Nexity SA (NXI) Earnings Call Transcript & Summary

Good evening, everyone. Thank you for joining us here for this webcast for the publication of our full year results 2024. As you can see, we are being innovative for these results with a video webcast. As is always the case, I'm here with Jean-Claude Bassien, our Deputy Director, General; and Pierre Pouchelon, Secretary General and Head of Finance. I'm going to share some of the major ins and outs of this announcement, and then Jean-Claude and Pierre-Henry will come back to the commercial performance and the financials. You will, of course, as is always the case, be given the opportunity to ask questions at the end of the presentation. If I may, let's kick things off with some of the key takeaways from this presentation. We'll go over them briefly and then come back to the details. There are five key messages. First of all, 2024, as you well know, was a transformative year for the company. All of the highlights for the entire year show the actions that we undertook on our four R's: recentering, re-dimensioning, recalibrating and redeployment. You will have heard about those throughout the year. We've been able to perfectly deliver what we announced we would at the beginning of 2024, reducing debt, savings, recalibrating our offer and launching new Nexity. All of this was carried out in the correct time line. Second takeaway, transformation has already led to concrete results on our business. Retail sales, as you know, is very important to us, and that's clearly ramped up in the second half with double-digit growth of plus 14%. This is the result of a number of effects. First of all, rates going down, of course, the end of the P&L law in France and also the strong dynamic in first-time buyers who have increased their purchasing power and who are out there to buy. All of this is amplified by the recalibrating of our offering and product range and also through our commercial and marketing campaigns that have been very successful. Jean-Claude will come back to that. Third takeaway, our balance sheet is significantly lighter than it was and liquidity is guaranteed, thanks to the implementation of our four R principles. We're wrapping up the year with financial debt at EUR 474 million. We're ahead of our target set at EUR 500 million that we set for the end of 2025. We've slashed our debt almost by half at minus EUR 369 million, so a 44% drop. I'd like to underline here that all of the divestment proceeds and capital gains were allocated to reducing Nexity's debt, thanks to being very demanding on WCR management. We told you that throughout the year, this was the second leg to our stool, minus EUR 301 million, which offsets the effects on EBITDA that I'll be getting to in a minute. Liquidity comes out EUR 1 billion at the end of 2024, which enables us to be very confident going into 2025. But, above all, liquidity is guaranteed because we've also, at the beginning of this year, been able to completely secure our medium-term banking funding. Now the banking offer matches our new size, and we are solid until the end of the maturity of the credit line in February 2028. So our banking debt is secured until February 2028. The credit line has been resized to EUR 625 million. Our covenants have also been reviewed to integrate the following components, taking into account the upcoming new real estate cycle, which is just kicking off, and also the increase in profitability for New Nexity, giving us some room to maneuver. Once again, I would like to take this opportunity to thank all of our banking partners for their support at this time in the market and at this time of our strategy. Fourth takeaway. Our results are perfectly in line with our expectations and what we announced with operating profit in the black at EUR 2 million with the expected impact of the transformation plan that has completely been offset by capital gains from divestments. Pierre-Henry will talk about those. And finally, a word on our outlook for 2025. All of our actions are now centered on getting back to profitability and to continuing to improve our balance sheet. 2025 is about operating profit and no longer -- recurring operating profit, not just operating profit, sorry. Continuing to control our balance sheet is extremely important. As you know, this has been important for me from the very beginning with New Nexity. A word on the form from today onwards. We are stopping operating -- operational reporting, which was kind of specific just to us. We're now speaking IFRS language from the 1st of January 2025 onwards. This will simplify and streamline our financial communication for all stakeholders. I'll have the opportunity to come back to our guidance at the end of the presentation. As I was saying in the introduction, we have been able to successfully execute our transformation plan based on the four R's, fully in line with the time line that we announced. The plan is now finalized even if its execution may well continue into 2025. Recentering on our major business lines has led us to 3 major divestments throughout the year, as you'll remember, the largest one, of course, was ADB, NPM and our majority stake in the Bien’ici platform. These divestments accounted for EUR 435 million in net capital gain entirely allocated to reducing debt. As we committed to, we've also been able to reduce WCR by more than EUR 300 million. Therefore, we are giving the same importance to the divestment program as to managing WCR. Controlling our balance sheet is a priority going into 2025, and we will remain opportunistic as we seek to divest the last noncore assets. On our savings plan, we had a redundancy plan in 2024. We've also managed to reduce our general costs and our real estate. We can confirm that we have hit the target of EUR 95 million for 2026 for a full year effect, 75% of which is effective from 2025. On recalibration, we've been able to undertake throughout the year a resizing of our offering with significant impact on operating profit. Jean-Claude and Pierre-Henry will come back to that. Nexity's offering is now perfectly sized for what it needs to do, and that's very important, of course, in a company with the kind of throughput that we have. Finally, redeploying New Nexity is running now. We announced to 3,800 staff the new measures on the 9th of January, and we're aiming to deploy and ramp up in 2025. New Nexity is a new organization based on territory multiproduct to rethink and accelerate the development towards profitable growth. And you can see the kind of progress that we have made, and we followed up on our promises. Let's focus on our market. What does the market look like? Well, first of all, there are some encouraging macro signs. Of course, the drop-off of the rates for central banks, which has led to drop in rates in the markets for real estate loans. As a reminder, at the end of January 2025, we're at 3.24% when we were at 4.2% at the end of 2023. That's, of course, a great improvement of purchasing power for our customers. We've also seen a stabilization of works cost with a BT01 index at about 0.5% below inflation. Remember that it had gone up 17% between 2021 and '23. From a political perspective, the 2025 budget has finally been adopted by the French Parliament and addresses a number of issues related to the real estate market. It's not enough, but it needed to happen. The measures that we were waiting for, for the priority zero rate loans went through and individual houses. And we know that they're committed for those laws to come into force on the 1st of April. This should give a boost to buildable land and to low tension land. Our clients are very interested in the zero rate loan. That's enabled us to increase our credit and rent offers. As you know, a donation measure was also adopted at Parliament aiming to improve the purchasing power for new builds. Profitability for investment in real estate remains an issue as the P&L law is removed. However, the government has committed to addressing this issue. And beyond any of those concerns, we will, of course, continue to develop tirelessly new products and to work on our financing offering -- offers, which are very important to our customers. We'll be coming back to those later. They're easy and readable. To continue on the market, a word on the offering. The figures on Slide 8 speak volumes. You know how important these figures are to me. These are a reflection of what I've been saying since the beginning of the crisis. In 2025, the entire market, including the 3 major components, i.e., developer sales, the individual home sales and development projects from social landowners represented a total market of homes that are going to be sold at 200,000 of new builds when the need, which is continuing to grow, is actually estimated at 460,000 homes per year. This is an imbalance that is driving a real estate crisis, but it's also a catalyst for Nexity in the midterm. If we take a look now at the individual sales market because as a reminder, what Nexity does is to bounce back on retail sales. There's a strong appetite for new builds. Demand is high. People are seeing the relevance of buying new. What is new is the reworking of individuals finance, thanks to things like 0-rate loans, 0% loans. And Nexity has gone even further by offering financing backed by our banking partners with a bonafide 0% loan, which enables us to align the credit payment with monthly rent. This worked very well with the campaign launched in September with the LCL banking partner on a number of targeted operations with highly satisfactory results on reservation volumes and traffic, which were up 40%. We've decided to implement the campaign once again. We launched it a couple of days ago. On the next slide, you can see 2 major operations that illustrate the commercial successes that we've seen recently. For example, right now, we are able to use our Crescendo offer to offer a 3-bedroom flat in Creteil for a monthly payment under than EUR 1,000, which is lower than rent for that type of apartment. In Montpellier, our Omana project has a 3-bedroom available for less than EUR 900 per month, which is the same as rent for that type of flat. The successes of our launches and the reservation numbers reinforce our desire to go even further and comfort us in the idea that having the right offer at the right time is very important. De-zoning the 0% rate is also important as a developer present around the country. On this next slide, I'd like to put forward 3 major things. First of all, these 3 things show our ability to develop our developer business. Belvedere, I'm sure you've heard about this one. This is a new urban district in Bordeaux. It's a hybrid district and Nexity transformation teams worked with our development teams. Carre Invalides is a renovation of its -- urban regeneration project involving Nexity Heritage, our distribution subsidiary, Pearl and our team -- our dismantling teams. And then finally, the Carrefour partnership with the first things moving forward in 2024. This partnership is the first national urban regeneration program, and we were able to achieve success in the tender, thanks to our position as an operator and a developer. With New Nexity and the ramp-up of local expertise, multiproduct in regions and also the strength of national expertise, we've been able to amplify the cross-fertilization of expertise. And to finish my introduction, let's look forward to future development of New Nexity. The pipeline, which is a summary of -- which is the sum of the backlog and potential revenue recalibrated based on profitability comes out at EUR 16.6 billion, the equivalent of 5.6 years of business. If you take into account the Carrefour deal, which hasn't been included in these indicators, it's a further EUR 2 billion. Birds in the hand, we have a developable volume of 61,000 homes. We, of course, still need definitive planning permission for that, but it's there. That's very good. And that means that New Nexity is a leader in the sector and by a lot. I'd like to give the floor now to Jean-Claude, who's going to come back to the commercial activity for the financial year.

Thank you, Véronique. Good evening to all those of you who joined the call in commercial real estate. This first slide rehouses the main metrics of our commercial activity. Residential real estate, as Véronique said in her introduction, the highlight is the marked recovery of retail sales, plus 7%, whereas the market is still down 4%. We note a marked acceleration in the second half of the year, strong momentum on first-time buyers, plus 21% on the year, up 27%. For bulk sales, they're down minus 16%, impacted by the decline in the LLI and a macro backdrop, not very promising. And of course, we focused on retail sales. Tertiary buildings, EUR 70 million is the order intake, higher than 2023, where the low point was EUR 39 million, remains low. The takeaway of '24 is the volume of delivery, 175 square meters delivered on large-scale iconic projects of our expertise. For services, growth is driven by operating activities, as we'll see in a moment. The next slide gives us a focus on a total reservations down 8%. It's important to note the recovery momentum on the reservation volume. This slide speaks for itself in terms of the momentum. Let me say that we've renewed the treatment of reservations previous to 2024, which led us to canceling certain reservations as part of our recalibration initiative. And this restatement covers 2,844 reservations to reflect the true commercial momentum in 2024. Focusing on retail sales. This slide shows the accelerations in H2. H2 on average, up 14%, driven by first-time buyers. The next slides, you have the client mix, a share of bulk sales down 6 points, retail sales up 6 points. I'll discuss the bulk sales. There, the sales to social operators remains flat, declining bulk sales is a reduction in the LLI intermediate rental housing and our focus on retail sales. On retail sales, 39%, up 6%. That's driven by home buyers. The end of the P&L for investors represented 80% of sales. Commercial offering that you see on screen fully reflects the transformation plan and the recalibration during the offering. A drop of 27%, even 44% over 2 years. Our sell-through period are improving, reduced to just 5 months. Let me emphasize that it's a return to pre-crisis levels back in 2019. The stock of completed housing remains insignificant. The lots at less than 6 months, very significant other impact on the interest-free loan. It's going to requalify the 12% remaining of our commercial offering, not yet affected. And so this is very positive news for our activity. On tertiary property, it's a major development year, 175,000 square meters deliveries. You have the iconic deliveries, the Garenne-Colombes, the Reiwa, our new head office. All this shows us what? It shows the ability of Nexity to deliver major tertiary and mix projects. We don't just say it, we do it, and you have the reality on screen. The backlog support -- reflects the low point in the cycle, even if we seek the market where it is, notably in the regions on -- services, the service properties are driving forward. Occupancy rates that are high for morning and studio as well as a growth in the average sale price for studio. Because for studio, we renovate our residences and so we can gradually up the rents. Distribution is posting a commercial recovery, thanks to a repositioning on smaller assets. This heralds for the coming year, revenue that will be up. And as you know, property management impacted by the refocusing and doesn't prompt any particular comment on our part. Over now to Pierre-Henry, who will detail the financial and nonfinancial performance.

Thank you, Jean-Claude. Good evening, everyone. Now let's start with the financial performance. As you can see on this slide, the transformation plan is visible in our finances with impacts that fully match our expectation and that are now fully applicable for 2024. This slide includes all of the major financial indicators, and we'll go over them one by one. First of all, revenue is at EUR 3.5 billion, down 12%, excluding divested activities, on property development for residential and for office space. This goes to show the improvements on existing operations. Regarding services, operating revenue is up due to new sites opening. Distribution has been impacted by relatively sluggish commercial activity in 2023, which has led to fewer orders in 2024. Operating profit is EUR 2 million. It is positive, and it is in line with our guidance. As expected, it's been heavily impacted by transformation costs for EUR 218 million, which include recalibration and re-dimensioning. These costs are almost entirely offset by capital gains on the 3 major divestments in the period, ADB, NPM and the sale of the majority stake that we had in Bien’ici. On recurring profit, we have the adaptation costs and the recalibration of our offering, which is visible, EUR 134 million due to drops in prices and increases in costs for work. Nonrecurring, we have EUR 38 million for projects that have been dropped. These are projects that we decided with our operational staff to not further pursue. We also have EUR 46 million of reorganization costs, including the redundancy plan. That amount had already been provisioned from the 30th of June for EUR 41 million. The total amount of our increase in value is EUR 260 million. On Slide 25, you can see the operating profit per business. It's been heavily impacted for the residential real estate due to the adaptation costs that I previously described. Operating profit for office space, EUR 22 million, in large part due to pushing forward on major projects delivered this year. For services, operating profit is down, impacted by distribution, which has been weighed down by a drop in reservations in 2023 and therefore, a drop in revenue in 2024. It's important to note the good performance of operations with operating profit that is up for co-working and for student residences. The margin rate is at 9.3% compared to 8% in the previous year. On this table, you can see that we also try to break down the recurring operating profit, excluding divested activities and excluding international businesses, which, as you know, are being sunsetted since 2023 and are not part of the new redeployment of New Nexity. As Véronique said, we have decided to abandon operational reporting to simplify and make our financial reporting more consistent across our documentation from January 2025. Guidance for 2025, that Véronique will come back to in a minute in her conclusion, will therefore be based on recurring operating profit in line with the New Nexity scope and in IFRS. We've given you a comparison for 2024, EUR 120 million loss for recurring operating profit with New Nexity and IFRS. Let's move now on to WCR. We've continued to reduce debt in 2024 based on our 2 main pillars, recentering our business divestment and also managing WCR in a very commanding way. WCR, excluding taxes, is down EUR 301 million to EUR 1.039 billion with the biggest increase being for residential real estate at minus EUR 186 million. The efforts have borne fruit in 2024, notably being more selective in our operations, purchasing of land is down EUR 130 million versus 2023, optimizing the lag period between the acquisition of the land, financing and then kicking off work. We call this the concomitant delay, increasing signing for clients with centralizing payment recovery and all of that had an impact on WCR, including also abandoning operations because we no longer need to pay engineering firms. It's important to note that WCR linked to international activities continues to weigh on WCR. That will continue to be a lever that we can pull up until they are fully sunsetted. As we move towards IFRS, as a reminder, WCR and IFRS for the end of 2024 is EUR 832 million to be compared to EUR 1.114 billion, a EUR 312 million drop. Excluding international business, it will come out at EUR 730 million. Let's move on now to net financial debt, EUR 474 million, significantly down by EUR 369 million. This is under the EUR 500 million that was stated in the guidance at the beginning of 2024 for the end of 2025. The variation includes 2 major levers, the divestments with a net capital gain from that EUR 435 million, entirely allocated to reducing debt and a drop in WCR. As we previously explained, that has gone into free cash flow, which is now positive at EUR 79 million, which totally offsets the effects of the transformation plan on EBITDA. We have added on this slide our IFRS interpretation of net financial debt, EUR 330 million compared to EUR 725 million at the end of 2023. The financial structure for the group at the end of 2024 shows net -- gross financial debt, sorry, at EUR 1.147 billion, significantly down by 31%. 60% of that gross debt is fixed rate. And thanks to our covering instruments, our gross debt is 90% covered at the end of 2024. The corporate RCF, EUR 800 million, has not been drawn at the end of 2024. Nexity has solid liquidity for EUR 1 billion. On the right, you can see the time line for maturities for our debt. Including major debts in the 1st September 2020 -- first semester 2025, sorry, EUR 304 million, completely covered by existing liquidity. As a reminder, our banking partners and bond partners have exonerated us from any financial ratios for 2024. However, at the beginning of 2025, we completely secured our midterm financing. Our banking financing is adapted to the new needs and size of the group up until the maturity of the credit line in February 2028. The credit line has been resized to EUR 625 million. Our covenants have been reviewed to take into account the upcoming real estate cycle and the improvement in profitability, thanks to New Nexity giving us some move to maneuver. Véronique has said in her introduction, thank you, and I'd like to also join her in thanking our banking partners. A slide on nonfinancial performance, which is at the core of our business performance. As you know, we have an ambitious carbon trajectory. We're aiming for a 42% drop in carbon weight by 2030. That's 10% better than the -- what is required by the RE2020 regulation. That means we'd be too ahead -- 2 years ahead of the regulatory thresholds. In 2024, we did even better. For our planning permissions, we were able to achieve 30% better than RE2020 in -- so we are getting ahead of the threshold for 2025. So basically, we're 3 years ahead of the curve. All of the low-carbon levers are being used to this end, including new construction methods. Two examples in the following slide. I won't comment on these, but these are renovation projects that go to show the expertise that Nexity has in this field. Thank you very much. And I'd now like to give the floor back to Véronique to wrap up this presentation.

So you'll have understood several changes 2025 in the way we guide the market. Firstly, the decision to stop the operating reporting to aligning Nexity's financial communication on IFRS including our guidance. This is to simplify things for our stakeholders, and we prepared you for that back in 2024. Second key factor, the guidance in 2025 won't cover the operating income, but current operating profit. In 2024, the transformation plan as well as management actions described focus both on operating as well as noncurrent operating profit. Hence, the decision to guide on operating profit. In 2025, we aim for a return to profitability and therefore, IFRS positive operating profit for New Nexity, excluding activities sold and international activities being terminated. That's the ambition. Second item of the guidance, key for me. The group plans to continue to master its balance sheet and maximum net debt IFRS below EUR 380 million maximum. I'd like to end this presentation with our fundamentals, a major transformation plan finalized with a redeployment focused on profitable rollout. We're a company now that's fully adapted to the market reality, a structural imbalance between supply and demand, which is growing and Nexity's agile ability potential of over 60,000 homes, strong secured financial structure fully adapted for the midterm and stakeholders backing. New Nexity strategic long-term stakeholders that are sustainable banks, maintaining their support and employees committed on the ground management actions are fully focused to accelerate a return to profitable growth through the development of New Nexity and cash flow development and continued deleveraging, by controlling WCR and with possible opportunistic disposal of noncore assets. A clear goal midterm allow for the payment of dividends if the leverage ratio is under 3.5x. Thanks for your attention. And of course, together with Jean-Claude and Pierre-Henry, we're available to answer your questions.

Operator Instructions] First question, Christophe Chaput for ODDO BHF.

I hope the sound is okay. I have three questions, if I may. The first, just to return to Slide 18 and the commercial offering, the outstanding works. If I recall early '24, you were referring to potential price drop, 6%, 8%. And during the course of the year, you were more at the lower part of the range. Do you have any information to give us in Q4? In other words, if price drops is, in fact, less than what you estimated? Second question on Slide 24 on the adaptation or adjustment cost to adopt EUR 134 million. It was EUR 57 million for H1. Why are costs higher in H2? And lastly, for 2025, do you have any information to give us on these costs to adapt the offering? In other words, are there costs that are already onboarded that need to be factored in? And just the 3 -- on debt, EUR 380 million maximum, we talk starting from the EUR 330 million reached in 2024, why a slight increase in that debt number?

Is operating cash flow, is in with the financial. Pierre-Henry will tell you a bit more about that.

So, good evening, Christoph. So let's take the questions in reverse order. Jean-Claude will address commercial offering. Net debt, yes, the EUR 380 million is to be compared with the EUR 330 million was built in the same way as EUR 550 million in operating reporting early 2024 because the debt of companies consolidated at equity at the end of '23 was at EUR 120 million. So it's the same construct that we have between EUR 330 million and EUR 380 million is a possibility to increase the capital in the company that we hold. Angelotti working very well with an operating margin of the order of 6% in 2024. So not at all affected by recalibration. It's a planned development in Oxitania with a product offering that's very well calibrated. And of course, we want to have the leeway of taking advantage of the liquidity windows because we own 50% of the capital. That's why we put the maximum again at EUR 380 million to give us that leeway. Turning to your other question on the adjustment costs. Well, no, not necessarily linearity between H1 and H2. There are adjustment costs on prices. We review them line by line, lot by lot depending on delivery dates. So we adjusted the exit prices during the course of the year. And the works costs, unfortunately, when we suffer, we try and monitor all that as close as possible. But Nexity has separate trade. So monitoring a lot of small players. So business failures, we were affected by those when they occur. It's difficult to reconcile that between June 30th and December 31st. We're fully in the envelope that we planned for 2024 and the positive guidance. And lastly, 2025, what you see clearly is that the noncurrent termination costs we hoped to have far fewer. We've done the job. And the aim is to complete that recalibration work at the end of the -- what we can say when the transformation plan's over. We'll be very selective. There are always promotions that are termination, but not with that quantum. Adjustment costs, the bulk of the offer adjustments was booked in the progress margin in 2024. There may be progress residues in 2025, but they're not material. Turning now to your question on the price impact of our recalibration. Let me remind you, Christophe, that on the matter, we had two actions: one on the repricing of our offering where necessary and an action focusing on adjusting the cost price linked to business failures and their impact on the works cost. Throughout the year, we implemented those 2 actions. And in terms of level of action, we haven't changed during the course of the year. We have the same items that were taken into account H1, H2 on those two factors, and there's no heightening during the course of the year. Yes. And in fact, we kicked off the year with -- you'll recall the minus 8%. We didn't pull them out of our house, said it's always the tryptic you need to look at, customer spending power, they lost some 25% of spending power because the rising interest, we were at 4.2% end of '23, early '24, 25% squeeze on purchasing power. There were wage increases, 12%, 13%. That's what the bank saw on the mortgage application. So clearly, there was a gap to fill to boost household finances between 6% and 8%, except that the interest rate drop kicked in with major effect. We end the year, at end of January, we were close to 3.2%. So we believe that 0.1% of less loan -- mortgage loan is 1% spending power. So they have increased by 10% their spending power. So we're really back in the ballpark of solvency in a campaign at minus 4% to be competitive and to have what Véronique described, this famous congruence between rent and loan to once again attract the first-time buyers that have returned to the market. Is that clear, Christophe?

Yes. Well, it's crystal clear, big thank you just to say on the commercial offering and essentially the outstanding works, you don't plan for further price cuts. So there's kind of a good match between demand and what's...

Well, what Pierre-Henry is -- very clear. We've done the job and henceforth, we're well positioned with the market environment that's more favorable. There are places where we cut prices, we drop. There are others where we up them. It depends on its yield management line by line and dynamic throughout the year. That's really back to the fundamentals of our business.

The next question is from Emmanuel Parot from Gilbert Dupont.

Yes. Can you hear me well? I have 3 questions. Let's come back to the commercial offering, first of all. On the project offering, I was wondering if the standard margin, normative margins were in line with the standards that you had earlier about 8%, 9%? Or are you coming in a little bit under expectation? Second question, I'd like to get a clearer idea of the message you're sending to the market here. You mentioned things that have improved and that, of course, makes sense. You didn't talk about the local elections in France that are coming up. That's always an issue for real estate markets. Is this something that you're fearful of in 2025? Are you expecting a bounce back of the market in 2025? Or do you think that you're not going to see anything until after the local elections? And my final question is on the recurring operating profit guidance, EUR 100 million or so. You're talking about more than 0. Should this be read kind of like 2024 that it's just a little bit over 0? Or should it -- could it be well beyond?

Okay. I can get the ball rolling here. Kind of nominal margin is something that's quite dangerous as a concept since 2023, indeed, anything that's gone through our commitment committee has been adjusted for the market, basically, the exit price makes sense in light of the purchasing power of our customers, the cost of the work. And in fact, kind of capped relatively high because as Véronique said, work is kind of at the tip of a peak and is more likely to go down. So the kind of standard that you would have expected from Nexity is different because of the different mix. We're rebalancing the mix with New Nexity, and we're no longer looking at the kind of mix that led to 8% to 9% profitability, which would have been about 55% retail. We're still at 60% bulk sales now. As a reminder, we are 9.5% retail, intermediate 8% and then bulk sales down near 6%. So it depends on the exit price, and that's when we get the aggregate margins. We're looking at margins between 6% to 8%. Composite margins, you could call them, versus the kind of nominal margins that you might have known in the past. Recurring operating profit guidance, we're going to be very cautious about that because we're in a market that, as you mentioned, very clearly is very up and down with lots of factors that are out of our control. So we're going to focus on the fact that it is out of the red, which is very ambitious in and of itself because as the slide that we showed you with the minus EUR 120 million, which is our comparison for 2024, goes to show just how much has been done and remains to be done. And that shows the dynamic of how we're rebuilding our margins with our recalibrated margins based on the recalibration plan, recomposing margins based on new operations that are still low in 2025 because as production gets rolled out of things decided in 2024, it's going to be low in 2025 and is only going to really be felt in 2026 and beyond. And the savings dynamic that we've been able to confirm shows that our savings plan is on track with 75% of it effective from 2025. So those are the 3 drivers, if you will, of recurring operating margin for Nexity, and we're going to be fighting to push that up as much as possible. On local elections in France, those elections always have an impact on our business. If we measure them, we generally saw a 15% drop-off of planning permission in the time running up to the elections. We're going to expect to struggle to get some of our planning permission that we're going to get in September 2026. That's been accounted for in our business plan. Our major issue was the lack of demand. Demand is now back up, and we are holding on to that demand. We're starting to see it in our core centers. And I think it's important to leverage that increase in demand. But as you said, we've got 60,000 houses that we want to build. We need planning permission for that. So it means lobbying mayors. What holds back mayors is often the major projects, the small ones go through fine. So we'll see what happens. I think that the real takeoff point will be end of 2026. But that's always the case as part of the electoral cycles. As we've explained, we've got a new cycle coming up, with a kind of low point in 2025, 2026 because there are two things that we need to take into account. The end of the P&L law, that was 80% of individual investors were carried out through the P&L mechanism that needs to be converted into something else, donations or first-time buyer support or whatever. And we've also got social landowners. As you know, end of 2024, the volumes were relatively high, in fact, very high and their liquidity wasn't high enough so that they could continue to keep levels that high. The drop in the [indiscernible] savings plan in France and its rate was good news. Nexity was designed to absorb this cycle 2025, 2026 is not going to be a rocket ship, but we want to be ready to catch the ball as it lands in 2027 and beyond. If you feel like we're pretty confident, then that's because we've done the work that needed to be done. We've adapted the company to the new reality of the market, and this means that we can look back at the market and get to work. And that's because the resizing and the recalibration has been done, and maybe that's why we're confident.

[Operator Instructions] Next question, which is the third question. Michael [indiscernible] calling from ROTH Capital.

Can you hear me? Two questions from my side. The first concerns the debt to be reimbursed in 2025, EUR 400 million with a balance sheet that has a lot of cash and a bit of debt, of course, about EUR 700 million in cash. So what are the options to refinance those maturities in 2025 and use the cash to reimburse that and possibly have a more efficient balance sheet structure?

I'll answer you on the cash, in Nexity's liquidity in the EUR 700 million, about 1/3 that's treasury pool directly on Nexity's account and 2/3 trapped in the promotions. We don't account. It will come to as the margins and equities upstreamed, and that's defined in the projects. We've secured midterm our bank financing, incorporating the fact that we're going to refinance, of course, the EUR 304 million that we have in H1. We have the RCF that is totally undrawn that, that can be used for any purpose because the RCF for the general purpose of the company, but can also serve for bond redemptions and we'll be opportunistic on markets if there are liquidity sources that are accessible to Nexity at appropriate funding costs at that point in time.

Okay. I'm not sure that you've answered my question here. So what part of the EUR 304 million be financed cash? The idea is to cut costs to draw on your RCF and on your existing cash.

Well, obviously, we'll use the existing cash and the working cap that we need for Nexity and draw the RCF to reimburse those bonds. It's true that they will conclude at a fixed rate period before the crisis of very low interest rates, and we factor that in. But the issue is to reduce -- to deleverage Nexity, reduce gross debt that's well underway. We're going to continue to mitigate the financial expenses that might be affected by variable rates slightly higher than the fixed rates that we're going to extinguish and deleveraging, which will mechanically reduce our financial costs. So the real issue is to continue to deleverage and clean up the balance sheet.

Don't you think we're going to have -- it's going to impact financial expenses when financial expected to be stable between '24 and '25? That's your question.

Mike was for '26. For 2026, it's a little soon to say. And of course, it will depend on the continued deleveraging, of course.

My second question on deleveraging. I was a bit surprised to see this EUR 380 million number that involves -- I mean, if I've read you right, with the EUR 474 million, that doesn't seem to be the case that involves a cash outflow of EUR 50 million you mentioned. I don't have the impression that it's material in terms of side, not EUR 50 million. So why such a high figure? Why not a bit more ambition if you're in positive EBIT in the year?

Well, you see -- no, it's always the same. I mean it's a maximum here, giving us a leeway to invest for Nexity's profitable growth. And I think it's important that we can continue to invest in the growth that we're discussing will give you the amounts when they're ready. It's part of the focus areas that we need to pursue because they generate EBITDA for Nexity. They generate treasury for Nexity. It's a company that generates cash. So it's important for us to have that leeway. And it's a maximum. That's always the same. It's kind of a range between EUR 330 million to EUR 380 million to manage that and the investment cycle return to profitable. And we're in a context, says Véronique, that's pretty unsettled. I'm sure you get the picture. So -- of course, we're going to use means available. We're very proactive. We've shown that when we can do better, we do that. So what Pierre-Henry is saying, we're giving ourselves the means to do what we need to do on Angelotti, but nothing prevents us from doing better. We'll be very opportunistic. We'll continue to work on WCR. This is guidance, but this is something we'll stick to absolutely until next year.

No. Indeed, you've done a good job on that this year in a challenging context. But for us, it's going to be -- it would be easier to have guidance that excludes consolidation or external growth transactions. So we don't know the amount, uncertain. It'd be simpler to have a guidance of deleveraging of net debt, excluding external trends. And if it happens, we adjust. We kept it as simple as possible because it will be the figure bottom right. There are already many changes with the scope, the shift to IFRS, recurring operating income. So keep it simple. I mean a lot of restatements, it just complicates the thing if we need to get back during the year, we'll do so. And on the working cap, a fine job done in 2024. Is that going to continue through '25? Or is it kind of going to grow positively?

The opposite, certainly not won't have the same impacts every year. There was a big effort done. We were highly selective, and we want to develop, expand. If it's profitable, we need to do that, but we remain very tight on congruence, on reducing design costs, keeping a lid on those. We got the international WCR that represents just under EUR 100 million that will have to deflate as we extinguish those subsidiaries. And we're going to work on that. But without assurance, I mean, that whether we can do it in '25 or '26, you see we have some wiggle room what we don't -- I mean, it depends on planning permissions, et cetera. But we do have some wiggle room on the WCR, if that's your question. I can't guarantee that it will be done and what we can achieve in '25. It depends on planning permission decisions that are not directly within our control.

Okay. So just a last question on the dividend. So -- you clearly wrote that you wanted to return to paying out a dividend, when you'll be able to do that. If we base ourselves on the year 2025 with kind of limited cash, is it possible at the end of 2025 that you'll announce a dividend payable in '26? Or will it be a year later?

It's too soon to say. The aim is return to profitability, continue to consolidate the balance sheet and a leverage ratio below 3.5x. It makes sense, consistent with our history when it's paid a dividend, always had leverage ratio below 3.5x. It's important to stick to that policy. And we'll see at the end of the year where we're at on those targets with management actions in place to do our utmost to boost our profitability as soon as possible, continued deleveraging, control WCR, achieving, where necessary, the disposal of noncore assets that remain. We'll see what time line we can have for all that. And with that, we'll be able to define a dividend policy approved by the Board.

Written question from Laurent on order intake in 2025. This is for office buildings, of course, we're in the kind of a low point. It's a business segment that's collapsing in the market. Obviously, the recovery can only be gradual over time. We're doing what it takes to diversify our target base and to seek out asset classes in addition to offices and take what we can have as alternative order intakes to offices. But clearly, it will be gradual.

I have a written question that I can answer here, but I'm not sure I fully understand it. The question is, can you come back to the dynamic on stores of homes? What are you expecting if things bounce back in 2026, such as some of your competitors do? Do you think you have the depth to surf the wave? I think the sequential improvement was shown in our slides. We've seen an increase in our retail bookings in a way that was very dynamic last year. And we were also able to show you that we had 60,000 homes in home now -- in hand, sorry. So yes, the local elections might delay some planning permission, but we do have the means to react if the rate of approval picks up in 2026. I think we've already shown that. A question from La Tribune. What is next year's position on the situation in the U.K.? We don't really need to have an opinion on what the U.K. is doing. I can't remember the exact number, but I think that the British government wants to build 100,000 new homes. I'm not sure within what time frame. I think they've already set off 20,000. The Prime Minister said that 20,000 was already on the way. That leads to entire new towns or towns getting extended. I understand that a lot of local councils have put their names forward. 100 or so have said that they are on board with the plan. I don't know whether that kind of thing is likely to happen in France. I think it's great. But a government saying, right, we've got a huge housing problem. Let's solve it, is something that's great, in my opinion. And they're going about finding the means to find homes for their citizens. That's great. Do we have any other questions?

Yes. So on the phone line, we have another question. This is Christophe Chaput, [indiscernible]

It's Christophe again, you're coming back. So 3 questions again, right?

He had three questions and then another follow-up question. You're already at 4. All right, go for it.

All right. I promise this is the last one. I want to come back to recurring operating profit guidance and in some ways, come back to Emmanuel's question. I understand that it's difficult for you to give us detail on the landing for the end of the year. But give us a hand and say whether you think the residential recurring operating profit will be positive at the end of 2025? Beyond the numbers, I'm trying to understand the dynamic because in 2024, you were at minus EUR 142 million on recurring operating profit, minus EUR 144 million for residential properties, EUR 134 million of adaptation costs that were discussed in your first answers. So if adaptation costs are much lower, then recurring operating profit for residential properties should be positive. In many ways, it should be significantly positive.

I see your question, and it is a good one. Indeed, the fact that 2024 recurring operating profit is negative mainly comes from residential properties and the transformation plan. So indeed, those costs are now in the rearview mirror. That means that -- and a lot of those costs were related to residential real estate because that's where we needed to adjust things. So indeed, a positive recurring operating profit can be seen as recurring positive profit for residential real estate, although there will be other dynamics in play, a little bit less for office space, for example, because as I'm sure you will have noticed, the order book, as Jean-Claude said, kind of in a lull right now. So we won't see the same dynamics as in previous years. We've already mentioned that. However, we are seeing good dynamics on services as we will continue to have operations continuing to drive growth and distribution as well, which had a good sales year in 2024. There's always a kind of lag time between sales performance and revenue. But when distribution has a good year from a sales perspective, then generally the following year, they drive profit and results. So better from distribution as well.

We have no further questions online. I'd now like to give the floor back to your host to wrap up today's conference.

I'd like to thank you all for being with us, and have a great evening. We'll see you tomorrow. [Statements in English on this transcript were spoken by an interpreter present on the live call]