Quadient Sa Unsp/Adr

Good evening, everyone. Welcome to Quadient's first half 2026 results presentation. I'm Laura Paxton, Quadient's Head of Investor Relations. Today's presentation will be hosted by Geoffrey Godet, our CEO, and Laurent Du Passage, our CFO. The agenda for today's call is on slide three. As usual, there will be an opportunity to ask questions at the end of the presentation. You can either submit your questions in writing through the web or ask questions live by dialing in to the conference call. Thank you very much. And with that, over to you, Geoffrey.

Thank you, Laura. Good evening, everyone. Let me remind you to get started of the strategic direction that we set at the beginning of the financial year, since everything else follows on from it. The pivot to digital is not new for Quadient, as you know. We've been preparing it for years. Demand for digital automated business and financial communication keeps building up. Artificial intelligence is accelerating it. The digitalization of financial workflows is also accelerating. And so are the invoicing mandates coming across Europe. And we set a clear objective. Digital becomes the largest and most profitable solution by 2030. So this is where the growth is. This is where our capital and our focus belongs. We reinforced the executive committee with four digital business leaders at the beginning of the year, and I personally took over direct leadership of the digital business. Additionally, this year, on the 20th of July, we announced that we were conducting a strategic review of our locus business. This review, I'm happy to report that it is now complete. And I will take you through the outcome on the next slide. But first of all, Let's look at what the Locker team has built. Moving back to 2018, Lockers was small, we would say, around 2,000 Lockers and around 6 million in revenue. Then, quickly after that, as we set our strategy, we acquired Passer Pending, a US-based company, in 2019. And then from there, progressively, we expanded across the US, Canada, Japan, the UK, and France. We also made another acquisition called Passer Concierge, another U.S.-based company, to consolidate the U.S. market in 2024. And in 2025, as a summary, the business delivered €114 million of revenue. Just as a quick reminder, this represented a 22.4% growth versus 2024 on a reported basis. and represented also 11% of Quadient revenue. The EBITDA margin was 5% last year, which was up 4.4 points after already passing the breakeven point in 2024. So, if I was to summarize in seven years, we multiplied 19 times the revenue and around 14 times the install base of location of lockers worldwide. We could say that we have today a mature asset, profitable, and at scale, the number one position in the U.S. and in Japan, and a U.K. network that's scaled actually very fast in the last three years. We could say that this business has delivered on its promise. Just take the opportunity to thank, obviously, all our partners and our customers, and most importantly, the Quadrant Logo team that built up this business for us. And this is the context in which we ran the strategic review this summer. So now the time is right to consider what is next for Lockers. So let's look at the outcome, going to slide six. In conclusion, I think the review produced two major outcomes, and you can see them on the left. The first, following a competitive process, we have signed an agreement to sell our UK operation, our open network, to a company called IDS for 65 million euros. The second outcome is that we also have launched the sale process for the rest of our local business. As a result, the local solution is now presented in accordance with the accounting rule called IFRS 5 in this presentation and in our first half financial statement. Consequently, 2025 figures have been restated on the same basis. Laurent will take you through all those changes and their impacts. So let's start with the sale of the UK open network to IDF, which as a reminder is the owner of Royal Mail, and also importantly is an affiliate of a company called Visa Equity Investment, which is a shareholder of Quaniance. Let me come back to the price. The price is 65 million euros. I would like a few key points. The UK was the least mature of our 3K geographies with an expected 2026 revenue a little bit more than 10 million euros and it was doubling. We had a fast growth, doubling in size which is 25 as we were in the ramp-up period of getting more and more usage. And given this Early stage of development, because our longer investments are usually on a 10-year cycle, so it's the first three years, it was naturally the most capital consuming of our open network basis. Getting that rise on that stage, that maturity of the development, provided us with a very strong return. The agreement came out of a competitive process that was run obviously with the advisors that we mentioned to you at the beginning of July. We had a chance to consider multiple offers that we have received and naturally after reviewing them, the board of Quadion concluded that this offer delivered the best value for the UK network and was in our corporate interest and its stakeholders, all our shareholders, and therefore approved the transaction unanimously yesterday. We expect this transaction, after the signing yesterday, to close before the end of 2026, hopefully even sooner. So, let's move to the next point that I want to talk to you about, about the consequence on leverage for Quadient. We expect the proceeds to take our leverage ratio target, which is screwed leasing, from 1.5 times, which was our previous guidance, to 1.2 times. Let me be precise on this one. These improvements come from the UK transactions alone. It assumes nothing about the rest of the process and nothing about the capex, which is my next point. So if I step back a little bit on our capital expenditure at the coordinate level, and to be clear, we focus on the local business as a whole, even though the UK represented a large portion of the capex of the lockers, it more or less now will remove around 120 million euros of lockers capex over the next five years. 120 million euros that are no longer required and it's a capital that we can now redirect to new priorities and focus. My next point is that we expect, obviously, additional proceeds from the sale of the rest of the locker business. And this is in addition to the proceeds from the UK. This includes, obviously, for the rest of the locker, a Japanese base and a North American operation to cover what we have. These are our largest and much more profitable locker networks. They hold leading position, the number one position in their respective markets. We are currently engaging with potential buyers and obviously, like we're doing right now in the UK, we will update the market in due course as we make progress. Put all of this together and we have what we could say now a strategic and financial flexibility that we simply did not have six months ago. Let me now hand it over to Laurent for the first half financials. Laurent.

Thank you, Geoffrey. Good evening. And before going into the numbers, a word on presentation. Just following the strategic review, as mentioned by Geoffrey, the lockers business is reported in accordance to IFRS 5 in our half-year financial statement. And the European private locker network, which we are retaining, as they are largely managed through male employees, has been reclassified within the male segment. All 2025 comparatives shown today have been restated on the same basis, except if explicitly mentioned, so that the figures you see are fully comparable. This reclassification strongly benefits to our EBITDA and EBIT at group level, as local are dilutive to the equivalence margin. It brings about 130 basis points on EBITDA and about 230 basis points on current EBIT margin. On the revenue side, as you can see on the slide, the translation post IFRS 5 is very straightforward. Digital scope remains unchanged, and MLC is about 3 million of revenue for the private local network being added into H1 2026. On that basis, Quadrion delivered 448 million euros of revenue in the first half of 2026, representing a 2% organic decline compared to the same period last year. Digital confirmed its gross momentum at 6.7% organically at 146 million euros, while male was down 5.7% at 302 million euros. From a geographic perspective, again, North America, our largest region, was essentially flat at 254 million euros. Main European countries were down by 4.4% at 165 million euros, with, as usual, we'll see that further later, a stronger male underlying decline in this geography. International is down by 4.9% at 29 million, mostly driven by male. Turning now to profitability, while I just mentioned total EBDA margin is improved post-IFRS 5 due to the deleted EBDA from lockers, EBDA buy at digital and male level are impacted by some lockers' transit costs and disenergies. reallocated to both solutions and impacting ABDA margin by about 0.6 points, on top of which you have a small dilutive private network impact on the main side for 0.5 points. Group ABDA's margin stands at 21.5%. It's done 0.8 points compared to last year, mostly due to the erosion on the main side and unfavorable mix effect. Digital margin was stable at 14.5% despite The implementation costs linked to the French Invoicing Go Live and of course the Forex. Current EBIT for the period came in at 57 million euros, a 5.9% organic decline due to May. Let's now turn to the revenue bridge on slide 9. Starting on the left is 465 million euros restated revenue for last year H1. This bridge shows the continued rebalancing of our portfolio. Digital contributed €9 million of additional revenue, partially offsetting the €19 million of organic decline in mail. The scope effect added €2 million from the acquisitions of both Serendia in June last year and CDP Communication in December 2025. On the right-hand side, currency had a €10 million negative impact, and it's all coming from Q1, meaning on Q2, no currency impact on the bridge. All-in reported revenue decline at 3.7%, and by 2% on an organic basis. Moving now to the current EBIT bridge on slide 10. From the €64 million we stated current EBIT last year, digital EBITDA rose of €3 million, partly offset the €6 million decline in male EBITDA, and you have an additional €1 million of organic increase in depreciation and amortization, notably tied to digital R&D. Currency accounted for 3 million euros of negative impact on the current EBIT while the scope effect was relatively neutral at the EBITDA level. As a result, current EBIT for the first half stands at 57 million euros, down 5.9% on an organic basis. Let's now move into the details of the performance-backed solution and starting with digital. On slide 12, So before reviewing specifically the half-year, let me put our digital performance into a longer-term perspective and note that these figures are prior to the application of S5 that are due to the local business for the sake of the consistency of these figures across the long time period. On the bottom left chart, our annual recurring revenue has gone from €109 million in 2019 to €264 million at the end of July 26th. a compound annual growth rate of about 15% per annum with a remarkably regular improvement over the period. The chart on the bottom right now shows the same story on quarterly revenue with subscription-related revenue growing at 16% compound annual growth rate since 2020, a logical similar trend compared to the ARR, and now represents 87% of digital revenue at the end of H1 2026. And at the top left side, You can see the profitability for Victoria with EBDA rising from around 20 million over a 12-month period at the beginning of the chart, and more than 50 million if you take both H2 last year and H1 this year, so the past 12 months.