emeis Société anonyme (EMEIS) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to our emeis web conference. So we here on behalf of Orpea SA for our 2023 full year results. I'm here with Laurent Lemaire. And we're going to be presenting today everything that we have been doing to reshape the company. I'm sure you're all aware that, that started back in November 2022. We will also talk about our financials for 2023, which part of inflation is to backdrop and the rate increases have not been able to offset that inflation list backdrop. So we'll be talking about our financials for 2023 and our forecast for 2024 and beyond. All that we have been doing is part of an overall change. We changed our name Orpea has become emeis, emeis represents both what we are and where we want to go, it is about transformation and change. And it will be presented along with our new corporate purpose at the upcoming general assembly. So we have Laurent who will present with our consolidated results for 2023. [Operator Instructions] So let's get into it. So we've got a fairly stock standard type of presentation, 3 sections we've got highlights for business right now that we've got our consolidated results that Laurent Lemaire will then present and I will wrap up with the third section of the presentation with conclusion and outlook for the long term. So let's start by talking about our key highlights for 2023. 2023 was quite a busy year, a year of great change for Orpea SA group. So obviously, we'll be covering everything that we have done to better serve our employees and our residents. They are the 2 key priorities for our corporate reshuffle or our overhaul and they represented by a number of key nonfinancial indicators that are improving considerably across the board. On top of that, we went through some financial restructuring, which was finalized at the beginning of 2024. So our level of debt has been considerably dropped, and we've continued with real estate disposals throughout 2023. New identity as well. I spoke about that just a few seconds ago. We kicked it off end of last year and really brought through beginning of this year, and that was our creative program, so that is to ramp up and push through our company's overall transformation. Again, finally, it was all to improve our financials, and that will lead us into the outlooks that we have for 2024 and beyond. Let's start now by talking about our employees and our residents. As you probably remember, the targets we set ourselves were some top priorities. And we had to really put the means on the table so that we could ensure our employees could do their job safely and comfortably. So that they could then probably care for our residents because obviously, our teams are professional, we need to constantly help them improve their performance. So in terms of health and safety at work, the number of work-related accidents which is something that we really focus on in great detail dropped actually by 8 points. So it went from about 33 accidents per million hours worked it down to 25 for 1 million of worked hours. So 33 down to 25 and that had a huge positive impact on our general appeal and attractiveness. Obviously, that had an impact on absenteeism on happiness and satisfaction of employees. So it is a fundamental indicator that we're going to focus on that we have been focusing on. Now on top of that, we also put in a lot of money into training, which is really important for us to be able to have sustainable financials. We also managed to recruit more people that have some more part-time employees who work with us, which meant that overall, that lowered the cost of recruitment. And that feeds into our long-term results in terms of top quality workplace environment and generally improving our overall financials. This is just a quick reminder of what we've been doing. We completely overhauled a few of areas in business which were actually failing. And that was predominantly when it came to employee representation. So we completely renewed the representative bodies for better labor relations, and obviously, we want to end up with a system, which is much more robust in the long term. So I spoke a few seconds ago about trading and the investment that we put into training. So what you need to remember is that this is very important for all of our French managers. We have 1,200 in staff members that we want to have trained by the end of 2024. So as part of the impact of program, we have 4 classes going through right up to September 2025. And so that our managers have the right skills and capabilities. And we want to make sure that they are properly aware of all types of performance speed in terms of quality, finance and managerial performance. Because there, once again, we want to boost our performance in France for those key points. Now obviously, all of this is to help us boost performance in terms of satisfaction, both for employees and our residents and we have been able to see that translate in improvement in quality of care. And all of that is thanks to the ongoing improvement programs that we've been putting in place. So we had a number of SAE declared events in France 2,177 so we've got to improve reporting culture. We ended up with some solid levels in terms of certification, 98% certification in France. In terms of satisfaction, so we have a number of external surveys. So that means that all the surveys in questionnaires that we're performing are fully transparent, and we can see that they are considerably up on last year from 90% to 92.4% and a Net Promoter Score, which is also considerably up from 21 to 33. On top of that, we have also ramped up efforts to improve ethics and provide positive treatment and also we have better relations with our families. Out of that, we've also improved health care and nursing. So we have really focused on transforming both the service we provide and how we provide it. So better quality, better security, as I've already mentioned a little earlier but we've also provided ways for our healthcare nursing staff to be more efficient. And we've really been doing a lot of work in that specific area. Moving on to the second main highlights. We've had some major improvements in terms of both the financial and extra financial performance. This has a direct impact on our staff on our residents and also on the long term, especially when it comes to our overall financials and long-term financials. So the financial restructuring is now finished. Well actually was finalized at the beginning of 2024, pretty much since the 21st of March. And along with that, we also have new governance and new governing bodies and also considerable real estate disposals that we have continued to push through towards end of 2023. So I'm sure that you remember all of this started back in 2022 when we presented our restructuring plan and continue through to 2023. With EUR 3.9 billion of unsecured debt put through as equity. And we also had cash injection of EUR 1.2 billion that we also had EUR 0.4 billion in cash injection through right issues. That was at the beginning of this year. We also have a new Board and with that new Board, we obviously have more seats at the table for the new major shareholders, Caisse des Dépôts, MAIF, MACSF and CNP Assurances. And they represent about 50.2% of overall shares. So as you can see, we've been able to drastically drop our level of debt by the end of that entire process. So what's important to bear in mind is that we continue through 2023. We'll continue at 4 -- in 2024, we'll continue to bolster our financials by continuing to divest out of certain real estate holdings. So we're able to sell off about EUR 250 million by end of 2023. We brought in EUR 300 million by end of 2022. So we're actually well ahead of the schedule that we've put in place. And this is important in terms of both real estate but also financial restructuring. So those 2 together. They were quite challenging. But that said, we are quite optimistic for the future, especially for 2024 because, again, with the financial restructuring and given the fact that the general back -- economic backdrop is quite challenging, but there are more opportunities with other market operators. We should be able to reach our overall target of EUR 500 million divestment -- sorry, EUR 450 million by 2024. And there should be some key real estate operations or transactions coming through, either divestments or sale and leaseback and now they should come through in '24, 2025. Again, it depends on market conditions. It depends on the price that prospective buyers are willing to put forward. Now I'm sure you're all aware that we changed our identity. Because we are now going to operate from a commercial point of view under the name of emeis. So this is a brand that we ultimately want to have adopted by the 2024 General Meeting to be a change of brand. It will be a change of visual identity and also corporate purpose. So this is part of a long-run process where we were able to reidentify our 4 new values. So that came through in May 2023. The 4 key values are a commitment to people, a taste for life, a thirst to learn and a spirit of mutual aid. So this is something that we brought through in 2023, but were to keep rolling them out because these are the 4 fundamental values. So we want to operate altogether. So 2024 is going to be the brand, visual identity and corporate purpose change. And then we will put it to the 2025 General Meeting, where we'll be pushing for a mission-led status. Again, we wanted to also bring about a fundamental shift when it came to management. And that program was called CREATE by our teams. Now the reason behind this is that we wanted to really make all of our countries fully pushed through the transformation plan. So obviously, the 4 main priorities: employees, patients, residents, society. So we want to have a positive economic and social impact and also for our stakeholders, because again the financial and the economic viability of the company is absolutely essential. So that ultimately we can become a group where we look after our teams, we take care of our teams, where we reach gold standard, then we have operational efficiency and financial sustainability and [indiscernible] that we can innovate. So this is the fundamental definition of our program, we called it CREATE. CREATE because each letter represents the key values that we wanted to all embody as a whole. And then we wanted to push this through via a number of key cross-cutting projects across all of our key business lines. So we want a central governance with local management teams. So we have monthly reviews. We have quarterly reviews as well through the Executive Committee for all of the support functions. Then we also have a quarterly review for local road maps, again, with each country, and we have a transformation division there to coordinate everything that is being done. Here are a few examples of what is included within the CREATE program. Again, this is just a few examples out of all 48 key examples of initiatives. So there are -- again, just to give you an example of something that we did back in 2023. We actually closed down or shut down 11 sites in 2023. So that's because we have a new methodology to identify sites that are struggling. So we also have a program for best practices when it comes to ramp up, and we're starting to see that come through. We've also been able to have prices differentiated from one segment to another, and that's what we're rolling out in France, predominantly because that comes with its own set of advantages, but also on the flip side, it helped us really focus more on marketing so that we can increase our occupancy rate. And this is something that was completely new that we hadn't in the past. On top of that, we also looked at all of our apps that we're using. So we have plenty of apps used in all of our sites. So we rationalized that streamlined all of that so that we could make all of our processes as streamlined as possible from an operational point of view. And we've really looked into all of our procurement processes as well, and our purchasing processes completely overhauled all of that. So that is with an overall objective of EUR 35 million to EUR 40 million as soon as 2024. Again, with the ultimate call of it helping company's financials. That's it for the past now looking at 2023, 2024. So 2024, we are looking at considerable increase in revenue, a 9.5% increase of organic growth. Also an occupancy rate which is increasing, which accounts for 2% of that overall revenue growth. We can also see a 3.6% increase, which comes from a progressive price rise as we saw in 2022 to 2022 to 2023. We went through inflationary tendencies in both France and Europe. So our prices didn't follow on directly in line, but now they are picking up, and that is having a major impact on our 2023 revenue. But at the same time, you also have a cost increase, but we have tried to offset that with our restructuration, which means our EBITDAR margin is now at 13.4%, which is actually down compared to what we have already seen. That said, for 2024, as I said back last year, so when we spoke about when we met for our half year results, our margin is actually up for the first half of the year. So our margin is up. So I think we hit an all-time low, but then we are picking up. So we saw a positive increase over the second half. And once again, we're already seeing the margin increasing so far in 2024. Attributable net profit. Now that has been under a positive effect. Thanks to all of the financial restructuring that we have been through and also because the shares have increased where our assets have improved. So also thanks to the capital increase for about -- a bit over EUR 2.8 billion that leaves us with an overall attributable net profit of EUR 1.3 billion, just over. Now what can we say about the 2024 outlook? So we're expecting to see a more considerable growth in terms of EBITDAR in 2024 compared to the current trend that we have already seen in 2023. So we're going to see it increase to about 15% to 20%. That will put us in a bracket between EUR 800 million and EUR 835 million. Now that is under our initial forecast when we were talking about a capital increase. But it is still considerably up about EUR 120 million up in terms of EBITDAR. Now that is predominantly expected to come through, thanks to our increased occupancy rate in the world. And as you can see, we have already seen proof of that in the first quarter of 2024 which is already up 2 points on 2023 1st quarter. But it's also thanks to structural measures that we're putting in place predominantly in France to really get back to a better situation in our nursing homes. So we have put in place a number of measures to optimize all of our investments. And also, as I said just a few seconds ago, we have already done as much as we can to continue with our real estate disposals. Again, depending on market conditions and to make sure that we can agree to a satisfactory price. So that's it for me for my introductory remarks for all of our general business points. But now I'm going to hand over to Laurent Lemaire, who will go into the financials.

Thank you, Laurent. So I'm going to run through the key figures for the year 2023, starting with the section concerning the change in revenue by geographies. You saw earlier revenue over the period is up 11% on a reported basis, 9.5% organic gap essentially due to the scope changes that occurred during the year. If we referred to the equations mentioned by Laurent sustained growth with a significant increase in the occupancy rate save the nursing homes in France, but it's a reality in the rest of the world, which as mentioned below the chart, the opening of 31 new facilities over the year. And as Laurent mentioned, just under 4% price component that unfortunately doesn't offset the inflation-related aspects of the year will return to that when we look at EBITDAR to the change in operated facilities and beds by the company. So the definition of in operation number of facility that's open and marketing 992 at the end of '22, 1,031 in '23, an increase of 39. We opened 31 also scope changes that occurred during the course of the year, both entry and exit. So the net balance is plus 39. That's an increase of about 4% and the number of facilities, over the period on the right number of beds, 93,470 beds at the end of the year, 2.9%, 1% gap between the 2, quite a few openings in the Netherlands where we have an unusual setup in the Netherlands where we have facilities at 2025 that explains the mismatch between the 2 figures. Now change in occupancy rate on the left, you see the full year performance the increase of 1.5 points globally going from 86% to 86.3%, all the others, except for the first line or the others are up 2.7% Central Europe, 3.8% Eastern Europe, 5.6% Iberia LatAm the top line minus 0.2% is, of course, impacted by French performance. More specifically, the nursing homes because the occupancy rates of clinics in France is up, so it was down 0.2 points over the period in France. If we look now -- on the right of the slide, you have the phasing of the rate between H1 and H2. As Laurent said, we have an H2 dynamic in 2023, which is the beginning of the recovery phase. 82.7% to 83.8%, you see the top line with France were back in positive territory between H1 and H2. So that's for the occupancy rate, the takeaway aside from nursing homes in France, significant growth across geographies. Turning now to the EBITDAR margin by Geographies on the upper part, you see the drivers that summarize the year with the occupancy rate that we've just seen that contributes positively of course, to EBITDAR recovery. The inflationary context, unfortunately, the continued into '23 after '22 with a slightly different mix. We had a strong energy component in '22 that no longer exists in '23, but we can say that we continue to have quite substantial wage pressure by wave an example, a government decision in Germany early '23, where the pay of caregivers. It was up 20%. Unfortunately, prices didn't follow that immediately. As I said, we have a price component that was favorable over the period. But from the P&L standpoint, not enough and too late to offset all the cost increases. Looking briefly at the left of the slide, you have the overall amounts with the exception of the first line, everyone's up or flat across Central Europe around 0. And a decrease in volume at the top essentially impacted by France that we mentioned earlier and also a challenging area in terms of economic performance which is Belgium, that's also part of that equation. Turning now to the group total we landed at EUR 696 million. Our guidance was at EUR 690 million was slightly above the guidance given. But compared to a figure of last year of EUR 780 million, so down 10.7% over the period. If we look at the numbers. On the right, we have delivered 13.4% to be compared with 16.7%. That's about 300 bps difference quite logically. The strongest pressure is seen in France, Benelux, U.K. and Ireland with a decrease of 400 bps, but you see the next 2 lines, Central Eastern Europe, which as we saw earlier had significant occupancy rate recoveries. We weren't able to maintain the margin. We're able to defend the EBITDAR of the period with revenue sharply often. So a dilutive effect across these 2 zones around 200 bps. The only country where we managed to up the margin rate in parallel with a strong increase in the occupancy rate in Spain that delivered a very good recovery over 2023 and also manage to leverage inflationary pressure that was slightly lower, that accounts for the fact that the EBITDAR margins sharply up, whereas in other geographies, pressure with stronger on wages. So that's the overall equation over the period. Turning now to the key aggregates with a consolidated group perspective. On the left, you have the full year, as said previously, we lost 300 bps over the period. We lost EUR 200 million on staff costs that came in at 66.7% over the period, an increase of some 2% and another 1/3, just over 100 bps, 120 bps on other expenses leading to the 326 bps. As I said earlier, the line of other expenses is under strong pressure across countries. Especially for food, we have countries where food costs in '23 continued to grow by 10% versus '22. And so that accounts this worsening of 120 bps on the other expenses line. Look at the right of the slide, you have the phasing H1, H2 that's where we see once again that in H2, we see the beginnings of an improvement, leading us with [indiscernible] to expect that at the end of H1 '23, we reached the low point at emeis and that gradually, we're seeing the company turnaround as we move into H2. So those are the key takeaways regarding EBITDAR. Let's now address some of the items that below EBITDAR that are important to understand the financials for the first IAS 36 impairment, both on tangible and intangible assets, 31st of December '23, we booked an impairment of EUR 830 million, of which EUR 438 million related to right-of-use assets under IFRS 16. It's a new approach that we implemented in FY '23 aimed at performing tests post IFRS 16 that gradually the market will be adopting we're reporting our results post IFRS 16, but very often, we perform impairment tests that were pre-IFRS 16 that prevailed through to the end of '22 at emeis. So we changed this approach in 2023. In the EUR 830 million that I've just cited, there are EUR 438 million the result from this new approach. What's important to understand, they're not important on real estate assets because IFRS 16 rights of the value -- the balance sheet value of leased assets. So it's an impairment on these rights in the balance sheet doesn't affect the real estate asset value. It's really book. It has no cash impact, but we need to book those as we've done this year. Returning to pre-IFRS impairment. That's box #1. We tested 837 facilities over the year EUR 173 million. There was obviously an increase in WACC interest rates reaching 7.3%. And during the course of our '23 plan we modeled the bps of all our facilities worldwide, leading in the DCF method book this impairment. We disclosed on 18th of Jan and 16th of Feb on potential impairments in the group's accounts of some EUR 400 million. So we refer to the application of pre-IFRS 16. And then below, you have the EUR 438 million linking to this line of EUR 830 million right of the slide. That's for the impairment test to the non recurring items, while the bulk of the one-offs, EUR 903 million stem from the EUR 830 million on the rest, EUR 74 million. Third, essentially expenses linked to restructuring or rather the group re-org as well as indicated in the box, most of the expenses relating to financial restructuring were deducted from additional paid in capital not in the P&L don't impact the P&L. So these are essentially all the re-orgs conducted that represent a part of this EUR 74 million. Turning now to financial income for the top right. You have all the items. Last year, we had an expense of EUR 319 million. And here, we have a net income EUR 2.319 billion. We did the chart just to clarify, EUR 2.319 billion EUR 2.850 billion financial income from the capital increase. It's the first capital increase that we under the logic, quite we had EUR 3.8 billion in debt. The creditors received about [indiscernible] in stock, and the remainder is the EUR 3.850 billion booked in the P&L as proceeds to the, as I indicated, no impact on cash or taxes. It's purely accounting it's a way of booking this debt mechanism, excluding this EUR 2.8 billion cost of minus of financial costs of minus EUR 500 million more, minus EUR 459 million, that's the interest on the net financial debt. That's excluding hedging, so it's the amount before interest rate hedging. That amount yields up EUR 216 million over '22. Two main drivers to that increased interest rates, but also quite substantially. The fact that as part of the financial restructuring in '22, we had one half with 2% credit spread and then we had a half at 4.75%. We did the full year 2023 at a credit spread of 4.75% is indicated in the final bullet point of the first box since December '23 were down again to 2%, but that had hardly no impact on FY '23. Hence, the increase in financial expenses. But in '24, we'll do the full year with 2% spread over the over EUR 3 billion that we have with the French banks and then minus EUR 72 million of other financial expenses third mainly all the real estate financing costs under IFRS 16, net of certain items of income, including hedging to be found in the box above on the rate for EUR 44 million. So these are the key takeaways to EUR 2.850 billion that contaminate quite strongly that line and the net income. So net profit over whole EUR 696 million EBITDAR and EBITDA at EUR 652 million provisions for EUR 667 million. That's down over last year, quite logically, financial result, EUR 2.850 billion proceeds on that one-off, minus EUR 903 million and we saw that almost all of that is IAS 36 EUR 1.355 billion. If you want to normalize this amount to have performance, excluding major one-offs you have to reduce this amount by EUR 2.850 billion IAS 36. The tax on that is about EUR 200 million, EUR 800 million minus EUR 200 million, that's EUR 600 million that helps you have a normalized take on the performance of 2023 in terms of net income. Let's now move to real estate financing and balance sheet. A first word about the real estate assets, as indicated at the top. We've changed the accounting method at the end of '22. We've discarded the historical approach of marking to market all the real estate assets on the basis of annual appraisals. And we've moved historical value. So to preserve visibility on the group's real estate assets we announced last year that we would report at the end of each year, give a value of the real estate portfolio based on independent appraisals. You have this chart below that shows that at the end of '23 EUR 6.3 billion. The asset and in that, you have EUR 5.3 billion from appraised real estate as indicated on the right, 414 facilities between the 2 periods, the values increased by EUR 400 million. Obviously, it's not an increase of the value. It's there are scoping impacts of certain assets under construction, various mechanisms. As mentioned, in the chart below. The yield use was at 5.6%, up 50 bps versus last year. And the result of this increase in the yield by 50 -- that's about EUR 400 million of value reduction over the period. That's for the real estate value and it's appraised asset value and not balance sheet. Next, you have a chart that we've already showed you last year, that gives you the bridge between the balance sheet and the assets starting with the right of the slide there, you see the EUR 6.3 billion in the gray block of the asset value. And in blue in the balance sheet, we have EUR 4.8 billion, which means that today, on the basis of previously mentioned appraisals for assets. We have EUR 1.5 billion of gap in value between the value of the real estate and our balance sheet and the externalized asset values in the chart shown previously referred to the left of the slide. You have last year's mechanism and you see that the red block, which is the difference between the '22 balance sheet fair value is of the same order at EUR 1.5 billion. We've kept the same differential between the 2 years between the balance sheet and the fair value estimated for the company. Next, let's move to the company's financing table. At the very -- at the bottom line, you have the change in net financial debt. We've gone from EUR 8.758 billion last year to EUR 4.642 billion, obviously in the change. That includes the impact of all the financial restructuring to be found in the line with the comments that we see EUR 1.160 billion in cash and the impact of debt equitization, for EUR 3.823 billion. Obviously, at December 31, we only did 2 of the capital increase the amount of EUR 1.160 billion under increased to EUR 393 million of the third capital increase that incurred in February, moving down the table top down, there are CapEx of EUR 141 million over the period, broadly similar to last year's split, EUR 105 million for maintenance and EUR 36 million for other operating flows, including change in working capital. That was a significant cash burn of EUR 140 million mentioned in the box on the right. The fact that just under half of EUR 149 million, EUR 60 million, that's a management decision to normalized salary settlement periods in France. Previously, the mechanism was to pay salaries in France, the following month, and group management decided to reverse to more common practice. And so the impact is EUR 60 million structurally. Next, the real estate investments there that are continuing to drop. We started just over EUR 1 billion. We ended the year at EUR 638 million, and we continue to reduce the CapEx of the company this year at the end of '23 EUR 315 million doesn't mean that going forward, we don't plan to expand the only issues that we won't do it on our -- for our own equity. But of course, we can open facilities with developers and lease the premises, but we're reducing our own funding. Noncurrent, EUR 145 million that increases the cash component on overall restructuring, that of P&L and as indicated on financial restructuring via capital increase on the asset management. We have net of EUR 138 million. That's a real estate disposal in 2023 of EUR 146 million with a real estate disposal of also EUR 146 million. That would give you a total of EUR 292 million, and that is the number that Laurent mentioned in his introduction that we've cashed in about EUR 300 million on the years 2022, '23 with the commitment of EUR 250 million that agreement which we had with our disposals, essentially in Netherlands, Austria and Germany with a full year in '23 attractive yields of the order of 4.5% -- 5% in spite of difficult market conditions. Next, a charge of EUR 308 million. That's logically up given what I show you in the P&L. At the bottom as we saw the capital increases and a positive change, a reduction in net debt of EUR 4.116 billion, leading to EUR 4.642 billion in debt. That's for the detail of the financing table. Just returning briefly to the structure of our debt as at December 31, we had a net of EUR 5.321 billion of the financing of June '22, which was the first part of the financial restructuring with G6 group, which is the core of the French banks providing that funding. We have EUR 1.7 billion in debt at 99% is essentially mortgage loans and financial leases for the underpinning to EUR 6 billion in assets and other debt for EUR 587 million. EUR 5.321 billion, we had EUR 645 million in treasury with the course incorporating IFRS EUR 4.642 billion, that's the debt to be found in the balance sheet. I'll show you in a moment. We look at the breakdown of the debt, almost 60% of the gross debt stemming from the G6 funding facility and about 1/3 from mortgage loans. That's for the debt structure. Turning now to the debt maturity profile of the group has shown on the chart on screen for years, '24, '25, '26, we have contained maturities to be mentioned that we've incorporated in this chart, the EUR 400 million of RCF maturing in which potentially could be maturing renewed. So she removed the EUR 400 million in '20s. We're about EUR 500 million of debt reimbursements on the next 3 years, '24, '25, '26. We have EUR 500 million debt to be repaid every year. The bulk of the repayment occurs in '27 with about EUR 2.5 billion in '27 . And that, for the most part, is the secured funding of June '22 for the G6. That's for debt maturity. Balance sheet, a few words on the items at assets where you have the line items of the company. The main change, the right-the-use assets, that's the reduction of -- EUR 400 million, that's the impairment on the IFRS 16 right-of-use assets, EUR 438 million. Item 2 on treasury, we ended the year with EUR 600 million in cash at the end of the year. We wouldn't draw on our RCF. We still have EUR 400 million available, undrawn on the assets held for sale that's IFRS 5, EUR 500 million of assets held for sale. Those are real estate assets, all the real estate assets where we had a LOI. That's our pipe. That's in line with the disposals mentioned by Laurent. Moving to the liabilities, equity up quite sharply minus EUR 1.5 billion to EUR 1.9 billion, as I mentioned earlier. Three isn't included, that will contribute for just under EUR 400 million in '24. And if you add up the 2 lines of the debt mentioned and box too, we have a debt of EUR 4.3 billion at the end of FY '23. That's it for me.

Thank you very much, Laurent, for such an in-depth presentation of our financials. So if I could just quickly wrap up with a few concluding remarks. 2023 was a year where we finalized our financial restructuring. And it's also a year where we're able to properly roll out and implement our reorganization plan, our transformation plan with some major breakthroughs. Some of which have already come through to improve the quality of the care provided to our residents and patients, but also really helping our staff as we saw the occupancy rate was really up around the world. But 2024 is also continuing that trend, especially in France, in our retirement homes. We have a 1 2% increase in occupancy rate. We've also seen some major changes in France that should bear fruit in the coming year. As you saw operational profitability is also increasing in the first half of the year. And we saw that already bearing fruits between the first and second halves of the year, last year. Now also for a long-term vision, we are still in a specific business, which, unfortunately, for the general population is a growing industry because the general population, it is aging and the aging population needs specific care, retirement homes, nursing homes and home care. So that market base is continually increasing. But again, it is an area where we provide a lot of services. We also provide a lot of services in terms of psychological care, so that is another area which is considerably growing for our business. And all of that is underpinned by a number of key underlying trends, that is really, really buoying up our business. So we have some solid positions in some key countries in Europe. We have some really unique expertise which sets us out from the crowd, especially when it comes to mental health, when it comes to old age. And we can see that predominantly with our clinics and our retirement homes or our nursing homes. We really provide a unique service and we can bolster that with more skilled teams, thanks to the training that we can provide to them, but also thanks to the innovation that we can provide, predominantly digital innovation. So in addition to those strong skill sets, we can also play a fundamental role as a public private company or act when it comes to providing age-specific services. Top of that, we are also going to continually rebalance our pricing over the year. So again, 2022, '23 was marked by very quick uptick in inflation, and we weren't necessarily able to offset that with our prices, but we're going to adjust for that going forward. We actually have the ability to bit by bit rebalance our prices. And we're going to be pushing that through with a commercial strategy, which would completely overhauled with office segmentation, with more expenditure going into marketing practices, which is not something that we really did in the past. So thanks to that, we're going to be able to push through increases in prices and also fight against this is a factor. The price and cost effect that we really saw in '22 and '23. And then your third point, I want to touch on is that we have strong potential for emeis', in terms of performance. We've got a long-term support. We also have an entire plan through CREATE, which is the program I spoke of a little earlier to get us back to specific standards in our clinics, both in France and abroad, with a better operation because, again, it hasn't been up to par in the recent past, and we're going to bring it up to par and move above and beyond with positive increases, 15% to 20% in the coming year. And also, we have an asset portfolio outside of Europe with plenty of opportunities especially when looking at both outside of Europe, but also even our underperforming facilities within Europe. And all of this is being supported by a much more stable financial position. So that's why we have both short-term trends and long-term megatrends that are really in our favor. So that's why we're very optimistic for emeis in the long term. Now if it's okay with you. It's time we now move to questions, where Laurent and myself will field any of your questions. And I think it'd be good if we started with questions, that we have by phone or shall we start with those written here in the chat.

I guess we've got a first question here. So far, there are no questions coming in, over the phone. So let's take the ones we have here that have been sent in by text. So Laurent, can you tell us a bit about the EBITDAR, D-A-R, to EBITDA shift? And can you tell us a bit about that and the impact of rent on revenue? So obviously, this takes into account IFRS norms and standards.

What I suggest, I'm not going to answer the question in detail. If you refer to the press release, you'll find all the bridges in Chapters 4, 5 and so on, where you will find all the relevant information on the bridges between the two. And you'll also find the detail of IFRS, the rental costs at EUR 414 million in '22, EUR 448 million in '23, but you'll find the full detail and the bridge is in the release.

So EUR 414 million in rent IFRS 16. So that's about 9% in revenue. I believe that answers the question that came in. Another question about reworking our prices, are you quite happy with the way that has come through, especially in psychiatric care? Okay. This is a unique question to France. Well, actually, predominantly in France, but we also have SSR and psychiatric services in Germany, Austria and price changes, which are very different from one country to the next. We are seeing strong improvements in terms of pricing with high single-ended improvements in the two countries that I just mentioned, so Germany and Austria. Now as for France, when it comes to increasing prices in SSR and psychiatrics in 2024, we've got a 1.1% increase. So are we happy with that? No, it's not enough. And we will continue to discuss that with the governing bodies with the respective authorities. But we feel it could be a bit better, especially when we compare it to other divisions. And we're going to see exactly what we are providing in the different facilities to see how we can try and increase that. When it comes to psychiatric care, we still don't have feedback from the authorities. We know that there is a lot of support said to come through from the government. So we are going to continue negotiating with the French government to see what we can get out of that. Moving on to the next question. The government has decided to increase pay for weekends in the public health care system. What about the private health care system? Do you not feel that if you don't change, then it's going to be unfair or there's going to be certain inequalities. Well, that is a public decision for the public sector. We haven't decided to do the same. Now we feel that we already pay a fair rate for our employees. Now again, our employees they don't -- all out going to get the same pay increase. That's what we are seeing in the public sector. But that said, we will continue to provide attractive pay. Again, ultimately, this comes down -- this boils down to the issue of general appeal and pay appeal. In particular, when you're looking at our retirement homes or nursing homes, compared to those ones run by the public sector. So we're going to continue to champion in what we provide. And obviously, compared to the government run retirement homes, we can still quite happily find employees, and we're having no problems when it comes to recruiting. While, yes, the industry is suffering a few issues just here and there. Generally speaking, we aren't really suffering from that. Now actually, if we come back to what I was saying at the beginning of the presentation, we were talking about the quality of our workplaces for our teams, we are starting to reap the benefits of the work that we're doing there with absentees and which is dropping. And generally speaking, we are having more long-term teams, and top quality care and support provided by our teams. Again, this is a long-term trend that we've seen coming through. And ultimately, that is making our retirement homes out nursing homes the most attractive on the job market. So it's more than just a pay. I would say, in fact, that pay is the least important criteria, especially when compared to the quality of the workplace that we can provide, and that is what makes us an appealing employer to work for. That applies to France, but it applies also to countries outside of France. Another question here. So we have one here in English EBITDA performance. A brand new program and comparatively better performance experienced in the second half of '23. The company is heading up, when will we see the reflection of things better performance on stock price? Okay, to answer your question, we don't provide forecast for our share price. That's up to the share market, stock market operators to answer that sort of question. I would just like to say that, yes, we have seen an improvement compared to 2023. And we said back in 2023 that we had hit a record low, and we expected things to increase. They did increase. We expect things to also improve in terms of the extra financials, but also the financials will follow. And EBITDA will also get into increase in 2024. Laurent, I've got another question for you, for EBITDA and price...

So you're asking us, we have a question here asking if we can give new guidance on the plan. Would you want to -- I'll take this one. So we have brought out a new perspective on 2024 stemming from an update in 2024, short term, we'll disclose nothing on the revision of the plan because in June, we'll be starting a new strategic plan cycle, obviously, with the vision of our new shareholders. If you refer to the release, we have a sentence on that, saying that by the end of the year, we should land with a multiyear vision of the group's pathway trajectory. So today, we don't have reliable and adequate information to give a revision of the corporate plan. We haven't integrated the strategy of our new shareholders and the plan. So you will have to wait until the end of the year for that.

We have another question here. We've got a lot of questions here. We'll try and answer them all together. So what assets are going to divest? So I imagine here you're talking about our real estate assets. There are a few small businesses outside Europe. Obviously, we need to clean up that part of our business. And given our geographic portfolio changes that are going to come through. And predominantly, our assets are going to be real estate assets that are going to be sold off some in Europe, in France, in Germany, Spain. We have already divested a number of our assets in the Netherlands. Now in terms of the quality of these real estate assets now they are strong assets. These are assets where we -- where there may have been a few operational issues, but we want to hold on to those places where we can improve operations. Or if we can't, then we'll divest it, we want to keep our asset portfolio quite active. What is going to be the price effect in '24, in France and outside of France? Laurent, do you want to answer that one? I'll start out. So in terms of the price effect, outside of France, it's quite dynamic. We have really seen the price improvements in Germany, Austria, Spain. If anything, I would say that the price effect is ramping up outside of France, despite the fact that inflation is slowing down, so that is going to make us more profitable outside of France. Now in France, there are 2 effects at place. So we have price increases in clinics, which is quite limited, simply because it depends primarily on government decided prices. Now that said, we do have some power over our revenue when it comes to occupancy. So we have been able to increase prices quite considerably around 5% to 10%. So 10% for our current residents or just a little over 5%, and then anywhere between 5% to 10% for our new residents. Again, that's to offset the negative price cost effect that we've seen over the recent years. So again, with a strong price effect there to offset that. What is the share of SMR in the overall mix?

That's about 1/3 of the global turnover group.

What is the 2024 pay increase going to be? Well, I imagine this is a question for France. Well, we still haven't finalized the compulsory pay negotiations that we have in France. So we don't know exactly where that's going to land. But obviously, it will reflect the business' current situation. The business situation, the slowdown of inflation shouldn't be too high. Which zone is going to have the biggest margin increases in 2024?

Well, broadly speaking, I'd say Central Europe on average and Germany. Those are the 2 areas where we have a fair number of drivers that should allow us to significantly grow both in volume and margins.

What sort of visibility do you have for your EUR 500 million divestment?

Well, as things stand, we have an active pipe. You've seen that in the balance sheet at the end of 2023, EUR 500 million in assets held for sale IFRS 5. So we had LOIs active work by the real estate teams with 2 strategies that Laurent mentioned at the start of the presentation, tactical with portfolios from 50 to 150 million, 200 million deals. We're working on broader deals. We're beginning to see the beginnings of a possible improvement certain investors returning. So we're really working flat out to find capacities, counterparties for more substantial deals than those I've just mentioned. So quite a few opportunities in the offering, leading us to believe that we're on the trajectory mentioned.

Yes. So definitely, we are on track to reach the EUR 500 million that we announced for 2024. And we are also going to target some bigger transactions. Now we still don't know whether some of those big ones are going to come through in closing in '24 or 2025, it depends on market appetite. Now that said, if we take into account my own experience over the past 2 years. I would say that some of our businesses are really dynamic right now, really pulling in interesting investors.

There was the Canne Trade Fair showing keen interest from international investors for real estate in France, the Health Care Center, we must be prudent, but it's an encouraging sign. What's going to stop the increase in occupancy rates.

Okay. For occupancy rate in France, well, I think that we've seen a positive increase between the first and second half of the year, last year. But I would say that if we look at all of France, not just for emeis, there has been a fairly slow uptake in terms of occupancy rate. Now that's a France wide trend. Obviously, we were affected by a scandal about 2 years ago, and that had a major impact on the entire industry. So obviously, if we want to improve that, we're going to have to constantly improve the quality of services that we provide, but also constantly improving the way we communicate on that and by improving our brand image. I'm sure you can perfectly understand how our brand name was quite hard hit. And also, we can push through our commercial activities. So our sales teams can really work on that. So we need to make sure that our teams are really getting back to something hard hitting. Now that said, it is going to take a bit of time, certainly more than expected. Could you tell us about your updated forecasts for your midterm retention rate? I think if we go back to the -- when we presented the plan in 15th of November 2022, we're anywhere between 50% to 20%. I think we're up to 40%. So we still need to improve that. So if we go from 40% to 20%, that's a bit of a EUR 3 billion in assets we need to divest. So there's quite a quite a long way to go. And I think it's going to take a few quarters to get through to that. Can you tell us about your real estate? Obviously, we'll work with the consultancy agencies. We work with advisory firms. We have to go through all of the necessary due diligence. So we're still preparing some key transactions. And again, it is all in line with the plan that we outlined at the end of last year.

Yes. There's one that I can take, someone join the call late and the CFO made a comment about potentially extending the D1 tranche. I know the guys said that I just indicated that in the maturity, there were EUR 400 million of RCF in 2026. So my general comment was we couldn't integrate it as such in the maturity. But I didn't mention an extension of D1 tranche.

So I've got another question here for you. There are no proper cost structure to have the market separately realize the value of real estate. Is your compensation package being adjusted to include the significant equity award to better align incentive with shareholder? [Foreign Language]

[Interpreted] As of today, no plans for an Opco, Propco split, we're not there. Even if there was an equity partnership, I mean, a Propco of all the assets, just a vehicle where we would house part of the real estate, but we're not in that phase yet today. So I think it's highly premature to talk about such a setup going forward.

[Interpreted] So obviously, everything is in the IFRS report, you should have everything there so that you can understand exactly where we stand.

And we in-house, we're increasingly thinking in that mode. So is to clearly separate performance analysis, which wasn't the case previously in the company and made the comprehension difficult. So we're heading in that direction. In our day-to-day management, we're not there from the stock market part yet.

And about the compensation package and whether there are going to be significant equity awards. So this is something which will be put forward to -- was put forward to the 2023 general meeting, and it will be again presented in 2024 at the Annual Meeting, the compensation package, obviously, is in part connected to the long-term incentive plan, which is in itself tied to the share price and it is obviously all going to be aligned.

There's a question, Laurent, the nursing homes between who pays private and government, how prices are set.

Okay. So it depends really on which country you're talking about. So we have business in 23 countries. But really quite present in 6 to 7 countries. So I think you really need to look at each country individually. And sometimes even from one region to the next within each of those countries. Let's just take France for an example. So it is our leading market, but it's also an area where nursing homes only account for about 25% of overall revenue. Around 1/3 of our revenue is accounted for by public subsidies to pay for health care providers. And 2/3 of our funding actually comes from our residents. So that's private. Now obviously, we can't entirely increase our rates for existing residents as we've already explained. However, for new residents, we have a complete free rein over what rates we can provide and also what services we can provide. Now again, that's unique to France. I think it would be good if we could look into each country, one after the other to give you a full understanding.

Aren't you worried that the 5% to 10% increase are going to limit the increase in the occupancy rate. What do you think about price competitiveness and price competition in France?

It is a possible likelihood that one would impact the other bit. We actually made a decision because the -- this effect was quite considerable in 2022, but we have a premium offer that we provide with our retirement homes. And generally speaking, they are at the top end of nursing homes and retirement homes in France. It shouldn't have an impact on our occupancy rate. But from a financial point of view, it would have a bigger impact. So I think it's going to be better if we strongly increase prices there, I think it shouldn't be too much of a problem. Now that's in France, there is a major effect, but it's quite a local effect. So obviously, when looking at France, you need to look at everything from a very local point of view. And then you can apply your price to volume policy according to that hyper local analysis that you're going to do. Again, it all depends on the quality of services you can provide. It depends on how you segment out your services within the retirement homes as well. I think that is going to be the main driver going forward. So I think we need to have a sales strategy or a marketing strategy, which is much more fine-tuned than it has been in the past. So that way we can differentiate between our retirement homes and our competitors. And I really think that having a final segmentation is going to be a key driver. So that, for example, within one single retirement home, you can provide services to residents with a higher purchase power, provide more high-level services. That's for one retirement home. And then in other retirement homes, again, I don't want to segregate the two from each other. I'm just saying that we need to have some areas of retirement homes where you provide a low level of services, therefore, costing less and you can sell it at a lower price. We started doing that in 2023, predominantly with our clinics, where we've rolled out our entire policy there, and we should be able to roll it out much more large scale in 2024, certainly in the first quarter of the second half of the year. So more differentiation in our commercial strategy, improved occupancy rates. And again, that will have a better price impact for the better financial health of the company.

What can you say about the SMR reform in France?

So the reform isn't entirely in effect for the time being. It will come through. It will be phased in. And I think it is important for us to look at that reform. And to adapt the way our facilities are organized according to that and to look at what we do in each of our facilities to see what provides. So what are we going to focus on, what are the key business drivers and what can we focus on in terms of providing specialty services. So I think for some time, we had a revenue guarantee where we had to breakeven for a number of years, but then after that we're going to be able to improve on that.

What margin can Germany generate because of the impact of pay? Well, we consider that Germany is a country where we can achieve a normal and very acceptable margin level. As we mentioned, there was quite a significant pay hike early in '23. But in return, as Laurent said, it's a country where we have repricing capacities that are most significant. We're talking high single digit or low double digit, take your pick. But just to give you an idea, that's the first point. So we expect through a gradual German pricing recovery, including this restabilization of prices at the end of '23 -- [ early '20 ], we'll return to a more acceptable situation. Second point is the sector was quite heavily affected in Germany by companies and facilities going under, going bankrupt. We see that in our occupancy rate numbers continuing to rise. I think that's driving the sector, one of the major players, well positioned, who will be able to benefit from that, over a 3-year vision there's no difference between Germany and the other, we consider it's one of our strong countries where we have solid positioning. We have a major rehab activity in parallel with the nursing home. So it's really one of the solid countries of the group.

I agree with everything you just said 100%. There are lot of our competitors that went under last year. They went bankrupt or their financials were really suffering. Obviously, we suffered last year compared to the year before. But generally speaking, we are doing quite well. And for us in 2024, Germany is actually a country where we see strong growth opportunities. It's going to be a model with a strong competitive edge giving that the market in Germany is suffering.

An interesting marketing positioning, whether first to evolve towards the high end by selling services, that's, I think, that contributes quite a lot to the P&L.

So a question about real estate divestment. We've got another one, what capitalization are we going to focus on? Well, we didn't really talk about that for 2024, but that said for 2023, we had quite a mixed bag when it came to capitalization. So it depended on a country. It also dependent on the state. We were up to -- so we went from up to about 5.7%, generally speaking. But obviously, that was for a number of projects that were already underway. So there was -- you had to add in other aspects into that 5.7%. So generally speaking, we were still able to get some satisfactory prices compared to market price.

There's a follow-up question on real estate. The competition that we would have with other players putting assets up for sale, held for sale, Belgian. That's a reference made to Clariane, do you want to take that one, Laurent? On the competition that we're seeing in asset disposed number of players, who are putting their portfolio up for sale?

Given the competitive market that is out there, well, I'd just like to say, we're not really looking at the same markets. So we come up against very few investors. Or I don't think I've seen any who have said for the time being. Yes, I'll do it or maybe I'll go look at a different transaction with a different operator. I'm hesitating between one or the other. Now generally speaking, when you're putting up an offer for a transaction, given who we are as a business and how we operate. And given that we are really shoring up finances and our major shareholders. We work with investors who actually want to work with us and who know from the outset that they want to work with us and that they want to work with us right through the transaction. Now that said, the real estate market is a market which is facing some hardships right now, but we aren't really having to fend off competition.

Just as a follow-up to refer to the Belgian example mentioned, we're only selling real estate in the current -- when you think about competition in Belgium, it's an Opco, Propco sale we're not selling our Opco segment. We're not dealing with the same investors in many markets because we're dealing only with the property, not the Opco. And then objective commitments, quality indicators in '24. Well...

So we haven't yet disclosed as much information on that. That said, our forecast is to obviously have a drop in accident and increase in satisfaction. And these key targets are going to be outlined in the different press releases, as part of our annual report and also a little later when we'll be talking about our CSR strategy that we'll be presenting to our market.

Question on debt maturity you have -- for this year, you refer to the slide on debt maturity. We have EUR 700 million in debt maturing in '24.

Actually, I'll answer the other question that we have on occupation rates in France or occupancy rates. So we're going to see an improvement for occupancy rate in France this year. As I said it really folds us in line with the conversations that we had earlier about pricing. Given the cost volume or the price/volume ratio, we said that in France, we want to focus on prices predominantly. So we are going to see a general increase of our occupancy rate in France, but that's not our main focus. Our main focus is financial stability, and therefore, we're going to focus on prices. Now we don't provide any global overall forecast for that. We'll give guidance on that a little later when we'll be talking about our half year results. Now when trying to understand why the occupancy rate is increasing faster than that in France. Well, it's because -- the entire industry is suffering. There's a lot of negative media coverage on the industry right now. And obviously, that is going to have a much long good term effect than we originally planned. And on top of that, you have inflation. So that means that people can't really manage to fund or finance their stays in our facilities. So that's why we think there's going to be a progressive improvement over time. But we're going to target our sales strategy and really ramp up our sales strategy by focusing on some key targets.

Question on the asset base that can be really segmented in terms of price.

So I think pretty much all of our facilities in France can be broken down on a price segment basis. So you can do it from one facility to the next. And then within facility. You may have one room which has a garden view. And you'll be able to select at a better price than the room that has a view over the car park. So that's a segment. So you can segment things by the furnishings, by the size of the room, by the aspect. And this is something that we haven't really been doing so far. But you can also take it up a level. So a facility within a local town. I remember a lot of people don't really want to travel too far to go into one of our facilities. So they are very local. Now with the different marketing strategy, we're going to be able to have a great impact on price and greater occupancy rate and they go hand in hand. So I think the short answer is all of our facilities can be broken down by segments.

Question the returns to the forecast, 2, 3 years, EBITDA, IFRS. I'm very sorry, but we won't answer. For the point we mentioned, we genuinely haven't updated our BP. It's not that we don't want to share it. We wouldn't but for the time being, we have nothing to disclose. Question to reduce development CapEx. We referred to that in the release with the reduction in EBITDA '24 versus the target. Could you clarify full year '24, '25 phasing of real estate expansion? We won't give us specific numbers. What I can tell you is compared to our initial plan. In '24, on average, we have a decrease about EUR 70 million decrease in EBITDA, with the range of EUR 891 million initially. We're working on reducing our development CapEx, not maintenance CapEx of the same order. It doesn't mean that the projects are adjacent but spreading over time, longer term, but in terms of cash, the idea of to offset the impact. Next, there was a question, is the risk that owing to an occupancy rate not rising in France, that the government is going to continue to subsidize your French activities if there are so many empty beds?

Well, this is an issue that doesn't affect emeis alone. So obviously, we look at each French region, one after the other. And there isn't a real difference in terms of average occupancy rate. Now we are a little below the French average. Again, that is directly related to the 2022 scandal and the book that was published. But that said, we are a little above the trend in France and the greater -- sorry, in Paris and the Greater Paris area. But again, I would like to come back to the point that this is not emeis specific. Now that said, a lot of public run facilities or not-for-profit facilities. They built up on the same financing model, and they are actually running at a loss. And they too would suffer drastically if the government pulled funding. So I don't think the government will pull funding. And I don't think they even have the regulatory framework to do that to completely pull funding. Another question, what is the average cost of debt post restructuring? No, you've already answered this question, but go again.

On the bulk of the groups that Euribor plus 2%, and we have a part of the real estate debt is for 1/3, that's slightly below -- we're slightly below Euribor plus 2%. Next is a question on the target EUR 800 million, 835 million EBITDAR. They create efficiencies? Answer is yes. Yes, just the question still on the screen. On the state subsidies in France, there's a scheme mechanism the money we receive from the state is adjusted for the occupants. We don't receive kind of a sealed envelope in the nursing homes for the full year. We're already in that mechanism, there's nothing new. There's no thread that the government said, you're very low. It's already factored in. And so we returned that depending on the occupancy rate, that's important. That's adjusted. I think I'd say, we've covered it.

Given that we've run through all of our questions, I would like to thank everyone for joining us for tuning in for listening and watching. To sum up. As you have seen strong progress in a number of key areas in reworking and reorganizing the entire group, this is something that we really wanted to push through focusing on key values. And it was really important to get the company back on short footing. It was important to focus on top quality services to our patients and residents, providing topology support to our staff. We also have financials which are progressively improving, as you saw, we saw a great improvement in the second half, compared to the first half. And positive signs for 2024. Generally speaking, strong financials, which mean that we now have investors who are major investors in the company and are really supporting our long-term growth plan. Really there to support emeis, given that we are in an industry which is -- has a positive future ahead of it, be it in terms of the clinics, the psychological support and the retirement homes and nursing homes that we have, both within France and outside of France. Once again, thank you all for tuning in for our full year results. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]