For the
period from
26/06/2020
to
31/12/2020
For the
period
ended
26/06/2020
For the
period
ended
31/12/2019
Profit for the period – 3.4 6.5
of which share of profit of equity method investee Austrian Lotteries – 3.4 6.5
Share of OCI of equity method investee Austrian Lotteries – 0.2 (0.4)
Total comprehensive income (100%) – 3.6 6.1
Group's share of total comprehensive income (66.67%) – 2.4 4.1
Dividends received by subsidiary of the Company 8.3 – 6.9
103Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
20. Equity method investees continued
CLS Beteiligungs GmbH 31/12/2020
Before
consolidation
of Austrian
Lotteries
as of
26/06/2020 31/12/2019
Equity method investee in Austrian Lotteries – 51.4 65.7
Current assets – 12.5 0.1
Non-current liabilities – – –
Current liabilities – – –
Net assets (100%) – 63.9 65.8
Group's share (66.67%) = carrying amount of interest in associate – 42.6 43.9
As of 26 June 2020, the carrying amount of interest in equity method investee LTB was considered as approximate
to fair value of €42.7 million (see Note 5.a).
LTB Beteiligungs GmbH
For the
period from
26/06/2020
to
31/12/2020
For the
period
ended
26/06/2020
For the
period
ended
31/12/2019
Profit for the period – 3.4 6.5
of which share of profit of equity method investee Austrian Lotteries – 3.4 6.5
Share of OCI of equity method investee Austrian Lotteries – 0.2 (0.4)
Total comprehensive income (100%) – 3.6 6.1
Group's share of total comprehensive income (66.67%) – 2.4 4.1
Dividends received by subsidiary of the Company 8.3 – 6.9
LTB Beteiligungs GmbH 31/12/2020
Before
consolidation
of Austrian
Lotteries
as of
26/06/2020 31/12/2019
Equity method investee in Austrian Lotteries – 51.5 65.8
Current assets – 12.5 –
Non-current liabilities – – –
Current liabilities – – –
Net assets (100%) – 64 65.8
Group's share (66.67%) = carrying amount of interest in associate – 42.7 43.9
(e) Other equity method investees from CASAG
For the full list of CASAG’s joint ventures and associates see Note 35.
Reef Casino Trust, in which CASAG indirectly holds a 42% stake, is classified as a joint venture because the majority
of the shares are held together with the partner through an intermediary holding company. Reef Casino Trust is
listed on the Australian Stock Exchange in Brisbane under the symbol “RCT”.
Casinos Austria International Mazedonia d.o.o. in which CASAG has a direct 35.00% share, is classified as a joint
venture because all shareholders’ decisions must be made unanimously.
104 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
20. Equity method investees continued
The following tables show the financial performance of significant equity method investees of CASAG:
Reef
Casino Trust
Casino
Lugano S.A.
Casinos
Austria Int.
(Cairns) Pty
Limited
Casino
Copenhagen
K/S
Casino
Vesterport
Copenhagen
K/S
Casinos
Austria
International
Mazedonia
d.o.o.
Other
individually
insignificant
joint venture associate joint venture joint venture joint venture joint venture
Effective ownership by
SAZKA Group a.s. 25.12% 17. 2 0 % 29.90% 29.90% 29.90% 20.93%
For the period from 26/06/2020 till 31/12/2020
Gaming revenues including
ancillary revenues – 20.1 21.2 12.0 0.3 13.6
Gambling levies and other taxes (0.2) (8.4) (2.8) (6.1) (0.1) (0.3)
Net gaming income including
ancillary revenues (0.2) 11.7 18.4 5.9 0.2 13.3
Profit for the period 5.1 1.2 0.5 0.8 (1.0) 2.9
Total comprehensive income
(100%) 7.0 0.1 0.5 0.8 (1.0) 2.9
Group's share of total
comprehensive income 2.9 – 0.3 0.4 (0.5) 1.0 (0.8)
Dividends received by subsidiary
of the Company – 0.9 0.2 – – 1.1 0.8
31/12/2020 31/12/2020 31/12/2020 31/12/2020 31/12/2020 31/12/2020 31/12/2020
Non-current assets 58.9 26.8 10.6 10.9 4.1 8.9
Current assets 4.2 19.2 8.9 1.9 0.6 8.2
of which Cash and cash
equivalents 2.6 17. 4 7.6 1.2 0.6 6.3
Non-current liabilities (0.1) (2.0) (9.4) (4.4) (1.0) (0.6)
of which Financial liabilities
(excluding trade payables) (0.1) (2.0) (0.5) – – –
Current liabilities (1.0) (7.8) (6.3) (3.0) (4.6) (3.6)
of which Financial liabilities
(excluding trade payables) – (0.6) – – – –
Net assets (100%) 62.0 36.2 3.8 5.4 (0.9) 12.9
CASAG's ownership 42.00% 28.76% 50.00% 50.00% 50.00% 35.00%
Group's share 26.0 10.4 1.9 2.7 (0.5) 4.5
Goodwill 0.3 8.1 17.0 7.2 9.8 11.9
Carrying value licence right – 1.0 – – – –
Retained earnings attributable
tothe majority shareholders – – – – – (1.2)
Carrying amount of interest
inassociate/joint venture 26.3 19.5 18.9 9.9 9.3 15.2 6.5
105Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
21. Trade and other receivables
“Non-current trade and other receivables” comprises advances and deposits provided that are due in more than
12 months after the reporting date.
31/12/2020 31/12/2019
Non-current trade and other receivables 58.1 29.7
Effect of prepayment of GGR contribution 22.7 –
Receivables from VLT vendors 19.6 22.8
Receivables from agents 7.2 –
Loans provided 3.1 2.0
Advances for pension benefits 0.2 0.2
Other receivables 5.3 4.7
“Effect of prepayment of GGR contribution” represents present value of receivable from Greek Government in
relation to the 10-year license extension (see Note3.f iii.).
31/12/2020 31/12/2019
Current trade and other receivables 224.1 246.0
Receivables from agents 129.8 151.9
Prepaid expenses 25.4 14.1
Trade receivables 9.8 21.8
Loans provided 4.7 19.2
Receivables from VAT and other taxes 14.3 19.6
Receivables from VLT vendors 3.4 3.4
Other receivables 36.7 16.0
Current “Receivables from agents” are collected on a weekly basis in the Czech Republic and Austria or twice a
week in Greece and Cyprus. Agents must deposit cash, which can be set off against receivables from the agent,
to the Group’s bank accounts These deposits are recognised in “Guarantee deposits from lottery agents” (see
Note 28). The Group also uses direct debit to transfer money from agents’ bank accounts to the Group’s bank accounts.
Current “Prepaid expenses” mainly comprise prepayments made to football clubs for advertising and sponsorship
services. They also include prepaid consultancy fees and prepaid rent for storage facilities.
Current “Trade receivables” comprise mainly trade receivables related to non-gaming activities in the amount of
€5.0million (31 December 2019: €14.2 million).
The disclosures for expected credit losses of “Trade and other receivables” are presented in Note 33.a.
22. Other financial assets
31/12/2020 31/12/2019
Other non-current financial assets 199.6 8.9
Financial assets at fair value through profit or loss (FVTPL) 180.3 6.7
Financial assets at fair value through other comprehensive income (FVOCI) 11.9 –
Restricted cash 7.4 2.2
Non-current “Financial assets at fair value through profit or loss (FVTPL)” mainly represents CASAG’s investments
in externally managed funds of €169.1 million. The investments are categorised to Level 2 in the fair value hierarchy.
106 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
22. Other financial assets continued
31/12/2020 31/12/2019
Non-current financial assets at fair value through profit or loss (FVTPL) 180.3 6.7
Managed by Raiffeisen Capital Management 31.6 –
Managed by Erste Asset Management 30.4 –
Managed by Amundi, Fund 1 33.7 –
Managed by Amundi, Fund 2 20.2 –
Managed by Amundi, Fund 3 16.7 –
Managed by Bankhaus Schelhammer Schattera 36.1 –
Oher 11.6 6.7
Based on the provisions of a change of control clause, the Group reclassified its investment in Grand Casino Kursaal
Bern AG from the equity method investee to non-current “Financial assets at far value through other comprehensive
income (FVOCI)”. The investment is categorised as Level 3 in the fair value hierarchy.
Non-current “Restricted cash” represents deposits on bank accounts relating to the legal obligation for gaming
licences in Belgium and the Czech Republic.
31/12/2020 31/12/2019
Other current financial assets 43.3 19.2
Financial assets at fair value through profit or loss (FVTPL) 38.6 –
Fixed-term deposits (over 90 days) 4.6 10.0
Restricted cash 0.1 8.8
Receivables under a cash pooling agreement – 0.4
Current “Financial assets at fair value through profit or loss (FVTPL)” mainly represents deposits in money market
funds, of which €29.2 million are related to Austrian Lotteries’s participation in the game “EuroMillions”. The investments
are categorised to Level 2 in the fair value hierarchy.
Current “Restricted cash” represents interest which will be incurred and paid in the next 12 months on certain debt
facilities. The decrease in restricted cash was caused by the repayment of a bank loan at CAME Holding GmbH
and a bank loan at Italian Gaming Holding a.s. (see Note 26).
The disclosures for fair value hierarchy of “Other financial assets” are presented in Note 33.f.
23. Cash and cash equivalents
31/12/2020 31/12/2019
Cash and cash equivalents 872.2 763.7
Bank accounts 549.6 255.8
Fixed-term deposits 300.6 504.3
Cash in hand 22.0 3.6
As of 31 December 2020, the Group has bank accounts with a total balance of € nil million (31 December
2019: €59.2 million) pledged under various borrowing facilities (see Note 32).
107Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
24. Equity
Share capital
The Company’s share capital comprises 20 ordinary shares in certificated form with a nominal value of CZK 100
thousand per share. The share capital is fully paid up. No changes were made in the share capital during the years
ended 31 December 2020 or 31 December 2019.
No shares of the Group are held by the Group.
Capital contributions and other reserves
Capital contributions and other reserves represents distributable capital funds of the Company, other reserves
from revaluations of FVOCI assets and reserves from share of other comprehensive income of equity method investees.
25. Non-controlling interests
For period ended 31 December 2020
As of 31 December 2020, the Group held a 36.10% economic interest in OPAP, creating a 63.90% non-controlling
interest in the net assets of OPAP, plus additional individually immaterial non-controlling interests from OPAP’s
shareholdings in Hellenic Lotteries S.A. (NCI of 16.50%), Neurosoft S.A. (NCI of 32.28%) and Stoiximan (NCI of
15.51%).
Additionally, the Group recognised a 21.36% non-controlling interest share in the remaining net assets (excluding
OPAP) of SAZKA Delta, the holding structure through which the Group holds an indirect interest in OPAP.
For a detailed description of the ownership structure of OPAP and an overview of purchases of NCI see Note 2.3.
As of 31 December 2020, the Group held a 59.80% economic interest in CASAG and a 53.60% economic interest
in CASAG’s subsidiary Austrian Lotteries, creating a 40.20% non-controlling interest in the net assets of CASAG
and a 46.40% non-controlling interest in the net assets of Austrian Lotteries. The Group applies the look-through
approach to its NCI in Austrian Lotteries and consequently the table below presents a full NCI in the net assets of
Austrian Lotteries and separately the NCI in the remaining net assets of CASAG. For a detailed description of the
ownership structure of CASAG and Austrian Lotteries see Note 2.3.
Additionally, the Group recognised individually immaterial non-controlling interests from CASAG’s shareholding
in Casino Sopron Kft (NCI of 45%), CAI Hungary Kft (NCI of 45%) and CCB Congress Center Baden BetriebsgmbH
(NCI of 11%).
A reconciliation of non-controlling interest is presented in the tables below:
31/12/2020
Austrian
Lotteries
CASAG
subgroup
(excl.
Austrian
Lotteries)
OPAP
subgroup
SAZKA
Delta
Management
subgroup
(exl. OPAP) Total
Non-controlling interest percentage 46.40% 40.20% 63.90% 21.36%
Non-current assets 835.1 386.1 2,413.2 –
Current assets 170.1 235.6 629.1 5.7
Non-current liabilities (66.6) (461.6) (1,372.8) (186.4)
Current liabilities (375.4) (89.7) (365.7) (4.8)
Net assets 563.2 70.4 1,303.8 (185.5)
Subgroup's non-controlling interest 3.7 9.3 15.3 –
Net assets attributable to the Group 559.5 61.1 1,288.5 (185.5)
Non-controlling interest calculation 259.6 24.6 823.4 (39.6)
Subgroup's non-controlling interest entering consolidation 3.7 9.3 15.3 –
Carrying amount of non-controlling interest 263.3 33.9 838.7 (39.6) 1,096.3
108 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
25. Non-controlling interests continued
2020
Austrian
Lotteries
CASAG
subgroup
(excl.
Austrian
Lotteries)
OPAP
subgroup
SAZKA
Delta
(excl. OPAP) Total
Non-controlling interest percentage 46.40% 40.20% 63.90% 21.36%
Net gaming revenue (NGR) 202.3 72.1 73 7. 2 –
Profit/(loss) for the year 47.5 (55.9) 215.4 (8.4)
Other comprehensive income (2.9) (9.8) (0.3) 0.1
Total comprehensive income 44.6 (65.7) 215.1 (8.3)
Profit allocated to non-controlling interest 22.0 (22.5) 139.3
(2)
(2.0)
(2)
OCI allocated to non-controlling interest (1.3) (3.9) (0.3)
(2)
–
Share of profit of subgroup's non-controlling interest
entering consolidation – 0.9 (6.1) –
Share of other comprehensive income of subgroup's
non-controlling interest entering consolidation – – – –
Total comprehensive income attributable to non-
controlling interest 20.7 (25.5) 132.9 (2.0) 126.1
Net cash from operating activities 9.6 (56.2) 186.4 8.8
Cash flows used in investing activities 58.1 (11.2) (78.5) (24.2)
Net cash from financing activities (100.0) 47.6 (234.8) 10.9
Net inflow (+)/outflow (–) of cash and cash equivalents
for the year (32.3) (19.8) (126.9) (4.5) (183.5)
Dividends declared to NCI
(1)
16.7 – 248.3 – 265.0
1 Total dividend declared to non-controlling interest was €265.0 million including withholding tax, consisting of dividend paid to non-
controlling interest of €264.3 million (of which €226.6 million was paid in cash and €37.7 million was settled by issuance of new OPAP S.A.
shares) and unpaid dividend to non-controlling interest of €0.7 million.
2 Profit and OCI allocated to non-controlling interest do not mathematically agree to profit and OCI multiplied by non-controlling interest
percentage due to the changes of interest percentage during the year.
For period ended 31 December 2019
As of 31 December 2019, the Group held a 31.99% economic interest in OPAP, creating 68.01% non-controlling
interest in the net assets of OPAP, plus additional individually immaterial non-controlling interests from OPAP’s
shareholdings in Hellenic Lotteries S.A. (NCI of 16.50%), Neurosoft S.A. (NCI of 32.28%).
Additionally, the Group recognised a 24.52% NCI share of the remaining net assets (excluding OPAP) of SAZKA
Delta, the holding structure through which the Group holds an indirect interest in OPAP.
109Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
25. Non-controlling interests continued
A reconciliation of non-controlling interest is presented in the tables below:
31/12/2019
OPAP
subgroup
Sazka Delta
(excl. OPAP)
Other
(individually
immaterial) Total
Non-controlling interest percentage 68.01% 24.52%
Non-current assets 2,078.8 –
Current assets 876.5 10.2
Non-current liabilities (1,315.5) (6.7)
Current liabilities (330.6) (194.5)
Net assets 1,309.2 (191.0)
Subgroup's non-controlling interest 18.2 –
Other movements 9.0 –
Net assets attributable to the Group 1,300.0 (191.0)
Non-controlling interest calculation 884.2 (46.8)
Subgroup's non-controlling interest entering consolidation 18.2 –
Carrying amount of non-controlling interest 902.4 (46.8) 0.3 855.9
Continuing
operations
Discontinued
operations
2019
OPAP
subgroup
Sazka Delta
(excl. OPAP)
Croatioan
subgroup
Other
(individually
immaterial) Total
Non-controlling interest percentage 68.01% 24.52% 33.00%
Net gaming revenue 1,091.7 – 3 7.2
Profit / (loss) for the year 239.6 (1 7.0) 18.7
Other comprehensive income (1.1) – –
Total comprehensive income 238.5 (1 7.0) 18.7
Profit allocated to non-controlling interest 174.2
(2)
(4.5)
(2)
6.2 0.1
OCI allocated to non-controlling interest (0.9) – – –
Share of profit of subgroup's non-controlling interest
entering consolidation (0.3) – –
Share of other comprehensive income of subgroup's
non-controlling interest entering consolidation – – –
Total comprehensive income attributable
to non-controlling interest 173.0
(2)
(4.5)
(2)
6.2 0.1 174.8
Net cash from operating activities 279.3 (34.5) 18.2
Cash flows used in investing activities (49.0) 24.8 (0.2)
Net cash from financing activities 221.5 (0.5) (31.8)
Net inflow (+)/outflow (–) of cash and cash equivalents for
the year 451.8 (10.2) (13.8) 427.8
Dividends declared to NCI
(1)
(130.4) (24.7) (10.8) – (165.9)
1 Total dividend declared to non-controlling interest was €165.9 million including withholding tax, comprising dividend paid to non-
controlling interest of OPAP S.A. of €165.9 million, of which €140.1 million was paid in cash and €25.1 million was settled by issuance of new
OPAP S.A. shares.
2 Profit and OCI allocated to non-controlling interest do not mathematically agree to profit and OCI multiplied by non-controlling interest
percentage due to the changes of interest percentage during the year.
110 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
26. Loans and borrowings
31/12/2020 31/12/2019
Non-current loans and borrowings 2,533.3 2,252.5
Bank loans 1,321.7 1,532.2
Bonds 1,211.6 720.3
31/12/2020 31/12/2019
Current loans and borrowings 129.0 99.4
Current portion of long-term bank loans including accrued interest 99.3 83.3
Accrued interest on bonds 10.3 9.3
Short term bonds 18.6 –
Short term loans and borrowings 0.5 5.0
Overdrafts 0.3 1.8
The Group clarified the definition of bond loan and therefore has reclassified balances of €1,048.9 million from
“Bonds” to “Bank loans” and the amount of €5.1 million from “Accrued interest on bonds” to “Current portion of
long-term bank loans including accrued interest”.
Reconciliation of movements of short-term and long-term loans and borrowings to cash flows:
2020 2019
Balance at 1 January 2,351.9 1,766.9
Cash flows
Loans and borrowings received 1,424.9 1 ,0 8 7.2
Repayment of loans and borrowings (1,286.6) (423.8)
Interest for previous year paid* (10.8) (4.3)
Non-cash changes
Business combinations 184.1 –
Disposal of subsidiaries – (85.1)
Accrued unpaid interest 12.1 11.8
Non-cash settlement (0.9) (7. 9)
Effect of FX differences (12.4) 7.1
Balance at 31 December 2,662.3 2,351.9
* Included in “Interest paid” in “Net cash generated from operating activities”.
For the reconciliation of movements of “Lease liabilities” to cash flows see Note 27.
111Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
26. Loans and borrowings continued
Debt instruments
Borrower/Issuer
Note
Currency
Principal
amount in
millions
of EUR
31/12/2020 Maturity Interest rate/Coupon
Book value
31/12/2020
Book value
31/12/2019
Loans and borrowings 1,421.5 1,620.5
CAME Holding GmbH (b) EUR – 2020 EURIBOR + margin* – 96.6
Casinos Austria (Swiss) AG CHF 1.6 2024 FIXED 1.6 –
Casinos Austria (Swiss) AG CHF 0.5 2021 FIXED 0.5 –
Casinos Austria AG EUR 70.0 2026 EURIBOR + margin* 70.0 –
Casinos Austria AG EUR 62.9 2026 EURIBOR + margin* 62.2 –
Hellenic Lotteries S.A. EUR 50.0 2023 FIXED 50.2 49.7
Horse Races Single-Member S.A.
(formerly Horse Races S.A.) (j) EUR – 2020 EURIBOR + margin* – 5.1
Italian Gaming Holding a.s. (c) EUR – 2023 EURIBOR + margin* – 211.9
Neurosoft S.A. EUR 0.5 2025 EURIBOR + margin* 0.5 0.6
OPAP S.A. EUR 300.0 2024 EURIBOR + margin* 298.3 298.8
OPAP S.A. EUR 250.0 2023 FIXED 247.2 249.4
OPAP S.A. EUR 100.0 2024 FIXED 100.6 100.6
OPAP S.A. EUR 100.0 2023 EURIBOR + margin* 96.6 100.0
OPAP S.A. EUR 50.0 2022 EURIBOR + margin* 50.2 50.2
OPAP S.A. (d) EUR – 2022 FIXED – 200.1
SAZKA a.s. (l) CZK – 2024 PRIBOR + margin* – 109.9
SAZKA a.s. (l) CZK – 2025 PRIBOR + margin* – 147.6
SAZKA Group Financing
(Czech Republic) a.s. (k) EUR 450.0 2024 EURIBOR + margin* 443.6 –
Bonds 1,240.5 729.6
Casinos Austria International
Holding GmbH EUR 18.7 2021 4.75 % 18.6 –
OPAP S.A. (h) EUR 200.0 2027 2.10 % 1 97.1 –
SAZKA Group a.s. – CZK 6bn CZK 228.6 2024 5.20 % 228.4 235.0
SAZKA Group a.s. – EUR 300m** (a) EUR 300.0 2027 3.88 % 299.8 –
SAZKA Group a.s. – EUR 300m** EUR 300.0 2024 4.13 % 298.1 2 97.1
SAZKA Group Financing a.s.
– EUR 200m** EUR 200.0 2022 4.00 % 198.5 1 97.5
Other 0.3 1.8
Total 2,662.3 2,351.9
* Margin applicable to the outstanding loans and borrowings as of 31 December 2020 is in the range of 1.3 % – 4.6 % p.a.
** A portion of €449 million of issued bonds is used as a hedging instrument in the “Net investment hedge” (see Note 30).
(a) On 5 February 2020, the Company issued €300.0 million of senior notes.
(b) On 10 February 2020, CAME Holding GmbH fully repaid this loan.
(c) On 17 February 2020, Italian Gaming Holding a.s. fully repaid this loan.
(d) On 23 March 2020, OPAP S.A. fully repaid this loan.
(e) On 27 March 2020, OPAP S.A. drew a bank loan of €100.0 million, which was fully repaid on 2 October 2020.
(f) On 31 March 2020, OPAP S.A. issued a bank loan of €200.0 million. On 1 July 2020, €50.0 million was repaid
and the maturity date extended to 1 April 2021. The loan was fully repaid on 29 October 2020.
112 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
26. Loans and borrowings continued
(g) On 26 June 2020, CAME Holding GmbH drew a bank loan of €105.0 million. On 21 December 2020, the loan
was fully repaid.
(h) On 27 October 2020 OPAP S.A. issued a retail bond.
(i) On 3 November 2020, the Company drew a bank loan of €100.0 million. On 21 December 2020, the loan was
fully repaid.
(j) On 7 December 2020, Horse Races Single-Member S.A. (formerly Horse Races S.A.) fully repaid this loan.
(k) On 21 December 2020, SAZKA Group Financing (Czech Republic) a.s. drew a bank loan of €450.0 million.
(l) On 21 December 2020, SAZKA a.s. fully repaid this loan.
Bonds issued by the Group have certain financial conditions attached to them, including certain financial covenants
based on financial results of the Group or certain Group companies. During 2020 the Group fulfilled the covenants.
Collaterals and Pledges
The following bonds and borrowings are collateralized pari passu:
• Bonds issued on 12 December 2017 by SAZKA Group Financing a.s. in the amount of €200 million with maturity
on 8 December 2022;
• Bonds issued on 23 September 2019 by SAZKA Group a.s. in the amount of CZK 6,000 million (equivalent of
€228.6 million) with maturity on 23 September 2024;
•
Bonds issued on 15 November 2019 by SAZKA Group a.s. in the amount of €300 million with maturity on
15 November 2024;
•
Bonds issued on 5 February 2020 by SAZKA Group a.s. in the amount of €300 million with maturity on 15 February
2027; and
• Bank loans drawn on 16 December 2020 by SAZKA Group Financing (Czech Republic) a.s. in the amount of
€450 million (with additional capacity up to €640 million) with maturity on 31 July 2024.
The collateral is shared under the terms of an intercreditor agreement dated 16 December 2020. The following
assets owned directly or indirectly by the Company are pledged:
• Shares in companies: (i) SAZKA Czech a.s.; (ii) Italian Gaming Holding a.s.; (iii) Austrian Gaming Holding a.s.; (iv)
SAZKA Group Financing (Czech Republic) a.s.; (v) RUBIDIUM HOLDINGS LIMITED; (vi) SAZKA a.s.; (vii) CAME
Holding GmbH; (viii) Medial Beteiligungs GmbH; (ix) OPAP (shares held directly by SAZKA Group a.s.) (x)
LOTTOITALIA S.r.l.
• Receivables: (i) from the bank account of SAZKA Group a.s. to which dividends of subsidiaries are distributed;
(ii) Receivables from intragroup loans provided to SAZKA a.s., Italian Gaming Holding a.s. and CAME Holding
GmbH; (iii) Receivables of SAZKA Group Financing (Czech Republic) a.s. from an intragroup loan provided to
SAZKA Group a.s.
The collateral effectively (through ownership interests in consolidated entities) represents a majority of the Group’s
assets presented on the consolidated balance sheet.
Other securities and pledges terminated during 2020.
Medial Beteiligungs GmbH and LTB Beteiligungs shares pledged in relation to a bank loan of CAME Holding GmbH
which was fully repaid in December 2020. The related pledge agreement was also terminated in December 2020.
SAZKA a.s. shares pledged in relation to a loan to SAZKA a.s. which was fully repaid in December 2020. The related
pledge agreement was also terminated in December 2020.
LOTTOITALIA S.r.l. shares pledged and enterprise pledge in relation to a bank loan to Italian Gaming Holding a.s.
which was fully repaid in February 2020. The related pledge agreement was terminated in March 2020.
OPAP S.A. shares pledged in relation to a loan to SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta
Hellenic Holdings Limited) which was fully repaid in November 2019. The related pledge agreement was terminated
in March 2020.
113Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
26. Loans and borrowings continued
Medial Beteiligungs GmbH shares pledged in relation to a bank loan to CAME Holding GmbH which was fully repaid
in February 2020. The related pledge agreement was also terminated in February 2020.
27. Leases
This Note provides information for leases where the Group is lessee. For the amounts recognised as a right-of use
asset see Note 19.
31/12/2020 31/12/2019
Lease liability balance as of 1 January 68.2 77.2
Business combinations 93.9 –
Disposal of subsidiaries – ( 7.7 )
Payment of lease liabilities (13.8) (9.1)
New lease contracts and contract modifications (4.2) 7. 8
Effect of currency translation (0.4) –
Lease liability balance as of 31 December 143.7 68.2
Interest expense from leases (see Note 15) (3.5) (2.5)
Expense relating to short-term leases (1.1) (0.4)
Expense relating to leases of low value assets (1.6) (0.8)
Expense relating to variable lease payments (2.2) (1.0)
Total expenses relating to leases not recognised as
Right of use assets according to practical expedients (4.9) (2.2)
“Total expenses relating to leases not recognised as Right of use assets according to practical expedients” are
presented as part of Materials, consumables and services as “Expense relating to leases” see Note 10.
For the reconciliation of movements of “Loans and borrowings” to cash flows see Note 26.
Material leases
The Group’s leases primarily relate to gaming halls, casinos and office space.
Lease payments for the Group’s Austrian casinos are in general adjusted according to the consumer price index.
The net book value of lease liability of Austrian casinos is €25.8 million.
Lease payments for the Group’s Austrian gaming halls are in general fixed. The net book value of lease liability of
Austrian gaming halls is €8.0 million.
Lease payments for the Group’s Greece and Cyprus gaming halls are adjusted according to the consumer price
index. The vast majority of the leasing contracts are of three years’ duration and give to the Group the exclusive
right to extend the terms up to nine years. Management assessed that renewal option will be exercised. The net
book value of the Group’s Greece and Cyprus gaming halls is €22.7 million (31 December 2019: €29.7 million).
The Group leases Markopoulo Park where the headquarters of the Group’s subsidiary Horse Races Single-Member
S.A. (formerly Horse Races S.A.) are located and where all the Greek horse racing activities of the latter take place.
The duration of the lease is twenty years, expiring in 2036. The lease payments are fixed. The net book value of
Markopoulo Park is €13.8 million (31 December 2019: €29.6 million).
Leases not yet commenced to which the lessee is committed
The Company is committed to leasing of an office space in the Czech Republic for a period of seven years starting
during the year of 2021. Commencement date of the lease is not yet determined and the office space is not yet
available for use. The present value of future committed non-cancellable lease payments is estimated to be
€25.4 million.
114 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
27. Leases continued
Future variable lease payments
Certain leases are adjusted for variable lease payments that do not depend on an index or a rate. These variable
lease payments are not included as a part of the lease liability at the lease commencement date. Variable lease
payments are included in profit or loss when the event or condition that triggers the variability occurs.
Estimated future variable lease payments related to leases of gaming machines and gaming halls are €37.7 million
over the respective lease periods.
Income from leases
The Group leases out certain non-residential premises and movable assets. In 2020 the Group recognised income
from leases of €4.3 million (2019: €4.5 million); see Note 9.
2020 2019
Income from leases in future periods 10.5 8.9
Within one year 3.6 4.6
From one to five years 6.9 4.3
28. Trade and other payables
31/12/2020 31/12/2019
Non-current trade and other payables 134.4 12.2
Contingent consideration for the purchase of interest in Stoiximan (see Note 5.b) 95.9 –
Deferred purchase price for intangible assets 15.6 –
Liabilities arising from unpaid winnings 15.3 2.2
Deferred consideration for the purchase of interest in OPAP S.A. 4.6 6.7
Deferred revenue 2.1 –
Obligation to purchase IGT Czech Republic LLC – 2.1
Other payables 0.9 1.2
Non-current “Liabilities arising from unpaid winnings“ represents winnings from certain games which are paid out
over an extended period.
“Deferred purchase price for intangible assets” represents a licence to operate gaming software in the Czech Republic.
31/12/2020
31/12/2019
(Reclassified)
Current trade and other payables 745.2 360.7
Liabilities arising from unpaid winnings 241.3 121.0
Gaming tax liabilities 118.8 80.9
Trade payables to suppliers 102.8 73.2
Gaming tax liabilities – minimum contribution of Hellenic Lotteries S.A. 37.7 –
Contingent consideration for the purchase of interest in Stoiximan (see Note 5.b) 32.4 –
Guarantee deposits from lottery agents 26.4 14.7
Payables to state (social and health insurance liabilities, other taxes) 27.9 16.2
Purchase price for additional interest in CASAG (Note 5.a) 24.3 –
Vouchers 21.4 –
Players deposit 29.0 5.5
Prepaid stakes 18.4 13.9
Contingent consideration for the purchase of interest in CASAG (Note 5.a) 3.4 –
Deferred consideration for the purchase of interest in OPAP S.A. 3.0 3.0
Contract liabilities 2.2 1.1
Deferred purchase price for intangible assets 1.2 –
Other payables 55.0 31.2
115Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
28. Trade and other payables continued
The Group reclassified “Payables to employees” which were previously presented in “Current trade and other
payables” to “Current employee benefit liabilities” (see Note 1.g ii., Note 31).
“Gaming tax liabilities” are due when cash for stakes is accepted. Gaming tax is calculated as the tax base multiplied
by a rate, which varies based on the type of game and country by country. The tax base is the difference between
“Amount staked” and prizes paid.
“Gaming tax liabilities – minimum contribution of Hellenic Lotteries S.A.” represents the contractual liability from
the difference between the gaming taxes paid on applicable GGR and the minimum annual amount of €50 million,
required according to Hellenic Lotteries S.A.’s concession agreement. The Group has not paid this amount on the
basis that restrictions imposed due to COVID-19 which impacted actual GGR generation constitute force majeure
(see Note 36).
CASAG sells vouchers for food and beverages. “Vouchers” presents the value of unredeemed vouchers.
As of 31 December 2020 and 31 December 2019 “Trade and other payables” were not secured.
29. Provisions
Non-current provisions Note
Litigation
provision
Restructuring
provision
Other
provisions Total
Balance at 01/01/2019 26.6 – 5.1 31.7
Additions 2.5 – – 2.5
Utilisation (2.5) – (4.6) (7. 1)
Release (18.5) – (0.1) (18.6)
Balance at 31/12/2019 8.1 – 0.4 8.5
Balance at 01/01/2020 8.1 – 0.4 8.5
Business combination 5 – 25.8 0.5 26.3
Additions 6.0 24.1 0.2 30.3
Utilisation (3.7) (1.2) – (4.9)
Release (0.6) – – (0.6)
Balance at 31/12/2020 9.8 48.7 1.1 59.6
Current provisions Note
Litigation
provision
Restructuring
provision
Provision for
jackpots and
scratch cards
Other
provisions Total
Balance at 01/01/2019 – – 8.7 3.9 12.6
Additions – – 8.1 – 8.1
Utilisation – – (8.8) (3.1) (11.9)
Release – – – (0.8) (0.8)
Effect of currency translation – – 0.2 – 0.2
Balance at 31/12/2019 – – 8.2 – 8.2
Balance at 01/01/2020 – – 8.2 – 8.2
Business combination 5 3.3 7.8 – 11.3 22.4
Additions 1.4 33.7 10.4 0.7 46.2
Utilisation (0.1) (10.6) ( 7.8) (1.3) (19.8)
Release – ( 7. 2) – (4.5) (11.7)
Effect of currency translation – – (0.2) – (0.2)
Balance at 31/12/2020 4.6 23.7 10.6 6.2 45.1
116 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
29. Provisions continued
“Restructuring provisions” comprises employee termination provision in CASAG. Following the restructuring plan
of €53.9 million announced in July 2020 and subsequent negotiations with the workers’ union, the restructuring
takes the form of enhancement to existing termination provisions as well as the introduction of new provisions,
especially stand-by-duty and part-time programmes. Following the agreement with the workers’ union and
allocation of employees to individual termination plans, the estimated costs of the restructuring plan in present
value terms was revised to €50.6 million as of 31 December 2020 (see Note 14). Together with existing provisions,
the current portion of the restructuring provisions relates primarily to golden handshake type agreements and is
expected to be realised early during the year 2021, while the non-current portion of the provision is related to
part-time and stand-by-duty agreements, which will be settled over time.
“Litigation provision” includes a €5.5 million provision related to a former agent’s claim against OPAP (see Note
32). The remaining portion comprises provisions for other individually immaterial litigations and related legal fees.
30. Derivatives and hedging
Currency and interest rate derivatives are used only for economic hedging purposes. When hedge accounting
requirements are fulfilled, derivatives are designated and recognised as “Hedging derivatives” (see Note 3.m iv.).
The following table shows the carrying amounts of derivative financial instruments:
Carrying amount at
31/12/2020
Carrying amount at
31/12/2019
Hedging
derivatives
Other
derivatives
Hedging
derivatives
Other
derivatives
Receivables relating to derivative instruments 7.9 – 4.7 8.3
Non-current receivables – – 1.2 8.3
Current receivables 7.9 – 3.5 –
Liabilities relating to derivative instruments 2.7 1.1 2.7 1.0
Non-current liabilities 2.7 – 2.7 1.0
Current liabilities – 1.1 – –
All financial derivatives at fair value as of 31 December 2020 and 31 December 2019 were categorised to Level 2
in the fair value hierarchy. For valuation techniques see Note 33.f.
Hedging derivatives
The Group held the following hedging derivatives:
Hedging derivatives Due date Direction Fixed rate
Notional
value as of
31/12/2020
Average
fixed rate
asof
31/12/2020
Fair value
asof
31/12/2020
Interest rate swaps 2023 – 3M EURIBOR 100.0 0.365 (2.7)
CZK/EUR forward and swaps* 2021 Sell EUR – n/m 2 7.16 7. 8
CZK/EUR forward and swaps* 2021 Buy EUR – n/m 26.16 0.1
Total hedging derivatives – 5.2
* FX forwards represent hedging instruments under a net investment hedge.
117Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
30. Derivatives and hedging continued
Hedging derivatives Due date Fixed rate
Notional
value as
of 31/12/2019
Average
fixed rate as
of 31/12/2019
Fair value as
of 31/12/2019
Interest rate swaps 2020 3M PRIBOR 17.7 0.310 0.3
Interest rate swaps 2024 3M PRIBOR 91.5 1.729 0.9
Interest rate swaps 2024 3M PRIBOR 22.9 2.215 (0.1)
Interest rate swaps 2025 3M PRIBOR 122.0 1.894 0.3
Interest rate swaps 2025 3M PRIBOR 5.9 2.512 (0.1)
Interest rate swaps 2023 3M EURIBOR 100.0 0.365 (2.5)
CZK/EUR forward and swaps* 2020 – n/m 26.214 3.2
Total hedging derivatives – 2.0
* FX forwards represent hedging instruments under a net investment hedge.
Interest rate risk – cash flow hedge
The Group uses interest rate derivatives (“IRS”) to mitigate the risk of fluctuating interest rates. Hedged items are
the future cash flows relate to interest payments under loan agreements, in which interest payments are based on
floating rates (EURIBOR, PRIBOR). IRS are used to swapping these variable rates for fixed rates. Hedge accounting
criteria were fulfilled as of 31 December 2020 and 2019, and such derivatives are recognised as “Hedging derivatives”
and the changes in the fair value for such derivatives are recognised directly in the Consolidated other comprehensive
income. The Group hedged interest payments on “Loans and borrowings” in principal amount as of 31 December
2020 of €100.0 million (31 December 2019: €571.1 million). The Group applies a Dollar offset method to measure
the effectiveness of the hedge relationship. The Group did not recognize any hedge ineffectiveness arising from
these IRS cash flow hedges in the profit or loss
Net investment hedge of foreign operation
The Group uses both non-derivative financial liabilities and derivative instruments to hedge foreign currency risks
resulting from net investments in foreign subsidiaries, provided that the other financial liabilities meet the same
requirements as a hedging derivative.
From 5 February 2020 the non-derivative financial liability designated as the hedging instrument under the net
investment hedge was changed from a bank loan of Italian Gaming Holding a.s. that was repaid on 17 February to
a portion of Eurobond issued by the Company with the maturity in 2027 (see Note 26). As of 31 December 2020
and 2019, non-derivative financial liability designated as a net investment hedge was a Eurobond issued by the
Company with the maturity in 2024 and portion of bond issued by the SAZKA Group Financing a.s. with maturity
2022 (see Note 26).Hedge effectiveness is determined at the inception of the hedge relationship, and through
periodic prospective effectiveness assessments to ensure that the economic relationship exists between the
hedged item and the hedging instrument.
During 2020 and 2019 the Group also entered into currency forwards that have similar critical terms as the hedged
item, such as currency or notional amount, to hedge foreign currency risks resulting from net investments.
The hedging relationship was 100% effective.
The Group did not recognise any hedge ineffectiveness from net investment hedges in the profit or loss in 2020
or 2019. The gain or loss on the hedging instrument that is determined to be an effective hedge of the net investment
is recognised in Other comprehensive income and is included in “Hedging reserve”.
118 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
30. Derivatives and hedging continued
The effect of hedge accounting recognised in profit or loss and Other comprehensive income during the period
was as follows:
Cash flow hedges for 31 December 2020
Change
recognised
in OCI
Change
reclassified
from OCI to
profit or loss
Change in
the Hedging
reserve
Cash flow hedging reserve, net of tax (20.2) 1.2 (19.0)
attributable to owners of the Company (20.1)* 1.2 (18.9)
attributable to non-controlling interest (0.1) – (0.1)
* of which revaluation of hedging instruments under the “Net investment hedge” in relation to foreign operations of €(13.9) million.
“Translation of foreign operations into the Group’s presentation currency” in Other comprehensive income includes translation gains in
relation to these foreign operations, of €19.6 million during the period.
Cash flow hedges for 31 December 2019
Change
recognised
in OCI
Change
reclassified
from OCI to
profit or loss
Change in
the Hedging
reserve
Cash flow hedging reserve, net of tax 9.9 (3.6) 6.3
attributable to owners of the Company 10.6* (3.6) 7.0
attributable to non-controlling interest (0.7) – (0.7)
* of which revaluation of hedging instruments under the “Net investment hedge” in relation to foreign operations of €6.1 million. “Translation
of foreign operations into the Group’s presentation currency” in Other comprehensive income includes translation gains in relation to these
foreign operations, in the amount of €6.3 million during the period.
Effects of cash flow hedges are recognised in consolidated other comprehensive income under “Remeasurement
of hedging derivatives”. “Net change in fair value of cash flow hedges transferred to profit or loss (net of tax)” for
2020 and 2019 includes reduction of IRS due to loan amortisation and payment of interest on loans. The impact
in profit or loss is presented as “Interest expense”.
Other derivatives (derivatives that do not qualify for hedge accounting)
The Group held the following other derivatives:
Other derivatives Due date
Notional
value asaf
31/12/2020
Fair
valueasof
31/12/2020
Notional
value asof
31/12/2019
Fair
value as of
31/12/2019
IR swaps 2021 108.0 (1.1) – –
FX swaps – – – n/m (0.1)
FX swaps – – – n/m (0.9)
Total other financial derivatives 108.0 (1.1) – (1.0)
The gain from revaluation in amount of €1.1 million (2019: €0.1 million) was recognised in Other finance expense.
The Group used IRS as of 31 December 2020 to mitigate the risk of interest rates. Although the IRS economically
offset the interest rate risk, hedge accounting criteria were not fulfilled as of 31 December 2020 for this derivative,
apart from derivatives designated as hedging instruments above. Consequently, such derivative was recognised
as “Other derivatives” and classified as financial instruments at fair value through profit or loss.
The Group used currency derivatives as of 31 December 2019 to mitigate currency risk. Although the currency
derivatives economically offset the currency risk, hedge accounting criteria were not fulfilled as of 31 December
2019 for these derivatives, apart from derivatives designated as hedging instruments under net investment hedges
(see section above). Consequently, such currency derivatives were recognised as “Other derivatives” and classified
as financial instruments at fair value through profit or loss.
119Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
31. Employee benefit liabilities
31/12/2020 31/12/2019
Non-current employee benefit liabilities 127.4 3.0
Post-employment benefit 119.1 3.0
Defined benefit plan 119.1 3.0
Bonuses 8.3 –
31/12/2020
31/12/2019
(Reclassified)
Current employee benefit liabilities 36.9 18.0
Bonuses 22.3 16.2
Other employee benefit liabilities 14.6 1.8
The Group reclassified “Payables to employees” which were previously presented in “Current trade and other
payables” to “Current employee benefit liabilities” (see Note 1.g ii.).
The increase in “Non-current employee benefit liabilities” relates mainly to the consolidation of CASAG (see Note
2.3 and Note 5.a).
Post-employment benefit
“Post-employment benefits” relate to CASAG and OPAP. Employees of CASAG born prior to 1 January 1945 and
existing and former Management Board members are eligible to participate in a defined benefit plan, and other
employees are entitled to participate in a defined contribution plan. OPAP employees are eligible to participate in
a defined benefit plan.
Defined contribution plan
Under Austrian labour law, the employer contributes 1.53% of the gross wage or salary each month to an employee
compensation fund. This fund represents a “Defined contribution plan” in accordance with IAS 19, and the related
employer contributions are reported under “Retirement benefit expenses – defined contribution plan” see Note 12.
The Group is also subject to mandatory contributions to state pension plans, specific conditions are determined
by the relevant jurisdictions (see Note 12).
Defined Benefit Plan
Under Greek and Austrian labour law, employees are entitled to severance payments in the event of retirement or
termination by the employer with the amount of payment varying in relation to the employee’s compensation and
length of service. The liability arising from the obligation is valued by an independent firm of actuaries. The last
actuarial valuations of the OPAP and CASAG defined benefit plans were undertaken in December 2020. As of
31 December 2020, vast majority of defined benefit plan liability relates to CASAG. The maturity of defined benefit
plan obligations coincides with the expected date of retirement of individual employees.
In Austria there are two types of “Defined benefit plan” obligations. Pensions are presented on a net basis (present
value of obligation is netted with fair value of plan asset out of which the obligation is to be settled directly) and
severance payments are presented on a gross basis.
120 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
31. Employee benefit liabilities continued
The following tables summarizes the Group’s defined benefit severance plans:
Note 2020 2019
Opening balance as of 1 January 3.0 2.5
Current service costs 0.9 0.5
Past service cost 5.1 –
Interest costs 0.3 –
Settlement cost (result) 1.0 4.2
Total cost recognised in Consolidated statement of profit or loss 7.3 4.7
Actuarial (gain)/loss arising from demographic assumptions 0.2 –
Actuarial (gain)/loss arising from financial assumptions 2.8 0.1
Actuarial (gain)/loss arising from experience adjustment – 0.1
Total actuarial (gain)/loss recognised in Other comprehensive income 3.0 0.2
Business combination 5 73.6 –
Payments (15.3) (4.4)
Closing balance as of 31 December 71.6 3.0
The following table summarizes the Group’s defined benefit pension plans:
Note
Present
value of
obligation
Fair value of
plan assets Total
Opening balance as of 1 January 2020 – – –
Current service costs 0.9 – 0.9
Interest costs 0.6 (0.3) 0.3
Total cost recognised in Consolidated statement of profit or loss 1.5 (0.3) 1.2
Actuarial (gain)/loss arising from financial assumptions 5.9 1.1 7.0
Actuarial (gain)/loss arising from experience adjustment 1.0 (1.5) (0.5)
Total actuarial (gain)/loss recognised in Other comprehensive income 6.9 (0.4) 6.5
Business combination 5 88.5 (4 8.5) 40.0
FX differences (0.1) – (0.1)
Contributions 1.5 (1.8) (0.3)
Payments (1.5) 1.7 0.2
Closing balance as of 31 December 2020 96.8 (49.3) 47.5
Fair value of plan assets:
Equity instruments 15.1
Bonds 23.8
Cash 1.9
Other assets 8.5
Fair value of plan assets 49.3
The principal actuarial assumptions used in the actuarial valuation as of 31 December 2020 and 31 December 2019
are the following:
Actuarial assumptions used: 31/12/2020 31/12/2020 31/12/2019
Austria
Greece and
Cyprus
Greece and
Cyprus
Discount rate 0.96% 0.60% 1.15%
Rate of increase in salaries 2.64% 1.50% 2.00%
Average service in the company 11.7 24.9 25.8
Inflation rate 2.00% 1.50% 1.50%
121Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
31. Employee benefit liabilities continued
The following table shows the change in actuarial liability of the Group if the discount rate was 0.5% higher or
lower (with no other change in input assumptions); or, if the expected rate of salary increase was 0.5% higher or
lower (with no other change in input assumptions)
Sensitivity analysis
Increase in
discount rate
by 0.5%
Decrease in
discount rate
by 0.5%
Increase of
expected
wages
by0.5%
Decrease of
expected
wages
by0.5%
Actuarial liability 107.5 131.3 131.0 108.9
Percentage change (9.75%) 10.23% 9.97% (8.64%)
Non-current bonuses
A number of employees in CASAG are entitled to “Long-service bonuses” when they reach a specified number of
years of employment with the company. Non-current employee benefit liability is recognised for these obligations
in the amount of €6.3 million.
Executive Members of the Board of Directors of OPAP S.A. and other key management personnel are entitled to
amounts when certain targets are fulfilled. A new programme was launched in 2020 while previous programme
was terminated and paid in July 2020. Non-current employee benefit liability is recognised of €1.2 million (31 December
2019: €3.6 million as a current bonus).
Current bonuses
Represents annual bonuses liabilities.
32. Contingencies
Legal matters
OPAP
Third party lawsuits against OPAP have been filed for total claims of €363.1 million (31 December 2019: €366.7 million).
The majority of these claims relate to old distribution agent arrangements, in relation to which all recent court
decisions have been in favour of OPAP. The management considers any negative outcome as highly unlikely
consequently no provision is recognised in connection with these claims.
In early March 2021, an Athens court of Appeal awarded compensation for loss of profit in favour of a former agent
of approximately €3.0 million plus interest from June 2006 to December 2011, for a total of approximately €6.0 million.
This is the second decision of the appellate court in the matter after the Supreme Court annulled in 2020 the first
decision from 2017, which awarded compensation of €9.0 million plus interest. The decision is not final and OPAP
S.A. will again proceed to the Supreme Court for the annulment of the decision. As of 31 December 2020, the
management recorded a provision for the respective amount based on the current court’s decision (see Note 29).
The same former agent also sought compensation for (i) the loss of profit incurred from 2012 to 2016 of €11.1 million
and an alternative claim of approximately €3.3 million and (ii) compound interest in an amount of €4.2 million,
against OPAP S.A. These proceedings have been placed on hold until the final resolution of the proceeding
described above. The management believes that negative outcome is unlikely and have not recorded any provision
for the claim.
CASAG
Casinos Austria are target to 15 pending lawsuits initiated by 27 claimants in connection with reductions made to
employee pension plans. Pension plans of CASAG include defined contribution plans and defined benefit plans,
see Note 31. For the claims in connection with defined contribution plans the management assess that negative
outcome is highly unlikely and does not recorded any provision in this respect. For the claims in connection with
defined benefit plans the management considers the outcome uncertain and reflects this uncertainty in the
valuation of the defined benefit liability (as a result of which a positive outcome in these cases would result in a
net gain for the Group).
122 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
31. Contingencies continued
Securities and pledges
Pledged assets for loans received 31/12/2020 31/12/2019
Tangible and intangible fixed assets – 97.0
Bank accounts – 59.2
The largest portion of pledged tangible and intangible assets represented trademarks with carrying value of € nil
million (31 December 2019: €73.7 million).
SAZKA a.s. assets pledged in relation to its bank loan were fully repaid on 21 December 2020. The related pledge
agreement was terminated in December 2020.
Pledged shares are described in Note 26.
33. Risk management
This section describes the financial and operational risks the Group is exposed to and its risk management methods.
The key financial risks the Group faces comprise credit risk, liquidity risk and currency risk. Since the Group has
third party financial indebtedness, interest rate risk exposure may also be deemed significant.
(a) Credit risk
i. Credit risk exposure
Credit risk represents the risk of loss that the Group companies would incur if a trading counterparty or business
customer is unable to fulfil its obligation resulting from payment obligations, obligation to off-take a service at a
certain price or non-delivery of a contracted service.
The Group‘s bank accounts are predominantly with international financial institutions. The Group has procedures
for assessment of credit risk which are applied to all customers to whom sales are made on credit terms. In addition,
the balances of receivables are continuously monitored on an individual and an aggregated level.
The Group is exposed to credit risk primarily as a result of its operating (in relation to its trade receivables) and
financing activities (including in relation to deposits with banks and financial institutions, loans provided to third
parties and other financial instruments).
The maximum credit risk exposure regarding financial assets is their carrying amount (if the counterparties fail to
meet all their contractual obligations and, at the same time, any guarantees and pledges provided are found to
be worthless).
One of the key measures to mitigate credit risk in ordinary business activities is deposits received from agents see
Note 28. Receivables from agents are monitored by management on the regular basis. The Group also monitors
the credit rating of the banks and financial institutions with which it transacts.
The maximum exposure to credit risks at the reporting date by type of counterparty and geographical region is
provided in the tables below.
Credit risk by type of counterparty
At 31 December 2020
Companies
(non-
financial
institutions)
State,
government
Financial
institutions Individuals Total
Assets
Non-current trade and other receivables 8.4 0.3 – 4.2 12.9
Other non-current financial assets – – 7.4 – 7.4
Current trade and other receivables 136.3 1.6 2.3 37.5 177.7
Other current financial assets – – 4.7 – 4.7
Cash and cash equivalents – – 872.2 – 872.2
Total 144.7 1.9 886.6 41.7 1,074.9
123Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
33. Risk management continued
At 31 December 2019
Companies
(non-
financial
institutions)
State,
government
Financial
institutions Individuals Total
Assets
Non-current trade and other receivables 4.4 – 0.1 2.2 6.7
Other non-current financial assets – – 2.2 – 2.2
Current trade and other receivables 93.2 8.7 1.9 105.2 209.0
Other current financial assets 0.4 – 18.8 – 19.2
Cash and cash equivalents 0.2 – 763.5 – 763.7
Total 98.2 8.7 786.5 107.4 1,000.8
ii. Credit risk by region
Trade and other receivables, Other financial assets and Cash and cash equivalents 31/12/2020 31/12/2019
Greece 503.2 767. 8
Austria 282.8 7.4
Czech Republic 157.8 148.5
Cyprus 47.0 43.2
Germany 29.3 –
Liechtenstein 12.8 –
Switzerland 8.0 16.8
Malta – 16.3
Australia 7.6 –
Hungary 5.5 –
United Kingdom 5.0 0.2
Other countries 15.9 0.6
Total 1,074.9 1,000.8
124 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
33. Risk management continued
iii. Ageing structure of financial assets
At 31 December 2020 Current
Past due
0-90 days
Past due
91-180 days
Past due
181-365 days
More than
one year
ECL
allowance Total
Non-current trade and
otherreceivables 14.1 – – – – (1.2) 12.9
Receivables from agents 8.4 – – – – (1.2) 7. 2
Loans provided 3.1 – – – – – 3.1
Other receivables 2.6 – – – – – 2.6
Current trade and
otherreceivables 167.1 10.2 1.1 1.7 47.6 (50.0) 177.7
Receivables from agents 122.9 8.7 0.4 1.1 40.9 (44.2) 129.8
Trade receivables 7.2 1.3 0.5 0.3 2.1 (1.6) 9.8
Loans provided 4.8 – – – – (0.1) 4.7
Other receivables 32.2 0.2 0.2 0.3 4.6 (4.1) 33.4
Cash and cash equivalents 872.2 – – – – – 872.2
Cash in hand 22.0 – – – – – 22.0
Bank accounts 549.6 – – – – – 549.6
Term deposits 300.6 – – – – – 300.6
Total 1,053.4 10.2 1.1 1.7 47.6 (51.2) 1,062.8
Non-current restricted cash 7.4 – – – – – 7.4
Current restricted cash 0.1 – – – – – 0.1
Term deposits (over 90 days) 4.6 – – – – – 4.6
125Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
33. Risk management continued
At 31 December 2019 Current
Past due
0-90 days
Past due
91-180 days
Past due
181-365 days
More than
one year
ECL
allowance Total
Non-current trade and
otherreceivables 6.7 – – – – – 6.7
Loans provided 2.0 – – – – – 2.0
Other receivables 4.7 – – – – – 4.7
Current trade and
otherreceivables 200.7 4.4 2.6 0.6 43.9 (43.2) 209.0
Receivables from agents 148.4 3.1 2.3 0.1 37.7 (39.7) 151.9
Trade receivables 20.6 1.2 0.2 0.2 0.8 (1.2) 21.8
Loans provided 19.3 – – – – (0.1) 19.2
Other receivables 12.4 0.1 0.1 0.3 5.4 (2.2) 16.1
Cash and cash equivalents 763.7 – – – – – 763.7
Cash in hand 3.6 – – – – – 3.6
Bank accounts 255.8 – – – – – 255.8
Term deposits 504.3 – – – – – 504.3
Total 971.1 4.4 2.6 0.6 43.9 (43.2) 979.4
Non-current restricted cash 2.2 – – – – – 2.2
Current restricted cash 8.8 – – – – – 8.8
Term deposits (over 90 days) 10.0 – – – – – 10.0
Cash pooling 0.4 – – – – – 0.4
126 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
33. Risk management continued
iv. Credit quality of financial assets at amortised cost
The Group classifies financial assets into credit quality classes. Class 1 comprise high-quality financial assets that
do not have any indicators of impairment and comprise bank accounts in banks, term deposits and cash in hand.
Class 2 comprises all other financial assets.
The Group monitors the risk on these assets with reference to internal and external credit ratings of the banks and
evaluates that related ECL is immaterial to the Group.
At 31 December 2020 Stage 1 Stage 2 Stage 3
Provision
matrix
ECL
allowance
Net
carrying
amount
Class 1
Cash and cash equivalents 872.2 – – – – 872.2
Bank accounts in banks 22.0 – – – – 22.0
Term deposits in banks 300.6 – – – – 300.6
Cash in hand 549.6 – – – – 549.6
Other current financial assets 4.7 – – – – 4.7
Restricted cash 0.1 – – – – 0.1
Term deposits (over 90 days) 4.6 – – – – 4.6
Non-current restricted cash 7.4 – – – – 7.4
Class 2
Current trade and other receivables 4.8 – – 222.9 (50.0) 177.7
Receivables from agents – – – 174.0 (44.2) 129.8
Trade receivables – – – 11.4 (1.6) 9.8
Loans provided 4.8 – – – (0.1) 4.7
Other receivables – – – 37.5 (4.1) 33.4
Non-current trade and other receivables 14.1 – – – (1.2) 12.9
Receivables from agents 8.4 – – – (1.2) 7.2
Loans provided 3.1 – – – – 3.1
Other receivables 2.6 – – – – 2.6
Total 903.2 – – 222.9 (51.2) 1,074.9
127Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
33. Risk management continued
At 31 December 2019 Stage 1 Stage 2 Stage 3
Provision
matrix
ECL
allowance
Net
carrying
amount
Class 1
Cash and cash equivalents 763.7 – – – – 763.7
Bank accounts in banks 255.8 – – – – 255.8
Term deposits in banks 504.3 – – – – 504.3
Cash in hand 3.6 – – – – 3.6
Other current financial assets 19.2 – – – – 19.2
Restricted cash 12.1 – – – – 12.1
Term deposits (over 90 days) 6.7 – – – – 6.7
Cash pooling 0.4 – – – – 0.4
Non-current restricted cash 2.2 – – – – 2.2
Class 2
Current trade and other receivables 19.3 – – 232.9 (43.2) 209.0
Receivables from agents – – – 191.6 (39.7) 151.9
Trade receivables – – – 23.0 (1.2) 21.8
Loans provided 19.3 – – – (0.1) 19.2
Other receivables – – – 18.3 (2.2) 16.1
Non-current trade and other receivables 6.7 – – – – 6.7
Loans provided 2.0 – – – – 2.0
Other receivables 4.7 – – – – 4.7
Total 811.1 – – 232.9 (43.2) 1,000.8
Movements of ECL allowances were as follows:
At 31 December 2020 Stage 1 Stage 2 Stage 3
Provision
matrix Total
Balance at 1 January 2019 (0.1) – – (38.6) (38.7)
Additions – increase in allowance recognised
in profit or loss during the year (0.1) – – (4.7) (4.8)
Effect of currency translation 0.1 – – 0.2 0.3
Balance at 31 December 2019 (0.1) – – (43.1) (43.2)
Business combination – – – (0.8) (0.8)
Additions – increase in allowance recognised
in profit or loss during the year (1.2) – – (6.5) (7.7)
Reversals – decrease in allowance recognised
in profit or loss during the year – – – 0.2 0.2
Write-offs – receivables written off during the
year as uncollectible – – – 0.3 0.3
Balance at 31 December 2020 (1.3) – – (49.9) (51.2)
During 2020, the ECL allowance determined through the provision matrix increased despite a decrease in current
financial assets, due to the effect of deteriorating credit conditions of suppliers caused by the COVID-19 pandemic.
The ECL allowance determined via the Stage model increased due to the effect of the newly recognised non-
current receivables against agents.
128 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
33. Risk management continued
Impairment matrix for current trade and other receivables as of 31 December 2020:
Gross
carrying
amount
Expected
credit
lossrate
ECL
allowance
Net
carrying
amount
Due 162.3 0.00% – 162.3
Receivables from agents 122.9 – – 122.9
Trade receivables 7.2 – – 7.2
Other receivables 32.2 – – 32.2
Past due < 90 days 10.2 18.63% (1.9) 8.3
Receivables from agents 8.7 20.69% (1.8) 6.9
Trade receivables 1.3 7.69% (0.1) 1.2
Other receivables 0.2 – – 0.2
Past due 91-180 days 1.1 45.45% (0.5) 0.6
Receivables from agents 0.4 100.00% (0.4) –
Trade receivables 0.5 20.00% (0.1) 0.4
Other receivables 0.2 – – 0.2
Past due 181-365 days 1.7 76.47% (1.3) 0.4
Receivables from agents 1.1 100.00% (1.1) –
Trade receivables 0.3 33.33% (0.1) 0.2
Other receivables 0.3 33.33% (0.1) 0.2
Past due >365 days 47.6 97.06% (46.2) 1.4
Receivables from agents 40.9 100.00% (40.9) –
Trade receivables 2.1 61.90% (1.3) 0.8
Other receivables 4.6 86.96% (4.0) 0.6
Total 222.9 22.39% (49.9) 173.0
129Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
33. Risk management continued
Impairment matrix for current trade and other receivables as of 31 December 2019:
Gross
carrying
amount
Expected
credit
lossrate
ECL
allowance
Net
carrying
amount
Due 181.4 0.06% (0.1) 181.3
Receivables from agents 148.4 – – 148.4
Trade receivables 20.6 0.49% (0.1) 20.5
Other receivables 12.4 – – 12.4
Past due < 90 days 4.4 6.82% (0.3) 4.1
Receivables from agents 3.1 6.45% (0.2) 2.9
Trade receivables 1.2 8.33% (0.1) 1.1
Other receivables 0.1 – – 0.1
Past due 91-180 days 2.6 69.23% (1.8) 0.8
Receivables from agents 2.3 73.91% (1.7) 0.6
Trade receivables 0.2 50.00% (0.1) 0.1
Other receivables 0.1 – – 0.1
Past due 181-365 days 0.6 50.00% (0.3) 0.3
Receivables from agents 0.1 100.00% (0.1) –
Trade receivables 0.2 50.00% (0.1) 0.1
Other receivables 0.3 33.33% (0.1) 0.2
Past due >365 days 43.9 92.48% (40.6) 3.3
Receivables from agents 3 7.7 100.00% (3 7.7 ) –
Trade receivables 0.8 100.00% (0.8) –
Other receivables 5.4 38.89% (2.1) 3.3
Total 232.9 18.51% (43.1) 189.8
130 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
33. Risk management continued
(b) Offsetting arrangements
Effects of offsetting on the balance sheet 2020
Gross
amounts
Gross
amounts set
off in the
balance
sheet
Net amounts
presented in
the balance
sheet
Amounts subject to potential
offsetting (master netting
or similar arrangements)
Net
amounts
Financial
instruments
Cash
collateral
Assets
Current trade and other receivables 5.7 (0.9) 4.8 – (4.8) –
Total 5.7 (0.9) 4.8 – (4.8) –
Liabilities
Current trade and other payables 18.3 (0.9) 17.4 – (4.8) 12.6
Total 18.3 (0.9) 17.4 – (4.8) 12.6
Effects of offsetting on the balance sheet 2019
Gross
amounts
Gross
amounts set
off in the
balance
sheet
Net amounts
presented in
the balance
sheet
Amounts subject to potential
offsetting (master netting
or similar arrangements)
Net
amounts
Financial
instruments
Cash
collateral
Assets
Other current financial assets 8.9 – 8.9 – (8.9) –
Current trade and other receivables 0.5 – 0.5 – (0.5) –
Cash and cash equivalents 66.1 – 66.1 – (66.1) –
Total 75.5 – 75.5 – (75.5) –
Liabilities
Non-current loans and borrowings 482.7 – 482.7 – (34.8) 4 47.9
Current loans and borrowings 83.3 – 83.3 – (4 0.2) 43.1
Current trade and other payables 4.9 – 4.9 – (0.5) 4.4
Total 570.9 – 570.9 – (75.5) 495.4
Amounts subject to master netting arrangements not set off in the Consolidated statement of financialposition
As of 31 December 2020, liabilities arising from fees to agents are offset in the balance sheet against receivables
from agents of €0.9 million.
As of 31 December 2020, deposits received from agents could be offset against receivables from agents of
€4.8 million (31 December 2019: €0.5 million).
As of 31 December 2019, short-term restricted cash could be offset against “Loans and borrowings” received by
CAME Holding GmbH and Italian Gaming Holding a.s. of €8.9 million. Additionally, cash withheld on bank accounts
of €6.7 million for the purposes of interest payments of such borrowings could be offset against “Loans and
borrowings”. As of 31 December 2020, these loans were repaid in full.
As of 31 December 2019, bank accounts pledged to financing banks as cash collateral for loans and borrowings
provided to SAZKA a.s. could be offset only in case of default against liabilities from “Loans and borrowings” of
€59.4 million. As of 31 December 2020, this loan was repaid in full. Such bank accounts were unrestricted.
(c) Liquidity risk
Liquidity risk represents the risk that the company might not be able to fulfil its payment obligations, primarily in
respect of amounts due to providers of loans and borrowings.
The Group monitors the risk of having insufficient funds by monitoring the liquidity and maturity of investments
and other financial assets and liabilities, projected cash flows from its activities and fulfilment of bank covenants.
The Group maintains free liquidity sources that comprise cash and equivalents and available amounts under credit
facilities in currencies in which the future financial needs are expected.
131Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
33. Risk management continued
The Group uses IT tools for liquidity management, market management, valuation of financial instruments and for
trading and risk management purposes.
The Group’s management minimises liquidity risk through ongoing future cash flow management and planning.
The key cash flow planning tool is annual medium-term plans prepared for the period of the at least the following
five years. The key Group cash flows for the current year are broken down into individual months and updated on
an ongoing basis.
As part of its liquidity risk management strategy, the Group ensures that a portion of its assets is highly liquid.
The table below presents an analysis of Group’s financial assets and liabilities classified by maturity, namely by the
period remaining from the reporting date till the contractual maturity. Where earlier repayment is possible, the
Group makes the most prudent assessment possible, therefore expecting the earliest possible repayment of
liabilities and the latest possible repayment of receivables. Assets and liabilities whose maturity is not contractually
specified are grouped under the “Due on demand/undefined maturity” category.
Following table presents contractual cash flows not discounted to net present value and include interest, if applicable.
Liquidity risk analysis (by maturity):
At 31 December 2020
Carrying
amount
Contractual
cash flows
1 year
or less 1-5 years
More than
5 years
Due on
demand/
undefined
maturity
Assets
Non-current trade and other receivables 12.9 13.2 – 12.9 0.3 –
Other non-current financial assets 199.6 199.6 – – – 199.6
Current trade and other receivables 177.7 177.8 177.8 – – –
Current derivative financial instruments 7.9 7.9 7.9 – – –
Other current financial assets 43.3 43.3 4.7 – – 38.6
Total 441.4 441.8 190.4 12.9 0.3 238.2
Cash 872.2 872.2 – – – 872.2
Liabilities
Loans and borrowings (2,662.3) (3,005.5) (210.6) (2,200.7) (594.2) –
Non-current trade and other payables (132.3) (132.3) – (111.7) (20.6) –
Non-current lease liabilities (118.8) (139.3) – (82.8) (56.5) –
Non-current derivative financial instruments (2.7) (2.7) – (2.7) – –
Current trade and other payables (577.4) (577.4) (577.4) – – –
Current lease liabilities (24.9) (28.9) (28.9) – – –
Current derivative financial instruments (1.1) (1.1) (1.1) – – –
Total (3,519.5) (3,887. 2) (818.0) (2, 397.9) (671.3) –
Net balance – liquidity risk
(financial assets & liabilities) (2,205.9) (2,573.2) (627.6) (2,385.0) (671.0) 1,110.4
Off-balance sheet future commitment
toleasing of office space (25.4) (31.6) (2.3) (13.6) (15.7) –
Net balance – liquidity risk
(including off-balance sheet) (2,231.3) (2,604.8) (629.9) (2,398.6) (686.7) 1,110.4
132 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
33. Risk management continued
At 31 December 2019
Carrying
amount
Contractual
cash flows
1 year
or less 1-5 years
More than
5years
Due on
demand/
undefined
maturity
Assets
Non-current trade and other receivables 6.7 6.7 0 6.6 0.1 –
Non-current derivative financial instruments 9.5 9.5 – 9.5 – –
Other non-current financial assets 8.9 8.9 – – – 8.9
Current trade and other receivables 209 209 209 – – –
Current derivative financial instruments 3.5 3.5 3.5 – – –
Other current financial assets 19.2 19.2 19.2 – – –
Total 256.8 256.8 231.7 16.1 0.1 8.9
Cash 763.7 763.7 – – – 763.7
Liabilities
Loans and borrowings (2,351.9) (2,688.0) (146.2) (2,394.2) (1 47.6) –
Non-current trade and other payables (10.0) (10.0) – (9.7) (0.3) –
Non-current lease liabilities (59.9) (72.2) – (35.3) (36.9) –
Non-current derivative financial instruments (3.7) (3.7) – (3.7) – –
Current trade and other payables (265.7) (265.7) (265.7) – – –
Current lease liabilities (8.3) (10.6) (10.6) – – –
Total (2,699.5) (3,050.2) (422.5) (2,442.9) (184.8) –
Net balance – liquidity risk (1,679.0) (2,029.7) (190.8) (2,426.8) (184.7) 772.6
(d) Interest rate risk
Risks to the Group relating to changes in market interest rates primarily relate to the loans with floating interest
rates. The Group monitors developments in financial markets. The risk of an increase in interest rates is continuously
monitored and the use of standard instruments to eliminate the risk (for example, interest rate swaps) is considered
(Note 30).
Interest rate sensitivity from the whole loan portfolio is not material. Certain interest rate exposures are hedged
by interest rate swaps while other loans and bonds have a fixed interest rate. In relation to unhedged loans, an
increase/decrease in interest rates (EURIBOR and PRIBOR) by 1 percentage point would cause an increase/decrease
of interest cost by €9.2 million (2019: €4.5 million).
Loans and borrowings 31/12/2020
% of total
loans 31/12/2019
% of total
loans
Variable rate borrowings 1,021.5 38.37% 1,022.4 43.47%
Fixed rate borrowings – maturity dates: 1,640.8 61.63% 1,329.5 56.53%
less than 1 31.3 1.18% 8.4 0.36%
1-5 years 1,117.8 41.99% 1,321.1 56.17%
over 5 years 491.7 18.47% – –
(e) Currency risk
The Group is exposed to risks arising from foreign currency transactions. These risks arise from sales or purchases
in currencies other than the functional currency.
The Group monitors currency risks and evaluates the potential impact of fluctuations in the currency exchange
rates on the Group’s operations. A significant part of the foreign exchange exposure is hedged either by natural
hedging, e.g. using financing in the same currency as the revenues generated and incurring revenues and expenses
in the same currency, or by using FX forward and swap contracts.
133Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
33. Risk management continued
Management also evaluates potential currency risks prior to the conclusion of significant contracts or business transactions.
The Group is exposed to foreign exchange risk when financial assets and liabilities are denominated in a currency
other than the functional currency in which they are measured. Foreign currency denominated intercompany
receivables and payables are eliminated in the consolidated balance sheet but the effect on profit or loss of their
currency revaluation is not fully eliminated, if the two group companies have different functional currencies.
Therefore, the total amounts of exposure to foreign exchange risk is not equal to respective items reported on the
consolidated balance sheet. Assets and liabilities denominated in a currency different from the functional currency
in which they are measured are presented in the tables below:
At 31 December 2020 EUR CZK USD Other
Non-current trade and other receivables 905.5 – – 0.4
Non-current derivative financial instruments – – – –
Other non-current financial assets – – 1.3 12.2
Current trade and other receivables 61.7 – – 3.0
Current derivative financial instruments 7.9 – – –
Other current financial assets – – – –
Cash and cash equivalents 28.4 – 0.8 28.8
Total assets 1,003.5 – 2.1 44.4
Long-term loans and borrowings (1,714.1) – – (1.2)
Non-current lease liabilities – – – (14.2)
Non-current derivative financial instruments – – – –
Non-current trade and other payables – – (15.6) –
Short-term loans and borrowings (120.4) – – (0.9)
Current lease liabilities – – – (2.4)
Current trade and other payables (7.7) – (2.8) (4.0)
Total liabilities (1,842.2) – (18.4) (22.7)
Total (838.7) – (16.3) 21.7
EUR risk exposure primarily relates to financing arrangements at the Company level, for which the functional
currency is CZK.
Other comprises Swiss Franc (net exposure of €13.5 million) and Australian Dollar (net exposure of €7.4 million).
Net exposure to other currencies is immaterial.
134 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
33. Risk management continued
At 31 December 2019 EUR CZK USD Other
Non-current trade and other receivables – – – –
Non-current derivative financial instruments – – – –
Other non-current financial assets – – – –
Current trade and other receivables 261.2 – – 0.1
Current derivative financial instruments 3.2 – – –
Other current financial assets 7.9 0.1 – –
Cash and cash equivalents 36.4 – 0.4 –
Total assets 308.7 0.1 0.4 0.1
Long-term loans and borrowings (664.1) – – –
Non-current lease liabilities – – – –
Non-current derivative financial instruments (1.0) – – –
Non-current trade and other payables – – – –
Short-term loans and borrowings (115.9) – – –
Current lease liabilities – – – –
Current trade and other payables (3.0) (0.7) (2.2) (0.7)
Total liabilities (784.0) (0.7) (2.2) (0.7)
Total (475.3) (0.6) (1.8) (0.6)
A reasonably possible strengthening (weakening) of EUR, CZK and USD against all other currencies as of 31 December
2020 would have affected the measurement of financial instruments denominated in a foreign currency and
affected the equity and profit or loss by the amounts shown below. This analysis assumes that all other variables,
in particular interest rates, remain constant.
Profit or loss Equity, net of tax
Effect in thousands of Euro
10% currency
strengthening
+ profit/
– loss
10% currency
weakening
+ profit/
– loss
10% currency
strengthening
+ increase/
– decrease
10% currency
weakening
+ increase/
– decrease
31/12/2020
CZK (39.1) 39.1 (36.3) 36.3
EUR – – – –
USD (1.6) 1.6 – –
31/12/2019
CZK (0.1) 0.1 – –
EUR 3.7 (3.7) (41.5) 41.5
USD (0.2) 0.2 – –
135Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
33. Risk management continued
(f) Fair value measurement
This Group holds the following financial assets and liabilities:
Carrying amount of financial assets and liabilities 31/12/2020 31/12/2019
Assets
Financial assets at amortised cost 1,074.9 1,000.8
Non-current trade and other receivables 12.9 29.5
Other non-current financial assets 7.4 2.2
Current trade and other receivables 177.7 212.4
Other current financial assets 4.7 19.2
Cash and cash equivalents 872.2 763.7
Financial assets at fair value through other comprehensive income (FVOCI) 11.9 –
Other non-current financial assets 11.9 –
Financial assets at fair value through profit or loss (FVTPL) 226.8 19.7
Other non-current financial assets 180.3 6.7
Non-current derivative financial instruments – 9.5
Other current financial assets 38.6 –
Current derivative financial instruments 7.9 3.5
Total 1,313.6 1,020.5
Liabilities
Financial liabilities at amortised cost (3,515.7) (2,695.8)
Long-term loans and borrowings (2,533.3) (2,252.5)
Non-current trade and other payables (132.3) (10.0)
Non-current lease liabilities (118.8) (59.9)
Short-term loans and borrowings (129.0) (99.4)
Current trade and other payables (577.4) (265.7)
Current lease liabilities (24.9) (8.3)
Financial liabilities at fair value through profit or loss (FVTPL) (3.8) (3.7)
Non-current derivative financial instruments (2.7) (3.7)
Current derivative financial instruments (1.1) –
Total (3,519.5) (2,699.5)
The Group considers that all carrying amounts of financial assets and liabilities at amortised cost are a reasonable
approximation of fair values.
To provide an indication about the reliability of inputs used in determining fair value the Group has classified its
financial instruments into three levels prescribed under the accounting standards (see Note 1.e).
2020
Carrying
amount Level 1 Level 2 Level 3
Financial assets at fair value through profit or loss 218.9 – 207.6 11.3
Financial assets at fair value through other comprehensive income 11.9 – – 11.9
Financial derivative assets 7.9 – 7.9 –
Financial derivative liabilities (3.8) – (3.8) –
Total 234.9 – 211.7 23.2
There were no transfers between Level 1 and Level 2 for recurring fair value measurements during the year 2020.
136 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
33. Risk management continued
2019
Carrying
amount Level 1 Level 2 Level 3
Financial assets at fair value through profit or loss 6.7 – – 6.7
Financial derivative assets 13.0 – 13.0 –
Financial derivative liabilities (3.7) – (3.7) –
Total 16.0 – 9.3 6.7
There were no transfers between Level 1 and Level 2 for recurring fair value measurements during the year 2019.
The following table presents the changes in Level 3 items for the periods ended 31 December 2020 and
31 December 2019:
2020 2019
Opening balance 6.7 2.2
Acquisitions 9.1 4.5
Reclassification from equity method investee (see Note 22) 16.2 –
Revaluation to fair value through other comprehensive income (4.3) –
Disposals (4.5) –
Closing balance 23.2 6.7
Level 3 FVTPL instruments comprises the Group’s investment in equity shares where the shares are not publicly
traded. The investment is presented at fair value, where the best estimate of fair value is transaction cost.
Available resources to assess the change in fair value were monitored, but there is no indication of the change of
fair value. Therefore, there is no impact on profit or loss from revaluation of Level 3 investments.
The fair values of financial derivatives fulfil the criteria of Level 2 in compliance with the IFRS 13 hierarchy.
Valuation techniques used to value financial instruments include:
• For Interest rate swaps – the present value of estimated future cash flows based on observable yield curves;
• For FX forwards and FX swaps – the present value of future cash flows based on forward exchange rates at the
balance sheet date.
The Group’s exposure to various risks associated with the financial instruments is presented in Note 30.
(g) Capital management
The Group aims to maximise shareholder value, to maintain access to diversified sources of capital to finance its
operating and business development needs, and to ensure financial resilience.
During 2019 and 2020 the Group fulfilled all the conditions required by its external financing arrangements.
Key financial ratios in the Group’s external financing arrangements are based on the ratio of EBITDA to net debt
and interest cover ratio.
137Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
34. Related parties
Related party transactions are transfers of resources, services or obligations between the reporting entity and a
related party. Relations between the Group and its related parties include relations with companies related through
common shareholders or Directors and Key management of the Company.
Related parties other than the shareholder comprises other companies owned by the Group’s shareholder KKCG AG.
All material transactions with related parties were carried out on an arm’s length basis.
There were no material transactions with equity method investees (see Note 20) in the current year or in the prior
year, except for dividends declared of €95.9 million in 2020 (31 December 2019: €90.1 million) and reserve
distributions of €7.6 million (31 December 2019: €47.8 million).
(a) Outstanding related party balances as of 31 December 2020 and 31 December 2019
The following tables present outstanding receivables and payables from related parties of the Group as of
31 December 2020 and 31 December 2019:
Outstanding balance with parent 31/12/2020 31/12/2019
Assets
Current trade and other receivables 0.1 8.5
Liabilities
Current trade and other payables – –
Outstanding balance with related parties of the Group other than parent 31/12/2020 31/12/2019
Assets
Non-current trade and other receivables 2.2 1.4
Current financial assets – 0.4
Current trade and other receivables 0.3 0.3
Liabilities
Current trade and other payables 1.0 3.1
(b) Transactions with related parties of the Group for the years ended 31 December 2020 and
31 December 2019
The following tables present transactions with related parties of the Group with effect on the Consolidated statement
of comprehensive income for the years ended 31 December 2020 and 31 December 2019:
Transactions with parent 2020 2019
Revenue from non-gaming activities 0.2 8.4
Materials, consumables and services (0.2) (0.2)
Interest income – 0.2
Dividend paid (150.0) (149.1)
Transactions with related parties of the Group other than parent 2020 2019
Revenue from non-gaming activities 0.1 0.3
Other operating income 0.2 0.1
Materials, consumables and services (4.5) ( 7.1)
Marketing expenses (1.3) (0.2)
Other operating expenses (0.2) (0.4)
Interest income 0.2 0.2
Other finance income and expense (0.2) 0.2
138 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
34. Related parties continued
(c) Transactions with members of the Company’s Board of Directors, Supervisory Board and
Executive Management for the years ended 31 December 2020 and 31 December 2019
Bonuses, remuneration and other personal expenses incurred in respect of members of the Board of Directors,
Supervisory Board and key management personnel of the Company:
2020 2019
Board of
Directors and
Supervisory
Board
Key
management
personnel
Board of
Directors and
Supervisory
Board
Key
management
personnel
Total remuneration 1.2 1.6 2.7 3.4
“Key management personnel” comprises the C-level management of the Company.
The following tables summarise the Group securities owned by members of the Board of Directors as of
31 December 2020:
Minimum
denomination
Number
ofnotes
Total
nominalvalue
(inEuro)
SAZKA Group CZK bond 10,000 CZK 345 131,454
SAZKA Group Financing bond 1,000 EUR 25 25,000
Number
ofshares
Total
market value
(inEuro)
OPAP shares 8,194 89,724
139Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
35. Group companies
Companies included in the consolidated group as of 31 December 2020 and 31 December 2019 and the Company’s
effective ownership interest are as follows.
The comparative information presents economic interest in entities within the CASAG subgroup, while the
classification of entities as subsidiaries, joint ventures or associates is only valid for the period after CASAG became
a subsidiary of the Group.
Effective portion of ownership interest
Note Country 31/12/2020 31/12/2019
Parent company:
SAZKA Group a.s. Czech Republic n/a n/a n/a
Group companies:
Austrian Gaming Holding a.s. Czech Republic subsidiary 100.00% 100.00%
CAME Holding GmbH Austria subsidiary 100.00% 100.00%
CASAG subgroup (a) Austria subsidiary 59.80% 38.16%
AleaX AG Liechtenstein subsidiary 59.80% –
Cachi Valle Aventuras S.A.** Argentina subsidiary 59.80% 38.16%
CAI Hungary Kft. Hungary subsidiary 32.89% 20.99%
CAI Ontario Inc.** Canada subsidiary 59.80% 38.16%
CAIO AG Switzerland subsidiary 59.80% 38.16%
CAIO DK ApS Denmark subsidiary 59.80% 38.16%
Casino Copenhagen K/S Denmark joint venture 29.90% 19.08%
Casino Event Immobilien GmbH Germany subsidiary 59.80% 38.16%
Casino Lugano S.A. Switzerland associate 17. 2 0 % 10.97%
Casino Marienlyst A/S Denmark joint venture 29.90% 19.08%
Casino Munkebjerg Vejle A/S Denmark joint venture 29.90% 19.08%
Casino Sopron Kft. Hungary subsidiary 32.89% 20.99%
Casino St. Moritz AG Switzerland subsidiary 59.80% 38.16%
Casino Vesterport Copenhagen K/S Denmark joint venture 29.90% 19.08%
Casinoland IT-Systeme GmbH Germany subsidiary 59.80% 38.16%
Casinos Austria (Swiss) AG Switzerland subsidiary 59.80% 38.16%
Casinos Austria AG Liegenschaftsverwaltungs-
und Leasing GmbH Austria subsidiary 59.80% 38.16%
Casinos Austria International (Cairns) Pty Ltd. Australia joint venture 29.90% 19.08%
Casinos Austria International (Mazedonien)
Holding GmbH Austria subsidiary 59.80% 38.16%
Casinos Austria International Belgium S.A. Belgium subsidiary 59.80% 38.16%
Casinos Austria International GmbH Austria subsidiary 59.80% 38.16%
Casinos Austria International Holding GmbH Austria subsidiary 59.80% 38.16%
Casinos Austria International Ltd. Australia subsidiary 59.80% 38.16%
Casinos Austria International Mazedonia d.o.o. Macedonia joint venture 20.93% 13.36%
Casinos Austria Liechtenstein AG Liechtenstein subsidiary 59.80% 38.16%
Casinos Austria Management AG (b) Switzerland subsidiary – 38.16%
Casinos Austria Management GmbH Austria subsidiary 59.80% 38.16%
Casinos Austria Maritime Corp.** USA subsidiary 59.80% 38.16%
Casinos Austria VLT AG Switzerland subsidiary 59.80% 38.16%
Casinos Austria of Egypt AG Liechtenstein joint venture 29.90% 19.08%
Casinos Denmark A/S Denmark joint venture 29.90% 19.08%
Casinos Odense K/S Denmark subsidiary 59.80% 38.16%
140 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
35. Group companies continued
Effective portion of ownership interest
Note Country 31/12/2020 31/12/2019
CAST Casinos Austria Sicherheitstechnologie
GmbH Austria subsidiary 59.80% 38.16%
CCB Congress Center Baden BetriebsgmbH Austria subsidiary 53.22% 33.96%
Cocino GmbH Germany joint venture 28.11% 17.9 4%
Complejo Monumento Güemes S.A.** Argentina subsidiary 59.80% 38.16%
Cuisino Ges.m.b.H. Austria subsidiary 59.80% 38.16%
Entretenimientos y Juegos de Azar S.A.** Argentina subsidiary 59.76% 38.14%
Fortuna 1 Aps Denmark subsidiary 59.80% 38.16%
Glücksrad Kft. Hungary joint venture 29.30% 18.70%
Grand Casino Kursaal Bern AG (c) Switzerland FVOCI – 5.15%
Great Blue Heron Gaming Company** Canada subsidiary 43.06% 27.4 8 %
Inmobiliaria Ovalle S.A. Chile subsidiary 59.80% 38.16%
Inversiones Anacaldo S.A. i.L. Chile associate 14.95% 9.54%
Leisure & Entertainment S.A.** Argentina subsidiary 59.80% 38.16%
LIE2 AG Liechtenstein subsidiary 59.80% 38.16%
National Videolottery of the Rep. of
Macedonia-Casinos Austria LLC-Skopje Macedonia joint venture 10.26% 6.54%
ÖLG Holding GmbH Austria subsidiary 59.80% 38.16%
Österreichische Lotterien GmbH subgroup Austria subsidiary 53.60% 3 7.62 %
Deutsche Sportwetten GmbH Germany subsidiary 34.17% 25.23%
Glücks- und Unterhaltungsspiel
BetriebsgesmbH Austria subsidiary 53.60% 3 7.62 %
Österreichische Sportwetten GmbH Austria subsidiary 34.17% 25.23%
Österreichische Klassenlotterie
Vertriebsgesellschaft m.b.H. Austria subsidiary 53.60% 3 7.62 %
Rabcat Computer Graphics GmbH Austria subsidiary 51.39% 36.22%
Win2day International GmbH Austria subsidiary 53.60% 3 7.6 2 %
WinWin International GmbH Austria subsidiary 53.60% 3 7.6 2 %
Reef Casino Investments Pty Ltd. Australia joint venture 29.90% 19.08%
Reef Casino Trust Australia joint venture 25.12% 16.03%
Reef Corporate Services Ltd. Australia joint venture 29.90% 19.08%
Revolutionary Technology Systems AG Switzerland joint venture 29.90% 19.08%
Spielbanken Niedersachsen GmbH Germany subsidiary 59.80% 38.16%
Viage Productions S.A. Belgium subsidiary 59.80% 38.16%
CLS Beteiligungs GmbH* Austria associate 66.67% 66.67%
Emma Delta Finance Plc (d) Cyprus subsidiary – 75.48%
IGH Financing a.s. (e) Czech Republic subsidiary – 100.00%
Italian Gaming Holding a.s. Czech Republic subsidiary 100.00% 100.00%
LOTTOITALIA S.r.l. Italy associate 32.50% 32.50%
LTB Beteiligungs GmbH* Austria associate 66.67% 66.67%
Medial Beteiligungs GmbH (f) Austria subsidiary 100.00% 99.66%
OPAP S.A. subgroup (g) Greece subsidiary 36.10% 31.99%
Daedalus Technologies FZC (h) Dubai subsidiary 24.45% –
Hellenic Lotteries S.A. Greece subsidiary 30.14% 26.71%
Horse Races Single-Member S.A.
(formerly Horse Races S.A.) Greece subsidiary 36.10% 31.99%
141Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
35. Group companies continued
Effective portion of ownership interest
Note Country 31/12/2020 31/12/2019
Neurosoft S.A. Greece subsidiary 24.45% 21.66%
OPAP Cyprus Ltd Cyprus subsidiary 36.10% 31.99%
OPAP International Ltd Cyprus subsidiary 36.10% 31.99%
OPAP Investment Ltd Cyprus subsidiary 36.10% 31.99%
OPAP Sports Ltd Cyprus subsidiary 36.10% 31.99%
Stoiximan (i) Malta business unit 30.50% 11.75%
Kaizen Gaming Limited
(formerly TCB Holdings Ltd)* Malta associate 13.27% 11.75%
Tora Direct Single-Member S.A.
(formerly Tora Direct S.A.) Greece subsidiary 36.10% 31.99%
Tora Wallet Single-Member S.A. (formerly Tora
Wallet S.A.) Greece subsidiary 36.10% 31.99%
RUBIDIUM HOLDINGS LIMITED Cyprus subsidiary 100.00% 100.00%
SAZKA a.s. Czech Republic subsidiary 100.00% 100.00%
SAZKA Asia a.s. Czech Republic subsidiary 100.00% 100.00%
Sazka Asia Vietnam Company Limited** Vietnam subsidiary 100.00% 100.00%
SAZKA Czech a.s. Czech Republic subsidiary 100.00% 100.00%
SAZKA DELTA AIF VARIABLE CAPITAL
INVESTMENT COMPANY LTD
(formerly EMMA DELTA VARIABLE CAPITAL
INVESTMENT COMPANY LTD) (j) Cyprus subsidiary 78.64% 75.48%
SAZKA Delta Hellenic Holdings Limited (formerly
Emma Delta Hellenic Holdings Limited) (j) Cyprus subsidiary 78.64% 75.48%
SAZKA Delta Management Ltd
(formerly Emma Delta Management Ltd) (k) Cyprus subsidiary 66.70% 66.70%
Sazka Distribution Vietnam Company Limited** Vietnam subsidiary 100.00% 100.00%
SAZKA FTS a.s. Czech Republic subsidiary 100.00% 100.00%
SAZKA Group CZ a.s. (l) Czech Republic subsidiary 100.00% –
SAZKA Group Financing a.s. Slovakia subsidiary 100.00% 100.00%
SAZKA Group Financing (Czech Republic) a.s.
(formerly SAZKA Group Holding a.s.) (m) Czech Republic subsidiary 100.00% –
SAZKA Group Russia LLC (n) Russia subsidiary – 100.00%
SAZKA Group UK Limited
(formerly KKCG UK Limited) (o) United Kingdom subsidiary 100.00% –
SAZKAmobil 5G a.s.
(formerly Italian GNTN Holding a.s.) Czech Republic subsidiary 100.00% 100.00%
SAZKA Services s.r.o.
(formerly Kavárna štěstí s.r.o.) Czech Republic subsidiary 100.00% 100.00%
SPORTLEASE a.s. Czech Republic subsidiary 100.00% 100.00%
Vitalpeak Limited** Cyprus subsidiary 100.00% 100.00%
* The equity method investees comprise a group of entities.
** Companies in liquidation.
(a) On 31 December 2019, the Group owned a 38.16% share in Casinos Austria AG, which was presented as an
equity method investee. On 26 June 2020, the Group acquired an additional 17.19% share and from that date
Casinos Austria AG and its subsidiaries are fully consolidated. See Note 5.a.
(b) On 22 October 2020, Casinos Austria Management AG merged with Casinos Austria (Swiss) AG.
142 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
35. Group companies continued
(c) Grand Casino Kursaal Bern AG is a financial investment of CASAG revaluated through other comprehensive
income (FVOCI). It is considered as part of CASAG subgroup, even though CASAG does not exercise significant
influence over the entity following impact of change of control clauses after the acquisition of CASAG by
the Group.
(d) On 18 January 2020, Emma Delta Finance Plc was liquidated.
(e) On 1 June 2020, IGH Financing a.s. was liquidated.
(f) On 26 June 2020, the Group acquired an additional 0.34% share in Medial Beteiligungs GmbH. The increase
represents an increase in share in the company without change of control. This additional purchase is presented
as “Purchase of NCI in subsidiaries” in the Consolidated statement of cash flows.
(g) During 2020 the Group has increased its economic interest in OPAP S.A. For detailed description please see
Note 2.3.
(h) On 31 March 2020, Daedalus Technologies FZC was acquired by Neurosoft S.A.
(i) Stoiximan does not have a separate legal form, but represents a business unit of Kaizen Gaming Limited
(formerly TCB Holdings Ltd). It is envisioned that the Stoiximan will be legally separated in 2021. The Group
consolidates Stoiximan from 18 November 2020 see Note 5.b.
(j) The controlling interest in SAZKA DELTA AIF VARIABLE CAPITAL INVESTMENT COMPANY LTD (formerly
EMMA DELTA VARIABLE CAPITAL INVESTMENT COMPANY LTD) (“SDVCIC “) is represented by the 100% of
its voting rights held by SAZKA Delta Management Ltd (formerly Emma Delta Management Ltd). However,
the economic interest attributable to the Group comprises the 78.64% (31 December 2019: 75.48%) of its
investor shares owned by RUBIDIUM HOLDINGS LIMITED. As of 2 October 2020, the Group increased its
economic interest in SDVCIC by 3.16% from 75.48% to 78.64%.
(k) 66.70% represents voting shares, the Group’s economic interest in Sazka Delta Management is 78.64%
(31 December 2019: 75.48%).
(l) On 10 December 2020, the Group set up a new 100% subsidiary, SAZKA Group CZ a.s. by means of acquiring
a shelf company.
(m) On 25 November 2020, the Group set up a new 100% subsidiary, SAZKA Group Financing (Czech Republic)
a.s. (formerly SAZKA Group Holding a.s.) by means of acquiring a company which had previously not carried
out any economic activity.
(n) On 27 March 2020, SAZKA Group Russia LLC was sold. Impact of the sale was immaterial.
(o) On 20 May 2020, SAZKA Group UK Limited (formerly KKCG UK Limited) was acquired from KKCG AG.
36. Subsequent events
Strategic
So far in 2021 the Company increased its direct shareholding in OPAP by 1.21% to 11.43% through market purchases,
as a result of which the Group’s shareholding in OPAP increased to 44.33% and its economic interest to 37.30%.
On 27 January 2021, the Group acquired a 4.31% shareholding in Casinos Austria AG following the execution of a
call option. As of 31 December 2020 Group recognised payable of €24.3 million.
On 26 March 2021, KKCG AG and the Company announced that funds managed by affiliates of Apollo Global
Management, Inc. had completed the investment of €500 million in the Company announced on 10 November
2020. The investment was effected through an investment into SAZKA Entertainment AG, a newly established
subsidiary of KKCG, which is now the 100% owner of the Company.
143Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the consolidated financial statements continued
36. Subsequent events continued
Financing
On 24 March 2021, LOTTOITALIA S.r.l. declared a dividend of €152.4 million and distribution of premium reserve
of €23.3 million. The Group received its share of €57.1 million on 30 March 2021.
On 30 March 2021, Österreichische Lotterien GmbH declared a dividend to be distributed in two instalments.
The first part, of €60.7 million, was paid in April 2021 and the second part, of €30.3 million, is to be paid in
October 2021.
On 31 March 2021, OPAP S.A. announced the management proposes the distribution of dividend of €0.45 per share.
Other
According to the Hellenic Lotteries S.A.’ concession agreement, it has to pay 30% of annual GGR to the Greek
state, subject to a €50 million minimum annual amount. . Hellenic Lotteries S.A. believes the €50.0 million minimum
annual fee is not applicable for 2020 as the force majeure clause in the concession agreement was triggered by
the pandemic-related restrictions imposed by the Greek state, and only €12.3 million (30% of actual 2020 GGR)
is payable. Hellenic Lotteries S.A. has therefore filed a request for arbitration. As a prudent measure, the Group
recorded a gaming taxes expenses for this outstanding liability of €37.7 million as of 31 December 2020.
COVID-19 update
In late October/early November 2020, a number of regions in Europe implemented tighter COVID-19 related
restrictions. A number of these restrictions have continued into 2021.
While all our online channels continue to operate without interruption, our physical retail networks have to various
degrees been affected by these restrictions, with a very limited impact in Austria (with the exception of casino
operations), the Czech Republic and Italy but a greater impact in Greece and Cyprus and at casino operations in
Austria and internationally.
The extent of the financial impact will largely depend on the duration of the current wave of the outbreak and the
extent and nature of resulting restrictions. Below is a brief overview of the current situation in our main markets:
Austria: The Austrian Government imposed a number of restrictions from November 2020. Some of these restrictions
have since been eased but a curfew and mandatory early closing for shops remain in force.
As was the case during the restrictions in force in H1 2020, these measures have had a limited impact on the
availability of Austrian Lotteries products through its land-based channels.
Austrian Lotteries’ online gaming offerings remain available to the public as normal. They include draw based
games (including Austrian Lotteries’ major products Lotto and EuroMillions), and online casino, poker, and
sports betting.
CASAG had closed all its casinos and gaming halls in Austria in accordance with the restrictions but has recently
reopened two casinos. Most of CASAG’s international casinos are also closed.
Czech Republic: The Czech Government imposed a number of restrictions from late October 2020. However, in
recent weeks, some of the restrictions have been eased.
As was the case in H1 2020, and similar to the impact of similar restrictions on Austrian Lotteries, these measures
have had a very limited impact on the availability of our products through land-based channels, as key categories
of points of sale (including newsstands, convenience stores and post offices) have remained open throughout
the period.
Our online gaming offerings remain available to the public as normal. We are continuing to promote the use of our
online platforms for lottery products as well as digital-only offerings. In 2020, 31.5% of our sales were via
digital channels.
144 Sazka Group Annual Report and Accounts 2020
Consolidated Financial Statements for the year ended 31 December 2020 (in millions of Euro)
36. Subsequent events continued
Greece and Cyprus: Beginning in early November 2020, the Greek Government introduced a series of measures
including nationwide and regional restrictions on the operation of various categories of retail and other venues.
These restrictions resulted in total or partial shutdown of OPAP stores and gaming halls at various times.
OPAP’s agents’ stores reopened in almost all regions in April 2020, although VLTs and gaming halls remain shut.
During periods when the store network was shut, OPAP’s online offerings continued to be available, offering an
extended range of products (sports betting, Tzoker, virtual games and Digital-only Games) after the expansion of
OPAP’s online offering in 2020. At the same time, the full range of Stoiximan’s products is available.
Retail activity in Cyprus had mostly reopened in 2021 but has recently been shut once again.
Italy: The Italian Government announced a number of new provisions from early November 2020 and some of
these have continued into 2021.
However, LOTTOITALIA continues to offer its games (which were suspended by the regulator during the first wave)
and convenience stores (LOTTOITALIA’s largest category of points of sale) remain open in all regions.
Date:
30 April 2021
Signature of the authorised representative:
Pavel Šaroch
Member of the Board of Directors
Robert Chvátal
Member of the Board of Directors
145Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Note For 2020 For 2019
Revenue from services 5 77.9 245.7
Dividend income 6 2,699.3 4,490.7
Gain from the sale of securities 7 396.0 7,79 9.6
Other operating income 0.3 0.5
Materials, consumables and services 8 (365.8) (740.2)
Marketing services (32.5) (20.8)
Personnel expenses 9 (96.2) (62.9)
Other operating expenses (10.5) (19.6)
Depreciation and amortization (7.1) (6.7)
Profit from operating activities 2,661.4 11,686.3
Interest income 10 405.6 152.0
Interest expense 10 (1,179.5) (433.6)
Other finance expense 10 (512.1) (1,002.2)
Finance costs, net (1,286.0) (1,283.8)
Profit before tax 1,375.4 10,402.5
Income tax expense 11 (114.3) 0.1
Profit after tax 1,261.1 10,402.6
Total comprehensive income 1,261.1 10,402.6
The Notes on pages 150 to 182 are an integral part of these separate financial statements.
Separate statement
of comprehensive income
146 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
Prepared in accordance with International Financial Reporting Standards as adopted by the European Union
Note 31/12/2020 31/12/2019 1/1/2019
Assets
Intangible assets 0.1 0.2 0.1
Property, plant and equipment 6.7 16.0 25.0
Investment in subsidiaries 12 35,068.8 32,928.5 28,264.2
Loans provided 13 18,444.7 – –
Trade and other receivables 0.2 – 0.2
Other financial assets – 113.1 –
Deferred tax asset 0.1 0.1 –
Total non-current assets 53,520.6 33,057.9 28,289.4
Loans provided 13 755.0 4,858.2 3,880.5
Trade and other receivables 14 317.1 274.5 2.9
Derivative financial instruments 19 206.2 80.1 –
Current tax asset – 5.7 5.7
Cash and cash equivalents 15 4 87.3 1,258.9 681.0
Total current assets 1,765.6 6,474.4 4,570.1
Total assets 55,286.2 39,535.3 32,859.5
Liabilities
Loans and borrowings 17 36,881.1 18,450.0 6,788.8
Lease liabilities – 9.3 18.0
Total non-current liabilities 36,881.1 18,459.3 6,806.8
Loans and borrowings 17 1,708.5 1,881.3 15.0
Lease liabilities 6.7 6.4 6.8
Trade and other payables 18 254.3 141.6 2,781.0
Employee benefit liabilities 29.0 14.2 8.8
Derivative financial instruments – – 2.1
Current tax liability 108.6 0.6 3.7
Total current liabilities 2,107.1 2,044.1 2,817. 3
Total liabilities 38,988.2 20,503.4 9,624,1
Equity
Share capital 16 2.0 2.0 2.0
Capital contributions 16 1,418.7 1,418.7 12,197.1
Retained earnings 16,298.0 17,611.1 11,036.3
Total equity 16,298.0 19,031.9 23,235.4
Total equity and liabilities 55,286.2 39,535.3 32,859.5
The Notes on pages 150 to 182 are an integral part of these separate financial statements.
Separate statement
of financial position
147Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Note
Share
capital
Capital
contributions
Retained
earnings and
profit for
theyear
Total
equity
Balance at 1 January 2020 2.0 1,418.7 17,611.1 19,031.9
Profit for the year – – 1,261.1 1,261.1
Total comprehensive income for the year – – 1,261.1 1,261.1
Dividends declared 16 – – (3,995.9) (3,995.9)
Other movements in equity – – 0.9 0.9
Total transactions with owners – – (3,995.0) (3,995.0)
Balance at 31 December 2020 16 2.0 1,418.7 14,877.2 16,298.0
Note
Share
capital
Capital
contributions
Retained
earnings and
profit for
theyear
Total
equity
Balance at 1 January 2019 2.0 12,197.1 11,036.3 23,235.4
Profit for the year – – 10,402.7 10,402.7
Total comprehensive income for the year – – 10,402.7 10,402.7
Dividends declared 16 – – (3,827.0) (3,827.0)
Distribution of Capital contributions 16 – (10,779.2) – (10,799.2)
Other movements in equity 0.9 (0.9) –
Total transactions with owners – (10,778.3) ( 3,827.9) (14,606.2)
Balance at 31 December 2019 16 2.0 1,418.7 17,611.1 19,031.9
The Notes on pages 150 to 182 are an integral part of these separate financial statements.
Separate statement
of changes in equity
148 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
Note For 2020 For 2019
Operating activities
Profit (+) for the year 1,261.1 10,402.6
Adjustments for:
Income tax expense 114.3 (0.1)
Depreciation and amortization 7.1 6.7
Gain (–) from the sale of securities 10 (396.0) ( 7,7 99.6)
Net interest expense (+) 10 773.9 281.5
Net FX losses (+) 10 329.8 50.1
Dividend income 6 (2,699.3) (4,490.7)
Other non-monetary transaction (55.2) 35.2
Operating result before changes in working capital and provisions (664.3) (1,514.3)
Increase (+) in provisions 12.1 6.3
Increase (–)/decrease (+) in trade receivables and other assets 21.1 (464.7 )
Increase (+)/decrease (–) in trade and other payables 114.2 (2,642.2)
Cash generated from (+)/used in (–) operating activities (516.9) (4,615.0)
Interest paid (1,111.6) (243.6)
Income tax paid (0.7) (3.0)
Cash generated used in (–) operating activities (1,629.2) (4,861.6)
Investing activities
Acquisition of property, plant and equipment and intangible assets (1.1) (0.8)
Acquisition of investments 12 (3,373.9) (6,074.2)
Proceeds from sale of investments 12 558.8 7,7 9 9.7
Proceeds from sale of property, plant and equipment and intangible assets 3.5 –
Dividends and other distributions received 6 3,693.3 5,900.5
Interest income received 274.2 121.7
Loans provided (8,709.5) (5,019.6)
Repayment of loans provided – 905.0
Assignment of loans provided 13 – 2,975.5
Net cash generated from (+)/used in (–) investing activities (7,55 4 .7 ) 6,6 07.8
Financing activities
Dividends paid 16 (3,995.9) (3,827.0)
Loans and borrowings received 17 16,527.1 13,674.0
Repayment of loans and borrowings 17 (4,115.8) (236.0)
Distribution of capital contributions 16 – (10,779.2)
Repayment of principal element of lease liabilities (6.7) (6.2)
Net cash generated from (+)/used in (–) financing activities 8,408.7 (1,174.4)
Net decrease (–)/increase (+) in cash and cash equivalents (775.4) 571.9
Effect of currency translation on cash and cash equivalents 3.8 6.0
Cash and cash equivalents at the beginning of the year 15 1,258.9 681.0
Cash and cash equivalents at the end of the year 15 4 87.3 1,258.9
The Notes on pages 150 to 182 are an integral part of these separate financial statements.
Separate statement
of cash flows
149Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements
Contents
1. General information about the Company 151
1.1 Description 151
1.2 Principal activity 151
1.3 Statutory body and Supervisory Board 151
1.4 Shareholder as at 31 December 2020 151
2. Basis of preparation 151
3. Significant accounting policies 155
4. IFRS first time adoption 161
5. Revenues 163
6. Dividend income 164
7. Gain from the sale of securities 164
8. Materials, consumables and services 164
9. Personnel expenses 165
10. Finance costs, net 165
11. Income tax expense 166
12. Investments in subsidiaries 167
13. Loans provided 169
14. Trade and other receivables 170
15. Cash and cash equivalents 170
16. Equity 170
17. Loans and borrowings 170
18. Trade and other payables 172
19. Derivatives 172
20. Contingencies 173
21. Risk management 173
22. Related parties 180
23. Subsequent events 182
150 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
1. General information about the Company
1.1 Description
SAZKA Group a.s. (the “Company”) was established on 2 April 2012 and registered in the Commercial Register
maintained by the Municipal Court in Prague, Section B, Insert 18161. The Company’s registered office is at
Vinohradská 1511/230, Strašnice, 100 00 Praha 10, and its Identification Number is 242 87 814. The Company carries
out management, strategic business development and financing activities for the Group (the “Group” means
SAZKA Group a.s. together with its subsidiaries, joint ventures and associates) and holds interests in other
Group companies.
The immediate parent of the Company as of 31 December 2020 was KKCG AG and its ultimate controlling party
pursuant to IFRS standards is VALEA FOUNDATION. On 17 March 2021, SAZKA Entertainment AG, an entity 100%
owned by KKCG AG, became the immediate parent of the Company.
1.2 Principal activity
The Company’s principal activity is the strategic management and development of companies directly or indirectly
controlled by the Company.
1.3 Statutory body and Supervisory Board
The Board of Directors as of 31 December 2020:
Chairman of the Board of Directors: Karel Komárek
Member of the Board of Directors: Pavel Šaroch
Member of the Board of Directors: Robert Chvátal
Member of the Board of Directors: Katarína Kohlmayer
Supervisory Board as aof 31 December 2020:
Chairman of the Supervisory Board: Tomáš Porupka
1.4 Shareholder as of 31 December 2020
KKCG AG 100% (sole shareholder)
Registered office:
Kapellgasse 21,
6004 Luzern
Switzerland
2. Basis of preparation
(a) Statement of compliance
The separate financial statements have been prepared in accordance with IFRS as adopted by the European Union
(“IFRS”). The Company prepares financial statements in accordance with IFRS for the first time for the period
ended 31 December 2020.
The accounting policies described in Note 3 were used in preparing the separate financial statements for the year
ended 31 December 2020 and in preparing the comparative information as of 31 December 2019 and 1 January 2019.
The Company also prepared consolidated IFRS financial statements for the same period.
These separate financial statements were approved by the board of directors on 30 April 2021.
(b) First time adoption of IFRS
These separate financial statements of SAZKA Group a.s. have been prepared for the first time in accordance with
IFRS as adopted by the European Union. The decisive day of transition to IFRS is 1 January 2019. The Company
has applied the accounting policies stated in Note 3 to all accounting periods presented in these financial statements.
The Company adopted IFRS due to regulatory requirements in connection with certain of its bonds (based on
paragraph 19a of the Act on Accounting 563/1991).
In preparing the opening statement of financial position in accordance with IFRS, the Company restated the
carrying amounts reported previously under Czech Accounting Standards.
151Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
2. Basis of preparation continued
See Note 4 for detailed information about the transition.
(c) Basis of measurement
The separate financial statements have been prepared on a going concern basis, using the historical cost method,
unless otherwise stated in the accounting policies.
The Company is consistent in applying the accounting policies described below.
(d) Functional and presentation currency
These IFRS separate financial statements are presented in Czech Crown (CZK), which constitutes the Company’s
functional currency. All financial information is presented in millions of CZK with one decimal place and rounded
to the nearest hundred thousand, unless stated otherwise.
Any differences between the amounts included in the separate financial statements and the respective amounts
included in the notes are attributable to rounding.
(e) Measurement of fair values
A number of the Company´s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date under current market conditions regardless of
whether that price is directly observable or estimated using another valuation technique. Fair values are obtained,
as appropriate, from quoted market prices, discounted cash flow projections and other valuation models.
When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
(f) Significant estimates and judgements
The Company has made several significant accounting estimates and judgments. The Group describes these
accounting estimates and judgements in detail in the relevant sections of the Notes.
The Company has made significant accounting estimates related to impairment of financial investments (see
Note 12).
The Company has made a significant accounting judgment related to de-facto control over OPAP S.A., classifying
the investment as a subsidiary (see Note 12).
(g) Standards, interpretations and amendments issued before 31 December 2020 but not
yeteffective
The following standards, amendments and interpretations are not yet effective and are not expected to have a
significant impact on the Company’s separate financial statements.
Documents that have been endorsed by the EU:
i. Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest rate benchmark (“IBOR”) reform Phase 2
The amendments complement those issued in 2019 and focus on the effects on financial statements when a
company replaces an interest rate benchmark with an alternative benchmark as a result of the reform. More specifically,
the amendments relate to how a company will account for changes in the contractual cash flows of financial
instruments, how it will account for the change in its hedging relationships and the information it should disclose.
The IASB effective date of is 1 January 2021. The Company is evaluating the impact of adoption of this amendment.
152 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
2. Basis of preparation continued
ii. Amendments to IFRS 16 “Leases” – COVID-19 related rent concessions beyond 30 June 2021
The amendment provides lessees (but not lessors) with relief in the form of an optional exemption from assessing
whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for rent
concessions in the same way as they would for changes which are not considered lease modifications.
This amendment is expected to be endorsed after its effective date. The IASB effective date is 1 April 2021.
The Company is evaluating the impact of adoption of this amendment.
Documents not yet endorsed by the EU:
i. IFRS 17 “Insurance contracts”
IFRS 17 was issued in May 2017 as replacement for IFRS 4 “Insurance contracts”. It requires a current measurement
model where estimates are re-measured in each reporting period. Contracts are measured using the building
blocks of:
• Discounted probability-weighted cash flows,
• An explicit risk adjustment, and
• A contractual service margin (CSM) representing the unearned profit of the contract which is recognised as
revenue over the coverage period.
The standard allows a choice between recognising changes in discount rates either in the Statement of profit or
loss or directly in Other comprehensive income. The choice is likely to reflect how insurers account for their financial
assets under IFRS 9.
An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for
short duration contracts, which are often written by non-life insurers.
There is a modification of the general measurement model called the “variable fee approach” for certain contracts
written by life insurers where policyholders share in the returns from underlying items. When applying the variable
fee approach, the entity’s share of the fair value changes of the underlying items is included in the CSM. The results
of insurers using this model are therefore likely to be less volatile than under the general model.
The new rules will affect the separate financial statements and key performance indicators of all entities that issue
insurance contracts or investment contracts with discretionary participation features.
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2023. The original
effective date of 1 January 2021 was amended based on the fact that amendments to IFRS 17 and an amendment
to IFRS 4 (issued on 25 June 2020 and effective for annual periods beginning on or after 1 January 2023) were issued.
The Company does not expect IFRS 17 to have a significant impact on the Company’s separate financial statements.
ii. Amendments to IAS 1 “Presentation of financial statements” – Classification of liabilities as current or non-
current
The amendments specify that the conditions which exist at the end of the reporting period are those which will
be used to determine if a right to defer settlement of a liability exists, and management expectations about events
after the balance sheet date, for example on whether a covenant will be breached, or whether early settlement
will take place, are not relevant.
The amendments clarify the situations that are considered settlement of a liability.
The amendments are expected to be endorsed before their effective date. The IASB effective date is 1 January
2023. The original effective date of 1 January 2022 was amended based on the fact that the Classification of
liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (issued on 15 July 2020 and
effective for annual periods beginning on or after 1 January 2023) were issued.
The Company is evaluating the impact of these amendments.
153Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
2. Basis of preparation continued
iii. Amendments to IFRS 3 “Business combination” – Reference to “Conceptional framework” & Amendments to
IAS 37 “Provisions, Contingent liabilities and Contingent Assets” – cost of fulfilling a contract
Minor amendments were made to IFRS 3 “Business Combinations” to update the references to the “Conceptual
Framework” for financial reporting and add an exception for the recognition of liabilities and contingent liabilities
within the scope of IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” and Interpretation 21 “Levies”.
The amendments also confirm that contingent assets should not be recognised at the acquisition date.
The amendment to IAS 37 clarifies that the direct costs of fulfilling a contract include both the incremental costs
of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts. Before recognising
a separate provision for an onerous contract, the entity recognises any impairment loss that has occurred on assets
used in fulfilling the contract.
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2022.
The Company does not expect these amendments to have a significant impact on the Company’s separate
financial statements.
iv. Annual Improvements 2018 – 2020
The following improvements were finalised in May 2020:
•
IFRS 9 “Financial Instruments” – clarifies which fees should be included in the 10% test for derecognition of
financial liabilities; and
• IFRS 16 “Leases” – amendment of illustrative example 13 to remove the illustration of payments from the lessor
relating to leasehold improvements, to remove any confusion about the treatment of lease incentives; and
• IFRS 1 “First time Adoption of International Financial Reporting Standards” – allows entities that have measured
their assets and liabilities at carrying amounts recorded in their parent’s books to also measure any cumulative
translation differences using the amounts reported by the parent. This amendment will also apply to joint ventures
and associates that have taken the same IFRS 1 exemption; and
• IAS 41 “Agriculture” – removal of the requirement for entities to exclude cash flows for taxation when measuring
fair value under IAS 41. This amendment is intended to align with the requirement in the standard to discount
cash flows on a post-tax basis.
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2022.
The Company does not expect these amendments to have a significant impact on the Company’s separate
financial statements.
v. Amendments to IAS 1 “Presentation of financial statements” – disclosure of accounting policies
The amendments require companies to disclose their material accounting policy information and provide guidance
on how to apply the concept of materiality to accounting policy disclosures.
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2023.
The Company is evaluating the impact of adoption of these amendments.
vi. Amendments to IAS 8 “Accounting policies, changes in accounting estimates and errors” – definition of
accounting estimates
The amendments clarify how companies should distinguish changes in accounting policies from changes in
accounting estimates.
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2023.
The Company is evaluating the impact of adoption of this amendment.
vii. Amendments to IAS 16 “Property, Plant and Equipment” (“PPE”)
The amendment prohibits an entity from deducting from the cost of an item of PPE any proceeds received from
selling items produced while the entity is preparing the asset for its intended use. It also clarifies that an entity is
“testing whether the asset is functioning properly” when it assesses the technical and physical performance of the
asset. The financial performance of the asset is not relevant to this assessment. Entities must disclose separately
the amounts of proceeds and costs relating to items produced that are not an output of the entity’s ordinary activities.
154 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
2. Basis of preparation continued
It is expected to be endorsed before its effective date. The IASB effective date is 1 January 2022.
The Company does not expect these amendments will have a significant impact on the Company’s separate
financial statements.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to the accounting periods presented in these
separate financial statements, unless otherwise indicated.
(a) Revenue recognition
Revenues are recognised over time, which is generally the period through which the services are rendered and
are stated net of discounts and value added tax. Services are accounted for as a single performance obligation
which is satisfied over time because the customer simultaneously receives and consumes the benefits of
the performance.
(b) Leases
A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of the
time in exchange for consideration. For such contracts, the lessee recognizes a right of use asset and a lease liability.
i. Lease payments
The Company applies exemptions for low value and short-term leases, for which the lease payments are recognised
directly in other operating expenses, together with variable payments such as turnover rent, property taxes paid
by the tenant and insurance paid by the tenant.
ii. Right of use assets and lease liabilities
Right of use assets are recognised in Property, plant and Equipment in the Statement of financial position.
A right of use of asset is initially measured in the amount of the recognized lease liability plus any lease payments
made at or before the commencement date, less any lease incentives received. The initial measurement of the
right of use assets is increased by the following items, when significant:
• Initial direct lease costs paid by the lessee; and
• Provision for estimated costs of dismantling and removal of the identified asset or restoration of the site where
the asset was installed.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain
that the Company will obtain ownership by the end of the lease term.
Lease liabilities are initially recognized at the present value of non-cancellable lease payments, including payments
under any extension option, if there is reasonable certainty that the option will be exercised. Future lease payments
are discounted using the interest rate implicit in the lease. Subsequently, lease liabilities are decreased by the lease
payments and increased for lease interest expenses.
iii. Lease income
Income from the lease of non-residential premises, office space and movable assets is recognized as other operating
income on a straight-line basis over the term of the lease.
(c) Dividend income (Note 6)
Dividends are recognised as of the date when the Company’s right to receive the relevant income was established.
Profit share prepayments are recognised in current profit or loss, i.e. in the period when the profit share prepayment
was declared.
(d) Interest income, Interest expense, Other finance expense (Note 10)
Interest income is recorded for all debt instruments measured at amortized cost on an accrual basis using the
effective interest method. This method defers, as part of interest income, all fees between the parties to the contract
that are an integral part of the effective interest rate.
Interest expenses comprise interest expense on loans and borrowings, bonds and leases on an accrual basis using
the effective interest rate method.
155Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
3. Significant accounting policies continued
Other finance income and expense comprise foreign exchange losses/gains and gains/losses on derivative
instruments that are recognized in profit or loss.
(e) Income tax expense (Note 11)
Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except
to the extent that it relates to items recognized directly in Other comprehensive income or directly in equity, in
which case it is recognized in Other comprehensive income or equity.
Current tax is the expected tax payable on taxable profit for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill,
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled
entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the end of the reporting period.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against
which temporary difference or tax loss carried forward can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to taxes levied by the same tax authority on the same taxable entity, if there is an intention
to settle current tax liabilities and assets on a net basis or tax assets and liabilities will be realized simultaneously.
Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability
to pay the related dividend is recognized.
(f) Foreign currency translation
Transactions denominated in a foreign currency are translated and recorded at the exchange rate determined by
the Czech National Bank as at the transaction date. Monetary assets and liabilities denominated in foreign currencies
have been translated at the exchange rate published by the Czech National Bank as at the balance sheet date.
All exchange gains and losses on cash, receivables and liabilities balances are recorded in the income statement
and presented net, except those which are recorded in equity for the purpose of hedging of investments.
Investments in subsidiaries in foreign currencies are valued at the transaction date and are not subsequently
revalued. Investments and securities measured at fair value are translated at the exchange rate at the balance
sheet date and any foreign exchange translation difference is considered to be part of the fair value re-measurement.
(g) Investments in subsidiaries
Subsidiaries are those investees that the Company controls because the Company (i) has power to direct the
relevant activities of the investees that significantly affect its returns, (ii) has exposure, or rights, to variable returns
from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the
amount of its returns. The existence and effect of substantive rights, including substantive potential voting rights,
are considered when assessing whether the Company has power over another entity. For a right to be substantive,
the holder must have a practical ability to exercise that right when decisions about the direction of the relevant
activities of the investee need to be made. The Company may have power over an investee even when it holds
less than the majority of the voting power in an investee. In such a case, the Company assesses the size of its voting
rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power
over the investee. Protective rights of other investors, such as those that relate to fundamental changes of the
investee’s activities or apply only in exceptional circumstances, do not prevent the Company from controlling
an investee.
Investments in subsidiaries are carried at cost. The cost is represented by the amount of cash or cash equivalents
paid or the fair value of the consideration given to acquire the subsidiaries at the time of their acquisition.
156 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
3. Significant accounting policies continued
Impairment losses are recognized using an allowance account. Allowances are recognized to write down the
investment to present value of estimated expected future cash flows.
(h) Financial assets and liabilities
Amortised cost is the amount at which a financial instrument was recognized at initial recognition less any principal
repayments, plus accrued interest, and, for financial assets, less any allowance for expected credit losses (“ECL”).
Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or
discount to the amount payable upon maturity using the effective interest method. Accrued interest income and
accrued interest expense, including both accrued coupon and amortised discount or premium (including fees
deferred at origination, if any), are not presented separately and are included in the carrying values of the related
items in the statement of financial position.
The effective interest method is a method of allocating interest income or interest expense over the relevant period,
so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective
interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit
losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the gross carrying
amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments
to the next interest repricing date, except for the premium or discount which reflects the credit spread over the
floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or
discounts are amortised over the whole expected life of the instrument. The present value calculation includes all
fees paid or received between parties to the contract that are an integral part of the effective interest rate. For assets
that are purchased or originated credit impaired (“POCI”) at initial recognition, the effective interest rate is adjusted
for credit risk, i.e. it is calculated based on the expected cash flows on initial recognition instead of contractual payments.
i. Financial assets at amortised costs
Amortised cost applies to instruments where the business model of the owner is to hold the financial asset to
collect contractual cash flows and the contractual cash flows are solely payments of the principal amount and
the interest.
The Company recognises the following financial assets at amortized cost: trade receivables, other receivables,
loans provided and cash and cash equivalents.
Classification
Trade and other receivables, loans provided are initially recognized on the date when they are originated and
measured at fair value plus any directly attributable transaction costs.
Derecognition
The Company derecognizes trade receivables, other receivables and loans provided when the contractual rights
to the cash flows from the asset expire, or when it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.
Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate
asset or liability.
ii. Financial assets at fair value through profit or loss
An instrument is classified as at fair value through profit or loss if it is held for trading or if the business model of
the owner is to manage the financial asset on a fair value basis i.e. to realize the asset through sales as opposed
to holding the asset to collect contractual cash flows. This category represents the “default” or “residual” category
if the requirements to be classified as amortised cost or fair value through other comprehensive income (“FVOCI”)
are not met. Upon initial recognition, attributable transaction costs are recognized in profit or loss when incurred.
Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are
recognized in profit or loss in line “Other finance expense“.
As of the balance sheet date the Company does not have any such financial instruments.
157Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
3. Significant accounting policies continued
iii. Financial derivatives
The Company uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate
risks arising from its operational, financing and investment activities. Derivatives are presented as trading derivatives,
as they do not qualify for hedge accounting.
Derivative financial instruments are recognized initially at fair value. Subsequently, derivative financial instruments
are measured at fair value. Changes in the fair value of the derivatives are recognized immediately in profit or loss.
iv. Non-derivative financial liabilities
The Company has the following non-derivative financial liabilities: trade and other payables, interest-bearing loans
and borrowings, and lease liabilities. These financial liabilities are recognised initially on the settlement date at fair
value plus any directly attributable transaction costs and subsequently at amortized costs.
The Company classifies as current any part of non-current loans and borrowings that is due within one year after
the end of the reporting period.
Financial liabilities – derecognition. Financial liabilities are derecognised when they are extinguished (i.e. when the
obligation specified in the contract is discharged, cancelled or expires).
v. Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when
the Company has a legal right to offset the amounts and intends to settle the transaction on a net basis or realise
the asset and the liability simultaneously.
vi. Financial guarantees
Financial guarantees require the Company to make specified payments to reimburse the holder of the guarantee
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or
modified terms of a debt instrument or other contract. Financial guarantees are initially recognised at their fair
value, which is normally evidenced by the amount of fees received. This amount is amortised on a straight-line
basis over the life of the guarantee. At the end of each reporting period, the guarantees are measured at the higher
of (i) the amount of the loss allowance for the guaranteed exposure determined based on the expected loss model
and (ii) the remaining unamortised balance of the amount at initial recognition. In addition, an ECL loss allowance
is recognised for fees receivable that are recognised in the consolidated statement of financial position as an asset.
(i) Impairment and expected credit loss model
i. Non-financial assets and investments in subsidiaries
The carrying amounts of the Company’s non-financial assets, other than deferred tax assets, associates are reviewed
at each reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated.
The recoverable amount of an asset is the higher of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value
is estimated either with reference to an active market (for publicly traded entities), or using market multiple method.
Costs of disposal are considered as immaterial.
An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. Impairment losses
are recognized in profit or loss. Impairment losses recognized in prior periods are assessed at each reporting date
for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been recognized.
ii. Financial assets (including trade and other receivables)
IFRS 9 requires an expected credit loss (“ECL”) model for recognition and measurement of impairments of financial
instruments and contract assets that are measured at amortized cost.
158 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
3. Significant accounting policies continued
Measurement of ECLs
Current trade and other receivables – simplified approach
For current trade and other receivables from 3rd parties the Company generally uses the provisioning matrix
approach. In the provisioning matrix approach, impairment is calculated as the current amount of receivables in
a predetermined Days Past Due bucket, multiplied by the historical loss rate associated with that time bucket and
adjusted for forward looking information.
Significant receivables are assessed individually using the expected discounted cash-flows method and an expert-
based approach.
Trade and other receivables subject to the provisioning matrix approach are measured at lifetime ECL.
Financial assets subject to the provisioning matrix approach are presented in the statement of financial position
net of the allowance for ECL.
Non-current trade and other receivables, other financial assets, loans provided – Standard ECL model
The Company assesses, on a forward-looking basis, the ECL for exposures arising from non-current trade and
other receivables, other financial assets subject to its Standard ECL model. The Company measures ECL and
recognizes net expected credit losses on financial assets at the end of each reporting period. The measurement
of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of
possible outcomes, (ii) the time value of money and (iii) all reasonable and supportable information that is available
without undue cost and effort at the end of each reporting period about past events, current conditions and
forecasts of future conditions.
Financial assets subject to the Standard ECL model are presented in the statement of financial position net of the
allowance for ECL.
The Standard ECL model developed by the Company applies a three stage approach for impairment, based on
changes in credit quality since initial recognition as required by IFRS 9. A financial instrument that is not credit-
impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an
amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or
until contractual maturity, if shorter. If the Company identifies a significant increase in credit risk since initial
recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is,
up until contractual maturity but considering expected prepayments, if any (“Lifetime ECL). If the Company
determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as
a Lifetime ECL. The Company’s definition of credit impaired assets and definition of default is explained below.
For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL is always measured
as a Lifetime ECL.
Current accounts and term deposits which are placed in strong and stable credit institutions meeting all capital
and liquidity requirements as set out by Basel III are considered by the Company to bear a “low credit risk”.
The Company continuously assesses whether the low credit risk assumption is valid at each balance sheet date.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECL, the Company considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Company’s historical experience and informed credit assessment and including forward-looking information.
Significant increase in credit risk is considered to have occurred if the asset is at least 30 days past due, if the
external rating grade or internal rating grade has decreased by two notches since initial recognition, or if asset-
specific qualitative information or forward-looking information that suggest that a significant increase in credit
risk has occurred is available.
159Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
3. Significant accounting policies continued
The Company considers a financial asset to be in default when:
• The borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company
to actions such as realising security (if any is held); or
• The financial asset is more than 90 days past due.
For purposes of disclosure, the Company has fully aligned the definition of default with the definition of credit-
impaired assets. The default definition stated above is applied to all types of financial assets of the Company.
The input parameters into the ECL model calculations are based on two approaches:
• External rating-based approach; or
• Internal rating-based approach.
The external rating-based approach is used for loans to and deposits with counterparties with an external credit
rating from one of the major rating agencies.
The internal rating approach is used for loans to and deposits with counterparties without such external credit
rating; the credit spread for the individual ratings are calibrated on regular basis.
The forward-looking information considered by the Company in the Standard ECL model has been derived from
correlation analysis. The information considered is publicly available information about the expected year-to-year
changes of GDP.
Presentation of allowance for ECL in the statement of financial position
In determining the carrying value in the statement of financial position, loss allowances for financial assets measured
at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the
loss allowance is charged to profit or loss. The revaluation reserve represents the difference between amortised
cost, net of ECL, and fair value of the asset.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no
realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not
have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the
write-off. However, financial assets that are written off could still be subject to enforcement activities.
(j) Cash and cash equivalents (Note 15)
Cash is cash on hand and deposits on demand. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.
Investments normally only qualify as cash equivalent if they have a maturity of three months or less from the date
of acquisition.
(k) Share capital (Note 16)
The issued share capital comprises fully paid shares. Incremental costs directly attributable to the issue of ordinary
shares are recognized as a deduction from equity.
(l) Loans and borrowings (Note 17)
Short-term and long-term loans are initially recognized at fair value and are subsequently stated at amortised cost.
All directly attributable transaction costs are accounted for in accordance with the effective interest method.
Any part of a long-term loan which is due within one year from the end of the reporting period is classified as a
short-term loan.
(m) Provision
A provision is recognized in the statement of financial position if, as a result of a past event, the Company has a
present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation.
160 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
3. Significant accounting policies continued
Provisions are recognized at the expected settlement amount. Non-current provisions are recognized as liabilities
at the present value of the expenditures expected to be required to settle the liability. Where the effect of discounting
is material, the discount rate is a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. Any additions and the effects of changes in interest rates are recognized as
finance income or costs in profit or loss.
Changes in estimated provisions may arise in particular due to variances from the originally estimated expenditures
or due to a change in the date of settlement, or in the extent, of the liability. Changes in estimates are generally
recognized in the statement of comprehensive income as at the date that the estimate is changed. Provisions are
reviewed on an ongoing basis.
i. Establishment and use of provisions
Additions to provisions are charged to the relevant expense accounts corresponding to the nature of the cost or
loss. Unwinding of the discounting of provisions is charged to financial costs as interest expense. The release of
provisions is recognized as a decrease in the relevant expense accounts.
(n) Employee benefits
i. Other short-term employee benefits
As “Other short-term employee benefits” are presented liabilities for wages and salaries, holiday pay, sick leave,
meal vouchers and other benefits that are settled wholly within the 12 months after the end of period in which the
service was rendered.
(o) Consolidation
The Company prepares consolidated financial statements.
The consolidated financial statements of the broadest group of entities to which the Company as a consolidated
entity belongs are prepared by KKCG AG with its registered office at Kapellgasse 21, 6004 Lucerne, Swiss
Confederation. These consolidated financial statements can be obtained at the registered office of the
consolidating entity.
(p) Related parties (Note 22)
The Company’s related parties are considered to be the following:
• Parties which directly or indirectly control the Company, their subsidiaries and associates;
• Parties which directly or indirectly have significant influence on the Company,
• Members of the Company’s or its parent company’s statutory and supervisory boards and management and
parties close to such members, including entities in which they have a controlling or significant influence; and/
or
• Subsidiaries and associates and joint-venture companies.
4. IFRS first time adoption
These separate financial statements of SAZKA Group a.s. have been prepared for the first time in accordance with
IFRS as adopted by the European Union. The date of transition to IFRS is 1 January 2019. The Company has applied
the accounting policies stated in Note 3 to all accounting periods presented in these financial statements.
In preparing the opening statement of financial position in accordance with IFRS, the Company performed the
following steps:
• Recognised all assets and liabilities whose recognition is required by IFRS;
• Derecognised all assets and liabilities whose recognition is not allowed by IFRS;
• Reclassified assets, liabilities and components of equity as necessary;
• Applied IFRS in measuring all recognised assets and liabilities;
161Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
4. IFRS first time adoption continued
The Company has retrospectively applied all standards and interpretations, save certain exceptions described
below. The Company has considered and applied all mandatory transitional exceptions of IFRS 1. Transitional provisions
used for individual items of assets and liabilities are described below, including optional exemptions applied and
impact on measurement in comparison with the previous GAAP (Czech accounting standards):
•
The Company elected to apply an optional exemption and measure the carrying amount of investments in
subsidiaries at deemed costs determined as carrying value of the investment under previous GAAP as of the
transition date (see Note 12);
• The Company measured provided loans at amortized costs using effective interest rate method with provisions
according to Company’s ECL model. The measurement principles are substantially similar to the previous GAAP
(see Note 21);
•
The Company applied an ECL model to trade and other receivables, other financial assets and cash. The measurement
principles are substantially similar to the previous GAAP (see Note 21);
•
The Company measured received loans at amortized cost using the effective interest rate method. Prepaid expenses
related to arrangement fees under previous GAAP were derecognised, as they are now included in the carrying
value of the loans. On aggregate the measurement principles are substantially similar to the previous GAAP (see
Note 17);
• The Company applied the optional exemption for leases.
With the exception of assets and liabilities related to lease accounting under IFRS 16, which are immaterial to the
financial statements, all assets and liabilities recognised under the previous GAAP (Czech Accounting Standards)
were also recognised under IFRS, following reclassifications to the IFRS reporting structure. Accounting polices
applied are described in Note 3 of this Separate financial statements.
In comparison with latest published financial statements under Czech Accounting Standards, all balances and
transactional amounts previously reported under Czech Accounting Standards were carried over as IFRS balances
with following exceptions:
i. Lease under IFRS 16
The Company recognised Right-of-use assets and Lease liabilities according to IFRS 16, and corresponding changes
in the statement of comprehensive income, where lease expenses recorded under previous GAAP were replaced
by corresponding amortization of Right-of-use assets and interest expense on lease Liabilities. At the date of
transition, the Company measured:
•
The lease liability at the present value of the remaining lease payments, discounted using the lessee’s incremental
borrowing rate at the date of transition to IFRS.
• A right-of-use asset as an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the statement of financial position immediately before the
date of transition. At the date of transition, the Company excluded initial direct costs from the measurement of
the Right-of-use asset and applied IAS 36 to this asset.
ii. Investment in subsidiaries
In line with transitional provisions of IFRS 1 the Company elected to measure the carrying amount of investments
in subsidiaries at deemed costs determined as the carrying value of the investment under the previous GAAP as
of the transition date (see Note 12).
As a result, there is no change in carrying value of the investments in the opening statement of financial position
as of 1 January 2019, however the change impacts value of the investments as of 31 December 2019. The reason
for the difference is the provisions of the previous GAAP, in which the investments held in foreign currency were
remeasured using FX rate as of the reporting date against a revaluation reserve which was an element of equity.
Under IFRS, the investments are held at cost and not remeasured for these FX rate changes.
162 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
4. IFRS first time adoption continued
iii. Provisions to investment in subsidiaries
Under the previous GAAP during the financial year 2019 the Company recorded an impairment to its investment
in subsidiary Italian Gaming Holding a.s. equal to the amount of received dividend.
Under IFRS, the Company performed an impairment testing of the investment as of 31 December 2019 and there
was no need for recognition of the impairment recorded under the previous GAAP because the recoverable amount
of the investment exceeded its carrying amount.
iv. Net investment hedge accounting
During the financial year 2019 the Company entered in a hedge accounting relationship under the previous GAAP,
under which a value of the foreign currency investment – revalued through equity as of reporting date as described
in the note ii above –was hedged against changes in value of foreign currency loans and FX derivatives as
hedging instruments.
Upon the transition to IFRS the hedging relationship was terminated. As a consequence, FX driven changes arising
from hedging instruments which were recognized in equity in accordance with the previous GAAP, i.e. FX changes
in values of foreign currency loans and fair value of related FX derivatives are recorded in financial results under
IFRS, impacting Net profit for the period.
The following tables shows reconciliation of Equity and Profit or Loss, respectively, with amounts reported in the
latest financial statements under previous GAAP.
In CZK million
31 December
2019
1 January
2019
Total equity under previous GAAP 17,8 31 .2 23,235.4
(i) Effect of IFRS 16 – difference between lease expense and interest expense from lease liability
and depreciation of right of use asset (0.3) –
(ii) Effect of Investment in subsidiaries valuation – under previous GAAP FX changes recorded
through equity, under IFRS no revaluation 163.7 –
(iii) Impairment of investments in subsidiaries – no impairment required under IFRS 1,037.3 –
Total reported Equity under IFRS 19,031.9 23,235.4
In CZK million
Year ended
31 December
2019
Net profit for the period under previous GAAP 9,209.5
(i) Effect of IFRS 16 – difference between lease expense and interest expense from lease liability and
depreciation of right of use asset (0.3)
(ii) Effect of elimination of Net investment hedge accounting – changes in value of non-derivative and
derivative hedging instruments recognized in equity under previous GAAP recorded through income
statement under IFRS 156.1
(iii) Effect of Impairment of investments in subsidiaries – no impairment required under IFRS 1,037.3
Net profit for the period under IFRS 10,402.6
5. Revenues
2020 2019
Revenue from services 77.9 245.7
Revenues primarily comprise revenues from intragroup services provided to subsidiaries and, in 2019, CZK
216.8 million from the Company’s parent, representing recharges of certain expenses incurred by the Company.
There are no subsequent performance obligations and no contract assets arise.
163Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
6. Dividend income
Dividend income represents received dividends from subsidiaries as per the table below:
2020 2019
Dividend income 2,699.3 4,490.7
Italian Gaming Holding a.s. 1,820.6 1,037.3
OPAP S.A. 876.0 –
SAZKA Group Financing a.s. 2.7 –
RUBIDIUM HOLDINGS LIMITED – 1,722.6
SAZKA Czech a.s. – 1,693.0
IGH Financing a.s. – 27.5
SAZKA DELTA MANAGEMENT LTD – 10.3
7. Gain from the sale of securities
2020 2019
Gain from the sale of securities 396.0 7,79 9.6
Gain from the sale of securities in 2020 primarily comprises a gain from the intragroup sale of shares of OPAP S.A.
to SAZKA DELTA HELLENIC HOLDINGS LIMITED, and gain from the sale of other financial investments.
Gain from the sale of securities in 2019 primarily comprises a gain from the sale of shares of SAZKA Group Adriatic
d.o.o..
8. Materials, consumables and services
2020 2019
Materials, consumables and services (365.8) (740.2)
Advisory and other professional services (333.5) (6 67. 5)
Cost of IT and software services (12.3) (7. 3)
Materials and consumables (1.7) (1.1)
Telecommunication services (0.4) (0.3)
Other services (17.9) (64.0)
Advisory and other professional services primarily comprise legal and other advisory fees. A substantial part of
2019 Advisory and other professional expenses is related to a voluntary tender for shares in OPAP S.A. (the “VTO”).
164 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
9. Personnel expenses
2020 2019
Personnel expenses (96.2) (62.9)
Wages and salaries (79.7) (51.0)
Social security and health insurance (15.3) (10.1)
Other social expenses (1.2) (1.8)
“Social security and health insurance” expense includes an amount of CZK 7.6 million (2019: CZK 5.2 million) related
to contributions to state pension funds. The Company’s legal and constructive obligation for these pension state
plans is limited to the contributions.
10. Finance costs, net
2020 2019
Interest income 405.6 152.0
Interest expense (1,179.5) (433.6)
Other finance expense (512.1) (1,002.2)
Foreign exchange losses (329.8) (50.1)
Gains/(losses) from financial derivatives, net (86.7) 82.2
Other finance expenses (95.6) (1,034.3)
Finance costs, net (1,286.0) (1,283.8)
Interest income
Interest income primarily comprises interest from intragroup loans (see Note 13). Breakdown of interest income
from intragroup loans is as follows:
2020 2019
Intragroup interest income 405.6 152.0
SAZKA DELTA HELLENIC HOLDINGS LIMITED 155.4 30.3
Italian Gaming Holding a.s. 140.9 –
Austrian Gaming Holding a.s. 54.6 –
CAME Holding GmbH 45.2 –
Sazka a.s. 8.4 –
RUBIDIUM HOLDINGS LIMITED – 14.2
SAZKA Group Adriatic d.o.o – 50.6
Other 1.1 56.9
Interest expense
Interest expense primarily comprises interest from bonds and bank loans. See Note 17.
Other finance expenses
Other finance income and expenses in 2019 primarily comprise certain one-off expenses relating to the VTO in
the amount of CZK 894.4 million, which do not fulfil the requirements to be capitalised and shown as part of
effective interest expense.
165Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
11. Income tax expense
As of 31 December 2020, income tax expense in the amount of CZK 114.3 million comprises current income tax
(31 December 2019: CZK deferred tax credit 0.1 million).
According to Czech legislation, the corporate income tax rate was 19% for the 2020 and 2019 financial years.
Reconciliation of effective tax rate
2020 2019
Profit before income tax 1,375.4 10,402.5
Income tax expense at Company’s statutory tax rate of 19% (261.3) (1,976.5)
Tax effects of:
– non-deductible expenses (338.1) (378.1)
- non-taxable income from dividend 400.4 853.2
- non-taxable gain from the sale of securities 35.3 1,481.9
– non-deductible donations for charitable purposes (2.6) –
– utilization of tax losses for which no deferred tax asset was recognised 28.3 19.3
– transactions taxed at rates other than the statutory rate 23.7 –
Actual income tax expense (114.3) (0.1)
Non-taxable income from dividends and non-taxable gain from the sale of securities relate to the income which
fulfil the conditions stipulated by the Tax Code. Accordingly, expenses related to the non-taxable income are
treated as non-deductible expenses. Non-deductible expense primarily comprises non-deductible interest, non-
deductible operating costs and non-deductible foreign exchange losses. Generally, the Company’s operating
expenses and interest expenses are deductible only to the extent that there is taxable income generated, which
is limited to intragroup Revenues and Interest income.
Utilization of tax losses relates to prior period tax losses, for which deferred tax assets were not recognized due
to uncertainty about future recoverability. The Company has fully utilized its tax losses in the current period.
Transactions taxed at rates other than the statutory rate represent part of the dividend income from OPAP, which
was taxed at a 15% withholding tax rate. The tax effect in the table above represents the difference between the
19% statutory rate and 15% withholding tax rate.
166 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
12. Investments in subsidiaries
The following table summarizes investments in subsidiaries at 31 December 2020,31 December 2019 and 1 January 2019.
31/12/2020
31/12/2019 1/1/2019
31/12/2020
31/12/2019 1/1/2019
Subsidiaries Ref Country Ownership interest
Austrian Gaming Holding a.s. 5,139.9 5,139.9 5,117.9 Czech Republic 100.00% 100.00% 100.00%
IGH Financing a.s. b) – 3.0 1,412.8 Czech Republic – 100.00% 100.00%
Italian Gaming Holding a.s. 9,251.6 9,251.6 9,251.6 Czech Republic 100.00% 100.00% 100.00%
OPAP S.A. a) 8,185.5 5,455.2 – Greece 10.22% 7.28 % –
RUBIDIUM HOLDINGS LIMITED h) 11,266.6 11,266.6 10,67 7.6 Cyprus 100.00% 100.00% 100.00%
SAZKAmobil 5G a.s.
(formerly Italian GNTN Holding a.s.) c) – 4.8 – Czech Republic – 100.00% –
SAZKA Asia a.s. 80.5 80.5 80.5 Czech Republic 100.00% 100.00% 100.00%
SAZKA Czech a.s. i) 670.5 1,664.5 1,664.5 Czech Republic 100.00% 100.00% 100.00%
Sazka Delta Management Ltd
(formerly Emma Delta
Management Ltd) 6.4 6.4 6.4 Cyprus 66.70% 66.70% 66.70%
SAZKA Group CZ a.s. d) 2.2 – – Czech Republic 100.00% – –
SAZKA Group Financing a.s. 52.2 52.2 52.2 Slovakia 100.00% 100.00% 100.00%
SAZKA Group Financing
(Czech Republic) a.s. e) 133.2 – – Czech Republic 100.00% – –
SAZKA Group Russia LLC – 2.5 – Russia – 100.00% 100.00%
SAZKA Group UK Limited
(formerly KKCG UK Limited) f) 278.9 – – United Kingdom 100.00% – –
SAZKA Group Adriatic d.o.o g) – – 0.1 Croatia – – 100.00%
Vitalpeak Limited 1.3 1.3 0.6 Cyprus 100.00% 100.00% 100.00%
Total
35,068.8 32,928.5 28,264.2
* The ownership interest is equal to voting rights except for OPAP S.A. for which the voting rights are disclosed in this Note under heading
of Control over OPAP S.A.
Changes during the year
a) During the year 2020, the Company acquired the following additional interests in OPAP S.A.:
• 1.87% through open market purchases;
• 0.48% as the result of participation in OPAP S.A.’s scrip dividend programme; and
• 0.59% bought from SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta Hellenic Holdings Limited).
The Company’s direct shareholding increased from 7.28% as of 31 December 2019 to 10.22% as of 31 December 2020.
b) On 18 January 2020 IGF Financing a.s. was liquidated. Liquidation was recorded in commercial register on 1 June
2020. The movement in the prior year represent distribution of other funds in the amount of CZK 1,409.8 million.
c) On 15 September 2020, the Company disposed of SAZKAmobil 5G a.s. (formerly Italian GNTN Holding a.s.)
through an intragroup sale with immaterial impact.
d) On 10 December 2020, the Company setup a new 100% subsidiary SAZKA Group CZ a.s. (by means of acquiring
a shelf company).
e) On 25 November 2020, the Company setup a new 100% subsidiary SAZKA Group Financing (Czech Republic)
a.s. (by means of acquiring a shelf company). On 30 December 2020, the Company made a contribution to other
reserves of CZK 131.3 million.
f) On 20 May 2020, the Company acquired KKCG UK Limited from a related party. After the acquisition the
company was renamed SAZKA Group UK Limited. During the period from August to December, the Company
made contributions to share capital of CZK 264.4 million.
167Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
12. Investments in subsidiaries continued
g) On 21 May 2019, the Company sold its share in SAZKA Group Adriatic d.o.o. to EMMA GAMMA LIMITED for the
selling price of CZK 7,799.7 million. Furthermore, the Company assigned the loan provided to SAZKA Group Adriatic
d.o.o. For the assignment of the loan, EMMA GAMMA LIMITED paid the amount of CZK 3,024.6 million. The net
effect of the assignment was recognised within the other operating expenses in the year 2019.
h) On 12 June 2019, the share premium of RUBIDIUM HOLDINGS LIMITED was increased by CZK 589.0 million.
i) During the period from October to December 2020, Sazka Czech a.s. made several distributions of other reserves
in the total amount of CZK 1,245.0 million and on 24 September 2020, the Company made a contribution to other
reserves of Sazka Czech a.s. of CZK 251.0 million.
Control over OPAP S.A.
The Company presents its investment in OPAP S.A. within subsidiaries. In addition to the direct interest of 10.22%
(31.12.2019: 7.28%, 1.1.2019: 0%), the Company also controls an indirect interest of 32.90% in OPAP S.A. Cumulatively,
SAZKA Group controls 43.12% (31.12.2019: 40.01%, 1.1.2019: 33.00%) of voting rights in OPAP S.A.
The Company makes an accounting judgment that it ultimately controls OPAP S.A. due to factors including: SAZKA
Group is, with control over 43.12% (31.12.2019: 40.01%, 1.1.2019: 33.00%) of voting rights, by far the largest shareholder
of OPAP S.A., as the participation in the General Meeting never exceeded 80%, therefore SAZKA Group a.s.
controls the majority of votes at such meetings. Additionally, all shareholders’ resolutions proposed at general
meetings that the Group has voted in favour of have been approved; and the Group’s appointees make up the
majority of the OPAP S.A. Board of Directors (including CEO, CFO and Executive Chairman).
Impairment of financial investments
Impairment testing is performed on annual basis as of 31 December. The recoverable amount is estimated using
fair value less costs of disposal (“FVLCD”).
FVLCD is the amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction
between knowledgeable, willing parties, less the costs of disposal. The estimate of FVLCD is based on either:
•
The market price of the asset/cash-generating unit derived from its trading in an active market. Costs of disposal
are considered as immaterial; or
•
The market multiples method. The Company consistently uses EV/EBITDA multiple of 11.7 derived from reference
to publicly traded companies to estimate the respective FVLCD. Costs of disposal are considered as immaterial.
Results of the impairment testing and sensitivity
Recoverable amount exceeded carrying value of investments for all investments as of 31 December 2020 and all
comparative periods. See below more information on inputs and evaluation for material investments.
Austrian Gaming Holding a.s. is a holding company through which SAZKA Group holds its share in Casinos Austria
AG (“CASAG”) and additional indirect share its subsidiary Österreichische Lotterien GmbH (“Austrian Lotteries”)
(through additional intermediate holding companies). The fair value of SAZKA Group’s share of the CASAG &
Austrian Lotteries business estimated by applying the market multiples method significantly exceeds the carrying
value of the investment. No reasonable change in input parameters would result in an impairment.
OPAP S.A. is a listed company and fair value is estimated based on market valuation. Fair value of SAZKA Group’s
directly held investment in OPAP exceeds the carrying value. Significant decrease in fair value of OPAP would
result in a partial impairment of the investment (as the shares held directly have been purchase on open market
during 2019 and 2020 and therefore are relatively close to the current market value of OPAP’s shares).
RUBIDIUM HOLDINGS LIMITED is a holding company through which SAZKA Group holds further interests in OPAP
(through additional intermediate holding companies in which SAZKA holds an effective interest of 78.64%). The fair
value of the interest in OPAP significantly exceeds the carrying value of the investment. No reasonable change in
fair value of OPAP would result in an impairment (as opposed to directly held shares in OPAP, these shares were
primarily acquired before 2019 at lower prices.
168 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
12. Investments in subsidiaries continued
SAZKA Czech a.s. is a holding company through which SAZKA Group holds its share in SAZKA a.s. Fair value of
SAZKA Group’s share in SAZKA a.s. estimated by applying the market multiples method significantly exceeds the
carrying value of the investment. No reasonable change in input parameters would result in an impairment.
Italian Gaming Holding a.s. is a holding company through which SAZKA Group holds its 32.5% share in LottoItalia.
Fair value estimated by applying the market multiples method significantly exceeds the carrying value of the
investment. No reasonable change in input parameters would result in an impairment.
For pledges see Note 20.
13. Loans provided
ref 31/12/2020 31/12/2019 1/1/2019
Non-current loans 18,444.7 – –
Loan to Sazka a.s.
a)
5,046.0
Loan to CAME Holding GmbH
c)
4,979.3 – –
Loan to SAZKA DELTA HELLENIC HOLDINGS LIMITED
b)
4,771.4 – –
Loan to Italian Gaming Holding a.s.
b)
3,648.0 – –
Current loans 755.0 4,858.2 3,880.5
Current portion of long-term loan to Sazka a.s.
a)
632.4 – –
Current portion of long-term loan to Italian Gaming Holding a.s.
b)
79.2 – –
Current portion of long-term loan to CAME Holding GmbH
c)
30.5 – –
Current portion of long-term loan to SAZKA DELTA HELLENIC HOLDINGS
LIMITED
d)
12.9 4,858.2 –
Loan to SAZKA Group Adriatic d.o.o.
e)
– – 2,975.5
Loan to Sazka Group Russia OOO – – 1.4
Other loans – – 903.6
a) On 21 December 2020, the Company provided an intragroup loan to SAZKA a.s. in the principal amount of CZK
5,670.0 million. The loan is repayable in March 2030.
b) On 14 February 2020, the Company provided an intragroup loan to Italian Gaming Holding a.s. in the principal
amount of EUR 139 million. The loan is repayable in February 2027.
c) On 7 February 2020, the Company provided an intragroup loan to CAME Holding GmbH in the principal amount
of EUR 91.5 million. In June 2020, the loan was assigned from the Company to Austrian Gaming Holding a.s.
as creditor. The loan is due in February 2027. Subsequently additional advances in the amount of EUR 98.2 million
were provided under this agreement. In December 2020, the loan was assigned back from Austrian Gaming Holding
a.s. to the Company as creditor.
d) On 12 February 2020, the Company extended the maturity of a previously provided short-term intragroup loan
to Sazka Delta Hellenic Holding Limited in the principal amount of EUR 190 million. The loan is due in March 2022.
In June 2020, Sazka Delta Hellenic Holding Limited made a partial principal repayment of EUR 65.4 million.
In December 2020, Sazka Delta Hellenic Holding Limited drawn an additional EUR 57.2 million. The outstanding
principal amount was EUR 181.8 million as of 31 December 2020.
e) In 2019, a loan to SAZKA Group Adriatic d.o.o. was assigned to EMMA GAMMA LIMITED as part of disposal of
the investment (see Note 12).
All intragroup loans are made with an interest rate derived from the interest rates on the Group’s external debt.
During 2020 and 2019 the interest rates were in the range from 3.5% to 5.0%.
For security and guarantees provided see Note 20.
In the statement of cash flow, the amount of loans provided was decreased by CZK 5,114.0 million representing
non-cash movement (see Note 17).
169Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
14. Trade and other receivables
31/12/2020 31/12/2019 1/1/2019
Current trade and other receivables 317.1 274.5 2.9
Trade receivables 278.8 239.5 0.2
Receivables from VAT and other taxes 34.3 26.2 –
Short-term prepaid expenses 2.8 8.1 2.2
Other 1.2 0.7 0.5
15. Cash and cash equivalents
As of 31 December 2020, the Company has bank accounts with a total balance of CZK 487.3 million (31 December
2019: CZK 1,258.9 million; 1 January 2019: CZK 681.0 million). The balances on these bank accounts are unrestricted.
16. Equity
Share capital
The Company’s share capital consists of 20 ordinary shares in certificated form with a nominal value of CZK 100
thousand per share. The share capital is fully paid-up. No changes were made in the share capital during the years
ended 31 December 2020 or 31 December 2019.
Capital contributions
The Company’s capital contributions comprise past capital increases from its parent company. The funds are
freely distributable.
Dividend distribution
On 6 November 2020 the Company declared a dividend to its parent company KKCG AG as further amended on
28 December 2020 in the amount of CZK 3,995.9 (equivalent to EUR 150.0 million), which was settled in three installments:
• EUR 100.0 million paid on 6 November 2020;
• EUR 10.0 million paid on 9 November 2020; and
• EUR 40.0 million paid on 22 December 2020.
On 4 November 2019 the Company declared a dividend to its parent company KKCG AG in the amount of CZK
3,827.0, which was paid on 5 November 2019.
Distribution of capital contributions
The Company provided financial assistance to its parent company on 2 May 2019 in the form of a loan in the amount
of EUR 420.1 million (CZK 10,770.9 million). On 30 July 2019, the Company distributed capital contributions in the
amount of CZK 10,779.2 million, which was settled by means of offsetting against the receivable arising from
the loan.
17. Loans and borrowings
31/12/2020 31/12/2019 1/1/2019
Non-current loans and borrowings 36,881.1 18,450.0 6,788.8
Long-term loans 15,433.0 5,053.2 6,788.8
Bonds 21,448.1 13,396.8 –
31/12/2020 31/12/2019 1/1/2019
Current loans and borrowings 1,708.5 1,881.4 15.0
Current portion of long-term loans 1,471.3 1,756.3 15.0
Accrued interest on bonds 237.2 125.1 –
170 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
17. Loans and borrowings continued
Reconciliation of movements of short-term and long-term loans and borrowings to cash flow:
2020 2019
Balance at 1 January 20,331.4 6,803,8
Cash flows
Loans and borrowings received 16,5 27.1 13,674.0
Repayment of loans and borrowings (4,115.8) (236.0)
Interest paid related to prior year* (1 97.1) (12.9)
Non-cash changes
Accrued unpaid interest 265.0 202.9
Non-cash settlement** 5,058.8 35.2
Effect of FX differences 720.2 (135.6)
Balance at 31 December 38,589.6 20,331.4
* Included in “Interest paid” in “Net cash generated from operating activities”.
** Non-cash settlement includes non-monetary drawings of principal of loan received from SAZKA Group Financing a.s. (see Note 13).
Loans and borrowing overview
Ref Currency
Principal
amount in
currency
ofdebt
instrument
31/12/2020
Principal
amount in
currency
ofdebt
instrument
31/12/2019
Principal
amount in
currency
ofdebt
instrument
1/1/2019 Maturity
Interest
rate/
Coupon
Carrying
value
31/12/2020
Carrying
value
31/12/2019
Carrying
value
1/1/2019
Bonds 21,685.3 13,521.9 –
6bn CZK a) CZK 6,000.0 6,000.0 – 2024 5.200% 5,994.3 5,970.2 –
300m EUR b) EUR 300.0 300.0 – 2024 4.125% 7,821 .9 7,551 .7 –
300m EUR c) EUR 300.0 – – 2027 3.875% 7,869.1 – –
Intragroup
Loans 16,904.3 6,809.4 6,803.8
Italian Gaming
Holding a.s. d) EUR – 66.0 66.0 2020 fixed* – 1,742.9 1,700.0
SAZKA Group
Financing a.s. e) EUR 201.8 201.8 201.8 2022 fixed* 5,260.9 5,066.5 5,103.8
SAZKA Group
Financing (Czech
Republic) a.s. f) EUR 450.0 – – 2024 variable* 11,643.4 – –
Total 38,589.6 20,331.3 6,803.8
* Interest rates on intragroup loans are is derived from a Group’s external loan and borrowings interest rates. During 2020 and 2019, the
interest rates were in the range from 3.5% to 4.5%.
a) On 23 September 2019, the Company issued a bond (CZK Bond) in the amount of CZK 6,000.0 million with
fixed interest rate of 5.20% p.a. and maturity in September 2024.
b) On 15 November 2019, the Company issued a bond (EURO bond) in the amount of EUR 300.0 million with a
fixed interest rate of 4.125% p.a. and maturity in November 2024.
c) On 5 February 2020, the Company issued a bond (EURO bond) in the amount of EUR 300.0 million with a fixed
interest rate of 3.875% p.a. and maturity in February 2027.
d) On 20 December 2018, the Company received an intragroup loan from its 100% subsidiary Italian Gaming
Holding a.s. in the amount of EUR 66 million with fixed interest rate and maturity in December 2020. The loan was
fully repaid in February 2020.
171Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
17. Loans and borrowings continued
e) On 12 December 2017, the Company received an intragroup loan from its 100% subsidiary SAZKA Group Financing
a.s. in the amount of EUR 200 million with fixed interest rate and maturity in December 2022. In May 2018, the
intragroup loan was amended and loan capacity increased up to EUR 201.8 million.
f) On 21 December 2020, the Company received an intragroup loan from its 100% subsidiary SAZKA Group
Financing (Czech Republic) a.s. in the amount of EUR 450 million with variable interest rate derived from 3M
EURIBOR and maturity in July 2024. The company can draw another EUR 190 million from undrawn borrowing facilities.
For security and guarantees provided see Note 20.
Bonds issued by the Company have certain financial conditions attached to them, including certain financial
covenants based on financial results of the group (comprises subsidiaries and equity method investees of the
Company). During 2020 the Group fulfilled the covenants.
18. Trade and other payables
31/12/2020 31/12/2019 1/1/2019
Short-term trade and other payables 254.3 141.6 2,781.0
Trade payables 97.9 13 7.9 121.1
Payables to state (social and health insurance liabilities, other taxes) 6.8 0.9 0.7
Other payables 149.6 2.8 2,659.2
Payables to related parties are described in Note 22 Related parties.
Other payables as of 1 January 2019 included an intragroup liability to Italian Gaming Holding a.s. in the amount
of CZK 1,234.5 million which was settled during 2019 and funds deposited at the Company based under cash
pooling arrangements in amount of CZK 1,424.7 million. These cash pooling arrangements were repaid during 2019.
Trade and other payables have not been secured against any assets of the Company and are not due after more
than 5 years.
19. Derivatives
The Company used currency derivatives during 2020 and 2019 to mitigate currency risk. Although the currency
derivatives economically offset currency risk, hedge accounting criteria were not fulfilled. Consequently, such
currency derivatives were recognized as “Trading derivatives” classified as financial instruments at fair value through
profit or loss.
Derivatives that do not qualify for hedge accounting
The Company held the following derivatives:
Derivatives Due date
Fair value
as at
31/12/2020
Fair value
as at
31/12/2019
Fair value
as at
1/1/2019
FX forwards 2021 206.2 – –
FX forwards 2020 – 80.1 (2.1)
The Company recognised a gain on revaluation of CZK 206.2 million (2019: CZK 80.1 million) and loss on revaluation
of CZK 292.9 million (2019: CZK 2.1 million), which are netted in Gains/(losses) from financial derivatives, net.
172 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
20. Contingencies
Securities and Pledges
Bonds issued by the Company are secured pari passu with the following other bonds and borrowings issued by
its financing subsidiaries:
•
Bonds issued on 12 December 2017 by SAZKA Group Financing a.s. in the amount of EUR 200 million with
maturity on 8 December 2022; and
•
Bank loans drawn on 16 December 2020 by SAZKA Group Financing (Czech Republic) a.s. in the amount of EUR
450 million (with additional capacity up to EUR 640 million) with final maturity on 31 July 2024.
The security is shared under the terms of an intercreditor agreement dated 16 December 2020. The following
assets owned directly or indirectly by the Company are pledged:
• Shares in companies: (i) SAZKA Czech a.s.; (ii) Italian Gaming Holding a.s.; (iii) Austrian Gaming Holding a.s.; (iv)
SAZKA Group Financing (Czech Republic) a.s.; (v) Rubidium Holdings Limited; (vi) SAZKA a.s.; (vii) CAME Holding
GmbH; (viii) Medial Beteiligungs GmbH; (ix) OPAP (shares held directly by SAZKA Group a.s.) (x) LottoItalia S.r.l.
(see Note 12)
• Receivables: (i) from the bank account of SAZKA Group a.s. to which dividends of subsidiaries are distributed;
(ii) Receivables from an intragroup loan provided to SAZKA a.s., Italian Gaming Holding a.s. and CAME Holding
GmbH; (iii) Receivables of SAZKA Group Financing (Czech Republic) a.s. from an intragroup loan provided to
SAZKA Group a.s. (see Note 13).
Guarantees
The Company has provided guarantees in relation to the bonds issued by its subsidiary SAZKA Group Financing
a.s. up to EUR 250 million. (2019: EUR 250 million). Fair value of the guarantee is negligible.
The Company has provided guarantees in relation to the syndicated bank loan drown in 2020 by SAZKA Group
Financing (Czech Republic) a.s. Fair value of the guarantee is negligible.
Security and pledges terminated during 2020
A bank loan provided to CAME Holding GmbH was fully repaid in February 2020. The related pledge agreement
was also terminated in February 2020.
A bank loan to Italian Gaming Holding a.s. was repaid in February 2020. The related pledge agreement was
terminated in March 2020.
Commitments
The Company is committed to leasing of an office space in the Czech Republic for the period of 7 years starting
during the year of 2021. The commencement date of the lease is not determined yet and the office space is not
yet available for use. The present value of future committed non-cancellable lease payments is estimated to be
CZK 123.5 million. For liquidity, see Note 21b.
21. Risk management
This section describes the financial and operational risks the Company is exposed to and its risk management
methods. The key financial risks the Company faces comprise are credit risk, liquidity risk and currency risk. Since the
Company has third party financial indebtedness, interest rate risk exposure may also be deemed significant.
(a) Credit risk
i. Credit risk exposure
Credit risk represents the risk of loss that the Company would incur if a trading counterparty or business customer
is unable to fulfil its obligation resulting from payment obligations, obligation to off-take a service at a certain price
and non-delivery of the contracted service.
173Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
21. Risk management continued
The Company‘s bank accounts are predominantly with international financial institutions. The Company is primarily
exposed to credit risk primarily from its loans provided to its subsidiaries. The risk loans provided is measured and
evaluated by monitoring the financial performance of the Company’s investments.
The maximum credit risk exposure regarding financial assets is their carrying amount.
The maximum exposure to credit risk at the reporting date by type of counterparty and geographical region is
provided in the tables below.
Credit risk by type of counterparty
At 31 December 2020
Companies
(non-
financial
institutions)
Financial
institutions Individuals Total
Assets
Non-current loans provided and receivables 18,444.9 – – 18,444.9
Current loans provided and receivables 1,033.6 – 0.2 1,033.8
Cash and cash equivalents – 4 87. 3 – 487.3
Total 19,478.5 4 87. 3 0.2 19,966.0
At 31 December 2019
Companies
(non-
financial
institutions)
Financial
institutions Individuals Total
Assets
Current loans provided and receivables 5,098.0 – 0.2 5,098.2
Cash and cash equivalents – 1,258.9 – 1,258.9
Total 5,098.0 1,258.9 0.2 6,357.1
At 1 January 2019
Companies
(non-
financial
institutions)
Financial
institutions Individuals Total
Assets
Non-current loans provided and receivables 0.2 – – 0.2
Current loans provided and receivables 3,875.1 5.7 0.4 3,881.2
Cash and cash equivalents – 681.0 – 681.0
Total 3,875.3 686.7 0.4 4,562.4
Credit risk by region
Financial assets and Cash and cash equivalents 31/12/2020 31/12/2019 1/1/2019
Czech Republic 10,022.2 1,208.0 679.4
Austria 5,011.1 0.2
Cyprus 4,784.3 4,858.2 388.6
Greece 147.8 73.9 1.4
United Kingdom 0.6 517.4
Switzerland – 216.8 –
Croatia – – 2,975.5
Total 19,966.0 6,357.1 4,562.4
174 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
21. Risk management continued
ii. Ageing structure of financial assets
At 31 December 2020 Current
Past due
0-90 days
Past due
91-180 days
Past due
181-365 days
More than
one year
ECL
allowance Total
Non-current trade
and otherreceivables 18,444.9 – – – – – 18,444.9
Long-term deposits 0.2 – – – – – 0.2
Long-term loans provided 18,444.7 – – – – – 18,444.7
Current trade and
otherreceivables 1,002.2 31.6 – 1,033.8
Trade and other receivables 247. 2 31.6 – – – – 278.8
Current portion of long-term
loans provided 755.0 – – – – – 755.0
Cash and cash equivalents 487.3 – – – – – 4 87.3
Bank accounts 487.3 – – – – – 4 87.3
Total 19,934.4 31.6 – – – – 19,966.0
At 31 December 2019 Current
Past due
0-90 days
Past due
91-180 days
Past due
181-365 days
More than
one year
ECL
allowance Total
Current trade
and other receivables 5,098.2 – – – – – 5,098.2
Trade and other receivables 240.0 – – – – – 240.0
Short-term loans provided 4,858.2 – – – – – 4,858.2
Cash and cash equivalents 1,258.9 – – – – – 1,258.9
Bank accounts 1,258.9 – – – – – 1,258.9
Total 6,357.1 – – – – – 6, 357.1
At 1 January 2019 Current
Past due
0-90 days
Past due
91-180 days
Past due
181-365 days
More than
one year
ECL
allowance Total
Non-current trade
and other receivables 0.2 – – – – – 0.2
Other long-term receivables 0.2 – – – – – 0.2
Current trade and other
receivables 3,881.2 3,881.2
Trade and other receivables 0.7 – – – – – 0.7
Short-term loans provided 3,880.5 – – – – – 3,880.5
Cash and cash equivalents 681.0 – – – – – 681.0
Bank accounts 681.0 – – – – – 681.0
Total 4,562.4 – – – – – 4,562.4
175Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
21. Risk management continued
iii. Credit quality of financial assets at amortized cost
The Company classifies financial assets into credit quality classes. Class 1 consists of high-quality financial assets
that do not have any indicators of impairment and fulfil the definition for “low credit risk” exemption and own cash
in hand. Class 2 consists of all other financial assets, to which the Company assigns a credit risk rating and creates
an ECL provision as described in Note 3.
At 31 December 2020 Stage 1 Stage 2 Stage 3
Provision
matrix
ECL
allowance
Net carrying
amount
Class 1
Cash and cash equivalents 487.3 – – – – 4 87. 3
Bank accounts in banks: 487.3 – – – – 4 87. 3
Class 2
Current loans and receivables 755.0 – – 278.8 – 1,033.8
Trade and other receivables – – – 278.8 – 278.8
Current portion of long-term loans provided 755.0 – – – – 755.0
Non-current loans and receivables 18,444.9 – – – – 18,444.9
Long-term deposits 0.2 – – – – 0.2
Long-term loans provided 18,444.7 – – – – 18,444.7
Total 19,687.2 – – 278.8 – 19,966.0
At 31 December 2019 Stage 1 Stage 2 Stage 3
Provision
matrix
ECL
allowance
Net carrying
amount
Class 1
Cash and cash equivalents 1,258.9 – – – – 1,258.9
Bank accounts in banks: 1,258.9 – – – – 1,258.9
Class 2
Current loans and receivables 4,858.2 - - 240.0 – 5,098.2
Trade and other receivables – – – 240.0 – 240.0
Short-term loans provided 4,858.2 – – – - 4,858.2
Total 6,117.1 – – 240.0 – 6,357.1
At 1 January Stage 1 Stage 2 Stage 3
Provision
matrix
ECL
allowance
Net carrying
amount
Class 1
Cash and cash equivalents 681.0 – – – – 681.0
Bank accounts in banks 681.0 – – – – 681.0
Class 2
Current loans and receivables 3,880.5 - - 0.7 - 3,881.2
Trade and other receivables - - - 0.7 - 0.7
Short-term loans provided 3,880.5 - - - - 3,880.5
Non-current loans and receivables – – 0.2 – – 0.2
Other receivables – – 0.2 – – 0.2
Total 4,561.5 – 0.2 0.7 – 4,562.4
176 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
21. Risk management continued
The Company considers provided intragroup loans as having low credit risk. The intragroup loans or the companies
does not have separate external credit ratings assigned, thus the Company evaluates the risk with reference to
external credit ratings assigned to rated elements of the Group. It is assumed that the individual risk would not be
higher than a standalone rating assigned to OPAP S.A. The Company assumes that the individual risks would be
in the range equivalent to a Moody‘s rating from Ba1 to Ba3.
The Company refers to Moody’s tables for historic 12-months default rates (period 1998-2020) for Ba1 to Ba3 rating,
which ranges from 0.29% to 0.83% and Moody’s tables for historic recovery rates (period 1983-2020) of unsecured
bonds of Ba rating, which is 43.46%. Based on above the Company believe that the credit risk is not material for
the Company as of 31 December 2020 and all comparable periods.
(b) Liquidity risk
Liquidity risk represents the risk that the company might not be able to fulfil its payment obligations, primarily in
respect of amounts due to providers of bank loans and bonds.
The Company monitors the risk of having insufficient funds by monitoring the liquidity and maturity of investments
and other financial assets and liabilities, projected cash flows from its activities and fulfilment of bank covenants.
The Company maintains free liquidity sources that consist of cash and equivalents in currencies in which the future
financial needs are expected.
The Company aims to balance its financing requirements using bank overdrafts, cash pooling, bank loans and leases.
The Company uses IT tools for liquidity management, valuation of financial instruments and for trading and risk
management purposes.
The Company minimises liquidity risk through cash flow management and planning. The key cash flow planning
tool is annual medium-term plans prepared for the period of the at least following five years. The key Company
cash flows for current year are broken down into individual months and updated on an ongoing basis.
As part of its liquidity risk management strategy, the Company ensures that a portion of its assets is highly liquid.
The table below presents an analysis of the Company’s financial assets and liabilities classified by maturity.
Where early repayment is possible, the Company makes the most prudent assessment possible, reflecting the
earliest possible repayment of liabilities and the latest possible repayment of receivables. Assets and liabilities
whose maturity is not contractually specified are grouped under the “due on demand” category.
Liquidity risk analysis (by maturity):
At 31 December 2020
Carrying
amount
Contractual
cash flows*
1 year
orless 1-5 years
More than
5years
Due on
demand
Assets
Trade and other receivables and long-term
loans provided 19,478.7 23,258.3 1,687.7 9,575.7 11,994.9 –
Derivative financial instruments 206.2 233.0 233.0 – – –
Total 19,684.9 23,491.3 1,920.7 9,575.7 11,994.9 –
Cash 487.3 487.3 – – – 487.3
Liabilities
Loans and borrowings (38,589.6) (45,128.5) (2,980.6) (33,816.8) (8,331.1) –
Trade and other payables (247.5) (247.5) (247.5) – – –
Lease liabilities (6.7) (6.9) (6.9) – – –
Total (38,843.8) (45,382.9) (3,235.0) (33,816.8) (8,331.1) –
Off balance sheet: Future lease commitments (123.5) (145.8) (14.1) (83.2) (48.5) –
Net balance – liquidity risk (18,795.1) (21,550.1) (1,328.4) (24,324.3) 3,615.3 4 87.3
* Contractual cash flows are not discounted to net present value and include interest, if applicable.
177Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
21. Risk management continued
At 31 December 2019
Carrying
amount
Contractual
cash flows*
1 year
or less 1-5 years
More than
5years
Due on
demand
Assets
Trade and other receivables and
short-term loans 5,098.3 5,1 27. 2 5 ,1 2 7.2 – – –
Derivative financial instruments 80.1 80.1 80.1 – – –
Total 5,178.4 5, 207.3 5, 207.3 – – –
Cash 1,258.9 1,258.9 – – – 1,258.9
Liabilities
Loans and borrowings (20,331.3) (24,291.5) (2,599.1) (21,692.4) – –
Non-current lease liabilities (9.3) (10.1) – (8.2) (1.9) –
Trade and other payables (140.7) (140.7) (140.7) – – –
Current lease liabilities (6.4) ( 7.1) ( 7.1) – – –
Total (20,487.7 ) (24,449.4) (2,746.9) (21,700.6) (1.9) –
Net balance – liquidity risk (14,050.4) (17,983. 2) 2,460.4 (21,700.6) (1.9) 1,258.9
* Contractual cash flows are not discounted to net present value and include interest, if applicable.
At 1 January 2019
Carrying
amount
Contractual
cash flows*
1 year
or less 1-5 years
More than
5years
Due on
demand
Assets
Trade and other receivables and long-term
loans provided 0.2 0.4 – 0.4 – –
Trade and other receivables and short-term
loans provided 3,881.2 3,969.7 3,969.7 – – –
Total 3,881.4 3,970.1 3,969.7 0.4 – –
Cash 681.0 681.0 – – – 681.0
Liabilities
Loans and borrowings (6,803.8) ( 7,8 87.3 ) (97.4) (7,78 9.9) – –
Non-current lease liabilities (18.0) (18.1) – (18.1) – –
Current lease liabilities (6.8) (7.0) ( 7.0) – – –
Trade and other payables (2,778.4) (2,778.4) (2,778.4) – – –
Current derivative financial instruments (2.1) (2.1) (2.1) – – –
Total (9,609.1) (10,641.3) (3,007.0) (7,63 4.3) – –
Net balance – liquidity risk (5,046.7) (5,990.2) 962.7 (7,633.9) – 681.0
* Contractual cash flows are not discounted to net present value and include interest, if applicable.
The Company has provided guarantees in relation to the bonds issued by its subsidiary SAZKA Group Financing
a.s. and in relation to the syndicated bank loan drown by its subsidiary SAZKA Group Financing (Czech Republic)
a.s., in total carrying amount of CZK 16,904.3 million as of 31 December 2020, which would be payable by the
Company in the case of default of their financing conditions.
(c) Interest rate risk
The Company is exposed to the risk of interest rate fluctuation.
The risk is primarily attributable to the Company’s loans with floating interest rates. As of 31 December 2020, the
only such loan was an intragroup loan from SAZKA Group Financings (Czech Republic) a.s.). The Company monitors
developments in financial markets. The risk of an increase in interest rates is continuously monitored and the use
of standard instruments to mitigate the risk is considered.
178 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
21. Risk management continued
Increase/decrease in interest rates by 1 percentage point (100bp) would cause an increase/decrease of profit by
CZK 116.4 million (31 December 2019: CZK 17.4 million; 1 January 2019: CZK 17.0 million).
(d) Currency risk
The Company is exposed to foreign exchange risk when financial assets and liabilities are denominated in different
currencies. The company manages the risk from foreign currency transaction through use of currency derivatives
and structuring the financing and cash-flow structure of the group in a way that creates effective economic hedging.
Foreign currency denominated intercompany receivables and payables are included in sensitivity analysis for
foreign exchange risk. The table below shows the split of financial assets and liabilities according to their currency
(note that CZK is the functional currency of the company and thus does generate currency risk).
At 31 December 2020 CZK EUR USD Other Total
Trade and other receivables and long-term loans provided 5,046.2 13,398.7 – – 18,444.9
Trade and other receivables and current portion of long-
term loans provided 870.9 162.2 – 0.7 1,033.8
Derivative financial instruments – 206.2 – – 206.2
Cash and cash equivalents 66.6 409.2 11.4 0.2 4 87.3
Total assets 5,983.7 14,176.2 11.4 0.9 20,172.2
Long-term loans and borrowings (5,909.4) (30,971.7) – – (36,881.1)
Current portion of long-term loans and borrowings (84.9) (1,623.6) – – (1,708.5)
Lease liabilities (6.7) – – – (6.7)
Trade and other payables (22.4) (200.0) – (25.3) (247.7)
Total liabilities (6,023.4) (32,795.3) – (25.3) (38,844.0)
Total (39.7) (18,619.1) 11.4 (24.4) (18,671.8)
At 31 December 2019 CZK EUR USD Other Total
Trade and other receivables and short-term loans provided 2 17.2 4,889.3 – – 5,106.5
Derivative financial instruments – 80.1 – – 80.1
Cash and cash equivalents 342.4 910.5 6.0 – 1,258.9
Total assets 559.6 5,879.9 6.0 – 6,445.5
Long-term loans and borrowings (5,885.3) (12,564.8) – – (18,450.0)
Non-current lease liabilities (9,3) – – – (9.3)
Current portion of long-term loans and borrowing (84.9) (1,796.4) – – (1,881.3)
Current lease liabilities (6.4) – – – (6.4)
Trade and other payables (54.2) (58.6) (11.9) (13.1) (1 37. 8)
Total liabilities (6,040.1) (14,419.8) (11.9) (13.1) (20,484.8)
Total (5,480.5) (8,539.9) (5.9) (13.1) (14,039.3)
At 1 January 2019 CZK EUR USD Other Total
Trade and other receivables and long-term loans provided 0.2 – – – 0.2
Trade and other receivables and short-term loans provided 0.6 3,880.4 0.2 – 3,881.2
Cash and cash equivalents 22.3 6 57.5 1.2 – 681.0
Total assets 23.1 4,537.9 1.4 – 4,562.4
Long-term loans and borrowings – (6,788.9) – – (6,788.9)
Current portion of long-term loans and borrowing (2.1) (12.9) – – (15.0)
Current lease liabilities (6.8) – – – (6.8)
Derivative financial instruments – (2.1) – – (2.1)
Trade and other payables (2,762.6) (13.1) (3.2) (2.1) (2,781.0)
Total liabilities (2,771.5) (6,817.0) (3.2) (2.1) (9,593.8)
Total (2,748.4) (2,279.1) (1.8) (2.1) (5,031.4)
179Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
21. Risk management continued
A reasonably possible strengthening (weakening) of CZK against foreign currencies as of 31 December 2020 would
have affected the measurement of financial instruments denominated in a foreign currency and affected the equity
and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest
rates, remain constant.
As of 31 December 2020, a 10% strengthening (weakenig) in the Czech crown would have increased (decreased)
profit or loss and equity in EUR by the amount of CZK 1,861.9 million (31 December 2019: CZK 854.0 million;
1 January 2019: CZK 228.0 million) and in USD by the amount of CZK 1.1 million (31 December 2019: CZK 0.6 million;
1 January 2019: CZK 0.2 million).
(e) Fair value measurement
Derivative instruments are classified within level 2 of the fair value hierarchy.
For all remaining financial assets and liabilities accounting at amortized costs, the Company assess that their fair
value approximates their carrying value in all material aspects.
Valuation techniques used to value financial instruments include:
• For FX forwards and FX swaps – present value of future cash flows based on forward exchange rates at the
balance sheet date.
22. Related parties
All material transactions with related parties were carried out on an arm’s length basis.
(a) Outstanding related party balances as of 31 December 2020, 31 December 2019 and
1January 2019:
The following tables present outstanding receivables and payables from related parties of the Company as of
31 December 2020, 31 December 2019 and 1 January 2019:
Outstanding balance with parent 31/12/2020 31/12/2019 1/1/2019
Assets
Current trade and other receivables – 216.8 –
Liabilities
Current trade and other payables – 1.0 1.0
Outstanding balance with companies controlled by the Company 31/12/2020 31/12/2019 1/1/2019
Assets
Non-current loans provided 18,444.7 – –
Current loans provided 755.0 4,858.2 2,967.9
Current trade and other receivables 278.0 22.3 1.7
Liabilities
Current loans and borrowings 1,471.3 1,756.2 15.0
Non-current loans and borrowings 15,433.0 5,053.2 6,788.8
Current trade and other payables 5.0 6.7 1.7
Outstanding balance with related parties of the Company with other companies controlled by the
parent 31/12/2020 31/12/2019 1/1/2019
Liabilities
Current trade and other payables 10.8 27.7 12.8
See Notes 13 and 17 for detailed split of loans and borrowings according to counterparties.
180 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
22. Related parties continued
(b) Transactions with related parties of the Company for the years ended 31 December 2020
and 31 December 2019:
The following tables present transactions with related parties of the Company with effect on the statement of
comprehensive income for the years ended 31 December 2020 and 31 December 2019:
Transactions with parent 2020 2019
Revenue from sale of goods and services – 216.8
Materials, consumables and services 4.4 4.0
Finance income – 5.3
Transactions with companies controlled by Company 2020 2019
Revenue from services 76.8 28.2
Materials, consumables and services 11.2 16.1
Dividend income 2,699.3 4,490.7
Interest income 404.5 95.2
Interest expense 247.7 295.7
Other finance expenses 30.6 0.5
Transactions with related parties of the Company with other companies controlled by the parent 2020 2019
Materials, consumables and services 19.4 38.3
Personnel expenses 0.4 0.5
Other operating expenses 4.5 8.4
Interest income 1.2 5.4
Other finance expenses 4.1 –
Materials, consumables and services mainly comprise consulting services, rental costs and rental services, IT
services and material and energy consumption. Other operating expenses mainly comprise travel expenses.
(c) Transactions with members of the Company’s Board of Directors, Supervisory Board and
executive management for the year ended 31 December 2020 and 31 December 2019:
Bonuses, remuneration and other personal expenses incurred in respect of members of the Board of Directors
and Supervisory Board, and other management personnel with executive power.
2020 2019
Board of Directors
and Supervisory
Board
Executive
management
Board of Directors
and Supervisory
Board
Executive
management
Wages and salaries (5.8) (27.5) (2.7) (19.6)
Social insurance – (4.2) – (2.4)
Total (5.8) (31.6) (2.7) (22.0)
“Key management personnel” comprise the C-level management of the Company.
There are no outstanding balances between the Company and the executive management.
181Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Notes to the separate financial statements continued
23. Subsequent events
Significant subsequent events that occurred after 31 December 2020:
1. In January 2021, the Company received a partial repayment of an intragroup loan from Italian Gaming Holding
a.s. in the amount of EUR 7.5 million (equivalent to CZK 196.4 million).
2. In January 2021, the company established a new subsidiary SAZKA GROUP UK HOLDING LTD, which is
incorporated in the United Kingdom.
3. In January 2021 the Company provided an additional intragroup loan to CAME Holding GmbH in the amount of
EUR 23.2 million (equivalent to CZK 605.1 million).
4. In February 2021, the Company provided a new intragroup loan to RUBIDIUM HOLDING Ltd in the amount of
EUR 8.3 million (equivalent to CZK 213.8 million).
5. In February 2021, the Company received partial repayment of an intragroup loan from SAZKA DELTA HELLENIC
HOLDINGS Ltd in the amount of EUR 8.3 million (equivalent to CZK 213.8 million).
6. During the first quarter of 2021 the Company increased its direct shareholding in OPAP by 0.99% to 11.21%, thus
the combined shareholding is 44.11% (effective share 37.08%).
7. During the first quarter of 2021, the Company drew an intragroup loan from SAZKA Group Financing (Czech
Republic) a.s. in the aggregate amount of EUR 84.9 million (equivalent to CZK 2,216.2 million).
8. COVID-19 update
In late October/early November 2020, a number of regions in Europe implemented tighter COVID-19 related
restrictions. A number of these restrictions have continued into 2021. The Company is only impacted indirectly,
through negative impact of COVID-19 related restriction on its investments.
While all Group’s digital channels continue to operate without interruption, physical retail networks have to various
degrees been affected by these restrictions, with a very limited impact in Austria, the Czech Republic and Italy
but a greater impact in Greece and Cyprus.
The restrictive measures have not affected Company’s ability to fulfil its obligation to lenders and have not impacted
going concern assertion.
Date:
30 April 2021
Signature of the authorised representative:
Pavel Šaroch
Member of the Board of Directors
Robert Chvátal
Member of the Board of Directors
182 Sazka Group Annual Report and Accounts 2020
Separate Financial Statements for the year ended 31 December 2020 (in millions of CZK)
PricewaterhouseCoopers Audit, s.r.o., Hvězdova 1734/2c, 140 00 Prague 4, Czech Republic
T: +420 251 151 111, www.pwc.com/cz
PricewaterhouseCoopers Audit, s.r.o., registered seat Hvězdova 1734/2c, 140 00 Prague 4, Czech Republic,
Identification Number: 40765521, registered with the Commercial Register kept by the Municipal Court
in Prague, Section C, Insert 3637, and in the Register of Audit Companies with the Chamber of Auditors
of the Czech Republic under Licence No. 021.
Independent auditor’s report
To the shareholder of SAZKA Group a.s.
Report on the audit of the consolidated and separate financial statements
Our opinion
In our opinion:
• the consolidated financial statements give a true and fair view of the consolidated financial
position of SAZKA Group a.s., with its registered office at Vinohradská 1511/230, Praha 10
(the “Company”) and its subsidiaries (together the “Group”) as at 31 December 2020,
of the Group’s consolidated financial performance and consolidated cash flows for the year ended
31 December 2020 in accordance with International Financial Reporting Standards as adopted by
the European Union, and
• the separate financial statements give a true and fair view of the separate financial position
of the Company as at 31 December 2020, of the Company’s separate financial performance
and separate cash flows for the year ended 31 December 2020 in accordance with International
Financial Reporting Standards as adopted by the European Union.
What we have audited
The Group’s consolidated financial statements comprise:
• the consolidated statement of comprehensive income for the year ended 31 December 2020;
• the consolidated statement of financial position as at 31 December 2020;
• the consolidated statement of changes in equity for the year ended 31 December 2020;
• the consolidated statement of cash flows for the year ended 31 December 2020; and
• the notes to the consolidated financial statements including significant accounting policies and other
explanatory information.
The Company’s separate financial statements comprise:
• the separate statement of comprehensive income for the year ended 31 December 2020;
• the separate statement of financial position as at 31 December 2020;
• the separate statement of changes in equity for the year ended 31 December 2020;
• the separate statement of cash flows for the year ended 31 December 2020; and
• the notes to the separate financial statements including significant accounting policies and other
explanatory information.
2
Basis for opinion
We conducted our audit in accordance with the Act on Auditors, Regulation (EU) No. 537/2014
of the European Parliament and of the Council (the “EU Regulation”) and Standards on Auditing
of the Chamber of Auditors of the Czech Republic (together the “Audit regulations”). These standards
consist of International Standards on Auditing as supplemented and modified by related application
guidance. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group and the Company in accordance with the International Code
of Ethics for Professional Accountants (including International Independence Standards) issued
by the International Ethics Standards Board for Accountants (IESBA Code) as adopted
by the Chamber of Auditors of the Czech Republic, with the Act on Auditors and with
the EU Regulation. We have fulfilled our other ethical responsibilities in accordance with
the IESBA Code, Act on Auditors and EU Regulation.
Our audit approach
Overview
The overall materiality for the Group : EUR 13.1 million, which
was determined as 5% of the average Group’s profit before
tax from continuing operations for the last three years (the
profit before tax for the year 2020 was adjusted for the gain of
EUR 142.7 million from the remeasurement to fair value of
previously held equity method investee upon acquisition of
control, that was considered to be a non-recurring item).
The overall materiality for the Company: CZK 442.0 million,
which was determined as 0.8% of the total assets.
Significant components of the Group were subject to a full
scope audit. Our audit work addressed 100% of the Group’s
revenues and 97% of the Group’s profit for the year.
Revenue Recognition Based on Complex Information Systems
– Gross Gaming Revenue (consolidated financial statements)
Impairment assessment of Intangible assets with indefinite
useful lives and Goodwill (consolidated financial statements)
Impact of COVID
-19 pandemic (separate and consolidated
financial statements)
As part of designing our audit, we determined the materiality and assessed the risks of material
misstatement in the consolidated and separate financial statements (together the “financial
statements”). In particular, we considered where management made subjective judgements,
for example, in respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our audits, we also addressed
the risk of management override of internal controls, including among other matters, consideration
of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
2
Basis for opinion
We conducted our audit in accordance with the Act on Auditors, Regulation (EU) No. 537/2014
of the European Parliament and of the Council (the “EU Regulation”) and Standards on Auditing
of the Chamber of Auditors of the Czech Republic (together the “Audit regulations”). These standards
consist of International Standards on Auditing as supplemented and modified by related application
guidance. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group and the Company in accordance with the International Code
of Ethics for Professional Accountants (including International Independence Standards) issued
by the International Ethics Standards Board for Accountants (IESBA Code) as adopted
by the Chamber of Auditors of the Czech Republic, with the Act on Auditors and with
the EU Regulation. We have fulfilled our other ethical responsibilities in accordance with
the IESBA Code, Act on Auditors and EU Regulation.
Our audit approach
Overview
The overall materiality for the Group : EUR 13.1 million, which
was determined as 5% of the average Group’s profit before
tax from continuing operations for the last three years (the
profit before tax for the year 2020 was adjusted for the gain of
EUR 142.7 million from the remeasurement to fair value of
previously held equity method investee upon acquisition of
control, that was considered to be a non-recurring item).
The overall materiality for the Company: CZK 442.0 million,
which was determined as 0.8% of the total assets.
Significant components of the Group were subject to a full
scope audit. Our audit work addressed 100% of the Group’s
revenues and 97% of the Group’s profit for the year.
Revenue Recognition Based on Complex Information Systems
– Gross Gaming Revenue (consolidated financial statements)
Impairment assessment of Intangible assets with indefinite
useful lives and Goodwill (consolidated financial statements)
Impact of COVID
-19 pandemic (separate and consolidated
financial statements)
As part of designing our audit, we determined the materiality and assessed the risks of material
misstatement in the consolidated and separate financial statements (together the “financial
statements”). In particular, we considered where management made subjective judgements,
for example, in respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our audits, we also addressed
the risk of management override of internal controls, including among other matters, consideration
of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
3
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance as to whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall materiality for each set of financial statements as a whole as set out in the table
below. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
both individually and in aggregate, on each set of financial statements as a whole.
Overall Group
materiality
EUR 13.1 million (EUR 17.9 million for the previous period)
Overall materiality
for the Company
standing alone
CZK 442.0 million (CZK 309.0 million for the previous period)
How we
determined it
Overall Group materiality was determined as 5% of the average Group’s
profit before tax from continuing operations for the last three years (the profit
before tax for the year 2020 was adjusted for the gain of EUR 142.7 million
from the remeasurement to fair value of previously held equity method
investee upon acquisition of control, that was considered to be a non-
recurring item).
The overall materiality for the Company was determined as 0.8% of the total
assets.
Rationale for the
materiality
benchmark
applied
Materiality is a matter of professional judgment. In drawing conclusions about
materiality, we considered both quantitative and qualitative factors.
For the overall Group materiality, we selected the average profit before tax
from continuing operations for the last three years as the benchmark. In our
view, profit before tax is the benchmark against which the performance of the
Group is measured the most by users, and it is a generally accepted
benchmark. We chose the average profit before tax for the last three years
because the 2020, financial performance of the Group was negatively
affected by the COVID-19 pandemic. This is considered to be a one-off
situation because the Group's long-term financial performance has been
stable with reasonable growth and the performance is expected to recover
after the pandemic. We decided to apply a 5% threshold, because based on
our professional judgment, this percentage is within the range of acceptable
and commonly used quantitative materiality thresholds for this benchmark.
The Company is a holding entity and dividends are the primary source of its
income. The ultimate objective of the Company is to increase value for
shareholders through enhancing investments in its subsidiaries. Based on
these facts, we determined the overall materiality for the Company based on
the total assets. We selected a 0.8% threshold, because based on our
professional judgment, this percentage is within the range of acceptable
quantitative materiality thresholds for this benchmark.
4
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of each set of financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Revenue Recognition Based on Complex
Information Systems – Gross Gaming Revenue
(consolidated financial statements)
For the year ended 31 December 2020, the
Gross gaming revenue of the Group amounted
to EUR 2,018.0 million. Refer to Notes 3 d) and
8 to the consolidated financial statements.
The Group operates in a regulated environment
in several jurisdictions and has a variety of
revenue streams across its operations. The
revenue streams involve a large volume of
individually immaterial daily transactions being
recorded, processed, computed, and accounted
for using highly complex interconnected IT
systems (both in house and third-party ones),
with a number of different and specialised bases
for calculating revenue.
The accuracy and completeness of the amounts
recognized from these revenue streams are
highly dependent on Information Technology (IT)
systems and automated processes and controls
(i.e. calculations, reconciliations) embedded in
or used by these systems. The complexity
arising from the increased use of the
aforementioned Information Technology (IT)
systems combined with the large volume and
complexity of transactions being processed on a
daily basis increase the risk of material
misstatement in the financial statements arising
from the ineffective inter-connectivity of the IT
systems and data, and the risk around the
degree of reliability of the amounts recognized
from these revenue streams.
The audit approach relies on the effectiveness of
controls over IT systems, which is critical to the
financial reporting, and the overall information
security resilience of the Group.
We assessed the information security resilience
of the Group by evaluating the design and
implementation of key IT processes and controls
over financial reporting. More specifically, we
assessed the overall IT environment including
the administration of access, changes and daily
IT operations for key layers of underlying
infrastructure (i.e. applications, operating
system, databases, and data) for the systems in
scope of the audit and tested the operating
effectiveness of the related controls. In addition,
in order to be able to place reliance on the
system generated information (i.e. data and
reports), and any IT dependent or automated
controls (i.e. interfaces, calculations,
reconciliations) implemented in these systems,
we also tested the operating effectiveness of
business process controls around revenues, and
performed substantive procedures over
revenues, tested reconciliations and non-
standard journal entries related to revenues as
part of our audit.
For the instances where, at the Group level, the
aforementioned systems and/or related
processes and controls were outsourced to third
party providers and sufficient audit evidence
concerning the relevant financial statement
assertions was not available from records held
within the Group, we obtained and evaluated the
respective assurance reports, issued by the
auditors of the Service Organizations, in order to
obtain the understanding of the nature of the
services being provided and the control
environment implemented at the Service
Organizations, including the results of the testing
of the operating effectiveness that was
performed by the auditors of the respective
Service Organizations. We have read the audit
reports and assessed the conclusions provided
by the respective auditors and whether the third
party services were operating as intended.
4
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of each set of financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Revenue Recognition Based on Complex
Information Systems – Gross Gaming Revenue
(consolidated financial statements)
For the year ended 31 December 2020, the
Gross gaming revenue of the Group amounted
to EUR 2,018.0 million. Refer to Notes 3 d) and
8 to the consolidated financial statements.
The Group operates in a regulated environment
in several jurisdictions and has a variety of
revenue streams across its operations. The
revenue streams involve a large volume of
individually immaterial daily transactions being
recorded, processed, computed, and accounted
for using highly complex interconnected IT
systems (both in house and third-party ones),
with a number of different and specialised bases
for calculating revenue.
The accuracy and completeness of the amounts
recognized from these revenue streams are
highly dependent on Information Technology (IT)
systems and automated processes and controls
(i.e. calculations, reconciliations) embedded in
or used by these systems. The complexity
arising from the increased use of the
aforementioned Information Technology (IT)
systems combined with the large volume and
complexity of transactions being processed on a
daily basis increase the risk of material
misstatement in the financial statements arising
from the ineffective inter-connectivity of the IT
systems and data, and the risk around the
degree of reliability of the amounts recognized
from these revenue streams.
The audit approach relies on the effectiveness of
controls over IT systems, which is critical to the
financial reporting, and the overall information
security resilience of the Group.
We assessed the information security resilience
of the Group by evaluating the design and
implementation of key IT processes and controls
over financial reporting. More specifically, we
assessed the overall IT environment including
the administration of access, changes and daily
IT operations for key layers of underlying
infrastructure (i.e. applications, operating
system, databases, and data) for the systems in
scope of the audit and tested the operating
effectiveness of the related controls. In addition,
in order to be able to place reliance on the
system generated information (i.e. data and
reports), and any IT dependent or automated
controls (i.e. interfaces, calculations,
reconciliations) implemented in these systems,
we also tested the operating effectiveness of
business process controls around revenues, and
performed substantive procedures over
revenues, tested reconciliations and non-
standard journal entries related to revenues as
part of our audit.
For the instances where, at the Group level, the
aforementioned systems and/or related
processes and controls were outsourced to third
party providers and sufficient audit evidence
concerning the relevant financial statement
assertions was not available from records held
within the Group, we obtained and evaluated the
respective assurance reports, issued by the
auditors of the Service Organizations, in order to
obtain the understanding of the nature of the
services being provided and the control
environment implemented at the Service
Organizations, including the results of the testing
of the operating effectiveness that was
performed by the auditors of the respective
Service Organizations. We have read the audit
reports and assessed the conclusions provided
by the respective auditors and whether the third
party services were operating as intended.
5
Impairment assessment of Intangible assets with
indefinite useful lives and Goodwill (consolidated
financial statements)
Management tests goodwill and intangible assets with
indefinite useful lives for impairment annually. Other
intangible assets are tested when impairment
indicators exist.
At 31 December 2020, goodwill measured at cost less
any accumulated impairment losses, amounted to
EUR 1,180.6 million in the consolidated financial
statements.
For goodwill impairment test purposes, an assessment
was performed for all relevant cash generating units
(‘CGUs’). Management determines the recoverable
amount of each cash-generating unit as the greater of
its value in use and its fair value less costs of disposal.
For the purpose of goodwill impairment tests, the
calculations of fair value less costs of disposal use
market price on active market (if available) or market
multiples method. The calculations of value in use are
based on cash flow projections based on financial
budgets and cash projections approved by
management.
At 31 December 2020, intangible assets with indefinite
useful lives measured at cost less accumulated
depreciation and any impairment, amounted to EUR
2.403.2 million in the consolidated financial
statements.
As a result of the deterioration of the macroeconomic
environment due to the impact of COVID-19 pandemic,
the Group proceeded with an impairment assessment
of the recoverable amount for the cash generating
units that were significantly affected and reported
losses.
The calculations for impairment tests for intangible
assets with indefinite useful lives use cash flow
projections based on financial budgets approved by
management covering a five-year period and cash
projections for the remaining period of the use of the
concession right.
This is a key audit matter for our audit given that
management in determining the recoverable amount
exercised judgement in calculating the future cash
flows, (e.g. expectations on market development, and
discount rates applied to future cash flow forecast).
Details on the assumptions used are included in Note
18 “Intangible assets and goodwill” to the consolidated
financial statements.
We evaluated management’s overall
impairment testing process, including
process for identifying indicators for
impairment, preparation of impairment
testing models as well as their review and
approval.
The key assumptions assessed per case
included, the revenue growth rates,
margin trends and discount rates.
We discussed extensively with
management, the suitability of the
impairment model and reasonableness of
the assumptions used and with the
support of our valuation specialists we
performed the following procedures:
• Benchmarking of the key assumptions
used in management’s valuation
models with market trends and
assumptions made in the prior year.
• Testing the mathematical accuracy of
the cash flow models and agreeing
relevant data to approved business
plans.
• Assessing the reliability of
management’s forecast through a
review of actual performance against
previous forecasts.
• Assessing the sensitivity of
impairment tests to changes in
significant assumptions.
• We validated the appropriateness of
the related disclosures included in
Note 18 to the consolidated financial
statements.
In relation to the provisional goodwill
amounting to EUR 466.0 million that was
recognised for STOIXIMAN Business
(Greek and Cypriot operations), for which
the transaction of its acquisition was
completed at 18 November 2020, we
have assessed whether there have been
any events or indications identified that
may have a negative impact on their
operations and profitability. Management
has a period of 12 months from the date
of acquisition to finalize the acquisition
accounting.
6
Impact of COVID-19 pandemic (separate and
consolidated financial statements)
The Company and the Group prepared its
financial statements using the going concern
basis of accounting. Refer to Notes 1 b) and 36
to the consolidated financial statements and
Notes 2 c) and 23 to the separate financial
statements, for management’s going concern
and other relevant disclosures.
We focused on the appropriateness of the
going concern basis of accounting given the
potential impact that the outbreak of COVID-19
pandemic will have on the Company’s and
Group’s operations and financial position. The
ability of the Group and the Company to
continue operating as a going concern is
dependent on Management’s ability to maintain
liquidity in order to meet its current financing
and operating obligations.
Management has also considered the impact of
COVID-19 pandemic on the Group’s future
operating results and cashflows. The outbreak
of COVID-19 pandemic and related restrictions
that were adopted by the governments in
countries where the Group operates have
negatively affected its operations and future
cash inflows.
Management’s assessment of the going
concern basis of accounting is based on
financial performance and cash flow projections
which are dependent on significant
management judgement and can be influenced
by management bias.
In assessing the appropriateness of the going
concern basis of accounting used in preparing
the consolidated and separate financial
statements, we:
• Obtained management’s assessment of the
impact of COVID-19 pandemic on the
Company’s future operations, financial
performance and cash flows, including their
analysis of future liquidity requirements. We
discussed with management the key
assumptions made and assessed their plans
to mitigate potential liquidity shortfalls.
• Obtained evidence over management’s
underlying cash flow projections for the
Company and significant components by
evaluating these against relevant external
and internal sources as deemed necessary.
• Checked the mathematical accuracy of
management’s cash flow forecasts for the
Company and significant components.
• Performed independent analysis at the
significant components level to assess the
key assumptions underlying the cash flow
forecast such as a further suspension of
operations beyond Management’s
assessment.
• Evaluated management’s conclusion that
there are no material uncertainties with
respect to going concern.
• Reviewed the adequacy and appropriateness
of management’s going concern and other
relevant disclosures in the Note 36 to the
consolidated financial statements and in the
Note 23 to the separate financial statements
and in the.
6
Impact of COVID-19 pandemic (separate and
consolidated financial statements)
The Company and the Group prepared its
financial statements using the going concern
basis of accounting. Refer to Notes 1 b) and 36
to the consolidated financial statements and
Notes 2 c) and 23 to the separate financial
statements, for management’s going concern
and other relevant disclosures.
We focused on the appropriateness of the
going concern basis of accounting given the
potential impact that the outbreak of COVID-19
pandemic will have on the Company’s and
Group’s operations and financial position. The
ability of the Group and the Company to
continue operating as a going concern is
dependent on Management’s ability to maintain
liquidity in order to meet its current financing
and operating obligations.
Management has also considered the impact of
COVID-19 pandemic on the Group’s future
operating results and cashflows. The outbreak
of COVID-19 pandemic and related restrictions
that were adopted by the governments in
countries where the Group operates have
negatively affected its operations and future
cash inflows.
Management’s assessment of the going
concern basis of accounting is based on
financial performance and cash flow projections
which are dependent on significant
management judgement and can be influenced
by management bias.
In assessing the appropriateness of the going
concern basis of accounting used in preparing
the consolidated and separate financial
statements, we:
• Obtained management’s assessment of the
impact of COVID-19 pandemic on the
Company’s future operations, financial
performance and cash flows, including their
analysis of future liquidity requirements. We
discussed with management the key
assumptions made and assessed their plans
to mitigate potential liquidity shortfalls.
• Obtained evidence over management’s
underlying cash flow projections for the
Company and significant components by
evaluating these against relevant external
and internal sources as deemed necessary.
• Checked the mathematical accuracy of
management’s cash flow forecasts for the
Company and significant components.
• Performed independent analysis at the
significant components level to assess the
key assumptions underlying the cash flow
forecast such as a further suspension of
operations beyond Management’s
assessment.
• Evaluated management’s conclusion that
there are no material uncertainties with
respect to going concern.
• Reviewed the adequacy and appropriateness
of management’s going concern and other
relevant disclosures in the Note 36 to the
consolidated financial statements and in the
Note 23 to the separate financial statements
and in the.
7
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on each set of financial statements as a whole, taking into account the structure of the Group,
the accounting processes and controls, the share of individual subsidiaries on the Group financial
position and performance and specifics of the industry in which the Group and the Company operate.
The Group comprise the Company and its subsidiaries. In establishing the overall approach to the Group
audit, we determined the type of work that needed to be performed at components by us, as the Group
engagement team, or component auditors operating under our instruction. We identified four
components (2019: three) as financially significant in 2020. Specified procedures over a specific
financial statement line item were performed at one further component (2019: two) and central testing
was performed on selected items, such as goodwill, external financing and the consolidation, primarily
to ensure appropriate audit coverage. The components included within our audit scope were determined
based on the individual components’ contribution to the Group’s key financial statement line items (in
particular revenue and profit before tax), and considerations relating to aggregation risk within the
Group. Where work was performed by component auditors, we determined the level of involvement we
needed to have in the audit work at those components to be able to conclude on whether sufficient
appropriate audit evidence had been obtained as a basis for our opinion on the Group financial
statements as a whole. We issued formal written instructions to all component auditors setting out the
audit work to be performed by each of them and maintained regular communication with them
throughout the audit cycle. Our audit work addressed 100% of the Group’s revenues and 97% of the
Group’s profit for the year.
Other information
The board of directors is responsible for the other information. As defined in Section 2(b) of the Act on
Auditors, the other information comprises the Annual Report but does not include both of the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information. In connection with our
audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our
knowledge about the Group and the Company obtained in the audit or otherwise appears
to be materially misstated. In addition, we assessed whether the other information has been prepared,
in all material respects, in accordance with applicable legal requirements, i.e. whether the other
information complies with the legal requirements both in terms of formal requisites and the procedure
for preparing the other information in the context of materiality.
Based on the procedures performed in the course of our audit, to the extent we are able to assess it,
in our opinion:
• the other information describing the facts that are also presented in the financial statements is, in
all material respects, consistent with the financial statements; and
• the other information has been prepared in accordance with the applicable legal requirements.
In addition, in the light of the knowledge and understanding of the Group and the Company
and its environment obtained in the course of the audit, we are required to report if we have identified
material misstatements in the other information. We have nothing to report in this regard.
Responsibilities of the board of directors, supervisory board and audit committee of
the Company for the financial statements
The board of directors is responsible for the preparation of the financial statements that give true and
fair view in accordance with International Financial Reporting Standards as adopted by the European
Union and for such internal control as the board of directors determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
8
In preparing the financial statements, the board of directors is responsible for assessing the Group
and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the board of directors either
intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative
but to do so.
The supervisory board of the Company is responsible for overseeing the financial reporting process.
The audit committee of the Company is responsible for monitoring of the financial statements’
preparation process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Audit regulations will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the Audit regulations, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal controls.
• obtain an understanding of internal controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group and the Company’s internal controls.
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the board of directors.
• conclude on the appropriateness of the board of directors' use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group and the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group or the Company to cease to continue as a going
concern.
• evaluate the overall presentation, structure and content of the financial statements, including the
notes, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors, supervisory board and audit committee regarding,
among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
8
In preparing the financial statements, the board of directors is responsible for assessing the Group
and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the board of directors either
intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative
but to do so.
The supervisory board of the Company is responsible for overseeing the financial reporting process.
The audit committee of the Company is responsible for monitoring of the financial statements’
preparation process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Audit regulations will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the Audit regulations, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal controls.
• obtain an understanding of internal controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group and the Company’s internal controls.
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the board of directors.
• conclude on the appropriateness of the board of directors' use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group and the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group or the Company to cease to continue as a going
concern.
• evaluate the overall presentation, structure and content of the financial statements, including the
notes, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors, supervisory board and audit committee regarding,
among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
9
We also provide the audit committee with a statement showing that we have complied with relevant
ethical requirements regarding independence, and we communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with the supervisory board and audit committee, we determine those
matters that were of most significance in the audit of the financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on other legal and regulatory requirements
Information required by the Regulation (EU) No. 537/2014 of the European
Parliament and of the Council
In compliance with Article 10(2) of the EU Regulation, we provide the following information, which is
required in addition to the requirements of International Standards on Auditing:
Consistency of the audit opinion with the additional report to the audit committee
We confirm that the audit opinion expressed herein is consistent with the additional report to the audit
committee of the Company, which we issued today in accordance with Article 11 of the EU Regulation.
Appointment of auditor and period of engagement
We were appointed as the auditors of the Group and the Company for year 2020 by the general
meeting of shareholders of the Company on 30 June 2020. Our uninterrupted engagement as auditors
of the Group and the Company has lasted for 3 years.
Provided non-audit services
To the best of our knowledge and belief, we declare that PwC Network has not provided to the
Company and its subsidiaries non-audit services that are prohibited under Article 5 (1)
of the EU Regulation, as amended by the Czech law following Article 5 (3) of the EU Regulation.
The non-audit services we have provided to the Company and its subsidiaries in the period
from 1 January 2020 to 31 December 2020 are disclosed on page 210 of the Annual Report.
Report on the assurance engagement in relation to compliance with the requirements
of the European Single Electronic Format (“ESEF”)
We have conducted a reasonable assurance engagement for the verification of compliance with the
applicable requirements of Commission Regulation (EU) 2019/815 on the European Single Electronic
Format (the “ESEF Regulation”) of the electronic reporting format of the Group consolidated financial
statements for the year ended 31 December 2020 included in the accompanying 2020 Annual Report
(the “Electronic reporting format of the consolidated financial statements”).
Description of a subject matter and applicable criteria
The Electronic reporting format of the consolidated financial statements has been applied by the
Company to comply with the requirements of art. 3 and 4 of the ESEF Regulation.
The applicable requirements regarding the electronic reporting format contained in the ESEF
Regulation determine the basis for application of the Electronic reporting format of the consolidated
financial statements and, in our opinion, constitute appropriate criteria to form a reasonable assurance
conclusion.
10
Responsibilities of the board of directors and the supervisory board
The board of directors of the Company is responsible for the application of the Electronic reporting
format of the consolidated financial statements that complies with the requirements of the ESEF
Regulation. This responsibility includes the selection and application of appropriate tags in iXBRL
using ESEF taxonomy and implementation of such internal control as the board of directors
determines is necessary to enable the preparation of the Electronic reporting format of the
consolidated financial statements which is in all material respects in compliance with the requirements
of ESEF Regulation.
The supervisory board of the Company is responsible for overseeing the financial reporting process.
Auditor’s responsibility
Our responsibility was to form a reasonable assurance conclusion that the Electronic reporting format
of the consolidated financial statements complies with the ESEF Regulation.
We conducted our engagement in accordance with International Standard on Assurance
Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical
Financial Information’, issued by the International Auditing and Assurance Standards Board. This
standard requires that we comply with ethical requirements, plan and perform procedures to obtain
reasonable assurance that the Electronic reporting format of the consolidated financial statements is
prepared, in all material aspects, in accordance with the applicable requirements.
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance that the
Electronic reporting format of the consolidated financial statements was applied, in all material
aspects, in accordance with the applicable requirements and such application is free from material
errors or omissions.
Our procedures included mainly:
• obtaining an understanding of the internal control system and processes relevant to the
application of the Electronic reporting format of the consolidated financial statements, including
the preparation of the XHTML format and marking up the consolidated financial statements;
• assessment of the risk of material departures from the requirements of the ESEF Regulation due
to fraud or error;
• verification that the XHTML format was applied properly;
• obtaining sufficient appropriate evidence as to the operating effectiveness of relevant controls
over the marking up process when the assessment of the risks of material misstatement include
an expectation that such internal controls are operating effectively or procedures other than
testing controls cannot alone provide sufficient appropriate evidence;
• evaluating the completeness of marking up the consolidated financial statements using the XBRL
markup language according to the requirements of the implementation of electronic format as
described in the ESEF Regulation;
• evaluating the appropriateness of the Company's use of XBRL tags selected from the ESEF
taxonomy and the creation of extension tags where no suitable element in the ESEF taxonomy
has been identified; and
• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
reasonable assurance conclusion.
11
Reasonable assurance conclusion
In our opinion, based on the procedures performed, the Electronic reporting format of the consolidated
financial statements complies, in all material respects, with the ESEF Regulation.
1 May 2021
PricewaterhouseCoopers Audit, s.r.o.
represented by
Jiří Zouhar
Petra Jirková Bočáková
Statutory Auditor, Licence No. 2253
10
Responsibilities of the board of directors and the supervisory board
The board of directors of the Company is responsible for the application of the Electronic reporting
format of the consolidated financial statements that complies with the requirements of the ESEF
Regulation. This responsibility includes the selection and application of appropriate tags in iXBRL
using ESEF taxonomy and implementation of such internal control as the board of directors
determines is necessary to enable the preparation of the Electronic reporting format of the
consolidated financial statements which is in all material respects in compliance with the requirements
of ESEF Regulation.
The supervisory board of the Company is responsible for overseeing the financial reporting process.
Auditor’s responsibility
Our responsibility was to form a reasonable assurance conclusion that the Electronic reporting format
of the consolidated financial statements complies with the ESEF Regulation.
We conducted our engagement in accordance with International Standard on Assurance
Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical
Financial Information’, issued by the International Auditing and Assurance Standards Board. This
standard requires that we comply with ethical requirements, plan and perform procedures to obtain
reasonable assurance that the Electronic reporting format of the consolidated financial statements is
prepared, in all material aspects, in accordance with the applicable requirements.
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance that the
Electronic reporting format of the consolidated financial statements was applied, in all material
aspects, in accordance with the applicable requirements and such application is free from material
errors or omissions.
Our procedures included mainly:
• obtaining an understanding of the internal control system and processes relevant to the
application of the Electronic reporting format of the consolidated financial statements, including
the preparation of the XHTML format and marking up the consolidated financial statements;
• assessment of the risk of material departures from the requirements of the ESEF Regulation due
to fraud or error;
• verification that the XHTML format was applied properly;
• obtaining sufficient appropriate evidence as to the operating effectiveness of relevant controls
over the marking up process when the assessment of the risks of material misstatement include
an expectation that such internal controls are operating effectively or procedures other than
testing controls cannot alone provide sufficient appropriate evidence;
• evaluating the completeness of marking up the consolidated financial statements using the XBRL
markup language according to the requirements of the implementation of electronic format as
described in the ESEF Regulation;
• evaluating the appropriateness of the Company's use of XBRL tags selected from the ESEF
taxonomy and the creation of extension tags where no suitable element in the ESEF taxonomy
has been identified; and
• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
reasonable assurance conclusion.
Report of the Board of Directors of SAZKA Group a.s. on relations between the controlling entity and the
controlled entity and between the controlled entity and other entities controlled by the same controlling entity
SAZKA Group a.s., with its registered seat at Vinohradská 1511/230, Strašnice, 100 00 Praha 10, Identification No.
242 87 814, registered in the Commercial Register maintained by the Municipal Court in Prague under file no. B 18161
(hereinafter the “Company”) was considered a controlled entity within the meaning of Section 74 et seq. of Act
No. 90/2012 Coll., on Commercial Companies and Cooperatives, as amended (hereinafter the “Business Corporations
Act”) in the accounting period from 1 January 2020 to 31 December 2020 (hereinafter the “Accounting Period”).
In accordance with Section 82 of the Business Corporations Act, the Board of Directors of the Company, as a
controlled entity, has drafted this report on relations between the controlling entity and the controlled entity and
between the controlled entity and other entities controlled by the same controlling entity for the Accounting Period
(hereinafter also the “Report on Relations” and “Related Entities”). The Report on Relations is structured in
accordance with Section 82 (2) and (4) of Business Corporation Act.
The structure of relations between the Company and other related entities
During the entire Accounting Period, the Company was a part of KKCG Group that is constituted by entities all of
which are controlled, directly or indirectly, by KKCG AG, having its registered seat at Kapellgasse 21, 6004 Lucerne,
Switzerland, registered under Registration No. CHE-326.367.231 (hereinafter “KKCG AG”).
During the entire Accounting Period the Company was directly controlled by KKCG AG.
List of all entities of KKCG Group that are controlled, directly or indirectly, by KKCG AG, including the Company,
constitutes an Annex to this Report on Relations. Information on the entities within the KKCG Group is stated as
of 31 December 2020.
The role of the Company
The role of the Company, as a controlled entity, is to hold and manage equity stakes in companies active in the
lottery and gaming operations and their unified management.
The method and means of control
During the entire Accounting Period, the control over the Company was exercised through a 100% share in the
voting rights at the Company’s General Meeting.
A summary of significant actions
In the Accounting Period, at the initiative or in the interest of KKCG AG or persons controlled by it the Company
took the following actions concerning assets which had exceeded 10% of own capital of the Company as determined
from the last financial statements preceding the issuance of this report:
• Prolongation of the repayment date for an intragroup loan provided to SAZKA Delta Hellenic Holdings Limited
(formerly Emma Delta Hellenic Holdings Limited) for the purpose of repaying an existing loan facility pursuant
to the EUR 210 million Facility Agreement originally dated 31 October 2019 (as listed in Section 5.2 below) (loan
was repaid as of 31 May 2020);
• Distribution of retained profits of the Company to its sole shareholder in the amount of CZK 3,995.9 million by
virtue of resolutions dated 6 November 2020 and 28 December 2020;
• Placement of short-term deposits with KKCG Structured Finance AG pursuant to a Cash Pooling Agreement
originally dated 20 June 2016 (as listed in Section 5.2 below);
• Granting of an intragroup loan to Italian Gaming Holding a.s. for the purpose of repaying an existing loan facility,
pursuant to a Loan Agreement dated 6 February 2020 (as listed in Section 5.1 below);
• Granting of an intragroup loan to CAME Holding GmbH for the purpose of repaying an existing loan facility,
pursuant to a Loan Agreement originally dated 6 February 2020 (as listed in Section 5.1 below) (until the assignment
to Austrian Gaming Holding a.s. on 22 June 2020 and from the assignment back onto the Company on
22 December 2020);
Further Regulatory Disclosures
194 Sazka Group Annual Report and Accounts 2020
Financial Statements
•
Granting of an intragroup loan to SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta Hellenic Holdings
Limited) for the purpose of repaying an existing loan facility, pursuant to a Loan Agreement up to the amount
of EUR 210 million originally dated 12 February 2020 (as listed in Section 5.1 below);
• Granting of an intragroup loan to Austrian Gaming Holding a.s. pursuant to a Loan Agreement up to the amount
of EUR 150 million originally dated 22 June 2020 (as listed in Section 5.1 below) (until the set-off which took place
on 22 December 2020);
• Provision of a sponsor’s guarantee in connection with a loan to CAME Holding GmbH under a Loan Agreement
(dated 23 June 2020), in favour of a financial institution, dated 23 June 2020 (until the release of security on
17 December 2020);
•
Provision of a sponsor’s undertaking in connection with a loan to CAME Holding GmbH under a Loan Agreement
(dated 23 June 2020), in favour of a financial institution, dated 23 June 2020 (until the release of security on
17 December 2020);
• Provision of guarantee, as an Original Guarantor, under a Senior Facilities Agreement dated 16 December 2020
as listed in Section 5.1 below);
• Conclusion of an Intercreditor Agreement with SAZKA Group Financing (Czech Republic) a.s., SAZKA Group
Financing a.s., SAZKA Czech a.s., Italian Gaming Holding a.s. and other contracting parties dated 16 December
2020 (as listed in Section 5.1 below);
•
Drawing of an intragroup loan in the amount of EUR 450 million pursuant to a Term and Revolving Loan Agreement
with SAZKA Group Financing (Czech Republic) a.s. dated 21 December 2020 (as listed in Section 5.1 below);
• Granting of an intragroup loan for the purpose of repaying an existing facility pursuant to a Loan Agreement
with SAZKA a.s. dated 21 December 2020 (as listed in Section 5.1 below); and
•
Providing security in connection with a Senior Facilities Agreement (dated 16 December 2020, as listed in Section
5.1 below) in the form of a pledge of shares in OPAP S.A. pursuant to a Share Pledge Agreement dated 29 December
2020 and related Control Agreement dated 29 December 2020.
An overview of contracts
The following contracts were concluded further between the Company and KKCG AG, or the Company and other
persons controlled by KKCG AG, during the Accounting Period:
•
Guarantee Facility Agreement with SAZKA Czech a.s. and other contracting parties dated 13 January 2020
(replaced by a loan to other entity dated 23 June 2020);
•
Amendment No. 4 to the Facility Agreement (originally dated 31 October 2019) with SAZKA Delta Hellenic
Holdings Limited (formerly Emma Delta Hellenic Holdings Limited) dated 15 January 2020 (repaid as of
31 May 2020);
•
Amendment No. 5 to the Facility Agreement (originally dated 31 October 2019) with SAZKA Delta Hellenic
Holdings Limited (formerly Emma Delta Hellenic Holdings Limited) dated 22 January 2020 (repaid as of
31 May 2020);
•
Amendment No. 6 to the Facility Agreement (originally dated 31 October 2019) with SAZKA Delta Hellenic
Holdings Limited (formerly Emma Delta Hellenic Holdings Limited) dated 22 January 2020 (repaid as of
31 May 2020);
• Notes Purchase Agreement with SAZKA Czech a.s. and other contracting parties dated 29 January 2020;
• Indenture in relation to notes with SAZKA Czech a.s. and other contracting parties dated 5 February 2020;
•
Amendment No. 7 to the Facility Agreement (originally dated 31 October 2019) with SAZKA Delta Hellenic
Holdings Limited (formerly Emma Delta Hellenic Holdings Limited) dated 5 February 2020 (repaid as of
31 May 2020);
• Facility Agreement with Italian Gaming Holding a.s. dated 6 February 2020;
• Facility Agreement with CAME Holding GmbH dated 6 February 2020;
195Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
•
Facility Agreement with SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta Hellenic Holdings Limited)
dated 12 February 2020;
• Deed relating to the Shareholders’ Agreement (originally dated 17 August 2016) with Rubidium Holdings Limited
and other contracting parties dated 12 February 2020;
•
Amendment No. 1 to the Facility Agreement (dated 12 February 2020) with SAZKA Delta Hellenic Holdings
Limited (formerly Emma Delta Hellenic Holdings Limited) dated 28 February 2020;
•
Amendment No. 1 to the Movable Assets Rent Agreement (dated 1 November 2017) with KKCG a.s. dated 3 March 2020;
•
Waiver and Termination Agreement (relating to the security for a Facility Agreement originally dated 9 May 2016)
with Italian Gaming Holding a.s. and another contracting party dated 3 March 2020;
•
Accession to the Flight Tickets Purchase Agreement with KKCG a.s. and another contracting party dated
20 March 2020;
• Amendment No. 2 to the Facility Agreement (originally dated 12 February 2020) with SAZKA Delta Hellenic
Holdings Limited (formerly Emma Delta Hellenic Holdings Limited) and SAZKA Delta AIF Variable Capital
Investment Company Ltd (formerly Emma Delta Variable Capital Investment Company Ltd) dated 30 April 2020;
• Agreement on Termination of Framework Deposit Agreement (dated 19 November 2018) with IGH Financing
a.s., v likvidaci, dated 11 May 2020;
• Share Purchase Agreement with KKCG AG dated 20 May 2020;
• Framework Agreement on Provision of Advisory Services with SAZKA a.s. dated 16 June 2020;
• Framework Agreement on Provision of Advisory Services with OPAP S.A. dated 16 June 2020;
• Facility Agreement with Austrian Gaming Holding a.s. dated 22 June 2020 (until the set-off which took place on
22 December 2020);
• Amendment and Restatement Agreement in relation to the Facility Agreement (dated 6 February 2020) with
CAME Holding GmbH dated 22 June 2020;
•
Assignment Agreement in relation to the Facility Agreement (originally dated 6 February 2020) with CAME
Holding GmbH and Austrian Gaming Holding dated 22 June 2020;
• Share Purchase and Transfer Agreement with SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta
Hellenic Holdings Limited) and SAZKA Delta AIF Variable Capital Investment Company Ltd (formerly Emma
Delta Variable Capital Investment Company Ltd) dated 24 June 2020;
• Escrow Agreement with CAME Holding GmbH and other contracting parties dated 25 June 2020;
• Supplement No. 2 to the Shareholders’ Agreement (originally dated 22 June 2017) with CAME Holding GmbH
and another contracting party dated 26 June 2020;
•
Share Purchase and Transfer Agreement with CAME Holding GmbH and other contracting parties dated
26 June 2020;
• Closing Agreement with CAME Holding GmbH and other contracting parties dated 26 June 2020;
•
Service Order No. 1 relating to the Framework Agreement on Provision of Advisory Services (dated 16 June 2020)
with OPAP S.A. dated 10 July 2020;
•
Information Sharing Memorandum regarding consolidation and reporting with Casinos Austria AG dated
17 August 2020;
• Non-Disclosure Agreement with Casinos Austria AG dated 24 August 2020;
•
Amendment No. 2 to the Confidentiality Agreement (originally dated 15 January 2018) with OPAP S.A.
dated 27 August 2020;
• Assignment Agreement relating to the agreement on provision of advisory services (dated 29 April 2020) with
SAZKA Group UK Limited and another contracting party dated 1 September 2020;
196 Sazka Group Annual Report and Accounts 2020
Financial Statements
• Share Purchase Agreement with SAZKA Czech a.s. dated 15 September 2020;
•
Agreement on the Provision of Contribution into the Other Capital Funds with SAZKA Czech a.s. dated 23 September 2020;
• Affiliate Side Agreement regarding provision of advisory services with SAZKA Group UK Limited and another
contracting party dated 1 October 2020;
• Cooperation Agreement with SAZKA Group UK Limited dated 13 October 2020;
•
Investment and Shareholder Agreement with KKCG AG, SAZKA Entertainment AG and another contracting
party dated 9 November 2020;
• Side Letter with KKCG AG, SAZKA Entertainment AG and another contracting party dated 9 November 2020;
•
Equity Commitment Letter with KKCG AG, SAZKA Entertainment AG and another contracting party dated
9 November 2020;
• Agreement on Sale and Purchase of Shares with KKCG AG dated 25November 2020;
• Amendment No. 3 to the Facility Agreement (originally dated 12 February 2020) with SAZKA Delta Hellenic
Holdings Limited (formerly Emma Delta Hellenic Holdings Limited) and SAZKA Delta AIF Variable Capital
Investment Company Ltd (formerly Emma Delta Variable Capital Investment Company Ltd) dated 10 December 2020;
•
Amendment No. 2 to the Cash Pooling Agreement (originally dated 20 June 2020) with KKCG Structured Finance
AG dated 10 December 2020;
• Share Purchase and Transfer Agreement with SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta
Hellenic Holdings Limited) and SAZKA Delta AIF Variable Capital Investment Company Ltd (formerly Emma
Delta Variable Capital Investment Company Ltd) dated 14 December 2020;
• Amendment Agreement No. 1 in relation to the Facility Agreement (dated 22 June 2020) with Austrian Gaming
Holding a.s. dated 14 December 2020;
•
Framework Agreement on the Provision of Advisory Services with SAZKA Group CZ a.s. dated 16 December 2020;
•
Agreement on Termination of ICT Services Agreement (dated 22 February 2018) with DataSpring s.r.o.
dated 16 December 2020; ICT Services Agreement with KKCG a.s. dated 16 December 2020;
•
Intercreditor Agreement with SAZKA Group Financing (Czech Republic) a.s., SAZKA Group Financing a.s., SAZKA
Czech a.s., Italian Gaming Holding a.s. and other contracting parties dated 16 December 2020;
•
Senior Facilities Agreement with SAZKA Group Financing (Czech Republic) a.s., SAZKA Czech a.s., Italian Gaming
Holding a.s., SAZKA Group Financing a.s. and other contracting parties dated 16 December 2020;
• Process Agent Appointment with SAZKA Group UK Limited dated 16 December 2020;
•
First Supplemental Indenture in relation to notes (dated 15 November 2019) with SAZKA Group Financing (Czech
Republic) a.s., SAZKA Group Financing a.s., Italian Gaming Holding a.s. and another contracting party dated
16 December 2020;
• First Supplemental Indenture in relation to notes (dated 5 February 2020) with SAZKA Group Financing (Czech
Republic) a.s., SAZKA Group Financing a.s., Italian Gaming Holding a.s. and another contracting party dated
16 December 2020;
•
Prepayment and Release Agreement with Austrian Gaming Holding a.s., CAME Holding GmbH and another
contracting party dated 17 December 2020;
•
Term and Revolving Facility Agreement with SAZKA Group Financing (Czech Republic) a.s. dated 21 December 2020;
• Facility Agreement with SAZKA a.s. dated 21 December 2020;
• Assignment and Set-Off Agreement relating to the Facility Agreement (originally dated 6 February 2020) with
Austrian Gaming Holding a.s. and CAME Holding GmbH dated 22 December 2020;
• Agreement on Sale and Purchase of Shares with SPORTLEASE a.s. dated 22 December 2020;
197Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
• Agreement on the Assignment of Business Premisses Tenancy Agreement (originally dated 31 October 2017)
with Vinohradská 230 a.s. and SAZKA Group CZ dated 22 December 2020;
• Business Premisses Tenancy Agreement with Vinohradská 230 a.s. dated 22 December 2020;
• Accession Deed with SAZKA a.s. and other contracting parties dated 23 December 2020;
• Accession Deed with Austrian Gaming Holding a.s. and other contracting parties dated 23 December 2020;
• Accession Deed with CAME Holding GmbH and other contracting parties dated 23 December 2020;
•
Second Supplemental Indenture in relation to notes (dated 15 November 2019) with SAZKA a.s., Austrian Gaming
Holding a.s., CAME Holding a.s. and another contracting party dated 23 December 2020;
• Second Supplemental Indenture in relation to notes (dated 5 February 2020) with SAZKA a.s., Austrian Gaming
Holding a.s., CAME Holding a.s. and another contracting party dated 23 December 2020;
• Parallel Debt and Local Security Agency Agreement with SAZKA Czech a.s., SAZKA Group Financing (Czech
Republic) a.s., Italian Gaming Holding a.s., SAZKA Group Financing a.s., Austrian Gaming Holding a.s., SAZKA
a.s., CAME Holding GmbH and other contracting parties dated 23 December 2020;
• Amendment No. 2 regarding the Assignment of Legal Services Agreement (originally dated 15 January 2020)
with SAZKA Group CZ a.s. and another contracting party dated 30 December 2020;
• Agreement on the Provision of Contribution into the Other Capital Funds with SAZKA Group Financing (Czech
Republic) a.s. dated 30 December 2020; and
• Agreement on the Assignment of Agreements (framework and individual) with DataSpring s.r.o and SAZKA
Group CZ a.s. dated 31 December 2020.
The following contracts concluded between the Company and KKCG AG, or between the Company and other
persons controlled by KKCG AG, prior to the commencement of the Accounting Period were still in force during
the Accounting Period:
• Agreement on Payroll Records Processing with KKCG a.s. dated 1 October 2015;
• Agreement on the Use of Fitness Centre with Vinohradská 230 a.s. dated 1 March 2016;
• Cash Pooling Agreement with KKCG Structured Finance AG dated 20. 6. 2016, as amended by Amendment No.
1 dated 24. 7. 2019 and Amendment No. 2 dated 10 December 2020;
• Framework Agreement on Provision of Advisory Services with KKCG a.s. dated 23 August 2016, as amended by
Supplement No. 1 dated 30 June 2017 and Supplement No. 2 dated 18 March 2019;
• Shareholders’ Agreement with Rubidium Holdings Limited and other contracting parties dated 24 July 2014, as
amended on 17 August 2016, 18 March 2019, and 27 June 2019;
• Joint Venture Agreement with Italian Gaming Holding a.s. and other contracting parties dated 30 April 2016, as
amended on 31 May 2017;
•
Framework Agreement on Provision of Services with DataSpring s.r.o. dated 1 November 2016 (until the contract
assignment dated 31 December 2020);
• Individual Agreement on Provision of Services with DataSpring s.r.o. dated 1 November 2016, as amended by
Amendment no. 1 as of 1 November 2017 and Amendment No. 2 as of 18 September 2019 (until the contract
assignment dated 31 December 2020);
•
Accession to the Assumption and Guarantee Agreement with CAME Holding GmbH and other contracting parties
dated 1 February 2017, as amended by an Extension Agreement dated 5 October 2018;
• Agreement with End User on the Provision of Services relating to the use of Microsoft Products with DataSpring
s.r.o. dated 13 April 2017;
•
Shareholders’ Agreement with CAME Holding GmbH and another contracting party dated 22 June 2017, as
supplemented by Supplement No. 1 dated 10 December 2019 and Supplement No. 2 dated 26 June 2020);
198 Sazka Group Annual Report and Accounts 2020
Financial Statements
•
Agreement on Security Inspections with Kynero Consulting a.s. dated 29 September 2017, as amended by
Amendment No. 1 dated 18 June 2018;
• Framework Agreement on Provision of Accounting Services with KKCG a.s. dated 1 November 2017;
• Project Support Agreement with SAZKA Group Financing a.s. dated 14 November 2017;
•
Framework Agreement on Ticketing Services in the Field of Air Transport with G-Jet s.r.o. dated 15 November 2017;
• Meeting Rooms Licence to Hire with KKCG UK Limited dated 1 January 2017;
•
Business Premises Tenancy Agreement with Vinohradská 230 a.s. dated 31 October 2017, as amended on 1 March
2018, 29 June 2018, 31 August 2018, and 1 November 2019 (until the contract assignment dated 22 December 2020);
•
Movable Assets Rent Agreement with KKCG a.s. dated 1 November 2017, as amended by Amendment No. 1 dated
3 March 2020;
• Financial Guarantee for obligations of SAZKA Group Financing a.s. dated 14 November 2017;
•
ICT Services Agreement with DataSpring s.r.o. dated 2 February 2018 (terminated by an agreement dated
16 December 2020);
• Loan Agreement with SAZKA Group Financing a.s. dated 12 December 2017, as amended by Amendment No.
1 dated 31 May 2018;
• Agreement on the Compensation for Software Extension with KKCG a.s. dated 13 December 2017;
•
Confidentiality Agreement with OPAP S.A. dated 15 January 2018, as amended by Amendment No. 1 dated 6 July
2018 and Amendment No. 2 dated 27 August 2020;
• Accession Agreement with KKCG a.s. and another contracting party dated 31 January 2018;
• Personal Data Processing Agreement with KKCG a.s. dated 16 July 2018;
• Framework Deposit Agreement with SAZKA Czech dated 24 August 2018;
• Framework Deposit Agreement with SAZKA a.s. dated 17 September 2018, as amended by Amendment No.
1 dated 21 December 2018;
•
Share Pledge Agreement (originally dated 9 May 2016) with Italian Gaming Holding a.s. and an other contracting
party, as amended by Side Agreement dated 29 October 2018 (until the release of pledge on 6 March 2020);
• Framework Deposit Agreement with IGH Financing a.s. dated 19 November 2018 (terminated by an agreement
dated 11 May 2020);
•
Subordination Agreement (originally dated 9 May 2016) with Italian Gaming Holding a.s. and another contracting
party, as amended by Amendment No. 1 dated 14 December 2018 (terminated as of 3 March2020);
• Loan Agreement with Italian Gaming Holding a.s. dated 14 December 2018 (repaid on 12 February 2020);
• Framework Agreement on Provision of Advisory Services with KKCG AG dated 12 February 2019;
• Indemnity Agreement with Organisation of Football Prognostics S.A. (OPAP S.A.) dated 1 March 2019;
• Consultancy Agreement with KKCG AG dated 11 July 2019;
• Royalty Agreement with OPAP S.A. dated 20 August 2019;
• Agreement for the Provision of Consultancy and Advisory Services with OPAP S.A. dated 20 August 2019;
•
Joint Cooperation and Common Interest Agreement with SAZKA Delta Hellenic Holdings Limited (formerly
Emma Delta Hellenic Holdings Limited), OPAP S.A. and KKCG AG dated 22 October 2019;
•
Facility Agreement with SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta Hellenic Holdings Limited)
dated 31 October 2019, as amended by amendment no. 1 dated 29 November 2019, no. 2 dated 12 December
2019, no. 3 dated 20 December 2019, no. 4 dated 15 January 2020, no. 5 dated 22 January 2020, no. 6 dated
29 January 2020) and no. 7 dated 5 February 2020) (repaid on 31 May 2020);
199Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
•
Purchase Agreement in relation to bonds with SAZKA Czech a.s. and other contracting parties dated
12 November 2019;
• Indenture in relation to bonds with SAZKA Czech a.s. and other contracting parties dated 15 November 2019 as
amended by First Supplemental Indenture dated 16 December2020 and Second Supplemental Indenture dated
23 December 2020; and
• Cash Pooling Agreement with Italian Gaming Holding a.s. dated 29 November 2019.
Assessment of damage suffered and its settlement
Neither based on agreements concluded during the Accounting Period between the Company and other persons
in the KKCG Group, nor based on other actions taken during the Accounting Period by the Company in the interest
or at the initiative of such persons, did the Company suffer any damage.
The evaluation of advantages and disadvantages resulting from the relations between the
related entities
A membership in the KKCG Group, with KKCG AG as the controlling entity, enables the Company to benefit,
especially, from the sharing of know-how and information (to the extent permitted by law and contractual
arrangements with third parties), from the ability to take advantage of the good reputation associated with the
KKCG brand and to access intragroup and bank financing (for example, through the possibility for other persons
in the Group to provide collateral for financial liabilities of the Company).
The Company has not identified any disadvantages or any risks arising to it from the relationships between the
Related Entities.
Annex: List of Related Entities as of 31. 12. 2020
In Prague on
30 March 2021
Signature of the authorised representative:
Pavel Šaroch
Member of the Board of Directors
SAZKA Group a.s
Robert Chvátal
Member of the Board of Directors
SAZKA Group a.s
200 Sazka Group Annual Report and Accounts 2020
Financial Statements
Annex No. 1 – List of related parties
List of parties controlled by the company KKCG AG, with its registered seat at Kapellgasse 21, 6004 Lucerne,
TheSwiss Confederation, registration number CHE-326.367.231, as of 31 December 2020
Company
"Horyzonty" LLC L’vivska Oblast, L’viv, 79005, Akademika Pavlova 6C, Office 7, Ukraine, reg. no 36828617
AEC a.s. (formerly AEC
Group a.s.)
Prague 8, Libeň, Voctářova 2500/20a, post code 180 00, identification no. 04772148
AEC s.r.o. Bratislava, Prievozská 1978/6, post code 821 09, Slovak Republic, identification no. 31384072
AleaX AG Fabrikstraße 4, 9496 Balzers, Liechtenstein, registration no. FL-0002.629.106-8
ANTAIOS s.r.o. Ostrava, Moravská Ostrava, Nemocniční 987/12, post code 702 00, identification no. 28345801;
Aricoma Group a.s. Prague 4, Chodov, Líbalova 2348/1, post code 149 00, identification no. 04615671
Aricoma Group AB Stockholm, Box 6350, post code 102 35, Sweden, reg. No. 559239-3473
Austrian Gaming Holding
a.s.
Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 04047788
AUTOCONT a.s. Hornopolní 3322/34, Moravská Ostrava, 702 00 Ostrava, identification no. 043 08 697
AUTOCONT s.r.o. Krasovského 14, Bratislava – mestská časť Petržalka, post code 851 01, Slovak Republic,
identification no. 36 396 222
BOŘISLAVKA OFFICE &
SHOPPING CENTRE s.r.o
Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 27457621
BOSM Czech, s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 06773877
Cachi Valle Aventuras S.A. Av. Francisco de Uriondo 330, 4400 Salta, Argentina. Registration no. IGTJ de Salta Folio 71/2
asiento 2465 L 10
CAI Hungary Kft. Lackner Kristóf u. 33/A, 9400 Sopron, Hungary, registration no. 08-09-027729
CAI Ontario Inc. 200 BAY STREET, ROYAL BANK PLAZA, M5J 2Z4 Ontario, Canada, registration no. 1164748
CAIO AG c/o Reuss Treuhand AG, Furrengasse 11, 6004 Luzern, Switzerland, registration no. CHE-
159.186.971
CAIO DK ApS c/o Nordic Gambling ApS, Flæsketorvet 68, 2, 1711 København V, Denmark, registration no.
40909990
CAME Holding GmbH Universitätsring 10, 1010 Vienna, Austria, registration no. 038898d
Casino Odense K/S Claus Bergs Gade 7, 5000 Odense C, Denmark, registration no. 14920293
Casino Sopron Kft. Lackner Kristóf u. 33/A, 9400 Sopron, Hungary, registration no. 08-09-009273
Casino St. Moritz AG Kempinski Grand Hotel des Bains, Via Mezdi 29, 7500 St Moritz, Switzerland, registration no.
CHE- 107.653.178
Casinoland IT-Systeme
GmbH
Lister Meile 2, 30161 Hannover, Germany, registration no. HRB 61326
Casinos Austria
(Liechtenstein) AG
Vorarlberger Strasse 210, 9486 Schaanwald, Liechtenstein, registration no. FL-0002.543.564-5
Casinos Austria (Swiss) AG c/o Reuss Treuhand AG, Furrengasse 11, 6004 Luzern, Switzerland, registration no. CHE-
100.189.949
Casinos Austria AG
Liegenschaftsverwaltungs
und Leasing GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN114288x
Casinos Austria International
(Mazedonien) Holding
GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN 400167g
Casinos Austria International
Belgium S.A.
Rue Grétry 16-20, 1000 Bruxelles, Belgium, registration no. 0502.785.246
Casinos Austria International
GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN 131441x
Casinos Austria International
Holding GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN37681p
Casinos Austria International
Ltd.
Mercure Hotel Level 1, 85-97 North Quay, Brisbane City QLD 4000, Australia, registration no.
ACN: 065998807, ABN: 065998807
201Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
Company
Casinos Austria
Management GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN38657z
Casinos Austria Maritime
Corp.
3440 Hollywood Blvd. Ste 415, 33021 Hollywood, USA, registration no. 59-2715677
Casinos Austria
Sicherheitstechnologie
GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN94404f
Casinos Austria VLT AG c/o Reuss Treuhand AG, Furrengasse 11, 6004 Luzern, Switzerland, registration no. CHE-
279.843.175
Casinos Event Immobilien
GmbH
Lister Meile 2, 30161 Hannover, Germany, registration no. HRB 201793
Casinos Austria
Aktiengesellschaft
Rennweg 44, 1038 Vienna, Austria, registration no. FN99639d
CES EA s.r.o. Prague 8, Libeň, Voctářova 2500/20a, post code 180 00, identification no. 08028656
Cleverlance Deutschland
GmbH
Eduard-Schopf-Allee 1, 28217 Bremen, Germany, registration no. 32267
Cleverlance Enterprise
Solutions s.r.o. (forlmerly
Cleverlance Enterprise
Solutions a.s.)
Prague 8, Libeň, Voctářova 2500/20a, post code 180 00, identification no. 27408787
Cleverlance Group a.s. Prague 8, Libeň, Voctářova 2500/20a, post code 180 00, identification no. 04771915
Cleverlance H2B a.s. Brno, Slatina, Tuřanka 1519/115a, post code 627 00, identification no. 28223756
Cleverlance Slovakia s.r.o. Bratislava, Prievozská 1978/6, post code 821 09, Slovak Republic, identification no. 35942487
Cloud4com SK, s.r.o. Bratislava, Staré Grunty 36, post code 841 04, Slovak Republic, identification no. 50569694
Cloud4com, a.s. Prague 7, Holešovice, U Uranie 954/18, post code 170 00, identification no. 24660329
CLS Beteiligungs GmbH Goldschmiedg. 3, 1010 Vienna, Austria, regitration no. FN84419x
Collington II Limited Custom House Plaza Block 6, International Financial Services Centre, Dublin 1, Republic of
Ireland, registration no. 506335
Complejo Monumento
Güemes S.A.
Av. Francisco de Uriondo 330, 4400 Salta, Argentina, registration no. FOLIO 187/88 ASIENTO
2288 LIBRO 9
CCB Congress Center Baden
Betriebsgesellschaft m.b.H.
Kaiser Franz Ring 1, 2500 Baden, Austria, FN67046y
Cuisino Ges. m.b.H. Rennweg 44, 1038 Vienna, Austria, registration no. FN54015i
DataSpring s.r.o. Prague 9, Vysočany, K Žižkovu 851/4, post code 190 00, identification no. 28808681
DEADALUS TECHNOLOGIES
FZC
Silicon Oasis Headquaters, DSOA Street, DSOA, 341568 Dubai, United Arab Emirates, tax
registr. no. 100227112800003
Deutsche Sportwetten
GmbH
Karmarschstr. 37+39, D-30159 Hannover, Germany, registration no. 219939
Eleganta, a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 27627985
Entretenimientos y Jegos de
Azar (EN.J.A.S.A.) S.A.
Del Milagro 142, 4400 Salta, Argentina, registration no. IGTJ de Salta Folio 65/6 asiento 2462 L
10
FM&S Czech a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 04283112
Fortuna 1 ApS c/o Casino Odense K/S, Claus Bergs Gade 7, 5000 Odensee C, Denmark, registration no.
14909087
Geologichne byreau “Lviv”
LLC
L’vivska Oblast, L’viv, 79011, ul. Kubiyovicha 18, Office 6, Ukraine, registration no.31978102
G-JET s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 27079171
Glücks- und
Unterhaltungsspiel
Betriebsgesellschaft m.b.H.
Rennweg 44, 1038 Vienna, Austria, registration no. FN241637z
Great Blue Heron Gaming
Com.
200 BAY STREET, ROYAL BANK PLAZA, M5J 2Z4 Ontario, Canada, registration no.
960662070
HELLENIC LOTTERIES S.A. 112 Athinon Avenue, Athens, Greece, registration no.25891401000
HORSE RACES S.A. 112 Athinon Avenue, Athens, Greece, registration no.132846101000
202 Sazka Group Annual Report and Accounts 2020
Financial Statements
Company
IGNIS HOLDING a.s.
(formerly MND Oil & Gas
a.s.)
Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 07435304
INDUSTRIAL CENTER 28/23
SP. Z O.O.
ul.Twarda 18, 00-105 Warszawa, Poland, registration no.1132912313
Inmobiliara Ovale S.A. Ignacio Carrera Pinto 109, 2720426 San Antonio, Chile, registration no. 14996/10019
INTERMOS Praha s.r.o. Prague 10, Vinohradská 1511/230, post code 100 00, identification no. 63076349
INTERMOS VALVES, s.r.o. Bratislava-mestská časť Staré Mesto, Moskovská 13, post code 811 08, Slovak Republic,
identification no. 35898411
Internet Projekt, s.r.o. Prague 2, Nové Město, Vyšehradská 1376/43, post code 128 00, identification no. 08526541
IPM – Industrial Portfolio
Management a.s.
Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 04572033
Italian Gaming Holding a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 04828526
JTU Czech, s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 02612020
Kaizen Gaming International
Limited (only activities in
Greece and Cyprus)
Flat B8, The Atrium West Street Msida, MSD1731 Malta, registration no. C43209
KAIZEN Gaming Limited
(only activities in Greece
and Cyprus)
Office 1/1007, Level G, Quantum House 75, Abate Rigord Street, Ta'Xbiex XBX 1120 Malta,
registration no. C58362
KKCG a.s. Prague 10, Vinohradská 1511/230, post code 100 00, identification no. 27107744
KKCG Development a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 08295484
KKCG Entertainment &
Technology B.V. (in
liquidation)
1101CT Amsterdam, Herikerbergweg 292, Kingdom of the Netherlands, registration no.
58856765
KKCG Industry B.V. 1101CT Amsterdam, Herikerbergweg 292, Kingdom of the Netherlands, registration no.
27271144
KKCG Investments AG Kapellgasse 21, 6004 Lucerne, Switzerland, registration no. CHE-271.643.388
KKCG Methanol Holdings
LLC
1675 South State Street, Suite B, Dover, DE, County of Kent, 19901, United States of America,
registration no. 36-4831670
KKCG Real Estate Group a.s. Prague 10, Vinohradská 1511/230, post code 100 00, identification no. 24291633
KKCG Structured Finance
AG
Kapellgasse 21, 6004 Lucerne, Switzerland, registration no. CHE-292.174.442
KKCG Technologies s.r.o. Vinohradská 1511/230, Strašnice, 100 00 Prague 10, identification no. 07171234
KKCG US Advisory LLC 125 High Street, Boston, MA-02110, United States of America, registration no. 84-2817214
Kura Basin Operating
Company LLC
70 Kostava Street (5 Gamsakhurdia Avenue), Tbilisi, Georgia, registration no. 405171567
Kynero Consulting a.s. Prague 10, Vinohradská 1511/230, post code 100 00, identification no. 24193461
Leisure & Enterteinment S.A. Del Milagro 142, 4400 Salta, Argentina, registration no. IGTJ de Salta Folio 253/4 asiento 3484
L 13
Liberty One Methanol LLC 400 Capitol Street, Suite 200, Charleston WV 25301, United States of America, registration
no.32- 0521898
Liberty One O&M LLC 400 Capitol Street, Suite 200, Charleston WV 25301, United States of America, registration no.
30- 0975326
Liberty Two Methanol LLC 400 Capitol Street, Suite 200, Charleston WV 25301, United States of America, registration
no.30- 0988055
LIE2 AG Fabrikstrasse 4, 9496 Balzers, Liechtenstein, registration no. FL-0002.606.855-3
LP Drilling S.r.l. 29016 Cortemaggiore, Salvo D’Acquisto 5, Italy, registration no. 01294260334
LTB Beteiligungs GmbH Universitätsring 10, 1010 Vienna, Austria, registration no. FN84439a
Medial Beteiligungs-
Gesellschaft m.b.h.
Universitätsring 10, 1010 Vienna, Austria, registration no.117154k
MEDICEM Group a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 07118422
Medicem Inc. 125 High Street, Boston, MA-02110, United States of America, registration no. 38-4126132
203Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
Company
MEDICEM Institute s.r.o. Kamenné Žehrovice, Karlovarská třída 20, post code 273 01, identification no. 26493331
MEDICEM Technology s.r.o Kamenné Žehrovice, Karlovarská třída 20, post code 273 01, identification no. 48036374
Metanol d.o.o. Lendava, Mlinska ulica 5, 9220 Lendava – Lendva, Slovenia, registration no. 6564534000
MND a.s. Hodonín, Úprkova 807/6, post code 695 01, identification no. 28483006
MND Drilling & Services a.s. Lužice, Velkomoravská 900/405, post code 696 18, identification no. 25547631
MND Drilling Germany
GmbH
31582 Nienburg, Domänenweg 7, Germany, registration no. HRB206722
MND Energie a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 09002359
MND Energy Trading a.s Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 29137624
MND Gas Storage a.s. Hodonín, Úprkova 807/6, post code 695 01, identification no. 27732894
MND Gas Storage Germany
GmbH
64665 Alsbach-Hähnlein, Birkenweg 2, Germany, registration no. HRB96046
MND Georgia B.V. 1101CT Amsterdam, Herikerbergweg 292, Kingdom of the Netherlands, registration no.
52308944
MND Germany GmbH Lüneburger Heerstraβe 77A, 29223 Celle, Germany, registration no. HRB207844
MND Samara Holding B.V. 1101CT Amsterdam, Herikerbergweg 292, Kingdom of the Netherlands, registration no.
52990680
MND Ukraine a.s. Hodonín, Úprkova 807/6, post code 695 01, identification no. 08957517
MND Group AG Kapellgasse 21, 6004 Lucerne, Switzerland, registration no.CHE-448.401.517
Moravia Systems a.s. Prague 10, Vinohradská 1511/230, post code 100 00, identification no. 26915189
Nazvrevi Oil Company
Limited
P.O.Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 4LY,
registration no. 1-32991
NEUROSOFT S.A. 466 Irakliou Avenue & Kiprou Street, 141 22 Iraklio Attikis, Athens, Greece, registration
no.84923002000
Ninotsminda Oil Company
Limited
195 Arch. Makarios III Ave., Neocleous House, 3030 Limassol, Cyprus, registration no. C74623
NOVECON a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 08270783
OAKDALE a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 27380912
ÖLG Holding GmbH Rennweg 44, 1038 Vienna, Austria, registration no. FN268558p
Ontrax Göteborg AG Scheelevägen 27, floor 16, 223 63 Lund, Sweden, reg. no. 556615-0032
OOO MND Samara ul. Alexeya Tolstogo 92, Samara, Samarská obl., 443099, Russia, registration no.
1046301405094
OPAP CYPRUS LTD 128-130 Lemesos Avenue, Strovolos, 2015, Nicosia, Republic of Cyprus, registration no.
HE140568
OPAP INTERNATIONAL LTD 128-130 Lemesos Avenue, Strovolos, 2015, Nicosia, Republic of Cyprus, registration no.
HE145913
OPAP INVESTMENT LTD 128-130 Lemesos Avenue, Strovolos, 2015, Nicosia, Republic of Cyprus, registration no.
HE297411
OPAP S.A. 112 Athinon Avenue, Athens, Greece, registration no.3823201000
OPAP SPORTS LTD 128-130 Lemesos Avenue, Strovolos, 2015, Nicosia, Republic of Cyprus, registration no.
HE133603
Österreichische
Klassenlotterie
Vertriebsgesellschaft m.b.H.
Rennweg 44, 1038 Vienna, Austria, registration no. FN468412t
Österreichische Lotterien
GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN54472g
Österreichische Sportwetten
GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN196645i
PDC INDUSTRIAL CENTER
48 SP. Z O.O.
ul. Twarda 18, 00-105 Warszawa, Poland, registration no.5252630921
POM Czech, s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 06773800
Precarpathian energy
company LLC
Ivano-Frankovska Oblast, Bogorodchany, 77701, ul. Shevchenka, Ukraine, registration no.
36042045
204 Sazka Group Annual Report and Accounts 2020
Financial Statements
Company
Rabcat Computer Graphics
GmbH
Rennweg 40-50/1/6 (1.OG), 1030 Vienna, Austria, registration no. FN276027y
Relax Rezidence Cihlářka,
s.r.o.
Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 05662079
Rezervoarji d.o.o Lendava, Mlinska ulica 5, 9220 Lendava – Lendva, Slovenia, registration no. 6564470000
RUBIDIUM HOLDINGS
LIMITED
Arch. Makariou III, 195, Neocleous House, 3030 Limassol, Republic of Cyprus, registration no.
HE 287956
SALEZA, a.s. (v konkurzu, v
úpadku, zahájeno
insolvenční řízení)
Prague 9, K Žižkovu čp. 851, post code 19093, identification no. 471 16 307
SAZKA a.s. Prague 9, K Žižkovu 851, post code 190 93, identification no. 26493993
SAZKA Asia a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 05266289
Sazka Asia Vietnam
Company Limited
3rd Floor, The Vista Building, 628C Xa Lo Ha Noi, An Phu Ward, District 2, Ho Chi Minh City,
Viet Nam, registration no.0314057663
SAZKA Czech a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 24852104
SAZKA DELTA AIF
VARIABLE CAPITAL
INVESTMENT COMPANY
LTD (formerly EMMA DELTA
VARIABLE CAPITAL
INVESTMENT COMPANY
LTD)
Arch. Makariou III, 195, Neocleous House, 3030 Limassol, Republic of Cyprus, registration no.
HE 314350
SAZKA DELTA HELLENIC
HOLDINGS LIMITED
(formerly EMMA DELTA
HELLENIC HOLDINGS
LIMITED)
Arch. Makariou III, 195, Neocleous House, 3030 Limassol, Republic of Cyprus, registration no.
HE 320752
SAZK A DELTA
MANAGEMENT LTD
(formerly EMMA DELTA
MANAGEMENT LTD)
Arch. Makariou III, 195, Neocleous House, 3030 Limassol, Republic of Cyprus, registration no.
HE 314151
Sazka Distribution Viet Nam
Company Limited
3rd Floor, The Vista Building, 628C Xa Lo Ha Noi, An Phu Ward, District 2, Ho Chi Minh City,
Viet Nam,
registration no.0313898374
SAZKA Entertainment AG Kapellgasse 21, 6004 Lucerne, Switzerland, registration no. CHE-366.705.452
SAZKA FTS a.s. Prague 9, Vysočany, K Žižkovu 851/4, post code 190 00, identification no. 01993143
SAZKA Group a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 24287814
SAZKA Group CZ a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 08993165
SAZKA Group Financing
(Czech Republic) a.s.
(formerly SAZKA Group
Holding a.s.)
Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 07877838
SAZKA Group Financing a.s. Dúbravská cesta 14, Bratislava – mestká časť Karlova Ves, post code 841 04, Slovak Republic,
identification no. 51142317
SAZKA Group UK Limited
(formerly) KKCG UK Limited
London, One Connaught Place, 5th Floor, W2 2ET, United Kingdom, registration no. 08869774
SAZKA Services s.r.o.
(formerly Kavárna štěstí
s.r.o.)
Prague 9, K Žižkovu 851/4, post code 190 00, identification no. 05111901
SAZKAmobil 5G a.s.
(formerly Italian GNTN
Holding a.s.)
Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 07911319
Seavus DOOEL 11 Oktomvri 33A, 1000 Skopje, Republic of Macedonia, reg. no. 5323983
Seavus AB Scheelevägen 27, floor 16, 223 63 Lund, Sweden, reg. no. 556588-5935
1 As defined below.
205Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
Company
Seavus CISC Area 18, 18, Baghramyan avenue, Arabkir, Yerevan city, 0019, Armenia, Code of the legal entity:
50129257
Seavus DOO (BA) Ivana Franje Jukica 7, Banja Luka, Bosna I Hercegovina, Republika Srpska, reg. no. 57-01-0252-
17
Seavus DOO (RS) Vojvode Misica 9, 18 000 Nis, Republic of Serbia, reg. no. 20177861
Seavus Educational and
Development Center DOO
Vojvode Misica 9, 18 000 Nis, Republic of Serbia, reg.no. 29508429
Seavus Educational and
Development Center DOOEL
11 Oktomvri 33A, 1000 Skopje, Republic of Macedonia, reg. no. 6643140
Seavus Enterprise
Foundation
11 Oktomvri 33A, 1000 Skopje, Republic of Macedonia, reg. no. 7026714
Seavus FLLC FLLC SEAVUS, 25A Internatsionalnaya st., office 420, Minsk, 220 030, Belarus, reg. no.
190835458
Seavus GmbH Itziker Dorf Strasse 57, 8627 Grüningen, Switzerland, ID. No. CH – 020.4.049.285-2
Seavus Group Holding BV Hoogoorddreef 15, 1101BA Amsterdam, Netherland, reg. No. 34316211
Seavus S.R.L. MD-2071, str. Alba-Iulia, 79/1, mun. Chisinau, Moldova, reg. No. 1020600026584
Seavus SHPK Njësia Bashkiake nr. 5, Rruga Abdyl Frasheri, Ndërtesa 8, Hyrja 7, Ap. 25, 1019 Tiranë, ID no.
L62225007B
Seavus Stockholm AB Scheelevägen 27, floor 16, 223 63 Lund, Sweden, reg. no. 556594-4799
Seavus USA Inc. 2352 Main Street, Suite 200, Concord, MA 01742, ID. No. 000873055
SG INDUSTRIAL CENTER 02
SP. Z O.O.
ul. Twarda 18, 00-105 Warszawa, Poland, registration no.5272464443
SIL Servis Partner a.s. Ostrava, Slezská Ostrava, Těšínská 1970/56, post code 710 00, identification no. 25830953
Spielbanken Niedersachsen
GmbH
Karmarschstraße 37-39, 30159 Hannover, Germany, registration no. HRB 50373
SPORTLEASE a.s. Prague 9, K Žižkovu 851, post code 190 93, identification no. 62361546
Springtide Ventures s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 01726587
Stoiximan Limited Flat B8, The Atrium West Street Msida, MSD1731 Malta, registration no. C95597
STR Czech s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 07728344
SUPERMARINE, s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 08062773
Tatte Property, a.s. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 24841935
Theta Real s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 27631842
TOK Poland Sp. Z o.o. ul. Twarda 18, 00-105 Warszawa, Poland, Reg. č 5252689699
TORA DIRECT S.A. 108 Athinon Avenue and Chrimatistiriou Street, Athens, Greece, registration no.5641201000
TORA WALLET S.A. 108 Athinon Avenue and Chrimatistiriou Street, Athens, Greece, registration no.139861001000
US Methanol LLC 400 Capitol Street, Suite 200, Charleston WV 25301, United States, registration no. 81-
1952040
VESTINLOG, s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 05629276
Viage Production S.A. Rue Grétry 16-20, 1000 Bruxelles, Belgium, registration no. 0474.725.225
Vinohradská 230 a.s. Prague 10, Vinohradská 1511/230, post code 100 00, identification no. 26203944
Vitalpeak Limited 8 Alasias street, Christodoulides Building, 3095 Limassol, Cyprus, registration no. HE 228204
VSU Czech s.r.o. Prague 10, Strašnice, Vinohradská 1511/230, post code 100 00, identification no. 08062897
win2day International GmbH Rennweg 44, 1038 Vienna, Austria, registration no. FN371257t
WINWIN International
GmbH
Rennweg 44, 1038 Vienna, Austria, registration no. FN366572d
WOODSLOCK a.s. Prague 4, Líbalova 2348/1, post code 149 00, identification no. 27379434
206 Sazka Group Annual Report and Accounts 2020
Financial Statements
Further regulatory disclosures
Disclosure of non-financial and regulatory information required by the Czech Capital Market
Undertakings Act
SAZKA Group a.s. is an issuer of bonds listed on the Prague Stock Exchange under reference CZK 6bn SUN SG
5.20/2024 (ISIN: CZ0003522930).
This part of the Annual Report contains information required to be disclosed by the Company as the issuer of
publicly traded instruments according to the Sections 118 par. 4) let. b) – h) and j) – l) and 118 par. 6) of the Czech
Act No. 256/2004 Coll., Capital Market Undertakings Act, as amended (the “Capital Markets Undertakings Act”).
In this part of the Annual Report, SAZKA Group a.s. is referred toas the “Company” and the overall holding of the
companies under SAZKA Group a.s. is, for the purpose of this part, referred to as “SAZKA Group” or the “SAZKA
Group structure”.
1. General information about the Company
Company name: SAZKA Group a.s.
Registered office: Vinohradská 1511/230, Strašnice, 100 00 Praha 10, Czech Republic
Company ID no.: 242 87 814
VAT registration no.: CZ24287814
LEI (Legal Entity Identifier): 3157001WZJ5O35EAL536
Commercial court: Commercial Register administered by the Municipal Court in Prague
Commercial Register file no.: B 18161
Date of Incorporation: 2 April 2012
Establishment date: 26 January 2012
Legal form: joint-stock company
Telephone no: +420 225 010 612
E-mail: ir@sazkagroup.com
Web: www.sazkagroup.com
Description of activities:
According to the Art. 3 of the Company’s Articles of Association, adopted on 26 January 2012, the Company’s
registered activities are (i) manufacturing, trade and services other than those listed in Annexes no. 1 to 3 of the
Czech Act No. 455/1991 Coll., as amended (the “Trade Licensing Act”) and (ii) the lease of property, residential
and non-residential premises.
The Company manages its ownership interests in the lottery and gaming companies within the SAZKA Group and
it does not undertake any business activity in the lottery and gaming market on its own. The Company is not a
holder of any lottery license or operator of lottery or gaming activities. For more details about the operations of
the Company and its business model, kindly refer to sections “Our business at Glance” and “Business Model” on
pages 2 et seq. and 12 et seq. of this Annual Report, respectively.
Legal Framework:
Overview of key legislation applicable the Company and to the operating companies in the SAZKA Group structure:
• Czech Act No. 89/2012 Coll., the Civil Code, as amended (the “Civil Code”);
• Business Corporations Act;
• Capital Market Undertakings Act;
• The Trade Licensing Act;
207Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
• Czech Act No. 563/1991 Coll., the Accounting Act, as amended;
1. General information about the Company continued
• Czech Act No. 186/2016 Coll., the Gambling Act, as amended;
•
Italian Civil Code from the year 1942, No. 262, and Italian concession deed No. 0058555 20/06/2016-I, as amended;
• Greek Act No. 4548/2018, on the Reform of Joint-stock Companies, as amended;
• Greek Act No. 2843/2000 related to monopoly laws, as amended;
• Greek Act No. 3229/2004, on the Supervision of the Gaming Market, as amended;
•
Greek Act No. 4002/2011, on the Regulation of the Gaming Market for Video Lottery Terminals and Online Games,
as amended;
•
Greek Act No. 3556/2007, on Transparency Requirements for Companies Whose Shares are Traded on a Regulated
Market, as amended;
• Austrian Act No. 620/1989, on gambling, as amended; and
• Cypriot Act No. 37(I)/2019), the Law Providing for the Regulation of Betting and Related Matters, as amended.
Organizational structure
The Company is a holding company, which primarily owns interests in companies within SAZKA Group and supports
its subsidiaries in the areas of central management, strategic management, development of their existing and new
sales channels and technologies, innovative gaming formats and marketing strategies. The Company also engages
in business development activities, including providing support to its subsidiaries in relation to acquisitions and
participation in tenders, and provides financing for its own activities and companies in the SAZKA Group structure.
The Company as such does not conduct business activities in the gaming and lottery sector and does not hold
any licences which are a necessary prerequisite to enter the gaming and lottery market. For the list of direct/
indirect subsidiaries of the Company, please refer to the “Notes to the consolidated financial statements”, section
“Group Companies” on page 160 et seq. of this Annual Report.
Until 17 March 2021, the Company had been wholly owned and directly controlled by KKCG AG, which is a parent
company of the KKCG group of companies (the “KKCG Group”). On 17 March 2021, SAZKA Entertainment AG, a
company established and existing under the laws of the Swiss Confederation, with its registered seat at Kapellgasse
21, 6004 Lucerne, Switzerland, registration number CHE-366.705.452 (“SAZKA Entertainment AG”), was interposed
between KKCG AG and the Company and thus became the sole shareholder of the Company.
KKCG AG is wholly owned by KKCG Holding AG, having its registered seat in Switzerland. The sole shareholder of
KKCG Holding AG is Valea Holding AG, having its registered seat in Liechtenstein. The sole shareholder of Valea
Holding AG is Valea Foundation, existing under the laws of Liechtenstein. Valea Foundation per se is not controlled
by any other person, nor does any other person hold shares in it. The designated beneficiary of Valea Foundation
is Mr Karel Komárek.
In accordance with the Company’s Articles of Association, no shareholder has the possibility to influence the
activities of the Company in any other way than by exercising his voting rights at General Meetings. Company’s
dependence on its sole shareholder is based on the shareholder’s ownership interest and share in the voting rights.
There are no specific measures in place to prevent potential misuse of shareholder rights over the Company beyond
certain limits set out by the applicable laws and the Articles of Association of the Company.
The registered capital of the Company
The registered capital of the Company is CZK 2,000,000 and has been fully paid-up. It is divided into 20 registered
common shares of nominal value of CZK 100,000 each. The shares of the Company are not traded on any stock
exchange market and therefore no ISIN has been assigned to them.
208 Sazka Group Annual Report and Accounts 2020
Financial Statements
1. General information about the Company continued
Description of the rights and duties attached to the shares
The rights and duties associated with all Company’s shares are identical. These rights and duties are set out in the
relevant provisions of Company’s Articles of Association and the applicable laws, primarily the Civil Code and the
Business Corporations Act. The rights attached to Company’s shares include, inter alia, the right to participate in
the General Meeting and to vote on matters within the competence of the General Meeting, the right to receive
the distributed dividend, the right to request and obtain an explanation regarding the affairs of the Company,
provided that such explanation is necessary to assess the matters included in the agenda of the General Meeting
or to exercise the shareholder’s rights at the General Meeting, and the right to a share in the liquidation balance.
Each share in a nominal value of CZK 100,000 is assigned 1 vote and therefore the total number of votes in the
Company is 20. No restrictions on voting rights have been introduced in relation to any of the shares. The obligation
associated with the shares is primarily the payment for the subscribed shares within imposed deadlines. The Company
has not adopted any specific dividend policy. The distribution of the dividend is governed by the relevant provisions
of the Business Corporations Act.
Holding of the Compapny’s shares by the persons with the managerial powers
The persons with managerial powers are neither holders of the shares or similar securities representing a share in
the Company, nor holders of any options or comparable investment instruments the value of which relates to the
shares or similar security representing a share in SAZKA Group. The persons with managerial powers are not
contracting parties to the contracts concluded in their favour and entered into by them and the Company.
Remuneration charged for the accounting period by auditors
The table below depicts the remuneration of the Company’s statutory auditor PriceWaterhouseCoopers Audit
s.r.o. for services provided in 2020:
EUR thousands Company
Other
consolidated
entities
Statutory audit of annual financial statements 142,164 69,048
Other assurance services 119,623 23,937
Tax advisory – –
Other non-audit services – 1,702
• The services provided by the statutory auditor of the Company in 2020 (in addition to the statutory audit of
annual financial statements) were:
• Review of interim consolidated financial statements of SAZKA Group and its components;
•
Reporting on the financial information presented in the offering document prepared for the purpose of the bond
issue by the Company;
•
Non-audit assurance engagements performed according to ISAE 3000 and agreed upon procedures performed
according to ISRS 4400 performed in respect of debt covenants and legislative and contractual obligations of
the Company and other consolidated companies in SAZKA Group structure;
• Gap assessment of documentation related to the IT system outside the finance function.
Rating
As of the date of publication of this Annual Report, the Company has a corporate rating, as well as the rating of
its two Eurobond issues, of B+ (stable outlook) by S&P Global Ratings and BB- (stable outlook) by Fitch Ratings
(the “Rating Agencies”). Both of the Rating Agencies are registered in accordance with the requirements set forth
by the Regulation (EC) No. 1060/2009 of the European Parliament and of the Council of 16 September 2009 on
credit rating agencies, as amended (the “Regulation”). The percentage of the total market share of neither of the
Rating Agencies is less than 10% of the market share in the sense of Article 8d of the Regulation. The Company
has decided not to engage rating agency with the market share lower than 10%.
209Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
2. Corporate bodies of the Company
The Company had set-up and maintains the following corporate bodies:
a) General Meeting;
b) Board of Directors;
c) Supervisory Board;
d) Audit Committee.
2.1. General Meeting
The General Meeting is the main corporate body of the Company. It is possible that the resolutions of the General
Meeting are adopted outside of the General Meeting as well (by means of per rollam voting). As the entirety of
the Company’s shares through the Accounting Period was owned by the sole shareholder, it was he who, in
accordance with section 12 par. 1) of the Business Corporations Act, exercised the powers of the General Meeting
in its capacity. As such, the procedural rules set out in Article 22 et seq. of Articles of Association of the Company
were not applicable throughout the Accounting Period.
The powers of the General Meeting (and the powers of the sole shareholder exercising the powers of the
General Meeting) include, among others, decisions on:
a) Amendments to the Articles of Association, unless the amendment results from the increase of the registered
capital by the authorised Board of Directors or unless the amendment occurred as a result of any other
legal circumstances;
b) Increase or reduction of the registered share capital and on authorising the Board of Directors to increase the
registered capital;
c) The possibility of offsetting a financial claim towards the Company against a claim for payment of the issue price;
d) The issue of convertible or preferred bonds;
e) Election and removal of members of the Board of Directors;
f) Election and removal of members of the Supervisory Board;
g) Approval of the annual, extraordinary, or consolidated financial statements, as well as any interim financial
statements if the execution of such statements is prescribed by any applicable laws;
h) The distribution of profit or any other own resources, or the settlement of loss;
i) Filing of an application for admission of the Company’s equity securities to trading in the European regulated
market or excluding such securities from trading in the European regulated market;
j) Winding up the company with liquidation;
k) Appointment and removal of the liquidator;
l) Approval of the proposal to distribute the liquidation balance;
m) Approval of the transfer, usufructuary lease or pledging of the enterprise or any part thereof which would entail
a fundamental change in the current structure of the enterprise or a fundamental change in the line of business
or registered activities of the Company;
n) Taking over the effects of any acts performed on behalf of the Company before its incorporation;
o) Approval of silent partnership agreements;
p) Giving strategic instructions to the Board of Directors which do not interfere with the business management
of the Company unless such instructions relating to the business management are requested by a member of
the Board of Directors;
q) Approval of the principles governing the Supervisory Board;
210 Sazka Group Annual Report and Accounts 2020
Financial Statements
2. Corporate bodies of the Company continued
r) Granting and revoking of the proxy powers to act on behalf of the Company;
s) Approval of the Company’s juridical acts which the General Meeting may prohibit under the law; and
t) Other decisions entrusted to the General Meeting by the law or the articles of association.
2.2. Board of Directors
The statutory body of the Company is the Board of Directors, which consists of four members who are elected
and revoked by the General Meeting of the Company. The term of the office of the members of the Board of
Directors is five years and the election and revocation of the Chairman of the Board of Directors is in the capacity
of the Board of Directors.
The Board of Directors is responsible for business management and proper bookkeeping of the Company. It also
submits the annual, extraordinary, consolidated or interim financial statements to the General Meeting for its
approval, and, in compliance with the Articles of Association of the Company, the Board of Directors presents to
the General Meeting the proposals to distribute profits or pay losses. On top of the above-mentioned responsibilities,
the Board of Directors is vested with any and all other competences except those reserved for other corporate
bodies of the Company under the Articles of Association, the law, or a decision of a public authority.
Nobody is entitled to give instructions to the Board of Directors regarding the business management. This shall
not limit the right of a member of the Board of Directors to ask the General Meeting for an instruction related to
the business management according to the Business Corporations Act.
The Board of Directors meets as often as it is required to ensure the smooth business operations of the Company.
The Board of Directors may also adopt resolutions outside the meetings, either in writing or using technical facilities
(per rollam). Per rollam resolutions of the Board of Directors are adopted if the majority of votes of all members
of the Board of Directors have been cast in favour. A meeting of the Board of Directors is quorate if the majority
of all of its members is present. Decisions of the Board of Directors are adopted if the majority of votes of the
members present at the meeting have voted in favour of the proposal – the Chairman of the Board of Directors
has a casting vote in case of equality of votes.
For the proper representation of the Company towards third parties, two members of the Board of Directors are
required to act jointly.
The following persons held the office in the Board of Directors of the Company through 2020:
• Mr Karel Komárek – since 17 August 2016 (Chairman of the Board of Directors);
• Mr Pavel Šaroch – since 17 August 2016;
• Mr Robert Chvátal – since 11 July 2019; and
• Ms Katarína Kohlmayer – since 12 December 2019.
Karel Komárek – Chairman of the Board of Directors
Appointment to the Board of Directors: 17 August 2016
Date of expiration of current term: 17 August 2021
Business address: Kapellgasse 21, 6004 Luzern, Swiss Confederation
For Mr Komárek’s experience and expertise please refer to Section “Board of Directors” on page 44 of this
Annual Report.
Mr Komárek is the Chairman of the Board of Directors of SAZKA Entertainment AG, the Chairman of the Board
of Directors of KKCG AG and a member of the statutory bodies of various other companies forming part of the
KKCG Group (including, among others, MND a.s.).
211Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
2. Corporate bodies of the Company continued
Pavel Šaroch – Member of the Board of Directors
Appointment to the Board of Directors: 17 August 2016
Date of expiration of current term: 17 August 2021
Business address: Vinohradská 1511/230, Strašnice, 100 00 Praha 10, Czech Republic
For Mr Šaroch’s experience and expertise please refer to Section “Board of Directors” on page 44 of this Annual Report
Mr Šaroch holds the position of the Chief Investment Officer of the KKCG Group and is also member of statutory
and supervisory bodies of various other companies forming part of the KKCG Group (including, among others,
SAZKA Entertainment AG, KKCG AG and KKCG a.s.). Mr Šaroch is also a member of the statutory and supervisory
bodies of other companies within SAZKA Group, the following of which are considered significant:
• Chairman of the Board of Directors of SAZKA Czech a.s. (Czech Republic);
• Chairman of the Board of Directors of SAZKA a.s. (Czech Republic);
• Member of the Supervisory Board of SAZKA FTS a.s. (Czech Republic);
• Chairman of the Board of Directors of Austrian Gaming Holding a.s. (Czech Republic);
• Chairman of the Board of Directors of Italian Gaming Holding a.s. (Czech Republic);
• Chairman of the Board of Directors of SAZKAmobil 5G a.s. (Czech Republic);
• Chairman of the Board of Directors of SAZKA Asia a.s. (Czech Republic);
• Chairman of the Board of Directors of SAZKA Group Financing (Czech Republic) a.s. (Czech Republic);
• Chairman of the Board of Directors of SAZKA Group Financing a.s. (Slovak Republic);
• Vice-Chairman of the Board of Directors of OPAP S.A. (Greece);
• Member of the Board of Directors of LOTTOITALIA s.r.l. (Italy);
• Member of the Supervisory Board of Casinos Austria AG (Austria); and
• Member of the Supervisory Board of Austrian Lotteries (Austria).
Robert Chvátal – Member of the Board of Directors
Appointment to the Board of Directors: 11 July 2019
Date of expiration of current term: 11 July 2024
Business address: Vinohradská 1511/230, Strašnice, 100 00 Praha10, Czech Republic
For Mr Chvátal’s experience and expertise please refer to Section “Board of Directors” on page 44 of this
Annual Report.
Mr Chvátal holds the position of Chief Executive Officer of the Company and is also a member of the statutory
and supervisory bodies of other companies in SAZKA Group, the following of which are considered significant:
• Member of the Board of Directors of SAZKA Czech a.s. (Czech Republic);
• Member of the Board of Directors of SAZKA a.s. (Czech Republic);
• Member of the Board of Directors of Austrian Gaming Holding a.s. (Czech Republic);
• Member of the Board of Directors of Italian Gaming Holding a.s. (Czech Republic);
• Chairman of the Board of Directors of SAZKA Group CZ a.s. (Czech Republic);
• Member of the Board of Directors of SAZKAmobil 5G a.s. (Czech Republic);
• Member of the Board of Directors of SAZKA Asia a.s. (Czech Republic);
212 Sazka Group Annual Report and Accounts 2020
Financial Statements
2. Corporate bodies of the Company continued
• Member of the Board of Directors of SAZKA Group Financing a.s. (Slovak Republic);
• Member of the Board of Directors of OPAP S.A. (Greece);
• Vice President of the Supervisory Board of Casinos Austria AG (Austria);
• President of the Supervisory Board of Austrian Lotteries (Austria);
• Director of ALLWYN ENTERTAINMENT LTD (United Kingdom); and
• Director of SAZKA GROUP UK HOLDING LTD (United Kingdom).
Katarína Kohlmayer – Member of the Board of Directors
Appointment to the Board of Directors: 12 December 2019
Date of expiration of current term: 12 December 2024
Business address: Vinohradská 1511/230, Strašnice, 100 00 Praha 10, Czech Republic
For Ms Kohlmayer’s experience and expertise please refer to Section “Board of Directors” on page 44 of this
Annual Report.
Ms Kohlmayer holds the position of Chief Financial Officer of the KKCG Group and is also member of statutory
bodies of various other companies forming part of the KKCG Group (including, among others, KKCG a.s. and MND
Group AG) and a member of the statutory and supervisory bodies of other companies in SAZKA Group, the
following of which are considered significant:
• Member of the Board of Directors of OPAP S.A. (Greece);
• Member of the Supervisory Board of Casinos Austria AG (Austria);
• Member of the Board of Directors of SAZKA Group Financing (Czech Republic) a.s. (Czech Republic);
• Member of the Board of Directors of SAZKA Group CZ a.s. (Czech Republic);
• Director of ALLWYN ENTERTAINMENT LTD (United Kingdom); and
• Director of SAZKA GROUP UK HOLDING LTD (United Kingdom).
2.3. Supervisory Board
The Supervisory Board is the supervising body of the Company. The Supervisory Board consists of one member
and the decision of the sole member of the Supervisory Board is considered to be the decision of the Supervisory
Board as such. Members of the Supervisory Board are elected and revoked by the General Meeting for a term of
five years.
The Supervisory Board supervises the exercise of powers by the Board of Directors and the activities of the
Company. The Supervisory Board reviews the annual, extraordinary, consolidated and, if applicable, interim financial
statements and the proposal for distribution of profits or settlement of losses, and submits its statement to the
General Meeting. It is entitled to inspect any and all documents and records concerning the Company’s activities
and check whether the accounting records are properly maintained and accurate and whether the business or
any other activity of the Company complies with the applicable laws and regulations and the Articles of Association.
Tomáš Porupka has held the position of the sole member of the Supervisory Board through 2020. Mr Porupka
was elected as of 17 August 2016 and has been acting as the sole member since 11 July 2019.
Mr Tomáš Porupka – Sole member of the Supervisory Board of the Company
Appointment to the Supervisory Board: 17 August 2016
Date of expiration of current term: 17 August 2021
Business address: Vinohradská 1511/230, Strašnice, 100 00 Praha 10, Czech Republic
213Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
2. Corporate bodies of the Company continued
Experience and expertise:
Mr Porupka studied law at the Faculty of Law of Charles University in Prague and the Autonomous University in
Madrid and economy at the University of Economics in Prague. He worked in international law firms in Prague and
Madrid for 11 years. Before joining KKCG AG, he worked at the Clifford Chance LLP branch in Prague as Senior
Associate for five years. During his previous practice he focused on international business and acquisitions, corporate
law and real estate law.
Mr Porupka is the General Counsel of KKCG Group and also a member of the supervisory bodies of other companies
within SAZKA Group, the following of which are considered significant:
• Member of the Supervisory Board of SAZKA a.s. (Czech Republic);
• Sole member of the Supervisory Board of SAZKA Czech a.s. (Czech Republic);
• Sole member of the Supervisory Board of Austrian Gaming Holding a.s. (Czech Republic);
• Sole member of the Supervisory Board of Italian Gaming Holding a.s. (Czech Republic);
• Chairman of the Supervisory Board of SAZKA Group CZ a.s., (Czech Republic);
• Chairman of the Supervisory Board of SAZKA Group Financing (Czech Republic) a.s. (Czech Republic);
• Member of the Supervisory Board of IGH Financing a.s., v likvidaci (Czech Republic) (until 1 June 2020);
• Member of the Supervisory Board of SAZKAmobil 5G a.s. (Czech Republic); and
• Chairman of the Supervisory Board of SAZKA Group Financing a.s. (Slovak Republic).
2.4. Conflict of interest
The Company is not aware of any potential conflict of interest between the obligations of the members of the
Board of Directors and the sole member of the Supervisory Board of the Company related to the exercise of their
functions and their private interest or other obligations. However, the performance of the office as members of
the Boards of Directors or Supervisory Boards of the companies specified above may constitute a conflict of
interest due to the fact that they are also members of the bodies of the other companies and while performing
the office of the other companies they are obliged to act in the interests of such companies. Such interest may be
different to the one of the Company.
2.5. Audit committee
The Company has established an Audit Committee in accordance with the requirements of the Business Corporations
Act. The sole shareholder appointed three members to the Audit Committee on 15 May 2020. The term of service
of the members of the Audit Committee is five years. The election of the Chairman of the Audit Committee is in
the capacity of the Audit Committee.
The competence of the Audit Committee according to the applicable legislation (the Czech Act No. 93/2009 Coll.,
on Auditors, as amended) is:
• Monitoring the effectiveness of the internal quality control and risk management systems and monitoring the
process of the preparation of financial statements and consolidated financial statements;
• Recommendations to the Supervisory Board as to the auditors which shall be appointed, assessment of their
independence and the discussion of any threats to the auditor´s independence if need be, including the adoption
of necessary safeguards;
• Submitting to the Board of Directors or the Supervisory Body recommendations to ensure the integrity of the
accounting and financial reporting and annual reports on the Audit Committee’s operations; and
• Exercising other powers pursuant to applicable Czech and European Union legislation.
214 Sazka Group Annual Report and Accounts 2020
Financial Statements
2. Corporate bodies of the Company continued
The Audit Committee is further governed by its Rules of Procedure, which were adopted by the Audit Committee
at its second meeting. The Rules of Procedure define the position of a Secretary-General of the Audit Committee,
who can perform certain administrative tasks. One of the attorneys providing services to the Company was elected
as the Secretary-General. The Audit Committee generally meets on a monthly basis; in the year 2020, the Audit
Committee held seven meetings in total.
In the course of the meetings in the year 2020, the Audit Committee had routinely cooperated with the Company’s
compliance, legal, and finance and accounting teams.
In 2020, the Audit Committee (i) provided several reports to the Supervisory Board of the Company; (ii) supplied
a report to the Public Audit Oversight Board; (iii) regularly discussed ongoing transactions of the Company or its
subsidiaries in Austria, the Czech Republic, Greece, Italy, and the United Kingdom; (iv) cooperated on the audit
planning for the year 2020; (v) conducted other tasks, as necessary.
The members of the Audit Committee of the Company in the year 2020 were the following persons:
•
Mr Otakar Hora, independent member – since 15 May 2020 (Chairman of the Audit Committee since 22 May 2020);
• Mr Jan Hrazdira, independent member – since 15 May 2020; and
• Mr Zdeněk Jurák – since 15 May 2020.
3. Persons with managerial powers, remuneration
3.1. Basic information
The persons with the managerial powers of the Company are:
a) the members of the Board of Directors;
b) the members of the Supervisory Board of the Company; and
c) the following other persons as of 31 December 2020:
• Mr Kenneth Morton, Chief Financial Officer. Responsible for defining and executing the Group-level financing,
tax and reporting strategy, for supervision of the implementation of key strategic financial initiatives as well as
for the leadership of budgeting.
•
Mr Štěpán Dlouhý, Chief Investment Officer. Responsible for market monitoring and identification of investment
opportunities, realisation of acquisitions, divestments, mergers, and other M&A activities as well as for negotiation
of transactions terms.
•
Mr Tony Khatskevich, Chief Technology Officer. Responsible for defining and executing the strategy of the Group
in IT/Technology, for liaising with other executive managers in IT/Technology across the whole Group and
participation in strategic management of their activities as well as initiation and coordination of Group-level
technology initiatives.
• Mr Ján Matuška, Chief Operating Officer. Responsible for the organic development of SAZKA Group’s business,
monitoring business performance and ensuring best practice exchange within the Group. Responsible for
designing business model optimisations as well as for developing relationships with strategic partners.
• Jan Štěrba, Chief Marketing Officer. Responsible for incorporating a marketing mindset into all facets of SAZKA
Group’s activities and business.
It should be noted that Mr Robert Chvátal, who is a member of the Board of Directors of the Company, also holds
the position Chief Executive Officer of the Company and in this position, he leads SAZKA Group and the development
and implementation of its strategy.
215Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
3. Persons with managerial powers, remuneration continued
3.2. Principles of Remuneration
The Company has neither adopted any particular remuneration policy nor established any remuneration committee
vis-à-vis the Board of Directors.
3.2.1. Members of the Board of Directors and Members of the Supervisory Board
The members of the Board of Directors have signed individual Agreements on the Performance of Office, which
were approved by the General Meeting of the Company. The Agreements on the Performance of Office are almost
identical, and their key terms are as follows:
• The function of a member of the Board of Directors is performed without remuneration.
• The function shall be performed personally, with due care and, in general, in accordance with applicable laws,
the Articles of Association of the Company and the terms and conditions of the agreement.
•
The Company is obliged to reimburse duly documented and reasonable costs incurred by the respective member
of the Board of Directors when performing his or her function, including, for example, costs of business trips.
• The respective member of the Board of Directors is obliged to compensate damages caused to the Company
as a result of breach of his or her duties while performing the function.
• The members of the Board of Directors accepted an obligation of confidentiality and noncompetition to the
extent determined by applicable laws or the Articles of Association of the Company.
• The term of the agreement correlates with the term of office of the relevant member of the Board of Directors.
•
No specific benefits are agreed in case of the termination of the agreement or the function of the relevant
member of the Board of Directors.
The individual Agreements on Performance of Office are: Agreement on Performance of Office between the
Company and Mr Karel Komárek entered into as of 17 August 2016; Agreement on Performance of Office between
the Company and Mr Pavel Šaroch entered into as of 17 August 2016; Agreement on Performance of Office between
the Company and Mr Robert Chvátal entered into as of 11 July 2019; and Agreement on Performance of Office
between the Company and Ms Katarína Kohlmayer entered into as of 12 December 2019.
None of the members of the Board of Directors of the Company is an employee of the Company, nor did any of
the members of the Board of Directors enter into any other agreement on provision of the services similar to the
employment agreement.
Some members of the Board of Directors of the Company are entitled to remuneration from certain entities
controlled by the Company, either by virtue of serving as members of statutory bodies or being in an employment
relationship with such controlled entities and/or from the mother company of the Company.
3.2.2. Member of the Supervisory Board
The Company has neither adopted any particular remuneration policy nor established any remuneration committee
vis-à-vis the Supervisory Board.
Mr Porupka, as the sole member of the Supervisory Board, has signed an Agreement on the Performance of Office,
which was approved by the General Meeting of the Company. The key terms of the Agreement on the Performance
of Office are as follows:
• The function of a member of the Supervisory Board is performed without remuneration.
• The function shall be performed personally, with due care and, in general, in accordance with applicable laws,
the Articles of Association of the Company and the terms and conditions of the agreement.
• The Company is obliged to reimburse duly documented and reasonable costs incurred by the member of the
Supervisory Board when performing his or her function, including, for example, costs of business trips.
• The member of the Supervisory Board is obliged to compensate damages caused to the Company as a result
of breach of his duties while performing the function.
216 Sazka Group Annual Report and Accounts 2020
Financial Statements
3. Persons with managerial powers, remuneration continued
•
The member of the Supervisory Board accepted an obligation of confidentiality and noncompetition to the
extent determined by applicable laws or the articles of association of the Company.
• The term of the agreement correlates with the term of office of the member of the Supervisory Board.
•
No specific benefits are agreed in case of the termination of the agreement or the function of the relevant
member of the Board of Directors or the Supervisory Board.
Mr Porupka is not an employee of the Company.
Mr Porupka and the Company have entered into a Legal Services Agreement. The services rendered to the Company
by Mr Porupka under such agreement consist, in particular, of legal services concerning various areas of Czech
law. Mr Porupka provides its legal advice in day-to-day business operations of the Company, as well as its strategic
and/or long-term projects. Similar Legal Services Agreement was concluded also between Mr Porupka and SAZKA
a.s. Mr Porupka receives remuneration under the Legal Services Agreements concluded with the Company and
SAZKA a.s.
The individual Agreements concluded between the member of the Supervisory Board and the Company are:
Agreement on Performance of the Office between the Company and Mr Tomáš Porupka entered into as of 17 August
2016; and ii) Legal Services Agreement between the Company and Mr Porupka entered into as of 31 March 2016,
and the related amendments: Amendment No. 1 entered into as of 31 March 2017, Amendment No. 2 entered into
as of 1 April 2019, Amendment No. 3 entered into as of 28 April 2020 and Amendment No.4 entered into as of
1 April 2021.
3.2.3. Other persons with managerial powers
The remuneration system of other persons with managerial powers is agreed in the Employment Agreements (or
agreements of similar nature), which were entered into by the Company and the respective executive on ad hoc
basis upon the assessment of the relevant experience, seniority, etc. in connection to the respective position.
This concerns, in particular, Mr Morton (Chief Financial Officer) as of 1 February 2020, Mr Dlouhý (Chief Investment
Officer) as of 1 March 2016, Mr Khatskevich (Chief Technology Officer) as of 16 March 2018, Mr Matuška (Chief
Operating Officer) as of 30 April 2019 and Mr Štěrba (Chief Marketing Officer) as of 1 February 2020. The Employment
Agreements are concluded for an indefinite period of time.
The remuneration system of the persons named above includes a fixed monthly salary in the amount agreed in
their Employment Agreement approved by the members of the Board of Directors, and an annual bonus (not
constituting a legal claim) calculated as a given percentage of the annual fixed salary, which is dependent on the
fulfilment of annual key performance indicators (“KPIs”). KPIs including percentage ratio on the final amount of
the annual bonus are individually set for each person in cooperation with their supervisor and comprise the goals
(depending on the particular position of each person) and also include goals linked to achievement of certain
economic results of the Company and/or its group (such as certain level of EBITDA). Fulfilment of the KPIs is
evaluated by the CEO for the executive management and the Board of Directors for the CEO, respectively. Set and
evaluated KPIs are reviewed by the HR department. Evaluation takes place in the first weeks of each year.
Calculated bonus entitlements are reviewed and approved for payment by Board of Directors, usually during the
month of February.
In addition, persons above are entitled to a Long Term Incentive Scheme (“LTIS”), which is a three-year incentive
plan (not constituting a legal claim). LTIS bonus is calculated as a given percentage of the annual fixed salary per
3 year period based on the fulfilment of long term KPIs. KPIs are linked to achievement of certain economic results
of the Company’s group (such as certain level of equity). Long-term KPIs are defined and set up at the beginning
of the employment by Board of Directors. The LTIS bonus is determined after the approval of the consolidated
financial statements. Two thirds of the LTIS bonus are paid out in the first quarter after every third year and one
third of the LTIS bonus is paid out in the first quarter after every fourth year at the latest. Entitlement to the LTIS
bonus expires in the event of unilateral termination of employment by the employee or termination or immediate
termination by the employer during the relevant LTIS period.
Apart from the monetary income, the executives are entitled to certain non-monetary benefits which include, for
example, an above-standard medical care benefit or fitness.
No specific benefits are agreed in case of the termination of the employment of the relevant executives.
217Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
3. Persons with managerial powers, remuneration continued
3.3 Summary of remuneration
The table below shows all monetary and non-monetary income received for the accounting period by persons
with the managerial powers from the Company and from persons controlled by the Company.
Financial remuneration 2020 in CZK
(SAZKA Group a.s., SAZKA a.s., SAZKA Group UK Ltd.) Non-financial remuneration
Board of Directors 24,909,672 – –
Exclusive health care
Pension insurance contribution
Cafeteria system contribution
Executive management – – 40,949,788
Exclusive health care
Company fitness centre
Multisport card
Medical insurance
Life Assurance
Supervisory Board – 5,828,184 – –
4. Corporate governance and administration codes
In the Czech Republic, no binding corporate governance codes have been adopted by the legislature (or any
administrative body), apart from the general rules set out by the law. The Company, as of the date of this Annual
Report, did not commit to comply with any specific corporate governance code as it considers applicable regulations
appropriate considering to its needs and its current size. The Company strictly adheres to applicable rules and
regulations, in particular the Capital Market Undertakings Act, the Business Corporations Act and the Civil Code.
The Company also follows the principle of transparency with respect to investors and regulators.
5. Diversity policy applied to the statutory body and the Supervisory Board
In the Czech Republic, there is no binding diversity regime which would be required for the Company to follow or
adopt. The Company, as at the date of this Annual Report, did not commit to comply with any specific diversity
regime. The Company is dedicated to diversity and equality and supports these principles in its subsidiaries.
The Company also fully adheres to the Czech law No. 198/2009 Coll., on equal treatment and on the legal means
of protection against discrimination and on amendment to some laws, as in force, as well as its Compliance Policies,
which the Company considers sufficient for its current needs.
6. Financial reporting process
The Company’s approach to risks in relation to the financial reporting process is primarily driven by the Accounting
Act. The Company prepared its consolidated financial statements in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European Union. Other SAZKA Group companies, regardless of
the accounting standard they use to prepare their individual financial statements, report all data for the Company’s
consolidation purposes according to IFRS. Unified accounting policies followed by the Company’s and selected
subsidiaries are defined in consolidation guidelines, which are in full compliance with generally applicable accounting
standards. The guidelines are supplemented with additional documents detailing specific areas of the accounting process.
General principles applicable to the preparation of the Company’s consolidated financial statements are specified
in the accounting rules. As a rule, any accounting document may only be entered into the books of the Company
on the basis of approved supporting documents. Approvals take place primarily online, through an approval process
in the enterprise information system. The scope of each approving signatory authority is set forth in the relevant
company’s internal regulations. In each material organisation, the accounting function is separated from the process
of managing business relations, including the administration of bank accounts and payment of liabilities; however,
the situation may differ in organisations with a small number of employees, where separation of duties is not
reasonably achievable.
218 Sazka Group Annual Report and Accounts 2020
Financial Statements
6. Financial reporting process continued
Only users with appropriate privileges have access to the accounting system. Access privileges for the system are
granted by means of a software application and are subject to approval by a superior and a system administrator.
Access privileges are granted according to each employee’s position. Only employees of the relevant accounting
department have privileges for active operations in the accounting system. All logins to the accounting system
are logged in a database and can be searched retroactively. The accounting system allows identification of the
user that created, changed or reversed any accounting record, thereby allowing potential mistakes or fraud to be
identified and rectified.
The accuracy of the accounts and financial statements is checked by an independent auditor, which audits stand-
alone and consolidated financial statements prepared with respect to the reporting date, that is, 31 December of
a given year. Selected accounting areas are also subjected to internal audits to verify whether the procedures used
are in compliance with applicable law and the Company’s internal regulations. Where discrepancies are found,
corrective action is proposed.
7. Significant court proceedings
The following administrative and civil proceedings are considered by SAZKA Group to be material:
Czech Republic
Petition for the annulment of the contract for the sale of business to SAZKA a.s.:
In November 2011, the plaintiff (an individual) in the Czech Republic commenced an action for annulment of the
contract pursuant to which SAZKA a.s. acquired its business. SAZKA a.s. joined the proceedings as co-defendant.
The proceedings have so far addressed only procedural issues, such as the plaintiff’s request for exemption from
the court fee and appointment of attorney by the court. The Municipal Court in Prague dismissed the plaintiff’s
petition for the appointment of attorney, among others, on 2 November 2015, and the High Court in Prague
confirmed the decision on 26 March 2018. In July 2020, the Municipal Court in Prague stopped the proceeding
due to a failure to pay the court fees. On 4 August 2020, the plaintiff filed an appeal with the High Court in Prague
which has subsequently ordered the plaintiff to remedy defects in the submission.
SAZKA a.s. received a resolution of the High Court in Prague (File no. 60 ICm 3145/2011) on 18 January 2021, by
which the High Court in Prague confirmed the first-instance decision of the Municipal Court in Prague to terminate
the proceedings. The present proceedings therefore came to an end with the stay of the proceedings, without a
decision on the substance of the case. With regard to the previous steps of the plaintiff (consistent use of all
ordinary and extraordinary remedies), it cannot be ruled out that the above-mentioned resolution of the High
Court in Prague will be challenged by an extraordinary appeal. However, given the previous developments in the
case, the Company’s Board of Directors considers that potential risk of losing this proceeding is negligible.
Greece
Claims for loss of profit compensations
In July 2017, an appellate court awarded compensation for loss of profit in favour of a former agent in the amount
of approximately EUR 9 million plus interest from June 2006 to December 2011, for a total amount of approximately
EUR 13.5 million. The Group recognised this amount in the FY 2017 Financial Information. OPAP sought an annulment
of this decision and the Supreme Court of Athens annulled and remanded the case to the appellate court for review
in early 2020. The case was heard before the Athens Court of Appeal on 30 January 2020. In early March 2021,
an appellate court awarded compensation for loss of profit in favour of said former agent in the amount of
approximately EUR 3 million plus interest from June 2006 to December 2011, for a total of approximately EUR
6 million. The decision is not final and OPAP will proceed to the Supreme Court for the annulment of the decision.
The same former agent also sought compensation for (i) the loss of profit incurred from 2012 to 2016 in an amount
of EUR 11.1 million and an alternative claim in the amount of approximately EUR 3.3 million and (ii) compound
interest in an amount of EUR 4.2 million, against OPAP. These proceedings have been placed on hold until the final
resolution of the proceeding described above.
219Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
7. Significant court proceedings continued
Judgment No. 1645/2019:
A company providing marketing services to OPAP alleged non-payment and subsequently sued OPAP for
approximately EUR 10.6 million, an alternative claim for EUR 23.7 million and a further alternative claim for EUR
4.8 million. The court of first instance dismissed the petition by Judgment No. 1645/2019 on 18 April 2019. Both the
claimant and OPAP submitted appeals to the Athens Court of Appeals. The case was heard before the Athens
Court of Appeal on 12 March 2020. In August 2020, an appellate court rejected claimants’ appeal. This case is
potentially not final as the claimant may file a writ of cassation according to the Greek civil procedure rules. In any
case, the Board of the Directors is of the opinion the claimant’s chances of success in case the extraordinary appeal
is filed are negligible.
Termination of contract claims:
There are 479 litigation cases at various stages, initiated by the former agents of OPAP before the Courts of First
Instance in Athens and the Athens Court of Appeal with respect to the invalidity of the termination of their contracts
with OPAP. In most cases, the former agents are claiming compensation for the loss of profit, moral damages, and
compensation for goodwill. Other agents are claiming restitution of their contract. The total amount claimed is
approximately EUR 284.143 million. Most hearings took place in 2019 and 2020. The Court of First Instance has
issued: i) twenty four (24) judgments in favor of OPAP which dismissed eighty (80) claims by petitioners alleging
unlawful contract termination and seeking restitution of the contract, ii) Seventy two (72) judgments in favour of
OPAP which dismissed one hundred ninety one (191) claims by petitioners seeking compensation for loss of profit
and other damages amounting to EUR 141.769 million, iii) thirteen (13) judgements which partially recognized
nineteen (19) claims by petitioners, namely for a total amount of EUR 0.493 million. For these 19 claims Court
rejected all other claims raised by said Claimants amounting EUR 12.269 million and iv) Two (2) judgements which
accepted two (2) claims filed by petitioners amounting of EUR 0.035 million.
In summary, to date, the Courts partially recognized claims with a total amount of EUR 0.528 million and rejected
claims with a total amount of EUR 154.038 million.
Moreover, the Athens Court of Appeal dismissed nine (9) claims by petitioners alleging unlawful contract termination
and seeking restitution of the contract.
Arbitration proceedings against Hellenic Asset Development Fund
In December 2018, SAZKA Delta Hellenic Holdings Limited (formerly Emma Delta Hellenic Holdings Ltd.) (“SDHH”)
and SAZKA Delta AIF Variable Capital Investment Company Ltd (formerly Emma Delta Variable Capital Investment
Company Ltd) commenced arbitration proceedings against the Hellenic Asset Development Fund (“TAIPED”) and
the Hellenic Republic in the London Court of International Arbitration, alleging breaches of the share purchase
agreement relating to the privatisation of OPAP by the Hellenic Republic in 2013, pursuant to which SDHH acquired
its shares in OPAP. The claims for damages (indemnity obligations) relate to several measures and based on last
updated submission of March 2021 the claimed amount totalled EUR 68 million plus interest. TAIPED filed a
counterclaim against SDHH, in which the damages sought were not at the time quantified. In its second pleading
on 16 July 2020, TAIPED quantified the damages sought in its original counterclaim in the amount of EUR 1.3 million
plus interest and raised additional counterclaims against SDHH seeking total damages in the amount of EUR
73 million plus interest. TAIPED’s counterclaims against SDHH alleged breaches by SDHH of its obligations under
the share purchase agreement. Subsequently during the fourth quarter of 2020, TAIPED retracted the additional
counterclaims of EUR 73 million plus interest and reduced the initial claim of approx. EUR 1.3 million leaving an
outstanding counterclaim of approx. EUR 0.8 million plus interest. The hearing took place in November 2020 and
the award is expected to be rendered during 2021.
220 Sazka Group Annual Report and Accounts 2020
Financial Statements
7. Significant court proceedings continued
Italy
Award of the concession to operate the Lotto game in Italy:
Agenzia delle Dogane e dei Monopoli (“ADM”) before the Regional Administrative Court of Lazio in connection
with the award of the Lotto concession to LOTTOITALIA s.r.l. (“Italian Award Litigation”). The Italian Award Litigation
was suspended until Consiglio di Stato (the State Council) decided a separate claim brought by the same plaintiffs
against the ADM seeking cancellation of the open tender for the concession to operate the Lotto game, which
was ultimately dismissed on 12 August 2019 by the State Council. As of the date of this Annual Report, no hearing
has been scheduled for the Italian Award Litigation. It is believed that the risk of losing is remote because of the
conclusions reached by the State Council in the context of the separate judgment concerning the annulment of
the tender procedure documents for the award of the Lotto game which, in compliance with the decision of the
European Court of Justice, rejected the claims of Stanley International Betting Limited and Stanleybet Malta Limited.
Austria
Arbitration Proceedings according to ICSID Rules
Casinos Austria International GmbH and Casinos Austria Aktiengesellschaft (“CASAG”) filed an arbitration request
with the World Bank according to the International Centre for Settlement of Disputes (“ICSID”) rules against the
Republic of Argentina and requested damages in the amount of USD 61 million plus interest and costs.
Casinos Austria International GmbH’s Argentine subsidiary Entretenimientos y Juegos de Azar Sociedad Anonima
(“ENJASA”) operated in the Argentine province of Salta games of chance based on an exclusive 30-year licence
granted by the provincial government in Salta, Argentina. In 2013, Ente Regulador del Juego de Azar (“ENREJA”),
the responsible authority, notified ENJASA about the revocation of ENJASA’s licence. ENJASA was forced, through
governmental decrees and resolutions, to transfer its gaming operations to other local gaming operators. The licence
was revoked based on a small number of isolated events which dated back a considerable time and were individual
human errors of some of ENJASA’s personnel in purely administrative matters. CASAG is of the opinion that the
revocation of the licence was based on fabricated breaches of the regulatory framework and of anti-money
laundering provisions, in total disregard of the actual facts and of ENJASA’s due process rights. Therefore, CASAG
considers the revocation of the licence as an unlawful expropriation and a violation of the Austria – Argentina
Bilateral Investment Treaty. The arbitration is still pending.
Cases initiated by the (mostly former) employees against CASAG due to the reduction of pension fund
contribution
After the adjustments made to the long term incorporated employee pension schemes consisting in a reduction
of (target) pensions by 30%, 15 lawsuits, initiated by 27 claimants, were filed against CASAG as of 14 April 2021,
with the aim of getting the original pensions. Two main sets of proceedings were initiated in relation to the reduction
of pension funds.
Pension fund scheme: In the first group of proceedings, the claimants contest the changes made to target pensions
in CASAG’s contribution backed pension fund plan. In particular the claimants ask for additional contributions into
the pension fund or payment of the difference between the pension actually paid out and the unreduced pension
(the reduction amount) by CASAG. CASAG’s management is positive that it is unlikely for the courts to decide in
favour of requested additional contributions by the company into the pension fund and/or the payment of the
reduction amount. This position is also supported by legal and pension experts. The reduction was, furthermore,
mutually agreed with CASAG’s works council. Hence, no provision related to this proceeding has been created by
CASAG (save for legal cost of around EUR 0.5m). However, in the very unlikely case of negative outcome, the costs
of the proceedings could exceed EUR 100 million.
Support facility and defined benefit scheme: The second proceedings initiated in relation to pension scheme are
linked to i) pensions paid by the support institution (“Unterstützungseinrichtung”), which is a separate legal entity
supervised by CASAG’s works council) and ii) in additional pensions paid by CASAG in a defined benefit scheme.
i) The funds for the pensions paid by the support institution are solely borne from the “Cagnotte” (tips of the
players to the staff-collective which are collected centrally). Since CASAG is not liable for the funds for the pensions
paid out by the support institution, there is no specific provision to be created to cover the potential costs of
the proceeding.
221Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
Further Regulatory Disclosures continued
7. Significant court proceedings continued
ii) For the portion related to additional pensions in a defined benefit scheme there is a medium risk that a court
would come to an adverse decision. The defined benefit plan liability is valued as if there was no reduction to the
plan (so it covers the worst-case scenario). Future valuation will be assessed based on the development of these
cases. If positive for CASAG, this would result in a one-time net gain (reduction of defined benefit liability) by
reducing the pension provision for the defined benefit scheme. However, since the defined benefit plan is
interconnected with the pension fund scheme and any savings in the defined benefit plan result in additional
payments to the pension fund scheme, this would not result in a saving for CASAG. However, as these future
payments are qualified as defined contribution plan according to IAS 19 no provisions for future payments would
be accounted for this portion but rather those would be continuous expense.
8. Significant contracts
The Company, as well as the entities within SAZKA Group enter into various contractual relationships as part of
their business. Those contractual relationships are, in the majority of the cases, concluded within the scope of their
business activities and the financing thereof. In addition, these relationships are related to ensuring their business
operations, security, risk reduction, use of external specialists or consultants, etc.
The following contractual relationships and other obligations are those that may be considered significant from
the perspective of the Company and of SAZKA Group as of 31 December 2020:
•
Agreements concerning loan financing provided by SAZKA Group Financing a.s. to the Company and the
obligations arising from the issue of notes (ISIN SK 4120013475) by SAZKA Group Financing, specifically, the
Loan Agreement, originally dated 12 December 2017, and the Project Support Agreement dated 14 November 2017.
• The Collaboration and Joint Venture Agreement, originally dated 30 April 2016, with Lottomatica S.p.A., laying
down the rights and obligations of the parties in the LOTTOITALIA joint venture.
•
The shareholders’ agreement, originally dated 24 July 2014, between the Company, Georgiella Holdings Co.
Limited and other parties regarding their mutual rights in relation to the holding of an ownership interest in OPAP
S.A., as further amended.
•
The shareholders’ agreement originally dated 6 March 2020, between the Company and Österreichische
Beteiligungs AG, as amended by the amendment and condition precedent satisfaction agreement and effective
from 16 December 2020, based on which the parties exercise joint control over Casinos Austria AG.
• The intragroup loan financing provided by the Company to SAZKA Delta Hellenic Holdings Limited pursuant to
a loan agreement originally dated 12 February 2020, for the repayment of existing intragroup facility granted to
SAZKA Delta Hellenic Holdings Limited.
• Obligations resulting from the issue of notes “SAZKA GR. 5,20/24“(ISIN CZ0003522930) by the Company on
23 September 2019.
• Obligations resulting from the indenture entered into in relation to the issue of notes (ISIN XS2010038813 Rule
114A, XS2010038904 Regulation S) by the Company on 15 November 2019.
• Obligations resulting from the indenture entered into in relation to the issue of notes (XS2113254028 Rule 144A,
ISIN XS2113253210 Regulation S) by the Company on 5 February 2020.
•
On 16 December 2020, the Company, through its subsidiary SAZKA Group Financing (Czech Republic) a.s.,
entered into a Senior Facilities Agreement with a syndicate of Czech and international banks and into a Intercreditor
Agreement. Under the Senior Facilities Agreement the lenders have committed to make available loan facilities
in an aggregate amount equal up to EUR 640 million. The financing includes a EUR 220 million amortising Term
Loan A facility and a EUR 220 million non-amortising Term Loan B facility, and a EUR 200 million Revolving
credit facility (RCF). The facilities mature in July 2024. In 2020, the Company already drew loans in the amount
of EUR 450 million (having EUR 110 million as available capacity under RCF). In 2021, the company drew additional
EUR 80 million.
• On 9 November 2020, KKCG AG, SAZKA Entertainment AG, SAZKA Group a.s. and Primrose Holdings (Lux)
S.Á R.L. entered into an Investment and Shareholding Agreement on the basis of which funds managed by
affiliates of Apollo Global Management, Inc. one of the world’s leading investors in gaming and the largest
222 Sazka Group Annual Report and Accounts 2020
Financial Statements
alternative investment manager agreed to invest €500 million in the Company through SAZKA Entertainment
AG (the “Primrose Transaction”), which was completed on 26 March 2021.
9. Description of expected financing of the activities of the Company
The Company maintains an ongoing dialogue with its current financing banks and new potential lenders, as well
as regularly monitoring bond market conditions. However, there are no signed or committed financing arrangements
beyond those described in this Annual Report.
10. Non-financial reporting
The Company will publish the non-financial information pursuant to Section 32g of the Accounting Act in a separate
report, which will be published no later than 30 June 2021 on the Company’s website (https://www.sazkagroup.com/
investors).
11. Events that have a significant meaning for the assessment of solvency of the issuer
The Company is not aware of any event specific to it which would have a material impact on the assessment of
the Company’s solvency.
With the use of all reasonable care and to the best of our knowledge, we confirm that the Consolidated Annual
Report for the year 2020 gives a true and fair view of the financial situation, business activities and economic
results of the Company and its consolidated Group for the relevant accounting period, and perspective for future
financial situation, business activities and economic results of the Company and its consolidated Group.
223Sazka Group Annual Report and Accounts 2020
Financial Statements 47–224Strategic Report 2–43 Governance 44–46
SAZKA Group
Investor Relations
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www.sazkagroup.com