Alten S.A.

Ladies and gentlemen, good evening. Welcome to the Alten call for the Q4 Financials 2020. My name's Val. I'll be your coordinator for today's event. This call is being recorded. You'll be in listening mode during the presentation, then we'll open it up to Q&A after that. If you have a question, Press star one to record your question. If you require assistance, press star zero. You'll be connected to an operator. Over now to Mr. Bruno Benoliel, Deputy CEO, to begin today's call. Over to you, sir. Yes. Good evening to you all. Thanks for joining us. for the call on a review of 2020. At the end of the year, the situation has changed little versus Q3, as I indicated earlier during the October. A lot of wait-and-see, a pretty sluggish and mixed uptake. Tech and aerospace heavily impact. We had organic decrease in 2020 of 13%, it of 12.9% thanks to a Q4, slightly better than expected. So Q4 turnover of Alten right to 167.4 million, down 17.5% versus Q4 last year we anticipated. 18.5, hence the slight improvement that I mentioned, but you can see that activity remains markedly down versus last year at constant rates, down 17.4%, minus 24.4% in France and 24% in France. Full year, 2020, 2 billion 349 million down 11.1% versus 19. It was 2.624 billion. Like for like, scope and forest activity is down 12.9% down, 19.5% in France and 7.9% international. Very sluggish response activity rate increased gradually remaining lows. 77.2% in Q2, 84% Q3, 86% for it. Final quarter, well below the normative rates year to date. It's 84.6% in 2020, is against 92.1% in 2019. Furlough schemes were reduced because of an improved activity rate. It's still present in a few European countries, essentially France and Germany, all geographies. headcount in furloughed was 13% in 2020, was brought down to 80% in Q3, thanks to leave-taking, and 5% in Q4. Obviously, it's not added to the intercontract rate and taken into account in the activity rates I'm giving you. So they're part and parcel of the intercontract rate because It's an intercontract that's subsidized. Headcount continued to decrease 37,200 at the end of last year, 32,000 engineers, consultants, end of December 2020. 33,000 29,000 engineers excluding acquisitions disposal engineer headcount would have been 29,000 headcount that's an organic drop of 3,000 people 2017 in France and 2418 outside France by geography at the end of December The situation is as follows. France remain penalized by auto and aero. Auto represents 13% of France turnover, declined by 35% in Q4 after minus 40 in Q3. Aerospace, 21% of French sales, down 34% in Q4. After a peak, so to speak, of minus 50 in the Q3 energy, thanks to nuclear, railways, naval life sciences, telecom in total, just over 40% of turnover is still growing. International. No change of trend in Q4 versus Q3 and changes by country are dissimilar. Activity is down 7.9 annual year to date, but 12.4% international in Q4 after minus 14% in Q3, minus 11% in Q2. North America, USA. 80% of NORAM, the main sectors, auto, oil and gas, and service finance picked up slightly, so less decrease in Q3, minus 20 versus 25 in Q3. Canada resisted well up 13% 2020. Services up 15%. Telecom 5%. Life sciences plus 90%. All sectors in Canada are up, except for aerospace, of course. Germany. Country where activity decreased the most within the group, the organic drop reaches 24.5% decrease that was slightly reduced in Q4 minus 30 versus 34 in Q3 activity didn't pick up in the order aero sectors even if The decrease of Q4 in both those sectors is lower than in Q3, but it does remain very significant because in auto, minus 30 in Germany at Q4, whereas we were on levels... Higher than Q3, auto still 45% of turnover. As to aerospace, only 25% of chairman turnover. Let me remind you of the numbers. Minus 4% in Q4, minus 60 in Q3. Once again, minus 40 in Q4. The other sector, finance, energy, life science are up. Scandinavia. at constant scope and forex activities down 19% in Finland, a small quarter of Scandinavia. Activity improved in Q4 thanks to the pickup of industrial equipment, a preponderant in that country. In Sweden, activity stabilized, a decrease of 20% at constant scope and forex on the back of the strong decrease in the auto and trucks demand. very major in Sweden. So the decrease full year is the order of 40%. Benelux activity decreased slightly, but in Belgium it decreased by 10%, stabilizing Q4 essentially owing to the service sector, whereas the pharma sector continues to grow significantly. In the Netherlands, activity grew 3%. Thanks to semiconductors, all the other sectors are up. Spain now activity down 5%, but contracted slightly in Q4 owing to continued lockdown. Defense and space, automotive, civil aero are down, whereas activities up across all the other sectors. Asia-Pacific scope grew 6-5%, but leveled off overall in Q4. Growth driven by India, where local activity grew, posted growth about 10%, notably in electronic semiconductors. And in the tertiary sector in China, 27 million in turnover. Activities down by just under 10%, 8% to be precise. The auto accounts representing a significant part of the Chinese business. Activity had picked up as of Q2 and picked up more vigorously into Q3 and leveled off in Q4. Now, Italy. is a specific country in 2020 for Alten double digit growth across sectors save telecoms going to the decrease of a client Vodafone in the UK activity began to pick up in the final quarter even if it's heavily impacted by the drop in aero accounts minus 35 auto minus 30, both representing just under 40% of UK turnover, like what's happening in the rest of the world. Diversification of enterprise and other sectors in the UK grew significantly. If we look at the activity by sector, I won't repeat that auto and aero remain heavily impacted by the crisis. All the other sectors suffering from marked growth save for rail naval energy thanks to nuclear and life sciences if we home in sector by sector automotive 70 percent of turnover today down 30% sequential improvement, minus 40% Q2, 36% Q3, 33% for Q4, for OEM, F, A, Ferrari, all are down. And equipment supplies, only ZF is up, as I said last time. We don't anticipate real pickup before mid-July. 21 at best. Rail activity and nail activity still growing by over 10%, driven strongly by naval, but rail reaching 10%, an activity that slowed, obviously, in Q2, that picked up in Q3 and accelerated in Q4 for long-term projects. Aerospace now 12% of turnover, down 33%, with a strong decrease in Q2 and amplified in Q3. And a slight uptick in Q4. Visibility remains reduced. And for us, no genuine uptick of activity will occur before 22 or even 23 in the aerospace sector. Le sous-secteur du spatial.

Within aerospace, the subsector of space is less severely affected. It's only slightly down and should pick up faster. We expect it to have picked up by the end of H1, what with new launches, INS bus, and the SpaceX launches. Defense and security, 5% of our business. down 7%, severely impacted by Q2, minus 14, has picked up slightly in Q3 and Q4. We expect that to remain the trend over 2021 because budgets haven't been brought down. The mixed shows that oil and gas represents about half of the business industry. It's stable over the year, but down at the end of the year, having been affected by the crude oil impact. Nuclear steam is fairly stable, given the projects that are long-term projects from the main part. As for energy-related equipment, it's still increasing more than 5%. which account for some 8%, 8.7% of Olten's business. It's slightly up. Pharmacy, up 10%. Medical equipment, up 3%. This should go on growing over 2021, obviously. The other industries account for slightly less than 6% of our business, down some 10% over the whole year due to industrial goods. Lastly, telecom, 7% of our business, down 3% over the year, but with very different scenarios for our various customers, all growing apart from Vodafone in Italy and Ericsson in Sweden, but we expect this to be one-off. SFELTIS in France, given the fact that they want to bring these services back in-house, as they started to do in 2019, and this is a trend that has increased over 2020 with the crisis. We expect business to pick up over 2021, what with a switch to 5G. Electronics and multimedia. It's started to pick up again over Q4, even though it is down 20 points in Q3 and down over the whole year. As for Amadeus, we had 100 or so consultants there and that has had an impact, but semiconductors and electronics have still gone up. Then services and finance up 20% thanks mainly to retail and services with banking up 5%. So if you look at the various businesses by sector or by geography, even though the full year has been significantly down with two sectors having driven that in a number of countries.

But on the whole, the other markets are resisting fairly well.

External growth now, many things have happened there with acquisitions. both in France and internationally, mainly outside France, actually. Nine acquisitions this year. Each of them fits in with the strategy of the group, and as I told you last time, the purpose is to speed up international growth on buoyant markets and or to achieve critical mass on sub-markets. And in France, increase our position on data science, infracloud, and data security, which will be growth drivers over the next few years. So let me maybe review the nine acquisitions over the full year. Give you a few numbers and tell you when the consolidation occurred. I know that you always... ask for that. So, we purchased a Chinese-Japanese company early in the year, 380 consultants, IT and software development consolidated as of the 1st of April. Then a little later, a Korean company, AP Solutions, 200 consultants, also specialized in software development, PLM, 200 consultants sales 18 and a half million euros consolidation much later due to the fact we wanted to get the information in the right kind of format so it was consolidated on the 1st of October 2020 in the US and with a Ukraine based delivery center One company specializing in software development, 100 consultants, €7.5 million in revenue, also consolidated as of 1st of October. Germany now, two companies purchased, both in engineering consulting, mainly for the automotive industry, onboarded software.

and an electronics environment.

One of them is a company we'd already made an announcement for, $19 million in sales, 200 consultants. We got a 70% stake and will consolidate it as of the 1st of January this year. The other company was purchased at the end of the year, 100% stake. We've been working on that for some time. There were significant losses in 2019 and 2020. The company was restructured, and we purchased it as it was undergoing final restructuring. It should get $24 million in sales for 2021. In the scope we've got, 205 consultants, consolidation January 1, 2021. In Italy now. One company for which there had been a specific press release, SDG, Data Science and Analytics. Headquarters are in Italy, but the business is also in Spain and the US. Their sales were 76 million euro for 2021, 885 consultants. Consolidation January 1st, 2021. And the other company, IC... Infra and services purchased over the new year. 300 consultants also consolidated as at the beginning of the year. In France, one IT infrastructure business, 100 consultants, 100 of them outsourced. expected revenue for 2021, 32 million. And lastly, Portugal, still on IT infrastructure and data science, a company geared for the local market, but which might be a platform for nearshore in Europe. Their revenue for 2021 is expected to be, 2020, sorry, is expected to be 27 million, 400,000, consultants, consolidation, 1st of January. So all in all, 3,000 people acquired for 240 million in revenues. We have also divested. That's more unusual, I suppose. But we have decided to pull out from three non-strategic businesses, one in China in the automotive industry, mainly on mechanical things or design. 6 million in sales, 154 consultants when we sold it on. It was deconsolidated as of the 1st of April. In France, a telecoms company doing business in telecoms that I mentioned last time, 264 consultants, 16 million euro, and that was deconsolidated as of the 1st of September. And lastly, also in France, process manufacturing companies 60 consultants, and we will deconsolidate it as of the 31st of December. Total revenue for those companies divested, €10.5 million. So if you do forward-looking comparison, you'll have total sales of 2.3134 billion. Outlook for 2021, we expect the automobile industry to peak up in the second half of the year, and we expect some insuring as PSA or Renault have done. But the things being what they are, there will be investments in rail, naval, aerospace, aeronautics. These will enjoy growth once more in 2021. Obviously, the visibility is not very sure, and everything will depend on the state of the health situation. Q1 should be fairly stable as compared to Q4 2020. Significant drop as compared to Q1 2020, which was a record high. And the gap will be bridged at the end of S1. And we expect or we hope some recovery will occur over the course of the year. However, we don't really expect that to happen before the second half of 2021, and it's therefore much too difficult to say anything about when we will enjoy organic growth once again. Onboard growth is probably 5%. Strong seasonality. The acquisitions for 2020 and 2021 will, at least in part, offset... drop in growth so there you have it I hope that I was clear enough and compact enough if you do have any questions I'll be happy to answer you ask participants if they have any questions yes thank you ladies and gentlemen if you do have any questions please press star 1 on your devices please make sure that But you are unmuted, and I will tell you when you can ask your question. Again, star one is what you need to do. We have a first question from Alexandre Plot, CM6 Securities. You have the quick floor. Yes, hello, Bruno. Hello. Just to make sure I understand, Organic negative growth for 2021 to the tune of 5%, as you said, with some offset from the acquisitions. But what does it mean exactly as concerns the upcoming scope? Answer, what I've said is that the negative growth on board is 5% or thereabouts. So the sales would be slightly below 2.2 billion. And I've told you about the acquisitions. I've told you what the sales figures are and the consolidation dates. Some of these were at least in part consolidated over 2020. And you can work on that to try and get a potential sales figure for 2021.

It won't. completely offset the negative growth it will offset at least part of it because some of it has already been consolidated over 2021 unfortunately the speakers are speaking over one another question second question I'm not sure I fully understood

the sectors pie chart on the service IT there's a growth over 2020 but I'm not sure I understood

So, in fact, what we did, if I just revert for finance services, so all the data I'm giving you, it's, of course, like for like across these sectors. It's obviously like for like. I mean, otherwise acquisitions, I mean, obviously lead to misleading, conclude down 4%. Essentially, well, owing to retail and service issues, Activity insurance is flat banking plus five. Okay.

Great. That's clear. Thank you. Thank you. No further questions in the queue.

Let me remind participants that you can use your keyboard by pressing star one to record your question. Thank you. We have a second question. coming in from derek marcon from socgen over to you hi bruno um best wishes for the new year we're still the 29th so um let's hope that there are fewer covid related announcements um wishing you uh Good health. First, on the furlough scheme, part-time layoffs at the end of February, do you think that the scheme will stop and be far less generous for corporates enjoying these furlough schemes? And if so, how do you plan to address the remaining stock of furlough schemes at the end of December? That's my first question. Now, the second question Questions concerning the embedded growth on H2, the mass for that, obviously, if give or take your H2 is similar to Q420, it means that you've basically taken up substantially on the invoice volume of consultants and increased the Q4 versus Q3 because it's true to staff. I mean, when you remove people, I mean, people from the bench, I mean, maybe you could give the number of those billed in Q4 versus Q3, and is there a substantial difference, and is there a kind of cumulative effect that needs to be taken into account to better read? And if we could just have the Q4 level alone, that'd be good. I think you gave it for the year, 3,000 adiage minus 3,495 minus 1,478 internationally.

So let's start with the last question. So Q4, we have Annette Staff.

minus 704 people so that's purely organic obviously not take into account this scope exits the disposal minus 704 and the split to be specific minus 556 for France and minus 148 for international The other question was on what was invoiced. Well, we've never really disclosed that in detail, but give or take what we can tell you between Q4 and Q3 is that we've increased the invoiceable headcount by about 2%, between 2% and 2.5%.

that's what backs up the onboarded growth flat and so then after that there are impacts I mean we can't model everything on the rates on the activity rates with activity rates that are fluctuating so sharply

We took also as an assumption that we'd be invoicing more because we invoiced more. Improved invoicing, put simply, isn't linked to recruitment. It's linked to the improved activity rate. So we took as an assumption that the activity remained flat. So what's on the onboarded rate, it's purely theoretical exercise. activity rate rises inevitably if you reduce your stock well we took as an assumption that if we take the same number of people with the same activity rate consequently and an equivalent external volume with no inter contract then the volume of revenue of projects invoiced consider on an onboarded reasoning remains flat because if mechanically we continue to decrease the headcount consequently the intercontract will shrink if we reduce the headcount on the intercontract not the case there are people who resigned but are in project we can't necessarily immediately replace them in which case will have a accretive impact on the activity which won't have a knock-on effect on the invoicing level and next the question was on the furlough the temporary unemployment scheme well we took the assumptions that today

are in our forecast, even if we haven't finalized, because I'm currently looking at that again.

In theory, we should have an end. I'm talking about France, an end of the furlough scheme for people who haven't opted for the scheme by the end of August.

So for 2021, yeah, by 21.

So we have to exit. For six months, we should have exited the compensation scheme for partial layoffs that's been lasting in France for a year, receiving 70% of your gross pay. We have to top that up because of the... collective agreement that we've entered into. The day that system, that scheme stops, we revert to a system in France, which is the ordinary law system in France, which basically we're compensated. Yeah, I said tax, actually, but we're actually only compensated at 30% 8% of gross pay, and that lasts for six months. And today, the assumption is through the end of February, we'll continue to benefit from compensation of 60%. In March, that would drop to 36%. So that's for France. 36%, in other words, that's your out-of-pocket. No. Yeah, the out-of-pocket obviously skyrockets necessarily. But then you have the calculation and there are assumptions that really depend on the operating prospects of an uptick in activity or outsourcing transfer of skills to other projects. and to see if the curves can converge at some point if the furlough scheme is going to less subsidize the P&L and will taper out at some point then we'll be converging towards an intercontract rate that's manageable and realistic for the time being. It's decreasing slowly but decreasing nevertheless. The other possibility is to have a redundancy plan affecting some few hundred people. Trouble is they are highly concentrated in places where the aerospace sector is heavily located. It costs a lot because you know there are competitors who are putting in place that the ROE is of one year. It disrupts the company. And in terms of labor relations, it's really the last decision to be taken when there's no other alternative. So for the time being, we expect that we will gradually get the intercontract curve to meet that at the end of the furlough scheme. I don't know if you've listened to the transport minister the other day, the day before yesterday. Well, she clearly... contradicted the budget, Minister, by saying that the furlough scheme and the whatever it takes mantra would continue as long as necessary. So this 60% compensation furlough scheme that in theory should have stopped September last year and is carried over month by month will linger for A lot of 21. As to Germany, well, in Germany we'll have a small redundancy plan, but really a mini one, about 100 people in Hamburg. And as for the rest, that's to say Munich, the south, and for the rest of the other intercontracts in Hamburg, we're going to operate with German furlough scheme which is very generous with an out of pocket of the order of 15-20% max depending on the situation that will last for sure until the end of 21 probably into part of 22 and the third option long term furlough isn't that an option because you didn't mention that well obviously we looked at it but for us it's not necessarily a good way of doing things because it requires a two-year commitment it requires not being able to if necessary make layoffs the time being situation being what it is and then we have to give activity over a two year period to 60% activity to all people to all employees so it's more kind of designed for industrial activities where we can get people to rotate on positions but we can't on projects have someone 60% and 40% on a furlough it just doesn't work that way Okay, that's clear. If I could add a quick one on the slowdown of international Q4, the base effect. I mean, those are base effects. I put you in the annex, the revenue change, organic growth rates, quarter by quarter. It's clearer than on the year-to-date. We compare Q3, Q4. Even though Q4 was stronger than Q3, we should have had an unfavorable base effect that should perhaps have amplified the comparison negatively. You'll see that across the board, the decrease rate is better in Q4 than it is in Q3, with the exception of Spain.

Because Spain went back into lockdown.

Oh, and Switzerland. You said Q121 and Q420, you're talking absolute terms, right? In number of projects. And so that means that isn't it the same rationale as Q3, Q420 is an increase in the number of people you're billing because Q1 traditionally, historically has always been slower than Q4 well that's why I'm reasoning on number of projects billed or invoiced number of people billed business days and we don't have the same number of days paid leave paid holidays but sequentially you look at the number of projects generally in Q1 and end of December there are a lot of projects that ended in the end of June that kind of step up quite strongly and generally we recover generally mid-February but usually towards the end of February.

This year that step was smaller. These are projects that already ended. Those that continued did so and end of January

number of projects built. Well, the number began to increase again, so we expect to have as many in Q1 as Q4, but now it'll be a strong organic decrease in Q1 to end of January. You were already square. There's every likelihood that you'll do even better than that, right? Well, we recovered a few. We're not square yet. I thought that at the end of January, right. Okay. I'm with you. Thanks, Bruno. I'm sorry.

Merci. Merci. Thank you. Next question from Stefan Slavinski. You have the floor. Good evening, Bruno. Good evening. Two questions. One on the acquisition strategy.

So you acquired nine businesses in 2020. What can we expect for 2021? Similar numbers or similar numbers of people acquired or similar sales or do you expect a step change compared to 2020? And on your offshore strategy, I expect that most of your acquisitions will be there, but what about inshore or is it going to be just organic growth? Right, so 2020 was big on acquisitions and we have got a rather significant pipeline of due diligence or and negotiations with LOIs being discussed. So sizable numbers, not all of that will lead to acquisitions. But I think we can expect, I mean, at this point in the year, given the number of companies we're looking at, we can expect, as I was saying, probably to purchase a similar number of companies in 2021 as in 2020. obviously as concerns headcount and sales there's not much we can say because some of them will only have 30 or so consultants but makes sense to bolt on to what we have somewhere else others might be bigger but at this point you can't really say yet which one of these two options might be more likely we really are either the very beginnings of the due diligence process or involved in the LOI already, but there's no way we can say yet. As for strategy, we're looking at companies both in France and outside of France. And abroad, well, there are a number of companies working on offshore mainly, incidentally, China and India.

Okay.

Yes, obviously these are companies we're looking at, but if there were to be a real increase of in demand on nearshore, inshore with Renault, for instance, we won't have any problem ramping up our delivery centers in India or Romania, say. We have recruitment processes in place. It wouldn't be much of a problem. question and that's not really underway for the moment Bruno what question this is not really happening on in Morocco or onshore or nearshore answer no not really and just another question about the state of lockdown in Europe and elsewhere You said many businesses were still buoyant and had significant growth.

And your numbers are sort of directly linked to the market.

But does that mean that if the health situation improves significantly, that would lead to

Projects picking up? Answer.

Lockdown doesn't really have any direct impact on the way aero or automobile would pick up now.

However,

Remote working is a fairly efficient form of work. People have grown used to it. The slowdown in business isn't so much due to organization or practical issues.

It's more for commercial reasons. So actually looking at prospects and potential clients, et cetera, you might be able to run a few on Teams or over the Internet, whatever app you want to use. But clearly fewer meetings means fewer bids and less business. Okay. Maybe one last question.

More directly related to operating, operational margins.

Said it was slightly better than expected. Can you say anything about S2? H2, sorry. Are you...

able to say anything about profitability in H2 answer I think I said that last time I think I said that profitability for H2 would be better than expected and I can confirm that question okay thank you thank you next question from Laurent Delors question

Thank you.

Can we mention government aid? 36%, is it regardless of sectors, or is it different for aero and automobile? Answer, no difference. Question, you don't expect a difference between the various sectors? Answer, no. It really is something that applies to all the businesses at business levels that are below the standard. But in some sectors, automobile or aero, there are specific provisions, but that doesn't apply to us. Question.

You said 5%, so 1,500 people.

What about the sort of normal attrition rate, so to speak, per month? How many people can we expect to go so we can forecast anything? Answer, well, I don't know. I mean, question, what happened over the last few months? Answer, look, there's some months where it might be 150, some other months it might be a bit more, and Other men, still it's below 100. So question over quarter, it's somewhere around 300 people, is that right? Answer, yeah. Question, so that's 600 over the year plus the 100 people. So basically you've got 700 or 800 people that you have to sort of reallocate and train. Is that right? answer well we've not actually said that like that because it's really something that's managed on a almost day-to-day basis depending on the various operation there might be 800 or a thousand people leaving and then we want to be able to reallocate so to speak the various consultants or we might just decide to agree to people on downtown in between consultancies in greater numbers than we usually would. And we might want to develop a different strategy. But in any case, it's just so long and so costly that it might not make sense to do it because business might have picked up by the time we finished.

Now, obviously, you can't... I mean, at some point in time, you'll get to the dregs, basically.

Not the best way of putting it, but still. Nowadays, an engineer might... leave after a couple of months being paid doing nothing because that's not what their career prospects are or expectations are. So some people might move on. Now rather unexpectedly we had a few, quite a few people resigning in and around Toulouse and we didn't expect that because of the way the aerospace business has been wrecked but In fact, we saw that many people have either been relocating, moving to other parts of the country, or changing industries. But there's no way you can forecast that. I mean, I'm sure that in the people who are still with us in sort of downtime might be people who are looking for a job somewhere else and staying with us until they find one and are not finding. So we'll have to see how that goes. as I was saying it really is a day-to-day management basically question you were talking also about the number of projects that were being invoiced and the numbers had been improving slightly from the beginning of the year I suppose you meant organically here so basically you'd be saying that you have Growth down for Q1, but still improvement over Q4.

Did double digit? Yes, double digit.

Question, and outside the automobile and aero, have some customers in other industries tried to push prices down more than usual? Well, actually, not in auto and aero, no. Some people have postponed their call for interest and their tenders because they're doing something else. Now, there have been some clients in the banking and insurance sector who have asked fairly significant price for drops and I said asked I didn't say they've got them question and excluding people in downtime what about the gap between average salaries and average prices is it going to be a bit of a problem I know it will be managed fairly easily. There are no salary increases apart from those who are being promoted. Question, thank you and goodbye. There are no further questions in line. Let me just remind participants that if they do wish to ask a question, they should press star 1. Yeah, Bruno, sorry to come back.

Just two quick ones, if I may. The first one you were saying, the visibility going forward is what it is. It's not crystal clear, but in terms of what the picture is six months back, do you have greater visibility on project launches than six months back on the Sparrow and volume what's expected going into 21 and in your um scenario for h2 have you factored in the um auto pickup as an certainty and that gives you kind of a a stock of the furlough uh numbers from 20 and on these 1500 people is there a profile emerging are these people who cannot really be re-employed aside from the auto aero sector because that's where the change is coming from and if that's the case given the very prudent tone that you have on the pickup short term that's obviously a burden that you're carrying obviously you kind of reduce some of them, but 300 per quarter, that's a load that you're going to carry into 22. Well, visibility is, when I said it's reduced, it's hugely reduced. We have no visibility on our client budgets for 21, and usually they don't have any before February or even March. And here, when people who are managing the accounts talk to their counterparts, they don't have any either because the accounts, the budgets are kind of unleashed run of the river, and in most industries today. So H2, as things stand, we've taken assumptions of an uptick in the auto business, but as I said, I haven't nailed down my 21 budget notably h2 because what's interesting after all is to look at the perception of each operational manager there are some who think that things are going to pick up strongly because vaccines will crack the problem others are far more measured so there's I would say in the numbers that we're getting that are supplied to management, there's a strong personal bias that's linked to the context and the way how individuals respond to the context. My take, my sense is that we'll pick up slightly in H2 in auto, but we mustn't expect a spectacular rebound not in H2, unless things are resolved spectacularly and that the sanitary crisis gradually dissolves. But, I mean, that doesn't seem to be the course for the next two, three months. There are some real issues for auto manufacturers of capex in batteries. I mean... everything that revolves around electric vehicles, of investing in fuel cells, and then, of course, for autonomous vehicles, where the problem for the OEMs is that in electric vehicles, the price of the battery represents quite a significant portion of the price of the vehicle, so it poses a problem of... a value change. What we're seeing is that they're all investing, but also CapEx that needs to go into alternative technology. I said two years ago that lithium wouldn't be the solution, so the solutions around hydrogen, but not only. So those are big investments, but they don't have the top line to... to do that, but sooner or later it's going to have to happen. That will only operate when the virtuous circle of an uptick in sales volumes will kick in, etc. So, but I mean, this is my personal view on auto. I see a slight increase in H2 and then probably in 22 when we'll begin to really emerge from the crisis a stronger recovery. The people on furlough schemes, the remaining 1,500 people, well, they're not people who are unemployable or difficult to employ. I mean, if we keep them, people we decided to let go in northern Germany, we... looked at their skill set and a fit with market needs, we said that it would be very challenging. So we're having a small, a mini redundancy plan in northern Germany. For the rest, these are skills that we had difficulty in hiring these past two years. They're young, well-trained, working on automotive or... aeronautics issues. So, Germany, clearly, German managers see an uptick. They have longer-term visions because they're in a country where the perspective is more long-term. That's why the German government decided to maintain very favorable furlough terms at the end of 21, and there's talk even up until the end of 22. to preserve skills in companies. Germany, that's a real, real issue for us in terms of follow because we have several hundred people in Hamburg and Ditto in southern Germany.

In France, it's limited to Toulouse. We have an extra bench of the order of 350 people in Toulouse.

and Nantes about 150 and Sofia a bit less I mean that's shrinking gradually next we'll have to decide but you have to get the right timing sometimes it's too late to launch heavy-duty operations that are costly in labor terms, but with the passage of time, the closer we'll get to the tipping point, the upside. Well, what I don't understand, people, I mean, you know, these people are linked to the geography. I mean, if you look at auto and aero, I mean, it's actually growing in terms of the drop of the furlough schemes. That should really come from the fact that you gradually reassign these people where the market's growing right yep yeah but the market elsewhere isn't sufficiently dynamic today in order to to absorb the surplus resources from the aero and auto sectors that's just not going to happen So it's going to manage gradually over time. And it's just not static. That is, there'll be people who resign, people who stay in furloughs in Germany, probably on a furlough scheme for over two years. But the question is, down the road, And is that in 21 or in 22? Will activity in those sectors pick up to absorb the remaining slack of people on furlough? Well, I mean, it's a bet. It's a gamble. We maybe change view during the course of 21 in light of events. But today in Germany, there's no reason was we have people who are competent we know the auto industry will end up by turning the corner and they have big need no need to let people go when the residual cost is the order of 15 percent 15 20 percent if we reason in terms of HR focus. I mean, these are people, obviously, if they serve no useful purpose, there's no point in keeping them because we know that if the market picks up, they'll remain idle. But for those, we've decided, obviously, to call it a day. But for the others, not. Well, it's true. When you look at all these sectors, you have two that are hurting badly.

But that's not really sufficient to absorb the... Yeah, they're the two biggest sectors, absolutely.

Yeah, I understand you. Thanks, Bruno.

You're welcome, Eric. Have a pleasant evening. No further questions in the queue. I'm now going to... hand this back to Mr. Beleniel to wrap up today's call. Thanks. Well, thanks for joining the Alten call. Thanks for your questions. We'll meet again on the 24th of February because that's the date on which we'll be publishing our 2020 results. Thanks again. Have a pleasant evening, great weekend. See you soon. Bye. Thanks for joining today's call. You can now hang on. The organizers of the call will remain connected.