FDJ United (FDJU) Earnings Call Transcript

Good morning, ladies and gentlemen. Welcome to this -- FDJ's 2020 Annual Results Presentation. So I am today with Pascal Chaffard, Executive Vice President of Finance, Performance and Strategy, and we will present the results together. So I hope that you are fine in this time of health crisis. And I'm happy to be able to talk to you, although, of course, we would have preferred to have a physical event. But since it was not possible, we are very happy to welcome you in this beautiful studio where we broadcast Loto and EuroMillions, our famous draw games. So let me turn now to some general comments about this very special year that we've all been through. Of course, this year, it comes after 1 year where we presented our first results after our IPO in February 2020. And I remember that when I described our results 1 year ago, I said that, of course, 2019 was a historical year for FDJ. So 2020 is not easy to qualify. It's a difficult time for everybody. The health crisis is not over, and it's not easy to grasp all its consequences on our environment, our economies and societies. Nevertheless, I think that regarding FDJ in this year, if I have -- if I had to summarize this year in 2 words for us, I would definitely say resilience and commitment. Resilience because the group has demonstrated its responsiveness, in particular, by implementing a major savings plan at the beginning of the crisis, therefore, was able to protect its profitability and results; and also because we seized the opportunities by having a strong online performance based on the investments that we did over the last years. Commitment also because this year, we actually put our purpose, our raison d'être in French, in our bylaws in our June general assembly. And we demonstrated definitely evidence of this commitment from the onset of the pandemic with the solidarity actions that we took both to our network, to our point of sales and also to the community in France. So before commenting further our results activity, I want to start with our extra-financial commitment. As I just said, we included in our bylaws, our purpose in -- during our general assembly in -- last June. And it was, of course, an important milestone in this very special year. It was, for us, as you know, a natural step that we announced before. And it is completely in line with the history of the company that, as you know, has been created for the benefit of war veterans, which are still our shareholders today. It's also what has made the company unique, I think, for 85 years. And it's clearly, for me, at the heart of the sustainability of its business model. So we also took -- of course, to develop these 6 commitments to implement this on our products, on our clients, on responsible gaming and on our retail network, not to put all of them. We also established a stakeholders' committee to deploy these commitments with high level and diverse personalities. 13 people, expert in their different fields, chaired by Rose-Marie Van Lerberghe, who is the former Managing Director of AP-HP, a hospital in Paris, and former Chairwoman of Korian, a company specializing in senior care. This committee already met twice by video conference and had vivid and constructive changes and ideas and suggested ideas on how to progress further for the implementation of those commitments. So we -- also, of course, as every year and even more in this year, we affirmed our CSR commitments, and we measured them. We have been rated like, for several years now, by Vigeo. And Vigeo, which is an extra-financial rating agency, has been rating us at A1+, which puts FDJ at the top 5% of all companies rated by Vigeo. We're also very proud of our diversity credential with a 100% grade on the French gender parity index introduced by the law in 2018. We are, of course, very dedicated on responsible gaming with, for instance, the commitment of dedicating 10% of our TV advertising budget to our responsible gaming campaign. And we work further on our environment commitments. But for instance, 100% of our tickets are on paper issued from sustainably managed forests. We also did measure this year, as every year, our contribution to the economy and society by an -- international experts. We found out that we contributed over EUR 5 billion to French GDP, 0.2%, which is roughly the same as last year. We -- in terms of employment, we are responsible for the creation of -- protection of more than 50,000 jobs in France. And of course, our contribution was particularly significant for some stakeholders, such as the state, the state budget with more than EUR 3.6 billion that was served to the state budget in 2020. And of course, very important economic contribution to the network, to our network of point of sales with almost EUR 800 million that were paid to our retailers, an equivalent of more than 20,000 jobs that are preserved or safeguarded or created by our activity. And I'm not going to talk about other stakeholders, such as, for instance, the French sports sector, where we maintain our commitments, or the French national heritage that we have continued to support over this year. So I want to focus for a few moments on the specific mobilization that we had during this year to react to the health crisis. And this has been very important on 2 fronts: one is, of course, solidarity with all those who needed urgent support, medical, personal or researchers and vulnerable people because of the crisis. And we gave to them EUR 2.7 million over the year in [ 2 halves ]. We also were very active in terms of solidarity with our network of retailers, specifically tobacconists and news agencies. They were -- most of them were authorized to open. However, they have been under strong pressure during the year -- this year. And we maintained an active dialogue with them. We helped them to comply with the health measures. We provide them with protective mask when it was difficult to find them at the beginning. We managed their financial relationship with us. We offered them support and coaching all over the year. We are and we will remain at their side to accompany them in the medium term. And we have the project to set a specific investment vehicle with other partners where we probably will put a level close to EUR 15 million to -- for them to get some loans in the medium terms. So now let me turn to the activity as such in 2020. And I want really to stress that we were able to preserve our performance despite a very significant impact of the health crisis on the activity of the company. We have also seen during this year, and we'll come back to that, a lot of lessons. And at the end of the day, our strategic priority is strengthened by the context, particularly, of course, our digital strategy. I think that the company has shown, during this year, its capacity to rebound where -- when restrictions were lowered, particularly during December, when the gradual recovery was confirmed throughout the second half of the year, with stakes up 3% over this second half despite the demanding 2019 comparison basis. So this growth has allowed for a decline, better decline that has been, at the end of the year, limited to minus 7% on our stakes, after, you remember, a decline of 18% during the first half of the year due to the first lockdown and the halt to international sports competition. Decline of revenue was roughly at the same level than stakes, minus 60%. And I think what was absolutely decisive with the capacity of the company to put in place a cost reduction plan of EUR 80 million right at the beginning of the crisis to preserve its EBITDA and results. And therefore, we were able not only to preserve our EBITDA but to come at the end of the year with a net income to -- of EUR 214 million, quite comparable, actually even a little over the adjusted 2019 net income of EUR 202 million that you should compare it with. Pascal will explain that. Therefore, we will be in a position this year to ask our shareholders to approve a dividend of EUR 0.90 per share at the Annual General Meeting that will happen in June, representing a total dividend of nearly EUR 172 million, therefore, of course, delivering the promise that we have made to our shareholders to distribute 80% of our consolidated net income as we stated during the IPO. So I want now to go a little bit in details on the impact of the health crisis of the company. And first, on our general activity, you can see that we had very different semesters. It's not a year, it's really 2 different periods for the company. H1 [ knew a ] severe drop in activity because, as you know, during the first lockdown, even though most of point of sales were authorized to remain open, traffic was low, bars were closed and some of our retailers, in fact, did close completely or partially their point of sales during this period. We also decided to stop Amigo because we just had Amigo as a game that requires you to stay in the point of sale, was not compatible with the context. Of course, most sporting events were, as you know, also canceled or reported. So this, of course, is -- are the main factors for this first half. In consequence, we adapted our commercial and marketing strategy. We postponed most of our game launches or relaunches for -- planned for the second quarter and we reduced our advertising budget. However, H2 showed the reactivity of our business and the capacity of the company to adapt to new conditions because, as you know, we had a second confinement, although in different conditions, but less drastic. And so H2 was definitely back to growth in both businesses, mostly in sports with 20% growth, to a lesser extent, lottery, and I'm going to come back to that. So in lottery, we had a very different situation between the different categories of games. In draw games, you have the impact of the decline of Amigo for the reasons I've just mentioned not only in the first half but also in second half where Amigo is open but with less attraction and less traffic on it. However, our big draw games, Loto and EuroMillions, recorded a plus 60% increase in stakes. This performance reflects the success of the relaunches of Loto in November 2019 and of EuroMillions in February 2020 with new gaming options and the increase in the EuroMillions price cap to a potential level of EUR 250 million. It shows also the resistance of those games because they are really part of our customer habits. Regarding instant games, scratch cards, the story is a little bit more complex. Decrease in stakes was 6% for the whole year. Of course, first half was very low with minus 11% and we almost came back to stability in H2. But second half was not able to compensate for the first half despite the launch of new games, particularly in the fourth quarter, including a digital game. And of course, the most interesting feature of this period was definitely the strong increase that we developed on online lottery stakes, which increased by more than 60% over the year and show definitely the relevance of the group's growth strategy based on investment in digital and development of a more omnichannel gaming experience and we'll come back to that. It's a solid growth, the growth that we had on the online lottery because it's also growth of new players with 60% growth of new players, 1 million more, basically. And also, I think an interesting feature is the fact that our online players do also play in our point of sale for half of them. Therefore, we think it's really part of the sustainability of this business, omnichannel business, where our players can actually play in both channels. And we think it's good for them and good for the company. On sports betting, story is different. And of course, as you see on this graph, more like a V curve. Of course, as I explained, we had a very drastic drop of sports betting in the first half, minus 40% in terms of stakes. So the rebound, the very nice rebound that we got in the second half with 20%, of course, did not totally compensate but it limited the decline to minus 10%. I will not come back to the reason for that. You -- I think you have followed what happened during the first half with basically no sports events and therefore very limited sports betting. Also, the bars have been especially hit by the period. They've been closed during the first confinement and they've been, as you know, closed since the second confinement and not been reopened and bars are, of course, one of our important network for sports betting. What we saw, however, is a very dynamic market from mid-May, lots of sporting events in the second half and a very good opportunity to develop the attractiveness of our offer, which we did both in the point of sales with a new Loto Foot, for instance, and increasing number of possible daily bets for our clients and also on our online activity with a new website, new streaming features, cash-out feature implemented. And also in the point of sales, continued dematerialization of the -- of our bets with more than 80% of our stakes that are actually prepared on mobile in the point of sale. So I want to turn now to the -- to our distribution network with, I think, 2 remarkable features for this year. One is actually the good resistance of our network. I remember at the middle of the year, we're all very worried about how this network could resist to the crisis. At the end of the year, it is still accounting for 90% of FDJ's total stakes, EUR 14.4 billion. And after, of course, a difficult first half, it was -- it has bounced back in the second half. Therefore, the limited -- the decline for the whole year was limited to 10% of stakes for our network. And again, if you exclude Amigo, it has been growing positively in the second half by 2%. We are particularly proud to have protected the size of our network, its capillarity. And to say that actually today, we are still, roughly speaking, at 30,000 point of sale all over the territory. We think it's part of the robustness of the company. And this is definitely linked to the support that we have provided to our retailers. Second feature, of course, is the strong momentum on online stakes. All over the company, it's been plus 40%, more than EUR 1.5 billion of stakes, 10% of the stakes of the company. The momentum has been driven, as we saw, by very strong growth in online lottery stakes, over 60%. Online lottery stakes have doubled in 2 years, reaching more than EUR 1.1 billion. So roughly speaking, I think the company has gained 2 years in terms of development of our digital business. And I know that it's a very positive news for everybody. We -- again, we believe that this online business is part of our omnichannel strategy and model. And if we look at the digitalized stakes, which is the KPI that we gave us in our strategic plan 5 years ago, they actually represent over 24% of the stakes of the company. So over the 20% that was set for the end of 2020 and that we have beaten. Last point for the activity during this year. During this year, we were actually able to continue to develop our adjacent activities. That is to say the new activities that are today not material in our figures but that will contribute to the resilience of our business model in the future by providing, over the years, more extra revenues and EBITDA. So we were actually able to develop our international B2B business with the gain of several contracts in Europe and our first contract in North America, in Ontario, for sports betting. And in payment and services, we were actually able to deploy the public service bills and tax payment facility that we gained from the French Treasury in 2019. So this service was launched in February 2020 and it was actually rolled during the year, and we have now more than 9,000 points of sales that do offer this service to pay not only taxes but also bills in those point of sales. And we have seen EUR 30 million of payments coming through this channel. So we believe it's a very good start although it's evidently small. And it gives us good confidence as we seek to continue to grow this part of our business. And I will now hand over to Pascal, who will cover our 2020 financial results in more detail.

Thank you, Stephane, and good morning, ladies and gentlemen. So before diving into the figures of 2020, it's worth mentioning that the 2019 figures Stephane has presented and that I will present during all of this call have been adjusted for the new regulatory fiscal regime in force as of January 1, 2020, but also for the exceptionally long lottery cycles of 2019 for the acquisition of Sporting Group on a full year basis and for one-off costs related to the privatization of FDJ in 2019. So those restatements, already presented during our previous financial communication, make 2019 figures comparable -- fully comparable to 2020 figures. This particular year that Stephane has just mentioned resulted in an unusual drop in stakes for FDJ. Unusual, because as a reminder, FDJ had only been -- seen 2 annual drops in stakes over the last 25 to 30 years. The decline in stakes led to a similar decline in revenue, 6.3% to EUR 1.9 billion. EBITDA was EUR 427 million, up 1.1% from EUR 422 million, which was the figure of 2019. The cash flow from operating activities increased by 30% to EUR 386 million, thus amounting to 91% of EBITDA. So before going into more details on these financial results, allow me to come back for a few moments to the company's financial model. From the stakes -- you know this model, I think. I will be very quick. I -- with -- from the stakes, we deduct player winnings of EUR 10.9 billion in 2020, i.e., 68% of the stakes to get to our gross gaming revenue, the GGR, in other words, the players' net spending. GGR of EUR 5.1 billion, down 6%, is then split between the state via public levies for EUR 3.2 billion and FDJ. Hence, our net gaming revenue, NGR of EUR 1.9 billion. Group revenue is calculated by adding NGR and revenue from other activities, B2B international, payment and services, as mentioned by Stephane a few minutes ago, of EUR 41 million in 2020. When operating and administrative expenses, excluding depreciation and amortization, are deducted from this revenue, EUR 1.5 billion, we get to an EBITDA of EUR 427 million in '21 -- in 2020. We will come back to this in more detail, but you probably remember that point-of-sales commission represents more than half of our cost base. This commission are a percentage of the stakes recorded in point of sales. Overall, about 60% of our costs, including point-of-sale commissions, are variable with stakes, and therefore, 40% are fixed. I won't get back over the fluctuation stakes commented by Stephane. Our player payout ratio is stable year-on-year at 68% but this masks significant differences by quarter. Those quarterly differences have already been commented during our previous financial presentations. Thus, revenue fell in the same proportion as stakes to EUR 1.9 billion. By activity, in lottery, the decline in revenue was totally in line with the decline in stakes, 6% each. In sports betting, revenue declined less than bets, 8.5% versus 10% on bets due to a lower player payout in 2020 than in 2019, minus 0.4 points to 75.9%, particularly in H1 and in the last few weeks of the year. And the revenue from adjacent activities remain stable. So as indicated earlier, EBITDA increased by 1.1% to EUR 427 million and a margin of 22.2%, up 160 points compared with 2019. This performance mainly reflects the implementation of the cost reduction plan of more than EUR 80 million versus our initial budget and/or EUR 40 million versus 2019, more than half of which related to advertising expenses. Let's see now how the main cost items are varied. POS commission are correlated to POS stakes. The decline of more than 7% in other cost of sales mainly reflects lower trade-related promotional activity, particularly during the lockdowns. Marketing and communication costs relate to, firstly, advertising costs, down 16% over 2020. This decline was particularly strong in the second and third quarter before returning on the fourth quarter to a level similar to 2019 to support a busy marketing schedule. Secondly, the cost of developing our offering, cost of designing and operating games and services, both in marketing and IT. As we have indicated on several occasions, this cost continued to rise, both in the first half and on an annual basis. The increase of 5% in 2020 illustrates our commitment to strengthen the foundation of our future growth, in particular, on digital. The decline in G&A expenses illustrate the positive impact of our cost reduction plan also. In the first half of the year, the decline in EBITDA was greater than the decline in sales, respectively, minus [ 16.4% ] versus minus [ 14.7% ], leading to a slight EBITDA margin erosion of 40 basis points to 20.5%. In the second half of the year, stable revenue and the completion of the cost reduction plan led to a 12% increase in EBITDA and a margin improvement of 250 basis points to 23.6%. This slide bridges 2019 EBITDA to 2020 EBITDA by showing the impact of each major item already commented in the previous slide. The increase in online stakes had an accretive impact on the group's gross margin. The low payer payout on sports betting in 2020, especially at the end of the year, had also a very positive impact on the EBITDA margin. And finally, the cost reduction plan allowed for EBITDA to be maintained with also a positive effect on the EBITDA margin. But it is very important to note that the main expenses items that declined in 2020 should return to a normative level in 2021. For example, sports betting advertising with the Euro Football Championship. Moreover, the event -- this event could have an upward impact on the sports betting player payout, which was especially low in 2020. So we will detail the various business unit margin on the following slide. Just regarding our acceleration business unit or adjacent activities, the decline in contribution margin is mainly due to the decline in sports -- Sporting Group business volume due to the pandemic in H1. Holding costs have been reduced by EUR 15 million, thanks to the cost reduction plan. If we now look at lottery, lottery revenue was down nearly 5 -- 6% and the contribution margin was relatively stable at EUR 502 million, minus 1%. Costs were reduced by 8%. POS commission are correlated to stakes recorded at POS. Other cost of sales are down by nearly 7%, notably due to reduced promotional activity, as mentioned before. The limited minus 1% drop in marketing and communication costs reflects the continued development of our game offering, partially offset by the reduction in advertising costs, plus 9% on game offering development and minus 12% on advertisement cost. The contribution margin rate improved by 150 basis points to 33.6%, thanks to -- thanks, in particular, to the favorable mix effect with online, representing nearly 8 -- 9% of total lottery stakes compared with over 5% in 2019. As we already said, the contribution margin on the online lottery is between 1.5 and 2x higher than online -- off-line lottery. Sports betting now, the revenue was down 8.5% while the contribution margin improved by nearly 3.8% to EUR 103 million. Costs were reduced by 12%, with POS commission correlated also to the POS stakes. Other cost of sales fell almost 18% following the cancellation of a large number of competitions. And marketing and communication costs fell by nearly 11%, following the very sharp decline in advertising costs in the second quarter, partially offset by an increase in the second half of the year to support a very busy sporting events calendar. The contribution margin represents 27.7% of the revenue, up by more of 300 basis points compared with 2019. Overall, the sports betting PPO came to 75.9%, as I said before. Its 40 basis points decline from an already low level in 2019 was amplified by unexpected sports results towards the end of the year and note that the PPO level is not replicable in 2021. On this next slide, as I explained, EBITDA include BU and ABU contribution margin, net of holding expenses. So now we will have a look at the bridge from EBITDA to net income. Depreciation and amortization expenses amounted to EUR 102 million, up EUR 6 million compared with 2019, with a full year amortization of the 25-year exclusive operating rights entrusted by the Pacte Law in France, what we call the equalization payments, compared with only 7 months in 2019. Nonrecurring items represented a net expense of EUR 32 million, mainly including asset impairments on H1, nothing new on H2. Net financial income amounted EUR 5 million compared with nearly EUR 21 million in 2019. This change is explained by financial market trends and also by the increase of the cost of debt. The debt increased as the result of the EUR 380 million syndicated loan to finance equalization payments. After taking into account a net tax charge of EUR 85 million, consolidated net profit amounted to EUR 214 million at end of December 2020. This net result should not be compared to the 2019 reported net profit of EUR 133 million but to the EUR 202 million net profit adjusted of this year. It is a 5.9% growth on the net income. In 2020, the change in working capital resulted in an inflow of EUR 39 million. It has been adjusted for various positive but nonrecurring calendar impacts. CapEx totaled EUR 80 million compared with EUR 67 million in 2019. The increase in IT investments more than offset the crisis-induced decline in investment in POS equipment. The increase in other investment reflects the development of our logistic tools and our commitment for the Paris 2024 Olympic Games. The free cash flow amounted to EUR 386 million, showing an excellent EBITDA to cash conversion of 91%. One of the indicators representing the level of the net cash generated by the group is a net cash surplus. At the end of December 2020, the net cash surplus amounted EUR 577 million compared with EUR 298 million at the end of June 2020 and EUR 80 million at the end of December 2019. The increase is mainly due to the EBITDA contribution and the change in working capital, as explained previously. Throughout 2020, we have, on several occasions, communicated on an available cash position of more than EUR 800 million. It reached 1 billion -- more than EUR 1 billion at the end of the year versus EUR 853 million at the end of June 2020. The bridge from cash and cash equivalent of EUR 673 million as per the balance sheet to the available cash position is -- of just over EUR 1 billion, as I just commented, is the following. You add EUR 472 million of term deposit and you deduct EUR 86 million of EuroMillions funds not available. When then the bridge from available cash of EUR 1 billion to the net cash surplus of EUR 574 million is the following. You add the 20 -- EUR 246 million of other financial investments and you deduct the gross financial debt of EUR 571 million. You also deduct the remaining funds to be retroceded to the French state for EUR 156 million. Thank you for your attention, and I will now hand over to Stephane to conclude this presentation.

Thank you, Pascal. So I want to conclude briefly this presentation by saying a few words on our strategy and turning to 2021 perspectives. So on our strategy, I think this year allows us to express confidence in the future. The group has proved to be solid. Our business model has shown its resilience, and we are deploying a strategy that enables us to combine medium-term growth with good profitability. This is what we actually, I think, shown in those results. So it gives, again, credits, I think, to this strategy. Particularly the strategy that was developed over the last years in terms of digital investments, and, of course, in sports betting, but particularly in the lottery, which was the less digitalized of our activity, has proved to be very efficient and very convenient to give us the possibility to accelerate our online development as we did during this year. So 2020 is a year that has reinforced our conviction, our strategic convictions for 2020-2025 strategy, built around 3 business priorities. One is, of course, to continue to develop [ omnichannelity ] in lottery; continue to invest both in our point-of-sales network and on our digital offer as we did and as we continuously do. Second is, of course, to continue to accelerate our growth in sports betting, both in our point of sales, where we have been able to enlarge our offer and to show how this is generating growth, but of course, also in the online sports betting market, which we expect -- that we expect to be quite -- to continue to be quite dynamic this year and the years over. And also, as we stated, by making our business model more diversified in the future and, therefore, even more resilient with emerging activities such as international, B2B and payment and services. To foster these 3 business objectives, we will need to be definitely even more client-centric and to establish a deeper value-creating customer relationship, thanks to progressive customer identification, deeper knowledge of our customers and their ways of playing and interacting with us and also giving us new tools for responsible gaming excellence. So now when I turn to 2021, that has, of course, already started, I think it is fair to say that uncertainties persist today. And that it is a little bit too early to expect a fully normalized health situation. Although, of course, we keep hope that it will come during this year. And I think we see some positive signs but we have still to wait a little bit to see those signs materializing. We have started the year, however, on the basis of the lessons we learned last year. And on the basis of what we have learned in terms of adapting the activity of the company to a -- new extraordinary conditions. And so we believe that in 2021, we are in a position to continue to develop our activity, to continue to develop our portfolio of games and services sustained by our innovation policy and marketing policy and advertising. So lottery should return to a usual calendar of events and activities with more than 10 Loto and EuroMillions special events during the year. Instant games also should return to a more normalized planning of events. We have started in January by launching Objectif Maison, which is a scratch card, a EUR 3 annuity game and it is starting well. And we'll have a number of new games or relaunch of games planned during this year with, of course, some usual events such as Mission Patrimoine and also a third phygital game, both off-line and online. Regarding online games, we, of course, are going to continue to enrich the range of our offer with 2 or 3 launches per month, inclusive some -- including some exclusive games for online. Sports betting, of course, will be fueled this year by big events that I think we all hope, particularly the Euro 2021 Football Championship and the Tokyo Olympic and Paralympic Games. In anticipation for that, we are going to fuel our own growth by continue strengthening the richness and attractiveness on offer, both in point of sales and online. And in our other activities, for instance, payment and services, we will continue to develop -- for instance, in payment and services, we expect to continue to roll out the French Treasury collection of payment service. And we are going to extend this solution for payments, for bill payments from major service providers, energy, rents, et cetera, with the aim of reaching a significant number of point of sales offering this service by the end of 2021. So you -- I think you will understand that given the current uncertainties and the fast-changing nature of the health situation and the conditions of our business, we will not today restate a precise new guidance. We hope we will be in a position to do it and to communicate on our 2021 outlook as soon as possible in the coming months, when I think the situation will become a little more predictable in terms of our context. But in the meantime, again, I think we have the confidence that the company is able to manage its activity as we did last year and hopefully so in better and better conditions. So thank you for listening to us, and we are now ready to answer your questions.

[Operator Instructions] The first question comes from the line of Jaafar Mestari from Exane BNP Paribas.

I've got 3 questions, if that's okay. Firstly, on the online mix, which was 10% on average for 2020. During the year, are you able to say what was the highest online mix you achieved at any point in time? And did the online mix come down after the end of the second lockdown? Or is the shift now becoming more permanent? And secondly, you're flagging a number of exceptional or unusual mix impacts in H2 and in Q4 that may or may not repeat next year. Last year, you had a number for that. You were saying, we think there's EUR 12 million of EBITDA from long cycles. So are you able to quantify the euro impact in the same way for 2020? How much extra EBITDA would you say was from long cycles, from low player payouts, from above-trend digital mix during the lockdowns, for example? And lastly, just on your shareholder base. In May, if I'm correct, retail shareholders who have held for 18 months will get an extra share. Have you been able to gather any intelligence on the makeup of your 18% of retail shareholders? Do you think they're mostly invested since IPO? Or has it churned a lot already, for example?

Thank you very much. I will start by answering question first and question 3 and will let Pascal answer question 2. So on question 1, which is online mix, I think the highest growth of online was definitely during the first consignment. There, at some point, we had 100% of growth of our online lottery digital stakes. After that, it has -- I think that does answer your question. I think it has more or less stabilized at a level of 40%, which keeps this 60% over the year of growth of our digital mix. I think what is interesting, again, we are not in a normal period yet. So it's difficult to observe in reality what should happen when we come back to normal, if "normal" does exist. But what we have seen in the second half is that, yes, a lot of our players have come back to the -- to our point-of-sale networks. But the online activity has kept quite a dynamic trend, higher than the one that we had before. Before, we were growing at a level over -- I would say, over 20% per year. And now I think that we can expect to grow at a level, I think, closer between 20% and 30% but closer to 20% -- to 30%, sorry, in a normal period. But again, this is still recent and not in a context which is completely normalized. On our shareholder base, good question. Yes, it's true that next May, the individual shareholders that have bought their shares and kept their shares since the IPO will get 1 extra share per 10 shares on the indication that we have -- we believe that -- I think the majority of individual shareholders that have subscribed during the IPO have -- has kept -- have stayed with us. So we expect around 450 -- we think we have 450,000 shareholders today and probably that most of them were shareholders at the time of the IPO. We don't have the precise answer yet. But roughly speaking, this should be the type of numbers you might expect in terms of people being able to get this extra share. And after that, as you have understood, we will have our general assembly in June and the dividend will be paid on the 23rd of June. So I think all this will probably incentivize our shareholders to stay with us during this year. And Pascal on margin.

Yes. On the margin and the different effects, what we can say, firstly, on event -- on the euro impact, this -- the euro usually is with a higher PPO than other events. We have seen that in 2016. We have seen that also for the World Cup in 2018 because it's more obvious to bet from -- for the players and also because there is a competitive impact of every operator tries to offer the best odds on this event. So it's usually with a higher PPO. That's why we don't think that the PPO will be as low as it was in 2020. Second thing, Euro 2021 will be an event -- an important event on the -- to recruit new players who will invest a lot in marketing, in advertisement expenses. It will have a return in investment but later, so it's a little bit -- it will be a negative on our EBITDA margin. To maybe give you some more precise idea on the PPO impact, in December, the PPO -- global PPO of sports betting lowered by 1 point during December. And this is an impact of a little bit less than EUR 20 million of EBITDA. So this is quite a huge impact that you should not take into account as it was in 2020 in your guide -- in your expectation for 2021. Maybe a few words about the long cycles. Yes, last -- the -- in 2019, we had exceptional long cycles with an exceptional amount, and it has been an impact of EUR 12 million on the EBITDA. On 2020, the impact of long cycles was slightly positive but not as much as in 2019. That's why we did not restate something for long cycles. On the 3 -- first quarter of the year, we were with low long cycle than average. And on the fourth quarter, it was better than average with this EUR 200 million jackpot on EuroMillions. Overall on the year, it was slightly above average but not at a very important level. I think I've answered your questions.

That's very helpful. And things like the digital mix, which was above trend as well, is that something you'd quantify?

Yes. The digital mix will have 2 impacts in 2021. First, we will continue to have a growth higher in digital than on point of sales, so it is a positive for the margin. This is right for lottery. For the sports betting, you have to remind that the margin that we have on the sports betting online is not higher than the marginal sports betting off-line. It's not the same than on the lottery side. Or the point -- the mix between sports betting and lottery in 2021 will be more favorable to sports betting than lottery. In 2020, sports betting fell a drop higher than lottery. And in 2021, we will have a higher growth on sports betting than in lottery. So the mix will be more favorable to -- for sports betting. And if you see our figures, the margin that we have in sports betting is important but less important than on lottery. So this mix effect will be negative in 2021.

The next question comes from the line of Simon Davies from Deutsche Bank.

A few questions from me. Can I start off with cash resources? Can you talk a bit about the M&A pipeline and whether you're seeing much in the way of potential deals? And given the significant amount of net cash on the balance sheet, at what stage might you consider returns of cash to shareholders?

Okay. So yes, we have been able to protect our cash also, and that was not obvious at the beginning of the year but I think we are quite satisfied with that. We have not modified our view and our policy on potential M&A. We have not modified our priorities. So our priorities are still, one, to consolidate our sports betting activity if we have opportunities. Those opportunities have not materialized at this point. Probably, we were quite concentrated on the management of the company also, that it -- so maybe it was not at the top of our priority, specifically at the beginning of this year. And also contrary to what some people expected, the crisis did not have a negative impact on the value and price of sports betting players, which have been able, as we did also in the second half, to regain part of what they lost at the beginning of the year through a very dynamic activity. And also we had other activities online where they were more able to continue to grow than sports. So it is still at the top of priority but I would say no materialization at this point. Other priorities to a lesser to -- at a lesser extent or lesser size or smaller size does include everything that could boost our growth in, I would say, adjacent activities that would accelerate our growth in those activities that we expect to be more contributive to growth and EBITDA into the future. So at this point, we are not going to modify our expectations. And we are still -- we still think that strategic M&A is one of the key assets for the company to continue to develop further. And so no project to give it back to shareholders at this point, apart from the dividend that, I think, is quite a positive news for this year.

Great. And my second question was on online. Can you say what you think has happened to your market share in online sports betting during 2020? And do you see scope to materially increase that without broadening out your offering, i.e., moving into areas such as online poker?

For our market share, we think it was roughly stable from what we say. It was quite a fight for us this year, precisely for a reason, I think, related to your second question, which is that contrary to other sports betting online players, we didn't have poker or horse racing to, I would say, keep some activity during the first half of the year and cross-sell those players to sports betting. So clearly, there, we have, I think, a disadvantage. So I think we were quite satisfied to be able to roughly maintain our market share as we expect. Therefore, we are definitely thinking that to have a sustained sports betting activity in the future, we need to diversify it. And that's part of the reasons that we might do some M&A or other ways to diversify this activity.

Great. And lastly, the regulator, the ANJ, recently expressed some concerns about marketing practices in the gambling space in France. What is your response to that? And do you expect any change in marketing strategies in the short to medium term?

Well, the -- you have to have in mind that the new regulator, the ANJ, in fact, did, for the first time ever, examine the promotional strategies of all the actors in the gaming and gambling market. So it was really the first time that there was this examination and therefore, communication. For us, there was approval of our strategy so there was no negative decision as such. I think it is quite normal that the regulators and specifically, the new regulators with these new responsibilities on to advertising and promotion plans should express some warning about the players. So I think that's quite, again, normal and expected. We don't expect, at this point, any change in regulation. But we expect, I would say, a natural dialogue with the regulator on the basis of what they will see on the market. And I think this, of course, is not only directed at us but also at all the other players that I will not mention here because it's not -- none of my business. Thank you.

The next question comes from the line of Sabrina Blanc from Societe Generale.

Sabrina Blanc speaking. I have 3 questions, if I may. Firstly, can you come back on the -- what you said about the EBITDA margin in 2020? Because, for example, you said that taking to account the player payout in December had something like a 1% impact at EBITDA level. So if we exclude this level, can you provide any guidance of your confidence about the margin for 2021? And my second question is regarding the ongoing curfew that we have today in France. Have you noticed any differences compared to the previous one due to the fact that we are stuck at home at 6:00 in the evening?

So on the margin, Pascal, you want to come back?

Yes. So on the margin, the 3 major impacts we had -- positive impacts we had on the margin on 2020 is one, this PPO level very low that you mentioned and I explained a little bit before. And we think that -- we don't know what will be the PPO of 2021, to be clear, but we cannot expect it to be as low as it was in 2020. As I explained, with the Euro Championship, with the very high competition on the sports betting area, we cannot expect such a low PPO. Second impact in -- just to come back to that, I said that it was a little bit less at EUR 20 million. It is quite exactly the gap between our guidance and our EBITDA or our final EBITDA if you see it. Second impact was the mix very favorable to online lottery that we mentioned before. This will still be the case in 2021 because we expect online lottery to continue to grow. So you can expect the margin of the lottery to continue to be higher or even to grow if the condition are there in 2021. And we don't know what will be really 2021. The third thing was our cost reduction plan of EUR 80 million compared to our budget and EUR 40 million compared to 2019. And we will reinvest major part of that because half of this cost reduction plan was marketing expenses. And we will be higher in 2021 on marketing expenses than 2020 obviously, but higher also than 2019 and higher than was the budget of 2020 initial. So we will not have this positive impact. If we come back to 2021, we will not provide any guidance for 2021, but I can give you some more color about the year, how can be this year. If we don't have a new lockdown, the first half of the year should be quite similar to the H2 of 2020 with some -- maybe slightly lower because we will have a longer period of the closure of bars. And you know that the closure of bars have an impact on -- have an impact, especially on Amigo. And we will not have, in H1, the particularly high activity that we have at the end of the year. So this is not -- and we'll not have also the catch-up that we had on H2 2020 on sports betting because we have more events on sports betting on H2 2020 to catch up the events canceled on H1. So we can expect first half of the year slightly lower but comparable to H2 2020. And if the conditions and the health crisis is coming to an end by the middle of the year, we could expect a second part of the year with a growth back to our normal growth. But again, it's -- just to give some color, it's not -- clearly not a guidance. We don't know what will be 2021. On the margin on 2021, I think you should not take the margin of 2020 as a good benchmark for 2021. It could be lower for the reasons I've already explained but it should be higher than the margin of 2019. We are in the process of improving our margin on the medium term, and we will try to improve it comparing to 2019. But the 2020 figures are not a good comparison, if I may say that.

And on your question on the impact of the curfew. No, just I will -- it's -- well, we have not measured it in a long period, so it's -- I think it's still to be assessed over some -- over the next months. If it was to continue, we don't see major impact of the curfew. Probably the most significant impact could be on sports betting in our point of sales because it is definitely an activity that people tend to practice more at the end of the day than at the beginning of the day. On lottery, it doesn't seem to be significant. That's what we know at this point.

[Operator Instructions] The next question comes from the line of [ Mitsa Ho from Pictet ].

I have 2 questions. The first one is related to the sales commission. I was just making a simple calculation on sales commission for 2019 and 2020 coming from your press release. So important, 2019, you paid EUR 859 million of commission, which is about 41.9%, which dropped to EUR 172 million in 2020, which is about 40.2%. You explained well that the -- this level of commission was coming from the development of online sales versus the POS. And that -- part of that should be sustained in 2021, which -- oh, there's an echo. So how much of this 170 basis points of margin could you keep in a normalized environment because you will have a kind of restart of your normalized POS? And the second one, if I understand well, the previous question you mentioned about H1 and H2. So if I take H1 EBITDA -- H2 EBITDA, you mentioned, so the EUR 253 million. You said H1 2021 should be comparable to this, minus a certain number so let's take EUR 20 million, EUR 30 million out. And 20 -- the second half should grow normally over this level. So we get to an EBITDA for 2021 of EUR 480 million, EUR 500 million, if I'm not mistaken in that respect. So could you maybe answer those 2 elements?