Positive outlook for 2020
Profitable growth momentum set to continue in the run up to 2025  

  • Stakes up by 8% and revenue up by 7 at the end of September 2019
    • Forecast for 2019: stakes up by over 7%, to approximately € 16.9 billion, revenue of approximately € 1.9 billion and EBITDA of approximately € 325 million.
  • Positive outlook for 20201
    • Revenue up by around 5% over the year
    • An EBITDA margin in line with that of 2019
  • Profitable growth momentum set to continue in the run up to 2025
    • Over 2020-2025, average annual growth in sales and revenue at the upper end of the + 3% / + 4% range.
    • 2025 EBITDA margin of over 20%.

BOULOGNE, France– (BUSINESS WIRE) -Stéphane Pallez, Chairwoman and CEO of FDJ Group said: "The positive momentum recorded by FDJ since the start of the year has been confirmed in the third quarter. Continuous increase in revenue and stakes across the segments of confirms the favorable outlook and that the group is on track to meet its objectives for 2019. FDJ benefits from a new, stable regulatory framework, granting 25-year exclusive rights over Lottery, and Sports Betting at points of sale. Combined with the strength of our business model, this gives us confidence in this momentum in 2020 and up to 2025. "

Sustained growth in the 3rd quarter of 2019, in line with annual targets

  • Revenue up 7% at the end of September

At the end of September 2019, stakes amounted to € 12.54 billion, up 8% compared with the first nine months of 2018. The positive performance recorded in the 1st half (up 7%) continued in the 3rd quarter (up 9%, to € 4.12 billion).

Over the first nine months of 2019, prizes of € 8.52 billion were paid out, an 8% increase, hence a player payout ratio of 68% vs. 67.8% over the same period in 2018, and 68.4% in the 1st half of this year. The increase in player payout ratio was attributable to changes in the product mix, owing to the strong performance of sports betting and growth in instant games.

On this basis, FDJ's gross gaming revenue (GGR = stakes - prizes) was up 7% to € 4.02 billion. FDJ's contribution to public finances was up 8% to € 2.63 billion.

Net gaming revenue (NGR = GGR - contribution to public finances) was € 1.40 billion, ie 11.2% of stakes, stable vs. the end of June 2019 and the end of September 2018.

25 million, FDJ Group total revenue

  • Stakes up 8 at the end of September and 9% in the 3rd quarter
    • Loto and Euromillions combined stakes up 10% in the 3rd quarter thanks to exceptional jackpots

At the end of September, Lottery stakes were up 6% to € 9.98 billion, a slight acceleration vs. the end of June, two in the exceptional performance of draw games, including Loto and Euromillions (up 2 at the end of September and up 10% in the 3rd quarter alone for these two games together).

Overall, at the end of September, growth was being driven by:

- Draw games, up 5% to € 3.97 billion, benefiting from many long cycles2, 16 in total at the end of September 2019 vs. 13 over the same period in 2018. At the end of September 2019, Loto had 9 long cycles, the most recent of which paid out € 20 million. Over the same period, Euromillions had 7 long cycles, including a "record" that started at the end of September, reached the maximum payout capped at € 190 million. In the 3rd quarter alone, these two games accounted for 20% of Group stakes;

- Instant games, up 8% to € 6.02 billion, with a rich flow of new games (ten launches / relaunches since the start of the year). The increase in stakes is mostly two to new, mainly one-off, games and is concentrated on the 5-15 category (up 10% at the end of September);

- Online gaming confirmed its strong growth momentum (+ 27%), driven by product range extension and mobile usage.

  • Sports Betting up 14%

At the end of September 2019, Parions Sport stakes were up 14%, to € 2.56 billion, with three sports notably driving this momentum: tennis, football and basketball.

In an ever-buoyant market, despite less favorable events vs. 2018, Parions Sport En Ligne (online) and Parions Sport Point de Vente (at point of sale) continue to perform well, thanks to an enriched product range and attractive betting odds.

  • Significant increase in digitalised stakes: + 38%

Digitalised stakes continued to increase significantly, up 38% to € 2.41 at the end of September 2019, representing almost 20% of the Group's stakes. This is driven by the development of online games and digitalisation of stakes in points of sale, particularly for sports betting.

  • Dynamic points of sale network: stakes up 6%

Stakes in the steady 30,000 + points of sale network stood at € 11.77 at the end of September, up 6% compared with the same period in 2018.

Forecasts for 2019 and 20203

  • Player stakes up by over 7% in 2019

FDJ expects to record stakes of around € 16.9 billion for the full

The Group also expects revenue of around € 1.9 billion. With adjusted revenue4 of € 2 billion:

- Lottery should generate revenue in excess of € 1.55 billion;

- Sports Betting should generate revenue of around € 370 million;

- Revenues from other activities should amount to around € 50 million, including the integration of Sporting Groups over the whole financial year.

Group EBITDA, excluding costs related to FDJ's privatization and IPO, is expected to reach € 325 million vs. € 319 million in 2018

  • Positive outlook for 2020

For 2020, the Group is targeting growth in the upper end of the + 4% / + 5% range, benefiting in the particular from the UEFA Euro 2020 football tournament, as well as growth in revenue of around 5% like-for-like4 with c. + 5% for Lottery and c. + 6% for Sports Betting. EBITDA margin should be in line with that of 2019 on an adjusted basis4 (ie 19%).

Outlook: profitable growth momentum set to continue in the run up to 2025

FDJ has established its 2025 strategic plan by taking into account 1) validation for 25 years of its exclusive rights over Lottery, and Sports Betting at points of sale, and 2) the new tax regime and regulatory framework. This plan leverages the momentum with the 2020 strategic plan, particularly in terms of digitalisation and international development.

Over 2020-2025, FDJ is targeting an average of 3% and 4%, aiming for the upper end of this range. In terms of revenue, Sports Betting should grow at a faster rate than Lottery, while other activities, notably International B2B and Payment & Services at points of sale, should contribute to sustain growth.

By 2025, EBITDA margin should be in excess of 20%, excluding external growth

Over 2020-2025, FDJ expects total investments of € 600 million, excluding external growth. These are expected to increase gradually every year. EBITDA to cash flow conversion should be maintained at c.80%, in line with trends observed in the past. Finally, FDJ aims for a dividend payout ratio of 80%, subject to shareholders' approval at the Annual General Meeting. 2020 should be in line with that paid for 2019.

About Française des Jeux (FDJ) Group

FDJ is the historical and unique Lottery operator in France, #2 in Europe and #4 worldwide. FDJ is also the main Sports Betting operator in France. FDJ offers more than 85 games, lottery - draw - based games (Loto, Euromillions) and scratch - card games (Millionnaire, Astro, Vegas, Cash) - and sports betting (Parions Sport), at points of sale and on line.

FDJ's performance is driven by a portfolio of iconic brands, the #1 proximity network in France, a growth market, investments, and an innovation strategy to make its offering more attractive with an enhanced gaming experience.

In 2018, for 25 million players, with more than 30,000 points of sale and 2,200 employees, FDJ collected € 15.8 bn in player stakes, 15% of which were digital. It distributed € 10.7 bn to its players, contributed € 3.5 bn to public finance, and paid its retailer € 0.8 bn.

Appendix

1. Breakdown of player stakes *

In billions of Euros

Stakes 9m 2019

Stakes 9m 2018

Change

FDJ total

12.54

11.64

+ 8 %

Lottery

9.98

9.39

+ 6 %

Instant games **

6.02

5.59

+ 8 %

Draw games

3.97

3.79

+ 5 %

Sports Betting

2.56

2.25

+ 14 %

 

Digitalised stakes ***

2.41

1.74

38%

Offline distribution network stakes

11.77

11.07

+ 6 %

Unaudited figures
* Stakes are the wagered by players and do not constitute FDJ Group revenue.
** Mainly scratch games (online and at points of sale).
*** Digitalised stakes comprise stakes placed online and dematerialized stakes at points of sale, ie using a digital service / app for their preparation before being registered at point of sale.

2. From stakes to revenue

In billions of Euros

9m 2019

9m 2018

Change

Player stakes

12.54

11.64

8%

Prizes won

8.52

7.89

8%

Payout ratio

68.0%

67.8%

 

Gross gaming revenue *

4.02

3.74

7%

GGR as a% of player stakes

32.0%

32.2%

 

Net gaming revenue **

1.39

1.31

6%

NGR as a% of player stakes

11.1%

11.2%

 

Revenue ***

1.42

1.33

7%

Unaudited figures
* Gross gaming revenue: stakes minus prizes.
** Net gaming revenue: gross gaming revenue minus contribution to public finances.
*** Revenue: net gaming revenue plus revenue from other activities.

3. Divisional breakdown contribution margin by Business Unit (BU)

Since 1 January 2019, the Group has adopted a new organization that revolves mainly around two business units: Lottery and Sports Betting. For each of these, contribution margin revenue minus cost of sales and marketing & communication expenses (excluding D&A depreciation & amortization) is shown below.

In millions of Euros

2018

 

Lottery BU

Sports
Betting BU

Others &
holding

Total before
GIVES

GIVES

Group total

Player stakes

12,770

3,047

15,817

15,817

Gross gaming revenue

4,372

748

5,120

5,120

Net gaming revenue

1,477

297

1,774

1,774

Revenue

1,482

297

23

1,803

1,803

Cost of sales *

874€

192€

2€

1,067€

33€

1,100€

Marketing & communication expenses **

132€

82€

48€

262€

15€

277€

Contribution margin

476

24

27€

474

49€

425

General & administrative expenses

159€

159€

15€

174€

EBITDA

 

315

Depreciation & amortization (D&A)

64€

EBIT

 

251

* Costs of sales to the distribution and sale of games, plus the related back-office functions. They essentially comprise, in order of importance: costs related to the point of sale.
** Marketing and communication expenses comprise, in order of importance: costs for services and advertising, advertising and customer service teams, of offers and services.


12019 adjusted for: (i) full-year integration of the 2019, and (ii) full-year impact of the new tax regime January 2020.
2Unwon jackpots are cumulative - starting at € 8 million for Lotus and € 75 million for Euromillions, thus offering increasingly larger jackpots.
3 Subject to the validation of the tax regime
4 Adjustments include:
- integration of Sporting Group, acquired in May 2019, over the whole financial year, representing a positive impact of € 15 million;
- full-year impact of the new tax regime based on gross gaming revenue (GGR) applicable as from 01 January 2020. The c. € 50m positive impact on revenue represents the elimination of allocations to counterparty funds (requiring a new insurance policy to cover these risks)
In 2018, the new tax regime would have had € 50m positive impact on FY revenue.

Contacts

Quentin Dussart
Phone : +33 (0)1 41 10 33 82
servicedepresse@lfdj.com

Source BUSINESS WIRE