Bouygues

Welcome to the BUIX conference call. Please be aware that each of your lines is in listen mode only. At the end of the call, we will open the floor for questions. We will then provide instruction for you to follow if you would like to ask a question. If any participant has difficulty hearing the conference, please press star zero on your telephone keypad for operator assistance. I would like now to introduce Mr. Pascal Granger, Deputy CEO and CFO of Bouygues. Thank you.

Good morning to all of you and thank you for joining us to discuss Bouygues first quarter 2022 results. With me in the room are Christian Lecoq, CFO of Bouygues Telecom and Armel Garry, Head of Investor Relations. Following our presentation, will be answering your questions. Let's start with Q1 highlights on slide four. Total group sales were up 6% in Q1 2022. The construction and services businesses demonstrated a good level of activity with a backlog up 4% and sales up 7% driven by COLAS. WIC Telecom experienced a good commercial performance both in mobile and in fixed. And last, TF1 sales increased meaningfully. Second, our two M&A projects are well on track and new milestones were completed. The Equance acquisition received all the required employee representative bodies' opinions. This condition precedent being met The share purchase agreement should be signed soon. On the 8th of April, TF1 signed the agreement with Altis Media related to the sale of TFX channel. The completion of the sale is subject to obtaining clearance from the relevant authorities, the French Competition Authority and ARCOM, on to the effective merger between TF1 and M6. Concerning the proposed merger between TF1 and M6, let me remind you that it is subject to regulatory authorizations. This process involving the French Competition Authority and the French Regulatory Authority for Audiovisual and Digital Communication is ongoing. The ADLC was notified of the proposed murder on the 17th of February 2022 and their decision is expected in October. Regarding the French Market Authority , INME, RTL, Bouygues and TF1 will submit their request for exemptions for the mandatory filing of a proposed public offering. Let's now turn to the group's key figures on slide five. Before starting, I would like to remind you that like every year, due to the usual seasonality, Q1 earnings are not indicative of H1 and full year results. That being said, group sales of 8.2 billion euros in the first quarter 2022 were up 6% year on year and up 3% like for like on the constant exchange rates. All our business segments delivered growth compared to Q1 2021, except Bouygues d'Immobilier as forecasted. The growth was particularly strong at Colas and TF1, with a solid contribution from Colas up 19% and up 12% like for like on the constant exchange rates, and a good performance at TF1, up 10% and 7% live for like at the constant exchange rates. Current operating loss was 77 million euros in the first quarter 2022, a stable level compared to the first quarter 2021. The operating loss was 93 million euros, it included a negative 16 million euros of non-current result that is not representative of our business. It is linked to the gain on the disposal of data centers at Bouygues Telecom and to charges related to our two ongoing M&A operations recorded at Bouygues Construction at TF1 and at the holding level. I would like to add that in the first quarter of 2021, The operating loss was 21 million euros, including a positive 56 million euros of non-current results, mainly related to the sale of data centers at Bouygues Telecom. Net loss attributable to the group was 131 million euros in Q1 2022. Alstom no longer contributes to our figure, while Q1 2021 included a positive contribution from Alstom of €120 million. Let's now turn to the review of operations. Let's begin with the backlog in the construction and services businesses on slide 8. The overall backlog at end March 2022 was at the high level of €34.6 billion and up 4% year-on-year. It included around 700 million euros from Destia. The backlog was down 1% at constant exchange rates and excluding the main disposals and acquisitions. The increase in the backlog was driven by Colas, including Destia. Colas achieved a good commercial performance in road activities in France, the US, and Canada, and also The further dynamic trend at Colas High notably with the award of the contract for the first phase of line four of the Cairo Metro in Egypt. With construction order intake was up 8% in Q1 year on year driven by both international markets on the normal course of business. That backlog remained stable in Q1 2022 versus Q4 2021. At Bouygues Immobilier, we noted a significant catch-up in building permit issuances in the residential property market compared to the first three months of 2021. However, we still have a low supply of units available, which is reflected in the reservations and the backlog. clients in commercial activities are still in a wait-and-see mode. As a result, Bouygues Immobilier's backlog was down 13% year-on-year. Last, the share of backlog in international markets continued to increase, representing 65% of the backlog at Bouygues Construction on Colas, up 3.3% year-on-year. Let's now look at the construction activities key figures on slide 9. The construction and services businesses started the year on a positive note. Sales were up 7% year on year and 3% like for like at constant exchange rates. It is worth noting the good performance international markets where sales were up 11% thanks to the significant increase at Colas international sales, which were up 35%, led by the Europe, Middle East and Africa regions, as well as the US and Canada. Of note, Destia contributed €109 million to Colas sales in Q1. The increase in international sales also reflects the positive impact of foreign exchange rates. Current operating loss was 208 million euros. I would like to highlight three points on current profitability. First, BRIC construction's margin improved slightly, 2.8% versus 2.6% in Q1 2021. This was led by BRIC Energy and Services, whose current operating margin reached 3% in Q1 2022. Second, the current operating result of Bouygues Immobilier reflects the low level of activity, notably in the commercial property market. Q1 2021 included a positive contribution of 45 million euros in sales, mainly driven by a specific project named Suez. On term, COLAS had a current operating loss in line with the usual low activity level in Q1, which was accentuated this year by the impact of foreign exchange rates. You know that our construction and service businesses are committed to foster sustainable development and responsible behavior. You will find a few examples of those on slide 10. Let me start with WIC Construction, a responsible and committed player in sustainable construction, which has been recognized and accredited by the Top Employers Institute, an independent international body, as a Top Employer France for the sixth consecutive year and the Top Employer Europe for the fourth year. Certifications were also awarded to its entities in the United Kingdom, Switzerland, Poland and Czech Republic. In Marseille, in Les Fabriques ecodistrict, the Alpha project of Bouygues Immobilier will be entirely designed in low-carbon concrete. There will be low-carbon white concrete on the facade and low-carbon gray concrete for interior walls and infrastructure. Produced from recycled materials, low-carbon concrete reduces the carbon footprint by 30% to 70% compared to conventional concrete. The first wall in low-carbon white concrete was completed in Marseille in January 2022. Finally, also in January 2022, Colas and CEPOR signed an agreement to supply Colas' fleet of trucks in France with only 100 renewable bio-based fuels that reduces greenhouse gas emissions by 60% compared to diesel fuels. fuel and slashes fine particle emissions by up to 80%, the initiative would cut the emission of carbon dioxide by nearly 46,000 tons in a year once the deployment is completed. Turning to slide 12, let's talk briefly about TF1's results, which were released at the end of April. First, TF1 released a good set of results. The sales increase of 10% and 7% for like on the constant exchange rates was driven by both business segments. First quarter advertising revenues were up 5% year on year at 377 million euros, thanks to the gradual recovery of some business sectors that were still impacted by the pandemic in 2021. And furthermore, Neuron Studios' revenues continued to expand internationally in the first three months, up 16%, bolstered in particular by the contributions of the studios acquired in Spain and Germany in 2021. Current operating profit showed slight improvement reaching 60 million euros in the first quarter. Cost of programs remained under control in the media segment during Q1 2022. However, new and profitability was affected by a lower contribution of programs deliveries in Q1 2022 due to the phasing of program deliveries on the strong basis of comparison related to a catch-up effect in program deliveries in Q1 2021. As a result, current operating margin was down 0.5 points to 10.6%. Let's now move to slide 13, which highlights TF1's actions for more sustainable behavior and gender equality. I would like to mention Ecofunding. This initiative was not specific to Q1 2022, as it was launched in July 2021, but the first campaign started on 1st January 2022. Ecofunding is the first environmental advertising fund on the market, 100% financed by TF1. Advertising campaigns promoting a sustainable service with the criterion recommended by ADEME, such as, for example, an energy label or repairability index, will trigger a contribution to the ecofunding program. This fund will be used to produce and distribute awareness campaigns on environmental labels and criteria recommended by ADEME. In March, TF1 presented the second Experts Allowing Session, which brings together women experts from, for example, the health, medical research, justice, police, artificial intelligence, and entrepreneurship sectors. The program's goal is to increase the proportion of women experts in news programs, on TF1 and LCI. The representation of women experts in TF1 news programs, 1 p.m., 8 p.m., and during weekend news was 44% in 2021. To conclude, TF1 slide 14, I will be briefly brief as TF1's team already commented on its 2022 outlook. At end March, TF1 considers that it was not economically impacted by the consequences of the war between Russia and Ukraine. However, the development of the conflict could have an impact on the European economy and therefore on its activity. I now leave the floor to Christian Lecoq from Bouygues Telecom's performance.

Thank you Pascal and good morning everyone. Starting with slide 16, you can see that commercial performance in mobile was solid in the first quarter. At end March 2022, Book Telecom had 14.9 million mobile plan customers, including M2M. Commercial activity remained dynamic during the quarter, as Book Telecom won 97,000 new customers in Q1. You can see on the right side of that slide, that BookTelecom is on track to reach its ambitious 2026 target to win 4 million additional mobile customers, including M2M, as we already gained 2.7 million customers since the beginning of 2021, including those of BTBD. Now, let us turn our attention to our fixed customer base on slide 17. As you can see, We had 4.5 million fixed customers at end March 2022, including net ads of 52,000 over the first quarter. FTTH continued to experience strong growth with 172,000 net ads during the first quarter. With a total of 2.5 million subscribers, FTTH customers represented 55% of our fixed customer base compared to 42% one year ago. Having achieved almost one third of our ambition 2026 target since January 2021, we are also on track to deliver our 2026 goal of 3 million additional FTTH customers. Let's have a look at key figures on slide 18. First, we achieved a good performance both in volume and in value over the past 12 months, leading to a 6% growth in sales built to customers. Mobile eBPU, now including BTBD and restated for roaming impact, was up €0.3 year-on-year at €19.7, and fixed eBPU was up €0.3 year-on-year at €28.6. This good performance was partially offset by the decrease in incoming sales, leading to a 3% increase in self-formed services. Indeed, as you know, self-formed services include incoming voice calls and text messages built to other operators, which by nature do not contribute to EBITDA after leases because of a symmetry in costs. In Q1 2022, incoming sales were down 24% due to a lower incoming traffic and to a decrease in regulated coal termination rates. As such, EBD after leases, which I repeat, is not impacted by the change in incoming sales, grew by 7% in Q1 2022, in line with our annual guidance, and reached €354 million. Consequently, margin improved compared to last year, which is consistent with our goal to progressively increase it. The current operating profit of 87 million euros was better than in Q1 2021. Operating profit stood at 92 million euros and takes into account a non-current income of 5 million euros mainly due to the gain on the disposal of data centers. Please note that Q1 2021 non-current income stood at €60 million, also mainly related to the disposal of data centers. Last, you can notice that growth cap reached €508 million in Q1 2022, a higher level than in Q1 2021. In order to secure the deployment and the strengthening of our 4G, 5G, and fiber networks, and in the context of tight sources, we accelerated a portion of our annual gross capex program in the first quarter. This has no impact on our 2022 capex guidance of 1.5 billion euros. The investments decreased by 94 million euros over the period due to lower data center disposals. Looking at slide 19, Just a few words on some of our sustainable initiatives and innovation announced or launched in Q1 2022 in order to better satisfy the requirements of our customers. Among them, we launched Reparation Express, which is an in-store mobile repair service open to everyone. We also introduced SOURCE, the first responsible and inclusive mobile plan. SOURCE is a no-commitment plan that promotes digital sobriety, 10 euros for 10 gigabytes. SOURCE offers customers the unique possibility of converting their unused gigabytes into financial support for associations, thanks to our partner Lilo. We also integrated a sustainable development approach into the new version of the BBOX4K TV decoder. For example, it is now 95% made from recycled plastic, allergen-free plastic parts, 10% lighter, and with this texture, we're designing to reduce scratches and to extend the book lifespan and promote its reuse. Last, we were the first operator to announce Wi-Fi 6E in France. The launch occurred on 26th of April and is part of a strategy to always offer the best Wi-Fi to our customers. Let me remind you that Boost Telecom was number one in Wi-Fi performance in France, according to the NPR survey published in March 2020. Turning to slide 20, I simply remind you of our unchanged target for the full year. And now Pascal has given you the floor back.

Thank you, Christian. I would like to briefly comment on the financial statements on slide 22. We have already discussed first quarter revenues and current operating results at the beginning of this call. Other operating income and expenses were negative at 16 million euros in the first quarter. This amount includes non-current income of 5 million euros at Bouygues Telecom, as Christian already explained, and non-current charges of 5 million euros at Bouygues Construction, 3 million euros at TF1 and 13 million euros at Bouygues SA level. These non-current charges are all related to the two ongoing M&A projects. As a reminder, in Q1 2021, the other operating income and expenses were positive at 56 million euros. This amount included a non-current income of 60 million euros at Bouygues Telecom, mainly related to the sale of data centers, and non-current charges of 4 million euros at Bouygues Immobilier, related to some adaptation measures. Concerning the share of net profit of joint ventures and associates level, I'm just reminding you that while we included a contribution from Alstom in Q1 2021, Alstom no longer contributes to our figure. We will now turn our attention to the group financial structure. Moving to slide 23, net debt was 2.1 billion euros at the end of March 2022. The usual seasonal impacts mainly explain the change in net debt between end December 2021 and end March 2022. Compared to end March last year, net debt was down 532 million euros, a significant reduction and net gearing decreased by six points from 22% to 16%. As such, the group still relies on a particularly strong financial position. Aside from the change in operations, end March 2022 net debt position was positively affected by the interest rate swap mark to market that I will explain to you on the next slide. Finally, please note that credit agency ratings have been remained unchanged. Let's now turn to slide 24 to describe the net debt evolution between end December 2021 and end March 2022. You can observe that the net debt increased by almost 1.2 billion euros since the end of last year. This change is mostly explained by the following three items. An outflow of 1.5 billion euros from operation up 365 million euros year on year that I will explain on the next slide. Second, an outflow of 63 million euros linked to share buybacks. And third, the positive impact of 400 million euros of swap mark to market related to future bond issuances. Let me provide a more detailed explanation on the swap effect. Considering the weak asset bond refinancing due in 2023 and the bond loan refinancing through bonds issuance for the equance acquisition, BRIC decided to hedge against interest rate fluctuations through interest rate swaps. Those interest rate swaps were contracted in July 2021 and mainly between November 2021 and January 2022, after Zeriquan's sale option signing. Their mark-to-market valuation as of 31st of March 2022 was 439 million euros, compared to 39 million euros at end December 2021. This value was recognized as an asset in the balance sheet within financial instruments edging of debt with shareholders' equity as a counterpart. A deferred tax liability was also recognized as a counterpart of shareholders' equity in order to take into account the associated taxes that will be paid upon exercise of each swap. The swap's mark-to-market and therefore its effect on net debt changes over time depending on euro interest rate fluctuation on financial markets. Once the underlying financing is in place, Bouyguesse will cash in the fair value of the swap and pay the associated taxes. Please note that on the 11th of May, the fair value of these swaps amounted to around 780 million euros. Turning to the breakdown of operations for the first quarter of 2022 on slide 25, you can observe. First, net cash flow including lease expenses remains stable compared to last year. It was driven by Bouygues Telecom and TF1, but offset by Colas and Bouygues Immobilier. Second, net capex was up 231 million euros, largely due to higher gross capex and lower disposals at Bouygues Telecom level. As you know, the phasing of capex is not linear over the course of the year. And third, you can see on the chart that working capital requirements related to operating activities and other increased by 128 million euros compared to the same period of last year. I would like to remind you that the management of working capital related to operations by business segments was remarkable both in 2020 and 2021. leading to a cumulative improvement of around 700 million euros. Therefore, we started 2022 with an optimized working capital requirement with an increase in activity at the beginning of 2022. This incremental change in the working capital requirement is typical, notably for a first quarter. Let's now conclude this presentation on slide 27. As a reminder, the 2022 group outlook is the following. In 2022, the group is expecting a further increase in sales on current operating profit versus 2021. After SBTI endorsement of COLAS greenhouse gas emission reduction targets in 2021, The other business segments are now aiming to receive SBTI endorsement of their decarbonization plans. The group remains very vigilant regarding the indirect consequences of the conflict between Russia and Ukraine. This outlook is subject to no further major deterioration of the current macroeconomic and geopolitical situation. This concludes our presentation. Thank you for your attention. Operator, please open the floor for questions.

Thank you for that. So now we're going to open the floor for questions. So if you would like to ask a question, please press star 1 on your telephone keypad now. Questions will be taken in order in which they are received, so please limit your questions so that everyone will have the opportunity to participate. If at any time you would like to remove yourself from the question queue, please press star two. The first question comes from the lines of Nicolas Cote-Colisson.

Please go ahead. Hi, good morning. Thank you. Two questions, please. The first one is on the construction and especially on the macro environment. It's maybe early stage, but have you noticed some delays in the decision-making on the client side? What are you seeing? And maybe if you can provide some color on the business or per region, that would be appreciated. And my second question is on telecoms. If you could give us some more color on the market share dynamics in fixed broadband. I was wondering if you were getting shares in a specific area and how is it working on the more rural side of France? Thank you.

Concerning your first question, to date we don't have any significant movements regarding the delays. The decision-making process is still ongoing. We don't have any important delay for any award or things like that. And as far as delays concerning deliveries, we are still in a good situation. No important delay concerning our projects or deliveries for our projects.

Yes. Hi, Nicolas. About your question on telecommunication. You know, we are increasing our number of clients in the world mainly for two reasons. The first one is that our FTTH footprint is higher and higher due to the development of FTTH network in this part of France. At second point, we are increasing our market share in this part of France also. Today, our market share is on at half our average level, I would say. Our goal is to continue to increase this market share thanks to the development of our technical footprint and thanks to the development of our commercial footprint.

Thank you. The next question comes from the line of Matthew Robillard calling from Barclays. Matthew, please go ahead.

Yes, good morning. I had two questions, please. First, construction on energy and services. I may have missed that during the presentation, but if you could give a little bit more granularity as to how that business progressed and notably on the margin. I don't know if you can share any number. And then with regards to mobile, we see that service revenues have slowed. you made it quite clear that it's due to lower incoming calls, traffic, and MTR cuts. But that's not something we've seen when one of your competitors reported. So maybe if you could give a little bit more granularity in terms of the build output trajectory compared to previous quarters to get a sense that, you know, growth is still there and solid. Thank you.

I will answer on the telecommunication part of the question. First point, I remind you that we report ABPU, average bill per customer, and so this ABPU does not include any incoming revenue. So the trajectory of ABPU will remain the same. despite any change in incoming revenue. What we saw in Q1 about incoming revenue is two things. First, as expected, lower mobile termination weight than last year, first point. And second point, a higher decrease in traffic than we expected at the beginning of the year. This is quite limited, and we didn't change our guidance for service revenue for the full year.

As far as your question concerning energy and services, in terms of turnover, the turnover of good energy and services has slightly increased during the first quarter compared to first quarter last year. It's approximately 3%. has also increased from 2.2% the first quarter of 2021 to 3% this quarter. That doesn't mean that it will increase to the same extent during the whole year, but we are on line with our plan to increase the gradually margin for big energy and services. We aim to obtain in the mid-term period, our target is 5%.

Great, thank you.

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

Hi, thanks for taking the questions. I had two questions, please. Firstly, just coming back to the telecom service revenues, as you mentioned, you didn't change the guidance. I was just hoping you could maybe explain why you didn't, given this change in termination rates, which presumably will impact later quarters, but also the change in incoming traffic. Are you basically saying that you think it's just a sort of a Q1 thing and they won't recur in the later quarters? So there's just a bit of volatility to just sort of help us understand a little bit, you know, why you see this as something that won't continue to be a drag in coming quarters. And then just maybe just secondly, can you maybe give a little bit of an update on what you're thinking is around the various inflationary pressures, again, particularly on your telecoms business, specifically on energy for this year, maybe next year, and labor. Thank you.

The MTR cut that we had at the beginning of the year will have an impact for the full year, but it was already included in our guidance. Regarding incoming traffic, we expect that the decrease we had in Q1 will not be the same during the next quarter. That's why we decided to not change our guidance. which I repeat is near 5% in terms of increase of service revenue for the full year. So we will see what the next quarters will be. But for the moment, we do not change the guidance. I also remind you that anyway, incoming revenue do not have any impact on our EBDA. The change on traffic, To give you some figures, the change in MTR and traffic, the impact on Q1 EBDA was minus 1 million euros. So you see, it's near zero. So no impact on EBDA coming from either MTR cut or incoming traffic change. About energy costs, energy costs represent around 2% of our total OPEX. and we have secured the price of our energy codes until the end of 2024. So we are at a very low level compared to the current level of energy codes because we set up the price near 50 euros per megawatt, compared to now a price which I think is ahead So we are at a fixed price in 2022, 2023, and 2024.

And on labor, do you see any inflationary pressures there?

On labor, no big pressure for the moment. A big part of our employees are, I would say, CSP plus. I don't know the English word for that. Managers. Managers. And so they are less impacted by the inflation for basic, I would say, basic purchases. And so it's not the same thing as other business, probably, for the telco.

Thank you.

The next question comes from the line of Nawa Christine calling from Morgan Stanley. Please, go ahead.

Thank you very much. I have two questions, please. Firstly, on telecoms, in terms of the pricing environment, it would be interesting to discuss how your NPS scores have been evolving recently and whether you feel that it can give you a good platform push price increases which are potentially higher than what you had in your initial plans given the current inflationary environment. And then I had also a question about FTTH and impacts from inflation and actually it could be interesting to have your view on the topic both as a user of services on the telecom side in terms of FTTH installment but also as a contractor, given that I believe you are also rolling out or involved in FTTH deployment as a contractor as well. So we hear from some operators that FTTH rollout prices are fixed for a certain period, so it will be interesting to hear, as a contractor, for how long these FTTH contracts in general are fixed in terms of prices. And then, on the part of Brick Telecom, it would be interesting to understand the inflation risk in terms of FTTH installments, because you are less involved in deployments, of course, but more in terms of connections and installments. It's a large part of your capex. How hedged are these FTTH installments against inflation so to summarize i appreciate it's a long question but just to try to understand the inflation impact on ftth contracts generally both as a contractor how these contracts are hedged against inflation and also on a big telecom on the installation side how hedge are those installations against inflation hope it makes sense thank you

Welcome. So I think that the first part of your question was on mobile commercial performance. Q1 2022 was quite calm, quite soft and quiet with a very low level of promotions. So no big deal. We have been able to continue to increase our ADPU. We are very happy with our performance in Q1. No big news, and we are very happy with the fact that the commercial situation is more and more stabilized compared to a few years ago. On FTTH, first, as you said, about rollout of FTTH infrastructure, I remind you that we are not rolling out any FTTH infrastructure. who are in a rental position through two GVs we put in place called SDAIF and SDFAST. And these GVs are buying the transceiver 5% to access to the infrastructure to other operators like mainly Orange or SFR from the PIRL or from the Public Initiative Network. So we are not impacted by any inflation on the cost to roll out FTTH infrastructures. About FTTH connections, you're right, it is a point, but today we do not have any impact due to inflation. The cost to connect subscribers is around 200 euros per subscriber. But we are reimbursed when our client is churning. We are reimbursed by a certain amount of this cost. So the impact first is quite limited on our P&L. And the second point is that the percentage of wages in this 200 euros is around, I would say, one third. So the impact of inflation on wedges will be quite limited if there is any in the future. But today it is not the case.

Thank you. And just on, I appreciate effectively on the telecom side, there are no deployments. The question was specifically on installation. And do you have a bit more information I think it's more bigger energy and services who's involved in this type of project. Do you have any color to add about how these contracts are structured in terms of pricing?

In fact, inflation is concerning the construction businesses. Globally, we have hundreds of thousands of contracts. There are differences, so it's quite difficult to have a very global view on that. What I can say in a nutshell is that first, we have three different mechanisms in order to mitigate this kind of risk. It could be inflation, it could also be other risks. First of all, we can transfer to our customer, to our client, the inflation risk, and we have many contracts with some indexation formulas, or we have also contracts which are costlessly structured. So that's the first mechanism. We know perfectly that these mechanisms are never perfect but they mitigate at least in a certain extent the risk. The second mechanism we have is a mechanism where we transfer the risk to the supply chain. You know that for some contracts we have long-term contracts with our supplier or we contract at the beginning of of work with suppliers or subcontractors at a fixed price. We still have a mitigation mechanism there. Thirdly, in all our sites, we have some contingencies, provisions for unpredictable events. It could include, obviously, increasing prices. All these mechanisms are not perfect. It's very difficult to forecast what could be the different scenarios in the future. We have no important impact in the net result of BRIC energy and services and BRIC construction and other activities of construction. At the end, we still have a thought if the price increase is very important, we claim We negotiate with our customers and we also ask for claims in certain circumstances. To date, at the end of March, no important impact in our results. For the future, we are monitoring these things very closely. We try to limit firm price contracts and monitor that very closely.

Fantastic. Thank you very much. It's very valuable to have a view on both sides. Thank you very much for that.

Thank you. We currently have no questions coming through. As a final reminder, if you would like to ask a question, please press star 1 now. The next question comes from the line of Virginie Rousseau calling from Oddo.

Yes, hi. I have an additional question regarding Bouygues Immobilier, please. You mentioned that the volume of billing permits is higher in Q1. Could you update us a bit on the environment and explain why this volume is higher? Is the environment better globally in France? Is it linked to a region specifically? Do you gain market share or is it global?

Thanks a lot. No, we are increasing because the basis of comparison was fairly low. And the basis of comparison was very low because, as you remind us, in the business in France, there are very specific periods just before local elections and just before local elections, public authorities are quite reluctant to authorize, to provide building permits and after then we had a period, you know that the local election has been delayed due to the COVID and after COVID we had quite significant number of new teams at the local authority level and they had to decide what project they want in their municipalities and then we had to adapt our project to their requirements so it takes quite a long time to go there but the current level is more normal than it was previously. So it's really a basis of comparison issue. This is quite global in France.

The next question comes from the line of Nicola Moore. Coding from Morgan Stanley, please go ahead.

Yes, good morning, gentlemen. I'll just focus quickly on contracting. So first on construction, can you give us a little bit of color on the, especially on the order intake, because you haven't booked any large projects, and maybe you can talk about the pipeline you have, but the underlying kind of run-of-the-mill contract and the order intake has been quite good. Where do you see the stress coming? Is it public money? Is it still, let's say, sticky private money? Number one. Number two, on Colas, I mean, do you still feel comfortable with your kind of global guidance on revenue increase for the year? I mean, Q1, obviously, seasonally is a weak quarter, but performance was very strong. Doesn't it give you confidence you can pretty easily, especially at the top line level, uh grow close to double digits for the year and last one on colas again just from the order intake i mean what's what's driving the strength ordering taking revenue what's driving the strength in in north america is it is it is there a bit of weather impact is it just to keep public money flowing through and and finally the the um the underlying basically activity level picking up plus a bit of trading most likely linked to the the bitumen price that would be

Starting with reconstruction, on the sales side, we have been quite strong in energy and services during the first quarter and stable in building and civil works. In Q1 2022, the level of order intakes is higher than Q1, but let's say that a quarter is not necessarily very relevant for sales. for such construction activities in particular. So the pipe is correct. Obviously, some projects could be more difficult to close probably in the tourism sector, but not very significant at the construction level. And so we don't see, to date, we don't see a movement saying that the decision will be delayed and so on. It could occur because as budget would increase, probably some customer will have the question how they finance the extra cost of their project. But to date, it's not significant. For Colas, obviously we had an increase which is related to the perimeter effect and you know that we have acquired end of last year subsidiary in Finland so you see this has an impact and for North America you are right probably there is an inflation back and there is probably a demand which is strong you know that they have an important stimulus plan and for instance in the in the us and certainly it will it will start to uh it starts to uh to impact our our figures now uh we don't guide for the year at the last level so i i won't give any any figure today so let's say that we have some the the situation is We are confident that the situation is still quite uncertain, generally speaking. So we have to be vigilant. Did I answer all your questions?

Yes, very good. And just on the margins, we're trending towards the 4%. still confident that we should be in the middle of the 3.3% to 4%? At the end of the year, there's no points of extra vigilance or a bit worried about inflation or the business is well-edged as it has been historically?

We have some hedging mechanisms, but we don't know if these mechanisms are 100% efficient. so we have to still have to be prudent. We don't guide for this year at COLLAS level, probably it will be impacted on certain items, let's say energy, let's say bitumen and so on. We have this mitigation mechanism, we are still To date there is no reason to imagine something different that we have guided at a big level, but we don't give any specific guidance for any activity for this year, which is in a certain extent quite quite uncertain. You know that scenarios from different organism concerning inflation, for instance, or global growth in the economy are very different from one to the other. We have to be agile. That's all I can say. We are vigilant in order to be agile.

Okay, thank you. And if I may, a last one on Equance. Is there room to be a bit more specific on the actual closing of the deal? Are we still talking? There's no real mention of new dates, but can you precise the second half kind of timing now?

There are two steps for equants. First, we have to go to signing and then we have to go to closing. We think that we will sign very, very soon because there is no specific reason not to sign today. For closing, we need to have some authorization. We need to have some foreign investment authorization from UK, US, and these authorization has been obtained. And we have some clearance from antitrust authorities. Certain have been obtained, but we still have some to obtain. For instance, the Europe clearance, and as you know, It's not so easy to predict how long it will take. But as there is no major issue, we are still expecting to close during summer.

Okay, perfect. Thank you very much.

Mr. Granger, there are no more questions at this time.

No more questions? So thank you for your... Thank you for your attention. Thank you for joining us today. We will be announcing our first half 2022 sales and earnings sooner than previous years on 2nd of August 2022. Should you have any questions, please contact our investor relations team. Their contact information is on the press release on our website. Thank you for your attention.

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