Quadient Sa Unsp/Adr

Good evening and welcome to Quadion Full Year 2023 results presentation. I am Catherine Hubert-Dorel, Quadion Head of Investor Relations. Today's presentation will be hosted by Geoffrey Godet, the CEO, and Laurent Dupassage, the CFO. The agenda for today's call is on slide three. And as usual, you will have an opportunity to ask questions at the end of the presentation. You can submit your questions in writing through the web or ask question lives by dialing into the conference call. Thank you very much. And with that, over to you, Geoffrey.

Thank you, Catherine. Good evening. I'm pleased to present you the highlight of a solid performance for the full year 23, which confirms our sustainable and profitable growth trend initiated now a few years ago. Revenue for the period came at 1 billion and 62 million euros, up almost 2% organically. And our recurring business model, now representing more than 70% of the total revenue of Quadient, continues to drive faster organic growth with the subscription-related revenue up 3.4% this year. At 157 million euros, current EBIT showed a 9.3% organic increase. Let me repeat, a 9.3% organic increase. This growth is mostly driven by the improvement in profitability that we had this year from both our software and our local businesses, which is more than compensating the small EBIT decline from our traditional mail business. On a reported basis, this is the third consecutive year of increase for the current EBIT. Full year 21 marked a low point in our trajectory, as shared with you back then. With this solid set of results, we will be proposing an 8% increase of the dividend to 65 cents per share, which represents a third consecutive year of increase as well for a dividend. So, overall, a positive full-year performance, which also marks the end of the 2021-2023 strategic plan. Turning now to slide 6 on how the full year result compared to our guidance and for the year and also our mid-term ambition of the three-year period. Slide 6. So last December, during our... called for the third quarter, we mentioned that the organic growth rate of our revenue was a little bit lower than the 3% initially envisioned. And we lowered the full year guidance to around 2%. This was due to the anticipated weaker performance of our locker business. And we'll come back to it. Despite this small adjustment, Q4 23 is marking the seventh quarter of organic growth in a row for the group. And we have delivered a 1.9% organic growth versus last year for the full year. At the current EBIT level, we have kept our commitment and delivered a 9.3% organic increase, a very solid performance thanks to both gross and our subscription-oriented revenues and rigorous operating discipline, especially as it relates to managing our costs. With the full year 2023 result, we also close our three-year strategic plan. We'll come back on the solid achievement in details at the end of the presentation, but from a pure financial standpoint, we had disclosed financial ambitions for the period when we first launched the plan in 2021. At the revenue level, organic growth for the three-year was set at 3% and revised to 2.5% last December 23. We have therefore delivered a performance in line with that ambition. Moving to the current EBIT level, we're just shy of the mid-circle digit average organic increase that we were targeting and finished the plan with a 3.3% organic CAGR over the period. Lastly, we have delivered this organic performance while deleveraging the company and have even exceeded our 1.75 target leverage, excluding leasing, as we close the year at 1.65. And the macro environment has certainly brought with it some challenging trends not initially envisioned, such as the evolution of labor markets during this last few years, interest rate pressure, and inflation. And despite all of these, the last three years of agility has demonstrated that Quadient is now on a sustainable and profitable growth trajectory. Moving to slide 7. I want to share with you a few words on governance. As disclosed earlier in the year, we have had some significant changes in our shareholding structure with the arrival of VESA investment and also of BPI France as two new large shareholders in 2023. As you can see on the graph, On the left-hand side, VESA is now our largest shareholder at more than 12% of our share capital. Additionally, we signed a governance agreement in July 23, right, which includes the opportunity for BPI France to request a board seat should that shareholding crosses the 8% threshold. That's what we announced to you in September last year. This level has been crossed at the end of last year, 2023, and following the due diligence process from our Remuneration and Nomination Committee, BPI France Investment has been co-opted to the Quadrillion Board as of last Friday, following the resignation of Sébastien Marotte from the Board. I want to take the opportunity to have the Quadrillion Board to thank Mr. Marotte for his contribution to the Board over the last years. We are delighted to welcome BPI France and Emmanuel Blau, its representative, to the Quadient board. This co-optation will be submitted to the approval of our shareholders at the next AGM, naturally, on June 14th, 2024. I will now hand over the floor to Laurent.

Thank you, Geoffrey. Good afternoon and good morning, everyone. I am Laurent Dupassage. I am Quadient's Chief Financial Officer. Before turning to the details of the financial performance for the year, I would like to make two important points. First, you may remember that at the closing of the H1 2023 accounts, we discovered accounting irregularities in the Italian and Swiss subsidiaries for our mail solution. Let me give you an update on the situation. The investigations are now completed and the case is closed. While we are pursuing legal action against those believed to be involved, At this time, we can confirm that this was an isolated situation perpetrated by a few employees and that this is a past issue with no material accounting impact on both 2022 and 2023 financial accounts. Regarding the past accounts, we have made an additional 23 million final adjustments to the opening balance sheet of 2022. related to non-cash items, mostly overvalued assets and undervalued liabilities. This is in addition to the 29 million euros we recorded in H123 and this is the final correction. We did not expect any other corrections to historic accounts as the investigation is now closed. Second, our investigation showed that the accounting irregularities impacted mostly the Italian male subsidiary. We have therefore decided to review the future of our mail activity in Italy and have initiated the process to sell this subsidiary within the 12 months. Consequently, from an accounting standpoint, the financial statements associated with this subsidiary have been classified as discontinued activities under IFRS 5 for both 2022 and 2023 years, this subsidiary representing 10 million and 8 million of revenue respectively in those years. Moving now to slide 9, revenue for Quadient in the full year stands at 1,062,000,000 euros. It's up 1.9% year-over-year on an organic basis. The graph on the left-hand side presents a breakdown by geography and by type of revenue. As seen throughout the year, organic growth from substitution-related revenue continues to outpace group performance with a plus 3.4% organic increase. For the year, it now represents 70% of group total. Also similar to the trend we've seen this year, North America continues to be the group main driver of organic growth. It's at 4.5% with all three solutions posting positive performances. North America represents 57% of our total revenue. The main European countries posted a contrasted performance with an improving trend in France-Benelux, which grew for the first time in many years, but a weaker performance in the rest of the European countries. From a solution standpoint, the decline is mostly linked to the mail solution. Lastly, International had a 1.9% organic increase, a good performance supported by both the software and the mail activities, and in the context of the change in the contractual agreements, with our partner Yamato for the locker solutions. Turning to the current EBIT before amenity expenses, on the right-hand side, I am pleased to report a 9.3% organic increase and a 157 billion euro reported figure. Now let's turn to slide 10 and our traditional revenue bridge by solution. This clearly shows the respective contribution from our solutions with a strong organic contribution from ICA, an almost stable performance from MRS and a small organic growth from PLS. This leads us to 1.9% organic growth for the group. 0.8% decline is driven by 4 million negative scope impact. Obviously, it includes the disposal of our graphics activities in the Nordics and shipping solutions in France back in June 22 and the acquisition of Delight in Canada in September 23. But also the 25 million euro negative impact of Forex mainly linked to the dollar weakening against the euro. Moving now to the next slide, we present here the same bridge regarding current EBIT before related expenses. And again, you can clearly see the contribution by solution, the very positive dynamic in place with the 9.3% organic growth driven by the development in current EBIT level for both our software and locker solution that are more than compensating the decline from mail. From a reported standpoint, we are moving from €151 million last year to €157 million, hence a reported EBIT growth of 4.4%, impacted by a €2 million negative scope effect and a €5 million negative forex. We will now move into the detail of each solution. Over to you, Geoffrey.