Bouygues

Ladies and gentlemen, welcome to WIGG's first quarter 2021 results conference call. I now hand over to Karine Addo-Cruzon, Head of WIGG Investor Relations. Please go ahead. Thank you. Good morning, ladies and gentlemen. I would like to remind everyone that you can find on the company website at www.wig.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 its 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 Olivier Roussard, CEO of Bouygues.

Thank you, Karine. Good morning to all of you and thank you for joining us to discuss the Bouygues first quarter 2021 results. With me in the room today, there are Pascal Granger, deputy CEO and CFO of Bouygues, and Christophe Lecoq, CFO of Bouygues Télécom. Following our comments, we will be answering your questions. Let's begin with the slide 4. Q1 2021 results reflected a solid start to the year with a sharp improvement compared to the Q1 2020. This Q1 2020 was negatively impacted by the beginning of the pandemic. As usual, given the nature of our activities, especially the road activity, Q1 was impacted by seasonality. Let me stress the main highlights for this quarter. First, we experienced a significant growth in group sales compared to Q1 2020. Second, the group current operating results and margins were close to Q1 2019. Third, net profit attributable to the group was positive, which is quite unusual, considering the seasonality of the business. Fourth, our financial structure remains very robust. And lastly, based on Q1 results, Bouygues Telecom is able to revise upwards its EBITDA after lease target for the full year. In conclusion, In an environment still uncertain and affected by the pandemic, the group confirmed its outlook. Let's turn now to the group case figures on slide 5 to review more in detail this performance. Group sales were 7.7 billion euros, up 7% year-on-year. The good news for the first quarter is that all our business segments delivered growth compared to Q1 2020, thanks to solid commercial activity. The growth was particularly strong in France, as larger activity was impacted by a strict lockdown from mid-March 2020. In international markets, sales were affected by an unfavorable exchange rate effect, life for life, and at a constant exchange rate, revenue was down by only 3%. Current operating results improved by €165 million compared to one year ago. At minus €77 million, results were close to Q1 2019 level, which is a good performance. And finally, it reflects first A favorable base effect as Q1 2020 was negatively impacted by the beginning of the lockdown. And second, the positive results of ongoing strategy plan and the operational action laid by the business segments. Therefore, Q1 2021 current operating margin was close to Q1 2019 level. Operating results improved strongly benefiting from this solid operational performance and 60 million of non-current income at Bouygues Télécom essentially related to the disposal of data centers. Finally, at 21 million euros, net profit attributable to the group was positive. It includes a 120 million euro contribution from Alstom, who was detailed in our press release published last week. Let's turn to slide 6 that highlights the Group's strong financial position. I now give the floor to Pascal.

Thank you, Olivier. At end March 2021, available cash was at the high level of 11.5 billion euros compared to 10.3 billion euros one year ago. It included 3.6 billion euros in cash and 7.9 billion euros of undrawn medium and long-term facilities, of which 7.5 billion euros were without covenants. As you can see, the debt maturity schedule is well balanced with no debt wars. Moving to slide 7, net debt was 2.6 billion euros at the end of March 2021. It is the lowest level for a first quarter in 15 years. Compared to end March last year, net debt was down 946 million euros, a significant reduction. The strong cash generated by operations of 1.5 billion euros covered both the payment of dividends and the acquisition of EIT, which has been renamed Brick Telecom Business Distribution and is now referred to as BTBD. Moreover, NetDebt benefited from the positive impact of the disposal of Alstom's share capital in November 2020, and March 2021 for a total of €0.9 billion. Net year-end decreased by 9 points over the same period to 22%. Compared to end December 2020, the increase in net debt is moderate €662 million as the usual seasonality effects were partially offset by an improvement in operations. The group relies on a particularly strong financial position, which remains a major asset to strengthen its business segments and accelerate their growth over the next few years. Let's now turn to slide 8 to see the net debt evolution between end December 2020 and end March 2021. You can observe that the moderate increase in net debt since the end of last year is mostly explained by the two following items. First, the positive impact of €492 million of proceeds from the sale of 12 million Alstom shares in March. And second, an outflow of €1.1 billion from operations decreasing by €189 million year-on-year that I will explain on the next slide. Turning to the breakdown of operations for the first quarter 2021 on slide 9, you can observe that. First, net cash flow, including lease expenses, increased by €179 million year-on-year, significant improvement reflecting the increase in activity in all businesses. This level is even better than in Q1 2019. Second, net capex was down 110 million euros mainly due to higher disposals in the first quarter at BRIC Telecom related to data centers. And third, You can see on the chart that working capital requirements related to operating activities increased by around 80 million euros compared to the same period of last year. I would like to stress that the management of working capital by the business segments in 2020 was remarkable. We started the year with the working capital requirements already optimized and with stronger activities than one year ago. To date, we do not observe any slippage. I will now turn to the review of operations, starting with the construction businesses. Let's begin with the backlog in the construction businesses on slide 12. At 33.4 billion euros, the overall backlog at end March 2021 was up 2%, at constant exchange rates and excluding the main disposals and acquisitions compared to the same period of last year. It also remained at a high level compared to the last six years. The share of order book in international markets is stable year on year, representing 62% of the backlog at brick construction and collapse. Let's now look at the backlogs by geography on slide 13. As you can see, the international markets remain dynamic with a 4% increase in backlog at end-March year-on-year at constant exchange rates and excluding the main disposals and acquisitions. Colas has notably won significant contracts in the road sector in West Africa and Eastern Europe. In the Greater London Region, Big Energies and Services was chosen by the operator Vertis to design and build its mega data center in Haze. In France, the backlog was down slightly year-on-year at end March 2021. Brick construction's backlog was up 3%, driven by a good commercial dynamic in medium-sized projects. The decrease of COLA's backlog reflected delays in public orders due to the pandemic. In roads, orders resumed, and in rail, new orders are expected in the second half of the year. Colas already responded to tenders for the Grand Paris project, whose results are expected in the coming months. At Bouygues Immobilier, reservations in a residential rose by 15% compared to last year, reflecting solid customer demand. However, delays in obtaining building permits are still very long due to the pandemic and municipalities agents working from home. We therefore have a lower supply of units available. Regarding commercial activities, clients are in a wait and see mode. As a result, the backlog was down 12% year on year. Let's now look at the construction activities key figures on slide 14. The construction businesses started 2021 on a strong note. Activity was up 6% like for like and at constant exchange rates driven by old business segments. In France, revenue was up 16%, partly reflecting a favorable comparison effect as the lockdown, which began mid-March last year, led to the closure of most of our work sites. In addition, we benefited from a steady demand in residential and a good activity in roads in March. This level of activity is close to the one we had in Q1 2019. Like for like and at constant exchange rates, international sales were down only 3%. The last activity, particularly in Central Europe and in the United States, was impacted by unfavorable weather conditions in the first quarter. The profitability improved significantly compared to Q1 2020. Current operating results increased by 155 million euros and current operating margin was minus 3.5% at the level of Q1 2019. This was led by, first, an increasing margin at Bouygues Energies and Services compared to Q1 2019. Second, better progress at work sites at Bouygues Immobiliers. And third, an earlier start of COLAS activity in Canada and the positive results of the ongoing strategic plan, including notably the organization in France on the optimization of industrial activities. Please remember that like every year, Q1 earnings are not indicative of first half and full year results due to the usual effect of the similarity. Looking ahead, our construction businesses have promising growth prospects as the essential needs of housing, energy, and transportation remain intact. Moreover, our businesses will benefit from the stimulus plans announced in the country in which they operate. Let's have a brief look at those plans across the world on slide 15. We have already shown you this map, which represents the percentage of sales of our construction businesses by region in 2020 and the underlying stimulus plans that have been announced for each of them. We updated the chart with the $2.3 trillion plan recently announced in the United States by President Joe Biden. This new plan would incorporate $621 billion for transportation infrastructure, notably including the modernization of bridges, highways, roads, and public transportation, airport renovation, rail upgrade, and port and waterways improvements. This plan will be financed over 15 years. It is too early to know precisely what will be approved by Congress, but this plan should bring good opportunities for collapse in the US. Greek construction could also benefit from good prospects in building activities and public works as they are developing in the region. The Portuguese Tunnel in the state of Rhode Island illustrates this potential. In Europe, and particularly in France, while there may be some delays, we still expect to see the positive outcomes in H2 2021. Let's talk briefly about TF1 as results were released at the end of April. We will discuss the proposed merger at the completion of the Q1 2021 results presentation. First, TF1 released a good set of results as highlighted on slide 17. The improvement in sales and current operating profits was driven by all three business segments. In Q1 2021, TF1's audience share among key targets improved compared to Q1 2020, highlighting the attractiveness of the group's TV channels. First quarter advertising revenues were up 1% year-on-year at €358 million. We saw the return of advertising spending in several sectors, such as food and retail. As a whole, sales were up 3% year-on-year. Performance at studios and entertainment was also very good, driven by new ones, which saw revenue boosted by some catch-up in productions originally planned in 2020. Current operating profit showed significant improvement reaching 57 million euros in the first quarter thanks to the good control of broadcasting schedule costs amounting to 211 million euros, which remained almost stable compared to the first quarter of last year. As a result, current operating margin was up 2.7 points to 11.2%. In this context, TF1 confirms its full-year outlook as you can see on slide 18. As recently announced, and in line with its strategy, Nguyen recently took a controlling stake in Aizen, a leading player in Spanish production. This strategic move is consistent with Newen's ambition to grow its activity in international markets by generating a significant part of its 2021 sales outside France and by increasing its backlog with pure player platforms. Moreover, TF1 expects Unify to increase its sales and achieve a positive current operating margin in 2021. Note that this outlook is based on information known to date and excludes any further deterioration due to the pandemic. Now, let me turn the call over to Christian Lecoq.