Earnings Call: Q4 2020

Feb 18, 2021

Good morning, ladies and gentlemen. Good morning, and thank you for being with us for this presentation of the Bouygues Group's annual results, the 2020 annual results. We're still working remotely because of the pandemic. This morning, I'm going to comment the results with Olivier Roussaint at Pascal Grande and, of course, with the heads of our five businesses. We'll then happily take your questions at the end of the presentation. First of all, I'd like to say a few words about changes to the governance of our group. Now at yesterday's Board of Directors meeting, I proposed that we separate the functions of Chairman and Chief Executive Officer. As you know, I have been Chairman and CEO since the 09/05/1989. I'm now nearly 69 years of age, and so I felt that the time had come to change the way our group is governed. Now the Board approved my suggestion. And of course, Olivier Roussard was appointed Chief Executive Officer of the group. Before that, he was Deputy CEO, so that was the natural way to do things. So he will be in charge of our Board of Directors and Management Committee. He has also appointed two new deputy CEOs: Pascal Granger, who was previously Senior Vice President and who will continue to be in charge of finance. You all know Pascal, of course. And secondly, Edouard Blug, also as Deputy CEO, my eldest son who's in charge of developing telecoms, CSO and group development. He will also be appointed Chairman of Bouygues Auhop, which is a small entity liaising between the Bouygues Group and the European Commission. The idea is to do lobbying, defend our positions when we need defending. And Edouard will also devote some of his time to Bouygues Telecom, where he has been appointed Executive Vice President in charge of Development. So I think that was a very useful move. Remember, the group was founded by Francis Bouygues exactly seventy years ago. I think it was in the 1951, and the first full year was 1952. Now one of the original things about the group is that in seventy years of its existence, we have only had two Chairman. It's rare enough to be worth mentioning. I think this is maybe one of the reasons that we have a very strong corporate culture. Our corporate culture is very original and very widely shared by our employees. These are, I believe, characteristic features of the Bouygues Group. And I think it will be up to the new team to develop, enrich and even modernize that culture to ensure that it is as widely shared as possible by our employees for the greater benefit of our clients and, of course, of our shareholders, too. That's what I want to say about our change of governance. Let's now move on to Page five to the presentation of the highlights for the year. So twenty twenty was an unprecedented year that was very difficult from the human and economic point of view. If the pandemic that there was a face hasn't finished now, these are vaccinations that are, in fact, light at the end of the tunnel. So in this broader context, the group has proved it's agile, responsible and resilient. We very rapidly adapted to the way we work and implemented strict protocols to protect our employees, our clients, our partners and, of course, our subcontractors. In France, back in mid April before the first lockdown, we gradually started up our construction business again. And thanks to the sharp rebound of business in the second half year, we have actually contained the impact of the pandemic on our revenue and on the group's results. So the group's current operating income rose 11% by comparison with the 2019. Now the target we set ourselves as a of a current operating margin slightly higher than the 2019, that target has been exceeded because we exceeded 6.8%, that is up 0.8 of a percentage point. Now against this backdrop of a crisis, the actual solidity of our financial structure is undeniable. We ended the year with a very low level of debt, fractionally below the €2,000,000,000 mark, down by comparison with 2019, and cash at a very high level of €12,000,000,000 Free cash flow after working capital requirements reached €1,200,000,000 which is much higher than in 2019. In fact, it's a remarkable performance that is worthy of mention given the context. And so far as there's no such thing as a vaccination against global warming, whose consequences are increasingly visible, increasingly striking, we have moved on to a new stage with our climate strategy. On the December 16 last, our five businesses published ambitious goals to reduce their greenhouse gas emissions by 02/1930, in line with the Paris Agreement. And of course, they also published their plans of action to achieve those goals. Finally, given our good results, the Board will propose that the next AGM approve the payment of a dividend of EUR 1.7 per share, which is a token of our confidence in the group's future. Moving on to the highlights. This is Page six of the handout. Our construction finished the year with a backlog at a record level, which gives us good visibility for the future. Furthermore, profitability was well turned around in the second half year, and free cash flow is at a remarkably good level. As for TF1, it has remained a leader in terms of its own commercial targets and has proved very quick to respond and adapt its programs at its costs. Finally, Bouygues Telecom has continued to expand. The commercial dynamics have been very good in mobile and actually gathered pace in fiber to the home. Bouygues Telecom exceeded its services revenue target, which rose by 6.4% over the year. Its EBITDA after leases also rose sharply over the year at over 6%. Finally, it generated free cash flow of €254,000,000 of course, in line with the guidance. Let's now look at the key figures for the group on Page seven, which is evidence of our good resistance to the pandemic. Thanks to the very strong mobilization of the businesses, the downturn in revenue was well contained and indeed, likewise, with current operating income. At €34,700,000,000 in 2020, the group's revenue was only down 9% over the period. Remember that it was down 15% at the end of the first half year by comparison with the 2019. Current operating income was well in the black for the year at €1,222,000,000 down €454,000,000 by comparison to 2019. Just for the record, in the first half year, we estimated that the impact of the pandemic would be some €650,000,000 That is the impact on the group's current operating income. At €696,000,000 the group's net income or group share net income includes an increase in noncurrent income related to the cost of adapting our construction business and impairments of various assets at the Unified division It also includes Alstom's contribution of EUR 169,000,000, which was down from EUR $238,000,000 in 2019. Alstom's contribution was EUR 118,000,000 in Q4, subsequent to the two transactions we carried out during the period. Let's take a closer look at the group's performance in the second half. That's Page eight of your handout. As we said at the start of today's presentation, the group had became very profitable once again in the 2020. Current operating margin reached 6.8%, up 0.8 of a percentage point over the year. This is higher than the target we set ourselves last August. And this performance was due to the good growth momentum at Bouygues Telecom, the pickup in business and the various savings achieved in construction at a TIFE one. Let's now look at the group's free cash flow. That's Page nine. The group generated a remarkably high level of free cash flow after working capital requirements at €1,200,000,000 much higher than we anticipated. It was up sharply on 2019 even when we factor out the Alsop dividend. Now this performance is indicative of two things. First of all, a very good generation of free cash flow at $725,000,000 despite the impact of COVID-nineteen on our businesses and our results and in a broader context of maintaining our investment momentum to increase our growth over the next few years. Leaving aside five gs frequencies, net CapEx totaled €1,600,000,000 which was stable by comparison with 2019. Finally, or secondly, I should say, the excellent management of working capital requirement relating to operating activity by all the business. And this performance contributed to the great strength of our financial structure, as you can see on our new slide. At fractionally below the €2,000,000,000 mark, net debt at year end improved by $240,000,002 €41,000,000 by comparison with year end 2019. This net debt allows for the high generation or should I say, it can results from high generation free cash flow after working capital requirements, the positive impact of the disposal of a 4.8% stake in the capital of Alstom in September 2020 for a total of EUR $450,000,000 net of expenses, the acquisition of EIT by Bouygues Telecom for some €830,000,000 and the first five gs frequencies, which we for which we paid €87,000,000 The gearing or net debt ratio was at historically low 17%. This compares with an average of approximately 37 over the last fifteen years. As you can see on Page 11, at the December 2020, Bouygues had a very high level of cash available for a total of €12,000,000,000 That's an increase of €400,000,000 compared with the December 2019. This breaks down at €4,000,000,000 in cash and €8,000,000,000 in undrawn lines of credit, of which €7,600,000,000 are covenant of concerning the debt structure. It's very well spread over time. Furthermore, the bank loans in this debt schedule, which is in light blue on the chart, is relatively minor by comparison, which shows just how efficient our centralized cash management is. This is I'm now going to give the floor to Olivier Roussard for a detailed review of the performance of our various operations. Olivier, you have the floor. Thank you, Martin. And we'll start off with the construction business. On this slide, you have pictures of this business. You have what is known as soft mobility. We're building a voussoir in the tunnel for Grand Paris, a bicycle lane and a garden where we plant greenery to prevent having too much concrete on the ground. Order book has reached an almost all time record, 33,100,000,000.0. That's the real record was two years ago, where we were slightly above that. But still, we have 62% of the order book of the backlog then is overseas, and it's stable compared to 2019. Let's take a closer look at the Construction business in France. The order book in France is slightly down, just 1% down year on year. It's 1% up at Bouygues Construction and 2% up at Colas compared to last year. At Bouygues Construction, order intake is up 5% in Q was up 5% in Q4 twenty twenty compared to a year before. And you have two examples of such orders. In Q4. There is a project in Banu and another one in Champs Sur Marne. At Colas, the order book is stable in Routes Metropole, that is the road business in France. And that's because we have a better than expected performance from private as well as public customers. The order book at Bouygues Immobilier is down 11%. There are reasons well, the same reasons as we mentioned before. We don't have an issue with demand. We have, in fact, an issue with supply. What it is, is that we have land, we have customers that are happy to buy property. But in between the two, we need to get the construction, the building permit, and that has been halted. And so that makes it difficult to take on new orders. If you look at the order book internationally, it's up 122% if you leave out disposals and acquisitions that occurred in 2019 compared to 2019. It's up because Bouygues Construction's order book is up 4%, and that's because its order intake was up 10% in 2020 compared to 2019. We have two examples, again, from Q4. The Pau Tucket Tunnel in The U. S, euros $256,000,000. You have Tushka in Croatia. We have Hong Kong, the health authorities, 200,000,000. For the order books book of Cola, it's stable, restated for the main acquisitions and disposals. It does include the extension of the metro line, the Edmonton metro line in Canada. That's worth EUR 500,000,000 right there. Q H1 was, of course, impacted by the COVID crisis, but the construction business bounced back in H2. And that dramatic return to business made it possible to contain the loss of revenue and indeed, a decline in operating profit for the year. Sales for the Construction business revenue was EUR 26,200,000,000.0, so down 11% over the year. That decline is more marked in France than elsewhere because the lockdown conditions were much more drastic in France than elsewhere around the world. The current operating profit stands at €437,000,000 so that's a healthy figure, but it's down still €473,000,000 compared to 2019. Current operating margin stands at 1.7% over the year, so that's down 1.4 percentage points compared to last year. However, on H2, current operating margin for the Construction business reached a high level, 5.7%, up 0.5 percentage points compared to H2 twenty nineteen. And so that good performance is the result of several things. Number one, gradual return to business, indeed, catching up because that is also because we took all sorts of steps in H1, making the necessary provisions to be able to start up when business picked up again, savings that were conducted around the business and then some compensation that we received after some sites were halted in H1. Throughout the year, significant efforts were made to generate free cash flow. And so now after WCR, it stands at it's a high number, it's €1,040,000,000 compared to 700,000,104 million euros a year before. So that's a significant improvement. Let's move on to TF1. The results were presented by Gil Pelisson about ten years ago ten days ago, I beg your pardon. So we'll go over this quickly enough. The first good news is that we maintained its leadership on commercial targets. The audience shares on women in charge of purchases remained high at 32.4%. Regarding individuals aged between 25 to 49, audience share was 29.9%, and that's a consistent increase since 2017. These audience shares show that, well, viewers spend more time watching TV because of the lockdown and the curfews and whatnot. Nonetheless, they decided to stick with TF1, which goes to show that the our programs were very much in line with viewers' expectations. Regarding the financial performance, well, you do have the effects of the COVID crisis with lost revenue in H1 twenty twenty, but then a rebound of the broadcasting business in H2. Revenue sales were down 11 for the year as a whole. There is a resumption of advertising income in H2, and that made it possible to make up for some of the cancellations of H1. Some of the advertising campaigns were simply postponed from H1 to H2. On revenue, there was new win, which had halted all its shootings between April and May, was able to resume that activity in H2. And then we do have to pay tribute to the efforts made by TF1 to keep the cost structure under control. In particular, the programming costs, TF1 was able to save as much as €152,000,000 for all its five free to view channels, and that is unprecedented in TF1's history. And that €152,000,000 saving made it possible to compensate 100% of the lost advertising revenue. Regarding the outlook for TF1, well, in 2021, TF1 will offer a great variety in its programs. And well, we will be able to resume programming, including for the Euro twenty twenty one because the World Cup is the following year. Still, there is some uncertainty about the COVID crisis, indeed possible variants and new lockdown conditions. But TF1 will lean on its ability to adjust and adapt. So as best to handle the situation and develop its broadcasting accordingly. It will be developing new ends activity internationally and so develop its new platforms there. And then we will refocus, unify, strengthen the brands, develop synergies to develop business and improve profitability. In fact, we're looking to positive COP in 2021. Now Bouygues Telecom. On this picture, you have a Bouygues Telecom shop. Because of the curfew conditions, we changed the opening hours. Now it's nine till six p. M, but the number of shops had to close down in shopping malls. Still, if you look at the sales momentum that we had in 2020, we can see that, that momentum was confirmed. Our operator was able to secure its position. And even though there was a significant increase in traffic, customer satisfaction did not decline at all. And in fact, at end December twenty twenty, Bouygues Telecom had 12,100,000 contract mobile customers, not including machine to machine or the EIT acquisition. We gained as many as 606,000 clients over the year, including 150,000 in Q4 alone. The base of fixed customers is now 4,200,000, including 38% of FTTH customers compared with 25% last year. The demand for FTTH has been stepping up. And that there, you have the effects of lockdown where there was a significant push of FTTH technology compared to ADSL. Bouygues Telecom gained 226,000 new customers. That's a record high ever since we launched the FTTH offer. All in all, Bouygues Telecom was able to take on to take on 604,000 FTTH customers over the year, with the total number standing at 1,600,000 at end twenty twenty. On this picture, you have the latest offer that is supposed to be the best REFI repeater on the market. It's called Modem B Box Fiber WiFi six. Bouygues Telecom was the first operator to build a vertical modem. It's vertical because signal propagation is better when you have a standing box rather than when it is horizontal. That's a significant technological breakthrough. And we have to pay tribute to Bouygues Telecom. Up until now, we had these boxes lying underneath the set box, and now it's standing alone and indeed stand in, which makes a huge difference. Now how does the new intake of customers reflect on revenue? Well, sales were up 5% over the year. I beg your pardon, sales from services were up 5% year on year in spite of the lost revenue of roaming that was as much as €33,000,000 The fixed business was up 9% over the period. And the mobile sales from the mobile business is up 3%, and that's because of more customers, but also improvement in ABPU, both mobile and fixed. The mobile average billing per unit grew from 19.2% in Q4 twenty nineteen to €20,400,000 in Q4 twenty twenty restated for the roaming effect. As to the fixed ABPU, it's even more spectacular. We're looking at an additional EUR 2.7 per customer per month with an ABPU standing now EUR 28.6. We have a bigger well, a more aggressive strategy called More for More, offering more services for a slight increase in the rates, and this is really now bearing fruit. Our strategy now has enabled us to generate in sales of services an improvement of 6.4% over the full year, standing at EUR 4,900,000,000.0. You have a little sticker on Page 25. So this was a major well, an impacted year where we lost a lot of roaming business and yet being able to generate 6.4% improvement is quite a feat. It is quite unique indeed in Europe because, of course, of the lockdown, there was no roaming business and yet we were able to achieve that performance. At 1,500,000,000 EBITDA after leases has was up €91,000,000 compared to last year. So that includes €20,000,000 of nonrecurring costs that were related to the brand positioning campaign and the advertising campaign. And then there's a €90,000,000 negative net impact of roaming over the year. And yet, in spite of all this, EBITDA margin after leases was stable at 30.7%. Current operating profit was EUR $623,000,000, up EUR 83,000,000 over the year. That includes EUR 50,000,000 of nonrecurring items in Q4 because of a better improvement in delinquent bills and a revision of the depreciation timetable. Operating profit stood at EUR651 million, including EUR28 million from non current profits and compared with €70,000,000 before because there were fewer mobile sites sold off. CapEx, not including five gs frequencies, 1,270,000,000 in line with the guidance. And disposals over the same period were €245,000,000 and that includes a significant portion of the Asterix project, optic fiber project. That was €185,000,000 disposals right there. And then free cash flow, euros $254,000,000 is in line with the objective for 2020. That is what we announced. Let's take a look at the effects of the EIT operation. That operation was completed on thirty one December in the morning last year. The acquisition price was EUR $264,000,000, 64,000,000, not including the earn out there. Some part of the price includes a reflection of the performance after the acquisition. In any case, that acquisition makes Bouygues Telecom the number three mobile operator in France with 14,200,000 customers with when you add in the 2,100,000 EIT customers. So this is a tool by which we will expand our market share. That was part of the strategy, which Richard and his teams discussed at the beginning of the year. So because of this acquisition with EIT, Bouygues Telecom will be able to develop its business on three key markets: well, general public, B2C and we EITA already has 2,100,000 customers right there. The corporate market, we have as many as 93% of French companies already covered. And then and well, we have as many as 4,000 branches on the Credit Mutual CRC network, so that will expand, of course, the network. Synergies will occur as EIT customers will migrate from SFR and Orange to Bouygues Telecom, although some were there already, of course. Let's review the announcements that Richard made on Capital Markets Day in January. His strategic plan is called Ambition 2026 for Bouygues Telecom. So what's the purpose there? Well, of course, we want to accelerate growth so as to become number two in the mobile business. We'll see just what we mean by number two in the mobile business. We want to be a major player in the fiber business with an additional 3,000,000 customers in B2C and then also increase the fixed part of the business for B2B. To get there, we have three assets. Of course, we have our employees very much committed to this, and we have seen a development over the year. The quality of the network, and that has been recognized by ARCEP again and again. And of course, it's outstanding customer experience, and that has been an asset for many years indeed. So Ambition twenty six proposes to pursue sustainable but profitable growth. The idea was to have sales from services above €7,000,000,000 by 2026. EBITDA after leases should stand at about €22,500,000,000 EBITDA margin is aimed to be 35% and then free cash flow, we're looking at €600,000,000 That's the third objective. Now what exactly do we mean by number two in the mobile business? Well, we want to be considered to be the first second choice. I mean, in terms of networks, when customers are asked, if you don't go for number one, whom would you go for? I mean, it's a matter of perception. We want to be in that position. Now how can we get there? Well, of course, there has been a significant brand positioning announced by Richard in 2020. We also need to secure position as the second mobile network in France, and that was done through the significant investments which Richard mentioned in Capital Markets Day. And then, of course, we have to capitalize on the integration of EIT. That's number one. Number two is to gain 3,000,000 additional FTTH B2B customers B2C customers, I beg your pardon. And that will be because expansion of our coverage. We will double the number of subscribers from 17,700,000 premises to twenty five thirty five million by 2026. You may remember this set top box by the vertical Wi Fi repeater. This is the first time that the media have recognized that have Bouygues Telecom have produced the best device on the market. It's the best on the FTTH market, which is happens to be the fastest growing business. So there, you have an example right there. But we'll also be working on eco design item products, and this that Wi Fi box is a case in point. And then we will be offering competitive offers and capitalize on our more for more strategy. And number three, we want to double our position in the fixed B2B business and be a major player in the wholesale fixed business. And well, we because of the connection with EIT, we can have access to the SME market, which is the most profitable segment market segment. And then there are a number of infrastructure projects that are underway. We want to be able to turn these FTTO and FTTA infrastructure turn this into a profitable business and be able to cash in on the wholesale fixed offer. So we have our objective for 2021. I mean, obviously, we'll pursue both FTTH and mobile with the integration of the IT. We're looking at organic growth at sales from services estimated at about 5%, plus 5% in spite of the lost roaming business, and we don't expect that to bounce back so quickly. You have to understand that roaming does not exist within Europe. Roaming business comes from The U. S. Or Asia. And as things stand, transcontinental flights are few and far between. And there are very few people on board and also very few roaming consumers and so very little business there. We're also looking at an improvement in EBITDA after leases, including EIT, up 5%, well, because, of course, people are spending more money in the business, but and we have to spend more on OpEx and CapEx. There are more leases. So we have in spite of this, we're looking at improved EBITDA. And then net CapEx should be about €1,300,000,000 not including five gs frequencies. And now I'll give the floor to Pascal Grande, who will give you details of the accounts. Thank you, Olivier. I'm going to talk about the consolidated accounts, beginning with the income statement. I'm not going to dwell on revenue and current operating income because they've already been presented by business by both Olivier and Martin. So I'm going to focus on the other operating income and expenses, which were a total of €98,000,000 negative in 2020 against income of 20,000,000 in 2019. Now these expenses include €69,000,000 at Colas. This is consistent with the reorganization of the road building business in France and, of course, the decommissioning of the Dunkirk refinery. They also include €17,000,000 in restructuring costs at Bouygues Immobilier and finally, euros 75,000,000 at TF1, corresponding to the impairment of part of the goodwill and some of unified brands. Now these expenses were partly offset by nonrecurring income. Two examples, 36,000,000 at Bouygues Construction, which is due to the litigation with Alpiq and, of course, euros 28,000,000 at Bouygues Telecom, mainly due to capital gains from disposals of mobile sites. The net debt improved by €40,000,000 over a year. This variation was due to, first of all, euros 25,000,000 in the reduction of €25,000,000 in the average outstanding debt by comparison with the previous year and a weakening of interest rates on our bond issues that was EUR 15,000,000 to us. Concerning the lower half of the income statement, we recorded taxation of EUR $317,000,000 in 2020, down from EUR $452,000,000 in 2019. The effective tax rate was 36% this year, up fractionally from 32 in 2019. And this variation can be attributed to two factors. First of all, a number of deficits abroad, outside of France anyway, which cannot be carried as deferred tax assets and secondly, the effective tax rate is different this year because 2020 losses on fully integrated subsidiaries are activated at a lower rate than the effective rate this year. The decrease of €134,000,000 in the net income of joint ventures and associates in 2020 was mainly due to the decreased contribution from Alstom. This variation can be explained in several ways. First of all, the €54,000,000 decrease in capital gains from disposals and dilution, euros 172,000,000 last year, but only €118,000,000 in 2020. Secondly, this can be explained by a decrease in Alstom's contribution, a €15,000,000 decrease due exclusively to the downsizing of our stake in the capital of Alstom. Overall, net income was €770,000,000 in 2020. The group share was €696,000,000 down from €1,184,000,000 in 2019. Let's now look at the group's balance sheet at year end 2020. The total of the balance sheet was €40,600,000,000 up from €39,500,000,000 at year end 2019. We are, by the way, Page 31. Noncurrent assets totaled 21,500,000,000 up by 1.132 This billion is due to several factors. First of all, intangible assets were up €517,000,000 Bouygues Telecom is the main contributor to this increase due to the acquisition of five gs licenses for a total of $6.00 €8,000,000 Conversely, the impairment of Unifi Brands was carried under this same item at minus €17,000,000 As for goodwill, goodwill rose by €691,000,000 This increase is mainly attributable to EIT for plus €756,000,000 offset partly by the impairment of Unifi the Unifi division's goodwill for a total of €58,000,000 Finally, joint ventures and associates was down slightly, down €14,000,000 This was mainly due to two changes. First of all, the valuation of Bouygues Telecom's stake in STAIF, which we refer to as the Asterix project. That is a for €295,000,000 almost entirely offset by Alstom for €263,000,000 This amount is consistent with the share of our result for the period. The variation in the value of Alstom was subsequent to our disposal of 4.8% stake and the first capital increase of Alstom. These current assets the current assets, should I say, were mainly stable over the period. Finally, assets held for sale assets or activities held for sale includes €41,000,000 in net book value the net book value of the BREITELICOM data center, which we expect to dispose of in the course of 2021. On the liability side, the biggest change concerns noncurrent liabilities, which rose by €1,221,000,000 between 2019 and 2020. Noncurrent financial debt rose by €1,300,000,000 This was, of course, subsequent to the €1,000,000,000 bond issue in April 2020 and the additional earn out to be paid for the acquisition of EIT by Bouygues Telecom. Let's now look at changes in net debt in 2020. This is Page 32. As you've already seen, net debt was fractionally below the €2,000,000,000 mark at the 2020. This low level of debt is a reflection of how well our businesses have performed in 2020, and in particular, Bouygues Construction, which had a very high level of cash at over €3,100,000,000 TF1 and Colas succeeded in reducing their debt to almost zero in 2020. Net debt at the 2020 was down EUR $241,000,000 by comparison with year end 2019. This was subsequent to the following main changes: first of all, EUR $450,000,000 due to the disposal of almost 4.8% in the capital of Alstom, as I said earlier on. Secondly, the cost of acquisitions, that was €747,000,000 net of disposals, comprising mainly EIT for €830,000,000 which includes the earn out. That was by Bouygues Telecom, of course. The acquisition of Granite Contracting by Colas for €224,000,000 And of course, the amount received in compensation subsequent to the Digicel litigation, that was approximately €90,000,000 In addition, we have €37,000,000 for various capital transactions and others, combining the share buybacks, the exercising stock options and the residual part of the capital increase reserve for employees. This issue known as Bouygues Confiancee. Of course, there was a dividend for EUR687 million. That was a cash out. EUR87 million corresponded to the first installment on the five gs frequencies. And finally, the important part of the year was the additional EUR 1,275,000,000.000 arising from operations. And this is what I propose now to look at in greater detail on Page 33. Let's begin with net cash flow, which includes the redemption of or sorry, I said, the repayment of lease obligations. This net cash flow was €2,337,000,000 down $3.00 €3,000,000,000 by comparison with 2019. This was due to the sharp downturn in activity and results of the period. Net CapEx, not including five gs, was stable at €1,600,000,000 As I said earlier on, the group decided in 2020 to maintain its CapEx momentum in 2020 to accelerate growth of its businesses over the next few years. Changes in working capital requirements relating to operations improved substantially over the period, substantially by that, I mean by €700,000,000 Now this performance is a good reflection of the ongoing efforts of the businesses to cash in trade receivables and reduce the level of inventory. So free cash flow after working capital requirements totaled €1,200,000,000 up sharply by comparison with 2019. Finally, the variation in working capital requirements arising from amortizations and miscellaneous improved by €195,000,000 This was mainly due to a number of postponements towards the end of the year at Bouygues Telecom. Overall, the variation in operations related working capital requirement was much higher than in 2019. A few words to finish. Let's finish with operating CapEx. That's Page 34. As mentioned, operating CapEx that's not including five gs frequencies are, broadly speaking, stable by comparison with 2019. However, this stability hides several factors, a €218,000,000 decrease in construction. The construction business adjusted its CapEx to the level of activity during the pandemic. Secondly, this was due to a January increase at Bouygues Telecom, which substantially increased its gross CapEx by comparison with expectations. Furthermore, in 2020, Bouygues Telecom acquired 70 megahertz of five gs frequencies at a cost of $6.00 €8,000,000 as you can see. Overall, operating impacts net operating CapEx totaled 2,220,000,000 in 2020. Finally, that brings me to the end of my presentation of the financial accounts, financial statements. I give you the floor back, Martin, for your view to continue. Thank you, Pascal. I'm now going to bring or conclude this presentation. Moving on to Page 36. In a difficult context, the context of the global pandemic known as COVID-nineteen, the group proved to be agile, responsible and resilient. Our activities are positioned in essential necessities, housing, transportation, communication, information, entertainment and so on, with business models that have not been undermined by the pandemic. All our business segments proved their ability to rebound swiftly, thanks to the adaptation measures that they rolled out as early as April 2020. Now this performance would not have been possible without the unrelenting commitment of all our employees, the quality of social dialogue that we have had for years with our social partners and, of course, the great financial strength of the group. Finally, the group proved to be resolutely responsible to its stakeholders. In this document, we've mentioned a certain number of decisions that we took in that respect. Now on the strength of its ability to adapt and its resilience, the group decided to maintain the capital location that we have shown on Page 37. First of all, the thing to do is to develop our existing activity. Beginning with Energy and Services, in 2020, we enforce our expertise in renewables and, in particular, in green hydrogen. At Colas, Colas provided itself with the logistical means required for its bitumen strategy, which consisted in securing supplies and in extending its distribution and trading businesses. At Bouygues Telecom, we have decided to accelerate our growth. As we told you, we've acquired EIT at the 2020 and launched our strategic plan called Ambinge Abition 2026. Finally, in Media, TF1 has been developing Nguyen's international business and working on large platforms. Finally, we're very eager to maintain our strong investment grade rating with good control over our debt and secure cash flow. Our long term rating was recently published by Sandip and Coors and Moody's. And as you can see, our ratings are very good and continue to be very good. Finally, we'd like to make a return to shareholders, and the Board of Directors has proposed that the next AGM vote on the payout of a dividend of €1.7 per share. Against this backdrop, in 2021, the group will invest in order to strengthen its business segments and boost their growth in the years to come while maintaining our dividend payout policy, as pointed out on Page 39. The outlook based on what we know to date and barring any deterioration due to COVID-nineteen, the outlook is as follows: In 2021, revenue and group's performance should be well above 2021, but not as high as in 2019. In 2022, the group's current operating profit should be back to a level similar to or slightly better than in 2019. Over and beyond the financial prospects, I'd like to say a few words to you about our corporate social responsibility road map. This is Page 39. Last year, we set ourselves four priorities. First of all, health and well-being in the workplace, gender balance, the climate and biodiversity. To preserve our employees' health and improve their well-being, Bouygues has reinforced its approach called quality of life in the workplace and is pursuing the development of social protection in all our companies in the group, in France and outside. The first one is called WIG care. And the first issue here is insurance benefits in the event of the death of one of our employees. To encourage gender balance at all levels, Bouygues will be launching its Gender Balance Plan twenty one-twenty twenty three, which will include a gender balance criterion in the variable compensation of the group's executive officers and senior executives. Finally, at the end of 2021, the group will map out the various stages and financial consequences of its climate strategy. It will also review the strategic conditions and financial conditions required to be carbon neutral by 02/1950. Finally, it will specify its commitments to biodiversity. That's it. Ladies and gentlemen, that brings us to the end of our presentation. But before moving on to questions and answers, let me remind you of our next two rendezvous on Page 40. On the April 22, I will be chairing the combined Annual General Meeting. And the first quarter twenty twenty one results will be published on the May 20. Next to rendezvous, my colleagues and I are now at your disposal to take your questions. PIERRE All right. We have a first question from Nicolas Coulissonde from HSBC. Nicolas, you have the floor. Thank you and good morning everyone. Regarding the construction business and the outlook for 2021, the COVID effect was kept under control at end twenty twenty, and yet, we don't expect business to be as good as in 2019. Can you give us the reasons why and the reasons why your competitors might be more optimistic than you? Then on the telecom and B2B, the regulator has imposed new restrictions well, new regulations on high quality service. What are you waiting to get into? Or are you waiting for new developments to get into the Professional, that is the B2B business? And then on Page 37, you have your strategy for capital allocation strategy. On the long term, in view of the very low level of the debt and cash generation that should remain high, this should offer opportunities for new diversifications and the fact that you have new demographics and a new sort of new health requirements. What are your long term expectations? All right. Number one, on the construction business and our own expectations regarding sales in 2021. For Bouygues Construction one Colas, we're looking at an improvement in revenue of about three to 4%. On Bouygues Immobilier, we are looking at something more significant, about 10%. The reason is that you had the lockdown effect on Colas and Bouygues Construction was a period when you could not bill our customers because sites had halted. But Bouygues Immobilier, you had a double penalty. You had the same, no new acquisitions. And then during the first lockdown, you could not sell anything, and so you couldn't get advances on new sites, which is why now Bouygues Immobilier is bouncing back in a more dramatic way. Now B2B, Richard. Yes, on the B2B end of the business, there is a new piece of regulation, which improves quality of service for Orange. And these are, of course, positive developments. And we are determined to enter the B2B to business with the infrastructure project in the Saint Malou project, and that will make us even more relevant on the B2B market. On question number three, we have always well, we've always tried to be as conservative and as cautious financially cautious as possible. It is true, the debt level is quite low. For the time being, our intention is to pursue existing activities and that may well require additional capital expenditure for external growth purposes. And so that's we allow for that. But other than that, we don't have any strategic ambition to embark on a new business altogether. Having said that, we are always keen to consider the future and look at possible scenarios, not just for France, but for the world at large. How are we going to pull out of the COVID crisis? And in particular, we are expecting, well, a significant increase in public debt. What difference will this make to the world economy? We have to allow or to consider a number of possible scenarios so as to position the group in the best possible way for the future. Thank you. Next question from Eric Le Marnier from Bryan Garnier. Eric, you have the floor. Yes. I have, in fact, three questions, if I may. Number one, on the construction business. I understood that Colas, in its press release, announced that they were looking at current operating profit in 2021 to be close to that of 2019. What I mean, what of Bouygues Construction and Bouygues Immobilier, you're expecting profit margin operating margin to bounce back? On Bouygues Energies Service, BYES, you didn't get into the detail of that, but can you tell us what was BYES' performance of sales and current operating profit? And then Alpiq, why is it that you received a compensation? Is it that Alpiq's performance, was it under expectations? On current operating profit, have Frederic's statement regarding Colas. What you have to recognize is that in well, in H1, of course, business was less than expected. So we are look we're waiting it won't be until 2022 that we expect profit to be in line with 2019. For Bouygues Immobilier, as early as Q3, we're expecting operating profit to be, in 2021, pretty much in line with what we had in 2019. That was Bouygues Construction. For Bouygues Immobilier, we are looking at an improved operating profit, but less in 2021 than what we had in 2019. For BYES, maybe BYES, current operating profit for the year is margin is 1% for the year and 3.2% for H2. Regarding the dispute with Alpiq, well, we closed on the basis on the provisional closing with Alpiq. When we arrived at the final reckoning with Alpiq, we came to a disagreement as to how they had arrived at the provisional numbers. We there was a dispute, and this was solved at the end of the year to our advantage with the €36,000,000 compensation. Thank you. The next question comes from Joseph Poulial from Kepler. Joseph, hello. I have in fact three questions. Number one, on cost inflation. When you see that some products used by the construction business, steel, copper, raw materials are going up. Do you expect this to have an impact on profit margin in 2021? Or do you have you organized some sort of hedging to protect from that? It would be good to know the percentage of your orders that have clauses that protect you from increases in the prices of raw materials. Regarding the expectations for 2021, you said that in 2020, local authorities paid their bills at the end of last year. And hence, you had less of a receivable well, a problem with collecting receivables. But for 2021, do you believe that what is the outlook for WCI? Do you think that the situation will turn around and that what you earned in 2020 might disappear in 2021? That was question number two. And question number three, a follow-up on the Alpek issue, this €36,000,000 in compensation. Is that the final award? Is that or are there still disputes with Alpek? And could that number be revised upwards? So on the cost of raw materials, yes, we have clauses that protect us from price increases, and we are indeed looking at increases in the price of raw materials, and that is why we have such protection clauses in our contracts. On that point, there are two ways of doing this. We have indexation formulas, but also when we purchase raw materials, we usually have the contract with a firm price even if the market prices go up. The second question about free cash flow in 2021. You may remember that in previous financial announcements in 2020, we told you that we were concerned that there might be an unfavorable development of the working capital requirement. We announced that in April, it didn't happen. We expressed our concerns again in June and still the problem did not materialize. So as you said, some clients played ball and they paid their bills on time. Well, no one paid ahead of time. And I'm not saying that local authorities really helped, but say they didn't make things any worse than they could have been. But it's very difficult to have a reliable model of the WCR in the construction business. What we do is in as much as possible, we try and cash in on our receivables, but we don't take more than we need or than what is due. And we also help our customers manage their inventories, and that is how we improve WCR. As to what to expect in 2021, this is a dynamic exercise. I mean, we want our people to work hard to collect the money that is owed us. Now the outcome for 2021, a it's bit premature to tell now, but we'll see. And the final point, for Alpiq, it's both good and bad news. The final the settlement is final, so we won't be getting anything more than what we have already received. This is Frederic Boulan from Bank of America. Frederic, you have the floor. Good morning. I have three questions. First of all, concerning telecoms and your targets for 2021, 5% EBITDA growth, including EIT. That's about a €60,000,000 contribution from EIG. EBITDA will be organically stable despite the 5% growth from services revenue. Maybe you could explain what's happening here. Secondly, concerning 2022, you have some EUR $630,000,000 additional from telcos, which is maybe encouraging in terms of the pickup of your profitability and indeed, the pickup of construction and particularly Colas. So I'm a little surprised by this message of stability or thereabouts. I must seem to be missing something there, if you could help me there. Third question concerning the group's debt. A year ago, you proposed an exceptional dividend of €0.90 subsequent to the Alstom transaction. Now the debt and cash flow are extremely well managed and in a very good place at the 2020. So what are the prospects? Do you prefer to remain cautious given the uncertainties of the pandemic? Or is there any chance of a medium term return to shareholders in the medium term? Thank you. Let's begin with telecoms question, Richard. Concerning EBITDA growth in 2021, you have to bear in mind what we told you at our Capital Markets Day. We've decided to accelerate growth, and this comes at a cost, particularly in 2021 in fixed lines, which will have a slight impact on our 2021 EBITDA. In addition to that, one peculiarity regarding 2021, that is that last year, first in the first quarter, we had roaming, which constituted significant revenue. But in our anticipation, the we won't have that income in 2021 unless you know otherwise. But barring that, that is a variance or negative variance by comparison to what you're familiar with. Your second question, well, to answer your second question, this is just cautious. We tend to be traditionally cautious. And once again, very conservatively, what we have told you about 2022 is a conservative estimate regarding stability. Dividend. Concerning the dividend, here too, you have to remember 2020. Remember, in 2020, we began by announcing an exceptional dividend. This was before the pandemic. In April, we suspended the dividend decision considering that the situation didn't lend itself to the payment of any dividend at all, let alone an exceptional dividend in April. Well, we reinstated that dividend at the September, which very few groups did. So we paid a very usual dividend at the September. Let's not forget that in the course of the year, we acquired EIT, which wasn't planned at the time of the dividend decision. And finally, I'd say we're in a situation where the outlook is okay, good. But we've decided to launch this Ambition 2026 plan at Bouygues Telecom, which will also require investments. So Aujourd currently, the rationale is what Martin Abrig has described. We want to develop our businesses, remain with a strong investment grade rating. And finally, work on the return to dividends or return to shareholders. As you know, the group's preference is to gradually increase the dividend when the situation enables us to do so. So that's the strategy we will continue to apply. Thank you. Another question? Remember to next question is from Thomas Coudry from Bryan Garnier. Thomas, you have the floor. Good morning. Thank you. I have a question concerning Media. We can see that the sector is consolidating, especially since various declarations made recently. My question is a very simple one. I'd like to know what role the Group intends or expects to play in this sector. And in particular, if the Bouygues Group would consider disposing its of its stake in TF1. Well, like you, we recently discovered the intentions of RTL Group. It would appear that M6 is changing hands. This is, of course, only very recent news, and it's news to us. So yes, we will have to consider everything. We haven't certainly haven't entered into any strategic discussions, but there's no reason why we shouldn't review the situation to get a better understanding of the sector. Let me say a couple of things. First of all, TF1 had a very good year in 2020. Its viewership strategy and programming costs strategy were very good. There were lot of work put in. And the outcome, the results are encouraging. The acquisition and development of Nguyen is producing results. And we believe that we have a great vector for future development, and we're very happy about that. That said, broadly speaking, the global landscape in media is different, particularly with the so called GAFA. As you know, France is still embedded in a rather archaic system. Our regulatory systems are almost antiquated. They're thirty five, forty years old. I know this all too well because I was a director at TF1 from the time it was privatized thirty four years ago. So what I can say is that what we feel most concerned about as things stand is the need to have in-depth transformation of the media regulatory system in Europe in general and in France in particular. Remember that TF1 has specific obligations by comparison with M6, that these obligations go back to the law of privatizing TF1, which dates back thirty five years. As usual, nothing has changed since, except that TF1 continues to have obligations that its competitors do not have. So yes, we are very interested in the future of M6. We're going to put a lot of work and thinking into this. Gilles Pelisson is working very hard on the group's development, TF1's development in particular. We feel that we're very well positioned. But let me conclude by saying that TF1 has succeeded in maintaining a position that's almost a unique position in liberal economies in a highly competitive world. TF1 has maintained its outstanding viewership, which is, I think, something we can thank the staff at TF1 for. Is there another question? Is there anybody out there? No more questions? So I had a question first, just getting back to the leverage. You said you wanted to maintain a strong investment grade rating. Can you maybe just help us put some numbers around that? I mean do you have a specific gearing ratio or net debt to EBITDA threshold just to sort of help us understand what is the correct leverage levels for your business when you speak to the agency, just to sort of put some numbers around it? And then just secondly, if you can maybe just clarify on the Construction divisional margin guidance that was slightly lost in translation. So apologies to make you repeat that. But what were your expectations for Blasio Mobilier and Bouygues Construction margins in 2021? Concerning leverage debt, we do not give any guidance on debt quite simply because very simple reason that rating agencies do not reason in terms of a gearing ratio. They reason by comparing future cash flows to the level of debt. So depending on how the group performs in its various business segments in the future, how these segments evolve because they all have different investment rationales, but the attendant ratio changes over time. This is why we prefer to say we hope to remain strong investment grade rather than give you something more specific and find ourselves in a position where we have to modify this over time. As for the current operating margins, I think I answered that earlier on, but in Bouygues Construction, we're back to the level of margin we had in 2019, which enables us to anticipate a similar margin in 2021, similar to the one we had beforehand. As for Colas, I think I said that we expected a lower level of metropolitan roadways activity, which will then be boosted by a stimulus plan, but the current operating margin should be slightly below the level of 2019. And thirdly, Bouygues Immobilier. Here, we expect the current operating margin, which should pick up on or be higher than in 2020, but unfortunately, lower than the level we achieved in 2019. You. Have we another question? Line of Andrew Lee from Goldman Sachs. Please go ahead. Thank you. I had a couple of questions on the telco side. I know you've spoken about guidance being conservative, but just to follow-up on the question earlier about underlying EBITDA growth being stable in telco within your guidance. I think that's partly because of high marketing costs that you highlighted at your Capital Markets Day. So just wanted to I wondered when do you start raising those marketing costs in telco? And has this started already? And if so, have you seen any impact? And then secondly, your market share take midterm guidance is also going back to the to what you highlighted at the Capital Markets Day. But wondered how you're thinking about that market share growth in terms of is it linear or back end loaded? Just be interested to hear your thoughts on the French competitive environment and how you'll be playing that over the next twelve months. Okay. Thank you for your questions about the evolution of the EBITDA. As I told you before, when we're looking at exactly what will be the specific variation in 2021. It will be a specific year. And due to the fact that it will be a specific year, we are impacting different elements. The first one is concerning the investments that we will do in fiber mainly. It's where we will have a significant growth higher than expected in our previous plan and which will impact definitely our EBITDA in 2021. And I reiterate the fact that in parallel of that, the roaming of Q1 will have some impact compared to the previous year. Except that, on a normal way, normally, we will still have a significant growth on our EBITDA as we did in the past and as we present to you in our Capital Market Day. So it's a temporary situation, especially in 2021. About the growth, we are able to produce a growth normally in B2C and B2B due to the quality of our network. We are planning to have this significant growth continue to be in our plans. And it will be due to the growth of the market, which is still growing on mobile, and it will be significant growing on FTTH. With due to these two opportunity, we consider it our plan to growth will be continue on the next six years. In parallel of that, we have decided to accelerate the growth for fiber, but we have decided to accelerate the growth too in B2B. So we are quite confident with the numbers we gave you during the Capital Market Day. That's the two elements that we had globally. Thank you. Yes. And by and large, the growth we're looking at is not on the basis of a price war. I mean, here, we are surfing on growth of the market itself. And we want to be seen as the number two operator, which is a sort of a customer magnet that enables us to arrange client acquisition at reasonable price conditions or tariff conditions. Next question please. Question comes from line of Jerry Dellis from Jefferies. Please go ahead. Yes, good morning. Thank you for taking my questions. I have two questions, please. First one on competition in French telecoms, just to develop things a little bit. I think year to date, we see some recovery in Iliad's porting data suggesting that they are gaining a bit more competitive commercial traction. They also seem to have a rather differentiated approach to the deployment of five gs. I'd be interested in your thoughts around what Iliad in particular is doing since it launched five gs and the implications for competitive tension in the French telecom market in 2021. And then the second question is really to do with Alstom. I think the lockup on your Alstom shares expires in early March. Just wondered if you could update us, please, with your strategic thoughts around the importance of Alstom within the group and your commitments to preserving that Alstom shareholding. We're not sure. We didn't quite get the first part of the question. Well, on the five gs market, the first issue was we are rolling out the infrastructure, and all four operators are rolling out the infrastructure. Of course, customers need to have a five gs smartphone now. Less than 5% or 10% of French customers have such a phone. Apart from that, we find that five gs has and is being used. We have a few 100,000 customers using it. But if you compare the use of a five gs customer and a four gs customer, you have an additional 10% use for five gs clients. So you would have to wait for the whole network to be rolled out to see more usage. You asked a question, but I didn't quite hear the first part of the question. Alsom was the second question. But the first part of the question on Bouygues Telecom, what was the first part of the question on Bouygues Telecom? The sound wasn't very good. Yes. If we look at the official porting data in France coming from the database, it shows that year to date, Iliad's intake porting in intake is up 40% year on year. That's quite a strong reversal in trend relative to what we saw last year. And I wondered what you sort of think about that. We observed that prices which came down in Black Friday have not quite got back up to previous levels. And we observed also Gilead being quite aggressive perhaps on pricing and also on five gs. So I was really just interested in your thoughts about that and whether you think it is something that we need to be concerned about or just something that will perhaps disappear in a very brief time. Sorry, we simply cannot hear you at all. We if we can get to us bilaterally afterwards because, I'm sorry, we really but we'll give you an answer about Alstom. Yes, on Alstom, we had an 8% stake in Alstom after the capital increase that was conducted in Q4, and we decided to go for a blank operation. That is, we sold some preferential subscription rights and signed up to part of the capital increase. Since the January, Alstom has completed its acquisition of Bombardier Transpor as was planned initially. The CDPQ and Bombardier Inc. Have subscribed to a capital increase in ASTOM, and our own stake came down to 3.6% with the same number of shares. There's a lockup that is valid till the March. We haven't decided whether we will keep or not we will keep our stake or not. Right now, Alstom is a leader in rail transportation, and this is a good