Bouygues

Ladies and gentlemen, welcome to the Buick first quarter 2020 results conference call. I'll now hand over to Corrine Adam, head of Buick Investor Relations. Please go ahead.

Thank you. Good morning, ladies and gentlemen. I would like to remind everyone that you can find us on the company website at www.buick.com. The earnings press release, the presentation we will be commenting on during this conference call. An Excel file with historical key figures for the group and each business and the company financial statements. Statements made on this call are forward-looking statements. Such statements reflect objectives that are based on management's current expectations or estimates and are subject to a number of factors and uncertainties that could cause actual figures to differ materially from those described in the forward-looking statements. I will now turn the call over to Pascal Granger Chief Financial Officer of BRIG.

Thank you, Karine. Good morning to all of you and thank you for joining us. I would like to welcome everyone to our conference call to discuss BRIG's three-month 2020 results. First of all, in these unprecedented times, I hope that you, your family, and your friends are all well. With me in the room is Christian Lecoq, CFO of WIC Telecom. Following our comments, we will be answering your questions. We are currently facing a situation that we have never experienced before and doing our best to act as a responsible player during this COVID-19 crisis, as highlighted on slide four. In France, Our businesses are mobilized to ensure that essential services to the population are maintained, such as communication, the ability to work from home in good conditions, information and assessments, as well as the maintenance of critical buildings. The group recognizes the major efforts of its stakeholders and has taken actions to act responsibly and support these efforts. It has already announced that Martin and Olivier Bouygues decided to relinquish 25% of their 2020 fixed and variable remuneration. The Board withdrew the dividend payout proposal at the latest Annual General Meeting and will reassess the situation in late July or early August. And Bouygues Telecom supported its small and medium enterprises partners by promptly paying their invoices in April and May without waiting for the legal deadline. Bouygues has also taken actions to support caregivers in this crisis. The group distributed 1 million European standard surgical masks to the French health authorities. Donations and financial contributions were made, notably to the Red Cross and hospitals. Furthermore, Aximum, which is a subsidiary of Colas, partly reorganized one of its plants to produce hydroalcoholic gel, as you can see in the picture on the right of the slide. Moving to highlights for the quarter on slide five, the initial effects of the COVID-19 pandemic were evident in lower results. However, in these challenging times, the group has maintained a strong financial position with 10.3 billion euros of available cash at end March. At the end of the quarter, the backlog in the construction businesses remained at the high level of 33.5 billion euros. It's important to note that Bouygues Telecom proved resilient as it has been less affected by COVID-19 in its commercial and financial results. As a reminder, as announced on 1st of April 2020, I would look for the group The construction businesses on TF1 was withdrawn and 2020 objectives for Bouygues Telecom were suspended. Let's now turn to group key figures on slide six. Q1 2020 results reflect the usual effect of seasonality and the impact of the lockdown in France since mid-March. Group sales of 7.2 billion euros in the first quarter of 2020 were down 9% and down 8% like for like on that constant exchange rates compared to the same period last year. The resilience of Bouygues Telecom, as well as the good start of the construction activities on TF1 in January and February, did not offset the significant decrease in activity from mid-March, mainly due to the decision of the French government to lock down the country. The sales decrease of 714 million euros year on year is entirely due to the COVID-19 crisis. Indeed, we estimated that the first quarter of 2020, COVID-19 had an impact of around 750 million euros, of which 600 million euros was in France. Total items explain this decrease. First, in construction activities, we experienced an almost complete interruption of work in France from mid-March and, to a lesser extent, a slowdown or shutdown of activity in around 10 other countries. Second, at TF1, we faced a gradual cancellation of advertising campaigns since March. And finally, at Bouygues Telecom, we severed from the mid-March closure of all stores. Current operating loss was 242 million euros in the first quarter 2020, an increase of €184 million year-on-year. This change is mainly due to COVID-19 despite the early mitigation measures implemented by the businesses. The estimated impact of COVID-19 on current operating loss is around €170 million. It reflects both a loss in current operating margin and unavailable costs in the three activities, such as employee fixed costs and amortization expenses. Net loss attributable to the group was 204 million euros in the first quarter 2020. It included a contribution from Alstom of 35 million euros versus 33 million euros one year ago. Finally, let me remind you that like every year, first quarter earnings are strongly impacted by collapse seasonality on IFRIC 21. Let us now turn to slide seven that shows that the group maintained a strong financial position. The chart highlights that at end March 2020, Available cash stood at €10.3 billion with €4.1 billion in cash and €6.2 billion of undrawn, medium and long-term facilities that contain no financial covenants. Moreover, the debt maturity schedule is well balanced with no debt wall. Please also note that, first, This schedule has yet to include the €1 billion bond issued in April carrying a fixed coupon of 1.125% with a redemption date in 2028. This new bond issue brings available cash to €11.3 billion at mid-April. And second, Bouygues would redeem 1 billion euros of bonds due in July 2020. Moving to slide eight, you can see that the COVID-19 had no material impact on the 3.6 billion euros net debt at end March 2020. The change between end December 2019 and end March 2020 is explained by the usual seasonal effects. The positive change in net debt between end March 2019 and end March 2020 is mainly due to the inflow of 1.4 billion euros related to Alstom. This robust financial position is key, particularly in this crisis. Let's now turn to slide 9 to see the net debt evolution between the end December 2019 and end March 2020. You can observe that the increase of earlier end is explained by three items. First, a moderate outflow of 37 million euros in acquisition and disposals, resulting mainly from the acquisition of granite contracting by Colas in the US. Second, an inflow of 8 million euros linked to capital transactions and others, including the share buybacks, The exercise of stock options and the remainder of the reconfiance capital increase reserved for employees. And third, an outflow of 1.3 billion euros from operations stable year on year that we will detail in the next slide. Turning to the breakdown of operations for the first quarter on slide 10, you can observe that. Net cash flow, including leases, expenses, was down 69 million euros year-on-year. This decrease was led by the three construction business segments and TF1. Net capex was up 21 million euros, mainly due, as expected, to Brick Telecom and, to a lesser extent, TF1. Net capex for construction activities was down reflecting early adjustments due to COVID-19. Last, change in the working capital requirements and others improved by 75 million euros, mainly explained by the positive change in working capital requirements related to operating activities. We expect the pandemic to have an impact on the Group's working capital requirements and net debt for the full year 2020. It is too early to quantify amount since feasibility remains very low and it will depend on how customers react to a situation we have never uncut before in the second quarter. We should see a distortion of working capital requirement related to the shutdown of activities that should recover over time. I will now turn to the review of operations, starting with the construction businesses. Let's begin with the backlog on slide 13. At 33.5 billion euros, the backlog in the construction businesses remains at a high level at end March 2020. As you can see on the chart, It is the second highest level in the past five years. The commercial momentum at Colas, and to a lesser extent at Brick Construction, remained good in the first quarter 2020. Colas backlog at Enmarsh was up 3% year on year, restated from many disposals and acquisitions, and at constant exchange rates. It remained stable in roads and improved strongly in rail. Brick construction backlog does not include the C1 stretch of the high-speed rail line project in the UK, worth 1.1 billion euros, which will be taken into order in the second quarter. Last, brick immobiliers backlog suffered, as expected, from a decline in reservations. Residential reservations were down 16% year on year as delays in obtaining building permits linked to municipal elections resulted in a lower supply. The overall backlog at end March 2020 was down 3% compared to the same period last year. Let's now look on slide 14 at a few major contracts won by the construction activities. In the first quarter, wood construction gained several contracts. On the upper left of the slide, we show the construction of the control center for lines 16 and 17 of the Grand Paris Express, worth 141 million euros. Just below that big picture, we see the completion of a housing complex in Monaco worth €115 million. On the upper right of the slide, we display the building of a combined cycle gas and steam power plant in Leuna, Germany, worth over €100 million. Furthermore, as shown on the bottom right of the slide, COLAS notably warns The construction of two highways and a taxiway in Alaska were 75 million euros. Let's now look at the construction activities key figures on slide 15. Q1 2020 results of the three business segments were impacted by the sharp decline in activity since the lockdown in France and in neighboring countries such as Belgium, Switzerland, and Italy. Despite the good start of activity experienced by Colas and Brick Construction in January and February, sales were down 12% year-on-year at 5.2 billion euros in the first quarter of 2020, and 11% like-for-like at constant exchange rates. This 686 million euros decrease was entirely explained by the COVID-19 as we estimate its impact to be around 700 million euros in the first quarter. Since the lockdown started mid-March in France, the decrease was particularly strong at 18%, whereas international activities proved more resilient with a decline in sale of 4% despite the slowdown or shutdown of activity in about 10 countries. We expect international sales to be further impacted in the second quarter in line with the spread of the pandemic. Brugge Immobilier was also penalized by the low supply in residential property development resulting from delays in obtaining building permits linked to the 2020 municipal elections, which are not yet over. The situation has worsened since the COVID-19 crisis. The current operating loss was 140 million euros, larger than last year, despite early mitigation measures implemented through cost savings and the use in France of partial unemployment for an average of almost one-third of brick construction and collapsed working hours in March. We estimate that the impact of COVID-19 on current operating loss was around 150 million euros in the first quarter, more than the increase in the loss compared to last year. Let us now turn to slide 16. Before the end of the lockdown, the construction activities have been planning on organizing to progressively restart their activity in France. They have capitalized on brick construction experience in Hong Kong, which restarted its business in February after an interruption of 15 days. Before resuming work, some essential requirements must be satisfied. personal protective equipment, clients' agreements, and the availability of the supply chain and of employees. Since mid-March, the business segments have gradually relaunched their activities in France. By mid-May, about 90 of sites have been restarted and reconstruction at Bouygues Immobilier. and 85% of roads work sites have collapsed. The productivity is affected by the safety precautions, particularly in buildings, due to limits on people from different trades working simultaneously. Outside of France, the situation is mixed depending on how affected the countries are by the COVID-19 prevention measures. We expect the activity to gradually resume when the relevant conditions are satisfied. Finally, a number of external factors could foster a recovery of the construction businesses, such as the introduction of economic stimulus plans and the launch of sustainable construction projects to deal with the outcome of the crisis. Let's talk briefly about TF1 as its results have been released on 19th of April. First, turning to slide 18, TF1's audience share was maintained at a high level during the first quarter. Nevertheless, TF1's financial performance was hit by the COVID-19 crisis as sales year-on-year were down 9% like-for-like and at constant exchange rates. Sales were affected by the gradual cancellation of advertising campaigns since March and the discontinuation of production shooting activities since the lockdown. Current operating profit reached 42 million euros, including cost savings on programming of 23 million euros. In the first quarter, we estimated that the COVID-19 impact on current operating profit was around 13 million euros from both loss of current operating margin and unavoidable costs. As stated on 1st of April, CF1 withdrew its 2020 outlook and expects that the COVID-19 crisis will have a very strong impact on second quarter 2020 results. Now, let me turn the call to Christian Lecoq.

Thank you, Pascal. Starting with slide 20, you can see that we benefited from a dynamic commercial performance during the first quarter 2020, despite the slowdown in headquarters since the mid-March lockdown. In mobile, we won 113,000 new plant customers excluding M2M. In FTTH, NetAds continued to grow with 170,000 new customers joining us during the first quarter of 2020. With a total of 1.1 million subscribers, FTTH customers represented 28% of the fixed customer base at end March 2020, compared to 18% one year ago. closing the gap with its competitors. Overall, at the end of March 2020, BookTelecom serviced 11.7 million mobile plan customers, including M2M, and 4 million fixed customers. As you can see on slide 21, COVID-19 had a strong effect on usage. In mid-March, we saw a sharp increase in mobile and fixed usage compared to the beginning of the month. Average voice usage per day in mobile increased by 50%, while average Internet usage per day in fixed was up 30%. Since the entry into lockdown, Book Telecom demonstrated its ability to maintain the quality of its network to support a sudden and massive traffic increase. Second, starting in February, we observed a fall in roaming usage tied to the closures of the borders of China, followed by the U.S. and, luckily, the Europe. Rooming usage in the next quarters remains uncertain. It will depend upon borders reopening and clients' willingness to travel abroad, notably outside Europe. Turning to slide 22, sales from services were up 10% year-on-year in the first quarter 2020. The significant growth in both mobile and fixed sales from services was relatively unaffected by COVID-19. Mobile revenues was up 9% year-on-year, driven by growth in the customer base and ADPU, as well as the positive impact of incoming calls on SMS, in line with an increase in voice on SMS usage. This did not translate into EBDA after Liz's gain, as interconnection costs were proportionally higher. Fixed sales from services were up 13% benefiting from customer growth in B2C and B2B. In the first quarter, Mobile ABPU and fixed ABPU were up year-on-year. Mobile ABPU increased by €0.4 and fixed ABPU by €1.3, reflecting both the success of our pricing strategy in a less competitive environment. As shown on slide 23, both telecoms delivered solid results in the first quarter 2020. sales were up 2.5% year-on-year, with a 10% increase in sales from services, partially offset by a 21% decline in other revenues. Two factors explain the decrease in other revenues. First, an unfavorable basis of comparison in B2C revenues, and second, lower onset sales due to the mid-March store closures in France. We estimate that COVID-19 had an impact of 20 million euros on Q1 sales. EBITDA after leases for the first three months was stable year-on-year at 299 million euros. I will come back to this in the following slides. At 68 million euros, the current operating profit was down 23 million euros year-on-year due to stable EBD after leases and higher amortization costs related to higher capex as expected. We estimate that COVID-19 had an impact of around 10 million euros on the current operating profit in the quarter. This amount notably reflects the cost of protective personal equipment the cleaning of premises and specific safety processes put in place for the stores to reopen after the lockdown. Operating profit of €70 million went down compared to the same period last year due to lower current operating profit and the lower volume of site disposals versus last year. Let's now focus on the changes in 2020 EBD after leases on slide 24. The waterfall on slide 24 highlights the change between Q1 2020 and Q1 2019 EBD after leases. Please note that all figures have been rounded. The changes year on year are explained by several items. An increase in sales from services of 100 million euros, including around 10 million euros for higher incoming calls on SMS revenue. Second, the perimeter impact of Neowim on sales and costs as Neowim was consolidated as of Q2 2019. Third, an increase in costs related to ongoing activity. This includes €10 million of additional interconnection costs, resulting from the growth in mobile-enforced usage, and a €50 million increase in recurring OPEX related to the rental of sites and FTTH premises, and expenses linked to customer experience improvement. This increase of €50 million year-on-year should be similar in the next three quarters. Fourth, The reporting of higher tax, notably related to the densification of the network, six IFRIC 21 taxes are recorded every first quarter only. And finally, around 30 million euros of not recurring OPEX, consisting mainly of bond and advertising expenses and costs related to COVID-19. This increase of 30 million euros year-on-year should not occur again in the next three quarters of 2020. Therefore, excluding NEOIM and incoming calls on SMS, revenue would have been up around 90 million euros compared to an increase of around 50 million euros in recurring operating expenses. As a conclusion, as shown on slide 25, I would like to give you some colors on the progressive reopening of our business activity in France. First of all, the lockdown did not prevent us from continuing to manage our infrastructure partnership projects. As a reminder, we concluded a partnership with Phoenix Tower International to deploy 4,000 sites in London's area. The closing of this transaction was concluded during the first quarter, and we began implementation of the rollout. As we already shared with you, we also signed two agreements regarding our projects, Saint-Malo and Asterix. One agreement is with Sennex for the rollout of a fiber backhauling network whose financing is now almost completed. The closing should be done by end June. The second agreement is with Vauban Infrastructure Partners for the rollout of FTTH in medium-dense areas, with financing processes on track. Since Monday, we started the progressive reopening of our activities, and 470 stores out of 500 are already back in service. All the necessary safety measures have been put in place to protect our employees and customers. However, at the beginning, we do not expect a customer rush in our stores as was seen in other European countries. We have also gradually restarted our FTTH rollout and we expect a strong increase in FTTH. V2B growth should be supported by the increasing importance given by companies to the reliability and quality of telecommunication networks. It will also deepen the pace of the recovery. However, many uncertainties remain regarding booming, depending on the timing of the country borders reopening and the clients' willingness to travel abroad.

Thank you, Christian. Now, I would like to briefly comment on the financial statements starting on slide 27. We have already discussed Q1 2020 revenues and current operating profit at the beginning of this call. Other operating income and expenses were down 13 million euros compared to the first quarter of 2019. This change is mainly explained by the lower volume of set disposals of Bouygues Telecom with 3 million euros in the first quarter of 2020 versus 12 million euros in the first quarter of last year. Cost of net debt decreased by 11 million euros year on year due to lower interest expense on our bonds as we reimbursed a bond issue in October 2019. Regarding income tax, We benefited from a higher tax saving resulting from the increase in operating loss in the first quarter. The effective tax rate was 28% in Q1 2020 compared to 25% on one year ago. Lastly, the share of net profit of joint ventures and associates was 25 million euros a decrease of 12 million euros year on year. It included a contribution from Alstom of 35 million euros, which was nearly stable with the previous year, despite the sale of part of our stake last September. We will now turn our attention to the group priorities in this changing context on slide 29. BRICS is in a good position to face this unprecedented crisis thanks to its strategic choices and its strong culture founded on social dialogue. First, the group benefits from a portfolio of diversified activities with BRICS Telecom more resilient in the current environment. All activities are well positioned in markets with positive medium to long-term prospects as they respond to essential needs. Third, as I have already mentioned before, the group benefits from a strong balance sheet and a solid financial position. we can count on 130,000 committed men and women. In France and abroad, the dedication is notably established through social relationships based on a permanent and fruitful dialogue. As shown on slide 30, Ensuring the safety and security of all employees, subcontractors, and clients remain our first priority. This is a crucial starting point to resume our activities. We put in place a widespread application of work from home since mid-March, and in the past several weeks, we have implemented all the necessary procedures to provide our employees a safe return to work. Mitigating the impact of the crisis on the sales and profitability of our group is our everyday job. To achieve it, we benefit from the variable cost structure of the construction activities, but it is not enough. The business segments also need to execute a strict discipline on costs, launching saving plans, and adjusting capex spending. Our business segments have been very proactive in planning and reorganizing the business for reopening. In France, thanks to an agreement signed with the unions, employees paid vacation have been partly allocated to EPREN, to facilitate the catch-up of activity during the summer. Lastly, in order to maintain a high level of available cash, we have renewed our medium and long-term credit lines without covenants and issued 1 billion euro bonds in mid-April with effective financial conditions. To conclude this presentation, let's now turn to slide 31. Let me remind you that on the 1st of April, BRIC announced first a withdrawal of the 2020 guidance for the Group, the construction businesses and TF1. Second, the suspension of BRICS Telecom 2020 objectives. And third, we confirmed the Group 2030 greenhouse gas emissions reduction objective with the definition of a target compatible with the Paris Agreement and drafted an action plan for the growth side business segments. As I've highlighted on slide 32, as of today, the full year impact of COVID-19 on the group, the construction businesses, and TF1 remains uncertain. Due to the lack of visibility and business reopening, the catch-up of activity and the outcome of the current crisis, it is too early to give any new guidance. Furthermore, BRICS Telecom maintains the suspension of its 2020 objectives, notably due to the lack of visibility on roaming usage and revenues related to reduced travel outside Europe on confinement measures. While first quarter 2020 results reflected the initial effects of the COVID-19 pandemic, we expect a greater impact on Q2 results for the group in each activity due to the ongoing health crisis in France and restrictive measures expanded to new countries. Before I finish, I would like to stress that the group has reacted very quickly to face this unprecedented crisis. Our first priority has been to secure the health and safety of our employees, subcontractors, and customers. We promptly started to organize return to work in all our activities, beginning even before the end of the lockdown. We made mass purchase of personal protective equipment. We also negotiated with the government and professional organizations to ensure that with the protocol put in place, our employees were safe on the work site to restart the activity under the best possible conditions. Furthermore, we signed a group-wide agreement with our unions to facilitate catch-up at least part of the activity shortfall during the summer. Finally, while obtaining the consent of our clients, we made sure that our supply chain allowed us to restart. At the same time, we renegotiated our credit facilities and issued a bond with attractive terms to secure our liquidity, which remains at a very high level. Three days after the end of the lockdown, 90% of brick construction on brick immobility sites and 85% of collapsed woodwork sites have been restarted. All brick telecom stores have reopened with the exception of those in large shopping malls which are not authorized to do so. Bouygues Immobilier will reopen its sales office on Monday and TF1 is also restarting its shooting. Moreover, productivity is consistently improving after some initial setbacks due to the implementation of health protection measures. Our next steps are to return to a normal level of productivity, to catch up the shortfall in activity as much as we can during the second half of the year, to negotiate with our clients in order to minimize the impact of COVID-19, and last, to keep a tight control over costs, reducing structural costs, and identifying new sources of savings in each of our business segments. In conclusion, This crisis will allow us to improve our approach to working and to strengthen our agility. I firmly believe that the group is well prepared to handle this situation and that we will be able to bounce back thanks to the dedication and creativity of all our people. This concludes my presentation. Please, operator, open the floor for questions.

Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. As a reminder to our participants, please limit yourself to two questions. And please stand by whilst you prepare for the first question. Okay, so our first question comes in from the line of Nicholas Cott Collison, calling from HSBC. Please go ahead.

Thank you. Good morning. My first question is on construction and related to the high order book in the construction business. Obviously, you've signed some contracts, but you have now extra safety costs and certainly lower productivity. So how do you protect the margins for 2021? Were you actually able to pass some of the costs to your clients in Hong Kong, for example? My second question is on telecoms and the B2B market. First, on the current situation, are you experiencing any issues with payment delays? And how do you assess the risk of SMEs going out of business? And maybe for the medium term, with the COVID crisis, does it make you reassessing the B2B strategy, maybe offering more services and security or cloud services? possibly through more acquisitions in that field. Thank you.

Hi, Nicolas. This is Christian. I will answer your two questions about telecom. First, I would like to remind you that our exposures, the B2B to SMEs is very low because our market share is very small. Given the exceptional context of the COVID-19 pandemic, That's why we have adjusted our collection procedures so as not to cut customers' lines during the crisis. This could lead, of course, to an increase of human defaults at the end of the year, but we think that that could remain at a very low level. And about bankruptcies, we do not see for the moment any bankruptcies in SMEs. Your second question was about B2B strategy. We are working to – of course, during the crisis, we have been able to propose to the some companies, some new services. I don't know exactly the kind of services, but I know that the marketing guys do that. And we are working also for the period after the holidays period, so the back-to-school period, to push on the B2B.

Back to your first question concerning construction and the extra costs related to the COVID-19. What I can say, first of all, we are quite early in the process. Obviously, we have started the discussion with all our clients in France and abroad. I would say that it is a one-by-one discussion, except in France where we have a discussion with the public authorities concerning these impacts of extra costs and lack of productivity, less productivity due to the measures we have taken. So we are starting the process. Let's say also that at collage level, we will be able to pass through this extra cost to the client very rapidly because the backlog is increasing. The duration of the contracts are quite short. So when we are bidding now, we take into account these impacts. And by reconstruction, we will try to get compensation from our clients. It is negotiated at the present time. But we have a global discussion for public clients in France.

Okay.

Thank you. That's clear.

The next question comes in from the line of Matthew Robilliard calling from Berkeley. Please go ahead.

Yes, good morning and thank you. I had a question on the telecom service revenues first. You posted a very impressive performance with a 10% growth, which was much higher than previous trends and also higher than the guidance you had initially released. And I was wondering whether this number was a surprise to you to some extent, or were you actually expecting a very strong Q1? Or were you just being conservative in your guidance for the full year? I understand there's a bit more SMS and voice, as you pointed out, but it doesn't seem to be explaining the variance there. And then I had a second question on the construction side. You mentioned that around 90% of the sites have reopened, as well as 85% . But can you give us an indication as to what kind of level of capacity utilization there are at? Because obviously reopening is not the same thing as opening at full capacity. And I don't know if it is too early for you to communicate on that, but if you could give us a sense of today, what is the kind of capacity utilization versus ex-COVID world situation. Thank you.

About your first question about telecom, keep in mind that in Q1, we had two specific effects. The first one, as you mentioned it, is the incoming call on SMS revenue. The second one is Neurim. Neurim was not consolidated in Q1 of last year. But except these two items, that's why the performance was very good during the first quarter for the revenue. This is due mainly to, of course, the increase of number of subscribers. and better ABPU than it was last year or even I think at the end of last year. So it's a good performance. We are very happy of that. It's a bit better than expected by us.

Thank you. Concerning your question related to construction, I would say that In terms of productivity, we are progressing very rapidly every week. In fact, the first week of April, the third week of April, when we restarted activities, productivity was very low. The level of activity was very low. Sites were started, but we were learning. In fact, we were in a learning curve approach, so productivity was quite low. In terms of civil works, the lack of productivity exists but is not so important in terms of building the activity is lower due to the fact that there is a lot of co-activity inside. So it's more difficult to organize but we are also progressing every week. significantly. Let's say that as of today, globally, in civil works, we will be at about 80, 90. For the building, around 50%. Thank you.

Yes, thank you.

The next question comes in from the line of Eric Lemery, calling from Brian Garnier. Please go ahead.

Yes. Good morning, and thanks for taking my question. First question regarding WIG Energy and Services. Could you tell us the level of the operating margin in Q1? And could you remind us, still for WIG Energy and Services, the key end markets? Did you observe some specific resilience for some end markets? I am thinking about, for instance, hospital or nuclear sites. I don't know if big energy works with these markets. And again, the second question on the breakdown between fixed and viable cost within the construction activities. Again, you mentioned the benefit of viable cost structures for construction, but could you remind us the split between fixed and variable cost for each of your construction division, please. Thank you.

Yes, concerning your first question was related to the profitability of our energy and services division. Globally, during the period, the profitability has been of 0.9%, but excluding the COVID impact, it would have stood at 2.8%, which reflects The improvement of this business margin has already initiated last year and that we have, which is our plan in fact. So we are at the level we were expecting, including COVID. The second idea you had is resilience concerning activities. You mentioned precisely the activities which have not been locked down, which are the maintenance of equipment for... for essential buildings. You mentioned pretty big buildings, hospitals and nuclear plants. Obviously, these activities have continued, but in our mix of activity, it's not a so huge part. So this is the reason why the impact of profitability is what it is. Thank you. The third question was related to the and variable part of our construction activities. Let's say that we have to divide by activity. In introduction, I would say that our structure of cost is variable, but the situation we are facing is very particular. This is very particular because when we, generally when we say when we say that our activity is variable, that means that when the market goes down, we are able to adapt our structure to make sure that our level of structure is adapted to the actual level of activity. In the present situation, we are facing a situation in which we have to maintain the structure to be able or resume activity at the level which was expected before. So we are covering a period in which, for a very specific reason, we have suspended activity. In this context, what we pay, what we don't pay. Obviously, we pay the structure, even if we have partial unemployment. but we pay also amortization and we pay also renting of equipment and so on and so forth. And in that particular context, obviously the variable part is lower than it is generally when we say that the activity is variable. We have been very proactive to manage that period. And we have put people under unemployment during the second part of March, essentially within reconstruction and collapse. And the variable, we can say that for this period, let's say that the variable part is one, is two-thirds, two-thirds of the global activity. Thank you. Am I clear?

Yes. Yeah. Thank you very much.

The next question comes in from the line of Giovanni Montalti calling from UBS. Please go ahead.

Hello. Hi. Thank you. Can I ask if you can share some comments with us about the ongoing competitive dynamics in the French tobacco market? In particular, there have been some, let's say, up and down with pricing for entry-level data and mobile. I don't know if you can share with us some thoughts there. And also on your EBITDA analysis in slide 24 for the telecom unit, I see you do not include the revenue change for others. So I was wondering if that means that you see no profitability from this type of revenue line. Thank you.

Yes, so about your second question, as usual, the other revenues do not generate any profitability. This kind of revenue is handset revenues, so this is a cost for us, this is a subsidy, and we take into account directly the net impact for the subsidy, which is the revenue minus the cost of the handset. And the other part mainly is the built-to-suit revenues and the margin for the built-to-suit revenues is very small. So no impact coming from that.

Your second question was about... Sorry if I interrupt that because, I mean, you have never given any clear indication on what's the level of profitability of the built-to-suit... So I should ask, considering there are 70 million or less, I mean, obviously big parties answered, but there is something on the project as well. We should think of the profitability of this project as something immaterial. Let's say, is this the right way of looking at it?

This is immaterial.

Okay, thank you. Thank you.

Your second question was about the... competition in a competitive environment. So before the lockdown, the competitive environment was the same as last year. So very good competitive environment. Price going up. No little level of promotions, small level of promotions. Since the lockdown, the situation has been quite different for the low-end part of the market because we saw some A bit more promotions than before, but we are not at the same situation than in 2018 or before. The impact is very, very limited. For example, we didn't see any pricing at 5 euros for life than before. Just that what was probably at 15 euros, we had some promotion at 12, for example, during three weeks. The impact is very limited and we expect that we will come back to the situation before the lockdown now as the shops are now reopening.

Sorry, apologies. The line was breaking down. You said you think the market may go back to the situation pre-lockdown.

Yes, yes, yes. Because the level of promotion was a bit higher during the lockdown, but the impact is very limited. It's only a few months of your promotions and not big promotions at five euros for life two years ago or even one euro during 12 months in 2015 or before. So we did not see that during the lockdown.

Thank you.

The next question comes in from the line of Joseph Pujar, calling from Kepler. Joseph, please go ahead.

Yes, good morning. My first question is on the 150 million of costs that you consider had the COVID in Q1 for you. I wanted to know if, or the impact, yeah? I wanted to know if We are talking here simply of the lower sales and the impact that it has to, yeah, it becomes more difficult to absorb fixed costs. Or on those 150 where there's some, I would say, one-off costs. like, I don't know, maybe buying computers to accommodate teleworking for your employees, or buying one-off, a lot of, I don't know, masks, or either alcoholic. Is there something which was done, let's say, once and for all, or we can extrapolate these 150 million and consider that two weeks of lockdown means 150 million euros and we can apply that to April and so on. That's my first question. The second question is regarding what you said before that in the new bidding process in construction you are passing these extra costs to the customers. My question is, on average, how much in percentage do you increase the bill by division, yeah, at COLAs, at construction? And if you can give more flavor on that. what is generating those extra costs, and so on. Thank you.

Concerning your first question, how we evaluate, how we did to estimate the amount of the impact of COVID during the first quarter. During the first quarter, in fact, it's quite easy to understand what we did. We have included in that the cost of stoppage of which we have, of activity, of which we have already compensated with 16%. We have included the 16% of extra costs for people which were You know that people are generally paid of 84% of their wages when they are under unemployment scheme, and we have decided to compensate our people for that. So it is obviously an extra cost. We have the cost of slowdown of the activity. We have the cost of purchase of masks, gloves, thermometers, and so on. And we have the cost which is related to the gradual restart of activity. So this is a mix of all these items which are not totally linear, I would say. Obviously, the cost of masks will be linear during the period during which we will be We will be obliged to have masks and so on, but some are one-off. But our figure is a cumulative figure. The second question you have were related to, for the future, how we did. In fact, as many of the factors are uncertain, when we did, It depends on each contract, but we can say in general that it is not a lump sum price that we indicated for that. What we aim to do, it's not always the case, but what we aim to do is to say, okay, we'll ask during a certain period, but we don't know how long it will last. during which we will have some extra costs. So we'll have a compensation clause, in fact, for that. You know, it's not a lump sum. So I can't say what will be the, how much it will represent because we don't know how long it will last.

Am I clear? Yeah, yeah. It's very clear. If we assumed a contract which is short enough that during all the life of the contract you are impacted by these extra costs, how much would it increase? If we talk, for example, collage, a collage average contract in percentage, how much more expensive it becomes? Does it increase by? three percent by ten percent it's just to to have the order of magnitude yeah i do not ask you to be very precise but uh yeah to to give some flavor and that would be appreciated please i'm very sorry that uh it's strictly impossible at that stage please remind please remind that the confinement has stopped three days ago so

It's very, very too early to give any flavor in that respect. I'm sorry. We are unable to do so. It depends on each contract, on each activity. Obviously, I told you, the activities are quite different. Obviously, when you have a man, just a man working in an equipment, it's very small. If we have many people in a very small area, obviously the amount would be far more important. Sorry, I have no average figure for that.

I fully understand. It matches the figures that we have heard here and there, which go from 3 to 15 percent. fully agree with you that it's very difficult at that stage to see what will be the reality. Thank you very much.

Thank you.

The next question comes in from the line of Andrew Lee calling from Goldman Sachs. Please go ahead.

Good morning, everyone. I had a couple of questions. The main one was really on the telco business and why you felt you couldn't reintroduce guidance on that part of the business when we've seen your peers do that, Orange and Iliad in recent weeks. Is it due to your B2B exposure? I thought that your B2B exposure was lower than peers and particularly your SME portion of that. Or is it a difficulty in mitigating the impact of the COVID revenue impact with cost reduction? Just any colour on on that uncertainty would be really great. And then secondly, I wondered if you could just give a bit more of an understanding on the immobilier trend in Q1. It looks a bit worse than what your competitors have been showing, which has been an improvement. Any kind of colour on the difference and why we should be confident in an improvement in immobilier through the rest of the year would be great. Thank you.

So about your question about telecom. First of all, I will remind you what are the financial impacts of COVID-19 for GoTelecom. The first one is lower net ads due to the slowdown in market growth and also for our growth. So it could lead to less revenue in the future. The lockdown impact will be a deferred price increase in our more formal strategy. So we have decided to delay some price increase during the lockdown. These two effects will be compensated by lower acquisition and retention costs during the lockdown. So the impact of these two effects will be very small. However, I remind you that the impact of handset subsidy costs will not be immediate since they are spread out over 24 months due to IFRS 15. But you have to add to that the impact on roaming. Roaming represents today 3% of our total revenue. quite big portion, and we have a lot of lack of visibility on our roaming revenue. And in fact, of this roaming revenue, we have no cost or small cost, no possibility to offset this kind of loss. Of course, it would have been theoretically possible to maintain the guidance by cutting the capex. But by doing that, We would have taken a risk on the quality of our network in a period when this quality is very important for our clients, in a period when the need of capacity is much higher than in the past. And so we decided not to do that. We will see in the future if we need to invest more or not in the capacity of our network. During the lockdown, we benefited from the slowdown on the construction of sites, so we saved some capex during this period. But now we have to think and to see if we need to invest more capacity on our network. We don't want to take any risk. on the quality of our network because I remind you that the quality is the key point of our strategic plan and we do not want to lose all the benefits of our strategic plan that we began two years ago just to save a few dozen million euros this year.

Yeah, that makes sense.

This is strategic. It would have been very easy for us to keep the guidance by cutting capex, but strategically, it's not a good solution.

Thank you.

As far as your question related to WIGI mobilier, residential reservations are are effectively down. In fact, it was expected, you know, we knew perfectly before the COVID crisis that before elections, we will have very few reservations due to the fact that we have a low available supply. So we are not surprised about that. Obviously, The COVID-19 has worsened that situation. I say that there is two periods. There is a period before the municipal elections for which, obviously, we have lands, we have applied for permits, but we know perfectly that we won't have the permits before the election. So, obviously, the COVID-19 is... It's for two reasons bad news, but it's life. The first reason is the fact that during the confinement period, the reservations have been very low. And secondly, we know perfectly that our supply will be higher when after the elections, and the election are postponed. Postponed, we don't know if it will be in June or later. Obviously, if it is later, it's not a good news for Bouygues Immobilier. So we'll see, we'll see. After the election, we have lands, we have applied for permits, and we have the opportunity to, to restart and being in a situation which is far better.

Thank you. That's very helpful.

The next question comes in from the line of Stephen Bayesian, calling from Main First. Please go ahead.

Yes, thank you. Could you make a word? I know it's very difficult, but is there anything you see in terms of tenders and pipeline in construction? Are we starting to see anything yet on the momentum for infrastructure plans or what's happening with the hospitality industry, for instance? Is that very significant in the pipeline? So any color you could put around it? the construction pipeline would be appreciated. And just a word also on telecoms, just sorry to come back on this one, but just to understand if the deceleration in ABTA growth, you would say, is entirely therefore due to the roaming that you mentioned. The reason I'm asking the question is because the slowdown at boot construction, despite, you know, the strong network there, You know, some savings you've made in marketing and the flow of employees is probably greater than what we've seen with some of the telecom operators. So I just want to make sure I'm not missing something there, such as, you know, consolidation of near rim that could be, you know, negative margins or, you know, anything special. And just to certify, anything you could say on the impact of oil prices for Collab? Thank you.

Just to remind you that the impact of the BDA is the fact that our BDA is stable is mainly due that we add this quarter 30 million of non-recurring OPEX. We won't add these OPEX the next coming quarter. About NERIM, you saw on the slide I think that the margin for Nehrim is quite near zero for the first quarter, plus 10 million in sales and around minus 10 in cost. About the rest, I think the slide is quite clear. And the roaming impact is very small during Q1. Because at the beginning of the lockdown, we still had some people abroad trying to come back in France and not able to do it. So they used a lot of their phones. And for roaming, the level of roaming, Q1 2020 compared to Q1 of last year, the level of roaming is stable for Q1. It represents around 20% of our warming of years.

Back to your question related to construction, as far as our pipeline is concerned, let's say that the infrastructure needs remain very high, both in France and abroad. Obviously, during the confinement period, there are some delays which have been produced in the procedures in order to award the contracts. But generally speaking, the pipeline is not, as of today, affected by COVID-19. We will see what happens later, but because there will be two impacts, obviously there will be probably a budgeting issue for certain people. But I remind that our business is quite important because when a government wants to do a stimulus plan, the major activity which is concerned is generally infrastructure and building because they have some in order to accelerate the global activity in that respect. In France, nothing very important has been decided yet, but there is already the one billion for sustainable infrastructure which has been announced. In Europe, there are some other stimulus plans. If you consider, for instance, UK, in which they have decided to do the HS1 project. I mentioned before that we have been awarded a one billion contract this month in that respect. in April, sorry, and I would say that in the U.S. it's totally massive, so we are sure that we will benefit from all these stimulus plans, but frankly speaking, it's quite early. So, sorry, it's my favorite answer today, but, you know, we are in the middle of the sanitary crisis, so people, we are managing first assumption of activity, but government do so, so it's not very surprising. The second question was related to the oil price. So we have combined impacts in that respect. For construction, obviously, it's a good news because, you know, as public budgets, for instance, are not extensive, if we pay a lower price for construction, for bitumen, it's a good thing. And if we have already contracted with our client and we pay a lower price for bitumen, it's a good news for us. So double good news. The sole impact we have is the impact in the activities of producing and trading bitumen. And in that respect, we are in a very specific situation at the end of March because the price was probably at the worst period for evaluating stocks. This is the reason why we had a slight impact. We had impact in TIPCO, but this impact will be probably compensated at least for part of it during the fourth commanding quarters. But there is no impact for the MAC asphalt activity as the index remains very stable in this area.

Thank you. Thank you.

The next question comes in from the line of Noelle Cristini, calling from Morgan Stanley. Please go ahead.

Thank you very much for taking my questions. I have two questions, please. Firstly, just a quick follow-up on B2B. Could you help us have a better view on the B2B exposure? How much of the revenue is exposed to B2B? And then on the dividend, could you please discuss the main elements you'll be looking at when assessing the dividend around July, August time? A bit of color on the thinking process would be much appreciated there. Thank you.

About your first question, I'm sorry, but we do not disclose our part of B2B revenue in the total revenue. Just to give you some flavor, our market share is around 30% in the mobile for the high-end part of the market, for the big companies, I would say, in the mobile. For the SME, we are around 10% in the mobile. And in the fixed business, we are around 5% either for the SMEs and the big companies. So you see the market share is quite small, especially for the SMEs.

Concerning dividends, I remind you that the decision we took during the month of April was not related to the financial structure of the group. As I explained before, the structure of the group is very solid and we do not have any hesitation or question concerning this in the forthcoming period. So our decision, Martin decided to propose to his board not to propose this dividend due to the fact that we were in the middle of the sanitary crisis. So with some very, very sad news every day on the newspaper on this and so on and so forth. So this was the driver of the decision. So what we will do end of July or beginning August is that we will consider where we will stand in term of resumption of activity, where will be the sanitary crisis, in which countries, where we will be affected, not in the past, but what will be the future visible at that date. And we will decide on that with these elements.

Thank you very much. The next question comes in from the line of Jerry Dallas, calling from Jefferies.

Please go ahead.

Yes, good morning. Thank you for taking my questions. My first question has to do with productivity. You mentioned that on building sites, productivity is currently running at around 50%. And I just wanted to understand how we translate that into your financials. Does 50% productivity imply that revenues are falling, are running 50% below normal levels on the basis that revenue is presumably generated or linked to delivery milestones? And on the cost side, what does 50% productivity sort of really mean? the costs still run at sort of 100% of normal levels, or what would the linkage be, please? And you mentioned getting back towards sort of full productivity. And I wondered what you think has to be achieved in order to get there, given that the additional safety costs and social distancing measures are unlikely to go away. You know, how realistic is full productivity? Would there be an incremental ongoing cost associated with that? And then very finally, if I may, would it be possible on telecoms to comment as to how much your churn is down during the period of lockdown, please? Thank you.

I will answer briefly to your question on telecommunication. Of course, the churn was much lower during the lockdown. So the self was lower and the churn was also lower.

As far as productivity in construction is concerned, let's say that obviously the figure we just mentioned is a combination of all factors. the health and safety measures which are taken in order to protect our employees. But it integrates also, it's very, very important, the availability of the supply chain and subcontractors. I told you that we organized the reconstruction to restart as soon as possible. our construction as soon as possible. But we have been very proactive. We have been buying some masks in China during the third week of March, which has been delivered at end of March in France. But I would say that it was blocked by the French authorities, which have taken part of this for their own needs. If you consider this situation for us, it's not always the same for our supply chain and for our subcontractors. This is part of the reason for which the profitability is quite affected at that stage. But this is progressing very deeply week after week. And we expect from the end of confinement, which is very recent, that this will boost rapidly the activity of our building activities. And this is what we have seen during the past weeks. There is no reason specifically to have a curve which will be better week after week. We are convinced of all of that. The second question you had in that respect was how to convert this lower activity with our turnover. Obviously, we are paid when we can invoice, when we deliver. So obviously, this is directly linked to our turnover.

Sorry, and thank you for that. And on the cost side, how are the costs related to lower productivity? What sort of savings are available relative to the normal cost base when you're running at 50% productivity, given your earlier comment that you are maintaining the capacity to get back to normal?

we have not an impact on productivity of 50%. This is the current level of activity on site. But this is, the activity is low for instance because subcontractors are not there. So when we, we don't have the turnover but we don't have the charges which are related to that. You understand what I mean? We are back to the question I answered before, which was related to the part of a variable on a fixed cost. And the part which is related to the productivity is far lower, fortunately. Got it. Thank you.

The next question comes in from the line of Frederic Boulan calling from Bank of America. Please go ahead.

Hi, good morning. Two questions on my side. Firstly, in terms of free cash flow, so can you go through the measures you're taking in terms of free cash flow preservation? Your working cap was not that different to last year, so it doesn't seem like there is a a big impact at this stage, but if you can go through what you expect. It's probably a bit early for specific guidance, but considering what you've seen in March, April, May, do you have a range of different scenarios you've done in terms of free cash flow or net debt for this year? And then secondly, following on Nawa's question on the dividends, If you could explain a little bit what are the criteria for you to take that decision and what's the framework for the ordinary dividends, for special dividends? Can you actually do that considering the French government is asking every company to get dividend by a third? What's the criteria? Is it based on free cash flow generation in the year or is it based on your confidence in free cash regeneration in the next year. So if you can help us a bit on your decision tree here. Thank you.

Okay. Starting with the working capital question, let's say you have seen that there is absolutely no impact of COVID during the first quarter of 2020, which is related as far as the working capital is concerned. So no impact, no impact for a reason which is very simple. is the fact that when we work, we invoice at the end of the month, let's say, and at the end of the month, the activity was lower. But as we have always delayed the period to be paid, there is no impact. It is too early. We think that we will have on working capital a sort of distortion during the coming period because we will have the impact of the lockdown period in which we have nothing to invoice and we will have to pay suppliers and contractors for work they perform before. So we will have a distortion over time. this distortion will be corrected. I am unable to say today what will be the period for regularization of that, but for sure at the end of June, we will have a significant impact which is related to the lockdown. As I mentioned before, we have we have abandoned our guidance, we didn't give a new guidance because we are not at the end of the sanitary crisis. So it would be quite surprising to be able to give a new guidance as we don't know on which scenario we can base that guidance. Someone mentioned before that some people are doing some guidance. Fair enough, but we don't have that Christ table, so we are unable to do so. It's too early. Frankly, it's too early. We are managing the sanitary crisis. We are managing the resumption of the activity. And then when we will be later, we will be able to tell you more about that. But obviously, we will have, as we mentioned, the result of the year is affected, so there will be an impact on that. And there will be an impact on working capital, but we are unable to manage. to tell you that today. So this is the reason why we do not give any guidance in terms of free cash flow. Your question related to dividends, I mentioned before what was the criteria. And if I have to choose, when you mentioned several ideas, obviously, this will be guided by our ability to generate cash flow on medium or long term, because usually the year will be affected.

Okay. Thank you very much. Okay. Thank you.

We have another question. Apologies.

Please go ahead. Just you mentioned also what I've said the French government in terms of dividend. I remind you that they said precisely that unemployment measures was not the measures which would induce the impossibility to pay dividends. This is related to tax postponement, payment postponement. credit lines which has to be guaranteed by the government, which is absolutely not the case for the BRIC group. I mentioned that our situation is very strong. Obviously, we didn't seek any help from the government in order to support our financing. So we are not in that case. So we have no, no, this is not a criteria for us.

Okay, clear. Thank you.

Okay, we have another question coming through from the line of Eric Lemery, calling from Brian Garnier. Please go ahead.

Yes, thanks. Just two quick follow-up questions for me, please. The first one, you mentioned that currently two-thirds of your costs are viable due to the pandemic situation. What was that figure? Yeah, in average. And what were the figures before the pandemic, let's say last year? This is my first question. And the second question, I understand that actually a lot of mayor in France have been elected after the first round of election in France, and that city councils should be able to be put in place as soon as the 18th of May, so very soon. Do you expect some positive impact from that, let's say, for instance, as soon as June?

Thank you. Answering your second question first, Obviously the fact that we will have municipal council which is a good news, but you have to take in mind two different things. First, generally people which are elected at the first round are small municipalities where we don't have the major part of our activity. And the second part, even after election it will take a bit time to restart. So no massive impact related to that decision. Okay. Secondly, concerning the cost structure, there is no difference, major difference in our cost structure before and after COVID crisis. This is general. What I mentioned before is the interruption of activity related to COVID allows us less flexibility than when the activity is decreasing due to a market factor. Because when we are adapting our structure for market, we are able to adapt our structure for a market factor, but in the precise case, the interruption of work during some weeks, we have no impact on our backlog. So we'll have to deliver the backlog. which is at a high level. So we obviously, we couldn't, we adapt our structure to a level of activity which will be maintained. Do you understand what I mean?

Yeah, yeah, yeah, yeah, I think so. Okay.

What we do, we are making efforts in order to select our... We have some spending which are related to some projects. Obviously, this year we will suspend some projects which are not strategic. We will maintain strategic projects, and Christian, for instance, mentioned that before, but we will be very selective this year, a bit more than selective than usually.

Okay, thank you.

The next question comes in from the line of Thomas Tavrid, calling from Brian Garnier.

Please go ahead.

Yeah, thank you very much. Two questions on telecom, please. The first one is a quick follow-up on the COVID-19 impact on the telecom business. You mentioned that you have a 20 million revenue impact and 10 million current operating profit impact. I just want to understand what part exactly falls as an EBDA impact over the quarter. And that seems like, let's say, a high conversion ratio from revenue to current operating margin of 50%. in spite of the fact that you said that roaming did not have an impact on the quarter. So I'm trying to understand how we should extrapolate that over Q2 as the revenue impact will be higher. Should we expect like at least a 50% impact falling right down into the current operating profits? And my second question is on network sharing agreements. Actually, Iliad requested lately an extension of its national roaming agreement with Orange. I'd like to know what's your reaction to it. And more generally speaking, do you think that the COVID crisis might have an impact on the regulatory stance and politics as far as network sharing agreements are concerned? And would you expect, I mean, regulation to be lighter on this point with the objective of having wider network sharing agreements over the French territory?

Thank you very much. About your first question about warming agreement, the extension of warming agreement between free and orange is about 2G and 3G technology. So the impact is no impact for us, I would say. Of course, we would have preferred that this warming agreement stopped, but it is not the case, but it is not a problem. About regulation, we will see. I don't know about that. Today, the government is mainly managing the territory crisis, and I don't think they have any time to think about that. The beginning was about the impact of other revenues, I think, on EBITDA. So I may use that the other revenues have no impact on EBITDA. Sorry, excuse me.

My impact was on the COVID-related impact. Sales is negative 20 million. It turns out into current operating profit of 10 million.

Yes, that's exactly that. The minus 20 million euros is about other revenues, not sales from services. The impact on stealth from services is in fact positive because we had more incoming calls during the lockdown. So the minus 20 is minus 30 in other news and plus 10 in stealth from services. And the minus 30 in the other news is coming from unset stealth. And so the margin is, of course, negative on itself because this is subsidies. Okay? So about the 10 million euros impact on current operating profit or EBDA. So this is mainly cost. This is 10 million of cost. This is 5 million of buying of safety equipment for our employees and for the reopening of the shops. and this is also $5 million we have taken in precaution because we decided at Book Telecom to pay our suppliers quickly, and also we have pledged to pay the invoices for the micro-business. And that's why we took 5 million euros expenses on that.

Okay, very clear. Thanks.

The final question comes in from the line of Matthew Rubiliard calling from Berkeley. Matthew, please go ahead. Hello, Matthew, is your line muted?

Oh, sorry for that. Can you hear me now?

Yes, please go ahead.

Yeah, thanks for taking a follow-up question. Very quickly on the costs again, you highlighted in slide 24 higher costs that you qualify as non-recurrent for brand and advertising, and if we take out maybe 10 for COVID, that's 20 for those advertising and brand. It seems like a very large amount for a quarter, so I was wondering if you basically entered into contracts and recognize some spending that will be actually spent really during the whole year. Because, I mean, living in France, I haven't seen anything particularly strong in terms of new commercial push certainly in the last few months. And so, is it really what I just said? And second, when we look at this at the end of the year, you will be saying the right presentation would be, well, we spend 30 or 20 million more throughout the whole year, and that's kind of much more normalized, so it's not a one-off. Hopefully that's clear.

Yeah, the 30 million is a one-off. I don't know if you are in France or not, but we launched a very big advertising campaign in January for our new brand signatures, which is On est fait pour être ensemble. And this is the launch of our new, not exactly new brand, but this is a new marketing positioning. So we did that in January and February. a very big, big, big campaign and this campaign is here to support our quality program. The quality program will of course continue but usually we do not have big marketing expenses for communication and bond in the first quarter and this year this is the case with this big marketing campaign.

Okay, thank you very much.

Thank you. That does conclude today's question and answer session. So I shall turn the call back across to yourselves for any final closing remarks.

Thank you very much for joining us today. We will be announcing half-year 2020 sales and earnings on 27 August 2020. Should you have any questions, please contact our investor relations team. Their contact information is on the press release on our website. Thank you.

Ladies and gentlemen, this concludes Preview First Quarter 2020 Results Conference Call.

Thank you all for your participation and you may now disconnect.