Earnings Call: Q2 2021

Jul 29, 2021

Ladies and gentlemen, thank you for joining us for the FDIC conference call. I now hand over to Stephane Palais, Chairwoman and CEO. Madam, please go ahead. Thank you very much. So hello, everybody. Good evening, good morning, whatever. So I'm as you know, I'm the Chairwoman and CEO of FDJ, and I'm with Betel Shafar, Executive Vice President Finance, Government Centrality. So 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 slide show that we'll comment is available on our website on the Investor section. So we are going to start with a short presentation, of course, to allow you to have time for the Q and A session. I will start before turning to our first half So as you have seen on Monday, European Commission has Announced that they opened an in-depth investigation about the against the French state. So we are not we're not part of at this stage of this process that we will become soon. And this in-depth investigation is about the appropriateness of the EUR 380,000,000 It was paid by FDJ to the French state. As I'm quoting the terms of the European Commission, remuneration for exclusive rights Welcome to FDJ for sports betting at point of sales and lottery. So as a lot of you have been present During the IPO and after I think that You have heard about this €380,000,000 payment. So you might remember that This amount represents the counterpart for the net value created by securing For 25 years, the exclusive rights that FTT Group previously held for an unlimited period. So this those rights were secured by the law And the law and the text that followed the law say that in as a counterpart For this security over €25 on €25, FDJ, at 2Pay, what we call suit, so equalization payments. I think we called it In English during this process. And this EUR 380,000,000 payment has been set After a process led with an independent body, the Holding and Transfer Commission, Commission Debartuacion de Transfers, that has been publishing its Methods for setting the sum that, by the way, we paid in 2020. So that's again, that's just a reminder of what of the basis of this Some and how it was fixed, and of course, we can come back to that later on. Just to also remind you that The risk of appeals against the legal tests enabling FDC privatization As noted in impact law and derived from, have been described in our documentation Since the beginning in October 2019 registration document prior to the IPO and reiterated Since in our 2020 registrator document. So 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, then of course, we'll start The process the process itself. So it will be to the French state to answer. The delay is usually 1 month to answer that It can be extended and it certainly would be extended and will be part of this procedure as an interested party. So that's basically what I can see at this point in terms of information that we That is known to us, and let's only come back to that. But I want to come back now to the first half 2021 key highlights because we are Quite happy to present those very good results. And 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 has been, of course, evolving and I will come back to that. So it's interesting to note and stress that our business momentum has been and is quite good With stakes and revenue up high single digit compared to 2019, the pre crisis comparison that we think is the most 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's important is To state that now this environment, especially for our point of sale, has been normalized Between mid May the end of June, with all our 30,000 Fulcrum sales open From early June, because the last restrictions for bars and restaurants have been lifted At the beginning of June, curfew also has been lifted. So of course, as we all know, we're not Yes, out of this. But 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. So growth was already nice in Q1, which is up 5% 6 Of the sense versus Q1 twenty nineteen despite nearly 10% of our point of sale net worth 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. And of course, with also a very good dynamic on sports betting, including the Euro 2020 as we as It was called championship. At the same time, of course, I want to stress As you know, it's part of our business model that we have continued to deploy our commitments In terms of Responsible Gaming, one of our major commitments and it was, of course, absolutely During this period, simply during the euro is the fact that we dedicate 10% of our annual TV advertising to To responsible gaming and to the prevention of underage gambling in order to raise awareness About those people and their families' concerns, it has been done and this commitment has been particularly strong during this Sure. As you are 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 establishing materially establishing This dedicated fund with some other actors, we put €15,000,000 in this fund that is now in the process of being established and will be able to help Approximately 500 businesses with pre participative, so Loans with special commission to help them go out of this So to turn back more precisely to the figures, When we compare our figures to the first half of twenty nineteen, our revenues increased by 9% To €1,100,000,000 based off an increase of 8% in stakes to €9,200,000,000 Stakes are up on all games except Amigo that, as I said, has been going back to good level at the end of this semester, But was, of course, still affected at the beginning. What is, I think, particularly important that The 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 in Q2 linked to the reopening of The 10% of our net growth that was closed for most of the semesters, of course, most of the bank restaurants And online, of course, continued to be very dynamic, up 71 Percent to more than EUR 1,000,000,000. So on this basis, EBITDA for the first half of the year reached EUR 2 €61,000,000 and to margin of 24.1%. I want to say that this margin was exceptionally amplified by factors that are still a bit specific To this first half of year twenty twenty one, in particularly, cost initially budgeted For H1 2021, we are postponed to H2 2021 because of the health context, Particularly, of course, costs linked to our network that we were not able to deploy due to sanitary conditions, Pascal, of course, will come back to that. And of course, the online mix effect It was positive. Online stakes represent now 12% of the total of our stake in H1 twenty 21. And as you see on the next slide, it's quite impressive to Where we come from on this with 6% in H1 twenty 19, 9% in the first half of twenty twenty and 12% now. Of course, The lockdowns and curfews related to the health crisis have been the catalyst for this boom. But it's quite impressive to see that we're still on a very, 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 battery, More than 50% compared to H1 2020 and almost 100 30% compared to H1 2019. Although strong, we continue to believe that this growth is Because it's mainly linked to the growth in the number of online players. So that's also Good point for the future. On this basis and considering the fact that which is a good news that we have So more growth coming from the point of sale and that we will add more in the next month. We believe that growth in online and direct rates would exceed 30% in the whole year of 2021, Reaching EUR 1,500,000,000 and which means continuing in the midterm at an annual rate Between 20% 30%. Again, one of the factors being Also the environment, but we believe we are, however, on a very good dynamic Midterm trends. So we believe that in this context, even though, of course, The sales trend environment is not completely stable. But as we have demonstrated our capacity to adapt to several phases in this crisis, We are now able to take forward looking view for the entire 2021 fiscal year. So we anticipate continued good momentum in the second half of the year, thanks to the positive impact of the reporting point of sales, The resumption of Amigo and Instant Games, both in terms of activity and cost, which means that full year Take should be around EUR 18,800,000,000 with Growth in the second half, high single digits compared to full year 2019 and H1 twenty 'nineteen, mid single digit when you compare it to the second half of twenty twenty, which was a very Dynamic semester, as you know, we expect also full year revenue of €2,200,000,000 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 increased 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 of the at the point of sales. And we also are We determined to continue to invest in our online business, online not free 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. Olivier, pretty outspoken fashion is expected to be over 80% as in the past. And I will now hand over to Pascal To comment in more details. Thank you very much. Thank you, Stephane, and good evening, everyone. I look forward This is the presentation of the H1 202021 results. Please note first that 2019 data I've been adjusted for the new tax regime effective since January 1, 2020, the tax legislation And the full year integration of 4th Groupe, but I'm not projected for the exceptional long luxury cycle, which has mainly impacted the second half Or even the Q4 of 2019. Regarding our KPIs about June 30, it is not relevant to consider the EBITDA Cash conversion rate because the whole period is impacted by calendar FX on this variation in working capital. And 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 asset payment in December, the public levies due to for the month and the annual settlement of the For all the acclaimed winnings. So let's begin with the key figures for this half year. Stake totaled €9,200,000,000 up 8.3% compared to June 30, 2019. The increase in stake is reflected in the increased revenue, plus 8.7%. The EBITDA, I recall, is Defined in our case as recurring operating income adjusted for depreciation and amortization increased by 25.6 percent to €261,000,000 hence margin of 24.1%. It was margin of 20 0.5% in the first half of twenty twenty and 20.9% in the first half of twenty nineteen. As Stephane has mentioned before, this margin was exceptionally amplified by different things that I will come back and I will come back later to this. If now we look at the increase of stake in detail, this 8% increase in stake was driven by all With stakes of €6,900,000,000 in the luxury grew by 4%. This growth was driven by instant gains, plus 7% With launches during the first half of the year such as La Grosse Pu in April or Cougoublin May were very well received, while our best selling games Such as cash, for example, continued to do well. Grow games are stable with 2 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, Grow Games' stakes are 20%. Lotto and Euromian continue to benefit from the success of their relaunches and have recorded long cycles in Q1. All betting stakes at EUR 2,300,000,000 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 Stephane just mentioned. In terms now of revenues for our business units, with broadly stable player payout rates in both lottery and foredecking The growth is in line with the growth in SAIC that we have just commented on. Overall, the slightly higher increase in revenue compared To the States is explained by the development of adjustment activities or we can say also diversification, mainly payments and services in commercial and B2B. Now let's detail the bridge from revenue to EBITDA. The EBITDA margin of H1 has been, as we said before, Optionally amplified, as mentioned by Stephane and I. This is mainly due to 2 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, Plus 1.9% and the growth of the turnover, plus 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 predicted on a yearly basis as we expect more balanced growth in H2 with point of sale back to a more normal situation. The second point to be noted is the decline in other cost of sales, down 2.5% compared to H1 twenty nineteen And on a small scale, the decline in G and A. This is in particular due to the fact that some expenses have been postponed in 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 The continuation of our investments to develop our games and services offering led those costs To 32% growth compared to the first half of twenty nineteen, plus 19% versus H1 2020. This growth is driven by the group strategy, notably the continuous investment in the digital activity, which will be further increased in H2. It is also driven by development of the adjustment activity, which most of the costs are accounted for in this category. Advertisements and promotions have increased by nearly 12% compared to H1 of 2019, And this is a higher rate than the turnover's growth explained by the online activity that demands more A and P, Notably to recruit new players and also explained by the new corporate campaign about the Euro 2020 that took place in 2021. As Stephane 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 3 factors: the catching up of cost in H2, commercial expenses and as already mentioned, Further investments, especially driven by digital. 2nd, the weight of POS activity with a more balanced growth between POS and online. And third, A part of the gap is also explained by traditional greater weight of cost in H1 versus in H2 versus H1. So now let's go to the breakdown of EBITDA. The group's EBITDA is made up of the contribution margin of Our 2 business units, Luxury installed betting and also the acceleration in this unit. And we deduct from this contribution margin our holding cost, G and A and Corporate Communications. For Lottery, The contribution margin was €298,000,000 representing a margin rate close to 37% versus 33% in H1 2019. We already explained why this contribution margin is high, This is the CapEx and also lower commercial investments. For Sports Betting, the contribution margin was €61,000,000 represented a margin rate of 25% versus 24% CET1, 2019. Finally, holding costs of €98,000,000 were stable compared to H1 2019. G and A are decreasing and 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 It's driven by nearly 80% by Lottery, which has more than 4% benefited from the postponement of expenses in H1 And also benefited from the digital mix effects, as we have already understood. Let's now detail the shift from EBITDA of EUR 261,000,000 to net income of EUR 146,000,000. The depreciation and amortization amounted EUR 63,000,000 which include about EUR 10,000,000 related to two factors. 1st, an accelerated depreciation of digital projects over 3 years versus 5 years previously, with an impact of about EUR 7,000,000 on H1 €1,000,000 and €10,000,000 over the whole year. In effect, digital technology requires continuous reinvestment in development, which at the end Have a shorter lifetime, hence the adjustment to the depreciation period for technological development Of this 2 projects. The second factor is the beginning of the amortization of the partnership with the organizing committee For Atlantic gains, there is 2024, which began in early 2021. The other significant figures is the tax charge of €57,000,000 equivalent to a rate of 20 8%, which can be predicted to the end of the year. 1 of The indicators of the group's cash position is the net cash surplus, which stood at €712,000,000 at June 30, 2021, Compared with €298,000,000 at June 30, 2020. The bridge from cash and cash equivalents of the balance sheet To available cash of nearly €1,000,000,000 is as follows, adding €381,000,000 of term deposits, which are available within 32 days And deducting €104,000,000 of euros not available for other purposes. Then the bridge Available cash of nearly €1,000,000,000 and the net cash surplus is as follows, adding €296,000,000 of other financial investments And deducting gross financial debt of €555,000,000 Thank you for your attention. And now with Stephane, we are ready to Sir, your question. Ladies and gentlemen, it's now the Q and A Yes. Good afternoon, everybody. Thanks for taking my question. I've got 3, please. First of all, can you talk a bit more about the European Commission move? What has motivated this? And I suppose related to that, how does that sort of overhang impacts your views on capital allocation? Perhaps not politics to perhaps launch a big special dividend, for example, but how has that also Frictions impacted revenue in the first half overall. And do you think you're now seeing An outsized bounce back now that the retail is back open. And I'll leave it there. That's Okay. Thank you. So I will start with your first question about European Commission and to ask Pascal to come back to your question about impact of COVID on our revenues in the first half and therefore expectation for For HQ. So it's rather difficult to comment on the situation for European Commission moved because as I said, well, this we have not been part At the informal process that as was before the official opening of this Investigation. And again, it is an investigation that has been opened. So what We have what we know is that there have been Several companies several, several competitors That has been asking different permission to open an investigation. Again, not a surprise that they are 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 Excluded rights, particularly. So again, everything that has been Don't prepare the tax law and the privatization has been, I would So we thought before. And I also want to Know that the French state has had several contracts with the commission before proposing the back flow and voting the back So it's not, again, something that is new and that is Discover. So 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. And what Again, I can state that this the legal framework That has been voted by Pact on securing the exclusive rights And the fact that we are paying the net value of this I think security over 25 years For rights that we asked before that we are not secured within legal framework is Something that was exposed and overexposed and discussed and went through complete data and everything. So again, this is something that has been really very much studied and very Publicly studied before it was enacted. So At this stage, I don't I there is no Consequence that I can draw from this. Again, we are the procedure of the investigation is starting. It's an investigation. And so I cannot I'm only going to be now I'm going to be an associated party. So of course, DG is going to be able to Also to participate to the procedure beside the French state, which is Again, the direct party concerned by this procedure. So I don't have no I have no other comment than just say that, well, 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? Yes. So you wanted to talk about the impact of COVID on our revenue on H1 and what we You can say about this on H2. On H1, if you want to summarize it very easily, the impact is Amigo. To be clear, Amigo was nearly half of its potential on the H1, 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, But we cannot say that it has a major impact on our activity Except the closure of the valves. So if we talk about what we expect in H2, In our guidance, we don't expect a new COVID crisis coming up very, very hard. And what could happen we don't know, but what could happen is if there is some restriction in points of sales, I don't talk about the closure of every part, but some restriction on the point of sale. Maybe we will be able to mitigate it with online activity. That was the case Barely in the first half. The adjusting that we did not put into our guidance is the closure of valves, A new quarter on a national basis of the bulk. 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 VC Move and how does that impact your thoughts on Capital allocation and how you might utilize surplus cash? Well, there is no impact. First, for the reason that I've been stating, which is that we are Very, very confident in what has been in the way this has been established and And I'm set by the state. And second, because as you know, we have, I would say large capacity given our balance sheet And our low leverage at this point. So frankly, at this stage, no impact. Okay. Thank you. Sorry, you're right. I should have said it. So thank you for asking the question again. Okay. Thank you. Next question from Ted John from Morgan Stanley. Please go ahead. Hi. Thanks for taking my questions as well. Paul, on the first one perhaps on the size of these accelerated investments. If I look at the cost lines that are pretty close to what you had in H2. And you said H2 is normally a bigger weighting for cost. So it doesn't look on the numbers like there's a huge amount of cost that's being deferred or pushed out. So could you give us an idea of how large the delayed POS advertising campaign, etcetera, looks like because your full year margin guidance, particularly doesn't look very conservative unless those are quite Large numbers. And then second of all, on the online development, I think I heard two numbers, one of which was the lottery Online lottery stakes above 50%. You said, I think you brought the overall online stakes above or at 30% for the year, which is your expectation. If I heard that right, I mean 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. If I took the H1 number and ran it across slightly, you'd end up with more than 40% growth. So can help or some color around those 2 will be useful. Thanks. 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 on the cost of sales, etcetera. The acceleration we talked about is about Offers and Service Development. This item is 32% In excess compared to first half of twenty nineteen is, as I said, 19% in excess. When we compare it to the first half of twenty twenty and inside those costs, there is Our roadmap of development of digital development, and this is one point where we will accelerate. This acceleration is not €20,000,000 to be clear. It's some million In some million, and it will be seen at the end of the year in this item called Gaming Development and Operation. So this and the reason why in the first half, you don't see a bigger Big expenses in other items is because of the cost of sales and G and A were down. And your second question is what is the growth of the online luxury in the 2nd part of the year? We expect it to be around more 20% than 15%, to be clear. And this has to be put it has 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. I'll just come back, but that's useful. Thank you. On the online stakes overall, I think I think you definitely spoke to 30% growth for the year, but given it was 71% in H1, I understand. The 71% in H1 is a global Online stakes, including 4 settings. If you look only at online lottery, The correct figure is 51 percent of growth in H1. This will go better with the 20 I talked about in H2 to go through the 30% overall on the full year. Within Lottery. Okay. Thank you. Yes. Thank you. Next question from Aga Wall from Bank of America. Please go ahead. Hi, Tim Kim here. Just a couple of questions. Firstly, what have you seen with online stakes since reopening given it's it's been a couple of months now. Have you seen a huge pullback? Is that how you're getting to the number? And you've also mentioned Amiga is recovering It's open everywhere. Are you seeing those volumes return back to normal? Or does it remain suppressed? And last question, apologies if you've run through this already, but what's the likely time line for the European Commission investigation? What should we be watching out for? Thank you. I will start maybe with your third question On the time frame, quite difficult transfer. What is known is that there will be Probably in the next week, but sometimes it takes longer, but I would say probably in the next week, Release of the full notification of the decision of the commission To open this investigation. The as I said, the French state At first, as 1 month to reply to this opening, but we'll ask one more delay as it is very usual. So 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 can So contribute so this there is a first that is the first phase. I think the commission has 18 months in principle To well, to conclude this investigation one way or another, But actually, you can also extend this today. So and 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 have, of course, You can appeal all the parties can appeal this decision. So My experience from those procedures, not my direct experience in STJ, but the experience that I heard Is that something that is that can be fairly long and That you sort of have to live with it. And because it's quite again, it's not Completely it's not enshrined in a very strict delay As again, as I've seen it. So we'll see when we know more. We'll tell you. But At this point, quite difficult to be more precise. 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 90% growth on H1 and the growth on Q1 The growth on Q2 is less important than the one in Q1, but 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 doubled almost doubled the online lottery during the first curfew The first sorry, the first lockdown. So the comparison basis is Right. Hi 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, But it's a good news globally for FDJ. And the third thing is It's more conjunctural. We had a lot of long titles in the lottery As we talked about in Q1, for example, EUR 210,000,000 Jackpot on our EuroMillions and this leads a lot of people to the online lottery. So we had not this opportunity in Q2, but we hope that the luck will be back with us in Q3 and Q4 about that. So the results of 903 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 airline lottery and they are playing more and more and 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 sales. So we have a lot of things to do To make it grow in the future. The second thing, if I well understood your question, Are we back to normal on the point of sale? Definitely, yes, totally back to normal. What is really Very, very interesting and we are very happy with that. It's the number of point of sale opened. We Talked about 20% of the point of sales closed in the 1st lockdown and then 10%. And we had some work A little bit inquires to say what will happen with those points of sales closed for a long period, will they reopen really or not? And we are very happy to say that in June, we have again more than 300 30,000 points of sales. This is Very good news. And 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. And we were a little bit worried also about Alango because this game has been almost slipping During 8 months, and it has restarted as if he has never slept. That's all very helpful. Thank you so much. Thank you. Thank you. Next question from Jaafar Mestari from Exane BNP Paribas. Please go ahead. Hi, good afternoon, everyone. I've got 2 questions, please, and maybe I'll ask them separately, if that's okay. So firstly, just on H2 margins. So H1 margin was 24%, and your full year 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. So you're flagging marketing investments, but then you're saying it's less than 20,000,000 And 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. So 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? Okay. Stephane told me that I will ask this question I have this question. I already asked this question. Yes, yes. This is a normal question. If I can help By bridging the margin of H1 to the global year, I said 3 items. The first item is The low expenses in H1 and more important expenses in H2. And you can assume that it's something like 1 point Of EBITDA from 24 to 22 to the whole year. So you can assume also that it is 2 points when you compare it from H1 to H2. If I make it clear, if you have EUR 10,000,000 €10,000,000 means 1 point of EBITDA on H1. If you have €10,000,000 that are Missing on H1 and that will be there on H2. The impact is not 10, it's €20,000,000 on H2 from H1 to H2. So it's 2 points when you say that. So we are talking about Quite small numbers at the end, but it's a quite huge impact on the margin. So the first thing is I can say that we're low in H1 and more important in H2. And in surplus of In addition of this effect, we will invest more in H2, but it's just in addition to this effect. So, okay. First thing, one point is explained by from 2024 to 2022, It's explained by what I said. You can assume that outpoint is explained by What we said about the strength of the point of sales in H2, more important than H1. And 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. So if I can summarize, the bridge from 24% to 22% It's globally 1.0 low expenses H1 and more expensive H2, outpoint The digital mix, mixed digital point of sale effects and the off points due to sort of traditional More extensive in H2. Is that more clear? Yes. That seems to take us to close to 400 basis points. To be clear, there is nothing else. No headwinds not communicated here. Okay. So 400 bps from all these things. Thank you. And 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 disinformation, some newspapers are calling the €380,000,000 They're calling it license costs, Which obviously would be very cheap license costs, whereas as you said correctly yes, no, I know you said correctly it's a net. Yes, absolutely. No, no, you're right. I'm sort of I'm chasing this because it's not the license Of course, I think it's absolutely clear from the beginning. It has been explained all over the place. But some people Your colleague license cost, which is absolutely which is a big, big mistake. And so we are chasing that. And because again, when you look That's what we have explained from the beginning, 2019, it has never been a license cost. So the comparison with license cost is just stupid. That's why we call it acquisition payments. It is correct in English. Yes, that's true or whatever. But to be fair, neither you or the state All the CPT have ever discussed the growth numbers. So roughly, if you do a DCF in the mind of several 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? There was no cost of the license. I think there was the CPT has established I don't remember what is the exact name of what was published, but as to believe it's decision or it's Advise to the state, stating that this This equalization payment was set according to 3 different Maybe you can surprise us the method. We've actually they actually indicated in their advice The range that resulted from MOE of those Three methods. And on this basis, they actually set This net value, but there was no license cost at any point. The free method, to be clear, and I think It's quite important and it has been made public. You can find it Yes, yes. I've got it with me. I've got it with me. It's close to net. As you said, it was a net. And I guess if you want to assess how fair it was, you have to decide what the growth was. So 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 last question in question This is another question. This is another question, which is what will we have to pay at the end of the 25 U. S. Period. To extend this those rights. And there you're right, it will not be an equalization payment at this time. We don't know, but it will not be called an equalization payment because the rights will have And this is that it will be new rights. But I think Stephane already asked this question during the IPO process. And clearly, we have not been we've not been able to give you this price because It's absolutely impossible to give this price for now. So we know that It's fair to say that at the end of 25 years, there will be something to pay, But I don't think we have today the possibility to Okay. Is it I'll leave it here, and thank you for the answer. Just to get an order of matching material realistically, 25 years to operate this business, which is going to do €418,000,000 of EBITDA this year, are we talking 100 of 1,000,000 of euros or are we talking 1,000,000,000 of euros? What was implied in how the state priced the equalization payments? Frankly, today, I'm not able to answer this question. And since I must say that Again, I can tell you what we've been stating on and what has been published in terms of the first acquisition payment. In the context that we are today, I'm not going to say anything else Then what is public information on that? And I don't have any other public information on this. And So frankly speaking, I cannot answer your question. Fair. It's fair. We have to live with it, as you said. Thank you very much. Thank you. Thank you. Next question from Sabrina Blonde from Societe Generale. Please go ahead. Yes. Good evening. Sabrina Blonde, Societe Generale speaking. I have three questions, if I may. 2 are very simple. And the first one is regarding the working capital. And you mentioned that we have non recurring element in H1 Juan, on a full year basis, could you come back on those effect? The second one is Question about CapEx, how should we see at the end of the year? And the third one, sorry, I come back on the equalization. Just could you remind us that on if I understood correctly, on top of the equalization payment, I know that you had To pay some other elements like the gathered and collected player winnings or sorry, I don't know how this is acting English, but au revoir, Clou, And so could you give us a clear view on that? Thank you. Okay. So on the last one, you're absolutely Right. We did not only pay EUR 380,000,000. We actually paid over EUR €400,000,000 My recollection that we paid €420,000,000 Because in the context of the as a consequence of the privatization, we gave back To the state, all those different elements, the one that you mentioned perfectly, That's of course, We're part of the scheme when the state was our majority shareholder, but we're Not compatible with the privatization. So not only we paid €380,000,000 but we also paid back over €400,000,000 And in the current framework of relationship with the state, We're not able to keep the Lord Norwood surname. Unclaimed winnings. Unclaimed winnings. Thank you, Pascal. So we have to give them back every year. So It's of course, in addition to what we take the 1st year as a kind of setup of the new Relations between the state and us. It makes it very clear that the new framework As some elements that benefited to FDJ, some other elements that were negative. And this is why this equalization payment is some plus, some negative things. And this cannot be only plus, it's only plus or minus. Maybe to continue with the working capital because you will see that we will also talk about claim winnings. For the working capital, the reason why it is not relevant in H1 is that public levies are paid To the state every month, but in December, we have 2 months. We have the we pay the public levies of November And we pay also the advance payment for December. So when you See those working capital in June, it's not normalized. You have more working capital in June that we have It's at the end of the year. The second thing that is not normalized is the end claim winnings. We collect the end claim we keep The Enclave winnings for all our activity, Lottery and Sport betting all the year. And at the end of the year, we give it back To the States, so we have also a second FX 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. So please don't only double the H1 number. It will be more. It will be more in line with what we said during the IPO and adapter, Something like €100,000,000 CapEx a year, more in line with that than €30,000,000 €33,000,000 multiplied by 2. Thank you very much. It's very clear. Thank you. Next question from Simon Davies from Deutsche Bank. Please go ahead. Yes. Hi. 3 for me, please. Firstly, just on digital. Probably, very strong growth in digital performance in the first half. What should we think in terms of the likely or the possibility of scaling down the point of sale network over the next year or so Given the extent of that growth. And 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 repayments of unclaimed winnings, can you give us a sense of what the normal range would be at the year end. And lastly, and 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 sort of 2 to 3 years in terms of legalizing of I Gaming. Okay. So 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, Very strong element of customer relation and growth. So the question, I think, for us It's more how we combine our 2 channels, as we call it On the channel strategy, the question is more how we combine the 2 rather Then scale down our Pentacel network. And 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 the 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. So it will really be a pity, I think, to shrink the part of our business today. So in terms of digital objectives, I think we say that we believe that online We can grow between 20% 30%. We have not, at this point, Set mid term target for online luxury share 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. So that I think for your first question. Your second Cheung was on level of claim winnings. Pascal, you want to I can take it. And claim winnings So at ChemEunix, globally, if we talk about instant games, you can assume that it is something like 1% of the stake. Of the stake on point of sale, because you don't have any unclaimed winnings online, as we know every customer and we pay the Automatically, so no unclaim winning. So you can assume 1% of the instant gifts offline And it is less than 1% on sports betting and draw games, in fact, less Between 0.5% 1% of the stakes. Globally, if we talk about figures, the average And claim winning for instant games should be something like €80,000,000 and something €950,000,000 for sports betting and games. Last year, we had lower level for unclaimed winnings because as you know, our It was globally down. And as a lot of point of sales were closed, we did not Cut off this and claim winnings at the speed that we do it usually. So the figures for the 2020 year was €70,000,000 globally. And your third question Online casino, my second question is from Yes. Online casino. Online casino I've been related in the context of the cash flow. So In 2019, so clearly, some people advocated for Taking the opportunity of the new regulation framework to open online casino, It was clearly and massively rejected, frankly speaking, in our Parliament. So 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. So difficult to comment further. Yes. Okay. Thank you very much. Thank you. Next question from Alexandre Vaushar from CJS. 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 reflect? Or is it a higher average spending per player? And in terms of market share, consequently over the first half of the year compared to your Competitors, where do you where are you? And also, I mean, to be able to I appreciate your performance by distribution channel, offline versus online. And also in terms of contribution margin between the two segments, Where are we? And second question just on M and A opportunities. Are there new or upcoming M and 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 for sure, I think we've been quite clear about the fact that we think that To be a profitable and I would say Significant actor on sports betting, you actually need to add other online activities. So that poker in that regard is definitely for us a Potential compliments that we would like to get in addition to our stock trading activity. And we have again, in this as a consequence of this statement, We have engaged discussion to have access to some Portfolio offers in that we would get From Specialized Actors, so on Marcou Blanche. So we are not yet there, It's part of plans. I think we didn't make any mystery about it. Again, not because poker is a fabulous 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. So That's for Fokker. On sports betting, I'm a little embarrassed by your question because you basically you asked 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. So 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 of the market, particularly during this semester and Actually, during this semester and during the year, we've been able not only to keep our market share, but probably to slightly increase it. However, as you I think as you know, certainly, we are not Amongst the 3 leaders of the market. So good, I would say, good position and Good defense and probably a little bit grow of our market share, but I would say no major change regarding our market share on online sports betting. The whole of our activities, 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. And I can do you want to Just maybe you asked also This growth has been driven by recruitments or upsell. Clearly, what we aim on For betting online, he has to recruit new players. That's why we've got quite a lot to do so. And we recruited A lot of new players during this first half and also we tried to do some upsell from Your third question was about the difference On contribution margin between online and offline, I will answer for Lottery because for 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 1.5 to 2 times the contribution margin of the point of sales online. I think your last question was on M and A or potential M and A, So M and A, I would say no news today that can be shared. All right. Thank you very much. Thank you. Thank you. Next Question from Joanna Jordan from ODDO. Please go ahead. Yes. Thank you. Just one question for me regarding the follow-up Regarding your last comment on the poker and potential discussions to have access to poker offer. Martin Blanche, I would like to better understand how does it work in the economics that would be related to that kind of project. So would you have to pay some fees To use the technology capabilities of the brand for that, so 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. Yes. Well, of course, yes, we would have to pay when we put a fee 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 the platform So 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, so it's a little bit early to give you more details. Okay. Thanks. As a recurring, it's low investment and low risk. Yes. Okay. Thanks a lot. Thank you. That was the last question. I'll 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. And of course, Don't hesitate to if you have any follow-up to contact us. We'd be happy if we have the answers to answer to you. So, bye bye. Thank you. Goodbye. Thank you very much. Thank you, ladies and gentlemen. This concludes