Earnings Call: Q2 2021

Jul 29, 2021

Hello, and welcome to the SPIE Half Year twenty twenty one Call. My name is Josh, and I will be your coordinator for today's event. Please note that this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. I will now hand you over to your host, Gauthier Louet, to begin today's conference. Thank you. Good morning, ladies and gentlemen, and thank you for attending SPEAK conference call. We did deliver strong results for the 2021 first half of the year. Both revenue and EBITDA are already back above pre crisis levels. I'm particularly pleased with the fast recovery of our margin and with our excellent working capital performance, which led to an acceleration of our deleveraging. During this semester, our bolt on M and A activity was also very dynamic and focused on our strategic priorities. So this strong first half of the year led us to upgrade our full year guidance. But first, I would like to share with you some good examples of our expertise, in particular to help our clients reducing their energy consumption. On Slide 3, in the UK, we have improved energy efficiency of a ventilation station, supplying the Kingsway Road tunnel under the Murthy River. We have supplied and installed high voltage switchgear, low loss transformers and control cabling. This new system will save about 440 tonnes of CO2 over the lifetime compared to the old ones. They will cut costs by more than 10,000 pounds per year. This contract demonstrates yet again that when our customers look for energy efficiencies, we are part of the solution. On Slide 4, in the steel industry, our Ampere solution allows our customers to significantly reduce the energy consumption of arc furnaces used to recycle scrap metal. This solution can cut CO2 emissions of an electric furnace by 2,800 tonnes per year. This is the equivalent of 900 cars traveling 20,000 kilometers. And since 2016, 1,000,000 tons of CO2 emissions have been avoided by our industrial customers who use the AMPA solution. On Slide 5, since the pandemic started, we have been very active to supply the healthcare sector with appropriate solutions. Here we installed IT infrastructure and communication systems for COVID-nineteen vaccination centers in Osnabruck in Germany. This infrastructure was implemented within a very short time, the first system being ready for operation within 2 weeks of the first inquiry. Fighting the pandemic, as we all know, is a race against time and we are proud to take part. And then on Slide 6, every year, our CSR policies are rated by EcoVadis. In 2020, we are awarded gold for the 7th year in a row. In particular, Ecovadis commended SPIE's increased focus on sustainable development, dialogue with stakeholders and implementation of new policies and initiatives aimed at managing CSR risks. Now moving to the highlights of H1. So we are pleased to report strong H1 twenty twenty one results with revenue and EBITDA above pre crisis levels, dynamic bolt on M and A focused on the group's strategic priorities excellent working capital performance, driving acceleration in deleveraging and with such a good start, we are confident for the balance of the year and we have great our full year guidance. So our H1 organic growth was at +9.7 percent compared to H1 2020, and we were back to the high activity levels recorded in H1 20 19. Total revenue growth was at +9.1percentand@plus1.7percentcomparedtoh1 2019. Our H1 EBITA margin was up 4.8%, up 170 basis points compared to H1 2020 and back to the pre COVID level of H1 2019. Our leverage ratio, which is as usual higher in June than in December due to our 2018, decreased markedly to 3 times at June 2021 compared to 3.6 times at June 2020. On Slide 10, in terms of organic growth, Q2 2021 showed a strong rebound at 19.1 percent organic, confirming a firm business recovery following the significant impact of the sanitary crisis last year. This does reflect the strong resilience of our business, which is increasingly driven by 2 powerful trends, the energy transition and the digital transformation. Slide 11, looking at revenue growth by segment. France enjoyed a strong rebound, up 21.1% organically compared to a low base in H1 2020, when the first lockdown had been particularly strict. Germany and Central Europe showed elevated strong growth Against a remarkably resilient H1 2020, organic growth was at +5.6%, of which 6.5% in Germany alone. Let us keep in mind that the organic decrease in H1 2020 in Germany had been very limited to only minus 0.3%. So it's really an excellent performance in Germany. North Western Europe was back to organic growth at +2 percent and Oil and Gas and Nuclear was only slightly down by 1.4% negative. On Slide 12, we compare our revenue with H1 2019. So compared to H1 2019, our revenue was up 2.1% overall and stable organically, which means that we are back to the high level of activity recorded in H1 2019. Germany and Central Europe is up 4.5% organically. It shows the strength of our positioning, in particular within the Transmission and Distribution segment. France is slightly up organically compared to a very dynamic H1 twenty nineteen. This does show fast and sustainable return to high activity levels. North Western Europe is 4.4% below H1 twenty nineteen, where we had high comparison basis in both the Netherlands and Belgium. Oil and Gas and Nuclear down 10% organically. As you know, the crisis in the Oil and Gas sector has been severe, but we see now business starting to recover. Bolt on M and A, part and parcel of our model. In 2020, M and A activity was interrupted by the sanitary crisis. It did resume in the second half of twenty twenty, and we have been very active since the beginning of 2021. So we made 6 acquisitions, totaling EUR 192,000,000 of full year revenue, and we now target to acquire revenue well in excess of €200,000,000 over the full year. Our acquisitions are focused on our strategic priorities: Enagotest in Poland, EUR 12,000,000 of revenue in Automation Systems for Power and Industrial Plants V11 Cable, solitaire, we love cable in Germany with €25,000,000 of revenue in Telecom Networks and KA AM in Austria with EUR 30,000,000 of revenue in Telecom Networks as well. Both these activities are exposed to FTTH and FTTH activity. WIGEL in Germany, EUR 50,000,000 of revenue in HVAC services. Valore in France, EUR 5,000,000 of revenue in Industrial Piping, especially in the pharmaceutical sector. And lastly, very recently, Infidis in France with EUR 70,000,000 of revenue in data center infrastructure. So quite a busy start of the year, but this is not the end. And now moving to our activity by segment. So in France, a sharp rebound in revenue and EBITDA on a low H1 2020 impacted by strict lockdown, which was in fact the stricter lockdown we had to endure. EBITA margin was up 2.90 basis points compared to H1 2020. So we see good momentum in Tech FM. We see a continuing high demand for telecom network services and now the 5 gs revenue has started to ramp up. Business levels in commercial installations were healthy. Industrial Services are still lagging a bit as the market has not yet fully recovered, but we tend to see some improvement on this side as well. I mentioned the recent acquisition of Infidus, which makes us one of the French leaders in data center hyperconversion services. And lastly, with regard to margin, EBITA margin is expected almost back to free COVID level in H2. Germany and Central Europe, the strong growth did remain unabated in Germany and in Central Europe. As we saw Germany delivered a very strong performance across the board, Transmission and Distribution Services have been fueled by energy transition investment in delivery for grid. Tech FM in Building Technology and Automation were also well oriented, and the German EBITDA margin was close to H1 twenty nineteen level. In Central Europe, we saw moderate revenue contraction in Hungary mainly due to contract phasing, while revenue growth was strong in Switzerland. In North Western Europe, we have really a very good news regarding the continuing margin expansion on the back of the successful organization and performance initiatives of the previous year. EBITA margin was up 230 basis points compared to H1 2020 and 170 basis points compared to H1 2019. In the Netherlands, revenue caught up in Q2 after a slow start. We see good trends in Energy and Water Infrastructure and Smart City Services, while the demand from industrial customer and primarily petrochemical did remain low. EBITDA margin made significant progress. In the United Kingdom, revenue grew strongly against H1 2020, while some customers are still a bit slow to make decisions. Both EBITDA margin and working capital improved, which is very satisfying on the back of all the efforts performed last year. Belgium rebounded, but revenue settled below H1 2019 level as the building sector remained affected, while energy and transport infrastructure were very active. And to along gas and nuclear, we also saw we also did see a rebound in nuclear, and we see positive signs in Oil and Gas, where we expect growth to return in H2. Altogether, EBITA margin improved by 90 basis points compared to H1 2020. Oil and Gas Services revenue was down against a resilient H1 2020. Business levels improved in Africa, but were offset by a number of contracts ending in the Middle East. The good news is that growth is expected to return in H2, while EBITDA margin, as you see, will remain high, benefiting from the reorganization conducted last year. In Nuclear Services, revenue rebounded on the low H1 2020, which as you will remember, have been impacted very early by COVID-nineteen restrictions. The Flamanville Ipira contract continues to ramp down and margins remain very high. So altogether at group level, our EBITA margin was back in line with H1 2019 level, and we see 3 good news on this chart. First, the strong pickup of margin in North Western Europe, all our organization efforts and performance initiatives are paying off. 2nd, the high level of margin maintained in Oil and Gas and Nuclear and third, the potential for group margin to exceed 2019 level and to be above 6% as soon as 2022 when France and Germany and Central Europe will be back to pre COVID levels. Now I hand over to Michel, who will comment on our financial performance. Thank you, Gauthier, and good morning, everyone. I am on Slide 20. As Gauthier has already mentioned, we achieved in H1 a strong rebound in all of our key figures, which are all at or above the H1 twenty nineteen level that you can see on the right column on this chart. Compared to H1 2020, group revenue was up by 9.1 percent at €3,300,000,000 of euro. EBITA was up by 71 percent at €160,000,000 EBITA margin was at 4.8%, up 170 basis points compared to H1 2020. Adjusted net income more than doubled to €82,000,000 of euro and net income rebounded sharply at EUR 57,000,000 while we had a loss last year. I will comment in detail the P and L in a minute, starting with the revenue. Gauthier has already detailed the top line by region, but let's see the bridge summary now. Our 9.1% revenue increase takes into account a 9.6% increase at constant ForEx and a negative ForEx impact minus 0.5%. We have already commented 9.7% organic growth. Growth from acquisition is limited to 0.3% due to the phasing of our acquisition all over the semester. It will mechanically be much more significant in H2. And I remind you that the negative scope effect is due to the disposal of the UK mobile maintenance activities made last year in March. On next slide, you can see that our adjusted net income rebounded strongly, resulting primarily from the sharp increase in our EBITA. In addition, our net interest charges were slightly reduced due to our lower level of net debt and our lower leverage. Our financial charges were negatively impacted by negative ForEx, while it was positive last year. And our adjusted tax rate was almost stable at 32%. On Slide 23, you can see that the reported net income rebounded sharply to €57,000,000 of euro. Amortization of goodwill was stable. Restructuring costs were close to 0. Other non recurring items were minimal as well, while last year, they reflected the accounting loss linked to the disposal of our mobile maintenance business in the UK. Let's move now to cash elements. The very good news, I could even say as usual, is the underlying improvements of our working capital at the end of June. Our working capital, which is structurally negative, improved by 7 days on an underlying basis. It represented minus 22 days of revenue at the end of June, while it was minus 15 days at the end of June 2020, excluding the impact of social charges and taxes deferral schemes related to the COVID-nineteen, which have been paid back at the end of June 2021. On this chart, the gray area on the bars represents the impact of the COVID related delayed payments. And this chart reminds you that it was only minus 3 days at the end of June 2018, which shows the magnitude of the progress we have made since then. The continued improvement in working capital is a result of our very strict cash management, which primarily translate into an excellent level of cash collection across the group. As you can see on this chart, the 7 days improvement result from a 2 days improvement on trade receivables, 4 days improvement in trade payables, 1 day improvement in accrued income net of revenue and advance received. So overall, 7 days at minus 22 days compared to minus 15 days at June last year. Due to our usual seasonality pattern, our free cash flow is negative in H1 by €338,000,000 But despite the payback of the social charges and taxes deferred, it is better by more than €40,000,000 compared with H1 2019, thanks to this very strong working capital performance. Compared to H1 2020, this year, we have resumed M and A activity, as Peter explained, and we have spent so far EUR 48,000,000 and dividend payment as well for EUR 70,000,000 euros Compared to end of June 2020, our net debt decreased by €83,000,000 Our leverage ratio was at 3 at end of June 2021, showing an accelerated deleveraging compared to end of June 2020 level at 3.6. This makes us very confident to reach 2.0 at the end of this year, which compares to 2.4 at the end of December 2020. Our credit rating from S and P is unchanged at BB and we have now BB rating from which we are not rated by Moody's anymore. You will note that the leverage including IFRS 16 is about the same, slightly lower at 2.9 in this chart. It's not in this chart, but in terms of debt maturity, there is no change, no debt maturity before June 2023, so nothing new here. And now I would like to stress this deleveraging over a longer period because this chart shows the seasonality pattern of our leverage, but it's interesting to note that with a delta of 0.6% increase in H1 2021, we are back to clear SAG acquisition pattern. If you remember the SAG acquisition made in 20 17, and it increased the seasonality of our working capital as T and D activities are more exposed to weather conditions. Since then, we have improved the working capital of these activities with improvement in processes and cash collection, but we have also improved working capital in other geographies like the Netherlands and the UK, for instance. This concludes my part, and I will now hand back to Bouquet. Well, thank you, Michel. Since the beginning of the year, we have experienced very healthy business trends in most of our activities and geographies. The rebound in the group's EBITA margin has been faster than anticipated, and we are firmly, lastingly driven by the energy transition and the digital transformation. On the wake of our strong H1 results, we upgrade our full year outlook for 2021, and we now expect group revenue atorabove2019level EBITA margin at 2019 level of 6% full year revenue to be acquired through bolt on acquisitions well in excess of EUR 200,000,000 and the strong reduction in the group's leverage now expected at around 2 at year end. The proposed dividend payout ratio will remain at about 40% of adjusted net income attributable to the group. We will pay an interim cash dividend of €0.13 per share, which is 30% of the approved dividend for 2020 on 27 September 20 21. And before we turn to Q and A, let me invite you to join us for Investor Day that will take place on September 20. This event will be an opportunity for us to give you insight on Speed's commitment to sustainability and to show that when it comes down to climate change, we are clearly on the side of the solution. This concludes our presentation, and we are now ready to take your questions. Thank you very much. And our first question comes from the line of Ebrahim Harmani from CIC. Please go ahead. Your line is now unmuted. Hello. I have two questions, if I may. The first one is about your margin in France. How do you expect that the margin is below its 2019 level despite revenues 2% higher? And the second one is about your guidance of EBITDA margin. Based on your guidance, an EBITDA margin of 6% in 2021, should we expect a margin higher than 7% in the H2? And which segment will support this level of margin? Thank you. Regarding the margin in France, as we explained in the past, Life is not fully back to normal and especially in terms of productivity and how we have to deal with the sanitary situation on our job. So we have a number of constraints there. Sometimes, the work having to be interrupted because of suspected cases, quarantine, etcetera. So this is one element. And the other one is, as we said, we have a 20 bps basis point impact from the rollout of our ERP system. We expect this the gap to diminish in H2, also thanks to underlying improvement. And as we said, we expect the margin in next year to be back to pre COVID level. Regarding margin H2, yes, you are right, it will be around 7%. That's the plan, which explains the diminishing in the gap we're announcing for H2 in France. Thank you. Our next question comes from the line of Simona Sali from Bank of America. Simona, please go ahead. Your line is now unmuted. Yes, good morning. So one question. So firstly on the leverage. So clearly at year end, as you said, you're going to be at 2 times net debt to EBITDA. So presumably, in 2022, you're going to be well below the two times. So how should we think about capital allocation beyond 2021? And secondly, now with the option for the facility management business of ENGIE that has started. Is there an update that you can give? So I assume that now you have a little bit more visibility on the perimeter and very high level if this would make strategic sense for SPEAK and how you're offering and positioning compares to ENGIE and if there would potentially be any antitrust issues in France? And also lastly, if you could please comment if you have started seeing an improvement in the commercial activity across your regions related to the grain investments? Thank you. Maybe I can start with the first question on the leverage. So as a reminder, the leverage at 2.0 at year end will be with thanks to a strong improvement in EBITDA, clearly. And since we have resumed we have resumed dividend payments, M and A activity and we would have repaid the full social charges and taxes delayed from last year. I think it's already a good performance. Also, the debt could be probably stable, we will see, but at least the leverage will be there. Now moving forward, I think the capital allocation will not change. So we have always clearly stated that our strategy is to use our cash flow into 3 different type of capital allocation. 1st of all, deleveraging is one element. So let's say that we always say that 1 third of our cash should be allocated to the deleveraging, 1 third to the bolt on acquisition and we'll continue. And I think the first half year this year has demonstrated this, our ability to execute fast. And of course, the dividend payment that we remain 40% of payout. So no change planned on the capital allocation strategy. Yes. And regarding ENGIE sales of the securities, so there's a project called Bright. We it's first of all, I would like to remind that SPEAK's plan on a stand alone basis is a very strong and robust plan and was was the independent European leader with a clear way forward. So really it's a good plan and we're not desperate to make any acquisition of any sort. However, the bright topic is an important event on the market, and it is our duty to look carefully at it. So that's what we are doing right now. It would only make sense if it was a safe way to significantly accelerate our value creation. So this is what we are studying at the moment and it's really very early and too early to draw any conclusions. So I think we'll need more time before we form an opinion. Thank you very much. Our next question comes from the line of Eric Lemarie from Bryan Garnier. Eric, please go ahead. Your line is now unaudited. Yes. Good morning. Thanks for taking my question. I got 3, if I may. The first one on your new guidance regarding your acquisition. So you mentioned acquisition Bolton acquisition went in excess of €200,000,000 of revenues. Should we expect speed to continue in the same rhythm of the 1st semester in the 2nd semester? So basically, do you think you could reach contribution in terms of revenues around €400,000,000 this year from bolt ons? This is my first question. My second question regarding regards to your last acquisition. So in this, if I'm not wrong, you mentioned in your press release and in this presentation €70,000,000 of revenues generated with only 63 people. If I'm not wrong, it's more than €1,000,000 of revenue per people. It looks very high compared to your previous bolt ons deals? Is there any reason for that? And should we expect Infidis to generate much stronger EBITDA margin than the regular bolt ons you make? And the last question on this ENGIE and Bright deal. Do you expect that once the deal will be done, do you expect the competition level in the market in France to ease a bit, to be less tense? Yes. So regarding M and A, obviously, we have a good pipeline, but it's unlikely that we will be doing as much in H2 as we did in H1. So there will be more acquisition in H2 clearly, but we're not advertising EUR 400,000,000 total for the year. Regarding Infidus, yes, these are very, very specialized services in the area of data centers. It's services we are familiar with because we have already acquired a company in this sector a number of years ago, which is sCloud, which has been performing very well. And yes, we have 63 talent people and there is obviously some contribution of subcontractors and the services are, as I said, very specialized. So it's a higher level of turnover per head, higher than what we are used to, but similar with what we saw in the previous acquisition with sCloud. And the level of margin is very good, yes, absolutely. And then regarding Bright, absolutely, this is a very important element. Whomever is the winner of this auction, we clearly see that there is room for improvement on the margin level. We have mentioned in the past that this player tended to be disruptive on pricing. So expect the benefit from the whole industry of change of shareholders. Thank you. Sorry, I realize that I am failed to answer the last question of the previous question, which is the green deal. It's a bit early in terms of translation into production. What we see is there's more centering activity in this regard stemming from various players, including public authorities, both at national and local or regional level And also various other customers that we have given examples today are also stemming from the industry. Clearly, the concern about decarbonization of the economy is spreading everywhere and spreading fast. So a lot of tendering activity in this regard is taking place right now. Thank you very much. Our next question comes from the line of Nicolas Tabo from Stifel. Nicholas, please go ahead. Your line is now unmuted. Good morning. Thank you very much for taking my questions. The first question would be to understand the trends in the revenue and organic growth. So looking back at the Q1 slide shows, it seems that your overall group organic growth decelerated compared to 2019, right? And I know there's many moving parts, but I wanted to understand if there's something to flag at the group level other than maybe more restriction from COVID. And maybe what would be the then the exit rate at the end of the quarter? And as you said, at or above revenue for the full year and you're already above in H1. Is there any particular headwind we have to think about other than COVID, obviously, which is difficult to predict? Is there something like contract phase out or any pressure that you want to mention? And then apart from the revenue, so on taxes paid, it was much lower despite higher profit. So what to expect in H2? It's a more technical question. And then on the net working capital, congratulations on the strong improvement. And is there any reason those 7 days should reverse in H2? And does a lower outflow in H1 means a lower reversal in H2? How should we think of that evolution sequentially? Thank you very much. Well, we are not worried about the trends and you may see some little variation in terms of a lot of significance in our type of activity. I think what's important here is that the trends are supportive and we're looking at the bigger H2, sorry. So no particular worry at all in this regard. And yes, you have a bit of contract fees or thing. But altogether, we will not see, I mean, a very different H2. Again, underlying trend are supportive. So we are fairly confident in this regard. Yes. Concerning your second question about the taxes, if I understand well, your question is about the tax being paid in H1. So yes, they are lower than last year, but we have to keep in mind that usually you paid your tax on the prior year results. So it's logical that they are lower this year. And if you now think about the P and L, they will be higher with a higher taxable income clearly. So I think we can counter when we so it's difficult to plan the tax at midyear in terms of P and L because it's assessed on a full year basis, but we try to show a tax rate that is the one that we could expect at year end. And based on our estimation today, the adjusted tax rate should be around 32%. And but the tax rate that you will see on the P and L could be higher because there you have sometimes some movement on the deferred tax elements, which is a bit complex and technical, but we already know that, for instance, the deferred tax liabilities in the UK will increase and it will have a negative impact on the P and L simply because the tax rate in the UK will increase from 19% to 25%, for instance. So I won't go too much technical details, but let's say that if you keep in mind that in the P and L, it will be around 32% and in terms of cash, yes, it should be slightly lower than last year on a full year basis. And then your third question about working capital. So yes, it's clear that you have this seasonality, so you will have a reversal of the in capital in the second half, clearly. So this is how we will reach the 2.0 level in terms of leverage. So if we discount the repayment of the social shares and taxes that we have explained, I think the overall performance should be quite positive and above the 100% cash conversion conversion we are used to target in the operations every year. Did I answer your question? Yes. Thank you very much. And can you just do you have the information on the exit rate that you can share with us for the end of Q2 to have an idea of when we exited sanitary restrictions, how the business was coming back? It's not meaningful. It's too small a a period of time. Again, as organic growth on the quarter has, in my view, limited meaning and shorter period. Generally, as the COVID I mentioned a bit of disruption due to COVID in terms of organization of sites and that sort of thing. But generally, the impact is limited. And in terms of decision making of our customers, it might have a bit of impact. But in terms of production flow, we were able more or less to produce everything that is serving in the order book at a normal rate. So it's we have readapted to the situation and say for a few odd events out there, we're back to normal. We have a very, very very few people now on temporary unemployment. We have a few sites that are still closed and like trade fair in Germany or a few sites where there is less activity like operas or theaters, where we'll do maintenance and some work for preparing for the events. But this is at group level, this is very limited. Thank you very much. Thank you. Our next question comes from the line of Peter Testa from 1 Investment. Peter, please go ahead. Your line is now unmuted. Hi. I've got 3 questions, please, that go one at a time. If you look at your comments you made about Tongji and Bright, you made a point that only if there were a safe way to significantly increase value creation. Maybe if you could just give us some reminder of how you view hurdle rate on M and A and how you take account of the difference between a large transaction and a small deal given different risk criteria and thinking about that and also the different implication of the capital structure, just give some reminder of how you regard their value creation from M and A? Well, obviously, on the talking Bright, it's a very much larger deal than usual. But if I look at one of large deal, which was SAG, and so transmission distribution activities in Germany. We have seen clearly an improvement of the margin. We have seen a very significant improvement of the working capital, and we did materialize the synergies that we advertised at the time of acquisition and in terms of integration, making the cultures match, etcetera, I think we have made excellent progress in limited number of years. Looking at M and A deals, you have to look at the integration aspects, the synergies, the reaction of the customers. And you see, you have to look and show that your balance sheet and your leverage remains very reasonable. So that these are the typical features that you need to take into account wherever the deal is. Okay. Is there a different view on return requirement given scale and risk and maybe also the fact that one could be funded by cash and the other may not entirely? Well, no, it's I mean, really, it has to be a good deal. It has to make sense in terms of value creation, whatever the size and the type of the deal. Okay. Then the second question, please. If you look at recruitment, can you give a sense on how recruitment is stepping up in your major zones in Q2 maybe expectation in H2 in recruitment? And the extent that which if you are indeed stepping up recruitment and whether there's any impact of this on margins from either having more people come in that need training or reengaging with subcontractor networks, which actually reflect factor growth may also have a margin impact, but will be repaid with growth as the resources of the speak grow? Well, it doesn't have an impact on margin. We're in a constant flow of training and recruitment and apprentices, different training for different technologies. And then recruiting people. We recruit at group level, 3000, 4000 people a year depending on the state of the activity. And so it is completely built in our cost base. And so there's no impact on margin. It's totally built in. Okay. Can you give a sense on how recruitment itself has stepped up in Q2 and what you think in H2 in your major regions? Well, it's so obviously, we were recruiting everywhere at the moment. And even last year, we never stopped recruitment. We had last year, we still were close to 3,000 people. As you remember, last year, we had still growth in actually in Germany, in VIN H2 and we had to deal with it. But also even in France, when technologies evolve, customer base evolves and you have to address that and keep recruiting. So it's we do not see a major step up right now. It's an upward trend since H2 last year. And in fact, since the previous year, it has only been slowed down in H1 last year. But apart from that, it's an upward trend all the time. And then recruitment is one thing, but you also have to work on talent retention. And I think the loyalty of our employees is strong. Resignation rate remains low. And we see schemes like employee shareholder schemes, they're also designed to enhance the loyalty of our employees. Yes. Okay. And then the third question, please, is if you could give some sort of sense on the commercial side of activity. There's obviously a lag between projects being announced 1 and launched and COVID coming after COVID can create some time aspects of that. So I was wondering if you could give some sort of sense on what you see in terms of pipeline or maybe more specifically book to bill Q2 versus Q1 or something like that, please? Well, book to bill is increasing. Clearly, we have a good order book, so our backlog is increasing and backlog for this year and backlog for the years to come. So it's a very positive trend everywhere. That's great. Thank you very much. Our next question comes from the line of Charles Schulte from Kepler. Charles, please go ahead. Your line is now unmuted. Yes. Hello. I have three questions, if I may. The first one, on Oil and Gas, the business seems to be lagging the rest of the group's activities. What are the outlook for oil and gas in H2 and 2022? My second question on NorthWestern Europe. Do you see room to further improve the profitability in this region and potentially close the gap with the rest of the group? Or do you think the profitability is structurally lower? And finally, on your shareholding structure, I can see that CDP2 is no longer in the share capital pie chart. Can you confine that they sold off their entire stake in the company? Thank you. Yes. So regarding oil and gas, we have more we have been affected by the crisis, both directly in terms of dealing with the sanitary situation and indirectly because the oil prices have been low for quite a while. Now it's improving now. And then the second element is more internal. We had a number of contracts in the Middle East assistance to commissioning, but at some stage, the commissioning is meant to be complete and obviously and this contract has not been replaced so far. We look at better H2, and we think we'll have a high single to double digit growth in H2. And we think that the oil price has moved up and so situation tends to normalize in Oil and Gas. So we're looking at probably at next year with more optimism. Regarding North Western Europe, there is room for further improvement in margin definitely, and I'm really pleased with the improvement we have shown already. UK is on a decent trend. You see, UK will remain dilutive at the group level. I'm not advertising anything different, but we have seen a significant improvement and also in terms of cash generation. So this is very satisfying. Netherlands are doing well, and I think Netherlands will be the first to reach the group's average, so the 6%. They're not far from that this year. And then Belgium is also progressing over close to 5%. So it's at some stage, definitely, apart from UK, I expect these countries to be at or close to group's average. And then regarding your question, so CDPQ, CDPQ is no longer a shareholder as they have exited completely in the recent months. As part of the strategy to move to private equity as opposed to be minority shareholders and non public companies. Okay. Very clear. Thank you very much. Thank you. We do have another question from Emmett LeMari from Bryan Garnier. Eric, please go ahead. Your line is now unmuted. Yes. Thank you. Just a quick follow-up for me. Could you remind us what is the maximum leverage for SPEAK in case of a large acquisition? To what David, are you ready to go? Well, we would like first in any case, our goal is always to take great. In case of a bigger acquisition, our goal would be to remain with a BB rating. So it means that we should not exceed 3 or 3.5, I think, it should be the max to stay with this rating because I think it's important. Okay. Thank you very much. So we don't have any further questions in the queue. So just as a final reminder, it is star 1 if you would like to ask a question or make a contribution on today's So we have questions from the webcast coming from Christophe Chapou. The first one is, since the acquisition of SAG, can you give us an idea of the improvement in working We have to check. But in a nutshell, we are now in a position where the rule of the German and Central European Business is in negative working capital all year through. And at the time of acquisition of SAGE, we had due to the way SAGE was dealing with customers and payments, etcetera, we had quite I mean, we were in positive, negative in positive working capital territory almost all year through with SAG. So it's a significant improvement. And the cash conversion rate of Germany has been constantly above 110%, 120% over the past 6 years. And the last one from the webcast. Regarding the tender offer on the Green Deal project, would you say that the pricing is rational and thus the margin should be the average? Yes, yes. I think we at the moment, we have not too many complaints about pricing discipline in our industry. And so really there is no reason to share on the contrary that margin would be affected because of this Green Deal project. Really, on the contrary, there's a lot of expectations from our customers in this regard in terms of what we can offer, how we can help them. And so competencies are valued. And so we do not expect any sort of price pressure from direction, clearly. And generally, we mentioned that we expect 2022 to be above 2019 in terms of margin. So we expect to be above 6% in 20 22. And we expect this trend to continue the years after. So my midterm goal is to reach 6.5% at group level and not too far from now. So really, the pricing environment is decent, and we are working hard on the underlying improvement as well. And so I'm really confident about the margin trend. So we have no further questions in the queue. I'll hand you back over to your hosts. Well, thanks a lot for attending this conference today. And I think we're on a good path. As I keep telling, it's a good time to be an electrical engineer, and I think that our H1 results do evidence this statement. So thanks a lot for attending this session. Have a nice summer, and talk to you in October. Have a good day. Bye bye. Thank you. Bye. Thank you very much for joining today's call. May now disconnect your handsets. First, please stay on the line. Thank you.