Atos Group (ATO) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Atos Group H1 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Philippe Salle, Group Chairman and CEO. Please go ahead.

Thank you. Good morning, everybody. So let's jump to the presentation. As you've seen, there are 4 different topics. I will take the first 2, the business highlights and the operational performance. Jacques-Francois will talk about the financial results, and I will finish with the outlook. So let's start with the business highlights. So in a nutshell, first of all, for us, it's a strong H1 performance with a full year targets that I confirm, and I will come back to this at the end. Ongoing further delivery of restructuring. So Genesis is well underway. I will also comment on this one. The commercial traction also is building further. Now it's a long run this one. We know it takes some time to rebuild, I'll say, confidence with customers. And last point, increasing momentum around our 3 strategic pillars, and I will come back also on this one. So if we look at the key numbers, so on what we call the going forward perimeter without Bull, without Latin America and also the small divestitures that we have done in Northern Europe. The revenues were EUR 1.661 billion, which is roughly minus 6% versus last year. It was in line with what we have guided, in fact, at the end of Q1. So it's easing versus Q1. And also it's the first time sequentially that Q2, in fact, is above Q1. It was not the case, in fact, in '25. The operating margin for the perimeter is EUR 190 million as we are close to 6 points of EBIT. And in fact, we are -- you will see that for Bull for Atos and flat roughly at 0 we shared it. And in fact, in Eviden, we have also invested heavily in the commercial activities, and we have been impacted slightly, I would say, by the Middle East. Order intake is at 91% at EUR 1.5 billion. It's also, I would say, getting some momentum. And you will see also that the qualified pipeline also has increased. Net change in cash that was done, in fact, in mid of July. So it's still minus EUR 120 million. And just for information, the restructuring cost was minus EUR 130 million. We are still contemplating a total cash out around, let's say, we say between EUR 150 million and EUR 200 million, in fact, in Q1. It will be probably between EUR 190 million to EUR 200 million this year. So it means that probably in the second half, it's maximum EUR 70 million. Net debt is roughly at EUR 2 billion, but it's normal also that the net debt is higher in H1 because we're going to have a positive cash flow. We will have also a client in advance payment. It's always lower, in fact, at the end of June. It will be much higher, in fact, at the end of December. So the net debt, of course, will go down by the end of the year. And the liquidity is close to EUR 1 billion. It's far more than we need, in fact, as we have lowered, I would say, the cash trap close to roughly EUR 100 million. Okay. Next slide. You can see the momentum. So you can see the, I would say, the different number that we have shown on the growth of Atos. So I would say, for the first time, we are now close to minus 7%. Remember that last year, we suffered a lot from the stop of contracts and also, let's say, stop of clients, unfortunately, from there in '24 and in early '25. We can say right now that there is no loss, in fact, in H1 this year. And in fact, we don't foresee any loss, in fact, in the course of H2, and that's why it's easing versus, I would say, last year. In terms of group OM, last year was EUR 133 million in H1. Remember that it's with the new perimeter, without the new perimeter, it was around EUR 110 million. And this year, we are at EUR 190 million, so roughly 2 points above last year. Now if we zoom a little bit on Genesis. So Genesis, we launched it, in fact, early '25. I have commented it, in fact, in the CMD in May. The Genesis, the first program, the EUR 650 million gains, in fact, has been done in Q1. So we have done the Genesis in 1 year. I have launched, in fact, a second phase of Genesis to ensure that the profitability will continue to increase, of course, in '27 and '28. So we are now at EUR 800 million or above. But the Genesis will be finished by the end of the year. So the restructuring will be really '25, '26. So we can refocus, I would say, the mind of the management to the top line, of course, which is the challenge for us. But definitely, we have good signs that it will come. Now if we go to the next slide, you can see also on the workforce. So after, I would say, all the divestiture Genesis, we are back roughly to 54,000 people. We are probably at the right level. There will be probably some a little bit more, but not that much. What is interesting to note is the attrition rate at 12%, which is probably a little bit too low versus 16%, but it is for me a good signal that I would say our staff are motivated. And I would say that we have -- we suffer, I would say, a lot of -- an attrition, excuse me, that is very small. And just for information, we have done a survey on the morale of the employees worldwide and what we call our internal NPS went up by 11%. So it means that there is more -- I think the staff is understanding exactly what we are doing with the group. If we go on the commercial traction, I think the very good news first is the book-to-bill. Remember that the book-to-bill at 91% doesn't mean that we're going to decrease just because, for example, the framework agreements, we don't count them in the book-to-bill. And if you see, for example, on the far right, with the European Public Sector Agency, it's a massive, I would say, contract that we have signed EUR 187 million for 4 years, but this is not in the book-to-bill. And the different framework agreement that you can see, one with the Dutch police, one with the European Patent police office, this is typically, I would say, contract that we don't book in fact in the portfolio. Good news is that France, U.K. and Eviden are above 100% in Q2. So it means that there is traction in these countries. And I would say bit by bit, there will be traction in fact, in the different geos. The second good news is the qualified pipeline. It continues to increase by EUR 800 million. It was already up EUR 900 million in Q1. So it's roughly EUR 1.7 billion more, I would say, tenders in H1, which I think it's for me a sign that there is first that Atos is invited, of course, in the different tenders everywhere and also the fact that I would say the commercial activity has some traction. And of course, it will pace in the coming quarters. Renewal rate is now 94%. So we are back to normal. It was the case, in fact, in 2024. And we have done also NPS, I would say, for the customers. We have I would say, good signs that the customer understand the strategy of Atos and also are confident that the group will continue, I would say, to serve them on their different challenge in the future. You can see some major contracts. And for example, in the U.K. on the left, it's a new logo, very interesting client where we start with CM&I and Digital Workplace, and we will continue with application AI in the future. Just for the different pillars, so remember that the 3 different pillars that we have launched and where we are now focusing the group, which is Agentic, so identification of the, I would say, company, cybersecurity and sovereignty. This is a typical, I would say, wins that we had during H1. So Eurocontrol, it's a big client of us. We are now, let's say, modernizing, I would say, their applications. You can see by far CNA, the big contract we have signed with the U.S., it's a TCV of close to $500 million. And we're going to put also identification in the contract. You have also examples with Primetals and Comunidad. I think what is important to understand is that AI is, in fact, embedded in the different projects that we do. So we have, of course, I would say, projects fully on data AI, data, for example, on data lake or making sure, I would say that the company has the right data momentum, let's say. And we have also some identification, but we have also, I would say, AI in the different contracts that we signed in Cyber and CM&I and Digital Workplace. Now for the different pillars, remember, we also have signed different, I would say, we have, let's say, some other companies also that are accompanying us, I would say, in this journey. So for Agentic, we use AI, we have signed also a big contract with Microsoft. With Digital Sovereignty and Cybersecurity, you can see SAP, IBM and for example, CrowdStrike and Salesforce. Now let's go on the operational performance of the first semester. So if we look at the top line revenues, so last year, it was roughly EUR 1.9 billion. Then of course, we need to restate from Latin America and Northern Europe, some foreign exchange. So in fact, I would say, on a like-for-like, the turnover was roughly EUR 1.8 billion, and we show EUR 1.7 billion, so minus 6.3% in Q2 in terms of inorganic growth. Now if we look at the countries by countries, in fact, I would say that it's easing everywhere. We are a little bit, let's say, disappointing by North America. It could have been, let's say, probably better. It's probably the country where it's a little bit more difficult. North America, however, is roughly at $96 million revenue per month. I would say it's roughly flat, flat plus. But as I said, there is no major loss, I would say, in America. And of course, if you look at, for example, the revenues of North America in December last year, it was EUR 92 million. It means that we will restart growing probably in the course of Q4 this year. For the rest, France is leading also at minus 5%, probably close to 0 in Q3. Germany also probably trying to be close to 0 in Q3. We will see. U.K. and Ireland continue, I would say, close at plus 9%. In international market, it's because a large client, in fact, I decided, I would say, to internalize, I would say, the CM&I business line. So in fact, it has a very big impact because it's by far the biggest customer in this market. And BNN roughly minus 5%. The good news, of course, is that Eviden, of course, is growing at plus 14%. We definitely see that in the defense, let's say, area, there are a lot of opportunities for Eviden and of course, for Atos. Now if we look at the operating margin, as I said last year, we were at EUR 113 million. Then, of course, we restate with the loss of Bull because Bull was losing money in H1. It's always, I would say, a low negative EBIT in H1 and a positive EBIT in H2. Latin America also and then you have the foreign exchange, which means that on the same perimeter, we are at EUR 133 million, so 3.7% margin. And we have increased the EBIT roughly by 43% on a decreasing turnover. So it means that, of course, Genesis is yielding, I would say, the results we are, of course, expecting. And we are quite pleased, I would say, that the margin of Atos is above 6% already in H1. If you look at the different components on Page 18 of the different operating margin. So on the right, you see the operating margin that is published. So it means with the loss of Bull because, as I say, Bull is always negative in H1. But on the current perimeter, it's on the left at EUR 190 million, and you can see the different numbers of the different geos. And then I will go down geo by geo, let's say, in the coming slides. So if I start with Germany, revenues organic was roughly minus 9%. We still, in fact, a lot of contracts last year, there are some black contracts, and there are no more black contracts right now in Germany. And as you can see, the Genesis, of course, we have reduced the staff heavily, in fact, in Germany and also in the region, which, of course, then can produce, I would say, EUR 30 million EBIT, EUR 29 million exactly, and we estimate we will be probably close to EUR 90 million this year. Then if we go to North America, as I say, that's the country where we decreased the most. It's still difficult. Remember that we decided not to renew a very big contract, EUR 100 million plus. This contract was in force until Q4 last year. So it has a 10% impact on, I would say, the growth plus the fact that we continue to have a different impact on some contracts we have stopped and lost. But it will ease, as I say, in Q4 this year. So definitely, what we are doing right now is just to make sure, I would say, the profitability stays around 10% and of course, now pushing hard to make the rebound in the U.S. France, minus 5% in organic growth, just also because the public sector was again weak in Q1, but it was the case also in '25. We have roughly stabilized, I would say, the margin, and we have done a lot of actions where we think we can increase the EBIT. It will be probably in '27 with different actions we take in place with Genesis. Unfortunately, France takes more time, I would say, than the rest of the different geos. If we go to the U.K. this is the country, I would say, that has done is a turnaround in the course of '25 with a new CEO, in fact, in the beginning of last year. So we have a 9% organic growth. We have signed a lot of different contracts and new logos. And we have been able, I would say, to push quite hard, I would say, the profitability. So we are quite pleased with a double-digit margin. Now with international markets on Page 23, as I say, the main, let's say, decrease is just one customer, unfortunately, in Asia. We have made the turnaround, in fact, in the rest of the different geos, it's mainly Spain and Switzerland. And of course, with this healthy, let's say, customer, the margin is a little bit down, but we are still able, I would say, to show a 6% margin. Last Belux, also minus 5% in terms of top line. We have also with Genesis, we have restarted, I would say, to protect the margin going forward. So there are more actions to come. So in fact, for Genesis, it's mainly right now, let's say, Belux, so Belgium and Netherlands and France that where we're going to do, I would say, more in the course of H2. The rest is almost done. Eviden, our product brand. So there is a good traction, in fact, with Eviden. Remember that, in fact, we could have done much higher because one business, Vision AI has been impacted heavily, in fact, by the Middle East. And in fact, the revenue is almost close to 0 but we definitely think that there will be a catch-up in H2. But there is, of course, we work in the defense industry, there is a lot of, let's say, opportunities there. The margin is roughly at 0, but it's also a change of the global cost allocation. So probably, I would say, the comparison with last year is not the right one. But for sure, we need to do something in the profitability, and it will be the case, in fact, in H2 and of course full year. With that, I hand over to Jacques-Francois on the financial results.

Thank you, Philippe, and good morning, everyone. So I will now take you through the financial section of this presentation, starting with the P&L below operating margin, then moving to free cash flow, net debt, liquidity and our updated debt maturity profile following the refinancing completed in the first half. The key message is that while the group continued to record a net loss in the first half of 2026, this loss mainly reflects the continued execution of our restructuring plan and the financial effects of the refinancing. At the same time, our cash performance was controlled. Our liquidity remained strong and the first step of refinancing materially improved our debt profile. So let me start with the bridge from operating margin to net income. In H1 2026, reported operating margin amounted to EUR 169 million, including the negative contribution of divested businesses. This compared with EUR 113 million in H1 '25. This improvement is consistent with the improvement at current perimeter and reflects the benefits of our operational transformation and cost discipline despite continued revenue pressure. Other operating income and expense amounted to minus EUR 314 million compared with minus EUR 566 million in H1 '25. The main components were Genesis-related reorganization costs of EUR 113 million rationalization and associated costs of EUR 8 million, amortization of intangible assets for EUR 17 million, equity-based compensation of EUR 18 million and other items for EUR 157 million. These other items mainly included onerous contracts and customer losses for EUR 44 million and litigation for EUR 94 million. As a result, operating loss stood at EUR 145 million in H1 '26 compared with EUR 452 million in H1 '25. Below operating loss, net cost of financial debt amounted to EUR 294 million compared with EUR 162 million last year. This increase mainly reflects the impact of the refinancing completed during the period, including accelerated depreciation of fair value adjustment for EUR 47 million according to IFRS 9 and the anticipated first lien bond early repayment call premium for EUR 63 million. Other financial expenses net amounted to EUR 27 million, including debt lease-related charges and pension-related charges. After a tax charge of EUR 37 million, net income amounted to minus EUR 504 million compared with minus EUR 695 million in H1 '25. The important takeaway is that the net loss has reduced by EUR 190 million year-on-year, even though it still reflects the cost of restructuring and refinancing actions required to strengthen the group for the long term. Turning now to cash flow. At current perimeter, net change in cash amounted to minus EUR 120 million in H1 '26. This figure starts with OMDA at EUR 315 million after reintegration of CapEx and leases amortization. From there, CapEx represented EUR 33 million, lease payments amounted to EUR 118 million and the change in working capital requirements, excluding working capital actions, was minus EUR 14 million. It was impacted by the unwinding of bonus payments for the fiscal year '25 in the first half of '26. Restructuring cash out amounted to EUR 127 million in the first half. This is an important element of the cash flow bridge as it reflects the continued execution of the transformation plan. Tax paid amounted to EUR 21 million, net cost of financial debt paid to EUR 82 million and cash outflows related to onerous contracts and litigation amounted to EUR 39 million. As a result, net change in cash at current perimeter, excluding change in working capital actions, stood at minus EUR 120 million. This performance reflects both the normal first half seasonality and the restructuring cash out, and it also confirms that underlying cash discipline remains strong. Let me now move to the debt, the net debt. At the end of December '25, net debt, excluding IFRS 9 fair value treatment stood at EUR 1.843 billion. As of 30th of June 2026, it stood at EUR 1.998 billion. The increase over the period reflects the negative net change in cash at current perimeter as well as the impact of completed divestments, changes in gross financial debt due to peak and call premium on the first lien refinancing. It also reflects change in working capital actions that reduced by EUR 146 million in the first half. This is made of 2 elements. Firstly, the reduction in the unsolicited cash received in advance of the payment due date for EUR 153 million because most of the cash in advance takes place at year-end, so there is logically less of that at the end of June. Secondly, the initial positive impact of receivables factoring. The reason I am highlighting factoring, although it is a small amount for now, is that we expect the program to ramp up over the coming months, and we see that as a secure, sustainable and relatively cheaper source of financing. Overall, this evolution should be read in the context of the first half seasonality, the execution of the restructuring plan and the refinancing completed during the semester. Importantly, despite the slight increase in net debt during the half, the group maintained a strong liquidity position at 30th of June '26 and strengthened its financial profile with the December '24 first lien refinancing, giving us the financial flexibility to continue executing our transformation road map. Indeed, during the first half of '26, we successfully completed the first step of our December '24 debt refinancing. This was a major milestone for the group. The transaction included the issuance of EUR 950 million of senior secured fixed rate notes due May 31 and EUR 300 million of senior secured floating rate notes due in May 31 for a total amount of EUR 1.250 billion. The proceeds were used together with cash on the balance sheet to repay the first lien term loan and repurchase or redeem the first lien notes, including accrued interest and call premium. This financing strengthened our financial profile in several important ways. Firstly, it reduced the weighted average cost of financial debt by around 220 basis points down to 7.4% total cost of debt was reduced by EUR 59 million per annum. Secondly, it extended the average maturity of our debt by 7 months to around 5 years. This was achieved in a market context where the transaction attracted significant investor interest, confirming the market's confidence in the group's transformation trajectory. It was a first step towards the normalization of our capital structure. Following the refinancing, the group now has no debt maturity before December 30 when the first 1.5 lien debt is due. The total amount of this tranche has reduced in the semester, thanks to EUR 109 million of bond buyback on the open market. as well as EUR 38 million from the early repayment corresponding to the proceeds from the sale of our South American operations in April. Let me mention, by the way, that we intend to disclose clearly that we are considering buying back more debt in the coming months. The new capital structure gives Atos Group a materially improved runway to execute its transformation plan, continue improving profitability and move progressively towards sustainable cash generation and deleveraging. At the end of June, our leverage ratio was 3.4x. We aim at reducing it to below 1.5x at the end of fiscal year '28. That concludes my presentation, and I'll now hand over back to you, Philippe.

Okay. Thank you. So on the last slide on Page 33. So I think the message, of course, is that with the, let's say, the profile of the U.S., we estimate that the organic growth will be around minus 5%. So we guided between minus 1% and minus 5%. In fact, I was waiting, let's say, probably better data from the U.S. I think it's more prudent to say we will be around minus 5% if I would say the U.S. doesn't pick up. So it's, let's say, at EUR 96 million roughly per month. Of course, we want to beat that. So it's probably conservative, but I definitely think that it's reasonable. The operating margin, it's like last year, I think whatever happened on the top line, we will deliver, I would say, the bottom line, and we are quite confident, in fact, because we have accelerated, of course, the Genesis. And then the net change in cash should be positive. Remember that in H1, we paid a bonus of roughly EUR 110 million. And we have also EUR 130 million of Genesis second quarter, no bonus payments and also Genesis probably max EUR 70 million. So just, I would say, the difference between the 2, it's roughly EUR 160 million of cash more, of course, than, I would say, H1. And of course, we have more EBIT. We're going to have less interest. We're going to have less also black accounts, and we can continue, of course, to work on the DSO. That's why we are quite confident also that the cash also will be back to positive, and that's why the net debt, of course, will decrease at the end of the year. Remember also that we are launching the factoring. We will see if we can touch several hundred million, which is the target for us. And of course, it will help us, I would say, probably to buy back against some bonds to reduce, I would say, the debt. We continue, I would say, to consider that after that, we're going to accelerate. As I said, Genesis will be finished by the end of the year. We are very confident now, I would say that we are focusing on the top line. We think that the market is healthy. There is no problem for us, and we are still, I would say, a small player versus, I would say, the size of the market. There are many opportunities. AI is not disrupting a company like us, like it's not disrupting in fact, the competition. In fact, it's a big opportunity for us. And AI for me, it's a marathon. It's probably a 5- to 7-year, I would say, effort, probably, let's say, slower in Europe than probably in the U.S. So for '28, continued the acceleration growth between 5% and 7%. We continue to think that we will be around 10% in operating margin. In fact, next year, we will be probably above 8% and then we continue, of course, to deleverage because the cash flow, of course, will be highly positive in '27 and '28. So we will start, of course, deleveraging with the cash and also with the increase, of course, of the profitability. So I would say the management is confident. I definitely think that I would say we are doing our job. It's not an easy one. This turnaround is not an easy one, but I definitely think that we have a good sign now that I would say the activity is picking up. We have done the job on the cost and of course, on the cash. And we are now, I would say, very highly confident that there will be, I would say, signs of restarting, I would say, the top line growth probably this year and if not, of course, in the course of '27. With that, I hand over to the questions.

[Operator Instructions] Our first question comes from the line of Frederic Boulan of Bank of America.

Maybe firstly, Philippe, if you can come back on the demand environment. You flagged some better commercial traction. It would be great to have any color around the nature of discussion, any impact from the current macro uncertainty, interest rate environment, et cetera? And then maybe within that, what's going on in terms of competitive or pricing dynamics? And I don't know if you want to contrast between the U.S., France and the rest. And then Jacques-Francois, would love to hear your thoughts around what's next for you to do after a lot of work around the portfolio from an asset perspective, from a refinancing perspective. Any opportunities ahead? Any specific moving parts you want to call out for the rest of this year and next year?

Okay. Frederic. So first, I would say that if you talk to CEOs, and of course, I see -- and I will see a client again this afternoon, I would say, several of them every week. And probably you're right, between U.S. and Europe, I definitely think that the pace is probably a little bit different. But I would say at Board level, for me, 2 topics are very important, which is cyber and AI. Sovereignty also probably is a board topic, but I would say probably less to an extent than probably AI and cyber. So we see, I would say, and that's why the 3 big bets that we have, I think, are completely in line with, I would say, what the Board and the CEOs right now have in their mind regarding the technology. So AI, it's a long run. As I say, AI, it's not an easy catch. We see a lot of things, but it's not identification of a process or identification of operations, it takes some time. I think I have already said that it's not a problem of technology because building an agent is not that difficult. It's mainly for data and process first. And that's why we simplify. We have, let's say, more and more consulting, let's say, projects on this one because you start first to look at your data and look at your process. So I would say, top of mind cyber and AI. Of course, sovereignty in Europe probably is more important than, let's say, in the rest of the world. Also in the U.S. also, they are talking about sovereignty. But I would say in the U.S., they have everything in the country to be, of course, sovereign. Europe is probably a different play. But what we see for the moment is that first, the budget of CIOs are not decreasing. I think they are still at a level or above. There is, of course, a lot of questions on AI because, yes, there is so many articles right now in the press that is difficult, let's say, to escape that kind of conversation. But as I say, it's not an easy catch. So it doesn't translate immediately, let's say, to AI projects. So my view is that in technology, the sentiment is okay. There is still a lot of work, the switch to cloud for some of the companies, installation of ERPs, we have a lot of demand, for example, for SAP, where we are very strong. And of course, the modernization of the, let's say, applications and modernizing, I would say, with agent, it's not an easy ride. It takes some time. It's sometimes very -- it could be, I would say, let's say, dangerous in terms of cyber because it depends on the LLMs you are using. So I would say, for me, the environment is healthy. There is no problem for me of demand. As I say, we are small compared to the size of the market. The market is several hundred billion in the U.S. and Europe. And as I said, the market share in the U.S. is less than 1% and we are roughly at several points in Europe. So that's what I say to the team. I think that there are many opportunities. Competition is fierce because I think that they are not that much, I would say, in good shape. They are fighting, I would say, to keep market share, specifically in Europe. But I would say we have win a lot of -- we have been able, I would say, to win some contracts in France in different countries in Europe and show, I would say, the difference between Atos and the competition. So for me, I think that the market is there. Atos now is back to normal. We need, I would say, of course, to continue to reinsure, let's say, the clients because it takes some time. I would say the '24 event was a shock to a lot of clients. And I see also in the U.S. because I go there every quarter that the sentiment also is gaining traction. And in fact, some -- in fact, I have said that we lost a lot of clients, and we will finish probably at EUR 1.2 billion this year. And at the peak, we had EUR 2.3 billion. So we lost roughly EUR 1 billion plus. Some of the contracts we're happy to lose. probably several contracts of EUR 100 million, we will probably regain them because I think that when I talk to some customers, they are not happy, in fact, with the competition. So there is a big opportunity, in fact, for the U.S. to make a rebound either in '27 or '28, it depends, I would say, on the length of the contracts that we have lost, some of them will appear in '27 and some of them will appear in '28. But overall, I would say I'm quite confident on the market. I think that there are quite a lot of opportunities. The fact that we are, let's say, shifting the profile of Atos on the 3 bets that we have, AI, cyber and sovereignty, definitely, we see a lot of traction in terms of client discussions. Now of course, like you, I want to see the result on the top line, and that's exactly what we're going to show. In fact, it's going to ease again in Q3. So in Q3, will be much better, of course, than Q2, like Q2 is much better than Q1 in terms of inorganic growth. So it's easing, and we are still aiming, I would say, to probably be flat, flat plus by Q4. That's the goal we have, of course, for this year. And then, of course, then after that, an acceleration of the top line in the course of '27. Jacques-Francois, if you want to.

Yes. Fred, so with regards to your question on the asset portfolio, it's true that when we look back, a lot of things have taken place in the last 18 months since Philippe joined and the exit -- the announced and executed exit of the Bull perimeter, the sale of some assets in South America. Then in terms of capital structure as well, the first step of the refi, which has taken place in May '26. So a couple of answers there. The first one is that in terms of asset disposal, there is nothing big, nothing big to expect. We just have a few tail of country exits, which were announced at the Capital Market Day with Genesis, country with a little perspective of growth or synergy with the rest of the group. That's on the M&A front. And not so much in the short term in terms of acquisitions because our capital allocation policy has not changed. This is priority to deleveraging. So we want to reduce the debt. We have demonstrated in H1 that we have bought EUR 109 million of bonds on the open market. We have clearly signaled our intention to do so in the future. Priorities in terms of capital structure, this is to refi. So I cannot give you a date because it depends on many things, when are we ready, what are the economics, what are the different levers to pull, et cetera. But clearly, in the next 12 to 18 months, we want to make some other significant steps with regards to getting out of the December '24 capital structure because that's still attached to the restructuring, and we want to get out of that as soon as we can in good conditions, of course.

Our next question comes from the line of Sam Morton of Invesco.

My question is for Jacques-Francois, please. So I guess first on the phasing of the factoring program. Can you help us understand the sort of the cadence at which those factoring proceeds will come into the company? And then also maybe how you would look to use the proceeds as they come in? And then I think the second question is really about the liquidity statement. And in particular, I think the conservative outlook you provided for year-end 2026. I think that caused some disappointment in the bond market. And I was just hoping that you could go through some of the areas where you think that you're being particularly conservative and maybe talk about the potential areas of upside if the conservative outlook proved to be misplaced.

Sure. Thank you, Sam. Good question to clarify. And actually, your 3 questions are, in the end, it's -- for me, it's one question. Because the answer to your second question with regards to why we have decided for the first liquidity test to be in our forecast at the level of 1.1 is precisely because the cadence of the factoring, even if we are working hard on that, is taking some time. And it's not something which goes with a finger or clips. It's taking time to ramp up. We have signed already one geography before the end of June. This is starting to ramp up as we speak. We are in the process of negotiating to open 3 more geographies, which should place in the coming months. So honestly, I cannot give you a precise phasing or a precise amount. But as Philippe mentioned earlier today on the call, we are talking about several hundreds of millions. And this is the determining factor for putting more and having more because, of course, when we get that money, that's not the only element. Now there are other elements, I will come to the others. But when we have this money, you recall that above EUR 100 million, 50% of these amounts go in immediate early mandatory repayments, which we will, of course, implement. That leaves EUR 100 million plus 50% of what is above. So we are very seriously contemplating utilizing this money for earlier than December '26/January '27 early reimbursement through purchases on the open market. You have to put yourself in our position, which is that when we do a forecast, I think that's a very important element despite our upbeat confidence and perspective, which we are reiterating today, we confirm the free cash flow positive, the margin trajectory, the guidance on revenue. Despite that, we need to be prudent. I don't want to give away some money before I have it and before this is materializing. So if there is any grain of salt in the process, which is whatever delaying, preventing, creating issues, et cetera, I don't want to have given that money away. So factoring was clearly the building block the most important. There is another one, which is quite significant as well. I mentioned in my slides that the cash in advance, which is the unsolicited payment at the end of the year in advance of the due date is something which typically happens quite a lot at the end of the year. And it's true less so at the different quarters, Q1, Q2 and Q3. Now our scope has moved. We don't have the Bull perimeter anyway. So the -- I can say, the content of the different business units and geographies, et cetera, has evolved a little bit. So that's another reason to be prudent and not completely bank the full amount which we had in prior years, which were between EUR 200 million and EUR 300 million at the end of the year of this cash in advance. So those are the most important building blocks. But rest assured that this is completely a priority, as I said as well in the earlier question to Frederic, deleveraging, reducing the amount of debt is absolutely a priority for the company.

Our next question comes from the line of Raman Narula from Principal Asset Management.

The first, just a quick clarification. Did I hear correctly that you said you're targeting EUR 700 million for the factoring program ultimately?

Several, several. Several means -- it doesn't mean 7. Several, yes. Thank you for allowing us to clarify.

Okay. Perfect. Yes. I guess the first question I had just on the renewals. Like if we don't count sort of bundling increases, if we don't count bundling of other services into the renewed contract, are you renewing contracts on similar scope and terms, i.e., price duration? I guess what I'm trying to gauge like if there's any price deflation when you are renewing these contracts in some of your product lines?

So most of the renewals is, I would say, on the same scope. Where you are right is that when we are a given contract or a given customer, we want to do what we call fertilization. So we want to increase the different scope that we can provide like cyber, digital applications, et cetera. But I would say renewals, it's really, I would say, most of it, it's mainly on the same scope. And the price deflation, when I look at the margin of the contracts we have signed, the margin is close to 25%. So there is no price pressure or we are also managing, I would say, so that if there is some price, of course, effect and it happens, but we are also managing, I would say, our internal delivery to ensure we stabilize, I would say, the project margin. So there is no -- I don't see price pressure right now, in fact, in the P&L.

Understood. And I guess the second question I had was on the incremental Genesis savings above EUR 650 million, the original plan. Is this all going to be a reduction in personnel costs? Or are there other cost lines that are going to see costs taken out?