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.

Thank you, Christian. I will now briefly comment on the financial statements on slide 22. We have already discussed nine months sales and current operating profit from activities at the beginning of this call. A few more comments this morning with comparison based on the nine months 2022 published figures. First, we recorded 77 million euros of PPA amortization during the first nine months of 2023, of which 46 million euros at Bouyguessey in relation with Equan's acquisition. Second, other operating income and expenses were negative at 146 million euros in the nine months. This amount notably includes non-current charges at equants in relation especially with the management incentive package in place and fees incurred by projects of disposals. Some current operating charges were also recorded at TF1, mainly linked to real estate optimization and measures to accompany the digital transformation plan of TF1. It also includes non-current charges and reconstruction in relation with the litigation change in Singapore, which is closed now, and the change in regulation in a country where reconstruction is settled. Third, financial reserves to that minus €316 million compared to minus 170 million euros in nine months 2022. This increase is mainly due to the cost of financing debt that increased by 108 million euros over the period, mostly due to a consequent acquisition financing cost. Fourth, a tax charge higher than in the first nine months 2022 was recorded, explained notably by the constraints related to international taxation are present in many different countries and the large range of tax rates applied in each of them. And fifth, contribution of associates increased from minus 7 million euros to 50 million euros, notably thanks to Tipco Asphalt, a collage subsidiary based in Thailand, and the fact that Salto, a video platform launched by TF1 with two other partners and now stopped, is no longer reporting losses this year. As such, net profit attributable to the group was €665 million, up €128 million compared to nine months 2022. I will now turn our attention to the group financial structure. Moving to slide 23, net debt was 10.2 billion euros at the end of September 2023. Compared to end December 2022, net debt was up 2.8 billion euros. I remind you that the group benefits from a particularly strong financial position and that our financial credit ratings remain strong. We repaid during this third quarter most of the remaining part of the syndicated loan put in place for the financing of the equance acquisition. Note that on the 2nd of October, we issued a combined nominal debt of 450 million euros, representing total proceeds of 390 million euros including an issue discount of 60 million euros, representative of the difference between current rates and those of Capens. We tapped two existing bond issues for a nominal value of 250 million euros and a nominal of 200 million euros, the first one maturing in 2027 and the second one in 2030. Following these two taps, The average maturity of the gross bond was 8.5 years, and the average coupon was 3.01%, with an average effective interest rate of 2.26%. The debt maturity schedule is well spread over time. Last, let me add that we don't have any bond refinancing scheduled before 2026. Let's now turn to slide 24 to describe the net debt evolution between end December 2022 and end September 2023. Net debt increased by 2.8 billion euros since the end of last year. This change is mostly explained by the following items. Acquisitions net of disposal totalling minus 108 million euros. There is nothing specific to highlight. This amount notably includes acquisitions and disposals at Colas, Equant and Bouygues Telecom. Second, the Colas squeeze-out offer for minus 180 million euros. Third, the capital increase reserved for employees name Buick Confiance number 12 for 150 million euros. Fourth, capital transactions other for minus 37 million euros, including buyback of treasury shares and the liquidity contract. Fifth, the change in residual swap net of taxation and the swap settled for minus 44 million euros. Six, the repayment of dividends for minus 743 million euros. Then the payment of 310 million euros to free mobile. And last, minus 1.5 billion euros from operations that I will comment in the next slide. Turning to the breakdown of operations for the first nine months of 2023 on slide 25, you can observe that. First, net cash flow, including lease expenses, increased by 233 million euros. Second, net capex was slightly up 38 million euros, highlighting attention of business segments regarding their investment in an uncertain context. And third, you can see on the chart that the change in working capital requirements related to operation activities and other stood at minus 2.2 billion euros, an improvement of more than 800 million euros versus last year. As you know, it is very difficult to predict working capital requirements. As we do every year, we will remain very proactive during this last period of 2023 to manage the working capital. Let's make a brief aside related to Colas on slide 26. First, on 20th of September, Bouygues filed a squeeze-out offer with the AMF with a view to listing Colas at a price of 175 euros per share. This decision aims to simplify the capital structure of Colas, of which share capital was held by Briggs for 96.8% at the date of the announcement. This offer is subject to the AMF's approval decision, and we expect that the squeeze-out offer on the delisting of Colas will occur before end 2023. At the same date, the functions of chairman and CEO have been separated with Pierre Van Stoflegat appointed CEO of Colas and I was appointed non-executive chairman of Colas. Last, let me add that the impact of this transaction on the group's net debt will amount to around 180 million euros. I will now conclude this presentation on slide 28. We are confirming the group outlook for 2023. We expect sales close to those of 2022, as well as an increase in current operating profit from activities. I remind you that this outlook is obviously based on 2022 pro forma financial information that assumes The equance acquisition was completed on 1 January 2022. Thank you for your attention. Operator, please open the floor for questions.

As a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. To withdraw your question, please press star 2. We'll take now our first question from Nicolas Colison from HSBC. Your line is open now. Thank you.

Hi, everyone. Thanks for taking the question. My first question is on eQuants because I'm interested in the way you drive the margin by being more selective on profitability. So can you give us an indication of what share of revenue represents the new contracts you are signing? I mean, whether they are recontracting with a client or signing a new client as opposed to the ongoing contract? And tell us whether the margin you are signing for is always in line or above your medium term target of 5%. And also if you can help us on the level of margin in asset-based assets you are selling. I may have a follow-up question on telecoms, but I'll let you answer this one first maybe.

Concerning your margin at Equence, no, we are not signing all contracts over 5%. We are increasing gradually our margin in order to cope with our financial target. So the improvement in margin will be gradual. You know that we have a backlog which represents So obviously, our order intake is around 13 billion euros. So all these factors will induce a gradual increase in margin. So we are on the way. We are confident that we will be at the amount level at the end of the year. and but a lot of things to do to to to to to be at five at five in 2027. okay thanks and sorry for my ignorance but the asset-based assets is it something that is higher margin or lower margin in fact we are at the beginning of the curve so there is no no impact you know in asset-based assets during the first year your your margin is not so high So we are selling activities where, in fact, providing some revenues, let's say, for the two assets for which we have signed some contracts, let's say, to the present, approximately 300 million euros, and a profitability which is not higher than the average one. So no... no impact in the trajectory for the next year related to these disposals. Okay, makes sense. It will affect obviously our turnover because when you have sold the activities, You don't have anymore the revenue corresponding to these assets, but it was totally forecast in our trajectory we presented in January last year. The sole thing we didn't know at that time was what would be the exact timing of disposals.

Okay, thank you. And just two very short questions on telecoms, because you've recently cut prices for your top-end offers. So if you can tell us a bit more about the dynamics in the different segments and whether you think that the proportion of C-money in the market may accelerate. And my second question is just a short one. I just wonder whether Lika Mobile is still an NPN on your network and how significant it is in terms of EBITDA, given they just got 10 million euros flying in France and could be under financial pressure. Thanks.

Thank you, Nicolas. About the market, I would say that we are in the same situation as in Q2. volume growth than compared to last year, less promotions, calmer market, less terminal renewals and so on. So as you said, we have more and more similarly in the market. That's the reason why our EBPU growth is 10 cents compared to last year. Clients are migrating to cheaper offers, especially seemingly offers. Regarding the fixed business, the situation is very, very good. We had a good growth in volume in Q3. It was our best growth since Q3 2017. So we are very happy with our performance in volume. And in terms of value, you can see that our EBPU worth is very, very good at 1.9 euros compared to last year. So good performance. about Lika Mobile Lika is still how MVino yes and I cannot give you any figures about the EBDA because if I do that the EBDA is probably equal to the turnover of course I cannot give you the price at which we are we take Lika Mobile clients

Okay, I appreciate that. Thank you.

We'll take now our next question from Nick Liam from Society General. Your line is open now. Thank you.

Yeah, thank you. Morning, everybody. Just to come back to the pricing, please, on mobile, like Nicola's question there. Could you talk a little bit more about the pricing environment, please? And I think you've just started to cut promotions. So could you tell us, will that be a little bit more of a help to the ARPU going forward, or is this going to be a difficult pricing environment now if customers are starting to spin down? And then just secondly on Colas, could I ask, the revenue seemed a little bit weak this quarter. Could you also quantify if possible the land sale in the US and just confirm that's a sort of extraordinary item, as in it's pretty much a one-off for the quarter and hasn't occurred in first or second quarter as well? Thank you.

Well, I I will answer your first question about pricing environment in mobile. Pricing environment is very, very good. Phone book pricing are going up. There are less and less promotions. We are able to continue to increase our back book pricing. Regarding pricing, the situation is very good. The fact is that even if we are increasing our prices, at the same time, we see some clients migrating to cheaper offers. The impact of the favorable pricing environment is not fully reflected in the eBPU due to this situation.

As far as Colas is concerned, your question related to the disposal of an asset in the land in the US, it represents approximately a bit more than 40 million euros.

Okay, perfect. And there were no other one-offs like that in the first or the second quarter or last year. This is, as you say, this is pretty much a one-off, is it? Yeah. Thank you very much.

We'll take now our next question from Matthew Bobilar from Barclays. Your line is open now.

Good morning. Thank you for the presentation. I had a few questions. The first one on construction, which has some strong trends and the order book continues to be solid. And I realize this is a very uncertain macroeconomic environment. but it seems that it is not affecting your business in construction. So maybe if you could give us a little bit more call as to why you're doing so well and how you expect the trends to continue the next few quarters. In terms of telecoms, I had a question about the churn. Maybe I missed that somewhere, but I was wondering what were the churn trajectories, both on fixed and mobile, considering all the price moves that we've seen in the markets. And then very lastly, I realize you give a guidance which talks about growth in revenues and COPPA. You published a consensus recently on your website for the full year to SON23, and I was wondering if you could comment how comfortable you felt with the guidance for COPPA in SON23. Thank you.

I answered the first question related to The order book of construction activities, obviously, we will have a lowering in our housing construction part, but infrastructure, especially on international activity, remains quite strong. This is the reason why we have that global level of order and intake and order book.

So in terms of churn, the churn level is quite stable for Book Telecom, mainly due to the fact that even if we are increasing prices for back book, at the same time, there is less and less promotions. Clients stay with their offers and do not move to other offers.

As far as the consensus is concerned, in fact, we do not comment consensus. It's not a guidance for our part. I just want to draw your attention on one important point. This point is the fact that last year Q4 was quite strong and it doesn't mean that each each Q4 are strong in such an extent. My comment is specifically related to AQUANTS and COLAS.

Thank you very much.

We'll take now our next question from Jacob Bluestone from BNP Exxon. Your line is open now. Thank you.

Hi, thanks for taking my question. Two, please. Firstly, just on the EBITDA bit, just to pick up on your comments around Q4, you've done 11% EBITDA growth, EBITDA growth in the first nine months. The guidance, I think, is sort of 70%. Can you maybe just remind us the magnitude of the comp effect in Q4, given it looks like you're running far ahead of your own guidance? And then just secondly, on networking capital, which you alluded to in your presentation, obviously quite a big improvement year on year. I was just wondering if you might be willing to share some thoughts on where networking capital could land for the full year in terms of the overall group improvement. Thank you.

So I will answer the first question about BookTelecom's EBDA. First, I may note that we classified the way we account for some frequencies in Q4 2022. This leads to a first increase in favorable comparison on EBDA at the end of time months in 2023 compared to 2022. The impact is around 17 million euros. In Q4, for the full year, there will be no impact compared to 2022. In Q4, you will have a negative impact of 17 million euros that will compensate the benefit at the end of the first nine months. And in terms of guidance, we are very confident to achieve our guidance.

As far as the working capital requirement is concerned, you know, every year we say the same thing. First, we don't guide on working capital requirement for very simple reasons. For construction activities, it's impossible to do so. For, you know, you have advance payment, you have... You have claims to be collected and so on and so forth. So you could have an important variation in the working capital requirements. So we don't guide on that subject. Obviously, having a higher, better level of cash at the end of September is a good thing. And we are very happy of that necessarily. Our policy in terms of working capital requirement is very simple. We incentivize our guys in order to negotiate contracts with favorable payment terms. We are very dedicated to cash collection during all the contract life. As a result, we know that construction has a very favorable working capital requirement and we intend to improve our working capital requirement in all our activities. a specific point on Bouygues Telecom. You know that Bouygues Telecom is growing and having this induced an increase in working capital requirement of Bouygues Telecom. Thank you.

As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. So we know your question, please press star two. We'll take now our next question from Mike Sembrew from Stifel. Your line is open now.

I've got two questions if I may. First one is on Colas. There was a sharp margin recovery so far this year. In the first nine months, it was 70 basis points, 30 basis points, excluding the U.S. land sale. Would it be possible to split how much of that improvement is due to internal efforts and how much is due to the fall of asphalt prices, which usually bode quite positively for asphalt trading businesses? And the second question is on construction. So it seems like France was quite a bit weaker than international businesses, both for COLAS and weak construction. Specifically, I'd like to know how civil engineering is doing in France for reconstruction.

As far as your question is concerning COLAS, no, we don't have any... an indication to give on... We have a recovery, that's for sure, of collapse margin during the first nine months of this year. This is partly due to the fact that we have not been impacted in such an extent by fluctuation of prices during the first nine months. The second impact is obviously, and you mentioned it, the land disposal in the U.S., but globally it is a recovery in our activities and the profitability of our activities. The second question was related to backlog activities. I think I gave you some information during France is, in fact, minus 1% for wood consumption. The backlog, sorry, I have to check my figures. But you are right. Generally, you are right. The intentional activity is more... more dynamic than the activity in France. Our backlog is stable in France, generally. And in terms of civil works, I don't have the figure. But generally, it's 12% in terms of activity stable in France. Very much.

We'll take now our next question from Nicolas Mora from Morgan Stanley. You can go ahead now. Thank you.

Yes. Good morning. Just a few follow-ups. First, on a bit in the same line as the previous question, just on Colas, you've seen the order book also almost slowing down to, what, plus 1% year-on-year on your roads. are anything special any particular areas of weakness we had in mind north america was very dynamic so a little bit surprised by the by the slowdown then in real estate so we we're just about uh at zero i mean should we expect more pain ahead or or can we uh can we expect a few let's say last minutes q4 sales in especially in commercial to uh to save the year Then on networking capital, I think the improvement has been most impressive at Colas. Outside of the incentives for management, I think we discussed in the past, is there anything particular to mention in the third quarter? And very last on CapEx, it's especially weaker year on year in telecoms. Is it just phasing? Is there another pickup? to expect in Q4 as we had in Q1, for example, or you just basically close the tap a little bit on CapEx in the year? Thank you.

So your last question was about CapEx in Telecom?

Well, at the group level, but especially in Telecom, which we're seeing basically a slowdown year on year. Is it just phasing? Do you want to be quite high?

It's only phasing. We confirm our guidance of 1.5 billion euros in terms of gross capex for the full year 2023. And so it is only phasing. It is very difficult to look at capex in telecom business quarter by quarter. We guide on the annual guidance. And I confirm the 1.5 billion for the full year.

As far as your two previous questions, one was related to working capital. Let's say that effectively we had an improvement in working capital at the group level and especially at Colas. I remind you that we were quite disappointed of working capital requirements of Colas last year. So you know working capital, that's life of working capital for construction activities. one year is favorable and the year after it could be less favorable or the contrary. So nothing specific, but I confirm you that all our operational teams are dedicated to the improvement of that working capital requirement, either at Colas level, but also at Equance level or construction activities level. The second question was related to the order book of construction in France, and you were saying that it was quite slow. You are right, the activity is not violent in France, you know the global environment. So we were expecting, because in that period, before local connections, we have generally a peak in order at Colas and we don't see yet that movement in the order book of Colas. We don't know what will be the future in that respect, but probably the peak will be lower than previously related to the finance. the global finance equilibrium of local authorities in France. Your last question was related to a big immobilier in Q4. We will have activity in Q4, which is, you know, we have generally some higher level of activity during the fourth quarter. in big mobility, we consider we will have that movement that year, probably not in the same extent that in the previous year. We will manage that very closely because effectively the property development market is under great pressure at the present time. I think I answered your questions.

Yes, sorry, I was on mute. Yes, just on Colas, you talked about France, but I was looking actually at the broader roads backlog because we were all under the impression, especially in North America was driving the growth. Europe was okay. To date, the growth was pretty good. It seems it's Maybe it's just a quarter, so we shouldn't pay too much attention. Since the slowdown overall to the whole roads business has been quite stark, and at the flip side, you're growing a lot in rail, and historically this has been a less predictable, let's say, low-margin business.

Less predictable, that's right. But you know, that's the market. In fact, you know that rail activities are which are decarbonized transportation means are developing, and we will follow that movement. But, you know, in average, you couldn't say that the margin would be lower. We don't know. It depends on our contracts.

Perfect. Thank you.

We'll take now our next question from Molly Whitcomb from Citi. You can go ahead now. Thank you.

Hi, thank you for taking my question. Can I please ask about inflation at Kola? Sorry, inflation in the backlog at Kola. So obviously you said growth 8%, but how much of that are we looking at for inflation? And I was wondering also whether you'd give us an indication on how much is recurring of the stuff that you're winning internationally? And then my second question is on equines. Obviously, some of your competitors are seeing really excellent growth in energies on kind of overall, and whilst you're seeing great growth, I'm just wondering, is it that the mix of the business is different, and that's why you're not seeing such high growth at the moment, or is it 100% just because you're working on margins? Thank you.

Your first question is related to Colas. We had some difficulties to hear you. Is it related also to inflation? In fact, you know, first, the overall backlog of Colas is smaller than netbook construction. So, you know, a lot of contracts are short-term contracts where, you know, you can adapt your pricing to the current level of inflation. of prices, so you don't have any impact, and long-term contracts are very few. In most cases, you have some taxation formulas when you have long-term contracts. This is right at the overall level of COLAS and reconstruction for long-term contracts. For equants, we didn't change the mix because we have an activity where you couldn't change the skills of your teams. So it's really an improvement in pricing. They make effort to to better pricing, and they are developing all levies they have identified and presented during the capital markets day in last February. So it will be a gradual improvement of equants margin over the next years.

Okay, thank you very much.

We have no further questions, so I will hand you back to Pascal to conclude today's conference. Thank you.

Thank you for joining us today. We'll be announcing full year 2023 results on 27 February 2024. Should you have any further questions, please contact our investor relations team. Their contact information is on the press release on our website. Thank you very much.

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