Good day, thank you for standing by. Welcome to the Elis full year 2025 results webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Martiré. Please go ahead.
Thank you. Good morning and welcome to Elis 2025 annual results presentation. I'm Xavier Martiré, CEO of Elis, and I am in London today with our CFO, Louis Guyot. We are pleased to present a year of strong operational execution and continued financial progress. Over the next hour, we will walk you through our business highlights, our financial performance, and the progress we have made on our CSR roadmap. After I review the operational highlights of the year, I will hand over to Louis, who will detail our 2025 financial results. I will then return to provide an update on our CSR achievements before discussing our outlook for 2026 in what remains a complex and uncertain international environment. We will then open the floor to your questions, and after our call, Nicolas Buron will be available to answer any of your questions offline.
Before we begin, please take the time to read the disclaimer. Let me start with the key message of this presentation. 2025 was another year of resilient growth, disciplined execution, and financial strengthening for Elis. In a macroeconomic environment that remained mixed across Europe and volatile in Latin America, we delivered revenue of EUR 4,796.8 million, representing growth of 4.9% compared to 2024. At constant exchange rate, growth reached 5.5%, with organic growth of 3.8%. Adjusted EBITDA increased by 5.6% to reach EUR 1,700.1 million. Importantly, the EBITDA margin improved again by 20 basis points, reaching 35.4%. This confirms our ability to continue expanding margins, even in the context of cost inflation and regulatory headwinds in certain regions.
Adjusted EBIT rose by 4.6% to EUR 766.6 million, with the margin stable at 16%. Fully diluted earnings per share increased by 5.2% to EUR 1.85. Since 2019, excluding the pandemic years, our EPS trajectory demonstrates consistent value creation. Free cash flow reached EUR 358.6 million, up by EUR 12.3 million year-on-year, reflecting the strength of our operating model. Finally, our leverage ratio declined 0.1x to 1.75x at year-end, in line with our capital allocation strategy and confirming the continued strengthening of our balance sheet. Beyond the strong financial metrics, what is particularly important this year is the quality of execution behind them. We delivered strong commercial momentum despite a challenging macroeconomic environment, particularly in Europe.
This performance continues to be supported by the structural growth of outsourcing across our markets. We pursued the further rollout of our service offering across all geographies, expanding both our client base and our penetration within existing accounts. Pricing remained positive as we implemented adjustments designed to offset cost inflation in a disciplined and granular manner. We also continued the active execution of our targeted acquisition strategy, completing value-creating bolt-on transactions that strengthen our network density and enhance our local positioning. Finally, continuous process optimization across our plants and logistic operations drove further productivity gains, reinforcing our operational excellence and supporting margin resilience. Taken together, 2025 once again illustrates the strength of our business model, balanced growth, disciplined capital allocation, operational efficiency, and continued financial deleveraging. Let's now look at revenue in more detail. At constant exchange rate, revenue increased by 5.5%.
Organic growth reached 3.8%, supported by continuous structural outsourcing trends and solid commercial momentum across most geographies. Hospitality delivered a strong summer season and a solid performance in December, helping offset softer activity in certain quarters. Pricing remains favorable, reflecting disciplined adjustments implemented to offset cost-based inflation, particularly wage inflation. M&A contributed 1.8% to growth in 2025. Acquisitions completed over the last two years added approximately EUR 80 million to revenue this year. Forex had a negative impact of 0.7%, mainly due to the evolution of Latin America currencies and the British pound. Overall, this performance reflects a healthy balance between organic growth, bolt-on acquisitions and disciplined pricing. Moving on to the next slide, our revenue growth benefited and will continue to benefit from positive market trends across our regions.
First of all, the COVID pandemic, as well as the many safety scandals over the last decade, especially in food industry, have resulted in a higher demand for hygiene and protective equipment for workers. Secondly, our growth in the healthcare business has been and will continue to be correlated with the aging of population in both Europe and Latin America. Third, the continued development of tourism directly drives our hospitality activity. The underlying growth trends might be different today from what they were a decade or two decades ago, but nevertheless, the industry continues to grow. The new trends encompass sustainable tourism, eco-tourism and responsible travel. Hotel groups are addressing these new clients' needs through modernization of infrastructure and use of circular services, such as those proposed by Elis. Fourth, the growing need for traceability and professional workwear, as well as European regulation, result in a steady development of outsourcing.
Last, we see more and more tenders coming with one or several CSR criteria, especially in Central and Northern Europe. Our circular services perfectly address this evolving need, and Elis is clearly well ahead of its competitors on that front, creating a competitive edge and room for growth. Let's now turn to slide eight, which highlights the structural foundation of our organic growth. Our long-term ambition is clear, progressively bring other geographies closer to the level of maturity we have achieved in France in terms of footprint, density and service breadth. France shows what our model can deliver at full scale. We cover virtually all end markets, offer the full range of services, and serve customers of all sizes. This density and breadth creates a virtuous circle of cross-selling, operational efficiency, and pricing discipline.
Outside France, no country has yet reached that same level of maturity, and that gap represents opportunity. We are closing it through several levels, increasing network density, expanding our offer to smaller customers as scale improves, and rolling out additional services such as pest control and clean room activities, which benefit from strong structural hygiene trends. We are also targeting specific growth pockets, for example, resident cleaning services in the U.K. and Spain, where outsourcing penetration remains relatively low. All of this is supported by continued investment in local sales teams. In short, our strategy is not to change the model, but to scale it market by market with discipline and consistency. The next slide virtually illustrates this point. Rather than reviewing each country individually, the objective here is to provide a clear picture of relative market maturity across our footprint.
In the heat map, we are looking at green countries represent markets where we see significant structural room for development, whether in terms of outsourcing penetration, service portfolio, depth of customer segmentation. Yellow markets are more advanced, but still offer incremental opportunity. France, shown in orange, stands as our reference point, the most mature integrated version of our model. What is particularly encouraging is that the majority of our footprint remains in green. This means that structurally, most of our markets are still earlier in their development curve compared to France. As density increase and capabilities expand locally, these markets can progressively unlock the same levers, broader service penetration, deeper cross-selling, and access to a wider customer base. This geographical mix give us strong long-term visibility on organic growth, even in a challenging macroeconomic environment. Moving to the next slide, M&A activity in 2025 was particularly dynamic.
We continued to execute our strategy of targeted value-creating bolt-on acquisitions, contributing approximately +1.8% to full-year revenue growth and further strengthening our network density in resilient end markets. In Spain, we acquired Carsan near Madrid and Bugaderia Neutral in the Barcelona area, both focused on hospitality, generating around EUR 10 million and EUR 13 million in revenue respectively in 2025. In Germany, we acquired Wäscherei Ernst, operating two plants serving many healthcare clients with nearly EUR 19 million in revenue. One site is new and offers significant spare capacity. We also announced the acquisition of Larosé, which operates two plants in Berlin and Schönebeck and generated around EUR 30 million in revenue. In Switzerland, we acquired Wäscherei Bodensee, serving hospitals and hotels with approximately EUR 23 million in revenue and meaningful expected synergies.
Outside Europe, we announced the acquisition of Acquaflash in Brazil, contributing around EUR 8 million in revenue. Finally, in France, we acquired Muller in the Grand Est, generating approximately EUR 7 million in annual revenue. In addition, Adrets, announced at the end of December, will contribute in 2026 on top of the +0.6% carryover impact from 2025 transactions. Looking ahead, our 2026 pipeline is as active as last year, supporting continued disciplined bolt-on execution. Moving on to the next slide, we present the four strategic rationales that typically drive our M&A activity. This framework was discussed in detail during our Investor Day in May. We have also categorized this year's acquisition according to these four buckets to give you a clear view of the strategic logic behind each transaction.
As you can see, most of the deals completed in 2025 were aimed either at consolidating our market position in geographies where we already operate or at securing additional industrial capacity. In many cases, acquiring capacity is more efficient and faster than building a new plant from scratch, and sometimes both rationales are combined within the same transaction. More selectively, we also use M&A to launch a new service not yet offered by Elis in a given geography or to acquire a complementary client portfolio. Turning to valuation, we remind you of the typical multiples we pay for bolt-on acquisition. In 2025, we acquired EUR 91 million of annualized revenue for EUR 108 million which represents slightly below 1.2x revenue on average.
This generally translates into an EBITDA multiple of around 5x before synergies, which can decrease to as low as 2.5x once synergies are fully implemented. Overall, this slide illustrates both the strategic consistency of our bolt-on approach and the discipline of our valuations framework. Moving on to the next slide. A key structural initiative during the year was a further deployment of our new CRM platform. Already operational in France, the Netherlands, and Ireland, this tool centralizes customer data and covers the entire client life cycle from lead generation to contract renewal. It enhances our ability to cross-sell services, improves onboarding processes, and reduces implementation lead times. Importantly, it also allows more dynamic pricing practices aligned with local market conditions. The rollout will continue across the group over the next three years and represents a significant lever for future organic growth.
In short, better retention, faster onboarding, and more cross-sell. Moving on to the next slide, I would like to provide an update on our pest control and clean room businesses, which remain high growth and high margin activities within the group. Clean room delivered +8.5% top line growth to EUR 275 million with robust commercial momentum despite a slightly more constrained client spending environment. We opened a third clean room laundry in Germany near Mannheim, reinforcing our leadership in Europe. Innovation continues to differentiate us, notably with reusable solution made from recycled PET materials. Pest control grew by approximately 9% to reach around EUR 80 million in revenue. We expanded into Latvia, marking our entry into the Baltic region. The loss rate improved by 2.5 points across all geo-countries, reflecting stronger execution and client satisfaction.
Organizationally, most countries now operate under a dedicated business unit structure, increasing operational focus and expertise. These two businesses continue to reinforce our service portfolio and overall value proposition. Also, we operate in 31 countries. Clean room services are available in 21 countries and pest control services in 13 countries. Leveraging our established platform to further deploy these services across our network offers substantial mid-term growth opportunities. Let's now take a look at each of our geographies. France first, where revenue growth was entirely organic at +3.3% in 2025, just like in 2024, with margin up ten basis points at the record level of 41.9%. Top-line growth was driven by commercial momentum in workwear despite a more complex economic and political context, and by hospitality, which benefited from a favorable comparable base during the summer and solid activity at year-end.
The slight EBITDA margin improvement was driven by volume growth and continued improvement in industrial processing. In Central Europe, revenue at constant exchange rates increased by 8.1%, including 3% organic growth. Belgium and Netherlands delivered solid performance. Growth in Germany was more moderate due to a challenging healthcare environment. Recent acquisition contributed 5.1% to the region's annual growth. The EBITDA margin improved by 50 basis points year-on-year. Germany recorded a 90 basis points margin improvement, driven by operational efficiencies and favorable energy purchasing condition. Moving to the next slide, Scandinavia and Eastern Europe delivered 1.9% organic growth. Outsourcing momentum remained solid in Finland, the Baltic States, and Norway. The competitive environment in Denmark, while still challenging, gradually improved throughout the year, and FX was a tailwind in the region.
The EBITDA margin increased by 20 basis points, supported by operational improvement, particularly in the Baltic region, as well as by the gradual improvement in the competitive landscape in Denmark. In the U.K. and Ireland, organic growth reached 2.6% despite macroeconomic headwinds. Commercial momentum in flat linen and workwear remained solid. Pricing adjustments were implemented to offset cost-based inflation. Hospitality performance was mixed, with softer activity during the second and third quarters. The EBITDA margin reached 32.4%, up 70 basis points year-on-year, driven by productivity gains in workshops and improved logistic efficiency. Moving on to the next slide, Latin America delivered 8.2% organic growth, reflecting strong commercial momentum and continued outsourcing development, particularly in healthcare and Mexico. However, the region was impacted by an 8% negative FX effect due to currency depreciation. The EBITDA margin declined by 130 basis points.
This reflects recent social policy decisions, including minimum wage increases, gradual reductions in working time, and additional premium pay requirements. We progressively implemented pricing adjustment during the year, which led to sequential improvement in the second half. Southern Europe revenue increased by 11.2% at constant exchange rate, reflecting strong activity levels, solid commercial momentum, and contribution from recent acquisition. Growth was particularly supported by strong performance in hospitality, while we also continued to expand our workwear outsourcing offering across the region. Across the main markets, Spain, Portugal, and Italy delivered similar levels of organic growth, demonstrating the strength and consistency of our regional positioning. In addition, two flat linen acquisitions completed in Spain contributed 4.4 percentage points to regional growth this year. Turning to profitability, the EBITDA margin improved by 100 basis points to reach 33.7%.
This improvement was mainly driven by higher volumes and more favorable energy procurement conditions. In May 2025, we held our Capital Markets Day, which provided a comprehensive deep dive to Elis' strategy, competitive positioning, and medium-term ambitions. During this event, we presented in detail the structural driver of our business model, the strength and scalability of our industrial platform, and the operational lever that will continue to support profitable growth over the coming years. We also clarified our capital allocation framework, our disciplined approach to bolt-on acquisition, and the initiatives that underpin our margin trajectory and cash generation profile. The Capital Markets Day was an important milestone for the group. It allowed us to step back from the annual cycle of results and provide a broader, more strategic perspective on Elis' positioning and long-term ambitions.
For those of you who were not able to attend or who would like to revisit certain sections, a full replay of the CMD is available online. Moving on to the last slide of the first section, let me briefly mention a more operational development in 2025. In November, Elis relocated to La Défense after nearly 10 years spent in Saint-Cloud near Paris. This new headquarters provide a more modern and efficient working environment for our corporate teams. The new premises are better adapted to facilitate collaboration across functions. It also reflects the continued evolution of the group as Elis has grown in scale and international reach over the past years. While this is not a strategic shift in itself, it is part of our ongoing effort to ensure that our organization and infrastructure remain aligned with the size and ambition of the group.
With that, I will now hand over to Louis for a detailed review of the five-month chart performance.
Thank you, Xavier. Good morning, everyone. Let me first walk you through the usual revenue breakdown by activity and market on geography to illustrate the group's strong diversification, which provides us with a resilient model in times of economic slowdown. Whichever way you look at the graphs, you will see that Elis positioning is well-balanced, which contributes significantly to its resilience. In terms of activity, flat linen, workwear, hygiene and well-being represent 47%, 37%, and 16% of revenue respectively. The contribution of our four end markets, which all have different growth drivers, ranges from 18% for trade and service to 30% for healthcare. This good balance is a key strength in times of crisis.
In terms of geographies, France represents 29% of our total turnover, and we have a balanced mix, with Central Europe and Scandinavia being more mature, and Southern Europe, Latin America offering higher growth prospects. This strong diversification in terms of activities, clients, geographies is not the result of chance. It is the outcome of a long-term strategy, which Xavier will remind you at a later stage of this presentation. Moving to the next slide, let me now comment on revenue growth and EBITDA margin evolution across the group. In 2025, revenue increased by 4.9% on a reported basis, and by 5.5% at constant Forex. Constant Forex, you can see the balance of the portfolio we were speaking about. Southern Europe, Latin America deliver very substantial organic growth in the high single digits.
Some zones are pretty solid, like France, Central Europe above 2%, and that allows some softer zones like the Nordics and U.K. with lower client activity and a bit more competition. On the other hand, bolt-on M&A delivered standard results in Central Europe and Southern Europe with still a strong pipeline. Forex was very negative in 2025 due to the shift of the markets following the U.S. tariffs policy announcement, especially in LatAm. Turning now to profitability, the group's EBITDA margin increased by 20 basis points to reach 35.4%. Please note that now all regions are above 32%. Most regions contributed positively to this improvement. Southern Europe recording one-point margin increase, reflecting strong operational leverage and favorable energy procurement conditions. Central Europe improved by 50 basis points, including a 90 basis points improvement in Germany, driven by operational efficiencies.
U.K. alone improved by 70 basis points, and Scandinavia, Eastern Europe by 20 basis points. France also recorded a further 10 basis points improvement. Latin America was the only region where margin declined, down 1.3%, affected by the impact of recent social policy measures, including minimum wage increase and working time adjustments. However, pricing actions implemented during the year led to sequential improvements in the second half. Overall, this slide illustrates once again the resilience of our model, solid top-line growth at constant Forex, combined with continued margin expansion at group level despite regional headwinds. Let me now walk you through the main elements of the P&L. Starting with EBITDA, as Xavier mentioned earlier, adjusted EBITDA reached EUR 1.7 billion, representing an increase of 5.6% year-on-year.
The EBITDA margin improved by 20 basis points to 35.4%, reflecting the combination of organic growth, operational discipline and ability to pass inflation in the price. Moving below EBITDA, depreciation and amortization remained broadly stable as a percentage of revenue compared to 24%. More specifically, depreciation related to linen on industrial assets was stable as a share of sales. However, higher fixed asset depreciation, which is basically the rents, increased significantly during the year. This increase is mainly driven by our continued investment in leased electric vehicles as part of our fleet electrification strategy. As a result, while the absolute amount of depreciation increased, the overall D&A to sales ratio is expected to stabilize in 26%. As a result, adjusted EBIT reached EUR 766.6 million, up 4.6% year-over-year, with a stable margin at 16%.
Coming now to non-current operating income expense. This line includes items that are not part of the recurring operating performance of the group. In 2025, this item includes certain positive one-off, notably insurance compensation received during the year for circa EUR 25 million. Share-based payment expenses increased in 2025 for two main reasons. First, the rise in our share price impacted the valuation of long-term incentive plans. Second, in France, employer contribution on free share allocation increased from 20%-30%, which mechanically raised the associated expense. Moving below operating income, financial expenses were higher in 2025, affecting refinancing at higher interest rates compared to previous years. The new bonds issued over the past two years carry coupon aligned with the current rate environment, which explains the increase in net financial expense.
Regarding tax, the average effective tax rate stood at 25.6% in 2025, slightly below the normative 27% for P&L. Indeed, the extraordinary French corporate tax surcharge introduced during the year was more than offset by the tax deductibility of LTIP-related expenses, as shares were delivered through share buyback rather than capital increase for the first time in 2025. At the end of the day, 2025 net income is 8.6% above 2024 level at EUR 366.6 million. Moving to the next slide, ROS is obviously a KPI we carefully track as it measures the value creation from our investments. We use it daily when making an investment decision, for example, an industrial investment or a big contract where significant linen must be purchased or when contemplating an acquisition, of course. Our pre-tax ROS is defined as EBIT divided by capital employed.
A detailed breakdown of the capital employed we use is presented in the appendix of this presentation at the end of 2025 total of EUR 5 billion. It excludes EUR 1.5 billion of intangible assets recognized in the group's last LBO back in 2007, which have so far nothing to do with Elis operations. In 2025, pre-tax ROS was 14.7%, 20 basis points above 2024 level. After a normative tax of 25.8%, the ROS will be circa 11% way above the WACC. You can see that if we exclude the two years of pandemic, Elis ROS has been showing steady improvement since 2018 on its way to our target of 15%. Moving on to the next slide. Let's now take a look at the 2025 fully diluted headline net income per share.
As usual, the main restatements to get to headline net income include the amortization of intangible assets recognized in past acquisition, IFRS 2 expenses, which corresponds to the non-cash cost of performance share plans, and non-current operating income and expense, which were lower in 2025 than 2024 due to insurance compensation received during the year. In 2025, we also restated the extraordinary surcharge of French corporate tax, which applies only to the 2025 fiscal year. All in, headline net income for 2025 stands at EUR 467.3 million, up 4.7% year-on-year. This translate into EUR 2 per share on the basic basis, up 5.6% year-on-year, and EUR 1.85 on a fully diluted basis, up 5.2% year-on-year.
This fully diluted figure reflects the potential impact of performance share plans and the convertible bond, in which case the corresponding interest expense is restated in line with IFRS methodology. Moving on to the next slide. You can see that Elis' fully diluted headline EPS is now approximately 65% above 2019 level. This highlights the structural improvement in our earnings per share over the past several years. Looking ahead, we expect this positive trajectory to continue, supported by ongoing operational improvements and the contribution of our share buyback programs. Together, these elements should continue to translate into sustainable EPS growth over time. Moving to the next slide. Let me now walk you through the evolution of free cash flow in 2025. Free cash flow reached EUR 359 million this year, representing a further improvement compared to 2024.
This confirms once again the strong cash generative nature of our business model. Starting from EBITDA, the increase in operating profitability was naturally the first driver of the improvement in cash generation. Turning to CapEx, it was broadly stable year-on-year in euro terms. It means that as the percentage of sales, it decreased by one full point, reflecting a much better leaner CapEx ratio. That is linked to better purchasing conditions and disciplined purchasing management. Importantly, this is not constrained growth as investment levels remained fully aligned with commercial development and contract wins. Working capital evolution remain well controlled. We continue to manage receivables, payables and inventories with discipline, maintaining a structurally efficient working capital profile.
Cash taxes were a bit high in terms of ratio on EBIT plus interest plus amortization at 23.4% due to approximately EUR 10 million of one-off items during the year, including the French exceptional overtax on some catch-up adjustments related to prior years. We expect that ratio to come back to 22% in 2026. Net interest paid increased year-on-year. This reflects the higher cost of recent refinancing and the early reimbursement of the 2026 bonds, incurring a double coupon of EUR 8 million.
Please continue to stand by. Your conference will resume shortly. You are now back live in the call. Thank you.
Hello, everybody. Sorry about that. I guess you got the interest line, so I will come back on the lease payment. Lease payment increased by approximately EUR 27 million compared to last year. This is mainly driven by the expansion of our EV electric vehicle fleet as part of our electrification strategy, and to a lesser extent, by slightly higher financing costs versus five years ago. We expect this evolution to slow down in 2026, especially as we have a rent franchise for the new headquarters for a couple of years. Regarding acquisitions, you have to sum up the three lines and you will find circa EUR 139 million for M&A. Out of that, EUR 20 million is linked to the last earn-out for Mexico. This compares with EUR 83 million paid in 2024 for the second earn-out, which mechanically supports year-on-year comparison.
Finally, on the non-cash variation of the debt, there is a positive EUR 48 million impact linked to the evolution of the dollar/euro Forex, compared to a negative EUR 35 million in 2024. As a reminder, this is financially totally neutral, as the exposures are hedged through cross-currency swaps with mark-to-market variation, which is accounted for in equity. This relates to the USPP we have on the balance sheet. Overall, free cash flow remains robust at EUR 339 million, reflecting strong operational performance, disciplined investment, controlling working capital, and effective financial management. The net debt reduced slightly, which allows to reduce the leverage by zero-one times as scheduled, preserving flexibility for disciplined bolt-on acquisition and shareholder returns. Moving to the next slide, let me comment on our debt profile and financing structure.
As you can see on this slide, Elis maintains a well-diversified financial structure with staggered maturities extending over the long term. In 2025, we successfully issued a new EUR 350 million bond with a 3.375% coupon maturing in September 2031. This transaction allowed us to further smooth our maturity profile and secure financing at attractive condition in the current market environment. At the same time, we completed the early repayment of the EUR 350 million bond initially maturing in February 2026. This proactive refinancing reduced near-term refinancing risk and extended the average maturity of our debt. End of 2025, our available liquidity stood approximately at EUR 1.3 billion, including EUR 400 million of cash on the balance sheet and EUR 900 million of undrawn revolving credit facility. This provides, of course, significant financial flexibility.
Our debt maturities are now well spread over time, with no material concentration in any single year. The maturity of our debt is at fixed rates, which provides visibility in the current interest rate environment. Overall, our financing structure remains robust, diversified, and aligned with our investment-grade profile. It supports both our ongoing deleveraged trajectory and our capacity to pursue disciplined bolt-on acquisition when opportunities arise. To conclude this section, let me now comment on the evolution of our leverage. As you can see on the slide, our net debt to EBITDA ratio decreased further in 2025 to reach 1.75x at year-end. This represents a reduction of 0.1 time compared to last year, fully in line with our capital allocation policy. If you look at the chart on the slide, you can see the steady improvement in leverage since the pandemic years.
Despite continued bolt-on acquisitions and shareholder returns, we have consistently reduced our financial leverage over time. This reflects three structural strengths of our model. First, strong and recurring EBITDA growth. Second, robust and predictable free cash flow generation. Third, disciplined capital allocation, both in terms of acquisitions and shareholder distributions. Importantly, this level of leverage gives us flexibility. It allows us to continue pursuing selective bolt-on acquisitions while maintaining financial discipline and resilience. In short, the combination of earnings goals, cash generation, disciplined financial management continues to strengthen our balance sheet year after year. I will now hand back to Xavier, who will give you an update on our CSR achievements in 2025.
Thank you, Louis. Let me now briefly come back to our 2025 CSR program, which are concluding this year. Our CSR roadmap was initially established in 2020 and updated in 2023 and 2024 to reflect our strengthened climate ambition and the evolving CSRD framework. It was built around clear, measurable targets covering climate, circularity, water and energy consumption, health and safety, diversity, and responsible supply chain management. We have achieved or significantly exceeded most of these objectives. Particularly in reducing carbon intensity, advancing fleet electrification, strengthening circular initiatives, improving employee satisfaction and training, and assessing our direct suppliers. Where targets were not fully met, mainly due to the external factors such as COVID, performance remains close to the objectives, demonstrating strong underlying momentum.
We also delivered meaningful progress in reducing water intensity and improving thermal energy efficiency across our sites, as well as a 37% reduction in our accident frequency rate compared with 2019. Overall, completing this 2025 roadmap confirms our ability to turn commitment into measurable results and shows that sustainability is fully embedded in our operating model. It also provides a strong foundation for the next phase of our CSR journey. Moving to the next slide regarding our climate strategy launched in 2023 and validated by SBTi, we continue to deliver strong emissions reduction in line with our roadmap. Our objective for scopes one and two is to achieve a 47.5% reduction in emissions between 2019 and 2030. As of year-end, we have achieved a solid 24% reduction.
This performance was notably driven by strengthened energy efficiency programs, energy transition initiatives at certain sites, and improvements in country-level emission factors. For scope three, we aim to reduce our absolute emission by 28%. As of year-end, we have achieved a 3% reduction. Overall, our total carbon footprint decreased by approximately 4% between 2024 and 2025 on a comparable perimeter. We look forward to continuing to work with all stakeholders to achieve these ambitious objectives and contribute to the global climate efforts. Moving to the next slide, let me comment on the recognition of our circular business model under the EU Taxonomy. As you know, the EU Taxonomy aims to define which economic activities can be considered environmentally sustainable based on three criteria. Such activities are reported as aligned.
For 25, the group is pleased to report that 70% of its turnover qualifies as aligned. By comparison, the European Commission indicated that companies reported an average alignment of 11% in 2024. These recognitions highlight both the intrinsic circularity of our business model and its strong sustainability profile. Let me now turn to our new CSR strategy for 2030. Building on the roadmap we have just completed, we are launching an ambitious five-year plan structured around three pillars: environment, our people, and society, with clear 2030 targets for each. Under environment, we will continue to leverage our circular model and operational excellence to further reduce our footprint. We are accelerating on climate and energy, targeting a 25% improvement in thermal energy efficiency versus 2018 and at least 15% alternative vehicles in our fleet.
We will also strengthen eco-design with 100% of new catalog collection going through a formalized eco-design process, increase workwear reuse by 30%, and reduce water intensity in our laundries by 30%. The second pillar, our people, reflects our conviction that sustainable performance starts with our teams. We are targeting a 30% reduction in accident frequency versus 2024, 42% women in managerial roles, at least 75% employee satisfaction, and a 10% reduction in absenteeism by 2030. Finally, under society, we aim to maximize our positive impact. This includes developing avoided emissions for our customer, assessing at least 95% of direct supplier against CSR criteria, and supporting young talent through the Elis Foundation.
Overall, this 2030 strategy represents a clear step-up in ambition, fully aligned with our business model, and designed to drive sustainable value creation in an environment where ESG performance is increasingly decisive. Moving to the next slide, Elis CSR strategy continues to deliver strong action and tangible results recognized both internally and externally. Internally, 74% of our employees say Elis is strongly committed to CSR. Externally, we continue to receive consistent recognition from leading ESG rating agencies such as MSCI, ISS, and Sustainalytics. We are particularly proud to be included once again in the CDP A List, ranking A List among the top 4% of the 23,000 companies assessed globally and among the top French performers.
These recognitions reflects the credibility of our climate strategy and the transparency of our disclosures. Our EcoVadis gold rating was also renewed with a score of 80 out of 100, placing Elis among the top 5% of 150,000 companies assessed worldwide. These recognitions strengthen our credibility with ESG-focused investors and support our commercial development, particularly with large corporate and public sector clients. In short, we delivered a strong 2025 CSR performance and are now launching a new 2030 CSR strategy fully aligned with our DNA and focus on sustainable value creation for all stakeholders. Let's now turn to our strategy and outlook. The very solid performance delivered by Elis in recent years is a result of a sound strategy that we have been applying for more than a decade. This strategy relies on four pillars.
First, the development of sustainable services and promotion of the circular economy, which has always been at the heart of our business model. Second, our industrial and commercial excellence to generate continuous productivity improvements and create valuable trusting relationship with our customer. Third, the consolidation of current positions, which leads to network density and creates both a key competitive advantage for us and a high barrier to entry for other competitors. And last, the expansion of our network, which over time has led to a more balanced geographical and end market mix and developed growth opportunities, thanks to outsourcing potential. Moving on to the next slide. Let's take a look at this graph that we present regularly.
There you see the evolution of top line and margin performance over the last two decades, and it is fair to say that the last few years have clearly demonstrated the resilience of our business model and our strong pricing power. The backbone of our resilience is twofold. First, the diversified geographical footprint Louis already touched on, with France representing less than one-third of our business. Second, the diversified portfolio of clients in terms of size and end markets. It is worth noting that this resilience, as well as the organic growth profile of the group, improved further with the expansion in Latin America and the acquisition of Berendsen. Consequently, you can see on the graph that margin has remained consistently at high levels within a narrow range, regardless of external events and taking into consideration the impact of IFRS 16 from 2019 onwards.
Given the current situation in the Middle East and the discussions around energy prices, I would like to remind you that when the war in Ukraine started in 2022, we were not hedging our energy purchasing. As a result, we were exposed to the sharp increase in input prices and as adjusting our prices takes time, our margin declined that year. Since then, we have implemented a hedging policy for gas and electricity that protects us from market volatility. I will come back to this in the next slide. On top of that, one very interesting characteristic of our business that we saw in 2020 is that linen investments come along with top-line growth. That means that conversely, they mechanically go down during such top-line years with a favorable impact on cash generation.
The cash generation trajectory has been impressive over the last five years, with free cash flow increasing from EUR 186 million in 2019 to nearly EUR 360 million in 2025, and we expect this trajectory to continue in the coming years. Moving on to the next slide. Let me briefly come back to the energy hedging strategy we implemented in 2022, shortly after the start of the war in Ukraine. At that time, as energy prices were becoming extremely volatile, we decided to introduce a structured hedging policy for both gas and electricity in order to better protect the group from market fluctuations. The approach we follow is a layered hedging strategy. Each year, we hedge roughly one-third of the volumes expected for the year N+1, N+2, N+3.
As a result, coverage progressively builds over time. As shown on the slide, if we look at the situation as of year N, energy volumes are almost fully hedged for N+1 , around two-thirds hedged for N+2 , and roughly one-third hedged for N+3 . By the start of the delivery year, this means that energy purchases are close to fully hedged, which provide us with very strong visibility on our energy costs and significantly limits our exposure to short-term price volatility. Overall, this layered strategy allows us to secure our energy costs several years ahead and smooth the impact of energy price fluctuation, which is particularly valuable in the current geopolitical environment. Turning to the next slide, you can see the concrete outcome of this hedging strategy.
For 2026, we have virtually secured all of our energy needs with 93% of gas and 94% of electricity volumes already hedged. Looking one year further, coverage for 2027 is also already very high, with 85% of gas and 73% of electricity volumes secure. This give us very strong visibility on our energy costs for the next two years and significantly reduce our exposure to potential volatility in energy markets. As a result, we currently expect our total energy bill to be around EUR 190 million in 2026, which would be below the level recorded in 2025, and we have already secured a further reduction for 2027. Overall, this hedging strategy allows us to stabilize the key component of our cost base and protect our margins in a very volatile energy environment.
Turning to the next slide, let me briefly comment on the situation in the Middle East. At this stage, we have not observed any significant impact on our activity, and our hospitality customers indicate that booking levels for late March and April remain very high. More broadly, any potential weakness in long-haul tourism would likely be offset by stronger domestic and intra-European travel, which would limit the impact on European hotel demand. From a cost perspective, our exposure to the main potentially affected items remain limited. As we discussed earlier, our gas, electricity needs are virtually fully hedged. As a result, our energy bill for 2026 and 2027 are already largely locked in and are expected to decrease sequentially.
The main cost item that remains exposed is fuel, which represents around EUR 60 million only per year and is purchased at the pump, and therefore exposed to the market price. Overall, the group closely monitors these developments and retains the ability to pass significant cost increases through to prices, as it did successfully in 2023 and 2024. Now, let's talk about our 2026 outlook. Starting with revenue, we expect organic growth to be slightly below the level achieved in 2025. This reflects slightly softer commercial signings recorded in the fourth quarter of 2025, which will mechanically impact the year. That said, the structural drivers of our business remain intact, and we continue to benefit from outsourcing trends and a solid level of recurring activity. Turning to profitability, we expect a slight expansion in both adjusted EBITDA margin and adjusted EBIT margin.
This improvement should be driven by continued productivity gain across all geographies, disciplined pricing, ongoing operational optimization, and a lower expected energy bill. Regarding earnings per share, we anticipate high single-digit growth in fully diluted net income per share. This progression should be supported by net income growth as well as by a reduction in the number of fully diluted shares, reflecting the impact of our share buyback program. Free cash flow is expected to grow at a mid-single digit rate. This will be driven primarily by EBITDA growth and lower net interest paid, reflecting the refinancing action already completed. As always, we maintain a strict discipline on capital expenditure and working capital management.
Finally, in line with our capital allocation policy, we expect our financial leverage ratio to decrease further to around 1.65x by year-end 2026, representing a reduction of approximately 0.1x. This confirms our commitment to progressive deleveraging while preserving flexibility for disciplined bolt-on acquisition and shareholder returns. Moving on to the next slide, let me briefly remind you of our capital allocation framework. As you will recall, we previously presented this framework in March 2025, and there is no change to it. It continues to guide our financial decisions in a consistent and disciplined manner. Everything starts with strong and recurring free cash flow generation. The resilience and predictability of our cash flows are the foundation of our model and give us flexibility. Our first priority remains operational development.
We continue to pursue our bolt-on acquisition strategy in a disciplined way, targeting between EUR 50 million and EUR 150 million of acquisition per year. These acquisitions are strictly value accretive, focused on strengthening our network density and reinforcing our competitive positioning in local markets. The second pillar is financial discipline. Maintaining our investment grade profile remains a priority. As part of this framework, we aim for progressive reduction of our leverage, limited to approximately 0.1x per year. This ensures balance sheet strength while preserving capacity for growth. Finally, once these two priorities are addressed, we allocate the remaining cash to shareholders' returns. This includes a regular dividend complemented when appropriate by share buybacks or potentially a special dividend, depending on market conditions. This framework ensures a balanced allocation of capital, supporting growth, reinforcing financial solidity, and delivering sustainable returns to shareholders.
It remains fully unchanged and continues to structure our financial discipline going forward. I will now hand over to Louis. He will detail the shareholders' return for 2026.
Thank you, Xavier. Let me comment on capital allocation for 2026, and especially the massive step up in shareholders return. Starting with the dividend, at the annual general meeting of shareholders in 2026, the supervisory board will propose the payment of a dividend of EUR 0.48 per share, which represents an increase of 7% compared to last year. This progression is fully consistent with our policy of delivering sustainable and progressive shareholder returns, supported by earnings growth on strong free cash flow generation. Turning now to share buybacks. As part of the implementation for capital allocation policy, we have executed in 2025, a EUR 150 million share buyback program. In 2026, we have a likely specific event.
Indeed, as you know, we have a convertible bond maturing in 2029, but this instrument includes an optional early redemption feature, also called soft call, that can be exercised from October 2026 onward, subject to market conditions. The market condition is a threshold of 130% of the par value, that is approximately EUR 21.5. In this case, we have the option to exercise this soft call as soon as mid-October 2026. In that scenario, bondholders would convert, leading to the derecognition of the debt component of the convertible, which is EUR 362 million. Everything else being equal in terms of M&A and buyback, this mechanical reduction in debt would lead to a decrease in leverage in 2026, well above the -0.1x annual reduction embedded in our capital allocation policy.
We expect a normal year in bolt-on M&A, meaning between EUR 50 million and EUR 150 million, as described by Xavier, and as we would like to stick to our capital allocation policy by targeting a leverage down to 0.1x in 2026, we may be driven to increase the buyback program in 2026 up to EUR 500 million. This represents a significant step up compared to 2025 and illustrates how our disciplined capital allocation framework creates the flexibility to accelerate shareholder returns while preserving financial discipline. Now, as the convertible bond conversion is not a cash event, I prefer to clarify the likely cash movement in 2026. We basically have two sources of cash, shown on the left-hand side. First, the free cash flow generating during the year, supported by EBITDA growth, continued operational discipline.
Xavier will confirm in the outlook that it shall increase in 2026 versus 2025. Second, the issue of the new plain vanilla bond in 2026, with a target size between EUR 500 million and EUR 600 million. These sources will be needed to fund the first bolt-on M&A. As previously indicated, we expect an acquisition envelope in the normal range of EUR 50 million to EUR 150 million, consistent with our discipline on selective approach. Second, the dividend payments. In May 2026, subject to shareholder approval, we will pay a dividend of EUR 0.48 per share, representing a total cash outflow of approximately EUR 110 million. Third, the refinancing of the EUR 300 million bond maturing in May 2027. That is a standard plain vanilla bond.
We intend to proactively refinance it in 2026 in order to smooth our maturity profile and maintain strong liquidity visibility. Fourth, the share buyback program of up to EUR 500 million, as announced earlier, reflecting the acceleration of shareholder returns made possible by our disciplined delivery framework.
In summary, the combination of strong free cash flow generation and tailored refinancing allows us to fund growth, accelerate shareholder returns, and maintain a disciplined deleveraging trajectory.
Thank you, Louis. Let me conclude with a few key takeaways. First, 2025 was another year of profitable growth and disciplined execution. We delivered solid organic growth, continued to improve margins, and maintained with a strict operational control across geographies. This consistency in execution remains one of the strengths of Elis. Second, we achieved record financial performance with margin expanding and strong cash generation. Our EBITDA margin reached a new high, free cash flow improved further, and earnings per share continued to grow. Importantly, this performance was delivered while continuing to deleverage in line with our capital allocation policy. Third, we made tangible progress on our ESG commitments. We are on track with our 2030 climate objectives.
We successfully completed our 2025 CSR roadmap, and our circular business model continues to receive strong external recognition. Sustainability remains fully embedded in the way we operate and grow. Finally, despite the geopolitical environment, we enter 2026 with confidence. We expect continued growth and further margin improvement combined with disciplined capital allocation. The combination of de-leveraging and tailored refinancing give us the flexibility to accelerate shareholders' returns with a higher dividend and significantly increase share buyback program. In short, Elis continues to demonstrate the resilience of its model, steady growth, expanding profitability, strong cash generation, and enhanced shareholders' returns, all supported by disciplined financial management. Thank you for your attention, and we are now ready to take your question. Operator, back to you.
Thank you. 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. We will now go to our first question. One moment, please. The first question today comes from the line of Annelies Vermeulen from Morgan Stanley. Please go ahead.
Hi. Good morning, Xavier and Louis. I have two questions, please. Firstly, on your plan for margin expansion in 2026, could you talk a little bit about the levers behind that and which end markets or geographies do you see the greatest opportunity for productivity gains, which I think is the main reason for your expectation of continued margin expansion? Secondly, specifically for LatAm, you spoke about pricing actions taken in the second half to mitigate those margin declines. Could you talk about your expectations for margins in 2026, specifically in LatAm? Thank you.
Good morning, Annelies. Margin 2026, as always, the improvement will come with volume. We have always some operating leverage thanks to additional volume. Productivity gains, as always everywhere, we target 2%-3% productivity gains, and it is well spread all across our geography. I will not specifically highlight one specific area where we will increase more. That means that even super mature market like France, we expect some additional productivity gains, and we have some new program launch. Even in France, we expect a margin expansion in 2026.
For the specific case of LatAm, you have seen that as we disclosed, if you remember when we presented the performance at the end of H1 2025, we said that we were on the way to recover a better performance on H2. So the gap in the margin was much lower in H2 2025. For 2026, now we consider that we have been able to stabilize the situation, and we are quite optimistic for 2026 to see the margin at least at the level of 2025 and more probably a better margin in LatAm in 2026 than 2025.
We have been able to adapt our pricing strategy to the new cost environment with many measures, as you remember, of some government to increase significantly a minimum wage, to decrease the working hours in many countries. They are quite creative because to start 2026 in Colombia, for instance, Petro, the president, decided to increase the minimum wage by 24%. It's not nothing for a blue-collar industry like ours. Nevertheless, we are on the way to adapt our price list in Colombia and to offset this impact. That's why at this level of the year, we are quite confident to see at least the same margin in LatAm in 2026 and more probably an improvement of the margin in the sector where we continue to have a solid organic growth momentum.
You remember that we signed some huge contracts in Mexico in healthcare and super successful. We have also some good momentum in Brazil. We will have a solid year of organic growth and I think margin improvement in LatAm in 2026.
That's great. Thank you. As a follow-up to that, on pricing discussions, are you happy with how those have developed in January across all your geographies?
Yes, absolutely no issue. Super confident to pass what we need to offset the inflation of our cost.
Perfect. Thank you.
Thank you. Your next question, Steve, comes from the line of Ben Wild from Deutsche Bank. Please go ahead.
Hi. Good morning, everybody. Thanks for taking my questions. Two questions for me, please. Firstly, on the energy hedging policy that you've discussed, can I just check, generally speaking across your markets, do you find that smaller independent peers are typically hedged, also? Do you think there are opportunities to win share from your smaller competitors given the kind of professional hedging policy that you outlined this morning? The second question just on the comment around Q4 contract signings. I think it's fairly consistent with what you described at the Q3 revenue update.
Maybe just a further update on the organic trajectory in the business that you're seeing at the moment and the kind of mood that your larger customers and your small medium-sized customers are in given the economic environment in Europe at the moment. Thanks.
Hello. Good morning, Ben. For energy policy, hedging, and so on, the situation on the market today is, I would bet that majority of competitors have more or less followed the way our strategy that is public. I would bet that majority of smaller competitors have been able to lock at least the pricing for 2026, perhaps not for 2027, but for 2026. I don't consider that we'll have a new competitive advantage thanks to the increase of the spot price within energy, so I don't think that it will change significantly the situation. By the way, we need to keep in mind that the total energy cost represent 6%-7% of the P&L, of the top line of the P&L, so it's not so massive.
We see some increase of the spot price. Even if the spot price increase double, it would be a saving of 5-6% in comparison to small customer. You know that we are not pricing aggressive on the market. We win contract thanks to reliability and quality, never because we destroy the pricing. I don't expect to have to benefit too much from this situation on energy regarding the competitive landscape. Second question regarding the sequence of the organic growth and impact of the slowdown of signature at the end of the year. What is for me quite interesting and quite promising for the midterm is the fact that we have registered some quite good signature in the beginning of the year 2026, the first two months.
When we will analyze the sequence of the organic growth of the group, what we expect, because it is signed, not already put in place, and it is installation of the contract that will arrive around summer for some contracts and a super big contract in healthcare in Germany, we are talking about EUR 30 million per year, that will start to be implemented in October, November. We are quite confident to see a sequence improving all over the year 2026. Probably a growth that will be better in H2 2026 than H1 2026, and not because we expect. This is because it is signed, just a timing to start to invoice.
Perfect. Can I just ask a quick follow-up on the energy cost? I think you guide to about EUR 190 million of gas and electricity cost in 2026. I think in 2024 the number was about EUR 240. Do you have the 2025 energy cost excluding vehicle fuel to hand?
Yes. To be even more precise in terms of saving in euro, if you take the two-three year evolution, it's more or less in 2024, we made a saving around EUR 40 million in comparison to 2023. In 2025, it is a savings of around EUR 30 million. We expect in 2026 a saving around EUR 20 million. For now, what we see for 2027 should represent another saving around EUR 10 million-EUR 15 million.
Perfect. Thank you.
Thank you. Your next question today comes from the line of Sabrina Blanc from Bernstein. Please go ahead.
Yes. Good morning, everybody. My first question, could you come back on the financial cost for 2026 if we have to compare to 2025 and after taking into account the refinancing mentioned by Louis? Second question is regarding, you have mentioned potentially some share buyback or special dividend in terms of capital allocation. So could you come back on what is your preference compared to the current market environment?
Sabrina, regarding interest, your question is P&L or cash?
Both.
Both. Okay. P&L, we shall have another small increase in the same magnitude as 25 for the same reason. Basically the debt is stable, but the new debts are slightly more expensive than the old debt. For cash, it's less regular, and we shall have a strong decline of the cash interest. So we made like a EUR 99 million this year, and it shall be EUR 10 million lower in 2026, and the majority is into the double coupon we paid in 2025, as you're aware.
Regarding your question and the last call of the capital allocation policy, you see what we do in 2026, which is a part of the answer, all in buyback. On the global answer, the American answer is that it depends on the market condition, of course. Of course, obviously, the stock price.
Thank you.
Thank you. Your next question today comes from the line of Karl Green from RBC Capital Markets. Please go ahead.
Thank you very much and good morning. Thank you for the comprehensive run-through. Just two outstanding questions from me. Firstly, just on pest control. You talked about the 2.5% loss rate improvement. How much further is there left to go in that area? Also in terms of the like-for-like growth, how much of that was cross-selling versus kind of standalone pest control sales? The second question just slightly more technical around the share-based payments. You mentioned that there was that change in increased employer contributions in terms of tax implications. All other things being equal, are we likely to see a follow-through to fiscal 2026?
Clearly you can't predict the share price over the balance of the year, but would we expect that share-based payments charge to keep going up a little bit or stay broadly stable? Thank you very much.
Good morning. I will start with pest control. Yes, it's the quality of the operation of Elis has allowed us to decrease the level of loss rate. We are quite super proud because even if we are still a small player in the world, I think that in terms of reliability and the quality of service delivered and efficiency of our interventions, we are at a super good level. We still have some margin to continue to decrease a little the loss rate, probably not at the, with the same magnitude of 2.9 points. Nevertheless, when we see the breakdown by country and so on, we still have some region where we could be even more efficient. It will, I think, still continue to decrease a little.
Regarding the second part of your question, the origin of the growth, it is a good mix between the cross-selling and pure virgin accounts. You know, it is what we have explained, and more and more countries now we operate through a specific business line. That means that for us, it's not really an issue to open some new accounts with pest control. It is, at the end, a good mix between cross-selling with existing customer and opening of new accounts thanks to pest control. Regarding your technical question on IFRS 2 treatment, in the EUR 46 million you have in 2025, three components. First, the free shares program EUR 26 million.
Second, the tax linked to this free share program of EUR 11 million, which encompass a bit of stock treatment as older stock has been impacted by the 30% new tax. The third component, which is EUR 9 million of kind of subsidy to the capital increase reserved to employee, which was a big success in 2025. Once I've said that, you understand that we have a couple of one-offs in 2025, so it shall be smaller in the future. The free share program accounting is linked to the stock price, so there I cannot say what it will be when delivered.
All in between EUR 40 million and EUR 45 million is a good idea to have in mind.
Perfect. Thank you very much.
Thank you. Your next question today comes from the line of Olivier Calvet from UBS. Please go ahead.
Good morning. Olivier Calvet covering for Louise Wiseur. I have two questions left. First on volume and price. What was the split of volume and price in the 2025 organic growth, and what do you expect for 2026? You know, you gave some color on adjusted EBITDA and adjusted EBIT. I just wanted to know if you could discuss how you see the evolution of costs, you know, in 2026 besides the energy and productivity topics, you know, on the labor distribution costs, SG&A perhaps. Thanks.
Volume and price is more or less the same, I would say in the 2025 and 2026. It's a mix of volume and price, equally split, I would say, to roughly summarize. Same volume, then growth and the price growth in 2025, and it's more or less what we expect also for 2026. The inflation of our costs is mainly due to wages. We expect in 2026, wages that will be around a 4% increase at the group level. Of course, less in some countries like France, much more in LatAm. We discussed the situation in Colombia. For the rest, can you perhaps explain a little more the second part of your question, please?
Yeah, sure. Just on, you know, the distribution costs and SG&A side of things, if you have, you know, specific expectations you'd like to break down.
No specific things to highlight. Logistics costs, it is we have, you know that we have developed some internal tool to optimize the route distribution at every laundry level. We are close to a rollout now, these new tools everywhere, and it is part of the productivity program that we have at the group level. When I say that we expect 2%-3% gains in every topics, logistics, you know, is one topic. Nothing special to highlight in line with what we have delivered in the past. SG&A, I have no specific subject to comment at this stage today.
Okay, thanks.
Thank you. Your next question today comes from the line of Oliver Davies from Rothschild & Co, Please go ahead.
Hi, good morning. Two questions for me. Just firstly, on the margin, obviously LatAm was quite a big drag on group margins last year, but you said that you kind of expect that to be flat to up this year, you know, along with some margin expansion in France. Which regions do you expect margin expansion to be tougher this year, I guess, given the guide for a slight improvement overall? Secondly, just on the headline net income per share guide, how much of the buyback are you assuming is executed to get to that high single digit number? Thanks.
In France, we expect another small improvement of the margin like in LatAm. Normally, we expect also probably margin improvement in Southern Europe. In the other region of the group, so Central Europe, U.K., Ireland and Nordics, we will be probably more cautious. In Nordics, you know that the margin is quite stable, so we don't expect any major move. In Germany, we know that we have also a huge increase of the minimum wage that has been decided for the year 2026.
In a context where, in health care, we have a lot of public contracts, we have a kind of competition on price and so on, so it will not be so easy to apply immediately the price increase needed to offset this inflation of the wages due to minimum wage. I will be quite cautious with expectation of margin in Germany. That will affect Central Europe. In U.K., we have now reached quite a strong level of margin, above 32%. If you remember, we started seven years ago or eight years ago at 23 only. In that context, we are forced to be quite cautious with the expectation.
It is an area where we have a solid competitor with Johnson, some other tough competitors on the market with the Scottish one with Clean also. So it's we need to be cautious now reaching 32%. I think that we have always said that in U.K., we will have sometimes some limits in the margin development due to the level of competition. It's not the case in Southern Europe, so it's the global picture that we have at this stage of the year regarding evolution of the margin, globally speaking, for 2026. Your second question was on EPS development on the relationship with share buyback. Well, you would agree that a single digit is a kind of bracket.
We already did EUR 114 million of buyback up to now, and it adds, of course, to what we did last year. Technically, we launch technically, you know that for this calculation, we take the average number of shares. It means that the day you buy the share, it's very important in the calculation. It means also that what you do at the beginning of the year has a massive impact versus what you do at the end of the year, which is more for next year actually, in terms of impact. That's why, I mean, if we do, I don't know, EUR 400 million or EUR 600 million, the difference will be made at the end of the year.
It doesn't change a lot, the EPS growth for 26. It changes of course for 27. The second point of course is the price in the model is very kind of important, which price you buy the shares.
Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone and wait for your name to be announced. We will now go to the next question. Your next question today comes from the line of Mourad Lahmidi from Exane. Please go ahead.
Yes, good morning, gentlemen. I have two questions, please. The first one is on the convertible bond and the link to the share buyback. I didn't hear the strike price of the convertible bond. If you can just say it again, that would be kind. The second question, the EUR 500 million share buyback, that's about 20 million shares at current share price. How many shares do you expect to cancel versus use to cover the share-based payment program? The second question is on the churn. Could you just comment on how this KPI has evolved across 2025? What do you see during the start of the current year? Thank you very much.
I will start perhaps with the second part of the question and give the floor to Louis after. No major change and stabilization of the performance regarding churn. It was quite stable at the end of the year 2025, and no big change in 2026, in the beginning of 2026. What I have highlighted in terms of change of trend is more for signature of new contracts. Quite smooth end of Q3 and beginning of Q4, and better end of the year and strong beginning of new year. That's why probably less organic growth in H1 and more organic growth in H2, as I said. It is more with new signature that we have seen the small change in the level of performance and quite stable for the churn.
Technical question on the convertible. I mentioned the threshold at which we can force the conversion. The strike is 30% below that is EUR 16 after dividend payment in May. So EUR 16, it means that you have like 23 million of shares linked to this bond. If you make the calculation, if we do all the buyback before the redemption date, it means that we will use all the buyback shares bought to reimburse the convertible at the end of the year.
That is, I mean, alternatively, a part can be used also for the free shares program, but it's quite minimal.
Sorry, just to confirm, you will cancel those shares?
No. No, no.
Okay.
We will use them to reimburse the bond as it is an OCEANE.
Okay. Got it. Thank you.
Thank you. There are currently no further questions. I will now hand the call back to Mr. Martiré for closing remarks.
Yes. Thank you for your interest for this presentation of another strong, solid year of performance of Elis. As we will have two weeks of roadshow, we'll be available to answer to all the additional questions you may have. Thank you, and I wish you a good day. Bye-bye.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.