Vinci Sa Act

Good morning to you all. Thanks for joining us for the presentation of our first half results. So a few pictures to start with on the cover of the booklet. You no doubt have before you this inartist view of the future. Saint-Cloud station of the mega contract of Line 15 West that we won recently. And this is a first with the Grand Paris company. Design and build five stations, 14 kilometers of tunnels, 2.71 billion of revenue to be delivered in Paris. 20, 30, 31. The Grand Paris Express is truly becoming a reality and it's without doubt going to boost the economic activity of the Paris region. Next, we often talk to you about decarbonizing the road and in particular the auto route that's imperative and urgent. And we're going to be testing two technologies allowing all e-vehicles, in particular trucks, to charge as they roll. It's a big advantage because you can reduce the power and weight of onboard batteries. Tests will take place over two years, 23 to 26, on two two-kilometer stretches near Saint-Arnaud, the aim being to certify the technologies that could then be deployed on very busy Next, a photograph here that shows one of the platforms of the Cape Verde Islands. We completed and closed the financing of this 40-year concession whose aim is to support, stimulate economic growth through the development of tourist potential of these islands. And of course, in our program, we've planned to make major initiatives for the environment and the production of renewable energy. It symbolizes the fact that we continue to grow in the airports sector. We're consolidating through these Cape Verde airports our leadership as the leading global private operator operating 17 airports across 13 countries. We've also strengthened our stake in VIA40, and Colombia work is progressing at pace. Next slide is the image of a project won by Vinci Energy and Vinci Construction have won about 300 million euros for the two conversion ACDC stations as part of the power interconnection between France and Spain in the Bay of Biscay and then a shot of the PV farm connected to the Brazilian grid, the Belmonte farm, 570 megawatts peak power, the shot of a construction project achieved by Vinci Construction and Consortium, the Sydney Gateway in Australia, 900 million euros to Build refurbished five kilometers of road, 19 bridges and cycle lanes to illustrate the fine breakthrough by Vinci Construction over the past 10 years in Australia, in New Zealand. And lastly, the signing off plan of the first co-living project developed by Vinci Construction. real estate in the Paris region. This is part of a broader operation of urban regeneration on a former waste line where we're developing the co-living, many homes, a nursery. with a rewilding project. So, just to show you that, as on previous occasions, we're seeing that the world is brimming with projects, and this allows us to be extremely selective as we move forward. Next, to say that H1 Performance at Vinci was very solid. Vinci Airport's a spectacular turnaround, a traffic that has returned to its pre-COVID levels. If we don't take into account the part of the world that's lagging slightly behind Asia, Vinci auto routes traffic is trending well. Strong growth of activity and operating margins at Vinci Energy and Cobra. Good selectivity at Vinci Construction also improving its operating margin. All this on slide 12. sees H1 revenue to grow by 13% versus last year, whereas, as you can see, EBIT grows from $724 million over a year. You'll have noted the free cash flow of the H1 that doesn't, of course, represent annual free cash flow. As you know, a great deal of seasonality in our business. This SCF, what's interesting is that it's positive. up 542 million euros as compared to where it stood last year. And lastly, order intake being renewed very satisfactorily both in volume and quality. That's important. We can remain confident which is the best way of winning attractive projects with a good level of margin. If we now turn to the geographical split, you see that all our major areas are up, often very significantly, as the case in Central and Eastern Europe, Western Europe, excluding France. France is up 7%, also the case in the Americas broadly and in Asia, Oceania. It's worth noting that international business now represents 56% of our total activity. Diving deeper into the various businesses, Vinci Auto Roots, light vehicle traffic is up, benefiting of a number of effects. A base effect, first of all, due to the fact that last year in January 2022, there was still a residual COVID effect. So we're benefiting from that this year in terms of the base effect, number of calendar effects. Also, there were... more business, open travel days for cars, visiting friends and relatives, FVR over last year. So the numbers growth of light vehicles is very useful, 2.8% even if it's somewhat boosted by the effect that I mentioned earlier. Truck traffic is down slightly, 1.2% for calendar effects, that is the number of opening days during which trucks can travel. But it's quite likely that this slight dip also reflects economic growth, which, as we all know, is not particularly buoyant at the present time. So I won't deliver the usual speech about the auto route decarbonization. You've heard it a number of times, but we're going to trial the two engineering operations of dynamic recharging that I mentioned at the outset and to say that all our service areas, our 180 service areas are now equipped with charging points with 1,326 as we speak, 1,500 by the end of the year, and it's important on the auto route, 70 ultra-fast charging points of at least 150 kilowatts. It's important to add that we're gearing up to equip not just our service areas but our rest areas with a program to equip some 50. Airports, as I said, traffic is recovering. June traffic levels was only down 6% versus the pre-COVID situation, excluding Asia. As I said, we're at the pre-COVID traffic levels with very solid performance levels in Portugal, Serbia, Dominican Republic, or more recently in Mexico. We acquired the cluster of airports around Monterey at the right time because since the acquisition, traffic's holding up very well. Traffic continued to grow in the U.K., driven in courage by a strong increase in flights in Japan. An interesting point, international regional traffic. Singapore, Korea, Taiwan has strongly accelerated of late, whereas traffic with China is being reestablished gradually. Vinci Airport, very good containment of operating costs in spite of cost inflation, not just energy and all this, leads to the performance shown here, and in particular, a fine increase in prices the operating margin. Of course, we continue to roll out our environmental policy across our 72 assets. Other concessions? Slide 16, as I said, we've strengthened our stake in the VIA 40 in Colombia that we now fully consolidate. We included Antrevias In Brazil, a concession of 570 kilometers in the state of Sao Paulo. Just after the two slides I've shown you, I'd like to indicate that the strategy incepted in 2006 aimed at diversifying infrastructure concessions projects. by growing Vinci airports allow us to post these significant figures. You can see that excluding French Orta routes today in concession, we're achieving 2 billion euros in business and 1.2 billion in EBITDA on the half as against, as you saw previously, 3 billion in business, 2.3 billion EBITDA for Vinci Orta. progressing, we're beginning to reap the benefits of the strategy that was initiated back in 2006. Works, look at the order intake, excellent level, as you can see on slide 17, both at Vinci Energy, COBRA, as well as Vinci Construction, and also the three segments, geography, France, Europe, excluding France, and international are all up with particularly strong growth as regards international. Diving deeper, Vinci Energy is in great shape, well-established across the four major dynamic trends, energy efficiency, the energy transition, and its adjunct, the energy electricity development that is growing in the energy mix and also the digital revolution with its huge need for data capture, retrieval, data storage, data operations and management that accounts for the sharp increase in the business, 18% on the harvest this last year, 13% in France and 21% outside France. and international where we've now gone flat out for a while represents 56% of the total. Vinci Energy, what's more, is improving its EBIT margin 6.8% on the half as against 5%, 65% in 22 and in accordance with their corporate culture continuous flow. of small to medium deals, 14 since the beginning of the year, to complete our geographical coverage and expertise. So Vinci Energy is proving to be an extraordinary machine that has a key role to play in the energy and digital transitions underway. posting the same momentum both in terms of flow business and the major ramp-up in EPC projects linked to the energy transitions with new ACDC conversion stations for offshore wind farms in the North Sea with, of course, high power transmission projects, high voltage in Brazil or Australia, also a good crop of PV farms, be it in the Iberian Peninsula or Brazil. The Belmonte power plant in Brazil was, as planned, connected to the Brazilian grid and put into production the day before yesterday. It's a major milestone for us because it's the first renewables project fully developed by Cobra and that we're going to keep in our portfolio. So since yesterday, we can consider that we're producing green power big time. Others in Brazil, Portugal, Spain, total power of 1.4 gigawatts to be constructed before the end of the year. The performance shown here are being delivered both in terms of energy development, order intake, and EBIT margin. Vinci Construction, we're also seeing a very good half. Revenue up 11%, 7% in France, 15% internationally. The activity is comprised of many local projects, buildings, civil engineering projects, the flow business as we call it, but activities particularly buoyant in major mobility infrastructure in France, the Grand Paris Express, line HS2 in the U.K., several auto routes, rail links in Canada, Australia, New Zealand, and the fixed link, the undersea fixed link, pretty extraordinary between Germany and Denmark. Let's dive deeper on the order intake. Very good progress of small projects below 5 million euros represent just over 60% of the order intake. It's important for us because it generates a great deal of resilience. And that's not always how we're perceived because we communicate a lot on the major projects that allow us to show you some fine pictures. But you need to know that 60% of the business logged over half projects lower than 5 million euros. It's very important to track that because that's what allows us to maintain the resilience of Vinci Construction. At the same time, we're seeing an increase in projects between 5 and 50 million euros, and this is something we've seen for a while now, an increase in the elementary size of projects, which is pretty much a good news because very often these are more technical projects in which we we can better showcase our ability to deliver value added. You're seeing that Vinci Construction is now achieving 55% of its business internationally in accordance with our strategy and the EBIT margin continues to grow but of course as you know that this margin is in no way a reflection of the full year because of the high seasonality of a number of sectors, notably road construction. Lastly, Vinci Immobilier, real estate that doesn't escape the deep crisis. Reservations are down 36 percent, revenue down 23 percent. It's obviously not very good news, but for us, as you know, it's a very modest activity. We can also note that two segments are performing better, that of hotels and what we call managed residences, either for seniors or students. This is a sector that is still faring quite well. We have 38 residences in service and nine new managed residents to be commissioned by the end of the year. That's what we can say now. Over to Christian Laberry, who will reflect that in the figures.

Thank you, Xavier. Slide 24. Slide 24 compares changes in revenue for H-123 relative to H-122, raising a 13 percent increase in revenue, including 12 percent organic growth. And this reflects the good momentum in our businesses in line with the previous fiscal years. The change is homogeneous between the three main branches between 12 and 13 percent organic growth. Plus 13% in concessions. The rebound in air traffic continues. Good traffic on highways. 13% for energy, 14% for COBRA, 12% for construction. The only caveat, as we said, is real estate. There's a 23% drop in revenue. Scope effects are relatively limited this year. To date, a growth contribution of 2.6 percent. Additional growth, which comes in addition to organic growth, with the consolidation of OMA, which accounts for about $300 million revenue over the half year. Forty acquisitions between last year and this year, which provides additional revenue of about $380 million. Euros, the main two segments are ICT by Contran in Europe and Otera in Norway. We're talking electricity infrastructure. Sephora is slightly negative, minus 0.6 percent. That is the impact of the euro rising against sterling. Next slide. France versus international, strong Boeing business in international operations of 20%. This gives us organic growth of 16%. But France has nothing to be ashamed of with strong growth of about 7%, which is slightly higher, more much higher than inflation. So we're talking 56 percent of the total increasing year-on-year. This is one of the main thrusts of our strategy. It has been for years. We want to increase the share of international operations in our revenue and profit. Now, operating income, 3.5 billion euros, i.e. 11 percent of revenue, an increase of 724 million. A strong increase in Vinci airports, EBIT reached 780 million. And half of that is due to the consolidation of OMA EBIT for Vinci. Auto route exceeds 1.6 billion. It's an improvement of over 150 million euros. We're also seeing improvements in Vinci Energy, Scopro IS, and Vinci Construction, both in quantum terms and in terms of the margin rate. As we said before, the only caveat, as I said before, is real estate. We're seeing a slight loss of 16 million in the first half versus a profit of 28 million last year. Now, our operating income, slide 27. We are seeing a strong increase of the IFRS 2 expense, which is mostly explained by the increase in the expense related to the group savings plan due to strong subscription. Initially, we have created 5.9 million new shares in the first four-month period of the year. We're working on the basis of four month periods but there's also been a change in method which has currently been implemented in France following recommendations from accounting authorities and this means a lower discount linked to the mobilization of shares. Other aspects, we're seeing an improvement in equity accounted associates. And this can be explained by the better performance of airports in Japan, which have now broken even though traffic has not returned to its 2019 level. Very few non-recurring items, as you can see. We're seeing an increase in cost of debt and financial interest. It should have been higher than what we're seeing on the screen because out of the 340 million in net financial expenses, we're taking into account the one-off impact of 170 million euros linked to the restructuring of the debt incurred to acquire London Gatwick. So this impact, unfortunately, will not repeat itself every single half year. But we managed to cut our losses. caused by the impact of interest rates hikes. We're seeing an increase in the tax liability and a stronger negative contribution of non-controlling interest, which represent the share of our partners in Gatwick Airport. They own less than 50 percent, and the share of OMA shareholders, which exceeds 70 percent of the share capital. So a net profit of about 2.1 billion sharply increasing over last year. And this is reflected in the EPS of 3.65 euros per share. Next slide, please. Number 28, we're seeing changes in debt over the half year. Next year, we can do a comparison over a 12-month trailing basis, which is probably more relevant considering the seasonal variations in our businesses. However, we are seeing an increase, which makes sense. This half year, despite a strong increase In EBITDA, 5.3 billion versus 4.5 billion in the first half of last year. Vinci Autoroute accounts for over 40 percent of EBITDA. And energy, in the broad sense of the word, plus Vinci Airports account for about 20 percent of EBITDA for the half year, respectively. WCR is shifting negatively. It has increased over the first half of the year, but to a lesser extent than last year, thanks to COBRA IS and Vinci Construction. Financial interest is up. Taxes are up. That makes sense. We've already analyzed that. CapEx is also strongly up, about 500 million euros. And this mostly relates to Vinci Airports. You probably remember that it strongly reduces investments during COVID, particularly with regard to Gatwick. And Cobra IS is investing into its public-private partnership projects, electricity infrastructure projects in Brazil. and renewable energy projects, particularly Belmonte. We're seeing a number of disposals and an impact of dividends and share buybacks, which is slightly higher than what it was last year. So by and large, debt is less than 21 million euros. And it breaks down between gross debt, about 28 billion euros, and cash to the extent of 800 million euros. Next slide, please. This reminds us that, yes, we are happy that we are in positive cash flow generation territory. It hasn't happened very often, only four times. But let's stay humble because the bulk of that cash flow is generated in the second half of the year. We could even say in the very last months or even weeks of the year due to significant inflows in the fall. However, This is still a source of satisfaction. The free cash flow in H-1 is improving relative to H-1 last year. We are in positive territory. Next slide, please. The consolidated balance sheet. Our capital employed accounts for over $56 billion. Out of the $56 billion, we have $44 billion in concessions broken down as follows. $20 billion for Vinci Autoroute, $20 billion for Vinci Airports, and about $3 billion for the other concessions, mostly Vinci Highways. The rest of the 23 billion euro in the, we have about 10 billion, 13 billion WCO. So Vinci Energies, Cobra, so the energy branch accounts for a little over 10 billion euros. So much for our balance sheet. Now, our financial policy, I keep saying the same thing. But it makes sense, so I don't see why I should change my tune. Liquidity is high. It's important to us. It's important to have liquidity, to have cash when you have gross debt that you need to manage. And at the same time, you need to grow in order to maintain our elbow room so we can make the right investment choices when we need to make them, as opposed to based on financial constraints. that come from markets. At the end of June, we have 18.5 million in liquidity, including a billion in cash. The 10.5 billion in credit lines will be brought down to eight. We decided not to renew the 2.5 billion credit lines set up in July last year for one year, but that could have been extendable. So what's the point of continuing to pay fees? when we don't absolutely need to. So $8 billion in cash broken down as follows between the holding company and our subsidiaries. So in total, $8 billion, which is still a pretty good level of cash. Our rating, both for S&P and Moody's, has been confirmed. The level is good, A minus, A3, depending on S&P or Moody's, with outlook stable in both cases. This means we will continue to issue bonds, as you can see in the lower right-hand corner. We have issued bonds for 1.3 billion euros between ASF and Vinci SA in over a 12-month trading basis. We're doing pretty well. Yes. Credit terms are more expensive than in previous years, but we're still doing pretty well, over 3 percent for the annual coupons. Last slide, the change in gross cost of debt. It's relatively limited, 3% of the average cost over the first half compared with 2.5 in H1 2022. In actual fact, the 3% takes into account the one-off item that I talked about before with regard to the debt incurred to finance the acquisition of London Gatwick. Otherwise, we have about 4%, a little over 4% in cost of debt, which is more than previous years. And on the right-hand side, you see the explanations, shifts in the different currencies. We're about 4 percent, slightly under 4 percent, but considering yesterday's ECB announcement, it could be higher in the next few months. We're hoping this will stabilize, and we expect the trend will go down. Sterling, close to 5 percent. Dollars, higher than 5 percent. On the left-hand side, the pie chart shows that a significant share of our debt is no longer Euro-denominated, and this shows our growth. For a number of years now, we've grown our business in the UK, but also in the dollar zone in Latin America, and these currencies are costing us more than the euro, obviously. Thank you very much, Christian. I'll go quickly before Q&A. This is our outlook for 2023. For the most part, we are reiterating our guidance. I will point out the slight changes when it comes to French auto routes. As usual, Much will be decided this summer, and it is premature to revise our guidance of a stable traffic mix for the year as a whole. With regard to Vinci Airport, clearly we are on the right track, but we are not expected yet to fully return to 2019 levels. due to the delay in Asia, including Japan and Cambodia. Regarding our construction businesses, we need to look at our order book. On slide 36, we can see that our order book is both at an all-time high and of excellent quality. Vinci Energies, well, what's the outcome? 2023, we'll see growth. Vinci Energy is expected to maintain at the very least a high level of operating margin recording in 2022. Cobra has a record order book and is expected to record sales growth of at least 10% while remaining among the best in the industry in terms of operating margin. For keen observers, you will have noticed two changes compared with our previous guidance. First of all, with regard to venture construction, venture construction is expected to post slight sales growth and improve its operating margin. And free cash flow, as we said six months ago, free cash flow should range between 4 and 4.5 billion euros throughout the year. Now, we'd like to add that we should be closer to the top end of that guidance range. So for Vinci as a whole, we expect further growth in sales and operating income, but to a lesser extent than in 2022. And our net income should be slightly higher than 2022, despite the increase in borrowing costs. That's all we can say. So we would like to reiterate that Vinci is a solid company. We're extremely diversified in terms of business lines and increasingly so in terms of geographies. Our group is well positioned on the underlying trends of the environmental transition and the energy transition. We are highly agile organizationally. We are poised to weather crises. We've shown that throughout the COVID pandemic. We're also feisty when it comes to securing contracts where we can fully show value added. And this means we are well equipped and we're particularly confident in our ability to pursue our virtues and sustainable growth trajectory over the years to come. I'd like to wrap up by saying that in view of all these factors, the Board of Directors, which met yesterday, has decided to pay an interim dividend of 1.05 euros per share. And of course, this does not prejudge the outcome for the full year. Page 38 shows the sequence of dividend payouts over the past 10 years. Our EXCOMM members are also here or have logged in remotely. And we're standing by to answer any questions you may have. Ladies and gentlemen, if you'd like to ask a question, please press star 1 on your keyboard. We will let you know when to ask your question. Question 1, Jean-Christophe Lefebvre-Moulinck, CIC. You have the floor. Hello. Hello to the entire team. Can you hear me? We can hear you, Jean-Christophe. Wonderful. I have a couple of questions on my end. I have a general question regarding the risk equation for projects, particularly COBRA IS projects in renewables. There are a number of important contracts for third parties. Could we have more color regarding the breakdown of risks? Are you bearing all of the risks, particularly when it comes to commodity supplies? Are you sharing risks with the customer? Same thing for the Grand Paris, the Greater Paris contract. design-build contracts riskier. Could we have additional explanations on that? In addition, and I'm happy about that, Vinci Auto Roots is improving its EBITDA by over 160 million. What is the highest contributor to that growth in EBITDA? Thank you very much. I don't know how you do it. whether in person or virtually. It's always Jean-Christophe who gets to ask the first question. I don't know how he does it. Congratulations. Regarding COBRA more specifically, but of course, this applies to all of our Vinci energies and Vinci construction businesses. Obviously, don't take this verbatim, but we are moving into a phase where the ability to do things ourselves is absolutely key. And this gives us good pressing power relative to our customers, because there's a growing number of geographic areas where our customers have a lot of projects, but they don't necessarily know how to go about it, and they don't have a lot of providers that can help them. And this means we are well poised to maintain our selective policy. We only took an interest in projects where we can truly provide value added, but also we get to be a little more ambitious when it comes to profit margin. So that's an underlying trend. Of course, needless to say, Cobra, this applies to Cobra as well. When it comes to the breakdown of risks, how we wish to break down risks between us and our customers, Pierre Anjolras can answer that question. You can take the question regarding inflation and how we pass on our higher cost on to customers. And also, with regard to DB contracts and the Greater Paris project, as Xavier rightly said, the ability to do things and get things done is more and more a prerequisite. And that's what our customers care about. When it comes to DB contracts, there's a long, months-long, sometimes years-long phase. marked by workshops, and through those workshops with the customers and other candidates, you get to fine-tune the project, the shape of it, and the contract terms and conditions. More specifically, you get to fine-tune a transparent allocation of risks between the customers and the consortium of contractors. The customer should bear the risk that he knows how to manage. That way they understand that it's better for them to bear those costs themselves rather than to assign them to the contractors. So joint preparation for the contract is absolutely key. It's a long process, but this is how you ensure proper risk breakdown. It's important, particularly when it comes to inflation, a growing number of customers prefer to bear that risk, particularly including in sectors where they were not used to doing that, the construction sector in particular. So those risks have been successfully transferred to the customer.

What I'd also add is the diversity of skills in Vinci Group in each of the divisions whilst coming together with varying sets of expertise on the multi-business contracts. It's the case for the Grand Paris project where we have underground work experience on the conventional contracts, rail experience, experience from the energy world and this ability we have to work together across the various groups' skill sets is a real value. So each can manage these technical and organizational risks, plus the ability with our grant project entities we have to federate all that and provide project governance and leadership. So we're fully confident in our ability to have correctly read the risks on these big projects. Well, I didn't quite understand the last question on the EBITDA Avinci auto routes, but maybe Pierre Copé can provide you an answer with that. On the EBITDA Avinci auto routes, it's up significantly. There are three packs, productivity, volume, and a base effect of the TP09 index on calculate the provision for major repairs last year, and that accounts for the spectacular leap this year. Ladies and gentlemen, if you'd like to ask a question during today's call, please press star 1 on your telephone keypad. Next question comes from Elodie Hall, JP Morton.