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Good day and welcome to Bureau Veritas Half Year 2023 Results Conference Call. My name is Priscilla and I'll 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 for questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand you over to your host, Hinda Garbi, the deputy CEO, to begin today's conference. Please go ahead. Thank you.

Thank you, Priscilla. Good morning, good afternoon, and good evening to everyone. I'm pleased to welcome you to our results presentation, the first time since becoming CEO on June 22nd. I'm joined by François Chabat, our group CFO. The Group has delivered a strong set of results for H1 2023, and these are a great credit to the work of all our teams around the world. I would like to thank my colleagues for this excellent performance. Before presenting our results, let me update you on the changes to the Group's governance that followed the AGM in June. Laurent Mignon, Chairman of Vendel's Managing Board, was appointed Chairman of the Board of Directors following the retirement of our previous Chairman, Aldo Cardoso. In parallel, the board committees were reorganized and are all shared by independent directors. As an independent director and chairman of the nomination and compensation committee, Pascal Lebar has been appointed lead independent director and vice chairman of the board. In addition, to support the execution of the group CSR strategy, the board created the CSR committee shared by Mrs. Anna Giroskalp. Mrs. Giroskalp brings a long-standing operational experience around CSR matters. Her input will be valuable to the board. Finally, we're also pleased to welcome Geoffroy Rodeviseux to our board of directors as an independent director. Looking now at our financial highlights for the first half. Revenue in H1 was €2.9 billion, up 7.8% year-on-year and 10.9% at constant currency. The organic growth was 9.4%, showing an excellent underlying performance year-to-date. In the second quarter, we delivered double-digit organic growth of 10.3%. This is a combination of strong volumes with the conversion of our healthy backlog and a pricing benefit as expected. Adjusted operating profit increased by 5.7% year on year to 434 million euros, generating a solid margin of 15%. Our adjusted net profit is up 11.1% to 276 million euros. Free cash flow totaled 131.9 million euros, slightly up year on year, reflecting CapEx increase allocated to our lab businesses and demonstrates our excellent working capital control. The group's leverage ratio was further reduced to 0.95 from 1.1 last year. This excellent performance and our confidence in future trends allow us to revise upwards our top-line growth outlook while we expect stable margin at constant currency. These results have once again been driven by our diversified business mix and Bureau Veritas' global geographical footprint. Looking at the mix this semester, marine and offshore, industry, building and infrastructure, certification and agri-food and commodities continue their strong growth momentum in line with the previous quarters. As expected, consumer products had a mixed first half as the contraction from reduced activity was moderated by the positive impact of our diversification strategy. From a geographical standpoint, the Americas, Africa and Middle East are leading the pack while Asia's organic growth picked up sequentially. Before passing on to Francois for the financial review, I would like to share with you our progress in CSR performance so far this year. In health and safety, we continue with our prevention programs where we further reduced our accident rate in the first half. On the gender diversity front, the proportion of women in leadership positions has increased to 29.7% in H1, and we are committed to our 35% target by 2025. Staying true to our purpose and mission, we continue to enhance our compliance and code of ethics across all our operations through training and awareness programs. On decarbonisation, we remain on track for our 20% reduction target by 2025. Year to date, our CO2 emissions per employee reduced by 3% compared to H1 2022. Most importantly, our greenhouse gas emissions targets have been validated by the Science-Based Target Initiative, SBTI, as we committed to reduce absolute scope one and two greenhouse gas emissions by 42% and to reduce absolute scope three greenhouse gas emissions by 25%, both by 2030. I now hand over to Francois for the financial review.

Thank you, Inda. Good morning, good afternoon to everyone. Before looking in more detail at the numbers, a few words on the key financial achievement of the first semester. Once again, we have proven our ability to deliver a strong and broad-based organic growth throughout the first half at 9.4%. On the profitability front, we delivered a margin of 15%, similar organically to last year. When it comes to the bottom line, our adjusted EPS climbed 11.1%, led by solid operating and financial performance. On cash, finally, we continued to reduce working cap by 100 basis points. This has contributed to maintaining a leverage below 1, similar to the end of December 22. Looking at the revenue bridge now, we delivered 2.9 billion euros in the first half with an overall growth of 7.8% and significant organic growth of 9.4%. It shows a strong momentum of our growth driver. External growth contributed 1.5% on a net scope basis, reflecting the impact of the Bolton acquisition realized in the past few quarters. As always, we continue to actively manage our portfolio. And in July, we sold our non-core automotive inspection business in the US, which for information represents less than 20 million euros of annualized revenue. On the acquisition side, we continue to have some promising projects in the pipeline. When it comes to Forex, we recorded a negative impact of 3.1%, which is mainly attributed to the strength of the Euro against most currencies. In the second quarter, we saw an additional impact due to a weaker dollar. At constant currency, our growth was 10.9% in the semester. When we look now at the overall performance of the group, this slide illustrates the broad-based growth we have enjoyed and demonstrates again the strengths and mix of our portfolio. four businesses delivered very strong organic growth marine offshore up 15.6 percent industry up 15.5 percent certification up 11.2 percent and building and infrastructure up 10.8 percent agri-food and commodities grew 6.5 percent organically led by all sub-segments while consumer product services contracted by 3.1% organically due to the slow consumer demand across developed economies. This was more than offset by new acquisitions, which added 6% of incremental revenue in the first semester of 2023. As you can see, in the second quarter, the positive trend of Q1 continued and even accelerated in some businesses. Organic growth was a very strong 10.3%, with double-digit organic revenue growth in four out of six activities. As you can see here, the M&A focus of the group remains on BNI and CPS divisions, reflecting recent acquisitions. Now, on the margin bridge on this slide, we delivered a 15% margin in the semester. The adjusted operating margin was resilient organically, and we're happy to report that despite inflationary pressures and the weak H1 for the CPS segment, we delivered a similar organic margin to last year. Forex was a drag of around 20 bps to the group margins due to the strength of the euro against other currencies. Within the portfolio now, The revenue growth and operating leverage drove organic margin higher in marine offshore, up 113 basis points organically to reach 24.7%. Agri-food and commodities was up 66 basis points to 13.5%. In addition, Our efforts to be more commercially selective by focusing on more profitable contract in industry have paid off. The industry division generated 147 basis point organic improvements to reach 12.3. Elsewhere, our CPS margin remained robust at 20.4%. It reflects the effort to protect the margin despite the lower level of revenue. Finally, BNI margin appears down to 12.2%, but was flat on the like-for-like basis. This is due to a positive one-off in H1 2022 regarding social liability in France, which was mostly offset in H2 2022. Our certification business maintained a high margin at 18.3%. And overall, we have managed to keep the margin at 15% in the first half, despite four exit wins. Moving now to all the financial metrics in the first half, EPS, cash, and bench-iterated items. Starting first with the bottom line elements, our net financial expense decreased by nearly half compared to last year to 15.2 million in the first semester. This is mainly attributable to the increase of financial income. Beo Aventas has a well-established policy of cash centralization, which allows to take advantage of the opportunity of higher interest rates. On the income tax front, our adjusted effective tax rate was reduced by 0.6 percentage points compared to the first half of 2022 to 30.7%. The decrease is due to the reduction dividend distributions from countries subject to withholding tax during the period. On the next slide, you see the growth in EPS. Here we delivered a strong adjusted EPS of 61 cents, up 11.1% year on year. This reflects, of course, solid operating performance, but also lower financial tax charges and financial charges. We are now 30% ahead of the 2019 levels, and we are confident to maintain a positive EPS momentum moving forward. Moving to the cash flow statements, Free cash continues to be very strong and is up 1.5% year-on-year to €131.9 million. Given the strong revenue performance in the second quarter, working capital requirement outflow was kept under control at €196 million compared to a €176 million outflow the previous year. I consider the working capital at 8.8% of revenue a good achievement given the strong level of activity at the end of H1, and we're expecting the usual seasonality when it comes to H2 working capital reduction. On the investment front, CAPEX increased to 2.6% of revenue to fund growth development in our lab-related businesses after the relatively low levels of 1.9% in 2022. We expect this to be circa 2.5% for the full year 2023. As a conclusion, we close H1 with a very stable and robust financial structure. The group adjusted net financial debt when below 1 billion at the end of June. Our leverage ratio was largely unchanged compared to the end of 2022. And as a reminder, we have no major refinancing before 25, and 100% of our debt is at fixed interest rates. Regarding the 500 million euro bond due in September, 200 million is already refinanced, and 300 million will be reimbursed through the use of cash. To sum up, another strong financial performance, and I would like to thank all the teams across BV for their strong commitment in achieving this result quarter after quarter. I now hand back to Inda for the business review.

Thank you, François. So let me share with you the first half highlights for our businesses. For marine and offshore, we delivered a very strong 15.6% organogram new growth, driven by both in-service and new construction activities growing double digit. This performance was led by the overall increase in the fleet, the high number of occasional surveys, and solid pricing. We expect this favorable momentum to continue in the second half with a lower organic growth. This is owing to exceptional half 2022 performance from survey catch-ups and one-off regulatory campaigns in Q4 last year. Services grew double-digit also thanks to a strong momentum for consulting services related to energy efficiency. On the sales front, our new orders totaled 4.3 million gross tons, bringing our order book to 20.4 million gross tons, providing a solid outlook for future growth. M&O performance is supported by robust trends going forward and is on a structural growth path. So let me show you and give you more color on that. You see clearly on the chart that the business has delivered a steady organic growth over the past several quarters with an upward trend over the last three years. This is driven by two long-term structural trends in the shipping industry. First, the average age of the world fleet is currently estimated at above 16 years, driving an acceleration in ship renewals. The second and most important trend is linked to the more stringent decarbonization regulations timeline and targets. This is triggering the development of alternative fuel ships, which already account for half of new ship orders worldwide in tonnage from recent research. This includes also LNG fuel ships where we have developed a leading position. In this context, the marine sector has a positive long-term build cycle. Indeed, shipyards are currently operating at full capacity, and ship owners must meet their decarbonisation targets, creating opportunities for the backlog to build up. Moving now to agri-food and commodities, where we delivered a 6.5% organic growth in the first half. The oil and petrochemical segment posted mid-single-digit organic growth thanks to higher testing volumes and price increased benefit. We continued our diversification into non-trade-related activities, gaining momentum in biofuels and oil condition monitoring. Our metals and minerals business grew low single digit overall. It benefited from a strong trade activity and the success of our group onsite laboratory strategy for the upstream business. We continue to see high demand for copper and base metals led by electrification in many sectors. Our agri-food business recorded high single-digit organic growth. It was fueled primarily by agricultural products and food testing in new geographies, such as the Middle East and the US. We are also benefiting from a favorable regulatory environment for traceability services in Europe. Lastly, government services achieved high single-digit organic growth led by the ramp up of several verification of conformity contracts in Africa, the Middle East and Central Asia. Turning now to industry, this business recorded one of the highest organic growth levels in our portfolio at 15.5%. Energy transition continued to accelerate over the period and is triggering an increase in clean energy investment and the rollout of decarbonization solutions. By sub-segment, power and utilities is a key driver of growth with a double digit organic performance in both OPEX and CAPEX activities. This included a solid momentum in the grid OPEX business in Latin America and projects related to nuclear power generation in Europe, both in new build and decommissioning. In renewables, we grew high double-digit organically with opportunities mainly in wind, battery energy storage, and carbon capture projects. In oil and gas, the performance was strong overall with OPEX, benefiting from a strong sales pipeline conversion. CAPEX growth, on the other hand, stems from the startup of new projects specifically on the gas side. For buildings and infrastructure now. In H1, we delivered 10.8% organic revenue growth led by strong performance across most geographies. From a mixed perspective, both construction related activities and in-service activities grew double digit. This performance highlights our balanced and resilient BNI growth platform. Asia Pacific was one of the best performing regions, delivering a double digit organic revenue increase in H1 and in Q2, driven by strong performance in India. The Chinese activity is steadily improving. In the Middle East, we continued our expansion with numerous projects in the region, including Saudi Arabia. Europe delivered strong growth as well, with France maintaining a solid momentum led by its in-service activity and energy efficiency programs. Moving to the certification business, we delivered a strong organic growth at 11.2% in the first half of 2023. Our growth was supported by both volumes and robust price increases across most geographies and schemes. This good performance was enhanced by the acceleration of the diversification of our portfolio in cybersecurity and new certification schemes. These generated half of the H1 organic growth performance. Sustainability driven solutions continue to perform strongly, up 17.3%. The drive for more brand protection, data transparency and social responsibility commitments all along the supply chain continues to gather pace. This growth was driven by high demand for verification of carbon emissions, supply chain audits and assurance of sustainability reporting. For consumer products, the resilience of our business in China and H1 last year now represents tougher comparables. For soft lines, we experienced a different set of dynamics in the various country. As expected, the slower activity in China was mitigated by South Asian countries benefiting from the continuing structural shift outside China. Technology-wise, the business is still affected by the slowdown in new product launches in information communication technologies and wireless. On a positive note, we grew double-digit organically in the new mobility subsegment. We continued our growth momentum for inspection and audit services with strong growth in sustainability services. This includes organic sourcing, recycling, social audits, and green claim verifications. In the next slide, you will see how we are evolving our consumer product services strategy. In consumer products, we are steadily strengthening our resilience and developing our footprint through acquisitions and sustained investment. Last year, we acquired three companies representing 44 million euros in annualized revenue. And this year we increased our CapEx to support customers expansions in new geographies. We are developing this business by accelerating our diversification in three ways, by sector, by service, and by geography. First, we have expanded in health, beauty, and household. This now represents 8% of divisional revenue and has excellent growth potential. In H1, it generated double-digit organic growth with Asia and the U.S. leading the way. The integration of Advanced Testing Laboratory and Gold Brave Laboratories, both acquired last year in the US, progressed well with a growing sales pipeline. Secondly, we are expanding our expertise and solutions in sustainability and CSR-related services. As an example, the acquisition of AMS Fashion has enabled us to support European retailers and brands looking to improve their supply chain reliability and resilience. Thirdly, many manufacturers are evolving their Asian footprint to de-risk China. This structural change in the supply chain is providing opportunities in many other Asian countries. Recently, we have invested in a new technology testing lab in Southeast Asia. On the European side, retailers have been relocating closer to end markets, creating opportunities in near-shoring zones such as Turkey and Morocco. Now, I would like to talk to you about our sustainability services innovation in the first half. As we have mentioned many times, sustainability and energy transitions are important drivers of our group's growth potential. The BV Green Line of solutions and services is a good proxy for our development in these fields. It represents today 55% of the last 12 months' sales. Continuing the trends from last year, our sustainability solutions are in high demand. We continue to expand and innovate to address new needs. A few examples in H1. First, in response to the newly introduced German Supply Chain Act, we developed a risk assessment methodology built around our clarity solution to address customer needs. This will also allow us to roll out rapidly in other countries when other regulators put in place similar requirements. A second example relates to our ship financing model that addresses the maritime sector decarbonization goals. We developed this tool to help a group of banks assess their investment risks and build their own strategies aligned with the Poseidon principles. Finally, in Q1, we introduced an audit framework for the climate neutral data center pact. I'm pleased to report that we have signed contracts with three major data center companies based in Denmark in order to assess and verify their compliance in terms of sustainability and efficiency. Moving now to the outlook. Based on the first half performance and a healthy sales pay plan, we now expect for the full year 2023 to deliver mid to high single digit organic revenue growth. This is to compare to mid single digit previously. A stable adjusted operating margin at constant currency and a strong cash flow with a cash conversion above 90%. Before taking your questions with Francois, I would like to close by saying that I am more than honored to take over as CEO of this great company. I believe Bureau Veritas has a highly robust portfolio of businesses, a global footprint and a great team of people and experts around the world. These trends are demonstrated by the first half results that also enabled us to raise our full year organic growth outlook. We're leading in so many fields, particularly with innovative solutions that ensure our customers can meet their own challenges proactively. Looking further ahead, the tick market has a very promising future. Bureau Veritas will continue to create value by investing and taking advantage of the growth opportunities that are key to building the next chapter for the group. Thank you all very much for your attention. Francois and I are now ready to take your questions on the call or on the webcast.

Thank you. Ladies and gentlemen, if you would like to ask a question or make a contribution on today's call, please press bar one on your telephone keypad. We'll now take our first question from Suhasini Varanasi from Goldman Sachs. Please go ahead. Your line is open.

Hi, good afternoon. Thank you for taking my questions. Three for me, please. Hi there. Can you please talk about how much price contributed to growth, organic growth in the first half? That's my first one. And second, your outlook on margins is now stable at constant FX rates. I think earlier it was stable year over year. Can you please talk about what the FX impact, what's the drag that you expect on a full year basis at current rates? And the third one, actually, is on certification division. Margins have fallen 60 basis points, roughly, on an organic basis. Can you help us understand why there was the weakness in 1H and your expectations for second half? Thank you.

Thank you, Swansini. I'll let François answer.

Go ahead. Hello, Swasini. So taking by your three questions in the reverse order, margin for certification, I would say we put a bit more of investment in terms of sales force in this segment that we believe is very promising. Hinda has mentioned the cybersecurity schemes. So great development here. Overall, we don't expect a margin erosion for the full year. So, no worry on the 12-month basis. Second, the outlook, the margin. Well, as you know, we're reporting Euros, and it seems like this year Euro is pretty strong. Our H1 numbers have been eroded margin-wise around 20, 21 basis points in terms of margin. You know, if I could predict the ethics, I would not be sitting in this chair answering your question. I would be somewhere on a paradise island. It is not the case. So the best I can tell you, and we've run our models and with the help of banks, I think as most companies are doing, and what we can see today is on a full year basis, the origin would be between 20 to 30 basis points at current spot rates. So we factor into it an H2 where the US dollar in particular would be very weak. So 20 to 30 basis points on a full year basis. And finally, the price component. We are careful about what we say around prices for obvious reasons, commercial reasons in particular. I think the growth we're doing in H1, as mentioned by Enda, has been first and foremost driven by volume. We want to remain very competitive, very active in the markets in which we operate. I will reiterate what we've said at the beginning of the year. We have reported in 2022 a price component in the growth of 2% in the P&L on a 12-month basis. We confirm that we'll be better this year in terms of price components. It is not for us a goal per se. What matters is that what we see in the H1 numbers, we have been capable to deal with inflationary pressures the best proof of it is that the margin is basically the same compared to last year. And we reiterate the fact that on a full year basis, at constant currency, the margin will remain the one we have enjoyed last year. So pricing is doing great. Do not worry. But the bulk of the growth is coming from volume, and we're happy about it.

Very clear. Thank you so much.

Thank you, Suhasini.

Thank you. We'll move on to Annelies Vermeulen from Morgan Stanley. Please go ahead. Your line is open.

Hi, good afternoon. I have two questions, please. So firstly on consumer, you know, sort of divisionally the weakest growth within consumer products and also by geography weakest was in Asia. But given that you talked about building an infrastructure, growing double digit in Asia, can we therefore infer that consumer in Asia, and I'm guessing China, remains particularly weak. I think previously you talked about the benefits from reopening in the second quarter. Is it fair to say that this perhaps hasn't been as strong as you expected? um and then secondly um on marine and offshore um so you know clearly the growth was very good in q1 but has accelerated further in in the second quarter i think in in q1 you were still benefiting from some regulatory tailwinds rollover from last year um but you know given some of the the structural trends that you've called out in that division you know do we need to think about a rebasing of growth in this division going forward i.e that it will sort of be structurally higher for longer or are there still some short-term benefits that will roll off? Thank you.

Thank you, Annelies. I think there are three questions there. I might come back to you on the second one. So let's start with CPS. I think As we've said, we were expecting CPS to have a challenging H1, thinking about the fact that last year, H1 last year, we actually had a very resilient performance, so the comparables are not particularly helpful when you look at H1 this year. What is very clear to us now, Annelies, is that we need to accelerate the diversification of our CPS business, And as I mentioned in my prepared remarks, we're looking at it by sector, by service, by geography. We have made acquisitions last year. It is absolutely no secret that we're looking to continue to accelerate our M&A in this space. We also increased our investment. so we're very clear that we need to to to make sure that we evolve our footprint and our offerings so we can actually ensure a stronger growth so um what we see is um q2 this year will probably hit bottom and we expect that the second uh half of the year for a for cps to be more more favorable because again the comparables are this time favorable in H2, so we expect that. And we, of course, going forward, our diversification strategy should pay off. So that's CPS. I believe you asked the second question on BNI, specifically BNI China. Is that correct?

To do with consumer, yes, around the – more than – because I think you called out double-digit B&I growth in Asia. So, you know, given your mix and your exposure in Asia, just around the comments around consumer, and particularly in China, what you can comment on there. And then the last question was on marine and offshore.

Yeah, so let me take care of M&O. So, look, we had an excellent, excellent performance of M&O. And as we said in Q1, we have seen – there are two ways to think of the M&O performance. I think the fundamentals of the sector are very strong. It's very clear. There is a renewal of ships and there is decarbonization targets that are basically going to push ship owners to upgrade their fleet and improve and really – commit to these targets and have a plan to do it. So from a build perspective, we consider that these are really good trends for a resilient build cycle for the sector. So if you look at our order book, then we have a very good baseline of growth in term of conversion of that order book backlog into growth. So that is a fact. What we have seen that was a bit more exceptional were some of the catch-ups that we have seen late last year and some regulatory inspections. And if you recall, it was the water ballast project inspections that were done that really boosted the revenue last year. So what we see is we have seen continued exceptional surveys as people really caught up with all the delays they had throughout COVID. We won't see as much in H2. And the other thing is the comparables in H2 are going to be tougher because of the pickup we have seen in H2 last year. So structurally, I think we have a solid growth. To upgrade it to a much higher growth, I think that won't be the case, certainly not in H2. What I can say is that we are positioning ourselves on segments of the market that should grow, namely dual propulsion systems, LNG fuel ships, so we are preparing ourselves to benefit from that growth in the market. I'll let François answer on the B&I.

Yeah, I think your question on BNI or the reference was trying to draw a comparison between the trend of BNI and the one of CPS in China. The situation in the building infrastructure in China is vastly different. The activity has well restarted. I say we have here easier comps because Q2 last year was, of course, on a full lockdown for construction sites. So overall, it's a double-digit growth on each one. for BNI China, and I think all the projects we are active at the moment have reopened, have restarted. The pipeline of sales is very strong. So I would say we are quite optimistic for the second half in our building infrastructure activity in China.

Okay, thank you very much. Thank you.

Thank you. We'll move on to our next participant, Neil Taylor from Redone. Please go ahead. Your line is open.

Yeah, good afternoon. Thank you. Three from me, please. Firstly, the restructuring and impairment costs that you've booked, I wonder if you could provide a little bit more detail on the background to and progress on what specific initiatives. I think you mentioned some of the initiatives that are taking place within CPS, but how much more is to come and any specifics on the asset impairments that you've booked? and how comfortable you are with what's on the balance sheet remaining. Secondly, sticking with CPS and the comments you just made in response to Anneliese's question, It sounds like you think the answer to the challenges there is sort of accelerating restructuring, but also investment. And how confident are you that the returns on some of the M&A and organic investment that you need to make will be acceptable over the sort of medium to long term? um and then uh final question um specifically that you you you mentioned in the statement i'm quite interested in in the opportunities arising from the olympics uh that will take place in france in 2024 i suspect you're quite well positioned across a number of uh your activities to benefit from from those whether you've had any opportunity to to frame that in terms of revenue or profit opportunity across the group and the longevity of that opportunity, please.

Okay, so thank you Neil for that. I'll let François answer on the restructuring.

Go ahead. Yeah, Neil, on the restructuring, so it's pretty straightforward. We've done most of it. There will be very little left for H2, a couple of millions, not more. I think I've mentioned we're looking at the profitability by sector. It's no mystery that when you are running a lab business, if your top line goes down, you know as good as me that it falls straight downwards. And I think our teams within the consumer product division have acted very rapidly so that the margin overall was frankly very well protected. we've closed H1 at more than 20%. So we've rationalized, and coming to your sub-questions, we've rationalized a couple of labs to concentrate the revenue on those, mainly in Asia, a bit in Europe. And this is part of the diversification that Inda was mentioning. On the one hand, we invest into new labs in in better locations we invest through mna on the other hand some legacy labs which for whatever reason have lost you know the volume they used to enjoy at some some places have been closed so it's it's a rapid turnaround frankly speaking and uh it's been done very diligently uh by the team a bit in q4 last year and and a bit a little bit as well in um so in h1 this year as you have you seen When it comes to the payback on the CPS-rated investment, I think we are very pleased, as Inder mentioned, that the acquisition we've done last year will contribute to the organic growth starting H2. And I would say the three acquisitions we've made last year, two in the US, one in Europe, are actually delivering more than on plan. So it's been a real pleasure to see this unfolding. And when it comes to payback, frankly, no question here that the price we paid was correct and the payback is as per standard.

Yeah, thanks, François. I think the only thing I would add to that is At the end, we will consider investments in a very disciplined way. If you look at the diversification in the HBH space, as I mentioned, that's a vast market. It's growing well. It's very resilient. It's also a move into the upstream side, if you like, of the testing, the analytical testing. That's an area we're interested in. So we're very clear on the strategic fit, on the return and the ability for us to really execute these M&As. And then on the investment side, I think it's very important, especially on the tech side, to be aligned with the evolution of technologies, of the opportunities, what we see today. new mobility is growing double digit for us it's an area of interest we see a lot of energy related consumer products are also an area we're looking at so there are a number of new segments that are linked to to a bit energy transition technology evolution that are actually important so uh I'm not worried on the returns, like Francois was saying. On the final point, on Olympic Games, this is already included into our financials. We don't break it down. What's important to think about for these Olympic Games, of course, we're very fortunate to be here in Paris, is there's a lot of investment by the French government. and the city here to refurbish stadiums and facilities and buildings and any of the sport and leisure facilities. And of course, there is a real renewal around accommodations here in Paris and elsewhere where games will take place. So we are obviously very opportunistic and following up on those.

Thank you. That's very helpful.

Thank you.

Thank you. We'll move on with our next participant, Harry Martin from Bernstein. Please go ahead. Your line is open.

Thank you very much. Good afternoon, everyone. The first question I don't think you've mentioned, but I wondered if you could give any sort of outlook for the oil and gas, renewables-related businesses into the second half. Are there any signs of softness or tougher comps in that segment particularly? The second one is on CapEx. I think it's quite interesting. CapEx for sales came up 2.6% in the first half. And you've mentioned that in order to finance growth in the lab activities, going against many years of reductions in CapEx for sales. as you've grown in less capital-intensive areas. So, I wondered if the increase is maybe a suggestion that the reduction down all the way down to below 2% of sales is a little bit too far and where you expect that capital intensity to reach in the medium term. And then the final question, just on the balance sheet, I mean, we're already at sub one times leverage BV once ran over two times. If you add free cash flow forecasts into this, it's clear that there's quite a bit of cash to deploy over time. So, Hinder, I wonder if you can just outline your approach to capital allocation, your attitude to M&A in the future, shareholder returns, and what we can expect to see over time. Thank you very much.

Thank you. Thank you, Harry, for those questions. Let me start with the oil and gas. And Francois will answer on the CAPEX. So first of all, all my connections in the oil and gas sector and everything I read tells me that the international business for oil and gas is super, super strong. There's a real strong cycle going on. In particular, we have seen that the gas projects have really taken off and we've been very focused on those because this is complex work and it's an area where we are particularly good at. So frankly, as I look forward, I don't see any signs of slowdown. You will hear headlines about North America versus international, but considering our footprint, that is not really of a great impact to us. So very positive about the oil and gas activity. But we remain very disciplined, though, on that. We are mostly focused on OPEX, and we're very selective on CAPEX work, and we make sure that we are really going for accretive work that we are able to execute. On the renewable side, look, I really think the outlook is quite positive. For the first time now, for every dollar spent in fossil fuels, $1.7 is spent on renewables. So we are seeing a real takeoff in terms of projects. We have seen recently that our Bradley Construction, which is an expert in wind farms, has really taken off in the US. We have a number of projects around the world. We just secured a project in Saudi Arabia for some renewable as well. So, this area is very buoyant, very busy, and we are well positioned for that. So, both for the energy side, for me, the near term is quite solid. We'll let François answer on CapEx.

No worries. So, you know, on CapEx, by nature, we remain an asset-like business. You know, even looking at the DH1 numbers, if you take the industry segment, grow more than 50 percent. The B&I segment, grow more than 10. Certification, more than 10. M&O, more than 15. None of these segments consume more than 0.8 percent of the revenue in CapEx. So CapEx to us is necessary in the lab businesses and only in those ones. I would say what we took some opportunities, I would say back in the year 1920-ish, where the cost of money was very low to go on, you know, some lease for some machines and equipment that kind of, you know, visually a little bit reduced or capex number by as per accounting standards. But I would say you should expect on a yearly basis, you know, 2.5 as being a pretty reasonable and normal level. There would be some acceleration indeed in consumer products. I think we are doing well in the metal and minerals and R&P business. So, you know, by a sense, we do remain a nice headlight business. And, you know, just the portfolio we have, we never get us to a 5%, 6% or 7%. That's not possible. And that's not what we want to do. So we are following our clients as best as we can. I think you had a third question on capital allocation, am I correct?

Yes, yes.

So on capital allocation, so few changes compared to past years, as you may have seen, when it comes to return to the shareholder, we've updated our dividend policy to distribute now, and you've seen the results in July, 65% of our adjusted net results. So we've saved this policy to be able to last, not just being a one-off. So it's been calibrated. That's point A. Point B, when it comes to Capital allocation, as I mentioned, CapEx, we can count on 2.5% of the revenue by and large. M&A, we have what is necessary to move. Good pipelines will remain disciplined here. And last but not least, when it comes to the leverage, we don't have intrinsically a leverage objective. One ish is good for us. It will be function of the M&A opportunity we can find. And here, anywhere below one and two, I think the most important is that I can sleep well at night. And I sleep very well below two.

So maybe to add on to that, Harry, to answer fully your question is, we have made no secret in recent discussions with investors and yourselves that we want to accelerate M&A. We have, as François pointed out, we have a healthy balance sheet and we have room to do things. We want to remain disciplined in a sense that we want to make sure that the attributes of the targets we're looking at are actually aligned with what we want. We're really looking to accelerate in markets of leadership for us. We have said that we want to expand in North America and we continue to be a market for us, both on the B&I and industry side of things. We have said that we want to grow in high growth space. Renewable comes to mind. Cyber is another. Sustainability as well. So we have very, very clear plans. And I just mentioned earlier CPS. So we are, while we didn't have specific acquisitions in H1, we are working on the pipeline. We're looking at targets and we're assessing them. And in due time, we will materialize them.

Thank you.

Thank you.

Thank you. We'll move on to our next participant, James Rose from Barclays. Please go ahead. Your line is open.

Hi, thanks very much. I've got two, please. The first, it's been flagged on previous calls that you were seeing and you had a very strong sales pipeline, which is visible in the results today. How is this pipeline looking now? Has it been replenished and can we still expect good volume growth to continue? And then secondly, on margins, Slightly down a constant currency despite 9% organic growth. Is there anything beyond the consumer business to flag which has held the group back? And when we think about the second half, if consumer comes back slightly, is there reason to think the drop through should be incrementally stronger in the second half? Thank you.

Thank you. So on the sales front, we are very focused on growing the pipeline of our business. We have good tools today. We installed Salesforce a few years ago. We have a real take up. it's becoming a tool now for uh for our sales effort we are focusing on also on high demand services where we are we have programs specifically to follow on that so all hands on deck uh if you like when it comes to the sales pipeline i'm quite pleased with where this uh the pipeline sits today our sales are are uh at budget or above depending on the businesses so we are we are doing well on the sales front i'm not really particularly concerned but of course we have to make sure that we are very sharp in key strategic markets. Let François address the margin, perhaps.

So, on the margins, you flagged the two. The one issue you flagged is correct. We have, of course, a softer margin at CPS, a bit more than 20%, but lower than usual. The second element is what has been mentioned on BNI, where we had a positive one-off in H1 last year that has phased out over H2. So, on a full year basis, this is natural, but H1 last year was positively impacted. So, now moving to H2, if you factor those two things, it will be easier on the BNI's front, for sure. On industry, which is to me the best news of H1, because industry is a large part chunk of our business, we should continue to see an increased profitability. We've been talking now for i think three quarters about the efforts taken by our operational leadership to uh to be slightly more selective on in the industry segment which is related to renewable which is related to power entity to opex businesses and i think we've reached a balance which is uh frankly not bad in being able to grow fast but at the same time to bring the margin up so we expect this to continue on edge too Overall, I'm not too worried for the second half when it comes to margin. That's why we've reiterated our guidance to keep the margin stable compared to last year at constant currency. We'll see later on during the year how it evolves, but we are usually prudent in our guidance moving forward.

Claire, thanks very much.

Thank you, James. You're welcome, James.

Thank you. We'll move on to our next participant, Simon from . Please go ahead. Your line is open.

Yes, good afternoon. Two on my side, please. First of all, on BNI in North America, could you comment a bit on the backdrop here? I think the trend slowed down a bit. So what are the drivers behind this, and how should we view the outlook? And secondly, I mean, looking at your medium-term target set at the CMD, so on top line, much better than meeting a digit but on margin so your target was to be above 16 percent uh so you should be at 16 at constant currency this year so my question would be should we still expect margins to improve going forward or should we rather focus on the absolute aop and the pace of growth given your focus on growing the top line and and with a mix which is not really helpful for you thank you

So thank you, Simon. On the BNI side, so the BNI platform has been designed and all our acquisitions and efforts and investments were made to ensure we have a resilient platform there. So we build this mix of businesses. with exposure to CAPEX, very good exposure to OPEX as well. And really it's doing its job as we expect it to do. So our growth, I consider it resilient this year. The comparables were, maybe there were some businesses that were projects that, you know, finished at some point, so you have some cycle there, a small one. But reality is I'm quite actually pleased with the resilience of the business. The interest rates haven't had, which we were watching very closely, haven't had really a negative impact. We've seen delayed decisions, particularly on the transactional side of the business, which tends to be around real estate transactions and some of the inspection work we do there. But in general, the rest of the business has held actually quite well. And I expect that as things start stabilizing in terms of interest rates in the States, that even that part will recover in due time. So, in general, it's played its role. We continue to watch that market. We consider it a prime or premium market for us, BNI, and we continue to invest there. And the other thing which I need to mention is in the U.S. is the – if you like, the new IRA, the Inflation Reduction Act, is preparing the ground for real momentum of growth in this space. It's going to take a bit of time. We're not going to see the impact immediately this year, but probably in the next 18 months to two years, as projects start, there will be an element of infrastructure attached to it that will be actually quite beneficial for us. So that's on the BNI and AM side of things. I think on the margin side, you want to take that?

Yeah, sure. So first, when comparing the current performance with the one of So the plan that has been shared at the end of 2021, you're right, we are developing faster on the top line front, and we deliver the 16% floor we've promised upon. I think this plan will set up around two elements. It's not a three-year plan that says in three years, this is what we're going to achieve. It's a plan that says each and every year, we'll at least achieve 5% and 16%. So happy on the top line, bottom line has been delivered. You know, at the end of the day, I'm always sometimes surprised when this call, there is so little ask about the, what at the end of the day, the value creation for the company, which is the Azure CDPS. And I think more and more And this company, what drives our decisions is that the ultimate impact on the EPS. And we've tried step by step, quarter after quarter, to build a trajectory on the growth front. maintain the trajectory on the margin fronts, and start to build the trajectory. And I recognize it's early in the recent history of Bureau Vertas. We are, since 2019, step by step, starting to build a story on the EPS front. So it's early days. I think there is still a lot to do. H1 results are in the right direction, but I think we'll talk more and more about the bottom line EPS contribution, which we believe is what matters for shareholders.

Thank you.

Thanks, Simon.

You're welcome.

Thank you. We'll move on with our next participant, Artur Trusler from Citi. Please go ahead. Your line is open.

Good afternoon. Thank you very much for taking my questions. Sorry if I missed the answer to this one, but just if I look at the restructuring and the impairment again, I remember in 2022, a lot of that related to consumer products in China. I wasn't sure from your previous answer whether that was the case once again in the first half of this year. And I just wondered if you could confirm whether or not that was the case. The second question I had related to depreciation and amortization. So if I strip out the acquisition amortization and the impairments, it looks like underlying DNA is around 10 million below the previous year in the first half. And I just wondered if you could provide some details as to how that came about. And then I guess my final question really, clearly your industry division did very, very well. And it seems to have materially outperformed your major competitor that reported the other day. And I just wondered if you could sort of talk about what you're doing right there that's enabling you to outperform your competitors. Thank you.

Yeah, thank you. François, you want to take the questions, the finance questions?

Yeah, sure. So, on the restructuring, just to be very precise, you're right, a good chunk was done in 2022 with China, a little bit of 2023 with China again, and rationalization of European footprint. And that's kind of close to all restructuring we have to do on CPS. As I mentioned, most of it is done now, delivered. So China, most of China in 2022, 2023, China slash Europe. That's A. B, on depreciation and amortization, I'm keen to see you are a precise reader of our financial statements. As I don't want to deprive you from the right level of information, I recommend you contact our investigation team that will give you more details about it so that you can refine your model.

When it comes to the margin of industry... It's more about the business, I guess, not only the margin, I'm assuming there, Art, right? Did you want to clarify? You were asking in general about the business.

Yeah, it was more about, exactly, yeah, I mean, you've outperformed from an organic growth perspective, and yeah, it just looks like it's gone very well, so I just wondered what you were doing better in your competition. Yeah.

Yeah, no worries. Thank you. So, look, I think it's good to understand really what's our position in the industry space. We've always been a strong player, an expert player in the energy system and started with oil and gas. And it's an area, even if we pivoted from it and we diversified in the company, we retained a lot of the expertise. And that expertise, we further augmented now with expertise in the renewable space. And we are not going into just one space. We're looking at wind and solar, we're looking now at hydrogen, we're looking at auxiliary systems, energy storage systems. So we're really expanding, we're investing into the capabilities for the industry. and really we're making sure that we're leveraging also our global footprint specifically to accompany, if you like, the build cycle that is going on right now. So you have a build cycle on the low-carbon energy system, and that includes also nuclear, and we have capabilities on all these. So we have... We have excellent expertise. We have a global footprint and we have a brand recognition across all the players in this sector. And where we don't have that brand recognition or a footprint, we have made acquisitions. We bought Bradley, as I mentioned, in the US and we continue to scout the markets to find other capabilities that we need. And for us, this industry space is is in many ways our legitimate playground, and it's something we want to develop. So I'm quite pleased with the performance, of course, and we've seen double-digit growth on the renewable side specifically. We'll continue with that. And, of course, the other thing which is important is our history around M&L capabilities, our marine and offshore capabilities in terms of floating capabilities, and we are seeing now growth in floating wind farms. That's an additional differentiation that some others maybe don't have. So we're very committed to this space and we'll continue to invest in it.

Great, thank you very much.

Thank you. I think we are looking at... Yeah, go ahead, please, Priscilla.

All right, we'll move on with Carl Green from RBC. Please go ahead, your line is open.

Yeah, thanks very much. Just two remaining questions from me, please. First one for Francois, quite straightforwardly, obviously interest income in the first half was up materially on the back of rising interest rates. Just thinking about the second half, given that you should see the seasonal working capital inflows a good cash generation and arguably an annualisation of higher interest rates, what sort of interest income number Are you looking at budgeting for the second half? That's the first question. The second question, sort of more broadly for the team, just on M&A, I mean, clearly you've said you would like to accelerate work and activity there. I mean, how confident are you that you can actually do that on a 12 to 18 month view versus, say, six months ago? I think one of your bigger competitors seems to be quite confident they can actually get the execution through more clearly over the next 12 to 18 months. So just any further call you can add there. Thanks.

Yes, thank you. I'll take the second question and then I'll also address the interest rates. Look, our intentions are very clear and the work we're doing are also very clear. We would like to accelerate. We have the financial capabilities for it and we know what markets we want to go after. It's a matter then now of really assessing the opportunities we find or the targets we find and making sure that we can actually find a path to secure them. So, we're hard at work, if you like, Paul, on that, and our intention is to try to accelerate within a timeframe that makes sense in the near term. This is not a very, very long term. In the near term, we would like to do that. So, I can't really tell you more than that, and we'll have to show you in the future.

Thanks. So, coming back to your point, I think you're making wise assumptions about the usual influx of cash coming seasonally over H2 mainly. You should not, however, underestimate the fact that we've paid dividends in July and These dividends were actually 45% higher than the year before. So we're very pleased about it, and I'm sure our shoulders are. So we have a little bit of, you know, it's a dual equation to manage, a bit less central cash, higher interest rates. However, this being said, we have really an ironclad discipline in this company when it comes to cash centralization. And believe me, when you operate in 140 countries, you better have it. So we are very, very proud of being able to really centralize each and every euro and make the best use of it. So what we see today, you know, in terms of net financial costs, if the high rates environment stays around us and if we don't have, you know, major M&A coming in, the net financial costs at, you know, current scope, say, without transformational M&A whatsoever, should be around 60 million-ish on a full year basis. which, you know, allows us to get a bit of a kick in the EPS.

Great. Thanks for the conversation.

You're welcome.

Thank you.

Thank you. And we'll have our last question from Josary Michelas from Odo. Please go ahead. Your line is open.

Yes. Hello. Thank you for taking the question. Just one for me. I was wondering in the industry division, If it is fair to assume that the pricing component is probably superior to other divisions, given the scarcity of resources, i.e. the qualified people in the sector, meaning that going forward, the more demand there will be, the more pricing power will the company have for those who have the people. Thank you.

Yes, thank you, Jocelyn. I don't know that I will compare it to other divisions. I think what's important here is having the capabilities at the right place and at the right time is definitely a very good competitive position to be in. And that's why we're very busy augmenting the capabilities in our technical centers around the world so does that give us some price advantage absolutely and that's what we want to bank on but uh but at the same time it's a busy space and there is a lot of interest from others of course so our ability to um to find the right targets to expand in the right markets is going to be very important okay thank you thank you okay thank you very much

Just because it appears there is no further questions, please go ahead with your additional closing remarks. Thank you.

Yes, thank you very much. Thank you, everyone, for your questions. Thanks, Priscilla.

Thank you, everyone. You may now disconnect. Have a great day ahead. Bye-bye.