Tipp24 SE

Small/Mid-Cap: Software & IT Services/Internet

Increasing PT by 15% due to lottery price increase

The expected German lottery ticket price increase of 33% adds an

additional factor strengthening our investment case for Tipp24 in the short term, leading us to increase our price target from EUR61.00 to EUR70.00 (55% upside potential). Judging by the effect of past lottery price increases, we do not expect to see a significant negative effect on playing volume. We believe consensus is so far not reflecting this potential revenue driver. Based on the expected lottery ticket price increase, we increase our sales estimates for Tipp24 by 3.7% in 2013 and 7.5% in 2014. With a more or less unchanged cost structure, this will lead to an increase in EBIT of EUR7m. However we expect that in 2013 (when the price increase only counts for half a year) this positive effect will be more than compensated by eventual costs to restructure the cat bond and an estimated c.EUR5m investments in the US business. As we expect a further c.EUR5m in the US in 2014, the full effect of the lottery price increase should only by visible (at the EBIT level) from 2015. We have also taken a closer look at Tipp24s new, second business stream, which will be to set up and operate online lottery platforms as white label solutions to state lotteries with a focus on North America. Generally we are convinced about the quality of Tipp24s product and we believe the US market offers significant growth potential for online lotteries (a market volume of more than USD2.9bn). The recent acquisition of 25.7% of Geonomics for c.EUR20m (which is already cooperating with Atlantic Lottery in Canada) will serve as a door opener for Tipp24 to this new market. However, we believe it will be difficult to gain access to this market, which has renowned names such as Camelot and Tatts Group vying for a place as well. Incorporating the recent acquisition of Geonomics and the investments in the US in our estimates leads to reduce the dividend for 2013 to EUR4.40 per share. However, this does not change our view on Tipp24 as a stock with outstanding dividend potential with an estimated dividend yield of 9.7% in 2013. We have not implemented the US potential into our estimates yet due to the timing uncertainty.
Y/E 31.12., EUR m 2008 2009 90 26 23 17 -81 2.19 2.19 2.32 0.00 100% 28.9% 25.7% 0.0% 36.6% 3.0 10.4 11.6 13.3 8.6% 2010 102 35 33 20 -92 2.45 2.75 2.89 0.00 100% 34.2% 32.1% 0.0% 38.4% 2.6 7.7 8.2 10.0 12.2% 2011 139 58 52 36 -129 4.55 3.89 5.31 0.00 100% 41.7% 37.3% 0.0% 42.5% 1.7 4.0 4.5 7.5 23.4% 2012E 140 64 57 41 -130 5.19 3.99 3.46 0.00 100% 45.4% 40.6% 0.0% 38.2% 1.7 3.6 4.1 9.0 25.8% 2013E 145 49 42 32 -157 3.95 3.95 4.77 4.40 100% 33.6% 29.1% 9.7% 24.7% 1.4 4.2 4.8 11.4 22.0% 2014E 151 58 51 38 -160 4.74 4.74 5.59 5.03 100% 38.3% 33.8% 11.1% 27.0% 1.3 3.5 4.0 9.5 26.7% Sales 46 EBITDA 10 EBIT 9 Net profit 7 Y/E net debt (net cash) -66 EPS (reported) 0.83 EPS (recurring) 0.83 CPS 1.14 DPS 0.50 Gross margin 100% EBITDA margin 22.9% EBIT margin 19.4% Dividend yield 6.2% ROCE 15.4% EV/sales 6.5 EV/EBITDA 28.3 EV/EBIT 33.3 P/E 9.7 Cash flow RoEV 3.0% Source: Company data, Berenberg Bank

Buy
Rating system Current price Absolute Price target

EUR 45.20

EUR 70.00

14/03/2013 XETRA Close Market cap EUR 361 m Reuters TIMGn.DE Bloomberg TIM GY Changes made in this note Rating Buy (no change) Price target EUR 70.00 (61.00) Chg
2012e 2013e old % old % 140 140 3.8 Sales 56.88 45.54 -7.1 EBIT 5.19 4.28 -7.8 EPS Source: Berenberg Bank estimates 2014e old % 140 7.5 48.39 5.1 4.56 4.0

Share data

Shares outstanding (m) Enterprise value (EUR m) Daily trading volume

8 231 12,258 46 34 SDAX -1.9 % 1.5 % 6.5 % 2.0 -87.9 % 2.6 % 1.4 %

Performance data
High 52 weeks (EUR) Low 52 weeks (EUR) Relative performance to SXXP 1 month -6.1 % 3 months 12.7 % 12 months 13.5 %

Key data
Price/book value Net gearing CAGR sales 2011-2014 CAGR EPS 2011-2014

Business activities:
Gambling (online lottery)

Non-institutional shareholders:
Gnther Holding 27.2% Marc Peters 4.8% Jens Schumann 4.45%

15 March 2013 Alexandra Schlegel

Analyst +44 20 3207 7896
alexandra.schlegel@berenberg.com

Gunnar Cohrs, CFA

Analyst +44 20 3207 7894 gunnar.cohrs@berenberg.com

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Impact of lottery price increases in the past

Lottery ticket prices will increase by 33% in Germany in May 2013. Tipp24 has already announced that it will replicate this new price structure in its own products. The core question remains how this new price structure will influence playing volumes. In this note, we look for an answer to this question by dipping into the German lotterys past. How did lottery prices develop in the past? When the German lottery started in 1955 it was priced at DM0.50 per line (although the minimum stake was DM1.00). The German government raised prices to DM1.00 in 1981, DM1.25 in 1991 and DM1.50 in 1999. With the switch to the euro, prices remained stable, and even decreased slightly to EUR0.75. The increase to EUR1.00 per lottery field, which we expect to take effect from May 2013, would therefore be the first price increase in 14 years. What impact did previous lottery price increases have on playing volumes? Research by Andreas Eichler of the University of Bielefeld found that the 100% price increase in 1981 had a significant effect on the number of lines played. Number lines played played in the six out of of 49 Number of of lines in the lottery 6 out 49lottery (since(since 1955) 1955)
Number of lines played

300000000 250000000 200000000

150000000 100000000 50000000 0 1950 1960

1970

1980
Year

1990

2000

2010

Source: http://stochastik-in-der-schule.de/sisonline/jahrgang26-2006/heft2/2006-2_Eichler.pdf, Source: nttp://stchastik-in-der-schule.de/sisonline/jahrgang26-2006/heft2/2006-2_Eichler.pdf, http://www.lotto-rlp.de http://www.lotto-rlp.de

Nevertheless, total playing volumes in terms of revenues remained stable. This means people spent the same absolute amount as before but reduced the number of lines they played.

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Lottery billings (in EUR since 1955) Lottery billings (in since 1955)
Billing in
160000000 120000000

80000000
40000000 0 1950 1960 1970 1980 Year 1990 2000 2010

Source: http://stochastik-in-der-schule.de/sisonline/jahrgang26-2006/heft2/2006-2_Eichler.pdf, Source: nttp://stchastik-in-der-schule.de/sisonline/jahrgang26-2006/heft2/2006-2_Eichler.pdf, http://www.lotto-rlp.de http://www.lotto-rlp.de

With the price increases of 1991 and 1999, this effect was far less significant. This might be because the price rises were less radical than the 1981 increase (+25% in 1991, +20% in 1999) but also because they were combined with slight changes to the rules to make the game more attractive. The decline in billings in around 2002 is related to the introduction of the euro. Although the switch to the euro did not involve a price increase (and instead saw a slight price decline), the change in currency made jackpots appear smaller, which caused a lower playing activity. For this reason, the rules of the game were changed to allow higher jackpots. What effect on playing volumes is expected from Mays price increase? The 33% lottery price increase in May 2013 is more in line with the rises in 1991 (+25%) and 1999 (+20%) than the 100% increase seen in 1981. It will also be accompanied by changes to the game to make it appear more attractive. We therefore do not expect to see a significant negative impact on playing volumes. The German government plans to add a new price category, bringing the total to nine. This new category is set to be the entry level: it will pay out EUR5.00 on two matching numbers and a super number. At the same time, the state lottery says that the payout ratio for the first prize category will rise from 10% to 12.8%, which will cause jackpot values to rise quicker and lead to higher jackpots overall. The past shows us that the overall jackpot size is one of the most important factors in persuading people to play the lottery.

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Effect of large jackpots on Tipp24s playing volumes until 2008

Source: Tipp24

*billings generated from 2000-2008

However, although the payout ratio in the first prize category will rise and a new price category will be introduced, the overall payout ratio of 50% of total revenues will remain unchanged. We imagine we might see a dip in playing volume shortly after the introduction of the new price structure as a shock reaction to the increase. However, we believe this will be balanced out because frequent players hold permanent lottery tickets and therefore might not immediately realise the price increase has taken effect, and will only do so when they check their accounts. In the mid-term, we believe playing volume will be more or less unchanged. This is because the players perceive the lottery as the only low-cost way they can win a life-changing amount of money. The media also plays an important part. By providing widespread coverage of the few players who hit the jackpot, rather than the millions of losers, it makes big wins appear more common than they are. We also believe that regular players become entrapped: they fear that the one week they do not play the lottery, their numbers will come up. This fear will be amplified with the rising level of jackpots. In the UK, Camelot has announced a far more radical price increase of 100% for the national lottery: prices per line will rise from GBP1.00 to GBP2.00. Camelot has justified this rise by saying that customers have asked for bigger prizes, and that it will use the increase to raise jackpots. This new price structure should be in place in autumn 2013. Initial customer reaction has been very negative, and players have threatened to boycott the lottery should the price hike come into place. A poll conducted by The Guardian found that 86% of respondents stated they would not continue to play the same way if lottery prices were doubled.

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

If you bet on the National Lottery, would you carry on doing so at double the ticket price?

Yes

14%

No

86%

This poll is now closed

Source: http://www.guardian.co.uk/commentisfree/poll/2013/jan/17/national-lottery-double-ticket-price-wouldyou-bet

What is the impact of higher lottery prices on Tipp24? Tipp24 has indicated that if lottery prices rise, it will replicate the new price structure. We expect a price increase will hurt customers, and initially might cause them to fill in fewer boxes so the amount they spend on the lottery ticket is unchanged. However, in the mid-term, we believe the hope of hitting the jackpot will prove too strong, and customers will return to their ordinary playing behaviour. The fact that the ticket price is increasing significantly will not detract from the enormous jackpots. Moreover, the new lower entry-level for payouts (with the chance to win EUR5.00 by matching two numbers) will, in our view, soften the blow of the price rise because the likelihood of winning at least the amount spent on the lottery ticket will increase. We also do not expect customers to shift to the Euromillones lottery (which provides even higher jackpots than the six out of 49 lottery) as it is significantly more expensive than the ordinary lottery, with a price of EUR2.50 versus EUR1.00 per ticked box. Tipp24s shares have significantly improved since the rise in the lottery ticket price was announced, rising by 22% ytd. We expect the company will at least comment on the revenue potential in its guidance for 2013 (expected to be announced on 28 March). So far the revenue potential deriving from the lottery price increase is not reflected in consensus estimates. What effect has the lottery price increase on our estimates for Tipp24? We have defined three potential scenarios of how the lottery price increase could, in our view, influence Tipp24. 1) Very positive: In our first scenario, the 33% lottery price increase does not cause a change in playing behaviour. The initial shock among players is balanced out by frequent players (whose ticket purchases are made automatically from their accounts), who do not immediately realise the rise has taken effect. We estimate that 50% of Tipp24s sales are related to the six out of 49 lottery and calculate the 33% price increase on this sales share would lead to additional sales of EUR23m. Overall sales would total EUR163m, equalling a sales increase of 16.5%. Costs would remain more or less unchanged, apart from the 15% gaming duty and slightly higher hedging costs. We therefore expect an additional EBIT contribution of c.EUR17m from the lottery price increase.

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

2) Positive: In this scenario, a fraction of customers decide to reduce the number of lines they play to keep their overall ticket costs the same, but this is outweighed by the number of players who continue their usual behaviour. Therefore, the positive effect of the price increase will outweigh the negative effect. We expect Tipp24s lotto six out of 49 revenues (estimated 50% of total sales) will increase by 15% adding EUR10.5m to sales and leading to total sales of EUR150.5m (+7.5%). This would add EUR7m to EBIT. 3) Conservative: We believe that even in our most negative scenario, customers will cut the number of lines played to keep the ticket price the same, rather than stop playing at all. Therefore, in this scenario, we expect revenues to remain unchanged while the number of lines played declines accordingly. Based on our analysis of the lotterys previous price increases, we believe the impact of the rise will be positive for Tipp24. We therefore believe scenarios one and two are the most likely. We even believe that, based on the history, scenario one seems as a possible outcome. However, to reflect the high uncertainty of how the price increase will affect Tipp24s revenues, we prefer to stay slightly more cautious. We therefore implement scenario two in our numbers. The price increase will be implemented in May 2013, so it only leads to half a year of elevated revenues in our estimates for 2013. Moreover, we believe the positive EBIT effect of EUR3.5m in 2013 might be eaten up by an eventual new structuring of the cat bond structure. At the same time, we have adjusted our estimates for 2013 and 2014 in the sense that we expect Tipp24 will invest a further EUR5m p.a. to ramp up the business in the US. Therefore, the full effect of the lottery price increase will only be visible in EBIT from 2015. Implementing the lottery price increase in our estimates, leads us to raise the price target from EUR61.00 to EUR70.00 based on our DCF valuation. DCF model
DCF model Terminal EUR m Operating profit (NOPAT) Change working capital Depreciation Investments Net cash flow Present value WACC Operating profit (NOPAT) DCF per share derived from Total present value thereof terminal value: Net debt at year start Investments, minorities & others Equity value No. of outstanding shares (m) Discounted cash flow per share (EUR)
Source: Berenberg Bank

2012 27.0 0.9 6.7 6.4 8.2 8.4 11.2%

2013 30.9 -3.6 6.5 6.7 27.1 24.9 11.2%

2014 37.1 -0.2 6.8 6.9 36.8 30.4 11.2%

2015 40.5 -0.1 7.0 7.1 40.3 30.0 11.2%

2016 41.1 -0.1 7.2 10.3 37.9 25.3 11.2%

2017 42.2 -0.1 7.5 7.5 42.2 25.3 11.2%

2018 43.4 -0.1 7.5 7.6 43.1 23.3 11.2%

2019 44.1 -0.1 7.5 7.8 43.6 21.2 11.2%

2020 45.4 -0.1 7.4 8.0 44.6 19.5 11.2%

2021 46.2 -0.1 7.4 8.2 45.3 17.8 11.2%

value

502.1 197.2 2.0% 6.0% 27.0% 4.4% 11.2% 6.0% 4.0% 1.2

Long-term growth rate WACC derived from 423 47% -129 2 555 7.99 70.0 Interest costs, pre-tax Tax rate Interest costs, after taxes Required ROE Risk premium Risk-free (10y. bond) Beta

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

What to expect from the new business stream

We examine the potential of the second business stream in the following section. Following the 2011 full-year results, Tipp24 announced it would build up a new, second business stream. Tipp24 aims to set up and operate online lottery platforms as white-label solutions for private lottery operators and state lotteries. Within this product, Tipp24 combines its technology and marketing expertise. It already has experience in this field: before the Interstate Gambling Treaty forced Tipp24 to shutdown its business in Germany in 2008, it was running the online lottery platform for service providersweb.de, RTL and t-online. It also managed to improve the Rhineland-Palatinate state lottery website, increasing its sales by 40% in just two weeks. We expect that Tipp24 will be paid in this area just the once if it is only offering short-term consultancy services or if it is running the website based on a commission which is linked to the number of lottery tickets sold. However, in comparison to Tipp24s traditional business model (until 2008 Tipp24s core business was brokering lottery tickets online for state lotteries receiving a commission fee of up to 12% of the transaction volume), we believe margins will be higher in this business segment as Tipp24 does not have to invest in marketing. We believe Tipp24s ambitions are focused on the North American market. For Tipp24, this market is particularly interesting as online lottery has always been prohibited in North America and thus local expertise to set up and run an online lottery is very limited. Since 2011, regulations have begun to soften and thus liberalisation tendencies of the online lottery market are visible. The legal situation in the US Some years ago, the US Department of Justice took the position that the Federal Wire Act of 1961 prohibited all online gambling across state lines, even though the law itself seemed to only apply to sports betting. As a result, the US states felt they could not conduct even in-state lottery transactions via the internet because of the possibility that such transactions might cross state lines. However, with the states in desperate need for cash, they decided to pin down the Justice Departments position. In 2009, New Yorks lottery division and the Illinois governors office asked the Justice Department to clarify its view on the Wire Act because they intended to sell lottery tickets online. It took the federal government two years to rule that the Wire Act only applied to sports betting. However, this decision did not automatically give the green light to internet gambling, since gambling is regulated at the state level. Based on the statement of the Justice Department, 21 states and the District of Columbia have considered offering online lotteries. However, only Illinois has so far managed to get its online lottery ticket operations up and running, offering Powerball and Mega Millions (both more or less function as nationwide lotteries). The Illinois lottery expects that online sales could attract a million new customers when Mega Millions payouts exceed USD100m. With only 9-12% of Illinois adults currently playing the lottery, this would almost double the number of players. What is the general potential of online lottery in North America? The US lotteries generated unaudited total sales of USD60.8bn in fiscal 2012, a rise of 9% (USD4.9bn) yoy, according to a survey from La Fleur magazine. Canadian lotteries reported USD7.8bn in traditional lottery sales, down 2% from USD8bn in fiscal 2011. We believe that of these sales, roughly 50% are lottery-type sales (big

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

jackpot products like Powerball and Mega Millions). We believe in the US scratch cards are far more popular than in Europe, contributing a significant share of revenues. Evaluating the potential impact of an increasing importance of the online lottery in North America on total lottery revenues, we have used the UK national lottery as an example case where online sales were introduced in 2003 and this new channel has been cited as a key reason for the lotterys solid sales growth. Total sales increased from GBP4.6bn in 2003 to c.GBP6.5bn in 2011. Of this, we believe around 70% is generated by lottery-type products. Online sales totalled c.GBP1bn in 2011, equalling 16% of total sales. With roughly a similar online penetration in the UK of 83.6% in June 2012 and 78% in the US and 80% in Canada, we generally could imagine the online sales share in the US and Canada based on lottery-type sales rising to a similar stake as in the UK in the future. In other countries such as Finland, which is one of the most online-friendly countries in the world, even higher online shares seem possible. Finland was the first country to introduce online lottery sales in 1996. Now, 30% of turnover comes from such sales. However, as not all states in the US are considering offering an online lottery, a 16% online stake on total U.S. lottery sales would appear to be too optimistic. So far, only the Illinois lottery offers online play on a single purchase. A few other US lotteries offer lottery products online, but these are all subscription-based, meaning that products need to be purchased for a period of six weeks up to one year. According to a survey in La Fleur magazine in August 2012, at least four US lotteries (Maryland, Delaware, New Jersey and Georgia) currently plan to sell their products online in fiscal 2013. In Canada, online lotteries are already more common. Atlantic Lottery is already offering online lottery services since 2004 as the first of the five Canadian government-run lotteries. British Columbia followed the example and Lotto Quebec launched its online and mobile sales portal in August 2012. The Ontario Lottery will start offering an online lottery in summer 2013. In the US, the Iowa, Kentucky, Michigan, Ohio, Oklahoma and West Virginia state lotteries are also currently investigating the potential for selling online. The state lotteries of Arizona, Arkansas, California, Colorado, Connecticut, Florida, Idaho, Kansas, Louisiana, Montana, North Carolina, North Dakota, Oregon, Pennsylvania, South Dakota, Texas and Washington State (i.e. 17 lotteries) have indicated that they do not have any intention of selling products online in fiscal 2013.

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

US lotteries: overall sales in fiscal year 2011

Source: La Fleurs Magazine, September/October 2012 Edition

The state lotteries in Illinois, Maryland, Delaware, New Jersey and Georgia, which are already offering online lottery or intending to do so in 2013, generated total sales of USD6.7bn in 2011. If we assumed an online stake of 16% in the long term, this would result in an online sales potential of USD1bn. If we add lottery-type sales of 5.5bn of the three Canadian lotteries which should all offer online lottery in 2013, this would lead to an additional online sales potential of USD880m leading to a total online potential of USD1.88bn. If the remaining states (total lottery-type sales of USD6.4bn) that are currently investigating online lottery potential do actually decide to proceed online, online sale potential would increase by USD1bn to a total of USD2.9bn. It is very difficult to attach a definite timeframe for achieving it, as regulatory issues within the respective states could take up to a decade to be resolved. However, this does not go against our general positive view on the potential for

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

online lottery revenues in the US. We believe there are a number of factors that will further drive growth in online lottery sales i.e. the increasing importance of smart phones and m-commerce.
Forecast: US Technology Adoption, 2010 - 2016
350 Total US population 300 Total online population 250 200 150

Installed base consumer used PCs (includes desktops, laptops, and netbooks Unique regular mobile Internet users (at least monthly)

100 50
0

2010

2011 (F) 2012 (F) 2013 (F) 2014 (F) 2015 (F) 2016 (F) Total population with a tablet device Unique smartphone users

Source: Forrester Research Consumer PC and Table Forecast, 2011 to 2016 (US) and Forrester Research Mobile Adoption and Sales Forecast, 2012 to 2017 (US)

We also believe that the online lottery will not only substitute offline lotteries but will generally help to boost lottery sales. The online lottery is expected to attract a new and younger base of customers who would not play the lottery offline. This effect has also been visible for the UK national lottery, with sales growth of 41% from 2003 to 2011 which is to a significant degree attributable to the introduction of online playing. This additional sales potential needs to be considered in addition to our current estimate for the potential of the online lottery in the US.
U.S. Lotteries per Capitia Sales Fiscal Years 2002 through 2011
U.S. Lotteries (average) 200

Per Capita Sales (in dollars)

190 180 173 163 163

188 180

189

190

188

187

184

170
160 150

140
130

2002

2003

2004

2005

2006

2007

2008

2009

2010

Fiscal Year
Source: LaFleurs Magazine, September/October 2011 Edition

Moreover we believe the general increasing importance of e-commerce will further

2011

10

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

drive growth in online lottery products. While e-commerce is currently representing 8% of total retail sales in the US, this share is expected to rise to 10% in 2017. However we expect there is further catch-up potential, especially if we look to the UK, where e-commerce is already generating 13% of total retail sales. Forecast US online retail sales 2012 to 2017
400

350
300
USD billions

$262
$231

$291

$319

$345

$370

250
200

150
100 50 0 2012 2013
13%
8%

2014
11%
9%

2015
10%
10%

2016
8%
10%

2017
7%
10%

YoY growth
Share of total retail sales

14%
8%

Source: Forrester Research Online Retail Forecast, 2012-2017 (US)

Forecast Online Retail in Western Europe

Proportion of the countrys economy represented by online retail
16% 14% 12% 10% 8% 6% 4% 2% 3% 2% 4% 4% 5% 5% 7% 5% 7% 7% 10%

15% 13%

2% 0%

Italy

Spain

Sweden 2013

France 2017

Netherlands Germany

UK

Source: Forrester Research Online Retail Forecast, 2012 to 2017 (Western Europe)

Another factor that in our view is going to drive online lottery sales is a certain trend towards state lotteries in the US hiring private management companies to run their lottery and thereby improve lottery sales potential. Illinois was the first lottery to hire GTech to run its operation, Indiana followed and currently Pennsylvania and New Jersey are in the process of completing contracts (with bids from Camelot, Tatts Group and GTech). However, as these private management firms see significant potential in online lotteries, we expect them to push for the

11

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

introduction of online lotteries in the respective states. Having evaluated the general potential of the future US and Canadian online lottery market, the key questions are how will Tipp24 be able to access this market, and what competitors it will face there? As the US state lotteries cannot turn to any experience in how to set up and run a website (as online lottery has always been forbidden), we believe they will look for suitable partners. We believe that they will in the first instance approach their existing technology partners GTech, SGI and Intralot, which have in the past developed an interface between the state lottery and retailers to share lottery ticket information. However in the past, these companies have been offline technology specialists. The difficulties arising from this lack of knowledge are illustrated by an incident that took place in the first month that the Illinois lottery offered its online lottery (March 2012), when the lottery website went down for about 30 minutes, preventing players from buying tickets for the record-breaking Mega Millions game with a jackpot of USD640m. However apart from these technology providers, two other major players have tried to enter the US market: Camelot and Tatts Group, the operator of several lotteries in Australia. Both have experience of running online lotteries. Both of them, and also GTech, have applied for a contract to manage the Pennsylvania Lottery. We believe that Tipp24 has a significant competitive advantage compared to the technology providers (GTech, SGI and Intralot), with its long-standing experience (more than 13 years in the business), and the combination of IT and marketing expertise. While we remain convinced about the quality of Tipp24s product, which we believe can compete or is even superior to what Camelot and Tatts Group are offering, we expect the major issue for Tipp24 will rather consist in gaining access to the relevant state lotteries in the US. However, to speed up this process Tipp24 has announced an acquisition end of last year. It purchased a 25.7% stake in the UK company Geonomics, which operates the lottery game GeoSweep (www.geosweep.com) through its UK subsidiary GeoSweep Limited. In this online game, players purchase squares (geos) on an online map; these squares act as lottery tickets in daily prize draws. The most popular squares purchased include the ticket buyers own house or well-known buildings.

12

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

GeoSweep website

Source: www.geosweep.com

Geonomics is mainly active on a B2B level, offering state lotteries the opportunity to develop a similar product like the GeoSweep lottery as a white label product. It has no experience of operating a lottery website, but can benefit from Tipp24s expertise in this field. However, the sweetspot of this acquisition for Tipp24 is Geonomics headstart in cooperating with state lotteries in North America. For instance, it has already closed down a contract with the Atlantic lottery based in Canada (net revenue lottery sales of USD256m). We believe that its cooperation with Geonomics might be a highly valuable door opener to the North American market. Technically, the business concept is as follows: Geonomics develops a white label version of the GeoSweep lottery for Atlantic Lottery in Canada. Atlantic Lottery offering of GeoSweep

Source: Atlantic Lottery

It hands over the operation of this website to Tipp24 and thus introduces Tipp24 to Atlantic Lottery, enabling Tipp24 to start building relations with the state lottery itself. Based on the high quality of its white-label version of the Geosweep lottery,

13

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

there is a likelihood that the state lottery will also, in time, ask Tipp24 to run or at least improve the ordinary lottery website. If it were to win two or three major state lotteries in North America, its reputation would grow and other state lotteries would start to approach Tipp24 as well. Conclusion: Generally we are convinced about the quality of Tipp24s service and we believe the US online lottery market offers potential for significant growth. We believe growth in this market is not only based on the conversion from offline to online, but is also driven by the general increase in importance of e-commerce and m-commerce. However, we believe the major challenge for Tipp24 will be to gain access to this market as renowned names like Camelot and Tatts Group are aiming to enter the US market as well. Nevertheless, we believe Tipp24 has already done a significant step with the announcement of the cooperation with Geonomics, which already has a contract with Atlantic Lottery. Having invested c.EUR20m in this cooperation illustrates in our view how strong Tipp24s intention is to succeed in the US market. However, although we clearly see potential for Tipp24 in the US market, we have no included any revenues from this business in our estimates so far due to the high uncertainty timing wise. We expect that the next 2-3 years will remain rather a ramp-up period. The first positive impacts on revenues should in our view follow in the years afterwards.

14

Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Financials
Profit and loss account
Year-end December (EUR m) Sales Own work capitalised Total sales Other operating income Material expenses Personnel expenses Other operating expenses Unusual or infrequent items EBITDA EBITDA margin Depreciation EBITA Amortisation of goodwill Amortisation of intangible assets Impairment charges EBIT EBIT margin Interest income Interest expenses Other financial result Financial result Income on ordinary activities before taxes Extraordinary income/loss EBT Taxes Tax rate Net income from continuing operations Income from discontinued operations (net of tax) Net income Minority interest Net income (net of minority interest) Source: Company data, Berenberg Bank estimates 2008 46 0 46 1 0 13 23 0 10 22.9% 1 10 0 1 0 9 19.4% 2 0 0 2 11 0 11 4 38% 7 0 7 0 7 2009 90 0 90 4 0 13 55 0 26 28.9% 1 25 0 2 0 23 25.7% 2 0 0 2 25 0 25 8 30% 17 0 17 0 17 2010 102 0 102 5 0 10 62 0 35 34.2% 1 34 0 1 0 33 32.1% 1 0 0 0 33 0 33 11 34% 22 2 20 0 20 2011 139 0 139 16 0 12 85 0 58 41.7% 1 57 0 6 0 52 37.3% 1 0 0 1 53 0 53 14 27% 38 2 36 0 36 2012e 140 0 140 25 0 13 89 0 64 45.4% 1 62 0 6 0 57 40.6% 1 0 0 1 58 0 58 14 25% 43 2 41 0 41 2013e 145 0 145 6 0 14 89 0 49 33.6% 1 48 0 6 0 42 29.1% 1 0 0 1 43 0 43 12 27% 32 0 32 0 32 2014e 151 0 151 6 0 14 85 0 58 38.3% 1 57 0 6 0 51 33.8% 1 0 0 1 52 0 52 14 27% 38 0 38 0 38

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Small/Mid-Cap: Software & IT Services/Internet

Balance sheet
Year-end December (EUR m) Intangible assets Property, plant and equipment Financial assets Fixed assets Inventories Accounts receivable Other current assets Liquid assets Deferred taxes Deferred charges and prepaid expenses Current assets TOTAL Shareholders' equity Minority interest Long-term debt Pensions provisions Other provisions Non-current liabilities short-term debt Accounts payable Advance payments Other liabilities Deferred taxes Other accruals Current liabilities TOTAL Source: Company data, Berenberg Bank estimates 2008 10 3 0 12 0 0 14 66 0 0 81 93 55 0 0 0 3 3 0 5 0 28 3 0 36 93 2009 14 2 2 18 0 0 9 81 0 0 90 108 64 0 0 0 4 4 0 5 0 34 1 0 40 108 2010 24 1 2 27 0 0 8 92 3 0 103 130 93 0 0 0 9 9 0 6 0 22 0 0 28 130 2011 23 3 4 30 0 0 7 130 6 0 143 173 129 0 0 0 13 13 0 6 0 24 1 0 31 173 2012e 42 2 2 46 0 0 8 130 5 0 143 189 147 0 0 0 8 8 0 7 0 24 1 0 33 189 2013e 42 3 2 46 0 0 12 158 5 0 175 221 174 0 0 0 13 13 0 8 0 25 1 0 34 221 2014e 41 3 2 46 0 0 12 160 5 0 178 224 176 0 0 0 13 13 0 8 0 26 1 0 35 224

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Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Cash flow statement

EUR m Net profit/loss Depreciation of fixed assets (incl. leases) Amortisation of goodwill Amortisation of intangible assets Other Cash flow from operations before changes in w/c Change in inventory Change in accounts receivable Change in accounts payable Change in other working capital Change in working capital Cash flow from operating activities Maintenance capex Cash flow from operating activities after maintenance Capex, excluding maintenance Payments for acquisitions Financial investments Income from asset disposals Cash flow from investing activities Cash flow before financing Increase/decrease in debt position Purchase of own shares Capital measures Dividends paid Others Effects of exchange rate changes on cash Cash flow from financing activities Increase/decrease in liquid assets Liquid assets at end of period Source: Company data, Berenberg Bank estimates 2008 8 1 0 1 0 9 0 0 -1 2 1 10 2 8 8 0 0 0 -10 0 0 0 0 4 0 0 -4 -5 66 2009 15 1 0 2 0 18 0 0 0 11 12 30 3 27 4 0 0 0 -7 23 0 4 0 4 0 0 -8 16 81 2010 21 1 0 1 0 23 0 0 1 -10 -10 13 2 11 10 0 0 0 -12 1 0 0 9 0 0 0 9 10 92 2011 36 1 0 6 0 42 0 0 0 1 1 43 4 39 3 0 0 0 -7 36 0 0 0 0 0 0 0 36 128 2012e 41 1 0 6 -20 28 0 0 2 -1 1 29 4 25 2 20 0 0 -26 2 0 0 0 0 0 0 0 2 130 2013e 32 1 0 6 0 38 0 0 0 -4 -4 34 4 30 3 0 0 0 -7 28 0 0 0 0 0 0 0 28 158 2014e 38 1 0 6 0 45 0 0 0 0 0 44 4 40 3 0 0 0 -7 35 0 0 0 35 0 0 -35 160

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Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Growth rates yoy

(%) Net sales Organic External EBITDA EBIT Net income EPS reported EPS recurring Source: Company data, Berenberg Bank estimates 2008 1.9 % 1.9 % 0.0 % 6.8 % 3.1 % 5.3 % 5.3 % 5.3 % 2009 95.4 % 95.4 % 0.0 % 146.8 % 158.6 % 164.7 % 164.7 % 164.7 % 2010 13.8 % 16.5 % 0.0 % 34.8 % 38.4 % 11.8 % 11.8 % 25.7 % 2011 36.7 % 36.7 % 0.0 % 66.5 % 68.6 % 85.9 % 85.9 % 41.3 % 2012e 0.5 % 0.5 % 0.0 % 9.5 % 8.8 % 13.5 % 14.0 % 2.6 % 2013e 3.8 % 3.8 % 0.0 % -23.2 % -23.2 % -23.6 % -23.9 % -1.0 % 2014e 3.6 % 3.6 % 0.0 % 18.0 % 17.8 % 20.0 % 20.0 % 20.0 %

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Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Regional sales
Regional Sales (EUR m) Domestic Rest of Europe NAFTA Asia Pacific Rest of world TTL Regional sales shares Domestic Rest of Europe NAFTA Asia Pacific Rest of world TTL Source: Company data, Berenberg Bank estimates 2008 40 6 0 0 0 46 2009 3 86 0 0 0 90 2010 2 102 0 0 0 104 2011 3 137 0 0 0 139 2012e 3 137 0 0 0 140 2013e 3 142 0 0 0 145 2014e 3 147 0 0 0 151

87.1% 12.9% 0.0% 0.0% 0.0% 100.0%

3.5% 96.5% 0.0% 0.0% 0.0% 100.0%

2.0% 98.0% 0.0% 0.0% 0.0% 100.0%

2.0% 98.0% 0.0% 0.0% 0.0% 100.0%

2.0% 98.0% 0.0% 0.0% 0.0% 100.0%

2.0% 98.0% 0.0% 0.0% 0.0% 100.0%

2.0% 98.0% 0.0% 0.0% 0.0% 100.0%

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Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Ratios
Ratios Asset utilisation efficiency Capital employed turnover Operating assets turnover Plant turnover Inventory turnover (sales/inventory) Operational efficiency Operating return Total operating costs / sales Sales per employee EBITDA per employee EBIT margin Return on capital EBIT/ Y/E capital employed EBIT / avg. capital employed EBITDA/ Y/E capital employed EBITDA / avg. capital employed Return on equity Net profit / Y/E equity Recurring net profit / Y/E equity Net profit / avg. equity Recurring net profit / avg. equity Security Net debt (if net cash=0) Debt / equity Net gearing Interest cover EBITDA / interest paid Altman's z-score Dividend payout ratio Liquidity Current ratio Acid test ratio Free cash flow Funds management Avg. working capital / sales Cash flow / sales Free cash flow/sales Inventory processing period (days) Receivables collection period (days) Payables payment period (days) Cash conversion cycle (days) Trade creditors / trade debtors Other Interest received / avg. cash Interest paid / avg. debt Capex / dep'n Cost per employee Capex / sales Maint. capex / sales Cash flow Cash ROCE Free cash flow Source: Company data, Berenberg Bank estimates 2008 0.8 -20.4 17.8 -466.9% 77.1% 247.8 56.7 19.4% 15.5% 15.4% 18.2% 18.1% 12.0% 12.0% 12.0% 12.0% -66 0.0% -121.0% 27.2 32.1 3.7 61% 2.3 2.3 0.0 2009 1.3 -27.1 46.1 -783.1% 71.1% 678.4 196.1 25.7% 33.7% 36.6% 37.8% 41.1% 27.1% 27.1% 29.3% 29.3% -81 0.2% -125.9% 143.2 160.8 4.5 0% 2.3 2.3 1.3 2010 1.0 -23.3 69.8 -797.6% 65.8% 842.0 288.4 32.1% 32.1% 38.4% 34.2% 41.0% 21.0% 23.6% 24.9% 27.9% -92 0.1% -99.1% 220.8 235.8 4.8 0% 3.7 3.7 0.1 -5.4% 32.1% 1.3% 0.7% 155.0% 547.7% 84 11.9% 2.2% 33 38.4% 0.4% 2011 1.0 -44.0 51.8 1833.4% 58.3% 1151.4 480.0 37.3% 36.5% 42.5% 40.9% 47.6% 28.1% 24.0% 32.7% 27.9% -129 0.1% -100.1% 196.6 220.0 5.4 0% 4.6 4.6 1.0 -4.2% 38.8% 25.9% 1.0% 279.4% 116.5% 99 5.2% 2.9% 54 44.3% 10.0% 2012e 0.9 -25.6 70.0 1161.2% 54.6% 1157.0 525.9 40.6% 36.5% 38.2% 40.8% 42.7% 28.0% 29.3% 29.8% 31.3% -130 0.1% -87.9% 359.9 402.5 5.4 0% 4.3 4.3 0.5 -4.8% 42.6% 15.8% 0.7% 155.0% 95.5% 104 4.6% 2.9% 60 40.0% 6.1% 2013e 0.8 -28.2 55.8 -947.4% 66.4% 1200.4 403.8 29.1% 22.6% 24.7% 26.1% 28.5% 18.1% 18.1% 19.6% 19.6% -157 0.1% -90.2% 267.7 309.1 5.1 112% 5.2 5.2 0.9 -5.2% 30.9% 19.1% 0.7% 155.0% 102.0% 116 4.6% 2.8% 45 26.2% 7.7% 2014e 0.8 -29.9 50.1 1144.1% 61.7% 1243.8 476.4 33.8% 26.9% 27.0% 30.5% 30.6% 21.5% 21.5% 21.6% 21.6% -160 0.1% -90.9% 321.6 364.7 5.1 106% 5.1 5.1 1.0 -5.2% 35.6% 25.0% 0.7% 155.0% 101.7% 117 4.6% 2.7% 54 28.5% 10.4%

-11.7% -5.6% 19.4% 25.7% -0.4% 25.6% 0 0 90741.4% 58400.0% 3.1% 620.1% 68 21.5% 3.5% 9 15.4% -0.1% 3.0% 154.8% 258.9% 95 8.2% 3.2% 23 36.6% 6.6%

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Tipp24 SE
Small/Mid-Cap: Software & IT Services/Internet

Contacts: Investment Banking

Equity Research
BANKS Nick Anderson James Chappell Andrew Lowe Eleni Papoula BEVERAGES Philip Morrisey Josh Puddle BUSINESS SERVICES William Foggon Simon Mezzanotte Arash Roshan Zamir Konrad Zomer CAPITAL GOODS Frederik Bitter Benjamin Glaeser William Mackie Margaret Paxton Alexander Virgo Felix Wienen CHEMICALS Jade Barkett Asad Farid John Philipp Klein Jaideep Pandya CONSTRUCTION Chris Moore Robert Muir Michael Watts DIVERSIFIED FINANCIALS Pras Jeyanandhan Richard Perrott +44 (0) 20 3207 7838 +44 (0) 20 3207 7844 +44 (0) 20 3465 2743 +44 (0) 20 3465 2741 ECONOMICS Dr. Holger Schmieding Dr. Christian Schulz Robert Wood FOOD MANUFACTURING Fintan Ryan James Targett +44 (0) 20 3207 7889 +44 (0) 20 3207 7878 +44 (0) 20 3207 7822 E-mail: firstname.lastname@berenberg.com; Internet www.berenberg.de MID-CAP GENERAL Gunnar Cohrs Bjoern Lippe Anna Patrice Alexandra Schlegel Stanislaus von Thurn und Taxis REAL ESTATE Kai Klose Estelle Weingrod TECHNOLOGY Adnaan Ahmad Sebastian Grabert Daud Khan Ali Khwaja Tammy Qiu TELECOMMUNICATIONS Wassil El Hebil Usman Ghazi Stuart Gordon Laura Janssens Paul Marsch Barry Zeitoune TOBACCO Erik Bloomquist Kate Kalashnikova UTILITIES Robert Chantry Andrew Fisher Lawson Steele +44 (0) 20 3207 7894 +44 (0) 20 3207 7845 +44 (0) 20 3207 7863 +44 (0) 20 3207 7896 +44 (0) 20 3207 2631

+44 (0) 20 3207 7892 +44 (0) 20 3207 7881

+44 (0) 20 3465 2748 +44 (0) 20 3207 7873

+44 (0) 20 3207 7882 +44 (0) 20 3207 7917 +44 (0) 20 3465 2636 +44 (0) 20 3207 7920

GENERAL RETAIL & LUXURY GOODS Bassel Choughari +44 (0) 20 3465 2675 John Guy +44 (0) 20 3465 2674 HEALTHCARE Scott Bardo Alistair Campbell Charles Cooper Louise Hinds Adrian Howd Tom Jones

+44 (0) 20 3207 7888 +44 (0) 20 3207 7931

+44 (0) 20 3207 7916 +44 (0) 20 3207 7918 +44 (0) 20 3207 7837 +44 (0) 20 3207 7934 +44 (0) 20 3207 7856 +44 (0) 20 3207 7915

+44 (0) 20 3207 7869 +44 (0) 20 3207 7876 +44 (0) 20 3465 2637 +44 (0) 20 3465 2747 +44 (0) 20 3207 7874 +44 (0) 20 3207 7877

+44 (0) 20 3207 7851 +44 (0) 20 3207 7834 +44 (0) 20 3465 2638 +44 (0) 20 3207 7852 +44 (0) 20 3465 2673

HOUSEHOLD & PERSONAL CARE Seth Peterson +44 (0) 20 3207 7891 Andrew Steele +44 (0) 20 3207 7926 INSURANCE Tom Carstairs Peter Eliot Matthew Preston Sami Taipalus MEDIA Emma Coulby Laura Janssens Sarah Simon

+44 (0) 20 3207 7862 +44 (0) 20 3207 7824 +44 (0) 20 3207 7858 +44 (0) 20 3465 2639 +44 (0) 20 3207 7857 +44 (0) 20 3207 7859

+44 (0) 20 3207 7937 +44 (0) 20 3207 7932 +44 (0) 20 3207 7930 +44 (0) 20 3207 7890

+44 (0) 20 3207 7823 +44 (0) 20 3207 7880 +44 (0) 20 3207 7913 +44 (0) 20 3207 7866

+44 (0) 20 3207 7870 +44 (0) 20 3465 2665

+44 (0) 20 3465 2737 +44 (0) 20 3207 7860 +44 (0) 20 3207 7928

+44 (0) 20 3207 7821 +44 (0) 20 3465 2639 +44 (0) 20 3207 7830

+44 (0) 20 3207 7861 +44 (0) 20 3207 7937 +44 (0) 20 3207 7887

+44 (0) 20 3207 7899 +44 (0) 20 3207 7925

Sales
Specialist Sales CONSUMER Rupert Trotter INSURANCE Trevor Moss LONDON Miel Bakker John von Berenberg-Consbruch Ronald Bernette Matt Chawner Toby Flaux Sean Heath David Hogg Ben Hutton James Matthews David Mortlock Peter Nichols George Smibert Max von Doetinchem Paul Walker +44 (0) 20 3207 7815 HEALTHCARE Frazer Hall TECHNOLOGY Jean Beaubois HAMBURG Susette Mantzel Marco Weiss PARIS Christophe Choquart Dalila Farigoule Clmence La Clavire-Peyraud Olivier Thibert ZURICH Stephan Hofer Carsten Kinder Gianni Lavigna Benjamin Stillfried CRM FRANKFURT Michael Brauburger Nina Buechs Andr Grosskurth Boris Koegel Joachim Kopp LONDON Greg Swallow Laura Cooper CORPORATE ACCESS LONDON Patricia Nehring +44 (0) 20 3207 7833 +44 (0) 20 3207 7806 +44 (0) 20 3207 7875 E-mail: firstname.lastname@berenberg.com; Internet www.berenberg.de UTILITIES Benita Barretto +44 (0) 20 3207 7829 INDUSTRIALS Chris Armstrong Kaj Alftan Sales Trading HAMBURG Paul Dontenwill Christian Endras Gregor Labahn Chris McKeand Fin Schaffer Lars Schwartau Marvin Schweden Tim Storm Philipp Wiechmann LONDON Stewart Cook Simon Messman Stephen O'Donohoe PARIS Sylvain Granjoux EVENTS LONDON Natalie Meech Charlotte Kilby Hannah Whitehead

+44 (0) 20 3207 7893

+44 (0) 20 3207 7835

+44 (0) 20 3207 7809 +44 (0) 20 3207 7879

+44 (0) 20 3207 7808 +44 (0) 20 3207 7805 +44 (0) 20 3207 7828 +44 (0) 20 3207 7847 +44 (0) 20 3465 2745 +44 (0) 20 3465 2742 +44 (0) 20 3465 2628 +44 (0) 20 3207 7804 +44 (0) 20 3207 7807 +44 (0) 20 3207 7850 +44 (0) 20 3207 7810 +44 (0) 20 3207 7911 +44 (0) 20 3207 7826 +44 (0) 20 3465 2632

+49 (0) 40 350 60 694 +49 (0) 40 350 60 719

+33 (0) 1 5844 9508 +33 (0) 1 5844 9510 +33 (0) 1 5844 9521 +33 (0) 1 5844 9512

+49 (0) 40 350 60 563 +49 (0) 40 350 60 359 +49 (0) 40 350 60 571 +49 (0) 40 350 60 798 +49 (0) 40 350 60 596 +49 (0) 40 350 60 450 +49 (0) 40 350 60 576 +49 (0) 40 350 60 415 +49 (0) 40 350 60 346

+41 (0) 44 283 2029 +41 (0) 44 283 2024 +41 (0) 44 283 2038 +41 (0) 44 283 2033

+44 (0) 20 3465 2752 +44 (0) 20 3465 2754 +44 (0) 20 3465 2753

+49 (0) 69 91 30 90 741 +49 (0) 69 91 30 90 735 +49 (0) 69 91 30 90 734 +49 (0) 69 91 30 90 740 +49 (0) 69 91 30 90 742

+33 (0) 1 5844 9509

+44 (0) 20 3207 7811

+44 (0) 20 3207 7831 +44 (0) 20 3207 7832 +44 (0) 20 3207 7922

US Sales
BERENBERG CAPITAL MARKETS LLC Member FINRA & SIPC Andrew Holder Colin Andrade Cathal Carroll Burr Clark Julie Doherty +1 (617) 292 8222 +1 (617) 292 8230 +1 (646) 445 7206 +1 (617) 292 8282 +1 (617) 292 8228

E-mail: firstname.lastname@berenberg-us.com Kelleigh Faldi Kieran O'Sullivan Emily Mouret Jonathan Saxon +1 (617) 292 8288 +1 (617) 292 8292 +1 (646) 445 7204 +1 (646) 445 7202

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Small/Mid-Cap: Software & IT Services/Internet

Please note that the use of this research report is subject to the conditions and restrictions set forth in the General investment-related disclosures and the Legal disclaimer at the end of this document. For analyst certification and remarks regarding foreign investors and country-specific disclosures, please refer to the respective paragraph at the end of this document.

Disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG)
Company Tipp24 (1) (2) (3) (4) (5) (6) Disclosures 3, 5

Berenberg Bank or its affiliate(s) was Lead Manager or Co-Lead Manager over the previous 12 months of a public offering of this company. Berenberg Bank acts as Designated Sponsor for this company. Over the previous 12 months, Berenberg Bank and/or its affiliate(s) has effected an agreement with this company for investment banking services or received compensation or a promise to pay from this company for investment banking services. Berenberg Bank and/or its affiliate(s) holds 5% or more of the share capital of this company. Berenberg Bank holds a trading position in shares of this company. Berenberg Bank and/or its affiliate(s) holds a net short position of 1% or more of the share capital of this company, calculated by methods required by German law as of the last trading day of the past month.

Historical price target and rating changes for Tipp24 in the last 12 months (full coverage) Date 27 March 12 06 August 12 15 March 13 Price target - EUR 56.00 61.00 70.00 Rating Buy Buy Buy Initiation of coverage 04 April 11

Berenberg distribution of ratings and in proportion to investment banking services Buy Sell Hold 44.96 % 17.54 % 37.50 % 65.52 % 6.90 % 27.59 %

Valuation basis/rating key

The recommendations for companies analysed by Berenberg Banks equity research department are either made on an absolute basis (absolute rating system) or relative to the sector (relative rating system), which is clearly stated in the financial analysis. For both absolute and relative rating system, the three-step rating key Buy, Hold and Sell is applied. For a detailed explanation of our rating system, please refer to our website at http://www.berenberg.de/research.html?&L=1 NB: During periods of high market, sector or stock volatility, or in special situations, the rating system criteria as described on our website may be breached temporarily.

Competent supervisory authority

Bundesanstalt fr Finanzdienstleistungsaufsicht -BaFin- (Federal Financial Supervisory Authority), Graurheindorfer Strae 108, 53117 Bonn and Lurgiallee 12, 60439 Frankfurt am Main

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Small/Mid-Cap: Software & IT Services/Internet

General investment-related disclosures

Joh. Berenberg, Gossler & Co. KG (Berenberg Bank) has made every effort to carefully research all information contained in this financial analysis. The information on which the financial analysis is based has been obtained from sources which we believe to be reliable such as, for example, Thomson Reuters, Bloomberg and the relevant specialised press as well as the company which is the subject of this financial analysis. Only that part of the research note is made available to the issuer (who is the subject of this analysis) which is necessary to properly reconcile with the facts. Should this result in considerable changes a reference is made in the research note. Opinions expressed in this financial analysis are our current opinions as of the issuing date indicated on this document. The companies analysed by Berenberg Bank are divided into two groups: those under full coverage (regular updates provided); and those under screening coverage (updates provided as and when required at irregular intervals). The functional job title of the person/s responsible for the recommendations contained in this report is Equity Research Analyst unless otherwise stated on the cover. The following internet link provides further remarks on our financial analyses: http://www.berenberg.de/research.html?&L=1&no_cache=1

Legal disclaimer
This document has been prepared by Berenberg Bank. This document does not claim completeness regarding all the information on the stocks, stock markets or developments referred to in it. On no account should the document be regarded as a substitute for the recipient procuring information for himself/herself or exercising his/her own judgements. The document has been produced for information purposes for institutional clients or market professionals. Private customers, into whose possession this document comes, should discuss possible investment decisions with their customer service officer as differing views and opinions may exist with regard to the stocks referred to in this document. This document is not a solicitation or an offer to buy or sell the mentioned stock. The document may include certain descriptions, statements, estimates, and conclusions underlining potential market and company development. These reflect assumptions, which may turn out to be incorrect. Berenberg Bank and/or its employees accept no liability whatsoever for any direct or consequential loss or damages of any kind arising out of the use of this document or any part of its content. Berenberg Bank and/or its employees may hold, buy or sell positions in any securities mentioned in this document, derivatives thereon or related financial products. Berenberg Bank and/or its employees may underwrite issues for any securities mentioned in this document, derivatives thereon or related financial products or seek to perform capital market or underwriting services.

Analyst certification

I, Alexandra Schlegel, hereby certify that all of the views expressed in this report accurately reflect my personal views about any and all of the subject securities or issuers discussed herein. In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this research report, nor is it tied to any specific investment banking transaction performed by Berenberg Bank or its affiliates. I, Gunnar Cohrs, CFA, hereby certify that all of the views expressed in this report accurately reflect my personal views about any and all of the subject securities or issuers discussed herein. In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this research report, nor is it tied to any specific investment banking transaction performed by Berenberg Bank or its affiliates.

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Remarks regarding foreign investors

The preparation of this document is subject to regulation by German law. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

United Kingdom

This document is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers.

United States of America

This document has been prepared exclusively by Berenberg Bank. Although Berenberg Capital Markets LLC, an affiliate of Berenberg Bank and registered US broker-dealer, distributes this document to certain customers, Berenberg Capital Markets LLC does not provide input into its contents, nor does this document constitute research of Berenberg Capital Markets LLC. In addition, this document is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers. This document is classified as objective for the purposes of FINRA rules. Please contact Berenberg Capital Markets LLC (+1 617.292.8200), if you require additional information.

Third-party research disclosures Company

Tipp24 (1) (2) (3) (4) (5)

Disclosures
no disclosures

Berenberg Capital Markets LLC owned 1% or more of the outstanding shares of any class of the subject company by the end of the prior month.* Over the previous 12 months, Berenberg Capital Markets LLC has managed or co-managed any public offering for the subject company.* Berenberg Capital Markets LLC is making a market in the subject securities at the time of the report. Berenberg Capital Markets LLC received compensation for investment banking services in the past 12 months, or expects to receive such compensation in the next 3 months.* There is another potential conflict of interest of the analyst or Berenberg Capital Markets LLC, of which the analyst knows or has reason to know at the time of publication of this research report.

* For disclosures regarding affiliates of Berenberg Capital Markets LLC please refer to the Disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) section above.

Copyright

Berenberg Bank reserves all the rights in this document. No part of the document or its content may be rewritten, copied, photocopied or duplicated in any form by any means or redistributed without Berenberg Banks prior written consent. June 2012 Berenberg Bank

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