Getlink Se

Good morning, everyone. With us today, Jacques Gounod, Chairman of the Board, Yann Leriche, Chief Executive Officer, Géraldine, Chief Financial Officer, and Virginie Rousseau, Capital Markets Director. I hand over to Jacques.

Thank you, Anne-Sophie. Good morning, ladies and gentlemen. It's always a pleasure to comment our 23 results, which is not too difficult today. You have seen that we are in line with the consensus. We are announcing an EBITDA which is close to 1 billion euros. So I think it's something which is at least historical results and exceptional results. This is, of course, and Jan will explain, Geraldine will explain. This is related to the very strong results we got from ElecLink. ElecLink, it is the first year where we have the full exercise, full results. Of course, we are still discovering this specific growing electricity market. And of course, we had strong benefit from the energy crisis. This will be commented later. What is important, of course, is that we have now a serious real pile of cash. And the best use of this cash, of course, is to serve dividends. And we will propose at the next AGM on the 7th of May an increase of 10% of the dividend up to 55 cents per share. I would like to apologize for the 23 guidance. which is, of course, 910 below both consensus and the results, 979 million euros, because we are always cautious. Once again, I repeat that it is the first year of full completion of the electronic operations, so we are cautious. We were very cautious. We are used to be very cautious, to be very conservative, and I think we are in the same mood for 24. Yann will comment the guidance, but we do prefer to announce something which is more reasonable due to the change in the electricity market, which is really the driver of the change we are proposing, keeping in mind that we prefer to deliver than to promise. So all in all, I must say that for this year, where we will celebrate the 30th anniversary of the opening of the tunnel, we have some outstanding results. And I do think that you will share our optimism for the future. Jan, the floor is yours.

Thank you, Jacques. Good morning, everyone. I'm pleased to be here with you today, along with our team that was presented. And so I will speak about our 2023 full-year results, which are the best ever for GetLink. So, I will start by explaining how we were able to achieve this performance, then Géraldine will present the detailed financial results, and I will finish with the outlook. I am on page four. In 2023, we reached an EBITDA of $979 million, the highest level ever achieved by the group. This unprecedented performance was obtained thanks to the exceptional contribution from Eleclin, but also by the strong resilience of Eurotunnel and Europort in a challenging market environment. To achieve these results, we stuck to our strategy, providing attractive services to our customers in all our businesses and capturing their willingness to pay. To be able to continue on this successful path in 2023, we also worked hard to prepare our group for the future. This means reinforcing our competitive advantages For example, by implementing an efficient plan for EES in order to stretch the channel crossing time gap with the ferries, or by unlocking high-speed passenger rail services from London to European capitals to increase tunnel usage. Our main 2023 figures are on page 5. Our EPTA reached $979 million in 2023, representing an 11% percent increase compared to the 2022 level. The main EBDA growth driver was ElecLink, which was operational for the whole of 2023, compared with just seven months in 2022, as operations started at the end of May of that year. In 2023, ElecLink generated an EBDA of $368 million, After deducting a 156 million provision for the profit sharing mechanism, we will come back on the PSM later on today. 582 million were generated by Eurotunnel and 29 million by Europort. This records a big year translated into an outstanding cash generation with free cash flow after debt service reaching 638 million. On page six, you can see Eurotunnel traffic. In 2023, our truck shuttle volumes were under pressure, mostly because of the intense competition from ferry companies. Two of them are deviating from the social models applicable in France and in the UK, and hence reducing their staff costs by approximately 60%. Despite that, we confirm our market leader status on the short straight. Our Le Château Pax traffic was up 6% versus 2022, with a market share of 58% above pre-crisis levels. Eurostar performed very well in 2023. Traffic is back close to historical levels, with 10.7 million passengers transported, up 29% compared to 2022. We will now go into more detail about the main highlights, and our main initiatives in each of our segments. So let's start with our passenger shuttle business on slide seven. As you know, our passenger shuttle traffic remains below pre-crisis. However, our mix of customers has changed with the drop in day trip and overnight tickets, while longer stay tickets are already 3% above 2019 level. To better serve those customers, who have needs which in certain areas are different from what they were before, we continued to enhance our service offerings with the full rebrand of our commercial service, a new booking app, and the refresh of our UK passenger terminal buildings. This had a direct impact on our Net Promoter Score, which improved nicely in 2023 from 34 to 41. Slide eight, as you know, Truck shuttle business has evolved in adverse context in 2023, with competition having reached a peak. Indeed, in 2023, because of our high electricity costs, we had to charge our customers a high EVA while the low oil price was favorable to ferries. This penalizing energy mix in 2023 was not offset by the carbon tax, which only became applicable in the maritime sector on January 1st, 2024. In addition, whilst anti-social dumping laws were voted both in France and in the UK in 2023, we are still waiting for them to come into force. This means that these two laws have not yet brought the level playing field back to the cross-channel market. In this context, we continue to fight to strengthen our competitive advantages. We want to be always faster, safer, greener, more reliable, and improve the services we offer to our customers, whether hauliers or our truck drivers. Like for pack shuttles, this work had a direct impact on our NPS, which improved by 20 points in 2023, a great achievement. So from 23 to 43. On slide nine, you can see that our shuttle yield increased by 5% in 2023. This is mainly driven by the increase of our energy surcharge for our truck customers that we call EVA, but is also underpinned by our successful and ever more efficient marketing strategy. Slide 10, yield optimization was absolutely key to limit the impact of inflation. In 2023, inflation remained high, with eurotunnel energy charges at a record level. In this context, we also continued our strict cost discipline, for instance, by accelerating our action plan to improve our energy efficiency. Page 11, 2023 was a remarkable year for our railway business, remarkable in terms of traffic performance at plus 29%, but also in terms of news flows with the announcements of new players willing to launch new high-speed rail service between London and continental Europe. These projects confirm the high potential for growth of the cross-channel passenger rail market. I will come back to this later on. Moving now to Electlink on page 12. In 2023, Electlink continued to post an outstanding operating performance with an impressive availability of the asset above 98%. Electlink benefited last year from a very favorable electricity market, which enabled the group to reach 558 million sales and 368 million EBITDA after having booked a 156 provision for the profit-sharing mechanism. We continue to discuss the application of this profit-sharing mechanism with the authorities, and Gerardine Perichon, our CFO, will provide you more details on this provision in a minute. Page 13, Europort posted a 9% revenue growth in 2022 with an EBITDA flat at 29 million, penalized by energy costs, and many strikes at SNCF Réseau, the French rail network operator. Page 14, 2023 was a remarkable year in terms of financial and performance, but also a year during which we continue to invest in our future. We spent $159 million on CAPEX with two major programs, our passenger shuttle refurbishment, a structuring program that will last several years, and which serve multiple objectives, lowering our maintenance costs, increasing capacities, but also improving our customer experience. The second main 2023 CAPEX program is related to EES, the European Entry-Exit System, to preserve our traffic fluidity. We are investing in our terminals to create a dedicated EES zone. We also built digital twins of our terminals to model the EES impact and ensure that we preserve our throughput and the quality of service for our customers. Our ambition is to turn EES into an opportunity to increase our competitive edge versus the fairies. Slide 15, before leaving the floor to Géraldine on financial results, I will finish with our ESG performance. In 2023, we reduced our greenhouse gas emissions by 10.5% compared with 2022, confirming the group's trajectory towards achieving a minus 30% reduction in its emissions in 2025 compared to 2019. Our alignment with European taxonomy remains at a record high of 93% of our sales. On the social front, we are also improving our metrics with 28% of the top three management levels being women, exceeding our target of 25%. This clearly reflects the impact of initiatives implemented on the brand and relates to management to promote gender equal access to technical carriers. So next page. On ESG, we are not satisfied with just being good performance. We also want to share a few convictions. This was one of the objectives of the creation of the decarbonized margin last year, linking financial and climate performance. The decarbonized margin is the ABD margin, including a new charge, still virtual at this stage, corresponding to a carbon bill, should we have to pay for CO2 emissions. In 2023, even with the carbon cost at 201 euro per ton, our decarbonized margin would only be 3% lower than our actual EBITDA. This pioneering indicator generated a lot of positive reactions. For example, it is now mentioned in the 2024 edition of the Verniman, which is a leading academic finance book in finance. I will stop here for the first part, and now Géraldine Perrichon will present our financial results. Géraldine.

Thank you, Yann. Now let's talk about financial performance, starting with Eurotunnel on page 18. Revenues are up by 8%, thanks in particular to the 26% growth on our railway network segment. EBITDA is slightly down by 1%, reflecting the inflation pressure on our cost that we are detailing on slide 19. As already mentioned by Yann, inflation was still strong in 23. Our energy bill increased by 57 million euros in 23, nearly doubling compared to the 22 figure. As a reminder, we buy most of our energy in advance. The rest of our costs were also under inflation pressure, adding an extra 23 million euros. We remain focused on discipline to mitigate that pressure, We actively piloted our electricity value adjustment, which is our energy cost pass-through mechanism for trucks. We also enhanced our yield management strategy, and above all, remained focused on our productivity measures and cost management. Moving to ElecLink on page 20. ElecLink, for its first full years of operation, benefited from exceptional market conditions. Revenues reached 558 million and EBITDA, 368 million. This number includes the profit sharing provision. This provision has been, as expected, at each year end reassessed to reflect the latest market conditions. On page 21, you can see that your report has demonstrated its resilience in 2023 with a stable EBITDA at 29 million euro despite the impact of the SNCF strikes in H1 and also in energy inflation. On a consolidated basis, page 22, our total revenue stands at 1.8 million euros, up by 14% compared to last year. EBITDA reaches 979 million euros, up by 11%, while EBIT is up by 9% at 728 million euros. The net consolidated result grows by 30% at 326 million. Taxes are up by 73 million, and that reflects election profitability, while net finance costs are significantly down, as explained on the next page. The 87 million euro decrease in our net finance cost is mainly driven by a lower level of inflation on the index-linked tranches of the eurotunnel debt. there is also the impact of the higher income generated by our cash management. The remarkable EBITDA generation translated into an outstanding free cash flow level, reaching 638 million after debt service, and that includes a 76 million euro debt repayment, as you can see on page 24. You will notice that our operating cash flow is 90 million euros down compared to last year. This is related to the ElecLink working capital requirement change. With a commercial launch in May 22 and successful long-term 23 capacity auctions closed in 2022 and partially cashed in at that time, ElecLink benefited last year from a strong cash inflow. And that result in 2023 in a mechanical decrease in the default income change. Our net capex in 2023 reached $144 million for the group, and this comes after a $21 million public subsidy received at the end of 2023. This was for Brexit-related expenses and in particular to finance our EES capex. On page 25, you can see that the group continues its strong cash generation because after the dividend paid in June 2023 of 271 million, our net debt is down by 7% at 3.6 million euros. Our cash position remains particularly strong, reaching a record level of 1.6 billion euros. That's all for 2023 numbers. Back to Yann for the outlook.

Thank you, Jarlene. I will now continue this presentation with the outlook. I am on page 27. In 2024, the cross-channel market will remain very competitive, including now on the PAC segment, until the anti-social dumping laws enter into force. It should happen before the summer, even if I want to stay cautious about the dates. Again, this backdrop will continue to reinforce our competitiveness, pursuing our operational excellence program, systematically attacking our cost base, being very agile in our marketing actions, and deploying our capex plans. In 2024, we will also continue to enhance our customer offerings. We have launched several initiatives, both for our passengers and our truck customers. We are, for example, developing several new partnerships with hotels, car brands, and so on. We are also continuing to deploy our yield management strategy for both our truck and packs. On trucks, we are adopting a more sophisticated approach to pricing. On packs, we are entering into phase two of our yield strategy with further segmentation, but also by unbundling our offer to provide more flexibility to our customers. Page 28. As mentioned on the previous page, our lush atoll market is currently very competitive. However, our fundamentals remain very strong. We have a unique value proposition, as we are very differentiated from our competitors, efficient and green. We will also benefit in the coming months and years from several very positive developments. We already spoke about the willingness of our government to stop social dumping on the short straights. There is also the international terminal in Amsterdam station which will accommodate more traffic after its refurbishment. I will come back to it. The EAS implementation that will manage better than our competitors. and the EU ETS applicable to the ferries, which will penalize their cost structure. Actually, it started on January 1st, 40% of their emissions in Europe, and will increase to 100% of their emissions in two years. Electlink, now on slide 29, since the start of its operation in May 2022, electricity market conditions have been exceptional. As expected, the market is currently normalizing, The positive news is that the electricity spreads are currently normalizing at a level which is above our initial investment case, which forecasted a normative EBITDA at 80 million per year, as communicated during our 2018 Capital Market Day. As of February the 18th, so last week, We sold 71% of the 2024 cable capacity at an average carrying price of 31 euros per megawatt hour. With the addition of the capacity market income, we have already secured a revenue of 292 million. Slide 30. 2024 is also an important year for our passenger high-speed rail business. Since it's opening in 2018, The London-Amsterdam high-speed line has been a great success with very strong demand. However, the development of this traffic has been capped by the boarding capacity constraints at Amsterdam Station and is currently limited to 250 persons per train. The good news is that the rebuild of Amsterdam International Terminal will start mid-2024 for six months Direct service from Amsterdam to London will be closed, but then when it reopens, this refurbishment will unlock the full potential of this line, which is estimated at 3 million passengers per year, which is 2 million additional passengers compared to 2023. Slide 31. Looking a bit beyond 2024, there is a great potential for new high-speed rail destinations through the tunnels. The market share that rail can take from aviation obviously depends on journey time. The studies we recently carried out proved that Germany and Switzerland can each capture 2 million passengers. We have worked hard to transform this opportunity into real services and a real business. We have done this by reducing the time to market by 50% for all rail undertakings willing to develop these services. We achieve that by simplifying and simplifying access to the tunnel with the relevant authorities, by working with rolling stock manufacturers to integrate the tunnel standard into their product design, by working with the other infrastructure managers in the UK, in France, in Belgium, in the Netherlands, in Germany, and in Switzerland, to work on the network and stations. This work, plus the financial aid that we propose to wide operators with our program called ETICA, makes us very confident that the passenger high-speed traffic will increase in the tunnel, connecting London to Paris, Brussels, Amsterdam, and also new destinations. Slide 32, coming back to 2024, we are expecting an EBITDA of between 780 million and 830 million. the normalization of the electing contribution will lead, as expected, to normalization of the group's results, which will, however, remain well above our historical results. Our group fundamentals are very solid, and we are well positioned to capture the forthcoming economic and social evolutions. This confidence in our future enables us to propose to our AGM a 10% increase in our dividend to bring it to 55 cents. 2024 is also an anniversary year. The group is turning 30 years old on May 6th. In 1994, we were pioneers. In 2024, our assets remains unique and harbors more potential than ever. We have many opportunities to celebrate that over the year ahead, but for now, we'll take your questions. Thank you.

Thank you. As a reminder, if you wish to ask a telephone question, please press star 11 on your keypad and wait for your name to be announced.

Alternatively, use the ask a question tab on the webcast.

Please stand by for your first question. Your first question comes from Christian Ndelku at UBS. Christian, your line is open, please go ahead.

Hi, thank you very much for taking my questions. The first one on the truck shuttle, you reduced the peak days from around 90 to 25 in 2024. This is suggesting to me that you're trying to use a bit your yields to counter the market share losses. So I guess my question is, how should we think about your shuttle yields in 2024? The second one, it's on the car shuttle. The ferry operators have announced capacity sharing on cars will be fully implemented from the summer. Do you believe that that could lead to a decrease in your market share on cars as a consequence? And the last one, again, coming to the truck shuttle, we have these new rules and checks on UK imports for meat and plants. that are implemented already from the end of January and then in April. Can you tell us what percentage of your truck volumes are in this segment? And how do you think about potential headwinds to volumes here? Thank you.

Okay. So, I will take your question in the order you ask them. So, first on trucks, yes, you're correct. We reduced our peak days. As I mentioned, you know, during the presentation, we want to be even more tactical in the way we manage our prices. And clearly, the peak days is a way, you know, to do yield management. And in the context that you know is a tough competition, it was a requirement to be even better than what we were in the past. And we continue to invest heavily in our capabilities regarding yield management to be a at the forefront of what is achievable. One key element is that we don't try to optimize yield. I mean, meaning we don't try to have the highest lead possible, and we don't try to have the highest volume possible. We try to optimize yield and volume. And actually, to be more precise, we try to optimize to find the best optimum for yield, volumes, and cost. Because, you know, sometimes even if you optimize yield and volume, you might have to put more resources to operate a trend, so to add capacity, which in the end is not optimal. So if we did that change, it is clearly because we saw that it was better for us. The optimum between yield, volume, and cost was better with that change and will continue in 2024 based on the market conditions, which are evolving to always refine our marketing approach to be always as efficient as we can. You mentioned then the car shuttle and what the ferries are doing. They want to replicate what they did on the freight market on the Pax. It has been announced. We have seen that. It's not into application anymore. I will be very cautious in what I say because you know that the French antitrust authorities are working on the case. So as a good practice, we don't comment, you know, a case which is in front of such an authority. I encourage you to ask them directly what they think of that agreement and you might learn a lot. Yeah, the new checks for the SPS product. So we don't communicate, as you know also, you know, what kind of goods do we transport. So I will not give you the full detail. But what is for sure is that those new checks will be, you know, a new formality that our customers will have to undertake. As for Brexit in the packs, we help them, we support them a lot. It was already at that time a differentiating service that we offer that some of our competitors are not offering. We help them to get prepared. You might have seen that we do not have yet the full information about how the physical checks as of April will be managed. it has been announced the date has been confirmed but we still don't know exactly how it will be managed and how much it is going to cost which is the point that we track carefully and we discuss as you can imagine a lot with the UK authorities to ensure that that additional cost will be as limited as possible to ensure that the trade will not suffer from it thank you very much

Please stand by while we prepare your next question. Your next question comes from Elodie Rule at J.P. Morgan. Your line is open. Please go ahead.

Hi. Good morning. Thanks for taking my question. My first question is on guidance, that branch that you provided. If we take the uplift from the provision on ERECLI, which is around 15 million I computed, I back out that the guidance for your channel EBITDA at the midpoint is around 580 million. So basically broadly flat versus what you've delivered in 23. So it sounds overly conservative given I guess we should expect cost to decrease, and you talked about your yield strategy. And I know you're cautious, but also why putting a cap at the same time on this guidance, again, given, as you said last year, your guidance proved conservative. So that's my first question, please. Second question is actually on energy and labor costs that you also know as well, just to confirm, indeed, that we should expect lower energy costs. to get your view on how we should think about cost generally for 24, if you have actually hedged portions of electricity cost, and if you negotiated further salary increases for the year and what we could expect for labor costs in 24. Thank you.

Okay, I will take the first one on the guidance. Yes, we announced today $780 to $830 million, so a $50 million range. Why do we have that range this year? It's because, as I mentioned during the presentation on the outlook section, the price war has started on the short straights for the PACs, which was not that much the case so far. And that will evolve positively at some point when the anti-social dumping regulations are going to enter into force. But here, I want to be very cautious on that precise date. Will it happen before or after the summer? You know, that will be a key trigger for this year. And we lobby and we push. And we are quite successful so far because, you know, in the two countries, both in France and in the UK, to have basically one year after, you know, March 2022, when P&O during the same day, they fired all their staff, you know, the 800 seafarers by conference call, so which triggered a lot of emotion, including at political level. That, plus our clearly actions, Unable to have one year after two new laws, both in France and in the UK. I mean, it's a remarkable time. Usually it takes, you know, years to have new regulation in our countries. But after this key achievement, now we're waiting for the decree in France and its equivalent in the UK. They are announced for the coming weeks and months, hopefully before the summer. Not sure 100%, so that's why you want to stay cautious and not to give you a number which is too optimistic and then not being able to deliver on it. Charlene, please go into the details about the energy costs.

Yes, so regarding energy, yes, we are still buying mostly one year in advance our electricity. We retain some exposure to the spots, but most of it is bought well in advance. So what does it mean for 2024? It means that we should see a decrease compared to 2023, indeed, but you will have seen that prices have been and still are above pre-prices level. Therefore, we expect a level between 22 and 23 numbers for 2024. Regarding the rest of the cost, again, we are not going to go into too much details, but you know that we have a social policy that is steady and that works to maintain the purchasing power of our employees. So we continue on our usual policy on that front. The inflation level has been lower at the end of 2023 compared to the year before, of course. So the cost increase will follow that curve as well.

Okay. Thanks very much.

Please stand by for your next question. Your next question comes from Nicolo Pessina at Mediobanca.

Please go ahead.

Yes, good morning, all. Thanks for taking my questions. The first one on the ELEC link profit sharing provisions, we see a lower level compared to 2022 at 31% of revenues. I'm wondering if this is your new best estimate going forward, and maybe if you can give us an update on the talks with the regulators for this profit-sharing mechanism. Second question, a follow-up on the energy cost. Maybe you can provide us an indication of which portion is hedged for 24-25, or which portion is supplied at the R&D tariffs. And finally, if I may have an update on the EBA. This was cut, if I remember well, last summer, but then I lost track and I'm wondering if it's still in place and what we should expect in 2024, whether at some point it will be fully eliminated.

Thank you.

Okay, so regarding the electric profit sharing mechanism, as I was saying before, we update this number every year, looking at the full stock of the provision because we are computing basically based on long-term assumptions and other parameters. the anticipated level of contribution over the life of the asset. So that's why there was a slight decrease in the percentage of that overall contribution in the total stock of the provision. Regarding energy cost, I'm not going to give you all the details on the different types of buying that we can make. I'm just going to say that AREN represented more than half of our buying electricity so far. We are still significantly hedged as well on the rest of the electricity consumption, but we retain a part exposed to the spot. The EVA was indeed decreased last summer because we got some anticipated... Good news on some subsidies that we transferred to the EVA evolution. It's also important for our clients to see that we indeed pass through energy evolution in one way or the other as well. So that's how we decreased the level of the EVA last year. Right now, the EVA is lower than what we had in 2023, but it's still there because we are still well above in terms of energy cost. the pre-crisis level, and this is what we communicate and what we work with with our truck client in a very transparent manner.

Thank you. Please stand by for your next question. Your next question comes from Sven Edelfelt at Otto. Your line is open. Please go ahead.

Yes, thank you very much for taking my question and good morning. So two for me. Firstly, your cash situation is very sound even after paying dividend. So can you perhaps tell us if there has been any discussion regarding a potential buyback at board level on what are your thoughts about a potential elect link to? That would be my first question. And then the second one, would be about the profit sharing. When do you expect to cash out the money? Can you update us on the negotiation, please?

Okay. So first point, yes, our cash in hand is quite sound. We do not plan currently to buy back some of our shares. It has been discussed and decided so at this stage at board level. ElecLink 2, yeah, you've seen that ElecLink 1 is a success. So we are actively working in that field. We are, you know, in France, for example, there are only two TSOs and RT and ourselves. So this is something that puts us in a very positive, you know, position on the transmission energy market. And so, we'll continue to work on it. And yes, LA Clean 2 and other services that we could develop in the energy market is something that we work on. Nothing more to say at this stage, but hopefully, we'll be able to discuss more this kind of topic during the year. PSM, we do not have today a final agreement with the authorities. Not that we are not willing to finalize the open point. Basically, it should have been done already last year, but they are not in a hurry to finalize that discussion because they have a lot on their plate, and obviously it's not their first priority. And for the moment, we don't pay them cash. We don't owe them cash. So they don't see that as something urgent. So that's why on that one, we continue with our own assumption and calculate and discuss that with our auditors to set the PSM at a level which seems to us the best reflecting what we would have to share in the future. At this stage, I can't say more. We push. I hope that this year, 2024, will be the year with a final agreement with them, because obviously it will be better for everyone to have more visibility on this. But here also, working with authorities, I don't want to commit on any date, just commit on our efforts, which are very active, but we are not the only one to decide.

Thank you very much.

Please stand by for your next question. Your next question comes from Eric Lemery at CIC. Your line is open. Please go ahead.

Yes, good morning. Thanks for taking my question. I've got two actually. The first on the slide number 31, you mentioned this potential problem. you know, from new destination. So, you explained the 2 million additional passenger for Germany, but you don't give any explanation from the 2 million for Switzerland. Maybe you can share with us how you obtain these figures, and maybe you can tell us when do you think we can expect this new destination to be implemented. And you mentioned as well some potential new operator, new high-speed rail operator. When do you think this new operator can start working with you? And I got a second question. You mentioned this exit entry system to be implemented in October and mentioned you have already started to work on it. And I was wondering what should be the impact at the end of the day of this year on your business and on your results in 2024? Thank you.

Okay, so page 31, indeed, you know, we are working on those two destinations. And I will make you a short answer. You can find a lot of information about that, more detail than what I'm going to say here on our website. We had organized a press conference in December of last year, so two months ago, We had a full deck about it, and you will find a lot of information. And then should you have additional questions, please do not hesitate to contact Virginie Rousseau. She will be happy to further inform you. So what do we do? Basically, the first element is to calculate what is the market potential, the market size. And to do that, because there are already services. So you were mentioning Switzerland. So here, for example, we take the Swiss destinations, the Swiss stations, and we look what is the current traffic between the main cities in Switzerland and the UK, mostly towards London. And then what we know is that depending on the duration of the trip between, let's say, London and Zurich, We know that if the train lasts more than four hours, for example, we are going to capture a ballpark more than 50% of market share. If it is above four hours, it will be lower than 50%. And there is a nice curve that we have not put in those charts, but again, that you will find in the slide deck, which is on our website. that will show you the potential of each cities, basically depending on the trip duration from London to those cities. So we start with that, the existing market. We know that by adding options, so by adding train to airlines, we will increase the market size. We took a very conservative approach of plus 20% of induced passengers. If you look at what happened Recently, for example, in both Italy and Spain, you will see that it is very conservative. And based on that, we calculate the market potential for oil, and that's how we end with 2 million passenger potential for Switzerland. The date, so it's not us who should answer that question. It's whether Eurostar, the the legacy operator, or new entrants. Those new entrants, two of them have declared that they want to enter the London to Europe market. One of them, so the two of them are named Euro. It's a company from the Netherlands. And the other one is Evolin, which is based in Spain. And you know that Evolin is... is owned by the Kosmein family, which the main shareholder of National Express now called Mobico. So they're experts in that business. They expressed that they wanted to start those international rail services and that they wanted to expand the destinations. And they also announced last year that they were willing to to start as of 2025. My personal opinion is that 2025 is probably a bit ambitious. Nevertheless, clearly, it will not last 10 years based on the work that we have done, which is a real one. Today, if you want to buy a high-speed train from Alstom, I mention Alstom because everyone said that they wanted to work with Alstom, but there are others. We have done the work ourselves with ASTEM and others to ensure that in their design, they already made the right decision to have rolling stock available to go without almost no modification in the tunnel. This is a great advantage because as you know, when the design is ready to go in the tunnel, the cost of those adaptations are very limited. If you adapt the trend after its production, the adaptation costs are very high. So that's why all of this makes us very optimistic that in a few years, and I remain on purpose a bit vague because, again, we are not, you know, those new entrants. We are just supporting and enabling those new rail services to happen quite fast, but it should be a matter of a few years. and much less than 10, because as we have communicated, we have reduced the time to market from 10 years to five years, and Evelyn, for example, has already started, so they have less than five years in front of them to get ready to operate. Then EES, yeah, so EES is a new control for all, you know, So third party passenger, so third country passenger, so basically all travelers that are not from the Schengen zone, when they will enter and leave the Schengen zone, they will have to have to go through new checks, new biometric checks. We could spend a lot of time on it. The first time, you know, you cross, you will have both facial recognition and figure prints to be given. And then after, when you will become a subsequent traveler for the next three years, it will be only one of the two, biometrics, checks, or figure and prints. This clearly will add some complexity to the border crossing. And we have decided, as we did for Brexit, to turn that, those new controls, into a competitive advantage. So that's why we are very mobilized. We have invested. And so it will take a bit more time to cross the channel on our terminals. We have calculated that per car, depending on the number of passengers and so on, it will add five to seven minutes to cross, okay? So if you compare that with our 35 minutes of being in our train, plus with the formalities on the two ends, you cross in one hour or a bit more, It's not a massive change, and we have developed some innovation that we don't disclose for the moment, but we are very confident that we'll do it better than our competitors and hence be much more attractive. Some of them are not really ready. We are ready. We have even done a full modeling, as I said, of our terminals thanks to thanks to a lot of IT new calculations. So that one, we are very confident that it will be positive news for Eurotunnel compared to its competitors.

All right. Thank you very much. Please stand by for your next question.

Your next question comes from Marcin Wojtyla at Bank of America.

Your line is open. Please go ahead.

Yes, thank you so much. Good morning. So firstly, could you provide a quick update on where we are in terms of capex that is related to the refurbishment and upgrade of your shuttle train fleet? How much capex there is left and when? Do you think you will finalize all these upgrades, please? And secondly, well, I just want to follow up on some of the previous questions on Eurotunnel operating expenses in 2024. So I understand that there will be savings on electricity, but overall, do you expect operating expenses to be up or down in 2024 in Eurotunnel? Thank you.

Okay, Charlene.

Okay, so regarding CAPEX, we have started, I mean, since the 2022 main programs and in particular the midlife one, we are working on the first shuttle refurbishment. This program is going to last a couple of years, as you all know, because as you know, we have nine trains. So of course, we schedule their refurbishment very closely. And this is why, year on year, there might be differences in the planning of that program. But overall, we are happy with the way this program is unfolding, and we are anxious to get them done as soon as we can because, of course, in terms of quality of service, reliability, and capacity upgrade, that would be a great achievement. Regarding the rest of the cost, yes, we expect to see the electricity cost to decrease in 2024 for Eurotunnel. For the rest, we are constantly working to try to contain and do some productivity measures. Nonetheless, even if the inflation has receded compared to 2023, we are still in an environment with elevated level of inflation, especially on salaries. As you know, we have one-third of our staff costs that are in the UK and two-thirds in France. In both countries, inflation is still higher than what we had in the past and the long-term target of the central banks. So that will be an increase as well on that front that we are trying to partially compensate with productivity measures elsewhere.

Next. Please stand by for your next question.

Your next question comes from Nicholas Mora at Morgan Stanley.

Your line is open. Please go ahead.

Yes. Good morning, all. First, can we come back on the new price war in car shuttle? How, I mean, a year ago, we started talking about the truck price war. Now we're talking about cars. I mean, how bad is it in terms of the price cuts offered by Irish Ferries, P&Os, and so on, beyond just offering free booze to customers? On pricing again and looking at trucks, where do you think the price gap is today between the Shuttle and the Ferries? The second one. Third one on... On yield management for cars, you're talking about switching to phase two. What is it, man? What does it entail in terms of your ability to, well, further push prices higher? And last one on OPEX, and sorry, Jardine, to come back to it. So in 23, we had 14 million of savings from certificates on electricity costs. Will this come back again in 2024? And on the rest of costs, where do you see, I mean, beyond wages that we understand well, where do you see the ability to deliver a bit of productivity? Where are costs going to be contained and grow below inflation? Thank you.

Okay. I will start with the price war. Here, of course, we are not going to disclose, you know, our marketing policies and strategies. If you just go, you know, on the website of our competitors, you will see basically that they are reducing their prices by about 20%. I mean, there are a lot of promotions in that range. I mentioned one number, but there are others. But, yeah, currently that's what they are doing. So two things. So then after that, you were asking what kind of HEAL Phase 2 strategy we are implementing. So here also I won't unfortunately say a lot because I don't want to disclose to our competitors, which are also listening indirectly to this call, what we are going to do this year and over the next years. But we know that we still have room for improvement to increase our yield. The goal is always to capture the full willingness to pay of our customers. This is the key element. What we target is the segment of one, meaning that we would like to be able basically to price based on the precise willingness to pay of each of our customers. And we know that our segmentations today are still a bit, you know, grossier in French, not refined enough. And so we have the potential to go into further refinement without adding complexity when people book. And that's why we are speaking about phase two. That will basically change the way we charge. I was mentioning just before that a few elements. We will, for example, unbundle a few of our offers to give more flexibility and some possibility to rearrange our service offering to better capture that willingness to pay. And we did that in two phases because the first phase of our yield improvement was made with our current tools and systems. The phase two triggers a full change of all our booking systems, so that's why it's taking a bit more time. We cannot afford to make some mistakes in our booking system and not being able, because of IT rush, not to be able to sell the correct matter. So this is underway. We are quite optimistic. Of course, we did already a lot, but there is more to come. Trucks, I will not mention the price gap, and some of you, by the way, track that in a very, very accurate manner. So basically, I will not answer, but you know what is the reality. This price gap increase, you know, obviously last year, and you know that two main triggers to that increase was one, the fact that we introduced our EVA and as we had high energy cost at the tunnel last year in 2023, And that electricity that we mostly bought, you know, a few months before, including 2022, has quite high prices, while the ferries saw their fuel cost decrease. So this was unfavorable to us in 2023. And you also know that thanks to the social dumping, they reduced their staff cost by 60%. which of course also help them reduce their cost basis and be able to offer lower tickets. So all of that is evolving positively for us currently, even if, as mentioned, we want to stay cautious because the regulation, I mean, the decrease for the anti-sulfur dumping regulation are still awaited. And as long as they won't be, you know, signed and enforced, I will stay cautious. Geraldine, OPEX.

So regarding the energy savings certificates, as a reminder, those are related to the fact that we replaced part of our truck shuttle fleet. It's a program that lasted over a couple of years, and we have received this year the last two and a half shuttles that are constituting that replacement. So we will still have some positive effect from energy certificate savings in 2024, but in a lower dimension compared to what we had in 2023. We'll be in the single-digit mode to answer your questions. Regarding the rest of the productivity, as you know, we went through a very heavy process of cost savings during the COVID year. We are capitalizing on that strong review of all our cost base. Now we are in the process of trying to refine and improve and continue working on a day-to-day basis on productivity measures. The avenue that we are looking at, for example, is fine-tuning our capacity to ensure that we have the missions at the right moment in the day for the different type of services to ensure that we have a maximized NPS and at the same time a load factor. So this is a very, I would say, Travail de fourmi is something that is really in a lot of details to ensure that we save as many missions as we can without endangering our quality of service. Another avenue is, of course, to go through procurement efforts and efficiency to ensure that we have the most competitive RFPs that we can have, but also improving the performance of our maintenance programs that are ongoing and that are a significant part of our focus this year to ensure that we have our trains at the right time with the right cost of parts.

If I may just follow up on new entrants in high-speed rail. So you've talked especially about Evalin, which seems to be the most advanced. These guys need to book slots at least two years in advance. Most likely there needs to be changes at St. Pancras in London and most likely in Paris as well. How realistic is the service in even two, three years' time? Just trying to gauge a little bit. how advanced these guys are, whether they've been actually contacting you to even secure capacity in the tunnel. Thank you.

Well, yes, we work, I mean, they contacted us, but not only us, the other infrastructure managers, HS1, SNCF, and so on, because as you know, in the rail sector, when you go through different infrastructure managers, You absolutely need to have a full coordination of the path that you want to book. So it's a common work which I started already months ago. So at this stage, they have already mentioned the fact that they wanted some slots. We are not at the stage where those slots are very precisely defined because it's too early. But there is no difficulty at all here because, as you know, we have capacity in the tunnel. HS1 has capacity. SNCF has capacity to at least go to Paris and somewhere to go to other places. So this is work underway. And to your question, two, three years, that seems to be optimistic. Or is it realistic? I will give you here something that, again, is only my personal opinion. It doesn't, you know, as a right expert and not more than this for that one, two years is probably a bit short. Three years start to be fully possible depending, you know, on their speed. You know, it's really hard to speak about a third party, but when you look at what they have already communicated and, you And if you ask them the question, I mean, they are serious, they work, and they are very credible. I don't see any real roadblock for them to be, you know, on the market in a very competitive timing.

Please stand by for your next question. Your next question comes from Robert Joensen at BNP Paribas Exxon. Please go ahead.

Hi, good morning, everybody. It's actually Hugo standing here for Rob. Just a couple of questions. Firstly, on CAPEX, just to follow on from a previous question, could you provide more color about your expectations for CAPEX, even if only just directionally in terms of whether you expect Eurotunnel CAPEX to go up or down this year? And then secondly, on disclosure, I believe there was some discussion about separately disclosing the revenue of trucks and passenger vehicles. Could you talk about whether that is still the case? Thank you.

Charlene.

So regarding CAPEX, as previously said, we are in a phase in the life of Eurotunnel where we are in a more elevated mode. We have in particular this midlife of PAX shuttles that is going on. We have a few other projects. So as previously explained, we believe that we will be in a range between 150 to 200 on some years over the next five to seven years. That year-on-year change will be driven by the life of the different projects and the management of the capacity needs of the business to adapt it as efficiently as possible. Regarding the disclosure and the split between revenues of passengers and trucks, no, it's not on the agenda, and I believe that it was not last year either.

Thank you. Please stand by for your next question.

Your next question comes from Christian Nadelku at UBS, please go ahead.

Hi, thank you for allowing me to follow up. Could I just check if I calculate well in 2023, the provision on ElegLink was around 29.7, call it 30%. Is this the correct sort of provision we should use in 2024? So 30% provision on ElegLink. And secondly, I guess if I take a 30% provision, on the ElegLink revenues on my estimate. This is telling me if I take a low end of the guidance, the 780, I take out 200 million of EBITDA for ElegLink, I'm left with 580. I'm trying to challenge a bit your argument that you are conservative on the guidance because at 580, your shuttle EBITDA is pretty much flat year over year. And I guess we talked today on the phone about the car price, a new price war emerging in cars recently. You talked about the subsidies on electricity being roughly 15 million lower year over year. The peak days, if you do the math on it, you're losing probably around 6, 7 million euros of revenues due to a lower number of peak days. And then we have EES. We have meat and plant checks. So I guess a lot of headwinds year over year. So maybe my question, apologies, it was a very long one, but could you actually tell us which are the tailwinds for the shuttle EBITDA growth year over year? Thank you.

I will start on the guidance. The key message for the guidance and the spread is that we want to be cautious. Cautious because, yes, there are certain factors, And the main one is the date at which the anti-social dumping regulation is going to enter into force. And this one, as I said beforehand, will it be before the summer as expected or not? The Amsterdam station and the other element that you mentioned. So if it happens early on, if we have the decree next week, which is very possible, that will be a very positive element for us. We do not that yet. I was speaking about the antitrust authority in France, which is looking closely at the agreements between two of our competitors. And that one also could trigger very positive news in the months to come. So, yes, they are positive. And I said we are much better prepared than our competitors from the changes in regulation. If I take, for example, the new checks on the SPS product, we are launching with SharePass, you know, services that will ease all that for our customers. For EES, as mentioned, also, you know, we are better prepared than them. So there are a few questions about the timing, the fact that we are well prepared and that all those new regulations are favorable to GetLink. There is no doubt about that. Provision about GetLink?

Yes, so you should look at the provision as the total provision, so 2022 and 2023. We don't have a different assumption year on year. The assumption might change every year, but the reassessment is for the full stock of the provision. So this is important to have in mind. So when we reassess at each year end, the contribution level, we believe, should be taken into account over the life of the asset. We apply that for the full life of the asset, including the past year.

Thank you very much.

Please stand by for your next question. Your final telephone question comes from Niccolo Pessina at Mediobanca. Your line is open. Please go ahead.

Thanks. Just a very quick follow-up on the dividend of 55 cents announced today. Would you say this is the floor for the future?

Okay. We never, you know, give long-term guidance or information about the dividend, but you know us for a while. We have always tried to to improve year over year. So clearly the goal is to continue to serve well our investors who are trusting us. So it's not a real answer, but it's a hint regarding our willingness.

Jacques Gounod speaking. I do agree with what Yann is saying. Yes, we want, of course, to increase year after year the dividend. which is a continuous trend since the beginning of such distribution. Thank you.

Please stand by for another telephone question. This comes from Atul Kumar at HSBC. Your line is open. Please go ahead.

Hi, thanks. Sorry, I guess there was a problem in my line, so kindly excuse me if you already answered the questions I have. I mean, my first question was about the truck shuttle volumes. I guess you mentioned that you are doing a lot of activities to attract the truck volumes, including your loyalty programs. new booking sites. So here, what confuses me or I'm not clear about is that I think generally because it's a highly competitive market and trucks go with ferry because they charge a significantly lower amount and whatever is the perishable items or the time-sensitive items, any which ways comes to you. So what I'm trying to understand here is that you're spending money to attract these truck volumes, do you really get the returns? Because any which way, those volumes were coming to you. So are you getting some returns? Are you getting some people coming to you away from ferry operators? So is it really worth spending on those volumes which are any way coming to you? So that is my first question, please.

Okay, so two things. On the volume on trucks, so As mentioned, what we optimize is yield multiplied by volumes. We maximize the revenue, and actually, as also mentioned, it's yield multiplied by volume minus the costs, which are also a key element to the equation because sometimes you are adding volumes, but there is no real return on it because the capacity that you must add is too high. And here also, even if we segment today much less than in our PAX shuttles because it's a B2B business, it's never as easy as in a B2C business to fully segment and capture the full willingness to pay for our customers. we start to do it more and more and we'll continue to do it more and more. The goal is to ensure that we provide the best service to each customer segment and from that we capture their best willingness to pay. I will give you one example because as you can imagine, all our customers are not the same. For example, the one from the Netherlands that are in the flower business that I visited two weeks ago in detail, we spent a lot of time with them, You know, time is the essence for them. When you transport flowers, if you are one day late because you miss, you know, the deadline to feed the supermarket and the market in the UK, your flowers will be on the shelves only the day after. And as they last two, three, four, five days, depending on the type of flowers, you will lose 10, 20, 30% of the value of the goods if you arrive late. So here... the willingness to pay is much higher than from other goods that are coming from China to Amsterdam and then transported by truck from Amsterdam to the UK through the channel. And this is why, for example, we have introduced last year our first service. It's a way to segment and to differentiate. So it's a dedicated line for those customers that are willing to pay more to ensure that whatever the traffic in our terminal, whatever the conditions, they will be treated first. And for that, we charge them 50 euros per direction more than the base price. And we have today a ballpark 7% of our customers that are using that service. So you see it's quite successful. We don't want to push it too much because if we push it too much, we are going to deteriorate the real advantage that we offer. So we didn't have that before. You know, it was a new introduction. We optimized our yield, and at the same time, we optimized the satisfaction of the whole year. So win-win.

Right. My second question was around the – the sports events which France is hosting this year, including Olympics and, you know, Summer Olympics. So what are your thoughts around that? I mean, are you expecting some acceleration in car shuttle volumes? And then obviously, you know, then obviously that could have a significantly positive impact on your duty-free at your terminals. So what are your thoughts around that, please?

Yeah, we expect a slight positive impact. We looked, of course, at what happened, you know, when the Olympics happened in the UK. The real positive impact should happen on Eurostar more than on the shuttle. People will be willing to attend the Olympics from the UK. You know, as most of the events will happen in Paris or in the Paris region, they will take a train more than their cars from what we see today. even if it's a bit early to say because we are only in February and we are still at a remote date from the Olympics, but clearly that's where we expect the most increase in traffic. I will add one element, which is a very nice one, which is the Paralympics flame will travel through the tunnel on the 25th of August. So that will be a new occasion to... to promote the tunnel and ensure that we can speak positively about us and continue to improve our branding, our recognition as the leader on the short price that we are.

Right, right. Sorry, I have two final questions, if I may, please. And again, maybe you already answered. First of all, on the pricing, I mean, could you please guide about the pricing in the car shuttle segment? How do you see the pricing in car shuttle in 2024? And then finally, just a clarification, the guidance on your EBITDA, that implies a year-on-year decline. Is that most on the electing side, or do you expect some decline in other businesses, other segments also, please?

Okay, I will answer the first one, Jarlene the second one. Pricing, unfortunately, you know, we are in a competitive business, so I will only tell you that we are actively engaged in improving our yield strategy and techniques and tools. That is the phase two that I mentioned beforehand after phase one of yield optimization. We're entering phase two, which is a slower one because we have to change all our systems to be able to implement it. But we know that we have some good opportunities to further refine our approach and to further capture value from our customers. We're very optimistic about that. But as you can imagine, I will not disclose any price for 2024, not to avoid to give any confidential information to our competitors, plus our market evolving quite fast. You know, we mentioned regulation and so on. That will, of course, change the competitive landscape. And we continue to be very, very active, very agile. Each time there is a change on the market, we adapt. We don't have a pricing level which is defined for all our products and which is stable over the year. It is not at all the way it's working on our end. It's changing all the time with sophisticated algorithm and approaches that we further develop year after year.

Géraldine, please tell us about the year-on-year guidance. We don't detail the guidance for business, so I'm not going to go into too much detail. Obviously, when you look at the spread in the electricity market and the secured auctions that we've already closed for 2024, electronic revenue trends is obviously decreasing in 2024, but that's expected. That's the normalization of the market. For the rest of the business, we aim to optimize value creation. As already mentioned, there is a lot of uncertainty in our environment, economically speaking, but also in terms of competition. There are several events that can be at the same time great opportunities, but also could have negative impacts, so we are cautious, and that's all I'm going to say on that.

Thank you. Okay, so I see that we have two last questions that we got through the chat. Can you please quantify the cost impact of the traffic disruption around Christmas 2023? So, yeah, we had two disruptions. We had a six-hour strike on our end, which has a limited impact because that was only six hours. We were able to accommodate the traffic at the end of the day. Eurostar was a bit more complicated, but the day after, they were able to manage it. Eurostar suffered a bit more with the flooding of a tunnel. And I want to be very clear that was not our tunnel, even if some press article misunderstood what was happening. That was a tunnel in London that was flooded for a day and a half. So all in all, a limited impact on our accounts. And then second question, can you explain the implications of a revised ETICA program for new entrants? What discount would be granted on new destination over 25, 30 So our full program, you know, you can find it on our website. I cannot make a short answer about that one because it's a program which is organized to really, you know, trigger new destination, new services, and there is financial support you know, based on the distance for those new services, for the increase of service, for the frequency and so on, so it cannot be a plain answer like this, but basically we are increasing our unit support by 20% in the new ETICA Phase 2, 25 to 2030, compared to the previous program, so it's a real increase, 20%. One, and second, we had disclosed in December that we expect that With this increased support and with the new destination that should be open, new frequency, thanks to the simplification that we organized on that market, we expect to provide a $50 million support over the five-year period 2025-2030. Okay, that was the last question. So we thank all of you for your attention to this call, for your wise questions, and we'll speak next time in July. Thank you.

Thank you.

Have a nice day.

Bye-bye.

Have a good day. Bye.