Ladies and gentlemen, thank you for joining us for the FDJ conference call. I now hand over to Stéphane Pallez, Chairwoman and CEO. Madam, please go ahead.
Thank you very much. Hello, everybody. Good evening, good morning, whatever. As you know, I'm the Chairwoman and CEO of FDJ, and I'm with Pascal Chaffard, Executive Vice President, Finance, Performance, and Strategy . We're going to talk about our H1 results, 2021. You may have read the press release that was published just after market close, and the slideshow that we'll comment is available on our website on the investor section. We're going to start with a short presentation, of course, to allow you to have time for the Q&A session. I will start before turning to our first half 2021 results. I will start with the European Commission news. As you have seen on Monday, European Commission has announced that they opened an in-depth investigation against the French state. We are not part of that at this stage of this process, but we will become soon.
This in-depth investigation is about the appropriateness of the EUR 380 million that was paid by FDJ to the French state as, I'm quoting the terms of the European Commission, Remuneration for exclusive rights granted to FDJ for sports betting at point of sales and lottery. As a lot of you have been present during the IPO and after, I think that you have heard about this EUR 380 million payment. You might remember that this amount represents the counterpart for the net value created by securing for 25 years the exclusive rights that FDJ Group previously held for an unlimited period. Those rights were secured by the law, and the text that followed the law said that as a counterpart for this security on 25 years, FDJ had to pay what we called soulte, so equalization payment, I think we called it in English during this process.
This EUR 380 million payment has been set after a process led with an independent body, the Holdings and Transfers Commission des participations et des transferts, that has been publishing its methods for setting this sum, that by the way, we paid in 2020. Again, that's just a reminder of the basis of this sum and how it was fixed, and of course, we can come back to that later on. To also remind you that the risk of appeals against the legal text enabling FDJ privatization as voted in PACTE law and derived from, have been described in our documentation since the beginning, in October 2019 registration documents prior to the IPO, and reiterated since in our 2020 registration document. This process has been opened. Again, it's an investigation. It's an official investigation that has been opened by the commission.
The next step will be the release of the full notification in the European Commission official journal. Of course, we'll start the process itself. It will be to the French state to answer. The delay is usually one month to answer, but can be extended, and it generally will be extended, and we'll be a part of this procedure as an interested party. That's basically what I can say at this point in terms of information that is known to us and we'll certainly come back to that. I want to come back now to the first half 2021 key highlights, because we're quite happy to present those very good results. I just want to highlight some elements before turning to Pascal. I think the first highlight is the good momentum despite restrictions related to the health crisis.
Of course, those restrictions have been present a good part of this H1, but have been, of course, evolving, and I will come back to that. It's interesting to note and to stress that our business momentum has been and is quite good, with stakes and revenue up high single- digits compared to 2019, the pre-crisis comparison that we think is the most appropriate one. I'm not going to take you back to the history of the various measures that have been taken by the French authorities since mid-March 2020. I think what is important is to state that now this environment, especially for our point of sale, has been normalized between mid-May and the end of June, with all our 30,000 points of sale open from early June. The last restrictions for bars and restaurants have been lifted at the beginning of June.
Curfew also has been lifted. Of course, as we all know, we're not yet out of this. I think it's quite interesting again, to see that we have good momentum despite an environment that has been partly under some restrictions and that it's getting back to very good numbers when we come back to normal. Growth was already nice in Q1, which takes up 6% versus Q1 2019, despite nearly 10% of our points of sales network being closed, and it has accelerated in Q2. It has accelerated, mainly driven by point of sale lottery, instant games, and especially Amigo. We have now also come back at the end of June in line with June 2019 levels. Of course, with also a very good dynamic on sports betting, including the Euro 2020, as it was called, Championship.
At the same time, of course, I want to stress, because as you know, it's part of our business model that we have continued to deploy our commitments in terms particularly of responsible gaming. One of our major commitments, and it was of course, absolutely key during this period and particularly during the Euro, is the fact that we dedicate 10% of our annual TV advertising to responsible gaming and particularly to the prevention of underage gambling in order to raise awareness about those people and their families concerned. It has been done, this commitment has been particularly strong during this past year with the Euro 2020 championship. As you might have heard that it's, of course, a sensitive period in terms of responsible gaming. We have also continued our long-term support for our network of retailers.
We are now in the process of materially establishing this dedicated fund with some other actors. We put EUR 15 million in this fund that is now in the process of being established and will be able to help approximately 500 businesses with prêt participatif. Loans with a special commission to help them go out of this crisis in good shape. To turn back more precisely to the figures, when we compare our figures to the first half of 2019, our revenues increased by 9% to EUR 1.1 billion, based off an increase of 8% in stakes to EUR 9.2 billion. Stakes are up on all games except Amigo. That, as I said, has been going back to good level at the end of the semester. Was, of course, still affected at the beginning.
What is, I think, particularly important that stakes have been growing in all distribution channels, offline and online. We're very satisfied that our point of sale activity increased by 2%. With the recovery linked to the reopening of the 10% of our net group that was closed for most of the semesters. Of course, most the bar restaurants. Online, of course, continued to be very dynamic, up 71% to more than EUR 1 billion. On this basis, EBITDA for the first half of the year reached EUR 261 million, and to margin of 24.1%. I want to share that this margin was exceptionally amplified by factors that are still a bit specific to this first half of year 2021. In particular, cost initially budgeted for H1 2021 were postponed to H2 2021 because of the health context.
Particularly, of course, cost linked to our network that we were not able to deploy due to sanitary conditions. Pascal, of course, will come back to that. Of course, the online mix effect was positive. Online stakes represent now 12% of the total of our stakes in H1 2021. As you see on the next slide, it's quite impressive to see where we come from on this with 6% in H1 2019, 9% in the first half of 2020, and 12% now. Of course, the lockdowns and curfews related to the health crisis have been the catalyst for this boom. It's quite impressive to see that we're still on a very dynamic growth, particularly compared to Q2 2020, which is a very demanding base of comparison. Of course, this performance is driven particularly by the ongoing very high growth of online lottery.
More than 50% compared to H1 2020 and almost 130% compared to H1 2019. Although strong, we continue to believe that this growth is responsible because it's mainly linked to the growth in the number of online players. That's also a good point for the future. On this basis and considering the fact that, which is good news, that we have now more growth coming from the point of sale and that we will have more in the next months. We believe that growth in online lottery stakes will exceed 30% in the whole year of 2021, reaching EUR 1.5 billion, and which means continuing in the midterm at an annual rate between 20% and 30%. Again, one of the factor being also the environment. We believe we are on, however, a very good dynamic midterm trend.
We believe that in this context, even though, of course, the sanitary environment is not completely stable. As we have demonstrated our capacity to adapt to several phases in this crisis, we are now able to take a forward-looking view for the entire 2021 fiscal year. We anticipate continued good momentum in the second half of the year, thanks to the positive impact of the reopening of the point of sales, the resumption of Amigo and instant games, both in terms of activity and cost, which means that full-year stakes should be around EUR 18.8 billion, with growth in the second half high single- digits compared to full-year 2019 and H1 2019, and mid-single- digit when you compare it to the second half of 2020, which was a very dynamic semester as you know. We expect also full-year revenue of EUR 2.2 billion.
As for the EBITDA margin, Pascal will also certainly come back to that. We believe it should be at least 22% or slightly higher based on the fact that we will have increase in the activity in the point of sale in H2 with a mix effect resulting in additional costs. Shift in fixed costs between the first and second half of the year. Again, to accompany the growth at the point of sale. We also are definitely determined to continue to invest in our online lottery business. In terms of OpEx in the second half of the year to continue to boost online midterm growth in the midterm to again continue this trend over the period. EBITDA free cash flow conversion is expected to be over 80% as in the past. I will now hand over to Pascal to comment in more details. Thank you very much.
Thank you, Stéphane, and good evening, everyone. As a forward to this detailed presentation of the H1 2021 results. Please note first that 2019 data has been adjusted for the new tax regime effective since January 1st of 2020. It's the tax legislation and the full-year integration of Proximus, but are not adjusted for the exceptional lottery cycle, which has mainly impacted the second half or even the fourth quarter of 2019. Regarding our KPIs as of June 30, it is not relevant to consider the EBITDA to cash conversion rate because the half year analysis is impacted by calendar effects on this variation in working capital. It is also not relevant to extrapolate the net cash surplus position over the entire year, as there is strong calendar impact at the end of the year with an advance payment in December.
The public levies due for the month and the annual settlement for all the unclaimed winnings. Let's begin with the key figures for this half year. Stakes of EUR 9.2 billion, up 8.3% compared to June 30th, 2019. The increase in stakes reflected in the increased revenue + 8.7%. The EBITDA, I recall, is defined in our case as recurring operating income adjusted for depreciation and amortization, increased by 25.6% to EUR 261 million, and margin of 24.1%. It was a margin of 20.5% in the first half of 2020 and 20.9% in the first half of 2019. As Stéphane has mentioned before, this margin was exceptionally amplified by different things that I will come back later to this. If now we look at the increase of stake in detail.
This 8% increase in stakes was driven by all activities with stakes of EUR 6.9 billion. The lottery grew by 4%.
This growth was driven by instant games, +7%, whose launches during the first half of the year, such as La Grosse Roue in April or Coup Double in May were very well received. Our best-selling games, such as Cash, for example, continued to do well. Draw games are stable with two different trends. Amigo stakes are down by almost 50% due to the closure of about 10% of our point of sale network during most of the semester. It's worth mentioning that Amigo has recovered its full potential since the end of June. Excluding Amigo, draw games stakes are up 20%. Loto and EuroMillions continue to benefit from the success of their relaunches and have recorded long cycles in Q1. Sports betting stakes at EUR 2.3 billion, are up 25%, driven by a growing market and the Euro 2020 Championship in June 2021.
I won't go back to the progression by distribution channel that Stéphane just mentioned. In terms now of revenues for our business unit with broadly stable player payout rates in both lottery and sports betting activities. Growth is in line with the growth in stakes that we have just commented on. Overall, the slightly higher increase in revenue compared to the stakes is explained by the development of adjacent activities, or we can say also diversification, namely payments and services in commission and B2B. Let's detail the bridge from revenue to EBITDA. The EBITDA margin of H1 has been, as we said before, exceptionally amplified as mentioned by Stéphane and I. This is mainly due to two factors.
The first remarkable point is the difference between the growth in the point of sale commission that you can see on the left of the slide, +1.9%, and the growth of the turnover +8.7%. In H1, lottery growth comes exclusively from digital, more than 100%, with a relative effect that has boosted the EBITDA margin of H1. This effect cannot be projected on a yearly basis as we expect a more balanced growth in H2 with point of sale back to a more normal situation. The second point to be noted is decline in other cost of sales, -2.5% compared to H1 2019, and on a smaller scale, the decline in G&A.
This is in particular due to the fact that some expenses have been postponed to the second half of the year, mainly commercial expenses, given the health condition in the first half of the year and the closure of 10% our network. For example, POS marketing was very low on H1 and maintenance in POS was greatly reduced. We expect those costs to resume in H2. The other cost items increased in H1 2021 versus H1 2019. The continuation of our investments to develop our games and services offering led those costs to a 32% growth compared to the first half of 2019, + 19% versus H1 2020. This growth is driven by the group's strategy, notably the continuous investment in the digital activity, which will be further increased in H2.
It is also driven by development of the adjacent activity, which most of the costs are accounted for in this category. Advertising and promotions have increased by nearly 12% compared to H1 2019. This is a higher rate than the turnover growth, explained by the online activity that demands more A&P, notably to recruit new players. Also explained by the new corporate campaign about the Euro 2020 that took place in 2021. As Stéphane mentioned before, we expect a full-year EBITDA margin greater than or equal to 22%, close to the EBITDA margin of 2020. The 200 basis point difference between the full-year expected EBITDA margin and H1 can be explained by three factors. The catching up of costs in H2, commercial expenses, as we already mentioned, further investments, especially driven by digital.
The weight of POS activity with a more balanced growth between POS and online. A part of the gap is also explained by traditional greater weight of cost in H2 versus H1. Let's go to the breakdown of EBITDA. The group EBITDA is made up of the contribution margin of our two business units, Lottery and Sports Betting, and also the acceleration business unit. We deduct from this contribution margin our holding costs, G&A, and corporate communication. For Lottery, the contribution margin was EUR 298 million, representing a margin rate close to 37% versus 33% in H1 2019. We already explained why this contribution margin is high. Digital mix effect and also lower commercial investment. For Sports Betting, the contribution margin was EUR 61 million, representing a margin rate of 25% versus 24% in H1 2019.
Finally, holding costs of EUR 98 million were stable compared to H1 2019. G&A are decreasing. Corporate communication is increasing as we launched a new corporate campaign. If we look now at the evolution of EBITDA in absolute figures, we see that the increase in EBITDA between H1 2019 and H1 2021 is driven by nearly 80% by Lottery, which has more than Sports Betting benefited from the postponement of expenses in H1, also benefited from the digital mix effect that we have already mentioned. Let's now detail the shift from EBITDA of EUR 261 million to net income of EUR 146 million. The depreciation and amortization amounted EUR 63 million, which include about EUR 10 million related to two factors.
First, an accelerated depreciation of digital projects over three years versus five years previously, with an impact of about EUR 7 million on H1 and EUR 10 million over the whole year.
In effect, digital technology requires continuous reinvestment in development, which at the end have a shorter lifespan. Hence, the adjustment of the depreciation period for technological development of digital projects. The second factor is the beginning of the amortization of the partnership with the organizing committee for Olympic Games Paris 2024, which began in early 2021. The other significant figure is the tax charge of EUR 57 million, equivalent to a rate of 28%, which can be predicted to the end of the year. One of the indicators of the group's cash position is the net cash surplus, which stood at EUR 712 million at June 30th, 2021, compared with EUR 298 million at June 30th, 2020.
The bridge from cash and cash equivalent of the balance sheet to available cash of nearly EUR 1 billion is as follows, adding EUR 381 million of term deposits, which are available within 32 days, and deducting EUR 104 million in funds not available for other purposes. The bridge between available cash of nearly EUR 1 billion and the net cash surplus is as follows, adding EUR 296 million of other financial investments and deducting gross financial debt of EUR 565 million. Thank you for your attention. Now with Stéphane, we are ready to answer your questions.
Ladies and gentlemen, it's now the Q&A part. If you wish to ask a question, you have to press zero one on your telephone keypad. Zero and one on your telephone keypad. We have a first question from James Ainley from Citi. Please go ahead.
Yeah. Good afternoon, everybody. Thanks for taking my question. I've got three, please. First of all, can you talk a bit more about the European Commission move? What do you think has motivated this? I suppose related to that, how does that sort of overhang impact your views on capital allocation? I guess perhaps not politic to perhaps launch a big special dividend, for example, but how has that also impacted your thoughts on M&A? Second question is, how much do you think COVID restrictions impacted revenue in the first half overall? Do you think you're now seeing an outsized bounce back now that retail is back open? I'll leave it there. That's all for now. Thank you.
Okay. Thank you, sir. I will start with your first question about the European Commission and ask Pascal to come back to your question about the impacts of COVID on our revenues in the first half and therefore expectation for H2. It's rather difficult to comment on the motivation for European Commission move because, as I said, we've not been part of the informal process before the official opening of this investigation. Again, it is an investigation that has been opened. What we know is that there have been several companies, several competitors that have been asking different permission to open an investigation. Again, not a surprise that they have tried this as we exposed those risks from the beginning, and again before the IPO. We knew that, well, it is part of the business model of those companies to challenge exclusive rights, particularly.
Again, everything that has been done to prepare the PACTE Law and the privatization as has been, I would say, thoroughly thought before. I also want to note that the French state has had several contacts with the Commission before proposing the PACTE Law and voting the PACTE Law, and so on. It's not, again, something that is new and that is discovered. Again, no surprise to the fact that people are trying. Why is the Commission opening the investigation now? I cannot comment because I don't have any clue about it, and I've not been part of the process before.
What, again, I can state that the legal framework that has been voted by PACTE on securing the exclusive rights, and the fact that we are paying the net value of this situation on 25 years for rights that we had before but that were not secured within a legal framework is something that was exposed and overexposed and discussed and went through complete data and everything. Again, this is something that has been really very much studied and very publicly studied before it was enacted. At this stage, there is no consequence that I can draw from this. Again, the procedure of the investigation is starting. It's an investigation. I'm only going to be an associated party.
Of course, FDJ is going to be able also to participate to the procedure besides the French state, which is again the direct party concerned by this procedure. I have no other comment than just say that we're going to explain this situation, and I don't think there is any other consequence that I can do at this point. Pascal?
Yeah. You wanted to talk about the impact of COVID on our revenue on H1 and what we can say about this on H2. On H1, if we want to summarize it very easily, the impact is Amigo. To be clear, Amigo was nearly half of its potential on the whole H1, and this is the major impact. The rest of the impact is not so important. We learned to live with the COVID. We had a little bit more digital, a little bit less instant games, maybe during the restrictions. We cannot say that it has a major impact on our activity except the closure of the bars. If we talk about what we expect in H2, in our guidance, we don't expect a new COVID crisis coming up very hard.
What could happen, we don't know, but what could happen is, if there is some restriction in point of sales, I don't talk about the closure of every bar, but some restriction on the point of sale, maybe we will be able to mitigate it with the online activity. That was the case barely in first half. The thing that we did not put into our guidance is the closure of the bar. A new closure on a national basis of the bars. We will see if this happens, but we hope that it will not happen in the second half of the year.
Thank you. Could I just come back to my first question on EC move and how does that impact your thoughts on capital allocation and how you might utilize surplus cash?
There is no impact. First, for the reason that I’ve been stating, which is that we are very confident in the way this has been established and set by the state. Second, because as you know, we have, I would say, large capacity given our balance sheet and our low leverage at this point. Frankly, at this stage, no impact.
Okay. Thank you.
Sorry. You're right. I should have said it. Thank you for asking the question again.
Okay. Thanks.
Thank you. Next question from Ed Young from Morgan Stanley. Please go ahead.
Hi, thank you for taking my question as well. On the first one perhaps, on the size of these accelerated investments. If I look at the cost lines, they're pretty close to what you had in H2. You said H2 is normally a bigger weighting for cost. It doesn't look on the numbers like there's a huge amount of cost that's been deferred or pushed out. Could you give us an idea of how large the delayed POS advertising campaign, et cetera, looks like? Because your full-year margin guidance of 20% doesn't look very conservative unless those are quite large numbers. Second of all, on the online development, I think I heard two numbers. One of which was that online lottery stakes were above 50%.
You said, I think you called it the overall online stakes above or at 30% for the year, was your expectation. If I heard that right, that implies down 15%, half on half in H2. Are you really expecting such a strong slowdown in online stakes in H2 to hit that? Or is that, again, conservative? Because if I took the H1 number and ran it across flat, you'd end up with more than 40% growth. Some help or some color around those two would be particularly useful. Thanks.
Okay. Pascal?
Okay. I can take it. If I well understood your first question, you want to know where is this acceleration of expenses that you don't see in our figures. You don't see it if you look at the total expenses because first half we had some items very low, like we said, other cost of sales, et cetera. The acceleration we talk about is about offers and service development. This item is 32% in excess compared to first half of 2019, is, as I said, 19% in excess when we compare it to the first half of 2020. Inside those costs, there is our roadmap of digital development. This is one point where we will accelerate. This acceleration is not EUR 20 million, to be clear. It's some million. It will be seen at the end of the year in this item called gaming development and operation.
The reason why in the first half you don't see big expenses in other items is because other cost of sales and G&A were down. Your second question is what is the growth of the online lottery in second part of the year. We expect it to be around more 20% than 15%, to be clear. That's to be compared to what we expect also on the retail network. We expect a high H2 in the retail network. This is also why we expect a 20% growth in second half of the year on the lottery.
Okay. Just to come back. That's useful. Thank you. On the online stakes overall, I think Stéphane spoke to 30% growth for the year, but given it was 71% in H1, did I hear that number correctly?
Okay.
That's necessarily very much in H2.
I understand. The 71% in H1 is a global online stake, including sports betting.
Yeah.
If you look only at online lottery, the correct figure is 51% of growth in H1. This will grow better with the 20% I talked about in H2 to go to the 30% overall on the full- year.
Within lottery. Okay. Thank you.
Yeah.
Thank you. Next question from Hagar] Wolf from Bank of America. Please go ahead.
Hi, it's Kim here. Just a couple of questions. Firstly, what have you seen with online stakes since reopening, given it's been a couple of months now? Have you seen a huge pullback? Is that how you're getting to the number? You've also mentioned Amigo is recovering, and it's open everywhere. Are you seeing those volumes return back to normal, or does it remain suppressed? Last question, apologies if you've gone through this already, but what's the likely timeline for the European Commission investigation? What should we be watching out for? Thank you.
I will start maybe with your third question on the timeframe. Quite difficult to answer. What is known is that there will be probably in the next week, sometimes it takes longer, I would say probably in the next weeks, a release of the full notification of the decision of the Commission to open this investigation. As I said, the French state at first has one month to reply to this opening, will ask one month delay, as it is very usual. This leads us to reply at the end of September. This can be extended, actually, and is often extended, as I understand it. All the interested parties can also contribute. This is the first phase. I think the Commission has 18 months, in principle, to conclude this investigation one way or another. Actually, it can also extend this delay.
On top of it, of course, if at some point the commission is coming with a decision at the end of this investigation, which can take quite a time, you can appeal this. All the parties can appeal this decision. My experience from those procedures, not my direct experience in FDJ, but the experience that I heard of is that it's something that can be fairly long and that you sort of have to live with it. Again, it's not enshrined in a very strict delay, again, as I've seen it. We'll see. When we know more, I will tell you. At this point, quite difficult to be more precise. Pascal .
Maybe I can take the answers on the online stakes and the recovering of the POS network. First on the online stakes, you are right. We had a 90% growth on H1. The growth on Sorry, on the Q1. The growth on Q2 is less important than the one on Q1. I will not talk about pullback. It's wrong to say that for three reasons. First reason on the Q2 2020, the comparison basis was very high because we almost doubled the online lottery during the first curfew. The first, sorry, the first lockdown.
Lockdown.
Lockdown. The comparison basis is quite high on Q2. Second thing, we had a recovery of point of sales at the end of the semester, which has also an impact on the growth of the online. It's a good news globally for FDJ. The third thing is more conjunctural. We had a lot of long cycles in the lottery, as we talked about in Q1, for example, EUR 210 million jackpot on EuroMillions. This leads a lot of people to the online lottery. We had not this opportunity in Q2, but we hope that the luck will be back with us in Q3 and Q4 about that. The results of online lottery in Q2 is not bad results. We have consolidated what we had before.
The player that has now been recruited to the online lottery are still playing on the online lottery, and they are playing more and more. We are working very hard to make them stay and make them also play a little bit more because you know that players on the online play on average a little bit less than players on the point of sale. We have a lot of things to do to make it grow in the future. The second thing, if I well understood your question is, are we back to normal on the point of sale? Definitely, yes, totally back to normal. What is really very interesting, and we are very happy with that, is the number of point of sale opened. We talked about 20% of the point of sales closed in first lockdown and then 10%.
We were a little bit inquired to say what will happen with those point of sales closed for a long period. Will they reopen really or not? We are very happy to say that in June, we have again more than 330,000 point of sale. This is very good news. We are also very happy to see Amigo at the end of June back to normal with exactly the same kind of turnover that we had before the crisis. We were a little bit worried also about Amigo because this game has been almost sleeping during eight months, and it has restarted as if it has never slept.
That's all very helpful. Thank you so much. Thank you.
Thank you. Next question from the forum, Terry, from Exane BNP Paribas. Go ahead.
Hi. Good afternoon, everyone. I've got two questions, please, and maybe I'll ask them separately, if that's okay. Firstly, just on H2 margin. H1 margin was 24%, and your fuller guidance suggests something like only 20% for H2. Qualitatively, I understand all the points you're making, but the numbers don't seem that big. You're flagging marketing investments, but then you're saying it's less than EUR 20 million. You're either flagging online mix as a H1 one-off, but then you just said that it will continue to outgrow the rest of the business in online lottery in H2. I'm just not quite sure how we can bridge 24% with 20% on a very, very similar revenue base. Is there a headwind that I'm missing here?
Pascal?
Okay. Stéphane told me that I will have this question. I have this question.
I already asked this question.
Yes. It's a normal question. If I can help you by bridging the margin of H1 to the global year. I said three items. The first item is the low expenses in H1 and more important expenses in H2. You can assume that it's something like one point of EBITDA from 2024- 2022 to the whole year. You can assume also that it is two points when you compare it from H1- H2. If I make it clear, if you have EUR 10 million, EUR 10 million means one point of EBITDA on H1. If you have EUR 10 million that are missing on H1 and that will be there on H2, the impact is not EUR 10 million, it's EUR 20 million on H2 from H1 to H2. It's two points when you say that.
We are talking about quite small numbers at the end, but it's a quite huge impact on the margin. The first thing is the expenses that were low in H1 and more important in H2. In addition of this effect, we will invest more in H2, but it's just in addition to this effect.
Okay
One point is explained from 24% to 22%, is explained by what I said. You can assume that half point is explained by what we said about the strength of the point-of-sale in H2, more important than H1. The rest is due to this effect that we see every year, except last year, because the year it was very different from the others, where we have always more expenses in H2 than in H1. If I can summarize, the bridge from 24%- 22% is globally one point low expenses H1 and more expenses H2. Half point, the mixed digital point of sale effects, and half point due to sort of traditional, more expensive in H2. Is that more clear?
Yeah, that seems to take us to close to 400 basis points.
Clear there is nothing else? No headwinds, not communicated here.
Okay. 400 basis points from all these things. Thank you.
Yeah.
I guess, secondly, I just think it would be great to have a sort of public finances 101 refresher here, because we're starting to see some dangerous, almost misinformation. Some newspapers are calling the EUR 380 million, they're calling it license costs, which obviously would be very cheap license costs. As you said correctly. Yeah, no, I know. You said correctly it's a net.
Yeah, absolutely. No, you're right. I'm changing this because it's not a license cost. I think it's absolutely clear from the beginning. It has been explained all over the place.
Yeah.
Some people still call it license cost, which is a big mistake. We are changing that, because again, when you look at what we have explained from the beginning, 2019, it has never been a license cost. The comparison with license cost is just stupid.
That's why we call it equalization payment.
Exactly.
It's the correct term in English.
Yeah.
License or whatever. To be fair, neither you or the state or the CPT have ever discussed the gross numbers. Roughly, if you do a DCF in the mind of civil servants today, what would you say was the implied cost of the license, just so we can get a better sense of how realistic it was?
No, there was no cost of the license. I think there was the CPT as published. I don't remember what is the exact name of what was published, but as published, its decision or its advice to the state, stating that this equalization payment was set according to three different methods.
I can summarize the methodology for-.
Maybe you can summarize the method they actually indicated in their advice.
Yeah.
The range that resulted from every of those three methods. On this basis, they actually set this net value, but there was no license cost at any point.
The three methods, to be clear, and I think it's quite important, and it has been made public. You can find it.
Yeah. I've got it with me. It shows the net. As you said, it shows the net. I guess if you want to assess how fair it was, you have to decide what the gross was. Maybe let's ask it completely separately. If I'm an investor with a 25-year or 26-year investment horizon, I need to embed a license cost in how I value the FDJ shares, because you're going to have to pay this, and next time you're not going to have.
You mean the license cost in 2045?
This is another question.
Yeah.
This is another question, which is, what will we have to pay at the end of the 25 years period to extend those rights.
There, you're right, it will not be an equalization payment at this time. We don't know, but it doesn't call an equalization payment because the rights will have ended, and it will be new rights. At this stage. Right.
I think somebody already asked this question during the IPO process, clearly, we've not been able to give you this price because it's absolutely impossible to give this price for now. We know that it's fair to say that at the end of 25 years, there will be something to pay. I don't think we have today the possibility to state what it would be.
Not a clue.
Okay. I'll leave it here and thank you for the answer. Just to get an order of magnitude, realistically, 25 years to operate this business, which is going to do EUR 418 million of EBITDA this year. Are we talking hundreds of millions of Euros or are we talking billions of Euros? What would imply in how the state priced the equalization payment?
Frankly, today, I'm not able to answer this question.
Yeah.
I must say that, again, I can tell you what we've been stating and what has been published, in terms of the first equalization payment. In the context that we are today, I'm not going to say anything else than what is public information on that, and I don't have any other things than public information on this. frankly speaking, I cannot answer your question.
Fair. It's there. We have to live with it, as you said.
Yeah.
Thank you very much. Thank you.
Thank you. Next question from Sabrina Blanc from Societe Generale. Please go ahead.
Yes. Good evening, Sabrina Blanc, Societe Generale speaking. I have three questions, if I may. Two are very simple. The first one is regarding the working capital, and you mentioned that we have non-recurring element in H1 and on a full-year basis. Could you come back on those effects? The second one is a question about CapEx. How should we see at the end of the year? The third one, sorry, I'm come back on the equalization. Just could you remind us that if I understood correctly, on top of the equalization payment, I know that you had to pay some other elements like the gathered and collect player winnings or, sorry, I don't know how this is at in English, but fonds workflow and so on. Could you give us a clear view on that? Thank you.
Okay. On the last one, you are absolutely right. We did not only pay EUR 380 million. We actually paid over EUR 400 million. My recollection that we paid EUR 420 million, because as a consequence of the privatization, we gave back to the state all those different elements, the one that you mentioned perfectly, lots non réclamés, fonds joueurs. That's, of course, were part of the scheme when the state was our majority shareholder but were not compatible with the privatization. Not only we paid EUR 380 million, but we also paid back over EUR 400 million. In the current framework of relationship with the state, we're not able to keep the lots non réclamés.
Unclaimed winnings
unclaimed winnings. Thank you, Pascal. We have to give them back every year. It's, of course, in addition to what we paid the first year as a kind of a setup of the new relations between the state and us.
It makes it very clear that the new framework has some elements that benefited to FDJ, some other elements that were negative. This is why this equalization payment is some plus, some negative things. This cannot be only plus. It's plus and minus. Maybe to continue with the working capital because you will see that we will also talk about unclaimed winnings. For the working capital, the reason why it is not relevant only in H1 is that public levies are paid to the state every month. In December we have two months. We pay the public levies of November. We pay also the advance payment for December. When you see those working capital in June, it's not normalized. You have more working capital in June than we have at the end of the year.
The second thing that is not normalized is the unclaimed winnings. We keep the unclaimed winnings for all our activity, our lottery and sports betting all the year. At the end of the year, we give it back to the state. We have also a second negative effect on the working capital at the end of the year. This is why it's not interesting to look at it just at the end of June. If I continue with your question on CapEx, you have probably seen that our CapEx were quite low on the first H1. They will be higher on H2. Please don't only double the H1 number. It will be more in line with what we said during the IPO and after, something like EUR 100 million CapEx a year. More in line with that than EUR 33 million multiplied by two.
Thank you very much. It's very clear.
Thank you. Next question from Simon Davies from Deutsche Bank. Go ahead.
Yeah. Hi. Three from me, please. Firstly, just on digital, very, very strong growth in digital performance in the first half. What should we think in terms of the possibility of scaling down the point-of-sale network over the next year or so, given the extent of that growth? Are you going to reset your targets in terms of digital penetration for lottery, given that strong performance? Secondly, I may have missed this, but in terms of the repayment of unclaimed winnings, can you give us a sense of what the normal range would be at the year-end? Lastly, in slightly left field, but obviously we've got regulation coming through in Germany and Holland, both legalizing online casino. Is that something that you think might happen in France over the next 2-3 years, in terms of legalizing of iGaming?
Okay. On digital, I understand that your question is, do we plan to scale down our point-of-sale network? It's really not at all our view because we are quite convinced that the good strategy is actually to build digital, in addition to the point-of-sale, which is, as you've seen, for instance, in the figures that we have this year, a very strong element of customer relation and growth. The question I think for us is more how we combine our two channels, as we call it an omni-channel strategy. The question is more how we combine the two, rather than scale down our point-of-sale network. Again, we are quite satisfied with the idea that we can actually combine low growth, but on a large basis of customers with high growth in the digital.
In addition to that, I just want to remind you that our exclusive rights for sports betting are only in our point of sale. It's actually quite a good business today. It's not growing as fast as the online market, but still growing close to 20% in the last numbers, with a very nice level of margin. It would really be a pity, I think, to shrink that part of our business today. In terms of digital objectives, I think we said that we believe that online lottery can grow between 20% and 30%. We have not, at this point, set mid-term targets for online lottery share of our business.
We will come back to that in the fall, as we have the project of refreshing our midterm objectives, with probably a capital market day in the fall, if, of course, the environment is enabling us to do that. That's I think for your first question. Your second question was on the level of.
unclaimed winnings
unclaimed winnings.
Yes.
Pascal, you want to-
I can take it. Unclaimed winnings are globally on, if we talk about instant games, you can assume that it is something like 1% of the stakes. Of the stakes on point of sale, because you don't have any unclaimed winnings online, as we know every customer, and we pay the customer automatically, so no unclaimed winnings. You can assume 1% of the instant games offline, and it is less than 1% on sports betting and draw games. In fact, between 0.5%-1% of the stakes. Globally, if we talk about figures, the average unclaimed winnings for instant games should be something like EUR 80 million and something like EUR 50 million for sports betting and draw games. Last year, we had a lower level for unclaimed winnings because, as you know, our activity was globally down.
As a lot of point-of-sales were closed, we did not cut off these unclaimed winnings at the speed that we do it usually. The figures for the 2020 year were EUR 70 million globally.
Your third question, I'm sorry, because.
online casino.
Oh, yes. online casino. online casino has been related in the context of the PACTE Law in 2019. Clearly, some people advocated for taking the opportunity of the new regulation framework to open an online casino. It was clearly and massively rejected, frankly speaking, in our parliament. I don't think this is something that is likely to happen in the short- term. I know that some actors are lobbying for it, but I don't think it's something that is visible, I would say, again, in the short- term. Difficult to comment further.
Yeah. Okay. Thank you very much.
Thank you. Next question from Alexandre Gérard from CIC. Please go ahead.
Yes. Hello, and thank you for taking my questions. Firstly, on sports betting, I'd love to have some more information to be able to better appreciate your performance over the first half of the year. Is it that 25% you mentioned compared to 2019 coming more from new players that you've been able to attract, or is it a higher average spending per player? In terms of market share, consequently, over the first half of the year compared to your competitors, where are you? Also, to be able to appreciate your performance by distribution channel, offline versus online, and also in terms of contribution margin between the two segments, where are we? Second question, just on M&A opportunities. Are there new or upcoming M&A opportunities that might be interesting for you to penetrate other segments of the market like poker? Thank you.
Maybe to start with your last point. On poker, I think we've been quite clear about the fact that we think that to be a profitable and, I would say, a significant actor on sports betting, you actually need to add other online activities. That poker, in that regard, is definitely for us a potential complement that we would like to get in addition to our sports betting activity. We have, again, as a consequence of this statement, we have engaged a discussion to have access to some poker offers that we would get from specialized actors on marque blanche. We're not yet there, but it's part of plans. I think we didn't make any mystery about it.
Not because poker is a fabulous activity, but it's because it's a way to keep your customers with you rather than have them being chased by others and taken by others, including sports betting. That's for poker. On sports betting, I'm a little embarrassed by your question because basically, you ask us to communicate data that would separate online sports betting and offline sports betting, and we do not do it. We communicate on the whole segment as a whole. Quite difficult to answer precisely to your questions. What we can say, however, in terms of performance on online sports betting is that it seems that we've been quite good in the context of the market, and particularly during this semester and during the Euro, we've been able not only to keep our market share, but probably to slightly increase it.
However, I think as you know, certainly, we are not amongst the three leaders of the market. I would say good position and good defense and probably a little bit growth of our market share, but I would say no major change regarding our market share on online sports betting. The whole of our activity, again, has been growing at good level, but again, different level of growth between the point of sale and the markets. No surprise regarding that. Pascal, do you want to continue?
Yeah, just maybe you ask also, this growth, has it been driven by recruitment or upsell? Clearly, what we aim on sports betting online is to recruit new players. That's why we invest quite a lot to do so, and we recruited a lot of new players during this first half. Also we try to do some upsell from existing players, which is the two that we had a bigger recruitment plan on this H1. Your third question was about the difference on contribution margin between online and offline. I will answer for lottery, because for sports betting, there is no relative effect offline because the revenue is not the same. On the lottery side, the figures have not changed. It is always 1.5x- 2 x the contribution margin of the point of sales online.
I think your last question was on M&A or potential M&A. I would say no news today that can be shared.
All right. Thank you very much.
Thank you.
Thank you. Next question from Johanna Jourdain from ODDO. Please go ahead.
Yes, thank you. Just one question from me regarding the follow-up, regarding your last comment on the poker and potential discussions to have access to poker offer. For marque blanche, I would like to better understand how does it work and the economics that would be related to that kind of project. Would you have to pay some fees to use the technology capabilities or the brand for that? Could you give us more details and how long should we expect in terms of having some announcement for this kind of project? Thank you very much.
Well, of course, yes, we would have to pay a fee to access.
Revenue sharing
to the platform in terms of revenue sharing. That's the type of agreement that I would say all the players that actually do have access to those platforms pay. It's very common. Nothing special. I think we will come back to that when and if we have an agreement to explain how it is set. It's a little bit early to give you more details.
Okay. Thank you.
Revenue sharing, it's a low investment and low risk.
Yeah.
Okay. Thanks a lot.
Thank you. That was the last question. I give back the floor to a conclusion.
Okay. Well, thank you very much for your questions. I hope that we've been covering a fair amount of subjects. Of course, don't hesitate, if you have any follow-ups, to contact us. We'll be happy, if we have the answers, to answer you. Bye-bye. Thank you.
Goodbye. Thank you very much.
Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.