Hello everybody. Nice to see you today for this presentation of our fiscal year 2022 annual results. I will hello to the people that are online. Thank you all for being with us today. I'm Stéphane Pallez, Chairwoman and CEO of FDJ Group. I will start this presentation and will be joined as usual by Pascal Chaffard, who is our CFO, not only, but our CFO and will be with me to comment those results and of course answer all your questions.
Let me start not by the disclaimer, not by reading the disclaimer, but by telling you that we are, of course, very proud and delighted by this, these results, which, I think, demonstrates the power of the FDJ economic. 2022 is definitely a year that can be characterized as a very good year and very, I think, representative of what we aim at doing in the next coming year, which is good growth and responsible growth on a medium-term basis.
That's what we want to explain to you today after a previous year that had been good, but maybe more impacted by exceptional phenomenon. Although exceptional, as we know, is not always exceptional. Let me start by commenting globally our financial and extra financial performance. Basically, it is remarkable to see that our revenues have been growing by 9% compared to 2021. As you know, because you're following us closely, first half was even more dynamic, but explained by post-COVID catch-up in comparison with 2021.
In the second half, I think we are back to something that is more likely our medium-term growth up to 6%, including, of course, the positive, maybe little exceptional impact of having the World Cup at the end of the year. We are particularly proud by the good performance of our point-of-sale network, which again, has been benefiting for a kind of post-COVID catch-up in first half, and that has been performing very well over the years with 8% increase in stakes over the whole year. At the same time, we've been continuing to grow our online business with stakes up 16%, now accounting for more than 12% of total stakes.
We believe, this type of online growth, is well in line with what we see as medium-term trends. Of course, we have, and we'll come back to that, we say that, medium-term should be around 20%, on an annual, on, in, an annual basis, but, this is for the five next year, so it can be 16%, this year. It's still a very good growth, again, when you have at the same time, 8% in the point of sales. Basically, what we aim at doing is, continue to grow, both, channel, and, going more and more to an omni-channel or a 2-channel, model, but more and more, omni-channel.
In term of profitability, Pascal will give you more details, our EBITDA margin was 24%, 90 basis points increase compared to last year. Based on a net profit of EUR 308 million, we're going to propose to our shareholders to approve a dividend of EUR 1.37 per share at the general assembly on April 27, which is an increase of 10% year-on-year. Which is in the context of our guidelines for dividend distribution which is between 80% and 90% since last year.
This year, we are at 85% because we believe it's important to give our shareholder the type of growth in dividend that we have in terms of revenue and EBITDA in terms of order of magnitude. We also very determined and devoted to our extra financial performance and commitment. It is measured every year, as you know, by our ratings, our A plus, A one plus rating for Moody's for the fourth consecutive year. It is measured by all the commitments that we'll detail later on. I'm going to come back to that also.
Just, I think it's very important, and that's really the basis of FDJ's economic and social model, that when the company is growing well, growth and profitability, it is also distributing to all its stakeholders. This is really the basis of the lottery model. This is one that we have implemented over years and that we continue to implement. This year, I think, is a good occasion to look at this. Every year, since for the last seven years, since I've been in FDJ, we've been measuring our economic and social impact. It's done by independent advisory consultant. This is EUR 6.5 million or 25% of French GDP.
We're measuring our impact in terms of employment. We contribute to create or maintain over 55,000 jobs in France and almost half in our local retail network. In terms of money distributed, of course, most of the most interested party is the French state, which is absolutely normal in the case of lottery or gaming operators. This year it's EUR 4.4. It's completely aligned with the type of growth that we have because it's increasing by 9%, 2/3 of our GGR. Some of it is allocated to specific causes such as sport of heritage. Most of it goes to the French budget.
This is exactly what we try to do with the privatization, which is align the interests of the company, its shareholders and the state, in that type of distribution mechanism. It's working absolutely fine. We are also, I think quite proud to see that our retailers are benefiting for the type of growth that we had in our network. We're going to distribute to them, or we're distributing to them in 2022, close to EUR 1 billion of commission, which represent between 20% and 40% of their revenue per point of sale. It's absolutely key for them. And again, it's aligned with the type of growth that we had in the network at growth of 7%.
We also have contracts with French suppliers because 90% of our suppliers are French. This is also increasing by 9%. Of course, our employees have been also a part of this results. The level of participation on intéressement, so it's the incentive mechanism that we have in France, are very high at 24% of their remuneration. We've been also continuing our recruitment and all in all, this increased by 11%. Again, our dividend is going to increase if the general assembly accept it by 10% year-on-year.
I think it's worth to note that 15% of this dividend is going to go to the veterans association that are our shareholders at a level of 15%. Of course, most of it will go to all the investors, including our 18% of individual shareholders and also to our employees for 4%, because our employees also shareholder the company and we believe it's one of our strengths. Also just to give a little more color to what I said in terms of our commitment to responsible gaming. Just some example of how this commitment has been deployed.
First, we've been spending 10% of the group advertising budget on responsible gambling campaign. It's not only our TV budget, it's our global advertising budget. We spent globally EUR 15 million on including this on different campaign to prevent underage and excessive gambling. We believe it's absolutely key for the sustainability of our business. We've been deploying some I think some very visible campaign, including during the World Cup, about prevention of underage gambling and excessive gambling in sports betting, with very, very clear messages. We also are deploying a very intense controls in our point of sales to prevent underage gambling. Again, we're the only one to do that.
I can detail, of course, this, but I'm not going to spend too much time now because we have a lot of things to say. I will also, as I said in the beginning, I will remind you that we've been the first company in the French gaming sector to get a rating. A rating on ESG. We are at one of the best level. We are among the 5% of the best-rated companies, all sectors, worldwide at Moody's, and we've been actually gaining two points this year. We are very also proud of that. We are certified for responsible gaming by the European Lotteries certification for the sixth consecutive year.
We're also more and more rated by different extra financial rating agencies, including EcoVadis, Green Planet, and so on. Not to mention, of course, our ratings for gender equality, which are at the best level. I want to talk a little more about the performance we had on our two distribution channel. Because again, I think it's a good illustration of the type of strategy that we want to deploy over the next years. Our point of sale network is stable at around 30,000 point of sale. This again is not happening just like that. It's the fruit of our work to recreate point of sale that have disappeared in other places.
Even more to invest in the transformation of this point of sale network to create new reasons to go to this network with the type of services that we deploy. To so pursue the transformation and modernization of a strong point of sale network with our partners. I think this has proved to be very efficient this year. We'll continue this over the next years, including with our new payment services that I will talk more a little later. Regarding our online growth, I think it is now returning to type of normal or normative growth that we had envisaged in our medium-term guidance after years that were obviously quite exceptional.
We have now online stakes exceeding EUR 2.5 billion. It is a sound growth because it's driven by the number of players that we recruit online. We have now 5 million online lottery players. This is, I think, a strong performance and a strong asset also to continue to grow this business in the next in the next year and again, to be more and more an omni-channel operator. In online sports betting, we'll talk more about sports betting later, I can also say that although we don't give our precise market share, our market share has increased during this year. Our performance on online sports betting has also been very, I think impressive.
Now, to give you a little more colors about the growth and what it come from on lottery. It comes basically from every game. Draw games and instant games have been growing very dynamically, both of them. Of course, the draw games have been very positive and very attractive on the in as regard Loto and EuroMillions. The those jackpot games have been also very efficient in driving our online growth because when we have big jackpots, we have roughly 25% of our stakes that are online.
It is definitely a driver to also recruit online players, and of course, once you have recruit them to work on those clients. Our instant games have also been very dynamic with a very strong portfolio animation and good success of our launches and relaunch this year. Both segments have been really behaving very positively and very well. Again, on online, we've been growing very dynamically. At the same time, I want to stress that we are very vigilant about the risk of excessive gaming, particularly online. This is where, of course, we have the best instruments to monitor and to take commitment.
We have taken a commitment to limit by 2025 the share of our gross gaming revenue coming from high-risk players to 2%. We are well on track to do that this year because we've been diminishing actually this percentage to 2.3%, so we are on track to reach this commitment, which is again commitment, medium-term commitment. Now our online lottery represents 12% of our lottery stakes versus 11% in 2029. Again, in a context where every segment is growing and every distribution channel is growing. On sports betting, we had a more contrasted year.
I think you remember that the first half of the year was actually negative. It was negative actually for the whole French market due to a combination of comparison effect, with the first half of 2021, which had the Euro partly, and also probably due to the fact that all the operators were sort of saving their munitions to prepare a second half and of course, the World Cup.
Not only the World Cup, because the second half was actually dynamic before the World Cup, and it was also, of course, very dynamic during the World Cup due to the good performance of the French team, even though we didn't win, another time. We had we were really, I think able to use this very good dynamic on the market to actually have a very good second half on both channel, actually, both in our point of sale and on our online activity, where we believe that we have we have actually grown this online activity twice the growth of the market.
That's why we believe we have definitely gained market share online, which is of course one of our medium-term goal. Of course, at the same time, we have taken important steps to become a full-fledged online operator, starting a poker offer just before the World Cup and signing the acquisition of the Turf, horse betting online player in November. We are now waiting for the different authorization that we have to get this year to be able to fully complete this acquisition and to integrate and to come with again a full-fledged online operator to be completely in the competition in the French market. A little word about payment and services.
I know that for you it is not at this point a big financial number, but I think it's a big strategic move that we have made. First, we have continued to develop the service that we offer in the context of the contract that we have gained from DGFiP. From the tax administration. This service is now offered in 14,000 point of sale. It's almost half of our network because it's been really seen more and more positively both by our clients and our retailers that have asked for it. I think that say something about what it brings to them.
On this basis, we are aiming at developing a larger offer under the brand of Nirio that we have launched recently. When we launched Nirio, we also launched our first additional offer to actually be able to pay your rent with that type of proximity payment, as we say. Of course, we aim to develop this type of services to other everyday bill, such as energy, water or phone bills. We will continue to do that. This, again, is very popular.
I think it's popular for good reasons, which is that it is a contribution to what our network is trying to do in terms of diversification, modernization, new services, because this of course, network business is based on high traffic in the point of sale. Of course, it's one of the reason to enter your point of sale, to pay your bill, but you might have others also, but it contributes to that traffic positive impact.
We have also, of course, bought two small companies, Aleda and L'Addition to boost our capacities, not only to offer those services but also to offer a complete offer to support our retailers in their cash and service management and to also to offer more and more payment services to our clients over time. In 2023, in the continuation of what I said, we will of course continue to animate our games with innovation.
I think the main innovation in 2023, although it's coming only in the last part of the year, will be the launch of a new game in the EuroMillions community with EuroDreams, which is an annuity game. It's the first game launched by the EuroMillions community since EuroMillions in 2004. We are quite excited about that as all our partners. We believe it also can be a good lever for our online business in the years to come. We'll of course we'll invest strongly in that launch in end October or early November, it's going to be precise. We'll continue to develop our phygital games.
We're going to have a 4th phygital game, so it's a new game that is adding to the previous success that we had of those instant games that start as a classic instant games and where you can go online with an enriched formula. Of course, in in sports betting, we're going to continue to enrich our poker offer that we started with a very simple offer, but which has been working well since it launched in last November. So we'll continue to enrich it. We have a full poker offer this year.
Of course, we'll continue to invest in our sports betting activity, including through the different events of this year, such as the Rugby World Cup and the Women's Football World Cup. Again, there is no big event, but we know now that sports betting activity is actually not depending so much about big events, but more spread over the year. We'll manage that. We have good hope to be able to complete the Turf acquisition before the end of the year by getting the authorization of the competition authorities and regulator, notably, and therefore, to be able to integrate completely our new online online operator.
We'll also continue to roll our payment and service activity through our Nirio brand and the extension of our partnerships with housing landlords and other big companies over next year. Of course, we'll continue also to strengthen our responsible gaming commitments, well, by doing what we've done successfully this year, by investing strongly in terms of money. 10% of our FDJ Group's overall advertising budget is devoted to responsible gaming in 2023 as it was in 2022. You might have seen our new campaign with Kylian Mbappé that has accepted to be part with his colleagues from the PSG of this campaign, which is a responsible gaming campaign.
We're very proud of that because I think it's really a very efficient way to talk to people we want to talk to, which probably listen more to Kylian Mbappé than to me on this. I'm aware of that, no problem. We'll also we have signed a new commitment of EUR 10 million over five years with an association that will work on underage gambling prevention. Again, real commitments, real money, and real belief that it's absolutely essential if we want to have a sustainable business over the medium term.
We have also, we have also worked with our regulator on some of the most, I would say, risky games or actually, seen as such or can have some characteristic for people that are attracted by risky games. We've been working on Amigo, and we'll actually relaunch Amigo in June with the modification of some parameter to reduce those risks. This is absolutely, of course, embedded in our guidance. We have, it's part of our commitment and it's part of our growth guidance for next year. Of course, we can come back to that later also.
All in all, just to confirm that our guidance for 2023 is absolutely in line with our medium-term guidance, which was given in November for our investor day. Our revenue growth should be between 4%-5%. Integrating Aleda and L'Addition on a fuller basis in 2022. Our online stakes we pursue the growth of online state around 20%. We intend to maintain our EBITDA margin. Why only maintain, you might say? Because actually, next year we have some extra costs due to inflation environment. Pascal will give you more details about that.
We believe that we have, of course, the capacity to sort of eat those costs in our guidance. That's why we at this point are cautious about increasing our EBITDA margin. We think it's actually already quite significant to take those extra costs in our EBITDA margin because as you know, inflation has more impact this year than it had last year. I'm not going to reiterate our medium-term guidance because it's exactly the one that we published at the investor day.
Again, it is very much, I think, illustrated by what we did in 2022 and even more by what we intend to do in 2023. And I will now let Pascal go into more details about this very good financial performance that we had this year and come back for Q&A. Thank you.
Yes. Not to try to be the Mbappe, but just to give you some detail on our financial performance. Sorry. Good morning to you all here also online. Beginning with the revenue, as Stéphane said, after first half of the year that benefited from a post-COVID catch-up, the second half was more in line with the FDJ Group trajectory with an overall 6% increase in revenue. Also benefiting from the FIFA World Cup, we said that before, leading to the 9% growth over the whole year. For the record, we had estimated that the COVID catch-up effect on the retail network drove about 2/3 of the +17% lottery growth in H1.
The lottery growth has come back to a more standard level of +5% in H2. Over the whole year, lottery growth amounted to 11% in revenue and 10% in stakes. On sports betting, H1 was a bit difficult with revenue down 5%. Stéphane also mentioned it. The dynamic growth was back in H2 since the resumption of the football championship in August and confirmed with the FIFA World Cup, as we said before. Over the whole year, stakes increased by nearly 4%, but due to a higher price payout, PPO, in 2022 than in 2021, revenue increased by only 1%. The revenue from adjacent activities increased by 23% in 2022.
This increase is mainly driven by the development of payment and services that Stéphane mentioned also earlier. The recurring EBITDA increased by 13% in 2022 to EUR 590 million, hence a 24% margin in line with our guidance and up 90 basis points versus 2021. Let's see in a minute the main cost items, how the main cost items evolved in the 2022. First, the point-of-sale commissions of EUR 965 million, they evolved globally in line with the pure stakes. Other cost of sales increased by 11.5% versus 2021. This increase can be explained by a number of factors, including the full resumption of our field marketing initiatives, which were significantly reduced in 2021.
It was also a little bit of COVID in 2021. The start of the development of our new visual identity to modernize the image of FDJ in the point of sales and also to homogenize this image. Third, the increase of the banking fees due to the development of online activities and other direct cost of online activity. Last, the integration of L'Addition for 5 months and Aleda for one month that had an impact also on cost of sales. Marketing and communication costs increased by 12%, and among them, advertising expenses are stable. They represent 1.5% of the GGR.
This is all the more remarkable in the context of a changing media mix in favor of digital, as the latter requires proportionally more advertising and promotion than the POS activity. Investment to develop the offer, namely our design and operating costs for games and services, both marketing and IT, continued to rise +15%. Two-thirds of this increase relate to the development of diversification activities, because most of the cost of the diversification activities are in this cost item, and the balance is related to the lottery. Finally, general and administrative expenses are relatively stable in 2022. This slide shows the year-on-year recurring EBITDA bridge from the contribution of each business unit that I will detail in the following slide.
I go directly on the return contribution margin of lottery. The +11% increase in revenue to EUR 1.2 billion, combined with a limited increase of 9% in expenses, led to a 110 basis point increase in the contribution margin, which amounts now at 37%. The evolution of POS commission is correlated to POS stakes, very simple. Other cost of sale increased by 9% as well as marketing and communication cost, with a 12% increase of game and services offer developments, mainly related to digital developments such as new games, continued adaptation of our offer and digital services, and work related also to the omni-channel customer account on the point of sales.
The advertising costs were stable, as I said, in global. If I turn now to the sports betting and online gaming activity, we name it like that because it now adds the poker activity, and soon, as Stéphane said, we open the horse-race betting activity. The revenue is close to stable, +0.6% to EUR 476 million, with a contribution margin of EUR 117 million, hence 25.1% margin rate, down 100 basis points. The PPO increase that I mentioned earlier explained the slight margin decline. The competitive environment during the FIFA World Cup led us to offer attractive odds, which we were able to do thanks to our efficient PPO management during the year.
I had the opportunity to mention that at the time of the Q3 results. The course of the French team also drove higher PPO. It's important to emphasize that despite those attractive odds and higher PPO, we ended the year within the regulatory limits of 76.5% PPO at point of sales and 85% PPO online. It is also important to put this event into perspective, as Stéphane said, the World Cup accounted for only, if I can say, around 6% of the global revenue of sports betting on the whole year. Moreover, important also to note that it has been a profitable event with controlled advertising and promotional investments. Finally, the World Cup enables us to recruit new players.
If I compare to October 2022, during the World Cup, we more than doubled the number of active online players, and the days when French team played, the number of new players was 4 to 14x the average October number, with a record for the final. We gain market share, as said also, Stéphane, online. We are sure about that on the three first quarter because we have the figures of the NGR, and we are also sure of ourselves during the World Cup. We also add the figures. We are waiting for the all year figure, but probably, we will have this information in the next days or weeks, and we will confirm that we have gained market share over the whole year.
The positive trend of the activity on sports betting continued after, even after the end of the World Cup. Players were able to reinvest their winnings, it means that the beginning of 2023 is quite interesting. One word about operating expenses. They increased slightly, +1.9%. Cost of sales were stable, the increase in marketing and communication costs, +5.2%, reflects the stability of advertising and promotional expenses. While expenses related to the numerous sports partnership, we saw an advertisement with PSG, and also we are a partner of the NBA in France, and those partnership were up in 2022.
Finally, the group's recurring EBITDA is made up of the contribution margin of the two business units, lottery first, and sports betting and online gaming, plus that of diversification activities from which we deduct holding costs. We have just detailed the contribution margin of lottery and sports betting. Holding costs are almost stable. For diversification activities, the contribution margin is minus EUR 20 million. This shortfall is mainly attributable to activities in the U.K., where the group has already taken steps to improve this profitability in the future. Let's now look at the bridge from recurring EBITDA to group net profit. Depreciation and amortization expense are almost stable at EUR 131 million. Non-recurring items represent a net expense of EUR 10 million in 2022. They are mainly related to external growth transactions.
The financial result is an expense of EUR 29 million in 2022, compared to an income of EUR 21 million in 2021. Interesting to comment on this point. This change is mainly due to the financial markets downturn, in contrast to the good performance in 2021, when the group also benefited from significant capital gains on innovation funds. We commented specifically that we had EUR 16 million not recurring benefits on innovation bonds. We have some innovation funds. We have some more in 2022, but not at that level. It should be noted that the group has invested on dedicated assets with underlying bonds maturing over in 2024 and or 2025.
These bonds will be redeemed at their nominal value, thus restoring the assets at their initial valuation, it will add some EUR 14 million positive impact to be accounted for by 2024 and 2025. In addition, despite to a difficult environment for technology stocks, as I said, the performance of the innovation funds of which FDJ has invested continues to be positive. It was EUR 16 million in 2021. It's plus EUR 6 million in addition in 2022. Now after taking into account a tax charge of EUR 113 million, consolidated net income is EUR 308 million, up 4.7% from 2021. Now let's take a look at the group's cash flow generation in 2022.
This cash flow generation was very satisfactory, with a continued excellent conversion, not conversation, sorry, rate of recurring EBITDA to free cash flow of 92%. The free cash flow is EUR 545 million, up 10% in 2021. This, you know, that probably is calculated by adding the EUR 59 plus million positive change in net working capital to recurring EBITDA and deducting our capital expenditure, which increased in 2022 by EUR 28 million to EUR 104 million.
As you know, also the calculation of the change in net working capital has been restated, as we did in the previous years for calendar effects and non-recurring items such as the EuroMillions or Loto jackpot net yet paid out to players at the 31st of December. On the CapEx, IT investment increased by EUR 12 million and point of sale investments by EUR 8 million. As a reminder, the still disrupted health context in 2021 did not allow us to intervene in the network as we desired. We came back to a normal level of investment in the point of sales.
The increase in the other CapEx is attributable in particular to a payment for Paris 2024 Olympic Games, of which we are one of the partners in France. Available cash. The indicator of the available, the level of cash generated by the group is the net cash surplus, and this corresponds to net investment securities and cash. At the end of 2022, the net cash surplus is EUR 968 million compared to 116 at the end of 2021. This increase is mainly due to the inclusion of recurring EBITDA and the change in working capital that we have just seen. Available cash, i.e.
cash that can be mobilized within 90 days in theory, but in practice, in our case, it's more within 32 days, reach about EUR 1,995 million at the end of 2022. To go from the EUR 513 million cash and cash equivalent that we have on our balance sheet to the EUR 995 million cash available, we add the EUR 587 million deposits, term deposits, and we deduct EUR 105 million of unavailable EuroMillions funds dedicated to this game and only that.
To go from the available cash to the net cash surplus, we had the other investment securities, and we deduct the gross financial debt of EUR 484 million, including the debt for equalization payment and also for our headquarters. I will not comment the detail of this slide, but it shows the various components of the net cash surplus that I have mentioned, and it allow us to see all the figure that I've commented before on this representation of the balance sheet. The balance sheet is the total is more than EUR 3.3 billion, and the net cash surplus is nearly EUR 1 billion. We can say that FDJ has a robust balance sheet.
I would like to return for a moment to the company's reserves, to remind you that the distributable reserves are less than EUR 300 million. We cannot therefore instantly distribute our cash with net cash surplus, especially, this is generated by our business, which we want to develop also through external growth.To end, let's end with all our financial KPIs represented on the, this slide. All showing progress in 2022, demonstrating the performance of the group. With this beautiful slide, thank you for your attention, and Stéphane and I are ready to answer your questions now.
Yes, please.
Good afternoon, everyone. Hugo Paternoster from Kepler Cheuvreux. I would have three question, please. The first one is on the revenue guidance. Could you run us through your base case scenario in term of business mix for 2023 between lottery and sports betting mainly? The second one is regarding to your EBITDA margin. You mentioned increased cost for 2023. Could you specify at which level do you expect, like, substantial increase in cost? The third one is regarding your sports betting market share. I know you won't comment on specific numbers. I just wanted to assess your gain there. You mentioned that your number of player has increased in sports betting. Just wonder, has...
Do you know if it's new, totally new player within sports betting, in market? What is your expectation in terms of retention rate for this player? Also, is it more skewed to a new player or your existing player base is betting more? I don't know if I'm clear on.
Yes, yes.
Thank you.
Maybe I will ask Pascal to take the two first questions.
Yeah.
One is business mix for revenue guidance.
Mm-hmm.
Just to make sure that we understand. The other one is, of course, about what type of cost have we embedded in our EBITDA margin guidance. On sports betting, yes, we are... We have increased our market share. As Pascal explained, we know it for sure for the first three quarters of the year because the figures have been published. We will know later on when our regulator is publishing the figures for the whole year and for Q4. As I said, we believe that we have grown probably twice the level of growth in the online market.
I think we can say that now, we still have the three leaders. Again, I'm not going to comment the figures of the three leaders. We believe that we are the first challenger, and will be even more once we have integrated the Turf. Just to give you some flavor about this. On the players, I think it's quite difficult. Maybe, Patrick, you want to give some more details?
Yes. The growth we had over the last two, three years is being driven by both an increase of players and on more or less half and another half on, of course, more expenses per player.
Yes, we work on the two fronts, if I may say so, to have more value players, with control of not having excessive players, but to have more value players. We knew that, when we compared our portfolio players to other players, that we were definitely below in terms of value players. Also we recruit, of course, new players, particularly during big events such as the World Cup. Pascal, you want to-
Yeah. I can comment on the, what I can say, on the mix lottery sports betting in the revenue of 2023. As you know, we had this World Cup in 2022. One of the objective of the sports betting is to do better than we did in 2022. We will have more growth on the online sports betting than on the retail sports betting, as you can easily understand. Globally, we will have a low single-digit growth. We are more growth on lottery.
On lottery, we will have growth on the lottery, on the draw game side, driven by, at the end of the year, the launch of EuroDreams. All the year, continued growth of the scratch cards, as always. It will be a quite balanced growth, but maybe with a little bit more lottery than sports betting as we had this World Cup last year. On the costs, yes. Globally, 40% of our cost base is touched by inflation. We didn't have much impact in 2022 because a lot of our contracts were covering 2022 even before the beginning of inflation.
We will have a more important impact on 2023. If I can comment some items that are quite obvious. The scratch cards, tickets and bet slips. We will have the combination of the increase of the cost of paper, the cost of salaries, where this paper is produced, and also an impact of the currency or dollar because we buy a majority of those tickets in dollar, so it will be quite important item. Other item, the transport, energy, in the case of FDJ, it's important in %, but the impact on the P&L is quite limited. More important on the impact of the, in the P&L, the IT costs.
The IT costs, we use a lot of contractors, and the cost of those contractors will rise, have already risen a little bit in 2022 and will rise in 2023 following the salaries, the salary cost and also the equipment, IT equipment is more expensive. Salaries of the FDJ employees also will be touched by inflation. We will recruit new people that will have an impact on our salary base also in 2023. Yes, it's an effort from for FDJ to be able to offset all those extra costs.
We have demonstrated, for example, in 2020 or during the COVID period, that we were able to do some savings and to control our cost base, so we'll do so. Frankly, it's not at the same level. It's easier in 2023 than it has been in 2020. We are quite confident in the, our capacity to offset by finding performance in other costs to offset those inflation. Maybe one last word. We have tried to anticipate a certain number of renegotiation of contracts not to have the full impact of the inflation in 2023. When you begin the negotiation in the beginning of 2022 instead of the end of 2022, it's easier to obtain better prices in 2023.
We did that also to anticipate major parts of the renegotiation of contracts. For example, on all what we are doing on the network, on the retail network. We have anticipated that, and we have a lower impact than the one that we would have if we would not have anticipated. Sorry, it was a little bit long.
Thank you. I think we have two questions online. Maybe I will take another one in the room and then go to people online. Thank you.
Good morning. Sabrina Blanc, Société Générale. I have a three question, if it's okay. The first one is regarding the current inflation context. You have mentioned the impact at FDJ level, but could we have more color at the point of sales? Is there any idea of potentially increasing the further the commission paid to point of sales to take that into account? The second one is regarding the cash. You have mentioned that you have roughly EUR 1 billion of excess cash, I would like to have more view on that if you have any M&A in mind. The latest one is regarding post the FIFA World Cup.
Do you have anything that the ANJ is putting more pressure in terms of advertising and the usual question about regulation?
Okay. Maybe briefly on your three questions and maybe Pascal will complement me, but I think I can basically. On the inflation context, we first, we don't see impact on our clients' behavior, on their level of spending. As we see in last year figure and in the figures that we have seen the beginning of the year, we don't see any impact. We don't see any impact. Again, we look closely because of course, we know that it is a risk, although it's a risk that is probably less material if our lottery than for other type of businesses.
Of course, since the situation is quite specific, we look closely. We don't see any impact either in lottery or in sports betting, because I saw some people saying it's more likely to happen in sports betting, maybe in other country. In France, again, we don't see it at this point. I think that's one element. Second element, whether our retailers want to ask us increase of commission. Well, first, you have seen that they've benefited very much and very significantly from our growth. I think the best answer to that is that their commission has increased by 7% last year.
Since we are aiming for growth next year, they are definitely very much aligned with our objective on that. Second, there is no, how would I say? There is no regular close where we have to renegotiate. In fact, when I joined FDJ at the end of 2014, the commission has not been renegotiated for years, apart from the responsible bonus. When we engage in the last, the only actually negotiation that we did in the last year, in 2017, it's because we wanted to renegotiate to actually differentiate the level of commission regarding the different economic model for sports betting and lottery. It's definitely in our hands.
The only reason that would make us look at such a negotiation would be if we would have things to ask to them that would be in the interest of our business model, both in growth and profitability. Otherwise, we have no obligation, no compulsory rendezvous clause or whatever to do that. Again, I think they have been very much benefiting from our growth. They have also been very I think satisfied by the investment that we did in payment and services, for instance. This is something that is clearly very positive for them also. Yes, we do a lot of things for this network, but it's because it's our business and our interest.
On our cash, I think I'm not going to tell you anything different from what I said at the investor day. We definitely have power to deploy this cash and our balance sheet to do some M&A. We have definitely stated that one of our aim is to grow our international business, and that probably will, if we want this to be significant in our business model, that will require some significant resources. At this point, I have no news to give you today. Otherwise, I would be, of course, happy to talk about it.
But we're definitely still on this state of mind. For the regulation, I never speak for the regulator. The regulator is in the process of looking at the advertising strategy of all the operators. We have given all the details about our intention, and I think we are waiting for the decision. We are on a spirit where we, as we did in 2022, we believe we want to stabilize those advertising expenses and use them selectively and use part of it for responsible gaming. That's really the principle we've been working around.
Of course, we're waiting for the approval of the regulator to comment further, but it's not only on FDJ, by the way. Thank you. Maybe I should take questions online and come back to you for the people online not to be discouraged. Thank you.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line Jaafar Mestari from BNP Paribas. The line is open now. Please go ahead.
Hi, good morning, everyone. I've got two questions, if that's okay. Firstly, on the dividend, you seem to have applied the midpoint of the 80%-90% payout range, you know, straight to the net income in a very clean way. I'm just wondering if there aren't situations where the board should flex that payout upwards, because what happened this year is you have very clean accounting, you make no adjustments, and basically shareholders are getting, maybe a slightly lower yield than they could have this year because of the non-cash, non-operating charges that effectively relates to the way you invest your cash on the bond market. You know, why not pay out 90% plus in a year like this?
Second question, more fundamentally on your product pipeline for full year 2023, EuroDreams looks very promising. I think you said that doesn't launch before the back end of the year. What is going to drive 4%-5% growth for the rest of the year and outside of traditional grow games? If I look at the program of new products that your regulator has approved, it looks, I think restrictive at best for instant games and for live draw games. You wanted to do an environmentally friendly scratch game, they said, no. You wanted to do Amigo online, they said, no. Scratch games are EUR 5. They, you know, they want one in, one out. Yeah, if you could help us build up to the 4%-5%.
Is it recruiting new players? Is it pushing the lower stakes product? Are there other launches you have not mentioned that we should be aware of?
Okay. on the dividend, I think the reasoning of the board, I think it's very consistent to this medium-term strategy that we have. We're not here to, I think, to boost for one year the dividend. We're here to offer visibility and recurring good remuneration of our shareholders.
I think the reasoning of the board was that this year they had to go up to 85% to compensate for the fact, as you noticed, that our net result was impacted by some financial items that we did have last year, and that on which we were clear that we were not going to have them maybe every year. I think this 85% makes the dividend growing at a level which is at pace with the growth of the revenues and the EBITDA. I think it's the decision of the board. It's going to be submitted to an assembly.
I think there was no reason to again, overboost. I think the really, the question that they want to be, I think, again, to have good visibility on a recurring level of dividend. They have this margin of maneuver that they have used this way. I don't think I can comment more on that unless Pascal wants to add something.
No, no. It's,
On the product pipeline. Well, first, as you, since you know us, well, and you've been following us, well, you know that, it's not only on new games that we do our growth. It's on our capacity to actually to manage over time to renew, to relaunch, to add some new items to some games that basically we've been doing very, very strong growth on the lottery, particularly. I think that it's not completely, it's not completely right to say no innovation, no growth, if I can be a little bit blunt.
On our dialogue with the regulator, yes, it is true that we have this dialogue that has conducted to some recommendation or some reducing of the risk of some games. But this was already the case in 2022, and you see the growth that we had in 2022. I think there also you should not overstate the impact. Reducing the risk in one thing is one thing. But reducing the overall growth when at the same time we continue to recruit, and particularly online, is different.
The fact that we have that I would say robust dialogue with the regulator is not precluding us from getting, again, medium-term growth for the lottery, and this will be the case, I think, next year also. I just want to correct a small point which is that in for the game that we call Mission Nature, the regulator has expressed certain concern about this game, but it has not yet been submitted to the regulator. It has not said no.
In terms of level of stakes in our business, it is definitely marginal because it's going to be a three-- If it's authorized, it would be an instant game at EUR 3 that would be sold during mainly the 2 last months of the year. So it's not anyway, it's not significant in terms of growth guidance for the lottery. So I think to say it more positively, I think we, as Pascal said, we believe that next year and including all the decisions that the regulator has communicated to us, yes, there will be growth from the lottery, growth in the online lottery, embedded in our guidance as it is today.
Thank you. On a positive, a few positive examples. Do you have examples of those renewals, relaunches, or extra cross-selling options that you have in the pipeline for 2023?
Well, again, the main innovation is EuroDreams, I said it, you said it. The main impact, of course, will be 2024. For the rest, we are completing our range of games, having new games in the same family. This is something that we do for some of our games, having a new phygital games. It's not one game that makes our growth.
On the, on the draw games, we have strong capacities to continue to support, particularly the EuroMillions jackpot because the way EuroMillions has been revamped some years ago, has been particularly efficient in producing long cycle, high jackpot and in also giving us some more financial means to organize a specific event to support the growth of EuroMillions which also, as you know, is one of the levers to support the growth of our online business. It's not because it's not new that it's not working well.
All right. Thank you very much. That's it.
We do have other questions online? Maybe I'm going to take one in the room and then another one. Please.
Thank you. Johanna Jourdain from ODDO BHF in Paris. Two questions on my side. The first one is regarding the loss in EBITDA of EUR 20 million in the other activities. I understand it's from the U.K. business, but could you give us more details on this? Maybe the outlook on 2023, do you still expect some losses there? My second question, the very traditional one, on the European Commission investigation. Do you have any updates on how do they consider the file and also on the calendar, please?
Okay. Maybe I'll start by answering the second question and to ask Pascal Chaffard to cover the first one on the U.K. business. On European Commission, I could just answer quickly that there is no news, no, I would say formal news. What I can say is that we've been the state and us because it's, as you know, it's an inquiry opened towards the French state as answer to all the question that the Commission has asked, and we've been also contributing to that. Now we are at the point where there is no new question to my knowledge coming from the Commission. They're in the process of analyzing everything that has been produced in terms of arguments.
I think we are very confident in our case from... That's my personal opinion. I would like to be, of course, to have more capacity to tell you that we're going to get a decision in 2023, which I would like definitely. It's not only in my hands. I can only say that I will do all I can do to get a decision this year. Pascal?
Yes, to comment on the EUR 20 million loss on the diversification activities. It is mainly, yes, due to the international activity. It's EUR 17 million about on the EUR 20 million. Among this international activity we have, yes, an activity of spread betting in the U.K. It's a B2C activity, it's a very high valuable customers niche type of sports betting. This activity was not the heart of why we bought Sporting Group some years ago and has some difficulties because of the regulation in the U.K. that have become more stringent on those high valuable customers.
We thought that it was not completely into the strategy of the group, we have launched a process of divestment of this activity. It also answers to your question, it, will it last in 2023? We will do all what we can to make it last not very long. The second part is the B2B activity that has been experienced some difficulties also in 2022. We have launched a process of economies and restructuring to also make it right by the end of 2023. We have 3 questions online. Okay.
We go, please. Yes? No?
online? Oh.
In the meantime, should we take a question in the room or if there is some?
Okay. I'm very sorry. This is a conference operator. My colleague has informed me she lost connection, and I can assist you with the call now. Is that okay?
Yeah. If you have some question online.
Yes. Hello. Yes, sir, we do. Okay. The question, the next one, sir, will be coming from... Just one second.
From Leo Carrington of Citi. Please go ahead.
Thank you. Good morning. If I might ask, firstly a brief follow-up on the costs for 2023. In terms of the spend in marketing and discretionary spend, is 2023 a lower spend year than 2022, given the product launch pipeline and also the non-recurrence of the World Cup? Then secondly, I hope you can help in terms of outlining further what the Aleda and L'Addition acquisitions can do for FDJ in payments. Do you see the near-term growth primarily from similar bolt-on acquisitions? Or from here, is there an organic growth opportunity from the scale benefits and synergies that the business now has from its broader offer and from in-house development by FDJ?
Maybe on cost, you want to start?
Yes. On cost, if I well understood, it was on marketing spend. On marketing spend, you have to figure out two different things. The first thing is advertisement. What we said is that advertisement was stable 2022 compared to 2021, and we don't expect to higher the advertising cost in 2023. We'll continue in that direction to lower or to stabilize those type of costs. What we include in what we call marketing costs in global is also the development of our offers, the development of digital and also the cost that of development of the services that we offer, for example, for payment and services activities.
Those type of costs will continue to develop, to rise, because we have a lot of things to do to continue to modernize and turn to digital our IT, and especially to prepare the next level, which will be the omni-channel capacity to have some accounts, player accounts available also at point of sales. We continue to do that will be important. This has nothing to do with advertisement. That will be at maximum stable.
Okay. Regarding your question about Aleda, L'Addition, and service, I would say strategy and view. What Aleda and L'Addition bring to us, they bring some assets in terms of clients and software and capacity to connect this, those softwares to the payment system and more generally, the management system of our point of sales. Aleda is actually already serving a part of our retailers. It's a good, I think it's a good asset to develop further that type of services with our retailers.
L'Addition is offering that type of services and system to mostly bar and restaurants, which have clearly some connection with our retailers, but which is on a larger scope. They both bring us, and I'm not going to enter too much into details regarding the difference between the two company, but they both bring us some existing assets and some extra capacity to develop further services and capacity for our retailers to manage services and to integrate them in an efficient management in the point of sale.
I think what we have is the combination of FDJ, its commercial forces, its information system, and those two companies that we are in the process of integrate, but really integrate to develop further in terms of value chain, what we can bring to our retailers. In terms of organic growth, I think with that, we have both the capacity of do what we do today already, through the Digicip contract and the new services, the new payment services that I mentioned for rents, for instance.
This is organic, and we have the capacity to develop it further through extra contracts that we would sign with other big service provider for water, energy, and so on. With Aleda and L'Addition, we have the capacity to grow the offer that we can bring to our retailers and others with a scale impact for a more comprehensive and efficient management of the point of sale and of the relationship with their clients. That's basically what we have. I think for today, it's already quite significant, and it gives us some good opportunity for further growth in next year and the years to come. Okay. Thank you.
Other questions.
Thank you, Pascal.
We will take the next question from line Ed Young from Morgan Stanley. The line is open now, please go ahead.
Thank you for taking my questions. I've got three if that's okay. The first one's on digital stakes growth. You slightly missed your target for over 20% growth. I appreciate it's still good growth in that, and you're saying this is the normalized level. Can you just help us understand what didn't come through as you were expecting, whether it's in Q4 or over the course of the year, in that? And just help us bridge for how we should think about that going forward. The second question's on poker. You've obviously launched poker now with iPoker. How's that launch gone and what is there left to do with that product? Is it sort of up and running as you'd like it?
The reason I ask is if I look at iPoker cash game traffic, it's a bit below where it was last year. It's about 10% of what Winamax is running at in Europe. I'm just sort of intrigued to see if there's more to come and if it's been the boost you expected so far. The third question, Stéphane, if it's possible to go back on responsible gambling. You mentioned it in the presentation. It's obviously challenging to understand customer behavior if they're in the land-based environment and paying cash, but you obviously have a digitized offer that's beyond just your online. I wonder if you could just give us some insight.
What % of your of your total business do you have visibility on who it is in fact placing the wagers? What how much of your traffic is anonymous and how much of your traffic isn't anonymous in total, including people using the app for a QR code or for online in total? Thanks.
On the level of online growth, I think it's actually a very good growth with 17%. I think that what actually was not expected this year, was the excellent growth that we had in addition to that in the point of sales, with 8%. When you put that in the current environment, I think we can be quite proud of this level of growth when you look at the way online growth and retail growth was rebalanced in almost every sector of the economy in France. It's not, it's not easy to exactly have to have a figure to compare.
When I look at what happened in online growth in the French economy, I see that it has been -7% on products. It has been 13%, I think, from top of my mind, overall. In leisure and travel, it's been a little higher, like 15%. In fact, we're higher than every other figures that I saw in online in the French, the recent French figures that I saw. I think really the key explanation is that people have been coming back in the retail network, and they like it. I'm not going to blame them.
My second point is that, I think one of the reason that, of course you are keen about that, and we're of course keen about this level of growth, and we continue, we're going to continue to invest, to get the type of 20% that we aim at. I think that you have to have in mind that first, of course, at 16% growth, it had a significant relative impact in our margin. The growth in the network had also an impact in our margin in terms of extra margin. In fact, we gained margin in the lottery, and Pascal showed the figure earlier with 37% margin. Actually, we gained not only from the online, but also from the growth in the network.
At the end of the day, I think we have not lost anything in that. After that it is clear that some elements of this growth, particularly when you look at, I mean, quarter by quarter, will stay cyclical because there is definitely some boost that is, extra boost that is coming when you have long cycle and big jackpots. I think what is really, what you have to look at, and that's why I mention it and will continue to mention, is the number of clients, 5 million clients online. I think that's a more, in a way, that's a more important and critical figure for us for the future.
Yes, it of course we would like to have even more growth online, but I think if we have 5 million clients and we are able to continue to keep them and to work on their value, it is very, very powerful for our business and our margin in the next future. I'm not worried about this 16%, at all and when I look at the whole picture. Poker, you want to?
Yes, I can comment it rapidly. Our poker offer is to complement our sports betting offer. We launch it beginning of November with a simplified version, and we launch it with a more complete version at the beginning of 2023. It's important for us to be able to offer all the capacity of playing poker in France. We know that the market is focused on the tournaments and the easy tournaments that we launched at the end of 2022. What we aim, we not aim an important market share. What is important is to be able to offer to our client all the range of product that they can have on the competitive market.
We will add also horse racing betting as soon as we get the authorizations to close this, the acquisition of ZEturf. Our aim at the end of the day is to have more clients that have as their first site, their major site on which they play, be FDJ instead of being other operators. That is why we have developed poker. We don't have a very important. It's not important to have big numbers on cash games or not. It's important to have the service this available for our, for our clients.
Your last question.
Yes, please.
If I understand it, was on what is the base of clients on which we're able to.
Mm-hmm.
implement our commitment about 2% of GGR maximum provided by people by risky player, if I'm summing it. it's definitely on the online lottery players because this is the only place where we can measure this in a precise and rigorous way. This commitment at this point, and it's been very clear in what we say, is implemented on the online lottery players. The 5 million that I've mentioned, and more in the future, more clients the future, I hope. Of course, it doesn't mean that we don't have policies to control excessive players in the point of sales.
It cannot be, it cannot go through the same type of instruments because people in the point of sales are mainly anonymous. We don't have any constant monitoring of their games. This is probably one of the things that we would like to have over time. Today, it's not the case. It does apply again, only to online lottery players. Is it the answer to your question?
yes. And thank you for all the detail, all of those. I guess I was saying you used to talk a little bit more about digitized stakes and not just online stakes, but also people using sort of digital in the shops. And I appreciate some of those might be linked to identity. So I just want to get an idea of how much
Well, they're not identified.
They
They are digitized, but they're not identified, stake at this point.
Mm-hmm.
Of course, one nice thing would be to go from digitized people who play through an app, which is mostly in sports betting that we have deployed. Now in sports betting, more than 85% of our players use the app to play in the point of sale, but they are not identified. They don't have to open an account.
Mm-hmm.
to play through their app.
Okay.
I think.
Sounds good.
We have to.
Thank you very much.
Maybe another question online and maybe to stop at, after that, if it's okay with you. Please.
We will take the next question from line Simon Davies from Deutsche Bank. The line is open now. Please go ahead.
Yeah. Morning. Just a couple of questions from me, please. Firstly, can you give some color in terms of current trading so far in Q1, and the sort of growth rates you're seeing across the business? Secondly, just on the ZEturf acquisition, assuming that goes through, what level of synergies do you think you can deliver from that deal? I think there's some additional consideration payable in 2023 depending on performance. What kind of cost could that be? Are these stretch targets, do you expect to pay it out in full?
Maybe on.
You want to take.
Yes.
You want to answer the current trading in Q1?
Yes.
I don't think so.
I will give you a detailed current trading. No, I will not comment the current trading on Q1. I will do a rendezvous at somewhere in middle of April to have the Q1 results. And maybe on the ZEturf, the synergies, we think they are important. They are important because as we said, this is a business of scale. Today we have a number of brands that we can have, we can simplify that. We know as much it is costly to market brands. We also will have only one platform, one client IT system, et cetera, et cetera. We'll have some synergies. We also...
This is cost synergies, but we also have revenue synergies. As I explained before, the fact that we will be able to offer the whole range of the services and products that is possible to offer in the French context will give us more capacity to retain players, to do some upsell about the player that we have already. So it will be really a benefit at our benefit. And we said that we expect that in 2024, this acquisition will be relative on the global sports betting and online gaming contribution margin.
On the question of the level of the earn-out that we said that we have in 2023, what I can say is that if ZEturf meets the target, it will not cost us as it will be at a level that is coherent with consistent with the level of target that they will meet. It's not, it will not have a negative impact. We will be really pleased to pay this extra price because it will mean that we are buying a company that is worth more than we expected.
Okay. We should maybe close at this point. Yes? Okay. Thank you very much, everybody. Thank you for your questions and see you and talk to you soon. Thank you.
Thank you.