Good morning, everyone, and thank you for joining us today for our Pluxee First Half Year 2024 results. I'm Pauline, and I'm Pluxee's Head of Investor Relations. I'm very happy that you are all here today with us for our first set of financial results as a standalone listed company. Today we are joined by our CEO, Aurélien Sonet, and our CFO, Stéphane Lhopiteau. Here is our agenda for the call. Our CEO will start with the highlights and key figures for the first half. This will be followed by a business update, and our CFO will take you through our financial performance in more detail before our CEO provides you our fiscal year 2024 and mid-term outlook. With that, I will hand over to Aurélien.
Thank you, Pauline, and good morning, everyone. It is my pleasure to be with you this morning to present our first results as a listed standalone group. I will start by taking you through the highlights and key figures for what has been an exciting period for Pluxee. Last February, we successfully spun off from Sodexo and listed on Euronext, where we now have been trading for over almost three months. This semester has seen the first step in our strategy execution and delivery, with new client wins and net retention on track with our full-year objectives. We recorded +24% organic revenue growth in the first half, with strong business performance across all regions and solid improvement in recurring EBITDA that continued to increase while absorbing new standalone costs. Our cash position is stronger than ever, fueled by a solid free cash generation.
Over the period, we have also successfully refinanced our debt through bond issuance, and our financial strength has been confirmed by a BBB+ rating from S&P. Based on the strong financial performance delivered in the first half, we are raising our fiscal 2024 financial objectives. Organic revenue growth is now expected between 15%-17%, and recurring EBITDA margin at 35% at least, absorbing standalone costs at a constant rate. In addition, we are reaffirming our mid-term financial objectives that we presented a few months ago during our Capital Markets Day. Let's now turn to our financial performance highlights for the first half fiscal year 2024. I'm pleased to say that Pluxee's business momentum and strong financial performance continued in H1 fiscal year 2024. We recorded total revenues of EUR 593 million.
This represents +24% organic growth year-on-year and has been driven by a very positive business momentum across all regions, and especially in some of our key countries such as Belgium, Romania, France, and Brazil, as well as a favorable macro environment. Recurring EBITDA stood at EUR 201 million, with a solid improvement in recurring EBITDA margin, increasing over the period by +90 basis points at a constant rate while absorbing new standalone costs. Our free cash flow generation reached EUR 228 million, corresponding to a cash conversion rate of 113%. This includes a slightly higher level of CapEx as a result of the strong investment path in tech and data, while benefiting from the good momentum in revenue. Let's come back quickly to our main achievements through the journey towards the spinoff and listing of Pluxee.
The last 12 months have been a period of profound transformation for Pluxee, culminating in the successful spinoff and listing. We have transitioned from a business unit of Sodexo to a fully independent company, supported by a strong and experienced board and leadership team. This was possible thanks to the hard work of all our colleagues, both at Sodexo and Pluxee, for which I would like to congratulate and thank them. From here, we have successfully refinanced our debt through an inaugural bond issuance, which was well subscribed, and we have strengthened further our leadership team and geographic governance to accelerate the execution of the strategic plan and deliver our mid-term ambitious financial objectives.
This includes the recent appointment of Alexandre Cotarmanac'h as Chief Product Officer to drive further enhancement of our global product offering, as well as the implementation of an enhanced geographic governance and the appointment of Chief Revenue Growth Officers. We will now move to the business update, starting in the next slide, which recaps the six strategic initiatives we talked about in the recent Capital Markets Day. Our performance in the first half of the year gives us confidence in our long-term success, and we are on track to deliver on the six strategic initiatives presented at our Capital Markets Day. Let me briefly remind you of what we presented in January. First, we are elevating our offer to clients and consumers, and we are addressing their needs through a wide range of employee benefits, which we are rolling out programmatically wherever it makes sense to do so.
Next, we are reinforcing our win-win partnerships with the merchants by boosting their revenues and enhancing their experience, bringing them more value-added services. Third, we are scaling opportunities in employee engagement, reward, and recognition. This large and growing market is driven by the need of companies to offer enhanced employee experience beyond collective benefits. Fourth, part of our focus is on acquiring new clients. This is driven by our powerful commercial engine, where we apply a segmented and personalized approach to drive conversion and SME penetration. Increasing face value is an important lever to unlock the full potential of our existing clients. We leverage data and consumer analytics to advise our clients on how they can optimize their costs while maximizing purchasing power for their employees. The second element is cross-selling, leveraging our broad benefits portfolio to increase the business that we do with our clients.
Our elevated value proposition to our clients will continue to help us optimizing our pricing going forward. Last but not least is driving profitability. Our target is to deliver 250 basis points of EBITDA margin improvement by fiscal year 2026, and this is underpinned by scale and operating leverage. Now, let's look on how we have delivered on this initiative over the first half of the year, starting with our success with new clients. We are well on track to meet our new client gain objective for the full year of more than EUR 1.3 billion. In the first half, development reached more than EUR 850 million in annual business volume at a constant rate. It was up 30% compared to the same period last year, and particularly strong in continental Europe such as Belgium, Romania, and France, as well as in Brazil.
As an example, in Romania, we've been awarded a new multi-year contract aiming to reward teaching staff with an attractive annual benefit package. This program will reach more than 300,000 beneficiaries in total. We are also progressively delivering on our growth ambition towards small and medium-sized enterprises, with over 40,000 new SME opportunities signed over the semester and a contribution to development from new SME clients of more than 25%, putting us on track to meet our +30% target for fiscal 2026. Now, let's look at how we have started unlocking the potential from our current client base, making further progress in retaining, extending, and monetizing existing relationships. In the first half, we recorded net retention rate above 102%. This is ahead of our mid-term objective. To remind you, net retention is a function of face value, cross-selling, and further portfolio growth.
I'm pleased with our progress over the first half across all three drivers. I'm particularly pleased of our high client retention in what is a very competitive environment. We have renewed contracts worth over EUR 1.7 billion in annual business volume with our multi-offering solutions, continuing to drive client loyalty. If we take Belgium as an example, we were able to leverage a new government measure supporting purchasing power to develop and deploy a new benefit program to existing and new clients. Supported by an extensive digital marketing campaign, we were able to deliver an additional EUR 150 million of business volume in H1. We also continue our efforts to drive cross-selling with both clients and merchants.
For example, we took advantage of the Christmas gift campaign in Poland to cross-sell meal benefit programs across our large installed gift client benefit client base, and we will further build on this effort this year. Another example is this time in Colombia, where we cross-sold advertising campaigns to half of our local affiliated merchants, enabling them to boost visibility and consumer traffic. Beyond client wins, retention, and cross-selling, the increase in average face value also contributed to our strong growth in H1 fiscal year 2024. We have seen continued increase in average face value over the semester, of course benefiting from sticky inflation, but also driven by our digital marketing and commercial efforts. Over the semester, we recorded more than EUR 600 million in business volume issued from increases in average face value, putting us on track for our cumulative fiscal 2024 to 2026 target of over EUR 3 billion.
Our impactful data-driven sales and marketing campaigns have been successfully deployed to advise clients on their face value contributions. This was combined with an increase in the legal face value cap across 14 countries. As of today, we estimate that we have now reached between 70% and 80% of the legal face value cap on average. If we look specifically at Romania, we have seen a record increase in the average face value in the first half, with successive increases taking the legal cap from EUR 6 to EUR 8. This has been monetized by a strong data-driven marketing and sales campaign across our client base, deploying a segmented approach by client type and by size. As a result, more than 5,000 clients increased their face value contribution, with 77% of the legal cap reached on average, so still much more to go for.
We are particularly pleased with the additional level of the face value we have driven over the first half, securing embedded revenue for the future. But our strong business performance goes hand in hand with a strong commitment on ESG that I will present to you in the next slide. As presented during the Capital Markets Day, Pluxee's ESG commitments and priorities are embedded in the execution of our strategic plan. First, we have already started working on a double materiality assessment to anticipate CSRD obligations from fiscal year 2025 onwards. We have selected the European sustainability reporting standards that are relevant to our Pluxee's business, and all our countries are consulting their local stakeholders to identify priorities and contribute to our 2030 sustainability vision.
That means interacting with our employees and more broadly with clients, merchants, consumers, but also suppliers, NGOs, and public authorities, all these being a great opportunity to receive valuable feedback. We plan to share initial results during our full-year fiscal 2024 results communication. Secondly, let me remind you about our clear action plan to reach net-zero emissions by 2035. This plan covers the entire value chain and was approved by the SBTi last December. Our first milestone is set for 2025, when our objective is to reach 100% renewable electricity in all our buildings. Several of our countries already switched to renewable options such as U.K., Romania, or Belgium. Lastly, as part of our second strategic initiative, we are constantly looking for new innovative ways to support our small and medium merchants.
As such, we have successfully launched in November a new initiative in France in partnership with Mapstr to promote sustainable consumption behaviors. This enhances visibility of merchants who offer healthy, inclusive, and eco-friendly meal alternatives. At this stage, more than 50,000 French small and medium merchants are currently listed. With that, I will hand over to Stéphane to deep dive in our financial performance.
Thank you, Aurélien. Good morning, everyone. It is my pleasure to be with you today to present our first half-year result as a listed standalone group. As recalled by Aurélien, growth for Pluxee starts with winning business volume. Therefore, let's start the financial performance review by a snapshot on such business volume issued, as a reminder, we call it BVI, over the first semester. In the first half of fiscal year 2024, we recorded overall EUR 2.4 billion of business volume issued, with employee benefits BVI increasing up to EUR 9.2 billion. The circa EUR 1 billion increase on employee benefits represents a +12% organic growth over the semester, which has been driven by a strong business momentum in both new client acquisition and portfolio growth, as Aurélien explained.
BVI from other products and services decreased to EUR 3.1 billion from EUR 3.5 billion as expected, given the high comparison basis in the prior year period as a result of significant public benefits programs issued over the course of Q1 2023. The strong growth in BVI has been one of the key contributors to Pluxee revenue growth over the first half of 2024. Total revenues reached EUR 593 million over the first semester, which represents +24% organic growth, slightly offset by a negative currency translation effect of -2.5%, including the application of hyperinflation accounting to Turkey. Our growth was strong across all regions. Such growth came primarily from increased activity in Latin America, where total revenues grew organically by +27%, supported by buoyant growth and high interest rates in Brazil and Mexico.
In continental Europe, total revenues grew organically by +19%, driven especially by Belgium, Romania, and France, and despite the high comparison basis in public benefits in H1 2023. Turning finally to the Rest of the World, the region posted total revenues up to EUR 102 million, representing +30% organic growth, driven notably by Turkey and India. As you know, with the strength of our business model, Pluxee total revenues are fed by both operating and float revenue, as disclosed on page 17. Over the semester, we saw continuous growth momentum in both operating and float revenues. Operating revenue reached EUR 518 million, with strong organic growth of +17%, driven by portfolio growth, including further increase in face value contribution, and by net client gains, with an increasing contribution from small and medium enterprises.
Float revenue increased up to EUR 75 million, representing +97% organic growth in H1 2024. All regions saw an expansion of their float revenue thanks to continuous increase in their float baseline as a result of higher business volume issued and thanks to our ability to leverage such float baseline in higher interest rates environment compared to H1 2023. Worth also giving a look at how this H1 high performance in operating and float revenue growth was spread over both Q1 that we already disclosed on the 10th of January and now Q2. Overall, we saw positive momentum all through the first half, with organic growth up to +26% in Q2, supported by strong operating revenue growth and by progressive deceleration in float revenue growth.
While total revenue grew +22% organically in Q1 to reach EUR 266 million, they were up +26% in Q2 to reach EUR 327 million, the two quarters benefiting from positive market dynamics across all regions and from a favorable macro environment. Operating revenue grew organically year-on-year from +15% in Q1 up to +20% in Q2, with almost all our countries presenting double-digit organic growth boosted by employee benefits. We will look specifically at the underlying drivers in the next slide. Float revenue grew from EUR 35 million in Q1 up to EUR 40 million in Q2, increasing respectively +110% and +88% organically. Float revenue growth has started progressively decelerating, reaching a peak in the second quarter as interest rates are stabilizing at a high level overall and as they are likely to decrease from now on.
Before coming back to float revenue details, let's focus first on the underlying drivers of our operating revenue growth. In the first half of 2024, we recorded +17% organic growth in operating revenue, reaching EUR 518 million, driven by a strong contribution from employee benefits underpinned by the structural business volume drivers outlined by Aurélien earlier. Employee benefits operating revenue reached EUR 431 million, growing +21% organically over H1. This was first fueled by the 12% organic growth in Employee Benefits BVI that we've seen before. If we look at the BVI bridge on your right-hand side, you will see that this came from, first, a continuous increase in average face value as a result of the intensive marketing and sales campaigns that were conducted over the period, particularly in Latin America and Continental Europe, and that were supported by increased legal cap level in 14 countries.
Second, the positive development in portfolio growth boosted by cross-selling to existing clients. And third, the net client growth, including an increasing contribution from small and medium enterprises. Employee Benefits revenue growth was also supported by an improvement in the take-up rate, reaching now 5% and representing a +30 basis points increase compared to fiscal year 2023. Such improvement in the take-up rate came from a strong commercial focus and from the progressive end of negative client commission in Brazil, which came into force in the month of May last year. Other products and services generated operating revenue of EUR 87 million in H1 2024, growing +4.2% organically compared to H1 2023. Organic growth accelerated in Q2, while Q1 organic revenue growth was impacted by the high comparison basis in public benefits.
That's it for the operating revenue detail. Turning now to the float revenue details on page 20. As of February 29 of 2024, the float baseline on Pluxee balance sheet, top of the page, amounted to EUR 2.8 billion, up +9% compared to August 31st of 2023. We saw continued growth in our float baseline in H1 2024, fueled by the steady increase in BVI and by some residual favorable impact of the change in regulation to the prepaid model in Brazil. Interest rates also increased significantly compared to H1 2023, resulting in an average yield of 5.5% over H1 2024 compared to 3.4% over H1 2023. In the end, fueled by a higher baseline and by increased interest rates, Pluxee float revenue grew by +97% over the semester, up to EUR 75 million, having probably reached a highest point.
Let's now look at how the strong revenue performance translates into profitability. Recurring EBITDA reached EUR 201 million in H1 2024, up +23% year-on-year and +28% organically. The three regions delivered strong improvement in EBITDA, which was driven by the very good momentum experience in the float revenue. This translated into a H1 2024 recurring EBITDA margin of 33.9% at current rates and 34.4% at constant rates, representing a + 90 basis point improvement compared to H1 2023, well on track with our full year objective. The recurring EBITDA margin, excluding float revenue, was temporarily impacted by additional standalone costs plus the impact of remaining management fees that were still invoiced by Sodexo over the first five months of the semester, as well as by some bad debts reserved in Latin America and other one-off.
We are confident in our ability to absorb these additional standalone costs and to drive closer underlying margin improvement going forward, thanks to, first, continuous focus on leveraging scale effects. Second, improved operational efficiency supported by continuous investment in tech and digital capabilities. And third, increased cost effectiveness as we continue to upgrade our internal structure, processes, and monitoring tools. While revenue and EBITDA are our main performance indicators, I would also like to walk you through the rest of our income statement. Clear here again that our top line is strong and that our profitability enjoyed overall a stronger trajectory. When looking at the net profit at the bottom, it reached EUR 68 million in H1 2024, a bit lower versus H1 2023.
This change reflects mainly the impact of the new capital structure of the group, as well as some one-off costs related mainly to the spin-off and rebranding. In more details, other operating income and expenses were -EUR 41 million in H1 2024 versus -EUR 3 million in H1 2023. H1 2024 included EUR 32 million of one-off expenses related to the spin-off and rebranding costs and EUR 11 million in connection with the write-off of specific digital assets related to a partner platform that has been now refocused on two countries. Other operating income and expenses are now expected to be around -EUR 80 million for our fiscal year 2024 compared to -EUR 60 million initially disclosed, the deviation coming from the assets write-off just referred to and from some restructuring costs to come.
On its side, financial result reached -EUR 10 million in H1 2024 compared to a +EUR 11 million in H1 2023. Actually, H1 2024 financial expenses increased following the increase in interest rates and the funding of the new capital structure in relation with the spin-off. As a reminder, EUR 610 million of additional debt were pushed down to Pluxee as of August 31st last year. Overall, the gross borrowing cost over H1, representing -EUR 23 million, were offset by the +EUR 23 million interest rate income generated from the group's solid non-float related cash position. But the one-off costs, mostly related to the implementation of the new financing structure, remained in the net balance of our financial result.
Given one, the current interest rate environment, two, the control over our borrowing costs, and three, the new bond issuance, we now expect the financial result to be improved to around minus EUR 15 million for the full year compared to -EUR 20 million initially provided. Finally, income tax amounted to EUR 42 million in H1 2024 based on an effective tax rate projected for the full year of now 38%. Such 38% effective tax rates for fiscal year 2024 particularly reflect the temporary higher level of other operating expenses in relation to the spin-off and to the write-off of specific digital assets, which cannot be offset against taxable profit. Going forward, we expect the effective tax rates to normalize at around 30% in the coming years.
After this full review of our H1 P&L, time to move to our high level of EBITDA came also with strong cash generation. In H1 2024, we delivered, bottom of the page, a recurring free cash flow of EUR 228 million compared to EUR 265 million in H1 2023, when excluding the impact of sales of receivables, which used to happen under the previous holding by Sodexo. Back to the top, just below EBITDA, capital expenditures reached EUR 68 million in H1 2024, corresponding to a CapEx-to-revenue ratio of 11.5%. We took benefit of the revenue momentum to invest further in our tech and data capabilities, resulting in a +28% increase in CapEx compared to H1 2023. We expect the CapEx ratio to progressively settle down in the coming years to our objective of 10% of revenue.
The change in working capital was a contribution to cash flow for EUR 158 million in H1 2024, in line with the EUR 150 million in H1 2023, when excluding the sale of receivables completed under a facility employed by Sodexo, but that we no longer use. All this has resulted in a strong cash conversion rate of 113% in H1 2024 compared to 163% in H1 2023 adjusted for the transfer of receivables. Of course, this strong cash generation has directly contributed to the strong improvement of our net cash position. Right-hand side of the chart, our net financial debt position as of February 29, 2024 was actually a net cash position standing at EUR 1.065 billion, excluding restricted cash, meaning a strong improvement versus the EUR 859 million as of August 31st last year.
This increase reflects the strong free cash flow we have just seen, as well as the proceeds received from disposal, mainly the sale of our minority stake in Epassi. Such inflows from the free cash flow and the disposals were partially offset by the outflows from the OIE expenses related to the spin-off and rebranding costs. Last, our net debt position, again net cash, was also impacted by standard non-cash items, namely, first, some accrued interest not yet cashed out within the free cash flow or the increase in lease liabilities in connection with our new headquarters building, all included in the category others. Or second, the impact of foreign exchange translation on cash position held in our countries. Finally, before handing over back to Aurélien, let's also look at our updated capital structure and financial profile.
As of February 29 of this year, our EUR 1.065 billion of net cash position was made up. First, as highlighted with the equity capital layer, almost EUR 2.3 billion of cash when excluding EUR 1 billion of restricted cash from the EUR 3.3 billion total cash balance at the top. Second, as highlighted with the equity capital layer, EUR 1.2 billion of gross debt when cumulating all the borrowing lines. As mentioned before by Aurélien, in the early days of H2 and in order to refinance a bridge loan at a lower cost and for a much longer maturity, Pluxee successfully issued new bonds for an aggregate amount of EUR 1.1 billion structured in two tranches: EUR 550 million issued with a 4.5-year maturity and a 3.5% coupon, and another EUR 550 million issued with an 8.5-year maturity and a 3.75% coupon.
As part of this bond issuance, Pluxee's strong financial profile was confirmed with a BBB+ rating and a stable outlook from S&P. The improvement in our net cash position as of the H1 end and the success of our bond issuance in the beginning of H2 make such profile even stronger as of today. Thanks for your attention. I am now handing over to Aurélien to provide you with an update on our outlook and with closing remarks.
Thank you, Stéphane. Our Capital Markets Day held last January has been the opportunity to present to the market our annual and medium-term financial objective. They've been built to reflect our focus on delivering sustainable organic revenue growth, improving our recurring EBITDA margin, and maintaining strong cash conversion levels. Based on this strong set of half-year results, we have decided to raise our financial objectives for the fiscal year 2024. Organic revenue growth is now expected between 15%-17% from low double-digit. Business momentum should continue over the second half, supported by our strong pipeline and sales and marketing efforts while facing higher comparison basis, especially in Q4. As such, we expect to generate double-digit organic growth in operating revenues for the full year, as well as still high growth in float revenues, even if decelerating in H2.
Recurring EBITDA margin should reach at least 35% absorbing standalone costs compared to at least 34.5% at constant rate. Our mid-term financial objectives remain unchanged. We reiterate our ambition to reach low double-digit organic revenue growth for fiscal 2025 and 2026, circa 37% recurring EBITDA margin in fiscal 2026, and above 70% cash conversion on average over fiscal 2024 to 2026. To conclude, we are very pleased with this very strong set of results, the first step in our strategy execution and delivery. The broad-based 26% organic revenue growth that we have just reported in Q2 reflects the strong attraction of our business and the dynamism of our local markets. It has allowed us to fund continued investment while delivering margin improvement.
Last but not least, our cash position is stronger than ever, fueled by solid free cash generation, giving us the ability to fully realize our organic and inorganic growth ambitions. Over the last few months, I've been lucky enough to visit our businesses and local teams, and I can see the energy and the enthusiasm created by the spin-off of Pluxee. It is really the start of a new growth chapter. All this underpins our confidence in successfully delivering our short and mid-term objectives. With that, with Stéphane, we would be happy to take your questions.
Thank you, sir. This is the conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. In the interest of time, we ask you to please limit your questions to two per caller. Please pick up the receiver when asking questions. First question comes from Mourad Lahmidi of BNP Paribas.
Yes. Good morning, gentlemen, and congratulations for this very strong quarter. So I have three questions on my side. The first one is on the guidance. So it seems to imply low double-digit growth for the rest of the fiscal year. So I'm just wondering if there are any elements for you to expect a slowdown in H2 relative to H1. Second question is on your like-for-like growth for Q1, actually, that you show in the H1 release. It seems that you've restated this like-for-like growth in Q1 compared to what you published previously. So I'm just wondering what has driven this restatement. Finally, a question on the write-off of digital assets. Could you please give us some details about the nature of this write-off driving the upgrade in the one-off costs? Thank you very much.
Thank you, Mourad. So we start with your first question regarding the guidance. What we said is that we expect either the business momentum that we've seen in H1 to continue over the second half. And again, this is supported by our strong pipeline and our successful and fruitful sales and marketing efforts. But we also, I mean, we will face a higher comparison basis, especially in Q4. Q4 last year was very strong, especially due to the first impact of the evolution of the law in Brazil. So that's why, I mean, we expect for the full year to generate a double-digit organic growth in operating revenue. And overall, we've been able to raise our guidance for the total revenue growth that we now expect between 15%-17%. Regarding the second question, Stéphane, maybe you can take it.
Yeah. So on this one, so we did not restate our reported figure. Our reported figure remains the same. But we restated the way we externalize organic growth. And basically, our Q1 reporting underestimated organic growth in connection with Turkey. So we changed the way we externalize this organic growth to be consistent with market practice. So there is no specific accounting guidance on the way you report organic growth. But there is market practice. And basically, I don't want to come into too many details. But when you look at a country under hyperinflation, in our case, Turkey, if you think about the way this country reports its figures in local currency first.
So the growth in terms of local currency is driven by increases in volumes, in our case, more vouchers, by local inflation, and by the application of the Consumer Price Index, which leads the books to be upgraded all along the year applying this index. We disregard this application of the CPI. But in the first Q1, we also disregarded the local inflation. And we only recorded for the increase in volumes in terms of organic growth, which is not consistent with market practice. And in our case, when you think about our business, when the objective of our sales force is to go to client and to record increase in face value, you absolutely need to reflect inflation impact because this is also the objective of our sales force to get price increases. So this is why we restated.
Again, we did not change anything in the reported figures. We changed the way we record organic growth, which is a way to externalize the variance between the two years in order to make it closely to the reality of business.
Thank you, Stéphane. Regarding your last question, Mourad, regarding the write-off of digital assets. Actually, since we started our digital transformation, so back to 2018, we have started developing our own digital assets that we mutualize at global level. And now having our own digital asset, it has made redundant in some countries some specific digital assets that we developed in partnership with a technological platform provider. So we decided to recenter the deployment of those specific assets in only two countries and to focus on the development and the deployment of our new I mean, our new global and proprietary asset in the rest of countries where we operate. So that's why we made this write.
Okay. Great. Thank you very much.
The next question is from Johanna Jourdain of ODDO BHF. Please go ahead.
Yes. Good morning. Three questions as well. So the first one regarding the partnership with Santander in Brazil. Could you please update us on where do you stand, what are the next steps, and when can we expect to see some contribution from this partnership? My second question is regarding the M&A pipeline. Could you please revert on your M&A pipeline and your level of appetite in the current context? And my third question is regarding the external processing costs. What is the trajectory that you expect over the coming years coming from about 30% of the current cost base being external processing costs? Where do you see that coming after a few years? Thank you.
Thank you, Johanna , for your question. So regarding the partnership with Santander in Brazil, so we are still waiting for the final approval of the central bank. It should happen over the summer, summer 2024, of course. Therefore, we expect the first positive outcomes of this partnership to be materialized on fiscal year 2025. Regarding M&A, so we said it during the Capital Markets Day, M&A will clearly enhance our key strategic initiative. It will help us accelerate the execution. Our M&A strategy is focused on the employee benefits and engagement market with three objectives: acquiring additional volume to reinforce Pluxee's market share, second, broadening our offering and product portfolio, and the third objective would be to enrich our tech capabilities still by partnering with innovative companies. Again, we will be very targeted and disciplined in our approach to M&A.
Having said this, we currently have a pipeline of active projects that are in various stages of development. Obviously, I mean, for obvious reasons, we cannot comment more. But this is where we stand as we speak. For the last question, Stéphane, regarding the processing costs.
So, regarding the processing costs and the percentage of such processing costs to revenue, so first of all, and you will understand it, Johanna , we don't guide specifically on this ratio. We guide globally on the EBITDA margin. What I can tell you is that these external processing costs are the most variable costs we have in our income statement. But they depend more on business volume issued rather than on revenue per se. And we, of course, have the target to optimize, even though they are variable, to optimize them as much as possible, leveraging all our investment and intake and data capabilities.
Maybe to add on what Stéphane just said, there is this project in France to digitize, to put an end to the paper. We are currently involved in the discussion and in the reflection with the French government and all stakeholders that are contributing to the system. We are working together on how to modernize the best way the meal benefit system. The digitization, the full digitization, is at the heart of it. It will help us, of course, I mean, optimize our processing costs in France.
The next question.
Thank you, Johanna .
I apologize, sir. The next question is from Julien Richer of Kepler Cheuvreux.
Yes. Good morning, everyone. A few words for me, please. You talked about the operating EBITDA margin evolution during H1. Is it possible to quantify the different moving parts? What has been the impact of Sodexo management fee, the standalone cost, etc., and how you see maybe not a guidance, but what kind of potential you think exists on that line going forward? Another one on the float revenue, what kind of investment vehicle do you have? I mean, do you have investments in short-term or longer-term assets that might enable you to maybe mitigate a little bit the negative impact of interest rate evolution? And the last one, maybe if you can give us the operating revenue growth in France, that would be great. Thank you.
Stéphane, you want to?
Okay.
Probably to start with the.
The two first ones, maybe take the last one. Okay. So on the operating EBITDA margin, if you look at the details, you will notice that compared to H1 2023, we are 300 basis points behind. This is fully explained by some one-off, which basically so we are talking about a bit more than EUR 500 million of operating revenue, so without the float, meaning that this 300 basis point deterioration corresponds to EUR 15 million. So looking for EUR 15 million, I think this EUR 15 million can be I think I know this EUR 15 million can be broken down into three buckets. First of all, in H1, for five months, we were still supporting some management fee from Sodexo, while at the same time, we had the ramp-up of our standalone cost.
To some extent, this one-off is something close to EUR 5 million-EUR 6 million additional cost, extra cost, that we are not going to have anymore in Q2. If you look at the details of our books, you will see that the management fee from Sodexo were up to EUR 11 million. So I'm not saying that we have to reset the full amount because we also have to cope with the ramp-up of our own standalone costs. So meaning that the difference between H1 and H2 is going to be something like EUR 5 million-EUR 6 million. Then we have the second bucket related to some bad debt reserve in Latin America in connection with the change in regulation in Brazil with the move to a full prepaid business model.
We had some clients facing some difficulties to catch up because they had to go and pay ourselves based on the previous model. They had to accelerate to some extent for some of them, paying us twice, which led some of them to facing some difficulties. We have a little bit of delays in some collection of cash in the A/R. If you look at the balance sheet, you will see clearly that we have EUR 8 million of increase in bad debt reserve in the H1. If you apply this to a full year, this is up to EUR 16 million compared to what we used to incur in the previous year. Now, this does not make any sense. This is really a one-off. We expect to be able to reverse this. This is an additional EUR 5 million extra cost in the H1.
Then we have also other technical matters related to the presentation of our combined account the year before and now two accounts. Just an example in connection with the service costs related to some put or call option, these kind of things, which also leads to a specific one-off cost. Overall, we have 300 basis points fully explained by one-off, which are not going to replicate in the second half of the year, which fully explain the deterioration of the H1 operating recurring EBITDA margin. Regarding the investment of our cash, we are optimizing such investment. It's always a challenge because, as we have all noticed, the decrease in interest rates, i t didn't come as quickly as initially expected in the beginning of the year.
Every time you extend a little bit the maturity of a term deposit, then the interest rates you get from the counterpart, from the bank, is lower because they anticipate the decrease in interest rates. So we are managing it as much as we can. And we announced that we were extending the maturity. But we have been very careful. And I think we were right to be careful because we have still been able to profit for the still high interest rate in the last three months versus what was expected if you go back to beginning of January. So we are balancing it as much as we can. But it's always a guess. And as we all know it, none of us know how interest rates will move in the coming months, even though there is a consensus that they should decrease.
Regarding your last question related to the operating revenue growth in France, more specifically, so we don't communicate we don't give the breakdown. I mean, the total revenue growth in H1 for France was close to 22%. Out of it, I mean, the organic operating revenue growth was, I mean, a double-digit growth. This is what I can share with you.
Great. Thank you very much.
The next question is from Pravin Gondhale of Barclays.
Hi. Thanks for taking my questions. If I may, 2 questions. Sorry. Sorry about it. Extremely sorry about that. Just wanted to check on the CapEx guidance first. The FY 2024 CapEx guide is now raised to 11.5% of sales versus 10% earlier. And then midterm guide is also raised to 10%-15% sales now. What are the key drivers of that change? Has there been any change in group's approach to the OpEx versus CapEx spend on tech, probably affecting the timing of tech spend or anything else? But can you just explain the drivers of that change and how that's impacting the dynamics of OpEx versus CapEx tech spend, please? And then the second question is on the Brazilian regulation change.
One of your peers recently said that they have replaced the negative commissions to the clients with alternative services being bundled with their main offering and suggested that it's sort of an industry-wide practice. Do you also follow the similar one? Do you offer some sort of alternative services in lieu of those negative commissions under new regulations? And if yes, what sort of services are those? Thanks.
Okay. Thanks for your question. Maybe I will start answering your second one regarding Brazil. So the evolution of the regulation in Brazil, so back to August 2023, this evolution allows issuers to offer to their clients bundle offers. And this includes well-being and nutrition benefits for organizations' employees. And as such, in Pluxee, we develop benefit packages. But for some of our private clients, and those packages include, for example, because you were asking, I mean, what kind of services, access to sport centers or telemedicine, those kind of benefits. Regarding the first question.
The CapEx ratio to revenue is currently high at 11.5%. This is on purpose. We are also taking benefit of the favorable environment on our ability to capture significant growth, to deliver significant organic growth, to accelerate in CapEx and tech OpEx at the same time. This is also one reason why this EBITDA margin is good. We are also preparing and investing for the future. The balance between CapEx and OpEx in terms of tech has remained approximately the same. It's approximately the same amount. It's true that going forward with the scale effect, it's likely that our CapEx ratio should come back to something closer to 10%. This is what we have as a target.
For the time being, the priority is also to take advantage of the current situation on our strong delivery on organic growth to prepare for further organic growth as well.
Thank you very much. That's really helpful.
The next question is from Ed Young of Morgan Stanley.
Good morning. I've got two left, please. First of all, just on the float evolution, Stéphane, you spoke about the float peaking. And Aurélien, you spoke about growth. I'm sure that's just year-on-year and quarter-on-quarter. But if you could clarify what you expect broadly on float in absolute terms in H2 versus H1, that would be useful. And the second thing is, just wondered if you have any update on timing you expect to hear about anything on French regulation. Thanks.
Regarding the float peaking, the float revenue, so we know to be more precise, we said that the growth of float revenue was peaking. Again, regarding H2, so we will see a deceleration of the float revenue growth in terms of absolute value of float revenue. First of all, we don't guide on this. Overall, you might expect something to be close or maybe a little bit lower versus what we delivered in H1. This is what we have in mind.
Regarding the evolution of the regulation for the meal benefits in France, as I said, I mean, so working sessions already started with the government and all the stakeholders. The objective or the goal is to submit a draft of law related to the modernization of the meal benefit system in September. So this is the timing that the government has in mind for the moment.
Thank you.
The next question is from Justin Forsythe of UBS.
Awesome. Thank you so much. Can you guys hear me?
Yes, very well.
Great. Congrats on a nice quarter here. Really appreciate it. So a couple of questions from me as well. So I wanted to understand a little bit better the bridge from book value or business value growth up to operating income or operating revenue growth in employee benefits. So I noted the 12%, and you gave a really nice bridge there. And also seems like take rates were up 30 basis points as well. So maybe you could just help us understand why take rates are going up and if there's anything else included in the delta between business value and revenue growth. The other question I wanted to ask is around 2H margin expansion because it seemed as if, and I apologize if I missed this and it has been already asked, that you're guiding to a bit of margin expansion in 2H.
However, we also have, it sounded like, some incremental spinoff costs. Understand that there is some outperformance layered into your guidance on the revenue side. But what is driving the accretion in margin expansion in 2H? Thank you.
Okay. So regarding your first question, Justin, so let's start maybe with the 12% BV growth. Let's come back to the drivers. So there are, I mean, the net new wins, portfolio growth, and cross-selling, and the increase in average face value. I mean, the contribution of those three main growth drivers was quite similar in H1 fiscal year 2024, compared to the breakdown we have given for fiscal year 2021 to 2023 with the average face value growth representing around 60% of the BV growth. So the remaining being split almost equally between portfolio growth, cross-selling, and the net new wins. And after, regarding the improvement in the take-up rate up to 25%, this improvement is the result of, first, the continuous commercial efforts of our sales team and both among clients and merchants.
This is based on our strong value proposition that we keep on enriching, leveraging on our investment in our digital products. It has also benefited from a slight uplift following the progressive end of the negative client commission in Brazil. Again, I mean, regarding this take-up rate, I mean, as we said during the Capital Markets Day, we expect that it will continue to progress slightly over the coming years.
So, regarding your second question on the improvement on the EBITDA margin in H2, so you're right. I mean, the outcome of our guidance and what we delivered through H1 is that we will deliver better EBITDA margins on the half of the year, which so first of all, I just want to make it clear that this has nothing to do with the spinoff costs because the spinoff costs are recorded in other income and expenses. But there are some explanations regarding the standalone cost that we now support based on new standalone situations. So there are, I think, three main reasons for the improvement of the EBITDA margin. The first one, what I explained before answering another question regarding the 300 basis points difference versus H1 and H2 due to some one-off, then we are absorbing our new standalone situation.
Going forward, it's going to be better quarter on quarter. It's going to be better in H2 because we are still delivering growth. The standalone costs are going to be our fixed costs. We will have a better absorption of these standalone costs going forward. Then when you look at what Pluxee has delivered over time, H2 were always better than H1 because it's also the way we manage. This is the dynamic behind the way you monitor the business, the performance all through the year with H2 being a little bit better than H1.
Got it. Thank you so much. Appreciate it.
The next question is from Sabrina Blanc of Bernstein .
Yes. Good morning. I have two questions. I have two questions for my part, please. The first one is regarding the acceleration of the operating revenues between Q1 and Q2. I understand that there is some, let's say, non-recurring or one-off impact in Q1 due to public benefits. But just to understand, excluding this element, what is the trend behind? And the second question is a small question regarding the currency impact. It seems that the currency impact is higher at float revenues than it is at operating revenues. Just to understand why it's not fully linear.
Okay. So regarding the acceleration in between Q1 and Q2, so you're right. There is one specific item, which is the public benefit. But this public benefit is more on the BVI than on revenue because we had when you issue business volume, you have a specific impact in a short period. But then the revenue derived from this issuance of business volume spread over a longer period of time. So this has not so much impact on the difference between Q1 and Q2. And overall, when we look at it because we also noticed this difference, of course, there are no specific things. It's more related to the global business momentum, commercial momentum.
The very good news behind it, if you look at the details, you will see that this acceleration is more in Continental Europe and the rest of the world versus Latin America, where we already have very strong position. So it's really good news for us that we are accelerating in Continental Europe and the rest of the world. Regarding the currency impact, your second question, so this is true as well. This is fully related to Turkey, again, where we have significant float revenue in Turkey due to the very high interest rates in the country. But this is offset by the currency translation effect. And something that I explained, this is the value behind our business that we have the ability to offset potential currency translation impact, deterioration in value of local currency by higher float revenue thanks to the high interest rate in such situations.
The final question, gentlemen, is from André Juillard of Deutsche Bank.
Good morning and congratulations for the strong results. A few questions, if I may. First one about guidance. You improved your fiscal year 2024 guidance, both on timeline and profitability. Why are you so conservative for the midterm guidance? And don't you think that you could improve them slightly? Second question about the float and the risk you see in the actual environment. Could you remind us the split of the float geographically? And in general, not only on the float, what are the main risks you identify in the actual environment in general? And last question, if I may. You partly answered it, but it's about capital allocation. So you've got a very comfortable cash-positive position. You seem to have a significant pipe. But do you still consider the possibility of return to shareholders? Thank you.
Thank you, André, for your question. So regarding the midterm guidance, so indeed, it remains unchanged. I don't consider that it's conservative. I mean, we are pleased to reiterate our mission for 2026 and to reach a low double-digit organic revenue growth both for 2025 and 2026. And this after delivering a growth between 15%-17% in fiscal year 2024. And we reiterate our objective as well to deliver this EBITDA margin improvement to reach up to 37% in fiscal year 2026 and delivering, I mean, the 70% cash conversion on average from 2024 to 2026. So for the moment, we feel good with this guidance. And again, we are very, very pleased with the strong set of results in H1 fiscal year 2024. But this is the first step in our strategy execution.
Regarding your question about float revenue, the float revenue is driven by two elements. First, the float baseline, which is quite well spread all over the world across all our countries. And then there are some differences in interest rates, which is the second driver of the float revenue. Of course, we have these differences. So it's very difficult. None of us know how interest rates are going to change in the coming months. There is a consensus, at least for the current year and the next year. And then you can also refer to the forward rate curve. And based on this and taking into consideration the increase of our float baseline, what is going to come from the increase in business volume issued, we can expect globally float revenue to remain quite stable over the coming year versus what they are in the current year.
But we'll see. This is too early to talk about this. My message is for you to be aware that, in our case, we have two key drivers in terms of float revenue growth. One, which is very erratic, unpredictable, which is interest rates. And we'll see. And the second one, which for us is more predictable, which is the underlying baseline made of the business volume issued, which translates into float amount available in our balance sheet. In terms of capital allocation, so it's currently too early for us to make any assumption, to have any specific consideration. As explained by Aurélien, we have some potential M&A targets. So we'll see. We are three months now after the spinoff. So quite early for us to change anything regarding this return to shareholders. And we will talk about this later in the year or in the next years.
Thank you.
Thank you very much.
I think it's time to conclude. Thanks a lot for attending this call this morning. As said before, we are really pleased with the first set of very strong results of Pluxee. This makes us very confident in our ambition and in our capacity to execute successfully our strategy and to continue delivering a strong performance in the future. Again, thank you. Thank you for your attention. We look forward to speaking with you beginning of July for the Q3 publication. Thank you very much. Have a great day.