Bouygues

We will take all your questions at the end of this presentation.

To ask a question, please press asterisk 1 on your keyboard. Let me now give the floor to Karine Adam-Cruzan, who is Head of Investor Relations at WIGU. Thank you. Good morning and welcome. Thank you for accepting our invitation to attend this teleconference for the presentation of our results for the first half of 2020. Before beginning, I'd like to remind you that on our website, www.buick.com, you will find the press release with our results, the presentation that we'll be commenting throughout this teleconference, an Excel file resuming the main figures for the group and its businesses, and the consolidated financial statements. This presentation is contains forward-looking statements and information concerning the BRIC group and its activities. They reflect objectives based on the group's senior management's current expectations or best estimates. However, due to a number of factors and uncertainties, our actual results may differ materially from the forward-looking statements described here today. Let me now give the floor to Martin BRIC, the group's chairman and CEO. Thank you, Karine. Good morning. to one and all, and thank you for taking part in this teleconference, which is being held by teleconference because of the current situation. And I'm going to comment the group's results with Olivier Roussard, Pascal Granger, and the CEOs of the five business lines comprising our three activities. We'll take all your questions at the end of our presentation. Let's begin with slide number four, the highlights of the first half of 2020. The first half of the year was, of course, marked by the COVID-19 crisis. However, despite the strong impact of this crisis, the group nonetheless generated a positive current operating profit in Q2, which is, of course, very good news. Furthermore, the group is well positioned to weather this crisis thanks to a very robust financial structure and a high level of liquidity with $11.1 billion in available cash at the end of June. Our construction businesses have a record backlog which gives us good visibility for future business. The landmark event of the second quarter is that Colas posted a current operating profit in Q2 thanks to the rapid restart of its activities. Greek Telecom, since the end of the lockdown, has returned to sustained commercial momentum. The strong growth in sales from services was up 8%, and the increase in EBITDA after leases was 9% year on year. Vitelecom has signed an agreement with Credit Mutuel. This is an exclusive memorandum of understanding with a view to acquiring EIT, which is the leading MVNO operator in the French market, and an important distribution agreement. Our telecom looks strongly positioned for the years to come. Given the information we have to date, and in particular the sharp downturn in roaming, Greek Telecom has revised its guidance because it's been suspended since last April. Let's now move on to the group's key figures, which you'll find on slide number five. As expected, the COVID-19 crisis has had a considerable impact on our results. Sales were down 15% year-on-year, or down €2.7 billion, which is entirely due to the COVID-19 crisis, which we have estimated to add an impact of minus €2.8 billion. Sales fell sharply in France, down 19% due to a strict lockdown, followed by a gradual resumption of our activity in all three sectors. In international markets, sales were down 10%, affected by the slowdown of activity, and the lockdown in several countries in which we have operations. The COVID-19 crisis fully accounts for the shortfall of €585 million in current operating income in the first half of this year. Were it not for COVID-19, this would have been an increase of €65 million by comparison with the same period last year. After reaching a low point in April, the group's current operating profit returned into the black from June onwards. So it became profitable once again from June onwards. Net profit attributed to the group was also down sharply given the context. As mentioned at the start of this presentation, the group's current operating profit was positive in Q2 2020. That's a profit of 110 million euro, which I'm very happy about, needless to say. This performance, which you'll see on slide number six, was due to the strong responsiveness of our business, particularly Brick Telecom, whose current operating profit has improved year on year, largely driven by the increase in its customer base and, of course, the increase in ABPUs. TF1, which achieved substantial savings over the period, and, of course, Kulas, which was restarted its roads business rapidly, particularly in France and Canada. Let's now take a look at the group's liquidity situation. This is slide number seven. As you can see, at the end of June this year, BRIC had a very high level of available cash at 11.1 billion euro. This is up sharply by 2.7 billion euro. compared with June 2019. This 11.1 billion breaks down into 4.4 billion in cash and 6.7 billion in undrawn medium and long-term facilities of which 6.3 billion are devoid of covenants. The debt maturity schedule is very well spread and includes the new 1 billion euro bond issue that was completed on the 7th of April last. I should also point out that the group regained one billion in bonds in July, so this amount is still included in the schedule as stated at June 30th, 2020. This high liquidity position contributes to the group's strong financial structure, which is shown on page eight, or slide eight. At 3.9 billion, The group's net debt at the end of June 2020 was an improvement on the situation 12 months beforehand. This includes the positive impact of Alstom due to the dividend received and the partial disposal or disposal of part of our stake in Alstom in September 2019. However, this does not take into account two other items. First of all, the payout of of a dividend of €1.70, which will be put before the AGM next week for payment on the 11th of September, if approved. And secondly, the acquisition of EIT by Brick Telecom, which should be closed in Q4 of this year. I'm now going to give the floor to Olivier Roussard for a detailed review of our activities.

Thank you, Martin. look at the various business areas, starting with construction on slide 11. So you can take a look at the business activity, the commercial activity. The order book, the backlog for construction has a record high of 35.7 billion euros at end June, which gives us good visibility on the future. That backlog has two major items in it. There are two deals that were made in Q2, a number of deals actually in Q2, and of course there was less of the order book that was in a way consumed because of the lockdown in Q1. In the three business areas, especially with Greek construction, you have a significant increase of the backlog, 18% with the new orders over the half year. Greek immobilier with a wholesale sale of 1,408 lots at the Caisse de Depot in H2. And then for Colas, the order book is, well, the increase is more limited, 1% over the year, because there were fewer orders in Rue de Metropole because of the pandemic and the electoral context. And, of course, as you know, the local elections were postponed. Finally, the order book for brick construction, the backlog and collapse internationally is up and reaches now 63% compared with 61% last year. On slide 12, we illustrated this commercial momentum on slide 12 with the number of significant projects in Q2. I won't go through all of them. There are two railway projects, the building of a high-speed railway link in HS2 in the U.K. and the replacement of the power supply of a metro line in Singapore. And then there's a product to build infrastructure for renewable energies with the wind farm in Fekong. And you have this on the top left corner of the slide. Looking at the financial performance, this is slide 13. As expected, there's, of course, the effect of COVID-19, a significant effect, of course, on H1. At 30 June 2020, construction sales were down 19%, minus €2.6 billion. Current operating profit is actually a loss. It's down 509 million euros. The declines are entirely attributable to the COVID-19 crisis. You have a little box at the bottom right corner. We believe that the impact on sales is minus 0.2 billion euros. And on current operating profit, the decline is 530 million euros. France was affected because of the strict lockdown and the slow lockdown. to business and of course there was the postponement of local elections of course that slowed down road building and also slowed property development overseas while internationally there was less of a slowdown but even though our activity was slowed down in a number of countries where we do have businesses After a low point in April, the situation gradually improved. Construction business started and returned to profit as of June. That improvement continued throughout the summer and is a reflection of proactive management of the COVID-19 crisis. On the next slide, slide 14, we were confronted to COVID as early as February in Hong Kong because case number 16 occurred. was discovered in Hong Kong in February. So we had to close down for two weeks or 14 days. Then, of course, we supplied all our employees with masks and gels. But after that, there were no further contaminations after this fortnight of interruption. And we, on the strength of that experience, we were able to start business again in France as early as 15 April, so long before the end of the lockdown, and we extended that to other countries which had also suffered a stoppage, as it were. So that experience was put to profit throughout the world. At mid-July, just about all the sites had reopened in France, and we were back almost to pre-crisis levels. Internationally, Sales were almost back to normal in many countries. The last country that returned to normal business was Singapore in mid-August. Summer was the opportunity to catch up on activity. We asked our employees to take their vacation during the lockdown so as to be able to work during the summer and make up for the losses there. over Q3. So we started new projects and sites. The various business areas try to limit the effect of the COVID crisis on the performance, negotiating the additional costs with customers and trying to save on other items. On slide 15 now, of course, the French government has launched a number of stimulus packages. On this slide, well, that's not just in France, around the world. You can see on the map the various stimulus packages that are available. So the numbers vary if you compare. In the United States, the Americans want $1,000 million, that is $1 billion. And the Democrats are opting for 3 trillion, 3,000 billion. So we'll see what comes out. In Europe, 750 billion will be allocated partly to the energy transition. Well, the various stimulus packages will be looking at low-carbon solutions, and our group is in a good position there. because we have a large portfolio of low-carbon solutions so that we can take the opportunities that will arise through these stimulus packages. We have a recap of the four areas where we do have solutions. Of course, sustainable construction, sustainable building, but we also have wooden structures, renewable energies, and that has everything to do with the storage of solar farms, renovation as well, where we have the green solutions for service buildings, positive energy buildings, and then what is known as clean mobility. And so we're looking at public transport infrastructure and such like. Now, we have on slide... 17 now, a few examples of low-carbon projects. We have the Sensation Building in Strasbourg, which won a prize for timber construction. Then we have Flowchain, which is the largest floating wind turbine in Europe. We have PureLink, which is a floating solar power plant. And on the right-hand side of the slide, bottom right, we have the Wattway Park. That's a solution that we have to light up roads and pathways, and this is for a cycle path. CF1 gave their presentation in July, so I'll go over them quickly, but the performance in H1 showed the effects. of the COVID-19 crisis on its business, but also it demonstrated TF1's ability to adapt rapidly on programming and programming costs to limit the effects of the crisis. Sales in H1 was 884 million euros, down 23%, minus 261 million euros. So this is essentially due to the COVID-19 impact estimated at €250 million over the period. You, of course, had the cancellation of advertising campaigns, a number of advertising projects were suspended, and then a number of shootings, especially in France, were interrupted, not just in France, but abroad as well. Current operating profit is €68 million, down €95 million, and that's wholly attributable to COVID-19. That loss is less than that of sales because, of course, efforts were made to bring down the costs of programming, the programming costs, and TF1 was able to save as much as 107 million euros on programs on free-to-air channels. That's about a 30% reduction. Since the end of the lockdown, the decline in advertising revenue is now reversing. Some of the advertisers are coming back. But because of the uncertainty of development, TF1 has decided to forego its objectives for 2020 and 2021. Let's move to Brick Telecom in slide 21. And you have a good sales performance since the end of the lockdown. Brick Telecom was the first operator that reopened its shops as early as 11 May at the end of the lockdown while respecting the sanitary precautions. So we told you about the measures taken, the preventive measures taken on the construction sites as well, but likewise for our shops. Ever since the shops reopened, the level of subscriptions is in fact higher than it was prior to the crisis, both for mobile and FTTH. In mobile, we had a concern that there's a new profile shaping up in the market with the premium customers migrating to the Internet, but that's not what happened. In fact, we have premium customers returning to the shops, and there's a high level of conversion into purchase. And so in H1 2020, the share of the premium segment maintained its position vis-à-vis SIM only and web only. And so the mobile market, plan base, not including MTM, machine-to-machine, was 11.8 million customers at end June 2020, up 274,000 new customers since end 2019, and 161,000 on Q2 alone. As expected, we have a higher demand on FTTH. The customer base for FTTH stands at 1.2 million customers at end June, with, as I said, 210,000 new customers since the end of 2019, including 93,000 in Q2. Penetration rate for FTTH now stands at 30% compared with 20% before, and so now Greek Telecom finds itself in a ratio comparable to that of its competitors on the FTTH ratio vis-à-vis Q2. all the fixed base customer, fixed line customers. On slide 22, we have the numbers for Q2. You can see that with more than 6% growth in overall sales at Q2 2020, Bouygues Telecom shows that it is uninterrupted quarterly growth, the strongest on the French market since mid-2017. So that growth performance has been maintained for 20 quarters running. So that is the consequence of the strategy that was introduced in 2015, which has made possible for Bouygues Telecom to look at constant growth momentum. Of course, we have a growth in the mobile market, base customer base, but also a fixed customer base, as we saw, but also an improvement in ABPU, average billing per user. On Q2 2020, as you can see at the bottom, at the top right corner of the slide, the mobile ABPU restated for roaming is up 0.3 euros at 19.7 euros per customer and per month, and fixed customers ABPU is up 1.3 euros at 27.2 euros. In spite of the decline in roaming, because of course, well, roaming is generated, roaming profit is not generated within Europe, but intercontinental travelers, so there's none of that. But in spite of that, growth in service sales in Q2 was sustained at plus 6% over one year. That's for the fixed service sales. It's up 11% and 4% on mobile service sales, up 4% for mobile. So the increase in not including roaming billed to customers compensated for the loss in roaming revenue because of the absence of intercontinental travel On slide 23, overall, on H1 2020, service sales were up 8% over one year at 2.4 billion euros, as you can see on the slide. On others, that sales is down because we've sold fewer handsets in the shops. You have to remember that handsets sold is almost essentially in shops, so when the shops were closed, you had to complete vanishing of the sales, but at 3 billion euros, sales were still up 4% over the half year. It does include the COVID-19 impact, you can see on the bottom right corner, estimated at minus 70 million euros, and it's only a 20 million effect on the current operating profits. EBITDA after leases is also up 9% at €711 million. That includes €20 million in non-recurring costs associated with the advertising campaigns that occurred in Q1 and also the repositioning of the brand and also the €20 million impact of COVID-19 in H1. EBITDA after leases stands at 29.6%, up 0.3% compared with QH1 2019. Current operating profit stands at 253 million euros, up 23 million euros over the year. That includes 17 million euros in capital gains because of the sale of FTTH premises to the co-enterprise as part of the Asterix project. You may remember that This is a deal with Orange in medium coverage zone. So Orange is in a position to generate lease revenue out of that by owning the premises. So we sold them to Orange. Operating profits was down 26 million in H1 because of the absence of non-current income. and non-current income was up 50 million euros last year. Gross capex were 581 million euros over the half year, up 51 million euros over the same period. Sales, that is disposals, were 194 million euros, mostly linked to the Asterix project, 185 million euros. Let's go back to the announcement we signed in June. Brick Telecom signed a an exclusive agreement with Euro Information, which is a subsidiary of Crédit Mutuel with a view to acquiring 100% of EIT, and to sign a distribution partnership. EIT is the number one MVNO operator in France. It is present on all the three key markets, B2C, C2C, and also wholesale, that is, to other MVNOs. It has five brands. and it has wholesale agreements with Orange, SFR, and WIC Telecom. EIT has about 2 million customers. Its distribution network is essentially made up of 4,200 branches of Crédit Mutuel and CIC, and as many as 30,000 commercial advisors, customer advisors. I beg your pardon, 25,000. Looking at B2C, we are in a context where that market has reached maturity. So, of course, there's tougher competition there. And the operation has a strategic interest for Brick Telecom because, A, we can step up our growth in both mobile and because we have a wider base, we can also offer mobile. fixed line contracts to the new customers. We can also have an additional distribution network. I mean, it is eight times bigger than that of WIC Telecom. And, of course, it means that WIC Telecom now can be in areas where we had no previous experience. So we are present throughout the territory. And, of course, this is a fixed cost business model. So if we can have... More customers, well, mechanically this means that profitability is higher, so this means that we can secure our free cash flow because of our fixed costs. Our contribution as estimated based on the baseline scenario, we expect to have an additional 200 million euros in EBITDA after leases and generate as much as 100 million in free cash flow. On slide 26, we will tell you about the price of acquisition for this MVNO base. So we have a fixed part, 530 million euros payable at closing, and an additional part, which will be anywhere between 140 and 325 billion euros, payable over five years and dependent on the revenue generated by the bank network. The operation will be finalized by end 2020. We need to have the necessary administrative authorization, that is the French competition authority, but also there also needs to be consultations with staff representatives. I'll now give the floor to Pascal Granger, who will give you a detailed presentation of the numbers.