Hello and welcome to the emeis Full Year 2024 Results Conference call. My name is Ben, and I will be your operator for today's conference. On today's call, we have Mr. Laurent Guillot, CEO, and Mr. Jean-Marc Boursier, CFO. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand you over to your host, Mr. Laurent Guillot, CEO, to begin today's conference. Thank you.
Thank you, and good morning to all of you, and thank you for attending this conference call. We are pleased to deliver today this set of figures, and doing so to confirm what we said to you in February. The turnaround is now underway and in our operating performance. In fact, our margins have now indeed entered with the second half 2024 in a phase of growth, bottoming out from transitory lows in H1 2024. We believe our performance is still below our potential, but the turnaround trajectory is now becoming clearer, fueling our confidence for the year ahead. We are indeed following the right direction and the right path. With a good grip on operational cost, the positive momentum of top line is mechanically feeding our operating profit.
With a notably far stronger EBITDA and EBITDAR in H2 than in H1, we can already expect a paced recovery that will prolong into 2025. Let's go quickly on a few figures because you already added for most of them in February. Top line is up 8.3% on organic basis, growing in all locations and all businesses, and particularly strong for nursing homes. Occupancy rates have continued to improve ahead of levels reached in H1 to 86%, up 2.7% versus 2023, even if it has been partly penalized by recent openings, even if these openings are progressively slowing down. EBITDA and EBITDAR beat guidance 2024 thanks to a strong H2. Recurring free cash flow is now almost balanced in H2 at EUR -31 million following a loss of EUR 130 million in H1 and more than EUR 420 million in 2023.
We are almost break-even in recurring free cash flow, and we are therefore confident that the trend will continue in 2025 with an EBITDA that should be between +15% and 18% at constant perimeter this year. On top of that, as you know, we have been able to secure more than EUR 900 million of disposal since mid-2022. This disposal contributed to keep our balance sheet in a good position, including our cash position above EUR 500 million at the end of 2024 and an almost stable net debt at EUR 4.7 billion. Our real estate portfolio is valued at EUR 6.2 billion, slightly down -4.6% like-for-like, probably at a cyclical low.
We have discussed that already in February, but we are now entered a virtuous circle where taking care of the team is bringing the company in terms of care to the highest standard, improving our occupancy rate and thus our profitability that allows us to continue to take care of our teams, which is a good circle we are in now and allow the improvement that you have seen in the second half. If we start with our CSR achievements, and I would say you know our top priorities about human resources and quality, you can see that all indicators are strongly improving compared to 2022 and at a good level, and most of them are improving compared to last year. Satisfaction rate has improved 2.6% versus 2022. Net promoter score on the same period +1 4 points.
In terms of quality, 125 facilities have been audited by the Haute Autorité de Santé in France with an average score of 3.89, 4 being the maximum. A very strong performance, and all our facilities have been audited in the last three years, as you can imagine as a consequence of the book in 2022. More than 80% will have been audited between 2024 and 2025 with every time a strong score. Very strong increase of the percentage of facilities that have been certified by external organizations such as ISO 9001 from 71% in 2023 to 89% in 2024. On human resources, still some room for improvement in turnover ratio that has improved compared to 2022 and 2023, but still at a high level, but we continue to work on that topic.
Absenteeism, very, I would say in the frame of this sector, 8.7% is quite a good performance. Same work-related accident frequency rate is at a low level compared to the sector overall, but still strong room for improvement there. The improvement on this perimeter, human resource perimeter, is clearly paving the way for an improvement of the quality, thus an improvement of occupancy rate and financial numbers. It is true that we have an overall improvement in performance in our occupancy rate. From 83.1% overall in average in 2023, we improved in 2024 to 85.8%, so + 2.7% in 2024 compared to 2023. The beginning of the year that you can see on this graph is showing a new improvement of around 2 points compared to last year. The good news is that it's both outside of France and in France compared to last year.
Next slide. Okay. No new information on this thing, except that you can see starting from a high level, the clinics have improved by 1.1% in 2024 compared to 2023, with a stronger improvement in nursing all across our geography, 3.2% versus 2023. The recovery momentum that we have now entered is the result of a combination of several factors. First, and it is quite important because you continue to see that in 2024, in 2025, the improvement of the resident recruitment process in 2024 with a number of new arrivals exceeding in 2024 by 10% the level recorded in 2023. This trend seems to be continuing in early 2025 so far, as I said.
Quality and HR ratings improvement providing support for occupancy, solid momentum in occupancy rate, positive price effect that your teams have been able to capture by several measures, including segmentation and our capacity to keep operating expenses under control, especially in H2 2024 after some investment in H1 2024. As a result, we saw EBITDA and EBITDA margin improving in H2, driving our earnings to beat our guidance of 2024. The EBITDA came at EUR 740 million, up 6%. This is EUR 10 million-EUR 30 million above our guidance, and the EBITDAR came at EUR 245 million, up 20%, also beating largely our guidance by EUR 35 million. It is now fair to say that this set of figures is a good milestone on the road to a good recovery that reinforces our confidence for 2025 and beyond.
We are still posting figures below our midterm ambitions and far below our midterm ambitions, but we are in the right place on the road toward normalization. We do confirm today that we see a positive momentum to be continued ahead with EBITDA expected to grow at constant perimeter by 15%-18% in 2025 compared to 2024. I hand over now to Jean-Marc, our CFO. He will present in greater detail the main financial achievement on the 2024 year-end numbers. Jean-Marc.
Thank you, Laurent. Good morning to all of you, and thank you for attending this call this morning regarding the 2024 audited financial statements of emeis Group. I will not spend too long on the figures that were already disclosed early February. However, it is fair to remind you that top line and operating margin are pointing encouraging trends, especially in H2, driving our confidence for the quarters to come. I would like thus to highlight four key items. First, the solid sales growth of over 8% on current and organic basis, benefiting from favorable occupancy increases and positive price effects. Second, a strong rebound in our EBITDA and EBITDA margin in the second half, leading us to beat our 2024 guidance, thanks to better-than-expected revenue growth, but also to encouraging operating expenses kept under control. Third, cash flow improved significantly this year.
Net operating cash flow has turned positive to EUR 15 million, EUR 101 million above last year. The recurring free cash flow is almost balanced in H2 at EUR -31 million, revealing a strong improvement versus H1 that was at EUR -131 million. Finally, free cash flow is still negative in 2024, but has improved by EUR 448 million in 12 months. Fourth and final, net debt remained relatively stable this year at EUR 4.7 billion, and liquidity position reached EUR 524 million at the end of the year. Sales that were published already early February posted substantial organic growth at + 8.4%, driven by a combination of three factors, all of which having a positive impact in 2024: a price effect of + 4.8%, an occupancy rate effect of +1 .8%, and the effect of the ramp-up of recently opened establishments for 1.6%.
This favorable growth trend can also be observed in the Group's two core businesses, but particularly on nursing homes that were up 10.8% year-on-year. All businesses in all regions contributed to the Group's organic growth, except for France, which posted organic growth of only 3.9%, but which is showing very encouraging signs, particularly in terms of occupancy rates. I will come back to it later. All other regions posted remarkable double-digit growth rates. Occupancy rates show a progressive recovery ongoing, with an average improvement of + 2.7 percentage points in 2024 versus 2023, reaching now an average of 85.8%. If we exclude the ramp-up facility, occupancy rate for the Group would be today at close to 88%, which is 2% higher than the average occupancy rate posted for the entire perimeter.
This is, in our opinion, a very solid achievement, even more since we were able to capture at the same time a positive price effect of almost 5%, as already disclosed. Next one. As I said before, H2 came largely ahead of H1 this year, and this comparison between the two semesters gives more color about the reason that drove this rebound. At the end of June, we indeed told you that occupancy rate recovery had already started, but the impact was muted at profit level by the increase in staff cost that we decided in 2023. We also told you that the recovery on operating margin was about to start, and this is exactly what happened in H2. The second half of the year is marked not only by the positive dynamic in sales, but also by staff cost that remained totally stable in H2 versus H1.
Consequently, if sales are up 3% in H2, EBITDA grew by 19%, and EBITDAR even more by 67%. Instead of a percentage, if we look at the margin in euro terms, you will note that the positive upside in sales, EUR + 92 million, was largely transferred into EBITDA, EUR +62 million, and EBITDAR, EUR 61 million growth. A positive momentum that we can expect to continue in 2025, suggesting very encouraging trends for the coming quarters. When we look at the EBITDA bridge between 2023 and 2024 by region, the positive contribution for all non-domestic countries, regions, has more than offset the negative from France. We explained already this when publishing the half-year result for 2024. Our French business was impacted first by slower-than-expected recovery trends on occupancy rates, whilst residual impact from inflation was eating operating expenses, and mostly by efforts made on staff cost.
You remember that we have recruited 1,600 additional people, mostly in H2 2024, and by wage increases, while the positive consequence of this was only progressive through occupancy rate and sales. More interestingly, when we look at the EBITDA bridge between the first semester and the second semester, it shows exactly that the turning momentum in the second part of the year has materialized, with all markets now contributing positively to EBITDA growth, showing everywhere the benefit from the measures that we've implemented recently. We don't comment. Next one. Next. Thank you. emeis net result group share came at EUR -412 million, still negative those.
However, when comparing to 2023, if I exclude the exceptional accounting income that was resulting from the recapitalization of the debt implemented as part of the financial restructuring, so that was a positive income of EUR 2.9 billion, the net result of this year improved by more than EUR 1 billion year-on-year. This is not only due to the operational recovery explained above, but also by the normalization of financial expenses at EUR 389 million and by much lower non-recurring item at only EUR -40 million. More interestingly, the cash flow statement shows interesting measurement of improvement. It is interesting to note that the more aggregates are considered for cash flow computation, the stronger the improvement versus last year.
As you can see, EBITDA is up EUR 41 million year-on-year, but net operating cash flow improved by EUR 101 million, recurring free cash flow by EUR 262 million, and the total free cash flow by EUR 448 million.
This illustrates the fact that our upturning momentum is not only driven by our operational rebound, but also by financial expenses normalization and by our capacity to better control working capital, CapEx, and non-recurring items. On these cash flow aggregates as well, the momentum in H2 is particularly attractive. If I focus on recurring free cash flow, which is in the middle of this slide, you can see that this cash flow contribution improvement is not only due to the reduction of development CapEx, but also by optimization of non-recurring items that should diminish ahead and by asset disposal. This indicator of recurring free cash flow is almost balanced in H2 at EUR -31 million, which is a very strong improvement versus the H2 of 2023, which was EUR -351 million, but also versus H1 2024 at EUR -131 million.
Improving free cash flow goes primarily through the control of our CapEx. As you know, most of emeis CapEx are real estate-related, either linked to our development program or to our properties maintenance. It is fair to say that development CapEx has been massively reduced over the year, down 51%. This is not only due to the natural fading out due to the progressive completion of our historical project, but also to the fact that we have decided to increase selectivity when we look at potential new projects. Very few new projects are launched, and emeis now favors the most profitable ones with a shorter payback, especially when real estate partnerships are found for financing. Regarding maintenance CapEx, on the other hand, we have decided to maintain these roughly unchanged at EUR 100 million to ensure that the quality of our facility will remain in line with our standards.
If I focus on development projects, in 2024, we have opened 1,700 new beds, and we have 1,400 additional ones under construction. We are also analyzing new projects for future years with a potential of 1,600 new beds. Most of these could be launched ahead if real estate partnerships were signed with investors through forward sales agreements. Such an approach is key for emeis since it allows to optimize the development CapEx, whilst keeping the optionality of capturing incremental growth and value creation from promising projects waiting in the wings today. As a matter of example, you remember that we signed in Q1 this year a partnership with a Dutch investor for 25 facilities to be developed in the Netherlands and to be opened between 2026 and 2029. Our partner will finance all CapEx during construction, and emeis, as an operator, will sign a lease once construction is completed.
We believe we should be able to secure more attractive deals like this one ahead. Optimizing free cash flow also means that we are in a favorable situation for selling assets. As you remember, our ambition for disposal was raised in October from historically EUR 1.25 billion to EUR 1.5 billion between mid-2022 and the end of 2025. In 2024 only, our teams have been very active since EUR 624 million of assets have been sold or are today under firm agreement. This is a significant milestone made of real estate disposal in average at a 5.6% yield with EUR 28 million of capital gains, mainly in the Netherlands, in Portugal, and in Ireland. Two operational disposals, one in Chile that was closed and cashed in in 2024, and the Czech Republic that we closed on the 31st of March 2025.
To date, more than EUR 900 million, hence 60% of this ambition, has already been reached. EUR 579 million of real estate disposal, which are already cashed. EUR 166 million of real estate disposal under agreement to date, and EUR 171 million of opco assets signed or closed. 2024 marks a significant acceleration on this matter. Therefore, the remaining disposal still to be achieved by year-end amounts to approximately EUR 600 million, with numerous discussions for potential deals ongoing, representing more than EUR 2 billion of gross asset value when it comes to propco disposal or firm value for opco disposals.
I'm very confident that our year-end ambition will be met. The appetite from investors seems relatively strong if I look at the number of potential acquirers in those different processes. With talks ongoing for EUR 2 billion of potential disposal, which is much more than our plan, we can therefore be selective and opportunistic.
Consequently of what we said, our net debt is almost stable since December 2023, growing by only EUR 59 million at EUR 4.7 billion, as you can see. I would like here again to insist on the recurring free cash flow that, in a certain extent, measures the real cash contribution of our business when excluding asset disposal, non-recurring item, and development CapEx that could generate ahead active contribution to growth. So the recurring free cash flow is still negative, but the second half is significantly improved and is almost balanced. Please remember as well that the group benefited from a EUR 390 million of capital increase in February 2024.
Overall, the Group net debt, excluding IFRS 16 rental liability, came at EUR 4.7 billion, broken down as follows: a gross debt of EUR 5.3 billion, with an average cost of debt at 5.37%, so slightly down versus H1. It was then at 5.44%.
EUR 524 million of cash and cash equivalent, well above our covenant or minimum liquidity of EUR 300 million. The IFRS 16 debt, so the lease liability, accounted to EUR 3.6 billion at the end of 2024, slightly below the 2023 levels. I will end my presentation with a few comments regarding our real estate portfolio. At the end of the year, it reached a fair value of EUR 6.2 billion, reflecting a market adjustment of -4.6% versus the end of 2020, -4.6% versus the end of 2023 on a like-for-like basis, largely attributable to a cap rate increase of +35 basis points during the year at 6.25%. It is interesting to note that fair values have already turned in some markets, have already upturned in some markets such as Central Europe, while pricing are still down in some other markets, mostly in France and in Northern Europe.
Now that risk premiums have largely reconstituted and while interest rates have started to decrease, we are very confident that this could signal valuation has now reached a trough, especially since observing operating performance improvement from operators have started to recover. Such a portfolio constitutes a solid anchor value on which to base our operational renewal for the years ahead. Thank you very much for your attention, and I will now hand over to Laurent to conclude this presentation with the outlook and our 2025 guidance.
Thank you, Jean-Marc. As you have understood from both our presentations, the momentum we have achieved now in terms of sales in the first half in 2024 and then in terms of sales and operating margin in the second half is obviously fueling our confidence for 2025.
On a longer term, on our markets, there is no doubt about the good trend and the good perspective we have due to the strong underlying market trends. For retirement homes, for instance, the high demographic intensity of the post-war period will materialize in the elderly population, which is expected to grow by almost 30% in the next 10 years. This represents 17 million more people aged over 75 years in 10 years from now. There is not the capacity installed in Europe and in our five main geographies to face this good trend, which gives us a good opportunity to continue to grow our occupancy rate, but also, at some point, to improve our pricing more aggressively. Mental disorder, unfortunately for the population, mental disorder prevalence is expecting to grow 20% within 10 years in Europe. In our main market, same thing.
There is not the capacity installed to face this growth. For us, it's a good opportunity. It is the same thing for rehab, where a large chunk of our customers are over 75 years old, which is also a growing population. We can indeed, in all our business, forecast supportive occupancy rate and progressively, and obviously more in nursing homes than in clinics for regulatory reasons, a good pricing momentum that we can count on in the next five years. If we look, in fact, at the capacity in Europe, on our five largest European markets, France, Germany, Spain, Austria, and Netherlands, we have a shortfall of approximately EUR 500 million nursing homes bed by 2030, which is huge and is not filled by the capacity. The midterm is very appealing for our company and for emeis.
Short term, however, our priority is to maintain the recovery trend upwards. The positive momentum engaged in H2 is set to continue. We do expect occupancy rate to improve further. The start of the year, as I've said a little bit earlier, confirms this expectation so far with two percentage points improvement on average, around two percentage points of growth in the first quarter. We continue to pay the highest attention to operating expenses, and we continue to keep it under control. As a result, EBITDAR is expected to be up in 2025 between 15% and 18% on a constant perimeter. We confirm and reiterate our ambition to grow our EBITDAR between 15% and 18%.
Clearly, same thing, we have engaged in a significant number of potential transactions to be comfortable with our targets of having EUR 1.5 billion real estate and operational disposal between mid-2022 and the end of 2025, as was our commitment set previously. Before answering to your questions you may have, I'd like to conclude and wrap up a little bit the key elements. First, as we said earlier in February, the positive trend on the top line on occupancy rate is continuing and provides good outlook for the coming quarter. Second, the solid rebound of performance looking H2 in operating margin drove our 2024 EBITDAR and EBITDA significantly ahead of our guidance. We've seen a real inflection point on this aggregate. It's a good outlook for the next quarters.
This inflection point is even more evident looking at cash flow, with net operating cash flow that turned positive in 2024, improving EUR 100 million in one year, and recurring free cash flow now almost balanced in H2 at EUR -31 million, signaling not only the recovery momentum on margin, but also in our capacity to take our cash and CapEx and working capital requirement under control. Disposals are in line with our expectations, more than EUR 100 million in the EUR 1.5 billion ambitions have been achieved already. We have EUR 600 million remaining disposal to be done. We are currently having discussions for potential operations representing more than EUR 2 billion, both operational and real estate. In conclusion, we confirm our guidance for 2025, with EBITDAR expected to grow between 15%-18% on constant perimeter. Thank you really for your attention.
We are now available with Jean-Marc to answer the questions you may have. What are the first questions?
Ladies and gentlemen, please go ahead.
Yeah, I read the question. Could you please update on whether your plan to present an updated business plan of the group in the coming months? Do we have a new business plan? As you have understood from our presentation and from the announcement that we made in February, we have significant change ahead that may be expected in our perimeter in 2025 because we are in discussions for EUR 2 billion disposals, both in real estate and in operations. We thought it would be more appropriate to give a guidance on 2025 numbers at constant perimeter.
Depending on what are the operations that we will do finally to achieve our target of EUR 1.5 billion in disposals, we will update you a little bit later on the consequences and on the impact on our numbers. Thus, due to these big deals and perspective perimeter change ahead, I think it is more appropriate to guide on the constant perimeter and to see year after year the advancement of the project. Do we have questions over the phone?
Yes, we do. Ladies and gentlemen, as a reminder, if you would like to ask a question or contribute on today's call, please press star one on your telephone keypad. To withdraw your question, it is star two. You can either dial out using the number located in the webcast, or you can submit a written question using the button "Ask a Question" from the webcast. Please ensure your line remains unmuted locally. You will be advised when to ask your question. The first question comes from the line of Alexander Peterc calling from Bernstein. Please go ahead.
Yes, good morning, and thank you for taking my question. I just have a few. The first one is on your indication of early 2025 occupancy trend starting at + 200 basis points, which looks encouraging. Is this an indication of where you'd like to land for the year? The second question again, that's related to the outlook. I know you don't guide on the top line, but you do give us an EBITDAR improvement guidance of 15%-18%. Should we assume similar top line trends as the one you experienced in last year? I have a small follow-up after that. Thank you.
Okay. Two questions. As you know, we don't guide on top line. You said it yourself. We don't guide neither on occupancy rate. Clearly, we have a lower, an easier comparison basis at the beginning of the year than at the end of the year because we saw some improvements already in the second half of last year, especially in France, where the first part of the year last year was not that strong. The second part of the year improved, especially after that we strengthened our commercial team and we changed our brand. I think there is a kind of dynamic, and I hope it will be confirmed throughout the year. I would say that comparison basis is easier at the beginning of the year than at the end of the year.
Second part of your question concerning the top line, I would say last year we had a strong pricing momentum, especially to recover from the price increases that we had in 2022, or the cost increases that we had in 2022, 2023. We were very dynamic in terms of pushing prices to our customers. Clearly, the inflation momentum has been fading in the recent past, starting in the second half of 2024. To continue to have a positive spread between price and cost, we may need to push a little bit less pricing than in the previous year. I would say compared to last year, we may have slightly less price increases overall.
Okay, that's great.
Did I answer to your both questions?
Yes, that's very good. Very good to have this additional color. That's very helpful. I just have a housekeeping question on non-recurrent items that decrease. Do you guide on that in any way for 2025? I think that is the tail end of restructuring costs and so on.
Jean-Marc?
No, we do not guide for 2025. We told you six months ago that we would keep it as low as possible. As a matter of fact, with EUR 40 million in 2024, it is much lower than what the group has experienced in the last few years. We intend to keep it as low as possible going forward. Will it be a good proxy for 2025 and beyond? I cannot tell precisely, but it is what I can answer as of today. There is one question regarding the question by Matthias Sustek on the real estate valuation. Is it including or excluding real estate transfer tax? This is excluding rent. One question on the liquidity position. Is it including or excluding enrollment facility? Is it all-inclusive? Our liquidity at the end of 2024 of EUR 524 million is inclusive of everything.
I take the question concerning the impact of the current tax war by the U.S. against the EU. As you know, our business is a very local business. I would say even in France, it's a local, very localized business. We are immune to the kind of external influence, both macroeconomic, geopolitical, and tax war is definitely a very good advantage for the company to be immune to this kind of variations and uncertainties. We have a question in French concerning the price and volume and occupancy rate in 2025. Can we guide at constant perimeter? Can we guide a little bit on that? I think I answered already partly to that topic.
We are around two percentage points above last year in occupancy rate in Q1. This is quite a good trend. The good news within these two percentage points is that if we look at France, which, as you know, was lagging behind in the evolution of the last years, and we were in Q4 last year at around one percentage point above Q4 2023. The first half of the year is closer to the average of the group, so slightly below two percentage points, which is a good evolution for the nursing homes in France. We expect, I mean, this occupancy rate, as I was saying, as a higher comparison basis for the second half of the year. We continue to put all the teams at work to do all their best and efforts to continue to increase.
This is one of the key elements for 2025 that we continue to grow our occupancy rate. On prices, as I was saying before, probably inflation was higher in 2023 and beginning in 2024. We had the capacity to keep a positive trend spread between price and cost. We pushed quite hard to increase our prices in 2024. We may be a little bit more prudent or cautious in 2024 in terms of price increases. We do not need that much neither to have a positive spread. Probably on that front, it will be a little bit lower.
On new beds, to give you a flavor of the potential contribution to growth. As I told you earlier, we have opened 1,700 new beds in 2024, mostly in Southern Europe, Spain, Portugal, and Italy. We have 1,400 new beds under construction that will be put in operation in 2025 and 2026, mostly in Spain, Switzerland, and Netherlands. We have today 95,000 beds. That gives you another magnitude of the potential growth of those new openings.
Okay, ladies and gentlemen, as a final reminder, there are no questions here on the line. As a final reminder, if you would like to ask a question, please press star one now on your telephone keypad. You can also submit a written question using the webcast alternatively.
Okay, there appears to be no other questions. If I sum up very quickly, we are really pretty much in the same mindset that we were in February when we made the presentation of the first numbers of 2024. The trend continues to be the same. We confirm our guidance with the EBITDAR expected to grow between 15% and 18% at constant perimeter. Our disposal strategy is perfectly in line with our expectations, with around EUR 2 billion potential operations, both in real estate and in pure operations as a disposal, to be able to achieve our EUR 1.5 billion ambition at the end of the year compared to 2022. Positive momentum continues to be the case for emeis. Thanks a lot to all of you, and see you soon. Bye-bye.
Thank you for joining today's call. You might now disconnect.