U.S. markets closed

Edited Transcript of EN.PA earnings conference call or presentation 20-Feb-20 10:00am GMT

Full Year 2019 Bouygues SA Earnings Call

Saint-Quentin-en-Yvelines Cedex Feb 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Bouygues SA earnings conference call or presentation Thursday, February 20, 2020 at 10:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Frédéric Gardès

Colas SA - CEO of Colas

* Martin Bouygues

Bouygues SA - Chairman & CEO

* Olivier Roussat

Bouygues SA - Deputy CEO

* Pascal Grangé

Bouygues Construction SA - Deputy CEO

* Philippe Bonnave

Bouygues SA - Chairman & CEO of Bouygues Construction

* Philippe Marien

Bouygues SA - Deputy CEO, CFO & Senior VP of HR, Information Systems & Innovation

* Richard Viel

Bouygues Telecom SA - CEO & COO

================================================================================

Conference Call Participants

================================================================================

* Eric A. Lemarié

Bryan Garnier & Co Ltd, Research Division - Research Analyst

* Josep Pujal

Kepler Cheuvreux, Research Division - Head of Building Materials & Construction Sector

* Nicolas Cote-Colisson

HSBC, Research Division - Head of European Telecoms Equity Product, Telecoms, Media and Technology

* Thomas Coudry

Bryan Garnier & Co Ltd, Research Division - MD of Equity Research

================================================================================

Presentation

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [1]

--------------------------------------------------------------------------------

[Interpreted] Ladies and gentlemen, good morning. It is now our duty to report to you. Okay, along with our senior management, I'm very happy to have this opportunity to present you with our results. Although happier that you will see that, broadly speaking, our results are quite good.

In 2019, Bouygues reached its annual targets, thanks to robust results supported by all its businesses. To begin with, the group improved its profitability. It improved its current operating profit and its current operating margin year-on-year. This is restated for the sale of a part of our stake in Axione in 2018.

Now in 2019, we also generated a lot of free cash flow. In fact, free cash flow of EUR 301 million, thus reaching our free cash flow target that we set ourselves at EUR 300 million, that was back in 2017. While free cash flow after working capital requirements, but not including the Alstom dividend, increased twofold to EUR 815 million in 2019.

And finally, net debt was down substantially to EUR 2.2 billion, down from EUR 3.6 billion at year-end 2018.

In the light of these results, the Board of Directors has decided to propose to the AGM of April 23 a dividend of EUR 2.60 per share, of which EUR 0.90 will be exceptional -- on an exceptional basis.

Now the free cash flow trend after working capital requirements has confirmed our confidence in ability to generate EUR 1 billion in free cash flow in 2020.

So let's now look at what we achieved in 2019.

Sales were up 7% for the year to EUR 37.9 billion. On a like-for-like basis, that was a 5% increase, a performance that was driven by all our businesses.

Current operating income was up EUR 112 million and up [EUR 218 million] (corrected by company after the call) if we factor out the impact of the Axione shares that the current operating profit in 2018 included a EUR 106 million capital gain as a result of the sale of part of our stake in Axione. But this substantial increase was driven by all 3 activities.

The current operating margin of 4.4% was up 30 basis points, that is not including the impact of the Axione disposal.

Net profit attributable to the group was EUR 1.184 billion, down EUR 124 million over the period, due to the EUR 133 million decrease in operating profit over the period. This, in turn, was due to nonoperating income of EUR 20 million, after a nonoperating income of EUR 265 million in the previous year, mainly due to Bouygues Telecom.

As I said by way of introduction, one of the landmark events was the very strong generation of free cash flow.

On the right-hand side of this slide, we have a chart showing group's free cash flow after working capital requirement between 2018 and 2020. We have also isolated the dividend from Alstom in 2018 and 2019, which were, respectively, for EUR 22 million and EUR 341 million.

Now if we factor out the Alstom dividend, free cash flow after working capital requirements more than doubled between 2018 and 2020 to reach EUR 815 million.

Several components contributed to that. EUR 330 million increase in [net cash flow] (corrected by company after the call) from the 3 businesses, the stability of net CapEx and the improvement in the variation working capital requirements for operations, which was actually improved by EUR 176 million.

The group is thus well positioned to achieve its free cash flow after working capital requirement target of EUR 1 billion, that's the EUR 1 billion mark, by the end of 2020. Furthermore, Bouygues strengthened its financial structure in 2019.

We significantly reduced our net debt from EUR 3.6 billion to EUR 2.2 billion. So obviously, the positive impact of Alstom, EUR 1.4 billion. This amount includes the dividend received in July, but also the proceeds on the sale of 13% of Alstom's capital, a sale that was carried out last year.

As a result, our net gearing declined sharply by 14 points to 19%.

Finally, we have a very considerable cash, in fact, EUR 11.6 billion in available cash, comprised of [EUR 3.3 billion] (corrected by company after the call) in cash and EUR 8.3 billion in undrawn facilities.

The debt maturity schedule is, as you can see, very smooth and very well distributed over the period.

Finally, in October of last year, we redeemed a bond for a total of EUR 1 billion. This strong financial structure means that we are -- have independence and it will also ensure the sustainability of our business model.

I'm now going to give the floor to Olivier Roussat, who will give you a detailed review of our various operations and activities. Olivier?

--------------------------------------------------------------------------------

Olivier Roussat, Bouygues SA - Deputy CEO [2]

--------------------------------------------------------------------------------

[Interpreted] Thank you, Martin, and good morning, everyone. We will start with the construction business. And of course, the order book, stable now at a very high level, EUR 33 billion, over 1 year. You can see on the slide. You could see that there are 2 high marks on the slide, 2018 and 2019, and that shows that the solutions that we are in a position to deliver do meet expectations, high demand or sustained demand because of reorganization brought about by climate change and the fact that we can actually deliver infrastructure and low-carbon solutions.

Colas' order book restated for currency effects, and we sold Smac last year, is drawn by international business, significant orders in Guiana and the U.K. As we shall see, in France, as expected, the order book, that slowed down at the end of the year because of the upcoming municipal elections in March 2020, which is not very conducive to new orders for mayors.

Bouygues Construction's order book in France is stable and down international. We do have a big contract for a tunnel in Hong Kong, EUR 756 million.

And then there was a draw -- a lower order book Bouygues Immobilier because in 2019 there was less on offer. This was because building permits were delivered late. And of course, it's, again, the upcoming elections. But by and large, the fundamentals are good, the market is buoyant, the size is significant and the need for housing is still there. And of course, low interest rates mean that people can still invest.

The order share of Bouygues and Construction -- Bouygues Construction and Colas internationally stands at 62% compared with 61% last year. So quite a significant amount.

A few examples of big contracts in Q4, the Hong Kong tunnel, EUR 756 million on the left-hand side of the slide. There was a disposal we in -- sorry, the Sways Building in Issy-les-Moulineaux was built in Q4. And then we have high-level service districts, we have that in French Guiana, in Cayenne, and then that was EUR 180 million. And then Network Rail in Britain, that's a work on the railway, EUR 553 million.

Let's look at the order -- the financial aspects. We have, without including Axione, the current operating profit for Construction stood at EUR 75 million -- sorry, improved by EUR 75 million, and that is because we have an improvement in Bouygues Energy and Service. We -- in October 2018, we had difficulty and the margin was minus 0.4%, and now it's positive 2.1%.

Regarding public works and building, we have a satisfactory margin at 3.1%.

Now operating profit from Colas is up, thanks to the good performance of Route Métropole and also Colas Rail breaking even. And now the operating profit for Colas has gained 0.4% -- 0.4 point, 3.2%. And then there's a significant contributions of Immobilier d'Entreprise, that's Bouygues Immobilier for commercial premises. In Q4, in particular, there was some improvement. The Q4 operating profit was 5.2% versus 2.6% for the first 3 quarters.

And so operating profit for the Construction business, the margin stood at 3.1%, so a slight improvement compared to 2018.

Before moving on to the other businesses, I would like to address an issue that we did discuss during the half year results, and that's the low carbon approach for all 3 construction businesses. We have a wide, broad portfolio of low carbon solutions on offer. This is an issue we've been working with for quite some time. We started this in 2005, 2006, where we started providing innovative, low-carbon solutions to our customers. And in 2019, we continued with a strengthened offer and a better leadership position for sustainable building. And so every time we give you a few examples of projects or solutions provided by our construction business, Bouygues Immobilier in Strasbourg delivered the highest, 100% timber tower residential building. We got the BBCA label for the ENJOY operation, which is this largest office building with a wooden structure. Bouygues Construction started the first building for reversible, the circular economy called Office Switch Home where, namely, you can switch from office to home, and that is right up the concept of circular -- the circular economy.

And then we have Wattway, that was a new development we introduced a few years ago. Now a few months ago, we came up with Wattway Pack, and that enables local authorities to have a turnkey system of autonomous plugs and power points and so you could plug in your electric car or you could use that for connected services.

At the end of the presentation, Martin Bouygues will give you more details about the group's approach to sustainable development, what we've been doing or what we will be doing in 2020 to reduce our own greenhouse gas emissions.

Talking about innovative solutions. Let me show you this movie about a -- what we've been doing, a solar farm built by Bouygues Energies & Services, it's the largest in Europe, and in Piolenc in France. Do have a look.

(presentation)

--------------------------------------------------------------------------------

Olivier Roussat, Bouygues SA - Deputy CEO [3]

--------------------------------------------------------------------------------

Right then. Let us move on to TF1. The results were presented last week by Gilles. So I'll be quick.

But we find the audience share is -- was high in 2019. For the group as a whole, we had a 32.6% audience share for women below 50 and 29.4% for individuals between the ages of 25 and 49. The comparison basis in 2018 was tough because last year, we had the men's football cup and so that drew in a high audience.

Revenue for last -- 2019 was EUR 2.337 billion, up 2% compared to 2018. This is mostly due to external growth.

Current operating profit stood at EUR 255 million, up EUR 56 million over the year.

Operating margin was up 2.2 percentage points to 10.9%. And so TF1 was able to reach its 2019 target operating -- double-digit operating margin. And that reflects not just growth in revenue, but also in keeping programs. The cost of programs under control, programming costs came down from [EUR 1.014 billion] (corrected by company after the call) in 2018 to EUR 985 million in 2019. So the good performance enabled TF1 to confirm its target for 2020, and indeed, for 2021. 2020, we proposed to keep a double-digit operating margin and keeping programming costs under control at EUR 985 million. There's digital Unify. We want to have at least EUR 250 million and 15% EBITDA.

And so TF1 has its prospect of sustainable growth and wants to become a major player in total video.

What is total video? Well, TF1's business is moving from being -- well, it's not a provider of content on all forms of media. So it can be broadcast and digital. It can be all forms of consumption. Can be linear replay or video-on-demand. It can be provided replay. It can be linear. And TF1 has decided to adapt its various offers to meet customers' expectations, new users. Salto will be launched in September 2020. This is a joint project with M6, France Télévisions and TF1. It's video-on-demand by subscription, and it's getting ready for addressable TV, which is what will enable it to enter the segmented advertising business.

We also proposed to strengthen its production capability with the development -- the international development of Newen. 80% of Newen's content was produced internationally. If you take into account all the production for 2019, it means that as much as 50% of all TF1's production will be done internationally.

And then the digital development is continuing. We have now a single advertising agency called Unify Advertising with synergies within Unify, but also with other units of TF1.

Moving on to Bouygues Telecom now. Let's start with the growth figures for the mobile and fixed businesses. There was growth in both the number of customers, not including machine-to-machine, includes 15 -- 11.5 million customers at end 2019, including 653,000 new customers in the year, including 152,000 in Q4 alone. That was mobile.

But in fixed, the base of customer was up 427,000 new customers for FTTH, including 142,000 in Q4. The penetration rate for FFTH stood -- now stands at 25% at the end of December, whereas it was only 16% a year before. The FTTH base now has 1 million customers with 3.9 million customers for the fixed customer base altogether.

If you look at the financial performance, sales was up at Bouygues Telecom. In services, we have an 8% growth in 2019. This is, as you can see on the right-hand side of the slide, this is due to mobile growth, 5.5%, and 14% for fixed service.

The growth in service revenue in 2019, and we haven't got the announcements from our competitors, but we have reason to believe that we will have the strongest performance in the market. This is because of the larger customer base, but also because we have an improvement in ABPU, average billing per user. EUR 27 per customer per month. That's for fixed service. Already up in the first 3 quarters of 2019 compared with 2018. It still is up EUR 1.1 compared -- in Q4 compared to Q4 2018.

And then very good news. For the first time since 2011, mobile ABPU is up compared to last year. It now stands at EUR 19.7, up EUR 0.50, compared with Q4 2018.

And looking now at income after sales, we see that total revenue stood at EUR 6.1 billion, up 13% over the year. Would be 12% on the constant -- on a like-for-like basis because Bouygues Telecom acquired 2 companies at the beginning of 2019, Keyyo and Nerim.

EBITDA after lease stood at EUR 1.411 billion, up EUR 147 million over the year.

EBITDA margin was up 1 percentage points to 30.7%.

Current operating profit stood at EUR 540 million, up EUR 86 million over the year. But operating profit was down EUR 166 million for 2 reasons. In 2019, there were fewer disposals, so they were less in terms of capital gains. And then there was an old dispute we have with the French government that dated back to 2013 and '14. And so there was [EUR 110 million] (corrected by company after the call) that was recognized in 2018, and that was about the 1,800 megahertz frequencies. We were -- we had a litigation with the government for that amount. And so the provision was reversed.

As expected, gross investment was down -- sorry, stood at EUR 940 million, down [EUR 302 million] (corrected by company after the call).

And free cash flow was up EUR 109 million to EUR 301 million. That was the objective announced 3 years ago. I mean, we had actually announced EUR 300 million 3 years ago. This is the consequence of our differentiating strategy that Bouygues Telecom has implemented over the past few years. There are 4 aspects to that.

Number one, we want to make sure that our customers have a simple and fluid experience. We also, of course, want to ensure excellent quality of both the mobile and fixed networks. We also want to provide service to the less densely populated areas and a full array of fixed and mobile solutions for companies to improve Bouygues Telecom's position on the BtoB market.

With a view to providing a high-quality customer experience, we've been pursuing a cross-cutting strategy, small steps that may help improve the experience of customers. For instance, fewer clicks needed to complete an operation online, for instance. Customer satisfaction has improved, and we can see this when you went to the -- go to the Arcep site in February. That's the number of warnings received per operator per customer. Bouygues Telecom has received -- has generated the fewest number of claims or complaints to Arcep. If you compare with our competitors, we can see that we have only 13 requests or complaints out of 100,000 customers.

With a view to meeting customer expectations, again, you may remember that we launched a new modem for the Bbox fiber box. Customers want something -- they want the best possible WiFi at home. And what we've decided to do, well, WiFi is better relayed when we have a vertical box as opposed to a horizontal box, so we've decided to do just that. Up until now, people had boxes flat on the floor. The upright boxes were something you found in North America rather than in Europe. And all of you may have experienced the connection of your PC or mobile to your -- to the net, you had to enter 26-character WEP code. Now we can use a QR code and that makes things much easier. And so you can make things easier and more fluid for customers.

And then we also want to improve our image and our identity. We believe that a happy -- human relations are the key to happiness. And we've started this new identity. The idea is to be present throughout media points. A large advertising campaign has been unfolding, and you can see, if you haven't seen it before, what you have on TV to advertise our brand.

(presentation)

--------------------------------------------------------------------------------

Olivier Roussat, Bouygues SA - Deputy CEO [4]

--------------------------------------------------------------------------------

And again, we were distinguished by Arcep, the telecom authority as being the best operator, first operator in rural areas, and the second, on average, over the territory. We now cover 99% of the population with the 4G network. We have a base of 21,000 mobile sites. There will be as many as 28,000 by 2023.

And in the fixed business, we have 12 million marketed FTTH premises. And now our objective is to have 22 million, rather than 20 million, marketed premises by 2022.

As regards to BtoB, we already have a good position in the mobile business, but we want to have a larger market share in the fixed business for BtoB. We use several offers for that, new innovative offers by Bouygues Telecom or through partnerships. We are looking at small and very small companies. The idea is to use the wherewithal of Keyyo and Nerim. But also, we are capitalizing on our FTTO infrastructure. And that is -- will bring it to my next subject because our strategy has always been pragmatic. We felt that we could pool resources for towers with other operators. And we felt that it was necessary to have an optic fiber infrastructure to meet the major data requirements that will only increase over the years. The idea is to connect various items -- points of the networks to target those areas that are not receiving services yet to be able to deliver 5G in the future. We also propose to have a fixed wholesale capacity so that being able to resell it to other operators.

And then fiber to the office. The fiber offer is precisely one of the needs of the corporate sector of the BtoB market. And so we will be in a position to both provide and operate this as part of the joint venture. We'll be the minority shareholder. The whole project will be EUR 1 billion over 7 years. And Bouygues Telecom will have a long-term contract with the -- this partner in the joint venture, where we will be, therefore, the minority partner.

Regarding FTTH premises, right now, Bouygues Telecom has access to Orange's medium populated areas through coinvestment or renting part of the premises. Now we are looking to partners to start another joint venture, again, where Bouygues Telecom will be the minority partner there. The idea there would be to cofinance the purchase of these 5% tranches of the premises and, of course, offer the services and the operation of these premises. So we will be buying the network that was rolled out by Orange. And as the number of customer increases, the business customer increases, we will be acquiring more tranches, 5% tranches of the network. We'll have a long-term service contract with our partner. We will be sharing the premises. We had already purchased some of the premises from Orange. And so these premises purchased from Orange will be rolled out in the medium populated areas. When we can announce the partner, we will.

I'll now give the floor to Philippe Marien, who will get into the details of the financial accounts.

--------------------------------------------------------------------------------

Philippe Marien, Bouygues SA - Deputy CEO, CFO & Senior VP of HR, Information Systems & Innovation [5]

--------------------------------------------------------------------------------

Thank you, Olivier. Good morning to all. Just a few additional words about these accounts closed at December 31. I'm not going to go back to sales and current operating profit because both have been commented business by business.

Other operating income and expenses, as you heard, were down substantially on 2018. It's, in fact, 2018 that was exceptionally high, particularly at Bouygues Telecom, as Olivier has just explained.

The cost of net debt was down slightly on 2018 because of the fact that our average net debt over the period was lower in 2019 than in 2018.

Moving on to the remainder of the income statement. An effective tax rate of 32%. This was up on the effective tax rate in 2018, which was 27%. But you will remember that last year, the effective rate was lower because of 2 things. First of all, the capital gain on the disposal of our stake in Axione, which was below the normal tax rate. And also in 2019, the transformation of the so-called CICE tax credit, which is now set against expenses, is at against personnel expenses. It was a tax credit. And of course, lower expenses, lower expenses. And from an accounting point of view, the impact is not the same.

But if we restate 2018 for these 2 impacts, Axione and the tax credit, which became a lower level of expenses, this leaves us with an effective tax rate of 31%. However, the rates were very comparable in 2018 and 2019 for recurring business.

The share of net income of joint ventures and associates rose EUR 48 million. Well, with Alstom, the figure is the same or almost identical for the 2 years. But we explained back in September that these 2 figures are not -- comparably very contrasting situations. In 2018, the EUR 230 million was our group share in Alstom's net income for 2018. Its net income was higher at the time, in particular, because of that number of provisions concerning the disposal of power gen electric. These provisions were reversed. That did not happen again in 2019. So for these results, Alstom contributed EUR 66 million to us in [2019] (corrected by company after the call). And of course, then there's a capital gain on the disposal of part of our stake in 2019 for a total of EUR 172 million, which gives us the EUR 238 million in 2019.

The remainder of the increase in this item was due to the good performance of Tipco, which is our company that refines and distributes bitumen in Asia through Colas. Also to the impact of Bouygues Telecom's 2 disposals. It's stake in the Zagreb Motorways -- sorry, the Zagreb Airport, I should say, rather, and motorways in Jamaica.

Overall, net profit attributable to the group was EUR 1.184 billion.

Moving on to the balance sheet. Noncurrent assets were down EUR 640 million. Current assets included Bouygues Telecom for EUR 132 million. The goodwill, [up EUR 240 million] (corrected by company after the call). You have the main components of that goodwill item. And of course, with our peak Energy & Services, the goodwill was reallocated in early 2019. Most of it was in late 2018. Keyyo and Nerim were the 2 Bouygues Telecom acquisitions in the course of 2019. De Mensen and Reel One were the 2 acquisitions made by TF1 in 2019.

And of course, in this particular item, we also have a ForEx impact, which increases this item. This particularly concerned the Canadian dollar in 2019.

A substantial decrease in joint ventures and associates, which mainly concern the accounting impact of the disposal of our 13% stake in Alstom in the course of 2019.

So much for the EUR 640 million in noncurrent assets.

Current assets rose EUR 1.147 billion. Operating assets, plus EUR 503 million, because the increase in the level of business. And cash rose by EUR 646 million due to the sale of our Alstom shares.

We have no more assets held for sale because at the end of 2018 this item concerned Smac, the disposal of Smac having been carried out in early 2019. We have no more assets held for sale.

Moving on to the liability side. Shareholders' equity to begin rose by EUR 768 million. The changes are quite traditional. Net profit of EUR 1.32 billion. Dividends paid out, EUR 710 million. Capital transaction reserves plus EUR 202 million. This concerned stock options exercised in 2019, but more importantly, the capital increase reserved for employees at Bouygues Confiance n°11 carried out in December 2019, and this was for a total of EUR 150 million. Of course, scope and other impacts, EUR 44 million.

Noncurrent liabilities were down EUR 636 million. This was mainly a decrease in noncurrent debt for [EUR 812 million] (corrected by company after the call). This includes EUR 1 billion from the bond we will redeem in July of this year, which is, therefore, no longer noncurrent, it becomes current. Of course, in 2019, we increased Bouygues Telecom's debt for approximately some EUR 200 million.

Now liabilities related to held-for-sale operations, that's the reverse entry for Smac, so there are no other transactions at the end of the year.

So overall, our net debt of EUR 2.2 billion. As Martin Bouygues said in his comments, this was down substantially from the net debt a year beforehand.

So how do this net debt vary over the year? Well, first of all, we had the impact from, first of all, the disposal of our 13% stake in Alstom and the EUR 341 million dividend. So total impact on cash of EUR 1.4 billion from Alstom. Acquisitions, net of disposals, totaled EUR 180 million outflow in cash. These are the various transactions we heard about earlier on. Keyyo and Nerim, De Mensen and Reel One and the sale of a small activity by Colas.

EUR 182 million is the cash equivalent of various operations. I mentioned share buybacks, exercises, stock options, the Bouygues Confiance n°11. Dividend, EUR 710 million. And of course, operations, which increased by almost EUR 700 million, a sharp increase on operations back in 2018.

The increase is almost EUR 400 million in cash from operations or cash flow from operations.

Now this breakdown of -- this operation breaks down as follows. Given IFRS 16, we prepare a talk about cash flow including leases because leases have become amortization, which by construction mechanically increases our net cash flow. We don't feel this is particularly relevant. What we rented in is the EUR 2.640 billion of EUR 2.680 billion that we generated in 2019, which was up by EUR 263 million on 2018.

This is an important matter because always good to see the conversion to cash or the better results, which is the case in 2019.

CapEx, almost identical to the level we had in 2018 and fully in line with the guidance we gave you and the budget. I suppose the outstanding item here in 2019, particularly in the fourth quarter, was the change in the variation working capital requirements. EUR 400 million outflow last year. At the end of September, the order of magnitude was still very similar. We thought it would be difficult to improve in a substantial way our cash flow in the fourth quarter. Well, the various measures taken in all our businesses, in inventory and customer receivables, all of that helped us improve the situation. So as a result, the deviation in working capital requirements was a much smaller outflow, [EUR 176 million] (corrected by company after the call), much more than the previous year.

So improved net free cash flow and a lesser deterioration of working capital requirements contributed to this EUR 400 million improvement in -- which was a very good performance for the year.

As always, you then have the breakdown of CapEx by business line. Not much needs to be said re the variation between 2018 and 2019. In fact, very much in line with the plan. That's what I have to say about the accounts at December 31, 2019.

As you know, this is the last time I will be making this presentation. The last time I'll be commenting on financial performance. I'd like to thank you for everything we have done together over the last 12 years. Over the period, we have talked about the company's business, strategy, its financial statements over 48x, which is a lot of times. In all events, it was a great wealth of experience for us because thanks to your careful listening, your comments, your remarks, we have improved. I think we have done better than in the past. That certainly helped us to take onboard a number of issues that you raised over the years in order to try and ensure that -- thanks to you, our shareholders are better served.

With that, I'd like to thank you all.

Pascal Grangé who has been with me since October last is now familiar with every aspect of the group. He's -- has always been familiar with construction, but he's now familiar with all our businesses. He will be my successor, and I'm sure he will continue this relationship with you. So thank you for everything.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [6]

--------------------------------------------------------------------------------

Thank you, Philippe. Moving comments. Moving times. Somewhat emotional for the group. It's an important passing of the baton because the CFO's position is a very important position in the group. But as Philippe said, Pascal Grangé has what it takes. In fact, the last 6 months, he has deepened his knowledge of the group. Philippe will be leaving us at the end of the week, which is not very far away. And all that remains for us to do is to wish him a very happy retirement in the best possible conditions.

I'm going to wrap up today's presentation by telling you about the group's ambitions for 2020. In long-term growth markets, our construction businesses will strengthen their portfolio of low-carbon solutions in order to maintain their leadership in sustainable construction. These businesses will also benefit from the various measures taken to improve their profitability. For instance, the current operating margin will continue to increase. We expect it to improve in 2020 by comparison with 2019.

As for TF1, TF1 will benefit from sustainable growth to position itself as a major player in the video market. It will maintain the cost of programs at EUR 985 million, thanks to Gilles Pélisson, I will continue to deliver double-digit margin, that's current operating margin, in 2020.

Finally, Bouygues Telecom will continue to grow by leveraging its differentiation strategy, thanks to the quality of networks and customer experience as well as the appeal of the brand, as Olivier Roussat explained so vividly. In 2020, the top line growth from service is expected to be around 5% and free cash flow should exceed EUR 300 million in a broader context of increased CapEx due to the increased 4G capacity and the start of the rollout of 5G. So we expect to invest between EUR 1.1 billion and EUR 1.2 billion in gross CapEx, that's excluding 5G frequencies in 2020.

All this leaves Bouygues well positioned to pursue its sustainable growth, but we have set ourselves 2 targets for 2020. First of all, to generate free cash flow after working capital requirements of EUR 1 billion, with contributions from all 3 sectors activity. Secondly, to reduce our group's greenhouse gas emissions by 2030. In fact, back 15 years ago, I wanted to bring -- to provide these clients with low-carbon solutions. The group now has acknowledged knowhow that leaves us in a leading position in low-carbon solutions. We must not just maintain, but increase our efforts to reduce carbon emissions. So we've asked our businesses to define a target that's in keeping with the Paris Agreement. Remember that the Paris Agreement aims at limiting the climate warming to a maximum of 1.5 degrees Celsius. So I've asked this group to draw up a plan of action this year. We will be reporting back to you on this particular point at a later stage.

Once again, I'd like to thank all the group's employees for their commitment, their energy in all various businesses with the view to our (inaudible). We are, of course, with my colleagues, at your disposal to answer your questions. Thank you.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [1]

--------------------------------------------------------------------------------

First question.

--------------------------------------------------------------------------------

Nicolas Cote-Colisson, HSBC, Research Division - Head of European Telecoms Equity Product, Telecoms, Media and Technology [2]

--------------------------------------------------------------------------------

Nicolas Colisson from HSBC. I have a question on telecoms. First of all, could you help us anticipate the impact of EBITDA and CapEx, the impact of the 2 joint ventures? Is this already built into the guidance that you've given us for CapEx on 2020? Or is it mostly after 2021? Also do you have any buyback clauses to become majority shareholders in these 2 joint ventures in due course?

Another question on telecoms. As the ABPU in fixed telephones has increased substantially in Q4, was this mainly because of price increases? Or were any of -- was any of this due to increases in connection costs, for example?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [3]

--------------------------------------------------------------------------------

Richard Viel will answer that.

--------------------------------------------------------------------------------

Richard Viel, Bouygues Telecom SA - CEO & COO [4]

--------------------------------------------------------------------------------

Yes. Concerning these 2 joint ventures, yes, they are, the figures are built into the guidance. Of course, the situation could be changed at a later stage. We could well be other than minority shareholders. Yes, that's a possibility.

Thirdly, concerning the ABPU review, it's indeed because of the price increase. First of all, price themselves intrinsically increase, but also our customer mix evolved as well. They are the 2 components.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [5]

--------------------------------------------------------------------------------

Gentleman here.

--------------------------------------------------------------------------------

Unidentified Analyst [6]

--------------------------------------------------------------------------------

I'm from ODDO Securities. I also have a question on telecoms. Maybe a few words about the excellent performance in mobile and mobile prices. Q4 was calm. Is that sort of a broader context for that? Or is this a general market trend? What about Bouygues' trend within the mobile market?

My second question concerns what fiber will enable Bouygues Telecom to achieve in the average density regions where I imagine Bouygues' market share is somewhat lower than it's natural or national market share. Have you had any intention of gaining market share in these areas in the medium term? Also If you could...

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [7]

--------------------------------------------------------------------------------

Okay. We are clearly the mavericks in the fixed telecommunication business.

--------------------------------------------------------------------------------

Unidentified Analyst [8]

--------------------------------------------------------------------------------

And you're some way short of your target of 4 million.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [9]

--------------------------------------------------------------------------------

No, no. That was not our objective. That was our initial objective. We revise our objectives over time. Now Richard will also answer that -- those question.

--------------------------------------------------------------------------------

Richard Viel, Bouygues Telecom SA - CEO & COO [10]

--------------------------------------------------------------------------------

My understanding is that I need to give you 4 or 5 answers, but I think by order in which you asked your questions. You talked about the mobile revenue in Q4, there was an exceptional event that we'd had the previous year in Q3. But intrinsically, revenue increased for several reasons. First of all, mobile prices. Remember, back in 2017, there was something of a crisis with EUR 5 for life, if you remember. In 2018, we're talking about EUR 10 for life. The end of '19, I think we're talking about EUR 12 for life. That's the kind of promotions that we hear about. But in terms of revenue, consumers are increasing and upgrading their packs. Of course, there is an increase in ABPU. Has that answered all your questions? Or was there something I've missed?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [11]

--------------------------------------------------------------------------------

Okay. Thank you. Next question.

--------------------------------------------------------------------------------

Josep Pujal, Kepler Cheuvreux, Research Division - Head of Building Materials & Construction Sector [12]

--------------------------------------------------------------------------------

Josep Pujal from Kepler Cheuvreux, and I have 3 questions. You talked a lot about reducing carbon footprint and low-carbon solutions. Is this something you intend to develop in-house? Or have you any target acquisitions, particularly companies that are on the -- at the cutting-edge in this area? And maybe we can -- a transition to Energy & Services. Do you see Energy & Services as a subsegment that would -- that's really benefiting from this energy transition?

My second question, will I give it to you now?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [13]

--------------------------------------------------------------------------------

No, no. I'll tell you what, on low-carbon solutions, as I mentioned in my presentation, 15 years ago, I decided to strategically orient Bouygues in this area well before everybody else. Why? Well, I told my brother Olivier about 15 years ago about buying Château [...]. I would recommend it's an excellent Bordeaux from Saint-Estèphe. It's a second classified growth, by the way. But in making this acquisition, we didn't have any real capacity in wine growing. To be very honest, we were mere consumers. We had no particular skills in wine growing. But the domain really deserved being renovated, refurbished.

At that time, I remember saying insofar as we are very fortunate to have a magnificent product that sells at a very good price, we mustn't have a negative impact on the environment. So I tried to mobilize skill sets within Bouygues and found that we had very few skills in this area. So from 2005, 2006 onwards, I fostered a keen -- a strong will in all our business, Colas, TF1, Bouygues Telecom, everywhere, not just in construction. Bouygues Immobilier, of course. So -- and the offshoot of this is that the various business activities started proposing innovative solutions. Now we recruited people and sent them out across the world and found that we were building up a certain amount of know-how, but we weren't good at transferring it or sharing it. So we developed a specific purpose-built tool for the purpose of sharing know-how in this area. To put this know-how at the disposal of all our employees in all areas revolving around sustainable development. This is very much a priority. Bouygues Construction is selling low-carbon solutions throughout the world. We are asked about low-carbon solutions in housing, in whole neighborhoods or in cities for that matter. Likewise, Colas is able to submit tenders whilst proposing solutions that really build sustainable development into what they're offering, either by saving on transportation or recycling materials.

The circular economy is now one of our development thrust. Will we have the opportunity or will we not specialize ourselves in these areas? Well, if needs be, yes, why not. But there are a lot of people who are very much at the cutting-edge in the group in these areas. So I believe that we're not lagging behind. However, the momentum is such that we must increase it. We're far from lagging behind, in fact. But I think we need to continue to develop, continue to expand our know-how. It's much easier to build a positive energy building than to build an aircraft, a positive energy aircraft. There's room in the building that consumes a lot less energy and so on. But ours are businesses where this whole low-carbon approach is much easier.

If you go to Challenger, I'm sure you're all familiar with this, what you'll find is that we implemented a modernization program a few years ago that has served as a model to teach people how to transform an existing building to a highly modern building that reduces its energy consumption. It actually produces its own energy. This applies to water, among others. So we've learned an awful lot. This has taught us a lot. This experience is something that we show to our clients. We have a training center for our engineers and all our employees. So I think the great opportunity is there for groups like ours, because this is a very complex type of know-how. It's quite recent and isn't really within the grasp of smaller companies that have less access to this type of technology. Remember, it's a costly technology, expensive.

Well, Energy & Services. Well, the Energy & Services part of Bouygues Construction is obviously concerned by low-carbon solutions, but in the same way as the rest of the group. You saw the floating solar farm. Well, that's Bouygues Energy & Services within Bouygues Construction. They built that. We built other facilities in Japan and Australia and here, there and everywhere. So yes, this is an area in which we hope to progress, which we hope to be able to make our contribution.

As for the other part of your question, the second part.

--------------------------------------------------------------------------------

Josep Pujal, Kepler Cheuvreux, Research Division - Head of Building Materials & Construction Sector [14]

--------------------------------------------------------------------------------

The second question on telecoms. About a fortnight, Orange and Free talked about network sharing. Is this something that inspires you? Or are you happy with Saint-Malo and Asterix?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [15]

--------------------------------------------------------------------------------

Oh, I love Saint-Malo. I'm very fond of Saint-Malo, not just the idea of Saint-Malo. Now let me be very clear about this. Imagine a fully shared network owned by Orange. I can perfectly well understand that being a great appeal to Orange, but not to us. A few years ago, we pushed for a fourth network. We said that 4 mobile networks at 10 billion was more complex to a market than 3. Well, I said, no, no, it's not. Now there are 4. We have done a certain amount of sharing a part of our networks with SFR on the medium, low-density networks, which entail a huge investment. We made that investment. We're glad we did. We're very happy about all that.

Now Orange and Free want to do something similar. Well, I don't see why not. I -- in fact, I can only encourage them. I'm sure it's in their interest to do that. And why not? However, to my mind, the idea of a single network will be a major strategic mistake. And I'm going to tell you why, because each of the 4 players, Orange, SFR, Bouygues Telecom or Iliad, each and every one of us has experienced major technical problems. All of us. If we would have just one network, everybody would be down at the same time. I don't think that's necessary on the country. I think wisdom would have it that in mobile networks, which by definition are somewhat fragile, I think it would be wise to, let's say, divide or share that risk. So I do not believe in sharing a single network at all. To my mind, from the technological point of view, it would be nonsensical, particularly from the point of view of technological safety. So I don't see the point. That's my point of view. But others may think differently.

--------------------------------------------------------------------------------

Josep Pujal, Kepler Cheuvreux, Research Division - Head of Building Materials & Construction Sector [16]

--------------------------------------------------------------------------------

Maybe I should add it, when you share networks, what do you share exactly?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [17]

--------------------------------------------------------------------------------

Well, you share not the transmission of waves, but you share pylons. Bouygues and SFR have shared pylons in certain number of regions in France or parts of certain regions. But on the same pylon, Bouygues-SFR, you have SFR's equipment and Bouygues Telecoms equipment. Is that clear? That's what we share, pylons. For Orange, if Orange wants to create a monopoly, once again, I can understand their point of view, but it doesn't suit us.

--------------------------------------------------------------------------------

Josep Pujal, Kepler Cheuvreux, Research Division - Head of Building Materials & Construction Sector [18]

--------------------------------------------------------------------------------

And the last question, but I see Philippe Marien on the move, so I would have a last question for him. The EUR 1 billion in free cash flow, which is the objective for next year, for 2020, can you help us with CapEx here because right now, we have the telecom CapEx, which will be up. Now if you look at the CapEx of the group as a whole, that is on the increase. This means you're pretty confident about the other half of the equation to move from EUR 815 million to EUR 1 billion.

--------------------------------------------------------------------------------

Philippe Marien, Bouygues SA - Deputy CEO, CFO & Senior VP of HR, Information Systems & Innovation [19]

--------------------------------------------------------------------------------

Well, Josep, this is already the end of my career and so that's a question for Pascal Grangé. Yes. He's already holding his fishing net.

--------------------------------------------------------------------------------

Pascal Grangé, Bouygues Construction SA - Deputy CEO [20]

--------------------------------------------------------------------------------

Yes. Well, thank you for this hazing. This is a new [comments/question]. Yes, we were looking at a free cash flow of EUR 1 billion next year with CapEx anywhere between EUR 1.6 billion to EUR 1.8 billion, as we announced, including on the telecoms. So of course, for the -- to get the equation right, we expect our profitability to increase in all our businesses.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [21]

--------------------------------------------------------------------------------

Yes?

--------------------------------------------------------------------------------

Eric A. Lemarié, Bryan Garnier & Co Ltd, Research Division - Research Analyst [22]

--------------------------------------------------------------------------------

Eric Lemarié from Bryan Garnier. I had 4 questions. Number one, on the construction business in Hong Kong, have you been impacted in January and February by the coronavirus crisis?

Question number two, the effect of local elections in France in 2020, do you expect Colas' revenue to come down in 2020 because of the municipal elections?

Question number three, regarding your guidance on operating profit for the construction business, you're looking at an improvement in operating margin. Can you break it down by business areas, Colas, Bouygues Immobilier, Bouygues Construction? And then can you give us an update on the cyberattack in Challenger last month?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [23]

--------------------------------------------------------------------------------

Yes. Regarding Hong Kong first, our company has almost no presence in Mainland China. However, we have always had a strong presence in Hong Kong. Now in Hong Kong, we made the decision to suspend our business 2 weeks ago completely. We resumed this morning. Why did we decide to suspend all activities in Hong Kong? Well, because one of our employee was found to be positive, virus positive. And so we made this decision, which was well accepted by our customers to stop everything for 2 weeks because one of our employees was contaminated, and we want to control risk as much as possible. Now business has resumed, and we hear that our employee is on the mend. And so this is reassuring. Nonetheless, the crisis is somewhat worrying. And so we've -- we shall take no unnecessary risk and will not expose our employees.

And if I may move on to the question, the issue of the cyberattack at Bouygues Challenger. On this issue, Bouygues has always had a very cautious policy. Well, you might tell me, we were not as cautious as we should have been. But that's a cop and thief situation where the thief is always one leg ahead of the cop. And in our group, there are 2 very sensitive, 2 critical businesses, and that's Bouygues Telecom, needless to say, sensitivity to cyberattacks to the network is very high indeed. And their legal obligation, we work with ANSSI, which conducts very stringent supervision. And so we've been working there very carefully. Likewise, the TF1, we don't want someone from the outside to some sort of hacker to take over a broadcasting system. And there are all sorts of systems in place to prevent -- to protect us from that happening. But nonetheless, we've had the situation that you are aware of. I would like to pay tribute to all our employees in all our businesses who decided to join forces and help the teams at Bouygues Construction. This is a huge problem here. We have 3,000 servers around the world. And each and everyone of them has to be reset as it were and that's huge, a huge task.

ANSSI were good enough to send very high-level people to help us at Bouygues Construction, and they've been helping us find a solution. Nonetheless, this is, at the end of the day, something for the police, the French police, but also the Canadian police, because they all started in Canada, but other countries are affected. So this is -- we don't even know -- quite know where it all started, but this is a new kind of virus. This is something that was unknown up until now. So we're still adapting. Well, we were fortunate in our misfortune because in the construction business, we use, of course, a lot of information technology, but that will not stop a plant from running. Even if the network -- even though the network may have collapsed temporarily, at least, we were able to continue business, but this is something we could have done without. Obviously, we've learned from that. This will prompt us, after the crisis, to try and analyze the situation to see how to be better prepared for this kind of event. In other words, how best to protect ourselves and to prevent this form of attack happening. But should an attack occur again, how to respond even more effectively.

Regarding operating margin and the effect of local elections maybe I'll let Mr. Gardès address this. Frédéric?

--------------------------------------------------------------------------------

Frédéric Gardès, Colas SA - CEO of Colas [24]

--------------------------------------------------------------------------------

Yes. Well, regarding municipal elections, upcoming elections, historically, we have found indeed that in election years, the markets tended to shrink. There's less of it this year because many of this [is marketed] through -- go through sort of an intercity project, so individual mayors are not affected.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [25]

--------------------------------------------------------------------------------

But for the road network, there will be an effect because they are about -- there's a decline in orders for roadwork.

--------------------------------------------------------------------------------

Eric A. Lemarié, Bryan Garnier & Co Ltd, Research Division - Research Analyst [26]

--------------------------------------------------------------------------------

On the operating margin, yes, you give a guidance for the construction business, but could you give us a breakdown between Colas, Immobilier and construction?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [27]

--------------------------------------------------------------------------------

Well, no, we don't give a break -- a sort of a breakdown for the guidance. I don't know where Pascal learned -- got that from, but it sounds like something I've heard before. Yes, sir?

--------------------------------------------------------------------------------

Thomas Coudry, Bryan Garnier & Co Ltd, Research Division - MD of Equity Research [28]

--------------------------------------------------------------------------------

Thomas from Bryan Garnier. A question about telecom. This guidance, you're looking at upwards of EUR 300 million in free cash flow, even though there are -- there's significant increase in CapEx in 2020. How do you propose to arrive? How can you compensate for this increase in CapEx and still have this good free cash flow? And then should one distinguish between gross and net CapEx in 2020? What about the guidance again on CapEx and free cash flow? What about Bouygues Telecom. I -- there's talk of Huawei, and should there be a negative decision, what would be the effects for Bouygues Telecom network? If ANSSI and the government decided that some of the Huawei equipment should be replaced on Bouygues Telecom's network, would you still be able to stick to your guidance? And then finally, on the Asterix project, you talked about premises shared with Orange, but SFR is also present. Why on the SFR FTTH premises? And how many premises are we talking about when the Asterix projects begins?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [29]

--------------------------------------------------------------------------------

Right. Well, let me start with Huawei. Right now, we're completely in the dark. We've applied for the license. We're still waiting. The effect in 2020, no matter what, will be limited because as applications are processed, that will take some time. And whatever CapEx is involved in this will not start until 2021, even -- or the end of 2019 -- 2020, but probably 2021.

Regarding Huawei, Bouygues Telecom's position is -- Bouygues' position as a whole, is that no matter what the decision is, there should not -- whatever decision should not bring about any distortion of competition with competitors that did not have the equipment. We happen to choose Huawei as an equipment supplier. At that time we chose them, all the guarantees were met in view of French and European requirements in terms of certificates and whatnot so as to be able to purchase Huawei equipment and roll it out. Now should the French government or European authorities change their minds, well, that's fine. After all, that's part -- it's the sovereign decisions of states. I'm not making a political statement here. However, should such sovereign decisions be made, and you had the case in the U.S. when Donald Trump decided put an end to Huawei equipment in the U.S. and indeed, well, Huawei -- well, telco operators that had Huawei equipment had to be compensated. And indeed, there's a $1 billion fund to do just that. So should there be any discrimination, well, -- that should apply to -- will only apply to 2 areas. There would be excess invest -- well, excess cost in terms of CapEx. And of course, it would take a lot of time. You can't just change equipment overnight. If you have Huawei equipment and you want to have 5G from Ericsson or Nokia, it means that, first, you have to dismantle your Huawei equipment and reassemble it to adapt to whatever new equipment comes about. And that's not a small matter. And when Bouygues Telecom and SFR got together, it took 5 years to get their network, their combined network put together. There's of course administrative work, there's the technical work to produce the equipment. Then you have to integrate the equipment in what is a highly complex network. So that takes time. It took 5 years. So that is where we stand on Huawei. We haven't got the answers yet.

But more generally, there's a pretty obvious question, isn't there? What is Europe's industrial policy? Does Europe have an industrial policy? I'm afraid the answer is there is no industrial policy for Europe. And maybe one day we should start thinking about this. Clearly, the Chinese have a clear industrial strategy, and we might have reason to believe that, well, when they had is -- the fact that they had a strategy makes a difference. There used to be an industrial strategy in Europe. There was the planning commission in France and there were clear strategies. There was the nuclear industry, the railway industry and whatnot. And you may have your disagreement, but at the end of the day, the strategy bore fruit. And so that has completely disappeared over the years. And of course, this has had a significant effect on the state of industry in Europe. And indeed, in the U.S., the U.S. are facing the same situation. So in -- well, we are citizens. We're here to serve the country, serve our citizens. We're not engaging in politics, but it's not for us to pay for other's mistakes.

--------------------------------------------------------------------------------

Richard Viel, Bouygues Telecom SA - CEO & COO [30]

--------------------------------------------------------------------------------

As for your question on the Asterix program, just for the record, as far as we're concerned, this concerns the medium dense region with Orange. Orange has about 80% of the opportunities in this zone. As for the other approaches with SFR or the so-called priority network areas, we'll see.

Your question concerning cash flow or some of the contributions concerning EBITDA. Our CapEx, we feel will be between EUR 1.1 billion, EUR 1.2 billion, but we -- gross that is. We must also include the fact that there will be disposals within the Asterix program and that these disposals should generate some EUR 200 million in proceeds. I think that answers your question.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [31]

--------------------------------------------------------------------------------

Thank you. We have another question.

--------------------------------------------------------------------------------

Unidentified Analyst [32]

--------------------------------------------------------------------------------

I'm from Finance Connect. Concerning joint ventures in telecommunications, do you include them in your CapEx figures? And if so, could you give us some order of magnitude?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [33]

--------------------------------------------------------------------------------

No. Joint ventures are not included in CapEx.

--------------------------------------------------------------------------------

Unidentified Analyst [34]

--------------------------------------------------------------------------------

Could it entail significant financial investments? Or are they small?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [35]

--------------------------------------------------------------------------------

We're talking about a few tens of millions of euros over a 5- year period. So it's only a very notional amount.

--------------------------------------------------------------------------------

Unidentified Analyst [36]

--------------------------------------------------------------------------------

More generally, I've known the group for a very long time. You have a free cash flow of EUR 1 billion. With a bit of luck, you may dispose of the remainder of your stake in Alstom some time, which means that the net gearing is going to drop to a very low level. Do you have an opinion on that level of gearing in a world where people tend to be borrowing billions at 0%? Is there any -- does that term beg any questions? And of course, you have an exceptional dividend. You have carried out OPRA transactions in the past or [you'll do] share buybacks, if you prefer.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [37]

--------------------------------------------------------------------------------

I feel that my responsibility as Chairman of the group is to ensure the group's future, its sustainability. It's my responsibility to our employees, but also to our shareholders. The group's sustainability depends on the strategic choices made in the various business activities, but has also a very close connection with our financial stability. It hinges on our financial stability. It so happens that I've known the Bombardier family for some 40 years, we're good friends. So I think our friends at Bombardier have suffered. They made choices. They wanted their own choices, but ultimately, the -- let's say, painful choices. But my responsibility is to ensure that the group can continue to grow, continue to expand while incurring a reasonable level of risk.

As for our indebtedness, well, the idea of having EUR 10 billion or EUR 20 billion in debt is something that doesn't frighten certain groups. Just like you, I don't know what the future of indebtedness is. I find it easier to conceptualize what I know of or what I know well, so much easier than things I don't know. The fact is that we live in a complicated world. Since the start of this year, look at this Asian virus, which is really disrupting the global economy. Look at the trade balances, Donald Trump's trade balances with the rest of the world. This too has been disrupting the global economy in a noninsignificant way. So we're living in a complicated and fearsome world. I would not really advocate a very high level of debt. So there's always a balance to be struck between the dividend and a higher level of debt. Not to overlook the group's rating, it's important to have a reasonable rating in order to fund our needs at attractive prices. We have always been particularly keen to be able to repay our lenders. That's part of what we do. So for the moment, we've distinguished in the dividend we're proposing to the AGM, we've distinguished between the exceptional component, which is EUR 0.90 with what we call the ordinary dividend of EUR 1.70, with which you're already familiar, so far as you've known the group for quite some time.

As for the future, we'll see what it holds in store. We'll see how things develop. I think in these early months of 2020, I think we're well positioned. We're confident about our future.

Remember that with Alstom, nothing is done yet. There's a very complex administrative process going on with the EU. I can't say we did particularly well in the previous administrative process. I hope things go better this time around. But there's a lot of unforeseeables in all this. Remember, in these administrative processes, the European Union is a combination of very generous people who will ask the whole world, say, well, here you are, we propose to combine Alstom and Bombardier. Would that bother you? Would that put you out in any way? Or what could we do to make it easier to swallow? We'll ask that to the Chinese. But when the Chinese had world #1 and world #2 and decided to combine them to make a world super heavyweight, they didn't ask anybody what they thought and that's how things went, but we're different. We proceed differently. We are somewhat, not to say, very naïve, but we have to live with that. Does that answer your question?

--------------------------------------------------------------------------------

Philippe Marien, Bouygues SA - Deputy CEO, CFO & Senior VP of HR, Information Systems & Innovation [38]

--------------------------------------------------------------------------------

Just on the technical aspect between an exceptional dividend and OPRA as a share buybacks, we've decided on EUR 0.90 per share, which is approximately EUR 360 million or EUR 370 million to be paid. For this exceptional component, the share buyback was for 1.4. This is a longer complex transaction. But for EUR 360 million, there was no point in buying back shares. The -- let's say, the trade-off in the two has a lot to do with the total amount involved.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [39]

--------------------------------------------------------------------------------

I think the exceptional dividends are quite [fashionable] at the moment.

--------------------------------------------------------------------------------

Philippe Marien, Bouygues SA - Deputy CEO, CFO & Senior VP of HR, Information Systems & Innovation [40]

--------------------------------------------------------------------------------

No. No, there is no need to buy back shares. I think it would not be appropriate. It was a case of a choice between an exceptional dividend at EUR 0.90, which is approximately 1/3 of the proceeds from the Alstom share disposal. So I think that's very consistent with what we said we would do when talking about using the proceeds from that billion or that disposal.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [41]

--------------------------------------------------------------------------------

One final question here.

--------------------------------------------------------------------------------

Unidentified Analyst [42]

--------------------------------------------------------------------------------

My question will be brief. Particularly on construction, outside of the Greater Paris region, what about business elsewhere in France? And concerning the Greater Paris, is this a design model that could be costly in the longer term? I'm just wondering, would this have any impact on margins in the medium term?

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [43]

--------------------------------------------------------------------------------

Philippe Bonnave will answer that one enthusiastically.

--------------------------------------------------------------------------------

Philippe Bonnave, Bouygues SA - Chairman & CEO of Bouygues Construction [44]

--------------------------------------------------------------------------------

Yes, the Greater Paris has decided to organize its future calls for tenders on very large lots for values in the region of several billion euro. I'm not sure that's going to increase margins. We'll tell you afterwards. In all events, the cost of the various studies are extremely high.

Your other question concerned outside of the Greater Paris region. Well, I think that's (inaudible) of EUR 400 million in revenue out of a total of EUR 5.4 billion in France. It's not negligible, but it's 7% to 8% of the total to give, again, just an order of magnitude.

--------------------------------------------------------------------------------

Martin Bouygues, Bouygues SA - Chairman & CEO [45]

--------------------------------------------------------------------------------

Okay. Thank you, ladies and gentlemen. Thank you. The Meeting's adjourned.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]