AEXAF - Atos SE (AEXAF) Q2 2023 Earnings Call Transcript
2023-07-28 19:40:24 ET
Start Time: 03:00
End Time: 03:52
Atos SE (AEXAF)
Q2 2023 Earnings Conference Call
July 28, 2023, 03:00 AM ET
Company Participants
Nourdine Bihmane - Group CEO and Co-CEO, Tech Foundations
Philippe Oliva - Group Deputy CEO and Co-CEO, BDS and Digital
Diane Galbe - SEVP
Nathalie Senechault - CFO
Conference Call Participants
Frederic Boulan - Bank of America
Alexandre Faure - BNP Paribas Exane
Laurent Daure - Kepler Cheuvreux
Presentation
Operator
Hello, and welcome to the Atos H1 2023 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded.
I would like to hand you over now to the Atos management team. Please go ahead.
Nourdine Bihmane
Hello. Good morning, everyone, and thank you for joining us to discuss Atos H1 '23 results. I'm Nourdine Bihmane, Group CEO and Co-CEO in charge of Tech Foundation, and today I'm joined with my colleagues Diane Galbe, Group SEVP; Philippe Oliva, Co-CEO in charge of Eviden; and Nathalie Senechault, our CFO.
In today's call, I will first share the highlight of the Group performance in H1 '23. Philippe and I will then cover the performance of our two businesses, Tech Foundation and Evidian. After that, Diane will provide an update on our strategic transformation project. Then, Nathalie will go through the detail of our financial performance in the first half of this year. And lastly, we will discuss our outlook before going to Q&A.
So, overall in H1, we have kept our momentum and continued to successfully drive our operational improvement. This ongoing improvement has translated into robust H1 results. In particular, we experienced solid commercial traction at the Group level in Q2 with 112% book-to-bill. This is a significant improvement compared to Q1, which was at 73% and evidences were relevant of the go-to-market strategy that are implemented at both Tech Foundation and Evidian.
We also delivered a robust organic revenue growth at 2.3% and brought our operating margin to 3.8%. Consequently, we have revised upwards our full year outlook for revenue growth and confirmed our operating margin outlook. We will come back to it at the end of the presentation.
Our free cash flow in H1 was minus €969 million and should be broadly similar over the full year. This reflects the high pace of execution of a major transformative action we are carrying out through the year; the margin expansion, including restructuring and tackling legacy underperforming contracts, as well as internal carve-out activities and working capital normalization.
We did achieve significant milestone in our transformation project in July, notably the separation of our internal operation into two entities. And we have fully secured our €700 million plus divestment program, which we are now expanding by an additional €400 million. All of this was completed within a 12-month timeframe.
Let's now turn to Tech Foundation. As you remember, we recently hosted an Analyst Day that provided to the Tech Foundation team an opportunity to shed more light on our business and on the clear value creation plan that we have in front of us. We have redefined our portfolio around core activities in order to address a wider market and focus on the higher growth segments in order to deliver the core revenue grow up to 2% in the next two years and accelerating hereafter.
We also highlighted our comprehensive margin expansion plan expected to deliver €1.2 billion in gross benefits by 2026. That will bring our operating margin to industry standard. And as of today, we have already delivered 42% of its objective. It has been a very rich and productive first year for Tech Foundation. The strong execution of our plan led us to upgrade our mid-term ambition, which I'll detail at the bottom right of the slide.
Another key aspect highlighted at the event was how AI is already and will continue to enhance all aspects of our business. At Tech Foundation, we are actively embedding several Gen AI platforms to improve our internal and external operations. In our offering, for example, in hybrid cloud, Gen AI will improve the management of IT infrastructure by automated incident triage, ticket routing and problem resolution. Also, Gen AI is a key technology in providing coding assistance to our infrastructure as a code practice.
In digital workplace too, Gen AI is changing the way we deliver our services with more personalized context aware experiences, knowledge management and co-pilot offering readiness. We are developing new Gen AI offering. Altogether, we are already having highly industrialized Gen AI platform available with two new solutions already released and we are working on a few additional specific partnership. More to come. Many use cases are bringing benefit not only in our sales function for crafting proposal, but also launching automated bid and RFP, response generation or in procurement with supplier assessment. Overall, Tech Foundation is fully embracing generative AI technology in our offering in our operation for our customer and for our internal efficiencies.
Turning back to our H1 results and starting with book-to-bill. Book-to-bill in Q2 was 106% compared to 67% in Q2 last year. We exceed the 100 mark for the first time since the Tech Foundation business line was created. This is quite an achievement and our refocused go-to-market strategy is clearly showing some tangible results. We improved the upselling on our top 100 accounts and successfully drove revenue retention with major long-term renewal in Q2. Commercial traction improved, particularly in the U.S., where we needed the most to rebuild sales teams and commercial pipeline which we are doing and it is starting paying off.
Throughout Q2, we won several high profile contracts, including the leading entertainment company based in the U.S. where we extended for five-year digital workplace contract and network operation. We are talking about a significant contract value with more than 80,000 clients with highly automated resolution. We renewed also a contract with Texas Department of Information and Resources where our private cloud and Mainframe-as-a-Service model delivers adaptive, resilient, cost effective and secure services to over 35 state agencies.
Another one with Honda, we renewed for three-year contract to continue their modernization and delivery of their digital workplace services for more than 3,500 associates. And lastly, we won the contract extension with the European Commission DIGIT after 15 years of successful collaboration to accelerate their IT transformation project. I will take a moment here to thank all our customers for the deep relationship we have been able to keep and maintain and grow during the years.
If we move to the next slide. Tech Foundation generated revenue of 2.9 billion in H1. The core business was stable as the decline of hybrid cloud and infrastructure continued to soften while digital workplace and technology advisory posted a moderated growth. In parallel, we kept reducing our non-core activities, which I'll remind BPO and all the hardware and software we sell as part of our portfolio reshaping strategy. As a result, we posted a managed organic decrease of minus 1.6% in total revenue for 2023.
As discussed during our Analyst Day, we are making steady progress on margin expansion plan, targeting our €1.2 billion in gross benefit by '26. As of June 23, 32% of this target has already been achieved compared with 21% at the end of March, meaning that we had a very productive Q2 with an additional €120 million gross runway benefit delivered, partially offsetting by cost inflation and backfilling and the impact of the revenue decrease. This achievement was primarily driven by headcount reduction in high-cost countries, 900 headcount in total during H1 and the continuous focus on addressing underperforming accounts which accounted for 8% of our H1 revenue versus 9% last year.
This concludes the Tech Foundation section, and I will now pass it to Philippe.
Philippe Oliva
Thanks, Nourdine, and good morning, everyone. So like Tech Foundation, Eviden had a robust first half. Strategically, we continue to expand our unique sovereign capabilities around data and our technology capabilities, as well as cementing the deep industry expertise that we have and which is enhanced by an efficient delivery model and a stronger IP portfolio. In H1, we opened three new cloud centers in India and in Eastern Europe that reinforce our end-to-end cloud offerings from engineering, application migration to operation and obviously improving the efficiency and competitiveness of our delivery capabilities.
We also launched very significant capabilities that we're calling AIsaac Cyber Mesh. It's a cutting edge cybersecurity detection and response solution powered by generative AI technologies and that we deployed in partnership with AWS. We also opened a new campus and leading research and development center in Grenoble in France, with the capacity of 1,300 people bringing expertise in artificial intelligence, decarbonization, and obviously, our high-performance computing capabilities.
Lastly, we are getting our digital identity solution ready for what is called on the market the post-quantum era. Notably, our Eviden leading product on identity management or encryption will evolve to be adapted to quantum threats by the end of this year. And that's an announcement that you've seen a couple of weeks ago.
AI is a domain that we've been working for years. As you know, we already drive solution in infrastructure with our advanced computing solution, where we have specific high-performance computers with AI application, on-premise or in the cloud for large resource center, healthcare and also application domain, like climate change monitoring. Of course, Gen AI is a fantastic opportunity on the market and also for us, and we're embracing it.
So what is the Gen AI offerings we are building? We are currently building offerings to help our customers fully leverage Gen AI from application to orchestration capabilities, new business models, and obviously impact on the infrastructures. This also includes a very practical way and pragmatic capabilities on how to roll it out in a corporate environment. That means tackling the regulatory and compliance, making sure that the datasets that we're using are highly secured, and obviously, ensuring the highest level of data encryption and security on those environments.
This includes local solution and infrastructure from supercomputers to the edge, as many customers want to leverage Gen AI in a private, sovereign and high end secured environment. In Europe, we are the unique player to be able to provide those kind of capabilities and that's really something that we are continuously insisting on validity to the fact that [indiscernible] is so unique remaining hardware manufacturer in Europe.
Our solution in the cloud, notably with our key partners, Microsoft, OpenAI, Google Cloud, and AWS, we are already supporting world leading customers in this domain and with a specific reference that is currently live for patient data management in the U.S. We need to use industry use cases. We know that we are actively developing on the market many, many our use cases related to product hyper personalization, knowledge management, patient assistance, or risk assessment and secure development capabilities and improvements.
What we're doing differently is that we are already deploying internally what we call our coding acceleration and developer assistance solution to also drastically improve our cost-based effectiveness and obviously our time to market to ensure its fast deployment of new application to our clients. And of course, we are working to apply Gen AI to ourselves. So internally, we say we are drinking our own champagne.
We are driving Gen AI project in consulting and sales, in marketing development, in obviously application development, but also in the knowledge based model that we're calling Genie. That is basically the capitalization of all the IP that we are trading internally to ensure also a fast understanding and rollout of our core innovative solution.
We all know that Gen AI is a revolution. We all have to leverage it. But what is putting us in a unique position in Europe is really related to our first dealing with 8,000 data experts and our unmatched number of key patterns, such as our 260 patents in cognitive solution, that means artificial intelligence machine learning, and also our 100,000 patents in advance computing and more.
Now let's go back to our H1 performance and starting with the book-to-bill one more time. Our commercial momentum remained really, really strong in Q2 with 119% book-to-bill, well balanced between digital and big data and our cybersecurity business. We maintain our focus on what we're calling short-term signings. That means ensuring that our backlog is really well positioned to extract fast revenue yield capability.
Interestingly, our [indiscernible] reflect the unique differentiating factors that set Eviden apart. Highly synergetic portfolio, we won as an example, we will have contract with Coca Cola Hellenic Bottling Company to provide both application modernization, public cloud migration, data analytics, AI and machine learning and everything protected with our cybersecurity portfolio.
We also announced and demonstrating our leadership in HPC. We won our first major HPC contract outside of Europe with the Indian Ministry of Earth and Science for climate change monitoring. So it's really, really something that we can be proud of, because that's drastically changing the way our innovation is recognized on a global basis.
Sovereign cloud offerings, we won a contract with the European engineering and technology company to deliver first of its kind AI-as-a-Service through Eviden’s Nimbix Portal, which is a key to the sovereign cloud strategy and the blueprint for further AI offerings developments.
We then also demonstrate our deep expertise in selected industries, which is allowing clients to really recognize our differentiated capability in very diverse sectors, including energy, utilities, healthcare where we recently won the major U.S. companies to provide public cloud migration to Microsoft Azure, combining application development, and cybersecurity.
Now let's look at our revenue and operating margin. Eviden delivered strong organic revenue growth at 7% in H1. Growth was strong in both cybersecurity and advanced computing as well as digital and cloud business lines. Organic growth improved significantly compared to the same period last year, driven by smart platform and cloud transformational services, along with very positive trends in the public sector and military and defense activity in Europe.
Our growth in Q2 is optically lower than what we deliver in Q1. This is a reflect of higher comparison basis plus 270 basis points higher than in Q1 and fewer net working days in Q2, but our underlying business trends in Q2 remain as solid as what we delivered in Q1.
Eviden's operating margin was 5.3%, a substantial increase compared to 3.5% in H1 2022. Despite continued cost inflation, we demonstrated improvements across all activities, resulting from effective cost take-out actions, portfolio rationalization and higher cost of absorption in our advanced computing and manufacturing capabilities.
With that, I now turn it over to Diane.
Diane Galbe
Thank you, Philippe, and good morning, everyone. So as we mentioned in the highlights, H1 2023 was marked by significant milestones achieved in our transformation. One of the main achievements was the completion of our internal operation carve-out. This is a decisive step in the execution of Atos transformation. We achieved this in the 12-month timeframe.
As we announced to you back in the Q1 results, we are now in a position to confirm that we completed in July as planned all local carve-outs and underlying separation activity, covering more than 99% of the Group's revenue. As a result, Tech Foundation and Eviden are fully operational as separate entities within the wider Atos Group.
It means that we have now delivered thanks to the great engagement of our teams, our customers and our suppliers the operationalization of the local legal entities in all geographies, the transfer of our employees contracts, assets to name a few is now completed. Tech Foundation and Eviden have now distinct operating models, a go-to-market strategy and a focused portfolio. The internal separation is now done. Atos has therefore completed the rollout of its new client-centric organization and can now focus on innovation and performance improvement with consistent value delivery.
The other significant achievement of Q2 was the fact that we fully secured our non-core business divestment program set during the Group's Capital Market Day back in June 2022. So six transactions featured on this slide, four of which are already completed, were carried out efficiently and have good financial conditions for the Group. This demonstrates our ability to execute swiftly as well as the attractiveness of our assets.
The results are more streamlined portfolio for both Tech Foundation and Eviden and over €700 million of total proceeds secured, which contributes to the financing of our transformation. Building on this success, we plan to expand our divestment program targeting an additional €400 million in proceeds that will enhance our financial flexibility.
When we devised on our program a year ago, and as we refined the scope of the two entities, we identified additional opportunities to rationalize the portfolio of both Group, and some of them have already received expressions of interest. We will, of course, keep you updated on our progress as we move forward.
Turning now to headcount evolution. At the end of June 2023, total headcount was 107,000 people, down minus 3.4% compared to end of December 2022 and down minus 1.9% excluding the impact of divestment. In H1, Atos welcomed more than 8,400 new employees. Our hiring is selective this year and our ability to attract the right talents across the world is very good.
The job market, as you know, is highly competitive, particularly in cybersecurity, cloud or data sciences. But the technology and image of Atos recognized by the great place to work certification enable us to onboard as many talents as required by the business.
Another highlight is our voluntary attrition. It remains low at 15% in Q2, which is slightly lower than the industry standard. This is another evidence of the high level of employee satisfaction and commitment at Atos. The reduction in Group accounts during H1 primarily resulted from intensified restructuring as part of our ongoing transformative actions as well as performance-related terminations, resulting in a total of 2,404 exits.
Now I turn the mic to Nathalie. Thank you.
Nathalie Senechault
Thank you, Diane, and good morning, everyone. If we take the broad view on Atos financial position, the Group has made notable progress during the past six months. Revenue was 5.5 billion, pretty stable year-on-year with a robust organic growth offset by divestment and foreign exchange.
Operating margin was 212 million or 3.8% of revenue, more than tripled compared to H1 2022. OMDA was up by 32% to €487 million or 8.8% of revenue. Normalized net income, excluding exceptional items, was minus 113 million, broadly stable year-on-year. And reported net income came out at minus 600 million. I will detail that later in the presentation.
In terms of cash generation, we did improve our underlying cash flow from operation in H1 2023 as you will see, and this was offset by the ramp up of transformative actions and associated costs as we are executing at a high pace on all fronts this year on restructuring, internal carve-outs, tackling underperforming contracts, as well as working capital normalization. As a result, free cash flow was minus 969 million in H1.
Now let's take a deeper dive into each key metric. Starting with the revenue evolution in H1, Group revenue was €5,548 million in H1 2023, up to 2.3% on an organic basis, a combination of a strong 7% growth at Eviden and a managed decrease of minus 1.6% at Tech Foundation, as Nourdine and Philippe explained. Scope effect was at minus 1.7%, primarily reflecting the divestment of Atos Italian operations, finalized on April 2023, and of Russian activities in September '22. Foreign exchange had a limited impact at minus 0.8%, mainly reflecting the depreciation of the Pound Sterling against the euro over the period.
Turning now to our operating margin on Slide 22. Atos' operating margin was €212 million in H1 or 3.8% of the revenue, meaning that we tripled, in fact we multiplied by 3.5x our operating margin between H1 '22 and H1 '23. This is the combination of strong improvements at both Tech Foundation and Eviden, as Nourdine and Philippe highlighted earlier.
Tech Foundation with a steady delivery on our margin expansion plan that generated 230 million of gross increment in operating margin year-on-year, offset by cost inflation, backfills and the impact of lower revenue. Eviden reaping the benefit of cost take-out actions, notably on staff cost, and portfolio rationalization as well as a better fixed cost absorption in advanced computing sell [ph] to higher revenue.
Moving now to our income statement from operating margin to net income. The main items to highlight are as follows. Reorganization, rationalization and integration costs amounted to minus €464 million in H1. These are costs associated with Atos' transformation plan. These high amounts reflect a significant accrual for new restructuring plan in Germany, a Tech Foundation where we have provisioned the whole plan that will be executed over time.
Second, restructuring costs incurred in the period in other countries. And finally, costs associated with internal carve-out that was successfully completed at the end of H1. Therefore, RRI costs should logically be much lower in H2. Other item for minus €53 million includes legal costs and impacts of vendor contract renegotiation.
Lastly, net financial expense at minus 103 million, these are lower than H1 last year numbers which included a loss of minus 109 million relating to the disposal of our Worldline shares, which I will remind you generated €290 million of net profit for the Group. Cost of debt was minus €40 million, increasing compared to minus €30 million in H2 '22 as we have now drawn most of our bank facility.
Moving now to H1 cash flow statement from top to bottom. OMDA improved by circa 120 million, reflecting the strong recovery of our operating margin. CapEx and leases were strictly controlled and reduced by circa 40 million. Change in working cap was minus 645 million on top of our usual seasonality pattern, whereby we have a significant outflow in H1 and inflow in H2 we had one of the impacts of working capital normalization for approximately 250 million in the context of the Group transformation. That was anticipated, if you remember, back in June 2022 at the Group Capital Market Day. These impacts relate to factoring which will reduce trade creditors.
Adjusted for this normalization impact, our cash flow from operation was minus 200 million, which represents 144 million improvement year-on-year, reflecting better underlying of our operational cash generation thanks to better OMDA and a strict control on CapEx and leases. Cash RRI amounted to minus 274 million in H1 '23 corresponding to transformation costs linked to restructuring and carve-out execution.
Lastly, other changes from minus 165 million relate to losses on legacy contracts that were provision at the end of '21 and '22. This lead us to a free cash flow of minus 969 million in H1 2023. H2 should, of course, be much better as Nourdine will explain. If we compare our H1 free cash flow to that of last year, which was at minus 555 million, the difference comes from, first, working capital normalization impact for circa 250 million, the planned increase in RRI which reflects the ramp up of our transformation actions, higher interest and tax and the other item which I just described. These four items offset the 144 million underlying improvement in our cash from operations.
Looking now at the Group net debt. In addition to the free cash flow of the period, we received proceeds from disposals for 218 million. This is mainly our Italian operation that we sold to Lutech. The transaction was closed in April. Including FX and other items, net debt increased to €2.3 million. This amount is a net of 2.6 billion gross cash and 4.9 billion in gross debt. In addition, we had at the end of June 0.3 billion of undrawn bank credit facility.
With that, I will turn it over to Nourdine to discuss our outlook.
Nourdine Bihmane
Thank you, Nathalie. So as I mentioned in the introduction, our performance in H1 has reinforced our confidence in our business. Based on the revenue growth delivered so far and on the visibility that we have for the second half of the year, we are upgrading our revenue growth outlook. We now expect to grow organically between 0% and 2% compared to our previous expectation between minus 1% to plus 1%. The dynamics remain the same.
We have an acceleration of Eviden organic growth compared to '22 and the continued managed reduction of Tech Foundation revenue resulting from the portfolio reshaping while our core business is fully stabilized. As for the Group operating margin, our outlook remains unchanged at 4% to 5%. Eviden operating margin is expecting to increase compared to '22, while Tech Foundation operating margin is expecting to stay in positive territories.
In terms of cash flow, while the minus 969 were a pretty significant drop, I want to remind everybody that it was aligned with what we mentioned in the Capital Market Day last year knowing that we were going to accelerate the restructuring and the cost of separation and as well transforming or normalizing our working cap. So for H2, we will be broadly breakeven, like Nathalie mentioned, including the underlying operational improvements. So for the full year, we will be broadly in line with what we delivered in H1.
Before going into Q&A, I want to thank all our employees. It has been a year since we embarked on this ambitious transformation process and their dedication so far has been extraordinary. This concludes our presentation. We will now take your questions. Operator, back to you.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions]. Your first question comes from Frederic Boulan at Bank of America. Frederic, your line is open. Please go ahead.
Frederic Boulan
Hi. Good morning. A couple of questions please. First of all on your leverage. So net debt is now 2.3 billion. How do you see net debt finishing the year considering your commentary on the issue free cash flow breakeven? Any disposal in there or other items. And then if you can share details at the stage on how you envisage the gap structure of the two units? Second, if you can comment on the spinoff, any next steps in terms of bondholder agreements, et cetera, that we should look for? Any timing you can give us on that. And then, if I may, around Eviden if you can give us a bit of color on trends. We've seen a lot of slowdown across the industry from your competitors. If you can comment a little bit on what to expect for H2 and how you see the Group performing versus your 7% target you presented for the business? Thank you.
Nathalie Senechault
Hello. So on your first question on the leverage, so as you rightly pointed out, we have now a net debt of 2.3 billion. We anticipate free cash flow as we mentioned for H2 breakeven. We also anticipate some proceeds from our disposals. So overall, based on this, we have sufficient headroom in terms of our banking covenants. On your second question, the capital structure of both NTT [ph], we are currently working on it. And we will give more information closer to the execution of the separation. On the third question, Philippe?
Philippe Oliva
Yes. So on Eviden side, so first in terms of trends, what we are seeing clearly here is a very strong dynamic on our cybersecurity and advanced computing business. We are still outperforming the market in terms of cybersecurity penetration and similarly [ph] related to the application of artificial intelligence in our portfolio. Our managed detection and responses are really successful on the market. On the digital side, despite the macroeconomic alignments, we are remaining confidence on the trajectory that we've defined in terms of revenue generation in H2, so I'm not seeing any risk related to the trend that we were expecting. So that is merely related to the fact that we're also drastically -- you probably remember we said clearly that we're stopping running after everything that is active on the market and really capitalizing on our cost trends, especially around, let's say, the rise of sovereignty requirements and the global deployment of our end-to-end solution from the company import down to let's say a cloud migration and total operations. So that's the global situation. So no specific alarm sign related to the macroeconomic alignments. I'm really confident on the fact that we are keeping our trajectory in terms of CMD trend that we presented a year ago.
Frederic Boulan
Okay. Thank you.
Operator
Thank you. Please stand for your next question. Your next question comes from Alexandre Faure at BNP Paribas Exane. Alexandre, your line is open. Please go ahead.
Alexandre Faure
Good morning. Thank you for letting me on and congratulations on finalizing [indiscernible]. I've got mostly housekeeping questions, I'm afraid. Firstly, on the reorganization and rationalization, integration costs, about 0.5 billion in H1 and you talked about having [indiscernible] cost upfront for the German restructuring. Does it mean that RRI costs will be minimal in H2, and that in 2024 that might be lower than the 400 million you initially outlined at the June 2022 CMD? My second point is on provision. I think there was about 750 million of those at the end of 2022. Am I right to think that this actually went up in H1? And also, should we expect all those provisions to have a cash impact and could you share a timeline there? Then my next question, again, apologies, it's a long list. You had €250 million of cash out around working capital normalization I think you called out. In June '22, you talked about €400 million of a potential impact from working cap normalization. So do you think there's a remainder that needs to come through or you reckon [indiscernible] it's actually a smaller amount that you anticipated? Also wondering on what's the rest of the working cap outflow in H1 of the 400 million that remains? And lastly, could you share the amount of receivable factoring as it stood at the end of June 2023? And I'm finally done. Thank you very much.
Nathalie Senechault
So I'll start on the first point of your questions. So on transformation costs, H2 will be much more limited than H1 in terms of P&L. You understand that '23 is for Atos and for the transformation program very, very strong year. We have all our restructuring plan of carve-out, so very strong year. We have a big H1, which clearly in terms of P&L will be much lower here in H1 in terms of P&L. On the cash impact, so H2 will be similar to H1 in terms of transformation cash out. So all-in-all, we expect roughly 500 million of transformation costs for the full year, both in terms of P&L and cash impact.
Alexandre Faure
Got it. And more broadly when it comes to the whole provision [indiscernible] at the end of -- you saw that helping with 2023. I'm just wondering when the rest of it will start impacting the cash flow statement as well.
Nathalie Senechault
Yes, so the provision will be disclosed in our [indiscernible] that will be published early in the Group. Cash impact was approximately €90 million in '22. This will possibly be higher this year as we are addressing [indiscernible]. And our free cash flow guidance for this year includes the same amount of cash of provision, same amount as 2022.
Alexandre Faure
Okay. And on working cap normalization, so your [ph] 250 million in H1, do you think you'll still get to €400 million of cash out related to working capitalization?
Nathalie Senechault
Yes. So you remember back in June '22 in the Capital Market Day, we announced that we may have 400 million of working cap normalization. We have it for 250 million this first semester. And the best of our estimate for the full year is that we would reach 400 million.
Nourdine Bihmane
And maybe just to complement on that, Alexandre. We are splitting the businesses. And as we announced last year, we anticipate it to normalize the two working cap to the future of both companies. So it was really part of the plan we designed and we are exactly executing what we mentioned last year.
Alexandre Faure
Right. Thank you. And very lastly, when it comes to receivables factoring, I know it was showing in the bigger reporting a few days, but [indiscernible] as early as today?
Nathalie Senechault
Yes, the amount is 715 million.
Alexandre Faure
715?
Nathalie Senechault
Yes.
Alexandre Faure
Thank you very much. And thanks again for making the time.
Operator
Please stand by for your next question. Your next question comes from Laurent Daure - Kepler Cheuvreux. Laurent, your line is open. Please go ahead.
Laurent Daure
Yes. Thank you. Good morning, ladies and gentlemen. So I only have three questions. The first one is on the trajectory, if you could be a bit more precise on the [indiscernible] now generating in cyber NHPC [ph]. Are you going double digit organic? My second question, I would like to come back on this working cap normalization. It's not only we un-boxing [ph] factoring, it is more than that. And do you plan to reduce over time, so non-recourse factoring to zero, or do you want to keep some factoring in your balance sheet? And the third point is if we take the end of the first half, what I really need to have to model the coming year is from mid 2023 to let's say 2026, how much restructuring charge and maybe provisions for [indiscernible] still to come? And same for the cash, how much cash outflow to the company still needs to spend over the next two years and a half? Thank you.
Philippe Oliva
Hi, Laurent. It's Philippe. So I start with the trajectory and I know that you're really impatient let's say to get more break down in terms of our financial figures between the different business lines of Eviden. As I say let's say in the course of Q1 and I mentioned that quite rapidly in their earning call today, we are outperforming the markets on both the HPC dynamic and the cybersecurity. So it remains very strong revenue growth. We are still seeing the same trend in H2. Backend loaded in terms of operating margin improvement also as well as the same profile than what we had in the H2 of 2022. So still something to provide in terms of operating margin let's say improvement, but quite confident especially as I said on the revenue growth strength for H2.
Nathalie Senechault
Laurent, on your question on factoring on working capital normalization, so we have 250 million of working cap normalization out of which one 100 on factoring and the rest on the supplier side. On your question whether we will maintain the level of factoring, the idea is to keep this amount of working cap normalization level of [indiscernible].
Laurent Daure
[Indiscernible]?
Nathalie Senechault
It's difficult to say right now exactly, but it should be around this number.
Laurent Daure
Okay, so it's really the day to day working cap, because -- the reason why you're share has done so much today is in fact you already cleaned [indiscernible] supposed to have cleaned the last part of the working cap 18 months ago. I remember there was already a big impact. So does it mean that the working cap was massively optimized two, three years back massively? Is it the case then?
Nathalie Senechault
The fact is that we have anticipated normalization of 400 back in June, and we see a normalization of 250 million in H1. In end of the year, our best estimate is that we will have 400 million.
Nourdine Bihmane
I think just to step in, we cannot really comment on two or three years ago. I think, Laurent, [indiscernible]. Anyhow, at the initial of our project, we decided to normalize the working cap. We cleared it by mentioning that we will do 400 million before the end or before the final split. We already achieved 260. I think a little bit more to come. And that's really the project of the entire transformation project that we launched.
So maybe with that last sentence. Thank you, everybody. And I will propose we stop here. And I wish all of you nice holidays and talk to you back in September. Thank you.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
For further details see:
Atos SE (AEXAF) Q2 2023 Earnings Call Transcript