Pluxee N V

Good morning. Thank you for standing by and welcome to the PUCSI first half fiscal 2026 results presentation. After the presentation, there will be an opportunity to ask questions by pressing star and one at any time. I advise you that this conference is being recorded today on Thursday, April 16th, 2026. At this time, I would like to hand the conference over to Ms. Pauline Biro, Head of Investor Relations. Please go ahead, Madam.

Good morning, everyone, and thank you for joining us today for our fiscal 2026 H1 results. So I'm Pauline. I'm head of investor relations for Pepsi, and I'm joined by Aurélien Saunet, our CEO, and Stéphane Lopiteau, our CFO. Let me get you through today's presentation agenda in the next slide. So Aurélien will start with the key highlights and figures for H1, followed by a focus on our commercial performance, and then Stéphane will take you through our financial results. Finally, Aurélien, we then conclude with our output, including an update on the regulatory situation in Brazil before we open the floor for the Q&A. And with that, I will hand over to Aurélien.

Thank you, Pauline, and good morning, everyone. I'm pleased to be back with you today to present our first half-fiscal 2026 result, starting with our key highlights. We are pleased to share that we delivered overall solid H1, which puts us well on track to meet our full year objectives. First, commercial momentum remains strong and resulted in sustained revenue growth, driven by our core employee benefits activity. Second, profitability delivered ahead of time. Recurring EBITDA margin extended strongly, supported by the operating leverage embedded in our business model, and the strong execution of our efficiency initiatives. Lastly, it translated into strong earnings growth and cap generation, reinforcing further our net financial cap position. Overall, H1 performance strengthens our confidence for the full year and allows us to enter H2 from a position of strength amid a more uncertain macro and geopolitical environments. Let's now focus on the key figures for the semester on slide five. Despite the increasingly challenging environment, we continue to deliver sustained top-line growth, with total revenues reaching 655 million euros, up 5.6% organically. This was supported by the continuous strength of our core business, with employee benefits operating revenue reaching €500 million, up plus 9.4% organically. And I'll come back on this in the coming time. At the same time, profitability delivered strongly, recurring EBITDA reached €242 million, up plus 12.9% organically, and recurring EBITDA margin expanded to 37%, up plus 229 basis points organically. And finally, recurring ticket flow reached 210 million euros, corresponding to an 86% cash conversion rate. In a word, we delivered a strong and well-balanced performance across calls, profitability, and cash generation. And this is exactly what the next slide highlights all the time. Beyond quality of execution, the performance delivered in S1 also reflects how our business model structurally converts top-line growth into margin expansion and cash generation. At its core, Plugsy benefits from a resilient growth engine anchored in employee benefits. Combined with the operating leverage embedded in our platform and the continued efficiency gains, this translates into higher profitability with the BTA growing at twice the pace of top angle. In turn, this profitability translates into strong cash generation, confirming the robust cash conversion capacity of our model. Let me now focus on our core growth engine, employee benefits, in the next slide. At the heart of our growth engine is employee benefits. This core business represents the vast majority of our revenues and continues to deliver high single-digit organic growth across regions in F1. In Latin America, employee benefits grew by plus 11.5% organically, driven by particularly strong commercial dynamics across products, and further supported by favorable face value trends, underpinned by local inflation rates. In continental Europe, growth reached plus 5.1% organically. In the current geopolitical and macroeconomic environment, this represents a solid performance and illustrates the resilience of our core offering across European markets. Finally, in the rest of the world, growth was particularly strong at plus 16.8% organically, in which regimes the favorable dynamics that we observe in terms of market penetration in those companies. Overall, employee benefits once again demonstrated this semester the relevance of our pure play positioning. I will now turn to other products and services in the next slide. Even if other products and services is facing temporary pressure in two specific activities, the long-term value creation story remains unchanged. Looking first at public benefits in continental Europe, current performance mainly reflects the effects related to the contract cycle and order fading, which are inherent to this business. At the same time, by leveraging our merchant network and payment capabilities, These large-scale programs structurally enhance group scalability. On top of that, a highly selective approach and close monitoring of contract performance ensures that public benefits remain sustainably accurate to growth and profitability overall beyond short-term trading impact. As base effects unwind, performance is expected to progressively regain momentum from H2. Switching to the UK and the US, where we are strategically refocusing our activity toward employee engagement, a structurally growing segment in both countries. We now operate fully digital, scalable platforms and are progressively exiting non-core, lower return activities. Together, these countries account for less than 5% of gross revenues. And while they are expected to continue weighing on gross revenue growth in H2 2026, they should return to a positive contribution from fiscal 2027. More broadly, we continue to actively manage the portfolio and allocate capital and resources selectively toward activities and markets offering the most attractive long-term returns. Let's now look at the key drivers of the group substantial margin expansion in the next slide. H1 marked another strong EBDA margin increase, with operating EBDA margin expansion accelerating at plus 268 basis points compared to plus 235 basis points last year. It comes first from the operating leverage embedded in our model. Our one-platform architecture allows us to absorb incremental volumes with limited additional costs, generating structural scale effects and synergies across the group. This sharp expansion also reflects the structural cost efficiency that we've been progressively delivering since the spin-off. It mainly comes from The streamlining of our product range and processes across countries. The accelerated automation, notably through the increasing use of AI as a key optimization enabler alongside technology and data. And a clear prioritization of projects and initiatives based on rigorous value creation monitoring. Plus discipline has become an increasingly important margin driver for Pluxy. complementing volume growth and reinforcing our ability to sustainably improve profitability. Let's switch now to the commercial traction delivered in H1 on slide 11. Our commercial trajectory remains solid in H1 and positions us well on track to deliver on our full-year business target. First, we achieved a record level of new clients with generating €0.9 billion of new annualized PDI across all client sizes and geographies. Second, net retention proved resilient despite a more challenging macro environment impacting end-user portfolios in some markets. Sales value remained a structural growth driver of business volumes. Since fiscal 24, we have generated 2.9 billion euros of cumulative incremental BVI from increases in sales value, bringing us very close to our three-year target of more than 3 billion euros. Let me now detail each of these levels, starting with new client development. new client development was particularly strong in S1. We generated a record 0.9 billion euros of annualized PPI from new client acquisition with positive momentum across all three regions. This reflects our strong commercial execution tailored to the specific dynamics of each local market. Just as importantly, performance remained well balanced across plant sizes, with STBs making a substantial contribution and accounting for more than 30% of new development over the semester. In addition, recent M&A contributed significantly, notably in Latin America, where the Santander partnership continued to perform at full speed. The acquisition of Beneficio Facile has also been a step change for employee mobility business in Brazil, driving more than 50% volume growth year on year. This momentum is to be reinforced by the ongoing integration of Kifur in Belgium and in France. With a strong, diversified and actionable pipeline, we are confident in our ability to deliver ahead of our full-year development targets. supported by disciplined execution in the second half. Now, beyond new client acquisition, let's now look at net retention, another key driver of our commercial performance. Over the semester, client loyalty remains consistently at high level, underlining the strengths of our value proposition to our clients. This provides a solid foundation to actively manage our revenue compliance through two key levels. First, increase in sales values, which remain a key contributor, driven by inflation trends in Latin America and the rest of the world, as well as the progressive implementation of recent legal cap increases across Europe. The dynamic is expected to accelerate and continue to support BDI growth in H2 and beyond. Second, the cross-selling, which gained momentum, reflecting our strategy to stand up as a multi-benefit partner for our clients. It is treated as an example by the accelerated deployment of our own employee mobility solutions, as highlighted on the previous slide. At the same time, end-user portfolios remain under pressure in some markets. A more challenging macroeconomic environment continues to weigh on labor market dynamics in some countries, leading to a temporary contraction in the covert employee base. As a result, net retention stood at 99% in H1, excluding the temporarily delayed large employee benefit program in Romania. He demonstrated solid resilience in the current environment, confirming the stickiness of our solutions and the effectiveness of our commercial and portfolio management strategy. And with that, I will now hand over to Stéphane to take you through our financial performance in more detail.

Thank you, Aurélien. Good morning, everyone. It is a pleasure to be with you today. to present our financial performance for the first half of our fiscal year 2026. Let's start this financial review with the business volumes issued on page number 15. Total business volumes issued, or BVI, reached €29 billion in H1-26. Employee benefits remained the growth ending, reaching €10.1 billion of BVI in H1, representing a plus 5.9% organic increase over the semester. It is worth noting that these figures include the deferred rollout to H2 of a large employee benefit program in Romania. Excluding this temporary phasing effect, employee benefit BVI grew plus 6.8% organically in H1. This performance reflects robust commercial execution driven by Latin America and the rest of the world as anticipated, which both delivered double-digit organic growth in employee-benefit BVI over the first semester. Looking now at other products and services, business volume issued declined by minus 20.9% organically in H1. As already mentioned by Aurélien, This performance reflected temporary headwinds in public benefits due mostly to anticipated contract cycle and phasing effects of certain large public benefit programs across continental Europe. Let's now see how such business volume issues translated into total revenues on slide 16. Total revenues reached 655 million euros net 1.6 up plus 5.6% organically or plus 3% on a reported basis including a minus 3.6% currency impact mainly due to activities in Turkey partly offset by a plus 1% scope effect. In Q2, total revenues increased by plus 2.8% organically. Operating revenue reached 573 million euros in H1, up plus 5.7% organically, and plus 3.9% on a reported basis, driven by employee benefits, which continued to deliver high single-digit organic growth, as introduced by Aurélien earlier. Focusing on Q226, operating revenue reached 306 million euros, delivering plus 2.8% organic growth. As expected, growth moderated, mainly reflecting non-recurring effects in other products and services, which I will detail on the next slide. When setting out these one-offs, we continue to see a strong and sustained momentum with operating revenue organic growth running at plus 6.1% in Q2, and plus 8.8% in H1, confirming the quality and resilience of our car business. Lastly, gross revenue increased by plus 5.3% organically, reaching 81 million euros in H1-26. On a reported basis, it was slightly down by minus 2.5%, including a minus 7.9% currency increase. I will come back to the plot revenue growth drivers in more detail later in the presentation. Before that, let's focus on the key drivers behind operating revenue performance over the semester, as shown on page 17. Employee benefits operating revenue reached €500 million in H-126, delivering a solid plus 9.4% organic growth of plus 7.8% on reported basis. Its high single-digit organic performance was fueled by strong commercial momentum, especially across Latin America and the rest of the world, and it was supported by a solid 5% take-up rate. Focusing on Q2 26, employee benefits generated operating revenue of 266 million euros up plus 7.5% organically. Turning to other projects and services, operating revenue reached 73 million euros in H1, down minus 14.3% organically, of which minus 20.6% in Q2. As Aurélien explained it earlier, this decline mainly reflects temporary public benefit impact in continental Europe, combined with the ongoing strategic repositioning of our activities in the UK and the US, including the exit from selected non-core and lower profitability contracts, temporarily weighing on both countries' performance. Let's give a look at the geographical breakdown to see how these operating revenue trends were reflected across regions over the semester on slide 8. Starting with continental Europe, operating revenue reached €250 million in H1-26, corresponding to a minus 0.7% organic contraction and a plus 0.8% reported growth. The trend, excluding one-off effects in public benefit, remained solid, delivering plus 3.4% organic growth in H1. Growth continued to be driven by Southern Europe, especially Spain, which was up double-digit organically, while Horn and Eastern Europe were more affected by the macroeconomic environment, notably with regards to end-user portfolio trends. With the public benefit impact progressively fading, growth trend in continental Europe should improve in Q3 versus Q2 in a still challenging macro context. Turning to Latin America, operating revenue amounted to 229 million euros in H1-26, delivering a strong plus 12.1% organic growth. The region continued to benefit from strong commercial momentum, particularly in Brazil. Growth was driven by increasing penetrations of Plexi solutions across corporates and SME clients, combined with a continued increase in base values supported by local inflation dynamics. In addition, public benefit activity in Chile remains strong, further contributing to the region's strong performance. As the initial regulatory revolution in Brazil have been affecting the group since the beginning of March, operating revenue growth will fall negative in Q3 in the region, as expected. Lastly, in the rest of the world, operating revenue reached 94 million euros in H1, growing plus 8.4% organically, or minus 5.3% on reported basis, including a minus 13.9% currency impact mainly related to the depreciation of the Turkish lira. Turkey remains a key growth driver for the group, supported by local hyperinflation environment, driving higher price values across the client portfolio, as well as by continued penetration through new contractions. As already indicated, performance in the region also reflected the ongoing transformation of our activities in the UK and the US. Excluding this impact, operating revenue grew plus 16.9% organically, highlighting the strength of the momentum. Before contributing back to growth from fiscal 2027, this in-depth transformation is expected more readily on Q3 than on Q2, as the cleanup of legacy activities continues. I will now come back to the contribution of float revenue to the top-line growth in H1 on page 19. Float revenue reached 81 million euros in H1-26, still delivering a plus 5.3% organic growth, including plus 2.2% in Q2. On a reported basis, float revenue decreased slightly by minus 2.5% year-on-year, impacted by a minus 7.9% currency impact, mainly driven by the Turkish Lira depreciation. Float revenue organic growth was mainly driven by higher business volume issues, notably in countries where interest rates remained elevated, such as Turkey or Brazil. This was partly upset by lower interest rates across most geographies, particularly in Europe, following successive interest rate cuts by the European Central Bank. To mitigate interest rate volatility and secure long-term revenue over time, the group continued to actively deploy a flexible investment strategy, increasing exposure to longer turnovers and fixed-rate instruments tailored to local financial market conditions. As a result, the average investment yield reached 6.1% in H126, up plus 10 basis points year-on-year. Looking ahead for the full year, given, one, the current geopolitical environment and the implied volatility on interest rates, and two, the still uncertain impact from regulatory evolution on float balance sheet position in Brazil, feasibility remains limited. As a consequence, our growth expectations for fiscal year 26 float revenue are now fluctuating from slight decrease to slight increase organically. After reviewing the top line performance, let me walk you through the significant profitability improvement delivered over the semester, starting with slide number 20. Once again, this semester's profitability performance clearly highlighted the strong value creation embedded in your business model and supported by your continued cost decision. Returning EBITDA reached €242 million in 2021-26. up plus 12.9% organically and plus 7.7% on a reported basis. Recurring EBITDA margins stood at 37%, increasing by plus 229 basis points organically and plus 159 basis points on a reported basis. This strong margin expansion, well spread across regions, was largely driven by operating performance. Indeed, recurring operating EBITDA, I mean the excluding flow-to-renew contribution, grew by plus 17.3% organically, translating into a plus 268 basis points organic uplift in the recurring operating EBITDA margin, up to 28.1%. Performance reflects, as already explained, strong operating leverage as well as strict cost-monitoring discipline and continuous operational improvement implemented both locally and at group level, combined with top-line and cost synergies from acquired businesses. This strong growth in recurring EBITDA contributed positively to the full income statement, all the way down to net profit, as disclosed on page 21. Below the bar, first, depreciation and amortization, still at minus 62 million euros in page 126, showing a slight increase year-on-year, consistent with the specific phasing of our capex in fiscal year 25, and the additional contribution from newly acquired companies. Second, other operating informal expenses decreased from minus 13 million euros to minus 8 million euros, reflecting limited runoff rationalization cost in age 1.26 compared with residual carve-out cost in age 1.25. For the full year, including Brazil and the structuring, OIE are expected to remain broadly stable year-on-year at minus 25 million euros. Operating profit, or EBIT, reached 172 million euros, up plus 9% in H1-26. Financial income and expenses came in at minus 3 million, broadly stable versus H1 of last year. borrowing costs remained unchanged and were largely offset by interest income generated from non-closed-related tax. For the full year, we expect financial income and expenses to land between minus 15 and minus 10 million euros. Finally, income tax expense reached minus 53 million euros with an effective tax rate broadly stable year-on-year at 31.4%. As a consequence, net profit reached €116 million in 2026, up plus 9.3% year-on-year, deflecting the strong expansion in recurring EBITDA, lower other operating items, and disciplined financial expense management. Excluding OAS, Adjusted EPS group shares reached €0.78, representing an increase of plus 6.8%, including the initial acquisition from the execution of the share-buy-buy program. Let's now take a look at how our solid operational and financial performance translated into a strong cash flow generation over H1 on slide 22. Recurring free cash flow reached 210 million euros in 2026, driven by the combination of a significant increase in recurring EBITDA, a disciplined monitoring of CapEx, and a favorable evolution in working capital exceeding restricted cash. CapEx reached 44 million euros in 2026 of 6.8% of total revenues, stable year-on-year, reflecting our disciplined capital allocation and the continued shift towards a more protect-driven model supported by cloud migration and IT service management. Changing working capital, excluding restricted cash, improved to 85 million euros compared to 43 million euros last year, driven by effective focus on cash collection and management. As a result, recurring cash conversion rates reached 86% in H-126, reflecting the quality of our recurring earnings. This performance keeps us well on track to meet our three-year average objective of around 80% cash conversion, despite expected regulatory headwinds in Brazil in the second half. This strong cash narration has also been a key driver supporting the further increase in the group net financial cash position as we'll see on page 23. Net financial cash position excluding restricted cash reached €1,270,000,000 as of end of February 26th. representing an increase of plus 107 million euros over the semester. This evolution reflected the strong recurring free cash flow, which more than covered the cash outflows, or first, the deployment of our M&A strategy, second, the dividend payment, and third, the ongoing execution of the 100 million euro share-by-buy program, of which around 64% had been completed by the end of H1. Gross financial debt remained quasi unchanged over the semester at a bit less than 1.3 billion euros, mainly composed of the two long-term bond tranches. During H1, we also entered into fixed floating interest rate swaps on part of this bond fixed rate further optimizing the financial structure as part of our assets to liability management strategy in connection with float revenue. And then, this fluxes strong financial cash position and cash generation is also reflected in our unchanged BBB plus rating and stability on Standard & Poor's. And with that, I will now hand it over back to Aurélien for the output.

Thank you, Stéphane. Let me now wrap up this presentation with our outlook, but starting with an update on recent developments in Brazil and the Group's integrated action plan. Since the revised framework was announced, we have consistently executed our action plan in Brazil, making tangible progress across our three work streams in line with regulatory milestones. So starting with operations, from early March, we have implemented the first measures set out in the decree, and in parallel, we've been preparing the rollout of our best-in-class open-loop solution, leveraging our existing forcing capabilities with the deployment starting in May. In addition, we've been deploying a multilevel efficiency plan to adapt our cost base and protect profitabilities, adjusted over time to reflect the different stages of the reform and our business needs. In parallel, we continue to maintain proactive and constructive discussions with Brazilian public authorities, focusing on feasibility, scope, and implementation timelines to ensure a pragmatic and orderly transition. And finally, we continue to pursue longer-term legal actions keeping all options open to support the sustainable development and proper functioning of the TACM work in Brazil. Overall, we are executing our roadmap in line with the plan, and teams both in Brazil and at group level remain fully mobilized. Combined with our strong S1 performance, this supports our confidence in confirming all our financial objectives for PISCO 2026. As a reminder, our fiscal 2026 objectives assume the full implementation of the workers' food program reform for the past from H2. It also incorporates the positive impact of our mitigating actions and the progressive adaptation of our operating model in those years. Within that framework, we continue to expect stable total revenues on an organic basis for the full year. Light organic expansion in recurring VBA margins. This is underpinned by the resilience of our model and by the actions we are taking across the group to protect profitability in a more challenging environment. And finally, recurring cash conversion of around 80% on average over fiscal 2024 to 2026. Overall, our strong Bitcoin delivery combined with our disciplined execution reinforce our confidence on fuller objectives while continuing to manage proactively in this complex geopolitical and macroeconomic context. To conclude, I would say that Plexi once again delivered a strong F1 performance with solid revenue growth, margin extension, and robust cash generation. While we are facing a contained regulatory evolution in Brazil, it does not change the fundamentals of our business model, the strength of our commercial momentum, nor our discipline on execution. And this is why we remain fully confident in meeting all our full-year objectives and procure some long-term value creation for the group. Thank you for your attention, and now with Stefan, we will be happy to take your questions.

Thank you, sir. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. To remove yourself from the question queue, please press star and two. The first question comes from Pravin Gondal of Bakris.

Hi, good morning. Thanks for taking my questions. Firstly, on retention, it's at sort of 99% excluding Romania. Could you please give us a sense when do you expect it to sort of return to positive territory? And then secondly, on CapEx levels? H1 capex were broadly flat year-on-year, but I remember you chatting, you talking about 5.25 capex being lower on temporary sort of delaying IT and tech capex. So given your shift to OpEx-driven model now, what's the right level of capex we should be thinking in medium term? And then finally on Brazil, It's been sort of a few months since the announcement of decree. Since then, have you announced any incremental cost mitigation or pre-negotiation actions which should help you to reduce the impact from the regulations? Thanks.

Thank you, Pradeep. So, we'll start with our last question regarding Brazil. So, indeed, as we said during our presentation, we started the implementation of our mitigation plan, and I'd like to highlight the commitment from our teams locally, and they've been working on two sets of measures. On one hand, the plant rehabilitation for all our clients who've been using the Worker's Food Programme solution, and so it has been a very deep work and a And it's a hard conversation that we've been having with clients, but positive overall. And the second set of measures is much more related to the first. And as we said, we've been running ongoing cost reduction and optimization actions. And we are doing it in accordance with both our business needs and the evolution of our trading model. Perfect. What I would mention among other actions is that we already conducted a first risk-referring initiative in February to start streamlining the organization. Regarding the CAPEX, maybe, Stéphane, you want to take this?

Good morning. As you rightly noticed, This semester, we were consistently with last year, for the first semester, a little bit lower compared to the 9% average of CAPEX versus revenue that we expect and still expect for this year. We are right now a bit lower compared to what we used to be two years ago, with, as you said, this switch to a more OPEX-driven model. However, what happened this semester, there is nothing related to some specific event like what we faced last year with the Carbide. This is more just the pace of our internal project where the pace of activation of the project when they are fully completed was a bit behind. But overall, in the full year, we are fully on track with more than 9% And then in the medium term, it's likely that this percentage will be reduced by still switching to this OPEC-driven model and also with the higher scale of the group as the group will deliver more growth in the coming years.

Thank you. And regarding the net retention, Look, we maintain our 100% objective for the full year. So we really aim at reaching at least 100%. And we will be helped by the base value increase. We mentioned it. value increase on H2 and on the end-user portfolio growth. For the moment, for some specific countries, we expect a positive infliction, but we also have to remain a bit focused within this challenging macroeconomic and geopolitical environment.

The next question is from Hans Leitner of Jefferies.

Yes, thanks for letting me on. A couple of questions from my side. Maybe you can comment on your reference to end-user portfolio decline. Can you maybe double-click on that, talking also a little bit in terms of geographic dynamic, especially I would be interested to understand the European dynamic. And then thanks for talking about Turkey. Maybe you can also... Give us a little bit more detail on your current size of the business operating revenue contribution and how there is the dynamic in terms of market share, et cetera. And then just lastly on Brazil, there's one, it sounds like the incumbent players are looking for a kind of adopting the open loop but also maintaining the closed loop. Can you just like talk a little bit about that where, in which case, the closed loop just makes sense to maintain and what led to the decision? Thank you.

Thanks a lot. I will start with your question regarding Brazil. So in Brazil, as we are sharing with you, we are still having And, you know, constructive discussion with the Brazilian government and clarifying whether there is an obligation and even for the workers' food program and, you know, is it a definitive decision to use only an open-loop system? And so we are trying to share in this discussion. but it's fair to say that if this obligation is confirmed, we still have other products in Brazil that will still take advantage of our closed-loop network, meaning our strong relationship with merchants. And on this topic, just to share with you, we still see some, you know, very good questions. I mean, many, and when I say many, it's thousands of merchants contacting us every month, close to 10,000 merchants who are still on board into the acceptance network of Pluxy. So that's for the, regarding Brazil and the open-loop and closed-loop. Stéphane, and maybe for Turkey.

Turkey, and good morning, and of course, Turkey is, as I think we already said, is one of our key countries. It's among our top six, something like top six countries. It's a dynamic country for us, and this country contributes well to the organic growth of the group with double-digit organic growth, strong double-digit organic growth from this country. And we don't share, you know, precise numbers by country, so I'm not going to tell you, you ask what is the level of collecting revenue. We distribute for France and Brazil as required by the accounting standards. because this country represents more than 10% of group revenue. So you can conclude that 30 is a big one among the top six, but lower than 10% of the group revenue.

And regarding the end-user portfolio decline, so indeed overall, at group levels, we disclosed quite one negative impact. but it's fair to say that it's pretty different from a country to another, from sector, from industries to others as well. We are still penalized in Europe, and many countries such as France, Romania, and Austria. And, for example, in France, we see companies that are you know, some are clearly putting critical projects and investments on hold and they remain quite conservative in their approach to investment and its impact is even more visible in the SME segment. And we saw it even during the Christmas campaign. And yes, after we, I mean, Previously, we are mentioning Mexico. It's still, I mean, the situation is getting better, but it's not back to positive yet. And we have other countries where still the affected segment can show some weak signal, I would say. So that's why, again, I mean, we remain very, very conscious for the Part 2 on this specific indicator.

Thanks for that. I'd just like to explain that because they have been impacted by public social programs. So when you reference that kind of end-user portfolio dynamic, is that also because of the expiry of those contracts? And if you now exclude those public contracts, just focusing on the core meal voucher, would you say that... No, no, I was not referring to those public benefits contracts.

I was really referring to the The employee benefits industry that has the IT automotive industry that in Eastern Europe are under pressure at the moment. Thank you.

The next question is from Justin Forsyth of UBS.

Hey, good morning, Aurelien, Stephane. Thank you so much for having me here. Just a couple questions. If I might, I wanted to come back on Brazil. I think we talked last quarter about some of the puts and takes between the revenue impact that you expect alongside the cost reductions. Just wondered if we could revisit that and confirm the progress there and maybe talk about the different buckets of cost. I think there's a good portion of cost which comes out relating to processing. So meaning when you remove some of the back-end processing costs, As you move to open loop, there is a big reduction in cost as a result of that. I wanted to focus on that other portion of cost, which is the OPEX side. Is there maybe more detail you can give on the specific actions you've taken?

Okay. Thank you, Stephan. Do you want to start?

And you might complete it. Justine, as of right now, during the presentation and answering some of the previous questions. In Brazil, I think we need to make an distinction between the potential endgame and the transition period. So the endgame, and when I say endgame, there is a lot of uncertainty about this endgame, and we explained that right now we took an assumption of a worst-case scenario with a full implementation of the reform as currently drafted in the DP. And this is the end game. And based on this end game, we said that our business in Brazil might be reduced by something like twice. And then, in this case, we would target to adapt significantly our business model in the countries by reducing our cost base And we started to look at it because we are preparing for this situation, and it's almost all lines in the cost base that will be concerned, both processing costs, cost of sale, or SG&E as well. And we said that, again, we did MBM. We would target to keep our EBITDA margin in the country unchanged, meaning that if The pipeline was to be reduced in the end by twice. We have to organize things, to restructure things, so as to be able to reduce our code base by twice as well in order to give this a bit of margin and change. Now, this is not where we are today. As we explained, we are in a transition phase. We are, there are still a lot of uncertainties regarding the scope, the timeline, the technical feasibility of this reform with some ongoing discussion with the government as well. So the industry has engaged with the government and we'll see what will happen. Meaning for this fiscal year 26 and for the second half, we have started to reduce a little bit our cost base as we are going to pay some preliminary aid wins. But we also need to protect the top line of the country in case, in the end, the reform was to be implemented only partially or in a different way compared to what is currently contemplated. Therefore, there will be an impact in the second half of the year, but the potential 50% decrease in revenue and in the code base, this is for a much later period in case, again, the full reform was to be implemented as currently started.

And maybe just to complement on the revenue side, because remember that the growth in the business volume and the performance of Brazil remains very strong in terms of business volume growth. Our uses in the mid-20s were very high. We still benefited from the full impact of our partnership with Santander. We also enjoyed strong performance in cross-selling thanks to our new employee mobility benefit product. And talking about H2, we still anticipate similar dynamics in terms of business growing growth than in S1, i.e., double DT. And for us, this is extremely, extremely important and positive.

The next question is from Andre Joulard of Deutsche Bank.

Good morning. Two questions, if I may. First one about the amortization. Could you give us some more color about the evolution of the amortization during H2 and the year after? Because you have, correct me if I'm wrong, but you have two components. First one about the general evolution of the amortization regarding the CAPEX and the OPEX. And secondly, the plan on M&A. And this is my second question. Your cash net position is even stronger than what it was at the end of last year. Do you have any new plans about the use of this cash or is it not clear? Thank you.

Good morning, André. Regarding, so this is Stéphane speaking, but I just should recognize my voice. Regarding your question about depreciation and amortization, no surprise for us. This is fully consistent with the pace of CapEx in the last two years. If you look at it over the last two years, we capitalized close. In average, there are some differences year on year, but close to 110 million euros per year. It was a little bit more than this in the scale of 24. It was a little bit less in the scale of 25. It will be a little bit more in this year's scale of 26. So this is the pace. And, you know, after a while, we are likely to reach the same level of depreciation year on year. And this is what we are seeing today with a little bit of contribution from the newly acquired company, which you see about companies like FOBI or Skipper. which has some tech assets, of course, we now consolidate the depreciation of the tech platform of this company. And at the same time, in terms of amortization of intangible assets as identified as part of the business combination, no surprise, and this is in line, again, with what we were expecting. Your question on the net cash position, I think it's worth differentiating two cash positions. You have the overall net cash position, and we also disclosed clearly in our activity report what we call this excess, this net excess cash position, making a clear distinction between the contribution of flow filter cash to cash and And if you look at this excess cash, pure excess cash, in the first half of the year, with no surprise, we don't benefit from an improvement, but we face a decrease of about €114 million in the first half, which is really related to the payment of dividend, the execution of the share buyback program, the cash out of interest which is happening at the beginning of the year, in the beginning of September every year, and all these kind of things. So, therefore, the first half of the year for us is always, and if you look at what happened in fiscal year 25 or fiscal year 24, it was the same. The first half of the year, for us, in terms of excess cash, this is a period where we earn some cash. A little bit more this year with the share-buy-buy program, while in the second half of the year, we don't have these significant cash outflows. and building again a strong excess cash position for the year. So just wanted to make it clear, this 107 million Euro improvement in overall net cash position is a combination of 140 million Euro decrease in excess cash and a 240 million Euro improvement overall on the flow in the test solution.

And maybe regarding the question of the new plan and the use of this test, just to confirm that M&A remains a key pillar for growth strategies, we saw it on the acquisition that we completed last year. I think that had an impact on our They bring also some growth synergies, and Beneficio Paci in Brazil has been a very good example with 50% of BV growth in one year. We see the acceleration, and the integration of the more recent acquisition is progressing well. Now we have a good track record, and we believe that we are well positioned to continue executing on our M&A roadmap. And we have a solid pipeline, and again, we want to execute this roadmap in a very rigorous and decisive manner. So we'll come back to you when possible. when it will be needed.

As a reminder, if you wish to register for a question, please press star and 1 on your touch-tone telephone. The next question, gentlemen, is from Mahir Vidani of UBS.

Hey, guys. Thanks for having me on. Just wanted to kind of confirm around the EBITDA guide. You reiterated it. But that was reiteration despite a pretty strong beat in the first half. Is that just implying conservatism, or do you expect perhaps the sort of downward trajectory in 2H and the EBITDA? And in terms of the macro environment, is there a bifurcation between, I guess, the sectors you're seeing the end user portfolio reduction? Is that more the automotive versus the tech? Have you... the conversations that you've had with some of your clients that are reducing the end user portfolio, is that because of AI fears and then stopping hiring for that reason? Or is it more because it's like concentrated towards blue collar macro jobs? So can you just provide a little color there on that?

Yes. So regarding your second question, Indeed, we start having, and we are engaging human proactively with our clients because most of them are wondering what would be the future of their organization. Not many of them have a very clear answer, but you know what makes Tuxi so resilient is the the diversity of our clients' portfolio because we are serving small but also very large clients in the private sector, in the public sector, and all of this in 28 countries. So that does explain the resilience. And within this range of clients, we have also the future giants, you know, the ones who will take advantage of AI. I mean, in order to grow with it. So, this is what I can tell you, but, I mean, if we look at industry by industry, it's hard to say that at the moment, indeed, the automotive industry, the IT industry, and part of the interim industry, are currently under-produced because their clients are using some of their projects that are related to their own activities.

Regarding your question about guidance and EBITDA, so this is not, Of course, all the teams are already focusing on doing their best in order to always do better, but this is what we currently have in mind. And if I have a bit more color, we expect all the regions to go on improving the epidermal with a similar trend compared to what we delivered in H1, with one exception, one big exception, which is Brazil. As I explained, in Brazil, we are not engaging right now in the pool of restructuring. We are making sure that we are able to benefit from all potential scenarios, so there is a little bit of cost reduction, but the reform of the short term, the second half of the year, will weigh a lot on the EBITDA margin of the group. And this is because of Brazil that in the second half of the year we will face a lower EBITDA margin compared to the previous year. So overall, but the improvement we delivered in H1 is going to be offset by a deterioration of the EBITDA margin in the second half of the year. Not as big as what we delivered in H1, so that will be in the end the remaining small improvement in the EBITDA margin for this year.

There are no more questions registered at this time. Back to you, Mr. Bill, for any closing remarks.

Thank you, and thank you for your attention this morning. In closing, I would like to reiterate our confidence in the future, supported by a strong process, and reiterate as well our continued focus on disciplinary concerns and long-term value creation. And with that, I wish you all a very good day. Goodbye.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.