FDJ United (FDJU) Earnings Call Transcript & Summary

Hello, everybody. So welcome to this presentation of our 2024 annual results. So I will be, this morning, presenting the results, of course, with Pascal Chaffard that will be on my side. So we are holding this meeting in person and as a webcast, of course, to allow our analyst investors who follow our PR and trying to attend or connect to their 9:30 a.m. U.K. time presentation. So you will be -- I'm not commenting the disclaimer, as you imagine. So as you have maybe seen from the little videos that we projected. We are today FDJ United. We've actually announced our new identity. Our new identity, of course, which is the mark of a new chapter in the group history, an international diversified group, a digital group with the acquisition of Kindred last year. And of course, we'll come back to that. So I will start -- before handing to Pascal that will detail the financial results of this year, I will start on the key highlights of 2024, which are illustrating the successful implementation of our profitable and sustainable growth strategy. And then I will come back for conclusion and for, of course, Q&A. So let's talk about 2024 key highlights. Of course, as you might imagine, the key highlights of this year has been, of course, the acquisition of Kindred. And as a result, the constitution of FDJ United as a new group, a balanced group, a group which is more diversified, both geographically, in terms of activities, in terms of channels. So a complete new group that is there today. So as you remember, in January 2024, we announced that we intended to launch the takeover of Kindred that was launched in February. We took full control more than 90% in October of 2024. And in January 2025, we completely finalized this acquisition in financial and legal terms. To finance this acquisition, this 2024 year was also the first year that the group ever issued a bond on the market, EUR 1.5 eurobond. It was also a great achievement and success for us. And in 2024, Kindred, but of course, now we'll talk about FDJ United has posted results completely in line with the expectations that we had when we launched this offer. That is to say, in the scope of activity that we retain, of course, without unregulated market, EUR 918 million revenue, mid-single-digit growth with a current EBITDA of EUR 223 million, which is roughly what we projected when we decided to launch this operation. Since we took control mid-October of this year, we, of course, have been working hard on the integration of Kindred, and we'll come back to that. It is well underway. Another, of course, important feature of this year that has been long awaited by us and by our analysts and investors has been the conclusion of the investigation opened by the European Commission into the question of the rights or the amount of the equation payment that we paid to secure our exclusive rights. As you know, this came to a conclusion in October -- end of October of this year. And the important conclusion is that there was no state aid. And of course, this was important. It's important for the legal security of this scheme both for us and the French state, and there was a little adjustment of the payment under a fourth method of calculation. I won't go into details, but we might answer to that, which means that we will pay an additional EUR 97 million, which is already taken into account in our accounts. So something that I think is a good result for this and, of course, does close this uncertainty about the risk that we had on this side. It definitely confirms the robustness of the scheme under which we operate today. And I think that's also a major achievement for us and, of course, our major shareholder today, the French state. So of course, 2024, just to remind you because as some people say, it was an absolutely amazing event. And of course, we did participate in this event in the way we like to participate, which is to have a team of champions. Those 32 athletes we did not only did that, but that's one of the things I wanted to remind. We had 32 athletes selected, 25 medals. So a lot of people were on the podium. So we like to support champion. We like to be a champion. We want to be a European champion in the gaming industry. So key highlights for 2024 to illustrate our good performance. First, I will talk about reported figures, so including Kindred from October 11. Turnover of EUR 3,065 million, increase of 17%. Excluding Kindred, the increase in turnover was 10% and 8% for our gaming activities in France. So strong growth in 2024 by all means. Recurring EBITDA of EUR 792 million, up 21%, a margin of 25.8%. Based on an adjusted net income of EUR 490 million, up 13%, we will be able to propose a dividend of EUR 2.05 to our general assembly meeting on May '22. It will mean actually, given the number of shares at this point, an increase of 15% of the dividend. A payout ratio of 77%, and it confirms our trust in the future of our model as we see it today. Of course, pro forma with Kindred consolidated from January 2024, if you want now to have a base to compare 2025, our revenue would have been EUR 3.788 billion, with recurring EBITDA EUR 964 million, a margin of 25.5%. I want also to highlight that, of course, this year, and you know that we've been issuing these bond issues. So of course, we also come with now new and even more important financial KPIs that actually are the same, are within the one that, of course, we announced, well in line actually. So a very high level of financial strength for our company this year. Current EBITDA to cash conversion, which is above 80% with 85%. And net financial debt at the end of the financial year, which is EUR 1.818 billion, a change, of course, from the surplus that we had 1 year ago, which, of course, goes with the acquisition of Kindred, which actually give a leverage ratio, which is under the ratio that we have set as a ceiling or a target as you may see it. So we're actually at 1.9x on financial debt to EBITDA -- to recurring EBITDA, which is, I think, also a very positive news and goes perfectly into our trajectory. Our long-term credit is rated by Moody's at Baa1 with a stable outlook. So good news on this side, too. And again, this is completely in our plan. So at the same time, of course, and you know that it's a very important part of our strategy and our values. We continued to invest in our sustainable commitments. We commit, of course, into responsible gaming. We devote actually more than 10% of our advertising budget to responsible gaming in terms of campaign and promotion. We act also directly to our clients with almost 20,000 awareness raising calls to our clients, which are at risk. So this is also very operational and concrete things that we do for our players. And of course, this has increased compared to previous year. This is something that we definitely do more and more. The effectiveness of those measures is demonstrated by the KPIs that we are setting to ourselves in terms of percentage of high-risk players in our games. For instance, in France, we have set KPIs of being under 2% for online gaming revenue, and we're actually at 1% so well under control. And we also have the equivalent KPI on Kindred's turnover side with the number of high-risk players actually reducing by 0.2 points to 3%. In addition, and that's also part of what we do, we invest for positive impact. We invest for positive impact in, for instance, national heritage and environment through the dedicated games that we have and that are collecting revenues for those cos. And we add to that number of sponsorship that we finance directly. So this is also a long-term commitment. We also continue -- and this is next slide. Thank you. We continue, as we did for the -- actually the last 9 years, we continued to measure our impact on the French economy at this point. We'll see whether we can extend that more largely in our new perimeter. So we've been publishing a study that is made on an annual basis by an independent body, which measures our contribution to GDP 0.25%. Our impact and contribution to the budget, the French budget, EUR 4.7 billion this year. It has also been increasing since last year and actually since the IPO. So it's also part of what we are proud of. We have created the equivalent or permit the equivalent of more than 57,000 jobs on the French territory. And of course, almost half of this being in our retail network. And we have been distributing to those retailers actually close to EUR 1 billion last year, so 29,000 retailers on the whole French territory, which have been, I think, which had the positive impact of our activity. And probably part of them won't be there if we were not part of their business plan today. And I won't mention the other points. So we also -- in terms of ESG, we -- of course, we are measured. We are measured by all the best and big rating agencies. So we are very proud to be at the top of those ratings for every, every organism that actually has rated last year. We are definitely #1 in the sector on those ratings. And we believe it is also part of our business model, so we are definitely very proud and satisfied to maintain it over time. So let me talk a little bit about what we've been doing this year in terms of integration. Integration, of course, has started only at the end of the year, but we prepared for it during a good part of 2024 to be able to speed up this integration as and when we would be able to do it. So it's been strongly managed within FDJ on all the streams that you can imagine that can go to IT, to advertising to, of course, corporate functions and so on and so on. So this has been strongly managed. It's been -- and I'm going to come back to that. This is something that also will produce actually additional synergies and cost optimization, which is also good news for our business plan. As in the same time, we did exactly what we committed when we bought Kindred, which is stop the operations in non-locally regulated markets. This was part of our commitment and our business plan when we announced it. We did it, of course, before the end of the year 2024. So as you might imagine, this also has been something that we prepared and actually did quite efficiently. We devoted a lot of time to work with all the teams, both from ex Kindred and FDJ to assess our various platforms and particularly to get a common view about the deployment of KSP, which, as you know, is the sportsbook that Kindred has been investing its and which is part of the business plan for the next years. We have now a complete view of the implementation road map of KSP that will also produce not only cost synergies, but marketing differentiation. So this is a key asset that, again, will generate a lot of positive elements in our medium-term business plan. So together, in this work, we've been able to actually identify more than EUR 50 million of additional synergies and cost optimization. Additional to the one that we signaled when we communicate on this acquisition, where we are talking mostly because that was the part that we were able to, I would say, to identify from the beginning, which was the synergies from France, of course, the combination of our business in France. So we had, at this time, identified mid-teens synergy, around EUR 15 million. And now we have additional EUR 50 million. That, of course, will materialize over the 2 coming years since they are linked to a number of projects, including, of course, one of the major one being implementation of KSP. And we've also been working on a lot of other very important objective for the group such as, of course, our CSR objectives, but we'll come to that later in the year. So where are we today at FDJ United? We are a group that is now present in 13 locally regulated European markets. And of course, in addition to France, which is now one of our significant markets for our online business, we have also, of course, Netherlands, Sweden, U.K., Ireland, Belgium and so on. We are confident that these markets, which have all their own regulations and outlook, offer globally strong development opportunities that will contribute to group future growth. And we also are very enthusiastic about the assets that we have now in this new group, in this new perimeter, assets which are going from very strong brands that we have all over our markets, very strong technological expertise, very strong marketing power and, of course, financial strength to deploy over this perimeter. So we are definitely, as I said today, one of the lottery betting and gaming leader in Europe. We have now, as we announced a balanced profile, both in terms of France and International. So International is now at the end of 2024, 26% of our revenue. We are also more balanced in terms of activities that are linked with exclusive rights, which are, of course, in France and Ireland and activities that are on markets open to competition. And we are also much more balanced and diversified in terms of channels of distribution with online being at 35% of our activities. We have, as a whole, 34,000 retailers -- of course, in addition to the one that we have in France, we have retailers in Ireland and also -- well, actually, mostly in Ireland, I would stop at this point. And we are counting today over 33 million players on the whole perimeter, 9 million of them being online, so it is definitely substantive. We have adapted the organization of the company, of course, to this new perimeter and strategy. We have now 4 business units, as you see, the 2 main ones are being French lottery and retail sports betting linked with the exclusive rights that we have in France. And the second most important one being, of course, online betting and gaming, which does encompass all the activities that we bought with Kindred plus the activities we had already on the French market under 1 -- in 1 organization. Both -- those 2 business units represent 90% of the group turnover. And we have 2 others, which are more in development like international lottery with, of course, PLI and further strategy to be developed and payment and services. So as I mentioned, we worked altogether to define our new identity to reflect what we believe we are now to also, I think, make the point and send the message that we are both very, I think, attached to our roots, our roots being FDJ, our roots, our histories, our values. This is an important message. But we are also a new company, a new company that wants to be -- look to the future and be united. So this is also a message, of course, to all the employees of the group that are now working together in a very international group. And I think we believe strongly in this combination of, I would say, loyalty to our values and history and dynamism and diversification looking to international. And this is definitely what we want to aim at. So our signature is with this new identity is playful, play forward, which will reflect, I hope, what we are going to explain you for the future in terms of strategy. So some highlights on the -- on our business units. First, on French lottery and retail sports betting that you saw on the previous slide, it was a very strong year with an increase of almost 5% of revenues all in all, with very strong performance of the lottery, which does represent, of course, the bulk of this business unit with over EUR 2 billion revenue, up 6% in terms of growth, which actually has benefited both from instant games with successful launch of many instant games, both classic and phygital games. Also very good performance of draw-based game with a lot of actually good and high cycle with high jackpots more than last year and EuroDreams contributing to this growth. And digital lottery performing very well with a growth of more than 20%, which is a very, I think, nice performance, driven by the increase of our players, which are now 5.6 million in digital lottery and also, of course, benefiting from the enhanced offering with EuroDreams, which is more digital than all our games and also growing success of our exclusive web games. So very, very strong year for digital Lottery, which is, of course, a great asset also for future prospects. So online lottery does represent 14% of our revenue today since, again, every line has been growing this year in this lottery business. Point-of-sale sports betting has increased, although being less dynamic than the lottery, but was growing, of course, including the impact of a lot of sports events. So all in all, a very, very good year. Growth also in the point of sale, which is, of course, something that we value. So it definitely demonstrates that you can grow in the point of sales and online at the same time, and this is part of our promise. On online betting and gaming, we have -- we are trying to give you on this slide, a global view of our pro forma revenue, which has been over EUR 1 billion, growing by a high single-digit figure. It's been balanced between our different markets and our different activities. Our top 3 markets account for nearly 10% of our revenue each with -- in France, a very good performance with market share increase. We have now in France, a market share which is over 20%. This is new, and this is one of the objectives that we pursued. We -- at the end of the year, particularly, and we'll come back to that, unfortunately, some less good news in Netherlands and United Kingdom due to tightening of the regulation and also some tax news in the Netherlands. But again, I don't think it does, I would say, change our view of those markets, which are still promising. And we have also, of course, as you know, not only sports betting, but casino present in our markets apart from France, which also has been growing dynamically and with a high level of margin during this year, and I will come back to that. I want to finish by also give you a quick view of our other activities. As I said, the 2 other business units: International Lottery and Payment & Services are more development activities. But of course, within International Lottery, you have PLI, which has been also growing nicely this year. Actually, they have been starting to benefit from games that we help them project in their territory. They also benefited from EuroDreams because they're also part of EuroMillions as we are. And we are strengthening our collaboration in terms, for instance, of increasing the visibility of the games at the point of sale. So we see a lot of good prospects for more synergies with PLI and growth in this market, which is, of course, a good base to start talk about International Lottery development. In the Payment and Services BU, we continued to enrich our offer with the launch of Niro Primo, which is a banking card. And we also participate in the free-flow toll motorways, which, of course -- in which, of course, you can now pay at our point of sales with the services that we put in place as, again, example of the way this activity is accompanying new ways of payments in the French market with the help of our network and IT. And I will stop at this point, hand over to Pascal to give you more details about our results. Thank you.

Thank you, Stephane, and good morning to you all here or remotely. I'm going too fast. Yes. So I'm now going to take you through our financial results. And before going into the figures in details, I'd like to say a few words about our new segment reporting and our new P&L, as you can see on the slide. As Stephane mentioned, we have changed our operating model and, therefore, we are adapting accordingly our segment reporting, which is now presented in 4 BUs that have been described by Stephane a little bit earlier. We have also changed our P&L structure to simplify it and also to bring it closer to industry comparables. Mainly, we have isolated IT services and personnel expenses in the P&L as well as the net depreciation and amortization. We give now a clearer vision of the cost of sales, the marketing cost and also the G&A costs. We have also redefined the cost allocated to the BUs. We have reallocated around 50% of what we call the holding to the BUs, for example, all the building costs that are linked to the different BUs. As a result, we are now talking about the recurring EBITDA of the BUs rather than their contribution margin. While these reclassifications reset the profitability measuring of each BU, we have no effect on the group's recurring operating income. And we have also -- the 2023 comparative has been restated also to reflect those changes, and you will find it in our detailed financial reports. So now if I come back to the figures quite briefly. First, I will comment the figures on the reported vision, i.e., the consolidating Kindred as of 11th of October. Before providing you with a vision of the group pro forma accounts, it means as if Kindred had been acquired on January 1, 2024. So first, on the reported figures, the 17% in revenue has been already explained to you by Stephane. And she also had mentioned that without Kindred, the growth would have been 9.5% and 6.4%, if we take into account only the gaming activities in France. All those figures are slightly above our guidance. The recurring EBITDA has benefited from the 2.5 months of integration of Kindred, but also a good year end in 2024, combined in particular with high margin on sports betting and a consistently strong digital dynamic throughout the entire financial year. It has been also mentioned by Stephane. All those elements brought the recurring EBITDA to EUR 792 million, 21% EBITDA margin, 21% growth and 25.8% EBITDA margin. The free cash flow has increased by 15% with an excellent conversion of recurring EBITDA to cash of 85% and the net profit has decreased by 6%. It's due to the effect of the cost of debt and the D&A related to the acquisition of Kindred, but the important thing is that the adjusted net profit, which is the basis of calculation for the dividend has increased by 13% and stands at EUR 490 million. Finally, we have a net financial debt of EUR 1.8 billion at the end of December 2024 compared to a net cash surplus of a little bit less than EUR 700 million at the end 2023. This is the result of the acquisition of Kindred, obviously. So now if we take a quick look at the bridge from revenue to the recurring EBITDA. The 21% EBITDA growth is partly due to the consolidation of Kindred from, I said, October 11. But without this perimeter effect, the increase is still very solid with a plus 13%. And this excellent result is due to the revenue growth that Stephane mentioned, but also to the good level of control of expenses. The cost of sales mainly consists of retailer remuneration. This remuneration amounts a little bit more than EUR 1 billion, taking into account the retailers in France, but also the retailers in Ireland. This 6% increase is due to the full year integration in PLI and the growth of PLI and also the growth in retail in France, which is 3%. The marketing cost amounts to EUR 223 million. They include the cost of advertising and the offer design. The increase plus 36% is mainly attributable to the perimeter effect of Kindred, but also for a smaller part of the impact of the partnership with the Paris 2024 Olympic and Paralympic Games. The IT services amounts to EUR 117 million, plus 7.6%. They cover the costs associated with the outsourcing of the IT development and IT operations. The increase is due to the perimeter effect of the consolidation of Kindred mostly. And the personnel expenses amounts to a little bit more than EUR 400 million, EUR 443 million and also they include the salaries and personnel-related costs. This increase is also mainly due to the integration of Kindred and the full year effect of the integration of ZEturf and PLI in 2024. The administrative and general cost, it's also -- the growth is also mainly due to the perimeter effect and those kind of costs includes consultancy fees, operating costs of central functions and also the part of the building costs that are not linked to the BUs. So if we -- now we move to the bridge from the EBITDA to the net income and ultimately to the net adjusted income, the net depreciation and amortization amounted to EUR 224 million. It's to be compared with EUR 125 million in 2023. And the increase -- the important increase is mainly due to the amortization of the assets recognized during the allocation of the PPA, the price allocation of our different acquisitions and also the amortization of the catch-up of the EUR 97 million of equalization payment that we -- that have been decided by the EU Commission, and we have catched up the 5 first years of amortization of this complement. The nonrecurring items represent a net expense of EUR 39 million, and this amount and the growth of this amount is attributable to the external growth operation and mainly more 100% linked to the acquisition of Kindred. The financial results for the 2024 financial year amounts to EUR 5 million. It's to be compared with the EUR 43 million in the previous financial year. The change is also mainly due to the cost of the debt related to the acquisition of Kindred. And furthermore, it's to be noted that despite a mixed global environment of the tech sector in 2024, the fair value of the funds that we have invested via FDJ ventures increased by more than EUR 2 million during the financial year. And after taking into account the income tax of EUR 138 million, our consolidated net profit, as I said before, is EUR 399 million. And now the adjusted net profit comes to EUR 490 million. And as a reminder, the adjusted net income corresponds to the net consolidated profit, but restated for the effects of net of tax of the amortization of the PPA, it's something like EUR 70 million. And also the catch-up amortization of the additional equalization payment, something like EUR 12 million. And also the effects related to the noncash currency hedging of the acquisition for something like EUR 10 million. Yes. So now let's move to the pro forma view of the 2024 figures. This pro forma view is important because this is the basis of comparison for 2025. The revenue stands at EUR 3.788 billion and the recurring EBITDA at EUR 964 million, represented a margin of EUR 25.5 million (sic) [ 25.5% ] and the free net cash flow is EUR 847 million, which means a conversion rate of EUR 88 million (sic) [ 88%. ] You see, as we have said before that the acquisition of Kindred is not damaging our capacity of generating cash. And the net profit is EUR 351 million and adjusted EUR 537 million. So now let's compare with the reporting view. The weight of each expenses category is substantially the same when we look at the bridge -- pro forma bridge with the exception of the sales cost that, of course, have a little less weight, 55% versus 60% in the published view, while marketing costs are weighted a little bit more. This is due to the mix of activity that is more online than it was before the acquisition of Kindred. Remember that we have now 35% of our activity, which is purely online. And the recurring EBITDA margin, I've already said it, it's 25.5%. Now let's look at the vision of the 2 main BUs. So for the pro forma vision of the Lottery and Retail Sports Betting BU shows EUR 2.5 million revenue. And the cost of sales is EUR 1.2 billion, and it represents almost 3/4 of the total expenses, which is consistent with the fact that this BU is still 86.5% retail versus the rest of 13.5% in digital, even if the share of digital is increasing quite rapidly, plus 150 basis points in 2025. The marketing cost amounts to EUR 125 million, which represents a slightly lower proportion than the one of the group. And the EBITDA of this BU is EUR 887 million represented a margin of 35.4%. Looking now at the pro forma revenue of the online betting and gaming BU. This revenue stands at a little bit more than EUR 1 billion. The cost of sales is EUR 257 million, represented around 1/3 of the total expenses, and you see the difference of business model with the French lottery. And in the -- when you look at the marketing costs, they are higher than the one of the French lottery. This is also the explanation of the difference of business model with an activity, which is 100% online. And the recurring EBITDA of this BU amounts to EUR 293 million, represented a margin of 28.5%. One word about our cash generation. In 2024, this cash generation was very satisfactory with an excellent recurring EBITDA to cash conversion of 85%. The free cash flow amounted to EUR 675 million, up 15%. I've said it previously. And FDJ United continued its investment and even stepped them up EUR 150 million investment in total with the vast majority of those investments still in IT. And as you see, the change in the working capital surplus is EUR 33 million. Those figures have been restated like the previous years to be comparable on year-on-year. So we have this EUR 675 million free cash flow. One word about now our net financial debt. I will not talk about our net cash surplus anymore of EUR 1.8 million. In 2024, we have acquired 98.6% of Kindred Capital. The price paid, including cash was EUR 2.2 billion in 2024 and the financing put in place that has been explained by Stephane is EUR 1.5 million with the long-term bonds rated Baa1 by Moody's and a syndicated loan of EUR 300 million. And if we take into account the other debt of the group, the total financial liabilities amounted to EUR 2.5 billion at the end of 2024 with an available cash of EUR 600 million. So the net financial debt is EUR 1.8 million (sic) [ EUR 1.8 billion ] and it represents a leverage of 1.9x the recurring EBITDA. This is also an excellent achievement with a leverage already under our midterm guidance of 2x from the end of 2024, only 2 months after the acquisition of Kindred. And to conclude, this slide illustrates the debt repayment schedule. In particular, you can see the deadline for the syndicated loan, which is repayable over 5 years and the bond issue with 6, 9 and 12 years tranches. We also presented the breakdown by nature of debt and by interest type with 82% fixed part rates. So I thank you for your attention. And now I will hand over again to Stephane, which will walk you about the group's outlook of 2025.

Thank you, Pascal. So some words about what are the main features of our perspective and activities for 2025. First, for the French lottery and retail sports betting outlook. This year, of course, is in addition to the usual very dynamic animation of our network and products and games. This year is actually the start of a big project, big medium-term project that you see on this slide, which is called FDJ & Moi. So FDJ & Moi is a project that we have been discussing for a long time and thought about for a long time, which mean that we will propose starting this year to our clients to create an omnichannel account that will enable them to play both in online and on the point of sale. So it's a very strategic move. It's not going to be done, of course, in 1 year. But 2025 will be definitely an important start for this strategy, which completely combines our willingness to better know our customer, both for marketing purpose and responsible objectives. And that's really, as you know, that goes hand in hand. So a lot of preparation for this. Of course, negotiations with our retailers that has been happening last year and, of course, readiness to launch this. In addition to that and, as I said, we will continue to launch new games, 2 phygital games. New lottery games with Crescendo. So of course, again, innovation continues in our games portfolio. And in sports betting, we will again continue to invest in this activity in the point of sales, which is important for the point of sales with less usual big sports events. But actually, we saw starting this year that the new format of the Champions League is something that, in fact, does give a dynamic effect to this activity. And so we'll do our best to make the most of it. On online betting and gaming, the major -- we have actually major steps in our road map. One, I think, major step and, again, it's also a midterm project is rollout of KSP of our sportsbook in several markets. It will go on in '25 and '26. And as I said, it is a major strategic and economic project, so we'll invest a lot of energy to do this rightly. We'll also launch the English brand 32Red in other markets to continue sustain our activities in many markets. And we will, of course, prepare for the opening of the Finnish market, which, as you remember, is a market, which is on the path to regulation. So we did not close our activity. We monitor it in a way that is consistent with what the Finnish authorities are telling us in terms of transition period in order to wait for the new legal framework that is progressing and will probably be on in '26 or start of '27. And we're also going to continue to implement crucial compliance tool. Again, another very strategic feature of our strategy in this business because it's a tool for detecting and supporting at-risk players. And as, of course, you know, again, our differentiation and competitiveness in those markets is linked to our capacity to use the best tools to integrate them into the clients' relation in all our markets. For the other activities, other BUs, I will be quick. On international lottery, that is to say, mainly PLI, we are actually going to start to offer games that are coming from France, from the French portfolio to Ireland. Again, we pursue the development of cooperation and synergies. And for payment and services, we will continue to enrich our offers, our new offers with mobile payments and cash back. So to come to the 2025 guidance. So for 2025, we are targeting a turnover of around EUR 3.8 billion. That is to say, stable to the pro forma turnover of 2024 that has been presented previously. It goes with a view that the French Lottery and Retail Sports Betting will have slight growth, low single digits and that on online betting and gaming BU will have a slightly down low mid-single-digit turnover with a current EBITDA margin rate of more than 24%. And, of course, this is less than the percentage that we have in 2024. I think you know now because we've started to explain that this reflects the impact that we have to take in 2025, particularly in terms of tax increase. So tax increase in France, but also in the Netherlands, and we communicated about those numbers previously. They are quite known. We also reflect in that the tightened regulation implementation that we learned from and assessed beginning of this year, especially in Netherlands and U.K. Of course, you could wonder, but I think you know why taxation does diminish gross revenue because, of course, the taxation is on GGR. So therefore, you have a direct impact on revenue and then on EBITDA with those increase of tax. We have been explaining that in France, particularly we'll have only half year impact, that is to say, EUR 45 million because the tax will be implemented from 1st of July. I'm not going to give you again the numbers, but we can answer to questions. In the Netherlands, we have, again, a tax increase that is basically an equivalent of EUR 10 million on our EBITDA. So it's, of course, impossible to compensate right now for that level of significant impact. On a full year base, the cumulative negative is around EUR 90 million. But of course, as we have announced, we're not going to just wait for this impact to happen. So we have already started and announced that we are putting in place mitigation measures in the form of a performance plan to gradually compensate those impacts starting actually from 2025. So EUR 20 million already will be compensated in 2025. And the full impact of this performance plan will reach probably -- not -- at least, sorry, EUR 100 million in full year in 2027. Half of this will be generated and benefit the online betting and gaming BU, particularly, of course, since, as I said at the beginning, we have identified more synergies coming from this business and more cost optimization that we are deploying, but we need a little time to put this in place. Therefore, the full impact will be only in 2027. For the midterm financial guidance, we are basically maintaining what we've been communicating again from the beginning. So cash flow conversion over 80%. CapEx, 4% to 5% of our revenue and leverage under 2, we actually, as you have noticed already under this 2. So we'll continue definitely to deleverage in 2025. Even with those negative impact. It will not change our trajectory in terms of deleveraging, which is also, I think, a good news. I've already talked about the level of dividend that we intend to propose for this year. And we believe that on the basis of our financial trajectory that we will continue to be able to grow the dividend in years after this year. So again, 2025 is a year that is definitely impacted by news that we would like not to have, but we believe that the company has strength and reactivity to compensate it and to continue a good attractive financial trajectory. And I will finish with that, which is, of course, our ambition. Ambition is, as I say, to be a leader, to be a leader in Europe as a unique sustainable luxury gaming and betting operator. I've been talking about this for 2025, but we will give you more medium-term view on this in our Capital Market Day that will be held on June 24. And I'm, of course, very -- I'm thrilled by this perspective. And now I will stop and wait for your questions if you have -- and sorry, we've been a little long. [ Maintained ] as started. No?

Or apparently, we have been very clear or the mix of the 2.

I have one question, especially on the sports betting and online betting. What other analytic tools are you using to manage competitive pricing and risk to maintain profitability over time?

Pascal.

Maybe I can take this one. And you have also somewhere in the room, [ Neil Sanden ] who can complement if needed. Today, we have those tools implemented in the Kambi platform that we use for the online betting and gaming side. We also have tools implemented in our -- in the tech that we use in France for Unibet and in France, separately for [indiscernible]. So we have those tools partly in-house and partly with Kambi. What we are doing currently is to move all those tools in a unique sports betting platform, which has been explained by Stephane, KSP, and we will have all those tools in this unique platform by the end of 2026. The rolling out has begun -- has yet begun, and it will take some time to be implemented in each country. And what we will have with this new platform is new features, new capacity to manage the pricing and to do it in a better way than we are doing today. And I must say that we are doing it in a very good way today. If we look, for example, in France, the level of the payout that we pay to the players compared to the level of the odds that we propose, we are one of the best actors in the French market. And also, this is the case in the other markets. We continue to have tools that will be ultimately by the end of 2026, 100% in-house. And we think this is important to manage the margin, but it's also important more globally to manage the differentiation of our product by having our own sports betting platform like are doing the major Tier 1 actors in the world. So this is okay with what I said. This is a good achievement of the integration. Another question? Here or online.

And we take our question from the telephone from Jaafar Mestari from BNP Paribas.

I have 3 questions, if that's okay. Firstly, the simplest one on the timing of the mitigation measures coming upstream. You said EUR 20 million will be reflected in 2025 already. Just curious if you could give us some idea of the ramp-up into 2026 and then, obviously, EUR 100 million in 2027 is what you're saying. Secondly, I'm trying to understand the order of magnitude of the hit here. You've quantified specifically the French tax impact. You've quantified specifically the Netherlands tax impact. You haven't put a number on the wider tighter implementation of existing regulations, but it looks like a possibly big number. So before any of that noise, it feels like EUR 1 billion EBITDA in '25 pro forma was a good reference point. Your guidance now implies EUR 920 million maybe. So we're short EUR 80 million. EUR 45 million is the year 1 impact in France, EUR 10 million is the year 1 impact in the Netherlands. You're going to have EUR 20 million of mitigation measures. Where is the other EUR 40 million to EUR 50 million, please?

Okay. So that was -- maybe on the -- just I will pass to Pascal. But just on the general timing, as I said, in the first year, so EUR 20 million, of course, you might expect that this is more -- this goes more with the, I would say, savings plan. So on a short-term basis, in 2025, we are more like doing some savings. So EUR 20 million is something that is at the -- given the size of the group is quite realistic. No problem, but Pascal can give details if he wants, but that I think not a big issue. I think the big message on this is that we have some major projects. And for instance, as we said, KSP, that, in fact, will be implemented, will be rolled in '25 and '26 and which will have 2 type of impact. One, of course, is the end of the Kambi contract. And the other is the effect in terms of better management, better differentiation of our offer and management of risk in our different markets. So that's the comment I wanted to make. So that's why we have this timing. Pascal?

So yes, on the ramp-up to just complement what Stephane has said, you can expect that we will more than double each year -- year-on-year for the 2 years, 2026 and 2027. And for example, we will have the full impact of the synergies in France in 2027 as the migrations that will lead to the merger of [indiscernible] and Unibet brand will be done before the end of Q1 2026. So the full year impact of that will be in 2027. We will also have on the OBG side in 2027, the full year positive impact of the rolling out of KSP. We will stop double paying Kambi on one side and our own platform on the other side. So it's true to say that it will come gradually with the type of a yearly level of measures that I've mentioned. And it's also true to say that we have launched a bunch of very important transformation program that will take some time, but those transformation programs are scheduled, are road mapped, so it's really totally credible. To continue on your second question, there is a question of the numbers. And it's right, it's fair to say that before all those elements, we were in the region -- this was the consensus of EUR 990 million to EUR 1 billion. And it's also true to say that the impact of the taxation is close to EUR 60 million. You have the one in France, you have also more than EUR 10 million in the Netherlands and a small also increase in the U.K. So it's a little bit less than EUR 60 million. We have this EUR 20 million plan -- saving plan of 2025. And you can imagine something like EUR 30 million to EUR 40 of additional impact of the regulation. And this additional impact of the regulation is linked to mainly 2 countries, Netherlands first and also a little bit of U.K. So you have the good math, Jaafar.

And just to clarify in terms of the mitigation measures, EUR 20 million in '25, you then said more than doubling. Are you talking about total or incremental? So is it EUR 20 million and then an incremental EUR 40 million in '26? Or is that EUR 20 million and an incremental EUR 20 million in '26?

Yes, it's more that. Yes.

And my last question, apologies for posing, was on the nature of those mitigation measures. There seems to be a very wide overlap between what you're calling mitigation measures and effectively a review of the Kindred synergies under the sportsbook contracts. All of these things were not quantified as part of your accretion math, but they were out there as things you would do. The impact of the tax changes is almost 2/3 in the French lottery business. You have less than 50% of your mitigation in the French lottery business. Is it because there's nothing else that can be done other than some group level cost savings? Is there something fundamentally in the product, in the pricing, in marketing different higher-margin products differently that can be done beyond that?

Yes. Okay. If you may, Stephane, I can comment to that. So yes, what is fair to say that it's for us the same when we talk about cost optimization, synergies, et cetera, it's the same kind of things. And what we measure is the additional impact to the one that we had already integrated in our figures, and it's fair to say that. If we look at the type of -- globally, the type of measures that we will have in the future year. If we look at OBG, we have the full impact of the French merger and also the review of the corporate function of the group. This is a first big element. We will have also the impact of the OBG platform mutualization with, as I said, the rolling out of KSP, but also the savings linked to the fact that we will stop to use the platform that we have in France, the 2 platforms that we have in France, we will save 2 platforms. We also have a lot of savings and optimization on the media and marketing space because we will rework all the mutualization of this media and marketing and also automatize the marketing with a new MMM approach within the old group with savings on the old group. And finally, we will have some classic procurement savings, a little bit more than we have expected before, linked to the volume of what we are spending over the wide space of OBG. For example, on data and payments, et cetera. This is for the OBG part. For the lottery part, what we have in this plan is, for example, to continue the optimization of the sales force. We have done that. We are currently doing a very important optimization of the sales force that will have its full impact in 2026. And we will continue to optimize this sales force over time. And this is something that will have quite a nice impact. We'll also continue to work on our IT cost over all the lottery space in the coming years. Also work on the marketing cost and the way we are doing all that. and work globally also, it's not linked to lottery, but globally in the corporate function of the group. So it's quite wide. The rework of the products will be maybe something additional to that, but it's not that obvious to -- I understand what you have in mind, to reduce the payout, to regain some GGR. So if we look at this, theoretically, it's a good thing to do. We have to be very cautious because there is a link between the level of payout and the level of efficiency of our different products. So -- and we have done a lot optimizing the payout in the past. We have explained, for example, that our major product, cash has had previously a 75% payout. It has now a 70.5% payout with an efficiency that has been strengthened despite the reducing of this. But we have -- we did already a lot of things to optimize the different price structures of our different games.

Our next question comes from Andrew Tam from Redburn Atlantic.

Just one for me. Can you tell us what regulatory considerations there are or need to be taken into account for the omnichannel account offering? And how does this reconcile with the wallet separation project that was undertaken last year to separate the retail business from the online business?

I will maybe start with this one. So the omnichannel account is something that has been presented to our regulator and is, of course, completely consistent with regulation and also with the separation that we did or that we are in the process of doing, but that actually mostly almost done today between the exclusive -- the customers that we have on exclusive rights and the customers that we have in the competition market. So there is -- I would say, there is no question mark on that. The way the type of structure and the type of incentives that are going to be put in this program have been approved by our regulator. And again, what we've been separating is really the exclusive right from the competition. So of course, in the lottery domain, we are under exclusive rights and our customer, therefore, can benefit from having a full omnichannel account if they choose to open one. And what is new in this program is that we're able to offer it and to offer it through our retailers that are going to be able and we're going to test it half of year in one of the French region. They're going to be able to propose it to their clients. So they will contribute to the recruitment of omnichannel clients starting this year.

And clearly, the separation of the accounts makes possible all this journey to omnichannel. And just to tell that we achieved this separation totally as we have scheduled exactly on the right timing beginning of February this year. So we are ready to continue the transformation.

And we have a further question from the conference call from Christian Devismes from CIC.

I have a question about the top line growth in sales in 2025. Excluding the impact of the tax increase, so it's around EUR 60 million. The turnaround guidance is a growth of around 2%, so this is below the long-term guidance between 4% to 5%. Can you explain the gap of the 2 to 3 growth points between 2025 growth and the medium-term growth? What are the main reason? Is it the comparison with the euro in Europe with geo and so on. But could you elaborate a bit about the gap of 2 to 3 points?

Yes, we have to take into account the different BUs to have -- to answer correctly. When you look at the Lottery and Sports Betting Retail BU, the impact of the taxation lower, yes, the growth in 2025, but it's still low single-digit growth. And our vision from the long-term growth of the lottery is still the same, low single digit on the retail and double-digit on digital. And 2025 is not different, but we have this tax impact. When we look at the OBG BU, the situation is a little bit different because we have explained that we have the taxation issue, but we have also some regulation impact. And we have the 2 tax and regulation impact at the same time in 2025. So before the taxation impact, we should have a low growth in 2025, but with a higher growth that we can expect in 2026 and 2027. And with the tax impact, we will have a slight decrease of the revenue on the OBG side in 2025. Does it answer your question?

It's perfect. Yes. Perfect.

[Operator Instructions]

We might have to -- you don't have any other questions, right? Sorry?

No further questions at the moment. Thank you.

Okay. Thank you very much. Thank you for listening to us, and thank you for your questions. And of course, we stay at your disposal. Thank you very much.

Thank you. Goodbye.

Bye.