Ladies and gentlemen, welcome to the emeis conference call regarding its 2026 half-year results. It will be structured in two parts. First, a presentation by emeis management team represented by Mr. Laurent Guillot, Group Chief Executive Officer, and Mr. Jean-Marc Boursier, Group Deputy Chief Executive Officer. Afterwards, there will be a Q&A session during which you can ask oral or written questions. I will now hand over to the management team. Gentlemen, please go ahead.
Thank you. Good morning, everyone, and thank you for joining Jean-Marc and myself this morning for the presentation of our half-year results at the end of June 2026. I know that earnings season is in full swing, Jean-Marc and I will try to keep this brief. First, I wanted to share with you our satisfaction at being able to present our half-year result today, fully audited nearly two months earlier than we have in recent years. This is further evidence of our group's return to normalcy, which is reflected in all aspects of emeis operations. You may have seen already our press release. You may already guess how happy we are regarding this set of figures showing strong performance in H1 ahead of our initial expectations.
I'd like to begin this presentation by highlighting the major achievements of the first half of the year, achievements we are proud of, and that have very well driven our financial and operational performance. First, I'd like to really thank and congratulate the emeis teams, who performed exceptionally well through this difficult year. First, in the face of quite significant flu season at the beginning of the year, and then during the heatwaves more recently. Health and safety measures, alongside with proactive plans, help protect our residents. I would also like to take here the opportunity this morning to warmly congratulate our team looking after our residents when facing the forest fires in Gironde or in Spain these days. Second, the significant improvement of our marketing processes, particularly in recruiting new residents.
The number of prospects increased by nearly 22% in a single year, which obviously fuels the growth of our occupancy rate. In this context, we have also further refined our pricing strategy, as occupancy rates rise across our markets. Proactive pricing management for accommodation with tailored and dynamic pricing structures, enabling through a pricing effect to outperform inflation while increasing at the same time occupancy. In addition, this year, we are seeing the positive effect of our OpEx optimization program that we call Boost, which aims to control operating expenses while maintaining the quality of care. The first half of the year also saw a very strong performance in certain markets. As you will see with Jean-Marc's presentation, France is recovering quickly, but performance is particularly satisfying and exceeds our expectation in Southern Europe and in Germany as well.
As you know, we exited the safeguard plan during the first half of the year. We were able to settle our tax and social security debts and reassess our maintenance capital expenditures budget to prepare for our group's future performance. All these factors have contributed to the growth in the average occupancy rate of our facilities. It has risen by 2.8 percentage points over the past year, now above 90% in Q2, and even reaching over 91% for the first half in our mature markets. This latest increase is part of the very favorable trend we have been observing for nearly four years now. This momentum shows no sign of slowing down. We do expect further improvement ahead. It is also worth noting that the growth in our revenue has largely translated into higher operating margins and income.
While revenue increased by EUR 103 million, operating margin rose by nearly EUR 70 million. Our net income by nearly EUR 100 million. This is a result of our agility, our segmentation strategy, and our vigilance in controlling costs, something also that feed our confidence for the coming quarters. We continue to make successful progress toward all our objective to move our group towards recovery and stronger performance ahead. We have now achieved our goal regarding confidence with our residents and patients, as well as quality of care and accommodation. The satisfaction rate shows a strong progress and is a proof of this. We are also making strong progress in increasing our average occupancy rate. Although we still have significant room for improvement ahead, the progress we've made so far is particularly encouraging. Occupancy rate is now above 90%, as I said, in Q2, but we'll do even better ahead.
Operating margins have risen sharply over the past two years. Here too, we will deliver stronger figures in the coming years. Our disposal plan has now been met and even exceeded. We will now be very opportunistic in this area going forward. Our balance sheet, particularly with regard to our debt maturity profile, has normalized since the refinancing completed six months ago in December and in January 2026. Our financial leverage ratio has decreased considerably over the past two years. It now stands at 8.7x . We are very confident that it will continue to decrease further in the coming semesters. The first semester thus exceeded our expectations in many respects. We sustained momentum in occupancy rate and effective control of operating expenses. In some international markets, signs of supply constraints appear to be emerging in the market when occupancy rates now exceeding 90%.
In France, although still lagging behind other markets, the pace of growth is particularly strong. The catch-up is therefore well underway. We are thus ahead of our initial expectations. As a result, the guidance for FY 2026 has to be revised upwards. We now expect the group's EBITDA on a like-for-like basis to grow between 12%-14% in 2026, whereas we had previously anticipated growth of only slightly more than 10%. Over the midterm, we continue to believe this momentum will continue, expecting a CAGR for EBITDA between 2024 and 2028 between 12% and 16%. Thank you for your attention. This was my introduction. Now I turn the floor to Jean-Marc Boursier, our Deputy Chief Operating Officer, to present this financial performance of the first half to you in greater detail. I will be available to answer the question you may have afterwards. Jean-Marc.
Thank you, Laurent. Good morning, everyone, and thank you for joining us this morning. I will begin my presentation by highlighting what I believe are the five most important points in our earnings release. First, revenue growth remains strong, reaching 6% like for like. It is driven by improved occupancy rate as well as favorable price effect. Second, operating margins are improving very significantly. The EBITDA margin, excluding IFRS 16, for instance, rose by 46% on a like-for-like basis, and as a percentage of revenue, it has increased by 2.2 points to 7.6%. Third, net income remains negative at -EUR 40 million, but has improved considerably, rising by EUR 97 million versus last year. Fourth, the operating contribution to our cash flow is very significant. In the first half of this year, however, it was offset by one-offs, transitional items related to the group normalization.
I'm referring to working capital requirements and to non-recurring items, which I will discuss in more details later. Net operating cash flow and recurring free cash flow are consequently stable. Finally, our leverage ratio continues to improve materially. Net debt to EBITDA ratio now reaches 8.7 x at the end of June versus 15.4 x a year ago. This improvement is not only driven by net debt reduction, but also by the sharp increase in EBITDA. If we start by occupancy rate evolution. Across the group, as you can see on this slide, in all of our markets and business segments and in all of our regions, our occupancy rate are rising significantly. This trend is relatively consistent across all regions, as you can see on the left-hand side of this slide.
For nursing homes in particular, the increase is very pronounced, with occupancy rates rising by 2.9 points to 89.4%. If we focus as usual on our two major markets, namely Germany on one hand and France nursing homes on the other hand, trends are also particularly favorable. It showed that the momentum remains strong and at a steady pace in both those regions. In France, as you can see, the 380 basis points increase in the occupancy rates is certainly driven by the group's commercial performance. Please note, however, that this trend also benefit from, first, the reduction in the number of beds in the denominator, which now consists of marketable beds as in other regions versus authorized beds. It benefits also from the sale of our senior living facilities.
The sale was closed at the end of 2025. The occupancy rate of those senior facility were slightly lower than the rest of the portfolio. In France, we are also very happy to see that occupancy rate rose in Q2 versus Q1, whilst usually relatively stable in those two quarters, this is very encouraging. In Germany, as you can see on the right-hand side of the slide, the occupancy rate continues to rise at a very rapid pace, plus 3.4 points. This trend is therefore continuing for the third consecutive year, as you can see, with an occupancy rate now approaching 90%. How does it translate into a revenue growth? Laurent said it. We enjoyed an organic growth in revenue of 6% in H1.
While the increase in occupancy rate is obviously a significant factor, +2.6% if you include the new openings, the favorable price effect remains the primary driver of the revenue growth, contributing 3.4% in H1. On a current basis, not an organic basis, but the current basis, revenue is up 3.5%, slightly minored by first, the disposal of our Czech Republic activities and the French senior housing I was mentioning in 2025, but also by the fact that we are currently disposing of our activities in Latin America, and therefore, we have excluded Latam from our revenue in application of the accounting norm IFRS 5.
If we look at the growth by activity, as you can see, nursing homes have outperformed again in H1 this year with a like-for-like growth of 7.1%, a material performance reflecting the strong occupancy rate improvements seen in all markets, in addition to the capture of positive price effects. The momentum was maintained despite sanitary risks thanks to the proactive health protocols, which helped contain a particularly virulent flu season as well as heat waves more recently. On clinics, although a bit weaker, the dynamics remain very satisfying, especially on mental health. This is benefiting from the effect of operational corrective measures taken throughout 2025. Following, as you would maybe remember, a relatively weak Q1 last year, that quarter fell short of expectation, particularly in terms of private room sales, but has been largely corrected since then.
If we look at revenue increase by geography, nearly 60% of our revenue is generated internationally, and on those markets, the like-for-like growth is 7.5%. In Spain, in Poland, in the Netherlands, growth is even double digits. This performance is driven by a very favorable price effect, like in Austria, in Germany, in Switzerland, and in Spain, as well as strong increases in occupancy rates in Italy and Poland, for instance. Note that in Ireland, where rates were under significant pressure last year, this matrix is now rapidly recovering, although it remains below last year levels. In France, the recovery is still going on, as said by Laurent. We were particularly positively surprised with the very good momentum in occupancy rates, especially on our nursing homes business, while the price effects remain positive.
As you can see on the nice slide, the performance of our revenue is flowing nicely into operating margin. Staff cost ratio has been further decreased, reflecting the measures we progressively implemented during the past 12 months to optimize the allocation of our human resources. At the same time, we also benefited from the initial effect of Boost, our operational performance program launched last year, which led to a reduction in the intensity of other costs or OpEx as well. I'm very confident that those two cost components, namely staff cost and OpEx, can be further improved in the years to come. As a result, these measures are enabling us to maximize the conversion of revenue growth into operational profitability. Consequently, EBITDA margin reached 15.8% and EBITDA margin before IFRS 16, 7.6%, both of them up two points versus last year.
When we break down the EBITDA growth by geography, we see that all regions are contributing positively to this growth, +EUR 15 million in France, +EUR 13 million in Northern Europe, mainly driven by Germany and the Netherlands, +EUR 11 million in Central Europe, with a very strong performance in Switzerland, and finally, + EUR 8 million in Southern Europe. Please note as well that our EBITDA includes EUR 23 million of profit on PropCo disposal versus only EUR 5 million last year. Laurent mentioned the Boost operational program, so let's say a word about Boost. The program was launched in 2025 and is designed to further improve the quality of our service while optimizing our OpEx base. To illustrate this, you can see a few examples of topics the team are currently working on.
The consolidation of regional pharmacies, the renegotiation of our laundry contracts, and the renewal of and standardization of our medical equipments are good examples of what we are tackling for the time being. Boost program addresses an OpEx base of approximately EUR 400 million and is expected to reduce operating expenses by 2% per annum over the next three years, thus feeding our confidence for further margin expansions. The initial results are very encouraging and prompt us to consider implementing similar measures outside France. If we continue to go down the P&L, you can see on the next page, growth in EBITDA flows nicely into EBITDA and then into EBITDA improvements. Rental expenses flattening are kept well under control despite important volume of PropCo disposal achieved last year. This is due to three factors. First, renegotiation of leases. Second, OpCo disposal achieved in 2025.
Third, acquisition in 2025 of some real estate assets that were historically leased, notably in Italy. As a consequence, EBITDA excluding IFRS 16 is at 46% like-for-like at EUR 228 million. You can also see on this page that EBITDA grew by 83% versus H1 last year at EUR 187 million with a margin of now 6.2% versus 3.5% last year. A very good trend that is very likely to continue. Since H1 2024, EBITDA grew by EUR 200 million, which is very noticeable. If we finish now the analysis of our P&L, with an EBITDA that is up EUR 83 million year-on-year, emeis net result group share grew by EUR 97 million, although still negative by -EUR 40. Two further elements to be noted in this page. First, the reduction versus last year of non-recurring items. Since most of the big operation were finalized in 2025.
In H1 2026, please note that these non-recurring items are largely related to the Isemia closing in January. Financial expenses are slightly up versus last year, +EUR 18 million. As a matter of fact, the financial income from derivatives for EUR 15 million was recognized last year. This means that on a like-for-like basis, financial expenses would have been totally stable, and this trend generally reflects decline in net debt volume on one hand, against the backdrop of a rising interest during the period on the other. Let's move on to the cash flow. The cash flow statement is facing, let's face it, some headwinds with a very good operational contribution offset by two one-offs related to the group normalization. These two temporary and non-recurring factors that have offsetted the growth in EBITDA are the following. First, a EUR 94 million working capital increase.
This is largely the result of the normalization of our suppliers payment processes, which were disrupted last year by the transition to a new accounting IT system in France. Second explanation, the early exit of emeis safeguard proceedings, which made possible for us to settle the fiscal and social debt that had been frozen by the French state until then. This largely explains the EUR 164 million you can see listed here under the non-recurring items. Please note also, the increase in maintenance CapEx that we have implemented to ensure emeis performance over the medium and long term. In the coming few years, the level of maintenance CapEx will continue to rise, but only very slightly. As you can see on the next slide, this is more of the same.
You can see that the net operating cash flow and recurring cash flow remained broadly stable in H1 with a very strong operating contribution that was temporarily offset by two non-recurring items, the two non-recurring items that I just explained. A few words on disposal. You may have noticed in the free cash flow the minimal contribution of asset disposal to the group this year, which is totally in line with our decision to adopt an extremely opportunistic approach on this topic now that the 2022 to 2025 disposal program has been met and even significantly exceeded. On the top of the Isemia transaction closed in January for EUR 761 million, and that is accounted for as capital contribution, EUR 114 million of disposals have been achieved in H1.
Almost two-thirds of them related to a sale and leaseback operation with the yield lower than 5%, which is an excellent valuation for emeis. Note as well that on the top of that, a further EUR 156 million of disposals are expected to be finalized in the coming quarters. For your information, we have engaged the disposal of the full perimeter of our activities in Latam, so Brazil, Uruguay, Mexico, and Colombia. At the end of June, 30% of the expected values were already finalized and cashed in, and a further 40% were already secured and signed, which mean that the whole Latam perimeter is very likely to be sold before year-end.
As a result of all information we are sharing with you today, you can see that the group net debt has decreased by EUR 566 million since the beginning of the year and now amounts to EUR 3.9 billion pre-IFRS. As a consequence of both net debt reduction and operating margin increase, you can see that our leverage ratio continues its rapid downward trend. It stood at 8.7 x at the end of June compared to 11.8 x at the end of December, and even 15.4 x a year ago. Looking ahead, we are totally convinced that the group financial structure will continue to improve. As a reminder, we have agreed to a covenant of 6.5 x effective in 2029, and we believe we have room to maneuver. Already, we are ahead of our commitment, which was to reach 12 x of leverage ratio by the end of 2026.
We are well below our covenant. To conclude my presentation, you will find here a few additional information regarding the debt structure. I will highlight just a few points. Our debt has an average maturity of nearly five years, with no significant reimbursement until 2030, as you can see. Our cash position stands at EUR 601 million at the end of June, which is comfortable. Please note as well that 55% of our debt has now been hedged or is at a fixed rate. This paints a picture of a group whose financial performance is not only improving considerably, but whose financial structure has also been significantly strengthened. We can now look ahead with confidence for the years to come.
As you know, today is the last time I will be addressing you as a Chief Financial Officer, and I will come to appreciate just how far we've come over the last two years. Now that our financial situation has stabilized, we will focus with Laurent on continuing to improve our operational performance in line with our medium-term guidance and beyond. In my new role as group Chief Operating Officer alongside Laurent, I will be dedicated to this task. Laurent, the floor is yours for the conclusion.
Thank you. Thank you, Jean-Marc. Before answering your question, I wanted to remind you the main point of this presentation, the ones that make us particularly pleased with these H1 figures. First, this half year highlights particularly strong momentum in our business with a like-for-like growth rate of revenue of 6% and an increase of nearly three points in the average occupancy rate. Second, this growth has positively impacted our operating margins, which are rising sharply. EBITDA, for instance, is up. EBITDA is up 18% like for like. Third, at the same time, our financial structure is strengthening significantly with a leverage ratio now at 8.7, which will continue to decline in the next semesters. Finally, as a result of this first half, which exceeded our expectations, we have raised our guidance for 2026 and now expect EBITDA to grow by 12%-14% on a like-for-like basis.
We are now available to answer to your questions.
If you wish to ask a question, please click on the green hand button on the audio player to enter the queue. Once we activate your line, you will see a message to unmute your microphone. Please make sure to do so. You can also submit a written question.
First question from Frédéric Dib. Can you please provide more detail on the sale and leaseback operation where you mentioned yields below 5%? Geography, types of asset, duration of lease. Below 5% seems aggressive compared to market comparables. How did you explain that? Yes, you are correct. This is quite aggressive. This is very good performance of our real estate team. This is also explained by the geographical mix because some of the assets sold were in Switzerland. This is also the proof that we are very selective now that we have exited from the safeguard period, that we are very selective with our operations. We will really focus on operations that make sense for the company from a financial point of view and really are in very good conditions. This is really our strategy, selectivity and very good price going forward. Second question.
Congratulations for the results. Your margin improvement is impressive given the inflationary pressure on wages. Should we expect emeis to be more impacted in H2 2026? We are managing this inflationary pressure. As you have noticed, we have made specific efforts on prices to try to compensate. At the same time, thanks to both productivity gains on overall and management of costs through the Boost program, we are balancing this inflationary pressure by our actions. We should continue to see an improvement in the results in H2, and hence the revision of the guidance. We are not expecting more impact in H2, but that is still to be done. It depends on the events. As you may have imagined, at the beginning of the year, we are not thinking about a war in Iran.
This had impact on the inflation, this had impact on our operation. We immediately adjusted and we are very active on that front to be sure that this will not impact our P&L. The second point is that for sure, concerning H2, most of our costs that are non-staff costs are already fixed and will not be impacted in the short term. This is particularly true concerning energy. Any question on the telephone?
The next question comes from Constantin Gumenita from Caius Capital. Please unmute your microphone.
Hi. Good morning, Laurent and Jean-Marc, and congratulations on solid numbers. Three questions from me, please. One on pricing. Should we expect a similar price evolution in the second half as in the first half, or perhaps slightly higher given the dynamic pricing model you referenced? On clinics, could you give a bit more color or reminder on the operational corrective measures implemented in 2025, and how you expect that to impact second half like-for-like growth versus the first half growth rate? Lastly, on costs. Very encouraging progress on the Boost program in France. Could you also give a bit of color perhaps on your actions with regards to staff costs and non-care home related central costs? Thank you.
Concerning pricing, or active pricing strategy, really this is something that we started one year and a half ago. It is really continuous improvement, facility by facility. What is positive in most of the countries is now that with increased occupancy rate, we start to have more capacity to be selective and to enforce this pricing policy. To sum up, the higher the occupancy rate, the higher the capacity we have to pass prices to our customer. I would say very similar price effect in H2 compared to H1, even if it is sure that after the start of the war in Iran, we reboosted, if I may say so, our pricing policy. Concerning the clinics. Same period, mid last year, first half last year, we launched a corrective action to increase our single room sales.
Meaning that the private contribution of our customers to be sure that they have been taking a little bit more and pay more single rooms than before. This had a significant impact starting already in the second half last year, but more in the first half of 2026, and we expect further results in the second half of this year. Thank you for your comment on Boost. On the staff costs, we continue to drive the staff costs down progressively. We say with a relatively cautious but steady approach month after month, quarter after quarter. This includes clearly organization optimization. This includes simplification of reporting through digitalization. This includes a lot of measures of productivity that obviously we do in our 1,000 facilities across Europe.
This is really a progressive improvement everywhere. This is a strong area of action. This is probably one of the area where we still have a significant opportunity to increase our margin. We are totally conscious of that. Jean-Marc, you wanted to add something or my answer was sufficient?
No, perfect.
Okay. Sorry.
Thank you very much. Can I ask a question?
Sure.
Can I just confirm on the last question?
You have a follow-up question?
Yes, I do. Are there any financial targets you can share on staff costs and other central costs?
No, I think the real target is the one that we have given on the EBITDA progression over the midterm period, which is a growth of 12%-16% average. We will take the measures needed to achieve this midterm guidance, which is clearly one of our goal. Depending on the year, depending on what happen with inflation, depending what happen with the organization, we may change the priorities to be sure to deliver this set of performance as it is our commitment
Thank you.
One question from Emmanuel Arnoldi. "Congratulations for the strong set of results. Could you please comment on how the EBITDA margin, ideally without pro forma income, compares with other industry players? I have the impression that industry standard EBITDA margin is slightly above 20% at now comparable occupancy rate. Thank you." Jean-Marc, I'm speaking too much. Do you want to take this question?
This is clear that we still have a lot of margin for maneuver in front of us. This is true that the best industry players are around the 20% EBITDA margin. We are at 16%. We have gained two points within one year, and we continue to work hard in order to catch up. We will be there shortly, and we will be there even before the demographic wave that will come in front of us, because as you know, demography will play a very positive role going forward as people born after 1945, after the Second World War, will arrive in our nursing homes at around 2029 or 2030. All of what have been explained by Laurent is embedded in our medium-term guidance and will enable us to reach the type of EBITDA margin that you are describing.
Yes. What is clear is that we are still at the early stage of the recovery. You're right in your comment, and this give us confidence that we can continue to show strong EBITDA improvement over the years. Another question from Julian Thomas. "New guidance 2026. It seems that your new guidance factors in some headwinds in H2, less real estate capital gains, wages, inflation, and so on and so on." Well, at this stage, this guidance is reflecting clearly our expectations for the full year. Well, it takes into account the very good results of H1, obviously, but also it takes into account some risk, and inflation is one, cautiousness. For sure, we are not expecting the same amount of real estate capital gain in the second half than in the first half. For sure, there is also opportunity.
It's really our best estimate at this time. Being above is definitely a possibility, and we will try to achieve that, but this is our best estimate at this time.
Your comment, Laurent, on capital gain is very important because last year we had generated EUR 64 million of capital gain, of which only five in H1. That has been factored in guidance that we have been disclosing to you. Obviously, we are there to try to beat it, as we have demonstrated this year.
In the first half, yeah. A question of Jean-Christophe Ganay. I'm translating it in English at the same time, so it will be a little bit slower than normal. "What is the rhythm of progression of occupancy rate you are expecting? How are the temporary workers number of people evolving? How is changing the turnover? Are there constraints of health budget in Europe? Is Boost more advanced in Europe versus France?" I take some, and I give you some, Jean-Marc. Occupancy rate progression. I assume you have seen in the presentation, we have a quite steady rate of increase of occupancy rate in the last years. We are expecting this trend, and it's page seven of the presentation. We are expecting something which is very close to that in the coming second half.
Moving forward, clearly in some countries, for example, in Spain, we have occupancy rate that are much higher. In these countries, as you can understand, it's difficult to go above 100% occupancy rate. We start to see in some country a slight slowing down. At the same time, France is quite dynamic in that regard, or Germany continues to be dynamic with an occupancy rate which is well below our target. I would say second half, we continue to show a good improvement, and we expect that to continue over the years, perhaps moving forward at a little bit slower pace. Temporary workers. I don't know if you talk about France or worldwide. This is clearly temporary workers is really something on which we are working to decrease the number of workers.
We've made huge progress in the two biggest countries, Germany and France, in the last year. It leads to a decrease in staff cost, which is one of our key points. Well, clearly, the market is not helping with difficulties to find some of our professional, especially when we are talking about the more qualified care people. Turnover is really going in the right direction. We have reached a low point in June in that respect. If I take the only month of June, which was really great, we have a turnover equivalent for the full year. We have a turnover of 15% in France in June. This is to be compared with the numbers that we had three or four years ago, above one-third. Really, we are making huge progress in that respect. This is not the end.
The goal is to really be as low as possible, as it is having a low turnover is a very good thing for the cost of labor, the staff cost. It's a very good thing for the quality, it's a very good thing for the company as a whole, as a capacity to retain its customers. Are there constraints on the budget in Europe? Yes, for sure. The first country where we have constraints in the in-house budget is France, definitely. In the other geographies, we don't see that with the same pressure. We have good price evolution, and we have good trends in Germany, in Austria. Even Spain is okay. We may have one difficulty, a little bit more than expected in the Netherlands, but we'll see that in the next months. It's not completely fixed.
For sure, overall, the European countries have a, I would say, a balance sheet issue and a spending issue. They have constraints in their budget, health will be one of the important budget under constraints. What it means for us, and we have already taken action in this respect, is that we need to increase the part that is paid by the families and by the patients. This is clearly one of the key actions of our strategy country by country, depending on the regulation in each country, what we can do to try to find additional ancillary revenues that are out-of-the-pocket money for more customers. Clearly, we are developing action plans everywhere with KPIs so that we can increase this part of the private payment. Jean-Marc, you want to comment Boost?
Bonjour, [audio distortion] . Boost is not a program that is only supposed to reduce cost by renegotiating with supplier. It's much more than that. It's a full operational transformation program where we have reviewed with the operations in our various residents and regions all the various verticals such as food, transport, medical equipment, maintenance of our houses, energy management, drug distribution, laundry, even animation and so on. The idea is can we at the same time improve quality while modifying the organization in such a way that we can optimize our OpEx structure? You have understood that we are tackling in France an OpEx base of EUR 400 million and that we are expecting at least 2% of OpEx reduction at least for 2026, 2027, and 2028.
It took us approximately a year to study and design the program and to roll it out in each and every region. We are very clear levers from improvement that we are currently implementing. It's still much more advanced in France than it is in the rest of Europe. Based on what we've done in France, we are trying to duplicate it. We are starting the duplication in Belgium notably as we speak, and it will be rolled out progressively in all of our other geography.
A question from Pierre Bosse. What is the share of the room in your facilities with air conditioning? How does it compare with our listed peers with the public sector? Very good question because we had the teams working very well in the last weeks on this canicule and heat period in Europe. In France, to give an example, for sure, 100% of our facilities have a common room which is air conditioned, which is just to be compliant with the law. That's not the case for everybody in France. In shares of room in the facility with air conditioning, we are at 50%. When we compare with the average of the private sector, we don't have any comparison with our listed peers. We are not sure if they have communicated on that.
If we compare with the private sector overall in France, private sector is around 18%. Public sector, Sorry?
18.
18%. Yes, 18%, 18%. 18%. The public sector is more around 6%, and the average of the sector is 10%. For sure, for us, it's a huge marketing competitive advantage that we have a higher rate of air conditioning, and we continue to have a program to roll out in the next year, an equipment program starting, obviously, with the south of France, where in some regions in the south of France, 90% of our rooms have air conditioning, as it is almost completely needed everywhere in our facilities in the south. For sure, in the north of France, for a few days in a year, it is less a priority in terms of investment because it's less a priority for the family to choose the place where they are going to put their parents.
Very important topic for sure in terms of quality and a huge marketing competitive advantage. Another question of Arnaud Cada. "Good morning, gentlemen. Congrats on this strong result. When do you think you will free yourselves from the growth investment constraints imposed by your lenders?" For the time being, to be frank with you, I don't feel these constraints. We have projects, and we have increased our CapEx for renovation as we think it's critical to maintain the high level of quality of what we are providing to our clients. We continue to spend good money in renovation, and we will continue to increase in the year to come, especially to renovate our houses. We've started already, and we've never stopped in reality, even during the crisis, to invest in the countries where we think there are good opportunities.
We really never stop to increase the number of facilities we have in the Netherlands. For sure, we are very selective in our decisions to grow. What we cannot do for the time being, and I don't want to do that because of our financial constraints, is we want to prioritize deleveraging. This is our top priority, and you've seen it has been going down in the last years, and it will continue to go down. Disposals become more selective from now on, and we will limit that, and growth investment continue to be quite selective, but more with our own financial targets and return on investment than by a constraint from our lenders. Jean-Marc, you want to add something?
Yes. Good morning, Arnaud. In order for you to have a quantified answer, in the recent past, we have invested by semester into development CapEx, something like EUR 30 million to EUR 40 million, as you will notice on page 23. We have an upper limit, which has been negotiated with the lenders, of EUR 130 million per annum. We are totally satisfied with this limit, and as said by Laurent, our priority is operational improvement. We are not going to restart a vast expansion program as it was the case with our predecessors.
Any more questions? No, it seems not. Just as a conclusion, the five main important points that you need to keep in mind. First, very good set of results, but the recovery is still at this early stage, and this is not the end of the turnaround. We have still a lot of room ahead for improvement. The occupancy growth rate that we have shown in the last years and that we are still seeing in the first half is structural. It is driven by quality, by marketing, by operational excellence. It is driven also by the fact that we have free capacity and room for improvement in occupancy rate and also a very strong long-term demand. As you have seen, France is becoming now a margin recovery story with Boost giving results. We have room, as one of you mentioned also, in staff cost optimization.
We have seen a small weakness in cash flow in this first half. It has been very well explained by Jean-Marc Boursier why we have this one-off effect because at the same time, the recurring cash flow generated by operation is improving and we continue to be very disciplined on capital allocation with the priority number one being on deleveraging. Disposals are very selective now, and we continue to increase our capacity and our investment selectively on growth, but with an approach which is very selective and focused on return on investment. This is really the key takeaways from this first half results. Very strong results. We are very happy about it, and we are very confident that we can continue to grow and improve our EBITDA moving forward. Thank you for being with us this morning. Have a good day. Bye-bye. One last point before we finish.
This concludes the conference call. You may now disconnect.