Econocom Group SE (ECONB) Earnings Call Transcript & Summary

[Foreign Language] So good morning, ladies, good morning, gentlemen, and welcome to all of you to this venue which should let us comply with the Health Ministry's recommendations. I see that you're not very disciplined. Normally, we were to keep a safe distance of 1 meter between everyone, but it seems that you are a close-knit group. So anyway, good solidarity. I also wanted to say hi to those who weren't able to be with us physically this morning or who didn't want to travel, in particular, our Belgian and U.K. friends, who are going to follow this meeting with a slight delay, thanks to the video broadcast that is going to be available at the end of the morning on our website. So you'll be able to rewatch our meeting if you feel like it. I wanted to use this quick introduction to make a plug. I would like to remind you that in these difficult times, with the health crisis at Econocom, we are one of the best specialists in the quick and sometimes financed implementation of homeworking systems, remote connection systems. So if your company is not equipped yet, in this very room, you've got the best people to talk to, to place an order. So let me introduce myself. I'm Bruno Grossi, I've worked with Jean-Louis and advised him for 7 years. I joined Econocom after the acquisition by Econocom of a company that I was code sharing called Osiatis, which helped give substance to one of the pillars of the Econocom business, and you'll discover that it contributes to its health. And before that, I spent almost 25 years of my professional career at Accenture, where I was a partner-in-charge of the telco and high tech sector. We are happy to welcome you here for the 2020 addition of our yearly presentation, during which we'll have the pleasure of giving you a detailed presentation about our 2019 results. And of course, at the end of the meeting, we're going to talk about the 2020 outlook. And this outlook will be slightly less detailed as usual, although you'll probably have questions. You will probably have seen it, 2019 for Econocom was a year of intense work, during which we implemented the actions that we had presented during our last meetings and that we had shared with you time and again. This intense, substantive work was rewarded by good results. We hope that you are going to like these results. And beyond the good figures that will be really the core of this morning's presentation, all the actions that were carried out in 2019 help us look to 2020 with strong and wonderful assets. And our goal this morning is to convince you of these strong assets. What are they? In some now, Econocom has a stable, experienced management team, highly experienced, you'll discover that for yourselves, with perfect knowledge of all our businesses in our galaxy. Secondly, the group situation is healthy. We are replenishing our buffers. Third major point, as we move into 2020, our business is buoyant, our industry is buoyant. Our offerings are more than ever, and we are getting further evidence every day. They are more and more in tune with current demand by our clients, and you'll have illustrations of that. Now let me introduce the various speakers of the morning as well as the agenda. So here, I'll give the floor in 30 seconds to Jean-Louis Bouchard, our Chairman and Founder, for his introductory comments. Then Laurent Roudil will come and talk to us about the team that I've just talked about in a minute. He'll give you more details about it. Then Angel will introduce himself too, and he will talk about the figures. That will be the figure session. And then Laurent will come back for the illustration part of our business that we consider to be the heart of company's concerns now, the digital transformation. And last but not least, Angel will come back on stage to present the outlook. And we'll all be available at the end of the session to field your questions, any questions you may have. And we hope that you'll have many, many questions, challenging ones also, as usual. Over to you, Jean-Louis.

Good morning, everyone, and thanks for coming. Very brave. I sat in your seats this morning thinking, what do you understand about Econocom? And since it's hard to understand, I've often had this comment, for 47 years, I've had this comment. And I'm quite happy because if people understood this, they would copy us. And if we were copied, we would have yet another competitor. We don't have 1 single major competitor now, we have a lot of competitors in individual sectors. But in our major line of business, we don't have 1 single competitor. And so it's difficult to understand. What's our business? It's a business of rental, distribution, services. It's complicated. How is that different? We'll try and explain that. And then there's management. In the last 3 years, there have been quite a few changes at the management level. And why has there been such change? Where are we now? And why are we confident now that this new leadership team is much more adapted and that we're not going to face yet another change in the short term. Any other reason to be happy is debt. Well, other -- well, usually, digital services company do not have a lot of leverage, whereas rental companies, the other half of Econocom's business, are quite the opposite. They take on a lot of debt to buy equipment that they lease to clients. So we're a mix. So usually, in the analysis that you make or that our partners and bankers make, what does that mean? Is there a lot of debt, not a lot of debt? Are we talking about it or not? Why are we talking about it? So a year ago, I wanted to go through a point with 0 accounting debt, because I wanted to show to the financial world that we could live very well without debt. Now we stayed the course because in spite of difficulties with year 2019, with ups and downs, we haven't increased our debt. And with the current operations, we are confident that we'll reach 0 debt in the next 12 to 18 months, maybe before that, we'll see, but it's still a valid target. The aim -- well, throughout its existence, we've never really had 0 debt, but we wanted to prove to you that we don't need debt to exist. I'll try and explain and clarify the situation. So altogether, here, we are going to try and show you that, first of all, the financial situation is healthy, and debt is not absolutely necessary. The management team is competent and in control, and then we'll give you an example of our business to show you that our business is easy to understand. And I think that Laurent Roudil will do that brilliantly because he's been with the group for 5 years. And up till now, he was in charge of services, mostly in France, and now he's in charge of all the French business, services, distribution, rentals and all the satellites. And so he's in charge of Econocom's offerings, and he's the best person to explain why for years we've signed and are still signing major operations with great -- with big customers which makes us very optimistic about the future. To explain this journey, to try and shed light on the figures and put them in context, I've realized that companies are cyclical, and they're made of men and women and they're cyclical like the seasons, like birth, growth, life and death. So companies are cyclical. And today, Econocom is cyclical. It was created in '73, and I was alone at the beginning. Then I had a secretary, then a partner, then 10, 20 partners. Cyclical -- cycles last usually 15 to 16 years. So why are companies cyclical? Now you can see that on the market. There are a lot of startups being created with new technologies coming on to the market, generally. After 5 years, they can see whether their ideas and concepts work, more or less. And so they'll approach investment funds to take equity stakes so that they can grow more quickly and recruit staff, so that they can usually develop a fairly international offering. And so they go through a second cycle. So there's the first 5 years, then the subsequent 5 years, investment funds pay a lot of services to these companies. So equity is provided, but then there are a lot of contributions in terms of strategy, advisory. They put in place some fairly strict and stringent cost controlling, which may not be the case for startups. They're usually not used to that. So investment firms, investment funds help these companies for 5 or 6 years. And so you can see tremendous growth or failure, but usually, those that do grow enjoy that for roughly 10 years. They benefit from this equity contribution and the presence by their side of investment funds. As you know, usually, PE firms need to divest after 10 years and entrepreneurs who create their companies around -- in their late 20s, early 30s. In '73, I was 31, I was born in '42. So that's probably the right age. So usually, entrepreneurs and the main shareholders, usually, they are still shareholders. They're no longer 30, but 45. When they're 45, their kids get expensive, they want to buy apartments, they want to sell some of their stock. And so they want to benefit from earn-outs, they want to sell some of their stocks, wages have increased. There's usually some complacency at the top, there's less control over expenditures, and competitors come up with new startups. And generally, after 15 years, there's a complete challenge calling into question of the company, its management by shareholders, usually. So either they go through a new fundraising cycle with new investors and they can go on to a new development cycle, or they can be bought out or disappear. We've seen that with a number of companies that have disappeared, the high-tech companies that were around when Econocom was created. You may remember IBM, they're still around, but a lot have disappears -- disappeared like Control Data or Tandem. It's true in tech, it's true in finance, it's true in banking, in any business. So these corporate cycles are found everywhere. And in general, there's always the creation growth, success period and then different pathways. We went through that at Econocom, the '73 to '88 period, so exactly 15 years, where we grew a lot. In '73, I was on my own. CCF, the bank, bought into the company 6 years later. They weren't an investment fund. Back then, there weren't so many funds bought. Banks provided equity directly. So we had tremendous growth, thanks to CCF back then because when we were -- Econocom Group with CCF, Crédit Commercial de France, it was much easier to recruit people than in the first phase. We went through all these cycles. And -- I'm sorry, I'm trying to remember the date. So CCF sold to Société Générale. So we had a second cycle between 1989 and 2003. Why 2003? Because in '03, there was the aftershock of the Y2K bug. With the Y2K fears, companies overinvested and overequipped themselves. They bought all the latest equipment, and they realized that it was all for nothing. So they were quite furious that they overinvested, so they slowed down their investments. And we were still in the black, but barely. If Jean-Philippe is in the room here, he could testify we made EUR 5 million or EUR 10 million, but not a lot. Then it picked up later, but that was the second phase. And now we've just closed the third cycle. And to explain about this cycle and why we are here today and why we're embarking on a full cycle with a lot of optimism, I've put together a graph showing you the group's development over 15 years. So on the left, you've got 2004 and 2019 on the other. And the blue line is revenues for 15 years from EUR 600 million to nearly EUR 3 billion. At the top right, you can see that it stayed flat for 3 years. In green, you've got profit. Revenues grew fourfold in 15 years. Profit went from EUR 18 million to EUR 126 million, so times 4. In yellow, you've got head count. So for 3 years, we've been around 11,000 people. And in red, you've got debt. And at the top, you've got the major events of the last 10 years. You can see that in 2010, ECS was acquired, the first arrow. Then 2013, you've got the acquisition of Osiatis, strong increase in revenues, strong increase in the head count, too. You can see the yellow curve rising very steeply. 2013 still, we created the EDFL business with self-financed acquisition, so strong increase in debt. Before 2013, we were not indebted. We were even cash positive, and we reached a plateau of EUR 252 million, and Angel will explain the relationship between the EUR 252 million and the cash cost of this business, how much it costs us to finance equipment ourselves. And here, you can see the appearance, the EDFL business created in '13. The acquisition of Satellites since 2014-'16 that I led in tandem with Bruno Grossi, very strongly, and then the departure of a number of managers and the arrival of a number of managers. So what happened? I realized in 2016-'17 that the phenomenon I described earlier happened, the people who made the group successful, Bruno and others, had reached a point where they no longer really wanted to recruit their #2s or promote them. They felt good in their position, they had great success. The share price was no less remarkable. So generally, they were shareholders themselves. When I asked them to recruit a significant number of sales reps, they said that it would be detrimental to results and so to the share price. There was a whole internal IT system that was -- the merger of the systems between purchasing and coming out of the acquisition of Osiatis had not been performed. So I realized that the fundamentals for a new success cycles were not there, and they were not being established. That's why I replaced the management team, and I try to promote a new management team first with my son, [ Robert ], who is in the room normally and who had a past and is still having a present as a successful entrepreneur and the young team that he had selected, thinking that this would work and that I would replace those who had made the group successful and who were not yet preparing for the next cycle. But it didn't work out. It didn't work out for 2 reasons. The first one is that the people who -- whom we had appointed or whom I'd profit were not experienced, and that lack of experience had 2 impacts. The decisions made were not in keeping with the past, and they were less in line with the past. And the team in place now that I promoted, but -- which was in promotion and who are country managers or entity managers or satellite managers. Well, the articulate -- the connection between the 2 did not work out because they did not have sufficient credibility to promote everything that we've just done in the last 18 months. And so what I put in place could not possibly work out. So I came back at the control 18 months ago. And what we immediately did as early as last January, I took office around the 15th of November or late October to make sure that cash controlling, cash and all the fundamentals will be there. And so we put in place a new management team, which was made up of people who are in the room. Laurent will explain who they are later. It's completely different. People -- these people have been with the group for a long time. They've been -- they know what the business is like. They have signed operations for a very long time. So they're part of the group's deep DNA, they know what works and what doesn't. And so they are fully credible with the rest of the team, so that they can carry on preparing for this fourth cycle. That's what is making us confident. Here you can see the reasons why there have been lots of changes at the top for the last 2 or 3 years. That's why Angel will show you that debt is fully under control, but it will decline further because we really want to show -- to prove to ourselves and the financial world that we don't depend on debt because debt is -- dependence is never really healthy, and we wanted to show you that with the businesses, Bruno explained that a minute ago, with what's going on now, well, the Italian team, I came back from Italy 18 days ago. Nothing was happening in Italy 18 days ago. And in just 18 days, well, let me tell you that I was in Milan with Véronique on Thursday, so exactly 3 weeks ago. Well, 2 days later, we arrived in Paris, and people asked us, are you coming from Milan? Well, then you -- but now the 800 people of the Italian team are all working from home. No one's at the office. So -- and we sold a lot, a lot of homeworking stations to all of our Econocom clients in the last couple of weeks, and well I hope that it's going to work even better. So I hope I was clear enough so that you could understand the main changes at Econocom. As we'll prove to you, it's not a complicated business. In a couple of words in a nutshell, if you want to take a parallel with construction, we're a general contractor in the digital universe. This means that we've got a very broad offering covering most of the digital universe. We can coordinate this offering with our clients and also finance it. Imagine, you've got a building or a house that you want to build, and you need -- you would need to talk to the different building trades and organize it all and finance it all. It's not easy. If you've got a good general contractor that so -- that's able to coordinate all the trades and provide funding, you won't think twice about it. And we usually do that, and it works really well. So I'll give the floor to Laurent, who is going to explain to you who the people on the team are and convince you that this time around, we've got the right team in place, and it's going to work out. Thank you.

[Foreign Language] Thank you for that, Jean-Louis. Okay. The new management team is made up of Jean-Louis Bouchard, you just heard from; Angel Benguigui, who will be introducing himself during his own presentation in a few minutes; and myself. We also have a weekly coordination committee that will be piloting the group as well. Now I'd like to go back a little bit and introduce myself and my career and explain what brought me to Econocom 5 years ago. Before coming to Econocom, I was Director General of British Telecom in France. And before that, I spent 12 years at Capgemini, handling public services and energy utilities. I ended up the Commercial Director of that department in Capgemini in France. I was 1 of the 120 Econocom corporate VIPs. Now this introduced me to Econocom and to all of the technologies that we are now deploying in what we know as the digital transformation. Five years ago, I met with Bruno and Jean-Louis, and they convinced me to join the group for a very simple reason. Even back then, 5 years ago, Econocom was a step ahead of the rest of the pack in supporting its clients implement their digital transformation. They had assets in place, but also they had a strategy that then led to a series of acquisitions that filled out the portfolio, rounded out the offering, and this is what has helped us over the last years to meet all of the needs of our clients through the expertise that we were able to gather through these M&A. So that was Jean-Louis and Bruno, and that's how they convinced me to join the group. And that comes on top of everything that Jean-Louis explained during his introduction. Econocom was rising, regular growth, increasing profitability and good development outlooks as well, with the acquisition of Osiatis that did occur just a year previously. So as part of this, I joined on the management team for the strategic accounts. What we wanted to do with that is group-wide to show that we were leveraging all of our know-how for all of our clients, from the largest CAC 40 companies to all of the SMEs that we were helping transform. This was a dynamic that enabled us to select some key accounts. We then defined a strategy with a global account manager setting strategic direction group-wide and to implement what Jean-Louis just described, as the general contractor who would offer everything related to digital services to our clients. This was quite a structural change to the group, and then Jean-Louis asked me to handle services. I believe, in September 2018, 8 months after being appointed, I gave a presentation to you, where I explained the reasons why I was confident that we will be able to bounce back on the Services business in France and also elsewhere in the group. I presented the 6 families of transition that we decided to implement. And I can tell you that what we presented back in 2018 bore fruit 2 years later with a strong bounce back. We have been able to more than double the recurring operating profit of the business, and we've also been able to double the profitability of that business line. So Services in France. So a significant change, but that leads me to be confident in the future, in the outlooks. We have the right solution, and we can now deploy it to other business lines. At the beginning of the year, Jean-Louis offered for me to become the Managing Director and the Head of France for the group. This encompasses TMF, Products & Solutions, Services that I was already working on and also all of the galaxy, with all of the expertise and satellites that it contains. To do this, we decided to strengthen the EXCOM with a number of key appointments. This is a team that has a lot of experience, solid fundamentals and good understanding of what Econocom does. We also decided to hire people from out of house. One of them, Long Le Xuan from Atos; Stéphane Hascoet from Capgemini, who joined us more than 1.5 years ago. And we were also able to convince people who were already with us in the past to come back. Chantal De Vrieze and Christophe Vanmalleghem from Belgium were also convinced that they could come back and be part of the bounce back at Econocom as part of the management team. We've also got people such as Philippe Goullioud, part of the Solutions team, and for 1.5 years, he has been completely overhauling that by including service components with transformation support being rolled out for the clients. And also Samira Draoua, who I appointed in February of last year. We asked her to head up TMF in France. And for a number of years, she's been developing business with one of our key partners in ASN. Thanks to the experience of all of the members on the executive committee, and also thanks to our full control of our businesses, we are fully confident in our ability to learn from the past and to be successful in the future. I'd now like to give the floor to Angel, who's going to run down the financials for 2019.

Thank you, Laurent. Okay, starting with the introduction, Angel Benguigui, some of you already know me. I've been with Econocom since 2006. When I joined Econocom back in 2006, I was heading up our Spanish business. There were 14 people in my team, EUR 15-or-so million in turnover. We were able to triple that in 3 years. We completely blew up in terms of profitability. And the then management team came to congratulate our team. And let me tell you that we were struggling to be on -- to keep up with the budget for the following years, but they were very interesting years nonetheless. To me, it felt like working multiple companies at the same time. We started developing the rental business very strongly. Then we started developing ECS and then integrating Osiatis, we got into Services. I had to learn about Services because before I joined Econocom, I was in international banking, I was already in finance. So I already had the experience there, but I didn't know about technology services. Then we purchased local companies, some beautiful local companies in distribution, in solutions. We integrated those companies as well. Currently in Spain, we have about 1,000 people. We have all of the group's businesses represented in Spain, and it's all very profitable. Since then and for a number of years now, Jean-Louis mentioned taking responsibility in the group, that didn't happen at the time for a number of reasons. But in April last year, I was offered to become Financial Director, General CFO, which, of course, I accepted. And this year, I am now Managing Director, heading up Finance, which I keep within my scope, but also handling all international business. Now let's run down the key figures for 2019. These figures confirm our outlook at the end of January last year -- this year, sorry. You received a press release, I believe, with some quite precise figures in them, but let me just come back to some of the key drivers. Revenue at nearly EUR 3 billion has remained stable, stable despite those EUR 53 million in turnover that we lost in Italy. Our recurring operating profit is within guidance. We've maintained, therefore, the guidance that we announced, EUR 126 million, up 14.3% over last year. It is what it is. We believe that is satisfactory given the current conjecture. Thanks to cost reductions and also thanks to excellent performance in businesses outside of Italy. We've been able to keep this growth. So financing, EUR 140 million, up EUR 7 million over last year. We, again, believe this is satisfactory. And finally, our net financial debt, which is at 1.4x EBITDA, so the same as last year and fully under control. If we break down revenue a little bit, it's fair to say that some countries and some business lines, as we will be discussing with TMF and Services and Products & Solutions later. Well, we would have had 4.3% growth if we had not had the Italian issues and if we hadn't lost out on EUR 143 million in turnover. Like-for-like excluding Italy, we would have had 4.5%. We lost EUR 13 million in ROP as well, but we still saw strong growth elsewhere. Breakdown country by country, France is up, Spain is up. France is far and away the largest part of the group, with 53% of group revenue. We've seen Spain increase. Benelux is also an important region for us. The U.S. is a unit where we have a lot of operations with European clients. We don't have an American presence to work with American clients, but rather to support European players in the American setting. Now we've done a quick bridge of the 2018 revenue because with all of the IFRS standards coming in, it can be quite difficult. Now I know that a lot of you in the room are specialists and understand this full well, but a breakdown remains relevant. The figures that we published in 2018 for the ISO normative figures compared to 2018 include EUR 221 million of discontinued business that you need to take away. EUR 374 million in revenue that are now booked due to IFRS 15. So in distribution, now you take the entire volume of business, excluding the sale through intermediation of software. And then EUR 72 million, the negative impact of IFRS 16. So our leasing contracts with our clients would lead us to the EUR 2,927 million like-for-like for this year. Now for TMF, we have done a quick restatement explaining what would have happened if we had not lost those EUR 134 million in revenue in Italy and the EUR 13 million in ROP loss. We would have seen growth in revenue, as you can see on the board, which would have been significant, and we would have seen excellent growth of ROP. Despite this, we are not satisfied with the changes at TMF. As Jean-Louis Bouchard said, it's all cyclical. We've been in a very positive cycle for a number of years with TMF. We had European leadership, we were the best, we had the best products, the best company. At some point, the group decided to buy subsidiaries and satellites to get into services, to get into orchestrated solutions. And this meant that there came a point at TMF that people got a bit complacent. So what we are doing, what we are going to do is strengthen TMF starting from the top. This is very important because even last year, we were discussing a plan to strengthen the sales force for TMF. It's true that last year was a very difficult year for TMF. So we weren't able to do all of the investment that we otherwise would have liked to do. We were able to do some things, but not everything. But I can tell you that there are some excellent, high-quality professionals that currently are running TMF within the group, and this is something new for them. So since 2019, Chantal De Vrieze, as Laurent mentioned, has been handling Benelux, but also the Netherlands. She's a great expert in TMF, she's got a lot of experience. Samira Draoua has been, for the last 2 months, handling TMF in France, which is the largest account for TMF. She has a lot of professional experience. She has been at Econocom since 2012, but she used to be with Cisco and other similar companies. Frances Weston will be coming in, in March. He will be Director General for the U.K. The U.K., as it stands, only has the leasing business. But leasing in the U.K. has huge development potential. Frances is from Barclays. Emiliano Veronesi, Director General for Italy. He was able to take the reins for a very difficult situation in a most impressive way. Unfortunately now he is having to deal with coronavirus, but also legacy equipment issues. So he is doing everything he can. He's very good. He is coming from General Electric with a long financial track record. And Carlos Perez-Herce, who is handling Spain, which is key for Econocom, as I mentioned. And we're not done as we are still looking for someone to head up Germany, and we're going to be strengthening all of the global teams in the group as well. To continue on TMF, suffice to say that on the underlying fundamentals, we believe that the EUR 165 million on the balance sheet is low compared to the volume of leasing contracts, 2.7% of the original purchase price. And this is an amount that we are doubling the revenue of year-on-year through the brokerage sales and other things. DSS, so Digital Services and Solutions, I think that we can and should be very proud of the results that they've been able to put in. They are a pillar that will be key in the recovery of our results. DSS contributed significantly to the growth of revenue. Services contributed significantly to profitability, most notably in France through the huge amount of work put in by Laurent Roudil's teams for profitability of all of our service business. So now this is a cornerstone of our group today. This is the profit and loss account. If you have any questions, you should feel free to ask them at the end of this presentation, if there are any items that you want more information on. We're in at more than EUR 48 million in net profit, which is up about EUR 4 million over the previous year. This is a bridge on debt between the 31st of December 2018 and 2019. First of all, you can see EUR 140 million in free cash flow with, for the first time, the application of IFRS 16 on leasing contracts. So EUR 113 million versus EUR 106 million last year. You can see this on the graphs on the handout, so EUR 113 million versus EUR 106 million. Increase in investment for TMF. We've been conservative on this, about EUR 50 million, EUR 54 million for EDFL versus EUR 89 million last year. So the lease payments that we are receiving based on the investments that were made only differ by EUR 8 million. Continuing on the improvement on WCR, the base effect was difficult to improve on because the previous year, we've also made a lot of improvements. And you can also see taxes, CapEx going down, M&A between divestments and payouts on put. We do have a small negative impact, and dividend is at the same level as last year. Share buybacks, EUR 26 million versus the EUR 16 million in share buybacks last year. I'm, of course, available for any questions you may have. The breakdown of our financial debt, EUR 252 million. On the one hand, you have net cash, so gross cash versus outstanding bonds and the like. What we wanted to show is that our debt is mainly in bonds. Our debt is mainly in bonds with maturities coming up. We have EUR 145 million maturity in June 2020. We're handling that, but the rest will be in the following years is all bond debt. Finally, here is the consolidated balance sheet for the group. What we wanted to underline here were 2 items, 2 items on the leasing business. As Jean-Louis Bouchard was explaining at the beginning of the presentation, we are targeting zero debt, which shows that having your own leasing business cost EUR 400 million, EUR 165 million in residual value and EUR 231 million in contracts that we have outstanding with clients who are paying every month for using them. So every month, we make EUR 77 million on those contracts. If we didn't have those EUR 400 million, of course, the group debt would be much lower. So there you go. That's what I had for you on the financials. We are available to answer any of your questions at the end of the presentation. Thank you very much. I'm going to be giving the floor back to Laurent.

So as part of the preparation for this presentation, Jean-Louis told me, we'll keep it simple because we'll explain that our business is simple. So I don't have a lot of slides to show you, but I wanted to be very clear and explain how we combine a unique business model, combining our Services business, our Products & Solutions business, coupled with the TMF finance possibilities. Now our clients are asking us more and more to take on responsibilities for all of the businesses that we provide them with and that ends to end. That's an essential aspect because that way, based on our legacy business, but also with the additional acquisitions that we've made in the various subsidiaries, that makes us able to address all or part of the customers' journeys in their digital transformation, whatever the sector, whatever the size of the customer. How does that translate into our own capabilities? Well, we realize that with the various acquisition and organic development strategies that we've come to cover 98% of all of our digital transformation project requests. That's essential because, first, we're very agile, but we're also highly able to take end-to-end responsibilities for all the deliverables that were asked for in these projects. How can that illustrate that better? Well, then, with a customer example. It's a big energy utility. We've had a partnership with them for years, and I'm deliberately talking about a partnership and for good reasons and the reason is threefold. I talked about the key account department. We've decided to recruit the head of all this account. He's here with us, Rodolphe, and he was recruited from the customer. We wanted to have full control of the customers' business stakes, but we also wanted to understand the nature and the majority of their digital transformation project. That was our first aspect in our strategy to develop our partnership with them. And then the second key element, because that's EUR 60 million in revenues with growth, that resulted in over 33% over the last 3 years. We wanted to be able to meet their request, and now 80% of their requests have been turned into service provisions in their various digital transformation projects, and that's with a more international scope in France and Belgium, which was the first contract that we signed historically with this customer. Let's take a very simple example. Because of our business, we're at the core of user concerns. The clients' employees work and go to the end consumers' houses, and in order to do their job, they started buying tablets. And then the technicians carried out interventions at the end consumers' premises. So they needed to give intervention reports to trigger purchases and orders for spare parts, and they also wanted to have the associated purchasing functionalities based on their tablets or phones, depending on what they were equipped with. And at Econocom, unlike some of our peers and rivals, we were able to follow them end-to-end, taking responsibility for every single step. We deliver the equipment. We proposed for their Belgian business and some of their French activities to finance the equipment. And in Services, we developed applications for their worst business issues. And then they asked us, well, now that we've got these tools, we need to be able to secure the network and the applications that you developed. So there, our digital security subsidiary was able to step in to add more value and to add a more comprehensive model to help them along in the digital transformation. They took it even further. They asked us to manage their mobile fleet. And there too, we've got a subsidiary, a team that's devoted to mobile management. We could rely on them to try and meet their requests. And then the customer workstation that the employees use led us to provide evolutions, new versions for what we installed. And so we have our Infeeny subsidiary, [ Mr. Long Le Xuan ], the CEO, is here. We worked with Microsoft, and we were able to migrate what we installed to latest versions of Microsoft Windows 10. We've got this end-to-end capability. We can address 80% to 90% of their request for digital transformation. And then we could also finance some of that with the various branches that we have as a partner. It's an essential aspect. And then the delivery quality has improved. Why? Because of that responsibility, we started administering satisfaction surveys, and we have better control of risk. And we control risk end to end, so we could have coordinated management rationales. So for the EUR 60 million in turnover, we've got half a dozen project managers who are managed by Rodolphe as key account manager. Every month, they're incentivized and managed in order to keep track of the projects, but also help the customer himself in the digital transformation at their own pace. So this transformation is real added value for the group on top of all the capabilities that we've acquired. That's a very hands-on example, a very simple one. But it really reflects the company's strategy, which has been to invest and acquire strong assets, innovative ones that would flesh out the legacy businesses of the group, so that now we can be the best partner for this client, but also for others with this end-to-end logic of comprehensive commitment. Thanks for listening, and I'll now give the floor back to Angel.

Thank you, Laurent. Well, the first thing I have to say about the outlook is that we're not going to give any outlook. We won't set any guidance. We have analyzed our growth ability and our improvement capacity for ROP for 2020. As we say in the press release, we think that, normally, ROP for 2020 should be significantly better than for the year 2019 for several reasons. In spite of the fact that we think that we'll have major productive reinvestments, we want to continue cutting costs, and we want to have growth again for TMF. We think that growth will hold up for DSS. But given the current contents, we think we shouldn't set any guidance, so we're not going to. What I can say is that our main financial objectives are to reduce debt. Jean-Louis Bouchard talked about it. We want to go through zero debt. We want to be independent. We're going to carry on closing and selling off noncore assets in order to focus and allocate all resources to those businesses and countries that are strategic. For a lot of them, we don't yet have the sufficient footprint and so we're going to continue with our cost reduction program, which is going very well. All that is the finalization of our transformation plan, which we hope to complete by the end of 2020. All that with a single goal. Our transformation plan itself aims to return to 15 years of new growth for the group. How? With strengthened human capital, men and women. And we've seen examples, Laurent told you about it. We've seen what we did at TMF to carry on with that. We're going to reinvest in our offerings, in our various businesses at TMF, Services, orchestrated solutions, Products & Solutions and distribution. And then once we've made progress on that, we'll target acquisitions in European countries where we think we could have a strong presence, and so come back to new growth momentum in terms of revenues and profitability for the group. That's what I could tell you about our goals. And we're now at your disposal, all of the speakers, for any question you may have for us.

We're now going to open the Q&A session with management. Well, I think that there are roving microphones. We have a first question from the back of the room.

I've got the first question.

First of all, thank you. Please introduce yourself.

Tony Lebon, ODDO BHF. I have a first question about debt. Could you disclose the level of factoring at the end of December 2019? In fact, deconsolidating factoring EUR 246.7 million?

Well, second. That was -- that question had been prepared.

It won't always be so precise maybe. Second question, about the use of commercial credit notes. I can see on the Bank of France website that you have increased your outstandings in the last few months. Could you explain what you use those credit notes for?

I'll ask Valérie Clar, who is in-charge of financing, to give you a precise explanation because she's keeping track of that on a daily basis.

Hello. The use of credit notes, well, I think you're referring mostly to 2019, that was for management of our financing needs and working capital requirements. As Laurent Roudil said, we have quite a few operations where we need to -- for company digitalization projects, we need to finance that ourselves for a bit longer before we can build the customers for that. And so there are a number of contracts that were financed within Econocom before they were deployed at the customers. That's for Products & Solutions. We had a big contract, by the way, in schools. So we had to self-finance some of the assets on our balance sheet before they could be deployed in schools in September or for TMF business. We had to finance that ourselves before we could refinance that. Anything to add?

Well, is there any specific tension on the credit notes market right now because we've got very little visibility on the bond markets on that? Have you felt any tightening on the part of investors who -- or not at all?

Well, yes, we can see some volatility. There's a wait-and-see attitude on the part of investors right now, where, fortunately, we've had investors following us for a long time. They know who we are and they are here for us. Others are a bit more reluctant, a bit more wait-and-see. Since we've still got a fair bit of cash now, what I wish to do is not to change our price too much on that market for the wrong reasons. So we'll go on to this market when it's a bit more -- quite a bit more -- with a bit less turmoil, but we don't need to issue right now, and we've got a few good investors. So yes, we have a complete peace of mind about that.

Then a question about the assets maybe. Since I have the opportunity to talk to Mr. Bouchard now, I have a sensitive question about the succession plan for management, not only, but also for the share ownership structure. Have you defined such a succession plan yourself? I'm asking because some investors asked me, and I didn't have any answer to give them about that. So could you give us some pointers about that, if you have any?

Well, just regarding stocks, I've got 8 children. The youngest are 9 and 5, and Robert here is my eldest son. So there's a family agreement, which means that Robert is managing the family agreement, and there are commitments between children that were signed in order to guarantee continuity in the ownership. Well, my large stake, the large family stake of the group is managed thus.

[ Eric Blanc ], Finance Connect. Just a few quick clarifications, please, regarding the cost reduction program. Could you give us some more granular figures? And also roughly speaking, you're not going to give us any details, but do you imagine that noncore assets -- what does that mean ballpark as a proportion of total revenues? That's my first question.

Well, for your second point, the revenues from discontinued activities was EUR 221 million in 2018 and EUR 161 million in '19. Regarding the expenditure reduction plan, we've maintained our EUR 96.5 million cost reduction plan for the base 2018-2021. Out of EUR 96.5 million cost reductions and gross expenditures, there's EUR 80 million roughly for all the continued activities, and the rest is affected to discontinued activities. So there are allocation percentages for activities that have been discontinued or held for sale. And after the divestments, the percentages will be reduced. And for the discontinued activities, the expenditures are reduced as we are closing down the activities. Out of EUR 80 million in continued activities that will have an impact on ROP, these are gross reductions. We've had EUR 30 million in reductions in 2019 in gross terms. The reinvestments we expected to make in 2019 were roughly EUR 9 million. We kept it at EUR 5 million because we wanted to be conservative as the context was not better to reinvest quickly. So EUR 30 million minus EUR 5 million. So for 2020, we expect to have EUR 30 million in further cost reductions and growth terms, and we expect to have roughly EUR 15 million in productive reinvestments. I hope I've answered your question.

Yes. Out of the revenues for discontinued activities, those that have been deconsolidated now, those that are accounted as discontinued activities, are there other types of activities that may be counted as discontinued activities?

Well, it's an open-ended plan. We don't review the plan every week, but the plan can be revised, sure. But nothing on the radar right now, since the plan was put in place. But of course, it can remain open-ended. And for the moment, there hasn't been any changes compared to what we said.

My last question is about treasury shares at 31/12, and maybe today, things are probably changing very quickly. Are you maintaining your share buyback plan? And what's the purpose of these treasury shares?

The purpose of treasury shares or are we still buying back shares? We're still going on with our share buyback program within the limits of our debt reduction ambitions. There's a mix between the 2. So share buybacks are less and less costly, but they still have a cost. So I have got authorization from the Board, so we are still buying back shares. How much now as a percentage of equity? Well, the number of issued shares is 245 million. We own roughly 26 million, so that's roughly 10%, and we've got authorization for another 10%.

That's to date?

Yes, to date. Seeing as the question came up, it actually gives rise to a little technical issue. The authorization that was given to the Board was conditioned to EUR 2. Now we have just gone through EUR 2, which means that we're actually not able to buy back shares right now. Otherwise, I'd do it. I hope that we can get back over EUR 2. That way, we can buy back shares. We can't actually buy them at the current price.

You can't have a floor on share buybacks.

Well, you can, in Belgium. We were surprised to learn this. Normally, there's a floor on selling and the ceiling on buying. Well, that's what you'd expect. But in Belgium, at the moment, in our terms of association, we are limited. And Belgium actually intends to divide that limit by 2. So the Board would then be able to buy back from EUR 1. We looked at this at the Board meeting last Monday. This was a decision at the GM level. If the Board's decision is enough, we can buy back under 2 years; otherwise, maybe we will need to move forward the GM, but it's going to happen at the beginning of May. I don't think we'll have time to change anything by then. But the overall trajectory is to continue the share buyback program, yes.

I have another question for Mr. Bouchard.

Maybe we could meet one on one.

It's the first time I've got to see you in person, so I'm asking all my questions. Now I looked at the holding account for Econocom, and I didn't see any debt. I asked the question because sometimes you have action secure -- share securitized debt in the holding company. I didn't see anything on the books, and I wanted to confirm with you that, that was the case.