Good morning! This is the Corso Conference operator. Welcome, and thank you for joining Lottomatica Group First Half 2024 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Mirko Senesi, head of IR. Please go ahead, sir.
Thanks, operator, and good morning, everyone. Welcome to Lottomatica Q2 results presentation. I'm here today with our CEO, Guglielmo Angelozzi, and our CFO, Laurence Van Lancker . Now, the floor directly to Guglielmo for the presentation. Guglielmo, please.
Thank you, Mirko, and good morning to everybody. So let's start from page two in the deck. We're pleased to announce very strong Q2 with acceleration in key projects, which leads us to upgrade the guidance to EUR 730 million adjusted EBITDA for the year. The rationale for the following: the market continues to grow strongly, it has accelerated in Q2, as we will see in detail. Lottomatica has been growing faster than the market. We have reached an all-time high online market share in June, and in every single month of the quarter. So also Q2 is the highest quarter ever. This is with and without SKS. The SKS integration is ahead of plan.
We've already secured three months into the closing 40% of the total synergies that we have disclosed share with the market, and the contribution to the EBITDA, which will flow in the PNL in 2024, is two times what we had originally announced. Last but not least, we disclosed in the last call that we were working on a very solid pipeline of bolt-ons. We accelerated on that. We have strong visibility for the year, and so we are committing to a number already this quarter for the bolt-on acquisitions. In a summary, Q2 is up 17% compared to Q2 2023, in terms of just EBITDA.
This is reported, but given the payout is normalized, if you look at it on a normalized base, as you can appreciate from the note, it's plus 18%, so it's basically in line with the normalized value. And this also leads to the upgrade of the guidance which I just mentioned. Let's now go in the single items we mentioned as a driver of the performance and the guidance upgrade. The first one is on the market. We are page number three of the deck. Market grows strong. It's very solid. There is robust demand, differently than other discretionary consumer spend segments, and it grows 14%.
You may remember that the Q1 data was impacted by a bad payout, but in any case, 14% is a very, very solid number. So this is the online market growth. Sports franchise is also doing well, because it's back to positive after a negative Q1 due to the negative payout. And gaming franchise is as announced on still a little bit on the softer and still a little bit with a little decline. In terms of performance of Lottomatica, we do double the market in online, so we grow 28% in terms of online GGR, excluding SKS. And I think the most important point here is that this is true across product segments and across brands.
Next page, page number four, that's the other two items I mentioned in the beginning, the acceleration of key projects, namely the integration of SKS and the bolt-ons. Most important point is that we confirm the quality of the asset that we acquired. There's a very capable team, which has a long tenure in the industry. We like the brand, Planetwin, which has a complementary positioning with the rest of our portfolio. We think there is a significant on-top potential. The integration is proceeding fast. The new organization is in place. The Italian operation have been relocated into the group headquarters. The Replatforming is ongoing to the group technology stack, and we expect to be live...
We confirm that we expect to be live for the next football championship. Also, we have performed quite a significant amount of activities, especially on the supplier side, in three months after closing. We can share that 40% of the EUR 65 million synergies are secured, and also that the impact of 2024 is going to be on a total base, that is to say, OPEX above the EBITDA, OPEX below EBITDA, another cash item, EUR 30 million, two times what we had originally planned. In terms of bolt-on, we commit to EUR 20 million and above run rate EBITDA coming from the acquisitions that we will close this year.
The total consideration for this is roughly EUR 70-75 million, of which, 35 will be paid in 2024, the rest, in 2025, and later. So an attractive and accretive multiple, and there is an additional pipeline in the works. Let's get to the market shares. That's page number five. Situation is very solid here, also. You can see on the graph, on the, it's the usual graph on the left side, up, in the page, Lottomatica, compared, to the other main players in the market. We reach, with 22.1% before SKS, the highest quarter ever, and then of course, on top of that, you have the 7% of SKS.
It's the highest growth, vis-a-vis our competitors, and you can see that, in the graph below, because it's 9.2 points, compared to the same quarter last year, if you include SKS, but also if you exclude SKS, it's 2.2 points, compared to smaller numbers of the competition. And what's even more important, and you will appreciate this in the current page, last graph, the one on the right of the page, this is a consistent performance, month by month, and brand by brand, for the Lottomatica legacy, and product by product, also. So there is a strong consistency through time, through brands, and through products.
Next page focuses on this point, which we think is very important, even farther. This is page six. This is the progression of the market shares throughout the years from January to June. Green bars are when in the month there is an increase of the market share vis-a-vis the previous month. Red is the opposite case. And you can see there is a lot of consistency in the Lottomatica performance, which results into an overall +0.9%, +0.9 points increase from June January to June. But again, with a strong consistency month by month, which is clearly outperforming the market, as you can appreciate from the graph.
And, directionals of these, the drivers of these are on page seven. Again, we continue to work on product and technology innovation, which drives organic growth. We continue to expand the product offering with new casino games, new providers, new exclusive sports betting markets, which have been launched to reach the Euro 2024 football season. Cross-fertilization among the assets of the Group, just to name a couple, we have enlarged the Planetwin365 prospecting offer by replicating some of the parts of the offer that we have in the rest of the Lottomatica Group. And even more relevant, we have completed the Replatforming of BetFlag for the sports component, and moved that to the Group tech stack at the end of May.
You can see the average market share of BetFlag, which we've always shared that not top product on sports betting. It has gone from 0.7% with a quantum leap in June at 1.2%, and continues to progress very well, which means you know solid 78% increase. So it's up and clearly immediately and it shows the strength and what you can do when you give to your customer base and to your brand the right product. Last but not least, again, this is an example of the many innovations that we've been doing in terms of marketing and CRM.
We've expanded our capabilities in terms of marketing, going towards a full-scale personalization of marketing communication, taking into account player interests, events, and this is made, this has been made possible thanks to a more extensive use of generative AI and new capabilities in customer acquisition and engagement activities. And this is driving very, very solid improvement in business KPIs and therefore in market share. So this is just, as usual, the common, the common line of all this is that we continue to invest in product, we continue to invest in technology. This drives growth, and we do it across the board, from the product to the tech, to the CRM and marketing.
We come to the last slide on my part of the presentation, which is page number eight. The revenues increase for the guidance from EUR 2 billion-2.02 billion to, the minimum is now EUR 2 billion 30 million. The maximum was EUR 2 billion 65 million, now it's EUR 2 billion 80 million. The adjusted EBITDA grows to EUR 700 million-EUR 730 million, as I mentioned. We basically confirm recurring CapEx, concession CapEx, and deferred consideration, which you may remember was a mix of, like the bets like earn-out, some earn-out, some payments, which were due for Goalbet, then some, and also smaller acquisition. We confirmed that also.
There is an additional EUR 35 million for the bolt-ons, which generate that EUR 20 million plus incremental run rate EBITDA, which comes at, which is the tranche for 2024, and the total of EUR 70 million comes at a very attractive and accretive multiple. Clearly there's more to go. As I mentioned before, there are still more stuff in the works. Now, with this, I hand it over to Laurence. Laurence?
Thank you, Guglielmo. Moving on to page 10, you can see how we've reached revenues of EUR 932 million in the first half of 2024, plus 14% on a reported basis versus the first half of 2023. In Q2, the equivalent number is EUR 492 million in revenues plus 24% on a reported basis, which is very similar to the normalized payout level in terms of growth, given that the both quarters last year and this year are very pretty much aligned in terms of with the normalized payouts. We look at it on EBITDA basis, we've achieved EUR 317 million in the first half, so plus 6% on a reported basis or plus 21% on our using a normalized payout.
In Q2, we have EUR 168 million +17% versus last year, or +18% on a normal- with a normalized payout. Going to page 11, when you look at the performance by business, online continues to remain the key driver of growth, with a reported growth of 37% or 47% using normalized payout, and with an EBITDA level +19% or 33% when looking at it on a normalized level. A sports franchise displays-- continues to display good volume growth, so 20%, year on year, using on a normalized basis, and still reflects the EBITDA performance, still reflects the payout impact of Q1. Gaming franchise continues to remain broadly flat. On page 12, you can see the CapEx profile for the first half.
So we've spent EUR 42 million of recurring, EUR 48 million of concession CapEx, and EUR 25 million of one-off. In terms of recurring, the 42 million, it's roughly, it's about half of what we expect for the year, so in line with guidance. And 48 million euros of concession CapEx is more skewed towards H1. So we've spent 75% of what we expect to spend for the full year, which is EUR 64 million. So the CapEx for concession are more skewed towards H1, which means that it looks, if you normalize for that, we would have effectively, we would arrive to the similar cash flow conversion that we would typically have in the high 70s or 80%.
When you look at the 20, the one-offs, the EUR 25 million, these include the past carryover of EUR 14 million. We had guided to EUR 20 million, so we've got another EUR 6 million to go in the second half. And then additional other acquisitions, including a minority buyout of Billions, which we did in Q1, and the deferred purchase consideration of EUR 4 million, which is EUR 4 million out of the EUR 9 million we had guided at the beginning of the year, with another EUR 5 million to go for the second half.
When you look at the operating cash flow, we've reached EUR 228 million, and when you compare it to H1 in 2023, if you were to normalize, if you were to adjust for the gaming machines concessions that we didn't pay, the last in the first half of last year, we only had EUR 10 million. If we were to do it like for like, where we had EUR 38 million, we would continue to see their operating cash flow growth. Page 13, you have the evolution of the net financial debt from the thirty-first of March to the thirtieth of June.
So we walking through the bridge, in addition to Adjusted EBITDA, we have a positive cash flow generation from change in network and capital of EUR 65 million, as is typical for our business, which where Q2 is provides cash flow generation, typically. And of course, that includes also the payment of the 0.5% that is returned by the ADM. Tax is paid for EUR 34 million, CapEx for 62. Remember, this is the CapEx for the quarter, not for the half. And then we paid the earn-out for the final earn-out for the BetFlag acquisition, which is EUR 50 million. With this, we complete all the consideration for the acquisition of BetFlag. We have financial expenses, and this is a EUR 54 million.
These exclude the negative carry that we've incurred for the SKS bond that we issued in December. And then you have EUR 641 million, which comprises the purchase price of SKS, as well as the refi costs and the negative carry that we've incurred for the SKS bond issued in December. Following that, we have dividend payments of EUR 66 million, which includes the dividend we paid in May this year of EUR 65 million, plus smaller amounts of dividends distributed to minority shareholders in our structure. And then other costs of EUR 16 million, which primarily consist of extraordinary OPEX.
This brings us to a cash position of EUR 129 million at the end of June, and they perform our leverage based on our run rate LTM EBITDA equal to 2.7x. With that, operator, we think we're done on our side.
Thank you. This is the Carlos Ghosn conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. That's star and one. The first question is from James Rowland Clark of Barclays. Please go ahead.
Hi, good morning. Thank you for taking my questions. My first is on the guidance. So at the midpoint, you've raised it by EUR 25 million. Could you just talk us through the quantum of the three factors that you've marked as driving that between the VLT performance, SKS365 synergies, and bolt-on deals? Secondly, on the SKS365 synergies, you mentioned achieving double the level of planned synergies in 2024. Does this mean you hit your longer term synergy target earlier than planned, or is there potential for that synergy target to be larger than you initially outlined? And also, could you just reference whether the EUR 13 million cash synergies are also PNL synergies? And then my final question is on an implied H2.
So taking the midpoint of your guidance, it looks like the second half is a guided EBITDA margin of 35.4%, and you did 34.1 in the first half, and I know that was payout affected, but there's a bit of an improvement half on half. So are you sort of comfortable that gives you the marketing power and the space to invest around taking online share, given the new concessions framework that's kicking in? And maybe update us on your thoughts on that as well. Thank you.
Sure, James. I can take you. So on the first point, when you look at the EUR 25 million, this is a combination of three factors, right? It is the synergies that flow into our PNL. So assume EUR 10 million for this year in terms of OPEX synergies. Of the 13, approximately 10 are OPEX. The second bucket is sort of bolt-ons. I'm not going by order of importance, but at least to give you the sense of what the different buckets are. And the bolt-ons will account for approximately EUR 5 million this year. And then we have clearly we have the organic growth that the remaining part is incremental organic growth.
The next question is from-
Sorry, sorry, sorry, sorry, sorry. So on the just to finish off, apologies, I forgot. On the second point, I want to go on. On the second point, we have the synergies that you've asked for about regarding the amount when we say that two terms synergies. The reality is, yes, we—it's an acceleration of the synergies, so we are realizing them faster than we expected. So originally we had EUR 5 million of OPEX synergies, and now we see this as EUR 10 million of OPEX synergies. The remaining three are cash synergies that don't flow through the PNL, like, for example, in financial costs or guarantees. We won't change the...
We're not changing the target of, of the, full synergy, full synergy amount that is, that remains still a EUR 65 million, of which 50 OPEX, 5 revenues, and the remaining is, cash, other cash synergies. And I think, and if you think about it in terms of, if you think about it in terms of implied, H2, yes, the-- clearly we have, sort of higher margins in the second half, but this is also because there's a ramp up in the synergy realization, on the part of, of S- of SKS. And, this assumes a more, as exactly as you said, a, a normalized payout in H2.
The next question is from Hugo Paternoster of Kepler Cheuvreux. Please go ahead.
Yes, good morning, gentlemen. I would have just three question on my side. The first one is on the sport franchise, and just wondering whether the payout ratio were exactly in line with the normative level in Q2, as we have heard for some of your peers that it was slightly lower, and therefore we could have a reversion to the mean in H2. The second one is on the online market share, which is growing across all the brands, and particularly due to the BetFlag cross-fertilization. Just wondering whether you still have room for improvement for this asset, particularly? And the first question is on the bolt-on. So you increase the pace of the bolt-on.
I just wonder, to what extent is it related to the current situation in Italy, with the new online regulatory framework? And the second part of this question is that if it's not related, could you comment on what do you see currently on the market for the weakest player in term of market share vis-a-vis to this framework change? Thank you.
Hi, Hugo. So on the payout, yes, sports franchise was broadly in line with the payout—it was maybe a few, like, maybe it was a half a point, slightly higher, and then we had better payout in online, but in aggregate, the payout was in line with our normalized levels. So Q2 in aggregate very much in line with our normalized levels.
Yeah. So I'll, this is Guglielmo, I'll take the other two questions. Look, room for improvement, yes, there is. There is absolutely room for improvement. I mean, it's like a few quarters ago, like many quarters ago, there was room for improvement, we've improved. Then there was room for improvement, we've improved. Now there is room for improvement, hopefully we will improve. What are the rationale for these? Well, the rationale are some assets are not at their full. I just commented BetFlag, we just switched the sports betting. We've seen a ramp up, a step up, an immediate step up in one month. We don't expect that to be finished. That's one point.
Goalbet, by the way, continues to do very well. It's improving, because of all the core activities that we do there. That's not about Replatforming of other stuff, it's improving, continuous improvement of the tech, all the activities that I tried to summarize in that slide. Better is doing better and better. Let me play on words. As you know, you may remember this was a full turnaround. When we acquired Better that was going down, then it started to go up. There's still a long way to go in order to restore it to its original strength. The brand is super strong.
The Lottomatica.it brand is super strong when you look at the entire component, not only iSports. So we still have a long way to go, and that's again, it's organic. It's not coming from, it's a continuous improving improvement of the offer. And you know, the then the elephant in the house, we just acquired SKS. We've basically not even started on the top line, except a couple of quick wins, which I mentioned.
But then, you will see the full impact of the opportunity when the re-platforming is done, when we have in place a product which is at the level of the rest of the group, and then we really expect that to kick in and drive additional market share. On top of this, because you know, there's a long list of on top, there is the omni-channel, the iGaming omni-channel, which continues to deliver, which continues to do well.
And it's if you look at not the short term, but if you look at the long term, that's a way of jumping and managing a long-term trend in the market, because it's clear that that is a tremendous pool of opportunity, and we crack the model, we're executing that, and it's delivering. And then on top, and I promise this is the last on top, it's really the. I mean, I don't think it's now it's it's many, many quarters. I don't think it's kind of a case that this is consistent month by month through time.
This is consistent. Of course, you can have a month where, but, you know, it's consistent through time, it's consistent through brands, it's consistent through products. And, this basically means that, the multi-brand strategy, the way we're doing that really, really works, and that's an additional, that's an additional point you have to consider. And I said that was the last on top, and, and I, actually, it was not, but it was to over-deliver on that, actually. So, but, we mentioned a project, and I'll come to the last question that you made, which is, like, what happens with the new setup, with the new framework for the online concession?
We'd always talked about the tails, we've always talked about the program that we have there. That is still not in the numbers. When we talk about bolt-ons, it's, you know, we've done some stuff there also, regarding online, but they're not really changing the numbers. It's more preparing the ground. That doesn't come through bolt-ons, it comes from a different business model, which we commented in the past. It's not reflected in the numbers yet. Bolt-ons are. The current level of bolt-ons is not reflecting that. That is another opportunity, and that is coming, so bolt-ons are basically totally unrelated, to the regulatory framework, as of now, in the terms of what you get reflected in that EUR 20+ million EBITDA, and in the market shares.
We're still in the preparatory phase of that, putting together the various pieces, and that is another component, another potential driver of an increase of market share. So there is a long list of reasons to believe on our side that the untapped potential is still significant for different reasons, which are the ones that I listed.
Okay. Thank you very much.
Welcome.
The next question is from Ed Young of Morgan Stanley. Please go ahead.
Good morning. My first question was on SKS. You just were speaking there about untapped potential. You obviously said in the presentation that you were happy confirming the quality of the asset, but I wonder if you could talk a little bit more about what you've found since you've had that asset under control. If I think back to something like BetFlag, you knew the online casino was good, but maybe not, didn't realize how good it was until you sort of had your hands on the asset. So could you talk a little bit more about where the untapped potential in SKS is?
Very clearly you're moving quickly ahead with the tech Replatforming, so that was a known before you started, but just interested if you could give some color on either opportunities to SKS or opportunities from SKS to the rest of your brands. And the second thing was related to that last question around the tail of online operators. Are you seeing any difference, if you like, in mentality from the tail in terms of their competitive behavior or their sort of willingness to continue based on the delay you've flagged to the payment of the online concessions, or is that still very much shaping behavior there? And then more broadly, are you seeing any change in the competitive environment or intensity from the larger players in the market? Thanks.
Yeah, I taking this once. When we say that we're happy with the asset, it means that we're happy with the foundations of the asset. That is to say, the quality of the team, people with many cases, 10-year tenure in the industry, with the quality of the tech hub in Serbia, which of course we are converting to the new tech, but it's great quality. We are happy with the setup with the fact that they have an omni-channel model and a brand which is a well-positioned brand and it's complementary to us. What we believe, where we believe we can create value, pretty straightforward.
I mean, their legacy sports product is not the same level of the one that we have for the rest of the group, and so the Replatforming there will bring a lot of potential, we believe, on the top line, in the sense that it's a deeper offer, it's a wider offer, it's more flexible, it's faster when you have to launch new markets. There's a lot you can do there.
And the other reason is that, there's a clear, still disconnect, not as large as there is on the opposite way around for BetFlag, which has shown, where there was, still is a huge disconnect between the casino market share and the sports market share, and in this case it's the other way around. But still, at the same time, there is a gap on the casino, which is partly a gap of offer, but it's also a gap of CRM capabilities, marketing capabilities, which of course, are possible. You can have some quick wins, but then you can really exploit them when you are on the same platform, and you can use all the tools.
You know, I mentioned some personalization of content based on interests and behavior through generative AI. You cannot just you know, go on a standalone platform and do that. You need to have the infrastructure of the group, because those tools have been developed on the infrastructure of the group. So that's another opportunity. So this is where we see the good foundations quite a few aspects where we can bring value in terms of offer product, tech, and marketing.
To give some color on the re-platforming, you know, there is a very, very clear plan which has been shared among the teams who work in foreign with the very strong tech hub that they have in Serbia with our people, with our latest people on the tech side. We believe that the developments will be done early next year. And then we will have, because you don't switch during the championship, so we will use the extra time. We could switch earlier, clearly, so this could be the fastest re-platforming that we have done. Because of course, you learn by doing and of course, because you have a good team there also.
But we won't switch immediately because you don't switch in the middle of the championship, you know, unless there is something, you know, special that you wanna take advantage of. But, you know, the plan is to use the month between the end of the re-platforming and the new championship to do business simulations, to test, to fine-tune, and then finally, move everything, turn the key, with the start of the new football season. This is where we stand. Everything is on track. And it's faster than the other times, but also Lottomatica was faster than the integration of the previous assets. It's a curve.
You, you learn by doing, and you develop, you develop APIs, you develop techniques, you develop interfaces which you can reuse, from time to time. That's why it gets faster. Number two, the second question is which was related to the previous set of questions is the detail. And we, we, we see that this is, we, we think this is a very solid project. It's kind of already unrelated to the real timing of the tender. The reality is that everybody has understood that you need a more efficient ecosystem in order to compete in the new setup. So one way or the other, I mean, there is always someone who understands it too late.
We have seen that in the gaming machines, we have seen it in other businesses, but, you know, the majority of people do understand it, and they need a different ecosystem. We need a different ecosystem. Everybody needs a different ecosystem, can leverage on a new ecosystem to compete. It's a pity to waste what is there. And, you know, there's a significant amount of players who are on board or onboarding with the model that we propose, which leaves them plenty of opportunities for the future. Of course, some of them will probably, maybe, maybe group and try to do something on their own, but the opportunity is there. It's confirmed, it's significant.
We have great momentum, and it will flow as the months progress in the market shares and in the PNL. Everything is progressing very well there. You know, I cannot disclose more because we're not in the condition yet to provide numbers there, but everything is confirmed there.
The next question is from Fabio Pavan on Mediobanca. Please go ahead.
Yes, hi, and thank you for taking my questions. First of all, congratulations for the results. I would have a couple of follow-up. First one is on the impact you just have shared on the Replatforming of BetFlag. Was wondering if this increase in market share is in line with your expectation or is exceeding your initial expectations? And also was wondering if do you believe that similar impact may also come on SKS Planetwin365? And the second question is if you have some update to share with us on July numbers following the record numbers you have just achieved in terms of market share in June. Thank you.
Yes, Fabio. So BetFlag, was that in line of fast or better? I think what we can comment now, one month into it, is that it was faster. So we would expect a material improvement, and this doesn't necessarily mean that the end game is gonna be different or higher. Clearly, you know, we expect material improvement, but this has been faster than we expected.
So, that's what I can comment now, then we will need more data to see if this leads to an increase of our internal estimates or not. For the moment being, we just observe, it's been, the reaction has been immediate, super fast. Getting to SKS, it's very hard to say today. What I can tell you is that the gap on the SKS product vis-à-vis the gap on the BetFlag product is different. BetFlag had a much worse sports product than SKS has. SKS has a good product, we're not saying that SKS has not a good product, it's just that we have a better one, but they have a good product.
So while BetFlag, we can easily say that they had a bad product, and we've always said that, so we—I don't think we can repeat such, like, a step up, a huge step up, with SKS. But we think, given the numbers are higher in SKS, it's a, it's a much larger business. In absolute term, it's gonna be something relevant. But the gap, the relative gap is smaller. It's a good product, compared to an excellent product, which is ours, compared to BetFlag, which was, say, bad product, poor product, not bad product, poor product.
So, we gonna see it in the numbers, but it's not in percentage terms, that is probably not the benchmark. July numbers, I mean, I can give you, like, a very high competitive in competitive terms. It's very early. I mean, it's very early, not because it's early in the month, because it's the thirtieth, but it's very, because we don't have the data. But I can tell you we're... What can I say? It's, we're decently optimistic about our relative performance in the month.
So, when we look at the numbers, we've seen that July has all the elements to be a good month in terms of relative performance, but then, of course, you cannot be sure until you see the numbers of the others. That's what I can say. But we're pretty happy.
Okay, thank you.
Welcome.
The next question is from Estelle Weingrod of J.P. Morgan. Please go ahead.
Hi, good morning. So most of my questions have been asked now. May I just ask for perhaps an update on the ongoing discussions around the new retail competition framework, please?
Yeah, Estelle, Guglielmo. Yeah, look, there's been for a few weeks an acceleration on, I would say on the region side especially, because they had, I believe, and in some discussions among the regions which have to agree among themselves first, with a, you know, kind of a framework which a meaningful one. I can use this expression. It was then, you know, it's a process which is ongoing.
As we always said, it's a difficult process, because it's, it requires what we see, we see a lot of good efforts, both on the government side and the region side, to find a compromise, which is respectful of the industry and of the existing investments, and at the same time of improving the quality of the network and of the controls, which we like, like we like that in the online. So, I mean, it's hard to say when they will reach an agreement, but we find there is a constructive and proactive momentum on both sides.
In any case, this will take even before they sign tomorrow, it's gonna take-- you've seen that with the online, which was the easy part, you know, it's gonna take a long time to get to a tender and to award the new concession. So even if they sign tomorrow, it's gonna take, in any case, it's gonna come in, the tender is gonna come in, the award of the new tender. So if I look at it in terms of also outflows, cash flows, it's gonna come not earlier than than we originally planned and discussed. Not earlier for sure, I guess, just look at the technical times you need in such type of processes.
But, we see a positive momentum in and constructive, especially constructive momentum. And what can I say is that I think the most important point is that both regulation, online and retail, fall under the same umbrella, which sets the principle, which is the Delega Fiscale. And the principles that we have in the online, which there's no reason why they shouldn't be also in the retail, are no changing law, no changing taxes, stability of the regulatory framework, empowerment of the concessioners, also for the responsible gaming part, more quality, more controls. It's all stuff that we believe further professionalize the industry and improve the relationship with the regulator and all the stakeholders.
At the same time, give assurance to companies and investors that the framework is a stable framework. So apart from commenting the chronicle of the negotiations, I think that is the most important thing to point out. Both the retail and the online are coming out from the same framework, and the framework contains these principles, which is the thing that we've explained to the market when the Delega Fiscale was approved, and it was confirmed in the decree for the online. So that's the way we look at it. Then, you know, who knows when they will approve it. But there is, for sure, an improved constructive momentum.
Great. Thanks a lot. Maybe just, can I check what the disagreements are based on right now in the discussions? Is that something you are aware of?
I think it's more a more. I think there is more within the regions that they have to find out with different not on the single region specific regions with different views of another regions. It's more different the different. I would say the most important point is making sure that the regions themselves are aligned with something which is a common position to be finalized with the government. There are probably already a good number of positions which result into a framework which is already something which is not far from the government, but you need to have consensus. That's I think the main point.
I mean, it's what we know, like everybody else, it's all stuff which is based on good principles, professionalize the shops, give quality to them, more controls, more training, but, you know, if this happens, then distances should be treated in a completely different manner. So it's more, I would say, on the region's side, to have a solid, rock solid consensus, and then agree with the government.
Okay. Very clear. Thank you.
Thank you.
The next question is from Domenico Ghilotti of Equita. Please go ahead.
Good morning. Three questions. The first two are related to a follow-up on the guidance. So when you are saying, okay, that one of the key reasons for the upgrade was, so the organic performance, I'm trying to understand if you were, say, surprised or if you were, you find upside, on, on the market performance or, actually on your market share, so if you had this kind of expectation on the market. And, second, well, if I look at the upgrade, it is mostly at the EBITDA level, much less at, top line level. So apart from the synergies, there is any other reason for that? And the third question is on, the gaming franchise. So if you can comment on what you are seeing, so we are seeing some-...
Softness, as you said, should we expect this to continue or, or to even accelerate? What, what's your view on that?
Okay, let me go, I can take them. So on the guidance, I think it's a combination of both. So it's continued, you know, strong tailwinds in the sector and then particularly in online, as well as also continued market share gains. It's really a combination of both. Clearly, combining both compounds the results. I think at an EBITDA level, yes, so the synergies is part of the answer, then the other part of the answer is also when you look at delta revenues, but also delta EBITDA, the other part of the answer is also the fact that you have also bolt-ons in there.
The vast majority of the bolt-on's allow you to, insource part of the distribution costs, so that is, improves, as well, the, the margins. And then, you know, overall, if you look at the, the chain, the, the-- you look at the, the mix, it has, you know, online has grown, faster in general, and that's a higher margin business. So that explains the, that explains also part of the difference between the, the margins at a, at a, you know, the pre- the previous guidance versus the, the new one. In terms of gaming franchise, sorry, Domenico, can you remind me the, the question on, on the gaming?
Just understand, you were commenting some softness, and if you are expecting this softness to continue or even maybe accelerate, or if you see a stable, trend there?
We have not seen an acceleration or the decline, no. We continue to see... Again, we'll have to see how the comparatives look in the second half. I think the first half, you know, on a year-over-year, has seen a larger impact because of, partly because of the seasonality. We'll have to see now then going into the second half, we expect it to continue to remain sort of flattish or low single digit decline. But we'll have to see how the H2 pans out. We haven't seen any sort of acceleration of trends.
Again, when you look at it, the percentages year-on-year, obviously the first quarter was, you know, the first half in general was more favorable because H1 2023 was a very strong first half. In general, one of the strongest first halves we've seen in a while. But we haven't seen a deterioration.
Mm-hmm.
an acceleration of any deterioration here.
Thanks.
The next question is from Simon Davies of Deutsche Bank. Please go ahead.
Yeah, morning. Three from me, please. Firstly, on the Euros, can you talk about how you fared through June and July? Did you see material contribution in either volumes or gross win margin? And was it a significant driver in terms of new customer acquisition? Secondly, concession CapEx, you given us guidance for 2024. Any thoughts in terms of how that shapes up in 2025 and beyond? And lastly, you seem to be putting more emphasis on bolt-on acquisitions. What kind of assets are you looking at? What do you think we should think of in terms of likely spend in a normal year? And given the scale of the opportunity in what I would assume is domestic bolt-on, does that mean that international M&A is likely off the agenda for the time being?
So let me go in order. So on the Euros, we've seen a good contribution overall. It doesn't really move the needle on our results, but you know, the EBITDA contribution is positive. We don't disclose the specific amount. You know, it's in the handful of EBITDA contribution. But it's a great opportunity for us in terms of acquisition, and we've leveraged the traffic and the volumes for further acquisitions in June and in July during the Euro season. So it's definitely been overall a positive catalyst for acquisition and a positive contribution to our bottom line.
In terms of concession CapEx, I'd say that I would... 2024 is a good reference, let's say, for concession spend. We're not guiding for 2025, but, you know what we spent in the amounts for the whole group are sort of EUR 60 million for Lottomatica SKS and around EUR 8 million for SKS, so it's around EUR 68 million. If you have to put that in the model, that is the most, let's say, rational assumption you can put in, but please don't take this as a guidance. But there's no reason for at the current time to change these numbers.
Yeah.
On the bolt-ons, I'd say, listen, in the—these are predominantly in the gaming franchise business. It's just where we see, you know, very attractive opportunities for consolidation as well, in addition to the other segments that, Guglielmo, the other initiatives that Guglielmo mentioned earlier, and they're done at attractive multiples. And there is, and again, the pipeline continues to be robust, and there's been an acceleration, especially after the acquisition of SKS. We've obviously we were maintaining the pipeline, and then we simply executed on it at a faster-paced pace post the twenty-fourth of April, which is when we closed the acquisition of SKS. So, you know, we... And again, we continue to see good opportunities as well in distribution and sourcing.
Again, distribution and sourcing, if you remember, we're doing at 2x EBITDA. These bolt-ons that are more sizable, it's anywhere between 3-4 times, let's say an average of 3.5, which is sort of what works out to be the multiple if you look at the numbers that Guglielmo mentioned on the page of bolt-ons, right? It's EUR 70 million CapEx spend for a EUR 20 million incremental EBITDA. So we could, there are still continued opportunities. That by no means does this mean that we will, this puts on hold any international expansion. On the international expansion, we've always said and will continue to say that we will continue always to scout the market.
For now, we continue to do that. And there is, you know, we monitor. We have an active pipeline where we scout and diligence international assets, and we continue to do that.
Great. Thank you very much.
Gentlemen, there are no more questions registered at this time.
Okay. Thank you, operator. As I said, no question on the queue, so thank you everyone for joining.