Good morning, ladies and gentlemen. Welcome to Ayvens Q2 2024 Results Conference Call. Today's speaker will be Tim Albertsen, CEO, and Patrick Sommelet, Deputy CEO and CFO. I now hand over to Mr. Tim Albertsen. Please go ahead, sir. Thank you. Good morning, ladies and gentlemen, and welcome to this Ayvens Q2 2024 Results Call. Unfortunately, we had a small technical problem this morning, so we had to change the room. So we hope it's still good in terms of the sound quality, but yeah, so sorry for that. I'm hosting the call with Patrick Sommelet. First, I will present the highlights of Q2 2024, and then Patrick will comment on our financial results, and then, as always, we'll take your questions right after. Let's go directly to slide four on the key takeaways. I'm glad to share that Ayvens had another solid quarter marked both by sound financial performance and further progress on the integration of LeasePlan. Indeed, with a net income group share of €189 million, our Q2 results confirm the financial upturn that was initiated at the beginning of the year, underpinned by our focus on profitable growth and strong cost discipline. This demonstrates our commitment and capacity to deliver on our strategic roadmap. Integration is moving forward and gaining momentum across the group. For our customers, the Ayvens brand name that establishes our company as a leading global sustainable mobility player is now live in 20 countries. The legal integration has been completed in France and Netherlands, our flagship locations, as well as for our insurance businesses in Dublin. At a time where EV transition is gaining momentum for all stakeholders in the industry, we have put early in the cycle a dedicated framework to manage this transition in a responsible manner. Let me turn now to the financial highlights of the quarter on page six. In a continued mixed economic environment where demand slowed, we booked a solid Q2 2024 financial results despite the ongoing normalization of the used car market. First, our margins improved further, standing now at 539 bps of our earning assets this quarter, up by 17 bps compared to Q1 2024. This improvement results from the action we launched to restore our margins earlier this year. Second, we recorded an underlying used car sales result, which remains at a high level at €1,480 per unit. This is a moderate decrease compared to the beginning of the year and in line with the anticipated normalization. Our underlying cost-to-income ratio improved by six percentage points for the quarter at 61.9%, thanks to both improved gross operating income and lower costs. Finally, our net income group share reached EUR 189 million, and our return on tangible equity stood at 9.6%. Regarding our balance sheet and capital position, we issued EUR 750 million of bonds early July 2024, and this means that we have already executed 80% of our annual program. Our deposits have increased to EUR 13 billion, up by close to EUR 300 million over the quarter, so we are well advanced in our funding program. Our capital position is strong with a CET1 ratio of 12.5% at the end of June, up from 12.3% at the end of Q1 2024. Let's now move to page seven on the progress of integration of LeaseP lan. Ayvens is moving forward at a steady pace in its integration journey after having obtained the DNO from the ECB and the Dutch National Bank in March 2024. As of today, entities has been legally integrated into four countries, including France and the Netherlands, as well as Greece and Poland. Taking all together, these four countries represent 31% of our group's funded fleet. Going forward, the treasury entities, which are today split between Dublin and Luxembourg, are also scheduled to be integrated in the coming months in our overall action to streamline this activity. In parallel, on the IT integration, three countries, Greece, Poland, and Norway, were migrated over the quarter, and France is scheduled to be live end of the year. These are key steps to become one company, and I'm glad to say that the execution was smooth and successful. From a financial standpoint, integration of LeaseP lan has contributed to generate EUR 27 million of synergies in Q2, an increase of EUR 7 million compared to the previous quarter. These increased synergies reflect the benefits of supply contract renegotiations and new tenders and procurement services, as well as a transfer of 455,000 insured vehicles since the beginning of the year to a more profitable direct insurance scheme. The cumulative EUR 47 million of synergies delivered since the beginning of the year. Operational execution is well on track to achieve the EUR 120 million P&L pre-tax synergies targeted all over the full year 2024. Let's now move to page eight to give you more insight on how we manage and protect our EV assets. Being at the forefront of sustainable mobility, onboarding and protecting the value of our leased assets is of utmost importance to us. This is why we have set up a dedicated framework on this topic, drawing on the past experience and dedicated resources with strong knowledge on electric vehicle technologies. This setup ensures adequate evaluation of our leased assets throughout their lifecycle. First, we make sure to onboard sound EV assets with correct RV levels when signing new contracts. As indicated in the previous quarters, we have lowered the resale values of electric vehicles in line with the latest market pricing projections and reviewed them several times a year. We have also been promoting longer contract durations, which both reduces rents for our customers and lowers our resale value risk. Finally, we are being selective in choosing the most reliable and robust OEM providers of electric vehicles. Second, we protect our asset values during the lease through excellence in vehicle management and maintenance, which is well recognized by professionals and retail buyers. We also monitor closely contract extension requests by customers and make sure that they are priced in line with the latest market development. Finally, we are developing multi-cycle lease to extract more value from our assets and reduce further the resale value risk. Finally, we leverage on our strong and diversified remarketing capabilities to maximize the resale value of our assets by channeling the right vehicles to the most adequate buyers. We also rely on our outstanding export capabilities, thanks to our large geographical footprint, to balance the trends of each of its local used car markets. Since the beginning of this year, exports have represented more than 50% of our total electric vehicle sales. Another key building block of our EV remarketing strategy is to build customer trust on the battery state of health. This initiative will be launched in Q3 2024 to enhance the market value of used battery electric vehicles by providing accurate battery quality information to our customers. Let's go to slide nine. Our earning assets increased by 9.5% year-on-year to EUR 53.2 billion. The growth pace decelerated compared to last quarter, which stood at 12.5%. It reflects our strategy to allocate resources to sustainable and long-term profitability contracts rather than growing volumes. I would like to highlight this is fully in line with our financial trajectory to 2026. Our total fleet has remained broadly flat year-on-year at 3.4 million vehicles. In fleet management, the number of contracts was down 4.9% compared to end June 2023. This decrease results from decisions not to renew some contracts, which did not meet our profitability criteria. Conversely, the funded fleet grew at 0.8% year-on-year. EV penetration in terms of car deliveries reached 39% in Q2 2024 versus 36% in Q1 2024. Battery EV penetration was 26% and plug-in hybrids at 13%. Looking at the new orders coming in, we see that the order take of battery electric vehicles is slowing down as we have lowered the resale values, as described earlier. Let me now hand over to Patrick, who will take your comment on our financial results. Thank you, Tim, and good morning, ladies and gentlemen. Before I dig into the results, let me say that we have done two accounting adjustments this quarter, which have led to the restatement of our quarterly series in Q3 2023, Q4 2023, and Q1 2024. These adjustments are detailed on slide 23 and 24 of our presentation. First, LeasePlan PPA has been adjusted within one year from the closing of acquisition in accordance with IFRS 3. The overall impact stands at EUR 25 million in net assets, of which EUR 63 million relates to the reassessment of LeasePlan software valuation. This was offset by a subsequent increase of EUR 60 in these assets and 22 million correction of other assets and liabilities. Second, we have adjusted the fleet valuation of a German subsidiary called Fleetpool, whose depreciation cuts were understated by EUR 10 million at the end of 2023, and a subsequent goodwill impairment of EUR 14.7 million in Q4 2023. We therefore made an accounting restatement of the comparative income statement for 2023. The financial data presented and commented below are all after these restatements. So now turning to our Q2 2024 results. This Q2 for Ayvens has shown a stabilization of our gross operating income at EUR 785 million, down -1% compared to Q1 2024. Our margins remain broadly stable this quarter at EUR 694 million versus EUR 706 million in Q1 2024, including a -EUR 44 million unfavorable swing in non-recurring items. Excluding these non-recurring items, underlying margins improved by a +EUR 31 million quarter on quarter, illustrating our focus on profitable growth, as mentioned earlier by Tim. The contribution of UCS results was positive EUR 91 million in Q2 2024, slightly higher than in Q1 2024, where it stood at EUR 87 million. This slight increase is related to the lower accounting impact of reduction in depreciation cost in Q2 2024 compared to the previous quarter, as shown on page 19 of the appendices. Let's now move to page 12 to comment further on our margin. Our leasing and services margins stood at EUR 694 million in Q2 2024 and EUR 714 million on an underlying basis, showing an increase of +4.6% quarter-on-quarter. This increase reflects the combined effect of improved pricing implemented on new contracts, selective commercial approach, and limitation of informal extension of contracts. This increase in margins also reflects the ramp-up of synergies, which amounted this quarter to EUR 27 million and increased by EUR 7 million compared to the amount in Q1 2024. These synergies were mostly extracted from procurement operation and insurance activities, as shown earlier in the presentation. As a result, our underlying margin expressed as the percentage of average earning assets improved further to 539 basis points this quarter compared to 522 basis points in Q1 2024. The impact of non-recurring items was again limited this quarter at minus EUR 21 million versus plus EUR 23 million in Q1 2024. These non-recurring items included notably the effect of hyperinflation accounting in Turkey for minus EUR 37 million. This impact is due to the decorrelation between the overall CPI in the country and the used car market prices, leading to impairment of the fleet. The other non-recurring items were notably positive EUR 7 million in fleet residual and a positive EUR 12 million linked to mark-to-market derivatives and brokerage revenues. Let us now turn to page 13 for the UCS. As you can see on the graph on the left-hand side, the used car sales profits are gradually normalizing, as we indicated in previous quarters. The evolution by powertrain is similar this quarter to Q1 2024, with UCS results on I still at a high level and a stable negative impact on BEVs. Overall, excluding the impact of previous reduction in depreciation cost and PPA, UCS profit was €1,480 per car in Q2 2024 versus €1,661 per car in Q1 2024. On a reported basis, the results per unit is stable quarter-over-quarter at €575 versus 573 in Q1 2024. We sold 158,000 cars this quarter after 152,000 cars in the previous quarter, demonstrating our strong remarketing capabilities. Now turning to OpEx on the next page. In Q2 2024, operating expenses are down quarter-over-quarter by -3%, including a EUR 7 million increase in CTA. This means that underlying operating expenses decreased by minus 4.3% compared to Q1 2024, reflecting our strong discipline, notably on our headquarters' IT costs related to the restructuring of LeasePlan Digital. This cost reduction was also helped by a favorable seasonality. The combination of lower costs and higher underlying margins compared to Q1 2024 led to an improvement of the underlying cost-income ratio at 62% in Q2 2024 versus 67.7% in Q1 2024. Underlying H1 2024 cost-income ratio stood at 64.7%, at the low end of our full-year guidance for 2024, which is ranging between 65% and 67%. Commenting on the next slide, cost of risk was down EUR 31 versus 33 million in Q1 2024, expressed as a percentage of average earning assets. Cost of risk stood at 23 basis points at mid-cycle level. The effective tax rate stood at 25.5%, a bit lower than the previous quarter, and it benefited this quarter from the deduction of EUR 81 interest payments, which was accounted in full in the Q2 of 2024. Net income group share reached after restatement EUR 196 million this quarter, which is an increase of EUR 17 million compared to Q1. This is obviously thanks to the stabilization of our GOI, the reduction of our cost base, and a lower tax rate this quarter. If we move to the next slide on RWA, so RWA decreased to EUR 57.8 billion this quarter from EUR 59 billion in Q1 2024. This is a combined effect of a slightly positive fleet growth, you can see on the chart, +EUR 200 million. The reduction of the order book to which accounts for -EUR 600 million. Then there is a mixed bag of non-transactional impacts, of which lower cash and deposits within central banks, a dividend distribution of our insurance subsidiary, lower market risk, and a lower balance sheet of balance sheet guarantees. As a result of this, our CET1 ratio stands at 12.5%. In June 2024, it is a bit up from Q1 2024, and it is stable versus December 2023, despite the negative impact of PPA adjustments and the contingent configuration update, which accounts for a negative impact of 17 basis points. Our capital ratio, as you can see, stands well ahead of MDA and regulatory minimum. This concludes our presentation. Thank you for listening. We are now ready to take any questions you may have. Thank you, ladies and gentlemen. If you wish to ask a question, please press star and one on your telephone keypad. The first question is from Kiri Vijayarajah, HSBC. Please go ahead. Yes, good morning, everyone. A couple of questions from my side. So unsurprisingly, that 539 basis point margin on earning assets, obviously very impressive progress, means you're already at the midpoint of the earlier 530-550 range. So my question is, is there scope to maybe increase that margin ambition? Alternatively, in the short term, does that mean we kind of flatline at this current level for the next couple of quarters? So really, how should we think about the growth, that margin outlook in basis points on earning assets? And then could I just ask for a bit more color on what you mentioned earlier on in the slides, the strong export capabilities when it comes to remarketing the used EVs? Are you using more third-party platforms to maybe broaden the geographic scope of where you can place the used vehicles? I'm just curious, is there some LeasePlan infrastructure that maybe you've inherited that's allowed you to leverage more that network than you had done previously? Just a bit more detail on what's giving you the edge there in terms of the vehicle remarketing side of things. Thank you. Thank you, Kiri. Thank you for the question. So maybe I start with the last question first. So it's true that we are exporting, as we said, 50% of our EVs because the markets are performing very differently. We have always actually done quite a lot of cross-border, but it's also fair to say that with the LeasePlan acquisition, we inherited a center in Poland who is actually managing this in a more efficient way than we did in the past. So that helps a lot, finding the right dealers across Europe, basically, and helps us actually quite a lot in terms of managing, let's say, the EV pricing challenge that there is in the market for the time being. On the margins, I'll let Patrick say a few more words. But overall, yes, we are happy with the development, Kiri, but it's also fair to say that we have seen it was a very conscious decision to slow down growth. But where we are today, we definitely want to stay flat as a minimum in 2025. And we need to get back in the markets, and we probably need to be a bit more aggressive than we have been in the last six to nine months. So partly part of the margins, let's say, in terms of anticipated growth, will actually be taken into the markets and ensure that we have a stable development on the fleet going forward. Or maybe Patrick, you want to say a few more words on the margins? Yes, thank you. I think you said it all. I think a large part of this improvement in margin is related to the strong effort which has been ongoing since Q3 2023 to reprice on new contracts or also to improve the number of recalculations on existing contracts. It's also related to the fact that the fleet that you can see from our slides is now stable from a quarter to another. And we are all aware that we will not stay this way. So in terms of commercial strategy, we are now a bit turning the boat and reigniting measures to develop our fleet growth again. So it's not something that will have an immediate effect because it takes a bit of time in a large business such as Ayvens, but it's certainly a shift from the measures we had implemented late 2020 to make sure that we can stabilize and slightly grow the fleet going forward. So that we'll have these commercial measures will potentially have an impact on margin, and we do not change the overall estimation for full year that we had given previously. Although it's very difficult to say from a quarter to another how this margin might evolve at 5 or 10 basis points, but the overall message is the one I give. Got it. Thank you very much, guys. The next question is from Geoffroy Michalet of ODDO BHF. Please go ahead. Hi, thank you, Gentlemen, and congratulations for those results. I have a question on the non-recurring items and more especially on the lines of mark-to-market of derivatives and breakage revenues. Could you maybe provide us some more color, and especially on the breakage revenues, because it was not as specifically mentioned in the previous presentation? Thank you very much. Yes, thank you, Geoffroy, for your kind words. I think it was previously mentioned. Currently, we are restructuring the treasury operation of LeasePlan, and hereby we are moving billions of loans from LeasePlan Treasury to Ayvens Treasury, the new operation of treasury, so that's headed by our head of treasury, Felix Orsini. And doing that, we sometimes have positive or negative accounting impacts related to the breakage of loans, which are accounted for at historical costs. And when depending on the market rate, when you renegotiate them, you have to account for a mark-to-market. So this is having an impact together with the mark-to-market of the swaps, and that's highlighted in those two lines. Okay, thank you very much. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is a follow-up from Julien Onillon, Stifel. Please go ahead. Hi, yes, good morning. I'd just like to come back on the EVs market and eventually your strategy here. Two things. Effectively, you mentioned that you have been much more prudent in terms of setting the residual value, and clearly, it's something that you need to do and to take longer initial durations. Do you mean that now with ALD, and you mentioned about also what you do during the lease and the remarketing? Are you confident that you are not making loss anymore on these EVs? That's indirectly my first question. And my second question related to that, because you mentioned that you will change a bit your marketing strategy here, that will mean that somehow you will cut a bit the pricing? Or how? You are—I understand you want to increase volumes, but margins are critical there, and of course, dependent about the competitors here. So how you make the matrix to work between effectively getting more volumes but not making losses in these EVs? And my final question, my third question on this respect is also, you mentioned that you have delivered this quarter 26% of BEVs, which is a strong increase compared to Q1 last year. You mentioned that things will stabilize in terms of order intakes. What has been in Q2 the percentage of order intakes in BVs? Very interesting to know. What does it mean in terms of, let's say, for your customer in terms of, let's say, stabilization here? Thank you. Thank you, Julien, for the question. So I think on the first question in terms of the residual values, the setting, I mean, are we absolutely sure? I think in terms of it's a very volatile market for the time being. So I think we feel very comfortable with the residual values we are setting. But on top of that, we know that there is obviously a it's a more volatile market than we have been used to. So we are developing a lot of other mitigating factors, as you mentioned, some of them in terms of longer durations. But also, I think probably the most important is that we are really working very hard to industrialize our capacity to keep these cars in our books probably for two or three rounds of leasing. We are doing that already in some countries and trying to get the best practices out of that. We see that first, there is an interest in the market for used EVs. And secondly, that is actually reducing the residual value risk substantially, and it's actually going out typically on very good margins as such. So that's one of the areas. I think we have taken some significant steps. It's also fair to say that for the time being, competition is not following us to the extent where we are. But again, with what's going on in the markets, we do believe that that market will normalize and that the steps we have taken will actually be followed typically by competition as well. But we feel comfortable with what we are doing. So I think what we said initially is that we have today around 13% of our portfolios full EVs. We can see that we manage that particular risk well. And then it's really around making sure that we actually get the right level of risk on the new production, which we do believe we have today. In terms of growth, first of all, we are still a little bit I mean, our industry is still growing structurally, and there are segments that are growing faster than others, and there are segments that are more profitable than others. And I think we are now through a very serious exercise of understanding our returns in countries and segments with clients, with partners. And we know pretty much where there are areas for us to grow profitably. That is the plan that Patrick referred to that he has been putting in place for the time being. We do anticipate we can grow without damaging our margins, but clearly, we have been quite hard on staying with the kind of margin the last six months, which is probably a bit too high for the market, and we need to reduce a bit our interest margins and particular other areas to ensure that we are in line with the market. That is happening. But clearly, the growth that we are pitching for is in particular segments with particular clients and in particular markets where we know that it supports our long-term objectives. In terms of we don't give exact numbers also because it's not necessarily 100% valid, the information we have on our order books. But I think we are down probably 20% in terms of deliveries on the orders of EVs. So clearly, there is an impact. And as I said, that's by intention. And we probably want to have a more balanced view going forward in terms of sustainable mobility, that there is probably more plug-in hybrids. There's probably more hybrids as well in the fleet going forward. So that we, again, as part of de-risking that particular risk, we want to have a more balanced approach going forward on that. I hope that answers your question, Julien. Yes, thank you. Just to come back on the durations, because it's effectively I can understand that it's a way to protect the risk if you have a longer, let's say, duration for EVs and eventually when you release again later on. Have you already on the current when the leasing is coming to an end, have you a percentage right now of re-leasing you have on EVs when the leasing is ending? Is it, what, 10%, 20%? And my second question, when you sign our new contract, same question in terms of percentage, maybe of longer initial duration than the normal four years you have on EVs. Have you succeeded? Have you some numbers to give us to say, "Okay, we are putting longer duration, but is it 5%? Is it 20%? Is it 30%? Or even more?" It will be interesting to know how you can really implement those new contracts and also same question for the re-leasing. Yeah. So again, we don't really want to give a lot of specific numbers on that, but what we can see is that the duration on full EVs is increasing significantly on the new orders. Again, it has an impact on the price for the clients, which is in their interest. And for us, it's also about getting down to a number, not necessarily a percentage of a residual value, but actually a real nominal value of the vehicle that brings it into a market where there is a demand for it. So that's the important part on that. But we see a clear increase in the length of the contracts of full EVs. In terms of the re-leasing and the second-life lease, it's live, I mean, for real in four or five countries. So it's still small numbers in terms of the overall group. But in the countries where we actually have built a capacity over the last two or three years, we see that we can probably reach between 10% and 20% of re-leases of VEBs, which is really interesting and gives us a very good way to actually mitigate potential, let's say, problems with residual values of particular cars. Thank you very much. The next question is from Reg Watson, ING. Please go ahead. Morning all. Morning, Tim. Just to summarize my understanding, it seems like when I look at the funded fleet growth, or should I say decline in the first six months of the year, you're singling out sort of a slight loss of competitiveness in terms of your margins. And you've talked about commercial realignment. How soon do you think before that can bear fruit and we'll start to see that in funded fleet growth again? Because I guess the book value is pretty static over the first six months of the year, and that's a little bit disappointing. Yeah. So, Reg, that's a fair question. And I think our business, typically, it's a business with a very long tail. And we deal with very large clients typically, but there's different segments. So we know that from we basically take initiatives till we start seeing a result on the fleet. We talk about typically four to six months. So for 2024, we do anticipate to slightly deplete over the rest of the year. And then as a minimum, we want to stay flat in 2025. We're actually looking at plans to start growing the fleet growth a bit more than what we had initially anticipated for from this year. But it takes four to six months to actually see that, first of all, new cars are still having quite a long delivery time. So we're still at six months, which is still higher than what we had before the COVID crisis. So practically, you can actually not really restart within less than four to six months. Okay. Okay. Understood. Thank you. Appreciate that. The next question is from Sharath Kumar, Deutsche Bank. Please go ahead. Good morning. Thank you for taking my question. So I have two, please. So firstly, can you talk a bit about service margins in particular? Again, it was good to see the sequential improvements coming through, but maybe if you could talk a bit about the underlying dynamics, sustainability from here, that would be helpful. Second, within the leasing margin, specifically on financing costs, you said 80% of your funding is currently complete for this year. Also wanted to understand any increase that you saw in wholesale funding costs post the France parliamentary elections. Generally, if you can talk about funding cost dynamics, that will also be helpful. Thank you. Yeah. Thank you, Sharath. I think I'll hand over to Patrick, please. Yes. Thank you. So service margin is indeed moving forward. It's mostly based on better penetration of insurance revenues towards our various countries and also some procurement synergies which are entering into play there. So it's something which is consistent with Q1 2024. It's in line roughly with our budget. If we look at budgets, actually, leasing margin is going quicker than service margin, but leasing margin is more related to market operation than service, which is more pricing and operations with clients. When it comes to leasing margin, we are actually seeing now a decrease in wholesale funding. So it has been a bit volatile depending on whether you talk about the interest rate, the spread, and everything. But overall, the spread we are experiencing are moving. Are decreasing. And over the past month, we are now seeing a decrease in interest rates after a period of volatility, I would say. So that's also a leasing margin is also behaving well because we had, and that was in the attempt to restore margin, the pricing we were giving to our countries and entities was more conservative over the past six months. And we will, looking forward, be a bit more aggressive on that to start going off fleet again. Thank you. Once again, if you would like to ask a question, please press star and one on your telephone. The next question is a follow-up from Julien Onillon, Stifel. Please go ahead. Hi. Yes. Thank you. Just a very quick question on the CTA, the cost to achieve that was EUR 33 million this quarter, EUR 26 million the previous quarter. What could we expect for the second half here? And eventually, do you have also some numbers expected for 2025? Thank you. Okay. So thank you for the details, but it's a bit early. Now, what we can expect for the full year is probably a bit lower CTA for 2024 that we will push towards 2025, depending because we have on a daily basis, we are now integrating, as mentioned by Tim, we are now merging, integrating IT in countries. And what we have seen is that some of the IT integration has been postponed from H2 2024 to H1 2025. So we will probably have to reconsider our sequential quarter-on-quarter spend on CTA. For 2024, it might be a bit lower. It's a bit early to give full details on that, but you can expect that indeed. Okay. Thank you very much. For any further questions, please press star and one on your telephone. Mr. Albertsen, Mr. Sommelet, there are no more questions registered at this time. I turn the conference back to you for any closing remarks. Thank you. Thank you all for your attention and your questions. As always, our IR team is ready to answer any further questions you might have, so don't hesitate to contact them. I guess we'll just wish you a very nice summer if you haven't had your holidays yet. We will definitely enjoy ours the next couple of weeks. Thanks again and have a good day. Ladies and gentlemen, this concludes today's Ayvens Conference Call. Thank you for your participation. You may now disconnect.