Atos (Euronext:ATO) Q1 2026 Earnings Call

0:00 Good day, and thank you for standing by. Welcome to Atos Group Q1 twenty twenty six Performance Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to your first speaker today, Mr. Philip Tsar, Group Chairman and CEO. Thank you. Please go ahead, sir. Thank you very much. Good morning, everybody. I am today with Jacques Francois, and we're going to talk about Q1. So let's go directly on Page six on the business highlights. So first, first point is solid financial performance. I think we are quite happy, let's say, with the start of the year.

0:59 We have always said that's the lowest point of the year, and then we gradually, I would say, improve the growth. Further progress in the execution of the Genesis plan. So the Genesis is doing also very well. We will finish the first Genesis plan probably by mid of this year. And we have extended the plan, I would say, with another savings to be finished probably by the end of twenty twenty six. The idea for us, of course, is to have the full savings of the new, I would say, the extended plan in the course of for the year 2027. We have a positive business momentum, and I will come back to this with, I would say, book to bill that is the highest for the last five years.

1:45 And also now we have a clear focus on our strategic pillars. At Genetic AI, we have launched a manifesto. Soline, we have launched also a manifesto internally and it's going to be externally in the coming weeks. And of course, Cyber, where we are number one in Europe. So if we go on the key numbers on Page seven, order entry is €1,500,000,000 it's 89% for Atos, it's 87% with dividend. And of course, as you can imagine with dividend, the other entry was a little bit low in Q1 with the war. We definitely think that it's going to be much better after, let's say, the war, but we don't know, unfortunately, when it's going to be finished. Revenue is €1,700,000,000 plus. It's roughly $1,640,000,000 euros what we call with the go forward perimeter.

2:36 The go forward is with our bill that we have sold on the March 31. And Latin America, and we expect to close Latin America next week. If it's not next week, beginning of May, but we will try, I would say, to finish this transaction, let's say, next week, which means that the perimeter now is roughly the perimeter going forward. There are still some countries we want to close, but are very small. But in terms, let's say, of sale, I think it's finished. Next change of cash, I think, a very good news. It's minus €47,000,000 So you have to understand that we have €71,000,000 of restructuring, so it means that we have produced roughly €24,000,000 of cash. And also, we have the build cash consumption.

3:24 Unfortunately, we are not able to estimate that cash consumption for now. We will do this, in fact, when we're going to close H1. Just for information, build EBITDA was around minus 25 CapEx minus €30,000,000 So, EBITDA minus CapEx is minus €55,000,000 We estimate that probably there is a positive working cap. But it's possible, of course, that Bill has an impact of, let's say, around 10,000,020 million €30,000,000 we'll see. So it means in fact that the production of cash is much higher than in fact EUR 24,000,000. And then the liquidity is EUR 10 it's a little bit above last year December 2025. And remember also that we have bought already €62,000,000 of the 1.5 L.

4:09 So of course, there is less cash, but we have also less debt. So let's go on the three year for the Genesis. So I'm not going to highlight, remember that there were seven pillars in Genesis. There are a lot of things that we are doing. So first the first one is the growth. So as I said, we have redesigned completely for me the engine of growth. And it's going to, I would say, produce a lot of, I would say, of course, results in the coming months now and years. So I would say the teams are in place, most of them, no. We have, I would say, put a focus with Florin, the CTO, our three strategic pillars, so AgenTx, Oven and Cyber.

5:02 We have now launched this morning for two or three months campaign also in France, I would say to let's say, push the image of Atos, and I would say the main I would say message is that Atos is back. And as I say, the term, the target operating model, in fact, in sales is completely in place. You will see also, for example, that the pipeline has increased almost by €1,000,000,000 in one quarter, and that's I would say that gives, of course, a very good sense for the rebound that we estimate that will happen, in fact, in Q3. In terms of country reviews, so we sold Ideal, and it's a company that was in Nordics, it's mainly in fact Norway and Finland. So we closed the deal on end of Jan. South America, as I say next week, and Bulle was down also end of March.

5:53 In terms of operational costs, I think we are continuing, I would say, the progress. The buildability right now is above 80%, and it's in fact close to 85%, the target that we have. We are now, let's say, recalculating a little bit differently this reliability rate because we take into account now the average salary of the people that are not billed versus, I would say, the salary of people that are billed. And then there is and we see that there is, of course, a discrepancy, and there is no, I would say, magic, but usually the people that are more costly unfortunately are more on the bench than the people that are billed. So I would say we will not recalculate, I would say, this side, but we will adjust it, I would say, to the salaries. Legal entities, we continue to simplify the number of entities. We want to shave, I would say, the number of entities by hundreds still.

6:45 And then we are also putting some AI internally. And right now, for example, we are testing AI on the revenues. So in fact, we are looking at all the contracts that we have, and it's several thousand, and we look also at the options, or I would say, the paragraph in the different contracts that we have signed where we can extend the pricing or bill a little bit differently, so it can give, I would say, some rooms of improvement in terms of margin and revenues for the teams. Genesis is doing very well. The Genesis, the initial plan will be finished mid-twenty twenty six, so we estimate that the $650,000,000 saving plan is almost complete.

7:31 And that's why we have extended another plan to have, I would say, a plan that will finish on end of twenty twenty six. So it means it's a target move more than $700,000,000 In terms of workforce on Page nine, as you can see, so we started the year at 63,000. We continue, I would say, the restructuring and we also managed levers versus hirings to be negative. So we finish at 61,000. You take out BUL to 2,500. So we are now at a little bit below 59,000. If you take South America, we are probably close to 56,000. So that's probably where we will be probably at the end of next week. And I would say the we will I definitely think that we can we will land around 55,000 when Genesis will be complete.

8:24 So we are almost there. We go on Page 10 on the order book. So first, the book to bill is very strong, 9,000 for Atos. And in North America, it's above 100,000. Just for the analysts, that's the I always say that the book to bill is a proxy, unfortunately, of growth. And I think we have a very good example. The book to bill of North America is above 100. They continue to decrease, unfortunately, in terms of top line in Q1. The book to bill of The UK is below 100, and now they are growing. So as I say, unfortunately, it's not immediate, I would say, readings when you have a book to bill at below 100, that it means that we're not going to grow. I don't think that is the case. We are still looking to find a better measure. It's not an easy one, but we are working on it. I hope that we can probably share some, let's say, results in H1 or at the end of the year.

9:23 The qualified pipeline, as I say, is up roughly close to 1,000,000,000 We are now at €13,000,000,000 roughly of qualified pipeline, so almost two years of revenues, a little bit less than two years, of course. The renewal rate also is 94%. The good news is that we don't have big renewals now going forward. So in fact, for this year, I think we are not going to lose any other contracts. It has been done, of course, in the course of 2025. The two big contracts in The U. S. Has been renewed. One has been signed, in fact, in end of March with CNA. It's a very big contract of $480,000,000 And we're also discussing probably to extend the contract to more than this $500,000,000 We have probably we're still in negotiation in the course of Q2. And the second one also is in California. We have won the contract. It will be signed in the course of April or May. It's done. We are just waiting, I would say, the signature of the client. And then for The U. S, it's done. We don't have big renewals, in fact, in other parts of the world. There is a medium sized contract, in fact, in B and N right now.

10:35 We are waiting the answer probably next week. And that's all, which I think is very good news. And that's why we are very confident on the rebound of the top line in Q3. And then as you can imagine, we have a good traction in cloud, in cyber and in data AI because we are growing, in fact, in this three service line, let's say. You can see below some contracts that we have renewed. So for example, CNA in The U. S, it's a very big contract. There is a is some CMNI, there is a digital workplace and cyber, and we are also now looking for digital applications and the data AI in fact for the clients, and it's an insurance company, so I definitely think that AgenTik has a big impact in this company.

11:22 We have, for example, with Gigalis in France renewed a four year plan with cyber, what we call framework agreement. So it means that we have after that the possibility, I would say, to tender or put people or put, I would say, new projects in place. Most of the framework, in fact, are not in the book to bill, so we are very cautious on this. And that's why it doesn't I think probably the book to bill is a minor, I would say, of probably what is going to happen on the revenues going forward. In The UK, we have won a very good contract with the Ministry of Housing at £63,000,000 seven years for digital applications.

12:07 And for example, in Germany, Austria, in Austria, we have won also a very big contract with OBB, 48,000,000 for nine years. But I think that there is good traction. I see that there is more and more, I would say, appetite. Those are open from the clients. I think it's much better than last year. And definitely, I think now we need to win, I would say, the contract. So I would say we are back to a normal business. If we go on Page 11, this is the three pillars in terms of technology. This is where we're going to invest most of our R and D and push, I would say, very hard. So, AgenTik, Sovereign and Cybersecurity. So, AgenTik, as I said, we launched already the manifesto.

12:55 We have already studios in place in the four big countries, and we have now signed different clients. And there is an ecosystem around us of startups that will help us, I would say, deliver the agentics and the agents in the different scenarios of our clients. Then with the sovereignty, so there is a manifesto also that we're going to produce. It has been already shared with the top 200 within Atos in fact last week, and we're going to share it externally in the course of next week or probably beginning of May. There is a lot of appetite as you can imagine right now, especially in Europe. And then cyber, of course, there are lots of things going with this.

13:43 We see also some developments with AgenTeq there. And of course, we have a very strong position as you can imagine in Europe and we are pushing now also Cyber in North America. Now, if I go to the next page, so the next section is the Q1 revenue performance. So I can go through, I would say, the main numbers. So first, as you can see, when we looked at the Q1 restated, it's roughly EUR 2,000,000,000. We take out the scope and the foreign exchange, the divestitures. So in fact, the perimeter going forward, which is without BUIL and without EDL, and of course, without Latin America was roughly EUR 1,800,000,000.

14:29 We finished at EUR 1,640,000,000, which is roughly minus 11%. And as I say, we were in fact anticipating, let's say, a weak Q1. It will be much better, in fact, in Q2, and we are still looking to make the rebound in Q3. If you look, in fact, on Page 14 by region, we are probably a little bit, let's say, surprised, but North America probably is too weak. The sentiment in fact, the economic sentiment is a little bit, let's say, challenging in this area. The rest is okay. As you can see, UK now is growing at plus 5%. We estimate also that Germany will be on positive growth in Q2. So we see, I would say, region by region that I would say we are coming back to a positive territory in the coming quarters.

15:21 If I go, let's say, region by region, so I start with Germany on Page 15. I think Germany is doing quite well. As you can imagine, also the EBIT now is positive in Q1. It was negative last year. And by the way, just for information, the EBIT of the group has more than tripled with our build in Q1 versus last year. We don't publish, of course, the EBIT. We will do this, in fact, in Q1. But I would say we see the benefits of Genesis now going and falling through, I would say, the P and L already, of course, in the beginning of twenty twenty six. Then you have, I would say, some contract wins. I'm not going to go over, but I would say we are stabilizing, I would say, Germany. And as I say, we estimate that the rebound will happen in the course of this year.

16:12 Now North America is probably the most difficult, let's say, region. In fact, the start of the year was probably lower than anticipated, but we are signing, in fact, a lot of new contracts, and the book to bill is €160,000,000 so it's big. And definitely, now we estimate that we're going to ease, let's say, this contraction of revenue in coming quarters. You can see some below some big wins. The biggest one, of course, is C and A. And also we have another one, our C and A at $30,000,000 as you can see below on the bottom, I will say, of the page. 17 is France. So France is still also challenging.

16:58 Remember also that we did not have a budget in January and February, so it freezes a lot of our public and defense customer. And public and defense in France is 40 of the revenues. So we know that the start of the year is lower is probably, of course, lower than anticipated in the budget for us. But we have some very good signs. For example, with SNCF. SNCF, when I arrived last year, they said that they want to stop to work with Atos, and finally, we work we won a very big contract with them. So it means that now the doors are open, as I say, many customers. Gigalis also it's a bigger contract we have won also for Cyber. And you can see also other, I would say, wins and qualifications.

17:46 UK, on Page 18, so that's the rebound of The UK, and also the profitability also is skyrocketing, as you can imagine. So we are very happy and there is more to come. I think we have win also a big contract in Q2 that will be probably a public. So I would say we are quite confident right now in The UK. And as I said, that's the first region not to come back to growth and there will be more of course in the coming quarters. Last, the international markets on Page 19. So we have taken out the €28.30000000 that's Latin America. So in fact, we saw that Latin America is around $220,000,000 so minus EUR 12,000,000. It's mainly in fact impacted by one client in Asia, in fact, that is stopping the CMNI contract, because they want to manage internally, I would say, their data.

18:42 The good news is that we suffered, in fact, in 2025 and we continue to suffer in 2026. But at the end of the year, this ramp down is completely finished. So it means that we are quite confident that we will restart growing, in fact, in the course of 2027. You can see also some wins that we have in Singapore, Spain and Slovak governments. Last, in fact, and it's not it was not international, sorry, is of course at Benelux, so Benelux or BNN, what we call with Atos. This is also a slow, let's say, start of the year, but we are, I would say, quite confident also that this region is doing very well.

19:27 We have win also a different with Euro control, with in the automotive sector with DAF and also in the Financial Services as you can see. Now, EBITDA, as you can see on Page 21, so without bill, in fact, the revenues were €71,000,000 and we are roughly at 69,000,000 it's roughly flattish. In fact, we have been impacted by the world because, for example, for Vision AI, a big chunk of our business is in Middle East. So we definitely think that it will be much better after the world concludes, but when, nobody knows. But I would say we have a good traction in terms of also contracts, and we are very confident that we'll accelerate both in the book to bill going forward and also, I would say, the top line.

20:21 So that's it for me. I give the floor now to Jacques Francois for the liquidity position. Thank you, Philippe, and hi, everyone. So on Page 23, as a reminder, the publication of the quarterly liquidity position is part of our regular reporting requirements, which have been defined and agreed with the group's financial creditors. So the certificates are available on our website. Our liquidity position remained strong at the end of March, thanks to the limited estimated cash consumption over the last quarter. In Q1, the net change in cash is estimated to be approximately minus €47,000,000 which includes €71,000,000 spent related to the restructuring.

21:08 The figure this figure is reported without any use of the accounts receivable factoring or without any specific optimization on trade payables. This number is also reflecting the results before the estimated impacts. So you can we take them from the left to the right on the slide. So A, the change in the unsolicited payments received in advance of the invoice payment due date during the year, so that's the minus €115,000,000 Then you have the exchange rate fluctuation, which amounts to approximately minus €2,000,000 You have the M and A impact, which is plus €257,000,000 and you have the debt repayment of minus €62,000,000 So these amounts are excluded from the net change in cash, which announced is minus €47,000,000 And that brings us as a result as of the end of March twenty six to have the Atos Group's liquidity at 1,736,000,000 which is to be compared with €1,705,000,000 at the end of December twenty twenty five.

22:14 And this is more than €1,000,000,000 above the minimum requirement of €650,000,000 set by the credit documentation. So with that, I'll now hand over Philippe. Okay. So just for the outlook, just I give you the numbers now with the FX at the end of March. So it's a little changes because, of course, as you can imagine, the dollar is weaker. So it's giving you all, let's say, a smaller revenues at the end of twenty twenty five with the FX of March. So, we are still at €7,100,000,000 so compared to €7,100,000,000 of course at the end of twenty twenty five, 300,000,000 and €12,000,000 as the EBIT.

23:01 We are now close, as I said, to 56,000 people without and we are now in the forty four fifty four countries of operation. So as I say, we continue also to close some countries. We'll be below 50 at the end of the year. Now, if I go on Page 26 for the guidance of this year, so remember that at the beginning of this year, we said we will try to touch positive, let's say, organic growth with the let's say, the start of this year and let's say, the economic sentiment, we estimate that it's not going to be possible. So we have now, I would say, range, it's between minus 1% and minus 5%. So we still keep, I would say, the worst case at minus five We think we do probably better than that.

23:55 And the best case, let's say, to minus one so we have flattish revenue. Operating margin confirmed at 7%. As I say, we have tripled more than tripled the EBIT in fact in Q1. So we are very confident on the profitability of this group for '26, of course. And net positive net change in cash, So in fact, you've seen that we have already spent €70,000,000 with Genesis in Q1. Genesis this year is probably between 150,000,000 and €200,000,000 So we have in fact expensed more than I would say the average that we should have by quarter and it's normal because we are accelerating the plan. And of course, the EBIT of the Q1 is always the lowest. So it means that it's a good sign, I would say, for the cash going forward.

24:42 And then I would say for 2028, next year and 2028, we are still looking for an acceleration of the top line, still targeting around 10% of profitability. And of course, the deleveraging will continue. In fact, I would say with this year, the deleveraging in fact will be seen already in fact in 2026. And in fact, with hundreds of millions of cash next year, because in fact, the genesis in terms of cash out next year will be very small. We will produce a lot of cash to either do M and A or deleverage, I would say, the balance sheet. With that, I can now refer Jacques Francois to take any questions that you have on the Q1 results or Q1 performance is not really results because we don't produce the P and L.

25:33 Thank you, management. We will now begin the question and answer session. To ask questions on the phone, please press 11 and wait for a name to be announced. To cancel your request, you can press 11 again. One moment for the first question. Our first question comes from the line of Frederic Boulan from Bank of America. Please go ahead. Hey, good morning, Philippe. Good morning, Jean Francois. Thanks for the questions. If I can ask two. Firstly on demand, so you flagged a strong order book momentum, number of big contract wins. Can you discuss a little bit the nature of discussions with clients and the impact on demand from the current macro? I mean, if like that for Evident, but we'd be keen to hear any broader impact on the overall demand environment.

26:25 And then specifically around pricing, would be good to understand where you see price points in the deals you've been signing recently, how it's comparing versus, let's say, a year ago? And is this pricing driven by any kind of competitive or AI factors? Thank you. Yes. So on the second point, Frederic, for example, C and A, the margin is 25%, which is roughly in line with the former margin that we have with C and A. Remember, that's the goal we have is to be around 25%, 26%. It's very important. And I'm very adamant on this. So I think probably and that's why also the book to bill also last year and this year is probably lower than what we can achieve because we are still watching very closely the margin that we want to produce.

27:19 Profitable growth, remember, is the goal for us. It's not very difficult to buy some contracts, but I would say it's forbidden, of course, as you can imagine, since now beginning of twenty twenty five. In fact, in some contracts, for example, like C and A, and it probably goes with the sentiment of the clients, everybody of course is talking about AI. Nobody probably understands the impact of AI, because it's very difficult right now to see what is going to happen. There are a lot of of course, disappointments, in fact, with some clients trying to put some agents because it's not that easy. And my view is that, AgenTeq is the new evolution, it's coming, but it will take probably two to five years to be reinforced, probably more in The U. S. At the beginning and after in Europe.

28:11 So we see that in these contracts, for example, Fortinet's eight year contracts, we're going to give, for example, some savings after year three and four in terms of let's say, in terms of AgenTik. But in fact, we as I already said already, since we don't know exactly the number of savings, in fact, we're going to share part of the savings that we're going to produce. But it's difficult, in fact, for clients and even for us to see the impact the real impact, I would say, of the savings we're going to have. So there are a lot of studies, and I'm sure that you read some of them, saying that we cannot divide by two, by three, by whatever. Unfortunately, there is one cause that nobody knows, it's the price per token, and we definitely think that this will probably scale out in the future.

29:00 And so it means that, in fact, there is a price for Agents, and there is probably, of course, less people cost in the contract going forward. But the sum of the two right now is still, I would say, unknown. So I would say everybody is talking about AI, everybody wants to us, let's say, to give some rebates or not rebates, but I would say to apply, let's say, Atos SE, in our delivery and then give, of course. But I would say it's too soon, even with the big contracts we are signing right now. We understand that there will be an impact, but it's too soon to say that there is a big impact. And as I say for us, we're going to protect the margin. So we estimate that the margin of 25% probably will be more after that. And then we can probably produce more output on a given framework.

29:49 Now, the sentiment, I would say, of clients, it depends on the sector. I think there are some sectors that are probably more difficult than the rest. Automotive is one, Transportation, Luxury goods. And other sectors, we don't see, in fact, a big impact on right now, let's say, the economy, the banking sector, insurance sector, defense, of course, and public, where we have very strong health care. So I would say it's a mix of sentiment, but you know that in economy, unfortunately, the fact that we there is a lot of uncertainty, it doesn't give, I would say, the sentiment to clients that they can spend more specifically with AI. So I would say that for the moment, probably there is a postponement of some contracts or projects. They are looking exactly, probably waiting, let's say, to see how the economy is going to rebound after the war.

30:43 So there is more wait and see from in some clients, let's say, for some projects. And that's why that's what we see for the moment. My view is that the projects will happen, but in fact, if you, of course, expand or postpone, let's say, by three to six months, it has an impact, in fact, in the for the twenty six year. And then, of course, it will be good news for, let's say, of this year and of course in 2027. Okay. Thank you very much. Our next question comes from Sam Morton from Invesco. Please go ahead. Hi. Two questions, please. So the first is the new bond buyback. So I think you brought back $62,000,000 of the $1.5 lien.

31:34 In Q certainly, the last time we spoke, I think you've been buying back the second lien. So I'm trying to understand what's the change in strategy there? And then secondly, any update you can provide on the refinancing? That would be really helpful. Thank you. Yes. I'll take Jean Francois is going to answer your two questions. Hello, Sam. So yes, the change of strategy is more or less in line I think with what we announced in the Q4 publication call, where we said that at the end of fiscal year twenty twenty five, we thought the second lien was really very low actually and we thought opportunistically a little bit of that. So last year, this was 2,500,000 of second lien. Now, when we look at the NPV, the second lien has gone up and it's true that the EUR 62,000,000 amount we have bought back on the market, on the open market was only EUR 1,500,000 bonds.

32:33 Again, we noticed that, how can I say, this bond was momentarily trading below due to geopolitical situation, nothing to do with the performance of the company? So since we had a little bit excess of cash, we decided to take advantage of that. We signaled that and we implemented this program, which is not finished by the way. It might be pursued in the coming weeks or months. That's the first question. On the second question, the refi, well, we are monitoring the market. The company is ready. So we have nothing to announce today other than we are checking how the market is evolving. We have some banks advising us. And when we think there is a good window allowing for a good operation and a good pricing, you and investors might hear from us.

33:28 Okay, great. Thanks a lot. You're welcome. Thank you for the questions. One moment for the next question. Our next question comes from the line of Laurent Dorey from Kepler Cheuvreux. Please go ahead. Yes. Good morning, gentlemen. I have two easy quick questions. The first is on revenue trends during the year. I think if I take the midpoint of your guide, minus three, how do you see the phasing from Q1 to Q4? And what are the main drivers of improvements? Do you still have some contract ramp up that makes the revenue trend much better, maybe starting in Q2? Or is it comps impact?

34:22 Any granularity on how you see the year shaping would be helpful. And my second question is on the bond buyback. To clarify, you made EUR 62,000,000. Are you cautiously looking at your balance sheet? Could you do much more than 62,000,000 like $203,100,000,000 euros Is it a question of liquidity of those bonds? So anything on the strategy on that will also help. Thank you. Yes. So in fact, for the we estimate Q2 will be around minus 6% and then positive in Q3 and Q4, the positive, then you calculate whatever you want. The central scenario, let's say, at minus 3% for me probably is okay.

35:10 And of course, if you have minus 11%, minus six plus and plus, if you divide it after that by four, you are probably around this minus 3%. So, would say the Central is around minus 3%, the worst case is at minus 5%. Then for the bond buybacks, the question for us, of course, we have probably plenty of cash, as you can imagine. And also, in fact, we're going to produce some cash this year. So if we start at minus 50,000,000 of course, we're going to produce €50,000,000 plus now in the coming quarters. We want to buy, in fact, point five L Bond, in fact, and that's the one we are looking at, that is below 100,000,000 So I think it's a good, let's say, buy for the group because it's cheaper than I would say the path in fact on the for the bonds. And remember that the bond is around 9% yield.

36:11 We remember that we are also looking at refinancing, so that's why we have to be a little bit cautious between the refinancing. And remember also that we have some repayments of the 1,500,000,000 with the proceeds of M and A that should occur, in fact, at the end of the year. So it's an equation, I would say, with all these variables. So we'll see if we continue to buy back bonds or we refinance first, and then we continue to buy back also, we will see. So at the end of this year, you have to pay back with this half of your proceeds from M and A, is it right? Yes. Exactly. The proceeds of WorkGrill, the proceeds of Latin America, of Ideal, of course, it's small amounts for the two, and the proceeds of BIL.

37:02 But it could be EUR 500,000,000 plus. So remember that we have this EUR 500,000,000 plus cash out that we have done at the end of the year. May I complement? Laurent, this is a start of the credit documentation. We have a couple of moments in time in the near future where we are going to do the liquidity test. There is a bar at €1,100,000,000 of liquidity. At the end of June, we are testing that on a forward looking basis, meaning that the company will will do our forecast internally and the amount which are above EUR 1,100,000,000 at the end of December, we will use them to reimburse as a mandatory early repayment the EUR 1,500,000,000 Lien tranche.

37:52 That's the first test. And the second test is we take the liquidity position, the actual liquidity position at the end of December. And again, against the €1,100,000,000 the amounts coming from the M and A proceeds would be used to repay early some weather, the EUR 1,500,000,000 lien capped at the amount, which leaves us above the EUR 1,100,000,000 position. I hope it's clear. To be even clearer, if you do all that, what is your best estimate in terms of interest savings in 2027 versus 2026 at group level? I'm afraid there are too many unknowns in the equation to give you a number. Okay. Have to wait if we do the refinancing, there are a lot of things that could happen again in the course of this year. So, it's too soon to give you already, let's say, guidance on interest rates for 27%.

38:51 We can probably give this with the Q3 results. So, probably in October, I think we will have a better view. Okay. Looking forward. Thanks. Yes. One moment for the next question. Our next question comes from Benoit de Praisia from Querent Finance. Please go ahead. Thanks for taking my question. I have just one very quick question. It's you had one black contract in The UK involving Aegon. I noticed that Aegon sold its UK subsidiary in the weeks in a few weeks ago. Do you think that you could renegotiate with the purchaser the contract you have and that is set to terminate in a few years in two thousand and thirty four, two and three, if I'm not wrong?

39:53 It's a very good question. Yes, the end of the contract is 2034. Yes, you have noticed that Aegon UK has been sold. So we are talking now to the buyer. It will be in May. In fact, we need to wait. And of course, the buyer has already a platform. So the good news is that do they want to keep only one platform or not, and then stop the platform of Aegon, which then of course will stop the contract. It's too soon, because of course we haven't talked yet, I would say to the buyer. So, we will have of course a better view in the coming months. But I think for us, it's a good news, yes, because I definitely think that they will not keep in terms of economies of scale, it doesn't make sense for them, I would say, have two platforms.

40:43 I think that their platform also is very efficient. So, we will see. And all they want to play this. So, there is a possibility effectively that they ask us to stop the platform that we have, and then transfer the data to their new platform. So, it means that the contract can end in the course, for example, of 2027. We will see, I don't know yet, it's too soon. But it's a very good question. It gives a good opportunity for us, yes. Thank you. That's all on my side. For the questions, our next questions will come from the line of Ryan Fu from PVTL Point. Please go ahead. Hi guys. Thanks for taking the question. Just one quick one for me. So you've given quite clear guidance on sort of the cash add backs or the adjustments to net change in cash to get to a true sort of unlevered or pre debt repayment cash generation.

41:41 Can you just help steer us on your 26% guidance? Clearly, there's a range there, but it feels from the adjustments you've discussed that actually the net change in cash will be considerably better than just positive. So just any further sort of color you could give would be really helpful. Well, Ryan, thanks for your trust and your faith. At this stage, our commitment and our guidance is to be free cash flow positive. I'm sorry, I will not deviate from that. Bear in mind that we have Philippe mentioned the Genesis cash out impact is between 150,000,000 and 200,000,000 so that's not nothing. And we have all the other lines of the cash flow statement, which are still consuming some cash. So yes, we're shooting for more, but our commitment is to be free cash flow greater than zero.

42:35 As you say, it's probably a conservative guidance, let's say. Okay. Got it. Cool. Thank you. Thank you for the questions. One moment for the next question. Our next question comes from Derek Marcon from Bernstein. Please go ahead. Yes. Good morning, guys. I hope you hear me well. Two questions from me. The first one on the book to bill. I just want to understand if it's the 87 percent is applied to the reporting reported figures or the fully planned scope. And in this book to bill, talking about absolute in absolute term, what's the proportion between renewal and new business that would be helpful to have this figure?

43:29 And my second question is on the M and A, the €257,000,000 you mentioned. Can you re explain what is included in this figure? Thank you. Okay. So the 87,000,000 it's Atos and Evidane. Atos only is 89,000,000 because as I say, Evidane has suffered from the war more than I would say the impact is more in the first I would say than Atos. Evident is more Europe, Middle East in fact. So that's why probably I think the impact is higher. We definitely think that the rebound will come, but of course we need to have more, let's say, stability. Then the book to bill between renewables On $17,000,000,000 or the 1,600,000,000?

44:18 No, no, it's only on the perimeter without Latin America and BUL, so 87%, 89%. 87% is the go forward and the 89% is only Atos, okay? And it's Atos without Latin America, 87% is with dividend, without BUL. And then the renewals versus I don't we don't have this number available right now. I cannot tell you. So we will come back to you on this one. And remember also, yes, you're right that with renewals, of course, as I say, it inflates also the book to bill, and that's why it's a proxy for the book to bill. Be careful on this. It's not because the book to bill is below 100 that we're not going to grow on the company.

45:04 I definitely think that it's possible. And in fact, we have shown this in The UK. Then for Build, so Build, in fact, there is a lump sum of EUR 300,000,000 at the beginning, plus two are out. The EUR 300,000,000 is the EV, the $250,000,000 is the equity. So in fact, we went from EV to equity without the provisions and the pensions, okay? So it means that the €250,000,000 was the equity check that we had for BUEL without the two earn outs. Then the $250,000,000 we take out the carve out cost, we estimate around €50,000,000 A part of it was the expense, I would say, in the cost of 25,000,000 the rest, of course, in Q1. We estimate around €50,000,000 so it means that the net cash for us is close to €200,000,000 okay?

45:57 Remember also that BUEL has a negative cash flow in Q1, we don't know how much. So we need to take this also into account. So the EUR 200,000,000 will be probably less, EUR 170,000,000,180,000,000, I don't know yet exactly how much. As I said, it depends on the working capital we're going to have on build, but it's quite tricky for us to calculate the working capital of BUILD because in fact, for some of activities of BUILD, they were on the same company as Atos or the other dividend. And that's why even on the bank accounts, unfortunately, we need to look line by line on the cash, I would say, to reconstruct, let's say, working capital. And that's why we're going to give you the figure with the H1 figure in fact. So that's roughly €200,000,000 without carrying cost and I would say equity check, probably less with the cash outflow of BUILD in Q1.

46:52 And then we still have the earn out. The first one is maximum €50,000,000 and we estimate we gain around, let's say, 40,000,000 plus. We will see, I would say, they need to close their accounts and it's, I would say, linked to the gross margin of bill. And then the second note is on the EBIT of bill in 2026. But of course, as you can imagine, the EBIT of bill in 2026 is not in my end unfortunately. So it's difficult to see what is going to happen on the second appointment. So we will see what happens on the first one. It's going to be a negotiation that we will start now, I would say, after the closing of the accounts. Unfortunately, BULO is not very, let's say, quick at closing accounts. So we will have probably numbers probably after the summer.

47:48 And so to get Philippe to get to the EUR $2.57 mentioned in the liquidity position, so you have built EUR 200,000,000 after carve outs, if I understood correctly, plus other things like Scandi or Latin America I'm just Yes, So I can say the angle Philippe took was the angle of explaining the story for BULE. Now in the carve out costs, some of that has been spent in 2025 already, a little portion in Q1 twenty twenty six, and there is a bit more to come in the rest of 2026. The vast majority of the $257,000,000 you can see is coming from Bill, the vast majority of that. You have then a plus 10,000,000 and a minus 10,000,000 which comes from the disposal of some other relatively small assets and some deduction for the carve out cost for Cartier. But you can assume that 95% of that is bill.

48:50 Okay. And Latin America and Scandi will come later in the year? Am I right? No. Scandi has been closed already. That's what I was referring to as other proceeds. That has been completed in Q1 already. And for Latin America, the closing is scheduled in the coming weeks. So there is not a penny yet of proceeds from Latin America in our Q1 numbers. Okay. That's perfect. Thank you. Thank you both. Thank you for the questions. We have no further questions from the line. Allow me to hand the call back to management for closing. Okay. Can you ask one more time if there are other questions or not? And then we can close. Okay. If there are no more questions, then thank you, everybody, for this morning. We have some, let's say, small roadshow, I would say, with some investors today and tomorrow. And we, of course, remain at your disposal if you have any questions.

49:58 But overall, I would say we are very confident now on the rebound of the company. I'm very pleased, I would say, on the results and very confident that this year of the rebound. And in terms of cash flow, I think there is no surprise for us neither on, I would say, the profitability and cash flow. And the rebound will occur in the course of H2. So next time, I will talk to you end of July now. So have a good day, and see you in three months. Bye bye. That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.