Bouygues

Hello and welcome to VUE 9 months 2023 results conference call. My name is Alicia and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keyboard to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to Pascal Granger, Deputy CEO of the group and CFO, to begin today's conference. Thank you.

Good morning, everyone, and thank you for joining us to discuss Bouygues' nine-month 2023 results. With me today is Christian Lecoq, CFO of Bouygues Telecom. Following our presentation, we'll be answering your questions. Let's start with our key figures, slide four. First, I would start by saying that in an uncertain macroeconomic environment, the group delivered a solid set of nine-month results, unmarked by Equan's contribution. Group sales were up 38% year-on-year, At 40.9 billion euros compared to nine months 2022 pro forma, including equants, group sales were up 3%. Group COPPA increased by 383 million euros compared to the nine months 2022 as published and by 237 million euros compared to the nine months 2022 pro forma. and reached 1 billion 623 million euros. Net profit attributable to the group was 665 million euros, a higher level compared to the previous year. Last, net debt was 10.2 billion euros compared to 3.7 billion euros at end September 2022. Restated from the impact of equants at the acquisition date for 6.5 billion euros, the free mobile dispute for 310 million euros that we continue to contest, and the Collas squeeze-out offer for 180 million euros, net debt at end September 2023 marked an improvement of 424 million euros compared to last year. Let's now turn to the overview of operations on slide seven. Let's begin with the backlog in the construction businesses. As a reminder, from January 2023, Buick Energy and Services backlog is no longer included in the construction businesses backlog as it is now included in the equance backlog. To facilitate comparison and analysis, we have highlighted in gray color the impact of Brick Energy and Services backlog in the previous years. The backlog at the end of September 2023 was at a record level of 29.8 billion euros, up 8% year on year. The increase in the backlog was driven by both brick construction and collapse. Let's have a look at backlog for each business segment on slide 8, which was up 2.2 billion euros, providing visibility on future activity as a whole. First, reconstruction order intake stood at 8.1 billion euros in the first nine months 2023. It was driven by the award of several large contracts above €100 million internationally since the beginning of the year, of which, in third quarter, two contracts in Hong Kong for around €400 million, two contracts in Switzerland for around €260 million, and a contract in Croatia for around €110 million. Normal course of business remained steady during the period. Brick construction nine months backlog excluding brick energy and services increased by 12% to 15.1 billion euros. Backlog was up 18% internationally and stable in France year on year. Increase was driven by both international building up 28% and civil works At Bouygues Immobilier, the general market conditions remain highly challenging for both residential and commercial property markets. Volume of residential reservations remain under pressure due to fast increase in interest rates impacting customer creditworthiness. For its part, commercial property market is at a standstill. And it is, as of today, very difficult to predict the timetable for recovery. Last, Colas order intake was up 8% at end September. Colas achieved a good commercial performance in rail activities, notably with a significant order in the third quarter of a €660 million contract in Manila for the north-south commuter railway line expansion. Colas backlog was up 8%, driven by rail up 34%. Road backlog was slightly down. Let's now look at the construction activities key figures on slide nine. To facilitate comparison and analysis, I remind you that we have excluded BRIC energy and services from the nine months 2022 figures. sales were up 2% year-on-year and up 3% like-for-like and at constant exchange rates. First, BRIC construction sales were up 6% year-on-year, essentially driven by international building. Second, at BRIC Immobilier, sales including share of co-promotions were down 18%, reflecting the difficult market conditions of both residential and commercial property markets, as mentioned earlier. And third, at Colas, sales were up 2% year on year, supported by a strong performance year-round, where sales were up 7%. Road activity kept growing by 2%, of which the EMEA was up 5%. Current operating profit from activities of the construction businesses reached 499 million euros, a higher level than in the first nine months 2022, resulting in a higher margin from activities at 2.5%. Copa at BRIC Construction was very close to nine months 2022, and Copa at BRIC Immobilier remained at break-even during the period, despite an adverse environment. Including the share of co-promotions, Briggs Immobilier Copa stood at 21 million euros. Looking at Colas, Copa was 308 million euros, improving by 89 million euros compared to nine months 2022, with margin from activities of 2.6%. This quarter margin notably benefited from the sale of some land in the US, leading to a strong 8.7% margin, up 1.2 points, the level of this improvement not being indicative of the full year. Let's now turn to the review of operations for our equants on slide 11. As a reminder, Starting from January 2023, EQUAN's figures include those of Bouygues Energy and Services. The nine months 2023 period is the first period for which we have a financial basis of comparison made of EQUAN's nine months 2022 figures and of Bouygues Energy and Services figures before elimination from Bouygues Construction. I remind you that these are unaudited figures. Equan's commercial activity was solid, with a dynamic order intake of 13.4 billion euros, including the award in third quarter of medium-sized contracts, such as the renovation of an hospital complex in Belgium and the construction of a solar farm in Sweden. Equan's backlog stood at 26 billion euros, stable compared to end December 2022, and offering visibility on future activity. The estimated backlog underlying margin is on the up, highlighting the ongoing positive impact of the PERFORM plan. A quant contribution to the group revenue represented 13.7 billion euros, a 6% increase, versus the unaudited pro forma of 12.9 billion euros at end September 2022. This higher pace than expected reflects favorable market trends, which don't prevent equants to pursue its selective approach to contracts and including the contribution of asset-based activities of which sale is underway. Obviously, these activities won't contribute next year. Thanks to the PERFORM plan, COPPA was up 139 million euros with a 2.7% margin from activities. This performance is totally in line with our full year expectations. Turning to slide 12. You already know that on 18 September 2023, Equance signed an agreement for the sale of the UK district heating and cooling network activities. Early October, Equance also signed an agreement for the sales of AITES concessions in the Netherlands. The completion of these asset disposals is expected in the fourth quarter of 2023. subject to relevant approvals. These sales were included in the equance strategic plan, and as such, will have no impact on equance revenue and corporate trajectory presented at the capital markets day on 23rd of February, 2023. To end with equance on slide 13, let me just add that 2023 guidance are confirmed with equants aiming for a slight increase in sales as a result of selective approach strategy, a COPA margin between 2.5 and 3%, and a cash conversion rate before working capital requirement of between 80 and 100%. Regarding sales, we could achieve this year a higher increase in sales than what we were expecting initially. But as already explained, this integrates notably the contribution of asset-based activities that obviously won't contribute anymore next year. Turning to slide 15, let's talk briefly about TF1's results, which were released on 27th of October. First, TF1 released better results in media in third quarter than in first and second quarters. On its side, Nguyen was still impacted by lower program deliveries. In the first nine months of 2022, sales were down 11% and down 8% like for like. Q3 represented a change in the media segment with sales up 8% and up 11% on a like-for-like basis due to a scope effect related to the disposal of unified assets. More specifically, advertising revenues were up 10% on a like-for-like basis, notably driven by the Rugby World Cup in September. Newen Studios' revenues remained down in Q3 impacted by an unfavorable basis of comparison related to major deliveries in Q3 2022, and also due to the discontinuation of activity of CELTO and the end of for France Television. Thanks to better revenues in Q3 and the good monitoring in the cost of programs, margin from activities was down 0.8 points at 13.2% in the first nine months. Turning to slide 16, I remind you that TF1 confirmed its 2023 outlook. The TF1 group will cement its leadership position and maintain a broadly stable current operating margin from activities and it will continue to generate cash flow in order to aim for a growing or stable dividend policy over the next few years. I now turn the call to Christian Lecoq for BRIC Telecom's performance.

Thank you, Pascal, and good morning to everyone. Let me start by saying that RCEP published on 26 October 2023 its Mobile Service Quality Survey. According to RCEP, Book Telecom was ranked second best mobile network for the 10th consecutive year across all services used by customers. In dense areas, Book Telecom was ranked joint first in mobile internet. The good results obtained demonstrate once again the excellence of the Book Telecom's network in terms of voice and SMS, as well as data. Turning now to page 18, Let's begin with the commercial performance in mobile and fixed. At end September 2023, Book Telecom had 15.4 million mobile customers, excluding M2M, thanks to 108,000 new customers in Q3 and a total of 217,000 new customers year-to-date. Book Telecom also had 4.8 million fixed customers at end September 2023. FTTH continued to experience strong growth with 3.4 million customers at ETH September 2023, of which 154,000 new customers joined us during the quarter, bringing the total number of new FTTH customers to 425,000 year-to-date. FTTH customers represented 71% of our fixed customer base, up from 61% a year ago. Last, with more than 33 million FTTH premises marketed, we are ahead of our schedule to reach our target of 35 million premises by 2026. Let's have a look at the key figures on slide 19. First, we achieved 6% growth in sales built to customers. Mobile eBPU was up €0.1 year-on-year at €19.8, and fixed eBPU was up €1.9 year-on-year at €30.9. Regarding mobile, we observe that due to inflation, some customers tend to lower their bundles. Therefore, price increases are not fully reflected in mobile eBPU. This strong performance was still partially offset by the continued decrease in incoming sales, leading to a 4% increase in sales from services. Other sales remained broadly stable over the period. EBITDA after leases increased by €143 million compared to 9 months 2022 and reached €1,451 million. The margin increased by two points compared to last year to 32.6%, which is consistent with our goal to progressively deliver margin expansion. The reclassification to intangible assets of fixed annual fees for some frequencies that remain in Q4 2022 had a positive impact on nine-month CBD after leases compared to 2022. I remind you that there will be no impact on full-year 2020 CEBD after leases compared to 2022, as frequency reclassification has been done in Q4 2022. The current operating profit from activities, which 585 million euros, up 63 million euros. Last, you can notice that gross capex was 1.1 billion euros in nine months 2033, a level in line with our 2023 target. Moving to slide 20, I remind you that our 2023 guidance is as follows. An increase in sales built to customers, an EBITDA after leases of around 1.9 billion euros, and a gross capex of around 1.5 billion euros excluding frequencies. The nine-month results presented this morning highlight that we are on the way to achieve all our 2023 targets. And now Pascal, I'm giving you back the floor.