Banijay Group N.V. (BNJ) Earnings Call Transcript & Summary

Good evening. This is Caroline Cohen, Head of Investor Relations, and welcome to the full year 2022 results webcast for FL Entertainment. Before we start, let me draw your attention to the disclaimer on Slide 2. I also want to remind you that this presentation is available on the company's new website where a replay of this call will be accessible. Your speakers today are Francois Riahi, our CEO; and our CFO, Sophie Kurinckx. First, you will hear from Francois, who will talk through our key financial highlights for the year followed by a closer look at our 2 businesses. Sophie will then go through the financials in more detail before Francois provides some concluding remarks on our 2023 outlook. We will then open up the line for your questions. So let's get started. Over to you, Francois.

Thank you, Caroline, and welcome, everybody, especially pleased to be here to present to you our first annual results for the year 2022. And clearly, 2022 was an outstanding year for FL Entertainment. We delivered strong financial results in line with or above guidance by all metrics. We continue to profitably grow both our content production and distribution and online sports betting and gaming businesses, both of them grew by a double-digit growth. And we dramatically strengthened our financial position, fueled by our listing and capital increase and of course, our cash flow. So I call it a successful year. In 2022, we also demonstrated our ability to execute against the strategy presented at the listing and we made good progress in all of the areas listed here, and Sophie and I will spend the following minutes to drive you from -- through our results to demonstrate this. So on all our strategic initiatives, we are full speed and on track. Sophie will go in detail on our 2022 financial performance, but I would like to give some highlights. The clear trends are continued revenue growth, high profitability and cash generation. Revenues were up 16%, driven by the strong performance of both business lines. Adjusted EBITDA reached EUR 670 million against our EUR 645 million guidance. The cash flow conversion rate reached 83%, and this is a clear strength of our business model, again demonstrated in 2022. Our leverage metric of net financial debt over adjusted EBITDA sits at 3.1x at the low end of our guidance of 3% to 3.5% and down from 3.7% at the end of 2021. Given these results, cash flow and leverage, we are therefore pleased to propose a dividend of EUR 150 million, which represents EUR 0.36 per share. This represents also a 49% payout ratio, which is above our guidance of a minimum of 1/3 of our adjusted net income. Let me go -- give some highlights also on business achievements in 2022 because our 2 businesses made major steps forward in 2022. If I look at content production and distribution, 3 highlights: one, our catalog, which is already the largest in the world, has been growing -- was growing -- has grown in 2022 by 30%. So with 160,000 hours, it's now 18 years of programs, if you watch them 24 hours a day. It was 14 years in 2021. I think it gives an extent of the performance. This has been possible, of course, with the strength of our activity in 2022, but also through acquisitions. If you look at the second element, our revenues with OTT players, mainly streamers, increased by 61% in 2021. I think it clearly demonstrate what we are seeing that we are agnostic to the distribution of the content. Of course, we work in majority with traditional TV channels, but we work with all distributors of TV content and the demand of streamers being growing at a high speed. We see that we follow the trend, if it makes sense. The third element is the fact that we have done in 2022, 15 bolt-on acquisition in 10 geographies. Of course, it gives a sense that we are truly global, especially after the merge with Endemol in 2020. But also it's an illustration of what we said as a listing -- at the time of our listing. We are in an industry which is consolidating, and we are very well positioned to consolidate this industry. If I turn to online sports betting and gaming. In this business, what is the main driver of the activity is the number of players. And in terms of player acquisition, 2022 has been a very good year with an increase by 25%, I will come back to that. And of course, this has been fueled by a strong commercial performance during World Cup, which was a highlight of the year. The second element is that our app has been performing, which means our technology is being very well adopted by customers. We have been the second most downloaded sports betting app in Europe. And then the third element I would like to highlight is the fact that we are pursuing in 2022, also highest standards of responsible gaming, and in 2022, 97% -- 97% of our revenues were coming from locally regulated countries, which makes us one of the best in class in this category. One word about ESG. ESG is fully embedded in our business model. And we made significant strides in this process of embedding ESG at the art of our business model. More information on these important steps will be included in our first universal registration document that will be published next month. To highlight just a few key elements, in content production and distribution, Banijay is committed to ensuring a truly representative and inclusive workforce and set up its first dedicated Diversity & Inclusion Board in 2022. And from the online sport betting and gaming side, the focus is on ensuring the highest standards for safer gaming. I said it already, we have 97% of revenues from the highly regulated market, which is a very important strength of our model. So we will report on the progress of these key financial performance indicators annually in our URD, and this will also be assessed by an independent third party. Let's dive deeper into each business, looking at what is driving our 2022 performance and of course, will also fuel future performance. First, in content production and distribution, it was another stellar year for our high-quality IP with 2 legs: new shows with international pickup and returning shows, and we wanted to highlight also the strength of our Superbrands. So starting on the scripted side, SAS Rogue Heroes and Marie-Antoinette have been picked up widely across the world. We also delivered what is expected to be the final season of global phenomenon Peaky Blinders, which I know will be disappointing for some of us. There was a significant surge in demand from both audiences and broadcasters in 2022, and this show has now been sold to more than 180 countries. But it was also another successful year on the unscripted side, which accounted for over 75% of our production revenues, and has a profitable and derisked cost-plus pricing model. Today, I want to highlight our superbrand unscripted offer. This is a business powered by a rich library of IP with repeat business driven by our recognized brands and formats. So here, for example, top important shows of our catalog, MasterChef, Big Brother, Survivor, LEGO Masters, and Hunted. You can see that these shows are widely broadcasted over the world. I want to use Survivor, which once ranked the #1 reality show full time by Variety magazine as an example of the enduring appeal of this format. It's 25 years since Survivor debuted on Swedish TV. The U.S. version is going into its 44th season, the French version, it's 29th. While each version is unique to territory, this is a show beat around core values. And Survivor is stronger than ever. It will return to the U.K. in 2023 and have made a comeback in Brazil, Norway, Bulgaria and Romania. New versions will be produced in Mexico, Serbia and French-speaking Canada. So that's 21 territories for Survivor's 25th anniversary. Big Brother is in 33 territories. So we are talking about sustainable and evolving superbrands, which are and will continue to be in demand from both broadcasters and audience. We'll give you a few figures to show the strength of our business and the evolution of our market. And I think these shows are important because as you know we have been acquiring Endemol in 2020 -- 2020 and 2021 where COVID years, with some impact of COVID, 2022 is not. And I think it's a good year to feel the power of the new entity, which is Banijay with Endemol. We have -- we produced 216 new non-scripted shows in 2022 and 38 new scripted shows -- sorry, 67 new scripted shows. And I think you all know that we are the global leader for non-scripted. Maybe you know less that we are also the European leader for the scripted content with around 130 shows aired in 2022, and we are #1, I would say, far ahead of our competitors. So this -- on the other side, you see that returning shows account for 69% of production revenues and you also have a feel of the diversity of clients in our distribution business with over 1,000 clients in 250 territories. So I think what you can see is that on one side, matched creative capability with the capacity to air hundreds of new shows every year. And on the other side of the business, which has a very high level of recurrence with returning shows and diversity of clients. As we mentioned during our listing, an important element of our strategy is that there is a significant consolidation opportunity in the content industry. And as you know, we have a proven track record of completing value-accretive M&A. And 2022 was also important in this strategy. In 2022, we completed 15 bolt-on acquisitions, the majority of which were not competitive, thanks to strong industry relationships and our attractive business model. I will say that also for this acquisition, we have maintained fully our discipline in terms of financial policy, and it's also an important element of how we do our strategy for acquisitions. The companies acquired are well-known production companies across both non-scripted formats and scripted content. This create additions and reach our content, talent and geographical footprint and also our IP and catalogue. A quick spotlight on 2 of our 2022 deals. We completed the deal with Beyond, a leading Australian producer of media content with more than 8,000 hours of scripted and non-scripted English language content across multiple genres. So Beyond has been a part of the increase in our catalog. This deal also offers significant distribution synergies. And second example, we added Groenlandia Group, an Italian label with an outstanding reputation for films and TV series created for cinema, television and streamers that brings us new capacity for premium scripted content in Italy. Their show, The Law According to Lidia Poët, which is a biopic of Lidia Poët, who was the first Italian lawyer in the years [ 1880s ]. It made waves on Netflix as it holds the #3 spot for non-English-speaking series globally, racking up over 28 million hours viewed in its first week. So we are a natural and attractive home for independent production companies, and we will continue to target new opportunities, thanks to our robust pipeline. Now moving to our online sports betting and gaming activities. This is a business with a lean, highly profitable and cash-generative business model built on the state-of-the-art and scalable tech platform. Betclic has a clear attractiveness in terms of customer experience. And that's what we want to highlight here with these figures on downloading of our app, which I think are quite telling. So Betclic is the best -- the most downloaded sports betting app in our core markets of France, Poland and Portugal, and the second most downloaded across Europe. And during the football World Cup, our Betclic apps were even among the top 5 most downloaded apps of all types in those markets. In Portugal, we were even above Amazon or [indiscernible]. Attracting new players is the key to growth for our online sports betting business and major sporting events represent a significant driver of activity. The football World Cup in Q4 was a commercial and a technical success. It allowed us to capture new players and showcase the quality of our platform. The tournament represented 7.5% of Betclic's sports book stakes for the year. Total unique active players increased by almost 40% between September and December. This contributed to a 25% year-on-year increase in players in 2022. The platform performed exceptionally well from a technical standpoint, 0 app downtime. Clear capacity to handle high visitor numbers, peaking at over 1 million a day. All backed up by high performance in terms of settlement speed, anti-hack protection and effective financial flow management. And this is critical to attract and to retain players. It's also a way to improve your business because if you pay quicker the bets, the winning bets, then the money can come back on new bets quicker. Looking ahead, the priority is to capitalize on and retain this increased number of players. So that's all from me for now. I'll come back a little bit later. And let me now hand over to Sophie to go through the financials in more detail.

Thank you, Francois. So as Francois stated, 2022 was a very strong year, and we met or even exceeded guidance for all key indicators. As you can see in the slide, this performance means 2019 to 2022 compound annual growth rate of 9% for revenue and 30% for adjusted EBITDA. Let's start with group revenues. Up 13% at constant exchange rates to just over EUR 4 billion, driven by a solid growth across both business lines. The fourth quarter revenues were up 16% year-on-year, and we saw distinct trends between the 2 businesses. In the second half of the year, content production and distribution activities returned to a normalized seasonality, while online sports betting and gaming business recorded a strong pickup, particularly in Q4 2022, thanks to the football World Cup. Moving to profitability at FL Entertainment level on Slide 20. The adjusted EBITDA rose by 10% to just over EUR 670 million, reflecting our continued revenue growth and strict cost control. The margin was 16.6%, in line with 2021 and strong when we compare it to our peers. Moving now to the consolidated P&L, which shows EBITDA and net income, both on a reported and normalized basis. Normalized P&L highlights the performance without the impact of the reorganization and business combination. You can find an updated version of this bridge in the appendix, and we are happy, of course, to answer any questions you may have on this. LTIP and employment-related earnouts and option and [ put option ] expense of EUR 114.5 million related to the vesting of LTIPs and are related to both content production and distribution and online sports betting and gaming businesses. It also includes a component linked to past acquisitions. The cost of net debt amounted to EUR 143.8 million compared to EUR 135.8 million, the increase being due to the previously highlighted December 2021 financing at the online sports betting and gaming level that has been repaid in July 2022 and higher charges for content production and distribution due to currency effect on U.S. dollars. The tax charge for the year totaled EUR 77.3 million compared to EUR 49.2 million in 2021 and is mainly due to the change in country mix and the lower tax loss carryforward used in 2022. Let's move to results by business line, starting with content production and distribution, where revenue was up 16.5%. Production revenues and distribution revenues were up by a similar percentage 18% and 17%, respectively. In terms of key trends, 2022 saw a rise in scripted content as a percentage of overall activity. This reflects the post-COVID catch-up in production activity. And as highlighted by Francois, revenue from streamers grew by 61% to 18% overall, reflecting the continued evolution of the industry. Looking at content production and distribution earnings, next, where adjusted EBITDA was up 9%, driven by the revenue growth already highlighted as well as tight production control. This resulted in a margin environment with expectations for this business. Q4 2022 adjusted EBITDA was down 10%, reflecting the comparison to a very strong Q4 2021 in this business and it was the moment that the post-COVID catch-up sped up. Adjusted free cash flow rose by almost 10%, representing cash flow generation of 78%, in line with our guidance for 2022. As highlighted at the 9 months, the change in working capital seen here reflects the growth of the business and the return to normal production cycle seasonality, meaning a peak of activity in Q3 and deliveries mainly occurring in Q4. The increase in tax paid reflects a change in country mix, the increased activity seen in the period and the lower tax loss carryforward already mentioned. Moving to the online sports betting & gaming business, next, which recorded almost 13% revenue growth on a reported basis in 2022. As already highlighted, Q4 was a very strong quarter for business, thanks to the fruitful work here, with revenues up 36%. At constant exchange rates and excluding Bet-at-Home discontinued operations, revenue was up almost 20% in 2022, which is a very good year. In terms of profitability, online sports betting & gaming adjusted EBITDA was up almost 15%, thanks mainly to the revenue growth as well as the lean cost structure. CapEx remains low, reflecting the strong infrastructure and platform we already have in place, and that was highly effective during the World Cup. Adjusted free cash flow was at 18% with a record adjusted free cash flow generation of 94.5%. The positive change in working capital that you could see this year is linked to the taxes related to bets done during the World Cup that have to be paid in January 2023. On Slide 26, we look at FL Entertainment's strong cash flow generation. Adjusted free cash flow, which is adjusted EBITDA minus CapEx and lease payments reached EUR 555 million. This was driven by the business performance as well as the tight control of cash expense and CapEx. This resulted in a cash conversion rate of 83%, in line with guidance. Adjusted for changes in working capital and income tax paid, our adjusted operating free cash flow was EUR 495 million. On Slide 27, you can see the group's solid financial position and decreased leverage. Net financial debt declined by EUR 178 million, reflecting the robust business performance over the year. This decrease came from an increase in adjusted free cash flows over the period and cash proceeds received following the transaction, which are the gray bars in this chart. This was partly offset by LTIP paid and exceptional items as well as acquisitions and interest recognized during the year in pink in this chart. Our overall leverage decreased from 3.7x at year-end 2021 to 3.1x at the end of 2022. This is at the low end of our 3 to 3.5x guidance. As a reminder, we have mainly fixed rate debt with no maturities before 2025. We benefit from a strong cash position as well as a significant undrawn secured credit line. And we have a healthy credit rating. In September, S&P upgraded Banijay to B+ and in the last week, Fitch also upgraded Banijay to B+. All of this puts us in a very strong position. And as our business continues to grow, we expect leverage to [ decrease ] further. So to conclude our financial section. Thanks to our strong cash generation, our low CapEx requirements, our solid financial position and decreased leverage, we are in a position to propose a dividend of EUR 0.36 per share. This represents a 49% payout ratio calculated on adjusted net income, which is above our commitments. Subject to approval of the Annual General Meeting on June 15, 2023, it will be paid fully in cash before the end of June. That's all from me. I will now hand back to Francois for some concluding remarks.

Thank you, Sophie. I won't be long, but I think it's important to talk about our 2023 outlook. The momentum of our 2 businesses will remain strong this year. And we have a clear reset of priorities to ensure that we remain in full position in this structurally growing markets. In content production and distribution, we'll maintain our focus on scripted and unscripted opportunities from new content and our rich content catalog and continue to meet our client needs, and we see our non-scripted offer of powerful superbrands as particularly well suited to the requirements in the current economic climate. For online sports betting & gaming, we told you we are confident about Betclic's ability to use the football World Cup to attract players and we delivered this. We are also confident about our ability to retain them, thanks to the quality of our platform, and our goal is to capitalize on increased player numbers generated in 2022 to drive increased betting volumes. The strength of our business activities will ensure we maintain our strong focus on cash generation as well as our strict capital allocation and financial disciple, which ensures we remain agile and ready to capture M&A opportunities when they are in line with this financial discipline and create value. So on financial objectives for 2023, they are fully aligned with our midterm guidance that we fully reconfirm. In 2023, this means mid-single-digit organic revenue growth for content production and distribution, double-digit organic revenue growth for online sports betting & gaming, resulting in adjusted EBITDA in the region of EUR 710 million, while maintaining the same guidance than in 2022 in terms of cash conversion and also our dividend policy. In conclusion, FLE is a business with leading position in attractive and growing segment of the entertainment industry. I think 2 characteristics, the business model of profitable growth at scale and with strong positions of leadership -- leadership position in attractive businesses. In 2022, our first year as a listed company, even our 6 first months as a listed company, that demonstrated our ability to deliver profitable growth at scale. And we will maintain our momentum in 2023 and beyond in line with our midterm outlook. We are also firmly committed to maintain the excellent progress in our ESG journey in 2022. Thank you for your attention, and back to you, Caroline.

Thank you, Francois. [Operator Instructions] And I now hand over to the operator, Sandra.

[Operator Instructions] We will now take the first question. It comes from the line of Aaron Watts from Deutsche Bank.

I had a few questions. I guess, first, on the content side, what were the key drivers of the outperformance in the fourth quarter on revenue and EBITDA relative to your guidance? And were there any timing factors or pull forward from 2023 that may have benefited the period? Secondly, also on the content side, can you please talk about the current demand environment, given the uncertain macro backdrop combined with some content spending strategy shifts among streaming providers, perhaps you can comment on the pipeline today relative to prior years at the same point. And then are you seeing any pushback on pricing from broadcasters or streamers that may impact margins on the content side this year. Do you see those content margins as being relatively stable in line with your midterm outlook, or this year we might see some pressure because of those factors. And if I could sneak one last one in, a quick one. You had talked about exploring financing options, including our convertible bond financing. I was just wondering if there was any update there?

Thank you, Aaron. That's a lot of questions. But of course, very relevant. I start maybe with the last one. No, there's no update to be given on the financing. We are very opportunistic and ready to use every opportunity -- attractive opportunity we can see in the market. On what drives the strong performance of the content production and distribution in 2023? I think there are several things to underline. First, I would say that there's still in 2022, a little bit of catch-up of COVID because there were productions that were delayed during COVID, especially scripted production. And so we see in 2022 a level of scripted shows in our production, which is above 2021, clearly, and above our average at -- it's 24% of our production revenues is coming from scripted -- it was 21%, I think, in 2021. And this is, for example, also the consequence of some shows delayed during COVID and then we have large scripted shows, which have been aired in 2022, the same year, Peaky Blinders, Marie-Antoinette, SAS Rogue Heroes, part of this is also the fact that some have been postponed during COVID. I think the second element was business performance and also the result of the acquisitions we have been making, which have also fueled the growth. That's the 3 -- the 3 components. On your second question, well, clearly, probably 2023, we won't see the increase in content demand globally compared to previous years, where it was evolving very quickly. It will still increase, but just a good element to underline. And we consider that our offer is well positioned to do better than the market. As on one side, of course, you have a flight to quality. We think we have a quality programs, strong brands that will be key in this context. And two, we see some streamers that were the one fueling the most increase that are more cautious about the cost of their grid. And we see that these streamers are increasing what they do in terms of non-scripted because of that, because an unscripted program costs less to produce than scripted. So being the global leader of non-scripted, we see it also as an opportunity for us. So that's why we maintain the same level of guidance on our organic growth in 2023 than what we gave as in our outlook. On the third question, again, we maintain our guidance on margins. Yes, inflationary context can be -- can lead to more difficult discussions with our clients, that makes sense. This -- but you have to take -- to keep in mind that we are a cost-plus model. So this is the base of our business. Now it means also that we will need to be more cost efficient in our production because our clients, of course, will be cautious about the cost. But again, we feel comfortable with the guidance we give. And our margin can oscillate year-on-year around long-term average, but we feel confident about it. And I'm sorry, I missed one part of your question. Clearly, I can tell you very clearly, if I understand well your question that we have not at all brought forward some revenues in 2022 that could have been made in 2023, not at all.

We will now take the next question. One moment, please. It comes from the line of Conor O'Shea from Kepler Cheuvreux.

Three questions, please. Just the first question. Can you give us a sense on what the boost to Betclic revenues or EBITDA was from the FIFA World Cup in Q4? And maybe you could compare that with the event schedule on major sporting events for 2023. I guess the Rugby World Cup in France and so on. Just -- what the drag there might be this year versus last year? Then second question on the restructuring costs. Could you give us a sense of roughly what proportion of the EUR 127 million was in each division? And if I have the same question for the LTIP, if possible, by division, and also the outlook for 2023, I had in mind, maybe I was being correct about this that it was around should -- was expected to be about 10% of EBITDA. But I think for last year was more above 20%. So just wondering what kind of ratio should we look at going forward?

Okay. Thank you very much. I'll take the first question, and give it to Sophie for the second question. So on your first question, on World Cup, we are not going to give some figures, but qualitatively, let me state it like that. The World Cup has been very important in terms of player acquisition. These players in a way have been acquired in November and December, basically during the World Cup. So in fact, the effect of these new players on the revenues has not been so strong in 2022. I would add that the World Cup -- the margin during the World Cup was not very high, given the fact that France went to final and Mbappé scored so many goals, which, of course, I was very happy about. But it means that in a way -- we have -- one of our core markets is France and people have bet massively on France. So I think that -- the figures are not good on revenue and EBITDA for World Cup. But and they -- we managed to reach all our targets and even better. But for us, the acquisition of players during World Cup will pay off in 2023 and in the years beyond, if we manage to keep these players, and that's what we want to do. So the Rugby World Cup in 2023 will not be a major event for us because Rugby is a minor sports in terms of sports betting. So 3 main sports are football, which is by far the most important; tennis and Basket Ball. But Rugby, maybe, of course, we have some bets on the World Cup in France, but it's not comparable to the World Cup. So to make a long story short, I would say, the impact of World Cup in our figures will be more in 2023, even if we had, I would say, a good commercial success during this World Cup. And so we -- let's say, we were on -- in line or even above our hopes and expectations on World Cup in 2022. I hope it answers your question.

Absolutely.

Sophie, if you want to...

Yes. So on the restructuring costs of EUR 127 million, in fact, the main part is coming from the holding for a little bit more than [ 100 million ] and it's clearly linked to the listing fees that we already discussed in the past, as we -- well, the fact that we have merged with the SPAC has been considered under IFRS as a service [ founded ] by the SPAC and had to be booked as an expense. And it's also the remaining part is the fees that we have incurred for the transactions that we have done regarding the listing of the company. So it's mainly linked to this.

So none in 2023. Very little? Okay.

Yes. And in terms of LTIP by division. So what is important to note is that in this amount, first, you have a one-off that we already discussed of EUR 33 million that is linked to the reorganization of the group. And in addition to that, we have some specific expenses that are linked to the acquisitions as a part of the put option and earnout payments have to be considered as a compensation even if we consider this is part of the acquisition price. And this is here for an amount of a little bit more than EUR 20 million. And then the remaining part are linked to the Banijay and Betclic LTIP. It's a little bit more than 10%, you're right. But on an average basis of the remaining period of this LTIP -- this guidance of 10% will stay, and we keep this on an average basis.

We will now take the next question. It comes from the line of Aaiza Ali from Barings.

Mine is just to check how you're thinking about the capital structure here given the debt will go current within 12 months? How are you considering potential refinancing when you start having those conversations, what your thoughts are there? That would be really helpful.

I'm really sorry, but we don't hear you very well. Could you repeat, please?

The question is about your debt. [ Debt of ] Banijay, when you're going to be looking at potentially engaging in the refinancing there and what your thoughts are around that?

In fact, we are quite opportunistic and we could, from time to time and depending on the market condition seeks to extend the maturity or to refinance this debt, but today, we don't give more information about it.

Sorry, I don't know whether that was just me, but the audio was quite bad. Could you repeat that, sorry.

Banijay could from time to time and depending on the market conditions, seek to extend the maturity or to refinance all or part of its debt but today we don't give more information about this. We are very opportunistic in our way to approach this, and we will see.

We will now take the next question. It comes from the line of Frauke Wolkewitz from ODDO BHF.

I hope you can hear me well. First of all, you have been saying that you have a healthy cash position. So what are you going to -- or what are you planning to do with this healthy cash position? And in this context, again, what are your M&A targets for 2023, anything big on the table or it only bolt-on? And the third question is about a potential CapEx guidance for 2023. Will it be in the range of financial year 2022?

Thank you for your questions. I start and Sophie will follow. On what are we going to do with our cash? That's a good question. First, we are going to distribute a dividend of EUR 150 million to start with, it will -- we will remain in a healthy cash position after that. Of course, that's why we do that. And of course, as you said, we want to continue to seize opportunities on M&A. So of course, we are looking at opportunities, especially in the production and content production business. It's really a part of the business model. We will continue to have bolt-on acquisitions, of course, because that's a part of our development in all our territories. And it makes sense for independent producers to join Banijay because it gives them the advantages of the scale without the drawbacks of the large corporate. And but now that's -- we have a pipeline in every country as targets, of course. After that, about transformative deals, that's things you cannot plan. And if there are opportunities, of course, we will look at that. Sophie, about the CapEx, maybe.

For the CapEx, we will stay in the same kind of amount that in 2022 in both businesses, we don't plan to increase the CapEx expense or the CapEx.

We will now take the next question. It comes from the line of Heidi Zhou from Rothschild.

I was just wondering, given the recent events surrounding Credit Suisse, if the group had any exposure to the bank.

Usually banks are asked whether they have exposure to counterparties but a little bit new. No, we don't have exposure to Credit Suisse or Silicon Valley Bank or Signature Bank. Not at all.

There are no more questions on the phone lines at the moment.

Sorry, operator. We have one question on the webcast. So the question is related to the update, whether we can make an update on the Q4 production activity and what was driving the very good organic growth from Q4? And is that a seasonal effect? Or should Q1 be good as well. And then in terms of M&A, what we are looking for.

M&A, I think, I answered. We are looking at being truly global as we are and present on every segment of the content production and distribution. We are looking at everything basically. But again, we will remain very disciplined. We don't see any point in acquiring companies at a price where it would be difficult to create value and that's an important driver, and we will complement our offer as we did. On Q4, Sophie, do you want to comment?

Well, at least in the production, this is the seasonality that drives the growth of this quarter -- sorry. Well, Q4 used to be in both businesses, a strong quarter. In production, this is the moment where we have to fill the grids of our clients. So this is the beginning of the season for all the linear broadcaster. And so that's why we need to deliver the content they need. And this is why Q4 is a high quarter for this projection. On the online sports betting & gaming, this is also a strong quarter, specifically in 2022 linked to the World Cup, but it's also the case without any World Cup because this is when all the matches are -- all the football leagues are doing -- are running, sorry. So this is also a very, very strong quarter after the summer, the players are coming back and bet again.

We've got another question on the telephone. It comes from the line of Mathieu Rescanieres from CVC.

I had a question on the fourth quarter EBITDA. You mentioned tough comp for the slight decline. But at the same time, revenue was increasing significantly. So maybe can you expand a little bit on that?

On Q4, let's have the figure. Yes. So actually difficult to -- because on a specific quarter, we are not providing visibility on margins at the quarter level. It can be a mix, for example, of the mix between scripted and unscripted because when you look at our margin in Banijay, again, on the long run, it's very stable and oscillating around the trend. But it also depends on what we do in terms of business. We have 2 different type of products, scripted and non-scripted, and 2 different type of businesses, production and distribution. They don't have all the same margin. And so a change in the mix between these 4 elements can create some variation on the margin. And for example, if you deliver large scripted shows in the quarter, your margin on this specific quarter can be lower than on the other quarters.

And what is important also to note is that, in fact, in Q4 2021, we were still in the catch-up of the COVID period. So that means that as our clients need more -- well, need content, we have been able to distribute the catalogue. So that means that the revenue coming from the catalogue to the distribution revenue represented a higher proportion of our total revenue in Q4 compared to the production. Now in Q4 2022, we are back to the normal level of business. And in fact, the distribution path decrease proportionally in our global revenue. And you should know that the margin made on the distribution is higher than the margin made in the production. So that's why you have this impact of an increase of the content production and distribution revenues by 14%, an increase yet -- and a decrease of the adjusted EBITDA. In online sports betting & gaming, in the Q4 -- in the Q4, we have an increase of 34% of the revenues versus an increase of the adjusted EBITDA of 69% -- of 69%, sorry. Of course, it's more or less in line with -- the growth of the EBITDA is more or less in line with the growth of the revenue. Despite the fact that -- in terms of marketing, we have made some investments, but you have to know that the sports betting is -- the online sports betting business is a cost fixed business. So when you increase more the revenue, it means that you don't need to increase as much the cost basis. So that's why you have with a small discrepancy in the other way around than the production business.

Also maybe something to add also just on the sports betting business. It's something that we highlighted several times is that you can have some volatility in the sports results. That's what I was mentioning for the World Cup about what France has accomplished during the World Cup has an impact on the margin. It has been the same for Portugal, for example. But -- so we cannot have a stable margin every quarter. There is some volatility in the margin. It can happen that in the quarter the margin is lower, the quarter the margin is higher, given the sports results. And it's about probability and the [ law ] of large numbers at the end of the day. It is averaged by probability and statistics. So you can have some volatility on the margin. I think it's important to have this in mind. For the moment, I would say, in our figures, it's not highly visible. We don't have -- we didn't have to stress this point based on a special situation, but we know it can happen that our margin is especially high or especially low any given quarter.

There are no more questions on the phone lines at the moment. I would like to hand back over to Francois Riahi for final remarks.

Thank you very much for having joined this call. And I hope you felt like we do that 2022 has demonstrated the strength, the power of our business model and the capacity to maintain profitable growth at scale for our 2 businesses. I think they expressed also the fact that we are very significant leaders in global industries that are growing, and it's not a bad place to be. Thank you very much, and have a good evening.