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Ladies and gentlemen, welcome to the Edenred Q1 2020 Revenue Conference Call. I now hand over to Mr. Bertrand Dumazy, Chairman and CEO. Sir, please go ahead.
Yes, good morning. Bertrand Dumazy speaking. Thank you for being with us to comment the results of our Q1 performance. I propose that we move to Slide 2 of your slide show. The 3 ideas I want to share with you are the following ones. First of all, we are highly committed to supporting our ecosystem through the consequences of the COVID-19, and we have 5 priorities. Priority #1 is to protect our employees. Priority #2 is to ensure seamless business continuity. Priority #3 is to swiftly design innovative specific-purpose payment solutions. Priority #4 is to respond fast with the launch of EUR 100 million savings plan and a downward revision of our 2020 CapEx. And Priority #5 is to launch our More than Ever relief plan with multiple initiatives already live worldwide. The second thing I want to share with you is our Q1 2020. We started really strong into the year, and it has been partly offset by the first impacts of the lockdown measures. And the third idea is our outlook. What we want to share with you is we are not immune in this very uncertain environment, but we are resilient, thanks to our strong fundamentals. Yes, we expect a marked decrease in business in Q2 linked to some Employee Benefits revenue being delayed to H2 and some revenue being lost. However, we have some resilience, thanks to strong fundamentals, and I will quote 5 of them. First of all, we are a fast-growing business and we have a robust balance sheet. Second, we have an offer covering essential needs, such as Eat, Move, Care and Pay. Third, we have a leading position on vastly underpenetrated markets. Fourth, we demonstrated and we demonstrate that we are an agile organization with local corporate entrepreneurs and scaling capabilities. And finally, the fact that we are a very digital companies allows us to ensure relentless innovation around specific-purpose payment solutions. So if we move to Page 4 and to our Priority #1, protect our employees. What you need to know is more than 95% of our employees are working from home, and we have only 17 employees who declared to have been affected by the COVID-19. So priority is to protect our employees and we are lucky due to the very fast ramp-up of working from home. We are lucky to have so few cases for now. So far, so good. Priority #2 is to ensure seamless business continuity, thanks to digital solution. As you may remember, more than 83% of our business volume was digital in 2019. So thanks to this high level of digitalization, we are able to serve our customers as usual via our digital solutions and distribution channels. We are able to deliver our services. We are able to settle the transactions. We are able to propose contactless payments in-store or online for enhanced safety. So people are able to use e-commerce capabilities. And we are able to propose digital value-added services such as geolocalization to drive the traffic or -- and to drive the traffic to partner merchants that are still open. And we gave you an example of what we are doing in Portugal. If I move to Slide #6. We see that under these lockdown measures, we have also some tailwind for the adoptions of Edenred's digital features. So we are -- we were digital at 83% in 2019, and we saw an increase of 9 points in Employee Benefits in Q1 2020 versus Q1 2019. So we are able to propose a seamless ordering and loading of user of digital accounts. We are able to propose flexible use matching the new working trends. So we are able to propose solutions for home office for flexible working hours. We saw an explosion of our contactless payments, plus 131% in Europe in the last month. And now we have more than 50 meal delivery online partners and so we are growing fast our digital offer. And in fact, we have 15 new partnerships in 11 countries with meal delivery and takeaway and food technology platforms. So it's a good fit with the new consumption trends and short-term health needs. So for example, in Brazil with Uber Eats, the total number of orders has been multiplied by 5 since March. So it's the direct application and concretization of the digitalization of the ecosystem of Edenred. The third priority, Page 7, is to design innovative and specific-purpose programs in record time. We gave you 2 examples. One is what we call the COVID-19 voucher in Italy, that has been specifically designed for hard-hit citizens. And in fact, you have in Italy right now EUR 400 million of subsidy that are distributed by cities across Italy to be spent on food by citizens in greatest need. And so we are in charge of this program. Another example is in Brazil where it has been launched for now 27,000 cards that has been issued so far and distributed to vulnerable families living in Brazilian favelas since March, mainly in São Paolo, Rio and Belo Horizonte. So our ability to design very fast new specific-purpose program in record time is our third priority. If we move to Page 8, our fourth priority is to closely monitor and protect our P&L and cash flow. So as to the P&L, we now have top line rolling forecast by country and by solution. And as to the OpEx, we launched a program of savings of EUR 100 million to mitigate our sensitivity to the consequences of the COVID-19 epidemic. As to the cash flow, we have revised down our 2020 capital expenditure. We are strictly monitoring our working capital, especially on client credit and payment terms, to continue to ensure a negative working capital. And we don't have any pressure on the float, the float coming mainly from our Employee Benefits business line. Because when we look at the inflow, which is the client issue volume and the outflow, which is the spend volume in the merchant network, what we observed during March and the first 3 weeks of April, they are evolving broadly in the same proportions globally. And remember that the float valuation has no impact on free cash flow in countries with some solutions and their restricted cash requirements. For example, the Ticket Restaurant in France because, in fact, the float we get from this activity is restricted cash. So the evolution of that doesn't have an impact on our free cash flow. Then at the priority #5 is to support our ecosystem. So multiple relief initiatives have been launched in many Edenred countries. So for example, we protect our truck drivers in Brazil and in Europe. So at UTA, we organize access to sanitary facilities for our European truck drivers as most rest stops are closed. For example, at Repom in Brazil, we organized a 3,000 free online health consultation for our Brazilian truck drivers who do not have any health insurance. We also try to encourage Employee Benefit users to support communities through donations. Then our Priority #5 has been reinforced with the launch of the More than Ever relief plan. As you may know, we decided to commit up to EUR 50 million to mitigate the consequences of the COVID-19 epidemic on our ecosystem. So this relief plan, named More than Ever, will be dedicated: first, to protect our employees with little or no health care coverage or social safety nets; secondly, to support our partner restaurant owners who have been severely impacted by the strict stay-at-home orders in the various countries where the group operate; and finally, support the scientific research to find a cure for the COVID-19. This fund will be notably financed by the decrease of 20% of the proposed dividend for 2019, but also the reduction in the compensation of the CEO, in line with the AFEP recommendation as well as the member of the Group Executive Committee and the Board of Directors. It's now time to listen to Patrick who will explain what will happen in Q1 2020 at the revenue level. Patrick, the floor is yours.
Thank you, Bertrand. Hello. Good morning, everybody. Let's start on Page 12 with the Q1 operating revenue. Q1 2020 operating revenue is up 6.6% like-for-like, which reflects a strong start of the -- to the year, and that has been partly offset by strict lockdown measure since March. So overall, we did EUR 370 million in Q1 2019. We moved to EUR 383 million in Q1 2020. This variation being explained by the like-for-like growth of 6.6%. Currency impact is minus 3.7%, mainly explained by the exposition to Brazilian reals and Argentinian peso. And scope FX is plus 0.6%, mainly coming from the integration of Easy Welfare, the company that we've acquired in Italy last year, and EBV Finance, that we integrated in February -- in our group in February this year. What we saw is a difference between Q1 up to mid-March, with a double-digit growth broadly in line with last year. And the last 2 weeks of March, where we see a decline of approximately 10% of our operating revenue, with a sharp entering into the lockdown in certain countries. Before turning into the detailed explanation of our revenue for Q1, I'd like to share with you some important reminders about the revenue dynamics for Employee Benefits on Page 13. To start with client revenue dynamics, which you can see on the left side of the picture. We have no impact from home office measures. As far as nonoffice workers -- home office workers, sorry, we see the same benefits as they would if they were working at the office. But we have temporary impacts from short-time working because the benefit allowance is calculated based on the number of actual days that are worked. Regarding merchant revenue dynamics, existing funds in user wallets will be spent within the next 10 months -- sorry, 12 months, leading to secure the delayed merchant revenue. The current decline in client orders, which is explained by the level of short-time working, will impact merchant revenue in the second phase. So as a matter of consequence, we have no pressure on the float, as explained previously by Bertrand, but we have a strong decline of revenue when a country enters into a lockdown. Then where we see some difference between countries where our solutions give access only to restaurants, such as Spain, for instance, and other countries in which our solutions give access to groceries and food stores, such as Belgium. The impact on the redemption volume is not the same. What about lockdown impact on Fleet & Mobility Solutions and Corporate Payment services? On Page 14. To start with Fleet & Mobility Solution, The heavy fleet solution are in line with the economic slowdown. It is a relative resilience and it works for the hubs and for the [ banks ]. Explaining especially that 1 day or another, the recovery will benefit to our level of operating revenue in that business. But when it comes to speak about light fleet solution, we are highly impacted by stay-at-home orders. Then lower oil price leads as well to lower retail fuel prices. On top of that, we strictly monitor client credit and payment terms, ensuring a negative working capital requirement, which is the case. As to the Corporate Payment services, the magnitude of the impact depends on the verticals. We currently see high impacts in verticals such as hotels and travels. And we see a relatively low impact in verticals such as telco companies. The impact on float, it can be considered as not significant for this business. If we now look at the Q1 2020 operating revenue breakdown per solutions on Slide 15. Employee Benefits remains the most important part of our business, with 62% of the overall group operating revenue. It rose by 3.2% like-for-like in comparison to Q1 2019. Fleet & Mobility Solution is 26% of the overall business, and it grew by 12.8% in comparison to Q1 last year. And then complementary solution, of which corporate tenant services is 12% of the overall business with a strong like-for-like growth of 12.1% in comparison to last year. If we now look at the operating revenue breakdown per geography on Slide 16. We have quite a strong growth in Europe with plus 5.9% like-for-like growth or 6.9% as reported. Europe represents a total proportion of 59% of the overall operating revenue in Q1 2020. Then Latin America is now down to 32% of the overall business. And it posted a 5.2% like-for-like growth in Q1 2020, that was minus 5.6% as reporting taking into account the strong currency impact coming from Brazilian reals and Argentinian peso. And then the Rest of the World is now 9% of the overall business, with a strong like-for-like growth of plus 18.4%, including U.S., Asia and Turkey. Let's dive now a little bit into the main geographies, and let's start with Europe on Page 17. In Q1 2020, in Europe, we have a solid quarter with a mixed impact from Latin Am, depending on the country. Overall, we posted a EUR 228 million, i.e., a plus 5.9% like-for-like. France was plus 2% like-for-like growth with a sustained growth for Ticket Restaurant, ProwebCE and LCCC, mainly driven by thorough execution of the Next Frontier growth driver regarding penetration, base maximization and innovation. But France has been, by far, the most drastically hit country by the consequence of the confinements leading to a particularly strong impact on both Employee Benefits and Fleet & Mobility Solutions over the last 2 weeks of the months of March. In the Rest of Europe, we have a double-digit growth in both Employee Benefits and in Fleet & Mobility until March. Employee Benefits growth has been partly explained by the higher digitization and face value increases in many countries. Then the social distancing measures are progressively implemented across the regions at various levels. And regarding the Fleet & Mobility, the heavy fleet segment has been more resilient to lockdown situation partly due to its significant exposure to Eastern and Northern Europe, where this kind of business continue to grow at the beginning of the year.Let's now move to Latin America, where we had good momentum in Brazil until late March on Page 18. Overall, we posted EUR 121 million, i.e., plus 5.2% like-for-like growth. In Brazil, we had a double-digit growth up to March, led in particular by good development of Fleet & Mobility value-added services. Then the local lockdown measures started to impact Employee Benefits and, to a lesser extent, Fleet & Mobility Solutions at the end of March.In Hispanic, Latin America, Mexico Q1 2020 revenue is impacted by lower Navideños spend volume in comparison to Q1 2019. And on overall, deteriorated the macro environment as anticipated at the end of last year. Fleet & Mobility was impacted by fuel price decline. You remember that this is the part of the world in which we are the most exposed to fuel prices. And most of the lockdown measures in the region started at the very end of March.If we look now on Page 19 to the Q1 2020 other revenue, formerly called financial revenue. We have mixed effects across the regions. Overall, we did EUR 12 million in Q1 2020 to be compared to EUR 13 million in Q1 2019. The most important highlight being the lower interest rates worldwide, especially in non-European countries and the negative currency effects in Latin America. But overall, the float is not suffering so far. So this -- the variation is broadly explained by the rate variation and not the base of that. What is important as well is that in Latin America, hopefully, part of the float managed in Brazil and in Mexico is hedged with quite a high level of rate for the next 3 years.To end up this presentation, let's sum up operating revenue plus other revenue to look at Q1 2020 total revenue. Q1 2020 total revenue is up 6.3% like-for-like and up 3.1%, as reported, due to the Latin America currency decline that does represent overall minus 3.7% in the bridge between EUR 383 million posted for Q1 2019 and EUR 395 million posted in Q1 2020.Thank you. I'll let now the floor to Bertrand.
Thank you, Patrick. So if we move to Page 22 and we look at our Q2 outlook. What I want to say is we already know that Q2 is not going to be a good quarter. The good news is things will get much better in H2. So in Q2, in fact, it was the Q2 2020 performance will reflect both delayed revenue in the Employee Benefits, delayed revenue that we will get in H2, but also some lost revenue.So if we look at it per product line, Employee Benefits will be impacted, first of all, by part of user spending that will be postponed to H2, as most of our partner merchants, the restaurant, the retailers are closed, but also rising short time working and unemployment rates during the lockdown period.The Fleet & Mobility Solution will be impacted by the stay-at-home measures for light fleet solutions, the lower transportation activities and the dropping of retail fuel price. As to the corporate payment services, it's going to be impacted by the lower economic activity, especially for hotels, leisure and media. So Q2 is not going to be a good quarter. But as I said, we have good reasons to believe that H2 is going to be much better.So in between, what do we do? Page 23, we have an OpEx and CapEx savings plan. So we launched pretty quickly a EUR 100 million savings plan to mitigate our sensitivity to the consequences of this COVID, especially in Q2. So in SG&A, we reduced our external costs and purchases, travel, marketing, consulting, mainly from rightsizing and postponing projects. But we also have a plan for the -- for our people with some frozen recruitments, the decrease in subcontracting and some people placed on furlough on a case-by-case basis. But the decision we also made is to maintain our budget for IT security, compliance and strategic digital innovation investments because our job is to prepare as hard as we can for the rebound.The second thing is we also revised our capital expenditure versus our budget for 2020. All those measures are there to protect our P&L and to maximize our chance to rebound as fast and as high as possible.We can also count Page 24 on a very robust financial position. If we look at our balance sheet, as you know, we have a solid balance sheet. First of all, our leverage ratio, net debt on EBITDA was 1.9x at the end of 2019. We are strong investment-grade by S&P and we have EUR 1.5 billion of short-term financing options if needed. By the way, we don't have any major debt repayment before 2024, and we don't have any financial covenants. So yes, the balance sheet of Edenred is very solid. The short-term outlook is, if we look at the cash seasonality inherent to Edenred's enhanced model, we know that we have a working capital outflow in H1 that will lead to a temporarily higher leverage ratio at the end of H1 versus the end of the year, like every year. And -- but we have a limited impact from the lockdown measures on the float and the negative working capital. Okay. So that's our financial position. So now if we look at the year 2020 outlook, Page 25. Yes, we are in an uncertain macro environment due to several unknowns, and I will quote 2 of them. First of all, the conditions and the duration of the transition period to return to normal, we don't know exactly how it's going to be. But it's coming, i.e., the economy will go back to normal. What we don't know is the transition period. The second thing we don't know is the long-term impacts on economies and behaviors. So we look at it very carefully, and our ambition is to adapt to that. So Edenred is not immune, especially in Q2, but we are resilient, thanks to strong fundamentals and that's why we are optimist as to H2. First of all, remember that we entered into this COVID crisis in a very good shape. We are a fast-growing company, and we have a robust financial position. So the plane is entering the turbulences in a very good shape. The second reason why we are optimistic is, we have an offer that is covering essential needs. We are in the Eat business, in the Move business, in the Care business and in the Pay business. What does it mean? It means that as soon as the severe confinement period is over, we are absolutely convinced that we will need to serve both essential needs, so we should have a strong rebound, thanks to the fact that we are focused on those 4 universes. The third reason why we are optimistic is, we have a leading position on vastly underpenetrated market. And part of our leadership is coming from our leadership in digitalization, and the world of tomorrow is going to be even more digitalized than the world of today and yesterday, so we should benefit from that. The fourth reason is we are an agile organization, i.e., we have a very unique mix of local corporate entrepreneurs that are acting on the ground and supported by our e-Quarter's scaling champions and technology experience. What does it mean is we see many initiatives flourishing in every country that are really dedicated to the local needs, but benefiting from our global technology platform. And I'm absolutely convinced that we will hear more and more about specific-purpose payment solutions earmarked funds because that's going to be the best way to relaunch the economy by the demand. But you want to have a demand that is very focused and very under control to relaunch the economy, and our systems of specific-purpose payment are going to be probably widely used. So in Q2, that is not going to be good, we know it. And in H2, that is going to be much better, thanks to our strong fundamentals. Thank you for your attention. And Patrick and myself are now at your disposal to answer all your questions.
[Operator Instructions] We have one first question from Mr. Ed Young from Morgan Stanley.
I've got 2, please. First of all, what does the marked decrease for Q2 mean? I notice you've got rolling top line forecasts in place. So can you help quantify that perhaps by business line and/or geography? And separately, how much of that Q2 decrease you expect to recover in H2 exactly? And then second of all, I'm just looking at the exit rates. It looks like Brazil operating revenue was flat to down in March if the country did double-digit growth in January and February. So if the lockdown measures didn't apply until the last few days of the month, could you just give us some color on what drove that, please?
Okay. So thank you for your question. Maybe I will start with the first 2 ones, and Patrick, you take the third one. So your question is, what is the marked decrease for Q2? It's early to say because we have only 3 weeks in Q2. But based on what we learned in the -- for the last 2 weeks of March. And based on the, let's say, the evolution of the strict confinement in Latin America, we think that, in fact, Q2 in terms of operating revenue decrease should be around minus 20%. But at this stage, we need to take some precaution. It could be better than that because things are changing on a daily or a weekly basis, so it's going to depend on the duration of the strict confinements. But more or less, we see that the trough could be at minus 20% in operating revenue in Q2. Then your second question is the recovery in H2. Based on what we learned and based on who we are, we see a move to positive territory somewhere in H2, i.e., as soon as the strict confinements are going to be over, we will have less short-term working, which is good, in fact, for our business volume. We will see the gradual reopening of the restaurants and the partner merchants, which is good for our reimbursement volume, because we -- you know that part of our operating revenue is coming from the reimbursement volume, so we will see an increase of the reimbursement volume contributing to our revenue. We will see an increase of the business volume as compared sequentially to what we saw in Q2 due to the reduction of the short-time working. We will also have some positive impacts on our Fleet & Mobility because all the restrictions in terms of mobility, especially on light fleet vehicles, had -- will have a strong impact on Q2, but it should be much better, in fact, as soon as this strict confinement is over. So I would say, marked decrease for Q2 around minus 20%. And in H2, back to positive territory, somewhere in H2, but we don't know exactly when. It's going to depend on the duration of the confinement, but also on the gradual back to the new normal. So based on those 2 elements, somewhere in H2, we will move back to a positive territory. And once again, remember that we are serving essential needs: Eat, Move, Care, Pay. So we should be the first one to benefit from the exit of the strict confinement measures. Patrick, for the question #3.
Regarding Brazil, yes, indeed, the overall like-for-like growth was plus 7.1%. We posted double-digit growth until end of Feb, beginning of March. And then like many times in Brazil, despite the fact that those guys did not have an official lockdown, in many cases, the Brazilian people are very prudent about their personal safety. So in many cases, we experimented a strong decline in terms of Fleet & Mobility revenue, for instance, and less consumption in terms of employee benefits, in fact. Recall, despite the fact that you -- the country did not opted for a stronger lockdown measure, in many cases, people stayed at home and many companies decide to ask their people to work at home, in fact. So that's the reason why we have this strong decline despite the official lockdown measures started officially at the very end of the month of March.
We have the next question from Mr. Paul Sullivan from Barclays.
Just to follow-up on the last point. How should we differentiate between geographies and the divisions within that sort of 20%? And also, can we talk about the lagged impact from the fuel price reduction? You've given some sort of sensitivity on that before and interest rates. And then moving on to the issue volume. The neutral initial -- or the float, the neutral initial impact, is that just a function of timing because the lockdown's impacts are transitory, but unemployment could have more of an impact on a sort of a rolling sort of lagged prices? And then finally, the sort of the new schemes that you're sort of rolling out, which I think is very interesting, both in Italy and in the U.K. with the stored meals program. Can you just talk about the economics of those programs? And just some of the challenges of implementation?
Okay. So Paul, thank you for your questions. So if I start by the dynamic between geographies, and in fact, per product line. So let's start with product line. In fact, in Q2, we have in employee benefits, let's say, a perfect storm in Q2, but a much better situation in H2. What do I mean by a perfect storm in Q2? First of all, from a geographical point of view, in Q2, we're going to have the vast majority of our countries that will be under strict confinements. Not the entire Q2, but a good part of Q2. So it's the first time in the history of Edenred where you have a crisis that is so deep, that on every country in Europe and in Latin America. That's true for Employee Benefits. The second thing is, in fact, we're going to have poor operating revenue generation due to the fact that, for many countries, the lockdown is also for the restaurants and some of the merchants. So basically, we have the revenue coming from the business volume that is down. Why? Because we have short-term working. And we have the revenue coming from the merchants that is not coming because people are receiving the benefits, but they don't spend the benefits because, basically, part -- or the totality of the retailers are going to be closed. So we have this perfect storm in Q2 for Employee Benefits. It's a storm that will get much better, in fact, in H2 because as soon as we are moving from severe confinement to gradual or progressive return to the new normal, what will happen is that people will spend the benefits they have on their accounts. So what we will see in H2 is a surge of reimbursement volume due to the fact that the money is on accounts, but has not been spent. That's why Q2 is the perfect storm for -- in Employee Benefits for Edenred, the vast majority of our countries under lockdowns, business volume that is affected due to the short-term working and reimbursement volume that is not coming because people are not spending. But then H2 much better because the end of the severe confinement saw a drop in terms of short-time working. So it's good for our benefits in business volume, and a huge amount of money that needs to be spent in H2. So it's good for the reimbursement volume. Okay? So that's the dynamic for benefits. For Fleet & Mobility, basically, we see the 2 things. First of all, Fleet & Mobility, in a nutshell, is less resilient than the benefits, i.e. when it goes down, it goes down deeper. And right now, what we have is due to the lockdown measures. People are not choosing mobility solutions because they don't move to go and sell product and services and everything. And in fact, we've seen this decrease. We see a bigger decrease, in fact, in light fleet than in heavy fleet. So heavy fleet, in fact, is, in this crisis, is doing better than the light fleet. It's going to be what happens in Q2. And in H2, it's going to be much better. Why? First of all, because the strict confinement measures, once again, will be less strict or in certain countries will be over. So the light fleet is going to rebound very sharply and it's going to be the same as well for the heavy fleet. And in fact, we have some encouraging signs. So for example, in Germany or in Austria or in Denmark, where we have heavy fleet business, the beginning of the deconfinement, if I may say so, we saw immediately the volume going up this Monday and this Tuesday, because in certain countries, we are able to follow that on a daily basis. So we know because we start seeing it for the deconfinement. In terms of ability to move, we see the immediate impact on our volumes in liter. Okay? So to compare the dynamics between the 2, I will say, Employee Benefits is somehow more resilient than Fleet & Mobility. What does it mean? But at the exception of Q2 where Employee Benefits is going to be bad because it's the perfect storm of decrease of business volume and money that is not spent, but so the rebound will happen in H2 for Employee Benefits. Then for Fleet & Mobility, I will say that heavy fleet is more resilient than light fleet, but it can move even faster than the Employee Benefits. And we see it in the first countries in Europe where you have the beginning of an organized deconfinement, especially in Germany, in Austria and in Denmark, and to a certain extent, to the eastern countries. That was your first question about the evolution of geographies and per product line. Your second question was about the impact on fuel price -- coming from the fuel price. First of all, you remember that for the last few years, we worked very hard to limit our, let's say, dependency to the fuel price. Okay? The second thing is, yes, there is a life time, i.e., it's not because you see the barrel going down, but you see the price at the pump going down immediately. Because you have many, let's say, things in between. And one of the things, for example, are the taxes, and some of the taxes, in fact, are fixed, and they don't evolve depending on the price of the barrel. And then you have the distribution policy as well of the major oil companies. So yes, there is a lag time. And generally speaking, you don't see the full decrease of the barrel into the pump price. But what is important to remember is we try to limit our dependency to that. So for example, in Europe, the -- our level of dependency is much lower than what we have in Latin America. Why? Because, in fact, in Europe, we did have many additional services such as the maintenance, the telematics, all the things we discussed before. And you'll remember also that we have some pricing formula that sometimes are not linked to the evolution of the pump price but are much more linked to the transactions, for example, or to the volume in liters. So the level of dependency we have is less than 12% of our total revenue for the group is dependent on the fuel price evolution. And the second thing is within the Fleet & Mobility, it's less than 30% of our revenue that is dependent on the evolution of the fuel price. So then you had a question about the program that we had in the U.K. for the children of schools. So for everybody to be aware, we have been selected by U.K. government and the Ministry of Education to administrate food for 1.4 million children that used to go to the canteen for almost something for free. And basically, because the schools are closed, the idea of the government was to use earmarked funds to make sure that those kids have access to some money that can be spent only to buy food and meal instead of going to the canteen because the canteen are closed and the schools are closed. So we have been selected and we had to build a digital program in less than 2 weeks, less than 2 weeks for 1.4 million children through 22,000 schools. We are very proud to have been able to put in place the platform. Nobody able was -- nobody before us has been able to do that. So it's a great level of satisfaction. As you said, Paul, behind this satisfaction, there are also some difficulties. The difficulties we had was the success of the platform. So we had thousands of orders the first few days, and we have not been able to cope with such a high level of orders. Then the usage of the platform was pretty bad at the beginning by the users. But the users are always right, when they are -- even when they are wrong. That's the principle of -- at Edenred. Having said that, we had a lot of misusages that didn't help us. So for example, the users were able to generate 1 bar code per month and per school or per children, and they did it 1 per day or per week. So we had an explosion of the generation of 2D bar code, and so we were not able to cope with this initial volume that was much higher than expected. The good news are, as usually with Edenred, we worked relentlessly, days and nights, knowing that our people are also affected by the limitation of the corona but all the U.K. teams have been able to get together and to find some solutions. And I'm proud to share with you that yesterday night, there was no backlog anymore. So we have been able to cope with that. So yes, a great pride to have been selected, a great pride to have been able to deliver the technological solution. Some difficulties at the implementation at the beginning. The users did not help us, but the users are always right even when they are wrong. So it's our job to correct that and no more backlog. What does it mean from an economic point of view? It's a program on which we sell our services, and so it's a positive contribution to the P&L of Edenred in the U.K. Then you had a question. You had a fourth question or -- sorry, Paul. I went through your 3 ones. I'm not sure you had a fourth one.
It was just about on the issue volume and the timing on the impact on cash. So I can see how the lockdowns are transitory because people aren't spending or you're not seeing the reimbursements come through. But as we go through the second half, could you see a dislocation whereby reimbursements go up, but also the unemployment -- higher rates of unemployment impact sort of new voucher issuance, so you have the sort of a lag cash impact? Just want to gauge the impact on working capital as we go through the year.
Yes. Okay. I'll let Patrick answer that question. But to make a long story short, we are very cyclical. Very, very safe. So Patrick?
Yes. Paul, theoretically, when we enter into a crisis with the decline, whatever the reason being for this decline, generally, we keep a certain level of issuing volumes. And what we explained is that the decrease can be explained by short-term unemployment, for instance. And then regarding the redemption volume, the redemption volume is much, much lower at the beginning of the crisis because, as simply said, our users cannot access to the restaurants and mainly grocery or food shops at the beginning. So no doubt about the fact that at the beginning of the crisis, we have no risk regarding the float and the cash flow. When the -- we recover, the question is the amount of additional issued volume and then the amount of additional reimbursement volumes when by hypothesis, the user can come back to restaurants and use the amount of credit that are still on their wallets in fact. What we see today is that we do not see a major discrepancy between those in the recovery sale. So -- and this is explained especially by the fact that in many countries, you have a maximum cap per day impact. Meaning that even by hypothesis, people wanted to burn all their credit in 1 single day or in 1 single weeks. It is not possible, in fact. And then the remaining question is the -- whether the issuing volumes could be affected by long-term negative trend, explained by economic crisis on top of what we see today, in fact. But overall, coming back to float, I don't see major difficulties being explained by the discrepancy between reimbursement volumes and issuing volumes when things are better.
Next question is from Madam Sabrina Blanc.
Sabrina Blanc speaking from Societe Generale. I have 2 question first. The first one is regarding the CapEx. And which type of level can we expect for this full year? And in which area can you reduce your CapEx consumption? I understand that excluding IT, of course. And the second question is regarding the risk of restaurant bankruptcy. I guess that, that will not have a big impact on your business because we can use some of our restaurant in case. But what could be the impact in terms of working cap and bad debt and some?
Okay. Thank you. So Patrick, maybe I'll let you answer the question on CapEx.
Yes. Sabrina, well, regarding CapEx, it's a bit too soon to say. But what we know is that at least we will save the equivalent of 10% of the CapEx we've anticipated in our budget for 2020. Of course, we are doing that in a very selective mode, meaning that we will continue for sure to continue on innovation and investment on our black [ bone ], in fact. We are more and more investing into our common platform, in fact, meaning that we will continue for sure to invest in compliance and security, for instance. But what we are doing currently consisting of postponing some project that has not as important as the previous one I've mentioned, regarding to the back offices, for instance, regarding to the comfort of our internal users, in fact. So overall, an amount which at least will be 10% less than what we projected, meaning that we should be at least close to the amount of CapEx we've invested last year. And by hypothesis, if we want -- we need to reduce furthermore this amount, we could do so, in fact.
Okay. The second question, Sabrina, was, if I understand correctly, about the economic dynamics of the restaurant. So yes, due to the crisis, some of the restaurants will go bankrupt. But remember that it's us that are reimbursing the restaurants. It's not the restaurants that are paying us. So basically, whatever happens to the restaurants, to a certain extent, we are not impacted by that because we are reimbursing the restaurants.
The next question is from Mr. Rajesh Kumar from HSBC.
Just on the run rate of decline which you pointed out earlier, can we get some color by segment or by market? That would be very helpful. And the second one is, I appreciate that a lot of your clients would have gone on short-time workers. You have also onboarded a lot of SME new customers. So just in terms of number of employees on the payroll for the vouchers business, what proportion of employment reduction you've seen so far as a run rate? And I'm talking about rate inventories rather than short time, which will -- which can potentially come back.
Okay. So thank you for your question. As to the decrease in Q2 and then the rebound in H2, what we think are -- we think that Latin America can be probably more impacted in the decrease than Europe, for maybe 2 reasons. The first one is, the exposure to Fleet & Mobility in Latin America is slightly higher than in Europe. So as I said, Fleet & Mobility is, how to say that, is more nervous to the evolution of the market. So it can go down higher or, let's say, deeper, but it can rebound faster as well. Remember that our guidance in the Next Frontier plan is to grow at double-digit growth every year for the next 3 years, and so -- and for the Benefit, it was above 7%. So it means that the Fleet & Mobility market is more nervous when it rises as when it declines as well. And we have this food price sensitivity that is playing as well and that's going to play everywhere around the world, but also in Latin America. So what we see is, we think that Latin America is going to be more impacted in terms of decrease than Europe. Okay? Then per product line, it's too early to say. But the conjunction of, let's say, all the measures of the confinement and the oil price, we could have the Fleet & Mobility that is more impacted than the Benefits. Having said that, it's very difficult for me to go further because we are observing, we are modernizing and we are putting everything in place to maximize the rebound as soon as the confinement is over. But I will say, Latin America, at -- by the end of the year, probably more impacted than Europe. And I would say, Fleet & Mobility, probably slightly more impacted than Benefits. Then you had a second question, which was about the short time, if I understand correctly, the proportion of the short time and the redundancies. So as to the short-time working. First of all, the proportion of short-time workers is very different from one country to another. The country that is using the most, the short time, is France. And maybe you know that, but you have now more than 50% of the total French workforce population that is on short-time working. But the state has been very clear, as soon as the strict confinement is over, the short time, let's say, incentive are going to disappear. So the short-time workers will go back to work. And so the usage of short-time working is very different from one country to another. France being the country that is using the most, the short-time working, knowing that, when you say using the most, when I say 10 million workers in France are on short-time working, it doesn't mean that they don't work or it doesn't mean that they don't work 100%. It can be 1 day per week, 2 days per week, 3 days per week. It's very flexible. So a short-time worker for us, what does it mean? The days the worker is working is a day where the worker is receiving some benefits. The day the worker is not working, he doesn't receive benefits. Okay? So as soon as the confinement is over, the short-time working is going to shrink very fast and the benefits will go back every day of work. Then you had a question on the SME. Yes, part of the growth of Edenred was on the development of our market in SME, whether in Fleet & Mobility or in Benefits. We did a lot of growth. But as you also know, we were coming from very, very far, i.e., traditionally, historically, Edenred was very focused on large accounts. So we posted some growth numbers that are very impressive year after year, yes, but starting with a very, very low base because it was not part of our G&A. So what does it mean? It means that, yes, we grew a lot, but SMEs are still a small part of our volume in the group.
We have a next question from Mr. Andre Juillard from Deutsche Bank.
Three question, if I may. The first one is about the public programs you have mentioned. Could you give us some more detail about them and quantify them, if possible, in term of volume and revenue? The second question is about the constraint that you can have in some countries about the spending on benefits. Could you give us some more detail about that? Because if you're expecting a rebound in H2, it means that people could be allowed to spend more. Is it possible almost everywhere? And I would appreciate having some more detail about that. And last question is about the EUR 100 million saving plan. You're mentioning that it was a split between OpEx and CapEx. You have again mentioned that you are expecting to cut the CapEx by almost 10%. But could you give us some more detail on the split between OpEx and CapEx?
Okay. Thank you for your -- part of your question. So first of all, as to the quantification of the new public programs, of today, I'm not able to quantify them because it's the beginning of the story. We gave you examples in Brazil, in Italy. Thanks to the question of Paul, we discussed about the program in the U.K. As of today, it's difficult to quantify because we don't know how much of the business volume it's going to be exactly. So for example, when we started the program in the U.K., Easter days were not supposed to be part of the program, knowing that the program is GBP 15 per week and per children. And at the last minute, they decided to include the Easter days within the program. So today, it's difficult for us to quantify. What I believe is the -- that the new opportunities that it creates, i.e., more and more we see some interest, but more interests for every state in terms of who these earmarked funds -- there are many things that we could create to make sure that the way we inject money into the economy, not only for relief, but later on to boost the economy by the demand. We want those incentives to be filtered. And thanks to the digital payment solutions and the platform of internalization we proposed, we see more and more opportunities. So for example, we are working on a few programs here in France that nobody envisioned in the past. So difficult to quantify. We do our job from a relief point of view. And we see many new opportunities that are flourishing under the idea that to relaunch the economy, it's going to be by the offer. But to make sure that in order for our policy works, it needs to be conserved, it's going to be much more efficient. Your second question is on the constraints as to the spendings on Benefits. In fact, yes, you have a few countries where you have some limits of spend per day. So the example is France where you have a limit at EUR 90. For your information, we are trying to lobby to have this limit that is increased during the confinement and a certain period after the confinement to accelerate the usage of the funds. And we would love to have part of the acceleration of the usage to be spent within the restaurants in priority because they are the most severely hit by the crisis. Having said that, even with a limit of EUR 90 per day, basically, when you receive an average benefit of EUR 10 per day, in 1 day, you can burn 2 days. So it means that if nothing is happening in 2 month -- so let's say that you receive your money for 2 month, and you have not been able to spend the 2 month, in France, you will need 4 month to spend everything. So what does it mean? It means that even in a country like France where you have the highest constraints, if the confinement ends, let's say, return to normal, but -- in September, you have September, October, November, December. By the end of December, everything is going to be burned. So what does it mean? It means that, yes, in certain countries, you have some constraints. But when you do the math, you see that the limits allows to burn very fast the amount that you didn't burn during the confinement. Another example is in Spain. In Spain, what we have -- so I give you 2 extreme cases, let's say, negatively extreme cases. In Spain, you can spend the money only in restaurants. The restaurants are closed. As soon as the restaurants are over, wham, all the Benefits are going to be spent. And in many countries, you can use your money in -- at many retailers. Not only the restaurants, but also the grocery stores, the supermarkets, the hypermarkets. In fact, to make a long story short, the vast majorities of our benefits can be spent on mainly format of retailers. The most extreme cases are in France and Spain. But even if when you look into details, you know that, in fact, even if you have some constraints, as soon as you leave the strict confinements, your ability to spend between the end of the strict confinements and the end of the year is very high. Your third question is as to the savings plan. So let me clarify. The EUR 100 million is only on OpEx. Okay? So the EUR 100 million savings plan is only on OpEx. And on top of that, because cash is king, we save on OpEx, but we also redefined our priorities. And by redefining our priorities, postponing certain projects, rightsizing some of them to the new normal. We have, as Patrick said, a decrease of 10%, so 10% of cash-out, versus the initial plan for 2020. So the EUR 100 million savings plan is an OpEx plan. Okay? And once again, I'll just -- so that there is no mistake, it's EUR 100 million savings plan versus our budget in OpEx and in CapEx.
[Operator Instructions] We have another question from Mr. Geoff d'Halluin from Bank of America.
Two questions from my side, please. First of all, would you mind to help us to understand what might be the operating profit flow-through of revenue shortfall on your business? And maybe if you can give us details between the Benefits and the Fleet & Mobility business? And secondly, have you started to see some clients wanting to negotiate the client fees? And is it something you would expect to see in the next coming months given the macro downturns? And maybe also regarding the net merchant fees in the Benefits business, of course?
Okay. So Geoff, let me answer to your second question and then the first one is going to be for Patrick. No, we didn't see client who negotiate their fees or merchant who negotiate their fees, simply because everything is on an emergency state, and so there are some other priorities. Okay? Do we expect that to happen? We don't know yet. And once again, remember that, with the merchants, we are driving some traffic to them, and so yes, we can negotiate that we have some limits to the negotiation. And one of the limit is to say, okay, we agree that we disagree, and you are no longer part of the ticket restaurant distribution channel, which is a problem, because remember, 60 -- so based on the surveys we have, 60% of the people who are going to the restaurant, for example, at lunch time during work days are saying, are declaring that without a solution like ticket restaurants, they could not afford to get there. So we are a huge traffic generator for the merchants. So yes, we have some negotiations, and these negotiations are every year, but there is a limit to what we can accept. And one of the limit is we are generating a lot of traffic. The second thing as well is, because we are providing a lot of innovation, thanks to the digitalization, when you're able to demonstrate the value added you bring to the table, it helps in terms of -- let's say, in terms of limit to the negotiation. Okay? So to make a long story short, we didn't see anything like that now. And if it happens, we will sit down in good faith, and we will try to find something that is reasonable for both parts. One last thing you need to know is it has been highly appreciated that we cut the dividend to fund More than Ever. And to say that's one of the top priorities of More than Ever is to help the restaurants and our partner merchants. As well as it is well, let's say, valued the fact that we are fighting for our restaurants to propose solutions such as fast reimbursement for them and to try to see if we could drive even more traffic after the severe confinement. Then your first question was about the operating flow, so Patrick?
Yes. Geoffrey, very difficult question indeed, in fact, and probably too soon to say. But what I can tell you is that amongst the at least EUR 100 million savings plan, 20% of those savings are -- can be considered as a variable cost. Then 40% is around people, especially by postponing hiring, reducing the number of subcontractors that we use, blah, blah, blah. And then the rest, 40% is SG&A savings, mostly around less project impact. So overall, in fact, we are not in use of using a flow-through ratio anymore as a guidance, as you know. But the objective is to keep the maximum agility, the maximum flexibility to save as much as we can the EBITDA margin and the EBIT margin impact.
Okay. Patrick, thanks. I understand that we don't have any other question. So let me conclude. First of all, I want to thank you to have taken the attention to be with us today. Secondly, I hope sincerely that you are safe and all your loved ones are safe under those very unique circumstances. Third, we had 2 very good first month of the year that were absolutely in line with our Next Frontier plan: double-digit growth on Fleet & Mobility, more than 7% growth on Benefits, and as usual, a growth that has been very balanced per geographies. Then we have been hit, like everybody else, by the COVID. We are not immune. And we learned a lot to prepare for a Q2 that is not going to be good. We see it at about minus 20%. The good news is that we see a much better H2. And as usual, at Edenred, we are very agile and very reactive to get prepared, first of all, for this bad Q2 that is coming, but after that, for the rebound. And as I said, we will move to positive territory somewhere in H2.The things you can count on is, first of all, the resilience. We are not immune, but we are resilient. The Benefits are flowing down. And even if they are not spent, they will be spent in H2. The second thing is, due to our digitalization, we are able to continue to serve our clients, but we are also able to invent new solutions that I think will be more and more popular within the next few years because having earmarked funds is a good way to increase the efficiency of the subsidies that will be given to boost the offer. The last thing is we entered into the crisis very strong, as a strong company. So as I said, with a very positive fast growth, but also with strong financials thanks to all the work we have been doing on our balance sheet. But also strong financials due to the specificities of our business model. So bear with us for a disappointing Q2. But you know the extent of the damage and bear with us for the rebound in H2. Thank you.
Thank you.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.