Rexel S.A. (EPA:RXL)

Earnings Call: H2 2020

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Feb 11, 2021

Good morning. Good afternoon, ladies and gentlemen. I am Patrick Berard. And this afternoon, first with Laurent Delabarre, our CFO, who is next to me, who will, in the first section, present to you our Q4 sales and full year 2020 earnings results. Immediately after, joined by other COMEX members, we will bring you through our next 3 years' view on the markets, Rexel's role and our guidance. In doing so, we come out of a very specific year, you all know. And out of this year, there are many learnings that gives us confidence in what we have done in the past and confidence in what we can really get out of the coming years and achieve with all the REC sales people in order to provide to our shareholders good earnings. To our stakeholder, constructive results of different kind and to our employee, a good future. Now let me go to the Q4 sales. And Q4 has told us that despite the COVID during the year, we have been able to adjust first and then having a steady growth which materialized in Q4 and which really gave us solid sales outlook in order to finish the year better than we thought. It was very robust in our capability to serve in our proximity model, very robust in the way we got all our customers and all the customer base and portfolio intact and really in a daily mode working with us. And it was very robust in the way we were managing internally to the lowest cost base in order to make the year as good as we could and without jeopardizing anything about the future. And this combination of getting out for the most we could of a market which was what it is, okay, with the up and downs, we have demonstrated a certain flexibility without jeopardizing the future because we capitalized on all elements, we continued to get them more in a user mode, more rolled out throughout the company and at the same time paving the road for the future. Therefore, this exchange of today come at a point in time, which is a great time. The time by which we harvest what we have done and we now can make the case that there are fundamental components for the next 3 years. This is what today will be about. Now get me if I go to the Q4 2020 results first, okay. A few numbers showed us how robust, how agile and how resilient this company has been able to go through all the up and downs of the year. First of all, there is one thing which has been remarkable. Our digital sales and digital penetration went up despite all other aspects. And we maintained a high level of digital transformation throughout the year, probably faster than the years before. And now there is a generic adoption by everybody because it's a way of life. And therefore, we have reached our digital sales penetration in 2020 above 20% and going up by 3 17 bps. And globally speaking, not just the digital sales, our global sales was better than expected until the last day of the year. And I will come back to it because we saw the ramp up. At the same time, we didn't we went through the crisis and we didn't close any of the indispensable assets, Proximity branches, Logistics Center, all remained open. All are still there for the same amount as before the COVID. We have adjusted the way we use them, but the asset space is absolutely intact for the future as much as for today. At the same time, because there was a crisis, we got a very tight and best in class OpEx management in term of adjusting. We adjusted to the worse and we adjusted very narrowly and very, very managed stepwise by weeks, by months throughout the recovery, knowing that they were not the same in all the places and therefore this agility at the same time, with the proximity and the well shared principles by which we would adjust all this OpEx to the market needs and the market demand brought us to the best of what we could in 2020. And what we could in 2020 was to reduce structurally also a lot of the different pockets of OpEx spending, whether it was obviously less traveling, but it could have been other elements of our previous way of life, which we have reduced, shrinked or our total structure of the company cost, which is now 6 points structurally lower than the year before. And this is the level by which we enter into 2021, which is also a moment by which we have rebased the company for the future. And all of this naturally. The question was, would we manage the cash? Would we get the cash out of such a crisis? And Rexel has proved the case, I made the case that we could extract all the cash that was needed and we got all the customer paying in time. We got our inventories down without jeopardizing the service level. It was also a few fundamental adjustments along the line of the down and the upper gain and we have generated the cash that you have seen in the that we have published this morning. And we have generated a free cash flow of EUR 613,000,000 in full year, which translate into a net debt of EUR 1,300,000,000 which allowed us to say this is the lowest level ever since the IPO in 2,007. In doing so, we were able to resume a different distribution policy for that we will propose to the general assembly of €0.46 per share for the future, which gives at the share price of yesterday a yield of 3.4%. Therefore, 2020 is a year of certain achievements. It's a year of harvesting the results of the previous years in all the investments we have made and it's also paving the road and setting the new base for 2021 and beyond a better company. What we see also in our numbers that at the end of the day, we got minus 6.5 percent of same day sales. However, digital went up and not just a peak during couple of months like during the lockdowns, but also after the peak coming to a level of resistance which is plus 11%. The gross margin suffered only from the lack of volume in order to get the rebates at the end of the year, but didn't suffer from any other element in the construction of the margin gross margin. As a result of this, plus the OpEx adjustments, we got an EBITA margin at 4.2%, which is down 78 bps versus previous year and still allowing us to have good results for what we consider a very tough year. Now when it comes to cash, as I said before, we managed EUR 630,000,000 of free cash flow before interest and tax, lowest level of net debt since the IPO. And just to remind you, it was €1,946,000,000 at the end of the previous year, very significant reduction. And at the same time, we were able to bring our indebtedness ratio also at the lowest since very long time at 2.114. When we did that, we did that also structurally with certain components. The numbers behind the number, they are structural components. And especially on the OpEx side, it's obviously using our staffing to the best of what was needing in order to serve our customers, but at the same time serving the customer with a high level of service. This is helping the gross margin being at the NPS the highest in many parts of the world that we never had before. But it's not just this. It's also eliminating different kind of cost, reducing T and E for obvious reason we couldn't travel, but also asking every single employee to do his work at the simplest spending level that we could and it did work. And allow me to say, we had a program before called Rexal Easy, make it simpler, make it low cost, make it happen. And this RECS LEC could materialize. It was something we had in mind for the next 3 years and the COVID forced us to make it faster. And therefore, we got the results. And now with Rexel EZ expanding and needing more every day in term of usage, we will have even better years to come. At the same time, let me show you also the way the recovery did happen and as you could see in the different territories, it's a bit like the COVID. It started in Asia. Asia recovered earlier, the upper line. It started then it came to Europe and especially Southern Europe and then it expanded. Therefore, we got the curve in Europe, which crossed the 0 level only in at the end of Q3 and mainly in Q4. And North America got hurt later. And obviously, as a slower recovery and will gets closer to and the 1st months of this year are telling us that it's getting even closer, meaning all these trends continue to materialize. It's a recovery pattern, top line. It didn't change the margin commercial margin line. We are back to where we wanted and the rest has been done by OpEx adjustments. Now in order to get more precise into these numbers, I will ask Laurent to take over and he will bring you through the regions. Thank you, Patrick, and good afternoon to everybody. Let me drive you through the different building blocks of our performance this year. Starting on slide 7, where you can see the geographical breakdown of our sales, both in Q3, Q4 and full year. Patrick Corelli comment on the global trend. In Q4 2020 specifically, Killy, Sunday sales were down 0.7% compared to a minus 17.7% in Q2 2020 a minus 4.2% in Q3 2020. As you see on the slide, sales improved sequentially in all our geography in Q4 and we had positive sales growth in both Europe and Asia Pacific where sales grew in double digit. In North America, which is 1 third of our sales, the business shows signs of improvement from a lower base. Let's now look on the next slide as a breakdown more in detail by geography. So you can see that after a strong drop in Q2, all country rebound starting in Q3 in Europe. And Europe has been in positive territory for the last two quarters. Germany and Scandinavia remained positive throughout the year on the upper part of the curve. France bounced back in Q3 after being hit hard in Q2, U. K. And Southern Europe were negative throughout the year and I've seen an improvement since the law in Q2 more pronounced in the U. K. All in all, in Europe, 5 out of 7 countries or sub region were in positive territory in Q4. On slide 9, we look more closely at our performance in Europe. Overall, sales in our biggest region stood at €1,930,000,000 in the quarter, up 2.1% on a same day basis. In our home market of France, which account for roughly 40% of our European sales, our revenue rose 1.4% on a challenging base effect, driven by proximity business and more specifically residential up mid single digit. Sales in Scandinavia were up 2.8% with the positive momentum in Norway up 14%, notably driven by price increase to offset the impact of the Norwegian Skruent devaluation on imports. On the other side, Sweden up 0.6% benefited from better momentum in November December, mainly thanks to increasing demand from small and medium contractors. Benelux grew by 6.9% with Benelux itself up plus 14.3%, largely benefiting from a boost in residential from PV market, which contribute for circa 10% in the quarter, because we have in that market some subsidies that end at the end of this year, which on a yearly basis contribute at no more than around 3% of our top line in that region. Sales in Germany posted strong 8.3% growth, thanks to positive trend in our Proximity business and from better demand in Automotive in the second half of the year. In the U. K, sales dropped by 8.2% versus a minus 17% in Q3, thanks to the first benefit of the reorganization illustrating the improvement of our service delivery and net promoter score. On one of our banners, the Denman ones, it was even up 11.1% in the quarter. With a new management in place since the beginning of 2020, we are now accelerating our repositioning on the proximity market with a clear focus on the digital offering deployment. We turn to North America on the next slide. As you can see on the graph, trend has been broadly similar between U. S. And Canada with the pickup beginning in Q3 after a sharp drop in Q2, this improvement continued in Q4, But North America still lags in terms of recovery versus other geographies. By country, sales in U. S. Were down 7.7% in Q4 2020 from minus 12.9% in Q3 2020 helped by a favorable base effect and positive momentum in our Proximity business, offsetting lower demand in projects and some scarcity of product in certain ranges. In Canada, sales dropped by 8.2% improving over Q320, which was down 12.3% from better automation business on OEM, auto, Petrochemical and Large Industrial Contractor. The next slide so more specifically the U. S. And the very uneven recovery passed by region with sales evolution ranging from roughly minus 30% to plus 5%, very clearly, we can identify 2 blocks of region. On one hand, 3 regions showing strong resilience: Northwest, our largest market, Mountain, Plain and Florida, driven by a strong positioning in the Proximity business and market share gains in a region where we have invested, let me highlight the contract with the Space Center in Florida, which demonstrates the ability of our revamped sales force to win new businesses. On the other side, another block of 5 regions are facing more challenging situation: California Midwest, Northeast, Southeast and Gulf Central, which are impacted in this region by the exposure project business and more specifically the heavy industry and of course in the Gulf the oil and gas. Turning to Asia Pac on Slide 12. We are also seeing there some contrasting trends between China, which have been sharply improving and the Pacific country where the improvement was still lagging. On slide 13, we can see that in greater detail 2 largest countries Australia and China. In Australia, sales were up 1.2% in Q4, returning to organic growth with the proximity business offsetting the loss earlier in the year of 2 industrial contracts, which had a negative impact of minus 3.5%. In China, sales grew by 22.7%, mainly driven by our growing Automation segment and governmental spending in Infrastructure and Automation as well as since already couple of quarters, a large aerospace contract, which contribute in Q4 for 12.8%. On slide 14, let's look now by the building block on our overall full year sales performance, so our full year sales stand at €12,600,000,000 we are down 6.5% on a same day basis or minus 8.4% on a reported basis. Organics and their sales growth were boosted by a copper positive impact of plus 0.2% with an acceleration in Q4 where it represents 1.3%. Sales were also impacted by unfavorable foreign exchange and scope effect. As you know, our Jet Sport service was deconsolidated as of mid February 2020. Now we anticipate the full year 2021 scope impact to be minus 0.2 from the JAKKSpro disposal and the full year currency impact to be circa minus 1.4% assuming the current spot rates remain unchanged next year. Let's move on slide 15 to the profitability by region. Overall with adjusted EBITDA of €526,400,000 in 2020. Adjusted EBITA margin stood at 4.2%, down 78 basis points compared to last here with a negative contribution in every geography. As pointed out by Patrick, the 78% drop in margin is a result of a temporary contraction in gross margin for 46 basis points and a minus 2 basis points in OpEx to sales, showing our very active cost management in the context of minus 6% drop in sales on an actual day basis. In Europe, adjusted EBITA margin was down 84 basis points to 5.3 with the gross margin contracting of 58 basis points, mainly due to the negative country mix and lower volume leading to lower rebates. On the cost side, we have been reactive and agile especially on salary and benefits, travel and professional fees, which offset an increase in bad debt provisioning. In North America, adjusted EBITA margin was more resilient than 54 basis points to 3.7 percent, thanks to gross margin preservation helped by good pricing initiative and active salary and benefits management. Salary and benefits were reduced by 12.3% more than the drop in sales. In Asia Pac, adjusted EBITDA margin decreased by 45 basis points to 1.9%. The gross margin contraction came mainly from negative country mix due to stronger growth and negative product mix in China. Here too, we have been very agile and reactive in OpEx management, notably on salary and benefits down 6.7%. Lastly, our corporate costs stood at €33,200,000 close to our normative level. On slide 16, we turn to our classical adjusted EBITA bridge. Adjusted EBITDA was down almost 21 percent to €526,000,000 and margin stood at 4.2%, down 78 bps as previously mentioned. This can be explained by the different building block going from the left to the right of the chart. First an adverse operating leverage impact of minus 141 basis points related to the drop in sales volume. 2nd, a temporary gross margin decline mainly from lower volume related rebates for 46 basis points. And this was partly offset by action on costs that had an overall global impact of 109 basis points including both temporary and more structural measures. Let me be more precise on this OpEx breaks, which include a temporary cost measure of 60 basis points mainly coming from temporary unemployment measure that largely benefits from governmental support mostly in Q2 and Q3 and to a lesser extent in Q4. A second block, which is our productivity of 32 basis points, reflecting the first impact of 6% structural workforce reduction already mentioned by Patrick. And lastly, a discipline on COVID non personnel cost for 52 basis points. The structural initiative enable us to enter 2021 with a very lean cost base. The structural Feet initiative initiated in 2020 will have mechanical rollover impact next year in 2021 of circa 30 basis points. And we also anticipate the 40 bps gross margin impact to reverse in 2021. Those will offset the absence of governmental support or temporary initiative on FTE. We should therefore be in a very good shape to fully capture the full effect of the volume recovery. On slide 17, we look at the bottom line part of our P and L. I will start with our adjusted EBITDA of €526,400,000 down 20.8%. Reported EBITDA was slightly higher at €537,000,000 down 20.7% year on year, reflecting the positive non recurring impact of copper. Other income and expense amount to a negative €529,900,000 largely due to the goodwill impairment of €486,000,000 already disclosed in our first half performance. It also include limited restructuring cost of €26,000,000 as most of the temporary workforce adaptation in H1 Borr no cost and the structural cost adaptation in H2 leveraged natural turnover. For 2021, we will update you more precisely during the course of the year, but we can now forecast restructuring costs of circa €35,000,000 for now. Restating from one off costs and other costs, our net financial expense decreased by €20,000,000 to €121,900,000 This figure comprised lease liability for €42,700,000 and recurring financial spend for €79,200,000 compared to 96.6 €1,000,000 in 2019 mainly coming from the reduction of our average gross debt as well as the decrease of our effective interest rate, which is now at 2.45% versus 2.62% in 2019. For 2021, while we anticipate broadly stable interest lease liability close to €43,000,000 We expect a further reduction of our financial expense from €79,000,000 to circa €70,000,000 largely thanks to the reinvestment of our €300,000,000 bond initiated as you know last December. Our income tax was up to €140,700,000 €112,300,000 we stated for the deferred tax assets write down, reflecting uncertainty around future recoverability of that loss carry forward in the context of the COVID-nineteen crisis. Restated from non recurring impact, the effective tax rate stood at 13.7 percent down 300 basis points. For 2021 onwards, we anticipate now further effective tax rate reduction to circa 30% mainly from further cuts income tax rate in France. As a result, net income was negative €261,300,000 And our recurring net income stood at a positive €277,700,000 down 18.6%. So on the next slide, we turn to our cash flow statement. As already mentioned, we generated very strong cash flow before interest and tax, reaching €630,000,000 reflecting in part the effort we made to manage working capital, the strong cash inflow translates into a high conversion rate of 101.2 percent or 95.7 percent restating from asset disposal. Let me say a word on free cash flow after interest and tax, which reached €458,000,000 after paying €66,500,000 in interest and €88,500,000 in income tax. Concerning working capital, which is the main factor behind the cash flow improvement, the bulk of the evolution comes from both trade and non trade working capital. Trade working capital has been reduced since to very active inventory management all over the year very strong accounts receivable discipline. Non trade working capital was reduced to a lower level of activity, resulting in lower tax and rebates receivable. Let me share a few details on the evolution of CapEx. Net CapEx was positively impacted by asset disposal in U. K. And U. S. And restated from those disposal, gross CapEx stood at €112,000,000 implying 0.9 percent of sales down from €125,500,000 in 2019 and fully in line with our guidance. Our strong cash flow performance combined with the proceeds from the disposals of Jet Prop Service and the absence of dividends allowed us to significantly reduce net debt, which was down by more than €600,000,000 to €1,330,000,000 the lowest level as already mentioned since the IPO in 2.007. This lead to leverage ratio of 2.40 times significantly better than last year's ratio despite the pandemics. Let's turn to the next slide where you can see now our liquidity picture, which shows that we have no significant short term repayment scheduled. As of December 31, we have €1,460,000,000 of liquidity including more than €600,000,000 of available cash and as you know the €850,000,000 in undrawn facility on our senior credit agreement. As said, we reimbursed in December our €300,000,000 bond due in 2024, which will result in an €8,000,000 per year decrease in our financial costs. We also successfully refinanced €300,000,000 receivable securitization obtaining a 3 year extension at similar financial condition despite a very challenging environment. All the refinancing operation carried out this year such as bilateral credit line, securitization and factoring. With the same group of core banks, which are still following us very closely and which demonstrate that these core banking partners are really believing in Rexel Business Model. Let's move now to our proposed dividend for 2020 financial year to be paid in 2021. This marks a resumption in our dividend payments, which were canceled as you know last year as a peak of the pandemic. We will propose a dividend of €46 per share representing a payout ratio of 50%, it offers a 3.4% yield based on yesterday's share price. It will be payable in cash in early May 2021 and it remains of course subject to approval at the Annual Shareholders Meeting to be held in Paris on April 22nd. With this, let me hand back to Patrick to discuss our 2021 outlook. Thank you, Laurent. And about the outlook, let me say a few things just before the numbers. First of all, everybody should consider that all the investments made since 2017 and having a full effect in 2020 we'll also carry forward. They are all valid. Nothing is lost. No nothing was wrong. And whether it was investment in proximity, investment in people, investment in tools, investment in digital structures, all of them proved to have been very solid, very useful during the 2020 time. And also the investment in having a much better Net Promoter Score from our customers and our initial organic growth that we had during the years before, that was key elements to make 2020 and where we key for 2021. Second thing is that all the new management that we had changed over the last 3 years before have proven to be remarkable management capabilities throughout the pandemia, so that we could really get the agility and we could really get the EBITA margin at the level that we have shown to you. And thirdly, all the process simplification all the digital usage by so many thousands of users internally and externally, customers, suppliers and so on, really made us change so that we could now work with a leaner organization and on the way to even more leaner organization. It's because we have this dynamic of these different components that the 2021 outlook and ambition and which make the guidance for next year or this year 2021. This is, 1st of all, same day sales growth that we evaluate being between 5% 7%. An adjusted EBITA margin at circa 5% and a free cash flow conversion above 60%. And thank you for the attention about the 20 year results. We will regroup all the questions by having also the 2023 vision and outlook. And therefore, I will now call for my colleague to come in and join us around this table here. And we will have different people joining either locally based or from the other end of the world, but we come to you with a new Vision for 2023. Thank you and for this moment. Good morning for the U. S. Good afternoon for the Europeans. Here we are back now for the 2nd part of our day, which is the strategic update and our midterm ambition. And before moving further into the detail of the content, allow me to make a start on these slides, when I took over the group, the connect was very different. And except one person, the General Secretary of the group, everybody on this slide were not part of the COMEX. And gradually, we went through 3 steps. And at the first step, Laurent joined me along with Jeff Baker, when he became the President of North America and he will be with us today by teams from Portland. And also, there was then Nathalie Wright, who joined us immediately after, as the Group Digital and IT Transformation Director, Laurent, Group CFO Jeff, North America U. S. A, all banners and all sister company in the U. S. A, CEO Nathalie, Group IT and Digital Transformation Director. Later on, Nathalie will also have an operational function looking over Scandinavia. And in the 2nd wave, we decided to have more operational people coming to reinforce. And therefore, Pierre Benoit came as an additional along with Roger Littel from Canada. And it was a moment when Pierre Benoit took over not just Belgium, but also Netherlands and to cluster Ireland and UK along with this Benelux countries. And more recently, we got 3 add ons. We got Thomas Moreau who had taken over as the CEO of France, taken over the business in France a few years before and two others, Luc D'Aurey, who replaced Fran Waldmann as the Head of HR and the youngest of the bank of the gang, I should say, Guillaume Dubois, who became the Head of Purchasing and Supplier Relationship Director. And now we are complete in terms of operations too because this function, this last function was not present at the COMEX before. And now today, I will be with some of them, not the entire, but first of all, Nathalie is here next to us. We got by distance on the other end of the world with 9 hour difference, we got Jeff Baker and Thomas More, the Head of France, will come. And they will present, they will make different contributions beyond what they are in charge of in order to help me making this 2023 journey highly concrete and visible to all of you. In fact, this team is also complemented by CEOs, whether it's region in the U. S, whether it's country around the world. And I have to say that all of us, this COMEX and DCOs passed 2020 acid test with really good robust financial performance, but also mental performance and management performance. Now when it comes to financial performance, you can see from the numbers let you know, yes, top line went down from +1 percent the year before to minus 6.5 And profitability by less in term of drop because from 5% to 4.2 percent as a percentage of sales. At the same time, they all worked very hard getting the cash flow going from 62.5% above 100% in term of free cash flow, Bifra, and tax generation. And this is a cash conversion ratio I was mentioning obviously. And this allowed the group to deleverage and to deleverage to what we told you before, the lowest leverage ratio since IPO in 2.07 and the indebtedness ratio going down to 2 0.14 times. Now in when I look forward And with this team, we'll be able to do. I have to look what we have done as an element of the building block for the future and with coming on top and above and we will go through these different components during our presentation. First of all, we enter into digitalization before the COVID, long time before and we grew and we developed and very often we were telling you, yes, we invest. Yes, we invest. And very often you are telling me, when do we get something out of it? When do we get something out of it? Now 2020 has shown that we got something out of it and we will show you how much is still ahead of us. But the digitalization wave is that the number of transactions doubled in the recent time and the information available and by which people are looking into it and working with it every day for quotation, for budget, for whatever just to solve to find out what's available is 5 times more intense than it was. At the same time, we got the wave of the green energy and how to move now more recently from fossil to green electricity. And when I say energy, obviously, I look at the electrical part, electrification dimension. And there is one thing which is very, very supportive for a company like Rexel. This is going to active energy efficiency mode because energy efficiency can be obtained differently, insulation, change your windows and kind of. It's 0 product for a company like Rexel. When it comes to Active Energy Management, it's all about capturing information, monitoring. It's about making the electrical installation clever and used for lower kilowatt consumption and more products to get it more products to achieve it. It fits also with the building automation and the smart home wave. Smart home can be a lot of things, but it could be simple things with high returns and it's about the functionalities. And today, there are many, many devices available that we sell every day. We sell 2 times more than 3 or 4 years ago and they do 3 times more functionality each of them embarking more functionality than the number of products. And all of this in the context of ESG. ESG, it was something quite optional by different companies and we started early as you will see during the with our presentation. Now there is some mandatory dimension to it, okay. But for XL it's a way of life and it's a growth enabler. And we don't oppose one to the other. It goes throughout the company and this is what we'll demonstrate to you this afternoon. This is a market also which is evolving with something quite different from the past. The barrier to entry have increased. The barrier to entry, it's much more difficult. Commoditization, it's not what we are living. To the opposite. And first of all, there are many users of electrical component. And they are the end users, you have the installers, you have the maintenance company. You have the specialists and there are a lot of different segments. Therefore, we improved drastically the digital customer knowledge and the customer segmentation so that we can interface very specifically each of them. For the one who cannot, we don't have this knowledge. You can go by me too. Once you understand this and we got this totally structured at company level, we can go precisely and match the real needs and their future. The second thing and long time I am in this business, 4 years that I'm running the group. When I took over in 2016, 50% of the SKU that we are selling today, we are just about to start. It was marginal selling and it was a little bit more for photovoltaic, but EV charging station, there was none. A lot of HVAC solution, they were traditional. 2 third of them of that time have disappeared. New ones have come too. Detection, it was light on and off. Today, it's light about movement, presence, dimming, it's everything else. And all of this call for capturing information, for supervision. It goes for systems and no longer device. It goes for Domotex integrated component. And even today, one of the most when we look from outside, the most traditional product like the cable becomes a smart way to be used with the connected cable drums, meaning the whole world our world has changed and has raised minibars in the recent years in term of understanding technical skills, capability to promote, capability to advise, capability to switch from 1 to the other. That's what our business is every day made of for thousands of our people. Now connectivity solutions, it was reserved for certain application. Today in one of 2 renovation, home renovation, building renovation, manufacturing, science renovation, it's all about connectivity. Connect the device between 1, 2, 3, 10, 20 collect the information, make them operate differently. It's all about connectivity solutions. And therefore, it's another bar which raised the bar for newcomers to enter unless they come from one or the other of the specifics. But on a broad scale, it's quite much more difficult than it was in 2016. At the same time, we have strengthened the commitment to CO2 reduction. It's easy to put this on paper. When it comes to do it, it's obviously which one for how much to be measured and converted into CO2 KPIs and measurement. And not everything contributes to. It's easy to talk about it. It means it's dedicated catalog, dedicated web shop depending upon which segment for which usage. All in all, our business has become a business of servicing, of raising the capabilities, more sophistication and being agile and all by even more segments than ever before. This is what this chart was underlying, okay? Now we will come back to all of this because obviously all of this has accelerated during the COVID and will be accelerating in a post COVID environment. Now tick the title here, Leading the Bright Future of Electrical Distribution. Here being a CEO of this company, this is which future so bright for electrical distribution? And why is it so bright? First of all, because as I told you, it's much more many products either new or existing that are growing by nature, by demand because they are increasingly effective and increasingly attractive to people. They solved the issues, they solved the problem. And they solved which problem? They solved the problem of energy efficiency, more product to get lower kilowatt hour usage, more product to get lower bills, more product to have every day just the adjusted green energy that many, many people are looking after in term of demand, in term of production, in term of storage. And all of this with an underlying public policies helping a lot in the recent time. And around the globe, every time there is a public policy, it goes in this direction. We sit right now at a very good moment to get public money, public policies, new norms, creating the demand for more products, for growing electrical distribution demand because all our installers, all them our maintenance, all our the people working with us, whatever they do on the electrification, we'll get a piece of this public help and demand at the same time. In doing so, we are repositioning ourselves as a much more service oriented company. Service because there is no way not to match the demand, no way not to add a product on time to be served, on time in full. And all our proximity model announced to bring all of this, it exists. We don't need to build it. And plus the digital capillarity on top of the physical capillarity, these two ways to go to every single users to talk to any demand where this demand is will allow us because of our ability that we have proven in 2020 and built up the years before to structurally outperform the market. And when it comes to our competitive edge, it's all about to having embarked so early in the digital journey. We started couple of years ago with CRM and it was the beginning. And this has changed one time, two time. And there is a learning curve. Somebody can decide at some moment in time now I'll be digital. It doesn't work like this. We all know. You have to pave the road. You have to make your mistakes and then you have to embark the people and you need to attract the people and then you have to define your role as distributor. And what kind of a role will I play digitally in this world? And that's what we have done. And obviously Nathalie will tell you more about this. But this is how now we can say we are part of the digital participants digital economy if this could be defined as such. And there is no exception to it. There is not one country. It's not one continent. It's all. It's true in China. They did a lot around the automation capability, machine to machine and more. Our friends there are doing a superb job adapting to their market. It's true in the U. S. And Jeff will tell you that we are now on one platform, one unique platform for the country. And now it paved the road for having a good rollout and capture all our customer the physical proximity model along with digital capabilities. And it has grown in Europe by different countries who grew at different step, different speed. But now we could say that we are there and we are growing fast. And if my memory is correct, we are about 30% digital sales in Europe. Maybe it's already much more than this tonight because these are the numbers of months ago, okay? Hopefully, it's more than this. And ESG, AG is a driver. It helps because it helps to facilitate. But it's not something that we decided to embark. It's in our DNA and it's a way of life. And it's a growth enabler because people refer to it and it makes the sales argument even stronger. But if we would have to learn and if we would not have the skills, if we would not have done this choice, we would not have on the E, the environmental dimension, all the solutions we can today say, hey, here we are and we maintain and we progress and we recommend and we suggest as the social dimension, which for example attracting young talents, creating new skills, getting the diversity in the with the next generation being more adapted to the reference social references of our of the standard of today and tomorrow. And g, because it has to be there has to be a governance around in turn making sure it's respected. And we are bringing into our way of life to the point that, for example, in certain decision making about investment, we're taking into account and we're trying to figure out how much CO2 reduction it would be? How much of talent and people performance or specifics it could require? And that's the dimension of it. And when it comes to my desk, I have it. And then all of this is a strengthened model, much more robust financial profile, I should say, because we will continue to make strong free cash flow generation. Because without strong free cash flow generation, we wouldn't do our work to prepare for better years. Now allow me to say one thing to highlight. The electrical distribution, as you could see on the left side of the chart, electrification goes to electricity, the green part. And electricity in the consumption will more than double until 2,050. It's 19% today. It will become 42% of the total energy consumption. Now the electrical distribution as part of it is circa EUR 180,000,000,000 market, the one we are in. And obviously, it will be boosted but this increasing electrical usage. And on the right part, what I have tried to highlight very clearly is that it increased the number of electrical applications. It increased the number of products. It increased in EV, in HVAC, in a house building. It's not a product. It's a huge number of different components in order to get it done, data centers, datacom. And everything about safety, monitoring, it needs capturing information, consolidating the information, returning to a device or many devices, whether it's lighting, whether it's heating, whether it's something else. Now the long term shift to green electricity, another driver, okay? Because the sensor by itself, you could have 100 in this building, but they need to work together. They need to be maintained. And each time we change a patrician or right now because of the pandemia distancing, the sensor to capture this information and we are bringing more to it, more sensor, more capturing. This is demand for an electrical product distributor. It's on top of the demand for electricity. There is a higher demand, much higher demand sometime for more products. Therefore, the growth pattern is not correlated strictly to the electrification, but it's the way it's being electrified and the way is more product. Therefore, there is a strong demand and we believe in this. And in our top line growth, these are the underlying these are the underlying. And all of this supported by the stimulus and the stimulus is quite major both in Europe and now in the U. S. And I see other parts of the world joining the stimulus to electrification. Now let me make one comment here on active energy efficiency. Now a lot of people are talking about energy efficiency. Yes, and it's a driver. But more products for less energy consumption, that's the active dimension to it. It means active is measuring. It's consolidating in order to make the output just being using kilowatt at the moment, we need them. And it's true for lighting. It's true for heat pump. It's true for the airflow. And all of this brings us also to new demand, demand response capability, dimming capabilities, monitoring solutions, networking. And it's all the job of the installers electricians. Whether they are small installers or big installers, it's a demand. It's not who. It's not it's a demand. It's the underlying driver for growth. And obviously, capabilities of a distributor like us, means we need to strengthen our capabilities in connectivity, in storage, in batteries, in some time we have to apply it to ourselves because we can sell in presence detection, in social distancing recently. We had a good case of this by which I now give you a case that we're just testing in 1 hour branch to be sure in 1 hour offices to be sure that new sensors could capture information about density of traffic and making the light move by 10 points from 90% or to 95% output to 85% output, nobody would notice except the electricity bill. And the electricity bill goes 40% to 50% down just for this last point in lumen. And these are the ways. This is the kind of thing that we propose, we manage, we can make quotation, we can get the proof and make the customer choose that this is the way to go. And it's the same for controlling temperature and managing temperature, pressure, movement, humidity and not just the industry, any building. Therefore, it's active energy efficiency, which is also a dimension complementary for the for our world. Now Rexel's transformations, what we have done, what we are doing every day lays the foundation for our further growth and outperforming the market. We have repositioned ourselves, okay? I will not talk about the past too long. We have done what had to be done. It was costly. We have invested. We put €400,000,000 for example, in the recomposition of the company, opening counter, refreshing counters, opening branches, investing in DCs and so on. At the same time, we have divested EUR 1,000,000,000 of non core assets. At the same time, immediately after, we grew by €1,000,000,000 over the 3 years after in organic sales organic growth. Second, we have flexibilized the company. And 2020 is the best asset testing in this, okay? I don't think I can convince you more than this. And we are able to keep the fundamental knowledge, having adjustments in our productivity when it is needed, but also keeping the fundamental assets of the company inside the company whether it's people, skills and all the footprint that we need to get to match physical and digital. We have deleveraged in order to get investors to understand that when the leverage, I was told always it's too high. It's too high. If a downturn would come, you're dead. We brought it down. It was supposed to be too high. I think we have reached the right level and the downturn came. We were not dead. And this is what 2020 was telling us. We could deleverage and when it's needed, we know how to deleverage. Therefore, now we are going for max 2.5, around 2.5 as the way by which we use our cash in order to to have all the maneuver that is needed in the marketplace. Focusing on customer and that's probably a world that is de facto is the strongest asset for the future. We have not lost customer during the COVID. We have gained many customers before. And when I look at the churn, the Algo telling us immediately after these are the list of people that you should go after because they don't behave like their peers and so on. We are able to go immediately after, immediately make sure that they were back at the right time and having an active mode working with us. Yes, we had to retrain the algo, but we had to retrain the customers also because they could have changed habits, okay? And they did some of them, but we captured them all. Some became more digital and we had to adapt the digital to be sure we're answering. Some we had to change even the Softman in the branch because they had slightly changed their own habits and we were able to change fast. But focusing on customer plus agility plus digital in order to make sure the stickiness was there, I can tell you this is a great asset. I wish I could have said that, now I can say it. In our transformation, we have invested about €300,000,000 on top of the €400,000,000 and over the last years. But nothing, nothing is not of usage today. Everything was appropriate. Now some of the things we decided to push more than others. We decided to put on hold and live with it as it stands, it was doing a job and focusing on others because we needed to become more appropriate because of the COVID or even because of the growth that we want to capture tomorrow. But they are all valid. They are all proving their efficiency. They are all needed for the future because they are all stand down solid base, Nathalie will talk to it later on, but there is nothing that is a write off. And ESG driven, which is the 6th dimension. I'm so happy for the people who have conducted that for years in our company that we were rated in the by the Global 100 Most Sustainable Corporation, one of them. It's a place which we need to defend, which we need to invest, which we are proud of. And it's a differentiator because customers and suppliers sometime are very sensitive to it. And we are fully in the game, fully recognized and we will not have a mileage to remain so. And I'm very proud of this. Now when it comes about the transformation of the value chain in order to be able to continue and grow and get better. We have an increasingly efficiency that is being now happening at each stage of the value chain. If you take the chart that is in front of us here, the dotted line blocks of being conventionally always a distributor, buy, source, procure, store and so on and distribute. There is some after sales more or less, but what have we done? Now we have improved our own efficiency to go through all these steps. It's higher efficiencies through Rexel Easy program, an artificial intelligence module to improve the branch assortment, meaning we personalize the branch for the most frequently visitors, the one who comes so that they get more products available immediately and this is daily or weekly rework to be sure that the assortment match their needs. Now in booming time or in store time, the assortment may change. And we realized during the COVID that this flexibility who's making us the best partner for our customer. But the same is value also to our suppliers because this variation of the demand during the COVID, we were able to bring to them with very fine level, sometime almost to the subfamily and almost to the SKU. Being a data driven company, as we always described to you in the past, is mainly creating a customer interface. And now we are at the stage in 1 or 2 countries to have initiated what we call no longer a web shop, but a personalized web shop, meaning the customer wants logging in as what is his environment, his needs, his past needs, his future needs because he operates with peers, with his peers in a very close environment and we detect all of this and we address. The residential guy who has to do maintenance on lighting modules, he has no need to get what the web shop would tell him on industry. And but not even so extreme what the wage shop would tell him for brand new houses if it has only maintenance and so on. It's very fine. It's very segmented. It's getting more and more and there is a machine learning to it and there is a people learning in it because people rely on it, they get the trust. And now when I see people who I know now for years and I visit them and they watch and they look on the screen and they got what the Algo is telling them to do and they feel confident and they take more proactively the customer by the hand to tell him take this. And a lot of robotization is happening too. Without being data driven, it would not materialize. One of the thing is the track and trace module by which every customer can know what is on preparation, what is and what the retail business has done, we have applied now to the B2B. We are not the business has done. We have applied now to the B2B. We are not the only one, but it's a dimension which takes time to get because habits change. And at each end of this value chain, at the interface for customers and the interface for supplier, we are enriching. We are enriching for suppliers the value of an information through data analytics and an information we can bring to them in order to make the value chain more efficient, where is inventories? Where are the shortages? What is changing in the demand? Should we go for different packaging in order to be ESG more efficient? That's the kind of thing without Rexel active at the interface, I think some suppliers would have difficulty to make it efficient to us and to them. At the same at the other end, same for the customers, getting rid of packaging, getting more information about expertise, cross selling, their next best offer, what do they need, when, how and so on. And we are working. We are enriching a lot on this front. Now all in all, what does it tell us? It tells that now digital is a way of life. It's at the heart of our day to day business. And this number speaks for themselves, €2,600,000,000 and increasing every day with a target to go to €4,000,000,000 And this is our digital sales. And my friend Jeff in the U. S. Is at the beginning a race because he has all the tools and the people enthusiastic seek to embrace because they use it internally and now they will convert the market to it. And in Canada, it's the same. In the U. K, which was behind for other reasons, the market is just approach giving an approach and it goes extremely fast. And at the same time, we need to be among the best in the marketplace, meaning opening an account, it's 3 minutes or it's not. And obviously there are still certain back office and other components of making the company more fluid and safer because doing it on the screen is easy, making sure it all works in the back. This was the resistance. That's what we are overcoming now. E mail to EDI, it's a robot's de facto. It's a digital robot that takes all the order coming in e mail and put it automatically into a new device so that it goes further down into the mode. And there is the place robots don't make mistake. They take this and bring it there. You should retype everything. There could be a mistake. It's these are kind of robots now work in 8 countries. And better decision in And better decision in a debt driven company. I couldn't when we started the churn, I couldn't and some people asked me, what will it bring to you? But when you get 1500 alerts, okay, every week telling you there is a risk that this customer may erode or diminish or potentially disappear. And in 88% of the case, now we know it's accurate. And by action, you can stop or reduce the risk of losing. It's a sales force efficiency and it's a company asset. Customer base is one of the asset. This is one of the most powerful thing that we would have thought of, not having yet the full results, I'm so happy to tell you it is a clear element of our future. And during the COVID, it was very strange to watch when people fell down by 70%, 80% lower sales And on the way up, how the churn algo reacted. And we had to retrain the algo, but the algo told us a lot. Therefore, it's part of the fast recovery of Q4. It's part of the good recovery for Jan, Feb, March and more months in this year. Now digital has the lever for improved commercial margin. Good margin is a must. And when I see for the country we have been asked to test on a broad scale that in 400 branches in France, the assortment penetration that is suggested by the Algo makes the assortment very correct and above 90% satisfaction. And 85%, 90%, I mean people are so pleased to see and they tell us it's so correct. It's right you have put this that next to it is this bringing sales. It brings almost 2% more than the branches not having the branch assortment being improved by the algos. Now 2% difference on a country, it's quite a lot. Now it's on the counter sales. It's not on the total sales, but Proximity business is a way to sell. Digital help to a counter, it's a great moment. And at the supplier interface, right now, we provide feedback, market feedback information to supplier. And we have a supplier portal which is used for 25% of our supplier base. We become somehow a marketing contributor to a supplier, but by having giving them access to how segments behave, what is going faster than another because they know exactly what they have to produce and more what the trends are and this is the kind of interface we will develop even more and more. And digital for our employee, I have to give them all the credit today on in front of this camera that 68% of our sales force is using CRM and they are all using the tools and they all they are promoters of the tools. And I know that there is always digital transformation, a resistance. We have passed this moment. They are really promoting active make their way of life. And we have a modern, modern and more modern Rexel employee whether it's inside sales or procurement people or external sales becoming even better and making good satisfaction for customers. Allow me now to say that the best testimonial is the one that a customer could bring. And I will just allow you to listen to the customer. Wilfred and Michel, thanks for having us today in one of your offices near Paris. To start the conversation, maybe can you say a few words about you your organization? Sure. Thank you very much, Ludovic. What I can say is that here in Paris, we are midsized installer. I have established my group back in 2007 through acquisitions. For the time being, we are 3 companies, each of them focusing on a specific customer segment. I can mention, for instance, industrial plants, office buildings and also luxury apartments. What I can say also is that we have managed to build together all our back offices in each of the 3 companies so we can leverage a certain critical mass to optimize processes, tools and also our suppliers, our key suppliers. Our overall revenues are about €12,000,000 and we are about 85 employees. Thank you. Maybe as a follow-up, could you share with us what are your expectations from a distributor? And more specifically, why have you decided to work with Rexel? Obviously, logistics come first. We need the right item at the right price, at the right place and at the right time. This is truly your core business and that's what we expect from you. Then what I can say is that we expect a high level of service, and service is all about people. So our main contact is your local branch managers. And what we expect is open people, good listener and people very efficient. If you offer us a good service, then you improve our chances to grow our own business and then it becomes a win win situation. What we have done in the last 10 years in the 3 different companies that I own is that we have decided to go with 1 single software in order to manage our business. And we have picked EsaBora, which is a Rexel software where we can we use it for proposal, order all our supplies and also do all our financial analysis on each project. I can share with you an experience. Usually, when I acquire a company, they work with 3 to 4 distributors. What we do instantly is to go down to only 2, so we gain inefficiency. And what I have done lately in the current situation, I have decided to go further down and decided to pick only 1 and we have decided on Rexel. We are obsessed with efficiency. And maybe people can say or might say it's crazy, but really think about it. Efficiency would come with a digitization. That's what we think. Appreciate. Thank you. Maybe as a final question, could you tell us how we could further improve our business together. Sure. What I believe is that we can further improve digitization, especially with your unique tool, EsaBora, I would love to have it at the fingertips of all our employees and particularly our technicians on-site to be able, for instance, to order any item at the best value. Thank you, Michel, for taking the time and sharing your experience with us today. Thank you very much, and thank you for your support. I should say thank you to this customer. I didn't went and visit him to tell him what he had to do. Don't worry. But I'm so glad about his testimony. And I know that there are many others who would phrase differently, but similar things. Now I will turn to Nathalie, who will take over the first half of her role. And she will explain the ESG embedded in our Rig Cells DNA. And then I will come back for the guidance. Nathalie, please? Yes. Thank you, Patrick. As Patrick said, it's a way of life. Indeed, a large part of Rexel Business relates to energy efficiency and So therefore, contribute to sustainability trends. We are very glad to say that our efforts of the last 15 years are recognized by a variety of highly selective ESG indices. Patrick mentioned recognition for XL to be the number 1 industrial distributor by the world top 100 most sustainable companies. Number 11, when we compare to all sector combined, so out of more than 8,000 companies, we are belonging also to the CDP A minor knowledge list. And our plans are fully aligned with the science based targets. So it's not coming by coincidence, being the best in class amongst competitors, building that differentiator, well recognized by our customers, by our suppliers, very much valued by our employees as well. We have started this journey long time ago, earlier than the rest of the industry, engaging all countries with clear plans. And it works because this commitment is very close to our heart, I would say, and to Rexel values. And it's a way of life and a growth enabler. But if we think about that, it is not only to have recognition that matters. What matters is really to build plans in order to develop plans that will make a difference. The demand for electrical components will increase. The focus on energy efficient products will increase as well. We are well positioned to address also the increased complexity that goes with it, more regulation, stakeholders that have different level maturities by geographies, by customer segment and we are well positioned to add more value in offering services and products to our customer, it's interesting to consider that as we speak, nearly 50% of the current products we are promoting have are embedding energy efficiency already. And this will grow steadily over the next few years. All of that will only be possible with strong partnership with our key suppliers to help them develop, promote and sell eco friendly solutions. And we are already very much engaged with them on that process and not just at group level, but by country, by customer segment, as I said earlier. So the what matters at the end is what plans as well has take very strong commitment and set clear objectives. And this applies first, our own operation that we are aiming to reduce by 35% until 2,030. And this comes on top of a 30% decrease that has taken place between 20 10 2017. That is what is very important as well is that we not only reduce our own emission, but we contribute to the reduction of the CO2 emission from the use of the product we sell and promote and our commitment is to reduce that again by 45% until 2,030. None of this will happen without developing and taking care of our human capital. Starting first by attracting new and diversified profile. Thanks to our digitalization, thanks to our commitment to sustainability, we are highly attractive. And we managed to develop, as an example, 2 hubs of capabilities, data, digital capabilities sitting in Europe, in France and in the U. S, bringing together 11 nationalities, young experienced people in different categories of activities. And I'm proud to say that we also even if in this category of jobs, it's always difficult to attract women, we have a good gender balance building that group. We have also to pay a lot of attention retaining talents. Our people knows our product, knows our customers, knows our suppliers. So making sure that not only we retain them, but we also facilitate the transmission of all those competencies that are so critical for our business, the example that Jeff will further explain later of the U. S. Is very illustrative of that because given the big organization that took place in the U. S. Matching this kind of score in retaining people and keeping people very engaged and very satisfied with their job is a very good example of what we do in that space. We cannot drive this transformation without investing in our people. Changing all the processes, bringing new tools is leading to a high intense level of training that is well supported by our global platform used everywhere in the world, Rexel Academy. We are also In building capabilities with new apprentice, 300 contracts signed just for France and Germany, building the capabilities for the future electrician. And we are, of course, spending time in developing the top talents that will be the leaders of the future. Thank you, Nathalie. And now 2 slides to come to the guidance before we go to more explicit components of it. And one is just to recall everybody how financially we have done throughout the years before and how 2020 should put a special year into, let's say an improvement path, sometime accelerating the improvement and sometime demonstrating that we can really come to our promise like the free cash flow generation, the net debt and also the robustness of the EBITA and margin. And therefore, we have put these numbers in perspective because what's count now is that we are committing for 2023 to have a sustained growth in sales to outperform the market by 50 to 100 pips outperform. 2nd, as a result of all the efforts made and the choice we are taking to improve our profitability and the cash conversion and to go for an adjusted EBITA margin from 5% in 2021, just explained in the early time of the afternoon, to above 6% in 2023 at constant scope and potentially circa 6.5% including potential portfolio asset rotation. At the same time, we will enhance the cash generation in order to have the conversion rate of EBITDA in free cash flow before interest and tax above 60%. Definition has to be precise here just to so that we are on the same page, therefore, not above 60%. Balance capital allocation. Even if there was a 20% hold on, we resume with a dividend policy of at least 40% and you have seen that it will be above in the proposal for 20 paid in 2021. And normalized CapEx to the sales level, we maintain at 0.9% of sales the CapEx needed in order to continue our progress, accelerate the rollout, but we think we can adequately work with this amount. The balance sheet optimization, there is always different opinions around the net to EBITDA ratio, which we choose to be around 2.5 because we want to create value for either sizing market opportunities if they come in good condition or increasing return to shareholders depending upon the condition. And for 2,030, Nathalie set the stage for all of us in the CO2 reduction ambition. I will not too much repeat, but there is one internally that we want to get through our and from our operation and this is a 35% and the one that we will make the users, we will have the users reaching which is minus 45%. Now I want to go into the outperformance. In this guidance, increasing outperformance in an attractive and growing market. What does it mean? To be 50% to 100% above, it means look at the past. From 2006 to 2016 during 10 years, we were negative by 190 bps. In the period 2017 1st 9 months of 2020, we went to plus 50 bps, meaning there is no reason to have any doubt about our capability to be 50 to 100 bps above in the 3 years to come. And because there is a dynamic, it's not because we like to have good numbers. It's because we see every day the momentum growing, the people being all aligned on what has to be done on all parts of the world and being flexible in capturing what's good in the market and not waiting for the market to be so good to us. Let's go after the good markets and not wait for the market be good to us. That has been a change in the culture in the way by which we are going and 2020 has shown that we were able to do so and therefore we go for at least 3.3% per year in the medium term. That's our growth pattern. Now I will pass to my colleague the different presentations here, so that they can really share with you what they have in mind and how they will execute on leveraging our innovative omnichannel value proposition, Nathalie will take will come back for a different Stream, which is the digital stream of innovative omnichannel value proposition. Then I will ask Thomas to take the lead on an urban model, we consider that the growth in large urban territories will be quite significant, different from the past, but quite significant. And it's our duty to have a different model that takes everything into consideration and we've given you the demonstration that we are already implementing. And obviously, there is a dimension of our great solution offer attached to it. Then Jeff will take over his view on the U. S, the U. S. Potential, the U. S. Digitalization, the U. S. Momentum because U. S. Is a key pillar in our strategy. And for Rexel, U. S. Market is very important. And who else than who better than Jeff can convince you of? And then Laurent will come back for the expanding the total addressable market and what it means out of the existing models. And I will come back at the end for the guidance. Nathalie, if you would like to take over from me, this is your first slide. Yes. Thank you. Thank you, Patrick. I've got Phew. We took, as Patrick said, little decision 3 years ago invest heavily in digital, to build a truly omnichannel model, connect more efficiently with clients, personalize the service, Enhance their experience and drive more business and attracting more clients. So as Patrick said, we reached EUR 2,600,000,000 in 2020, 21% of group sales, 31% in Europe. And it's keep growing. It's keeping growing. So 2 main levers. 1, connecting with customers digitally, what does that mean? A few examples just to highlight where we stand. Because as Patrick It's not about having a plan or doing pilots. It's really doing it real time at scale in a variety of countries. So taking the example of France, what we observe is that the connected customer buys 2.4 times more then a customer that is just interacting with us through the traditional channel. And the illustration was done by Mr. Tranidezza just don't have done the video, which you have seen before. He said it's about efficiency and he has one channel to which he gets used and on which he can find what he needs. And this is highly important for us to keep investing in building up that capabilities in making sure that customers are more and more connected to our solutions. Even in a very tough time facing COVID, what we've done with our personalized homepage through digital marketing specific campaigns has generated more than 1,000 additional customers for France. So that's another example of the benefit of having such an engine. And we can also observe that when we have this targeted approach with our customers. This is driving, no surprise, cross selling, upselling options and the large business opportunities. It's not the only lever that we can activate. Thanks to all the investment we've made and the solution that we have introduced. We are also using data to enhance physical relationship. And Patrick mentioned the churn delivering 1500 alerts to our salespeople with more than 3,200 salespeople being trained on churn that are validating that what we tell them is true and relevant and taking actions. This is Business retention and customer satisfaction. Same thing for AI driven branch assortment, now deployed in 4 21 branches in France, increasing our counter sales by 1.9%. Rich content, that's something that we can build because we can uniquely cross information about our products together with the segment our customers are belonging to. And providing with that rich experience is increasing the share of wallet of our customers by 4%. Simple things that's providing targeted basket to a customer makes a huge difference. So again, this is just some highlights on what why digital our digital solutions are making a difference, boosting profitable growth? This has It's been a challenge, as you can imagine, in our multilocal environment to build the data platform that is supporting all of those different solutions. And we've made a conscious decision to select with the countries what will be the scenarios that will be the most beneficial for the business. We let them keep their country data source and we built a layer collecting data, so what we call the golden records on customers, product, suppliers as well as a set of harmonized data that we can populate from the country data in order to build the algorithm that can be then referred back to the countries so that they can adopt and run the solutions and deploy them to their in order to benefit to their business. So it's now in place. The investment phase is behind us. So we can Kale, adding new solutions or expanding to new geographies with low marginal costs. Data are consistent. We are building IP. We have recruited, as I said before, a strong hub of competencies with data Data Engineers and Solution Owners. And so we are ready to continue to get this rolled out and even expanded. So as Patrick said, our commitment is quite strong and our midterm ambition is to at least deliver 1 third of our sales through our digital engine. We are confident and with Jeff and Doma being here, I'm sure that we are highly supportive of that plan. So we are confident that with the improvement that we are going to continue to deliver France, U. K. And U. S. Especially that we will be ready to match that goal. Patrick mentioned several examples, but just to give you a few numbers. Branch assortment, as I said, 1.9% additional sales. The next best offer, providing to our to the people that are answering to the phone or that are behind the counter with guidance on which product VAC should propose on top of what the customer is requesting is leading to those individuals first, to validate that the recommendation are correct, 82%. And on top of that, proposing between 2 and 3 additional function to the given customer and more than 15 14 products. So this is also pretty significant. And the personalized homepage, for those of you that were attending the Rexel Expo in October 2019, long time ago already, you've seen the pilot of what we were testing with our customers during that expo on the personalized homepage now is fully deployed in France, we have now returned good return on what is the benefit. And what is quite impressive is This is the number of pages increase that have been viewed last December, as an example, plus 60%. And that is driving a very high, not only high of course digital higher digital sales, but at the same time much more interaction with our customers and much more opportunity to learn about them and to cover them with valuable services. So just to end up with how does that all fit together? Because we talked about a lot of different things that we've done. As Patrick said, we are quite proud, I have to say, that we have 3 years ago, made some tough decision, decided on big investments. And what we have done is paying back, is now robust, deployed, used in several geographies. And it has to do, number 1, with our very large understanding of what our customers are expecting, who are their customers, merging a lot of data on our 360 view of our customers, point number 1. Point number 2, we have dramatically enhanced our product knowledge. This is, together with the ability we are giving to our customers to select the way they want to interact with us, EDI, personalized web phone, sending us e mail that we can then transition to EDI and to the and to our digital platform, giving them the right assortment at branch level. Number 4, and Thomas will talk a little bit more about that, what we have done to take the best the technologies to improve our service capabilities. And point number 5, giving customers a choice on the way they want to be delivered, developing a few new digital solutions. So if you look to this blue line that is not representing all categories of customers, but that gives you that gives you a sense of the digital journey end to end personalized for our customers. I want to add something, Nathalie, if you allow me on that, is that at the time we entered into digital, we decided together with some colleagues that let's build a churn. It's an algo. Let's work on the Sian. It was a project. Let's go for personalized web shop. It was another dimension. Let's build our next best offer Algo, another Algo. At the same time, we are building an auto store, which you will see later on. And we'd say, why not to have a track and trace? Yes. At the end of the day, what we are saying here from the client in a segment to the locker where he picked his goods, this is end to end pure player mode. It's pure player by the number of interfaces being helped to make the right decision without having silos to interface and kind of it's an end to end. And at the same time, it brings all the information to have a machine learning and a human learning that accelerate the transformation to be a data driven end to end like a pure player. And it gives a new dimension to conventional sales force. It gives a new dimension to inside salespeople. But here we have an end to end. We could design a few others because they exist. We didn't want you to confuse the slides. But to the people who are really questioning, when do we see the returns? Because this is a return for quality, it's a return about fast, it's a return about best people serving best customer for best decision. And this is the NPS going up. It's for productivity gains and it's a quality gain which turned into productivity to use people for value selling and not to correct errors. I don't want to say more than this, but I wanted to demonstrate that here and it works and this is a live thing. It's not something on a paper, okay? It's a live thing, okay? I want to point out it's live, okay? And there are a few more live. And therefore, that's where we are in Feb 2021 in order to jump into the next 3 years. Now I think the time has come to give even more color even to what it means when it comes to high density urban areas, if we don't go anymore by the usual way of addressing this, Thomas, you can take it over. Yes. Thank you, Patrick. Yes. And in fact, in reinforcing what you said on the digitalization, we know that digitalization to grow and to boost we are doing and we want to do is not only because it's a channel, it's a transactional channel. It's because it's a way of life in Uxell. And just to show you, just to highlight the fact that on a daily basis in our branches all over the world, the web is becoming the common interface, the common interface for all the sales teams. In fact, we know that branch network is a key pillar of Rexel identity, of the Rexel Proximity business. What we are doing, in fact, is to push digitalization at every step of the customer journey. This is really critical in the way we want to demonstrate the strength of the digital. And this is key in our Rexel customer journey whatever the channel. If you look at the different context elements here looking at the offer complexity, need for expertise for customer contact, meaning that people needs more and more specific elements, specific knowledge on what they are doing and Michel Sartranides, the customer, was explaining what he was expecting from guys in the branches. We know that the only way to become more efficient, to become more relevant regarding the customer will be to support our sales team with the web, the web is not only a transactional mode. This is the permanent tools, the permanent commercial tool to promote, to animate, to inform customers on a daily basis. And this is why we are growing faster than ever. This is because one more time, this is a way of life for our guys, for our sales teams, for our customers. And the last point is this is not at all in a position with branch growth. More branches are pushing the digital to their customer, more they are growing themselves. This is a key element of the growth we want to push today. The second element Patrick was explaining, the urban zone and the fact that, in fact, customer are expecting more and more from Rexel the capability to adapt our service format, they adapt our value proposition depending of the location they are. And this is a key element. We are not in a mono format model in Rexel. We are we have developed and we are developing on a daily basis the multi format models to be sure that it is relevant to customer needs. What does it mean? It means to take into account customer constraints, it means to take into account economical and environment challenges. If you look at urban zone urban zone urban areas today, we know that economically speaking, this is where the business it's a stronger, it's a bigger, the biggest part of the cake is in these places. The question mark is in these places, we have different constraint to manage. So what we have done and what we're going to do in the future is to adapt the model of Red Cell. And if you look what we are doing in for instance in Europe, but in many countries we are pushing this model, it's to create a new model with something we are we talk about, Jovan Auto Store. The Jovan Auto Store, in fact, it's a unique commercial and logistic platform, it's a mix. It's a combination between logistic and commercial. It's a combination between robotization and digitalization. And this is really a new way to address urban zone, the urban sector and to give efficiency to our customers, and this is something unique, we have developed this model in Geneva, in Oslo, in Stockholm, in Basel. In Paris, we just launched a new one in 2020, end of 2020 and in Zurich in 2021. So this is not a unique model, you can see. This is really a new service model we really want to push because this is really efficient in this Zouin. In addition to this auto store model, what is really interesting is we have pushed, in addition to this format, a multi format delivery mode and a multi format Pickup Solutions, the question is how outside of the branches, eco branches are still open I mean trade over the territory. The question is how we could optimize our capillarity in Uber zone, how we could optimize low carbon logistic offer in this urban zone. And this is why we have developed here you have the Paris example. But if you look at what we have done in Oslo, Nathalie, you could explain or if you are looking at what we are doing in Switzerland, this is really something we have developed. It means that Autostore is not the only stone. It means it's one stone of the complete model we are developing and we are the unique company proposing this kind of service. It means that based on the solutions, the auto store solution, we can develop multi points of pickup products. And here you look at Paris, we have a partnership with the leader in terms of parking and individual mobility, which is ANDIGO Group. And we have now an exclusive partnership with this group. Giving the access, if you look at the picture on the slide, giving access to lockers for XL And the capability for our customers, in addition to the branch network, to give access to location to pick up products. So you can imagine how the easy way for our customers to get products in places where it's almost impossible because of the cost, if you look at I mean, Paris downtown, such German des Pres or if you look at Opera, you can imagine that places here are not we are not able to develop this kind of branches traditional branches. Here, you have an example of the diversity of formats we can propose for their for customer efficiency, for customer satisfaction. What I propose, it's based on this, it's to have to watch a small movie, a short movie, highlighting, in fact, the model we are developing in Paris And we have the same thing, as I said, in Europe, but highlighting the force, the strength of this model. Well, I don't know. Yes. So very proud This investment, of course, and because and we really consider that it is something in at the heart of the differentiation we want to bring to customers and differentiation for efficiency for customer efficiency and for customer obsession in terms of satisfaction. Last point regarding the business development is regarding the solution in terms of CO2 emissions. Of course, Patrick was explaining that the capability and the fundamental role we have in the delivery of energy efficiency solution. What we have to highlight here is the fact that Rexel is at the heart is a key driver, is a key operator on the energy driver is a key operator on the energy efficiency world. And what we have to identify, what we have to highlight is the capability for Rexel to deliver the best solution not because we are technically the best, of course, we are and we have to be, but also because we are objective. And we are always sharing about the objectivity of Rexel in front of our customers in terms of technology, in terms of energy, in terms of brands and the capability to deliver the best solution is also based on this added value. Rexel is an innovator of an innovation concentrator. And if you look at what we are doing today, the role of Rexel is much more than a simple box mover here. This is much more than a partner in the capability of customers, first of all, to be CO2 effective in their operation and also to bring solution and efficient solution and the best solution to their own customers. And if you look at here, you have a list of some of the solution we are proposing today to our customers, integrators for end users, some of the solutions we could propose to optimize their operation or their solutions. The objective is around 50% of green products and solution is not an objective. This is the case today. 50% of our sales are green solution, green products today. So this is something already existing, and this is something we are pushing today. Thank you, Thomas. And now I will hand over to Jeff because Jeff is far away. Geoff, I will be the one pushing your slides. I'm here. You are the boss. And for once, I'm the slide pusher, okay? Thank you, Patrick. Are you up to the challenge? Hello, everybody. It's sure nice to be with you. I know that you're all interested in the future, but if we take just a moment and look at our recent history, I think it's going to set the stage for that discussion. When Patrick became CEO of the group early on, he confirmed that the organization of the U. S. Business was blocking us from reaching our full potential. We had 2 major banners, each operating largely independently, competing for resources, border to border, ocean to ocean, coast to coast. In addition, we had some market leading digital technology locked up in our flat business up in the Northwest because we lacked a common platform Across our commercial businesses. And this all changed on this call, our Capital Markets Day call in February of 2017 when Patrick announced that in the U. S, we would gradually move from our national banner approach to a regional multi banner approach, focusing on what we thought at that time was 7 regions, it became 8. And through this approach that we were aiming at gaining market share here in the U. S. And gradually that word appears again reaching an adjusted EBITDA margin at or above the group level. Now I can tell you from experience, Patrick's definition of gradually does not translate to slowly. This was Be Deliberate and Get Going. When we get to the next slide, we'll cover a few of the foundational changes. But the most significant yes, back up one, Patrick. There we go. Some of the most significant changes here was the structure of our electrical distribution business. But for the past 3 years since we put it into place, and this is obviously fully tested in 2020 and here early in 2021. And I wish my team were here to join me. But I want you to look at their faces. These 8 Regent CEOs, they're talented, experienced. They make decisions close to their customers, suppliers and they're people. They have authority to make decisions. They're accountable for the decisions they make. We've added agility and speed, simplicity on getting things done. Everything is local in our business. They define our local offer plans, the inventory needed, the customer segments we chase, it's driven market share gains in our proximity business. We've gained a lot of servicing our customers from multiple supplier franchises across the banners. We're building competitive differentiation by marrying our Service offerings around the products we sell, driving the internal adoption of our digital tools and as Natalie talks about making them a way of life everywhere. Fast and ongoing upgrades to the P and L performance and free cash flow, we'll be talking about that. Rhonda's already hit on it. Margin is a function of value. Margin is a function of value, driving a differentiated service model. Now 6 of our 11 commercial businesses in the U. S. Are above group average to meet Patrick's expectation in 2017. Looking over at some of these metrics, in 2020, our top line dropped by 12.6% over 2019. At the same time, our commercial margin increased by 50 basis points. We're not chasing empty calories in the U. S. We're focused on being a more value to our customers. Our S and V dropped, as Patrick and Laurent had mentioned earlier, by 12.3%. Our headcount was down by 9 But at the same time, our eNPS, our net people score jumped way up. The average over the past 90 days has been over 50, which puts us in an excellent rating. And if you want to make a place better to work, listen to your employees. 6,400 comments have come through our NetPeopleScorp platform in the last two years. Our Head of HR, Caroline and Becker and I read them all. And more importantly, we take action on them. Engaged and motivated employees produce results. And I'll tell you here in the U. S, I've got quite a team. And we're organized and committed to them to make sure that they get the resources that they need. Patrick, let's switch over to the next page. Pieces of our journey since 2016. We increased our investment in inventory between 2016 2018 By $150,000,000 in the proximity business, if you don't have materials, it's tough to sell it. And in places we needed inventory like we needed oxygen, so we invested. We opened 58 locations. We organized ourselves into 8 regions with our 3 really great specialty businesses still being across the country, we're within weeks of having one web platform. We reinforced our supplier relations here By becoming strategic with them rather than big, if you can see from the slide here on the right hand side, we reversed the trend of declining growth and we're growing. Gross margin over this period of time has increased by 100 basis points despite COVID. Now this feels pretty good, but we are nowhere satisfied. And we know we can do better in all of these categories. Patrick, the next page. What's happening here in the U. S. In terms of growth drivers? To begin with, the U. S. Stimulus spending, the new administration's focus on green energy production and conservation. Public policy on a federal and state level is going to give us a big boost. The industry recovery, heavy industry, oil and gas, food and beverage, data centers, much, much better numbers in 2021 and 2020. Strong demand for U. S. Residential and Small Commercial. Now let me put a little bit of color on this one. In December, the annualized number of building permits for single family housing in the U. S. Was almost 1,300,000. That's the highest since 2007. Plus we have over 70,000,000 detached single family homes in the U. S, many of which are going to need to be retrofitted. Historically, the bill of material on a single family home here in the U. S. For us was somewhere between 2,500 and $3,500 The smart home of today has a bill of material approaching $10,000 and you add solar into the equation here and storage, you're adding another 10,000 To 20,000 on top of that. So the value of each of those new homes and the value of converting the established homes is so much greater than it was in the past. Berard and And actually when you add these up, you can get into situations where the average home in the future, the bill of material could easily be 6 or 7 times greater what historically has been. Hotels, restaurants, entertainment businesses are about to wake up. There's pent up demand for projects and maintenance. And every day, Patrick, as you say, we get easier to do business with our new web platform and expect that 30% of our sales will come through our digital platform just because it's so easy to use. We'll see the impact of our investments in our branches, our reinforced proximity model. Today in our plat business, we have nearly 4,000 deployments of what we call in motion. It's service platform that puts our proximity model actually within steps of our customers needing the product. As of last night, it was 3,986 deployments of In motion. This just now became available to our Jexpro and Rexel customers. It is unique. It is powerful. We have a good start on our software and services business, but this is just the beginning. We expect this to double by 2023. Next page, Patrick. Patrick, you're doing quite well on this. I'm impressed. What I can say to all of you is in the last 3 years, we've established the right business platform both in terms of our organization and now with our digital platforms, our business platform is solid. It's performing. We are well positioned to catch the wave of market recovery and get a really good ride out of it. We're going to be able to take the full leverage of our digital investments ahead of us. We've just barely turned them on. Laurent is going to be speaking in a moment about some of the software tools available in Europe that I think can translate over. And you heard about this Laura from our customer, Michel. Finally, well, not finally, but leveraging our single a global supplier relationship. In this case, leveraging, it's being more important than being big to our suppliers. It's being strategic. And that leverage comes from being able to translate our relationship into more customers for our customers and us, more SKUs for our suppliers and us, more services for our suppliers and us and higher margins therefore for both parties. So we've been setting the platform also for getting the software and services development and wrapping Software and services around all of the products we sell, margin is a function of value as our customer Michel said. And our business is we're an information company providing the best information to our employees, our customers and our suppliers. We're a supply chain company. Like Michel said, having the right material at the right place for the right price at the right time. And we're a services company, wrapping around services on these components that we sell to create a higher value proposition and therefore higher margin. So Laurent, I'll pass it back to you. Yes. Thank you, Jeff. And let's now move to the 5th and last pillar to further drive the gross outperformance, which is expanding our addressable markets mainly through 4 avenues. The first one being the closer relationship with our supplier for which we can sort and monetize a huge number of data from our fragmented customer base. Already today, we are exchanging data with around 1 out of 4 of our key strategic partners through an industrial digital platform that we will continue to expand. The second action is supporting our customers in the design and integration field, be it industry around Industry 4.0, commercial or residential building, especially on midsized project. The 3rd action, providing our customer with software and service already generate more than $100,000,000 in the U. S. North America, mainly on the Industrial Automation side. And in Europe, we are developing software for our customer. Isabora, the quotation platform that the customer testimony discussed before. We have also another platform in Austria called Comtech, which allow our customer to do quotation. And we have also Energiese Connect. We discussed it already 2 years ago at the Rexel Espoo an agnostic smart home controllers to connect different building automation ecosystems. We will continue to develop apps so that the electrician we'll have the capacity to monitor its final customer installation and prevent any potential issue. Of course, software and service are key to us because it provides us with recurring revenue through subscription fees. We will accelerate on that front through M and A as I will discuss on the next slide. The 4th action related to the development of agnostic training session with some of the course leading now to official public certification such as in electrical vehicle, photovoltaic or industrial automation. Those profitable activity also help us to increase the customer stickiness. On the next slide, we see how M and A will also help us accelerate our addressable market expansion, more specifically in 2 fields where we are currently actively looking at potential opportunities, software editing solution specialized in tertiary building electrical and PV installation and EV charging solution providers. And lastly, we have announced last week the Wisco utility business in Canada, we are all very proud of this acquisition, which is really ticking all the right box. First, it allows acceleration in the promising green hydro utility markets, which hydro represents around 60% of the electricity production in Canada. 2nd, it doubled our market share in the segment to 20%, which also generate a compelling level of synergies making the deal accretive year 1. And third, it's been recurring revenues with around 2 thirds of revenues from long term contracts bringing visibility and resilience to our business. Now over the last hour and a half almost two hours, Patrick, Nathalie, Thomas, Jeff have demonstrated how Rexel is going to outperform and accelerate in a post COVID attractive and growing market. And I will now drive you through its translation into a higher profitability. Rexel organic profitability improvement will be fueled by 3 levels. The first one what we call the operating leverage, which consists in current TBT margin applied to the incremental volume we are going to grasp over the next 3 years. The second pillar continue to pave the way to improve our gross margin. Understood staying focused on OpEx productivity, COVID acting as a catalyst in that field that should lead to more structural change in our way of working. I will come back to the GM and productivity levels later on this presentation. But Nathalie clearly presents the contribution of our digital transformation plan to our profitable growth. But the digital solution we deploy are also fundamentally changing the way we work and interact with our customer and supplier generating operating leverage, margin enhancement and productivity gains as we will see on the next slide. It's a big busy one, but the idea around that is that really digital transformation is a virtuous cycle for profitability, driving 1st operating leverage through more efficiency in the sales process. The action in blue on the graph, Rexel is easy to transact with such action as on the upper left, active notification to customer to improve satisfaction and reduce call, automatic purchase orders are faster quotation each of that boosting our top line. 2nd on the margin and expense, the action in brand on the graph with higher availability and quality of service, better purchasing and services. 3rd, of course, OpEx productivity in blue green, leaner process and return automated process with supplier automated follow-up on delivery with track and trace productivity of the sales force. And the proof being in the pudding, let's move to the next slide to present the digital journey on 2 geography over a long, long period, long cycle. On these two examples, we illustrate and confirm the close correlation between digitalization and profitability. Over a bit more than 10 years, those 2 European countries, we have featured on this slide grew strongly the digital sales by 3.5 times for the first one for the first country moving from 14 percent of digital sales out of the total sales to 53% and 3.1x for the second moving digital sales from 15% to 44%. EBITA margin almost doubled for the first country an increase by 1.5% for the 2nd country illustrating how digital translate into profitability. Now let's go more into our levers on GN and OpEx starting on this slide with the gross margin level, we are resumed on 4 key levers for margin improvement. The first one being the own brand. We will never have more than around 2%, 3% of own brand products in our sales mix, but rolling out our own brand product especially on commercialized product in a higher number of country, especially in Europe will help us to capture the very accretive and contributive Upstream margin. Second, increasing pricing already today in place in around 60% of our turnover. We have pricing methodology. We have great tool and we need to continue to further rollout over the rest of the group. 3rd, we will leverage on volume and scale with our strategic suppliers. 4th, we will improve operational efficiency on stock management. We discussed the branch stock assortment, which will help us to increase the efficiency of our inventory. Those initiatives already exist in our most mature country and have proven to be really very efficient programs. And our current IT and digital transformation now allows us to deploy and execute more systematically across the Antai Group. We move on the next slide to the OpEx productivity on 3 key levers. First, the footprint. Footprint has clearly demonstrated its value during COVID. But also the need to reduce square meter and replace large branches by more agile touch points with our customer as clearly presented by Thomas. We will aim at reducing our sales area by would say circa 15% over the period. The second is digitalization. We'll continue to make Rexel he's your company to do business with. And we will continue to simplify and optimize end to end process in sales, Logistic Finance to generate productivity and focus on more added value activities as clearly stated by Patrick. This digitalization will help us to drive our headcount not at least through natural turnover by not replacing some category of employee because of improved our new processes calling for less human actions. And 3rd, cost discipline post COVID. New ways of working have clearly emerged all over this year. Less travel, less paper, less meeting, but at the end cheaper and more efficiency around the group. They have been translated into structural and stricter cost discipline to drive an efficient control on our overheads. Let's now move to the next slide. Going to the different building blocks of our midterm guidance to grow from the 4.2 EBITA margin in 2020 to above 6 organically in 2023 and around EUR 6,500,000 with potential portfolio management. I will start from the left with the minus 15 bps headwinds coming from the one off impact in 2020 relating to COVID, if you recall the bridge I presented previously on the full year 2020 the bridge between the EBITA in 2019 2020, we had governmental hold support that will not repeat for 60 bps and a drop in volume related rebates for circa 45 basis points. So all this will bring a headwinds of 15 bps which is the first bucket. Then over the next few years, we will face around 120 basis points of cost inflation, which correspond to a recurring circa 2% inflation every year. Then this will be more than offset by a significant productivity gain of around 160 bps over the next few years resulting from our initiative helped of course by digital of which a great part of in 2021 productivity has already been secured by the OpEx initiative already implemented in 2020. And then we will get another 130 basis points on the operating leverage on volume corresponding as already mentioned to the current contributive margin applied to the incremental revenues generated over the next 3 years. We will then complement all of that by an above 30 basis points improvement in margin. With that, we'll reach organically by 2020 an EBITA margin above 6%. This margin should we further improve to around 6.5% should we carry out potential portfolio management over the period subject of course to market condition. It implies broadly similar amounts of disposal in terms of sales that's what we have performed historically. Moving to the next slide, this is another way to look at our performance through our country mix. On the left hand side, you see the country breakdown in 2020 by range of EBITA margin and for each of the bucket and how it evolves over the next 3 years. We see clearly again here and we repeated the correlation between profitability and digital with already in 2020, 33% of the group sales above 7% EBITA margin and at already an average of 32% of digital sales. And this bucket, if you go on the right side of the slide, becomes 40% of the group by 2023 with an average digital penetration of 44%. In addition, the combination of the wide range of action in the middle will go. It's a bit small. But on the top hand side, the most sophisticated development for the high profitable country. So it's the deployment of artificial intelligence in the most advanced performer. 2 on the lower part the portfolio management in order to improve the profitability of the group, which will lead at the end to have around 80% of the group sales in country above 6% of EBITA margin, which is more or less double the size of where we are today. After this review on the financial performance, let's move now on the next slide to the capital allocation. Already presented by Patrick, what is important to see there on the first two bucket is that the capital allocation remain unchanged, namely around 0.9% of sales for our CapEx around a bit more than €120,000,000 every year, which will we continue to steadily invest to further improve our organic growth. Second is the guidance on dividend. We want to maintain an attractive dividend with a payout policy ratio of at least 40% for recurring net income. On the 2 other boxes here that's where we want to evolve compared to historical trends. Because after the deleveraging of the group since 2016 and driving our strong with our strong free cash flow generation, we want to resume M and A with bolt on acquisition or consider increasing return to shareholders through share buyback depending on market conditions, while maintaining in the midterm, our net debt to EBITDA ratio, our leverage ratio around 2.5% time, sorry. Digging to the M and A strategy there, we have 3 main priorities. 1st, increase our market share in our TD markets. With a clear priority in the U. S, our market share is still low. Our regional market share for the large region is already significant. It's a very fragmented market where there are still a lot of opportunities for acquisition. The second is to move to adjacent specialists. In fields such as multi energy, we commented security and datacom are also another pillar we may consider. 3rd, tying back to my previous quote around adjacency, accelerate our developments in value added model such as Software and Solution or Industrial Integrator. And of course, for that acquisition for all these acquisition, we will apply very strict financial criteria. With that, let me now hand over to Patrick to wrap up and to conclude this session before opening to the Q and A. Thank you, Laurent. And let me tell you one thing. I have been long in that business, and I've been almost 17 years now. And if I look over at least minimum of 10 to 12 years. Never ever before now before this year 2021 and what is coming for the next 3 years. Never we had such a convergence between customer needs, end user, installers, between supplier offering and the social trend that makes these two worlds being aligned with in the middle, a distributor like Rexel, where all the employees no demand. I have seen a need for technology was not there. I have seen my people jumping and trying to make something, but it was weak on both ends. Or I have seen very strong short term issues and no consistency between all. For the first time since long, with my experience and my reading, I see all coming together. And believe me, this is why I strongly believe in this next 3 years agenda. But I have another reason to feel very good. And I will tell you the reason is something like a dream. I know sometimes you think as you're a CEO or you're a manager and you think of what should I have. And now Rexel has assembled all the pieces of the digital puzzle into a coherent customer personalized value proposition. We are there. We need to continue to enrich to develop Danna, but at the end of the day, it's there. Now if you take these 2 together, that's the best moment that I ever seen by which a market and all the stakeholders and the company with all the strengths coming together. And what you have seen on this blue line assembly and there are many of the different sets. This is what I call here assembling the pieces of digital puzzle plus the pieces of employee and digital and digital and employee coming together without any Colliding. Interest. It's a great moment. I wanted to share with you, difficult to put on the slides, but look at me. I strongly believe, I mean, that's a great moment. Now let's go back to probably less passionate moment. Rexel positioned to accelerate the growth, strengthened company strengthened is redesigned. We have all the investment that were valid and all the benefits we get and there is an acceleration in digitalization. That is just going to accelerate even more in the next 2 years. We will position in an attractive market. This market has never been so attractive because it's fueled by this increase in electrical usage, which themselves can only be managed or obtained, but much more electrical products. We leverage our ESG DNA. Difficult to jump into it if you're not. We will just enjoy having that in our blood and new initiatives to accelerate growth. Obviously, we will select the one which will help to the best of our profitability not to get lost. We need to really select, but we have been doing that in the past, we will continue to do so. And we are all wise here and very wise management in order to be able to do that. And we have a strong management team and we have a good governance to ensure execution. We have a strong discipline internally with all the countries and therefore execution is what we are being able in order to support the midterm guidance. The ambition is again sustained growth in sales outperformed the market by 50 to 100 bps. Second, improvement in profitability and cash conversion. EBITA margin from 5% around 5% in 2021 to about 6% in 2023 at constant scope and circa 6.5% including potential Portfolio Management. At the same time, enhance the cash generation. Therefore, we put the conversion rate of EBITDA into free cash flow before interest and tax about 60%. Balance capital allocation, let's repeat. A dividend policy of at least 40% of recurring net income and a normalized CapEx to sales level of circa 0.9%. The balance sheet optimization, we will go for 2.5x net debt to EBITDA ratio to create value for sizing market opportunities have room or go for an increasing return to shareholders. And for 2,030, let's keep going on the CO2 reduction commitment of a 35% reduction in CO2 when it is our own operation and a 45% reduction in CO2 when it is helping our customers and end user to make it happen. And I will finish on this. It's the time now to get your questions through the phone. We will all be pleased to answer your questions. And they are the one on the first part 2020 results or the next 3 years, 2023 outcome. Thank you for listening. And now listen to your questions and we will answer to the best. Berard. And your first question today is from the line of Andreas Willey from JPMorgan. Please go ahead. Yes. Good afternoon, Patrick. Good afternoon, everybody. I've got a couple of questions. The first one on your targeted outperformance Berard versus the market. Is it right to conclude that maybe the last couple of years, it's more Europe than the U. S. Where you have started Do better, is that the wrong impression? And where do you see the bigger potential going forward? So that's my first question. The second one is on working capital. We had a 2020 we had a big benefit in 2020. Should we just see a similar reversal if revenues go back to the prior level? Or is there also structural improvement that you have achieved? And the last question I have on the outperformance you target in terms of the top line versus the suppliers, do you assume that some of the channel fragmentation we have seen with specialists and so on, which where some of your suppliers now sell more themselves or through other channels it comes to an end? Or can you overcompensate basically for that negative impact? Thank you. Thank you, Andreas. We took a lot of example of Europe, and it is true that Europe got a faster growth recently. But I will never forget also that when we turn around the U. S. With Jeff, the organic growth, organic growth, the majority was obtained in the U. S. But we had to finish the capillarity. We had to finish a lot of integration. Therefore it was the potential is bigger. Our capabilities, it took longer to get the footprint made and the digitalization and all the bricks put together. But why is it so important to us today that the potential is big? The recovery ahead of us is still to come and significant to come. At the same time, all the investments made are now ready to function in a sense that we can really capture this. Now if Geoff you disagree, you tell me because you have to commit now. We cannot hear you, Jack. We don't need to talk about the history and The fundamental rebuilding that we've been through. Thank you. And therefore but there is also a big potential in Europe. I mean, believe me, there are markets where we are turning around things right now like U. K. Whatever the U. K. Economy and the Brexit kind of thing, forget it. There is a U. K. Population. You can need a U. K. Situation whereby we can gain market share. We are digitalizing heavily. We are improving the people, the network, the organization, the simplicity, the pricing, the margin, all of this is right in the process of improving significantly. Therefore, there are also potential in Europe. On the working cap, you want to take it maybe because I'm Yes. This year the free cash flow include an inflow coming from working capital of around €120,000,000 million. Obviously, next year with a recovery in sales, there is a mechanical effect that it will become an outflow of about more or less the same magnitude in the free cash flow, we have trade working capital around 13% this year, we have well managed inventory, but we don't want we still have to work on the quality of inventory. But we think the level for company access can be slightly improved, but not significantly. So as a proxy, we keep about the same 13% for next year in our assumption. So we'll have an outflow from the trade working capital. But on the other side, we have an improvement on the EBITDA that will also improve our next year free cash flow. On the outperformance and what the channel fragmentation means to us, first of all, it's nothing new. It has grown a lot. And during the COVID, we have seen some going up, some others going down. And we watch them, each of them very carefully. One thing which is important to us is that can we outperform by gaining market share by and we gain market share by being different, meaning we are joining the club and the competition of on one hand pure players, on the other one conventional, on the big guys international or of the regional Berard and of the and we expand our product range. We expand our all the new things that we were mentioning before in HVAC, in air flows, in sensors, in capturing information, in monitoring, in all of this created demand. Allow me to say there is one thing. There is space for everybody and there is space for being different, but there is also a barrier to entry for who would like to come in just by saying, I have here a conventional assortment and everybody can have conventional assortment, but it's less than 10% of our offer. And it's not what makes a difference. And when installers are really looking for capturing this growth. And yet in these markets, they look for people who can really make them effective. That's why yes, we are in this race, but it's a new game and we are in this game and it will last. Thank you very much. And your next question comes from the line of Lucie Tharie. Please go ahead. Your line is open. Thank you, gentlemen, and thank you for taking my question. There was quite a comprehensive presentation with a lot of details. I think I have 3 questions. And I think the first question I have is going back to one of the slides that you've been showing where you were showing that the percentage of digital sales, so digital sales penetration was kind of driving quite significantly an expansion in margin. I was going you provided a lot of details, I think, around that. But conceptually, when you think about the 3 or 4 key mechanisms which are allowing this magnitude of expansion in margin when we have an increased digital sales, is What is it precisely? Is that the reduction in the physical footprint? Is it maybe the fact that you are able to cross sell much more across the platform? Just to try to conceptually think about the increased digital sales penetration and why automatically We are seeing this expansion in margin. What why does it make it so automatic? You want to bring the 2 other questions or one after the other? I'd go one at a time. Okay, Lucie. The one thing we have learned and we have experienced and we are measuring, when you reach a critical mass in digital, there are other elements that either don't grow or you reduce. The square footage, it doesn't mean I will reduce the number of points contact points, but the square footage in the branch or more lockers and maybe to replace 1 branch by 4 or 5 different sites of different nature. It's reorganizing, but to lower cost. That's one piece of the equation. The second thing which I know, each year in this company, we have 7%, 8% of people coming in, people leaving. We have now to anticipate on the kind of people we need for the future and don't replace the one that go naturally that do not belong to the category of skills that we need. Therefore, there will be productivity gains obviously. And along with digitalization, once it's done, when all the bricks data, construction, usage, interface are solid, then we can enter into it and we are there. And we jumped a bit fast probably at some moment in time. It was a little bit tense. But now we are at the time we are capturing the productivity gains is an obvious conclusion of the growth in digital sales. When it because when you talk margin, it's bottom line. And what was this? Yes these are the first two effect. There is another one. In the moment we bring more digital, we reduce the error rate. When you bring data, you go for quality and simpler. And it's something which is very difficult to T on the P and L, but it goes on every line. Too big inventory, you put obsolete stuff. If you have an algo that is choosing the right staff, you reduce the obsolescence. Absolence at the end of the day, it's negative to the P and it's a commercial write off. The same for customer churn. If you see a common churning, but you feel he's not a good payer. Therefore, maybe I should let him go. You anticipate about having a dramatic impact on the P and L if it goes without paying at the end. These things that we take for the good of the growth, they have also an impact on the quality. And the non quality eliminating the non quality is also a leverage on the bottom line. Understood. Very clear. My second question, you mentioned during the presentation that you're talking about becoming a service provider rather than historically having been really a distributor, are you able to quantify how much of your sales today would you say are service based? And do you have maybe any historical data, even qualitative on how the service based sales have evolved Over time in terms of growth and also how they have contributed to profitability? In fact, the service it's a matter we do a lot of service. We have to look at the monetized service. And because servicing without getting the returns, we have done a lot in the last decade. How much can be monetized? Now North American, Canada and U. S. Together, they today, they have about EUR 100,000,000. This can double. Now if it applies when I see what they do, how we can get it done, we can extend to other countries. Therefore, Forest Service, which has to be a differentiator or something that had them to do. Subscription fees right now on our Isabora and so on is low in amount that could increase all could expand to more people because now it's a well run type. And the more we go for sensors, for capturing information, for sophisticated application, the key question that come along from end users or installers, yes, but service, what do we do after? Who we maintain? How do we get this done? And a portion of it, we will embark on in order to get service revenue from these new developments in the market. Thank you. And lastly, apologies maybe for the slightly more short term question on 2021 guidance. But I think many people this morning were surprised by the strength of the guidance on organic growth, which seems to be above many of your suppliers and some of your competitors, notably in the U. S, what are the macro scenario you have used to gain confidence on this number, because it's relatively narrow range, especially as it seemed that the U. S. Is seems to be kind of lagging in terms of the recovery or maybe taking a little bit more time, maybe because of nonresidential. But any color on that would be helpful. First of all, the one who were presenting something this morning are just a portion of our portfolio of activity. When I look at electrification, you will have the cable, you will have the lighting, you will have orders than what was presented this morning. I don't want to compare because we are addressing also the other categories. Therefore, they are compounded mix, which probably because we are in the electrification, we are in the development of lighting, we are in the development of the industry. If I look at the recovery of industry in Germany now compared to last year at the beginning of Jan and Fab, it's a phenomenal thing and it will go beyond Germany. It's all the OEMs. They are coming back and so on. Therefore, when we look at customer segments And when we look at the territories and when I look now about the U. S. And I will talk for Geoff, but not too long ago, Jeff and myself, we were making a review with our Florida team. They got 0 of the entertainment business. Now if at the and all the entertainment is second half of the year, it's in Florida. And if next year, I mean 2021, there is a little bit more relief due to the vaccine and so on. And in Florida, people will go back to Disney or the hotels and so on. They went from 15,000,000 visitors to 1. And if it goes back to 15 or 20, hopefully to 50, but if it goes back by half, this is significant demand we will capture. Therefore, yes, the recovery in the U. S, which is very dependent upon where, how and when, there is a lot to come already in 2021 some of it. And structurally also the same person in Florida was telling us that our remote work, we are pushing people to go from the north to Florida or expand a house or do a lot of construction. At a at a certain it was like exactly the numbers that Jeff was mentioning about how many more items are coming along this. Now I don't want to I'd let everybody put his own hypothesis. We feel confident about the 5% to 7%. And if I may add, there is also inflation dimension where we believe we will get we think Q4 will get a bit more inflation than the year before and this should continue to some extent in 2021. So either a bit on copper, either on the rest that will help us also to some extent. Thank you very much to both of you. And our next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead. Your line is open. Good afternoon. Thanks for taking my question. The presentation was very comprehensive. So I just have one question. But thinking about Some of the adjacencies that you have talked and also thinking about you seem to have some pretty differentiated tools for the distribution business that you've implemented over the last couple of years, the industry is still incredibly fragmented. There's a lot of small distributors that won't have the capability to do this type of investments. But is there I was thinking whether you thought about whether there is a way scale of this business significantly without getting physical presence necessarily, for example, by letting others license or franchise all this toolkit that you seem to have created, which is quite unique, is that something you've thought about or Wouldn't make sense. Daniela, there is one thing in life. In the life of a distributor, you cannot franchise the skills. And in industry, in interface, in sophistication, I could reduce a lot internally, but not the skills dimension. And it may force on us to get more specialists of this of that for certain agencies or first hand models or automation. If we are good in the U. S, in Canada and in Europe in certain markets, it's because we have the skills. And by the way, neither Jeff nor Roger Little in Canada nor my CEOs and Thomas is one of them in Europe, we have reduced our skilled sales force during the COVID because to be skilled is to be chosen. Therefore, models like franchise and Son are really not in the heart of my evolution today. Now agencies going to more in the datacom, going more in further enlightening expertise. And Fran, yes, we will increase in each of the agency model that we have today, in different countries, sometimes very good in working in the Nordics with the ESCO Co and the electrical installation, electrification, electrical. And right now we have added the one in Canada. It's probably something we are learning and we could expand. And around the data centers also, not the big guys, but what it takes? The 5 gs, what does it take to be good specialists, understand and what it takes in the buildings, in the offices, in the schools, in the municipalities, the 5 gs and all the distribution of so many application to so many people. Without electricity, it will not work. What kind of a panel? What kind of a how to measure? How to reduce? How to optimize? That's our job. And therefore, that could be a model of specialization having to have their margin. They have some time a little bit higher cost, but they have to have a higher margin because the more margin, the better is EBITDA. I was thinking actually some my questions that's very helpful. But I was thinking not necessarily a large shrinking when I was saying franchising maybe was the wrong word, But more like licensing, for example, you don't have a big presence in Latin America, but there are distributors in Latin America. Why not let them use your systems like the artificial intelligence tools And sort of extract some cash from that in places you're not around at the moment. You want to take it all on, Nathalie? Or no? We should want to. Yes, I can. Yes, I think that we built a solid asset that becomes our IP. And so I think that that's something we can always investigate because it but it has a lot of value. So we have to be very meaningful in assessing which one we think Could be relevant to potentially distribute and share. But that's an interesting question. Yes, it's a good question. By the way, we took in 2020 the decision to protect everything we have done with IP, okay? Now that it's done, if we would like to open it to roll out somebody else data on our applications, it become a commercial way and we don't exclude that. I have not built it in our plan as of now as a firm target with where and how. Yes. But both in the U. S. And in Europe, we could do that. Now the IP protection is finished or it's already in the process of. Let's see strategically to whom it would make the most sense. Either to get more of the same business we are in and do a little bit of a consolidation in the digitalization, but they be complementary businesses not having done it that we could run on our platforms. At least what is scalable to us could be scalable for somebody else. Yes, sure. So, good point. Food for thought, interesting. And our next question comes from the line of Martin Vlilke from Citi. Please go ahead. Your line is open. Berard. It's Marcin from Citi. If you go back to a question on acquisitions, you highlight on Slide 48 about the U. S. Being a priority for reinforcing the electrical position. Obviously, you've seen some big mergers in the U. S, consolidation of that industry. When you talk about the targets being mid sized, is that more your sort of ability To do mid sized deals versus larger deals? Or is there more opportunity in that sort of area? And then the follow on question would be, As that industry consolidates in North America, does that improve the pricing power of the industry? So will you benefit more generally from Increasing consolidation in North America. Thanks. There are 2 criteria by which we will look at acquisitions. It has to be value added and not a restructuring implication mode. There is always a little bit, but marginally. It has to be also accretive. And it is obvious that at the end of the COVID, there might be opportunities where we look at them. It should not take us away from where we want to be. It should be either an accelerator or it should be bigger size of the same journey. But not something that would stop us of going there because at the end of it, more than this size, it will be our capability to serve the market which counts. And the market is evolving fast. And if this would slow down, I would prefer not. If it's a way to get more size on the same and fast, yes, we will look at it. The supplier concentration is not just the purchasing power. Obviously, more volume gives more margin. That it's counting in the way we take the offer and we bring it to the largest amount of end user or installers or maintenance company and so on. This is playing our role in the value chain on a large scale because then we can acquire the skills, we can get much more user of our own tools and we could benefit at the interface of let's say a bigger scale of observation and negotiation. Yes go ahead. Just on a financial point of view, Martin, in our guidance and leverage ratio around €2,500,000,000 it allow us to do around €700,000,000 to €800,000,000 in terms of EV of acquisition. So it's midsized large bolt on. If something bigger would pop up, we would need to go to the board. But with what we have in our guidance is that kind of profile, which fit completely to what just said around the quality of the region he has built And the fact that there are a lot of small payer in each of the region we are in where we and what is important at the end is a local market share. So we could add on here and there a couple of things with good level of synergies, plug and play onto our stable and good platform today. And that's what we are aiming to and we have a list already open on which we are working with Jeff and the team in the U. S. Thank you. And if I can just have a follow on. Do you find that the push for digitization is forcing some of the smaller players to sell. So do you benefit in yourself from digitization that some of the small independent players that about few branches. Are they effectively becoming forced ever? Is that a driver of this consolidation as well? It could be a driver. It's not the only way. It is obvious that, let's say, midsized to small players we'll not be able to cope with what we have done because let's put it this way without the size, you couldn't get the critical mass in skills, Trico Comas in financing the development. And it's obvious that there will be a breakup in the marketplace between the one who will have to join the party with the others or will have difficulty on the long run. We are open by the way. We open and we don't close the door to either like we said earlier bring our because it's protected its IP. We have the scale. We can bring people to join the party. It could be a way our people would say, well, look, I cannot invest. Take it over for value which makes sense for me and should make sense for us. But we are very open on any format. But yes, there will be a breakout. Yes. And if I can add one thing is talent attractiveness. It's a race as well. Yes. It's not a simple journey. Jeff was able to attract both from Seattle and San Francisco or even California because we sit in Portland and because we have an attractive minimum critical mass of good people. Jeff, you want to say a word on this maybe? Because by the way, I saw them arriving. They are in your back. Well, they are. Yes. I'm actually spending COVID with are a few of our development team. So I'm right here in the middle of all of our digital development here in the U. S, Patrick. When you're with all the cool people, you get all the best equipment. So it's been really nice to be here. But to answer an earlier question too on the new platform that we've developed for the U. S, we built it with the hooks in it at some point in time where we might be able to commercialize it. So it was actually part of our design if we made the decision at some point in time to be able to license some of this technology we've been building that it would be a pretty easy transition to make it happen. But You're right, Patrick. Having our technology group, many of them right here in Oregon between Seattle and San Francisco, Oregon is a great place to live. The price of housing and getting by here, the accessibility to the mountains and the beach and those kinds of things are really important to this team. On the other side of the wall for me here is a bike rack. And this is a group that bikes to work rather Then driving or taking transportation and it's creating the environment which suits their life. The other thing that I would add So Patrick is and to Natalie's point with regard to recruiting, we have learned so much about the productivity in this COVID era of accommodating our technical workers working from a remote location. And I really think it adds to our ability to be able to pick up some really great talent. And the way we develop code it is a place that these developers like it because it is so fast and so attuned to the request Our customers that they're able to do their work and see it deployed and in the marketplace in matters of weeks and the pride of authorship with this team in terms of what they're able to put out there, it's just been terrific. And it's really the heart and soul of This development team here. Don't make the case too good. Otherwise, I will have to put the guidance higher. No, don't do that. I thought you might say you were going to move out here and join me and I wouldn't encourage that either. Next question? Thank Berard and Now our next question comes from the line of Andre Cuchna from Credit Suisse. Please go ahead. Your line is open. Good afternoon. Thank you very much for taking my questions. I'll go one at a time as well. Can I firstly ask about the outperformance of the market that you target? Do you see this as kind of pure market share gain? Or do you see that as more of a capture of a kind of increasing market wallet? And how would that kind of split between the 2? And maybe just to calibrate it a bit, could you give us an idea of how much Of market outperformance did you deliver in 2020? No, no. The 50 to 100 bps over performance that we refer to. There is obviously pockets of market where we are best positioned. And we will try to capture the most. I mean, if we could capture further a few API in North America, we would increase and we will accelerate in the Industrial Automation sphere, for example, because we have the skills, we have the people. And there are not so many who can do. They are a few competitors and we want to win that race. On the other hand, there is a market demand generic, which we need to capture faster and better and reach for more SKU than our competitors. Then it becomes a market share gain. I cannot really give how much of each because it's a dynamic thing and it really depends where it materializes. But it's obvious we are looking for globally these 50 to 100 bps by feeling good because we have demonstrated recently over the last 3 years that every sales rep can gain more customers, more SKU. Remember what we said, more customer, more SKU and we have added recently more digital apps in order to secure that. But the formula more customer, more SKU results always in market share gains. And if you add more digital, you make it sustainable. And this is the formula by which every single employee, North America or Europe or China. That's where we have this. We will not go away from this because it has proven that's the way we came from losing, if you remember the chart, to plus 50, which we now want to bring to between plus 50, plus 100 bps. And you want to add something to No, but that's what you said. Okay. Okay. Maybe to add to that, these more customers, more SKUs, the digital connections, the amount of services, this is not something new to us in 2021. This has been Patrick's mantra now for many years. We measure our branches. We measure our salespeople. We measure our management team on increased customers, selling existing customers, more SKUs, adding on digital capabilities, adding on services. So this is a part of the Rexel DNA. And Patrick's right. I mean, it's not complicated. It's very straightforward. We will outperform the market if we gain more customers and lose fewer. We'll outperform the market if we sell our existing customers more items. So it's very straightforward and it is a part Of every plan including every compensation plan. Thank you. Berard. Can I ask another question? On the those 2 algos that you mentioned, the 2 tools on customer churn prediction and the kind of area brand specific assortment development. How rolled out are they now across the group? The churn is in 8 countries and is coming now to as a big block to 9 10 countries, meaning we probably will get 2 third of the sales force running with the churn and it should probably if I take out maybe countries like India, it's probably 80% of our customers will be on the platform to be followed by the different ingredients that allow us to say, hey, hey, he's a churnable guy or he's not a churnable guy. And then every week or every second week. And if need be faster than this depending upon the phase. It's not something which is reporting, it's a dynamic way by which we operate. Yes. And the alerts are provided to the all the salespeople through their local processes are injected in their CRM so that they can take an action, report on the Capture, the reason why the customer was likely to churn. So that means that we can then improve our algorithm. And this is shared between Europe and the U. S. In order to have a consistent way of doing it. So it's pretty robust and really deployed across the board, we have also strained more than 3,200 salespeople so that they understand how this should change the way they work daily. So on branch assortment, we have now deployed it for 400 Almost full, yes. And this one is not only deploying the algorithm, but it's physically removing SKUs from the branch and putting new SKUs and then making sure that customers understand that, adopt that and we are measuring all the benefits. This is also something that is a very good learning and on which we'll continue to further elaborate our algorithms So that in other countries, we can continue to improve through AI our inventories. And it's also a fixed, let's say, how can I say, a reactive tool because every 2 weeks or every month, this is being rolled out and then you take a few items out and you bring a few items in? It's not a one time. It's really the way by which we adjust to the market and the change of the market in each of the region, in each of the country in each Yes. And it's and there is some differences when you look to the branches that are 30 kilometers around. So it's not an algorithm that goes for France. It's really granular and adapted to local customer demand. Great. Thank you. Natalie, Patrick. I would add to that the importance of these algorithms are learning all the time. And you can imagine what would happen to the churn algorithm with all of the disruption as a result of COVID and how invalid it would have become if it had been a segment algorithm. So these are algorithms where as Natalie pointed out, they are constantly learning I have is on the profit bridge on Slide 44. When we talk about the COVID impact reversal, does that incorporate a reversal of some of the COVID related temporary savings as well? Or do you expect kind of COVID inefficiencies that you were incurring during 2020 to kind of offset against that? Just to clarify the 15 bps headwinds is a non repeat of all the governmental subsidies and all the action on temporary action on headcounts minus the one off margin decline due to volume related rebates that should come back. So the net of that is around 15 bps. On the other COVID action as we said probably we will lose a bit, but not so much because now it's a strict discipline. Probably we will travel a bit more, but we'll get other pocket because everything has not been fully activated everywhere. So on this one, most of it will be kept at this level meaning it will have zero impact in the 2021, 2023 bridge. Great. Thank you very much for your time. Thank you. Your next question comes from the line of Phil Buller from Berenberg. Please go ahead. Your line is open. Yes. Hello, everyone. Thank you for taking my question. I think it's pretty clear from all the presentations that the whole team is clearly very energized about the future, which is obviously good to see. I guess I'm keen to know how much confidence of how much conservatism is baked into the 2023 guide. On the top line, the growth potentially you're guiding to, I think you've covered well and it makes sense. My question is more on the margin side. If I look at the financial report, it looks as though the 2020 average headcount was 3,000 fewer employees, which is 12% of your headcount. And that's obviously a very big number, some of which is Temporary, I understand. But as we see the growth return, is it right to assume that the headcount growth will come back at a lower pace Sales given the shift that is happening towards digital. And I guess I'm wondering how this all nets out in the 6% margin ambition, which I appreciate it's a very good level compared to the recent past. But which should we consider that 6% level as a peak margin or more of a milestone in a journey towards potentially higher margins thereafter given all the very positive commentary you've given on during the presentation? I will give you the beginning of the answer and Laurent will complete. From day 1, when I took over the CEO job, I did everything which was needed not to have a profit warning. I would hate to see 1 in my life, meaning there is always some kind of prudence and there is always some kind of a push. The push is things that we decide to go for with all my colleagues. Not always easy. There are some resistance, does not last very long. But at the end of the day, we are back, we do, we deliver and we go for it. Prioritization is the key word. At the same time, nobody knows exactly over 3 years how much of the market there would be up and down. There could be headwinds, there could be tailwinds, there are all kind of therefore, the agility by which we will maneuver he's a key thing. But I feel confident with we have put on the paper. Now when it comes to the OpEx and cost allocation? Yes, yes. What I commented on is already starting at the end of H1 2020, we had started to work on more structural measures that we have led to a certain level of productivity at the end of 2020, for which we will have the full year impact next year and have already I would say around half of my 2021 productivity that is already in the bag. So that's very important. There is still additional to do. But coupling the digital plus the non replacement of people and with the natural turnover we have within the company, this is a very efficient way to drive down headcount without any significant disruption and cost within the company. That's why as you have seen I've guided on the restructuring level of around €35,000,000 which is less than the €50,000,000 we had historically because we think now we have the lever to do even better at lower cost. And one thing I'm sure of, more product, more SKU by the same amount of people at good margin is already also part of the equation. I mean, growing by what we have today in term of staffing and now we have to replace some skills, some people, some aging, some old kinds. That's the normal way of life. And having a more active workforce planning in terms of proactively knowing who will retire, who should be replaced by what anticipating even better than we have done in the past, it's an active way to be good to our people, good to the company, productivity gains without having to take special steps, but proactively managing the resources that goes with the evolution. And that's where we are. That's the way we look at it. And therefore, don't be surprised about the productivity gains that we expect to make. They are right now all feasible. And again, as you can imagine, we have spent a bit of time phrasing exactly the guidance on EBITDA and it is above 6. So it's not a cap. It's something we want to achieve and we will work hard to do more. That's great. Thank you very much. And your next question comes from the line of Elisabeth from Des Saint Regis. Please go ahead. Your line is open. Hi. It's Elizabeth Desarges from Clarton actually. Hello to you all. My question is on what are the long term growth prospects of your market? What do you call long term? Well, Okay. So going from Slide 20, there is a midterm 3% expectation of growth for the market and you expect to outperform that. And beginning in 2021, I imagine that the market itself will already be quite dynamic. So What exactly are you imagining the market to grow by over that period? And then what is more relevant to me, as a long term investor, is long term and then tying that back to all the good remarks you gave at the beginning about the bright future of this market. There is one chart which we didn't produce. This is the kilowatt hour consumption foreseen until 2,050, which is quite significant in term of electric coal generation and electrical consumption. And we look only at the consumption. And each time there is an evolution from fossil to electrification, it benefits to electricity, and obviously, in the car industry, it could be hydrogen, something else. But for our for the building, for all the usage, it's electricity. And each time that there is an increase in electricity, then an even more and more solid demand in the number of products. It's not something linear. There is an electricity gain, which we consider 2.5% more per year and there is on top and above demand for products of different mix, of different value along the years to come, but there is more demand on top and above. This is what's behind our growth and top line exercise. Now it's not the same in all countries. They are part of the world where we will not touch. It could go faster. But for other reasons, we will not go there. But where we are in the territories of where we are today, that's how we look at it. Yes. And on the midterm, so we can good data for which we can benchmark and that's how we frame our market outperformance. So with this market around 3% 2022, 2023. After that's why you have this slide of Patrick around the electricity as a whole, which will continue to grow up to 2015 taking a bigger share in the energy consumption. That is a long term driver. It's around 2.5% growth plus the electrical usage. So we are strong believers that fundamentally this market is carrying very long term drivers, but we cannot give you precise how much it will bring to the market. For example, all the green deal and the government stimulus will help. It is difficult today to assess in detail how much it will bring? We know that active energy efficiency will be quite quickly impacted positively impacted. But we believe that the market after 2023 even if we have not detailed data will continue to be growing. We know also some factors which are limiting the number of specialists to install, the number of good electricians to install, meaning there is a push, a demand in ANA and there is also the need for more dollars and more qualified people. Therefore, there is we have a reasonable approach, I think, between all these constraints opportunities. Yes. My question clearly was given that the energy consumption alone brings 2.5% CAGR long term. And given that there's a multiplying effect around usage and transition and maybe also inflation at some point, it's the 3% seem to me maybe modest. Maybe, maybe. But then I will have plenty of good news to announce at the different moment we will meet each other. Now for long term investors, if this confirm in 2 years or in 1 year what you are saying right now and it would confirm, obviously, I would be the first to tell you I was modest. There are different things, as I say. Today, for example, whether in North America, in certain regions, in Canada, for sure. And in Europe, many markets, we see our own customers having enough job for the balance of the year. And if it comes to it, it means there will be a cap at some moment in time. We see also suppliers having some cap on right now, it's known for the car industry. It's we've added for our industry on the electronic components. There is the electricity in kilowattereusage demand, that's one thing that will be consumed and how much it can translate under which constraint. Therefore, allow me to say, there is obviously a mixed bag of all these different components. Plus we factor that the fact that all these new products also at one point replacing older product that people do not buy anymore. So there is a bit of cannibalization also. That's why we came to this guidance. Even if now people are buying more, it's more expensive and so on, but it has an impact also. Okay. Thank you very much. And your next question comes from the line of Pierre Bose from HSBC. Please go ahead. Your line is open. Yes, good afternoon to all and congratulations again for this very interesting presentation. I have 2 questions, if I may. The first one is, have you aligned management compensation with 2023 target? And if you have done that, what has been the criteria of the metrics? That's the first question. And the second question is on the competitive landscape. I know that you don't like very much to comment on it, but how will you position sell digital offering compared to your traditional peers such as Sonnepa or West Coast regarding more decentralized, maybe they are lagging behind. And regarding Amazon and all the pure web player, where are the segments which you are competing? Or what type of clients are they competing with directly with Exane? Thank you. On the compensation dimension, a certain level of the managers of the company, which embark leadership teams in the regions or countries, they have an LTI. They have an LTI program and the STL program is always based on the 3 years achievement. They will also embark in the future other components and digital is 1 just to be specific. And certain ESG criteria will join or have joined like for myself already my remuneration scheme and only on measurable targets. This will increase like this. It's an alignment in the company. And if I may add for the short term incentive, because it's a 3 year journey starting with 2021, which is one of the most important year of the journey, we have gross profit in volume, EBITA in percentage and trade working capital accounting for 70% and another 30%, which is qualitative, but which include which must include digital and ESG criteria. On the how do we compare ourselves with our competitors, let's say, the traditional competitors? Hopefully, we are not doing too badly because we gain market share and we are taking some customers away. Now let's put it this way, what one does better, the next goes after the next day. And like it's there is a dynamic effect of who is best in the market on what and how sensitive it is to the market resonance so that more customer get to the right place and the right choice being made. And it's not the only way to choose a distributor. There is also the assortment, the brands and there are many other components. Regarding and I was so happy not to have heard the name Amazon during all this conversation. And now for the closing remark, I will say the same thing as before. They are a player in all the markets where they choose to be. It's a long time that if you go on Amazon, you find conventional products, electrical product that are on our shelf. They are not the only one. This is true on many sites that you find cabling, lighting, components, the brands and everything else. It's a way of life to live with them and it will be like this. And we have to adjust to and we have to fight against and it's but we have to differentiate. And I think the choice we are we have tried to bring to you today that differentiating and a risk factor model. I'm not saying we are good, better, less, whatever. And but we differentiate. And we differentiate in favor of what the customer needs are. We are not monolithic. We are personalizing even more. And I think the value of being a specialist, the ability to personalize, to adjust, to correct, just to go with the market where the market is and with our customers and their evolution. And but I don't disregard. I don't underestimate and we are not blind. We watch carefully. You name it 1. I could name a few others. And we want to be sure that we have the right answer and faster. And all our salespeople inside and external understanding how to fight their competition conventional traditional conventional digitalized or pure player end marketplaces. They are the competition is furious outside, but we try to get the winning formula adjust it regularly. The last question before your closing comments, our next meeting will be on April 22 where we'll present our Q1 sales and there will be also the Annual Shareholder Meeting on that day. I would like to thank each of you. It has been a long session. I really enjoyed. I enjoyed it with my colleague. As you see, the company is evolving. The company is strong. The company has a great future. And it's just an honor to be here today in front of you and it's a pleasure for all of us in their name and the name of all our colleagues who are watching also in all their name and our employees, thank you. Thank you to you for your question and attention too. Thank you. Thank you. Thank you.

• Annual report
• Earnings release
• Slides