Very Good 2022 Results – Confirmation of The 2023 Outlook, in Line with the FDJ’s Group’s Responsible Growth Trajectory

February 20, 2023 | Financial

2022 revenue of €2.5 billion, up +9% , based on stakes up +9%, to €20.6 billion
- After a 1 ^st half benefiting from the post-covid catch-up, the 2 ^nd half is in line with the Group’s growth trajectory with sales up by +6% [1], including the effect of the World Cup Football world at the end of the year
- In this exceptional context, the progress of all activities and on all channels:
  - Significant growth in sales points (+8%) and continued momentum in online sales (+16%) which represent more than 12% of total sales
  - Turnover up by +11% for the lottery and +1% for sports betting and competitive online games [2]
- Reinforcement of awareness-raising and control actions to prevent excessive gambling and gambling by minors, in particular with more than 10% of the overall advertising budget dedicated to responsible gambling
Current EBITDA [3] of €590 million, up +13%, i.e. a margin of 24.0%, and net income of €308 million
Growth for the benefit of all stakeholders
- Significant economic and social contribution to GDP of 6.5 billion euros
  - 55,300 jobs maintained or created in France
  - 965 million euros in remuneration paid to retailers
  - 684 million euros of purchases made in France
- Profit-sharing and profit-sharing bonus, which represents 24% of payroll
- A dividend of €1.37 per share, i.e. 85% of consolidated net income, up +10% compared to 2021, proposed to the general meeting of April 27, 2023
2023 objectives: revenue up between +4% and +5% [4] and current EBITDA margin rate maintained at around 24%

Boulogne (February 15, 2023) – La Française des Jeux (FDJ), the leading gambling and gambling operator in France, announces its 2022 results and confirms its outlook for 2023.

Stéphane Pallez, Chairman and CEO of the FDJ group, declared: ” FDJ recorded very good results over the whole year, with progress in all its activities supported by significant growth in its 30,000 points of sale and a continuation of the digital dynamic. This good performance benefits all of our stakeholders, in particular our employees, our partner merchants and our shareholders. The Group also continued to strengthen its societal commitments, in particular its actions to prevent excessive gambling and gambling by minors. This financial and extra-financial performance reinforces the Group’s strategy, confident in its prospects for balanced value creation in the medium term.”

Key figures (in millions of euros)

	2022	2021	*Var.*
Stakes	20,618	18,976	*+8.7%*
Turnover*	2,461	2,256	*+9.1%*
current operating income	459	393	*+16.8%*
Net profit	308	294	*+4.7%*
Dividend per share (€)	1.37	1.24	*+10.5%*

Current EBITDA**	590	522	+13.1%
Current EBITDA margin/revenue	24.0%	23.1%

* Turnover: net income from games and income from other activities

** Current EBITDA: current operating income restated for depreciation and amortization

2022 highlights

Very good results – current EBITDA margin of 24%

In 2022, the FDJ group recorded a solid performance, with revenue growth of +9% to 2,461 million euros, in line with the increase in stakes. After a first half that continued to benefit from post-covid catch-up, the increase in revenue in the second half was +6%, i.e. a level close to the Group’s historical growth trajectory.

Current EBITDA amounted to 590 million euros, up +13%, thanks to strong growth in point-of-sale activity and dynamic digital growth. The current EBITDA margin on sales was 24%, up +90 basis points.

Growth of all activities

In the lottery, the increase in turnover, of +11% to 1,916 million euros, reflects the good intrinsic momentum of the games and the return to normal in the network of points of sale. The performance of draw games is notably attributable to the attractiveness of Loto and Euromillions, with a significant number of high jackpots. That of instant games was driven by portfolio activity, in particular the success of game launches and relaunch, including Cash, x10 and x20, and Ace of Hearts.

Revenue from competitive sports betting and online games amounted to 467 million euros, up 1%. After a first half penalized by an unfavorable 2021 comparison base on the holding of UEFA Euro 2020, the rebound in activity recorded in August and September, with the resumption of the European football championships, intensified at the end of the year, with the FIFA World Cup. The good progress of the French team has resulted in a very high rate of return to players, with a weight of this competition of 6% in the annual turnover of the activity.

Significant growth in sales outlets and continued momentum in online sales

In the network, stable at nearly 30,000 points of sale, stakes recorded an increase of +8%, to 18.1 billion euros.

This momentum is driven by high attendance, reflecting both consumers’ attachment to this local network, which the Group supports in its transformation and diversification, and the attractiveness of the FDJ games offer, which is an attendance major.

After two years of very strong growth, with a doubling of digital stakes between 2019 and 2021, accelerated by the changes in behavior induced by the health crisis, the progression of digital stakes is normalizing. In 2022, they exceeded 2.5 billion euros, up +16% compared to 2021, representing more than 12% of total stakes. In the fourth quarter alone, the Group’s digital activity set a new record with stakes exceeding €700 million, up +14% compared to the same period in 2021. In addition, the market share of FDJ on online sports betting, cumulatively at the end of September and on the FIFA Football World Cup, has progressed.

The increase in digital stakes continues to be mainly attributable to the increase in the number of players. For the lottery, they are now nearly 5 million, a doubling compared to 2019, of which two-thirds also play at points of sale. The share of gross online lottery gaming revenue from high-risk players stands at 2.3%, with the goal of reaching less than 2% by 2025.

Strengthening of sports betting and competitive online gaming activity

The FDJ group is continuing to implement its strategy aimed at strengthening its position in the French competitive online gaming market. To this end, it has, in November:

Launched a poker offer on the online ParionsSport application;
Concluded an agreement for the acquisition of the ZEturf group, the 2 ^nd online horse racing betting operator in France, which also offers online sports betting under the ZEbet brand. This Group generated revenue of nearly €50 million in 2021. This transaction is expected to be finalized in the second half of 2023, after the lifting of the conditions precedent, in particular its authorization by the French Competition Authority. .

Development of the Payment & Services activity

With the aim of becoming one of the leading local payment and collection networks in France, the Group has, in 2022:

Recorded a +46% increase in the number of invoice collections on behalf of the DGFiP, a service now available in more than 14,000 points of sale;
Launched the Nirio brand for daily bill payment services (lessors, energy companies, etc.) in the FDJ network;
Acquired two companies to develop in the point-of-sale management and payment solutions sector: Aleda, a specialist in point-of-sale collection and payment solutions for local businesses, and L’Addition, a specialist in equipment and collection and payment services for cafés-bars-hotels-restaurants.

International strategic partnership

At the end of 2022, FDJ and Scientific Games, a leader in the supply of products, technology and services to lotteries, announced a partnership to market a range of phygital scratch cards. FDJ is the pioneer of these innovative games, which offer players who have won at the point of sale the opportunity to continue their digital gaming journey and increase their winning potential. FDJ has already launched three phygital games since 2019 and a fourth will be marketed in 2023.

Consolidated social commitments

In 2022, Moody’s ESG Solutions assigned the FDJ group an A1+ rating for the fourth consecutive year, with a score of 72/100, up 2 points compared to 2021.

In addition, the Group maintained its 100/100 rating for the third time on the “Pénicaud” index on gender equality. It is also one of the 5% of companies with the highest ratings by Ecovadis, with a score up to 71/100, and the maintenance of its Gold medal.

The Group pursues in particular:

The constant strengthening of its actions to prevent excessive gambling and underage gambling , to which it devoted nearly 15 million euros in 2022, with:
- More than 10% of the overall advertising budget is dedicated to responsible gaming, with new preventive information campaigns and a reinforced action plan before and during the Football World Cup. Since January 2023, the Group has also been rolling out a new campaign with Paris Saint-Germain (PSG) to increase the reach of its prevention messages and promote recreational sports betting;
- Controls at points of sale, in particular via mystery visits associated with a system of penalties in the event of non-compliance with the ban on sales to minors, which is unparalleled in France. In 2022, nearly 2,700 mystery visits were carried out, with around a hundred traders sanctioned by license suspensions;
- From 2023, a new commitment of 10 million euros over five years to support actions to prevent underage gambling is carried out by associations.

Its commitment to reducing its environmental impact and contributing to the preservation of biodiversity, with:
- The implementation of a new energy sobriety plan (buildings, digital, and travel);
- A partnership with the association Gestes Propres, aiming to broadcast an awareness campaign on the screens of points of sale encouraging the throwing of scratch tickets and game receipts in sorting bins;
- The relocation of a significant portion of the printing of the Group’s scratch tickets to Europe;
- A donation of 200,000 euros to the National Forestry Office via its “ONF – Agir pour la forêt” fund to contribute to the restoration of forests destroyed by the large-scale fires that affected French forests last summer.

Growth that Benefits all stakeholders

For the seventh consecutive year, the Economic Information and Forecasting Office (BDO-Bipe) assessed the economic and social contribution of the FDJ group in France.

In 2022, FDJ’s contribution to national wealth amounts to 6.5 billion euros or 0.25% of Gross Domestic Product (GDP);
In terms of jobs, the FDJ group has created or maintained 55,300 jobs in France through its activity, including 22,000 in the bar-tabac-press network.

FDJ’s growth benefits the national community and in particular Public Finance with more than 4.4 billion euros in overall contribution, including 4.1 billion euros in public levies on games, which benefit:

To the French heritage in danger. Thanks to the Mission Patrimoine lottery games, more than 26 million euros have been donated to the Heritage Foundation for the 2022 edition;
And to French sports, both professional and amateur, via the action of the National Sports Agency (ANS).

The creation of value by the FDJ group is shared between employees and shareholders, with:

Staff costs of 327 million euros, including a profit-sharing bonus representing 24% of payroll ^[5] ;
237 million euros in dividends for the 2021 financial year, which benefit in particular veterans’ associations, and historical shareholders, to finance their social actions and nearly 400,000 individual shareholders.

The economic impact of the company is significant, in particular in favor of:

Local trade, with 965 million euros in remuneration paid to its 30,000 retailers;
French suppliers, with 684 million euros of purchases, overwhelmingly from SMEs-ETIs, or nearly 90% of the total volume of purchases.

In addition, the FDJ Corporate Foundation, which will celebrate its 30th anniversary in 2023, is committed to promoting equal opportunities by supporting around a hundred projects per year throughout the country, with an allocation of 25 million euros. over five years (2023-2027).

2023 objectives

In line with the medium-term objectives presented at the Investor Day in November 2022, the Group’s 2023 objectives are:

An increase in turnover between +4% and +5%, on the basis of a 2022 financial year including the acquisitions of Aleda and L’Addition in a full year, i.e. 2,514 million euros;
Growth of around +20% in digital stakes [6] ;
A current EBITDA margin rate is maintained at around 24%.

At the same time, the Group will continue to develop its societal commitments, in particular in favor of the fight against underage gambling and excessive gambling.

2022 activity and results

Turnover of €2,461 million, up +9.1%, based on stakes of €20,618 million, up +8.7%

The Group’s stakes amounted to 20,618 million euros, up +8.7% compared to December 31, 2021. Business is up in all business lines, with revenue up by +11% for the lottery and +1% for competitive online sports betting and games, and on all sales channels, with stakes at +8% in the network and +16% in digital.

The share going to the winners amounted to 14,094 million euros (+8.7%), representing a stable rate of return to players (TRJ) at 68.4%. Gross gaming revenue (GGR = wagers – players’ winnings) amounted to 6,526 million euros (+8.7%).

The net income from games (PNJ = PBJ – public levies on games) constitutes the remuneration of the FDJ group on games. After 4,147 million euros in public levies (+8.7%), the NPC stands at 2,388 million euros (+8.5%).

After taking into account the income from other activities, in the amount of 73 million euros, the Group’s revenue amounted to 2,461 million euros, up +9.1% compared to 2021.

Current operating income of €459 million and current EBITDA of €590 million, i.e. a current EBITDA margin rate on sales of 24.0%, an improvement of 90 basis points compared to 23 .1% of 2021

The cost of sales amounted to 1,330 million euros (+7.9%). They consist of 965 million euros (+7.0%) of commissions paid to retailers, the evolution of which is correlated to that of sales outlets. The increase in other costs of sales, of +33 million euros (+10.1%), reflects the recovery of actions and commercial animations compared to 2021 when they had been temporarily reduced.

Marketing and communication costs include advertising and product design costs, as well as IT development and operating costs for games and services. They amounted to 461 million euros, an increase of +11.2% attributable to strategic investments to develop the offer, in particular digital (design and IT development of games, customer service, etc.), while advertising expenditure was stable at 1.5% of gross gaming revenue.

Administrative and general costs mainly include personnel and operating costs for central functions, as well as the costs of buildings and IT infrastructure. They are stable at 200 million euros.

The Group’s current operating income (COI) thus amounted to 459 million euros, up +16.8%.

Net depreciation charges were stable at 131 million euros.

Current EBITDA, current operating income restated for depreciation and amortization, amounted to 590 million euros, up +13.1%, i.e. a current EBITDA margin of 24.0%, up compared to 23.1% achieved in 2021.

Net income of 308 million euros, up +4.7%

In 2022, non-current operating income and expenses are -€10.4 million and mainly include costs related to external growth operations.

In 2021, non-current operating income and expenses amounted to -€1.5 million and mainly included:

A reversal of an unused provision following the final judgment of the Court of Cassation in favor of FDJ in the proceedings initiated by broker agents;
Impairment of assets related to Sporting Group.

Operating income amounted to €448.8 million, up +14.6% compared to €391.8 million recorded in 2021.

The change in the financial result (-28.7 million euros in 2022 compared to +20.8 million euros in 2021) is mainly explained by the decline in the financial markets, in contrast to their rebound in 2021, a year on which the Group had also benefited from significant capital gains on innovation funds.

The Group has invested in dedicated assets, whose underlying bonds mature in 2024 and/or 2025, when they will be repaid at their nominal value, these assets thus returning to their initial valuation.
Despite a difficult environment for technology stocks, the performance of the innovation funds in which FDJ has invested continues to be positive.

The tax charge amounted to 113.3 million euros, representing an effective rate of 27.0%.

Consolidated net income thus amounted to 307.9 million euros, up +4.7% compared to 294.2 million euros in 2021.

By activity

The Group’s organization is structured around three operating segments: two Business Units (BU), Lottery and competitive sports betting and online games, and diversification activities (International, Payment & Services, and Entertainment ) with cross-functional support functions (notably customer, distribution and information systems). In addition, the holding mainly groups the central costs.

The contribution margin is one of the main performance indicators for these segments. It is calculated as the difference between the revenue of the segments, the costs of sales (including retailer remuneration), and the marketing and communication costs (excluding depreciation) attributed to them.

Lottery

The lottery recorded a good performance, with revenue up +10.9% at 1,916 million euros, on the basis of stakes up +10.1%. This performance is attributable to both draw games and instant games.

The cost of sales amounted to 1,033 million euros (+8.9%) and mainly correspond to the remuneration of retailers.
Marketing and communication costs amounted to 174 million euros, up +9.7%, reflecting the development of the games and services offer, particularly digital.

The contributive margin for the lottery stands at 709 million euros, i.e. a contributive margin rate on turnover of 37.0%, up from 35.9% in 2021.

Competitive sports betting and online games

Revenue from competitive online sports betting and gaming amounted to €467 million, up +0.6% compared to 2021, based on wagers up +3.7% to 4,373 million euros. The rate of return to players stands at 77.7%, up from 77.1% in 2021, a level still below the regulatory maximum.

The quasi-stability of the cost of sales, at 235 million euros, mainly reflects the change in the remuneration of the network of points of sale.
Marketing and communication costs amounted to 115 million euros. Their increase of +5.2% is attributable to the development of supply.

The contributive margin for sports betting stands at 117 million euros, i.e. a contributive margin rate on turnover of 25.1%, compared to 26.1% in 2021.

Diversification

Diversification activities (International, Payment & Services, and Entertainment) recorded revenue of €78 million. Half of the increase of 14 million euros compared to 2021 is attributable to the consolidation over a few months of Aleda and L’Addition and, for the balance, to the internal development of the International and Payment & Services activities. The contribution margin of -20 million euros is attributable in particular to the activities in the United Kingdom for which measures have been taken to improve profitability.

Solid financial structure and available cash of close to 1 billion euros

The Group’s tangible and intangible investments reached €104 million, higher than the €76 million invested in 2021. They mainly concern the development of information and back-office systems, as well as socket terminals and point-of-sale games.

Acquisitions of securities, 95% of L’Addition and 100% of Aleda represented an amount of 43 million euros, taking into account the cash of the acquired companies.

The normalized change in operating working capital surplus (restated for calendar impacts and unclaimed prizes) comes to 59 million euros. Thus, based on the current EBITDA of €590 million, free cash flow [7] stands at €545 million, up from €495 million in 2021, with a conversion rate of current EBITDA into cash at 92%.

At the end of December 2022:

The Group’s shareholders’ equity amounted to 925 million euros out of a balance sheet total of 3,316 million euros;
Net cash surplus, one of the indicators representative of the Group’s net cash level, stood at 968 million euros, up from 916 million euros at the end of 2021, and FDJ has available cash [8] close to 1 billion euros.

Dividend

The FDJ Board of Directors, meeting on Tuesday, February 14, approved the Group’s 2022 accounts. He will propose to the general meeting of April 27, 2023 a dividend of 1.37 euros per share, up +10%, i.e. a distribution rate of 85%, the payment of which will take place on May 9, 2023.

The audit procedures on the consolidated accounts have been carried out. The certification report is in the process of being issued.

A financial presentation is available on the FDJ group website:

https://www.groupefdj.com/en/shareholders/financial-presentations.html

The 2022 consolidated financial statements are available, in French and in English, on the FDJ group website:

https://www.groupefdj.com/en/investors/financial-publications.html

SOURCE: FDJ group.