Econocom Group SE (ECONB) Earnings Call Transcript & Summary

Good morning, one and all. Welcome. I'm Etienne Jacquet. I'm the Head of Corporate Finance at Econocom in charge of shareholder and investor relations. We are delighted to welcome you today for this annual presentation, during which we are going to present our results and to share with you the outlook for this new year. As usual -- conclude the presentation with a session of questions and answers. The idea is to have an interactive discussion with you, so of course, we are urging you to ask your questions on the connection forum. Without further ado, I'll give the floor to Angel.

Good morning. Thank you for being here with us today in this virtual meeting given the environment that we still have in Europe. I'm going to talk to you about the group as we see it today. This is the development we've had over the last few years. I know that in previous presentations we already referred to our development, but we think that today, once our transformation plan is concluded and once we've reached our goals, as we'll see later, we think it was important to take stock of the change between the year 2009, which was the year just before the acquisition of ECS, which was the first major structural acquisition that was made for the group; and until 2020. On this slide, you can clearly see the change in turnover for the group. And you can also see in blue, light blue, the change in recurring operating profit. And in orange red, you can see the change in our net cash. What is important, as far as I can see, is to explain that this decade of strong growth, until 2017 included, was organized around 2 plans. 2 strategic plans arise in 2012, the aim of which was to double turnover from the group and which was mostly organized around the acquisition of ECS in 2010. You can see that the group had a positive net cash position in 2009, EUR 30 million. It's only with the acquisition of ECS that we started taking on a bit of debt but very little. And then there was a second plan, mutation, through which the plan also -- the group also wanted to become a service company after becoming the European leader on the rental market; and the launch of the satellite acquisition model, which led us to have in 2017 sales of nearly EUR 3 billion and recurring operating profit of EUR 154 million but fairly high debt. After these years of strong development, we decided to put a transformation plan in place. That was a period of consolidation that I'm going to talk to you about today. It's now over. We are going to talk about it on the next slide, but you can see that the ROP is stabilizing. If you can stay on the previous slide, yes, still on this slide. So 3 years of consolidation during which you could see the major effect in the stabilization of ROP, a decline in turnover because some activities were discontinued but also because of the pandemic, but you can see that there's still a return to net positive cash, EUR 20 million in net positive cash in 2020 -- for EUR 30 million in 2009. What's important on this slide is that, in 2009, the group's equity was split into 198 million shares and now 196 million. We'll see that there are 220 million, but some of -- there are some treasury shares. And so that leads us to 196 million. So all this development and growth and in spite of the consolidation plan, the transformation plan that was necessary, since 2009, we've been able to multiply turnover by 3.4x and ROP by 3.2x without any dilution for shareholders. Moving on to the next slide, on which we can see what is split of the shareholder structure. You can see that in treasury shares we've got 25.6 million shares. The number of shares is on the right, 220.8 million. So that's the 196 million shares that we saw on the previous slide. The free float, 106.1 million; and the holding companies controlled by Jean-Louis Bouchard, 89.1 million shares. So EUR 3 per share. You can see the market cap. Well, we are currently acquiring own shares because we consider that the value of the share is such that it's interesting for our shareholders. We now have 11.6 million in treasury -- 11.6% in treasury shares. We can go higher. And there are benefits to this possibility because the group -- once the transformation plan is over, and Laurent will talk about that later, the group is going to be able to embark on a new growth plan both organic and external through acquisitions. And we are fully able to acquire companies partly in shares and partly in cash. So that means that, thanks to this transformation plan, thanks to the development and growth over the last few years and thanks to the deleveraging that we've been able to finalize in 2020, we are now ready to go back towards growth through acquisitions, which is -- has a lot of potential in the Econocom Group. And that's one of our strong suits. We were able to prove over the last few years the ability to acquire and successfully integrate all the companies that were bought. Now we'll move on to this next slide to focus on the transformation plan that was essential. We talked about it already, but we are confirming that this transformation plan -- well, the goals of the transformation plan were reached at the end of 2020. This transformation plan had 3 main pillars, as you know: first of all, the cost-reduction plan that we called Drakkar initiated in 2018. The goal was reached. Second pillar, refocusing on businesses. We had a number of disposals and similarly a number of discontinuations. So disposals Jade and Rayonnance in 2019, 2020 maintenance in France, in Digital Security. In 2021, we've already sold our former subsidiary Aragon. And we are currently in talks for divestment of Helis and removing it from the scope of the group. In terms of business discontinuations, this transformation plan was here to reduce costs and refocus our business on strategic activities and in high-potential countries. So we closed a number of units that were not strategic in countries like Mexico or Czech Republic, Romania, Morocco or Ireland, small countries in which units had difficulties achieving critical mass. It's always difficult to attract managers in these circumstances, managers who are able to extract a high potential of profitability. So we preferred to stabilize the group, so we had to lose some revenues in the process, but that meant and is going to mean -- because the consequences in terms of costs will be rather visible in 2021 and later because these are costs that are completely gone. We also closed the distribution activity that we had in Italy close to TMF's business. We have distribution in Italy but via satellites, and that's very successful. They are supported by EDF. And also 58, a consultancy project, that was now closed. And the third reason to be satisfied and something that was very successful, another goal that was reached in 2020, we wiped off our debt in 2020 and we now have positive cash. So that was my introduction and the main ideas about who we are today. We are a robust company with a healthier risk profile with strong acquisition and integration abilities. We have a conquest culture. And we have enough freedom and room for maneuver so that, in the next few year, we can embark on a new conquest of the market. Thank you. I'm going to throw it over to Éric Bazile, our group CFO.

Thank you, Angel. Good morning, everybody. I am delighted to present the definitive figures for the Econocom Group for the fiscal year 2020. As far as we are concerned, these are very good figures in spite of the health and economic crisis that we've been facing for a year now already. We consider that Econocom has reached the goals that it had set itself in terms of operating margin improvement and deleveraging. As Etienne said earlier, the figures that were approved yesterday by the Board of Directors are fully in line with what we had disclosed on the 21st of January. However, there are a number of items on which we wanted to dwell. I'll start with revenues that you can see. Revenue declined by 11.3% like-for-like compared to 2019. This decline, I think, can be explained at the end of the day by 2 factors. First of all, our business was impacted by the health crisis. It's undeniable. This crisis delayed quite a few projects with our public and private customers, and so that had repercussions on sales. What's more, in line with our deleveraging goals, we wanted to be more restrictive in our TMF activities that were not refinanced. Because of these 2 phenomena, there was a decline in turnover by 11.3%, as you can see on screen. However, please note that this drop slowed down in the last quarter of the year 2020 because, during this Q4, the decline was only 8.4%. If you look at things in more detail: Services came back in Q4 2020 to the level of turnover that they had in Q4 2019, first good news. And also, the Products and Solutions business, the distribution business, booked in Q4 2020 a growth of over 8% compared to the sales that it delivered in Q4 2019. That's sales. ROP now. Well, as you can read, we had EUR 123 million, EUR 122.5 million to be precise. It's an increase of EUR 2.6 million compared to the ROP like-for-like that we had in 2019. And the profitability rate of the group, still like-for-like, gained 0.6 percentage points from 4.2% to 4.8%. There too we consider that it's good performance, and this good performance is the result of 3 effects at the end of the day. The first effect, that Angel talked to earlier, the cost -- structural cost-reduction goal. The aim was to reduce these costs by slightly less than EUR 100 million compared to the 2018 baseline. We've now reached this goal. In Services, under Laurent's impetus, for years, we've been working on constantly improving profitability, and I'll come back to it in a minute. In 2020, this improvement in profitability is quite significant. Last but not least, in all businesses, service, distribution, rentals, we've been focusing on higher-value-added operations even more so than in the past. Regarding EBITDA, just to shed light on these major indicators. Well, EUR 123 million in ROP corresponds to an EBITDA of EUR 156 million. Another focus, on net income: Thanks to good control on of expense -- on our interest expense, stability in our tax burden and return to slight profitability for our discontinued activities, net income for the group also increased slightly from EUR 48.6 million to EUR 50.2 million at the end of FY 2020. Now if you move away from the P&L and look at cash, especially free cash flow. This year, you'll observe a particularly high level, almost EUR 180 million. Well, that's, of course, the reflection of the good results that I've just talked about. And it's also the -- a reflection of strong reductions in working capital requirements, but I'll tell you more about that later. Last but not least, as we've already explained, our net financial debt, that was EUR 272 million at 31st December 2019 -- EUR 252 million at 31st December 2019. We now have excess cash of EUR 20 million, hence the variation of EUR 272 million. So major deleveraging that happened that was made possible with free cash flow of EUR 179 million we've talked about and also with net proceeds from our M&A activities of EUR 140 million that I'll explain in a second. Also this deleveraging of EUR 272 million was achieved with return to shareholders equivalent to the levels of previous years, roughly EUR 50 million that we'll give you more details about in a minute. Now let's look at the performance and contribution of our various businesses. I would first like to start with DSS hub, Digital Services and Solutions including Services business and Products and Solutions. What you can already see in terms of revenues is that this division had a more limited decline than the rest of the group, a decline of minus 5.9%. For the Products and Solutions business, the decline is even limited to 5.1%, thanks first to a fourth quarter 2020 that I've already talked about, and growth was particularly dynamic there by 8.3%; and more broadly, throughout the year, thanks to steady demand from our public and private customers for equipment and solutions that enabled them to put work from home in place, as recommended by the various governments. Against this backdrop, our product and solution subsidiaries in France, in Belux or in Germany therefore had a year 2020 that was rather good. For Services, still talking about revenues, here you can see a drop of 7.5%. In spite of this near stability in Q4 that I was talking about a minute ago, I think that what you can say is that the decline is partly related to a drop in our IT management services business. Although it's limited, the decline is probably more marked for projects that are built according to time, especially those related to our applications businesses especially in France. In spite of the 5.9% decline in turnover for the whole of the DSS division, you can see that ROP went from EUR 76 million to EUR 86 million, an increase of EUR 10 million. That's roughly plus 13%. And more significantly even, as far as I'm concerned, the profitability rate of DSS went from 4.3% to 5.2%. This strong improvement in profitability can be seen first in Services, as I said a minute ago, and I wanted to come back to it. You can see that, for Services, ROP went from EUR 30 million to EUR 37 million. That's an increase of 25%. And the profitability rate for this Services business was 4.7% in 2019, up to 6.4%. Here you've got the outcome of all the efforts that were made in particular on the Planet services in France but not only in order to constantly improve our margins on contracts and to determinedly reduce our structural costs. At Products and Solutions, the increase in ROP was more subdued from EUR 46 million to EUR 48 million. However, the profitability rate also grew from 4.1% to 4.5%. We consider that 4.5% in this business of Products and Solutions is here also a rather interesting level. That's the outcome of the improvement in our margins like -- in satellites like Exaprobe and others but also a decline in costs in most of our products and solutions subsidiaries. And also it's thanks to the positioning of these subsidiaries towards more added-value services. Thanks to all that, thanks to the increased profitability over the year and thanks to a return to growth in Q4, our aim for the new fiscal year is to carry on improving the margin levels. That's what I had to say for DSS. Regarding TMF, Technology Management & Financing, on this next slide, here one must observe that the impact was higher with revenues at EUR 913 million, minus 19.6%. This decline in revenues by 19.6% compared to 2019 can be explained roughly equally, so for about EUR 100 million each, on one hand, by the health and economic crisis, which led some of our clients to postpone some of their projects and to also adopt a certain wait-and-see attitude that continued until the fourth quarter. And on the other hand, this decline can also be explained by our desire to reduce the volume of our nonrefinanced operations given the goal that we have to deleverage the company that we talked about earlier. In spite of this 19.6% drop in revenues, the TMF division was able to limit the decline in ROP to 16%, roughly. In total, the profitability rate of the TMF business therefore improved slightly from 3.9% to 4.1%. At the end of the presentation, Angel will come back to the prospects that we've identified for TMF in 2021. Now I'll immediately give you more clarifications about the EUR 100 million in free cash flow I talked about earlier; and the way that we deleveraged by EUR 272 million so that, at the end of last year, we had excess cash of EUR 20 million. Regarding free cash flow, I think that the most important point to comment on is mostly this reduction in WCR, which is close to EUR 140 million if you add the decline in WCR related to TMF investments that are not refinanced of EUR 53 million and the EUR 87 million in WCR reduction for the other businesses. Out of EUR 53 million in WCR reduction related to nonrefinanced TMF investments, of course, there's what I was talking about earlier, the low level of production that we wanted to improve given our deleveraging goals; and also, as a contributor to the EUR 53 million, the recovery of a number of late receivables from 2019; and also the refinancing with third parties of contracts that were not refinanced at 31st December 2019, for which over the course of 2020 we found some rollover -- recourse-free rollover possibilities. Regarding to -- regarding WCR related to other activities, the plus EUR 87 million you can see on the diagram, what you can say about this is that the decline is the reflection, first, of increased use yet limited use, plus 15%. So a higher use of factoring and reverse factoring, especially reverse factoring. And for the remainder, this is the reflection of the particular focus that we had throughout the year on operating cash for the group, with all of our entities trying to use all potential operational levers so that we could reduce working capital requirements so that we could deliver this performance at the end of the year. Beyond the free cash flow of EUR 179 million, the other 2 things that I wanted to comment on are the EUR 139 million in M&A and the EUR 51 million in return to shareholders. Out of EUR 139 million in cash-in related to M&A, there's EUR 125 million proper net proceeds of the disposal of nonstrategic assets made in 2020. Angel talked about them earlier, the 2 biggest ones being, of course, maintenance in France and the Digital Security business. And there's also -- there have been beneficial effects from the integration of Les Abeilles from 30 September onwards last year and also some acquisition debt to be paid in 2020. And in total, that leads us to EUR 139 million you can see on screen. Regarding treasury shares and dividends. This return to shareholders of EUR 51 million, it's subdivided into 2 roughly equal parts: first, purchases of treasury shares that Angel talked about; and also the payment in November of a dividend of EUR 0.12 per share. This dividend payout was made possible in particular by the fact that Econocom did not benefit from a state-backed loan last year. Before I throw it back over to Laurent and Angel to talk about the 2021 outlook, I wanted to wrap up my part of the presentation with this next slide that shows the outcome of all the efforts that have been made in the last couple of years as part of the transformation plan that was presented to you, efforts to reduce our costs structurally by EUR 100 million, efforts to improve our profitability rate. We saw that in total for the whole group we've increased by 0.6 percentage points to 4.8% at the end of 2020. We saw that all businesses, starting with Services but also distribution and rentals, contributed to the improvement in the profitability rate. We strived to reduce our working capital requirements, not just for TMF, improvements on activities outside of TMF's nonrefinanced business. And the deleveraging is also the outcome of the group's refocusing that we've already talked about. So in total, we went from average debt higher than EUR 250 million in the last 3 years 2017, '18, '19 to excess cash of EUR 20 million. That's to be compared with almost EUR 160 million in EBITDA that we posted at the end of 2020. With all that, we think that we are ready to embark on growth again both organically and externally through acquisitions, and that's what Laurent and Angel are going to tell you in more details for the 2021 goals.

Okay, I should be able to speak now. So good morning, everyone. This is Laurent Roudil speaking now. I wanted to share with you the outlook that we are looking at for 2021. If we look at just the first slide that's been shared with you. This is related to the trends that are good for all of the business lines that we have at Econocom. We are seeing a ramp-up of digitalization, what is generally known as smart working these days. And what we're realizing is that our 3 main business lines are positively engaged with these trends. This is something that we've seen throughout 2020, and that trend is further increasing, so let's look at how we are prepared to meet the increase in demand. Well, first of all, product and solution, all of our equipment sales generally. Well, if you look at that, we already have more than 150,000 SKUs in our catalog to meet that demand. We're also working with leading partners, be it equipment makers or software developers who've been present in their respective markets for years now. These are gold standard partnerships. And in many cases, they are structural elements for our business lines, especially given the increase in demand. High-quality partnerships mean that we can deliver on time and deliver the right product to our clients. And we've also been working on our service offering. We work on equipment, of course, but we're also ahead of the curve on consulting, on advice, on configuration of our telecoms and IT equipment. And then we can do all of the setup with our clients. These are 3 major assets that will help us meet the increase in demand in the market for product and solutions. On the service side of things, we wish to consolidate our leadership position for management of workstations. We discussed this back in September. Clients now want to take control of their workstations, as we have seen. And this led us to develop our modern workplace offering, which is a turnkey remote working solution for remote management, for technology. And this leads us to work with the Microsoft suite and other technologies. As it stands today, we have a well-rounded offering, including what our satellites bring to the table as a complement to what we can provide to our clients. We're also doing a lot of DevOps for cloud applications, and this gives us a further service that we can provide to clients for IT management and production. On TMF. In 2020, we launched a number of transformation projects that you heard about throughout 2020, and those have ramped up over the last 6 months especially. We now have a strong refinancing offering which is an asset that clients are clamoring for. It means that they can renew their IT equipment as they reorganize their working methods and spaces. And once again, here we have 20 or so legacy financial partners who support us in this refinancing offering. And we know that, as debt increases, especially small and medium-sized companies tend to prefer leasing, which is an opening for us. [Foreign Language] [We're just experiencing a sound issue here. There we go.] So we are expecting investment from companies as soon as the health situation gets back to relatively normal. For Products & Solutions, for the sale of telecom and IT equipment, we are looking at more than 50% of our revenue coming from public sector clients. That's very important for us. We also have more than 600 people who have security clearance to work with defense sectors and other confidential sectors. And the public sector is important for TMF as well because there's extra market share there, so we have a strong investment plan for that, especially on the commercial side, so that we can garner more market share there. Our private sector experience leads us to believe that we can continue to count on our growth for Products & Solutions, as we've seen over the last months. And we're also present in pretty much all sectors. This means that we have the ability to support clients in investment needs that are more and more globalized and European-wide. So through these 3 business lines, we're ever more equipped to support our clients in that. And it means that they can delegate complexity to us. We can create added value and therefore profitability based on that. And finally, we are seeing more related to public and private vendors. We're seeing a lot more related to the circular economy, CSR in a more general sense. These are things that we've been involved in since the very beginning, since the 1970s when Econocom was created. When we sign a client -- when we sign a contract with a client, we are able to gather up all of the old equipment and recycle them or reuse them. This is something that we have been doing for a while now and that we have a lot of experience in. In our Econocom corporate HQ, we also apply that kind of philosophy as part of our transformation plan. We reworked our corporate offices based on the lessons learned over the last years. And we're working on having a lower ecological impact in our new offices as part of our partnership with our clients as well. On the next slide, you can see some of the things that Angel and Éric already expressed during the financial announcement. First, to go back to organic growth. We are confident, based on all of the reasons that we've already expressed, that we are in an upward trend. Over the last 15 months, we have been working to meet the increasing needs in some sectors. And this means that we believe we are now able to meet the increasing complexity that clients are expressing based on the more complex working environments that they now need to manage. These are structural components to the business line. And we've also strengthened our management team with experienced managers to further manage that complexity, which has truly added value with our turnkey solutions for digital that we can offer our clients. Secondly, resume external growth. As we've already explained, we are in a solid financial situation, ready to move towards external growth. We are looking to be pretty ambitious in TMF and in leasing in Europe. And for IT and telecom equipment sales for Products and Solutions, we also intend to strengthen our presence in some European countries such as in Germany and in Southern Europe to increase the size versus today because we already have about 1 billion today and we're considering being able to double that. The outlook is good. We've got a buoyant market that leads us to consider some acquisitions. When it comes to Services, we want to strengthen our position in our ability to support clients in moving towards cloud technology. We want to bring together management not only of workstations but also of infrastructure together in a single passage that we can then advise people on, and then we can follow up with management of new strategies for management of their equipment. With our applications that we've developed over the last 3 years, we now have a great amount of capacity for data management. We have access to a lot of data through our business lines, and it means that we can optimize our production models and also help our clients optimize their own management of their IT systems. So that's the second thing. We're also continuing to be vigilant about our costs, especially the nonproduction-related costs. We learnt a number of things over our experiences in the last 18 months in cost cutting. Angel already mentioned this as well, and so did Éric. Today, we have developed a "return on investment based" corporate culture, which is very strong within the group. Each investment is carefully considered, weighed based on the relevant requirements and looking at whether it will improve profitability versus the average profitability group-wide. And then based on this work that's going to continue for the coming quarters as well, we can also consider self-financing to support our growth, which is our next development line for the coming quarters and years. Now we can move on to our Q&A session with Jean-Louis Bouchard, who is going to coordinate everything; and will also be pulling us in to answer the questions, depending on the nature of the question that you ask.

We have a first question from the audience here saying that, "You have significantly drawn down your debt level over the year EUR 270 million roughly. And you are now looking at a positive cash situation for 2020. What are the overarching goals for the company in the medium term for its debt levels?"

The reason I set the target when I came back to the company about 2.5 years ago was that there had been a mix-up from people that were outside of the company. We've become a service-based company, and supposedly, service companies don't need to take on any debt for their core business. Generally, a service company will take on debt for external acquisitions, but in our financing business, 90% or 95% of our business is actually refinanced through subsidiaries. That means that we're handling the tech equipment, and then the further 5% to 10% was actually booked with us. And that 5% to 10% was booked with us because of the high technical expertise that was required from a digital standpoint to monitor all of that equipment. When we finance something, we like to keep control on it and to be able to get it back if people aren't paying up. So just to make sure that there's no ambiguity about the solidity of the books at Econocom, I set that target, which was the opportunity to clean out some cobwebs as well and also to show that the company could survive without any debt. That goal has now been achieved. We are debt free, as you've seen. So our financial situation is particularly healthy right now. The downside of this was that it drew down our refinancing on own capital business over the last 1 or 2 years. So as -- so you've seen TMF has dropped off. Part of that is due to the fact that -- investment levels being lower during the health crisis but also because we stopped refinancing on our books. So the fact that we're going to start doing equipment through TMF again, it's going to be booked with us. You're going to see an increase in the business. Basically we achieved our goal. We proved that we're able to function without any debt to finance our own equipment, so the equipment that is booked with us. And I think that we can restart that side of the business gradually now as company investment picks up. Does that answer your questions?

We have another question on the forum here. This is on Services. Service margins have significantly increased over the last 2 years, sitting now group-wide at about 6%. What were the main reasons for that? And are there further profitability targets to be achieved for that division?

Yes. Of course, it's Laurent Roudil who can answer that.

So related to the first part of your question. Let's say that there are 3 components here that have enabled us to significantly improve over the last 3 years our recurring operating profit and also our profitability. The first reason is that we put a lot of work into dilutive contracts. We systematically renegotiated with our clients some of our legacy dilutive contracts. There is another thing, which is that we had mothballed 30 or so initiatives. That aimed to improve our P&L situation. Those have been renewed, working on the productive side of the business that was costing too much. And the mothballing also enabled us to have further room for maneuver to create new offerings in higher-added-value markets than where we had presence before. And then thirdly, and this is very important, and I know that a number of our managers are listening in today, we have worked on developing a profit-oriented corporate culture with managers who were hired from outside or promoted from the Services department within France and also internationally. And those are the 3 main things that explain the increase in our results. As to whether we can further improve the situation, I remain convinced that we will improve our profitability rate in the coming months and years and for 2 reasons. First of all, the markets are good, and we have adapted our offering to meet those demands. And we're also looking for a new acquisition in a cloud-based environment for project and infrastructure management. And that means that we could sell high-added-value consultancy and management, generally double-digit added-value profitability there. And that should further increase the profitability of services in the coming months and years.

Thank you, Laurent. Another question on forum: You recently announced that you would be buying up Mr. Walter Butler's share in the company. Can you explain why and what's going on behind it?

He became shareholder when we purchased Osiatis. Part of that was paid in shares, and part of that was paid in cash. And he's been a loyal shareholder ever since. Well, there were, however, divergences between my way of seeing things over the last 3 years, a kind of conservative family company management style with very little dilution, with strong capital situation, strong profitability, whereas I think his fund was more interested in the top line and in market share in a much more aggressive way. So 1 year ago, we agreed that we would buy out his share. It was right at the beginning of the pandemic, so that got pushed further down the line. It was important because it gave us more visibility. Everyone was pretty lost at the beginning of the pandemic, knowing what was going on, but given that half of our revenue comes from people paying rent on rented equipment, if people stopped paying rent, then we were a bit worried that, that might have a negative impact on our books, but things ended up going quite smoothly. And we got back to Walter and agreed to finalize the decision that was decided on basically a year ago. I think that the stock is currently undervalued. And our ability to deleverage, as you saw, shows that probably the best course of action for the group is to buy back its own shares. So currently we hold about 25 million out of a total of 220 million. This means that there's about 195 million nonself-owned shares out there. My own personal group controls 90 million of those. So we've got pretty solid control overall of the market cap. There are a lot of opportunities ahead of us, and we'll be discussing this with the management Board. As we have discussed, over the next 10 years, we're going to be doing a lot of acquisitions. We have a good decade behind us. If we can have just as good a decade ahead of us, well, you can do the math. That means that we could pay for these acquisitions with some of our self-owned shares or, and this is one of my ideas, we can find a partner to replace Walter but at a larger scale. Since we can buy back 20% of our shares, currently we're at 25 million, we can push it up to 44 million. So we could find maybe a partner specialized in M&A and customer support to help us develop in Europe and India. What our large clients are wanting nowadays is European-wide presence. Whenever we work with a car manufacturer or a [ TELUS ] or any other big company, they say, "Okay, the equipment is great," but they want to have a single point of contact Europe-wide. Equipment accounts for about 1 billion in revenue, and I think that we could easily double that in the coming years. And by doubling revenue, we would [ need ] enough money to buy out the companies. Generally, we have leverage ratios at about 3x. That means we've got about EUR 500 million. I'm not saying that this is what we're going to decide in the short term, but I am saying that we do already have EUR 75 million that are on hand, if you include the EUR 25 million in self-held shares, so we should be able to support our acquisition policy going forward.

Thank you, Jean-Louis. Another question, on residual value. "Could you tell us about the trends that you've seen in 2020 and what kind of shifts you're expecting in 2021?" Angel, do you want to answer that?