Hello, and welcome to the Edenred half year results call. My name is Saskia, and I will be your coordinator for today's event. Today's call is being recorded, and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any point, please press star zero, and you will be connected to an operator. I will now hand you over to Bertrand Dumazy, CEO of Edenred, to begin today's conference. Please go ahead.
Ladies and gentlemen, good morning, and thank you for being with us for the Edenred H1 2024 results. Julien Tanguy, the CFO of the group, and myself, we are very pleased to present you our performance in H1 2024. I propose that we move directly to page 5 of the presentation, where you have a summary of our results, and I'm pleased to share with you that Edenred confirms the strong momentum of the last half years. The total revenue has grown by 19%, recorded. The EBITDA has grown almost 24% versus H1 2023. Our generation of cash, the FFO, funds from operations, has grown by 18% versus H1 2023, and our net profit has grown by 16%, reported versus H1 2023. If we move to page 6, in fact, what did we do in the H1 2024 versus our Beyond strategy? We did three things.
First of all, we further penetrate our core markets, what we call scale the core. Indeed, we continue to have a strong business momentum on our highly attractive core meal and food solutions, but also energy cards. Remember that we are operating on vastly under-penetrated markets. In terms of acquisition, we made the acquisition of IP energy card business in Italy to accelerate our penetration of the Italian B2B mobility market. Thanks to this acquisition, we moved from the number 6 position to number 2 position in Italy. The second thing we did in H1 2024 is to seize external growth opportunities to grow beyond. Beyond Fuel, we made the acquisition of Spirii to bolster our e-mobility offering, and we launched the Spirii offer in France and in Germany in May 2024.
An example is we have been able to sign a new contract with UTA in Germany for the management of their EV charging points. Beyond Fuel represents now more than 30% of our core activities. We also accelerated in Beyond Food. For example, we made the acquisition of RB to reinforce our transport benefits in Brazil. And as to Beyond Fuel, Beyond Food represent now more than 30% of our offer in the food vertical segment. The third thing we did is we leveraged the Reward Gateway acquisition successfully. We celebrated a few weeks ago the anniversary of the one year of this acquisition. I remind that Reward Gateway is a SaaS platform, enabling Edenred to extend its attractive benefits offer towards engagement. We had three objectives. First of all, a strong financial delivery with double-digit growth, done.
We want to generate some synergies on the UK market, and we are well advanced on the delivery of those synergies. And finally, we deploy the offer on continental Europe, and in fact, it's done in 3 countries, namely France, Italy, and Belgium. I propose to move to page 7. Page 6 is the description of what we did as to the Beyond strategy from an activity point of view. Page 7 is what did we do in terms of capital allocation in H1 2024, and as regard to the Beyond strategy. In fact, we did 4 things. Priority number 1 is the organic growth. To generate double-digit growth, we need to invest, and so our CapEx to total revenue is within the expected range, i.e., 7%-8% of our total revenue in H1 2024.
Our priority number two is growth by acquisition, and we cash out EUR 143 million of acquisition in H1 2024. Priority number three is the return to shareholders, and in fact, we return EUR 496 million to our shareholders via paid dividends for EUR 304 million, but also share buyback for cancellation purpose for a total amount of EUR 150 million. Finally, the demonstration of this strong balance sheet has been done with the confirmation of our A- rating by S&P in April 2024. So what does it mean, page eight, in terms of our ability to generate sustainable and profitable growth in 2024?...
Thanks to our results in H1 2024, we are pleased to share with you our EBITDA estimate for the full year 2024, and our EBITDA landing should be between EUR 1.23 billion and EUR 1.3 billion. I remind that in 2023, we landed at EUR 1.094 billion. If we now look at what is behind, in fact, this like-for-like growth, double digits in H1 2024, and we move to page ten. So first of all, if we look at the operating revenue, as you see, our Q2 operating revenue has been growing at 14% like for like, and leading to an H1 performance growth of operating revenue of 15.4% in H1 2024.
Indeed, we have a strong business momentum thanks to new client wins in every business lines, benefits and engagement, mobility and complementary. And you have some examples here of, let's say, iconic brands who decided to join the Edenred family, not only in every business line, but also in every segment, large accounts, middle market, but also SMEs. And if you look at our performance in SMEs, the ARR in the first half of 2024, in terms of new contracts, post performance of growth of 17%. So yes, Edenred continues to win new clients, especially on the SME market, that is vastly under-penetrated. As you know, we are very keen to go beyond as well, and here we are pleased to share with you that we signed a contract with Audi to manage, in fact, their supercharger stations in Germany.
So Edenred with Spirii will be in charge of the software management of the supercharged stations. If we move now to page 11, the double-digit growth that we had in H1 2024 is in benefits and engagement, but also in mobility. As you can see, benefits and engagement, which represent 65% of our operating revenue, has been growing at almost 16%. The mobility segment has been growing at 21%, knowing that mobility represents 24% of our total revenue. If we move to the next page, you see that the growth is across all geographies. In Europe, we grew like-for-like by almost 11%, in Latin America by 22%, and the rest of the world by 26%. Europe representing 61% of our operating revenue, Latin America 29%, and the rest of the world 10%.
Now, if we look at the evolution of the EBITDA, page 13, three things that I want to share with you. First of all, we post a strong growth, like-for-like of our EBITDA. It's a growth of 26.2%. The second thing is our EBITDA margin, once again, is up, moving from 41% to 42.8%, which is an improvement published of 180 basis points, and like-for-like, it is an improvement of 270 basis points. Behind or below the EBITDA, you see that we also have our operating leverage, and in fact, the operating EBITDA margin has increased by 140 basis points like-for-like in H1 2024.
So not only from an economic point of view, we did well in H1 2024, but also from an extra economic point of view, page 14, and H1 2024 marks the further recognition of our ESG commitments. If you look at the EcoVadis, we increased our score by 4 points versus 2023. And if you look at Sustainalytics, in fact, we increased our ranking by 160 basis points. So yes, we made significant improvement in our ESG delivery in H1 2024. I propose you now a focus on benefits and engagement. If we move to page 16, you remember that, in fact, part of our business is regulated, but a good chunk of our business is not regulated, especially the engagement part with the employee savings, the rewards and recognition, the well-being and the employee comm- ...
Accelerate in the unregulated part of our business. GOintegro is commercialized in seven countries, and Reward Gateway is now commercialized in six countries. On top of the historical countries, which are the U.K., the U.S. and Australia, we are pleased to share with you that it has been deployed in France, Belgium and Italy, as we shared with you before. If we now zoom, page 17, on the regulated part of our business, in fact, we have a broadly favorable environment. First of all, on the left part of the slide, you remember that we propose more than 100 specific purpose payment programs, and those specific purpose payment programs are deployed in more than 30 countries. And the Beyond Food, a part of those solutions represent now 31% of the benefits and engagement operating revenue in H1 2024.
The second thing is, yes, there are some long-term drivers supporting the demand. There is a strong incentive for increasing benefits and engagement on those vastly under-penetrated markets. Why? First of all, because our digital solutions are proposing additional purchasing power for employees, then because specific purpose money is fueling the local economy. And finally, those digital services are a very efficient tool to increase the magic equation made of companies' attractiveness, employees' retention, and employees' engagement. Finally, yes, we have ongoing discussions to modernize the benefit schemes, and the first thing to remember is the regulatory framework is very supportive for our benefits offer. All the discussions are around increasing the maximum face value.
They are also about the strong push for full digitalization, but also around can we invent some new benefits to embrace new trends for employees everywhere around the world, such as the employee mobility or the work from home. And finally, because those programs are social programs, we see a reinforcement of the prepayment, which is very good for our other revenue part of the P&L, but also from a cash generation point of view. But we also have some ongoing discussions around the modalities. First of all, discussion on the rebalancing between the upstream and the downstream fees, who is paying what and how much. And we have conversation on the conditions of the usage of solutions. Which type of merchants? What is the maximum daily spends?
So those ongoing discussions around the modalities to modernize the benefits schemes, as you know, we have conversations in Brazil, in France, but also in Italy. Then if we move to page 18, and to the unregulated part of our business, and Reward Gateway, with our engagement offer, is a good example of that. As previously shared with you, we achieved major milestones during the first year of the integration. Objective number one, the financial performance, and yes, we post a double-digit growth in H1 2024 in the U.K., Australia, and U.S., fueled by a solid business momentum. The second thing is, yes, we generated the synergies we are looking for on the U.K. market. And in fact, we delivered more than 60% of the expected 2025 annual synergies in the first semester of 2024.
So the UK integration is well, in line with our initial plan. Finally, the third objective was the rollout in continental Europe. So yes, Reward Gateway solutions have been launched in France, Belgium, and Italy in Q2 2024, and we are getting ready to launch those solutions in Luxembourg, Spain, Germany, and Romania by the end of 2024. It's now time for me to let Julien Tanguy, the CFO of the group, to explain the detailed financial performance of Edenred in H1 2024.
Thank you, Bertrand. Hello, everyone. I'm very pleased to be with you this morning to share this first half of the year results. Starting with the detailed financial performance, I will cover today the first half 2024 about our tech and product investments. A quick reminder before jumping to top line performance, 2023 figures are adjusted to reflect new revenue recognition methodology in Brazil, and you can find all the tables with both adjusted and previous figures in the appendices. We start with the top line, and Q2 solid performance on page 20. Total revenue is up 16.3% in like-for-like, and +16.8% in published. Scope effect is +2.3%, and FX effect is -2.8%. The two effects neutralize each other.
I remind you, scope effect mainly comes from Reward Gateway and period acquisitions. Knowing that Reward Gateway has been consolidated as from May 2023, Reward Gateway is part of like-for-like growth since May 2024. On page 21, you will find the H1 2024 top line performance. Here, again, performance is strong. Our total revenue grew by 18%, thanks to both operating revenue, up 15.4%, and other revenue, up 58%. Let's move now to page 22, and to Edenred's good performance in Europe. So in H1 2024, the like-for-like operating revenue is up 10.7%. In France, the growth rate is around 8%. This growth is supported by strong performance in Beyond Food Solutions, driven by the success of the digital platform for Works Councils .
On this market, we take advantage of our leadership position to increase penetration and renew our contracts with historical clients. New software contracts will allow us to grow gift volume in the coming years. We still suffer from negative impacts of the end of Action Logement contract and CESU S ocial discontinuation. This impact is also visible in the performance of complementary solutions. Ticket Restaurant is delivering double-digit growth, thanks to accelerated expansion within SME market and new large accounts wins, as explained by Bertrand earlier. In the rest of Europe, we grew our operating revenue by 11.7% in H1. Edenred delivered double-digit growth in benefits and engagement, driven by double-digit growth in Ticket Restaurant, despite high comparison basis effects in Q2, with sustained commercial dynamism and contribution of higher maximum face value usage.
Italy delivered double-digit growth, driven notably by strong performance in benefits and engagements, thanks to both meal voucher and welfare solutions. Beyond Food Solutions have great success, delivering double-digit growth in all major countries. And in mobility, Edenred delivered double-digit growth, thanks to good dynamics in fuel solutions and the success of Beyond Fuel Solutions. Toll in Germany benefited from new regulation, incorporating a tax based on CO2 emission in the calculation of toll tariffs. After Europe, we move to Latin America on page 23. Latin America growth is +22.1% in H1 2024, including Brazil, with a performance of 8.7% over the semester. This performance in Brazil is driven by double-digit like-for-like growth in benefits and engagement, thanks to the continued penetration of the market and the ongoing success of the Itaú partnership.
We are celebrating the five years of this contract with this major Brazilian bank this year. We recorded good sales momentum in mobility, with the increasing success of Beyond Fuel Solutions, toll and maintenance, and despite the flood in the south of Brazil, in the state of Rio Grande do Sul, in April and May, impacting the business and our operations. I remind you that part of our teams is located close to Porto Alegre, where flood happened. Regarding expanding Latin America, the growth is +52% like-for-like, and is supported by robust growth in benefits and engagement, supported by good momentum in Mexico and commercial successes in the SME segment. We also have strong momentum in mobility, thanks to good traction in new sales, especially in key accounts in Mexico, and success of maintenance solution in this country.
After the operating revenue, we move to other revenue, and I will start with our performance in H1. I will give you more visibility on our expectations for H2 2024, and for the year 2025. I am on page 24. H1 2024 is another semester of strong growth in other revenue. Other revenue stands at EUR 124 million in H1, versus EUR 82 million in H1 2023. This strong growth is a result of sustained business momentum, positively impacted, impacting the flows and higher interest rates in H1 2024 versus last year in the Eurozone. I remind you, ECB decided interest rates increase all along H1 2023. As you can see, the trend is positive in every geography, with like-for-like growth rate between 32% and 150%.
After H1 2024, let's move to other revenue projections for H2 2024 and 2025 on page 25. In 2024, other revenue is expected between EUR 230 million and EUR 240 million, i.e., double-digit growth versus 2023. This level, at the end of the year, implies other revenue between EUR 106 million and EUR 116 million in H2, to be compared to EUR 121 million in H2 2023. In fact, in Eurozone, the last ECB rate increased happened in September last year, reaching a peak. ECB started to cut rates in June this year, increasing the gap versus last year interest rates. On top of ECB decisions, interest rates started to be reduced in many geographies, including Brazil, and we expect ECB to cut interest rates twice before the end of this year.
So if we do the math, taking into account the mid-range of our 2024 EBITDA estimate of EUR 1,230 million and EUR 1,300 million, and taking into account our projection of other revenue for H2, operating EBITDA is expected to grow 14%, reported in H2, 2024. At the top range of estimates, operating EBITDA growth would be around 20% in H2. If we project ourselves to next year, our best estimate as of today for full year 2025, other revenue is a minimum of EUR 210 million. We expect 2025 to be a flow that will apply in 2026, due to increasing level of activity and flattening of interest rates.
Therefore, Edenred will benefit from a minimum of EUR 210 million EBITDA, coming from other revenue in 2025 and 2026. I hope this visibility will help you to better understand and forecast our financial trajectory. After these comments on other revenue, let's come back to H1 2024 performance on page 26. Operating and other revenue growth translate into faster EBITDA growth. Total revenue is up 18.3% like-for-like, while EBITDA is up 26.2%. This strong performance is a consequence of a good control of operating expenses. Thanks to this cost management, the operating EBITDA margin is at 62 basis points. Edenred is delivering operating leverage. After the EBITDA, let's look to Edenred's net profit group share on page 27. Let me comment the main variation of our P&L versus last year.
As already seen, the EBITDA is up 23.7%. EBIT growth stands at 22.4%, impacted by Reward Gateway PPA depreciation, and as I already said, we closed this acquisition in May 2023. Net financial expense moved from EUR 58 million to EUR 98 million, impacted mainly by the financing of Reward Gateway acquisition and the impact of interest rate increase on our floating rate gross debt. As a consequence of those variations, our net profit group share is up 16.3% versus last year, moving up from EUR 202 million to EUR 235 million. Regarding the assumptions to build the full year 2024 Edenred net results, I give you a few indications to help you to go from EBIT to net result group share. Those numbers are our best estimates as of today.
Other income and expenses should be between -EUR 30 million and -EUR 35 million. Net financial expenses should be between -EUR 195 million and -EUR 205 million. Effective tax rate should be between 30% and 33%, and minority interests should stand at -EUR 45 million. So after the P&L, we move to free cash flow on page 28. So our EBITDA is close to EUR 600 million, and our funds from operations stand at EUR 400 million, up 18% versus 2023. I remind you that funds from operations is the first free cash flow generation engine. In 2024, Edenred's total working capital variation is comparable to 2023. The working capital variation is -EUR 285 million versus -EUR 248 million last year.
Change in float is minus EUR 121 million, reflecting the seasonality of our discount business. Cards are issued and loaded in Q4, and users spend their benefits mostly in Q1 and Q2, the year after. The increase in working capital of, excluding float, of EUR 240 million. Decrease, sorry, of working capital excluding float of EUR 240 million, is mainly due to our business with digital banks. Those clients have less cash sitting on our platform compared to end of December last year. I remind you that PayTech is serving digital banks. The variation of +EUR 76 million in restricted cash is the result of variation of regulated products in both float and working capital, excluding float. Last line of the free cash flow is CapEx.
The level of CapEx in H1 2024 is EUR 97 million. It is 20% above the level of last year and represents 7% of our total revenue in H1. So now we move from FFO to net debt on page 29. On this slide, we present a bridge of our net debt from June 2023 to June 2024. Since June 2023, Edenred generated more than EUR 900 million of free cash flow. Edenred returned to shareholders around EUR 500 million, of which more than EUR 300 million are dividends, and we bought back more than EUR 100 million of shares for cancellation purpose. We made acquisition for around EUR 140 million.
At the end of June 2024, Edenred net debt is EUR 1,000 million. With that, let's look at the balance sheet of Edenred, and this balance sheet is solid. In terms of debt maturity, the average net debt is 3.2 years. You know that a convertible bond of EUR 500 million is coming to maturity in September, and we work on the financing of this debt. When it comes to our balance sheet, we have EUR 5.2 billion of cash and restricted cash. We have additional short-term financing options with non-drawn revolving credit facilities of EUR 750 million. We have access to new city market for another EUR 750 million. We have no financial covenants, and S&P confirmed our A- rating in April this year.
Let's go to following page, and on page 31, a presentation of our well-balanced capital allocation with our clear priorities. So as explained by Bertrand, our first priority is to generate organic growth and innovation. We invest continuously in product and technology, with EUR 480 million invested in 2023. I will come back to that on the following pages. We also put in place systematic validation process for an investment committee at group level to give the go before any large project is launched. Second priority is M&A with a stringent financial and strategic discipline. Key objectives of M&A is to deliver growth and create value for Edenred. IRR from acquisitions over the last eight years is twice Edenred WACC on average. Acquisitions are to be accretive in terms of EPS.
Third priority, you know, we have a progressive dividend policy, and our dividend per share has increased by 14% CAGR since 2020. Fourth priority is share buyback. You know that, we'll do that in case of excess cash. Our first share buyback program has been launched in March 2024, for EUR 300 million over three years. At the end of June 2024, EUR 150 million have already been bought on the market. After the presentation of our main KPI in terms of financial performance, I will spend a couple of minutes talking of our product and tech spend and our level of CapEx. As we had some comments coming over last month, I want to give you more information about the CapEx trajectory. I am on page 33.
As you all know, Edenred is a global platform connecting 60 million users to 2 million merchants through 1 million corporate clients. As a platform, we are proposing smooth user experience, and we can connect to many partners, including other large digital platforms such as Uber Eats, Deliveroo, or Nubank. Being a state-of-the-art platform means we need to maintain constant effort to fuel double-digit growth. I am on page 34. In 2023, our product and tech spend was around EUR 480 million, of which 30% is CapEx. And I remind you, CapEx are spent to enrich the platform in terms of features and connectivity capabilities, and 60% of our spend is operating expenses. Operating expenses are here to support our daily business.
In terms of destination, 70% of our costs are dedicated to the platform as an application, 20% goes to infrastructure, and 10% goes to security and compliance. Regarding OpEx, most of our products are supported by applications hosted in the cloud. As we are working with Azure or AWS, cost of the platform are following our business volume trajectory. It might be considered as a running cost. On top of those cloud costs, operating expenses include the platform maintenance and external software costs such as Salesforce or Microsoft. Those software costs are charged to us mainly with a subscription model. The more employees we are, the higher the OpEx are. Regarding CapEx, we have accelerated in data and in the transformation of core platforms to prepare future growth and scalability.
We also invested in cloud migration, allowing smoother ecosystem integration, and we made of PayTech our mutual specific purpose payment factory. Finally, regarding security and compliance, we have multiplied by 3 our resources in security over the last 3 years, and 100% of our business process is processed on security-certified platforms. Trust is key in our business. To focus on CapEx trajectory, I propose we move to the following page, and I am on page 35. Three pieces to understand our CapEx trajectory from 2020 to 2024. First, internalisation of key skills. Second, the CapEx to tech spend ratio. Third, the percentage of total revenue we decided to invest in CapEx. Regarding internalisation of skills, how we want to reduce the dependency to external suppliers, we have internalized key skills.
As a technology company, we need to keep the know-how on our core assets in-house. Regarding the CapEx to tech spend ratio, it stands at 49.6% in 2023, coming from 41.1% in 2021. This ratio—in 2020. This ratio remained overall constant over the past four years, and it reflects the CapEx destination of some of our tech costs. And finally, our CapEx moved from EUR 104 million in 2020 to EUR 190 million in 2023. The invested amount has increased in line with our top line, and the ratio CapEx to total revenue stays between 7% and 8%, in line with Beyond 2025 guidance. This is it for the financial performance part.
I hope this set of comments will help, and I hand over to Bertrand for the last part of the presentation.
Thank you, Julien. So if we move to page 37, basically what we want to do to further generate sustainable and profitable growth, three things. First of all, we want to continue to scale the core. As you know, we are the leading platform for benefits and engagement, but also for mobility. So we want to further penetrate our markets, and notably in the SME segments. The second thing we will continue to do is to go beyond. We want to extend our portfolio in the Beyond Food, but also the Beyond Food solutions, while we want to leverage the recent acquisition of in-employee benefits, RB in Brazil, employee engagement, Reward Gateway, and in mobility with Spirii. And finally, we want to continue to scale our platform. Once again, the platform business is a scale game.
The Beyond strategy is delivering, and to give you a point of reference, we started Beyond January 1, 2022, so if you take as a year of reference 2021, if you think about our lending in 2024, you take the 2021 number, you multiply more or less by 2, and you have our lending in 2024. So to make a long story short, the Beyond strategy is delivering, and is delivering results that are doubling the size of the company in three years. So we will continue to do so. That's why for 2024, so page 38, our estimate in terms of EBITDA lending is between EUR 1.23 billion and EUR 1.3 billion.
We are on our way on the path to EUR 5 billion plus total revenue by 2030. Thanks a lot for your attention to the H1 2024 Edenred results. Julien and myself are now all yours to answer any question you may have.
Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. To remove your question from the queue, please press star two. So again, that is star one for your questions today. And our first question comes from Julien Richer from Kepler. Please go ahead.
Good morning, everyone. I have three questions, if I may. The first one, you talked about the discussion around modalities to modernize benefits scheme, and you mentioned rebalancing upstream, downstream. Any change on government view on merchant fee? Does that mean that in France, the, this topic is now back on the table? More generally speaking, can you please give us an update on the regulation situation in France and the ongoing investigation in Italy also? The second question is on the operating EBITDA margin, so it improved 60 basis points plus in H1. What is the trajectory going forward? I mean, do you have any specific number in mind on what kind of level it should reach in the medium term, or the improvements on a yearly basis that you think is achievable?
The last one is on the stage value increase on the contribution, on the stage value increase. What has been the contribution in H1, and what you expect for going forward, H2 and 2025? Thank you.
Okay, Julien, thank you for your question. I will start with the first one, and then Julien, for the second one, and maybe both of us for the third one. So as you know, we are on a market where the merchants are contributing, but also the companies because we put in place the program and we manage the program. So in France, there were some a lot of work to explain how it works to the government and to the minister, Ms. Olivia Grégoire. And in fact, the good news is a consensus was reached right before the European election. A consensus, and it's our understanding a consensus based on, first of all, the minister said again and again, and again, "We want more Ticket Restaurant in France." Why?
Because you still have in France more than 20 million workers who do not have access to this solution. And this solution is good for the workers, it's good for the employers, it's also good for the state, because I remind everybody that in terms of fiscal exemption, it is an investment of the French state of about EUR 1.4 billion. But in fact, they are getting EUR 2.4 billion, so net, it's EUR 1 billion. So, not easy to find a consensus, because you have the employers, you have the employees, you have the issuers, you have the merchants, and you have the state, so you have five different stakeholders.
In fact, the minister and the cabinet of the minister reached a consensus between each of us, saying, "We want more." Second thing saying, "We want it full digital," because the total cost of ownership will decrease by being, you know, full digital, knowing that in France you have 13 different issuers. So when you have 30% of the market that is still in paper, it's a hassle for the merchants, and it's a hassle for us as well. So we have, you know, a common interest. The other thing that was put on the table was clarity as to, you know, the fees, and an incentive to rebalance the cost between, you know, the merchant and the employers.
We heard, we don't know it for sure, that discount at employer level could be banned, which is, you know, a very good thing for the entire industry. So a consensus was reached. The consensus is good for the industry, so it's good for Edenred. Digitalization is good for Edenred. Good economic conditions is obviously good for us. What we heard is it was supposed to be announced right after the European election; unfortunately, things did not work politically as expected. So you know that we are now in a situation where we don't have a new government. So as to the reform, we'll see how it goes.
For me, two conclusions: first of all, the current system is very okay for Edenred and for the industry, and it would be better for the industry and for Edenred if the reform is voted, but we can live without it. The second thing is, the reform is, let's say, it's not a political reform. It goes beyond every political parties in France, because everybody wants more purchasing power for the French workers. And by the way, purchasing power was, the item number one, debated by the political parties, because it's the number one concern for the French people. So the reform is a good reform.
The reform is a consensual, reform, if I may say so, then we'll see where it goes and how it goes, but if it doesn't go due to a political uncertainty, we can live without it as well. You had a sub-question as to the investigation in Italy. Nothing new, under the sun as compared to what we said about, you know, the consip 9. First of all, the business is doing well in Italy. We are growing at double-digit. Second thing is, Consip 9 is working with Edenred, and Consip 10 , which was, you know, the next, the next contract, confirmed the fact that, we are their preferred supplier, and we continue to win many, many accounts in Italy. So as to the investigation, nothing new under the sun.
As to the business in terms of the momentum of Edenred, commercial momentum, nothing new under the sun, because we are growing at double digit.
Then, the second question was as to the operating EBITDA margin and our operating leverage. Junior?
Yes, thank you, Bertrand. Yes, thank you, Julien, for your question. So first, as I said during the presentation, our operating EBITDA margin is up in H1 2024. It's plus 62 basis points, and you've seen that we've been able to achieve this improvement of operating EBITDA margin with a solid growth in top line and a good control of our cost. So if we look at the full year of 2024, both EBITDA and operating EBITDA margins will be up versus the end of last year. Why? Because the trend we see in terms of top line in Q2 is a good reference for what we will have in Q3 and Q4 in terms of top line growth.
Because we are going to manage our cost to play the operating leverage and to be sure that we'll be able to improve our operating EBITDA margin. So this is for 2024, and then regarding 2025, which is, you know, quite far from where we are today, we think that the strong momentum we have today is expected to continue. So solid top line growth and good cost management. So even if we know that other revenue will be down next year, we will manage the company to improve the operating EBITDA margin.
And then you had a first question as to the face value position.
Yes, Bertrand.
As you know, in many countries, we have some face value increase. As you know, it takes about 2 years to go after the full potential of, you know, the face value. So, if I give you an example, in France, the legal face value is about EUR 14, and when we look at the average usage, it's less than EUR 10. So what does it mean? There's still a long way to go to convince the employers to give more within the legal envelope that is available. It's true for Ticket Restaurant, but it's also true for all the other products.
So if I take the example of, France, as you know, Ticket Restaurant represent about EUR 2,000 per year and per employee, and the total solutions that we propose with some fiscal exemption represent about EUR 6,000. And we are still very, very far from, you know, the total usage of the EUR 6,000.
Okay, good. Thank you very much.
Thank you. And our next question now comes from Praveen Gondalia from Barclays. Please go ahead.
Hello, thank you very much for taking my questions. First on operating like-for-like growth, can you share some more colors on contribution of different buckets, like face value revisions, new business, et cetera, to the like-for-like growth in H1? How should we think about those two trends in the second half, especially the face value revisions? I know you talked about the headroom there being still there for the utilization of face value, but then how the inflationary trend and face value revision trends have been shaping up in different markets for your employee benefits division? That's one thing. And then secondly, on the capital allocation and M&A framework.
I mean, the Complementary Solutions, organic growth continues to be subdued for past few quarters. And in the past, you talked about higher valuation in this space being a barrier for you to do M&A. But if you think other way around, would you consider disposing the business in part or fully to benefit from such higher valuations and use that cash to do M&A in benefits and engagement or fleet and mobility businesses, or further cash returns to shareholders? Thank you.
Okay. So, let's start with face value and the question about the impact of face value on our growth. As Bertrand explained, in many countries, we are still far from the full usage of face value, and even inflation has decreased, it is still there. So we see that we are able to push additional face value to our clients. But then it's true that it's not at the same level as we did it in 2022 and 2023, because the level of inflation is a little bit lower. But we see that in many countries, we are still able to push those face value increase.
And if I do a comparison, because face value increase is not something new at Edenred, you know, before 2019, we were pushing face value increase to our clients, and we were successful with that. The point is that the face value increase in terms of percentage was much lower compared to what it is today. So face value increase is still there. As Bertrand said, in France, we are still far from the maximum face value available on more than EUR 14. So we have opportunities to ask our client to increase the level of face value. And as I said, we still have inflation in some countries, so the employers still need to protect the purchasing power of their employees.
So contribution of face value is still there, even if it is lower compared to what it was. Second thing is new biz. We shared a few numbers during the presentation. One of them is about the SME penetration and the fact that we are still successful when it comes to sell our products to SMEs. You see that we've been able to increase the ARR coming from new SME contracts by 17% in H1 this year compared to last year. So it is a good demonstration of the attractiveness of our products on the market. And yes, we have the ability to conquer new clients, and as we already shared, we are doing that with SME, but we are also able to conquer new large accounts to grow.
What we see for the next quarter is still a strong momentum and our capacity to further penetrate our markets that are still vastly under-penetrated. So this is it for our capacity to grow, thanks to both face value and new business. And then you had a question about capital allocation and our capacity to do acquisitions. So as we explained, the first priority in terms of capital allocation is to fuel the organic growth. We've been able to grow organically at a pace above 10% over the last few years, and our ambition is to keep on doing that. And to do that, we need to invest in our product in tech, as I explained during the presentation.
It's key for us to be sure that we come to our clients, users, and merchants with the right products and the right, let's say, features. So we are working on that. And then second priority is M&A, and I think that what we've done over the last, let's say, 18 months, is a good demonstration of our strategy. First thing, we did 2 strategic acquisitions. The first one being Reward Gateway, for benefits and engagement, allowing us, you know, to propose to our clients, fully, let's say, a platform with all the features that are available on the market in terms of benefits and engagement. And the second strategic acquisition we did is Spirii in EV. So Spirii is a company that is managing a software for the charge points. It is the operating system of a charge points.
And so those two acquisitions are key in our Beyond strategy. And on top of that, we did acquisitions to scale the core. And let's take two examples. The first one is IP in Italy. We know that we're gonna become the number two on the market, thanks to this acquisition, and it's an acquisition that will allow us to scale our operations and to improve our capacity to help our clients to migrate to EV. And the second acquisition we did in our scale the core strategy is the acquisition we did in Brazil with RB, which is a transportation voucher. The acquisition will be closed in the coming weeks. And this is also a good demonstration of our ambition to keep on going on our benefits business.
...Then what will we do? We still have cash, as you have seen that our level of debt at the end of June 2024 is the same as it was one year ago. We'll see if we can seize opportunities to scale our platform and to, let's say, confirm our leadership position on all the market where we are.
Sorry, just to clarify on that. So I was asking about Complementary Solutions business, which has been-
Yeah.
underperforming for the past few quarters. And previously, you did talk about the higher valuations in complementary solutions space, which is being a barrier for you to do M&A. But on the other way around, would you consider disposing the complementary solutions business in part or fully to benefit from those higher valuations and use that cash, let us say, for further share buyback, given the subdued share price currently?
Pravin, in fact, in Complementary Solutions, you have many different activities. So, when you say sell Complementary Solutions, we have, for example, public social programs that are part of Complementary Solutions. So if I understand your question, you are talking about corporate payment in the U.S.
Yes, yes.
Corporate payment in the U.S., yes. So it's only one part of Complementary Solutions. When you are saying underperforming, it's because, first of all, as to the other things, as CSI, in fact, you have some public social programs that we stopped. So, for example, in France, we stopped a program that is called SDA, because that was the end of the program after five years. And so it has an impact on the performance of the complementary solution. You have to de-average. As to CSI, we are growing at double digit. So do we consider to sell some activities of Complementary Solutions? Not fully, but are we managing actively our portfolio of solution? The answer is yes. That's why, for example, it was the end of SDA, and we continuously review our portfolio.
To give you another example, Sécurité Sociale in France, we decided to stop, because when we looked at the potential and the margin, we said, it's not a business for us. So to make a long story short, do we manage actively our portfolio of activity? Yes, depending on the growth opportunities and the EBITDA generation activity. Do we want to, give back to our shareholder? Yes, and it's what we are doing via our dividend, progressive dividend policy, and if needed, some share buyback.
Thanks. This is, this is really clear. Thank you very much.
Thank you.
Thank you. And up next, we have a question from Ed Young, from Morgan Stanley. Please go ahead.
Good morning. Thank you for taking my questions. The first one is back on the change in Brazil, as you mentioned, these potential conversations about potential changes to the system and upstream and downstream. You did also mention, and it's something which I don't think we've really discussed beyond the specific criminal case, the sort of wider potential reform in the market. So I wonder if you could elaborate on that and say if there are any sort of common themes being discussed across these different geographies. Second, on Brazil, first of all, thank you for the restatement regarding the use of the compensation in the market. It's very useful. I wanted to ask, do you think this is the new normal for the market, or do you think there's any chance of a clarification that could ban the use of compensation practices?
Some of your competitors think it works contrary to what the law initially intended. Then two very small clarifications, if it's possible. First of all, Julien, at EBITDA other move to +2 from -7, could you give us the moving parts and how we should think the evolution of that in H2 and in out years? And second of all, I don't think there's any change here, but the question has been asked this morning if there's any change to your free cash flow conversion target under your Beyond plan. Thanks.
Okay. So, as to the regulation, once again, part of our business is regulated, especially the Ticket Restaurant, and it's about 40% of our total revenue. And as I said, we manage more than 100 programs everywhere around the world. And as I said, because it's a slightly unregulated market, there has always been some conversation about, you know, the system and the modalities of the system. And if you look at it based on the history, at the end of the day, the conclusion is more or less the same: we want more. And that's why we have been growing so much, and that's why we will continue to grow a lot on this market, because it's vastly under-penetrated.
As I said, in France, 20 million workers do not yet have access to a solution like Ticket Restaurant. And what I'm saying is true everywhere around the world, and it is also true in Italy. The second thing I said is, as it is the case in France, on a regular basis, there is some conversation on how it works. Do we need to change the modalities? Is there a way to make sure that it's well-balanced between the employers and the employees? It is true in France, it is true in Brazil, it is true everywhere around the world, and it is also true in Italy. And if you take the example of France-
... conversation. Unfortunately, it did not conclude yet, but we know that the arbitrage that were given in France are very positive. So, so it's true in France, but you saw also in Brazil, there were some, you know, questions asked, some answers, then some, some working tables. And if you look at the growth we have in, in Brazil, you see that under penetration and the willingness to have a regulation allowing even more penetration is very positive. And so what is true in France, what is true in Brazil, is also true in Italy, but many other countries around the world. So to make a long story short, it's, you know, it's business as usual in, in, in our industry. So that's for, that's for, regulation.
Then, I'm not sure I got your second question about Brazil and what you call the new normal.
What I meant was, as per your restatement, there's been a ban of negative commissions, and there's been instead, a market practice of using compensation to sort of put it in its place. I just wondered if you thought this was the new normal in the sense of, do you expect this to continue for forthcoming years, or do you think there's a chance that it will be clarified that the use of compensation isn't allowed in the same way? There's some discussion of that in the market.
Yeah. Yeah, I think there will be some clarification, because basically what the law is saying is, you cannot give a discount at the employer level, which is a very good thing for the industry, and so for Edenred. But you can give some incentive, considering products around the health of the employees. So basically, the competition is harsh, and people are playing with this angle of the law. So I do believe that the regulation will look at it, and will state more clearly what is feasible and what is not feasible. I don't expect regulation to come back on the ban of discount in forms of cash. Cash discount is forbidden for the social program of food and meal benefits in Brazil.
I don't expect the regulation to come back. I expect the regulation, and it's a very good thing, to be more precise and clear on what can be done in, in the form of some other incentive that are not cash incentive. Then you had the third question as to the free cash flow.
Yeah.
So for the free cash flow, I think there was a question about the line that we have in our, in our presentation, that is, EBITDA others. So maybe one comment about that, because EBITDA others is EBITDA that is generated at, let's say, a headquarters level. So why do we have a +EUR 7 million? It's mainly because we have improved the way we reach out to countries with what we call, master service agreements. So it is, you know, what the countries are paying for, headquarters services, and it is the reason why you see this, increase in, EBITDA others.
Regarding the last question about free cash flow, you know, our ambition is to generate free cash flow, and to get a free cash flow conversion ratio above 70%. And our target for this year is, of course, to be above those 70%, and also to stay at this level for 2025. As I explained, when we look at our, let's say, forecast for 2025, even if it's too early to say, we have a strong sales momentum. Our H2 2024 will be solid, and we will be able to grow double digits, and we will enter 2025 with this momentum. And we will deliver the free cash flow conversion as we explain with our midterm targets.
Thank you both for all the detail.
Thank you. In the interest of time, we kindly ask everyone to limit themselves to two questions only from now. Thank you for your cooperation. We're now moving on to our next question, which comes from Estelle Weingrod from J.P. Morgan. Please go ahead.
Hi, good morning. So I'll stick to two questions. I mean, the first one, Julien, do you mind repeating the, the below EBITDA elements of guidance? And for net financial expense next year, how should we think about the refinancing of your converts, and the impact it, it should have on that line? Also, my second question would be, can you comment quickly on the, just on the, the working cap? The outflow was much higher this first half versus, last year, at EUR 361 million versus EUR 120 million. Just to understand better. And I'll just nick, just a third question, just, just in case you have a second. Just about your underlying, like-for-like in France, I'll just stick to the one of CESU, Action Logement, and, and CleanWay, please. Thank you.
Okay. Regarding below EBITDA numbers, I get to you. First, so we're gonna refinance, you know, the convertible, but in terms of cost, the impact is not that big, because you know that in IFRS, the convertible is translated into a straight bond. Then, for sure, the cost will be a little bit higher compared to what it was a few years ago. But when I look at, you know, the financing cost for next year, next year, so as I explained, you know, other revenue will go down because interest rates in Eurozone will go down. Then we know that the financing costs will go down, too, so there will be a, let's say, better than what they are this year, because we will take benefit of the interest rate decrease.
You know, what is true for the revenue is also true for financing costs. So next year, financing, financial expenses will be lower compared to what they are today, or, or what they are expected to be in twenty, in 2024. Then regarding the free cash flow, yes, and for other income and expenses, we will be between EUR 30 million and EUR 35 million for, for, for this year. And maybe I give you the other numbers. So effective tax rate is expected to be between 30% and 33%, and a minority interest should be around EUR 45 million. Then regarding your question about working capital, could you, could you, ask it again? Because I, I, I did not get it.
Yeah, sure. I mean, it's on slide 48 of the in your free cash flow table, the decrease in working cap, EUR 361 versus EUR 120, the previous year.
Yes, for sure. These are the same numbers we have on page 28, but you have, you know, the split between float and working capital, excluding float, on page 28. The EUR 361 has to be looked at with float first, so it is minus EUR 121. It is minus EUR 121, because, you know, we have this lease activity, and as I explained, you know, we load the cards of our users in Q4, you know, for the, what we call, the peak season, which is the Christmas season indeed, where we sell a lot of gift vouchers, gift cards. And then, you know, users are spending the money in Q1, so most of the time, in January or February.
So you have, you know, the cash in, that is in Q4 last year, and then you have the cash out from Edenred perspective, that is in Q1. So this is for the float. And then regarding working capital, excluding float, you know that at PayTech, which is our, let's say, a payment platform, we have external clients, and those external clients are digital banks. And we are doing the issuing and the processing for those clients. So it means that when you have an account with Monese or T ide, you put your money on the Edenred platform.t
And when the clients of those banks are spending their money, or when those banks are moving to another issuer, because when they are becoming bigger, they can decide to have their own platform, it has a negative impact in our working capital, so where the money is going out of the platform. But because it is regulated, we have the opposite movement in restricted cash. So at the end of the day, it has no impact on our free cash flow.
Okay, thank you very much.
Thank you. We now move on to a question from Hannes Leitner, from Jefferies. Please go ahead.
Yes, thank you for letting me on. Just, I think, I'm not sure if you answered it, but did you keep up the free cash flow conversion guidance, as I was missing that in the slide deck or in the press release? And then the second thing is, and maybe you can talk a little bit about the 12% EBITDA, like-for-like growth ambition going forward. What are the moving parts as you expect next year, and to turn a headwind? So maybe you can talk about the divisions where you expect the growth to come, and then maybe also by geographies. Thank you.
Okay, so Julien, quickly on the free cash flow conversion. I already answered some questions. Free cash flow conversion will be above 70%, and we stick to our midterm target, as I said, both for 2024 and 2025. When you look at our generation of cash in H1, think about it, basically, our level of debt is stable between 2023 and 2024, and in between, we made some acquisitions, and there was a historical return to the shareholders via share buyback and an acceleration of our progressive dividend policy. I guess that's the proof in the pudding in terms of our ability to generate free cash flow with a high free cash flow conversion above 70%.
As to the second question, our guidance, not guidance, but indication or our ability to generate 12% EBITDA, like-for-like growth, we did for many years in a row. When we look at the different engines of growth that we have, we are confident to continue to generate that level of growth after 2024. Why? First of all, as I said, there's still a lot to do to scale the core, vastly under-penetrated market, so many clients to go after. Times more services that we propose to those clients. When you look at our portfolio of solutions, our portfolio of solutions is widening year after year, thanks to our innovation, but also thanks to our ability to distribute digital services that have been developed by others.
The combination of more clients, times more solutions that is sold to those clients, is the number one driver.
... The number two driver is when you think about, the different, acquisitions that we made, and it's what we call to go beyond, basically what happens when you look at the EV revolution in Europe, when you look at, two equation that we are trying to solve on benefits and engagement. Equation number one for the HR directors being how to be more attractive, how to be able to retain the employees, and also how to be able to engage. We know that this trend is a long-term trend, and this trend is good for Edenred, because we are providing, a portfolio of solutions allowing to answer to each piece of the equation. The second equation we are solving for the, for the employees is on top of an equation of purchasing power.
The only asset you have is your health, and health is the combination of, first of all, good times, physical activity, times well-being. As you can see in the portfolio of Edenred, we have solutions for each piece of the equation. Where is the growth, where will the growth come from after 2024? The growth will come from every business line, because we have a lot to do on benefits and engagement, and we have a lot to do on mobility. If you go into the details behind that, more clients times more services lead to more revenue per client.
As we said, it's coming from, you know, each, each piece of the equation, and on top of that, you have some face value increase that are happening every year, and some work that we are doing to make sure that the employers are going after the face value. And finally, because we are more and more a platform, we are able to price as a platform with some new fees as well. And we have some other levels that are very powerful, the cross-selling and the upselling. Remember that we are serving 60 million users around the world. So the combination of all those elements, which are true for every business line, will lead to double-digit growth.
By the way, double-digit growth is what we have been doing for the last 9 years, quarter after quarter, semester after semester, at the exception of the year of the COVID. So yes, based on our strategy, which is working, once again, you take the numbers of Edenred in 2021, you multiply by 2, and more or less you have the landing in 2024. So this strategy, per business line, is delivering and will continue to deliver in the coming years.
Thank you so much.
Thank you. From UBS, we have Justin Forsyth with our next question. Please go ahead.
Thank you very much, Bertrand, Julian. Just a couple from me. So pretty impressive 20% operating EBITDA growth, like-for-like. Just, I believe that's a little bit of a change in terms of the unlocking of the operating leverage that we were talking about last year. I remember you saying that you were willing to put investments behind the platform. Maybe you can just talk as to whether there was a little bit of a change in ethos this year, and how you plan to attack that going forward, if there's more investments to be made, or if you believe you can continue to unlock that operating leverage. And also, on that point, if there's anything to call out in terms of the dilutive impact of M&A on margin expansion versus FX impact on operating EBITDA margin. That's the first question.
The second question is relating to the EV charging side, actually. It seems like Audi has a pretty big scale across Europe in terms of charging. So maybe you talk a little bit about how that revenue model works. Is it ARR or transactional? And at a higher level, how are you thinking about the size of this TAM? Where do you believe the majority of the TAM sits? Is it on the charging points, on the road solutions, or at home in the context of the new Spirii acquisition? Thank you.
Okay, thank you for your questions. So first of all, our strategy did not change. As explained by Julien, you need to invest in the platform to run the platform, because the platform is growing, so you have growing running costs, and then you have to invest to prepare the future growth for Edenred. And basically, when you look at H1 2024, we are exactly, you know, in both lines, i.e., in terms of CapEx, we invested between 7% and 8%, and we know that the entire year is gonna be between 7% and 8%. But then we generate an operating leverage because we start seeing also the return on investment of all the investment we made the previous years.
So, for example, some of the investments are done to fuel the convergence of our different platforms under one single platform. So what you see in H1 2024 is the same strategy in terms of investment, which is a platform strategy, generating double-digit growth, but also generating an operating leverage that we start seeing. And we will see that along the years, because all the investments we have been doing are paying off, not only in terms of growth, but also in terms of our level of OpEx versus the revenue that we are generating. So there is no change in our strategy. Then your second question is about EV charging. How does it work? In fact, you have a few pieces....
First of all, we are in the B2B business, so basically our clients are the corporate clients, companies. For the companies, what they are looking for is a charging solution, mainly on site, because in fact, 60%-70% of the recharge is done on site. So we had a solution on-road, which is our multi-energy card, giving, in fact, access to more than 600,000 charging points in Europe. And now, thanks to Spirii, we have a solution on site. What does it mean? First of all, we are the orchestrator of the installation of the charging point on site for our corporate clients. Second thing is we are managing what we call, in fact, the operating system of the charging point. When it works, doesn't work, you know, it's a software business.
And then on top of that, you have the consolidation of who is charging, when, at which price, and who is paying what, which is, you know, a consolidation via the cloud, which is an application business. And what we provide with Spirii is in fact the three things. And some clients are choosing, you know, the full monty, and some of them are saying, "Okay, I will take care of the installation of the charging point myself. I don't need your advice on that. But then I want you to be in charge of the CPMS, so charging point management system, or I want you to be also in charge of what is called the eMSP, i.e., the consolidation via the cloud of the activities and the payment behind that." And we are able to provide the full monty or some pieces of the equation.
What is the business model behind that? It's a mix of fixed fee and variable fee, depending on the solution you choose from Edenred. Obviously, we modulate that, depending on the market conditions and the competitive landscape.
Thank you very much. Appreciate it.
Thank you. Unfortunately, that's all we have time for, for today for the Q&A session. But for any further questions, please don't hesitate to contact the investor relations team for any further questions. And with that, I'd like to hand the call back over to you, Mr. Dumazy, for any additional or closing remarks.
Okay. So thank you for the time you spent with us. As you see, we are very pleased by our H1 2024 results. It's the confirmation of our Beyond strategy, the ability to generate double-digit growth in a sustainable and profitable manner. We have good vibes for the second half of the year. Once again, because we're able to grow on every business line, in every country, because there are a lot of tailwinds in terms of more benefits and engagement, digital services provided by the leader of the market, which is us, and because we are moving fast in mobility, surfing on the EV revolution. We are also very pleased to see the acceleration of our Beyond program, Beyond Food and Beyond Fuel.
We are very pleased also by the equilibrium of our P&L and our ability to generate strong cash flow in H1 2024, and for sure, for the rest of the year. Thank you for your attention, and see you soon. Bye-bye.
Thank you for joining today's call, ladies and gentlemen. You may now disconnect.