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.

Thank you, Olivier. I have a few additional explanations for you on the accounts as of June 30th. Concerning the income statement on slide 28, I'm not going to elaborate on the sales and current operating profit that have already been commented at length. Other operating income and expenses netted out at minus €44 million in the first half. This is down by comparison with the first half year of 2019 and mainly includes €45 million in non-recurring expenses at Colas, due to the reorganization of the road business in France and the continued decommissioning of the Dunkirk site. Last year's non-recurring income was a positive 42 million euros because it mainly included non-recurring income at Greek Telecom, stemming from the mobile sites mentioned by Olivier earlier on. The cost of the net debt fell by 13 million over a year. This was in particular due to lower interest expense at Brugge S.A. following the bond redemption in October 2019. Moving down to the lower half of the income statement, we booked a tax credit of €12 million at June 30th by comparison with an expense of €132 million last year. So this calculation gives us an effective tax rate of 4%, which obviously is not in any way significant. This is due on the one hand to the fact that certain losses recorded abroad did not give rise to the booking of deferred tax assets and, on the other hand, due to the fact that the losses in the first half of 2020 are activated at a tax rate lower than the annual rate, insofar as these losses will in all likelihood be used from 2023 onwards. Overall, the net income attributable to the group is a loss of €244 million after a profit of €225 million last year. Let's now take a look at the Group's balance sheet at June 30th. The total of the balance sheet is €41.5 billion after €39.4 billion at year-end 2019. Moving on to slide number 30, you'll see that on the asset side, non-current assets total €20.4 billion, up €132 million. This variation can be largely attributed to two important factors. The increase in the value of joint ventures and associated entities, that is a €281 million increase, rising to a total of €1.8 billion. This is mainly due to the valuation at €295 million of Big Telecom's share in SDAIF. SDAIF is the joint venture met earlier with Vauban Investment Partners in the general framework of the Asterix project. This is also due to a €236 billion million euro decrease in property, plant and equipment, which is down to 7.4 billion euro, a decrease which is mainly due to colas. Slide 31, you see that current assets total 21.1 billion euro, up almost 2 billion euro by comparison with the end of last year. First of all, current operating assets increased during the first half year by approximately 870 million euro, There are three main contributing factors here. First of all, an increase in other receivables at BRIC Telecom, an increase of €325 million, including €222 million rating to SDIF, which I've just mentioned. In fact, the proceeds from the sale of FTTH connections for €185 million before tax, or €222 million including tax, These proceeds were booked in July and therefore will be booked to Q3 and not Q2. Second factor, an increase in contract-related assets at Colas for €237 million. This is due to the seasonality of the business. And finally, an increase in trade receivables at Big Telecom for €115 million, which is in line with the growth in sales. Furthermore, the cash situation rose by €1.1 billion, thanks notably to a 1 billion euro bond issue in April. Moving on now to the liability side on slide 32, shareholders' equity were down 349 million to 11.5 billion. Now this includes in particular net income from activities continued over the period, which actually amounted to a loss of 219 million. Other income and expenses that are carried directly under shareholders' equity for a net expense of €114 million. These were mainly comprised of the €82 million negative impact of currency translation at group level and the €32 million negative impact of actuarial adjustments to pensions and several payments. Slide 33, this is the non-current liabilities, which amount to close to €10.2 billion, up almost €2 billion. Long-term debt. rose by €2.1 billion over the period to €6.3 billion. This increase was notably comprised of the €1 billion bond issue in April, previously mentioned, as well as the drawing down of credit facilities to the tune of €870 million by BRIC-SA. This brings us to the variation of net debt in the first half of 2020. We're on slide 34. As we saw previously, net debt reached €3.9 billion at June 30th, which is an increase of €1.5 billion by comparison with December 31st, 2019. This increase breaks down as follows. €39 million in acquisitions net of disposals, that's a negative figure of €39 million, which is a very small amount for the period. This was mainly due to a number of acquisitions made by Colas. The second factor is €6 million plus €16 million in capital and other transactions, which include share-by-banks, the exercising stock options, and the remaining part of the capital increase reserved for BRIC employees. This was the so-called BRIC Confiance No. 11 program. Then a €-5 million in dividends. These are dividends paid by the consolidated activities to equity investments below the controlling interest threshold. And finally, a €-1.5 billion in due to the running of the businesses, which is the bulk of the variation of the half-year. This amount is slightly lower than last year, so let's take a closer look at this variation in slide 35. Let's begin with net cash flow. Including lease obligations amounted to $383 million over the first six months, down over $400 million by the first half of 2019. due to the sharp decline in business and the decline in results over the period. Net capex were down €171 million to €607 million. This variation is particularly notable in the construction businesses, which in the first half year notably adjusted their capex to bring it in line with the level of activity. Furthermore, Brick Telecom increased its grossed capex, as we heard earlier on, but at the same time benefited from the proceeds from the sale for €185 million as part of the Asterix project. This brings us to changes in working capital requirements relating to operating activities. Thanks to the efforts made by this unprecedented period, the variation in working capital requirements over the period was considerably lower than in the first half of 2019, by almost €600 million. We have, at the end of June, we have yet to book any deformation in the working capital requirement as we expected. This is a phenomenon that will lag over time. However, it will be lower than we initially anticipated or initially feared. Finally, this quarter, we have isolated the changes in working capital requirements related to property, plant, and equipment, which have changed from minus 117 to minus 131 million euro. And the bulk of this variation was due to the disposal of FTH connections for €280 million, which was booked in July. Finally, the variation is almost identical to last year for the same period. That's it. That brings us to the end of my presentation of the financial statements. Thank you for your attention. Thank you, Pascal. Let me now wrap up our presentation, and I propose to refer you to slide number 37. I'd like to begin by telling you that the COVID-19 crisis and its consequences have an impact on our strategic choices. We want to strengthen the more resilient businesses in the group, with telecom, of course, and energy and services. We also intend to continue developing COLAS, by expanding the international network through external growth in target countries, and by optimizing our industrial activities in quarries and bitumen. TF1 and Brigue Immobilier must continue to transform themselves. In the case of TF1, TF1 needs to strengthen its positioning in the value chain to reduce its dependence on the advertising market. In the case of Brigue Immobilier, Brigue Immobilier needs to turn around its sales and profitability. Finally, we intend to accelerate our digital transformation by developing innovative products and solutions and by reshaping our organizations and work processes. In this unprecedented context, the group is convinced that we need to enter into a new stage of our climate strategy. As mentioned on slide number 38, entails reducing the carbon footprint of our activities while strengthening the portfolio of our low carbon solutions. Now the group is confirming the definition of a greenhouse gas emissions reduction target by 2020 that will be consistent with the Paris agreements and by setting up a plan of action for its five businesses in the course of this year, 2020. As for the group's financial objectives, this is slide 39. I'd like to remind you that we withdrew our financial guidance last April. Given the uncertainties concerning COVID-19 and its impact over the rest of the year, the group has not set any new guidance for 2020. That said, thanks to the responsiveness of the business segments and the measures we've taken, the group will return to significant profitability in the second half of this year without reaching the particularly high levels of the second half of 2019. Greek Telecom is showing its resilience by pursuing its growth strategy and has chosen to maintain a high level of investment in order to strengthen the quality of its networks in the context of where usage is constantly increasing. As a result, Brick Telecom has revised its objectives for 2020. On the basis of what we now know, and barring any new negative consequences of COVID-19, we now expect growth in sales from services, of approximately 4%, despite the sharp decline in roaming due to COVID-19. Gross capex that could reach €1.2 billion. This includes necessary expenditure for the integration of EIT, but not including the acquisition of 5G frequencies. And finally, free cash flow of some €250 million. By way of conclusion, RIG is well equipped and well positioned for this unprecedented crisis. The long-term trends on which the group relies remain buoyant despite the current crisis. All of our businesses are essential. After a challenging first half of 2020, our fundamentals and our strategy should enable us to return to growth in all three sectors of activity. I'd like to take this opportunity to Once again, pay tribute to the spirit and commitment of all our employees in this very difficult period of time for us all. Now, before moving on to questions and answers, let me remind you of the calendar, which you will see on page 41. On the 4th of September, we will have our annual general meeting to deliberate on the payment of a dividend. The results for the first nine months of 2020 will be published on the 19th of November.

My colleagues and I are now at your disposal to answer your questions. Please press star 1.

First question from Frédéric Blanc of Bank of America. You have the floor, sir. Good morning and welcome. I have two questions. On Bouygues Télécom, we had 10%. growth sales and services in Q1 and 6% in Q2. How do you work out this 4% objective if you're looking at stable sales in H2? Why such a slowdown? The second question on margins. Can you tell us more about the margins in H2? If you look at the construction business, can you give us details about the sort of profit margins you can expect in 2021? Will you be in a position to come back to numbers similar to that of 2019? Can you give us details about construction, collage, and immobilier?

This is Richard Vial speaking. concerning the sales from services, the annual figure by comparison with the first half year, two important points need to be made. First of all, in the second half year, roaming has a much higher impact than in the first half year. In the first half year, there was no impact on roaming on Q1. Approximately 30 million impact in Q2. We expect a 40 million impact in Q3, and in Q4 will also be will also count. So that's an impact. The second is structurally in the way Greek Telecom operates, which is something I explained to you regarding 2018 and 2019. Greek Telecom has a strategy that we roll out in the summer in the quiet periods. As a result, revenue in the first half year is lower than in the second half year. As a result, when you start the second year, the revenue from H1 is compared with H2, which is a high basis of comparison. But this year, we will not do as well in terms of incremental income because of COVID-19. So this will have a lower impact. So a slight slowdown in the more for more, as we call it, or more for more, and the dip we expect in roaming in the second half year, Combined, this leads us to be cautious about our global figure for the year. Richard, that's for you. Olivier Roussard, maybe you would like to add a few words. Olivier. In construction, we expect a good, solid Q3. But as I said in my presentation, we've caught up, especially the fact that there are Sure, holidays taken during the summer period, holidays were already taken during the COVID-19 period, and we expect a better Q4 again. If we look at the details for BRIC Colas, Colas and BRIC Immobilier, in Q3, we should still have some impact of COVID-19 and reconstruction. There are areas where we haven't fully resumed our activity, and I'm thinking, for instance, of the work we're doing in the Philippines, We gradually resumed in August in Singapore, but in Q4, construction should be back on par, barring a downturn in the COVID-19 crisis worldwide. At Colas, however, the situation is somewhat different. In Q3, the level of activity should be slightly higher than the Q3 2019, which was nonetheless at a high level. This was a pre-election year when we tend to have more business than during election year. However, as I said earlier on regarding local elections, we can expect a downturn in Q4 because since June there's been a sharp decrease in the number of public tenders for roadways in France, so we can expect a lower level of activity in Q4. As for Brick Telecom, Richard has answered, and as for TF1, our visibility is relatively poor for the moment. So the trend is a trend of slowdown, but nonetheless, advertisers are coming back. My question about the margins on 2021. I thought you were talking about the second half here. For 2021, at Brick Construction in 2021, we expect margins to be back to a level comparable with what we achieved in 2019, but as for Colas, due to the very tense situation and calls for tenders that we expect in the second half year, in 2021 our margins should be slightly lower than the margins we achieved in 2019. We expect to be back to business as usual in 2022. As for Big Immobilier, in 2021 we anticipate margins higher than the margins in 2020, though not as high as 2019. This is because a lot of building permits have been delayed. This is also because of the election period. Thank you.

Thank you. Next question from Nicolas Del Pellisson from HSBC. With Brick Telecom, what do you expect the long-term effect on our EBITDA margin? Do you have OPEX with the leases of networks before the acquisition of VIT? And on construction margins, can you tell us more about your ability to share additional costs related to COVID with your subcontractors and your customers. Could you assess the additional costs linked to safety measures? You worked it out to five basis points.

Richard Vielle will take the first part of your question. Well, our ambitions as regards margins at Big Telecom in the medium term We're aiming at an EBITDA margin of 25%. This is our leitmotif. Remember, we're at 19, we've exceeded 30, and so the target is 35, not 25, I apologize, 35%. When you talk about disposals, I'd just like to add that when we decide to proceed with a project like Asterix, the paradox is that we dispose of assets, but at the same time, the financial conditions we have in FIBA are better than in previous cases. This is just to show you that we can proceed with disposals, sometimes for the purposes of cash, but also to improve the long-term profitability of BRIC Telecom. As for the construction part of your question, what I can say is that it's very difficult to give you a forecast. There's France on the one hand, but also international operations, which include a lot of different countries. In France, we have public contracts and the French government has taken a number of decisions regarding how additional costs are to be shared, so that's predictable, very predictable. As for private markets, well, it's on a case-by-case basis. We discuss the additional costs with each client individually. Likewise with suppliers, the situation will vary depending on the type of business they're in. I'm afraid I can't or couldn't give you any idea as to how any additional costs will be shared if they are to be shared. So I'm afraid I can't give you any insight, any dependable insight anyhow, into how these costs will be shared. It's not very meaningful at this stage.

Thank you. The next question. The next question from BM First, sir. Yes, a question about the stimulus packages. Do you have any visibility on timing for the new calls for tenders that will come as part of the stimulus packages? And regarding telecom, in terms of pricing, can you give us details about the competitive environment? I believe that back in April you said that telecom There was more competition as the shops were closed. I mean, more online competition. That is, are we back to normal now? Has the environment come back to normal?

Well, that's what the stimulus plans, like you, we have heard wishes expressed in Europe, in America, and of course, These are of interest to our activities in Europe and in the U.S. Very big figures, very substantial amounts have been mentioned, but we have yet to see how all of this is going to flesh out. We do not know how these stimulus plans will be implemented, who will be concerned. So as things stand, we are waiting to see how these decisions will materialize in the weeks to come. As for the telecoms part of your question, as we told you back in April, there were promotions or promotional drives in Q2. Obviously, traditional distribution wasn't working the same way as usual, so promotional drives took over. But we can say that as of now, as we near the end of the holiday period, is that back to what we call power, our nominal situation, this only concerns the lower end of the market. But historically, we began with promotions at 5 and 10, 12, 14. We came back to 12. My feeling is that we're looking at about 14 euro. So that seems to be a the right trend in the low end. As for the high end, well, the reopening of our stores was a great success, and people have been coming back for premium services, for premium handsets. So I think the enthusiasm is still there. The potential advent of the fifth generation will change, because mobile phones will change if the 5G comes in.

And now we have questions in the English line.

The next question comes from the line of Jacob Bluestone from Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking the question. I've got two questions, please. Firstly, just staying on the topic of premium versus no frills, you mentioned that the sort of mix between the two has stayed fairly steady. Could you perhaps quantify what is actually the mix between the two And also, how has that evolved over the last couple of years? That's the first question. And then secondly, could you maybe just give a little bit of guidance for your expectations for networking capital for this year? Thank you.

Okay, so I tried to be sure that I well understood your question. So it's concerning premium versus low-end, the first one. So first of all, I came to confirm you that... The premium part is still consistent. It's a stable situation. We speak that sometimes about 50%, 50% of the market between the premium and the sole business. But you need to realize that outside of that numbers, in terms of value, the premium is the 75% value share. So it's the most important part. That's the reason why shops exist. That's the reason why relations and CSRs exist to create relations with customers to have premiums. This is the first part. On the CapEx part, about the fact that the CapEx for the future, the only thing we told you that it's for 2000 or 2020, it will be 1.2 roughly, because at the end, it includes EIT and so on. But for 2021, we don't know exactly what will happen, and it will depend about two aspects. Of course, we'll have to integrate EET, but we need to look at how it will be integrated, first point. And the second point is about the speed-up of the 5G arriving on the market. So for those reasons, I have no guidelines really to propose for 2021 now. You need to wait a little bit.

If I can just ask a follow-up, just for networking capital for the year, is that something you can guide on? Catch what you say. Sorry for that. So I was asking about networking capital for the group for the full year.

The free cash flow about this year? No? I told you, no.

It's fine. I'll take it offline.

The BFR. You look at the BFR at the group level of Bouygues Telecom?

I was asking about the networking capital for the group, the Bouygues group.

As you know, Variations in working capital requirements mainly concern construction. This is based on the experience of previous years. You'll remember that at the start of the year, we gave you a networking capital guidance, which anticipated what we'd already undertaken in construction in particular, with a view to improving our working capital requirement. Then, of course, we were hit by COVID-19, and we anticipated a sharp decline in networking capital requirements. in the first half year due to the variation in activity, the sharp downturn in construction in particular. The good news, the very good news in our accounts today is that this sharp deterioration of working capital did not happen in the first half of the year. It did deteriorate because construction has a seasonal effect which sees working capital deteriorate in the first half of every year. But As I said, every year operating working capital deteriorated less than last year, which is the first element of good news. So I understand your question concerns networking capital at year end. That said, we have no experience of what's currently happening. The current situation is something we have no experience of. This is why we haven't given you any guidance. We believe that part of the deformation we expected in the first half year which didn't take place, will actually happen in the second half year, but to a lesser degree than we expected initially when the COVID-19 crisis started back in it.

Thank you. That's perfect. That's very helpful.

The next question comes from the line of Jerry Dulles from Jefferies. Please go ahead.

Yes, good morning. Thank you for taking my questions. I have a Two questions, please. You mentioned when discussing the margin outlook for the construction activities that weak construction should get back to a 2021 margin similar to 2019 and that COLAS could get back to 2019 levels maybe in 2022. But as I look at the current operating margins for construction and COLAS back in 2019, they were still relatively low, around 3%. And I think you have in the past guided to reaching normative margin levels of around about 4% in both of these divisions. I wonder whether you still think that those 4% normative margin levels are attainable and on what sort of timescale, please. My second question has to do with the telecom free cash flow guidance. I can see that you have reduced that guidance to 250 million euros, reflecting the higher capex. But if we triangulate back to an EBITDA target from the 250 million, if we assume net capex of a billion, a low level of interest costs, and maybe tax of around about 150 or 160 million, it would suggest that EBITDA would decline year on year in the second half. I wonder whether that is what you are anticipating or whether there's something else, some other moving part within the free cash flow guidance that we should be considering. Thank you.

Olivier Rousseau will give you an answer. Well, let me tell you that the normative margins that we announced For Bouygues Construction, we stand at about 3.5%, and we believe that normative profit margin would be about 4%. But we also feel that activities for Bouygues Construction and Colas haven't got the same normative margins. Those of Colas are driven by industrial factors, quarries and bitumen, which means that we can have more margins than simply on road works. Regarding Bouygues Telecom... EBITDA should be higher in 2020 than it was in 2019, but we did not give guidance on that. So I won't give you any.

Could I just follow? On the telecom part, so about the fact that you have the feeling that EBITDA could be lower in H2 rather than in H1, not at all. You need to understand that on the H1, we have all the concentration of the taxes. So for all those reasons and about our plans, we're still confident on the fact that in H2, the EBITDA will be higher.

Okay, just to be clear, I was suggesting that the 250 million free cash flow guidance implies that the second half EBITDA are lower than the second half of 2019. Are you saying that that's not likely to be the case?

Well, you need to realize that in H2, we will have, of course, impact from the rooming part, which will be much more significant. That's the reason why we consider that on the cash flow, we should have some impact. And the other reason is because the investments that we will maintain consistent and important on H2 will will be based on, of course, on some acceleration that will be possible during H2 rather than H1 due to the COVID. And the second part is you need to remember that we will integrate EIT during this period with some investments that have to be prepared to have a better integration. That's for all those reasons you see that on the free cash flow.

Okay? Okay. Thank you. That's very clear. And just on the normative margin in construction, I didn't catch whether there is still a timeframe for reaching the normative margin levels. Previously, it was described as being medium term, which I think was interpreted as being three years or so. Is it still possible to put a timeframe on reaching these normative margins, or is life just too uncertain now?

Well, for Colas, we believe that we could not reach the normative margins before 2022 because of the tension on the market, particularly because of what happens in France. There are few call for tenders, so we'll have to wait until business picks up again. And that is a phenomenon that we have in election years, for local election years. And this year, we have a much longer impact in as much as the municipalities were elected only in the summer. On reconstruction, construction, we said that we were looking at a return in 2021 to the situation we had in 2019. But 2019, I meant construction not including energy and services where we have the normative margins that we can have there.

Thank you very much.

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

Good morning. Thank you. Can I ask if you can share some thoughts with us about where we are with political decisions around Huawei in France? And can you help us understand better what could be the impact on Buick Telecom and your action plan around that? Thank you very much.

So on the Huawei, you know the recent announcements from the ANSI on the fact that we are in a situation on which we have four cities on which we have to change our equipment on a short-term basis. It's for 2021. For the 2023, we need to have four other cities to be changed probably with one of the other suppliers. And then there is a request about 2025 for nine cities, and there is the last request about the rest for 2028. That means that roughly at the big telecom level for this period of eight years, we will have to adapt our network with a replacement of about 3,000 sites. So 3,000 sites on eight years, it feels reasonable, and probably that this equipment could be reused in some aspects or We are not speaking so much as a significant impact on that point. Is it okay?

Yes, thank you. Thanks so much.

We can now continue with questions in the French call. Yes, good morning. I have three questions. My first question concerns the stimulus plans you've mentioned. You said there would be a large energy transition component in these stimulus plans. Is this something that leaves you more ambitious as regards energy and services? Could you recall your sales figure for this subdivision of construction, energy and services, if you would? Are you more ambitious regarding the future? Are you prepared to make acquisitions in this area? My second question concerns what you've said about your intentions for Brick Telecom, in other words, to accelerate growth. You're talking about new initiatives after the acquisition of EIT. Are you looking at B2C or B2B? My third question is, could you tell us what the level of activity was in June, by comparison with June 2019? Was it 3%, 5%, 10% less? You've said it's almost the same level as in June of 2019, but how close? See, in June you said you were profitable again, so... The idea is to try and determine if, you know, when you're at minus 5 or minus 10, if you're still breaking even. That's really what's behind my question. All right, concerning the first part of your question, the very stimulus plans and the energy transition component, well, the Chairman of Reconstruction will answer that very gladly. Well, for a number of years now, we've been preparing for this development. We're obviously very happy to see these stimulus plans emerge, particularly with the focus on decarbonizing and reducing the carbon footprint. We have great expertise in the field of new energies, be it aeolian, wind energy, solar energy, coal generation, biomass, and electrical production with low carbon emissions. This is one of the reasons behind the acquisition we made with the Kaft & Lagen in Germany where we are replacing coal-fired generators. In fact, this year we delivered a very large plant in Kiel in the north of Germany with a view to replacing a coal-fired power plant. We're ready for all these stimulus plans. Everything relating to timber and sustainable construction all tie into the skills and expertise we've been developing over the last few years. As for the volume of sales at Energy and Services, we are bordering on €4 billion. So the construction is now well balanced between building about €4 billion infrastructure, about $4 billion, and energy and services, about $4 billion too. As was said earlier on, our intention is to reinforce our position in the field of energy and services. As for the telecom, Richard Viviel, Big Telecom did indeed mention that it intended to accelerate its growth. Well, we began with... an approach to the B2B by buying Kayo. Kayo is generating part of this business in SMEs, or with SMEs. Now, of course, we're integrating Nerim, and we're deploying cloud-based solutions for B2B. In particular, with EIT, we now have new ambitions. Why new ambitions? Well, because EIT gives us access to an additional 2 million mobile clients, but also 4,250 branch offices, and 30,000 relationship managers. We can improve on this, but the idea is to develop two areas. Fixed lines, where we have big ambitions. Just for your information, we have 12 million mobile, 4 million clients in fixed, which gives us some idea of what we could improve with the IT. Finally, with SMEs, that's part of B2B. Well, CIC, the bank, has the characteristic that it's in relationship with 40% of all SMEs in France. This is another area of potential development on top of the initial reasons for purchasing IT. Concerning the activity, some information about June, maybe Olivier Roussard can give you further information. Okay, when we look at... If I focus on France for a second... We were at some 98% of our level of activities with Colas, Brick Construction, Brick Immobilier. That's for France, almost 98%. Now, if we stand back a bit and look at the international operations, Colas was more or less on par with last year. Brick Construction was still penalized by a handful of countries. They said Singapore was still in lockdown in June. The Philippines were also penalized for some On the whole, I think we can see that in June, our level of activity was maybe 1%, 2%, possibly 3% below the level we achieved in 2019.

Thank you.

Before we move on to the next question, let me remind participants that you can press on star 1 to put your question. The next question comes from Thomas Poudry. From Grand Garnier, you have the floor, sir. Yes, good morning. Two questions about telecoms, if I may. One about the figures. You're looking at CapEx on H1 compared with other operators. Your CapEx, gross CapEx is up in H1 in spite of the COVID crisis. Can you tell us why that is, why you're looking at more CapEx and why isn't there, on the contrary, a decline in CapEx? And another number, looking at other revenue that is not including services, excluding services on telecom. There again, others are up compared with Q2 last year, whereas in Q1, of course, the decline there should be an impact due to lower sales of handsets. So how do you account for this increase in others in Q2? And then finally, on the acquisition of EIT, you said that you were stronger in terms of customer base in mobile than in fixed lines. In spite of sustained investment, what you have, Huawei, we have 5G coming up. The fiber still continues, but in terms of capital allocation, if you're going to invest in EIT, what's the idea? You propose to invest in a broader customer base rather than investing in infrastructure. I mean, I would like to know the rationale, what prompted you to go for EIT and about EIT. Are we looking at a new brand that you will keep in your portfolio, or do you expect the EIT customer to migrate to Bouygues Telecom contracts instead? Before I give the floor to Richard Vielle, let me just say that for us, the acquisition of EIT, says Martin Bouygues, is part of our growth strategy. Buick Telecom is part of the group, the Buick group. We have a healthy financial position. We have been weathering the crisis, the COVID crisis, with confidence, and we believe that EIT was a growth opportunity. The idea was not to invest abroad. We've always said that we want to focus on the French market in all areas, by the way, for mobile, fixed lines, and B2B. And so the acquisition of the IT is part of that strategy. Regarding Bouygues Télécom, as you can see, is a very sound company with low leverage, mostly owned by Bouygues, and so Bouygues' position makes it possible to invest. We're doing during the crisis simply because, well, whether there's a crisis or not, we believe it is essential to improve our resources, our production capacity so as to improve services and the offer. Richard will now add something. Well, with EIT, we're purchasing a customer base, but we have six brands. You have Crédit Mutuel Mobile. You have CIC Mobile. You have Auchan Sea Discount and Energy. So you have a whole portfolio of brands, as it were, of relations. Well, the idea with EIT is that we will leave the banking brands that remain for a while to be replaced. by BRIC Telecom eventually, whereas the daughter brands, Energy Sea Discount and Ocean, will look at this on a case-by-case basis, whether we should keep them in order to remain diversified or if you want to migrate towards BRIC Telecom, but we can do either. That's what regards EIT. But for CapEx in general at BRIC Telecom, you have to remember that we want to invest, but not for the sake of investing. The idea is to provide new quality of services. And in so doing, we have the best quality growth to date. And we don't have the numbers for free, but if we look at the growth of WIC Telecom for H1, you have the numbers if you compare it with orange oranges in the red. And SFR, they're supposed to be bigger, and yet their growth is 30% less than our growth. So the idea is that we are investing in quality. That is the right strategy because we have better quality, we have more clients, and with that we invest in more quality. This is a win-win cycle. But paradoxically, the COVID period has shown that the capacity requirements have increased. We went from two Geiger down to... to somewhat less afterwards, but there was a major need for mobile services. Also, there's a great demand for fiber, and we want to be a major player there. And to that end, there is a bit of capex required, but that is the right way. That's the right approach. We can't just say, I want to keep my numbers up, so I stop investing. That won't work. Now, regarding the others line for H1, well, of course, up until May, there was a significant impact on handsets and accessories. Now that the shops have reopened, there is some improvement. But you also have to take into account the fact that in Q2, there's an element both in costs and in sales because we create a subsidiary with Saint-Malo. That created revenue to the tune of $60 or $70 million. That's when it occurred. And that is, of course, is to be compared with what you had in Q2 last year. Thank you.

The next question is from Eric Lamarier from Bryant Gardner. Yes, thank you for taking my questions. I have three in all. First, a short question about big energy and services, energy services. You've given us a few figures. What about energy and services performance in terms of sales and operating margin? Your competitors, Eiffage Energy and Vassi Energy, have performed well, certainly been resilient in the first half year. So I'm just wondering if this also applies to Brieg Energy and Service. My second question concerns Brieg Immobilier. Could you tell us more about... what measures you've taken to turn around big mobility. You mentioned measures, and it's in your slide. That's slide 37, by the way. Maybe you could tell us a little bit more to give us some idea of how this will roll out. And my third question concerns digitalization in the construction business. Do you feel that the current pandemic will accelerate the development of digital tools and solutions on worksites? Thank you. Philippe Bonave will answer you for big energy and services. Well, in energy and services, at 1.6 billion at the end of June, that was sales with operating income of minus or operating margin of minus 1.8%. As for big immobilier, Pascal Minot. Well, a certain number of measures have been taken for big immobilier Concerning our development, more land for more projects. This will be not just for large corpus, but the use of artificial intelligence and intelligent solutions to help us manage land ownership and land occupation better. Of course, greater presence. with sellers in the public and private sectors. That's how we plan to develop the activity. Secondly, profitability. We'll be working on the value of the products we produce. We're working on this. And, of course, production and construction costs, standardization, purchasing, and prefabrication, which are all ways of reducing our costs. Of course, we're working on our structure costs. This is just a simple basic financial hygiene strategy. Your third question concerns digital in the construction sector. I can tell you that for quite some time we've been working on digitalization. We have digital mock-ups that are used extensively. We have digital means of communication. And you will remember that at Brigg Construction we had a very violent problem a virus, an IT virus at the start of the year, which had an impact on the way we behave. In other words, we had to restore our tools, we had to reinstate people's trust, and we had to make the whole system more reliable. So this is still ongoing. That said, in construction, teleworking doesn't work on worksites. You have to have people on site to raise walls and drive in piles and build floors and what have you, but teleworking is a solution which, during the crisis, enabled us to do quite a few things, particularly in sales and the commercial side of the business where we've been taking orders. So digital in the construction sector is something that we're working on quite a lot. We've made a lot of progress, but there's still some way to go, particularly in terms of reliability. Reconstruction was hit by a virus. Abug were not the only ones to have been hit by this type of a misadventure, but that certainly taught us a few lessons about the efforts we need to put in to improve our reliability. I don't know if Philippe Benard or Frédéric Gardez would like to add to that. Regarding digital, I'm I'd like to point out that we have a major project with our partner Dassault Systèmes. Dassault Systèmes is aimed at something completely original that doesn't exist anywhere else, which should lead to a digital project platform. So we are advancing hand-in-hand with Dassault on this project with a view to the long haul. It's a very, very interesting project. Well, I'd call us... The crisis meant that we accelerated our digitalization, and of course you will have heard of the BEAM. For a number of months, we've been working on SIM, which is City Information Modeling, which is the next stage, particularly for infrastructure. The idea being to map out all our networks is something we've been doing quite some time and that should give us a competitive advantage. This very detailed knowledge of networks should make the difference. Olivier, did you want to add a word about energy and services? You're talking about the basic comparison. I want to come back to the first thing you said, Philippe. It's important to understand that energy and services exposure is very much French exposure. And, of course, France was very adversely affected by lockdown. We haven't got much presence in Germany. Captain Lagen was was almost untouched by the crisis. When we're talking about Vinci Energy and their exposure in countries like Scandinavia or Germany, well, these are geographies where we have operations. So obviously the basic comparison does not work in our favor insofar as other countries got through lockdown more flexibly than France. Now you're talking about margins minus 1.8% in the first half year. You mentioned the other construction businesses. Can I ask, do you expect to be able to get back to the same level of margins as you had in 2019? Do you expect that for next year, or is that too ambitious? Well, our ambition with energy and services is a very gradual ambition. Before the pandemic, we told you, in fact, we told you earlier this year that in the case of energy and services, we were not on a par with the rest of the profession. The rest of the profession is generating 46%. We're a long way from that, so we're gradually working towards that level of margin. So in 2021, we'd like to return to the level we had in 2021, but that will not be enough in itself. We'd have to continue improving our margin in 2022, 2023 to reach the standard for the market. No more questions in the queue. One last reminder, if you'd like to ask a question, press asterisk one on your keyboard.

Right then. Well, I would like to thank you all for having... No, no further questions. So thank you so much for attending this conference call, the presentation of the half-year results. We will be publishing our numbers for the first nine months on 19 November. In the meantime, feel free to get in touch with our investor relations department whose phone numbers and details you can find in our publications. Thank you. Thank you for attending today's conference call. You may now put the phone down. The organizers of the conference call should remain online.