Good day. Thank you for standing by. Welcome to the Atos Group H1 2026 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. 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. Let's jump to the presentation. As you've seen, there are four different topics. I will take the first two, the business highlights and the operational performance. Jacques-François will talk about the financial results. I will finish with the outlook. Let's start with the business highlights. In a nutshell, first, for us, it's a strong H1 performance with full-year targets that I confirm. I will come back to this at the end. Ongoing further delivery of cost structuring. Genesis is well underway. I will also comment on this one. The commercial traction also is building further. It's a long run, this one. We know it takes some time to rebuild, I'll say, confidence with customers. Last point, increasing momentum around our three-year strategic pillars. I will come back also on this one.
If we look at the key numbers, on what we call the going forward perimeter without Bull, without Latin America, also the small divestiture that we have done in Northern Europe. The revenues were EUR 1.661 billion, which is roughly -6% versus last year. It was in line with what we have guided, in fact, at the end of Q1. It's easing versus Q1. Also, it's the first time sequentially that Q2, in fact, is above Q1. It was not the case, in fact, in 2025. The operating margin for the perimeter is EUR 190 million, as we are close to 6 points of EBIT. In fact, you will see that above for Atos, flat, roughly at zero, with Eviden. In fact, in Eviden, we have also invested heavily in the commercial activities. We have been impacted slightly, I would say, by the Middle East.
Order entry is at 91%, at EUR 1.5 billion. It's also, I would say, gaining some momentum. You will see also that the qualified pipeline also has increased. Net changing cash that was done, in fact, in the middle of July, it's still -EUR 120 million. Just for your information, the restructuring cost was -EUR 130 million. We are still contemplating a total cash out around, we say between EUR 150 million-EUR 200 million. In fact, in Q1 it will be probably between EUR 190 million-EUR 200 million this year. It means that probably in the second half it's maximum EUR 70 million. Net debt is roughly at EUR 2 billion. 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. The net debt, of course, will go down by the end of the year. 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. Next slide. You can see the momentum. You can see, I would say, the different number that we have shown on the growth of Atos. I would say for the first time, we are now close to a -7%. Remember that last year we suffered a lot from the stop of contracts and also, let's say, a stop of clients, unfortunately, from their will in 2024 and early 2025. We can say right now that there is no loss, in fact, in H1 this year.
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 133 in H1. Remember that it's with the new perimeter. Without the new perimeter, it was around 110. This year we are at the 190, so roughly 2 points above last year. If we zoom a little bit on Genesis. Genesis, we launched it, in fact, early 2025. I 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. We have done the Genesis in one year. I have launched, in fact, a second phase of Genesis to ensure that the profitability will continue to increase, of course, in 2027 and 2028.
We are now at EUR 800 million or above. The Genesis will be finished by the end of the year. The restructuring will be really 2025, 2026. We can refocus, I would say, the mind of the management to the top line, of course, which is the challenge for us. Definitely, we have good signs that it will come. If we go to the next slide, you can see also on the workforce. After, I would say all the divestiture, the 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 the 16%.
It is for me a good signal that I would say our staff are motivated, and I would say that we suffer, I would say, a loss, an attrition, excuse me, that is very small. 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%. 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 track, I think the very good news first is the book-to-bill. Remember that the book-to-bill at 91 does not mean that we're going to decrease. Just because, for example, the framework agreements, we don't count them in the book-to-bill.
If you see below, for example, on the far right, with the European Public Sector Agency, it is a massive, I would say, contract that we have signed, EUR 187 million for four years. This is not in the book-to-bill. The different framework agreement that you can see, one with the Dutch police, one with the European Patent Office. This is typically, I would say, contract that we do not book, in fact, in the portfolio. Good news is that France, U.K., and Eviden are above 100% in Q2. It means that there is traction in these countries. I would say bit by bit, there will be traction, in fact, in the different geos. The second view news is the qualified pipeline. It continues to increase by EUR 800 million.
It was already up EUR 900 million in Q1, it is roughly EUR 1.7 billion more, I would say, tenders in H1, which I think it is, for me, a sign that Atos is invited, of course, in the different tenders everywhere. Also the fact that, I would say, the commercial activity has some traction, and of course it will pay in the coming quarters. Renewal rate is 94%, we are back to normal. It was the case, in fact, in 2024. We have done also a NPS, I would say, for the customers. We have, I would say, good signs that now 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 below.
For example, in the U.K. on the left, it is 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, remember that the three different pillars that we have launched and where we are now focusing the group, which is agentic. Agentification of the, I would say, company, cybersecurity, and sovereignty. This is a typical, I would say, wins that we had during H1. Eurocontrol, it is a big client of ours. We are now, let us say, modernizing, I would say, their applications. You can see DEFRA, CNA, the big contract we have signed with the U.S., and it is a TCV of close to $500 million. We are going to put also agentification in the contract. You have also examples with Primetals and Comunidade.
What is important to understand is that AI is in fact embedded in the different projects that we do. We have, of course, I would say, projects fully on that AI, data for example, on data lake or making sure, I would say, that the company has the right data momentum, let us say. We have also some agentification. We have also, I would say, AI in the different contracts that we sign in cyber and CM&I and Digital Workplace. Now for the different pillars, remember, we also have signed different. We have some other companies also that are accompanying us in this journey. For agentic, we use API. 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.
Let's go on the operational performance of the first semester. If we look on the top line revenues. 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. In fact, I would say on the like-for-like, the turnover was roughly EUR 1.8 billion, and we show EUR 1.7 billion, so -6.3% in Q2 in terms of inorganic growth. 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 plus.
As I said, there is no major loss now, I would say, in America. Of course, if you look at, for example, the revenues of North America in December last year, it was $92 million. It means that we will restart growing probably in the course of the Q4 this year. For the rest, France is easing also at -5%, probably close to zero in Q3. Germany also probably trying to be close to zero in Q3. We will see. U.K. and Ireland continue, I would say close at +9%. 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. It has a very big impact because it's by far the biggest customer in this market. Then BNN, roughly -5%.
The good news, of course, is that Eviden is growing at +14%. We definitely see that in the defense area, there are a lot of opportunities for Eviden and, of course, for Atos. 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 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. It means that, of course, Genesis is yielding, I would say, the results we are, of course, expecting.
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 margins. On the right, you see the operating margin that is published, it means with the loss of Bull, because as I said, Bull is always negative in H1. On the current perimeter, it's on the left at EUR 190 million, and you can see the different numbers of the different geos. Then I will go geo by geo now, let's say, in the coming slides. If I start with Germany, revenues organic was roughly -9%. We still, in fact, cut a lot of contracts last year. There some black contracts, and there are no more black contracts right now in Germany.
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, now can produce, I would say, EUR 30 million, maybe EUR 29 million exactly. We estimate we will be probably close to EUR 90 million this year. 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+ . 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. It will ease, as I say, in Q4 this year.
Definitely what we are doing right now is just to make sure, I would say, the profitability stays around 10%. Of course, now pushing hard to make the rebound in the U.S. France, -5% in organic growth. Just also because the public sector was also, again, weak in Q1, but it was the case also in 2025. We have roughly stabilized, I would say, the margin, and we have done a lot of actions where we think we can now increase the EBIT. It will be probably in 2027. Different actions will 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 its turnaround in the course of 2025 with a new CEO, in fact, in the beginning of last year.
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. We are quite pleased with the double-digit margin. Now with international markets on page 23, as I say, the main 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. Of course, with this healthy customer, the margin is a little bit down, but we are still able, I would say, to show a 6% margin. Last, the BNN, also -5% in terms of top line. Also with Genesis, we have restarted to protect the margin going forward. There are more actions to come.
In fact, for Genesis, it's mainly right now, let's say BNN, so Belgium and Netherlands and France where we're going to do, I would say more in the course of H2, the rest is almost done. Eviden, our product brand. 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. In fact, the revenue is almost close to zero. We definitely think that there will be a catch-up in H2. There is, of course, work in the defense industry. There is a lot of, let's say, opportunities there. The margin is roughly at zero, but it's also a change of the global cost allocation. Probably, I would say the comparison with last year is not the right one.
For sure, we need to do something in the profitability, and it will be the case, in fact, in H2 and of course H1 2027. With that, I hand over to Jacques-François on the financial results.
Thank you, Philippe. Good morning, everyone. 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. 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 2025. 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 -EUR 314 million, compared with -EUR 566 million in H1 2025. The main components were Genesis-related reorganization costs of EUR 113 million, rationalization and associated cost of EUR 8 million, amortization of intangible assets for EUR 17 million, equity-based compensation of EUR 80 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 2026 compared with EUR 452 million in H1 2025.
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 and lease related charges and pension-related charges. After a tax charge of EUR 37 million, net income amounted to -EUR 504 million, compared with -EUR 695 million in H1 2025. 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 -EUR 120 million in H1 2026. 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 requirement, excluding working capital actions, was -EUR 14 million. It was impacted by the unwinding of bonus payments for the fiscal year 2025 in the first half of 2026. 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 -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 2025, 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 PIK 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 two 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 month, 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 2026, and strengthened its financial profile with the December 2024 first lien refinancing, giving us the financial flexibility to continue executing our transformation roadmap. Indeed, during the first half of 2026, we successfully completed the first step of our December 2024 debt refinancing. This was a major milestone for the group. The transaction included the issuance of EUR 950 million senior secured fixed rate notes due May 31, and EUR 300 million senior secured floating rates 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 seven months to around five 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 and a half lien debt is due.
The total amount of this tranche has reduced in the semester, thanks to EUR 109 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 2028. That concludes my presentation. I'll now hand over back to you, Philippe.
Okay. On the last slide on page 33. 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 -5 . We guided between -1 and -5 . In fact, I was waiting, let's say, probably better or data from the U.S. I think it's more prudent to say we will be around -5 if, I would say, the U.S. doesn't pick up. It's the, 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 happen 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. 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. Just, I would say the difference between the two, it's roughly EUR 160 million of cash more, of course, than I would say, H1. Of course, we have more EBIT. We're going to have less interest. We're going to have less also black accounts. We can continue, of course, to work on the DSOs.
That's why we are quite confident also that the cash also will be back to positive. 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 EUR million, which is the target for us. Of course, it will help us, I would say, probably to buy back again 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. 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. AI for me, it's a marathon. It's probably a five to seven year, I would say, effort. Probably, let's say, slower in Europe than probably in the U.S. For 2028, continue the acceleration, grows between 5% and 7%. We continue to think that we will be around 10% in operating margin. In fact, next year we'll be probably above 8%. Then we continue, of course, to deleverage because the cash flow, of course, will be highly positive in 2027 and 2028.
We will start, of course, deleveraging with the cash and also with the increase, of course, of the profitability. 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. I definitely think that we have good signs now that, I would say, the activity is picking up. We have done the job on the cost and of course, on the cash. 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. If not, of course, in the course of 2027. With that, I hand over to the questions.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile a Q&A roster. Our first question comes from the line of Frédéric Boulan of Bank of America. Please go ahead. Your line is open.
Thank you. Good morning, Philippe and Jacques-François. 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. Then maybe within that, what is going on in terms of competitive or pricing dynamics. I do not know if you want to contrast between the U.S., France, and the rest. Then Jacques-François, would love to hear your thoughts around what 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? Thank you.
Okay. Hello, Frédéric . First, I would say if you talk to CEOs, of course, I see then I will see a client again this afternoon. I would say several of them every week. Probably you are right, between U.S. and Europe, I definitely think that the pace is probably a little bit different. I would say at board level, for me, two topics are very important, which is cyber and AI. Sovereignty also probably is a board topic, I would say probably less to an extent than probably AI and cyber. We see, I would say, that is why the three 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. AI, it is a long run.
As I say, AI, it is not an easy catch. We see a lot of things, it is not agentification of a process or agentification of operations. Takes some time. I think I already said, it is not a problem of technology, because building an agent is not that difficult. It is mainly, for me, data and process first, that is why we simplify. We have, let's say, more and more consulting projects on this one, because you start first to look at your data and look at your process. 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, I would say in the U.S., they have everything in the country to be, of course, sovereign. Europe is probably a different play.
What we see for the moment is that the budget of CIOs are not decreasing. I think they are still at the level or above. There is, of course, a lot of questions on AI because there is so many articles right now in the press that is difficult, let's say, to escape that kind of conversation. As I say, it is not an easy catch, it does not translate immediately, let's say, to AI projects. My view is that in technology, the sentiment is okay. There is still a lot of work and 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. Of course, the modernization of the, let's say, applications. Modernizing, I would say with agent is not an easy ride. It takes some time.
It could be, let's say, dangerous in terms of cyber, because it depends on the LLMs you are using. 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, and the market is EUR 700 billion in the U.S. and Europe. As I say, the market share in the U.S. is less than 1%, and we are roughly at several points in Europe. 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 in good shape. They are fighting to keep market share, specifically in Europe. I would say we have been able to win some contracts in France, in different countries in Europe.
I would say the difference between Atos and the competition. For me, I think that the market is there. Atos now is back to normal. We need now, I would say, of course, to continue reassure the clients because it takes some time. I would say the 2024 event was a shock to a lot of clients. I see also in the U.S., because I go there every quarter, that the sentiment also is gaining traction. In fact, I have said we lost a lot of clients, and we will finish probably at EUR 1.2 billion this year, and at the peak we were at EUR 2.3 billion, so we lost roughly EUR 1 billion+ . 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. There is a big opportunity, in fact, for the U.S. to make a rebound either in 2027 or in 2028. It depends, I would say, on the length of the contracts that we have lost. Some of them will appear in 2027, and some of them will appear in 2028. 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 three 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, that's exactly what we're going to show. In fact, it's going to ease again in Q3. In Q3, we'll be much better, of course, than Q2. Q2 is much better than Q1 in terms of inorganic growth. It's easing, and we are still aiming, I would say, to probably be flat plus by Q4. That's the goal we have, of course, for this year. Then, of course, then after that, an acceleration of the top line in the course of 2027. Jacques- François, if you want to.
Yes. Hi, Frédéric . 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. The announced and executed exit of the Bull perimeter, the sale of some assets in South America. In terms of capital structure as well, the first step of the refi, which has taken place in May 2026. A couple of answers there. The first one is that in terms of asset disposal, there is nothing big to expect. We just have a few tail of country exits, which were announced at the Capital Market Day with the Genesis. A country with a little perspective of growth or synergy with the rest of the group. That's on the M&A front.
Not so much in the short term in terms of our acquisitions, because our capital allocation policy has not changed. This is priority to deleveraging. 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. I cannot give you a date, because it depends on many things. When are we ready? What are the economics? What are the different levels to pull, et cetera? Clearly, in the next 12 - 18 months, we want to make some other significant steps, with regards to getting out of the December 2024 capital structure.
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.
Thank you.
Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Sam Morton of Invesco. Please go ahead. Your line is open.
Hi. A question to Jacques-François, please. I guess first on the phasing of the factoring program, can you help us understand the sort of cadence at which those factoring proceeds will come into the company? Then also maybe how you would look to use the proceeds as they come in. Then I think the second question is really about the liquidity statement. In particular, I think the conservative outlook you provided for year-end 2026. I think that caused some disappointment in the bond market. 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 proves to be misplaced.
Sure. Thank you, Sam. A good question to clarify. Actually, your three questions are, in the end, for me, it's one question. 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 clicks. 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 three more geographies, which should place in the coming months. Honestly, I cannot give you a precise phasing or a precise amount.
As Philippe mentioned earlier today on the call, we are talking about several hundreds of millions . This is the determining factor for putting more, and having more. Of course, when we get that money, that's not the only element. There are other elements, I will come to the others. 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 + 50% of what is above. We are very seriously contemplating utilizing this money for earlier than December 2026/January 2027, 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. 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. 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. 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, the, I can say, the content of the different business units and geographies, et cetera, has evolved a little bit. 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. 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 Frédéric . Deleveraging, reducing the amount of debt is absolutely a priority for the company.
That's great. Thanks a lot.
Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Raman Narula from Principal Asset Management. Please go ahead. Your line is open.
Hi. Good morning. Thank you very much for the presentation and for taking my question. 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 means a few.
Oh, several. Okay.
It doesn't mean seven. Several. Yes. Thank you for allowing us to clarify.
Okay. Perfect. I guess the first question I had just on the renewals, 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, if there is any price deflation when you are renewing these contracts in some of your product lines.
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. We want to increase the different scope that we can provide, like cyber or digital applications, et cetera. I would say renewals, it is free. I would say most of it is mainly on the same scope. 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. 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 have stabilized, I would say, the project margin.
I don't see price pressure right now affecting the P&L.
Understood. 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?
No, it's mainly personnel costs. You're right. In fact, when I launched Genesis last year, I was, let's say, expecting probably lesser decrease in the top line in 2025 and 2026. That's why we tailored, I would say, the Genesis plan with, let's say, better top line. Unfortunately, it didn't happen, and also because we lost a lot of customers in the U.S. I have just adjusted Genesis to protect the margin. The idea for me is really to be at 7% this year, to be between 8% and 9% next year, and of course, above 9% in the course of 2028, between 9% and 10%. Whatever is the top line, of course.
Of course, if we accelerate, and I definitely think it will come, the marginal growth will bring a lot because I will keep the cost roughly flat plus, it means that the marginal growth, of course, will bring marginal EBIT. That's exactly the way I would say I've tailored. In fact, I have ensured, I would say, that with the decrease of 2025 and 2026, we continue to deliver the margin that we have, in fact, put at the CMD last year. That's why I'm quite confident that we can reach, I would say, the 10% margin in 2028. It's just because we have increased the shaving of costs, and it's mainly personnel costs, yes. In fact, when I say Genesis is finished, all the actions will be taken by this year.
There will be no new actions, in fact, in the course of 2027. Of course, some actions we're going to take in September to December, for example, in France and Netherlands, they will have some impact in the course of 2027. That's why it will continue, let's say the exits will continue in the course of 2027. I would say at the end of the year, my main message to the team is really we finish completely Genesis. We know exactly what kind of reduction we want to have going forward. We just need, I would say, to execute the decisions we're going to take in the course of 2026. Of course, now I would say the mindset should be on the top line and the delivery, of course.
Very important also that we keep the quality of delivery. I think Atos has probably a moat on this one. I think we are very well known to, I would say, the excellence of delivery of the different projects that we have.
Got it. Just to be clear, the total restructuring cash costs of circa EUR 200 million that you expect to spend this year, this will take you to the cumulative EUR 800 million of Genesis savings?
Yeah, exactly. In fact, the total cost, we spent roughly EUR 400 million+ last year in Genesis. This year, close to EUR 200 million, a little bit below. We will be probably at EUR 600 million+ . I always said Genesis is roughly a EUR 700 million envelope, we'll stay in this envelope for Genesis. It means that there will be still between EUR 50 million and maximum EUR 100 million next year. With the same envelope, instead of EUR 650, we're going to have EUR 800 million+ of savings. Yeah.
Understood. That's very helpful. Just the last one from me. Can you sort of give us a sense of how H1 2026 on a constant perimeter, the performance has been across the various sort of product lines you have, CM&I, Digital Workplace, et cetera? If you're able to give an indication of the current product mix of the backlog, that'd be helpful as well.
We don't track the profitability per business line. Not yet. Probably, we need to do that in the future. What I see is that, of course, Eviden, the product, and Data AI is double-digit growth. We see more and more projects on Data AI. As I said, the Data AI business line, we track only projects focusing 100% on Data AI. In fact, we do also Data AI in different projects in CM&I, in Digital Workplace, et cetera, even in cyber. It's impossible for me, I would say, to give you that kind of information. There is no pattern of one business line, except Data AI, that is growing very fast, except Eviden. The rest roughly is in line with what we have done.
I would say we have shown there is no one business line going, let's say, deeper in terms of decrease in top line.
Okay, understood. Thank you very much.
The only business line where I don't push very hard is the Digital Workplace. That's the only, because for me, it's not really, let's say, an IT project. In fact, that's the business line with the lowest project margin, which is normal. It's more a commodity, let's say, product. So that's the one where I don't, let's say, push the team to fight on this one. The rest, I definitely think that, of course, it's pure IT, managed services, for example, of mainframe, et cetera, or switch to cloud. Let's say, if we say the only business line that will probably will decrease the most will be Digital Workplace, but on purpose, because I definitely think that we can propose different options, I would say, to the client than this one. Okay?
All right. Understood. Thank you.
Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Laurent Daure of Kepler Cheuvreux. Please go ahead. Your line is open.
Yes. Great. Good morning, gentlemen. I have three question, in fact. The first one is going back to the P&L and below the restated operating profit. You still have a lot of other losses. If you could clarify the litigation and client losses you put below, and why do you treat that as exceptional? More importantly, if I remember well, a year or two ago, you were planning to achieve a pretty clean P&L midterm. I want to be certain that maybe this is the last time we have such element below the line. My second question is on your 5%-7% midterm growth. I think none of your competitor is expecting this kind of growth rate, even the very best.
Does it mean that you are running more because you think you're going to win back part of the client losses you had in past years, do you already have clear evidence of that? My last question, I would like to have a clear update on the additional P&L savings coming from Genesis two, 2027 versus 2026. If I got you right, between 2027 and 2028, you're not expecting more savings, right? Thank you for all that.
First, on the growth of 5%, I don't know what the competition is saying, and I don't care. Sorry. Also, remember that we are now a medium player. We have also a lot of opportunities in the U.S. because I definitely think that we have lost contracts we should not have. I would say lost is because of the credit rating of the debt. Of course, for example, there are two or three clients at EUR 100 million+ . If we gain two or three clients like this, it's EUR 2, EUR 300 million, it's already more than 5% growth. In fact, around this 5%. Yes, I'm quite confident that we're going to regain this. Then there are traction, I would say that Atos is back. We are invited in all tenders in the different countries.
We see we can regain, I would say, some of the traction we have lost. I definitely think that we have probably lost too much. I know that the financial instability was, of course, a big question mark for clients, and especially for contracts for five or seven years. I think that there is a rebound possible because we will catch up, I would say, the loss that we have unfortunately witnessed in 2024 and 2025. We will see. You will see. I would say the competition is different. First, they are much bigger. If you talk about Capgemini or Accenture, they are probably in a different space for me. Some of them suffer from engineering. I think that, I would say we don't have exactly the same pattern. Remember that we don't do BPO, and BPO will suffer a lot with agentic.
I think we are well-positioned for the future. In terms of saving for Genesis, yes, there is EUR 100 million+ going in from 2027 to 2026. Of course, again, we have increase of salary, et cetera, so there will be a minus, of course, in 2027 versus 2026. I would say the savings that we're going to have pro forma, and going forward, let's say for 2027, is around EUR 100 million. The question is that, do we are going to have more savings in 2028? It's possible also, because I'm going to agentify also the process. Even, I would say, our own back office. It's possible that we have even more, I would say it's not Genesis anymore for me. It's the fact that we're going to be smart in terms of cost in our G&A.
In fact, when you look at the G&A as a percentage, the goal was roughly to be at 5%. We're not there yet because, of course, the turnover is too low. It's possible that I do an action probably to have more savings in the course of 2028. We'll see. For the first question, François, probably.
Yes. Thank you, Philippe. Your question about the P&L, full clean P&L, midterm, et cetera, and at what horizon does that happen, and is that already completely clean? Remember last time we discussed, we explained Genesis is a three-year program. Philippe just reminded us a couple of minutes ago about the fact that there is still some cost to come with Genesis, even if some cash will be out of the door next year. In terms of P&L and other items and extraordinary items, I think you're putting the finger on the line other, which I commented very briefly upon, but I can elaborate a little bit. Mainly this is driven by two things. One is litigation.
I don't want to give any name, but you have noticed that during the second quarter there were some developments and some things happening on the front of the litigation for us. In the spirit of being absolutely well-covered, even if we are fighting to defend our position, we completed our existing provisions just to make sure we are very well covered. That's the first point on litigation. Regarding onerous contract, we've been as well very transparent consistently about the two big black accounts remaining for the company. One of them is not in run, but still in project mode. It's true that at the end of December, we thought, and we took the provision which we assessed at the time as being right. Now, six months later, we have to reassess and add some other amounts of provision for this onerous contract.
At the moment now, when I'm speaking, I'm confident this is the right amount. Can I commit that nothing else will come in the future? I'm afraid at this stage I cannot, because we still have this black account, which is still in project mode, so it's not completely over. When the migration will happen, it will be in run mode. We'll be, of course, 100% comfortable. That's not the case yet. Maybe to conclude on your when do we have the clean P&L, well, the target is this year.
Remember that it's a four-year project, Genesis, we are year two. You say mid project, yes. I think by the end of 2026, the P&L will be clean. Normally, I would say for the rest for 2027, you should not expect, I would say, big amounts except probably the refinancing cost if we refinance in the course of 2027, of course.
To be clear, the onerous contract is mostly one contract. It's not all over the place, right?
Yes.
Yeah. That 95% is one contract. It is treated as extraordinary because we are consistent with the previous accounting methods applied. In a way, we don't have the choice but to book it there, which is abnormal, unfrequent, and extraordinary event.
We are finishing the cleaning of this company. It's not a new black contract. There are no new. In fact, black contracts, there are only two now. There is one that is losing roughly EUR 10 million per year, which is going to be a maximum now two years. We are probably trying to set an upside in the course of 2027. We could have some good news. We are back to one. Then on litigation, you know exactly that's also the legacy, unfortunately, of the past with TriZetto.
Great. Thank you.
Okay.
Thank you. There are no further questions. Speakers, please continue.
Okay. If there are no more questions, I think as a conclusion, I think as you can imagine, we are quite confident. I think that Genesis now is fully in place. As I said, the second part will be fully in place by the end of the year. As I said, the mindset of the management team, including mine, of course, is really now to accelerate the top line and continue, of course, let's say the restructuring that we have done and the turnaround of this company. I definitely think that after year two, we will be in a different path, in the course of 2027. I'm quite pleased with the work that the team has done in 18 months, and we will show you, in fact, in Q3 that it's easing in terms of top line, and we are ready for the rebound.
Thank you for your time this morning. I know that there are a lot of different publications, so I free your time. Of course, if there are any other questions or whatever, we remain at your disposal. Have a good day, and talk to you now for Q3 at the end of October.
This concludes today's conference call. Thank you for participating. You may now disconnect.