Fnac Darty Sa Ord

Good evening, everyone, and I'm delighted to be here with you to share our results, our revenues with you for 2023. For this presentation, I shall first give you an overview of our activities and detail some of the more strategic initiatives that we undertook in 2023 concerning the main success factors of our roadmap. And then Jean-Brieuc here, our CFO, will give you a summary of our revenues. Then I'll come back and I will share the conclusions for you and be here for your questions. 2023 was an extremely busy year and I'm very satisfied by our performance. In a macroeconomic rather constrained context, we worked towards meeting our goals for every day, our strategic plan, and we were even able to accelerate an in-depth transformation of our digital client and service model. In 2023, we crossed the one million subscriber mark at Darty Max, and it just goes to show that we have our commitment towards durable and responsible consumption. We also finalized our projects which are extremely ambitious for development of our e-commerce activity to further strengthen our unique European position. This collective success was thanks to our employees who gave much proof of their ability to adapt as best as they could to changes in our sector and to expectations of our customers. I am confident that we shall continue in our project and I'm enthusiastic about starting 2024 for several reasons. Indeed, 2024 represents 70 years of FNAC, FNAC's existence, 50 years of the Contrat de Confiance, Dati, and, of course, it's the Olympics year and Paralympics year in Paris. We'd be here to welcome that event after 100 years, an exceptional event, and we are extremely proud that we are contributing towards its official sponsorship. We will be highlighting all our know-how and expertise to contribute towards the outreach of this movement and the coming together and festivities in our stores and on our online sites. What's better than pictures to illustrate all this? Here's a video.

Intensément. Pour être prêt le grand. Pour donner le meilleur de nous-mêmes. Et ce n'est pas forcément pour être applaudi, ni pour être admiré. C'est avant tout pour mettre nos talents au service de tous nos clients. Courir vite pour tenir une promesse. Faire monter l'exigence, la qualité, la réactivité jusqu'au plus haut niveau. Changer de discipline au nom de l'esprit d'équipe. Battre des records d'enthousiasme, de concentration, de créativité. Se lancer dans une course vers toujours plus de service et de satisfaction. Chez Fnac Darty, nous avons fait triompher nos valeurs et nos différences. Nous avons gagné en performance, gagné en solidarité, gagné en expertise, gagné en reconnaissance, gagné en engagement. Tous ensemble, nous avons fait briller le collectif. Tous ensemble, nous avons vécu de grands moments. Tout le monde a participé et tout le monde a gagné. Et si elle était là, notre plus belle médaille ? Un nouveau défi s'offre à nous. Excellent. Excellent.

So I'd like to start this presentation of 2023 with a focus on our major product markets. Now, you've got in front of you on the left, you've got the growth in value of our markets. And there are three major categories of products. You've got home appliances, technical products, and editorial products. On the right side, you see the growth in volume. And as you will see, we still haven't absorbed the excess of volumes created in 2020. However, the difference in value and trends are very different. Indeed, as far as our editorial products are concerned, they're displaying good momentum and are essentially driven by sales in 2020. gaming and book sales. On the other hand, home appliances are showing a slight decrease in sales progression and are not really made up for volumes that still remain down after the COVID period. Technical products are showing a slight improvement in terms of value, and they are driven by telephony sound and photo that compensate the sharp drop in TV and IT equipment. These last two segments have always been suffering because of the high level of equipment bought during the health crisis and absence of innovation in the market of PC. Since the market, since the increase in activity during the COVID period, we never got back to the same levels. These changes have really impacted the retail sector, which is changing a lot. And now we see that there is a market concentrating around specialists and Besides, growth in e-commerce is extremely expected and it will have a direct impact on pure players. In this complex environment, we have once again shown our resilience thanks to the strategy that we've been implementing for three years now in our everyday plan. To begin with, given the drop in volumes, we've maintained revenues and managed to maintain our gross margin. Our omni-channel strategy has a plus point. The negative impact of mixed product and the growth of Gaming 7 and telephony has had a positive impact on mixed channel with an increase in business in stores and growth of services. So we shall have to remain on our toes to keep inflation down, interest rates down, and be extremely flexible. As Jean-Pierre says, we have also continued managed to reduce the increase in costs by 1.4% in 2023. And finally, in view of the slump in household consumption and the confidence index has never been so low in these last 10 years, we've undertaken initiatives to stimulate growth and show that we can still make money as we did with the takeover of certain parts of media market in Portugal, which has strengthened our position since the 1st of October in 2023. I'd also like to point out that the litigation related to the divestment of Comet has finally come to a close. In effect, on the 12th of February last year, the Supreme Court of London turned down the appeal of the liquidator of the Comet Group Limited, contesting the judgment made by the Court of Appeal in London in October 23 in favor of Daugherty. FNAC Daugherty should receive the balance of the sum initially paid in 2022. and we feel that we should be seeing a total refunding of costs and legal costs, interests, etc., which will give us €40 million extra of positive cash flow in the first quarter of 2024. We are delighted that we finally put a foot stop to this entire incident, which started in 2012. Let's get back to the fundamentals of our everyday strategic plan, which is based on the reason why we do this business, committed towards informed choice and sustainable... This is based on three pillars. The first one is our omni-channel strategy that offers an optimal customer experience, and thanks to its extremely efficient digital offer and network of stores of extremely great quality. Secondly, it's also based on diversified products, and that gives special importance to sustainability and repairs. And we have services via subscriptions for technical assistance and after-sales services. Let me now tell you about it in detail. Our omni-channel strategy is adapted to different methods of consumption for customers. So you have each time a physical experience and digital experience and a mix of both. We have a huge network of 1,000 stores which covers all our territories, France, Switzerland, Spain, Portugal, Belgium, and Luxembourg. This represents nearly 78% of our total sales, backed by our strong digital presence on 14 internet sites and our own platform of marketplace. This represents 22% of our sales. 27.5 million visitors come online every month in France for our sites, Snack and Darty, and we are number two players insofar as e-commerce, the busiest e-commerce is concerned. Best proof of our success is the omni-channel strategy that we've employed, which represents 50% of our total digital sales, and that we see at Click and Collect. The second pillar of our strategy is the diversity of our offer, which represents 47% in technical products of our total revenues and 20% in home appliances, editorial products 18%, and other services, which are now up to 15%. This diversity gives us greater resilience and less vulnerability to sometimes volatile changes in various sections. We are leaders and recognized as such in various categories, which gives us an additional advantage. And we are undisputedly number one in certain editorial products, books and discs and services, ticketing, et cetera, and number one repairers in France. Our third pillar and strategy is this offer of services that we provide to via subscription and which meet a strong expectation, a keen expectation of our customers and enable us to generate a recurrent revenue stream. In 2023, we crossed the mark of 20 million subscribers for Darty Maxa. And actually, we had 1,125,000 subscribers end of 2023. We are aiming at 2 million by 2025. So this method of subscription is much more expected by our customers, and we have covered nearly 12 million products by DartyMax in just a single year. Our development of this service model through subscription is accompanied by FNACV Digital for IT use, and which is now part and parcel of our customers' daily life. And then you've got Maison Relax with our partner HomeServe for all home repairs. And that commits our customers. That means that they have an informed choice and sustainable consumption in all categories and products, editorial, technical, and also appliances. This shows that the group is very strongly involved in culture. We have the Goncourt Award for high school students that we created in 1988, and we've been organizing it for 35 years. Awards are now also given for reference literary, which have become a reference for literary awards and are recommended on the reading list. And they're the most sold in France. We also accompany it with the FNAC Novels Award, and it's the first prize for this season, the literary season. It's been like that since the last 20 years in all our FNAC bookshops and FNAC members, as well as comic book... Price with France Inter. The giving of these awards has been a real booster for our sales, and we've been riding the wave of this popularity in the comic book sector particularly. Fnac Dati is also committed towards technology. Since 1972, Fnac developed its own Fnac Labo for testing products completely independently and guiding its consumers as of its own test protocols. This was the only time we had this concept in the world, and we tested 531 products in 2023. And now this is part of FNAC V Digital, a service that's available on subscription. Our customers can be guided by experts at the Lab of FNAC and that for their various digital uses every day. Since 2021, all our recommendations in cultural technological feeds are also available on our site called Les Claires FNAC. which is recording excellent increase in traffic of nearly a million hits per month, very unique in 2023. And finally, we are committed towards extending the life and duration of our products and promoting sustainable behavior. So we are doing this through DatiMax repairs, and we have a label called Choix Durable. which is present in our stores to guide our customers towards reliable products in all categories, which according to our after-sales barometer at Fnac Dati is now best-traded brands for the six consecutive years in terms of repairability, reliability, and the impact on the environment. Besides, we talk about enlightened delivery, and especially we commit ourselves We encourage our customers to repair rather than replace. We've also started continuing the hiring and acceleration of training for new technicians, more than 300 in 2023, to meet this growing need for repairs. So Second Life is another business that we have, and that is to meet our environmental ambitions in terms of circular economy. In 2023, the resale values under the name brands Fnac Second Vie and Darty Second Vie increased by 30% and reached 120 million euros. At Fnac Dati, the Second Life is not just a second-choice product. Our Second Life products provide the same guarantee of quality and the same service conditions of delivery as do our new products. They get a two-year guarantee, and people who are subscribing to Dati Maxx are eligible to it. This Second Life offer today is expanding greatly and is dovetailing perfectly with the offer for new products. And provided, offered at lower prices, it gives you a perfect, it gives you very competitive rates. And it's easily found in all our shelves along with the new products. What's more, Being the first collector in France, we are perfectly positioned for a natural stream of quality products of eligible home appliances for a second life. Given this demand, we have implemented several recycling services. And so now, on this slide, you see all the various strategic initiatives that we've undertaken with our very efficient partnerships, and that will boost our marketplace. To begin with, we have brought in-house the... the management of our marketplace, and we have merged the back office of NAC and DATI. And today we've got 3,600 sales partners with 35 million offers in terms of activity. This will improve our position as leaders, as online sales in categories. We've also signed up a collaboration with Rakuten France in September 23 to increase our presence online, and so we'll have an outreach to 15 million new users per month. We want to go even further. With Seval Logistics, a subsidiary of CMA CGM, we have united our forces to create Weaven, a future major European logistics e-commerce player and of the SaaS marketplace. This company means to simplify the daily life of our salespeople by proposing a turnkey marketplace. We have obtained the required clearances since early January, and operations should kick off in the first half of 2024. We are aiming at €200 million of revenue and an operational margin in double digits in the next five years. Talking of innovation, let's just go on to another activity in the group which is really going up. RetailLink is our advertising department. It's omnichannel, 100%. and which deploys offers that enables brands to get close to their own community of users to meet their aims and objectives in publicity and commitment and sales. Since 21, we launched 1,600 campaigns in our business, and that represents nearly €90 million of revenue in 2023. Between 2019 and 2023, sales and operational margin increased by plus 40%, just showing our leadership in this field and taking advantage of our omnichannel position. On the right, you have a few illustrations of what we can do for our customers on these communicative screens, either in digital or in stores. In 2023, we increased our digital transformation thanks to partnerships that we had developed over the last few years and and we have undertaken the modernization, a major modernization of our data structure in 2021 with our partnership with Google to include search tools like Google Cloud Retail. These tools include options now for extended analytics for AI and learning. There are different case studies going on with AI that we are testing today. In fact, some of our developers are using these tools like CoPilot, and that enables us to generate qualitative content for marketplace and accelerate the moderation of content to gain inefficiency during after-sales operations. We have our ambition now, actually, is to give further importance to being responsible and protective and experiment that we are using to implement generative AI with our employees and to create value and service. Now, what I wish to talk to you about is our social and societal responsibility as a firm and a company, which is a regular pillar of our group strategy. Our ESG policy, I might remind you, is based on five pillars, sustainable consumption, climate conservation, development of human capital, ethical business, and commitment in our various markets. And we are determined to provide results. On the right, you can see that we have reached our aim in our everyday plan to reduce our direct emissions by 50% by 2030 as opposed to 2019. End of 23, we'd already come down to minus 26% compared to 2019. We also fixed another aim in reducing by 15% our electricity consumption in France. between now and 2024. This is already a reality, thanks to the conversion of our entire store networks to full LED lighting and also centralized management of heating and cooling of HVAC. Concerning human capital, we've accelerated various action plans to develop the diversity within the group of various advances that we've made. Concerning women and the role of women, the top 200 managers had 33% in 2023. That's plus three points compared to 2022. And finally, we have maintained a score of CDPA- despite a hardening of scoring criteria. In conclusion, in this first part, in 2023, we are confirming our commitment towards our customers and our employees. And proof of this is the increase of two points in our score in 2023 in the customer satisfaction index. Besides, FNAC and I are more than compensated for all that they have done through the equal responsible actions of their customers, etc. And we have also revealed a new platform for the brand Darty, which will further consolidate our commitment towards customers. sustainability with a larger number. So it's all set to last. And finally, one last point, which is very important. Attractivity, retention and commitment of our employees are a very determining factor in our company enterprise project. And given the expectations which are increasingly high of our employees and the lack of skills in certain fields as we have in repairs. We've made an effort in terms of training in 2023. 94% of our employees received training and more than 230 employees were trained for various different business lines, repair technicians, etc. 180 new technicians were also recruited with permanent contracts. We have opened 27 apprenticeships also and as you know, we are working actively with all our employees, and we thank them here for their commitment for working with us together on a daily basis and making all this such a success. Over to you, Jean-Brieuc.

Thank you, Enrique. Hello, everyone. I'd like to take a closer look at the group's operating performance by distribution channel category. before concluding with our financial performance. Let's first look at sales. Slide 20. As Enrique has already commented, the group ended the year with sales of 7.9 billion, down just 0.9% on a reported basis and 1.1% on a like-for-like basis. This performance comes against a backdrop of high inflation, which is weighing on purchasing power. Consumers are taking a wait-and-see attitude, postponing purchasing when they are not essential. Under those conditions, the group has once again demonstrated its ability to outperform the market. At this stage, the ticketing business is still consolidated, despite a purchase option exercised by CTS Eventim in August. The procedures for obtaining antitrust clearance is still underway in its preliminary phase. The timetable for completion of this transaction remains uncertain. Looking at each distribution channel, Sales this year have been driven by points of sale, reflecting a renewed willingness on the part of customers to return to shops. Our strategy of diversifying channels and products is therefore paying off. The group's online sales are returning to normal. This return to normality is a market trend, as shown by FEVA's latest report on e-commerce in 2023. One of the fantastic strengths is the weight of omni-channel sales this year. remaining high at 50% of online sales up 1.6 points. This is further evidence of the long-term relevance of the omni-channel model. Turning now to performance by category. The trends are similar across all the zones covered. Editorial products are growing, driven by strong book sales and gaming, posting record sales with the return to stock of Sony's latest generation console and the launch of a number of games that are eagerly awaited by the public. Services continue to grow in all regions, driven in particular by the continued development of Darty Max. As Erika said, we passed the 1 million subscriber mark in the second half year, and had 1,125,000 subscribers at the end of December, in line with our roadmap to reach 2 million subscribers by 2025. Technical products were down, again due to the lower sales of hardware, particularly computers, which had benefited from the strong need for equipment for teleworking and learning at home during the health crisis. Lastly, sales volumes of household electrical appliances fell sharply both in large and small appliances. Let's look at the operating performance of each of our regions, starting with France-Switzerland. Sales in this region fell by 1.1% on a life-for-life basis. According to Banque de France data published end of January, Fnac Dati continues to outperform the French market. On the basis of the group's product mix, the market was down 4.3%. Finally, Even if it's not really significant at a group level, Nature and Découverte reported a sharp fall in sales compared with last year, particularly in the fourth quarter as a result of the decline in household purchasing power and the shift away from discretionary products. Let's move on to the Iberian Peninsula. Sales were down 4% on a like-for-like basis with constructing effects. Portugal reported growth while Spain posted a sharp fall reflecting the strong pressure. on consumer purchasing power and a continued tough competitive environment. I would also remind you that we completed the acquisition of 100% of Mediapart Portugal at the end of September. The contribution to sales of this entity for the last quarter alone was €39 million. Finally, let's finish with the Belgium-Luxembourg zone. This is the only region showing positive momentum with like-for-like growth of 2% over the year. Slide 21. You'll see the details of the development of gross margin in line with what we said. Fnac Darted succeeded in maintaining its gross margin thanks to its positioning, focusing on premium products, making it easier to pass on price rises to customers, but also by its decision to maintain promotional activity in line with levels seen in 2022. And lastly, thanks to growth in the service business, and in particular the continued acquisition of Dautimax subscribers, excluding the dilutive effect of the franchise, minus 10 basis points in 2023, the group's gross margin remains stable at 30.3%. Operating costs reached 2.2 million euros in 2023, up only 1.4% on 2022, compared with inflation in France of 4%. The group demonstrates the operational agility while keeping a tight rein on costs. Performance plans have enabled us to improve productivity. In addition, an investment plan to reduce our energy consumption has borne fruit, sharply limiting the impact of rising energy costs. In 2023, the increase in costs will come mainly from The impact of higher energy costs, 20 million euros, and the balance coming from HR costs, a reason compared with 2022. The average salary increase in 2023 has been higher than in previous years to take into account the higher level of inflation. Let's turn to the other income statement items on slide 22, the operating current operating profits. ROC, €171 million in line with expectations. The operating margin came in at 2.3% as a result of gross margin maintained with a slight decrease in volumes, rising energy costs, and a very limited increase in operating costs, almost offset by the efforts of the performance plans implemented within the group, as we've just seen. The non-current items totaled €131 million, compared with €27 million in 2022. This amount is mainly due to 106 million euros of exceptional expenses, including a provision for the dispute with ADLC, 85 million euros, and a brand impairment, 20 million euros, as well as other non-recurring items of 25 million euros. Finance costs amounted to 79 million euros. The cost of net financial debt was stable. The increase of 33 million euros was due to the increase in the IFRS 16 charges plus 35 million euros due to the rise in interest rates on the restatement of rents and other non-recurring financial expenses up by 19 million euros mainly relating to the impairment and disposal of the group stake in the Daphne Purple Fund. As a reminder, The group invested around 6 million euros in the Daphne Purple investment fund. Up until the end of 2022, this investment had been revalued annually at fair value. In the first half of 2023, we decided to sell our stake. Since its inception, the investment in this fund has generated a cumulative capital gain of 10.4 million euros. The tax charge came to 31 million euros. lower than last year, in line with the fall in the group's results. The net profit before exceptionals, the group share adjusted for the €106 million of exceptional non-current items, that is to say ADLC provision and brand impairment, will be €31 million in 2023. After taking into account net income from discontinued operations, including the favorable ruling on the ComEd litigation consolidating net income group share will be €50 million in 2023. Slide 23. Let's look at the analysis of free cash flow at the end of December. Free cash flow from operation excluding IFRS 16 will be 180 million euros in 2023. This brings us back to a normative level fully in line with our target of 500 accumulated million euros for the period 2021-2024. The working capital requirement has returned to normal levels following the sharp margin squeeze observed in 2022. Inventory levels are under control and has over the year the inventory turnover rate remained at the level usually seen in the previous years. Operating investments amount to 115 million euros down compared with 22 in line with group's expectations. After taking into account a number of other items, in particular the repayment relating to the victory on appeal, In the Comet litigation, 96 million euros, this is the amount we cashed in December, and the acquisition of MediaMarkt in Portugal, 15 million euros, the group generated positive net cash flow of 204 million euros. This will enable the group to return to a net cash position of 198 million euros at 31 December 2023, compared with a net debt position of minus 5 million euros at 31 December 2023. end of December 22. A few words about our financial structure on slide 24. At the end of 2023, the group has had shareholders' equity of more than €1.4 billion and cash and cash equivalents of €1.1 billion. In 2023, FNV successfully renegotiated the options to extend its credit lines, the RCF, whose maturity has been extended to 29, with an option to extend it to 2030, and the DDTL, whose maturity has been extended to 26, with an option to extend it to 27. I would remind you that the RCF is worth 500 million euros and has not been drawn down. The DDTL, a delayed drawn-term loan, is an Android bank credit line of 300 million euros. The group secured its refinancing last year. by setting up this facility, which can be drawn down on a single occasion and solely to repay the bond maturing in 2024. The liquidity position of the group is very solid, 1.7 billion euros. This gives us full confidence in our ability to make opportunistic decisions about the strategic allocation of our resources, whether for external growth, debt reduction, or a return to shareholders. We will nevertheless continue to be close attention to Bitcoin. Close attention to our leverage ratio. This stands at 1.8 times EBITDA after the IFRS 16 at 31st of December 23 compared with 2.0 last year. Now a few words about the return to shareholders. In 23, the group implemented a share buyback program for the purposes of performance share plans. The authorized amount of 20 million euros has not been reached At the end of January, the group plans to restart the program for February 24, 23rd of February, to reach the authorized amount, i.e. to buy back around 4.5 million euros. Finally, FNAG's RTIB will propose to the next general meeting of shareholders scheduled for the 29th of May 2024 the payment of a dividend of 45 cents per share. This represents a payout ratio of 39%, calculated on an adjusted rate net profit from continuing operations, which is in line with previous years, and with the policy of return to shareholders set out in the everyday strategic plan. The detachment date is set for the 3rd of July and the payment date, the 5th of July. I would like to hand over to Enrique to conclude this presentation with some thoughts on the future. Thank you, Jean Brieux.

Thank you for the pages.

The Olympics will be held here in Paris, and it's going to be the 70th birthday of NAC, plus 50 years of our contract. So the coincidence of these three major events have made it a major year of 2024, very special for our complete company. Plus, we are official supporters for the Olympic Games and the Paralympics. So that means we'll be providing 25,000 different parts of big and small electrical appliances. For a commitment of 100% re-employment for all our products and particularly in the framework of Second Life, we shall also be ensuring after sales during the entire Games period. A FNAC corner will be specially set up in the Olympic Village to ensure that we can sell to our tourists also and cultural products to our athletes. Loyal to our DNA, we will also be contributing to the cultural programming of Club France and the Fan Zone in France and celebrating French awards, which will be duly celebrated with those who receive these awards. Our group is also committed towards two athletes, Enzo Lefort the fencer, and Elodie Lorandi, the handicapped swimmer. We will be celebrating a 50-year contract in 2024, our confidence contractor, and we shall do a relifting of this contract with a photo of the flak. And finally, in 2024, we expect growth to be helped by the drop-down of inflation, take advantage of buying power and a reduction in the saving rate. The cost of energy will probably also be favourable to us and we are expecting to see that. There will be an increase, however, in wages and rentals. We have certainly seen in the last few months the few figures published by the French Central Bank. Our market in January has shown a drop of 5%, and in this context, I'm convinced that our strategy is extremely a winning one, and we shall overperform. However, since this is a recovery year and consumption of the households is still very uncertain, particularly when it comes to volumes. In this context, we shall keep trying to surpass our performance in markets thanks to our operational nimbleness and our omnichannel manager. Besides, we shall keep a strict control on our costs and we shall try and maintain sound liquidity in our position, remaining attentive, however, to any kinds of market opportunities and try and reduce our financial leverage to 1.5 times by the end of December. in order to pursue our strategic initiatives and to simplify our model and to support futures growth. So far, our current operational result in 2024 is at least the same as that of 2023. We are confirming our aim to get to a free FTF, a cumulative of 500 million euros, like in 2021 to 2024, and this would be about 180 million this year. So that brings me to the end of my presentation. I'd like to thank you very much. And, of course, be available for any questions that you might have. Well, we know what the first question is going to be.

Let me read it quickly. Retailing represents 1% of our group.

What would be the ceilings for retail media? Will it keep developing 40% operational margin? Well, thank you very much for your question. Just to specify, we set that up. that our margin had gone up by that amount, and it was not the detail that we'd given you of the margin. We are quite happy with what we've seen. You've seen that we have a unique technical capability in the market. We are the second biggest visited site in France, and we have a million square meters. So that's a huge opportunity. We have very good exposure of brands and are all, All broadcasters, all advertisers are using this very well, and we are really using all the latest technology to improve our positions. And so this is retail media, which is doing really well. And I think we shall be there now with the non-manufacturers to help them. We know our customers, and so we shall use that. We shall cash in on that to improve our position. We are really confident about that. I feel that we are way ahead of all the other markets.

Any other questions? 180 million FCF and with the working capital flow down.

So how are you going to get to that 180 million? In 2024, we expect that the working capital requirement will also help towards the FCA. We are trying to standardize our working capital requirements, and we feel that we shall try and maintain that. Services also have contributed essentially to the growth of free cash flow. Because of Darty Max and the extension of guarantee, they're also contributing towards the FCF, a big contributor. Now, taxes, corporate taxes were very special in 2023. There were two effects that we had. On the one hand, you had... taxation that came down, and structurally we're paying less in 2023 compared to 2022, and in cash we paid too much up front in 2022, so we shall get some cash back. However, this year will be a little more normal. One last point, which you might keep in mind concerning CapEx, we can expect a CapEx in 2023 which would be lower than 170 million compared to 2023, so it's for all these different elements that we have the 180 million of the free cash flow that we are confirming with full confidence for 2024.

This is from Alexandra Casas. 40% doesn't really mean much if you don't have the mass in retailing. You're asking us for details. I

I wanted to just explain to you about our position and what we know about retailing. We have illustrated the size and the dimension of all that we know how to do. But we can't share all our secrets with you today. And I'm sure that no other player on the market in our sector gives so much detail. All I can say is that in retailing, apart from all that we are doing today, we are showing improvement and, of course, our margin levels will show that. We will be in line with our top line and we will have the profitability that we require. This is, of course, minus all the cost of media, external media, et cetera. We find that there's a healthy growth, especially in digital, which is really growing harmoniously. and it is strengthening our position.

Now this is a question from Odo. Five percent.

How do you expect to get to 180 million, considering that you don't really... Well, to answer your question, Geoffroy, we are not obliged to... give a press report when results are lower than guidance or consensus. As it so happens, when you look at the analyst consensus, we are at a million. We are at a million compared to everyone's estimates. They're just off by a million. We didn't have to get there. Besides, we find that this difference is not important, given the guidance that we have provided end of January. Besides, the markets were ever so complicated. And to get back to us, the slight difference that we had was focused on two areas in particular, nature et découverte in Spain, who didn't have such a good performance, not as good as we expected. And so there's a slight difference compared to the initial guidance. As far as the rest of the business is concerned, the business behaved fairly well.

Okay.

OPEX management and advertising, a drop of 5 million, whereas inflation is extremely high. So this is about membership in Portugal. We want to know more about cost reduction and how far we could reproduce these plans in 2024.

Well, the whole company is trying to reduce costs. Of course, productivity has to be there in store. And actions we launched during the first half year are bearing fruit in the second half year. So it's a timing effect. And of course, the performance of the second half year is even more impressive because of that. But you have to look at it over the full year. We are very happy with the results. And for the PDP, Well, for over 10 or 15 years, the company has tried, struggled to keep costs really at a very low level. So it's part of our objectives. As Enrique said, 2024 is going to be a bit more normative in terms of inflation, but we have also... The cost, like employees' rental costs, increased in 2023, so it's not going to be easy, but we'll fight for that. Yes, we want to use artificial intelligence as well, so each year we have plenty of projects to develop the year correctly. The guidance of 2024, as we said, we are thinking that... In our product, the product cycle will be more favorable than in 2023. The interest rates and the inflation rates will decrease in the mid or longer term, so it's favorable. We have some events which are going to help us. Our own anniversary, the Olympic Games, the So all those events accumulated plus the arrival of a new cycle and the innovative cycle, especially for the technological products, thanks to artificial intelligence. I'm thinking of the computer world lacking innovations for years. So this is going to have a more positive impact on the revenues. So we work on margins, on costs, of course. And Services have to be quite supportive. Fourth question, you're saying... Well, it's lower than 30, so there's no risk. We're not going to answer this question. For the buyback, share buyback, this program is to make sure that we can have... profit-sharing plan so there would be no problem in terms of for the shareholders. When you have a share buyback program, you have a unique objective.

This is for the allotment of the performance share and to if we had to cancel the shares,

So Geoffroy had an underlying question, but we could not get it. Okay. Alexandre Cash is asking us the following. For the 106 million euros, this is the exception, non-recurring item. To answer your question, Alexandre, out of the 106 million, you have 85 million euros being the provision for the ADLC and 20 million for the brand impairment. We are not going to recover a part of it. A transaction was signed with the competitive authorities so we should pay for it and it will be 85 million euros for sure. Marilyn Ford, Société Générale.

A lot of questions.

What is the brand impairment of 2023? Darty, mainly. And naturel découvertes as well, 4 million euros and 15 million for Dati, linked to the development of the interest rates. So it increases the rates for the DCF calculations, the technical impact without any impact on cash. Second question.

Well, you already answered this question.

Question on what you think. are going to do with nature and découverte. Well, the cycles were not favorable last year for the discretionary products, but we invested a lot on the renewal of the offering and the attractiveness of the brand in terms of brand awareness, but consumers in this last period were not buying the discretionary products, so we are working with the teams to work on the cause, to look at the less profitable locations, and to relaunch new cycles so that Net-a-Decouverte becomes, again, the favorite brand of the French. And what about the ticketing disposal on the PNL? It all depends on when we dispose of it. so the impact will depend on the time during the year where it will be deconsolidated, not disposed of, but deconsolidated. In our guidance, to be clear, we took something intermediary. The ticketing will exit on the 30th of June, according to us. It has a negative impact of 10 million euros on the ROC, on the current operating income. so we take as an assumption this June. So you have 35% of the income after taxes we could consolidate on the second half year. It would be less than 10 million euros. It is included in the guidance. Last point, because we didn't answer your second question, Marilyn, out of the 32 million euros we had for the discontinued operation. It was just the tax impact on the provision of 130 million euros last year. Now we can deduct the Comet provision and it will be eliminated on the 30th of December.

We don't have the full name of the person who's asking a question. about guidance that we gave for the 240 million of cash flow for 2025. Well, 2025, given the market as we know it today, is a new cycle that's starting, but it's still quite far, but there's no reason to doubt it. Of course, this guidance of 140 million, we gave it in a different context, in a very normative market context, and now, seeing what happened in 2023, this is not really the normal kind of market I agree that it's a difficult market and we did manage to get to 118 million and we're confirming it for 2024. It's a slightly better market, so why shouldn't we do it? Then there's a whole series of questions about ticketing, I think you've answered some of them, about the consolidation of the COR and also the cost of energy. The cost of energy is 21 million euros and that is related to the change in contract and also the increase in electricity prices and the ability for us to absorb these prices. Now, that has been adjusted downwards over the years, and that's quite satisfactory, and particularly it's the consumer behavior, consumption behavior, which shows that there's a decrease in consumption, and it'll keep decreasing in 2024. And this goes with the price adjustment that'll take place in 2024, so it'll have a double whammy effect on us.

But taxes are shooting up.

Taxes will make up for a slight bit of it for the drop of energy prices in 2024. So it is a drop in prices and drop in consumption. And then I think we've answered this question about the cash flow for 2023-2024. And now there's a question about the cash generation of 500 million. It's a question by Florence. My answer is yes. Will there still be an improvement in working capital requirement? Will it be lower? Yes, I think I've answered your question already.

Now, this is about Spain, coming from HBSC. How do you want to improve turnover in Spain?

Well, we were surprised by what happened in Spain. We were expecting more from the market, and it remained extremely aggressive. We tried to protect it as best as we could by getting good margins and by reducing volumes. technological performance is as good as in the earlier years but we are not satisfied actually it was more impacted to the increase in interest rates particularly for all the rentals I think work on costs and restructuring of the company and certain developments in our flagship stores combined with good performance in digital and brand reputation will help us to launch a recovery in good conditions, and we'll hit the right balance in terms of benefits. The operating results for 2024, will they be better or worse? Well, I think that's what we were trying to explain to you. In the present market conditions, we hope to get to at least the same levels as 2023. And in clear, it means we shall do as good as 2023 or better. It depends on recovery and depends on consumers coming back to purchases. That's important. It's just that the underlying consumption helped us on the market. like it happened in 2023. However, the cycle that we started by launching all our subscription efforts, and now we've got over a million people who've done it. It's replacing a lot of our old service activities. We are using all the second life repairs, et cetera. That's all making its way now. and it's leading to new cash generation. So in 2024, that will amplify, and we'll have more volume on the market, more than in 2023 at least. About refinancing, and that's from Julie Gessert from my alliance. She's asking us about how we financed our next bond of... Will it be convertible or not? So to begin with, we have 300 million euros that will be reaching maturity in 2024, but we have a backup with DTL that we can use, and so we are fairly safer. And if the markets are open and if they are in our favor and if the rates seem reasonable, it's quite feasible that we refinance fairly quickly. In 2024, that seems fairly clear. Now, the convertible bonds plus all the clearance given by RCA and by a director's board for that, we shall have to benchmark. For us, this convertible market is not yet open. Clément, question on tension concerning the conflict in the Red Sea. Will that impact the logistics? Well, this is a new happening, a new phenomenon. And it might have an impact on certain products that come by boat and that use the canal. But So far, the impact is limited. And at this point of time in the year, we have enough stock. So there's not much of an impact as far as stocks are concerned. Of course, we are on our toes and following it. If this conflict is to extend, then all our partners will have to readapt. We'll have to look for other sourcings, other warehousings closer to us on European markets. And perhaps that's what we'll do. But for the time being, As things stand, it's too early if it's going to be a lasting effect or not. A limited impact as far as we see it today.

We have a question on the payment of the ADLC fine.

When? those 85 million euros we've provisioned. Can you answer that one? Yes, there will be a payment, unfortunately. One day we'll have to pay. When exactly? Well, the administrative procedure, the hearings have started. It will be during March and we'll probably pay at the end of the first half year or beginning of the second half year. It all depends on the diligence of Well, there is no urgency because it dates back to 2009, but it will be end of the first half year or beginning of the second half year. A question on the option of CTS. Emmanuel HSBC has some doubts. Emmanuel would like to know whether the exercise of the option may fail. It's not going to fail, but the competitive authorities are examining the dossier, trying to understand how the ticketing market is operating, and it may take some time. As usual, we are never sure of anything with those authorities, so we have to be cautious in terms of time schedule. We have no great visibility on that.

Another question...

The question is, do we have an idea about the intent, the capital increase of visa? We heard, we received a letter of intent. This letter is similar to the previous one. They do not intend to buy back shares at a given at a sufficient level. And for the long-term intent, well, they took a major share in our equity. They are interested in the retail and various industries, among which the retail. So you have to ask this question to him, but this investor may support our projects. the energy price, what is the impact of the decrease in the electricity cost. The energy mix has changed. We reduced the consumption to a large extent. Fortunately, we still have this nuclear power, therefore we can use this nuclear power for our consumption and we signed PPA contracts for solar energy as well so the mix has changed the energy mix has changed the cost is now more similar excluding taxes similar to the one before the Ukraine crisis that consumption has reduced a lot and this is sustainable because it is not related to the climatic impact, but it's due to the investment in lighting, the right gestures adopted within the company in all our centers. Another question, Marilyn. The dispute with Solvay. Solvay was our energy supplier before 2022. We did not want to continue with them. We had discussions on the conditions of the termination of the contract. We found an agreement. It is a satisfactory agreement. We found another supplier, so this dispute is behind us and is well settled between our two companies. A question by Alexandre Carat. We talk a lot about artificial intelligence, risk and opportunities, threats for Fnac and Dati. We see opportunities as product sellers. The first phone of Samsung is already equipped with artificial intelligence, so it will be more intuitive. The relationship with the product will be more intuitive. accelerate the innovation cycle and the replacement of products. The Microsoft layer will be integrated in the new products which are going to come at the end of the year. For household appliances, we can imagine a lot of improved performances. We step up the cycle, more premium products as well. We're glad. And for the cost management and in terms of optimization of our system in the back office, we have identified various initiatives everywhere across the company to help us better work on our data and better manage our operating costs. We did remarkable work in 2022 and 2023 to structure the databases. We have our agreements with Google and Microsoft in terms of cloud, and we can now step up the use cases, and they will have a very tangible impact in 2024 beyond the proofs and the tests. So we have very good hopes, strong hopes, This technology is not a brand-new technology because we've been working on artificial intelligence for some time, but the use within our teams is going to be increased.

Clément's question, how are big brands reacting to years of a drop in volumes? Do they have more kickbacks or fewer marks? What are they doing? Well, all brands will behave in the same way, so dropping volumes for certain categories was a bit violent. We are comparing it to earlier years when the market was really buoyant and it was nearly a billion euros worth, and today it's about 6% to 7% greater than our sales before COVID. So it's not as though our margins are down. The volumes were compensated partly by The average rates there, and despite the fact that inflation has neutralized it, but brands are just getting used to adjusting this new system, becoming more efficient, not just to bring market prices down because you still have to maintain that. They're improving on value and quality. The retailers like Darty, that's what we have to do now. in 2023. It could also mean that industry is going through a new consolidation cycle and that certain brands, particularly in home appliances, will now, like Brut Geveco, etc., are coming together. Some have talked about outsourcing to China, relocating to China. So we can see that there is an impact concerning volumes. But like in all industries, there are high and low cycles, and that sometimes means that you have to reorganize, restructure, streamline, and we all have to do this.

Sales in stores in 2023.

So what's your strategy on this side? New openings? or are you shutting down? Well, thanks for your question. As you see, we are still developing our stores, particularly franchise stores, and sometimes we have some owned stores. and that's something that we continue to do here or abroad, either our franchised or stand-alones, and we have projects concerning kitchenware. We are developing all our kitchen brands. 2023 showed very good results, and we've earned ourselves quite a reputation, and that's in France. But in Saudi Arabia, we also have opened a new store, and we have projects that will continue. 70% of our sales are through the digital performance that we have in stores, particularly around Christmas. And that has certainly helped us. That's the omni-channel business that's really helped us. It was the click and collect, of course. Now, of course, we've also got more competitivity in the bookstores, particularly since October.

Since October, I think consumers have understood now that for certain cards they have to pay.

And concerning shutting down of stores, we are doing what we promised in 2025. Nearly 100% of our total stores will be closed. profitable either they are they're all being dealt with and we are trying to find remediation or shutdown there's going to be certain refurbishment as well all that is underway and I'm perfectly sure that we'll be able to do it to have everybody in good financial health all around one last question There are a lot of questions which have already been answered.

So I'm sorry if I haven't answered all of you individually, because some of them were punched up.

Of course, with the team, we meet you in various fora and we give you means to ask us questions. So with Saint-Brieuc, we'd like to thank you all very much for listening in and for the interest that you have in our group today. I do hope that we'll be meeting you soon again in the coming weeks or even later so that we can keep sharing with you all our Dati and FNAC adventures. Thank you very much.