Bouygues

Good morning to one and all. Thank you for joining us for this presentation of Briggs' interim results, first half of 21-22. I'll be presenting with Pascal Granger, who will do the financial part of the presentation just after me, and after that we will... uh take your questions with the five heads of our business segments and members of general management let's begin by giving you an update on the acquisition of equans on this slide which is page four we've mapped out the various milestones first of all the 12th of may 2022 we signed the sale purchase agreement Insofar as we received the go-ahead from the employee representative bodies of both Equans and Engie. The second milestone was on the 19th of July when we received the green light from the European antitrust body. to authorize us to acquire equans, subject to WIG complying with its commitment to divest Colas Rail Belgium within a maximum of nine months. The third milestone was when the CMA, the UK's Competition Markets Authority, which handed down a decision on the 19th of July underlining that This transaction would potentially worsen competitive conditions concerning the current tender relating to catenary systems for the high-speed two railway line, HS2 as it's known, north of London. So this morning we reached a further milestone with the CMA decision authorizing us to to our agreeing to test the remedies we have put forward. Again, remedies aimed at correcting the anomalies they'd identified. So they have a few weeks to answer, give us feedback after testing these remedies with the various stakeholders. So on this slide, we've mentioned that the closing of the acquisition is still expected to be completed in the second half of 2022, bearing in mind that the Final milestone is the UK antitrust body known as the CMA. The second acquisition is the proposed merger between TF1 and M6. On the 22nd of July, we received the report issued by the French Competition Authority's investigation teams. It should be pointed out that the final decision will be taken by the college of the antitrust authority and not the investigation teams. The investigation teams will put forward proposals. which the college will accept or reject, the college being sovereign in its decision, but the investigation team has raised a number of significant competition authorities, especially in relation to the advertising market. Clearly, if the remedies we have put forward to the investigation team were to be accepted or were not to be accepted, the project would no longer be relevant For the moment, we intend to not to make any changes to original plan and will inform the authority within the next three weeks around the 15th of August, at which time we will comment item by item the points raised by the investigation teams. Then we will meet with the college of the authority of the authorities board next September five and six. Moving on to page six, the main figures, main highlights of our interim results. The first half of 2022 was marked by the start of the war in Ukraine. We actually presented our annual results the very day the war started in Ukraine. The first half was also marked by continued health care restrictions in China, which, of course, had a considerable impact on global trade and the supply lines. There are also macroeconomic and geopolitical effects that are quite complex and difficult to anticipate. So in this somewhat peculiar environment with a much stronger inflationary trend than we've had in the last 30 years, we've nonetheless succeeded in publishing good results with 18.5 million euro in sales. So our half-year sales are up 6%, mainly sales. thanks to Colas sales. Without, on a like-for-like basis, that increase would have been 3%. Our current operating profit was €492 million, up €21 million on the same period last year. Media and telecom both improved significantly and improved their operational profitability. However, profitability in the construction and service businesses have been impacted by COLAS, but I'll come back to COLAS a little bit later on. The current operating margin was stable. during the period at 2.7%. Net profit attributed to the group was 147 million euro, and this year includes 44 million euro in non-recurring expenses, essentially costs relating to the two proposed acquisitions or the merger of TF1 and M6. But when we compare this with the previous year, the net profit for the first half of last year included a €219 million contribution from Alstom, mainly due to the disposal of shares. Once they've been sold, they can't be sold a second time. And, of course, a non-recurring income from the sale of data centres for a total of €80 million. Again, once they've been disposed of once, they can't be sold again. So, that said, we are now confirming the outlook, the group's outlook for 2022. Page seven of the presentation, a few words about the funding of the equines acquisition. On the 17th of May, we received a very good welcome from investors with our six billion euro syndicated loan, which are clear evidence of the quality of our signature. Two tranches, a one billion tranche over a period of seven years at 2.25%. Now, we took out pre-hedging instruments as a result of which the actual economic cost for the group was slightly below 0.95%. The second tranche is over a 15-year period, with the coupon at 3.25%. Again, thanks to these pre-hedging instruments that we acquired, the economic cost for the group was slightly below 1.9%. Now, these bond issues are the first step in the refinancing of the 6 billion euro syndicated loan that we subscribed in December 2021 with the view to the acquisition of equans. I should say in passing that WIG has an A3 rating with a stable outlook with that's Moody's and Standard & Poor's have us at A- with a negative credit watch. These ratings have been unchanged since the 10th of November 2021. And I propose to have a look at the RSE in issues that we have taken in our various business segments. We have continued to work for the climate and biodiversity. And on this slide, we just have five examples of initiatives we've taken in each of our segments. Let's begin with reconstruction on the left, which rolled out its bi-sprung offering, which involves energy renovation. This is our R&D department of reconstruction, which has come up with very innovative solutions, which converts energy-losing buildings into active energy buildings. well, industrial working methods. On the photograph, you'll see what we did at Longo near Amiens, north of Paris, where 12 houses from the 1960s were renovated. The second example is with Brigue Immobilier. Brigue Immobilier launched its more sustainable, more comfortable and more modular housing called Coeur de Vie. But also its concept called Jardin pour la Vie. This is a concept which we apply on all abrigue immobility projects being designed in 2022. The idea is to bring nature back into our cities. These gardens are systematically designed with environmentalists and with the landscape gardeners. In June, Colas dedicated its second Biodiversity Day. to broader initiatives in favor of biodiversity. Since 2012, the group has set itself the target of doing something for biodiversity in each and every one of its gravel pits and quarries by 2030. As for TF1, TF1 at the Deauville Green Awards, TF1 won eight prizes. This is thanks to a number of films and documentaries raising awareness about sustainable development. Another initiative is in Brieg Telekom where we have applied for SBTI approval for our climate targets at Brieg Telekom. Let's now take a look at our review of operations beginning with construction and services.

At the end of June 2022, the backlog for construction and services is 35.1 billion, up 6% on the constant exchange rate, and not including main disposals and acquisitions. It's only up 1%. You can see on the orange bar that there's a consolidation at Colas. Order book there is up 25%, 14%. on an equal scope and exchange rate basis, which means that there's good business on the road business is thriving both in France and the US. But this business is also driven by Colas High with significant contract sites such as the Metro in Cairo, Egypt in Q1, then the extension of a renewal and modernization of the railway tracks in the U.K. for another five years. The order book stands at 20.5 billion euros for reconstruction. Good visibility for the future. It's slightly down compared to 30 June 2021. That's because there's no major public works contract on this order book, the major tunnel or metro. We didn't sign anything yet. in H1, but conversely, there's a hike in Bouygues Energy and Services order book. Order taking is buoyant there, up 7%, and that includes the regular business below 100 million euros. These contracts are doing well. And when there are – well, these contracts, well, there's more competition, and the fact that we are drawing them means that we are very competitive. Now, on property, residential property is doing well. Demand is high. The – Office buildings there are sort of more, are less active. That's for residential. Of course, the reservations are down 14% because we have fewer building permits. The stock is low, so that's why there's less demand. But also there's a lag in the sale in blocks of apartments. That will be done in H2 rather than H3. All in all, Brick Immobilier's order book is up 12% compared to, sorry, it's down 12% compared to June 21, but stable compared to December 2021. Let's look at the key figures for the construction and services business. That takes us to slide 13. Revenue for construction was 13.7 billion euros, up 7%, including 3% on an equal scope and exchange rate basis, and that's mostly driven by Colas. Colas' revenue is up 17%, with 9% on an equal scope and exchange rate basis, basically because of its international business, but also because of the increase in the price of raw materials and energy. Bouygues Construction's revenue was stable, whereas Bouygues Immobilier was down 11%. That's because, as I said, there was less sales in residential, and there's the... lackluster aspect of the office building business. For H1 2021, there was a significant operation with Swayze, and that's of course not there this year. The current operating profit for the construction business was 41 million euros. You have to remember that H1 is not significant because for Colas in North America, that's a period where there's no business or we only have losses then. And so the current operating profit in H1 is not representative of the profit or the income for H1. for the year. Current operating margin stands at 0.3 percent on 0.3 percentage points for that period. If you zoom in on the various profit margins, Bouygues Construction current operating profit margin is 2.9% compared with 2.6% in H1 2021. The good performance of Bouygues Energy and Services is why we were able to grow there because that profit margin was 3.2% compared with 2.3% in H1 2021. Building and public works was stable at 2.8%. Regarding Bouygues Immobilier, in spite of the lower sales, costs were kept under control, and that's why current operating profit was in line with that of last year, standing at 1.8%. Let's take a closer look at Colas' current operating profit, because that stands at minus €160 million for H1, Now, there are explanations, well, regarding, comparing to H1 2021. In H1 2021, we had businesses, because of the weather, favorable weather in Canada, early spring, less late spring meant that business started early in 2021, which is a less favorable basis of comparison for 2022. There was a distortion effect of inflation. Colas was not in a position to pass on the increased price of raw materials and energy to its You have to remember that our costs include bitumen and gas. Gas is needed to heat up bitumen, and because the price of gas went up, that means our own costs went up, and we were not able to pass that on, or that it's not all of it, to our customers. Revenue that was logged in as... Some of that did not include the price hikes. Some of the price increases can be passed on, some partially, and some are index-linked, but the indexes do not always reflect the actual reality of prices. Then, of course, when prices go up, this is dilutive on profit margin because the clauses, the cost indexing clauses, enable us to revise the cost, but not the profit margin. And so that mechanically goes down. And for bitumen, especially the bitumen business works on a ton basis. And if you have a fixed margin on the ton, when the price of the ton goes up, if the margin remains stable, well, that means the – well, if the profit remains stable, the percentage goes down. if the price goes up. And then in H1, we generate losses, especially in North America. And on top of that, the exchange rate is punishing because if the dollar goes up and the losses go up, well, then this combines, this compounds the phenomenon. Well, Gilles and Philippe gave you the details of TF1, so I will go over that quickly. TF1 had a good operational performance in H1. The revenue was up 5%. reaching 1.2 billion euros. There were two factors that involved the media, and Nuen Studios were involved in that growth. The advertising revenue was up 2%, but you may remember that we had in June 2021 the Euro Football Cup, which created more revenue, so the basis of comparison is less favorable. Nuen Studios acquired studios in Spain and Germany, and that made a difference to its production. Current operating profits stood at 189 million euros in H1, and that's because we kept programming costs down. As a result, profit, current operating margin was 15.9% higher than what it was in H1. On page 16 now, you have the outlook for TF1. The macroeconomic environment, inflation, the Ukraine, has not made much of an impact on the financial performance on H1. However, for the second half, we'll have to remain cautious and we will have to keep our costs under control. Let's move on to page 18, and that is Bouygues Telecom's performance. Now, regarding the sales performance, that was the momentum going in H1. We have as many as 15 million contract customers, not including machine-to-machine. That's an additional 193,000 new customers from H1 customers. compared to H2 2021. And FTTH has also gained new customers, 315,000 new customers on H1. and there were 143,000 in Q2. You have to see that the premises marketed by FTTH was higher than expected. We expected 27 million marketed premises by end 2022. And at end June 2022, we actually reached that figure. In fact, we had 27.2 million premises marketed. Of the 6.2 million new premises, 60% were in what are known as the PIN areas where there's less competition, and that's good for us. Now let's move on to page 19. We had good sales performance, but we also had good unit income, average bills per unit. That is what we actually billed to our customers. That's doing well. As you can see on the slide, mobile ABPU was up 0.2 euros over one year. reaching 19.8 euros, not including roaming. We're not able to recover on roaming because this, as it was in pre-pandemic times, in the fixed business, ABPU was up 1 euro to 28.7 euros. In parallel, the entering messages revenue, that's voice messages and text messages, that was down. The rates are regulated, but there are two reasons why for the downside. Well, the regulated price was down, and then there are There's increased uses of OTT apps which do not generate any incoming revenue. But in any case, that makes no difference to the P&L because there may be revenue generated from incoming services, but then this is offset by outgoing expenses because when you receive a text message, you respond, and so it cancels out. Regarding the revenue of services, it was 2.8 billion euros, up 3% over one year, less than expected. The overall revenue was up 5% for the period and that's mostly in the others line and that's the handset business. Because costs were well kept under control, EBITDA after leases was up 9%. Mechanically, EBITDA after leases was 29.4% compared to 27.6% in H1 2021. Over the same period, capital expenditure increased. was up 115 million euros, and that is in line with our investment, our CAPEX strategy. Our annual objective was 1.5 billion euros in capital expenditure. Disposals over the period were 32 million euros, and that is in line with the data centers compared to 80 million euros in H12021. Next slide. That's slide 20. Move on to a status report on 5G. Bouygues Telecom now has reached a new stage in that. It signed a strategic partnership with Ericsson in June, and that means that we will be able to address a new core network the standalone network, and that enables us to leverage the full benefits of 5G because we can bring together all the improvements of 5G, including those latency times that are reduced, and also we can extend private networks mobile networks to companies. That's a bit technical, but it means we can address issues of criticality, security, and performance using the benefits, the gains on latency. Another aspect in the spring, we launched a 5G open road project. for mobility place enabling to cars and vehicles to connect to each other but to devices on the road that makes traffic more fluid in dense areas. In urban areas we'll be looking at pedestrian safety, reducing the carbon footprint of mobility, logistics of the last mile and using autonomous shuttle vehicles to reduce, to control, to regulate demand. Moving on to BRIC telephones, well, other than financial objectives, We want to look more specifically, instead of service revenue, we look at revenue billed to the customers. So we restate this. We take out the incoming and outgoing text message revenue. Now, the services revenue, you have to remember whether incoming revenue is completely offset by outgoing charges. Whenever you receive an SMS, you respond, and so incoming cancels out outgoing. In any case, we find that we expect revenue bill to the customer to grow significantly, to grow 5%, to increase by 5%. We've reached that objective, and so we're not renewing that objective since it's been reached. Now, because of its good half-year performance of EBITDA after leases, Telecom has revised upwards its annual growth rate to 8% for EBITDA compared to 7%. And we can confirm capex to 1.5 billion euros. Now Pascal will give you details about the accounts. Thank you.

Thank you, Olivier. Good morning or good afternoon to you all. Just a few additional expressions on the accounts as of June 30th. Concerning the income statement, page 23, I'm not going to dwell on sales and current operating profit that have already been commented. Non-recurring items are minus 144 million, as explained, or minus 44 million, after a non-recurring income of 80 million last year. As we have explained, the amount at the end of June 2022 mainly includes... expenses relating to the equines acquisition or the proposed merger between TF1 and M6. Big Telecom had non-recurring income due to the data center disposals in this quarter to this half year, I should say, but to a much lesser extent than in the first half of 2021. The net cost of debt or cost of net debt has been, broadly speaking, stable between the two half years. working our way down the income statement. Income tax was 103 million, down from 146 million in 2021. This calculation reveals an effective tax rate of 30% after 34% in 2021. This level of effective tax rate was because of losses abroad which do not give rise to deferred taxes. The The decrease of the share of net profits of joint ventures between the end of June 2021 and the end of June 2022 is due to the absence of any contribution from Alstom, which was €219 million last year, just for the record. Overall, the net profit was 100 of group share. That's 147 after 408 at the 30th of June last year. That's a decrease of 261 million euro entirely due to non-recurring income and losses and the absence of any contribution whatsoever from Alstom. Change 24, as you can see, the group's net debt at the end of June was 3.705 million after 2.8 billion at the end of June 2021. Now, the net debt ratio gearing is still very low at 29%, even though it's up slightly by comparison with the end of June 2021. The next pages, I'm going to talk to you about the change in net debt in the first half of the year. reminding you that the first half year is traditionally subject to the seasonality of our business. So page 25, as I've said, our net debt totals 3.7 billion, our total 3.7 billion at the end of June 2022, after net debt of 941 million at the same time last year, which was a record level. That variation over a six-month period is explained as follows. acquisitions for a total of €172 million. This mainly includes the payment of €130 million to Engie when we signed the share purchase agreement on 12 May last. This amount will be deducted from the amount to be paid to Engie at the date of closing of the deal. This also includes the buyback of TF1 shares and, of course, the disposal of Gamnod at TF1. Buyback of treasury shares for a total of €104 million. Dividend payout at Bouygues mainly, but also the dividends paid to minority shareholders in TF1 and Colas. Dividends for a total of €775 million. Variation in the value of swaps on interest rates that we acquired for the purchase of Equans totaled €769 million, a plus €769 million. and operations at a cost of 2.48 billion, which I will explain in the next slide. At the end of June 2022, the just fair value of these pre-hedging swaps was 765 million euro, after 38 million euro at the end of December 2021, and 429 million at the end of March 2022. Of course, this value fluctuates over time, and the 28th of July was 626 million euro, for example. But the fair value of the 765 million euro swaps includes 245 million in contingent swaps, which have been engraved in marble since we issued our bonds on the 17th of May. Likewise, at this issue, at the time of this issue, a 42 million euro cash component was received for the swaps, which were not contingent swaps. Let's now look at the details in the change of, this is page 26, change in net debt breakdown of operations. Net cash flow, including the payment of leases, was 1 billion euro. largely due to expenses paid for the equans and TF1M6 transactions. Net capex was 1.064 billion, up 264 million. This is a reflection, mainly a reflection, of the increase in investments made at Brigg Telecom in line with its Ambition 2026 plan. The change in operating working capital requirements and others was minus 2.437 billion. after a minus 1.4 billion at the end of the first half 2021. This deterioration comes after two years of strong improvements in working capital requirements, as mentioned on numerous occasions over the last quarter. This change in WCO is quite logical, particularly in the first half, which was marked by an increase in the value of inventory due to the increase in raw materials and trade receivables because of the substantial increase in sales during the quarter. That brings me to the end of my presentation of the financial statements. Thank you for your attention, and Olivier, I'll give you back the floor. Okay, let's wrap up this presentation with a review of the outlook for the group. You'll see here that this is based on information we have to date. It excludes any further deterioration in the situation due to COVID-19 and does not include the acquisition of equans or the merger between TF1 and M6. So once we've factored all of these things out, in 2022, we expect a further increase in sales and current operating profit. In 2021... we received sbti certification regarding our decarbonization targets when in 2022 we aim to aim to receive sbti approval for the our other segments given the macroeconomic changes and all the direct or indirect consequences this can have on our activities and results, we will be, as a result, very vigilant regarding any other changes. Before moving on to questions and answers, let me remind you that our next communication will be for our results for the first nine months of the year, which will take place on the 17th of November. This brings us to... questions and answers, which we will take with all our senior managers. Ladies and gentlemen, if you wish to ask a question, press asterisk one on your keyboard. First question was from Mathieu Robillard from Barclays. Thank you for that presentation. I have a question concerning construction In the first half year, a lot of provisions were written back. I was just wondering, is there anything you'd like to tell us about this write-back of provisions? Are we to expect anything in the second half year? For the more concerning the margin at Colas, I see you're not giving us any guidance for 2022. But for the record, I think you were targeting 4% in 2023. But given the results of the first half year, do you feel that despite that, the margin will be increased this year or not? will increase in 2022. I also have a question on telecommunications. Good EBITDA growth. APU is also up, but EBITDA is up even better. I'd like to understand this increase in EBITDA. Could this be due to maybe better synergies due to the acquisition made or Will there be a substantial or was there a substantial contribution from other parts of the business? That would explain this improvement in EBITDA. I'm going to ask Pascal to explain while Benoit is preparing the telecoms question. The first question concerned the provisions in the construction business. Well, as you know, traditionally, the provisions in construction business I have a number of explanations, particularly with the volume of provisions is high, fluctuations not so much so. There's no real phenomenon concerning how we provision for our construction activities in any of the three business, Colas, Brigue Immobilier, or Brigue Construction. So nothing unusual there. The second question concerns the guidance we gave regarding Colas for 2023. This is the 4% guidance we gave you. I'd like to stress the fact that there's no real lesson to be learned from the first half here except for the fact that the increase in sales, which isn't due to the volume effect but due to inflation, actually dilutes margins. As Olivier Rousseau explained, inflation is compensated because we have an index formula or whatever, obviously this boosts our sales but also our costs. But we're not increasing sales to increase or improve our margins. This is particularly notable in 2022. However, we haven't got the visibility we need to be able to tell you if this will have an impact on 2023. So it's too soon to say. I should point out on this particular aspect that if you look at purchases consumed by Skodas, we've increased from an average of 46% of sales to 52%, which is clear evidence of the fact that there's a sharp increase in the cost of raw materials. Benoit, if you'd like to answer that second question concerning Big Telecom's EBITDA improvement and the reasons behind it. Yes. Other revenue does not contribute significantly to our big telecoms EBITDA. It's simply that our costs have been well contained. Costs have increased slower than sales. We've contained our costs very well. That's why our EBITDA has improved by over 8%, at a time when sales only rose by 6%. Next question. Nicola Qualifon from HSBC. My first question concerns construction. The other concerns telecom. So in construction, what about global demand for public works and infrastructure, more generally speaking? The underlying question is, is your positioning in more complex projects going to protect you against margin and volume effects? As for public works contracts, what about the impact of the increase in costs despite demand, and what proportion do you expect for PPP projects? Regarding telecoms, could you tell us a little bit more about your ability to increase your prices for new clients? How do you explain the slowdown in ABPU in mobile phones, despite the fact that fixed ABPU is rising? Was this due to different timing in prices? Let me just point out that prices have been increased in both cases, which is quite remarkable. But before talking about the increase... The first answer to your question will be from Pascal concerning market developments in construction. Yes, good afternoon. Regarding markets and particularly the public works and public contracts market, yes, there is strong demand for large infrastructure projects, particularly in two areas. First of all, transportation, particularly with large public transport infrastructure projects in a number of very large cities. the Greater Paris project, of course, the Grand Paris, as it's called, but also in the UK with HS2, the high-speed line, or Australia and Sydney and Melbourne, very, very large infrastructure projects where we're involved in construction but also involved in tendering. The second area is energy-related projects, low-carbon projects, nuclear projects, of course. As you know, we're involved in the Hinkley Point project in the U.K. There are also tenders ongoing in France and elsewhere for which we are the civil engineering partners for EDF. This is the EPO nuclear power plants. We're also involved in Sizewell Sea alongside EDF and other partners. So these low-carbon projects in the nuclear sector are one thing, but there's also our wind power projects. We're involved in the offshore, the Fécamp offshore. We built our first base camp offshore. of the 60 wind farms we're building. We're also working on projects in Asia and to a lesser extent in France and the UK. So the first type of business, low-carbon energy projects and public transport, they're the two big areas. There are also projects emerging around maritime or coastline infrastructure or sometimes land extensions into the sea. They were involved in other projects, others in the pipeline, but so yes, a lot of demand for these projects throughout the world. Second part of the question concerns the share of PPP, public-private partnerships. Relatively low proportion of PPP projects There are a handful out there, but it's very small. I think we have three concessions in the tender stage at the moment, but nothing else springs to mind in the public-private partnerships. Benoit, concerning telecoms. concerning the increase in ABPU in telecoms. Well, in recent years, we propose what we call more for more. We offer additional services, additional data in mobile phones in exchange for a few euro cents more We will continue with that more for more strategy. It's targeted by cohort at different times of the year, as a result of which the increase in ABPU isn't always linear from one quarter to another. But it is regular over time if you look at the growth of ABPU over the last year or two. So it's constant growth, though sometimes it isn't always linear growth. So that's still the rationale, and we will continue to pursue that. In fixed lines, it's a little sharper. There is a seasonal effect. Sometimes we have price increase campaigns in the course of the year. But in fixed lines, we also have the benefit over long term of the penetration of fiber. is at a higher price than ADSL. So when customers finish their promotional period, that's in year two, the ABPU increases more substantially in fixed lines than in mobile. That will continue to be our strategy. In particular, when you look at fixed lines, the ABPU of our competitors gives us reason to believe that we have some leeway. Next question.