FDJ publishes strong financial and non-financial results

Strong 2018 results: revenue of €1.8 billion up +2.3% and EBITDA margin of 17.5%, with net income of €170 million

• Retailers' commission increased by +4% to €785 million.

Strong economic and social footprint: contribution of €5.4 billion to GDP, +2.9% vs. 2017

• 52,500 jobs created or maintained

• Territorial impact: 20,350 jobs created or maintained in local bar-tobacconist-press stand network

For Stéphane Pallez, Chairwoman and CEO of the FDJ Group: "The financial and non-financial results of the Group confirm the relevance of our business model which combines strong operating performances, redistribution to the community, including the French national heritage since 2018, Responsible Gaming and a strong economic and social footprint. They enable the FDJ Group to continue investing, both in digital transformation and in CSR. With that in mind, FDJ undertakes to allocate, as from 2019, 10% of its television advertising investment to Responsible Gaming."

• Revenue of €1.8 billion, up +2.3% against 2017, and EBITDA margin of 17.5%.

In 2018, players’ stakes increased by +4.4% to €15.8 billion and players’ winnings increased by +5.7% to €10.7 billion, with a return to player rate (RTP) that rose from 66.8% to 67.6%, mostly attributed to the strong performance of sports betting.

FDJ recorded a gross gaming revenue (GGR = player stakes - winnings) up by +1.9% to €5.1 billion with an almost 50% share of the French gambling market.

FDJ’s contribution to public finances increased by +2.8% to €3.5 billion, of which €3.3 billion were public levies on stakes.

FDJ’s revenue in 2018 came up to €1,803 million, +2.3% against €1,762 million in 2017.

In 2018, the Group’s operating expenses, excluding amortisation, amounted to €1,488 million, increased by +2.9%, notably following the first phase of the retailers' commission scheme increase, overall up by +4% to €785 million.

The agreement with retailers signed at the start of 2018 with the aim of fully associating them in the company's sustainable development, took effect in two stages:

• In 2018, retailers stopped making rental payments for point-of-sale furniture (more than €13 million in 2017) and were paid for promotional activities, overall equivalent to 0.1 point of commission;
• In 2019, the second phase of the retailers’ commission increment comes into force, differentiated by games in order to support low stakes scratch games and sports betting, equivalent to 0.2 point of commission

In the course of these two years, retailers’ average global revenue will increase by 0.3 point, leading to an average commission of 5.5% to retailers compared to 5.2% in 2017 (95% of players’ stakes are placed in our network of more than 30,000 points of sale).

FDJ recorded a stable EBITDA of €315 million, a healthy margin of 17.5% on revenue.Excluding the impact of the retailers' increased commission, EBITDA would have increased by +4.6% and the EBITDA margin by +0.3point.

Operating income was stable at €257 million.

• Solid net income of €170 million

The FDJ Group's net income in 2018 came to a solid €170 million, against €181 million in 2017, taking into account the financial results affected by market developments at the end of 2018.

With shareholders' equity up by €44 million to €564 million and a cash surplus up by €33 million to €841 million at the end of December 2018, the FDJ Group continue to present a sound financial structure.

• CSR policy: increased emphasis on Responsible Gaming and strong commitment against underage gambling in 2019

Corporate Social Responsibility (CSR) is at the core of the company's sustainable development model with Responsible Gaming as a key priority.

FDJ reinforced retailers’ training to prevent underage gambling with more than 13,000 of them trained in 2018.

During the World Cup, FDJ aired awareness campaigns on the prohibition of underage gambling while also adding a reminder at the end of its Illiko (instant games) TV campaigns. These actions amounts to more than 2% of FDJ's 2018 television advertising budget. FDJ announces that, as from 2019, 10% of the Group's investment in television advertising will be allocated to Responsible Gaming and particularly underage gambling[1].

In 2018, FDJ maintained its level of compliance with the European Lotteries Responsible Gaming certification at 100%, the highest level of commitment obtained since 2012. Its level 4 certification, corresponding to the highest level of global commitment, was also confirmed by the World Lotteries Association in 2018.

Beyond that, FDJ is committed to:

• fighting fraud and money laundering: a risk analysis was conducted on €4 billion worth of transactions in relation to gaming and payments of winnings in 2018; In 2019, a money laundering risk assessment tool will be developed and applied to all physical and digital bets;
• promoting diversity: FDJ obtained a score of 84/100 on the new "gender equality" index established by the Avenir Professionnel law of September 2018 and the Group continues to reinforce its actions to improve its score in 2019;
• fighting against global warming: in the 10 years between 2007 and 2017, FDJ's greenhouse gas emissions fell by 8% while revenue grew by 62%. In 2019, FDJ will implement an ambitious action plan with the aim of reaching carbon neutrality this year and reducing its carbon emissions by 20% by 2025.

 

• Contribution of €5.4 billion to GDP, +2.9% vs. 2017, and 52,500 jobs created or maintained.

For the third year running, the BIPE (French Information and Economic Forecasts Bureau) assessed the Group's economic and social contribution in France[2].

In 2018, the contribution by FDJ to national wealth came to €5.4 billion, +2.9% more than in 2017 and representing 0.2% of Gross Domestic Product. The economic leverage effect brought about[3] by FDJ is similar to that of the construction sector.

In terms of employment, FDJ created or maintained 52,500 jobs in France. Between 2016 and 2018, the average annual growth was +0.7%.

FDJ's contribution is noteworthy for two ecosystems:

• the State, with an overall contribution of €3.6 billion to the State budget, up +3.3% against 2017, of which €3.5 billion to public finances and €0.1 billion in dividends;
• a network of local retailers with €785 million in commissions, FDJ created or maintained 20,350 jobs in 2018. Overall, FDJ contributed to 20% of employment in the bar-tobacconist-press stand network. With an accessible point of sale in less than 10 minutes on foot in towns or by car in rural areas, via more than 30,000 points of sale in more than 10,000 municipalities, FDJ has one of the largest local networks nationwide.

FDJ supports other ecosystems, with €160 million redistributed and 6,200 jobs created or maintained, i.e. 12% of total employment attributed to FDJ:

• French sports, both professional and amateur, through the action of the Centre National pour le Développement du Sport (National Centre for Sports Development) and numerous partnerships for €116 million;
• French national heritage thanks to funds contributed to the Fondation du Patrimoine from the Mission Patrimoine games set up in 2018. FDJ redistributed €22 million in 2018, matched by the State, allowing for more than 230 sites to start receiving financing;
• the social action and the memorial contribution of its founding shareholders and war veterans’ associations: Union des Blessés de la Face et de la Tête (Union of those Wounded in the Face and Head) and Fédération Nationale André Maginot received €18 million in dividends in 2018 which contributed more than 90% to their budgets;
• The Foundation FDJ’ actions encouraging equal opportunities by supporting more than 100 national and local non-profit organisations with a budget of €4 million in 2018.

About FDJ Group:

FDJ, the national lottery and the French leader in gambling and entertainment, the #2 Lottery in Europe and #4 worldwide, offers more than 90 games, lottery – draw-based games (Loto, EuroMillions) and scratch-card games (Millionnaire, Astro, Végas, Cash) - and sports betting (ParionsSport), at points of sale and on line.

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

In 2018, for 25 million players, with more than 30,000 points of sale and 2,200 employees, FDJ collected €15.8 bn in player stakes, 15% of which were digital, distributed €10.7 bn to its players, contributed €3.6 bn to public finance and paid its retailer network €0.8 bn.

Appendix: Summarised financial data

In €m	2017	2018	Change
Player stakes	15,144	15,817	+4.4%
Players' winnings	10,122	10,697	+5.7%
Return to player rate (RTP)	66.8%	67.6%	+0.8 pt
Gross gaming revenue (GGR)*	5,022	5,120	+1.9%
Gross gaming revenue as % of player stakes	33.2%	32.4%	-0.8 pt
Net gaming revenue (NGR)**	1,727	1,774	+2.7%
Net gaming revenue as a % of player stakes	11.4%	11.2%	-0.2 pt
Revenue***	1,762	1,803	+2.3%
EBITDA****	316	315	-
Amortisation and depreciation	54	64	+17%
Current operating income Operating income	261	251	-3.9%
Operating income	258	257	-
Net income	181	170	-5.8%
Net cash flow from operating activities	257	227
Investment in intangible and tangible assets	89	93	+4.9%
Net cash position*****	808	841
Shareholders' equity	520	564

* Gross gaming revenue: player stakes reduced by players' winnings

** Net gaming revenue: gross gaming revenue reduced by government levies

*** Revenue: net gaming income and income from other activities

**** EBITDA: current operating income restated by amortisation and depreciation.

***** Net cash position of financial liabilities