Good evening and good morning for those who are based in the U.S., and thank you for your participation to this event. You know that we have an issue with the webcast that doesn't work for us today. We are doing that through a call, which is affecting not only to Teleperformance teams, but to a long list of companies. We are going to make it through a call. I hope you have been able to download or to read the first half results that presentation of the PowerPoint that is accessible on our website. I suppose you are there. I'm going to comment that through a call. We are, of course, tonight to comment on our Teleperformance Group results at the end of June that we just released.
I hope you have received the press release that has been launched before the close of the stock market today. Of course, after my presentation, you will have the ability to raise questions through a Q&A session. I'm trying to present that in English, and slides, as I mentioned, are available through the webcast. Are no more available through the webcast, that's the issue, but mainly online on the corporate website. We are recording this presentation, and of course, this will be available, hopefully, on our site as quick as we can later on. Just to mention that today presentation contains certain forward-looking statements that address our expected future performance and by the nature, address matters that are uncertain. These expectations are subject to a number of factor or uncertainties that could cause actual results to differ materially from those described in the forward-looking statement.
For a detailed description of these factor and uncertainties, please refer to the risk section factor on the URD available on the corporate website. Let's start now with the key facts and the key figures related to the first half, and we'll go later deeper on result region by region and on cash situation and finishing with yearly long-term outlook. If I move to slide four in the presentation, let's move to slide four. I do believe that there are the first half highlight, and I think there are three of them which are noticeable. First of all, the H1 financial results show how much Teleperformance has resilient in face of the adversity. We have been able to deliver a growth of 5% organically, which is, I believe, significant and has to be noticed.
We still continue to deliver high profitability with 9.5% EBITDA margin, and our cash flow is up by 11.6% to close to EUR 200 million at EUR 292 million. These figures are the consequence of what we have done all along this month recently. We do believe that Teleperformance achieved an agile transformation to overcome the global health crisis. We have this Protect 3 policy, which mean employee health, business health, cash health. What does it mean? Employee health. A total of 220,000 employee are now working from home after a transformation period of just two months. I don't know if you imagine what does it mean to move so many people in a so quick period with so many language, so many cultures, so many countries, and so many technical issue. This is something which is outstanding, and I just wanted to remark it.
Just to the point on the fact that this working home there are three issues that were linked to that. First of all, the safety of the employee working at home, of course. Secondly, the ability for this employee to continue to be paid on a day-to-day basis, which is absolutely key for the people that are not benefiting from a furloughed system or a specific system that we might have in some countries. Lastly, for those who were not able to come to work at home, they were sitting in a site where this transition was significantly increased, and they were able to continue to come to work safely. That is the first step. Second step, business continuity solution with our client. What does it mean?
It means that we have been able to continue to work with our client, whatever the situation, whatever the country, whatever the language. 90% of our clients were in agreement to work at home. It has not been easy to get their approval, but we have been able to get it and finally to succeed in doing so. Lastly, that's key. We are liquid. We have more than EUR 1.5 billion in liquidity available for tomorrow if a crisis will continue, and I'll come back later on that. More importantly, we have good results. It explain the reason why we have good results are the Protect 3 policy. What is interesting is that June 2020 show a business recovery model. We had a strong commercial momentum, and we are in a position to deliver new guidance for 2020 and roughly confirm the 2022 outlook.
Let's move to the following slide. It's just a slide that's just to show that the group is taking care of its people. We get a status confirm of best or great employer in 23 country across the world. That represents 70% of our global network across the world. It was our priority to make sure that people are safe along these days. You find here by region and by country where we get a certification either from Best Places to Work or Great Place To Work, that is not so easy to get. Since January 1st, we had 17 countries that have been awarded renewal or first win of this distinction. We have been able to get a lot of awards in the industry and to be the leader by far for Everest, Frost & Sullivan, Forrester, or PI metric.
It's not by chance. I do believe that we are by far the leader in this market. I am on slide seven. We had a small video that was made up to explain how we are going to work tomorrow on TP Cloud Campus. What is TP Cloud Campus? It's a comprehensive virtual ecosystem that enables all of our people to work through remote management. I hope we will be able to see the video on our website as quickly as we can. This system is simple. How are you able to hire, train, manage, and coach people from a remote place, making sure that these people are still together as they were in the site? It started in Lisbon early this year. Now it's starting to be developed across the world. It will help dramatically to develop this approach.
We do believe that since we have moved to work at home, we think that half of our people will stay at home, once the crisis will be over, which is I don't know when, but 50% of people will stay working at home and to deploy their job. We have to have this TP Cloud Campus approach. Let's move now to the accounts. I'm going to slide nine, just to show what we have as a figure. We have revenue that is EUR 2.66 billion, which is a 5% like-for-like growth and a reported growth of 3.7%. Our EBITA is EUR 253 million. It takes, of course, all the cost of the work at home transformation and all the costs that we incurred in this crisis. The operating profit is EUR 150 million, and I'll come back later on that, with a net profit of EUR 63 million.
If we move now to slide 10, you will see the revenue growth analysis. It's quite simple. EUR 127 million has been added to the figure after neutralization of the currency effect, which is negative, of course, mainly due to the main Latin American currency and the Indian rupee that have slipped significantly after the crisis. I just wanted to highlight the fact that it's probably difficult to swallow that this year, but it's going to help us significantly next year with the levels that have been achieved by this currency. Let's move to an interesting slide, which is slide 11, that shows what happened over the like-for-like growth over these months. As you can see, and I'm sure you remember, that the start of the year was good, notably January and February, where we had good figures.
We had, of course, growth which was above our 7% guidance at this stage. From mid-March to May 30 or mid-May, we had some site shutdown and travel ban, and it was what I call the time of the crazy transformation, where during these days, more than 160 people moved from site to home. I can tell you it was a hard time. What is interesting since that, June has been a very strong like-for-like growth, except for TLScontact, I'll come back later on on that. We have been able to achieve a better growth even in June than we had in January and February. That shows that gives, I would say, reasonable confidence for the second part of the year.
This V is absolutely interesting to understand, and we have to understand that these figures not only are taking the core business figure, but also the specialized figure and the difficult timing that TLS is needing as we speak. Let's move to page 12. You will see that here is, as always, plenty of figures, but they are interesting. You'll find the breakdown of the 5% that we achieved for like-for-like in each one. What is interesting is that Core Services and D.I.B.S. have delivered over this first half 7.3% over the period, which is above the initial 7% group guidance despite the depth of the COVID crisis, especially from March to May. This has been achieved by different stuff.
Of course, the star is being still Ibero-LATAM, that is driving the growth at 18.5% over the half year, knowing that the growth was 18.8% in Q2, even accelerating. CEMEA is delivering 8.3% + 2.9% in Q2, also a good growth. EWAP is roughly 5%. That gives you the growth. We had, it's true, a significant decrease in India and Middle East, for two reasons I'll come back later on. We had a serious shutdown in India, and we are still shut down in some places, notably in Mumbai, Calcutta, and Chennai, and that has an impact. We decided to concentrate our offer to the international clients, and we decided to stop some domestic business that was making business, but not sufficient margin.
As a whole, we have been able to deliver 7.3% for the like-for-like growth in H1 for the Core Service, and 7.9% growth in Q2. We move now to specialized service, situation is simple. The only decrease that you are seeing is coming from TLS. In the meantime, LLS is still growing dramatically, and I'll come back to that later on. What is true is that TLS is facing a situation in which the trade has been cut by more than 70%, and it has an impact, of course, of our figure. As a whole, this is going to impact us probably in the second part of the year. We do believe that we are going to deliver a better growth than the 5% that we achieved in the first half. We move now on slide 13, sorry. We are here, the results.
Of course, H1 margin is impacting all activity. In three regions we had significant severe lockdown, Tunisia, Philippines, and India. We had the work at home agent, what we call WAH transformation cost. I'll come back to that later on. We have to make it simple, EUR 22 million of cost linked to that, plus EUR 10 million of cost linked to the depreciation of some airline receivable, while we get EUR 7 million positive in the other side, either from rent reduction and either from government measures that help support us. Of course, we have the impact of the travel ban and no visa business for Teleperformance. That's where we land to 9.5%. If I move now region by region, I'm on page 14. You see that what happened in EWAP, you have a 5%, to make it simple, a 5% increase in sales, made of two things.
Three things has to be noted. Of course, lockdown in Philippines, and they are still locked down, notably in the north of the country. Reduced demand in travel and accommodation sector, where that did hit. A return to solid growth in APAC, notably China and Malaysia, and a better situation in U.K. too. As a whole, it has explained this 5%, 5.8% growth and a reduced margin on EBITDA. If we move to the Star, which is Ibero-LATAM, little to say. Booming growth everywhere in H1, despite the health crisis. We have been named the company of the year in Latin America. Strong e-commerce, e-service, financial service wins in H1, and good momentum there. Of course, some impact of the margin by the transformation cost to remote spot, but not so much to us, given the growth that we experienced.
Coming to Europe on page 16, sorry, I'm moving on. Page 16. We have been able to deliver a growth of 8.3% in H1, with close to 13% in Q2. Surprisingly, situation is contrasting. You have the significant decrease in countries where there are the strict lockdown, France, Baltics, Tunisia and Italy. While we have growth in other parts of the region, say into Turkey, Greece, north of Europe, Egypt, even Russia, where we have been able to grow significantly. Of course, in terms of margin, we have been hit. I believe we will be back quickly, on a classical, better situation, especially in this country. Of course, there is a way higher transformation cost. The lockdown in Tunisia is going hopefully to stop. If we move now to India on page 17, clearly we have been limited to a WAH transformation.
It has to be said that it's more difficult to move people from site to home, given the situation locally, and we suffer from that. Also we have major site lockdown in India. It has been very severe. This is still happening, as I mentioned, mainly on the metro city, we call it the metro city. It has an impact in account on the margin. On specialized service, the decline in revenue explained by 100% to the near shutdown of TLScontact's business in Ukraine. Everything has been stopped. The company has been able to reduce dramatically its costs, but has a significant impact on their results. We are loss in TLS. Probably not all of you have understood that, but we are making loss in TLS because even if we have been able to compress the cost, we have no more sales.
LanguageLine overcame the impact of the health crisis very quickly, returned to a strong growth in June. Even in May. It has to be noted that these people are working at home for now, years and years. Once the crisis has been at least stabilized, it came back very quickly to a significant growth. Of course, it has an impact on the margin, but LanguageLine Solutions is delivering significantly high margin and continue to deliver that. That is the comments by region. Let's move on, page 19. What happened? In fact, I put there all the expense incurred to protect employee. We have the EUR 20 million that I just mentioned earlier on, that has been partially offset by rent reduction and various government measures for EUR 4 million.
We have write-down on receivable provision to be precise, on provision, that was for EUR 10 million. Given the situation in Tunisia and given the staff, we had a goodwill impairment for the French -speaking market that has been recorded for, without cash, of course, impact of EUR 34 million that has been recorded in H1. That explains the reason why the results operating profit is significantly down versus last year compared to the EBITDA before non-recurring. That is the reason, but it has no impact in term of cash, of course. If we move now to the second part of the P&L, few things to tell, of course. Financial results are roughly flat. In fact, if you take the cost of the debt, we are EUR 2 million below than last year. There are some associated costs that are incurred in financial and notably in rents.
The income tax has been reduced, but increased in terms of effective tax rates. If you take out the loss on goodwill, you are still in the range of 30% on tax rate, and this is normative for the future, and we deliver EUR 53 million in terms of net profit for the first half. If we move now on page 21 on the cash flow, I believe it's one of the achievements of the group. We increase our CapEx ratio from 3.9 to 4.5. If you take out roughly EUR 19 million that we spend during this crisis, also working at home, we are flat versus last year, which is an achievement given the growth that we have been able to deliver and given the CapEx that was decided last year and was difficult to stop, specifically in Q1.
The CapEx is a little increasing, and you have a significant decrease in working cap. This is made of two things. One is the attention paid through the payer to the outstanding receivable. We have been very strict on our debt, so I know cash are receivable. We try to take advantage of postponing some payment on certain tax liability. That won't continue, of course, at the end of the year. All in all, we have been able to deliver EUR 192 million in net free cash flow, which is above last year. I'm now going to spend some time on slide 22, which is your balance sheet, and I'm going on page 23 to show that we have been able to reduce our debt by EUR 130 million compared with the end of last year. It is not the end of 2020, the end of 2019, sorry.
We still have EUR 1.5 billion liquidity ahead of us, we confirm our credit rating BB B last April. A situation that is very liquid, that enable us in case of a crisis or increased crisis, to be able to swallow what could happen in term of finance. What is our outlook? We decided to fix the outlook for 2020. We expect more dynamic growth in H2 than in H1. That's what we believe that our annual like-for-like should be around 6% for this year, and our margin will be at 12.5% for the year. For 2022, I'm believing it was harsh to tell that, but we believe that our annual average like-for-like growth will be 6% per year over 2020 and 2022. Our EBITDA margin, we should come to 14.4% in 2022, 10 basis point lower than it was scheduled.
Everything there is, of course, linked to what we believe that could happen to TLS, where we expect that the situation will be better in 2022 for TLS, with no clear visibility in 2021. That's what I can tell you. I'm sorry for this non-webcast, but for this call. I hope you will be able to look to our presentation on our website. I'm ready to take questions that might come over the phone. Thank you.
Thank you. If you would like to ask a question via the phone lines, please press star one on your telephone keypad and ensure that your telephone line is unmuted locally. You'll then be advised when to go ahead with your question. Please stand by. The first question comes from the line of Edward Stanley, calling from Morgan Stanley. Please go ahead.
Hi, Olivier. Thanks for taking my questions. I've got three, please. You've mentioned the business development team at Q1 were already doing a pretty good job, and the contract ramp-ups are obviously coming through, but you only mentioned them in Latin America. I'm wondering whether there is.
More to come on the business development front and whether that's spread across all of your core geographies or whether that is predominantly Latin American or Ibero-LATAM based, anyway. The second question is, we've heard a lot about social media and content moderation and fake news during the pandemic. We've also, on the flip side of that, heard quite a lot about Facebook and the advertising boycott. Given that you do quite a lot of advertising content moderation, I just wonder how that changes your growth outlook for that portion of the group. Finally, I'm just curious about, given that the Cloud Campus and work from home has been set up for two, three, four months now, I can't remember exactly how long. What are the KPIs doing? Are you seeing anything surprising in your KPIs as you've ramped up from home?
Are they sort of better, worse, or actually stable versus what you would have expected? Thank you.
Okay. Three question. I have an opening remark. What I would tell about the crisis are two things that I just wanted to make in the crisis. Two things for me are relevant in this crisis, are noticeable. First, the ability to move quickly in this 180, 170 people from brick and mortar site to home, to remote site. That's the first point. Second point is the ability to sell remotely. Again, I come back to your question just after. The ability of these people to have sold remotely by video, by making a virtual visit, by different, has been astonishing. It's true in LATAM and Ibero-LATAM, I'm sure you have seen the figure. This figure are self-explaining. It's true also in Europe, it's true to a certain extent in China. 5% in U.S. is a mix of decrease and sales.
They are different from region to another region. I cannot tell the contrary. As a whole, you can say that the group has been able to sell everywhere across the globe. It's less visible because sometimes you have less firming, if I may say, or vanishing business, specifically in transportation and in the hotel industry, as an example. As a whole, everybody has been able to sell properly and significantly. Content moderation has been impact. It's still not so big for us given the size, but I'm sure you have noticed that we increased dramatically in China, in Asia, and in Malaysia. This is part of the growth. Yes, I agree. TP Cloud Campus, it's just a start.
I cannot give you precise metrics or whatever, but what we have seen on the remote work is that the quality of the work has not been reduced. There are some things that are better, some things that are better than when you are on site, and some things that are less good, longer. As a whole, the quality of what is delivered to our client is still very good. Of course, this has to be managed, it has to be secured, it has to be checked. Just to be clear, the most difficult stuff is of course the cybersecurity and the security of the data. That's what we are working on that, and we try to make it happen. As a whole, we are really satisfied.
If I'm telling you that we do believe that we will be, when the COVID crisis will be over, at 60% still working at home, it's not by chance. It's because it's working, yes.
Oh, well done.
I have no precise KPI for cloud campus. It's a little early to tell. Maybe we'll be better next time.
Okay. One quick follow-up. You mentioned that, I think previously, you mentioned that maybe 30% of staff or 40% of staff might stay at home permanently. I think you just mentioned 60% of staff. Are you any closer on working out how many you think will stay at home and whether any of your clients are actually demanding that you come back to the sites rather than staying at home? Is there any sort of shift in the opposite direction, if you will?
Today, we urge the people to stay home. We are not going to ask the people to come to the site, and to be obliged in 15 days, one month, and two months to come back to the situation that we lived in March or in April. That's the first step. Second point is that we don't know where we are going to end at the end of when the crisis will be over. I don't know whether it will be 40%, 50%, or 60%, so I take 50% because it seems reasonable. Clearly, as always, when you're obliged to do things are done. Especially on the client side, also on the management side, people have discovered that they are able to deliver a good quality with a good control on site, on home, from remotely.
We have not clearly precise figure, precise the amount. I do believe at the end of the day, we should land something around 50% sales.
Thank you.
Okay.
The next question comes from the line of Alexander Mees calling from JP Morgan. Please go ahead.
Good evening, Olivier. Thanks for taking the questions. Three, please. Firstly, there were various one-off costs that related specifically to the crisis in the first half, including the working from home transformation. I wonder if you can quantify the costs that occurred in H1 to impact the margin that won't recur in H2. Secondly, the like-for-like growth, 13% or so it looks like in June. The guidance that you've given implies around 7% like-for-like growth in H2. I'm just wondering which parts of the business were growing so strongly in June that you expect to slow down in the months ahead. Just finally, if half of your people do stay at home on a permanent basis, so what sort of savings do you think you might achieve in terms of office space over the medium to long term? Thank you.
Tough question to answer precisely. First of all, the impact, in fact, you have the very core that are in the EUR 22 million that are clear. It's the 7 million masks that we bought, it's all this cleaning stuff, all that is clear. Probably they are going to decrease to a certain limit in H2. I'm not able to give you a precise figure, because when it comes to security, you cannot have a controller say, "Oh, no, don't spend this money," because it's not budgeted and you have to protect people. It's difficult to tell. I have budget, I hope it's going to be lower. We already bought the 7 million masks, we already bought a lot of hydroalcoholic gel, and everything is done.
I believe there will be an impact and I'm sure you understood that if you look the first half results versus the second half results, you see a significant improvement, and part is coming from that. To be honest, the major impact on the crisis, on the cost of the crisis, is not this EUR 22 million, or maybe less if you take out the other part. The major impact is the disruption, the number of hours that has been lost, the number of calls that have been lost or the wrong interactions that have been lost, which is absolutely impossible to compute. That's clear. It's clear that we do believe that the second part of the year will be better because that's why we don't want people to come on site.
Given the time it took us to put that in place and given the pain that cost us, we want to make sure that everything is fine before we move on, because that is a major cost. We are going to slow down in H2, keep in mind that TLS is still doing low, and June, July, August, September are huge months for TLS. Frankly, I cannot give you a precise figure. You start to know us. We are a careful guy. Of course, we have, as usual, little visibility on the last quarter that is key for us. I'm not going to give you a precise figure. What is sure is that I do believe that overall time is going to continue to climb. I don't know what will be the level of the business in India.
I don't know what will be the level of business in U.S. You know that California, Texas, Arkansas, and Florida are in bad shape as we speak. How long it will stay, I don't know. I'm not sure you have to see a direct link between the good month of June and the second part of the year potential reduction. Your third question was on savings. I'm sure I will not remember precisely the third question. Can you repeat it to me, please?
I was just wondering if 50% of your people do stay at home on a permanent basis?
Yeah.
Yeah, just office savings, sorry.
Again, we are making some plans. Too early to tell. I do believe one of the major stuff is the ability to nurture the growth, I would say, with lower CapEx and lowest cost. This is the major impact. The problem is that when you think that as a minute, as a global, you say 50% is going to be perfect. Of course, it's always the same story. When you need to work at home, you have hard time to make it. I was speaking of India, I was speaking to Philippine. In France, in Europe, too difficulty to work at home for technical reason. It's not exactly equal, and things are not equal from a country to another. We are not in a position to give you any figures today.
First, in term of timing, how long it will last and what will be the stuff. What I'm convinced of, if we are able to develop more and more, what I call the e-company way, we are going to clearly save CapEx in the future. You won't see that in 2020. We start to see it in 2021, I hope, but it's too early to tell.
Thank you, and well done on a really good half.
Thank you.
The next question comes from the line of Suhasini Varanasi calling from Goldman Sachs. Please go ahead.
Hi. Good afternoon, everyone. Thank you so much for taking my questions. I have a couple on the long-term objectives, please. You're talking about at least 6% organic revenue growth, over 2021 and 2022, and your earlier objective was, I think, at least 7%. Given the growth that you've actually seen through the lockdown period, given the demand for your services, I just wanted to clarify, do you see anything changing in the marketplace? In terms of the market growth, market structure, that you are guiding for slightly less organic growth versus previous expectations. Second question is on the margins. The 200 basis points of margin improvement between 2020 and 2022, is that going to be evenly spread across the two years, or is it going to be more front-end loaded in 2021, for example?
Thank you for these good questions, which are very difficult, specifically the last one, which is very difficult to answer. Clearly, long-term objective, we don't see a change of the market structure, but what we see, there are some businesses that are significantly down. I mentioned airlines, transportation, and things like that, so I don't know what they are going to become. In the meantime, you have an emergence, a growth of e-company, especially in the e-services and all of that. All in all, we do believe that it's going to be roughly equal versus our previous forecast. 6% seems to be, for us, ahead of the market. I don't know whether the market will be at 4%, 5%. I don't know, probably 4% today, so we should exceed that by 2%. It's too early to tell.
The main question, which is difficult to answer today, is whether people will start to travel again. It partially answers the second question that you have. The second question that you have is mainly linked to the ability of TLScontact to come back to a situation that is probably, come back to what we see. I don't know whether we will be exactly in that position. What is clear is that I do believe 2020 for TLScontact is going to be a difficult year. I don't see a recovery, even if it starts to pick up a little with the student business. It's not going to replace all the business that we lost. I hope 2021 we'll start to see again, traveling that might explain this 200 basis point and might explain part of it being recovered as quick as 2021. Frankly, I don't know.
I do believe in 2022, we will have solved the issue, whatever it takes, whatever the solution will be. From a solution from another. That's the way we are seeing it. Frankly, it's too early to give you any guidance for 2021. We have not yet started the budget, as you can imagine, and we are still managing the crisis, still managing the situation. We do believe that we should be able to come back to this level by 2022, yes. That's what I can tell you.
Got it. Thank you. Just a couple of housekeeping questions, please.
Yes.
What is the impact on working capital from the deferment of tax liabilities in the first half?
Around EUR 30 million, three zero.
Got it. Thank you.
It's EUR 30 million. Mm-hmm.
Understand. Also, what is the impact of terminating the low-margin contracts in India and Middle East in the first half, please?
We have an impact.
In terms of yes
In terms of course, it should concentrate the level of the results in terms of percentage of the results should increase. The question is whether we will be able to get full speed again in India. You have two things which are happening. The fact that you reduce the volume. You remember when we bought India, it was roughly EUR 120 million of business that was delivering a margin around 4%, and EBITDA margin of 4%, while the international business was delivering 20%-22%. It gives you an idea of the impact. Of course, it depends a lot of the ability to restart India at full speed, which is not the case at full speed.
Understand. Thank you very much.
The next question comes from the line of Christophe Chaput, calling from Oddo. Please go ahead.
Yes. Good evening. Two questions from me, please. The first one is, during the Q2, what kind of new contracts have you signed, and do you sign, let's say, unexpected contracts, for example, a player that want to outsource for the first time or something like that? The second one is regarding the acquisition policy. It doesn't seem to change in term of size, but regarding the activity or the price you are willing to pay, do you change something in your mind during that period? Thank you.
New contract, I don't know what is an unexpected contract. You don't get new contract without expectations. We had specific targets that we start to work on, and I'm not going to give you names, but nothing unexpected. The fact that we have the depth of this contract maybe have been underestimated at the time we made the budget. Let's put it this way.
No. Yeah.
Go ahead.
Yeah, sorry. I mean, perhaps a player that outsource for the first time, or a player that, I would say, that you work at home in a very efficient way.
Yeah
Do the business like this.
Yes, it happened. Notably in North America, but not only there. Yes, in Europe, too.
Okay. If that could be a lever, let's say, in your growth for the future, is it visible?
What is visible is the ability of the group to have a group answer to global multinational. Say you have an issue there, we can solve it across the world, and we are still working on that. That's what makes a difference. The ability to tell, okay, we are going to take care of your issue, because it's not only calls, of course, your issue across the region. We should probably be better soon, be better again. I strongly believe that we have significant growth ahead of us if we're able to do that, and we have to increase that. I'm committed to that, yes. About acquisition policy, of course, we are looking to staff. To be honest, it was not our first priority.
Our first priority, and I'm sure you remember when we announced Q1 figures, we were happy of the figures, but we didn't know what could happen, frankly, with this global crisis, and plenty of us were questioning what could happen. We were lucky and happy not to have done any deals before the crisis. Now, I don't believe we are going to rush September on acquisition, but we are probably looking to some different stuff, yes. In term of price, as always, when you pay cheap, you have not good stuff. We are very, very concerned about our return on capital employ, on the cost of the capital. We are not going to make stupid stuff. We are going to be more and more selective. Again, the strategy is always the same.
Buy companies that make money, companies that help us to enlarge our portfolio, enlarge our depth, or increase the depth of our business. That's what I can tell you. We are, as always, in active mode, but not very active as we speak. It might change in the second part of the year.
The last one, please, is on currency effect on top line.
Very limited for the H1. Considering the actual, let's say, rate of the currency, what is your best assumption for H2, please? I know that it's tricky, just so we know.
To be honest, I was having lunch with the treasurer guy, and nobody has expected that the dollar will move from 108 to 118 in two days. My expectation are, as always, difficult. What is clear, there are two stuff. For 2020, I must confess that most of the things are done. For 2021, I'm just seeing that the currency are in a better position than they were when we started the budget last year. I'm speaking of the transaction risk. About translation, I do believe that if the dollar is staying at 118 versus EUR, it's not going to help us, of course, for translation, not only on sales, but also on the translation in EUR of the result of LLS. We cannot do anything about that.
Yeah.
Frankly, a hard time to predict anything on that.
Okay. Thank you, Olivier.
The next question comes from the line of Antonin Baudry calling from HSBC. Please go ahead.
Yes, good morning, everyone, and thank you to take my question. Most has been answered, in fact, but just a quick follow-up on the economy of cost program that you announced earlier this year. Which part has been already considered in H1 or is in H1 margins? Which parts remain to consider in H2? Thank you.
It's a question which is difficult because the cost program has been defined at a time we were not believing that we were growing at this level, to be honest. Of course, there are easy stuff that are done, especially on travel ban. Let's say that on the 250, for the annual, you have half of it that is much more in the second part of the year, and a quarter that is coming from the H1. It's true that in the meantime, which is difficult to understand, but even the growth, you are obliged to put some cost on top of that. There are some cost that has been made. There are few to come, yes. There are other to come. We are going to work on that. The problem is that things are not equal, by far.
They are still to be done, and we are working on that, yes. I can tell you the cost has been under scrutiny all along these months, and will continue to be so.
Yeah. Thank you, Olivier.
The next question comes from the line of Rory McKenzie calling from UBS. Please go ahead.
Good evening, everyone. It's Rory here. Just two, please. On specialized services, can you talk about the cost reductions you've managed to achieve in TLScontact ? You've talked about not expecting things to get much better, but any range of things you think about for H2? Secondly, on LLS. You talked about how it overcame the impact of the healthcare crisis on return to strong growth. I'm just wondering if whether, again there, you've managed to win any additional contracts that have stepped up the base of revenues in that business as well.
In TLS, of course we have. It's where the cost has been reduced dramatically, not only underwrite but also direct. Just to give you an idea, roughly half of the workforce has been changed or has disappeared from TLS. Because people are no more use. We have been able to reduce rent, we have been able to push some costs out. This will continue in the second part of the year. Frankly, even the level of operational gearing that we have in TLS, it's good, of course, but it limits the stuff. It's not sufficient to cover the good margin that we are doing in TLS. For LLS, there is no big contract, if I may say. What we have seen is that this is increasing. We have 26,000 clients in LLS. The major contract is small compared to core business.
This is even non-noticeable. What we see is that the level of use of LLS is still growing dramatically. We are looking what we call OPI minutes over the phone interpreting units, and we see that we are following a curve that probably Scott Glenn presented you already in different meetings, in different analyst day. This is increasing dramatically from year- to- year. From three year from now, we have increased significantly over the. This is continuing. In the meantime, we have a second step that is continuing, the use of the video, that is growing dramatically. LLS is a constant growth. There is no bumpy road, if I may say. Of course, you have the impact of the March COVID that has an impact for 10-15 days or maybe first 20 days, but there is no huge contract that has been signed.
There are plenty of smaller contracts compared to cost savings that have been signed, but these contracts are growing dramatically. We have two effects. One is a new contract and the new penetration of LLS in different markets, specifically in the hospital industry, in the healthcare industry, but also in the government part. Plus the use of video that is more expensive, that increase the ticket and the margin, too. That's what I can tell you. We are reasonably confident that LLS will continue to grow, not only in 2020, but there is no reason why it should not continue in 2021.
Okay.
Beyond that.
Great. Thank you. Just a follow-up on TLScontact. Within your margin guidance for this year of 12.5%, and given that obviously it's a very big kind of summer season normally for TLScontact.
Yeah
Should we assume then that the specialized service margin is going to struggle by more in H2?
No. Of course you have an impact. What we are telling you should make your math, and I am sure you are going to see that. We are close to swallow the impact of TLScontact versus in the second half of the year.
Got it. Thank you.
It's difficult to tell today. It's difficult to tell. You're right. The impact of TLS, the activity of TLS is higher in H2 than in H1, but some cost has been taken out already. When you put that together, you are able to make it.
Understood. Thank you very much.
The next question comes from the line of Nicolas Tabor calling from MainFirst. Please go ahead.
Good evening. Thank you very much. Few questions from me, please. The first one was on D.I.B.S. I wanted to hear what was the latest developments and how the D.I.B.S. services had been doing during the lockdown April, May, and now. If you see maybe a slowdown in the delivery rate you expected, especially in LATAM. The second one would be on the work from home. I wanted to understand, first, what is the main driver for you, not just over the short term, were you just afraid of having a second wave, moving people around, but maybe over the long term, is it really cost driven? Is it employee motivation driven? Where do you find the incentive that makes it the right solution today? Thank you very much.
On this, no. I would say on contrary, part of the growth of LATAM is due to the fact that they have been able to swallow all the D.I.B.S. offer quicker than the other region. It's not so true for Europe, but in U.S. it's happening also. D.I.B.S. is exactly what we want to sell. You want some solution. You want much more than volume. Of course, the market is there, and of course, competition is probably different, but the ability to swallow and to integrate all the aspects of this is a part of the reason of the success of the delivery all time. For the work at home, there are, of course, different issue, and you mentioned them. Cost, frankly, it will have an impact, but it's too early to mention it.
As I mentioned, we cannot today close centers. If tomorrow people have to come back to our center. You have also ability to recruit different people, and especially, and it was particularly true in North Europe and in some place in the U.S., the ability to have work at home enables you to find other population that are much more stable than the population that we might have in some countries. That are the main reason. In terms of quality, as you have understood, this is working well. People are happy to work at home. Some of them are having a shift, let's say, for somebody that want to stay home at peace and working in the morning and not in the afternoon or the other way, it's fantastic. That are the reason.
The flexibility, the agility is probably one of the most important topic that we are working for that.
Great. Maybe coming back to the D.I.B.S. question, can you give us an idea of where you are in deploying those solution and ramping them up across different geographies? I mean, leveraging what you acquired with Intelenet, and is it accelerating or has it decelerated versus your initial expectations before the crisis?
Any set expectation are never met. We want to have more. No, I'm joking. This crisis, in fact, accelerating the necessity of D.I.B.S., because people don't want volume interaction or basic interaction. They want more and more complex interaction. If you are able to do that quicker, safer and at home, you are going to deliver much more. You are going to get much more volume. This crisis has generated new business, surprisingly. Some business has been hit, but other have been growing dramatically. Part of the story of the success of Ibero-LATAM is the e-client, e-approach, I would say, business. That is the situation. Clearly, LATAM is ahead of the game after you have CMEA and just behind U.S. and Europe, with different stuff for the North America and for Asia.
Clearly, LATAM is ahead of the game and CMEA is close, too. That is what I can tell you today.
Thank you very much.
I'm going to take two more question.
The next question comes from the line of Patrick Jousseaume, calling from Societe Generale. Please go ahead.
Yes. Good evening, Olivier, congratulations for these results. My first question is on slide number 19. Just wanted to be sure that the expense incurred to protect employees and the write-down on receivable are included in the EBITDA before non-recurring items.
Yes.
Okay. If we consider this various item, which represent around EUR 25 million, it remains EUR 50 million to be explained, the gap between $327 million and $253 million. Would you say that half of it is coming from TLS and half of it is coming from the disruption?
I don't know how you compute. Another way to make a computation is to take the level of sales of this year, and you apply the rate of last year.
Yeah. It was EUR 40 million. The gap is EUR 80 million.
You have roughly Yes, your 50/50 rules is correct. In the 50 rules, what is left is a mix of disruption, less cost savings, less different stuff. That is difficult to follow, because you are not at the same level. Your computation is roughly correct, yes.
Okay, thank you. Second question. Tax rate, I'm not sure I was able to catch what you said about tax rate. Should I understand that it is 30% that we should model for?
Yeah.
20% should remain-.
It's coming good here.
Yeah. Okay. 30% should remain the, let's say, tax rate that we should take into account for the future?
Far, yes.
Okay. Last question is on LLS. Is it possible to get more colors about the type of organic growth that this company had in Q2?
Close to double digit.
Okay. Thank you very much.
The final-
I can do this. Let's put it this way. I think it will be, let's put it this way. I am taking the last question.
Thank you. The final question comes from the line of Laurent Gélébart, calling from Exane. Please go ahead.
Yes. Good evening, Olivier. Just coming back on this write-down on receivable for EUR 10 million. I would like to understand what happens here. Is it a client going bust, and do you have more of the same potentially coming later on this year?
No. It's simple. We have plenty, we are looking to client very precisely. You know that we are working for some airline company. Especially in Latin, but not only. This company, some of them have been bankrupt, some are under Chapter 11. We are careful. I hope we will be able to recover this receivable, but I'm not too sure. That's why we have been careful in providing for this receivable. That's it. Of course, the second part of the year. I just wanted first, just to compare this EUR 10 million, and I'm sure you have not seen that receivable amount on our balance sheet, which should be in the range of EUR 1.8 billion, if I'm not mistaken. It's not so I don't have it here, I am just working gap, but this is not surprising. It's very minimal.
Lastly, of course, we put a team to check and to follow precisely in each region what's happening to our main clients. We are going to be very careful on that, either for July, but also for all the months to come, yes.
Thank you. I have a couple of further questions. The second one relates to your organic growth. Could you share with us which is a part coming from new clients and the rest?
No, what I can tell you is that I cannot answer like that, the new clients. It's too early. What I can tell you is that the new biz has been more important than last year, but we also lost some business from farming, which mainly from the difficult sectors, and has been hit in the first part of the crisis. We have much more of a new biz, but also decrease on business, that not only disappeared, but reduced dramatically. That's what I can tell you.
Okay. The last one, it's more midterm. It's related to TLS. Basically, the market is a disaster. We have all understood that.
I think all your competitors are also have to swallow the same stuff. My question is very simple. I think that in the Schengen Area, you get a change of regulation earlier this year, allowing you basically to charge or to increase 30% more per application when you renew the contract. Are you moving from EUR 30, I guess, to EUR 40? My point is, do you believe that all players, and you as well, are going to renegotiate, when the time is coming, all your contracts to increase the base price you can charge for the end client?
Frankly, I don't know. I must confess that I don't know. Today, what we are working on TLS is just to make sure to adjust as quick and as much as we can, the cost base, keeping the good relationship with the major clients. That's what we are trying to do. I cannot answer, frankly, I don't know. I have no idea.
No problem.
It's a blurry situation, as you can understand. What I'm believing is that at the end of the day, people will travel again. I don't see when, I don't see why they should not do that. When, that is the question.
If you look at what IATA is saying, they believe that traffic will be back to 2019 level in 2024, so.
Yeah.
Maybe they don't know, huh?
Yeah. I'm not sure it's true, but I don't know. Frankly, I don't know.
Okay, thank you very much.
Thank you to all. I'm going to stop the call now. Thank you. I'm sorry again, not being able to deliver a webcast. I would hope we were able to put that on our website as quick as we can. We are going to put also some documents on the website that are interesting, notably all the accolades that we get from our clients, all the recognition that we get from government in this crisis. That are not money, not figures, but showing what we are doing and what has happened during this month that has been so tough for everybody. Thank you to all. For those who are on holidays or that will go to holiday, have a good summer. Thank you. Bye-bye.
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