Econocom Group SE (ECONB) Earnings Call Transcript & Summary

Good morning. I am Benjamin Pehau, in charge of Financial Communications at Econocom. Many thanks to everyone, historical partners of the group, investors, analysts, for your presence today. We are delighted to welcome you in Brussels for the presentation of our full year '23 results. The presentation will be made by Jean-Louis Bouchard, Chairman and CEO of the Group; Patrick Van Den Berg, Angel Benguigui, both Managing Directors. We will proceed as follows. Jean-Louis Bouchard is going to start with an introduction. Patrick and Angel will comment on the core presentation, including financial and ESG aspects and a short outlook for the short term. We will finish this session with the traditional Q&A. People attending remotely have the opportunity to ask question in parallel directly on the platform. A cocktail will be served after the presentation, which is also the opportunity to meet and discuss with Econocom's management. Let me start with a video for the '23 highlights of the group. Many thanks again to everyone. [Presentation]

Hello, everyone. I have not rehearsed in French. I'm going to try to explain you, we came here about 3 months ago to expose our strategic plan. And yesterday, we had a Board meeting, and one of the questions of the Board which I found was interesting is strategic plan, you talk a lot about numbers, numbers that we were growing, ratios and everything. But what is the main difference between before the strategic plan and what do you hope to be after the strategic plan? And to help me to expose this, I will propose you a chart of the history of the group in the last 12 [ of ] 14 years. And to outline the main trends so it can be more clear to you. Where does our strategic plan stands? And why have we chosen to grow more organically than to grow by acquisition? So is this the way to do it? Okay, it works. So on the left, you have 2009. And then on the right, you have 2028. And you see that we have grown a lot before, about 10 years, from 2009 to 2019. With a microphone. It can be easier. It works. Thank you. I cannot do anything without Angel, no? That's obvious. I will point out with this because otherwise, it cannot be read, really. What you have -- this is year 2009, and then we grew mainly by acquisitions. Then at this stage, we -- you might remember, we had a lot of satellites. We had about 30, 35 satellites. Some of the satellites were companies that were acquired for technology in the tech world. And some of them we merged with our main activities, and some we sold, mainly making profit. And only out of 36, 3 bankrupt, but the 33 were successful, and about 20 of them were very successful. So we were able to sell some of those companies without maintaining reviews quite at a high level. If I -- I need 3 hands now. But as you know, with numbers, I have been a magician for 50 years, so I'll try to be for 51 years to show you some magic. So let's -- okay, here I point out the EBIT, as you can see, this is the orange curve. So by acquisition, we grow the EBIT to a high number, 154, but we maintain all the time in the last 5 years above EUR 100 million EBIT. So even though we sold some companies, we were able to maintain a quite strong revenue and a strong EBIT. But why did we sell those companies? First, because some of them we did not need. And then to do this acquisition, we had to increase our debt. So I'll show you, the debt curve. You see the debt is in yellow, and the debt from -- almost was positive there, then we grew a lot of debt. And some point in time, 5 years ago, there was some questioning of, are we able to pay back this debt. Unfortunately, some of our competitors are not able to pay back their debt and then they disappear. So it was an internal contest. And we sold some of the companies. We increased our way of operating, we have ameliorated our way. And we achieved, at the beginning of the COVID, which is a good coincidence, the fact that we had no more debt. And then it was no sense at that time, remember, the cost of fund was almost nil. So we started, again, to invest mainly in our main business, which is financing, technical equipment and strategic technical equipment. And not really buying company, we stopped buying companies. But then we went back to a normal debt. As will be exposed later on, we have announced that we are divesting 3 companies. And mainly, this debt will go back to a very low number. It could go back to 0 if we wanted to, but now we are going to invest into 2 directions. The first one is internal organic development. We're hiring a very strong new sales force and training this sales force, which is quite costly. And at the same time, we'll start again buying company to achieve about a 400 million business in acquisition, and we already have started this process, and Patrick and Angel will describe to you later on. So you see, there is a main change of strategy, organic growth, acquisition -- not organic growth, excuse me. Acquisition growth, external growth, flat, and now we're [ stuck ] again with an organic growth. Why is that? Because it -- first, it's almost impossible to do well the 2 things at the same time. I'm trying to do 3 things at the same time, I'm not very successful. But when you do it with [ certain ] companies, it's quite difficult and [it's straining ] for a lot of people. Secondly, if we go back to our -- the main activity of Econocom, we are sales. We don't manufacture. We don't develop software, except for very small parts of the group. And we help our customers evolve in the tech world. Tech world is changing. I've been -- Econocom is 50 years old. And I've been involved in this business for more than 50 years, and it's changing all the time. And for the main customer, for all our main customers, first, they are [ becoming ] Europeans, so they are getting bigger every time. And then they have to cope with all the tech changes which are happening. And it's more and more complicated. I'll give you an example. Today, we talk a lot about remote working, okay? But remote made -- helped us a lot in '21, '22 because a lot of people equipped themselves with PCs and laptops and so on, so they were able to work remotely. In the coming year, very soon, next year, the year after, this is going to explode again with the intelligence artificial, I don't know how you say it in English, IA, probably? Okay, many with the IA because the laptops will have to be much more powerful to cope with IA. So there's going to be, again, a huge change. But at the same time, the remote working used to be personal remote working. Now remote working is group remote working. And all the group European companies, for example, are asking us to propose them meeting rooms, some of them thousands of meeting rooms, equipped with reliable equipment, not this kind of equipment. Equipment where we can -- we have one, but I tried it earlier, it does not really work when we propose it this way. And if you have to -- if you are a tech chief of a large group and you had to equip your group throughout Europe with about 2,000 or 3,000 meeting rooms, then you need to address security. You need to address equipment. You need to address audiovisual equipment and transmission equipment. And it must work because you're online and seen by everybody in your group. So there's a huge market in front of us. Our job is to propose to our customers the equipment, the security around the equipment, the operating of the equipment and the financing of the equipment. So you see that it's very complicated and then that we have to choose. And we have chosen this time to do it organically, and not by debt, because we still want to remain independent. And every time you have some debt, you lose a part of your independence. To finish this chart, let me show you that, as a shareholder, I've been a shareholder for a long time, as you know. The number of shares grew from a decrease from 181 million to 173 million. So this development was not done by division of the shares. People that were shareholders and kept their shares, not only still have their shares today, were not diluted. But the earnings per share went from [ EUR 0.63 ] to, again, this year, we were proposed [ EUR 0.16 ] for the shareholder. When the company profit is about per share, EUR 0.37 or EUR 0.38. So the company remained quite profitable. And this is what we forecast. We forecast the debt to go down this year, probably go back a little bit again with acquisition and then still going down. We want to keep independence. And the EBIT itself, we foresee the EBIT to grow steadily to close to probably around 200 million in 5 years from now, 3.5 years from now. So what -- behind it, behind all this, behind those numbers, what are the main changes? The main changes are it's like the -- we are here in the center of Europe. The customers are becoming European. They want to be represented everywhere in Europe. The suppliers, our partners, banks, suppliers, equipment, they want us to be European. And we need to be European. For example, if we negotiate to buy 40,000 screens of this type, it's better to buy it on the Europe level, than at local level. Same thing when we need to develop tools, and this is behind the numbers. When you have to develop tools in every country, it's better to have the same tools for the same activity than to develop 17 different tools in 17 different countries. It's costly at the beginning, but then you make profit at the end. So these are the big change behind it. Also, the big changes about it, if you want to grow organically, you need to train people. And we need -- we have set up training sessions, and we will train our sales force throughout the Europe all year around to have a steady [ trend ]. And last but not least, to make sure that this works, we have set up a new branch we call BDS, which is Business, D for development and Support, to make sure that in every country, they get the right support and the right access to the main development which is being sold to the key clients. So I hope this helps you understand where the strategic plan stands for, and why we announced it 3 months ago, and where do we stand already after 3 months. Thank you very much.

Thank you very much, Jean-Louis, for the introduction. Up to me to talk to you about the results of 2023. And when I arrived this morning, I had a talk with some of you already. Some said, a couple of changes in terms of the presentation of the results. That's something for which we anticipated as well as a question. So I'm going to start with that because it is directly linked to what we presented at the Capital Markets Day. We talked at the Capital Markets Day about the focus of the group, and same focus also means that you have to sometimes question what are you going to do with some of the activities that you identify basically as noncore for the [ entire group ]. And we identified that we would sell off 3 companies in 2024. One of them already included in discontinued activities before. And 2 others, Les Abeilles and Apps, Cloud & Data, both in France, we included them into discontinued operations at the end of 2023. And that's basically what we're showing here. So departing from the EUR 2,718 million of revenues that we reported, published back in 2022. We took out EUR 127 million related to those 2 activities, mainly, to get down to EUR 2,591 million instead of the restated 2022 revenue level, on which then we will develop also on the next slide, the revenue growth that we realized, which, of course, also includes the revenue growth linked to the acquisitions that we did back in 2022. So the EUR 57 million that you see here, which is mainly the revenue contribution from SEMIC and LYDIS, 2 companies in the Products & Solutions activities that we acquired back in '22. In the same logic and also looking at the operating margin, we also, of course, applied it. So the operating margin back in '22 amounted to EUR 139 million, a EUR 25 million reclassification into discontinued operations in '22 linked to the 2 main companies, Les Abeilles and Apps, Cloud & Data. We get to a restated 2022 operating margin level of 114. It's important to start with that because the presentation, as we will show it to you is, of course, based about the, what we call the continued activities of the group, because that's our focus going forward. And that's exactly where Jean-Louis referred to as well as part of the explanation in the beginning about the direction and the strategy plan for the group. So if you then look what it brings in terms of development on revenues and operating margin between '22 and '23. The total revenues of the group increased with 3.5% from EUR 2,591 million to EUR 2,681 million. It's a 1.2% organic growth and the difference, of course, then being linked to the impact of the 2022 acquisitions. The operating margin also slightly increased, from EUR 114 million to EUR 116 million in 2023, with a stable profitability rate, 4.4% in '22 and 4.3% in '23. And we'll go into the activities individually to give you some further background on that. Starting with the Products & Solutions activities. From a revenue point of view, still the most important activity within the group, with EUR 1,207 million of revenues in '23, where we encountered a distribution market which developed a bit negatively in 2023. We realized a negative growth of 2.5% there, total growth, and 6% negative growth from an organic point of view. But you have to put that percentage into perspective, mainly talking about 2 items. First of all, the growth realized in 2022 in itself. So realized 15% of organic growth in 2022. So the minus 6% has to be put into perspective against this 15%, plus the market. If you look in general to the workplace market, the B2B workplace market, what we see from talking to our partners, talking to the market, that the overall market trend in '23 has been rather minus 15%. So we [ seen ] that we do better than the market trend in 2023. So overall, the revenue development for us is satisfying, also knowing that looking forward, as Jean-Louis mentioned it already, that for '24 and especially '25, we see strong opportunities, with companies reinvesting post-COVID into the new cycle of hardware. And also new technology trends, pushing companies to keep on investing in hardware to keep up basically with the software requirements and the tool requirements that are currently in the market. Profitability at 3.6%, EUR 43 million contribution of this activity, slightly down on 2022, which was at 4% at that time. Which, of course, linked to the fact that when you have some volume pressure in the market, there's a bit more competition. So I think that the normative sort of profitability rate of this activity should be a bit higher and more in the region of where we were back in 2022. That's something which we will show as well going into the future. Then the financing activities. Strong growth realized in 2023, with a EUR 1 billion revenue number, EUR 998 million, 11% up, and a trend that we have seen across the year 2023, along the different quarters. Strong revenue growth realized in Germany, in Italy and other countries as well, driven as well by the fact that with the increase in interest rates, our clients are looking for also alternative financing solutions, have a more cash-focused approach and basically boosting as well in that way our business opportunities. Also supported by the way how we developed our offers over the last year. We talked about the offers at the Corporate Capital Markets Day. We are integrating into the offering much more also a sustainable approach, including refurbish opportunities, replying much more also to the needs of our clients in that respect, which also helps us developing the finance activities going forward. A strong step up on the operating margin, towards EUR 47 million, which is more of a normative level in terms of percentage, 4.8% in '23, than in '22, where we had some one-off items in the first half year that we accounted for. So in terms of operating margin levels and also in terms of percentages for the business at 2023 where we should look at. Then on the services activities. Services activities were, in 2022, we still had some negative growth. We turned that around into '23 into positive growth, something we indicated already at the start of the year, which we realized as from the second quarter, in the end realizing EUR 476 million of revenues and a 4.6% growth, which is full organic growth in the year. As mentioned already back in July in '22, on the other side, then on the TMF side, we had some positive one-off items. So there again, the '23 operating margin is the one to look at. And what we said already back in July as well is that we had, at the start of the year, some challenges in relation to pushing through the cost increases relating to personnel, to energy costs towards our clients as well, something which we managed very well in the second half of the year, increasing the operating margin level from 4.3% to 5.3% for a full year basis. So if you increase of 1% just in the second half of the year, it basically means that the second half of the year in itself brings an operating margin level above 6%, which is really the level at least where we target for also into the future. So we're very happy with the move and the push that we made there in the second half of the year, and to also reconfirm our commitment that we took back in July on this activity. If you then look overall from a simplified income statement point of view, we mentioned the revenues already with a 3.5% growth, and almost EUR 2.7 billion of revenues. The operating margin, which slightly increased. And just to mention that in our operating margin, we also have the cost of factoring that we use in the business, and of course, also as a result of the increase in interest rates, there was an increase in that cost as well for a bit more than EUR 4 million, EUR 4.4 million. So you have to take that into account also when looking at the operating margin level. Then the operating profit. So the operating profit from our continuing operations. We see a very strong step up there, from EUR 85 million last year to EUR 105 million this year. And that's linked to the strong reduction in relation to the other operating income and expenses. When we presented our 2022 results, we had a quite significant number of other operating expenses. The net amount was around EUR 26 million, EUR 27 million, which decreased significantly to EUR 8 million over 2023. Again, a commitment we took back in February '23 already that this number would decrease significantly, and that would help us also in basically boosting the net profit from our continuing activities in 2023. And that's what we realized. If you then look at the net profit level from continuing operations, of course that's impacted by tax impacts on the higher results, also impacted by the increase in interest rates, so EUR 4 million higher net tax charges, and around EUR 6 million increase of the net financial interest expenses directly linked to the increase, of course, in the interest rates. But still showing a strong step-up on the net profit from continued business activities from EUR 49 million in '22 to EUR 59 million in 2023. Rounding off with the net profit and the net profit being impacted by the impact of the discontinued activities, and where we had a higher contribution, significantly higher contribution in 2022 compared to the more normative contribution in 2023. But I said, those discontinued activities are the companies we are going to sell off at the start of our strategy plan, mainly '24, as presented already back in November. So what is key first mainly is to follow the trend on the continued activities, because that's where we're focusing on in the future, and that's also where our future growth and future profitability will come from. Then on net financial debt. This slide basically to show you at the end of '23, what is the mix between cash and the funding elements. 225 million of cash. You see also the 200 million of bonds financing, which was secured at the start of '23, still at very attractive rates at that -- at the time. So that helps us a lot as well. I'm basically showing you that we have a very flexible financing structure in terms of the financing lines that we have put in place of confirmed -- in confirmed lines, which would also help us in the future, especially thinking again about also the divestments that we have planned for this year to optimize our net financial debt. And this also optimized the financial interest expenses going forward. What is important to mention, if you look to the net financial debt level, I'll go into the next slide, the net financial debt that increased from EUR 143 million in '22 to EUR 181 million this year, that there is a EUR 70 million lower level of the consolidated factoring or reverse factoring at group level. So basically, that EUR 70 million should be included and offset against what you see here in the free cash flow, the minus EUR 56 million of working capital movement, showing that on an adjusted basis for the factoring, there is actually a positive working capital impact of EUR 14 million, which goes in line with what we presented last year already. Our objective is to optimize the cash management and the working capital potential for the group. So if you look at the free cash flow from last year, which is presented here as EUR 67 million this year, minus EUR 14 million, you have to adjust for the EUR 70 million of difference in the deconsolidated factoring levels for the group. For the other items, I think it speaks rather for itself, especially also on the cash-out items linked to the dividends that were paid, the share premium refunds and the share buybacks that we did also during the year 2023. But as mentioned, EUR 181 million of net debt today, which is a starting point before also doing the divestment that we have planned. Rounding off on the financial debt, we always talk to you like in the previous meeting about the operating cash surplus. Which basically means starting from our net financial debt, we adjust that number for the discounted future cash flows from our own book lease operations. So these deals where we decided to invest in ourselves in the last years and representing a EUR 209 million of future cash flows for Econocom. Which basically means that on an adjusted basis, there's a EUR 28 million of operational cash surplus. First, it's important to share that with you to show what the impact is of the investment that we made in our own book deals as Econocom. We talk a lot about financials. But of course, we also want to talk about our nonfinancial performance, with a couple of key achievements on ESG, starting with investing also in more utilization of green energy. So in '23, in France and in Spain, we decided to go for almost fully green energy solution, where in 2022, we were not yet using that, we made that [ elemented ] move. We are increasing the number of refurbished equipments, which increased by around 20% over the last 2 years, of course, also helped by the acquisition of [ eco factory ], the reconditioning activities that we did back in '22, and it will help us boosting that number even further in the future. And investing in our gender equality as well, by increasing the ratio from 83 to 86 on 100 in France. And these are also commitments that we took in the strategy plan, and we will keep on investing in as a group in the years to come. Also, our EcoVadis ranking. That's why we made a move in '23, moving into the gold status, as you will see here. What's more important is to show the speed and the rhythm at which we are progressing. So back in '22, we were still, let's say, only at bronze level. We stepped up very quickly to silver levels and to gold levels over the last couple of years, confirming our ambition to be a platinum, have a platinum rating by 2028 at the end of our strategy plan. And also in '23, we were, for the first time, also listed in the Financial Times Diversity Leader listing, which is also an important topic for us, where we continue to focus on into the future. Before handing over to Angel to talk about the developments also around our strategy plan, I'm going to show you a quick video in relation to our impact report. Our impact report, which was a hard copy document which we launched every year, a quite static document. I wanted, of course, to make it more dynamic, and make it also more sustainable and economic friendly -- environmental friendly. So we decided to change that into an Impact website, which allows us to be much more dynamic in sharing the different initiatives that we take as Econocom in relation to sustainability with the market, with our partners, and have really a dynamic environment to do so, not just, let's say, a static environment. You're going to see a small video on that. [Presentation]

So I said, the report will be available in this digital format on the website by the end of March. I'd like to hand over to Angel to give us an update on the One Econocom strategy plan. Thank you very much.

Thank you, Patrick. Thank you, everybody. It's a pleasure that you are -- all of you here with us for this results presentation. I will tell you about what we are doing in 2024. As you know, we expected to start our strategic plan with around EUR 2.7 billion turnover, 4.3% of operating margin on revenue, and more or less EUR 63 million net income. And our starting point is the one we planned in October. So this is the first good news. So we are starting as we wanted -- where we wanted to be. And we are, of course, maintaining all our objectives in our strategic plan. As you know, for 2028, is to double our net income to get EUR 4 billion revenue and to improve our profitability rate. So as we told in November, EUR 900 million of this growth will come on organic, and around the EUR 400 million coming from acquisitions where we need to improve our capabilities and where we can't do it on our own. So coming back to these main levers for reaching our targets. The first one and the main one for improving our organic growth is, of course, to strongly grow our sales force. And then we started a strong program into the group in order to -- very ambitious, in order to develop our sales force with agents and the sales, all the countries, all the activities. And I can tell you that it's something that we'll be working because all the managing directors, we are directly involved with a high percentage of our variables. So this is very important for the group in 2024. And we are all aware about that. That is one of the pillars of the success of the growth for the next year. So the second one is to increase the cross-sell between the different activities and the different countries. And the third one, to develop new offerings and end-to-end, and as-a-service offerings. This is something that, as you could see in the film, will be developed by Israel, that is here with us, in the new business development support direction in the group. And then, we are looking for new targets in the main activities and the main countries where we want to be, for external growth, then for acquisitions. In terms of capabilities and verticals, we are very strong in the workplace. We have strong capabilities in distribution, financing and services. We are not very strong in audiovisual, but we have some good capabilities. You know that we launched together. You could see in the film, at the beginning, we launched together in 2023, and we already have a good pipe of deals or European deals. So taking profit of the experience that we have in the Netherlands, in France, in Spain, we are able now to develop European deals in this vertical, but we will be improving our capabilities. And the infra & network is more or less the same situation. We have 14% of our revenue on infra & network, but we want to develop. Finally, on the non-IT assets financing, we also want to develop ourselves. So now we have capabilities, 65% around the workplace, 35% around audio visual, infra & network and strategic assets and equipment. But what we want is to be able to deliver end-to-end solutions in all the countries where we are present and with all the capabilities, including the design, including the refurbishment and with distribution financing and managed services in all the countries for all the verticals. So our aim is to be able to deliver end-to-end solutions for these verticals in all the main European countries where we are. And we are starting very -- in a very good way because we launched a new offering in September, coming from financing France, it's a very easy solution, and it's called EaSI. It's Econocom as a Service for Impact. This is end-to-end solution around the workplace that includes design, distribution, financing, services and refurbishment. And we have a good pipe around this new solution. But we already signed already, and it's not so easy to launch a solution in September and to sign a very nice deal, EUR 5 million, 11,000 devices, many countries around the workplace with the largest European agricultural group InVivo. So it's a nice achievement. It's a new as-a-service solution. It's the center of our strategic plan. So you know that we have many streams to develop for executing our strategic plan, and we have to be focused. So we are focusing in 2024 in some main streams. On the organization and government, we have a [ commix ], Jean-Louis, Patrick and myself, once a week. We have a group management committee, 15 people, once a month physically, main country managers and managing directors. This is the operational direction for the business, all over the group, and we are trying with this new organization to be able to work in transverse, to work in collaboration all activities and other countries. For that also, and for alignment on offering and deploy largest sales coverage, Business Development Support is sponsoring 2 committees for transverse conversations between the countries and activities and developing the international deals. We are, as I said, putting a lot of investment in 2024 on sales recruitment, with a central team that will be helping all the countries and activities for that. And we already decided to put in place a new direction around all the tools and the data intelligence group with [ Conta ], that is also here. I mean, I think that these are the main streams where we want to focus: on recruitment, on business development and alignment on offering, and on tools and data intelligence in order to be able to harmonize the offering. Because we can have the same offering, but if we don't have the same tools, it's very difficult to execute. So to tell you that also in order to fund the journey Patrick already told about, we are looking for divestments. So I think that we we'll be able to tell you something in the next weeks, next months about these 3 subsidiaries that are not in the scope of the strategic plan and that are for sale. So we come to our main points of outlook. For 2024, we are where we wanted to be. We have a divestment plan that already is in place. I hope that we will be able to tell you something about that very quickly. And I can tell you that it will be a nice reduction of debt for the group and not a reduction for revenue and EBIT for this year. And that we already have a pipe of acquisitions, mainly in audiovisual, and first step, and in distribution also all over Europe. Accelerating recruitments, deploying new offerings and then our only guidance for 2024 will be on the revenue. Why? Because we had to do some investments. So it will depend also on the results of the year, but we are planning investments in recruitment. We are planning some investments in data intelligence. And we are also planning some investments for acquisitions. So we will not be giving a guidance in terms of results, but we can tell you that our aim is to grow between 3% and 5% on revenue in 2024. And we expect that mainly in H2, the distribution market will be improving. So we think that it will be more on the Q3 and Q4 that we will be able to give you good results on that. So these are our expectations for the year. These are the main streams where we are focusing our efforts. These are -- this is the way we are executing the plan with the priorities with 2024 that are very clear. And now time for Q&A. We are at your disposal for answering all the questions that you may have.

Ready for questions? Before questions first. let's make this meeting a bit lightly because it's -- we are not getting a seat, but it could be. You all know the story about the 3 envelopes? The manager that is being made redundant? And he greets his successor, and he hands him 300 envelopes, you know the story? You're going to be concerned because you've been here 3 years. You say, every year, you will open 1 envelope. So after 1 year, the manager opens 1 envelope, and he reads it and say, blame your predecessor, okay? And the second year goes around, then he opens an envelope and say, blame the market. And after 3 years, he opened the last envelope. No, no, he say, set up 3 envelopes. Well, Patrick has been here 2 years.

Thank you very much. I'm waiting for the envelopes.

So now I hand up the responsibility to you to manage answering the questions. But for some of the questions, I can handle it. Okay. Okay. Benjamin?

I think first, some questions from the room, and then we go to questions maybe from...

Thank you for the clear presentation. I have some, let's say, boring question on 2024, and you've already partially answered. So indeed. So as Angel said, we -- you have a sales target, you don't have a profitability target. Could you give us some means about the, let's say, the potential impact still of your growth investments? So we understand that you, okay, you want to plan or lay out the foundation for the coming years of growth and also profitability improvement. Could you give us a bit of a range, maybe of how much pain you're ready to endure, to invest in your growth? Yes. Could you give us a bit -- that's my first question.

I will not put a number to it as such. It's not going to be significant in the end in terms of the impact because when Angel mentioned the EBIT target, if we prefer to 5% growth, growth will result in additional contribution in terms of results as well. And that contribution should allow us to carry out most of the investments we want to do, and we plan to do as part of the start of the strategy plan. But then again, we want to be, and we are free to sort of accelerate. When you prepare a plan based on organic growth, and you want to relaunch that organic growth, you have to invest. You have to invest into the organization, into the people, into the recruitments, all the topics that Angel mentioned as well. And keeping up with the trend that we included in the strategy plan, it is important that in '24, we do that, because basically to launch it and to boost it and to make sure that the trend also for the years to come will be there as planned. But no worries. No, there's nothing going to be as significant as such. But we just want to give ourselves a bit of flexibility there, which I think is very logical at the start of a strategic plan.

I know most of you would like the profit to increase. But why? The reason is, do we have to increase the profit? Of course, for the shareholders, it's a good thing to increase the profit if you're going to sell short term. But if you're a long-term player, you don't have to. You have to choose between increasing the profits shortly, or make investments so you'll make a much higher profit later on. We could -- also one of the reasons could be that we need it for a bank support, but we don't need more bank support. We have more than we need. At this time, we have close to between 300 million and 400 million commitment from banks, secured bank loans. We're using maybe 1/3 of it, maybe that. So we don't really need the money with the banks. And as Angel told you, we probably will get some money from our divisions shortly or with -- before summer anyway. So we don't -- apart for me as a long shareholder, I have fixed a minimum of what we should get, which is about the same as this year. but we could also decide to invest more rapidly and to get less, but we have made the decision to grow at the speed that we have shown you on the plan. And I think, as a main shareholder and to protect the actual sales of the future shareholder, I think it is a good strategy.

And the other question is on the leasing so TMF, to meet the growth, as I see it, but I didn't have the, let's say, the pro forma sales figures in the past. So it looks to me like there was a growth acceleration in Q4. I think you said that the growth was actually more continued throughout the year. But in my view, it's not what was reported as far as, let's say, the first 9 months. So I have the impression that the growth really accelerated in Q4, and correct me if I'm wrong here. So should we expect -- so this 10% organic growth, should we expect this type of the same level? Or was there something special basically in 2023?

[Foreign Language] Maybe I can speak about the TMF activity.

Yes. And I'll explain on the number because I understand the question on the trend. I'll come back to this.

But the trend, as you was able to see, even if we put in the numbers of 2023, the discontinued activities on TMF, we still are growing strongly in TMF, okay? So this is the result of investing in sales force in the last 2 years. We already told you some presentations ago that we were investing strongly in TMF in all the countries. And I think that in 2023, we had the result of these internal investments with a very good results in our TMF activity in countries like Patrick mentioned, in Germany. In Germany, we doubled the production in TMF in 2023. And we are expecting a good growth for 2024. In Italy, we come back to be one of the main ones in the market. In Spain and in the rest of the countries, we are in a very good situation. And we already reinforce the teams. And I really think that we will be -- keep on going with a good and strong development in growing in TMF. We also have a differentiator compared to the competitors. We have a fast asset strategic financing. We have a central team at group level who is able to originate with the countries and to structure and to finance and refinance on a hybrid way: some refinancing without recourse, some refinancing with recourse, and some deconsolidation that is bringing a lot of value to these activities. So I really think that we are in a good way to strongly becoming the leader on TMF in Europe.

Maybe coming back to your question because if you look at the seasonality in the first half of '22, we had a couple of larger TMF financing operations. And those larger deals were in '23, mainly in the second half of the year. And when we presented the half year results, we had explained that, especially on those larger deals, the timing or the phasing is not always the same year-on-year. So there has been a difference in terms of seasonality between '22 and '23, which you can indeed clearly see. So probably, your perception about the strong growth in '23 is also impacted by the fact that the large operations we had in '22 were mainly at the start of '22, but the larger operations in '23 were also at the second half of '23. So you have the seasonality impact. I think it's important then to look at the overall trend that we presented over today on a continued activity basis year-on-year. And yes, we remain very positive about the outlook of that activity.

Okay. Thank you. And I forgot to introduce myself. So David Vagman from ING. One very last question. We had a very nice jump in profitability in leasing, if I'm correct, in 2023 versus 2022. Now, I'm talking -- excluding the discontinued activities, if I look at the profitability in leasing in 2022. Can you come back on this big jump? And is it sustainable, putting aside the growth investment?

It's mainly the '23 is the year to look at. In '22, we had a couple of one-off items that impacted negatively the 2022 results. So if you look in terms of the profitability and the profitability percentage, which is up to 4.8% in '23, that's basically the number to look at so going forward, and that's also our reflection and the assumptions that we included in the strategy plan. That's sort of the level where we target on and maybe a bit more, which is also behind basically the growth in the operating margin percentage that we included in our strategy plan. To remind, we came from 4.3. We want to go up to 5.1. But it includes already some of those movements. If you look back to '22, basically, there were some, I said, negative one-off items in the financing activities, positive impacts in service activities, but they more or less balance out from a total consolidated point of view. So if you look at the consolidated results of Econocom, you can really compare like-for-like. From a profitability percentage point of view per activity, you should really base yourselves on what we have just presented in relation to 2023, with the ambition, of course, to increase that going forward.

Let me give you some help to understand Econocom because when I read comments from the press or from analysis, it always come back as, it's difficult to understand. And for 50 years, I've heard, why don't you do like the others? As soon as somebody tells me, this is how it's done elsewhere. Once every 2 time, I say, I don't want to do the same as well. And one of the reason is 50 years ago, 55 years ago, I was with IBM. And since then, most of the companies that existed at that time did disappear. So if you do it like the others, you disappear, so probably sooner. From all the companies that started at that time that did exist, one is left is IBM, the other one is CapGemini. All the others have disappeared, or have been created since. So we are [ reflect ], but they are not involved into hardware. Arthur Andersen or CapGemini or [ stuff ] like that, it's mostly software. So we are not involved in software. So we don't want to be doing the same thing the others are doing. We always question ourselves, what should we be doing, what is being done elsewhere, which is good, and we can adapt, and what is not, what is different and what should we keep to be different to be on the market and to serve our customers? So every time you try to compare it to the rest, which is normal, and it's a good thing to do. But then we have to choose. And this is our management and administrative job to choose between what is different, what should be different and what should be the same. So it's one of the reasons you have difficulties to compare us, but even though we are trying, we understand very well that what you need. As you've seen, we come here more and more often to speak to you, to speak English to you, sometimes Spanish to you, but still, every time, you might be surprised that no, we're not going to do exactly the same as X, Y, Z.

But the focus that we bring into the company helps going forward. They have been, indeed, over the last couple of years, some movements with companies that were sold. And I know there have been companies that have been discontinued and now they're discontinued and -- but the focus that we have now determined is part of the strategy plan because at that time, there was not just such a clear direction that we have today makes it very clear for the future, and will help us also in giving that guidance more clearly to you in the future.

Yes. this is very important because some of the questions we had not directly you said, why do you stay in the market? Why do you stay listed? And on the press today, we see a lot of companies buying back their shares or being delisted. So we have the same questions. First, if the share stays low, we probably go on buying some more shares. Why? Not to have more than 52% because not only I have 52%, but I have double share, a double voting right. So the maximum is the ceiling. So it won't give us anything. But buying some shares today could be a tool for us tomorrow, the next day, to buy a significant company. Paying with shares if the price of the shares go back up or to a normal price or at least to a higher price. That could be one of the reasons. The second one is because it helps a lot with the management to be listed, because it forces us for the type of exercise we are doing today. But all year around, we have to keep disciplined because we are listed. We have to keep disciplined about communication, we have to keep disciplined about that, we have to keep disciplined about -- all types of discipline. And it's easier when you have a listed group, and you're around your partners, your bankers, your analysts behind us because we have to keep this discipline. And if you're not disciplined, it's -- you need then to have a very strong name behind you or reputation behind you. So I don't want to go out of the listing, and I think you are helping us a lot.

Luuk Van Beek from Banque Petercam. One question about the divestments. With the Capital Markets Day, you mentioned EUR 180 million in proceeds. Is that based on the 3 companies shares now as is continued? Or are you expecting to do anything on top of that? And also, do you expect to make a book profit on the ones that you will be divesting in '24?