Ayvens (AYV) Earnings Call Transcript & Summary

Welcome, and good afternoon to all. We are pleased to host you for this Capital Market Day. And I will present our new strategic plan with Patrick and Bernard. This presentation will be divided into 3 sections. A reminder of our track record in the last few years and our environment, the presentation of the 3 pillars of our plan, our financial trajectory and a brief conclusion. Our clients at the heart of everything we do. They run from very large international corporations to local businesses and private consumers. While their needs can vary, they share a common expectation, the trusted fleet partner, Ayvens, provide them with a hassle-free mobility. It allowed them to focus on developing their businesses. Let me now give the floor to 3 of them. The first testimony is from Siemens. Ayvens operates for Siemens fleet across 29 countries. It highlights the breadth of services and value we provide to large international companies. [Presentation]

The second video is from Jan Sevankoven, a dealer group and a long-time partner of Ayvens. [Presentation]

And now our last testimony from [indiscernible], illustrating our service offering to retail customers. [Presentation]

First, many thanks to them for their testimonies. They provide a poriferal reflection of the value we deliver to our clients. They also demonstrate the long-lasting relationship we build with them, which spend an average over 12 years with our large international corporate clients. Our strategic journey over the last 3 years was built around the simple ambition to create the leading leasing company and fully capture the scale benefits of merging ALD and [indiscernible]. The integration involved the execution of IT migrations across 21 countries in a regulated environment. Against that backdrop, we successfully delivered the promised EUR 440 million gross synergies, annual run rate. It contributed to the decrease of our OpEx base by EUR 320 million and the continued improvement in our margins, which are now at around 590 bps. As a result, we're on track to deliver on 26 targets, in particular, underlying cost-income ratio at around on the ROE in the range of 13% to 15%. Our strategic execution has led to strong value creation for our shareholders. The total shareholder return reached 98% since January 1, 2024. Liquidity of the stock is also up by 120%. It led to Ayvens' inclusion in major equity indices. We are now entering our next phase of development with strategic plan Ayvens 2029. While maintaining a strong focus on profitability, our strategy will be driven by balanced approach, optimizing both growth and returns. Over the next 3 years, we expect to deliver a funded fleet growth of at least 3%. Earning assets will grow by around 10%. Leveraging our superior scale and tech, notably AI, we'll continue to enhance the intrinsic profitability of our business through further cost efficiencies, simplification and standardization initiatives across the group. If we look beyond 2029, we positioned today the group to capture the opportunities arising from evolving customer needs and technological innovation. The 2029 financial targets mark a clear upgrade versus [indiscernible] '26. In 2029, we target to deliver a cost-to-income ratio, excluding inflation in Turkey, at 49% and are already in the range of 14% to 16%. We increased our cash dividend payout target between 50% and 60%. And we will also be distributing excess capital back to shareholders. Finally, we raised our CET1 ratio target to circa 12.5%, which is aligned with how we've steered the company over the last 2 years. Let's now deep dive in the environment in which we operate. In Europe, registrations of new vehicles declined and remain structurally below the pre-COVID level. At around 13.3 million vehicles in 2025, they remain 16% below 2019 and expected at 12.5 million vehicles in 2030. In this context, the operating lease market has proved very resilient with a slight growth, hence, has clearly outperformed the auto market. Going forward, the operating lease market is expected to grow by 0.4% per annum, boosted by the transition from ownership to usership. On top of that, the good news is there are sweet spots within the overall leasing industry with higher growth prospects where we plan to gain market share. As a result, for the next 3 years, our funded fleet will grow by more than 1% per annum. Let's now comment on electrification, a key change in our industry. In its early phase of development, BEVs didn't fully answer customer needs in terms of range and charging time, besides new BEV prices stood much higher than those of ICE cars. Last, charging infrastructure was underdeveloped. The BEV market is still in a transition phase in which electric vehicle specification and infrastructure are progressively bridging the gap with current needs. This will lead to a further reduction in resale value uncertainty. New car prices and EV result values will progressively converge towards a lot of ICE vehicles as electric vehicles become the new norm. At the same time, used cars customers' adoption of BEV is increasing, thanks to a clear advantage in terms of cost of ownership versus traditional ICE cars. For Ayvens, it means that we will progressively be in a position to seize more growth opportunities. Now turning to the competitive landscape. Banks, leasing captives of car factories on car dealers were totally active on financial lease and small fleets. These actors are developing operating lease activities. Why? Mainly because of the operating lease market has not decreased in a declining auto industry. On our side, at Ayvens, we have developed strong commercial tranches with international and large corporates. We're already strong in retail, which, in our definition, includes SMEs and private consumers, but we can clearly continue to develop. We are uniquely positioned to leverage the continuous shift to usership from retail customers. Let me go into more details on the next slide. First, with the largest fleet on the broadest geographic footprint, our scale is driving a key operative advantage impacting many aspects of our activities. Procurement is quite obvious. As an example, each year, we purchased around 600,000 vehicles and 3 million tires for a yearly investment of around EUR 20 billion. The economies of scale translate into a lower cost to serve our clients. Second, we gather considerable amount of data on our running fleet across 40 countries. This allows us to monitor proactively our clients' fleet and provide them the right services. Finally, we have developed a skilled and unique expertise in managing reserve value risk across all powertrain for all major models. Next slide, please. Going forward, the overall operating environment will create growth opportunities for Ayvens, which we will fully leverage now that we are done with our intensive integration phase on that uncertainty on BEV's residual values has started to reduce. As the leader in the industry, we are uniquely positioned to leverage our scale, capabilities and customer reach to capture incremental share. We will grow organically and also potentially through small bolt-on acquisitions. New OEMs, particularly from China, have emerged. The Chinese OEMs already gained a 6% market share in Europe in 2025 and 9% in H1, '26. For the new entrants, without a financing captive, Ayvens is a preferred partner with the broadest client reach. This is reflected in the partnerships we have established with companies like Tesla, BYD and Chery. The transition towards electric mobility gives us the opportunity to develop and scale new products and services, supporting both our growth and profitability objectives. Let's now get into the action plan and its projected financial impacts. The acquisition of LeasePlan has created a strong positive scale effect and allowed to build a resilient group in the context of electrification, but it also brought some complexity on disruption. This next strategic phase is about growing on selected sweet spots and develop new revenue streams. This is a first part -- the first pillar of our Avon strategic plan with [indiscernible] grow selectively and upsell. Second, putting our clients first means providing them with best-in-class service. Indeed, we strive for operational excellence every day at every layer of the organization. So excel is the second pillar of our strategy to make Ayvens simpler more efficient and easier to work with, leveraging our talented people, data, tech and AI. Third, our responsibility is not only to manage today's mobility, but it is about preparing the future. As technologies accelerating, transform is the third and last pillar of our strategic plan. Our strategy will rely on solid foundations, our people, a robust risk management framework on a business model, which is increasingly sustainable. Let me elaborate on value creation for each share stakeholder. We provide our customers cost efficient and hassle-free mobility services. Our clients, notably large corporates, are also increasingly looking to reduce their fleet emissions. Ayvens' impact on this aspect is measurable. In 2025, battery electric vehicles accounted for 32% of Ayvens' deliveries in Europe. The successful execution of our strategic plan will first and foremost depend on our people. Now that integration is behind us, we'll focus on developing our people by creating an engaging and impairing work environment where they can develop and thrive. [indiscernible] we create value for our shareholders. Over the past 3 years, this meant prioritizing value over volumes and maintaining a disciplined focus on returns. As we enter the next chapter, we will leverage our competitive strengths to optimize both growth and profitability, translating into superior returns for our shareholders. To achieve our ambition, we're aligning the culture across events with our strategic priorities, fostering accountability, performance and embedding client centricity across the organization. As a first step, I streamlined the Executive Committee in February, establishing clearer and more actionable areas of responsibility to accelerate decision-making and execution. This principle is now being cascaded through the organization with delayering an increase of span of control. These simplified structures are designed to increase execution speed. AI represents a major opportunity to further improve our operating excellence and efficiency. Together with our data capabilities, it will enable smarter decision-making, greater automation. Beyond technology deployment, success will recur a cultural shift. We are training employees on new technologies, leveraging data more effectively and integrating AI into the daily work. Finally, in a moving environment, agility remains essential to anticipate change, at a quickly and capture emerging opportunities while proactively managing our risks. Next slide. Following the acquisition of LeasePlan, Ayvens became a financial holding company regulated by the ECB. It led to a substantial enhancement of our risk management framework, governance and control environment. Our robust risk management is essential to protect our balance sheet and deliver sustainable returns. It covers all of our risks. [indiscernible] value risk remains our most significant exposure and a key area of expertise. The effectiveness of our setup has helped the group navigate the material disruption in the current leasing industry. Indeed, the most structuring change has been the electrician of vehicles, which have emerged as a distinct asset class with their own resale value drivers and risk dynamics. Among leasing players, we are the first to adapt our BEV pricing. The divergence in used car sales results across the sector illustrates the benefits of acting early. We'll continue to closely monitor resolve value developments and maintain a disciplined approach to risk management. Turning now to sustainability. We take an end-to-end approach from responsible sourcing, sustainable mobility solutions to life cycle management, a particularly compelling opportunity is circularity in repair and maintenance. There is significant untapped potential to extend vehicle leasing life, increase the use of refurbished spare parts reduce waste and improve economics at the same time. This integrated approach is supported by a robust ESG risk management and transparent disclosures that meets the expectations of regulators, investors and other stakeholders. This approach delivers measurable results. Our objective is to reduce the CO2 intensity of our lease fleet to between 75 and 85 grams per kilometer by '29 compared to 1.01 grams in 2025. This supports our SBTI validated decarbonization pathway that remains unique in our industry and reflects the credibility and ambition of our transition plan. These actions create value across our business, helping customers transform their fleet, optimizing our costs, strengthening employee engagement and enhancing our brand. I will now ask Bernard to present our first pillar, Grow.

Thank you very much, Philippe. Our ambition is clear. we want to gain market share while optimizing returns. And we expect our funded fleet to grow by more than 3% between 2026 and 2029. This will increase our earning assets by approximately 10%. We will target profitability growing geographies. We will also focus on attractive segments. We plan to grow our retail fleet by 15%, and we plan to grow our LCV fleet by around 10%. At the same time, we will increase service penetration across our client base. This will support service margins. We will start with our established insurance and damage cover offer. Here, we plan to raise penetration by at least 3 percentage points. Evolving mobility needs and technologies also create new service opportunities. And by 2029, we plan to roll out Avons Power, our EV charging solution. in 15 countries is where we plan to roll it out. We will also scale our LCV programs across markets. These include vehicle on road optimization, proactive service planning and preventative maintenance. Let us now look at our growth and upsell plans in more detail. We expect modest growth in the operating lease market. As Ayvens, we will focus on some segments that have more growth and profitability potential. To achieve this, we screened the market through several lenses. We looked at geographies, customer segments and products. We then selected the most compelling growth opportunities. Our ambition is to grow our funded fleet, by more than 3% between 2026 and 2029. Let us take a close look at the selective approach, starting with geographies. Western Europe accounts for 80% of our funded fleet. And within this region, we have identified 2 groups of countries. The largest group consists of mature markets. These already have high leasing penetration especially among corporate clients. In those markets, we aim to maintain and reinforce our leadership. And the second group consists of medium growth markets, mainly in Southern Europe. Here, we will expand selectively through the most profitable channels. The U.K. is a distinct market. And as you know, we are already reshaping our commercial footprint here towards segments with stronger profitability profiles and the net effect will be a reduction of the U.K. fleet. By contrast, Eastern Europe, Asia and Latin America offers strong structural growth prospects. Their markets and leasing penetration are less mature. Their fleets are also predominantly ICE. These regions account for only 8% of our funnel-free today. But they offer another avenue for growth. We do not plan to enter new countries, instead we will accelerate development in our existing markets and outgrow the market. Let us now turn to our strategy by client segment. The corporate segment is already mature in Europe. So we expect growth to come mainly from retail clients, private consumers and SMEs. This segment should grow by around 7% between 2025 and 2029. Our ambition is to grow at roughly twice that pace. Retail clients are also attractive in terms of profitability. On average, margins are about 50 basis points higher than for our corporate clients. We already have a well-established retail footprint. These clients account for close to 1/3 of our funded fleet today. We serve them directly through our online showrooms and indirectly through our partners' networks and platforms. And to increase our retail coverage, we will industrialize our distribution capabilities. Digitalization will be a key enabler to improve the client experience and operational efficiency. It will also support scalable growth. We will use AI and digital capabilities to create a simple and seamless journey. It will be fully integrated through the contract life cycle. We will return to the specific initiatives and road map later. Light commercial vehicles are another compelling opportunity. The market should grow by 7% between 2026 and 2029, and demand remains largely focused on ICE vehicles. This offers an attractive mix of growth, profitability and limited residual value risk. And to capture this opportunity, we will sharpen our commercial focus on SMEs and underpenetrated markets. At the same time, we will come strengthening our LCV proposition through differentiated services and operational expertise. One example is our turnkey offer, proprietary turnkey offer. It is an in-house best-in-class solution. Clients get access to pre-configured vehicles that are available immediately. We use our scale in vehicle procurement and conversion. This lets us offer competitive pricing and a faster, simpler customer experience. The solution is already deployed in the Netherlands, and we will roll this out in more markets. Beyond vehicle supply, we help clients maximize vehicle availability and productivity. We do this through vehicle on-road optimization, proactive service planning and preventative maintenance. These services include downtime and improved utilization. To keep our clients' businesses running efficiently, this is especially valuable for LCD clients. Every day off the road directly affects business performance. Our uptime management capabilities are most advanced in the U.K., and they are considered to be best-in-class, and we now plan to expand them across our entities. Electric LCVs are another growth driver. OEMs are improving their lineups, ranges are longer and operating performance is stronger. Electric vehicles can therefore, meet our commercial fleet needs. In electrification, also offers favorable economics in a high fuel cost environment. Together, these factors should accelerate adoption, and we aim to lead this transition and support clients throughout the electrification journey. Together, these initiatives position us to gain market share in LCVs. And we aim to grow our funded fleet in LCV from around 530,000 vehicles today to approximately 580, 229. The second part of our growth plan is upsell. We will increase service penetration and develop new value-added offers. This will support revenue growth. It will also help offset the expected decline in maintenance margins as electrification reduces servicing needs. Service penetration varies across markets, surface categories and client segments. This creates a significant opportunity to increase our share of wallet. The opportunity is especially strong in insurance and damage cover. As technology mobility patterns and client expectations evolve, new service opportunities are emerging. We plan to expand Ayvens' Power, our EV charging solution and to scale our LCV fleet. Downtime management services across markets. Let us look at 2 concrete examples, starting with insurance and damage cover. Insurance is an attractive growth area with a compelling risk and return profile. Motor insurance is typically high frequency, low severity business. and Ayvens is well positioned to serve corporate and SME clients. We can provide timely, best-in-class service on competitive terms. We control repair costs. And we monitor our clients' fleets in close collaboration with them. Ayvens has well-established expertise and strong footprint with its dedicated fully fledged insurance subsidiary. We plan to build on this position and increase penetration by 3 percentage points from the current 53%. In short, this business has 4 attractive characteristics, low operational volatility, strong client retention among those who choose our offer, no funding requirement and an accretive contribution to the group's ROTE. Let's move to the second example of upsell opportunities. Our ambitions in electric vehicle charging provide a concrete example of how we intend to turn market challenges into growth opportunities. For many clients, charging remains complex. They must find an available charge point, navigate different networks and manage different payment methods. Ayvens' Power simplified this. A single card gives access to more than 1 million charge points across Europe. This creates real value for clients, and it strengthens our relationship and generates recurring margins. The Ayvens' Power Card and app are already available in the Netherlands and Norway, and we plan to roll them out progressively to 15 countries by 2029. The financial contribution will grow over time and more than compensate the decrease of fuel card revenues. Having covered our growth ambitions, I will now give back the floor to Philippe for a second pillar of our plan, excel.

Thank you, Berno. As you can see on screen, our costs include EUR 1.7 billion of annual OpEx and EUR 2.6 billion of vehicle operations annual spend in 2025. There remains significant potential to further enhance productivity and efficiency across the organization by simplifying and standardizing our processes. With AI capabilities, we intend to enhance productivity by 30% on selected key processes through the automation of labor-intensive process. On IT, specifically, we spent around EUR 450 million per year. Ambition is to build a more harmonized, efficient and scalable technology landscape. It will reduce costs while progressively shifting resources from run activities to projects that enhance our capabilities and support future growth. AI will be instrumental in accelerating this transformation. Overall, these initiatives will be driving a steady decrease of our OpEx throughout the Ayvens' 2029 strategic plan. It will also addressed the operating cost embedded within our service margins. We have identified further opportunities to leverage this group scale, optimize supply spending and improve efficiency. As a result, we are targeting a 2% reduction in lease costs by the end of 2029. Let's see that in detail. We are determined to leverage AI as a key enabler of our ambitions, driving greater operational efficiency, low cost and client satisfaction. We see a significant potential to be more efficient in our business processes. We are targeting 30% efficiency on 8 core processes across finance, commerce, on service and operation functions. We will also simplify the customer journey and fulfill our ambition towards our clients make mobility easier. On IT, we're equipping our developers with AI-powered tools and capabilities to accelerate delivery and improve productivity, targeting a 30% efficiency gains across the software development life cycle. Realizing this potential is as much about people as it is about technology. We have launched dedicated training to all our staff with more than 3,200 employees already trained to date. -- and we'll complete the training across all our projects in the coming months. Let's now look at 2 concrete examples of how we are leveraging AI to optimize the customer journey starting with customer request handling. Customer interactions are a critical part of our service model with more than 15 million contacts managed every year. To address growing customer expectations, while improving efficiency, we are developing an AI-powered customer interaction model. We have done first deployment in Belgium and France before scaling to other large countries. To illustrate how this will work, imagine a customer looking for information about vehicle delivery, a contract amendment or an invoice. Instead of contacting an employee in customer service directly, the customer can first use a chat bot through MyAyvens. The chat bot will instantly answer questions using customer-specific information and our knowledge base. If the inquiry requires additional support, the conversation can seamlessly move to live chat or another preferred digital channel. The customer doesn't need to repeat information. For more complex cases that require human intervention, AI supports our service agents by gathering relevant information and preparing draft responses. Our staff remains fully in control of the customer interaction but benefit from faster processing, reduced time [indiscernible] work and more consistent responses. It allows our teams to focus on the interactions where human expertise creates the greatest value. This improves customer satisfaction, increased productivity and lowers our cost to serve. Let's now move to the second use case as the second use case on onboarding. Client onboarding is a critical step in the customer journey. Today, our KYC and credit onboarding processes are fragmented, differ across countries and still rely too heavily on manual activities. We onboard every year around 100,000 clients. Streamlining and automating those processes represent another significant opportunity. Our strategy is to build an efficient and risk-resilient onboarding model by harmonizing and optimizing practices across countries. We will accelerate digitalization, strengthen data quality and deploy core onboarding capabilities across the organization. We'll build a scalable operating model with faster onboarding, lower cost per client and better quality of control and TOIC. It will also help us accelerate retail expansion while maintaining a low cost of risk. Let's move to IT strategy. Following the integration of [indiscernible] LeasePlan, we operate a fragmented IT landscape. Our vision is to progressively harmonize our technology landscape and implement a global monetary platform across the group. Together with the simplification and standardization of our processes, the GMP will drive automation projects on a more consistent customer experience. It is built as a set of independent modules that can be deployed separately from one another. This means we do not need to implement the full platform everywhere at once. Instead, we'll prioritize deployments where business needs and value creation opportunities are the greatest. Our investment priority is the front end, where customer interactions are a key differentiator and where tailored solutions can create the most value. For back office activities, our objective is to leverage standard solutions with a proven tax record. This plan will allow us to reduce our IT intensity ratio by 3 points to reach 12% in 2029, while improving the allocation of our technology investments. This will be done with an increase of 50% of our build costs while reducing the rent cost of our application. On next slide, vehicle operations represent a cost base of more than EUR 2.6 billion of annual spend. Across the group, some countries are already delivering best-in-class performance, demonstrates that the practices, tools and capabilities required already exist within Ayvens today. Our focus is to deploy its best practice across our entities. One area where scale creates tangible value is procurement. We are further strengthening purchasing discipline and leveraging our size to secure better commercial terms. This includes increasing preferred network steering and repair and maintenance as well as expanding preferred brands and supply agreements in tires. The second area is about improving the way we manage our spending. Key initiatives include spare parts optimization, more disciplined repair processes and [indiscernible] management. We also ensure repair versus replace decisions in line with best-in-class standards. Finally, beyond these examples. We see significant potential in systematic cost control. The combination of AI, a 50 million event data lake, country benchmarking on control towers will further enable us to detect inefficiency faster, to challenge performance more effectively and continually improve cost to serve management across the group. By 2029, we target to cut our net spending in service margins, so represent net savings of about EUR 60 million per annum. Remarketing is another critical part of our business. We expect to sell more than 500,000 vehicles per annum. There are 2 main drivers of the remarketing performance. The first is a price at which we sell vehicles. So we will direct vehicles to the best sales channels, carefully manage resell timing to avoid stock accumulation and measure our performance versus market benchmarks. The second is the cost of selling vehicles, which is largely logistics related. We focus on reducing the time vehicles remain in our remarketing chain and challenge the cost of each logistic provider. Looking further ahead, we aim to embed remarketing much more deeply into our value chain. By leveraging its expertise on market intelligence, remarketing will play a greater role in vehicle purchase decisions. It will help determine the right vehicles, specifications on acquisition prices to optimize resale values and maximize life cycle returns. Overall, these initiatives will improve our remarketing performance with a target to improve by 1% to 2% the average used car selling price. Let's now turn to the third pillar of our strategic plan, transform. Creating long-term value also require us to anticipate how the mobility ecosystem will evolve and to position Ayvens to capture the future opportunities. Customers are increasingly looking for affordable solutions, creating an opportunity in used car leasing. Use car lease that we name re-lease, is a natural extension of our retail growth engine. We think our customer value proposition, the rest is the issue of affordability. It combines lower cost, 15% to 25% cheaper than your new vehicle lease, and high quality of the assets with no reserve risk for the customer. It will become more and more attractive with used BEVs when the market matures as BEV have a lower maintenance cost. We are confident we can grow this product to a 1000 plus fleet in 2029 with a higher potential in 2030 decade as electric becomes the new norm. The model delivers accretive profitability versus traditional new vehicle leasing. Next slide. Software-defined and AI-enabled vehicles are one of the most important long-term developments in the auto industry. Connected vehicles continuously generate information on usage, battery health maintenance requirements and operating performance. Thanks to improving accessibility to OEM data on advances in AI, that information is becoming easier to aggregate and translate into actionable use cases. Connected vehicle data can support predictive maintenance, proactive roadside assistance, accident management, battery health monitoring, emissions reporting and a range of other new data-enabled fleet services. These capabilities can help customers reduce downtime, lower costs and improved fleet performance. Next slide. Autonomous mobility is one of the most widely discussed trends in the auto industry, and we think the long-term potential is significant. The path to adoption is likely to be gradual, uneven across markets depending on local regulation, our volume forecasts vary widely. Beyond these uncertainties, we know it will be a sizable opportunity for Events. We believe Avon is a natural partner thanks to the expertise in fleet management. We are actively monitoring technology, regulatory and market developments and engages with key players across the ecosystem. And I'll now give the floor to Patrick for the financial trajectory.

Thank you, Philippe. So let's start with the macroeconomic outlook. We have a scenario of progressive stabilization of the current uncertainties and a low growth, low inflation for Western Europe. GDP growth in the Eurozone should come up to circa 1.5%, while the ECB deposit facility rate does not go higher than 2.75%. Inflation should cool down to stabilize at a level around 2%. The price scenario for cars is a very moderate increase for ICE and hybrids and the continuation of downward scenario for BEV and PHEV. We have been applying these as early as H1 2024. In this backdrop, our indicative outlook is an earning asset growth of circa 10% with an acceleration across the period 2029. Margins in million euro will grow However, margins expressed in basis points of earning assets will slightly soften under the effect of new car production and a higher share of electric vehicles. The contribution of used car sales results should be very limited. Operating expenses will decrease in absolute value from '26 to '29. So let us now spend a couple of minutes on our funding strategy. As you know, since September 2023, we have put in place a diversified funding strategy which has successfully enabled us to lower our cost of funding and grow our leaving margin. As of today, we have a stock of funding on our balance sheet of around EUR 45 billion, which is split between Societe Generale and external sources of funds, including retail deposits bank loans and funding from the market through bonds and securitization. We benefit from high rating levels as displayed on the bottom left box on the slide. The reduction in the overall funding cost that we have had over the past 3 years is reflected in the narrowing of our credit spread on the chart. This has been supported by 3 pillars. First, the successful execution of the merger and the increase of profitability secured notably through the synergies. This has become very apparent to bond market investors since H2 '24, as you can see from the evolution of the credit spread. Second, the lower interest cost and the bond issuance as these have come in strong demand with high oversubscription rate. Last but not least, an increasing proportion of retail deposits, which now represents close to 1/3 of our total funding higher than what -- higher than that we had targeted at the beginning back in '23, which was ranging between 25% and 30%. And as you are aware, retail deposits are our cheapest funding source. Going forward, we will keep on diversifying our funding sources. Deposits that we collect via Ayvens' Bank should represent an increasingly important source of funds from 33% today to a range of 35% to 40%. We will grow our deposit base in the Netherlands and Germany in which significant development potential lies ahead. Besides, it is likely that we will also test and tap in overall open market to achieve and potentially exceed this ambition. With between EUR 1 billion to EUR 2 billion of annual issuance, securitization will represent an increasing share of our funding mix, targeting a contribution slightly above 10%. As for bonds, we plan to issue EUR 2 billion to EUR 3 billion per annum. The share of bonds is expected to decrease slightly from 24% to around 20% in 2029. So overall, the continuation of diversification and a lower cost of funds for the group going forward. So let me say a few words on how we are going to improve the readability of our performance. From 2027, we will stop reporting underlying margins and underlying costs income. Back in '23, we had several items making the performance of Ayvens difficult to read. First, a significant amount of cost to achieve. Second, the unexpected volatility of the mark-to-market of swaps in retail from LeasePlan hedging strategy; and third, the impact of PPA. We will not highlight these items anymore for the following reasons. Cost to achieve will not be mentioned as the integration period is over. This is not to say that we will not invest in our business, but this will be part of our BAU costs. We have fully [indiscernible] the swap book of [indiscernible]. Today, we only use swap in a [indiscernible] manner. There is no reason to anticipate that this will have a meaningful impact on our P&L, and therefore, no reason to highlight it. Lastly, amortization of the PPA has now been almost entirely done. So the only piece of volatility we will keep is hyperinflation in Turkey as it is purely exogenous. Today, it represents an annual impact of around EUR 100 million. This impact is due to the fact that our running fleet in Turkey, around 25 [indiscernible] cars, does not see their price increasing as fast as inflation. Therefore, every quarter, we have to impair the fleet corresponding to the gap between car prices and CPI evolutions. This impact should reduce as inflation is progressively contained. However, we still anticipate some volatility on at least the 2 next years. So the current cost income guidance for '26 at 52% on an underlying basis, excluding all nonrecurring items is strictly equivalent to 53%, excluding hyperinflation alone. Going forward, we will base our disclosure and guidance and cost income, excluding hyperinflation. So as a result of the strategy and course of actions that we have described, we will decrease cost income by 4 points. This improvement will be led by increasing revenues, but also by a steady decrease of our operating expenses. Looking at the chart and going through the various items. We estimate that operating expenses inflation will represent close to 3 percentage points of cost income. BEV embed a slightly lower service margin than ICE vehicles and a higher proportion of BEV in our fleet will lead to a slight softening of margin expressed in basis points. Also, resuming growth will lead to new assets entering our earning assets with high book value. This will also contribute to slightly soften the margin expressed in basis point. Altogether, these 2 items should represent 2 percentage points of adverse cost-income evolution. Now coming to the benefits of our strategic plan. We will grow our new assets. And we will grow our margins in euro. This should represent an improvement of circa 3 percentage points of our cost-income. We will also improve the group's productivity, in particular, through the extensive use of AI and also the optimization of our operating model. Altogether, this should represent an improvement of 6 percentage points in the cost income coming from both the reduction in our operating expenses and a reduction in the costs included in our service margin. In total, cost-income at 52%, excluding nonrecurring items in '26, equivalent to 53%, excluding hyperinflation, will be decreasing by 4 percentage points by 29 to reach 49%, excluding hyperinflation. As mentioned by Philippe, we are upgrading our financial targets. So we will reach a return on tangible equity ranging between 14% and 16% to be compared with the previous range of 13% to 15%. Here, I would like to stress that between '23 and '26, the improvement in the ratio has actually been stronger than anticipated on margins, costs and capital management. Indeed, in the 13% to 15% range that we gave in September 2023, there was an assumption of more than EUR 250 million in annual UTS results embedded into the revenues. As you know, from our H1 '26 results and from the indication we gave today, the actual number of UCS will be much lower in 26, rendering the rest of the performance even more remarkable. CET1 ratio will be at around 12.5%. And as we explained in detail, cost-income, excluding hyperinflation, will decrease percentages from 53% to 49%. Lastly, we plan a regular dividend payout ratio increased from 50% to a range between 50% and 60%. And if everything goes according to plan, a payout ratio of 60% does not absorb the significant cash generation of the firm. Therefore, there might be small to medium-sized bolt-on acquisition and the rest will be swiftly returned to shareholders through exceptional cash dividends or share buyback, as we have been doing in a disciplined manner in '25 and '26. With this, I hand it over to Philippe for the conclusion of our presentation. Thank you very much. Thank you, Patrick. Let me now conclude our presentation. First, in a difficult car market environment, the operating lease market has been and will be resilient, notably supported by the ongoing shift to usership. We'll leverage our scale, our customer-centric DNA, to grow in selected profitable segments, in particular, the smaller fleets. After a period of integration following the merger, we can now be fully focused on operational excellence to combine superior customer service and lower cost. We'll leverage Newtek across the board. I want to thank all our employees that are the foundation of our success. Our plan will contribute to create sustainable value for our shareholders. with an ROTE between 14% and 16% and a dividend payout ratio between 50% and 60% plus the return of excess capital. If we take a step back, we can see 3 periods in Ayvens' journey. The first one was the creation of Ayvens with the challenge of becoming regulated, executing the merger in the context of the biggest transformation of the auto market in the last decades. The second phase that we now open will see more stability within Ayvens as IT migration is now behind us. This is the opportunity to grow our profitability, leveraging a continuous improvement of our platforms and processes. In the 2030 decade, electrified cars will become the new norm. Reseal value risk will become comparable to what it was historically with ICEs before the transition. This will open a new phase of sustained growth and higher profitability. Thank you for your attention. We look forward to answering your questions after a 15-minute break. [break]

Thank you. Going now into our Q&A session. So we please ask you to limit yourself to 2 questions at a time so that everybody has the opportunity to ask questions. And obviously, if time permits, then you can come back with new questions. Number one, please. towards the front, yes?

Jacques-Henri Gaulard, Kepler Cheuvreux. I have two, and I may sneak a subsidiary one. The first 1 is, if I were to tell you that used car sales result will be 0 from now on to the end of the plan, can you still deliver 14%, 16% RoTE. The second question is on the fleet. And on the country, in particular, I remember that previously before the own plan, you are not sure about Turkey and keeping Turkey as a market. And it seems that since you assume that hyperinflation is going to continue, you will stay in Turkey. More generally, within your book, considering what happened in the U.K., are there any potential weakness you're seeing there? Or are you still happy about the residual value and its sensitivity to the different shocks? And the last question, if I may, hearing berno, in particular, why don't you change your headquarters to the Netherlands.

Okay. thank you for those 3 questions. I may start by the third one. I think one of the strengths of Ayvens is the diversity of our people. We are in the 40 markets. And I think it's important to keep this cultural diversity in headquarters. So we are happy with the 2 headquarters for the moment. I think we will have some evolution in the sense that probably we'll get to more specialized teams in each place in order to improve efficiency. But I think it's -- we don't aim to build a French company. We are a super international diverse company, and I think it's a strength. And you can see that in the management, and that remains the case. The last person that I recruited for the [indiscernible], our Chief People Officer, which is a British citizen located in Amsterdam. So it gives you an indication that we want to maintain this diversity. On the second question that was about, are we happy with our book on reserve values. I would say if we look at what has been done in the last years, since the -- at the end of 2023, was taken a decision to review the perspective of the market, in particular, for the BEV, and I think it was a very sound and is wise decision, it took a while to decrease the reserve values. It took 2024, 2025. We've continued in 2025, but we think that the level that we've reached is pretty reasonable on the BEV and the more the year go, in fact, the more we have visibility on the BEVs because customer acceptance in use cars is starting to grow. And probably the last month with the middle list events have helped to educate the customer about the benefits of the BEV in terms of cost of ownership and it's quite visible. For the first question, I think I will ask Patrick to take the answer, please.

So indeed, if I remember well, it was a question around UCS, considering what we had a result of H1. So we have given a guidance that we stick to for UCS in the full year, which was, I remind you, a range of evolution of [ 200 to 600 ] for gross you see per car. So we will be in this range, albeit that the low on the low side of this range. And also, we believe we will maintain a slightly positive net UCS in 2026 considering most recent development.

Number one, please.

Sharath Kumar from Deutsche Bank. I have 2 questions. Firstly, on margins. Related to your second quarter level of greater than 600 basis points, I want to understand how much margin compression is embedded within your guidance? At least my assumption that it is more likely to be closer to 600 basis points rather than 550. I can see tailwinds through higher retail penetration, LCV, whereas there is one notable headwind in the form of BEV penetration. So if you could just help us with the moving parts and also quantify what the margins for BEVs versus ICE vehicles as well as for LCVs? That's my first one. The second one is on bond yields in an environment of bond yields, higher bond yields, in an environment of structurally higher bond yields, how exposed is your business to higher funding costs? Is it fair to say that it's broadly neutral given that you have ability to pass on higher funding costs? And given where your fleet growth assumptions are, it shouldn't be punitive. So any thoughts there would be appreciated.

Okay. I think Patrick will answer the second question, and I will answer the first one. So on the margin development, in -- as we've seen in the presentation, we forecast for a slight decrease in margins in bps, which are evolving with 2 contradictory factors. You've got 1 positive factor, which is all the action plan that we make to develop the margin, especially working on the service margin costs, and there is a strong focus to look in the company not at margins, but at cost individually. Because if you just realize the volume of costs that we have, costs are not equal to OpEx that are EUR 1.6 billion, EUR 1.7 billion, as you can see now. Costs are the OpEx, plus the cost in the service margin, which are more than EUR 2.6 billion plus the cost in remarketing, EUR 100 million in logistics, plus cost of purchasing cars, which are around EUR 20 billion. So there is a lot to be done there, and we're absolutely determined to attack that in like the OEM attack the cost, which is not exactly the culture of a service company maybe. But I think it's the culture that we want to have. So that is very helpful on the margins. And there are 2 things that are not helpful on the margin expressed in bps. The first one is, for the moment, as on for the moment, the BEV has less margin than an ICE car because the residual value expressing percentage of BEV is lower compared to an ICE. This is linked to the fact that technology is improving very fast in BEV. But over time, the used car BEV becomes more obsolete to the new vehicle compared to what was an ICE compared to a new vehicle. But over time, this is fading away. And 1 day, I was saying in my presentation, BEV will become the new norm, which means that directionally, in the future, the percentage of decrease of the used car compared to a new vehicle will be similar for BEV as what it's always been for an ICE, which means that, today, we've got the difference between the margin in between the BEV and ICE, but this is going to decrease over time. But for the moment, there is a difference. And as we sell more BEV every year, this has a dilutive impact for the moment on the margin. So this is a negative impact. And the second negative one is, when we start growth, due to the way accounting is done in this business, you got a bit less margin at the beginning of the contract than at the end. So mechanically, when we restart growth, it's slightly dilutive. So these 2 effects are compensating the positive effects of all our actions, which leads to a margin in bps that's slightly decreased compared to the level where we are. But our plan is a plan based on margins, on OpEx. And these are the 2 topics that we are focusing on. We don't base to plan and used car sales. Patrick, do you want to take the...

Yes. Thank you. I think the second question was pertaining to the exposure on interest rates and our ability to pass it to customers. So yes, we are able to, and we do it to pass to our customer on a very regular basis increased interest rates. However, we are a stock business, so it can take a bit of time. And we have a rough estimation, depending on the countries that for an increase of [ 10 ] basis points of interest rate, we have the first year, a negative impact of around EUR 20 million on our margins.

And that after the first year. If it's so there, the effect stops.

Peter Basten out from California. I have 2 questions. So this sounds very loud. Is this okay?

Yes. The sound is okay, yes.

Okay. So scale is the overwhelming competitive advantage in leasing over the years or over the decades. And so the ALD plus lease plan could have been -- should have been maybe is 1 plus 1 equals 3. Yet we see the target today of a 15% ROTE yet ALD ran 15% to 20%. And when we double in scale, why do we not see 20% ROTE? What's the gap between the theory of a much bigger company in the practice? Second question is on FTE on employees. When the deal was announced, the combined company FTE was maybe 15,000. I think we're down to 14,000. However, primary diligence suggests that given the overlap in sales, technology, et cetera, the chance for natural attrition could drive FTE down pretty substantially. What do you assume in your plan for 2029 to 2030 FTE?

Okay. Two questions. If Patrick will correct me, but what I have in mind is we're not there at that time, but the terms of the merger, the headcounts were around 15,000, as you say. And now we 12,500 people, and we've continued to decrease -- we have continuously decrease the headcount in the last months and quarters. And obviously, we'll continue to work on this. As you've seen, we've got clear targets on the cost side. So from 15,000 to 12,500 is what has been done, and it's not the end of the story knowing that we work on all the parameters of costs. And in fact, as was explaining, you've got much more cost on procurement than not in accounts. We don't mean that we don't work on accounts, you need to work on all parameters, but we've got more than EUR 20 billion that are not headcount cost. On the second question, well, in -- when we look in the past at what was the ROTE, and there were some periods with extremely high ROTE, there were 2 different things. One, there were period with extremely high UCS result, used car sale result, and especially after the shortage of cars at the beginning of the decade, shortage of new vehicle cars, suddenly, there was a fantastic windfall in the used car market. So there was a shortage of car first because of COVID. After that, there was a shortage of car because of chips. And then there was a shortage card because of logistic issues, and that led to a level of production of new vehicles that was below demand. So it's led the consumers to go to used car vehicles. And the used car sales result per car in '22 and '23 was about EUR 3,000 to EUR 4,000 per car, when historically, it's a few hundred. So obviously, this impacted very positively the ROTE at that time, but that was like it happens once in every 50 years, maybe. And in my 30 years of auto life, I have never seen that. The second part is, if you go a bit earlier in the history of these companies, margins expressing bps in leasing and service margins tend to be higher. But with cost-to-income ratio that was not -- that compared to [ 49 ] that were not better, but with much higher margins. And now working very hard on our processes and our cost, we can get to this efficient cost-to-income ratio with margin expressing bps that are a bit lower. And I was explaining BEV that's now are less profitable than ICE, but I think this is something that will disappear in the future when the acceptance for use -- of used cars BEV will become similar to what was traditionally the ICE acceptance. And this is gradually coming in. Can you please go in the middle here.

It's Owen Paterson from Jefferies here. Just 2 questions. The first one, so you've outlined a market that's effectively flat to growth terms just above. At the moment, at least, it seems like some key payers are willing to grow a bit faster than that. So I guess, how are you balancing the risk to your own market share or your own margins, if you want to protect market share or vice versa? How are you thinking about that? And then my second question is on Chinese residual values. You seem fairly happy with with the exposure and development to Chinese vehicles? I guess do you see residual value risk there at all? They're new brands, aftermarket networks aren't as large. Is there a scenario where you hold back your exposure to Chinese vehicles?

Okay. Thank you for the questions. I will start by the second one. We don't make rezoning on the residual values based on the nationality. There is no [indiscernible] about Chinese versus legacy carmakers It's an individual approach, and we work with what we call a scorecard of OEMs. And we've got a list of KPI that we track for them in order to said them in 3 categories: the OEMs that are in the red part, we don't want to work with them, and they can be Chinese, but they can be of any nationality. The preferred one because their management of reserve value is sound historically, typically, people that do not go to what we call the toxic channels, so namely rental car and demo cars. Well, everybody goes to it, but it's a question of proportion. And you got the in between. So this influence the way we set [indiscernible], and permanently reassessing each carmaker if the behavior evolves. That's -- so there is a list of components. And the other one that can I was mentioning, behavior in toxic channels, but we can also mention, for example, availability of spare parts because your question was about the Chinese. If I take a Chinese carmaker that has, for example, an agreement with an existing permit to distribute spare parts and is able to deliver parts as fast as a player that has been in the industry for the last 30 years, we will not have the same judgment on the RV as a carmaker that sends the parts from China and in which provide parts in an erratic way. So this is this kind of very granular approach, very systematic so not linked to the nationality. But it's also true that we need to pay attention because, in China, well, I don't have the latest statistic, but a few years ago, we had 150 brands. And if you pay attention to what the Chinese government said, if you are -- days ago, that the repetition of what you said already in the past is preaching consolidation in China. So you need to check well what are the bets that you make. Everybody is not BYD in terms of volume and capacity to gain market share. So we need to pay attention to that when you make your choices on reserve value. Sorry, a bit long answer, but it's an important topic. On behavior on competition, well, if we look at what has happened in the last years, I think, we had historically 3 leading companies with more or less the same size to merged, becoming [indiscernible] much bigger than the third one, which can have been understood as a stress for some players. So the other players and a number of them who're feeling that their lack of scale compared to Ayvens was an issue, but they tended for a number of them to be more aggressive, especially on BEV. If you look at the numbers that are published by some competitors, we see that both in 2005 and H1 2026, now this gives a difference in terms of margins and it gives a difference in terms of used car sales results. So we can -- so our view is, in a context that was a big disruption of the industry due to electrification, significant entity in the region value, our view is it was not the moment to push the accelerator very strong on growth. But as I was explaining, the more the years go, the more this uncertainty decrease, so the more it will make sense to accelerate growth. So in our view, that's the reason why we mentioned the plan that the growth that we indicate, there will be less in 2027 and more in 2029 because we think uncertainly will decrease. So we should look at what competition does with these eyes. That was a question of scale. We had the scale. And even with the recent merger of one of our competitors, if you look at total fleet, total fleet not only funded fleet, we remain well above and the total fee remains important in terms of procurement, not from -- for the [indiscernible] of cars, but for the rest of procurement. So we are not pushed to growth for growth because we don't need it. What we do is [indiscernible] temptation between gross and value.

Matt Clark from Mediobanca. A couple of questions, please. Firstly, on the residual value, which I guess is EUR 20-something billion, I can't remember the exact number, could you give us a sensitivity of it to the oil price, presumably oil price going up a lot is bad for the residual value of ICE vehicles. What exactly is the sensitivity? How do you think about that risk to your residual values? And then second question is more on the capital side. You've given pretty conservative guidance in terms of fleet growth for the next few years. The corollary of that should be that there's higher scope for distributions. Could you give us your risk-weighted asset growth outlook? Should we just expect it to scale with the earning assets, and so very little first couple of years and then some back-loaded growth into 2029 because that will help us understand the capital return prospects for you?

So start with the second one on RWA growth. So we have mentioned earning asset growth of around 10%. As you are well aware, we have done some RWA optimization in the past for significant amounts. There will still be a bit of RWA optimization, but not to the same -- for the same scale, not in the same magnitude making it that RWA growth should be slightly lower than [indiscernible] growth. So with this, I think you can have a good estimate already.

Your first question was about sensitivity of ICE resale values to the lower oil price, if I'm correct. Okay. What we've been seeing in the last 6 months with the Middle East events, it's more focus of the customers on the BEV used cars, obviously, because they look in terms of total cost of ownership, and they just realize that with an oil price that grows it may become interesting to have a BEV versus an ICE. So it's true that it has impacted the evolution of prices, but not that significantly today. So there is an erosion of the ICE prices, but it's also true that at least the vast majority of what we sell in used car sales, this has impacted, and that's the reason why we've got gross UCS that is declining as mentioned. At that, on the ICE, so there is this oil parameter that you mentioned. But I think there will be also other parameters that can impact in the coming months. I will take one that we don't see yet, but I think we'll see, which is the impact of the input cost of the OEM. You've got a number of input costs that are increasing, for example, the cost of chips. And that given the magnitude of this increase in costs, it's difficult to think that in Europe carmakers that you now see are not making a lot of money. And we see that if take the 3 main players of the industry in Europe that accounts for more than 50% of market share, they don't have a profitability that allow them not to pass part of their input costs into prices. So if this happens, and I think it will happen in the coming months, probably beginning of next year, that should have indirectly a positive impact on used car sales, ICE or BEV, but ICE in particular. So we can see the negative impact of oil on the ICE, but I think there are other impacts that are also inflation impact that can be positive in the coming months. So we'll follow that regularly. And as we've been doing, at the beginning of each year, we give you an indication about where we see the gross UCS results for the coming year.

Thank you. In terms of that inflationary impact from higher chip prices, et cetera. Do you see that as a comparable magnitude to the oil price impact -- the negative oil price impact that we've seen so far?

We've not seen the impact today in the new vehicle prices, but I think we'll come to see it because between -- it first hit the suppliers of the AUM that it goes to the OEM. And of that, the OEM pass it to the new orders. So there is always a lag between the moment where it happens and the moment where you see it in the new vehicles for us. Historically, when you got inflation on new vehicle, it's a positive on the used car because as we all know, the used car market and the new vehicle markets are highly related.

Sure. But in terms of the oil factor and the chip factor, do you think they're roughly balanced over time?

Should we balance, sorry?

Over time, in terms of impact on UCS. We've had a negative impact from oil already. There will be a positive impact from chips in the future perhaps. Do the magnitudes broadly offset?

In my answer I was mentioning the oil price, I was saying there are other parameters that impact the used car market. We all know that it's a market that is difficult to predict in terms of prices, and that's the reason why we fundamentally base our plan on what is in our hands, margins, OpEx. But my answer was to say, well, some people, at the moment, just looking at the very recent months, take a very negative view on this. And they are not only bad news and these things can evolve quite fast. In the coming years, the share of BEV used car is increasing. So when you've got oil prices increase, that is helpful for BEV. So we'll be less in balance between ICE and BEV in terms of sales mix, which in scenario of oil price continuing to go up is helpful. To the very left, of the left of the room, please.